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Australian Competition and Consumer Commission v Chen

Australian Competition and Consumer Commission v Chen

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Case Copied 27 August 2003 34 min read

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FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v Chen [2003] FCA 897
TRADE PRACTICES – Application for a declaration that the respondent engaged in conduct in contravention of the Trade Practices Act 1952 (Cth) – respondent outside Australia - respondent operated and maintained unauthorised “imitation” Sydney Opera House website and associated sites – declaration appropriate to mark the Court’s disapproval of conduct.
TRADE PRACTICES – Application under s 80 of the Trade Practices Act 1952 (Cth) for injunctive relief – respondent outside Australia – evidence of international co-operation to curb fraudulent or misleading cross-border conduct – appropriate to take into account not only formal enforcement mechanisms, but likely response of administrative agencies in foreign country – grant of injunction not futile
Trade Practices Act 1952 (Cth), ss 6, 51A, 52, 53, 55A, 80, 87
Federal Court of Australia Act 1976 (Cth), s 21
Federal Court Rules, O 7 r 9, O 8 r 2
Foreign Judgments Act 1991 (Cth)
Foreign Judgments (Reciprocal Enforcement) Act 1933 (UK)
Australian Competition and Consumer Commission v The Shell Company of Australia (1997) 72 FCR 386 cited
Dow Jones & Company Inc v Gutnick (2002) 194 ALR 433 cited
Australian Competition and Consumer Commission v Hughes [2002] ATPR 41-863 cited
Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89 cited
Australian Competition and Consumer Commission v The IMB Group Pty Ltd (In Liq) [1999] ATPR 41-688 cited
ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 cited
National Australia Bank v Dessau [1988] VR 521 cited
Helicopter Utilities Pty Ltd v Australian National Airlines Commission (1961) 80 WN(NSW) 48 cited
Australian Competition and Consumer Commission v Purple Harmony Plates Pty Ltd (No 3) (2002) 196 ALR 576 cited
Re Liddell’s Settlement Trusts [1936] Ch 365 cited
Castanho v Brown & Root (UK) Ltd [1981] AC 557 cited
Hope v Hope (1854) 4 De G M & G 328; 43 ER 534 cited
Locabail International Finance Ltd v Agroexport [1986] 1 WLR 657 cited
ICF Spry, The Principles of Equitable Remedies (6^th ed, 2001)
P E Nygh and M Davies, Conflict of Laws in Australia (7^th ed, 2002)
D Harland “The Consumer in the Globalised Information Society – The Impact of International Organisations” (1999) 7 Comp & Cons LJ 1
D Ali, “Cross Border B2C Disputes” [2002] NZLJ 31
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v CHEN
N 1039 OF 2002
SACKVILLE J
SYDNEY
27 AUGUST 2003

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 1039 OF 2002

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
APPLICANT

AND:

RICHARD CHEN
RESPONDENT

JUDGE:

SACKVILLE J.

DATE OF ORDER:

27 AUGUST 2003

WHERE MADE:

SYDNEY

THE COURT:
DIRECTS the Applicant to bring in short minutes of order consistent with these reasons for judgment within 7 days.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

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: [2003] FCA 897
Decision Date: 27 AUGUST 2003

CaseChat Overview and Summary

The Australian Competition and Consumer Commission (ACCC) brought proceedings against Chen for alleged misleading and deceptive conduct in relation to the Sydney Opera House ticket sales. Chen was found to have operated several websites that were designed to mislead consumers into believing they were official Sydney Opera House ticket sales sites. The dispute was heard in the Federal Court of Australia. The primary legal issues before the court were whether Chen had contravened the Trade Practices Act 1974 (Cth) by engaging in misleading or deceptive conduct, and whether the court should grant the ACCC’s request for declaratory and injunctive relief.

The court considered the nature of Chen’s conduct and the potential harm to consumers if the misleading practices were allowed to continue. The court noted that while Chen’s websites no longer contained information about the Sydney Opera House and did not offer a ticket booking facility, there was no guarantee that Chen would not resume misleading activities in the future. The court held that the public interest in protecting consumers from misleading conduct warranted a declaration, as well as an injunction. However, the court decided that the form of the injunction should be narrower than requested by the ACCC. The court concluded that a declaration should be made in the terms sought by the ACCC, with the exception of a reference to section 53(d) of the Trade Practices Act, and that an injunction should be granted to prevent Chen from engaging in similar misleading conduct in the future.

The court's final orders included a declaration that Chen had engaged in misleading or deceptive conduct in relation to the Sydney Opera House, and an injunction preventing Chen from engaging in similar conduct in the future. The ACCC was directed to prepare minutes of order consistent with the court’s reasons. The decision underscores the importance of international cooperation to adequately protect consumers in the digital age, and the need for further measures to combat online fraud and misleading conduct.

Orders

Orders of the court

Full text does not contain this section.

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

SACKVILLE J

I add this comment. While domestic courts can, to a limited extent, adapt their procedures and remedies to meet the challenges posed by cross-border transactions in the Internet age, an effective response requires international co-operation of a high order. As the evidence in this case shows, some steps have been taken to secure that co-operation: see, too, D Harland “The Consumer in the Globalised Information Society – The Impact of International Organisations” (1999) 7 Comp & Cons LJ 1; D Ali, “Cross Border B2C Disputes” [2002] NZLJ 31 (“B2C” refers to “transnational business to consumer”). Clearly enough, much more needs to be done if Australian consumers are to be adequately protected against fraud or misleading conduct perpetrated over the Internet.CONCLUSION The ACCC has made out its claim to declaratory and injunctive relief by reason of the respondent’s contraventions of the TP Act, although the form of the injunction I propose to grant is narrower than that sought by the ACCC. I shall direct the ACCC to bring in short minutes of order consistent with these reasons.

Ratio Decidendi

Legal Principle Established

Established by: SACKVILLE J

It seems to me that this approach is also appropriate in determining whether or not to grant an injunction pursuant to s 80 of the TP Act. The fact that an order is likely to prove difficult or even impossible to enforce is not necessarily a bar to the grant of relief, although it is a material consideration to be weighed against other circumstances relevant to the exercise of the Court’s discretion.SHOULD A DECLARATION BE GRANTED? The declaration sought by the ACCC is in the following terms:“that the respondent, in connection with the Imitation Site, the Witestar Site and the WBO Site (as those terms are defined in the accompanying Statement of Claim):(a)engaged in conduct that was misleading or deceptive or was likely to mislead or deceive in contravention of section 52 of the Trade Practices Act 1974 (Cth);(b)made false or misleading representations in contravention of sections 53(c) and 53(d) of the Trade Practices Act 1974 (Cth);(c)engaged in conduct that was liable to mislead the public in relation to services in contravention of section 55A of the Trade Practices Act 1974 (Cth).”In my opinion, it is appropriate to make a declaration in these terms, subject to the qualification that, as I have previously indicated, the reference to s 53(d) of the TP Act should be omitted. I have taken into account the fact that the Sites no longer contain information relating to the Sydney Opera House and no longer purport to provide a facility for booking tickets at the venue. I have also taken into account that the current registrant of the domain name “sydneyopera.org” appears to have no connection with the respondent. However, I do not infer from these facts that there is no threat that the respondent will not resume his pattern of blatantly misleading and deceptive conduct in relation to the Sydney Opera House. The respondent has not appeared in the Court to explain what has happened in relation to the Sites and, of course, no undertakings have been given to refrain from misleading conduct in the future, either to this Court or to the United States authorities. The respondent appears still to be associated with at least two of the Sites and, given the pattern of misleading and deceptive conduct revealed in the evidence, there can be no assurance that the respondent will not use the Sites or create other web sites to convey misleading information to Australian consumers (and consumers elsewhere) about the availability and sale of tickets to Sydney Opera House events. As the Full Court recognised in Tobacco Institute v AFCO, the public interest in protecting Australian consumers from misleading conduct often warrants the making of a declaration. A declaration also marks the Court’s disapproval of the respondent’s conduct and, if appropriate, can be used to inform consumers of the dangers posed by the respondent’s operation of the Sites. I think that these considerations justify making a declaration in the present case in the terms to which I have referred.SHOULD AN INJUNCTION BE GRANTED?

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1039 OF 2002

BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT
AND:	RICHARD CHEN RESPONDENT
JUDGE:	SACKVILLE J.
DATE OF ORDER:	27 AUGUST 2003
WHERE MADE:	SYDNEY