Federal Court of Australia

Australian Communications and Media Authority v V Marketing Australia Pty Ltd (In Liq) (No 5) [2025] FCA 970

ORDERS

THE COURT ORDERS THAT:

1.    The fourth respondent’s application for a special order as to costs be dismissed.

2.    The applicant pay the fourth respondent’s costs of and incidental to the proceedings, including reserved costs, in a lump sum to be fixed by a registrar if not agreed.

3.    As to the costs of the proceedings against the second respondent:

(a)    the second respondent pay the applicant’s costs, including reserved costs, up to 7 October 2021 in a lump sum fixed by a registrar if not agreed;

(b)    the applicant pay the second respondent’s costs on and after 7 October 2021 in a lump sum as fixed by a registrar on an indemnity basis if not agreed;

(c)    the registrar set off one from the other the lump sum amounts so fixed to the end that the balance in whose favour that set off yields be the sum owed to that party by the other party. Consequentially, that other party pay that balance to the party in whose favour the set off has operated.

(d)    for the avoidance of doubt, the costs of attending judgment and of the related costs application form part of the second and fourth respondents’ respective costs.

4.    The cross-claims be adjourned for a case management hearing in August 2025 on a date to be fixed by the Court after consultation with the parties.

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

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

LOGAN J:

1    Upon the pronouncement of orders and related publication of reasons this morning: Australian Communications and Media Authority v V Marketing Pty Ltd (In Liq) (No 4) [2025] FCA 287 (the principal judgment) counsel on behalf of the second and fourth respondents, namely Balaska and Mr McLennan, indicated that those respondents wished to make a special application in respect of costs. Unfortunately, those parties were not then, as they most emphatically should have been, in a position immediately to support that application by evidence.

2    The profession needs clearly to understand that the taking of judgment is no mere formality. The contingency of a special order in respect of costs is always present in the event that there have been prior offers, be they offers under r 25 of the Federal Court Rules 2011 (Cth) or offers to compromise outside the confines of that rule. Parties who anticipate the contingency of a special order as to costs being made on application should serve well in advance but obviously not file, because that would transgress privileges associated with the making of offers of compromise, material which, in the event of a particular, more favourable order being made, can be read and relied upon immediately to support an application for a special order in respect of costs. That particular need was all the more acute in this case because it had been well known to the parties that immediately after today, I would be departing on a period of long leave of four months.

3    The end result was, instead of being able to deal with the application this morning, it was necessary to allow the respondents time to assemble the material they relied on and then to hear the application this afternoon. The application on the part of Mr McLennan was one for indemnity costs in respect of the whole of the proceedings. Alternatively, it was for costs on that basis on and from 7 October 2021. The reason for that date will become apparent shortly. As to Balaska, Balaska sought no order as to costs until 7 October 2021 but thereafter on an indemnity basis. I should say as well, these reasons for judgment must be read in conjunction with the principal judgment. The reason why 7 October 2021 featured in submissions was encapsulated in a letter which contained a proposed “in principle” resolution of the proceedings as against Balaska and Mr McLennan.

4    The “in principle” aspect recognised explicitly that the agreed position promoted between the parties would remain subject to the court exercising a discretion in respect of taking up the position that was promoted by the letter sent by Balaska and Mr McLennan’s solicitors to the authority’s solicitors, the Australian Government Solicitor. The essence of the offer made is found in [6] which states:

Our clients hereby make the following “in principle” offer of resolution:

6.1    Balaska to admit to having caused the making of 553,630 telephone calls to numbers on the Do Not Call Register during the period 1 March 2017 to 30 September 2017 in contravention of section 11(1) of the DNCR Act;

6.2    Balaska to pay a penalty in the sum of $425,000 on account of these contraventions of the DNCR Act;

6.3    Balaska to pay 25% of your client’s costs on the standard basis, to be agreed or assessed;

6.4    Balaska to be subject to an order that for a period of five years, it will not make any telemarketing calls, or cause any telemarketing calls to be made its behalf;

6.5    Your client to withdraw the claim against the direction, Mr McLennan;

6.6    No order to be made as to costs on the claim against the director, Mr McLennan, meaning that Mr McLennan would bear his own recoverable costs in the order of $150,000; and

6.7    All terms subject to your client and Balaska being able to agree upon a Statement of Agreed Facts for the purpose of the penalty hearing against Balaska.

5    It will be seen immediately that Balaska came to obtain a more favourable result than that offered by the letter of 7 October 2021, which was that no order as to penalty was made; neither were injunctions granted. The offer was the subject of rejection by the Australian Government Solicitor on behalf of the Australian Communications and Media Authority (ACMA) by a letter dated 14 October 2021. That contained a counter-offer which was in these terms:

6.1    Balaska to admit to having caused the making of 553,630 telephone calls to numbers on the Do Not Call Register during the period 1 March 2017 to 30 September 2017 in contravention of section 11(1) of the DNCR Act;

6.2    Balaska to pay a penalty in the sum of $700,000 on account of its contraventions of the DNCR Act;

6.3    Balaska to be subject to an order that for a period of 5 years, it will not make any telemarketing calls, or cause any telemarketing calls to be made on its behalf;

6.4    Mr McLennan to admit that he contravened section 11(7) of the DNCR Act by being knowingly concerned in Balaska’s contraventions of section 11(1) of the DNCR Act.

6.5    Mr McLennan to pay a penalty in the sum of $75,000 on account of his contraventions of the DNCR Act;

6.6    Mr McLennan to be subject to an order in the terms set out in at paragraph 14 of the Amended Originating Application; and

6.7    Balaska and Mr McLennan to pay a contribution of $215,000 towards the ACMA’s costs.

That was never taken up by Balaska or Mr McLennan.

6    As The Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 (Agreed Penalties Case) read in conjunction with Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450 (Pattinson) confirms, civil penalty proceedings are but a particular species of civil litigation. Those cases confirm that it is a mistake to assimilate them with proceedings in the criminal jurisdiction.

7    It does not necessarily follow that all questions which might inform the exercise of what is, after all, an unfettered discretion as to costs found in s 43 of the Federal Court of Australia Act 1976 (Cth) automatically flow through to civil penalty proceedings. One reason for that which was nicely, with respect, highlighted by counsel for the ACMA was that it would be unusual, indeed, in a civil penalty case to see a respondent burdened with indemnity costs because that respondent had chosen to contest liability to a civil penalty: see as to that r 25.14(3). In turn, that gives force to the thought about whether r 25 has any application at all to a civil penalty proceeding. My inclination is that the rule does not, with r 25.14(3) offering a reliable clue as to non-application.

8    In this regard, the position might be contrasted with other forms of civil litigation to which an emanation of the Commonwealth is a party. In those circumstances, one might see r 25 applying in the same way as it would between a non-Commonwealth party and Commonwealth parties and litigation between ordinary parties. That extends to taxation proceedings with the recently decided S.N.A Group Pty Ltd v Commissioner of Taxation (No 2) [2025] FCA 281 offering an example of an application of r 25.14 in a taxation appeal context.

9    So I prefer to proceed on the basis that the letter of 7 October 2021 was a letter which should be regarded as having been written on Calderbank terms, ie, a letter which sought to engage the position described in Calderbank v Calderbank [1975] 3 All ER 333.

10    In the Full Court, the following observation was made in Australian Competition and Consumer Commission v Employsure Pty Ltd (2023) 407 ALR 302 (Employsure), at [111]:

111    First, we note that during the submissions Employsure relied, inter alia, on the fact that it had made what the primary judge described as an “offer of compromise” on 13 February 2020, prior to the commencement of the liability hearing (offer). It is worth noting that we have some reservations about that characterisation, as unlike in private proceedings, where an offer of a monetary amount (e.g. damages) as consideration for another party discontinuing a claim can resolve the proceedings, in a civil penalty case, such an offer in relation to a pecuniary penalty cannot bring the matter to an end. At its highest, in these circumstances, it can be construed as an offer to make joint submissions as to penalty. This is because the assessment of penalty, even where it is agreed, is a matter for the Court: see, for example, Agreed Penalties Case (HC); NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285. The Court is more than a rubber stamp, and must be satisfied that the proposed penalty is an appropriate one in all the circumstances: Agreed Penalties Case (HC) at [58] per French CJ, Kiefel, Bell, Nettle and Gordon JJ, and see Volkswagen Aktiengesellschaft v Australian Competition and Consumer Commission [2021] FCAFC 49; (2021) 284 FCR 24. Moreover, the regulator’s position is different from that of a private litigant, as public interest considerations come into play. This is not to suggest such offers are not to be encouraged, but rather reflects the different nature of the proceedings.

11    What I take from that is that although a regulator’s position is different from that of a private litigant, that is not to say that there can be no order for indemnity costs against a regulator.

12    Indeed, to adopt that position would, in my view, be contrary to the recognition that these types of proceedings are a species of civil litigation, which is a position confirmed in the Agreed Penalties Case and Pattinson. It is just that, sometimes, the position of a regulator may introduce considerations additional to those of a private litigant when one comes to decide whether or not rejection of a particular offer should be regarded as reasonable or not. In this instance, it needs to be remembered that the ACMA has succeeded in terms of establishing contraventions and establishing those contraventions by concession.

13    That concession, which was the subject of the offer, was confirmed later in October 2021 by the filing of a defence which contained direct admissions by Balaska of contraventions.

14    Mr McLennan’s forensic success was such that, on any view, a judicial exercise of the discretionary power in respect of costs would see him granted costs in his favour against the authority, with those costs being determined in the ordinary way on a party/party basis. When one looks at the letter of 7 October 2021, there is a joint offer made by Balaska and Mr McLennan. That offer is, in my view, to be regarded as nothing more than what one might term a “walk away” offer.

15    That being so, the ACMA should not, in my view, be regarded as being in jeopardy of an order for costs on an indemnity basis merely because it chose to prosecute its claim to judgment. As it turned out - and Thomas J’s judgment is eloquent in this regard - the authority’s case failed. But, all that would mean is that there would be an order, the nature of which was conceded by the ACMA, that costs follow the event. It is convenient these days often to order costs to be determined on a lump sum basis with that amount, if not agreed, being determined by a registrar, as contemplated by r 40.02.

16    Neither party raised any objection in respect of an order on that basis. The costs of Mr McLennan include some reserved costs, but the ACMA accepts that these would be picked up by an order for costs in Mr McLennan’s favour. I can see no basis for exercising the costs discretion on the basis of making a special order as to costs against the ACMA in relation to Mr McLennan. I see no feature of the authority’s conduct vis-à-vis Mr McLennan which was other than seeking to prosecute its claim to finality.

17    There is no hint of any misconduct by the ACMA. It just happens to have had a different view to Mr McLennan about its forensic prospects. Thus, in respect of Mr McLennan, I dismiss the application for a special order in respect of costs. Instead, the order will be that the authority pay Mr McLennan’s, ie, the fourth respondent’s costs of and incidental to the proceedings, including reserved costs, in a lump sum to be fixed by a registrar if not agreed. There is no need to state specifically that those costs will be assessed on a party/party basis because that is the default position under the rules in the absence of a special order.

18    The position in relation to Balaska is somewhat more complicated. It was only by the letter of 7 October 2021, as confirmed by the subsequently filed defence, that Balaska conceded liability. Up to that point, in my view, the ACMA is entitled to its costs in the usual way on the basis of having had to prosecute its claim to that point in order to obtain a concession of the commission of contraventions by Balaska. Thereafter, effectively, the proceedings have been pressed by the ACMA to secure relief beyond declarations as to contraventions.

19    The ACMA has further prosecuted the case so as to secure civil penalty and injunctive orders. These, in my view, had to fail in relation to civil penalty proceedings as a necessary consequence of a continuum, part of which included the conclusions and findings of Thomas J in his judgment in respect of Balaska’s directing mind and will: Mr McLennan. The end result is that Balaska has obtained orders more favourable to those which were promoted to the ACMA by the letter of 7 October 2021. That letter, in my view, is a genuine offer of compromise.

20    It explicitly recognises a point made by the Full Court in relation to the role of the court in Employsure, at [111], but it is an offer which, if accepted, would have seen the joint promotion of agreed contraventions and an agreed penalty. It would have been a strong thing for the court in the face of that agreement and having regard to the Agreed Penalties Case and the underscoring of this being a particular type of civil litigation in Pattinson - for the court likely to have departed from a jointly promoted penalty position.

21    The position as I see it in relation to Balaska is that Balaska could, at the outset, have filed a submitting notice. It chose not to do that but to contest the proceedings - indeed, to seek their being dismissed summarily. It failed in that regard. So the orders in respect of costs should recognise the forensic success enjoyed by the ACMA ultimately by concession and as well recognise the forensic success enjoyed by Balaska, really as a necessary sequel in relation to penalty as I saw it from the findings made vis-à-vis its directing mind and will.

22    As to the injunctive relief, again as a sequel to those findings, I saw it as unnecessary as a matter of discretion to make any injunctive orders. The end result may well be a somewhat messy outcome in respect of costs, but it is by no means unknown for registrars to have to determine costs to a particular point in favour of one party in terms of their quantification and to do the same in respect of the costs of another party, and then to reach a balance of account as to what is owed, if any – one to the other.

Associate:    

Dated:    19 August 2025

SCHEDULE OF PARTIES