Australian Competition and Consumer Commission v Le Sands Restaurant and Le Sands Café Pty Ltd t/as Signature Brasserie

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1161 of 2010

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

AND: LE SANDS RESTAURANT AND LE SANDS CAFE PTY LTD (ACN 002 262 286) T/AS SIGNATURE BRASSERIE

JUDGE: JAGOT J DATE: 8 FEBRUARY 2011 PLACE: SYDNEY

BACKGROUND 1 This proceeding between the Australian Competition and Consumer Commission (the ACCC) and Le Sands Restaurant and Le Sands Café Pty Ltd, trading as Signature Brasserie (the restaurant), involves a claim that the restaurant contravened s 53C of the Trade Practices Act 1974 (Cth) (the Act) (now s 48 of Schedule 2 of the Competition and Consumer Act 2010 (Cth)). The respondent is alleged to have published menus which made representations as to price in circumstances where a surcharge was imposed on Sundays and public holidays. The menus did not, as required by law, in a prominent way and as a single figure, specify the single price for the supply of the menu items on Sundays and public holidays. 2 I referred this matter to mediation after the first mention date. As a consequence of the mediation, the parties have agreed that certain declarations and orders should be made. The basis for those declarations and orders is the Agreed Statement of Facts (the agreed facts), which has been signed by both parties and was filed with the Court on 28 January 2011. 3 The agreed facts record that the respondent is incorporated and capable of being sued. Further, they record that the respondent, from at least 2 May 2010, published menus and provided them to restaurant customers. The respondent provided those menus to customers on Sundays and public holidays (amongst other days). However, the menus did not specify, in a prominent way and as a single figure, the single price for the supply of items to customers on Sundays and public holidays. Rather, the menu identified the price on Sundays as the price listed on the menu plus a 10% surcharge, and on public holidays as the price listed on the menu plus a 15% surcharge. The existence of these surcharges was noted at the bottom of the menu by publication (in small print) of the following statement: "10% surcharge on Sundays and 15% Public Holidays". 4 The ACCC, in response to a complaint made to it, sent a letter to the respondent on 4 May 2010 informing the respondent of the requirements of s 53C of the Act. That section relevantly provides as follows. (1) A corporation shall not, in trade or commerce, in connection with: (a) the supply or possible supply of goods or services to a person (the relevant person); or (b) the promotion by any means of the supply of goods or services to a person (the relevant person) or of the use of goods or services by a person (the relevant person); make a representation with respect to an amount that, if paid, would constitute a part of the consideration for the supply of the goods or services unless the corporation also: (c) specifies, in a prominent way and as a single figure, the single price for the goods or services; […] (4) For the purposes of paragraph (1)(c), the corporation is taken not to have specified a single price for the goods or services in a prominent way unless the single price is at least as prominent as the most prominent of the parts of the consideration for the supply. 5 The ACCC on 30 June 2010 issued an infringement notice to the respondent under s 87ZE(1) of the Act. This sought payment of a penalty of $6,600. However, the infringement notice contained an error in one of its Schedules and, in consequence, was withdrawn by the ACCC on 21 July 2010. A new infringement notice to the same effect was also issued on that date. 6 By letter dated 19 July 2010, received by the ACCC on 22 July 2010, the respondent notified the ACCC that its menu had been changed and requested withdrawal of the infringement notice. By facsimile on 28 July 2010 the ACCC notified the respondent that the infringement notice would not be withdrawn, and that the period for payment of the $6,600 penalty would expire on 19 August 2010. 7 Following further correspondence, the culmination of which was that the ACCC confirmed its refusal to withdraw the infringement notice, the time for payment of the penalty expired on 19 August 2010 without the respondent having paid. In consequence, on 6 September 2010, the ACCC commenced this proceeding. 8 Pursuant to my order that the matter be referred to mediation, the ACCC and the respondent attended a mediation conference before a Registrar of the Court on 7 December 2010.

APPLICABLE PRINCIPLES 9 The ACCC, in its written submissions filed on 28 January 2011, comprehensively identified the relevant facts and principles to be applied. In short, and adopting the structure of those written submissions: 1. I am satisfied that I have the power to make the orders proposed by consent between the parties. Those orders are within power and, in my view, are appropriate. 2. The agreed facts contain a proper factual basis for the making of the declarations proposed. I accept, in particular, the ACCC's submission that it is in the public interest that the declarations be made. Australian Competition and Consumer Commission v Gourmet Goody's Family Restaurant Pty Ltd [2010] FCA 1216 (the Gourmet Goody's case) was a case involving similar facts. I noted at [6] that the Gourmet Goody's case was the first occasion on which a penalty had been imposed under s 76E of the Act. Both the Gourmet Goody's case and the present case involve the important principle of general deterrence. As the ACCC submitted in the Gourmet Goody's case (see [10]), representations as to price are made by cafés and restaurants to consumers virtually every day. It is important in these circumstances that declarations and orders made pursuant to the Act reflect the public policy underlying it, including the importance of general deterrence. 3. In the Gourmet Goody's case, where I imposed a penalty of $13,200, the respondent had accepted its culpability and liability on and from the first return date. In the present case, the matter was referred to mediation and has taken a somewhat longer time to resolve. Nevertheless, the penalty of $15,000 which the parties have proposed in this case, when compared to the maximum penalty of $1.1 million under the Act (see s 76E(3)), remains at the low end of the scale. This reflects the respondent's overall low level of culpability, particularly in terms of the fact (as set out in the agreed facts) that the respondent rectified its menus relatively quickly after being notified of the complaint to the ACCC and the contravention of the law which the menus originally involved. 4. The respondent's culpability in the present case should be seen as less than that of the respondent in Australian Competition and Consumer Commission v AI Constructions (ACT) Pty Ltd [2010] FCA 1377 (AI Constructions), in which Stone J imposed a penalty of $20,000. According to the ACCC's submissions in the present case, this penalty was imposed by Stone J in default of appearance by the respondent. In contrast, in the present case, a director of the respondent, Ms Antonopoulos (whom I have given leave to appear on behalf of the respondent), has at all times taken the responsible attitude of appearing before the Court, engaging in good faith in the mediation, and agreeing the terms of the proposed declarations and orders. 5. While (as previously noted) general deterrence is of particular importance in the present case, specific deterrence is of considerably less importance. Ms Antonopoulos has confirmed today, consistently with the agreed facts, that the restaurant's menus have been altered so as to show, in a prominent way and as a single figure, the single price for the supply of items to customers on Sundays and public holidays. My acceptance of the principle that specific deterrence is not a material factor in this case does not alter the requirement that the penalty both reflect the requirement of general deterrence, and remain proportionate to the culpability of the contravener in question. In the case of NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 294-295 (NW Frozen Foods), the Full Court observed as follows: [t]he Court should not leave room for any impression of weakness in its resolve to impose penalties sufficient to ensure the deterrence, not only of the parties actually before it, but also of others who might be tempted to think that contravention would pay… 10 For these reasons I accept the overall submission that the ACCC has made in its written submissions as follows: […] general deterrence is of real importance in the present case because of the nature of the conduct the subject of the proceedings. Representations as to price made by cafés and restaurants affect virtually every consumer. The requirements imposed by the Act and the consequences [of] failing to comply with those requirements must be understood not only by the respondent, but industry participants more generally. 11 Moreover, it is significant that the ACCC attempted at first instance to deal with the respondent's contravention by issuing an infringement notice pursuant to s 87ZE of the Act. The respondent did not pay the penalty specified in the infringement notice and, as a result, the ACCC was forced to institute this proceeding. A clear signal should be sent by this Court that, in circumstances where contravening conduct is admitted, the cost of litigation should be avoided by compliance with infringement notices.

PENALTY 12 As the ACCC's submissions properly reflect, the quantum of the pecuniary penalty that should be imposed is a matter for the Court rather than the parties to litigation. Nevertheless, and as the ACCC's submissions put it: [p]rovided that the Court is satisfied that the terms of the orders are appropriate, it is in the public interest for the Court to make orders on the terms that have been agreed between parties so as to encourage negotiated settlements. 13 This reflects the approach set out in Trade Practices Commission v Allied Mills Industries Pty Ltd (1981) 37 ALR 256 at 259; [1981] FCA 156 at 4-6, where Sheppard J said as follows: It is, of course, true that the penalty has been suggested to me by the agreement of the parties. Uninformed of their agreement, I may have selected a different figure, but I am satisfied that it would not have been very different from theirs. There is from time to time, amongst members of the profession and amongst the public, discussion concerning plea bargaining. Sometimes it is suggested that it involves disreputable conduct. It is my opinion that that is so if it at all implicates the Court in private discussions as to what the Court's attitude will or would be likely to be if a particular course is taken. In this case nothing of that kind has occurred. The parties have made their own agreement and put it to the Court for approval, not knowing what its attitude was likely to be… This, of course, is not a criminal case; the liability is civil only. But, even in the most serious criminal cases, it is not unusual for the prosecution to accept a plea to a lesser charge, subject always to the approval of the Court. I have said what I have said only to explain that the course which the parties have adopted is both proper and not uncommon, even though perhaps novel in the comparatively new field of trade practices. 14 Of course, what has happened today, consistent with the course Sheppard J identified, is no longer particularly novel. The Full Court of the Federal Court approved this approach in NW Frozen Foods at 298-299, where it said that: [w]e agree with the statement made in several of the cases cited that it is not actually useful to investigate whether, unaided by the agreement of the parties, we would have arrived at the very figure they proposed. The question is not that; it is simply whether, in the performance of the Court's duty under s 76, this particularly penalty, proposed with the consent of the corporation involved and of the [ACCC], is one that the Court should determine to be appropriate. 15 Having regard to the nature of the conduct, the facts of the case, and the penalties imposed in other similar cases (including the Gourmet Goody's case and AI Constructions), I am satisfied that the penalty of $15,000 is appropriate.

CONCLUSION 16 For these reasons, I am satisfied that there is an appropriate factual and legal foundation for the making of the declarations and orders proposed. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.