ACCC v Harbin Pty Ltd - [2008] FCA 1792

FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v Harbin Pty Ltd
ACN 005 339 328 [2008] FCA 1792
TRADE PRACTICES – misleading or deceptive conduct – dual pricing – appropriateness of orders sought – where compliance program with external audit obligations already imposed under a s 87B undertaking – service of reasons for judgment and orders on the external auditor directed
TRADE PRACTICES – misleading or deceptive conduct – dual pricing – terms of declaratory orders – whether order for corrective advertising should be made – where corrective advertising serves an appropriate preventative purpose in the circumstances
Trade Practices Act 1974 (Cth) ss 52, 53(e), 86C, 87B
Trade Practices (Consumer Product Safety Standards) Amendment Regulation 1999 (No 1) (Cth)
Australian Competition and Consumer Commission v Visy Paper Pty Ltd (No 2) (2004) 212 ALR 564 cited
BMW Australia Ltd v Australian Competition and Consumer Commission (2004) 207 ALR 452 cited
Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd (2004) 207 ALR 329 cited
Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (in liquidation) (2007) 161 FCR 513 cited
Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd (No 2) (2008) ATPR 42-230 cited
Australian Competition and Consumer Commission v Telstra Corporation Ltd (2007) ATPR 42-207 cited
Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 95 FCR 114 cited
Australian Competition and Consumer Commission v Target Australia Pty Ltd (2001) ATPR 41-840 cited
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v HARBIN PTY LTD (ACN 005 339 328)
No SAD 179 of 2007
FINN J
28 NOVEMBER 2008
ADELAIDE

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY

SAD 179 of 2007

BETWEEN:
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant

AND:
HARBIN PTY LTD (ACN 005 339 328)
Respondent

JUDGE:

FINN J

DATE OF ORDER:

28 NOVEMBER 2008

WHERE MADE:

ADELAIDE

THE COURT:
1. Declares that the respondent has in trade or commerce:
(a)engaged in conduct that is misleading or deceptive, or likely to mislead or deceive, in contravention of s 52 of the Act; and
(b)in connection with the supply or possible supply of goods or in connection with the promotion of the supply of such goods, made a false or misleading representation with respect to the price of such goods, in contravention of s 53(e) of the Act,

By causing to be published in The Advertiser newspaper on 29 March 2007 an advertisement which advertised for sale at the three Ray’s Outdoors Stores in South Australia during the period 29 March 2007 to 31 March 2007, amongst other products, a Rio Grand Barbecue at a sale price of $99.00 and showing a strikethrough price of $299.99 thereby representing that:
(c)the price ordinary customers would have paid in Harbin’s retail stores in South Australia to purchase the Rio Grand Barbecue immediately prior to 29 March 2007 was $299.99 when, contrary to such representation, the price ordinary customers would have paid immediately prior to 29 March 2007…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2008] FCA 1792
Decision Date: 28 November 2008

CaseChat Overview and Summary

The Australian Competition and Consumer Commission (ACCC) brought proceedings against Harbin Pty Ltd in the Federal Court of Australia, seeking relief for the alleged misleading conduct of Harbin in advertising the sale price of a Rio Grand Barbecue. Harbin advertised the barbecue at a sale price of $99.00 with a strikethrough price of $299.99, suggesting a saving of $200.99. However, the ACCC argued that the original price was less than $299.99, and thus the savings were overstated.

The primary legal issues the court had to address were whether Harbin's advertising constituted misleading or deceptive conduct under sections 52 and 53(e) of the Trade Practices Act 1974 (Cth), and if so, what appropriate remedies should be imposed. The court needed to determine whether an injunction, corrective advertising, and costs were warranted. The court also considered the adequacy of Harbin's compliance program and whether it had genuinely attempted to comply with the Act.

The court found that Harbin had indeed engaged in misleading conduct by overstating the savings in its advertisement. However, the court determined that an injunction was not appropriate in this instance as Harbin had already demonstrated a willingness to change its procedures and the contravention was unintentional. The court did, however, order corrective advertising to be published in The Advertiser newspaper to correct the misleading impression created by the original advertisement. The court further ordered Harbin to pay the ACCC's costs and directed that a copy of the orders and reasons be served on Harbin's auditor and the ACCC notified within 14 days.

In conclusion, the court made a declaration of misleading conduct, ordered corrective advertising, and directed Harbin to pay the ACCC's costs. The court did not impose an injunction, finding other means more appropriate to address Harbin's compliance shortcomings.

Orders

Orders of the court

1. Declares that the respondent has in trade or commerce:

(a) engaged in conduct that is misleading or deceptive, or likely to mislead or deceive, in contravention of s 52 of the Act; and

(b) in connection with the supply or possible supply of goods or in connection with the promotion of the supply of such goods, made a false or misleading representation with respect to the price of such goods, in contravention of s 53(e) of the Act,

By causing to be published in The Advertiser newspaper on 29 March 2007 an advertisement which advertised for sale at the three Ray’s Outdoors Stores in South Australia during the period 29 March 2007 to 31 March 2007, amongst other products, a Rio Grand Barbecue at a sale price of $99.00 and showing a strikethrough price of $299.99 thereby representing that:

(c) the price ordinary customers would have paid in Harbin’s retail stores in South Australia to purchase the Rio Grand Barbecue immediately prior to 29 March 2007 was $299.99 when, contrary to such representation, the price ordinary customers would have paid immediately prior to 29 March 2007 was less than $299.99; and

(d) Harbin was offering the Rio Grand Barbecue for sale to ordinary customers in Ray’s Outdoors Stores at a saving of $200.99 for the period 29 March 2007 to 31 March 2007 when, contrary to such representation, Harbin was offering the Rio Grand Barbecue at a saving of less than $200.99.

2. Orders that Harbin cause to be published at its own expense in the Thursday edition of The Advertiser newspaper within 28 days of the date of this Order, an advertisement, in the form of Appendix 1 and:

(a) of a size no less than 12 cm wide by 16 cm long;

(b) with a bold type heading in at least 18 point type and the body of the notice in a type not less than 10 point, Times New Roman font and right and left justified; and

3. Orders that Harbin pay the applicant’s costs of the application.

4. Directs that a copy of these orders and the reasons for judgment be served on the auditor appointed by Harbin to audit annually its Compliance Program pursuant to its undertaking accepted by the applicant on 21 September 2004, and that the ACCC be given written notification of that service within 14 days of such service.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

FINN J

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Established by: FINN J

In its amended application, the ACCC now seeks relief by way of:1. a declaration as to the contraventions of s 52 and s 53(e) of the Act;2.an injunction for a period of five years to restrain Harbin from making a similar misrepresentation in relation to the sale price of a particular good (to put the matter inexactly); 3.an order for corrective advertising;4.an order under s 86C(2)(b) for a probation order and associated orders; and5.costs.I will deal with these in turn. 1. A Declaration Harbin does not oppose the making of a declaration. It objected to the ACCC’s original proposals (which sought two separate declarations) and advanced its own proposed declaration. The ACCC in its amended application proposed a slight variant on Harbin’s. As I indicated at the hearing, I will make the declaration in the form Harbin proposed. While the ACCC’s proposal is the more simple, Harbin’s is the clearer. And the matter, in my view, is an appropriate one for the grant of declaratory relief. For businesses which rely upon newspaper advertisements as a regular vehicle for inviting consumer interest in bargains, sales, etc, the prospect of having a declaration made against it can be salutary when, as I note below, it is linked with an order for corrective advertising.2. An Injunction It is well accepted that an injunction is a discretionary remedy and will not be awarded as of course on proof of a contravention of the TP Act: BMW Australia at [35]-[36]. As the Full Court observed in Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (in liquidation) (2007) 161 FCR 513 at [111]:Many contraventions simply will not justify injunctive relief. We doubt whether unintentional misconduct in contravention of s 52 would lead to such relief.It is necessary for a claimant “to demonstrate that the injunction will serve a purpose”: ibid; though it is unnecessary to that end to show that commission, continuance, or repetition of contravening conduct is threatened or apprehended: see s 80(4) and BMW Australia at [36]. In the present matter the ACCC seeks to find justification for the grant of an injunction (albeit in appropriately limited terms that can be clearly understood and practically complied with: cf Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd (No 2) (2008) ATPR 42-230) in the following considerations (i) there is a need to prevent recurrence of contraventions given the inadequate procedures Harbin had in place at the time; (ii) inadequate investigations of the circumstances were made; (iii) Harbin has indicated it intends to continue to engage in two price advertising; (iv) Harbin has not provided documentary reassurance to the ACCC; and (v) the contravention occurred while Harbin had a compliance program in place. For my own part, I am not satisfied that it is appropriate in the circumstances to sanction Harbin’s single and unintentional contravention of the Act with the imposition of an injunction. If it be the case that Harbin needs further to be sensitised to the seriousness of breaching the TP Act and to be made more attentive to the purposes of its compliance program, this can be achieved by other more appropriate means which can be adapted to Harbin’s particular circumstances, as I will indicate. Harbin has already demonstrated preparedness to change its procedures. I should add, I do not accept that its conduct after the contravention reflects so adversely upon it as to provide some justification for the award of injunctive relief.3. Corrective Advertising

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SAD 179 of 2007

BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant
AND:	HARBIN PTY LTD (ACN 005 339 328) Respondent

JUDGE:	FINN J
DATE OF ORDER:	28 NOVEMBER 2008
WHERE MADE:	ADELAIDE