Australian Competition and Consumer Commission v ATS All Trades and Services Pty Ltd

NEW SOUTH WALES DISTRICT REGISTRY NSD 1119 of 2008

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

AND: ats ALL TRADES AND SERVICES PTY LTD ACN 107 855 434

REASONS FOR JUDGMENT 1 On 17 July 2008, the Australian Competition and Consumer Commission instituted proceedings against the three respondents, ATS All Trades and Services Pty Ltd (ATS), John Barry and Aaron Bell. At the relevant time, ATS carried on the business of providing job-finding and marketing services to tradespeople. Mr Barry, the second respondent, was the sole director and shareholder of ATS. Mr Bell, the third respondent, was an employee of ATS. The allegation made against ATS was that it contravened certain provisions of the Trade Practices Act 1974 (Cth) (TPA). The allegation made against each of Mr Barry and Mr Bell was, broadly speaking, that they were knowingly concerned in ATS's alleged contravention of the TPA. By way of relief, the ACCC seeks declarations that Mr Bell engaged in certain proscribed conduct, injunctions restraining Mr Bell from engaging in certain conduct as well as its costs of the proceedings. 2 Mr Barry died in mid-March 2009. Prior to Mr Barry's death, ATS and the ACCC reached agreement on the orders disposing of the proceedings against ATS. On 19 March 2009, I made orders by consent disposing of the proceedings against ATS. (The terms of that order are Annexure A to these reasons). On 19 March 2009, I also made an order, consented to by the parties, that the proceedings be dismissed against Mr Barry with no orders as to costs.

ATS'S BUSINESS 3 ATS carries on the business of providing job finding and marketing services to trades people. It marketed its services in the following way: o telemarketers acting on behalf of ATS would telephone prospective customers; o if a prospective customer expressed interest to a marketer, one of Mr Barry, Mr Bell, or another ATS employee, Jenny Hallaby would make a follow up telephone call to the prospective customer; o if a prospective customer remained interested after the follow-up telephone call, he or she would be sent a documents entitled "Membership Contract" and "Member Profile"; and o ATS would then obtain from the customers payment in full for a number of months of services (usually 12 months) to be delivered by ATS. Following receipt of that payment, ATS would forward a package of materials entitled "Welcome".

The services offered by ATS included ATS providing each customer weekly with a document identifying job opportunities for the particular member. It also operated, at the relevant times, a website for the purposes of marketing and delivering services.

THE ACCC'S PLEADED CASE 4 The ACCC's case is that, in marketing its services to prospective customers, ATS made three broad representations, each of which was false or misleading. These representations are referred to in the statement of claim as the "Job Opportunities Representation", the "Google Representation" and the "Wattyl Discount Representation".

The Job Opportunities Representation 5 The "Job Opportunities Representation" referred to the representation: that ATS provided each of its customers and would provide each customer with a list of work opportunities with clients requiring trade services of the kind usually provided by the prospective customer within the region in which the prospective customer usually operated. 6 The ACCC alleges that ATS made the Job Opportunities Representation: (a) each time a telemarketer called a prospective customer; (b) each time Mr Barry, Mr Bell or Ms Hallaby made the follow-up telephone call to customers who had indicated interest to a telemarketer; and (c) by sending to prospective customers the document entitled "Membership Contract" together with the document entitled "Member Profile". 7 The ACCC alleges that only one document (known as the ATS job list) was provided to each of the customers of ATS on a weekly basis. Each week a job list was produced for Queensland, Victoria, South Australia, Western Australia, Sydney, Newcastle, Wollongong and the Australian Capital Territory. The ACCC alleges that each of those job lists was of trade works generally with no particular indexing for any particular trade and that relevant job listings did not include job opportunities for trades of various of the "members" of ATS, and did not include listings for those trades in the regions in which the member operated. Where appropriate, I will adopt the expression "member" to describe a customer who contracted with ATS for its services. 8 The ACCC alleges that the list of work opportunities that ATS provided to each member did not include the names of people who: · required trade services of a particular kind; · were located in the particular region in which the ATS member usually operated. It follows, according to the ACCC that ATS contravened s 52 of the TPA, relying on s 51A.

The Google Representation 9 The "Google Representation" referred to the representation: that ATS provided each of its customers and would provide each customer with a web page that would be displayed by a search using the Google search engine. 10 The ACCC alleges that ATS made the Google Representation: (a) each time a telemarketer called a prospective customer; (b) in certain calls made by Ms Hallaby in the period January 2008 to March 2008; (c) in certain calls made by Mr Bell from at least October 2007. 11 The ACCC contends the Google Representation was false because it misstated the nature of the web presence provided by ATS. The ACCC alleges that ATS did not have a system that made its members' web pages searchable by Google. Rather, if the use of the Google search resulted in a webpage being displayed, that website was an ATS landing page, and not a member's webpage. 12 It follows, according to the ACCC, that ATS contravened s 52 of the TPA. Again the ACCC relies on s 51A, in that ATS did not, at the time if made the Google Representation, have reasonable grounds for making a representation as to future matters.

Wattyl Discount Representation 13 The "Wattyl Discount" referred to the representation: that acquisition of services from ATS entitled the customer to receive a twenty percent discount on all Wattyl products except brushes and consumables. 14 The ACCC alleges that the ATS made the Wattyl Discount Representation by: (a) Mr Bell telephoning prospective customers; and (b) publishing the representation on its website. 15 The ACCC alleges, the Wattyl Discount Representation was false because being a member of ATS did not entitle any person to a discount from Wattyl. In the result, ATS was said to have contravened s 52 of the TPA.

LIABILITY OF THE THIRD RESPONDENT 16 The ACCC's alleges that the third respondent, Mr Bell, was knowingly concerned in ATS's contraventions of the TPA: see s 75B(1). 17 The ACCC alleges that Mr Bell directed telemarketers (or arranged for Ms Hallaby) to make the Job Opportunities Representation when they called prospective customers. The ACCC also alleges that during the period of May 2004 - July 2008, Mr Bell himself telephoned certain prospective customers (who had previously indicated interest to a telemarketer) and made the Job Opportunities to each of them. 18 The ACCC alleges that from May 2004: (a) Mr Bell knew that the only lists provided to all customers of ATS on regular basis were general lists of work opportunities with clients requiring trade services; (b) Mr Bell knew that the lists of work opportunities with clients requiring trade services were not lists of clients requiring trade services of any specific kind; (c) Mr Bell knew that the lists of work opportunities with clients requiring trade services were supplied in respect of the following regions of Australia - Queensland, Victoria, South Australia, Western Australia, Sydney, Newcastle, Wollongong and the Australian Capital Territory -without indexing of any smaller regions within those regions. At all times Mr Bell knew that these regions were larger than the regions within which tradespeople usually operated their business. 19 In relation to Mr Bell's involvement in the Google Representation, the ACCC alleges that he: (a) made the Google Representation to those prospective customers to whom he was marketing ATS's services; (b) arranged for telemarketers and Ms Hallaby to make the Google Representation when they were marketing ATS's services; (c) at all material times knew that ATS would not provide the customers with a webpage that would be displayed by a search using the Google search engine. 20 In relation to Mr Bell's involvement in the Wattyl Discount Representation, the ACCC alleges that he: (a) wrote those parts of the webpage that were published by ATS that contained the Wattyl Discount Representation; (b) from April 2007 knew that acquisition of services by customers from ATS did not entitle customers to receive any discount on any Wattyl products. Mr Bell knew that any customer of ATS would need to make his, her or its own application to Wattyl for a discount arrangement and that Wattyl would then assess each application to determine whether Wattyl wished to enter into arrangements with that customer, including whether a discount would apply to that customers' purchases, and if so what percentage discount would apply.

THE EVIDENCE 21 At the hearing of the matter, on 26 March 2009, much of the evidence relied upon by the ACCC in seeking to prove accessorily liability on the part of Mr Bell was drawn from statements made by Mr Bell during the course of an oral examination conducted by the ACCC pursuant to s 155(1C) of the TPA. The transcript of Mr Bell's ACCC examination contains representations adverse to his interest and was admitted on that basis. The ACCC also relied on the transcript of the oral examination of Mr Barry. In addition, counsel for the ACCC relied on (and read) the affidavits of five individuals. Mr Bell was not present at the hearing and the five deponents were not cross-examined.

Evidence in relation to the Job Opportunities Representation 22 The ACCC relies on the affidavit of Paul Stanley Roy Montgomery (made on 2 March 2009), who is a tradesperson specialising in cleaning drains and relining pipes. Mr Montgomery is the owner/operator of two businesses, known as All Type Drain Cleaning (ATDC) and Cleaning and NuFlow Technologies Pacific (NuFlow) respectively. Mr Montgomery operates his businesses on the Sunshine Coast of Queensland. Mr Montgomery states that the bulk of his work is in the Sunshine Coast region or the northern suburbs of Brisbane. Mr Montgomery became a member of the ATS on about 21 September 2007. 23 From 21 September 2007 to mid-October 2007, Mr Montgomery did not receive any faxes or telephone calls from ATS at his home address or on his mobile telephone. Sometime in mid-October 2007, Mr Montgomery logged into his ATS website account. He was directed to do so by an ATS employee during a conversation Mr Montgomery had with him about receiving job notifications via telephone. Mr Montgomery described the job list that appeared after he had logged into the website as "just a list of tenders where you had to tender for work as opposed to ready-to-go jobs" and was "a generic job list for Queensland". Quite soon after (perhaps on the same day or the day after), Mr Montgomery telephoned one of the "jobs" listed on the job list. The person who answered told Mr Montgomery that what they were advertising for was an employment opportunity for plumbers and not actually a request for work to be performed. 24 The ACCC also relies on the affidavit of Maria Anthony (made on 1 March 2009). The relevant evidence of Mrs Anthony is as follows. Mrs Anthony is the wife of Mr Anthony and a part-owner of Aqua Waterproofing Solutions Pty Ltd (Aqua). Aqua specialises in the sale and installation of waterproofing material in residential bathrooms and laundries and outdoor areas that need to be waterproofed such as balconies. It is based in the southern region of Sydney. Aqua became an ATS member in March 2009. However, prior to becoming a member, Aqua was considering its options it terms of advertising and marketing for the business. Mrs Anthony became aware of a service called Omni-Quant, which provided information about tender opportunities to small businesses and traders. Mrs Anthony also came to learn about ATS. During the course of her research, Mrs Anthony noted that ATS's subscription price was approximately half of that of Omni-Quant. It also appeared to Mrs Anthony, after reviewing the ATS website, that ATS had a large number of members and that ATS were generally smaller businesses (not unlike Aqua). On 6 March 2008, Mrs Anthony had a telephone conversation with an ATS representative who identified herself as Jenny. The following conversation ensued: "Jenny" Hi, my name is Jenny from All Trades and Services. I've been speaking with your husband Glenn and he said that you are trying to decide between us and Omni­Quant. Mrs Anthony I am familiar with the services of Omni-Quant so I am actually leaning that way, "Jenny" We are half the price of Omni-Quant We don't have the same large overheads as they do - so we can afford to provide the same service a lot more cheaply. We have all the same jobs as Omni-Quant -but we also have a lot of smaller clients such as real estate agents and smaller scale work like townhouses that Omni-Quant don't have. Mrs Anthony So you have all the jobs that Omni-Quant have? "Jenny" Yes we do - and Omni-Quant don't SMS their clients when they have an urgent job do they? We've got heaps of waterproofing work on at the moment, What happens is, that if we receive details of an urgent waterproofing job, we take the details, SMS those details to you or, your husband - you then call them - and work out the details from there. Also, every week you will receive a list of jobs for the Sydney area. You then pick the jobs that you are interested in from the list, contact the numbers on the list and away you go. How easy is that? We also have work available for Wollongong - you interested in work in Wollongong? Mrs Anthony Not really. It would depend on how busy we are - our preference would be for work in Sydney. "Jenny" So, in addition to the weekly job list with all the Omni-Quant jobs and our jobs - you also get SMS messages for urgent work, mail outs of your business cards or brochures and internet advertising on Google. Your husband said that you do both waterproofing and bathroom renovations - so you could advertise under waterproofing and bathroom renovations. You don't get all that with Omni-Quant do you? Mrs Anthony If you are assuring me that the job lists include all the jobs that would be on the Omni-Quant list and all the work you guys get, then I'll give it a go. Can we pay monthly? "Jenny" No, we just do one payment. But look, if you pay today over the phone, I'll give you a discount. It's normally $1200 for 12 months - but if you pay today - I'll give you 15 months for $1200. How's that? Mrs Anthony Okay, we'll sign up. 25 On 19 March 2008, Mrs Anthony logged into the ATS website and accessed the job list with the details provided in the welcome pack. She reviewed the joblist on-line and noticed that there was not one waterproofing or bathroom renovation job. When her husband arrived home, they reviewed the list together. Mrs Anthony's evidence was that she and her husband were surprised that the joblist included no waterproofing or bathroom renovation work as this was not what "Jenny" had indicated in previous conversations. On 25 March 2008 Mrs Anthony logged onto the ATS website and accessed the job list. The job list, although it had a different date, appeared to have the same contents as the job list she looked at on 19 March 2008. Again, it did not have any waterproofing or bathroom renovation work on it. 26 After looking at the list, Mr Anthony called ATS. After that phone call (described at [30] below) Mr Anthony instructed Mrs Anthony to check the business's post-office box. Mrs Anthony checked the business post-office box on 27 March 2008. There was nothing from ATS or Omni-Quant. Nor was there anything when Mrs Anthony checked the post-office box on each of 28 and 31 March 2008. 27 Aqua then decided to cancel its ATS membership. 28 The ACCC also relies on the affidavit of Glenn Michael Anthony (made on 1 March 2009). Mr Anthony is a director, and part owner. Aqua joined ATS on a 12 month membership in March 2008. On 27 February 2008, Mr Anthony received a phone from a person who was an employee of ATS and identified herself as "Jenny". The following conversation ensued: "Jenny" Hi, this is Jenny from All Trades and Services. Are you interested in obtaining further work for your business? Mr Anthony Am always interested in further work for the business. "Jenny" All Trades and Services provides a canvassing and marketing service to members. What happens is that once you sign up to our service - we advertise your business to all sorts of clients, from small to big, including big building contracts. We advertise your business on the web and mail out your details to our clients. Our clients include architects, developers, builders. We also fax or email you a job list every Wednesday with details of jobs that you can pick and choose from. For bigger jobs, we can send you plans that you can quote from. Mr Anthony You can provide waterproofing work for us. We want to expand the waterproofing side of the business. "Jenny" Sure. We can also send you bathroom renovation work as well. Mr Anthony Can you put all these details into a fax and fax them through. "Jenny" No problem. We do a 15 month subscription for $1200 and for that you receive, a weekly job list, a webpage, mail outs. We also do a petrol discount scheme., You will read about it on the fax. If you are interested, tick the box on the fax. 29 On 26 March 2008, Mrs Anthony provided Mr Anthony with a copy of an ATS job list that she had downloaded from the ATS website. Mrs Anthony told Mr Anthony that the 26 March job list was the same as a job list from 19 March. Neither job list contained any waterproofing work. Mr Anthony later called ATS on the 1800 number that was listed on the ATS paperwork. The following conversation ensued with "John": Mr Anthony We have received 2 job lists and neither of them have any waterproofing work. "John" Look, I'll email you some work. Mr Anthony What do you have waterproofing work? "John" No, we don't have any waterproofing work and I can't just pull it out of a hat. Mr Anthony Where is the Omni-Quant work? "John" Oh, did you want Omni-quant work? Mr Anthony Yeah, that is the reason we signed with ATS, on the basis that you could also get us the Omni-Quant work. "John" Okay, give me until Friday and I'll get you some work. 30 Mr Anthony's evidence is that he did not receive any job details as a result of this telephone conversation. 31 The ACCC also relies on the affidavit of Michael Barbara (made on 1 March 2009). Mr Barbara is a sole trader operating MBS Special Deliveries (MBS), which specialises in furniture removal. MBS commenced trading in March 2000, and operates from Mr Barbara's home in Merrylands, Sydney. Mr Barbara's wife, Emily Barbara, assists in the business through arranging advertising, bookings, record-keeping and other administrative tasks. On 4 January 2008, Mr Barbara received a telephone call from a woman named Jenny from ATS. The following conversation ensued: "Jenny" Hi, this is Jenny from ATS All Trades and Services We provide a marketing and canvassing service to small trades. We also have clients that contact us when they have a job that needs doing. We need your trade to come on board because we have so many people calling and asking about furniture removalists. Mr Barbara So, how does it work? "Jenny" People come to us asking for tradesmen to do work for them, give us details of the job and we will pass the details through to our members. They could go directly to you but most of the time they come to us first. You get a job list each week with details of the jobs- you then pick and chose what you want to do - contact the clients and away you go. We send any urgent jobs to you by SMS, You also get a full webpage on Google and you will also receive a discount on your fuel and we do weekly mail outs of your brochures and business cards to our clients. Mr Barbara So do I give you pamphlets or business cards? "Jenny" Yes that will be great - we then arrange for a letter box drop of them. It costs either $1300 for 12 months or $1500 for 15 months usually, but I'll do you a special $1000 for 15 months. Mr Barbara Ok well can you put all that information in a fax and fax it through. I'll have a look at it all. 32 On or about 15 January 2008, Mr Anthony decided to become an ATS member. Mr Anthony did not receive the first ATS job list until 19 February 2009. Although throughout March 2008 Mr Anthony received job lists generally either every Tuesday or Wednesday, none of the job lists ever included any removalist jobs. When Mr Anthony requested that he be refunded his money, ATS refused. 33 The relevant evidence of Anka Emily Barbara is as follows. Mrs Barbara is the wife of Mr Barbara and provides administrative assistance to her husband in relation to his business. On about 11 January 2008, Mrs Barbara had the following conversation with a woman named Jenny from ATS: Mrs Barbara So how does this work? "Jenny" Well, what happens is businesses go onto our website where we advertise all our members, those businesses then call ATS with details of the work they want done, we then pass those details onto our members. Either by our weekly job list or if the job is urgent we send them a SMS. We are a large company, Australia wide, and we also find work in New Zealand. It's guaranteed work. We also make it so

that if people go to Google and type in your business name, it will come up with your webpage We have clients calling all the time asking for furniture removalists and we don't have any as members which is why it would be realty good for your business to come on board. We limit the number of each of the same trade so that all our members get work through us. If you guys come on board you are going to get heaps of work through us. Mrs Barbara So, how do we get this work? "Jenny" Every Tuesday we send out a job list with details of all the jobs we have sourced. You look down the list, find your trade, and then you contact the Client and you directly deal with them. Like I said, if the client urgently needs a service, we will SMS you. So we find the work and you then contact them. We also promote your business to our clients and arrange for a letter box drop in your local area Mrs Barbara So, what are all these logos at the bottom of the page? "Jenny" They are big companies that we have contracts with and support our services. We have contacts with big companies like Wattyl. Members are also entitled to get discounts with them. We also provide a discount on petrol to our members - 2 cents off each litre of fuel. "Jenny" So how much will all of this cost? "Jenny" We've got a special on today only. Its usually $1485 for 12 months but as a special today, I will do it for a $1000 for 15 months. That's it - it's a one off payment for all our services. It's a real bargain when you consider the cost of setting up a webpage - and a webpage that comes up with Google. Mrs Barbara Well, are you only after furniture removalists because I have my own beauty salon. "Jenny" Ok, I tell you what, you offer a discount to ATS members and we will advertise your beauty salon on our website at no extra cost. Just send in the information. Mrs Barbara Well it all sounds good. So what now? "Jenny" Great. Well we'll send a courier to pick up a cheque for the 1000 dollars. You get the art work for the website together on a CD and he can collect that at the same time - give us the brochures for the mail drop as well. It will take about 10 days for your business to be put up on the website but it might take a bit longer for the art work to appear -but your business will be there for our clients to see. Mrs Barbara Oh ok. Alright, well I'll have the stuff ready -- when is the courier guy going to get here? "Jenny" This afternoon if you like, otherwise tomorrow morning. 34 On or about 12 January 2008, Mrs Barbara had the following telephone conversation with Jenny: Mrs Barbara Don't send the courier yet because the cds are not ready. We need another day, "Jenny" Yeah that's fine. Mrs Barbara What format do I need to do the artwork in? Is photoshop ok? "Jenny" Yeah that's good. We just need some images, photoshop will be great. 35 On or about 14 January 2008, a courier came to Mrs Barbara's home address. She gave the courier a cheque made out to ATS. She also gave the courier two CD's containing artwork for MBS and for her own business, which is called Beautique. Mrs Barbara also provided business cards for both businesses (MBS and Beautique) and a price list for Beautique. 36 On 17 January 2008, Mrs Barbara received a fax from ATS at her home address. The fax was a member profile form that was to be filled out for her business, Beautique. It had a short covering fax, with the words "Thank you, ATS". Mrs Barbara completed the member profile form for Beautique and faxed it back to ATS on the same day. 37 Mrs Barbara's evidence was that she was expecting to receive the first ATS job list by fax on 14 January 2008. No job list arrived. On Tuesday 22 January 2008, again no job list arrived. Mrs Barbara's husband called ATS on or about 23 January 2008 and told it that they had not received a job list. Shortly after, (on the same day or the next day) Mrs Barbara received faxed a job list at her home. Mrs Barbara examined the list and noted that it did not include any jobs for removalists. 38 On Tuesday 29 January 2008 again no job list arrived by fax. Mrs Barbara's husband again called ATS and shortly afterwards a job list arrived by fax. On Tuesday 5 February 2008, no job list arrived by fax. Again Mrs Barbara's husband telephoned ATS and a job list arrived shortly afterwards. On 12 February 2008, after reviewing the most recent job list, Mrs Barbara discussed with her husband the ATS job lists and noted that there were no jobs for furniture removalists. 39 Mr and Mrs Barbara continued to receive job lists by facsimile through March 2008. As at the date of her affidavit (1 March 2009), Mrs Barbara continued to receive job lists by email (a practice that commenced in April 2008). 40 The ACCC tendered a document that was entitled "JOB LISTS WEEK OF: 07/04/08: EXAMPLE" (April Job List). This document was originally a document that formed part of an exhibit to the oral examination of Mr Barry that had been conducted by the ACCC under s 155 of the TPA. The April Job List contained jobs for Queensland, Victoria, Western Australia, Sydney, Newcastle, Wollongong, and the Australian Capital Territory. Each of those job lists was of trade works generally with no particular indexing for any particular trade. 41 The ACCC tendered a document entitled "Telemarketing Script Example", which was a document that set out the "script" used by ATS telemarketers when contacting potential customers. The script was in the following terms: My name is . Am I speaking to I am calling about sending you Business from clients. I guess you could do with more Business We have New Work Property Maintenance, (Owner Builders, Medium & Large Construction, Extensions, Decks, Pergolas, Garages, Civil work, Industrial Maintenance, on going maintenance, Shop fit Refurb). What type of work do you do? (DONT SPEAK) (wait 6 sees) Are you looking for more work? > Each Week we will forward a list of clients wantinq work done We give you your own web page, and (poodle) category. We even do direct mail for you. Your investment is only $1350 for 12 months (Only equivalent to $26 per week) GST excluded $1485 GST Inclusive (Around $30 per week) Our Clients are looking for good quality tradesmen who do a good job and are reliable!! We will forward our membership application- Will I Email or Fax you - (If email do you check your email) Look forward to sending you the clients for (repeat what type of work) and helping you to promote your business. You must obtain Current Company Details - Full name of Authority (The Authority must be the owner and must have mobile) Whenever a prospect says no say these words As you know we have a lot of work - Do you have any friends or business associates in any trade who could do with work? If they decide to go ahead we will give you 4 nights accommodation for 2 people. (I am sure you would appreciate a Holiday on us). Worth Approx. $500. Send me information etc That's fine; my purpose in contacting you today is to ask "Do you want Additional business during the coming 12 Months. Other wise we are on the internet www.alltradesandservices.com 42 The transcript of Mr Bell's ACCC examination shows that Mr Bell was aware that the script was used by telemarketers for some years.

Evidence in relation to the Google Representation 43 The ACCC contends that the Google Representation was false because it misstated the nature of the web presence provided by ATS. During the course of the ACCC examination, Mr Bell gave an explanation in relation to the operation of the Google search function provided by ATS, which is to the following effect. 44 Mr Bell explained that ATS members were given two Google categories, which were two search words of the member's choosing. Mr Bell's experience was that Google charges on a "per click" basis (each time an internet user clicked on the advertised ATS site, ATS would be charged by Google). According to Mr Bell, so as to mitigate this cost, ATS later engaged a company called Hot Goanna to create landing pages, which are web pages that appear when a potential customer clicks on a search-engine result link. The advantage of using landing pages is that they take the internet user to a page containing the type of information the internet user is actually looking for obviating the need for the user to navigate his or her way through the entire website to look for the information. According to Mr Bell, the use of landing pages improved ATS's "conversion rate", the conversion rate being the proportion of internet users who visit the ATS website (or at least some part of it) and made a request for the services of a tradesperson. 45 Before ATS adopted "landing pages", if a person seeking services of a tradesperson went to the ATS website, the person would be required to fill out an electronic form setting out the request, which would then be attended to by an ATS employee. However, as a result of ATS's adoption of a landing pages system, if an internet user landed on one of ATS's landing pages (for example, one that pertains to electricians) and made a request for the services of a tradesperson, the customer would still have been required to fill out an electronic form requesting particular services (again the request will be attended to by an ATS employee). The ACCC summarised it this way: As a result of enhancements, it now directs to a "landing page", being a page advertising ATS' members' capability by trade. The end result of either the former system, or the system with enhancements, is that the potential customer using the Google search engine may fill out a form on‑screen which results in a notification to an employee in the ATS office of the trade services in which the potential customer is interested. That employee in the ATS office may or may not then refer the job opportunity on to any particular ATS member.

Evidence in relation to the Wattyl Discount Representation 46 The ACCC alleges that this misrepresentation was made, firstly, by the prominent display of the representation on the ATS website, and, secondly, by Mr Bell when he called prospective customers. 47 That the following was displayed on the ATS website does not appear to be in dispute: All ATS Members receive a 20% discount on all Wattyl Products. All Enquiries Call ATS on 1800 103614. www.wattyl.com.au All Wattyl Products (except brushes and other consumables. Please note: Approved Customers only) The evidence of Mrs Barbara was that the ATS employee known as "Jenny" represented to her on or about 11 January 2008 (see [33] above) that ATS members were entitled to discounts from Wattyl. 48 In proving the falsity of the Wattyl Discount Representation, the ACCC tendered a letter, dated 10 October 2007, from Jenny Waldegave (Wattyl Company Secretary) to Ian Serles (Director, Enforcement and Coordination Branch, ACCC). The letter was in the following terms: Dear Sir Alleged misleading conduct by ATS All Trades and Services Pty Limited (ATS) Thank you for your letter dated 25 September 2007 advising of the investigation into alleged misleading and deceptive conduct by ATS in connection with the statement appearing on the ATS website to the effect that "All ATS Members receive a 20% discount on all Wattyl Products. All Enquiries Call A TS on 1800 103 614. All Wattyl products. (Except brushes and other consumables) Please note: Approved customers only." We respond to the questions raised in your letter as follows: 1 Does Wattyl Australia have any business arrangement with ATS under which Wattyl agrees to provide ATS members with 20% discount on all products, excluding brushes and other consumables? If so, please provide details of the arrangement including any applicable terms and conditions. No such business arrangement exists between Wattyl Australia and ATS. In approximately April 2007, a representative of ATS (Aaron Bell) made an approach to a representative of Wattyl in a non-work related situation and asked whether members of ATS could receive a discount on Wattyl products. The Wattyl representative informed Mr Bell that the question of discounts was a matter which was determined on an individual basis and depended on matters such as the individual's volume and frequency of purchases. It was also made clear to Mr Bell that individual members would need to make their own applications to Wattyl, which would then assess each application to determine whether Wattyl wished to enter into arrangements with the member, including whether a discount would apply to the member's purchases, and if so, what percentage discount would apply. Mr Bell was subsequently provided with a number of application forms (sample attached) for provision to ATS members should they wish to apply to Wattyl. In about late May 2007, Wattyl became aware that ATS was making a representation that ATS was also using the Wattyl logo and trademark on the website. A representative of Wattyf informed Mr Bell that the statement was incorrect and that the discount for individual members was subject to approval by Wattyl on a case by case basis. 2 Does membership of ATS make a small business eligible to receive any benefit from Wattyl Australia which the small business would not otherwise be entitled to receive? If so, please provide details. The answer to this question is "no". As noted above, the provision by Wattyl of discounts and credit terms is a matter of assessment of individual applications on a case by case basis. We trust this assists. Please contact the writer on [phone number] should you have any further questions. Yours sincerely Jenny Waldegave Company Secretary 49 I am satisfied that the document falls within the description of a "business record" in s 69 of the Evidence Act 1995 (Cth).

CONSIDERATION 50 I now turn to consider whether the each or any of the pleaded representations is false such that it could be said that ATS engaged in misleading or deceptive conduct.

The falsity of the Job Opportunities Representation 51 It is to be recalled that the Job Opportunities Representation, as pleaded by the ACCC, was in the following terms: that ATS provided each of its customers and would provide each customer with a list of work opportunities with clients requiring trade services of the kind usually provided by the prospective customer within the region in which the prospective customer usually operated. 52 I am satisfied that ATS made this representation in relation to the businesses about which direct evidence was given. Although the evidence suggests that in the course of making the representation, the maker of the representation did not always make specific reference to the region in which the prospective customer operates, I am satisfied that implicit in what was said to the prospective customer was that the work opportunities that would be provided by ATS would be within the region in which the prospective customer usually operates his or her business. 53 I am also satisfied that by sending out the document entitled "Membership Contract", ATS made the Job Opportunities Representation. Again, although the "Membership Contract" did not explicitly refer to ATS providing prospective customers with a list of work opportunities within the region in which the prospective customer usually operate, I am prepared to accept that implicit in what was said was that the work opportunities provided by ATS would be within the region in which the prospective customer usually operates his or her business. 54 In my view, the evidence establishes that each of Mr Montgomery, Mr Anthony, Mrs Anthony, Mr Barbara and Mrs Barbara were at no stage provided "with a list of work opportunities with clients requiring trade services of the kind usually provided by the prospective customer within the region in which the prospective customer usually operate." That they did not receive a list of work opportunities of this type is contrary to the representation that was made to them. However, as Bowen CJ, Lockhart and Fitzgerald JJ cautioned in Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 at [page 88]: The non-fulfilment of a promise when the time for performance arrives does not of itself establish that the promisor did not intend to perform it when it was made or that the promisor's intention lacked any, or any adequate, foundation. Similarly, that a prediction proves inaccurate does not of itself establish that the maker of the prediction did not believe that it would eventuate or that the belief lacked any, or any adequate, foundation. 55 The situation is, however, ameliorated by s 51A of the TPA. Mr Bell has not adduced any evidence that suggests that, at the time ATS made the Job Opportunities Representation, there existed reasonable grounds for it to make the representation. 56 Accordingly, I find that by making the Job Opportunities Representation, ATS engaged in conduct that was misleading and deceptive for the purposes of s 52 of the TPA. Further, although there is no direct evidence on this issue, I am satisfied that the inference can be drawn that ATS made the Job Opportunities Representation on many other occasions beyond those revealed by the evidence directly. I do so because of existence of the telemarketing "script" and the fact that ATS had many "members", all of whom would have received the "Membership Contract", a document that itself contained the Job Opportunities Representation.

The Google Representation 57 The evidence clearly establishes that the Google Representation was false. At no stage was an ATS member provided with his or her own web page revealed by a Google search.

The Wattyl Representation 58 The evidence clearly establishes that Wattyl Discount Representation was false. The evidence establishes that no stage did the acquisition of services from ATS entitle a customer to receive a 20% discount on all Wattly products, except brushes and consumables.

THE LIABILITY OF MR BELL 59 The mere fact that a corporation is found to have contravened the TPA does not mean that an employee of the corporation will be found to be knowingly concerned in the breach. As the High Court said in Yorke v Lucas (1985) 158 CLR 661 at 670: There can be no question that a person cannot be knowingly concerned in a contravention unless he has knowledge of the essential facts constituting the contravention.

In Rural Press Limited v Australian Competition and Consumer Commission (2003) 216 CLR 53 at [48], Gummow, Hayne and Heydon JJ said (in relation to an allegation that two of Rural Press's employees were knowingly concerned in the company's contravention of s 45 of the TPA): The trial judge rightly held that it was necessary to find that McAuliffe and Law participated in, or assented to, the companies' contraventions with actual knowledge of the essential elements constituting the contraventions. The Rural Press parties complained that he failed to make particular findings, but they are in fact inherent in his reasoning. In the end the argument was only that McAuliffe and Law "did not know that the principal's conduct was engaged in for the purpose or had the likely effect of substantially lessening competition … in the market as defined." It is wholly unrealistic to seek to characterise knowledge of circumstances in that way. Only a handful of lawyers think or speak in that fashion, and then only at a late stage of analysis of any particular problem. In order to know the essential facts, and thus satisfy s 75B(1) of the Act and like provisions, it is not necessary to know that those facts are capable of characterisation in the language of the statute. (Emphasis added) See also Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1. 60 The ACCC submitted that the transcript of Mr Bell's ACCC examination shows that Mr Bell either wrote the script used by telemarketers when making calls to prospective customers on behalf of ATS, or contributed to its writing. In my view, however, Mr Bell's responses at the ACCC examination on this issue were equivocal at best, although the evidence does establish that he was aware that the script was used by telemarketers for some years. 61 I accept the ACCC's submission that the evidence is that Mr Bell was the manager of the business and hence managed the sales functions of ATS. I also accept that the evidence establishes that Mr Bell actively monitored the performance of telemarketers and was responsible for the recruitment of telemarketers who would use the telemarketing script. I also accept that Mr Bell at times rang prospective customers, and during the course of conversations with prospective customers, would make a statement along the lines of "each week you are guaranteed to receive job listings, clients needing your service". I also accept that Mr Bell knew of the existence of the "Membership Contract" that was sent to customers and which, contained the Job Opportunities Representation. 62 I am satisfied that Mr Bell knew that ATS had made, or was proposing to make, the Job Opportunities Representation. 63 The transcript of Mr Bell's ACCC examination shows that Mr Bell was aware that the form of the job list that was sent to ATS customers remained the same, subject to "small, minute" changes, from week to week. The fact that Mr Bell was aware of this is unsurprising, given Mr Bell's role within the business and his acknowledgment that he "knew the business inside out". 64 I am satisfied that Mr Bell knew that the Job Opportunities Representation had been made, and that he knew that the Job Opportunities Representation was false. Accordingly, I am satisfied that, pursuant to s 75B of the TPA, Mr Bell was knowingly involved in ATS's contravention of s 52 of the TPA constituted by ATS making theJob Opportunities Representation. 65 After reviewing the transcript of Mr Bell's ACCC examination, I am satisfied that Mr Bell was aware of the Google Representation, and that it was false. Accordingly, I am satisfied that, pursuant to s 75B of the TPA, Mr Bell was knowingly involved in ATS's contravention of s 52 of the TPA constituted by ATS making theGoogle Representation. 66 The ACCC submitted that the transcript of Mr Bell's ACCC examination shows that Mr Bell made the arrangements which led to the Wattyl Discount Representation being made and was fully aware of the detail of the statement. I am not sure, however, that the evidence goes so far. The transcript of Mr Bell's ACCC examination shows that Mr Bell spoke to an employee of Wattyl about the provision of a discount to ATS members; although it is unclear as to whether he admitted that he knew that the Wattyl Discount Representation was being made. Having said this, given Mr Bell's significant involvement in, and knowledge of, ATS's activities, I infer that he was aware that the Wattyl Discount Representation was being made on the ATS website and during the course of telephone conversations with prospective customers. Indeed it is likely that Mr Bell made this representation himself when telephoning prospective customers. 67 I am satisfied that Mr Bell was aware that ATS made the Wattyl Discount Representation. 68 The transcript of Mr Bell's ACCC examination shows that Mr Bell was aware that only those customers who completed specified paperwork and returned it to ATS for processing through a specified person at Wattyl Australia could receive a 20% discount. Mr Bell also knew that the paperwork was an application for a commercial credit account with Wattyl. Accordingly, I am satisfied that Mr Bell was aware of the falsity of the Wattyl Discount Representation. It follows that I am satisfied that, pursuant to s 75B of the TPA, Mr Bell was knowingly involved in ATS's contravention of s 52 of the TPA constituted by ATS making the Wattyl Discount Representation.

RELIEF 69 In its application, the ACCC sought the following relief: [9] A declaration that the Third Respondent (Bell) was knowingly concerned in each of the contraventions of the Act constituted by the making of the Job Opportunities Representation by making the Job Opportunities Representation to certain prospective customers and by directing or arranging for telemarketers and Jenny Hallaby to make the Job Opportunities Representation, when he knew that the Job Opportunities Representation was false. [10] A declaration that Bell was knowingly concerned in each of the contraventions of the Act constituted by the making of the Google Representation by making the Google Representation to certain prospective customers and by arranging for telemarketers and Jenny Hallaby to make the Google Representation, when he knew that the Google Representation was false. [11] A declaration that Bell was knowingly concerned in each of the contraventions of the Act constituted by the making of the Wattyl Discount Representation by writing the documents published by ATS that contained the Wattyl Discount Representation, when he knew that the Wattyl Discount Representation was false. [19] An injunction restraining Bell for a period of five years or such other period as the Court determines from being directly or indirectly knowingly concerned in promotion or conduct by a corporation of any business relating to job finding or marketing services for trades people, if the corporation operating that business solicits or accepts payment for services before any such services have been supplied in full without complying with the Cooling Off provisions.

The "Cooling Off" provisions are similar to those set out in the interlocutory orders that I made on the day of the hearing. The ACCC also seeks an order for costs, as well as an order that the reasons for decision and any order of the Court be sealed and placed on the Court file for the purposes of s 83 of the TPA. 70 I think it is unnecessary to make the declarations sought by the ACCC which were couched in fairly general terms. However, I will make the interlocutory injunction (that was made on 26 March 2009) final. I will order that Mr Bell pay 40% of the ACCC's costs of the proceedings. While the proceedings were commenced and prosecuted against three respondents, the need to prosecute them to finality was the result of Mr Bell's failure to compromise the claim against him. I certify that the preceding seventy (70) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore.

Associate: Dated: 17 June 2009 Counsel for the Applicant: T J Brennan

Solicitor for the Applicant: Australian Government Solicitor

ANNEXURE A THE COURT ORDERS THAT:

1. The first respondent (ATS) by itself, its servants or agents be restrained from representing in trade or commerce orally or in writing to the public or to any person that it will provide to its customers a list of current work opportunities with clients requiring trade services of the kind usually provided by a particular trade or class of trades within a particular region unless, when ATS makes such a representation, it provides to its customers in the ordinary course of its business a list of current work opportunities that is indexed by reference to that particular trade or class of trade and that particular region.
2. ATS by itself, its servants or agents be restrained from representing in trade or commerce orally or in writing to the public or to any person that it will provide to its customers a webpage that would be displayed by a search using an internet search engine unless, when ATS makes such a representation, it names any such internet search engine and provides to its customers in the ordinary course of its business webpages that would be displayed by a search using each search engine so named.
3. ATS by itself, its servants or agents be restrained from representing in trade or commerce orally or in writing to the public or to any person that acquisition by a customer of any service from ATS entitles the customer to a discount, allowance, rebate or credit on acquisition of any other goods or services from any other corporation unless, when ATS makes such a representation, the customer is entitled to the discount, allowance, rebate or credit as the case may be.
4. ATS by itself, its servants or agents be restrained from soliciting or accepting payment in respect of any job finding or marketing service from any person unless: 4.1. in the case of soliciting payment, ATS tells the person from whom it solicits payment orally and in writing that no payment is required before the service in respect of which payment is solicited has been supplied in full; or 4.2. in the case of accepting payment, the service in respect of which payment is accepted was supplied in full prior to the date upon which the payment was accepted; or 4.3. in either case, the Cooling Off Provisions set out in Attachment 1 apply to any such payment and ATS, orally and in writing, tells the person from whom it has solicited or accepted payment that the Cooling Off Provisions apply.
5. ATS pay any amount that becomes payable to a customer under the Cooling Off Provisions in accordance with the Cooling Off Provisions.
6. ATS: 6.1. within one month of the date of the Orders, appoint a person with experience in trade practices law to advise ATS as to the content of an education, training and trade practices compliance program for employees or other persons involved in its business, which is: 6.1.1. designed to ensure an awareness of sections 52 and 53 of the Act; 6.1.2. subject to being tailored to ATS' circumstances, consistent with the Australian Standard on Compliance Programs AS3806 (the Compliance Program); 6.2. within three months of the date of the Orders, establish the Compliance Program; 6.3. implement and administer the Compliance Program for a period of three years from the date it is established; and 6.4. within three months of the date of the Orders, provide a written report to the ACCC on the content of the Compliance Program and provide a further report to the ACCC on the implementation and administration of the Compliance Program at the conclusion of each period of twelve months during which the Compliance Program is being implemented and administered.
7. In the proceedings against ATS, the Applicant and ATS are each to bear its own costs.
8. The proceedings be otherwise dismissed as against ATS.