Australian Competition and Consumer Commission v AGL Sales Pty Ltd

Federal Court of Australia|2013-12-12|Before: Mr P, Middleton J

On 3 November 2011, 1.1 the Second Respondent (CPM), by conduct of its contracted sales representative, called on Ms Lisa Plant for the purpose of negotiating an unsolicited consumer agreement for the Third Respondent (AGL SA) to supply retail electricity and retail gas to Ms Plant and, despite the presence of a visible notice displayed on the door of the house on Ms Plant's premises, which contained the words 'DO NOT KNOCK' and a pictorial depiction of a fist knocking with a line through it (the Plant notice), 1.1.1 remained on Ms Plant's premises; 1.1.2 knocked on the door of the house on Ms Plant's premises; and 1.1.3 when Ms Plant came to the front door, entered into negotiations with Ms Plant with a view to making an agreement for the supply of retail electricity and retail gas by AGL SA to Ms Plant; and thereby did not leave the premises immediately on the request of the occupier (being a request by way of the Plant notice), and, thereby contravened paragraph 75(1)(a) of the Australian Consumer Law (ACL) being Schedule 2 to the Competition and Consumer Act 2010 (Cth); and 1.2 AGL SA, as the supplier of the retail electricity and retail gas to which the negotiations referred to in 1.1 above related, contravened paragraph 75(1)(a) of the ACL. THE COURT ORDERS THAT:
AGL SA pay the Commonwealth of Australia a pecuniary penalty of $35,000 in respect of the acts and omissions relating to AGL SA's contravention of section 75(1)(a) of the ACL.
CPM pay the Commonwealth of Australia a pecuniary penalty of $25,000 in respect of the acts and omissions relating to CPM's contravention of section 75(1)(a) of the ACL. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 267 of 2012

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

JUDGE: MIDDLETON J DATE: 12 DECEMBER 2013 PLACE: MELBOURNE

INTRODUCTION 1 The Court found in its reasons delivered on 11 October 2013 in Australian Competition and Consumer Commission v AGL Sales Pty Ltd & Ors [2013] FCA 1030 ('the Reasons') that each of AGL SA and CPM had contravened s 75(1) of the Australian Consumer Law ('the ACL'), being Sch 2 of the Competition and Consumer Act 2010 (Cth) ('the CCA'), by the actions of CPM's contracted sales representative. 2 Joint submissions have been made to the Court in order to assist the Court in coming to its own assessment of the level of penalties to be imposed and any other orders that the Court considers appropriate. These submissions have been made by the ACCC and AGL SA. 3 The Court has been asked to: (1) make declarations pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) ('the Federal Court Act'); (2) order payment by AGL SA of a penalty in the amount of $35,000 pursuant to s 224 of the ACL; and (3) order payment by CPM of a penalty in the amount of $25,000 pursuant to s 224 of the ACL.

RELIEF SOUGHT 4 The ACCC and AGL SA submit that declarations of the contraventions of the ACL should be made in this proceeding. 5 Section 21 of the Federal Court Act confers on the Court a wide discretionary power to grant declarations, to be exercised where there is utility in doing so. 6 Important consequences will flow from making a declaration of a contravention by AGL SA and CPM. In particular, a declaration will serve the public interest in a number of ways: (1) to define and publicise the type of conduct that constitutes a contravention of s 75 of the ACL, including where a do not knock sign constitutes a request to leave; (2) to confirm the seriousness of the ACCC's claim that AGL SA and CPM contravened a provision of the ACL; (3) to assist the ACCC in the future in carrying out the duties which are conferred on it by the ACL; (4) to mark the Court's disapproval of the conduct engaged in contrary to the ACL; and (5) to set out clearly the foundation on which consequential orders, in this case pecuniary penalties, are made. 7 AGL SA submits jointly with the ACCC that the Court should make orders for payment of a pecuniary penalty pursuant to s 224 of the ACL by: (1) AGL SA, in the amount of $35,000; and (2) CPM, in the amount of $25,000. 8 I have already discussed in the Reasons some of the principles relevant to the imposition of penalties. I make this one further brief comment. 9 Achieving a penalty of appropriate deterrent value is the purpose of having regard to all relevant factors and recourse to the tools of analysis used when exercising the penalty fixing discretion, including the one transaction principle (also referred to as the one course of conduct principle) and the totality principle. 10 The one transaction principle recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, the court must ensure that the offender is not punished twice for the same conduct: Construction, Forestry, Mining and Energy Union v Williams (2009) 262 ALR 417; [2009] FCAFC 171 at [35] to [39] per Moore, Middleton and Gordon JJ and Construction, Forestry, Mining and Energy Union v Cahill (2010) 269 ALR 1; [2010] FCAFC 39 at [41] - [42], per Middleton and Gordon JJ. 11 The totality principle involves different considerations and serves a different purpose to the one transaction principle, as the totality principle is a final check to ensure that the penalties to be imposed on a wrongdoer, considered as a whole, are just and appropriate: Johnson v R (2004) 205 ALR 346 at 347-348 [3]-[5] per Gleeson CJ and at 354-358 [18]-[35] per Gummow, Callinan and Heydon JJ. 12 As in this proceeding there is only one act or omission by each of AGL SA and CPM to which s 224(1) applies (being the failure of Mr Kansagara to leave Ms Plant's premises on the request of the occupier of the premises), the question of whether the one transaction principle should be applied as part of the penalty fixing discretion does not arise and the application of the totality principle becomes more straightforward.

Relevant Factors 13 The facts establishing the particular conduct which the Court found contravened the ACL are set out in the Reasons. 14 I now turn to consider the relevant factors impacting upon the appropriate relief to grant.

Nature, extent and duration of conduct / circumstances in which conduct took place 15 The contravening conduct that occurred on 3 November 2011 at Ms Plant's private residential premises involved an agent of CPM, on behalf of AGL SA, knocking on the door of a consumer who had a 'do not knock' sign displayed at her premises. The agent remained on the premises, knocked on the door and entered into negotiations with the consumer with the view to making an agreement to supply retail electricity and gas by AGL SA to her. The agent therefore did not leave the premises immediately on the request of the occupier. 16 Other conduct of the contracted sales representative occurring at the premises of Ms Plant on 3 November 2011 is the subject of earlier declarations, pecuniary penalties and other orders made by the Court. The refusal to leave enabled that contravening conduct: had the sales representative left on request, no opportunity for that contravening conduct would have arisen. 17 The failure to leave when requested was serious in nature because of the location and context in which it occurred, being a private residence to which AGL SA and CPM were not invited. The contravention subverted both the consumer's desire not to be disturbed or interrupted by sales representatives and the very protections provided to the consumer by the legislation.

Amount of loss caused and profit gained 18 A contravention of s 75 will rarely, if ever, directly result in financial loss or damage. 19 Section 75 of the ACL protects consumers in their homes by imposing a mandatory standard of conduct for persons engaged in door-to-door selling. The standard is intended to limit consumers' exposure to inconvenience, invasion of privacy and unwanted sales calls. 20 The consumer did not suffer direct financial loss because she did not enter into an agreement with AGL SA. However, the consumer was subjected to unwanted interactions with a salesperson and suffered the inconvenience and invasion of privacy.

Whether similar prior conduct 21 Other than the findings and orders made in this matter on 11 October 2013, the Court has not previously found AGL SA or CPM to have contravened the ACL, or the CCA, or its predecessor legislation.

Size of contravener & its financial position 22 The evidence as to the size of AGL SA and the AGL corporate group has been set out in the Reasons. 23 Evidence as to the size and financial position of CPM was produced to the Court during the hearing, being the tax returns, turnover and taxable income for the financial years 2010 to 2012. CPM also submitted that it had 160 permanent employees and a sales team of 600 casual contractors. It was agreed as a fact at the hearing that the turnover of CPM was a small percentage compared to that of the AGL respondents.

The deliberateness of the contravening conduct 24 The Court found that the 'do not knock' sign would be observed by the class of persons it was directed to, including Mr Kansagara. It also found that Mr Kansagara had attended ACL training, and that he was aware of his obligation to leave premises immediately upon request, of the ACL and of its impact on sales practices. I consider that the conduct was deliberate.

Involvement of senior employees or management 25 At the time of the contravention, neither senior employees nor management of AGL SA or CPM were involved in, endorsed or had knowledge of, the contravening conduct, or had any opportunity to correct it before it occurred.

Culture of compliance and corrective measures in response to contravention 26 The compliance practices of AGL SA and CPM have been described in the Agreed Statement of Facts referred to in the Reasons, however, clearly they were not sufficient to prevent the contraventions. 27 Since receiving notification of the ACCC's concerns the Respondents have undertaken corrective measures.

Co-operation and contrition 28 Although AGL SA and CPM contested liability in relation to the contravention of s 75(1) of the ACL, they agreed with the ACCC in relation to an expeditious means of resolving the question of liability, avoiding the need for a larger, more resource intensive hearing and for cross examination of witnesses. AGL SA and CPM have also cooperated in presenting joint submissions as to relief. 29 The ACCC and AGL SA have not sought to state a specified percentage discount for AGL SA's and CPM's co-operation. 30 However, had the Respondents not cooperated in the way that they have, higher penalties would have been justified.

Parity 31 I explained the principle of parity at [67] to [69] in the Reasons. For present purposes it is important that the treatment of the parties be even handed. However, where the circumstances permit it does not offend the parity principle to impose different penalties among the contraveners. 32 The reasons for the differential in the penalties I propose to make are: (1) the difference in responsibility to be attributed to the energy retailer, being the business which receives substantial benefits from successful sales to consumers, and the need for deterrence, both specific and general, on firms that become an ultimate party to an unsolicited consumer agreement; and (2) the difference in size and financial position as between AGL SA and CPM.

Maximum penalties and instinctive synthesis 33 The maximum penalty for a body corporate for each act or omission that relates to a provision of Div 2 of Pt 3-2 of the ACL, which Division includes s 75, is $50,000. 34 As there is only one act or omission of each of AGL SA and CPM (being Mr Kansagara's failure to leave the premises immediately upon request), it follows that the maximum penalty for each relevant Respondent is $50,000. 35 In considering all relevant factors to assess a penalty of appropriate deterrent value, the process to be applied is that adopted by the High Court in Markarian v R (2005) 228 CLR 357, including making a discretionary judgment based on all relevant factors and paying careful attention to the maximum. I have also kept in mind the related contraventions of the Respondents.

Conclusion 36 I consider (taking into account the agreed position of the parties) that the following pecuniary penalties pursuant to s 224 of the ACL are of an appropriate deterrent value (and within the permissible range) for the contravention admitted: for AGL SA, a penalty in the amount of $35,000; and for CPM, a penalty in the amount of $25,000. 37 These penalties reflect the need to deter conduct of such seriousness by the relevant Respondents and others in the door-to-door selling industry.

DISPOSITION 38 I propose to declare and order that:

On 3 November 2011, 1.1 the Second Respondent (CPM), by conduct of its contracted sales representative, called on Ms Lisa Plant for the purpose of negotiating an unsolicited consumer agreement for the Third Respondent (AGL SA) to supply retail electricity and retail gas to Ms Plant and, despite the presence of a visible notice displayed on the door of the house on Ms Plant's premises, which contained the words 'DO NOT KNOCK' and a pictorial depiction of a fist knocking with a line through it (the Plant notice), 1.1.1 remained on Ms Plant's premises; 1.1.2 knocked on the door of the house on Ms Plant's premises; and 1.1.3 when Ms Plant came to the front door, entered into negotiations with Ms Plant with a view to making an agreement for the supply of retail electricity and retail gas by AGL SA to Ms Plant; and thereby did not leave the premises immediately on the request of the occupier (being a request by way of the Plant notice), and, thereby contravened paragraph 75(1)(a) of the Australian Consumer Law (ACL) being Schedule 2 to the Competition and Consumer Act 2010 (Cth); and 1.2 AGL SA, as the supplier of the retail electricity and retail gas to which the negotiations referred to in 1.1 above related, contravened paragraph 75(1)(a) of the ACL.
AGL SA pay the Commonwealth of Australia a pecuniary penalty of $35,000 in respect of the acts and omissions relating to AGL SA's contravention of section 75(1)(a) of the ACL.
CPM pay the Commonwealth of Australia a pecuniary penalty of $25,000 in respect of the acts and omissions relating to CPM's contravention of section 75(1)(a) of the ACL. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton.

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