Australian Competition and Consumer Commission v Gordon Superstore Pty Ltd

Federal Court of Australia|2014-05-13|Before: Edmonds J

Pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth), the Respondent made the following oral statements to a consumer between January and May 2012 in the course of discussions about problems with a refrigerator and two replacement refrigerators supplied by the Respondent to a consumer, and the consumer's attempts to obtain a refund or remedy: (a) When asked for a refund over concerns about the quality of a refrigerator, "You are not entitled to a refund"; (b) when referred to the Respondent's published refund policy, "That does not apply to large appliances. You have a one year warranty with Samsung. It is their problem, not ours"; (c) in response to a further request for a refund on the same basis as in paragraph 1(a) above, "I cannot give you a refund, and I don't have your fridge in stock, but I can offer you a replacement fridge to the same value"; (d) in response to a complaint about the quality of a replacement refrigerator, "You will need to contact Samsung and get an engineer to inspect it"; (e) in response to a further request for a refund, "I will get Samsung to pick it up. [And] You won't get your refund until Samsung picks it up", and in further response to that request for a refund, "once I get the money back from Samsung, we will give you your refund", and, by doing so, the Respondent has, in trade or commerce: (f) made representations in connection with the supply or possible supply of goods or services that were false or misleading and concerned the existence, exclusion or effect of any guarantee, right or remedy available under the consumer guarantee provisions of the Australian Consumer Law ("ACL") contained in Div 1 of Pt 3-2 of Sch 2 of the Competition and Consumer Act 2010 (Cth), and/or other remedies relating to those guarantees in Pt 5-4 of the ACL in contravention of s 29(1)(m) of the ACL; and (g) thereby engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the ACL.

THE COURT DECLARES THAT: Injunction 2. Pursuant to s 232 of the ACL, for a period of three years from the date of these Orders, the Respondent is restrained (whether by itself, its servants, agents or otherwise howsoever) from making representations (whether oral or written) to any customer to the effect that the Respondent: (a) Does not have any obligation to provide any remedy in relation to goods supplied by it regardless of the consumer guarantee provisions of Div 1 of Pt 3-2 and/or the remedies relating to those guarantees in Pt 5-4 of the ACL ("the Consumer Guarantee Provisions"); (b) does not have any obligation to provide any remedy in relation to goods it supplies where remedies are available from the manufacturer; (c) does not have any obligation to provide a refund in relation to goods it supplies regardless of the circumstances and the Consumer Guarantee Provisions if such goods are a large appliance; (d) does not have any obligation to provide a remedy in relation to goods it supplies independently of dealings with, and the liability of, the manufacturer; and (e) does not have any obligation to provide a refund in relation to goods it supplies regardless of the circumstances and the Consumer Guarantee Provisions where it has not been paid an amount equivalent to the price of such goods by the manufacturer. Pecuniary penalty 3. Pursuant to ss 224(1)(a)(ii) and 228 of the ACL, within 28 days of the date of these Orders, the Respondent is to pay to the Commonwealth a pecuniary penalty in respect of the contraventions of s 29(1)(m) of the ACL in the amount of $25,000.00. Publication orders 4. Pursuant to s 246(2) of the ACL, within 28 days of the date of these Orders, the Respondent is to prominently display a copy of the summary of consumer rights under the ACL at Annexure A of these Orders at the point of sale of every product supplied by the Respondent during the operation of a retail sales service undertaken under the name Harvey Norman for a period of three years from that date. Compliance program 5. Pursuant to ss 246 and 232 of the ACL: (a) Within 28 days of the date of these Orders ("Commencement Date") and for a period of one year following the Commencement Date, the Respondent is to implement its own compliance program to be undertaken by each employee of the Respondent with respect to the rights available to consumers under the ACL including the Consumer Guarantee Provisions ("Consumer Law Compliance Program"). The Consumer Law Compliance Program must conform to the compliance standards set out in the Australian Standards on Compliance Programs (AS 3806-2006); (b) for a period of two years after the expiry of the said one year period, the Respondent is to participate in a consumer law compliance program to be recommended by subsidiaries of Harvey Norman Holdings Limited to all franchisees trading under the "Harvey Norman ®" name in Australia and made available for the participation of their employees; and (c) by no later than 14 days after the Commencement Date, the Respondent is to serve on the Applicant, an affidavit verifying that, in conformity with these Orders it has displayed the notice referred to in Order 4 above and it has implemented the Consumer Law Compliance Program. Costs 6. Each party is to bear its own costs of the proceeding and all previous costs orders against either party in the proceeding are to be vacated. ANNEXURE A Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1866 of 2012

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

AND: GORDON SUPERSTORE PTY LTD ACN 142 549 022

JUDGE: EDMONDS J DATE: 13 MAY 2014 PLACE: SYDNEY

Introduction 1 The hearing of this application proceeded by way of a statement of agreed facts dated 20 December 2013 (Ex 1) made jointly by the applicant ("ACCC") and the respondent (sometimes referred to as "Gordon Superstore") for the purposes of s 191 of the Evidence Act 1995 (Cth); and by way of joint submissions of the same date ("JS") made jointly on behalf of the parties. 2 The ACCC commenced these proceedings on 19 November 2012 ("Proceedings"). In its Amended Application filed on 10 July 2013, the ACCC sought a declaration that the respondent, by making certain oral statements to a consumer between January 2012 and May 2012 ("Oral Statements"), had contravened ss 18 and 29(1)(m) of the Australian Consumer Law ("ACL") which is found in Schedule 2 to the Competition and Consumer Act 2010 (Cth) ("the Act"). The ACCC also sought other consequential orders. 3 The respondent, trading as Harvey Norman AV/IT Superstore Gordon, is and was at all material times: a trading corporation within the definition of "corporation" in s 4 of the Act; engaged in trade or commerce within the meaning of ss 18 and 29(1)(m) of the ACL; a franchisee of a subsidiary of Harvey Norman Holdings Ltd; and operating as a single retail outlet or store in Gordon, New South Wales, under the name "Harvey Norman AV/IT Superstore Gordon", selling electronic products and after-sales services in respect of those products ("the Store"). 4 By Ex 1, for the purpose of the Proceedings only, the parties agreed the facts, matters and circumstances set out in [5] to [24] below.

First Fridge 5 On about 16 January 2012, the respondent supplied to Suzanna Melghan Devine ("Mrs Devine") a Samsung 639L French Door refrigerator ("First Fridge") for the price of $2,100.00. 6 On about 31 January 2012, Mrs Devine attended the Store and spoke to a sales representative of the respondent about a problem she was having with the First Fridge, namely, that it was building up frost around the seal. She requested a refund, and she referred to a notice displayed in the Store which stated that if an appliance did not perform the function it was meant to, then the respondent would provide a refund as long as the consumer had the receipt. The sales representative: (1) In response to Mrs Devine's request for a refund, made an oral statement to the effect of: "You are not entitled to a refund" ("First Oral Statement') (Amended Application, para 1(a)); and (2) in response to Mrs Devine's reference to the notice, made an oral statement to the effect of: "That does not apply to large appliances. You have a one year warranty with Samsung. It is their problem, not ours" ("Second Oral Statement") (Amended Application, para 1(b)). 7 The next day, or thereabouts, the manager of the Store ("Store Manager") telephoned Mrs Devine in respect of the First Fridge and made an oral statement to the effect of: "I cannot give you a refund and I don't have your fridge in stock, but I can offer you a replacement fridge to the same value" ("Third Oral Statement") (Amended Application, para 1(c)).

Second Fridge 8 On about 4 February 2012 the respondent supplied to Mrs Devine a replacement for the First Fridge ("the Second Fridge"). 9 In about mid to late February 2012, Mrs Devine telephoned the Store and spoke to the Store Manager again. She told him that she was having problems with the Second Fridge (namely, that it was building up frost and ice around the seal and the freezer door would no longer shut properly). In response the Store Manager made an oral statement to the effect of: "You will need to contact Samsung and get an engineer to inspect it" ("Fourth Oral Statement") (Amended Application, para 1(d)). 10 In about early to mid-March 2012, a sales representative of the respondent telephoned Mrs Devine and told her that the respondent would supply her with a replacement for the Second Fridge.

Third Fridge 11 On about 16 March 2012, the respondent supplied to Mrs Devine a replacement for the Second Fridge ("the Third Fridge"). 12 Mrs Devine had the same problems with the Third Fridge that she had had with the Second Fridge, namely, that it had a huge build-up of frost and she could not open the door. 13 On about 18 May 2012, Mrs Devine telephoned the Store and spoke to the Store Manager again. She requested a refund for the Third Fridge. In response to her request the Store Manager made an oral statement to the effect of: "I will get Samsung to pick it up. You won't get your refund until Samsung picks it up" ("Fifth Oral Statement") (Amended Application, para 1(e)) and he added words to the effect: "... and I get the money from Samsung". 14 A few hours later, the Store Manager telephoned Mrs Devine and, after telling her that he was arranging for Samsung to pick up the Third Fridge, he made an oral statement to the effect of: "Once I get the money back from Samsung, we will give you your refund" ("Sixth Oral Statement") (Amended Application, para 1(f)) and he added words to the effect: "You will have your refund by Tuesday". 15 On about 24 May 2012, the respondent provided a refund of $2,100.00.

The representations constituted by the Oral Statements

First Fridge 16 By the First Oral Statement, the respondent in trade or commerce: (1) Represented in effect that it would not, and did not have any obligation to, provide a refund in relation to the First Fridge; and (2) thereby made a representation that was false or misleading under Pts 5-4 and 3-2 (the "Consumer Guarantee Provisions") of the ACL in that a supplier such as the respondent: (i) could be obliged to provide a refund for goods supplied by it, including the First Fridge, in certain circumstances, such as where those goods were not of acceptable quality; and (ii) possibly had such an obligation in relation to the First Fridge. 17 By the Second Oral Statement, the respondent in trade or commerce: (1) Represented in effect that: (i) It would not, and did not have any obligation to, provide any remedies in relation to goods it supplied, including the First Fridge, where remedies were available under a warranty with the manufacturer, Samsung; and (ii) it would not, and did not have any obligation to, provide a refund in relation to goods it supplied, including the First Fridge, where those goods comprised a large appliance; and (2) thereby made a representation that was false or misleading under the Consumer Guarantee Provisions of the ACL in that a supplier such as the respondent: (i) could be obliged to provide certain remedies for goods supplied by it, including the First Fridge, in certain circumstances, such as where those goods were not of acceptable quality, even if remedies were available under a warranty from the manufacturer, Samsung; (ii) could be so obliged to provide a refund in relation to goods supplied by it, including the First Fridge, whether or not those goods were a "large appliance"; and (iii) possibly had such obligations in relation to the First Fridge. 18 By the Third Oral Statement, the respondent in trade or commerce: (1) Represented in effect that it would not, and did not have any obligation to, provide any refund in relation to goods it supplied, including the First Fridge; and (2) thereby made a representation that was false or misleading under the Consumer Guarantee Provisions of the ACL in that a supplier such as the respondent: (i) could be obliged to provide a refund for goods supplied by it, including the First Fridge, in certain circumstances, such as where those goods were not of acceptable quality; and (ii) possibly had such an obligation in relation to the First Fridge.

Second Fridge 19 By the Fourth Oral Statement, the respondent in trade or commerce: (1) Represented in effect that it would not, and did not have any obligation to, provide any remedies in relation to the Second Fridge where remedies were available from the manufacturer, Samsung; and (2) thereby made a representation that was false or misleading under the Consumer Guarantee Provisions of the ACL in that a supplier such as the respondent: (i) could be obliged to provide certain remedies for goods supplied (or replacement goods supplied) by it, including the Second Fridge, in certain circumstances, such as where those goods were not of acceptable quality, even if remedies were also available from the manufacturer, Samsung; and (ii) possibly had such an obligation in relation to the Second Fridge.

Third Fridge 20 By the Fifth Oral Statement and the Sixth Oral Statement, the respondent in trade or commerce: (1) Represented in effect that: (i) it would not, and did not have any obligation to, provide a refund in relation to the Third Fridge independently of dealings with, and the liability of, the manufacturer, Samsung; and (ii) it would not, and did not have any obligation to, provide a refund in relation to the Third Fridge in circumstances where the respondent had not been paid an amount equivalent to the price of the Third Fridge by the manufacturer, Samsung; and (2) thereby made a representation that was false or misleading under the Consumer Guarantee Provisions of the ACL in that a supplier such as the respondent: (i) could be obliged to provide a refund for goods supplied (or replacement goods supplied) by it, including the Third Fridge, in certain circumstances, such as where those goods were not of acceptable quality, independently of dealings with, and the liability of, the manufacturer and even if it had not been paid an amount equivalent to the price of the good by the manufacturer, Samsung; and (ii) possibly had such an obligation in relation to the Third Fridge.

Whether conduct deliberate and period over which conduct extended 21 On the basis of the above facts, there is no evidence that the Oral Statements were made with an intention to mislead or deceive or with an intention to misrepresent the Consumer Guarantee Provisions. The Oral Statements were made over a period of about four months from about late January 2012 to mid-May 2012 to a consumer by one sales representative and one Store Manager.

Whether loss to consumer 22 There is no evidence of loss or damage to Mrs Devine arising from the contravening conduct of the respondent.

Co-operation with the ACCC 23 Retail stores in Australia trading under the "Harvey Norman" banner do so under franchise arrangements between subsidiaries of Harvey Norman Holdings Limited ("HNHL") and numerous companies unrelated to each other or to HNHL or its subsidiaries. The subsidiaries are the franchisors. Each franchisee company owns and operates a retail store. 24 On 19 November 2012, the ACCC commenced these Proceedings. They were commenced following a period of broad discussions between the ACCC and HNHL in relation to complaints to the ACCC made by consumers about statements made by a number of sales representatives in a number of stores. The discussions were focussed on the potentially misleading nature of the statements and did not identify any particular store, including the respondent's store, as being the subject of a complaint. Before commencing legal action against the respondent in respect of the conduct that constitutes the contraventions the subject of these Proceedings, the ACCC did not inform the respondent or HNHL about that conduct or any other specific conduct of the respondent. 25 At an early stage in these Proceedings, the respondent (through its solicitors) proposed a settlement meeting with the ACCC following which a settlement was reached by the parties. 26 The respondent's co-operation has saved the ACCC and the Court (and ultimately the community) the cost and burden of litigating a fully contested hearing.

Whether prior contravention of the ACL 27 The respondent has not been previously found by a court to have contravened any provision of the ACL or to have engaged in similar conduct to that described above.

Size and financial position of respondent 28 The respondent operates a single retail store at Gordon in New South Wales. 29 As at 17 December 2013, there were 10 employees engaged full-time, three employees engaged part-time and 12 employees engaged casually in the respondent's business. 30 For the financial years ended 30 June 2012 and 30 June 2013 the respondent's sales revenue and net profit were: Year Year ended 30 June 2012 Year ended 30 June 2013 Sales Revenue $8,997,737 $9,080,524 Net Profit $136,766 $91,581 31 The above net profit figures take no account of income tax because the respondent carries on its business through a family trust structure ("Trust"). Income tax on the profits of the business is paid by beneficiaries to whom the profits are distributed each year. 32 As at 30 June 2013, the net assets (assets less liabilities) held by the respondent (as trustee) were $10. 33 The respondent conducts its business pursuant to a franchise agreement between it and a subsidiary of HNHL. The respondent and the Trust are not related entities of HNHL or its subsidiaries.

Compliance training 34 The respondent was incorporated on 12 March 2010 and commenced business shortly thereafter. The compliance training, in relation to the consumer law provisions of the Trade Practices Act 1974 (Cth) now known as the Competition and Consumer Act 2010 (Cth), has comprised at least the following: (1) Staff have attended a face-to-face consumer law training session presented by an external professional trainer engaged by a subsidiary of HNHL. (2) Memoranda received from time to time from the franchisor (a subsidiary of HNHL) on various aspects of the consumer law have been read and discussed at the respondent's regular staff meetings.

The Regulatory Framework 35 Section 18 of the ACL relevantly provides: "A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive". 36 Section 29(1)(m) of the ACL provides: (1) A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services: … (m) make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3-2);

The consumer guarantee provisions 37 Part 3-2, Div 1, Subdiv A of the ACL provides a number of statutory guarantees in relation to supply of goods to consumers. Among these statutory consumer guarantees, s 54 of the ACL provides a guarantee as to acceptable quality of goods. Section 54 relevantly states: (1) If: (a) a person supplies, in trade or commerce, goods to a consumer; and (b) the supply does not occur by way of sale by auction; there is a guarantee that the goods are of acceptable quality. (2) Goods are of acceptable quality if they are as: (a) fit for all the purposes for which goods of that kind are commonly supplied; and (b) acceptable in appearance and finish; and (c) free from defects; and (d) safe; and (e) durable; as a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of the goods), would regard as acceptable having regard to the matters in subsection (3). (3) The matters for the purposes of subsection (2) are: (a) the nature of the goods; and (b) the price of the goods (if relevant); and (c) any statements made about the goods on any packaging or label on the goods; and (d) any representation made about the goods by the supplier or manufacturer of the goods; and (e) any other relevant circumstances relating to the supply of the goods. 38 These Proceedings concern a refrigerator and two replacement refrigerators, each supplied new to the consumer. The consumer experienced problems with the operation of each refrigerator so as to give rise to a question as to whether there was a breach of the above guarantee in relation to each refrigerator. 39 A consumer can obtain relief for a breach of the consumer guarantee under Pt 5-4 of the ACL. Actions against suppliers of goods are dealt with under Div 1, Sub A. Section 259 establishes the actions that the consumer may take and states: (1) A consumer may take action under this section if: (a) a person (the supplier) supplies, in trade or commerce, goods to the consumer; and (b) a guarantee that applies to the supply under Subdivision A of Division 1 of Part 3-2 (other than sections 58 and 59(1)) is not complied with. (2) If the failure to comply with the guarantee can be remedied and is not a major failure: (a) the consumer may require the supplier to remedy the failure within a reasonable time; or (b) if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time - the consumer may: (i) otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or (ii) subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection. (3) If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may: (a) subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection; or (b) by action against the supplier, recover compensation for any reduction in the value of the goods below the price paid or payable by the consumer for the goods. (4) The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure. (5) Subsection (4) does not apply if the failure to comply with the guarantee occurred only because of a cause independent of human control that occurred after the goods left the control of the supplier. (6) To avoid doubt, subsection (4) applies in addition to subsections (2) and (3). (7) The consumer may take action under this section whether or not the goods are in their original packaging. 40 Section 260 determines when a failure to comply with a guarantee is a major failure. Section 260 provides that: A failure to comply with a guarantee referred to in section 259(1)(b) that applies to a supply of goods is a major failure if: (a) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or (b) the goods depart in one or more significant respects: (i) if they were supplied by description - from that description; or (ii) if they were supplied by reference to a sample or demonstration model - from that sample or demonstration model; or (c) the goods are substantially unfit for a purpose for which goods of the same kind are commonly supplied and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or (d) the goods are unfit for a disclosed purpose that was made known to: (i) the supplier of the goods; or (ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made; and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or (e) the goods are not of acceptable quality because they are unsafe. It is possible that the problem of frost building up around the seal of the refrigerator door, to the extent that the door would not seal properly on the Second Fridge, or that once sealed, the door would not open on the Third Fridge, fell within the description of a major failure. 41 Where the failure is not a major failure, s 261 outlines the measures that a supplier may take to rectify a failure to comply with a guarantee and relevantly states: If, under section 259(2)(a), a consumer requires a supplier of goods to remedy a failure to comply with a guarantee referred to in section 259(1)(b), the supplier may comply with the requirement: (a) if the failure relates to title-by curing any defect in title; or (b) if the failure does not relate to title-by repairing the goods; or (c) by replacing the goods with goods of an identical type; or (d) by refunding: (i) any money paid by the consumer for the goods; and (ii) an amount that is equal to the value of any other consideration provided by the consumer for the goods. 42 Section 262 of the ACL provides limits on the consumer's ability to reject goods under s 259 but none of those limits apply to the representations made by Gordon Superstore. 43 Where the failure to comply with the guarantee cannot be remedied or is a major failure and the consumer rejects the goods, s 263 sets out what the supplier must do to remedy the failure. Section 263 relevantly states: (4) The supplier must, in accordance with an election made by the consumer: (a) refund: (i) any money paid by the consumer for the goods; and (ii) an amount that is equal to the value of any other consideration provided by the consumer for the goods; or (b) replace the rejected goods with goods of the same type, and of similar value, if such goods are reasonably available to the supplier.

Use of Agreed Facts 44 By the JS, the parties submitted that the agreed facts in Ex 1 are inherently credible and the narrative is coherent. I agree. I also agree that I can accept that the agreed facts in Ex 1 are a true record of the relevant events.

ADMITTED CONTRAVENTIONS 45 Gordon Superstore has admitted to six oral statements - two made by a sales representative and four made by a store manager. Gordon Superstore admits that both persons were in its employ and that the conduct engaged in by these employees was on Gordon Superstore's behalf, within the apparent authority of the relevant employee, and is therefore to be taken to be the conduct of Gordon Superstore for the purposes of the ACL pursuant to s 139B(2) of the Act. 46 On that basis, as set out in [6], [7], [9], [13] and [14] above, Gordon Superstore made the First to Sixth Oral Statements. 47 By making these six oral statements, Gordon Superstore made five representations as follows: (1) In relation to the First Oral Statement, that it would not, and did not have any obligation to, provide a refund in relation to the First Fridge. (2) In relation to the Second Oral Statement, that: (i) it would not, and did not have any obligation to, provide any remedies in relation to goods it supplied, including the First Fridge, where remedies were available under a warranty with the manufacturer, Samsung; and (ii) it would not, and did not have any obligation to, provide a refund in relation to goods it supplied, including the First Fridge, where those goods comprised a large appliance. (3) In relation to the Third Oral Statement, that it would not, and did not have any obligation to, provide any refund in relation to goods it supplied, including the First Fridge. (4) In relation to the Fourth Oral Statement, that it would not, and did not have any obligation to, provide any remedies in relation to the Second Fridge where remedies were available from the manufacturer, Samsung. (5) In relation to the Fifth Oral Statement and the Sixth Oral Statement, that: (i) it would not, and did not have any obligation to, provide a refund in relation to the Third Fridge independently of dealings with, and the liability of, the manufacturer, Samsung; and (ii) it would not, and did not have any obligation to, provide a refund in relation to the Third Fridge in circumstances where Gordon Superstore had not been paid an amount equivalent to the price of the Third Fridge by the manufacturer, Samsung. 48 These representations were false or misleading under the Consumer Guarantee Provisions of the ACL as follows: (1) In relation to the First Oral Statement - because a supplier such as Gordon Superstore: (i) could be obliged to provide a refund for goods supplied by it, including the First Fridge, in certain circumstances, such as where those goods were not of acceptable quality; and (ii) possibly had such an obligation in relation to the First Fridge. (2) In relation to the Second Oral Statement - because a supplier such as Gordon Superstore: (i) could be obliged to provide certain remedies for goods supplied by it, including the First Fridge, in certain circumstances, such as where those goods were not of acceptable quality, even if remedies were available under a warranty from the manufacturer, Samsung; (ii) could be so obliged to provide a refund in relation to goods supplied by it, including the First Fridge, whether or not those goods were a "large appliance"; and (iii) possibly had such obligations in relation to the First Fridge. (3) In relation to the Third Oral Statement - because a supplier such as Gordon Superstore: (i) could be obliged to provide a refund for goods supplied by it, including the First Fridge, in certain circumstances, such as where those goods were not of acceptable quality; and (ii) possibly had such an obligation in relation to the First Fridge. (4) In relation to the Fourth Oral Statement - because a supplier such as Gordon Superstore: (i) could be obliged to provide certain remedies for goods supplied (or replacement goods supplied) by it, including the Second Fridge, in certain circumstances, such as where those goods were not of acceptable quality, even if remedies were also available from the manufacturer, Samsung; and (ii) possibly had such an obligation in relation to the Second Fridge. (5) In relation to the Fifth Oral Statement and the Sixth Oral Statement - because a supplier such as Gordon Superstore: (i) could be obliged to provide a refund for goods supplied (or replacement goods supplied) by it, including the Third Fridge, in certain circumstances, such as where those goods were not of acceptable quality, independently of dealings with and the liability of the manufacturer and even if it had not been paid an amount equivalent to the price of the good by the manufacturer, Samsung; and (ii) possibly had such obligations in relation to the Third Fridge. 49 By reason of these matters, Gordon Superstore admits five contraventions, namely, that it: (1) Made five representations in connection with the supply or possible supply of goods or services that were false or misleading and concerned the existence, exclusion or effect of any guarantee, right or remedy available under the Consumer Guarantee Provisions of the ACL in contravention of s 29(1)(m) of the ACL; and (2) in doing so, engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of section 18 of the ACL.

Relief Sought 50 While recognising that the question of relief remains at the discretion of the court, the parties respectfully asked that the Court: (1) Make declarations pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) ("FCA Act"); (2) grant injunctive relief pursuant to s 232 of the ACL; (3) order payment by Gordon Superstore of a penalty in the amount of $25,000.00 pursuant to s 224 of the ACL; (4) order that Gordon Superstore display a copy of the summary of consumer rights under the ACL at the point of sale for three years; and (5) make orders pursuant to s 246 of the ACL providing for Gordon Superstore to establish a compliance program. 51 I am satisfied that the relief proposed by the parties is within power and appropriate. In these circumstances, I should not refrain from providing the relief sought because, had it been left to me, the relief may have been different. Public interest considerations have to be taken into account: Australian Competition and Consumer Commission v Target Australia Pty Ltd (ACN 004 250 944) [2001] FCA 1326 at [24] (Lee J); NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 291. 52 Turning to the specific forms of relief sought, I agree with the parties' submissions in the JS as to each.

Declaration 53 I agree that the three requirements articulated by the High Court in Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 437-438 (Gibbs J) before making declarations - the question must be a real and not a hypothetical or theoretical one; the applicant must have a real interest in raising it; and there must be a proper contradiction - are each satisfied in this case. I also agree that the declaration sought is appropriate because it serves to: (1) Record the Court's disapproval of the contravening conduct; (2) indicates the ACCC's claim that Gordon Superstore has contravened the ACL; (3) assists the ACCC to carry out the duties conferred on it by the Act; (4) deters other corporations from contravening the ACL.

Injunctions 54 I agree with the parties' JS that the Court has power under s 232 of the ACL to make the order sought; the injunctive relief is not vague or imprecise, nor does it require continuing supervision by the Court; there is no multiplicity or overlapping injunctions that may give rise to confusion about the scope of the obligations being imposed; and the injunction is appropriate to deter a repetition of the conduct.

Pecuniary penalty 55 The parties jointly submitted that the Court should make an order imposing a pecuniary penalty pursuant to s 224 of the ACL on Gordon Superstore in the sum of $25,000. 56 Section 224(1)(a)(ii) of the ACL relevantly empowers the Court, in respect of contraventions of provisions of Pt 3-1 of the ACL (which includes s 29) to order the contravener to pay such pecuniary penalty in respect of "each act or omission" as the Court determines to be appropriate. No penalties are provided for in the ACL for contraventions of s 18. 57 Section 224(2) of the ACL provides that, in determining the appropriate pecuniary penalty, the Court must have regard to all relevant matters including: (1) The nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission; and (2) the circumstances in which the act or omission took place; and (3) whether the person has previously been found by a court in proceedings under Chapter 4 or Pt 5-2 of the ACL to have engaged in any similar conduct. 58 The factors that the Court is to take into account when assessing penalty were recently summarised by Middleton J in Australian Competition and Consumer Commission v AGL Sales Pty Ltd [2013] FCA 1030 at [51] and [52]. 59 In support of the proposed penalty, the parties rely on the facts set out in Ex 1 and the admissions made by Gordon Superstore in the JS. 60 In their JS, the parties undertook an analysis of the relevant matters to be taken into account in assessing penalty by reference to these facts and admissions, under the following heads: (1) Nature, extent and duration of conduct - circumstances in which conduct took place - whether conduct was deliberate; (3) amount of loss caused; (4) whether similar prior conduct; (5) involvement of senior employees or management; (6) size and financial position; (7) culture of compliance and corrective measures in response to contraventions; (8) co-operation and contrition discount; (9) deterrence; (10) maximum penalties and one transaction/one course of conduct principle; and totality principle. 61 I agree with the parties analysis under each of the heads and, in the circumstances, it is only necessary to make any observations with respect to the latter two. The parties submitted that the preferable view was that the five contraventions arose out of one course of conduct and that the appropriateness of the proposed penalty was to be assessed accordingly. I agree with that submission. The parties also submitted that if they were wrong on that issue, the proposed penalty also adequately reflected the totality of Gordon Superstore's contravening conduct in accordance with the totality principle. I also agree with that submission. 62 I agree that the proposed penalty of $25,000 is appropriate whether the five contraventions are viewed as arising out of one course of conduct, or whether they are viewed as discrete and independent contraventions for which separate penalties should be imposed.

In-store notice 63 Compelling a retailer such as Gordon Superstore to display a notice at the point of sale is useful to ensure that every consumer sees an accurate statement of the rights under the ACL available to them when entering into a consumer transaction with Gordon Superstore. 64 Such a notice also assists sales representatives to be aware of consumers' rights under the ACL. 65 The parties submitted that Gordon Superstore should display an in-store notice as set out in the proposed order. I agree.

Compliance training 66 Orders for the implementation of a compliance program and audits may be made under s 246 of the ACL (where provision is made expressly in s 246(2)(b)). 67 The parties submitted that Gordon Superstore should undertake the ACL compliance programs. The compliance programs are appropriate to the circumstances of Gordon Superstore and the industry in which it does business. I agree.

Costs 68 The Court has power to award costs under s 43 of the FCA Act. 69 The parties submitted that the Court should order that each of the parties is to pay their own costs. I agree with that submission. I certify that the preceding sixty-nine (69) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds.

Trade Practices Act 1974(Cth)

At a glance

Court

Decision date

Before

Source

Judgment (31 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (4)

Cited By (3)