Trade Practices Commission v Farrow

Case [1990] FCA 106

Re: TRADE PRACTICES COMMISSION
And: RODDY FARROW also known as RONALD FREDERICK and TRADE PRACTICES
COMMISSION and JIM SPATHAROS also known as DIMITRIOS SPATHAROS
Nos. SG23,25,27,29,31,43,45,47,49,51,53,55,76-81,86-96, 111-116 of 1989
FED No. 106
Trade Practices Act

COURT

IN THE FEDERAL COURT OF AUSTRALIA


SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Von Doussa J.(1)
CATCHWORDS

Trade Practices Act - prosecutions of two persons knowingly involved in contraventions by corporations of s.59(2) - companies invited members of the public to engage in business activity requiring the investment of money and the performance of work - seven investors induced to invest total of $262,000 in business represented as manufacturing motorised wheelbarrows - companies now in liquidation - investors lost money - representations blatant lies - cynical plan of deception - factors to be considered when imposing heavy fines including means and ability to pay - imposition of term of imprisonment in default - factors leading to disparity in sentences between defendants - defendant who masterminded deception fined $60,000 in total on 33 counts - other defendant fined $7,500 on 7 counts - orders for damages made in favour of the victims.

Trade Practices Act 1974 - ss.59(2), 79(1)(d), 79A, 87, 87A.

Crimes Act 1914, s.18A.

Criminal Law (Sentencing) Act 1988 (S.A.) ss.3, 61.

HEARING

ADELAIDE

#DATE 19:3:1990

Counsel for the prosecutor : Mr J.R. Mansfield QC

with Mr S.F. Vorreiter

Solicitors for the prosecutor: Department of Public Prosecutions

Counsel for Farrow : Mr S.C. Ey

Solicitors for Farrow : Mangan Ey and Associates

Counsel for Spatharos : Mr T.P. Kavanagh

Solicitors for Spatharos : Caldicott and Co.

ORDER

A. In Nos. SG25, 27, 29, 31, 33, 35, 37, 39, 41, 43, 45, 47, 49,

51, 53, 77, 78, 79, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 111, 113, 114, 115 and 116 of 1989 :

1. The defendant Roddy Farrow is convicted of each charge.

2. The following fines are imposed : In respect of No. SG25 $1,250 In respect of No. SG27 $1,250 In respect of No. SG29 $1,250 In respect of No. SG31 $1,250 In respect of No. SG33 $1,250 In respect of No. SG35 $1,250 In respect of No. SG37 $1,250 In respect of No. SG39 $1,250 In respect of No. SG41 $1,430 In respect of No. SG43 $1,430 In respect of No. SG45 $1,428 In respect of No. SG47 $1,428 In respect of No. SG49 $1,428 In respect of No. SG51 $1,428 In respect of No. SG53 $1,428 In respect of No. SG77 $3,334 In respect of No. SG78 $3,333 In respect of No. SG79 $3,333 In respect of No. SG86 $3,334 In respect of No. SG87 $1,430 In respect of No. SG88 $1,430 In respect of No. SG89 $1,428 In respect of No. SG90 $1,428 In respect of No. SG91 $1,428 In respect of No. SG92 $1,428 In respect of No. SG93 $1,428 In respect of No. SG94 $3,333 In respect of No. SG95 $3,333 In respect of No. SG111 $2,000 In respect of No. SG113 $2,000…

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AGLC
Trade Practices Commission v Farrow [1990] FCA 106
Case
[1990] FCA 106
Decision Date

CaseChat Overview and Summary

The Federal Court of Australia was tasked with adjudicating a case brought by the Trade Practices Commission against Roddy Farrow and Jim Spatharos. The crux of the dispute involved allegations that the two defendants were knowingly involved in contraventions of the Trade Practices Act, specifically Section 59(2), through their companies which solicited investments from the public for a purported business venture. The venture, which promised to manufacture motorised wheelbarrows, was ultimately revealed to be a sham, with the defendants perpetrating a deceitful scheme that resulted in significant financial losses for seven investors who collectively invested $262,000. The companies involved in the scheme are now in liquidation, and the investors' losses were a direct result of the defendants' blatant misrepresentations and deceitful business plan.

The legal issues before the court encompassed the interpretation and application of the Trade Practices Act in the context of corporate prosecutions, the appropriate penalties for individuals knowingly involved in illegal business activities, and the principles guiding the imposition of fines and imprisonment. The court had to consider the culpability of each defendant, their roles in the fraudulent scheme, and the appropriate financial penalties and terms of imprisonment to deter future misconduct while taking into account the defendants' means and ability to pay. Additionally, the court needed to justify any disparity in sentences between the two defendants, considering their respective contributions to the fraudulent activities.

The court found Roddy Farrow, the mastermind behind the deception, guilty on all counts. It imposed a total fine of $60,000 across 33 charges, reflecting the severity and scale of his involvement. In contrast, Jim Spatharos, who played a lesser role, was found guilty on 7 charges and fined $7,500. The disparity in fines was justified by the court based on the respective roles and contributions of each defendant to the fraudulent scheme. The court also imposed imprisonment terms in default of payment, with Farrow facing up to 3 years in prison if he failed to pay his fines. Furthermore, the court ordered Farrow and Spatharos to pay damages and interest totalling $280,900 to the victims, reflecting the significant losses incurred due to their fraudulent activities.

The court's final orders included the conviction of both defendants, the imposition of fines, the declaration of imprisonment terms in default of payment, and the requirement for Farrow and Spatharos to jointly and severally pay damages to the victims. The court also ordered that Farrow and Spatharos pay the prosecution costs and granted liberty to apply for settlement and entry of orders under the Federal Court Rules.

Orders

Orders of the court

A. In Nos. SG25, 27, 29, 31, 33, 35, 37, 39, 41, 43, 45, 47, 49,

51, 53, 77, 78, 79, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 111, 113, 114, 115 and 116 of 1989 :

1. The defendant Roddy Farrow is convicted of each charge.

2. The following fines are imposed : In respect of No. SG25 $1,250 In respect of No. SG27 $1,250 In respect of No. SG29 $1,250 In respect of No. SG31 $1,250 In respect of No. SG33 $1,250 In respect of No. SG35 $1,250 In respect of No. SG37 $1,250 In respect of No. SG39 $1,250 In respect of No. SG41 $1,430 In respect of No. SG43 $1,430 In respect of No. SG45 $1,428 In respect of No. SG47 $1,428 In respect of No. SG49 $1,428 In respect of No. SG51 $1,428 In respect of No. SG53 $1,428 In respect of No. SG77 $3,334 In respect of No. SG78 $3,333 In respect of No. SG79 $3,333 In respect of No. SG86 $3,334 In respect of No. SG87 $1,430 In respect of No. SG88 $1,430 In respect of No. SG89 $1,428 In respect of No. SG90 $1,428 In respect of No. SG91 $1,428 In respect of No. SG92 $1,428 In respect of No. SG93 $1,428 In respect of No. SG94 $3,333 In respect of No. SG95 $3,333 In respect of No. SG111 $2,000 In respect of No. SG113 $2,000 In respect of No. SG114 $2,000 In respect of No. SG115 $2,000 In respect of No. SG116 $2,000 TOTAL $60,000

3. The defendant pay the total sum of $60,000 on or before 20 March 1991.

In default imprisonment for a term calculated at the rate of one day's imprisonment for each $25 of the amount of the fines that are unpaid. The Court declares that the order for imprisonment in default of payment of the fines shall cease to have effect in respect of the fines imposed on Roddy Farrow by this order after the said Roddy Farrow has served an aggregate of 3 years imprisonment in respect of these fines.

B. In Nos. SG23, 55, 76, 80, 81, 96 and 112 of 1989:

1. The defendant Jim Spatharos is convicted of each charge.

2. The following fines are imposed : In respect of No. SG23 $1,500 In respect of No. SG55 $1,500 In respect of No. SG76 $ 500 In respect of No. SG80 $ 500 In respect of No. SG81 $ 500 In respect of No. SG96 $1,500 In respect of No. SG112 $1,500 TOTAL $7,500

3. The defendant pay the total sum of $7,500 on or before 20 March 1991.

In default imprisonment for a term calculated at the rate of one day's imprisonment for each $25 of the amount of the fines that are unpaid.

C. The defendant Farrow and the defendant Spatharos jointly and

severally pay the costs of the prosecution to be taxed.

D. In the matters of Nos. SG23, 25, 27, 29, 31, 33, 35, 37, 39,

41, 43, 45, 47, 49, 51, 53, 55, 76, 77, 78, 79, 80, 81, 86, 94, 95, 96, 111, 112, 113, 114, 115 and 116 of 1989 : The defendant Farrow and the defendant Spatharos pursuant to Sections 87(1A) and 87(1B) of the Trade Practices Act 1974 jointly and severally pay damages and interest as follows:

(1) To George Angelis $102,000

(2) To Anthony George Yammouni $ 26,000

(3) To Frederick Charles Harrison $ 26,000

(4) To Andrew Percival Quirke $ 48,562

(5) To Jo Milton Carl Johansen $ 26,000

(6) To Alan Edward Sawtell $ 52,338 TOTAL $280,900

E. In the matters of Nos. SG87, 88, 89, 90, 91, 92 and 93 of

1989 :

The defendant Farrow pursuant to Sections 87(1A) and 87(1B) of the Trade Practices Act 1974 pay damages and interest as follows :

(1) To Ian William Muir $ 52,000

F. Liberty to apply is granted.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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