Wheels keep on spinning for Europcar franchisee
The Full Court of the Federal Court has allowed an appeal by the ACCC against the former Tasmanian Europcar franchisee, BAJV Pty Ltd (BAJV), and BAJV’s director Brendon Ayers. BAJV was ordered to pay a $200,000 civil pecuniary penalty by the Federal Court in July 2013, after admitting to deliberately overcharging customers to repair damaged hire vehicles and failing to issue refunds. Brendon Ayers was also ordered to pay a $40,000 civil pecuniary penalty for being knowingly concerned in the conduct (previously blogged about here).
The ACCC appealed the penalty orders made by Justice Marshall against BAJV and director Brendon Ayers on a number of grounds, including an error of law. The appeal comes after the ACCC announced in its media release in July 2013 that it was carefully considering the judgment.
The ACCC alleged that Justice Marshall erred when he discounted the penalties because he considered that the ACCC should have taken a more proactive role in responding to BAJV’s invitation to meet for discussions before instituting proceedings. The Full Court accepted the ACCC’s submission that the primary judge should not have reduced the penalty in these circumstances. As a result, the penalties were increased to $220,000 for BAJV and $44,000 for Brendon Ayers.
The other errors alleged by the ACCC as to the appropriate level of penalty were all rejected by the Full Court. The ACCC argued that:
- the primary judge erred in finding that BAJV had taken steps to ensure the infringing conduct ceased by a particular date, with the conduct in fact continuing for a longer period – while the Full Court found there was an error of fact, it was not sufficient to justify any change to the penalty imposed;
- the primary judge erred in proceeding on the basis that BAJV was a small to medium sized family company when it was 50% owned by the franchisor of the Europcar car rental business in Australia and as such a higher penalty was required to ensure specific deterrence – the Full Court rejected this ground as a basis for increasing the penalty; and
- the primary judge erred in determining that the appropriate penalties were $200,000 for BAJV and $40,000 for Mr Ayers in circumstances where the maximum penalty for the two courses of conduct was determined to be $2.2 million for BAJV and $440,000 for Mr Ayers and the Court considered the conduct should attract a “mid-range” penalty – the Full Court concluded that an arithmetical error as to where the proposed penalties would fit within the range was not sufficient to vitiate the exercise of the discretion involved in the actual determination of the penalties to be imposed on the respondents and did not justify appellate intervention.
The Full Court also allowed a cross-appeal by BAJV and Mr Ayers as to costs, reducing the costs that the ACCC is entitled to recover by 15% (to 85% of its costs).
The case marks another win for the ACCC in appealing penalty judgments. After commencing proceedings in 2010, the ACCC succeeded in convincing the High Court to reinstate higher penalties against TPG, originally imposed by the judge at first instance (previously blogged about here). As noted by the ACCC’s Chairman, Rod Sims, the TPG decision “is of great significance to the ACCC because it is important that penalties imposed for breaches of the Australian Consumer Law are set at a level that deters future breaches”. However, unlike the ACCC’s win in the TPG decision, where the court reversed the penalties from $50,000 to $2 million, the so called ‘win’ in this instance was marked by a relatively small increase in penalties of $24,000.
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