Australian Securities and Investments Commission v Latitude Finance Australia

This case arose out of a national advertising campaign for a long-term payment offer connected with purchases from Harvey Norman franchisees. ASIC alleged that, during the period from 1 January 2020 to 11 August 2021, consumers were told they could buy goods in-store and online using a payment method involving 60 monthly repayments, no deposit and interest-free terms.

ASIC's case was that the advertising conveyed a dominant message that those were the material terms of the deal. ASIC alleged that this was misleading because the offer could only be used if the consumer had an eligible GO Mastercard issued by Latitude Finance Australia, or applied for and was approved for one, and then used that card or its linked account for the purchase. ASIC also alleged that consumers would have to pay at least an establishment fee and or monthly account service fees for the credit card account.

ASIC said that this qualifying information was important and was not disclosed, or not sufficiently disclosed. It alleged contraventions of ss 12DA, 12DB and 12DF of the Australian Securities and Investments Commission Act 2001 (Cth). The judgment also records that Harvey Norman Holdings denied that it pursued, or was involved in, the national advertising campaign in question.

ASIC filed an interlocutory application seeking two things. First, it wanted leave to file an amended originating process, amended concise statement and amended concise reply. Secondly, it sought non-standard discovery under r 20.15 of the Federal Court Rules 2011 (Cth).

The amendments to the pleadings were not controversial. The court described them as minor and clarificatory, and there was no opposition to leave being granted. The real contest was about discovery.

ASIC sought discovery by reference to 10 categories of documents. The court noted that discovery is not automatic. Under r 20.11, the court must be satisfied that the order sought will facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible. That meant the judge had to look at each disputed category and ask two practical questions. Did the documents relate to issues actually raised on the pleadings? And even if they did, would ordering discovery be proportionate and useful enough to justify the burden?

A central part of the reasoning was the court's explanation of how allegedly misleading advertising is assessed. The judge referred to the principle that what advertisements convey is a question of fact to be determined objectively against the background of all relevant circumstances. The judgment cites Campomar and Taco Bell for that approach.

That mattered because ASIC argued that several discovery categories would help show the characteristics of the audience for the campaign and the understanding to be imputed to that audience. The court was not persuaded. On the pleadings, the campaign was directed to reasonable consumers generally, meaning the public at large, not a special class with particular characteristics.

Because the pleaded audience was an undifferentiated class of ordinary consumers, the court considered that broad discovery into customer profiles, audience characteristics, customer insight reports and ratings data would not materially assist the objective task of deciding what the advertisements conveyed. The court also noted that it is readily able to interpret the language used in the advertisements in the context in which that language was presented.

This is an important procedural point. The court was not saying that marketing data can never matter. It was saying that, in this pleaded case, those categories were not sufficiently tied to the issues the court actually had to decide.

The court refused Categories 1, 2, 3 and 8. These categories sought documents such as quarterly customer insight reports, analyses of those reports, documents comparing consumer profiles, and documents about the viewership or ratings of television or radio programs carrying the advertisements. The judge held that these categories did not sufficiently relate to an issue raised on the pleadings in the way ASIC argued. The court also found that ordering discovery would not facilitate the just, quick and efficient resolution of the proceeding.

The court took into account that the defendants had already produced a substantial number of documents to ASIC under compulsory notices issued during ASIC's investigation. That reduced the need for further discovery and reinforced the proportionality concern. The judge accepted that the burden of searching for and producing documents in these categories would be disproportionate to the likely assistance they would provide.

Category 7 was also refused. It sought documents analysing consumer sentiment towards the payment method or related credit cards. The court considered this category even further removed from the pleaded issues. The judge said the defendants' views or analyses about consumer sentiment would not inform the objective question of what the advertisements conveyed or whether the ASIC Act had been contravened as alleged. The concept of sentiment was also described as nebulous, and replacing it with attitude did not solve the problem.

Category 10 was directed only to Harvey Norman Holdings and sought the franchise Manual or other document setting out the System under Harvey Norman franchise agreements. ASIC argued these documents were relevant to whether Harvey Norman Holdings was responsible for the national advertising program. The court refused the category. The judge was not persuaded there was a real possibility that those documents would say anything meaningful about the advertising program or the second defendant's involvement in it. The request was treated as speculative, especially given other documents had already been produced in response to ASIC notices about communications and involvement with franchisees in promotions.

ASIC had more success with Category 6, which concerned complaints or feedback received after the relevant period from consumers, or people acting on their behalf, who had signed up for the payment method. The court accepted that these documents were adjectivally relevant, subject to an important qualification.

The judge recognised that an individual consumer's understanding is not determinative of the legal test. Misleading conduct is assessed objectively. But that did not mean complaint material was irrelevant. Complaints and feedback can still be evidence of particular consumer understandings, and that can be relevant to the issues raised by the pleadings.

The court narrowed the category so it only covered complaints or feedback relating to the particular allegations of misleading or deceptive conduct, or false or misleading representations, identified in ASIC's proposed amended concise statement. With that limitation, the court was satisfied discovery should be ordered. The defendants had not identified any particular practical burden in giving discovery for this category, and the first defendant had previously undertaken complaint identification work in response to ASIC notices.

For businesses, this part of the judgment is especially practical. Complaint records may become discoverable if they bear directly on the pleaded message said to be misleading. That means complaint handling is not just a customer service issue. It can become part of the evidentiary record in regulatory litigation.

The court granted leave for ASIC to file its amended originating process, amended concise statement and amended concise reply. On discovery, the court was prepared to order discovery for Categories 4 and 5 because they were not opposed, and for Category 9 because the first defendant agreed to give that discovery. The court also ordered discovery for Category 6, but only in the narrowed form described in the reasons.

The court refused the other disputed categories, namely Categories 1, 2, 3, 7, 8 and 10. Because ASIC achieved only very limited success on the disputed questions raised by its interlocutory application, the judge said it was appropriate for ASIC to pay the defendants' costs.

That costs outcome is a reminder that even a regulator can face an adverse costs order on an interlocutory application if it pushes discovery requests that the court considers too broad or insufficiently connected to the pleaded issues.

Businesses should read this case carefully but with the right lens. It is not a final statement that the campaign was unlawful. It is a procedural ruling about what documents had to be produced before the substantive case could be heard. Even so, the allegations described in the judgment show the kind of advertising structure that can create risk: a simple headline promise built on top of a more complex credit product with approval requirements and account fees.

If your business promotes a payment plan, deferred payment arrangement or interest-free offer, ask what an ordinary consumer would take from the headline message alone. Then compare that impression with the actual mechanics of the offer. If the customer must obtain a linked credit card, pass a credit assessment, pay establishment fees, pay monthly account fees or accept other conditions before accessing the promoted arrangement, those points may be central qualifying facts rather than minor details.

This is especially important in multi-party campaigns. A retailer may own the customer relationship. A lender may own the credit product. A holding company or brand entity may be involved in national advertising. Franchisees may be the point of sale. If responsibilities for ad approval, disclosures, complaint handling and record keeping are not clearly allocated, the public message can drift away from the legal reality of the offer.

The discovery ruling also gives a practical litigation lesson. Courts are likely to resist broad fishing exercises into marketing analytics or internal sentiment material if the pleaded case can be decided objectively without them. But targeted complaint material can be ordered where it directly connects to the alleged misleading message. Businesses should therefore treat complaint systems, campaign approvals and document retention as part of compliance infrastructure, not just operations.

This page is based on Australian Securities and Investments Commission v Latitude Finance Australia [2023] FCA 655, a Federal Court decision of Yates J dated 19 June 2023. The judgment concerns an interlocutory application for amended pleadings and non-standard discovery.

The decision summarises ASIC's allegations and records the defendants' positions for the purpose of the procedural application. It does not determine final liability on the alleged contraventions of the ASIC Act. It also does not set out the detail of all agreed discovery categories in the extract summarised here.