On 29 May 2015, Justice Middleton delivered his decision in ACCC v Dhruv Chopra (Chopra).
The ACCC had alleged that Mr Chopra, an online retailer of electronics products, had contravened the Australian Consumer Law and in particular, the statutory consumer guarantee provisions and related false and misleading representations by statements made on his website. Mr Chopra made certain admissions, resulting in Orders by his Honour about both liability and quantum of the civil pecuniary penalty (penalty).
In relation to the issue of penalty, his Honour considered himself bound to apply Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (CFMEU) in determining the appropriate penalty.
However, his Honour questioned the parties as to what level of penalty would be manifestly excessive or manifestly inadequate in the relevant circumstances, based upon outcomes in comparable cases. Although contingent on the appropriate question being asked from the Bench, this approach allows parties to indicate a range of penalties in their response while complying with the limits outlined inCFMEU.
CFMEU – THE LIMITS
CFMEU overturned in excess of twenty years of authorities relating to the ability of regulators and defendants to make joint submissions to the Court about the appropriate pecuniary penalty or range of penalties. The Full Bench of the Federal Court applied the recent High Court decision Pasquale Barbaro v The Queen, Saverio Zirilli v The Queen concerning penalty recommendations in criminal matters and held:
- Courts should have “no regard to the agreed figures in fixing the amounts of the penalties to be imposed, other than to the extent that the agreement demonstrates a degree of remorse and/or cooperation on the part of each respondent”; and
- The parties (including any regulator) are not permitted or required to provide the Court with their view as to the penalty or range of penalties the Court may impose.
The Commonwealth applied to the High Court for special leave to appeal the CFMEU decision. Special leave was granted to the Commonwealth on 18 June 2015 and the appeal is likely to be heard in October 2015. For further detail please see our previous Corrs in Brief article “Where to now for agreed civil penalty outcomes following the CFMEU and Barbaro decisions?” that can be accessed here.
CONSIDERATION OF CFMEU PRINCIPLES IN CHOPRA
The Court accepted the ACCC’s submission that the approach adopted by the Full Bench in CFMEU should be applied in this proceeding. In considering the application of CFMEU, Middleton J held:
- “The legal representatives for both the regulator and the respondent have a responsibility to assist the court to avoid appealable error. This involves ensuring that a penalty is not manifestly excessive or manifestly inadequate. This can be appropriately achieved by the making of submissions based upon the applicable legal principles, any relevant previous decisions, and the evidence before the court. The opportunity to do so will often arise in the course of discussion betweenthe Bench and the legal representatives in any particular proceeding as to the appropriateness of a particular penalty. I do not see the Full Court in CFMEU as seeking to stifle any necessary discussion in this regard between the Bench and the legal representatives of the parties before the court.”
- “In the context of considering previous decisions, a debate as to the similarities and differences between such decisions and the conduct of the contravener before the court may occur. Consistency in the imposition of penalties under the ACL is obviously desirable.”
However, Middleton J also stressed that “[p]revious decisions (no matter how analogous) do not limit the range of penalty which may be appropriate, nor do they restrict the approach to be taken ... in any particular later decision”.
PENALTY IN CHOPRA
Justice Middleton made declarations (by consent) and ordered Mr Chopra, the sole operator of the online electronics store (now closed), to:
- pay penalties totalling $100,000;
- be restrained from engaging in similar conduct for a period of five years;
- undertake training on his obligations under the ACL; and
- pay the ACCC's costs of the proceeding.
In determining the appropriate penalty, his Honour considered each of the French factors and the ACCC’s submissions outlining pecuniary penalties imposed in analogous decisions. His Honour acknowledged the usefulness of those submissions in providing “details of the relevant statutory provisions, the maximum penalties, the nature of the conduct of the contravener, and the relevant factors taken into account by the court”.
Specifically, the ACCC referred to (amongst other decisions), ACCC v Artorios Ink Co Pty Ltd (No 2) (Artorios), in which the respondents were found to have engaged in misleading and deceptive conduct in representing to small businesses that they had placed orders for products when that was not the case. The individual respondents in Artorios were each penalised $50,000. However, two key differences between Artorios and Chopraexplained the differing level of penalties imposed in each case.
WHERE TO NOW?
Legal representatives should be prepared to respond to questions from the Bench about manifestly excessive or manifestly inadequate penalties, based upon outcomes in comparable cases. In so doing, parties will need to be mindful the significance of such submissions to any subsequent appeal and legal representatives’ obligations to the Court. It will be interesting to see how and whether it becomes routine for the Bench to actively engage with the parties’ legal representatives concerning penalty ranges and the weight to be given to analogous decisions. While Chopra does not and cannot restore the measure of certainty removed by CFMEU, his Honour adopts a sensible and balanced approach that may be followed in future proceedings.