IN THE SUPREME COURT OF VICTORIA	Not Restricted	
AT MELBOURNE
COMMERCIAL COURT
GENERAL LIST
S ECI 2023 01497

IN THE MATTER of s 37 of the Victorian Energy Efficiency Target Act 2007 (Vic)

BETWEEN:

ESSENTIAL SERVICES COMMISSION  	Plaintiff	
		
and		
		
QENERGY LTD (IN LIQUIDATION) (RECEIVERS & MANAGERS APPOINTED) (ACN 120 124 101)	Defendant	

AND
S ECI 2023 01495
BETWEEN:

ESSENTIAL SERVICES COMMISSION  	Plaintiff	
		
and		
		
MOJO POWER EAST PTY LTD (ACN 159 727 401)	Defendant	

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JUDGE:	Matthews J 	
WHERE HELD:	Melbourne	
DATE OF HEARING:	21 July 2023	
date of JUDGMENT:	21 July 2023	
date of reasons for JUDGMENT:	4 August 2023	
CASE MAY BE CITED AS:	Essential Services Commission v QEnergy Ltd; Essential Services Commission v Mojo Power East Pty Ltd	
MEDIUM NEUTRAL CITATION:	[2023] VSC 460	

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ENERGY AND RESOURCES – Electricity – Liability of electricity or gas retailers not to have an energy efficiency certificate shortfall – Declaratory relief – Pecuniary penalty applicable – Declarations of contravention made – Statutory interest and costs awarded – Victorian Energy Efficiency Target Act 2007 (Vic) – Forster v Jododex Pty Limited (1972) 127 CLR 421.

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APPEARANCES:
	Counsel	Solicitors	
For the Plaintiff	Mr M Peckham	Cherie Canning, Essential Services Commission	
			
No appearance for the Defendant in proceeding S ECI 2023 01497 or in proceeding S ECI 2023 01495	  		

TABLE OF CONTENTS

Introduction	1
Applicable law: the VEET Act regime	5
The Victorian Energy Upgrades program and energy efficiency certificates	5
Obligation not to have an energy efficiency certificate shortfall	6
Principal obligation and liability for civil penalty	6
Annual energy acquisition statements	8
Enforcement of the energy efficiency shortfall penalty	9
Previous case law	10
Establishing the contraventions of the VEET Act by the Defendants	10
Contravention of the Principal Obligation by QEnergy	10
QEnergy’s Annual Statement and Audit Report	10
Whether QEnergy made a ‘scheme acquisition’	11
Whether QEnergy is a ‘relevant entity’	13
Whether QEnergy had an ‘energy efficiency certificate shortfall’	14
Shortfall statement and amount of penalty	15
Payment of the outstanding penalty	15
Conclusion regarding whether QEnergy contravened the Principal Obligation	15
Contravention of the Principal Obligation by Mojo Power East	16
Mojo Power East’s Annual Statement and Audit Report	16
Whether Mojo Power East made a ‘scheme acquisition’	17
Whether Mojo Power East is a ‘relevant entity’	18
Whether Mojo Power East had an ‘energy efficiency certificate shortfall’	19
Shortfall statement and amount of penalty	21
Payment of the outstanding penalty	21
Conclusion regarding whether Mojo Power East contravened the Principal Obligation	21
Whether declarations are appropriate relief	22
The Commission’s submissions	22
Consideration	23
Statutory interest	25
The Commission’s submissions	25
Consideration	28
Costs	29

HER HONOUR:
Introduction
1	On 14 April 2023, the Essential Services Commission (‘Commission’, the Plaintiff in each proceeding) commenced two proceedings in this Court by originating motion: proceeding S ECI 2023 01495 against Mojo Power East Pty Ltd (‘Mojo Power East’), and proceeding S ECI 2023 01497 against QEnergy Ltd (‘QEnergy’).  Hereafter, Mojo Power East and QEnergy will be referred to as the Defendants, unless it is necessary to distinguish between them.
2	The Defendants are related parties.  In each proceeding, the Commission seeks a declaration that the Defendants contravened s 27(1) of the Victorian Energy Efficiency Target Act 2007 (Vic) (‘VEET Act’), by failing to surrender any energy efficiency certificates for the calendar year 2021, and are therefore liable to pay energy efficiency shortfall penalties in the amounts of $429,520 for QEnergy and $149,450 for Mojo Power East.
3	Each of the Defendants paid the outstanding penalties in question on 2 June 2023, some six weeks after the proceedings were commenced.  Therefore, the primary issue has been practically conceded.  Further, QEnergy entered into liquidation on 15 June 2023 and both Defendants had receivers and managers appointed that day.  In light of these events, the Commission no longer seeks an order for the payment of the penalties, but continues to seek declarations and orders for the payment of statutory interest and costs.  
4	By summonses dated 10 July 2023 issued in both proceedings, the Commission seeks leave pursuant to s 471B of the Corporations Act 2001 (Cth) (‘Corporations Act’) to continue the QEnergy proceeding and to seek final relief in both proceedings.  The summonses were listed for 21 July 2023.
5	In support of its applications, the Commission relies on the following:
(a)	two affidavits of Karst Hinderik Maat dated 14 April 2023, one filed in each proceeding (‘Maat QEnergy Affidavit’ and ‘Maat Mojo Affidavit’);
(b)	two affidavits of Cherie Bernadette Canning dated 10 July 2023, one filed in each proceeding (‘Canning QEnergy Affidavit’ and ‘Canning Mojo Affidavit’).  Ms Canning is employed by the Commission as General Counsel; 
(c)	a further affidavit of Ms Canning dated 20 July 2023 filed in the QEnergy proceeding (‘Further Canning QEnergy Affidavit’); and
(d)	a written outline of submissions dated 11 July 2023 (‘Commission’s Outline’).
6	Hall & Wilcox filed notices of appearances for the Defendants on 24 April 2023, and then filed notices of ceasing to act for both on 14 July 2023.  On 14 July 2023, King & Wood Mallesons filed notices of appointment of solicitor for both Defendants.
7	The Further Canning QEnergy Affidavit establishes that the liquidators of QEnergy, who had been appointed on 15 June 2023 by order of the Supreme Court of Queensland, were served with all of the Court documents in this proceeding.  It also establishes that Robert Smith, Mark Holland and Barry Kogan, the receivers and managers of both Defendants (‘Receivers’), now represented by King & Wood Mallesons, had been served with all of the Court documents.  Further, by email dated 14 July 2023 addressed to the Associates to Delany J (before whom the summonses were then listed), King & Wood Mallesons informed the Court that the Receivers’ instructions were:
(a)	that the Receivers would not appear or take any active part in the proceedings;
(b)	that the Defendants submitted to the making of all orders sought and the giving or entry of judgment which the Court determines appropriate in respect of all claims made; and 
(c)	that the Receivers do not take any steps to adopt or accept personal liability for any of the claims made against the Defendants in the Proceeding.
8	The summonses were allocated to me for hearing and determination.  At their request, I excused the Defendants from appearing at the hearing on 21 July 2023.
9	At the hearing on 21 July 2023, I heard short oral submissions from counsel for the Commission.  I granted leave for the Commission to continue with the proceeding against QEnergy under s 471B of the Corporations Act.  I also gave a brief ex tempore ruling and made the declarations sought, and made orders as to interest and costs.
10	I made a declaration that, pursuant to ss 37(1)(a) and (2)(a) of the VEET Act, QEnergy:
(a)	contravened s 27(1) of the VEET Act by having an energy efficiency certificate shortfall of 6,136 energy efficiency certificates in the calendar year 2021 where:
(i)	it was obliged to surrender 6,136 energy efficiency certificates for that year;
(ii)	each certificate represents one tonne of carbon dioxide equivalent of greenhouse gas emissions reduction, under s 18(1) of the VEET Act; and
(iii)	it did not surrender any energy efficiency certificates for that year at all; and
(b)	therefore, by the Commission’s issue of a shortfall statement dated 10 October 2022, incurred liability to pay an energy efficiency shortfall penalty to the Essential Services Commission Enforcement Fund under s 28(1), in the amount of $429,520.
11	I made a declaration that, pursuant to ss 37(1)(a) and (2)(a) of the VEET Act, Mojo Power East:
(a)	contravened s 27(1) of the VEET Act by having an energy efficiency certificate shortfall of 2,135 energy efficiency certificates in the calendar year 2021 where:
(i)	it was obliged to surrender 2,135 energy efficiency certificates for that year;
(ii)	each certificate represents one tonne of carbon dioxide equivalent of greenhouse gas emissions reduction, under s 18(1) of the VEET Act; and
(iii)	it did not surrender any energy efficiency certificates for that year at all; and
(b)	therefore, by the Commission’s issue of a shortfall statement dated 10 October 2022, incurred liability to pay an energy efficiency shortfall penalty to the Essential Services Commission Enforcement Fund under s 28(1), in the amount of $149,450.
12	I also made orders that:
(a)	pursuant to s 58 of the Supreme Court Act 1986 (Vic), QEnergy pay statutory interest on the unpaid amount of the penalty, to be paid into the Essential Services Commission Enforcement Fund, for the period from 14 November 2022 to 2 June 2023, in the amount of $23,535;
(b)	similarly, Mojo Power East pay statutory interest in the amount of $8,189; and 
(c)	the Defendants pay the Commission’s costs of the proceedings.
13	At the conclusion of the hearing, I indicated that I would publish more fulsome reasons for judgment for making the declarations set out above and the orders as to interest and costs.  These are those reasons.
Applicable law: the VEET Act regime
14	It is necessary to begin by setting out the relevant provisions of the VEET Act and other relevant regulations.
The Victorian Energy Upgrades program and energy efficiency certificates
15	The Victorian Energy Upgrades (‘VEU’) program is a Victorian government market based energy efficiency program.  
16	It is governed by the VEET Act, and the Victorian Energy Efficiency Target Regulations 2018 (Vic) (‘VEET Regulations’).  The purpose of the VEET Act is to promote the reduction of greenhouse gas emissions by establishing the VEET scheme which provides for the creation and acquisition of energy efficiency certificates (by accredited providers); and requires the surrender of energy efficiency certificates (by energy retailers).
17	Part 3 of the VEET Act is titled, ‘Energy efficiency certificates’.  Certificates can be created if certain prescribed activities are undertaken after the commencement of the VEET scheme.
18	The VEU website describes the scheme as follows:
Households and businesses can receive rebates or discounts on energy-saving products.  This helps cut power bills and reduce greenhouse gas emissions. 
Every upgrade allows businesses under the Accredited Providers program to generate Victorian Energy Efficiency Certificates.  Each certificate represents one tonne of greenhouse gas prevented from entering our atmosphere.  Accredited providers then sell these certificates to energy retailers. 
Energy retailers use the certificates to meet annual emissions targets set by the Victorian Government.  
The incentive or discount for households and businesses varies depending on the market activity and certificate price.
19	Mr Maat describes the VEET scheme in these terms:
In short, the scheme operates by accredited persons creating certificates based on energy efficiency upgrades in Victorian homes and businesses. Energy retailers may purchase these certificates (thereby supporting the prescribed emissions reduction activities) and then surrender the certificates to the commission to meet their annual obligations.
Obligation not to have an energy efficiency certificate shortfall
20	Part 4 of the VEET Act is titled, ‘Energy efficiency certificate shortfall and VEET scheme target’.
Principal obligation and liability for civil penalty
21	The VEET Act provides that a relevant entity must not have an energy efficiency certificate shortfall for a year in which the relevant entity makes a scheme acquisition.  I shall refer to this as the Principal Obligation.
22	A ‘scheme acquisition’ means the purchase for on-sale to a prescribed customer or prescribed class of customers in Victoria of:
(a)	electricity from AEMO or a person or body prescribed for the purposes of this paragraph but does not include any acquisition of electricity by AEMO; 
(b)	gas from a producer, storage provider or interconnected pipeline operator (within the meaning of the National Gas Rules) or from AEMO or a person or body prescribed for the purposes of this paragraph, but does not include any acquisition of gas by AEMO.
23	A ‘relevant entity’ means a person:
(a)	who sells either electricity or gas, or both electricity or gas, to customers; and
(b)	who makes a scheme acquisition in connection with the sale of either electricity or gas, or the sale of both electricity and gas, to customers; and
(c)	who (i) has 5,000 or more customers to whom either electricity or gas is, or both electricity and gas are, sold to in Victoria; or (ii) makes a scheme acquisition of 30,000 MWh or more of electricity; or (iii) makes a scheme acquisition of 350,000 GJ or more of gas; but does not include a person prescribed not to be a relevant entity for the purposes of the VEET Act.
24	An ‘energy efficiency certificate shortfall’ is defined in s 29 of the VEET Act, as follows:  
(1)	The energy efficiency certificate shortfall of a relevant entity for a year is to be calculated in accordance with the formula—
A – (B + C)
where—
“A”	is the number of tonnes of carbon dioxide equivalent of greenhouse gas emissions that the relevant entity is liable for under section 31 in that year;
“B”	is the number of tonnes of carbon dioxide equivalent of greenhouse gas emissions attributable to certificates surrendered under section 33 by the relevant entity in that year;
“C”	is the number of tonnes of carbon dioxide equivalent of greenhouse gas emissions which are a carried forward surplus for the previous year.
(2)	If the result of the calculation under subsection (1)—
(a)	is greater than zero, the relevant entity has an energy efficiency certificate shortfall for the year equal to the result;
(b)	is zero or less than zero, the relevant entity does not have an energy efficiency certificate shortfall for the year;
(c)	is less than zero, the relevant entity has a carried forward surplus for the year.
25	For the purposes of that definition, the formula for determining “A” (the total amount of tonnes of carbon dioxide equivalent of greenhouse gas emissions that a relevant entity is liable for in respect of electricity in a year) is as follows:
E × RE
where—
“E”	is the amount of electricity (in MWh) acquired by the relevant entity under scheme acquisitions in that year;
“RE”	is the greenhouse gas reduction rate for electricity fixed under section 32 for that year.
26	The VEET Act establishes a civil penalty for breach of the Principal Obligation.  Section 28(1) provides that a relevant entity which has an energy efficiency certificate shortfall for a year is liable to pay to the Essential Services Commission Enforcement Fund, as a pecuniary penalty, an energy efficiency shortfall penalty determined in accordance with that section.  
27	The energy efficiency shortfall penalty payable by a relevant entity for a year is determined by multiplying the relevant entity’s energy efficiency certificate shortfall (in tonnes of carbon dioxide equivalent of greenhouse gas emissions) for that year by the prescribed shortfall penalty rate.
28	The ‘prescribed shortfall penalty rate’ for 2021 is $70. 
Annual energy acquisition statements
29	A relevant entity which makes a scheme acquisition during a year must lodge an energy acquisition statement for the year on or before (a) 30 April in the following year; or (b) any later day allowed by the Commission.
30	An energy acquisition statement must set out, among other things: the amount of electricity and gas acquired under scheme acquisitions during the year; the value, in tonnes of carbon dioxide equivalent of greenhouse gas emissions, of certificates being surrendered for that year under s 33; any carried forward surplus for the previous year; and any carried forward surplus for the current year.  
31	An energy acquisition statement must be signed on or behalf of the relevant entity making the statement, and must also be audited by an independent third party engaged by the relevant entity before it is lodged.
Enforcement of the energy efficiency shortfall penalty
32	If the Commission considers that a relevant entity is in breach of the Principal Obligation in respect of a year, the Commission may issue a ‘shortfall statement’ to the relevant entity.  The shortfall statement must set out, among other things, the energy efficiency shortfall penalty that the relevant entity is liable to pay under s 28, and the manner and time in which that penalty is to be paid.
33	The shortfall statement must also include a statement advising the relevant entity that if the energy efficiency shortfall penalty is not paid in accordance with the shortfall notice, the Commission may apply to a court for an order requiring the penalty to be paid.  
34	If an energy efficiency shortfall penalty is not paid in accordance with a shortfall notice, the Commission may apply to a court for:
(a)	a declaration that the relevant entity has contravened s 27; and 
(b)	an order requiring the relevant entity to pay the energy efficiency shortfall penalty.
35	If the court is satisfied that the relevant entity has contravened the Principal Obligation, the court may (a) make the declaration sought; and (b) order the relevant entity to pay to the Commission for payment into the Commission Enforcement Fund the amount of the energy efficiency shortfall penalty that the relevant entity is liable to pay under s 28.
Previous case law
36	The Commission submits that there are no published judicial decisions which meaningfully consider the operation of the VEET Act.  It says that the VEET Act has only been referred to in two cases, and only by way of background in a private commercial dispute.
Establishing the contraventions of the VEET Act by the Defendants
37	The evidence relating to the contraventions of the VEET Act by the Defendants is set out below, along with the Commission’s submissions in respect of that evidence. 
38	Recapitulating, to establish a contravention of the Principal Obligation by the Defendants, the Commission must show that each is a ‘relevant entity’, that in the relevant year each made a ‘scheme acquisition’, and that in that year each had an ‘energy efficiency certificate shortfall’.
39	Each of these elements will be addressed below, first for QEnergy and then for Mojo Power East.  
Contravention of the Principal Obligation by QEnergy
40	Before addressing the three elements referred to in paragraph 38 above, first it is necessary to briefly summarise QEnergy’s Annual Statement and Audit Report for the relevant year.
QEnergy’s Annual Statement and Audit Report
41	In relation to QEnergy, there are two key pieces of evidence:
(a)	QEnergy’s annual energy acquisition statement for 2021, dated 29 July 2022 (QEnergy Annual Statement); and
(b)	the independent audit report prepared for QEnergy by Clear Environment Pty Ltd, dated 29 July 2022 (QEnergy Audit Report).
42	The QEnergy Annual Statement is signed and certified by Craig Mallory, Chief Operating Officer of QEnergy and Mojo Power East, in the following terms:
I, Craig Mallory, am an authorised representative of QEnergy Ltd and certify that all the information provided in this form is a true and accurate representation of the facts.  Further, records that demonstrate the accuracy of the statements have been retained and can be provided on request.
43	The QEnergy Audit Report is required to be provided with the Annual Statement, pursuant to s 33(6) of the VEET Act, as noted above.
44	The purpose of the QEnergy Audit Report is described in its introduction as follows:
The primary purpose of auditing an AEAS is to confirm the amount of electricity and gas acquired by the Relevant Entity under VEU program acquisitions during the calendar year and to calculate any VEEC shortfall.
45	The Commission submits that the QEnergy Audit Report may be admitted against QEnergy, pursuant to the ‘business records exception’ in s 69 of the Evidence Act 2008 (Vic) (Evidence Act) or as an admission made with authority under s 87 of the Evidence Act.  I accept this submission.
Whether QEnergy made a ‘scheme acquisition’
46	The Commission submits, and I accept, that there is evidence to establish that QEnergy made a scheme acquisition of 35,562.1 MWh of electricity in connection with the sale of electricity to customers in Victoria for the 2021 compliance year.
47	QEnergy’s Annual Statement listed its total amount of electricity purchased as 35,562.1 MWh, as measured at an AEMO settlement point.  That amount is verified by Clear Environment in the QEnergy Audit Report.
48	There is evidence that the electricity purchased by QEnergy was on-sold to prescribed customers:
(a)	Regulation 40(1) of the VEET Regulations provides that, subject to sub-reg (2), customers to whom a relevant entity sells electricity in Victoria are ‘prescribed customers’.
(b)	The exception in sub-reg (2) provides that a person who occupies certain scheduled premises (‘scheduled activity premises’) are not prescribed customers in relation to those premises until after the passing of a commencement dated specified in reg 40(3), which is 1 January of the second calendar year after the calendar year in which, for the first time, a certificate created in respect of the premises is registered under s 22 of the VEET Act.
(c)	In QEnergy’s Annual Statement, the amount of electricity reported above is reported under the heading, ‘Scheme acquisitions’, and the sub-heading, ‘Electricity acquisition’.  In Section C, it is reported as an ‘electricity scheme acquisition’. 
(d)	Further, the QEnergy Audit Report states that: 
(i)	QEnergy confirmed that it did not have any large Victorian customers or SAP [scheduled activity premises] registered customers during 2021; 
(ii)	QEnergy reported that it cross-checked its customer base against the SAP Register and did not identify any of its customers on the SAP Register; and
(iii)	QEnergy electricity scheme acquisitions consist of AEMO acquisitions and there are no SAP exempt loads.
49	There is also evidence that the electricity was purchased from AEMO or a prescribed person or body.  The QEnergy Audit Report states that the amount of 35,562.1 MWh was verified by running a ‘Confidential Daily Summary Report’ within the AEMO Market Management System (MMS), and stated by way of confirmation that ‘QEnergy electricity scheme acquisitions consist of AEMO acquisitions’.
Whether QEnergy is a ‘relevant entity’
50	The QEnergy Annual Statement and the QEnergy Audit Report each describe QEnergy as a ‘relevant entity’.
51	The Commission further submits that an entity will be a relevant entity if the following three matters are satisfied:
(a)	It sells electricity to customers: 
This is established by QEnergy’s business as an energy retailer.  This is not controversial, and is demonstrated by its website and its electricity retail licence.
(b)	It made a scheme acquisition in connection with that sale of electricity to customers: 
This is established by the QEnergy Annual Statement and the QEnergy Audit Report, as noted above.
(c)	It makes a scheme acquisition of 30,000 MWh or more of electricity:
This is established by the QEnergy Annual Statement and the QEnergy Audit Report, as noted above, which indicate a scheme acquisition of 35,562.1 MWh.
Whether QEnergy had an ‘energy efficiency certificate shortfall’
52	The formula for determining the value of “A” in the calculation under s 29 is addressed directly in the QEnergy Annual Statement, reproduced below:

53	The value of “B” and “C” in the calculation under s 29 are also addressed in the QEnergy Annual Statement, each of which are reported as having a ‘nil’ value.
54	Again, that reporting is verified by the QEnergy Audit Report, in the following terms: 
Section C
Total scheme acquisitions for 2021 by QEnergy are 35,562.1 MWh of electricity.
Section D
Total liable acquisitions have been correctly entered from the answers to Section C.  The 2021 greenhouse gas reduction rate for electricity (0.17255) was correctly applied and consequently the VEEC liability was confirmed to be 6,136 VEECs.  The greenhouse gas reduction rate was confirmed by reference to the VEU program website (14 June 2022).
QEnergy has not offered any VEECs for surrender.
There was no VEEC shortfall or surplus from the 2020 compliance year.
55	Accordingly, the amount of the energy efficiency certificate shortfall is:
Formula:	A – (B+C) = energy efficiency certificate shortfall
Calculation:	6,136.24 – (0+0) = 6,136.24.
Shortfall statement and amount of penalty
56	The amount of the penalty for which QEnergy was liable to pay under s 28 is $429,520 (6,136 x $70).  In calculating that penalty, the amount of the energy efficiency certificate shortfall was rounded down to 6,136 certificates.
57	On 15 September 2022, the Commission wrote to QEnergy, proposing a shortfall in the amount of 6,136 certificates, and inviting submissions in response by 26 September 2022.  No response was received.  On 10 October 2022, the Commission issued a ‘shortfall statement’ under s 36 of the VEET Act, requiring QEnergy to pay an energy efficiency shortfall penalty of $429,520, on or before 14 November 2022.
58	There was subsequent correspondence between the Commission and QEnergy, in which QEnergy did not dispute the stated amount of the penalty, and made various assurances of payment.
Payment of the outstanding penalty
59	The present proceeding was commenced on 14 April 2023.
60	On 2 June 2023, the outstanding amount payable by QEnergy ($429,520) was paid into a bank account maintained by the Department of Treasury and Finance for that purpose, among others.  
Conclusion regarding whether QEnergy contravened the Principal Obligation
61	As set out above, to establish a contravention of the Principal Obligation, the following must be satisfied:
(a)	QEnergy must be a ‘relevant entity’;
(b)	in the year in question, being the calendar year 2021, QEnergy must have made a ‘scheme acquisition’; and
(c)	in calendar year 2021, QEnergy must have had an ‘energy efficiency certificate shortfall’.
62	As set out above, each of these requirements has been met in relation to QEnergy.  As a relevant entity that made a scheme acquisition in calendar year 2021, it therefore contravened the Principal Obligation by having an energy efficiency certificate shortfall of 6,136.24 certificates.  Pursuant to s 28 of the VEET Act and after rounding, this gives rise to a shortfall penalty of $429,520, payment of which was due on or before 14 November 2022.  Payment was not made when due and was made only after this proceeding was commenced.
Contravention of the Principal Obligation by Mojo Power East 
63	Before addressing the three elements referred to in paragraph 38 above, first it is necessary to briefly summarise Mojo Power East’s Annual Statement and Audit Report for the relevant year. 
Mojo Power East’s Annual Statement and Audit Report
64	In relation to Mojo Power East, there are two key pieces of evidence:
(a)	Mojo Power East’s annual energy acquisition statement for 2021, dated 29 July 2022 (Mojo Annual Statement); and
(b)	the independent audit report prepared for Mojo Power East (trading as People Energy) by Clear Environment Pty Ltd, dated 29 July 2022 (Mojo Audit Report).
65	The Mojo Annual Statement is signed and certified by Mr Mallory in the following terms:
I, Craig Mallory, am an authorised representative of Mojo Power East and certify that all the information provided in this form is a true and accurate representation of the facts. Further, records that demonstrate the accuracy of the statements have been retained and can be provided on request.
66	The Mojo Audit Report is required to be provided with the Mojo Annual Statement, pursuant to s 33(6) of the VEET Act, as noted above.
67	The purpose of the Mojo Audit Report is described in its introduction as follows:
The primary purpose of auditing an AEAS is to confirm the amount of electricity and gas acquired by the Relevant Entity under VEU program acquisitions during the calendar year and to calculate any VEEC shortfall.
68	As noted above in relation to QEnergy, the Mojo Audit Report may be admitted against Mojo Power East, pursuant to the ‘business records exception’ in s 69 of the Evidence or as an admission made with authority under s 87 of the Evidence Act.
Whether Mojo Power East made a ‘scheme acquisition’
69	The Commission submits, and I accept, that there is evidence to establish that Mojo Power East made a scheme acquisition of 12,373.7 MWh of electricity in connection with the sale of electricity to customers in Victoria for the 2021 compliance year.
70	Mojo Power East’s Annual Statement listed its total amount of electricity purchased as 12,373.7 MWh, as measured at an AEMO settlement point.  That amount is verified by Clear Environment in the Audit Report.
71	There is evidence that the electricity purchased by Mojo Power East was on-sold to prescribed customers:
(a)	In Mojo’s Annual Statement, the amount of electricity reported above is reported under the heading, ‘Scheme acquisitions’, and the sub-heading, ‘Electricity acquisition’.  In Section C, it is reported as an ‘electricity scheme acquisition’.
(b)	Further, the Mojo Audit Report states that: 
(i)	People Energy confirmed that it did not have any large Victorian customers or SAP [scheduled activity premises] registered customers during 2021; 
(ii)	People Energy reported that it cross-checked its customer base against the SAP Register and did not identify any of its customers on the SAP Register; and
(iii)	People Energy electricity scheme acquisitions consist of AEMO acquisitions and there are no SAP exempt loads.
72	There is also evidence that electricity was purchased by Mojo Power East from AEMO or a prescribed person or body.  The Mojo Audit Report states that the amount of 12,373.7 MWh was verified by running a ‘Confidential Daily Summary Report’ within the AEMO Market Management System (MMS), and stated by way of confirmation that ‘People Energy electricity scheme acquisitions consist of AEMO acquisitions’.
Whether Mojo Power East is a ‘relevant entity’
73	The Mojo Annual Statement and the Mojo Audit Report each describe Mojo Power East as a ‘relevant entity’.
74	As submitted by the Commission, an entity will be a relevant entity if the following three matters are satisfied in respect of the relevant year:
(a)	It sells electricity to customers: 
This is established by Mojo Power East’s business as an energy retailer.  This is not controversial, and is demonstrated by its website, its electricity retail licence. 
(b)	It made a scheme acquisition in connection with that sale of electricity to customers: 
This is established by the Mojo Annual Statement and the Mojo Audit Report, as noted above.
(c)	It sold electricity in Victoria to more 5,000 or more customers:
This is established by the Mojo Audit Report, as noted above, which stated that Mojo Power East had more than 5,000 customers in Victoria for the 2021 year, thus satisfying the criteria for a relevant entity.  The Mojo Audit Report noted that Mojo Power East did not trigger the reporting threshold of 30,000 MWh sales in 2021.  However the 5,000 customers or 30,000 MWH sales are alternatives and only one needs to be satisfied to render Mojo Power East a relevant entity.
Whether Mojo Power East had an ‘energy efficiency certificate shortfall’
75	The formula for determining the value of “A” in the calculation under s 29 is addressed directly in the Mojo Annual Statement, reproduced below:

76	The value of “B” and “C” in the calculation under s 29 are also addressed in the Mojo Annual Statement, each of which are reported as having a ‘nil’ value.
77	Again, that reporting is verified by the Mojo Audit Report, in the following terms:
Section C
Total scheme acquisitions for 2021 by People Energy are 12,373.7 MWh of electricity.
Section D
Total liable acquisitions have been correctly entered from the answers to Section C. The 2021 greenhouse gas reduction rate for electricity (0.17255) was correctly applied and consequently the VEEC liability was confirmed to be 2,135 VEECs. The greenhouse gas reduction rate was confirmed by reference to the VEU program website (2 June 2022).
…
People Energy has not offered any VEECs for surrender.
There was no VEEC shortfall or surplus carried over from the 2020 compliance year.  …
78	Accordingly, the amount of the energy efficiency certificate shortfall is:
Formula:	A – (B+C) = energy efficiency certificate shortfall
Calculation:	2,135.08 – (0+0) = 2,135.08
Shortfall statement and amount of penalty
79	The amount of the penalty for which Mojo Power East was liable to pay under s 28 is $149,450 (2,135 x $70).  In calculating that penalty, the amount of the energy efficiency certificate shortfall was rounded down to 2,135 certificates.
80	On 15 September 2022, the Commission wrote to Mojo Power East, proposing a shortfall in the amount of 2,135 certificates, and inviting submissions in response by 26 September 2022.  No response was received.  On 10 October 2022, the Commission issued a ‘shortfall statement’ under s 36 of the VEET Act, requiring Mojo Power East to pay an energy efficiency shortfall penalty of $149,450, on or before 14 November 2022.
81	There was subsequent correspondence between the Commission and Mojo, in which Mojo did not dispute the stated amount of the penalty, and made various assurances of payment.
Payment of the outstanding penalty
82	On 2 June 2023, the outstanding amount payable by Mojo Power East ($149,450) was paid into a bank account maintained by the Department of Treasury and Finance for that purpose, among others.
Conclusion regarding whether Mojo Power East contravened the Principal Obligation
83	Each of the three requirements referred to in paragraphs 38 and 61 above (adjusted where necessary to read ‘Mojo Power East’ rather than ‘QEnergy’ where necessary) have been met in relation to Mojo Power East.
84	As a relevant entity that made a scheme acquisition in calendar year 2021, Mojo Power East therefore contravened the Principal Obligation by having an energy efficiency certificate shortfall of 2,135.08 certificates.  Pursuant to s 28 of the VEET Act and after rounding, this gives rise to a shortfall penalty of $149,450, payment of which was due on or before 14 November 2022.  Payment was not made when due and was made only after this proceeding was commenced.
Whether declarations are appropriate relief
The Commission’s submissions
85	The Commission submits that the power to make declarations falls into the Court’s wide discretionary power under s 36 of the Supreme Court Act 1986 (Vic) (‘Supreme Court Act’).  
86	The Commission refers to High Court authority that, prior to making declarations, the High Court has held that three requirements should be satisfied: the question must be a real and not hypothetical one, the applicant must have a real interest in raising it, and there must be a proper contradictor.
87	The Commission submits that each of those requirements is satisfied in this case:
(a)	First, the proposed declarations relate to conduct in contravention of the VEET Act, and the matters in issue have been properly identified and particularized.
(b)	Second, it is in the public interest for the Commission to seek the declarations and for the declarations to be made.  The Commission is the regulator under the VEET Act, and therefore has a real interest in the declarations being made.
(c)	Third, QEnergy and Mojo Power East are the proper contradictors, because they are the defendants, and the subjects of the proposed declarations.  In that sense, they have an interest in opposing the making of the proposed declarations.  A party will not cease to be a proper contradictor merely because it consents to the proposed declarations, or does not actively oppose them.
88	The Commission submits that in addition to these matters, the declarations sought are appropriate because they:  
(a)	record the Court’s disapproval of the contravening conduct, including the belated payment of the associated penalties;
(b)	will deter corporations from engaging in further contraventions, or encourage them to pay any penalties promptly when due;
(c)	will serve the public interest in defining and publicising the requirements of the VEET Act;
(d)	will assist the Commission in the future in carrying out the duties conferred on it by the VEET Act, including the recovery of shortfall penalties; and
(e)	will inform consumers of the contravening conduct, and the belated payment of the associated penalties.
Consideration
89	The Court has a broad discretion to make declarations, both inherently and pursuant to statute.  
90	The principles set out by Gibbs J in Forster v Jododex Pty Limited are applicable:
The question must be a real and not a theoretical question; the person raising it must have a real interest to raise it; he must be able to secure a proper contradictor, that is to say, some one presently existing who has a true interest to oppose the declaration sought.
91	I am satisfied that these principles are satisfied in the present case.
92	First, the question here, which is whether the Defendants have contravened the Principal Obligation, is a real and not a theoretical question.  At the time the proceedings were issued, the Defendants had not paid the shortfall penalties.  By the time of the hearing, they had done so.  However, this does not mean that the question is now merely theoretical.  Clearly, there is no longer any utility in the Commission seeking orders for the payment of the penalties, and it properly does not do so.  But declarations, particularly as to the contravention of obligations imposed by legislation, are different.  
93	Second, I am satisfied that the Commission has a real interest in pursuing the declarations because of its statutory role.  
94	Third, I am satisfied that there is a proper contradictor here, being the Defendants.  That they have elected not to play an active role in the proceedings and do not oppose the relief sought does not mean that they do not fit the definition of ‘proper contradictor’ set out in Forster, being someone who ‘has a true interest to oppose the declaration sought’.  The Commission submits, and I accept, that the Defendants do not cease to be proper contradictors merely because they consent to the declarations or do not actively oppose them.
95	In ACCC v Yellow Page Marketing (No 2), Gordon J (as her Honour then was) considered declaratory relief in the context of default judgments and deemed admissions, and referred to the following considerations relevant to the exercise of the discretion to grant injunctions in such instances.  Those considerations include:
1.	whether the declaration will have any utility;
2.	whether the proceeding involves a matter of public interest;
3. 	whether the circumstances call for the making of the Court’s disapproval of the contravening conduct.
96	While not directly analogous with the present case, these considerations are helpful when considering the principles in Forster v Jododex.  
97	The declarations will have utility, as they will identify contravening conduct and explain how it breaches the VEET Act.  It is in the public interest to make the declarations, particularly given that these are the first two proceedings brought under the VEET Act for declarations of contravention and the enforcement of shortfall penalties.  As the Commission submits, the declarations will record the Court’s disapproval of the contravening conduct (including late payment of penalties), deter companies from engaging in further contraventions or encourage the prompt payment of penalties when due (particularly so given the expose to statutory interest and costs if prompt payment is not made), define and publicise the requirements of the VEET Act, assist the Commission in future in carrying out its statutory role including the recovery of shortfall penalties, and inform consumers of the contravening conduct.  The circumstances here call for the Court’s disapproval of companies who contravene their statutory obligations under the VEET Act.  
98	Having found, as set out above, that the Defendants contravened s 27 of the VEET Act, and being satisfied for the reasons set out above that it was appropriate to make declarations as to those contraventions, I made the declarations sought by the Commission.
Statutory interest
The Commission’s submissions
99	The Commission submits that each of QEnergy and Mojo Power should be ordered to pay statutory interest under s 58 of the Supreme Court Act, at the rate fixed under s 2 of the Penalty Interest Rates Act 1983 (Vic), on the principal penalty amounts from the date of the expiry of the first demand for payment to the date on which the penalties were paid – that is, from 14 November 2022 to 2 June 2023 (200 days).  The relevant amounts are $23,535 in respect of QEnergy and $8,189 in respect of Mojo Power East.
100	The Commission relies on s 58(1) of the Supreme Court Act, which is in the following terms:
If in a proceeding a debt or sum certain is recovered, the Court must on application, unless good cause is shown to the contrary, allow interest to the creditor on the debt or sum at a rate not exceeding the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 or, in respect of any bill of exchange or promissory note, at 2% per annum more than that rate from the time when the debt or sum was payable (if payable by virtue of some written instrument and at a date or time certain) or, if payable otherwise, then from the time when demand of payment was made.
101	The Commission submits that each of the penalties was a sum certain, arising from and set out in the shortfall statements dated 10 October 2022, and calculated in accordance with s 28(2) of the VEET Act.  The regime established by the VEET Act contemplates that the liability to pay a shortfall penalty will be uncontroversial, and that they will be in a prescribed amount.  In this case, the penalties were based on the Defendants’ own audited reports, and the Defendants’ liability to pay them was never in dispute.  
102	Further, the Commission submits that the penalty arises automatically by the issue of a shortfall statement, and is not created by an order of the court.  Although the VEET Act provides a summary procedure for the making of orders for the payment of unpaid penalties, it does not contemplate that any such proceedings will be routinely necessary.
103	In this regard, the Commission refers to the following aspects of the VEET Act:
(a)	liability is said to arise under s 28, and is not expressed to be conditional on the making of an order under s 37;
(b)	the amount of the penalty is not subject to the court’s discretion, but rather is calculated by the formula in s 28(2);
(c)	section 36 provides that, when the Commission issues a shortfall statement, it must: 
(i)	set out the penalty ‘that the relevant entity is liable to pay under section 28’ (emphasis added), as well as the manner and the time in which that penalty is to be paid; and
(ii)	‘include a statement advising the relevant energy that if the energy efficiency shortfall penalty is not paid in accordance with the shortfall notice, the Commission may apply to a court for an order requiring that the penalty be paid’; and
(d)	similarly, s 37(1)(b) provides that the court may make an order ‘requiring the relevant entity to pay the energy efficiency shortfall penalty’ (emphasis added). 
104	The Commission submits that it is relevant that neither QEnergy nor Mojo Power East has ever disputed their liability to pay the penalties in question.  After several assurances of payment went unmet, the Commission commenced the proceedings on 14 April 2023, seeking recovery of the outstanding penalties.  Those amounts were paid only on 2 June 2023 – some 6 weeks’ after the commencement of proceedings, and 200 days after the expiry of the first demand for payment.
105	Where it has been necessary to commence proceedings for the recovery of the unpaid penalties, the Commission submits that those matters support the additional imposition of statutory interest, under s 58 of the Supreme Court Act.  It submits that more generally, the award of statutory interest under s 58 has three main purposes:
First, as compensation to the judgment creditor for being out of the funds from the date of commencement of the proceeding until judgment; secondly, to deter judgment debtors from delaying proceedings and thereby having the use of the money for a longer period; and finally, to encourage defendants to make realistic assessments of their liability in a case and to take bona fide steps to compromise the claim.
106	The Commission submits that each of those factors is relevant to the recovery of unpaid shortfall penalties, and supports the ordering of statutory interest on those amounts.  From a regulatory perspective, it is said that the ordering of statutory interest will emphasise that energy retailers who accrue liability to pay shortfall penalties must pay the penalties as and when they fall due – and not some 200 days late, when compelled to do so by proceedings commenced under s 37 of the VEET Act, also serving as a deterrent for paying late.  It is also submitted that awarding statutory interest will compensate the State for being out of the funds for a considerable period of time.
Consideration
107	In my view, the Commission’s analysis of the effect of the VEET Act, as set out in paragraphs 102 and 103 above, is correct.  By operation of the VEET Act, once the shortfall statement is issued by the Commission pursuant to s 36, the penalty arises automatically.  That is, the penalty is already owing, in an amount that is capable of being ascertained, without any need for an order of the court, and the effect of an order is to require that the penalty be paid.  
108	The order that the court may make, pursuant to s 37(1)(b) of the VEET Act, concerns enforcement of the liability to pay the penalty, but does not create the penalty.
109	That being the case, the proceedings against the Defendants are for recovery of a sum certain, arising from and set out in the shortfall statements dated 10 October 2022.  Pursuant to s 58(1) of the Supreme Court Act, interest must be allowed on that sum at a rate not exceeding the rate fixed under s 2 of the Penalty Interest Rates Act 1983 from the time the sum certain was due until payment, unless good cause is shown to the contrary.  In this instance, the relevant period is 14 November 2022 to 2 June 2023.  
110	No good cause to the contrary has been shown here.  Rather, the circumstances favour the making of orders that the Defendants pay statutory interest for the relevant period.  Given that liability to pay the penalties arises upon the issue of the shortfall statements, it ought not be necessary for the Commission to have to commence proceedings for the recovery of unpaid penalties.  That the Defendants capitulated some six weeks after the proceedings were commenced does not ameliorate their situation.  In my view, the purposes of awarding statutory interest, as set out in Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No 3), are met by awarding statutory interest in this case.
111	For these reasons, I made orders for the Defendants to pay statutory interest on the shortfall penalty amounts for the period 14 November 2022 to 2 June 2023.
Costs
112	The Commission seeks orders that the Defendants pay its costs of the proceedings.  
113	In my view, that is the appropriate order to make in respect of costs in this case.
114	The Court has a general discretion in respect of costs.  The usual rule as to costs is that a successful party to litigation is entitled to an award of costs in its favour, with the unsuccessful party bearing the liability for the costs of the unsuccessful litigation.
115	I see no reason not to follow this usual rule.  The Defendants could have avoided these proceedings completely by meeting their obligations to pay the shortfall penalty on time, but did not.  As already said, they effectively capitulated after the proceedings had been issued and it ought not have been necessary for the Commission to have had to initiate litigation against them.  The interests of justice dictate that the Defendants should meet the Commission’s costs of doing so.  That the Defendants did not play an active role and acquiesced in the declarations and orders made does not change the position in respect of costs.
116	For these reasons, I made orders that the Defendants pay the Commission’s costs of the proceedings.