Re Sterling; Ex parte Esanda Ltd

[1980] FCA 61

Re: CRAIG JACKSON HENDERSON
And: PIONEER HOMES PTY. LTD.; PIONEER AGENCIES PTY. LTD. (1980) 43 FLR 277
S.A. Nos. G6-41 inclusive of 1978
Case stated

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
SOUTH AUSTRALIA DISTRICT REGISTRY
Smithers(1), Franki(2) and Northrop(3) JJ.

CATCHWORDS

Case stated - trade practices - advertisements - misleading statements - promotion by any means of the supply of services - statements "with respect to" price - statements concerning effect of any condition - questions of fact or law.

Trade Practices Act 1974 ss. 52, 53.

Federal Court of Australia Act 1976 s.25 (6).

Trade Practices - Consumer protection - Prosecutions - Case stated - Advertisements - Statements made in connexion with promotion of supply of services - Statements with respect to price of services - Statements concerning effect of any condition - Whether statements misleading - Trade Practices Act 1974 (Cth), ss. 4, 4 (1) (d), 4C (d), 52, 53 (e), (g) - Federal Court of Australia Act 1976 (Cth), s. 25 (6).

HEADNOTE

The defendants were charged, separately, on informations with contraventions of s. 53 (e) and (g) of the Trade Practices Act 1974 ("the Act"). The informations arose from certain newspaper advertisements promoting transactions involving purchasers entering into a contract for the sale of house and land and any extras or two contracts one for the sale of land and the other for the building of a house and any extras. At settlement the purchaser was to be provided with temporary finance and, at least a year but not more than three years thereafter, long-term finance would be substituted. The advertisements referred to deposits of $100 and weekly payments of between $40 to $50. In fact in the transactions being promoted the weekly payments increased to $75.42 after the long-term finance was substituted. The terms of the individual advertisements are described in the judgment of Smithers J.

Before the trial judge, Smithers J., the defendants pleaded not guilty and at the request of all parties his Honour stated a case for the Full Court. The questions asked in the stated case were: (a) Were the contents of the advertisements which referred to $100 deposit and payments of weekly amounts statements made in connexion with the promotion by any means of the supply of services? (b) If yes to (a) - (i) were the said statements made with respect to the price of services; and (ii) were the said statements made concerning the effect of any condition? (c) If yes to (b) (i) and/or (ii) - were the said statements misleading?

Held: Per curiam - all questions should be answered in the affirmative in respect of each advertisement because: (1) As to question (a) - Per Smithers J., the contents of the advertisements were made in connexion with the promotion of the sale of rights and interests in real property and thus of services as defined in s. 4 of the Act and accordingly of services within the meaning of s. 53 of the Act. Per Franki and Northrop JJ., the word "services" is defined by s. 4 of the Act as including interests in real or personal property and "any contract for or in relation to the lending of moneys" and by s. 4C(d) the supply of services includes a reference to the supply of services together with property or other services or both.

(2) As to question (b) (i) - Per Smithers J., the transaction proposed by the advertisement was a package deal offering two "services" within the meaning of s. 4 of the Act - land and a loan. The price referred to in the advertisement was what according thereto would secure to the purchaser both land and loan. That the payments described might relate also to the discharge of interest and other incidental charges was not inconsistent with this conclusion. Per Franki and Northropp JJ., the words "with respect to" bear a very wide meaning much the same as the words "in respect of". Grannall v. Marrickville Margarine Pty. Ltd. (1955), 93 CLR 55; State Government Insurance Office (Q.) v. Rees (1979), 53 ALJR 752; R. v. M., (1980) 2 NSWLR 195, referred to. A statement setting out the way in which the price is to be paid is a statement with respect to the price although not a statement with respect to the amount of the price.

(3) As to question (b) (ii) - Per Smithers J., the relevant part of s. 53 (g) of the Act refers to a condition to be observed by one of the parties in the actual transaction which is in the mind of the promoter and which he is actually promoting and the only conditions relevant are those the advertisement states will be part of the transaction being promoted if the parties actually enter it. The term that the vendor would arrange the necessary loans for the purchaser to be repayable at not less than $45 per week would come within the meaning of the word "condition" in s. 53 (g) of the Act as it went to the root of the proposed contract. Ballard v. Sperry Rand Australia Ltd. (1975), 6 ALR 696, applied. The advertisements stated the effect of a condition which did exist because they asserted that in the transaction being offered there was a term relating to the financing of the transaction by the purchaser and that its effect was as stated. Per Franki and Northrop JJ., the advertisements stated the effect of a fundamental term and so included "a statement concerning the effect of a condition" within the meaning of s. 53 (g) of the Act.

(4) As to question (c) - Per curiam, upon the particular set of agreed facts each statement under consideration must of necessity be misleading.

Observations by Smithers and Franki JJ. on the classes of persons to whom the advertisements were directed and against whose understandings the advertisements were to be judged.

World Series Cricket Pty. Ltd. v. Parish (1977), 16 ALR 181; McDonald's System of Australia Pty. Ltd. v. McWilliam's Wines Pty. Ltd. (No. 2) (1979), 41 FLR 436, applied.

HEARING

Melbourne, 1980, May 12. #DATE 12:5:1980

CASE STATED.

In proceedings brought by the informant against the defendants alleging breaches of s. 53 of the Trade Practices Act 1974 the trial judge at the request of the parties stated a case for the Full Court pursuant to s. 25 (6) of the Federal Court of Australia Act 1976. The terms of the case stated appear sufficiently from the judgments of Smithers and Franki JJ.

R. G. Matheson Q.C. and M. Blue, for the informant.

H. C. Williams Q.C. and M. J. Kernot, for the defendants.

Cur. adv. vult.

Solicitor for the informant: Alan R. Neaves, Commonwealth Crown Solicitor.

Solicitors for the defendants: Olsson, Lowrie & Co. T. J. GINNANE

ORDER

1. Questions in the case stated answered as follows:

(a) "Yes" in respect of each advertisement.

(b) (i) "Yes"

(b) (ii) "Yes"

(c) "Yes"

2. Either party is at liberty to apply for an order for costs for these proceedings upon notification to the Deputy Registrar within fourteen days of this date of its desire to make such an application.

Orders accordingly.

JUDGE1

This matter is now before the Court pursuant to an order of the High Court directing this Court to exercise in relation to the special case stated by me as the trial judge, the jurisdiction conferred upon the Full Court of the Federal Court of Australia Act 1976. The relevant parts of the agreed facts upon which the answers to the questions stated in the special case and the relevant sections of the Trade Practices Act 1974 (the Act) are sufficiently set out in the judgments of the members of the Full Court delivered in the proceedings herein on 21 May 1979.

The first question stated to this Full Court was:-
"Were the contents of the advertisements which referred to $100 deposit and payments of weekly amounts statements made in connection with the promotion by any means of the supply of services?"
The answer to this question is in the affirmative. Indeed it was not seriously contested to the contrary. The contents of the advertisements were obviously "made" in connection with the promotion of the sale of rights and interests in real property and thus of services as defined in s.4 of the Act and accordingly of services within the meaning of s.53 of the Act.

The second question is as follows:-
(b) "If yes to (a),

(i) were the said statements made with respect to the price of services; and

(ii) were the said statements made concerning the effect of any condition?"
In considering this second question it is convenient to deal, first with the advertisement exhibit "E". This advertisement announces that it is inserted by Pioneer Homes and displays representations of attractive looking houses. It speaks of a last chance to buy one of two remaining houses including house, land, carpet, paving and fencing, for the full price of $37,600. It announces in very prominent type "$100 deposit and $45 per week". And it does so in a way that suggests that this statement is unqualified and definite. If one reads on, the first words encountered are "That's right, the home deal that really stands up". It invites the reader to "Invest In Your Future", and then tells him that the deal is one which involves him in an outlay of "less than 30[ an hour for the first twelve months". It then comments "So much for so little, House, Land, Carport, Paving, Fencing, Carpets". After the word "Carpets" is an asterisk. This directs one to the following in comparatively and actually very small print:-
"Bridging finance as above for 12 months. A further 12 months' temporary finance can be arranged, if required, to approved clients from S.G.I.C. and Lensworth Finance Ltd., FULL PRICE $37,600."
Other parts of the advertisement indicate that the proposed transaction will be "a fixed price contract". One section of the advertisement asks, "How low can we go - from $45 a week for a new house. That's cheaper than rent (only 27[ an hour for 12 months)". Another section of the advertisement states "from $100 deposit" and comments, "That's right, only $100 deposit lays the base for the house (just over 1[ an hour for 12 months)".

As is pointed out in the discussion hereinafter appearing the advertisement is to be interpreted as offering a transaction of sale to a potential purchaser of the specified land at the price of $37,600 payable by a deposit of $100 and $45 per week in respect of which the price payable would be paid to the vendor and would be paid to him not later than at the expiration of twelve months, out of moneys borrowed by the purchaser on a loan which the vendor would arrange and the terms of which would be such that the loan interest and other charges relating thereto could be discharged by payments of $45 per week.

It is clear from the stated case that after twelve months the purchaser who entered into the proposed transaction would have to make payments of considerably more than $45 per week until the amount required to be paid by the purchaser to discharge his obligation to the vendor and in respect of the loan which it was contemplated he would require to complete the purchase was paid. So far as the first twelve months were concerned the statement in the advertisements were accurate. But the statements as to the payments to be made thereafter were not accurate. But whether the latter were statements with respect to price is another matter. In a sense they were because they state the rate of payment that the purchaser will be required to make to complete the transaction. However I do not think that one can assert that a reasonable reader would reasonably understand from the advertisement that the vendor was offering to sell the house on the basis that he himself would accept payment of the price, presumably including interest thereon, at the rate of $45 per week. I do not think it could be said that a reasonable reader would reasonably understand that the vendor was offering to stand out of his money on account of the price required by him for the land after the contemplated settlement date which would be not later than at the expiration of the first twelve months. From then on some third party lender is certainly in prospect. Accordingly, I conclude that it could not be asserted in simple terms that the statements concerning the repayments after the first twelve months are statements with respect to the price to be paid to the vendor for the land. However, the offences alleged are concerned with the price not for the land but for the service which was offered. Certainly the rights in the land which were the subject of the proposed transaction were a service within the definition of "services" in s.4 of the Act. But the proposed transaction involved another service. It was what may be called, a package deal. It offered land and it also offered a loan of money. The loan offered was not one in which the vendor of the land or the person advertising the package would necessarily be the vendor. But the promise as part of a total transaction to arrange a loan clearly falls within the description "any contract for or in relation to the lending of money". See part (d) of the definition of services in s.4(1)(d) of the Act. Accordingly each part of the proposed transaction, namely the sale of the land and the promise to arrange a loan constituted a service within the meaning of the Act. The answer must be that there was a price to be paid by the purchaser for the total services offered. According to the advertisement that price was $100 deposit and $45 per week until the loan was repaid. It is impossible to say how much of that price was attributable to the land and how much to the loan. But it is clear that the $100 deposit and $45 per week was what according to the advertisement would secure to the purchaser both land and loan. It was the price for these services. Accordingly the answer to question (b)(i) with respect to the statements in annexure "E" so far as they concern repayments after the first twelve months is in the affirmative.

It is not necessary to answer question (b)(i) with respect to the payments to be made in the first twelve months because it is not said that they were false or misleading.

It is convenient at this stage to consider the answer to question (b)(ii) namely whether the statements concerning the $100 deposit and weekly payments of $45 were made concerning the effect of any condition. Section 53(g) is in the following terms:
"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
. . .
(g) make a false or misleading statement concerning the existence, exclusion or effect of any condition, warranty, guarantee right or remedy."
For the purpose of ascertaining the scope of the expression "condition" in s.53(g) it is useful to refer to what is said by Donald & Heydon in Volume 2 of Trade Practices Law (1978) at p.608, namely:-
"The reference to 'condition' and 'right or remedy' were inserted in 1977 in order to avoid problems arising from the ambiguity of 'warranty' as meaning 'contractual term sounding only in damages', or 'any contractual term', or 'any promise (i.e., including the normally non-enforceable promises made by manufacturers when retailers sell durables to customers). The ambiguity is now resolved: 'condition' will catch warranties as opposed to conditions, and statements about terms which are not classifiable either as conditions or warranties will be statements, directly or indirectly, about a 'right or remedy': see Hong Kong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd./1962/ 2 Q.B. 26"

There can be little doubt that in a contract for the sale and purchase of land, whatever sense the expression "condition" in s.53(g) is to be understood, a term that the vendor would arrange the necessary loans for the purchaser to be repayable at not more than $45 per week, would be such a condition. It obviously goes to the root of the contract. I would refer to and adopt the comments of the Australian Industrial Court in Ballard v Sperry Rand Australia Ltd. (1975) 6 A.L.R. 696 where, speaking of the offence created by s.53(g) in its then form, the Court said at p697:-
". . . the essence of the offence was a false statement concerning a warranty and that 'existence' or 'effect' could overlap in many cases. To state the effect of a warranty is also to state the existence of a warranty in terms having such effect. The instant case provides a good illustration. To state that there is a 'one year's warranty' when the truth is that the warranty is for a 90 day period is both a false statement as to the existence of a one year warranty and a false statement as to the effect of a 90 day warranty."
Of course, in this case, the advertisement is concerned not with a transaction which has been entered into by the parties. It is one of those cases referred to in the opening words of s.53 where, whatever statements are made in the advertisement, are made in connexion with the promotion of the supply of services. In this context, the only conditions which are relevant are those which the advertisement states will be part of the transaction being promoted if the parties actually enter into it. The alleged condition, the existence or effect of which is said to ahve been the subject of false or misleading statements in this case, is a condition to the effect that the vendor would arrange for finance by way of loan or mortgage or in some form which the purchaser would accept from a lender or lenders sufficient in amount to pay the vendor his full price of $37,600 and which would provide for repayments of loan and interest and other charges at the rate of not more than $45 per week, and that such payments would be sufficient to discharge such charges in the fulness of time. If a statement were made that the proposed transaction, if entered into, would contain a provision to this effect, then that statement was an assertion that such condition did exist, that is, that it was a condition of the actual transaction being promoted or offered. It also stated the effect of a condition which did exist, because it asserted that in the transaction being offered there was a term relating to the financing of the transaction by the purchaser and that its effect was as stated above. Of course it erroneously stated the effect of the actual condition in the transaction being promoted or offered.

The concept invoked by s.53(g) is that of a transaction being promoted. In relation thereto, what does exist is the collection of rights and duties which will be acquired or assumed by the parties to the transaction being promoted as between the proposed vendor and the proposed purchaser, if they enter into the transaction which the promotor actually has in mind, and is promoting. So far as finance is concerned the condition which is part of the transaction actually being promoted is made clear in the special case. It shows that weekly payments provided for in that transaction are substantially in excess of $50 per week after the first twelve months. When s.53(g) refers to a condition which is existing or not existing, or stated accurately or otherwise it is inevitably referring to a condition to be observed by one of the parties in the actual transaction in the mind of the promoter and which he is actually promoting. The conditions in the transaction being promoted are to be identified as those which the vendor is actually offering, not what he says in his advertisement that he is offering. If the advertisement states that one of those conditions is of a particular kind, but that condition is not included in the bundle of rights and duties in the transaction which the vendor intends to make, then it is correct to say that that condition does not exist and the statement that a transaction with that condition in it is being offered is false or misleading. Similarly if the advertisement states that the finance provisions of the proposed transaction are of a particular kind, but the finance provisions in the transaction actually being promoted are different then the effect of the condition is falsely or misleadingly stated. In this case the transaction and its conditions concerning finance which were actually in the mind of the promoter and those which he was actually promoting as stated in the special case differed.

The question is therefore what would a reasonable reader of the class to which the advertisement was directed reasonably understand from the advertisement. Would he understand that he was being offered a deal in respect of which he would pay $45 for twelve months, or two years if he happened to be approved, and then have to do the best for himself that he could in the open market? The kind of reader concerned is quite likely to be a man or woman of indifferent education, unacquainted with conveyancing practice or the law and unaccustomed to analysing business documents. The advertisement invites the reader to have full confidence in Pioneer Homes, to rely on the advertisement as candid and bona fide, meaning what it says, speaking the language of the reader and to be read without suspicion. In World Series Cricket v. Parish (1977) 16 A.L.R. 181 at pp. 202-203 Brennan J. in an application for interlocutory relief made the following relevant statement:-
"Although knowledge may be a valuable barrier against deception, the question for the Court to determine is whether there is a prima facie case that the use of the terms complained of would mislead or deceive the class of persons to whom the advertising is addressed. In the present case, there is substantial evidence that the advertising is directed to the general public - the knowledgeable and those who are not, the superficial reader or viewer or listener as well as the profound, the gullible as well as the cautious." (see also per Bowen C.J. at pp. 188-189 and per Franki J. at p.195)
The man or woman the target of the advertisement would read that Pioneer homes were presenting the last two houses available at $100 deposit and $45 per week. Those simple words convey that the house is to be bought for those payments. He or she is told that the deposit is $100 and would understand that the $45 was the weekly instalment not merely the rate of payments for a year or two with some unstated rate of instalments thereafter. And when he or she reads that the payments work out at 30[ an hour or 27[ an hour for twelve months and that the deposit works out at 1[ an hour for twelve months the reader would be impressed by the cheap rates he was being offered, but it is going a long way to suggest that although he was supposed to be "investing in his future" at the rate of $100 down and $45 per week that future was only of twelve months duration. Similarly when that person read about the bridging finance the terms would possibly be unfamiliar to him. But they were expressed in language which promises him something. Was he to understand that in addition to promising him something the company was to be read as contradicting the impression he had gathered from the plain prominent exciting words at the head of the advertisement? I do not think so and I do not think the draftsman of this advertisement intended him to so understand. Explanations of that kind would be in order after Mr. & Mrs. Truckdriver had come into the office and paid their $100 deposit.

The advertisement conveys to persons to whom it is addressed, that the transaction offered is one in which the purchaser will become the owner of the real estate concerned upon payment of a deposit of $100 and weekly payments of $45 until the purchase price, or money borrowed to pay the purchase price, and interest and incidental charges in respect of the purchase price, or the relevant loan, is discharged. It implies that the transaction promoted therein contains the conditions, first, that the transaction promoted contains a term that the vendor will arrange finance for the purchaser, adequate for him to pay to the vendor the balance of the stated price and in respect of which the purchaser would be required to execute appropriate documents, presumably a mortgage or mortgages, which would require him to pay off the relevant loans by weekly instalments of not more than $45, and secondly that the loan to be arranged by the vendor would be on such terms that $45 per week would be sufficient to discharge that loan and the interest thereon and its incidental charges at some time in the future. This seems rather a complex term to read into the advertisement, but notwithstanding that the transaction was the simple one that the purchaser was to become the owner of the home on payment of $100 and $45 per week and borrowing was involved, the apparent complexities are merely the accurate statement of the reality in extended form.

Accordingly it is my view that statements in the advertisement in the form of annexure "E" to the special case were statements as to the price of the total service offered and to the effect of a condition of the transaction promoted by that advertisement. The foregoing observations and conclusion concerning the advertisement in the form of annexure "E" are applicable to the advertisements in the form of annexures "F", "G" and "K". The answers to both questions concerning those advertisements are in the affirmative.

The advertisement in the form of annexure "H" states that Pioneer Homes Pty. Ltd. can offer homes on terms that the purchaser will be able to become the owner of one, or even more than one of them, by payments of as little as $100 deposit and $50 per week, and impliedly invites a purchaser to communicate with the company with a view to the making of a transaction of purchase on such terms. The advertisement does not indicate whether the transaction will be a contract between the vendor and the purchaser under which the vendor will accept payment of the price at the stated rate, or whether the purchaser would be required to enter into mortgages to acquire the money to pay the price forthwith. The advertisement seeks to promote the supply of a service and it does impliedly say that the promoted transaction, if it is entered into will be on terms that the payments to be made by the purchaser will not exceed $100 deposit and $50 weekly in the case of certain of the "quality" homes available. It follows that the advertisement does state the effect of one of the conditions of the promoted transaction. The discussion with respect to annexure "E" is relevant and the answer to both questions in respect of the advertisement in the form of annexure "H" is Yes.

The advertisement, in the form of that in annexure "J", states that Pioneer Homes Pty. Ltd. has in being a "special new home" offer in respect of homes in certain Adelaide suburbs. It states that it is a feature of this home purchase offer that $100 is the deposit and weekly payments are $45. It seems clear that the reader is being told that he can become the owner of one of these homes on payment by him of $100 deposit and $45 per week thereafter for some unspecified period. The reader is told also that bridging finance as above will be made available, apparently, for twelve months to approved applicants and can be arranged for a further twelve months if required and that the full price is $37,600.

The advertisement is clearly intended to promote the supply of services. But for the intimation concerning bridging finance it is clear that the transaction being promoted is one in which the obligations of the reader will be limited to $100 deposit and $45 weekly. It is said that the intimation concerning bridging finance shows the reader, that if he had gained that impression on reading the prominent part of the advertisement, that impression was mistaken. I refer to the observations earlier in these reasons as to the class of reader involved. I consider that talk of bridging finance for one or two years does not with any clarity qualify the simple message of the prominent part of the advertisement. If a document is addressed to simple or ordinary people and contains a firm, prominent and simple assertion which all can understand, the impression created thereby is not to be washed away by implications said to be lurking in statements positive, rather than negative in form, in a legend in the advertisement, the alleged full import of which is not stated. The sort of reader in contemplation is hardly likely to think that what is stated so plainly and attractively in lines one and two, is being cancelled by implications to be gathered from the small print. The result is, in my opinion, that the statements of the advertisement in the form of annexure "J" to the special case with reference to the deposit and weekly payments were made with respect to the price of services and were made concerning the effect of a condition in the terms of that arising as stated above in the discussion of the advertisement in the form of annexure "E". Accordingly, in my opinion the answers to question (b) in respect of the advertisement in the form of annexure "J" are:-
(b) (i) Yes.
(ii) Yes.

The advertisement in the form of annexure "I", is clearly a step in the promotion of a transaction in which the reader will purchase the home referred to therein at an undisclosed price for $100 deposit and $50 per week. In my opinion the statements therein concerning the deposit and weekly payments are made with respect to the price of the services to be supplied. They state the rate of payment required to discharge the purchaser's contemplated liability to pay the price of the real property he will be purchasing. That they may relate also to the discharge of interest and other incidental charges is not inconsistent with this. Similarly, the statements were made concerning the effect of a condition. The condition which the advertisement says is or will be part of the transaction being promoted is that the purchasers liability in respect of payments to be made by him will not exceed a deposit of $100 and payments of $45 per week. If the condition as to the payments to be made which was part of the actual transaction being promoted was different from those of the condition referred to in the advertisement then the statements were probably false, certainly misleading. Similar observations may be made in respect of the advertisement shown in annexure "L".

Accordingly in respect of these advertisements being annexures "I" and "L" to the special case, the answer to question (b) is:-
(i) Yes.
(ii) Yes.

I turn to the advertisement being annexure "M" which was published by the defendant Pioneer Agencies Pty. Ltd. That advertisement directs the attention of readers to a proposal that they should purchase a new home in one of a number of Adelaide suburbs from "the Pioneer Range" for the price of $37,600 on terms that the purchaser should pay $100 deposit and $50 per week. If no more appeared, it would be quite clear that the references to the deposit and the weekly payments would be statements as to the amounts of weekly payments which would be accepted by the vendor to discharge the purchase price. But more does appear, as the potential purchaser is informed that money would have to be borrowed, presumably by him, and that the vendor might arrange for "bridging finance" for "twelve months to approved applicants" or possibly for two years. Nothing is said about the source of the money to be borrowed to cover the outstanding liability of the purchaser in default of bridging finance, or at the expiration of the term of such bridging finance. The terms of the advertisement do not indicate that the transaction being promoted by the advertisement is dependent upon finance being arranged. The suggestion is that if bridging finance is required it may be arranged by the promoters. Nevertheless, it may be read into the advertisement that long term finance in the form of "long term loans" may be required by the purchaser to pay the price. The advertisement quotes "$100 full deposit, $50 per week" and adds "with no addition to long term loans". It is to be understood from this, that when the long term loan was arranged, there would be no liability to make payments in excess of $50 per week.

It seems clear therefore that the statements in the advertisement indicate that the purchaser will be required to borrow money to discharge the balance of purchase monies after payment of the $100 deposit. It follows that the payments of $50 per week are really with respect to the discharge of the obligations arising out of the borrowing of the necessary money.

But for reasons indicated, in relation to advertisements considered above I am of the opinion that the statements were made with reference to the effect of a condition, the condition being in the terms of that defined in the consideration above of the advertisement being annexure "E". The answers to question (b) in respect of the advertisement in annexure "M" are therefore:-
(i) Yes.
(ii) Yes.

As to the advertisement being annexure "N" I see no distinction in principle between the statements in that advertisement and that being annexures "I" and "L". Accordingly the answer to question (b) is:-
(i) Yes.
(ii) Yes.

As to the advertisement being annexure "O" I see no distinction in principle between the statements in that advertisement and those in the advertisement being annexure "M". Accordingly the answer to question (b) is:-
(i) Yes.
(ii) Yes.

JUDGE2

On 21 May 1979 (25 A.L.R. 179) this Court delivered judgment in this matter wherein it struck out the stated case on the ground that it had no jurisdiction to answer the questions posed. The High Court on 7 November 1979 (54 A.L.J.R. 16), in proceedings seeking a writ of mandamus, made an order that a writ of mandamus issue directed to this Court and the judges of this Court who had heard the matter commanding them to exercise, in relation to the Special Case stated by Mr. Justice Smithers, the jurisdiction conferred upon them by s.25(6) of the Federal Court of Australia Act, 1976. At the same time the High Court dismissed the application for special leave to appeal from the judgment of this Court. The relevant parts of the agreed facts set out in the stated case and the relevant sections of the Trade Practices Act 1974 ("the Act") have been sufficiently set out in the judgments of 21 May 1979.

It will be seen from the agreed facts in the stated case that no point is made that any difference between the various advertisements is of any substantial significance. The agreed facts make it clear that the transactions which the advertisements were promoting comprised the sale of a block of land together with a house thereon, or to be built thereon, and in some cases some or all of specified extras, namely carport, fencing, paving, vinyl and carpets were included. These houses were said to be available for purchase at certain locations on finance plans specified in the said advertisements. The transaction being promoted involved the purchaser entering into a contract for the sale of house and land (and specified extras, if any) or two contracts, one for the sale of land and the other for the building of a house (and specified extras, if any). At settlement temporary finance would be provided for the purchaser. At least a year but not more than three years, after settlement, long term finance would be substituted for temporary finance.

The advertisements referred to the payment of a deposit of $100 and weekly payments of $40, $45 or $50. Some of the advertisements did use the word "from" before mentioning the weekly payment but no reference is made to this fact in the stated case nor do I consider it of any significance.

In reality the transactions being promoted provided for a payment of a $100 deposit and weekly payments of $40, $45 or $50 per week during the period before the substitution of long term finance. Thereafter the weekly payments by a purchaser were to be $75.42.

In my opinion, each of the advertisements annexed to the case and referred to as exhibits E to O, would appear to the appropriate class of reader as an offer of a home for $100 deposit and either $40, $45 or $50 per week depending upon the particular advertisement. In some of the advertisements reference was made in small type to the cost for the first 12 months and to bridging finance and some were cast in a way that might suggest to a well educated and cautious reader that the attractive proposition of paying only $40-$50 per week might be subject to some qualification. However, these advertisements were directed to the general purchasing public and not only to the well educated and cautious reader. Some of the potential readers were uneducated people on low incomes and, in some cases, people badly in need of accommodation.

I repeat what I said in relation to s.52 of the Act in McDonald's System of Australia Pty. Ltd. v. McWilliam's Wines Pty. Ltd. (1979) A.T.P.R. 40-140 at p. 18518:
"Broadly speaking it is fair to say that the relevant persons are those not particularly intelligent or well informed but perhaps of somewhat less than average intelligence and background knowledge, although the test is not the effect on a person who is quite unusually stupid."

The informations fall into two general categories. The first is in relation to advertisements alleged to be ". . . in connection with the promotion by advertising of the supply of services. . . " and it is alleged that the defendant" . . . did make a misleading statement with respect to the price of services. . . " The misleading statement alleged is then particularised as a statement that the price of the services was payable by $100 deposit and instalments "of" or "of from" whatever is the amount stated in the relevant advertisement.

The second category is in relation to advertisements alleged to be ". . . in connection with the promotion by advertising of the supply of services. . . " and it is alleged that the defendant "did make a misleading statement concerning the effect of a condition. . . " The misleading statement alleged is then particularised as a statement that "the amount of each weekly instalment due upon $100 deposit in payment of the said price".

The opening words of s.53 include the words "in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services". The section prohibits a corporation, in trade or commerce, from doing any of the acts set out in the section in the circumstances which I have just mentioned. The informations are "in connection with the promotion by advertising of the supply of services".

I proceed now to consider the questions separately.

Question (a):
Were the contents of the advertisements which referred to $100 deposit and payments of weekly amounts statements made in connection with the promotion by any means of the supply of services?

The respondents did not seriously argue that the transactions to which the advertisements were directed were not statements made in connection with the promotion by any means of the supply of services. It may be thought rather strange that those transactions would fall within the supply of services. However, the definition of "services" in s.4 includes interests in real or personal property and "any contract for or in relation to the lending of moneys" and s.4C(d) provides that a reference to the supply of services, unless the contrary intention appears, includes a reference to the supply of services together with property or other services or both. I am satisfied that question (a) should be answered "Yes" in respect of each advertisement.

Question (b):
If yes to (a)
(i) Were the said statements made with respect to the price of services; and
(ii) Were the said statements made concerning the effect of any condition?

I will answer question (b)(i) first.

It was argued by the respondent that a statement with respect to finance was not a statement with respect to price and that the statements in the advertisements, the subject of the charges, related to repayment of mortgages and not to the payment of the purchase price. In my opinion this argument should not be accepted.

I consider that a statement setting out the way in which the price is to be paid is a statement "with respect to" the price although not a statement with respect to the amount of the price. A statement prescribing the manner in which and the time by which the obligation to satisfy the payment of the price may be discharged is, in my opinion, a statement with respect to price.

The words "with respect to" have been given a wide meaning where they appear in relation to the powers conferred by s.51(1) of the Constitution. As an illustration Dixon C.J., McTiernan, Webb and Kitto JJ. in Grannall v. Marrickville Margarine Pty. Ltd. (1955) 93 C.L.R. 55 at p. 77 in a joint judgment said in relation to the words "with respect to":
"For what they require is a relevance to or connection with the subject assigned to the Commonwealth Parliament, a conception very different from those which have been employed in the exposition of s.92".
The Oxford English Dictionary, (1933), Vol. VIII at p. 534 gives "with reference or regard to something" as one meaning of "with respect to". It also gives the phrase "with respect to something" as one meaning of "in respect of". In my opinion there is little difference between the words "with respect to" and "in respect of" although if anything the words "with respect to" may very well be somewhat broader than the words "in respect of". The words "in respect of" have received considerable judicial interpretation and in State Government Insurance Office (Qld.) v. Rees (1979) 26 A.L.R. 341 at p. 351 Mason J. with whose judgment Gibbs and Aickin JJ. agreed said:
"The crucial question, then, is the meaning to be given to the words 'in respect of workers' compensation'. The expression 'in respect of' denotes a relationship or connection between two things. In State Government Insurance Office (Queensland) v. Crittenden (1966) 117 CLR 412 at 416; (1967) ALR 237 at 239, Taylor J quoted, with evident approval, the remarks of Mann CJ in Trustees Executors & Agency Co Ltd v. Reilly (1941) VLR 110 at 111; (1941) ALR 105 at 106: 'The words 'in respect of' are difficult of definition, but they have the widest possible meaning of any expression intended to convey some connection or relation between the two subject-matters to which the words refer.' The same view was taken later in Club Motor Insurance Agency Pty Ltd v Sargent (1969) 118 CLR 658; (1969) ALR 670. But, as with other words and expressions, the meaning to be ascribed to 'in respect of' depends very much on the context in which it is found."
Barwick C.J. and Stephen J. did not express views which differed to any material extent on this question. The words "with respect to" appear in the case under consideration by us in the context of Division 1 entitled "Unfair Practices". Although it is necessary to bear in mind that proceedings for a contravention of s.53 of the Act are criminal proceedings I am satisfied that the meaning I have attributed to the words "with respect to" is a fair meaning of those words in the context in which they appear and is consistent with the views I expressed in relation to the construction of a penal section in Thompson v. Mastertouch T.V. Services Pty. Ltd. (1977) 15 A.L.R. 487 at pp. 496-497.

This view is in accord with a recent decision of the New South Wales Court of Criminal Appeal in Reg. v. M. & Ors. (1979) C.L.C. 40-565. The Court was considering the meaning of the words "with respect to" in s.73 of the Securities Industry Act 1970 (N.S.W.). That section dealt with a criminal offence and read:
"A person shall not with respect to any securities, make any statement or disseminate any information. . . "

The Court said at p. 32-418:
"Because the section is limited only to statements or information the subject matter of which is securities, does not mean that the statement or information ceases to be 'with respect to securities' at any point at which 'securities' as such are not being dealt with by the words actually used. A statement 'with respect to securities' may refer to all sorts of matters. It may refer to dividends. It may equally refer to profits, and not cease to be a statement 'with respect to securities'."

I answer question (b)(i) "yes" in relation to all advertisements.

I proceed now to (b)(ii). The breach of s.53(g) as charged requires proof of a "misleading statement concerning the effect of a condition". In my opinion the transactions which the advertisements sought to promote were transactions whereby a purchaser could become the owner of a house and they included the manner in which the purchase money would be satisfied. It is clear that the advertisements were built around the comparatively small weekly payments which were required. The modest weekly payments were undoubtedly the predominant feature of the advertisements and, in my opinion, it was a fundamental term of the transaction that apart from the deposit of $100 the purchase price was to be satisfied by the weekly payments specified. In fact, apart from the first year, weekly payments were to be greatly in excess of the $40, $45 or $50 per week mentioned in the advertisements. In my opinion the advertisements stated the effect of a fundamental term and so included a "statement concerning the effect of a condition".

The respondent argued that s.53(g) was directed to cases where there was a condition on foot and submitted that if any part of s.53(g) was relevant it might perhaps have been that part which referred to a statement as to the existence of a condition. However, in my opinion the proposed transaction included a condition that the purchase money was to be paid by a deposit of $100 and weekly payments of $40, $45 or $50 per week as the case may be. The stated case did not suggest that the respondent ever had any intention of carrying out the transaction on the basis that the purchase money could be paid by the deposit and payment of $40, $45 or $50 per week. The case is not one which might fall within the category of cases where the act of the corporation was a promise as to future action and not a statement as to an existing fact or where a corporation was declining to honour a guarantee. (See generally Thompson v. Mastertouch T.V. Services Pty. Ltd., supra, and Hollis v. A.B.E. Copiers Pty. Ltd. (1979) A.T.P.R. 40.115).

I answer question (b)(ii) "Yes" in respect of each advertisement.

Question (c):
If yes to (b)(i) and/or (ii) were the said statements misleading?

Had I decided when the matter was first before this Court that it had jurisdiction to answer the questions submitted to it I might have had considerable doubt whether this was an appropriate question for the Court to answer. In most cases the question of whether an advertisement is misleading would be a question of fact. Section 25(6) of the Federal Court of Australia Act permits a single Judge in a matter within that section to state any case for the consideration of a Full Court and the High Court has returned the matter to us for us to exercise our jurisdiction which is by s.25(6) jurisdiction to hear and determine the case or question.

On the facts agreed in the stated case the question of whether each advertisement is misleading is one ultimately of law. The construction to be given to the word "misleading" is not in doubt and upon the particular set of agreed facts each statement under consideration must of necessity be misleading and these facts would not support any other conclusion. (See generally Lombardo v. Federal Commissioner of Taxation (1979) 79 A.T.C. 4542 and McDonald's System of Australia Pty. Ltd. v. McWilliam's Wines Pty. Ltd., supra at pp. 18516-18517).

I would therefore answer question (c) "Yes" in respect of each advertisement.

In the result I would answer each question "Yes" in respect of each advertisement. I would also order that if either party wishes to seek costs the Deputy Registrar in Victoria must be notified in writing within 14 days after today.

JUDGE3

I would answer each question in the case stated "Yes" in respect of each advertisement. I concur in the reasons for judgment of Franki J.