Clean Energy Regulator v MT Solar Pty Ltd

Clean Energy Regulator v MT Solar Pty Ltd - [2013] FCA 205 - FCA 2013 case summary — Zoe

[10]

Contraventions by MT Solar Pty Ltd

Renewable Energy Regulator be removed as the applicant and Clean Energy Regulator be added as the applicant in the place of Renewable Energy Regulator.
In the period from 2 August 2010 to 14 October 2010, the first respondent (MT Solar) contravened s 24B(1) of the Renewable Energy (Electricity) Act 2000 (Cth) on 17 occasions in that: 2.1 It provided renewable energy certificate assignment forms and other information to Renewable Energy Traders Pty Ltd in relation to the installation of each of the solar power generation systems on the dates and at the locations specified in rows 1 to 17 in Table A below; 2.2 The forms and other information falsely claimed that each of the systems had been installed by a person who: 2.2.1 was accredited to perform those installations under the Clean Energy Council accreditation scheme; and 2.2.2 in the case of the installations described in rows 5 to 17, held an unrestricted electrical licence to perform electrical work in NSW; 2.3 Renewable Energy Traders Pty Ltd relied upon that information to create renewable energy certificates for each system, as specified in rows 1 to 17 in Table A below, that it was not entitled to create; and 2.4 It could reasonably have been expected that Renewable Energy Traders Pty Ltd would rely upon the false and misleading information in that way.
In the period from 13 October 2010 to 4 November 2010, MT Solar contravened s 24B(1) of the Renewable Energy (Electricity) Act 2000 (Cth) on three occasions in that: 3.1 It provided renewable energy certificate assignment forms and other information to Greenbank Environmental Pty Ltd in relation to the installation of each of the three solar power generation systems on the dates and at the locations specified in rows 18 to 20 in Table A below; 3.2 The forms and other information falsely claimed that each of the systems had been installed by a person who: 3.2.1 was accredited to perform those installations under the Clean Energy Council accreditation scheme; and 3.2.2 held an unrestricted electrical licence to perform electrical work in NSW; 3.3 Greenbank Environmental Pty Ltd relied upon that information to create renewable energy certificates for each system, as specified in rows 18-20 in Table A below, that it was not entitled to create; and 3.4 It could reasonably have been expected that Greenbank Environmental Pty Ltd would rely upon the false and misleading information in that way.

[14]

Contraventions by Barry Kibblewhite 7. In the period from 2 August 2010 to 4 November 7.1 MT Solar and Green Master contravened s 24B(1) 7.2 Mr Kibblewhite was knowingly concerned in 7.2.1 he undertook the physical installation of, 7.2.2 in each case he provided false information 7.2.3 in each case he provided false information 7.2.4 he knew that the false information would 7.2.5 he knew that Renewable Energy Traders Pty 7.2.6 he knew that Renewable Energy Traders Pty TABLE A - MT SOLAR INSTALLATIONS No Installation Date Location of installation 1 2/8/2010 4 Currawong Avenue Lane Cove West NSW 170 2 12/08/2010 11 Artillery Crescent Holsworthy NSW 189 3 17/08/2010 55 Statham Avenue North Rocks NSW 4 18/08/2010 6 Windhover Court Bella Vista NSW 5 21/08/2010 50 Casaurina Road Alfords Point NSW 6 2/09/2010 23 Karowa Street Bomaderry NSW 7 6/09/2010 10 Bay Road Russell Lea NSW 8 7/09/2010 20 Malory Avenue West Pymble NSW 9 9/09/2010 36 Willunga Road Berowra NSW 10 13/09/2010 86 Railway Parade Canley Vale NSW 11 14/09/2010 4 Blythe Avenue Glenwood NSW 12 16/09/2010 28 Prospect Road Summer Hill NSW 13 17/09/2010 83 Brown Street Penrith NSW 14 20/09/2010 13 Farrier Way Kellyville Ridge NSW 15 30/09/2010 3 Flemington Street St Johns Park NSW 185 16 6/10/2010 77 Woolcott Street Earlwood NSW 17 6/10/2010 100 Northcote Street Canterbury NSW 18 13/10/2010 Unit 1/188 Cressy Road Ryde NSW 19 22/10/2010 62 Valentia Avenue Lugarno NSW 20 24/10/2010 8 Ruby Street Hurstville NSW 2010, the fifth respondent (Mr Kibblewhite) contravened s 24B(2) of the Renewable Energy (Electricity) Act 2000 (Cth) on 22 occasions because: of the Renewable Energy (Electricity) Act 2000 (Cth) as described in paragraphs 2, 3 and 4 above: and each of those contraventions in that: and performed electrical wiring work associated with, each of the solar power generation systems on the dates and at the locations specified in Tables A and B below; to MT Solar and to Green Master (as the case may be) that he was accredited to perform those installations under the Clean Energy Council accreditation scheme; to MT Solar and Green Master (as the case may be) that he was authorised to perform the electrical work as though he held an unrestricted licence to perform such work in NSW; be provided by MT Solar and Green Master (as the case may be) to Renewable Energy Traders Pty Ltd and Greenbank Environmental Pty Ltd (as the case may be); Ltd and Greenbank Environmental Pty Ltd (as the case may be) could reasonably be expected to rely upon the false information to create renewable energy certificates for each of the installations, as specified in Tables A and B below; and Ltd and Greenbank Environmental Pty Ltd (as the case may be) would not be entitled to create those certificates. No of RECs REC Trader Renewable Energy Renewable Energy 153 Renewable Energy 189 Renewable Energy 166 Renewable Energy 189 Renewable Energy 166 Renewable Energy 185 Renewable Energy 153 Renewable Energy 339 Renewable Energy 153 Renewable Energy 153 Renewable Energy 228 Renewable Energy 185 Renewable Energy Renewable Energy 166 Renewable Energy 166 Renewable Energy 166 Greenbank 166 Greenbank 228 Greenbank

[17]

Injunctions 13. Pursuant to s 154S of the Renewable Energy (Electricity) Act 2000 (Cth), MT Solar: 13.1 Be restrained from providing false or misleading information to any person in relation to the creation of renewable energy certificates associated with the installation of any solar power generation system by or on behalf of MT Solar; and 13.2 Take all reasonable steps to ensure that, before providing information to any person in relation to the creation of renewable energy certificates associated with the installation of any solar power generation system by or on behalf of MT Solar, the information is not false or misleading. 14. Pursuant to s 154S of the Renewable Energy (Electricity) Act 2000 (Cth), Green Master Building Solutions Pty Ltd: 14.1 Be restrained from providing false or misleading information to any person in relation to the creation of renewable energy certificates associated with the installation of any solar power generation system by or on behalf of Green Master; and 14.2 Take all reasonable steps to ensure that, before providing information to any person in relation to the creation of renewable energy certificates associated with the installation of any solar power generation system by or on behalf of Green Master, the information is not false or misleading. 15. Pursuant to s 154S of the Renewable Energy (Electricity) Act 2000 (Cth), Mr Liu take reasonable steps to ensure that any company in respect of which he: 15.1 is an executive officer; and 15.2 is in a position to influence the conduct of the company; does not provide false or misleading information to any person in relation to the creation of renewable energy certificates associated with the installation of any solar power generation system by that company. 16. Pursuant to s 154S of the Renewable Energy (Electricity) Act 2000 (Cth), Mr Zhu take reasonable steps to ensure that any company in respect of which he: 16.1 is an executive officer; and 16.2 is in a position to influence the conduct of the company; does not provide false or misleading information to any person in relation to the creation of renewable energy certificates associated with the installation of any solar power generation system by that company. 17. Pursuant to s 154S of the Renewable Energy (Electricity) Act 2000 (Cth), Mr Kibblewhite be restrained from providing false or misleading information to any person in relation to the creation of renewable energy certificates associated with the installation of any solar power generation system by him.

[22]

REASONS FOR JUDGMENT (REVISED) 1 These proceedings were commenced on 28 March 2012 by the Renewable Energy Regulator which, at that time, had responsibility under the Renewable Energy (Electricity) Act 2000 (Cth) (the REE Act) for, amongst other things, enforcing the provisions of the REE Act. 2 The powers, duties, functions and responsibilities of the Renewable Energy Regulator under the REE Act were transferred to the Clean Energy Regulator (the regulator) when that body was established under the Clean Energy Regulator Act 2011 (Cth). 3 Under the Clean Energy Regulator Act 2011 (Cth), the regulator is established as a body corporate with perpetual succession (s 11 and s 16). Under that Act, the regulator has such functions as are conferred upon it by a climate change law (s 12). The regulator has power to do all things necessary or convenient to be done for or in connection with the performance of its functions. 4 In effect, by reason of the operation of the provisions to which I have referred at [1]-[3] above, the regulator has replaced the Renewable Energy Regulator as the relevant regulatory authority under the REE Act. I propose to make an order reflecting that change. The consequence of my making that order will be that the regulator will be substituted as the applicant in the present proceedings. 5 In the present proceedings, the regulator seeks declarations, injunctions, pecuniary penalties and costs in respect of contraventions by the first, second and fifth respondents of s 24B of the REE Act and by the third and fourth respondents of s 154N(1) of that Act. 6 The first and second respondents (MT Solar Pty Ltd (MT Solar) and Green Master Building Solutions Pty Ltd (Green Master)) are alleged to have contravened s 24B(1) of the REE Act by providing false or misleading information to another person in relation to, or in relation to the installation of, small generation units (being grid-connected solar power generation systems) in circumstances where the supply of that information resulted in the creation of renewable energy certificates (RECS) under Pt 2, Div 4, subdiv BA of the REE Act which the entity that created the RECS was not entitled to create. 7 The third and fourth respondents (Bo Liu (Mr Liu) and Yongxin Zhu (Mr Zhu)) are said to have contravened s 154N(1) of the REE Act because, as executive officers of MT Solar and Green Master respectively who were in a position to influence the conduct of those corporations in relation to the contraventions of s 24B(1) committed by each of those corporations, they failed to take all reasonable steps to prevent those contraventions. 8 The fifth respondent (Barry Eli Kibblewhite) (Mr Kibblewhite) is alleged to have contravened s 24B(2) of the REE Act in that he undertook the physical installation of, and performed electrical wiring work associated with, the relevant solar power generation systems in circumstances where he was not authorised to perform that electrical work. The regulator submitted that the alleged contraventions on the part of Mr Kibblewhite led to the creation of RECS in circumstances where they should not have been created. In this way, Mr Kibblewhite is said to have been knowingly concerned in the contraventions of s 24B(1) of the REE Act committed by MT Solar and Green Master. 9 Each of MT Solar, Green Master, Mr Liu and Mr Zhu admits the contraventions alleged against each of them respectively. Each of those respondents filed a Defence. None of those respondents put in issue any matter pleaded by the regulator in its Statement of Claim. Those respondents and the regulator agreed certain facts and matters for the purposes of these proceedings. Those facts and matters are specified in a Statement of Agreed Facts dated 2 October 2012 and filed on 18 October 2012 which has been signed by a representative of the regulator and either by or on behalf of each of those respondents. That Statement of Agreed Facts became Exhibit A at the hearing. I have attached a copy of that Statement of Agreed Facts (without annexures except Table A and Table B) to these Reasons for Judgment as Attachment "A". 10 Mr Kibblewhite was validly served with the regulator's Originating Application and accompanying Statement of Claim on 24 July 2012. He has also been informed of each set of orders which I made in the proceedings after that date. I am satisfied that Mr Kibblewhite has been well aware of the existence and nature of the present proceedings since July 2012 and that he was informed of the hearing date well in advance of the hearing. 11 On 10 August 2012, I ordered Mr Kibblewhite to file and serve his Defence by 31 August 2012. Notwithstanding the terms of that order, Mr Kibblewhite has not filed a Defence. In addition, Mr Kibblewhite has taken no part in the proceedings. He did not appear at the hearing and was not represented at the hearing. He has ignored the proceedings. 12 At the commencement of the hearing, upon the application of the regulator, I made an order, pursuant to r 30.21(1)(b)(i) of the Federal Court Rules 2011 that the hearing proceed generally insofar as it concerned Mr Kibblewhite notwithstanding his absence. 13 In light of the co-operation given by the first, second, third and fourth respondents to the regulator and the terms of the Statement of Agreed Facts agreed amongst those parties, I will proceed to deal with the regulator's claims for relief against those respondents by considering the submissions made on behalf of the regulator, the submissions made on behalf of the first to fourth respondents and the Statement of Agreed Facts. 14 As far as the regulator's case against Mr Kibblewhite is concerned, it is necessary for the regulator to prove the contraventions against him before any question of relief can arise. In order to prove its case against Mr Kibblewhite, the regulator read and relied upon the following affidavits: (a) The affidavit of Elizabeth Margaret-Anne Rosenberg affirmed on 22 October 2012; (b) The affidavit of Michael John Woodbridge sworn on 22 October 2012; and (c) The affidavit of Peter Ian Bache sworn on 23 October 2012. 15 I am satisfied that the evidence to which I have referred at [14] above proves the facts set out in the Statement of Agreed Facts and also proves the contraventions alleged against Mr Kibblewhite. 16 The essence of the case put and proven against Mr Kibblewhite is: (a) Knowing that, in order to perform the installations for MT Solar and Green Master which he was ultimately retained to perform, he was required to be: (i) Accredited under the Clean Energy Council (CEC) accreditation scheme to undertake those installations; and (ii) Appropriately qualified under relevant NSW regulatory requirements which included a requirement that the electrical wiring associated with the installation had to be undertaken by a person holding an unrestricted licence for electrical work issued by the relevant NSW authority he provided false information and falsely represented to both MT Solar and to Green Master that he was so accredited and qualified in circumstances where he did not hold the relevant CEC accreditation and did not hold an unrestricted licence covering the relevant electrical work issued by the relevant NSW authority. In order to present this false picture, he created false documents. (b) As intended and expected by Mr Kibblewhite, both MT Solar and Green Master procured home owners where such installations were carried out to assign to MT Solar or to Green Master (as the case may be) the home owners' entitlement to create RECS as a result of effecting those installations and then passed on to REC traders the information provided by Mr Kibblewhite to them in connection with the transfer of the home owners' entitlements to create RECS in return for cash in circumstances where the REC traders in question could be expected to and did in fact rely upon the information provided by Mr Kibblewhite in order to create and trade the particular RECS and thereby contravened s 24B(1) of the REE Act. (c) The details of the installations, of the RECS issued and of the REC traders involved are set out in Table A and Table B attached to the Statement of Agreed Facts. (d) The conduct summarised in subpars (a) to (c) above constituted contraventions of s 24B(1) of the REE Act by MT Solar and by Green Master and of s 24B(2) by Mr Kibblewhite. Mr Kibblewhite was knowingly concerned in the contraventions of s 24B(1) of the REE Act committed by MT Solar and Green Master (as to which see s 24B(2)(c)) and may also have contravened other subpars of s 24B of the REE Act, in particular, subpars (a) and (b) of s 24B(2). 17 Of course, in order to prove its case against Mr Kibblewhite, the regulator must first prove its case against the primary contravenors, MT Solar and Green Master. I am satisfied that it has done so.

[23]

The Regulatory Framework under the REE Act 18 Section 3 of the REE Act contains the objects of that Act. In that section, those objects are specified as follows: The objects of this Act are: (a) to encourage the additional generation of electricity from renewable sources; and (b) to reduce emissions of greenhouse gases in the electricity sector; and (c) to ensure that renewable energy sources are ecologically sustainable. This is done through the issuing of certificates for the generation of electricity using eligible renewable energy sources and requiring certain purchasers (called liable entities) to surrender a specified number of certificates for the electricity that they acquire during a year. Where a liable entity does not have enough certificates to surrender, the liable entity will have to pay renewable energy shortfall charge. A partial exemption relating to one or more emissions-intensive trade exposed activities may be taken into account in working out a liable entity's renewable energy certificate shortfall for a year. If it is, it will reduce the renewable energy shortfall charge otherwise payable. 19 Part 2 of the REE Act creates a scheme whereby persons who generate renewable electricity may create RECS. Under the REE Act, where a liable entity does not have enough RECS to surrender, the liable entity will have to pay a renewable energy shortfall charge. RECS are used to avoid or reduce the amount of renewable energy shortfall charges that liable entities who acquire electricity have to pay. The liable entities will generally acquire certificates by purchasing them. 20 A person who, during a year, makes a relevant acquisition of electricity is called a liable entity (s 5 and s 35 of the REE Act). A relevant acquisition of electricity is a wholesale acquisition of electricity or a notional wholesale acquisition of electricity (ss 5, 31, 32 and 33 of the REE Act). 21 RECS are created by people who generate power from accredited power stations using eligible energy sources where the amount generated exceeds the relevant 1997 eligible renewable power base line. RECS are also created for approved installations of solar water heaters or small generation units (as defined in s 5 of the REE Act). RECS are created based upon the amount of electricity generated from renewable energy sources. The higher the output from such sources, the more RECS are created. 22 A small generation unit, as defined in s 5 of the REE Act, is a device that generates electricity that is specified by the regulations to be a small generation unit. The grid-connected solar power generation systems the subject of the installations in question in the present proceedings were all small generation units within the meaning of s 5. 23 A person needs to be registered under Pt 2, Div 2 of the REE Act before that person can create a REC. A REC must be registered when it is created. Every transfer of a REC must also be registered. The initial registration of RECS is done online in an internet-based registry managed by the regulator. 24 When a certificate has been surrendered by a liable entity, it ceases to be valid. 25 Part 2, Divs 1-4 of the REE Act govern the creation, trading and extinguishment of RECS. 26 RECS may be transferred after they have been registered by the regulator. 27 Part 3 and Pt 4 of the REE Act impose a proportional liability on wholesale purchases of electricity to hold a prescribed number of RECS in each year (s 35 and s 39 of the REE Act). Liable entities can satisfy the statutory liability by surrendering RECS to the regulator. 28 The intention of the legislature in creating the scheme which I have described at [18]-[27] above is to put in place a market incentive to create renewable energy through the creation, registration, transfer and surrender of RECS in accordance with the statutory scheme. As submitted by the regulator in the present proceedings, in its implementation of these measures to achieve renewable energy targets, the REE Act is a cornerstone of Australia's response to climate change and thereby contributes to the fulfilment of Australia's international obligations in respect of climate change. 29 The integrity of the REC market is secured by the regulatory provisions of the REE Act. The regulator is charged with the responsibility of administering the regulatory framework established by the REE Act in order to ensure the efficient and fair operation of the REC market and in order to support the achievement of the objects of the REE Act. 30 From 2001 to 2010, there was a single certificate commodity, the REC. Since 1 January 2011, RECS have been reclassified into two types of certificate: Large-Scale Generation Certificates and Small-Scale Technology Certificates. All of the contraventions in the present case occurred in the period from August to October 2010. Therefore, those contraventions relate only to the creation of RECS and not to the types of certificate created from 1 January 2011. 31 Section 24B of the REE Act provides as follows: 24B False etc. information resulting in improper creation of certificates under Subdivision B or BA - civil penalty (1) A person (the first person) contravenes this subsection if: (a) the person provides information to another person (the second person) in relation to, or in relation to the installation of, a solar water heater or a small generation unit; and (b) the information: (i) is false or misleading in a material particular; or (ii) omits a matter or thing without which the information is misleading in a material particular; and (c) the second person relies on the information to create certificates under Subdivision B or BA in relation to the solar water heater or small generation unit; and (d) it could reasonably be expected that the second person would so rely on the information; and (e) the second person's reliance on the information results in the second person creating certificates under that Subdivision, in relation to the solar water heater or small generation unit, that the second person is not entitled to create. Ancillary contraventions (2) A person must not: (a) aid, abet, counsel or procure a contravention of subsection (1); or (b) induce, whether by threats or promises or otherwise, a contravention of subsection (1); or (c) be in any way, directly or indirectly, knowingly concerned in, or party to, a contravention of subsection (1); or (d) conspire with others to effect a contravention of subsection (1). Civil penalty provisions (3) Subsections (1) and (2) are civil penalty provisions. Note: Division 1 of Part 15A provides for pecuniary penalties for breaches of civil penalty provisions. 32 Section 154B provides that this Court may order a person who has contravened a civil penalty provision to pay a pecuniary penalty to the Commonwealth (s 154A and s 154B(1)). An order under s 154B(1) is known as a civil penalty order (s 154B(2)). Only the regulator may apply for a civil penalty order (s 154C(1)). 33 Section 154M provides: 154M State of mind Scope (1) This section applies to proceedings for a civil penalty order against a person for a contravention of any of the following civil penalty provisions: (a) subsection 24A(1); (b) subsection 24B(1). State of mind (2) In the proceedings, it is not necessary to prove: (a) the person's intention; or (b) the person's knowledge; or (c) the person's recklessness; or (d) the person's negligence; or (e) any other state of mind of the person. (3) Subsection (2) does not affect the operation of section 154L. 34 Section 154L exculpates a person from liability to pay a pecuniary penalty if the conduct which is claimed to constitute a relevant contravention of the REE Act was engaged in by that person while operating under a relevant mistake of fact. None of the respondents in the present proceedings relied upon s 154L. 35 Section 154N and s 154P are in the following terms: 154N Civil penalties for executive officers of bodies corporate (1) If: (a) a body corporate contravenes a civil penalty provision; and (b) an executive officer of the body corporate knew that, or was reckless or negligent as to whether, the contravention would occur; and (c) the officer was in a position to influence the conduct of the body corporate in relation to the contravention; and (d) the officer failed to take all reasonable steps to prevent the contravention; the officer contravenes this subsection. (2) For the purposes of subsection (1), the officer is reckless as to whether the contravention would occur if: (a) the officer is aware of a substantial risk that the contravention would occur; and (b) having regard to the circumstances known to the officer, it is unjustifiable to take the risk. (3) For the purposes of subsection (1), the officer is negligent as to whether the contravention would occur if the officer's conduct involves: (a) such a great falling short of the standard of care that a reasonable person would exercise in the circumstances; and (b) such a high risk that the contravention would occur; that the conduct merits the imposition of a pecuniary penalty. Civil penalty provision (4) Subsection (1) is a civil penalty provision. Note: Division 1 provides for pecuniary penalties for breaches of civil penalty provisions. 154P Reasonable steps to prevent contravention (1) For the purposes of section 154N, in determining whether an executive officer of a body corporate failed to take all reasonable steps to prevent a contravention, a court may have regard to all relevant matters, including: (a) what action (if any) the officer took directed towards ensuring the following (to the extent that the action is relevant to the contravention): (i) that the body corporate arranges regular professional assessments of the body corporate's compliance with civil penalty provisions; (ii) that the body corporate implements any appropriate recommendations arising from such an assessment; (iii) that the body corporate's employees, agents and contractors have a reasonable knowledge and understanding of the requirements to comply with civil penalty provisions in so far as those requirements affect the employees, agents or contractors concerned; and (b) what action (if any) the officer took when he or she became aware of the contravention. (2) This section does not limit section 154N. 36 The maximum pecuniary penalty for a contravention of s 24B(1) of the REE Act, if the person is a body corporate, is 500 penalty units (s 154B(6)(b)). This translates to $55,000 for contraventions in 2010 ($110 per penalty unit). The maximum pecuniary penalty for a contravention by a person of s 24B(2), if the person is an individual, is 100 penalty units (s 154B(6)(a)). This translates to $11,000 for contraventions in 2010. 37 The pecuniary penalty for a contravention by an executive officer of a body corporate of s 154N(1) must not be more than the maximum pecuniary penalty that could be imposed on the officer under s 154B if the officer had committed the contravention referred to in s 154N(1)(a) (s 154B(5)). In this case, the maximum pecuniary penalty for a contravention of s 24B(1) by an individual is 100 penalty units ($11,000) (s 24B(1) and s 154B(6)(b)). Therefore, the maximum pecuniary penalty that can be imposed upon Mr Liu and Mr Zhu for each contravention of s 154N(1) is $11,000. 38 Subsection 154B(7) provides as follows: Matters to be taken into account by Court in determining amount of penalty (7) In determining the pecuniary penalty, in accordance with this section, for a contravention by a person of a civil penalty provision, the Court may have regard to all relevant matters, including: (a) the nature and extent of the contravention; and (b) the nature and extent of any loss or damage suffered as a result of the contravention; and (c) the circumstances in which the contravention took place; and (d) whether the person has previously been found by a court in proceedings under this Act to have engaged in any similar conduct; and (e) the extent to which the person has cooperated with the authorities; and (f) if the person is a body corporate: (i) the level of the employees, officers or agents of the body corporate involved in the contravention; and (ii) whether the body corporate exercised due diligence to avoid the contravention; and (iii) whether the body corporate had a corporate culture conducive to compliance; and (g) if the contravention is of subsection 24A(1) - whether the person has surrendered any renewable energy certificates under section 28A to compensate for the contravention. 39 Section 154S is in the following terms: 154S Injunctions (1) If a person has engaged, is engaging, or is about to engage in any conduct that is or would be: (a) an offence against this Act or the regulations; or (b) a contravention of a civil penalty provision; the Federal Court may, on the application of the Regulator or any other aggrieved person, grant an injunction restraining the person from engaging in the conduct. (2) If: (a) a person has refused or failed, is refusing or failing, or is about to refuse or fail, to do a thing; and (b) the refusal or failure is, or would be: (i) an offence against this Act or the regulations; or (ii) a contravention of a civil penalty provision; the Federal Court may, on the application of the Regulator or any other aggrieved person, grant an injunction requiring the person to do the thing. (3) The power of the Federal Court to grant an injunction may be exercised: (a) whether or not it appears to the Court that the person intends to engage, or to continue to engage, in conduct of that kind; and (b) whether or not the person has previously engaged in conduct of that kind. (4) The Federal Court may discharge or vary an injunction granted under this section. (5) The Federal Court may grant an interim injunction pending a determination of an application under subsection (1). (6) The powers granted by this section are in addition to, and not in derogation of, any other powers of the Federal Court.

[24]

A Brief Synopsis of the Relevant Facts 40 In 2009, the NSW Government announced its Solar Bonus Scheme. The Scheme provided a generous feed-in tariff of 60c per kilowatt hour (kWH) of power generated by customers who installed grid-connected solar power generation systems. The tariff was guaranteed to apply until 31 December 2016. As a result, the total of the tariff payments able to be received over a number of years was expected to exceed the purchase and installation costs for small-scale solar power generation systems. 41 As the scheme was designed to end in December 2016, regardless of installation date, the earlier in the life of the scheme that a system was installed, the greater the anticipated return on that system. The NSW Government's Solar Bonus Scheme generated a huge increase in the demand for the speedy installation of small-scale solar power generation systems at residential premises in NSW. The demand was so immediate and so great that the scheme quickly reached the maximum subscription limits and was then closed to new customers. The demand also led to the entry of many new businesses, electricians and operators into the solar power supply market. 42 Because very few home owners were registered under the REE Act, retailers of small-scale solar systems typically offered a point-of-sale discount on the system to be supplied in exchange for the assignment of the home owners' entitlement to create RECS by reason of that installation. 43 Mr Liu and Mr Zhu entered the solar power supply market in early 2010. They established MT Solar on 27 April 2010. Thereafter, MT Solar carried on business in NSW supplying and installing grid-connected solar power generation systems. MT Solar offered point-of-sale discounts in return for the assignment of the home owners' entitlement to RECS. 44 It was Mr Liu who took primary responsibility for MT Solar's commercial dealings with customers and contractors. 45 Most of MT Solar's customers were home owners who were seeking to have small-scale grid-connected solar power generation systems installed at their homes. As neither MT Solar nor its customers were registered to create RECS, MT Solar used registered commercial REC traders to deal with the RECS available for the systems which it supplied and installed. The details of its arrangement with its customers and the REC trader in each case is set out in par 18 of the Statement of Agreed Facts. 46 MT Solar's business grew rapidly. In order to satisfy customers who wished to maximise their returns on the installation of small-scale solar power generation systems, MT Solar was under pressure to have electricians and installers available to perform the relevant installations. MT Solar found it difficult to find appropriately qualified electricians and installers to carry out the installations which it was securing. 47 In the course of enquiring about electricians who might be able to perform appropriate installation work for MT Solar, Mr Liu was given the name and contact details for Mr Kibblewhite. In early July 2010, Mr Liu telephoned Mr Kibblewhite and told him that he had solar power system installation work for which he needed an electrician. In the course of that conversation, Mr Liu asked Mr Kibblewhite whether he had an electrician's licence. Mr Kibblewhite replied that he did have such a licence. Mr Liu told Mr Kibblewhite that he (Kibblewhite) also needed CEC accreditation in order to perform solar installations. Mr Kibblewhite stated that he did not, at that time, have such accreditation but that he would obtain it. 48 In late July 2010, Mr Kibblewhite telephoned Mr Liu and told him that he had now obtained CEC accreditation. He told Mr Liu that his accreditation number from CEC was P3834. The two men then agreed to meet in order to discuss Mr Kibblewhite's performing work for MT Solar. 49 On 26 July 2010, Mr Kibblewhite met with Mr Liu. On this occasion, Mr Kibblewhite confirmed that he had appropriate CEC accreditation. Mr Liu asked to see the CEC accreditation certificate. Mr Kibblewhite stated that he did not yet have it but that it was expected from the CEC in the next couple of weeks. Mr Liu also asked to see Mr Kibblewhite's electrician's licence. Mr Kibblewhite stated that he only had "a number" which had been issued by the Department of Defence and he said that he could use it to work in any State, including NSW. On the strength of these assurances from Mr Kibblewhite, Mr Liu then agreed to engage him to perform electrical installation work on behalf of MT Solar. 50 Mr Liu never followed through with Mr Kibblewhite to verify that he had, in fact, ultimately obtained CEC accreditation nor did he verify Mr Kibblewhite's assertion that he had an appropriate NSW electrician's licence. He did not verify Mr Kibblewhite's claims with the CEC or with the appropriate regulatory authorities in NSW. 51 The fact was, however, that Mr Kibblewhite did not hold an unrestricted electrician's licence issued in NSW and he had never been accredited by the CEC. 52 In the period from early August 2010 to late October 2010, Mr Kibblewhite undertook the installation of 20 grid-connected solar power generation systems for MT Solar. 53 The details of those installations are specified in Table A to the Statement of Agreed Facts. 54 Following completion of the installations which he carried out for MT Solar, Mr Kibblewhite issued to MT Solar a Tax Invoice under the trading name "Chaser Electrical" for the services which he had performed. 55 Mr Kibblewhite then either completed or assisted MT Solar to complete various forms in order to enable RECS to be created as a result of the installation of each system and MT Solar to trade the RECS by assigning the home owners' entitlements to a registered REC trader. In the present case, two REC traders were involved, Renewable Energy Traders Pty Ltd and Greenbank Environmental Pty Ltd. 56 The success of MT Solar was so great that Mr Zhu decided to establish his own solar power generation system supply business. He did so through Green Master. Green Master's activities replicated those of MT Solar. Mr Zhu also used Mr Kibblewhite in the same way as MT Solar had used him. Green Master was responsible for the installation of two systems. Presumably, Mr Zhu retained Mr Kibblewhite on the recommendation of Mr Liu. 57 Mr Kibblewhite's deception was discovered in late October or early November 2010 when checks were undertaken by Integral Energy in relation to his involvement with claims for solar bonus credits under the NSW Solar Bonus Scheme. The detail of these matters is to be found at pars 54-63 of the Statement of Agreed Facts. 58 MT Solar, Green Master, Mr Liu and Mr Zhu have co-operated with the regulator in investigating the alleged contraventions in the present case. As I have already mentioned, each of those parties has made appropriate admissions and co-operated in the formulation of the Statement of Agreed Facts. None of those parties has previously been found by a court to have contravened any provision of the REE Act. 59 Furthermore, Mr Liu has specifically admitted that he was reckless as to whether the contraventions by MT Solar would occur and Mr Zhu has admitted that he was negligent as to whether the contraventions by Green Master would occur. Mr Liu has conceded that he failed to take all reasonable steps to prevent the contraventions by MT Solar and Mr Zhu has made a similar concession in respect of the contraventions by Green Master. 60 These concessions were made by each of Mr Liu and Mr Zhu for the purpose of having their conduct assessed pursuant to s 154N of the REE Act. 61 I wish to make clear that, in assessing the appropriate relief to be granted to the regulator against the first to fourth respondents, I have taken into account the entire contents of the Statement of Agreed Facts which is attached to these Reasons for Judgment (including all documents annexed thereto) and not merely had regard to the brief synopsis which I have set out in this section of my Reasons. Similarly, as far as Mr Kibblewhite is concerned, I have taken into account all of the evidence tendered against him. His conduct was systematic and fraudulent and led to the installation of 22 solar power generation systems by MT Solar and Green Master and the creation of a significant number of RECS which should never have been created. He also put at risk the safety of those persons who occupy the dwellings where he installed systems. 62 MT Solar and Green Master paid the cost of having all of those installations thoroughly checked for quality of workmanship and safety. No problems were found.

[25]

The General Approach 63 The contraventions committed by each of MT Solar and Green Master are contraventions of s 24B(1) of the REE Act. In 2010, each contravention of that subsection by a body corporate carried a maximum penalty of $55,000. MT Solar committed 20 contraventions. The maximum penalty that can be imposed upon it for those 20 contraventions is, therefore, $1,100,000. Green Master committed two contraventions. The maximum penalty that can be imposed upon it for those two contraventions is, therefore, $110,000. 64 The contravention alleged against each of Mr Liu and Mr Zhu are contraventions of s 154N(1) of the REE Act. In the case of Mr Liu, the agreed position as between the regulator and him is that he was reckless as to whether the contravention would occur within the meaning of s 154N. The position agreed as between the regulator and Mr Zhu is that Mr Zhu was negligent as to whether the relevant contraventions would occur within the meaning of that section. 65 The maximum penalty for each of the contraventions of s 154N committed by Mr Liu is $11,000. For 20 contraventions, the aggregate of the maximum penalties that could be imposed upon Mr Liu is $220,000. The maximum penalty for each of the contraventions of s 154N(1) committed by Mr Zhu is $11,000. For two contraventions, the aggregate of the maximum penalties that could be imposed upon Mr Zhu is $22,000. 66 The contraventions committed by Mr Kibblewhite are contraventions of s 24B(2) of the REE Act. The maximum penalty for a contravention of that subsection by an individual is $11,000. Mr Kibblewhite committed 22 contraventions. The aggregate maximum penalty that could be imposed upon him is, therefore, $242,000. However, Mr Kibblewhite has already been punished in respect of four of his contraventions as a result of action taken by the NSW Department of Fair Trading (as to which, see pars 94-97 of the Statement of Agreed Facts). For this reason, the regulator seeks penalties only in respect of only 18 of Mr Kibblewhite's contraventions. Thus, the aggregate maximum penalties that could be imposed upon Mr Kibblewhite is $198,000. 67 The relevance of maximum penalties when consideration is being given by the Court to the imposition of a pecuniary penalty in a criminal case has been authoritatively determined by the High Court in Markarian v The Queen (2005) 228 CLR 357 (Markarian). At 372 [31] in Markarian, Gleeson CJ, Gummow, Hayne and Callinan JJ said: It follows that careful attention to maximum penalties will almost always be required, first because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the court at the time; and thirdly, because in that regard they do provide, taken and balanced with all of the other relevant factors, a yardstick. That having been said, in our opinion, it will rarely be, and was not appropriate for Hulme J here to look first to a maximum penalty (The maximum selected by his Honour was not, as will appear, the maximum available in respect of the principal offence.), and to proceed by making a proportional deduction from it. That was to use a prescribed maximum erroneously, as neither a yardstick, nor as a basis for comparison of this case with the worst possible case. That he used the maximum penalty impermissibly appears from his Honour's particular deference to it in this passage ((2003) 137 A Crim R 497 at 506 [37]): "Parliament cannot have intended that, other things being equal, the penalty for supplying more than 250 g should be less than for supplying that quantity." The form of the statement is explained by the fact that his Honour did not start with the maximum penalty for an offence involving the quantity in question, but used another maximum penalty as his starting point, that is, the maximum for an offence in the category of seriousness immediately below that of the principal offence. 68 In this Court, these remarks by the High Court in Markarian have been held to apply to the imposition of civil penalties (see Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 (Australian Ophthalmic Supplies) at 584 [108] (per Buchanan J); Minister for Sustainability, Environment, Water, Population and Communities v Woodley [2012] FCA 957 (Woodley) at [40]-[41] (per Foster J); Australian Communications and Media Authority v Bytecard Pty Ltd [2013] FCA 38 (Bytecard) at [38]-[39] (per Foster J); and Secretary, Department of Health and Ageing v Export Corp (Australia) Pty Ltd (2012) 288 ALR 702 at 714 [49]-[50] and at 718 [67] (per Perram J)). 69 It is plain that the legislature has given the clearest possible indication that contraventions of s 24B and s 154N of the REE Act are to be considered as serious matters when a court comes to determine an appropriate civil penalty. 70 The principal object of civil penalty provisions is to ensure deterrence. In Trade Practices Commission v CSR Limited (1991) ATPR 41-076, which was a case dealing with s 76 of the Trade Practices Act 1974 (Cth), French J (as he then was) said (at p 52,152): The principal, and I think the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act. 71 The dictum of French J in Trade Practices Commission v CSR Limited which I have extracted at [70] above has been applied not only in the trade practices context but in a wide variety of regulatory regimes. In particular, the need for a penalty to have a proper deterrent effect has been emphasised in the context of laws passed by the Parliament to protect the environment (eg Woodley [2012] FCA 957, esp at [53]-[67]). 72 In both Woodley and in Bytecard, I approached the determination of civil penalties by applying the process commonly called "instinctive synthesis". As I said in both of those cases, that process, as I understand it, has the following attributes: (a) There must be a weighing of all relevant factors, rather than starting from a predetermined figure and making incremental additions or subtractions for each separate factor (Markarian, at 373-375 [36]-[39] (per Gleeson CJ, Gummow, Hayne and Callinan JJ) and at 385-387 [69]-[73] (per McHugh J); and (b) It is critical that the reasoning process involved in synthesising the penalty be transparent (Markarian at 373-375 [36]-[39] (per the plurality) and at 390 [84] (per McHugh J).

[27]

The Course of Conduct Principle 75 Counsel for the regulator submitted that, in the context of sentencing offenders for criminal offences, it is well recognised that the same, or very similar, conduct may give rise to a number of technically distinct offences. He submitted that the law recognises that an offender who is to be sentenced in such circumstances should be given a sentence which fairly reflects the substance of the offending conduct, rather than a purely mathematical accumulation of sentences for each separate offence which may be able to be technically identified. He said that, in cases where multiple offences truly represent only one multi-faceted course of conduct, the course of conduct principle is a "tool of analysis" which can be used to avoid any double punishment for those parts of the legally distinct offences which involve overlap in wrongdoing (Pearce v The Queen (1998) 194 CLR 610 (Pearce) at 623 [40]-[42]; Johnson v The Queen (2004) 205 ALR 346 (Johnson) at 348 [4]-[5] and 356 [27]; and Attorney-General (SA) v Tichy (1982) 30 SASR 84 (Tichy) at 92-93). 76 Counsel went on to submit that the same principles are now accepted as applying in the civil penalty context (Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 (Mornington Inn) at 396-398 [41]-[46] (per Stone and Buchanan JJ); and Construction, Forestry, Mining and Energy Union v Cahill (2010) 194 IR 461 at 473-474 [38]-[42] (per Middleton and Gordon JJ)). He submitted that the question which arises in each case is whether the contravention should be treated as being truly a single course of conduct or whether the contravention's separate character should be maintained when penalties are imposed. He said that this is a factual enquiry to be made having regard to all of the circumstances of the case. 77 I agree with the substance of the submissions made by Counsel on behalf of the regulator which I have summarised at [75]-[76] above. 78 Counsel for the regulator went on to submit that the contraventions in the present case were separate and distinct, not in some purely technical legal sense, but in substance. In support of that submission, Counsel set out eight separate considerations as follows: 15. In this case, despite some similarities, the contraventions should not be seen as constituting a single course of conduct engaged in by each respondent. The following considerations point away from such an approach: 15.1. Each contravention arose from a separate, unrelated contract with a different homeowner. 'Bundling' contraventions into a single course of conduct would not adequately reflect the reality that each contravention related to a different contract with a different homeowner. 15.2. The work performed under each contract, and in respect of which the RECs were wrongly created, was different in each case as to (i) location (ii) timing and (iii) value. 15.3. Mr Kibblewhite was engaged by the corporate respondents on a case-by-case basis, not as an employee or pursuant to any bulk work arrangement. He issued separate tax invoices for each installation in differing amounts depending upon the work performed. Thus a separate, conscious choice was made by the first four respondents to engage him on each occasion, and a separate, conscious choice was made by him to accept that engagement on each occasion. 15.4. Documents containing the false information were created and provided to the REC Traders each time an installation was performed. The creation and provision of these documents thereby represented a distinct act of wrongdoing on each such occasion. 15.5. Different numbers of RECs were created in respect of each installation, according to the specific solar power generation system which was installed in each case. 15.6. The corporate respondents received remuneration from the REC Traders on an installation-by-installation basis in differing amounts depending upon the number of RECs which were created in each case. 15.7. The protracted nature of the conduct was such that later contraventions came to have a different, and more serious, character than the early contraventions. In particular (as will be explained) MT Solar and Mr Liu's failures to check Mr Kibblewhite's false claims became more and more reckless in light of his repeated and increasingly unbelievable excuses. (The progressively serious nature of repeated contravening conduct was treated as a distinguishing feature of separate contraventions by the Full Court in Mornington Inn at [58].) 15.8. The Application and Statement of Claim in this matter explicitly articulate that each respondent is alleged to have contravened the REE Act with respect to each separate installation. (For example, the application seeks (i) declarations in terms which explicitly identity the number of separate contraventions alleged against each respondent and (ii) a pecuniary penalty for 'each of' the contraventions so identified. The Statement of Claim is, likewise, expressed in terms which consistently identify that the respondents are alleged to have committed a contravention in relation to 'each or the installations with which they were involved (see for example paragraphs 43, 44, 54, 60, 63 and 66). The first four respondents have filed defences admitting each of those separately alleged contraventions. Mr Kibblewhite has taken no step to oppose those allegations. The framing of the case in this way is of 'real significance' to treating the contraventions as separate rather than as a single contravening course of conduct. (See Mornington Inn at [58]). 79 The respondents argued that they should have the benefit of the application of the course of conduct principle. 80 Counsel for the regulator accepted that allowance should be made for the similarities and possible points of overlap in the contravening conduct by imposing penalties which have regard to the circumstances of each contravention, including its place in the context of the series of contraventions, and, if necessary, moderating the cumulative total of such penalties through the totality principle so as to ensure an appropriate final amount.

[29]

Single Course of Conduct? 84 There is no doubt that each of MT Solar and Mr Liu committed 20 separate contraventions of the REE Act when Mr Kibblewhite installed solar power generation systems at the 20 locations listed in Table A attached to the Statement of Agreed Facts. There is also no doubt that each of Green Master and Mr Zhu committed two separate contraventions when Mr Kibblewhite installed such systems at the two locations listed in Table B attached to the Statement of Agreed Facts. Finally, there is no doubt that Mr Kibblewhite committed 22 separate contraventions of the REE Act when he provided the false information to MT Solar and Green Master and ultimately to Renewable Energy Traders Pty Ltd and Greenbank Environmental Pty Ltd. 85 The relevant conduct in the present case took place over a period of approximately three months in 2010. The deception practised by Mr Kibblewhite on the other respondents, on the relevant REC traders and on other persons and entities associated with the installations which he carried out was the same deception repeated on 22 separate occasions. The essence of his deception was the making of false statements to the effect that he was accredited by the CEC and licensed by the relevant NSW regulatory authority. The contraventions committed by Mr Liu and Mr Zhu, who were the relevant operatives as far as each of MT Solar and Green Master was concerned, are constituted by their conduct in accepting Mr Kibblewhite's assurances without bothering to verify the truth of those assurances. Because of their failure to take steps to verify the truth of Mr Kibblewhite's assurances, Mr Liu and Mr Zhu did not cause MT Solar and Green Master to cease dealing with Mr Kibblewhite and continued to allow those corporations to pass on false information and documents to Renewable Energy Traders Pty Ltd and Greenbank Environmental Pty Ltd. For present purposes, the position of MT Solar and Green Master is the same in each case as the position of the two individuals, Mr Liu and Mr Zhu. 86 I have carefully considered the eight matters raised by Counsel for the regulator in support of his contention that the contraventions in the present case should not be regarded as constituting a single course of conduct engaged in by each respondent. 87 While it is true that the deception practised by Mr Kibblewhite upon those with whom he dealt was the same deception, in the sense that it comprised false representations as to his CEC accreditation and as to his qualifications and entitlement to work as an electrician, it is nonetheless correct to say, as the regulator does, that each installation was a separate activity which involved separate and distinct physical work and separate and distinct paperwork. Even after Mr Kibblewhite initially deceived Mr Liu and carried out his first installation, he was not compelled to carry out further installations and thereby to continue his deception. He chose to continue his deception and consciously to do so on each occasion that he carried out a subsequent installation. This deception did not occur all at once and was not one incident which led to multiple charges being preferred (as was the case in Pearce) - charges which had real overlap in their legal and factual elements. In the present case, Mr Kibblewhite set about using the same deception over and over again in order to make money. 88 Mr Liu's contravening conduct was his failure to take all reasonable steps to prevent MT Solar's contraventions. Initially, he accepted Mr Kibblewhite's assurances. But, as time wore on, he not only accepted Mr Kibblewhite's initial assurances but shut his eyes to the truth by failing to verify those assurances. An occasion for verifying Mr Kibblewhite's CEC accreditation and electrician's licence arose every time that Mr Liu, on behalf of MT Solar, retained Mr Kibblewhite to carry out installations on behalf of MT Solar. Mr Zhu was in a similar position insofar as the business of Green Master was concerned. 89 I think that the correct approach to the imposition of civil pecuniary penalties in the present case is for the Court to treat each installation and the consequential dealings with the relevant REC trader as, in substance, constituting a separate contravention. Any lack of proportionality in the total amounts of the penalties arrived at in this way should then be moderated by the application of the totality principle.

[30]

The Penalties in the Present Case 90 In fixing the quantum of the penalties to be imposed in the present case, I propose to have regard to the need for general deterrence, the need for specific deterrence, the specific matters mentioned in s 154B(7) of the REE Act (which subsection applies to all contraventions in the present case) and any other relevant matter. The determination of what is a "relevant matter" in any given case is a matter for the Court. The matters specified in s 154B(7) of the REE Act are matters to which the Court may have regard. They are not matters to which the Court must have regard. Nonetheless, the catalogue of matters specified in s 154B(7) are matters to which, in most cases, the Court would have regard in determining the appropriate pecuniary penalty. 91 Counsel for the regulator accepted that, in the present case, the Court could properly have regard to the financial position and business arrangements of the respondents and the steps taken by or contributed to by them to remedy any damage caused by their contraventions. 92 The regulator seeks a penalty against MT Solar in the range of $105,000-$130,000. The regulator arrived at that suggested range by propounding a starting point penalty range for each contravention which is then discounted by 40% for co-operation. The amount of each penalty is progressively increased over the period during which the contraventions occurred. The appropriate starting point penalty for each of the first five contraventions is suggested to be in the range of $5,500-$8,250. The appropriate starting point penalty for each of the next 10 contraventions (ie those which occurred in September 2010) is said to be in the range $11,000-$13,750. The appropriate starting point penalty for each of the last five contraventions is said to be in the range of $16,500-$19,250. The total sum arrived at by adding the discounted penalties for each contravention is then discounted further by 20% in order to give effect to the totality principle. 93 The mechanics of this approach are explained in Penalty Table A attached to the regulator's Written Submissions. 94 A very similar approach is suggested in respect of the penalty to be imposed upon Mr Liu. The arithmetic in respect of Mr Liu is contained in Penalty Table B attached to the regulator's Written Submissions. The regulator seeks a penalty in the range of $21,000-$26,000 in respect of Mr Liu. This range is 20% of the range put forward in respect of MT Solar reflecting the relationship between the two levels of penalty in s 154B(6) of the REE Act. 95 In respect of Green Master, the regulator seeks a penalty in the range of $23,100-$26,950. As against Mr Zhu, the regulator seeks a penalty in the range of $4,620-$5,390. The detailed calculations referable to Green Master and Mr Zhu are found in Penalty Table C attached to the regulator's Written Submissions. They are based upon a starting point range of penalty of $16,000-$19,250 for each contravention to which a discount of 30% is applied for co-operation. No further reduction is applied. 96 The regulator submitted that Mr Kibblewhite is in a different category of offender from the other respondents. In respect of him, the regulator seeks a penalty in the range of $128,700-$148,500. That penalty is said to be in the range of 65%-75% of the maximum and has not been reduced on account of the totality principle. The quantum of the penalty sought against Mr Kibblewhite is arrived at by attributing a penalty of $7,150-$8,250 for each of 18 contraventions in respect of which a penalty is sought. No reduction is proposed on account of the totality principle or for any other reason. 97 For reasons which I shall shortly explain, I have determined that the following civil pecuniary penalties should be imposed upon the respondents: (a) Upon Mr Kibblewhite, $108,000. (b) Upon MT Solar, $70,000. (c) Upon Mr Liu, $14,000. (d) Upon Green Master, $14,500. (e) Upon Mr Zhu, $2,900. 98 I shall now turn to consider the particular penalties to be imposed in the present case.

[31]

General deterrence 99 The REC Scheme embodied in the REE Act is a key mechanism used to achieve the Commonwealth Government's fundamental renewable energy objectives. The provision of false information by participants in the Scheme will undermine the integrity of the REC Scheme and hence the Government's ability to meet the renewable energy target to which it has committed by undermining consumer confidence in the renewable energy sector in terms of safety, effectiveness and affordability. Furthermore, if RECS are created by reason of the installation of systems which have not been properly installed, there is a risk that the incorrect number of RECS will be created thereby further weakening the renewable energy objectives. 100 Second, the REC market is a significant one. In 2012, the value of trades in Small-Scale Technology Certificates alone was expected to exceed $1 billion. Major investors are heavily involved in the REC market and very much in tune to the possibility of disruption through compliance failings. 101 Third, the effective operation of the REC market relies heavily upon voluntary compliance with the REE Act. Therefore, when non-compliance is detected, significant penalties are warranted in order to ensure that others may not think that the risk of being caught is well worth taking, having regard to the likely financial rewards of non-compliance. As submitted by the regulator, where the legislature entrusts people with responsibility for compliance, non-compliance should properly attract a strong deterrent penalty. 102 Fourth, non-compliance may not be readily detected. It is well recognised that difficulties in detecting contraventions are a significant factor in the need for general deterrence. In the present case, in the end, the contraventions were readily detected. However, this may not always be so. The imposition of substantial penalties for involvement in the provision of false information will provide a strong incentive to industry participants to establish robust mechanisms for ensuring compliance and accuracy. This will not only reduce the risks of non-compliance by them but may also lead to more ready detection of others. 103 For the above reasons, I should give significant weight to the need for general deterrence when determining the appropriate penalty for MT Solar. I propose to do so. 104 There is also a need to impose a significant penalty upon Mr Liu in order to ensure that executives in positions such as the one he occupied in relation to MT Solar take all necessary steps to prevent contraventions of the REE Act. 105 Specific deterrence, in the present case, is not a significant factor. MT Solar is no longer in business. Mr Liu may, in the future, commence another business. There is, therefore, some significance in specific deterrence in his case. 106 I now turn to consider the factors adumbrated in s 154B(7) of the REE Act.

[34]

The circumstances in which the contraventions took place (s 154B(7)(c)) 112 MT Solar and Mr Liu were motivated by the prospect of making large amounts of easy money. Mr Liu gave no real attention to ensuring that he and MT Solar complied with the REE Act. When confronted with the choice between ensuring appropriate compliance with the provisions of the REE Act by only dealing with qualified installers, on the one hand, and taking advantage of the huge demand for the installation of grid-connected solar power generation systems, on the other hand, Mr Liu chose the latter and disregarded the former. 113 The regulator made the following submissions at pars 52-54 of its Written Submissions: 52. Secondly, although Mr Liu and (through him MT Solar) were misled by the active and deliberate deceptions of Mr Kibblewhite, they were well aware of a number of matters which should have alerted them to the risks that Mr Kibblewhite was not properly qualified to perform the work in such a way as would permit the creation of RECs. (These are set out in detail in the SOAF at paragraphs 66-70 and 76.) the more fundamental of these included the following: 52.1. His only claimed electrical qualifications were through the Department of Defence, such that he clearly did not hold a licence issued by NSW authorities (as required under the REE Act). Additionally, he was unable to produce a licence when requested, claiming only to have 'a number'. 52.2. He did not hold a CEC accreditation in early July and, despite his claim to have obtained such accreditation later that month, he was unable to produce a certificate from the CEC. Over the next two months he made excuses as to why he remained unable to produce a copy of such a certificate. 52.3. As at late July/early August 2010 Mr Kibblewhite was not listed on the CEC website of accredited installers. When asked by Mr Liu about this he suggested that the website may be updated later. 53. Thirdly, there were numerous simple, fast and effective checks which could have been undertaken to verify (or, as it turns out, disprove) Mr Kibblewhite's claims. Despite what they knew about him, no steps were taken by MT Solar or Mr Liu throughout the course of the contraventions to verify those claims (beyond asking Mr Kibblewhite himself for a copy of the certificate). Nor did they alert the REC Traders to the unverified nature of any of Mr Kibblewhite's claims. Mr Liu and MT Solar accept that the implausibility of these claims should have caused them to verify Mr Kibblewhite's qualifications before engaging him. (SOAF at paragraphs 71 and 74). 54. These significant failings became more and more serious as time progressed. Whatever plausibility Mr Kibblewhite's initial claims may have had, it was seriously eroded as the weeks went by and as his repeated excuses were left unchecked. The repeated decisions to engage Mr Kibblewhite throughout this period ultimately represented a significant prioritising of MT Solar's commercial interests over the fulfilment of its regulatory responsibilities. 114 I agree with the substance of those submissions. 115 The regulator seeks the imposition of ever increasing penalties over the relevant period upon the basis that the later contraventions by MT Solar and Mr Liu should properly be viewed as more serious than the early ones. I think that, in the circumstances of this case, that approach is warranted, but not to the extent sought by the regulator. In my judgment, because the contraventions took place over a relatively short period of time and in a period marked by rapid installation activity, it is more appropriate to apply only two differential starting point ranges of penalty in respect of the contraventions, rather than to apply an ever increasing scale referable to particular months, as was submitted by the regulator. 116 After taking all relevant factors into account, including the need for general and special deterrence and the factors adumbrated in s 154B(7) of the REE Act, I have in mind using the range suggested by the regulator in respect of the first five contraventions by MT Solar ($5,500-$8,250) and the range $8,250-$11,000 (15%-20% of the maximum) for all of the remaining 15 contraventions.

[36]

Co-operation (s 154B(7)(e)) 118 Co-operation with authorities in the course of investigations and subsequent proceedings will be a mitigating factor that almost certainly will reduce the penalty that would otherwise be imposed. A reduction on this account reflects the fact that such co-operation: (a) Is usually evidence of contrition and an acceptance of responsibility; (b) Increases the likelihood of co-operation in a way that furthers the object of the legislation; (c) Frees up the regulator's resources, thereby increasing the likelihood that other contravenors will be detected and brought to justice; and (d) Reflects a willingness to facilitate the course of justice (see generally NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 293-294 (per Burchett and Kiefel JJ); Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] ATPR 41-993 at p 48,627 [55] (per Branson, Sackville and Gyles JJ); and Mornington Inn at 404 [73]-[74] (per Stone and Buchanan JJ)). 119 The size of the discount will vary depending upon the circumstances of the case. A significant discount is warranted if the fullest possible co-operation is afforded to the regulator right from the commencement of its investigation. 120 MT Solar and Mr Liu have co-operated fully with the regulator's investigation in relation to the contraventions proven in these proceedings, including by making appropriate admissions. These admissions have assisted significantly in enabling the contraventions to be proven. In particular, Mr Liu has accepted that he was reckless in his failure to verify Mr Kibblewhite's assertions, an acceptance which carries with it an admission that there are aggravating circumstances in respect of the relevant contraventions. Significant credit should be given to MT Solar and Mr Liu for making these admissions and accepting the complexion placed upon them by the regulator. Furthermore, Mr Liu provided real and substantial assistance to NSW Fair Trading in its investigation and prosecution of Mr Kibblewhite. 121 The regulator submitted that MT Solar and Mr Liu should receive the benefit of a discount for co-operation of 40%. I think that is an appropriate discount factor and propose to apply it in the present case.

[45]

The circumstances in which the contraventions took place (s 154B(7)(c)) 138 Similar considerations arise here as arose in respect of MT Solar and Mr Liu with the exception that, to some extent, Mr Zhu relied upon Mr Liu and, in any event, the number of contraventions was fewer and the time period over which they were committed much shorter. 139 The regulator made the following submissions at par 74 and par 75 of its Written Submissions: 74. As discussed in relation to MT Solar (at paragraphs 50 to 55 above), the circumstances in which Green Master and Mr Zhu committed the contraventions suggest a significant level of recklessness and wrongdoing. Briefly: 74.1. Green Master was, like MT Solar, created in circumstances which sought to capitalise upon the strong market demand and Mr Kibblewhite was engaged immediately to satisfy Green Master contracts which were not otherwise able to be fulfilled by it using its preferred electrician. The urgency with which he was engaged is illustrated by the fact that he performed Green Master's first installation on 28 September 2010, the day alter Mr Zhu had arranged for the company to be incorporated. (SOAF at paragraphs 38-41) 74.2. Secondly, Mr Zhu and Green Master were (like MT Solar and Mr Liu) well aware of a number of matters which should have alerted them to the risks that Mr Kibblewhite was not properly qualified to perform the work in such a way as would permit the creation of RECs. (SOAF at paragraphs 42 and 72.) These included: 74.2.1 over the two month period in which he had been working with Mr Zhu on MT Solar installations Mr Kibblewhite continued to assert that he had not received his CEC certificate; 74.2.2. he did not in fact claim to have any electrical qualifications from NSW authorities (as the REE Act required) but rather said they were from the Department of Defence; and 74.2.3. he was not listed on the CEC website as an accredited installer, and had explained this to Mr Zhu on the basis that his details were kept confidential by the Department of Defence. 74.3. Thirdly, the same simple, fast and effective checks could have been undertaken to verify (or, as it turns out, disprove) Mr Kibblewhite's claims. Despite what they knew about Mr Kibblewhite, no steps were taken by Green Master or Mr Zhu to verify those claims nor to alert the REC Traders to the unverified nature of those claims. Green Master or Mr Zhu accept that the implausibility of these claims should have caused them to verify Mr Kibblewhite's qualifications before engaging him. (SOAF at paragraphs 66, 67, 73 and 74.) 75. These failings were comparable in seriousness to the failings by MT Solar and Mr Liu in October 2010 (ie towards the end of its involvement with Mr Kibblewhite) This is because Green Master's engagement of Mr Kibblewhite first began 2 months after he was known to have claimed to have relevant qualifications. The acceptance of his implausible explanations and the failure to conduct checks at that time was considerably more reckless than at an earlier point in time. The proposed penalty ranges reflect this. 140 I agree with the substance of those Submissions. 141 The regulator seeks the imposition of penalties at the highest end of its suggested range of penalties in respect of both contraventions committed by Green Master and by Mr Zhu. For the same reasons as I considered the highest ranges propounded by the regulator in respect of MT Solar and Mr Liu to be too severe, I consider the suggested range in respect of Green Master and Mr Zhu also to be too severe. 142 After taking all relevant factors into account, including the need for general and special deterrence and the factors adumbrated in s 154B(7) of the REE Act, I have in mind using the higher of the two ranges arrived at by me in respect of MT Solar and Mr Liu ($8,250-$11,000) in respect of the two contraventions by Green Master and Mr Zhu.

At a glance

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Judgment (64 paragraphs)

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Cases Cited (13)