Consideration
293 As the Defendants correctly submitted, these proceedings are not representative, but relate to 14 individual customers, and as such, the particular calls must be considered and assessed by reference to the individual claims. Each of the 14 cases is distinct and must be considered separately, and ASIC bears the burden of establishing each claim. This is not a case of systemic unconscionability.
294 Nonetheless, there are a number of similarities between the calls and in relation to the submissions advanced by ASIC and the Defendants. It is appropriate, therefore, to make some observations at the outset.
295 First, most of the Consumer Contraventions are in issue.
296 During closing submissions, for the first time, the Corporate Defendants admitted that their sales conduct in relation to Mr Mirrawana, Ms Marika, Ms Gaykamangu and Ms Mirniyowan, was unconscionable. I note that prior to the closing submissions the Defendants had not sought to defend the conduct in relation to Mr Mirrawana and Ms Marika, but submitted, nonetheless, that the conduct had to be established. Their position in respect to Ms Gaykamangu and Ms Mirniyowan had been to deny the conduct. Although no amendment was made to the pleading to reflect the changed position, there is no suggestion that the Court cannot proceed on the basis of acceptance of the oral admission. On that basis, it is unnecessary to decide those four claims, although there may be a dispute as to the factual basis of the claims for the purposes of imposing penalty. That said, in respect to each of those Consumers, there are other claims made apart from unconscionability which require findings. Those findings will necessarily inform the basis of the unconscionability claims. This reflects the limited nature of the admissions made. In that context, a number of submissions made by the Corporate Defendants in respect to the pleading of those unconscionability cases, do not appear to advance their position.
297 The Corporate Defendants also accepted that, on the balance of probabilities, the following express representations were made and were false and/or misleading within s 12DB(1) of the ASIC Act:
(1) the representation pleaded at [189] to [191] of the FASOC in relation to Mr Tapera, being that Select represented he could only be sent policy information regarding FlexiSure Life Cover once the insurance policy had commenced and/or once he had provided his payment details;
(2) the representation pleaded at [296] to [297] of the FASOC in relation to Ms Yeatman, being that the minimum level of cover for FlexiSure Life Cover was $35,000 (when in fact the minimum level of cover was only $15,000); and
(3) the representations pleaded at [711] to [712] of the FASOC in relation to Ms Mirniyowan and Mr Wurrawilya that they told the Sales Agent they were "really happy" with the quote provided, when in fact neither Ms Mirniyowan nor Mr Wurrawilya had stated that they were "really happy" to the Sales Agent.
298 These are also very limited admissions as contraventions of ss 12DA(1) and/or 12DB(1) are alleged to have been made in respect to 13 of the Consumers, with these admissions relating only to part of the allegations made in respect to Mr Tapera, Ms Yeatman and Ms Mirniyowan.
299 In addition, ASIC contends, in respect to some claims, that admissions have been made by the Corporate Defendants, and others in respect to statements made in the Royal Commission or in s 19 examinations. In that context, the Corporate Defendants' submission that, as a general proposition, statements by Mr Howden and others in s 19 examinations and elsewhere, (for example that a particular telephone call is a "bad call"), cannot amount to an admission in respect to the call because what is said is general, not related to the pleadings and therefore not relevant, cannot be accepted. Similarly, the submission that the statements were merely commentary and opinions, and therefore unhelpful, as a general proposition, also cannot be accepted. An admission is "a previous representation that is made by a person who is or becomes a party to a proceeding…and adverse to the person's interest in the outcome of the proceeding": Evidence Act, dict. Statements made by people with the authority to make them, which are adverse to the interests of the Corporate Defendants or Mr Howden, are capable of being an admission.
300 For example, as I will return to below, the Defendants' dealings with Ms Marika was a case study at the Royal Commission, and it is submitted by ASIC that Mr Howden made a number of significant admissions in relation to this matter in his evidence before the Royal Commission. Although not admissible against him: Royal Commissions Act 1902 (Cth), s 6DD, they are admissible against the Corporate Defendants as admissions pursuant to Pt 3.4 of the Evidence Act. Mr Howden was also examined pursuant to s 19, and again it is contended admissions were made, admissible against the Corporate Defendants (although there are some over which he did not claim privilege). Suffice to say at this stage, that the admissions are broader than the concept of a "bad call" and include such topics as the adequacy of the Sales Agent's explanation on certain subjects, and whether aspects of a call were misleading. Although these statements relate to the call with Ms Marika, there is a commonality about aspects of the calls. These admissions may, depending on the circumstances, apply similarly to other calls. It is appropriate also to recall, that in the case of statements by Mr Howden, he was the Responsible Manager under Select's AFSL. The Corporate Defendants' submissions, as to what can, or more importantly, what cannot, be drawn from the calls, must also be considered in this context. That said, what, if any, weight is to be placed on any admissions will depend on the statement made, and the issue to be decided. These are addressed in more detail below. Suffice to say at this stage that (as a general proposition) in the instances where admissions are alleged by ASIC, even if I were not satisfied those statements are properly characterised as admissions, the evidence itself is sufficient in any event to establish the relevant contraventions.
301 Second, although ASIC made very detailed submissions as to each of the telephone calls the subject of the Consumer Contraventions, illustrating its submission by reference to their content, the Defendants did not address in oral closing submission any of the specific telephone calls. In written submissions, very little attention was directed to the content of the specific calls. That is, although the Defendants made general submissions challenging ASIC's submissions, they often did not do so by submitting, by reference to the calls, that the aspects ASIC identified did not have the meaning or effect contended.
302 Rather, the Defendants, when making their oral submissions, focused on the pleadings in respect to the Consumers. This is a topic I have addressed above. Nonetheless, it is appropriate to recall that it is necessary to read the pleading as a whole and in context. More particularly for present purposes, the Defendants' approach, which considered each pleaded factor of vulnerability (including such issues as whether the Consumer was in a weaker bargaining position as well as the personal circumstances of the Consumers) separately, in isolation from others, cannot be accepted. For example, each matter considered in isolation does not have to establish vulnerability or a weaker bargaining position, but rather the combination of characteristics (such as indigeneity, age, remote location and lack of English language skills) can have that effect. The Defendants' approach is contrary to the legislation and the authorities.
303 The Corporate Defendants criticised the approach of ASIC in addressing the individual calls, submitting that it diverted attention from the calls themselves, and is apt to mislead when the calls speak for themselves. It was submitted that they did not intend to take that approach, as the Court needs to assess the calls by listening to them by reference to the pleadings.
304 By failing to address the content of the calls, and specifically, what can be concluded from the audio recordings thereof, the Defendants' submission that the focus of the assessment should be on the pleadings, absent that analysis, carries with it an air of artificiality. The submissions were often at a level of generality, devoid of the context of the calls in which the statements were made, which rendered them unrealistic.
305 To take just one example at the outset, to illustrate. As a general proposition relevant to each of the Consumers, the Corporate Defendants submitted at [237] and [239]:
[237] The Sales Agents were selling standard insurance products on standard terms. There was nothing unique about the product that gave the Sales Agent any particular bargaining strength. The Consumers had the capacity to obtain the same product from a competitor. Equally, they were free to simply not buy the product or hang up the phone. There was no pre-existing obligation on the Consumers to speak with the Sales Agents, and the Sales Agents did nothing to foster any such sense of obligation.
…
[239] …They could hang up the phone without being concerned about having wasted the Sales Agents' time and without any embarrassment about the repercussions.
306 More particularly, in relation to 11 of the Consumers, the Defendants made a specific submission in relation to unconscionability and coercion (and in respect to the inequality of bargaining position or vulnerability). To take two examples. In relation to Ms Marika, it was submitted that:
In circumstances where a customer has no obligation to purchase what is a standard product, ignoring or refusing a customer's request or query may be poor sales practice. It may be rude. Similarly, not providing a range of options might make the product less attractive to a potential consumer. But these are inherently unlikely to be coercion. The customer has a simple way to deal with such conduct. He or she can hang up the phone or refuse to purchase the product.
307 In relation to Ms Yalumul:
The suggestion that Ms Yalumul was in a weaker bargaining position than Select is incorrect (see paragraphs 235 to 241 above). Ms Ghobadi was selling a standard product on standard terms. [She] did not have any hold over Ms Yalumul. There was nothing preventing her from simply hanging up the phone or refusing to purchase the product.
308 Submissions of a similar ilk were made in respect to other Consumers (except with respect to the four claims of unconscionability, being Ms Marika, Mr Mirrawana, Ms Gaykamangu and Ms Mirniyowan, which were eventually admitted in so far as the sales conduct was impugned). Although the factor is a relevant consideration in any assessment of the calls, the proposition was repeatedly made in isolation of the circumstances of the calls. What, if any, weight it has must necessarily depend on the circumstances of the call (as reflected by the fact it did not carry weight in the admission in relation to the four unconscionability claims).
309 Third, contrary to the Defendants' submission, ASIC has not approached this case by reasoning on a stereotype basis. ASIC does not suggest that merely being Indigenous creates vulnerability. Rather, it contended that indigeneity, in combination with other factors, such as a limited grasp of English, advanced age and residing in a remote community, together make certain Consumers vulnerable. It was submitted that this approach was similar to that in the recent case of Australian Competition and Consumer Commission v Telstra Corporation Ltd [2021] FCA 502; (2021) 392 ALR 614, where Telstra was found (on its admission) to have engaged in unconscionable conduct towards 108 Indigenous consumers. In that case, the Court's declarations reflected that the consumer's vulnerability lay in being Indigenous combined with English language difficulties, limited reading, writing and financial skills and being unemployed or having limited income. In this case, the Consumers have each provided evidence, which is unchallenged, as to their individual circumstances, and it is the inferences to be drawn from the evidence which forms the basis of these claims. It may be accepted that care must be taken not to assume that because a person is vulnerable the decision was made by the person because of that vulnerability: see for example, Kobelt at [110]. However, this case is customer-specific, addressing what occurred in each instance, as evidenced by the recordings of these telephone calls: see for example, Unique at [115], [165]; Australian Competition and Consumer Commission v Australian Institute of Professional Education Pty Ltd (in liq) (No 3) [2019] FCA 1982 at [772(6)]; Australian Competition and Consumer Commission v Keshow [2005] FCA 558 at [78], [84], [87].
310 ASIC relies on the combination of characteristics as being 'red flags' to the Sales or Retention Agent that a customer may be vulnerable.
311 As ASIC submitted, the Corporate Defendants' compliance training manuals cite indigeneity as a 'red flag'. For example, the Select AFSL Compliance Training Manual (v.2.0), dated 26 February 2015, provided under the heading "What is Unconscionable Conduct":
The best example of unconscionable conduct for our purposes is selling insurance products to customers who:
• Might be intellectually challenged
• Indigenous people
• Cannot speak English
• Are under the influence of drugs or alcohol.
312 Indeed, that manual also imposed an additional requirement where the customer is Indigenous:
It is a current business requirement that all sales to indigenous people are followed up with a call a week or so later, to ensure they have received the welcome pack, can afford the premium selected and [sic] happy with their purchase decision.
313 That the Corporate Defendants use indigeneity as a 'red flag' for vulnerability is also apparent in Mr Howden's statement to the Royal Commission, where he relevantly said:
Following ASIC's review of the sale of funeral policies (Report 454) Select introduced an enhanced verification procedure (as described in Annexure RH-11 (SAF.0003.0001,0276)) to ensure extra care and diligence is exercised when dealing with potentially vulnerable customers (including Aboriginal and Torres Strait Islander Australians).
314 This 'red flag' approach also reflects the approach of the Financial Services Council, in its Life Insurance Code of Practice (Code) where it states at [7.1]:
We recognise that some groups may have unique needs, such as older persons, consumers with a disability, people from non-English speaking backgrounds and Indigenous people, when accessing insurance, making an inquiry, claiming on their insurance, making a Complaint and communicating with us. Where we identify that a customer requires additional support, we will take reasonable measures to ensure that we provide additional support.
315 I note the Defendants take issue with ASIC's reliance on the Code as it commenced on 1 October 2016 and there was a transition period until 30 June 2017 to be bound by the Code, by which time all the sales calls except that to Mr Shrestha had occurred. I note also that a number of retention calls occurred in late 2017 (for example, in respect to Ms Yalumul, some calls occurred in August 2017). It was also complained that this was not pleaded. Leaving aside the issue of whether the Code was binding, it plainly reflects, consistent with Select's training, that certain characteristics in a person are red flags for vulnerability in this sales environment. It also undermines the Defendants' submission that identifying Indigenous people in some way involves stereotype reasoning.
316 That said, as illustrated above, Select's compliance manuals and Mr Howden's statement to the Royal Commission reflect that Sales and Retention Agents were trained and required to be alert to such characteristics of vulnerability, including lack of capacity in English and indigeneity. Any attempt by the Corporate Defendants to minimise any significance or relevance of the training to this aspect of the claims on the basis that the training is at a general level and, therefore, does not assist in establishing that the Agent knew, or should have known, of any vulnerability, cannot be accepted. I note the submission is rather a two-edged sword for the Corporate Defendants in that they, and more particularly, Mr Howden, as the Responsible Manager under Select's AFSL, had an obligation to ensure that any financial advice was given efficiently, honestly and fairly.
317 This approach by ASIC is consistent with the evidence of Dr Eades, who spoke of markers or flags in the conversations, which should have alerted the Sales and Retention Agents to the vulnerable position of various Consumers. As Dr Eades explained, the opinions she expressed were not just based on her expertise and knowledge but on "the many, many red flags that appear in those conversations" she considered, the subject of the Consumer Contraventions.
318 The reference to characteristics in ASIC's pleadings, in particular indigeneity as a 'red flag' for vulnerability, does not invoke any stereotype reasoning process when considered in light of the manner in which this case was presented. Rather, as explained above, the Consumer's evidence is relied on as to their individual circumstances. ASIC's case is customer-specific, addressing what occurred, as evidenced by the recording of the telephone calls. The 'red flags', as the Corporate Defendants' training documents reflect, put the Sales and Retention Agents on notice of possible issues. Each call then must be assessed having regard to its contents, given the evidence.
319 Fourth, aligned with what ASIC asserts, in relation to the 12 vulnerable Consumers, the relevant Sales and Retention Agents had knowledge of the particular characteristics and circumstances of those Consumers, or ought to have known of the same, such as to raise in the mind of any reasonable person a very real question as to the Consumer's ability to make a judgment as to what was in their own best interests. ASIC contends that the particular combination of characteristics of each relevant Consumer made them vulnerable, in the sense of their inability to make a judgment as to what was in their best interests in the circumstances of the telephone calls.
320 In all cases where ASIC alleged that the relevant Sales Agents and Retention Agents had knowledge of a Consumer's vulnerability, the case is put on the basis that the Agents had actual knowledge, or alternatively, ought to have known of the matter. In that context, the Agents did not make genuine or reasonable attempts to ensure that the Consumers understood what had been discussed during the call and what was being sold to them, and those Agents could not have been reasonably satisfied that the Consumers did understand. It was submitted that if there is a distinction between special disadvantage (as in the equitable doctrine of unconscionability) and pre-existing vulnerability, disability or disadvantage more generally, and the Court is not satisfied that 12 of the 14 Consumers were at a special disadvantage, it may still find (though it is not necessary) that they were vulnerable and that the Corporate Defendants took advantage of that; or, in the alternative, that the Consumers were in a far weaker bargaining position than the Corporate Defendants. I note the FASOC pleads that the relevant Consumers were either vulnerable and/or in a weaker bargaining position, or that they were in a weaker bargaining position. I approach the resolution of the claims on that basis. That said, the terms vulnerability and special disadvantage, in ASIC's submissions, appeared to be used interchangeably. It is to be recalled that although vulnerability is pleaded, as resolved in Quantum, it is not a necessary criteria to establish for statutory unconscionability.
321 As noted above at [277], ASIC refers to Amadio, and relies on the analysis therein as to the Defendants' level of knowledge of the vulnerability. In summary, Amadio involved two elderly parents who did not speak good English and who were in effect tricked by their son to sign a guarantee for him. The Court concluded that the bank manager knew enough to know that these elderly parents did not understand the transaction, being the guarantee that they were signing. Accordingly, the bank's behaviour was held to be unconscionable and the guarantee was set aside. Mason J at 466-467 said the following:
In deciding whether the bank took unconscientious advantage of the position of disadvantage in which the respondents were placed, we must ask, first, what knowledge did the bank have of the respondents' situation?
Mr. Virgo was aware that the respondents were Italians, that they were of advanced years and that they did not have a good command of English. He knew that Vincenzo had procured their agreement to sign the mortgage guarantee. He had no reason to think that they had received advice and guidance from anyone but their son. In cross-examination he conceded that he believed that Vincenzo had acted in the "role of adviser/explainer" in relation to the transaction and referred to him as acting "in his capacity as dominant member of the family". Mr. Virgo also knew that, in the light of the then financial condition of the company, it was vital to Vincenzo to secure his parents' signature to the mortgage guarantee so that the company could continue in business. It must have been obvious to Mr. Virgo, as to anyone else having knowledge of the facts, that the transaction was improvident from the viewpoint of the respondents. In these circumstances it is inconceivable that the possibility did not occur to Mr. Virgo that the respondents' entry into the transaction was due to their inability to make a judgment as to what was in their best interests, owing to their reliance on their son, whose interests would inevitably incline him to urge them to sign the instrument put forward by the bank.
Indeed, the inquiry by Mr. Amadio senior as to the duration of the arrangement should have alerted Mr. Virgo to the likelihood that Vincenzo had not adequately or accurately explained the intended transaction to them, let alone the possible or probable consequences which attended it.
Whether it be correct or incorrect to attribute to Mr. Virgo knowledge of this possibility, the facts as known to him were such as to raise in the mind of any reasonable person a very real question as to the respondents' ability to make a judgment as to what was in their own best interests.
322 And similarly, Deane J said at 476-477 (footnotes omitted):
It is apparent that Mr. and Mrs. Amadio, viewed together, were the weaker party to the transaction between themselves and the bank. Their weakness may be likened to that of the defendant in Blomley v. Ryan of whom McTiernan J. said:
"His weakness was of the kind spoken of by Lord Hardwicke" [in Earl of Chesterfield v. Janssen (60)] "in defining the fraud characterised as taking surreptitious advantage of the weakness, ignorance or necessity of another. The essence of such weakness is that the party is unable to judge for himself."
That weakness constituted a special disability of Mr. and Mrs. Amadio in their dealing with the bank of the type necessary to enliven the equitable principles relating to relief against unconscionable dealing. Put more precisely, the result of the combination of their age, their limited grasp of written English, the circumstances in which the bank presented the document to them for their signature and, most importantly, their lack of knowledge and understanding of the contents of the document was that, to adapt the words of Fullagar J. quoted above, they lacked assistance and advice where assistance and advice were plainly necessary if there were to be any reasonable degree of equality between themselves and the bank.
323 Deane J then at 477 posed the question:
The next question is whether the special disability of Mr. and Mrs. Amadio was sufficiently evident to the bank to make it prima facie unfair or "unconscientious" of the bank to procure their execution of the document of guarantee and mortgage in the circumstances in which that execution was procured.
324 His Honour observed at 478:
Mr. Virgo simply closed his eyes to the vulnerability of Mr. and Mrs. Amadio and the disability which adversely affected them.
325 And at 479:
Mr. and Mrs. Amadio's disability and the inequality between themselves and the bank must be held to have been evident to the bank and, in the circumstances, it was prima facie unfair and "unconscientious" of the bank to proceed to procure their signature on the guarantee/mortgage.
326 And see: Australian Competition and Consumer Commission v Radio Rentals Ltd [2005] FCA 1133; (2005) 146 FCR 292 at [21]; Thorne v Kennedy [2017] HCA 49; (2017) 263 CLR 85 at [77].
327 ASIC submitted that where knowledge is pleaded, from the pleaded characteristics and circumstances of the Consumers, an inference was available, or the reasonable person in the position of the Agent would have deduced, that the Consumers were vulnerable. That is, the Consumers could not have looked after their own interests or alternatively were in a weaker bargaining position.
328 The Corporate Defendants took issue with ASIC's reliance on Amadio, contending, inter alia, that it had not pleaded that the characteristics relied on affected the Consumer's ability to make a judgment as to what was in their best interests. However, in this context, that is inherent in the concept of vulnerability.
329 The artificiality of the Corporate Defendants' submission, which resulted from their failure to grapple with the content and audio of the telephone calls, was particularly acute in the repeated submissions (particularly in writing) that the Sales and Retention Agents did not, or could not, know of any of the characteristics or vulnerabilities of the Consumers at the time of the calls.
330 The Defendants contended that it is not the pleaded personal characteristics that primarily made the Consumers vulnerable, or a combination of those factors. It was submitted that the Consumers' vulnerability cannot be attributed to such simple and identifiable features as the fact they are Aboriginal or their age or address but rather, it was the result of complex underlying factors, most of which were not apparent from the calls and, therefore, unknown to the relevant Agent. Leaving aside this issue, which is addressed below, the Defendants' submission as to the individual characteristics takes the pleading out of context. The submission ignores the very compliance training provided to Agents. The submission is also general in nature and does not address the content of the calls.
331 In that context, it was submitted that ASIC had not pleaded that the Agents had knowledge of the sociolinguistic concept of gratuitous concurrence. The characteristic of gratuitous concurrence is pleaded in respect to Mr Mirrawana, Ms Gaykamangu, Ms Campbell, Mr Nundhirribala, Ms Mirniyowan and Ms Yalumul. The evidence of gratuitous concurrence is said by ASIC to be relevant because it shows that where relevant Consumers appeared to assent to propositions, they did not in fact do so. It provides an explanation for an assent, even though the Consumer did not agree or consent. It rebuts any suggestion that the relevant Consumers agreed with what occurred. ASIC submitted that significant for the coercion claims is that the free will of the innocent party was overborne. In establishing that aspect, it relies on this evidence of gratuitous concurrence to submit that no weight can be placed on the fact that a particular Consumer has said "yes". Although the Agent may not have been aware of the sociolinguistic concept of gratuitous concurrence, a consideration of the content and audio of the calls reflects on whether the Agent knew, or ought to have known, that the Consumers were vulnerable and/or in a weaker bargaining position. And, as explained below, suffice to say at this stage, in some calls, regardless of the Agent's knowledge of the concept of gratuitous concurrence, any reasonable person would know that the Consumer did not understand what had been discussed and in that context some affirmative responses were not a reflection of an agreement to what was being offered to them.
332 As discussed above, the Sales and Retention Agents only needed to have been on notice as to indicators, or "red flags", pointing to the possibility or likelihood that a person did not understand what was being discussed. In that context, ASIC contended in respect of each Consumer, that there were such red flags sufficient to indicate to Sales and Retention Agents that they needed to do more to be genuinely or reasonably satisfied that the Consumers understood the nature of the policies they were purchasing, or the fact that they were purchasing anything at all.
333 Moreover, in that context, in so far as the Defendants contended that given the pleading, unless a Sales or Retention Agent was aware of all the identified pleaded factors, they could not be aware of any vulnerability, that submission cannot be accepted. It is not borne out on a proper reading of the pleading.
334 In so far as the Corporate Defendants tendered documents to support the submission that many of their Agents were from overseas, which was said to support the inference that someone from overseas would not be aware of such matters as an Aboriginal accent, or name, the submission does not advance the Corporate Defendants' case very far. Of course, it is for ASIC to establish its case, but the mere fact of an Agent having been a traveller from overseas tells the Court little, if anything, about an Agent's awareness of such matters. The flaw in the Corporate Defendants' submission is illustrated by Mr Hoey (an Irish traveller), who gave evidence. He recognised the names, accent and location of a number of the Consumers as being Aboriginal. His evidence on that topic was not challenged.
335 The Defendants also contended that there was no evidence that some of the Consumers have a distinctly Aboriginal name or accent, and that the allegations involved stereotyping (which I have addressed elsewhere). Moreover, ASIC identified by reference to the calls what it said reflected, for example, an accent. The Defendants did not address or respond to those submissions by reference to the calls, but instead suggested that they generally ought not to be accepted. As noted in the preceding paragraph, Mr Hoey recognised such features. It was not suggested that I could not recognise other accents, for example, the obviously Irish accent of Mr Hoey. Some of the Agents had an obviously English or British accent (for example, Ms Ghobadi, as did Mr Moore). These are matters of general experience. I do not accept the submission that it was necessary to call specific evidence on these topics. As a general proposition, I accept ASIC's submissions as to the names and accent. That said, where these matters are alleged, they are not alleged in isolation, and are typically alleged with other matters (such as locations) and must be considered in the context of the evidence relevant to the alleged contravention. Moreover, this is also in a context where, as explained above, the Sales and Retention Agents were trained and required to be alert to such characteristics of vulnerability, including indigeneity, and where there is a specific policy in place to address that circumstance.
336 Fifth, the best evidence for determining whether the Sales or Retention Agent had actual knowledge (or ought to have had such knowledge) of the Consumer's relevant characteristics and circumstances and the impact of them, is the recording of those calls and the transcripts thereof. Each relevant call must be considered in light of the claims.
337 That said, as ASIC submitted, there are some common features of these calls. The Sales and Retention Agents are pushy and persistent. The recordings often involved a person speaking at a very fast speed and using complex language. The speed with which the sales calls were conducted, in a number of cases, resulted in decisions to purchase insurance products being made in as little as 20 minutes (the average time of the sales calls was between about 20 and 35 minutes). Only a short time into the call the Sales Agent plays the Consumer a pre-recorded PDS, which is only required to be played before a policy is purchased. That is, within a short time, the Sales Agent is of the view that a policy will be purchased. The Agents ask leading questions in the calls designed to elicit affirmative responses. Policy amounts were put to the Consumers without any questions as to their need or appropriateness. The Agents gave no opportunity to the Consumers to ask questions or reflect on what was occurring. In a number of cases, the Consumer barely speaks, except to provide the details elicited (for example banking details for direct debit). In some cases where questions were asked they were not answered. The Sales Agents just continued or pushed forward through the call, to sign the Consumer up to a policy. There were no reasonable attempts made to ensure the Consumers understood what was occurring. Often, the Sales Agents used the approach of endorsing or reinforcing the appropriateness of what was occurring (that is the sale of the insurance to them) by referring to the Consumers' relatives, who they said had referred them for this policy. These features also were common in the retention calls, with the Retention Agents pushing ahead to achieve their agenda, regardless of what was being said by the Consumers.
338 Sixth, as referred to above, each sales call involved a PDS being provided to the Consumer as there is a legal obligation to do so before a Consumer acquires a financial product.
339 In respect to each of the Consumers, there was no written PDS provided to them to explain the terms and conditions before they agreed to purchase the policy. Rather, the PDS was provided during the calls by way of an oral product disclosure usually in the form of a short pre-recorded message. The PDS was spoken quickly and used complex terminology. The Consumers' consent to have the PDS given to them in that way was not first obtained, and that is an integer of the coercion and unconscionable conduct claims.
340 As a result of correspondence with ASIC as to the Corporate Defendants' obligation to provide the PDS, the Corporate Defendants provided legal advice, received by them, which they said underpinned their practice.
341 The advice was sought, on 11 July 2013, in the following terms:
Could you please spend an hour or so to investigate and hopefully advise us how outbound unsolicited calls can be made to potential customers using an over the phone voice recording of the PDS?
The three to five day time lag and large volumes of printed material we're mailing out could both be potentially eliminated if we could complete the sale in the one call.
342 The advice was received, on 15 July 2013, and relevantly included:
Accordingly, if the person agrees that you can provide the PDS over the telephone and if you are satisfied on reasonable grounds that they have received the statement, you can do it.
343 That is, according to the advice (and without commenting on the correctness or otherwise of the advice), two conditions must be satisfied if the PDS is to be given in this manner. First, the Consumer agrees to receive the PDS via telephone. The consumer's consent is needed before this form of PDS can be utilised. Second, the caller is satisfied on reasonable grounds that the consumer has "received the statement". The reference to the consumer having "received the statement", read in context, must be taken to mean that the consumer understands the statement. The Corporate Defendants were concerned about ensuring that the procedure they wished to adopt was legally acceptable. This is because there is a legal requirement in s 1012C of the Corporations Act to provide the statement to the consumer before a sale is made or finalised. Indeed, Select told ASIC (in a letter dated 8 December 2015) that it took steps to ensure it was compliant with its legal obligations, amongst which included providing the PDS orally over the telephone, before the customer became bound to acquire the insurance. It was also stated in the letter that the PDS comprised the product information explained by the Sales Agent to the customer, as well as a pre-recorded component that covered certain additional requirements (such as the name and contact details of the product issuer, an indication of the nature of the information contained in the PDS relating to the product and an option of receiving, orally, any information required to be included in the PDS) so long as this alternative way of giving the PDS (including as a pre-recorded message) is agreed to by the customer.
344 A common feature of these calls is that consent was not sought from any of these Consumers before the PDS was played. Nor are the Consumers actually asked if they understood the PDS, after it had been played. I note that despite the advice received by the Defendants, the script approved by Mr Howden for use by the Sales Agents does not contain anything about obtaining consent. I note also that although Consumers were asked whether they had received the PDS, the issue is whether they have understood the statement.
345 To give just one example. The Corporate Defendants submitted in relation to Mr Mirrawana the following:
In relation to obtaining Mr Mirrawana's express consent to playing the pre-recorded PDS, before playing the PDS Mr Hoey said he would play the product disclosure statement and asked Mr Mirrawana to "listen to this recording". Mr Mirrawana responded "Right, right". After the recording was played Mr Hoey asked Mr Mirrawana to confirm that he "heard, received that message okay". Mr Mirrawana responded "Yeah"
346 The submission appears to contend that Mr Mirrawana consented to this approach. The submission takes this passage out of the context of the call, and considers it in a vacuum. As previously stated, that approach is of little assistance. In any event, as explained in more detail below, in the context of the call in which these statements were made, a proper consideration of what was said does not reflect that consent was sought or that any attempt was made to ascertain whether the PDS was understood. Mr Mirrawana was simply told this was happening. Any response is, at best, an acknowledgement of that statement. Similarly, phrasing the statement after playing the call as having heard and received the message, is not asking the correct question if the Sales Agent was concerned to ensure that the Consumer understood the PDS. Any response to that, in the context of this call, could not reasonably be contended to reflect that the Consumer understood the PDS. No Sales Agent could reasonably have understood it to have that effect. The same submission is made by the Corporate Defendants in respect to each Consumer, and having considered each of the calls, the same conclusion arises in respect to each of them. Therefore, each of these calls have that feature, bearing in mind the importance and purpose of the PDS. What effect that has in establishing the claims made, depends on the individual calls.
347 Seventh, in respect to 13 of the Consumers there are allegations of false and/or misleading statements and misleading or deceptive conduct having been made in the sales calls. Again, although it is necessary to consider each separately given what was said during each of the calls, there is commonality about some of the statements. For example, in a number of calls it is alleged such statements related to the exclusions to the policy, that ADC, AIC and HEC were part of the standard policy when they were optional extras, and who would receive the benefits.
348 In respect to whether the alleged false and/or misleading statements have been established, the Defendants' submissions as to the interpretation of the calls often brought with it an artificiality to what occurred which could not be maintained on listening to the calls. To take just one example. In relation to Mr Mirrawana, it was submitted that Mr Hoey indicated that he was quoting for the "top level of cover" and that he could work down from there in terms of affordability, and that Mr Mirrawana assented to this approach. However, a consideration of the conversation reflects that realistically, that was not so. Rather, Mr Hoey simply quoted that fee and signed up Mr Mirrawana accordingly. No other options were put to Mr Mirrawana. It was not suggested that a lower amount of cover could be obtained and no questions were asked by the Sales Agent as to whether Mr Mirrawana wanted cover or about the level of cover. The Defendants' submissions often involved nuances which were unlikely to have been picked up even by consumers who were not vulnerable and/or in a weaker bargaining position.
349 Eighth, in respect to each of the unconscionability claims for the sales calls, the Corporate Defendants submitted for each Consumer that:
[The Customer] was not targeted. There is no evidence that the conduct of the Sales Agents towards him [or her] deviated in any way from their standard approach. There is no evidence that he could not have acquired the same product from a different provider, on the same terms.
350 This submission was no doubt directed to some of the considerations in s 12CC. It was the culmination of earlier submissions made on such topics as, inter alia, vulnerability and bargaining position. However, a submission that the Sales Agent did not deviate from his or her standard approach, considered in a vacuum of the detail of the calls, does not assist. Moreover, while the submission that there is no evidence that the Consumer could not have acquired the same product elsewhere may be correct, it fails to grapple with the content of the calls. For example, in most cases the calls were cold calls, with the Consumer not looking for insurance, and in some instances making it plain they did not want insurance. In some cases, the Consumer expressly stated that they wished to put off making a decision until they had written documentation. In some cases the Consumer already had insurance. The individual circumstances of the calls affect the relevance and/or weight that may be attached to such a consideration.
351 Ninth, as noted above at [287], there is a dispute between the parties as to the breadth of the concept of coercion. The submission is best addressed by reference to the manner in which the case is presented. In respect to all but one of the Consumers (being Irshad Hussain), an allegation of coercion is made in addition to unconscionability in respect to the sales calls. The cases in respect to each Consumer, although pleaded to relate to the particular conduct, have similarities, such that, using Ms Marika as an illustration provides insight as to the manner in which is it said coercion is established in respect to each Consumer.
352 ASIC contends that it can be established that Ms Marika was coerced by the following features (FASOC [545]-[546]):
(1) her personal characteristics, including her age, difficulty speaking and understanding English (including due to deafness in her right ear) and that she resided in Sydney and a rural area of New South Wales, but had previously resided in a remote area of the Northern Territory, which ASIC submitted combined to limit her assertiveness and ability to push back;
(2) her personal circumstances, including that that she had limited financial means, that she was employed (but ceased working in late 2015), may have been receiving Centrelink payments, was financially supporting at least four of her children and grandchildren and could not afford $60.06 in fortnightly premiums;
(3) prior to being signed up to the policies, Ms Marika had informed both Sales Agents (Luke Zanotto and Mr Hudson) that she already had funeral insurance through her work;
(4) the Sales Agents ignored and/or spoke over Ms Marika's statements that she already had funeral insurance;
(5) Mr Zanotto ignored and/or spoke over her statements that she was happy with her existing funeral insurance policy and did not want to change insurances;
(6) Mr Hudson ignored her request that she be afforded the opportunity to speak with her existing funeral insurance provider;
(7) Mr Hudson made some false and/or misleading representations;
(8) Mr Hudson did not make any genuine attempt to offer Ms Marika alternate levels of cover, including insurance for fewer members of her family or herself only;
(9) Mr Hudson sought to upsell HEC, ADC and AIC without disclosing that they were optional extras;
(10) Mr Hudson played a pre-recorded PDS without first obtaining Mr Marika's express and/or informed agreement to receive the PDS in this way;
(11) Mr Hudson failed to make a genuine, or alternatively, reasonable, attempt to confirm that Ms Marika understood everything discussed during the 9 September 2015 telephone call;
(12) at the conclusion of the 9 September 2015 telephone call, Ms Marika did not understand that she had been signed up to optional AIC and ADC; that she had been signed up to Let's Insure Funeral Cover, with optional AIC and ADC for herself, her three children and her five grandchildren; that she had been signed up to two separate policies; and/or the nature of the Let's Insure Funeral Cover, with optional AIC and ADC, that she had been signed up to;
(13) Mr Hudson spoke quickly, rushed her through the telephone call and used words that she did not understand; and
(14) Mr Hudson signed Ms Marika up to the policies during the same call, rather than giving her an opportunity to reflect.
353 ASIC submitted that the aggressive manner in which Mr Hudson conducted the call, together with the personal characteristics and circumstances of Ms Marika, had the effect that Mr Hudson had an unfair advantage during the call. By emphasising the amounts of money that would be paid under the policy and by failing to explain the key features of the policy, including their significant exclusions, Mr Hudson "pushed" or "compelled" Ms Marika to sign up for the policy. It was submitted that in circumstances in which Ms Marika did not understand the policies she had been signed up to, and did not understand the consequences of her purchase, it is clear that her will was overborne, in that she had not given meaningful or informed consent. Mr Howden (while claiming privilege), agreed during the s 19 examination that this had occurred. He agreed that, in the way Mr Hudson had conducted himself, he denied Ms Marika "free choice" as to whether to enter into the policies. That, it was submitted, amounts to coercion. That Mr Hudson was uninterested in Ms Marika's consent, ASIC submitted, was illustrated by the fact that he started taking details of other people to be insured under her policies only 10 minutes into a 35 minute call and before he had explored the costs of the policies or options with her.
354 ASIC submitted that in circumstances in which Ms Marika did not understand the policies she had been signed up to, and did not understand the consequences of her purchase, it is clear that her will was overborne, in that she had not given meaningful or informed consent.
355 ASIC submitted that coercion is a relational concept; the alleged wrongdoers' conduct must be assessed in light of the characteristics of the innocent party. It submitted that the characteristics of the innocent party are relevant to both inquiries, whether the technique was an illegitimate one and whether the innocent party's free will was overborne.
356 The Corporate Defendants submitted that whether Ms Marika's will was overborne, in that she did not give meaningful or informed consent, is not the correct focus of the inquiry, which is whether there is a necessary element of "compulsion or serious threat". The Corporate Defendants took issue with the characterisation of the Sales Agent's conduct. For example, it was submitted, inter alia, that making false and misleading statements does not establish coercion, and nor does the fact Ms Marika purportedly did not given informed consent to receive the pre-recorded PDS, or that Mr Hudson did not do enough to establish that Ms Marika understood what was discussed during the call. It was submitted the conduct is far removed from that discussed in the authorities as to what amounts to coercion.
357 The parties diverge as to the scope of the concept of coercion in two respects. First, ASIC contended that it is not just threats, or intimidation, or threats of physical violence, but rather that coercive activity can be construed more broadly to encompass any form of illegitimate pressure. Second, in assessing whether coercion has been established, the Court should not only examine the actions of the wrongdoing party, but should also consider the effect of the conduct on the mind of the person subject to the conduct. The Corporate Defendants generally dispute both propositions. Indeed, their submissions which address the coercion claims in respect to the Consumers proceed on the basis of a narrower view of the concept than that contended for by ASIC.
358 ASIC referred to ACM18 (No 2) which was said to provide a useful analogy in support of its submission. Given the issues that arise as between the parties as to the scope of the concept of coercion, it is appropriate to consider this case in some detail. In ACM18 (No 2), the company was found to have engaged in coercion in the circumstances, which were described at [19]-[22] as follows:
[19] As at 3 September 2014, JR was employed part-time as a secretary, was a single mother of three children, received Centrelink benefits and could not afford to pay the JR Debt to ACM. ACM was aware of each of these matters from that date because JR provided that information to ACM's representative, Mr Rolf Francisco during a telephone call on 3 September 2014.
[20] On 3 September 2014, Mr Francisco telephoned JR while she was in a carpark with her daughter. This phone call was in connection with the Telstra services which gave rise to the JR Debt and/or in connection with the possible supply of a payment plan and/or financial accommodation by ACM by way of an extension of time to pay off the JR Debt fully. Mr Francisco advised JR that ACM had commenced preparing the documents that would be used for legal action against JR, that ACM management was planning for a summons to be drawn, issued and served upon JR soon so that ACM could recover the debt in full, and that if a default was listed on her credit file, JR would not be able to obtain credit for the next five to seven years. Mr Francisco said words to the effect of "And I know with three kids, credit is very important to you, right?"
[21] The terms of the representations which the applicants claim were made by Mr Francisco (and therefore ACM) to JR are as follows:
(a) that ACM had commenced preparing the documents that would be used for potential legal action against her, when it had not;
(b) that ACM was planning for a summons to be drawn, issued and served upon JR soon to recover the debt in full, when it was not planning to do so and/or did not have reasonable grounds for so stating; and
(c) that if a default was listed upon JR's credit file, JR would not be able to obtain credit for the next five to seven years, when ACM did not have reasonable grounds for so stating.
The applicants contend that these representations were not true and/or that ACM did not have reasonable grounds for making them.
[22] JR was stunned, felt threatened and was greatly concerned by the matters said by Mr Francisco. She felt flustered and railroaded into agreeing to payment on the basis that if she did not, service of a summons was imminent. JR offered to pay ACM $1000 in an attempt to stop the threatened court proceedings. This amount represented the total of her pay and Centrelink benefits for a fortnight and, if JR made this payment, she knew she would not have enough to cover rent for that fortnight. She provided her debit card number to Mr Francisco, but ultimately this payment was not made following suspension of the debt as a result of a complaint to the Telecommunications Industry Ombudsman (TIO).
359 Griffiths J concluded at [267]-[272]:
[267] For the following reasons, I find that the three representations do amount to coercion. First, the representations were made in the context of a conversation during which Mr Francisco became aware that JR was employed only part-time, was a single mother of three children, received Centrelink benefits and had made an offer to pay off the debt as a rate of $20 per week. He was also aware that JR had made a complaint to the TIO. Despite these matters, Mr Francisco asserted that ACM's management "is really demanding for full payment before full recovery action ensues". He made this statement notwithstanding that, as Mr Clarke acknowledged, he should have accepted the $20 offer having regard to JR's circumstances.
[268] Secondly, I find that Mr Francisco sought to obtain an unfair advantage in his discussions with JR by stating that ACM's management was imminently planning to have a summons drawn and served against JR so that the debt could be recovered in full (as opposed to a payment plan as offered by JR). Mr Francisco sought to soften up JR by then saying that he wanted to resolve the issue with her before those legal steps were taken and then, after ascertaining that she was on Centrelink and had three children, he assured her that he was on her side and was her "advocate so that I could represent you with management".
[269] Thirdly, notwithstanding that Mr Francisco knew that no summons was being drafted and that, at best, a Legal Checklist had been prepared, he told JR that he would go to his manager's office and see what he could do "so we can put a cease order on this account and stop further recovery action".
[270] Fourthly, after speaking with Mr Clarke while JR was on hold, Mr Francisco told JR that the documents were already being prepared for use in the potential legal action against her, a statement which was false and untrue for the reasons set out above. He also claimed that his management was asking for half the full amount. This statement was also untrue having regard to Mr Clarke's evidence of his conversation with Mr Francisco which makes clear that it was Mr Francisco who mentioned that amount, not Mr Clarke.
[271] Fifthly, it was at this stage of the conversation that Mr Francisco set out the three reasons why JR should pay $1,500, one of which reiterated that it would "hold off all potential legal action against you".
[272] Sixthly, I accept that as a result of what she was told by Mr Francisco, JR felt stunned and physically sick and said that she felt "pinned to the wall". I also accept her evidence that she felt flustered, anxious and "rail-roaded" into agreeing to pay a substantial amount to avoid legal proceedings. I accept JR's evidence which is to the effect that she felt that she had no choice but to comply with the demand for an up-front payment of $1,500 or face legal proceedings. In those circumstances, she offered to pay $1,000 within days and then a further $500 the following week when she received her Centrelink payments. Mr Francisco's representations, when viewed in context, constituted coercion within the meaning of s 50(1)(b) of the ACL.
360 It was said by ASIC that relevantly those circumstance were: (1) the individual being pursued was in a position of vulnerability: at [19]-[20]; (2) that individual being "stunned", "railroaded into agreeing" and placed in a position where they had no choice: at [22]; (3) being emotionally blackmailed or made to feel afraid of the consequences for one's family members of not complying: at [20]; (4) attempting to obtain an unfair advantage by "soften[ing] up" the person, in particular by assuring them that the caller would advocate for them: at [268]; and (5) making untrue claims to the person to threaten or persuade them: at [267].
361 The Corporate Defendants took issue with ASIC's reliance on ACM18 (No 2) and contended that the coercive conduct in that case was of such a different kind to the allegations in the instant case that it does not assist ASIC.
362 In so far as the Corporate Defendants submitted that coercion requires that there be threatening conduct or intimidation, that submission cannot be accepted. There is nothing in the terms of s 12DJ(1) which confines that concept in the manner contended for. As illustrated by the authorities referred to above, coercion is not limited to those concepts. As explained above, in Maritime Union, Hill J said at [61] that coercion "carries with it the connotation of force or compulsion or threats of force or compulsion negating choice or freedom to act". ACM18 (No 2) provides a good illustration. The concept of coercion imports some form of compulsion, whether by threat, force or otherwise: Australian Competition and Consumer Commission v Safety Compliance Pty Ltd [2015] FCA 211 (Safety Compliance) at [147]. The issue is what is encompassed in the concept of "otherwise", there referred to. That is, the element of compulsion is the necessary ingredient for a coercion claim, but compulsion can be brought about by conduct other than by threat or force.
363 As to the second point, to determine whether coercion has been established, one must look at both the actions of the alleged wrongdoing party and the effect those actions had on the innocent party. The same action (e.g. a threat to do harm) may have a different impact depending on the complexion of the party to whom that action is directed, and the context in which the action is taken. ASIC's submission that the key question is whether the free action or free choice of the consumer has been negated, can be seen as nothing more than a recognition that coercion includes actions undertaken involving negation of choice or freedom to act: see for example, Maritime Union at [61]; Safety Compliance at [147]. However, that does not turn the assessment of whether there has been coercion into a purely subjective inquiry (noting that ASIC did not contend that it is purely subjective). Nor can it distract from the concept underpinning coercion, that of compulsion. That is, the negation of free choice must be brought about in that context. That said, as explained below, ASIC's submission on the individual claims does, at times, suffer from the vice that the Corporate Defendants complained of, (namely, they have the tendency to focus only on the subjective inquiry). The question of negation of choice or freedom to act cannot be considered in a vacuum and must be tethered to the concept of compulsion. I will return to this below when I address ASIC's submission that the issue is whether the Consumer has given meaningful or informed consent, equating the absence of that with negation of choice. However, before doing so it is helpful to consider, inter alia, the basis of ASIC's submission and its reliance on ACM18 (No 2) as an analogous case.
364 To the extent that the Corporate Defendants submitted that the sole focus should be "whether the wrongdoer's actions were capable, objectively, of constituting coercion, rather than whether the innocent party actually had their will overborne", that submission is too narrow. Again, ACM18 (No 2) provides a good illustration, where in upholding the coercion claim, Griffiths J plainly had regard to the effects of the pressure brought to bear on the debtors, including their subjective feeling of negation of choice: ACM18 (No 2) at [272]. In McCaskey at [51], French J referred to "the manner or circumstances of a demand or communication, including the language used, the time and place at which it is made and the person to whom it is communicated". This reflects that the characteristics of the consumer, and the effect on them, in the circumstances in which the communication was made, are relevant to the assessment of whether the conduct undertaken amounted to coercion. That said, the question of the effect of the conduct on the consumer is only one of a number of relevant considerations. It does not change the nature of the inquiry. As the analysis in ACM18 (No 2) reflects, attention must be directed on the conduct of the person making the representations, in the circumstances and in the context in which that conduct occurred. As apparent from [272] of ACM18 (No 2) (recited above), Griffiths J concluded, having considered the six points raised, that the representations, considered in context, constituted coercion.
365 ASIC, in support of its submission as to the scope of coercion, sought to draw an analogy between coercion and duress, noting that duress has moved beyond the idea of a physical threat or act and, for example, there is now a well-recognised category of economic duress. It was submitted that there is an analogy between duress and coercion in that some illegitimate act has negated the free will of the consumer and, in considering that issue, it is necessary to understand how the consumer felt in the context of the transaction. ASIC contended that it can involve some other "illegitimate means of persuasion". To put it another way, it was said that duress, like coercion, can occur in a number of ways (and is not confined to a physical threat). If that is the extent of the reliance on the analogy, so much may be accepted. However, it is unnecessary to consider that submission in any more detail as it was used to support the conclusions already contended for by ASIC, relying on ACM18 (No 2), amongst others. As will be apparent from the below paragraphs, those conclusions do not rely on ASIC's submission that there is an analogy with the concept of duress. That said, it is appropriate to make four brief observations on this topic. First, care must necessarily be taken with reliance on any analogy as this application involves the statutory concept of coercion in the ASIC Act, not the common law notion of duress in the context of contracts. As illustrated in Quantum, attention must be directed to the statute. The term coercion is used, where this is one of a number of provisions in a suite of provisions which address or provide for a statutory norm of corporate behavior. As the Defendants submitted, the analogy is not precise. Second, following on from that, duress in the law of contract is focused on whether it is unconscionable for a party who issued the threat (or undertook the impugned conduct) to take benefit from the contract: Seddon N, Cheshire and Fifoot Law of Contract (11th ed, Lexis Nexis Butterworths, 2017) at [13.5]. Its effect is to relieve the innocent party of being bound to the contract. That is different from the purpose of s 12DJ. Third, in that context, care must also be taken of the authorities relied on by ASIC, for example: Barton v Armstrong [1976] AC 104, Universe Tankships Inc of Monrovia v International Transport Workers Federation [1983] 1 AC 366, Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 and Westpac Banking Corporation v Cockerill (1998) 152 ALR 267 (Cockerill). Moreover, the passages referred to must be read in their proper context. It is one thing to suggest that they illustrate that the courts recognised, in respect to duress, acts of pressure encompassing a broader concept than a physical threat. It is another thing to rely on them to change the approach to coercion in its statutory form. I take from ASIC's oral submission that it relied on them for the first point, referred to above at [357], only. In so far as ASIC relies on the passage highlighted in its written submissions from Cockerill which goes further than that, it was not elaborated on in oral submissions. No such approach is referred to by ASIC as having been applied in the statutory context of coercion. Finally, it must be remembered that the statutory concept has been interpreted to involve compulsion. That concept of itself requires there be some conduct, which is capable of compelling a person or applying pressure to act in a particular way.
366 As ASIC correctly submitted, by reference to ACM18 (No 2), coercion can be established by a combination of circumstances. The assessment of whether or not particular conduct is coercive will depend on an overall impression or evaluative judgment, considered in light of the surrounding circumstances. Those surrounding circumstances, as illustrated by ACM18 (No 2), include the personal circumstances of the person said to be coerced. By the same token, the Corporate Defendants' submission that the conduct in ACM18 (No 2) was different to that alleged in this case, can also be accepted. However, that does not detract from the nature of the circumstances in ACM18 (No 2) which were considered to be relevant in assessing the coercion claim. What this highlights is that each case will turn on its own facts. The Corporate Defendants' submission that this conduct is far removed from that discussed in the authorities as to what amounts to coercion, must be considered in that context. It is not simply a question of comparing the facts in one case with another.
367 For example, relevantly, ACM18 (No 2) involved debt collecting, and the types of considerations which may inform whether conduct was coercive in that particular context would likely be different in a sales context. It may be that conduct which could be characterised as a threat or intimidation (amounting to coercion) is more likely to arise in circumstances where a person is trying to extract payment of a debt. One may be less likely to threaten someone when making a sale, as opposed to extracting a debt. However, as discussed above, the authorities recognise that compulsion can occur in circumstances absent a threat or intimidation. Although debt collecting might be the more typical circumstance referred to in the authorities, s 12DJ prohibits the use of coercion in the supply or possible supply of financial services to a consumer. That obviously encompasses a very wide range of circumstances. A person could, depending on the circumstances, be railroaded or pressured into signing up for a financial product by a variety of different illegitimate means. Coercion can take many forms, and is not as confined as the Corporate Defendants suggest.
368 Moreover, debt collecting occurs in a particular context. For example, as Perram J observed in ACM12 at [14], "[b]y 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".
369 This is to be contrasted to the sales calls, where in most, although not all instances, the calls were unsolicited and unexpected. In respect to one Consumer (being Ms Yalumul), there is also an allegation of coercion in respect to the retention conduct. Again, that will involve a consideration of the particular circumstances. But what is clear is that the retention conduct is not necessarily about the collection of outstanding money but heavily focused on retention of the policies. That also places it in a different circumstance to those cases which considered debt collecting.
370 All that said, it is appropriate to return to ASIC's submission referred to above at [358], that ACM18 (No 2), provides a useful analogy with this case. The circumstances relied on as summarised in [360], must be viewed in context. For example, the untrue claims relied on in ACM18 (No 2) are qualitatively different from those, for example, pleaded in respect to Ms Marika. That is, false statements of imminent legal action against the Consumer who owed a debt, or statements that management is demanding full payment, as in ACM18 (No 2), are different to false and/or misleading statements, for example, as to exclusions to the policy, or that certain features were part of the standard cover, without informing Ms Marika that they were optional extras. The former, by their nature puts pressure on the Consumer who owes a debt. It is conduct which attempted to remove a consumer's freedom to act. The latter do not, of themselves, carry that connotation. Similarly, the submission that in ACM18 (No 2) the consumers were "stunned", "railroaded into agreeing" and placed in a position where they had no choice, must also be considered in context. That is, those feelings were brought about in the face of false statements of imminent legal action being launched against them. Again, this illustrates that it is not as simple as comparing cases. Moreover, it highlights that considerations relevant in one case cannot simply be taken at a level of generality (and out of context) as being illustrative of coercion in another factual circumstance. The Agents may have employed objectionable conduct but it does not necessarily follow that the Consumer was coerced within the meaning of that concept in s 12DJ.
371 In that context, it can readily be seen that unlike in ACM18 (No 2), where the Australian Competition and Consumer Commission identified three representations in the conversation which were, in the circumstances, said to be coercive, in this case the pleadings in respect to each relevant Consumer (Ms Marika's being typical of that in respect to the other Consumers), involve many integers and appear to cover a broader range of conduct. I have referred above to issues that may arise in respect to the false and/or misleading statements. Accepting that the circumstances are not to be considered in isolation, there are integers which identify some acts which, when considered by themselves (and absent the circumstances of these Consumers), may be seen as unexceptional in a sales call context, for example, making the sale in the one call. ASIC has also relied on omissions to act as integers of coercion. As a general observation, it is difficult to see how the failure of a Sales Agent to do something, for example, to take reasonable steps to confirm that the Consumer understood, could be seen to be designed to put pressure on the Consumer, or be an attempt to remove their freedom to act. That is not to suggest it might not be a relevant circumstance in which to assess the impact or effect of other conduct which took place in a coercion allegation, or be relevant to a breach of other provisions (for example, unconscionable conduct).
372 ASIC submitted that there is a myriad of ways in which compulsion can occur including "through trickery, unfair pressure and the use of unfair advantages, just as occurred in [ACM18 (No 2)]". That submission extracts the concept of unfair advantage from the reasoning in ACM18 (No 2) and the context in which it was used. There is no reference in the reasoning to trickery or unfair pressure, but these concepts appear to be relied on by ASIC as describing the reasoning in ACM18 (No 2). In ACM18 (No 2) at [268], it was observed that the agent "sought to obtain an unfair advantage in his discussions" by making the false statements he did which related to the existence of imminent legal proceedings being instituted. It cannot be extrapolated from that whereby, if an unfair advantage is obtained, that necessarily amounts to coercion in s 12DJ. The submission seeks to elevate those concepts without grounding them in the notion of compulsion. ASIC also contended that coercion is concerned with the bringing of illegitimate pressure. Attaching additional labels or descriptors to conduct does not assist in determining whether coercion has been established. It may be accepted that it can be established by different forms of conduct, but at its heart is the necessity for compulsion. The conduct undertaken must have the element of compelling a person to act or refrain from taking action.
373 As illustrated by ACM18 (No 2) at [272] recited above at [359], Griffiths J took into account the effect of the conduct on JR. He accepted her evidence that the effect of the identified conduct on her was that she believed she felt she had no choice but to comply with the demand for an up-front payment or face legal proceedings, and she acted accordingly. This evidence was not of a general nature or that she felt pressure generally but related to the effect of that conduct on her. She made a decision to act as she did because of the conduct. She was compelled or had no choice other than to act as she did. That is to be contrasted with the general nature of some of the evidence of the Consumers in this case.
374 Pausing there. Returning to ASIC's submission made in relation to most of the Consumers, that because the Consumer did not understand what they had purchased, their will was overborne in that they did not give "meaningful or informed consent" and, therefore, coercion has been established. In doing so, ASIC frequently reframed the issue under s 12DJ(1) by posing the question as whether the Consumer had given meaningful or informed consent, which had the tendency of focusing the inquiry on the subjective view of the consumer, and working backwards from that. Although, if established, it may be a fact relevant to assessing whether coercion is established, an approach which focuses only on the subjective position of the consumer, as explained above, is inconsistent with authority. ASIC cites no authority for its reliance on the phrase "meaningful or informed consent" in this context, and it appears to be an extrapolation from the concept of negation of choice. It is not the approach adopted in ACM18 (No 2), which was said to be a useful analogy. I note that the words meaningful and informed, although they appeared to be used interchangeably, have different meanings. The former would go to the genuineness of the consent, the latter, is directed to the knowledge on which the consent is based. The submission, at a general level, fails to direct attention to the concept underpinning coercion. As the authorities recited above demonstrate, coercion involves the negation of choice or freedom to act; that the consumer has been compelled by the conduct of the alleged wrongdoing party to do something or refrain from doing something (in this case, sign up to a policy). Inherent in that description of coercion is the notion that the consumer has not willingly consented to sign up to the policy because they have been forced or otherwise pressured to do so by the conduct of the alleged wrongdoing party (as a consumer's will has been overborne). It can be seen that negation of choice in this context is not necessarily the same as the failure to give meaningful or informed consent.
375 So much is illustrated in this case by the reliance on integers such as some of the false and/or misleading representations (given their nature), as explained above, or playing the PDS in the circumstances in which it was played. It is not suggested that the false and/or misleading representations (for example, a failure to explain the exclusions or that certain features are optional) compelled or pressured a consumer to purchase a policy. Rather, where that is pleaded ASIC typically submitted the false and/or misleading representations "clearly deprived [the consumer] of free choice and an ability to give informed consent". As a general proposition, a consumer may have misunderstood, not fully understood, or not been told the full details of the product being purchased, but that fact, by itself, is not the focus of this aspect of s 12DJ(1), which is directed to whether it has been established that the conduct is coercion in the manner described above. Similarly, the fact that a false and/or misleading representation has been made per se, is not the focus of the inquiry. Bearing in mind this is only one provision in a suite of provisions directed to providing statutory norms or standards of corporate behavior. Such conduct in itself may be deprecated, and may breach other standards (as illustrated by the conclusions in respect to the Consumers in this case). That is not to suggest that these matters may not be relevant in assessing whether coercion is established, but whether that is so must depend on the content of the representation and the context and circumstances in which it was made bearing in mind what must be established given the nature of coercion.
376 ASIC's submissions advanced on these claims which focus on the concept of establishing a lack of meaningful or informed consent, in effect, do not simply address the type of conduct which ASIC alleges may be a form of compulsion, but have the tendency to change the focus of the concept of coercion within the meaning of s 12DJ(1), as explained in the authorities. Failing to give meaningful or informed consent in the manner relied on does not, as ASIC contends, necessarily establish coercion in and of itself. There must be attention to the acts of the alleged wrongdoing party. There must be some form of compulsion in the conduct undertaken, which involves a negation of choice or freedom to act. As previously explained, whether coercion is established will depend on an assessment of the alleged conduct the subject of the claim, in the circumstances in which it occurred. It is timely to recall that whether any particular conversation is coercive will not depend on a line by line analysis of the call, but rather an overall impression: ACM12 at [17].
377 Before leaving this topic, it is appropriate to make an observation about the Corporate Defendants' repeated submission that the conduct does not have "the necessary element of compulsion or serious threat". The reference to "serious threat" appears to be taken from Safety Compliance at [262]-[263]:
[262] Having said that, I am not satisfied that Safety Compliance's Conduct and the despatch of the debt recovery letters can, in all of the circumstances, properly be described as coercive. The Conduct can properly be described as misleading, and actions in relation to debt recovery letters as an inept attempt at intimidation involving false representations of affiliation with debt recovery and reporting agencies. However, I do not accept that the necessary element of compulsion or serious threat is present even though the tenor of the phone calls and debt recovery letters was deliberately intimidating.
[263] As pointed out by French J in ACCC v McCaskey at [51], quite apart from content, "the manner or circumstances of a demand or communication, including the language used, the time and place at which it is made and the person to whom it is communicated" are relevant in determining whether a communication goes beyond legitimate purposes, such as drawing attention to the existence of an obligation and the consequences for non-compliance.
378 From this passage, the Defendants submit that the material question is whether the alleged wrongdoer breached the requisite normative standard because its conduct had "the necessary element of compulsion or serious threat". Prior to this passage, Farrell J recited the relevant principles from McCaskey and Maritime Union, in the manner recited in this judgment at [284]-[285], observing at [147], that coercion "generally imports some form of compulsion, whether by threat of force or otherwise". Nothing in Safety Compliance is inconsistent with the conclusion referred to above at [362]. Moreover, in so far as the Defendants pick up the phrase "serious threat", that does not appear in any other authority, as is clear from a consideration of McCaskey, Maritime Union, ACM12 and ACM18 (No 2). I doubt her Honour intended to alter the description of what amounts to coercion. Properly read, it may be that by referring to "serious threat", her Honour was simply intending to draw a distinction between innocent threats which are pursued legitimately and threats which, depending on the circumstances, would amount to coercion. For example, as her Honour notes at [261], merely threatening to institute action for the repayment of a debt, without more, is not of itself coercive. This is supported by the references which immediately follow in [263] of Safety Compliance, where her Honour seeks to explain the approach in assessing whether conduct "goes beyond legitimate purposes" by referring to French J in McCaskey at [51]. In any event, it cannot be extrapolated from the passage recited immediately above, in the context in which it appears, that where there is a threat relied on to establish a coercion claim that it must be a serious threat. That said, the seriousness or otherwise of the threat or other conduct would, depending on the factual context, be relevant to assessing whether a claim had been established.
379 Safety Compliance simply illustrates that each case turns on its own facts. The facts in that case are removed from the claims made here. To provide one example. An obvious distinction, is that in respect to a number of the claims it is alleged that the Consumer was vulnerable or at least in a weaker bargaining position, which is a relevant consideration: see McCaskey at [51]; ACM18 (No 2) at [276]. In Safety Compliance, the consumers were, relevantly, small business owners and managers. It was not contended that those consumers were in a weaker bargaining position or were otherwise vulnerable.
380 Before leaving Safety Compliance, it is appropriate to address ASIC's submission that based on [265] of the reasons, pivotal to Farrell J's finding that no coercion occurred was that:
…there was no pressure to complete the purchase through demand for immediate payment. Had there been a demand for immediate payment to complete the purchase, then the degree of intimidation inherent in a representation which leads a small business owner or manager to believe they are dealing with a government agency in a position to punish non-compliance by fines is likely to have tipped the balance into coercion of the purchase. I do not consider that an apt characterisation in this case.
381 From that ASIC submitted that in contrast to Safety Compliance, where customers were allowed a cooling-off period and time to think, there was no opportunity afforded to Consumers in this case with the payment details and direct debit authorities demanded on the call with payment then taken automatically from the Consumers. Again, this illustrates that each case necessarily turns on its facts. It does not follow that taking the debit details in the call necessarily amounts to coercion. Importantly, the significance placed in Safety Compliance on this factor is its effect on the degree of intimidation inherent in the representation (said to be coercive) that had been placed on the business owners. The nature of the representation was the significant factor. Moreover, the nature of the erroneous representation relied on was directed to compelling the customer to purchase the product.
382 Apart from a general submission that the cases where findings of coercion have been made differ markedly from the instant case, both in terms of the type and gravity of the relevant conduct, the Defendants' statement that the conduct did not have "the necessary element of compulsion or serious threat" is the only submission advanced in respect to the individual claims.
383 Tenth, in respect to eight Consumers (Ms Marika, Mr Mirrawana, Ms Yalumul, Ms Yeatman, Ms Shadforth, Mr Hussain, Mr Lewis and Ms Mirniyowan), there are also allegations in respect to retention calls, with the claims including undue harassment, coercion and unconscionability. Again, each claim and call must be considered separately to determine whether the claim has been established. However, there is a commonality in some of the Defendants' submissions in relation to the retention calls.
384 For example, the Defendants contend that the requirement to cancel the policy in writing, which is referred to by the Retention Agents in the various retention calls, cannot be an integer of undue harassment because it was a contractual obligation on the part of the Consumers. The Corporate Defendants contended that such a requirement was contained in the PDS for the relevant products during the relevant period, citing as examples, the Essentials Life Cover PDS dated 2 January 2018, Let's Insure Funeral Cover PDS dated 25 February 2014 and Let's Insure Funeral Cover PDS dated 13 February 2016. It was submitted that the PDS was St Andrew's document. St Andrew's had responsibility for, and final approval of, the PDS. The Corporate Defendants did not have authority over the PDS's. The requirement that policies can only be cancelled in writing, it was said, was a requirement imposed by St Andrew's. BlueInc Services was bound to follow this requirement. It was submitted that the fact that, in "special circumstances" the Retention Manager had discretion to accept an over the phone cancellation request when the customer was unable to send the request in writing, illustrates that this was the exception, not the rule. There can be no question that Retention Agents were told to, and expected to, follow the rule that policies had to be cancelled in writing. The Defendants submitted that it was at least an arguable interpretation of the documentation that the policy must be cancelled in writing. This requirement was also said to reflect widespread industry practice.
385 I accept ASIC's submission, that at its highest, those documents only provide a manner in which a policy may be cancelled, rather than a mandatory method. The submission as to the obligation to follow the PDS which says a policy can be cancelled at any time in writing providing 30 days-notice is only based on s 19 examinations of Mr Howden and Mr Jalba (neither of whom were called by the Defendants). This is in a context where Mr Howden also accepted (in a letter to ASIC from Select, dated 4 June 2019, in answer to a s 912C Notice) that there was a discretion to accept a cancellation "over the phone", although he describes it as applying in "special circumstances". Mr Howden noted that the discretion was not recorded in any documents (which would include the PDS), yet it existed. It follows, that whatever is in the documents, it was not a mandatory requirement. It can be inferred that the requirement that the cancellation be in writing, if it existed, was not rigidly applied. Moreover, whatever may appear in the St Andrew's PDS, such a condition of requiring cancellation in writing does not appear in the Distribution Agreements between Select and St Andrew's. None was pointed to by the Defendants. Rather, the Distribution Agreements provide that a policy can be cancelled in accordance with the Insurance Contracts Act 1984 (Cth) or at the 'request' of the customer which appears to be much broader than is suggested by the Defendants.
386 However, leaving that issue to one side, there are some flaws in the Defendants' reasoning. The submission considers the issue of cancellation in isolation from the circumstances.
387 For example, some of the Consumers were signed up for the policy in one phone call. No documentation was provided to the Consumers before being signed up, and no signature was required. From the one call they are committed to an ongoing financial obligation. It is rather ironic in those circumstances that cancellation of that policy could only be done in writing. Moreover, given that circumstance, the Defendants had no record of the Consumers' signature such as to compare any written cancellation.
388 Although the Corporate Defendants rely on the written PDS, the Consumers were not given a copy of any documentation until after they had signed up to the policy. The short form PDS which the Sales Agents used in each of the sales calls (at Mr Howden's instigation) did not contain any reference to a requirement to cancel in writing. There was no other reference in any of these sales calls to such a requirement. It follows that when the Consumers were signed up for the policy, if there was such a requirement, they had not been told it was a condition.
389 Moreover, as accepted by the Corporate Defendants, there was a discretion to accept a cancellation over the telephone, although it was suggested this would only apply in special circumstances. An example given by Mr Howden of a special circumstance, referred to in his letter to ASIC, dated 4 June 2019, was where a customer had no access to a post office. In some of the calls (see for example [563]-[564], [854]-[864], [1080]-[1081] below), where the Consumers stated that they could not write (presumably because some had poor literacy skills), it is difficult to understand why such a discretion would not be exercised. Moreover, ASIC's case in the retention claims relies on a number of other circumstances including, in some instances, the Consumer expressly stating they did not want the policy and could not pay the premiums (and having failed to pay premiums, sometimes repeatedly). In closing, the Defendants' submission that because a person could not write does not mean they could not have asked someone else to write for them, and it is a simple requirement, is to advance a submission in isolation from the content of the calls. The Defendants' submission that "[w]riting makes things clear, and that's why in many written contracts, something that's required to be done is required to be done in writing", is rather incongruous given the financial consequences of signing up to a policy over the telephone (without, in many cases, the Consumer having first seen any of the underlying policy documentation). To submit that the requirement "is not a particularly onus requirement" also fails to take account of the circumstances. The consequence on occasions of the continued insistence of the need for the policy to be cancelled in writing, is that despite Consumers wishing to cancel their policy because they were unable to pay the premiums, they continued to have those premiums charged, and on occasions the premiums even increased (see for example [493]).
390 I note also in this context, that the Corporate Defendants had a discretion to cancel a policy if the premiums were a month in arrears. For example, in the PDS given to Ms Marika after she had been signed up to a policy, it stated that under the heading, "When cover ends", that the policy would end in certain circumstances including "the date we cancel your policy due to non-payment of premiums". The PDS expressly provides "[w]e can cancel your Policy when it is due and remains unpaid for more than one month". In that context, and where the Consumer expressly stated that they could not pay the premium, it is difficult to understand the insistence on cancelling the policy in writing, given that in many cases it resulted in the Consumer continuing (against their wishes) to accrue debt to the Corporate Defendants. Indeed, that is what eventually occurred in relation to the policies held by Ms Yalumul, Ms Yeatman, Ms Shadforth, Ms Gaykamangu, Ms Campbell, Mr Lewis, and Ms Mirniyowan, although for most it was only after many unsuccessful attempts to cancel their policy and further debts accruing.
391 It is in that light that the Corporate Defendants' submission, that requiring the policy to be cancelled in writing was in accordance with industry standards, must be considered.
392 Whether, in any given call, the statement that a policy can only be cancelled in writing was made in order to prevent or forestall cancellation and otherwise to make it harder for the Consumers to cancel their policies, must be considered in the above context. Whether it was being used as a road block, as contended for by ASIC, turns on the content of the particular call.
393 It was also submitted by the Corporate Defendants, in respect to the retention conduct, that it was reasonable for Retention Agents to assume a Consumer would wish to maintain coverage for a policy, especially where payments had already been made, and that the Retention Agents' conduct during the calls is to be assessed in that context.
394 This submission is at such a level of generality so as to be of little assistance. As explained below, in respect to some of the calls, the Consumers made it abundantly clear that they sought to cancel the policy and/or did not have the financial means to pay the premiums. In respect to some, for example, Mr Mirrawana, his representative made it plain that he did not know what he had entered into. From a consideration of the content (and by reference to the audio) of at least some of the calls, that the Consumer did not want the insurance policy and their inability to comply with a requirement to cancel the policy in writing, would have been, or ought to have been, readily apparent to the Retention Agents. In some calls, it was not reasonable for the Retention Agents to assume that a Consumer would wish to maintain coverage for a policy, and if that was so at the outset of a call, they ought to have been quickly dissuaded from that assumption. In many instances, there were a large number of calls by Retention Agents to a Consumer, and although it might not have been by the same Agent, they were all on behalf of the Corporate Defendants, and their actions are attributed to them.
395 The same can be said of the Corporate Defendants' submission that:
There is nothing anti-consumer about Retention Agents offering or attempting to persuade a Consumer to continue a policy with a lowered premium and benefit rather than cancel it, particularly if the reason the Consumer gave for wanting to cancel the policy was that they couldn't afford the current premiums. It certainly does not constitute undue harassment to make such an offer in a polite and professional way, even on repeated occasions…
396 Such conduct must be considered in the context in which it occurred, and not in a vacuum.
397 Moreover, the performance of Retention Agents was measured at the time against key performance indicators, which included their ability to collect premium payments and achieve a retention rate of over 50 percent. Any submission that what was done was necessarily motivated by the best interests of the Consumers is to be considered in that context.
398 Again, attention must be focussed on the individual calls.