Annand & Thompson Pty Ltd v. Trade Practices Commission [1979] FCA 62

Federal Court of Australia|1979-06-29|Before: Fisher JJ

Trade Practices - Appeal - Whether use of "new! misleading or deceptive in relation to motor vehicles not of recent manufacture - Whether affirmative disclosure order

ANNAND & THOMPSON PTY, LTD. v, TRADE PRACTICES COMMISSION

G. No. 24 of 1978 Coram: Franki, Northrop and Fisher JJ.

ed IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION G. No. 24 of 1978 QUEENSLAND DISTRICT REGISTRY

JUDGES MAKING ORDER: Franki, Northrop and Fisher JJ.

Orders 4 and 5 of the orders entered on 10 October

1978 are set aside. 3. The respondent pay the appellant's costs before

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but classifies 1t as "New". The only other factor which could be added to this is that the conversation

between Mr. Andrado and Mr. Thompson took place in that

part of the premises where "new" as distinct from used cars were sold. This appears from the evidence of Mr. Thompson where the following answers were given

"Q. So that the new cars and the second-hand cars are in separate parts?

Q. But he went into the new car part to speak to you about a 'Jeep'?

A. Yes. Q. Were there any 'Jeeps' there then? A. Yes. There was a demonstrator

'Jeep! which was a hard-top. He had a drive of that."

In relation to the sale to Mr. Watson, a quantity surveyor, his evidence was that on 15 January 1977 he went to the appellant's premises and was approached by

conversation he said to Mr. Lloyd that he had driven a Jeep before which belonged to a friend and when Mr. Lloyd asked him how old it was he, Mr. Watson, said "A couple of years old. I'm not quite sure how old it was" and that Mr. Lloyd had replied "Well, you'd notice the difference in power between that one and this." In

his affidavit Mr. Watson said that on 18 January 1977

he spoke to Mr.Lloyd and told him he wanted to get a valuation on his existing vehicle "as I wanted to buy a new car" but his evidence, later set out, contradicts this. On that day Mr. Watson filled in an order form which was similar to the order form in Mr. Andrado's case except that no entry was made against the sentence "I acknowledge

you do not warrant the correctness of the year model

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which is believed to be ..." As in Mr. Andrado's case the words "Demo" and "Used" were crossed out where they appear in the notation "New/Demo/Used"., On the

same occasion Mr. Watson also signed an application for finance which contained a part "Description for goods which are new/second hand", The words "second hand"

were crossed out. The application for finance was signed by Mr. Watson. On 19 January 1977 Mr. Watson signed an application for registration. In his affidavit he says that when he signed this application "...the only handwritten part of the document that had been previously completed was my name and address. The application was not dated at the time. I did not examine, at the

time, the printed details on the document as I regarded the application as purely a formal document that was

necessary for the vehicle to be registered in my name."

The year of manufacture is in fact shown on the application

for registration which was tendered in evidence as being 1976. On 26 January 1977 when Mr. Watson went to collect the vehicle he said in evidence that Mr. Lloyd telephoned an insurance company and referred to the Jeep as "a new soft top 1977 Jeep". The receipt from the insurance company notes under the "Year of make" 1977. At the

time of delivery of the vehicle on that day Mr. Watson

received a 1974 Owner's Manual. The salesman, Mr. Lloyd ,

"Q, I take it you agree that when you went to see Annand & Thompson your concern was to investigate the purchase of a new as opposed to a second-hand vehicle?

Q. Do you say - well, I withdraw that. Can you tell me when it was that you put it to Annand & Thompson or the salesmen that you wanted to investigate the purchase of a 1977 vehicle?

A. It never entered my head the vehicles they had on display were anything other than of recent manufacture so that I didn't specifically mention either 1977 or 'new! to the salesmen.

Q. Just purely as a matter of detail, on page 3 of your affidavit, paragraph 8...?

Q. The second sentence, 'On arrival I spoke to ...(reads) ... a new tyre'(sic)?

A. That's right. Q@. I just want to get clear that is what

you went there to investigate and that is what you talked about - a new car?

Q. Did you mention the word 'new' when you inquired about it?

Q. Did any of the salesmen you spoke to mention the word 'new' in relation to the Jeep you eventually bought?

HIS HONOUR. Would you answer the question, please? Did any of the salesinen, to whom you spoke about the Jecp you ultimtely

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Somewhat later the following questions were also asked

"Q. Thank you. On page 11 of your affidavit, paragraph 42, you say, 'I believe at the time I purchased the vehicle...(reads)...soft top Jeep*. Surely you would not expect in January 1977 to be purchasing an imported 1977 vehicle?

A. I expected it to have been recently manufactured - not 1977, no, but from mid-1976.

Q. You are saying Allan Lloyd did not make it clear you were purchasing a 1977 Jeep; is that what you are saying now?

A. No. He made it clear to my insurance company while I was sitting there it was a 1977, so on that I assumed, as he said 1977, that it must have been

manufactured in 1977, since he did not say 1976 or 1975."

It should be mentioned that the price charged 1n each

In relation to the purchase by Mr. Watson his Honour found that "Mr. Watson dealt with a salesman employed by the respondent on the basis that the vehicle was new in a part of the premises of the respondent reserved for the sale of new vehicles as opposed to second hand vehicles", He also found that Mr. Watson had informed the salesman that he had driven a

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~20- couple of years old and the salesman remarked that he would notice the difference in power between that

that evidence indicated that there had been no model change since 1974 and therefore no differences in the

I consider that there was evidence before the learned trial judge from which he could arrive at the conclusions which he reached. However, at least since the clarification of the law in Warren v. Coombes, supra, it is clear that this Court should reach its own conclusion

as to the proper inferences to be drawn from the primary facts.

In relation to the sale to Mr. Andrado TI do not consider that misleading or deceptive conduct by the appellant has been established on the balance of probabilities. It is necessary to look at the whole of the transaction of sale and purchase and not only at one aspect of it. Different principles may be applicable in the case of an advertisement. No representation was made that the Jeep was of any particular age and the appearance of the word "New" in the order form associated with "Demo" and "Used" points to the word "New" being usedin contradistinction to the words "Demo" or "Used". Also the reference to the year model points in the same direction. The test is whether in an objective sense the conduct of the appellant was such as to be misleading or deceptive when viewed in the light of

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say that the question is to be tested by the effect

on a person, not particularly intelligent or well informed, but perhaps of somewhat less than average antelligence and background knowledge although the

test is not the effecton a person who is,for example, quite unusually stupid. The question is not whether the purchaser was deceived but whether the conduct was misleading or deceptive. In the subject case the trade

On balance I have come to the opposite conclusion with regard to the sale to Mr. Watson. Mr. Watson's oral evidence denied any verbal representation to him that the vehicle was new and also that he mentioned

The same considerations flow from the order form, applications for finance and registration as

The reference to a 1977 Jeep in the conversation of Mr. Lloyd with the insurance compmy,is in my

The year "1977" appears on the receipt of the insurance company and I consider that this statement 1s sufficient, in the background against which it was made, to render the appellant's conduct, in respect of

I pass now to consider the question of tho order which was madc pursuant to s.80A(1). The first requirement is that the Court must be "satisfied" that a person has engaged in conduct constituting a

The learned trial judge was of course satisfied that a breach of s.52 was established in respect of the sales both to Mr. Andrado and Mr. Watson. I proceed now to consider the question of the order against the background that a contravention has been established only in relation to the sale to Mr, Watson in January 1977. It was common ground before us that there was no evidence of the number of Jeeps sold between 1 October 1974 and the date of the hearing before the trial gudge. There was also no evidence of any contravention of any provision of the Act in relation to a sale to any person other than Mr. Watson and there was no evidence of any proceedings in respect of or complaints by any purchaser other than Mr. Andrado and Mr. Watson in the relevant period. Apart from these two purchases, there was no evidence of the period of time between the date shown on the compliance plate of any Jeep sold by the appellant in the relevant period

-23- breach of the Act in relation to any purchaser other than the two purchasers in respect of whose purchases the proceedings had been brought. 1 consider that there must at least be some significant nexus between the conduct found and the order which may be made under s.80A(1). This must follow from the breadth of the orders which may be made. 'The learned trial judge in my opinion did not correctly analyse the pesition in considering the question of the exercise of his discretion. He referred to the submission made to him that "...the policy of not informing prospective purchasers of the length of tame the vehicle had been in existence (already referred to above) and the number of Jeep motor vehicles sold by the respondent would justify such an order." His Honour then said "It does appear to be the general policy of the legislature that contravention of the Act is to be remedied in every possible way." His Honour later said "Having regard to the evidence I feel an order should be made but not in the precise terms of that sought. It seems to me that if the attention of the persons who acquiredJeeps from the respondent was drawn to the compliance plates and the date which appeared thereon that would be sufficient." His Honour did not refer to the particular evidence which he had in mind when he referred to "having regard to the evidence." It seems to be more likely than not that his Honour decided to make the order which he made because he considered that 1b was probable that there were some Jeeps which had been sold in the relevant period in circumstances where the

appellant's conduct had been in contravention of s.52.

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It was rightly conceded by the respondent before us that this was not a conclusion which could be reached. Compliance with the order would require at least some effort on behalf of the appellant and might also be thought to cause considerable confusion to purchasers and to the appellant if a number of Jeeps had been sold in the relevant period. When one considers that the guidelines then laid down by the Commission would not prevent a vehicle being described as "new't although not newly manufactured and that no question of the sale of a superseded model is involved, I do not think that theorder made was justified. I consider that the appeal should be upheld in relation to the order under s.80A(1).

I pass now to the question of costs. The learned trial judge ordered that the appellant pay the respondent's costs of the proceedings before him up to and including

in its attack on the trial gudge's order for costs were a. That the case was in the nature of a test case;

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-25- I do not consider the first two reasons, whilst correctly stating the position, are sufficient to ground

The trial judge found that "The offer of an undertaking by the defendant company was made on the last day of hearing and that offer weighed heavily with me in the exercise of my discretion to refuse an injunction." The appellant attacked the finding of fact by the learned trial judge that the offer of an undertaking was made only on the last day. I do not consider that the evidence is such that this finding should be disturbed, although the appellant was successful in resisting an injunction. Apparently this was largely determined by its offer of an undertaking. In these circumstances I think that the order which his Honour made that the appellant pay the costs of proceedings up to and including judgment on 20 June 1978 (including the costsreferable to the argument regarding

costs incurred up to that judgment) should not be disturbed.

"As to the costs of the application for further orders, as each party has succeeded on one of the two

was sought under s.83, and which the trial judge refused,

and the order which he made under s.80A of the Act. Because of the view which I take with respect to the order made under s.80A of the Act I would uphold the appeal in relation to the order for costs of 8 September 1978 and substitute for it an order that the respondent in these proceedings pay the appellant's costs before the trial judge in relation to the application for orders

In the appeal before us I consider that both parties have been to some extent successful, the appellant in relation to the order under s.80A and in relation to costs with regard to those proceedings and the respondent in relation to the issue of whether any contravention of s.52 has been established. JI would order

that each party be left to pay its own costs of this appeal.

In summary then I propose that the appeal be upheld to the extent that orders four and five of the orders which were entered on 10 October 1978 be set aside and in lieu thereof the respondent be ordered to pay the appellant's costs before the trial judge in relation to the application for orders under ss.80A and 83 and that each party bear their own costs of this

I certify that this and the twenty f ve preceding pages are a true copy of the

Reasons for Judgment herein of his Honour Mr, Justice Frrvns

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ANNAND & THOMPSON PTY, LTD. Appellant (Respondent) and TRADE PRACTICES COMMISSION Respondent (Applicant) NORTHROP J. REASONS FOR JUDGMENT 29 June, 1979,

is a corporation under the Trade Practices Act 1974, as

amended, the Act, carrying on business at Brisbane and at other places as a dealer selling motor vehicles and is engaged in trade or commerce within sec. 52 of the Act.

"52.(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive". Prior to 1 July 1977 the sub-section was

"52.(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive." On 27 April 1978 the respondent, Trade Practices Commission, as applicant, pursuant to sec.80(1) of the Act, obtained an order from the Federal Court of Australia calling upon the appellant to show cause before the Federal Court on 3 May 1978 why the appeliant "shoyld not be restrained from representing that motor vehicles are of more recent manufacture

than in fact they are in contravention of sec. 52 of the Trade

Practices Act 1974" upon the grounds appearing from four specified affidavits. The affidavits were lengthy and detailed and there were a number of exhibits to each affidavit but none of the

affidavits contained any concise or even comprehensible statement of the grounds upon which the order was sought.

The absence of a clear statement of the grounds upon which

an injunction is sought must lead to confusion and uncertainty and this is amply illus.rated by what has happened in the present case.

In substance, the affidavits related to facts arising with respect to the sale by the appellant of two jeep motor vehicles to two separate purchasers, a Mr. Watson and a Mr. Andrado in January 1977 and August 1977 respectively. These two vehicles had not previously been sold by retail. Under State regulation, every motor vehicle must have attached to it a compliance plate containing information relating to the description of the motor vehicle, its date of manufacture and other specified particulars. The date of manufacture is defined, for the purpose of the regulations, in such a way that it need have no direct relationship to the date the motor vehicle was actually manufactured or assembled, The compliance plate is affixed to the motor vehicle by the "manufacturer" being the person who 1s authorised to affix the compliance Plate to the motor vehicle and need not be the person who actually manufactured or assembled the motor vehicle. An importer of motor vehicles assembled overseas is normally the "manufacturer" under the regulations. Pursuant to the regulations, the date of manufacture to be inserted on the compliance plate is the date the motor vehicle is available in Australia in a condition which will enable it to be registered. The date appearing on the compliance plate therefore need have no direct relationship to the date of actual manufacture or assembly of the motor vehicle irrespective of whether the motor vehicle was assembled overseas or in Australia. The compliance plates fixed to each of the two jeeps referred to in the affidavits, showed a date January 1975. Each of the jeeps was imported into Australia fully assembled. There had been no model changes with respect to jeeps since the year 1974 and each of the jeeps was a current model. Each of the jeeps was sold as a new motor vehicle as distinct from a demonstration or used Motor vehicle and the sale took place from that part of the

appellant's premises reserved for the sale of new motor vehicles 3.

, 3. as distinct from that part of the appellant's premises reserved for the sale of used motor vehicles. One of the affidavits contained a record of interview between officers of the respondent and officers of the appellant with respect to the sale of the jeeps and showed that differences of opinion exist as to the meaning to be given to the word "new" when used in relation to the sale of a "new" motor vehicle. Neither generally, nor in particular with respect to the two jeeps, did the appellant take steps to bring to the attention of the purchasers the date shown on the compliance plate. Each was sold as a new jeep. The appellant drew a distinction between new motor vehicles in the sense of not being previously registered and used on the 'one hand and used motor vehicles in the sense of having previously been registered and used, At the time of the interview in November 1977, officers of the appellant considered that the appellant had done nothing wrong and maintained the view that they would not instruct salesmen to disclose to prospective purchasers the age of unused vehicles, At the interview, officers of the respondent, stated that they had reason to suspect that the appellant had contravened sec, 53 of the Act, but the respondent has not instituted proceedings against the appellant under sec. 79 of the Act with respect to the sale of either:of the two jeeps. Most of the facts thus briefly referred to can be gleaned from a careful reading of the four affidavits, but as I said before, the grounds upon which the application was made are not clearly stated therein. The confusion is compounded by the use of the words "more recent manufacture" in the form of the injunction sought when the word "manufacture" is used in a

When the order to show cause came on for hearing, the then Counsel for the appellant sought an adjournment of the hearing to enable the preparation of the defence to the proceedings. Counsel for the respondent did not oppose the application and did not seek any interim orders but relied upon undertakings which he understood would be given by the appellant. In the result, the hearing was adjourned to 10 May 1978 and Counsel for the appellant made the following statement:

"I have already indicated to your Honour that the respondent will vigourously defend these

proceedings, but it is conscious of the fact that publicity has already attended the introduction of these proceedings and will no doubt continue them,

It is concerned to show its bona fides in this matter and in those circumstances the managing director of Annand & Thompson has decided, and I am instructed to so advise the court, that he will issue instructions to all sales men engaged by Annand & Thompson selling vehicles at retail that, henceforth, they should advise interested purchasers of motor vehicles from Annand & Thompson of the year of manufacture of the motor vehicle they are interested to purchase if that date is known to Annand & Thompson, and if not an indication of a date prior to which Annand & Thompson understands the vehicle to have been manufactured, That advice will be given by the salesmen whether or not the question is asked and the practice will henceforth be followed regardless of the outcome of these proceedings.

on for hearing and evidence was given on behalf of the respondent and the appellant on the 10 and 11 May 1978. During the course of the hearing, the Managing Director of the appellant offered an undertaking to the Court to instruct the appellant's salesmen in such a way as would lead to prospective purchasers being made aware of the length of time a vehicle was in existence where that case was possible. Further, during the course of the hearing, 1t became apparent that the question to be resolved was whether the description of the jeep motor vehicles as "new"

was misleading within the meaning of sec,52 of the Act.

In reasons for judgment published on 20 June 1978 the Court said:

"The word "new" can mean both "not second- hand" and "of recent origin": see John McGrath Motors (Canberra) Pty. Limited v Applebee 110 C.L.R. 656. It is clear

in the instant case that neither vehicle was a second-hand vehicle. Whether the description of both vehicles as "new" was misleading or is likely to mislead or deceive within the meaning of Section 52 is a question of fact. There was expert evidence before me to the effect that within the motor trade, traders in motor vehicles regarded the

use of the word "new" as appropriate to describe a vehicle which was the current model, had not previously been owned by a person other than the firm selling it, and had not been previously registered. This "trade" meaning is not to be taken as the yardstick when considering the meaning of "misleading" in relation to a sale to a member of the public.

Both the vehicles, the subject matter of this action deteriorated to some extent as a result of storage and I am of the view that the lapse of time in each case between the affixing of the compliance plate and ultimate sale (two years or more) was of too long a duration to enable the respondent to describe them as "new" without that

two instances there has been a breach of Section 52 of the Act."

In evidence before the Court was a letter dated 27 February 1976 from the respondent to the Secretary of the Australian Automobile Dealers' Association which omitting formal parts read as follows:

"I refer to your letter, dated 17 February 1976, concerning "new vehicle definitions". You say that at a recent Executive Committee Meeting of your Association, General Motors Dealers said that they had been advised by their Managing Directors Advisory Council that, on the advice of the Commission, vehicles could not be advertised as "new" after six months of their original release. You now seek clarification of this matter.

At the outset I must point out that it is not the Commission's function to provide legal advice. Nor can it give a clearance or authorization in relation to individual advertising campaigns. I should add that proceedings in respect of a contravention of the Trade Practices Act 1974-1975 may be instituted by persons other than the

Commission and that the ultimate decision whether there is a contravention lies with the Court.

The Commissioner's view of the use of the term "new" as used in advertising 1s

to be found in its guidelines on advertising (copy enclosed) and in particular paragraph 7 of the guidelines.

You will note that the reference to the"six month" period is to be found in paragraphs 7.4 - 7.5, I refer you also to paragraph 7.9 where the decision of the U.K. Court of Appeal in R. v. Ford Motor Co. Ltd is discussed. I enclose for your information a copy of the judgements in that case.

be advertised as "new" will depend on all the circumstances surrounding the advertisement in question. In the case of motor vehicles having regard to the nature of the product and the market in which they are advertised, I consider that they can be described as "new" where:

(a) the vehicle had not previously been sold by retail;

(b) it is a current model, . 6. Where a vehicle has not been previously sold by retail but is a superseded model any advertisements should clearly indicate this fact because whilst such a vehicle

is "unused" it is not a "new" model in a marketing sense.

be of assistance to you and your Association." There was no evidence to show that the appellant knew of this letter, but its contents do reflect on how the word "new" is to be understood when applied to the sale of motor vehicles. In the present proceedings, the two jeeps referred to had not previously been sold by retail and were then the current model.

The Court considered whether, in the exercise of its discretion, an injunction should be granted in the terms sought. The Court had regard to the undertaking given by the managing director of the appellant and discounted the

effect of the attitude earlier expressed to officers of the

respondent in November 1977 and in the result decided not to grant the injunction sought and dismissed the application. The Court stood the matter over to a date to be fixed to hear argument as to costs and for any further

applications thateither of the parties saw fit to make.

By telegram dated 24 April 1978, the day before the order to show cause was made, the respondent notified the appellant that it intended to make an ex parte

application for the injunction, and the telegram continued:

"Fhe T.P.C. proposes also to seek disclosure ua orders under s.80A of the Act and findinas of fact under s.83 of the Act."

It is unfortunate that these orders were not set out in

the order to show cause. They were not brought to the attention of the Court until 11 May 1978 when, in the course of final submissions, Counsel for the respondent informed the trial Judge of the intention of the respondent to seek an order under s.80A and s,83 of the Act. Section 80A came into operation on 1 July 1977 and sub-sec. (1) thereof is

"80A.(1) Where, on the application of the Minister or the Commission, the Court is satisfied that a person has engaged in conduct constituting a contravention of a provision of Part V, the Court may make either or both of the following orders:-

(a) an order requiring that person or a person involved in the contravention to disclose to the public, to a particular person or to persons included in a particular class of persons, in such manner as is specified in the order, such information, or information of such a kind, as is so specified, being anformation that 1s in the possession of the person to whom the order 1s directed or to which that last~mentioned person has access;

. or avperson involved in the contravention to publish, at his own expense, in a manner and at times specified in the

of which are specified in, or are to be determined in accordance with, the order."

On 30 June 1978, submissions were made to the Court with respect to the making of an order under s.80A of the Act, with respect to the findings of fact under s.83 of the

Act, and with respect to the costs of the earlier proceedings before the Court. On 8 and 14 September 1978 the Court

"These orders will not become effective until 7 days from 8 September, 1978;

The respondent to pay the applicant's costs incurred up to and including judgment of 20 June, 1978 and any costs in relation to the argument on the question of costs;

The application for a finding of fact pursuant to Section 83 of the Trade Practices Act 1974 be dismissed;

person or company which has acquired by purchase, lease or hire-purchase by retail a Jeep make motor vehicle (not previously registered) from the respondent since 1 October 1974 that the date by which that vehicle was assembled and was in a condition ready for registration appears:on a compliance plate which is affixed to the

to such persons by pre-paid ordinary post within twenty-one (21) days of the date of these orders.

Each party pay its own costs of the applications for further orders."

The appellant appealed against the judgments and Orders whereby the Court "made an order for disclosure pursuant to Section 80A(1) (a) of the Trade Practices Act 1974 and ordered the Appellant to pay the costs of the proceedings up to and including judgment on 20 June, 1978 together with costs referable to the argument regarding the issue of costs " and sought the following orders:-

"1. An order that the order made on 8 September, 1978 pursuant to Section 80A(1) (a) of the Trade Practices Act which was amended on 14 September, 1978 be set aside.

"In particular the two orders appealed from relate to the order for costs and what is described as the disclosure order under s,80A, I propose to consider first the appeal against the disclosure order.

Under s.24 Federal Court of Australia Act 1976, a Full Court of the Federal Court has jurisdiction

to hear and determine appeals from judgments as defined in s.4 of the Act. The appeal is an appeal properly so called and is not limited to an appeal on a question of law, see for example McCormack v. Commissioner of Taxation,

High Court, 5 April 1979 (unreported), On an appeal,

the Full Court should apply the principles stated in Warren v. Coombes, High Court, 13 March 1979 (unreported). In this regard, I adopt, with respect, the reasons expressed by Franki J. in his reasons for judgment herein.

The order made under sec,80A of the Act depends upon the Court being satisfied that a person has engaged in conduct constituting a contravention of a provision of Part V of the Act. Section 52 1s a provision of Part V of the Act. In order to determine the appeal, it 1s necessary for the Full Court, as the first step, to be satisfied that the appellant has engaged in conduct constituting a contravention of s.52 of the Act, The only basis upon which it was submitted that the appellant had engaged in such conduct was in relation to the sale of the two jeeps. The evidence given with respect to the sale of the two jeeps is set out in the reasons for judgment of Pranki J, and need

On the evidence, it is clear that the appellant was and is conducting its business of selling

motor vehicles by retail in such a way as to delineate clearly between what it considers to be new vehicles on the

one hand, and used or second hand vehicles on the other. It has a new car section and a used car section and these two

sections are kept physically separated and distinct from each

other. Its business generally is conducted on the same basis as the opinions expressed in paragraph 5 of the letter by the respondent dated 27 February 1976. The sale of the two jeeps are illustrations of the conduct engaged in by the appellant in trade or commerce but before considering whether that conduct contravenes s.52 of the Act, reference should be made to two matters for the purpose of putting them to one side as being irrelevant to the present issue.

There is evidence that parts of a newly assembled motor vehicle may deteriorate while the vehicle is being kept in storage and that in the present case parts of one of the jeeps had deteriorated during the effluxion of time before the sale. For present purposes both that evidence and any evidence directed to establishing the fact that the appellant sold one of the jeeps as a "1977 model" are irrelevant. The purchasers have rights and remedies against the appellant both under the Act and under State legislation relating to sale of goods and at common law. As the trial Judge correctly stated in his reasons for judgment "the question to be resolved of course is whether the' description of the vehicles as 'new' vehicles was misleading within the meaning of s.52 of the Act." In the present case the Court is not concerned to consider or make orders concerning any legal rights that the purchasers of the jeeps May have against the appellant. Nor is the Court concerned to consider whether the appellant has committed any offence under s.53 of the Act, or any other provision of the Act.

A reference to the Shorter Oxford Dictionary illustrates that the word "new" when used as an adjective can have many varying meanings. Some of the many dictionary meanings are set out: not existing before; now made or brought into existence, for the first time; of recent origin or growth; not before used or worn. When used to describe a car or motor vehicle the word "new" is commonly understood to mean not second hand or not used. This is refined to be understood as meaning that the car or motor

retail. A demonstration model is understood as meaning

a motor vehicle which has not been sold by retail, but has been used by the seller to demonstrate to persons how that type of vehicle performs. This meaning of the word "new" is accepted generally within the motor trade. Under

s.52, it is not sufficient to establish that a particular person was misled or deceived, the question is whether the conduct engaged in is misleading or deceptive or, since

1 July 1977, is likely to mislead to deceive. The question is to be answered by considering the effect of the conduct on a reasonable man, the man in the street. In the

present context it must be added that the reasonable man

is one who is considering purchasing a motor vehicle. In my opinion, the use of the word "new", when used in connection with the sale or purchase of a car or motor vehicle, is to be understood as meaning a car or motor vehicle which is a current model whichhas not previously been sold by retail. The meaning of the word "new" in this context is to be contrasted with the meaning to be understood by its use in other contexts, It is quite common for a person to describe his car as "a new car" after he has bought it

and after he has used it. It 1s not unusual for a person who has bought a used car to describe it as his new car.

Some fifty years ago, the dicotomy was between new cars and second hand cars, and in Marcus Clark (Victoria) Ltd. v. Brown (1928) 40 C.L.R. 540, the High Court had to consider the meaning to be given to the terms

contained in documents. Knox C.J. Isaacs and Powers JJ. in a joint judgment at p.548-9 said:

"The guarantee being inserted, and as of the purchaser's right, what is the true interpretation of the contract as to the car being described or warranted as new by the contract itself and consistently with the exclusive clause referred to? The central principle for this purpose is thus stated by Blackburn J. in Fowkes v. Manchester and London Life Assurance and Loan Association (1863) 3 B.&S. 917, at p.929: 'In all deedsand instruments the language used by one party 1s to be construed in the sense in which it would

be reasonably understood by the other." Applying that principle to the two documents A and B, the proper conclusion is that the written contract declares or asserts the car to be a 'new car", That arises in the following way:- Exhibit

A, the primary document, states: 'I the undersigned" (Brown) 'hereby order and agree to pay for the goods specified hereunder upon the terms indorsed hereon.' The terms indorsed are called 'Terms of business.' Par.II says: 'All new cars are sold subject to the following guarantee'

and the guarantee is set out, Par.13 says: 'No guarantee is given with second hand cars.' A purchaser reading those terms would reasonably understand that the selling company's cars were divided for the purposes of 'terms of business' into two classes, namely, 'new' and 'secondhand,' and that if he purchased a car as a 'new car' he would be entitled to the stated guarantee."

"It was argued for the appellant that the expressions 'new! and 'secondhand' were

not exhaustive, since the latter is confined to cars purchased from others, and that there is a third possibility, namely, that the appellant sold also 'used cars', that is, cars used only by itself. That is a rather strange argument on the part of

but also to the fact that it appears from the evidence of a former sales manager of the appellant that there was a 'secondhand department' of the company, and a 'new

to any other department. But in any case it is not a conclusive argument."

In John McGrath Motors (Canberra) Pty.

--Ltd. v. Applebee (1963-64) 110 C.L.R. 656, the High Court was considering an appeal from a judgment for damages awarded

against the appellant for fraudulent misrepresentation. The appellant, a dealer in new and secondhand cars, sold to the plaintiff a car which was a current model and which had not previously been sold by retail but which had been manufactured seventeen months earlier. The salesman of the appellant described the car as "new". The High Court allowed the appeal, and in the course of giving judgment the Court, comprising Kitto Taylor and Owen JJ, in a joint judgment said at p,659:

understood it to mean 'not secondhand." These cases illustrate the fact that the dicotomy between

f#new" cars and "used"cars or "secondhand" cars 1s not of

The High Court has considered s.52 of the Act in re: Credit Tribunal ex parte General Motors

Acceptance Corporation, Australia (1976-77) 14 A,L.R. 257 and Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. (1978) 18 A.L.R. 639. In the former case, Mason J. in considering whether provisions in a schedule to a State statute contravened s.52 of the Act,

"With this possible exception the Thirteenth Schedule notice is neither inaccurate nor misleading. Whether the last sentence in par 2 is'misleading' within the meaning of s.52(1) of the Trade Practices Act is a separate question. 'Misleading' is a word which 1s capable of expressing various shades of meaning, sometimes signifying that which is subjectively misleading and at other times that which is objectively misleading,

Its meaning therefore is apt to be influenced, indeed decisively influenced, by the context in which it is found. Here the setting in which s.52(1) appears is shown by the headings 'Part V - Consumer Protection' and 'Division 1 - Unfair Practices'. In this context the prohibition contained in the sub-section emerges as an important general prohibition against a corporation in the course of trade or commerce engaged in a form of conduct,

In the second of those cases Stephen J. said at p.647:

"As I read s.52(1) the same may be said of it, it is concerned with consequences as giving to particular conduct a particular colour. If the consequence is deception, that suffices to make the conduct deceptive.

Section 52(1) creates no offence, it only prescribes a course of conduct deviation from which may result 1n an order of the

court, made under s.80 of the Act, forbidding further deviation in the future. The section should be understood as meaning precisely what it says and as involving no questions of intent upon the part of the corporation whose conduct

When, as in s.52(1), the focus is upon the misleading of others rather than upon the injury to a competitor, it becomes of particular importance to identify the respect 1n which there is said to be any misleading or deception. The particular feature of the Hornsby Centre's conduct of which the

Sydney Centre complains as being misleading and deceptive is not simply the use of

its corporate name, so similar in part to its own name, but rather that by that use others are led to believe that the Hornsby Centre is

@ branch of, or is otherwise associated with, the Sydney Centre."

See also Weitmann v. Katies Ltd. (1977) 29 F.L.R. 336 per Franki J. at p.343.

In the present case, the conduct complained of is the holding out and selling as new, motor vehicles which are current models and which previously have not been sold by retail. The conduct is to be considered in the context of the business being conducted by the appellant and as understood by persons contemplating purchasing a Motor vehicle. In this context, use of the word "new" as meaning a current model which previously has not been sold by retail is neither misleading nor deceptive nor is likely to mislead or to deceive. Apart from giving rise to an implication that the vehicle is a current model, the word "new" does not give rise to the implication that the vehicle is of recent origin and nothing more. The concept "of recent origin" itself gives rise to difficulties of construction and of application involving varying periods of time. In the context of the conduct of the appellant and on proper analysis if the word "new" is to be given the meaning "of recent origin", it may have no meaning other than to be understood to imply that the vehicle is the current model and has not been superseded by

another, I hesitate to use the adjective 'new, model. In any

event, a motor car may well be of recent origin even if

previously sold by retail and if resold within a few weeks

of the first sale, it is difficult to see how on the second sale, the car could be understood to be a new car even though it is of recent origin. Likewise, in the context of the

sale and purchase of motor cars, it is difficult to see how a motor car even if of recent origin could properly be described as a new car if it has been superseded by another

I am not satisfied that the appellant engaged in conduct that was misleading or deceptive or was likely to mislead or deceive, The appellant did not engage in conduct which was unfair. It follows that I would allow the appeal against the disclosure order.

I would allow also the appeal against the orders for costs. The costs incurred up to and including the reason for judgment of 20 June 1978 were with respect to the issue of whether the appellant had contravened s. 52 of the Act. In my opinion it had not and therefore the order that the appellant pay the respondent's costs incurred up to and including judgment on 20 June 1978 and any costs in relation to the argument on the question of costs should be set aside, Likewise, the order that each party pay its own costs of the application for the further orders should be set aside,

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (223 paragraphs)

Cited By (2)