Australian Competition & Consumer Commission v Australian Business Reports Pty Ltd

[1997] FCA 895

IN THE FEDERAL COURT OF AUSTRALIA	)
)
AUSTRALIAN CAPITAL TERRITORY	)  AG 75 of 1996
)
DISTRICT REGISTRY	)
)
GENERAL DIVISION	)

BETWEEN:             

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant

  AND:  

AUSTRALIAN BUSINESS REPORTS PTY LIMITED (ACN 074 812 856)
First Respondent

GARY JOHN SOLAH
Second Respondent

JUDGE:	FINN J
PLACE:	CANBERRA
DATED:	27 AUGUST 1997

MINUTES OF ORDER

THE COURT DECLARES THAT:

1. The respondents are guilty of contempt by reason of their breach of the orders made by Finn J on 19 December 1996 in proceedings AG 75 of 1996.

THE COURT ORDERS THAT:

1. The respondents pay the applicant’s costs of and incidental to this application, to be taxed on an indemnity basis.

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

IN THE FEDERAL COURT OF AUSTRALIA	)
)
AUSTRALIAN CAPITAL TERRITORY	)   AG 75 of 1996
)
DISTRICT REGISTRY	)
)
GENERAL DIVISION	)

BETWEEN:             

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant

  AND:  

AUSTRALIAN BUSINESS REPORTS PTY LIMITED (ACN 074 812 856)
First Respondent

GARY JOHN SOLAH
Second Respondent

JUDGE:	FINN J
PLACE:	CANBERRA
DATED:	27 AUGUST 1997

REASONS FOR JUDGMENT

The applicant, the Australian Competition and Consumer Commission (“the ACCC”) has moved for orders that the two respondents, Australian Business Reports Pty Ltd (“ABR”) and Mr Solah, be found severally guilty of contempts of orders I made on 19 December 1996 in proceedings between the applicant and the respondents.

That motion was heard on 1 May 1997.  I reserved my decision at the time and, on 21 May, indicated to the parties that, as any determination of the motion would involve deciding matters in contest in the principal application, I would defer giving judgment on the motion until after judgment had been delivered in the application itself.  The latter occurred on 20 August 1997.  To avoid unnecessary duplication and because of the significant overlap of the motion with the application, the Reasons for Judgment of 20 August are to be regarded as incorporated by reference into these reasons.

The ABR’s business as from July 1996 has been the supply or promotion of a document entitled “Consumers Business Register” (“the Register”) to companies and businesses in Australia.  Mr Solah is the sole director of the ABR.

In proceedings against the respondents initiated on 11 December 1996, the ACCC alleged that both respondents mailed letters and forms to businesses containing representations occasioning contraventions of s52 of the Trade Practices Act 1974 (Cth), that (inter alia) and I here paraphrase:

(a)       the ABR was a government office or was affiliated with government, whereas it was not;

(b)      the addressee was required by law to register with ABR for inclusion in a register of companies and businesses - the Register - prepared by ABR, whereas there was no such requirement;  and

(c)       by entering its name in the Register, a business would be recognised by federal and state contractors, whereas the respondent did not have reasonable grounds for making that representation.

Declaratory and injunctive relief was sought.

On 19 December I made interlocutory orders in this matter the relevant terms of which, for present purposes, were:

“1.      Pending the hearing and determination of this application, or until further order, each of the first and second respondents, their servants or agents, in trade or commerce, by conduct which involves the use of postal services, be restrained from supplying or offering to supply or promoting the supply, to any person, of any register:

(a)       represented as provided by a government office or as affiliated with government, when such a register is not so provided or affiliated;

(b)       where registration for such register is represented as required by law, when there is no such requirement;

(c)       represented to be recognised by particular persons or classes of persons, when the first and second respondents did not have reasonable grounds for making that representation;

(d)       where it is represented that the business’ suppliers were required by law to commission licensed suppliers, such licensing being conferred by entry of the business name in the Register, when there is no such requirement.

2.       Pending the hearing and determination of this application, or until further order, the second respondent, his servants or agents, in trade or commerce, by conduct which involves the use of postal services, be restrained from supplying or offering to supply or promoting the supply, to any person, of any register:

(a)       represented as provided by a government office or as affiliated with government, when such a register is not so provided or affiliated;

(b)       represented as having been prepared by an organisation with a presence at particular offices where it does not;

(c)       where registration for such register is represented as required by law, when there is no such requirement;

(d)       represented to be recognised by particular persons or classes of persons, when the second respondent did not have reasonable grounds for making that representation;

(e)       where it is represented that the business’ suppliers were required by law to commission licensed suppliers, such licensing being conferred by entry of the business name in the Register, when there is no such requirement.”

The Two Charges

Before turning to the actual charges made against the respondents I should indicate that, notwithstanding submissions to the contrary made by the ACCC in reliance upon s140(2) of the Evidence Act 1995 (Cth), I intend in conformity with other decisions of this Court to apply the criminal standard of proof in this matter. In so doing I am content, because of its present appropriateness, to adopt the reasoning of Tamberlin J in Al Hayat Publishing Co Ltd v Ahmed Sokarno Eman Mohamed, unreported, 28 February 1997 both in relation to the standard of proof required and to “civil contempt” more generally:

“The contempt alleged here is traditionally referred to as “civil” contempt as it arises from a failure to obey an order of the court made in civil proceedings.  There is no submission that the contempt here is contumacious or involves any deliberate defiance of the Court’s order.  However, intent to disobey is not necessary.  It is sufficient if the person or the corporation is aware of the order and intentionally does an act or omits to perform an act with the result that there is a breach of the order:  Stancomb v Trowbridge UDC [1910] 2 Ch 190 at 194;  Flamingo Park Pty Ltd v Dolly Creation Pty Ltd (1985) 5 FCR 169 at 183.  Of course deliberate defiance or contumacious disregard of the order is relevant to the determination of an appropriate sanction.

As the High Court observed in Witham v Holloway (1995) 183 CLR 525 at 530, the distinction between criminal and civil contempt is largely illusory.  All proceedings for contempt must now realistically be seen as criminal in nature:  Hinch v Attorney-General (Vic) (1987) 164 CLR 15 at 99 and Witham (supra) at 534.  The usual outcome of successful contempt proceedings is punishment in one form or another whether it be in the form of an admonishment, a fine or imprisonment.  For this reason the criminal standard of proof must be satisfied in both civil and criminal contempt proceedings.  The application of the criminal standard of proof recognises the gravity associated with any charge of contempt.  Such a charge is criminal in nature and because of this a charge of contempt should not be brought lightly or without proper cause.”

By its now Amended Statement of Charge (see Federal Court Rules, O40r6) the ACCC first alleged (and I here paraphrase) that in January 1997 and thereafter the two respondents sent out letters and forms to businesses which, though varied in some particulars from those in use when the 19 December orders were made, were substantially the same as their predecessors in content.  They are said to suffer, in consequence, the same vices as those letters and forms, those vices being the representations that:

(a)the register was provided by a government office or was affiliated with government, when such a register was not so provided or affiliated;

(b)registration for such register was required by law, when there was no such requirement;

(c)the register was recognised by particular persons or classes of persons, when the first and second respondents did not have reasonable grounds for making that representation.

Secondly, the Amended Charge made the further allegation that (inter alia):

“5.      Further conduct by the First and Second Respondents which is also relied on by the Applicant as constituting breaches of the orders of the Court (as set out in paragraph 1 of this statement of charge) and as constituting contempt (as alleged in paragraphs 2 and 3 of this statement of charge) is the sending out on or about January, February, March and April 1997 of reminder letters, in the form of the letter annexed hereto and marked “C” sent by the First and Second Respondents to the business “Conquest Corner Gourmet” on or about 23 February 1997 and 27 March 1997 and other letters believed by the Applicant to be the same, or substantially the same, in content as the letters annexed hereto and marked “C” and “D” respectively. ...”

I will refer below to the annexures referred to in this.

Charge 1:  the post-19 December letters and forms

Because of the conclusions I arrived at in my reasons of 20 August, it is unnecessary here to traverse the factual material relied upon to establish this alleged contempt.  I there concluded that the post-19 December letters and forms relied upon by the ACCC as evidencing the contempt did not make the representations that (a) the register was provided by or affiliated with government;  or (b) that registration was required by law.

No finding was there made - nor was argument strongly put - on the third of the alleged representations relied upon in the motion (ie that the register was recognised by particular persons or classes of person).  The full text of the relevant letter and form are set out in the 20 August reasons.  The only part of these to which counsel for the ACCC referred as constituting the contempt were the following two sentences in the letter soliciting participation in the Register:

“The Register will be available for public scrutiny for the purposes of cross trading.  Entering your business in the Register will assist recognition by the general public and also for reference by your suppliers.”

I am unable to see that these sentences contain a representation that the Register is “recognised by particular persons or classes of person”:  emphasis added.  The second of the two sentences quoted replaced that in the pre-19 December version that referred to the Register being “recognised by Federal and State Contractors”.  Considered in light of this sentence the object of the injunction’s reference to “particular persons or classes of person” is transparent enough.  And so considered, a reference to the “public” at large is not relevantly a reference to “particular persons or classes of person”.

Accordingly I do not find any of the conduct relied upon in the first charge, actually to have constituted a breach of my orders.

Charge 2:  the follow-up correspondence

The conduct impugned here was the invoicing after 19 December 1996 of small business that had completed and returned the application forms used prior to the orders of 19 December 1996.

In my reasons for judgment of 20 August I found that those pre-19 December forms and their associated letters contained representations giving rise to contraventions of s52 in that they represented that the Register had an affiliation with government and that registration was required by law.

The invoices annexed to the charge, in requiring payment of the registration fee of $165, each contained the following sentence:

“Your entry for the Consumers Business Register has been approved and processed in accordance with the signed details of your Entry Verification Form.

(Copy Attached)”

The Entry Verification Form, I should note, was the form used for application for registration.  I should add, that on the evidence that has been adduced, the invoice annexed to the charge was merely the first of a sequence of, apparently, four invoices containing a progressively more strident demand for payment, the last in the sequence having inscribed on it a “Final Notice” indicating that:

“unless payment is forwarded immediately, this account will be placed in the hands of a National Debt Collection Agency”:  bold in original.

The ACCC’s submission was, first, that the invoice itself contained, so I am asked to infer, a representation that the register was provided by a government office or was affiliated with government.

Though my reasons of 20 August do not deal with the invoice as such, my conclusion on the innocence in this regard of the post-19 December form applies with like force to the invoice.  I am unable to see that it makes the representation alleged.

The ACCC’s alternative submission was that in some number of instances on the evidence before me, a pre-19 December Entry Verification Form was annexed to the invoice sent after 19 December and that this involved a republication or else a continuation of the original pre-19 December representations which, as I have noted above, I found to give rise to contraventions of s52.

For present purposes, in my view, the annexation of pre-19 December forms serves merely an evidentiary function.  It is clear beyond reasonable doubt that, in invoicing small businesses after 19 December 1996 in respect of forms sent to such businesses prior to that date, the respondents were in breach of the terms of the interlocutory orders.  Consistent with the amended charge this conclusion can be reached in both of two ways.  I should preface what I have to say of this by noting that the letters and application forms sent to small businesses prior to 19 December contained representations of the types proscribed by the interlocutory orders - as my reasons of 20 August make plain.

First, if the dealings of the ABR with its “clients” (if I can so call them) be dealt with as a matter of contract, then it is orthodox contract law that when a small business filled in and returned its application form it was making a contractual offer to ABR.  Only on acceptance by ABR of that offer did a contract for the “supply of” the register come into existence.

Counsel for the ACCC has submitted that the invoice should, in accordance with the postal rules, be taken as constituting the acceptance of the offer so made, and that I should infer from the dates on the invoices in evidence before me relating to pre-19 December applications - these dates range from 6 February 1997 to 15 April 1997 - that the contract of supply in these instances was formed after 19 December, hence in breach of the orders of that date.

No reason has been advanced in this matter that would justify the invocation of an exception to “[t]he general rule ... that a contract is not completed until acceptance of an offer is actually communicated to the offeror”:  Tallerman & Co Pty Ltd v Nathan’s Merchandise (Victoria) Pty Ltd (1957) 98 CLR 93 at 111; see generally Cheshire and Fifoot’s Law of Contract, 95ff, Butterworths, 1997, 7th Aust. Ed.  For their part the terms of the invoice in suggesting that an application required to be “approved”, provide some support for the usual inference that the parties would have expected communication of an acceptance.  Accordingly and consistent with the “general rule”, I find that the respondents, by communicating an acceptance of (ie an “approval” of) pre-19 December offers through invoices sent after that date, have thereby entered into contracts for the supply of the Register in breach of the orders of that date.

Alternatively, the conduct of the respondents in invoicing small businesses, should, consistent with my 20 August findings, properly be said to be putting into effect the burden of the proscribed representations - ie registration (hence payment) was required by law, the register itself being affiliated with government.  Any question of contract apart, by insisting upon payment - in some instances, on the evidence, in the face of opposition to, or refusal to, pay - the ABR was insisting upon participation in the register and in so doing was, relevantly, insisting upon and promoting the supply of the register and on the basis of the representations made in the pre-19 December letter and form.

This conduct, viewed in either of the above ways, was in breach of the orders and I refer in particular to Order 1 and its paras (a) and (b).  I should add, and this is made plain in my reasons of 20 August, that Mr Solah was for all practical purposes to be regarded as the mind and will of the ABR.  He was its sole director and secretary.

The Character of the Respondents’ Conduct

I have found that in one of the two ways specified in the Amended Charge, the respondents have acted in breach of my orders of 19 December.  Their actions in sending out the invoices in question - and where necessary follow-up invoices making more insistent demands - cannot properly be described as other than intentional.  It equally is clear beyond doubt that the respondents were aware of the orders in question.  In these circumstances I conclude that they both were guilty of contempt:  cf Al Hayat Publishing Co Ltd, above.

Having made this finding, I should add the following.  First, there is no evidence before me which would lead me to conclude that the respondents acted in deliberate defiance of the Court’s orders.  Secondly, the course of the principal application leading to the making of the 19 December orders was such, in my view, as could reasonably have led the respondents to the conclusion (albeit mistaken) that the matter to which they needed to direct their attention in ensuring compliance with the orders was the language of the letters and forms to be used after 19 December.  That language provided the focus of the 19 December orders.  But the orders in their terms were not so confined as my findings indicate.

For this reason I have reached the conclusion that, though a contempt has been proved and to the requisite standard, it was not one of particular gravity in the sense that, if not excusable, it was probably explicable for the reason given above.  In saying this I do not resile in any way from the criticisms of the respondents I made in my 20 August reasons in relation to their manner of dealing with small businesses concerning the Register.  But that is another matter.  My concern here is with the character and quality of their disobedience to orders of this Court.

In the circumstances the sanction appropriate to vindicate the authority of the Court and the public interest in the administration of justice would be an order that the respondents pay the applicant’s costs of and incidental to this application, to be taxed on an indemnity basis.

I will then declare that the respondents each are guilty of contempt by reason of their breach of the orders made by Finn J on 19 December 1996 in proceedings AG 75 of 1996.  And I will make an order for costs in the terms I have indicated.

I certify that this and the preceding nine (9) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn

Associate:

Dated:            27 August 1997

Counsel for the Applicant:	I Davidson
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the Respondent:	C Whitelaw
Solicitor for the Respondent:	Corrs Chambers and Westgarth
Dates of Hearing:	1 May 1996