Number of contraventions and maximum penalty
56 A threshold issue concerns the number of contraventions of s 34 of the Australian Consumer Law that took place. This issue is determinative of the maximum penalty that could be imposed.
57 The ACCC submitted in its written submissions that each time Meriton engaged in the impugned conduct, whether by masking an email address or by the bulk suppression of email addresses, "it was likely (as intended) to create a more positive or favourable impression of the quality or amenity of a Meriton property on the TripAdvisor website". The ACCC submitted that Meriton accordingly committed "thousands" of contravening acts and omissions, each attracting a penalty of up to $1.1 million. The ACCC submitted that the number of contraventions was so large that it was unhelpful to seek to identify the number (and, by multiplying the number by $1.1 million, the maximum penalty) with precision, referring to Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68 at [143] and [145]; Coles at [18]; Reckitt Benckiser at [139]-[145]; and Get Qualified at [32]-[33]. In oral submissions, senior counsel for the ACCC submitted that each of the approximately 14,500 instances of the MSA-masking practice (the figure is based on the Liability Reasons at [106]) constituted a contravention, and each withholding of a group of emails constituted a contravention.
58 Meriton submitted in its written submissions that the ACCC's submissions were contrary to assurances given to the Court and Meriton that only two contraventions were alleged by the ACCC, namely one contravention of s 18 and one contravention of s 34. Meriton referred to statements made by senior counsel for the ACCC at a case management hearing in the proceeding on 19 April 2017, approximately six weeks before the trial on liability. At that hearing, the ACCC sought leave to amend its concise statement, in particular, by amending the schedule to the concise statement so as to identify many more instances of the masking of emails and the bulk withholding of emails (both referred to in the schedule as the masking practice) than had previously been identified. The application for leave to amend the schedule was opposed in part (transcript, 19 April 2017, pp 13-18). In response, senior counsel for the ACCC submitted: "It's one breach, or perhaps two - a breach of section 18 and a breach of section 34, based on the totality of that behaviour" (p 18). Towards the end of the case management hearing, senior counsel for Meriton sought to confirm the ACCC's position, so that there would be no confusion later (p 31). Senior counsel for Meriton summarised what he understood to be the ACCC's position. Senior counsel for the ACCC responded by stating: "there are two breaches alleged in paragraph 1 [of the originating application]. They are both systematic breaches, breaches of section 18 and section 34. That's the case we bring … And, of course, only one of those attracts a pecuniary penalty. That's the section 34 breach".
59 Meriton submitted in its written submissions that: this is a case where multiple breaches were expressly eschewed; the ACCC chose to run its case on the basis that the system adopted by Meriton constituted one breach of s 34 and, accordingly, the maximum penalty which it is entitled to seek is $1.1 million; the distinction between one breach and many shaped the whole hearing; the principal matter in issue was the effect of Meriton's conduct; the ACCC never sought to demonstrate that every time Meriton masked or withheld an address, that single act reduced the number of negative reviews or created a more favourable impression, etc; and they did that only in respect of the whole of the conduct treated as a single action. In oral submissions at the relief hearing, senior counsel for Meriton submitted that if Meriton had known that the ACCC was alleging that each act of masking and each instance of bulk withholding constituted a contravention, Meriton would have made enquiries of lay witnesses, and potentially called evidence from the individuals whose email addresses had been masked (or a sample of such individuals) as to whether they would have left a review. In this regard, senior counsel for Meriton referred to p 14 of the transcript of the case management hearing on 19 April 2017, where he had indicated that such evidence may need to be called. In response to a question from the Court as to whether Meriton would or might have conducted its case differently if there had been a prospect of 13 contraventions being found - one in relation to each property - senior counsel for Meriton said that neither expert approached the matter on a property by property basis and, unsurprisingly, findings were not made on a property by property basis. He submitted that further evidence would have been gathered in relation to causation, namely as to the effect of masking a smaller number of email addresses, or the effect if masking only took place at a single site. He submitted that the findings in the Liability Reasons were not made on a property by property basis and it would be unsafe to make such findings now.
60 In its written submissions in reply, the ACCC submitted that, at the case management hearing on 19 April 2017, the ACCC's senior counsel was simply explaining that the ACCC intended to prove the nature and extent of Meriton's misconduct by proving the instances of contravening conduct identified in the amended concise statement (including the amended schedule). The ACCC further submitted that: it was clear at all times that the ACCC intended to prove (as it did) many more than one instance of contravening conduct implemented throughout the relevant period and comprising numerous and repeated contravening acts and omissions; the ACCC did not, at the case management hearing or at any other time, provide any "assurance" or make any "representation" that it would seek to prove only one contravening act or omission giving rise to a maximum penalty of not more than $1.1 million; and, in any event, even if Meriton did labour under some misapprehension (which the ACCC did not accept was the case), no prejudice was suffered by Meriton and no estoppel arises. The ACCC disputed that Meriton would have run its case differently had it known that the ACCC was seeking to establish many thousands of separate contraventions.
61 In my view, although senior counsel for the ACCC referred to "systematic" implementation of a practice (p 18) and "systematic" breaches (p 31), the better view is that he conveyed that only one contravention of s 34 was sought to be established. However, the question that then arises is whether it is open to the ACCC now to contend (or for the Court to consider) that there were more than one contravention of s 34. A critical consideration in this regard is whether Meriton would suffer any prejudice. This turns, in particular, on whether Meriton would or might have run its case differently. For the following reasons, I do not consider that Meriton would suffer any prejudice.
62 First, some of the points raised on behalf of Meriton are directed to the ACCC's contentions that a contravention of s 34 occurred each time an email address was masked and each time a group of emails was withheld. However, for reasons set out later in these reasons, I do not accept the ACCC's contentions in this regard. It follows that these points (such as the prospect of calling the individuals whose email addresses were masked) largely fall away.
63 Secondly, the main issue at trial was the effect of the impugned practices - in broad terms, whether they had the effect of reducing the number of negative reviews, and whether they had the effect of improving the relative number of favourable reviews compared to unfavourable reviews. In circumstances where the TripAdvisor website is structured so that there is a separate 'page' for each property, the evidence regarding the effect of the impugned practices was necessarily whether the practices had the suggested effect in relation to each of the relevant properties. Mr Emmins examined in detail, by way of example, the Kent Street, Pitt Street and Broadbeach properties. But the overall effect of his evidence was that the same analysis applied to each of the other Meriton properties. Thus the parties did, in effect, address whether the impugned practices had the effect alleged by the ACCC in relation to each of the 13 Meriton properties. In light of this, I doubt that Meriton would have run its case any differently had there been a prospect of 13 contraventions being found against it.
64 Thirdly, and relatedly, regardless of the number of contraventions in issue, it was relevant to consider whether the impugned practices had the effect alleged at each of the 13 Meriton properties. This is because one of the mandatory considerations for the determination of the appropriate penalty is the nature and extent of the relevant acts or omissions. Thus, it was relevant to consider whether the impugned practices had the alleged effect at all, or only some, of the 13 Meriton properties. Meriton did not approach the case this way. It sought to prove that the impugned practices did not have the alleged effect at any of the 13 properties.
65 In light of these matters, I consider it unlikely that Meriton would or might have run its case differently had there been a prospect of 13 contraventions being found against it. In these circumstances, I do not consider that Meriton would suffer any prejudice if the Court were to consider whether there were 13 contraventions - one for each property - rather than one contravention of s 34, and I consider it open to the Court to consider whether there were 13 contraventions of s 34 notwithstanding the statements made on behalf of the ACCC at the case management hearing.
66 I note also that, in the context of an agreed penalty hearing, the Court is not constrained by the agreement of the parties as to the amount of the proposed penalty or by the parties' agreement as to the number of contraventions. It is open to the Court to form a different view (subject, of course, to giving the parties appropriate notice). This is because the Court needs to be satisfied that the proposed penalty is an appropriate penalty and that the statement of agreed facts provides a proper basis upon which to proceed. By parity of reasoning, even in an adversarial context, the Court is not necessarily constrained by the positions adopted by the parties as to the amount of a penalty or the number of contraventions. Of course, this is subject to the proceeding being conducted fairly and appropriate notice being given if the Court is minded to depart from the basis upon which the parties have proceeded. For the reasons set out above, I consider it to be consistent with the fair trial of the proceeding for the Court to consider whether there was one contravention of s 34 in relation to each of the Meriton properties.
67 I now consider the number of contraventions of s 34 that took place.
68 As noted above, the ACCC contends that each instance of the masking of an email address, and each instance of the bulk withholding of a group of emails, constituted a separate contravention of s 34 of the Australian Consumer Law. As already indicated, in my view, the ACCC's contention should not be accepted. The provision refers to engaging in conduct that is "liable to mislead" the public as to certain matters. As discussed in the Liability Reasons at [191], a distinction is drawn between "likely to mislead or deceive" (s 18) and "liable to mislead" (ss 33 and 34), with the latter applying to a narrower range of conduct. Under s 33 and, by parity of reasoning, s 34, what is required is that there be an actual probability that the public would be misled: Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd (2014) 317 ALR 73 at [44]. In my view, the evidence does not establish that each instance of the masking of an email address was liable to mislead the public as to the relevant matters. If the conduct is defined so narrowly, there is insufficient scale for the Court to be satisfied that there was an actual probability that members of the public were misled as to the relevant matters. In relation to the bulk withholding practice, while it is possible that in some cases the bulk withholding of a group of emails constituted a contravention, it is not established that every case of bulk withholding constituted a contravention.
69 While I do not accept the ACCC's contention, it does not necessarily follow that there was only one contravention of s 34. As already indicated, another possible analysis is that there were 13 contraventions - one in relation to each of the Meriton properties.
70 In my view, the evidence establishes that Meriton contravened s 34 of the Australian Consumer Law in relation to each of the 13 properties that were the subject of consideration in the Liability Reasons. As discussed already, one of the main issues at trial was the question whether the impugned practices had the effect alleged by the ACCC; in simple terms, whether the impugned practices reduced the number of negative reviews and improved the relative number of favourable reviews compared to unfavourable reviews. In circumstances where there is a separate 'page' for each property on the TripAdvisor website, the evidence as to whether the impugned practices had the alleged effect was necessarily dealing with the question of effect in relation to each of the Meriton properties. Thus, contrary to Meriton's submissions at the relief hearing, I consider that the expert evidence did address whether the impugned practices had the alleged effect in relation to each of the 13 properties. That is because the experts approached the issue on the basis that there was no relevant distinction between the properties, and their opinions and analysis were applicable to each of the properties. In relation to the MSA-masking practice, there was evidence that this practice occurred in relation to all 13 properties (see [106] of the Liability Reasons). In relation to the bulk withholding practice, the evidence did not establish that this occurred at all of the 13 properties. It occurred, at least, in relation to the Broadbeach, Bondi Junction, Kent Street and Pitt Street properties (see [127] of the Liability Reasons). Thus, although not expressed in these terms, I consider my findings as to the effect of the MSA-masking practice at [162]-[183] of the Liability Reasons to apply to each of the 13 Meriton properties, and I consider my findings as to the effect of the bulk withholding practice at those paragraphs of the Liability Reasons to apply to, at least, the Broadbeach, Bondi Junction, Kent Street and Pitt Street properties.
71 Later in the Liability Reasons, at [204]-[216], I considered the question of causation, namely whether consumers were likely to be led into error by the impugned practices and whether there was a sufficient causal nexus between the conduct and any such error. Although not expressed in these terms, I consider my conclusions in relation to the MSA-masking practice to apply to each of the 13 Meriton properties, and I consider my conclusions in relation to the bulk withholding practice to apply to, at least, the Broadbeach, Bondi Junction, Kent Street and Pitt Street properties. Given the overlap between the MSA-masking practice and the bulk withholding practice, I consider it appropriate to treat the conduct as giving rise to a single contravention (rather than two contraventions) in relation to each of the Broadbeach, Bondi Junction, Kent Street and Pitt Street properties.
72 Accordingly, I conclude that Meriton engaged in conduct that was liable to mislead the public as to the characteristics and suitability for their purpose of the accommodation services it provided at each of the 13 Meriton properties, constituting 13 contraventions of s 34. The maximum penalty is therefore $14.3 million.