To apologise, or not to apologise – that is the question

Imagine: Major news outlets have just published damaging allegations of serious and systemic misconduct by your business, potentially resulting in significant losses by your customers.  To make matters worse, the regulators have come knocking.

On its face, your compliance officer believes there may be some truth to the allegations.  The corporate affairs team wants to get ahead of the story and immediately issue an apology to all affected customers.  The lawyers are concerned that this would be admitting liability.  The Board and CEO are unsure what to do amidst this crisis.

It is an understandable human trait to equate apologies with admissions, as well as aim to minimise damage by denying or ignoring apparent wrongdoing.  However, in the regulatory world, this instinct may only compound the consequences.

In this article, we:

• explore some recent examples where apologies were not made;
• provide insights on how courts and regulators recognise apologies and admissions; and
• suggest some practical measures to help you prepare and make decisions.

Qantas Airways “ghost flights”

During the tail end of the COVID-19 pandemic and the resulting travel disruptions, Qantas cancelled flights for which tickets had been sold to customers, and continued to sell tickets for flights which it had already decided to cancel.

Qantas then falsely represented to customers that its flights had not been cancelled, claiming that it was going to use “reasonable endeavours” to operate the relevant flights at or close to the scheduled times.

After the ACCC commenced civil penalty proceedings for the misconduct in August 2023, Qantas continued to avoid apologising or making admissions.

In a lengthy statement on its website in October 2023,[1] Qantas said it had sincerely apologised for getting many other things wrong, such as cancelled flights and unacceptable delays, due to COVID-related staff shortages and supply chain issues coinciding with huge pent-up demand.

However, Qantas also said:

• “While mistakes were made by Qantas, the ACCC’s legal case ignores the realities of the aviation industry – airlines can’t guarantee specific flight times”.
• “In most cases, the delays between us making the decision to cancel a flight and notifying customers allowed Qantas time to find them an alternative.”; and
• “For the cancellations in question, where the flights were to depart well into future, we believe this would have resulted in a significantly more frustrating customer experience.”

Eventually, in 2024, Qantas made full admissions and apologies regarding its misconduct, and agreed to pay $100 million in civil penalties and $20 million in compensation.[2]  However, Qantas’ Chief Executive was criticised in the media for characterising the airline’s admitted wrongdoing as mere “delays in communications”.[3]

Crown Resorts media allegations

In late July 2019, various media organisations, including The Age, The Sydney Morning Herald, and Channel 9’s 60 Minutes, aired serious allegations against Crown, including that:[4]

• it knew its China-based staff were breaching Chinese gambling laws;
• it had partnered with junket operators linked to organised crime syndicates, including triad-controlled drug trafficking and money-laundering groups; and
• millions of dollars had been laundered through the bank accounts of its subsidiaries.

In response, apparently acting on what it believed to be reliable information at the time, Crown vehemently denied the allegations.

In August 2019, Crown issued a statement to the ASX, as well as a full-page advertisement in The Sydney Morning Herald entitled “Setting the record straight in the face of a deceitful campaign against Crown”.

In these statements, Crown described the allegations variously as “wrong”, “unfair”, “unbalanced”, “sensationalised”, “unsubstantiated”, “exaggerations”, “unsupported connections” and “outright falsehoods”.

Coincidentally, around one week after Crown’s public statements, the NSW Independent Liquor and Gaming Authority issued the Terms of Reference for the “Bergin Inquiry”.  That inquiry ultimately found that Crown was not suitable to continue holding its NSW casino licence.  This was followed by two State Royal Commissions, a shareholder class action, an ASIC investigation, an AUSTRAC civil penalty proceeding, and multiple State regulatory financial penalties.

An apology is not always an admission

Within both the criminal and civil law contexts, the concepts of an apology and an admission often overlap.  However, it is important to remember that they are two distinct things.

In the case of Dovuro Pty Ltd v Wilkins,[5] the High Court considered the distinction between apologies and admissions.  Dovuro was alleged to have acted negligently when its imported canola seeds (which were later discovered to contain weed seeds) were sold on to growers, who subsequently suffered financial loss in taking precautionary measures to deal with the weeds.

Wilkins relied on Dovuro’s public apologies as amounting to admissions of negligence.  Dovuro, via a media release and a letter, stated the following:

• “We apologise to canola growers and personnel. This situation should not have occurred…”;
• “…this does not excuse Devuro in failing in its duty of care to inform growers as to the presence of these weed seeds. We got it wrong in this case”.

The Court emphasised the need to carefully identify what precisely is being admitted in an apology, the relevance of that admission to the issues in legal proceedings, and whether the admission may be relied on by a court in the application of the legal principles.[6]

Things said after an event, such as an apology, may constitute an admission of relevant facts.  However, the Court acknowledged that they may also be “informed only by hindsight and the speaker’s wish that the clock might be turned back”.[7]

Ultimately, the Court decided in Dovuro’s favour, finding that the apologies did not amount to an admission of the legal question of negligence.

Apologies and admissions are recognised

ASIC recognises and encourages apologies where appropriate, as part of a broader approach to cooperation or remediation:

• Regulatory Guide 271: Internal dispute resolution highlights that an explanation or apology may be a reasonable way to address a customer complaint.[8]
• Information Sheet 151: ASIC’s approach to enforcement: “ASIC encourages and recognises cooperation…we may take into account early notification of a contravention, or cooperation during an investigation, when considering whether to pursue enforcement action or what enforcement action to pursue”.
• Regulatory Guide 277: Consumer remediation positively highlights an example of a licensee apologising to a customer (as well as refunding fees and paying compensation).

Consistent with this, in ASIC v Mercer Financial Advice (Australia) Pty Ltd,[9] ASIC accepted that Mercer had made generous remediation to relevant clients, made admissions of the relevant contraventions, co-operated with ASIC in its investigations, been contrite, and made public apologies, acknowledging their failings.  ASIC accepted that “Mercer’s cooperation was relevant” to the reduced penalty.[10]

Similarly, in ASIC v OnePath Custodians Pty Ltd,[11] OnePath was found to have engaged in “fees for no service” contraventions.  However, the Federal Court ordered that the agreed civil penalty would be imposed, after considering demonstrations of contrition and remorse, letters of apology being sent, and that the breaches were voluntarily reported to ASIC.[12]

However, apologies need to be sincere

In ASIC v MLC Nominees Pty Ltd,[13] a non-executive director made an apology in an affidavit to the Court for the contraventions:

“The Trustees recognise that the admitted contraventions are a very serious matter. The Trustees deeply regret that these contraventions occurred.”

ASIC challenged the sincerity of this apology.  The Court found that, whilst no doubt genuine, the apology was “expressed somewhat briefly and in formulaic language.”[14]  The brevity of the apology did not “assuage my concern that the defendants still do not truly comprehend the nature and extent of the seriousness of the contraventions.”[15]

Apologies also need to be timely

In ASIC v AMP Financial Planning Proprietary Ltd,[16] the Court found AMP had engaged in unconscionable conduct by deducting or failing to refund life insurance premiums and advice fees from deceased customers’ accounts.

Critically, the Court provided insight into the importance of the timing of an apology.  For example, the defendants’ witnesses did not in their affidavits make any apology on behalf of the defendants for the contravening conduct.  They only did so in the course of the hearing via their barristers, “seemingly in response to ASIC’s submissions”.  The Court held that “the timing of this statement (that is, coming so late) tended to diminish its power and effect.”[17]

Practical measures

We suggest adopting a structured and proactive approach to enable you to navigate the complexities of issuing apologies or admissions in response to apparent breaches.

Embed strong corporate governance:

• Establish clearly who holds the authority to decide whether an apology or admission is appropriate.
  • Who is your spokesperson/s?
• Determine necessary sign-offs or approval processes to avoid confusion or delay.
• Identify alternative decision-makers in case key personnel are unavailable.

Implement robust communication practices:

• Specify how and where issues related to breaches will be communicated internally.
  • Will you leverage an existing committee, or establish a bespoke forum?
• Consider how records of discussions and decisions will be maintained.

Develop a comprehensive response plan:

• Develop and maintain well-documented policies and procedures for identifying, reporting, and managing breaches.
• This may include a data breach response policy, and formal protocols for stakeholder and regulatory communications.

Prepare and educate your people:

• Does your training adequately cover crisis and breach management?
• Consider incident simulation exercises to “stress-test” the response plan, to increase knowledge and skills but also identify potential gaps.

Require further assistance?

Contact Us

Our Expert Team

Our Training

Authors: Tali Borowick (Law Graduate) and Anthony Jensen (Special Counsel)

[1] https://www.qantasnewsroom.com.au/media-releases/qantas-update-on-accc-claims/

[2] ACCC v Qantas Airways Limited [2024] FCA 1219.

[3] https://www.smh.com.au/business/companies/sorry-not-sorry-qantas-perfects-the-art-of-the-non-apology-20240507-p5fqgb.html.

[4] Report of the Inquiry under section 143 of the Casino Control Act 1992 (NSW), Volume 1, pp199-203.

[5] (2003) 215 CLR 317.

[6] See also Hardie Finance Corporations Pty Ltd v Ahern (No. 3) [2010] WASC 403, [339].

[7] Dovuro Pty Ltd v Wilkins, [173].

[8] See ASIC’s RG 271.74.

[9] [2023] FCA 1453.

[10] [2023] FCA 1453, paragraph 90.

[11] [2023] FCA 1485.

[12] [2023] FCA 1485, paragraph 24.

[13] [2020] FCA 1306.

[14] [2020] FCA 1306, paragraph 223.

[15] [2020] FCA 1306, paragraph 286.

[16] [2022] FCA 115.

[17] [2022] FCA 115, paragraph 135.