Federal Court of Australia
Australian Communications and Media Authority v V Marketing Australia Pty Ltd (in liq) (No 2) [2024] FCA 34
ORDERS
DATE OF ORDER: |
THE COURT ORDERS THAT:
1. The amended application filed on 2 March 2021 as against the fourth respondent be dismissed.
2. Costs be reserved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
THOMAS J:
BACKGROUND
1 The first respondent, V Marketing Australia Pty Ltd (in liquidation), undertook telemarketing activity by using voice telephone calls made by its employees or agents to members of the public. The third respondent, Mr Michael Vazquez, was the sole director of V Marketing.
2 The second respondent, Balaska Pty Ltd, traded as Energy Options AU and carried on a business which included the sale, supply and installation of solar energy systems. The fourth respondent, Mr James McLennan, was the sole director of Balaska.
3 On or about 2 April 2013, Balaska decided to proceed with outsourcing its sales and marketing functions to V Marketing. No written agreement was entered into.
4 A draft written agreement of the verbal agreement between V Marketing and Balaska was prepared in February 2018 but was never signed.
5 The applicant, Australian Communications and Media Authority (the ACMA), as part of its functions, is required to keep a Do Not Call Register of telephone numbers for the purpose of the Do Not Call Register Act 2006 (Cth) (the DNCR Act).
6 Section 11 of the DNCR Act relevantly provides:
(1) A person must not make, or cause to be made, a telemarketing call to an Australian number if:
(a) the number is registered on the Do Not Call Register; and
(b) the call is not a designated telemarketing call.
…
Ancillary contraventions
(7) A person must not:
…
(c) be in any way, directly or indirectly, knowingly concerned in, or party to, a contravention of subsection (1); or
…
…
7 Throughout these proceedings, the parties referred to the “washing” of telephone numbers. It is my understanding that this refers to the process under s 19 of the DNCR Act whereby V Marketing can provide a list of telephone numbers to the ACMA and is informed by the ACMA which, if any, of the telephone numbers provided are registered on the Do Not Call Register.
8 I also note s 11(3) of the DNCR Act provides that s 11(1) does not apply if, within the last 30 days of when the telemarketing call was made, V Marketing washed a telephone list on which the called telephone number appears and received a reply from the ACMA that the telephone number called was not registered on the Do Not Call Register.
9 Between 1 March 2017 and 30 September 2017, it is alleged by the ACMA that V Marketing on behalf of Balaska attempted to make, or caused to be made, 553,630 calls to numbers on the Do Not Call Register. Each of the calls was a voice call to an Australian number as defined in s 4 of the DNCR Act and a telemarketing call as defined in s 5 of the DNCR Act. The telemarketing calls were not “designated telemarketing calls” as defined in Schedule 1 of the DNCR Act, that is, they were not authorised.
10 The ACMA caused six compliance warnings to be sent by email to Balaska. The fifth and sixth compliance warnings fall outside of the time period to which these proceedings relate and therefore need not be considered further.
11 The first compliance warning was sent by email and dated 28 February 2017 and referred to two telemarketing calls having been made to one telephone number on the Do Not Call Register. In response to receiving this warning, Mr McLennan sent an email to Mr Mark McEvoy, General Manager of V Marketing, requesting “can you check your data washing procedure and let me know when sorted please” (italics in original). Mr McEvoy sent an email in reply to Mr McLennan attaching evidence of the call washing for the relevant post code. Mr McEvoy also provided details of V Marketing’s policy when receiving a Do Not Call question, which involved marking the telephone number as “Do Not Call” and terminating the telephone call.
12 The second compliance warning was sent by email and dated 29 April 2017 and referred to a telemarketing call having been made to the telephone number the subject of the 28 February 2017 compliance warning. Mr McLennan did not forward this warning to Mr McEvoy.
13 The third compliance warning was sent by email and dated 31 May 2017 and referred to one telemarketing call having been made to a telephone number on the Do Not Call Register, but did not identify the number. Mr McLennan forwarded this warning to Mr McEvoy stating “[d]oesn’t look to be a number listed but there is compliance reference” (italics in original).
14 The fourth compliance warning was sent by email and dated 21 September 2017 and referred to the making of three telemarketing calls to one telephone number on the Do Not Call Register. Mr McLennan forwarded this warning to Mr McEvoy requesting that he search the telephone number and advise whether it was washed and to provide evidence of this. On 26 September 2017, Mr McEvoy sent a reply email to Mr McLennan attaching a screen shot of the relevant post code and date washed.
15 In total, the compliance warnings referred to seven telemarketing calls made against two then identified telephone numbers on the Do Not Call Register over a period of approximately seven months.
16 V Marketing, Balaska and Mr Vazquez made admissions as to the contraventions. What remains to be determined is the liability of Mr McLennan.
SUBMISSIONS OF THE ACMA
17 As sole director of Balaska, Mr McLennan was knowingly concerned in the contraventions of s 11(1) of the DNCR Act in contravention of s 11(7).
18 Mr McLennan admitted that he knew that V Marketing made telemarketing calls on behalf of Balaska, but denied that he knew that V Marketing was required to comply with the DNCR Act, denied that he did not take any material steps to ensure that V Marketing complied with the DNCR Act, and denied that he was knowingly concerned with the contraventions of the DNCR Act.
19 Balaska admitted the conduct alleged against it and admitted that, as a result, it contravened s 11(1) of the DNCR Act.
20 The contraventions related to the making of 553,630 telemarketing calls during the period from 1 March 2017 to 30 September 2017 (the Relevant Period).
21 There were 553,630 contraventions alleged against Mr McLennan.
22 Mr McLennan contravened s 11(7) of the DNCR Act by being “knowingly concerned in” the contraventions by Balaska of s 11(1).
23 Sections 11(1) and 11(7) are civil penalty provisions (see s 11(8) DNCR Act).
24 The ACMA relied upon the following material in relation to the allegations against Mr McLennan:
(a) the ACMA compliance warnings sent by email to Balaska immediately prior to and during the Relevant Period;
(b) the emails sent by Mr McLennan to V Marketing immediately prior to and during the Relevant Period, forwarding the ACMA compliance warnings; and
(c) the terms of the draft agreement between V Marketing and Balaska and representations made in relation to that draft agreement.
25 In order to establish a contravention of s 11(7) of the DNCR Act by Mr McLennan, it must be shown, first, that Balaska contravened s 11(1) and, secondly, that Mr McLennan knew of the essential facts and had some practical involvement in the acts or omissions that constituted Balaska’s contravention of s 11(1).
26 This was achieved by establishing that:
(a) during the Relevant Period Balaska caused V Marketing to undertake telemarketing activities on behalf of Balaska;
(b) V Marketing made telemarketing calls to the numbers listed on the Do Not Call Register on behalf of Balaska; and
(c) the calls were not “designated telemarketing calls” as defined in Schedule 1 of the DNCR Act.
27 Based upon the admissions made by Balaska, Mr McLennan:
(a) had knowledge of the essential elements of Balaska’s contravention of s 11(1);
(b) had authority and power, on behalf of Balaska, to direct V Marketing in relation to its telemarketing activity on behalf of Balaska;
(c) failed to take any material step to ensure V Marketing complied with the DNCR Act when making telemarketing calls for Balaska;
(d) failed to take any material step to prevent V Marketing from contravening the DNCR Act when making telemarketing calls for Balaska, including after he was, on multiple occasions, put on notice of alleged contraventions; and
(e) therefore, had practical involvement in Balaska’s contraventions of the DNCR Act.
28 Against the background that Mr McLennan was the sole director and general manager of Balaska and had day-to-day management of the Balaska business and was responsible for ensuring the compliance of Balaska with the DNCR Act, following receipt of the first warning of 28 February 2017, Mr McLennan was on notice, at least from 1 March 2017, that V Marketing was making telemarketing calls to numbers listed on the Do Not Call Register on behalf of Balaska and was thereafter knowingly concerned in Balaska’s contraventions of s 11(1) of the DNCR Act.
29 During the course of the Relevant Period, Mr McLennan continued to receive compliance warnings and, as a result, had knowledge of the fact that V Marketing was continuing to make telemarketing calls to numbers listed on the Do Not Call Register on behalf of Balaska.
30 In respect of each compliance warning, the fact that the ACMA issued a compliance warning was sufficient to put Mr McLennan on notice that the calls made by V Marketing were not “designated telemarketing calls” for the purposes of Schedule 1 of the DNCR Act.
31 As the sole director and controlling mind of Balaska, Mr McLennan had authority and responsibility to take some material steps to prevent Balaska from causing V Marketing to contravene the DNCR Act.
32 A draft agreement between V Marketing and Balaska for the provision of telemarketing services, which was attached to an email to Mr McLennan dated 17 October 2017, was relevant to the ability of Mr McLennan to take steps to prevent Balaska from causing V Marketing to contravene the DNCR Act.
33 The draft agreement contained a provision, in cl 3.6, that V Marketing must comply with all guidelines and directions issued by Balaska for the “method of marketing, promotion, advertising and communication”.
34 As to the draft agreement, which was never agreed or signed, Balaska advised the ACMA on 22 February 2018 that “this agreement was never finalised between the parties but it does give a good outline of how the process works between V Marketing and Balaska”.
35 The agreement between V Marketing and Balaska gave Balaska power to give directions to V Marketing as to the method of marketing, promotion, advertising and communication.
36 The responses from Mr McLennan following the compliance warnings were inadequate and demonstrated a lack of due concern about compliance.
37 Mr McLennan did not take any other step or action to investigate the alleged contravention or to make any change to V Marketing’s compliance arrangements or otherwise prevent Balaska from causing further contraventions by V Marketing.
38 The emails sent by Mr McLennan following receipt of the compliance warnings demonstrated that Mr McLennan had the capacity to direct V Marketing in respect of its work on behalf of Balaska and to require proof of V Marketing’s compliance with the DNCR Act. Therefore, it may be accepted that Mr McLennan could have taken, but did not take, any material steps to ensure V Marketing did not contravene the DNCR Act.
39 The evidence that Mr McLennan would “come into V Marketing’s office occasionally for a Monday morning meeting with field sales representatives to run through the current focus of the campaigns” and that Mr McLennan “would educate the field sales representatives on how to do their job better” and that Mr McLennan also provided two vehicles for use by V Marketing sales representatives supported the conclusion that Mr McLennan had power and capacity to require V Marketing to take steps, such as reviewing and improving its call washing procedures, or directing V Marketing staff to use the call washing procedures correctly and the staff demonstrating to Balaska that the procedure was effective so as to ensure V Marketing did not contravene the DNCR Act. The ACMA asserted that Mr McLennan did not take any such material steps.
40 Throughout the Relevant Period Mr McLennan had knowledge of the essential facts of Balaska’s contraventions of s 11 (1) and, by his failure to take any material step to ensure compliance and prevent future non-compliance in circumstances where he had authority and responsibility to do so, he had practical involvement in the acts that constituted Balaska’s contraventions of the DNCR Act.
41 The knowledge that Mr McLennan was required to have in order to make him a person knowingly concerned was knowledge that V Marketing, on behalf of Balaska, was making calls to numbers on the Do Not Call Register. It was not necessary for him to know of each individual call made by V Marketing as part of that course of conduct in contravening the DNCR Act.
42 The ACMA provided an illustration. A directs B to conduct a marketing campaign and specifically directs B to call numbers on the Do Not Call Register. On Mr McLennan’s argument, A could never be a person with knowledge of the essential elements of the contraventions unless A knew the numbers which were called in accordance with the direction.
43 If a person with knowledge of the contravening conduct has the power to take steps to cause the conduct to cease and does not take the steps, that person is properly regarded as having sufficient practical involvement in the contraventions to be regarded as a person “knowingly concerned”. Mr McLennan, as the sole director and general manager, controlled the contravenor, Balaska, and is properly regarded as the sole guiding mind and will. His involvement was established by reference to these criteria.
44 The authorities are against the proposition that it is necessary for the ACMA to plead and prove that Mr McLennan knew in advance that each of the 553,630 “telemarketing calls to Australian numbers that were registered on the Do Not Call Register” would be made and, absent that knowledge, Mr McLennan cannot have had the relevant knowledge.
SUBMISSIONS OF MR MCLENNAN
45 The ACMA must, as a matter of law, prove actual knowledge by Mr McLennan of every element of the underlying contraventions.
46 The ACMA has not pleaded such a case of knowledge and has expressly disavowed running a case beyond its pleading.
47 The ACMA has not pleaded, and there was no evidence capable of establishing Mr McLennan’s knowledge of the essential elements in respect of the primary contraventions by Balaska.
48 For the primary contraventions, knowledge was not an element. The contravention is one of strict liability. Hence, Balaska admitted the contraventions.
49 For the ACMA to establish accessorial liability against Mr McLennan, the ACMA needed to plead and prove that Mr McLennan had knowledge of the essential elements of every contravention by Balaska. The ACMA did not allege that Mr McLennan had this knowledge in respect of each call nor, indeed, that he had this knowledge in respect of any of the 553,630 calls.
50 Mr McLennan must have had, at the least, some practical involvement in the acts or omissions constituting the contravention.
51 The ACMA has not pleaded or called evidence as to the cause of V Marketing making in excess of 550,000 telemarketing calls during the Relevant Period to numbers on the Do Not Call Register.
52 The ACMA did not call evidence that even the people in V Marketing knew of the cause of V Marketing making all of those calls to numbers on the Do Not Call Register.
53 The ACMA has not pleaded or proved that Mr McLennan knew of the cause.
54 The ACMA has not pleaded or called evidence as to what steps Mr McLennan could have taken to prevent this unidentified cause.
55 The ACMA has not called any evidence from its own witnesses who worked at V Marketing that Mr McLennan exercised any control over the operation of V Marketing’s telemarketing business, or that they considered it his role to do so, or that they considered him able to direct them as to how V Marketing ran its telemarketing business. The evidence of the ACMA’s own witnesses was not consistent with Mr McLennan exercising or being able to exercise any control over the operation of V Marketing’s telemarketing business.
56 Mr McLennan’s evidence that he did not have control was consistent with the evidence of the ACMA’s own witnesses.
57 It is not possible for a court to make a finding that Mr McLennan failed to take unidentified steps to prevent an unidentified cause of V Marketing’s contraventions and thereby become “knowingly concerned” in V Marketing’s contraventions.
DISCUSSION
58 It was common ground that the issue in dispute in these proceedings was whether there was a basis for the Court to conclude that Mr McLennan had knowledge of the essential facts or elements of Balaska’s contraventions of the DNCR Act such that he would be knowingly concerned in those contraventions.
59 It is common ground between the parties that it is a well-established principle that a person is “knowingly concerned” in a contravention if they have actual knowledge of the essential facts which constituted the contravention, even if they do not know those facts constituted a contravention. Moreover, the party must have had, at the least, some practical involvement in the acts or omissions constituting the contravention (Australian Competition and Consumer Commission v SensaSlim Australia Pty Ltd (in liq) (No 5) (2014) 98 ACSR 347; [2014] FCA 340 at [543]).
60 There is no requirement that the person know or appreciate that the contravenor’s conduct was unlawful or capable of being characterised as a contravention of the relevant provision.
61 In this case, the primary contravention (engaged in by V Marketing and Balaska) was essentially one of strict liability. All that must be proved is that a call was made. However, as is required by the statute, it must be established that Mr McLennan was knowingly concerned and must have had actual knowledge.
62 In Yorke v Lucas (1985) 158 CLR 661 (Yorke), the case concerned allegations of misleading or deceptive conduct by a corporation and the liability of persons aiding, abetting, counselling or procuring or party to a contravention by a corporation. Mason ACJ, Wilson, Deane and Dawson JJ observed (at 670) that “[t]here can be no question that a person cannot be knowingly concerned in a contravention unless he has knowledge of the essential facts constituting the contravention”.
63 Mason ACJ, Wilson, Deane and Dawson JJ further held that, for a person to be knowingly concerned in a statutory contravention, it “requires a party to a contravention to be an intentional participant, the necessary intent being based upon knowledge of the essential elements of the contraventions” (at 670).
64 In Giorgianni v The Queen (1985) 156 CLR 473 (Giorgianni), Wilson, Deane and Dawson JJ observed (at 504-505):
In the first place, there is no basis upon which it can be said that where a statutory offence requires no proof of intent, it is unnecessary in order to establish secondary participation in the commission of that offence to prove actual knowledge of all the essential facts of the offence. Intent is an ingredient of the offence of aiding and abetting or counselling and procuring and knowledge of the essential facts of the principal offence is necessary before there can be intent. It is actual knowledge which is required and the law does not presume knowledge or impute it to an accused person where possession of knowledge is necessary for the formation of a criminal intent. Secondly, although it may be a proper inference from the fact that a person has deliberately abstained from making an inquiry about some matter that he knew of it and, perhaps, that he refrained from inquiry so that he could deny knowledge, it is nevertheless actual knowledge which must be proved and not knowledge which is imputed or presumed.
65 On occasions it has been concluded that knowledge might be established as a matter of inference from the circumstances around the contravention.
66 In the case of Pereira v Director of Public Prosecutions (1988) 82 ALR 217, the Court considered the position where actual knowledge may be established as a matter of inference from the circumstances surrounding the commission of the alleged offence. The Court noted (at 219-220) that:
First, in such cases the question remains one of actual knowledge: Giorgianni v R (1985) 156 CLR 473 at 504-7; 58 ALR 641; He Kaw Teh (CLR at 570). It is never the case that something less than knowledge may be treated as satisfying a requirement of actual knowledge. Secondly, the question is that of the knowledge of the accused and not that which might be postulated of a hypothetical person in the position of the accused, although, of course, that may not be an irrelevant consideration. Finally, where knowledge is inferred from the circumstances surrounding the commission of the alleged offence, knowledge must be the only rational inference available.
67 White J in Australian Securities and Investments Commission v ActiveSuper Pty Ltd (in liq) (2015) 235 FCR 181; [2015] FCA 342 referred to Yorke and said (at [398]) that “[i]n order for a person to be knowingly concerned in a statutory contravention, that person must have been an intentional participant, with knowledge of the essential elements constituting the contravention”. His Honour went on to say that:
399 Actual knowledge of the essential elements constituting the contravention is required. Imputed or constructive knowledge is insufficient: Young Investments Group Pty Ltd v Mann [2012] FCAFC 107; (2012) 293 ALR 537 at [11].
400 Proof that a person had actual knowledge of each of the essential elements making up the contravention may be derived from direct evidence but more commonly will be a matter of inference from all the circumstances found to be proved. In some cases, actual knowledge can be inferred from the combination of a defendant’s knowledge of suspicious circumstances and the decision by the defendant not to make inquiries to remove those suspicions.
68 Dowsett J considered the principles in relation to the DNCR Act in Australian Communications and Media Authority v FHT Travel Pty Ltd [2011] FCA 550 (FHT Travel) and said (at [9]) that:
In my view, in order to demonstrate knowing involvement or, for that matter, that there was aiding, abetting, counselling or procuring of a contravention, it must be demonstrated that the relevant person was knowingly involved in, or knowingly entered into such conduct. This is the approach that has consistently been taken under the Trade Practices Act 1974 (Cth) …. It has not been suggested that it is incorrect. It is therefore necessary to show that the second respondent knew that telephone calls to be made would contravene the [Do Not Call Register] Act, at or before the time at which they were made.
69 The ACMA submitted that his Honour’s reasons make it clear that this requirement did not involve a requirement that Mr Mc Lennan, in this case, knew in advance of the making of each particular telephone call.
70 In FHT Travel, the person alleged to have been accessorily liable knew that the contravenor was using sales lists which were not “washed lists”.
71 Dowsett J observed (at [12]): “I am therefore willing to infer that from shortly after 2 September 2008, [the second respondent] was aware that the first respondent was making calls without seeking to identify numbers which were on the register”.
72 The ACMA submitted that FHT Travel is authority for the proposition that awareness (due to the compliance warnings having been received) of the risk of the making of calls to numbers on the Do Not Call Register was sufficient knowledge. As the ACMA put it, the second respondent, by reason of the circumstances, knew that calls would be made to numbers on the Do Not Call Register.
73 The ACMA referred to Australian Communications and Media Authority v Mobilegate Ltd (a company incorporated in Hong Kong) (No 8) (2010) 275 ALR 293; [2010] FCA 1197 (Mobilegate) in which Logan J said at [172]:
There was debate before me in submissions as to the level of detail of knowledge of contravening conduct which the [ACMA] must prove. As I understood it, the submission made on behalf of Mr Phillips was that the [ACMA] needed to go so far as to prove that he was aware that particular profiles were fictitious and that particular deceptive messages were being sent using that particular fictitious profile. That would involve proof of detailed knowledge of the deceptive quality attending each and every of many thousands of messages. I reject this submission. It is not, in my opinion, supported by Yorke. It will be sufficient to prove accessorial liability in respect of the corporate contraventions if the [ACMA] proves that Mr Phillips was aware that IMP and on its behalf Jobspy were employing a system of operations whereby fictitious profiles were being created to the end that each third party consent to the use of the premium shortcode would be procured by a message which was deceptive because of the employment of a fictitious profile. Proof of knowledge at a more detailed level of abstraction is not, in my opinion, essential.
74 Mobilegate involved contraventions of the Spam Act 2003 (Cth) where the person who was alleged to be accessorily liable knew that fictitious profiles were being created on a dating website which would send messages to Australian mobile telephone numbers.
75 In each of FHT Travel and Mobilegate, the knowledge was direct knowledge of a practice which would inevitably result in contraventions. In FHT Travel, the knowledge was that the contravenor was using sales lists which were not washed lists. In Mobilegate, the knowledge was that the contravenor was creating fictitious profiles on a dating website which would send messages to Australian mobile telephone numbers.
76 In the current case, as the ACMA put it, Mr McLennan’s knowledge arose from receipt of the compliance warnings which indicated that contravening conduct may have occurred.
77 In the context where knowledge is said to be inferred from the circumstances surrounding the commission of the offence, counsel for Mr McLennan described this as “a system case”. It was submitted “you can run a case that says a company has a system that produces contraventions, and the individual said to be knowingly concerned in the contraventions, approved the system, or directed the running of that system with knowledge that the outcome of the system would be the things that were the contraventions”.
78 It was submitted that these circumstances are quite different from Mr McLennan’s circumstances in the current case.
79 The authorities make it clear that the ACMA must demonstrate that Mr McLennan had actual knowledge of the essential elements constituting the contravention to the extent that the person is an intentional participant in the contravention, based upon that knowledge. Whether knowledge of a system (as in the case of FHT Travel, actual knowledge of the fact that unwashed lists were being used, and as in the case of Mobilegate, actual knowledge that fictitious profiles were being created on a dating website) is sufficient (leading to a finding of actual knowledge and the conclusion that the person was an intentional participant) depends upon the circumstances of the case against the background of the requirement of actual knowledge of the essential facts.
80 A central aspect of the ACMA’s argument was the provision of the four compliance warnings which were issued by the ACMA to Balaska and the action Mr McLennan took on receipt.
81 The ACMA asserted that, following receipt of the first warning of 28 February 2017, Mr McLennan was on notice at least from 1 March 2017 that V Marketing was making telemarketing calls to numbers listed on the Do Not Call Register on behalf of Balaska and was thereafter “knowingly concerned” in Balaska’s contraventions of s 11(1) of the DNCR Act.
82 This is not a case where it was asserted that Mr McLennan authorised or directed activities (such as, to take the example provided by the ACMA, to make calls to numbers on the Do Not Call Register) where his knowledge of a system might be sufficient knowledge.
83 The case advanced by the ACMA was that, on basis of the warnings given by the ACMA and his subsequent actions, Mr McLennan was “knowingly concerned”.
84 Each compliance warning indicated that calls “may have been made”.
85 The first compliance warning was dated 28 February 2017 and referred to the making of two telemarketing calls, of which the first identified a telephone number registered on the Do Not Call Register while the second did not identify any telephone number. An explanation was given by V Marketing in response to the email which Mr McLennan sent to V Marketing. Mr McEvoy emailed to Mr McLennan evidence of the call washing for the relevant post code. Mr McEvoy also provided details of V Marketing’s policy when receiving a Do Not Call question, which involved marking the telephone number as “Do Not Call” and terminating the telephone call.
86 As its highest, the first compliance warning may have caused Mr McLennan to have knowledge of two possible calls to a single number. This was not knowledge of the essential facts which constituted the contraventions alleged. The response received from Mr McEvoy, which indicated the relevant post code and the date washed, was relevant to the question of Mr McLennan’s knowledge (or lack of knowledge).
87 The second compliance warning was dated 29 April 2017, two months after the first warning. The second warning referred to the making of one telemarketing call to the same telephone number which was the subject of the first warning.
88 Given the lengthy time between the two warnings, and the fact that both warnings related to the same telephone number (which may have received multiple telephone calls), I conclude that the warning would not have caused Mr McLennan to have knowledge of any of the essential facts which constituted the contraventions.
89 Given that the ACMA took the course of issuing compliance warnings, a person in Mr McLennan’s position may reasonably have assumed that the warnings indicated the extent of the issue.
90 The third compliance warning was dated 31 May 2017, one month later, and referred to one call without identifying the telephone number. Again, Mr McLennan sent the warning to V Marketing noting that it “[d]oesn’t look to be a number listed but there is compliance reference” (italics in original). I conclude that this was not knowledge of the essential facts which constituted the contravention.
91 The fourth compliance warning was dated 21 September 2017, some four months after the previous warning. This warning referred to the making of three telemarketing calls. Two did not identify a number registered on the Do Not Call Register. The very lengthy time between the third and fourth warnings, combined with the fact that the fourth warning referred to three calls and just one number, would not have caused Mr McLennan to have knowledge of the essential facts which caused the contraventions. Mr McLennan raised the matter with V Marketing and Mr McEvoy replied to Mr McLennan attaching a screen shot of the relevant post codes and date washed. The response received was relevant to the question of Mr McLennan’s knowledge (or lack of knowledge).
92 Even by this stage, given the fact that the third warning related to one unidentified number and then there was no further communication from the ACMA for a period of four months when three calls and another single number were identified and, in light of the explanation provided, it cannot reasonably be said that Mr McLennan had actual knowledge of the essential facts of the contraventions.
93 I conclude that, given the contents of the compliance warnings, the timing of the compliance warnings and the responses received from Mr McEvoy, Mr McLennan did not have actual knowledge of the elements of the contraventions.
94 This position was quite different from the facts which were considered in FHT Travel and Mobilegate. They are also different from the example given by way of illustration by the ACMA. In that example, the person against whom accessorial liability was being pressed had directed the contravenor to conduct a marketing campaign and call numbers on the Do Not Call Register. In those circumstances, knowledge of the scheme (which involved actual knowledge of the steps being taken which involved the contraventions) would be adequate to establish the person being knowingly concerned and playing an active role. No such conduct of this type is asserted or established in this case.
95 The ACMA submitted that Mr McLennan had some practical involvement in the acts or omissions that were constituted by Balaska’s contraventions. This arose, in the ACMA’s submission, because Mr McLennan was alleged to have failed to take any material step to ensure compliance and prevent future non-compliance in circumstances where he had authority and responsibility to do so.
96 In view of the conclusion I have reached regarding the knowledge of Mr McLennan, it is not necessary to deal with that aspect.
97 However, I will make some observations.
98 Reasonable steps which might have been taken by someone in Mr McLennan’s position are determined by reference to the extent of the knowledge. By the end of the period of seven months, from Mr McLennan’s perspective, having received the compliance warnings, he was aware of seven telemarketing calls to three telephone numbers. On each occasion (except the second occasion, which Mr McLennan concedes was by virtue of an oversight) Mr McLennan forwarded the warning to V Marketing. The responses from V Marketing provided relevant information as to washing for the post codes and were relevant to the issue of knowledge.
99 Given the contents of the compliance warnings, the timing of the compliance warnings and the responses received from Mr McLennan, the action he took was reasonable and proportionate. There was no failure to take reasonable action.
100 The ACMA referred to the terms of the draft agreement.
101 There is no dispute that the draft agreement was never signed. The date upon which the draft agreement was provided to Mr McLennan by V Marketing post-dated the relevant period. At its highest, the ACMA referred to evidence to the effect that the agreement “does give a good outline of how the process works between V Marketing and Balaska”. The ACMA referred to cl 3.6(a)(ii) of the draft agreement that “the referrer must comply with all guidelines and directions issued by the recipient for the … method of marketing promotion, advertising and communication”.
102 Whilst the ACMA called evidence from witnesses from V Marketing, there was no evidence from them about the draft agreement or that Mr McLennan exercised any control over the operation of V Marketing’s telemarketing business, or that they considered it was his role to do so, or that they considered him able to direct them as to how V Marketing ran its telemarketing business. Mr McLennan’s evidence was that he did not have control and this was consistent with the evidence from those witnesses called by the ACMA.
103 In my view, there was insufficient evidence to enable a finding that the terms of the arrangement between the parties followed the draft agreement so that cl 3.6(a)(ii) was part of those terms.
104 The ACMA has also asserted that the emails sent by Mr McLennan following receipt of the compliance warnings demonstrated that he had the capacity to direct V Marketing in respect of its work on behalf of Balaska and to require proof of V Marketing’s compliance with the DNCR Act. As is clear, the compliance warnings related to actions of V Marketing employees. In those circumstances, it would not be unusual for a person in Mr McLennan’s position to forward those compliance warnings to the person with the ability to respond and make corrections, if necessary. The communications were not framed in terms of a contractual requirement, nor did they require any contractual response. In my view, they are not evidence of a capacity of Balaska or Mr McLennan to direct V Marketing.
105 The ACMA also referred to evidence that Mr McLennan would “come into V Marketing’s office occasionally for a Monday morning meeting with field sales representatives to run through the current focus of the campaigns” and that he “would educate the field sales representatives on how to do their job better” and that he provided two vehicles for use by V Marketing sales representatives. This was suggested to be indicative that Mr McLennan had power and capacity to require V Marketing to take steps such as reviewing and improving its call washing procedures, or directing V Marketing staff to use the call washing procedures correctly and the staff demonstrating to Balaska that the procedure was effective so as to ensure V Marketing did not contravene the DNCR Act.
106 Each of the matters raised by the ACMA dealt with Mr McLennan’s interaction with field sales representatives who, from their description, would have face-to-face meetings with prospective customers and so would need to be conversant with the services provided by Balaska. The description provided by the ACMA clearly fell within those activities. It did not suggest in any way that Mr McLennan or Balaska may have had the power or capacity to require V Marketing to take steps with respect to its call washing procedures.
107 As I said earlier, because of the conclusions I have reached as to Mr McLennan’s lack of actual knowledge of the essential facts which constitute a contravention and consequently that he was not “knowingly concerned” in a contravention, it is not necessary for me to reach conclusions about the ability of Mr McLennan or Balaska to direct V Marketing. However, as to that issue, I would conclude that the evidence was not sufficient to establish that a clause such as 3.6(a)(ii) was a term of the arrangements between V Marketing and Balaska and that none of the evidence referred to by the ACMA supported the conclusion that Mr McLennan had power to direct V Marketing.
108 Counsel for Mr McLennan raised several issues with the ACMA’s pleadings. This was a civil penalty matter. Any allegation made must be pleaded properly. It is not necessary for me to deal with these issues in view of the conclusions which I have reached.
DISPOSITION
109 I order that the amended application filed on 2 March 2021 as against the fourth respondent be dismissed.
COSTS
110 Costs be reserved.
I certify that the preceding one hundred and ten (110) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Thomas. |
Associate:
QUD 235 of 2019 | |
JAMES MATTHEW MCLENNAN |
