Australian Competition and Consumer Commission v P & N Pty Ltd

[7]

THE COURT DECLARES THAT:

From about November 2012 until May 2013, each of P & N Pty Ltd ("P&N") and P & N NSW Pty Ltd ("P&N NSW"), trading as "Euro Solar", in trade or commerce: (a) engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of section 18 of the Australian Consumer Law ("ACL"), being Schedule 2 to the Competition and Consumer Act 2010 (Cth) ("CCA"); and (b) in connection with the supply or possible supply of goods or the promotion of the supply or use of goods, made false or misleading representations concerning the place of origin of goods, in contravention of s 29(1)(k) of the ACL, by making representations to consumers, through the use of the words "Australian solar panel" and "Australian solar panels" and the use of a logo containing the words "Australian solar panel" and an image of a map of Australia ("Logo"), in advertisements and promotions appearing: (c) in newspapers; (d) on television; (e) in videos published on the website at 'www.youtube.com' ("YouTube"); and (f) on the website at 'www.eurosolar.com.au', that the solar panels being promoted by them for supply or use were made in Australia, when in fact those solar panels were not made in Australia.
From at least January 2013 until 27 September 2013, Worldwide Energy and Manufacturing Australia Pty Ltd ("WEMA") trading as "Australian Solar Panel", in trade or commerce: (a) engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of s 18 of the ACL; and (b) in connection with the supply or possible supply of goods or the promotion of the supply or use of goods, made false or misleading representations concerning the place of origin of goods, in contravention of s 29(1)(k) of the ACL, by making representations to consumers, through the use of: (c) the words "Australian solar panel" as a trading name; (d) the Logo to promote the "Australian Solar Panel" business; (e) the domain names 'www.australiansolarpanel.com.au' and 'www.australiansolarpanel.com' to promote the "Australian Solar Panel" business; and (f) the words "Australian solar panel" and the Logo in promotional material on the websites at 'www.australiansolarpanel.com.au' and 'www.australiansolarpanel.com', that the solar panels being promoted by it for supply or use were made in Australia, when in fact those solar panels were not made in Australia.
From about May 2012 to February 2013, each of P&N and P&N NSW, trading as "Euro Solar", in trade or commerce: (a) engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of s 18 of the ACL; and (b) in connection with the supply or possible supply of goods or the promotion of the supply or use of goods, made false or misleading representations that purported to be testimonials by persons relating to goods, in contravention of s 29(1)(e) of the ACL, by making representations to consumers that videos appearing on YouTube and the website at 'www.eurosolar.com.au' were testimonials by customers of "Euro Solar", when in fact they were not.
From at least January 2013 to February 2013, WEMA trading as "Australian Solar Panel", in trade or commerce: (a) engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of s 18 of the ACL; and (b) in connection with the supply or possible supply of goods or the promotion of the supply or use of goods, made false or misleading representations that purported to be testimonials by persons relating to goods, in contravention of s 29(1)(e) of the ACL, by making representations to consumers that written statements appearing on the website at 'www.australiansolarpanel.com.au' were testimonials by customers of "Australian Solar Panel", when in fact they were not.
Nikunjkumar (Nick) Patel ("Nick Patel"): (a) acting in his capacity as director of P&N, including as the sole director at all material times up to and including 19 April 2013, and having knowledge of the essential elements of the contraventions of ss 18, 29(1)(e) and 29(1)(k) of the ACL by P&N referred to in paragraphs 1 and 3 above, was knowingly concerned in, or a party to, those contraventions; and (b) acting in his capacity as the sole director of WEMA, and having knowledge of the essential elements of the contraventions of ss 18, 29(1)(e) and 29(1)(k) of the ACL by WEMA referred to in paragraphs 2 and 4 above, was knowingly concerned in, or a party to, those contraventions.

[18]

INTRODUCTION 1 This proceeding is brought by the Australian Competition and Consumer Commission ("ACCC") against P & N Pty Ltd ("P&N"), P & N NSW Pty Ltd ("P&N NSW"), Worldwide Energy and Manufacturing Australia Pty Ltd ("WEMA") and Mr Nikunjkumar Patel. The ACCC seeks declarations, injunctions, publication orders, pecuniary penalties and other orders against the respondents with respect to contraventions by the respondents of s 18 of the Australian Consumer Law ("ACL"), being Schedule 2 to the Competition and Consumer Act 2010 (Cth) ("CCA"), and s 29(1)(e) and (k) of the ACL. The respondents did not contest the allegations and a statement of agreed facts and joint submissions on penalty were put before me. 2 In relation to the proposed declaratory orders, I am asked to make those orders on the basis of evidence put forward by way of a statement of agreed facts. The effect of an agreed fact is as set out in s 191 of the Evidence Act 1995 (Cth). I was prepared to make declaratory orders on that basis in Australian Competition and Consumer Commission v Skins Compression Garments Pty Ltd [2009] FCA 710 and, although my approach was subsequently criticised by Finkelstein J in Australian Competition and Consumer Commission v Bridgestone Corporation [2010] FCA 584, the weight of authority is in favour of the Court being able to proceed in that way subject to a recognition of the fact that the obligation remains on the Court to be satisfied that the facts are true. I refer by way of example to Minister for Environment, Heritage and the Arts v PGP Developments Pty Ltd [2010] FCA 58; (2010) 183 FCR 10 at 19-20, [30]-[38] per Stone J; Australian Competition and Consumer Commission v MSY Technology Pty Ltd & Ors (No 2) [2011] FCA 382; (2011) 279 ALR 609 at 612-616, [11]-[27] per Perram J; Australian Competition and Consumer Commission v Dimmeys Stores Pty Ltd [2011] FCA 372; Australian Competition and Consumer Commission v Sampson [2011] FCA 1165. I should add that there is nothing in the statement of agreed facts in this case which suggests that they should not be accepted as true. In other words, there is no lack of coherence or apparent contradictions in the agreed facts. 3 In relation to the proposed pecuniary penalties, I was asked by the parties to follow the approach in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 ("NW Frozen Foods") at 290-291 per Burchett and Kiefel JJ and Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR 41-993. In other words, if I am satisfied that the proposed pecuniary penalties are within an appropriate range, then they are the penalties I should impose. At the same time, my attention was quite properly drawn to the decision of the Court of Appeal of the Supreme Court of Victoria in Australian Securities and Investments Commission v Ingleby [2012] VSCA 49 where those decisions were said to be bad law. I respectfully acknowledge the force of the points made by the Victorian judges. Clearly there are points to be made on both sides as to the appropriate approach, but sitting as a single judge I think I should follow the approach of the Full Court of this Court unless that Court or the High Court suggests that a different approach should be taken. The approach of the Full Court in NW Frozen Foods is well-established and, so far as I know, still being applied by single judges of this Court. I should add that the difference between the two approaches is not so significant in this case because I think the proposed penalties are appropriate, rather than being within a range, but at the upper or lower reaches of that range.

[26]

The "Testimonial Representations" (ss 18 and 29(1)(e) ACL) 25 The "Testimonial Representations" were representations that purported to be testimonials by customers of Euro Solar in respect of P&N and P&N NSW and customers of Australian Solar Panel in respect of WEMA, relating to solar panels. 26 From May 2012 to February 2013, P&N and P&N NSW published, or caused to be published or both, videos that purported to be testimonials by customers of Euro Solar relating to solar panels ("video testimonials") on websites including YouTube and the Euro Solar website. The video testimonials purported to be given by customers of Euro Solar whereas in reality the persons in the videos were actors. 27 From January 2013 to February 2013, WEMA published or caused to be published statements that purported to be testimonials by customers of Australian Solar Panel relating to solar panels ("written testimonials") on the Australian Solar Panel.au website at "www.australiansolarpanel.com.au/aboutus/customer-testimonials". The written testimonials were purportedly given by customers of Australian Solar Panel with various names. 28 The testimonial representations made by P&N, P&N NSW and WEMA respectively were false, misleading or deceptive, or likely to mislead or deceive because the purported testimonials were not given by customers of Euro Solar in the case of P&N and P&N NSW, or were not given by customers of Australian Solar Panel in the case of WEMA. WEMA trading as Australian Solar Panel was a wholesale supplier. It did not supply any retail customers and it did not have any actual customers such as those represented in the written testimonials. 29 Finally, P&N and P&N NSW provided their sales and marketing staff with an approved sales script to be used when receiving telephone inquiries from prospective customers and this script required all sales staff to advise prospective customers of, among other things, the place of origin of all solar panels and inverters sold by the companies (i.e., China).

[27]

Admissions 30 Each of P&N, P&N NSW and WEMA admits that by making the Made in Australia Representations and the Testimonial Representations they engaged in conduct in trade or commerce that was misleading or deceptive, or likely to mislead or deceive in contravention of s 18 of the ACL. Each company also admits that in making the Made in Australia Representations they made false or misleading representations concerning the place of origin of goods in trade or commerce in connection with the supply or possible supply of goods, or the promotion of the supply or use of goods and thereby contravened s 29(1)(k) of the ACL. Each company also admits that by making the Testimonial Representations, which comprised making false or misleading representations that purported to be testimonials by persons relating to goods or services, they had, in trade or commerce in connection with the supply or possible supply of goods, or the promotion of the supply of goods, contravened s 29(1)(e) of the ACL. 31 Mr Patel admits that he was knowingly concerned in, or a party to, the contraventions within the meaning of ss 224(1)(e) and 232(1)(e) of the ACL by P&N and by WEMA. In terms of his role and in addition to the matters identified in [6] above, Mr Patel decided to use Australian Solar Panel as a brand name in the Australian market for solar panels. He decided to register Australian Solar Panel as a business name for WEMA and applied for that registration in around July 2012. He decided to register the domain name www.australiansolarpanel.com.au for use by WEMA and applied for that registration in around October 2012. He decided to register the Logo as a trademark for WEMA and he applied for that registration on 29 November 2012. He decided to register the domain name www.australiansolarpanel.com for use by WEMA and applied for that registration in around December 2012. He decided that P&N would use the words Australian solar panel and/or Australian solar panels, and the Logo, in its advertisements. He was aware of the Made in Australia Representations made by P&N and WEMA, and the Testimonial Representations made by P&N and WEMA. He was aware of the facts and circumstances whereby the Made in Australia Representations were false and misleading including, because he knew in November 2012 prior to the date on which the Made in Australia Representations were made by P&N and by WEMA and at all material times since, that the solar panels that were the subject of the supply or possible supply, or promoted for supply or use by P&N were not made in Australia and were in fact made in China. He was also aware that the Testimonial Representations were false and misleading including, in the case of P&N, because he knew in around May 2012 when the video testimonials were published on YouTube and the Euro Solar website and at all material times since, that the video testimonials were not made by actual customers of Euro Solar and the video testimonials featured actors to make the statements in the video testimonials, and, in the case of WEMA, including because he knew in November 2012 prior to the date on which the written testimonials were published on the Australian Solar Panel.au website, and at all material times since, that WEMA, trading as Australian Solar Panel, was a wholesale supplier only and it did not supply any retail customers and did not have any actual customers such as those represented in the written testimonials, so the written testimonials could not have been given by customers of Australian Solar Panel. 32 Mr Patel admits that he did not take adequate steps to prevent P&N and WEMA making, nor cause P&N and WEMA to cease continuing to make, the Made in Australia Representations and Testimonial Representations, save that he took steps to ensure that P&N and WEMA ceased some of that conduct after this proceeding was commenced in respect of the Testimonial Representations made by P&N and WEMA, and in respect of the Made in Australia Representations made by P&N. He admits that he did not take adequate steps to prevent P&N and WEMA making the Made in Australia Representations and Testimonial Representations. He did not take adequate steps to cease continuing to make the Made in Australia Representations until after this proceeding was commenced, but did cease making the Testimonial Representations in February 2013 immediately after being alerted by the ACCC of its concerns about these representations.

[31]

Declarations 43 The Court's power to make declarations is contained in s 21 of the Federal Court of Australia Act 1976 (Cth). The declarations sought by the ACCC are in the following terms: 1. From about November 2012 until May 2013, each of P & N Pty Ltd ("P&N") and P & N NSW Pty Ltd ("P&N NSW"), trading as "Euro Solar", in trade or commerce: (a) engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of s 18 of the Australian Consumer Law ("ACL"), being Schedule 2 to the Competition and Consumer Act 2010 (Cth) ("CCA"); and (b) in connection with the supply or possible supply of goods or the promotion of the supply or use of goods, made false or misleading representations concerning the place of origin of goods, in contravention of s 29(1)(k) of the ACL, by making representations to consumers, through the use of the words "Australian solar panel" and "Australian solar panels" and the use of a logo containing the words "Australian solar panel" and an image of a map of Australia ("Logo"), in advertisements and promotions appearing: (c) in newspapers; (a) on television; (b) in videos published on the website at 'www.youtube.com' ("YouTube"); and (c) on the website at 'www.eurosolar.com.au', that the solar panels being promoted by them for supply or use were made in Australia, when in fact those solar panels were not made in Australia. 2. From at least January 2013 until 27 September 2013, Worldwide Energy and Manufacturing Australia Pty Ltd ("WEMA") trading as "Australian Solar Panel", in trade or commerce: (a) engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of s 18 of the ACL; and (b) in connection with the supply or possible supply of goods or the promotion of the supply or use of goods, made false or misleading representations concerning the place of origin of goods, in contravention of s 29(1)(k) of the ACL, by making representations to consumers, through the use of: (c) the words "Australian solar panel" as a trading name; (d) the Logo to promote the "Australian Solar Panel" business; (e) the domain names 'www.australiansolarpanel.com.au' and 'www.australiansolarpanel.com' to promote the "Australian Solar Panel" business; and (f) the words "Australian solar panel" and the Logo in promotional material on the websites at 'www.australiansolarpanel.com.au' and 'www.australiansolarpanel.com', that the solar panels being promoted by it for supply or use were made in Australia, when in fact those solar panels were not made in Australia. 3. From about May 2012 to February 2013, each of P&N and P&N NSW, trading as "Euro Solar", in trade or commerce: (a) engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of s 18 of the ACL; and (b) in connection with the supply or possible supply of goods or the promotion of the supply or use of goods, made false or misleading representations that purported to be testimonials by persons relating to goods, in contravention of s 29(1)(e) of the ACL, by making representations to consumers that videos appearing on YouTube and the website at 'www.eurosolar.com.au' were testimonials by customers of "Euro Solar", when in fact they were not. 4. From at least January 2013 to February 2013, WEMA trading as "Australian Solar Panel", in trade or commerce: (a) engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of s 18 of the ACL; and (b) in connection with the supply or possible supply of goods or the promotion of the supply or use of goods, made false or misleading representations that purported to be testimonials by persons relating to goods, in contravention of s 29(1)(e) of the ACL, by making representations to consumers that written statements appearing on the website at 'www.australiansolarpanel.com.au' were testimonials by customers of "Australian Solar Panel", when in fact they were not. 5. Nikunjkumar (Nick) Patel ("Nick Patel"): (a) acting in his capacity as director of P&N, including as the sole director at all material times up to and including 19 April 2013, and having knowledge of the essential elements of the contraventions of ss 18, 29(1)(e) and 29(1)(k) of the ACL by P&N referred to in paragraphs 1 and 3 above, was knowingly concerned in, or a party to, those contraventions; and (b) acting in his capacity as the sole director of WEMA, and having knowledge of the essential elements of the contraventions of ss 18, 29(1)(e) and 29(1)(k) of the ACL by WEMA referred to in paragraphs 2 and 4 above, was knowingly concerned in, or a party to, those contraventions. 44 In my opinion, the declarations are appropriate in form. It is in the public interest that they be made. The representations that constitute the contravening conduct were made over a fairly substantial period of time. The declarations identify the contravening conduct and it is in the public interest that the conduct be identified and that its contravening nature be made clear.

[32]

Injunctions 45 The Court's power to grant injunctions is contained in s 232 of the ACL. The ACCC seeks the following injunctions: 1. Each of P&N, P&N NSW and WEMA be restrained for a period of 3 years from the date of this order, whether by itself, its servants, its agents or otherwise, in trade or commerce in connection with the supply or possible supply of solar panels, or in connection with the promotion of supply or use of solar panels, from making any representation to the effect that those solar panels are made in Australia, when they are not. 2. Nick Patel be restrained for a period of 3 years from the date of this order in trade or commerce in connection with the supply or possible supply of solar panels, or in connection with the promotion of supply or use of solar panels, from being knowingly concerned in or party to the making by a corporation of any representation to the effect that those solar panels are made in Australia, when they are not. 3. Each of P&N, P&N NSW and WEMA be restrained for a period of 3 years from the date of this order, whether by itself, its servants, its agents or otherwise, in trade or commerce in connection with the supply or possible supply of solar panels, or in connection with the promotion of supply or use of solar panels, from making any representation that purports to be a testimonial by any person, when it is not. 4. Nick Patel be restrained for a period of 3 years from the date of this order in trade or commerce in connection with the supply or possible supply of solar panels, or in connection with the promotion of supply or use of solar panels, from being knowingly concerned in or party to the making by a corporation of any representation that purports to be a testimonial by any person, when it is not. 5. Each of P&N, P&N NSW and WEMA, within 7 days of the date of this order, must take all reasonably practicable steps to remove from broadcast, publication, display or circulation any advertising or promotional material that conveys any of the representations referred to in the declarations at paragraphs 1 to 4 above. 46 The Court's power extends to the "accessory" as well as the principal offender, in other words, it includes Mr Patel's conduct. Some of the traditional restraints on the power of a Court to grant an injunction have been removed (see s 80(4) and (5) of the Trade Practices Act 1974 (Cth) and now s 232(4) of the ACL). The proposed injunctions are appropriate. They will restrain the respondents from repeating the contravening conduct for a period of three years from the date of the orders. 47 The injunctions are appropriate and, in my opinion, necessary because of what has occurred in the past and the potential in the future for the wide spread dissemination of false or misleading or deceptive advertisements.

[33]

Publication Orders 48 The Court's power to make publication orders is contained in s 246(2)(d) of the ACL. The publication orders sought are as follows: 1. P&N and P&N NSW jointly cause to be published, at their own expense, within 28 days of this order a corrective notice, in the form (including colour) of Annexure A to these orders, in each of the following newspapers: (a) The Adelaide City Messenger; (b) The Advertiser; (c) The Courier Mail; (d) The Herald Sun; (e) The Sunday Telegraph; (f) The Sunshine Coast Daily; (g) The West Australian; and further, to ensure that each such corrective notice: (h) with dimensions 18 centimetres long and 12 centimetres wide; (i) is in text which is in Arial font and which is: (i) for the headline, not less than 18 point and bolded; and (ii) for the remaining text, not less than 12 point; and (j) is placed within the first 5 pages of each of the newspapers. 2. P&N and P&N NSW jointly publish, or cause to be published, at their own expense within 3 days of this order, a colour copy of a corrective notice in the form of Annexure A to these orders on the website at www.eurosolar.com.au (Eurosolar Website), and further, are to ensure that such corrective notice is: (a) accessible by a prominent one-click hyperlink: (i) comprised of the words "Corrective Notice: Our contraventions of the Australian Consumer Law by making false, misleading or deceptive representations that Australian Solar Panels were made in Australia and that statements were testimonials by customers - Click here for further information" in 18 point, bold, black Arial font on a white background, centred and in a black bordered box; (ii) which is displayed in the top third of the homepage of the Eurosolar Website and viewable immediately on a computer screen upon access to the homepage of the Eurosolar Website; (b) crawlable (i.e. its contents may be indexed by a search engine); (c) displayed on a stand-alone webpage that is coded in standard "HTML" format; (d) not displayed as a "pop-up" or "pop-under" window; (e) legible and in text which is in Arial font and which is: (i) for the headline, not less than 18 point and bolded; and (ii) for the remaining text, not less than 12 point; and (f) maintained on the Eurosolar Website for the period of 30 days from the date of this order. 49 The publication orders should be made in circumstances where the representations have been widely published. That will achieve at least two purposes. First, it will advise customers of the respondents of the false, misleading, or deceptive conduct and the reasons the conduct was of that nature. Secondly, it will perform a valuable educative role in terms of conduct which constitutes a contravention of the ACL.

[34]

Pecuniary Penalties 50 The Court's power to order a person to pay a pecuniary penalty in relation to contraventions of s 29(1)(e) and s 29(1)(k) is contained in s 224 of the ACL. The maximum penalty in respect of such contraventions is $1.1 million for a body corporate and $220,000 for a natural person. The parties propose a pecuniary penalty in the case of each of P&N and P&N NSW of $50,000, a pecuniary penalty in the case of WEMA of $25,000 and a pecuniary penalty in the case of Mr Patel of $20,000. 51 Section 224(2) of the ACL provides as follows: In determining the appropriate pecuniary penalty, the Court must have regard to all relevant matters including: (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; and (b) the circumstances in which the act or omission took place; and (c) whether the person has previously been found by a court in proceedings under Chapter 4 or this Part to have engaged in any similar conduct. 52 Section 76E of the Trade Practices Act 1974 (Cth) was in similar terms to s 224 of the ACL, and through a line of authorities this Court has identified a number of additional matters which are relevant to the determination of the appropriate pecuniary penalty. They are as follows: (1) the size of the contravening company; (2) the deliberateness of the contravention and the period over which it extended; (3) whether the contravention arose out of the conduct of senior management of the contravener or at some lower level; (4) whether the contravener had a corporate culture conducive to compliance with the ACL, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention; (5) whether the contravener has shown a disposition to co-operate with the authorities responsible for the enforcement of the ACL in relation to the contravention; (6) whether the contravener has engaged in similar conduct in the past; (7) the financial position of the contravener; (8) whether the contravener's conduct was systematic, deliberate or covert; and (9) the amount of loss or damage caused including whether consumers suffered any loss by the contravening conduct. (Trade Practices Commission v CSR Ltd (1991) ATPR 41-076; NW Frozen Foods at 292 per Burchett and Kiefel JJ (see also Heerey J at first instance Australian Competition and Consumer Commission v NW Frozen Foods Pty Ltd [1996] ATPR 41-515 at 42-444 and 42-445) and Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249 at 258 [37]). 53 The primary object in imposing a pecuniary penalty is deterrence, both general and specific: NW Frozen Foods at 294-295 per Burchett and Kiefel JJ; Trade Practices Commission v CSR Ltd at 52,152 per French J (as his Honour then was). The pecuniary penalty should not be so low as to constitute in the eyes of the contravener an acceptable cost of doing business: Singtel Optus Pty Ltd v Australian Competition and Consumer Commission at 265 [62]. 54 The ACL provides that a person is not liable for more than one pecuniary penalty in relation to the same conduct (s 224(4)). Each time the representations are made there is different conduct so s 224(4) is not relevant. Nevertheless, it is open to me to consider the conduct as a whole and impose a global penalty (Australian Competition and Consumer Commission v Pepe's Ducks Ltd [2013] FCA 570 at [39]). I will adopt that approach. 55 The contravening conduct consisted of the making of the representations repeatedly over a period of some months and through a wide variety of media. Both representations, i.e., the Made in Australia Representations and the Testimonial Representations, were important features of the respondents' advertising campaign and of the way they presented themselves in the public. An additional feature to be taken into account in the case of the Made in Australia Representations is that it is suggested in some of the advertisements that not only were the solar panels made in Australia but that customers or potential customers of the respondents ought to be supporting them because of that fact. 56 From May 2013 WEMA placed a corrective notice in a prominent location on its home page stating that Australian Solar Panel products are not made in Australia but are made in China. This corrective notice was viewable on the WEMA website by consumers until July 2013 when WEMA decided to take down the entire website. 57 Since commencing operations in around September 2011, P&N and P&N NSW have sold more than 70,000 solar panels to more than 5,000 retail customers including approximately 6,000 solar panels branded as Australian solar panel since November 2012. Since November 2012 WEMA trading as Australian Solar Panel has supplied approximately 6,000 solar panels branded as Australian solar panel to P&N and P&N NSW which were then sold to retail customers. 58 There is no evidence before the Court as to the number of customers that might have relied on the relevant representations and therefore it is not possible to quantify the amount of any profit gained by the respondents or loss caused to customers. 59 None of the respondents have previously been found by a Court to have contravened, or to have been knowingly concerned or involved in a contravention of the ACL or its predecessor, Part 5 of the Trade Practices Act 1974 (Cth). The ACCC and the respondents ask the Court to treat this as a highly relevant factor when determining the appropriateness of the agreed penalty. It is a relevant factor and one the Court is required to take into account. 60 In addition to the financial information relating to each of the respondents set out above, I note that P&N has offices in Queensland, Tasmania and Victoria and currently has 28 employees. P&N NSW has offices in New South Wales and South Australia and currently has 21 employees. WEMA currently has five employees. 61 The parties submit that the contravening conduct was careless and reckless and they asked me to find that the representations arose due to the respondents' lack of understanding of the relevant legislation and the absence of an effective compliance system. 62 I have already referred to certain facts relating to Mr Patel's involvement in relation to the Made in Australia Representations (at [31]-[32]). Mr Patel made those decisions knowing that the solar panels that were to be supplied were not made in Australia. The three corporate respondents made the Made in Australia Representations knowing that they were misleading. The contravening conduct comprises a course of conduct over fairly substantial periods. The Made in Australia Representations were a marketing strategy and continued after the ACCC raised its concerns about the respondents' conduct with them in February 2013 and thereafter at least until shortly after the ACCC issued this proceeding. I find that the Made in Australia Representations were made carelessly and recklessly and were a central part of the respondents' business and marketing strategy. 63 P&N and P&N NSW engaged a third party company to create the video testimonial representations. Those companies and Mr Patel knew that the testimonial representations in the video testimonials were false. The respondents continued to publish the video testimonials on the Euro Solar website and YouTube until February 2013 soon after the ACCC raised its concerns about the respondents' conduct with them. The respondents removed the video testimonials from the Euro Solar website and from YouTube on 28 February 2013. 64 WEMA engaged a third party to create the written testimonials. The representations in the written testimonials were false as WEMA did not have any retail customers. The written testimonials continued to be published on the Australian Solar Panel website until February 2013 soon after the ACCC raised its concerns about the respondents' conduct with them. The respondents removed the written testimonials from the Australia Solar Panel website on or about 18 February 2013. I find that the corporate respondents were careless and reckless in making the Testimonial Representations. 65 As to participation of senior management in the contravening conduct, I do not think that there is any doubt that through Mr Patel senior management of P&N and WEMA participated in the contraventions. There is no evidence that senior management of P&N NSW participated in the contravening conduct. 66 At the time the representations were made the corporate respondents did not have a culture of compliance with the ACL. None of the companies had any relevant educational programs, or disciplinary measures in place. The respondents have indicated to the ACCC that they plan to establish a comprehensive CCA and ACL compliance program in the near future. 67 The respondents took a number of corrective measures in relation to their acknowledged contraventions of the ACL after receiving the initial letter from the ACCC and prior to this penalty hearing as follows. I quote from the joint submissions on penalty: a) the Respondents removed the Written testimonials from the Australian Solar Panel website on or about 18 February 2013, around 10 days after being alerted by the ACCC to their concerns about these Testimonials, and removed the Video testimonials from the Euro Solar website and YouTube on or about 28 February 2013, 20 days after being alerted by the ACCC to their concerns about these Testimonials; b) P&N and P&N NSW ceased making the Made in Australia Representations in all their newspaper advertisements on or about 16 May 2013, on the Eurosolar website on or about 20 May 2013, and in TV commercials in or about the first week of June 2013, being between 10 and 28 days after the commencement of these proceedings by the ACCC; c) P&N and P&N NSW removed a number of Eurosolar TV commercials, which made the Made in Australia Representation, from You Tube on or about 20 May 2013, around 14 days after the commencement of these proceedings by the ACCC; d) WEMA and Nick Patel decided to change the trading name of their company, as well as its trade mark and brand name from "Australia Solar Panel" to "Australian Premium Solar" after the commencement of these proceedings by the ACCC however WEMA continued to using the trading name of the company on the WEMA website up until about 24 July 2013; e) WEMA and Nick Patel took steps to disable the WEMA website on or about 24 July 2013 in order to cease making the Made in Australia Representation; and f) WEMA and Nick Patel had, by 19 June 2013, placed a stamp bearing the words "Made in China" on all boxes containing unsold or undelivered Australia Solar Panel products. 68 The respondents have cooperated with the ACCC in the conduct of this proceeding by participating in the formulation of the statement of agreed facts, the proposed orders and the joint submissions on penalty. They have done that at an early point in the proceeding and the parties submit that it is a significant mitigating factor that the respondents have each admitted liability in relation to the contraventions of the ACL without a contested hearing. A complex trial has thereby been avoided. I think that that is a significant mitigating factor. 69 I am satisfied that having regard to all the facts it is appropriate that P&N and P&N NSW pay the same penalty because the contravening conduct of each of them is similar. It is appropriate that the pecuniary penalty imposed on WEMA be lower because overall its conduct was not as substantial or widespread. It is appropriate that Mr Patel's pecuniary penalty be lower than that of the corporate respondents because of the distinction the ACL draws between penalties in relation to companies and natural persons and because of his relatively modest salary. 70 I am satisfied that the appropriate pecuniary penalty in the case of each of P&N and P&N NSW is $50,000 and that the appropriate pecuniary penalty in the case of WEMA is $25,000. The appropriate pecuniary penalty in the case of Mr Patel is $20,000. 71 I am satisfied that it is appropriate to make orders for the payment of these penalties in instalments having regard to the financial position of the corporate respondents. 72 I will make an order that the pecuniary penalties specified in [70] above be paid in instalments as follows: (a) in respect of P&N: (i) $40,000 within 28 days of the date of this order; and (ii) $10,000 within 6 months of the date of this order; (b) in respect of P&N NSW: (i) $15,000 within 28 days of the date of this order; (ii) $17,500 within 6 months of the date of this order; and (iii) $17,500 within 12 months of the date of this order; (c) in respect of WEMA: (i) $20,000 within 28 days of the date of this order; and (ii) $5,000 within 6 months of the date of this order; (d) in respect of Nick Patel, $20,000 within 28 days of the date of this order. In the event that there is a default by a respondent in the making of any of the instalment payments referred to above, the whole of the outstanding amount of the pecuniary penalty specified in [70] above in respect of that respondent is due and payable by that respondent.

Australian Competition and Consumer Commission v P & N Pty Ltd - [2014] FCA 6 - FCA 2014 case summary — Zoe

At a glance

Court

Decision date

Before

Source

Judgment (35 paragraphs)

Parties

Legislation Cited (5)

Cases Cited (13)