Henderson, Craig Jackson v Bowden Ford Pty Ltd

[1979] FCA 102

CATCHWORDS

Trade Pract lces - f a l s e representat ions - plea of g u i l t y -

imposition of f i n e - inexperienced employee - meaning of

"new" i n pr ln ted order form - relevance of other

contemporaneous representations.	Trade Pract lces Act
s.53(b).

CRAIG JACKSON HENDERSON	v	BOWDEN FORD PTY. LTD.
S.A. No. G 5 of 1979.
Fisher J.
Adelaide
5 October 1979.

IN THE FEDERAL COURT OF AUSTRALIA )

1

SOUTH AUSTRALIA DISTRICT REGISTRY ) S.A. No. G5 of 1979

1

GENERAL DIVISION )

IN THE MATTER OF THE TRADE PRACTICES

ACT 1974 SECTION 53(b)

B E T W E E N :

CRAIG JACKSON HENDERSON

Informant

- and -

BOWDEN FORD PTY. LIMITED

Defendant

O R D E R

JUDGE MAKING ORDER:	Flsher J.
DATE OF ORDER:	5 October 1979.
WHERE MADE:	Adelalde

THE COURT ORDERS THAT: -

1. The defendant is gullty of a contravention of s.53(b) Trade Practices Act 1974, 1s convicted, and is fined $1,000.00.

2. The fine be paid to the Drstrlct Registrar of thrs court

wlthln 21 days of the above date. i

3. The defendant pay the informant's costs wrth respect to this information.

I N THE FEDERAL COURT O F AUSTRALIA ) )

SOUTH AUSTRALIA	D I S T R I C T REGISTRY	)	S.A.	NO.	G5 of	1979
)

GENERAL D I V I S I O N )

--	I N THE FATTER OF THE TRADE PRACTICES
ACT 1974 SECTION 5 3 ( b )
B E T W E E N :
CRAIG JACICSON HENDERSON

I n f o r m a n t

- and -

BOWDEN FORD PTY. LIMITED

D e f e n d a n t

CORAM: Fisher J.

5 O c t o b e r 1979

REASONS FOP. nJUDGMENT ON PENALTY

The defendant B o w d e n Ford P t y . L l m i t e d ( " t h e d e f e n d a n t " )

i s a c o m p a n y incorporated i n South A u s t r a l i a . I t w a s charged

w i t h t w o contraventions of the T r a d e P r a c t i c e s A c t 1 9 7 4 ( " t h e A c t " )

a r i s l n g o u t of t he s a m e circumstances. I t has by i ts counsel

pleaded g u i l t y t o the charge t h a t it " d i d , i n cont ravent ion of

s . 5 3 ( b ) of the T r a d e P r a c t i c e s A c t 1 9 7 4 , i n t r ade or c o m m e r c e , i n

connection 1~1th the supply of g o o d s , namely a Ford E s c o r t G h l a

m o t o r v e h l c l e , f a l s e l y represent t h a t the sa id m o t o r vehicle w a s

n e w " . A f u r t h e r charge t o the effect t h a t t he defendant " d i d , i n

cont ravent ion of s . 5 3 ( a ) of t h e T r a d e Practices A c t 1 9 7 8 , i n t rade

o r commerce, i n connection w i t h the supply of g o o d s , n a m e l y a

Ford E s c o r t G h i a m o t o r v e h i c l e , f a l s e l y represent t h a t the sa id

motor v e h l c l e was a 1970 model" was clls!olssed upon t h e Informant

t ende r ing no evidence. I t remalns f o r me t o determine t h e

a p p r o p r i a t e p e n a l t y i n c i rcumstances where t h e maxlmum f i n e whlch

can b e imposed by t h e c o u r t i n r e s p e c t of a con t r aven t ion of s .53

i s , i n t h e c a s e o f a body c o r p o r a t e , $50,000.

The contravention occu r red i n t h e fo l lowing c i rcumstances ,

which were proved by affidavits f l l e d by bo th t h e informant and

t h e defendant and n o t s u b j e c t e d t o any cha l lenge . The defendant

1s a member o f a group o f companies which h a s been operating

s i n c e January 1968, and it c l a lms t o b e t h e l e a d l n g Ford d e a l e r i n

South Australia. I t d e a l s i n bo th new and used v e h l c l e s . From ~ t s

premises a t 229 Wakefleld S t r e e t , Adelalde i t c u r r e n t l y sells new

v e h l c l e s , and it d e a l s i n second-hand v e h l c l e s from o u t l e t s a t

Hi l lc res t , E n f l e l d , S a l i s b u r y , Beverley and Reyne l la , a l l o f whlch

a r e suburbs o f Adelaide. Durlng t h e 11 y e a r s of i t s operations,

more than 15,000 new v e h i c l e s have been s o l d and more than t h a t

number o f used v e h l c l e s . The contraventzon a r o s e o u t o f a t r a n s -

action between one Kenneth George Rosewarne ("Rosewarne") and a

salesman i n t h e employ o f t h e defendant , P e t e r Edv~ard Robinson

("Roblnson") , i n t h e month o f J u l y 1978.

For a number of y e a r s p r i o r t o t h a t d a t e it had been t h e

p r a c t l c e of t h e defendant t o h o l d r e g u l a r t r a i n l n g s e s s l o n s f o r

i t s salesmen, I n t h e cou r se of whlch t h e salesmen a r e instructed

t o ensu re the accuracy o f thelr r e p r e s e n t a t i o n s a s t o the y e a r and

model o f v e h l c l e s . Unfor tuna te ly f o r t h e defendant,Roblnson had

been employed by it f o r on ly 3 weeks, and h e w a s l n h l s f i r s t

p o s i t l o n a s a salesman a t t h e t i m e of t h e of fence . H e had n o t ,

a t t h e t i m e i n question, completed t h e f u l l t r a i n l n g cou r se

conducted by the defendant.

Rosewarne vlslted the premlses of the defendant on 1 July

1978, where he met Roblnson and discussed with hlm the purchase of

a Ford Cortina motor vehlcle. He was shown a Ford Escort wlth

manual transmlsslon and told "it's .:he latest model". He declded

to purchase a Ford Escort wlth automatlc transmission but was

told by Robinson that thls model was not in stock and would not

be available for about four weeks. Accordingly Rosewarne slgned

an order form for a Ford Escort wlth automatlc transmlsslon.

On 3 July Rosewarne returned to the defendant's premlses and enquired of Roblnson whether he would have to pay more if there was an lncrease in the prlce before the vehlcle he had

ordered was delivered. He was told that he would have to pay

any Increase in prlce prlor to delivery.1ihen he informed Roblnson

that he was not happy about thls, Roblnson sald that there was a

new Ford Escort Ghia walting to come from the workshop to the

sho\~room. Rosewarne enqulred on two occasions on thls day if it

was the latest model, and was told that it was. He declded to

accept the Ford Escort Ghla on the basls that it would be delivered

to hls home on the followlng Wednesday, 5 July 1978. When the

vehlcle was brought to hls home on that date by Roblnson, Rosewarne

again enqulred if lt was the latest model. Roblnson repeated hls

model". Rosewarne then slgned an order form headed "Retall earller statement In the followlng words: "yes, it's the latest "new" In the order form are contained in thls headlng and in the formal offer to purchase, and in each Instance on one occaslon only.

About f o u r wealis l a h e r Lhe Ford E s c o r t Ghla was involved l n

an a c c ~ d e n t , m consequence of vlhlch Rosewarne became aware f o r

t h e first t i m e of t h e i n f o m a t l o n s e t o u t on t h e compliance

p l a t e a f f i x e d t o t h e v e h i c l e , t o t h e e f f e c t t h a t it was manufacturec ,

I n October 1976. There was evidence b e f o r e m e from Rlchard

Morr ls Levy, t h e General F l e l d Manager C e n t r a l Reg5onal O f f l c e ,

of t h e Ford Motor Company Llmlted ( "Ford" ) t h a t t h e v e h l c l e i n

q u e s t i o n w a s delivered t o t h e defendant i n t h e month o f Aprzl 1977,

and t h a t Ford continued t o manufacture v e h l c l e s o f t h a t t y p e

u n t l l J u l y 1977. T h e r e a f t e r Ford manufactured what was accepted

t o b e ano the r model o f Ford E s c o r t Ghia motor v e h l c l e s , t h e

main differences be lng an inc reased englne c a p a c i t y and f u e l t a n k

capacity. Thus a s a t J u l y 1978 t h e Ford Esco r t Ghla s o l d t o

Rosewarne was n o t t h e c u r r e n t model, b u t a model t h e manufacture

o f which had ceased. I t was a superseded model i n t h a t it was

n o t t h e l a t e s t model, even though t h e p r o b a b i l l t l e s were t h a t i t

w a s s t i l l a v a i l a b l e f o r purchase by t h e p u b l l c .

These a r e t h e f a c t s on t h e b a s l s of v~hlch t h e defendant

p leaded g u l l t y t o a charge o f havlng f a l s e l y r ep re sen ted on 5

J u l y 1978 a t t h e home of Rosewarne t h a t t h e v e h l c l e s o l d t o

Rosewarne was "new". The charge t h a t i t had f a l s e l y r ep re sen ted

t h a t t h e v e h l c l e was a c u r r e n t model was dismissed upon no evldence

be lng t ende red i n suppor t t h e r e o f .

It i s apparen t t h a t t h e on ly r e p r e s e n t a t i o n made on 5 J u l y

1978 i n t e r m s t h a t t h e v e h l c l e was "new" was contained i n t h e

o r d e r form. I n the l l g h t 02 t h e p l e a of g u i l t y , it must be t aken

a s conceded by t h e defendant t h a t t o d e s c r l b e t h e v e h i c l e i n

quest ion i n t h e order form a s "ne~v" w a s a f a l s ~ rppresentat3on.

I

I t was not "ne!~" f o r t he reason t h a t it was a superseded model,

i n t h e sense i n whlch I have above used t h a t expression.

Difficulties Inherent i n asce r ta in ing t h e appropriate meaning t o

a t t a ch t o t h e word "new", and particularly 1-7hait appears i n an

o rde r form w e r e d e a l t with by t h e Fu l l Court of t h l s Court i n

Annand & Thompson Pty. Ltd. v Trade Practices Commission (1979)

25 A.L.R. 91.

I

On 5 Ju ly 1978 and on e a r l l e r occasions i n answer t o enquir ies

i

by Rosewarne, Robinson had s t a t e d thati-he veh ic le was t h e l a t e s t

model. These representa t ions w e r e a l s o f a l s e , but t h e charge i n

t he information which i s before m e i s not based on any of those

statements.

I t i s i n these circumstances t h a t counsel f o r t he defendant

submitted t h a t t h e admitted offence was merely a technical breach

of t h e A c t , i n t h a t t h e f a l s e representation was t o be found i n t h e order form, whlch form was t h e document of Ford and not t h e

defendant. I cannot accept t h l s submission. The essence of t h e

f a l s e representa t ion was t h e p lac lng before Rosewarne by Roblnson

of t h i s order form i n respect of a s a l e of t h i s p a r t i c u l a r

vehicle . Moreover t h i s offence i s i n my opinlon t o be considered

agains t t h e background of a number of enqu i r i es by Rosewarne,

both on t h e occaslon of t h e offence and e a r l i e r , whether he was

purchasing t h e l a t e s t mode1,and Robinson's p o s l t i v e answers t o

these enquiries.

In two cases before t h i s cour t and i t s predecessor t h e

Austral ian Industrial Court,Smithers J. gave considerat ion t o t h e

f a c t o r s relevanL Lo Llla a~uount uf Lhe apprupr laLe penalLy.

I r e f e r t o H a r t n e l l v Sharp Corporat ion o f A u s t r a l i a Pty . Limited

(1975) 5 A.L.R. 493 and v Southern M o ~ o r s Box H i l l P ty . Ltd.

(1977) 1 5 A.L.R. 428. I n t h e f o ~ m e r c a s e t h e m a t t e r s whlch he

regarded a s important w e r e t h e Importance o f t h e u n t r u e s t a t emen t ,

t h e degree of w i l f u l n e s s o r c a r e l e s s n e s s i n t h e making of t h i s

s t a t e m e n t , t h e degree o f u a t r u t h f u l n e s s , t h e e x t e n t t o whlch t h e

s ta tement had been disseminated, what e f f o r t s , i f any,had been

made t o c o r r e c t t h e s i t u a t i o n and t h e e x t e n t t o whlch it could be

, -

c o r r e c t e d , a n d t h e d e t e r r e n t e f f e c t of any pena l ty . I n t h e l a t t e r

c a s e h e added one f u r t h e r c r i t e r i a , namely t h e e f f e c t on t h e

defendant o f adverse publicity. With r e s p e c t I adopt h l s approach

a n d I have given consideration t o t h e s e c r l t e r l a i n s o f a r a s they

a r e app l i cab le .

It is i n my opln lon c r u c i a l t o b e a r i n mind t h a t t h e l e g i s l a t u t e

I

r e g a r d s very seriously o f f e n c e s under t h i s Ac t , imposlng i n t h e

c a s e o f c o r p o r a t i o n s a maximum p e n a l t y of $50,000. I have a l s o t o

bea r i n mlnd t h a t it i s conceded t h a t t h l s i s n o t t h e f i r s t

t ime t h a t t h e defendant h a s contravened t h i s t y p e of l e g l s l a t a t l o n ,

I n t h a t it committed an o f f e n c e on 9 February 1976 a g a l n s t t h e

Unfa l r Adve r t i s inq A c t (S.A.) f o r which it w a s f i n e d $175.

I n t h i s m a t t e r t h e r e p r e s e n t a t i o n i n t h e o r d e r form was i n

r e s p e c t o f t h i s v e h l c l e undoubtedly u n t r u e and d i d have an

impor tan t bea r ing on t h e mind o f Rosewarne. It w a s f a l s e i n

r e s p e c t o f a t o p l c upon w h ~ c h t h e la t te r sought r za s su rance on

a number o f occasions. I do no t see t h e decept ion as d e l l b e r a t e

b u t r a t h e r a s t h e consequence of t h e l a c k of c o n t r o l and t h e

c a r e l e s s n e s s o f t h e defendant i n permitting such an inexper ienced

salesman, who had not completed the defendant's training sessions,

to make sales to the public. I can, and do, take into account

the dlfflculties of an inexperienced employee in completing an

order form containing such an ambiguous word as "new" and the

problem of adaptlng that form to fit truthfully diverse clrcumstan-

ces. Fortunately for the defendant, the false representation

dld not go beyond Rosewarne, who has been compensated to the extent

of $875 by the defendant for the loss he clalms to have suffered.

I take into account the fact that the defendant has pald thls

compensation and that it had instituted tralnlng sessions as a

procedure to achieve compliance wlth the provisions of the Act.

However to accord with the legislature's dlrectlon a substantial

penalty must be imposed. In thls area the deterrent aspect is

most important and t h ~ s must be taken into account.

In all the circumstances I thlnk an appropriate penalty is

a fine of $1,000 which the defendant must pay together with the

costs of the informant, to be taxed if not agreed.

i

The order of the court is that a conviction be entered against

the defendant and a flne of $1,000 imposed. I order that the flne

be paid to the Dlstrlct Registrar of this court within 21 days

of thls date and that the defendant pay to the informant its costs

to be taxed if not agreed.

I cert~fy that th~s and the 6 preceding

pages are a true copy of the Reasons for

Judgment of Mr. Just~ce Flsher

Dated: s - @ c ~ /F77 ,