ASIC V Accounts Control Management Service PTY LTD Misleading and deceptive Conduct

Australian Securities and Investments Commission v Accounts Control Management Services Pty Ltd (No 2) [2012] FCA 1317 (23 November 2012)

Last Updated: 4 December 2012

FEDERAL COURT OF AUSTRALIA

Australian Securities and Investments Commission v Accounts Control Management Services Pty Ltd (No 2) [2012] FCA 1317

Citation:		Australian Securities and Investments Commission v Accounts Control Management Services Pty Ltd (No 2) [2012] FCA 1317
Parties:		AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v ACCOUNTS CONTROL MANAGEMENT SERVICES PTY LTD ACN 050 268 141 and ACM GROUP LTD ACN 127 181 097
File number:		NSD 684 of 2011
Judge:		PERRAM J
Date of judgment:		23 November 2012
Catchwords:		PRACTICE AND PROCEDURE – Orders, form of – whether order granting injunction should include the word ‘permanently’ – consideration of appropriate form of order
Cases cited:		Australian Securities and Investments Commission v Accounts Control Management Services Pty Ltd [2012] FCA 1164 cited
Date of hearing:	23 November 2012
Place:	Sydney
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	10
Counsel for the Plaintiff:	D Stack
Solicitor for the Plaintiff:	Australian Securities and Investments Commission
Counsel for the Defendants:	J Petrolo
Solicitor for the Defendants:	Beilby Poulden Costello

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 684 of 2011

BETWEEN:	AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION Plaintiff
AND:	ACCOUNTS CONTROL MANAGEMENT SERVICES PTY LTD ACN 050 268 141 First Defendant ACM GROUP LTD ACN 127 181 097 Second Defendant

JUDGE:	PERRAM J
DATE OF ORDER:	23 NOVEMBER 2012
WHERE MADE:	SYDNEY

THE COURT DECLARES THAT:

1. Between 24 November 2008 and 21 June 2010, the Defendants engaged in misleading and deceptive conduct in contravention of section 12DA(1) of the Australian Securities and Investments Commission Act 2001 (Cth), by representing to eight debtors who it pursued for payment of credit card and personal loan debts it had acquired from third party creditors that:.

(a) the Defendants were a firm which specialised in commencing legal proceedings against debtors for the recovery of debt;
(b) the Defendants frequently commenced legal proceedings against debtors for the recovery of debts;
(c) the debtor's matter had been referred to the Defendant's lawyer for the purpose of commencing legal proceedings;
(d) the Defendants had decided to commence legal proceedings against the debtor;
(e) the Defendants would commence legal proceedings immediately against the debtor;
(f) the Defendants would cause Sheriff's officers to serve documents upon the debtor;
(g) a collections officer was a "Senior Legal Officer";
(h) the Defendants were proceeding to bankrupt a debtor.
when none of this was true.
And by:
(i) contacting a debtor's employer and seeking information on the false premise that they needed the information to verify a credit application.

2. Between 24 November 2008 and 21 June 2010, the Defendants engaged in unduly harassing and coercive conduct in relation to eight debtors, in contravention of section 12DJ(1) of the Australian Securities and Investments Commission Act 2001 (Cth), by:

(a) Threatening to issue a warrant for a debtor's arrest;
(b) Threatening to inform a debtor's husband about her indebtedness;
(c) Threatening to call a debtor's friends and employer until she repaid the debt;
(d) Threatening to cause Sheriff's officers to attend a debtor's house to effect service when the Defendants did not intend to do so;
(e) Threatening to serve documents on a debtor at her place of employment when the Defendant's did not intend to do so;
(f) Threatening to take action against a debtor that would result in his taxi licence being revoked;
(g) Threatening to take action against a debtor that would result in him being unable to travel overseas;
(h) Calling a debtor's neighbour and friend with the expectation that they would tell the debtor that the Defendants had contacted them;
(i) Calling a debtor's employer and eliciting confidential information about a debtor under the false pretence that the debtor had applied for credit;
(j) Calling a debtor's employer and eliciting confidential information about the debtor under the false pretence that the debtor would be served with legal papers; and
(k) Involving third parties, such as partners, friends and neighbours in the collection of debts with a view to putting pressure on the debtor to pay.
THE COURT ORDERS THAT:

3. The Second Defendant, by itself, its servants and its agents be restrained from engaging in the misleading and deceptive conduct declared in paragraphs 1 (a)-(i) above.
4. The Second Defendant, by itself, its servants and its agents be restrained from using undue harassment and coercion as declared in paragraphs 2(a)-(k) above.
5. The Defendants pay the costs of the Plaintiff.
   

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 684 of 2011

BETWEEN:	AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION Plaintiff
AND:	ACCOUNTS CONTROL MANAGEMENT SERVICES PTY LTD ACN 050 268 141 First Defendant ACM GROUP LTD ACN 127 181 097 Second Defendant

JUDGE:	PERRAM J
DATE:	23 NOVEMBER 2012
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. I delivered my primary judgment in this matter on 26 October 2012: Australian Securities and Investments Commission v Accounts Control Management Services Pty Ltd [2012] FCA 1164. The question which arises today is the form of the orders which should be made. In the primary judgment at [321], I said as follows:
   321. I would not, however, be willing to make declarations in the form proposed by ASIC. These ran to 66 pages, and dealt, in detail, with the position of each of the debtors. Although I am prepared to entertain further debate, at present it seems to me that an appropriate declaration would be that:

The Defendants engaged in misleading and deceptive conduct by informing debtors who they pursued on unpaid accounts they had acquired from third party creditors that:
(a) they were about to sue them; or
(b) the file was in the hands of their lawyers; or
(c) a decision had been made to sue them; or
(d) they would shortly be served with Court process by the Sheriff

when none of this was true.

2. Consequent upon that indication, the parties have prepared competing short minutes of order. The present debate is twofold. The first concerns whether Prayers Three and Four sought by ASIC should be made. In their final articulated form, these were as follows:

THE COURT:

...

3. ORDERS THAT the Second Defendant take, and continue to take, all necessary steps including, without limitation,
   
   1. The preparation of training manuals;
   2. The holding of regular training sessions; and
   100. The monitoring of communications
        

so as to ensure, as best it can, that its employees, servants and agents, in their attempts to recover from debtors, debts which have been purchased from third party creditors, do not engage in unduly harassing and coercive conduct, in contravention of section 12DJ(1) of the Australian Securities and Investments Commission Act 2001 (Cth) in the manner declared in paragraphs 2 (a) to (k) above.

4. ORDERS THAT the Second Defendant take, and continue to take, all necessary steps including, without limitation,
   
   1. The preparation of training manuals;
   2. The holding of regular training sessions; and
   100. The monitoring of communications
        

so as to ensure, as best it can, that its employees, servants and agents, in their attempts to recover from debtors, debts which have been purchased from third party creditors, do not engage in misleading and deceptive conduct, in contravention of section 12DA(1) of the Australian Securities and Investments Commission Act 2001 (Cth) by making false representations to debtors in the manner declared in paragraphs 1 (a) to (i) above.

3. As opposed to that, ACM submitted that the following orders 3 and 4 should be made:

THE COURT:

...

3. ORDERS THAT the Second Defendant, by itself, its servants and its agents be restrained from engaging in the misleading and deceptive conduct declared in paragraphs 1 (a) -(i) above.
   
4. ORDERS THAT the Second Defendant, by itself, its servants and its agents be restrained from using undue harassment and coercion as declared in paragraphs 2(a)-(k) above.
   
4. The second debate between the parties concerned the question of whether ASIC’s proposed Orders Five and Six should or should not contain the word ‘permanently’. Paragraphs Five and Six of ASIC’s proposed order is as follows.

THE COURT:

...

5. ORDERS THAT the Second Defendant, by itself, its servants and its agents be permanently restrained from engaging in the misleading and deceptive conduct declared in paragraphs 1 (a) to (i) above.
   
6. ORDERS THAT the Second Defendant, by itself, its servants and its agents be permanently restrained from engaging in undue harassment and coercion as declared in paragraphs 2 (a) to (k) above.
   
5. Dealing with the second question first, this debate is largely pointless. Both parties proceeded on the basis that the injunctions proposed by ASIC would be permanent in effect. This formed the basis for ASIC’s submission that the addition of the word ‘permanently’ to the injunction did no harm, and the foundation of Ms Petrolo’s argument for ACM that since it did nothing, it should be omitted.
6. Mr Stack, who appeared for ASIC, referred me to the proposition that this was a standard form in which injunctive relief had been granted for twenty years. I was not taken to any authority to make good that proposition, and I am not certain it is correct; but be that as it may, I do not see that there is any point in including in orders words which do no work. If there is ever a debate about what these orders mean, and I cannot see how there could be, the transcript of the argument before me together with these reasons for judgment will well show that the injunction was intended to be a permanent one. In those circumstances, I conclude that the orders suggested by ACM without the word ‘permanently’ are the appropriate ones.
7. I turn then to the substantive debate between the parties. Here, the question was whether the orders of the Court should, in effect, be informed by [327] of the reasons for judgment. In those reasons, I indicated that I did not think that a bare injunction simply to forebear from engaging in undue harassment and coercion would be sufficient to bring about organisational change. ASIC’s orders seek to deal with that problem to an extent by prescribing a régime of training manual preparation, training sessions and call monitoring. I accept that Prayers Three and Four proposed by ASIC do attempt to give effect to what I said at [327].
8. However, Ms Petrolo submitted that I ought not to take the course of making an order of that kind because (a) its terms were too vague, and (b) a mandatory injunction had not formed part of the relief which had been claimed by ASIC in its amended originating process. Mr Stack submitted that the relief claimed was informed by practical matters, and he emphasised both the words ‘as best it can’ and the specific reference to the declarations in Orders One and Two as indicating that the orders would have the practical consequence of requiring ACM to act on these matters.
9. On balance, I do not think that the order which has been articulated by ASIC overcomes the difficulties of the uncertainty of its operation, and I think there is force in the submission made by ACM that it would be difficult for me to embrace, in any event, what ASIC suggests without there being an amendment to its originating process. True it is that the idea of a mandatory injunction was one which finds its origins in [327] of the reasons for judgment, but that does not mean that ASIC is entitled without amendment if the point be taken against it to claim relief which is not otherwise sought.
10. I should say, however, that that is not the principal reason I decline the relief. The principal reason is because I do not think that the orders which have been proposed are sufficiently clear to make enforcement of them a meaningful enterprise. In those circumstances, I propose to make orders in accordance with the short minutes of order which have been articulated by ACM, and I make Declarations One and Two, and Orders Three, Four and Five in the document prepared by the solicitors for ACM.
    

I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.

Associate:

Dated: 30 November 2012

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