Australian Securities and Investments Commission v Accounts Control Management Services Pty Ltd

Australian Securities and Investments Commission v Accounts Control Management Services Pty Ltd - [2012] FCA 1164 - FCA 2012 case summary — Zoe

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REASONS FOR JUDGMENT I. Introduction [1] II. Relevant Principles [10] III. General Facts [19] IV. The Telephone Calls [45] (a) Debtor One [49] Call 1: 27 March 2009 [56] Call 2: 31 March 2009 [60] Call 3: 3 April 2009 [63] Call 4: 8 April 2009 [65] Call 5: 17 April 2009 [68] Call 6: 28 April 2009 [72] Call 7: 6 May 2009 [75] Call 8: 7 May 2009 [78] Call 9: 11 May 2009 [80] Call 10: 13 May 2009 [82] Call 11: 13 May 2009 [83] Call 12: 15 May 2009 [86] Call 13: 15 May 2009 [88] Call 14: 15 May 2009 [90] Call 15: 15 May 2009 [92] Call 16: 15 May 2009 [94] Call 17: 15 May 2009 [96] Call 18: 18 May 2009 [100] Call 19: 22 May 2009 [102] Call 20: 25 May 2009 [105] Call 21: 25 May 2009 [108] Call 22: 25 May 2009 [110] Call 23: 27 May 2009 [114] Calls 24 - 27: 29 May 2009 - 9 June 2009 [116] Call 28: 11 June 2009 [118] Conclusions on Debtor One [120] (b) Debtor Two [126] Call 29: 22 December 2008 [130] Call 30: 22 December 2008 [132] Calls 31 - 33: 19 March 2009 - 21 April 2009 [136] Conclusions on Debtor Two [138] (c) Debtor Three [141] Call 34: 3 December 2008 [146] Call 35: 4 December 2008 [149] Call 36: 22 December 2008 [151] Call 37: 18 March 2009 [153] Call 38: 18 March 2009 [155] Call 39: 15 April 2009 [158] Conclusions on Debtor Three [160] (d) Debtor Four [165] Call 40: 30 April 2009 [170] Calls 41 - 44: 25 June 2009 - 22 September 2009 [172] Call 45: 2 October 2009 [174] Call 46: 24 November 2009 [176] Call 47: 25 November 2009 [179] Call 48: 27 November 2009 [181] Call 49: 27 November 2009 [184] Call 50: 30 November 2009 [189] Call 51: 30 November 2009 [191] Call 52: 11 December 2009 [194] Conclusions on Debtor Four [196] (e) Debtor Five [200] Call 53: 24 November 2008 [204] Calls 54 - 57: 3 December 2008 - 6 January 2009 [206] Call 58: 13 February 2009 [209] Call 59: 17 February 2009 [211] Call 60: 20 February 2009 [213] Call 61: 20 April 2009 [215] Call 62: 11 August 2009 [217] Call 63: 23 December 2009 [219] Call 64: 8 January 2010 [221] Call 65: 19 January 2010 [223] Call 66: 19 March 2010 [225] Call 67: 19 March 2010 [227] Call 68: 24 March 2010 [229] Call 69: 25 March 2010 [231] Conclusions on Debtor Five [233] (f) Debtor Six [236] Call 70: 16 December 2008 [240] Call 71: 17 December 2008 [242] Call 72: 23 December 2008 [245] Conclusions on Debtor Six [247] (g) Debtor Seven [251] Call 73: 28 May 2009 [254] Call 74: 2 June 2009 [256] Call 75: 4 June 2009 [259] Call 76: 26 June 2009 [261] Call 77: 26 June 2009 [262] Call 78: 26 June 2009 [264] Call 79: 26 June 2009 [266] Conclusions on Debtor Seven [268] (h) Debtor Eight [272] Call 80: 14 July 2009 [276] Call 81: 14 July 2009 [278] Call 82: 20 July 2009 [280] Call 83: 16 December 2009 [282] Call 84: 4 January 2010 [284] Call 85: 4 January 2010 [286] Call 86: 4 January 2010 [288] Call 87: 4 January 2010 [290] Call 88: 4 January 2010 [292] Call 89: 5 January 2010 [293] Call 90: 16 June 2010 [295] Call 91: 16 June 2010 [296] Call 92: 16 June 2010 [298] Call 93: 17 June 2010 [299] Call 94: 18 June 2010 [301] Call 95: 18 June 2010 [303] Call 96: 21 June 2010 [305] Conclusions on Debtor Eight [307] V. Whether there should be a grant of declaratory relief [313] Misleading or deceptive conduct [315] (a) Significance of the contraventions [315] (b) Change in manuals [316] (c) Change in ownership [317] (d) Form of declaration [321] Unduly harassing or coercive conduct [323] (a) Significance and nature of the contraventions [323] (b) Change in ownership [325] VI. Whether there should be a grant of INJUNCTIVE relief [327] VII. Can the claims under the ASIC Act be maintained? [329] VIII. Relief [350]

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I. Introduction 1 The second defendant, ACM Group Ltd, is a debt collector and the first defendant, Accounts Control Management Services Pty Ltd, is its predecessor entity. The second defendant assumed the conduct of the first defendant's business in July 2009. Except where the context otherwise requires, I will refer to this business, regardless of which entity was conducting it at the relevant time, as 'ACM'. ACM purchases outstanding debts from financial institutions such as the National Australia Bank ('NAB') and corporates such as Telstra. Having acquired those debts, it uses its workforce to seek to recover some portion of the face value of the debts in question. Because it buys the debts at a steep discount to their face value (typically a discount of between 79% and 99%), it does not need to recover very much before it is making a profit. 2 This case is concerned with the methods adopted by ACM to pursue recalcitrant debtors to make them pay up. Generally this was done by telephone call from an outward-bound call centre by employees of ACM. The plaintiff ('ASIC') alleges that, on a large number of occasions during those telephone calls, ACM employees said things which were not true (for example, that lawyers had been retained to sue the debtor when this was not so) or that the conversations were unduly harassing or coercive. 3 ACM recorded all of these calls. ASIC relied upon a large quantity of transcripts of the telephone calls together with the audio files from which those transcripts were drawn. It submitted that in a number of instances the hectoring tone of what took place could not wholly be grasped from the written word on the page. 4 Because it is illegal to engage in misleading or deceptive conduct or conduct which is unduly harassing or coercive, ASIC's claimed relief against the defendants was that this Court should issue an injunction restraining them from engaging in such conduct in the future. Declaratory relief was also sought. 5 The defendants accepted that, in some of the instances upon which ASIC relied, misleading or deceptive conduct was established, but not in all of them. Whilst it accepted the accuracy of the recordings and transcripts, it disputed, at least in some instances, ASIC's characterisation of the conduct as misleading or deceptive. Insofar as the allegations that the defendants had engaged in conduct which was unduly harassing or coercive were concerned, the defendants again accepted the factual substratum of ASIC's case but denied in all cases that its conduct bore the characterisation which ASIC sought to put on it. 6 It was inherent in that defensive posture, at least so far as factual arguments were concerned, that some contraventions would be found. But, so the defendants submitted, relief would be withheld from ASIC for three related reasons. First, viewed in their full context the contraventions were minor and historical; secondly, this was particularly the case where the second defendant was a successor to the first defendant and where many of the breaches identified by ASIC related to the first defendant's conduct and not its own; thirdly, the internal arrangements of ACM had been altered to overcome whatever systemic difficulties there had been in the past - staff manuals had been revised and the staff in question had moved on. Taken altogether, there was no need for relief to be granted because, to put the matter compendiously, nothing was now wrong. 7 Against the possibility that this line of defence might prove insufficient, ACM deployed a supplementary legal argument. It noted that ASIC's claims for relief were premised, at least initially, on ss 12DA and 12DJ of the Australian Securities and Investments Commission Act 2001 (Cth) ('the ASIC Act'). Both of these depended for their enlivenment upon whether the defendants could be said to be providing 'financial services' within the meaning of that Act. ACM submitted that its debt recovery activities could not plausibly be described as the provision of a financial service so that relief under the ASIC Act was unavailable. 8 ASIC, of course, denied this but with a weather eye invoked identical provisions in the former Trade Practices Act 1974 (Cth) ('TPA') which were not, however, dependent upon the presence of financial services for their enlivenment. To this the defendants countered that it was beyond ASIC's statutory functions to seek a remedy under the former TPA. In short, the defendants submitted that the ASIC Act and the former TPA were stools which ASIC was betwixt but not upon. 9 Insofar as the facts were concerned, ASIC's case was advanced in relation to eight debtors. I will refer to them as Debtors One to Eight to preserve their anonymity. I turn first to the relevant principles.

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II. Relevant Principles 10 Only two areas of discourse are involved: misleading or deceptive conduct and conduct which is said to be unduly harassing or coercive. 11 As to the former there was no debate between the parties. ASIC's case was simply that some of the things said by the call centre staff were not true or, if they related to future matters, lacked a reasonable basis. If those contentions be made good then, subject to the defendants' more general arguments about the non-application of the ASIC Act and the former TPA, breaches of the relevant sections would be established. Those sections were s 12DA(1) of the ASIC Act ('A person must not, in trade or commerce, engage in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive') and s 52(1) of the former TPA ('A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive'). Section 52 is the relevant provision rather than the corresponding provision in the Competition and Consumer Act 2010 (Cth) because the events in question antedate its commencement. It was agreed, correctly, that this was the effect of the transitional provisions to that legislation. The operation of those provisions is explained in Australian Competition and Consumer Commission v MSY Technology Pty Ltd (No. 2) (2011) 279 ALR 609; [2011] FCA 382 at [5]-[6]. 12 There was a minor debate between the parties as to how the question of undue harassment and coercion was to be approached. The relevant proscription is contained in s 12DJ(1) of the ASIC Act as follows: A person contravenes this subsection if: (a) the person uses physical force or undue harassment or coercion; and (b) the person uses such force, harassment or coercion in connection with the supply or possibly supply of financial services to a consumer, or the payment for financial services by a consumer. 13 The relevant section of the former TPA, s 60, was as follows: A corporation shall not use physical force or undue harassment or coercion in connection with the supply or possible supply of goods or services to a consumer or the payment for goods or services by a consumer. 14 In the present circumstance, the only words which matter are 'use physical force or undue harassment or coercion'. The first matter which is clear is that the rule is against undue harassment rather than mere harassment. The content of the word 'undue' will vary with the circumstances. In the context which is the confronting business of debt collection, it is likely to have a significant impact. By definition, the class of person who find that they have fallen into the hands of a debt collection agency are likely to be those who, for whatever reason, have not met their legal obligations. The necessary context is one, therefore, in which the law of contract and the ordinary usages of lending have failed to secure compliance by the debtor with his or her obligation to repay. It is not to be expected in such cases that the debt collector must proceed as if at a prayer meeting. There are, of course, limits to everything. In Australian Competition and Consumer Commission v McCaskey (2000) 104 FCR 8 at 27 [48] French J thought that, in the context of debt collection, if the frequency, nature or content of approaches and communications from the debt collector were such that they were 'calculated to intimidate or demoralise, tire out or exhaust a debtor rather than convey the demand and an associated legitimate threat of proceedings, the harassment will be undue'. This view was endorsed by Hill J in Australian Competition and Consumer Commission v Maritime Union of Australia (2001) 114 FCR 472 at 485 [60] and by Foster J in Ahmed v Harbour Radio Pty Ltd (2009) 180 FCR 313 at 321-323 [33]. It is with this test that I will assess the unduly harassing or coercive nature of the calls before me. 15 Turning then to coercion, there is some debate as to whether 'undue' qualifies only 'harassment' or whether, instead, it qualifies 'coercion' as well. For the reasons given by Hill J in Australian Competition and Consumer Commission v Maritime Union of Australia at 485 [58] it is likely that French J did regard 'coercion' as being governed by 'undue'. Hill J reached the contrary view; that is, that 'undue' did not qualify 'coercion' (see 485-486 [59]-[62]). I agree with the views of Hill J to which I have nothing to add. 16 Consequently, all that is required is 'coercion'. That, however, is a stronger word than harassment. It connotes, as Hill J observed in Australian Competition and Consumer Commission v Maritime Union of Australia at 485 [61], some negation of choice or freedom to act. 17 Of course, whether any particular discussion or conversation is revealed to be unduly harassing or coercive will depend not upon a line-by-line analysis but, rather, on the overall impression. 18 I turn then to the facts.

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III. General Facts 19 ASIC's case based on misleading or deceptive conduct is premised on the claim that what ACM had told the debtors about the nature of its own business and its intended actions was false. For example, it was said that ACM was a 'litigation firm' or that it was about to commence proceedings. Before the correctness or otherwise of those claims may be assessed it is necessary to grasp, if only in broad outline, the day-to-day way in which ACM's business was conducted. 20 ACM employs around 280 staff. Of these around 90% are 'collections officers'. These staff work from ACM's premises in Melbourne and Sydney. In Sydney there are two sets of offices - one in Elizabeth Street and the other in Castlereagh Street in the Central Business District. The collections officers are organised into teams presided over by a team leader. 21 Each collections officer had a portfolio of debtors. The debtors could fall into different categories: credit card debtors, personal loan debtors and corporate debtors (such as Telstra customers). According to one of ACM's former employees who was called, a Mr Tompson, most of ACM's debtors' debts had been outstanding for a considerable time. The size of a collections officer's portfolio fluctuated but it was not unusual for it to have 300 or so debtors (as Mr Tompson had). 22 The work involved was not easy. Many of the debtors, as might naturally be expected, were abusive. Others - up to 80% of the total - were evasive; that is, they did not return calls or became uncontrollable. The strategies used on debtors varied. The general aim was to get the debtor to pay the account in full or to agree to some kind of arrangement under which the debt would be paid off over time with interest. Sometimes an interest freeze might be offered. The details and history of each debtor was recorded in a computer system called DebtSmart. This allowed the collections officer to see the history of the debtor. 23 Perhaps as a result of the rather confrontational nature of the work, the turnover rate for collections officers was quite high, about 50% per annum. The work of the collections officers was always over the phone and never face-to-face. Nor was there sending of emails or letters by collections officers. 24 Upon being hired by ACM, each employee was given a training manual. At the time relevant to the events the subject of the present proceedings, the manual was in the form of Exhibit 2. The manual suggested various scripts which might be used to assist a debtor in coming to the decision that he or she should pay up. The manual made it very plain that debtors should be threatened with litigation. One of the responsibilities that a collections officer had was, according to the manual, to 'use litigation when speaking to debtors'. The suggested litigation threats ranged from the relatively innocuous - 'I wish to offer you the opportunity to settle this account before legal proceedings commence against you' - through to more developed threats such as this one: Mr/Mrs/Ms. (Surname), the reason for my call to you today is a courtesy call due to the fact that I have received your physical file this morning from our solicitors. I have unfortunately been requested by our solicitors to put forward a final recommendation in reference to the outstanding amount of $(Balance) and will need to finalise my recommendation by no later than (Note down the exact time on paper to refer back to in later part of conversation)… As I was looking through your file (give time) I have noticed here in your file is a Statement of Liquidated Claims which has been drawn and it is set for issuance at the local court in Sydney on (Give exact date) at (Give exact time). (Pause) Mr/Mrs/Ms. (Debtors Surname), Do you understand what a Statement of Liquidated claims is? (If the debtor answers YES, Ask the debtor to explain, so that you can confirm). (If the debtor answer NO, Explain by saying… it is a series of document basically called summons). (Emphasis in original.) 25 Many other parts of the manual encouraged collections officers to make the strong suggestion that lawyers had already been involved in the account. For example there was this script: IMPORTANT PHRASES ● I HAVE RECEIVED STRICT INSTRUCTIONS FROM MY SOLICITOR, TO PROCEED WITH LITIGATION… … ● I DON'T EVEN KNOW WHERE YOUR MATTER IS UP TO AS OUR SOLICITORS HAVE YOU [sic] FILE… ● I HAVE JUST COME OUT OF A MEETING WITH THE SOLICITOR WITH RESPECT TO 3 MATTERS UNFORTUNATELY 1 WAS YOURS… 26 Or this one: CLOSING A CALL ● IF I DON'T RECEIVE THE RECEIPT BY (time) THE ACCOUNT WILL BE DEEMED AS NOT PAID … ● IF YOU DO NOT ADBIDE [sic] BY THIS AGREEMENT, UNFORTUNATELY I WILL HAVE TO HAND DOWN MY FINAL RECOMMENDATION TO THE SOLICITORS 27 Or this: NEW LINES ● I CAN ONLY HELP YOU IF YOU HELP YOURSELF. ● MY SOLICITORS HAVE HAD A GOOD LOOK AT YOUR FILE AND HE HAS [sic] ADVISED ME TO ASSIST YOU. … ● BY TOMORROW 3.00PM THIS ACCOUNT WILL ACCUMULATE $350.00 WORTH OF LEGALS [sic] FEES ● THIS IS YOUR LAST CHANCE BEFORE IT GOES TO COURT. ● YOUR ACCOUNT HAS BEEN BROUGHT FROM THE SOLICITORS OFFICE AND THEY ARE EXPECTING A RESPONSE FROM ME AS TO PROCEED WITH LITIGATION AT 2.30PM THIS AFTERNOON. … ● JUST A REMINDER THAT OUR SOLICITORS HAVE GIVEN YOU ONE LAST CHANCE TO SETTLE THIS ACCOUNT. 28 It is true that the defendants did have a legal section which employed 4 or 5 people. It is also true that it was not completely unheard of for the defendants to pursue proceedings. That was, however, a fairly rare event. Mr Brabazon, ACM's Chief Operating Officer, gave evidence that this would occur on the recommendation of a section manager and would result in a referral of the debtor to the legal section. After that section's consideration, a matter then might be sent to external solicitors. The percentage of debtors who were subject to legal action was quite small. Mr Brabazon was shown Exhibit 18, which was a schedule of the total number of accounts for each month in the period September 2008 to January 2010. It also showed the number of accounts for which: (a) legal status was indicated; (b) judgment had been obtained; and (c) legal fees were charged. The month of March 2009 was typical: there were 489,752 open debtor accounts; 2071 of which were in legal status; 95 of which had been pursued to judgment; and 458 of which involved the charging of legal fees. One cannot be precise about such matters, but the percentage of debtor accounts which were sent to the Legal Department was less than 0.5% and the number in which legal fees were incurred less than 0.1%. 29 What should one take from this? Only this: the defendants did have a Legal Department but it was not in any sense a common part of its business to refer debtors to this section. Further, when matters were referred to the legal section, this was done on the recommendation of the section manager and not by individual collections officers. In no way were collections officers in a position to threaten to commence litigation (at least if that threat was to be accurate). What this means, of course, is that the manual which the first defendant had prepared was suggesting to collections officers that they should make statements which were not true. That misleading conduct then ensued is hardly surprising. 30 I turn to the statements which were actually made below. ASIC contended that I should make a number of specific factual findings about the defendants' business. The specific findings formed the basis of its later claims that ACM had engaged in misleading or deceptive conduct. The particular matters were: (a) The defendants did not employ 'in-house' lawyers It will follow from what I have said above at [28]-[29] that this contention is not correct - the defendants did have a small legal section. (b) The defendants did not specialise in commencing legal proceedings against debtors for the recovery of debts I accept this contention. Whilst the defendants did very infrequently commence proceedings this was such a minor aspect of its business that it could not be described as a speciality. (c) The defendants infrequently commenced legal proceedings against debtors, for the recovery of debts For reasons already given I accept this proposition. (d) The defendants did not utilise officers of the Sheriff of New South Wales to serve originating processes or to have affidavits sworn At the trial no one was able to point to any practice in New South Wales by which service or the taking of evidence was effected in this manner. The ACM manual, however, encouraged collections officers to tell debtors that court documents would be served by Sheriff's officers and to 'stress that they are dressed like a police man [sic] and Come in a marked car'. (e) The defendants were not in a position immediately to commence proceedings against debtors Although ACM's Legal Department was small and did not frequently cause proceedings to be commenced, this does not mean that the Legal Department was incapable of commencing proceedings against particular debtors, nor that they could not do so rapidly if necessary. I reject the proposition. 31 Above at paragraphs [24]-[27], I have referred to a manual distributed to collections officers. After ASIC began its inquiries, its chief operations manager, Mr Brabazon, decided to examine it a little more carefully. Mr Brabazon had commenced with ACM in 2008 so it is perhaps a little surprising that he had not acquainted himself with the manual until 2010 when ASIC began its inquiries, but little was made of this and it would not be appropriate to take this aspect of the matter any further. 32 In Mr Brabazon's opinion, and mine also, many aspects of the manual encouraged collections officers to engage in misleading conduct. I have dealt with this already above. Perhaps the matter is best summarised by Mr Brabazon's evidence at T106: It's the case, isn't it, that collection officers weren't involved in legal processes; is that correct? --- Sorry --- Collection officers were not involved in legal processes? ---Not - no, not per se. So in terms of the process that was adopted if there were legal proceedings that would involve others in the organisation; is that so?--- Yes. 33 Once he became aware of the problem, Mr Brabazon reviewed the manuals, as a result of which he produced a new manual with the misleading parts excised. 34 It should be noted that, while the earlier manual did encourage misleading or deceptive conduct, it did not encourage collections officers to engage in unduly harassing or coercive conduct in the way in which that behaviour is described at [12]-[17]. Indeed, the manual repeatedly instructed collections officers to conduct themselves in a professional manner. 35 The manual did not stand alone. Each collections officer was given a phase of initial training. Mr Brabazon gave evidence of a process of on-going training consisting of ad hoc sessions as well as any additional training that might arise from a collection officer's reviews. 36 ASIC did not submit that these training arrangements were unsatisfactory, although comparison with other operators of call centres might have suggested that regular training could be more structured. Nevertheless this was not suggested and I say no more of it. 37 Mr Brabazon gave this evidence about call monitoring: Now, how often - are you aware - how often are calls monitored? --- Calls are monitored regularly - monthly - and/or when complaints are made. And who's primarily responsible for reviewing or monitoring calls? --- The section managers do the calls on the staff but if there's a complaint that comes through to Mr Oates' office then he listens to the calls. 38 Again, ASIC did not submit that this level of call monitoring was inadequate. Although I will not decide the matter on this basis, it does seem to me quite unrealistic to expect much adherence to the procedures now specified in the manual if operators are monitored so infrequently. 39 The upshot of this is that, as a result of Mr Brabazon's review, there is now a manual in place which does not encourage misleading behaviour, a training régime whose particular aspects were not subject to criticism and a system of call monitoring not alleged by ASIC to be inadequate. When pressed, counsel for ASIC conceded that, since the introduction of the new manual, there was no evidence of any new complaints. This is consistent with the inference I am minded to draw that the new manual has largely eliminated the difficulties which had been identified insofar as misleading or deceptive conduct is concerned. 40 ASIC submitted that it was significant that ACM's compliance officer had not been called. But the fact is that its chief operations officer - who rewrote the manual - was called. I do not quite see how ASIC's submission advances matters. Mr Brabazon was cross-examined about the old manual and he accepted that it was inappropriate in many ways. This was unsurprising evidence since it had already been elicited in chief. He was not challenged on his evidence about training or call monitoring. In the absence of such an attack it is difficult to know how I would go about rejecting Mr Brabazon's evidence on these matters or how a failure to call the compliance manager might aid in that process. 41 In the circumstances, I conclude that: (a) the misleading or deceptive conduct which occurred was largely a function of the manual which was in place; and (b) the manual has now been replaced and there is no evidence of any repetition of the former conduct. 42 A second important factual matter concerns the structure of the ACM group. The current entity operating the business is the second defendant, ACM Group Ltd. The business was formerly operated by the first defendant, Australian Control Management Services Pty Ltd. Both entities are ultimately under the control of Mr Humberto Vieira. Mr Brabazon's evidence was that it had been decided that the business would be floated by way of an initial public offering ('IPO') but that the IPO had not proceeded. It was an aspect of the IPO that the business should be transferred from the first defendant to the second defendant. To that end an undated deed was executed assigning all of the debts owned by the first defendant to the second defendant. Mr Brabazon's evidence was that the deed was executed in July 2009. 43 ASIC was sceptical of this evidence, suggesting obliquely instead that it was a device for avoiding the granting of relief. More than scepticism, however, would be needed to put a case that this was what had occurred. The groundwork for such an argument was not, in my opinion, in place. 44 In those circumstances, I conclude that: (a) the transfer of the business was an aspect of an IPO which was abandoned; (b) it had no impact on the day-to-day running of the business; and (c) the business remains under the control of Mr Vierira and the day-to-day management of Mr Brabazon.

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(a) Debtor One 49 It appears that Debtor One formerly had a credit card debt with the Commonwealth Bank. ACM purchased this debt which, by the time it came into ACM's hands, was in the vicinity of $21,690.13. Debtor One was initially entered into the collections system on 14 May 2008. The ACM Ledger entry for Debtor One is 13 pages long and records the many discussions which took place between her and various collections officers at ACM between 14 May 2008 and 8 July 2009. She was married but her husband was unaware of the existence of the credit card debt. 50 Ultimately, ASIC relied upon 21 individual telephone discussions. ACM also relied upon a number itself. There were, broadly speaking, seven ways in which ASIC alleged that ACM had engaged in misleading or deceptive conduct. These were that ACM had represented to Debtor One, her husband, her neighbour and her friend that: (a) ACM employed 'in-house lawyers' (which it did not); (b) ACM specialised in commencing legal proceedings against debtors for the recovery of debt (when it did not); (c) ACM frequently commenced legal proceedings against debtors for the recovery of debts (when it did not); (d) the matter had been referred to ACM's lawyers for the purpose of commencing legal proceedings (when it had not); (e) ACM had decided to, could and would commence legal proceedings shortly against Debtor One (when it had not, could not and would not); (f) ACM was going to send Sheriff's officers to serve documents upon her (when this was not so); and (g) ACM was going to commence bankruptcy proceedings against Debtor One (when it was not). 51 It will have been noted that, above at [30], I have already rejected (a) on the basis that ACM does employ in-house lawyers. I there also rejected (e) to the extent that it suggests that ACM could not commence legal proceedings rapidly. 52 Additionally, ASIC also submitted that ACM had engaged in undue harassment or coercion by: (a) threatening to inform Debtor One's husband about her indebtedness (where Debtor One had already told ACM that her husband did not know and that she did not want him to know); (b) threatening to call Debtor One's friends and employer until she repaid the debt; (c) threatening to have Sherriff's officers attend her house to effect service (when this was not going to happen); (d) threatening immediately to commence bankruptcy proceedings (when this was not going to happen); (e) calling third parties (her employer, neighbour and friend) with the expectation that they would tell Debtor One that ACM had contacted them; and (f) making the representations outlined at [50]. 53 I set out below those portions of the transcript of the various calls upon the parties rely. For present purposes, a few features should be noted: (a) the persistent suggestion that her husband would be informed of the debt (either directly or, in one case, by the suggestion he would work it out once the marked cars were on-site); (b) the discussions which took place with Debtor One's neighbour; (c) the constant threat of legal action of various kinds; and (d) the offensive nature of some of the remarks. 54 I now turn to the conversations themselves. I should say that the parties created a colour-coded chart indicating their position on each of the calls. The parts of each call in issue were extracted, which was useful, and then coloured yellow (if relied upon by ASIC), pink (if relied upon by both parties) or blue (if relied upon by ACM). Neither party made submissions about why any particular call was misleading or deceptive or unduly harassing or coercive. ACM did admit some of ASIC's allegations in a likewise colour-coded pleading (although it did not do so extensively). In the end, it has been necessary to assess each call. 55 In Debtor One's case there were 28 relevant calls.

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Call 5: 17 April 2009 68 ASIC relied upon this call. It included the following: Male speaker: Yes, I understand. It's just that this matter is on the brink of going legal, that's why I'm giving you a call about that many times, but I'm - I'm willing to give you until the 27th… … Male speaker: It's just that - it's just that on the 27th I'll tell the Legal Department if I don't receive a result it will go legal. Debtor One: Okay. Male speaker: It is a big amount, [$]21,000. If this does go legal, we will serve a Statement of Liquidated Claims… Debtor One: Okay. Male speaker: …at your address, with two Sheriffs. Debtor One: Okay. Male speaker: So you can sign off the paper, and they'll tell you when you - when the matter will be going to court, and it's just that it - I know you don't want your husband to know, but it's just that when that happens, when there'll be a marked - a marked car going down your driveway, to hand you those letters, I am sure he would finally realise there is a problem. Have you spoken to your husband about - maybe he can help you out. … Male speaker: …it's just that our Legal Department knows that either the property that you have at - just let me pull your file - at [address given] belongs to … Debtor One: Right. Male speaker: …either you or your husband, so we know that you own property, and we also know that you work full time; so - do you know you are in a position to pay us that debt this - this debt you owe, and they will enforce - enforce that law on to you. Debtor One: Okay. Male speaker: Unfortunately. Debtor One: I (indistinct). Male speaker: Like I said, I'm just doing my - my - my job. I - I am not going to enforce it myself, but the lawyers here, the solicitors here, they are going to enforce it. … Male speaker: It's just that we are not with a bank, we just require payment in a week or so, but I've been sticking my neck out for you, and I said, you know, 'This lady's genuine, just give her more time, I am sure she'll come up with the money'. … Male speaker: Okay, I'll put that on my notes [that you will be calling back on the 27th] and I'll update our Legal Department in regards to that matter, all right? 69 This was misleading. The collections officer was not going to tell the Legal Department and it is not shown that the matter was about to 'go legal'; a statement of claim was not about to be issued; the Sheriffs were not coming; the lawyers were not about to act; the speaker was not going to update the Legal Department. 70 The suggestion that there would be a marked car at Debtor One's house with two Sheriff's officers, when combined with the observation that the collection officer knew that the debtor did not want her husband to know of the situation, was, in effect, a tactic by which the officer sought to intimidate the debtor and suborn her will. It was thereby unduly harassing and coercive. 71 On the other hand, the references to Debtor One's home ownership were neither unduly harassing nor coercive. Legal proceedings followed by enforcement against Debtor One's property was a legitimate option for ACM: see [14].

[27]

Call 15: 15 May 2009 92 ASIC relied upon Call 15, in which Debtor One's husband responded to the message left with his neighbour. It included the following: Debtor One's husband: Apparently a neighbour of mine got a call… Shell: Yep. Debtor One's husband: …from a woman that was trying to contact me, but she managed to contact my neighbour, but I don't - and he said it's a civil matter, but I've got no idea what it's about. Shell: Okay. Can I just get your full name? Debtor One's husband: [Name given]. Shell: [Debtor One's husband]. Okay. Okay. Okay, and what was your date of birth, [Debtor One's husband]? Debtor One's husband: [Birth date given]. Shell: [She spells Debtor One's husband's name]. Debtor One's husband: Yes. Shell: Mmm. Debtor One's husband: Who am I talking to? Is this a company or… Shell: We are a litigation company. Debtor One's husband: A what, sorry? Shell: A litigation company. Debtor One's husband: Litigation? Shell: Yes. Debtor One's husband: I can't hear you, you've gone - your voice has gone really… Shell: Can you hear me now? Debtor One's husband: Yes. Shell: Yep. We are a litigation company. Debtor One's husband: Okay. … [Shell, who answered the call at ACM, transfers Debtor One's husband to Quang] Quang: Yes, I'm trying to get in contact with [Debtor One], but unfortunately I think her phone's switched off. Is it possible I leave a message with you so you can pass it on to her? … Quang: It's a legal matter… Debtor One's husband: Mmm-hmm. Quang: …and due to - due to privacy reasons, I can't really tell you, because I'll be breaching certain articles of the Privacy Act… Debtor One's husband: Uh. Quang: …but if you could leave her a - a message… Debtor One's husband: Mm-hmm. Quang: …and get her to call us back… Debtor One's husband: Yes. Quang: …that would be fantastic, but it's a very urgent legal matter. … Quang: Because I've got - I've got strict instructions from our solicitors to pass the message on to her. … Quang: Okay. Well, she can call and speak to our Legal Department, and anyone there could just pick - pick up the call and handle her matter, or basically the person that is on the letter. … Quang: Yes, ACM Group, Litigation Department. … Quang: …okay, or within 48 hours, because it is an urgent matter and needs to be addressed with her. 93 This was misleading: ACM was not a litigation company; the speaker had no instructions (strict or otherwise) from the solicitors. It was also harassment of an undue kind to be contacting the husband for the reasons given in relation to Call 12.

[29]

Call 17: 15 May 2009 96 ASIC relied upon this call. Before setting the next call out it is worthwhile noting that the transcript does not capture the tone of Connie, who appears to have been Quang's supervisor. By turns rude, condescending and vicious, no description of this call (and some of her later efforts) can adequately capture the offensiveness involved. 97 Call 17 included the following: Connie: Is your husband a secondary cardholder on this? Debtor One: No, no. Connie: Does he know about this card? Debtor One: No. Connie: No. That's why you are scared? Debtor One: Yes. … Connie: The only time [a previous debtor] acted on her account, was when she was served with papers to take her home. Do you understand? … Connie: We are going to be serving you with papers. Debtor One: Okay. Connie: And we don't necessarily have to serve you in person. We can then turn up to your family home and serve your husband with them papers, and then he will find out. … Connie: Right. And [your house is] in your name and [your husband's name]. … Connie: We are going to start legals, and you will be served at [address given]. … Connie: But at the moment when you go to court, all the Magistrate's going to see [is] that you've been nothing but promises, broken promises, and you know how much your - it's - you know how much it's for, this debt? … Connie: Right. Who's Lisa [full name given]? Debtor One: She's a family friend. Connie: We've actually even tried to get in touch with her to get this sorted out. … Connie: We never got through to her, but we've actually got a number here to ring her. … Connie: I would be on your red alert now, because if you really didn't want you husband to know about it… Debtor One: Yes. … Connie: …he's not only going to find out about it, he's going to lose his home over it, let me tell you. … Connie: And [your husband] will lose his house over it. That's how - that's how critical it is. I am not talking [$]2,000. … Connie: Mm. Okay. This gets more and more suspicious, this conversation. [You have given us a] PO Box [number, instead of an address], [you have told us that] you are staying here, [you have told us that] you are not working, [you have told us that] you are working casual. We are really, really going to have to subpoena you to court to tell us everything, I think. … Connie: But you have never done anything about [the debt]. We've - we've even got calls here recorded from [Commonwealth Bank] Collections, and the same story - you promised, you promised. They've even tried to contact your husband, did you know that? … Connie [Telephone number provided]. They tried to contact [name provided]. [Name provided] is your husband, isn't he? … Connie: Yeah, well, there you go. Eventually… Debtor One: I know, I know, and that's - that's what - I know I keep saying I know, and I'm sorry, because I just don't know what else to say to you at this stage, but please - please, leave it with me, and I will - please, just give me the benefit of the doubt, and I will… … Debtor One: On Monday I'm going to get you a stat dec. Connie: And what's that stat dec going to say? Debtor One: It's - the stat dec is going to say that I promise to pay… Connie: 'I promise to pay'. 98 This exercise in unpleasantness conveyed several misleading statements: that papers were going to be served (they were not); that legal action was about to be commenced (it was not); that Magistrates would soon be involved (they would not). 99 It contained at least two threats: a threat to bring the debtor's husband into the whole picture and a threat to bring a family friend into the matter. For reasons already given in relation to Calls 5 and 6, this was both undue harassment and coercion.

[31]

Call 19: 22 May 2009 102 ASIC relied upon Call 19, which was from ACM to a family friend of Debtor One's, the 'Lisa' referred to in Call 17. It included the following: Connie: That's good. I was wondering whether you could help me. I've got an application form here in front of me regarding [Debtor One and her husband] - or [Debtor One]. Do you know of a [Debtor One]? Lisa: Yes, I do. Connie: I'm trying to locate her work. Do you know where she's working at the moment? Lisa: May I ask what this is about? Connie: It's a legal matter, a civil matter. Lisa: Okay. Connie: Yes, she's put your name on the application form. Lisa: Oh, okay. I'd have to talk to her about this, I think. Connie: Oh, would you? Lisa: Yes. Connie: Okay. Because - what about [her husband], can you get [her husband] to give me a call as well, her - her husband? … Connie: Yes, sure, it's Connie from ACM Legal Group in Sydney. Lisa: ACM Legal… Connie: Legal… Lisa: Yes. Connie: …Group, regarding a civil matter. Lisa: Yes. Connie: I've been in touch with her the last couple of weeks, but she's not answering her mobile. Lisa: Okay, yes. Connie: I just wanted to know if she's okay, firstly, but I need to talk to her urgently. Lisa: Okay. Connie: And if you could let her know that I've got your number too, to ring you whenever she - you know, she's not available or whatever. Lisa: So what am I to do about the matter… Connie: No. Well, she's put your name down on the application form. … Connie: Okay, because - yes, I need to talk to her urgently, or if you could let [her husband] know that Connie called. One or the other would be great. 103 This suggested, erroneously, that ACM was some kind of legal firm. In that way it was misleading. Although, by itself, I would not regard the reference to the matter being a 'civil' matter as by itself misleading, in the context of the reference to the 'ACM Legal Group' it was likely to convey an impression that litigation was involved and was therefore misleading. This is unsurprising given that this is what the manual suggested should be conveyed. 104 It is apparent that this call was to a third party. She was identified in the submissions to me as a friend of Debtor One's. In my opinion it was not proper to contact a third party in this way. For the reasons given in relation to the call to Debtor One's neighbour (Call 13), this was both unduly harassing and coercive.

[34]

Call 22: 25 May 2009 110 ASIC relied upon Call 22, during which Debtor One spoke to both Quang and Connie. It included the following: Quang: We are just proceeding with legal action against you, that's all. … Quang: But, you know, there's a lot of opportunity for you to backtrack and, you know, stop all the legal things going on. … Connie: We've started legal action from this morning. I've been in a meeting with you this morning, with our solicitors. Debtor One: Okay. Connie: And you will be served. … Connie: So, really, why don't you just say you haven't got the money, and we can serve you with bankruptcy papers? It's simple. You will be finished in a couple of - four weeks it will be all over and done with. … Connie: Right. People that you know. So it's okay if we come to your house and serve you with your husband there? … Connie: And do you know why we called your friend? Because we've got a list of people here we can call. Every time you avoid us, we'll be calling somebody else. … Connie: …who do you want to go into it with, the Magistrate? … Connie: So we are going to make another note on your file and it's only going to make you look worse when you go to court. You know that, don't you? … Connie: Don't think that [you're going to get out of trouble] because you are calling us, that it's going to keep us away from you. Like I said, we called your friend because you didn't answer your phone. If you don't answer your phone Wednesday, we will call your husband. That's how it works… … Connie: [Debtor One], do you want me to ask your friends and relatives where you work? I've got a list here of people I can ring. How do you think we got Lisa's number? … Connie: Oh, you are unbelievable. You are unbelievable. You are going to have to answer to a Magistrate; you know that, don't you? … Connie: Or are you just stalling us, are you? Because I am going the whack another $2,000 legal fees on this account by the end of the week. It'll go up to $25,000. Debtor One: Okay. Connie: Because you've wasted that much of mine and Quang and everybody else's time that works here, and we've got nothing out of you, so what is the point of me waiting for Wednesday? Call you tell me that? Debtor One: As I said to you… Connie: 'As I said' - here we go again. 'As I said, let's stall a bit longer'. Well, guess what, I'm going to ring your husband today, and try and get out of him where you are working. Good day to you. [End of telephone conversation] 111 This was certainly misleading. No legal action was proceeding; legal action had not been started in the morning; the operator had not been in a meeting with solicitors; the debtor was not going to be served; no bankruptcy papers were in preparation; and the 'Magistrate' was not going to be looking at the matter. 112 It was also unduly harassing and coercive. The operator was threatening to contact friends and relatives and (implicitly) to tell them of the debtor's difficulties (although the chronology suggests that her husband was already aware). This was an attempt to intimidate Debtor One and negate her freedom of choice. I do not need to consider whether, having regard to the Privacy Act 1998 (Cth), this was a threat to engage in unlawful behaviour. Regardless, it was well beyond the bounds of legitimate conduct. 113 For completeness, the audio file for this call reveals Connie to use a hectoring and bullying tone. That manner augments the unduly harassing and coercive nature of the calls.

[36]

Calls 24 - 27: 29 May 2009 - 9 June 2009 116 ACM relied on these four calls, which involved Debtor One and an ACM employee called Thomas, who described himself as a Section Manager. These calls apparently occurred after Debtor One contacted the Consumer Action Law Centre. My attention was drawn to the following passages: Call 24 Thomas: I apologise, I know I was due to call you at 12, I got caught up in a meeting that went for a lot longer than expected. Is now okay to talk or… Debtor One: Yes, sure Thomas: Okay. Debtor One: I'm sorry, where are you calling from again. It was Tom, wasn't it? Thomas: Yes, Tom, from ACM, regarding your [Commonwealth Bank] account. I had a message to give you a call. Debtor One: Oh yes. Yes, Jillian, is that right? Thomas: Sorry? Debtor One: With Jillian? You're - you're one of the solicitors, is that right? Thomas: No, I'm calling from ACM Group, so we are the… Debtor One: Oh. Thomas: …the people that purchased the [Commonwealth Bank] account… Call 25 Thomas: Are you able to just call back when - we've received your fax [regarding the Consumer Action Law Centre], and obviously we want to provide an - an answer to you… Debtor One: Okay. Thomas: …obviously given that you've given us a - a sort of notice period, so I want to ensure that we are obliging at our end, so… Debtor One: Okay. Call 26 Thomas: …you know we - we really don't have much - much more we can do… Debtor One: I - I can… Thomas: …do you know what I mean? Debtor One: Yes. Thomas: Yes, so I … Debtor One: And thank you for being really nice, because, you know, like - yes, I am not going to go into details, but can I just ask you this - you said something about a goodwill payment. Thomas: Yes. Call 27 Thomas: No, but I'm - what I'm - what I'm asking is you've - you've made some inquires so when we speak tomorrow… Debtor One: Yes. Thomas: …we'll be in a position to actually get something concrete happening, because obviously this has just been - I know you can't talk right at the moment… Debtor One: Yes, yes. Thomas: …but obviously you don't want to just keep going around and around in circles, we want to… 117 The conduct in these calls was appropriate. Thomas' demeanour was measured and professional. I do not accept that this conclusion has any consequences for the calls in which the opposite conclusion has been reached.

[38]

Conclusions on Debtor One 120 Debtor One's debt was marked on the ACM Ledger as 'settled in full' in June 2009 following a payment by her husband of $19,000. This represented a $3,607.21 discount because, at the time of payment, Debtor One's debt of $21,690.13 had been increased by $917.08 as a result of interest and late fees. If ACM paid 21% or less of the face value of the debt to acquire it (as Mr Brabazon said was typical), the $19,000 it received was still substantially more than it had paid, which would have been less than $4,600. 121 There is no doubt that over the period 27 March 2009 to 11 June 2009 ACM, through several operators, persistently engaged in misleading conduct by implying to Debtor One (or her acquaintances or relations) that: (a) ACM was a firm which specialised in commencing legal proceedings for the recovery of debt (when it was not); (b) ACM frequently commenced such proceedings (when it did not); (c) the matter had been referred to ACM's lawyers for the purpose of commencing legal proceedings (when it had not); (d) ACM had decided to commence legal proceedings against Debtor One (when it had not); (e) legal proceedings, including bankruptcy proceedings, would be commenced immediately (when they would not); and (f) ACM would cause NSW Sheriff's officers to attend her home to serve documents (when this was impossible). 122 I also accept that this was not isolated behaviour. It was, rather, the inevitable working through of the processes described in the manual. 123 On the other hand, whilst I accept that the operators did, from time to time, suggest that ACM had in-house lawyers, I cannot conclude that this was not misleading for it did, in fact, have a number of in-house lawyers. The same conclusion applies to the representations that ACM was in a position immediately to commence legal proceedings; the representations were made but, for the reasons at [30], they were not misleading. 124 I accept ASIC's submission that, in several instances, the operators behaved towards Debtor One in a way which was unduly harassing and coercive. Specifically, I find that ACM engaged in unduly harassing or coercive conduct by: (a) threatening to inform Debtor One's husband about her indebtedness (where Debtor One had already told ACM that her husband did not know and that she did not want him to know); (b) threatening to call Debtor One's friends and employer until she repaid the debt; (c) threatening to have Sherriff's officers attend her house to effect service (when this was not going to happen); and (d) calling third parties (her neighbour and friend) with the expectation that they would tell Debtor One that ACM had contacted them. 125 The operator Connie's behaviour was quite unacceptable but, as I have said, it was not solely confined to her. The threats to speak with third parties were wholly inappropriate as, of course, was the carrying out of those threats. I also regard the threats, made in accordance with the manual, to have Sheriff's officers come to serve documents in marked cars as unduly harassing and coercive. I reject ASIC's contention that ACM's misleading conduct and threats to commence legal proceedings (including bankruptcy proceedings) were also unduly harassing and coercive.

[41]

Call 30: 22 December 2008 132 ASIC relied upon Call 30. It included the following: Alex: [Debtor Two], is that silver Holden Barina yours? … Alex: [I'm calling] regarding a legal matter. Look listen, I've got two Sheriff's officers organised to come out to your home place to serve your court documents. When is the best time? … Alex: It seems like you're a person that has no clue what they're talking about. Is there an adult there by any chance, [Debtor Two]? Did you want to give me authorisation to speak to someone that might understand exactly what I'm talking about? … Alex: You heard exactly what I said. Would you - would you have anyone that can basically understand exactly what I'm talking about? Did you want to give me authorisation to speak to someone else? … Debtor Two: Whatever. Alex: [Debtor Two], as I said, is there someone that would basically understand and will be up to my level when I speak to them, please. … Alex: I'm one of the supervisors, senior legal advisor, I can tell you that, ha-ha. So [Debtor Two], [Debtor Two], I can see here everything I'm telling you you're taking as a joke, and I can see - I've flipped through your file, you've taken everything as a joke. I'm telling you right now, is there anyone that you want me to speak to that can understand exactly what I'm talking about? Maybe they can basically knock a bit of - a bit of, you know, sense and tell you this rather serious. … Alex: No, it's a promise, I can tell you that. If I said I'm going to send someone out to serve your court documents, it's a promise. I don't make threats. You know, you might make threats, but I make promises. 133 This was misleading. There were no Sheriffs' officers coming and the operator was not a senior legal advisor. 134 ASIC alleged that Alex represented that proceedings had already been commenced. I do not think that such a representation was made. ASIC did not allege that there was a misrepresentation that proceedings were about to be commenced and, consequently, I make no finding in this regard. 135 On the other hand, the exchange was certainly insulting. It was not thereby coercive, although it was certainly a species of harassment. The question of whether it was undue harassment is more difficult. Debtor Two's previous discussion in Call 29 had included the spurious suggestion that she was not the debtor. It was obvious that asking her pleasantly for the money was unlikely to be an effective tactic. Whilst the behaviour of the collections officer was plainly in poor taste, having regard to the context, I am not prepared to say that the harassment was undue.

[46]

Call 35: 4 December 2008 149 Both parties relied on Call 35. It included the following: Alex: Okay, I did say I'd give you a call back. Now I've got the power to place an injunction on the file, [Debtor Three], which means to hold off any further proceedings on this file. But I need to know what is your intention - intention on this matter, your personal loan account? … Alex: …a - [if I was] a wise man - if I - if I had basically [letters of demand in] my mail, addressed to myself, to my PO Box, telling me that I owe a debt and I claim that wasn't mine, I'll call up and follow-up the matter. Now this will be explained to the Magistrate. I will be more than happy to basically tell the Magistrate this is what happened. … Alex: I'm going to ask you this one more time. If you don't answer it correctly, I will terminate the call. As I said, the debtor is more serious than my - in the Magistrate. I couldn't care less. I've got a big pocket - I've got a big pocket to say… Debtor Three: I really - to tell you the truth, I'm willing to go to court. It doesn't worry me. Alex: Okay, yeah, as I said, listen, I've got documentations. Debtor Three: (Indistinct) yeah, I know, I know, I know. Alex: I have got documentations here to prove the debt… Debtor Three: (Indistinct) I know all about you. Alex: As I said, we've got a big - big pocket here, mate. I'm not sure about you. I'm not sure about you, but we do… Debtor Three: I haven't got - mate, if I haven't got the money to pay you back, I haven't got it. That's as simple as that, you know. Alex: No, no, no, no, no, no, no. [Debtor Three], [Debtor Three] - you work full time. I'll guarantee if I take legal action, I obtain judgment under - through the legal channel, obviously, I garnish your wage - I'll tell you right now I'll get something out of you. … Alex: Okay. Now, what I'm going to do is, I'm gunna allow my solicitors to do whatever they want to do, escalate it, send Sheriff's - Sheriff's officers out, serve you Court documents, but you got my number there. Don't wait until it's too late. Don't wait until the Sheriffs come out. 150 This contained a threat that proceedings would be commenced and that Sheriff's officers would effect service. On the other hand, it would be fair to say that Debtor Three was mostly unmoved, pointing out that he did not have the money and inviting ACM to go ahead and commence proceedings. In my opinion it was misleading but probably unsuccessful. I do not find undue harassment or coercion.

[56]

Call 46: 24 November 2009 176 ASIC relied upon Call 46, which ACM placed to Debtor Four's employer. It included the following: Ashleigh: Good morning, [name of employer], Ashleigh speaking. … Collections Officer: Yeah, I'm sorry. I'm actually calling from a financial institution in regards to a - a credit application that's gone through and they've actually - the person that's actually put it through has listed you guys as their employer. I'm wondering if I can speak to HR or resourcing or anything like that in regards to that person? Ashleigh: Mmm-hmm. Yeah, you can speak to me if you like. … Collections Officer: Okay. And it says he works 30-plus hours a week. Is that correct? Ashleigh: Yeah, definitely. Collections Officer: Yeah, definitely. I would imagine in the contracting. Now, I can't really - I'm trying to read his writing, that's all. It says here he's - we've got an annual here anywhere between - is it 55 or 50? Ashleigh: Mmm. Collections Officer: It looks like 55 to 60 to me. Ashleigh: Right. Collections Officer: Would you be able to confirm that or not? Ashleigh: Yeah, just a moment. I'll just have a look on his file. Yeah, around to - I'd say average, yeah, 50-plus. Collections Officer: So we'll stick down there 50, not 55. … Collections Officer: Okay. That's not a worry. What I'll do is I'll give him a call. Let him know [how] his application went. Thanks so much for that. 177 This was misleading. Confidential information was elicited by a statement which was knowingly false, namely, that the call was for the purpose of processing a 'credit application'. This, so it seems to me, is a reasonably serious matter. 178 I did not apprehend ASIC to advance a case that the company affected by this conduct had been subject to coercion. ASIC did advance a case, however, that calling Debtor Four's employer was unduly harassing or coercive because ACM intended that the employer would ask Debtor Four questions about the call and Debtor Four would thereby discover that ACM was calling his employer. As is made apparent in Call 49, Debtor Four did find out that ACM had called his employer. I conclude that this case is made out and that ACM engaged in unduly harassing or coercive conduct.

[57]

Call 47: 25 November 2009 179 ASIC relied upon Call 47, which was also placed to Debtor Four's employer. It included the following: Barbra: Good afternoon, [name of employer]. This is Barbra. Collections Officer: Hi there, Barbra. I'm sorry to bother you. I'm actually looking to send some documents over to an employee of yours at - who's working at [name of employer]; is that right? Barbra: Yep. Collections Officer: Yeah. I believe he's always out on the job site. I'm just wondering would - I mean, is there any particular - because I know I need - I need to actually give him the documents in person. If I were to come in and - or post these documents through, would he be called in to collect them or would we have to… Barbra: No. Collections Officer: …out on site to do it? Barbra: We just would give it to one of the guys who's going down to whatever job… Collections Officer: Okay. Barbra: …site he's on, so. Collections Officer: Okay. I don't want to say who it is. It's just basically legal documents, so we just - we need them served to the actual person. … Collections Officer: Yeah, see, all I - if I gave you his name would you be able to keep that between you and me, just… Barbara: Yeah. Collections Officer: …because I really don't want - I've already said a lot more than what I should have. Barbara: Mmm. Collections Officer: It's just fairly urgent to send those documents. His name is [Debtor Four]. Barbara: Okay, yeah. Collections Officer: Yeah, and I've been told he still - he works for the company and he's on the job site and I was just wondering which job site that is and if someone were to come with papers would they - would they take - would someone take them down there or would they have - because we have to actually personally serve them see. So… 180 I do not accept that this is misleading or deceptive. The reference to legal documents is insufficient, in the context of this call, to infer the imminence of legal proceedings. For the reasons given in relation to Call 46, however, this call involved undue harassment or coercion.

[59]

Call 49: 27 November 2009 184 Both parties relied on Call 49. It included the following: Male speaker [prior to Debtor Four answering the phone]: Just say 'I'm transferring you to the legal manager'. … Dorelle: Yeah. What I'll do. I'll just place you on hold and I'll get - I'll speak to the manager, okay? … Dorelle: That's good. [Debtor Four], Kush, one of my staff members, has been handling your account. She's given it to me to take to court and I … … Debtor Four: Quite a bit, I'm the only breadwinner at the moment. We're - we're in court for custody of my partner's children - she's got two girls - so… … Dorelle: Yeah. Well, won't look good on your case if they know that there'll be - debt collectors - ah - chasing you… Debtor Four: Yeah. Dorelle: …for debt. It's not going to look good on her case if she's using you as a - as support income. I now understand she's left her job, your partner, she doesn't work at that place anymore, so… Debtor Four: Yeah, all right. Dorelle: Yeah, so. Debtor Four: You've been calling up there too? Dorelle: Well, we have been tracking you down, mate, because (indistinct)… … Dorelle: Yeah. We've already spoken to your pay for - payroll and they understand that your income is around 50k a year; is that correct? Debtor Four: I beg your pardon? Dorelle: We've already spoken to payroll officer and we understand that your pay is around 50k a year. Is that correct? Debtor Four: Mate, that's a privacy, you've just fuckin' breach privacy. You can't… … Dorelle: Yes, we can, because I tell you when we go to court and we garnish your wages and - and the courts - we show the courts this is how much you make we will leave [you] with the bare minimum of $239.74 less and we will get the rest. That's why - this is how serious the matter is now. Trust me, [Debtor Four], you know, once I said the matter's going legal, you think it's just going to go to court, the Magistrate's going to tell you 'How come you didn't pay your debt?' and they're going to slap you on the wrist and put you on some instalment order? [Debtor Four], it's not like that mate. We're ACM Group. We're the number one debt collection agency in Australia, all right? We - we're ruthless, mate. … Dorelle: …put our - you put our name [into Google], mate, there's a lot of people who regret it that we went to ever talk to - went to court, okay? So I'm going to give you a final opportunity, mate, okay? You need to come up with a goodwill payment. You need to come up with at least 50 per cent of the debt, then I'll put you back on the arrangement. Debtor Four: Oh, really? Oh, really? Dorelle: Yeah. Yeah. Or I serve you the papers mate…and get a garnishee order. … Dorelle: Yeah, it's called a judgment. It's a court judgment. So we'll have judgment for 12 years, which means that for the next 12 years ACM Group will be able to do any sort of legal enforcement action to recover the debt and your $10,000 account… … Dorelle: Yeah, well, you know, you've got to the weekend. So I don't know have to - I don't have to proceed on this matter till 3pm on Monday. So you've got till then to see what you can come up with. If you come close to it I'll take it into consideration because you have made $1,100 worth of payments, so I'll take that into consideration. So you've got till Monday and this was - Kush will just give me a call… … Dorelle: (Laughs.) Watch your language, [Debtor Four]. We'll still take you to court and we'll get judgment for 12 years. … Dorelle: Yeah, you've got to understand that I stuck out my neck for you, right, and I look like a fool. Now I have to go back and recommence court proceedings against you right, after you gave me your word that you will stick to this agreement and that you'll make your payment. And the thing is, mate, right, I'm a family man and I understand everyone's got debts to pay. I can understand that kids are very expensive to take care of, right, but… Debtor Four: Yes, (indistinct) they are. Dorelle: …if I've put a - promise something - yeah, if I want to promise something, I want to keep to it. If I can't, I would keep - call up and say 'Listen, I can't make this payment, look, can we reduce the payments?' but, mate you have not been in contact with us, you've been avoiding us, okay? We've contacted your number so many times and you still haven't replied back to any of our calls and messages. It's only when Kush, right, had to go to the point where she had to investigate the matter on you and is threatening you with legal proceedings, right, that's when you called back. That's when you - got your attention. … Dorelle: And [the debt is] only going to get bigger due to - due to our legal…fees as well. Debtor Four: Sorry you lost what? Dorelle: And I only advise you that it's only going to get bigger due to our late - our - our legal fees as well. … Dorelle: Hold on. Hey, Kush, has the legal fees been added on to this account? … Dorelle: Yeah, but me looking at the file, me preparing it and me going to court on Monday, that's - all costs money mate. I haven't added those charges yet, so right now you owe $8,969.97 but on Monday it will be a different story, mate. 185 This was misleading. Dorelle was not a legal manager; he was not about to take the matter to court; papers were not about to be served; judgment and garnishment were not imminent; the case was not going to court on Monday. 186 Although there may be questions about the lawfulness of the manner by which ACM came to know Debtor Four's salary, I do not see why, once armed with that information, it was harassing or coercive to use it with Debtor Four. 187 ASIC also alleged in relation to this call that it was unduly harassing or coercive to: (a) suggest that the debt would threaten the custody application; (b) say that ACM was 'ruthless, mate'; and (c) say 'we are tracking you down'. 188 Although this is close to the line, I think that, in the context of the debt recovery business, this escapes, perhaps by a very narrow margin, being characterised as unduly harassing or coercive conduct.

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Call 50: 30 November 2009 189 Both parties relied upon Call 50, which was made by ACM to Debtor Four's partner. It included the following: Kush: And this will be followed by a $100 weekly arrangement from the 29th of October, where they'll review it in about three months. What [one of our legal managers] also stated very clearly was that in accordance with this agreement they will hold up any legal proceedings unless the arrangement is in default. So basically what's happened is - I don't know if [Debtor Four] told you or not, but the same legal adviser spoke to him last week… Debtor Four's partner: Mmm-hmm. Kush: …advising him that he had a deadline of 3pm today - $4,000 payment for us to put him on an arrangement or we'll be signing off on the legal documents. … Kush: No agreement. Debtor Four's partner: No agreement today. Kush: This is what I'm trying to explain to you. This has gotten to the point where he has not made a payment for over a year and we left him many, many messages on his phone. We tried and tried and tried and we said to him 'Call us back, we just want to talk to you' and the only time we got a call back was when we said to him we were going to go legal and that is the only time we got a call back and my manager, like, just stuck his neck out and now we have to go back to our solicitors and they're not happy with it. This is what I'm trying to tell you and this is why… … Kush: …they're just ready to sign off and I don't want that to happen to him. I've - you know, (indistinct) explained me the situation. … Kush: …he's the solicitor, I can't say nothing, I can't overrule him. I'm just doing my job. … Kush: Okay, yeah. No worries. What we're going to do is - basically what happens is that a (indistinct) is ordered so that means a summons is ordered. It's served to him either at work or at home, either way, or someone can take it on his behalf. Once he's been served he's got 28 days to act. So what happens there is there's a couple of options. He can either payment - pay - do a payment in full… … Kush: …the thing is we've got enough - basically what's happened is you're just going to - this is - I'm telling you straight up, right. The judge is going to say 'Okay, when was the last payment made?' We'll say 'Okay, the 7th of the 8th 2009'. And they'll said 'Okay, what was the deal?' and we'll go 'We've got it in writing, we've got a signature, we've got phone conversations saying that he would pay $500 over two months followed by $100 weekly'. 'How many payments did you get?' 'We got $1,000'. 'Where did the weekly payment go?' 'We don't know'. 'Okay. So what have you done in order to get in contact with him?' 'We've tried to call him. We've left messages. We found out where he's working. He's moved addresses. We've had to locate him. We've left messages. He's never responded. It got to the stage where it got to legal. Once we said we were going legal, we finally got a call back. When we demanded a certain amount of the balance in order for that to go away he has rejected it. He's come back with $500'. They'll say 'Okay, fine, it's been a year. There has been no payment'. Bang, done, sealed. … Kush: [Debtor Four] said to us that he did not want to pay and the my - my solicitor explained to him exactly what I just said to you - 'This is what's going to happen'. Debtor Four's partner: Yeah. Kush: 'This is what is going to happen' and he did not like that and he - my solicitor said to him 'I'm sorry, but this is what they want to do'. He's just passing on the message. … Kush: I've got a meeting in about - about 3.30. What I'll do is I'll give you a call back - should only take me about five minutes - I'll give you a call back on [Debtor Four's] mobile. Debtor Four's partner: Yeah. Kush: I will speak to the solicitors, I'll see what they have to say and I'll just let you know. 190 This was misleading. Lawyers were not involved and they were not considering proceedings. There was no prospect of a judge saying anything about the debt. It was, however, wholly inappropriate to be dealing with Debtor Four's partner. This was a species of improper tactic - it was unduly harassing for the reasons given in relation to Call 12.

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Call 51: 30 November 2009 191 Both parties relied upon Call 51, which was also between ACM and Debtor Four's partner. Again, ACM placed the call. It included the following: Kush: Hey, it's Kush calling from ACM Group. Just literally walked out of the meeting now. I'll tell you exactly… Debtor Four's partner: Yeah. Kush: …what they've said to me, okay. They're happy to hold off legal. … Kush: Yeah, I need to punch it in before then, otherwise they're just going to go 'Nah' because basically they just said end of business today, that's what they've said to me, so. … Kush: Okay. What I'll do is I'll give you all the - it's just this one time I need it done, that's all, because I don't want them to go any further on it, okay? I'm sorry but they've given me specific orders and I can only follow… … Debtor Four's partner: …and what guys are allowed to do. But were (indistinct) known that you're not allowed to contact our work at any time. Kush: Not unless it hasn't been re - and we're more than - we're allowed to contact your work unless we've been told specifically not to and we never have been told because I won't have the (indistinct)… Lisa: And request information… Kush: (Indistinct). Lisa: And request information about that. Kush: No, all I said to her was I said I was doing - she asked me where I was from, I said… Lisa: Yeah Kush: …'I'm from a financial institution', which we are. Lisa: Yes. Kush: She asked - I asked if I could ask some questions in regards to [Debtor Four], she said… Lisa: Mmm-hmm. Kush: …'that's fine'. I did ask her a few questions, whether she answered them or not I can't say but she couldn't - she only gave me basic information. Basically it wasn't HR and it wasn't anything like that. I asked a few questions, I did not do it under any pretences. She just - I asked her the questions, I said 'Could you answer them or not?' she said she'd try and I asked her. Simple as that. I didn't… Lisa: Yeah, but you weren't allowed to do that; reading on the actual signed itself, unless - unless you've had written consent you're not allowed to and that's (indistinct). Kush: Yeah, but I didn't … Lisa: (Indistinct). Kush: …voluntarily - she volunteered the information, that's the thing. I didn't ask her straight up 'I want to know about this person'. 192 This was misleading. The operator gave the impression that there was a legal team involved and the proceedings were only just in abeyance. The operator also said that, when she called Debtor Four's employer, she didn't speak to human resources or 'anything like that' and that she 'did not do it under any pretences'. This is not true. In Call 46, the caller (who I infer was Kush from the similarity of the voices and from the fact that Kush admitted to calling Debtor Four's employer): (a) asked to speak to human resources and was told by Ashleigh that she could assist, and (b) said that she was calling in relation to a credit application. This was misleading. 193 For the reasons given in relation to Call 50, this was unduly harassing. ACM had no business seeking to strongarm Debtor Four through his partner.

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Call 66: 19 March 2010 225 ASIC relied upon Call 66. It included the following: Victoria: …I'm actually based in the Legal Department. I'm just reviewing files at this stage. … Victoria: Now, I've been given strict instructions from my solicitor at this stage for files that gain two years plus, that needs to be closed, meaning, [Debtor Five] this amount of $2,423 must be closed today. … Victoria: I have to decide (indistinct) once you've signed off, I take it to the solicitor, he takes it to court and once it's taken to court, it's stamped and you get served. So it's an actual legal document. … Victoria: Yeah. Well, the agent, in uniform, will serve your payroll officer because they are going to go with the garnishee. They are going to garnishee your wages, which leaves you approximately $300. … Victoria: …The only thing that I can say to possibly help you out, [Debtor Five], is to provide you [with a] discount. The only amount that I can approve at this point is 30 per cent, which is pretty good, though. I mean, better than you paying the full amount, which you're liable for, because it's your debt. But the Legal Department, I can just approve 30 per cent. … Victoria: And your reference number, your legal reference number, and then if you could get back to me in a few minutes. I just need an answer. … Victoria: …signing the file off, will be 3 o'clock, but I need a call before 2.30 to let me know if it's a yes or no, and then we'll proceed from there. 226 This was misleading: Victoria was not based in the Legal Department, she had not been given 'strict instructions' from the solicitor, a uniformed agent was not about to serve the payroll officer and Debtor Five's wages were not about to be garnished. Taken altogether it left the impression that proceedings were imminent. It was not unduly harassing or coercive. A threat to serve a garnishee notice on a third party is not the same kind of conduct as, for example, serving a person at their workplace, which involves direct embarrassment.

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Call 68: 24 March 2010 229 Both parties relied upon Call 68. It included the following: Mafa: The reason why accounts are only frozen is because they are going into legal action. … Mafa: And letters have been sent out. But, yeah, look, at this stage, the account's going into legal action. I can see here - do you mind holding while I get your - like your physical file? … Mafa: Now, okay, we've actually got - they were supposed to get their documents - this is a legal file. They were suppose to get the documents last Friday, but something was in the delay of it, possibly might be this Friday. This Friday's where they are looking at (indistinct) to proceed. Debtor Five: Mmmm-hmmm. Okay. Mafa: There's some pages missing here, but I don't know what they might be. Yeah. So, at this stage, that's what's happening with the account. That's why - because I haven't come across it yet. You've just called now and I've just found out. What happens is when the account's fallen into broken arrangement, all the broken arrangements - it's not just your account, it's like, everyone within the company, all the broken arrangements accounts go straight down to our solicitor's department. … Mafa: Okay, what happens, once the documents are stamped, that puts legal fees added onto the account. Debtor Five: Yeah, ok. Mafa: Which is about a thousand dollars. What happens then is a Sheriff, a uniformed Sheriff in an unmarked car comes out to the address and has to serve it to you. Debtor Five: Yep. Mafa: Or anyone at the house. Debtor Five: Okay. Mafa: Now, those documents will show you the date and what the actual case is about for you appearing in court. Debtor Five: Yep. Mafa: And then when you go to court, you'll have your say. … Mafa: Once both of those - both payments have fallen in, what I'll do, I'll ask solicitors just to hold it off until next week, until you get the five hundred paid. … Mafa: Yeah, that's ok. What I'll do, I'll (indistinct) and I'll go and speak to solicitors just to hold off until next week until we get that first payment. 230 This abundantly hinted at the commencement of proceedings and was thereby misleading. The references to the involvement of solicitors and Sheriff's officers were also misleading, as was the suggestion that 'all the broken arrangements accounts go straight down to our solicitor's department'. I do not think it was unduly harassing or coercive.

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Call 70: 16 December 2008 240 Both parties relied upon Call 70. Call 70 was in these terms: Selin: Then it's not going to be too good. Because the reason why I'm today actually calling you is, see, we're a Legal Department, ok? We're just here to go ahead with legal proceedings, okay but… … Selin: Yes, I understand you, sir. But, like I said to you, we are actually here to go ahead with legal proceedings and just - immediately. … Selin: Yeah, yeah. Yeah, I understand that, but you know - the thing you don't understand is I have to tell my solicitor something by tomorrow… Debtor Six: Sorry what is that? Selin: I have to tell my lawyer something tomorrow. … Selin: …was that - just - just for - just a courtesy call, do you understand? Debtor Six: Right. Selin: They actually want to go ahead with legal proceedings. They want to take you to court. … Selin: You will - if we take you to court… Debtor Six: Right Selin: …we will serve you with judgment, which lasts for 12 years. … Selin: I need you to do something tomorrow. Because like I said to you today, the reason why I was calling was to let you know that we're going to start signing it off. … Selin: I'm going to go tell my solicitors that 'he can't find the money so you sign his papers off'. … Selin: Like if I was the lawyer, I'd stop it for you, but I'm not the lawyer. So (indistinct)… Debtor Six: (Indistinct) I mean, you are being fair - I don't tell you you are wrong or anything. The only thing is I'm in the bad position, you know. Selin: Yeah, I understand you, believe me I do, but like I said, it's - I can't do anything about it, because then they're going to - they're going to be angry at me, saying 'Why aren't you giving us an answer?' … Selin: Make sure, please call me on Thursday, before 3 o'clock, because that's when solicitors are going to come and say to me, at 3 o'clock, 'Look, what's going on?' and I have to give them an answer. So call - make sure you call me before 3 o'clock, not 3 o'clock on the dot, before 3 o'clock. At least 2, 2:30. 241 This was misleading. It suggested that Selin was in the Legal Department, that he had to report to the solicitor the next day and that proceedings would be commenced shortly. On the other hand, it was not unduly harassing or coercive for the reasons given in relation to Call 1.

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Call 71: 17 December 2008 242 Both parties relied upon Call 71. It included the following: Kurt: Should we proceed with an examination summons and you - you do not appear, we can issue a warrant for your arrest. So we need - we need to get you a fixed address. … Kurt: Do you understand if we force you into bankruptcy and this goes legal… Debtor Six: Right. Kurt: …you are at the risk of losing your [taxi driver's] licence? … Kurt: …to a collection agency. The debt's now reached the Legal Department of that collection agency. Debtor Six: Right. Kurt: And basically, when we purchase these debts, [Debtor Six], it's purely for the purpose of litigation. So basically, the reason why Ali's giving you this courtesy call - and you're lucky to be getting a phone call like this… … Kurt: It's just that your deadline for this account is this Friday, 3pm. Like I said, the solicitors have requested the full outstanding balance. Should you not be able to - we need to work something out, because if they force you into bankruptcy you are at the risk of losing your [taxi] licence. … Kurt: If you can't confirm an address by Friday, we're proceeding with legal action against you. 243 This was misleading. The matter had not reached the Legal Department. Debtor Six was not about to be made bankrupt, was not about to be arrested and was not about to lose his taxi licence. ACM's purpose was not solely, or even modestly, 'litigation'; there were no solicitors. 244 I also regard the threats to have Debtor Six arrested and to have his taxi licence revoked as unduly harassing on the basis that they were calculated to intimidate Debtor Six. ASIC also submitted that the threat to 'proceed with an examination summons' was unduly harassing or coercive conduct. I reject this. It was nothing more than a threat of legitimate legal proceedings: see [14]. ASIC further submitted that, during this call, ACM engaged in unduly harassing or coercive conduct by alleging that Debtor Six had previously left Australia dishonestly to avoid his debt. No such allegation was contained in the passages to which I was directed.

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Call 72: 23 December 2008 245 Both parties relied upon this call. It included the following: Selin: Hi, it's Selin calling from ACMS Legal Department. Debtor Six: Sorry, who? Selin: Selin, from ACMS Legal? … Selin: No, I can't wait that long. I can't wait that long. I can't wait that long, because my solicitors are asking for something off me. You can't keep telling me to keep waiting. … Selin: Yes, and you will go bankrupt. Do you want to go bankrupt? Debtor Six: I don't know… Selin: You think it's very easy going to this court. 'Oh, I don't have money and they can't do anything to me'. It's not that simple. … Selin: This is my job. I'm not even supposed to be making an arrangement with you, [Debtor Six]. I'm just supposed - because we're a Legal Department. We just take you straight to court. … Selin: Yeah, the Court will decide - listen to your friend. The court will decide and they will give you a better payment. Believe me. They will ask for full payment off you. That's fine. You don't want negotiate with us, that's fine. … Selin: Yeah, but - but, see, this is my last day. I'm finished today. I'm not going to be in after this. So today, I have to sign off all papers before I leave. … Selin: I'm just going to sign the papers off, end of story, finished. … Selin: Yeah, you don't know about our rules. You don't know about the legal system either, and you are just talking like court is just like a playground that you walk into. … [Debtor Six was transferred to Selin's supervisor, Ryan] Ryan: Your file will be signed off this afternoon if we haven't received payment. … Ryan: Yes, today. Well, then you will be getting served unfortunately. You will be getting served at [address given]. … Ryan: Well, then I am telling you you are going to be served. We are going to force you into bankruptcy, your passport may be taken. You will be unable to travel… … Ryan: Can you hold a taxi licence when you are bankrupt? I don't think you can. … Debtor Six: You guys are harassing me. Ryan: Harassing you? Debtor Six: You take me to the court. Yes. Ryan: How are we harassing you? Debtor Six: You are telling me 'We're going to take you to the court. We're going to cancel you' - you are not Government. You are the debt collector, okay? I spoke to the ASIC, and I have got a - I have got an appointment with the… … Ryan: So you are saying this is fraud now. Do I need to get the police involved? Debtor Six: (Indistinct) credit. Ryan: Do I need to get the police involved? Is this a fraud matter, [Debtor Six]? … Ryan: Well then I'm telling you right now we are proceeding. Debtor Six: Well, it's up to you. Ryan: Okay? It is up to me, and that's what I have decided. What do you want to do? 246 This was misleading in many ways. Neither operator was from the Legal Department; service was not about to occur; bankruptcy was not at hand; and Debtor Six's passport and taxi licence were not at risk. The comment that the Legal Department 'just take you straight to court' also implied, erroneously, that ACM specialised in commencing proceedings against debtors and did so frequently. I also think that the threats relating to Debtor Six's passport and taxi licence were 'calculated to intimidate' (see [14] above) and, therefore, unduly harassing.

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Call 74: 2 June 2009 256 ASIC relied upon Call 74, which was between ACM and Debtor Seven's mother. It included the following: Jade: And you are aware… Debtor Seven's mother: And… Jade: …that we're not a bank and we don't do hardship? … Jade: Well I'm letting you know that we're not a bank, we don't do hardship. So, you know… … Debtor Seven's mother: Because I'm being… Jade: …NAB bank can't… Debtor Seven's mother: …threatened by you people. Jade: …actually do - you're not, we're not threatening you, [Debtor Seven's mother]. … Jade: This is your son's debt. So we're not threatening you. Debtor Seven's mother: That's (indistinct) ill. He's ill. Jade: We're not threatening you. Debtor Seven's mother: He's not capable of any… … Jade: Oh, you sound really upset, [Debtor Seven's mother]. I mean, you know, just - I'm not going to be making special considerations just for one person. … Jade: Look, do you mind holding? I'm just going to speak with my solicitors. Won't be a moment. Are you there, [Debtor Seven's mother]? … Jade: Okay. Well by all means, I mean, if [the National Australia Bank are] going to buy the debt back, that's totally up to them but, you know, I'm not going to discuss anything with them if they're not, you know, planning on buying the debt back because, you know, I can't accept arrangements. The solicitors just won't... … Jade: Well, you're saying you're in hardship as well. … Debtor Seven's mother: …personally. I think that'll really put him into a chaos then. He's got agoraphobia at the moment as well, which means he can't leave the house. That's been half his problem. He had a car accident at the end of the - end of last year… … Debtor Seven's mother: Yeah. [Charmaine, another collections officer] didn't seem to want to know [about Debtor Seven's problems] and started threatening and all sorts of things and I don't need that at the moment either. I'm on stress tablets as well because I'm finding it very difficult to process well. Jade: Look, I'll just one thing. You know, I don't think Charmaine would have threatened you, she's not that type of person. Debtor Seven's mother: Well, she did. She (indistinct). Jade: No, no, no. Charmaine - Charmaine would never threaten anybody, she's not that type of person, that's not how she, you know, works. She's not a threatening person at all. Debtor Seven's mother: Well, (indistinct). Jade: She would have only just mentioned to you what - what may happen. Debtor Seven's mother: Well, to sell a home. Jade: Well, you know, she's just looking out for your best interest, you know what I mean? She doesn't want [Debtor Seven] to get a bad credit, so it if means selling your home and paying the debt, I'm sure she was just… Debtor Seven's mother: What, for $6,000? Jade: …giving you options. Debtor Seven's mother: No, no. That's what - she didn't say that to me. She said - we've got a $700,000 house and she said she could sell and force us to sell our house to pay the debt. 257 The correct characterisation of this is as an argument, the heat of which is not adequately captured by the transcript. Debtor Seven's mother had taken exception to ACM's methods. Nevertheless, some aspects of it were misleading. The reference to the solicitors being involved was apt to suggest that legal action was pending or likely; this was incorrect. Was it a species of harassment that their house might be sold to settle their son's $6,000 debt? In some circumstances it might be, but my impression was that the mother did not believe this at all. I find this call involved misleading and deceptive conduct but not undue harassment or coercion. 258 I should also note that, although ACM placed this call to Debtor Seven's mother, the opening exchanges made it clear that the operator and Debtor Seven's mother had spoken before. I do not know who initiated contact (ACM or Debtor Seven's mother), so can make no finding that ACM's communication with her was improper.

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Call 78: 26 June 2009 264 ASIC relied upon Call 78, which also took place between Jade and Debtor Seven's mother on the same day. It included the following: Debtor Seven's mother: Right. I just went in touch - got in touch with [the National Australia Bank], spoke to gentlemen there. He said it has been passed over to [the National Australia Bank], they have it but he said it takes two weeks to come across and he said someone will be ringing today your compliance manager in there and advising them to stop all action on the account and that's what they have informed me this morning. … Debtor Seven's mother: You're - you're filing something in court that not - should not be there. Jade: Did I say that? Did I say that? You're putting words in my mouth now. What I did say was… … Jade: I said I was drawing up the papers, yes, I was. Debtor Seven's mother: Right. Well, that's what I said. If… Jade: Doesn't mean it's going to go to court straightaway. 265 This was misleading and deceptive - there were no papers being drawn up. I do not find undue harassment or coercion. I must say, though, that the rudeness from both parties, by this time, had reached significant levels. I found the following remarks from Jade particularly distasteful: Debtor Seven's mother: Please, be reasonable. I'm not to know [that the National Australia Bank have not yet contacted ACM to notify you that they are buying the debt back]. I don't know how long things take. I'm in a - a retail furniture store. I'm home on a rostered day off today. I've got my son vomiting his heart up out there since - because he heard about what you said about… Jade: Oh, look, [Debtor Seven's mother], you telling me your son's vomiting his heart out because what I'm telling you… Debtor Seven's mother: (Indistinct). Jade: …it's totally irrelevant. Debtor Seven's mother: Isn't irrelevant. He's got… Jade: Give him a bucket, then. Him vomiting's got nothing to do with me. Debtor Seven's mother: That's why he's doing it because he's stressed, he's got a mental depression. Jade: I don't care - [Debtor Seven's mother], unfortunately your son vomiting has got nothing to do with what we are talking about…

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Call 93: 17 June 2010 299 Both ACM and ASIC relied upon Call 93. It included the following: Debtor Eight: Okay. I'm not planning for either of these things to happen, but aside from any of that, I would also just like an indication of what the status of the matter is at the moment, like where it is with you guys and at what point, what date, that you have set for it to to be referred to civil action. Freg: I can't give you a date. Debtor Eight: Why not? Greg: Because I haven't signed off on [legal action] yet. … Greg: Well, being honest with you, if you're going to make the payment by the 30th, there is no reasonable agreement that has been reached by the 30th of this month, then I will be signing that off. … Debtor Eight: …will stay any further proceedings, I will then be able to assess which option I can take and I will take those promptly. … Greg: …The offer one is 50 per cent of the debt and no legal proceedings go on, if you don't breach the arrangement. That's how it works anywhere. … Greg: (Indistinct) I work up to 9 o'clock. If I have to go to court, I come back, that's it. … Greg: I can't give you a day [that legal action will commence] because I haven't signed off on it. … Greg: How can someone provide you with a date if it hasn't been issued yet, do you know what I mean? (indistinct) to everyone else to get it stamped and then we can only advise of you a date. … Greg: Which I will go and speak to my solicitors and see if they will approve it by the 30th. If not, then nothing is going to happen about it. … Debtor Eight: But once a demand for legal action has been made… Greg: Yeah. Debtor Eight: …there is usually a required time frame, a reasonable time frame. Greg: 2009 (indistinct) 12, that's the time frame, the write-off date. Debtor Eight: So I don't even understand what I am having a conversation with you, what the status of this matter is, and that's all that I want to know. Greg: I just don't understand what you - you wanted a settlement offer, I gave you settlement offer. Debtor Eight: Okay, and you're going to include on there that if that's not paid by 30 June… Greg: It's voided, yeah. Debtor Eight: …you'll then sign off on the legal action; is that right? Greg: I'm going to say it's voided, that's what I'm going to put on there. 300 This was misleading: the operator did not have to go to Court; there were no solicitors; compendiously, the inference that proceedings were at hand was not correct. It was not unduly harassing or coercive for the reasons given in relation to Call 1.

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Call 95: 18 June 2010 303 Both ACM and ASIC relied upon Call 95, in which ACM called Debtor Eight's father. It included the following: Debtor Eight's father: The first I've heard about all of this is a couple of days ago. She's rung me up, very upset, and I didn't know anything of this. But, apparently she's had an arrangement with you to repay her debt at $100 a month and she has been a few days late. Greg: Mmm-hmm. Debtor Eight's father: And you're now threatening to take her to court, declare her bankrupt, et cetra, et cetra. Is that about right? … Greg: Now the account has hit the legal status. What that means is legal recovery action may commence on the account if we can't come to some sort of amicable agreement. Debtor Eight's father: Yep. Greg: Now, the amount owing is $10,283. The solicitors have advised that they are willing to take the offer of $8,700 to close off the account or she can come up with a 50 per cent amount of the actual debt owing and then she can be placed back on the arrangement. … Debtor Eight's father: So hopefully this will cure the situation. Greg, can you do this for me. Can you go to your solicitors and say if this were to be settled shortly, forthwith, is eight-seven is their absolute bottom line. Greg: Yep. I can assure you, [Debtor Eight's father], that is it because I actually spoke personally, I know one of guys personally here, and I do sympathise with her circumstances and I put it all down on the line, I did put my head towards it, and that is the lowest amount that they will go, because [$]10,283, it's a large amount, and for them to drop to - usually they'll give a couple of hundred dollars, $500 max, not 8,700 to close off the account. Debtor Eight's father: Yeah. Greg: It's nothing, [Debtor Eight's father], believe me. I've been in this industry for a while and being honest with you, they now have to do it. 304 This was misleading: no solicitors were involved; the inference that proceedings were close at hand was not correct. It was not, however, unduly harassing or coercive for the reasons given in relation to Call 1.

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Conclusions on Debtor Eight 307 Debtor Eight's three Ledger Reports (one for each debt) were all printed on 11 November 2010. By that time: (a) the debt of $4,531.55 owed on the National Australia Bank MasterCard had increased to $4,544.31 due to the addition of $12.76 in interest; (b) the debt of $658.94 owed on the National Australia Bank Visa card had been joined by $11.52 in interest and $30 in late fees, leaving a total debt of $700.46; and (c) the debt of $9,935.11 that was initially owed to the Commonwealth Bank in respect of the Variable Rate Personal Loan had increased to $10,743.75 because $763.64 in interest and $45 in late fees had been added. 308 All three debt accounts were marked as 'Settled in Full', however. Debts (a) and (b) were settled by a payment of $4,800 made by Debtor Eight's father on 17 July 2009 (representing a $444.77 discount). Debt (c) was settled on 25 June 2010 when Debtor Eight's father made a payment (apparently on his own credit card) of $8,700. It seems that a total of $9,160 was paid by Debtor Eight (or on her behalf) to settle debt (c). 309 I have found that, in relation to Debtor Eight, ACM did engage in misleading or deceptive conduct, though not to the extent alleged by ASIC. Specifically, I find that ACM engaged in misleading or deceptive conduct by representing that: (a) the matter had been referred to ACM's lawyers; and (b) ACM had decided to and would commence legal proceedings shortly against Debtor Eight. 310 I do not think that it has been shown that ACM misleadingly represented that: (a) ACM employed 'in-house' lawyers; (b) ACM specialised in commencing legal proceedings against debtors for the recovery of debt; (c) ACM frequently commenced legal proceedings against debtors for the recovery of debts; and (d) ACM could commence legal proceedings shortly against Debtor Eight. 311 Furthermore, I do not think that it has been shown that ACM engaged in unduly harassing or coercive conduct. 312 I turn then to the legal issues.

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VII. Can the claims under the ASIC Act be maintained? 329 ASIC's claims under the ASIC Act related to misleading and deceptive conduct (s 12DA(1)) and undue harassment and coercion (s 12DJ(1)). In both cases the conduct must be connected to 'financial services'. In the case of s 12DA(1) the misleading and deceptive conduct must be 'in relation to financial services'. In the case of s 12DJ(1) the undue harassment or coercion must be 'in connection with the supply or possible supply of financial services to a consumer or the payment for financial services by a consumer'. 330 In both cases the defendants' challenge to ASIC is straightforward: the business of extracting money from overdue debtors did not involve the provision of a financial service. 331 ASIC submitted that the situation of the defendants was covered by s 12BAB(1)(g) which provided: For the purposes of this Division…a person provides a financial service if they: … (g) provide a service that is otherwise supplied in relation to a financial product 332 The 'financial product' involved was said to be the loan contracts and credit card contracts which had previously existed between each debtor and his or her original creditor (that is, in this case the NAB or the Commonwealth Bank). These contracts had been assigned to ACM. The service which was provided to the debtors in relation to these financial products was said to be the provision to the debtors of on-going credit. 333 I accept that the loan and credit card contracts between the debtors and the original creditors were 'financial products'. There are two steps in this conclusion. The first is that these contracts would be a 'credit facility' within the meaning of reg 2B of the Australian Securities and Investments Commission Regulations 2001 (Cth). The pertinent parts of the regulation are thus: (1) For paragraph 12BAA(7)(k) of the Act, each of the following is a credit facility: (a) the provision of credit: (i) for any period; and (ii) with or without prior agreement between the credit provider and the debtor; (iii) whether or not both credit and debit facilities are available … (3) In this regulation: credit means a contract, arrangement or understanding: (a) under which: (i) payment of a debt owed by one person (a debtor) to another person (a credit provider) is defined; or (ii) one person (a debtor) incurs a deferred debt to another person (a credit provider); and (b) including any of the following: (i) any form of financial accommodation; … (iii) credit provided for the purchase of goods and services; … (v) an article known as a credit card or charge card; … (ix) a financial benefit arising from or as a result of a loan; (x) assistance in obtaining a financial benefit arising from or as a result of a loan. 334 Most of the original debts had arisen from credit card accounts between the debtors and the NAB. There were also personal loans: one from NAB and one from the Commonwealth Bank. These all fell within the definition of a credit facility within reg 2B. All of those contracts were assigned to ACM. I do not think that altered their character as credit facilities. All that occurred at the moment of assignment to ACM was that the identity of one of the parties changed - all other rights remained the same. 335 The second step in reaching the conclusion that these contracts (now exposed as credit facilities under reg 2B) were financial products are the challenging terms of s 12BAA(7)(k) of the ASIC Act, which relevantly tells anyone who has got this far that: Subject to subsection (8), the following are financial products for the purposes of this Division: … (k) a credit facility (within the meaning of the regulations) 336 Since we know that the contracts are credit facilities, the challenges which s 12BAA(7)(k) presents are not obvious. They lie, however, in the relatively innocuous opening words 'Subject to subsection (8)'. 337 Section 12BAA(8) tells one some things which are not 'financial products'. Section 12BAA(8)(e) and (f) include on this list: (e) a facility that is a designated payment system for the purposes of the Payment Systems (Regulation) Act 1998; (f) a facility for the exchange and settlement of non-cash payments (see subsection (b)) between providers of non-cash payment facilities 338 On 11 April 2001 the Reserve Bank of Australia designated the credit card schemes operated by Bankcard, Mastercard and Visa as a 'payment system' under s 11 of the Payment Systems (Regulation) Act 1998 (Cth). 339 I do not think that the individual contracts in question are themselves a facility which is a designated payment system. No doubt they are part of a payment system but that is not what (e) requires. Likewise the individual contracts are not, by themselves, a facility for exchange and settlement between the banks involved; they are at best merely part of such a system. 340 It follows that the carve-outs in s 12BAA(8)(e) and (f) are not engaged. The contracts between ACM/ACM Group and the debtors are therefore 'financial products'. 341 The question then becomes whether, as ASIC submitted, defendants had, to use the language of s 12BAB(1)(g), 'provid[ed] a service that is otherwise supplied in relation to a financial product' (if so, it will be recalled, they would be taken to provide a financial service). 342 ASIC submitted that by providing on-going credit to the debtors the defendants were providing a 'service' and that 'service' was supplied 'in relation to a financial product' viz the loan and credit card contracts. I accept the latter submission given the breadth of the words 'in relation to'. Attention can, therefore, be confined to whether the defendants provided a 'service' consisting of on-going credit. 343 'Service' is defined in s 12BA(1) to include 'any rights (including rights in relation to, and interests in, real or personal property), benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce', subject to some irrelevant exceptions. 344 I accept that the granting to each debtor of more time to pay was the granting of a right (namely, the right to relieved of the immediate obligation to pay) and that this occurred in trade or commerce. An essential part of each collections officer's job was to get the debtors on to payment plans. Necessarily, the provision of a payment plan was, albeit in an unusual sense, the provision of credit. No doubt it is difficult to view the unpleasant calls the debtors received as a service but those calls were not the service but rather merely an encouragement to take the service up. 345 It follows that I conclude that there was a provision of a financial service to each debtor on each occasion that more time was extended. 346 This brings one back, at length, to ss 12DA(1) and s 12DJ(1). The former requires the misleading conduct to occur 'in relation to' financial services. I am satisfied that the misleading conduct I have identified was 'in relation to' the provision of the financial services I have identified and hence, as s 12BA(1) requires, in relation to those financial services. 347 It also follows that the unduly harassing or coercive conduct which I have identified can be said to be 'in connection with the supply or possible supply of financial services to a consumer' within the meaning of s 12DJ(1). 348 In those circumstances, ASIC is entitled to pursue the defendants under these two provisions. 349 ASIC also pursued its relief under the equivalent provisions of the former TPA. The defendants submitted that ASIC had no authority to pursue relief under that Act. Since I have concluded that ss 12DA(1) and s 12DJ(1) apply, the resolution of that debate presently lacks utility and its resolution is not necessary.

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