Australian Competition and Consumer Commission v Multimedia International Services Pty Ltd

THE COURT ORDERS THAT: 2. Within 60 days of the date of this order the respondent pay to the Commonwealth of Australia the pecuniary penalty of $230,000 as ordered in order 4 of the orders of this Court on 29 April 2016. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

EDELMAN J: 1 On 29 April 2016, I gave reasons for judgment in relation to the remedies to be imposed for Multimedia's contraventions of the Australian Consumer Law. One order made was the imposition of a pecuniary penalty of $230,000. Two matters remained in dispute: costs of the remedies hearing and orders concerning the time for payment of the pecuniary penalty. The parties agreed that these issues could be determined on the papers after receipt of written submissions. 2 In my reasons for decision I had expressed preliminary views about costs: Australian Competition and Consumer Commission v Multimedia International Services Pty Ltd [2016] FCA 439 [142]. The parties subsequently consented to proposed orders that the respondent pay the ACCC's costs fixed in the amount of $35,000 to be paid within 60 days of the date of the order. For the reasons I expressed, that order is appropriate. 3 The issue which remains is whether orders should be made permitting Multimedia to pay the pecuniary penalty by instalments and the period within which such payments should be made. 4 Multimedia seeks orders that the pecuniary penalty be payable in two instalments: $115,000 to be paid by 29 October 2016 and the remaining $115,000 to be paid by 29 April 2017. 5 The Court can order payment of penalties by instalments where there is sufficient financial material before the Court to justify the instalment arrangements: see Australian Competition and Consumer Commission v Humax Pty Ltd [2005] FCA 706 [12] (Merkel J); Australian Competition and Consumer Commission v Eternal Beauty Products Pty Ltd [2012] FCA 1124 [61] (Murphy J). 6 An order for payment of a pecuniary penalty by instalments can ameliorate the effect of the penalty. An ameliorative effect can be due to the time value of money. An ameliorative effect can also be due to the ability of a business to spread a cost over a longer period of income. The longer the delay in payment, the greater the ameliorative effect and the less the deterrent effect of the penalty. Nevertheless, an order for delayed payment and payment by instalments can be appropriate where there is genuine difficulty for a respondent to pay. Although that difficulty might have been taken into account in the assessment of the amount of the penalty, there can still be reasons for an order for delayed payment or payment by instalments. One reason might be that the full extent of the respondent's difficulty in paying the penalty might not have been apparent. Another reason might be that the order for delayed payment or payment by instalments could fine tune a penalty which might otherwise have been towards an upper end of the range that a judge was considering. In any case, a delayed payment or payment by instalments should be based on evidence that there will be some hardship visited upon a respondent who is required to pay within a short period of time. 7 The ACCC submits that there is insufficient material before the Court to justify any payment by instalments. The ACCC points to the June 2015 balance sheet for Multimedia which shows that Multimedia has significant assets. Those assets include approximately $2.5 million in cash reserves and nearly $38 million in trade debtors compared with $19.9 million in current liabilities. 8 I accept Multimedia's submission that there has been a substantial decline in contracts into which it has entered with advertising customers since September 2015 as well as a substantial decline in income since 30 June 2015. Nevertheless, even taking these declines into account, there is ample ability for Multimedia to pay the penalty imposed, together with the orders for costs in relation to the liability and remedies aspects of the proceedings. I have referred to the considerable current assets held by Multimedia. Multimedia made no submissions concerning how it would impose hardship on it to pay the penalty from current assets such as from its cash at bank. 9 Even if the focus of hardship to Multimedia arising from payment of the pecuniary penalty were limited to its income and based on the assumption that the penalty would be paid only from income, I am satisfied that the penalty could be paid from current income without undue hardship. The monthly figures for the value of contracts signed up to which I made reference in my reasons for decision were not monthly income amounts. They are additional amounts added to the income stream. The monthly income amounts are the cumulative results of the income stream from contracts in previous months. This means that there will be some lag in the income effect due to the decline in new contracts. Even taking that lag into account, the penalty should be capable of being paid even from income alone without undue hardship. 10 As the parties agreed that the ACCC's costs of the remedies part of the proceeding should be paid within 60 days of this order it is appropriate that the pecuniary penalty also be paid within this period. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edelman.