Australian Competition and Consumer Commission v Office Link (Aust) Pty Ltd
[1997] FCA 1265
•21 NOVEMBER 1997
FEDERAL COURT OF AUSTRALIA
TRADE PRACTICES - injunctions and orders - applicant claimed declaratory, injunctive and other relief in respect of alleged contraventions by respondent of s 52, 53(e), 53(g) and 53C of Trade Practices Act - parties reached settlement - application for final orders by consent, including order for implementation by respondent of a trade practices compliance program - Court’s power under s 80 of the Trade Practices Act to grant injunction “in such terms as the Court determines to be appropriate” - whether Court may order implementation of compliance program in relation to Trade Practices Act generally or whether it must be limited in scope to provisions in respect of which contravention is alleged or established - scope of appropriate compliance order.
Trade Practices Act 1974 (Cth) s 80
Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (Federal Court of Australia, Merkel J, 3 September 1997, unreported Judgment No 871/97) followed
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v.
OFFICE LINK (AUST) PTY LTD
No. WAG 89 of 1997
CARR J
PERTH
21 NOVEMBER 1997
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
WAG 89 of 1997
BETWEEN:
AUSTRALIAN COMPETITION AND CONSUMER
COMMISSION
ApplicantAND:
OFFICE LINK (AUST) PTY LTD
(ACN 066 656 942)
RespondentJUDGE: CARR J DATE OF ORDER: 21 NOVEMBER 1997 WHERE MADE: PERTH
MINUTE OF ORDERS:
BY CONSENT THE COURT ORDERS THAT:
There be a declaration that:
By causing to be published the respondent’s advertisement for a Motorola d160 Digital Mobile mobile telephone (“the Motorola telephone”) in “The West Australian” newspaper of 9 July 1997 containing representations that:
(i)the Motorola telephone could be purchased for $9.00;
(ii)a purchaser of the Motorola telephone would in addition pay only for the calls that such purchaser makes; and
(iii)a purchaser of the Motorola telephone would receive as a bonus Voice Mail Access with no monthly access fees;
where the advertisement did not disclose or did not sufficiently disclose that:
(a)the respondent was not in fact offering for sale the Motorola telephone but was in fact offering for sale a package comprising the Motorola telephone and the services of Vodac Pty Ltd requiring entry into an agreement with Vodac Pty Ltd for a period of 15 months at a minimum cost of $450.00 together with a connection fee of $65.00 (“the Vodac services”);
(b)it was a condition of a purchaser acquiring the Motorola telephone for $9.00 that the acquirer also purchase the Vodac services;
(c)if a purchaser wished to acquire only the Motorola telephone and not the Vodac services as well, the price for the telephone was more than $9.00;
(d)the full cash price of the package was $524.00; and
(e)call retrieval costs would apply to Voice Mail Access
the respondent has, in trade or commerce:
(A)engaged in conduct that was misleading or deceptive or was likely to mislead or deceive contrary to section 52 of the Trade Practices Act 1974 (“the Act”);
(B)in connection with the supply or possible supply of, or with the promotion of the supply of, goods, being mobile telephones, and services, being associated mobile telephone services, (collectively referred to hereafter as “mobile phone packages”) made false or misleading representations with respect to the price of goods or services contrary to s 53(e) of the Act;
(C)in connection with the supply or possible supply of, or in connection with the promotion of the supply of, goods and services, being the mobile phone packages, made false or misleading representations concerning the existence or effect of a condition contrary to s 53(g) of the Act; and
(D)in connection with the supply or possible supply of, or in connection with the promotion of the supply of, goods and services, being the mobile phone packages, made representations with respect to amounts that, if paid, would constitute a part of the consideration for the supply of mobile phone packages and did not specify the cash price for the mobile phone packages contrary to s 53C of the Act.
The respondent be restrained, whether by itself, its servants, agents or howsoever, in connection with the supply or possible supply of, or the promotion of the supply of, mobile telephones or mobile phone packages, from making representations as to price without clearly and prominently specifying all relevant conditions which apply or may apply to the price.
The respondent be restrained, whether by itself, its servants, agents or howsoever, in connection with the supply or possible supply of, or the promotion of the supply of, mobile telephones or mobile phone packages, from making representations with respect to amounts that, if paid, would constitute a part of the consideration for the supply of the mobile phone packages without also clearly and prominently specifying the cash price of the mobile phone packages.
The respondent cause to be published at its own expense in “The West Australian” newspaper an advertisement in the form annexed hereto and marked “A”, and further that such advertisement shall be:
(i)of a size not less than 111mm x 200mm;
(ii)in text which is in type not less than 12 point;
(iii)published within the first 19 pages of the newspaper; and
(iv)published on one occasion within 14 days of the making of this order;
The respondent pay a refund to any consumer who:
(i)has purchased a mobile phone package in response to the advertisement referred to in Order 1 hereof;
(ii)considers that he or she has been misled by one or more of the representations set out in Order 1 hereof; and
(iii)returns the mobile telephone to the respondent together with a claim for a refund by 31 December 1997;
in the amount of the full price paid by the consumer for the mobile phone package to the date of the return of the mobile telephone (excluding call charges).
Within 14 days of the making of this order, the respondent send to all purchasers of the mobile phone packages referred to in the advertisement referred to in Order 1 hereof a notice in the form of the notice annexed hereto and marked “B”.
That the respondent implement a Trade Practices Corporate Compliance Program in the terms set out in annexure “C” hereto amended as follows:,
(a)by the insertion in paragraph 3 of “sections 52, 53(e), 53(g) and 53C of” immediately after the word “with” in the second line of that paragraph; and
(b)by the insertion of the words “abovementioned sections” immediately before the word “Trade” in line 1 of paragraph 4(e) and line 2 of paragraph 8.
The respondent pay the applicant’s costs of the application to be taxed.
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
GENERAL DIVISION
WAG 89 of 1997
BETWEEN:
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
ApplicantAND:
OFFICE LINK (AUST) PTY LTD
(ACN 066 656 942)
Respondent
JUDGE: CARR J DATE: 21 NOVEMBER 1997 PLACE: PERTH
REASONS FOR JUDGMENT
INTRODUCTION
The purpose of these reasons is to explain why I have declined to make an order in completely identical terms to those set out in a minute of consent orders signed on behalf of the parties and passed up at a recent directions hearing.
On 15 August 1997, the applicant, the Australian Competition and Consumer Commission (“the Commission”) applied to the Court for declaratory relief, final injunctions and other orders against the respondent, Office Link (Aust) Pty Ltd, pursuant to ss 80 and 87 of the Trade Practices Act 1974 (Cth) (“the Act”).
The application arose out of an advertisement inserted by the respondent on 9 July 1997 in “The West Australian” newspaper. The Commission alleges that, in making certain representations about the price of a digital mobile telephone in that advertisement, the respondent:
.engaged in conduct that was misleading or deceptive or was likely to mislead or deceive contrary to s 52 of the Act;
.in connection with the supply or possible supply of, or with the promotion of the supply of, goods, being mobile telephones, and services, being associated mobile telephone services (collectively referred to hereafter as “mobile phone packages”) made false or misleading representations with respect to the price of goods or services, contrary to s 53(e) of the Act;
.in connection with the supply or possible supply of, or in connection with the promotion of the supply of, goods and services, being the mobile phone packages, made false or misleading representations concerning the existence or effect of a condition, contrary to s 53(g) of the Act; and
.in connection with the supply or possible supply of, or in connection with the promotion of the supply of, goods and services, being the mobile phone packages, made representations with respect to amounts that, if paid, would constitute a part of the consideration for the supply of mobile phone packages and did not specify the cash price for the mobile phone packages, contrary to s 53C of the Act.
The Commission and the respondent agreed to settle the proceedings by applying to the Court for the grant of final orders by consent. At a directions hearing on 3 October 1997 the parties tendered a minute of proposed consent orders. I was prepared to make all but three of the orders at that stage. Those three orders comprised the third declaration referred to above, one of the injunctive orders sought and a proposed order that the respondent implement a “Trade Practices Compliance Program” in the terms of an annexure (“Annexure C”) to the minute of proposed consent orders. In relation to those three matters, I made orders requiring the applicant to file and serve short submissions about the appropriateness of the orders sought and granted the respondent leave to file and serve any response to those submissions. I ordered further that the matter be otherwise adjourned indefinitely on the basis that either consent orders would be made in terms of the abovementioned minute or the matter would be relisted for further argument on a date to be fixed. The applicant has filed detailed submissions on the three matters. The respondent has chosen not to file any submissions in response, but wishes to be heard on the matter of costs. After reading and considering the applicant’s submissions, I made the parties aware that whilst I was prepared, on the basis of those submissions, to make an order in respect of the first two of the three matters referred to above, I had formed a provisional view that I should vary the orders sought in relation to the third matter in the manner referred to below. The parties indicated that they were content to forego the opportunity for further argument, that I publish my reasons for varying the order relating to the Trade Practices Compliance Program and then hear submissions on the question of costs.
Annexure C was in the following terms:
THE COMMISSION’S SUBMISSIONS
Most of the submissions filed on behalf of the Commission dealt with the matter of the Trade Practices Corporate Compliance Program. Most of those particular submissions were to the effect that I should not follow a recent decision of Merkel J in ACCC v Z-Tek Computer Pty Ltd (unreported, Federal Court of Australia, 3 September 1997, Judgment No. 871 of 1997). I shall return below to that decision. Alternatively, it was said that Z-Tek was distinguishable on the following bases, namely that:
.In Z-Tek the advertisement was for goods (computer equipment) whereas this matter essentially involves services;
.The potential market in this matter is “virtually unlimited” whereas in Z-Tek the market was confined to those likely to be interested in a range of computer products advertised in a specialist magazine; and
.The medium in which the advertisement appeared in Z-Tek was significantly different to the medium used by the respondent in this matter.
The Commission submitted that there was an important distinction, for contempt of court purposes, between undertaking a compliance program on the one hand, and carrying on business in a way which may risk contempt of an injunction, on the other hand. Finally, the Commission submitted that there was no extra burden for the respondent in the compliance program proposed in this matter, compared to the one approved in Z-Tek. Other submissions were made which I have considered, but which I do not need to set out in these reasons.
THE STATUTORY FRAMEWORK
Section 80 of the Act relevantly provides as follows:
“(1)Subject to sub-sections (1A), (1AAA), and (1B), where, on the application of the Commission or any other person, the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute -
(a)a contravention of a provision of Part IV, IVA or V;
(b)attempting to contravene such a provision;
(c)aiding, abetting, counselling or procuring a person to contravene such a provision;
(d)inducing, or attempting to induce, whether by threats, promises or otherwise, a person to contravene such a provision;
(e)being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or
(f)conspiring with others to contravene such a provision,
the Court may grant an injunction in such terms as the Court determines to be appropriate.
(1AA) Where an application for an injunction under sub-section (1) has been made, whether before or after the commencement of this sub-section, the Court may, if the Court determines it to be appropriate, grant an injunction by consent of all the parties to the proceedings, whether or not the Court is satisfied that a person has engaged, or is proposing to engage, in conduct of a kind mentioned in sub-section (1).”
In Z-Tek Merkel J comprehensively reviewed the decisions of this Court in relation to s 80 since s 80 (1AA) was inserted in 1983. His Honour noted the width of the power conferred by s 80 and its public interest character, but identified one limitation on that power as being the scope and purpose of the Act and in particular the section itself. I shall not rehearse that analysis in these reasons. His Honour held that, on the basis of those authorities, there must be a nexus between the conduct alleged or found to constitute the relevant contraventions and the injunctions granted. I respectfully agree with that conclusion. Then his Honour referred to the fact that Parts IV, IVA and V of the Act deal with what he described as fundamentally different subject matters. His Honour observed (at p 7):
“Accordingly, in general, it is difficult to envisage how injunctive relief that is appropriate in a proceeding based on an alleged contravention of Parts IVA and V could, appropriately, lead to orders enjoining conduct which relates to a contravention of a provision of Part IV unless the conduct in question also touches upon or involves a contravention of the particular provision of Part IV. In such a case an injunction in relation to a provision of Part IV is unlikely to have the relationship required by s 80 with the actual or alleged contravention of the Act which enlivened the Court’s jurisdiction under s 80.”
His Honour then referred to what he described as a constitutional limitation and said (at p 8):
“If the Court grants relief which has no nexus or relationship to the case or controversy before the Court it will not be exercising judicial power within the confines of Ch III of the Constitution. Accordingly, orders under s 80 must have the requisite relationship with the case or controversy the subject of the proceeding in the Court. Taking a broad view, the case or controversy in the present case relates to misleading or deceptive advertising and the making of representations by Z-Tek which are alleged to constitute contraventions of ss 52, 53(e) and 53C of the TPA. Accordingly, any injunctive relief granted under s 80 must be related to, and in resolution of, that case or controversy.”
The Trade Practices Compliance Program which was before Merkel J in Z-Tek related to the Act generally rather than to the specific provisions in Part V which were alleged to have been contravened by Z-Tek. Noting that the orders were sought by consent, and having expressed an inclination to make the orders sought if they were within the Court’s jurisdiction, his Honour expressed the view that the compliance program should be no wider than one which is designed to prevent repetition of the conduct for which the relief was sought. His Honour said that he had considered ordering a compliance program in respect of Part V of the Act generally, but declined to do so for much the same reason as he was not prepared to order a compliance program in respect of Part IV or indeed any other part of the Act. Finally, his Honour said that if his view about the limitation of the power to grant injunctive relief under s 80 were wrong, he would exercise his discretion against making the orders sought by consent in any event, essentially for the same reasons given for concluding that the orders were not “appropriate”.
I respectfully agree with all of the reasoning given by Merkel J. I acknowledge the existence of most of the factual differences upon which the Commission seeks to distinguish Z-Tek. [I reject the submission that the present matter essentially involves the provision of services - I consider that it involves both goods and services i.e. the telephone and the telecommunication services.] But I do not see those differences as a basis for distinguishing Z-Tek. I agree that Parts IV and V deal with conduct which falls into broadly different areas, that is, restrictive practices in the case of Part IV and consumer protection in respect of Part V. So far as Part IVA is concerned, there may well be occasions when the same conduct falls foul of, say, s 51AB and (for example again) s 46 (misuse of market power - which is in Part IV) and also a provision of Part V of the Act such as s 52. In those circumstances, there is nothing in the principles explained in Z-Tek which would preclude orders for a compliance program extending in reach across those three parts of the Act, but confined to those sections which had a sufficient nexus or relationship to the conduct which was before the Court. The extent and nature of the contraventions might, on occasion, warrant orders for a compliance program which was not confined to particular sections. In this matter I can see no provisions of Part V of the Act, other than the ones upon which this application is based, which might be encompassed within the ambit of the Trade Practices Compliance Program.
If I have followed Merkel J into error on the matter either of jurisdiction or power or both, I would exercise my discretion against making the orders sought by consent for the same reasons which I have given above for holding that that order is not “appropriate”.
CONCLUSION
There will be orders in terms of the minute of proposed orders save that Annexure C thereto (the Trade Practices Compliance Program) is to be amended so as to relate to misleading or deceptive advertising or the making of representations in contravention of ss 52, 53(e), 53(g) and 53C of the Act. The formal order will be drawn up as a consent order. However, these reasons will make it sufficiently clear that, although paragraph 7 of the minute of orders is (to the extent just mentioned) by consent of both parties, the applicant’s position was that it sought an order requiring the respondent to implement a more extensive compliance program and was denied such an order.
I certify that this and the preceding seven (7) pages are a true copy of the Reasons for Judgment of Justice Carr
A/g Associate:
Dated: 21 November 1997
Counsel for the Applicant: Mr N W McKerracher and
Mr T P BurrowsSolicitor for the Applicant: Australian Government Solicitor Counsel for the Respondent: Mr S G Scott Solicitors for the Respondent: Messrs Stables Scott Date of Hearing: The application was dealt with on the papers filed. Date of Judgment: 21 November 1997
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