Australian Competition and Consumer Commission v SensaSlim Australia Pty Ltd

YATES J: 1 On 11 May 2016, I made certain orders against the remaining respondents following a penalty hearing: Australian Competition and Consumer Commission v SensaSlim Australia Pty Ltd (in liq) (No 7) [2016] FCA 484 (the penalty reasons). In those reasons I noted (at [178]) that the applicant had sought an order that the remaining personal respondents - Mr Foster, Mr O'Brien and Mr Boyle - pay its costs of the proceeding. I noted that, at the penalty hearing, Mr Boyle had sought to be heard on the question of costs following the publication of the penalty reasons. I allowed Mr Boyle that opportunity, although I expressed the provisional view in the penalty reasons that I could see no reason why Mr Foster, Mr O'Brien and Mr Boyle should not pay the applicant's costs of the case as brought against each of them, respectively. 2 Mr Boyle and the applicant have now provided written submissions on the question of costs as between them, in accordance with Orders 13 and 14 of the orders made on 11 May 2016.

Mr Boyle's submissions 3 In his submissions, Mr Boyle refers, firstly, to his attempts to come to a settlement with the applicant. Mr Boyle says that the terms he offered included his consent to certain injunctions, a disqualification order for a period of one year, and a contribution ($5,000) towards the applicant's costs. He says that his offer also included his preparedness to submit to a pecuniary penalty in an amount to be "negotiated" between himself and the applicant. 4 Mr Boyle criticises the applicant's "offer of settlement" which, he says, required him to agree to facts which were not accurate. He complains that the applicant was not willing to "negotiate" on the amount of the pecuniary penalty to be paid - it wanted Mr Boyle to agree "to allow the Court to impose a pecuniary penalty at some later date". He also complains that the applicant required him to agree to a compensation order for an amount to be determined by the Court at a later date, even though, subsequently, the applicant abandoned its claim against the respondents for compensation orders. 5 Mr Boyle says that he does not believe that the applicant acted "appropriately as a model litigant" in the manner in which it "handled the settlement negotiation". By this, I understand Mr Boyle to mean that his offer of settlement should have been accepted by the applicant. 6 Secondly, Mr Boyle argues that various contraventions alleged against him at the liability hearing failed. He submits that a proportionate discount should be applied to the costs sought against him. Indeed, Mr Boyle submits that the applicant should pay his costs of defending the claims on which the applicant did not succeed. 7 Thirdly, Mr Boyle says that he conducted himself "at the highest level at all times throughout the entire process". He says that he has shown the Court "the appropriate respect and met with all requirements in a timely manner". He says that he "did not cause any delays in the process". 8 In this connection, Mr Boyle also points to the fact that, because the liability hearing was heard in Brisbane (for reasons associated with the inability of the second respondent, Mr Foster, to leave Queensland at that time), he engaged counsel from Brisbane. He says that, because subsequent hearings were held in Sydney, it was necessary for him to bear the additional cost of his inter-state counsel attending in Sydney on those occasions. 9 Finally, Mr Boyle points to what he says are mitigating circumstances which should be taken into account on the question of costs. Mr Boyle refers to the amount of the pecuniary penalty that has been ordered against him, and his limited financial circumstances, which I discussed in the penalty reasons. He requests that provision be made for a "payment plan" in respect of the costs he might be ordered to pay. He also requests that any order for costs against him be "postponed" until after the applicant has exhausted its attempts to recover costs against the two other remaining personal respondents.

consideration and disposition 10 Notwithstanding Mr Boyle's submissions, I am not persuaded that, on the question of costs, he stands in any significantly different position to Mr Foster and Mr O'Brien. On 11 May 2016, each was ordered to pay the applicant's costs of the case as brought against him. 11 It is true that a number of alleged contraventions pleaded against Mr Boyle did not ultimately succeed. In some cases, this was due to the particular way in which the applicant had chosen to plead its case, rather than to the lack of a proper factual foundation. Also, the applicant submits, correctly in my view, that the essence of the contraventions that were made out against Mr Boyle in respect of the Welcome letter and the KMB letter, concerned the false representation, in which Mr Boyle actively participated, that he controlled and directed the SensaSlim business and was actively involved in that business. The fact that Mr Boyle's liability was not established for each other aspect of conduct alleged against him in which that false representation was made, does not mean that the applicant acted inappropriately in pursuing Mr Boyle for those additional, alleged contraventions. 12 Overall, I am not persuaded that this is a case where costs should be apportioned according to the particular contraventions that were, and were not, established, against Mr Boyle. All contraventions alleged against Mr Boyle concerned two central findings of fact which Mr Boyle resisted and which were made against him, namely that he was personally involved in misrepresenting to prospective franchisees and Area Managers that he directed and controlled the SensaSlim business and was actively involved in that business, and that he deliberately failed to inform Area Managers, in a timely manner, that he intended to resign as a director of SensaSlim. 13 Mr Boyle's submission that the applicant did not act appropriately in the "settlement negotiation" to which he refers, should be rejected. It is not necessary for me to either know or understand the ins and outs of how the parties handled any "settlement negotiation". It is enough for me to observe that the imposition of penalties and other remedies in a case such as the present is, ultimately, a question for the Court, not for the parties to "negotiate". I can only assume that Mr Boyle's idea of an appropriate penalty would have been an amount falling within the range of $4,241 to $7,626, which he urged on the Court during the penalty hearing. A penalty in that range, even if "agreed", would never have been accepted as appropriate, particularly in light of the pecuniary penalty of $75,000 which I did impose. Similarly, a disqualification order for the period of one year, even if "agreed", would not have been accepted as appropriate in light of the disqualification order for three years which I did make. 14 Whilst I have no doubt that Mr Boyle has incurred not insignificant legal costs, including the cost of having interstate counsel appear for him in Sydney at the penalty hearing, this fact has no real weight in determining Mr Boyle's liability for the applicant's costs. Similarly, the fact that Mr Boyle has been ordered to pay a substantial pecuniary penalty is not a factor which has real weight. 15 Mr Boyle's submission that the applicant should first exhaust its attempts to recover costs from Mr Foster and Mr O'Brien before pursuing costs against him is, with respect, misconceived. The applicant is only seeking an order against Mr Boyle for that part of its costs which relates to the preparation and bringing of the proceeding against Mr Boyle. The applicant does not seek an order that Mr Boyle pay or contribute to its costs of bringing the proceeding against the other respondents. 16 Whilst I am satisfied that Mr Boyle has limited financial means, I am not persuaded that a "payment plan" in respect of costs should be ordered. For one thing, no attempt has been made by Mr Boyle to articulate the structure of any such "plan" or to demonstrate, in practical terms, its appropriateness or feasibility. 17 Finally, it is not correct that Mr Boyle has conducted himself "at the highest level at all times throughout the entire process". It is to be remembered that Mr Boyle gave false evidence in his examination conducted under s 155 of the Trade Practices Act 1974 (Cth): Australian Competition and Consumer Commission v Boyle [2015] FCA 1039. In any event, such considerations are not relevant to the determination of costs, unless they are raised to counter the argument that the party concerned has acted inappropriately. The applicant makes no suggestion that Mr Boyle acted inappropriately in his conduct in this proceeding. 18 In all the circumstances, the appropriate order is that Mr Boyle should pay the applicant's costs of and incidental to the proceeding as against him. I certify that the preceding eighteen (18) numbered paragraph are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates.

SCHEDULE OF PARTIES NSD 1163 of 2011 Respondents Second Respondent PETER CLARENCE FOSTER Third Respondent PETER LESLIE O'BRIEN Fourth Respondent ADAM TROY ADAMS Fifth Respondent MICHAEL ANTHONY BOYLE