Trade Practices Commission v Annand & Thompson Pty Ltd

TRADE PRACTICES

ACT

1 9 7 4

-	r2l' .. :, I' : ........ ........ ........ .......

TRADE

PRACTICES

CCMYTSSTWT

_c-.

........ ........ ........ .......

ADpllcant

A ~ J

........ ........ ........ ........

_--

ANGXJD & Ti5OXPSOX FTY. LX7~IT 'W,F

. . . . . . . . . . . . . . . . . . . ----

........ ........ ...

Rcsp~~r!&n$. . .

ST.JOIm J.

20 JUNE, 1978

SYDNEY.

TRADE PRACTICES	COMMISSION
V.

ANNAND & THOMPSON PTY LIMITED

No. G 10 of 1978

Before St .John

SYDNEY, 20 June , 1978.

Could you please make

t h e f o l l o w i n g

alterations

t o the

above ~udgment of

H i s Honour M r Jui,tlcrA St . John .

p.8:

L m e 24: "....of

t he

r c sponden t

company

and

words. . . ."

should read

'I. - .

.of

t he r e sponden t

company, words.

. . .

p.9:

Line b :

....

t h e

g e n e r a l

manager

t h a t

u s + d

. . . . l '

should

read

' I . .

. .the

general managcr

who

used..

. .

Llne

- I o . . . .he

d i d

I n t h e p n s c e n c e .

-. ' I

should rcad

". . .he d i d i n

the

prcsccncc . . .

.I'

3 .

p.10:

Line 21: ' I . . .

.purpose

which

1 s work

may

not m a h . . . .

should

read

'I.. .

.purpose of which is work, ay n o t m.-lkc. . .

CATCHWORDS

Trade Practices Act

1974 - misleading conduct -

"new" motor vehicle - in~unction	refused -
dlscretlon s.52 and s.80.
TRADE PRACTICES CDMMISSION
V.
ANNAND & TIIOMPSON PTY. LIMITED
G. NO. 10 of 1978
Before St.John J. SYDNEY, 20 June, 1978.

IN THY FEDERAL COURT

OF AUSTRA1,TA

) )

QI>EEVSLP3D DISTRICT REGISTRY	) No. G.10 of 1978
)
GENERAL DIVISION	)

TRADE PRACTTCES ACT	1.974
B E T W E E N :

TRADE PRACTICES COt5MISSIOI<

Informant

- and -

ANNAP33 & THOMFSOX FTY.

T,J!.:l 'FED

Defendant

SYDNEY

REASONS

F R

JIJDGMZNT

ST.

J O X N

J .

TUESDAY,

2 ' ) JUXNE,

197s

This is an appllcation by thc Trade Practlces Commlsslon

(th,.

Commlsslon) for an

in~unctlon

undcr sub-sectlon 1 of Sectlon Eo

of the Trade Practlces Act

1974 restralnlnq the respondent

from rcprcsentlng that

motor velncles are of more rpcent

manufacture than In fact they arc	m contraventlon cf Sectlon
52 of that Act.

The facts relled upon to support-

the appllcation are the

clrcumstances sulroundlng the

s a l e of 7. Jccp motor vchlcles

to two separate purchasers and

a wbscqucnt lntervlcw between

officers of the Conunlsslon and

the Managlng Dlrqctor and

a Ryanch

General Manager of the rcspon131:nt company.

. .

/ %

-2-

The respondcnt company

1s one registered in Queensland pur:;uant

to that Statc's Companlcs Act

1934 and counsel for the

respondent conceded that the transactlons relating to tho

two motor vehlcles werc

tradc! or cormnerce" wlthln the

meanlng of Sectlon

52.

In August,

1977, Mario Ezrlc Andrado tclcphoncd an employee

of the respondent company, onc Brlan Thompson, and asked the

price of a certain style of Jeep vehlcle. On the ncxt day

he attended the premlses and

was takon for a drlve

In a

demonstratlon model. Having enqulred the prlce

of the

demonstration model

he Informed Mr. Thompson that

he thoughL

It was too expcnslve and

he would rathcr purchase

a new short

wheel base Jeep. He then paid a holding deposlt and fllled

out the order form whlch descrlbed the vchlclc hc sought to

purchase as "new". Mr. Andrado subsequent.1.y took dellvely

a Jeep but of the long wheel base varlety,

he havlng hcen

told that the short wheel base variety was not available.

Havlng arranged to trade in a vchlclc

In part payment Mr.

Andrado pald the balance

of the amount In exccss of

$6,000

to the respondent and took dellvery of a long wheel base

Jeep vehlcle on

2 Septcmber, 1977. On 3 Scptcvbcr, 1977 a

frlend of Mr. Andrado

3rew hls attentlon

to a small plate

aff lxed to the forward slde of the flre wall of thc vehlcle

which bore tho date "1/75".

It is necessary to digress in order to cxpl.am the prcsence

of thls plate. Thomas Arthur Pllce, scnlor mechanlcal

englncer slnce 1974 with the Quccnsland Maln Roads Dcpartnlont

. ./3

-3-

drew attcntion to

a number of regulatlons made pursuant

sub-sections (1) and (2) of Sectlon 70 of the Queensland the Governor-in-Councll wlde powers to make regulatlons dealing wlth, inter alla, things speclficd in the schedule

to the Act referred to. Clause

13 of the schedulc provldcs

that regulations may

be made provldlng for, regulating and

controlling the constructlon and maintcnancc of vehicles

in accordance wlth condltions

or speciflcatlons prescribed.

Clause 1 of the schedule to Part

13 of the Trafflc Regulatlons

1962 provldes that every vehlcle drlven or used upon a

road

shall be constructed and

equipped as provlded In the schedule.

Clause 86(D) of the sald schedule to Part

13 1s In the followlng

terms :

"86D. Every motor vehlclc manufactured

on or

after the Flrst Day of January,

1972, shall

have fltted a compllance plate approved by

the Australlan Motor Vehlcle

Cer1.i flcate Bmrd.

Such plate shall

be afflxed In a consplcuous

posltlon on the vehlclc and shall not be

removed or modlfled wlthGut the apsrova

1 f

the Commlssloner of Main Roads

no]- shal

1 such

plate be defaced In any way."

"Compliance plate" 1s deflned by Clause	4( 1.)	d) of thc said
Trafflc Rcgulatlons as follows:-

"An 1dentlfI.catlon plate, as apploved by the Australlan Motor Vehicle Certlflcdke DaaLd for

affixlng to the motor vchlclc

to which It is

attached.

./4

-4-

M r .

Prlce

deposed

t o t h e f a c t t h a t

each

Sta t? of

Austral la

has s lmllar but not ldent lcal lcgls la t lon recognls ing thc

exlstence of compliance p l a t e s approved by thc said

Uoard

(he re ina f t e r r e fe r r cd to a s

t hc

A.M.V.C.B.).

The

A.M.V.C.B.

ha s l a ld

down

t h a t

compllancc

p la tes a re meta l p la tes

which

contain informatlon relat lng to

t h c dcscrlptlon

thc

motor vchlcle , ~ t s

date of manufacturc,

Its s c r l a l number

and the numbers of the D?slgn Rulcs wlth

whlch lt has bcen

manufactured t o comply.

I t i s common ground that

the oblect

comnpllance

p l a t e

i s to ldcnt l fy the vehlc le

i n such

way a s w l l l malcc

It apparent to

anyonc concerned t o know

what Design Rules were I n fo rce a t t he

time of

the aff lxlng

the p la te .

I t i s not

inspected

t o determine

whether

not

it is I n such condltlon by

o f f l c e r s of

the Maln Roads

Department but approval has

becn

glven t o "manufacturers"

t o a f f l x p l a t e s

honesty system.

The quotatlon marks

around'hanufacturc?' arc there because

the A.M.V.C.B.

has adopted

spec ia l def in i t lon

the word

"manufacturer" which need

not bear

any r e l a t ionsh lp to

the

r e a l meanlng

the word.

Accordlng

t o tha t def ln l t lon the

"manufacturer" 1s the name of the pcrson

or company t o whom

the pr lvl lcge

af f lx lng compllarice

p l a t e s h c s been

granted.

In the case

of lmportcd v'chlclcs

It would normally be

the

impolter.

I t can thus be

seen

that

"manufacturer"

appears on the compliance p la t e may

be completely mlsleadlng

t o any

person not famlllar to the dcflnlt lon adopted

the

A.M.V.C.B..

Further,

the

A.M.V.C.B.

has laid down tha t

t he

datc of manufacture t o be lnser ted on thc platc:

1s thc date

. .

-5-

the motor vehicle

1s avallable in Australla In

a condltlon

whlch will enable It to be reglstered.

It wlll be' readlly

seen that this date

1s also completely artiflclal and would

be mlsleadlng to any person not famlllar wlth

Its special

meanlng. In addltlon to It bclng mlsleadlng In relatlon to

imported vchlcles

It could be mlslcadlng in relatlon to any

vehlcle. The vehlcle may have been assembled for

a number

of years cxcept for the additlon of some component necessary

for reglstratlon and when that component

1s afflxed a compllance

plate could also be afflxed showlng the date

of manufacturc

as some years aftcr

It had been ln fact manufactured.

The presence of the compllancc plate

1 s not inany way relied

upon by the

Commission to support the appl2.catlon

for an

inlunction.

I refer to thcm as

a possible source of problems

for motor dealers when vehlclcs are

displayed for sale vith

the plate visible to a prospcctlve purhcaser: see Given

C.V. Holland (Holdlnqs) Pty. Ltd. 15 A.L.R. 439 per Frank1 J.

on displaymg a vehlcle wlth an odometcr reading whlch had

been "wound back". Respondent's counsel has subnutted that

these plates In some way, because of their presencc, operzte

in the reverse way to the effect of the odometer In he case

clted. It is submitted that their presence negat-Ives the

descrlptlon of the vehicles as "new". Had there bren

evidence that elther of the purchasers

knew of then existence

and the informatlon

contamed on thcm that submlssion may

have substance. However, as there 1s no such evldence In

relatlon to eithcr purchaser the submisslon must fall.

. ./ti

-6-

Reverting now to the clrcumstanccs surroundlng the sale

Mr. Andrado, It bccomes clear that the Issue in the case

whether or not in the clrcumstances It was mlsleadlng

descrlbe that partlcular vehlclc

whlcl-1 had bccn completcly

assembled and ready for rcglstratlon from the month of

January, 1 9 7 5 as a "new" vehicle

In Septembel, 1977.

The second set of clrcumstances concerns the purchase of a

slmllar vehlcle by Ian Richard Watson in January,

1977.

There agaln Mr. Watson dealt

wlth a salesman employed by

the rcspondent

on the basls that thc vehlcle was

ne In a

part of the premises of the respondcnt reserved

for the sale

of new vchlcles as opposcd

to second hand vrhlcles.

Howcver, in

Mr. Watson's case thcre was a more sxpllcit

representatlon of thc newness

of the vehlcle becausr Mr.

Watson informcd the salesman that

e had drlven a simllar

vehlcle whlch he described as then being a couple of years

old and the salesman remarked that

e would notice the

difference In powcr between that vehicle and the new vehlcle.

Other evldence mdlcated that there had bccn no model change

slnce 1974 and therefore there would be

110 difference in

the power output of the two vehlcles. Thc salesman's co:nment

as to powpr dlfferencc lmplles a dlffcrcnce

In englne betw+en

1 9 7 5

and

1977.

Varlous documents descrlbed the vehlcle sold as

new and the

salesman referred to the vehicle

as a new vchlclc. Mr. Watson

had varlous complaints about Che condltlon and pQrformance

of hls vchlcle and In March,

1 5 7 7 took lt. to a used

car

. / 7

-7-

dcaler ,

lnformcd

the dcaler that

had purchased the vehicle

only a couple of months beforehand and

was offered $5,500

fo r

which

offer he accepted. Later

that

dealer

rcrused

t o

complete the purchase statlng that the vchwlc

was

not

two months old but

two ycars old

and t h l s he had

asceltalned

by re ference to the

compliance p la t e whlch had

shown "1/75".

There 1s ample evidence before

me t h a t dcpendlny upon storage

conditions,

ncwly manufactured vehlclrs deterlorate

i n dcgrccs

varylng accordlng

to the condl t ions

i n which

they arc stored

and to th s na tu re

the substance

from whlch

varlous parks

a re made.

For

example,

one

the vchlcles purchased

had

a f au l ty pe t ro l

pump

and expcrt cvldence

was ylven to the

effect that thc rubber

dlapllrdyn

I n slich

pumps

dc ter lora tes

wlth

the effluxlon

t l m e .

I accept

that some degree of

deter lorat lon takes place

and

scr lous deter lorat lon takes

place

111 bad

s torage condl t lons par t icular ly

I n condltlons

where

sa l t a i r has access

the veh lc l e s .

The

questlon

t o be resolved of course 1s whether the descrlptlon

of the

vehlcles as

"new" vehicles was mislc~admg wlthln the

meanlng

of Sectlon 52 of the Act.

The

word

"new"

can

mean

both "not sccond-hand" and "of

recent

or lgln":

see John McGrath Motors

(CanbPrra)

P t y .

LLrnlCed

Applebcr? 110 C.L.R.

656.

It 1s c lea r I n the

Instant

case

tha t ne i ther vehlc le

was

second-hand

vchlclc.

Whether

the descrlptlon

of both vehlcles as

"new"

was

mlsleadlng

i s l lkc ly to mls lead or

deceive

within thc ncanlng

Section 52 i s a questlon of f ac t .

Thcrc was cxpcrt

evidence

-8-

before me to the effect that wlthln the motor

trade, traders

in motor vehlcles regarded the

UEC of the word

"new" as

approprlate to descrlbe a vehlcle

which was the current

model,

had not

previously been owned by a person other than the

flrm selllng it, and had not been prcvlously rcqlstered.

Thls "trade" meanlng

1 s not to be taken as the yardstlck

when consldering the mcanlng of "mlsleadlng"

In relation

to a sale to a member

of the puhllc.

Both the vehlcles, the sublect matter of thls actlon

deterloratcd to some extent as a result of storage and

am of the

vlew that the lapse of time in each casc between

the affixmg of the compliance plate and ultlmate

sale

(two years or more) was of too long a duratlon to cnablc

the respondcnt to descrlbe them as

"new" wlthout that term

being misleadlnq or deceivmg.

I am therefore of the view

that in the two instances there	has been a breach of
Sectlon 52 of the Act.

It remalns now to conslder whether in thc cxcrclsc

of my

discretion an ln]unctlon should bc granted	m the terms
sought.

Part of the applicant's case was that when the Conunsslon's

offlccr lntervlewed the respond-nt's manaylng dlrcctor and

Mr. Ellis, the general manaqer of the Breakfast Creek Branch

of the respondent company and words wcrc spoken by one of

thc311

whlch could

be understood to mean that the rcspondrnt's

salesman would not be instructed to advlse potential custonv2rs

. .

-9-

the length or perlod

a vehlcle had been I n exlstcncc.

The respondent

through

Its counsel suqgcsted that

t h e o f f l c c r

was

incorrect when

he a t t r lbu ted the

words

t o t h c managlnq

d i rec tor

and

suggested that they should have

been altrJbut.r+d

the general

manager.

Evidence was also glven by the qenei-al

manager

and

the

managlng

d l r e c t o r t o t h l s e f f e c t .

not

think

have

to r e so lve th i s conf l i c t

because

1s c lea r

t h a t , even

I F It w a s the general

manager

tha t us rd the

wolrds

he dld so i n the presence

the managlnq d l rcc tor , there

i s no

suggestlon that the manaqny director

indicated

lack

agreement and

by h l s sllence approved, havlng regard

t o

the subject matter

the

intervlew.

A t the hearJnq

the

managlng dlrector offered

an undertakmg to the

Court t o

l n s t r u c t the respondent’s salesman

I n such

way

a s would

lead t o prospectlve purchasers bclng

made aware of the lenqth

t i m e the vehlcle

was i n exls tence, where that course

was

possible.

I see no reason why I should not

t r e a t t h m undcrtaklng a t

i t s face value

and

discount the force

t he a t t l t ude

expressed t o t h e

Commlssion’s o f f i c e r because

It was

obviously

adopted before legal advice

had been

obtained.

There has been tendered &fore

rnc’ a Trade Practices Conurusslm

Circular No.10

e n t l t l e d “Consumer Protcctlon Advertlsjng

Gulde l ines“ .

Reference 1s made to Sect ion

2E and the

powers of

t h e Commlsslon thereln dnd some pages of the docurwnt

a re d i rec ted to

expresslon “misleadmg“ or “deceptlvc“

I n Scctlon 5 2 of the A c t .

The document was tmdercd by the

. .

/l0

-10-

respondent and,	on it was bascd a submlsslon t h a t a par t lcu lar
section a t page	16 of the document cons ldcred the descr lp t~on

a motor v e h x l e a s

"new" and referred CO -

K. v Ford Motor

C o .

Ltd.

(1974)

3 A l l E.R.

489.

According t o

t h e

summary

that case the

word "new" could have been

accurately

appl led

the vehicles

1.n

ques t lon In

th l s case .

However,

there

was

evldrnce that the respondent

01- any

l t s

employees

r e l i e d upon

t h l s g u l d c l m e

I n folmulating any

policy

i n re la t lon to the descr lp t ion

the vehlcles

had	fo r s a l e .

Although I have come t o t h e

vlew tha t t he

two vehlcles could

not properly bear the dcscrlptlon

"new"

can apprecldtc

t h a t motor

dealers would have

some d l f f l c u l t y I n dstermlnlng

whether

t h a t a d ~ c c t i v c was

approprlate.

I t would

douht

be usefu l to the

motor t rade I f

I could set

a tun<+

l l m i t on

the length

of tlme a vehlcle could be I n exlstence before It

could no longer be

described a s new but the task

1s impossible

and

I n

addl t lon every case resolves i tself lnto

qucstlon

fact . Also,

there

may be force I n the

reepondent

pomt

that blemishes caused

storage on

vchlcles, the prlmary

purpose of which 1 s work may not rnakc that vehlcle not

"new".

It would

appear

t o me

t h a t t h e

motor

d e a l e r s ' d l f f l c u l t l e s

could

be avoided

if the prospectlve purchasers ' at tention

w a s drawn to the length

of tlmc the vehlclc.

h,ld been I n

existence thereby quallfylng thc adlrctive

"new"

i f

had

been

used.

. / l

i',

, '

-1i-

Thc respondent's counsel argucd that thc dscision

o€ thls

Court in Unlversal 'fclwasters (Qld.

) T , l n l l m v Wzrence Jar,?;

Guthrle,

( Full Court dellvcred

4 Aprll, 1978) suppolizd a

submisslon that the respondent company was not llable for

the acts of Its servants. On my

rcadmg of the majority

judgments the contrary to that submisslon

1s supported

and Sectlon

8 4 ( 2 ) has the effect of maklng the respondent

company llable for the acts

of its servants.

In additlon to the matters alrcady adverted to	I take Into
account the fol1owlng:-

The rcspondent is in

busmess In larqe rneaslirc

as a motor dealer and the only two

complaints

to surface are those

detalL-d hereln.

The particular vehlcle, the Jeep, I S one in which modo1 changcs are not freqJent, thereby putting lt In a somewhat unusual category.

Thcre 1 s not sufflclent cvldencc for mc to concludc

that such mlsleadlng

as occurred was dellberate.

In all the clrcumstanccs I

do not thlnk that

~t 1 s neccssary

to grant the

~n~unctlon

sought and I dlsmlss the appllcatlon.

I stand the matter over to a datp to be flxed to hear argurrrnI:

as to costs and for any further appllcatlons that elCher of

the parties scc flt to make.

[1978] FCA 42

20 Jun 1978