Trade Practices Commission v Norton Holdings Pty Ltd

[1987] FCA 11

IN THE FEDERAL COURT	)
OF AUSTRALIA	1

WESTERN AUSTRALIA 1 No. WA G1 of 1987

DISTRICT REGISTRY 1

GENERAL	DIVISION	)
B E T W E E N :

I TRADE PRACTICES COMMISSION

Applicant

and

NORTON HOLDINGS PTY. LIMITED

First Respondent

and

mTAN ANGUS McKENZIE

Second Respondent

CORAM: T O O I E Y J.

12 January 1987

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M TEMPORE REASONS FOR JUDGMENT

Last week the Court granted an injunction to restrain

the respondents from operating two accounts; one, an account with.

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the Commonwealth Trading Bank and the other, an account with the

First Federal Building Society. The Trade Practices Commission

seeks an extension of those injunctions, and also, by way of

interlocutory relief, the grantlng of injunctions against the

respondents restraiming them from promoting a scheme which goes by

various names, but can be conveniently referred to as the Metro

Marketing Scheme.

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I am satlsiied that the Commisslon has demonstrated not

only that there is a serious question to be tried as to misleading

or deceptive conduct on the part of the respondents but that there

is a prima facie case. Mr. McKenzie, the second respondent, has

spoken at some length about the way in which the scheme works, but

nothing that he has sald has really dealt with the essential

complaint made by the Commisslon. This is that the advertisements

placed by the respondents, and the documents which are sent to

persons who respond to those advertisements, suggest activities

to be carried out, which are quite different from those which the

person responding learns	when, and only when, he	or she has paid
$40.

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, . And clearly the amounts which a person may earn cannot

be derived from filling envelopes, as the advertisement suggests;

nor can they be earned merely by doing what is set out in the

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exhibits PJD 8 and PJD 9. It only becomes apparent when one has

paid one's $40 that moneys can only be earned by others responding

in a similar way. I am quite satisfied that the advertisements

and the initial documents are misleading or deceptive and indeed

that they almost certainly contravene other sections of the Trade

Practices Act 1974.

The question then 1 s what relief should- be granted to

the Commission by way of injunctions at this stage. So far as the

exlsting lnjunctions are concerned, they really are subsumed in

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what 1 s sought ln the application itself, and so It 1s enouTh to

turn t o the lnterlocutory relief which 1 s clalmed In the

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in3unctlon.

As aqainst the first respondent it seems to me that an

injunctlon in terms of para.ta1 is appropriate with one or two

qualifications. I would grant an injunction pending the hearing

of this application or until further order - and, interpolating, I

do that to give the first respondent an opportunity to return to

the Court if it can demonstrate that the injunction should not

continue until trial.

I would also delete the words that appear at the f o o t of

p . 3 , "or otherwise howsoever", because I think that casts some

cloud of uncertainty over what it is that the respondents may do

or not do. Otherwise the injunction will lie in terms of the

application. I have expressed some doubts about the operation of

the word "promoting", but it seems to me that it is probably as

appropriate as any in the circumstances. For myself I cannot

think of a more satisfactory way of expressing the injunction.

So far as para.(b) is concerned, there will also be an

injunction in the terms of that paragraph. Mr. McKenzie has

expressed a concern as to the effect of an injunction upon the

other operations with which e is involved. It seems to me that

there is no reason why the injunction should have that result.

There are various ways in which, through the bank and the building

soclety. he can ensure that activities unrelated to those

complalned of bp the Commission may be	the	subject of separate
accounts.

There is not a great deal to be achieved, it is true, in

freezing either account, given the smallness of the amount

standing to the credit in each case. But nevertheless it is an

inference - indeed it is more than an inference because of what

was said by Mr. McKenzie - that a substantial amount of the moneys

paid into both accounts were from the operation of the scheme.

With a view to preserving those moneys as best it can be done in

the circumstances and to provide for compensation, inadequate

though that may be if the Commission succeeds in its substantive

application, I am satisfied that	an injunction should lie	in terms
of para. (b).

As against the second respondent, much of what I have

said in regard to the first respondent applies -equally. Again

though I would insert after the words, "application" in line 2,

the words, "or until further order" so that Mr. McKenzie can

return to the Court if he seeks to vary or set aside the terms of .

the injunction. Equally an injunction should lie in terms of

para. (b).

I should a d that Mr. McKenzle gave c rtain

undertakings, not in a formal way, as to what he could do

regarding shelving the operation of the scheme for the time being

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i	and returnina moneys that he may recelve between now and the time
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~	this matter comes on for hearing. Nothlng that I have said in the
course of these reasons and nothing in the order I p opose to make
should dissuade him from doing that. Indeed he may need to do lt
in any event to comply with the terms of the injunction and to
ensure that he is not In breach of it. But given the stage at
which those matters were referred to by him and the concern that
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appears from the documents filed by the Commission, it seems to me
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that the injunctions should lie. Those matters to which Mr.
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McKenzie has referred, he can certainly put into operation if he
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so chooses.
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I There will be a further order that the costs of today’s

i	hearing he reserved.
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I certify that this and the .

preceding 4 pages are a true

copy of the r asons for

judgment h rein of the

Honourable Mr. Justice Toohey. . -

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Associate

Dated: 12 January 1987 . ^