Australian Competition and Consumer Commission v Multimedia International Services Pty Ltd

Multimedia's business practices 9 As I explained in the introduction to these reasons, Multimedia's business model involves contracting with host businesses to provide advertising screens. It generates revenue by contracts with small business customers to display advertisements for the small business. 10 Multimedia would not install its advertising screens at a host business unless it obtained at least five contracts to advertise for its customers at the host business or unless it had contracts for more than $10,000 of revenue for advertising at that venue. It obtained contracts for advertising from small businesses through appointments with sales representatives for interested businesses. Multimedia would endeavour to conclude a contract between Multimedia and the small business. The contracts would require the advertising small business to make periodic payments to Multimedia in exchange for the display of their advertising. A deposit would be paid to Multimedia and Multimedia would prepare the advertisement (which could be amended) and then upload it to the advertising screens at the host business. 11 Between 1 January 2011 and 31 March 2015, Multimedia used a two page standard form contract for its advertising agreements. The contract contained terms and conditions in small print. One of the small print terms and conditions was that the advertiser could not cancel the contract and the contract was not subject to a cooling-off period. Another of the small print terms and conditions was that the advertiser would have no recourse against Multimedia if there were delays by Multimedia in providing the services. A third small print condition was that Multimedia reserved the right to change the location of an advertiser's advertisement to a location selected by Multimedia, including where the site listed in the contract ceased to be available or became unsuitable. A fourth small print condition was that the contract would continue automatically after the initial two year period, unless and until the advertiser provided 12 months' notice, delivered in writing by registered post, that it did not wish the contract to roll-over.

The provisions of the Australian Consumer Law that were contravened 12 The first relevant provision is s 21 of the Australian Consumer Law. That section provides as follows: Unconscionable conduct in connection with goods or services (1) A person must not, in trade or commerce, in connection with: (a) the supply or possible supply of goods or services to a person (other than a listed public company); or (b) the acquisition or possible acquisition of goods or services from a person (other than a listed public company); engage in conduct that is, in all the circumstances, unconscionable. (2) This section does not apply to conduct that is engaged in only because the person engaging in the conduct: (a) institutes legal proceedings in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition; or (b) refers to arbitration a dispute or claim in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition. (3) For the purpose of determining whether a person has contravened subsection (1): (a) the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and (b) the court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section. (4) It is the intention of the Parliament that: (a) this section is not limited by the unwritten law relating to unconscionable conduct; and (b) this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and (c) in considering whether conduct to which a contract relates is unconscionable, a court's consideration of the contract may include consideration of: (i) the terms of the contract; and (ii) the manner in which and the extent to which the contract is carried out; and is not limited to consideration of the circumstances relating to formation of the contract. 13 The second relevant provision is s 29(1)(g) of the Australian Consumer Law. That subsection provides: False or misleading representations about goods or services (1) A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services: … (g) make a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits… 14 The third relevant provision is s 36(3) of the Australian Consumer Law. That subsection provides as follows: Wrongly accepting payment ... (3) A person must not, in trade or commerce, accept payment or other consideration for goods or services if, at the time of the acceptance: (a) there are reasonable grounds for believing that the person will not be able to supply the goods or services: (i) within the period specified by or on behalf of the person at or before the time the payment or other consideration was accepted; or (ii) if no period is specified at or before that time--within a reasonable time; and (b) the person is aware or ought reasonably to be aware of those grounds.

Bethanie's Jumping Castles: unconscionable conduct 15 From January 2012, Bethanie's conducted the business of hiring out jumping castles at children's birthday parties in Sydney. Bethanie's is operated by a sole trader, Mr Jones. 16 On 26 September 2014, a representative of Multimedia telephoned Mr Jones to ask if he would be interested in advertising Bethanie's on television screens that Multimedia would install at the Northgate Newsagency. Mr Jones wanted to advertise Bethanie's to increase sales for his business, especially during the off-peak period between January and August. A meeting was arranged with a Multimedia sales representative for 10 October 2014. 17 On 10 October 2014, a sales representative for Multimedia, Mr Aggarwal, went to Mr Jones' home for a meeting. Mr Aggarwal showed Mr Jones advertisements that Multimedia had prepared for other businesses. Mr Aggarwal told Mr Jones that Multimedia would be installing TV screens at Northgate Newsagency within a few weeks. He said that the television screens at Northgate Newsagency would be located above the cashier and that they would display advertising that could be clearly seen by customers waiting in line to pay. Mr Aggarwal said that the advertisements would be created in-house by Multimedia. He told Mr Jones that once Mr Jones had approved the advertisement and paid the initial deposit then his advertisement would be shown at Northgate Newsagency within four weeks of signing the contract. 18 Mr Jones asked Mr Aggarwal what would happen if advertising at Northgate Newsagency ultimately did not result in additional business for Bethanie's. Mr Aggarwal replied that Mr Jones had the option of changing the location for his advertising up to four times. 19 During the appointment, Mr Aggarwal filled out the front page of Multimedia's contract and the direct debit form with Bethanie's details. Mr Aggarwal did not show Mr Jones the fine print on the back of the contract. He did not draw Mr Jones' attention to terms of the contract preventing Mr Jones from cancelling the contract and denying any recourse if there was a delay by Multimedia in providing the advertising services at Northgate Newsagency. Mr Jones did not read the fine print terms and conditions on the back of the contract before signing it. He signed the contract with Multimedia because he wanted Bethanie's advertising to be shown at Northgate Newsagency. 20 The total cost of Bethanie's agreement with Multimedia over 2 years was $3,952 (excluding GST). This represented a large amount of money for Bethanie's, in the context of its advertising budget of $15,000 per year. Between 31 October 2014 and 27 January 2015, Multimedia deducted an initial payment of $543.40, and three subsequent payments of $188.24. 21 On 28 November 2014, Mr Jones received an email from Multimedia containing a proof of Bethanie's advertisement. In the email, Multimedia said that if Mr Jones did not approve or otherwise respond to it within 7 days then Multimedia would deem the advertisement to be acceptable and proceed to publish it. Mr Jones considered that the proof was acceptable and did not respond to the email. Mr Jones did not receive any further communications from Multimedia until 21 January 2015. 22 On 21 January 2015, Mr Jones visited the Northgate Newsagency. He did not see any televisions screens showing advertising. The same day he telephoned Multimedia and explained his concern to Ms Harrison, an employee of Multimedia. Ms Harrison told Mr Jones that she did not know what was happening with the installation of the TV screens. She said that she would find out when the screen would be installed and would then email Mr Jones. 23 By 6 February 2015, Mr Jones had not heard from Multimedia. On that day he telephoned Multimedia and spoke again to Ms Harrison. Again, he reiterated his concerns including explaining that he was paying money to Multimedia but he was not being provided with any services in return. Again, Ms Harrison said that she was not sure why TV screens had not been installed at Northgate Newsagency and that she would find out and let Mr Jones know. Mr Jones said that he would not pay Multimedia if there were no TV screens installed at Northgate Newsagency because Multimedia had not provided any services. Ms Harrison replied that although Multimedia was debiting Mr Jones' account, the advertising was for a two year period starting from when the screen was installed. She told Mr Jones that he was under contract with Multimedia and had to pay the contractual amounts. Later that day she emailed Mr Jones to say that the screens would be installed later that week. She undertook to confirm that the installation had occurred as soon as possible. 24 On 25 February 2015, after not receiving any further communications from Multimedia, Mr Jones visited Northgate Newsagency. No screens had been installed. Mr Jones then cancelled his direct debt arrangement with Multimedia by closing his bank account. He emailed Ms Harrison explaining that he had closed his bank account to prevent Multimedia from deducting further payments. He said that he had paid Multimedia for a service that was not provided. He asked for an address of Multimedia from which to seek reimbursements. More than a week later, Ms Harrison provided that address. 25 Multimedia did not install televisions screens at Northgate Newsagency until 11 May 2015. Until that date Multimedia did not show Bethanie's advertising on screens at Northgate Newsagency (or anywhere else). On 4 June 2015, around seven months after the promised date, Multimedia informed Mr Jones that his advertisement was now being shown at Northgate Newsagency. Mr Jones had lost the ability to advertise during Bethanie's off-peak period. 26 Multimedia then engaged a debt collector, Business 2 Business Recoveries Pty Ltd (Business 2 Business), to recover $3,764.80 from Bethanie's. Business 2 Business is a company that operates from the same address as Multimedia and shares a director with Multimedia. It sent an email to Bethanie's on 13 May 2015 before Mr Jones was even aware that his advertisement had begun showing at Northgate Newsagency. In the email, Business 2 Business said that if $3,764.80 was not paid to Multimedia, recovery would be outsourced to Atradius. This agency was identified as Multimedia's legal representatives but was actually an external debt collection agency. Another email was sent on 27 May 2015. The emails also said that failure to pay could result in an adverse credit rating for Bethanie's. 27 Business 2 Business sent further emails to Bethanie's on 21 August 2015 and 23 September 2015 pursuing payments from Bethanie's of $2,500 and $2,200 respectively.

Multimedia's conduct in relation to Bethanie's was unconscionable 28 Section 21(1)(a) of the Australian Consumer Law provides that a person must not, in trade or commerce, in connection with the supply or possible supply of services to a person (other than a listed public company), engage in conduct that is, in all the circumstances, unconscionable. 29 The matters which the Court may consider in assessing whether conduct is unconscionable include (i) the terms of the contract; and (ii) the manner in which and the extent to which the contract is carried out (s 21(4)(c)). They also include a list of non-exhaustive considerations in s 22(1). 30 In Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90 [23], the Full Court said: The task of the Court is the evaluation of the facts by reference to a normative standard of conscience. That normative standard is permeated with accepted and acceptable community values. In some contexts, such values are contestable. Here, however, they can be seen to be honesty and fairness in the dealing with consumers. The content of those values is not solely governed by the legislature, but the legislature may illuminate, elaborate and develop those norms and values by the act of legislating, and thus standard setting. The existence of State legislation directed to elements of fairness is a fact to be taken into account. It assists the Court in appreciating some aspects of the publicly recognised content of fairness, without in any way constricting it. Values, norms and community expectations can develop and change over time. Customary morality develops "silently and unconsciously from one age to another", shaping law and legal values: Cardozo, The Nature of the Judicial Process (Newhaven, Yale University Press, 1921) pp 104-105. These laws of the States and the operative provisions of the ACL reinforce the recognised societal values and expectations that consumers will be dealt with honestly, fairly and without deception or unfair pressure. These considerations are central to the evaluation of the facts by reference to the operative norm of required conscionable conduct. 31 Those considerations relevant to whether Multimedia has engaged in unconscionable conduct in relation to the admitted contravention relating to Bethanie's include: (1) the representations by Multimedia that Bethanie's advertising would be displayed at Northgate Newsagency at Westfield Hornsby within four weeks of Bethanie's signing the contract; (2) the failure of Multimedia to draw to Mr Jones' attention to particular terms of the contract including terms prohibiting cancellation of the contract by Bethanie's and providing no recourse where Multimedia delayed providing the advertising services at Northgate Newsagency; (3) the context in which that failure occurred, which was that Mr Aggarwal from Multimedia had filled out the front page of Multimedia's contract and the direct debit form with Bethanie's details; (4) the failure of Multimedia, between September 2014 and May 2015, to provide advertising services to Bethanie's, although it deducted payments from Bethanie's account for the services it failed to provide; (5) Multimedia's refusal to release Bethanie's from its contract, and its act of engaging an affiliated debt collector to pursue further contractual payments from Bethanie's until at least September 2015; and (6) the statements by the affiliated debt collector that the failure by Bethanie's to pay the relevant amounts would result in legal proceedings to recover those amounts and could result in an adverse credit rating for Bethanie's. 32 I accept Multimedia's admission that its conduct towards Bethanie's between September 2014 and May 2015 was inconsistent with the societal values that underpin acceptable business standards. In all the circumstances, it was unconscionable conduct in contravention of s 21 of the Australian Consumer Law.

Corben Chiropractic: misleading or deceptive conduct and wrongly accepting payment 33 Since 15 October 2012, Corben Chiropractic has provided chiropractic services to the public in Queensland. Its sole director and shareholder is Mr Corben. 34 On 21 February 2012, Multimedia entered into an agreement with the Clem Jones Centre to install its television screens at the Centre. However, over the next 18 months Multimedia did not take any steps towards installing advertising screens at the Clem Jones Centre. 35 On 23 September 2013, a representative of Multimedia spoke to the group fitness manager of the Clem Jones Centre, Ms Larsen. Multimedia explained that it wanted to send a sales representative to the Clem Jones Centre to identify where screens could be placed. Ms Larsen said that she did not know when Multimedia could come out to the Centre and that she would have to check with the Chief Executive Officer, Mr Heald. 36 At around the same time, a Multimedia employee telephoned Mr Corben to see whether he was interested in advertising Corben Chiropractic at the Clem Jones Centre. The employee gave Mr Corben details of the number of visitors per week to the Clem Jones Centre and the cost for the advertising. Mr Corben wanted to increase business for Corben Chiropractic and he was attracted by the number of visitors to the Clem Jones Centre. He made an appointment for a Multimedia sales representative to attend his business later that week. 37 On 25 September 2013, Multimedia sent an email to Ms Larsen stating that its site representative would be visiting the Clem Jones Centre on 26 September 2013 between 10am and 12pm. Ms Larsen forwarded the email to Mr Heald. Later on 25 September 2013 Mr Heald telephoned Mr James, an employee of Multimedia. Mr Heald explained that Multimedia's sales representative should come to the Clem Jones Centre at a time that suited the Clem Jones Centre rather than a time nominated by Multimedia. He also said that he was concerned about Multimedia's 18 month delay in contacting the Centre and that he had not yet decided whether to continue the agreement with Multimedia. 38 On 26 September 2013 at approximately 10.30am, Ms Larsen telephoned Multimedia and spoke to a representative to whom she told that the Clem Jones Centre was not interested in going ahead with the agreement with Multimedia as it had been 18 months since Multimedia contacted the Centre. The representative said that Multimedia already had a representative coming out to visit the Clem Jones Centre but Ms Larsen said that she could not make that appointment. Ms Larsen repeated that the Clem Jones Centre did not wish to go ahead with the agreement. The representative replied that the Clem Jones Centre could not cancel the agreement, which was for a period of three years. 39 Despite Ms Larsen's request that Multimedia not attend the Clem Jones Centre, a sales representative of Multimedia arrived at the Clem Jones Centre the same morning and met Mr Heald. Mr Heald told the sales representative that he did not want to speak further to that person and that all further communications would be with Mr James of Multimedia. The sales representative stated that the Clem Jones Centre had an agreement with Multimedia. Mr Heald did not undertake to perform the agreement. At around noon, Mr Heald telephoned Mr James and told him that the Clem Jones Centre did not wish to proceed with the agreement with Multimedia. 40 Around three hours after the conversation between Mr Heald and Multimedia, a sales representative from Multimedia visited Mr Corben at Corben Chiropractic's premises. The representative, Mr Mamari, showed Mr Corben a demonstration of advertisements prepared by Multimedia. Mr Mamari told Mr Corben that the advertisements would be shown on two television screens at the Clem Jones Centre. He said that the two screens would be located at the entrance to the pool and in front of the treadmills in the gym at the Clem Jones Centre. Mr Mamari also said that there was also a term in the contract that if the advertisement could not be shown at the Clem Jones Centre because of a fire or a flood then Multimedia would relocate Corben Chiropractic's advertisement to another location at no extra cost. There was no such term. 41 Mr Corben signed the contract. The total contract amount of $2,184 (excluding GST) was the entire advertising budget for 2013-2014 for Corben Chiropractic. Mr Corben entered into the contract with Multimedia on the basis that the advertising would be shown at the Clem Jones Centre. 42 Multimedia continued to attempt to implement the agreement with the Clem Jones Centre for the installation of Multimedia screens. On 30 September 2013, Multimedia sent an email to Ms Larsen seeking another time for a sales representative to visit the Clem Jones Centre to measure it up for the installation of Multimedia's screens. On 1 October 2013, Multimedia forwarded the same email to Mr Heald. The same day, Mr Heald replied saying that he did not want to continue with the agreement with Multimedia. He emphasised the length of time that had elapsed since Multimedia had initially contacted the Clem Jones Centre in February 2012. Multimedia did not install its TV screens at the Clem Jones Centre. 43 Although Multimedia had not installed its screens, and although it was clear that the Clem Jones Centre were not going to permit installation, Multimedia deducted amounts from Mr Corben's credit card, as business expenses for Corben Chiropractic. On 1 October 2013, Multimedia deducted $600.60 from Mr Corban's credit card. And then on three subsequent dates at the end of October, November, and December, Multimedia deducted $187.70 from Mr Corben's credit card. 44 In November and December 2013, Multimedia and Mr Corben corresponded about Corben Chiropractic's advertising proof that Multimedia had prepared. But by 13 January 2014, Mr Corben had not heard from Multimedia about his advertising. So Mr Corben visited the Clem Jones Centre to see his advertising. He was told by Ms Larsen that the Clem Jones Centre had not installed Multimedia's screens. Three days later, Multimedia wrote to Corben Chiropractic to say that it could not display Corben Chiropractic's advertisement at the Clem Jones Centre. It said that the advertisement would be shown at Camp Hill Healthcare instead. 45 Mr Corben did not consider Camp Hill Healthcare to be an appropriate venue for the advertising of his business. Nor did he consider a medical centre to be equivalent to a sporting centre as a venue for advertising of chiropractic services. He was also aware that there were only a third of the visitors to Camp Hill Healthcare compared with the Clem Jones Centre. 46 On 14 and 16 January 2014, Mr Corben requested a refund from Multimedia and a release from his contract. On 20 January 2014, that request was refused by Ms Hope, an employee of Multimedia. Ms Hope emailed Mr Corben and said that Multimedia was entitled to relocate Mr Corban's advertising if it could not display Mr Corban's advertising at the Clem Jones Centre. Ms Hope offered Mr Corben the Camp Hill Healthcare option or another location. Since he had been told that he could not cancel his contract, Mr Corben agreed to relocate his advertisement to Camp Hill Healthcare for the 12 month period. He asked for his advertisement to be shown at another location as well to compensate him for the reduced number of visitors to Camp Hill Healthcare compared with the Clem Jones Centre. Multimedia refused. 47 Sometime after 26 February 2014, Multimedia started displaying Corben Chiropractic's advertisement on TV screens at Camp Hill Healthcare.

Multimedia's contraventions of ss 18, 29(1)(g), and 36(3) of the Australian Consumer Law 48 Multimedia concedes that through Mr Mamari it made two future representations to Mr Corben. Those representations were that: (1) Corben Chiropractic's advertising would be shown at the Clem Jones Centre; and (2) Multimedia had the necessary arrangements in place with the Clem Jones Centre to install TV screens and show advertising there. 49 The effect of s 4 of the Australian Consumer Law is that the representations were as to future matters and are taken to be misleading unless Multimedia had reasonable grounds to make them. Sections 18 and 29 of the Australian Consumer Law provide that a person will not have reasonable grounds to make a representation if, at the time the representation is made, the representor did not have facts sufficient to induce, in the mind of a reasonable person, a basis for making the representation. As I have explained, Multimedia did not have reasonable grounds to make them. 50 Multimedia did not have reasonable grounds to make the representations. It had not installed its screens at the Clem Jones Centre. It had been told by Ms Larsen and Mr Heald very shortly prior to the representations to Mr Corben, that the Clem Jones Centre did not wish to continue its agreement with Multimedia. Multimedia knew that it would not be able to provide advertising services at the Clem Jones Centre. 51 Multimedia's representations in connection with the possible supply of its services constituted conduct that was misleading or deceptive in contravention of s 18 of the Australian Consumer Law. They were also false and misleading representations that Multimedia's services had particular benefits which they did not have, in contravention of s 29(1)(g) of the Australian Consumer Law. 52 As to s 36(3) of the Australian Consumer Law, as Heerey J said of the predecessor provision to s 36(3) in Australian Competition & Consumer Commission v Commercial and General Publications Pty Ltd [2002] FCA 900 [213]: the critical element … is not that the defendant accepts payment without a reasonable belief that it will be able to supply services. Rather, the prosecutor has to establish, objectively as at the time of acceptance of payment, facts and circumstances which constitute reasonable grounds for believing that the defendant will not be able to supply the services. The relevant belief is not the defendant's belief. The defendant may not in fact be aware of the facts and circumstances constituting the reasonable grounds; it is sufficient if it ought reasonably be aware of them. 53 Multimedia accepted each of the four payments from Corben Chiropractic when there were reasonable grounds, of which it was aware at the time it accepted each payment, to believe that it would not be able to provide advertising services at the Clem Jones Centre within a reasonable time, or at all. Those circumstances were that Multimedia had not installed its TV screens at the Centre and that Multimedia had been told on 26 September and 1 October 2013 that the Centre did not wish to continue with the agreement with Multimedia. By accepting each payment in trade or commerce, Multimedia contravened s 36(3) of the Australian Consumer Law on four occasions.

Color Studio: misleading or deceptive conduct and wrongly accepting payment 54 The third small business in relation to which Multimedia contravened the Australian Consumer Law was Color Studio. 55 Color Studio operates screen printing and embroidery services to customers in the Mareeba area in Queensland through its sole director, Ms Matthews. It sells corporate clothing, high visibility work wear, team sports uniforms, sportswear and marquees. Between 2011 and 2013, Color Studio operated a storefront at Mareeba News selling school uniforms. 56 On 26 November 2014, Multimedia entered into an agreement with Mareeba News, by its directors, to install advertising screens at Mareeba News. 57 On 1 December 2014, a representative of Multimedia contacted Ms Matthews and enquired if she was interested in advertising Color Studio on TV screens at Mareeba News. Ms Matthews was interested in advertising and she made an appointment with a Multimedia sales representative for 8 December 2014. 58 On 8 December 2014, a sales representative of Multimedia, Mr Booth, visited Color Studio. Mr Booth showed Ms Matthews examples of advertising that Multimedia could provide. Ms Matthews told Mr Booth that she was only talking to him because he was offering advertising at Mareeba News. Mr Booth confirmed that he could offer advertising for Color Studio at Mareeba News. They discussed the length and cost of the advertisement. Mr Booth then filled out a contract and direct debit agreement with Ms Matthews' details. He drew her attention to the site clause (which listed the site as Mareeba News) and the payment clause. But Mr Booth did not tell Ms Matthews that the installation of Multimedia's TV screens at Mareeba News was conditional on Multimedia reaching the required numbers of advertisers or revenue. Nor did Mr Booth inform Ms Matthews that if Multimedia did not install advertising screens at Mareeba News then Color Studio's advertisement would be shown at a different location. Further, Mr Booth did not inform Ms Matthews of the fine print terms on the reverse of the contract or explain those terms. Ms Matthews quickly read the front of the contract and the fine print before signing the contract. 59 The contract between Color Studio and Multimedia provided that Color Studio's advertising would be shown at Mareeba News. The amount specified in the contract, $2,080 (exluding GST) over two years, was a large amount for Color Studio. It was approximately 60% of its advertising budget for 2014 to 2015. 60 On the same day as the meeting and on the following day, Mr Booth had arranged to meet with a total of nine other potential advertisers. However, the only other potential advertiser who confirmed the appointment was a courier service based at a residential address. The contract with Ms Matthews was the only contract that was agreed. 61 On 9 December 2014, Mr Booth visited Mareeba News to determine where Multimedia's screens could be installed. After measuring up the store Mr Booth told Ms Graham of Mareeba News that Multimedia would be in touch about installing its TV screens. 62 On 5 January 2015, Multimedia accepted a payment of $572 from Color Studio. 63 On 8 January 2015, Ms Matthews received an email from Multimedia with an advertising proof for her approval. Ms Matthews requested changes to her advertisement which were made. On 22 January 2015, Multimedia sent an email to Ms Matthews saying that Multimedia could not display Color Studio's advertisement at Mareeba News due to site constraints. Multimedia told Ms Matthews that it would relocate Color Studio's advertising to Byrnes St Medical Centre. 64 Ms Matthews replied to Multimedia's email on the same day saying that if Color Studio's advertisement could not be shown at Mareeba News then she did not wish to continue with the contract and that she wanted a refund of monies she had paid to Multimedia. She did not receive a response from Multimedia so five days later she telephoned Multimedia and spoke to an employee of Multimedia. She reiterated that she wanted to cancel the contract but the Multimedia employee advised her to read the fine print on the back of the contract. The employee told her that Ms Matthews could not cancel the agreement and that Multimedia could change the location of Color Studio's advertising. 65 On 27 January 2015, Ms O'Brien of Mareeba News telephoned Multimedia about the installation of its TV screens at Mareeba News. A representative at Multimedia told Ms O'Brien that Multimedia was not installing television screens at Mareeba News because there was not enough interest from local businesses in advertising at Mareeba News. Later that day, Multimedia sent an email to Ms O'Brien saying that installation of TV screens at Mareeba News would not be proceeding due to a lack of sponsorship from businesses. 66 Around 13 February 2015, Ms Matthews telephoned Multimedia seeking a refund of $1,669.80 that it had debited from Color Studio's account. Ms Matthews was concerned because she thought that only $1,040 (excluding GST) would be debited from Color Studio's bank account. She asked to speak to someone in accounts. They had a conversation which she described as follows: I said: My name is Noela Matthews. You debited $1,669.80 from Color Studio's bank account. In the agreement I signed with The Community Network it says that only $1,040 would be debited. I don't understand why $1,669.80 was debited from my account. Could you please explain why that amount was debited? She said: I have looked at the agreement. There seems to have been a mistake. I will need to speak to someone else before we can refund the $1,669.80 to you. I said: I am not happy with The Community Network. You have not done anything correctly. Everything seems to have gone wrong. You have not done anything that I wanted. You said that my advertisement would be shown at Mareeba News but I was advised by The Community Network that my advertisement could not be shown at Mareeba News and it would be relocated to Byrnes St Medical Centre. I want you to cancel the agreement. She said: We will refund the $1,669.80 to your bank account. We cannot cancel the agreement. If you look on the back page of the agreement at the terms and conditions you will see that The Community Network can change sites for your advertising when a site does not go ahead. At the time you signed the agreement we thought Mareeba News was going ahead. I have spoken to my supervisor. Due to the difficulties you are having, we can give you 3 months of additional advertising at both Mareeba Hospital and Byrnes St Medical Centre for the same amount of money in your agreement. I said: I would prefer to cancel the agreement but if I can't do that, I do not want to pay you the same amount listed in my agreement up front as you have not done the right thing by me. I will pay in monthly instalments. She said: Okay. We will change the payment arrangements to a monthly debit of $97.46. I said: I do not want the contract to roll-over. I want it to end after the 2 years and I want that marked on the file. I also want you to mark on my file that you are not to contact me again. She said: I have recorded that information on your file. Your agreement with The Community Network is listed as starting on 23 January 2015 and ending on 23 April 2017. 67 Ms Matthews did not want her advertising at the Mareeba District Hospital because she did not consider it would be as valuable to Color Studio. She agreed to the monthly payments because she did not think she had any choice in the matter after her telephone conversations. 68 Multimedia did not install TV screens at Mareeba News. From 2 June 2015, Multimedia commenced showing Color Studio's advertising at Mareeba District Hospital.

Multimedia's contraventions 69 Multimedia admits that by its conduct in relation to Color Studio, in connection with the supply or possible supply of its services, it engaged in conduct that was misleading or deceptive, and likely to mislead or deceive, in contravention of s 18 of the Australian Consumer Law, and that it made false and misleading representations that its services had particular benefits which they did not have in contravention of s 29(1)(g) of the Australian Consumer Law. Those admissions should be accepted. 70 By making the statement to Ms Matthews that Color Studio's advertising could be shown at Mareeba News, Multimedia represented to Color Studio that if Color Studio entered into a contract with Multimedia its advertising would be displayed on TV screens installed by Multimedia at Mareeba News. Multimedia's representation was false and misleading. The representation concerned a future matter and s 4 of the Australian Consumer Law has the effect that it is taken to be misleading unless Multimedia had reasonable grounds to make it. Multimedia did not have reasonable grounds to make the representation at the time it was made because: (1) it had not installed its TV screens at Mareeba News; (2) it had not signed any contracts with other businesses to advertise at Mareeba News at the time of the appointment with Color Studio; (3) it had only signed one advertising contract for advertising at Mareeba News, which was the contract with Color Studio; and (4) it did not know whether it would secure the minimum number of advertisers or revenue needed to install its TV screens at Mareeba News. 71 Multimedia also accepted a payment from Color Studio when there were reasonable grounds, of which it was aware at the time it accepted the payment, to believe that it would not be able to provide advertising services at Mareeba News within a reasonable time, or at all, because Multimedia had not installed its TV screens at Mareeba News. By accepting the payment in trade or commerce, Multimedia contravened s 36(3) of the Australian Consumer Law.

Pecuniary penalties 72 A pecuniary penalty can be imposed under s 224(1) of the Australian Consumer Law on a person who has contravened a provision of Part 3-1 of the Australian Consumer Law. The provisions in that Part include the sections which are the subject of the five contraventions in this case: ss 21, 29(1)(g), and 36(3). The maximum penalty for each contravention by Multimedia, as a body corporate, is $1.1 million: s 224(3). 73 A pecuniary penalty can be awarded for each act or omission, having regard to all relevant matters (s 224(2)). The relevant matters include: (a) the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission; (b) the circumstances in which the act or omission took place; and (c) whether the person has previously been found by a court in relevant proceedings to have engaged in any similar conduct. The numerous factors which will commonly be relevant are often set out in the cases: see, for instance, the cases discussed in Australian Competition and Consumer Commission v Woolworths Limited [2016] FCA 44 [124]-[126]. 74 In my discussion below, I consider the relevant factors in this case. The accepted approach to pecuniary penalties involves a process akin to that which in criminal law is described as "instinctive synthesis", which explains the relevant factors and, without expressly structured ordering or weighting of those factors, instinctively synthesises the factors to reach a conclusion concerning penalty. The instinctive synthesis approach is not wholly instinctive. It requires explanation of the relevant factors. It takes into account, and explains, the proportionality between the ultimate penalty and the contraventions involved. In that respect, courts commonly consider the number of "courses of conduct" involved where there are a series of closely related contraventions. This instinctive synthesis approach has been applied in many cases: see, for example, Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560, 567-568 [27] (Gray J); 572 [54]-[55] (Graham J); Director of the Fair Work Building Industry Inspectorate v Bragdon (No 2) [2015] FCA 998 [11] (Flick J); Director of Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 1213 [14]-[16] (Tracey J). 75 A central underlying concern in the process of instinctive synthesis is deterrence, both specific and general. As I explain below, there is a substantially reduced need for specific deterrence in this case. But general deterrence of this type of conduct remains very important. The importance of general deterrence has been constantly emphasised over the life of pecuniary penalties. Nearly two decades ago, French J said in Trade Practices Commission v CSR Ltd [1991] ATPR 41-076 at 52, 152, that although there was no role in regulation for two of the three goals of criminal punishment (retribution and rehabilitation), the principal, and perhaps only objective of a penalty regime (putting to one side desert theories of penalty), is to "put a price on contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene the Act".

Courses of conduct 76 There was a significant dispute between the parties concerning the number of courses of conduct involved in Multimedia's contraventions which gave rise to potential penalties. The ACCC alleged that there were five courses of conduct as follows: (1) one contravention of s 21 (unconscionable conduct) in relation to Bethanie's; (2) two contraventions of s 29(1)(g) (false or misleading representations in relation to services) in relation to Corben Chiropractic; (3) four contraventions of s 36(3) in relation to Corben Chiropractic; (4) one contravention of s 29(1)(g) in relation to Color Studio; and (5) one contravention of s 36(3) in relation to Color Studio. 77 As to (2), Multimedia submitted that these two contraventions were not a course of conduct but were, instead, the "same" conduct to which only a single penalty could apply. Section 224(4)(b) of the Australian Consumer Law provides that where the same conduct contravenes two or more provisions, a person is not liable to more than one pecuniary penalty in respect of the same conduct. Senior counsel for the ACCC pointed out that this subsection does not apply where the same conduct contravenes the same provision (citing Australian Communications and Media Authority v TPG Internet Pty Ltd [2014] FCA 382 [81] (Bromberg J)). It is unnecessary to ascend to the metaphysics of how the same conduct can amount to multiple contraventions of the same provision. The short point is that the two contraventions of s 29(1)(g) might be construed as contraventions of the same provision by different representations based on different words in Multimedia's conduct. But the two representations, and the conduct, was so closely related, that at best they are extremely close to a single contravention. They should only be treated as a single course of conduct in this strong sense. The representations were that Corben Chiropractic's advertising would be shown at the Clem Jones Centre and that Multimedia had the necessary arrangements in place with the Clem Jones Centre to install TV screens and to show advertising there. 78 More significant was the dispute between the parties concerning whether there were two courses of conduct or five. In Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (No 7) [2016] FCA 424 [29]-[31], I discussed the course of conduct principle in detail. It is unnecessary to repeat that discussion. On any view, the conduct in relation to Bethanie's was separate from the other conduct. It was the only conduct which I have found to be unconscionable. The conduct in relation to Corben Chiropractic and Color Studio also constituted separate courses of conduct. That conduct involved (i) different representations and acceptances of different payments, (ii) by different Multimedia representatives, (iii) from completely different customers, and (iv) separated by more than a year in time. 79 Multimedia's conduct in relation to the s 29(1)(g) contraventions compared with the s 36(3) contraventions were also separate courses of contravention for each of Corben Chiropractic and Color Studio. In each case the contraventions of s 29(1)(g) (compared with those involved with s 36(3)) involved (i) different conduct (representations compared with accepting payment), (ii) by different persons in Multimedia, (iii) in contravention of different provisions, and (iv) at different times. However, in the case of Corben Chiropractic the four contraventions of s 36(3) involved extremely similar conduct in relation to the relevant small business. The four contraventions should be treated as a single course of conduct. 80 For these reasons, there were five relevant courses of conduct.

Nature and extent of the contravening conduct 81 I have described the circumstances of the contravening conduct in detail above. The contraventions were serious. However, as senior counsel for Multimedia submitted, the contraventions must be understood in context. Between 27 May 2011 and 14 April 2015, Multimedia entered into 14,477 advertising contracts. These were the only contraventions that have been found from those 14,477 contracts. The amounts of money in each case were also small and, in each instance, the total amount debited to the small business was less than the contract sum. Nevertheless, the amounts were not insignificant as proportions of the advertising budgets for these small businesses. And the conduct, although not engaged in by senior management, was conduct which was performed in the context of making profits for Multimedia. 82 The ACCC submitted that each course of conduct extended over the entire period of a year from the time of the representations until the time of the refund. In terms of the effect that the conduct had on the owners of each small business, the frustration would have been felt over much of this period. But the conduct was a series of discrete acts which were not repeated over the course of the year. 83 Also, although the conduct in relation to each business was serious, the conduct concerning Bethanie's was considerably more serious than in relation to Corben Chiropractic or Color Studio. The conduct in relation to Bethanie's involved the series of matters I have described, including misleading representations that Bethanie's advertising would be displayed at Northgate Newsagency at Westfield Hornsby within four weeks; the failure to draw important terms in the small print of the contract to Mr Jones' attention (particularly in the context where Mr Jones wanted to advertise at Northgate Newsagency); the site was described on the front page of the contract; part of the contract was filled out by Mr Aggarwal from Multimedia; and a term of the contract provided no recourse where Multimedia delayed providing the advertising services at Northgate Newsagency. Following the failure of Multimedia to provide advertising services to Bethanie's for seven months despite deducting payments from Bethanie's account for the services it failed to provide, its conduct in failing to inform Mr Jones for nearly a month once his advertisements had been shown, then engaging an affiliated debt collector to pursue further payments, was accurately described by the ACCC as "high handed". 84 In relation to Corben Chiropractic, the representations made by Mr Mamari were only a few hours after Multimedia (not Mr Mamari) had been informed that despite the contract (which had not been acted upon since February 2012) the Clem Jones Centre would not host the advertising screens. Nevertheless, Mr Corben's money was taken from his account for three months subsequently. He was not permitted to terminate his contract. He was not given a refund immediately after a notice under s 155 of the Competition and Consumer Act was issued by the ACCC to Multimedia in May 2015 which specifically identified issues in relation to Mr Corben and the Clem Jones Centre. He was not given a refund until much later. 85 In relation to Color Studio, when Mr Booth made his representations to Ms Matthews, he did have other appointments with advertisers although only one had been confirmed and two of the others had been unable to be confirmed. Nevertheless, Mr Booth's appointment diary shows that he had very little time, in some cases barely 45 minutes, to establish contracts with potential customers. And, as Mr Corsbie said in his evidence, generally 10 to 20 interested advertisers are necessary to provide enough comfort to Multimedia that a host site will reach the threshold to be viable. A host site will not even be pursued unless 8 to 10 advertisers agreed to an appointment. Ms Matthews was also not shown the fine print of the contract which was significant to her as being more than half of her advertising budget. She was not told the true reason for the cancellation of the host site as the location of advertising. There were delays in responding to her and she wasn't allowed to terminate her contract, and was not given a refund until February 2016.

The deliberate nature of the conduct 86 The ACCC did not allege that any of the representations that were made, or any of the wrongful payments or the unconscionable conduct, was "deliberate" conduct in the sense that it was conduct committed wilfully in the knowledge, or reckless to the fact, that it amounted to a contravention of the law. The conduct was intentional but it was intentional in the sense that a conscious choice was made by each of the Multimedia representatives to engage in the actions amounting to the representations, the taking of wrongful payments, and the unconscionable conduct.

The 2011 communications from the ACCC 87 On 21 April 2011, the ACCC wrote to Multimedia to inform it that further complaints had been received by the ACCC. The complaints included a failure to explain terms of the contract, the terms and conditions being in small print, and a failure to supply advertising and to pay compensation for that failure. Multimedia was told of a "high level of complaints". Two particular customer complaints were described to Multimedia. Nine questions were posed for Multimedia to answer. Multimedia responded in considerable detail to those questions in a lengthy reply the next month. One observation made by Multimedia was that there was no formalised training plan for new marketing representatives.

Mr Corsbie's evidence and his cross-examination 88 Mr Corsbie is the head of Group Technology and Development at Multimedia. He has been employed by Multimedia since 2005. He is part of the senior management team. Mr Corsbie provided an affidavit in support of Multimedia. At the heart of Mr Corsbie's affidavit were matters concerned with Multimedia's culture of compliance. 89 Mr Corsbie explained in his affidavit the processes and procedures that he said (at [2]) were in existence at the time of the incidents that are the subject of this litigation. He referred to a 21 day induction and training process that tele-sales operators (who set appointments) go through when they join the company and how that process is sometimes repeated. He exhibited a copy of the Sales Representatives' Handbook. He described the four day intensive training programme for sales representatives. He also annexed correspondence between the ACCC and Multimedia in 2011 (to which I referred above). Correspondence was also sent in 2015. Mr Corsbie described how in 2015, Multimedia made changes to its contract after communications with the ACCC (including putting all conditions on one side of an A3 page contract, making termination of the contract easier and reducing it to six months, and making the lack of a cooling off period more prominent). 90 Mr Corsbie also suggested a number of reasons for the contraventions. Those reasons do not explain all of the contraventions but they do explain some of the surrounding circumstances such as the delays. He explained the problems that arose from the departure of an experienced Corporate Services Manager and a replacement who took an approach which was more focused on debt recovery until January 2014 when the replacement was, herself, replaced. He also described problems with a new computer system for handling customer enquiries and complaints in a timely manner that was meant to go live in August 2014. The new system is now in the process of being removed. 91 Mr Corsbie's affidavit was not solely an attempt to deflect the blame for Multimedia's conduct. He expressed contrition and regret and said that Multimedia "must accept responsibility for what occurred and ensure that it does not occur again" ([3]). He explained how Multimedia has agreed to ensure that in future, customers who wish to advertise will be given the option of terminating the contract if the nominated site does not become available. He acknowledged that a customer like Mr Jones should have been allowed to terminate his contract. 92 The ACCC required Mr Corsbie to attend Court to be cross-examined on his affidavit. Due to the emphasis placed by Multimedia on some contested aspects of Mr Corsbie's affidavit, I permitted that cross-examination but confined it to 15 to 20 minutes. Senior counsel for the ACCC admirably concluded within 18 minutes. 93 Mr Corsbie impressed me as an honest and entirely straightforward witness. Although his affidavit was exposed in cross-examination as deficient in several respects (such as the suggestions that customer payments in the incidents in this case had been paid to sales commission) and incomplete in others, Mr Corsbie was fair and measured in his answers. He did not hesitate to answer questions adversely to Multimedia and to accept responsibility. Although he did not have direct responsibility for customer service or training, he conceded that the new computer system to which he referred in his affidavit did not have anything to do with marketing or compliance with Australian Consumer Law. He accepted that he did not know if any of the sales representatives referred to in this case had been trained and he acknowledged that he did not know whether any of them were given the Marketing Representatives Handbook or precisely when the Marketing Representatives Handbook was updated to include the section dealing with the Australian Consumer Law. He said that the Handbook's primary driver was to improve customer services. He accepted that the failure to give a refund to Mr Jones, Mr Corben, or Ms Matthews was not related to the new computer system. And he acknowledged that the new system did not have any impact upon the representations that were made to Mr Corben and Ms Matthews. 94 Although Mr Corsbie does not conduct training or compliance (but is a member of the senior management team) it became clear from the cross-examination of him that although Multimedia has developed substantial compliance measures, there were still respects in which those measures could be improved at the time of the contraventions. However, Multimedia is now actively attempting to improve these systems. As Mr Corsbie explained, Multimedia has consented to the imposition of a compliance program. That program is set out in the orders at the commencement of these reasons. It is very substantial. Multimedia has also implemented a new, and expensive, complaint handling system. 95 Multimedia has also now provided an undertaking that provides for a number of restrictions including that for the next five years it will not enter a contract with a potential advertiser with an automatic rollover clause without taking steps which include drawing the clause to the advertiser's attention, permitting the advertiser to terminate the contract by two months' written notice prior to the renewal period. Another matter contained within the undertaking is that Multimedia will not change the nominated site where it was proposed that the advertiser's advertisement would be displayed unless it first informs the advertiser in writing of the proposed change and provides the advertiser in writing with the option of terminating the contract immediately with no further cost (and keeps a record of the advertiser's response).

The involvement of senior management 96 Other than the involvement of senior management of Multimedia in establishing the compliance procedures that I have discussed, there was no direct involvement of senior management in any of the contraventions. Although Mr Simpson made the decision that Multimedia would not attempt to enforce the Clem Jones Centre contract, this does not involve him in the contraventions. There was no evidence that he was aware of the issue involving Mr Corben. Mr Simpson was available for cross-examination but, almost certainly with one eye to issues of proportionality, the ACCC did not seek to cross-examine him.

Past contraventions 97 There have been no findings of any past contraventions by Multimedia.

Sales, revenue, and profits 98 For the financial years ending 30 June 2014 and 30 June 2015, Multimedia's total revenue, expenses, profits, assets and liabilities were as follows: Year Operating profit (before tax) Total Assets Advertising income Dividends declared Financial year ending 30 June 2011 $2,212,898 $9,458,861 $12,934,937 $0 Financial year ending 30 June 2012 $2,782,178 $11,652,809 $14,659,276 $0 Financial year ending 30 June 2013 $4,706,751 (recorded as $4,684,589 $15,718,795 (recorded as $36,177,725 $13,966,903 (recorded as $18,862,383 $0 in the 2014 financial report) in the 2014 financial report) in the 2014 financial report) Financial year ending 30 June 2014 $5,611,237 $28,440,538 $18,428,271 $9,440,000 Financial year ending 30 June 2015 $4,820,638 $26,969,768 $12,561,414 $10,340,000

99 Although there is confusion in the annual reports about the correct figures for the financial year ended 30 June 2013, the figures show that Multimedia is a substantial business in Australia. Nevertheless, the total penalty proposed by the ACCC of $355,000 would be around 7% of Multimedia's operating profit before tax for the last financial year, and potentially a larger portion of the operating profit before tax of the next financial year.

Loss to customers and profits to Multimedia 100 The ultimate loss to customers and direct profit to Multimedia from the contravening conduct is, at best, very small. On 29 February 2016, Multimedia sent refunds to each of the following: (1) Bethanie's Jumping Castles $1030.07 (2) Color Studio $1351.76 (3) Corben Chiropractic $1163.70 101 As the ACCC pointed out, although these amounts were refunded, the small businesses lost the use of that money for, at most in the case of Corben Chiropractic, just under two and a half years. The interest on that amount, or the value of lost advertising elsewhere, was not quantified but it cannot be assumed to be more than a few hundred dollars for these small businesses, spread over several years. And, as Multimedia point out, some advertising was provided. 102 Multimedia's direct profit is unlikely to be any more than this. As I have explained, I do not accept that all of these amounts were paid to Multimedia's sales representatives. Some was withheld from their commission. But the ultimate direct benefit to Multimedia from these contraventions was very small.

Cooperation and contrition 103 Multimedia, through its legal representatives, and through Mr Corsbie, has expressed contrition for its contraventions. As I have explained, I accept that Mr Corsbie's contrition is genuine and that it was respectful. Multimedia also relied upon a number of other matters as demonstration of its contrition. 104 One matter was its refunding of the money paid by the customers involved in the contraventions, as well as two others about whom no finding of contravention was made. I take into account the refunds as evidence of contrition (and also as ameliorating the customers' losses and Multimedia's gains). But, as evidence of contrition, it is significant that the refunds of those three small businesses with which this litigation is concerned came only after this litigation had been commenced and after a lengthy delay for those businesses and, in the case of Bethanie's, after a debt collector affiliated with Multimedia had been engaged. 105 More significant both as evidence of contrition, and as a factor to be considered in its own right, is the considerable cooperation that Multimedia provided to the ACCC in these proceedings. Multimedia settled these proceedings, admitted liability, and agreed to all remedies proposed except the amount of penalty and possibly costs of the penalty hearing. The settlement of the proceedings might have come after some preparation had been completed but the ACCC also did not press some allegations of contravention. Multimedia admitted many of the facts which were the subject of this proceeding and accepted responsibility for all the contraventions. It undertook to pay a substantial penalty although, as I explain below, the penalty falls some way below that which I consider to be appropriate. As I have explained. Multimedia also gave a substantial undertaking under s 87B of the Competition and Consumer Act. Its cooperation was substantial and is very significant. 106 At one point in written submissions, the ACCC suggested that a discount for cooperation of 5% should be given. Senior counsel quite properly withdrew that submission. If the discount for cooperation in this case were to be quantified it would be considerably larger than 5%. But the proper approach is not for a numerical amount to be assigned to any factor. It is the process of instinctive synthesis that I have described.

Consequential loss of profit by reason of adverse publicity 107 Multimedia submitted that adverse publicity surrounding its conduct led to a significant decline in customers and a loss of profit. The ACCC submitted that, as a matter of principle, this was not a mitigating factor and that, in any event, the evidence before the Court did not establish any causal effect between adverse publicity and any decline in customers or loss of profit. 108 As to the question of principle, the ACCC relied upon the decision in Australian Competition & Consumer Commission v AirAsia Berhad Company [2012] FCA 1413. In that case, Tracey J considered a submission from AirAsia in mitigation that it had suffered reputational damage. His Honour accepted that reputational damage had been suffered and that the declaration which would be made would further harm AirAsia's reputation. However, he concluded that the reputational harm was caused by failure to comply with statutory obligations and that any "mitigatory effect of adverse publicity on the fixing of a pecuniary penalty is, at best for AirAsia, minimal" (at [60]). I respectfully agree with that conclusion. It appears that there was no evidence that the company's reputational damage had, or would have, any effect on profitability. The submission appears to have been made at the most abstract level of a company's general reputation. In Ryan v R [2001] HCA 21; (2001) 206 CLR 267, 285 [54], McHugh J said (footnotes omitted): No doubt it is legitimate to take into account many matters that are personal to the offender and that will have consequences on that person's future life. It is legitimate, for example, to take into account that the conviction will result in the offender losing his or her employment or profession or that he or she will forfeit benefits such as superannuation. But I am not convinced at the moment that public opprobrium is to be treated as equivalent to the loss of a job or similar personal or financial loss. 109 As McHugh J explained, there is a difference between a submission in mitigation, particularly by a company, that the effect on it has been some unquantified public opprobrium and a submission in mitigation which refers to particular quantifiable loss. Two cases referred to with approval by McHugh J were R v Richards (1980) 2 Cr App R (S) 119, 121 and R v Wright (No 2) [1968] VR 174, 180. In the first of these, the Lord Chief Justice referred in sentencing to the need not to "lose sight" of disciplinary proceedings against the offender which were inevitable and which by the loss of income "in themselves mean a very large financial penalty, albeit indirectly; likewise the loss or probable loss of his pension rights". In the second case, the Full Court of the Supreme Court of Victoria referred to the loss of long service leave and contributions to superannuation arising from conviction as "undoubtedly a matter to be taken into consideration". 110 Although great care must be taken in transplanting any principles from criminal law directly to the area of civil penalties, I consider that the financial consequences from publicity of a respondent's conduct can be a matter which is taken into account in civil penalty proceedings. One reason for this is that the financial consequences from publicity will often be relevant to deterrence. When a court assesses the likelihood of the respondent or others repeating the contravening conduct, or similar conduct, the consequences that the conduct has had upon the respondent, including publicity of that conduct, are a relevant matter to consider. 111 However, apart from the indirect relevance of financial consequences from publicity to specific deterrence, it is more controversial whether the Court should also consider the financial consequences from publicity in a direct manner such as to reduce the possibility of double punishment. The ACCC referred to the decision in Trade Practices Commission v Cue Design Pty Ltd (1996) 85 A Crim R 500. In that case, O'Loughlin J denied any mitigating effect to the financial losses suffered by Cue Group as a result of publicity given to the proceedings. His Honour said (at 506): Accepting, as I do, that the Cue Group has suffered financially as a result of the publicity given to these proceedings, the question is whether it is a factor to be taken into account in fixing penalty. Normally one would think that this sort of publicity is the usual consequence of a prosecution of this nature. 112 His Honour then referred to the remarks of Smithers J in Eva v Southern Motors Box Hill Pty Ltd [1977] FCA 2; (1977) 30 FLR 213, 222-223 including that the probable consequences of adverse publicity initiated by the prosecuting authority went beyond the mere fact that the company was being prosecuted for named offences. Rather, "the danger of cumulative punishment along these lines is real and should be treated as part of the background against which penalty should be assessed". After referring to these remarks in Cue Design, O'Loughlin J held (at 508) that the principle did not apply where the regulator had acted reasonably in publishing a news release. In that case, the "attendant publicity was a consequence of the defendants' conduct". Penalties were not reduced for that reason. 113 Although I consider that a loss of sales and loss of profits to the company are matters that can be taken into account in the assessment of specific and general deterrence, I accept the submission of the ACCC that the evidence in this case does not establish any causal connection between the contraventions and any decline in sales. 114 The evidence that Multimedia relied upon to attempt to establish a causal connection was from Mr Wilson and Mr Simpson. There was a dispute between the parties about the admissibility of this evidence, in part due to uncertainty about how the information to which they referred had been obtained. That uncertainty was rectified by an affidavit filed last night by Multimedia. The affidavit was from Mr Underwood, a software developer who built the information technology system for Multimedia. The ACCC did not make any submission that any uncertainty remained. 115 Mr Wilson is a solicitor acting for Multimedia. His evidence annexed a letter from a firm of chartered accountants which said that the "number of contracts sold and the total value of same has fallen dramatically since 30th June 2014" and that "[t]urnover in the eight months to 29th February 2016 has fallen by 67% when compared with turnover in the year ended 30th June 2014". The accountant's letter contained the following chart in support of the assertion about the fall in the value of contracts sold: Accounting Period/year Number of contracts Value of contracts (Aus $) Year ended 30th June 2011 4,938 10,417,206 Year ended 30th June 2012 4,760 9,597,550 Year ended 30th June 2013 5,285 11,392,935 Year ended 30th June 2014 4,500 14,144,359 Year ended 30th June 2015 2,568 9,493,513 Eight months to 29th February 2016 1,151 4,119,547

116 Mr Wilson's evidence did not explain the manner in which these amounts had been calculated by the accountants. None of the source documents was provided to the ACCC or to the Court. It is also unclear why the accountants were comparing the turnover in the eight months to 29th February 2016 with the turnover in the financial year ended 30 June 2014 rather than the financial year ended 30 June 2015. More fundamentally, the evidence from the accountants suggests that the most significant drop in the number of contracts sold was between 30 June 2014 and 30 June 2015. These proceedings were commenced on 30 November 2015. And it is common ground that a media release by the ACCC was in December 2015. 117 The evidence from Mr Simpson was also too general to permit any inference that Multimedia has lost profits as a result of publicity surrounding its contravening conduct. Mr Simpson has only been a director of Multimedia since 2014 and an Operations Manager since 2007. He manages the Australian office of Multimedia and has a close involvement with sales. 118 Mr Simpson provided a schedule of the number of contracts signed up each month during 2015. He obtained this information from Mr Underwood, an information technology programmer who put together the system for Multimedia. The information was as follows: Year Month Contracts signed up 1 Yr 1 Yr Admin Val 2015 January 132 $240,375.32 $31,548.00 $447,551.82 2015 February 164 $295,060.40 $38,957.00 $595,297.26 2015 March 228 $426,194.95 $54,970.00 $836,264.17 2015 April 162 $323,786.90 $38,479.00 $663,988.65 2015 May 156 $296,523.80 $36,567.00 $595,242.12 2015 June 203 $390,490.45 $47,800.00 $778,961.41 2015 July 204 $379,824.77 $48,517.00 $760,883.62 2015 August 173 $317,816.09 $40,869.00 $633,336.99 2015 September 208 $350,777.27 $49,234.00 $722,643.36 2015 October 118 $223,110.00 $28,202.00 $439,570.00 2015 November 156 $265,315.46 $38,588.00 $529,948.46 2015 December 90 $161.150.40 $23,316.00 $335,385.80 2016 January 111 $180,117.64 $26,747.00 $379,614.64 2016 February 92 $152,356.54 $24,003.60 $318,164.92 2016 March 71 $119,258.41 $16,928.00 $230,491.91

119 Mr Simpson gave his opinion, based on his knowledge of the business operations of Multimedia, that there is no explanation for the significant downturn in the number and value of contracts since September 2015 other than the institution of these proceedings (on 30 November 2015) and the publicity caused by the ACCC press release in December 2015. 120 There is a clear fall in the number of contracts entered in January, February, and March 2016 compared with the same months in 2015. But a more instructive comparison would be whether there had been the same fall in contracts in the months prior to the ACCC press release compared with those same months in 2015. But no such information was provided by Multimedia. 121 The reason I do not consider a causal connection, in the counterfactual (or "but for") sense was proved is not limited to the lack of comparison with relevant months prior to the ACCC press release. It is also due to the lack of any concrete evidence of the effect of the ACCC press release such as evidence from any sales representative or potential customer or even evidence about the extent to which their sales had been affected by adverse publicity. 122 Ultimately, although I am not satisfied that the evidence supports any causal link between a decline in sales and any adverse publicity, this conclusion makes little difference to the ultimate result. This is because, as I have explained, the conduct of Multimedia by the time of this hearing demonstrates a reduced need for specific deterrence from that which is commonly encountered. A conclusion that there had been a decline in sales as a result of adverse publicity would simply be a further matter to consider in deciding the extent to which specific deterrence was required. It is very unlikely to have altered my assessment.

Potentially comparable cases 123 In Australian Competition and Consumer Commission v Woolworths Limited [132]-[137], I considered the legal principles concerning the use of penalties in other cases as part of the process of determining penalty. My reasoning in Woolworths was not intended to suggest that no reference should be made to other cases. As I explained, if contraventions are relatively similar then a similar penalty should be imposed. Further, if an appropriate range emerges from the cases then that range should be a factor which guides the process of imposing a penalty (although there is never a requirement that the penalty must fall within a range). However, I explained that there can be little utility in the direct comparison of one or two cases where there are significant factual differences. A direct comparison between cases with significant factual differences, and an attempt to extrapolate a penalty in that way, will often require unarticulated assumptions in the process of comparison between incommensurables. Perhaps for this reason the parties referred only to two penalty cases on s 21, and did not refer to any cases concerning penalties for contraventions of s 29(1)(g) or s 36(3).

Contraventions of s 21 124 The ACCC relied upon two authorities on unconscionability: Australian Competition & Consumer Commission v Lux Distributors (No 2) [2015] FCA 903 and Australian Competition & Consumer Commission v South East Melbourne Cleaning [2015] FCA 257. These authorities involved a number of substantial differences from the current case although they illustrate penalties for unconscionable conduct. 125 In Lux, sales representatives had gained access to the homes of three elderly customers by deception and pressured them into buying vacuum cleaners that they did not want. The Full Court described the unconscionable conduct as including gaining "only by deception", using a ruse of a free maintenance check, the "opportunity to practise skilled selling techniques on elderly people in their homes": see Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90 [63]. There were various contraventions during the selling processes, and a lengthy sales period during which older customers felt prevailed upon to purchase. 126 The penalties imposed for unconscionable conduct were $185,000 for each of the two contraventions amounting to a total of $370,000. The primary judge, on the remitter for penalty, observed that Lux is a small, family-owned, business currently trading at a loss and that the total penalty imposed was about 90% of its pre-tax profit over the five years to 30 June 2014: see Australian Competition and Consumer Commission v Lux Distributors Pty Ltd (No 2) [2015] FCA 903 [21], [31]. 127 In SE Melbourne Cleaning, the respondent company, Coverall, was an experienced franchisor. It acted unconscionably in relation to two inexperienced franchisees. Its unconscionable conduct included deliberate failure to pass on to the franchisees money that had been paid by customers for work done by the franchisees. Coverall also charged the franchisees sales and marketing fees without any right to do so. The conduct was deliberate. Specific deterrence was not relevant because Coverall had gone into liquidation and would not pay the penalty ([37]). The sums of money were relatively small in the overall commercial context, the victims were compensated in full, and Coverall had co-operated with the ACCC. The primary judge imposed a penalty of $150,000 for each of the two contraventions. Together with other contraventions the total penalty was $500,000.

Contraventions of ss 29(1)(g) and 36(3) 128 The parties did not identify any authorities on relevantly analogous facts dealing with contraventions of ss 29(1)(g) or 36(3). This may have been because the authorities that concern penalties for s 29(1)(g) involve widely differing circumstances and the parties may have considered that none is closely comparable with this case and no range of penalties emerges. Although there are a large number cases which have imposed pecuniarily penalties for contraventions of s 29(1)(g) of the Australian Consumer Law that assumption appears to be accurate: see, eg, Australian Competition and Consumer Commission v AGL South Australia Pty Ltd [2015] FCA 399 (White J); Australian Competition and Consumer Commission v Reebok Australia Pty Ltd [2015] FCA 83 (McKerracher J); Australian Competition and Consumer Commission v Origin Energy Limited [2015] FCA 55 (White J); Australian Competition and Consumer Commission v Breast Check Pty Ltd (No 2) [2014] FCA 1068 (Barker J); Australian Competition and Consumer Commission v Zen Telecom Pty Ltd [2014] FCA 1049 (Barker J); Australian Competition and Consumer Commission v Titan Marketing Pty Ltd [2014] FCA 913 (Rangiah J); Australian Competition and Consumer Commission v Scoopon Pty Ltd [2014] FCA 820 (Greenwood J); Australian Competition and Consumer Commission v ACN 135 183 372 (in liquidation) (formerly known as Energy Watch Pty Ltd) [2012] FCA 749 (Marshall J); Australian Competition & Consumer Commission v Marksun Australia Pty Ltd [2011] FCA 695 (Gilmour J). 129 The penalties imposed on corporations in these cases have varied from $75,000 to $1.95 million. They have involved single contraventions and multiple contraventions. The circumstances of contravention have varied greatly. 130 For example, at one extreme, a single pecuniary penalty of $75,000 was imposed on Breast Check for conduct that included the publishing of pamphlets that falsely, and deliberately, represented the specific performance characteristics, uses and benefits of the company's breast imaging services. The company was a small company that never made money. The publication was made over a seven month period but there was relatively limited evidence about the number of persons to whom the representation was made: Australian Competition and Consumer Commission v Breast Check Pty Ltd (No 2) [2014] FCA 1068. 131 At the other extreme, a pecuniary penalty of $1.95 million was imposed on a company that made false and misleading representations on television, radio print advertisements and online. Two different penalty provisions were contravened by twelve courses of conduct in a mass marketing campaign involving 80 advertisements and costing millions of dollars. The representations were that its electricity price comparison, brokering and advisory services had various uses and benefits. The company had been a medium sized company but it had gone into liquidation. The penalties involved for the twelve courses of conduct focussed upon general deterrence and ranged from $50,000 to $250,000: Australian Competition and Consumer Commission v ACN 135 183 372 (in liquidation) (formerly known as Energy Watch Pty Ltd) [2012] FCA 749. 132 There are few cases concerning penalties for contravention of s 36(3), or its predecessor provision in the Trade Practices Act 1974 (Cth) ss 58(b) or 75AZL(3) (which attracted a penalty five times lower before 2002). Penalties for a contravention of s 36(3) are also likely to vary greatly. In circumstances involving a related breach of s 36(4), albeit involving an individual (with a maximum penalty five times lower), penalties have been imposed which range from $10,000 for each contravention (see Australian Competition and Consumer Commission v Chopra [2015] FCA 539). In relation to corporations, the circumstances can even vary within individual cases such as where the period of contraventions spans different penalties regimes. In one case, Australian Competition and Consumer Commission v Chubb Security Australia Pty Ltd [2004] FCA 1750, Bennett J imposed penalties for a large number of contraventions involving similar provisions but spanning periods of time with different maximum penalties. Her Honour imposed penalties of 20% of the maximum penalty at the relevant time but discounted that amount to reach a conclusion in relation to the penalties with the same maximum as the current legislation of around $90,000 per contravention.

Conclusion on penalties 133 Multimedia submitted that I should impose a single penalty of $85,000. That submission was based, in part, upon the assumption that there were either two or three courses of conduct. Even then, Multimedia did not explain how it had arrived at this penalty for each of the courses of conduct. Having regard to the need for general deterrence, a penalty of $85,000 is well below that which I consider to be appropriate in all the circumstances of this case for all of the contraventions. 134 In contrast, the ACCC submitted that total penalties of $355,000 should be imposed, in the following way for the contraventions of the Australian Consumer Law: (1) $175,000 for the contravention with respect to Bethanie's; (2) $40,000 for the course of conduct giving rise to the contraventions of s 29(1)(g) with respect to Corben Chiropractic; (3) $60,000 for the course of conduct giving rise to the contraventions of s 36(3) for Corben Chiropractic; (4) $40,000 for the contravention of s 29(1)(g) with respect to Color Studio; and (5) $40,000 for the contravention of s 36(3) with respect to Color Studio. 135 As I have explained, the ACCC was correct to treat each of the matters above as involving a separate course of conduct. However, having regard to all of the circumstances including the extent of all the mitigating factors, I consider that an overall penalty of $355,000 exceeds the appropriate award. The total overall penalty that I consider appropriate is $230,000. 136 The appropriate penalties are as follows: (1) $110,000 for the contravention with respect to Bethanie's; (2) $25,000 for the course of conduct giving rise to the contraventions of s 29(1)(g) with respect to Corben Chiropractic; (3) $40,000 for the course of conduct giving rise to the contraventions of s 36(3) for Corben Chiropractic; (4) $25,000 for the contravention of s 29(1)(g) with respect to Color Studio; and (5) $30,000 for the contravention of s 36(3) with respect to Color Studio. 137 As I have explained, the s 36(3) contraventions were distinct courses of conduct from the s 29(1)(g) contraventions for each of Corben Chiropractic and Color Studio. However, I have taken into account, in the assessment of the principle of totality, that there were some common underlying facts in each case concerning the false or misleading representations and the wrongful acceptance of payment. The penalties for each, if assessed alone, would have been higher. I have also taken into account in the totality assessment that at an even higher level of generality, each course of conduct, other than the conduct in relation to Bethanie's, involved a similar underlying failure of the systems of compliance.

Conclusions 138 I have focussed in these reasons on the issue of the pecuniary penalty. That was the only issue in dispute, other than costs which may be able to be resolved by consent. As I have explained the appropriate total penalty is $230,000. 139 The parties also proposed a number of orders by consent. All of those orders are appropriate. The first is an order under s 246(2)(b) of the Australian Consumer Law for implementation of a compliance program. In Australian Competition and Consumer Commission v Sontax Australia (1988) Pty Ltd [2011] FCA 1202 [36] Gordon J explained that the purpose of such orders is to "ensure a company-wide awareness of responsibilities and obligations in relation to the contravening conduct or similar or related conduct". There must also be a "nexus between the terms of the compliance program and the contravening conduct". The proposed compliance program is extensive and appropriate. It is designed to minimise the risk of Multimedia engaging in conduct which contravenes ss 18, 21, 29 and 36 of the Australian Consumer Law. It will enhance the training Multimedia gives to its staff and it will ensure that those processes are formalised, completed and maintained, including by further training of staff, creation of a compliance policy, and reviews and reporting of Australian Consumer Law compliance to the board of directors. 140 As I explained at the hearing, the declarations proposed by the parties under s 21 of the Federal Court of Australia Act 1977 (Cth) are appropriate. They are sufficiently clear and concise and they record the disapproval of the conduct in a way which informs the public and establishes the foundation for the other orders. It is in the public interest that they be made and the ACCC, as a public regulator under the Australian Consumer Law, has a genuine interest in seeking them just as Multimedia had an interest in opposing the making of them. 141 Finally, Multimedia also agreed to pay $35,000 of the ACCC's costs of the liability hearing within 30 days of the Court's order. 142 The only remaining matter concerns the costs of this hearing. The parties had indicated that this was likely to be a matter in dispute. If necessary, I will give the parties leave to file short written submissions (of not more than two pages) by 5 May 2016. Both senior counsel properly accepted that any costs dispute should be resolved on the papers if the question of costs remains in dispute. My preliminary view, however, is that the ACCC should be entitled to all of its costs of the remedies hearing. Although the full amount that the ACCC sought was not awarded, (i) the hearing was a necessary consequence of Multimedia's contraventions and it would have been necessary even if penalty had been agreed, (ii) matters such as the cross-examination of Mr Corsbie did not unnecessarily elongate the hearing and were very useful in solidifying my understanding of the proper penalty, and (iii) although there was a considerable amount of material put before the Court and delays as a result of objections to evidence, I do not presently consider that the amount claimed by the ACCC caused the proceedings to be much longer than they would otherwise have been. If this is the appropriate order (and subject to submissions from the parties if necessary) then I consider that it is also highly desirable that the amount of costs be fixed by agreement of the parties or by the Court to avoid the further expense of a taxation. Although my preliminary view is that the ACCC should be entitled to all of its costs, it may be appropriate that matters such as the objections to evidence and the smaller penalty should be considered in the fixing of costs in a modest amount. I certify that the preceding one hundred and forty-two (142) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edelman.