Case Note: Australian Securities and Investments Commission v Layaway Depot Pty Ltd [2023] FCA 1685

Case Note: Australian Securities and Investments Commission v Layaway Depot Pty Ltd [2023] FCA 1685

Commercial Law

In 2022, the Australian Securities and Investment Commission (ASIC) brought proceedings against Layaway Depot Pty Ltd (LAD), alleging that LAD had contravened section 29 of the National Consumer Credit Protection Act 2009 (Cth) (Credit Act) and section 32A(1) of the National Credit Code at Schedule 1 to the Credit Act (Credit Code). Justice Rangiah of the Federal Court of Australia delivered judgement on 29 May 2023.

By a statement of agreed facts (SOAF), LAD admitted that it had contravened the Credit Act and the Credit Code. The parties provided agreed proposed orders. The decision is relevant to businesses insofar as it provides details on the relevant consumer contracts and the considerations of a court when determining an appropriate civil penalty.

The relevant contracts were with 70 different consumers who described themselves as being on Centrelink benefits. The contracts were for the sale, by instalments, of household and electronic goods such as printers, headphones, smart phones, televisions, electronic tablets, gaming consoles, and wireless speakers. The relevant contracts were “credit contracts” by operation of s 9 of the Credit Code.

Section 9 provides that certain contracts for the hire of goods, under which the hirer has a right or obligation to purchase the goods and where the total of the charges and any other amounts payable under the contract exceeds the cash price of the goods, are to be regarded as “sale of the goods by instalments” and in certain circumstances will be regulated by the Credit Act and the Credit Code.  By sections 4 and 5 of the Credit Code and section 6 of the Credit Act, entry into those relevant contracts by LAB was a ‘credit activity.’ LAD therefore contravened section 29 of the Credit Act by engaging in credit activity without holding an Australian Credit Licence (ACL).  A lesson here, for all businesses, is to carefully consider whether they are engaging in credit activity that requires an ACL.

When examining the appropriate civil penalty in these proceedings, Justice Rangiah carefully considered the nature and extent of the contravening conduct, the size and financial position of the respondent, deterrence (both general and specific), harm to consumers, past conduct, LAD’s cooperation with ASIC, and comparative civil penalties.

The decision considered the relevant course of conduct and the totality principles. Where there are multiple contraventions, with multiple acts and omissions, occurring over a particular period, a court may group the contraventions together as a single course or courses of conduct.  When determining whether or not to group contraventions together as arising from a single source of conduct, a court may consider whether there is an inter-relationship between the factual and legal matters of the two or more contraventions. Consideration is given to whether the contraventions arise out of the same course of conduct or the one transaction. In the criminal context, the outcome is that an offender is not punished twice for what is essentially the same criminality. That being so, the course of conduct principle is no more than a tool of analysis and does not restrict a court’s discretion as to the appropriate penalty to be imposed. Where there are multiple contraventions, but each involves deliberation, such grouping may be inappropriate as is the case where the relevant conduct is directed towards numerous recipients.

Should you require any assistance in determining whether your business requires an ACL, or in responding to a regulatory investigation, please get in touch.