Australian Competition and Consumer Commission v Australian Purchasing and Tender Service Pty Ltd

[1998] FCA 1781

FEDERAL COURT OF AUSTRALIA

TRADE PRACTICES – misleading and deceptive conduct – documents distributed suggesting Government affiliation when none existed – suggesting a requirement by law that the recipient pay a registration fee and register its business on sender’s database when no such requirement – suggesting that the recipient would be unable to supply products or services to Government departments or other Government bodies if it did not pay a registration fee and register its business when no such restriction existed – breadth of orders required to restrain such conduct.

Trade Practices Act 1974 (Cth) ss 6A, 52, 53(aa), 53(c), 53(d), 53(f), 55A, 75B

Federal Court Rules O 32 r 2

ACCC v Australian Business Reports Pty Ltd (Finn J, 20 August 1997, unreported – Judgment No 894 of 1997 referred to
ACCC v Optell Pty Ltd (1998) ATPR 41-640 referred to
Yorke v Lucas (1985) 158 CLR 661 referred to

AUSTRALIAN COMPETITION & CONSUMER COMMISSION v AUSTRALIAN PURCHASING & TENDER SERVICE PTY LTD (ACN 078 755 165) AND SUZANNE JOHNSTON AND CLINTON ANDELA
WG 109 OF 1997

LEE J

27 JULY 1998
PERTH

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WG 109 OF 1997

BETWEEN:

AUSTRALIAN COMPETITION & CONSUMER COMMISSION
Applicant

AND:

AUSTRALIAN PURCHASING & TENDER SERVICE PTY LTD (ACN 078 755 165)
First Respondent

SUZANNE JOHNSTON
Second Respondent

CLINTON ANDELA
Third Respondent

JUDGE:

LEE J

DATE OF ORDER:

27 JULY 1998

WHERE MADE:

PERTH

THE COURT ORDERS AND DECLARES THAT:

1.        APTS, by sending by mail to businesses within Australia documents comprising:

(i)a form headed “Government Purchasing and Tender Index”, together with

(ii)a reply-paid envelope addressed to “Government Purchasing and Tender Index” at a post office box address, and enclosed inside

(iii)an envelope marked, inter alia, “OHMS”,

purporting to be sent by an organization named the Government Purchasing and Tender Index (“GPTI”) containing representations that:

(a)GPTI was a Government body or was affiliated with Government; whereas it was not;

(b)the addressee was required by law to register with GPTI for inclusion in a database prepared by GPTI entitled the Government Purchasing and Tender Index national database (“the database”), whereas there was no such requirement; and

(c)the addressee would only be able to supply products or services to Government departments or other Government bodies if registered with GPTI and included on the database, whereas there was no such requirement,

in respect of each such representation, in trade or commerce, has engaged in conduct that is misleading or deceptive, contrary to s 52 of the Act.

2.APTS, by sending by mail to businesses within Australia the GPTI forms purporting to be sent by GPTI containing representations that:

(a)GPTI was a Government body or was affiliated with Government, whereas it was not;

(b)the addressee was required by law to register with GPTI for inclusion in the database, whereas there was no such requirement; and

(c)the addressee would only be able to supply products or services to Government departments or other Government bodies if registered with GPTI and included on the database, whereas there was no such requirement,

in respect of such representations, in trade or commerce, by conduct in connection with the supply or possible supply of business and company listing and database services (“the services”), or in connection with the promotion of the supply or use of the services:

A.In respect of the representations at pars (a), (b) and (c) hereof, has falsely represented that the services are of a particular standard, quality, value or grade, contrary to s 53(aa) of the Act;

B.In respect of the representations at pars (a), (b) and (c) hereof, has represented that the services have approval, uses or benefits that they do not have contrary to s 53(c) of the Act;

C.In respect of the representations at par (a) hereof, has represented that APTS has approval or affiliation that APTS does not have contrary to s 53(d) of the Act; and

D.In respect of the representations at par (b) and par (c) hereof, has made a false or misleading representation concerning the need for the services contrary to s 53(f) of the Act.

3.        APTS, by sending by mail to businesses within Australia the GPTI forms purporting to be sent by GPTI containing representations that:

(a)GPTI was a Government body or was affiliated with Government, whereas it was not;

(b)the addressee was required by law to register with GPTI for inclusion in the database, whereas there was no such requirement; and

(c)the addressee would only be able to supply products or services to Government departments or other Government bodies if registered with GPTI and included on the database, whereas there was no such requirement

in respect of each such representation, in trade or commerce, has engaged in conduct that is liable to mislead the public as to the nature, the characteristics or the suitability for their purpose of the services contrary to s 55A of the Act.

4.Johnston, by authorizing the making of the representations set out in pars 1, 2 and 3 above, has been, directly or indirectly, knowingly concerned in, or party to, the contraventions of the Act by APTS set out at pars 1, 2 and 3 above.

5.Andela, by acting as agent for or on behalf of APTS in connection with, inter alia, the acquisition by APTS of the post office boxes referred to in the GPTI forms and the reply-paid services under which the reply-paid envelopes were enclosed as part of the GPTI forms, has been, directly or indirectly, knowingly concerned in, or party to, the contraventions of the Act by APTS set out at pars 1, 2 and 3 above.

6.APTS, whether by itself, its servants, agents or howsoever, in trade or commerce, be restrained from supplying or offering to supply or promoting the supply to any person of any form of index, register, directory or list of businesses or persons, howsoever described:

(a)represented as provided by a Government department or other Government body or as affiliated with Government, when such index, register, directory or list of businesses or persons is not so provided or affiliated;

(b)where registration for such index, register, directory or list of businesses or persons is represented as required by law, when there is no such requirement;

(c)where registration for such index, register, directory or list of businesses or persons is represented as required in order for any person to supply products or services to Government departments or other Government bodies, when there is no such requirement;

(d)represented as having been prepared by an organization with a presence at a particular office, when that office is a serviced office only.

7.APTS, whether by itself, its servants, agents or howsoever, in trade or commerce, be restrained from supplying or offering to supply or promoting the supply to any person of any form of business or company listing or database services:

(a)represented as provided by a Government department or other Government body or as affiliated with Government, when such business or company listing or database services are not so provided or affiliated;

(b)where registration for such business or company listing or database services is represented as required by law, when there is no such requirement;

(c)where registration for such business or company listing or database services is represented as required in order for any person to supply products or services to Government departments or other Government bodies, when there is no such requirement;

(d)represented as having been prepared by an organization with a presence at a particular office when that office is a serviced office only.

8.APTS, whether by itself, its servants, agents or howsoever, be restrained in trade or commerce, from operating, publishing or promoting, directly or indirectly, any form of index, register, directory or list of businesses or persons.

9.Johnston be restrained from being in any way, directly or indirectly, knowingly concerned in or party to the supply, or offer to supply or the promotion of the supply, to any person, by conduct which involves the use of postal, telegraphic or telephonic services, of any form of index, register, directory or list of businesses or persons, howsoever described:

(a)represented as provided by a Government department or other Government body or as affiliated with Government, when such index, register, directory or list of businesses or persons is not so provided or affiliated;

(b)where registration for such index, register, directory or list of businesses or persons is represented as required by law, when there is no such requirement;

(c)where registration for such index, register, directory or list of businesses or persons is represented as required in order for any person to supply products or services to Government departments or other Government bodies when there is no such requirement;

(d)represented as having been prepared by an organization with a presence at a particular office when that office is a serviced office only.

10.Johnston be restrained from, by conduct which involves the use of postal, telegraphic or telephonic services, operating, publishing or promoting, directly or indirectly, any form of index, register, directory or list of businesses or persons.

11.Andela be restrained from being in any way, directly or indirectly, knowingly concerned in or party to the supply, or offer to supply or the promotion of the supply, to any person, by conduct which involves the use of postal, telegraphic or telephonic services, of any form of index, register, directory or list of businesses or persons, howsoever described:

(a)represented as provided by a Government department or other Government body or as affiliated with Government, when such index, register, directory or list of businesses or persons is not so provided or affiliated;

(b)where registration for such index, register, directory or list of businesses or persons is represented as required by law, when there is no such requirement;

(c)where registration for such index, register, directory or list of businesses or persons is represented as required in order for any person to supply products or services to Government departments or other Government bodies when there is no such requirement;

(d)represented as having been prepared by an organization with a presence at a particular office when that office is a serviced office only.

12.Andela be restrained from, by conduct which involves the use of postal, telegraphic or telephonic services, operating, publishing or promoting, directly or indirectly, any form of index, register, directory or list of businesses or persons.

13.Johnston and Andela pay the ACCC’s costs of the action, including any reserved costs, to be taxed.

14.There be liberty to the ACCC to apply for further orders in respect of Johnston and Andela.

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

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WG 109 OF 1997

BETWEEN:

AUSTRALIAN COMPETITION & CONSUMER COMMISSION
Applicant

AND:

AUSTRALIAN PURCHASING & TENDER SERVICE PTY LTD (ACN 078 755 165)
First Respondent

SUZANNE JOHNSTON
Second Respondent

CLINTON ANDELA
Third Respondent

JUDGE:	LEE J
DATE:	27 JULY 1998
PLACE:	PERTH

REASONS FOR JUDGMENT

1. The applicant (“the ACCC”) seeks orders under the Trade Practices Act 1974 (Cth) (“the Act”) in respect of contraventions of ss 52, 53(aa), 53(c), 53(d), 53(f), 55A of the Act alleged to have been committed by the corporation (“APTS”). Pursuant to s 75B the second respondent (“Johnston”) and the third respondent (“Andela”) are said to have been persons involved in such contraventions of the Act.

2. The ACCC is a body corporate established by s 6A of the Act entitled to seek such orders for relief under the Act.

3. The proceedings were commenced by an application filed in October 1997. Orders for interim relief were made on 9 and 23 October 1997. At that time solicitors instructed by APTS, Johnston and Andela instructed counsel to appear on the interlocutory hearing for interim relief to oppose the orders sought. Those solicitors filed an appearance on behalf of all respondents on 24 October 1997. On 1 December 1997 APTS was placed in liquidation by a resolution of members. On 1 May 1998 leave was granted to the ACCC to continue the proceeding against APTS subject to any judgment against APTS not being executed without leave of the Court. That order was made with the consent of the liquidator. Thereafter, the liquidator took no part in the proceeding.

4. At material times Johnston was a director of APTS. She did not appear on the hearing of the application. Andela, as explained later in these reasons, was a person who carried out significant acts on behalf of APTS. Andela did not appear on the hearing of the application. Both Johnston and Andela had been duly served with process. No defence was filed by any respondent.

5. Pursuant to O 32 r 2 of the Federal Court Rules I directed that the trial proceed notwithstanding that no respondent had appeared at the hearing.

6. The applicant’s case was presented in a number of affidavits which established the following facts.

7. From late August 1997, and for some months thereafter, APTS distributed to various businesses throughout Australia a document (“the form”) which, it was submitted by the ACCC, represented –

   (a)that APTS as a Government body, or as an entity authorized by, or affiliated with, Government, maintained a “register of businesses able to supply products and/or services to Government Departments”; and

   (b)that only businesses recorded on that “register” would be eligible to be invited to provide products or services to “Government Departments”.

8. The form advised recipients that “This form should be lodged by the 10^th October 1997 together with the registration fee”. The “registration fee” was described as “12 Months: $197.00 - 24 Months: $296.00”. Cheques were to be made payable to “Australian Purchasing & Tender Service (APTS)”.

9. A reply-paid envelope was included in the distributed material. The envelope was addressed to a post office box at the General Post Office in the State in which the form was distributed. A standing instruction was given to Australia Post by APTS to re-direct all envelopes returned to such post office boxes to another post office box at Bundall in Queensland.

10. The set-out, style and colour of the print, and the content of the form represented that it was a form prepared by a Government office or department, or for Government purposes. The form was posted to businesses in envelopes marked “OHMS”. The heading of the form, “Government Purchasing & Tender Index”, was printed over an outline of a map of Australia. The form bore a purported “bar code” and a “GPTI Reference no:” and provided for an applicant for “registration” to complete and sign a “Declaration” that the information contained in the form was “accurate at the time of signing”. The form represented that the “Index” was maintained at “Section 1, 134 Bunda St, Canberra City ACT 2601”.

11. Relevant parts of the text of the form read as follows:

    “IMPORTANT NOTICE

    Registrations are currently available for businesses able to supply products and/or services to Government Departments.

    Opportunities currently exist for a wide range of products and services to be included on the Government Purchasing and Tender Index national database designed to assist purchasing departments to fulfill [sic] their purchasing/tender requirements.

    In accordance with the recent changes to Government Purchasing policies, businesses now have a greater opportunity to tender for Government contracts with the services and assistance of the Government Purchasing & Tender Index.

    The Government Purchasing & Tender Index has been administered to provide purchasing authorities with a detailed up to date database and reference for product and service information by industry and location.

    By returning this completed application form you will automatically be placed on the Government Purchasing & Tender Index database.

    Registration incorporates your automatic entry on the database. Government Purchasing and Tender Authorities are able to access this database immediately. You will also receive immediate purchasing & tender application assistance.

    If your business is available to supply products and/or services to Government Departments and you would like to register to be included in the Government Purchasing & Tender Index please complete this application form and return with payment in the reply paid envelope provided.

    Upon receipt of your completed application form and payment you will be issued with a registration number. Please quote this registration number on all correspondence.

    …

    A BRIEF GUIDE TO GOVERNMENT PURCHASING POLICY

    Government policy on the purchasing of products and services is through competitive tendering. The prime objective of this policy is to obtain best value for money. This means purchasing the products and service [sic] that best match the purchasers [sic] specifications with consideration to quality, environmental performance, delivery, service and price. It is also Government policy to pay suppliers on time. The Government is committed to promoting fair and open competition by making the best use of the skills from the private sector. It is the purpose of the Government Purchasing & Tender Index (GPTI) to provide purchasing departments with suppliers, key contact names and business information to assist them in purchasing from the private sector.”

12. The foregoing conduct of APTS involved elements of sharp practice. The bar code was bogus. There was no “Index” maintained under Government authority for the recording of businesses able to provide goods or services to Government departments and, ergo, there was no closing date and no requirement for registration on that “Index”. There was no “Index” maintained at the address in Canberra described as the address of “GPTI”. The envelopes marked “OHMS” were not used for Government purposes and APTS was not authorized by Government to so represent. APTS could not provide any service in the terms represented in the distributed form.

13. The evidence presented to the Court showed that approximately 1,800 businesses responded. APTS received approximately $400,000 in “registration fees”, none of which is in the hands of the liquidator.

14. The ACCC submitted that in contravention of the Act, APTS –

(a)had engaged in conduct in trade or commerce that was misleading or deceptive, contrary to s 52 of the Act;

(b)had made a false representation that services of a particular standard were supplied by APTS, contrary to s 53(aa) of the Act;

(c)had represented that services supplied by APTS had an approval they did not have, contrary to s 53(c) of the Act;

(d)had represented that APTS had an approval or affiliation it did not have, contrary to s 53(d) of the Act;

(e)had made a false representation concerning the need for services, contrary to s 53(f) of the Act; and

(f)had engaged in conduct liable to mislead the public as to the nature, characteristics, suitability for their purpose of services, contrary to s 55A of the Act.

1. I am satisfied that each alleged contravention of the Act was committed by reason of the conduct deposed to in the uncontested affidavits, such conduct being audacious, elaborate and fraudulent. It was a matter of concern that such conduct appears to have had counterparts in other proceedings in this Court. (See: ACCC v Australian Business Reports Pty Ltd, (Finn J, 20 August 1997, unreported - Judgment No 894 of 1997); ACCC v Optell Pty Ltd (1998) ATPR 41-640). In ACCC v Optell orders had been made restraining Andela from engaging in, or being involved in, similar conduct at the time he participated in conduct in this matter to give effect to the scheme described.

1. I am satisfied by the material that Andela, although not formally a director, directed the operations of APTS in significant respects and that he instructed Johnston in the acts she carried out on behalf of APTS. Telephone and facsimile numbers used by APTS were numbers set out on a business card used by Andela found on APTS premises. The Bundall address for APTS is the address on Andela’s business card. A conversation between an investigating officer of the ACCC and Andela shows that Andela was aware of the facts which revealed the nature of the conduct of APTS in this matter. He organized the GPO boxes in each State and the re-direction of the reply-paid envelopes returned to those boxes. The whole of the material presents the inference that he was the person who controlled operations of the APTS. He was a person involved in contraventions of the Act by APTS.

2. I am also satisfied by the extensive material in the affidavits that Johnston took part in the distribution of the forms by posting them in envelopes marked “OHMS” and in the collection of monies forwarded to APTS. When interviewed by an investigating officer of the ACCC Johnston showed awareness of material facts that would make her acts the acts of a person involved in the contraventions of the Act by APTS. (See: Yorke v Lucas (1985) 158 CLR 661 at 670.)

3. I am satisfied that orders should be made in terms which are broad enough to provide protection for the public, assistance to the liquidator, and to deter others from engaging in similar conduct.

4. Declarations and orders will be made in the following terms:

   1.        APTS, by sending by mail to businesses within Australia documents comprising:

   (i)a form headed “Government Purchasing and Tender Index”, together with

   (ii)a reply-paid envelope addressed to “Government Purchasing and Tender Index” at a post office box address, and enclosed inside

   (iii)an envelope marked, inter alia, “OHMS”,

   purporting to be sent by an organization named the Government Purchasing and Tender Index (“GPTI”) containing representations that:

   (a)GPTI was a Government body or was affiliated with Government; whereas it was not;

   (b)the addressee was required by law to register with GPTI for inclusion in a database prepared by GPTI entitled the Government Purchasing and Tender Index national database (“the database”), whereas there was no such requirement; and

   (c)the addressee would only be able to supply products or services to Government departments or other Government bodies if registered with GPTI and included on the database, whereas there was no such requirement,

   in respect of each such representation, in trade or commerce, has engaged in conduct that is misleading or deceptive, contrary to s 52 of the Act.

   2.APTS, by sending by mail to businesses within Australia the GPTI forms purporting to be sent by GPTI containing representations that:

   (a)GPTI was a Government body or was affiliated with Government, whereas it was not;

   (b)the addressee was required by law to register with GPTI for inclusion in the database, whereas there was no such requirement; and

   (c)the addressee would only be able to supply products or services to Government departments or other Government bodies if registered with GPTI and included on the database, whereas there was no such requirement,

   in respect of such representations, in trade or commerce, by conduct in connection with the supply or possible supply of business and company listing and database services (“the services”), or in connection with the promotion of the supply or use of the services:

   A.In respect of the representations at pars (a), (b) and (c) hereof, has falsely represented that the services are of a particular standard, quality, value or grade, contrary to s 53(aa) of the Act;

   B.In respect of the representations at pars (a), (b) and (c) hereof, has represented that the services have approval, uses or benefits that they do not have contrary to s 53(c) of the Act;

   C.In respect of the representations at par (a) hereof, has represented that APTS has approval or affiliation that APTS does not have contrary to s 53(d) of the Act; and

   D.In respect of the representations at par (b) and par (c) hereof, has made a false or misleading representation concerning the need for the services contrary to s 53(f) of the Act.

   3.        APTS, by sending by mail to businesses within Australia the GPTI forms purporting to be sent by GPTI containing representations that:

   (a)GPTI was a Government body or was affiliated with Government, whereas it was not;

   (b)the addressee was required by law to register with GPTI for inclusion in the database, whereas there was no such requirement; and

   (c)the addressee would only be able to supply products or services to Government departments or other Government bodies if registered with GPTI and included on the database, whereas there was no such requirement

   in respect of each such representation, in trade or commerce, has engaged in conduct that is liable to mislead the public as to the nature, the characteristics or the suitability for their purpose of the services contrary to s 55A of the Act.

   4.Johnston, by authorizing the making of the representations set out in pars 1, 2 and 3 above, has been, directly or indirectly, knowingly concerned in, or party to, the contraventions of the Act by APTS set out at pars 1, 2 and 3 above.

   5.Andela, by acting as agent for or on behalf of APTS in connection with, inter alia, the acquisition by APTS of the post office boxes referred to in the GPTI forms and the reply-paid services under which the reply-paid envelopes were enclosed as part of the GPTI forms, has been, directly or indirectly, knowingly concerned in, or party to, the contraventions of the Act by APTS set out at pars 1, 2 and 3 above.

   6.APTS, whether by itself, its servants, agents or howsoever, in trade or commerce, be restrained from supplying or offering to supply or promoting the supply to any person of any form of index, register, directory or list of businesses or persons, howsoever described:

   (a)represented as provided by a Government department or other Government body or as affiliated with Government, when such index, register, directory or list of businesses or persons is not so provided or affiliated;

   (b)where registration for such index, register, directory or list of businesses or persons is represented as required by law, when there is no such requirement;

   (c)where registration for such index, register, directory or list of businesses or persons is represented as required in order for any person to supply products or services to Government departments or other Government bodies, when there is no such requirement;

   (d)represented as having been prepared by an organization with a presence at a particular office, when that office is a serviced office only.

   7.APTS, whether by itself, its servants, agents or howsoever, in trade or commerce, be restrained from supplying or offering to supply or promoting the supply to any person of any form of business or company listing or database services:

   (a)represented as provided by a Government department or other Government body or as affiliated with Government, when such business or company listing or database services are not so provided or affiliated;

   (b)where registration for such business or company listing or database services is represented as required by law, when there is no such requirement;

   (c)where registration for such business or company listing or database services is represented as required in order for any person to supply products or services to Government departments or other Government bodies, when there is no such requirement;

   (d)represented as having been prepared by an organization with a presence at a particular office when that office is a serviced office only.

   8.APTS, whether by itself, its servants, agents or howsoever, be restrained in trade or commerce, from operating, publishing or promoting, directly or indirectly, any form of index, register, directory or list of businesses or persons.

   9.Johnston be restrained from being in any way, directly or indirectly, knowingly concerned in or party to the supply, or offer to supply or the promotion of the supply, to any person, by conduct which involves the use of postal, telegraphic or telephonic services, of any form of index, register, directory or list of businesses or persons, howsoever described:

   (a)represented as provided by a Government department or other Government body or as affiliated with Government, when such index, register, directory or list of businesses or persons is not so provided or affiliated;

   (b)where registration for such index, register, directory or list of businesses or persons is represented as required by law, when there is no such requirement;

   (c)where registration for such index, register, directory or list of businesses or persons is represented as required in order for any person to supply products or services to Government departments or other Government bodies when there is no such requirement;

   (d)represented as having been prepared by an organization with a presence at a particular office when that office is a serviced office only.

   10.Johnston be restrained from, by conduct which involves the use of postal, telegraphic or telephonic services, operating, publishing or promoting, directly or indirectly, any form of index, register, directory or list of businesses or persons.

   11.Andela be restrained from being in any way, directly or indirectly, knowingly concerned in or party to the supply, or offer to supply or the promotion of the supply, to any person, by conduct which involves the use of postal, telegraphic or telephonic services, of any form of index, register, directory or list of businesses or persons, howsoever described:

   (a)represented as provided by a Government department or other Government body or as affiliated with Government, when such index, register, directory or list of businesses or persons is not so provided or affiliated;

   (b)where registration for such index, register, directory or list of businesses or persons is represented as required by law, when there is no such requirement;

   (c)where registration for such index, register, directory or list of businesses or persons is represented as required in order for any person to supply products or services to Government departments or other Government bodies when there is no such requirement;

   (d)represented as having been prepared by an organization with a presence at a particular office when that office is a serviced office only.

   12.Andela be restrained from, by conduct which involves the use of postal, telegraphic or telephonic services, operating, publishing or promoting, directly or indirectly, any form of index, register, directory or list of businesses or persons.

   13.Johnston and Andela pay the ACCC’s costs of the action, including any reserved costs, to be taxed.

   14.There be liberty to the ACCC to apply for further orders in respect of Johnston and Andela.

I certify that the preceding (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee.

Associate:

Dated:             

Counsel for the Applicant:	N W McKerracher QC
Solicitor for the Applicant:	Australian Government Solicitor
No appearance for the First, Second and Third Respondents.
Date of Hearing:	27 July 1998
Date of Judgment:	27 July 1998