Australian Securities and Investments Commission v BSF Solutions Pty Ltd

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

1. I gave judgment in these proceedings in relation to the respondents' contraventions of the National Consumer Protection Act 2009 (Cth) (the Credit Act) on 24 May 2024: Australian Securities and Investments Commission v BSF Solutions Pty Ltd (Liability) [2024] FCA 553 (the Liability Judgment). Defined terms used in that judgment bear the same meaning in these reasons. As is routine in civil penalty cases, I had ordered that there be a separation of issues such that the question of pecuniary penalties sought against the respondents (and in this particular case questions of final injunctive relief against Mr Harrison and Mr Swanepoel from carrying on or being involved in the carrying on of any business engaged in credit activity) were ordered to be heard separately and subsequently to the other questions in the proceedings: see [6]. An appeal from the Liability Judgment was dismissed by the Full Court on 10 July 2025: BSF Solutions Pty Ltd v Australian Securities and Investments Commission [2025] FCAFC 88.
2. The hearing on the remaining issues concerning pecuniary penalties and the wider form of injunctive relief has been fixed to commence on 7 April 2026. On 22 and 25 August 2025, ASIC filed its further evidence for that hearing. On 3 October 2025, ASIC provided a letter as ordered by me setting out the penalties sought and the basis for those penalties. By interlocutory application dated 17 November 2025, the respondents sought rulings on their objections to ASIC's evidence in advance of the final hearing. I acceded to that course so as to enable the respondents to know in advance of the hearing whether their objections would be upheld.
3. It should be noted at the outset that the proceedings were commenced by way of Concise Statement, which was amended during the course of the hearing on contravention. I dealt with the nature and purpose of a concise statement in the Liability Judgment at [144]-[145], in which I adopted the reasoning of McKerracher and Colvin JJ in Allianz Australia Insurance Limited v Delor Vue Apartments CTS 39788 [2021] FCAFC 121; (2021) 287 FCR 388 at [140]-[154]. As I observed in the Liability Judgment, their Honours pointed out at [144] that where the matter proceeds on the basis of a concise statement and concise response, then unlike pleadings, those documents are not conceived of as a comprehensive statement of all the matters that must be established in order for a claim or defence to succeed. In such instances, the concise statement and response serve the function of providing a fair disclosure of the nature of the case to be advanced, with more precise issues being disclosed by other means, and to the extent considered to be appropriate, in the interests of fairness.
4. I also note at the outset the well-established principle that in a civil suit for the recovery of a pecuniary penalty, it is important that those accused of a contravention know with some precision the case to be made against them, as an aspect of procedural fairness: Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2015] FCAFC 25; (2015) 230 FCR 298 at [63] (Logan, Bromberg and Katzmann JJ).

1. The present application raises an important question of principle; namely, in what circumstances can the regulator rely on evidence at the penalty stage which goes beyond the allegations conveyed to the respondent before the hearing as to contravention? Counsel for the respondents relied on three authorities, although I note that none of them concerned proceedings commenced by way of concise statement.
2. The first case is Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (in liq) [2007] FCAFC 146; (2007) 161 FCR 513. In that case, default judgment was entered against the respondents, giving rise to deemed admissions as to the allegations of fact in the statement of claim: [42]. The primary judge, Kiefel J, held that evidence which would alter the pleaded case should not be admitted at the time of assessing pecuniary penalties. The primary judge held that the act of resale price maintenance which was the subject of the pecuniary penalty assessment was limited to the one occasion which had been pleaded: [50]. The Full Court said that the primary judge had correctly disregarded any contended correlation between the contravening conduct and the pricing behaviour of a related company to the respondent, on the basis that those matters altered the pleaded case and were not the subject of deemed admissions: [56]-[57]. The Full Court did not express any criticism of those aspects of the primary judge's reasoning.
3. The second case is Australian Competition and Consumer Commission v Flight Centre Limited (No 3) [2014] FCA 292; (2014) FCR 325. In that case, a question arose in relation to whether a maximum penalty higher than $10 million for some of the contraventions could be assessed by reference to the value of the benefit obtained from the contravention, in circumstances where there was no pleading in the statement of claim as to the obtaining of such a benefit. The respondent contended that it was procedurally unfair for the ACCC to be permitted to advance a case that the maximum penalty for those contraventions was other than $10 million. Much of the reasoning concerns the provisions of the Federal Court Rules 2011 (Cth) in relation to pleadings. Logan J found that the absence of any pleading of material facts necessary to engage a maximum penalty greater than $10 million in respect of any of the alleged contraventions denied the respondent an opportunity to make an informed choice and related submissions as to whether some issues other than just liability either could or should go to separate trial: [26]. Logan J said that the arguments in favour of excluding from a trial as to liability any issue as to a reasonably attributable benefit were not necessarily all one way. His Honour pointed out that the ACCC's case entailed the proof of email correspondence which had passed between officers or employees of the respondent and those of the airlines concerned, and said that many of those documents were included in the tender bundle without the recipient having been called, but that it was at least possible that a recipient within an airline might be able to address in evidence not just the receipt of a particular email but also the effect, if any, which it had on that airline's subsequent behaviour or otherwise to explain the reasons for subsequent behaviour. His Honour said that in the absence of a pleaded circumstance of aggravation, there may be no forensic advantage in calling or investigating the merits of calling the recipient of the email concerned, as opposed to not contesting its tender. His Honour said that a failure to plead a circumstance of aggravation may also impact upon what is or is not directly relevant to a fact in issue and thus on whether to seek discovery or non-party discovery and, if so, its scope: [26].
4. Logan J also pointed out that evidence of an actual market outcome was not necessarily an important issue in determining the appropriate penalty, except perhaps as a matter of aggravation, and that not to plead the actual market outcome was one of those facts which, though relevant only as to penalty, would take an opposing party by surprise if it were not pleaded: [27]. His Honour then said that that was not to say that all facts which the ACCC proposed to contend are relevant to penalty must expressly be pleaded: [27]. His Honour did not elaborate on that last observation.
5. Logan J said that the matters concerning reasonably attributable benefits obtained from a contravention which served to increase the applicable maximum penalty were questions of fact affecting liability to the imposition of the penalty, not circumstances relevant only to the discretion of a judge when imposing the penalty: [35]. His Honour appeared to suggest that the question whether factors existed which would increase the maximum penalty above $10 million ought to have been determined at the same time as the question of whether contravention was established: [35]. His Honour held that the absence of any pleading of such aggravating circumstances and the conclusion of the trial in respect of liability meant that it was too late for the ACCC to raise an issue going to a higher maximum penalty: [35]. Accordingly, no circumstance of aggravation was applicable such that the maximum penalty for each of the contraventions in question was $10 million: [35]. In a later passage, Logan J said that in the absence of an express pleading, it was too late after the findings of contravention had been published for the ACCC to claim, over objection, a higher penalty or otherwise to press for a finding that there was a circumstance of aggravation constituted by a benefit reasonably attributable to a contravention: [41]. That pleading failure also had the effect that evidence as to any such circumstances of aggravation, though it would be relevant if a related material fact were pleaded, was not admissible: [42].
6. It is not necessary for me to decide whether all the reasoning of Logan J is correct, including as to whether factors relevant to an increase in the maximum penalty should have been heard and decided at the initial hearing. However, the significance of the case for present purposes is that Logan J found there was a material breach of the pleading rules designed to ensure procedural fairness by the ACCC not having pleaded matters going to an aggravated maximum penalty before the hearing as to contraventions occurred.
7. The third case is Australian Securities and Investments Commission v National Australia Bank Ltd [2023] FCA 1118; (2023) 171 ACSR 176. That case also involved a question concerning the maximum penalty. ASIC pleaded only one contravention (see [50]), but at the penalty stage, ASIC sought to allege some 74,593 contraventions (see [54]). This would have had the effect of increasing the potential maximum penalty from $2.1 million to over $130 billion. Derrington J said that a moment's thought would reveal that a party facing a potential maximum penalty of $2.1 million would adopt a different approach to the litigation if that maximum was, early in the proceedings, revised to over $130 billion, for example by not allowing the matter to proceed on agreed facts and putting on more specific evidence as to its knowledge and conduct (see [83]). His Honour identified the matter as turning on considerations of basic procedural fairness (see [81]), as well as the need to discourage trial by ambush on the part of the regulator (see [82]).
8. In the present case, counsel for the respondents correctly accepted that not all matters relevant to the assessment of penalty must be pleaded or notified before the hearing on contravention. Counsel for the respondents then submitted that the relevant principle to be applied as to whether a matter which was not pleaded (or otherwise notified) before the hearing as to contravention can be relied on at the penalty hearing is whether there is a possibility that the course of the hearing on contravention, or forensic decisions by the parties in relation to that hearing, may have been different if the matter in question had been raised. In my view, that submission is too widely stated for the following reasons.
9. In the first place, it is necessary to bear in mind that the present case was commenced by way of concise statement rather than by way of statement of claim. The reasoning of McKerracher and Colvin JJ in Allianz at [140]-[154] is emphatic that a concise statement is a different form of document to a pleading, and is directed to exposing the real nature of the dispute as a means of facilitating the case management of the proceedings. Their Honours drew attention to the flexibility provided by the process of a concise statement as an aspect of the modern approach of the Courts to discouraging tactical and technical disputation of a kind associated with traditional pleadings. Their Honours said that if a claim that is at the heart of the case that a party seeks to advance at the final hearing is not to be found in the concise statement then there will need to be an application for leave to amend that will be dealt with in accordance with the established procedural law as to late amendments to alter a case: [149]. But in circumstances where the nature of a claim is broadly disclosed by the concise statement, a party cannot sit by passively and insist upon some strict curtailment of a case that may be run by reference to pleading rules, as both parties have a duty to expose the real issues: [149]. Where an issue is expressed broadly in a concise statement, and the other party considers that it will be unfair to its forensic preparation of the case for the issue to remain stated in such broad terms, then it is that party which must seek clarification: [149]. The clarification required in the interests of fairness will then depend on the particular circumstances, and the Court will make appropriate orders by way of case management: [149]. Their Honours said that the respondent cannot save up its complaint that the case is stated too broadly until the conduct of the final hearing and then maintain that no detailed case can be run because no such case has been disclosed, because to do so is to treat the concise statement as having the same character as a pleading, and to do so would also be to adopt a strategic and technical approach of a kind inconsistent with the duties imposed upon parties and their lawyers to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible: [149].
10. Applying those statements of principle to the particular context of civil penalty proceedings where there is a bifurcation of issues concerning liability and penalty at separate hearings, it will generally be the case that it is only where the regulator seeks to depart from the heart of its case as disclosed by its concise statement (or from the way in which the regulator's case has been narrowed by other communications) that the regulator will be precluded from conducting its case in that fashion at the penalty stage. Before the hearing on contravention takes place, if the respondent regards the concise statement as too broadly stated to provide it with procedural fairness in the circumstances of the particular case, then it is a matter for the respondent to seek greater specification, whether by way of a traditional pleading, or particulars of certain matters, or by some other means. I say that by way of general principle, recognising that the question of procedural fairness must be decided according to the particular facts of the case. If the respondents are of the view that they need to know the amount of the penalties which will be sought against them and the detailed basis for those penalties in order to decide, for example, whether to give evidence at the liability stage of the proceedings, then it is their duty to raise the matter before the hearing as to liability and seek greater specificity from the regulator.
11. Further, even if the Court were to find that the case involved a breach of procedural fairness, then the further issue would have to be addressed as to whether any such breach was material. The respondents' submission, which I have identified at [12] above, as to the circumstances in which a matter which was not pleaded or otherwise notified before the hearing as to contravention can be relied on at the penalty hearing, appears to be an attempt to invoke a formulation of the test for materiality of a breach of procedural fairness. However, the governing formulation of that test is to the effect that a breach of procedural fairness is not material unless the decision by the relevant decision-making authority could have been different as a matter of reasonable conjecture: Nathanson v Minister for Home Affairs [2022] HCA 26; (2022) 276 CLR 80 at [32]-[33] (Kiefel CJ, Keane and Gleeson JJ); [46] and [55] (Gageler J). While that decision dealt with judicial review of administrative decision-making, their Honours treated the circumstances of the breach of procedural fairness by a trial judge in Stead v State Government Insurance Commission [1986] HCA 54; (1986) 161 CLR 141 as analogous: [34] (Kiefel CJ, Keane and Gleeson JJ); [48] (Gageler J). That principle differs from the respondents' submission in two important respects. First, the respondents' reference to "possibility" must be qualified by limiting it to reasonable possibilities. Second, the question of different decision-making is focused on the decision by the decision-making authority, not merely the party advocating a position before that decision-maker. That distinction may be of only theoretical interest in relation to certain kinds of decisions, such as whether and to what extent a party will give evidence, in that the reasonable possibility of different evidence being adduced will typically entail the reasonable possibility of a different outcome. But there are many other kinds of decisions by parties which are of too trivial or insignificant a nature to raise a reasonable possibility of the decision by the decision-making authority being different. For example, a failure to allege certain relatively minor matters which are relevant only to the assessment of penalty, and not to the issue of contravention, may have caused the respondent to decide not to investigate those matters before the contravention hearing, but that might not have led to the reasonable possibility of a different decision being made on contravention, and would be unlikely to affect the decision on penalty if sufficient time remains to address those matters before the penalty hearing takes place.

1. The respondents have objected to a substantial amount of the evidence which ASIC proposes to lead at the penalty hearing on the basis of the question of principle which I have addressed above. The respondents made a number of other objections to ASIC's proposed evidence, but have indicated that they do not require reasons concerning those other rulings. The evidence which is the subject of the objections dealt with in these reasons is as follows:

(a) the whole of the affidavit of Ms Alexandra Kelly affirmed on 22 August 2025, and alternatively, particular objection is taken to paras 2-5, 8-10, 13-19, 21, 26-29, and 31-33;

(b) the whole of the affidavit of Mr Andrew Fleming affirmed on 22 August 2025, and alternatively, particular objection is taken to paras 8.3-8.18 (and tabs 3-18 of AJF-1), 9-19, 23-25, 29 (the second sentence), 33-34, and 48-68 (and tabs 54-59 and 61-75 of Exhibit AJF-1);

(c) the whole of the affidavit of Ms Jillian Williams affirmed on 22 August 2025, and alternatively, particular objection is taken to paras 2-6, 9-17, and 32-33;

(d) the whole of the affidavit of Ms Katia Sanderson affirmed on 22 August 2025, and alternatively, particular objection is taken to paras 2-4, 7-12, 33-39, and 44; and

(e) the affidavits of Mr Jack Martin sworn on 19 July 2024 and Mr Muhammed Hussein affirmed on 6 August 2024, which ASIC proposes to tender as containing admissions.

1. The subject-matter of the evidence to which objection was thus taken concerns the following:

(a) the relationship of Mr Harrison or Mr Swanepoel respectively to various entities which are said to have received financial benefits from the impugned transactions;

(b) the vulnerability of consumers who took up the impugned services;

(c) the existence of consumer complaints in relation to the impugned services;

(d) the costs involved in Cigno and BSF being regulated credit lenders;

(e) the detriment to consumers in not having recourse to the dispute resolution processes provided by the Australian Financial Complaints Authority;

(f) previous administrative steps and proceedings in relation to the Credit Act involving the respondents;

(g) the extent of cooperation with the regulator and a culture of compliance (or the lack thereof) and whether steps were taken by way of remediation; and

(h) errors in compliance with adverse publicity orders after the Liability Judgment was delivered.

1. In my view, there is no substance in the complaint concerning the first two of those topics. As to the first topic, substantial evidence was led at the hearing on contravention concerning the involvement of companies in which Mr Harrison or Mr Swanepoel had a commercial interest with the various payments that were made relating to the impugned transactions. I made some findings concerning those matters in the Liability Judgment at [86] and [93]. The evidence proposed to be given by Mr Fleming in relation to that matter simply provides more detail as to ASIC's case on a matter which had been conveyed before the hearing on contravention by affidavit evidence in supplementation of the Concise Statement. As to the second topic, concerning the vulnerability of consumers who took up the implied services, there were sufficiently strong indications in the evidence adduced by ASIC at the contravention hearing and in the Concise Statement itself that I do not think that the respondents could have been in any reasonable doubt that ASIC would rely upon the vulnerability of consumers as a relevant factor at the penalty stage (see the references in the Liability Judgment at [39]-[40] as to the kinds of consumers to whom Cigno marketed the services, and also the figures provided in Annexure A to the Concise Statement as to the total fees charged by BSF and Cigno as a percentage of the loan amount in the 16 particular instances provided which suggest either financial desperation or financial ignorance by those consumers).
2. As to the other six topics, I do not regard any of them as lying at the heart of ASIC's case and therefore as needing to be disclosed by the Concise Statement. Accordingly, in light of the views that I have expressed above as to the applicable principles, if the respondents regarded the Concise Statement as having been too broadly or insufficiently stated, then it was their duty to raise the matter and seek further specification before the hearing on contravention took place. The respondents were not entitled to save up any such complaint until after the contravention hearing. As a matter of fact, the respondents made no such request for further specification of the matters upon which ASIC would rely in relation to penalty until well after the issues on contravention had been decided. Accordingly, I do not regard there as being any breach of procedural fairness in ASIC relying at the penalty stage on the evidence to which the respondents have objected.
3. In any event, even if I had been of the view that there was a breach of procedural fairness, I would not have found that any such breach was material. I do not accept that if ASIC had disclosed in its Concise Statement each of the eight matters which are the subject of the disputed evidence then there was a reasonable possibility of Mr Harrison or Mr Swanepoel making a different decision as to whether they would give evidence at the hearing on contravention, or that there would have been any different decision made by the respondents as to the evidence to be led at that hearing, and thereby raising a reasonable possibility of a different outcome on contravention. There is no direct evidence suggesting that different decisions as to evidence at the contravention hearing might have been made by the respondents, and I am not prepared to infer objectively as a matter of reasonable conjecture that different decisions might have been made. The topics addressed by the disputed evidence do not seem to me to be of such significance to the question of the assessment of penalty that notification of those matters might reasonably have led to different decisions concerning evidence at the contravention stage to be made. By contrast with the three cases on which the respondents relied, the contested matters in the present case do not concern the maximum penalty, and their significance falls well short of the matters dealt with in those cases.
4. Accordingly, I admit the evidence identified above to which objection has been taken.

1. In my view, the costs of the Interlocutory Application dated 17 November 2025 should be costs in the cause. That is partly because the question of admissibility of evidence would otherwise have been heard and decided at the penalty hearing, and the present application has thus saved time which would otherwise have been spent at the hearing itself. In addition, the Interlocutory Application has led to ASIC deciding not to read a significant amount of the evidence which it had served, and some other parts of the evidence have either been rejected or been made the subject of orders as to limitations on the use to which the evidence can be put. Accordingly, there has been a measure of success by both sides of the dispute.

I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackman.