Section 175 of the NCCP and the course of conduct principle
51 Section 175 of the NCCP provides:
Civil double jeopardy
If a person is ordered to pay a pecuniary penalty under a civil penalty provision in relation to particular conduct, the person is not liable to be ordered to pay a pecuniary penalty under some other provision of a law of the Commonwealth in relation to that conduct.
(Emphasis added in italics.)
This requires identification of the "particular conduct" identified in each contravention.
52 In Australian Securities and Investments Commission v Channic Pty Ltd (No 5) [2017] FCA 363 Greenwood J considered the application of s 175 in relation to contraventions of ss 117(1)(a), (b) and (c) and 115(1)(d) of the NCCP Act. Section 117 is similarly worded to s 130 and imposes obligations upon credit assistance providers similar to those imposed by s 130 upon credit providers. Section 115 is similarly worded to s 128, and operates in a similar fashion although applying to credit assistance providers. His Honour considered the contraventions under s 117(a), (b) and (c) were each of a different class, but considered it appropriate to group them together so as to constitute a single contravention for the purpose of determining an appropriate penalty: Channic at [77].
53 His Honour further considered that each of the contraventions of s 117(1) gave rise to the failure to comply with s 115(1), because the defendant provided credit assistance without complying with s 117(1). His Honour accepted ASIC's submission that the defendant was not liable to a further pecuniary penalty concerning the contravention of s 115(1) in respect of the same conduct giving rise to non-compliance with s 117(1). It seems that his Honour took the view that the contravention of s 115(1) concerned the same "particular conduct" for the purposes of s 175.
54 In ASIC v ANZ [2018] FCA 155, Middleton J considered contraventions of ss 128(a) and (d), and 130(1) of the NCCP Act. His Honour found that for each relevant credit contract the "particular conduct" giving rise to the contravention of s 128(a) and (d) was the same as that giving rise to the contravention of s 130(1)(c). His Honour said (at [28]):
Whether by operation of the common law, or as a result of the operation of s 175 of the Act, ANZ should be liable to be ordered to pay a pecuniary penalty only in respect of one contravention for each of the relevant contracts.
55 In referring to the operation of the common law his Honour was referring to the "course of conduct" principle. That principle was explained in Construction, Forestry, Mining and Energy Union v Cahill (2010) 269 ALR 1; [2010] FCAFC 39 at [39], [41]-[42] (Middleton and Gordon JJ) in the following terms:
The principle recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality.
…
In other words, where two offences arise as a result of the same or related conduct that is not a disentitling factor to the application of the single course of conduct principle but a reason why a Court may have regard to that principle, as one of the applicable sentencing principles, to guide it in the exercise of the sentencing discretion. It is a tool of analysis which a Court is not compelled to utilise.
A Court is not compelled to utilise the principle because, as Owen JA said in Royer [2009] WASCA 139 at [28], "[d]iscretionary judgments require the weighing of elements, not the formulation of adjustable rules or benchmarks". The exercise of the sentencing discretion does not fall to be exercised in a vacuum. It is a matter of judgment to be exercised according to the facts of each case and having regard to conflicting sentencing objectives: McHugh J in AB v The Queen (1999) 198 CLR 111 at [14].
(Emphasis in original.) (Citations omitted.)
56 As Beach J observed in Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd trading as Bet365 (No 2) [2016] FCA 698 at [24]-[25] (endorsed in Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181 at [141] per Jagot, Yates and Bromwich JJ), the course of conduct principle does not have paramountcy in the process of assessing an appropriate penalty, and it cannot of itself unduly fetter the proper application of the provision allowing the imposition of a civil penalty or operate as a de facto limit on the penalty to be imposed for contraventions. Its application must be tailored to the circumstances.
57 Ultimately, the question is one of discretion in coming to the correct penalty and the course of conduct principle is a guide for use where it is appropriate.
58 Although they arrived at the same endpoint in terms of the proposed pecuniary penalty the parties took differing approaches to the number of contraventions. ASIC approached the question on the basis that there were three classes of contravention but accepted, as in Channic, that for the purposes of penalty it was appropriate to treat them as one course of conduct and thus a single contravention.
59 CBA submitted that the contraventions of ss 131 and 133 of the NCCP Act involved the same "particular conduct"; and therefore fell within s 175 and required be treated as a single contravention. It contended that s 131 is given effect to by ss 128(c) and s 129, and that a credit provider is required, before granting a credit limit increase, to assess whether the credit contract with the credit limit increase would be unsuitable if certain circumstances apply. It said that s 133 prohibits a credit provider from granting a credit limit increase if the contract with the credit limit increase would be unsuitable if those same circumstances apply.
60 On CBA's argument if the credit limit increase was not granted, neither s 131 nor s 133 would apply, and where the credit limit increase is granted it argued that there must always be a breach of both sections. Hence, it contended the "particular conduct" covered by both sections is the granting of the credit limit increase where the relevant circumstances applied, and hence the contraventions must be treated as a single contravention for the purposes of a pecuniary penalty. It said that analysis is apparent from the operation of ss 131(1) and 133(1) and consistent with the decision in CFMMEU v ABCC [2019] FCAFC 201; (2019) 272 FCR 290 at [13]-[14] (Bromberg, Wheelahan and Snaden JJ).
61 In CFMMEU v ABCC the Full Court was considering the effect of s 556 of the Fair Work Act 2009 (Cth) (FWA), for the purposes of ordering a pecuniary penalty, in relation to contraventions of ss 499 and 500 of the FWA. Section 556 of the FWA is materially indistinguishable from s 175 of the NCCP Act and thus the reasoning in relation to the meaning and operation of "particular conduct" is applicable in relation to s 175.
62 The Full Court said (at [13]-[14]):
The respondent's contention is that significance needs to be given to the word "particular" in the phrase "particular conduct" and that the use of "particular" supports the contention that "conduct" whenever used in s 556, is necessarily referring to the same conduct. To that point we would agree. The word "particular" in s 556 is used to reinforce that the conduct being addressed by s 556 is the same conduct throughout. However, what the respondent suggests is that when s 556 uses that expression, it means all of, or the whole of, the conduct in respect of which "a person is ordered to pay a pecuniary penalty under a civil remedy provision".
We disagree. Commonly and as is the fact in this case in relation to the contraventions of s 500, contravention of a civil remedy provision may be constituted by a range of conduct made up by a number of different acts or omissions. When a pecuniary penalty is imposed for a contravention, each of those acts or omissions involved in the contravention will be the subject of the pecuniary penalty if a pecuniary penalty is imposed. So much is recognised by the phrase "in relation to" in s 556. The purpose of that phrase is to make it clear that the provision is addressing "particular conduct" that is the subject of the penalty imposed, and not necessarily all of or the whole of the conduct for which the penalty was imposed. Where that particular conduct is the subject of a pecuniary penalty, s 556 requires that that particular conduct not be the subject of a further pecuniary penalty.
63 I do not accept CBA's contention that the "particular conduct" which is the subject of the contravention of s 131(1) is the same "particular conduct" which is the subject of the contravention of s 133(1). Thus s 175 does not require that the contraventions of those provisions must be treated as a single contravention for the purposes of penalty.
64 In CFMMEU v ABCC the refusal to get off a crane was the "particular conduct" for the purpose of the contravention of s 499 of the FWA and thus engaged s 556: at [15]-[16]. The Full Court concluded that the refusal to get off a crane was "a part of and was subsumed by the whole of the conduct the subject of a contravention of s 500" (which was constituted by climbing on the crane; refusing to get off the crane; using insulting language; and engaging in abusive behaviour). In those circumstances the Court found that s 556 of the FWA required that the particular conduct the subject of the s 500 contravention (for which a penalty was ordered) precluded the s 499 contravention (the refusal to get off the crane) from being treated as susceptible to a penalty. Consequently, the contraventions of ss 500 and 499 were to be treated as a single contravention.
65 That, however, provides little support for CBA's argument in the present case. Section 175 requires identification of the "particular conduct" identified in each contravention; it does not dictate that any overlap in the particular conduct will give rise to the application of s 175 such that the Court must determine any civil penalty on the basis of a single contravention.
66 CBA's contentions seem to go as far as to suggest that because there was or may be an overlap in the particular conduct underpinning the admitted contravention of s 131(1) with the conduct underpinning the admitted contravention of s 133(1), then pursuant to s 175, for the purposes of penalty, the two contraventions must be treated as a single contravention. I do not consider the "particular conduct" in relation to the contravention of s 131(1) is the same "particular conduct" as in relation to the contravention of s 133(3).
67 The "particular conduct" to which s 175 refers is the constituent acts or omissions that a wrongdoer has committed - that is what the wrongdoer actually did. It refers to the constituent physical acts or omissions and does not include "any necessary elements of character or circumstance that, when added to those acts or omissions, constitute the particular contravention". So much is made clear in CFMMEU v ABCC at [17]-[26].
68 Sections 131(1) and 133(1) are relevantly concerned with different conduct. Section 131(1) is concerned with the obligation on the licensee to make the assessment that the credit contract will be unsuitable for the consumer on the basis that one of the matters in s 131(2) exists as at the date of assessment. A failure to assess a credit contract as unsuitable where one or more of the matters in s 131(2) exist constitutes a contravention of s 131(1), exposing the licensee to a civil penalty. Section 133(1) is concerned with the actual provision of a credit contract or actual increase of a credit limit to a consumer which is unsuitable (though for near identical matters as prescribed in s 131(2)). A licensee might contravene s 131(1) where it failed to assess the credit contract as unsuitable (on the basis that it involved a credit limit increase), but the licensee would not contravene s 133(1) if it did not go on to increase the credit limit. Alternatively, a licensee might contravene s 133(1) by providing a credit contract to a consumer which was unsuitable, but not contravene s 131(1) because it had in fact assessed the credit contract to be unsuitable.
69 Section 131 - appearing as it does in "Division 3 - Obligation to assess unsuitability" - and s 133, which appears in "Division 4 - Prohibition on entering, or increasing the credit limit of, unsuitable credit contracts", reflects a Parliamentary intention to distinguish between anterior obligations on licensees to make assessments of suitability of the provision of credit or further credit and any subsequent decision to make the credit contract or increase the credit limit. As I note above, it is not inexorably the case that a contravention of either provision will result in contraventions of both.
70 I consider the conduct in which CBA engaged which underpins the contraventions falls into three classes:
(a) first, the contraventions found in relation to s 130(1)(a) and (c) of the NCCP Act are:
(i) failing to comply with s 130(1)(a) by failing to make reasonable inquiries about Mr Harris' requirements and objectives in relation to the Harris Credit Contract; and
(ii) failing to comply with s 130(1)(c) by failing to take reasonable steps to verify Harris' financial situation.
The "particular conduct" in relation to those contraventions was CBA's failure to make reasonable inquiries and failure to take reasonable steps to verify the relevant information it had obtained. The particular conduct in relation to the contravention of s 128(d) falls into the same class as it is also based in CBA's failure to make the inquiries and verification required by s 130;
(b) second, the contravention found in relation to s 131(1) was CBA's failure to assess the Harris Credit Contract as unsuitable if the credit limit increase was made as it was likely that the Harris Credit Contract with the CLI would not meet Harris' requirements or objectives. The "particular conduct" was the failure by CBA to assess the Harris Credit Contract as unsuitable (s 131(1)) because it did not meet Mr Harris' requirements or objectives (s 131(2)). It was not the failure to make inquiries and to verify the relevant information. Unlike the position in CFMMEU and ABCC the particular conduct underpinning the contravention of s 131(1) was not "a part of and…subsumed by the whole of the conduct the subject of a contravention of" s 130; and
(c) third, the contravention found in relation to s 133(1) was the subsequent provision of the credit limit increase to Mr Harris in circumstances where the Harris Credit Contract with the credit limit increase was unsuitable as it was likely that it would not meet Harris' requirements or objectives. CBA was prohibited from increasing the credit limit applicable under the Harris Credit Contract if the contract was unsuitable for him (pursuant to s 133(2)) as it did not meet his requirements or objectives. The "particular conduct" was actually providing the credit limit increase when the Harris Credit Contract was unsuitable with such an increase. It was not the failure to make inquiries and to verify; nor was it the failure to assess the credit contract as unsuitable. Again, the particular conduct underpinning the contravention of s 133(1) was not "a part of and…subsumed by the whole of the conduct the subject of a contravention of" s 131(1), or of s 130(1).
71 I am not persuaded that the overlap or interrelationship of the particular conduct which constitutes a contravention of s 131(1) and the particular conduct which constitutes a contravention of s 133(1) means that, for the purposes of imposition of a pecuniary penalty, by operation of s 175 they must be treated as a single contravention.
72 Nothing however turns on this issue. While the "particular conduct" in each contravention is largely not the same, I accept ASIC's contention that there is a sufficient relationship between the legal and factual elements of each of the contraventions that, by operation of the course of conduct principle, it is appropriate to treat the conduct as constituting a single contravention for the purpose of determining an appropriate penalty.