(a) Mr Paul Brabazon
96 Mr Brabazon swore four affidavits dated 31 March 2017, 3 July 2017, 21 July 2017 and 27 July 2017. Mr Brabazon deposed that he had been Chief Operating Officer (COO) of ACM since April 2008 and has worked in the financial services industry since at least 1974.
97 Mr Brabazon gave evidence in relation to the information that is normally included in a debtor's consumer credit report. According to Mr Brabazon, all of the defaults or other information relating to an individual during the retention period specified in s 20W of the Privacy Act 1998 (Cth) (being 5 years for a simple default, up to 7 years for a serious credit infringement) can be provided to a credit provider.
98 Regarding the issues concerning CT, Mr Brabazon deposed that he made enquiries of CT's account and that all ACM employees (including the last three operators who telephoned CT), had attended ACM's required training sessions, reviewed policies and manuals and passed relevant examinations. Mr Brabazon gave oral evidence that during the period when the letters were sent to CT from ACM in relation to debt recovery, ACM did in fact commence legal processes against customers who had debts over $3,000 or owned real property. He stated that ACM would not commence legal proceedings if someone was solely on a pension and had no assets. He said that depending on individual circumstances, ACM may not commence legal proceedings against someone if, for example, ACM received a certification from a doctor which suggested the person was actually incapacitated or in hospital for longer periods.
99 Mr Brabazon deposed that debtors frequently lied to avoid paying debts. For that reason, ACM requested corroborating documentary evidence to support claims made by debtors about health issues or financial inability to pay a debt. Mr Brabazon said that no medical reports, certifications or records verifying or confirming CT's condition or financial circumstances were provided at any time during ACM's dealings with CT.
100 Mr Brabazon also referred to a document titled "Debt collection guideline: for collectors and creditors" issued in February 2016 by the ACCC and ASIC (2016 Guidelines). It contains a recommendation at clause 5(c) that a debtor not be contacted more than 3 times per week or 10 times per month and that unduly frequent contacts may amount to undue harassment or discrimination.
101 Regarding CT's debt to Telstra, Mr Brabazon deposed that on 25 June 2010, Telstra assigned CT's debt of $5,768.53 to ACM. This was one of several thousand debts assigned to ACM by Telstra. Typically, Telstra assigned a debt after failing in its own attempts to collect the debt. When a debt was assigned to ACM, Telstra provided ACM with records containing such information as steps taken by Telstra to collect the debt and whether the debtor owned or rented real property. Mr Brabazon deposed that in his experience, Telstra used the letter "O" to record on its file that a customer owned real property. He said that the inclusion of the letter "O" in the relevant records for CT indicated that he owned real property.
102 Mr Brabazon gave evidence of ACM's DebtSmart system, which automatically puts an account on hold if its status is changed to "Customer Disputes Account". The hold period is 14 days to allow further information to be provided in respect of the dispute, and would be automatically lifted if no such information was provided. The CT Notes indicated the status of CT's account had changed to "Customer Disputes Account" on 16 December 2014, and an entry on 31 December 2014 records that further information was not provided within the requisite time period.
103 In additional oral evidence in chief given with the leave of the Court, Mr Brabazon said that in his experience working in the finance industry, it is very difficult for persons who have delinquencies listed on their consumer credit report, unless very minor, to obtain further credit or finance. He said the circumstances which ACM took into account during the period 2011-2015 as to whether or not to commence legal proceedings against a debtor included whether there were unpaid accounts, as well as other criteria such as whether the amount exceeded $3,000 (it was originally $5,000), any assets owned by the debtor and whether the debtor was in employment and therefore the company could garnishee the remuneration. He said that not all these criteria were inflexible and that in a particular case the $3,000 minimum level of debt might not be applied.
104 Mr Brabazon was asked in cross-examination why statements from a carer or nurse would not provide sufficient proof of a debtor's medical condition. His initial answers were non-responsive and designed to advance ACM's interests. Ultimately, he appeared to accept that persons other than a doctor might be able to give such confirmation. He said that oral statements from nursing staff could be a form of proof, but he then immediately added, self-servingly, why would nurses take the phone over to CT if he was not able to speak. He then added that "nurses aren't doctors either" . Mr Brabazon said that having listened to the tape he got the impression that CT was able to speak reasonably. He was challenged on this by reference to his lack of professional qualifications to assess stroke victims. I found his evidence also to be self-serving.
105 Mr Brabazon acknowledged that it was open to ACM to ask CT's son to obtain a medical report and that ACM could also have written to CT at the nursing home and seek his consent to release his medical records and provide a statement of financial circumstances. Mr Brabazon said that if ACM had CT's ex-wife's email address, ACM could have tried to contact her and ask for a medical report.
106 Mr Brabazon gave evidence about the relationship between ACM and Australia Post. Up until around 2010, ACM processed its own debt correspondence but from that date it entered into a contract with Australia Post (which was not in evidence). He explained that the general practice was for ACM to provide electronic data to Australia Post, usually on a Friday, with a view to Australia Post then generating hardcopy letters and dispatching them within a timeframe stipulated in the contract. He said that the letters were dated in a way which anticipated the likely day the letter would be delivered. Thus, if a letter which was sent out by Australia Post is expected to be received the following Monday, the letter would bear the date of the following Monday.
107 When asked what monitoring ACM had of the actual date of delivery, Mr Brabazon said that all bulk deliveries included "test letters" sent to ACM staff, including himself, so that the date of receipt could be noted and Australia Post's performance monitored by ACM. In response to a question from the Court, however, he confirmed that no such tests were done in respect of people who lived out of Sydney.
108 Mr Brabazon was asked various questions about his experience from 2001 to the present regarding credit defaults. His answers were to the effect that he had only limited direct knowledge and he relied on what he learned from industry contacts and friends. He said that he was involved in 2006 with studying credit card arrangements in Australia when he was working in Poland. Mr Brabazon agreed that any decision whether or not to advance a person credit relied upon a consideration of a number of different factors, of which one might be an adverse credit listing. He also acknowledged that under Australian law, if a debt is settled or paid in full, a notation must be added to the credit listing.
109 Mr Brabazon was cross-examined on the Privacy Fact Sheet 38 dated May 2014 from the Office of the Australian Information Commissioner. Mr Brabazon agreed that ACM had policies in place throughout 2011 to 2015 applicable to requests for hardship assistance. Further, he agreed that it was inaccurate to say that ACM could list a debt with a credit reporting bureau as a default in the case of someone was in a position of potential financial hardship.
110 Mr Brabazon was cross-examined at some length on whether there had been compliance with ACM's policies and procedures in its dealings with both CT and JR. He was taken to that part of the report prepared for ACM in September 2016 by Anteris Consulting titled "Review of Compliance Environment" (Anteris Report) which described changes to ACM's policy concerning financial hardship and vulnerable customers following Perram J's judgment in ACM 2012. Mr Brabazon confirmed that, having regard to what JR told Mr Francisco on 3 September 2014 as to her financial circumstances, Mr Francisco was authorised to accept any payment proposal that was offered by JR, no matter how long it would take to repay the debt, pursuant to ACM's policy as described in the Anteris Report. He also confirmed that having accepted such a payment proposal, legal proceedings would not be commenced.
111 Mr Brabazon accepted that, having regard to JR's financial circumstances as disclosed to Mr Francisco on 3 September 2014, she could have been referred to ACM's hardship team. He reiterated that JR's offer to pay $20 per week should have been accepted. Later in his cross-examination, however, Mr Brabazon said that while it was inconsistent with ACM's policy to say that management was demanding a full payment from JR to avoid recovery action, that did not mean that Mr Francisco was not able to ask for full payment. Further, he added that because JR was working, and agreed to pay half the debt, he did not think that she was in hardship.
112 Mr Brabazon ultimately accepted that Mr Francisco's statement to JR that management was demanding a full payment was inaccurate and in breach of ACM's policy as described in the Anteris Report and that the request that JR pay half the amount was contrary to the same policy. But he then said that it all depends upon how the discussion unfolds, and that JR could have had $4 million in a bank account. He said that by asking for a large amount of money that may come forth with a larger amount of money. Mr Brabazon appeared reluctant to make concessions which ought reasonably to have been made. His reluctance may have been attributable to an abiding concern to advance ACM's interests in the proceeding.
113 Mr Brabazon was cross-examined about the processes for initiating legal action as described in the Anteris Report. The Report described changes which had been made to ACM's legal referral process such that only a Relationship Manager could refer a matter to the ACM Legal Processing & Collections Team after complying with specific directions set out in the ACM Legal Process Policy (MSP709-11). The Report stated that, among other things, the Legal Process Policy required the Relationship Manager to undertake a thorough assessment of a customer's circumstances and mandates completion of the Legal Checklist on DebtSmart. Should the checklist be completed satisfactorily, the Relationship Manager must then gain approval for litigation by completing a Legal Approval Form, which required sign off from the relevant Section Manager. At this point, "the file will be locked down in DebtSmart (via the Legal compliance button" and automatically transferred to the Legal Processing & Collections Team, who would then undertake what was described as a final quality check, including an assessment for hardship or other sensitive issues. Finally, the Report noted that ACM's Legal Processing & Collections Team would liaise with external solicitors throughout the process and provide instructions where necessary.
114 The Legal Checklist pro forma in evidence required details to be completed in relation to a range of matters depending upon the nature of the proposed legal action and whether it is a bankruptcy, a garnishee order or an examination.
115 Mr Brabazon acknowledged that there were various levels of management, at least three, between an ACM Relationship Manager and the Legal Processing & Collections Team. He agreed that either the Relationship Manager, or someone higher in the chain of command, had to carry out a thorough assessment of the customer's circumstances before referring a matter to the Legal Processing & Collections Team. When he was asked if Mr Francisco was in a position to say anything to JR on 3 September 2014 about whether there was any possibility of the matter being referred to the Legal Processing & Collections Team, he responded by saying that he didn't know because he wasn't there. He then said he wasn't aware of whether Mr Francisco had carried out any assessment of the customer before the telephone conversation. Mr Brabazon then rather stubbornly resisted accepting certain assumptions that were put to him by the applicants' Senior Counsel about what occurred. Mr Brabazon's attitude did not assist his credibility.
116 Mr Brabazon acknowledged that ACM's Legal Process Policy (MSP709-11), as described in the Anteris Report, required a Legal Checklist to be completed by the Relationship Manager, and that only if the checklist is completed satisfactorily is the Relationship Manager in a position to seek approval for litigation by completing a legal approval form, which then needs to be signed-off by the Section Manager. This was the position throughout 2011 to 2015 to the best of his recollection. He also accepted that ACM's Legal Processing and Collections Team had a right to reject any recommendation to litigate and it was only when the team decided to proceed that the matter was referred to external solicitors for litigation. Mr Brabazon confirmed that throughout 2011 and 2015, it was only after a matter was referred to external solicitors that any documents for the purposes of legal proceedings would be prepared.
117 Mr Brabazon was cross-examined on an ACM customer Ledger Card Report with several entries dated 22 August 2012. He avoided directly answering the question that if there was no entry on DebtSmart recording the status of a matter as "Legal - Preparing Documents", it could be inferred that no decision had been made to prepare legal documents in respect of a debtor. He drew an unconvincing distinction between preparing for litigation and preparing legal documentation.
118 Mr Brabazon was cross-examined at some length on the issue of the accuracy of the reference to "O" in the Telstra documents generated in the period 2006-2008, which ACM subsequently obtained in respect of the CT Debt. It was put to Mr Brabazon that whether a debtor in fact owned real property would have to be checked as part of the internal legal processes. Mr Brabazon said that this could be done at any time of the internal process and not just by the Relationship Manager. Mr Brabazon ultimately agreed that the issue of home ownership would have to be checked before the file was sent to external solicitors.
119 Mr Brabazon confirmed that ACM's policy was that "staff shouldn't mention any legal situation whatsoever unless they have approval from the Section Manager or Team Leader". He also said that it would have been inappropriate for a Relationship Manager during the period 2011 to 2015 to refer to legal proceedings in communications with a debtor until a decision had been taken that legal proceedings would commence.
120 When asked about the propriety of the many letters which ACM sent to CT relating to legal proceedings, Mr Brabazon emphasised the significance of the use of the words "may" and "could". Mr Brabazon was also cross-examined on the propriety of sending a "NOTICE OF INTENTION TO COMMENCE LEGAL PROCEEDINGS" letter before a decision had been made to commence legal proceedings. He agreed that such a letter would be "entirely inappropriate" under certain circumstances but, again, he emphasised that the letters sent to CT did not use the word "will" and instead used "may".
121 Mr Brabazon was taken to various internal ACM policies produced in response to s 155 notices, including a document titled "Legal Approval Flow Chart - Prior to Commencement of Legal Action". He said that he was not sure if this policy was in place in 2012, but he accepted that it was after then. The document stated that Relationship Managers, Senior Relationship Managers or Team Leaders cannot discuss legal action with a customer unless preapproved by a Section Manager. It also stated that Section Manager approval must be noted on the Note History, or a signed approval uploaded to the relevant customer account. Mr Brabazon confirmed that the system in place between 2012 to 2015 was that, once Section Manager approval had been received, even then a Relationship Manager could not discuss possible enforcement actions. Mr Brabazon agreed that it was probable that until there had been at least a number of attempts to resolve settlement of the customer's account by ACM, a Relationship Manager should not even get to the stage of preparing a checklist, but added that there could be exceptions.
122 Mr Brabazon was also cross-examined on an ACM policy titled "General Guide Criteria before processing an account for Legal" (General Guide). Criteria 3 of the General Guide provided that "There needs to be sufficient information to confirm that the customer is a. Receiving an income and is employed full time b. Owns property c. Owns a business". Mr Brabazon stated the document was only a general guide and there could be exceptions. It was then put to Mr Brabazon that, having regard to the General Guide and JR's personal circumstances, it was highly unlikely that ACM would ever issue proceedings against her. Mr Brabazon responded by saying that while he did not know about the word "highly", he agreed that "it could be unlikely, yes".
123 When it was put to Mr Brabazon that, based on the General Guide, it was "impossible" that ACM would ever issue proceedings against JR because she was working part-time, did not own property, did not run a business and was on Centrelink benefits, Mr Brabazon said that it would have been "unlikely".
124 When similar questions were put to him regarding the unlikelihood of legal proceedings against CT, Mr Brabazon said that it was "unlikely" that any litigation would ever have been brought against CT.
125 Mr Brabazon was taken to an ACM document dated May 2010 which included information on job descriptions for a collection officer. In particular, he was taken to page 7 of that document and the statement there that a collector "may discuss matters regarding an account only with the account owner, the debtor, (unless you obtain authorisation in the form of a written letter from the debtor to discuss the account with a third party)". Mr Brabazon said that this was subsequently modified to also allow verbal authorisation to be given upon approval by either the Senior Relationship Manager or Team Leader.
126 Mr Brabazon was taken in cross-examination to a document titled "ACM Group Ltd Training Booklet - Rules and Regulations" dated July 2010. He confirmed that this document applied to all ACM staff from July 2010. He confirmed that ACM policy during the period 2010 to 2015 was that a minimum arrangement of $20 per fortnight could be accepted if ACM received a Centrelink statement verifying low income. Mr Brabazon acknowledged that JR's Centrelink statements should have been requested to verify that she was in fact receiving Centrelink payments. When it was put to Mr Brabazon that it was "entirely inappropriate" for Mr Francisco to put pressure of any sort upon JR to reach an arrangement during the 3 September 2014 telephone call, he initially disagreed, saying that this was because JR was working. He ultimately accepted that Mr Francisco should have asked JR to provide the Centrelink information as required by the policy.
127 Mr Brabazon was cross-examined on a document titled "ACM Group Ltd Staff Compliance" which was updated on 17 October 2013 (Staff Compliance Document). His attention was drawn to a statement in that document that: "ACM Staff Members are never to say to a customer that they are discussing their account or referring their account to in-house Lawyers or Legal Department/Team" but that they "may state that they may discuss potential legal action with their Manager" (emphasis in original). Earlier in cross-examination, Mr Brabazon agreed in respect of a document titled "Legal Process" dated 14 December 2012, that the policy as stated in that document was that collectors could not tell debtors that legal action will be commenced or may be commenced in circumstances where ACM had not started legal action. When it was put to Mr Brabazon that it was entirely inappropriate for Mr Francisco to have said to JR that legal documents were being drawn up, Mr Brabazon said that it would have been appropriate if Mr Francisco had been told by his manager to discuss legal action but that if this had not occurred then it would have been inappropriate. Mr Brabazon confirmed that according to the Staff Compliance Document, it was ACM policy throughout the period 2011 to 2015 that collectors should never talk about legal action to any customer who was receiving welfare payments and where ACM held verification documents. He agreed that that policy also applied where verification had not yet been requested.
128 Mr Brabazon was taken to a document dated 20 February 2014 and headed "ACM Group Ltd Hardship Training". His attention was drawn to statements at page 5 of that document that "Some customers will state that they are in Financial Hardship" and "With other customers Relationship Manager (RM) will need to discuss with the customer their financial situation and make a decision as to their suitability for the HARDSHIP PROGRAM contained in this training material" (emphasis in original). Mr Brabazon accepted that throughout the period 2011-2015, the onus was on the Relationship Manager to find out whether or not a customer would be suitable for the Hardship Program, and that was a step all Relationship Managers should have done before requesting any payment from a particular debtor. Mr Brabazon's attention was drawn to a part of the document which stated:
If the customers (sic) financial situation is obvious and you have supporting documentation e.g.
(a) They are on Centrelink.
(b) They want to make a $20 a fortnight payment ($10 a week).
Accept the arrangement. …
129 It was then put to Mr Brabazon that JR was one of the "paradigm situations", in circumstances where she had offered to pay $20 per week and having regard to her financial situation. Mr Brabazon responded by saying that "you could reasonably assume that that could be the case, although she did offer to pay half of the debt, $1,500…". This is one of several examples when Mr Brabazon resisted accepting that conduct of his staff in relation to both CT and JR was inconsistent with ACM policy in force at the relevant time, where objectively that plainly was the case.
130 This is further illustrated by Mr Brabazon's response to the proposition that CT would have been eligible for the Hardship Program and should have been put into it rather than being subjected to four years of telephone calls and correspondence. Mr Brabazon initially accepted that proposition. He then added that ACM had put in place a "sensitive word report" whereby each night the ACM system searches for certain sensitive words in any account which is then referred to a senior representative so that the account is actioned properly and this system was not in place during 2011 to 2015.
131 When Mr Brabazon was pressed as to whether it was "wholly unreasonable" to keep calling and writing to CT, Mr Brabazon equivocated by saying that he did not know and that there were reasons both positive and negative. Ultimately, and only after he was pressed several times, Mr Brabazon agreed that CT should have been processed as a candidate for hardship.
132 The applicants did not invite the Court to make an adverse credibility finding regarding Mr Brabazon. I regret to say that Mr Brabazon was not an impressive witness. I do not suggest that his evidence was untruthful but he was often unresponsive to questions and sought to advance ACM's interests. As the summary of his evidence indicates, he failed to make concessions which ought reasonably to have been made and he was unreasonably defensive in some of his responses in cross-examination. I have approached his evidence with caution even though I make no adverse credibility finding.