…appeal on costs – where primary judge ordered mostly successful party to pay half costs of unsuccessful party
In Australian Competition and Consumer Commission v Employsure Pty Ltd [2023] FCAFC 5 (8 February 2023), the ACCC appealed a decision to impose a civil penalty of $1 million on the basis of manifest inadequacy.
It also appealed the consequent costs order under which the ACCC was ordered to pay 50% of Employsure’s costs.
The case concerned Google advertising by Employsure that promoted free employment-related advice when users searched for terms such as ‘fair work commission’ and ‘fair work ombudsman’. The resulting Google ads included the search terms so that, for example, a search for fair work ombudsman resulted in an ad that said “Fair Work Ombudsman Help – Free 24/7 Employer Advice”.
None of the Google ads made any mention of Employsure, and there were six ads at issue.
It was held in an earlier Full Court decision that publication of each Google ad conveyed, or was likely to convey, to the ordinary or reasonable business owner that Employsure was a government agency or affiliated or endorsed by a government agency (see Australian Competition and Consumer Commission v Employsure Pty Ltd [2021] FCAFC 142, at [175]).
It was found that Employsure’s conduct was misleading and deceptive or likely to be so contrary to s18 of the Australian Consumer Law. It was also held that the ads falsely represented that the service would be of a particular standard, quality, value or grade, contrary to s29(1)(c), and that the advertising entity had approval or affiliation with the government agency contrary to s29(1)(h).
In order to make out an appeal on the basis of manifest inadequacy, the Full Court identified that the ACCC would need to demonstrate that the result was one which was not open on the evidence or facts, found or agreed (at [34]). Such an appeal is distinct from the approach taken by the appellate court in a case alleging specific error (at [40]).
Rares, Stewart and Abraham JJ reviewed the case law on the principles relevant to assessing a civil penalty (at [42]-53]). Their Honours discussed the application of the maximum penalty as a yardstick (at [48]), ensuring that the penalty achieved the purpose of deterring future contraventions (at [49]-[50]), and the distinct principles of course of conduct and totality, which the primary judge conflated (at [52]).
The Full Court also noted (at [58]) that while penalties in comparable cases may be of assistance, care must be taken. It is consistency in the application of relevant legal principles rather than numerical consistency that is to be achieved.
The Full Court considered the following circumstances:
- the hundreds or thousands of individual contraventions each of which was capable of attracting a maximum penalty of $1.1 million (at [48] and [61])
- the important objective of general deterrence (at [61])
- the deliberate conduct of Employsure even if the breaches were not deliberate (at [62]-[64])
- the size and financial position of the contravening entity which had an annual profit of $25 million (at [71]).
Their Honours concluded that imposing a penalty that was less than the maximum for one contravention failed to achieve the necessary degree of general deterrence, and was manifestly inadequate (at [73]). Imposing the penalty afresh, the Full Court ordered a civil penalty of $3 million (at [97]).
On the issue of costs, the Full Court revisited the principles relevant to exercise of the costs discretion (at [105]-[108]). It found that the primary judge had erred in the exercise of the discretion (at [109]) by depriving the ACCC of its costs and ordering it to pay 50% of Employsure’s costs.
In obiter, their Honours clarified that an “offer of compromise” by Employsure to accept a particular penalty cannot be equated to offers put in private proceedings (at [111]). Such an offer in relation to a pecuniary penalty cannot bring the matter to an end because the assessment of penalty would, in any event, be a matter for the court.
The Full Court ordered that the ACCC should be awarded its entire costs of the remitted penalty hearing and the appeal.
Shanta Martin is a barrister at the Victorian Bar, ph 03 9225 7222 or email shanta.martin@vicbar.com.au. The full version of these judgments can be found at www.austlii.edu.au. Numbers in square brackets refer to a paragraph number in the judgment.
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