ACCC v Top Snack Foods Pty Ltd - [1999] FCA 752

FEDERAL COURT OF AUSTRALIA
Australian Competition & Consumer Commission v Top Snack Foods Pty Ltd [1999] FCA 752
TRADE PRACTICES – misleading and deceptive conduct – application by Australian Competition & Consumer Commission for declarations and injunctive relief and on behalf of persons claiming to have suffered loss – whether reasonable grounds for making representations – sale of confectionery and snack food franchises – Trade Practices Act 1974 (Cth) ss 51A, 52, 80, 87(1A) and (1B)
DAMAGES – damages under Trade Practices Act 1974 (Cth) - not limited by analogy with contract, tort or equitable compensation – full effect given to the language of the sections – capital lost – unrewarded labour – interest on financing – anxiety – whether injunctive relief appropriate – public interest
WORDS AND PHRASES – “franchise”, “trials”, “public interest”
Trade Practices Act 1974 (Cth) ss 51A, 52, 80, 87(1A), 87(1B)
Marks v GIO Australia Holding Limited (1998) 158 ALR 333, applied
Gates v City Mutual Life Assurance Limited (1986) 160 CLR 1, cited
Cut Price Deli v Jaques (1994) 49 FCR 397, (1994) 126 ALR 413, followed
Netaf Pty Ltd v Bikane Pty Ltd (1990) 26 FCR 305, (1990) 92 ALR 490, followed
Collings Construction Co Pty Ltd v Australian Competition and Consumer Commission (1998) 152 ALR 510, cited
Humphries v TWT Ltd (1993) 120 ALR 693, cited
Trade Practices Commission v Optus Communications Pty Ltd (1996) ATPR 41-478, cited
AUSTRALIAN COMPETITION & CONSUMER COMMISSION v
TOP SNACK FOODS PTY LIMITED, GEORGE MANERA, NICHOLAS KRITHARAS, SELINA MANERA, ADWAY HOLDINGS PTY LTD AND NICK KRITHARAS HOLDINGS PTY LTD.
NG 782 OF 1996
TAMBERLIN J
SYDNEY
4 JUNE 1999

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 782 OF 1996

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant

AND:

TOP SNACK FOODS PTY LIMITED
First Respondent

GEORGE MANERA
Second Respondent

NICHOLAS KRITHARAS
Third Respondent

SELINA MANERA
Fourth Respondent

ADWAY HOLDINGS PTY LTD
Fifth Respondent

NICK KRITHARAS HOLDINGS PTY LTD
Sixth Respondent

JUDGE:

TAMBERLIN J

DATE:

4 JUNE 1999

PLACE:

SYDNEY

REASONS FOR JUDGMENT

This proceeding arises out of the marketing of a franchise scheme to prospective “distribution agents”. The scheme involves the distribution to commercial and industrial sites of boxes of “snack food” such as potato crisps, chocolate bars and other similar snack products. The applicant, the Australian Competition and Consumer Commission (“ACCC”) contends that during the marketing and operation of the scheme, the respondents engaged in or were involved in conduct that was misleading and deceptive in contravention of the Trade Practices Act 1974 (Cth) (“the TPA”).
The ACCC brings these proceedings pursuant to ss 80, 87(1A) and (1B) of the TPA alleging conduct in contravention of ss 51A, 52 and 59. The ACCC sought declarations against the first to fourth respondents, together with orders restraining the respondent companies, Top Snack Foods Pty Ltd (“Top Snack”), Adway Holdings Pty Ltd (“Adway”) and Nick Kritharas Holdings Pty Ltd (“N K Holdings”) from continuing to…

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: [1999] FCA 752
Decision Date: 4 JUNE 1999

CaseChat Overview and Summary

The Australian Competition and Consumer Commission (ACCC) commenced proceedings against Top Snack Foods Pty Ltd (Top Snack) and others, alleging that the respondents engaged in conduct that was misleading and deceptive in contravention of the Trade Practices Act 1974 (Cth) (TPA). The ACCC sought declarations, injunctive relief and damages on behalf of five franchisees who had invested in the respondents’ franchise scheme. The scheme involved the distribution of snack foods to commercial and industrial sites. The ACCC alleged that the respondents made numerous misrepresentations in relation to existing facts and future matters, designed to and did, in fact, induce the franchisees to enter into agreements to operate the franchise. The ACCC further alleged that the representations were made without reasonable grounds and that the conduct contravened ss 51A, 52 and 59 of the TPA. The respondents denied that they had engaged in any misleading or deceptive conduct. The Court found that the ACCC had established its case in respect of each of the five franchisees. The respondents had made various representations as to profitability, packing rates, the number of sites that could be serviced in a day, and the loss of customers in the early weeks of operation. The Court found that the evidence of the franchisees was convincing and that the respondents had not satisfied the Court that there were reasonable grounds for the representations. The Court found that the misleading conduct had caused each of the franchisees to enter into the franchise agreements and to continue to operate them. The Court found that the franchisees had suffered losses as a result of the misleading conduct and granted damages to the franchisees. The Court also granted injunctive relief against the respondents.

Orders