Australian Securities and Investments Commission v SunshineLoans Pty Ltd

LOGAN J: 1 On 5 July 2024, the Court, in the original jurisdiction and as constituted by Derrington J, made two orders. One was a declaratory order. The other was a recusal order. The declaratory order was in these terms: 1. Pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) for the period between 1 July 2016 and 2 November 2020, and pursuant to s 166(2) of the National Consumer Credit Protection Act 2009 (NCCPA) for the period between 13 March 2019 and 2 November 2020, SunshineLoans Pty Ltd: (a) by entering into 670,609 Small Amount Credit Contracts (SACCs) which each provided for it to charge a fee of $35.00 for agreeing to amend the terms of the SACC (or part thereof) (Amendment Fee), contravened s 24(1A)(a) of the National Credit Code (being Sch 1 to the NCCPA) on 670,609 occasions by entering into SACCs on terms which imposed a monetary liability (being the Amendment Fee) prohibited by ss 23A(1)(b) and 31A(1) of the National Credit Code; (b) by charging the Amendment Fee to consumers on 12,693 occasions, contravened s 24(1A)(b) of the National Credit Code on 12,693 occasions in that it required payment of an amount in respect of a monetary liability (being the Amendment Fee) that could not be imposed consistently with the National Credit Code because it was prohibited by ss 23A(1)(b) and 31A(1) of the National Credit Code; (c) by accepting payment of the Amendment Fee from consumers on 8,376 occasions, contravened s 24(1A)(b) of the National Credit Code on 8,376 occasions in that it accepted payment of an amount in respect of a monetary liability (being the Amendment Fee) that could not be imposed consistently with the National Credit Code because it was prohibited by ss 23A(1)(b) and 31A(1) of the National Credit Code; (d) by reason of the conduct identified in declarations (a), (b) and (c) above, SunshineLoans Pty Ltd also contravened s 47(1)(d) of the NCCPA. 2 The recusal order was in these terms: 1. The following proceedings be transferred to the National Operations Registrar for the purposes of reallocation to another judge of the Court: (a) Australian Securities and Investment Commission v SunshineLoans Pty Ltd (ACN 092 821 960) (QUD 190 of 2022); and (b) SunshineLoans Pty Ltd (ACN 092 821 960) v Australian Securities and Investment Commission & Anor (QUD 338 of 2024). 2. The costs in the recusal application be costs in the penalty hearing. 3. The applications for adjournment be dismissed. 4. There be no order as to costs of the adjournment applications. 3 As can be seen on the face of the recusal order, although it is made in QUD 190 of 2022 and entails a recusal by his Honour in respect of that proceeding, it also entails a recusal by his Honour of further judicial responsibility for a separate proceeding, QUD 338 of 2024. The court file in respect of QUD 338 of 2024 does not contain a separate recusal order. However, it is quite plain that the substance of the recusal order made on 5 July 2024 was intended also to have application to QUD 338 of 2024. 4 The foundation for QUD 190 of 2022 is an application by the Australian Securities and Investments Commission (the Commission) for the enforcement of the National Consumer Credit Protection Act 2009 (Cth) (NCCPA) by the seeking of relief against SunshineLoans Pty Ltd (SunshineLoans) in respect of alleged contraventions of that Act in the course of its money lending business. More particularly, the allegation made by the Commission is that SunshineLoans charged customers, who had entered into what the NCCPA terms "small amount credit contracts", fees which were prohibited by that Act. The remedies sought by the Commission in the enforcement proceeding extend to declaratory relief in respect of contraventions, injunctions, and the imposition of civil penalties. 5 In April this year, Derrington J reached particular conclusions in respect of the contraventions alleged: see Australian Securities and Investments Commission v SunshineLoans Pty Ltd (No 2) [2024] FCA 345. At that time, his Honour made case management orders which envisaged a later hearing in respect of the relief to follow from the reasons for judgment which he had published. Suffice it to say the declaratory orders of 5 July 2024 were a sequel to the later case management envisaged in April. 6 On reflection and after hearing submissions from the parties flowing from the reasons for judgment delivered in April, his Honour decided that he should recuse himself from further hearing QUD 190 of 2022, as well as a separate but not unrelated proceeding instituted by SunshineLoans against the Commission and another under the Administrative Decisions (Judicial Review) Act 1977 (Cth). The reasons for the recusal order were the subject of brief reference by his Honour on the day the recusal order was made, but his Honour made it plain at that time that he would later publish formal reasons for the recusal order. His Honour did so on 18 July 2024: see Australian Securities Investments Commission v SunshineLoans Pty Ltd (No 3) [2024] FCA 786. 7 The Commission has applied for leave to appeal against the recusal order. The recusal order is undoubtedly an interlocutory judgment for the purposes of s 24(1A) of the Federal Court of Australia Act 1976 (Cth) (FCA Act). That subsection provides that an appeal may not be brought from a judgment of a single judge that is an interlocutory judgment unless leave to appeal is granted. The FCA Act by s 4 defines "judgment" to mean materially "A judgment, decree or order, whether final or interlocutory …". 8 The time limit within which to seek leave to appeal is prima facie within 14 days after the date on which the interlocutory judgment concerned was made. In this instance, however, the Commission's consideration on whether or not to seek leave to appeal was necessarily and, with respect, properly delayed pending consideration by the Commission of the formal reasons for judgment, which although delivered, with respect, with considerable expedition, were nonetheless not delivered until 18 July 2024. 9 Further, it is quite apparent, both from the very nature of the proceeding in which his Honour decided he ought to recuse himself, as well as the evidence read for the Commission in support of its application for leave to appeal, that the question as to whether, in the circumstances, recusal was necessary was one of considerable wider, and undoubtedly public, importance in terms of civil penalty practice and procedure in this country. 10 It is necessary to put that importance in a general way, because it is a frequent practice of the Parliament in relation to particular norms of behaviour to seek to require compliance with those norms via the provision of civil penalties for their contravention. Such civil penalties have as their object deterrence by putting a price on any deviation or contravention which is economically unacceptable: see Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450 (Pattinson). One only needs to look to Pattinson to realise that the civil penalty regime at issue in the present proceeding is by no means unique to the NCCPA. 11 The considerations in respect of the granting of whether to grant leave to appeal were long ago stated by the Full Court in Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 (Decor v Dart). 12 What one must not do in relation to an application for leave to appeal is to reach any final conclusion in respect of the merits of the proposed appeal. One must ask, rather, whether the proposed grounds of appeal are sufficiently arguable to warrant a grant of leave. That is decided at an impressionistic level, nothing more. 13 It was, with respect, a most unusual course for a judge to follow, to disqualify himself at the conclusion of a determination of liability in respect of contraventions from proceeding further to determine penalty. I say unusual because it is by no means uncommon, indeed usual, as the Commission correctly put in its submissions, for civil penalty proceedings to be divided as between an initial determination of liability and then, if liability be determined, a second phase in which consequential relief, including the determination of civil penalties, then falls for determination. 14 Of course, each case must be inherently fact-specific as to whether occasion for disqualification arises, and the interlocutory judgment delivered by his Honour is eloquent as to his Honour's consideration that such an occasion had arisen. Nonetheless, it is again by no means uncommon in civil penalty proceedings for judges necessarily to have to reach views about relative credibility of witnesses who may in turn be witnesses whose evidence becomes relevant in the context of whether or not to impose civil penalties and, if so, in what amount, to say nothing of consequential relief. 15 Further, it is by no means difficult to see how, by analogy, the recusal outcome in this case might be relevant to whether judges determining criminal proceedings by single-judge trial should disqualify themselves after reaching a conclusion as to guilt which entailed credibility findings, or, for that matter, whether a judge entertaining a contempt proceeding ought likewise to disqualify himself or herself after reaching a conclusion that a contempt had been committed. 16 Although SunshineLoans formally opposed the granting of leave to appeal, its counsel, with respect, quite appropriately recognised that there were substantive wider questions at large in the application for leave to appeal made by the Commission, albeit questions that were necessarily fact-specific in terms of their origin. 17 While the Commission does need an extension of time, and it is always necessary that there be an acceptable explanation in respect of delay, the granting of an extension and the prospective merits of an application for leave to appeal are separate, but by no means unrelated, subjects. 18 Here, and as a matter of impression, I am well persuaded that the Commission has, on the grounds set out in the draft notice of appeal, an arguable case. I am also well persuaded that there were good reasons, both in terms of awaiting the formal reasons for judgment for the recusal order, as well as a need on the part of the Commission to make strategic value judgements at the highest level, which explain the slight delay of about a fortnight in applying for leave to appeal. The grant of leave to appeal should extend to so much of the order as also relates to proceeding QUD 338 of 2024, even though there has not been a formal order separately made in that proceeding. 19 I turn then to the application made by SunshineLoans. It is a very moot point, in my respectful view, whether SunshineLoans needs leave to appeal. I make that observation respectfully, having had my attention drawn by Mr Brady KC and Mr Cleary to a judgment of the Full Court on the subject of whether leave to appeal is required as a sequel to a judgment which has declared contraventions of a regulatory regime have occurred: see Monash Health v Singh (2023) 327 IR 196 (Monash Health), at [27] - [46]. 20 It is not, with respect, apparent from the judgment of the Full Court in Monash Health, and notwithstanding the number of cases to which reference is made, that the Full Court's attention was drawn to a much earlier judgment of the Full Court which, on my reading of it, would suggest that a judgment of the kind found in the declaratory order is not interlocutory: see Arrowcrest Group Pty Ltd v Gill (1993) 46 FCR 90, at 100 - 101. 21 In Damorgold Pty Ltd v J.A.I. Products Pty Ltd [2014] FCA 448, a case to which reference is made in Monash Health, Tracey J concluded that a judgment akin to the declaratory order made in the present case was final rather than interlocutory. That was certainly a view that I reached of the position recently in obiter remarks in Hallam v Tancred [2024] FCA 837 (Hallam), although it must be said of those, in turn, that I did not refer to Monash Health. 22 However all this may be, and to adopt an approach which I did in Hallam, if leave were necessary, and Monash Health certainly suggests that it is, the case is one, undoubtedly, in my view, where leave should be granted. 23 The orders concerned have determined contraventions. The challenge which SunshineLoans seeks to make to the declaratory orders is, again applying the test as set out in Decor v Dart and having regard to the grounds (numerous though they may be) in the draft notice of appeal and the related outline of submissions, at least sufficiently arguable to warrant a grant of leave. The Commission did not press that the case was so clear as to warrant a peremptory refusal of leave. 24 Once again, an extension of time would be necessary if indeed leave to appeal is necessary. Once again also though, the decision by SunshineLoans came necessarily to be affected by the fate of any decision which the Commission took in respect of a challenge to the recusal order. It would have been a complete misuse of Court time for there to have been separate leave to appeal hearings. I am well satisfied that there is an acceptable explanation for the, again, slight delay of less than a fortnight by SunshineLoans in applying, if only out of an abundance of caution, for leave to appeal. 25 I propose, therefore, to order that the Commission be granted leave to appeal against the recusal order on terms that the grant of leave be treated also as a grant of leave in respect of so much of that order as related to QUD 338 of 2024 and, insofar as the same is necessary, that the Commission be granted the requisite extension of time to the date on which it filed its application for leave to appeal. 26 As to the application by SunshineLoans, and for reasons which I have set out, I propose to make the order in slightly different terms by ordering that, insofar as the same may be necessary, SunshineLoans be granted leave to appeal against the declaratory order and a related extension of time to the date upon which it filed its application for leave to appeal. 27 I propose to reserve costs, as requested by the parties, in respect of each of the applications. In so doing, I note that SunshineLoans foreshadowed that it may seek a special order in respect of costs which would at least entail a departure from costs following the event in respect of the Commission's appeal, were that appeal to be successful. It would, of course, be inappropriate to reach any concluded view about any such costs application. I do nothing more than note that the case is one where strategic issues of public importance can be seen to be at large in relation to the Commission's appeal for all of the reasons which I have already given. Whether or not to make any special order in respect of costs is a decision for the Full Court. 28 As to the length of time and for the assistance of the registrars whose duty it is to formulate an appeal list, I note that counsel have estimated that the appeals consequent upon the grant of leave would, if heard together (and I shall so order) and given the number of issues at large, be of three days duration. That joint estimate does not strike me as in any way an unreasonable one. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Logan.