//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2015] FCA 278
Federal Court of Australia
2015-03-27
Katzmann J
Original judgment source is linked above.
Number of paragraphs: 151
Counsel for the Applicant: Mr S White SC with Mr D Tynan
Solicitor for the Applicant: Australian Government Solicitor
Counsel for the First and Second Respondents: Dr R C A Higgins
Solicitor for the First and Second Respondents: Clayton Utz
Counsel for the Third Respondent: Mr C Moore SC
Solicitor for the Third Respondent: Allens
IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 2012 of 2013
BETWEEN: AUSTRALIAN COMPETITION & CONSUMER COMMISSION
JUDGE: KATZMANN J DATE OF ORDER: 27 MARCH 2015 WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 2012 of 2013
BETWEEN: AUSTRALIAN COMPETITION & CONSUMER COMMISSION
JUDGE: KATZMANN J DATE: 27 MARCH 2015 PLACE: SYDNEY
REASONS FOR JUDGMENT 1 This proceeding is concerned with door-to door sales practices for the supply of electricity to consumers. More particularly, it is concerned with attempts by sales representatives employed or engaged by SalesForce Australia Pty Ltd ("SalesForce") on behalf of Origin Energy Electricity Limited ("Origin Electricity") - pursuant to contracts between SalesForce and Origin Energy Retail Limited ("Origin Retail") - to sign up consumers at their homes to unsolicited consumer agreements for the supply of electricity. The conduct in question occurred over a period of 16 months, from September 2011 until December 2012. 2 The Australian Competition and Consumer Commission ("ACCC") contends that all three companies contravened the Australian Consumer Law ("ACL"). On 26 September 2013 it filed an originating application seeking declarations of wrongdoing and various orders, including pecuniary penalties. Following a mediation conducted by a registrar of the Court on 9 December 2014, the parties reached a settlement and on 5 March 2013 they filed a Statement of Agreed Facts and Admissions. As a result of those admissions the ACCC does not press its claim against Origin Retail and seeks the leave of the Court to discontinue the proceeding against that company which I will grant. 3 The parties have also agreed upon the declarations and orders that should be made. The source of the Court's power to make orders for pecuniary penalties in this kind of case is s 224 of the ACL. This is a power which is enlivened upon the Court being satisfied (relevantly) that a provision of Pt 2-2 (unconscionable conduct) or a provision of Pt 3-1 (unfair practices) has been contravened. Consequently, despite the parties' consent, the Court is bound to satisfy itself that the contraventions have, indeed, occurred. The parties made joint submissions, not only as to conduct but also in relation to orders, including the amount of the pecuniary penalties, a course sanctioned by the Full Court in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 ("NW Frozen Foods") and which, despite criticism in subsequent cases, was approved by another Full Court in Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd (2004) ATPR ¶41-993; [2004] FCAFC 72 ("Mobil Oil") at [79]. More recently, however, doubts about the correctness of NW Frozen Foods have been revived. In Australian Securities and Investment Commission v Ingleby (2013) 275 FLR 171; [2013] VSCA 49 the Victorian Court or Appeal held that the Full Courts in NW Frozen Foods and Mobil Oil were wrong. 4 In Barbaro v The Queen (2014) 88 ALJR 372; [2014] HCA 2 ("Barbaro") the High Court deprecated the practice in criminal proceedings of prosecution counsel providing submissions to the court about the range of suitable sentences. In Australian Competition and Consumer Commission v EnergyAustralia Pty Ltd [2014] ATPR ¶42-469; [2014] FCA 336 ("EnergyAustralia") at [115] Middleton J held that Barbaro did not implicitly overrule NW Frozen Foods and the cases that have followed it and offers a spirited defence of the reasoning in NW Frozen Foods. In Australian Energy Regulator v Snowy Hydro Limited (No 2) [2015] FCA 58 at [136] Beach J did likewise. 5 It is unnecessary for me to embark on my own analysis. The Full Court is currently reserved in a case where the issue squarely arises for consideration: Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining & Energy Union (QUD 257 of 2013). In the meantime, I am bound by NW Frozen Foods and Mobil Oil. For this reason I received and have had regard to the joint submissions. 6 On the basis of the agreed facts and admissions, I am satisfied that Origin Electricity and SalesForce contravened of Pts 2-1, 2-2, 3-1 and 3-2 of the ACL as alleged. I am satisfied, too, that the penalties proposed are appropriate and that I have the power to make them. Despite some initial misgivings about whether they went far enough, which were allayed during oral argument, I am also satisfied that all of the non-pecuniary orders sought should be made.
Relevant statutory provisions 7 Most of the relevant statutory provisions are contained in the ACL. 8 Section 18(1) provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Section 18(1) is unlimited by Pt 3-1, which is about unfair practices. Part 3-1 includes s 29 (false or misleading representations). 9 With one exception, the relevant statutory provisions are largely the same today as they were during the period in question. The exception concerns the unconscionable conduct provisions. The ACL was amended by the Competition and Consumer Legislation Amendment Act 2011 (Cth), which commenced on 1 January 2012. Unconscionable conduct is alleged and admitted in relation to the conduct of the respondents towards two consumers (Witnesses C and E). The unconscionable conduct in these cases straddle the changes. As the parties submitted, however, the changes are immaterial for present purposes. At both periods of time, s 21(1) prohibited a person, in trade or commerce, in connection with the supply or possible supply of goods or services to another, from engaging in conduct that, in all the circumstances, is unconscionable. The Full Court in Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90 ("Lux Distributors") said at [41]: The word "unconscionability" means something not done in good conscience.… Notions of moral tainting have been said to be relevant, as often they no doubt are, as long as one recognises that it is conduct against conscience by reference to the norms of society that is in question. The statutory norm is one which must be understood and applied in the context in which the circumstances arise. The context here is consumer protection directed at the requirements of honest and fair conduct free of deception. Notions of justice and fairness are central, as are vulnerability, advantage and honesty." 10 During both periods the ACL contained a non-exhaustive list of matters to which the Court could have regard for the purpose of determining whether there had been a contravention of s 21(1). Those matters included: (a) the relative strengths of the bargaining positions of the supplier on the one hand and the customer (formerly consumer) on the other; (b) whether, as a result of conduct engaged in by the supplier, the customer was required to comply with conditions that were not reasonably necessary for the protection of the supplier's legitimate interests; (c) whether the customer was able to understand any documents relating to the supply or possible supply of the goods or services; (d) whether the supplier exerted any undue influence or pressure on, or used any unfair tactics against, the customer or a person acting on the customer's behalf in relation to the supply, or possible supply, of the goods or services; and (e) the amount for which, and the circumstances under which the customer could have acquired identical or equivalent goods or services from someone other than the supplier. 11 Division 1 of Pt 3-1 deals with false or misleading representations. They include false or misleading representations about goods or services. Section 29 is the pertinent provision. Section 29(1) relevantly states: 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: … (h) make a false or misleading representation that the person making the representation has a sponsorship, approval or affiliation; or (i) make a false or misleading representation with respect to the price of goods or services; or … (l) make a false or misleading representation concerning the need to for goods or services; or (m) make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3‑2); … 12 By s 50 a person is prohibited from using physical force, or "undue harassment or coercion", in connection, amongst other things, with the supply or possible supply of goods or services. 13 Division 2 of Pt 3-2 deals with "unsolicited consumer agreements". 14 Subdivision B is concerned with negotiating unsolicited consumer agreements. Section 73(1) prescribes permitted hours for doing so. It states that a dealer must not call on a person for the purpose of negotiating an unsolicited consumer agreement or for an incidental or related purpose at any time on a Sunday or a public holiday, before 9 am or after 6 pm on any other day, or after 5 pm if the other day is a Saturday. Section 73(2) excludes the operation of subs (1) if the call is made by consent given to the dealer or the dealer's agent where the dealer or the dealer's agent was not present at the time consent was given. 15 "Dealer" is defined in s 71 to mean a person who, in trade or commerce, enters into negotiations with the consumer with a view to making an agreement for the supply of goods or services to the consumer or calls on or telephones a consumer for that purpose, regardless of whether the person is, or is to be, the supplier of the goods or services. "Negotiation" is defined in s 72 for present purposes to include "any discussion or dealing directed towards the making of the agreement or proposed agreement (whether or not the terms of the agreement or proposed agreement are open to any discussion or dealing)". 16 There is also a statutory definition of "unsolicited consumer agreement", which appears in s 69 of the ACL. Section 69(1) relevantly provides that an agreement is an unsolicited consumer agreement if: (a) it is for the supply, in trade or commerce, of goods or services to a consumer; and (b) it is made as a result of negotiations between a dealer and the consumer: (i) in each other's presence at a place other than the business or trade premises of the supplier of the goods or services; or (ii) by telephone; whether or not they are the only negotiations that precede the making of the agreement; and (c) the consumer did not invite the dealer to come to that place, or to make a telephone call, for the purposes of entering into negotiations relating to the supply of those goods or services (whether or not the consumer made such an invitation in relation to a different supply); and (d) the total price paid or payable by the consumer under the agreement: (i) is not ascertainable at the time the agreement is made; or (ii) if it is ascertainable at that time - is more than $100 or such other amount prescribed by the regulations. 17 If, as here, an allegation is made that an agreement is an unsolicited consumer agreement, then s 70 erects a presumption that it is, unless a respondent proves otherwise. 18 Section 75 imposes an obligation on a dealer who calls on a person at any premises for the purpose of negotiating an unsolicited consumer agreement, or for an incidental or related purpose, to leave the premises immediately on the request of the person with whom the negotiations are being conducted or the occupier of the premises or any person acting with the occupier's actual or apparent authority. 19 Section 76 prohibits a dealer from making an unsolicited consumer agreement with a person unless: (a) before the agreement is made, the person is given information about his or her right to terminate the agreement during the termination period, the way in which that right might be exercised and other matters prescribed by the regulations; (b) if the agreement is made in the presence of both the dealer and the person, the person is given the information in writing; (c) if the agreement is made by telephone, the person is first given the information by telephone and then in writing; and (d) the form and the way in which the person is given the information comply with any other requirements prescribed by the regulations. 20 If a dealer contravenes a provision of Subdivision B and the dealer is not, or is not to be, the supplier of the goods or services to which the agreement relates, then s 77 states that the supplier is also taken to have contravened the provision. 21 Section 139B(2) of the Act relevantly deems conduct engaged in on behalf of a body corporate by a director, employee or agent of the body corporate within the scope of his or her actual or apparent authority or by any other person at the direction or with the consent of the director, employee or agent (where the direction, consent or agreement is within the scope of that person's authority) to be engaged in also by the body corporate. 22 "Engaging in conduct" is defined in s 4(2) to mean "doing or refusing to do any act…"
The admitted contraventions 23 All the admitted contraventions involve attempts to sign up consumers at their homes to unsolicited consumer agreements with Origin Electricity for the supply of retail electricity. In total there are 39 separate contraventions to which penalties apply. In addition there are 17 contraventions of Pt 2-1 of the ACL, specifically, s 18, for engaging in false or misleading conduct or conduct likely to mislead or deceive. The 39 separate contraventions to which penalties apply fall into three different categories: (1) Unconscionable conduct in contravention of Pt 22 of the ACL: (a) Engaging in conduct in connection with the supply or possible supply of retail electricity that in all the circumstances is unconscionable, contrary to s 21(1) (2 contraventions); (2) Unfair practices in contravention of Pt 3-1: (a) Making false or misleading representations that the person making the representations had a sponsorship, approval or affiliation he or she did not have, contrary to s 29(1)(h) of the ACL (2 contraventions); (b) Making false or misleading representations with respect to the price of retail electricity, contrary to s 29(1)(i) of the ACL (3 contraventions); (c) Making false or misleading representations concerning the existence, exclusion or effect of a condition, warranty, guarantee, right or remedy, contrary to s 29(1)(m) of the ACL (2 contraventions); (d) Using undue harassment or coercion in connection with the possible supply of retail electricity, contrary to s 50(1)(a) of the ACL (1 contravention); (3) Negotiating unsolicited consumer agreements in contravention of Pt 3-2 of the ACL: (a) Calling on a person for the purpose of negotiating an unsolicited consumer agreement outside the permitted hours for doing so, contrary to s 73(1) of the ACL (4 contraventions); (b) Failing to provide information required to be provided to a person who is called upon for the purpose of negotiating as unsolicited consumer agreement before entering into negotiations, contrary to s 74 of the ACL (18 contraventions); (c) Calling on a person for the purpose of negotiating an unsolicited consumer agreement or for an incidental or related purpose but not leaving the person's premises immediately on the request of the occupier, contrary to s 75 of the ACL (3 contraventions); and (d) Making unsolicited consumer agreements without informing the consumers in writing of their rights to terminate the agreements during the termination period, contrary to s 76 of the ACL (4 contraventions).
The agreed facts 24 The agreed facts were extensive, spanning some 37 pages. On the basis of the agreement and the admissions I find each fact to be proved. What follows is a summary of the facts upon which I am satisfied that the agreed contraventions occurred. 25 Each of the respondents is a corporation within the meaning of s 4 of the Competition and Consumer Act 2010 (Cth) (Act) in which the ACL appears as Schedule 2. Each was engaged at all relevant times in trade or commerce; Origin Electricity as a retailer of electricity to domestic consumers and SalesForce as a supplier of sales and marketing services, including by providing sales contractors to organisations who wish to market their products using door-to-door sales techniques. Origin Retail had authority to negotiate contracts with consumers on behalf of Origin Electricity and, relevantly, also with SalesForce for the provision by SalesForce of services in respect to door-to-door sales. 26 Since about November 2005, under contracts between Origin Retail and SalesForce, Origin Retail engaged SalesForce to conduct door-to-door sales activities on behalf of Origin Electricity by retaining sales representatives to call on consumers at their homes for the purpose of entering into negotiations directed towards the consumers making agreements for the benefit of Origin Electricity for the supply of retail electricity. The sales representatives negotiated with the 10 consumers at the centre of the proceedings to sign them up to agreements with Origin Electricity. On all the occasions in question in the proceeding, SalesForce was a dealer within the meaning of s 71 of the ACL. 27 Training of these sales representatives was conducted by both SalesForce and Origin Retail. Origin Retail provided training to sales representatives engaged by SalesForce to familiarise them with the relevant products to be supplied to consumers by either Origin Retail or Origin Electricity. SalesForce provided the balance of the training, although Origin Retail had some "input into" and "provided … materials for, and directions in relation to, some of the training provided by SalesForce". SalesForce deployed its sales representatives in accordance with the directions given by Origin Retail. 28 By reason of these matters each sales representative who engaged in the contravening conduct did so as an agent of both SalesForce and Origin Electricity and within the scope of his or her apparent authority, so that, for the purposes of the Act, Origin Electricity and SalesForce are taken to have engaged in the conduct. 29 At all material times, the customers were consumers of retail electricity within the meaning of s 3 of the ACL. 30 After 6 pm one evening in late September 2011 a sales representative engaged by SalesForce called upon Witness A at her home in Waratah, New South Wales, in order to negotiate an unsolicited consumer agreement for the supply to her of retail electricity by Origin Electricity. In the course of that call, the sales representative represented to Witness A that he was calling on her to make sure she was getting a government concession on the supply of retail electricity, that he could get her one with her existing supplier, and that she was not required to change suppliers. He did not tell her that his purpose was to seek her agreement to the supply of retail electricity by Origin Electricity or that he was obliged to leave her premises immediately on request. Nor did he give her, as soon as practicable and before starting to negotiate with her, the name of SalesForce or the address of Origin Electricity which the regulations required him to do. Having regard to his actual purpose, his stated purpose was misleading or deceptive or likely to mislead or deceive. Furthermore, his representation that he could get her a government concession with her existing supplier and that she was not required to change suppliers was also misleading or deceptive or likely to mislead or deceive because, in order to receive a government concession, she would indeed be required to enter into a contract with Origin Electricity. 31 This conduct was a contravention by both Origin Electricity and SalesForce of s 18 of the ACL. SalesForce also contravened ss 73(1)(c), 74(a), 74(b) and 74(c) of the ACL By reason of the operation of s 77 of the ACL, Origin Electricity also contravened those sections. 32 In late September or early October 2011 a sales representative engaged by SalesForce called upon Witness B at his home in Pakenham, Victoria, for the purpose of negotiating with him an unsolicited consumer agreement for the supply of retail electricity by Origin Electricity. In the course of that call, the sales representative falsely represented to Witness B that he was calling on him because there was a mistake in his last electricity bill in that he had been overcharged by his retail electricity supplier by approximately $50. The sales representative did not advise Witness B that his purpose was to seek his agreement to supply retail electricity or that he was obliged to leave his premises immediately on request. 33 Moreover, the sales representative did not provide Witness B as soon as practicable and before starting to negotiate with him the name of SalesForce or the address of Origin Electricity. The representation as to purpose was false, misleading or deceptive or likely to mislead or deceive as was the representation that Witness B had been overcharged by approximately $50 in his last electricity bill. 34 Consequently, both SalesForce and Origin Electricity engaged in trade or commerce in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of s 18 of the ACL and in connection with the supply or possible supply or the promotion of the supply of retail electricity, they made a false or misleading representation with respect to the price of the supply of retail electricity, in contravention of s 29(1)(i) of the ACL. 35 Furthermore, SalesForce contravened s 74(a) of the ACL when the sales representative failed to advise Witness B that his purpose was to seek his agreement to the supply of retail electricity. It also contravened s 74(b) of the ACL when the sales representative failed to advise Witness B that he was obliged to leave his premises immediately on request; and it contravened s 75(c) when the sales representative failed to provide Witness B soon as practicable and before starting to negotiate with him the name of SalesForce and the address of Origin Electricity. As the supplier of the retail electricity to which the proposed agreement related, and by operation of s 77 of the ACL, it follows that Origin Electricity also contravened s 74(a), (b) and (c). 36 Witness C was a native Tamil speaker, who could not read English and who could speak and understand relatively little English. 37 In late 2011 a sales representative engaged by SalesForce called upon him at his home in Dandenong, Victoria, for the purpose of negotiating with him an unsolicited consumer agreement for the supply of retail electricity by Origin Electricity. At the time of the call there was no-one else in the house. 38 The sales representative spent about 30 to 45 minutes there under the false pretext that he was from Witness C's existing electricity supplier. Witness C told him he had difficulty understanding English and was not able to understand the documents the sales representative had shown him. There is no suggestion that the sales representative could speak Tamil. 39 The sales representative then telephoned the sales office of SalesForce. 40 During that call the sales representative put the telephone on speaker mode and instructed and prompted Witness C to say "yes" in response to the questions asked of him by the person on the other end of the telephone. Witness C did as he was asked. The sales representative then signed up Witness C to a contract with Origin Electricity for the supply of retail electricity. 41 In conducting himself as he did, the sales representative exerted undue influence or pressure over Witness C and deployed unfair tactics. The sales representative knew or ought to have known from both his observations of, and conversations with, Witness C that Witness C had difficulty understanding, reading and speaking English, that he might require assistance to read and understand the documents, that he was vulnerable and that he was susceptible to undue influence and pressure and unfair tactics. Yet he did not provide Witness C with a reasonable opportunity to obtain assistance to read and understand the documents and took advantage of, or obtained an advantage from, his vulnerable position. 42 Having regard to all of this conduct, both Origin Electricity and SalesForce engaged in trade or commerce in connection with the supply or possible supply of retail electricity to Witness C, in conduct that was in all the circumstances unconscionable, in contravention of s 21 of the ACL. 43 By the representation by the sales representative to Witness C that he was from Witness C's existing electricity supplier, both Origin Electricity and SalesForce, in trade or commerce, engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of s 18 of the ACL. They also made a false or misleading representation, in connection with the supply or possible supply or the promotion of the supply of retail electricity, that they had an approval or affiliation which they did not have, in contravention of s 29(1)(h) of the ACL. 44 Witness D was the recipient of an unwelcome visit at her home in Blacktown, New South Wales. The visit occurred sometime after 6 pm. The visitor was a SalesForce sales representative, who attended the premises for the purpose of negotiating an unsolicited consumer agreement with Witness D for the supply of retail electricity by Origin Electricity. 45 Prominently displayed under the doorbell to the left of the front door of the home was a notice containing: the words "PLEASE DO NOT KNOCK No sales people, thank you"; an image of a hand knocking on the door struck through with a red cross. 46 Witness D told the sales representative that it was not a good time to call on her. He nevertheless persisted. He represented to her that he was calling on her to make sure she was eligible to receive a government discount on her electricity bill, a representation which Origin Electricity and SalesForce admit was misleading or deceptive or likely to mislead or deceive because that was not in fact his purpose. He did not inform her in writing of her right to terminate the agreement during the cooling-off (termination) period. 47 By the representation as to the purpose of the call each of Origin Electricity and SalesForce contravened s 18 of the ACL. 48 As the sales representative called upon Witness D after 6 pm for the purpose of negotiating an unsolicited consumer agreement with her, SalesForce contravened s 73(1)(c) of the ACL. As the sales representative disregarded the notice displayed on the front door of the premises, SalesForce also contravened s 75(1) of the ACL. And as the sales representative did not inform Witness D in writing of her right to terminate the agreement during the cooling-off period, SalesForce contravened s 76 of the ACL. As the supplier of the retail electricity to which the proposed agreement related, by operation of s 77 of the ACL, Origin Electricity also contravened each of those sections. 49 Witness E was on a carer's pension, providing full-time care for her husband, when, on 11 February 2012, she was called upon by a SalesForce sales representative at her home in Singleton, New South Wales. Once again, the sales representative's purpose was to negotiate an unsolicited consumer agreement for the supply of retail electricity by Origin Electricity to Witness E. Once again, however, the sales representative represented that his purpose was a different one. On this occasion the sales representative represented to Witness E that he was calling on her to check whether she was getting the right discount on her electricity bill. 50 Witness E told the sales representative several times that she was not interested in changing her electricity supplier. Despite this, the sales representative did not immediately leave the premises. 51 Witness E informed the sales representative that her husband was the authorised account holder for the electricity account and refused to give him her husband's details. 52 Nevertheless, the sales representative telephoned SalesForce's sales office to confirm a contract with Witness E and gave the person at the other end of the telephone details concerning Witness E's husband. The sales representative took the phone from Witness E and terminated the call when the person at the other end of the phone said that her husband would need to be present on the call. The sales representative then told Witness E that he would place a second call to the sales office to confirm the contract and instructed her to advise the person at the other end of the phone that her husband had signed the contract when he had not. 53 At no time did the sales representative advise Witness E that his real purpose was to seek her agreement to the supply of retail electricity by Origin Electricity or that he was obliged to leave her premises immediately on request. He did not give her written advice that she had a right to terminate the agreement during the cooling-off period. Nor did he provide her, as soon as practicable and before starting to negotiate with her, either the name of SalesForce or the address of Origin Electricity. 54 The representation as to purpose made by the sales representative was misleading or deceptive or likely to mislead or deceive and, as a result, both Origin Electricity and SalesForce contravened s 18 of the ACL. 55 By reason of the behaviour of the sales representative towards Witness E, both Origin Electricity and SalesForce used undue harassment or coercion in contravention of s 50(1) of the ACL. 56 As the sales representative did not advise Witness E that his purpose was to seek her agreement to the supply of retail electricity from Origin Electricity, SalesForce contravened s 74(a) of the ACL. As the sales representative did not advise Witness E that he was obliged to leave her premises immediately on request, SalesForce contravened s 74(b) of the ACL. As the sales representative failed to provide Witness E, as soon as practicable and before starting to negotiate with her, the name of SalesForce and the address of Origin Electricity, SalesForce contravened s 74(c) of the ACL. By the sales representative's failure to immediately leave the premises after being told several times by Witness E that she was not interested in changing her electricity supplier, SalesForce contravened s 75(1). And by failing to inform Witness E in writing of her right to terminate the agreement during the cooling-off period, SalesForce contravened s 76 of the ACL. By operation of s 77 of the ACL, as the supplier of the retail electricity to which the proposed agreement related, Origin Electricity also contravened these sections of the ACL. 57 Furthermore, both Origin Electricity and SalesForce engaged in conduct which, in all the circumstances, was unconscionable, in contravention of s 21 of the ACL. 58 On or about 5 April 2012 a sales representative engaged by SalesForce attended at the home of Witness G in Manly West in Queensland. The time was about 6:20 pm. The purpose of the call was to negotiate an unsolicited consumer agreement for the supply of retail electricity by Origin Electricity to Witness G. Once again, however, the sales representative pretended otherwise. On this occasion the sales representative represented that he was at the consumer's home to fix an error in one of his electricity bills issued by his then current electricity supplier. He told him that it was the last night sales representatives were going to be in the street fixing errors. 59 This behaviour was misleading or deceptive. Consequently, both Origin Electricity and SalesForce contravened s 18 of the ACL. They also made a false or misleading representation with respect to the price of the supply of retail electricity by reason of the representation made by the sales representative concerning the error in the electricity bill, in contravention of s 29(1)(i) of the ACL. Furthermore, because of the time and purpose of the call, SalesForce contravened s 73(1)(c) of the ACL and, by operation of s 77 of the ACL, as the supplier of the retail electricity to which the proposed agreement relates, Origin Electricity thereby also contravened s 73(1)(c) of the ACL. 60 At about 6:30 pm on or about 17 April 2012 a SalesForce sales representative called at the home of Witness H in Gympie, Queensland, in order to negotiate with her an unsolicited consumer agreement for the supply of retail electricity by Origin Electricity. In the course of his call, however, he did not inform her of his real purpose. To the contrary, he falsely represented to her that he was calling on her to change her retail electricity supplier to Origin Electricity due to changes implemented by the government and that because of those changes she was required to change her electricity supplier to Origin Electricity. 61 These representations were misleading or deceptive and, as a result, both Origin Electricity and SalesForce contravened s 18 of the ACL. The representations were also false or misleading with respect to the need for the supply of retail electricity and, consequently, both Origin Electricity and SalesForce contravened s 29(1)(l) of the ACL. 62 Having regard to the time and purpose of the call, SalesForce contravened s 73(1)(c) of the ACL. By reason of the failure on the part of the sales representative, as soon as practicable and in any event before starting to negotiate, to clearly advise Witness H that his purpose was to seek her agreement to the supply of retail electricity by Origin Electricity and that he was obliged to leave the premises immediately on request, SalesForce contravened s 74(a) and (b). By reason of the failure of the sales representative to give her SalesForce's name and Origin Electricity's address as prescribed by the regulations, SalesForce contravened s 74(c). By operation of s 77 of the ACL, as the supplier of the retail electricity to which the proposed agreement related, Origin Electricity also contravened those provisions of the ACL. 63 Witness J lived in Crystal Brook in South Australia when, in or about early July 2012, he was visited at her home by the sales representative of SalesForce. The sales representative's purpose was to negotiate with him an unsolicited consumer agreement for the supply of retail electricity by Origin Electricity. 64 Despite being told several times that Witness J was not interested in changing his electricity supplier, the sales representative did not immediately leave the premises. Consequently, SalesForce contravened s 75(1) of the ACL and, by operation of s 77, as the supplier of the retail electricity to which the proposed agreement related, Origin Electricity also contravened s 75(1). 65 The sales representative represented to Witness J that changing his written retail electricity supplier to Origin Electricity did not involve entering into a contract or the payment of an exit fee. These representations were misleading or deceptive or likely to mislead or deceive and, consequently, both SalesForce and Origin Electricity contravened s 18 of the ACL. Furthermore, the representation that there was no exit fee to change electricity suppliers was a false or misleading representation concerning the existence, exclusion or effect of a condition, warranty, guarantee, right or remedy with the result that both SalesForce and Origin Electricity contravened s 29(1)(m) of the ACL. 66 The sales representative failed to inform Witness J in writing of his right to terminate the agreement during the cooling-off period. Consequently, SalesForce and (by operation of s 77, as the supplier of the retail electricity to which the proposed agreement relates) Origin Electricity contravened s 76 of the ACL. 67 On or about 17 July 2012 two sales representatives engaged by SalesForce called upon Witness K at her home in Waratah, New South Wales. 68 Their purpose was to negotiate with her an unsolicited consumer agreement for the supply of retail electricity and retail gas by Origin Electricity. Yet, they represented to her that the purpose of the call was to check whether she was eligible to receive a discount on her electricity bill. In the course of the call, they also represented to Witness K that she was signing an expression of interest to change her retail electricity supplier to Origin Electricity (when in fact she was signing a contract) and that she would remain with her current retail electricity supplier unless she contacted Origin Electricity. This conduct was misleading or deceptive or likely to mislead or deceive and, because of it, both Origin Electricity and SalesForce contravened s 18 of the ACL. 69 The sales representatives failed to advise Witness K that their purpose was in fact to seek her agreement to the supply of retail electricity by Origin Electricity or that they were obliged to leave her premises immediately on request. They did not provide her as soon as practicable and before starting to negotiate with her either the name of SalesForce or the address of Origin Electricity. Nor did they inform Witness K in writing of her right to terminate the agreement during the cooling-off period. 70 By the conduct of the sales representatives in representing to Witness K that she would remain with her current retail electricity supplier unless she contacted Origin Electricity and in failing to advise her that their purpose was to seek her agreement to supply retail electricity from Origin Electricity, both Origin Electricity and SalesForce made a false or misleading representation concerning the existence, exclusion or effect of a condition, warranty, guarantee, right or remedy in contravention of s 29(1)(m) of the ACL. 71 Additionally, as the sales representatives did not advise Witness K that their purpose was to seek her agreement to the supply of retail electricity from Origin Electricity, SalesForce contravened s 74 (a) of the ACL. As the sales representatives did not advise Witness K that they were obliged to leave the premises immediately on request, SalesForce also contravened s 74 (b) of the ACL. And, as the sales representatives did not provide Witness K, as soon as practicable and before starting to negotiate with her, both the name of SalesForce and the address of Origin Electricity, SalesForce contravened s 74(c) of the ACL. What is more, as the sales representatives did not inform Witness K in writing of her right to terminate the agreement during the cooling-off period, SalesForce also contravened s 76 of the ACL. As the supplier of the retail electricity to which the proposed agreement related, by the operation of s 77, Origin Electricity also contravened these sections. 72 The final consumer to whom this proceeding relates is Witness M. It was on or about 18 December 2012 when Witness M received a visit in Witness M's home from a sales representative engaged by SalesForce. Witness M lived in Moorooka in Queensland. 73 When he arrived at Witness M's home, the sales representative represented to Witness M that he was from Witness M's existing retail electricity supplier and the company which provided electricity poles and wires to Witness M's house. He also represented that he was there as part of a government study to investigate complaints from people within the area about the high cost of energy. Each of these representations was misleading or deceptive or likely to mislead or deceive. Indeed, each was false. The sales representative's real purpose was to seek his agreement to the supply of retail electricity from Origin Electricity, that is to say, his purpose was to negotiate with Witness M an unsolicited consumer agreement for the supply of retail electricity by Origin Electricity. Consequently, each of the representations he made was misleading or deceptive or likely to mislead or deceive and both Origin Electricity and SalesForce thereby contravened s 18 of the ACL. By reason of the same conduct, both Origin Electricity and SalesForce, contravened s 29(1)(h) of the ACL. 74 As the sales representative failed, as soon as practicable and in any event before starting to negotiate, to clearly advise Witness M that his purpose was to seek his agreement to the supply retail electricity by Origin Electricity and that he was obliged to leave the premises immediately on request, both Origin Electricity and SalesForce also contravened s 74(a) and (b). As the sales representative failed to provide Witness M, as soon as practicable and in any event before starting to negotiate, the name of SalesForce and the address of Origin Electricity both companies also contravened s 74(c). It need hardly be said at this point that Origin Electricity is liable in these respects by operation of s 77 of the ACL.
Declarations 75 Section 21 of the Federal Court of Australia Act 1976 (Cth) ("FCA Act") gives the Court a wide discretionary power to make declarations. The questions to which the agreed declarations relate are real, not hypothetical or theoretical. As a public regulator under the Act, the ACCC has a real interest in raising them and there is an important public interest, too. Origin Electricity and SalesForce are proper contradictors. The declarations the parties seek are appropriate because they serve to record the Court's disapproval of the contravening conduct and will hopefully deter other corporations from following suit. I also accept that making declarations of this nature assists the ACCC to carry out its statutory duties.
Penalties 76 A contravention of s 18 does not attract a pecuniary penalty but all the other contraventions do. Sections 224(1)(a)(i), (ii) and (iv) of the ACL relevantly empower the Court, in respect of contraventions of Pt 2-2 (which, it will be remembered, includes s 21), Pt 3-1 (which includes ss 29 and 50) and Pt 3-2, Div 2 (which includes ss 73, 74, 75 and 76), to order the contravener to pay such pecuniary penalty in respect of "each act or omission" as the Court determines to be appropriate. But if conduct constitutes a contravention of two or more of the provisions referred to in s 224(1)(a), s 224(4) prevents the Court from imposing more than one pecuniary penalty under the section in respect of the same conduct. 77 The maximum pecuniary penalties are set out in s 224 of the ACL. The maximum pecuniary penalty that may be imposed on the respondents, as bodies corporate, for each act or omission to which s 224 of the ACL applies is $1.1 million in the case of a contravention of Pt 2-2 or Pt 3-1 and $50,000 in the case of a contravention of Div 2 of Pt 3-2. 78 The main purpose of imposing a civil penalty under s 224 is to ensure compliance with the Act by deterring future contraventions, whether by the contravener or by others who might be tempted to engage in contravening conduct themselves. In Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at [61] French CJ, Crennan, Bell and Keane JJ observed: General and specific deterrence must play a primary role in assessing the appropriate penalty in cases of calculated contravention of legislation where commercial profit is the driver of the contravening conduct. 79 The need for general deterrence is perhaps underscored by the fact that this is the fifth proceedings the ACCC has instituted against an energy retailer. All but one of those proceedings also involved at least one marketing company, in relation to door-to-door selling activities. The ACCC also accepted a s 87B undertaking from a sixth energy retailer. 80 As the parties jointly submitted, the penalty must be sufficiently high to deter both Origin Electricity and SalesForce as well as other businesses and individuals engaged in door-to-door sales and marketing from contravening the ACL. It should also be sufficiently high to deter them from engaging in similar practices in other areas, including other ways of selling their products, which might be used as substitutes for door-to-door marketing, such as telemarketing. And it must be high enough to prevent potential offenders from treating it as merely an acceptable cost of doing business: SingTel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249; [2012] FCAFC 20 at [62]. 81 In setting an appropriate penalty, the Court is required by the terms of s 224(2) to have regard to all relevant matters including: (a) the nature and extent of the act or omission; (b) the nature and extent of any loss or damage suffered as a result of the act or omission; (c) the circumstances in which the act or omission took place; and (d) whether the person has previously been found by a court in proceedings under Ch 4 (which deals with offences) or Pt 5-2 (which deals with remedies) to have engaged in any similar conduct. 82 The authorities refer to a range of factors that bear upon the assessment. Some, but not all, are relevant to the matters covered by s 224(2). Those factors include the following, identified by French J (as his Honour then was) in Trade Practices Commission v CSR Ltd (1991) ATPR ¶41-076 at 52,152-52,153 in the context of similar provisions of the Trade Practices Act 1974 (Cth): (a) the size of the contravening company; (b) the degree of power of the contravener, as evidenced by its market share and the ease of entry into the market; (c) whether the contravention was deliberate; (d) the period over which the conduct extended; (e) whether the contraventions arose out of the conduct of senior management; (f) whether the contravener has a corporate culture conducive to compliance with the consumer protection legislation; (g) whether the contravener has cooperated with the regulator in relation to the contraventions. 83 Other relevant factors include the financial position of the contravener and whether the conduct was systematic or covert. Plainly, the risk of reoffending or recurrence is also relevant and, related to that, whether the contravener is contrite and has taken steps to reduce the risk.
Nature and extent the conduct 84 The admitted contraventions occurred over a 16 month period, from September 2011 until December 2012. There are 39 separate contraventions attracting penalties under the ACL. The parties jointly submitted that there were 13 separate home visits by sales representatives to 10 different consumers. There is no agreed fact that there were return visits to the 10 customers, which is the implication from this joint submission, but nothing turns on this. 85 Although the conduct is not identical, there are several common denominators. 86 In each case the sales representative practised deceptions on the consumers in order to secure their custom. In most cases they lied to them from the outset, inveigling their way into their homes. In most cases, despite being told that the consumer was not interested in their product, they persisted until they had signed her or him to a contract. They preyed on the vulnerable and the ill-informed. In two cases they behaved unconscionably. In one instance the sales representative engaged in harassment or coercion of a consumer. In their submissions, the parties rightly characterised the conduct as serious. It is serious, not only because of the deliberate deceptions and the exploitation of vulnerable consumers, but also because of the location and context in which the conduct occurred: at private homes to which the respondents were not invited. As Middleton J put it in EnergyAustralia at [19], "[s]uch contraventions subvert both the consumer's desire not to be disturbed or interrupted by sales representatives and the very protections provided to the consumers by the legislation". 87 In Lux Distributors at [10] the Full Court referred to the background to the introduction of the regulation of door-to-door selling in the ACL and made some telling observations: The vulnerability of the consumer to the salesperson in her or his own home arises from the difficulty in putting an end to the sales process once the salesperson is in the home, especially after that person has spent time and undertaken persuasive effort in a sales process or "pitch". People can simply agree to things to put the situation at an end. These are not new revelations referable only to the operation of the ACL. They concern the basic psychology of salesmanship, taught by life experience and common sense, once entry has been gained to the privacy of a person's home. Ingratiating solicitude, just as much as high-pressure bullying sales tactics, may lead to a feeling of necessitous acceptance, especially by a polite and accepting person. In other words, special or particular care and attention to a customer can be just as effective as a sales tactic as high-pressure bullying. Further, the acquisition of comparative information is not often possible in the home, and reliance is necessarily placed on the truthfulness of the salesperson's information. Critical to the success of the sales conduct is the gaining of entry into the home, the winning of the confidence of the customer, and remaining long enough to persuade the customer to buy; entry into the home and length of time in the home are critical factors.
Nature and extent of any loss or damage 88 Five of the 10 consumers were signed up to Origin Electricity for the supply of electricity after they were approached by the sales representatives. There is, however, no evidence that any witness suffered financial loss as a result of the conduct because the contracts were cancelled following a complaint to Origin or the relevant state energy ombudsman. This is a mitigating factor. But several of the consumers were inconvenienced and/or experienced stress in trying to have the contracts cancelled. One of them, Witness E, felt uncomfortable and intimidated by the sales representative. In a case of this nature these consequences are undoubtedly relevant. One of the purposes of the legislation is to protect consumers from what Middleton J referred to in EnergyAustralia at [41] as "inconvenience, intrusion and invasion of privacy".
Circumstances in which the conduct took place 89 The ACL came into operation on 1 January 2011. Beforehand, however, there were equivalent State laws regulating unsolicited sales. 90 Before the introduction of the ACL, the ACCC conducted an education campaign to alert industry participants and consumers to the impending provisions regulating unsolicited consumer agreements. The ACCC also made public announcements of its intention to focus on door-to-door conduct in the retail energy sector. There was a media release in June 2011 following the authorisation of the Energy Assured Limited ("EAL") Code of Practice. The ACCC chair, Rod Sims, delivered a speech on 13 September 2011 at the ACOSS/CHOICE 'Energy at Home' Conference. That was followed by another media release. In August 2012 the ACCC published a research report on the Australian door-to-door sales industry. 91 Furthermore, both Origin and SalesForce were well aware of their obligations. 92 The ACCC and Australian Energy Regulator jointly wrote to Origin on 26 July 2011 seeking an acknowledgement of its obligations under the ACL in relation to door-to-door marketing activities, including the very type of conduct the subject of this proceeding, such as: explaining the purpose of the visit and producing identification; informing the consumer that he or she may request the dealer leave the premises at any time; the dealer's obligation to leave the premises when asked and not contact the consumer again for at least 30 days; and the obligation to provide the relevant contact details. On 30 August 2011 - shortly before the first of the contraventions - Origin submitted to the regulators a signed acknowledgement that it understood and had implemented its obligations. 93 Origin was also on notice from the Energy & Water Ombudsman in three states - New South Wales, Victoria and Queensland ("the State Energy Ombudsmen") - that complaints were being made about door-to-door sales activities during 2011. Some of the contravening conduct actually occurred after Origin became aware of the ACCC's investigation through the issue of a notice under s 155 of the Act in March 2012. 94 SalesForce was also served with a s 155 notice in April 2012. Yet, as with Origin, contraventions took place thereafter. 95 The parties jointly submitted that: The conduct in the present case was not sanctioned or approved by any procedures in place by SalesForce or Origin and was engaged in by sales representatives contrary to their training. 96 That may be accepted. But SalesForce implemented a commission-based pay structure, including bonuses, to pay and reward sales representatives for the number of sales they made. Without a clear disincentive for the kind of conduct at the centre of this proceeding, common sense suggests that a pay structure based on rewarding an employee or contractor for the more contracts he or she secures is likely to encourage, rather than discourage, conduct of the kind that occurred in this case by providing an incentive to do whatever is necessary to secure a contract. For this reason, despite the fact that the conduct in question was not sanctioned or approved by any procedures the respondents had in place, in the absence of any evidence of a clear disincentive, the pay structure SalesForce implemented in all likelihood contributed to the contravening conduct.
Whether the respondents have previously been found by a court to have engaged in similar conduct 97 SalesForce has not been previously found to have engaged in similar conduct. 98 On the other hand, in Australian Competition and Consumer Commission v Origin Energy Limited [2015] FCA 55 ("Origin Energy"), Origin Electricity and Origin Retail (together "Origin") and their parent company Origin Energy Limited each admitted to various contraventions of s 29(1)(g) and s 29(1)(i) of the ACL in relation to conduct that took place between February 2013 and June 2014. The conduct consisted of representations made about discounts Origin was offering on charges for gas and electricity usage on certain energy plans. As White J summarised the position at [16], "contrary to the reasonable understanding of consumers [that the advertised discounts would be from energy usage charges calculated by reference to rates applicable generally to consumers like themselves], the energy usage charges under the DailySaver Electricity Energy Plan and the DailySaver Gas Energy Plan to which the discounts were to be applied were to be calculated using rates which were, in some cases, higher than the rates applicable generally to residential consumers like themselves." See also [22] which is to the same effect. 99 The contravening conduct in Origin Energy did not involve door-to-door marketing practices. It involved representations made to actual and prospective customers on the Origin website and in documents posted to consumers who had agreed to the energy plans with Origin. To that extent the conduct is not similar. But it did involve false or misleading representations about the price of energy that Origin was offering to consumers. And in the case of the web-based representations they were capable of misleading a potential consumer to sign up to an Origin plan. In these respects it bears some similarities to aspects of the conduct with which the present case is concerned. As the conduct in Origin Energy post-dated the conduct in the present case, it might be thought to be irrelevant. But as it occurred after the s 155 notices were issued, it is relevant to the questions of deterrence generally and specific deterrence in particular.
Size and financial position of the Origin entities and SalesForce 100 Origin is one of the largest electricity retailers in Australia. According to the IBISWorld Industry Report D2620, entitled Electricity Retailing in Australia, published in October 2014, it has a share of about 13% of the market. As at 30 June 2014 it had approximately 2,876,000 retail electricity customers. According to its 2014 annual report, in the 2013-14 financial year Origin Energy Limited, the parent company, generated about $14.52 billion in revenue and $530 million in statutory profit, including about $8 billion in revenue for generation, wholesaling and retailing in the electricity sector. That said, its EBIT (earnings before interest and tax) is a small proportion of the total revenue ($787 million) because a significant part of the retail revenue is paid to third parties to cover transportation and generation costs. 101 SalesForce is a national supplier of marketing services, including door-to-door marketing, and performs all the marketing of electricity and gas products for its parent company. In the financial year 2013-2014 its parent company generated $453 million in revenue, but revenue from electricity and gas sales generated by SalesForce made up only a small portion of this sum. 102 Annexed to the Statement of Agreed Facts and Admissions was a document entitled "Confidential Annexure", which the parties agreed should be treated confidentially and not disclosed in open court. The information in the document relates to the financial performance of SalesForce during the period over the last four years and is commercially sensitive ("the information"). At the request of SalesForce I was asked to make a non-publication or suppression order in respect of the information. I deal with that issue below.
Deliberate conduct/involvement of management 103 The conduct was unquestionably deliberate but there is no evidence of the involvement of senior management. Nor is there evidence that either company directed, sanctioned or encouraged the sales representatives to behave as they did. Indeed, the sales representatives received training in relation to the requirements of the ACL both before and during the relevant period and their conduct was contrary to that training. The training was conducted by SalesForce using material developed and approved by SalesForce and Origin Retail. It included training about inappropriate conduct and conduct which would contravene the ACL. SalesForce also carried out refresher training, which included "compliance spotlights" when compliance issues were identified by Origin.
The corporate culture 104 At the time of the contraventions Origin had a compliance program. The compliance program included trade practices training for relevant Origin employees. Moreover, in its contracts with SalesForce Origin required that SalesForce ensure that its door-to-door activities complied with all regulatory requirements, including the ACL (or its predecessors) and that it establish and manage controls, procedures and processes to minimise complaints and errors. 105 In 2011 PwC undertook two audits of Origin's compliance program on behalf of the Energy Services Commission and the Independent Pricing and Regulatory Tribunal. The audits disclosed deficiencies in Origin's compliance program, most relevantly in relation to complaints handling and the re-training of sales representatives. As a result, Origin developed and implemented a remediation program to improve its compliance, training and complaints handling procedures. 106 In January 2012 the EAL Code of Practice came into effect. The Code of Practice created a self-regulated industry scheme, the purpose of which (the parties agreed) was to enhance compliance with the existing federal and state-based regulatory framework applying to the door-to-door marketing of energy to residential and small business consumers. Origin and SalesForce were members of the EAL and from on or about 16 January 2012 they committed themselves to comply with its Code of Conduct. 107 SalesForce invested significantly in compliance processes and systems in the two years before this proceeding was started. This included $500,000 in annualised salary costs associated with roles in compliance and more than $70,000 in systems upgrades and improvements. SalesForce also re-structured its senior management to place an increased focus and emphasis on compliance. 108 Both Origin and SalesForce, however, accepted that the measures they took to ensure compliance were inadequate.
Corrective measures 109 Origin took steps to address the deficiencies through the implementation of a remediation program. 110 In March 2012, Origin engaged Ernst & Young to monitor and examine the performance of SalesForce as its door-to-door sales provider, examine certain door-to-door processes and review Origin's preparedness for the audit of Origin's compliance with the EAL Code of Practice. Ernst & Young found deficiencies in Origin's compliance with the Code, as a result of which Origin made further changes to its remediation program. Throughout 2012 Origin devoted substantial resources to its remediation program and engaged a number of additional employees to manage the improvement measures it implemented. Those measures included extensive improvements in the following areas: clearer directions and scripting for sales representatives to follow when engaging in door-to-door selling; improved control mechanisms devised to ensure sales agents did not door knock outside of the permitted hours; complaints identification, investigation and resolution; a new quality assurance framework for the verification call process which was designed to drive continuous improvement; and training and regular refresher training. 111 Most importantly, on 27 September 2013 Origin ceased all door-to-door marketing activities. 112 SalesForce has also taken significant steps to improve its compliance program, particularly from 2013, and there is no evidence of any contravening conduct after December 2012. In late 2014 David Besson, a director of SalesForce, made a decision that the company would not be providing door-to-door residential marketing services after 30 June 2015. Evidence was given by consent on this subject from Jonathan Light, one of the lawyers for SalesForce, based on information and belief. According to the advice given to Mr Light by Kathleen Forbes, General Counsel of SalesForce and its parent company, on 24 February 2015 SalesForce's parent company announced that it had reviewed its direct sales business and decided to "reduce focus on door-to-door sales". Mr Light also stated that SalesForce was presently party to only two contracts for the provision of door-to-door residential marketing services and has agreed with both clients that its services would cease on or before 30 June 2015. He added that SalesForce had no intention of offering services of this kind to any other companies and it was in this context that he referred to Mr Besson's decision late last year. 113 While the decisions to cease door-to-door marketing are voluntary, there is no evidence to suggest that the decisions were made for any ulterior purpose. I accept the submissions of counsel that these measures are indicative of the seriousness with which the companies have responded to the problem. This is a factor which weighs heavily in their favour. It substantially reduces the risk of a recurrence of the contravening conduct.
Cooperation and contrition 114 Origin Electricity and SalesForce cooperated with the ACCC. Their admissions and their agreement as to orders were, however, late in coming. The proceeding began on 26 September 2013 when the originating application was filed. Liability was contested, even after the ACCC had filed affidavits from its consumer witnesses. By the time a settlement had been reached, doubtless all parties had expended considerable sums of money. Moreover, the lateness of the settlement suggests that the agreement was less likely an expression of genuine contrition and more likely a reflection of the strength of the ACCC's case. No evidence was given by any senior executive or employee of either company upon which a finding of contrition could be made. Nevertheless, the effect of the admissions and the agreement is that an estimated three-week hearing has been avoided and with it a considerable savings in costs for the parties and Court resources has been achieved. What is more, the 10 affected consumers are no longer required to give evidence and submit to cross-examination. The respondents are entitled to credit for this which the penalties should reflect, though not as much as an early settlement would have earned them.
Application of the principles 115 The parties propose penalties totalling $2,000,000 for Origin Electricity and $325,000 for SalesForce. They were unable to explain how these sums had been calculated and they made no submissions about the range of penalty for each contravention, although they jointly submitted that this was not a single course of conduct case and "an appropriate penalty should be attributed to each contravening act". Notwithstanding the submission, it seems to me that the conduct in relation to each consumer should be regarded as a single course of conduct. Accordingly, I propose fixing penalties for 10 contraventions, the upper limit of which will therefore be the highest maximum penalty for a single offence. 116 Of course, as has often been said, the determination of penalty is not an exact science. After taking into account all relevant factors, the Court applies a process of "instinctive synthesis" in order to reach an appropriate figure: Australian Competition and Consumer Commission v BAJV Pty Ltd [2014] FCAFC 52 at [51]. That is what I have done below. 117 In relation to the conduct towards each of the consumers in fixing an appropriate penalty I have borne in mind the primary need for deterrence, both general and specific, and the circumstances in which the contraventions took place. I have also taken into account that in each case the behaviour of the sales representative was deliberate, notwithstanding that it was not sanctioned by management. 118 The parties jointly submitted and I accept that a substantially higher total penalty should be imposed on Origin Electricity than on SalesForce in conformity with the approach taken in similar cases, reflecting the different financial positions of the electricity company on the one hand and the marketing company on the other and the fact that it is the energy retailer which ultimately benefits from successful sales to consumers.
Witness A 119 There are four contraventions relating to Witness A which attract a pecuniary penalty. They are all contraventions of Pt 3-2. The maximum penalty for each of these contraventions is $50,000. 120 The sales representative called on the consumer after 6 pm, failed to leave immediately on request, failed to advise Witness A of the true purpose of the visit, and failed to supply the prescribed information. Each of these contraventions attracts a penalty. The total available sum is therefore $200,000. As I have already observed, however, I consider that the contraventions were part of a single course of conduct directed to securing a contract with the consumer. Consequently, the maximum penalty for all the contraventions should not exceed $50,000. 121 I take into account in the companies' favour the fact that the sales representative's behaviour was contrary to his training. I also take into account the absence of any evidence of loss or damage, the existence of compliance programs, albeit deficient ones, the steps each company has taken to ensure there is no repetition of this kind of behaviour and their cooperation with the authorities. 122 I would impose a penalty of $35,000 on Origin Electricity and $7,000 on SalesForce.
Witness B 123 The conduct involved in the contraventions in this case was very similar, except that here, the call was not in the evening, which makes it less serious. Here, however, there was a false or misleading representation in contravention of s 29(1)(i), which carries a maximum penalty of $1.1 million. The contraventions of Pt 3-2, which carry maximum penalties of $50,000, are subsumed by this. The subjective considerations are the same in each case and I do not propose to repeat them. 124 I would impose a penalty of $100,000 on Origin Electricity and $20,000 on SalesForce.
Witness C 125 The conduct in this case is without doubt the most serious of all. What distinguishes this case from the others is the callous exploitation of a particularly vulnerable individual. The contravention of s 21 of the ACL attracts a maximum penalty of $1.1 million. In my opinion, the conduct is such as to deserve a penalty at the upper end of the range. But at the time this conduct took place neither Origin Electricity nor SalesForce had been before the Court and the subjective considerations to which I have already referred mitigate the severity of the penalty that would otherwise be appropriate. 126 I would impose penalties of $600,000 on Origin Electricity and $120,000 on SalesForce.
Witness D 127 The circumstances attending the sales representative's conduct in this case are similar to the circumstances involved in the case of Witness A. The maximum penalties are the same. I would therefore impose the same penalties of $35,000 on Origin Electricity and $7,000 on SalesForce.
Witness E 128 The conduct in this case is much more serious, so much so that the two respondents accept that the sales representative engaged in undue harassment and coercion, in contravention of s 50 of the ACL and was also unconscionable, in contravention of s 21. What is more, Witness E felt uncomfortable and intimidated by the behaviour. I would put this conduct in the same class as the conduct involving Witness C but because of the impact on the witness in this case, I would increase the penalties to $610,000 and $122,000 respectively.
Witness G 129 The conduct involving Witness G is similar to the conduct in B's case, except that the call here occurred after 6 pm. But for this feature there is no reason to distinguish between the two. I would impose a penalty of $110,000 on Origin Electricity and $22,000 on SalesForce.
Witness H 130 The conduct towards Witness H is in the same category as the conduct towards Witness G and should attract the same penalties of $110,000 and $22,000.
Witness J and Witness K 131 These two cases are very similar. Both involved two false or misleading representations in contravention of s 29(1)(m), the maximum penalty for which is $1.1 million. I would impose a penalty of $150,000 on Origin Electricity and $30,000 on SalesForce for the contravening conduct in each of these cases.
Witness M 132 The level of deception in this case deserves a similar penalty although there is only one contravention of s 29(1). I would impose a penalty of $125,000 on Origin Electricity and $25,000 on SalesForce.
Totality and parity 133 At this point the Court is required to apply the totality principle "to ensure that overall [the]… penalty is appropriate", having regard to the respondents' culpability and "the sum of the penalties imposed for several contraventions does not result in the total of the penalties exceeding what is proper having regard to the totality of the contravening conduct involved": see Australian Competition and Consumer Commission v Safeway Stores Pty Ltd (1997) 145 ALR 36 (Goldberg J). It is also necessary to ensure that the aggregate of the sums for the contraventions does not result in a figure which would be "crushing" for the individual respondents: Origin Energy at [59]. 134 The sum of these figures is $2,025,000 in the case of Origin Electricity and $405,000 in the case of SalesForce. By happy coincidence the figure for Origin Electricity is similar to the agreed figure. The figure for SalesForce, however, is significantly higher. I would not reduce the penalties for Origin Electricity in these circumstances by reference to the totality principle. There can be little doubt that the sum proposed by the parties would not have a crushing impact on that company. I am, however, mindful of the special circumstances of SalesForce. 135 For the moment, however, and until or unless the decisions in NW Frozen Foods and Mobil are overruled, the question is not what penalty I would impose, absent the agreement of the parties, but whether the agreed sums are "within the permissible range": Mobil Oil at [51]. I am satisfied that they are. In coming to this conclusion I have had regard to the other cases of door-to-door sales and marketing activities in contravention of the ACL, which involved competitors of the respondents in their respective markets, although, for the following reasons, it seems to me that those cases provide at best limited assistance. 136 First, no two cases are ever the same. 137 Secondly, all the proceedings involved penalties derived by agreement of the parties. Doubtless for this reason the judgments in the comparable cases contain insufficient detail about the factual circumstances to enable any sensible comparison to be made.
Non-punitive orders under s 246 of the ACL 138 On the application of the regulator, the Court may make orders to ensure that a person who has engaged in contravening conduct does not engage in the same, similar or related conduct for a period of time, not exceeding three years: s 246(2)(b) of the ACL. Orders may be made, for example, for the establishment of a compliance program (s 246(2)(b)(i)) or to revise the internal operations of its business which led to the person engaging in the conduct (s 246(b)(iii)). Orders may also be made requiring the person to disclose to certain persons information in its possession or to which it has access (s 246(2)(c)) and for the publication at the contravener's expense of an advertisement (s 246(2)(d)). 139 The first of these orders sought in the present case is that Origin Electricity and SalesForce at their own expense: (a) within three months of the date of the orders, conduct a further review of their existing ACL compliance programs, with particular regard to conduct the subject of the declarations; (b) within six months after the date the review is completed, implement any changes identified as necessary during that review; (c) for a period of three years from the date of the orders, maintain a compliance program which includes the improvements made arising from the reviews conducted of their existing ACL compliance programs; and (d) within 10 months of the making of the orders, write to the ACCC to confirm that the above reviews have been undertaken and any identified improvements made. 140 Although I was initially concerned that this order did not go far enough, and I remain a little troubled by the dearth of information given to me about the existing compliance programs, for two reasons, I do not propose to impose a greater obligation on either company. First, I believe I can take some comfort from the knowledge that the regulator has reviewed the compliance programs and has consented to the order. Secondly, both companies have decided to abandon door-to-door sales altogether. In that respect, I note that the ACCC did not consider it necessary to impose an injunction or undertaking either to enforce the decisions or to ensure compliance with the law. Presumably the size of the pecuniary penalties and the prospect that should the companies "reoffend" they will be substantially higher should operate as a sufficient disincentive. 141 The second non-punitive order upon which the parties have agreed relates to the publication of a corrective notice in the terms appearing in the annexure to the orders. 142 The proposal was that the notice be published in two Wednesday editions of The Australian, The Sydney Morning Herald, The Age, The Courier Mail and The Advertiser. During oral argument I canvassed with the parties whether The Sydney Morning Herald and The Age were the best vehicles to carry the notice in their respective States. Since then I was provided with readership figures for all the newspapers as well as The Daily Telegraph and the Herald Sun. Having regard to those figures and in order to reach a greater number of consumers I propose that the notice be published in The Daily Telegraph rather than The Sydney Morning Herald and in The Herald Sun rather than The Age.
Non-publication order 143 At the hearing SalesForce applied for an order under s 37AF of the FCA Act to prohibit the publication of the information in the Confidential Annexure to the Statement of Agreed Facts and Admissions. 144 Section 37AF gives the Court power to make a suppression order or non-publication order on one or more of the grounds set out in s 37AG of information, amongst other things, that relates to a proceeding before the Court and is "information that comprises evidence or information about evidence" (s 37AF(1)(b)). The material in question answers this description. The ground upon which SalesForce relied is contained in s 37AG(1)(a): that "the order is necessary to prevent prejudice to the proper administration of justice". In deciding whether to make such an order, the Court is required to take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice: s 37AE. 145 These provisions appear in Div 2 of Pt VAA of the FCA Act. 146 The application was supported by an affidavit affirmed by Jonathan Light on 13 March 2015. Mr Light, who is a senior associate employed by the solicitors acting for SalesForce in the proceeding, said that he was told by the General Counsel of SalesForce and its parent company that: (a) the information contained in the annexure has never been publicly disclosed by either the company or its ASX listed parent company and is not otherwise publicly available; (b) if the information were disclosed in open court, prejudice to SalesForce is likely to result because the company operates in a competitive environment and its competitors could be expected to take advantage of the information to the company's detriment; (c) if the information were disclosed in open court, SalesForce's parent company may have to make an urgent announcement to the ASX. 147 For the following reasons I am persuaded that the order can be made and that there are no discretionary reasons for not making it. 148 The evidence discloses that the information is not in the public domain and is confidential to SalesForce and its parent company. It is commercially sensitive. If the information were disclosed, it could be used by competitors of SalesForce and damage SalesForce in the market in which it operates. It is not in the interests of the administration of justice that the proceedings "become a vehicle for advantaging or prejudicing trade rivals": Australian Competition and Consumer Commission v Cement Australia Pty Ltd (No 2) [2010) FCA 1082 at [23]. It is in the interests of the proper administration of justice that the value of confidential information not be destroyed or diminished. Otherwise, the parties and members of the public might lose confidence in the Court and the Court's processes "might open the way to abuse": Australian Broadcasting Commission v Parrish (1980) 29 ALR 228; (1980) at 230; 43 FLR 129 at 134. 149 While these cases were decided before the enactment of Pt VAA, the principles in them seem to me to apply to the making of an order under this Part. The only relevant difference between s 50 and s 37AG(1) is the insertion of the adjective "proper" before "administration of justice". I cannot see that that has any practical effect: Perram J expressed the same opinion in Australian Competition and Consumer Commission v Air New Zealand Ltd (No 3) [2012] FCA 1430 ("Air New Zealand") at [19]. 150 Section 37AJ states that the suppression or non-publication order operates for the period decided by the Court and specified in the order. As Perram J said in Air New Zealand at [38], this means that the order should operate for a finite period. SalesForce did not identify any period. But s 37AJ(3) provides that the period during which an order operates may be specified by reference either to a fixed or ascertainable period or by reference to the occurrence of a specified future event. In all the circumstances, I propose to order that the information in the annexure not be disclosed until further order.
Costs 151 The parties also agreed about costs. I will make orders in accordance with that agreement. I certify that the preceding one hundred and fifty-one (151) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katzmann.
Associate: Dated: 27 March 2015 ANNEXURE A MESSAGE TO CONSUMERS ABOUT DOOR-TO-DOOR ENERGY SALES The Australian Consumer Law protects your rights as a consumer when a door-to-door salesperson comes to your home. When they come to your door, a salesperson must: A salesperson selling gas or electricity services must not create the impression or represent that: • tell you the purpose of their visit before they start to negotiate • you are being overcharged by your current electricity supplier, when that is not the case • state their name and the name and address of the company supplying the goods or services they are offering you • they are investigating price increases or checking you are being billed correctly by your current electricity supplier, when that is not the case • tell you that they must leave immediately if you ask them to • they have sponsorship with, approval of or affiliation with a government when that is not the case • leave immediately if you ask them to - whether verbally or by displaying a 'do not knock' sign expressing that unsolicited door knocking by salespeople is unwelcome at your home • they are from your existing energy supplier, when that is not the case • tell you about your rights to cancel the agreement and explain how you can exercise those rights • you are required to change your electricity supplier due to changes implemented by the government, when that is not the case • give you a written copy of any agreement before you sign it, which has on it the full contact details of the supplier of the goods or services. • you are not entering into a contract for the supply of electricity or gas, when in fact you are Origin Energy Electricity Limited and SalesForce Australia Pty Ltd have been ordered to publish this message following court action by the ACCC. If you think a door-to-door salesperson has not followed these rules, please contact the supplier. If you are not satisfied with their response, you can call the ACCC Infocentre on 1300 302 502 Origin Energy stopped using door-to-door sales to sign up potential customers from 27 September 2013. For more information visit www.accc.gov.au
Australian Competition & Consumer Commission
Origin Energy Electricity Limited
[2013] VSCA 49
[2014] HCA 2
(1980) 29 ALR 228
(1997) 145 ALR 36
(2013) 250 CLR 640
(2013) 275 FLR 171
(2014) 88 ALJR 372
(1996) 71 FCR 285
(2012) 287 ALR 249