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Australian Competition and Consumer Commission v Albert

Australian Competition and Consumer Commission v Albert

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FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v Albert [2005] FCA 1311
TRADE PRACTICES – Remedies – declaratory and injunctive relief – consent orders –power to make orders – whether appropriate to make orders
Trade Practices Act 1974 (Cth) – ss 51A, 51AD, 52, 58, 59, 75B, 80
Federal Court Act 1976 (Cth) – s 21
Corporations Act 2001 (Cth) - s 471A
Federal Court Rules – Order 35A rule 2
Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 referred to
Arthur v Vaupotic Investments Pty Limited [2005] FCA 433 applied
Australian Competition and Consumer Commission v 1Cellnet LLC [2005] FCA 856 applied
Australian Competition and Consumer Commission v Australian Securities and Investment Commission (2000) 174 ALR 688 referred to
Australian Competition and Consumer Commission v Black on White Pty Limited
(2001) 110 FCR 1 referred to
Australian Competition and Consumer Commission v Goldy Motors Pty (2001) ATPR 41-801 referred to
Australian Competition and Consumer Commission v Real Estate Institute of Western Australia (1999) 95 FCR 114 referred to
Australian Competition and Consumer Commission v Target (2001) ATPR 41-840 referred to
Australian Competition and Consumer Commission v Z-Tek Computer Pty Limited (1997) 78 FCR 197 referred to
Australian Federation of Construction Contractors v Australian Building Construction Employees’ v Builders Labourers’ Federation (1984) 73 FLR 61 referred to
Australian Securities Commission v McLeod (1994) 54 FCR 309 referred to
BMW Australia Limited v Australian Competition and Consumer Commission (2004) 207 ALR 452 referred to
Commissioner of Taxation v Finn (1960) 103 CLR 165 referred to
Corporate Affairs Commission (NSW) v Transphere Pty Limited (1988) 15 NSWLR 596 referred to
Grey v Mango Pre Paid Calling Cards Pty Limited [2004] FCA 1664 referred to
ICI Australia Operations Pty Limited v Trade Practices Commission (1992) 38 FCR 248 referred to
Matheson Engineers Pty Limited v El Raghy (1992) 37 FCR 6 applied
News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 referred to
Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (1993) 41 FCR 89 referred to
Trade Practices Commission v GLO Juice (1987) 73 ALR 407 referred to
Trade Practices Commission v Santos Limited [1993] ATPR 41-221 referred to
Trade Practices Commission v Walplan Pty Limited (1985) 7 FCR 495 referred to
Truth about Motorways Pty Limited v Macquarie Infrastructure Investment Management (1999) 200 CLR 591 referred to
Zomba Production Music (Australia) Pty Limited v Roadhouse Productions Pty Limited (2001) 190 ALR 288 referred to
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v DANIEL ALBERT AND GREGORY ZIMBULIS
NSD 472 of 2005
JACOBSON J
20 SEPTEMBER 2005
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 472 of 2005

BETWEEN:

AUSTRALIAN COMPETITION
AND CONSUMER COMMISSION
APPLICANT

AND:

DANIEL KIVE ALBERT
FIRST RESPONDENT

GREGORY GEORGE ZIMBULIS
SECOND RESPONDENT

JUDGE:

JACOBSON J

DATE OF ORDER:

20 SEPTEMBER 2005

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.Within 14 days the parties are to provide draft short minutes of order giving effect…

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: [2005] FCA 1311
Decision Date: 20 SEPTEMBER 2005

CaseChat Overview and Summary

The case before the court involved the Australian Competition and Consumer Commission (ACCC) suing Albert, along with several companies he was associated with, for breaches of the Franchising Code of Conduct. The ACCC sought declaratory and injunctive relief, as well as consent orders, against the respondents. The respondents had engaged in the sale of franchise agreements for services provided by their companies without complying with the necessary regulations under the Franchising Code of Conduct.

The primary legal issue for the court was whether it was appropriate to make the proposed orders in light of the respondents' non-compliance with the Franchising Code of Conduct. Specifically, the court needed to consider whether the introduction of Order 35A of the Federal Court Rules meant that proof of the applicant's claims could be dispensed with when the application was supported by a statement of claim. The court also had to assess whether the orders proposed by the parties were appropriate and whether they complied with the relevant legal standards.

The court found that the introduction of Order 35A did indeed allow for the making of orders without the need for additional evidence, as long as the claim on the face of the statement of claim was sufficient. However, the court was cautious about the broadness of the proposed consent orders and considered it necessary to narrow the scope of these orders. The court concluded that some of the proposed orders were too extensive and did not sufficiently reflect the specific breaches that had occurred. The court thus decided to limit the consent orders to those that directly addressed the breaches and ensured compliance with the Franchising Code of Conduct.

The final orders made by the court required the parties to provide draft short minutes of order within 14 days, reflecting the reasons for the judgment and ensuring that the orders were properly tailored to address the specific breaches identified. The court's decision thus provided a balanced approach that upheld the integrity of the Franchising Code of Conduct while also accommodating the consent orders proposed by the parties.

Orders

Orders of the court

1. Within 14 days the parties are to provide draft short minutes of order giving effect to the reasons of judgment delivered today.

Background

Background to the litigation

However, recent authorities indicate that the introduction of Order 35A of the Federal Court Rules eliminates the requirement of proof by way of evidence of the applicant’s claims, at least where the application is supported by a statement of claim. All that is necessary is that on the face of the statement of claim there is a claim for the relief sought and jurisdiction to grant the relief: Arthur v Vaupotic Investments Pty Limited [2005] FCA 433 at [3] per Heerey J; see also Australian Competition and Consumer Commission v 1Cellnet LLC [2005] FCA 856 at [14] per RD Nicholson J. The Facts disclosed on the Pleading The essential facts disclosed on the face of the statement of claim may be summarised as set out below. The first respondent was Chief Executive Officer/Managing Director of three companies (jointly referred to as “the companies”) being i.e. Networks Pty Limited (“Networks”), Photo Safe Australia Pty Limited (“Photo Safe”) and Data Vault Services Pty Limited (“Data Vault”). He was also sole director of Networks and Photo Safe, sole shareholder of Networks, and a shareholder of Photo Safe and Data Vault. The second respondent was Sales Manager of the companies. The first and second respondents, for and on behalf of Networks, Photo Safe and Data Vault, engaged in the marketing, promotion and sale of distributorships for services provided by those companies. The Networks services were internet access terminals and mobile download terminals by which consumers could access the internet, their email account, send text messages and download mobile phone ring tones. The Photo Safe service was to duplicate and store photographs and negatives on compact disc and/or the internet. The Data Vault service was a service to facilitate the secure storage of data from a person’s computer. Between February 2002 and May 2004, Photo Safe and Data Vault entered into franchise agreements termed “Exclusive Agency Agreements” (“franchise agreements”) with various individuals and companies appointing them sole and exclusive agents for the promotion and sale of Photo Safe or Data Vault services. The franchisees provided consideration ranging between $60,000 and $160,000. The first and second respondents, for and on behalf of Networks, sought to enter into similar franchise agreements with various individuals. Several prospective franchisees paid between $15,000 and $76,000 as a deposit for the purchase of Networks terminals. Contrary to s 51AD of the Act, the companies failed to comply with various regulations in the Franchising Code of Conduct (“the Code”) prior to entering into the franchise agreements. The companies failed to give a copy of the Code to prospective franchisees (cl 10) and failed to create a disclosure document (reg 6). Photo Safe and Data Vault also failed to provide a current disclosure document to the franchisees, contrary to reg 6B and 10 of the Code. Furthermore, contrary to clause 11 of the Code, prior to entering into the franchise agreements, Photo Safe and Data Vault failed to obtain written statements from each of the franchisees that they had received, read and had reasonable opportunity to understand the disclosure document and the Code, and failed to obtain signed statements from each of the franchisees that they had been given independent advice about the proposed franchise agreements.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

JACOBSON J

I am content to make orders in these terms.Conclusion Since I decline to make some of the proposed consent orders, it will be a question for the parties to determine whether they are prepared to consent to the more confined orders which flow from the reasons which I have given. If the applicant does not oppose those orders it may do so without losing any right of appeal it would otherwise have; see Z-Tek at 205.

Ratio Decidendi

Legal Principle Established

Established by: JACOBSON J

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 472 of 2005

BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT
AND:	DANIEL KIVE ALBERT FIRST RESPONDENT GREGORY GEORGE ZIMBULIS SECOND RESPONDENT
JUDGE:	JACOBSON J
DATE OF ORDER:	20 SEPTEMBER 2005
WHERE MADE:	SYDNEY