Rodrigues, Winston Franklin Joseph v Abe Copiers Pty Ltd

[1983] FCA 332

Re: WINSTON FRANKLIN JOSEPH RODRIGUES; STEPHEN GARTH BEDE BROWN
And: A.B.E. COPIERS PTY. LIMITED
Nos. ACT G6, G7, G8, G9, G18, G23 of 1983
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
GENERAL DIVISION
Morling J.

CATCHWORDS

Trade Practices - consumer protection - supply of goods represented as new when they were not - factors relevant to determination of penalty - goods worth nearly as much to purchasers as if new - defendant advised by solicitor that activity in breach of Act - improper attitude of defendant to breaches of Act

Trade Practices Act 1974, ss. 53(b), 79.

HEARING

CANBERRA

#DATE 10:11:1983

ORDER

1. A penalty of $5,000 be imposed upon the defendant in respect of each of the offences referred to in proceedings G 6, G 7, G 18, G 23 of 1982.

2. The defendant to pay four-fifths of the prosecutor's costs in proceedings G 6, G 7, G 8, G 9, G 18, G 23.

3. The costs of all proceedings to be taxed as one set of costs.

JUDGE1

On 19 August 1983 I published my reasons for convicting the defendant on four charges arising out of contraventions of section 53(b) of the Trade Practices Act 1974. The facts out of which the charges arose are referred to in my earlier reasons and I need not repeat them. It is sufficient to say that in my opinion they disclose that the defendant's business has been conducted in a most unsatisfactory and commercially improper manner. In short, the evidence discloses that the defendant repeatedly represented to purchasers of photocopying machines that they were new whereas they were not then new.

It is fair to say that the use which had been made of the machines prior to them being sold was not very extensive if regard is had to the capacity of the machines over their expected working lives. However, this does not excuse the offences.

If the only evidence had been that the machines had been used as demonstration models in the defendant's showroom I would not have been disposed to have treated the offences as being very serious, but that is not the only evidence. There is evidence which I accept that Mr Cronin, a senior employee of the defendant, expressed his concern that the company was, in effect, misrepresenting its machines to purchasers. There is other evidence, which I also accept, that on at least one occasion the meter on a machine must have been turned back so as to give a false reading of the number of copies which it had produced. I regard this conduct as commercially deplorable and deserving of severe censure.

Had I been of the belief that the machines, the subject of the charges upon which I have convicted the defendant, were worth much less than the prices paid for them by the purchasers, I would have fixed much higher penalties than I propose to impose. However, I am satisfied that because of the nature of the machines and the guarantees under which they were sold, they were worth nearly as much to the purchasers as if they had been new.

There is evidence which I accept that the relevant machines performed no less satisfactorily than brand new machines. In fact, one of the machines - the one delivered to the Department of Veterans Affairs - was replaced by the company at no expense to the purchaser. As to the other three machines there has been no complaint about their efficiency nor has any request been made that they should be replaced or that part of the purchase price should be refunded. These matters do not excuse the offences but in my opinion they are relevant on the question of penalty.

I am not unmindful of Mr Sully's submission that the defendant has been found to have engaged in conduct which falls far short of an acceptable standard of commercial morality. I also take into account that the basis of the defendant's tender to the Commonwealth was that it would supply new machines and that by not doing so it has obtained an unfair advantage. But I am not persuaded that at the time the defendant made its tender it intended to supply other than new machines. It is to be remembered that it supplied many machines to the Commonwealth and I think it is to be presumed in the defendant's favour that the machines other than the ones the subject of the charges were, in fact, new machines.

Mr James submitted on behalf of the defendant that it had already suffered considerable financial loss because it had failed to gain significant government business as a result of these prosecutions. This was a natural consequence of the defendant's own conduct and it has nobody to blame but itself for the adverse consequences of its own actions.

It is fair to say that there was little incentive to the company's employees to act in the manner which gave rise to the prosecutions. So far as can be judged from the evidence they gained no or only a marginal financial advantage from selling and representing as new, machines which were in fact not new. But the defendant must accept responsibility for the manner in which its employees conducted its business and the fact is that the business was conducted in a most unsatisfactory manner. The senior management of the company was alerted to the unsatisfactory state of affairs by Mr Cronin as early as March 1982. He had become so concerned about the matter that he had consulted his solicitor. His solicitor gave him written advice, which is in evidence. This advice was shown to the defendant's New South Wales manager and to its national marketing manager. I need not set out all the terms of the advice but it stated in clear terms that Mr Cronin was under instructions from the defendant -

"to continue to do business with the Commonwealth on that basis, i.e. one which involves further breaches of contract and possibly fraudulent acts."

The advice continued:

"The consequences for you, should the Commonwealth become aware of the circumstances and initiate action, would plainly have severe consequences for the company and also yourself as agent or servant of the company. We need not particularize details of those consequences . . . ".

Yet three of the four offences occurred after these gentlemen were acquainted with the situation. Either they took no steps to rectify the unsatisfactory position in the defendant's Canberra sales office or any steps that they did take proved quite inadequate.

There is evidence that on the day before I delivered my reasons on 19 August, Mr Finnie, the southern regional manager of the defendant, addressed a meeting of about 90 machine purchasing officers from various Commonwealth departments and statutory authorities. Some of the statements made to the meeting by this gentleman were, to say the least, extraordinary. He said that the defendant's procedures were no different from the normal practices in the industry and "the provisions of the Trade Practices Act should not have been applied to ABE". He referred to the fact that the judgment was to be handed down the following day and regaled his audience with an expression of his opinions as to the likely penalties which the court would impose. He said, "If any final penalty was below $10,000, ABE would regard itself the winner" and mentioned further and larger penalties which the defendant would regard as "a draw", or "a win" for the Commonwealth.

Bearing in mind that the defendant had denied all the charges in respect of which the decisions were to be handed down the next day, the statements made by Mr Finnie were so incautious, not to say bizarre, as to be almost beyond belief. To say the least, they were in excruciating bad taste. However, I propose to dismiss from my mind the statements he made as to the monetary penalties which the court might impose.

Nevertheless, the statements he made to the meeting leave me with an uneasy feeling that he did not regard the defendant's breaches of the Act as being very serious. Mr Sully submitted that the evidence disclosed that the company still did not take the offences seriously. He relied upon the fact that the defendant's Canberra manager at the time the offences occurred had not been demoted but merely shifted to another position.

The termination of Mr Cronin's agency with the defendant was also relied upon as showing an improper attitude on the part of the defendant to the charges. I feel bound to say that I am disturbed by the evidence as to the termination of Mr Cronin's agency agreement and it raises in my mind a suspicion that he was unfairly treated. However, the evidence does not permit me to form a concluded view on this matter and accordingly I do not take it into account in fixing the penalty.

Taking all the circumstances into account, I impose a penalty of $5000 in respect of each of the offences G6, G7, G18 and G23 of 1982, that is to say, total penalties of $20,000.

Bearing in mind that the defendant was successful on two of the charges brought against it, I think the appropriate order for costs is that the defendant should pay four-fifths of the prosecutor's costs. The costs should be taxed as one set of costs.