Federal Court of Australia

Australian Securities and Investments Commission v SunshineLoans Pty Ltd (No 4) [2026] FCA 1628

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 167(2) of the National Credit Act, SunshineLoans Pty Ltd (SunshineLoans) pay to the Commonwealth of Australia a pecuniary penalty of $3.5 million in respect of SunshineLoans’s contraventions of s 24(1A)(a) of the National Credit Code the subject of Order 3(a) of the Full Court Decision.

2.    Pursuant to s 167(2) of the National Credit Act, SunshineLoans pay to the Commonwealth of Australia a pecuniary penalty of $850,000 in respect of SunshineLoans’s contraventions of s 24(1A)(b) of the National Credit Code the subject of Order 3(b) of the Full Court Decision.

3.    Pursuant to s 167(2) of the National Credit Act, SunshineLoans pay to the Commonwealth of Australia a pecuniary penalty of $1.15 million in respect of SunshineLoans’s contraventions of s 24(1A)(b) of the National Credit Code the subject of Order 3(c) of the Full Court Decision.

4.    SunshineLoans pay the pecuniary penalties imposed by Orders 1 to 3 to the Commonwealth of Australia by two instalments as follows:

(a)    50% of each penalty is to be paid on or before 5 February 2027; and

(b)    the remaining 50% of each penalty is to be paid on or before 7 May 2027.

5.    SunshineLoans pay the Australian Securities and Investments Commission’s costs of the proceedings on the standard basis, as assessed or agreed.

In this order:

A.    References to sections of the National Credit Act are references to the National Consumer Credit Protection Act 2009 (Cth).

B.    References to the National Credit Code are references to Schedule 1 to the National Credit Act.

C.    References to the Full Court Decision are references to the decision of SunshineLoans Pty Ltd v Australian Securities and Investments Commission (2025) 308 FCR 474.

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

REASONS FOR JUDGMENT

DERRINGTON J:

Introduction

1    On 12 April 2024, this Court found that SunshineLoans Pty Ltd (SunshineLoans) contravened s 24(1A)(a) and (b) of the National Credit Code (being Schedule 1 to the National Consumer Credit Protection Act 2009 (Cth) (National Credit Act)) and s 47(1)(d) of the National Credit Act on 691,678 occasions between 1 July 2016 and 2 November 2020 (Relevant Period): Australian Securities and Investments Commission v SunshineLoans Pty Ltd (No 2) [2024] FCA 345 (“Liability Judgment” or “LJ”). Declarations of contravention were made on 5 July 2024, but the question of penalty was deferred to a further hearing. These reasons deal with that question.

2    In broad terms, SunshineLoans was found to have contravened the National Credit Code by imposing and enforcing a term in its small amount credit contracts (SACCs), which charged customers a $35 fee described as an “Amendment Fee” or “Rescheduled Payment Fee” (Amendment Fee). The Amendment Fee was enlivened where, relevantly, the borrower amended their repayment obligations by requesting, and subsequently being granted, a deferral of a scheduled repayment: LJ [164].

3    In respect of those contraventions, the Australian Securities and Investments Commission (ASIC) seeks an order that SunshineLoans pay civil penalties totalling $10.5 million. SunshineLoans, on the other hand, contends that a total civil penalty of $1 million would be more appropriate. It submits that, whilst it admittedly acted in a wrongheaded manner over an extended period, the SACCs containing the Amendment Fee were prepared by, and on the advice of, its solicitors, such that its contraventions were neither deliberate nor intentional. On that basis, it submits that the need for specific deterrence is relatively low.

4    For the reasons which follow, it is appropriate to order that SunshineLoans pay a total of $5.5 million in civil penalties. Its contraventions were serious and deliberate, affected financially vulnerable consumers over a lengthy period, and warrant substantial specific and general deterrence. Though some allowance should be made for SunshineLoans’s reliance on legal advice when implementing the Amendment Fee, as well as its subsequent remediation program, those matters are considerably outweighed by the nature and extent of the conduct, SunshineLoans’s limited insight into and acknowledgment of its seriousness, and the limited mitigating force of its internal compliance measures.

Background

5    The Liability Judgment was delivered on 12 April 2024, in which this Court found that, as a fee payable upon an amendment to the terms of a loan, the Amendment Fee was payable otherwise than “in the event of a default in payment under the contract” and was therefore prohibited under s 31A of the National Credit Code: LJ [169]. Accordingly, the Amendment Fee was prohibited from being imposed in SACCs by s 23A(1) of the National Credit Code, such that its inclusion in SunshineLoans’s SACCs constituted a breach of s 24(1A)(a): LJ [170]. It was further found that by requiring customers to pay, and accepting payments of, the Amendment Fee, being a monetary liability which could not be imposed consistently with the National Credit Code, SunshineLoans contravened s 24(1A)(b): LJ [202] – [204].

6    The Liability Judgment spanned some 86 pages, largely because the Court was required to deal with a number of propositions advanced by SunshineLoans which were “hopeful” at best and extremely so at worst: LJ [315]. For example, SunshineLoans submitted that ASIC had no standing under ss 166 and 167 of the National Credit Act, on the basis that the reference to “a civil penalty provision” in s 166(1) referred only to civil penalty provisions in the National Credit Act, and not those in the National Credit Code: LJ [11], [19]. Other “jurisdictional” challenges were also advanced (LJ [73] – [101]) as were contentions regarding the applicable standard of proof: LJ [128] – [138]. In this regard, Counsel for ASIC aptly described the liability trial as “scorched-earth litigation”.

7    SunshineLoans’s evidence and submissions as to the nature of the Amendment Fee were also the subject of criticism. In particular, the suggestion that granting a deferral of a repayment did not constitute an amendment or variation to the relevant SACC, but rather an indication of default, was found to have “more than a degree of unreality about it” and was “contrary to the effect of the clear words used by the parties as recorded in the customer transaction logs”: LJ [206]. Relatedly, it was observed that many of SunshineLoans’s witnesses appeared to have been “well schooled in what to say under cross-examination” in relation to that point: LJ [290]. The evidence of Mr Shane Powe, SunshineLoans’s sole director, was the subject of particular criticism, as was that of Mr Nicholas Bennetts, the Operations Manager and Head of Assessments. Both were found to have given their evidence in a manner which suggested that they had been coached to advance a particular theory, namely that no agreement existed to amend the terms of the SACCs when customers were granted a deferral: LJ [294], [302]. The Court regarded that as neither honest nor credible, and Mr Bennetts’s evidence was considered to be a “deliberate misconstruction of the obvious circumstances which were in front of him”: LJ [298] – [299], [304].

8    Following the making of declarations on 5 July 2024, the Liability Judgment was appealed by SunshineLoans. On 24 March 2025, the Full Court dismissed the appeal but reframed the declarations of contravention as follows:

2.    The Court declares that pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) for the period between 1 July 2016 and 12 March 2019 SunshineLoans Pty Ltd:

(a)    by entering into 424,905 small amount credit contracts (SACCs) which each provided for it to charge a fee of $35.00 for agreeing to amend the terms of the SACC (or part thereof) and in particular for agreeing to allow additional time for payment of credit charges (Amendment Fee), contravened s 24(1A)(a) of the National Credit Code (being Schedule 1 to the National Consumer Credit Protection Act 2009 (Cth)) on 424,905 occasions by entering into SACCs on terms which imposed a monetary liability (being the Amendment Fee) prohibited by s 23A(1)(b) and s 31A(1) of the National Credit Code;

(b)    by charging the Amendment Fee to consumers on 8,921 occasions, contravened s 24(1A)(b) of the National Credit Code on 8,921 occasions in that it required payment of an amount in respect of a monetary liability (being the Amendment Fee) that could not be imposed consistently with the National Credit Code because it was prohibited by s 23A(1)(b) and s 31A(1) of the National Credit Code;

(c)    by accepting payment of the Amendment Fee from consumers on 5,129 occasions, contravened s 24(1A)(b) of the National Credit Code on 5,129 occasions in that it accepted payment of an amount in respect of a monetary liability (being the Amendment Fee) that could not be imposed consistently with the National Credit Code because it was prohibited by s 23A(1)(b) and s 31A(1) of the National Credit Code;

(d)     by reason of the conduct identified in declarations 2(a), 2(b) and 2(c) above, SunshineLoans Pty Ltd also contravened s 47(1)(d) of the National Consumer Credit Protection Act.

3.     The Court further declares that pursuant to s 166(2) of the National Consumer Credit Protection Act for the period between 13 March 2019 and 2 November 2020, SunshineLoans Pty Ltd:

(a)     by entering into 245,704 SACCs which each provided for it to charge the Amendment Fee, contravened s 24(1A)(a) of the National Credit Code on 245,704 occasions by entering into SACCs on terms which imposed a monetary liability (being the Amendment Fee) prohibited by s 23A(1)(b) and s 31A(1) of the National Credit Code;

(b)     by charging the Amendment Fee to consumers on 3,772 occasions, contravened s 24(1A)(b) of the National Credit Code on 3,772 occasions in that it required payment of an amount in respect of a monetary liability (being the Amendment Fee) that could not be imposed consistently with the National Credit Code because it was prohibited by s 23A(1)(b) and s 31A(1) of the National Credit Code;

(c)    by accepting payment of the Amendment Fee from consumers on 3,247 occasions, contravened s 24(1A)(b) of the National Credit Code on 3,247 occasions in that it accepted payment of an amount in respect of a monetary liability (being the Amendment Fee) that could not be imposed consistently with the National Credit Code because it was prohibited by s 23A(1)(b) and s 31A(1) of the National Credit Code;

(d)    by reason of the conduct identified in declarations 3(a), 3(b) and 3(c) above, SunshineLoans Pty Ltd also contravened s 47(1)(d) of the National Consumer Credit Protection Act.

(See SunshineLoans Pty Ltd v Australian Securities and Investments Commission (2025) 308 FCR 474).

9    Separately, after the original declarations were made, SunshineLoans applied for the proceedings to be referred to the National Operations Registry for reallocation to another judge for the penalty hearing. That application was initially granted but was subsequently overturned on appeal to the Full Court, on 24 March 2025: Australian Securities and Investments Commission v SunshineLoans Pty Ltd (2025) 308 FCR 514. The Full Court’s decision was upheld by the High Court on 18 March 2026: SunshineLoans Pty Ltd v Australian Securities and Investments Commission (2026) 100 ALJR 489 (SunshineLoans HCA). Accordingly, no reallocation took place, and the matter returned to me for a hearing as to penalty on 21 September 2026.

Relevant principles

Civil penalties under the National Credit Act

10    ASIC seeks the imposition of pecuniary penalties pursuant to s 167 of the National Credit Act, which relevantly provides as follows:

167 Court may order person to pay pecuniary penalty for contravening civil penalty provision

Application for order

(1)    Within 6 years of a person contravening a civil penalty provision, ASIC may apply to the court for an order that the person pay the Commonwealth a pecuniary penalty.

Court may order person to pay pecuniary penalty

(2)    If a declaration has been made under section 166 that the person has contravened the provision, the court may order the person to pay to the Commonwealth a pecuniary penalty that the court considers is appropriate (but not more than the amount specified in section 167A).

Determining pecuniary penalty

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

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

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

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

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

11    Section 167A provides that the pecuniary penalty imposed must not be more than the “pecuniary penalty applicable to the contravention”. In other words, s 167A requires the penalty to not be greater than the maximum penalty, for which s 167B makes provision.

12    Section 24(1A) of the National Credit Code is a civil penalty provision. However, it only acquired such a character after 13 March 2019: see Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Act 2019 (Cth). As such, no civil penalties may be imposed for any contraventions which occurred prior to that date.

13    Accordingly, the relevant “Penalty Period” is between 13 March 2019 and 2 November 2020. During that period, SunshineLoans contravened:

(a)    section 24(1A)(a) on 245,704 occasions, by entering into SACCs which contained the Amendment Fee (Contract Term Contraventions);

(b)    section 24(1A)(b) on 3,772 occasions, by charging the Amendment Fee to consumers (Fee Charging Contraventions); and

(c)    section 24(1A)(b) on 3,247 occasions, by receiving the Amendment Fee from consumers (Fee Receipt Contraventions).

Maximum penalty

14    Before turning to the mandatory considerations under s 167(3) of the National Credit Act, it is appropriate to first consider the maximum penalty applicable to SunshineLoans’s contraventions. To that end, s 167B(2) provides that the maximum penalty for any given contravention is the greatest of: (a) 10 times the penalty specified by the civil penalty provision; (b) the benefit derived or detriment avoided because of the contravention, multiplied by 3; or (c) either 10% of the company’s turnover for the 12 months prior to the contravention, or if that amount is more than 2.5 million penalty units, then $525 million. Here, the three alternatives are as follows:

(1)    For s 167B(2)(a), s 24(1A) of the National Credit Code is identified as carrying a penalty of 5000 penalty units. The applicable penalty unit values during the Penalty Period are $210 between 13 March 2019 and 30 June 2020, and $222 between 1 July 2020 and 2 November 2020. Taking the lower penalty unit amount, 50,000 penalty units is $10,500,000.

(2)    For s 167B(2)(b), the $35 Amendment Fee was paid to SunshineLoans on approximately 3,247 occasions in the Penalty Period, totalling $113,645. When multiplied by three, this amounts to $340,935.

(3)    For s 167B(2)(c), the evidence suggests that SunshineLoans recorded a gross income of approximately $43 million for the 2019 financial year. 10% of that amount is approximately $4.3 million.

15    Accordingly, the applicable maximum penalty is that for which s 167B(2)(a) provides, being $10,500,000 for each contravention that occurred between 13 March 2019 and 30 June 2020, and $11,100,000 for each contravention that occurred between 1 July 2020 and 2 November 2020. ASIC has recorded the theoretical maxima for each group of contraventions as follows:

16    As this table demonstrates, the total maximum penalty in this case is approximately $2.7 trillion. The relevance of this figure was the subject of some debate at the hearing, for the penalty sought by ASIC amounts to just 0.0004% of the maximum. In this regard, ASIC submitted that the maximum was “so large as to be effectively meaningless and not of particular assistance in arriving at an appropriate penalty”. It was suggested to Counsel for ASIC that the effect of such a submission was that the maximum should be ignored. However, that was vehemently denied: Counsel submitted that the maximum penalty is significant, and should thus be taken into account, to the extent that it illustrates that the Parliament takes matters of this nature very seriously.

17    Whilst that proposition can be accepted, it does not necessarily support ASIC’s contention. Parliament has deliberately assigned civil penalties to provisions which it considers so significant that their contravention ought to be severely punished. It has also deliberately imposed a maximum penalty that is determined by reference to the greater of three alternatives. In doing so, it must have appreciated that, if penalties are to be calculated on a per contravention basis, and if civil penalty provisions may be contravened by each individual interaction between corporation and consumer, the relevant maximum amount could be enormous in circumstances like the present. Yet the Parliament imposed no limitation on that possibility. Indeed, it could easily have done so in s 167B of the National Credit Act, by either not applying the greater of the three alternatives or imposing some overarching ceiling. Viewed in this way, the maximum penalty must bear some significance, and it is not appropriate to simply ignore it, in favour of an amount arbitrarily selected by the regulator, where it becomes uncomfortably vast.

18    The resolution of this issue lies in the High Court’s decision in Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450 (Pattinson). There, the plurality accepted that whilst the maximum penalty might be regarded as a “yardstick” for the purposes of determining the appropriate penalty, it is but one factor which must be balanced with all the others (at 471 – 472 [49] – [55]). In so concluding, it rejected the notion that a maximum penalty implicitly requires that contraventions be graded on a scale of increasing seriousness, with the maximum to be reserved exclusively for the worst category of contravening conduct. The following observations of the Full Court in Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25 at 63 [155] – [156] were considered instructive in that respect:

[155]    The reasoning in Makarian about the need to have regard to the maximum penalty when considering the quantum of a penalty has been accepted to apply to civil penalties in numerous decisions of this Court both at first instance and on appeal. As Makarian makes clear, the maximum penalty while important, is but one yardstick that ordinarily must be applied.

[156]    Care must be taken to ensure that the maximum penalty is not applied mechanically, instead of it being treated as one of a number of relevant factors, albeit an important one. Put another way, a contravention that is objectively in the mid-range of objective seriousness may not, for that reason alone, transpose into a penalty range somewhere in the middle between zero and the maximum penalty. Similarly, just because a contravention is towards either end of the spectrum of contraventions of its kind does not mean that the penalty must be towards the bottom or top of the range respectively. However, ordinarily there must be some reasonable relationship between the theoretical maximum and the final penalty imposed.

(Citations omitted)

19    In Pattinson, the High Court dealt with the inverse question of whether a penalty ought to be reduced having regard to the maximum penalty and the seriousness of the conduct. Nevertheless, the same principles apply to this case, where the penalty sought to be imposed is minuscule relative to the maximum. Applying those principles, the theoretical maximum remains a relevant consideration in determining the appropriate penalty. Its extraordinary magnitude, however, substantially diminishes its utility as a yardstick against which an appropriate penalty can be assessed. Necessarily, it does little to constrain the range of penalties which might realistically be advanced as appropriate.

20    Therefore, the present case is one in which closer attention must be paid to the mandatory considerations under s 167(3), and the additional considerations to which the authorities draw attention, when determining the appropriate penalty.

Mandatory and other considerations

21    Section 167(3) of the National Credit Act, extracted at supra [10], requires the Court to take into account “all relevant matters”, including: (a) the nature and extent of the contravention; (b) the nature and extent of any loss or damage suffered because of the contravention; (c) the circumstances in which the contravention took place; and (d) whether the person has previously been found by a court (including a court in a foreign country) to have engaged in similar conduct. The Court is, at a minimum, required to take these matters into account when determining the appropriate penalty.

22    In addition, in Australian Securities and Investments Commission v Westpac Banking Corporation (No 3) (2018) 131 ACSR 585 at 594 [49] (ASIC v Westpac (No 3)), Beach J identified the following factors as being potentially relevant, depending on the circumstances of the case:

[49]    The fixing of a pecuniary penalty involves the identification and balancing of all the factors relevant to the contravention and the circumstances of the defendant, and the making of a value judgment as to what is the appropriate penalty in light of the purposes and objects of a pecuniary penalty that I have just explained. Relevant factors include the following:

(a)    the extent to which the contravention was the result of deliberate or reckless conduct by the corporation, as opposed to negligence or carelessness;

(b)    the number of contraventions, the length of the period over which the contraventions occurred, and whether the contraventions comprised isolated conduct or were systematic;

(c)    the seniority of officers responsible for the contravention;

(d)    the capacity of the defendant to pay, but only in the sense that whilst the size of a corporation does not of itself justify a higher penalty than might otherwise be imposed, it may be relevant in determining the size of the pecuniary penalty that would operate as an effective specific deterrent;

(e)     the existence within the corporation of compliance systems, including provisions for and evidence of education and internal enforcement of such systems;

(f)     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;

(g)    whether the directors of the corporation were aware of the relevant facts 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;

(h)    any change in the composition of the board or senior managers since the contravention;

(i)     the degree of the corporation’s cooperation with the regulator, including any admission of an actual or attempted contravention;

(j)    the impact or consequences of the contravention on the market or innocent third parties;

(k)    the extent of any profit or benefit derived as a result of the contravention; and

(l)    whether the corporation has been found to have engaged in similar conduct in the past.

23    These have been referred to as the “augmented French factors”, being an elaboration of the factors identified by French J in Trade Practices Commission v CSR Limited (1991) ATPR 41-076 at 52,152 – 52,153: see Federal Commissioner of Taxation v Balasubramaniyan [2022] FCA 374 [93] – [94]. They are to be analysed by way of “intuitive synthesis” to determine the appropriate penalty: Australian Securities and Investments Commission v Westpac Banking Corporation (Omnibus) (2022) 407 ALR 1, 25 [129]. In other words, the Court is to arrive at a discretionary value judgment based on a balancing exercise between the relevant factors.

24    Importantly, specific and general deterrence must be given a “primary role” in this intuitive synthesis: Australian Competition and Consumer Commission v TPG Internet (2013) 250 CLR 640, 659 [65]. That is because deterrence of further contraventions is the primary, if not sole, purpose of a civil penalty: Pattinson 457 [9]. As the Full Court said in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 294 – 295:

The Court should not leave room for any impression of weakness in its resolve to impose penalties sufficient to ensure the deterrence, not only of the parties actually before it, but also of others who might be tempted to think that contravention would pay, and detection lead merely to a compliance program for the future.

(See also Reckitt Benckiser 62 [151] – [152]; ASIC v Westpac (No 3) 609 [120]).

25    Likewise, a civil penalty “must be fixed with a view to ensuring that the penalty is not such as to be regarded by [the] offender or others as an acceptable cost of doing business”: Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249, 265 [62].

26    Accordingly, whilst the augmented French factors guide the requisite analysis, they each speak to the amount of civil penalty which is sufficient to achieve specific and general deterrence. It is through this lens that the factors must ultimately be considered.

The relevance of the previous adverse credibility findings

27    As mentioned, several adverse credibility findings were made against SunshineLoans’s witnesses in the Liability Judgment. These were the subject of the application for recusal and, in turn, the appeal to the High Court. There, the Court provided guidance as to the extent to which the credibility findings may be relied upon at the penalty stage and it is appropriate to summarise that guidance here.

28    Gageler CJ and Gleeson J (with whom Steward J agreed) observed that the findings are available to be taken into account “to the extent that they are relevant to such issues as may be raised for determination at the penalty stage of the hearing”: SunshineLoans HCA 494 [5]. Their Honours further observed that to take such findings into account to the extent relevant “is not a departure from, but rather part of, determining the case on its legal and factual merits”: SunshineLoans HCA 501 [50].

29    Gordon J (with whom Steward J also agreed) stated that the findings made are “appropriately to be carried forward, to the extent relevant, to the penalty hearing”: SunshineLoans HCA 504 [73]. Her Honour also noted that the Court is not required to approach the penalty stage with a “state of suspended judgment” as if the liability stage had not occurred: SunshineLoans HCA 504 [73].

30    Similarly, Jagot J said that “no judge may adopt a ‘frame of mind’ in which judgment is wholly suspended” in a penalty hearing and it would be “legally impermissible” for a judge to treat the findings of fact and conclusions of law made in the liability stage as being anything other than “final, binding, conclusive and incontrovertible in their application to the subsequent hearing”: SunshineLoans HCA 516 [140].

31    Accordingly, the adverse credibility findings already made are available to be taken into account to the extent that they are relevant to the issues now arising on penalty. They establish the context in which those issues are to be considered and resolved, and ought not be ignored, lest the Court adopt a suspended state of judgment.

The Appropriate Penalty

32    Against that background, the appropriate penalty for SunshineLoans’s contravening conduct may be determined. That requires analysis of the mandatory considerations identified in s 167(3) of the National Credit Act, as well as those other factors which courts have determined to be potentially relevant.

Mandatory factors

Nature and extent of the contravening conduct: s 167(3)(a)

33    SunshineLoans’s contraventions of the National Credit Code occurred in its offering of SACCs – small amount credit contracts – to consumers. Those credit contracts, which involve a credit limit of $2,000 or less, are generally entered into by vulnerable consumers with low incomes and limited financial stability. So much is clear from the various additional restrictions imposed upon SACCs in s 31A of the National Credit Code: see Explanatory Memorandum, Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 (Cth) [5.6] – [5.8].

34    The evidence in this case also demonstrates that many of SunshineLoans’s customers were experiencing some form of financial hardship. Of the 66 example customers considered in the Liability Judgment, some were borrowing money for school fees, funeral costs and vehicle registration. Many had overdrawn bank accounts and often defaulted very shortly after entering into the SACC. Additionally, SunshineLoans’s customer communications log recorded its customers as having borrowed money for home repairs and maintenance, Christmas presents, necessary medical procedures, furniture and vehicle repairs. That evidence is unsurprising given the nature of the product as a short-term cash solution. In this regard, ASIC submitted that both the purpose and effect of SunshineLoans’s conduct were to generate income from vulnerable customers. There is some force in that submission, and it ought to be taken into account in the assessment of penalty: see, for example, Australian Securities and Investments Commission v Darranda Pty Ltd (Penalty) [2025] FCA 938 [149] (Darranda (Penalty)).

35    This is particularly relevant to the issue of general deterrence. It appears to be common ground that, during the Relevant Period, SunshineLoans was a significant participant in the SACC sector of the consumer credit industry. From August 2023, it ceased offering SACCs and is now a significant participant in the MACC – medium amount credit contract – sector. Since 2017, its lending has accounted for between 8.9% and 12.18% of the total funds loaned across the SACC and MACC markets. Importantly, both markets (but particularly the SACC market) involve consumers experiencing financial hardship or difficulty. Conduct which has the purpose or effect of exploiting the financial vulnerability of those consumers, or intensifying their hardship, should not be countenanced by an insufficient penalty, lest the other market participants consider it to be an acceptable cost of doing business: see also Australian Securities and Investments Commission v Walker Stores Pty Ltd (in liq) (2026) 316 FCR 342, 379 [247].

36    On the other hand, it ought to be kept in mind that this section of the market necessarily involves substantial risk. As the evidence of SunshineLoans’s customer base demonstrates, there is a high rate of default among borrowers. Given the costs generally associated with enforcement action, it is not unreasonable to assume that there are relatively few businesses willing to participate in this kind of market. In those circumstances, it might be thought that an overly zealous penalty could have broader consequences for the willingness of legitimate businesses to participate in the market, which affects market composition. There were, however, no evidence or submissions directed to that possibility, and it would therefore be inappropriate to take it into account.

37    As to the extent of the conduct, it is uncontroversial that the Amendment Fee affected approximately 670,000 people in the Relevant Period and approximately 245,000 people in the Penalty Period. However, the total number of people affected is likely to be much larger, given the Amendment Fee had been included in SunshineLoans’s SACCs from November 2013. On the other hand, most were only affected by reason of the invalid clause being included in their loan contract. Only a relatively small proportion of people were ever required to pay the unlawful fee.

38    Nevertheless, the parties have, rightly, agreed that each of the three categories of contravention identified above – the Contract Term Contraventions, the Fee Charging Contraventions and the Fee Receipt Contraventions – should be regarded as a course of conduct for the purpose of determining penalty. There is also substantial factual overlap between the three courses, each ultimately arising from the inclusion and operation of the same contractual term. This is similar to the approach adopted by Hespe J in Darranda (Penalty) at [91], where her Honour considered the extent of the contravening conduct to be explained not by any deliberate or conscious repetition of misconduct, but by the fact that impugned terms were included in a template contract provided to consumers:

[91]    Although there were 516 contraventions of s 24(1)(a) of the Code, this is not a case of a serial recalcitrant contravenor but a case where the contraventions arose from a single course of conduct. Although involving multiple contraventions, the contraventions are to be regarded as a result of a singular failure by the contravenor to properly understand the legal consequences of the terms of its contracts rather than the latest instance of the contravenor’s pursuit of a strategy of deliberate recalcitrance. The contraventions arose because of the failure of Darranda to understand that the terms and conditions of its customer contracts resulted in those contracts being characterised as credit contracts and not consumer leases. Deterrence is to be evaluated accordingly.

39    This course-of-conduct analysis is the lens through which the extent of SunshineLoans’s conduct should be viewed. This has important consequences for the extent to which any penalty may act as a sufficient deterrent. It also offers a further justification for a marked departure from the maximum penalty applicable in this case: see supra [16] – [20].

40    It follows, with the caveat that the course of conduct principle applies, that the nature and extent of the contravening conduct in this case is at the serious end of the scale and that justifies the imposition of a considerable penalty.

Nature and extent of any loss or damage: s 167(3)(b)

41    During the Relevant Period, SunshineLoans charged the Amendment Fee 12,693 times and received payment of the Amendment Fee on 8,376 occasions, totalling $293,160: LJ [123]. During the Penalty Period, it charged the Amendment Fee on 3,772 occasions and received payment of it on 3,247 occasions, amounting to $113,645. These amounts illustrate, in a broad sense, the financial detriment suffered by customers as a result of the contravening conduct. They are also relevant for the purposes of considering whether the penalty imposed amounts to an “acceptable cost of doing business”: Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249, 265 [62].

42    ASIC contended that the charging of the impermissible fee was likely to have had a materially adverse impact on the customers who were charged, because they were generally financially vulnerable people: see supra [34]. That should be accepted. As mentioned, the nature of SACCs as a short-term cash solution inherently increased the likelihood that they would be entered into by those experiencing financial hardship. There is also evidence that SunshineLoans’s customers were, in fact, entering into SACCs to remedy near-term cash shortfalls. In those circumstances, it is likely that the $35 Amendment Fee would have added to those customers’ financial stress to a not insignificant degree.

43    Conversely, whilst SunshineLoans accepted that its customers were generally experiencing financial difficulty, it sought to draw attention to the fact that it did not charge the Amendment Fee on each occasion on which it rescheduled a customer’s direct debit payment at their request. It further submitted that the total amount received by reason of customers paying the Amendment Fee reflects neither a substantial profit nor a substantial proportion of SunshineLoans’s overall income. As to the latter, the evidence indicates that SunshineLoans lent $603 million during the Relevant Period and $232 million during the Penalty Period.

44    In this regard, it submitted that the penalty contended for by ASIC ($10.5 million) represents approximately 92 times the amount received from the fee and, therefore, greatly exceeds the level necessary to achieve deterrence. Whilst one can accept the relative ratios, as the Full Court observed in Fewstone Pty Ltd v Australian Competition and Consumer Commission (2026) 317 FCR 149 at 161 – 162 [60] – [61] (citing viagogo AG v Australian Competition and Consumer Commission [2022] FCAFC 87 [161] – [162]), the profit or revenue obtained by reason of a contravention is not necessarily reflective of the seriousness of the contravention and, therefore, the appropriate penalty:

[60]    We agree with the observations of the Full Court in viagogo that reported profit may not reflect the objective seriousness of the contravention, and that objective seriousness is frequently more a function of the character of the conduct, the harms or potential harms (monetary or otherwise) from the conduct, and the deliberateness of the conduct. We also agree with the observations in viagogo that profit is merely one factor that may be relevant among many others and that the authorities should not be construed as requiring, in point of principle, that there be some linear relationship between the appropriate penalty and profit or that the penalty should only exceed the profit by a certain amount.

[61]    In that regard, the primary judge was correct to observe that the relevant penalty is not tethered to the amount of profit from the contravention. In its written submissions, City Beach submitted that its proposed penalty of $3.15 million would still be “more than 7 times the revenue and almost 100 times the profits” and that this appeared to be “more than adequate to create the necessary economically irrational choice.” Such an approach erroneously seeks to constrain the appropriate penalty by some mathematical relationship with the direct profit from the contravention. The sale of a very dangerous but very cheap product contravening a safety standard may be a paradigm example of a circumstance where the appropriate penalty may bear no relevant relationship to the profit, actual or potential, because of the heightened need to deter corporations from ever selling such a product, or from failing to have systems and processes in place to protect against such products being supplied to consumers.

45    Accordingly, while the amount received by SunshineLoans in Amendment Fee payments is relevant to assessing the financial impact of the contravening conduct upon customers, it cannot be used to reduce the severity of the penalty in the manner for which SunshineLoans contends. That is particularly so where the $35 Amendment Fee was charged to customers experiencing financial distress and difficulty, such that its impact upon them is likely to have been magnified relative to the amount actually charged and received.

Circumstances in which the contraventions took place: s 167(3)(c)

46    The third mandatory consideration is concerned with the genesis of the contravening conduct and the circumstances in which it occurred. To that end, SunshineLoans adduced evidence of its sole director, Mr Powe, as to how the Amendment Fees came to appear in its SACCs. Again, at the penalty hearing, Mr Powe was a poor witness. As the following discussion reveals, his account of the relevant events was contrary to accounts which he had previously given to ASIC. He also adopted a somewhat cavalier approach to cross-examination, and on some occasions gave careless responses which, on an ordinary reading of the transcript, might be regarded as contrary to his interests.

47    In summary, his evidence, as it appears in his affidavit of 3 July 2026, was that he was unaware that the Amendment Fees were unlawful, because the SACCs in which they appeared were prepared by, and on the advice of, his solicitors. He deposed that, having read the Liability Judgment, he unconditionally accepted that his understanding of the legality of the fees had been incorrect, and acknowledged his responsibility as the sole director of SunshineLoans for its non-compliance with the National Credit Code.

48    According to Mr Powe, SunshineLoans began using SACCs as a financial product in November 2013. Prior to that time, it had used “leasing contracts” which had been recommended and prepared by its solicitor, Mr Phillip Smiles of the firm Smiles Turner. Mr Smiles had been SunshineLoans’s “primary legal and compliance advisor” and was engaged to prepare “consumer facing” contracts and advise on all aspects of the operations of the business.

49    In October 2013, a senior investigator in the employ of ASIC, Ms Melanie Spong, visited SunshineLoans’s offices to express concerns with the length and complexity of its leasing contracts. Mr Powe recalled that she recommended engaging Dr Paul O’Shea of O’Shea Lawyers to assist with the preparation of replacement consumer contracts.

50    Mr Powe deposed that, thereafter, SunshineLoans ceased offering leasing contracts to consumers and instructed Mr Smiles to prepare draft template SACCs. On 24 October 2013, Mr Smiles provided two draft template SACCs, both of which made provision for a “Rescheduling/admin fee following default” under the heading “Unascertainable Fees and Charges”. The description of the fee was “When repayment/s are rescheduled, payable following rescheduling”. The fee was also recorded in the draft template pre-contractual statements which Mr Smiles had prepared.

51    Mr Powe recalled that he sought advice from Dr O’Shea on the draft SACCs because he was concerned to ensure that SunshineLoans complied with the National Credit Code and the National Credit Act. He deposed that, on 1 November 2013, he and Mr Daniel Simmons of SunshineLoans met with Dr O’Shea at his office to discuss the draft SACCs, during which Dr O’Shea provided some preliminary advice. While Mr Powe could not recall the full extent of the topics discussed, which is understandable given the passage of time, his evidence was that the “Rescheduling/admin fee” was not discussed. That possibly finds some support in the subsequent written advice issued by Dr O’Shea on 5 November 2013, which did not address the lawfulness or otherwise of the “Rescheduling/admin fee”. That advice summarised the 1 November 2013 meeting as follows:

Thank you for our conference with you both at our office on Friday 1 November 2013. We note that you had some questions about compliance by your business with its Responsible Lending Obligations under its Australian Credit Licence and otherwise under the National Consumer Credit Protection Act 2009 (As Amended) ("the Act"). We also discussed the relationship between the Act, its Regulations and the Regulatory Guides, such as RG209 Responsible Lending Conduct, produced by the regulator, ASIC.

We note that you are primarily dealing in Small Amount Credit Contracts (SACC)s as defined under the Act.

This letter confirms in writing the advices given in that conference.

52    However, in a response to a notice from ASIC on 28 April 2021, Mr Simmons stated that the decision to include the Amendment Fee in the SACCs was made collectively by him, Mr Powe and Dr O’Shea at their meeting on 1 November 2013. He also stated that the three men “discussed the fees and when and how they were to be charged”, following which “the unanimous decision was taken to adopt all of the relevant fees including the Amendment/Reschedule Fee”.

53    Mr Powe gave a similar answer in his examination by ASIC officers in August 2021, the transcript of which records him as stating:

Okay. So we went and saw Paul O’Shea at O’Shea Lawyers to, to draft our SACC contracts for us. And on the 1st of November, we went to Paul’s office to discuss every facet of the new contracts that he had drafted for us. So we went through, when we were there, we went through every single fee, we went through every single charge, every single facet of the, of the contracts from start to finish to go. And, and while we were there, so we, we would ask questions. Paul would refer to his, to his documents to make sure that we were all on the same page and that’s what we were doing. And that was on the 1st of November.

54    Mr Simmons was also examined by ASIC on that occasion and gave a similar recollection of the events of 1 November 2013. He confirmed that his email of 28 April 2021 was consistent with his understanding of how the Amendment Fee came to appear in the SACCs. That is, it was the result of a “unanimous decision” between him, Mr Powe and Dr O’Shea.

55    These statements were put to Mr Powe in cross-examination. He accepted that they correctly reflected his recollection of the relevant events as at August 2021, but said that his recollection had since changed after reconsidering the relevant material, particularly Dr O’Shea’s advice of 5 November 2013. He reiterated his recollection that the Amendment Fee was not discussed at the 1 November 2013 meeting. It will be necessary to return to this evidence below.

56    Leaving that issue to one side for the moment, Mr Powe further deposed that SunshineLoans commenced issuing SACCs to customers on 4 November 2013, largely in accordance with the drafts prepared by Mr Smiles. His evidence was that he did not, at any time, discuss with Mr Smiles the types of fees that could lawfully be included in the SACCs.

57    In late November 2013, Mr Powe sent a copy of the SACC prepared by Mr Smiles to Ms Spong. He deposed that she was critical of the length and complexity of the document and recommended that Dr O’Shea be engaged to prepare simpler versions. Dr O’Shea was subsequently engaged for that purpose. Mr Powe did not recall Ms Spong raising any concern about the “Rescheduling/admin fee”.

58    On 11 December 2013, Dr O’Shea provided a further letter of advice to SunshineLoans. Like the 5 November 2013 advice, it did not address the lawfulness or otherwise of the rescheduling fee.

59    On 13 December 2013, Dr O’Shea provided SunshineLoans with a suite of draft template SACC documents. Relevantly, the contract schedule made provision for a “Rescheduled payment fee” in the amount of $35.00.

60    On 4 March 2014, Mr Powe sought confirmation from Dr O’Shea that SunshineLoans’s documents and processes were “all sorted out and in the correct order” before going “live with your new contracts”. It appears that SunshineLoans thereafter commenced offering SACCs in accordance with the templates prepared by Dr O’Shea.

61    On or around 1 June 2018, the description of the fee in the SACC templates was amended from “Rescheduling payment fee” to “Amendment fee”. Mr Powe deposed that this change was caused by officers of SunshineLoans’s IT contractor, InMarket Pty Ltd, which was responsible for operating the loan management software used by SunshineLoans. He claimed that neither Dr O’Shea nor O’Shea Lawyers ever raised any concern or made any comment in relation to that amendment.

62    Ultimately, Mr Powe’s evidence was that he relied upon the expertise and experience of Mr Smiles and Dr O’Shea who had, between them, prepared the SACCs used by SunshineLoans. He deposed that there was no reason to seek advice from either of them specifically in relation to the lawfulness of the Amendment Fee, because it had been included without comment in the draft template SACCs prepared by them.

63    Mr Powe was cross-examined as to his knowledge of the unlawfulness of the Amendment Fee and the extent to which he relied upon the advice of Mr Smiles and Dr O’Shea. In cross-examination, he accepted that he was broadly familiar with the provisions of the National Credit Code in November 2013, when the SACCs were being introduced into SunshineLoans’s operations. It was also put to him that he knew, at that time, that fees under SACCs could only be charged in a limited number of circumstances, one of which was customer default. He responded, “Yes”. It was then put to him that he knew, in November 2013, that if customers paid in accordance with a rescheduled payment plan, no default had in fact occurred. To this he responded, “Yes, okay, yes”. On an ordinary reading of the transcript, that response might appear to amount to an admission. However, it was apparent from the manner in which he answered the question that he was not accepting its premise, but simply acknowledging the proposition being put to him on ASIC’s behalf. That understanding is reinforced by his later evidence that he only became aware that the Amendment Fee was not a fee payable on default after reading the Liability Judgment. It follows that his earlier response ought not be understood as an admission that he possessed such knowledge in 2013. Nevertheless, it can be accepted, for the purposes of this analysis, that he was generally familiar with the provisions of the National Credit Code at the relevant time.

64    Thereafter, it was suggested to Mr Powe that the decision to include the Amendment Fee in the SACCs was made jointly by him, Dr O’Shea and Mr Simmons, and that his evidence was an attempt to distance himself from that joint responsibility and to cast the blame upon Dr O’Shea. To that he responded:

I’m saying that, after looking at the emails of correspondence at the time, which is definitive, that there was no discussion of any fees at Paul O’Shea’s meeting, and in fact the discussion of the arrears management fee, not the amendment fee, occurred subsequent to a later phone call, which Paul O’Shea has sent me an invoice for and is documented.

65    He further asserted: “Now I have the letter from Dr O’Shea that specifically refers to the meeting, I now have a clear understanding of what happened at the meeting”.

66    This evidence is not without some difficulty. The 5 November 2013 letter from Dr O’Shea did not refer to the Amendment Fee. It is not immediately apparent how that omission could have altered Mr Powe’s recollection of the matters discussed at the meeting on 1 November 2013, particularly in circumstances where his erstwhile understanding was that he, Dr O’Shea and Mr Simmons discussed “every single fee”, “every single charge” and “every single facet” of the draft SACCs “from start to finish”. It is curious, to say the least, that such an emphatic recollection could have changed merely on the basis of a letter, which, viewed objectively, says nothing about that which was or was not discussed, save for a general reference to Messrs Powe and Simmons having “questions about compliance by [SunshineLoans] with its Responsible Lending Obligations under its Australian Credit Licence and otherwise under the [National Credit Act]”. For those reasons, it is appropriate to treat Mr Powe’s evidence as to the 1 November 2013 meeting with great caution. To the extent that his present evidence is inconsistent with the accounts of that meeting which he gave to ASIC in 2021, the earlier accounts should be preferred.

67    Moreover, the suggestion that SunshineLoans simply relied upon the drafts prepared by Mr Smiles and Dr O’Shea, without seeking or obtaining advice from them as to the legality of the Amendment Fee, adds to the difficulty in accepting Mr Powe’s account. His evidence was that he was concerned to ensure compliance with the National Credit Code and National Credit Act, and that he was “particularly concerned” to ensure that SunshineLoans complied with “the more regulated processes and requirements for SACC loans”. He also accepted, in cross-examination, that he was broadly familiar with the provisions of the National Credit Code in 2013. In those circumstances, one might ordinarily have expected the legality of the Amendment Fee to have been the subject of specific legal advice. The suggestion by Mr Powe that no such advice was obtained is difficult to reconcile with his professed concern to ensure compliance. This provides a further reason for rejecting his account.

68    There is also difficulty in Mr Powe’s evidence that he was not involved whatsoever in the change of the description of the fee from “Rescheduling payment fee” to “Amendment fee” in June 2018. It is difficult to understand how, in any circumstance, Mr Powe could have outsourced to an IT contractor amendments to the terms of a contract so fundamental to the operations of his business. In any event, if that did occur, it is suggestive of inattentiveness at best, and wilful blindness at worst, on his part.

69    Accordingly, the more probable conclusion is that Mr Powe, Mr Simmons and Dr O’Shea collectively decided at their meeting on 1 November 2013 to adopt the Amendment Fee in the SACCs. Mr Powe contributed to that decision notwithstanding his familiarity with the provisions of the National Credit Code, as he accepted in cross-examination. The suggestion that he had no involvement in the change to the description of the fee in 2018 should also be rejected. Further, it is not probable that the Amendment Fee appeared in the SACCs without any advice or discussion between Mr Powe, Mr Simmons and Dr O’Shea. In that regard, it should be noted that neither Mr Simmons nor Dr O’Shea gave evidence in relation to their involvement in these events.

70    In light of the foregoing, it is not unfair to observe that, in giving the evidence which he gave, Mr Powe was attempting to distance himself from the decision to adopt the Amendment Fee in the SACCs, and to attribute primary responsibility for it to Dr O’Shea and, to a lesser extent, Mr Smiles. This is a matter which must be taken into account in the final assessment of penalty.

71    That said, it is appropriate to have some regard to the fact that the Amendment Fee appears to have been included in the SACCs partly because it formed part of template contracts prepared by SunshineLoans’s solicitors. Some allowance should be made for that fact when assessing the appropriate penalty, notwithstanding that (a) there is no evidence that SunshineLoans ever received positive advice to the effect that the Amendment Fee was legal, and (b) Messrs Powe and Simmons were involved in the decision to include the Amendment Fee in the SACCs.

Previous similar conduct: s 167(3)(d)

72    It is uncontroversial that SunshineLoans has not previously been found to have engaged in conduct similar to that which was found in the Liability Judgment to contravene the National Credit Code. However, ASIC submitted that this consideration should be given “little weight, if any, as a mitigating circumstance”, citing the following observations in Volkswagen Aktiengesellschaft v Australian Competition and Consumer Commission (2021) 284 FCR 24 at 48 [143] – [144] (Volkswagen):

[143]    It has also been held, in the context of criminal sentencing, that prior good character is, in any event, generally not given significant weight in sentencing for offences where general deterrence is a significant consideration: Nippon Yusen at [284] and the cases there cited. There is no reason to suppose that this principle would not apply equally in the context of the fixing of an appropriate pecuniary penalty. General deterrence was plainly a significant consideration in determining the appropriate penalty to impose on Volkswagen, particularly given the nature of the contraventions.

[144]    Third, “a first time contravention does not, as a matter of principle or practice, always require a substantial discount for a first-time contravener”, particularly where the contravention is serious and engaged in over a long period of time: Fair Work Ombudsman v NSH North Pty Ltd (2017) 275 IR 148 at [177]. Volkswagen’s contraventions were, as the primary judge found, plainly extremely serious contraventions involving, as they did, systematic, deliberate and covert conduct involving the deception of the Commonwealth and Australian consumers in respect of an important matter over a considerable period of time. In those circumstances, the mere fact that Volkswagen had not been found to have engaged in similar conduct previously was deserving of minimal, if any, weight as a mitigating circumstance. As already noted, it is hardly surprising that neither Volkswagen nor the Commission submitted otherwise to the primary judge.

73    In Volkswagen, the parties had agreed that the absence of prior contraventions was not capable of being a mitigating factor in circumstances where Volkswagen’s conduct was “systematic, deliberate and covert” and included false representations for financial gain: Volkswagen 47 [139] – [140]. SunshineLoans sought to distinguish that case from the present circumstances on the basis that its conduct did not rise to the same level. However, that ignores the general principles which underpinned the analysis in Volkswagen. As their Honours’ reasons demonstrate (at 48 [144]), the relevant inquiry focuses upon whether the contravention was “serious and engaged in over a long period of time” (citing Fair Work Ombudsman v NSH North Pty Ltd (2017) 275 IR 148, 205 [177]). The systematic, deliberate and covert character of Volkswagen’s conduct was the basis upon which their Honours concluded that its contraventions were sufficiently serious. That the present conduct may not rise to the same level does not mean that its seriousness and duration are irrelevant to the mitigating weight, if any, to be afforded to SunshineLoans’s absence of prior contraventions.

74    Here, the contraventions of the National Credit Code by SunshineLoans were serious. In particular, they enabled it to derive additional revenue from customers who were generally vulnerable and often experiencing some form of financial hardship. Moreover, for the reasons given in the previous section, it appears that Mr Powe was involved in the decision to include the Amendment Fee in the SACCs. There is also no dispute that the contraventions occurred over a substantial period. For those reasons, it is appropriate to adopt a similar approach to that taken in Volkswagen, and give little weight, as a mitigating circumstance, to the fact that this is a first-time contravention.

Other considerations

75    Both parties have sought to draw the Court’s attention to those augmented French factors which are helpful to their respective cases. That is not an inappropriate approach, given the factors are not a “rigid catalogue of matters for attention”, as if the list were a legal checklist: Pattinson 461 [19], citing Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560, 580 [91]. The parties’ submissions on these factors will be considered in turn.

The change of position

76    The first additional factor to which ASIC drew the Court’s attention is SunshineLoans’s conduct in this litigation. Though not strictly within the list of augmented French factors, it is nonetheless a “relevant matter” which is to be taken into account.

77    ASIC submitted that Mr Powe’s evidence of his reliance upon legal advice is not consistent with the defiant manner in which SunshineLoans defended the liability stage of the proceedings. After ASIC raised its concerns about the lawfulness of the Amendment Fee, SunshineLoans elected to steadfastly contest liability, both at first instance and on appeal, by taking every possible point of argument. In this regard, Counsel for ASIC described SunshineLoans’s approach to the liability stage as “scorched-earth litigation”, which was a not inapt description. As the Liability Judgment shows, many of the arguments advanced, particularly those as to jurisdiction and standing, were devoid of merit to the point of being potentially disingenuous. Indeed, even the substantive points as to the proper characterisation of the Amendment Fees were hopeful at best. Whilst there is no doubt that SunshineLoans was entitled to put ASIC to proof, the forensic choice to conduct the liability proceedings in the manner that it did sits somewhat uneasily with its present contention that the Amendment Fee came to be charged merely because it relied upon incorrect legal advice. This was, very properly, acknowledged by Counsel for SunshineLoans, who appeared at the penalty hearing but not at the liability hearing. He conceded that he could offer nothing in support of how the latter was conducted.

78    The intransigent manner in which the initial hearing was conducted is aptly illustrated by SunshineLoans’s submission at the liability hearing that the Amendment Fee was a fee “payable on default”. In that regard, the following observations were made in the Liability Judgment:

[200]    It is difficult to know whether, in this respect, Sunshine Loans had adopted a deliberately obstruse attitude, was effectively misleading borrowers, or was concocting a fanciful argument to avoid liability in these proceedings. The evidence which is identified below shows that the pattern was that a borrower would contact Sunshine Loans seeking an alteration to their payment obligations (for example, by extending the time for repayment or the amount of each repayment) and a new schedule would be agreed, and the borrower would be charged the Amendment Fee. The agreed amendment would usually be confirmed by the sending of a new payment schedule to the borrower. It is difficult to see how that variation to the initially agreed payment terms could have the consequence that payment in accordance with it by the borrower would mean that a default occurred.

(Emphasis added).

79    The suggestion that the Amendment Fee constituted a fee payable upon default was plainly wrong. Indeed, it was later observed in the Liability Judgment that, assuming a reasonable level of integrity and intelligence of SunshineLoans’s director and officers, it was difficult to conclude that they would have honestly believed that construction to be true: LJ [317]. In this regard, the vigorous pursuit of that argument, both at first instance and on appeal, tends to diminish the mitigating force of SunshineLoans’s reliance upon legal advice.

80    Therefore, in addition to the difficulties with Mr Powe’s evidence discussed at supra [46] – [70], SunshineLoans’s contention that it unknowingly acted upon incorrect advice when engaging in the contravening conduct, should be accorded limited weight as a mitigating circumstance.

Deliberateness of the contravening conduct

81    The degree to which SunshineLoans’s contravening conduct was deliberate is a not unimportant issue. It is common ground that the inclusion of the Amendment Fee in the SACCs was the result of a deliberate decision, in the sense that it did not occur by reason of oversight or inadvertence: see Australian Competition and Consumer Commission v Dell Australia Pty Ltd (No 2) [2023] FCA 983 [46]. The evidence shows that it was a decision made by Mr Powe, Mr Simmons and Dr O’Shea, and that Mr Powe was at the time familiar with the provisions of the National Credit Code.

82    In all the circumstances it should be accepted that no director or officer of SunshineLoans, acting reasonably, could have understood the Amendment Fee as operating in circumstances of customer default. In the Liability Judgment at [317], in the context of SunshineLoans’s reliance on the defence in s 183 of the National Credit Act, I made the following observation which is relevant here:

[317]    Again, were it necessary to determine whether Sunshine Loans acted honestly, I would have to conclude that it did not. If one ascribes to its directors and officers a reasonable level of integrity and intelligence, it would be difficult to conclude that they held any belief that the manner in which Sunshine Loans charged the Amendment Fee to its customers was permitted under the Credit Code. As I have found, that lack of honesty extended to the evidence which they gave.

83    On that basis, SunshineLoans’s conduct in deliberately including the Amendment Fee in its SACCs increases the need for specific deterrence.

84    On the other hand, there was no sufficient evidence supporting the conclusion that Mr Powe or Mr Simmons knew that the Amendment Fee was unlawful and it did not appear that ASIC suggested otherwise. However, whilst the absence of such knowledge is relevant, it does not deprive the deliberate, as opposed to inadvertent, character of the conduct of significance in addressing its seriousness. Moreover, Mr Powe knew that SACCs involved “more regulated processes and requirements” and he was generally familiar with the provisions of the National Credit Code. Hence, though it may be accepted that there is insufficient evidence to establish that he was aware of the unlawfulness of the Amendment Fee, in the circumstances he ought to have been aware, and he ought to have sought specific advice on its legality.

85    Such matters exacerbate the level of seriousness attached to the intentionality of SunshineLoans’s conduct.

Culture of compliance

86    One of the key areas of disagreement between the parties is the extent to which SunshineLoans had a culture of compliance. ASIC, on one hand, submitted that SunshineLoans’s conduct throughout the litigation demonstrates a culture not conducive to compliance, and rather a lack of remorse or contrition. On the other hand, SunshineLoans contended that it maintained specialist external legal advisers for compliance throughout the Relevant Period and, since then, has implemented various changes to its compliance program. In a broad sense, both submissions can be accepted.

87    As a starting point, it can be accepted that, at all relevant times, SunshineLoans had retained legal advisors to assist in its business operations. Initially, between 2009 and 2013, it retained the services of Mr Smiles. Mr Powe’s evidence was that Mr Smiles was instructed to prepare SunshineLoans’s “customer facing” contracts, provide advice on legislative changes or legal developments relevant to SunshineLoans’s operations, provide all training and compliance materials to ensure compliance with the National Credit Act and the National Credit Code, conduct audits of SunshineLoans’s compliance with the National Credit Act and the National Credit Code, and provide advice on any legal queries or concerns raised by officers of the business. Mr Powe also deposed that, after SunshineLoans commenced issuing SACCs, he received regular alerts and newsletters from Mr Smiles’s firm, Smiles Turner, providing updates on matters of interest in the industry, including relevant proceedings or issues of concern identified by ASIC.

88    Mr Powe further deposed that Dr O’Shea was engaged as SunshineLoans’s primary legal advisor from 2014, and that, like Mr Smiles, he was instructed to prepare SunshineLoans’s customer facing contracts, review and amend the contracts as required, advise SunshineLoans on every occasion on which an amendment to the contracts was proposed, conduct compliance audits and reviews of the contracts to ensure their compliance with the National Credit Act and the National Credit Code, conduct training for the purpose of continuous professional development, and provide advice on all ad hoc legal enquiries or proposed changes to SunshineLoans’s business. It also appears that Dr O’Shea prepared a “Compliance Plan” for SunshineLoans in May 2021. Mr Powe was not cross-examined in relation to his evidence as to the work undertaken by Mr Smiles and Dr O’Shea.

89    It also appears that SunshineLoans has instituted some compliance measures since the end of the Relevant Period. Notably, it appointed a compliance manager in June 2022 and a compliance officer in July 2026. Further, since October 2024, it has engaged an in-house legal counsel to provide advice on the operations of the business. Of course, it must be kept in mind that the Liability Judgment was handed down in April 2024, and initiatives undertaken since that time might be considered an attempt to increase SunshineLoans’s prospects of receiving a lower penalty. Nevertheless, the work of the compliance manager, Mr Michael Westerberg, is relevant. In his affidavit, which was relied upon in these proceedings, he deposed to, inter alia, reviewing Dr O’Shea’s Compliance Plan, reviewing and amending SunshineLoans’s policies, increasing staff onboarding and ongoing training procedures, arranging for training to be delivered by external legal advisors, engaging a human resources consultant, and establishing a risk and compliance committee. Mr Westerberg was not cross-examined on this evidence.

90    Whilst all of that can be accepted, the difficulty is that SunshineLoans’s conduct in relation to the Amendment Fee and the ensuing litigation have the effect of reducing the degree to which those general compliance initiatives can operate as a mitigating factor. The existence of a general compliance framework is of little practical relevance in circumstances where its senior managers were prepared to deliberately construct a narrative to defend the litigation. The deficiencies in their evidence at the liability stage of the hearing are reflected in the following paragraphs of the Liability Judgment:

[298]    Like Mr Simmons, I do not accept that Mr Bennetts sought to answer honestly the questions put to him in relation to this issue. His approach was not merely to take every opportunity to advance Sunshine Loans’ case and his evidence extended to a deliberate misconstruction of the obvious circumstances which were in front of him.

…

[302]    In a similar manner, Mr Powe adhered to the contention that despite the obvious agreement to vary the loan contract between Sunshine Loans and its customers for which the Amendment Fee was paid, no such agreement existed. He, too, gave evidence in the manner of someone who had been schooled to advance a particular theory.

…

[304]    … Rather, it is clear that he [Mr Powe] gave his evidence in an attempt to avoid the conclusion that Sunshine Loans was charging fees otherwise than on a default, and in an attempted justification of its actions. Ultimately, his evidence was not credible in the face of the objective evidence, and he was also not a witness who tried to give his evidence in an honest manner.

…

[312]    … Even if Mr Powe, Mr Bennetts and Mr Simmons had those beliefs about the facts [ie. that the SACC between had not been varied to change the date for the next repayment; and that Sunshine had a reasonable belief that the customer was defaulting in making the payment under the SACC], which is doubtful, they were not reasonable. … It is pellucid in this case that the Amendment Fee was charged for the making of an amendment or variation to the repayment terms under the SACC. A cursory consideration of the events and the relationship between the parties makes that clear beyond question. Any suggestion to the contrary is disingenuous.

…

[317]    Again, were it necessary to determine whether Sunshine Loans acted honestly, I would have to conclude that it did not. If one ascribes to its directors and officers a reasonable level of integrity and intelligence, it would be difficult to conclude that they held any belief that the manner in which Sunshine Loans charged the Amendment Fee to its customers was permitted under the Credit Code. As I have found, that lack of honesty extended to the evidence which they gave.

91    The “narrative” which the officers of SunshineLoans advanced was that they honestly believed that the Amendment Fee constituted a fee payable upon the default of a customer, and that the rescheduling of a payment did not constitute an agreement to amend the terms of the loan. That was found to be disingenuous, and a belief which no person with a reasonable level of integrity and intelligence could have held. Moreover, it was also found that the evidence of Messrs Powe, Bennetts and Simmons suggested that they had been “schooled” in what to say under cross-examination, and that they “stubbornly clung” to their fanciful claimed understanding that a customer’s request to reschedule a payment merely constituted a request for a “stop” to be placed on the next direct debit: LJ [290].

92    In the light of such findings, the difficulty for SunshineLoans is not merely that its director and officers held an incorrect view about the legality of the Amendment Fee, or that it defended the litigation commenced by ASIC. Rather, it is that those in control of it deliberately adopted a fanciful position and stubbornly clung to it in the face of its apparent incorrectness. That conduct is somewhat irreconcilable with the existence of a culture of compliance within SunshineLoans, both during and after the Relevant Period. At the very least, it substantially undermines the mitigating effect of the evidence of its general compliance framework and initiatives undertaken since the Relevant Period. For those reasons, and having regard to the fact that SunshineLoans’s senior management does not appear to have changed since the Relevant Period, limited weight should be given to its compliance framework as a factor warranting a reduction in penalty.

Cooperation with ASIC

93    A related point is the extent to which SunshineLoans cooperated with ASIC. In this regard, it is again relevant that SunshineLoans took many points of law and evidence at the liability hearing, a large number of which were described as “fanciful”: LJ [200]. Particularly, its unreal contentions that ASIC lacked standing to apply for civil penalties under the National Credit Act, and that the Court did not have jurisdiction to deal with the matters raised in the proceedings, prolonged the litigation and significantly increased the costs associated with it.

94    Conversely, account can be taken of the fact that Mr Powe began engaging with ASIC in 2013, when he had discussions with Ms Spong as to SunshineLoans’s use of leasing contracts and its subsequent adoption of SACCs. It is also relevant that SunshineLoans ceased charging the Amendment Fee on 2 November 2020, after ASIC raised its concerns. Both matters, but particularly the latter, demonstrate at least some degree of engagement by SunshineLoans with the regulator.

95    Nevertheless, SunshineLoans is not entitled to any mitigation on account of its cooperation in the course of these proceedings. Though its conduct should not be treated as aggravating, no “discount” should be afforded for cooperation.

Contrition and remorse

96    The next factor in dispute between the parties is the extent to which SunshineLoans, through Mr Powe, has expressed remorse for its contravening conduct. In his affidavit, he deposed that, having read the Liability Judgment, he accepted “unconditionally and without reservation” the Court’s finding that the Amendment Fee was not charged upon default. He went on to state that he unconditionally accepted that his erstwhile understanding of the Amendment Fee was incorrect and “did not reflect the true legal character of the fee as found by the Court”.

97    Mr Powe then deposed as follows:

10.    I do not in any way seek to revisit or dispute the Court's findings. I offer this explanation only to convey that, at the time, I did not understand that I was charging a fee prohibited by law. I acknowledge my responsibility as the sole director for SunshineLoans’ noncompliance with the Credit Code and its contravention of the Credit Act.

11.     I regret the impact that charging the Relevant Fee has had on SunshineLoans’ customers. I understand that the imposition of even a modest fee may have caused financial difficulty to those consumers, and I am genuinely sorry for any harm caused.

98    Little weight should be given to that expression of remorse at this late stage of the proceedings. In particular, it stands in contrast with SunshineLoans’s submissions at the liability hearing, and Mr Powe’s previous evidence that the Amendment Fee was beneficial to customers, because it provided them with an opportunity to avoid a failed direct debit, which could affect their ability to obtain finance in the future, and also allowed SunshineLoans to use a “softer and more personal approach”. It is difficult not to regard the claimed contrition as being a mere tactical step, made in the hope of lighter penalty.

99    Whilst an absence of contrition in defence of litigation is not generally treated as an aggravating factor, it is nevertheless relevant to the question of whether the evidence before the Court provides a basis for concluding that the need for specific deterrence is reduced because the contravener has demonstrated insight into the nature and seriousness of the conduct found to have occurred: Australian Securities and Investments Commission v Bekier (Penalty Judgment) [2026] FCA 756 [92]. That approach reflects the role of deterrence as the central tenet in the imposition of a penalty. Applying it here, it is not unfair to observe that Mr Powe’s expressions of remorse in his affidavit are rather cursory. Though he acknowledged that his erstwhile understanding of the Amendment Fee was wrong, and accepted the findings of the Court, he did not properly grapple with the seriousness of his conduct. Nor did he confront the manner in which SunshineLoans conducted its defence at the liability hearing. On that latter point, in circumstances where SunshineLoans vigorously contested liability, and led evidence from witnesses who were found to lack honesty and credibility, one might have expected a more fulsome expression by Mr Powe of his appreciation of the findings made against SunshineLoans, the seriousness of the contravening conduct, and its effect on customers. His mere acceptance of the findings in the Liability Judgment (after having exercised all possible avenues of appeal) was insufficient in that respect, as were his general statements to the effect that the Amendment Fee “may have caused financial difficulty” for customers.

100    Moreover, and no less significantly, when considering the extent to which Mr Powe has expressed remorse for SunshineLoans’s conduct, it is important to keep in mind that his evidence as to the circumstances in which the Amendment Fee came to appear in the SACCs was rejected. For the reasons given, that evidence was an inappropriate attempt by Mr Powe to distance himself from the decision to include the Amendment Fee in the SACCs, and to cast the blame upon his lawyers, Dr O’Shea and Mr Smiles. That is difficult to reconcile with his asserted acceptance of responsibility for SunshineLoans’s contraventions and materially reduces the weight that can be accorded to his expression of remorse.

101    Overall, the evidence does not provide a sufficient basis upon which to conclude that SunshineLoans, by Mr Powe, has demonstrated the necessary degree of insight into the nature and seriousness of the contravening conduct to materially reduce the need for specific deterrence.

Remediation

102    After the Liability Judgment was handed down, SunshineLoans began a remediation process with customers who had been charged the Amendment Fee during the Relevant Period. Refund payments to those customers were processed on 3 June 2024. Thereafter, it was decided that remediation should extend to all customers who had been charged the Amendment Fee from November 2013. A refund to those customers was processed on 23 July 2024. Though interest was not initially paid on the refunds, a supplementary interest payment occurred on 26 June 2026, with interest calculated at the cash rate set by the Reserve Bank of Australia plus 6%.

103    In the evidence is a document prepared by Clayton Utz entitled, “Rescheduled Payment Fee Remediation Program”, dated 3 July 2026 (Remediation Program). It traverses in some detail the process by which SunshineLoans was to undertake remediation. In particular, it identifies that SunshineLoans is to take steps to obtain the bank account details of customers in order to facilitate the payment of a refund. If those details cannot be ascertained, the Remediation Program provides that SunshineLoans is to pay the outstanding refunds from the Relevant Period to the Public Trustee, and the outstanding refunds from pre-2016 customers to a charity.

104    According to SunshineLoans’s compliance manager, Mr Westerberg, the company has paid at least $420,000 in remediation and interest payments as at 20 August 2026. It appears that it intends to pay at least $230,000 in further payments in accordance with the Remediation Program, though it anticipates that it will have paid more than $700,000 upon the completion of the program.

105    It is appropriate that the Remediation Program should be taken into account as a mitigating factor on penalty, particularly when one compares the amounts paid and intended to be paid with the amount SunshineLoans received from the Amendment Fee during the Relevant Period, being $293,160.

106    However, it can also be accepted that SunshineLoans was in no great hurry to commence the Remediation Program. Notably, an affidavit of Mr Powe was filed when the matter was originally set down for penalty hearing in July 2024. In it, he deposed as follows:

23.     I have directed the employees of Sunshine Loans to return the $35.00 fee to all customers from whom it was received in the period 1 July 2016 to 2 November 2020. I gave this instruction shortly after 12 April 2024 and thereafter processes have been developed to achieve that instruction. As at this time, the $35.00 has been returned to all customers from who it was received in the relevant period to the extent that their existing bank account details allowed such return.

107    This was somewhat unsatisfactory because it offered no detail as to the total number of customers who had been refunded, the value of the total refunds paid, the “processes” which had been developed to facilitate the refunds, the amount of interest (if any) to be paid, how any excess amounts derived from the Amendment Fee were to be dealt with, and whether customers who were charged the Amendment Fee outside of the Relevant Period were to be remediated. Nevertheless, those deficiencies have now been overcome, and the evidence has been supplemented by a further affidavit of Mr Powe and an affidavit of Mr Westerberg, which explain the nature and scope of the Remediation Program. Nevertheless, this additional evidence indicates that there was some delay in SunshineLoans paying interest on the refunded amounts, and preparing, or causing to be prepared, the Remediation Program document.

108    In general, the evidence discloses that though some delay has occurred in the implementation of the Remediation Program, SunshineLoans has now taken significant steps to mitigate the damage suffered by affected customers. The program is comprehensive and demonstrates a commitment on its part to remediating, as best it can, the harm it caused by the imposition of the Amendment Fee. Upon its completion, SunshineLoans will have paid out an amount materially exceeding that which it received from charging the Amendment Fee, due in no small part to the high rate of interest being applied. Therefore, irrespective of the lateness of its commencement, it should be taken into account as a not insignificant mitigating factor when assessing the appropriate penalty. Whilst remediation does not eliminate the need for a substantial penalty, it remains relevant that SunshineLoans has undertaken steps to reverse, so far as possible, the financial detriment of the contravening conduct.

Financial position and capacity to pay

109    The final key matter of contention between the parties is the capacity of SunshineLoans to pay any penalty imposed. Before considering the evidence on that matter, it is appropriate to outline the extent to which the capacity of a contravener to pay a civil penalty is relevant to the assessment of the penalty necessary to achieve both specific and general deterrence.

The relevance of a contravener’s capacity to pay a civil penalty

110    A civil penalty must be “proportionate”, not in the ordinary criminal law sense, but in the sense that it “strikes a reasonable balance between deterrence and oppressive severity”: Pattinson 468 [41]. As the Full Court observed in Reckitt Benckiser at 62 [152] (and adopted by the plurality in Pattinson at 468 [41]):

[152]    If it costs more to obey the law than to breach it, a failure to sanction contraventions adequately de facto punishes all who do the right thing. It is therefore important that those who do comply see that those who do not are dealt with appropriately. This is, in a sense, the other side of deterrence, being a dimension of the general deterrence equation. This is not to give licence to impose a disproportionate or oppressive penalty, which cannot be done, but rather to recognise that proportionality of penalty is measured in the wider context of the demands of effective deterrence and encouraging the corresponding virtue of voluntary compliance.

111    In other words, the relevance of a contravener’s capacity to pay a civil penalty is tied to the need for general deterrence in the particular case. That is consistent with deterrence being the paramount consideration when assessing the appropriate penalty: Pattinson 457 [9].

112    Similar observations were made by Heerey, Finkelstein and Allsop JJ in Australian Competition and Consumer Commission v High Adventure Pty Ltd (2006) ATPR 42-091 at 44,564 [11]:

Moreover, 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.

(See also Australian Competition and Consumer Commission v BlueScope Steel Limited (No 6) [2023] FCA 1029 [143]).

113    It follows that, while SunshineLoans’s capacity to pay is relevant, it is of “less importance when balanced against the necessity of imposing a penalty that satisfies the objective of general deterrence”: Australian Communications and Media Authority v Clarity1 Pty Ltd (2006) 155 FCR 377, 387 [43]; Australian Competition and Consumer Commission v Dimmeys Stores Pty Ltd [2011] FCA 372 [54]; Australian Communications and Media Authority v Mobilegate Ltd A Company Incorporated in Hong Kong (No 6) [2009] FCA 1533 [28]. This appears to be uncontroversial as between the parties. However, for the reasons given herein, particularly as to the nature of the industry, the nature of the conduct, and the size of the contravener, the significance of general deterrence should not be understated in this case.

Evidence as to SunshineLoans’s capacity to pay a civil penalty

114    SunshineLoans adduced a report by a forensic accountant, Mr Dennis Lee of Cor Cordis, which addresses its financial position and the extent to which it is capable of paying a civil penalty. Mr Lee was not cross-examined by ASIC.

115    In broad terms, Mr Lee opined that SunshineLoans has total assets between $59.0 million and $63.1 million and total liabilities between $66.6 million and $67.0 million. In turn, he concluded that a penalty of between $1.45 million and $1.95 million would likely require a “material change” to SunshineLoans’s operations, and that a penalty of approximately $5.05 million to $5.55 million or more would result in the company being unable to continue to trade as a going concern. Those conclusions are based upon SunshineLoans’s balance sheet as at 31 March 2026, which identifies the company as having total assets of $75.1 million and total liabilities of $66.1 million, leaving a net asset balance of $9 million. However, Mr Lee has made some adjustments to those amounts, by identifying several assets which, in his view, should be discounted from the balance sheet.

116    Firstly, the balance sheet records an asset identified as a “Commercial Loan”, valued at $7,185,157. Mr Lee indicated that the borrower in this arrangement is Auswright Training Pty Ltd (Auswright), a registered training organisation, in which Mr Powe held a 50% shareholding. It is said that Auswright no longer trades and there is no ability for SunshineLoans to call in the loan. For that reason, Mr Lee adjusted the value of the asset to a nil balance.

117    Second, the balance sheet has an asset valued at $4,805,496, entitled “Unsecured Investor Loans suspense”. According to Mr Lee, that relates to SunshineLoans’s unsecured investor loan liabilities and reflects a difference between the value of those loans calculated by its external accountants and that which is recorded in its internal register of lenders. The external accountants have calculated the liability as being $19.1 million, while it is recorded internally as being $23.9 million. The “Unsecured Investor Loans suspense” account was inserted into the balance sheet by the external accountants to record the discrepancy until it is resolved. In Mr Lee’s view, the discrepancy relates to certain accruals of interest which the external accountants have not recognised. Accordingly, he adopted SunshineLoans’s calculation of the unsecured investor loan liability and adjusted the “Unsecured Investor Loans suspense” account to zero, thereby reducing the company’s assets by $4,805,496.

118    Third, Mr Lee dealt with an asset entitled “Computer Program / Website Development Expenditure”, recorded at $11,526,819 at cost, and $4.4 million after depreciation. The entry apparently reflects expenditure by SunshineLoans on the development of a loan management system for use in its business operations. Mr Lee noted that SunshineLoans does not have any right to sell or licence the system and, in any event, it is not readily saleable on the open market due to its bespoke nature. Accordingly, for his assessment of SunshineLoans’s assets at the “low” end, he reduced the value of the asset to nil.

119    As mentioned, ASIC did not cross-examine Mr Lee in relation to his report and, otherwise, it did not seek to call his asset adjustments into question.

120    After explaining his asset adjustments, Mr Lee then addressed SunshineLoans’s cash flow and solvency. In doing so, he considered the following matters.

121    Firstly, Mr Lee identified that SunshineLoans has, as at 31 March 2026, approximately $8.9 million in cash and cash equivalents.

122    Second, he considered the Cash Advance Facility Agreement (CAFA) provided to SunshineLoans by Sunrise Financial Services Pty Ltd (Sunrise). Sunrise appears to be an arm’s length lender, and is SunshineLoans’s largest and only secured creditor. The CAFA was originally signed in 2021. It expired in 2024, but the parties operated under its terms until a new CAFA was executed on 24 June 2026.

123    Under the 2021 CAFA, the maximum amount able to be drawn down by SunshineLoans is the lesser of $100 million and 70% of the aggregate amount of short-term financial accommodation provided by SunshineLoans to its borrowers. In the 2026 CAFA, the former amount was reduced to $50 million. By Mr Lee’s calculations, based on SunshineLoans’s loan book, the maximum amount that is available to be drawn down is $29,438,122. He also calculated that SunshineLoans has drawn between $31.44 million and $40.36 million on the facility, depending upon whether its cash and cash equivalents can be used to directly offset the loan. Importantly, in either case, SunshineLoans has overdrawn the Sunrise facility, either by $2.0 million or $10.9 million. On that basis, he opined that it was already in breach of the CAFA, irrespective of the penalty that is ordered.

124    Third, Mr Lee considered SunshineLoans’s profit and loss statements for the 2024 and 2025 financial years, and the 2026 financial year to 31 March 2026. From those, it appears that SunshineLoans made profits of $1.53 million in FY24, $2.17 million in FY25, and $573,608 in YTD26.

125    Fourth, in terms of cash flow, Mr Lee opined that the business requires approximately $2.3 million each month to fund its operating expenses, and approximately $4 million to continue operating its business without material change. He observed that the lowest cash on hand balance recorded by the business was $2.2 million in December 2024, and otherwise cash has remained above $4 million.

126    Given the above, Mr Lee opined that a material impact would occur if SunshineLoans’s cash reserves fell at least 10% below the $4 million threshold, that is to $3.6 million. Applying an estimate of $5.05 million to $5.55 million in cash flow reserves as at November 2026, he concluded that a penalty of an amount greater than or equal to those reserves would result in the company being unable to trade as a going concern, while a penalty between $1.45 million and $1.95 million would result in the business having less than $3.6 million in available cash and, therefore, being required to reduce its operating costs, curtail lending activity, and/or demand repayment of loan receivables from related companies.

127    In that latter respect, the evidence indicates that SunshineLoans has loans receivable from PowerPay Pty Ltd (PowerPay) in the amount of $4.139 million, MyPayNow Pty Ltd (MyPayNow) in the amount of $764,170, and iSavenow Pty Ltd (iSavenow) in the amount of $571,246. All three entities are connected in some way to SunshineLoans: Mr Powe is a director of PowerPay, and there are common shareholders between PowerPay and SunshineLoans; MyPayNow was formerly a subsidiary of SunshineLoans, and Mr Powe’s son is a director and shareholder; iSavenow has common shareholders with SunshineLoans, and Mr Powe’s son is also a director. All three entities appear to be gradually repaying their respective debts, and Mr Lee considers them to be “fully recoverable”. Accordingly, he has included, in his discussion of “material change”, the possibility that SunshineLoans could demand their repayment should it be necessary.

128    Despite the absence of any cross-examination of Mr Lee, some difficulties appear on the face of his report. In the first instance, it was prepared on the assumption that any civil penalty would be payable immediately, which ignores the possibility that it could be payable over time in instalments. Second, Mr Lee’s conclusion that a penalty of around $5.05 million to $5.55 million or greater would result in the business being unable to trade as a going concern, did not take into account the measures which were considered to amount to a “material change”. That is, he did not consider SunshineLoans’s capacity to pay, being increased by it reducing its operating costs, curtailing its lending activity, and/or demanding repayment of the loans to PowerPay, MyPayNow and iSavenow. In that latter respect, there is no evidence as to the capacity of those entities to make immediate repayment rather than continued incremental repayment. Nor is there any evidence as to SunshineLoans’s capacity to borrow further funds from its other existing creditors.

129    Therefore, though Mr Lee’s report is detailed, it does not address, and there is little evidence of, the extent to which SunshineLoans can alter its operations in order to withstand the imposition of a significant penalty. Whilst the report indicates that such changes are possible, it offers no discussion as to SunshineLoans’s likely capacity to pay after they are implemented. That is not necessarily a criticism of Mr Lee, but rather of the material with which he was provided. These matters undermine the value of his conclusions, as does the assumption underlying the report that any penalty would be immediately due and payable rather than capable of being paid in instalments.

130    Therefore, whilst his evidence is relevant and generally accepted, the Court is unable to regard the penalty thresholds identified by him as determinative for present purposes. They do not provide a complete picture of SunshineLoans’s capacity to meet a civil penalty and, in any event, that capacity is of lesser importance than the need to impose a penalty sufficient to achieve general deterrence.

Synthesis

131    Having regard to the foregoing matters, a substantial civil penalty is justified. SunshineLoans’s contraventions of the National Credit Code were serious, deliberate, involved vulnerable consumers, occurred over a lengthy period, and were committed by a substantial participant in the consumer credit industry. General deterrence is, therefore, of considerable importance. Specific deterrence is also significant, because SunshineLoans continues to engage in business in the consumer credit industry, it has demonstrated only limited insight into the seriousness of its erstwhile conduct despite the findings made in the Liability Judgment, its senior management remains unchanged, and limited weight can be given to its asserted culture of compliance. Further, its sole director, Mr Powe, appears to have made the calculated decision to give evidence in an attempt to cast the blame for the Amendment Fee upon his lawyers, notwithstanding that such evidence contradicted that which he had previously given. That illustrates the culture within SunshineLoans and the limited extent to which it, through its sole director, has genuinely grappled with the gravity of its conduct. However, against those matters must be balanced the fact that the contraventions, though numerous, comprised three substantially overlapping courses of conduct, that SunshineLoans relied in part upon legal advice, that it received only $293,160 from the Amendment Fee during the Relevant Period, and that it has since undertaken, and continues to undertake, a substantial remediation program. The latter is a significant mitigating consideration. Though late, the Remediation Program is both fulsome and comprehensive. Importantly, it returns funds to those who have suffered loss as a result of the contraventions. Had it not been implemented, it is likely that the appropriate penalty would have been substantially higher.

132    ASIC has proposed a penalty of $10.5 million, comprising $6.5 million for the Contract Term Contraventions, $1.5 million for the Fee Charging Contraventions, and $2.5 million for the Fee Receipt Contraventions. Conversely, SunshineLoans contended for a penalty of $1 million, comprising $550,000 for the Contract Term Contraventions, $150,000 for the Fee Charging Contraventions, and $300,000 for the Fee Receipt Contraventions. From those figures, it is clear that the parties broadly agree as to the relative significance of each class of contravention. Those proportions should be reflected in the final penalty.

133    In the circumstances, having considered cumulatively all the matters discussed in these reasons, a total penalty of $1 million is plainly not sufficient. It achieves neither specific nor general deterrence, having regard to the nature of SunshineLoans’s business, the severity of the conduct in which it engaged, its lack of remorse, and its position within the consumer credit industry. Conversely, a penalty of $10.5 million would be excessive, in circumstances where SunshineLoans relied in part on legal advice and has engaged in an extensive remediation program in which it has already expended more funds than it received from charging the Amendment Fee. Further, the evidence as to SunshineLoans’s financial position does not support the conclusion that a penalty of that magnitude is necessary.

134    Rather, the circumstances of this case justify an order that SunshineLoans pay a civil penalty of $5.5 million, comprising $3.5 million for the Contract Term Contraventions, $850,000 for the Fee Charging Contraventions, and $1.15 million for the Fee Receipt Contraventions.

135    The fact that such a penalty approaches the upper threshold identified by Mr Lee has not been overlooked. However, for the reasons given, the evidence does not establish that payment of a penalty of that amount would necessarily cause SunshineLoans to cease trading. Further, and in any event, the potential for SunshineLoans to be unable to trade as a going concern does not outweigh the need for a penalty which achieves sufficient general deterrence. In those circumstances, the penalty imposed is not oppressively severe.

Disposition and costs

136    For the foregoing reasons, it is appropriate to order that SunshineLoans pay a civil penalty of $5.5 million, comprising $3.5 million for the Contract Term Contraventions, $850,000 for the Fee Charging Contraventions, and $1.15 million for the Fee Receipt Contraventions.

137    As to costs, there is no reason why the costs of these proceedings, comprising both the liability and penalty stages, should not follow the event, that being ASIC’s obtaining a civil penalty order. Therefore, it is appropriate to order that SunshineLoans pay ASIC’s costs of the proceedings on the standard basis, as assessed or agreed.

Associate:    

Dated:    6 November 2026