Federal Court of Australia

Australian Energy Regulator v CAM Engineering and Construction Pty Ltd [2025] FCA 737

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 44AAG(1)(b) of the Competition and Consumer Act 2010 (Cth), the Court declares that, by failing to be a member of the energy ombudsman scheme operated by the Energy & Water Ombudsman (NSW) Ltd (EWON) during the period 11 March 2021 to 21 July 2022 (Relevant Period), where it was permitted to be a member of that scheme, while also during the Relevant Period selling energy to exempt customers within New South Wales, CAM Engineering:

(a)    failed to comply with a condition of its retail exemption (Condition 17), imposed under s 112(1) of the Retail Law (NSW); and

(b)    therefore, contravened s 112(2) of the Retail Law (NSW).

2.    Pursuant to s 44AAG(2)(a) of the Competition and Consumer Act 2010 (Cth), within 28 days of the date of these Orders, CAM Engineering is to pay to the Commonwealth of Australia a pecuniary penalty in the sum of $250,000 in respect of its contravention of s 112(2) of the Retail Law (NSW).

3.    Pursuant to s 44AAG(2)(c) of the Competition and Consumer Act 2010 (Cth), CAM Engineering must:

(a)    submit to EWON’s jurisdiction in respect of any complaints by its exempt customers concerning matters which occurred during the Relevant Period; and

(b)    in respect of any such complaints, not take any objection on the basis of the time limitation in cl 4.3 of EWON’s Charter.

4.    Pursuant to s 44AAG(2)(c) of the Competition and Consumer Act 2010 (Cth), CAM Engineering must write to each exempt customer to whom it sold energy within the Relevant Period, being each person named in the list contained in Confidential Annexure A to these Orders, both by mail to their residential address and, where an email address is provided for them, by email to their email address, in the form of the approved letter which is Annexure B to these Orders, informing them of:

(a)    its failure to be a member of EWON during the Relevant Period;

(b)    their rights to make complaints to EWON, including in respect of any complaints arising within the Relevant Period; and

(c)    the effect of Order 3 above.

5.    The applicant has 14 days from the date of these Orders to provide to my Associate any affidavit evidence and written submissions, not exceeding 3 pages in length, on the question of costs.

6.    CAM Engineering has 28 days from the date of these Orders to provide to my Associate any affidavit evidence and written submissions, not exceeding 3 pages in length, in response on the question of costs.

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

Confidential Annexure A

List of exempt customers at Cooranbong Gardens Retirement Village

[Redacted]

ANNEXURE B

Approved form of letter to exempt customers

[To be issued on CAM Engineering’s letterhead]

[Exempt Customer name]

[Exempt Customer address]

Dear [Exempt Customer name]

Notification of rights relating to the New South Wales Energy & Water Ombudsman Scheme

Supply of electricity to residents of the Cooranbong Gardens Retirement Village

CAM Engineering Pty Ltd (ACN 611 016 570) (CAM Engineering) was the developer and electricity seller for the Cooranbong Gardens Retirement Village (Village) during the period 11 March 2021 to 21 July 2022 (Relevant Period). The Village is serviced by an “embedded network” – that is, a private electricity network that serves multiple premises.

During the Relevant Period, CAM Engineering held a retail exemption from the Australian Energy Regulator (AER), pursuant to which it was entitled to sell metred energy to residents of the Village via the embedded network. It was a condition of CAM Engineering’s retail exemption that it must be a member of the New South Wales Energy & Water Ombudsman scheme (EWON).

EWON deals with complaints from New South Wales electricity and gas customers, and some water customers. EWON is a scheme that enables consumers (like you) to make complaints, and have those complaints investigated and determined (in a binding way) by EWON. This assistance from EWON is only available if your electricity seller is a member of EWON.

Despite being required to do so, CAM Engineering did not join EWON until 22 July 2022 and was not a member of EWON during the Relevant Period.

Proceeding in the Federal Court of Australia

On 19 October 2023, the AER commenced proceedings against CAM Engineering in the Federal Court of Australia. On 12 June 2024, CAM Engineering admitted that it had not complied with the condition of its retail exemption requiring it to join EWON, contrary to section 112(1) of the National Energy Retail Law.

On [## insert date], the Federal Court of Australia:

1.    declared that, by failing to be a member of EWON during the Relevant Period, where it was permitted to be a member of that scheme, CAM Engineering failed to comply with a condition of its retail exemption, and therefore contravened section 112(1) of the National Energy Retail Law;

2.    ordered CAM Engineering to pay a civil penalty in the amount of [$## insert amount]; and

3.    ordered CAM Engineering to:

a.    submit to EWON’s jurisdiction in respect of any complaints concerning matters which occurred during the Relevant Period; and

b.    in respect of any such complaints, not take objection on the basis that the complaints were not made within 12 months of the Relevant Period; and

c.    send this letter to each of the customers to whom it sold electricity during the Relevant Period.

The orders are attached with this notice.

Effect of the Federal Court’s orders

Because of the Federal Court’s orders, if you had any complaint about the sale of electricity by CAM Engineering during the Relevant Period, you can now seek assistance from EWON in relation to that complaint. Otherwise, because CAM Engineering was not a member of EWON during the Relevant Period, EWON would not have been able to assist. Under the orders, CAM Engineering cannot object to any complaints arising within the Relevant Period on the basis that the time for making complaints has expired.

You may also complain to EWON if you have any issues arising after the Relevant Period. CAM Engineering ceased to hold its retail exemption on 13 January 2025 but was replaced as exempt seller by Cooranbong Village Management Operator Pty Ltd (ACN 642 399 442), which is also a member of EWON.

Details about EWON and its complaint process can be found on their website (https://www.ewon.com.au/page/making-a-complaint).

Please contact [insert contact name and details] if you have any questions in relation to this.

Kind regards,

[insert contact name]

REASONS FOR JUDGMENT

SARAH C DERRINGTON J:

Introduction

1    This proceeding is brought by the Australian Energy Regulator (AER), the independent statutory authority established by s 44AE(1) of the Competition and Consumer Act 2010 (Cth) (CCA), against CAM Engineering and Construction Pty Ltd. CAM characterises the conduct the subject of the proceeding as “a failure to join the ombudsman’s scheme.” That characterisation significantly and materially understates the contravening conduct. The contravention occurred in the context of the development of a retirement village to be operated by CAM. When CAM began selling villas in the retirement village for sums in excess of three-quarters of a million dollars, it offered residents a “special facility of being able to purchase their electricity at a discounted rate.” In order to offer such a special facility, CAM was required to obtain a certain exemption from the AER. It was a condition of that exemption, imposed by law, that CAM join the relevant ombudsman’s scheme.

2    Not only did CAM fail to join the scheme at the appropriate time, it ignored correspondence and the exhortations of the relevant ombudsman and the AER for a period of almost 16 months. When issued ultimately with an infringement notice, it failed to pay the penalty despite proffering no excuse for the contravention. After eventually admitting liability in circumstances where a denial was simply untenable on the facts, the proceeding came before this Court to determine the appropriate penalty. CAM, through its sole director Mr Craig Bateman, gave evidence which revealed a scepticism about the need for compliance with the condition of the exemption, which scepticism he continues to express, such that he accorded no priority to complying with that obligation.

3    Consequently, this is a case where the need for both specific and general deterrence is revealed. The latter is all the more important when retirement villages, which are often populated with a significant number of vulnerable people, are able to be operated by those with no relevant qualifications or experience in the raft of legal and regulatory obligations that pertain to such operations, and where the profitable running of the business of the retirement village may be prioritised over compliance with the law.

4    For this reason, a significant penalty is appropriate in this case.

5    On the Friday before the hearing of this matter the following Monday, the Court was informed that CAM’s legal representatives had withdrawn. It emerged at the hearing that this was because Mr Bateman was in arrears of fees for this proceeding but wished to use whatever funds he could make available for legal representation to pay his legal representatives to represent CAM in a proceeding in the Supreme Court of New South Wales. Mr Bateman was given leave to represent CAM at the hearing in this Court. The Court, and Mr Bateman, had the benefit of the written submissions which had already been filed by CAM’s legal representatives and on which CAM relied at the hearing.

Background

6    The functions of the AER include the enforcement of the National Energy Retail Law (National Retail Law), which is a schedule to the National Energy Retail Law (South Australia) Act 2011 (SA) (Retail Law (SA)). The Retail Law (SA) applies, with certain modifications, as a law of New South Wales pursuant to s 4 of the National Energy Retail Law (Adoption) Act 2012 (NSW) (Retail Law (NSW)). Pursuant to s 44AAG(1)(b) and (2) of the CCA, the AER applies for a declaration that CAM contravened s 112(2) of the Retail Law (NSW) and for the imposition of a civil penalty and associated relief.

7    The parties filed a Joint Statement of Agreed Facts on 8 May 2024 (SAF) and a Joint Outline of Submissions on Liability on 4 July 2024. The parties agreed that it was appropriate for the Court to make the declaration sought under s 44AAG(1)(b) of the CCA.

8    The contravention occurred in the context of the on-selling of electricity through an embedded network between 11 March 2021 and 21 July 2022 (Relevant Period) by CAM to residents of the Cooranbong Gardens Retirement Village, of which CAM was the developer. During the Relevant Period, CAM held the registered class R3 retail exemption no E-6843 (Retail Exemption) granted to it by the AER under s 110(1) of the Retail Law (NSW) in respect of the embedded network at Cooranbong Gardens. Such an exemption may be granted to an owner or operator of a retirement village selling metered energy to residential customers within the limits of a site that they own, occupy or operate.

9    Pursuant to s 112(1) of the Retail Law (NSW), Condition 17 of the Retail Exemption was imposed by the AER and required CAM, if permitted by an energy ombudsman scheme:

(a)    to be a member of, or subject to, an energy ombudsman scheme for each jurisdiction where it sells energy to exempt customers; and

(b)    to comply with the requirements of that scheme.

10    The National Energy Retail Rules (Retail Rules) are made under s 237 of the National Retail Law, s 15 of which gives the Retail Rules the force of law. The National Energy Retail Regulations (NSW) (Retail Regulations (NSW)) are also made under s 12 of the Retail Law (SA), and apply, with certain modifications, as regulations in force in New South Wales pursuant to s 5 of the Retail Law (NSW). During the Relevant Period, reg 5(a) of the Retail Regulations (NSW) prescribed the Energy & Water Ombudsman (NSW) Ltd (EWON) as the energy ombudsman for the State of New South Wales.

11    It was therefore plain, as accepted by both parties, that the contravention had occurred in circumstances where:

(a)    CAM is an “exempt seller”.

(b)    During the Relevant Period, CAM sold energy (electricity) to “exempt customers” in New South Wales.

(c)    During the Relevant Period, CAM was not a member of, or “subject to”, the EWON scheme.

(d)    During the Relevant Period, CAM was permitted, and therefore required, to join the EWON scheme.

12    It was also agreed by the parties that CAM’s engagement of Marden Energy Pty Ltd (trading as Network Energy Services) (NES) as its Embedded Network Manager does not provide any defence to liability.

13    As has been observed on several occasions, the fact that the parties have agreed that a declaration of contravention should be made does not relieve the Court of the obligation to satisfy itself that the making of the declaration is appropriate: Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (Agreed Penalties Case) at [48] and [59]; NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; 71 FCR 285 at 290-291; Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd (2004) ATPR 41-993 at 48,632 [78]. It is not the role of the Court to simply “rubber stamp” orders agreed between a regulator and a person who has admitted a statutory contravention: Agreed Penalties Case at [31], [48] and [58]; Mobil Oil at 48,630 [70]; Re Chemeq Ltd; Australian Securities and Investments Commission v Chemeq Ltd [2006] FCA 936; 234 ALR 511 at [100]; Construction, Forestry, Mining and Energy Union v De Martin & Gasparini Pty Ltd (No 3) [2018] FCA 1395 at [74]; Australian Securities and Investments Commission v Australia and New Zealand Banking Group Limited [2023] FCA 256 (ASIC v ANZ) at [50].

14    As O’Bryan J went on to explain in ASIC v ANZ at [51]:

The making of declarations should have some utility: see Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53 (Rural Press) at [95] (Gummow, Hayne and Heydon JJ). However, this does not necessarily require a litigant to seek consequential relief in connection with the subject matter of the declaration: see, e.g. Australian Securities and Investments Commission v Australian Lending Centre Pty Ltd (No 3) (2012) 213 FCR 380 at [271] (Perram J); Australian Securities and Investments Commission v AMP Financial Planning Pty Ltd (No 2) [2020] FCA 69; 377 ALR 55 (AMP Financial Planning) at [143] (Lee J). In the context of proceedings brought by a regulatory body, declarations relating to contraventions of legislative provisions are likely to be appropriate where they serve to record the Court’s disapproval of the contravening conduct, vindicate a regulator’s claim that the respondent contravened the provisions, assist a regulator to carry out its duties, and deter other persons from contravening the provisions: Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2006] FCA 1730; ATPR 42-140 at [6] (Nicholson J), and the cases there cited.

15    I am satisfied that a declaration in respect of the admitted contravention of s 112(2) of the Retail Law (NSW) will have the requisite utility, in that it will serve the public interest by identifying the contravening conduct and recording the Court’s disapproval of such conduct: Australian Securities and Investments Commission v Ostrava Equities Pty Ltd [2016] FCA 1064 at [51].

The appropriate pecuniary penalty

Legislative provisions relevant to penalty

16    Sub-sections 44AAG(1) and (2) of the CCA permit the AER to apply to the Federal Court for orders that a person is in breach of a State energy law, relevantly the Retail Law (NSW). If the order declares a person to be in breach of such a law, the order may include an order, inter alia, that the person pay a civil penalty. The provision is in the following terms:

44AAG Federal Court may make certain orders

(1)    The Federal Court may make an order, on application by the AER on behalf of the Commonwealth, declaring that a person is in breach of:

(a)    a uniform energy law that is applied as a law of the Commonwealth; or

(b)     a State/Territory energy law.

(2)    If the order declares the person to be in breach of such a law, the order may include one or more of the following:

(a)    an order that the person pay a civil penalty determined in accordance with the law;

(b)    an order that the person cease, within a specified period, the act, activity or practice constituting the breach;

(c)    an order that the person take such action, or adopt such practice, as the Court requires for remedying the breach or preventing a recurrence of the breach;

(d)     an order that the person implement a specified program for compliance with the law;

(e)    an order of a kind prescribed by regulations made under this Act.

17    Section 294 of the Retail Law (NSW) provides:

294 Matters for which there must be regard in determining amount of civil penalty

Every civil penalty ordered to be paid by a person declared to have breached a provision of [the Retail Law (NSW)], the [Retail Regulations (NSW)] or the [Retail Rules] must be determined having regard to all relevant matters, including –

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

(b)     the nature and extent of any loss or damage suffered as a result of the breach; and

(ba)    without limiting the operation of section 4A(1)(c)(ii)(B) or (C) – the value of any benefit reasonably attributable to the breach that the person or, in the case of a body corporate, any related body corporate, has obtained, directly or indirectly; and

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

(d)    whether the person has engaged in any similar conduct and been found to have breached a provision of [the Retail Law (NSW)], [the Retail Regulations (NSW)] or the [Retail Rules] in respect of that conduct; and

(e)    in the case of a regulated entity – whether the person has established, and has complied with, policies, systems and procedures under section 273.

The approach to the determination of an appropriate penalty

18    Although the High Court has warned against the use of prescriptive factors, in particular the “French factors”, as a “rigid catalogue of matters for attention” or a “legal checklist” (Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 274 CLR 450 at [19], quoting Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [91]), s 294 of the Retail Law (NSW) imposes a statutory mandate to take into account at least five matters (s 294(e) being presently irrelevant), in addition to any others that may be relevant.

19    In addition to the statutory mandate in s 294, the Court’s task remains evaluative in determining what is appropriate in the circumstances of the particular case. As the majority said in Pattinson at [40] in relation to the discretion conferred by s 546 of the Fair Work Act:

[it] is, like any discretionary power conferred by statute on a court, to be exercised judicially, that is, fairly and reasonably having regard to the subject matter, scope and purpose of the legislation.

20    In undertaking its evaluative task, the Court is guided by the so-called “French factors”, which subsume the statutory considerations. These were first enunciated by French J in Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 at 52,152–52,153, and then expanded upon by his Honour in Chemeq at [99]:

… I extract the following factors relevant to the level of penalty for contravention of the continuous disclosure provisions. The list is non-exhaustive:

1.    The extent to which the information not disclosed would have been expected to and (if applicable) did affect the price of the contravening company’s shares (s 674(2)(c)).

2.    The extent to which the information, if not generally available, would have been discoverable upon inquiry by a third party (s 676(2)).

3.    The extent (if any) to which acquirers or disposers of the company’s shares were materially prejudiced by the non-disclosure (s 1317G(1A)).

4.    The extent to which (if at all) the contravention was the result of deliberate or reckless conduct by the corporation.

5.    The extent to which the contravention was the result of negligent conduct by the corporation.

6.    The period of time over which the contravention occurred.

7.    The existence, within the corporation, of compliance systems in relation to its disclosure obligations including provisions for and evidence of education and internal enforcement of such systems.

8.    Remedial and disciplinary steps taken after the contravention and directed to putting in place a compliance system or improving existing systems and disciplining officers responsible for the contravention.

9.    The seniority of officers responsible for the non-disclosure and whether they included directors of the company.

10.    Whether the directors of the corporation were aware of the facts which ought to have been disclosed and, if not, what processes were in place at the time, or put in place after the contravention to ensure their awareness of such facts in the future.

11.    Any change in the composition of the board or senior managers since the contravention.

12.    The degree of the corporation’s cooperation with the regulator including any admission of contravention.

13.    The prevalence of the particular class of non-disclosure in the wider corporate community.

21    In addition to these matters, other relevant considerations include the size of the contravening company: see Pattinson at [18], quoting CSR at 52,152–52,153.

22    The Court must in conducting its evaluation be vigilant as to its purpose for doing so. That purpose is, and remains, deterrence (Pattinson at [15]). As stated by French J in CSR at 52,136:

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

23    I turn then to consider the factors relevant to the circumstances of this case.

Maximum penalty

24    In this case, the maximum penalty applicable for the contravention of s 112(2) of the Retail Law (NSW) is $10 million. That is because s 112(2) is prescribed by the Retail Regulations (NSW) as a “tier 1 civil penalty provision”, to which s 4A(1)(c) of the Retail Law (NSW) applies (see reg 6(2) and Schedule 1, Part 1). Section 4A(1)(c)(ii) of the Retail Law (NSW) provides that the applicable penalty for a breach of a civil penalty provision by a body corporate is an amount not exceeding the greater of the following:

(a)    $10,000,000 (default maximum);

(b)    if the Court can determine the value of any benefit reasonably attributable to the breach of the civil penalty provision that the body corporate, and any body corporate related to the body corporate, has obtained, directly or indirectly – 3 times the value of that benefit (benefits test);

(c)    if the Court cannot determine the value of the benefit – 10% of the annual turnover of the body corporate during the 12-month period ending at the end of the month in which the body corporate breached, or began breaching, the civil penalty provision (turnover test).

25    In Pattinson (at [49]-[55]), the High Court explained the relevance of a prescribed maximum penalty as a “yardstick”. It held that the Full Federal Court had erred in treating the statutory maximum “as implicitly requiring that contraventions be graded on a scale of increasing seriousness, with the maximum to be reserved exclusively for the worst category of contravening conduct”: at [49]. The Court continued at [50]:

… Considerations of deterrence, and the protection of the public interest, justify the imposition of the maximum penalty where it is apparent that no lesser penalty will be an effective deterrent against further contraventions of a like kind. Where a contravention is an example of adherence to a strategy of choosing to pay a penalty in preference to obeying the law, the court may reasonably fix a penalty at the maximum set by statute with a view to making continued adherence to that strategy in the ongoing conduct of the contravenor’s affairs as unattractive as it is open to the court reasonably to do.

26    In Australian Securities and Investments Commission v Holista Colltech Ltd [2024] FCA 244 at [116]-[117], I considered the use that was to be made of the yardstick in circumstances similar to the present, where there is no suggestion on the facts that CAM adhered to a strategy of choosing to pay a penalty in preference to obeying the law:

… The High Court drew attention to two important considerations that emerge from the reasoning of the Full Court in Reckitt Benckiser (2016) 34 ALR 25 at [155]-[156]. The first was their Honours’ recognition that the maximum penalty is “but one yardstick that ordinarily must be applied” and must be treated “as one of a number of relevant factors, albeit an important one”: Pattinson at [54], quoting Reckitt at [155]. The second was that the maximum penalty “does not constrain the exercise of the discretion” under s 546 of the Fair Work Act (or its analogues in other Commonwealth legislation), beyond requiring “some reasonable relationship between the theoretical maximum and the final penalty imposed”: Pattinson at [54]-[55].

Earlier in that case, the High Court had considered proportionality in the context of a civil penalty regime. In observing (Pattinson at [10], [38]) that the “notion of proportionality”, in the sense in which that expression is used in the criminal law, could not be translated coherently into civil penalty regimes, the Court (at [40]) approved the following statement of Burchett and Kiefel JJ in NW Frozen Foods at 293:

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

Nature and extent of the breach (s 294(a))

27    As I have already said, it is important to understand the context in which the contravention occurred. The regulatory obligations for an exempt seller, as is CAM, differ in several respects from those which apply to an authorised retailer. First, customers connected through an embedded network are not afforded the full suite of protections available under the Retail Law (NSW) and Retail Rules to customers of an authorised retailer. For example, exempt sellers do not have to proactively identify exempt customers experiencing hardship or offer flexible payment options (cf s 44(a) and (c) of the Retail Law (NSW) and Rule 74 of the Retail Rules), nor are they required to comply with the Better Bills Guidelines (cf Rule 25(1) of the Retail Rules). Secondly, exempt sellers are not subject to the same audit and self-reporting obligations as are authorised retailers (per Part 12 of the Retail Law (NSW)). Thirdly, exempt sellers are less likely to have a sophisticated or sufficient understanding of their own role or obligations given that their primary business is not the provision of electricity.

28    For these reasons, Condition 17, requiring exempt sellers to be a member of a relevant ombudsman scheme, was introduced on 16 March 2018. The “Notice of Final Instrument” published by the AER included (at [3.1]) the following reason for the introduction of Condition 17:

The draft Notice also explained our final policy position to expand energy ombudsman access to residential customers. We consider this position appropriate based on the principle that exempt customers should, to the extent possible, have the same consumer protections as customers of authorised retailers. In addition, evidence from the consultation indicates the characteristics of some particular groups of exempt customers, such as those in caravan and residential parks, are such that they have the greatest need to access ombudsman schemes.

(Emphasis added.)

29    The AER’s position on the importance of access to ombudsman schemes was a matter of public record throughout the Relevant Period. In particular, ensuring embedded network compliance with exemption conditions, including consumer access to ombudsman schemes, was identified as a priority in the AER’s Compliance & Enforcement Priorities for 2021-22 and 2022-23. These are matters which inform the Court’s assessment of the nature and extent of the relevant contravention: Agreed Penalties Case at [60]. In the present case, the exempt customers were residents of a retirement village who, it might be inferred, fall into the category of consumers who may have a heightened need for access to an ombudsman scheme.

30    As to the extent of the breach, although the failure to join EWON of itself may not be considered to be particularly serious, it is CAM’s conduct in failing to do so over a continuous period of 16 months, despite repeated exhortations to do so by both EWON and the AER, which leads me to conclude that CAM’s conduct amounted to nothing less than contumelious disregard of its statutory obligation to join EWON. It is that conduct which renders the breach in this case far more extensive than it would otherwise have been.

Circumstances in which the breach took place (s 294(c))

31    It is convenient to explore the circumstances of that conduct at this point.

32    As I have already identified, Mr Bateman is the sole director of CAM. He gave evidence by affidavit dated 10 October 2024 (Affidavit of CB) and orally. No objection was taken to Mr Bateman’s additional oral evidence. Mr Bateman gave evidence that 72 retirement villas were originally proposed for the development site at 383 Freemans Drive, Cooranbong NSW, and the adjacent site at 361 Freemans Drive, Cooranbong NSW was intended to be used for an 87-bed aged-care unit. The latter proposal was later supplanted by an application for a further 40 retirement villas that were not yet approved by Council. Mr Bateman testified that around August 2024, Villa 44 was marketed at between $770,000-$790,000 and Villa 45 at between $810,000-$820,000. He agreed that based on those examples, the turnover of Cooranbong Gardens was estimated conservatively to be in the vicinity of $75 million if all 110 villas were sold. Cooranbong Gardens is owned by Cooranbong Gardens Plus 55 Pty Ltd (Cooranbong Gardens Residents’ Handbook Version 2024_4, Annexure CB4 to Affidavit of CB) of which Mr Bateman is the sole director and ultimate shareholder.

33    It was not apparent that Mr Bateman had any experience of operating retirement villages prior to Cooranbong Gardens. Mr Bateman said in oral evidence that no qualifications were required to operate such a village, although he believed that may have changed recently. He deposed that, in January 2021, CAM hired Ms Donna Loomes as the Village Manager, a person who was new to the Aged Care sector and who had no previous involvement with the operation of an embedded network (Affidavit of CB at [11], [13]).

34    Mr Bateman deposed that Ms Loomes first contacted NES in about February 2019 (although he must have meant 2021 given that Ms Loomes was not employed until January 2021). Mr Bateman deposed that he and Ms Loomes had a meeting onsite with Mr Damian Arsenis from NES (Affidavit of CB at [26]). In oral testimony, Mr Bateman said that meeting took place prior to March 2021. Mr Bateman deposed that, during that meeting, Mr Arsenis said words to the effect of “there’s no rush to become a member of EWON but at some stage you are required to be a member of EWON” (Affidavit of CB at [30]). In cross-examination, Mr Bateman agreed that he understood from that meeting that CAM would need to join EWON.

35    CAM was issued with its registrable exemption on 11 March 2021, which NES had applied for on behalf of CAM (Affidavit of CB at [31]). CAM commenced selling electricity to the residents of Cooranbong Gardens from March 2021 (Affidavit of CB at [39]) and Mr Bateman agreed in oral testimony that it had done so from 11 March 2021.

36    In its “Cooranbong Gardens Electricity Welcome Pack” dated 10 March 2021 (Annexure CB3 to Affidavit of CB), CAM enclosed the “Electricity Supply Charter”, which describes the responsibilities it has under the AER’s guidelines as an Exempt Seller and R3 Exempt Network Service Provider. Mr Bateman said in his oral evidence that Mr Arsenis had prepared the Welcome Pack. It referred residents to the AER website to access “all conditions” that apply to CAM’s sale of electricity to the residents. Clause 7 of the Charter is in the following terms:

7. What to do if you are not satisfied

Please raise any matters of concern with the billing service provider (Network Energy Services: 1300 664 521 or 03 9807 5286) and if you are still not satisfied please contact the Village Manager of Cooranbong Gardens.

If your complaint has not been resolved to your satisfaction, you can lodge a complaint and seek free information and advice from the Energy and Water Ombudsman NSW (EWON) on 1800 246 545 (freecall), or lodge a complaint via their website at www.ewon.com.au.

37    What was contained in the Welcome Pack with respect to EWON was, at that point in time, untrue. The residents could not lodge a complaint with EWON because CAM had not complied with Condition 17 and was not a member of EWON.

38    On 12 March 2021, NES provided a letter of offer to CAM in respect of the provision of services concerning the supply of electricity to residents of Cooranbong Gardens (Affidavit of CB at [32]). The Services Agreement between Cooranbong Gardens Plus 55 Pty Ltd and NES was executed on 26 March 2021 by both parties (Annexure CB2 to Affidavit of CB). It was a condition of that agreement that:

The Client [Cooranbong Gardens Plus 55 Pty Ltd] shall comply with relevant regulatory and legislative requirements to ensure the compliant operation of their embedded network and exempt selling activities, which includes satisfying those stipulated by the AER and jurisdictional requirements.

39    On 26 March 2021, Mr Arsenis wrote to Ms Loomes relevantly in the following terms (Annexure CB1 to Affidavit of CB):

Following the execution of the services agreement with NES, we can now move forward.

Here is a summary of actions to be followed up on:

…

•    Cooranbong Gardens will need to sign up as a member of the Energy and Water Ombudsman NSW. Here is where you can apply (there is no rush yet as annual membership fees do apply): https://applications.ewon.com.au

40    Although Mr Bateman sought in oral testimony to convey that his belief at the time was that there was no rush to join EWON, it could not have been by reference to that email. Mr Bateman said he couldn’t remember seeing the email, “and it’s not addressed to me either”. Mr Bateman accepted that it was “not really” his practice to read any of the communications sent by NES to Ms Loomes in the course of setting up the embedded network at Cooranbong Gardens. Further, in cross-examination, Mr Bateman said that none of the conversations he had had with EWON or the AER made him think there was any rush, particularly when he was still being given the chance to pay 12 months after the initial requests were sent.

41    CAM did not call Mr Arsenis, nor anyone from NES, to explain what was meant by there being “no rush” to sign up to EWON, nor to provide any evidence of the conversations between Mr Arsenis and Mr Bateman. It can be inferred that any evidence that may have been given would not have assisted CAM: Jones v Dunkel [1959] HCA 8; 101 CLR 298.

42    Mr Bateman’s real reason for not joining EWON emerged during cross-examination when he agreed that, although having been told in March 2021 that he needed to join EWON, he did not regard it as a priority. That appeared, initially, to be for two reasons. The first was financial management. He said:

… when you’re running a business with nearly 40-odd invoices coming through monthly, and the responsibility to pay certain things on a certain period of time, you do prioritise payment and non-payment.

43    The second was his apparent scepticism about whether there really was any need to join EWON. That was brought out in the following exchange during cross-examination:

MR BATEMAN:    Also you prioritise do I need to actually be a part of this?

MR PECKHAM:    And even though you had been told in March 2021 that you did need to join EWON, you didn’t regard it as a priority?

MR BATEMAN:    No, because I get told I’ve got to be a member of certain bodies every month or two when I was running there, and I had to be a member of the Retirement Villages Association, I have to be a member of this, I have to be a member of this other association. They weren’t regulatory bodies, but they were still memberships of associations or bodies that I get told monthly that I have to be. Now, I don’t need to be a part of the Retirement Villages Association, it’s just one of those priorities that you, as a business person, you look at and you go, do I need to spend this money? The EWON membership fell into that category that when it first come through, I thought it was a scam.

44    Mr Bateman’s evidence that he thought communications about joining EWON were a scam must be rejected. First, as has already been set out above, Mr Bateman accepted that he knew from Mr Arsenis as early as February 2021 that if he were to run an embedded electricity network, he would need to be a member of EWON. Further, he had engaged NES to prepare necessary compliance documents, which included the Charter in the Welcome Pack. It can reasonably be inferred that, as the operator of Cooranbong Gardens and as the exempt seller, Mr Bateman had at least read over the documents prepared at his direction on behalf of CAM by NES. Further, Mr Bateman deposed to recalling having a telephone conversation with Mr Justin Zerafa, Member Liaison Officer of EWON, around 14 April 2021. He described it as a “very cordial conversation” but having no “sense of urgency conveyed” to him during the conversation (Affidavit of CB at [46]). Mr Bateman deposed to having a conversation with Ms Loomes about this telephone conversation, during which he “delegated to Ms Loomes the responsibility of addressing the obligations on CAM Engineering in respect of this matter”, including “responsibility for arranging membership with EWON if it was in fact required” (Affidavit of CB at [47]). It defies belief that, having had a conversation with Mr Zerafa about joining EWON, something which he had known for several months from his own consultant (NES) was a condition of his exemption, then subsequently delegating responsibility for following through on that obligation, Mr Bateman would view any follow-up correspondence from EWON as a scam.

45    That follow-up correspondence included an email sent on 14 April 2021 by Mr Zerafa to Mr Bateman personally (Affidavit of CB at [45]), not to Ms Loomes, informing him that “It’s time to become a member of the Energy & Water Ombudsman NSW.” The email continued:

As you provide energy to residential customers via an embedded network, your organisation must become a member of the Energy & Water Ombudsman NSW (EWON).

You may have received an email recently from the Australian Energy Regulator https://www.aer.gov.au/ (AER)

46    After setting out the steps required to complete the EWON membership application and detailing the information that needed to be provided by 5 May 2021, the email reiterated the obligation in the following terms:

Why Cooranbong Gardens needs to join EWON:

Under the National Energy Retail Law, any person or business who sells energy to another person for use at premises, must have either a retail authorisation or a retail exemption.

Under the National Electricity Law and the National Electricity Rules, any-one who engages in an electricity distribution or transmission activity must either be registered with the Australian Energy Market Operator (AEMO) as an electricity network service provider, or have a registered exemption issued by the Australian Energy Regulator (AER). Under both the Retail Exempt Selling Guidelines, and Electricity Network Service Provider Exempt Guidelines issued by the Australian Energy Regulator, all such exempt entities are required to join the relevant State Ombudsman scheme, in this case the Energy & Water Ombudsman NSW (EWON). This requirement came into effect in March 2018.

(Emphasis added.)

47    When asked during cross-examination about his reaction to this email, Mr Bateman proffered a third reason for his failure to join EWON, namely that he believed, and still believes today:

that the Department of Fair Trading still governs the Retirement Villages Act … our residents at any stage can go to the Department of Fair Trading and complain about the operator, being myself, for overcharging on electricity.

48    On 28 April 2021, Mr Zerafa enquired of Mr Bateman by email how he was progressing with the application for EWON membership that was due on 5 May 2021. Having not received the application on 5 May 2021, Mr Zerafa emailed Mr Bateman on 6 May 2021 offering to extend the due date to 11 May 2021, failing which the matter would need to be referred to the Deputy Ombudsman.

49    Despite the leniency shown to CAM by EWON and the increasingly urgent tone of the correspondence, nothing was forthcoming from CAM. On 12 May 2021, the Deputy Ombudsman wrote to CAM (at Mr Bateman’s personal email address) reiterating, in bold type, that it was a compulsory requirement of an operator of an exempt entity to join EWON. The letter observed that Mr Zerafa had contacted Mr Bateman on 14 April 2021 and followed up with two voice messages and two emails, to which no response had been received. The Deputy Ombudsman indicated that if the completed membership forms were not received by 28 May 2021, the Compliance and Enforcement Branch of the AER would be informed. The letter also drew attention to the possibility of civil penalties flowing from the continuing breach.

50    In cross-examination, Mr Bateman said he could not remember receiving the letter. Nevertheless, he accepted that it should have made him aware that there was, by that time, a pressing need to join EWON.

51    A further letter was sent to CAM (at Mr Bateman’s personal email address) by the Deputy Ombudsman on 2 June 2021, reiterating the compulsory nature of the requirement to join EWON, again in bold type, and informing CAM that the Compliance and Enforcement Branch of the AER would now be notified because the completed membership forms were not received by 28 May 2021 as requested. CAM was nevertheless invited to contact Mr Zerafa immediately if it wished to rectify the situation.

52    In cross-examination, Mr Bateman said he could not remember reading the letter and that, even though he was conscious that Ms Loomes had not been following up on joining EWON as had been delegated to her, “this was low on my priorities”. Mr Bateman’s testimony was that even if he had read the letter at the time:

I would have taken it a little bit more seriously, that’s for sure, but I just don’t know how much credence is – at the time – at the time I was pulling people out of houses that were struggling to breathe, so this sort of stuff was very low on my priorities.

53    Although Mr Bateman had made reference previously to the additional responsibilities encountered during the COVID-19 pandemic (Affidavit of CB at [12(a)] and [68(g)]), his evidence about his involvement in “pulling people out of houses” was new. It was not referred to in his Affidavit, nor were the impacts of the pandemic generally ever proffered as an excuse to EWON or the AER for CAM’s inability to comply with its obligations. Ms Loomes, who presumably could have given evidence relevant to this issue, was not called. I place very little weight on this reason for Mr Bateman’s failure to prioritise CAM’s obligation to join EWON.

54    Having been notified by EWON of CAM’s ongoing non-compliance, the AER wrote personally to Mr Bateman on 24 June 2021, informing him once more of CAM’s obligations under s 112(2) of the Retail Law (NSW) and informing him of the consequences of non-compliance, including “court proceedings, infringement notices and court enforceable undertakings”. CAM was given yet another chance to join EWON by 9 July 2021. Mr Bateman professed no recollection of receiving that letter but accepted it should have made him aware that there was a pressing need to join EWON by 9 July 2021.

55    No action was taken by Mr Bateman, or anyone else, on behalf of CAM by 9 July 2021. Nor did the AER act with any alacrity. On 17 March 2022, the AER’s Assistant Director – Compliance and Enforcement notified NES, as CAM’s authorised representative, that CAM must take steps to join EWON by 1 April 2022 and reiterated the enforcement options available to the AER. Mr Bateman was personally copied into that email. Mr Bateman conceded that he “probably did” read the email at the time. The following day, Mr Arsenis of NES emailed Ms Loomes referring her to the email and the letter sent by the AER on 24 June 2021 (albeit erroneously stating it was from EWON) and recommending “that the village sign up as a member of EWON before the 1 April which will satisfy EWON’s request”.

56    Mr Bateman deposed that he believes he was made aware of that email at the time and organised a meeting with Ms Loomes as a result. He did not say how long after being made aware of the email that that conversation took place. He said, “Ms Loomes and I discussed that it was my understanding this had been sorted back when I delegated the responsibility of paying the EWON Membership in April 2021. I hadn’t heard anything to the contrary. It was then revealed that had not happened” (Affidavit of CB at [57]). Mr Bateman deposed that Ms Loomes went on leave on 26 April 2022 and did not return to her role thereafter (Affidavit of CB at [58]). Mr Bateman said he did not know whether Ms Loomes spoke to NES about joining EWON before taking her leave (Affidavit of CB at [59]).

57    In cross-examination, Mr Bateman was unable to say that he had instructed Ms Loomes to join EWON. His testimony was that “we did have a meeting that would have been regarding that, and it would have been steps of where are we at with it, and have we filled out the application form and sent it off”. Again Ms Loomes, who could have given evidence about this conversation, was not called. In any event, given the emails sent to Mr Bateman’s personal email address on 14 April 2021, 28 April 2021 and 6 May 2021 by Mr Zerafa, on 12 May 2021 and 2 June 2021 by the Deputy Ombudsman, and on 24 June 2021 and 17 March 2022 by the Compliance and Enforcement division of the AER, I reject Mr Bateman’s evidence that, by April 2022, he believed “this had been sorted” in April 2021.

58    In any event, Mr Bateman took no steps between his conversation with Ms Loomes and her departure to ascertain whether or not CAM had joined EWON. On 12 July 2022, the AER informed Mr Bateman, in a letter sent to his personal email address, that CAM’s failure to join EWON had been referred to the AER’s Investigations and Enforcement Team, and the letter requested that CAM provide information and documents by 19 July 2022. Mr Bateman accepted in cross-examination that he had received this letter and that he took it seriously – “I think I actually sent it to my solicitor”. On 19 July 2022, CAM submitted its application for membership of EWON, which was approved on 22 July 2022.

59    Following an investigation, on 26 October 2022 the AER issued CAM with an infringement notice requiring payment of an infringement penalty of $67,800 by 5 December 2022. CAM did not pay the infringement penalty. It submitted that its decision not to do so was made in the context of the penalty amount representing a multiple of more than 27 times the value of the benefit that CAM derived from failing to join EWON.

Value of any benefit reasonably attributable to the breach (s 294(ba))

60    CAM’s submission in relation to the size of the infringement penalty is premised on its submission that there is no evidence that there was any actual benefit derived by CAM as a result of not being subject to the external scrutiny of EWON during the Relevant Period, and that in any event, in its capacity as the operator of a retirement village, it was subject to the scrutiny of NSW Fair Trading. Nevertheless, CAM appears to concede that, at the very least, the value of the benefit it gained equated with its saving on EWON membership fees during the Relevant Period, in the sum of $2,500.

61    CAM’s submission that the jurisdiction of NSW Fair Trading somehow diminished the need for scrutiny by EWON in respect of its supply of electricity to residents through an embedded network is misplaced. As submitted by Counsel for the AER, NSW Fair Trading does not have any powers equivalent to those of EWON to resolve complaints and make binding determinations about residential energy issues.

62    To focus only on the saving of some $2,500 by CAM as the value of any benefit received is to misunderstand the scheme as a whole. CAM was running a retirement village of some size and had been granted an exemption to sell electricity to its residents. There was no evidence led as to the value to CAM of that arrangement, but it can be inferred that it was not insubstantial. It was a matter marketed to residents in the Welcome Pack as something CAM was “proud” to offer to residents – “the special facility of being able to purchase their electricity at discounted rates”. Had CAM indicated to the AER that it did not believe it had to join EWON for whatever misconceived reason, it is most unlikely that CAM would have been granted the Retail Exemption and it would not have been able to offer the electricity service to prospective purchasers of the villas within Cooranbong Gardens.

Nature and extent of any loss suffered (s 249(b))

63    There is no evidence of any pecuniary loss to any of the residents of Cooranbong Gardens as a result of CAM’s breach. Nor is there any evidence that any resident made a complaint about the supply of electricity. The parties were agreed that none of CAM’s customers who were on-sold electricity during the Relevant Period sought access to EWON (SAF at [20]).

64    Nevertheless, none of the residents had access to an ombudsman scheme during the Relevant Period. This had the consequence that the arrangement to which they had signed up with CAM lacked any oversight by EWON, or any other authority.

Has CAM engaged in any similar contravening conduct? (s 294(d))

65    The parties were agreed that CAM has not previously engaged in any similar contravening conduct.

Other relevant factors

66    In addition to the statutory considerations mandated by s 294 of the Retail Law (NSW), other factors are relevant to the assessment of an appropriate penalty in this case.

Deliberateness and duration of the contravening conduct

67    CAM submits that its conduct should not be regarded as deliberate, on the basis that Mr Bateman’s state of mind during the Relevant Period, as deposed to in his Affidavit at [68], does not support that finding. CAM relied on the statement by the Full Court in Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; 340 ALR 25 at [131]:

If a contravention does not involve any state of mind then it is for the party asserting any particular state of mind (be it a deliberate flouting of the law, recklessness, wilful blindness, “courting the risk”, negligence, or innocence or any other characterisation of state of mind) to prove its assertion. If, in the event, neither party discharges its onus to establish any particular state of mind in relation to the contraventions, the Court determines penalty on no more than the fact of the proscribed nature of the conduct. However, if any degree of awareness of the actual or potential unlawfulness of the conduct is proved then, all other things being equal, the contravention is necessarily more serious. Such awareness may be able to be inferred from the very nature of the conduct or representations constituting the conduct. However absence of such proof does not establish a mitigatory state of mind. It means only that the neutral state of mind required for liability has not been disturbed for the purposes of penalty. If a contravening party wishes to go beyond the neutral statutory state of mind for liability and positively assert a lack of consciousness of the character of the conduct for the purposes of penalty, that is a circumstance of mitigation which the contravening party must prove.

(Citations omitted.)

68    CAM submitted that Mr Bateman’s evidence that he relied on NES for his erroneous understanding of his legal obligations should be a mitigating factor. As has already been outlined above, the evidence reveals that Mr Bateman received unequivocal advice from EWON of his legal obligation to join EWON by as early as 14 April 2021. Contrary to the implication made in [68(a)] of his Affidavit, whatever misapprehension Mr Bateman may have been labouring under prior to that date could not reasonably have continued beyond receipt of the email from Mr Zerafa. Nor was it reasonable in the face of that email and the subsequent correspondence referred to above from EWON and the AER, to the extent such is suggested at [68(e)] and [68(f)] of his Affidavit, to await confirmation from NES of that obligation, or to continue to believe that complaints about the provision of electricity could be handled by the NSW Department of Fair Trading. Mr Bateman’s evidence at [68(b)] of his Affidavit that he was aware that the Welcome Packs provided to the residents of Cooranbong Gardens contained information that the residents had access to EWON and the Department of Fair Trading cannot be reconciled with his oral testimony that vacillated between his belief that he did not have to join EWON and his belief that various communications from EWON to him were a scam (Affidavit of CB at [68(d)]). I do not accept Mr Bateman’s evidence that CAM’s failure to join EWON was in any way affected by his additional responsibilities incurred during the COVID-19 pandemic as suggested in [68(c)] and [68(g)] of his Affidavit and during his oral testimony.

69    Although in cross-examination Mr Bateman maintained his position that “still to this day” he believes there is “ambiguity and crossover” between NSW Fair Trading and EWON, and that he thought EWON was “like an association such as the Retirement Villages Association, that it was you could either be a member or not, it didn’t matter”, no reasonable basis for the maintenance of that belief, at least after 14 April 2021, emerged from the evidence. Despite being told first by NES in February 2021 that CAM would be required to join EWON, and despite the subsequent correspondence from EWON and the AER up until 12 July 2022, Mr Bateman did not make any enquiry of NES or a legal advisor, preferring (so it seems) to rely on the knowledge he gained:

… through my dealings with certain things, especially managing a – or helping a – a friend of mine out, manage an engineer and – and construct a retirement – a manufactured-home estate, that the Department of Fair Trading and NRAS was the be-all, end-all to everything.

70    Contrary to CAM’s submissions, Mr Bateman’s state of mind does not equate with the “reasonable misunderstanding” or “arguable but erroneous construction” referred to as a potentially mitigating factor in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Telstra Corporation Ltd [2007] FCA 1607; 168 IR 368 at [18]; Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53; 260 FCR 68 at [63]; and Australian Competition and Consumer Commission v Lactalis Australia Pty Ltd (No 2) [2023] FCA 839 at [18]-[20].

71    I find that CAM’s conduct in failing to join EWON when it commenced supplying electricity to its residents was negligent and, by 14 April 2021, was at the very least reckless, if not deliberate.

Involvement of senior management

72    It is unarguable that senior management, being Mr Bateman as the sole director and shareholder of CAM, was intimately involved in the contravention. As the Village Manager, Ms Loomes may also be considered to have held a senior management role. The AER submitted as much; CAM submitted that she was not part of the senior management of CAM during the Relevant Period. I accept the latter submission. Ms Loomes’ role was directed at the day-to-day management of Cooranbong Gardens. It is tolerably clear that she was not involved in decisions taken by CAM as the developer of Cooranbong Gardens.

Corporate culture conducive to compliance

73    CAM submitted that it had a culture “reasonably conducive of compliance” during the Relevant Period. It submitted that the culture has been significantly strengthened since then. CAM relied on its engagement of NES to assist it to comply with its regulatory obligations as evidence of the reasonableness of its corporate culture. Nevertheless, CAM maintained that its contravention was, at least in part, caused by erroneous advice provided by NES in the email of 26 March 2021 in saying “there is no rush yet” to join EWON. Despite that statement, Mr Bateman agreed in cross-examination that he never asked NES when CAM would need to join. Nor, as has already been observed, did CAM call Mr Arsenis to give evidence to explain that statement or as to the content of the conversations referred to in Mr Bateman’s Affidavit. It is to be inferred that any such evidence would not assist CAM.

74    Further, CAM adduced no evidence of its compliance policies and procedures during the Relevant Period, or indeed subsequently.

75    Mr Bateman’s evident cavalier approach to correspondence from EWON and the AER throughout the Relevant Period, and his maintenance at the hearing of his erroneous understanding of the differing purposes of NSW Fair Trading and EWON, provides little comfort that he understands the importance of regulatory compliance.

Cooperation with regulatory authorities

76    The AER submitted that CAM is not entitled to any discount for its compliance with the AER’s statutory compulsory notices in the context of the investigation into CAM, observing that that conduct was no more than was required of CAM in the circumstances under the statute.

77    As to the admissions made by CAM in respect of liability, whilst these did result in the avoidance of a hearing on liability, they were not made until 12 June 2024, eight months after the proceeding had been commenced and after the completion of the AER’s evidence (comprising the SAF and the joint tender list) and the preparation of a joint list of issues dated 8 May 2024. In addition to the lateness of the admissions, the AER submitted that there could be no dispute on the facts underlying the contravening conduct, and the arguments raised by CAM to resist liability were of little or no merit and had not previously been raised by CAM, either in response to the infringement notice or at all. Those arguments involved an admission that CAM was not a member of EWON prior to 21 July 2022 (Concise Statement in Response at [1(a)]), a statement that CAM did not appreciate prior to that time that it was required to become a member of EWON (Concise Statement in Response at [13(b)]), followed by a denial that it failed or refused to comply with Condition 17 of its Retail Exemption (Concise Statement in Response at [15(a)]).

78    It is accepted that CAM cooperated to some extent in relation to its admissions of liability, albeit belatedly and without any real alternative.

CAM’s size and capacity to pay

79    CAM relies on its size and capacity to pay as mitigating factors in the present case. As was said in Australian Competition and Consumer Commission v Leahy Petroleum (No 2) [2005] FCA 254; 215 ALR 281 at [9], where both factors were similarly relied upon in an attempt to mitigate the quantum of penalty:

Plainly, such factors can be relevant to the penalty that is necessary to deter the company from contravening the Act in the future. Size may also be relevant to general deterrence because other potential contraveners are likely to take notice of penalties imposed on companies of a similar size. However, a contravening company’s capacity to pay a penalty is of less relevance to the objective of general deterrence because that objective is not concerned with whether the penalties imposed have been paid. Rather, it involves a penalty being fixed that will deter others from engaging in similar contravening conduct in the future. Thus, general deterrence will depend more on the expected quantum of the penalty for the offending conduct, rather than on a past offender’s capacity to pay a previous penalty. I therefore respectfully agree with the observation of Smithers J, referred to by Burchett and Kiefel JJ in NW Frozen Foods, to the effect that, a penalty that is no greater than is necessary to achieve the object of general deterrence, will not be oppressive.

(Emphasis added.)

80    Similarly, in Pattinson at [41], the High Court accepted that a pecuniary penalty provision “requires the court to ensure that the penalty it imposes is ‘proportionate’, where that term is understood to refer to a penalty that strikes a reasonable balance between deterrence and oppressive severity”.

81    The evidence as to the size and financial position of CAM is slim.

82    Receivers and managers were appointed in respect of all present and after-acquired property of CAM on 29 October 2024. In December 2024, a company called Gabssto Pty Ltd, in which neither Mr nor Mrs Bateman has any interest, purchased the land on which Cooranbong Gardens is situated, and which was previously owned by CAM. The operation of Cooranbong Gardens has been transferred to Cooranbong Village Management Operator Pty Ltd, a wholly owned subsidiary of Gabssto Pty Ltd.

83    Mr Bateman gave evidence that CAM is owned by CMB and SSB Investments Pty Ltd, a company owned by him and his wife. CMB and SSB also owns The Gardens Care and Retirement Group Pty Ltd, which in turn owns Cooranbong Gardens Plus 55 Pty Ltd, of which Mr Bateman is the sole director. No evidence of the financial circumstances of these entities was adduced.

84    On 16 March 2023, CAM informed the AER in response to a compulsory notice issued under s 206 of the Retail Law (NSW) that its turnover in FY2022 was $12 million and was $6.59 million in FY2021. In cross-examination, Mr Bateman accepted that if all 110 villas in the Cooranbong Gardens development were completed, there would be a turnover conservatively estimated at $75 million for each new generation of residents.

85    CAM’s financial statements for the financial years 2020-2023 show increasing net losses until FY2023, where some ground was retrieved: ($96,979); ($613,899); ($4,968,295); ($430,536). The company’s net asset position consequently deteriorated year-on-year: ($349,213); ($963,113); ($5,931,409); ($6,361,946).

86    CAM’s General Manager, Mr Zachary Williams, who was expected to give evidence as to CAM’s financial forecasts, was not called nor was his affidavit read. Mr Bateman referred in his evidence to two financial forecasts prepared by Mr Williams in respect of stages 6 and 7 & stages 8 and 9 respectively of the development (Affidavit of CB at [8]-[9]). They were admitted by agreement as business records of CAM. Those forecasts purported to show, at least prior to the appointment of receivers, that CAM was unlikely to turn a profit until mid-2026. CAM submitted that for this reason, the Court should ensure that the penalty amount is set only as high as is necessary to achieve deterrence from conduct of the nature of the contravening conduct, rather than contraventions of s 112 more generally.

87    In Australian Competition and Consumer Commission v High Adventure Pty Ltd [2005] FCAFC 247 at [11], the Full Court said:

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

88    In the present case, it is of significant importance that operators of retirement villages, which are often populated by more vulnerable members of the community, understand that compliance with their legal obligations is neither a matter of discretion nor a matter to be prioritised below the day-to-day operations of the business.

CAM’s degree of power and market share

89    The AER acknowledges that CAM does not have any significant market power, operating only one boutique retirement village during the Relevant Period. Nonetheless, the residents of the villas were potentially susceptible to the possible consequences of the contravening conduct, such that CAM does have significant power in relation to those residents.

CAM’s non-payment of the infringement notice

90    On 26 October 2022, CAM was issued with an infringement notice in the sum of $67,800, as prescribed by s 279(2)(b)(ii) of the National Gas Law, being the Schedule to the National Gas (South Australia) Act 2008 (SA), and by s 308 of the Retail Law (NSW), which was payable by 5 December 2022. Despite an extension to the time for payment of almost a year – to 13 October 2023 – CAM elected not to pay the infringement notice.

91    As submitted by the AER, CAM did not, either at that time nor after this proceeding was commenced, proffer any meaningful or proper defence to the contravention nor any reason for failing to pay the infringement notice. This is a matter to be taken into account and requires the imposition of a penalty that is higher than the infringement notice amount. As Jagot J said in Australian Competition and Consumer Commission v Le Sands Restaurant and Le Sands Café Pty Ltd [2011] FCA 105 at [11]:

A clear signal should be sent by this court that, in circumstances where contravening conduct is admitted, the cost of litigation should be avoided by compliance with infringement notices.

92    CAM submitted that “the Court should not lose sight of the actual conduct for which the penalty is to be imposed. It was a failure to join the ombudsman’s scheme. It was not conduct calculated to achieve an economic gain or visit economic harm on any third parties.” This submission reveals CAM’s continuing mischaracterisation of its conduct.

What is the appropriate penalty?

93    The AER submitted that an appropriate penalty would be towards the higher end of the range between $203,000 and $339,000. It observed that such an amount reflects:

(a)    2-3% of the available maximum penalty of $10 million;

(b)    a multiple of 3-5 times the amount prescribed for the infringement notice; and

(c)    roughly one-third to one-half of the sale price of a completed villa in the Cooranbong Gardens development, which contemplates 110 villas on completion.

94    CAM submits that the appropriate penalty range is $25,000 to $50,000.

95    I approach the assessment of the appropriate penalty in this case on the basis that, although there has been only one contravention, the persistence in the contravention over a period of 16 months, in the face of explicit information from NES, EWON, and the AER that it was a legal requirement to join EWON, displayed a contumelious disregard by CAM of its legal obligations under the Retail Law (NSW). That does not, however, mean that the appropriate penalty approaches the $10 million maximum.

96    CAM is a small company which is obviously in some financial difficulties. It was, however, in a position of power with respect to retirees who had bought into its retirement village development and who were entitled to expect that the retirement village was operated by those who took their responsibilities, including those described in the Welcome Pack, seriously.

97    I am not persuaded that there is no need for specific deterrence in this case. Mr Bateman, CAM’s sole director, although accepting that CAM had contravened s 112(2) of the Retail Law (NSW), remained unconvinced of the real necessity for compliance. He maintained there was overlap between NSW Fair Trading and EWON that made joining EWON unnecessary. Mr Bateman also indicated that he is pursuing proceedings in the Supreme Court of New South Wales to regain control of Cooranbong Gardens and to continue with his long-term development plans.

98    In circumstances where I have found that CAM’s conduct, persisting as it did over a period of 16 months, was at least reckless, if not deliberate, the object of general deterrence dictates that a penalty of some magnitude is warranted to deter other operators of retirement villages from ignoring their legal and regulatory obligations.

99    In all the circumstances, I consider a penalty of $250,000 to be appropriate to achieve the objects of both specific and general deterrence.

100    I have taken into account CAM’s submissions as to its impecuniosity. Relative to the applicable statutory maximum of $10 million, the sum I have arrived at represents a very small proportion of that applicable maximum. I consider that any lower sum would provide very little general deterrence.

Disposition

101    I will make the declaration sought by the AER, and agreed to by CAM, in paragraph 1 of the originating application filed on 19 October 2023. I will also make the agreed remedial orders sought in paragraphs 3 and 4 of the originating application.

102    I will order that, pursuant to s 44AAG(2)(a) of the CCA, within 28 days, CAM pay to the Commonwealth of Australia a pecuniary penalty in the sum of $250,000 in respect of its contravention of s 112(2) of the Retail Law (NSW).

103    The parties may have 14 days from the date of this judgment to provide to my Associate written submissions, not exceeding 3 pages in length, on the question of costs.

Associate:

Dated:    4 July 2025