Declarations (s 21 Federal Court of Australia Act 1976 (Cth) ("the FCA Act"))
Misleading or deceptive conduct (s 18 ACL and ACL (Vic))
Fletcher & Parker (Balwyn) Pty Ltd [ACN 004 958 794] ("Fletcher & Parker Balwyn") an estate agent licensed under the Estate Agents Act 1980 (Vic) while carrying on the business of an estate agent in trade or commerce, by representing through the Places Magazine, Newspaper and Online advertisements ("the advertisements") it published, or caused to be published, at various times in 2015 that:
(a) The vendors of the Victorian real estate, identified in Annexure A below ("the properties"), would sell those properties for a price that was within the price range in the advertisements, or was not substantially more than the highest figure in the price range, in the advertisements relating to those properties;
(b) The vendors had instructed the Respondent to sell the properties for a price that was within the price range in the advertisements, or was not substantially more than the highest figure in the price range, in the advertisements relating to those properties;
(c) The Respondent in fact believed and held the opinion that the properties would be sold at a price that was within the price range in the advertisements, or was not substantially more than the highest figure in the range in the advertisements relating to those properties;
(d) The Respondent had reasonable grounds for believing and holding the opinion that the properties would be sold at a price that was within the price range in the advertisements, or was not substantially more than the highest figure in the price range in the advertisements relating to the properties; and
(e) The likely selling price for the properties was within the price range in the advertisements, or not substantially more than the highest figure in the price range in the advertisements relating to the properties.
Whereas in fact, at the time of the advertisements -
(f) The Respondent did not have any, or any reasonable, grounds for believing that the vendors of the properties would sell them for a price that was within the price range in the advertisements, or was not substantially more than the highest figure in the price range, in the advertisements relating to the properties;
(g) The vendors had not instructed the Respondent to sell the properties for a price that was within the price range in the advertisements, or was not substantially more than the highest figure in the price range in the advertisements relating to the properties;
(h) The Respondent in fact did not believe or hold the opinion that the relevant property would be sold at a price that was within the price range provided, or was not substantially more than the highest figure in the price range in the advertisements relating to the properties;
(i) The Respondent did not have any or any reasonable grounds for believing or holding the opinion that the properties would be sold at a price that was within the price range in the advertisements, or was not substantially more than the highest figure in the price range in the advertisements relating to those properties; and
(j) The likely selling price for the properties was not within the price range in the advertisements, and was substantially more than the highest figure in the price range in the advertisements relating to those properties
has, in trade or commerce, engaged in conduct that was misleading and deceptive or likely to mislead or deceive contrary to section 18 of the ACL and section 18 of the ACL (Vic).
Fletcher & Parker Balwyn while carrying on the business of an estate agent in trade or commerce, by representing through its email responses to potential buyers or other interested persons that:
(a) The vendors of the properties, would sell those properties for a price that was approximately, or was not substantially more than, the dollar figure stated for that property;
(b) The vendors were prepared to sell those properties for a price that was approximately, or was not substantially more than, the dollar figure stated for that property;
(c) The vendors had instructed the Respondent to sell the properties for a price that was approximately, or was not substantially more than, the dollar figure stated for that property;
(d) The Respondent in fact believed and held the opinion that the properties would be sold at a price that was approximately, or was not substantially more than, the dollar figure stated for that property;
(e) The Respondent had reasonable grounds for believing and holding the opinion that the properties would be sold at a price that was approximately, or was not substantially more than, the dollar figure stated for that property; and
(f) The likely selling price for the properties was approximately, or was not substantially more than, the dollar figure stated for that property.
Whereas in fact, at the time of the particular email responses:
(g) The Respondent did not have any, or any reasonable, grounds for believing that the vendors of the properties would sell them for a price that was approximately, or was not substantially more than, the dollar figure stated for that property;
(h) The vendors had not instructed the Respondent to sell the properties for a price that was approximately, or was not substantially more than, the dollar figure stated for that property;
(i) The Respondent in fact did not believe or hold the opinion that the relevant property would be sold at a price that was approximately, or was not substantially more than the dollar figure stated for that property;
(j) The Respondent did not have any, or any reasonable grounds, for believing or holding the opinion that the properties would be sold at a price that was approximately, or was not substantially more than, the dollar figure stated for that property;
(k) The likely selling price for the properties was not approximately, or was substantially more than, the dollar figure stated for that property;
has, in trade or commerce, engaged in conduct that was misleading and deceptive or likely to mislead or deceive contrary to section 18 of the ACL and section 18 of the ACL (Vic).
False or misleading representations (s30 ACL and s 30 ACL (Vic))
Fletcher & Parker Balwyn, in trade or commerce, in connection with the sale or grant, or the possible sale or grant, of an interest in land, or in connection with the promotion by any means of the sale or grant of an interest in land, by making the following representations, through the Places Magazine, Newspaper and Online advertisements ("the advertisements") it published, or caused to be published, at various times in 2015, that:
(a) The vendors of the properties (identified in Annexure A below), would sell those properties for a price that was within the price range in the advertisements, or was not substantially more than the highest figure in the price range, in the advertisements relating to those properties;
(b) The vendors were prepared to sell those properties for a price that was in the price range in the advertisements, or was not substantially more than the highest figure in the price range, in the advertisements relating to those properties;
(c) The vendors had instructed the Respondent to sell the properties for a price that was within the price range in the advertisements, or was not substantially more than the highest figure in the price range, in the advertisements relating to those properties;
(d) The Respondent in fact believed and held the opinion that the properties would be sold at a price that was within the price range in the advertisements, or was not substantially more than the highest figure in the price range in the advertisements relating to those properties;
(e) The Respondent had reasonable grounds for believing and holding the opinion that the properties would be sold at a price that was within the price range in the advertisements, or was not substantially more than the highest figure in the price range in the advertisements relating to the properties;
(f) The likely selling price for the properties was within the price range in the advertisements, or not substantially more than the highest figure in the price range in the advertisements relating to the properties; and
Whereas in fact, at the time of the advertisements -
(g) The Respondent did not have any, or any reasonable, grounds for believing that the vendors of the properties would sell them for a price that was within the price range in the advertisements, or was not substantially more than the highest figure in the price range in the advertisements relating to the properties;
(h) The vendors had not instructed the Respondent to sell the properties for a price that was within the price range in the advertisements, or was not substantially more than the highest figure in the price range in the advertisements relating to the properties;
(i) The Respondent in fact did not believe or hold the opinion that the relevant property would be sold at a price that was within the range provided, or was not substantially more than the highest figure in the price range in the advertisements relating to the properties;
(j) The Respondent did not have any, or any reasonable grounds, for believing or holding the opinion that the properties would be sold at a price that was within the price range in the advertisements, or was not substantially more than the highest figure in the price range in the advertisements relating to those properties; and
(k) The likely selling price for the properties was not within the price range in the advertisements, and was substantially more than the highest figure in the price range in the advertisements relating to those properties,
has made false or misleading representations concerning the price payable for the properties contrary to section 30 (1)(c) of the ACL and the ACL(Vic).
Fletcher & Parker Balwyn, in trade or commerce in connection with the sale or grant, or the possible sale or grant, of an interest in land, or in connection with the promotion by any means of the sale or grant of an interest in land, by making the following representations through its email responses to potential buyers or other interested persons that:
(a) The vendors of the properties would sell those properties for a price that was approximately, or was not substantially more than, the dollar figure stated for that property;
(b) The vendors were prepared to sell those properties for a price that was approximately, or was not substantially more than, the dollar figure stated for that property;
(c) The vendors had instructed the Respondent to sell the properties for a price that was approximately, or was not substantially more than, the dollar figure stated for that property;
(d) The Respondent in fact believed and held the opinion that the properties would be sold at a price that was approximately, or was not substantially more than, the dollar figure stated for that property;
(e) The Respondent had reasonable grounds for believing and holding the opinion that the properties would be sold at a price that was approximately, or was not substantially more than, the dollar figure stated for that property; and
(f) The likely selling price for the properties was approximately, or was not substantially more than, the dollar figure stated for that property.
Whereas in fact, at the time of the particular email responses:
(g) The Respondent did not have any, or any reasonable, grounds for believing that the vendors of the properties would sell them for a price that was approximately, or was not substantially more than, the dollar figure stated for that property;
(h) The vendors had not instructed the Respondent to sell the properties for a price that was approximately, or was not substantially more than, the dollar figure stated for that property;
(i) The Respondent in fact did not believe or hold the opinion that the relevant property would be sold at a price that was approximately, or was not substantially more than, the dollar figure stated for that property;
(j) The Respondent did not have any, or any reasonable grounds, for believing or holding the opinion that the properties would be sold at a price that was approximately, or was not substantially more than, the dollar figure stated for that property;
(k) The likely selling price for the properties was not approximately, or was substantially more than, the dollar figure stated for that property;
has made false or misleading representations, concerning the price payable for the properties contrary to section 30 (1)(c) of the ACL and the ACL(Vic).
Non-Punitive Publication Order (s 246 ACL (Vic))
Adverse Publicity Order (s 247 ACL (Vic))
Fletcher & Parker Balwyn, having contravened a provision of Chapter 3 of the ACL (Vic), within 10 days of the date of the Order:
(a) take all reasonable steps to cause to be published within the first 10 pages of the Weekly Review paper (in which Fletcher & Parker Balwyn advertise);
(b) cause to be displayed, prominently, conspicuously and continuously, for a period of 6 months, in the public area at the Canterbury and Blackburn offices of Fletcher & Parker Balwyn -
a Public Notice in the form and with the content of Annexure "B" to the Order. Each of the Notices:
(i) be at least 30 centimetres by 42 centimetres in size or a size of no less than a full page in the newspaper;
(ii) use a minimum type size of 12 point Times New Roman or equivalent; and
(iii) be in full colour.
An order that Fletcher & Parker Balwyn, take all reasonable steps to cause the Public Notice to be published on:
(a) The home page of all websites which are presently owned, operated or maintained by or on behalf of Fletcher & Parker Balwyn, or if any such URL is replaced or changed, the Internet home page of the corresponding website, for a period of 6 months from the date of the order, and use its best endeavours to ensure that:
(i) the Public Notice is to be viewable by clicking through a "click-through" icon located on the Fletchers website;
(ii) the "click-through" icon referred to in the sub-paragraph (i) above is located in a central position on the page first accessed when the user opens to the home page of any Fletchers website;
(iii) the "click-through" icon must contain the words "FALSE, MISLEADING AND DECEPTIVE CONDUCT - IMPORTANT NOTICE ORDERED BY FEDERAL COURT OF AUSTRALIA IN RELATION TO CANTERBURY AND BLACKBURN OFFICES" (in capital letters and use a minimum type size of 16 point Times New Roman or equivalent), clearly and prominently in red on a contrasting background and the words "Click Here"; and
(iv) the Public Notice occupies the entire webpage which is accessed via the "click through" icon referred to above.
Pecuniary Penalties (s 224 ACL (Vic))
An order that Fletcher & Parker Balwyn pay to the State of Victoria a pecuniary penalty of $40,000 in respect of each contravention totalling $880,000 for the 22 contraventions of s 30 of the ACL (Vic) payable within 30 days after the Court order.
Compliance program (s 246 (2)(b) ACL(Vic))
Fletcher & Parker Balwyn at its own expense:
(a) establish, within three months of the date of the order, a compliance program which meets the requirements set out in Annexure C to this Order and maintain the compliance program for three years from the date on which it is established; or
(b) if it already has an existing consumer law compliance program:
(i) within three months of the date of this Order, review the existing compliance program and make any amendments necessary to ensure that it meets the requirements set out in Annexure C to this Order; and
(ii) maintain this amended compliance program for at least three years from the date on which the amendments, referred to in paragraph 8(b)(i) above, are made.
Fletcher & Parker Balwyn file and serve on the Applicant, within three months of the date of this Order, an affidavit of its proper officer verifying that it has carried out its obligations under the orders of the Court sought under paragraphs 5, 6 and 8 above, detailing what it has done, including:
(a) in respect of paragraph 5(a) above, by providing a copy of the corrective advertisement as published in the newspapers;
(b) in respect of paragraph 6(a) above, by providing a copy of:
(i) a date stamped screen capture of each website showing the click-through link; and
(ii) a date stamped screen capture of the stand-alone web page containing the notice.
Costs
An order that Fletcher & Parker Balwyn pay a contribution of $40,000 towards the Applicant's costs payable within 30 days of the Court order.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
[2]
INTRODUCTION
1 The respondent in this proceeding, Fletcher & Parker (Balwyn) Pty Ltd (Fletchers), carries on a business as a licensed real estate agent in Victoria, operating through offices which it wholly owns as well as through offices it operates on a joint venture basis with other parties. A separate company operates other real estate offices as franchises which are branded as "Fletchers". The Fletchers offices in which the contraventions the subject of this proceeding were committed are the Canterbury office which it wholly owns and the Blackburn office which is a joint venture office in which it has a 51% interest. Both offices carry on business as residential real estate agencies in the eastern suburbs of Melbourne.
2 The applicant, the Director of Consumer Affairs Victoria (Consumer Affairs), alleges that in advertisements Fletchers published online and in real estate magazines, as well as in the emails it sent to potential property buyers or other interested persons, in respect to 22 properties which it offered for sale in 2015, Fletchers represented to potential buyers that:
(a) the vendors would sell the properties for a price within the advertised price range, or not substantially more than the highest figure in the price range, or would sell or were prepared to sell the properties for a price that was approximately or not substantially more than the figure stated in the emails;
(b) the vendors were prepared to sell the properties for a price within the advertised price range, or not substantially more than the highest figure in the price range, or a price that was approximately or not substantially more than the figure stated in the emails;
(c) the vendors had instructed Fletchers to sell the properties for a price within the advertised price range, or not substantially more than the highest figure in the price range, or a price that was approximately or not substantially more than the figure stated in the emails;
(d) Fletchers in fact believed and held the opinion that the properties would be sold for a price within the advertised price range, or not substantially more than the highest figure in the price range, or a price that was approximately or not substantially more than the figure stated in the emails;
(e) Fletchers had reasonable grounds for believing and holding the opinion that the properties would be sold for a price within the advertised price range, or not substantially more than the highest figure in the price range, or a price that was approximately or not substantially more than the figure stated in the emails; and
(f) the likely selling price for the properties was within the advertised price range, or not substantially more than the highest figure in the price range, or a price that was approximately or not substantially more than the figure stated in the emails.
3 Fletchers now admits that when it made those representations they were false or misleading. At the time it made the representations one or more of the following had occurred in respect of each of the 22 properties:
(a) Fletchers did not have any, or any reasonable, grounds for believing that the vendors would sell the properties for a price within the advertised price range, not substantially more than the highest figure in the price range, or for a price approximately or not substantially more than the figure stated in the emails;
(b) the vendors had not instructed Fletchers to sell the properties for a price within the advertised price range, not substantially more than the highest figure in the price range, or for a price approximately or not substantially more than the figure stated in the emails;
(c) Fletchers in fact did not believe or hold the opinion that the relevant property would be sold for a price within the advertised price range, not substantially more than the highest figure in the price range, or for a price approximately or not substantially more than the figure stated in the emails;
(d) Fletchers did not have any, or any reasonable, grounds for believing or holding the opinion that the properties would be sold for a price within the advertised price range, not substantially more than the highest figure in the price range, or for a price approximately or not substantially more than the figure stated in the emails; and/or
(e) the likely selling price for the properties was not within the advertised price range and was substantially more than the highest figure in the price range, or was not approximately, or was substantially more than, the figure stated in the emails.
4 Consumer Affairs alleges that by this conduct Fletchers:
(a) engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the Australian Consumer Law (ACL) in Schedule 2 of the Competition and Consumer Act 2010 (Cth), and s 18 of the Australian Consumer Law (Victoria) (ACL (Vic)) (by operation of s 8 of the Australian Consumer Law and Fair Trading Act 2012 (Vic)) (ACLFTA); and
(b) made false or misleading representations concerning the price payable for land in contravention of s 30(1)(c) of the ACL and the ACL (Vic).
5 Fletchers has admitted the contraventions and the underlying conduct by way of a Statement of Agreed Facts filed with the Court. It consents to orders which include a pecuniary penalty of $880,000, declarations, an adverse publicity order, a compliance program and a contribution towards the costs of the proceeding. The admitted contraventions are of both the ACL and the ACL (Vic) but for ease of reference I will usually refer only to the ACL (Vic).
6 For the reasons I set out below, it is appropriate to make the orders proposed by the parties.
[3]
THE FACTS
7 The factual background is primarily drawn from the Statement of Agreed Facts and to a limited extent from affidavits filed on behalf of Consumer Affairs.
[4]
Fletchers' business
8 Fletchers is a licensed estate agent under the Estate Agents Act 1980 (Vic) and was incorporated and registered in Victoria in 1972. It carries on its business under the trading name "Fletchers" at wholly owned offices in Canterbury, Balwyn North and Manningham and in offices operated as joint ventures in Blackburn, Maroondah, Glen Iris and Glen Waverley. A separate company, F & P Holdings Pty Ltd, was and is the franchisor for a number of other franchised real estate offices branded as "Fletchers". As I have said, the contraventions which are the subject of this proceeding were committed in Fletchers' Canterbury and Blackburn offices.
[5]
Fletchers' marketing
9 Fletchers provided training for its real estate sales consultants, its joint venture offices and the franchisees. It conducted meetings of its sales employees on a regular basis at each of its Balwyn and Canterbury offices, and conducted internal training sessions for the sales staff employed by it, its joint venture partners and the franchisees.
10 Fletchers published for itself, its joint venture partners and the franchisees a weekly residential real estate magazine called "the Places magazine" (Places magazine) which advertised all the residential properties listed or available for sale by Fletchers in metropolitan Melbourne/Victoria. It provided the Places magazine to each of Fletchers' offices, its joint venture offices and the franchisees and distributed the magazine to the public at large by making it freely available from those offices.
11 It also regularly advertised some or all of the residential properties that it, its joint venture partners and the franchisees had listed for private sale or auction in "The Weekly Review" magazine, a magazine distributed weekly in print, online and mobile phone applications. It regularly advertised properties it had listed for sale on the property websites Domain and realestate.com.au.
12 Fletchers also responded to queries submitted by potential buyers through internet websites on which it advertised properties and to queries raised by potential buyers in relation to the advertised properties.
[6]
Fletchers' marketing strategy
13 In broad terms the evidence shows that the sales strategy in Fletchers' Canterbury and Blackburn offices included, in the initial stage of the marketing campaign, advertising properties for sale at a price or price range below the real estimated price or price range for the property, in an attempt to generate a higher level of buyer interest in the property. Fletchers would also sometimes advertise the properties for sale stating "price on application" or "POA" without supplying a price or price range and provide a low price indication or quote when contacted by potential buyers. Then, in the later stages of the marketing campaign Fletchers would increase the price quote given to potential buyers although not up to the real estimated price or price range.
14 Fletchers intended that providing a low advertised price or price quote would generate increased buyer interest and competition between buyers would drive up the ultimate sale price. Fletchers expected each property to sell at a price higher than the advertised price or price range and in many cases it had been instructed by the vendors that the property was not, in fact, available for sale at the price quoted. The reserve price set for the properties was generally above, sometimes substantially above, the price or price range advertised and/or advised to potential buyers.
[7]
The properties
15 Fletchers has admitted misleading or deceptive conduct in relation to the sale of 22 properties in 2015, being properties situated at:
(a) 6 Monash Street, Box Hill South (the Monash Street Property);
(b) 2 Troy Court, Forest Hill (the Troy Court Property);
(c) 8/842 Toorak Road, Hawthorn East;
(d) 9 Marina Street, Vermont (the Marina Street Property);
(e) 3 Gunyah Road, Blackburn North;
(f) 8 Polydor Place, Blackburn North;
(g) 34 Moona Street, Burwood East;
(h) 38 Bentley Street, Surrey Hills;
(i) 9 Dorene Court, Vermont South (the Dorene Court Property);
(j) 3/12 Arcadia Street, Box Hill South;
(k) 4 Kitchener Street, Box Hill South;
(l) 3/43 Glen Ebor Avenue, Blackburn;
(m) 54 Linda Avenue, Box Hill North;
(n) 46 Barter Crescent, Forest Hill;
(o) 20 Gordon Crescent, Blackburn;
(p) 307 Station Street, Box Hill South;
(q) 2/15 Olympiad Crescent, Box Hill North;
(r) 1/445 Mitcham Road, Mitcham;
(s) 45 Tannock Street, Balwyn North (the Tannock Street Property);
(t) 87 Stevenson Street, Kew;
(u) 18 Lynden Street, Camberwell; and
(v) 3/12 Charlotte Street, Blackburn South.
16 Consumer Affairs has agreed not to proceed in relation to Fletchers' conduct in respect to the sale of three properties, situated at 33 Gray Street, Doncaster, 10/8 The Avenue, Windsor and 2 Bermuda Drive, Blackburn South.
17 It is unnecessary to detail the contravening conduct in respect of each property sale. It suffices to use three examples.
[8]
The Monash Street Property
18 On 20 March 2015 Fletchers obtained an exclusive authority to sell the Monash Street Property from the owner, Kathryn Brentwood. In the authority Fletchers based the estimated commission payable on sale prices of $1.65 million and $1.75 million. Ms Brentwood instructed Fletchers to market the property with no price displayed.
19 On 2 April 2015, Jacqui Versteegen, a member of the Fletchers sales team, sent an email to Fletchers' sales and marketing group regarding the Monash Street Property and provided a price guide "POA (over $1.350M)".
20 On 17 and 18 April 2015 Michael Richardson, an employed sales agent and auctioneer in Fletchers' sales team, advised Ms Brentwood that senior staff from Fletchers' Canterbury office believed potential buyers should be provided a price quote of "$1.25 million plus". He said that buyers in Surrey Hills have been adding on $200,000-300,000 to an advertised sale price and that at a quoted price of $1.25 million plus Fletchers wanted buyers to think $1.45 million/$1.55 million. Mr Richardson said that was the best way to "get a record price". He said that he wanted six bidders that were willing to bid strongly around that mark and the competition would push the price up. He said that his strategy was to remove that price indication as buyer interest in the property lifted throughout the marketing campaign. He gave as an example another property where the initial price quote was "$850,000 plus" then changed to "POA", in which the property had a reserve of $1.1 million and sold for $1.4 million.
21 The Monash Street Property was advertised for sale with "price on application". In April and May 2015, Mr Richardson responded to four email enquiries from potential buyers seeking to obtain a price indication in relation to the property. He responded that Fletchers were expecting buyer interest to be around $1.35 to $1.4 million and he provided links to some comparable sales in the area. On 7 May Mr Richardson responded to an enquiry from another potential buyer seeking a price indication and he said that the auction "will be starting at $1,100,000".
22 In the period 7 May to 17 May 2015 Fletchers advertised the property online on real.estate.com.au, in the Weekly Review magazine and in the Places magazine with a price quote of "$1.1 million plus".
23 On 16 May 2015, the day prior to the scheduled auction, Ms Brentwood instructed Fletchers that the reserve price was $1.4 million. On 17 May 2015 the property sold at auction for $1.731 million, more than $500,000 over the price indication initially given to potential buyers.
[9]
The Troy Court Property
24 In about mid-April 2015 Benjamin Williams, a director of Fletchers, and Graeme Keogh, a Senior Property Consultant employed by Fletchers, met with the owners of the Troy Street Property, Geoffrey Prestegar and Kim Stewart. Mr Williams informed the vendors that the property was worth around $900,000.
25 On about 14 April 2015 Fletchers prepared a Listing Appointment Form for the property which contained the entries "Expectations: $800,000" and "Discussed range: $900,000". On about 20 April 2015 Fletchers obtained an exclusive authority to sell the Troy Court Property from Mr Prestegar. In the authority Fletchers based the estimated commission payable based on a sale price of $900,000.
26 Notwithstanding the price estimate given to the vendors, from 27 April 2015 to 3 May 2015 Fletchers advertised the property in its "Buyer Bulletin - New Listings" brochure at "$650,000 plus".
27 On about 22 April 2015 Mr Keogh sent an email to Mr Williams in which he said that he had met with Ms Stewart and she was very concerned about the price quote of "$650,000 plus". On 23 April 2015 Mr Keogh sent an email to Mr Williams and Robert Sheahan, a director and, shareholder of Fletchers. He provided a hand written attachment to the email which he said that he sent with "an enormous amount of trepidation", in which he said that Fletchers had told the vendors that the property was worth about $900,000 and that a price quote of $650,000 plus was "ACCC stuff". He said that he believed the quote of $650,000 plus was too low, that the vendors hated the quote, and that he would like to quote $700,000 plus.
28 On 24 April 2015 Fletchers increased the price quote for the property from "$650,000 plus" to "$690,000 plus", which was still $210,000 below Fletchers' estimate of the likely sale price. Fletchers advertised the property at "$690,000 plus" on realestate.com.au from 27 April 2015 to 30 May 2015, in the Weekly Review on about 27 May 2015, and in the Places magazine in May and June 2015.
29 On 4, 5 and 8 May 2015 Mr Keogh responded to three email enquiries from potential buyers who sought a price indication in relation to the property and he informed them that Fletchers were quoting $690,000 or $690,000 plus for the property.
30 On 27 May 2015 Mr Keogh sent an email to Mr Williams and two other members of the Fletchers sales team, Lachlan Williams and Stefan Cook, asking them to estimate what price the property would sell for. Mr Cook estimated that the property would sell on 30 May 2015 for $908,000.
31 On 30 May 2015 the property sold at auction for $1.059 million, more than $400,000 over the initial advertised price and approximately $370,000 over the amended price later advertised and indicated to potential buyers. The authority states that the reserve was set at $850,000 but Mr Prestegar recalls agreeing on a reserve of $900,000 two days prior to the auction.
[10]
The Dorene Court Property
32 On 27 July 2015 Fletchers obtained an exclusive authority to sell the Dorene Court Property from the owner, Karen Cooper. In the authority Fletchers based the estimated commission payable on a sale price of $1.2 million.
33 Between 10 August 2015 and 15 September 2015 Fletchers advertised the property at various points in its "Buyer Bulletin - New Listings" brochure, on the property websites Domain and realestate.com.au, in a brochure, and in The Weekly Review and the Places magazine, with the price statement "$900,000 plus" or "$900,000 +".
34 On 23 August 2015 Greg Cooper sent an email to Mr Richardson enquiring why the price statement was "$900,000 plus" when Mr Richardson had informed the vendor that she could get $1.2 million for the property without going to auction. Mr Cooper also enquired about what Fletchers' sales staff would say to potential buyers if they asked for an indication of the price the house was likely to sell for.
35 On 24 August 2015 Mr Richardson responded by email and gave a clear explanation of underquoting as part of Fletchers' marketing strategy. He said that:
(a) the price quote "is not the sale price" and it "gets the phone ringing, email enquiries and buyers through the front door"; and
(b) "it is better to start low and lift the quote".
Importantly, he said that "what Fletchers say differs from the first week and second week of the campaign" and "if we tell a buyer what you actually want it destroys the campaign". He concluded by noting his view that "record prices come from emotional buyers when they compete… this is your best strategy."
36 In late August and early September 2015 Mr Richardson responded to four email enquiries from potential buyers who sought a price indication and he informed them that Fletchers were expecting the property to sell for a price above $900,000.
37 On 14 September 2015 Ms Versteegen sent an email to Fletchers' marketing group and sales team requesting that the advertising for the property be changed by removing the prices and putting in "POA".
38 On 15-17 September Mr Richardson responded to three further inquiries from potential buyers seeking a price indication and he informed them that buyer interest was at around $1 million, and at around $1 million-$1.1 million.
39 On 19 September 2015 the property sold at auction for $1.6 million, which was approximately $700,000 more than the initial advertised price and the initial price indication given to potential buyers. On the day of the auction the reserve was set at $1.1 million.
[11]
PECUNIARY PENALTY
40 Pursuant to 224(1) of the ACL (Vic) the Court is empowered to impose a pecuniary penalty for breach s 30 of the ACL (Vic) although not for breach of s 18. The Court can order a person to pay the penalty to the Commonwealth, State or Territory in respect of each act or omission by the person to which s 30 applies.
41 Under s 228 of the ACL (Vic) Consumer Affairs can commence a proceeding for recovery of a pecuniary penalty on behalf of the State of Victoria and, pursuant to s 134 of the ACLFTA, any pecuniary penalty order will be paid into the Victorian Consumer Law Fund.
[12]
The purpose of a pecuniary penalty
42 In the recent decision of Director of Consumer Affairs Victoria v Manningham Property Group Pty Ltd [2017] FCA 1448 (Manningham) at [36]-[39], which also related to underquoting by a residential real estate agency, I set out the purposes underpinning imposition of a pecuniary penalty in the following terms:
The central purpose of a civil pecuniary penalty is deterrence, both specific to the contravener and in general. In Commonwealth v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482; [2015] HCA 46 (Fair Work Building Industry Inspectorate) (French CJ, Kiefel, Bell, Nettle and Gordon JJ) at [55] the plurality cited with approval the remarks of French J in Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 (TPC v CSR) at 52,152 where his Honour said:
The principal, and I think probably 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 contravener and by others who might be tempted to contravene the Act.
In NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 (NW Frozen Foods) Burchett and Kiefel JJ (at 294-295) said:
The Court should not leave room for any impression of weakness in its resolve to impose penalties sufficient to ensure the deterrence, not only of the parties actually before it, but also of others who might be tempted to think that contravention would pay, and detection lead merely to a compliance program for the future.
In Singtel Optus v Australian Competition and Consumer Commission (2012) 287 ALR 249; [2012] FCAFC 20 (Singtel Optus) at [68] (Keane CJ, Finn and Gilmour JJ) (cited with approval in Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54 at [64] (TPG) (French CJ, Crennan, Bell and Keane JJ)) the Full Court said:
The Court must fashion a penalty which makes it clear to [the contravener], and to the market, that the cost of courting a risk of contravention of the Act cannot be regarded as [an] acceptable cost of doing business.
However, in seeking to deter, a pecuniary penalty should not be set so high as to be oppressive: Trade Practices Commission v Stihl Chainsaws (Aust) Pty Ltd (1978) ATPR 40-091 at 17,896 (Smithers J); NW Frozen Foods at 293; Australian Competition and Consumer Commission v Leahy Petroleum (No 2) [2005] FCA 254 at [9] (Merkel J).
[13]
The relevance of the parties' agreed position
43 As I explained in Manningham at [40]-[42], there is a public policy in favour of accepting an agreed penalty where the Court is sufficiently persuaded that a penalty is appropriate in all the circumstances. Doing so promotes predictability in civil proceedings and it encourages corporations to acknowledge contraventions which avoids lengthy and complex litigation and frees the Court to deal with other matters: NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 (NW Frozen Foods) at 291 (Burchett and Kiefel JJ); Commonwealth v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482; [2015] HCA 46 (Fair Work Building Industry Inspectorate) (French CJ, Kiefel, Bell, Nettle and Gordon JJ) at [46].
44 In Fair Work Building Industry Inspectorate, the plurality said (at [58]) that:
Subject to the court being sufficiently persuaded of the accuracy of the parties' agreement as to facts and consequences, and that the penalty which the parties propose is an appropriate remedy in the circumstances thus revealed, it is consistent with principle and, for the reasons identified in Allied Mills, highly desirable in practice for the court to accept the parties' proposal and therefore impose the proposed penalty.
45 Where a penalty figure cannot be said to be more appropriate than another, the Court ought not depart from the submitted penalty figure merely because "it might otherwise have been disposed to select some other figure": Fair Work Building Industry Inspectorate at [47] citing NW Frozen Foods at 291.
[14]
Maximum penalty
46 Under s 224(4) of the ACL (Vic), if conduct contravenes two or more provisions of the Act a person is only liable for one pecuniary penalty in respect of the same conduct. Consumer Affairs submits, and I accept, that in the circumstances of the present case the maximum penalty should be assessed on the basis of one contravention for Fletchers' conduct in relation to each property sale. Fletchers did not submit to the contrary. I approach the question of penalty on the basis that Fletchers committed 22 contraventions of the ACL (Vic).
47 At the time of the contravening conduct the maximum penalty for each contravention was $1.1 million (s 224(3)) and the maximum aggregate penalty is therefore $24.2 million. That is, however, well beyond the penalty which the parties seek and beyond what any court would impose in the circumstances of the present case.
[15]
The relevant considerations in fixing a pecuniary penalty
48 The considerations relevant to fixing a pecuniary penalty are well-established. In Manningham at [45] to [49] I explained:
The methodology for fixing a pecuniary penalty in a civil proceeding is not cast in stone and it is not an exact science: Construction, Forestry, Mining and Energy Union v Cahill (2010) 269 ALR 1; [2010] FCAFC 39 (CFMEU v Cahill) at [47] (Middleton and Gordon JJ); NW Frozen Foods at 290-291. The Court must consider all the relevant facts and circumstances and use a process of "instinctive synthesis" to arrive at the appropriate penalty. In Markarian v The Queen (2005) 228 CLR 357; [2005] HCA 25, which concerned criminal sentencing, McHugh J described this process (at [51]) as:
…the method of sentencing by which the judge identifies all the factors that are relevant to the sentence, discusses their significance and then makes a value judgment as to what is the appropriate sentence given all the factors of the case.
Section 224(2) of the ACL (Vic) provides that the Court must have regard to all relevant matters including the nature and extent of the act or omission, any loss or damage suffered as a result of the act or omission, the circumstances in which the act or omission took place, and whether the person has previously been found by a court in proceedings to have engaged in similar conduct.
In Australian Competition and Consumer Commission v TPG Internet Pty Ltd (No 2) [2012] FCA 629 (TPG No 2) at [61] I summarised a non-exhaustive list of the relevant matters, which include:
(a) the size of the contravening company;
(b) the deliberateness of the contravention and period over which it extended;
(c) whether the contravention arose out of the conduct of senior management of the contravener or at a lower level;
(d) whether the contravener has a corporate culture conducive to compliance with the ACL (Vic), as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention;
(e) whether the contravener has shown a disposition to cooperate with the authorities responsible for enforcement of the ACL (Vic);
(f) the financial position of the contravener;
(g) whether the contravening conduct was systematic, deliberate or covert; and
(h) the contravener's position of influence and importance in its industry sector.
See TPC v CSR at 52,152-52,153 (French J); Australian Competition and Consumer Commission v AGL Sales Pty Ltd [2013] FCA 1030 at [52] (Middleton J); NW Frozen Foods at 292-4; J McPhee & Son (Aust) Pty Ltd v Australian Competition and Consumer Commission [2000] FCA 365 at [150] (Black CJ, Goldberg and Lee JJ). The significance of each factor to the appropriate penalty depends on the facts of the case.
…
The totality principle requires the Court to consider the entirety of the underlying contravening conduct to determine whether the total or aggregate penalty is just and appropriate: see TPG No 2 at [138]-[139].
49 I now turn to those considerations which are significant in the circumstances of the present case.
[16]
The nature, extent and deliberateness of the contravening conduct
50 I consider Fletchers' contravening conduct to be plainly deliberate and serious. As Middleton J said in Director of Consumer Affairs Victoria v Hocking Stuart (Richmond) Pty Ltd [2016] FCA 1184 (Hocking Stuart Richmond) in relation to the practice of underquoting by a real estate agency:
Price is an essential piece of information about the property being offered for sale for prospective buyers. Buyers should be able to rely on correct information to make an informed decision. Failure to provide the correct range of price by engaging in underquoting is misleading.
51 Fletchers' conduct involved the deliberate creation of an enticing but misleading marketing web for the sale of the properties, and it made misleading representations through advertisements and by emails to potential buyers that were intended to and did create the illusion that the properties might be a bargain.
52 Mr Richardson explained the practice of underquoting in his email of 24 August 2015. He said that the price quoted "is not the sale price" and it is just intended to generate increased buyer interest. He accepted the misleading nature of the price indications given in advertisements and emails by stating that "what Fletchers say differs from the first week and second week of the campaign". He went as far as to say that "if [Fletchers] tell a buyer what you actually want it destroys the campaign".
53 In my view Fletchers' marketing strategy was, at least in part, based upon the view that high sale prices come from competition between emotional or over-excited buyers who have been wrongly persuaded to believe that the property may be within their price range. Such conduct is plainly misleading or deceptive or likely to mislead or deceive prospective property buyers, and it must be condemned.
54 The evidence shows that such conduct was an accepted practice in Fletchers' Canterbury and Blackburn offices. It occurred throughout 2015 and involved a number of Fletchers' shareholders and directors as well as employed sales consultants, both senior and junior. The use of underquoting as a marketing strategy was commonplace and accepted at senior levels in those offices. On at least one occasion Fletchers' sales staff were provided sales training which focused on an example where underquoting had apparently resulted in a significant spike in buyer interest and a high sale price.
55 The evidence shows that underquoting was a deliberate strategy in Fletchers' Canterbury and Blackburn offices, including that:
(a) in February 2013 Mr Williams prepared a Powerpoint presentation for internal training purposes titled "How to run a successful auction campaign". He listed the price quote as an important factor and suggested that where the likely selling price of a property was $800,000, that an agent should quote $680,000 to $740,000;
(b) in April 2015 Mr Richardson advised the vendor of the Monash Street Property that it was appropriate to provide a price quote of "$1.25 million plus" even though the estimated sale price was much higher. He said that the low price quote was designed to get the telephone ringing and buyers inspecting the property and his strategy was to remove that price indication as buyer interest in the property lifted throughout the marketing campaign. He said that was the best way to get "a record price";
(c) on 30 April 2015 Cristina Fotia, part of the sales team at Fletchers, sent an email to Blackburn office staff which included statements that: "A wise man once taught me when I first started real estate… "Quote them low watch them go" and "Safe to say we are doing a good job at it!!";
(d) in May 2015 Timothy Heavyside, a director of Fletchers, made a presentation to the vendor of the Marina Street Property in which he said that:
(i) a price guide needs to be set to encourage sufficient interest to get people through the door;
(ii) buyers viewing a house who see a lot of people at an open house think there's more interest in the house (emphasis added in italics);
(iii) a lower price guide will get a significant number of people through the door, whereas a price guide closer to the expected sales price would not attract interest and the vendor may not get their desired sale price; and
(iv) advertising the property at a low price would give Mr Heavyside a chance to do his job;
(e) in late May 2015 Mr Richardson and Ms Versteegen prepared a PowerPoint presentation based on the marketing campaign for the Monash Street Property. The presentation, to be delivered at a Fletchers' in house training session for sales staff, highlighted that at the start of the campaign the price guide was $1.3 to $1.4 million and the vendor expected a price of $1.4 to $1.5 million. After an unsuccessful open house inspection Fletchers reduced the price quoted to potential buyers to $1.1 million plus. The presentation stated that the end result of this underquoting strategy was a marked increase in buyer interest with 111 buyers inspecting the property over three weeks, 23 requests for a copy of the contract, nine second inspections, two building inspections, 180 onlookers in attendance at the auction, and a sale price of $1.731 million;
(f) on 30 June 2015, the minutes of a Fletchers internal sales meeting record under the heading "General Business" that the "quote of the week" was "market the fk out of it and then underquote the shit out of it - good vendor management"; and
(g) in September 2015 Katherine Barter, the owner of the Tannock Street Property, queried why the property was to be marketed with a price statement of $1.1 to $1.2 million when Fletchers had estimated that it would sell for between $1.5 and $1.65 million. Mr Heavyside informed Ms Barter that the price quote was low because "it brings in a broader market range" and that "people with a low budget will often come up, and it will also catch the people with bigger budgets as well".
56 I also infer that Fletchers' directors and sales agents, both senior and junior, were well aware that underquoting involved a breach of the ACL and ACL (Vic). They were warned in that regard on numerous occasions, including:
(a) on 1 April 2014 Bradley Brown, a director of Fletchers and the Chief Executive Officer, sent an email to group sales staff informing them that Consumer Affairs had written to Fletchers seeking documents. He advised them to stay on top of their quote range, that in a rising market there is danger in underquoting and that Fletchers faced risks of large fines and bad press;
(b) on 4 April 2014 Mr Brown emailed Fletchers' sales staff advising that Consumer Affairs were scrutinising the real estate market and that staff had to ensure that their price quotes aligned with price estimates;
(c) on 29 June 2015 Mr Brown emailed Fletchers' sales staff reminding them that Consumer Affairs was active and outlining some important points about files and auctions; and
(d) on 28 September 2015 Mr Brown emailed Fletchers sales staff stating that Consumer Affairs continued to be active in respect of underquoting and reminding staff of Fletchers' practices and procedures. I note, however, that this was after most of the contravening conduct had already taken place.
57 At least one Fletchers' director displayed a dismissive attitude to Fletchers' obligations under the ACL (Vic). On 29 May 2014 Mr Heavyside forwarded an article by email to other Fletchers' directors which stated that an underquoting blitz from Consumer Affairs had come up empty handed, and he said it "looks like [Consumer Affairs] are a toothless tiger". Mr Heavyside was involved in 15 of Fletchers' 22 contraventions.
58 Mr Keogh showed his understanding that underquoting was illegal in an email he sent to Fletchers' directors, Mr Williams and Mr Sheahan, on 23 April 2015. He said that as Fletchers had told the vendors of the Dorene Court Property that it was worth about $900,000 it was "ACCC stuff" for Fletchers to provide a price quote of "$650,000 plus". Fletchers subsequently increased the price quote to $690,000 which was still substantially lower than the price estimate given to the vendor. In my view the increased price quote was just an attempt to disguise the continuing breach of the ACL (Vic). Fletchers continued to provide a misleading price guide to potential buyers.
59 Mr Sheahan plainly understood that underquoting was a breach of the ACL (Vic). On 29 October 2015 (after the contravening conduct) he sent an email to Mr Williams in which he said that "the whole issue of underquoting is what we need to tackle..." and that it boils down to the question of:
HOW DO WE QUOTE RESPONSIBLY (To the vendor + the marketplace) without underquoting, without scaring buyers away and without incriminating ourselves in the process? (I know what you are thinking: IS THIS EVEN POSSIBLE???!!!!???)
(Emphasis added in bold.)
60 I consider Fletchers' directors and sales consultants in its Canterbury and Blackburn offices acted with a cavalier disregard for legal obligations that they well understood. The prevailing attitude can be seen in remarks such as that Consumer Affairs is a "toothless tiger", "quote them low and watch them go", and "market the fk out of it and then underquote the shit out of it" (which was recorded in the minutes as quote of the week). I accept Fletchers' submission that the contravening conduct was not systemic across its entire business but it was a deliberate and recurring practice in the Canterbury and Blackburn offices.
61 I accept that Mr Brown attempted to ensure Fletchers' practices were compliant with the ACL (Vic) but his attempts and Fletchers' procedures were seriously inadequate. The practice of underquoting in the Canterbury and Blackburn offices was widespread and far from secret, and it was engaged in at a senior level. The continuation of that conduct in the face of the warnings provided reflects poorly on those directors who were directly involved in the conduct and on the seriousness of the attempts Fletchers' senior management made to curtail it. That Fletchers' compliance and oversight processes were so lax that two of its offices could operate in such a manner provides a compelling basis for a penalty at the upper end of the range.
[17]
The loss or damage suffered
62 It is common ground that the Court should infer that prospective purchasers, other vendors and other real estate agents suffered loss as a result of Fletchers' contravening conduct, and I do so. While it is impossible to assess the extent of any loss or damage that may have been suffered it is appropriate to sentence on the basis that there has been some loss: Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd (2015) 327 ALR 540; [2015] FCA 330 at [54]-[57] (Allsop CJ); Singtel Optus v Australian Competition and Consumer Commission (2012) 287 ALR 249; [2012] FCAFC 20 (Singtel Optus) at [58]-59] (Keane CJ, Finn and Gilmour JJ).
63 It is likely that some consumers that sought to buy one or other of the 22 subject properties were inconvenienced, disappointed or deceived by Fletchers' underquoting. Through reliance on Fletchers' false representations some prospective property buyers are likely to have had their hopes of purchasing a home raised, to have gone to the trouble of seeking and obtaining mortgage finance, to have attended a number of auctions at which they are unsuccessful, and some may have missed out on other opportunities to buy a house. It is likely that some vendors who used other real estate agents missed out on attracting buyer interest and other real estate agents who did not engage in underquoting were subjected to unfair and improper competition. Some consumers are likely to have wasted time and effort in pursuing the purchase of a property that they were never able to afford, and likely to have suffered a loss of confidence in the integrity of estate agents and the licensing scheme under which they operate.
[18]
The circumstances in which the conduct took place
64 The contravening conduct occurred in the context of the marketing and sale of the 22 properties over the course of a year, and in circumstances where Fletchers' CEO had warned sales staff against underquoting.
[19]
Prior contraventions or similar conduct
65 Fletchers has not been found to have engaged in prior contraventions or similar conduct.
[20]
The size of the contravener
66 At all material times Fletchers' Canterbury and Blackburn offices employed approximately 71 staff, which included estate agents, agents' representatives, managers, and various support staff. The two offices employed approximately 18 estate agents during 2015 (nine at Canterbury and nine at Blackburn), 19 during 2016 (11 at Canterbury and eight at Blackburn) and 19 as at 20 October 2017 (12 at Canterbury and seven at Blackburn).
67 In 2015 the two offices sold a total of 392 properties and in 2016 they sold a total of 386 properties.
68 Fletchers operates a substantial business. It is much larger than Hocking Stuart Richmond which was the subject of the decision in Hocking Stuart Richmond, (which comprised one office and was operated by a sole director) and much larger than Hocking Stuart Doncaster which was the subject of the decision in Manningham (which comprised one office with eight to ten staff and three directors).
[21]
The financial position of the contravener
69 Fletchers operates as a unit trust in which Fletchers acts as trustee for Fletcher & Parker Unit Trust which is the trading entity, and it distributes profits to the beneficiaries of the trust. Its business comprises three wholly owned offices and four joint venture offices. The joint venture offices are owned and operated by separate corporate entities. The Blackburn office is owned and operated by Fletchers Blackburn Pty Ltd, of which Fletchers currently owns 51% of the issued shares.
70 The trust is profitable. In the 2015 financial year it earned a net operating profit of $2,649,236 and in the 2016 financial year it earned $1,749,174. Its provisional net operating profit for the 2017 financial year is $2,574,329.
[22]
Any profit derived from the contravening conduct
71 Fletchers earned commissions totalling $370,558.94 from the sale of the 22 subject properties. Its profit margin would, however, have been substantially less than that after deduction of direct and indirect expenses associated with those sales. Assuming a (generous) profit margin of 30%, Fletchers would have derived a profit of approximately $111,167 from the relevant sales.
[23]
The level of management involvement
72 The contravening conduct involved Fletchers' directors and senior sales staff, as well as junior and non-executive staff. Mr Heavyside was heavily involved in the conduct, and other directors, such as Mr Williams and Mr Sheahan, were also involved. The contravening conduct occurred at a senior management level.
[24]
The culture of compliance
73 The evidence shows that Consumer Affairs attended Fletchers' offices in late 2015. Soon afterwards Fletchers commenced a review of its compliance measures which resulted in Fletchers implementing changes to its compliance and training programs. Fletchers put on evidence as to the extent of this compliance. I am satisfied that Fletchers has taken steps to improve its compliance since the commencement of Consumer Affairs' investigation, and I have taken that into account.
74 The orders provide for the implementation of an ongoing compliance program which requires Fletchers to appoint a compliance officer to design, implement and maintain the compliance program, to appoint a compliance advisor to conduct a risk assessment of the company and provide recommendations, to issue a compliance policy, to develop a complaints handling system, to provide regular training and to provide compliance documents to Consumer Affairs.
[25]
The cooperation with the regulator
75 Fletchers admitted liability and saved Consumer Affairs and the Court the time and expense of a contested hearing. I have taken that into account.
[26]
The appropriate penalty
76 I am satisfied that the agreed penalty of $880,000 is just and appropriate having regard to the entirety of Fletchers' conduct and the surrounding circumstances. Such a penalty is more than double the commissions Fletchers earned from the relevant sales and it represents almost eight times the approximate profit Fletchers derived from those sales. A penalty of this magnitude equates to $40,000 per contravention and it constitutes more than one third of Fletchers' profit for the last financial year.
77 Such a penalty is higher than that imposed in two recent decisions regarding similar contraventions. In Manningham the penalty of $160,000 represented approximately 140% of the commissions that Hocking Stuart Doncaster earned from the relevant sales, and just under five times the approximate profit derived from the relevant sales. It equated to a penalty of $17,777 per contravention. In Hocking Stuart Richmond the penalty of $330,000 was more than double the commissions earned from the relevant sales and it equated to a penalty of $30,000 per contravention. In my view a higher penalty is appropriate having regard to the different circumstances in the present case including the number of contraventions, the size and profitability of the contravener, and the cavalier approach that Fletchers took to its obligations.
78 A penalty of this magnitude meets the principal objectives of deterrence, both specific and general. It is necessary to set a penalty which makes it clear to Fletchers and to the market that the cost of such conduct cannot be regarded as an acceptable cost of doing business: Singtel Optus at [68], cited with approval in Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54 at [64] (French CJ, Crennan, Bell and Keane JJ). This is the first occasion that Fletchers has been found to contravene the ACL (Vic) but the evidence indicates that from 2014 its directors and employees were warned of the risk of breaching the ACL (Vic) through underquoting, and notwithstanding that they regularly engaged in the practice. As can be seen in the remarks extracted above, a number of Fletchers' directors and sales agents took a dismissive approach to their obligation not to make false or misleading representations as to price. A penalty of this magnitude is appropriate to deter Fletchers from a repetition of such conduct.
79 A penalty of this size will also deter other real estate agencies from engaging in similar conduct. The number of recent prosecutions by Consumer Affairs, and common experience, points to a widespread problem of underquoting by residential real estate agencies. It is noteworthy that in Manningham the respondent sought, somehow, to mitigate the seriousness of its conduct on the basis that underquoting was widespread. As I said in Manningham at [55], "[t]he fact that underquoting is widespread in the industry indicates a penalty at the higher end of the range because of the requirement for general deterrence." It requires a penalty to be set at a level that means the game of underquoting is not worth the cost.
80 Stepping back from the penalty I am satisfied that it is fair and appropriate having regard to the totality principle. The penalty of $880,000 imposes a significant burden on Fletchers but it is not oppressive. I consider it to be an appropriate reflection of the Court's condemnation of the contravening conduct.
[27]
DECLARATIONS
81 The Court has a broad discretion to order declaratory relief under s 21 of the Federal Court of Australia Act 1976 (Cth). The requirements for the declarations sought in the present case are satisfied. The questions are real, Consumer Affairs has a real interest in seeking the declarations and Fletchers is a proper contradictor: Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 437-438 (Gibbs J). The Court will ordinarily not refuse orders that are within jurisdiction and are otherwise unobjectionable: Australian Competition and Consumer Commission v Econovite Pty Ltd [2003] FCA 964 at [11] (French J); Australian Competition and Consumer Commission v Acquire learning & Careers Pty Ltd [2017] FCA 602 at [96] (Murphy J).
82 The Statement of Agreed Facts provides a sufficient evidentiary basis for the declarations sought. In my view they are appropriate, serve a public interest and do justice between the parties. They show that such conduct breaches the ACL (Vic), they record the Court's disapproval of the conduct, they vindicate Consumer Affairs' claims and they assist its future duties by informing consumers of the dangers of such conduct and deterring others from engaging in similar conduct: Australian Competition and Consumer Commission v Eurong Beach Resort Ltd [2005] FCA 1134 at [5]-[6] (Kiefel J); Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2006] FCA 1730 at [6] (Nicholson J).
[28]
ADVERSE PUBLICITY ORDER
83 As I said in Manningham at [81]:
The purpose of adverse publicity orders under s 247 of the ACL (Vic) is to alert consumers that misleading and deceptive conduct has occurred, to protect the public interest by dispelling the false impressions that the misleading representations have created, to support the primary orders and to assist in preventing repetition of the conduct: Australian Competition and Consumer Commission v TPG Internet Pty Ltd (No 2) [2012] FCA 629 at [143] (Murphy J) and the authorities there cited.
84 The orders require Fletchers to publish a corrective notice in the attached form within ten days of the orders in the first ten pages of the editions of the Weekly Review newspaper in which Fletchers advertises, to prominently display the corrective notice in Fletchers' Canterbury and Blackburn offices for six months and to publish the corrective notice for six months on all websites which are owned, operated or maintained by or on behalf of Fletchers. The corrective notice sets out Fletchers' contravening conduct, states that it has contravened the ACL (Vic) and states the pecuniary penalty amount.
85 In my view such orders are appropriate in the circumstances.
[29]
COMPLIANCE PROGRAM
86 Fletchers has agreed to orders that it implement a formal compliance program under which it is required to appoint a compliance advisor to conduct training, identify compliance risks and report to Fletchers' senior management group on a regular basis. Given the failure of Fletchers' previous compliance attempts such orders are appropriate. They may prove to be an important tool for educating Fletchers' directors and sales staff about the requirements of the ACL (Vic) and may reduce the likelihood of a repetition of such conduct.
[30]
COSTS
87 The parties jointly propose that Fletchers contribute $40,000 towards Consumer Affairs' party-party costs of the proceeding, payable within 30 days. Such an order is appropriate.
88 I have made orders in terms of the draft minutes provided by the parties.
I certify that the preceding eighty-eight (88) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Murphy.