Viagogo AG v Australian Competition and Consumer Commission

ABRAHAM J 1 The appellant seeks a stay of order 7 of the orders made by the primary judge on 2 October 2020, requiring payment of a $7 million pecuniary penalty. 2 In support of this application the appellant read the affidavits of Christopher Miller affirmed on 21 November 2020, and Katrina Mary Groshinski sworn 22 February 2021. 3 For the reasons below, order 7 of the primary judge's orders made on 2 October 2020 in proceeding NSD 1489 of 2017 by which the appellant is to pay pecuniary penalties, is temporarily stayed until the appeal in this proceeding is heard and determined.

Procedural history 4 On 18 April 2019 the primary judge delivered judgment in relation to liability in this matter: ACCC v Viagogo AG [2019] FCA 544 (liability judgment). His Honour concluded that in the period 1 May to 26 June 2017 the appellant had made four categories of representations on or related to its website in breach of the Australian Consumer Law (ACL): the Official Site Representation (that the appellant's website was an official ticket seller); the Quantity Representations (that tickets to events were scarce, when in fact they were only scarce on the appellant's website); the Total Price Representations (that the price displayed was the total price); and the Part Price Representations (that the price displayed elsewhere excluded additional fees). 5 On 2 October 2020, penalty was imposed: ACCC v Viagogo AG (No 3) [2020] FCA 1423 (penalty judgment). His Honour ordered a pecuniary penalty of $7 million and made declarations that the appellant had contravened the relevant provisions of the ACL in relation to each category of representation. The primary judge also issued an injunction restraining the appellant from repeating the representations and thereby breaching the ACL, for 5 years. Finally, the primary judge made orders requiring the appellant to implement and maintain an ACL compliance program for 3 years, and ordered costs. 6 On 29 October 2020 the appellant filed a Notice of Appeal in relation to the liability and the penalty judgments. Various procedural orders have been made by consent since 2 November 2020 extending the date for payment of the pecuniary penalty. 7 A date for this appeal is yet to be finalised.

Legal principles 8 The principles upon which a stay may be granted are well established. 9 Rule 36.08 of the Federal Court Rules 2011 (Cth) provides that: 36.08 Stay of execution or proceedings under judgment appealed from (1) An appeal does not: (a) operate as a stay of execution or a stay of any proceedings under the judgment subject to the appeal; or (b) invalidate any proceedings already taken. (2) However, an appellant or interested person may apply to the Court for an order to stay the execution of the proceeding until the appeal is heard and determined. (3) An application may be made under subrule (2) even though the Court from which the appeal is brought has previously refused an application of a similar kind. 10 Rule 36.08 confers a broad discretion. Generally, there must be demonstrated "a reason or an appropriate case" to warrant the exercise of discretion in favour of granting a stay. It is not necessary to establish special or exceptional circumstances for the grant of a stay: Powerflex Services Pty Ltd v Data Access Corp (1996) 67 FCR 65 at 66. 11 Two questions must be considered: first, is there an arguable point on the proposed appeal: Nolten v Groeneveld Australia Pty Ltd [2011] FCA 1494 (Nolten) at [24] or some "rational prospect of success" in relation to any of the grounds of appeal: Burns v AMP Finance Ltd [2005] FCA 761 at [5]; and second, does the balance of convenience favour the grant of a stay: Nolten at [24], [46]. 12 The party seeking the order bears the onus of demonstrating a proper basis for a stay, which must be fair to all parties: Alexander v Cambridge Credit Corporation Ltd (receivers appointed) (1985) 2 NSWLR 685 (Alexander) at 695. That party must demonstrate that there is a real risk that it will suffer prejudice or damage if a stay is not granted, which will not be redressed by a successful appeal: Kalifair Pty Ltd v Digi-Tech (Australia) Ltd, McLean Tecnic Pty Ltd v Digi-Tech (Australia) Ltd [2002] NSWCA 383; (2002) 55 NSWLR 737 (Kalifair) at [18]; Flight Centre Limited v Australian Competition and Consumer Commission [2014] FCA 658 (Flight Centre) at [9(f)]. This requirement will be satisfied if a successful appeal will be rendered nugatory unless a stay is granted: Ali v Australian Competition and Consumer Commission [2020] FCA 860 at [11]; Australian Competition and Consumer Commission v BMW (Australia) Ltd (No 2) [2003] FCA 864 (BMW) at [5]; Alexander at 695; Kalifair at [18]. 13 The successful party at first instance is entitled to presume that the judgment appealed from is correct: Powerflex Services Pty Ltd v Data Access Corp (1996) 67 FCR 65 at 66, citing Re Middle Harbour Investments Ltd (in liq) (unreported, Court of Appeal NSW, 15 December 1976); Flight Centre at [9(b)]; Wooldridge v Australian Securities and Investments Commission [2015] FCA 349; (2015) 106 ASCR 551 (Wooldridge) at [11]; Urban Alley Brewery Pty Ltd v La Sirène Pty Ltd (No 2) [2020] FCA 351 at [48], [51].

Arguable case 14 The appellant contended, and the respondent, noting the low threshold of arguability, did not dispute for the purposes of this application that there was an arguable ground of appeal or that the appeal is other than bona fide: BMW at [5]. I also note that the appellant does not contend that the prospects of success of the appeal are so strong or overwhelming that the interests of justice could only be served by granting a stay: Wooldridge at [18]. 15 I approach the matter on that basis, and the consideration below is in that context. The focus of this consideration is therefore directed to the second issue, the balance of convenience.

Submissions 16 The appellant contended that the circumstances present a real risk of prejudice to the appellant if it is required to pay the penalty. It contended that the effects of the COVID-19 pandemic have been devastating to the live entertainment industry, in which the appellant operates. The appellant described the evidence as reflecting that COVID-19 has had a "catastrophic effect" on its revenue. The appellant referred to the consequences of the restrictions placed on live events which were demonstrated by the fact that the sector was predicted to lose two-thirds of its workforce over the course of the pandemic to December 2020. The appellant's revenue is based entirely on ticket sales to live events. The appellant provided details of its financial position. In relation to ticket sales, suffice to say for present purposes the appellant suffered a net loss in the second quarter of 2020 as a result of the pandemic, and its cash and equivalents have declined significantly over the course of the year. As a consequence the appellant has been forced to reduce the number of its employees, agents and contractors, details of which were provided. 17 The appellant submitted that were it required to pay the pecuniary penalty now, it is likely to have an effect on its financial position, and may consequently require further staff reductions or delay payments to vendors. It submitted that apart from prejudice to the appellant itself, those steps would likely cause hardship to staff or third parties that may be deprived of income. It submitted that there is no real risk to the Australian Competition and Consumer Commission (ACCC) that the appellant will be unable to pay the penalty if the appeal fails. The appellant is suffering immediate financial difficulty due to the COVID-19 pandemic. The appellant submitted that there is some expectation that the outlook for the live entertainment industry will improve in late 2021. 18 The appellant noted that it does not seek a stay of the non-pecuniary orders made on 2 October 2020. The deterrent and consumer protective effect of those orders will therefore continue to secure the ACCC's regulatory objectives. The appellant also noted that it had paid the costs order and that there was a security for cost order made for the appeal. 19 In oral submissions the appellant addressed the respondent's reliance on Wooldridge, distinguishing it from this case on the basis of the nature of the orders which were there sought to be stayed. It also addressed the respondent's submission about the deterrent effect in the penalty being paid, by reference, in particular, to Flight Centre at [10], [15]. The appellant submitted that authority reflected that the deterrent effect of a penalty is established by the imposition of that penalty, and that position is deployed by the ACCC when obtaining orders against corporations in liquidation. 20 The respondent opposed the order, emphasising that deterrence is served by the paying of the penalties, citing Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482 (Commonwealth v DFWBII). The respondent submitted that "permitting a contravener to avoid the sting or burden of paying a penalty pending an appeal lessens its deterrent effect, which in turn affects the protection of the public". It submitted that the protection of the public and public interest considerations "are entitled to significant weight", and that the Court should not give the impression that first instance orders "are provisional upon confirmation on appeal, lest the public purpose of making such orders in the first place be undermined": Wooldridge at [13]-[16], and see also [11]. It submitted that more specifically, it is significant as the orders in this case relate to a prominent, international corporation who describes itself as the "world's largest ticket marketplace" and which engaged in large scale conduct breaching several provisions of the ACL affecting many Australian consumers, warranting penalties of $7 million. The respondent took issue with the appellant's submission as to the effect of Wooldridge, submitting that pecuniary penalty orders are protective. The respondent also took issue with the appellant's submission about Flight Centre and the passage at [15], namely, that the deterrent effect is with the imposition of the penalty and not the payment. It was submitted that was contrary to authority including Australian Building and Construction Commission v Construction, Forestry, Mining and Energy Union [2018] HCA 3; (2018) 262 CLR 157 (ABCC v CFMEU) at [42], [44], [87], [116], [123], [125], Commonwealth v DFWBII at [23]-[24], [55], [59], [60], [78], [108]-[110]. 21 The respondent emphasised the seriousness of the contraventions, referring to [24]-[25], [59]-[61], [66]-[69], [71]-[72], [77]-[82], [98]-[99], [104]-[107], and [123] of the penalty judgment. 22 The respondent submitted that the appellant has not demonstrated any prejudice which will not be redressed by a successful appeal, and that this is not a case where the absence of a stay order will render the appeal nugatory. It also submitted that the appellant has not demonstrated the kind of circumstances or impact that would make compliance with the primary judge's orders prior to appeal so prejudicial so as to outweigh the above public interests. The respondent was critical of evidence relied on and submitted that the appellant has been unprepared or unable to quantify any actual impact, and has been unprepared or unable to do more than speculate as to steps it may need to take. It submitted the evidence does not persuasively explain how such prejudice would not be remediable in the event the appeal was to succeed. The evidence does not establish that paying the ordered penalties now would leave it unable to finance the conduct of the appeal, or that it would cause insolvency. Further, the evidence as to the deleterious effect the COVID-19 pandemic has had upon the entertainment industry does not establish an irremediable prejudice in paying the penalty now, prior to appeal. It submitted that it is speculative to suggest that there will be any improvement in the outlook for the holding of live entertainment events in late 2021. 23 It submitted that the evidence does no more than show that the payment of the penalty, whenever it is paid, would impact upon its financial position in a way which 'may' cause it to take some measures. Such a prejudice is no more than the sting or burden that penalties for serious contraventions of the law might be expected to have in any number of cases. It submitted that many cases recognise that an appropriate penalty may have such a sting or burden as to be financially disastrous for the wrongdoer, sending them into insolvency, administration, liquidation or bankruptcy. It submitted that this does not provide a basis for refusing to order an appropriate penalty amount, and nor does it provide a basis for ordering that a penalty not be paid pending appeal.

Consideration 24 The seriousness of these contraventions and the public interest in enforcing the penalty imposed is self-evident. Similarly, there can be no issue that the successful party at first instance is entitled to presume that the judgment appealed from is correct, and the Court should not give the impression that first instance orders are provisional upon confirmation on appeal: Wooldridge at [16]. These are all matters which carry significant weight when assessing where the balance of convenience lies. A stay, if granted, does not reflect on the obvious importance of those matters. 25 That said, the respondent's submission that payment of a penalty may be financially disastrous is not a basis for a penalty not to be imposed, and is also not a basis to stay the order pending appeal, ignores the different considerations relevant to the imposition of a penalty and the principles relevant to the granting of a stay. If the respondent's assertion were correct, it would mean that regardless of the circumstances, a stay of a penalty would not be ordered. The breadth of that submission as advanced in the written submission, if correct would also result in a stay being refused even if the financial result would render a success on appeal nugatory. That is not correct; each case must be considered on its merits. 26 Care must also be taken in considering the authorities referred to by the respondent regarding the importance of public interest considerations in the context of a regulatory injunction. Although the principles that are discussed are beyond debate, their factual application is again case specific. For example, the effect of an application to stay an order disqualifying a director from holding such function may, depending on the circumstances, have a more immediate public protection aspect than a pecuniary penalty. That was the factual scenario under consideration in Wooldridge, and the only type of order discussed: see [12]-[18]. Whether other protective orders exist and have taken effect may also be relevant. 27 I note that the non-pecuniary orders made, being injunctions and a compliance program, are not the subject of this application and would, if a stay is granted, remain in effect. From a public interest perspective, these have a deterrent and importantly, a consumer protective effect. That is not to suggest that pecuniary penalty orders do not have a protective aspect, but rather to recognise that in this case there were additional orders made which remain in effect. 28 It is also necessary to address the parties submission as to the significance of paragraph [15] in Flight Centre, where Rangiah J stated: Flight Centre suggested that there is unfairness in being required now to pay the pecuniary penalty to deter it from conduct that it says may ultimately be found to be lawful. However, the deterrent effect arises from the imposition of the penalty, not the requirement that it be paid before the appeal. A stay of the order would affect the requirement for payment before the appeal, but not the validity of the order. A stay would not affect the deterrent effect of the order. 29 His Honour was considering an application for a stay of the pecuniary penalty and costs order that had been imposed, in circumstance where no evidence was led by Flight Centre as to any prejudice. Rather, as Rangiah J described at [14], their argument amounted to a proposition that the mere commencement of an appeal against an order imposing a pecuniary penalty is, in the absence of prejudice to the respondent, enough to warrant a stay of the order pending the appeal. 30 As the respondent correctly remarked, there is no authority cited for the propositions in [15] as to the deterrent effect of a pecuniary penalty order. That said, the statement was made in the particular context of addressing a submission in that case as to unfairness and should not be elevated to a significance it does not have. As the respondent correctly submitted, the High Court in ABCC v CFMEU and Commonwealth v DFWBII have made clear the importance of the deterrent effect of such an order, and that encompasses the payment of the pecuniary penalty. Any suggestion that the deterrent effect is confined to the imposition of the penalty is incorrect. 31 Apart from the obvious public interest aspect, the respondent does not identify any additional prejudice in a stay of the order. It focused its submission on the adequacy of the financial information and that the appellant bears the onus of justifying a stay with sufficient evidence. This is in the context where the affidavit was admitted without objection. The respondent did not challenge the underlying financial information, and save for submissions in respect to paragraph [19] of Mr Miller's affidavit suggesting that, at least by implication, the assertions therein are misleading based on the underlying financial information provided, no detailed submission was advanced in respect to the remaining opinions expressed as to the financial impact of the COVID-19 pandemic. The respondent also made submissions in respect to paragraphs [22]-[23] which address the impact of paying the pecuniary penalty at this time, and contended that the information contained therein is inadequate to found a stay. That submission is based on the information provided on the face of the affidavit and did not require the respondent to challenge the underlying evidence. As explained by the respondent, the submissions it made about the evidence generally were directed to the weight to be attached to it. That said, during submissions the respondent accepted the evidence that payment of the pecuniary penalty order at this time would have a significant impact on the appellant's financial position. 32 What appears uncontroversial is that the entertainment industry has been very significantly impacted by the COVID-19 pandemic. A business that derives its revenue from ticket sales would obviously be significantly impacted, as the financial evidence relied on establishes to be so for this appellant. Without referring to the details of the financial evidence of the effect on the appellant's revenue, it is at least arguably not inapt to refer to it as its senior counsel did, as a "catastrophic effect". The respondent did not take issue with that description. 33 To date, the evidence establishes that a consequence of the financial position suffered has been the very significant reduction of employees and agents. The evidence that any further financial impact at this time may affect employee and agent numbers can be accepted. 34 The respondent's submission that any prejudice suffered by the appellant can be remedied by repaying the penalty if the appeal is successful does not grapple with the effect the order may have on others, including employees, agents and contractors. In that context, the respondent's submission that there is no evidence about the appellant's staffing arrangements and whether any decisions could be reversed, for example, whether employees could be re-employed, does not address remedying any harm. 35 The appellant's evidence could have been more specific, although I accept that given the nature of the pandemic, in the context of an international business in the entertainment industry, the financial circumstances may be frequently changing. The respondent's submission as to the adequacy of the information including for example, how many employees would be affected, from which countries, with information about their employment details such as whether they would be re-employed, must be considered in that context. What might be sufficient evidence in this context, may well not be otherwise so. 36 The appellant contended that there is no real risk that it will be unable to pay a penalty if the appeal fails, but rather, it is suffering immediate financial difficulty in the conditions of the COVID-19 pandemic. I note that the appellant is not suggesting it cannot now pay, rather it is the impact of doing so now that is relied on. 37 The appellant's evidence was that there is some expectation that the outlook for the holding of live entertainment events will improve in late 2021, with the inference being at that stage the financial issues that arise now may not have the same effect then. Although the respondent submitted that it is speculative to suggest that there will be any improvement in outlook for the holding of live entertainment events in late 2021, it is difficult to envisage what more could have been provided, given the unpredictability of COVID-19. What is a matter of public knowledge is that over time, as restrictions have been lifted activities in the entertainment sector have increased, subject to various lockdowns. It is also a matter of public knowledge that with the vaccine program being implemented, with time, it is hopeful that restrictions are eased which may have a positive impact on events and the size of the audiences. So much was accepted by the respondent during the hearing. 38 As noted above, it was accepted by the respondent that payment of the pecuniary penalty order at this time would have a significant impact on the appellant. The appellant may consequently have to make further staff reductions or delay payments to vendors. Those steps would likely cause hardship to staff or third parties that may be deprived of income. 39 Weighing up the relevant considerations, in the particular circumstances of this case, the appellant has established that the balance of convenience lies with the granting of a temporary stay of the order as to the pecuniary penalty until the conclusion of the appeal process in this Court.

Conclusion 40 Order 7 of the primary judge's orders made on 2 October 2020 in proceeding NSD 1489 of 2017 by which the appellant is to pay pecuniary penalties be temporarily stayed until the appeal in this proceeding is heard and determined. 41 I grant the parties liberty to apply. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Abraham.