Australian Competition and Consumer Commission v Employsure Pty Ltd (No 3)

• Jurisdiction: Australia Federal only
• Court: Federal Court (Australia)
• Judgment Date: 11 January 2022
• Neutral Citation: [2022] FCA 3
• Date: 11 January 2022

Federal Court of Australia

Australian Competition and Consumer Commission v Employsure Pty Ltd (No 3) [2022] FCA 3

File number(s):	NSD 2384 of 2018
Judgment of:	GRIFFITHS J
Date of judgment:	11 January 2022
Catchwords:	PRACTICE AND PROCEDURE – costs of trial and pecuniary penalty hearing – where applicant only partially successful on issues raised at trial – where respondent ordered to pay only 20% of pecuniary penalties sought by applicant – whether indemnity costs are appropriate
Legislation:	Competition and Consumer Act 2010 Sch 2 (Australian Consumer Law) ss 18(1), 29(1)(b), 29(1)(h) Federal Court of Australia Act 1976 (Cth) s 43 Federal Court Rules 2011 (Cth) r 40.01
Cases cited:	Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (No 2) [2018] FCAFC 112 Australian Competition and Consumer Commission v Employsure Pty Ltd [2020] FCA 1409 Australian Competition and Consumer Commission v Employsure Pty Ltd (No 2) [2021] FCA 1488 Australian Competition and Consumer Commission v Employsure Pty Ltd [2021] FCAFC 142; 392 ALR 205
Division:	General Division
Registry:	New South Wales
National Practice Area:	Commercial and Corporations
Sub-area:	Regulator and Consumer Protection
Number of paragraphs:	23
Date of last submissions:	20 December 2021
Date of hearing:	Determined on the papers
Counsel for the Applicant:	Mr N Owens SC with Ms D Forrester
Solicitor for the Applicant:	Corrs Chambers Westgarth
Counsel for the Respondent:	Dr R Higgins SC with Mr C Bannan
Solicitor for the Respondent:	Webb Henderson

ORDERS

		NSD 2384 of 2018
BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant
AND:	EMPLOYSURE PTY LTD ACN 145 676 026 Respondent

order made by:	GRIFFITHS J
DATE OF ORDER:	11 January 2022

THE COURT ORDERS THAT:

1. The respondent pay 20% of the applicant’s costs of and incidental to the liability hearing.

2. Within 28 days hereof, the respondent reimburse the applicant an amount of $176,092.35 (excluding GST), representing 20% of the amount of $880,461.75 (excluding GST) paid by the applicant to the respondent in accordance with the Court’s orders of 23 October 2020 which were subsequently vacated by the Full Court.

3. The applicant pay 50% of the respondent’s costs of the remitted penalty hearing, as agreed or taxed.

4. All the above costs orders are to be paid on a party-party basis.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

GRIFFITHS J:

1. These reasons for judgment relate to the question of costs of the trial and the determination of pecuniary penalties. The primary reasons for judgment are reported as Australian Competition and Consumer Commission v Employsure Pty Ltd [2020] FCA 1409 (Employsure PJ). The reasons for judgment concerning pecuniary penalties are reported as Australian Competition and Consumer Commission v Employsure Pty Ltd (No 2) [2021] FCA 1488 (Employsure Pecuniary Penalties).

2. The relevant background is summarised in Employsure Pecuniary Penalties at [1] to [3] and need not be repeated here. Briefly, the applicant (ACCC) was successful on appeal (see Australian Competition and Consumer Commission v Employsure Pty Ltd [2021] FCAFC 142; 392 ALR 205 (Employsure Full Court)) in respect of that part of Employsure PJ relating to six Google Ads which the Full Court held contravened relevant provisions of Sch 2 of the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law) regarding misleading or deceptive conduct because they conveyed a false representation of government affiliation (the contravening conduct). The ACCC did not appeal from the Court’s rejection at trial of its claims of misleading or deceptive conduct in respect of a seventh Google Ad, nor did it appeal the Court’s rejection of its claims of misleading or deceptive conduct in respect of Employsure’s use of keywords and free advice representations, nor its claims relating to alleged unfair contract terms and unconscionable conduct.

3. In Employsure Pecuniary Penalties, the ACCC sought a pecuniary penalty of $5 million in relation to the contravening conduct; an injunction restraining Employsure for a period of five years from making any representation of government affiliation; and that Employsure should repay 25% of the costs of the trial paid by the ACCC to Employsure (an amount of $220,115.44).

4. The Court ordered Employsure to pay a pecuniary penalty of $1 million (as opposed to the $5 million sought by the ACCC and the $750,000 put forward by Employsure) and declined to grant any injunctive relief. As noted in Employsure Pecuniary Penalties at [4](c), the parties asked the Court to defer the issue of costs following the publication of the reasons for judgment in Employsure Pecuniary Penalties. The parties have filed outlines of submissions in chief and in response on costs, as well as supporting affidavits.

5. In brief, the ACCC submitted that:

1. it should be awarded 25% of its costs of and incidental to the trial;

2. further to the Full Court vacating the order for costs of the trial, Employsure should be ordered to reimburse 25% of the costs paid by the ACCC to Employsure following the trial on liability (i.e. $220,115.44); and

3. in respect of the penalty hearing, the ACCC said that it should have all its party-party costs in respect of that proceeding.

6. In contrast, Employsure’s position regarding costs may be summarised as follows:

1. the ACCC should pay Employsure’s costs of the liability and pecuniary penalties stages of the proceedings on a party-party basis up to 12 February 2020; and

2. the ACCC should pay Employsure’s costs of the liability and penalty stages of the proceedings on an indemnity basis from 13 February 2020, relying in particular on a claim that it was unreasonable for the ACCC to refuse to accept Employsure’s offer of compromise dated 13 February 2020.

Consideration and determination

7. As is well-known, the Court has a broad discretion to make orders with respect to costs under s 43 of the Federal Court of Australia Act 1976 (Cth). In the usual case, the Court’s discretion is exercised by an order that costs follow the event and that they be determined on a party-party basis, as agreed or taxed (r 40.01 of the Federal Court Rules 2011 (Cth)).

8. The general principles which guide the Court’s discretion to order a party to pay indemnity costs are equally well-known. They are conveniently described by the Full Court in Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (No 2) [2018] FCAFC 112 at [5] to [8] per Nicholas, Yates and Beach JJ:

5 Section 43 of the Federal Court of Australia Act 1976 (Cth) confers a broad discretion on the Court to award costs in proceedings. In Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151, Black CJ at 152 stated the principles applicable to a claim for indemnity costs:

…it is well established that the starting point for any consideration of an application for indemnity costs is that in the...