13 Australian Consumer Law

In addition, on the basis of Dr Martin’s report, I find that each of the complainants as young Aboriginal women for cultural reasons would not directly question the respondent to elicit information from him. Those characteristics, he said, would be typical of the indigenous communities in the Northern Territory visited by the respondent.

Dr Martin’s general conclusions are largely contained in the following passages from his report:

‘There is a consequent lack not only of skills such as financial literacy, but also of knowledge of the values, mores, expectations and assumptions implicit in interactions between culturally competent and informed persons within the general Australian society. Additionally in my experience, the reticence of the individual Aboriginal consumers in their dealings with older, non-familiar, non-Aboriginal males discussed previously, is typical of Aboriginal women of similar ages living in regions such as those considered in this report.

It is also my experience that not responding, especially but not only when dealing with strangers, is a common mechanism to avoid difficult or embarrassing questions amongst Aboriginal people in remote or traditionally oriented communities. In my opinion, these factors place Aboriginal people from these regions generally, and Aboriginal women in particular, at a significantly increased risk in commercial dealings such as those initiated by Mr Keshow.’

Secondly, building upon three case studies, Professor Altman highlighted the significant indirect economic and non-economic benefits for Aboriginal people and communities associated with engagement with the arts:

‘60. In situations where there are few formal employment opportunities and people live in deep poverty, successful engagement with the arts has extraordinary benefit. Artists are engaged and productive, and while often still on full or part welfare support, they cannot be categorised by demeaning terms such as the idle unemployed. Under current policy settings where the unemployed, especially in remote Australia, are required to work for the dole under the Community Development Program and where income is managed for many with the BasicsCard and the Cashless Debit Card, earnings from the arts give individuals a degree of economic autonomy and pride. Unrestricted dollars earned from the arts have higher value than quarantined dollars received as income support. Such economic autonomy provides artists the freedom to share their arts income with kin in a manner that is consistent with enduring Aboriginal custom.’

Professor Altman expanded upon his reasons as to why the conduct is likely to have direct and indirect negative impacts on the benefits accruing to Aboriginal artists and their communities and might jeopardise future growth of Aboriginal involvement in the sector:

‘(1) In situations of information asymmetry exacerbated by misleading or ambiguous labelling, buyers may choose the inauthentic product, Product B, over the authentic product, Product A, and may do so influenced by inaccurate information. The misleading conduct of the manufacturer of the inauthentic product is thereby rewarded, resulting in a “perverse and inequitable outcome” (Altman report at [92]). That outcome, in turn, is likely to be exacerbated if the misrepresented Product B is also cheaper than the authentic Product A with the result that Product A may ultimately be driven out of the market. Accordingly, the direct financial consequence of such unethical practices may be a decline in demand for the authentic Product A with a consequential and potentially substantial reduction in financial returns to Australian Aboriginal artists whose income earning possibilities may, as earlier observed, be extremely limited.

(2) Indirect impacts of such conduct include the possibility of a decline in consumer confidence in the sector generally at a time when some distinct Aboriginal brands are emerging, thereby unfairly reducing the commercial value of “brand equity” in the market. Professor Altman accepted that such impacts on one segment of the market may have limited impact upon other segments of the market such as handcrafted tourist art and fine art clearly attributed to named Aboriginal artists. However, he did not consider that such a possibility could be dismissed, especially where diverse products are displayed together, “thus reducing the physicality of market segmentation and enhancing the possibility that the authenticity of all products will be questioned” (Altman report at [97]).’

The overall picture which the evidence presents is that the respondent is what is sometimes called a ‘humbugger’. He sold and supplied, or purported to sell and supply, to residents of indigenous communities in the Northern Territory in the period in question children’s educational materials and later household goods. He took advantage of the lack of education and commercial experience of those in the communities in doing so. In many instances, the educational materials were not needed or useful having regard to the age of the child or children of the consumer. The products he contracted to provide were most commonly not supplied, or not supplied in their entirety. Whether a contract to provide educational materials was met was haphazard. The payment arrangements in each instance involved an open-ended periodic payment authority, procured at the instance of the respondent, and authorising payment on the day which Centrelink or like benefits were regularly received by the particular complainant or other community resident. The respondent in a number of instances continued to receive periodic payments well after the value of the goods to be provided by him (whether or not they had been provided) had been received. In fact, there is no evidence to show that the respondent maintained adequate records of what products had been sold to which consumers, whether the products had been provided, as agreed, or what had been paid for them.

When dealing with the complainants, the respondent realised that all or most of their income was from their Centrelink payments, and that a fortnightly payment to him of (say) $50 by one of the complainants would absorb about 10% of that person’s regular payments. He was also aware that the complainants each lived in a generally impoverished community. Their oral evidence convinces me that each of the complainants reacted to the respondent’s approaches with diffidence and passive acquiescence rather than any apparent enthusiasm or informed judgment or understanding about the transaction proposed by the respondent. I infer that the respondent realised in the case of almost all of the respondent’s customers from indigenous communities that all or most of their income was from Centrelink payments, and that the fortnightly payments authorised would absorb a significant proportion of that customer’s income. I also infer that he was aware that generally the respondent’s customers were from impoverished indigenous communities, and that the response to his approaches was generally diffident and passive acquiescence rather than any apparent enthusiasm or informed judgment or understanding of the proposed transaction. The respondent at interview did not put forward any information inconsistent with those inferences.

I have made findings as to the educational and commercial literacy of the complainants. Imbalance between a retailer and consumer in educational or commercial literacy generally will not of itself be enough to make a transaction unconscionable. In this matter, the respondent’s dealings had additional features. He was a mature person clearly well able to understand the nature of the transactions into which he entered, and to appreciate those things which a consumer with normal commercial acumen might inquire about, or expect. Clearly, as I have found, none of the complainants made such inquiries or pursued such expectations. In particular, the respondent did not proffer, and none of the complainants sought, any written record of the contract into which they had entered. The respondent must have realized that. The respondent did not proffer, and none of the complainants sought, details of the number of modules of education materials of NMA [National Maths Academy] which would be provided, nor when they would be provided, nor how much they would cost. The respondent did not provide, and none of the complainants sought, information as to when the anticipated purchase price for the goods to be supplied would have been paid for by the periodical payments authorised, nor what would happen when that purchase price was reached, nor how the periodical payments could then be terminated. The respondent could have, but did not make any such calculation himself. He could have specified, but did not, a termination date for the periodical payments in the periodical payment form to meet the anticipated selling price. The periodical payment forms used by the respondent imposed conditions upon the complainants, and the respondent’s customers, which were not reasonably necessary for the protection of the legitimate interests of the respondent: see s 51AB(2)(b) [of the Trade Practices Act 1974 (Cth)]. In the case of the contracts with DCS [Drysdale Correspondence Schools] not only was there no documentary record of the agreement provided to the complainant Ms White, but there was no evidence to indicate that the respondent had any educational materials to provide to her (beyond the NMA educational materials) at the time of the contract or, indeed, subsequently. He did not provide any DCS correspondence educational material. In the case of the transactions involving the sale of household goods by lay-by through EBS [Easy Buying Service], the respondent did not provide, and the complainants Ms Williams, Ms Turner and Ms Palmer did not seek, details of the product or products to be acquired except in some instances by a generic description (e.g. DVD player). Nor did the respondent take any steps following the making of those contracts to acquire or allocate any particular goods for supply to that complainant or to any other of his customers who entered into arrangements involving payment to EBS. Those matters illustrate firstly that the respondent’s customers, including the complainants, did not fully understand the nature of the transactions they entered into. The only document they signed in each instance was the periodical payment form. I have found the complainants did not have a full understanding of that document. I find the same is true of the respondent’s customers in the Northern Territory generally. That is not to say that each of the complainants, or each of the respondent’s customers, did not understand the effect of the periodical payment form or for cultural reasons did not have the capacity to decline his approach. I have found in the case of Ms Turner and Ms Doolan that they had that understanding. I am sure there are a number of the respondent’s customers who did have a similar understanding, and to varying degrees the capacity in the light of their background and education, to decline to enter into a transaction with him. Overall, I am satisfied that all but those two complainants, and the majority of the respondent’s customers, did not fully understand the periodical payments form. And I am satisfied that each of the respondent’s customers including the complainants did not fully understand the nature of the transactions into which they entered.

I have also reached that view with respect to each of the respondent’s dealings with the respondent’s customers in the Northern Territory. Obviously, those persons would have differing degrees of exposure to commercial and business transactions and differing facility in communicating in English; some would in general terms have understood the nature of the periodical payment forms, and many would not. Consequently, as with the transactions involving the complainants, not all the factors to which s 51AB(2) [of the Trade Practices Act] directs attention would operate to point to unconscionable conduct on the part of the respondent in his dealings with each of the respondent’s customers. But my findings as to the respondent’s way of operating, to which I have referred in detail above, also lead to the conclusion that his conduct in relation to each of the respondent’s customers was unconscionable as that term is used in s 51AB(1) of the Act.

In effect, therefore, as the amicus curiae submitted … where a system of conduct designed and implemented by a respondent, while not directing, nonetheless accommodates unconscionable conduct, it is incumbent on the respondent to integrate measures into its system to ensure that those under its direction adhere to consumer protections. A system which fails to integrate such measures into its system as a result of indifference to consumer protection considerations may, on this approach, constitute conduct against conscience by reference to societal norms. As the amicus curiae submitted, ‘[t]he same conscience that operates to restrain a party from engaging in unconscionable conduct and to compel it to make amends where it has done so, can also operate to require that party to take steps to mitigate the risk that unconscionable conduct will figure in systems under its control’ …

Crucially, in determining the characteristics of those targeted and the kind of evidence required to demonstrate special disadvantage, the Full Court in Unique (FCAFC) emphasised the need to avoid the making of unwarranted stereotypical assumptions and identified the kind of evidence which may be necessary to establish an unconscionable system so as to avoid the difficulties encountered by the ACCC in Unique:

‘[165] Even if Indigenous or poor or unemployed people were “targeted”, that would at one level only be to focus upon the expressed aims of the government policy. It is important also not to make unwarranted stereotypical assumptions about these groups of people. It was a feature of many of the submissions of the ACCC, even if sometimes only implicit, that either the individual consumers and the conduct towards them could be taken as representative or, if not, assumptions of vulnerability should be made about all those “targeted”. It was this latter silent assumption that not only underpinned many of the ACCC’s submissions but also [778] of his Honour’s findings [in Unique (FCA) [2017] FCA 727]. The use of gifts of laptops or iPads, the use of incentives to staff to encourage them to sign up students and the holding of sign-up meetings (see [774](b), (c) and (d) of the primary judgment), which could be an otherwise inoffensive system (see the second sentence of [778]), became unconscionable because of the targeting of Indigenous, remote and socially disadvantaged communities (without knowing anything at all in the evidence about those communities).

[166] Unique submitted, and we accept, that the equivocal nature of the evidence was, in fact, recognised by the primary judge when at [653] he found there were matters that were left “rather up in the air” by the evidence. We accept Unique’s submissions that those matters were central to the system case, and in particular whether Unique’s conduct could be described as unconscionable.

[167] What could have brought the evidence down out of the air? It should not be thought that we are of the view that the task was Herculean. Apart from Ms Martin there was no educational expert. In Kobelt, for example, there was considerable expert evidence about the Indigenous communities themselves. An educational expert might have explained how online courses operate in an education sense: the kinds of facilities necessary for a student to tackle them successfully and the levels of literacy necessary.

[168] An educational expert might have given an opinion on the fact, well-established in the evidence as the ACCC submitted, that although Unique’s revenue increased from $40,301 in 2013 to $33,779,726 in 2015, its expenditure on staff and resources did not increase at all. How, one might have asked an expert, would a program in a business such as this, enrolling more than 3,600 students to participate in online courses from remote locations and knowing many students might face literacy and social challenges, have been appropriately planned, resourced and delivered? Assertions from the bar table about the accounts were of no assistance. …

[169] … What was required to characterise a system as unconscionable was some coherent evidence of what a proper system would look like compared to any inadequacy of Unique’s system (on this hypothesis).

[170] An expert familiar with the government policy could also have contextualised the policy which led to the changes in the VET FEE-HELP program, the assumptions underlying how it would be delivered and to whom, and what support the policy contemplated would be given to students, especially those in remote locations or with particular educational, or economic, disadvantage. The “failures” alleged in [22] of the [Amended Statement of Claim] could have been explored, at a systemic level, and through Unique’s own documentation, with Unique’s witnesses. A larger cohort than six individual consumers and four locations could have been selected. At the very least, evidence about how and why these consumers and locations were selected could have been adduced. A properly prepared representative sample could have been used.’

However, his Honour found that these difficulties had been addressed by the approach adopted by the regulator in AIPE (No 3) in ‘draw[ing] all of the threads of evidence together’ (at [60]). That evidence included in particular the evidence of ex-employees and business records such as enrolment records and data, enrolment forms, complaints and records of complaint handling, as well the evidence of 13 individual consumers which was relied upon only to illustrate by detailed examples the unconscionable way in which the system worked overall ‘at the enrolment coalface’ (at [163]; see also at [44]). As such, his Honour held that the evidence of the individual consumer witnesses ‘was helpful and made for a stronger case for the applicants’, but, in contrast to Unique, ‘was not indispensable and not used as evidence that of itself was representative of the system or pattern’ (at [163]).

Thus, while the ACCC’s systems case in Unique (FCA) was ‘overwhelmingly circumstantial’, Bromwich J held that the ACCC’s case in AIPE (No 3) was not only circumstantial but included “important and far-reaching direct evidence” of the internal workings of AIPE [Australian Institute of Professional Education] (at [170]). His Honour concluded on this issue that:

‘[170] … This was not a case of extrapolation from what was done to individual students: cf Unique at [74]. Rather, the evidence of what was done to individual consumers was illustrative of how the pattern of behaviour by AIPE played out in the field, avoiding that being left only to inference or abstract evaluation. The totality of evidence supports a reasonable inference that the pattern of behaviour was widespread, and thereby had a widespread effect, contributing to a very high proportion of that type of enrolment. The ACCC did not have to go so far as to eliminate every other possible explanation — that would be to impose a standard of proof beyond the balance of probabilities.

[171] The evidence was more than enough to prove that it was an inevitable outcome of the enrolment system that unsuitable consumers would be enrolled as students, which it actively resisted changing in a way that would limit, let alone avoid, that outcome being highly prevalent. This materially assists the applicants’ unconscionability case. There is nothing compelling to suggest any other significant cause for this extreme outcome, so as to stand in the way of this conclusion. The liberalised nature of the post-2012 VET FEE-HELP scheme does not provide as good an explanation and may safely be put to one side, because disadvantage is better understood as a barrier to, rather than a cause of, unsuitable enrolment. The applicants’ evidence went far enough to remove as any reasonable explanation that the outcome arrived at was due simply to the inevitable consequence of disadvantaged persons having a higher rate of failure than other members of the community. What mattered in this case was how such persons came to be enrolled in the first place. That exercise in blaming the consumers was, to my mind, a most troubling and almost patronising conclusion to reach in any event, but one that can be reduced to, at most, a minor and inconsequential explanation in this case.’

The harm caused is summarised in the agreed facts at [53]–[62], and in the joint submission at [60]. It included the accrual of debts of amounts that were very significant to the affected consumers. The effects on those consumers are set out at [59] of the agreed facts, which bears setting out in full:

‘Thirdly, the exploitative and deceptive nature of the sales practices had the potential to bear directly upon the dignity of the individual Affected Consumers who were subjected to them. Those individuals included consumers of limited education, consumers with extremely limited English language skills, consumers with cultural propensities to avoid confrontation and conflict particularly in a commercial environment such as the sale of mobile phone plans and devices, and consumers with very severe physical and mental health difficulties. Rather than treating these consumers in ways that were appropriate and sensitive to these vulnerabilities, it appears that the sales staff pursued the greater incentives that were likely available for the sale of the Post-Paid Products and Services and, in doing so, took action which risked diminishing the basic dignity of the consumers. Affected Consumers may have felt a real sense of cultural shame and embarrassment, which is particularly significant to Indigenous Australian people.’

Recognition that the supplier of a financial service may engage in conduct that is unconscionable, notwithstanding the recipient’s voluntary entry into the contract for the supply of the service, does not make the absence of the exertion of undue influence an irrelevant consideration. Section 12CC(1)(d) invites the court to consider ‘whether any undue influence or pressure was exerted on, or any unfair tactics were used against’ the recipient of the financial service (emphasis added) as one of the factors to be weighed in determining whether, in all the circumstances, the supplier’s conduct is unconscionable. The absence of the exertion of undue influence, pressure or unfair tactics bears on the assessment of whether the commercial advantage obtained by the supplier in connection with the supply of the financial service is an unconscientious advantage.⁶³

The finding was not that Anangu customers were required, as a result of Mr Kobelt’s conduct, to comply with a condition that Mr Kobelt withdraw the whole of the available balance in the customer’s account. The finding was that, under Mr Kobelt’s book-up system, credit was supplied on terms which included authorisation to withdraw the whole of the available balance in the customer’s account unless the customer placed a limit on the authorisation. In any event, the conclusion of unconscionability requires consideration of the supplier’s conduct in all of the circumstances. Again, the finding that it suited many of his Anangu customers for Mr Kobelt to withdraw all of their funds, for reasons unconnected with the customers’ want of financial literacy, bears directly on whether his conduct in supplying book-up credit contravened the statutory norm.

Mr Kobelt was not required to act in an altruistic or disinterested way in his dealings with his customers. Nor was Mr Kobelt required to devise an alternative, superior form of book-up credit. The statutory proscription is on engaging in unconscionable conduct. The difficulty with ASIC’s system case of statutory unconscionability lies in identifying any advantage that Mr Kobelt obtained from the supply of book-up credit that can fairly be said to be against conscience.

The judgment required of a court exercising jurisdiction in a matter arising under s 12CB [of the Australian Securities and Investments Commission Act 2001 (Cth)] is a heavy one. For a court to pronounce conduct unconscionable is for the court to denounce that conduct as offensive to a conscience informed by a sense of what is right and proper according to values which can be recognised by the court to prevail within contemporary Australian society. Those values are not entirely confined to, or entirely removed from, the values which historically informed courts administering equity in the development of the unwritten law of unconscionable conduct. They include respect for the dignity and autonomy and equality of individuals. They include respect for the cultural diversity of communities.⁶⁴

To say, as does ASIC, that the cultural considerations which fed into Mr Kobelt’s Anangu customers’ choice to maintain their relationship with Mr Kobelt and to continue to participate in his book-up system were amongst the very factors which made those customers vulnerable and that the operation of Mr Kobelt’s book-up system ‘would be patently unacceptable conduct elsewhere in modern Australian society’ fails, in my opinion, to afford to the Anangu people the respect that is due to them within contemporary Australian society. Those of the Anangu people who chose to maintain their relationship with Mr Kobelt and to continue to participate in his book-up system evidently considered that continued participation in the book-up system suited the interests of them and their families having regard to their own preferences and distinctive cultural practices.

Voluntariness must be judged against other relevant matters: the power imbalance between the parties; the relative lack of choice available to Mr Kobelt’s customers; the fact that customers had a limited understanding of the terms of the arrangement; the lack of transparency of the terms and conditions of the arrangement; and, importantly, Mr Kobelt’s exploitative conduct. Many of those matters arose from Mr Kobelt’s particular conduct, rather than any particular characteristic of his customers. They arose because Mr Kobelt chose to set up his system of book-up in the way that he did.

Contrary to the view of Wigney J in the Full Court, and notwithstanding that some customers expressed positive views about Nobbys [a general store formerly operated by Kobelt], it is not paternalistic to assess the vulnerability of Mr Kobelt’s customers and whether that vulnerability was exploited. It is not paternalistic to take into account that the view of a vulnerable party of a transaction will be shaped by context and circumstance. Equally, it is not paternalistic to look at the transaction and the position of the parties objectively. It is to do no more than engage with the criteria of unconscionability.

The Court’s focus must primarily be on the nature of the conduct by the stronger party. First, s 12CB(4)(b) extends s 12CB(1) unconscionable conduct to a ‘system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged’. It follows from the fact that a specific person need not be identified that special disadvantage of an individual is not a necessary component of the prohibition. Indeed, Parliament’s intention in this respect was explained in the following terms:

‘[T]he focus of the provisions is on conduct that may be said to offend against good conscience; it is not specifically on the characteristics of any possible “victim” of the conduct (though these may be relevant to the assessment of the conduct).’⁶⁵

…

Vulnerability or special disadvantage may arise from matters including ‘poverty or need of any kind … [and] illiteracy or lack of education’. Mr Kobelt’s customers were vulnerable or at a special disadvantage. Their vulnerability existed because of the remoteness of their communities, the limitations on their education, their impoverishment, and the limitations on their financial literacy — not as a result of Anangu cultural practices. Both the primary judge and the Full Court accepted that Mr Kobelt’s customers were vulnerable and there was no dispute that Mr Kobelt knew of his customers’ special disadvantage.⁶⁶

There are a number of errors in that analysis. Vulnerable persons may be unable to protect their own interests. If a person, unable to protect their own interests, voluntarily enters into a transaction, this does no more than remove the conduct from it being the subject of relief on the ground of undue influence where the elements, and methods of proof, are quite different. It is because it is a transaction that is voluntarily entered into by someone under a special disadvantage that unconscionability, including statutory unconscionability, developed, in order to ensure that persons who are vulnerable and unable to protect their own interests are not the victim of conduct by a stronger party in unconscientiously taking advantage of that vulnerability. And that is what Mr Kobelt’s book-up system did.

It is irrelevant that some of the customers might have regarded the requirements of Mr Kobelt’s system as not unreasonable or considered that it alleviated pressures of demand sharing. The requirements of the system were unreasonable, regardless of any effects on demand sharing. Even if some of his customers might have thought otherwise, the customers were so disadvantaged by their remoteness, the limitations on their education, their impoverishment and the limitations on their financial illiteracy, as well as the limited available alternatives, as to be in a position where they could not demand a superior system.

Unconscionable conduct in equity can include the passive acceptance of a benefit in unconscionable circumstances. Mr Kobelt’s conduct went beyond that — he engaged in an active system of conduct that, even if approached without dishonest motives or with a ‘degree of good faith’, had the effect of being exploitative and unfair. The requirement is still ‘victimisation or exploitation’ by a stronger party of a more vulnerable party. And that was the problem with Mr Kobelt’s book-up system.

[Gratuitous concurrence is] the sociolinguistic term for a conversational pattern which has been recognised by some observers since the first half of the 20lh century, and which appears to often impact Aboriginal communication with non-Aboriginal Australians, especially in institutional settings. As I have previously described … it can be explained as:

‘saying “yes” (or “yeah” or “mm” or nodding their head) in answer to a question, (or “no”, “nuh” or shaking their head to a negative question), regardless of whether or not the person agrees with what they are being asked, and sometimes regardless of whether they even understand the question.’

The expectation in Anglo conversations is that an unqualified answer such as ‘yes’, ‘yeah’, ‘mm’ or ‘Okay’ to a question is a definite agreement (in contrast to answers such as ‘maybe’, ‘I’m not sure’, ‘yes, I think so’). Thus any subsequent answer that is not consistent with this unqualified yes type answer is seen by Anglo speakers as a contradiction or inconsistency. In contrast, speakers who use answers of gratuitous concurrence sometimes intend to communicate politeness, cooperation, compliance or even submissiveness. Sometimes such answers may communicate superficial, temporary or contingent agreement.

When an Aboriginal person uses gratuitous concurrence but their answers are interpreted according to non-Aboriginal expectations, this necessarily entails a degree of miscommunication, because there is a divergence in what the two parties think has been communicated. This divergence can often remain undetected, affecting the basis for communication later on in the conversation.

Although the Agent may not have been aware of the sociolinguistic concept of gratuitous concurrence, a consideration of the content and audio of the calls reflects on whether the Agent knew, or ought to have known, that the Consumers were vulnerable and/or in a weaker bargaining position. And, as explained below, suffice to say at this stage, in some calls, regardless of the Agent’s knowledge of the concept of gratuitous concurrence, any reasonable person would know that the Consumer did not understand what had been discussed and in that context some affirmative responses were not a reflection of an agreement to what was being offered to them.

The Sales Agent was aware of Ms Yalumul’s personal characteristics. Her name, date of birth, address and other information provided, together with her accent (noting also that it can be heard on the call that Ms Yalumul was speaking in an Aboriginal language), would have made her age, background and indigeneity apparent to the Sales Agent. The content of the call made it apparent she was having difficulty understanding English including from the lack of understanding as to what was occurring. At the very least, the Sales Agent should have been aware that Ms Yalumul could not understand. There were very obvious red flags or alerts, which were ignored. Rather, she took advantage of the obvious vulnerabilities to make the sale.

This case is in stark contrast to Puxu in three respects. First, TPG’s target audience did not consist of potential purchasers focused on the subject matter of their purchase in the calm of the showroom to which they had come with a substantial purchase in mind. Here, the advertisements were an unbidden intrusion on the consciousness of the target audience. The intrusion will not always be welcome. The very function of the advertisements was to arrest the attention of the target audience. But while the attention of the audience might have been arrested, it cannot have been expected to pay close attention to the advertisement; certainly not the attention focused on viewing and listening to the advertisements by the judges obliged to scrutinise them for the purposes of these proceedings. In such circumstances, the Full Court rightly recognised that ‘many persons will only absorb the general thrust’. That being so, the attention given to the advertisement by an ordinary and reasonable person may well be ‘perfunctory’, without being equated with a failure on the part of the members of the target audience to take reasonable care of their own interests.

It was common ground that when a court is concerned to ascertain the mental impression created by a number of representations conveyed by one communication, it is wrong to attempt to analyse the separate effect of each representation. But in this case, the advertisements were presented to accentuate the attractive aspect of TPG’s invitation relative to the conditions which were less attractive to potential customers. That consumers might absorb only the general thrust or dominant message was not a consequence of selective attention or an unexpected want of sceptical vigilance on their part; rather, it was an unremarkable consequence of TPG’s advertising strategy. In these circumstances, the primary judge was correct to attribute significance to the ‘dominant message’ presented by TPG’s advertisements.⁶⁷

In relation to the first error outlined above, the impugned representation is a representation that during the Relevant Period ACBF was owned or managed by an Aboriginal person or persons. Putting to one side the pleadings argument earlier discussed, it follows that the falsity of that representation will be established by evidence that shows that, in fact, during the Relevant Period ACBF was not owned or managed by an Aboriginal person or persons. It will not be shown by evidence going to whether other companies in the ACBF group were owned or managed by an Aboriginal person or persons.

…

In relation to the second error outlined above, contrary to the primary judge’s view (at [64]–[65]), there was no need for ASIC to adduce evidence or make submissions in relation to authorities such as Mabo, Love, McHugh or Helmbright, nor to do so by reference to the definition of ‘Aboriginal person’ in cl 1.2 of the ACF Plan Rules. As a matter of ordinary language an ‘Aboriginal person’ is a person descended from the indigenous inhabitants of Australia prior to British settlement: see Attorney-General (Cth) v Queensland (1990) 25 FCR 125 at 126–7 per Jenkinson J, 131–2 per Spender J and 148 per French J. And the primary judge’s finding that ACBF made the Aboriginal Ownership/Management Representation necessarily implied that the meaning of ‘Aboriginal person’ was sufficiently clear to those to whom the representation was made. Nor did anything turn on the asserted failure by ASIC to better define what it meant by ‘Aboriginal person’. There is nothing in the evidence to suggest that some other conception of ‘Aboriginal person’ was appropriate in the circumstances of the case, nor that the issue of falsity would be decided differently if some other conception of ‘Aboriginal person’ was used.

Based on this material, some of which I have set out in more detail above, I am satisfied that EDirect made each of the representations to the various consumers identified in the statement of claim. I am also satisfied that each of the representations was misleading or deceptive in the sense that it was inconsistent with the truth: see World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 at 201. This conclusion applies to each of the categories of representations set out above. Whilst I do not propose to review all of the material relating to all of these misrepresentations, it is perhaps appropriate to observe that the most egregious aspect of EDirect’s conduct was in its selling its mobile phones and service plans to people living in remote areas of Australia, including remote Aboriginal communities, when the slightest enquiry on its behalf would have disclosed that those mobile phones could not connect to the Optus GSM network because that network did not provide coverage to those remote areas of Australia. Similar observations could be made about EDirect’s conduct in publishing statements and maps on the VIPtel website which clearly conveyed the impression that EDirect was able to provide mobile phone coverage to almost all of the Australian land mass. Again, the slightest enquiry would have revealed to Edirect that this representation was quite untrue.

This egregious conduct was compounded when EDirect fobbed off complaints from some of its customers living in these remote areas that they could not connect to the Optus GSM network on their new mobile phones provided by EDirect. With one of those customers, after having made two earlier complaints by phone that his new mobile phone was showing ‘no service’ and being told it would be alright in 24 hours, the EDirect person handling his third phone complaint gave him the somewhat disingenuous and fatuous advice that: ‘…there might be possibility that you might be getting a coverage problem at your home, because there is partial coverage at your place. So you can just go down the street, out of your house, in the street, or maybe in the roof top (my emphasis). You would be getting the network. You would be getting a bar for your mobile phone…’.

In this case, given that it was selling its mobile phone services throughout Australia, including vast remote areas of the country, it was reasonable to expect that EDirect ought to have been aware that the mobile phone services it was supplying could not provide the most fundamental thing required of the mobile phone supplied with the mobile service plan ie an ability to connect to an available network, because the Optus GSM network did not cover the whole of the Australian land mass. The fact that consumers in some parts of Australia could connect to the Optus GSM network using EDirect’s mobile phones obviously does not excuse the fact that some customers in remote areas could not.

In this regard, I note that I was not persuaded that on the balance of probabilities an ordinary consumer would reasonably be misled into thinking that the loose boomerangs and the bullroarers were hand-painted or made by an Aboriginal person but only that there was a real risk that a member of the class acting reasonably would be misled (Birubi at [107]–[117] and [137]–[144]). As such, I accepted that a reasonable member of the class may not have been misled into inferring that these products were hand-painted by, or made by, a person of Aboriginal ethnicity. However, that does not in itself suggest that any lesser penalty should be imposed. Rather, as Allsop CJ emphasised in Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd (2015) 327 ALR 540; [2015] FCA 330 … with respect to the representations in that case:

‘95. … Although the interpretation of the impugned phrases is a matter about which minds could differ, the fact that a debate that the phrases were misleading was objectively open indicate that the impugned phrases should never have been deployed in the way that Coles chose to deploy them. Corporations that market goods and services to consumers have an obligation to ensure that they do not mislead or deceive the public about the goods and services they are marketing. The existence of alternative constructions of the phrases they use is a matter they must take into account in their decision-making processes. The fact that some people may not be misled is not the point. It is important that sellers in the market recognise that consumers are entitled to reliable, truthful and accurate information. Confidence in such is a matter of importance for the Australian community and economy. It is an important factor in market efficiency…’