Trade Practices Commission v C.G. Smith Pty Ltd

[1978] FCA 6

I -&45\kX-\k> L N L V

CATCHWORDS

.

i	Procedure - A p p l i c a t i o n t o be	discharged from undertaking
i

t o C o u r t - C o u n s e l ' s au thor i ty t o give undertaking. Trade

Practices A c t 1 9 7 4 .

TRADE PRACTICES COMMISSION v. C.G. SMITH PTY. LIMITED, IAN

FAIRWEATHER and ROGER GmGORY MATSON (also known as R.	G i l b e r t )
No. G44 of 1977

C o r a m : B o w e n C. J.

17 th February 1978

, - .

I N THE FEDERAL COURT OF AUSTRALIA 1 1

NEW SOUTH WALES DISTRICT REGISTRY 1 No. G44 of 1 9 7 7

1 -

GENERAL DIVISION 1

I N THE FATTER of the T r a d e Practices

A c t 1 9 7 4

BETWEEN: TRADE PRACTICES COMMISSION

A p p l i c a n t

AND:	C.G. SE4ITH PTY. LIMITED
_.

F i r s t R e s p o n d e n t

IAN FAIRWEATHER

Second R e s p o n d e n t

ROGER GREGORY MATSON (also known

as R. G i l b e r t )

Third R e s p o n d e n t

O R D E R S

JUDGE MAKING CRDER: B o w e n C . J .

DATE OF ORDER: 1 7 t h February 1978

WHERE MADE: Sydney

THE COURT ORDERS THAT:

1. A p p l i c a t i o n dismissed w i t h costs.

.

I N THE FEDERAL COURT OF	AUSTRALIA	)
1

NEW SOUTH WALES DISTRICT REGISTRY	)	No. G44 of 1977
1
GENERAL DIVISION	1

I N THE MATTER of the Trade Practices

A c t 1 9 7 4

BETWEEN : TRADE PRACTICES COMMISSION

Appl icant

AND:

- C. G. SMITH PTY. LIMITED

F i r s t Respondent

I A N FAIRWEATHER

Second Respondent

ROGER GREGORY MATSON	( a l s o
known as R. Gilbert)

Third Respondent

CORAM: Bowen C. J.

17th February, 1978

J U D G M E N T

Th i s is an a p p l i c a t i o n by Ian Fa i rweather t o

be r e l eased f rom an unde r t akmg g iven t o the Cour t on 2 1 s t

J u l y 1977 i n proceedings commenced by order n i s i by the Trade

Practices Commission ( " t h e Commission") a g a i n s t C.G. Smith

P ty . Limited (" the Company") , Ian Fairweather and Roger Gregory

Matson. The Commission sought i n j u n c t i o n s t o restrain t h e

Company from engaging i n t r a d e or commerce i n the conduct

of a d v e r t i s i n g mterests i n l and i n a manner which was a l l e g e d

t o be misleading and a n i n j u n c t i o n t o r e s t r a i n M r . Fa i rweather

and M r . Matson from aiding or a b e t t i n g t h e Company or any

l ' ,

- 2 -

.

l per son t o engage i n such conduc t o r being knowingly concerned

i n or p a r t y t o such conduct.

I

1	When t h e matter came	on before Franki	J. on
!	!

21st J u l y 1977 a t 10 .15 a . m . , t h e Commission was r e p r e s e n t e d

by M r . Bennet t of Counsel a d t h e t h r e e r e s p o n d e n t s were

represented by M r . Hilbe,y of Counsel. An adjournment was

s o u g h t i n o r d e r t o d i s c u s s s e t t l e m e n t . A f t e r about one and

t h r e e - q u a r t e r h o u r s , t h e matter came on a g a i n b e f o r e F r a n k i J.

and terms of s e t t l e m e n t , s i g n e d by t h e respective Counsel,

were handed up.

By t h e s e terms, t h e p a r t i e s a g r e e d t o o r d e r s i n

the terms of documents annexed t o t h e terms and marked "A" r "B"

and "C". Annexure "A" provided fcr an i n j u n c t i o n a g a i n s t t h e

Company i n t h e terms sought and a lso for a n o r d e r t h a t t h e

Company d i s c l o s e t o e a c h p e r s o n who had pa id money, c e r t a i n

information by sending by post wi thin twenty-one days a l e t t e r

i n a form set out. Annexure "B" provided for a n i n j u n c t i o n

r e s t r a i n i n g M r . Fairweather and M r . Matson i n t h e terms sought .

Annexure "C" p r o v i d e d f o r a n o r d e r t h a t j o i n t l y a n d s e v e r a l l y

t h e t h r e e r e s p o n d e n t s p a y t h e a p p l i c a n t ' s costs.

I n a d d i t i o n , t h e terms of s e t t l emen t p rov ided

t h a t t h e Commission a g r e e d t o f i l e w i t h t h e C o u r t a l e t t e r i n

t h e form of a document annexed and marked "D". This document,

w h i l e d i s c l a i m i n g a n y a u t h o r i t y t o a u t h o r i s e or t o clear

adver t i sements conta ined a s t a t e m e n t t h a t t h e Commission had

- 3 -

-

no o b j e c t i o n t o t h e tes t of a p r i n t e d form of an adver t i sement

which was a t t a c h e d .

P u r s u a n t t o t h e terms of s e t t l e m e n t , t h e

respondents , by the i r Counse l , gave unde r t ak ings t o the Cour t

as set f o r t h i n a document annexed and marked "E". These

under tak ings were as follows:-

"THIS COURT DOTH NOTE THE UNDERTAKINGS TO THE COURT

j o i n t l y a n d s e v e r a l l y , b y t h e first, second and

t h i r d r e s p o n d e n t s , t h a t t h e y w i l l -

. re fund t o each person who completes and posts

t a t h e f i r s t r e s p o n d e n t a document i n t h e terms of

t h e form se t o u t i n a n n e x u r e "A" t o t h e s e terms

of s e t t l e m e n t , t h e money p a i d by such person t o

t h e first r e s p o n d e n t o r t o F a i r m a t F i n a n c e Co. ,

such re€und t o be made w i t h l n 2 1 days o f t he

r e c e i p t by	t h e first respondent of	the	s a i d
document.

. p r o v i d e t h e a p p l i c a n t w i t h i n 28 days w i th a l i s t

of the pe r sons who have paid money t o t h e f i r s t

r e s p o n d e n t o r t o Fairmat Finance C o . i n r e s p e c t

of a n i n t e r e s t i n t h e s a i d l a n d .

. p r o v i d e t h e a p p l i c a n t o n o r b e f o r e 1st day of

December 1 9 7 7 w i t h a l i s t of persons responding

t o t h e s a i d l e t t e r and a s t a t e m e n t o f t h e steps

t aken w i th r ega rd t o each."

Pursuant t o the t e rms , it was f i n a l l y o r d e r e d t h a t t h e p a r t i e s

h a v e l i b e r t y t o apply on t h r e e d a y s ' n o t i c e .

These orders of 21s t Ju ly 1977 were e n t e r e d on

24th August, 1977. No s t e p was taken pr ior t o t h e i r b e i n g

e n t e r e d	t o	cha l l enge	or	q u e s t i o n	them.	They	were	consen t
o r d e r s .

- 4 -

On 5 t h October 1977 a n o t i c e of motion w a s

i s s u e d b y t h e Commission a g a i n s t M r . Fa i rweather and M r .

Matson seek ing an order tha t they be commit ted t o p r i s o n for

contempt of Cour t i n t ha t t hey had d i s r ega rded and commi t t ed

a b r e a c h o f t h e i r u n d e r t a k i n g g i v e n on 2 1 s t J u l y 1977.

This motion came on f o r h e a r i n g b e f o r e m e on

26th October 1977. The Commission was represented by Counse l .

M r . Matson appeared i n p e r s o n . M r . Fa i rwea the r d id no t appea r .

H e had been on a p l a n e d e s t i n e d t o leave Aus t r a l i a bu t had

been apprehended i n Darwin, where he was t h e n i n c u s t o d y .

The motion came a g a i n b e f o r e m e on 27th October 1977. M r .

Fa i rweather was t h e n b e f o r e t h e C o u r t i n c u s t o d y . H e was

r e l e a s e d on c e r t a i n c o n d i t l o n s . The motion came on before me

f o r f u r t h e r h e a r i n g on 4 th and 8 th November and t he S th , 6 th

and 9 th December 1977.

When t h e h e a r i n g was i n progress on 9 t h December

1977, M r . Fa i rweather appl ied to be d i scharged f rom the

undertaking. I t was d e c i d e d t h a t , as t h e motion for contempt

had proceeded so f a r , M r . F a i r w e a t h e r s h o u l d t e n d e r h i s e v i d e n c e

i n s u p p o r t o f h i s a p p l i c a t i o n t o be d ischarged from t h e

under tak ing a long wi th any o ther ev idence he wished t o t e n d e r

i n h i s case i n r e l a t i o n t o the mot ion for contempt . It would

be evidence in the contempt motion and evidence on which he

wou ld base h i s app l i ca t ion t o be discharged. The hear ing

acco rd ing ly con t inued on t he 9 th December 1977 and 2nd and

3rd February 1978. It concluded on 3rd February 1978,

- 5 -

when I re se rved my dec is ion on the mot ion and M r . Fa i rwea the r ' s

1 1 a p p l i c a t i o n .

The grounds on which Mr. Pai rweather c la imed

he should be discharged from the unde r t ak ing were t h a t it

was g iven by M r . Hi lbery wi thout h i s knowledge , consent or

I

i n s t r u c t i o n s a n d t h a t M r . H i lbe ry was a t t h e time unaware

of t h e b a d f i n a n c i a l p o s i t i o n of t h e Company, M r . Fairweather

I and Mr'. Matson.

M r . Hilbery and M r . Fa i rweather bo th gave

ora l e v i d e n c e i n r e l a t i o n t o t h e matter. I n my op in ion ,

M r . H i lbe ry endeavoured t o g ive a f rank and hones t account

of wha t occu r red , t hough h i s r eco l l ec t ion a t times proved

f a u l t y . I would no t be p repa red t o ac t upon the t es t imony

of M r . Fa i rweather on conten t ious matters where he was n o t

cor robora ted by o ther ev idence .

1 I

My conclus ions f rom the ev idence are -

1 1. T h a t t h e firm o f S o l i c i t o r s , Coonan and Assoc ia tes , were

i n s t r u c t e d t o act f o r t h e Company, Mr. Fairweather and

M r . Matson i n t h e p r o c e e d i n g s commenced b y t h e Commission

by o r d e r n i s i .

2 . That the m a t t e r was handled by Mrs. Coonan, p r i n c i p a l of

t h e f i r m , a s s i s t e d by M r . Leo.

3.	The	f i r m b r i e f e d	M r .	H i lbe ry	of	Counsel	t o	a p p e a r	for a l l
t h ree	r e sponden t s .

- 6 -

.

4. Afte r i n t e r locu to ry i n junc t ions had been g ran ted aga ins t

t h e t h r e e r e s p o n d e n t s , a confe rence w i th M r . H i lbe ry was

h e l d on 6 t h J u l y 1977 a t which M r . Matson and M r . Fa i rwea the r

were b o t h p r e s e n t .

5. M r . H i l b e r y f u r t h e r d i s c u s s e d t h e case in t e lephone

confe rences w i th M r . Fa i rweather on Sunday 10th and

Tuesday 12th July 1977.

6. There was ano the r con fe rence w i th M r . Hi lbery on 15 th

July 1977 a t which M r s . Coonan, M r . Leo and M r . Fa i rweather

were p r e s e n t .

7. On 20 th Ju ly 1977 M r . H i l b e r y r e c e i v e d d r a f t terms of

se t t lement f rom M r . Bennett . These were s u b s t a n t i a l l y

i n t h e form ul t imate ly handed up on 2 1 s t July 1977. On

2 1 s t J u l y 1977 , t hey were amended m small bu t no t un impor t an t

respects a t t h e i n s t a n c e of M r . Hi lbery des igned t o make

them more f a v o u r a b l e t o t h e r e s p o n d e n t s .

8 . After r e c e l v i n g t h e d r a f t terms on 20 th Ju ly 1977 , M r .

Hi lbery had a confe rence w i th Mrs. Coonan a b o u t t h e d r a f t ,

dur ing which Mrs. Coonan s p o k e t o M r . Matson on t h e

te lephone about the terms.

9. On 2 1 s t July 1977, M r . Fa i rweather was no t p re sen t because

he had t o b e i n C o u r t a t Parramatta. Dur ing t he confe rence

he ld dur ing the ad journment on 2 1 s t J u l y 1 9 7 7 , t h e d r a f t

terms were d i scussed a t some length between M r . H i lbe ry ,

Mrs. Coonan, M r . Leo and M r . Matson. Some amendments

were later p u t t o M r . Bennet t and agreed t o by him. The

terms agreed upon, which were s igned by both Counsel and

handed up t o F rank i J . , i n c l u d e d t h e amendments.

- 7 -

.

10. M r . Hi lbery gave ev idence tha t he be l ieved the

o r i g i n a l d r a f t terms were read ou t o r descr ibed t o

M r . Fairweather . H e had no clear r e c o l l e c t i o n as t o

d e t a i l , b u t a t t a c h e d t h a t t o r e c o l l e c t i o n o f a te lephone

c a l l t o M r . Fairweather on 20th July 1977. Later ,

af ter r e f e r r i n g t o a copy of h i s memorandum of fees,

he thought tha t he was mistaken i n t h i n k i n g a te lephone

ca l l was made t o M r . Fairweatiner on t ha t day. H e o u t l i n e d

var ious matters a r l s i n g i n h i s d e a l i n g s w i t h M r . Fairweather

and M r . Matson which l e d him t o b e l i e v e t h a t t h e y c o n s u l t e d

t o g e t h e r , t h a t t h e y b o t h s p o k e f o r t h e Company and t h a t

when M r . Fairweather was n o t t h e r e , M r . Matson spoke

f o r him. H e be l ieved bo th were d i r e c t o r s , a l t h o u g h

M r . Matson was n o t i n f ac t a d i r e c t o r . H e be l ieved he

was e n t i t l e d t o t a k e i n s t r u c t i o n s f r o m M r s . Coonan i n

r e s p e c t o f a l l th ree respondents and tha t he had

i n s t r u c t i o n s , not only from M r . Matson but from Mrs. Coonan,

t o agree t o t h e terms, inc lud ing t he unde r t ak ing on beha l f

of e a c h o f h i s c l i e n t s .

11. M r s . Coonan was n o t c a l l e d i n re la t ion t o M r . Fa i rwea the r ' s

a p p l i c a t i o n .

12. A t t h e 2 1 s t July 1977, M r . Hi lbery was not informed and

was not aware t h a t t h e Company or e i t h e r o f t h e i n d i v i d u a l

respondents was i n a n y f i n a n c i a l d i f f i c u l t y . What was

t h e f i n a n c i a l p o s i t i o n o f t h e Company or t h e i n d i v i d u a l s

a t t h a t time was n o t e s t a b l i s h e d by the ev idence . However,

t h e Company went i n t o l i q u i d a t i o n on 17th August 1977 and

M r . Matson became bankrupt on h i s own p e t i t i o n p r e s e n t e d

- 0 -

on 2 1 s t November 1977.

13. M r . Matson v i s i t e d M r . Fairweather a t h i s home af ter Court

hours on 2 1 s t Ju ly 1977, t ak ing wi th him a copy of t h e terms

of s e t t l e m e n t . The matter was d iscussed . M r . Fairweather

expressed anger	a t	the pe r sona l ob l iga t lon p l aced	upon
him.

1 4 . A f t e r t h e 2 1 s t J u l y 1977 , M r . Fa i rweather jo ined wi th

M r . Matson i n c a r r y i n g o u t t h e terms of s e t t l e m e n t ,

i nc lud ing t he s end ing ou t o f t he l e t t e r r equ i r ed by

t h e o r d e r s of 2 1 s t J u l y 1977.

M r . Fa i rweather in c ross -examinat ion , agreed he had a t tended

a conference with Mr. Hi lbery a t which a compromise of t h e

proceedings brought by t h e Commission was discussed.

Pr ior t o 2 1 s t J u l y 1977 he knew tha t an a t t empt w a s t o be

made t o g iv ing o f an unde r t ak ing t ha t se t t le t h e p r o c e e d i n g s a n d t h a t t h i s would involve the

money would be refunded t o

persons who claimed it. H e a s s e r t e d t h a t h e d i d n o t u n d e r s t a n d

he would Matson be personally involved. H e s a i d h e r e a l i s e d t h a t M r .

and M r . Hi lbery were going t o a t tempt t o reach a s e t t l e m e n t

w i t h t h e Commission on 2 1 s t J u l y 1 9 7 7 . When asked whether he

was c o n t e n t t h a t m o r n i n g t o l e a v e t h l n g s t o M r . Matson and

M r . H i lbe ry , he s a id : “I was n o t c o n t e n t t o , b u t I had to . ”

I n my view, M r . Hi lbery was j u s t l f l e d i n r e l y i n g upon

i n s t r u c t i o n s f r o m M r . Matson and Mrs. Coonan i n r e l a t i o n

t o t h e settlement, i nc lud ing t he unde r t ak ing t o be given by

M r . Fairweather .

- 9 -

Counsel for t h e Commission a r g u e d t h a t

Counsel's g e n e r a l a u t h o r i t y e x t e n d s t o t h e g i v i n g o f an

under tak ing on beha l f of h i s c l i e n t . H e c i t e d Matthews v.

Minister (1887) 20 Q.B.D. 1 4 1 . T h a t c a s e r e f e r r e d t o t h e

compromise o f an a c t i o n , b u t t h e compromise d i d n o t i n v o l v e

the g iv ing o f any unde r t ak ing . I t has been he ld t he Cour t

w i o f h i s c l i e n t , i n c i r c u m s t a n c e s w h e r e C o u n s e l l l no t accept an under tak ing of fe red by Counse l on beha l f

states he has

no au tho r i ty from h i s c l i e n t t o g i v e it (Smith v. Beeman

(1842) 6 J u r . 2 2 2 ) . I n Marsden v. Marsden (1972) 2 A l l E .R . 1 1 6 2 ,

under tak ings were given by Counsel on behalf of a wife as

par t of a compromise wi th her husband. Subsequent ly the

wife moved t o set t h e compromise a s ide and he r app l i ca t ion

was s u c c e s s f u l . I n t h a t case the a u t h o r i t y of Counsel

was l i m i t e d by e x p r e s s i n s t r u c t i o n s unknown t o t h e o t h e r s i d e .

H e compromised c o n t r a r y t o h i s i n s t r u c t i o n s . The a p p l i c a n t

in formed the Cour t o f her in tended aTpl ica t ion t o set a s i d e

t h e compromise a day o r two p r i o r t o t h e o r i g i n a l o r d e r b e i n g

en te red . The a c t u a l a p p l i c a t i o n w a s lodged on the day the

o r d e r was en tered . Al though prec ise times cou ld no t be

de t e rmined , he r app l i ca t ion was t r e a t e d as one which had

been made b e f o r e t h e o r d e r was p e r f e c t e d .

I n t h e p r e s e n t case, I have come t o t h e c o n c l u s i o n

t h a t M r . Fa i rweather was aware b e f o r e t h e 2 1 s t J u l y 1977 t h a t ,

i n o r d e r t o e f f e c t a s e t t l e m e n t of the p roceed ings , unde r t ak ings

r ega rd ing r e funds , i nc lud ing unde r t ak lngs by the Company, M r .

Matson and himself would have t o be given. H e l e f t it t o

- 10 -

M r . Matson and M r . H i lbe ry t o s e c u r e t h e b e s t terms they

c o u l d . I n my view, i n a l l t he c i r cums tances , it was w i t h i n

M r . H i l b e r y ' s a u t h o r i t y t o g ive the under tak ings which he

did. Furthermore, M r . Fairweather, with knowledge of t h e

s e t t l e m e n t , t o o k t h e b e n e f i t of the consent o rders which

had been made. The Commission and, indeed, the Company

and M r . Matson, were p r o p e r l y e n t i t l e d t o r e l y upon t h e

fact t h a t the unde r t ak ing was given on M r . Fa i rwea the r ' s

beha l f as p a r t of t h e s e t t l e m e n t . The o r d e r s were du ly

entered. The Commission's proceedings were f i n a l i s e d by t h e

orders and cannot now be rev ived .

I n t h e r e s u l t , I o r d e r t h a t M r . Fa i rwea the r ' s

a p p l i c a t i o n t o be d ischarged from the unde r t ak ing be d i smis sed

w i t h costs.