Guthrie v Universal Telecasters Queensland Limited

[1977] FCA 74

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B R I z E 2 E ........ ......	IJISTRICT W G I S T X	)	B XL>.	.228..	of	3.976
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GEmRAL ........ .... T,I~~ISICF -- 1

In the matter of:

TRADE PRACTICES ACT 1974

TERENCE. JAMES. .GUTHRIE..	.....
........ ........ ........ ........

........ ........ .?I?f9.EQWf.. ...

W?.rn&53.b .TPbP.C*STF.GS. ......

QYE.W'SW .&?MITE?. ........ ..

........ ........ ........ ........ Defendant

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'?W3 CVJRT ORDERS T!UiJ?:

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1. The defendant company is convicted. ..

2. The defendant company is to pay a penalty of $2,000 (two thousand dollars).

I	3. The defendant cornpan$ is to pay the lpformant's costs.
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Date Entered:

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I N THE FEDERAL COURT )

l 1 B. No. 228 of 1976

OF AUSTRALIA )

GENERilL DIVISIOW I n the matter of -

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THE TRADE PRACTICES ACT 1974

B E T W E E N :

TERENCCE J M l E S GUTHRIE I

Informant

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UNIVERSAL TELECASTERS

QUEENSLAETD LIMITED

D e f e n d a n t

REASONS FOR JUDGMENT ST.JOHN J.

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WEDNESDAY, 1 2 OCTOBER, 1977. BRISBANE

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The defendant company is charged that It did In contraventlon

of Section 53(e) of the Trade Practices Act 1974, in trade '

or commerce, in connsction wlth the promotion by advertismg i . I

of the supply of goods, to wit Falcon motor cars, make !

misleading statements concerning the existence of price

reductions, the said misleadlng statements being made

in and by an advertisement published and screened by the

Television Station TVQ Channel 0 at Brisbane in the said

State, the said statements being misleading in that the

said statements contamed the words and sentences,

"Dr. Jim's lovely tax cuts are guaranteed till only April

3 0 , so if ycu haven't been out to Metro Ford by then

you could be a deadset April Fool. Metro Ford offer

immediate delivery of automatic Falcon 500 sedans that L

save you $335.00. If you don't take dellvery by Aprll 30

you're up for an extra 335 bucks In tax.". !

It was alleged, by way of particulars, that the statements

were misleading in that the words meant that the existence

of a reduction In prxe in such vehicles would not continue

after 30 April, 1975 so that a purchaser after that date

would have to pay an additional $335 in sales tax on

such a vehicle whereas the true position was that a

reduction in price was to continue though at a reduced

amount. .

I have already given judgment in two prosecutions relating

to the same advertisement in Terence James Guthrie v Metro

Ford Pty. Llmlted B. No.224 of 1976 and Terence James

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Guthrie v Doyle Dane & Bernbach Pty. Llmited B. No.226 of

1976. i

In those judgments I dealt \nth the lssues of the

misleading nature of the advertisement and the argument

that the statement was not one concernmg the existence

of a price reduction. The evidence in the instant case

as to those issues is identical with the evidence in those

two cases and I repeat my finding that In my view the

advertisenent was misleadlng and concerned the	existence
of a price reductlon.

The advertisement consisted of a video-tape cassette

made by Doyle Dane and Bernbach Pty. Llmited on the

instructlons of Metro Ford Pty. Limited. The goods

advertised were Ford motor cars. It was argued for the

defendant company that the statement was not the defendant

company's statement but a statement by Metro Ford Pty.

Limited and It was only statements made by the defendant

which were a contravention. This involves the proposltion

that the repetition of a misleading statement made by

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some other person is not an offence. Section 85(3),

to which I advert later, is sufficient to deal with

i	this argument, if the plain words of the section were
not sufficlent. *
After making, early In March, 1975, the cassette was
delivered to the defendant company where it was inspected
by playing it through on a video-tape machine by Mr. Yardley

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of the defendant company. His positlon was that of

sales service manager and his duties lncluded inspection

of advertisements with a view to avoiding, inter alia,

contraventlon of the Trade Practices Act.

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The date of the alleged offence is 15 Aprll, 1975

and there 1 s no contest that the adverxisement was shown

on that date on the defendant company's television

station Channel 0 in Brisbane.

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Early in April, 1975, perhaps during the first week of that month, the advertisement was seen by Mr. Paterson, who

had up until shortly before that time worked for a hire

purchase company and was familiar with the nature and

extent of the sales tax cuts. After seeing the advertlsement, at approximately 7.30 in the evening, he telephoned Channel

0, stated that he wished to complain about a misleading

advertisement and the person taklng the call suggested

he telephone the sales manager on the next day. At about

10.30a.m. on the following day, Mr. Paterson had a

conversation with the man who ldentified himself as Mr.

Terry Garry, the sales manager of the televislon station.

He informed Mr. Garry that the advertisement was misleadlng, "in as much as sales tax would not increase by $335 on the Falcon in May". Mr. Garry questioned Mr. Paterson

as to hls knowlelcge of sales tax and the latter replied

quoting hls experience with the finance company and his

awareness oE the sales tax position. Mr. Garry said that

the advertisement would be renewed. On 15 April,

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Mr. Paterson noted that the same advertisement was belng !

used and he agaln telephoned televlsion station Channel 0

and a technician informed him that he should ring the	I
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next day. He dld not	do so, but telephoned the Trade
Practices commission.

Having observed Mr. PatersoE in the witness box and

listened to hls evidence I came to the vlew that anyone

speaklng to Mr. Paterson whether by telephone or otherwise i

would gain no other lmpresslon but that he was a

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responslble citizen and would appear to be informed

on the subject matter on whxh he spoke. I accept his

evldence in its totality. Mr. Garry was not called.

On 9 April, 1975 Mr. Wise, an offlcer of the Trade

Practices Commlsslon, havlng had brought to hls notice a complaint in respect of the advertisement, telephoned

Channel 0 and vas connected with Nr. Terry .Garry. He

identlfied himself with the Trade Practlces Comlssion

and informed Mr. Garry that he had received a complaint

about the Metro Ford advertisement but he was unable to

specify the nature of the complaint. Mr. Garry sent by

post a script of the advertisement to Mr. Wise. On

15 Aprll, 1975 Mr. Wlse checked the script against the

television advertlsement whlch he watched and llstened .

to and found them to be exactly the same. On 21 Aprll,

1975 he attended the premises of Channel 0 and had a

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1	conversatlon with Mr. Terry Garry.	.
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The defendant company has given evidence in reliance I

on Sectlbn 85 (l) and 85 ( 3 ) by way of defences, as well

as submitting that the prosecutlon had not made out its

case. The advertisement, of course, was about the goods

of Metro Ford Pty. Limited. Mr. Fitzgerald Q.C. submits

that the goods referred to in Section 53 of the Act are

the goods of the person making the statement that is

misleading. This interpretation does not readily occur

to one on a reading of the sectlon and there are no words

indicating such a restricted meaning. Further,it would

appear that the submitted interpretation is at varlance

with Section 85(3) which is in these terms:

"85 ( 3 ) In the proceeding under this Part in

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relation to a contravention of a provision of

Part V committed by the publlcatlon of an

advertisement, it 1s a defence If the defendant

establishes that he is a person whose business

it is to publish or arrange for the publicatlon

of advertisements and that he recelved the

advertisement for publication in the ordmary

course of business and dld not know and had no

reason to suspect that its publication would

amount to a contravention of a provislon of

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that Part. "

It would appear to me that by provldmg for such a defence

the legislature recognises that an advertiser can be gullty

of an offence in respect to an advertisement of other persons

goods and for repetitlon of a statement made originally by

other some pe- m. . . / 6

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Coming now to the relevant facts relating to a defence

under Section 85( 3) I am of the view that by 15 April, !

1975 the defendant company had reason to suspect that i .

its publicatlon would amount to a contraventlon because

of Mr. Garry's conversation with Mr. Paterson In whxh

Mr. Garry was alerted to the true posltion in relation

to sales tax after 30 April, 1975.

As to the defence based on Section 85(1) I am satlsfied

that the defendant company has established, on the civil

onus, the facts necessary to satisfy paragraph (a)

of Section 85(1). In seekmg to prove that the

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defendant company took reasonable precautlons to avold

a contraventlon, as 1s required of it by Sectlon 85(1)

(b) a nunber of witnesses were called. Mr. Archer, the t

General Manager of Channel 0, gave evidence that with the

coming into force of the Trade Practices Act a system of

vetting television advertisements was brought into being.

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I . The initial vetting was to be carried out by Mr. Yardley

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who had had a good deal of practical experience in the

advertislng world and Mr. Yardley was supplied with a

booklet which would appear to obtain an adequate summary

of Parts IV and V of the Act.

At some later stage Mr. Yardley acquire2 a copy of the

Act but it is not clear when he did so.

The instructlons to Mr. Yardley, were, that he should in cases of doubt that he could not resolve, refer the

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matter to Mr. Archer or to Mr. Lusk, the company secretary

and the person who assumed Mr. Archer's role when	Plr.
Archer was absent.

Mr. Yardley gave evldence that he had vetted. the advertlsement in question, had thoughtit to state the saies tax posltion accurately and did not form the view that the advertisement

was misleading. Having done that, he certifled that

in his view it did not offend against the Trade Practices

Commission by a notation on the cassette contamer. The

advertisement was dlscontinued on 21 April, 1975 and at

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no time was Mr. Yardley informed that there had been

any complaint about the advertisement. Included amongst

the precautions to be taken I am of the view there should

have been instructions to check the accuracy of any

statement, the ultimate source of which was a government

department,by enqulry of the relevant department.

Additionally, there should In my view have been a precautlon

that in the event of any complaint belng made to the effect

that the contents of an advertisement were misleading,

that complaint should be immediately referred to the

person or persons whose duty It was to take precautions

to avoid contravention of the Act. Further, the obvious

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precaution oZ insisting upon advertisef's verlfying the

factual content of their advertlsements should have been

taken.

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Due diligence was pot exercised in relation to the

investlgi tion of ?fr. Paterson' S complaint. Proper

investigation would have led to the advertisement being

withdrawn before the date of the alleged offence, 15 April,

1975.

On behalf of the dafendant company a number of submissions

have been made to me on the Interpretation of Section 84(2)

and the meanlng of "another person" In Section 85. These

submissions were based upon an interpretation contrary

to that arrived at in Ballard v Sperry Rand Australia Ltd.

6 A.L.R. 696. In my view "another person" does not t

include a director, servant or agent of the. corporation,

as was declded in that case. Further, for the same

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reasons as expressed in that report, Tesco Supermarkets

Ltd. v Mattrass 1972 A.C. 153 has no appllcation because

l of the presence of Section 84.

I hold that the defendant company has not made out a

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defence and, applymg the crimmal onus of proof, I

convict the defendant company.