Thompson, John Cranston v Magnamail Pty Ltd

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Trade Prac t lccs Act 1974 - Section 45 - False

1 .

Statemert - n?all order purchacc - r e f u n d of goods returned - mitigation of penalty.

John Cranston Thornpson

Magnamail

P t y .

L l m i t e d .

B. No. 74 cf 1976

Before St.John J.

Sydney, 10 August, 1977.

- an6 -

Z'T. JOI'?? J.

. ..

The

fa lse statement

r e l i e d upon

t h e p r o s r c u t i o n

wa.5

t h e

s t a t emcn t

t o t h e e f f e c t t h a t t h e r i . n g s

were

s i l v c r p l a t e .

A n a l y s l s r e v e a l e d t h a t n o

sllver

c o n t m t

vas

p r e s e n t a n d

t h a t 111 fact

t h e rir.gs werc

made

l x g t ? l y of

t l n w i t h

m z l l

q u a n t i t i c s of

n l c k e l ,

lead and

antimony.

The

managing

d i r e c t o r of

the

defendant

company,

Mr. Von

Mel len th ln , gave ev idencc t ha t he had

first

noticed

t h e

rjngs

being

a d v e r t i s e d I n v a r i o u s

Amciflcan

j o u r n a l s ,

some

w h l c h

a d v c r n s e m e n t s w?re

t ende red

I n ev idence .

s a y s

t h a t

b e l i e v e d a t a l l timcs

Chat

thc s ta tc rnents

made

those

advcrt isernents

American ?oul-nals

and la ter

rcpcated

i n t h e

adve r t i s emen t s

published

on ‘uchalf

hls company werc t r u c .

However,

3.n

February , 1975 , havlng

ob ta lncd

samples

wrote

t o a company i n South Afr lca

known

a5 C a m p u q n flcdia

Pty.

I	Llmited and	asked. tllat	company	t o prepa re advc r l l s cmen t s	based
I

upon t h e Am.?ricarl advcrtlscrnc,r!ts

previously

rcferred t o a n d

r e q u e s t i n g t h a t t h e r i n g s

s u b n i t t e d

t o

jrwcller

t o hc!

./2

'31c

defendant company lmportcd apprcxm-lL

"1.y

1 , 0 0 0 zlngs

f rnm the Un l t ed S t a t e s pay lnc j

th.?rr-fcr

6 2

c e n t s

per

r Lng

e x c l u s i v e

f r e i g h t

a n d

o t h e r

c h a r g e s .

Thc!

rincjs

;;ere

a d v e r t l c e d i n

magazlne ca l led

"Ncw

1dr.a"

whlch

Z L

khe

r e l e v a n t t i m ?

had a

c l r cu la t ;o?

excess of

482,000.

The

a d v e r t i s c ~ e n t c o n t a m e d a

s t a t c r r en t

t o

t h c e f f c c t

thlt

a re fund of

t h e amount p a l d would he madc

i f t h e pcrc11asc.i-

was

n o t

d c l l g h t e d

a f t e r t e n days

free

t r l a l .

M r .

Von

M c l l e n t h i n s t a k e d t h a t r e f u n d s

wcrc

made,

i f

r c y c c s t e d ,

a f te r a l a p s e of

10 days.

The ra te of c1Laims For refi;nd=. i n

respect

t h e r i n g s r e a c h e d

percentaqz whlch

was

dol15le

w?zat t h e company p o l i c y set as a

reasonal~lc!

ra te

and

af te r approximately 500 r i n g s were

sold.

d e c i s i o n was made

n o t

marke t any fu r the r r i ngs bccausc

the

da~nage Chat

would

done

t o

the de fendan t company ' s r epu ta t ion v i th

i t s

customers.

Counsel

for the de fendan t

company

h a s a g a i n

rellcd upon

t?ie

o p p o r t u n i t y g i v e n

t o ciaim

r e fund

a s

f a c t o r i r , ~ n i t l g a t ~ o n .

H e h a s submitted

a l s o t h a t

t h e o f f e n c e i s onc

brOUcJht

&out

c a r e l e s s n e s s

a n d

m s riot one of & l l b c r a t e dccr::lt:.

I am

somewhat suspicious I do n o t t h l n l ; I hdvc

suflTiclc?nC

material.

which

cou ld mal:f,

finding

tha t t he dc fcndan t .

. / 3

- 7-

It i s salcl on behalF of

the dcfcndanC cc:-l_=my that no p r o f l t

was 1113dc on t h i s particular transact ion a n d that. I should takz

t h a t clrcurnstance

i n t o accounC

I n mltlgation

the offence.

I n the circumstances

of this case, whexc thf prochct \:&S

withdrawn

from

the rtlark.;et because

l ~ y e r r e s l s l a n c a ,

I do

not

feel

thz t the l ack

p r o f i t

is a

significant

f x t o r .

Mall-order

custorncrs

d3 not have

the opportuni ty to

l nsp -c t

goods bcfore ordermg thcm.

Th?'

S makes it espec ia l ly

important that accuracy

i n descr ipt ion

i s

achlzvcd.

I n

the clrcunlstanccs

thlIk that the appropriate penalky

is $800.00.

The case of John Cranston Thompson v Magnamail Pty Ltd involved a claim against the defendant company for a refund of goods returned, following a false statement regarding the nature of the goods. The case was heard by St. John J. in Sydney on 10 August 1977. The central issue in this case was whether the defendant company had made a false statement in the course of trade or commerce, which is prohibited under Section 45 of the Trade Practices Act 1974. Specifically, the court had to determine if the statement that the rings were silver plate was indeed false, and if so, whether the company's actions warranted a penalty.

The court found that the statement regarding the rings being silver plate was indeed false, as chemical analysis revealed that the rings were made primarily of tin, with small quantities of nickel, lead, and antimony. Despite the managing director's belief that the statements made in American journals and subsequent advertisements were true, the court concluded that the defendant company had made a false statement. Additionally, the court noted that the opportunity for customers to claim a refund did not mitigate the offence, as it did not negate the false statement's impact on customers who had already purchased the goods.

Given these findings, the court determined that the appropriate penalty was $800.00. The court acknowledged that the defendant company did not profit from the transaction, but emphasised the importance of accurate descriptions in mail-order transactions, where customers cannot inspect goods before purchase. Consequently, the court ruled against the defendant company and imposed the penalty.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established