R v Allianz Australia Insurance Ltd

Proceedings 2020/362564 Rex (Crown) AWP Australia Pty Ltd (Accused) Representation: Counsel: Proceedings 2020/362580 N Robinson KC / T Epstein / N Morrissey (Crown) T Game SC / K Edwards SC / S Palaniappan (Accused)

Proceedings 2020/362564 N Robinson KC / T Epstein / N Morrissey (Crown) R Higgins SC / S Callan SC / R McEwen (Accused)

Solicitors: Proceedings 2020/362580 Commonwealth Director of Public Prosecutions (Crown) Allens Solicitors (Accused)

Proceedings 2020/362564 Commonwealth Director of Public Prosecutions (Crown) Herbert Smith Freehills Solicitors (Accused) File Number(s): 2020/362580; 2020/362564

Remarks on sentence

1. HIS HONOUR: On 14 September 2023, the Commonwealth Director of Public Prosecutions (CDPP) brought charges by way of indictment against Allianz Australia Insurance Ltd (hereinafter Allianz) and AWP Australia Pty Ltd (hereinafter AWP) for breaches of ss 1041E(1) and 1311(1) of the Corporations Act 2001 (Cth) relating to the provision of misleading information about what may generally be referred to as travel insurance.
2. In the case of Allianz, the CDPP alleged six contraventions which related, separately, to information published on the domestic travel insurance landing page; the comprehensive travel insurance landing page; the multi-trip travel insurance landing page; the basic travel insurance and travel landing home pages; the compare cover options landing page; and the rental car excess insurance landing page of Allianz's website. It was alleged that the information was materially misleading (and in one case false) as it failed to disclose certain sub-limits and limits associated with the relevant benefits on each website page. Particulars are lengthy and were provided at the time that the indictment was preferred.
3. In the case of AWP, the CPDD alleged one count of publishing or disseminating materially misleading information, being information published on the "Purchase Path" hosted by AWP Australia Pty Ltd regarding Allianz Australia Insurance Limited's travel insurance policies.
4. In each case and in relation to each corporate accused, the CPDD alleged that the accused ought reasonably to have known that the information was materially misleading and likely to induce persons to acquire financial products.
5. Allianz pleaded guilty to the six charges and AWP pleaded guilty to the single charge preferred against it. Each of the corporations pleaded guilty at the earliest opportunity, namely, in the Local Court on 14 June 2022.
6. As earlier indicated, the Court, as presently constituted, is required to sentence each of the corporations in relation to the foregoing charges, insofar as they or it are relevant to the particular corporation.
7. The parties have cooperated significantly in relation to the issues before the Court. There is a Statement of Agreed Facts (hereinafter "the Agreed Facts") which it is sufficient to repeat as a description of the offending for the purposes of these remarks. Those summaries are in the following terms: "Allianz 1. Between 11 February 2016 and 6 June 2018 (Allianz Charge Period), Allianz Australia Insurance Ltd (ACN 000 122 850) (Allianz) committed six offences of disseminating information that it ought reasonably to have known was false in a material particular or materially misleading, and the information was likely to induce persons to acquire financial products, contrary to sections 1041E(1) and 1311(1) of the Corporations Act 2001 (Cth) (Corporations Act). 2. The offences committed by Allianz concern incorrect information, that is, information that was materially misleading (save for the representation in Count 1(a)(ii) that was false), that was information published on its website in respect of various benefits contained in the following insurance policies: domestic travel, comprehensive travel, multi-trip travel, basic travel, and rental car excess insurance (Relevant Allianz Policies). In essence, the information published failed to disclose: a. sub-limits that applied to the 'Cancellation Fees and Lost Deposits', 'Travel Delay Expenses', 'Hospital Cash Allowance' and 'Loss of Income' benefits; b. policy limits, sub-limits and conditions that applied to the 'Additional Expenses', 'Luggage and Personal Effects' and 'Snow Pack' benefits; c. conditions and exclusions that applied to the 'Personal Liability' and 'Overseas Emergency Medical Assistance' benefits; d. sub-limits, conditions and exclusions that applied to the 'Cruise Pack', 'Overseas Emergency Medical and Hospital Expenses' and 'Rental Car Excess' benefits; and e. exclusions that applied to the 'Alternative Transport Expenses' benefit. 3. The information was published on 'landing pages' on Allianz's website, which Allianz hosted and managed, and which consumers could browse (Travel Insurance Landing Pages). Evidence of the false or misleading information disseminated is set out in Annexure A. 4. On 4 June 2018, Allianz submitted a section 912D notice to ASIC. On 6 June 2018, Allianz disabled the Travel Insurance Landing Pages. Details of subsequent investigations, cooperation and remediation are outlined below at paragraphs 55 to 63. AWP 5. Between 24 November 2016 and 12 June 2018 (AWP Charge Period), AWP Australia Pty Ltd (ACN 097 227 177) (previously known as AGA Assistance Australia Pty Ltd) (AWP) committed one offence of disseminating information that it ought reasonably to have known was materially misleading, and the information was likely to induce persons to acquire financial products, contrary to sections 1041E(1) and 1311(1) of the Corporations Act. 6. The offence committed by AWP concerns incorrect information, that is, information that was materially misleading, that was information published on a 'Purchase Path' in respect of various benefits contained in certain of the travel insurance policies described in paragraph 2 above. In essence, the information published failed to disclose: a. sub-limits that applied to the 'Cancellation Fees and Lost Deposits', 'Travel Delay Expenses', 'Hospital Cash Allowance' and 'Loss of Income' benefits; b. sub-limits and conditions that applied to the 'Additional Expenses' and 'Luggage and Personal Effects' benefits; c. conditions and exclusions that applied to the 'Personal Liability', 'Overseas Emergency Medical and Hospital Expenses' and 'Overseas Emergency Medical Assistance' benefits; and d. exclusions that applied to the 'Alternative Transport Expenses' benefit. 7. The 'Purchase Path' was hosted and maintained by AWP (Purchase Path). Consumers wishing to obtain a quote or to purchase certain travel insurance products online were directed from the Travel Insurance Landing Pages hosted and maintained by Allianz to the Purchase Path. Evidence of the misleading information disseminated is set out in Annexure B. 8. AWP submitted a section 912D notice to ASIC on 19 June 2018 after the AWP Purchase Path was disabled on 12 June 2018. Details of subsequent investigations, co-operation and remediation are outlined below at paragraphs 55 to 63."
8. Apart from the description of the offending, there are other important facts and circumstances in the Agreed Facts which are relevant to the sentencing process. It is necessary to note that Allianz holds an Australian Financial Services Licence (AFSL) which permits it to underwrite general insurance products, including travel insurance and, in the course of that business, Allianz issued five relevant Travel Insurance Product Disclosure Statements during the offending period.
9. AWP also holds an AFSL and, pursuant to that licence, has authority to issue, but not to underwrite, general insurance products.
10. On 23 December 2010, Allianz and AWP entered into an agreement under which Allianz appointed AWP as its agent and authorised it to develop travel insurance products, draft Product Disclosure Statements (PDS) for that product, to determine premiums and to market those travel insurance products. AWP was appointed as an agent to accept, process, and settle all claims made in relation to those travel insurance products.
11. Allianz agreed to underwrite the travel insurance products. Allianz regarded AWP as the product expert in relation to the travel insurance products.

Website refresh

1. In 2015, Allianz decided to refresh its website, including the online travel insurance content and, thereafter, initiated and managed the website refresh. In the case of travel insurance products, any document referring to travel insurance supplied by AWP was required to be reviewed and approved by both Allianz and AWP. On 9 October 2015, an AWP Product Specialist left a comment on the Document Compliance Sign Off system (hereinafter referred to as "the System") that the material was approved by AWP subject to inclusion of certain marked-up changes.
2. On 21 October 2015, Corporate Counsel from AWP commented that AWP Legal had approved the content subject to amendments. The comment also recorded that the content and the review had not "considered any disclaimer content that may be necessary".
3. On 9 November 2015, a Corporate Lawyer from Allianz engaged an external law firm to review the draft travel insurance content against the PDS and on 12 November 2015, the law firm advised, inter alia, of potentially misleading or incorrect statements in the draft content, for example, the use of the word "unlimited" in the description of cover for overseas emergency medical and hospital expenses, notwithstanding that sub-limits applied.
4. On 12 November 2015, the Allianz Lawyer uploaded the external lawyer's comments into the System including the comments about the use of the word "unlimited" in the description of cover for overseas emergency medical and hospital expenses. The Allianz Lawyer commented in reply: "discussed with [lawyers], ok to reinstate 'unlimited' for overseas emergency medical & hospital expense on the basis that there are no dollar sublimits specified in the PDS."
5. The text in the final revised document uploaded to the System was: "Unlimited cover for overseas emergency medical & hospital expenses plus $1,000 cover for emergency dental expenses." There was an asterisk placed on the comment which referred to a disclaimer stating, "Terms, conditions, limits and exclusions apply. Please see relevant PDS for details." No legal review was conducted of the refreshed website, prior to it going live.
6. On 10 December 2015, the Allianz Lawyer informed several Allianz staff members and a Key Account Manager from AWP that parts of the website refresh reused existing content that had not been the subject of review. The Allianz Lawyer referred specifically to content for travel insurance that "they had not been able to comprehensively review within the test website period". It was recommended that all reused content be reviewed after the website went live.
7. During December 2015 and January 2016, the Allianz Lawyer engaged in a high-level legal review and identified issues with the content of some sample webpages. Allianz staff members were asked whether they desired a legal review of every webpage to ensure consistency.
8. On 1 February 2016, a quote was sought from the external lawyers for the legal review of those parts of the Allianz website that had gone live, and which had not previously been reviewed. This included the Travel Insurance Landing Pages. An estimate was provided of between $25,000 and $30,000.
9. On 3 February 2016, the Allianz Lawyer sent emails to several senior staff members setting out the scope of the legal review and the cost estimate.
10. On 4 February 2016, Allianz's General Manager of Direct Retail Distribution (hereinafter "the General Manager" or "Allianz's General Manager") forwarded an email from the Allianz Lawyer attaching the cost estimate to the Chief General Manager of Retail Distribution. The General Manager explained that the Allianz Lawyer had identified a number of issues from their high-level legal review of the website, which had been rectified on 2 February 2016, and that they had recommended obtaining an external review of the entire website given capacity issues within the inhouse legal unit.
11. On 5 February 2016, the General Manager responded to an email sent by the Allianz Lawyer earlier that day. The General Manager stated that the external costs were significant, an internal review was preferred and to brief externally when certification was needed.
12. The General Manager asked whether there was internal capacity to review the website and was told that internally there could only be dedicated two days per week to review the whole website and, if an external review was not authorised, then it was proposed that there be a review of each product section in order of priority. The General Manager did not approve the cost of the external legal review.
13. On 9 February 2016, a Sales Support Analyst at Allianz raised a System task titled "Travel pages content review", which described the purpose of the task as giving "stakeholders an idea of changes to be made and provide feedback on what is currently Live".
14. On 12 February 2016, AWP Legal closed its review. On 22 February 2016, AWP Product closed its review, commenting that the content had been "Approved by [AWP] Product with the proviso that changes required by [AWP] Legal are made".
15. On 18 and 24 March 2016, the Allianz National Sales Manager (Retail Distribution) made comments on the System task and signed off on the basis that "consolidated feedback from [AWP] product & distribution, and Allianz distribution" were taken into account.
16. On 31 March 2016, a different Allianz Corporate Lawyer reviewed the System task on behalf of the Allianz legal team. The System task was subsequently closed without rectification of the matters raised by the National Sales Manager.

Legal reviews

1. Between March and August 2016, the inhouse legal unit at Allianz reviewed various parts of the refreshed website in order of priority. Home insurance was completed on 22 March 2016; boat insurance was completed on 6 May 2016; motor insurance was completed on 11 May 2016; and life insurance was completed on 26 August 2016. Issues lists were circulated to the relevant product manager and the authors of the issues list subsequently met with those managers to discuss the contents.
2. On 30 August 2016, a Corporate Compliance Officer at Allianz circulated an email dealing with the travel insurance review which it said was with the Product Support Manager for review and which, once complete, would be provided to the Allianz Lawyer for signoff. A draft of the review by the Product Support Manager was supplied to the Allianz Lawyer on 14 September 2016.
3. On 24 November 2016, the Allianz Lawyer completed the review of the Travel Insurance Landing Pages and circulated the "Travel Issues List" to several staff members. The List set out, in table form, multiple statements published on the Landing Pages which were identified as potentially misleading or deceptive.
4. The covering email noted a number of issues: there was a large volume of items missing significant qualifications; sub-limits that were incorrect; it highlighted high severity items and those that were more likely to require redressing customers; it suggested that, in order to finalise remediation actions, AWP needed to group the various items into different categories so that they could be done in a consistent manner; and, it suggested that the list be sent to AWP with a request to respond with their recommended actions and for them to markup the webpages for Allianz's review.
5. The Issues List was emailed to two AWP staff members on the same day. Allianz's National Sales Manager noted that Allianz needed "someone from [AWP] to review the attachment and discuss [AWP's] product and legal comments in the notes section of the document" and to "mark up the document with the actual action agreed to be taken" for discussion.
6. On 25 November 2016, a Key Account Manager for AWP forwarded the Issues List to AWP staff, including the Product Development Manager (Travel Insurance), requesting a discussion.
7. On 8 December 2016, the Account Manager forwarded the List to AWP's Compliance Manager, requesting a discussion. On 20 December 2016, the Account Manager sent a follow-up email which copied in a Senior Corporate Counsel from AWP.
8. On or about 21 June 2017, AWP obtained legal advice from a different external law firm who had reviewed the Issues List and substantively agreed with the assessment of the issues identified.
9. Between July 2017 and May 2018, there were several Work in Progress (WIP) Meetings from which the following relevant notes may be extracted: Date Notes 6 and 13 July 2017 AWP's Account Manager had, inter alia, "chased Partner Solutions and Legal for update". 5, 19 and 26 Oct 2017 AWP's Account Manager was "Following up with Partner solutions again as the task is still outstanding on DSCO and has been for over a year" and that they would, "seek a timeframe from AWP legal". 1 Nov 2017 18 Jan 2018 AWP's Account Manager had chased AWP's Regional Corporate Counsel (Asia Pacific) on 12 January 2018 for a "response from AWP Legal". 25 Jan 2018 The matter had, "Escalated to Grant as now back and will pursue". 8 Feb 2018 "Escalation as high priority made due to T&C inconsistencies on TI B2C web page. AAL reviewed with suggested amendments. Currently sitting with external legal. MT to prioritise urgently." 22 Feb 2018 "External Legal review [had been] completed and is currently with AWP Legal team for review. No ETA on dates to send back to AAL". 22 Mar 2018 4 and 18 Apr 2018 Recorded that AWP had received, inter alia, recommendations from external legal advisers and that work was being undertaken to address them. 2 May 2018

1. On 15 May 2018, a further WIP meeting was held, following which the Head of Compliance for Allianz sent an email to its Chief Risk Officer noting that the List indicated "a reasonably significant amount of content on Allianz Australia's website that is considered to be false and misleading, to varying degrees of severity" and one of the listed items, "Basic Cover", remained published online. The email indicated that a breach review would be organised and the Action Log for that review recorded that AWP were to determine where proposed changes were to be made and how they were to be progressed; AWP needed to add three columns outlining the System task number, if it had been completed and the date it was completed; and, AWP needed to identify the number of impacted customers for each issue identified in the table.
2. On 21 May 2018, Allianz held a meeting to consider whether the false and misleading information on the Travel Insurance Landing Pages constituted a significant breach that needed to be reported to ASIC pursuant to s 912D of the Corporations Act 2001 (Cth). Those attending the meeting included the Head of Compliance, the Chief Risk Officer, an Executive Legal Counsel, the General Manager and the Allianz Lawyer. There was agreement that the matter needed to be notified to ASIC by 4 June 2018.
3. On 4 June 2018, Allianz submitted a notice under s 912D to ASIC. On 6 June 2018, the Travel Insurance Landing Pages were disabled. On 7 June 2018, the CEO of AWP emailed Allianz's General Manager advising that AWP had been briefed regarding the decision to report the Travel Insurance Landing Pages to ASIC and signified their support for the decision to turn off the website. On 12 June 2018, the AWP Purchase Path was disabled. On 19 June 2018, AWP submitted a s 912D notice to ASIC.
4. As is obvious from the foregoing, the notice by Allianz and AWP when providing the breach reports was an admission of wrongdoing. After the notices under s 912D of the Corporations Act, ASIC issued a s 912C notice in response to which Allianz provided 39 statements published across the Travel Insurance Landing Pages which it considered may have been incorrect or misleading.
5. Allianz's General Manager and Chief Risk Officer appeared as witnesses in the Royal Commission into misconduct in banking, superannuation and financial services on 17 and 18 September 2018. Their evidence concerned, at least in part, the false and/or misleading information published in the Travel Insurance Landing Pages and incorrect or misleading statements in the Purchase Path. The Chief Risk Officer agreed, in evidence, that for many years Allianz had inadequate processes to monitor the content of its website, and the General Manager acknowledged that there was no or insufficient process for regularly ongoing review of the website content.
6. AWP, which was also subject to a notice under s 912C, provided a table listing the potentially incorrect, misleading and/or deceptive representations that appeared on the Purchase Path.
7. The agreed facts set out that which Allianz has identified as the causes of the misleading conduct in the Travel Insurance Landing Pages which were described in the Agreed Facts as: "a. Allianz had inadequate processes for monitoring the content of its website; b. Allianz had inadequate processes for monitoring and closing compliance incidents once they had been identified; c. Allianz had inadequate oversight in respect of AWP; d. Allianz had an insufficient appreciation of the consequences for customers of the information being on the website and Allianz's management had not considered the matter to be a priority; and e. Allianz had not provided adequate resources to its compliance function."
8. AWP identified the following causes, which are listed in the Agreed Facts, for the misleading content being permitted to be on the Purchase Path. Those causes were: "a. AWP had inadequate processes for detecting incorrect information on its Purchase Path or those processes perpetuated the inclusion of the incorrect information; and b. AWP had inadequate processes for monitoring and tracking compliance incidents once they had been identified, including ensuring that corrective measures and improvements were appropriately prioritised."
9. Without detailing all of the issues, it is clear that from at least 20 July 2018, Allianz, in conjunction with AWP, cooperated fully with the ASIC investigation, answering requests which may or may not have been capable of successful objection; providing ASIC with regular progress updates on the rectification and remediation of the matters which were the subject of the breach reports; and seeking input and/or advice from ASIC on the approach to and scope of customer remediation, including meeting with and discussing these matters which ASIC representatives.
10. Those meetings continued through the early part of 2019.
11. In mid-2018, Allianz and AWP engaged independent forensic accountants to assist in designing and implementing a remediation program in respect of past claims for those customers affected by the misleading information in the Travel Insurance Policies. They also adopted a "best cover" approach to future claims handling which ensured that customers who sought to claim on their travel insurance were provided with the maximum level of cover under either the PDS or the website content, whichever was greater.
12. There were 781 customers that were the subject of remediation to whom Allianz and AWP paid out an amount of $1,264,864 (including interest) in respect of past claims. In respect of the best cover approach to future claims, as at 14 January 2019, the total cost for the 535 applicable claims in respect of such policies was $944,511.92.
13. The Agreed Facts document contains tables setting out the number of policies sold under the various travel insurance subsets the total of which was 226,600. The gross sales written in relation to those policies totalled $35,698,909. That amount is apportioned as between the various kinds of travel insurance offered and purchased.
14. In respect of AWP, the Gross Written Sales for the relevant policies sold during the AWP Charge Period was $22,609,378.
15. The Agreed Facts also set out the minimum net profits (being net of income tax) of $1,829,567 for relevant Allianz policies sold during the Charge Period. For AWP, the relevant figure was $847,852. Those profits do not account for profits earned or losses incurred in respect of sales of additional Allianz policies to the relevant customers either during the period to which the amounts relate or for any subsequent charge period.
16. Over and above the foregoing, the Agreed Facts set out Allianz's self-reported turnover for the period from 1 March 2015 to 29 February 2016, which was approximately $4.375 billion. That figure represents Allianz's gross written premiums during that period, obviously not confined to travel insurance.
17. In relation to AWP, for the period 1 December 2015 to 30 November 2016, the self-reported turnover was $166,430,752. This figure represents revenue from services rendered by AWP during that period.
18. It is agreed between the parties that the total value of the benefits that have been obtained and are reasonably attributable to the commission of the offences that have been charged cannot be determined. In those circumstances, the maximum penalty for each offence, under the relevant provisions to which the Court will shortly refer, is the greater of 45,000 penalty units or 10% of the body corporate's annual turnover during the 12-month period ending at the end of the month in which the body corporate committed, or began committing, the offence. In relation to Allianz, the maximum penalty for each of the six offences is $437,587,176; and in relation to AWP, the maximum penalty for the one offence is $16,643,75.
19. In the case of Allianz, the six offences occurred between 11 February 2016 and 6 June 2018. In the case of AWP the offence occurred in the period between 24 November 2016 and 12 June 2018.
20. AWP's conduct was the disseminating of information that it ought reasonably to have known was materially misleading and likely to induce persons to acquire financial products. Allianz's conduct was disseminating information that was incorrect, that it ought reasonably to have known was false in a material particular or that was materially misleading, and the information was likely to induce persons to acquire financial products.
21. The relevant provisions, being ss 1041E(1) and 1311C(1) of the Corporations Act, are in the following terms: CORPORATIONS ACT 2001 - SECT 1041E False or misleading statements (1) A person must not (whether in this jurisdiction or elsewhere) make a statement, or disseminate information, if: (a) the statement or information is false in a material particular or is materially misleading; and (b) the statement or information is likely: (i) to induce persons in this jurisdiction to apply for financial products; or (ii) to induce persons in this jurisdiction to dispose of or acquire financial products; or (iii) to have the effect of increasing, reducing, maintaining or stabilising the price for trading in financial products on a financial market operated in this jurisdiction; and (c) when the person makes the statement, or disseminates the information: (i) the person does not care whether the statement or information is true or false; or (ii) the person knows, or ought reasonably to have known, that the statement or information is false in a material particular or is materially misleading. SECT 1311 General penalty provisions (1) A person who: (a) does an act or thing that the person is forbidden to do by or under a provision of this Act; or (b) does not do an act or thing that the person is required or directed to do by or under a provision of this Act; or (c) otherwise contravenes a provision of this Act; Is guilty of an offence by virtue of this subsection, unless that or another provision of this Act provides that the person: (d) is guilty of an offence; or (e) is not guilty of an offence. Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility. SECT 1311C Penalty applicable to an offence committed by a body corporate (1) The penalty applicable to an offence committed by a body corporate is: (a) for an offence for which a fine is the only penalty specified--the fine specified multiplied by 10; and (b) for an offence for which a term of imprisonment is the only penalty specified--the fine worked out under this section. … (4) This section applies in relation to an offence committed by a body corporate unless there is a contrary intention under this Act in relation to the penalty applicable to the offence. In that case, the penalty applicable is the penalty specified for the offence. Note: The following are examples of cases in which a penalty is specified that would indicate a contrary intention: (a) subsection 1211B(3), which specifies a penalty for a body corporate; (b) the table item in Schedule 3 relating to subsection 794D(3), which specifies a penalty for each day, or part of a day, in respect of which an offence is committed; (c) a regulation made under paragraph 1364(2)(w) prescribing a penalty for a body corporate for a contravention of the regulations.
22. The penalty imposed for a breach of s 1041E(1) under Sch 3 of the Corporations Act is 15 years imprisonment. As a consequence of the penalty prescribed in Sch 3 and the circumstance that each of the defendants is a corporation, the provisions of s 1311C(4) apply.
23. It is an agreed fact and, on the material before the Court, the Court itself independently accepts and determines that the benefit derived and detriment avoided as a result of the offence cannot be determined, and therefore the fine becomes the greater of 45,000 penalty units or 10% of the annual turnover of the body corporate, as earlier indicated. Since the annual turnover of each body corporate is such that 10% of the annual turnover is greater than 45,000 penalty units, that is the basis upon which the maximum penalty for the offences in question is set. Those maximum penalties have already been recited and must be considered as a guidepost in the fixing of an appropriate sentence.

The principles associated with sentencing

1. Sentencing is a process that is difficult for many to understand. The maximum sentence established by the legislature often, if not always, establishes the seriousness with which the legislature treats the conduct in question, compared to other offences.
2. However, when a Court is required to sentence a person (including a corporation) who is guilty of an offence, the maximum sentence is imposed only in circumstances where the conduct of the offender, in the range of conduct that would give rise to an offence of such a kind, is in the category that the maximum sentence is appropriate. While the term has been deprecated, that category was sometimes referred to as "the worst case of offending".
3. The Court is required to look at the range of conduct that would give rise to an offence of the kind charged and determine where in that range of conduct the particular offender's conduct falls. In so doing, the Court is determining the objective seriousness of the conduct within the range of conduct that gives rise to such an offence.
4. Thus, even in the most serious of offences, a Court may refer to an offence as well below the mid-range of offending, or in the mid-range of offending or, in rare cases, in the worst case of offending. The circumstance that there can be imagined worse conduct does not result in conduct not being within that category that requires the maximum penalty. Human nature and human imagination can always imagine a worse case.
5. Similarly, the circumstance that less serious conduct can be imagined by a judicial officer required to sentence an offender does not necessarily result in a sentence that is not at the lowest end of the range of sentences available.
6. Sentencing is an intuitive or instinctive process in which the objective seriousness of the offending, which has been described above, and the subjective circumstances of the offender are synthesised to arrive at an appropriate sentence. The Crimes Act 1914 (Cth) requires that a sentence imposed by a Court for a commonwealth offence be of "a severity appropriate in all the circumstances of the offence". [1]
7. Section 16A(2) of the Crimes Act requires a sentencing court to take into account certain prescribed matters that are relevant and known to the Court. In doing so, the Court must bear in mind the purposes of sentencing.
8. The purposes of sentencing have often been described as conflicting or pulling in different directions. The purposes include: the protection of society; the deterrence of the offender, and of others who might be tempted to offend; retribution and reform. Those objectives overlap and, as already stated, often, if not always, point in different directions. None of the purposes can be considered in isolation and each is a guidepost to the appropriate sentence to be imposed. [2]
9. The process is neither logical nor mathematical. It is, as already stated, intuitive or instinctive. The process requires the assessment and weighing of each of the objective and subjective circumstances in order to achieve an appropriate sentence that fulfills the overall purpose undertaken in the sentencing process. [3]
10. The Crown in its submissions on sentence suggests that some guidance may be obtained from civil penalty cases in respect of offences of this kind. While the Crown recognises that civil penalty cases are primarily aimed at imposing a penalty that serves the purpose of deterrence and compliance and not, as in criminal cases, with retribution, denunciation and rehabilitation, there are other aspects which are important. The defendants accept that, at least in relation to the issues of objective seriousness, the civil penalty cases may have some relevance.
11. However, the fact that civil penalty cases are primarily aimed at deterrence and compliance is not the only reason that there are limitations on transplanting that which may have occurred in civil penalty cases to criminal offences.
12. There is a fundamental difference between the imposition of a civil penalty and its effect on the standing and reputation of a defendant. The imposition of a criminal offence, in and of itself, results in punishment, even without the imposition of a monetary penalty or other sentence. Nevertheless, there is some relevance in the civil penalty cases, bearing in mind the limitations already mentioned. Consequently, I have considered the cases provided by the Crown in its submissions.
13. Before stating my conclusions as to the objective seriousness of the offence or offences, it is necessary to make some comment on some of the terms utilised in the course of the submissions of the parties. Each of Allianz and AWP referred to the circumstance that the misleading conduct was not "deliberate" or "dishonest".
14. First, if the conduct were "dishonest", then the conduct would be caught by the provisions of s 1041G of the Corporations Act. The penalty for an offence under ss 1041E and 1041G is identical.
15. As a consequence, it would seem that the legislature considers the publication of information that is false or materially misleading and is likely to induce persons to apply for financial products, as no less serious than engaging in dishonest conduct in relation to a financial product or services. Having noted that circumstance, it is nevertheless important to understand that the conduct embraced by an offence under s 1041E of the Corporations Act extends to conduct that is intentionally dishonest and is intended to mislead members of the public into purchasing the financial products about which the information is published.
16. It is necessary also to deal with the use of the term "deliberate" or "deliberately". The corporations request that the Court take into account that the conduct was not "deliberate". The term "deliberate", where used in criminal law, is replete with ambiguity.
17. It cannot be said that the conduct was "accidental" or anything other than "a deliberate act". I have taken the submission, as is obvious from the submission itself, to refer to the circumstance that the corporations did not intend consciously to mislead the consumers of the product. In other words, the misleading nature of the information provided was not, at the time of its publication, known to the corporations.
18. Even the foregoing has limitations. To paraphrase a famous comment, a corporation has neither a sole to be damned nor a body to be kicked. Its knowledge is the knowledge of its employees. The total knowledge of its employees would have revealed that the information published was misleading.
19. Nevertheless, no person within either one of the corporations was aware that, when published, the information provided was misleading and neither corporation set about on a course knowingly to mislead consumers in the purchase of the travel insurance. The circumstance that the conduct was not knowingly dishonest and was not intended to mislead, nor published in a manner that was knowingly misleading, is a factor which significantly mitigates the objective seriousness of the offences in question.
20. Moreover, although it is probably more relevant to the issue of rehabilitation and the need for specific deterrence, the corporations volunteered their breach of the sections in question. There is, in my view, a significant Ellis [4] factor, in such conduct, particularly, given the remediation that has been implemented, because the breach of these provisions may never have come to the attention of the authorities and there may never have been a prosecution of the corporations.
21. The circumstance that the corporations volunteered breaches of the provisions in question is a factor that also affects the degree to which even general deterrence is considered. The provisions in question, and the offences they create, render, ordinarily, general deterrence a significant factor.
22. These provisions have been promulgated and the maximum sentences set at a level, which is plainly intended to provide a disincentive to corporations from engaging in the impugned conduct in disseminating misleading information. The nature of these offences is such that general deterrence ordinarily looms large.
23. Where, as here, the corporation has volunteered the breach and the breach has occurred in a manner that was other than knowingly, the level of general deterrence can be weighed in a manner that is intended to impact upon other corporations who also volunteered the information.
24. There is a benefit to the administration of justice and to the scheme sought to be implemented by the promulgation of these offences for corporations to volunteer breaches. That is a factor, to which the Court will come later in these reasons, of some significance in the determination of the sentence to be imposed because it impacts both the administration of justice and the need for specific deterrence.
25. I do not consider specific deterrence to be a significant issue. It has relevance, but it is not overly significant. The corporations each have examined the causes of this breach and do not need a significant level of specific deterrence to ensure that steps are taken to ameliorate the risk of misleading information being published again. It is ironic and itself a lesson in management that, if on or shortly after 5 February 2016, Allianz had approved the external legal review, it (and AWP) would have avoided these offences, the fine and remediation cost at a total cost of approximately $30,000.
26. Having made those comments, as is clear from the legislative scheme, it is important that corporations take the steps at the highest level to ensure that proper processes are in place which prevent breaches of this kind. As is clear from the facts that have been recited, these breaches were essentially caused by a desire not to expend the necessary monies to ensure proper oversight of that which is published by the company.
27. For not dissimilar reasons to those expressed by the High Court in its judgment in Jacob's Group, supra, the offences are directed to providing a disincentive to the corporation as a whole from engaging in conduct which treats the publication of misleading information and the punishment for that publication not as a cost of doing business, but rather, as an incentive to ensure proper processes are in place to prevent (or at least to ameliorate significantly) any risk that misleading information will be published.
28. In the current circumstances, as is clear from the recital of the facts above, there were steps within the corporations to ensure that the information that was published accorded with that which was on offer. The steps were not utilised to the extent that they should have been because it was thought that the expenditure ought not to be undertaken. In that sense, the specific deterrence (and the general deterrence) needs to reflect the disincentive on such decision-making.
29. The corporations have submitted that the range available to the Court for the penalty to be imposed are within a narrow range. Of course, the range of sentences depends fundamentally upon the determination by the Court of the objective seriousness and the manner in which the Court assesses the subjective circumstances of each of the corporations.
30. In the case of Allianz, its submissions suggest that an appropriate range for the sentences to be imposed, being at the lowest range would be one between $12 million and $30 million and would be proportionate to its overall "criminality". In the case of AWP, the suggested figure was between $2.5 million to $6 million.
31. The Crown does not disagree with the suggested range. Notwithstanding the lack of disagreement, the suggestions that have been made and the manner in which they were made do not seek to set the bounds of that which is available to the Court, which would be impermissible. On the contrary, the submission was extremely helpful, and, given the reservations and flexibility associated with the submission made, of great assistance to the Court. [5]
32. Before dealing with the assessment of objective seriousness, I deal with the factors prescribed by s 16A(2) of the Crimes Act, a number of which are considerations affecting the objective seriousness of the offending in question. The Court has already dealt with the nature and circumstances of the offence, or in the case of Allianz, the offences.
33. I accept unqualifiedly that, in the case of the six offences with which Allianz has been charged, they form part of one course of conduct, and the Court cannot impose six separate sentences which fails to take into account the totality of the offending in question and the fact that the one course of conduct is involved in it.
34. Injury, loss or damage did result from the offence, but such injury, loss and damage are difficult to assess. Further, the level of remediation which has been implemented by each of the companies, in conjunction with ASIC and in cooperation between all of them, results in there being no resulting injury, loss or damage.
35. The remediation is also, in and of itself, a partial disincentive to others who might be tempted to offend in a similar way. The foregoing, of course, is also relevant to the level of contrition, which is evidenced not only by the remediation that has occurred but also by the pleas entered and the voluntary nature of the disclosure of the offending. The remediation, in that sense, is equivalent to the reparation to those who may have suffered as a result of purchasing the financial service on the basis of there being no limit or sub-limit to the insurance able to be recovered.
36. Extremely significant in the setting of any penalty, albeit that it is not a matter that I take into account in the assessment of objective seriousness, is the fact that each of the corporations has pleaded guilty to the offence, has volunteered the breach, has pleaded guilty at the earliest possible opportunity and the foregoing has resulted in a benefit to the administration of justice and a benefit to the community and any and all victims of the misleading conduct. The corporations have clearly cooperated fully with ASIC and the law enforcement agencies in the investigation of the offence, which is an ameliorating factor over and above the plea of guilty.
37. The Court has already referred to the necessity for general deterrence and to a more limited extent, the necessity for specific deterrence to form a factor in the sentence to be imposed.
38. In the case of Allianz, there have been previous civil penalties imposed upon it, but I do not consider that such a factor is significant in the determination of the sentence to be imposed.
39. The comments I have already made show the extent to which, in my view, rehabilitation is a significant factor and the manner in which each of the corporations has acted, which is consistent only with the prospects of rehabilitation being extremely good and the likelihood of future offending being significantly reduced.
40. One further factor requires comment. While I accept that the offering of travel insurance is a separate product offered by the corporation, I do not accept that, in ordinary circumstances, the Court should treat as significant the level of profit or the turnover of that division which offers the product.
41. As can be seen from the facts in these proceedings, the incentive and/or disincentive is one that is directed to the corporation as a whole. It is only in those circumstances that the corporation as a whole can provide to any administrative arm of the corporation the appropriate level of resources necessary to ensure compliance with the duties imposed upon the corporation.
42. I do not consider that the profit and/or turnover of the travel insurance section of the corporation is wholly irrelevant, but I am mindful that, in many circumstances, albeit not in these circumstances, it is relatively easy for a corporation to manipulate its profit for a particular division in a manner that would impact on a sentence, if that were the criterion on which the Court acted.
43. Dealing with objective seriousness, given all of the factors to which I have referred and bearing in mind all of the submissions of the corporations, I assess the objective seriousness of each of the corporations as not at the lowest level, but at a level which is significantly below midrange in seriousness. I bear in mind each of the subjective circumstances to which I have referred and each of the circumstances, of a subjective nature, to which the corporations have referred.
44. For reasons already stated, I have taken into account the provisions of s 16AC of the Crimes Act relating to cooperation with law enforcement agencies and I have taken into account in setting the fines I am about to impose, the financial circumstances of each of the corporations, pursuant to the terms of s 16C of the Crimes Act. I also provide a 25% discount for the pleas of guilty at the earliest opportunity. Further, pursuant to the terms of s 4K(4) of the Crimes Act, I will impose one penalty, which I refer to as an aggregate sentence, in respect of all six counts of which Allianz is now to be convicted.
45. I accept that the primary purpose of the task now being performed, and the required task is to impose a sentence that is of sufficient severity to be appropriate in all the circumstances of the offence and the circumstances of the offenders. In all of the circumstances, the Court imposes a sentence on AWP of $3,300,000 and the Court imposes a sentence on Allianz of $13.5 million.
46. The Court makes the following orders: In respect of AWP Australia Pty Ltd (ACN 097 227 177): (1) The Court records that between 24 November 2016 and 12 June 2018, at Brisbane in the State of Queensland and in other referring jurisdictions within the Commonwealth of Australia, AWP Australia Pty Ltd disseminated information that was materially misleading, namely information published on the Purchase Path hosted by AWP Australia Pty Ltd regarding Allianz Australia Insurance Limited's travel insurance policies, that it ought reasonably to have known was materially misleading, and the information was likely to induce persons in these jurisdictions to acquire financial products, contrary to ss 1041E(1) and 1311(1) of the Corporations Act 2001 (Cth). (2) In respect of the foregoing offence, taking into account the discount of 25% for the plea of guilty, the Court imposes a fine of $3,300,000. In respect of Allianz Australia Insurance Limited (ACN 000 122 850): (1) The Court records that between 11 February 2016 and 6 June 2018, at Sydney in the State of New South Wales and in other referring jurisdictions within the Commonwealth of Australia, Allianz Australia Insurance Limited disseminated information that was false in a material particular or materially misleading, namely information published on the domestic travel insurance landing page of its website regarding Allianz Australia Insurance Limited's domestic travel insurance policy, that it ought reasonably to have known was false in a material particular or materially misleading, and the information was likely to induce persons in these jurisdictions to acquire financial products, contrary to ss 1041E(1) and 1311(1) of the Corporations Act 2001 (Cth) and is guilty of that offence particularised in the indictment of 14 September 2023. (2) The Court records that between 11 February 2016 and 6 June 2018, at Sydney in the State of New South Wales and in other referring jurisdictions within the Commonwealth of Australia, Allianz Australia Insurance Limited disseminated information that was false in a material particular or materially misleading, namely information published on the comprehensive travel insurance landing page of its website regarding Allianz Australia Insurance Limited's domestic travel insurance policy, that it ought reasonably to have known was false in a material particular or materially misleading, and the information was likely to induce persons in these jurisdictions to acquire financial products, contrary to ss 1041E(1) and 1311(1) of the Corporations Act 2001 (Cth) and is guilty of that offence particularised in the indictment of 14 September 2023. (3) The Court records that between 11 February 2016 and 6 June 2018, at Sydney in the State of New South Wales and in other referring jurisdictions within the Commonwealth of Australia, Allianz Australia Insurance Limited disseminated information that was false in a material particular or materially misleading, namely information published on the multi-trip travel insurance landing page of its website regarding Allianz Australia Insurance Limited's domestic travel insurance policy, that it ought reasonably to have known was false in a material particular or materially misleading, and the information was likely to induce persons in these jurisdictions to acquire financial products, contrary to ss 1041E(1) and 1311(1) of the Corporations Act 2001 (Cth) and is guilty of that offence particularised in the indictment of 14 September 2023. (4) The Court records that between 11 February 2016 and 6 June 2018, at Sydney in the State of New South Wales and in other referring jurisdictions within the Commonwealth of Australia, Allianz Australia Insurance Limited disseminated information that was false in a material particular or materially misleading, namely information published on the basic travel insurance landing page and the travel landing home page of its website regarding Allianz Australia Insurance Limited's domestic travel insurance policy, that it ought reasonably to have known was false in a material particular or materially misleading, and the information was likely to induce persons in these jurisdictions to acquire financial products, contrary to ss 1041E(1) and 1311(1) of the Corporations Act 2001 (Cth) and is guilty of that offence particularised in the indictment of 14 September 2023. (5) The Court records that between 11 February 2016 and 6 June 2018, at Sydney in the State of New South Wales and in other referring jurisdictions within the Commonwealth of Australia, Allianz Australia Insurance Limited disseminated information that was false in a material particular or materially misleading, namely information published on the compare cover options landing page of its website regarding Allianz Australia Insurance Limited's domestic travel insurance policy, that it ought reasonably to have known was false in a material particular or materially misleading, and the information was likely to induce persons in these jurisdictions to acquire financial products, contrary to ss 1041E(1) and 1311(1) of the Corporations Act 2001 (Cth) and is guilty of that offence particularised in the indictment of 14 September 2023. (6) The Court records that between 11 February 2016 and 6 June 2018, at Sydney in the State of New South Wales and in other referring jurisdictions within the Commonwealth of Australia, Allianz Australia Insurance Limited disseminated information that was false in a material particular or materially misleading, namely information published on the rental car excess insurance landing page of its website regarding Allianz Australia Insurance Limited's domestic travel insurance policy, that it ought reasonably to have known was false in a material particular or materially misleading, and the information was likely to induce persons in these jurisdictions to acquire financial products, contrary to ss 1041E(1) and 1311(1) of the Corporations Act 2001 (Cth) and is guilty of that offence particularised in the indictment of 14 September 2023. (7) In respect of the foregoing six offences, taking into account the 25% discount for the plea of guilty, the Court imposes an aggregate or single sentence, being a fine of $13,500,000.

Endnotes

1. Crimes Act 1914 (Cth), s 16A(1).
2. Veen v The Queen (No 2) (1988) 164 CLR 465; [1988] HCA 14.
3. Ibid., Markarian v The Queen (2005) 228 CLR 357: [2005] HCA 25: The King v Jacobs Group (Australia) Pty Ltd [2023] HCA 23 at [53].
4. R v Ellis (1986) 6 NSWLR 603.
5. Compare Barbaro v The Queen; Zirilli v The Queen (2014) 253 CLR 58; [2014] HCA 2. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 February 2025