CUADRO and ANOR v Global Pre-Paid Communications and ORS (No.1)
[2004] FMCA 26
•13 January 2004
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CUADRO & ANOR v GLOBAL PRE-PAID COMMUNICATIONS & ORS (No.1) | [2004] FMCA 26 |
| TRADE PRACTICES – Where third respondent was the sole director of first respondent company – whether there was a breach of s.75B Trade Practices Act – whether third respondent had knowledge of representations made by employee of company to the applicants – where the representations made were partly oral and partly in writing – inferences that can be drawn as to knowledge of a sole director. |
Trade Practices Act 1974 (Cth), ss.51A, 52, 75B
Geale v Glenhoun Holdings Pty Limited (in liquidation) (1985) ATPR 40-615
| Applicant: | CELSO CUADRO & ANOR |
| First Respondent: | GLOBAL PRE-PAID COMMUNICATIONS PTY LTD |
| Second Respondent: | RUSSELL FIELDING |
| Third Respondent: | FRANK YATES |
| File No: | SZ 902 of 2003 |
| Delivered on: | 13 January 2004 |
| Delivered at: | Sydney |
| Hearing date: | 13 January 2004 |
| Judgment of: | Raphael FM |
REPRESENTATION
| Solicitors for the Applicant: | Hassett Dixon Solicitors |
| Counsel for the Respondent: | Mr G McVay |
| Solicitors for the Respondent: | McConnell Jaffray Lawyers |
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SZ 902 of 2003
| CELSO CUADRO & ANOR |
Applicant
And
| GLOBAL PRE PAID COMMUNICATIONS PTY LTD & ORS |
Respondent
REASONS FOR JUDGMENT
The third respondent to these proceedings, who is the only party against whom relief is being sought, has, through his advocate, made a submission that I should hold that the applicants have not made out a prima facie case that he is guilty of a breach of s.75B of the Trade Practices Act 1974 (“the Act”) by being knowingly concerned in the alleged breaches of s.52 and s.51A by the first respondent corporation and the second respondent employee.
Mr McVay put to me an attractive argument that the applicants had not established that the third respondent had any knowledge of the representations said to be made by Mr Fielding and that there had been no pleading of any specific representations relied upon by the applicants in another written document, Exhibit 1, entitled Global Pre-Paid Communications Global Express Dispenser Info Pack (“the document”).
Mr Bors who appears on behalf of the applicants pointed out that the representations said to have been made in paragraph 7 of the application are said to have been made by the first respondent by its employee and having been made partly orally and partly in writing referring to the document, that is the information in writing. Paragraph A to the application says that the representations were made by the respondents and each of them. Paragraph 9 also refers to each of the three respondents as does paragraph 10 and 11 and then paragraph 12 refers to the silence of each of the respondents. It does not seem to be disputed that the third respondent was the sole director of the first respondent. Apparently there was a shareholder of the first respondent. It is not alleged that that person had any involvement in the running of the company.
Mr Bors has analysed the representations alleged to have been made, of which there are eight, and he has shown to my satisfaction that in regard to the representation made in paragraph 7(a) the reference to a “one stop shop” can be found in the document by looking at a photograph of the dispenser which is contained in the very last.
He has satisfied me, for the purposes of this application, that the representation concerning the market for pre-paid telecommunication cards referred to in paragraph 7(b) is also found in the document. I am not convinced that he has satisfied me in relation to representation 7(c) which is, "the respondent supplied and continued to supply pre-paid mobile telephone products from all major service carriers", that is Optus, Vodaphone and Virgin. Certainly the photograph contained in the brochure shows Optus cards being available but nothing else in the document indicates those cards are to be used in the machine and under a heading entitled "equipment", a list of cards is given and Optus is not one of them.
The representation made in paragraph 7(d) that the respondent would organise that machines be placed at high volume locations is found in the document under the heading "Five Easy Steps to Get Started". The representation made in paragraph 7(f) is contained in a document which the applicants have not established to my satisfaction emanated from anyone but Mr Fielding. The representation in sub-paragraph 7(g) that the machines were highly durable and required little or no servicing was alleged by Mr Balls to be found under the paragraph headed "The Global Express Dispenser" and does indeed say that:
“The card dispenser is hand crafted of heavy gauge steel constructed for durability and security.”
It does not say that the dispenser requires little or no servicing if properly maintained. That appears to be a representation made by someone else. Likewise, there is no representation in the document similar to that found at 7(h) that the machines only required attendance on a weekly basis.
It is clear from Geale v Glenhoun Holdings Pty Limited (in liquidation) (1985) ATPR 40-615 that in the situation of a company similar to the one that is before me I can make inferences as to the knowledge of a sole director as to matters contained in something like the document.
I think I can go further and make inferences that the sole director would not only be aware of representations made in that brochure but would be aware of representations identical to those contained in the brochure made by one of the company’s staff. It is not an unreasonable inference to draw that staff would be expected to repeat matters which are contained in a printed brochure that is intended to induce persons to make a purchase.
I am satisfied that the applicants have established, at least on a prima facie basis, that the representations alleged in paragraphs 7(a), 7(b), 7(d), 7(g) insofar as the machines were highly durable, are representations which, if they can be established to have been false and misleading, were in the knowledge of the third respondent and were therefore representations in respect of which he was knowingly concerned and for which he may be liable.
I certify that the preceding eight (8) paragraphs are a true copy of the reasons for judgment of Raphael FM
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