Number of contraventions
204 The Corporations Act provisions contemplate a penalty for "contravening" a penalty provision: Corporations Act, s 1317G(1E). The National Credit Act also contemplates a penalty for contravening a penalty provision: National Credit Act, s 167. The ASIC Act provisions contemplate a penalty "in respect of each act or omission" that constitutes a contravention: ASIC Act, s 12GBA.
205 While the language in the ASIC Act is most explicit, the Corporations Act and the National Credit Act also authorise separate penalties for each act or omission constituting a contravention of a relevant provision. They require the same exercise of assessing whether the circumstances of the case in fact disclose one or several contraventions.
206 A number of principles can be discerned from the authorities to guide the assessment as to whether ongoing conduct affecting multiple customers ought be regarded as one contravention or multiple contraventions for the purpose of determining an appropriate penalty:
(1) it is important to ensure that a respondent is not sanctioned more than once for what is, in substance, one episode of contravention: Optus at [53];
(2) it is appropriate to consider whether, and the extent to which, the contravening conduct should be regarded as a single course of conduct and penalised as one offence in relation to each category of contravention, on the principle that a contravener should not be penalised more than once for the same conduct: Australian Securities and Investments Commission v The Cash Store Pty Ltd (in liq) (No 2) [2015] FCA 93 (The Cash Store) at [21].
(3) where there is an interrelationship between the legal and factual elements of a contravention, the "course of conduct" principle can be applied to group contraventions together to ensure that a person is not "doubly punished", however it represents a "tool of analysis" only which a court is not necessarily compelled to use: Australian Securities and Investments Commission v Channic Pty Ltd (No 5) [2017] FCA 363 at [81];
(4) a single strategy implemented via different media, or that went through different episodes or iterations, is more likely to comprise different contraventions: Optus at [54];
(5) where there have been discrete episodes each involving deliberation then there is more likely to be a separate contravention in each episode, even if they reflected a common theme, strategy or model;
(6) even a single strategy involving a single (or substantially consistent) form of conduct might give rise to numerous contraventions where the conduct is directed toward and received by numerous recipients: Optus at [54];
(7) even where there are different strategies or courses of conduct, or instances of impact on consumers, the overall penalty must still be gauged against the Court's assessment of the seriousness of the conduct - the "totality principle"; and
(8) it is inappropriate and impermissible to treat multiple contraventions (including a course of conduct) as just one contravention for the purpose of determining the maximum monetary limit dictated by the relevant legislation: Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73 at [227].
207 In relation to misleading or deceptive conduct claims, consistent with the reasoning by the Full Court in Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181 at [141] and [157], a separate contravention occurs each time a misleading representation is made. Therefore, each time the relevant pages of the website were viewed, a contravention occurred.
208 In relation to Financial Circle's misleading or deceptive conduct directed to the public, there is a separate contravention each time a person accesses Financial Circle's website: Australian Competition and Consumer Commission v Valve Corporation (No 3) [2016] FCA 196 at [181] per Edelmen J. While it is not possible to establish the precise number of contraventions that occurred, there is evidence that in a one-week period, the website was visited 1,543 times. Assuming that to have been an average number of visitors for the four months the website was live, then by extrapolating that figure, there were arguably over 25,000 visitors to the website, and therefore that many contraventions. It would follow that there is, for practical purposes, no maximum penalty.
209 In relation to Financial Circle's misleading or deceptive conduct directed to actual loan applicants, there is a separate contravention on each occasion a representation was made to an applicant, without reasonable grounds, that:
(1) it was in their interests to obtain financial advice; and
(2) it was in their interests to switch superannuation funds and to purchase new or replace their existing insurance.
210 In the Kerr Report, Mr Kerr opines that, in 10 out of the 12 client files reviewed, it was not evident that the applicant required superannuation or insurance advice. ASIC submits that, from this, it can be inferred first that Financial Circle represented to those applicants that it was in their interests to obtain financial advice on superannuation or insurance, and second that it did not have reasonable grounds to do so.
211 Mr Kerr also opines that it was not reasonable to conclude that the advice was appropriate to the client in 11 out of the 12 files reviewed. Again, therefore, it can be inferred from the fact that the advice was provided, that Financial Circle represented to the Applicant that the advice was appropriate. Given Mr Kerr's conclusions, in these 11 instances, the representation was misleading because the advice was not in fact appropriate.
212 ASIC submits, and I agree, that there are therefore at least 21 contraventions of the misleading or deceptive conduct provisions in respect of actual applicants.
213 Further, ASIC submits that since the sample of 12 clients assessed by Mr Kerr was randomly selected, the Court should infer that the sample is representative of all 51 clients serviced by Financial Circle. The figures can therefore be extrapolated across the whole applicant cohort with the result that there are around 89 contraventions. ASIC does not seek declarations from the Court of 89 contraventions, but refers to the number of potential contraventions to demonstrate the seriousness of Financial Circle's conduct: see The Cash Store at [10].
214 As Financial Circle's unconscionable conduct directed to actual loan applicants relies upon the same representations made to applicants, in ASIC's submission the same number of contraventions and courses of conduct arise.
215 In relation to s 961L of the Corporations Act, a separate contravention arises on each occasion that an Adviser, in respect of each client, contravenes ss 961B, 961G and 961J in circumstances where Financial Circle failed to take reasonable steps to ensure its Advisors compliance with those provisions: Australian Securities and Investments Commission v Golden Financial Group Pty Ltd (No 2) [2017] FCA 1267 (NSG Penalty Judgment).
216 In the present case, the evidence discloses that, of the 12 client files reviewed by Mr Kerr in all cases the Adviser failed to comply with s 961B(1) and in 11 out of 12 cases the Adviser failed to comply with ss 961G and 961J. There are, therefore, at least 34 contraventions of s 961L by Financial Circle.
217 Again, ASIC submits, and I agree, that the Court should infer that the sample of 12 client files is representative of the whole. The figures can therefore be extrapolated across the whole applicant cohort, with the result that there is a total of 144 contraventions.
218 Financial Circle contravened s 29 of the National Credit Act by engaging in a credit activity as a provider of credit on 51 occasions, that is, each time it entered into a loan contract with an applicant.