Trade Practices Commission v Qld- Aggregates Pty Ltd
[1982] FCA 209
•14 OCTOBER 1982
And: QUEENSLAND AGGREGATES PTY. LIMITED AND BRIAN WHITE
No. G3 of 1981
Trade Practices
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Morling J.
Trade Practices - exclusive dealing - compensation - employee - breaches of Act unknown to directors of corporation - financial benefit to employee but not to corporation - employee's financial hardship - appropriate penalties
Trade Practices Act 1974, ss. 47(1) (6), 76
SYDNEY
#DATE 14:10:1982
1. That the first respondent pay to the Commonwealth of Australia by way of penalty in respect of the contraventions of s.47(1) and (6) of the Trade Practices Act alleged in the Amended Statement of Claim herein the following penalties:(a) five thousand dollars ($5,000.00) in respect of the contravention alleged in paragraph 4;
(b) one hundred dollars ($100.00) in respect of each of the contraventions alleged in paragraphs 5 to 14 inclusive.
2. That pursuant to s.77 of the Trade Practices Act 1974 judgment be entered for the Trade Practices Commission on behalf of the Commonwealth of Australia against the first respondent for the sum of six thousand dollars ($6,000.00).
3. That the second respondent pay to the Commonwealth of Australia by way of penalty in respect of the contraventions of s.47(1) and (6) of the Trade Practices Act alleged in the Amended Statement of Claim herein the following penalties:
(a) eight thousand dollars ($8,000.00) in respect of the contravention alleged in paragraph 4, 16 and 17.
(b) one hundred dollars in respect of each of the contraventions alleged in paragraphs 5 to 14 inclusive and 16 and 17.
4. That pursuant to s.77 of the Trade Practices Act 1974 judgment be entered for the Trade Practices Commission on behalf of the Commonwealth of Australia against the second respondent for the sum of nine thousand dollars ($9,000.00).
5. That the respondents pay the applicant's costs including any reserved costs.
6. Liberty to apply is reserved to all parties.
On 23 June 1982 I gave reasons for holding that the applicant had established breaches by both respondents of s.47(1) and (6) of the Trade Practices Act. The question now arises what penalty should be imposed in respect of those breaches.In the case of the company I have found that its breaches of the Act occurred because, and only because, of the conduct of Mr Brian White. It is true that the company gave him authority to enter into contracts of the kind made with the cartage contractors and is therefore fixed with responsibility for those contracts. Nevertheless I am satisfied that the directors of the company had no knowledge of the arrangements White made with the contractors, and I am further satisfied that the directors would not have approved such arrangements had they been aware of them. It is true that if a company gives authority to an employee to act on its behalf it is fixed with responsibility for the employee's actions performed within the scope of that authority. But where the employee's actions are taken substantially for his own benefit and not to advance his employer's interests I think it is proper to have regard to that circumstance in determining the question of penalty under s.76. Under s.76(1) the court is required to determine pecuniary penalties 'having regard to all relevant matters including the nature and extent of the act or omission, the circumstances in which the act or ommission took place and whether the person has been previously found by the Court in proceedings under this Part to have engaged in a similar conduct'.
The company had no reason to suspect that White was engaging in action that would render it liable for breaches of s.47. I do not think that the fact that all the contractors were obviously acquiring their trucks from Denmac Ford Pty. Limited was sufficient to put the directors or White's superiors on notice of what White was doing. Some comment was made on the failure of the company to call Mr Greg Watkins but in my opinion the absence of evidence from him does not require me to reject the evidence given by Mr Alan White, who was a member of the company's board of directors, that the board had no knowledge of Brian White's actions.
What is of particular significance in the company's case is that it has derived no benefit from its breaches of the Act. To the contrary, it has become embroiled not only in the present proceedings but in a series of actions brought against it by the contractors with whom Brian White dealt. Insofar as those contractors have suffered any loss as a result of the conduct for which the company has been found responsible, that loss will be recoverable against the company in the separate actions being brought by the contractors. Those actions are presently awaiting hearing. It must frequently be the case that the only proceedings brought in respect of infringements of Part IV of the Act are proceedings by the Trade Practices Commission for the recovery of penalties under s.76 or for injuctions under s.80. In such cases the pecuniary penalty imposed by the court may well be the sole effective deterrent of the impugned conduct. But that is not the situation in the present case where the contractors are bringing independent proceedings against the company.
It is true, as was submitted on behalf of the Commission, that a number of expensive trucks may well have been acquired by contractors as a result of the arrangements made with them by White. Insofar as any misrepresentations were made as to the amount of work which would be available to the contractors, those misrepresentations are the subject of part of the allegations in the other proceedings. If those allegations are made out the company may well be found liable in damages in respect of them. I do not think it would be proper for me in these proceedings to fix penalties under s.76(1) having regard to the allegations being made in the other proceedings.
The Amended Statement of Claim particularizes eleven separate breaches of s.47(1) and (6). Although each breach is separate and distinct they all arise out of the one course of conduct undertaken by White without the knowledge of the directors. In these circumstances I think it is appropriate to impose a significant, but not drastic, pecuniary penalty in respect of the first of the breaches, and nominal penalties in respect of the others. In my opinion, having regard to all the maters referred to in s.76(1) of the Act, a penalty of$5,000 should be imposed on the company in respect of the breach involving Gordon Ashburn Ahlquist, and penalties of $100 should be imposed in respect of each of the other ten breaches relating to Mervyn Walter Hardy, Lennie Alfio Romeo, Peter Jackson Coulson, David Robert Tritton and Audrey Forence Tritton, Donald Cameron Stewart, Edisley Keith Peck, Ernest Joseph King, Klaus Daniel Kalczuk and Pamela Joan Kalczuk, Lachlan Matthew Hogan and Glen Theodore Watt.
I have found it difficult to determine the appropriate penalties to impose upon Brian White. It was his idea to make the arrangements with the contractors which rendered him and his employer liable to penalties for the breaches of the Act. He received $300 in respect of each of the eleven contracts entered into with the contractors. Moreover, he kept the arrangements secret from his employer. He was a relatively highly paid employee and his conduct does him no credit at all.
On the other hand, I am prepared to accept that he did not know that he was infringing the Act. He said he regarded the $300 payments as being 'spotter's fees' which were commonly paid in the industry. In fairness to him, it should be said that the moneys paid to him were paid by Denmac Ford and not by the contractors, and one can understand that he might have regarded them as payments in the nature of commissions on sales. This, of course, does not excuse his conduct nor his failure to tell his employer what he was doing.
There is uncontradicted evidence before me from Brian White that as a result of the publicity which has surrounded the present proceedings he has had difficulty in obtaining and holding employment. He has long since lost his employment with the first respondent and is now unemployed. According to his last employer, a contributing factor in the termination of his employment in July 1982 was the finding made against him in the present proceedings and the associated publicity. Whilst he does not presently have any paid employment he conducts jointly with his brother-in-law a piggery which is said to be self-supporting but does not provide any significant income. In the result, he presently has no income. He does not have substantial assets. He has seven children aged between three months and twenty-two years of age. His wife and five of his children are fully dependent upon him. There is also evidence that he is in poor health.
In an ordinary case where a corporation and its employee are guilty of the same breaches of the Act, I think it would be usual to penalize the employer more heavily than the employee. But in the present case, where White's conduct was designed to advance his own interests and not that of his employer, I can see no reason why White should be penalized less heavily than his employer. This is especially the case because of the personal profit made by White from his part in the transactions.
Mr White has been joined as a responent in the proceedings being taken by the contractors against the company. He is therefore also at risk of being found liable to pay damages to the contractors. Insofar as his actions may be proved to have caused loss to the contractors they will have their redress against him.
I think the penalties imposed on Mr white must take into account the fact that he received $3300 from Denmac Ford for his part in the transactions. Because his actions really constituted one course of conduct I think it is also appropriate in his case to impose a significant penalty in respect of one of the offences, and nominal penalties in respect of the others.
However, I cannot shut my eyes to the fact that he has already suffered adverse consequences as a result of his conduct, and that he is presently in parlous financial circumstances. In my opinion he should pay a penalty of $8000 in respect of the contravention involving Gordon Ashburn Ahlquist and penalties of $100 in respect of each of the other ten contraventions. I reserve liberty to apply on the question of time to pay the penalties.
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