O'Connor, A.J. v Stevenson, G.S

[1989] FCA 236

Re: ANDREW JAMES O'CONNOR
And: GARY SCOTT STEVENSON
Nos. G163-191, G193-204 and G1085-1092 of 1988
FED No. 236
Trade Practices Act

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES REGISTRY
GENERAL DIVISION
Einfeld J.(1)

CATCHWORDS

Trade Practices Act - plea of guilty to prosecutions - misleading, deceptive and false statements made to potential customers in order to sell advertising space - unavailability of defendant for cross examination - question of penalty given defendant's denial of personal responsibility - onus, standard and method of proof of facts for sentencing purposes.

Trade Practices Act (1974) - ss 53(c), 53(bb), 64(2A), 84.

HEARING

SYDNEY #DATE 11:5:1989

Counsel and Solicitors for Mr P Hastings instructed by
the prosecution the Director of Public

Prosecutions.

Counsel and Solicitors for Mr A Sullivan instructed b
the defendant Colin W Love & Co.

ORDER

The defendant is convicted of contraventions of sections 53(bb) 53(c) and 64(2A) of the Trade Practices Act 1974 as alleged in informations filed in this Court on 12 February 1988 and 14 July 1988 listed in paragraph 2 hereof.

Order that the defendant pay to the Registrar of this Court

(i) Five thousand dollars in each of charges G 195 and G 1091 of 1988.

(ii) Two thousand dollars in each of charges G 163, 165-168, 172, 174, 179-184, 186-188, 192-194, 196-204, 1085, 1089 and 1092 of 1988.

Order that the defendant is to pay the costs of the prosecution.

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

JUDGE1

In February and July 1988, Gary Scott Stevenson (the defendant) was charged by the Trade Practices Commission (the Commission) with fortynine offences under sections 53(bb), 53(c) and 64(2A) of the Trade Practices Act 1974 (the Act). He has pleaded guilty to 31 of these charges and the prosecution has indicated that it will offer no evidence on the remaining 18 charges. The maximum fine for each of these charges is prescribed by section 79 of the Act as $20,000.

1. Paragraphs (bb) and (c) of s 53 provide:-
   

53. A corporation shall not, in trade or commerce, in connexion with the supply or possible supply of goods or services or in connexion with the promotion by any means of the supply or use of goods or services -

. . . . .

(bb) falsely represent that a particular person has agreed to acquire goods or services;

(c) represent that goods or services have sponsorship, approval, performance

characteristics, accessories, uses or

benefits they do not have.

1. Section 64(2A) of the Act provides:
   

A corporation shall not, in trade or commerce, assert a right to payment from a person for unsolicited services unless the corporation has reasonable cause to believe that there is a right to payment.

1. The charges to which the defendant has pleaded guilty include offences under each of these three provisions.

2. At relevant times the defendant conducted a publishing business, part of which involved selling advertising space in magazines which he published. These magazines included:
   

a) "Care" - a journal for the parents of intellectually handicapped children

b) "Chopsticks" - the official journal of the Korea and South East Asia Forces Association

c) "Fight for Life" - a magazine associated with drug and alcohol awareness

1. The prosecution's principal allegation was that the defendant and his salespeople sought advertising for these publications by falsely representing that certain persons in the businesses being approached had previously agreed to insert advertisements. These assertions were false.

2. The defendant purchased his publishing business from Francis Joe Visscher on 17 November 1986. The business included the publication of "Exceptional Parents" (the previous name of Care) and Chopsticks. In 1986 the Commission instituted similar prosecutions to the present charges against Mr Visscher. An affidavit denying those charges was sworn on 5 November 1986 by the defendant who was then an employee of Mr. Visscher. Reliance was placed by the prosecution on that affidavit to establish some of the facts in these proceedings.

3. On 19 November 1986 the defendant registered the business name Lockart Publications (Lockart) with the New South Wales Corporate Affairs Commission. He also became the registered boxholder of P.O. Box 450, Turramurra. This was the name and address used by the defendant for the publication of Chopsticks. Later, on 6 March 1987 the defendant trading as Lockart Publications signed an agreement with the New South Wales Branch President of the Korea and South East Asia Forces Association to publish Chopsticks in return for some of the revenue raised from the sale of advertising in the journal. There was presumably an earlier agreement with that organisation which the defendant took over or carried on when he purchased Mr. Visscher's business.

4. On 22 April 1987 the defendant registered Packmore Publicity (Packmore) with the New South Wales Corporate Affairs Commission and on 8 May became registered boxholder of P.O. Box 521, Kogarah. Packmore may have become the publisher of one of the magazines in question.

5. From early February 1987 to the end of May 1987 the Sydney office of the Commission received unsolicited complaints from consumers concerning advertising in Care and Chopsticks. Officers of the Commission then commenced to telephone advertisers in these magazines, and a number of statements that became the basis of charges were taken.

6. On Thursday 23 June 1987 officers of the Commission assisted four federal police officers in the execution of a search warrant on the defendant's business premises at Suites 2 and 3, 71A Victoria Road, Gosford. Further customers of Lockart were contacted by the Commission on the basis of invoices taken during this search.

7. During the search there was found a sheet of paper headed "Tony" with script written on it. At the time, one of the defendant's salespersons was a Tony White on whose desk the piece of paper was said to have been found. This sheet was placed in the official property envelope which was not sealed until the officers left the premises. When the envelope was opened on 26 June 1987, the sheet was missing. The prosecution alleges that a Commission officer had read the script several times on 23 June and that when the sheet was found to be missing, he was instructed by his superior to type into his computer immediately his recollection of the contents of the script. The words now produced as having been in that script represent a damaging account of illegality if they were ever used to sell advertising. The defendant denies that he had ever seen or been responsible for this script and refutes any suggestion that he removed it from the envelope in which it was placed. On the other hand, the prosecution has produced evidence from witnesses and other material seized during the search from appears that the defendant's salespeople operated similarly reproduced from the script. The defendant declined to be interviewed personally but through his solicitor, he did answer a series of questions put to the solicitor by the Commission.

8. It appears that the defendant commenced telephoning businesses in connection with advertising in Care on 21 November 1986 using the alias Peter Harvey. Thereafter salespersons using different pseudonyms sold advertising in the magazine on his behalf. At about the same time, or a little later, advertising space in Chopsticks commenced to be sold in the same way.

9. The defendant acquired the magazine "Fight for Life" on 1 June 1987, having registered a new business name "Sunmack Public Relations" as its apparently intended publisher. From 21 August 1987 the Commission received similar complaints about this magazine as well as continuing to receive unsolicited complaints about the other two of the defendant's publications.

10. From material and evidence produced by the prosecution, it appears that potential advertisers were first identified their own advertisements appearing in other similarly compiled magazines and in the yellow pages. Apart from purporting to confirm a sale supposedly made at some earlier date, an important purpose of the subsequent telephone call was to get some type of reference number from the customer which could be used as an order number on an invoice. Sometimes it was said that this was a legal requirement for tax purposes. If the customer objected, he or she was told that it was too late as the magazine had already gone to print. There seems to be some doubt about the eventual consequence in such cases, because the defendant says that whenever there was an objection, the advertisement was cancelled or the customer received a free advertisement. There is little contrary evidence to dispute the defendant's assertion.

11. Following upon the telephone conversation, a representative of the defendant called on the customer. A form of advertisement was produced, the objective of which was to have the advertisement signed as approved and to obtain a cheque in payment. The wording of the advertisement was often taken from earlier copy which appeared in the publication from which the advertiser's name was originally taken.

12. Together with the defendant's plea of guilty, the evidence satisfies me that the relevant salespeople made the representations alleged. By reason of section 84 of the Act, the defendant is therefore liable for the wrongdoing identified. The critical question on the penalty issue is the extent of the defendant's personal involvement. Affidavits sworn by him denied personal complicity and say that when he learned of what had been happening, he moved to stop it. This raises the question of how, by whom and to what degree the facts in proceedings such as this need to be established when disputed. I briefly addressed this question in Thorp v Brian Lawlor Automotive Pty Ltd, unreported 24 July, 1987.

13. There is some dispute in the authorities on this matter and on the related matter of what is admitted by a plea of guilty. In R v O'Neill (1979) 2 NSWLR 582, Moffitt ACJ said at 588:
    

I think three elemental matters can be stated. First a plea of guilty, in itself, carries with it an admission of the essential legal ingredients of the offence admitted by the plea, and no more. Second, beyond that, any facts relied on by the Crown and, in particular, any that aggravate the offence must be established by the Crown by some acceptable procedure. Third, any dispute as to matters beyond the essential ingredients of the offence admitted by the plea, must be resolved by ordinary legal principles, including resolving relevant doubt in favour of the accused.

1. His Honour then outlined what he thought the acceptable procedure to be:
   

Where there are depositions and these are tendered before the judge and admitted, he is entitled to determine the nature of the offence by reference to the depositions. Where the accused disputes the facts, the appropriate course is for the accused to give evidence on oath and for the Crown to call before the judge any contrary evidence, except so far as he properly has before him admissions of the accused or evidence given on some other occasion, e.g. committal depositions sufficient to enable him to resolve the disputed facts. Where the Crown relies on matters which are disputed, and are not the subject of evidence given on oath before the judge or of depositions on oath admitted before the judge, they should not be brought to account, unless the subject of further evidence on oath.

1. I am not at all sure that this is the correct approach to be taken. However, these and other ideas of Moffitt ACJ do not deal with cases like the present case where evidentiary material has been admitted, some of it hearsay, and the defence produces evidence disputing some of the facts alleged and asserting different facts, but does not, because he cannot, give oral evidence due to serious long term illness. Nor does Moffitt ACJ say what the sentencing Judge is to do with the facts presented and how and by what tests or criteria the fact finding is to be determined.

2. In R v Martin (1981) 2 NSWLR 640 Hope JA, with whom Nagle CJ at CL and Begg J agreed, said at 642:
   

Without the benefit of authority I would have come to the conclusion that the trial judge must form his own view as to what, within the ambit of the verdict and of the charge, he should accept for the purpose of sentencing. It goes without saying that, as with the jury, he must be satisfied beyond reasonable doubt, but what he accepts on that basis is a matter for him and not a matter for the jury, provided that what he accepts is within the ambit of the verdict that the jury has arrived at.

1. From the judgment of the Full Court of the Supreme Court of Victoria in Reg v Harris (1961) VR 236, approved by the Full Court of the South Australian Supreme Court in R v Stehbens (1976) 14 SASR 240, Hope JA distilled and agreed with the following principle:
   

The responsibility of awarding punishment once a jury have convicted a prisoner lies solely upon the Judge. He has to form his own view of the facts and to decide how serious the crime is that has been committed, and how severely or how leniently he should deal with the offender. The learned judge in forming his view of the facts must not, of course, form a view which conflicts with the verdict of the jury, but so long as he keeps within those limits, it is for him and him alone to form this judgment on the facts . . . . . . He has presided at the trial and he has seen the witnesses and has seen how the trial has progressed, and he can form his own judgment of the seriousness or other character of the offence.

1. See also Reg v Webb (1971) VR 147 at 152. Stehbens also approved the remarks of Bray CJ in Reg v Thomson (1975) 11 SASR 217 at 221:
   

Is the judge in sentencing still bound to act on the view of the facts most favourable to the accused and consistent with the jury's verdict? Or can he act on the version which he himself is satisfied beyond reasonable doubt to be true, provided that it is not inconsistent with the jury's verdict? When the view of the jury of the particular factual issue in question for the purpose of sentencing is unknown, and the judge is prepared to make a finding on it beyond reasonable doubt based on his own opinion of the sworn evidence before him, I am inclined to think that he is at liberty to act upon it.

and those of the Full Court of the Supreme Court of Victoria in Reg v Kane (1974) VR 759 at 762:

If the learned Judge, as may well have been the case, regarded it as his duty to take the view of the facts most favourable to the prisoner, it would deny his freedom to form his own view of the facts within the limits of the conviction, and it would be a wrong approach.

Stehbens concluded:

This does not mean, of course, that a judge is free to form his own opinion of the facts without regard to the general principles of proof in criminal cases. The judge must give the prisoner the benefit of any reasonable doubt when forming his view of the facts for the purpose of sentencing the prisoner, consistent with the verdict of the jury.

In Kingswell v R (1985) 159 CLR 264, Brennan J said at 288:

. . . . . . . . . . . . . a distinction should be drawn between a finding of fact to guide the exercise of a sentencing discretion and a finding of fact on which the liability of an offender to a particular maximum penalty depends. The former is a familiar aspect of sentencing; the latter is ordinarily a consequence of a plea of guilty or of a jury's verdict of guilty. The distinction is drawn in R v Horne

(1777) 2 Cowp 272 at pp 682-683 (98 ER 1300 at p 1306), where it was laid down that the charge must contain such a description of the crime that the court "may apply the punishment which the law prescribes", but the charge need not set out circumstances which "do not contribute to make the offence" though they "may aggravate". Thus the conviction on an indictment ordinarily determines the maximum penalty which the law prescribes, and other circumstances - though relevant to the seriousness of the offender's conduct and to the exercise of the sentencing discretion - are left to the consideration of the judge.

His Honour went on:

When the ambit of the sentencing discretion is ascertained by reference to the conviction, the judge alone determines any question of disputed fact on which the exercise of his discretion depends. The judge is not at liberty to find that the offender was guilty of an offence graver than the offence of which he was convicted nor to make findings that conflict with the verdict of the jury.

1. This view was discussed by the High Court in R v Meaton (1986) 65 ALR 65 where the Court divided, as it had done in Kingswell itself, on the issue of whether it is necessary to include in an indictment matters of fact which, although not elements of the relevant offence, render the accused liable to a greater maximum punishment. The division of the Court in Meaton was even as to what Kingswell had decided, the minority in Meaton (Brennan & Deane JJ) holding that Kingswell decided inter alia that, as a matter of substantive law, the sentencing power "is validly enlivened by the satisfaction of the judge" that the relevant factual matter existed.

2. In contrast to the present case, most of these observations arose from findings of guilt by a jury. The New South Wales, Victorian and South Australian approaches appear to differ with each other and with the High Court's attitude and the Queensland position as shown in R v Welsh (1983) Qd R 592 from which I quoted with other cases in Lawlor Automotive (above).

3. In these circumstances I propose to proceed on the basis that I must be properly and fairly satisfied of any fact which is relevant to the fixing of the penalty and that any doubts should be resolved in favour of the defendant.

4. The prosecution concedes that on the available evidence, the defendant cannot be held personally responsible for the authorship of the sales pitch which was lost and later reproduced. Indeed if this had been the general method of the defendant's operations, it might have been expected that a copy of the same pitch would have been found in more than one desk in the premises when searched. On the other hand, the repetition by apparently independent customers of so similar a sales pitch being used by several different salespeople suggests that it was in widespread use in the defendant's business. It is difficult to conceive that this and the use of aliases by most, if not all, salespeople were co-incidental. The evidence of one of them called for the defence, Ms Ryan, to contrary effect was most improbable and incredible. I reject her account but that only leaves the matter still open for the drawing of inferences.

5. The prosecution asserts that on all the evidence including the affidavit he swore in the prosecution of Mr. Visscher and the matters of fact appearing in the judgment of this Court in Green v Ford (1985) 7 ATPR 40-603 in which the defendant was peripherally involved, the defendant must at least have known what method of selling was being used in his business. At most he was its architect. There is undisputed evidence that even after the raid on his premises, the same or similar conduct continued.

6. On the evidence I think that the defendant was well aware that advertising was being sought by conduct in contravention of the Act. Whoever was the author of the discovered script of false and misleading statements, I think it very likely that the defendant was personally responsible for the general practices used by his sales people of misleading people in the way alleged. Someone had to tell Ms Ryan for example, who had no prior experience in this type of business, what to say and do when she started work: Despite her quite unbelievable denials, this must have been the defendant or someone delegated by him. Her family had a prior personal association with the defendant. Her obviously untruthful evidence may therefore suggest not merely her own nervousness in the witness box or even concern for her own possible implication in future charges, but a deliberate effort to protect the defendant from the consequences of his unlawful conduct and to hide unpalatable facts concerning the defendant. The guilty pleas plus the evidence presented mean that the contrary conclusion can certainly not be formed. On balance I believe that the right conclusion to draw is that he was personally implicated to some degree in the unlawful conduct.

1. In mitigation of penalty, defence counsel asked that allowance be made for the remorse demonstrated by the pleas and in the defendant's affidavits, the fact that pleas have saved the Commission and the public great expense by avoiding a long trial, his alleged poverty, his ill health, and the amount of costs he has to pay. Some of these matters are relevant, others are not. There is no evidence of how much money he made from his unlawful conduct but the defence points to the fact that only 7 people have been identified as having been defrauded and the total amount of their deprivation is under $1,000.00.

2. Defence counsel did not ask for a non-pecuniary penalty and did not suggest that these were minor charges. In fact he acknowledged that the assailed behaviour was notorious in the industry. To mark the need for a proper punishment and for deterring such conduct in the future, both by the defendant and by others, and giving attention to relevant matters in mitigation, I fine the defendant $5,000 in each of the charges 195 and 1091 which have been nominally chosen for this purpose as more serious than others. On the remaining charges, I fine him $2000 each. The defendant is to pay the costs of the prosecution which I have been advised are estimated at about $25,000. These are to be agreed or taxed.