Director, Consumer Affairs Victoria v Vic Solar Pty Ltd

Counsel for the Applicant Ms G Costello SC with Mr M Kenneally

Solicitor for the Applicant Legal Services Branch, Consumer Affairs Victoria

Counsel for the Respondents The respondents did not appear

BETWEEN: DIRECTOR OF CONSUMER AFFAIRS VICTORIA Applicant

AND: VIC SOLAR TECHNOLOGIES PTY LTD (ACN 160 835 941) First Respondent

order made by: O'BRYAN J DATE OF ORDER: 3 May 2021

1. The First Respondent pay an aggregate pecuniary penalty to the State of Victoria of $3 million in respect of its contraventions of ss 29, 76 and 79 of the Australian Consumer Law being schedule 2 to the Competition and Consumer Act 2010 (Cth) (Act) applying as a law of the State of Victoria by s 8 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) (Australian Consumer Law (Vic)) as set out in the first, second, third, fourth and twelfth declarations made by the Court on 3 March 2021.
2. The Second Respondent pay an aggregate pecuniary penalty to the State of Victoria of $450,000 in respect of his knowing involvement in the contraventions of ss 29, 76 and 79 of the Australian Consumer Law (Vic) by the First Respondent as set out in the first, second, third, fourth and twelfth declarations made by the Court on 3 March 2021.
3. The Second Respondent be disqualified from managing corporations for a period of five years.
4. The Respondents pay the Applicant's costs of the proceeding concerning further relief.
5. All costs awarded in favour of the Applicant in this proceeding be awarded as a lump sum pursuant to r 40.02 of the Federal Court Rules 2011 (Cth).
6. The quantum of costs under order 5 and the making of such further orders and directions for that purpose be referred to a Registrar of the Court for determination. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 On 29 January 2021, I delivered judgment in this proceeding on the issue of liability: Director, Consumer Affairs Victoria v Vic Solar Pty Ltd (No 2) [2021] FCA 26 (Liability Judgment). I found that the first respondent (Vic Solar) had contravened ss 18, 21, 29, 73, 74, 76, 78, 79, 84 and 86 of the Australian Consumer Law (being Schedule 2 to the Competition and Consumer Act 2010 (Cth) (CCA)) applying as a law of the Commonwealth by s 131 of the CCA and as a law of the State of Victoria by s 8 of the Australian Consumer Law and Fair Trading Act 2012 (Vic), and that the second respondent (Mr Srinivasan) was knowingly concerned in certain of the contraventions of ss 18(1), 29, 76 and 79 of the Australian Consumer Law applying as a law of the Commonwealth and as a law of the State of Victoria. Where it is necessary to distinguish the Australian Consumer Law applying as a law of Victoria from the Australian Consumer Law applying as a law of the Commonwealth, I will refer to the former as the Australian Consumer Law (Vic) and the latter as the Australian Consumer Law (Cth). 2 Subsequently, on 3 March 2021, I made declarations concerning the respondents' contraventions of the law and timetabling orders for the grant of further relief to the applicant (Director): Director, Consumer Affairs Victoria v Vic Solar Pty Ltd (No 3) [2021] FCA 171 (Declaratory Relief Judgment). 3 This judgment concerns the further relief sought by the Director pursuant to the amended originating application dated 29 July 2020 and further amended statement of claim dated 28 July 2020 being: (a) orders for pecuniary penalties against Vic Solar and Mr Srinivasan pursuant to s 224 of the Australian Consumer Law (Vic); (b) a disqualification order against Mr Srinivasan pursuant to s 248 of the Australian Consumer Law (Vic); and (c) orders for injunctions against Vic Solar and Mr Srinivasan pursuant to s 232 of the Australian Consumer Law (Cth). 4 At the hearing on further relief, the Director confirmed that she did not pursue any of the other claims for relief in the amended originating application, save for an order under s 237(1)(b) of the Australian Consumer Law (Vic) that Vic Solar pay to Jennifer Hizon (one of the consumer witnesses in the proceeding) the sum of $400, being the deposit paid by Ms Hizon to Vic Solar and never repaid, in breach of s 84 of the Australian Consumer Law. Although Ms Hizon gave evidence in the proceeding, there is no evidence that she has consented in writing to the Director making the application under s 237(1)(b) on her behalf. In the absence of such written consent, the Director is not able to apply for such relief: see s 242(2). I therefore dismiss that part of the application. 5 At the hearing on further relief, the Director relied on the evidence adduced at trial and the findings of the Court as reflected in the Liability Judgment and the Declaratory Relief Judgment. The Director also read the following additional affidavits: (a) an affidavit of Andrew Nicholas Bray affirmed 26 February 2021 in which Mr Bray deposes that, on 10 February 2021, the Director served the Liability Judgment, and proposed orders for timetabling a hearing as to pecuniary penalties and other relief, on the respondents by the methods of substituted service ordered by the Court on 25 June 2020 and, later in February 2021, had attempted to effect personal service of those documents on the respondents at other addresses that appeared from ASIC searches to be associated with the respondents (being addresses in the suburbs of Abbotsford, Southbank and Murrumbeena in Melbourne); (b) an affidavit of Allen Salib sworn 9 March 2021 in which Mr Salib deposes to his unsuccessful attempts to serve documents on the respondents at an address in the suburb of Abbotsford in Melbourne; (c) a second affidavit of Allen Salib sworn 9 March 2021 in which Mr Salib deposes to his unsuccessful attempts to serve documents on the respondents at an address in the suburb of Southbank in Melbourne; (d) an affidavit of Allan Knight sworn 10 March 2021 in which Mr Knight deposes to his unsuccessful attempts to serve documents on the respondents at an address in the suburb of Murrumbeena in the suburb of Melbourne; (e) an affidavit of Andrea Mapp affirmed 20 April 2021 in which Ms Mapp deposes that the Director served the Director's submissions on further relief and the affidavit of Ms Bethany Sutton on the respondents by the methods of substituted service ordered by the Court on 25 June 2020; and (f) an affidavit of Bethany Sutton affirmed 26 March 2021 in which Ms Sutton exhibits various ASIC and internet searches associated with the respondents and other documents (referred to below where relevant). 6 The Director also sought to tender a letter and accompanying documents from HPS Tax Consulting Pty Ltd dated 28 December 2017. The letter stated that it was a reply to a notice issued by the Director under s 126 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) in relation to a company called Clean Energy Co Australia Pty Ltd. No such notice was in evidence, although there was a notice issued by the Director to HPS Tax Consulting in relation to Vic Solar. Despite what the letter from HPS Tax Consulting stated, the documents attached to the letter were what appeared on their face to be various financial statements and tax returns of Vic Solar. The Director sought to rely on the financial statements and tax returns in proof of the revenue and profit of Vic Solar during the period of the contravening conduct. The documents are hearsay and only admissible if they are shown by evidence to be business records under s 69 of the Evidence Act 1995 (Cth) (Evidence Act). The letter from HPS Tax Consulting, stating that the documents are financial statements and tax returns of Vic Solar, is itself hearsay and therefore not admissible in proof of that fact. Unfortunately, the financial statements were not put to Mr Srinivasan for verification in the course of his compulsory examination by the Director conducted on 8 November 2018. Nevertheless, the admissible evidence included a written reply on behalf of Vic Solar to a notice issued by the Director under s 126 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) on 16 October 2018. Although the reply was stated in an abbreviated form (which was not helped by the failure of the Director to adduce in evidence a copy of the notice issued to Vic Solar under s 126), it is tolerably clear that, by the reply, Vic Solar stated that its financial statements and tax returns for the financial years ended 30 June 2015 to 2017 had been prepared by HPS Tax Consulting and were kept at their offices. That statement is admissible as an admission under s 81 of the Evidence Act. On the basis of that evidence, I accept that the documents produced by HPS Tax Consulting are business records of Vic Solar and are admissible. I note for completeness that, in its response to the s 126 notice issued by the Director, Vic Solar also produced various financial records, but those records were piecemeal and incomplete. They nevertheless constitute admissible evidence with respect to Vic Solar's financial position during the period of contravening conduct. 7 As I noted in the Declaratory Relief Judgment, since 17 February 2020 (when their solicitors filed a notice of ceasing to act), the respondents have not participated in this proceeding. That remains the case in respect of the hearing concerning further relief.

Pecuniary Penalties 8 The Director proposed a total penalty of between $500,000 - $750,000 against Vic Solar and $50,000 - $75,000 against Mr Srinivasan, payable to the State of Victoria, in respect of their respective contraventions of the Australian Consumer Law, although the Director acknowledged that the appropriate penalty to be imposed was ultimately a matter for the Court to determine. For the reasons explained below, I consider that much more substantial penalties are required in this case.

Relevant statutory provisions and legal principles 9 Relevantly, s 224(1)(a) of the Australian Consumer Law (Vic) provides that if a court is satisfied that a person: (a) has contravened a provision of: (i) Part 2-2 (which includes the prohibition against unconscionable conduct in s 21); (ii) Part 3-1 (which includes the prohibition against false or misleading representations in s 29); and (iii) Division 2 of Part 3-2, other than s 85 (which includes the obligations associated with unsolicited consumer agreements in ss 73, 74, 76, 78, 79, 84 and 86); or (b) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision, the court may order the person to pay to the State of Victoria such pecuniary penalty, in respect of each act or omission by the person to which this section applies, as the court determines to be appropriate. 10 Subsection 224(2) provides that, in determining the appropriate pecuniary penalty, the court must have regard to all relevant matters including: (a) the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission; and (b) the circumstances in which the act or omission took place; and (c) whether the person has previously been found by a court in proceedings under Chapter 4 or Part 5-2 of Chapter 5 of the Australian Consumer Law to have engaged in any similar conduct. 11 Subsection 224(3) specifies the maximum penalty that may be imposed by the Court for each act or omission to which s 224(1) applies. Different maximum penalties are applicable to ss 21 and 29 on the one hand and ss 73, 74, 76, 78, 79, 84 and 86 on the other. Also, different maximum penalties applied during the period in which the contraventions occurred (between June 2014 and December 2018). 12 In respect of contraventions of ss 21 and 29, the maximum penalty for the period of June 2014 to 1 September 2018 was $1.1 million for a body corporate and $220,000 for an individual. Since 1 September 2018, the maximum penalty for a body corporate has been the greater of: (a) $10 million; (b) if the court can determine the value of the benefit that the contravening corporation obtained directly or indirectly and that is reasonably attributable to the act or omission, three times the value of the benefit; and (c) if the court cannot determine the value of that benefit, 10% of the annual turnover of the contravening corporation, and the maximum penalty for an individual has been $500,000. 13 In respect of a contravention of ss 73, 74, 76, 78, 79, 84 and 86, the maximum penalty since June 2014 has remained $50,000 for a body corporate and $10,000 for individual. 14 Subsection 224(4) provides that, if conduct constitutes a contravention of two or more provisions referred to in s 224(1)(a), a person is not liable for more than one pecuniary penalty in respect of the same conduct. 15 I have recently summarised the legal principles relevant to the application of s 224 in Australian Competition and Consumer Commission v STA Travel Pty Ltd [2020] FCA 723 and to an equivalent penalty provision in s 12GBA of the Australian Securities and Investments Commission Act 2001 (Cth) in Australian Securities and Investments Commission v Dover Financial Advisers Pty Ltd (No 3) [2021] FCA 170. I adopt those principles for the purposes of this judgment.

Nature and extent of the contravening act or omission 16 During an approximate 4 ½ year period from June 2014 to December 2018, Vic Solar engaged in a wide range of contravening conduct in connection with the sale of solar PV systems to residential households. In that period, Vic Solar entered into around 4,300 contracts for the supply of solar PV systems through its system of door-to-door lead generation (Liability Judgment at [37]). The sales revenue earned by Vic Solar during the period of contravening conduct was: (a) in the financial year ended 30 June 2015, $6,479,252; (b) in the financial year ended 30 June 2016, $17,490,397; (c) in the financial year ended 30 June 2017, $10,521,588; and (d) in the financial year ended 30 June 2018, $6,818,369. 17 Certain of the financial records of Vic Solar indicate that not all of that revenue was in respect of the sale of residential solar PV systems. The evidence suggested that at least the following amounts of revenue related to the sale of residential solar PV systems: (a) in the financial year ended 30 June 2016, about $12.7 million; (b) in the financial year ended 30 June 2017, about $5 million; and (c) in the financial year ended 30 June 2018, about $3.7 million. 18 The residential part of Vic Solar's solar PV system business was therefore a substantial business. 19 The contravening conduct involved the following categories contraventions of s 29: (a) the Community Bulk Buy misrepresentations, the subject of the first declaration made by the Court; (b) the false testimonials the subject of the second declaration made by the Court; (c) the country of origin misrepresentations, the subject of the third declaration made by the Court; (d) the global manufacturer misrepresentations, the subject of the fourth declaration made by the Court; (e) the misrepresentations to individual consumers concerning savings on their electricity bills, the subject of the sixth to tenth declarations made by the Court. 20 In the Liability Judgment, I found (at [96]) that Vic Solar's marketing campaign involved making representations to the effect of the Community Bulk Buy representations in the period June 2014 to December 2018 (being the period in which the lead generators were engaged by Vic Solar) and that it is apparent from the scripts used by the lead generators, and the available brochures and voucher, that the Community Bulk Buy concept was at the heart of Vic Solar's marketing efforts. On the basis of that evidence, and in the absence of any contrary evidence from the respondents, I infer that the Community Bulk Buy misrepresentations were made in the vast majority of sales by Vic Solar through its system of door-to-door lead generation. Accordingly, those misrepresentations were made many thousands of times. The false testimonials were part of the Community Bulk Buy brochures distributed by Vic Solar. Accordingly, I also infer that the false testimonials were also conveyed to consumers many thousands of times. 21 The country of origin misrepresentations and the global manufacturer misrepresentations were made in brochures relating to the "One Solar" branded solar panels supplied by Vic Solar (Liability Judgment at [101] and [107]). It is not clear how widely those brochures were used or distributed. At least one of the consumer witnesses was given one of the brochures (Liability Judgment at [104]). Nevertheless, the evidence establishes that the brochures formed part of the business records of Vic Solar and, in the absence of contrary evidence from the respondents, I infer that the brochures were used in the day to day business of Vic Solar. It follows that the misrepresentations were also conveyed to consumers thousands of times. 22 The contravening conduct involved the following categories of contraventions of the requirements of the obligations associated with unsolicited consumer agreements: (a) its dealers failed to clearly advise home-owners, before beginning to negotiate, that the dealer's purpose was to seek agreement to the supply of a solar PV system by Vic Solar, in contravention of s 74(a) - the subject of the eleventh declaration made by the Court; (b) before entering into agreement, failing to give the consumer information in writing as to the consumer's right to terminate the agreement during the termination period or the way in which the consumer may exercise that right, in contravention of ss 76 and 79 - the subject of the twelfth declaration made by the Court; (c) in respect of two of the consumer witnesses, accepting a deposit at the time of signing the agreement, in contravention of s 86 - the subject of the thirteenth and fifteenth declarations made by the Court; (d) in respect of one of the consumer witnesses, not returning or refunding the deposit paid after the consumer terminated the agreement, in contravention of s 84 - the subject of the fourteenth declaration made by the Court; (e) in respect of one of the consumer witnesses, commencing the installation of a solar PV system at the consumer's premises within 10 days of her signing the agreement, in contravention of s 86 - the subject of the sixteenth declaration made by the Court; (f) in respect of one of the consumer witnesses, making an unsolicited consumer agreement at the consumer's home and not providing a copy of the agreement to the consumer after it was signed, in contravention of s 78 - the subject of the seventeenth declaration made by the Court; and (g) in respect of two of the consumer witnesses, calling on the consumer after 6pm for the purpose of negotiating an unsolicited consumer agreement, in contravention of s 73 - the subject of the eighteenth and nineteenth declarations made by the Court. 23 As can be seen, several of the contraventions of the obligations associated with unsolicited consumer agreements involved one or two instances, although that is not to diminish the seriousness of any contravention of the obligations. However, the contraventions of ss 74(a), 76 and 79 were more systemic. 24 In respect of the contraventions of s 74(a), I have found that the scripts used by Vic Solar's lead generators when door-knocking were both misleading and had the effect that the lead generators failed to advise clearly that the true purpose of the visit was to seek the home-owner's agreement to a supply of a solar PV system by Vic Solar (Liability Judgment at [143]). On the basis of that evidence, and in the absence of any contrary evidence from the respondents, I infer that the scripts were used in the vast majority of sales by Vic Solar through its system of door-to-door lead generation and, accordingly, Vic Solar contravened s 74(a) many thousands of times. However, the conduct engaged in by Vic Solar in contravention of s 74(a) was materially the same conduct as the making of the Community Bulk Buy misrepresentations which I have found to be in contravention of s 29. It follows that, while Vic Solar contravened s 74(a) many thousands of times, the contravening conduct constituted a contravention of more than one of the prohibitions referred to in s 224(1)(a). By virtue of s 224(4), the respondents are not liable to more than one pecuniary penalty in respect of the same conduct. 25 In respect of the contraventions of ss 76 and 79, I have found that on each occasion that Vic Solar entered into agreements in the course of its business operations in the period June 2014 to December 2018, there was a contravention of those provisions. Accordingly, Vic Solar contravened those provisions more than 4,000 times. 26 In the Liability Judgment (at [178]), I also found Vic Solar engaged in unconscionable conduct in contravention of s 21 in respect of each of its sales of solar PV systems between June 2014 and December 2018. However, the conduct engaged in by Vic Solar that was unconscionable was its business and trading system which involved, as central elements, the misleading conduct described above and the failure to comply with the obligations associated with unsolicited consumer agreements described above. It follows that, while Vic Solar contravened s 21 many thousands of times, the contravening conduct constituted a contravention of more than one of the prohibitions referred to in s 224(1)(a). By virtue of s 224(4), the respondents are not liable for more than one pecuniary penalty in respect of the same conduct.

Any loss or damage suffered as a result of the contravening act or omission 27 In the Liability Judgment (at [175]), I found that the prices charged by Vic Solar for its solar PV systems were above average market prices for systems of similar quality and that the evidence supported the conclusion that Vic Solar's business model to some extent insulated Vic Solar from market pressures, thereby enhancing its ability to charge above-market prices. The expert evidence showed each of the consumer witnesses paid significantly more than the average price for a similarly sized solar PV system of similar quality (Liability Judgment at [85], [175]). The consumer witnesses paid prices for the solar PV systems that ranged between $5,500 and $13,500, and Mr Johnston estimated that the median market price for systems of equivalent quality were at least $1,000 less and up to $6,000 less (for the higher priced systems). 28 It follows that Vic Solar's contravening conduct was likely to have caused loss or damage to consumers. Consumers who entered into contracts with Vic Solar were likely to have suffered damage being the difference between the price for Vic Solar's solar PV system and the available market value of such a system (see in an analogous context Australian Competition and Consumer Commission v Cement Australia Pty Ltd (2017) 258 FCR 312 at [504]). The Director did not advance submissions seeking to estimate the amount of consumer loss or damage flowing from the contravening conduct. However, based on the evidence of the consumer witnesses and the expert evidence of Mr Johnston, it is possible that the contravening conduct enabled Vic Solar to levy charges that were thousands of dollars higher than prevailing market prices. The consumer loss, across all of the sales made by Vic Solar, was therefore potentially in the millions of dollars. On the basis of Mr Johnston's evidence, the evidence of the consumer witnesses and the number of sales of solar PV systems by Vic Solar pursuant to its unconscionable trading system, I estimate that substantial consumer loss was likely suffered by reason of Vic Solar's conduct, being in the millions of dollars. It is not possible, though, to be more precise.

Any financial gain from the contravening conduct 29 The evidence concerning Vic Solar's financial position during the period of contravening conduct was piecemeal and incomplete. There is no evidence that Vic Solar made significant, or any, profits from its trading activities that have been shown to be unlawful. Vic Solar's financial statements for the financial year ended 30 June 2015 record accumulated losses from prior years of $121,300 and net profit after tax of $98,436, leaving accumulated losses of $22,864. Vic Solar's financial statements for the financial year ended 30 June 2016 record a net loss of $45,367, leaving accumulated losses of $68,231. Profit and loss figures for the 2017 and 2018 financial years were not available. 30 In each of those financial years, however, substantial sums were paid by Vic Solar as wages and management fees. I infer, from his position in the company, that Mr Srinivasan earned income from Vic Solar by way of wages or management fees (or both) in that period.

The circumstances in which the contravening act or omission took place 31 In the Liability Judgment (at [174]), I found that the contravening conduct involved the following elements: (a) A business model that involved an intentional system of trading to call on consumers at their homes using the "lead generators". That is an environment in which consumers are more vulnerable to predatory and unfair sales tactics because they may not have undertaken any investigation of available market prices or alternative products and some consumers may also experience heightened sales pressure when a sales representative visits their home. (b) A dishonest marketing concept based on the "Community Bulk Buy" misrepresentations having the intended effect of creating a false impression in the minds of home-owners that they had an opportunity to participate in a "community" or "social" enterprise that would generate costs savings for them. (c) A systematic failure to comply with the requirement of s 74(a) to disclose clearly the purpose of the visit to consumers' homes (to sell solar PV systems supplied by Vic Solar) and the requirements of ss 76 and 79 to provide clear and prominent notification of termination rights and the means by which those rights could be exercised. 32 In short, the conduct involved dishonest and unfair trading practices directed to consumers in vulnerable circumstances.

The deliberateness of the contravention 33 In my view, the respondents' contravening conduct should be characterised as deliberate. It was a central part of Vic Solar's trading strategy to target consumers in their homes through the use of lead generators and to do so using the false "Community Bulk Buy" marketing concept. In the Liability Judgment (at [184]), I found that Mr Srinivasan: (a) knew that the Community Bulk Buy representations were false; (b) knew that the country of origin representations were false; and (c) knew that the form of agreements used by Vic Solar did not contain a notification of the consumer's termination rights. 34 That knowledge can be attributed to Vic Solar in circumstances where Mr Srinivasan was a director of Vic Solar and had responsibility within Vic Solar for the business model, marketing documents and agreements which gave rise to those contraventions of the Australian Consumer Law by Vic Solar (see Liability Judgment at [186]). 35 Acting as a model litigant, the Director tendered (as an exhibit to the affidavit of Ms Sutton) a copy of a letter given by Corrs Chambers Westgarth to Vic Solar on 7 September 2016 (and which Vic Solar had voluntarily produced to Director, as contemplated by the letter). The letter expressed the opinion that: On the basis of the information presently available to us, we consider that it is reasonable for Vic Solar to submit to CAV that the unsolicited consumer agreement provisions in the ACL do not apply to agreements reached as a result of Vic Solar's "lead generation" sales method. This is because customers who enter into such agreements do so after inviting a Vic Solar representative to their home in the knowledge that the predominant purpose of the invitation is to enter into "discussion or dealing directed towards the making of the agreement". 36 I place little weight on that letter as a mitigating factor for a number of reasons. 37 First, the letter is not in the nature of independent advice given to Vic Solar by Corrs Chambers Westgarth. The stated purpose of the letter was to provide a basis on which it would be "reasonable" for Vic Solar to submit to Consumer Affairs Victoria that its contracts for the sale of solar PV systems to residential consumers did not constitute unsolicited consumer agreements within the Australian Consumer Law. The letter was an exercise in advocacy with the consumer regulator, not independent advice. The letter concluded with the offer: We are happy for you to provide a copy of this letter to CAV and would be happy to attend any meeting that is arranged with CAV to discuss the steps that Vic Solar has taken to ensure that its sales practices comply with the ACL and explain the basis on which it contends the unsolicited consumer agreement provisions do not apply to agreements resulting from the "lead generation" sales method as set out above. 38 Second, as the respondents did not participate in the hearing, there was no evidence given as to their actual beliefs regarding their trading conduct, whether based on the letter from Corrs Chambers Westgarth or otherwise: c.f. Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) (2018) 260 FCR 68 at [61]-[64]. 39 Third, even if the letter could be regarded as independent legal advice obtained by the respondents, such advice is generally considered not to be a mitigating factor of any material weight: see Universal Music Australia Pty Ltd v ACCC (2003) 131 FCR 529 at [309]-[310]; Visy Paper Pty Ltd v Australian Competition and Consumer Commission [2005] FCAFC 236; 224 ALR 390 at [49].

Whether the person has previously been found by a court to have engaged in any similar conduct 40 Neither Vic Solar nor Mr Srinivasan has previously been found by a court to have engaged in any similar conduct.

Whether the contravention arose out of the conduct of senior management or at a lower level 41 In the Liability Judgment, I found that (at [183] and [184]): (a) at all relevant times, Mr Srinivasan was the director of, and a shareholder in, Vic Solar and oversaw the direction of the Vic Solar business and worked within the business on a day-to-day basis; (b) Mr Srinivasan understood and was responsible for Vic Solar's marketing and sales system involving the lead generators knocking on household doors to seek an invitation for a Vic Solar sales representative to visit to discuss the sale of a solar PV system; (c) Mr Srinivasan reviewed and approved the marketing scripts used by the lead generators in the course of their marketing activities on behalf of Vic Solar; (d) Mr Srinivasan knew that the Community Bulk Buy representations (amongst others) were false; and (e) Mr Srinivasan knew that the form of agreements used by Vic Solar did not contain a notification of the consumer's termination rights. 42 It follows that the contraventions arose out of the conduct of the most senior management within Vic Solar.

Compliance culture 43 In the course of responding to the Director's investigation of its conduct, Vic Solar produced various documents in the nature of codes of conduct and training modules relating to the manner in which Vic Solar's marketing and sales representatives should communicate with consumers. While these documents referred to the Australian Consumer Law, they contained almost no detailed information concerning the obligations under that law. Given the nature and extent of the respondents' contravening conduct, I conclude that the documents were entirely ineffectual in drawing the attention of the respondents or their representatives to their obligations under the Australian Consumer Law.

The financial circumstances of the respondents 44 Vic Solar went into administration on 19 November 2019 and entered into a Deed of Company Arrangement on 3 February 2020. The Deed of Company Arrangement proposed a fund of $130,000 in payment of unsecured creditors, being a return of between 6 and 13 cents in the dollar. There is no evidence that Vic Solar is still operating as a business selling solar PV systems. I infer that Vic Solar is unlikely to be able pay a pecuniary penalty. 45 There is no evidence before the Court concerning Mr Srinivasan's financial circumstances. A title search dated 24 February 2021 shows that, as at that date, Mr Srinivasan was the registered proprietor of a property in South Morang in Victoria. The property is subject to two caveats, and a mortgage in favour of the National Australia Bank.

Cooperation with the enforcement authorities 46 During the Director's investigation of the respondents' trading conduct between 2014 and 2016, the evidence shows the respondents corresponded with the Director to a limited extent. Ultimately, in 2018, the Director exercised powers under s 126 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) to compel Vic Solar to produce documents and Mr Srinivasan to attend a compulsory examination. I do not consider that any of that conduct can be regarded as cooperation with the Director. Subsequently, in this proceeding, the respondents made limited admissions and then ceased to participate. Overall, no allowance should be made for any cooperation on the part of the respondents.

Contrition 47 There is no evidence of contrition on the part of either respondent. Further, Mr Srinivasan's decision not to participate in this proceeding indicates that he has no contrition in respect of the contraventions.

Other considerations relevant to Mr Srinivasan 48 One further consideration is relevant to Mr Srinivasan. As discussed below, in my view it is appropriate to make a five-year disqualification order under s 248 of the Australian Consumer Law against Mr Srinivasan. In the context of relevant contraventions of the Corporations Act and the Australian Consumer Law, the imposition of a disqualification order on a director is regarded as a relevant factor in the assessment of any pecuniary penalty to be imposed: see Australian Securities and Investments Commission v Healey (No 2) (2011) 196 FCR 430 at [119] per Middleton J; Australian Competition and Consumer Commission v Renegade Gas Pty Ltd (trading as Supagas NSW) [2014] FCA 1135 (Renegade Gas) at [97] per Gordon J; Australian Competition and Consumer Commission v South East Melbourne Cleaning Pty Ltd (in liq) [2015] FCA 25 (South East Melbourne Cleaning) at [146] per Murphy J; and Australian Securities and Investments Commission v Wooldridge [2019] FCAFC 172 at [56] - [58]. 49 In Australian Competition and Consumer Commission v Safety Compliance Pty Ltd [2015] FCR 1469; 110 ACSR 306 (Safety Compliance), Farrell J referred (at [28]-[31]) to s 248(4) of the Australian Consumer Law which provides that: For the purposes of this Schedule (other than this section or section 249), an order under this section is not a penalty. 50 Her Honour noted that there is no equivalent provision in ss 206C or 206E of the Corporations Act and the existence of the provision raised the question whether disqualification orders need to be taken into account in the assessment of a pecuniary penalty. Her Honour concluded that, as it is necessary for the Court, in deciding whether to impose a pecuniary penalty, to consider all relevant circumstances, it is relevant to consider the impact of a disqualification order on the respondent's capacity to pay the penalty.

Consideration of appropriate penalty 51 In the present case, I consider that the most significant contraventions of the Australian Consumer Law attracting a pecuniary penalty are: (a) the contraventions of s 29 associated with the Community Bulk Buy misrepresentations and accompanying false testimonials; (b) the contraventions of s 29 associated with the country of origin misrepresentations and the global manufacturer misrepresentations; (c) the contraventions of s 74(a) associated with dealers failing to clearly advise home-owners, before beginning to negotiate, that the dealer's purpose was to seek agreement to the supply of a solar PV system by Vic Solar; and (d) the contraventions of ss 76 and 79 associated with the failure to give the consumer information in writing as to the consumer's right to terminate the agreement during the termination period or the way in which the consumer may exercise that right. 52 Each of those four categories of contraventions occurred many thousands of times in connection with the sale of solar PV panels by Vic Solar. They were systemic elements of Vic Solar's business model. That is not to diminish the significance of the other contraventions by Vic Solar. However, as explained above, the other contraventions tended to be individual instances of contraventions rather than systemic matters. 53 The above four categories of contraventions also formed the foundation for the finding that Vic Solar's trading conduct was unconscionable in contravention of s 21. However, applying s 224(4)(b), a penalty should not be imposed for the contravention of s 21 as well as the above four categories of contravention, as that would be to impose more than one penalty in respect of the same conduct. Further, I also consider that the conduct that constitutes the contravention of s 74(a) is largely the same as the conduct that constitutes the contravention of s 29 relating to the Community Bulk Buy misrepresentations, and by reason of s 224(4), more than one penalty should not be imposed for those contraventions. For those reasons, I propose to impose penalties for categories (a), (b) and (d) above and not for the contraventions of ss 21 or 74(a). 54 The contravening conduct within each of those three categories arises out of the same course of conduct. I consider that it is appropriate that a "concurrent" or single penalty should be imposed for each such course of conduct (being three courses of conduct): Australian Competition and Consumer Commission v Yazaki Corporation (2018) 262 FCR 243 (Yazaki Corporation) at [234]. That is to prevent the respondents being punished twice in respect of multiple contravening acts or omissions that should be evaluated, for the purposes of assessing an appropriate penalty, as a lesser number of acts of wrongdoing: Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; 269 ALR 1 at [39], per Middleton and Gordon JJ. However, it is not appropriate or permissible to treat multiple contravening acts or omissions as just one contravention for the purposes of determining the maximum limit dictated by the relevant legislation: Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; 340 ALR 25 at [141]; Yazaki Corporation at [227]-[235]. 55 The principal object of imposing a pecuniary penalty is deterrence; both the need to deter repetition of the contravening conduct by the contravener (specific deterrence) and to deter others who might be tempted to engage in similar contraventions (general deterrence): Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; 287 ALR 249 at [62]-[63]; Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at [65] per French CJ, Crennan, Bell and Keane JJ; Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 at [55] per French CJ, Kiefel, Bell, Nettle and Gordon JJ and [110] per Keane J. 56 In relation to Vic Solar, I consider that each of the three categories of contravention involve very serious contraventions of the Australian Consumer Law. Throughout most of the period of the contravening conduct, the maximum penalty for each act that constituted a contravention of s 29 was $1.1 million and for each act that constituted a contravention of ss 76 and 79 was $50,000. Thus, the maximum penalty for each category of contraventions is very large (in the case of the contraventions of s 29, potentially in the billions of dollars and in the case of contraventions of ss 76 and 79, potentially in the low hundreds of millions). In terms of consumer harm, I consider that each of the categories of contraventions had a similar effect which was to undermine consumers' ability to make informed choices about the purchase of solar PV systems and purchase an optimal system at lowest cost. There are almost no mitigating factors in favour of Vic Solar which chose not to participate in the proceeding, although I recognise that it has not previously been found by a court to have engaged in any similar conduct. Having regard to the primary objectives of specific and general deterrence, and all of the other considerations referred to above, I consider that each of the categories of contraventions by Vic Solar should attract a penalty of $1 million, being $3 million in total. In imposing a penalty of that size in circumstances where Vic Solar no longer conducts business and has limited assets, I am most conscious of the importance of general deterrence and the need for the Court to mark its disapproval of the contravening conduct. 57 Mr Srinivasan was knowingly concerned in the same three categories of contravention. Again, there are almost no mitigating factors of any significance, save that Mr Srinivasan has not previously been found by a court to have engaged in any similar conduct. In my view, there is no relevant difference in the degree of culpability of Vic Solar and Mr Srinivasan for the contravening conduct, as Mr Srinivasan was the controller of VicSolar and made all relevant decisions. Save for the disqualification order that is to be made against Mr Srinivasan, I would have imposed a penalty on Mr Srinivasan that reflected the statutory ratio of corporate and individual penalties that was applicable throughout most of the period of contravening conduct, being one fifth (which would have resulted in a penalty for each of the three categories of contraventions in respect of which Mr Srinivasan was knowingly concerned of $200,000 and an aggregate penalty of $600,000). However, taking into account the fact that a disqualification order will also be made against Mr Srinivasan, I consider that an appropriate penalty for each of the three categories of contraventions in respect of which Mr Srinivasan was knowingly concerned is $150,000, being $450,000 in total.

Disqualification Orders 58 The Director seeks an order pursuant to s 248 of the Australian Consumer Law (Vic) that Mr Srinivasan be restrained from managing corporations for five years. 59 Section 248(1) provides that a court may, on the application of the regulator, make an order disqualifying a person from managing corporations for a period that the court considers appropriate if: (a) the court is satisfied that, relevantly, the person has been involved in a contravention of a provision of: (i) Part 3-1 (which includes the prohibition against false or misleading representations in s 29); and (ii) Division 2 of Part 3-2, other than s 85 (which includes the obligations associated with unsolicited consumer agreements in ss 74, 76 and 79); and (b) the court is satisfied that the disqualification is justified. 60 Section 248(2) provides that, in determining whether a disqualification is justified, the court may have regard to: (a) the person's conduct in relation to the management, business or property of any corporation; and (b) any other matters that the court considers appropriate. 61 In Australian Competition and Consumer Commission v Halkalia Pty Ltd (No 2) [2012] FCA 535 (Halkalia), Tracey J observed (at [110]) that s 248 of the Australian Consumer Law is modelled on s 206C of the Corporations Act 2001 (Cth). Numerous decisions of the Court have confirmed that the principles developed in the context of s 206C are relevant in the context of s 248: see for example Halkalia at [111]; Renegade Gas at [89]-[96]; South East Melbourne Cleaning at [147]-[148]; and Safety Compliance at [33]. Many of those principles were summarised by Santow J in Australian Securities and Investments Commission v Adler [2002] NSWSC 483; 42 ACSR 80 (ASIC v Adler) (at [56]). It is necessary to acknowledge, though, the different context in which disqualification orders may be made under s 206C of the Corporations Act in comparison to the Australian Consumer Law. Many of the contraventions of the Corporations Act for which a disqualification order may be imposed (being civil penalty provisions defined in s 1317E(3)) concern laws that relate to the governance of corporations such as the duties of directors in ss 180-183. The expression of the relevant principles by Santow J in ASIC v Adler reflect that context. 62 As is made clear in ASIC v Adler and the authorities referred to therein, a central object of a disqualification order is to protect the public from the harmful use of the corporate structure. It was previously suggested that while a disqualification order serves the objective of deterrence, such an order was not punitive. However, in Rich v Australian Securities and Investments Commission (2004) 220 CLR 129, the High Court concluded that a distinction between "protective" and "punitive" proceedings brought by a regulatory agency was elusive and that disqualification orders have both a protective and a penal character. 63 As noted above, s 248(4) provides that, for the purposes of the Australian Consumer Law, other than ss 248 or 249, an order under s 248 is not a penalty. As Farrell J observed in Safety Compliance (at [30]), that subsection (and its predecessor in s 86E(3B) of the Trade Practices Act 1974 (Cth)) has not been the subject of judicial comment. Nevertheless, it seems apparent from the text of the provision that a disqualification order is to be regarded as a penalty for the purposes of ss 248 and 249 of the Australian Consumer Law, but not for other purposes. In so far as a disqualification order under the Australian Consumer Law serves a penal function, the factors that are relevant to the assessment of a pecuniary penalty will also be relevant to the determination of whether a disqualification order is warranted. 64 In the present proceeding, the Director emphasised the protective purpose of a disqualification order. In the context of the Australian Consumer Law, the relevant public to be protected comprises consumers who may otherwise deal with, and be harmed by, corporations managed by a person who has been found to have contravened the Australian Consumer Law. Many of the factors that are relevant to the assessment of the imposition of a pecuniary penalty are also relevant in determining whether to make a disqualification order for protective purposes. That is because those factors bear upon the likelihood that Mr Srinivasan will continue to manage corporations in a manner that will result in contraventions of the Australian Consumer Law and the consequences for consumers if that occurs. Factors that bear upon the likelihood that Mr Srinivasan will continue to manage corporations in a manner that will result in contravening conduct include: (a) the deliberateness of Mr Srinivasan's involvement in the contraventions; (b) Mr Srinivasan's attitude towards compliance with the Australian Consumer Law; (c) Mr Srinivasan's competence in managing a corporation in a manner that is likely to ensure compliance with the Australian Consumer Law; (d) whether Mr Srinivasan has expressed contrition for the contraventions that have occurred; (e) whether Mr Srinivasan has engaged in similar conduct in the past; and (f) whether Mr Srinivasan continues to occupy a position of management of a corporation. 65 Factors that bear upon the consequences for consumers if further contraventions occur in the future include particularly the nature and extent of the previous contraventions and of any loss or damage suffered as a result of those previous contraventions. 66 In the present case, I am satisfied that it is appropriate to impose on Mr Srinivasan the disqualification order sought by the Director, largely for the reason explained in the context of considering the pecuniary penalty to be imposed. In summary: (a) The contraventions of the Australian Consumer Law in which Mr Srinivasan was involved were serious breaches of the law. The contraventions were at the centre of Vic Solar's business model which I found involved trickery and sharp practice, illegality and taking advantage of consumers in their homes when they are more vulnerable to such practices: Liability Judgment at [176]. (b) The contraventions of the Australian Consumer Law in which Mr Srinivasan was involved likely caused substantial consumer loss, potentially some thousands of dollars for each sale of a solar PV system. (c) Mr Srinivasan knew that the Community Bulk Buy and country of origin representations were false. (d) Mr Srinivasan failed to put in place effective legal compliance systems and procedures within Vic Solar's business and there is no evidence to indicate that Mr Srinivasan knows what is required to ensure corporate compliance with the Australian Consumer Law. (e) Mr Srinivasan's decision not to participate in this proceeding indicates that he has no contrition in respect of the contraventions. 67 The affidavit of Ms Bethany shows that Mr Srinivasan is currently the director of a number of companies within Australia, at least one of which (and possibly more) are involved in some capacity in the solar industry. Relevantly: (a) on 27 May 2020, Mr Srinivasan was appointed a director of Grid Support Services Pty Ltd ACN 641 277 894 (and is also a member of that company); and (b) between 14 May 2020 and 7 August 2020 Mr Srinivasan was, and from 7 December 2020 to date has been, a director of Eco Connect Solutions Pty Ltd ACN 639 812 230. 68 Eco Connect Solutions Pty Ltd was incorporated on 17 March 2020 (shortly after Vic Solar went into administration and entered into a Deed of Company Arrangement). One half of the shares in Eco Connect Solutions Pty Ltd are owned by S&Z Investments (Au) Pty Ltd ACN 618 281 628. Mr Srinivasan is also a director and secretary of that company. The evidence shows that it is likely that Eco Connect Solutions Pty Ltd owns the website www.ecoconnectsolution.com.au. The website states that the business of Eco Connect Solutions includes the supply and installation of solar PV systems for residential and commercial projects. 69 Having regard to the foregoing matters, in my view it is appropriate to disqualify Mr Srinivasan from managing corporations for a period of 5 years.

Injunctions 70 The Director also seeks an injunction pursuant to s 232 of the Australian Consumer Law (Cth) restraining Vic Solar, for a period of 5 years, from engaging in conduct in the future of a kind that has been found to be a contravention of the Australian Consumer Law in this proceeding and which was central to Vic Solar's business model, namely: (a) entering into an unsolicited consumer agreement unless the agreement complies with ss 74, 76, and 79 of the Australian Consumer Law; (b) establishing a business or practice that suggests that solar panels, inverters, solar power systems and related installation services, can be purchased through or with the assistance of a "social enterprise", or at a discount through community bulk buying, unless that is the case; (c) establishing a business or practice where it engages in conduct that is misleading or deceptive or likely to mislead or deceive in relation to the identity of the manufacturer, distributor, installer, or dealer of a solar panel system and related products or the country of origin or solar panels and inverters; and (d) falsely indicating that an offer to purchase goods or services is available for a limited period of time. 71 The Director submitted that, while Vic Solar is not currently engaged in trading activities, the injunction provides additional protection to the community should it resume trading. 72 In my view, an injunction against Vic Solar lacks utility in circumstances where it is not currently trading and the evidence indicates that there is no likelihood that it will recommence trading. Even if it were to recommence trading and engage in future contraventions of the Australian Consumer Law, on application by the Director the Court has power to restrain such future conduct and impose large pecuniary penalties on Vic Solar and any person knowingly involved in the contraventions. Those sanctions ought to be a sufficient deterrent. 73 The Director also seeks an injunction restraining Mr Srinivasan, for a period of 5 years, from being knowingly involved in future contraventions of the Australian Consumer Law by a corporation of the kind the subject of this proceeding, as set out above in respect of Vic Solar. In support of that relief, the Director submitted that the grant of an injunction against Mr Srinivasan has utility because it imposes additional consequences on Mr Srinivasan for future contraventions, including for contempt proceedings, relying upon Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (2007) 161 FCR 513 at [110] - [111]. 74 In my view, an injunction against Mr Srinivasan in the form sought by the Director is not appropriate. First and foremost, I consider that the sanctions to be imposed on Mr Srinivasan, being a pecuniary penalty and a disqualification order for 5 years, will act as a significant deterrent to future contraventions. Second, if Mr Srinivasan were to again be knowingly involved in similar contraventions, the Court has power to restrain such future conduct and impose large pecuniary penalties on Mr Srinivasan, which will also be a significant deterrent. Third, the disqualification order to be made against Mr Srinivasan will greatly reduce the opportunity for future contraventions. Fourth, it is desirable that injunctions be framed in clear and precise terms so that they can be readily complied with. However, the injunction sought by the Director would involve a number of layers of interpretation including whether conduct satisfies that test of "knowing involvement".

Conclusion 75 In conclusion, I will order that: (a) Vic Solar pay an aggregate pecuniary penalty to the State of Victoria of $3 million; (b) Mr Srinivasan pay an aggregate pecuniary penalty to the State of Victoria of $450,000 and be disqualified from managing corporations for a period of five years; and (c) the respondents pay the Director's costs of the proceeding concerning further relief. I certify that the preceding seventy-five (75) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Bryan.