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Parties Dispute Pecuniary Penalties for Misleading Representation
The respondent was charged with contraventions of ss 29(1)(b) and 29(1)(h) of the Australian Consumer Law in light of six Google advertisements which conveyed misleading or deceptive government affiliation representation. The Court, in determination of appropriate penalty, considered the course of conduct principle.
Facts:
By orders dated 27 August 2021, the Full Court declared that the respondent (Employsure) contravened ss 18, 29(1)(b) and 29(1)(h) of the Australian Consumer Law (ACL) (see Sch 2 to the Competition and Consumer Act 2010 (Cth)), through six Google advertisements (the six Google Ads) the subject of the appeal. Such were displayed in response to Google searches for “fair work ombudsman” and other related search terms over the period from 10 August 2016 to 31 August 2018 (Relevant Period). The contraventions related to representations made in the six Google Ads which the Full Court found represented that Employsure was affiliated with three government agencies (Affiliated Government Representation).
The ACCC appealed part of the primary judgment relating to six Google Ads which appeared in response to Google searches for particular keywords. The appeal was upheld. In the latter judgment, the Full Court granted declaratory relief and remitted other matters to the primary judge. The remitted matters require determination concern pecuniary penalties pursuant to s 224 of the ACL in relation to the s 29 contraventions.
The ACCC sought a pecuniary penalty of $5 million in relation to the s 29 contraventions; an injunction pursuant to s 232 of the ACL restraining the respondent for a period of 5 years from making any representation that it is affiliated with, or endorsed by, in any way, a government agency, when that is not the case; and for Employsure to repay 25% of the costs paid by the ACCC to Employsure in respect of the trial (i.e. an amount of $220,115,044).
The multiple and repeated contraventions relevantly caused consumers erroneously to consider that they were dealing with a government entity. The ACCC submitted that, because of the large number of individual contraventions (whether in the order of hundreds, or thousands), there is no meaningful overall maximum penalty. The ACCC contended that these contraventions in the Relevant Period are best conceived of as six “courses of conduct” (being one for each of the six Google Ads). Alternatively, the ACCC submitted that the contraventions should be assessed as involving three courses of conduct, reflecting the three government agencies who figured in the six Google Ads.
Issue:
Whether or not injunctive relief should be granted pursuant to s 232 of the ACL, and costs of the trial having regard to the ACCC’s success on the appeal.
Applicable law:
Competition and Consumer Act 2010 (Cth) Sch 2 (Australian Consumer Law) s 224 - where if the Court is satisfied that a person has contravened a provision of Pt 3-1 of the ACL (which includes s 29), the Court may order the person to pay such pecuniary penalty, “in respect of each act or omission” by the person to which it applies, as the Court “determines to be appropriate”.
Australian Competition and Consumer Commission v Australian Private Networks Pty Ltd (t/as Activ8me) [2019] FCA 284 - relied upon in accepting Employsure’s submission that the penalty proposed by the ACCC is out of step with penalties imposed in other cases for similar conduct in the period 2016-2018.
Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd [1997] FCA 450; (1997) 145 ALR 36 - provides that application of the totality principle should ensure that, overall, a sentence or penalty is appropriate and that the sum of the penalties imposed for several contraventions does not result in the total of the penalties exceeding what is proper having regard to the totality of the contravening conduct.
Australian Competition and Consumer Commission v Cabcharge [2010] FCA 1261 - provides that parity of penalties against contraveners in other comparable proceedings is a relevant factor in assessing penalty.
Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2017] FCAFC 159; 258 FCR 312 - where the question whether certain contraventions should be treated as a single course of conduct is a factual enquiry in all the relevant circumstances of the case.
Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2015] FCA 330; 327 ALR 540 - provides that if misrepresentations in the employment relations and work health and safety advice industry are not seen to attract sufficient penalties, this will undermine market efficiency, which depends upon business confidence in being given reliable, truthful and accurate information.
Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2007] FCAFC 146; 161 FCR 513 - provides that any penalty ought not be so disproportionate as to be oppressive and the character of the contravention must be the central determinant of the penalty taking into account any ameliorating circumstances.
Australian Competition and Consumer Commission v Dodo Services Pty Ltd [2021] FCA 589 - where there is evidence which indicates that Employsure was pro-active in seeking to resolve the matter before proceedings were commenced.
Australian Competition and Consumer Commission v IPM Operation & Maintenance Loy Yang Pty Ltd [2006] FCA 1777; 157 FCR 162 - held that contesting liability does not act as an aggravating factor or otherwise require the penalty to be increased.
Australian Competition and Consumer Commission v Jetstar Airways Pty Ltd [2019] FCA 797; 136 ACSR 603 - where Perry J agreed with the parties that the preferable course was to treat two separate sets of representations.
Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; 250 CLR 640 - where the High Court, applying the observations in Singtel Optus, has referred to the “primary role” of deterrence in assessing the appropriate penalty for contraventions where commercial profit is the driver of the contravening conduct.
Australian Competition and Consumer Commission v Viagogo AG (No 3) [2020] FCA 1423 - where it was submitted that the course of conduct principle therefore provides a more useful analytical tool through which to assess the proportionality of a pecuniary penalty.
Australian Competition and Consumer Commission v Visa Inc [2015] FCA 1020 - where it was held that the mechanical approach “would impermissibly constrain or formalise what is, at the end of the day, a broad evaluative judgment”.
Australian Energy Regulator v Snowy Hydro Limited (No 2) [2015] FCA 58 - provides that conduct which is truly “the same”, not merely similar, closely related or repeated, and can be differentiated from the “course of conduct."
Australian Securities and Investments Commission v MLC Nominees [2020] FCA 1306 - where the course of conduct principle therefore provides a more useful analytical tool through which to assess the proportionality of a pecuniary penalty.
Clean Energy Regulator v MT Solar Pty Ltd [2013] FCA 205 - provides that in cases where the Court believes that the cumulative total of the penalties to be imposed would be too low or too high, the Court should alter the final penalties to ensure that they are “just and appropriate”.
Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 252 CLR 482 - where reduction reflects the fact that such cooperation, for example, frees up the regulator’s resources and thereby increasing the likelihood that other contraveners will be detected and thus facilitates the course of justice.
Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53; 260 FCR 68 - held that the features of the contravention that can be seen to be relevant to its seriousness will find their place, not in the operation of some freestanding retributively-derived principle of proportionality, but in understanding the degree of deterrence necessary to be reflected in the size of the penalty.
Markarian v The Queen [2005] HCA 25; 228 CLR 357 - provided that careful attention to maximum penalties will almost always be required, first because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the court at the time; and thirdly, because in that regard they do provide, taken and balanced with all of the other relevant factors, a yardstick.
Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72; ATPR 41-993 - where it was held that cooperation with a regulatory body in the course of investigations and subsequent proceedings can properly reduce the penalty that would otherwise be imposed.
Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70; 168 FCR 383 - provides that in cases where the Court believes that the cumulative total of the penalties to be imposed would be too low or too high, the Court should alter the final penalties to ensure that they are “just and appropriate”.
Pattinson v Australian Building and Construction Commissioner [2020] FCAFC 177; 282 FCR 580 - provides that the setting out of such factors is of assistance, however, not only in capturing relevant matters, but also in providing the necessary focus: that it is to the contravention in question to which the penalty is directed.
Royer v Western Australia [2009] WASCA 139 - provides that a court is not compelled to utilise the principle because “[d]iscretionary judgments require the weighing of elements, not the formulation of adjustable rules or benchmarks”.
Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; 287 ALR 24 - the Full Court has explained the need to ensure that the penalty in such cases “is not such as to be regarded by that offender or others as an acceptable cost of doing business” and will deter them “from the cynical calculation involved in weighing up the risk of penalty against the profits to be made from contravention”.
Trade Practices Commission v CSR Ltd [1990] FCA 521; (1991) ATPR 41-076 - identified factors which point to a penalty at the mid-lower end of the available spectrum.
Analysis:
The ACCC contended that there was a need for a penalty which will strongly deter other businesses that may be minded to contravene the ACL in a similar way. The ACCC warned that if the pecuniary penalty was not set at an appropriate level a perception that civil penalties for gains won by publishing misleading Google Ads to drive up traffic and lure consumers into a particular marketing web could be absorbed as a mere “cost of doing business” and that if misrepresentations in the employment relations and work health and safety (WHS) advice industry are not seen to attract sufficient penalties, confidence of business consumers in the industry will be undermined (as may occur in any industry).
A $5 million penalty reflects the seriousness of the prolonged contravening courses of conduct. The representations deprived consumers of the opportunity to make choices free from the misleading representations as to the nature of the service they were being offered and were a result of a specific and successful strategy to increase revenue, undertaken by one of Australia’s largest and growing providers in the employment and WHS advice sector. The ACCC acknowledged that it is not possible to quantify precisely how many individual contraventions occurred during the Relevant Period because it is not known precisely how many times each of the six Google Ads were viewed.
The conduct did not involve a deliberate marketing ploy. Employsure was not deliberately trying to lure people away from the services offered by agencies such as the FWO or the Fair Work Commission. The breach was an inadvertent one, which, as submitted by Employsure, is a mitigating circumstance, when assessing all of the circumstances in which the conduct took place. The ACCC has failed to demonstrate that any useful purpose will be served by an injunction. The conduct was not deliberate. It ceased more than three years ago and is highly unlikely to recur.
Conclusion:
Employsure Pty Ltd is to pay to the Commonwealth within 28 days of the date of this order a pecuniary penalty in the amount of $1 million, in respect of the contraventions the subject of the declaration made by the Full Court in Australian Competition and Consumer Commission v Employsure Pty Ltd (No 2) [2021] FCAFC 157.
The Court declines to grant any injunctive relief. Within 14 days hereof, the parties should file and serve written submissions (not exceeding five pages in length) and adduce any additional evidence on the question of costs, not only costs of the original trial, but also in relation to the question of relief. Each party should within a further seven days file any written submissions in response, not to exceed two pages, and any objections to evidence. The issue of costs of both the trial and hearing on relief will then be determined on the papers and without a further oral hearing.
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