Commissioner of Fair Trading v Kent Publishing Pty Ltd

[2007] NSWSC 590

CITATION:	Commissioner of Fair Trading v Kent Publishing Pty Ltd [2007] NSWSC 590
HEARING DATE(S):	25 May 2007
JUDGMENT DATE :	8 June 2007
JUDGMENT OF:	Price J at 1
DECISION:	See paragraph 26
CATCHWORDS:	Interim injunction - use of telemarketers - misleading and deceptive conduct.
LEGISLATION CITED:	Trade Practices Act 1974 (Cth) s 52, 53(bb), 53(c), s 55, s 55A, s 58, s 64, s 64(3), s 64(5), s 64(6), s 80(2), Pt IV, Pt IVA, Pt V Fair Trading Act 1987 (NSW) s 65
CASES CITED:	Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 148 ALR 339 ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FLR 248 Kennan v Monahan [1991] 1 Qd.R 401
PARTIES:	Commissioner of Fair Trading Kent Publishing Pty Ltd Dean James King
FILE NUMBER(S):	SC 2007/20008
COUNSEL:	Mr G Sarginson - applicant Ms M Hindman - respondent

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

PRICE J

8 June 2007

2007/20008 Commissioner of Fair Trading v
Kent Publishing Pty Ltd &
Dean James King


JUDGMENT

1 HIS HONOUR: Where the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute a contravention of Part V of the Trade Practices Act 1974 (TPA) or aiding, abetting, counselling or procuring a person to contravene such a provision, s 80(2) TPA authorises the Court to grant an interim injunction pending determination of an application under subsection (1) where in the Court’s opinion it is desirable to do so.

2 By a notice of motion filed on 10 January 2007, the plaintiff seeks interim injunctive orders against each of the defendants as follows:

“Pursuant to section 80 of the Trade Practices Act 1974 (Cth) and section 65 of the Fair Trading Act 1987 (NSW):
1. Until further order, the First Defendant and Second Defendant be restrained from conducting, or being engaged in, whether or not in a personal capacity, as a sole trader, in a partnership, as an employee, through another person, through the agency of another person, through the agency of a chain of other persons, through a company or the agency of a company (whether or not that company is one which the Second Defendant is an officer and whether or not that company is one which the Second Defendant is a shareholder) or otherwise, any of the following:
entering the details of any person, business, or company in any publication known as:

A) The All States Annual Report

B) Guide to Australian Associations

C) Media Guide to Australia

D) Hotel and Restaurant Guide of Australia

E) The Australian Accommodation and Dining Guide

F) National Travel and Tourism Guide

G) Australian Quality Assured Services

H) The National Business and Trade Guide

I) Essential Local Service

J) Kent Group Travel

K) Australian State and National Business Service

L) The Unionist

M) Coast to Coast Travellers Guide

N) Industrial Safety Gazette

or any publication with a similar name (collectively ‘the publications’) prior to receipt by the First Defendant from that person, business or company which authorises the entry of the details and:
(a) is signed and dated by the person, or signed by a person
with the authority to sign on behalf of the business or company by virtue of their position in the business or company;

(b) specifies the name of the publication;

(c) specifies the name and address of the person publishing the publication;
(d) specifies the particulars of the entry to appear in the publication;
(e) specifies the amount of the charge for the making of the entry or the basis on which the charge is, or is to be, calculated;
(f) contains the words, in a prominent position on the document, “this is a solicitation not an invoice for a debt incurred by you”; and
(g) has been provided to the person, business or company to whom the entry relates.
2. Demanding, requesting, or asserting a right, or purported right, to payment from any person, business or company in respect of the listing of details in the publications unless and until a document as described in Paragraph 1(a)-(g) has been received by the First Defendant from the person, business or company to whom the listing relates.
3. Attempting to enforce any asserted right, or purported right, to payment from any person, business or company in respect of the listing of details in the publications unless and until a document as described in Paragraph 1(a)-(g) has been received by the First Defendant from the person, business or company to whom the listing relates.
4. Collecting a debt, or purported debt, from any person, business or company in respect of the listing of details in the publications unless and until a document as described in Paragraph 1(a)-(g) has been received by the First Defendant from the person, business or company to whom the listing relates.”

3 Kent Publishing (the first defendant) is a corporation which conducts a publishing business of which the second defendant is the sole director and secretary. In a statement of claim filed on 10 January 2007 the plaintiff seeks declarations and injunctive orders claiming that the defendants have contravened ss 52, 53(bb), 53(c), 55, 55A, 58 and 64 of the TPA and the corresponding provisions of the Fair Trading Act (NSW). It is convenient to refer in this judgment solely to the provisions of the TPA.

4 In seeking an interim injunction, the plaintiff must satisfy the Court that, there is a serious issue to be tried and the balance of convenience is in favour of granting the interlocutory injunctive relief.

5 Affidavits of some twenty three deponents have been filed and served by the plaintiff. Consideration of this large number of affidavits relied upon by the plaintiff satisfies me that there is strong and credible evidence of the following:

Kent Publishing publishes a number of publications. Telemarketers are used to induce the operators of small business to place advertisements in Kent Publishing’s publications. It is a standard practice used by Kent Publishing to have the telemarketers obtain details of advertisements from sites on the internet or from publications not associated with Kent Publishing.

As is said by Leanne Potts, a former employee, in an affidavit sworn on 4 April 2007:

“16. An important part of sales work is the use of leads. A lead is usually the name, address, phone number and other details of a business that is a potential customer. The most common form of lead is another advertisement from a publication not associated with Kent Publishing. It was common for Kent Publishing to supply leads to their sales staff, but sales people also used their own leads which could be from another tourism magazine or from tourism brochures collected from travel agents.
17. Leads could also be obtained from the internet. For example, when sales people were selling into one of Kent Publishing’s tourism magazines, the adverts could be taken from a tourist website. During the time I worked at Kent Publishing it was common to see sales people simply reading advertisements out to potential customers from other non Kent Publishing publications. This was standard practice within Kent Publishing and was part of the instructions given to staff by Julie and Dean on a regular basis.”

6 The person referred to as “Dean” by Ms Potts is the second defendant.

7 Telemarketers ring the operators of a small business and by the use of the lead make express or implied representations that a proposed listing or advertisement is a “renewal”, or a “confirmation” of a previous agreement to advertise in a particular publication of Kent Publishing when that is not so.

8 At paragraph 18 of her affidavit Ms Potts states:

“18. While engaged as a sales person for Kent Publishing I routinely did the following:
(i) Using a lead that was either supplied by Kent Publishing or which I had obtained through my own sources, I telephoned the business in the advertisement.

(ii) Using the supplied script I said something very similar to:

“I’m calling from tourism, in regards to this years listing. Can I just run through the details with you now?”
(iii) I read out the wording in the particular advertisement and, after reading each address, telephone number and other details I would ask, “Is that right?”

9 Another example of the misleading and deceptive nature of the conduct engaged in by Kent Publishing is found in the affidavit of Mary De Poorter sworn on 11 November 2006. Mrs De Poorter and her husband were the owners and operators of a restaurant. She describes [at paragraph 5] a telephone conversation in late November 2004 in which the telemarketer said:

“I’m calling from the Australian Accommodation and Dining Guide. This is a follow up call from earlier in the year. Just verifying your advertisement with us……….”

10 The text of the advertisement used by the telemarketer came from the De Poorter’s website. Mrs De Poorter confused the Australian Accommodation and Dining Guide with the Restaurant and Catering Food Guide in which the De Poorters had advertised their restaurant. They had not previously advertised in the Australian Accommodation and Dining Guide which is one of Kent Publishing’s publications.

11 Credit card details are obtained by the telemarketers and amounts ranging from $384.00 to $489.00 are debited. Proofs of the advertisement or listing are sometimes sent. The publications it appears are either not published or are published in small numbers.

12 Credit card slips are on occasions “re-cycled”. This practice involves using credit card slips to debit the cards after the initial transaction has gone through without the customer authorising the transaction. Furthermore, old transaction invoices are sometimes sent out to customers along with a copy of the relevant publication to give the impression that an account has not been paid. On occasions customers pay the account although it has previously been paid.

13 Section 52 which falls within Part V of the TPA relevantly provides:

“ 52. Misleading or deceptive conduct
(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
(2) Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1).”

14 There is a strong prima facie case that Kent Publishing has breached at the very least s52 TPA and the second defendant aided, abetted, counselled and procured those contraventions of the TPA.

15 The defendants submit, however, that upon a close consideration of the terms of the orders sought in the notice of motion, it appears likely that the particular provision with which the motion is concerned is s 64 of the TPA (particularly) subsections (3), (5) and (6). Section 64(3) is as follows:

“(3) A corporation shall not assert a right to payment from any person of a charge for the making in a directory of an entry relating to the person or to his or her profession, business, trade or occupation unless the corporation knows or has reasonable cause to believe that the person has authorized the making of the entry.”

16 The defendants contend that not any one of the publications detailed in paragraph 1 A to N of the notice of motion is a “directory” and the motion ought to be dismissed. My attention has been drawn to what was said as to the meaning of a “directory” in s 64(3) TPA by McPherson J in Kennan v Monahan [1991] 1 Qd.R. 401 at 404. There must be, the defendants argue, a sufficient link between the final relief sought such that the interlocutory relief is vindicated by the final relief. Given the terms of the notice of motion the defendants submit the link in this case must be final relief sought under s 64 TPA particularly subsections (3), (5) and (6).

17 It is well established that the power of the Court to grant an injunction under s 80(1) TPA is controlled by the words “in such terms as the Court determines to be appropriate”. An injunction should not prohibit conduct falling outside the boundaries drawn by s 80: see ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FLR 248 per Gummow J at 267.

18 In Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 148 ALR 339 at 344 Merkel J said:

“In summary, in determining whether an injunction under s 80 is “appropriate” there are, at least, three limitations on the court’s power.
First, the power is confined by reference to the scope of the purpose of the TPA and in particular s 80. It is within the scope and purpose of s 80 to grant injunctive relief which is designed to prevent a repetition of the conduct for which the relief is sought.


Secondly, there is a contextual limitation within s 80 itself. As the jurisdiction to grant an injunction is enlivened by an alleged or actual contravention of a provision of Pt IV, IVA or V of the TPA, there must be a sufficient nexus or relationship between the contravention and the injunction granted. It is that nexus or relationship that enables determination by the court of whether the injunction sought is “appropriate”.
Thirdly, there is the constitutional limitation which requires that the injunction granted be related to the case or controversy the subject of the proceeding.”

19 What is required in the present case is a sufficient nexus or relationship between the alleged contravention of a provision of Pt V of the TPA and the injunction granted. Broadly stated, the present case relates to misleading or deceptive conduct by the defendants to obtain payment for advertisements or listings which may or may not be placed in Kent Publishing’s publications. The interim injunctive orders sought by the plaintiff in summary prevent the defendants from entering the details of any person, business, or company in any of the publications specified in paragraph 1 A – N and accepting payment, deducting any amounts from customers via electronic funds transfer, or asserting any right to payment for advertising or listing in any of the publications prior to receipt by Kent Publishing of a document as described in paragraph 1 (a)-(g).

20 As the defendants contend, the terms of the first prayer of the notice of motion bear resemblance to s 64(3) and (5) of the TPA and the interlocutory relief sought does not prohibit the making of a representation that a customer had previously agreed to advertise in a particular publication. It is evident, however, that one of the triggers for the debiting of credit cards or the request for payment is the entry of a customer’s details obtained by conduct contravening s 52 TPA in one of Kent Publishing’s publications.

21 The interlocutory relief is directed at ensuring that payment is not obtained by the defendants for advertisements or listings without the prior receipt of a written authority. The prerequisite of the written authority is designed to prevent a repetition of the contravening conduct or similar conduct by which payment is obtained. I am satisfied on the material before me that there is a sufficient nexus between the alleged contravention of s 52 TPA and the interim injunctive orders.

22 Whilst it is unnecessary to give consideration to the question of whether a publication identified in paragraph 1 A – N of the notice of motion is a “directory” within the meaning of s 64 (3) TPA, it seems to me, at the very least, that the Hotel and Restaurant Guide of Australia, the Australian Accommodation and Dining Guide and the Australian State and National Business Service are. Not all of the publications have been included in the material exhibited in the present proceedings and each publication requires discrete consideration. It appears from the annexure to Ms Hindman’s written submissions of 3 May 2007 that some publications may in fact never have been published. Each of the publications which I have specified, it seems to me, falls within the definition of “directory” contained in Black’s Law Dictionary which was adopted by McPherson J (with whom Demack J and Williams J agreed) in Kennan.

23 It is apposite to note that prior to reaching the conclusion that the word “directory” bore some such meaning or connotation as ascribed by Black, his Honour considered the dictionary meaning of “directory” and made reference to the Macquarie Dictionary. His Honour quoted (at 404) what now appears in the 4th edition of the Macquarie Dictionary as the first meaning. The third meaning ascribed in the 4th edition to the word “directory” is:

“any book or list which serves to direct the reader.”

His Honour in his judgment did not refer to that meaning. It might be that the third meaning was not available in 1991 when Kennan was decided.

24 I do not propose to accede to the defendants’ request that final findings be made that none of the publications identified in paragraph 1 A – N of the notice of motion is a “directory” within s 64(3) TPA. I conclude that there is a serious issue to be tried.

25 The plaintiff has a strong case and on the present material is likely to succeed in the final proceedings. Consumers will continue to be adversely affected unless Kent Publishing is required to obtain written authorisation before payment. On the other hand, Kent Publishing will be able to trade and to use telemarketers. The proposed interim orders are not onerous. The balance of convenience, I conclude, favours the making of the orders.

26 In my opinion, it is desirable to make the following orders:

1. Until further order, the first defendant and second defendant be restrained from conducting, or being engaged in, whether or not in a personal capacity, as a sole trader, in a partnership, as an employee, through another person, through the agency of another person, through the agency of a chain of other persons, through a company or the agency of a company (whether or not that company is one of which the second defendant is an officer and whether or not that company is one of which the second defendant is a shareholder) or otherwise, any of the following:
entering the details of any person, business, or company in connection with the advertising or listing in any publication known as:

A) The All States Annual Report

B) Guide to Australian Associations

C) Media Guide to Australia

D) Hotel and Restaurant Guide of Australia

E) The Australian Accommodation and Dining Guide

F) National Travel and Tourism Guide

G) Australian Quality Assured Services

H) The National Business and Trade Guide

I) Essential Local Service

J) Kent Group Travel

K) Australian State and National Business Service

L) The Unionist

M) Coast to Coast Travellers Guide

N) Industrial Safety Gazette

or any publication with a similar name (collectively ‘the publications’) prior to receipt by the first defendant or second defendant from that person, business or company of a document which authorises the entry of the details; and
(a) is signed and dated by the person, or signed by a person
with the authority to sign on behalf of the business or company by virtue of their position in the business or company;

(b) specifies the name of the publication;

(c) specifies the name and address of the person publishing the publication;
(d) specifies the particulars of the entry to appear in the publication;
(e) specifies the amount of the charge for the making of the entry or the basis on which the charge is, or is to be, calculated;
(f) contains the words, in a prominent position on the document, “This is not a bill. You are not required to pay any money”; and
(g) has been provided to the person, business or company to whom the entry relates.

2. Demanding, requesting, or asserting a right, or purported right, to payment from any person, business or company in respect of the listing of details in the publications unless and until a document as described in paragraph 1(a)-(g) has been received by the first defendant or second defendant from the person, business or company to whom the listing relates.
3. Attempting to enforce any asserted right, or purported right, to payment from any person, business or company in respect of the listing of details in the publications unless and until a document as described in paragraph 1(a)-(g) has been received by the first defendant or second defendant from the person, business or company to whom the listing relates.
4. Collecting a debt, or purported debt, from any person, business or company in respect of the listing of details in the publications unless and until a document as described in paragraph 1(a)-(g) has been received by the first defendant or second defendant from the person, business or company to whom the listing relates.

5. That the defendants pay the plaintiff’s costs of this motion.

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