Application of the principles relevant to multiple contraventions
197 Although the parties were agreed that it was not appropriate to penalise the same conduct twice under the first principle, the parties were not agreed as to the approach to be taken to the application of the course of conduct principle in the present case.
198 AustralianSuper accepted that it engaged in three courses of conduct:
(a) failing to establish rules required by s 108A of the SIS Act to identify and merge multiple accounts;
(b) failing to promptly identify and merge multiple accounts in accordance with a procedure that complied with s 108A of the SIS Act; and
(c) failing to promptly remediate members whose multiple accounts were not merged as required by s 108A of the SIS Act.
199 AustralianSuper submitted that the course of conduct principle is a tool of analysis to reach the final appropriate penalty. It does not require that a separate penalty be assigned to each course of conduct where there has been no agreement as to the basis on which such an assignment might occur.
200 ASIC submitted that the course of conduct principle ought to be applied by reference to the affected groups of members. Thus:
(1) The first course of conduct relates to the members for whom AustralianSuper failed to both promptly identify and merge the member accounts and failed to promptly remediate. (This is the subject of declaration 1.)
(2) The second course of conduct relates to the members who ceased to have active multiple accounts prior to 6 April 2019 but whom AustralianSuper failed to remediate promptly after that date. (This is the subject of declaration 2.)
(3) The third course of conduct is not directed to a group of members but is directed to AustralianSuper's failure to establish rules in compliance with s 108A of the SIS Act. (This is the subject of declaration 3.)
201 ASIC agreed that where the same conduct constituted separate breaches of different provisions, it was appropriate to penalise that conduct once. ASIC accepted that it was not appropriate to penalise the conduct the subject of declarations 3(b) and 3(c) because those breaches arise from the same conduct as the breaches of the SIS Act identified in declarations (1) and (2).
202 Having regard to the facts agreed between the parties and the admissions of AustralianSuper, it is difficult to group the contraventions by reference to the form of the proposed declarations for the purposes of applying the course of conduct principle. The course of conduct principle is concerned with conduct. The declarations do not in my view provide a clear demarcation between courses of conduct. Whilst I accept that there are three courses of conduct, the declarations are not framed by reference to those three courses of conduct. Declarations (1) and (2) are framed by reference to the effect on members. To distinguish courses of conduct based on the consequences of the conduct rather than the actions or inactions of AustralianSuper does not appear to me to be appropriate. The conduct the subject of declarations (1) and (2) overlap, at least to the extent that both concern a failure to remediate. There was a group of members affected by two courses of conduct and a group of members only affected by one course of conduct. Declarations (3)(b) and (c) overlap with, but do not mirror, declarations (1) an (2).
203 In the circumstances in Trivago (No 2), Moshinsky J considered "it appropriate to determine a separate penalty for each relevant sub-period (rather than determining a single penalty for all of the contraventions during the Relevant Period)" because:
This is consistent with the structure of the Liability Judgment, which described the form of the website during each relevant sub-period… and considered whether the ACCC's case was made out separately in respect of each relevant sub-period… It is also consistent with the form of the declarations made on 28 February 2020, which comprised a separate declaration for each of the four relevant sub-periods.
204 The analysis adopted in Trivago (No 2) does not readily translate to the present circumstances. The declarations made in Trivago (No 2) reflected three distinct courses of conduct. That is not the case here. The declarations in the present case have taken the form they have because the penalty period is part of a longer period during which the conduct was engaged, even though that conduct did not amount to contravening conduct subject to a civil penalty over that broader period. The declarations are based on the different consequences of the conduct rather than the conduct itself. I do not consider it appropriate to determine a separate penalty by reference to the form of the separate declarations.
205 ASIC referred to Cement Australia in support of its contention that separate penalty amounts be attributed to each of the declarations. In that case, the Full Court considered that the primary judge had erred in characterising the making of, and giving effect to, one particular contract as a single course of conduct. At [431]-[432], the Court stated:
We consider that the course of conduct principle must be informed by the particular legislative provisions relevant to these proceedings. In particular, we consider that weight must be given to the fact that the legislature has deliberately and explicitly created separate contraventions for each of the making of, and giving effect to, a contract, arrangement or understanding that restricts dealings or affects competition: ss 45(2)(a) and 45(2)(b).
This statutory structure is relevant because it will often be the case that the making of, and giving effect to, a contract, arrangement or understanding will involve overlapping or homogenous conduct. The Court should be wary that it does not undermine this explicit distinction by applying the course of conduct principle too liberally in such circumstances.
206 It is important to understand the context in which that observation was made. The primary judge had drawn a distinction in respect of one contract by applying the course of conduct principle in respect of the making of and giving effect to that contract but not applying that principle in respect of the making of and giving effect to other contracts. The Full Court was not satisfied that the making of, and giving effect to the contract in that case could be justified as constituting a single course of conduct. The Court reasoned at [435]-[439]:
[435] However, as we read the primary judge's judgment, the basis for the different treatment is that entering into the Amended Millmerran Contract on 28 July 2004 had no effect on competition, and the respondents obtained no benefit by giving effect to it, given that any effect on competition had dissipated by 31 December 2003. That appears to be the basis upon which his Honour analysed it as, in effect, one course of conduct.
[436] We do not consider that the ultimate consequence of the giving effect to the contract provides any justification for treating that as a single course of conduct with the making of that contract. It does not point to any significant interrelationship between the legal and factual elements of the two contraventions. It does not relate to any link in the elements of the contraventions, or any temporal or other relevant circumstances: Royer v WA at [22].
[437] Not only is there a lack of justification for the distinction, but we consider there are compelling reasons why the primary judge erred in characterising the making of, and giving effect to, the Amended Millmerran Contract as a single course of conduct.
[438] From a temporal perspective, the act of exercising the option to extend the relevant contract, and the subsequent acts needed to ensure compliance with the terms of the extended contract, were markedly separate in time. Specifically, the period in which the Amended Millmerran Contract was given effect was nine months.
[439] Furthermore, this is not a case where the conduct of making, and giving effect to, a contract, arrangement or understanding was the same. It may be the case that in some circumstances, the same act may be relied upon as evidencing both the "making of" and "giving effect to" contraventions, especially in proceedings involving informal arrangements: see, eg, J McPhee at [181]. This was not such a case. The pleaded conduct was different for each contravention.
207 The present case is distinguishable for the following reasons:
(1) The parties' joint submissions did not distinguish the factual circumstances surrounding each course of conduct.
(2) From a temporal perspective, the contraventions of the SIS Act giving rise to the penalty occurred over the same period of time and that period overlapped almost entirely with the period over which the contravention of the Corporations Act to be penalised occurred.
(3) The legal and factual elements of the contraventions of the SIS Act and the Corporations Act were significantly intertwined. It was the same systemic failings which gave rise to each of the failures identified in the three courses of conduct. The underlying conduct informing the contraventions of one provision overlaps significantly with the underlying conduct informing the other contraventions.
(4) The only act which the Corporations Act may be seen to penalise by civil penalties which is not the subject of a civil penalty under the SIS Act is the failure to establish rules required by s 108A of the SIS Act. However, the Corporations Act does not create a separate express contravention for a breach of s 108A of the SIS Act. The breach of the Corporations Act was the breach of the standard of efficiently, honestly and fairly. The breach of s 108A had a consequence which resulted in financial services not being provided efficiently, honestly and fairly and was a step that was necessary to ensure that consequence did not eventuate. The breach of s 912A of the Corporations Act cannot be readily divorced from the consequences of the breach of s 108A of the SIS Act in this case.
(5) In the circumstances of the present case, where the total penalty had been agreed without agreed apportionment, there seems to me to be artificiality, if not a danger, in using the agreed total penalty as a predetermined figure to be apportioned across intertwined co-terminus contraventions that were the result of systemic failures. It was not suggested by either party that the Court does not have power to impose a pecuniary penalty by reference to a global sum. Indeed, it appears to me to not be entirely consistent with the totality principle to suggest otherwise.
208 In being satisfied that the total penalty is appropriate in the present case, I have had regard to the course of conduct principle as a tool of analysis and recognised that there are three courses of conduct as identified by AustralianSuper at [198] above.
209 The application of the course of conduct principle must be tailored to the circumstances of the contraventions I am considering. Here, there were many acts of contravention affecting a very large number of consumers. To describe the conduct as involving three courses of conduct is useful in understanding the circumstances of the contraventions but is of otherwise of limited utility in the present case.