Australian Competition & Consumer Commission v Alvaton Holdings Pty Ltd

Australian Competition & Consumer Commission v Alvaton Holdings Pty Ltd - [2010] FCA 760 - FCA 2010 case summary — Zoe

[11]

TRADE PRACTICES COMPLIANCE PROGRAM The respondent will establish a Trade Practices Compliance Program (the"Compliance Program")that complies with each of the following requirements:

Appointment of Compliance Officer (a) The respondent will appoint a Director or a Senior Manager of the business operated by the respondent to be responsible for the development, implementation and maintenance of the compliance program (the "Compliance Officer").
Staff Training- the respondent will: (a) arrange for all of its directors, servants and agents who are or may be involved in supplying goods which are intended to be used or are likely to be used by consumers, to attend practical trade practices training designed to ensure they are aware of their responsibilities and obligations in relation to s 65C of the Act; (b) ensure that the first training session is to be conducted within 6 months of the date of the order of the Court requiring the Compliance Program and subsequent sessions are to be held at 12 monthly intervals thereafter for a period of 2 years; (c) ensure that the training is administered by a suitably qualified compliance professional or legal practitioner with expertise in trade practices law; (d) request the trade practices professional who conducted the training to provide to the respondent, within 14 days of completion of each of the three annual training sessions, a written statement or certificate verifying that such training has occurred and listing the names of the persons who attended each session; (e) within 14 days of receiving the written statement or certificate referred to in 2.4, provide a copy to the applicant; and (f) if no written statement or certificate is provided to the respondent in accordance with paragraph 2.4 do provide to the applicant, within 14 days of completion of each of the three annual training sessions, a written statement: (i) explaining the circumstances of and reasons for the written statement or certificate not being provided; and (ii) stating that such training has been carried out and listing the person who provided the training, the date or dates upon which the training was provided and the names of the persons who attended each session.
Product Safety - the respondent will: (a) maintain up-to-date copies, at its business premises, of all prescribed consumer product safety standards and prescribed consumer information standards that relate to products that the respondent supplies; and (b) design, implement and maintain recall procedures that enable products supplied by the respondent that do not comply with prescribed safety and/or information standards under the Trade Practices Act to be efficiently and effectively withdrawn from the market and returned to the respondent. 4. Review - the respondent will, at its own expense, cause an annual review of the Compliance Program elements (the"Review") to be carried out in accordance with each of the following requirements: (a) Scope of the Review - the respondent shall ensure that the Review is broad and rigorous enough to provide the respondent with a supportable verification that the respondent has in place a product safety compliance program that complies with the requirements of the order of the Court to establish and maintain the program and is suitable for the size and structure of the Respondent's business. (b) Independence of Reviewer - the respondent shall ensure that the Review is carried out by a suitably qualified, independent compliance professional with expertise in trade practices law (the"Reviewer"). The Reviewer will qualify as independent on the basis that he or she: (i) did not design or implement the Compliance Program, including providing the training referred to in paragraph 2 above; (ii) is not a present or past staff member or director of the respondent; (iii) has not acted and does not act for the respondent in any trade practices related matters, other than reviewing the Compliance Program; and (iv) has no significant shareholding or other interests in the respondent. (c) Evidence - the respondent shall use its best endeavors to ensure that the Review is able to be conducted on the basis that the Reviewerhas access to all relevant sources of information in the respondent's possession or control, including without limitation: (i) enquiries of any employees, representatives, agents and stakeholders of [the Respondent; (ii) documents created by the respondent's consultants, legal practitioners and accountants for use in the respondent's Compliance Program; (iii) all documents required to assess compliance with the relevant product safety/information standards under the Trade Practices Act. (d) Timing - the respondent shall ensure that the first Review is completed within one year and one month of the commencement of the Compliance Program and that each subsequent Review is completed within one year thereafter. 5. Reporting (a) The respondent shall use its best endeavours to ensure that the Reviewer sets out the findings of the Review in a written Trade Practices Compliance Program Review Report, which will provide particular and specific information regarding the scope of the Review and the effectiveness of the Trade Practices Compliance Program including: (i) details of the evidence gathered and examined during the Review; (ii) the name and relevant experience of the person appointed as Compliance Officer for the period under review; (iii) the Reviewer's opinion on whether the respondent has in place staff training and product safety records and procedures that comply with the Compliance Program set out in this Annexure A; and (iv) actions recommended by the Reviewer to ensure the continuing effectiveness of the Compliance Program. (b) The respondent shall use its best endeavours to ensure that each Trade Practices Compliance Program Review Report is completed and provided to the Respondent within one month of completion of the Review. (c) The respondent will cause the Trade Practices Compliance Program Review Report to be provided to the applicant within 14 days of its receipt from the Reviewer. (d) The respondent shall implement promptly and with due diligence any recommendations made by the Reviewer that are reasonably necessary to ensure that the respondent maintains the Compliance Program. 6. Information to the applicant - If requested by the applicant, the respondent shall, at its own expense, provide copies of documents and information in respect of matters which are the subject of the Compliance Program.

[25]

Consent orders and admissions 23 In determining whether to make the orders the Court must be satisfied that what is proposed is in the public interest. The Court weighs the public interest and the desirability of an agreed resolution of enforcement proceedings: Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 161 ALR 79. 24 The Court's power to make orders extends to making orders in proceedings resolved between the parties by consent. The principles were stated by Lee J in Australian Competition and Consumer Commission v Target Australia Pty Ltd [2001] FCA 1326 at [24] as follows: It is the Court's duty in receiving consent orders in any matter to scrutinise such orders as to their appropriateness. However, after being satisfied as to the appropriateness of the orders, the Court should be slow to impede final settlement of such matters, particularly those involving public interest considerations. Moreover, the public has an interest in the mutual resolution of litigation, and subject to the foregoing the Court should be careful not to refuse to make orders simply because the orders may have been different had it been the Court's task to formulate them. 25 In deciding whether consent orders conform with legal principle, the Court is entitled to treat the Respondents' consent as involving an admission of all facts necessary or appropriate to the granting of the relief sought: Thomson Australian Holdings Proprietary Limited v Trade Practices Commission (1981) 148 CLR 150 at 164 per Gibbs CJ, Stephen, Mason and Wilson JJ. 26 Where the parties have reached an agreed position in relation to declarations, the position may differ from the general principles stated above. In BMI Ltd v Federated Clerks' Union of Australia (1983) 51 ALR 401 at 413-414, Keely and Beaumont JJ stated: We think that it is generally undesirable that the Court should grant relief by way of declaratory orders under s 108 in the absence of any contest on the question. If the matter were merely one of private right between particular parties, for example, a question as to the respective rights of parties under a contract, it may well be appropriate for a court to make a declaration as to those rights by consent. In such a case, the public and other parties cannot be affected, let alone bound, by such a declaration. 27 In the 2009 decision, Australian Competition and Consumer Commission v Allergy Pathway Pty Ltd [2009] FCA 960 at [18] -[19], Finkelstein J, citing BMI, made declarations in terms that had been submitted by consent by the parties. However, in doing so, his Honour stated: The declaration cases, however, require proof by way of evidence. An assurance by parties (whether by admission or agreed statement) that asserted facts are true will not suffice. Moreover, the House of Lords did not think a departure from this rule was justified because of administrative expediency. For the time being, at least until a Full Court holds otherwise, it is, in my view, incumbent upon a single judge of the Federal Court to follow BMI and therefore not grant a declaration involving a public right in the absence of evidence that supports the declaration. 28 Since then, by way of illustration, this Court, in the following decisions, has made declarations supported by a signed statement of agreed facts: Australian Competition and Consumer Commission v Cosic Holdings Pty Ltd [2009] FCA 1579; Australian Competition and Consumer Commission v Wilson Parking 1992 Pty Ltd [2009] FCA 1580; Minister for the Environment, Heritage & the Arts v PGP Developments Pty Limited [2010] FCA 48.

[26]

Declarations 29 Generally, whether it is appropriate for the Court to make declarations is a matter informed by the following: (a) a declaration must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 582 per Mason CJ and Dawson, Toohey and Gaudron JJ. (b) a declaration must be more than just a summary of conclusions reached in reasons for judgment: Warramunda Village Inc. v Pryde (2001) 105 FCR 437 at [8] and [13]. (c) the person seeking the declaration must have "a real interest...[and] must be able to secure a proper contradictor, that is to say, some one presently existing who has a true interest to oppose the declaration sought": Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 437-8 per Gibbs J, quoting Russian Commercial and Industrial Bank v. British Bank for Foreign Trade Ltd [1921] 2 AC 438 at 448 per Lord Dunedin; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 582 per Mason CJ and Dawson, Toohey and Gaudron JJ and (d) a declaration will not be granted if it will produce no foreseeable consequences for the parties: Gardner v Dairy Industry Authority (NSW) (1977) 18 ALR 55 at 69 per Mason J or have no utility: Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89 at 99 per Sheppard J. 30 The power of the Court to make declarations under s 21 of the Federal Court Act extends to the making of declarations that particular conduct contravened the Act: Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89. 31 In deciding whether it is appropriate to make declarations in an ACCC-instituted proceeding, the Court has looked to the public interest nature of the proceedings and the public interest role the applicant has in enforcing the Act: Australian Competition and Consumer Commission v Target Australia Pty Ltd [2001] FCA 1326 at [18]; Australian Competition and Consumer Commission v Goldy Motors Pty Ltd [2000] FCA 1885 at [30] and [34]; Australian Competition and Consumer Commission v Grove and Edgar Pty Ltd[2008] FCA 1956 at [20]. More specifically, the Court has observed that declarations: (a) are an appropriate vehicle to record the court's disapproval of the contravening conduct: Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (No 2) at 100; (b) serve to vindicate the Applicant's claim that the Respondent contravened the Act: Australian Competition & Consumer Commission v Goldy Motors Pty Ltd at [30]; (c) are of some assistance to the Applicant in future in carrying out the duties which are conferred upon it by the Act: Australian Competition & Consumer Commission v Goldy Motors Pty Ltd at [34]. (d) are of assistance in clarifying the law: Australian Competition & Consumer Commission v Goldy Motors Pty Ltd [2002] FCA 1885 at [34]; and (e) may inform consumers of the dangers arising from a respondent's contravening conduct: Australian Competition and Consumer Commission v Pacific Dunlop Ltd [2001] FCA 740 at [59]-[69]. 32 Further, the public interest may be advanced or protected by a declaration of contravening conduct that was directed to large numbers of the public over a significant period of time, notwithstanding that other relief may be denied: Australian Competition and Consumer Commission v IMB Group Pty Ltd [1999] FCA 313 at [21]. 33 The statutory objective of the Act is "to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection": s 2 of the Act. The seeking of declaratory relief in appropriate matters is consistent with this objective, as declarations clearly state the nature of the conduct and the fact that is unlawful. This serves to educate the Australian community as well as relevant market participants of the kind of conduct that may contravene the Act especially wholesalers who import goods of a kind intended to be used by infants and young children. It also promotes general deterrence and community-wide compliance with the Act. 34 The Court has on many occasions acknowledged that declarations play an important public interest role in the resolution of proceedings brought under the Act. Declarations are recognised to have a particular public interest outcome that other remedies, important as they are, are not able to provide. 35 There is a long held view that a declaration, being a judicial act, should only be made on evidence and not simply on admissions or deemed admissions: Bank of Kuwait and the Middle East v Ship MV Mawashi Al Gasseem (No 2) (2007) 240 ALR 120 at [10]-[11] per Mansfield J and the cases referred to therein, particularly the observations of Kiefel J in Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (2006) 236 ALR 665 at [52]-[59]. The Statement of Agreed Facts supplied to the Court, is drafted in such a way to supply the Court with evidence of the contravening conduct. 36 The declarations proposed are an appropriate means of assisting the applicant in carrying out its role pursuant to the Act, and deterring others from similar conduct. The declarations in the terms proposed clearly identify aspects of the respondents' conduct which are in contravention of the Act. Declarations are especially pertinent in this case, due to the nature of the goods, particularly the choking, suffocation, inhalation/ingestion hazards that the goods may cause. 37 I am of the opinion that the Court may make the proposed declarations based upon the Statement of Agreed Facts and should do so because: (a) the policy object to which the principle in BMI Ltd is directed is the necessity for a substantial factual basis for the making of declaratory orders where the rights of third parties may be affected; (b) the facts in the Statement of Agreed Facts meets that policy objective because: (i) it constitutes evidence of facts which it is open to the Court to accept; (ii) it contains detailed facts and not merely admissions on broad conclusions; (iii) the facts stated are self-evidently within the knowledge of the parties; (iv) the facts stated concern only the conduct of the parties to the proceeding each represented by competent solicitors; and (v) there are no relevant third party rights or interests to be protected or affected.

[27]

Injunctions 38 Injunctions may be ordered under s 80 of the Act if it is in the public interest to do so: Australian Competition and Consumer Commission v 4WD Systems Pty Ltd (2003) 200 ALR 491 at [212] and [216]. 39 As the terms of s 80(4) and (5) of the Act suggest, the Court has a wider jurisdiction to grant an injunction under s 80 of the Act than under traditional equitable principles, though these remain relevant: Australian Competition and Consumer Commission v 4WD Systems Pty Ltd at [212] per Selway J citing ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 256-7. 40 It is well established that injunctions under s 80 of the Act are available and appropriate, not only to restrain an apprehended repetition of the contravening conduct, but also to deter a repetition of the conduct. By way of example see Australian Competition and Consumer Commission v Wizard Mortgage Corporation Ltd [2002] FCA 1317 at [22]-[26] per Merkel J; ICI Australia Operations Pty Limited v Trade Practices Commission and Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (2007) 161 FCR 513 at [96]-[114]. 41 The admitted facts must disclose a sufficient nexus between the conduct alleged and the orders sought otherwise the Court, in granting relief, will not be exercising judicial power within the confines of Chapter III of the Constitution: Australian Competiton and Consumer Commission v Z-tek Computer Pty Ltd (1987) 78 FCR 197 at 203 per Merkel J. 42 The proposed injunctions must be clearly and precisely stated so that they are capable of being obeyed and will not require the continual supervision of the Court: Australian Competition and Consumer Commission v 4WD Systems Pty Ltd at [212]. 43 The applicant has a legitimate concern to prevent repetition of the conduct that occurred in this instance. Deterrence of repetition of the conduct by the respondent will be more likely to be achieved if the Court grants not only the declaratory but also the injunctive relief sought by the applicant. There is a sufficient nexus between the terms of the injunctions and the admitted conduct. The terms of the injunctions are clear and capable of being obeyed. They are in my opinion appropriate orders to be made in this case.

[28]

Probation orders 44 Pursuant to s 86C(2)(b) of the Act, the Court may make a probation order for a period of no longer than three years: …directing the person to establish an education and training program for employees or other persons involved in the person's business, being a program designed to ensure their awareness of the responsibilities and obligations in relation to the contravening conduct, similar conduct or related conduct… 45 The orders for compliance programs should be expressed with sufficient precision to enable a breach of the order to be ascertained and effectively punished: Australian Competition and Consumer Commission v Virgin Mobile Australia Pty Ltd (No 2) [2002] FCA 1548 however I accept that it is neither practicable nor useful to prescribe with particularity the content of such programs: Australian Competition and Consumer Commission v Construction Forestry, Mining and Energy Union [2006] FCA 1730. 46 In this case, the respondent has on numerous occasions had to recall from retail suppliers, defective and non-compliant goods supplied by it. In light of the Respondent's previous conduct, the Applicant requires the respondent to engage in a comprehensive and thorough compliance program, which requires the respondent to: (a) establish a Trade Practices Compliance Program and appoint a Director or Senior Manager of the business operated by the respondent as a Compliance Officer; (b) arrange for all of its directors, servants and agents who are or may be involved in supplying goods which are intended to be used or are likely to be used by consumers, to attend practical trade practices training conducted by an independent person with appropriate knowledge of the Act, which is designed to ensure that the attendees are aware of their responsibilities and obligations in relation to s 65C of the Act; (c) within 14 days of completion of each of the three annual seminars, request the person who conducts the training to provide the Respondent with a written statement or certificate verifying that the training has taken place, and listing the names of the persons who attended each session; (d) establish product safety procedures; and (e) have the compliance program annually audited and a report provided to the Applicant. 47 These orders will tend to serve an important educative purpose within the respondent and I am satisfied that they should be made.

[29]

Publication Orders/ Information Notices 48 There are numerous judicial authorities that support the proposition that the purpose of ordering corrective advertising under s 86C of the Act is to protect the public interest and that punitive considerations should not be entertained. In Australian Competition and Consumer Commission v On Clinic Australia Pty Ltd (1996) 35 IPR 635, Tamberlin J observed at 640: The purpose of corrective advertising is to protect the public interest. … Corrective advertising is intended to dispel incorrect or false impressions which may have been created as a result of deceptive or misleading conduct. It is not intended to be punitive. In any matter concerning corrective advertising the timing of such corrective advertising is of course important … There is no principle that any particular period is appropriate as a point beyond which corrective advertising is not warranted. In the context of advertising it is necessary to examine the nature, extent and intensity of the advertising and the media in which it has been released with a view to deciding whether there could reasonably be any current misapprehension as a result of the advertisements. 49 Advertising that is directed to dispelling incorrect or false impressions created as a result of deceptive or misleading conduct will generally have, as an ancillary benefit, some public educational effect in relation to the operation of the relevant legislative provisions. In Australian Competition and Consumer Commission v Target Australia Pty Ltd [2001] FCA 1326, Lee J commented, at [21] that: …the purpose sought to be achieved by corrective advertising is to raise public awareness - for both consumers and competitors - as to the type of conduct that may contravene the Act, and as to the outcome of the particular litigation. 50 In Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 95 FCR 114, French J (as he then was) observed that it is important that corrective advertisements do more than merely announce a 'win' for the ACCC and the contrition of the respondent. His Honour said at [49]: Such advertisements in cases involving contraventions of Part IV are within the power conferred by s 80 if they are directed to informing the relevant markets of the outcome of the litigation so that those in the market have at least a broad understanding of the ways in which the contraveners have had to change their conduct. This will at least alert those in the markets to question or inquire about the lawfulness of conduct in the future which may seem to contravene the Act and/or breach the injunctions which have been granted…. [Such advertisements] aid in the enforcement of the primary orders and the prevention of the repetition of the contravening conduct. 51 His Honour expressed similar views in Australian Competition and Consumer Commission v Virgin Mobile Australia Pty Ltd (No 2) [2002] FCA 1548 at [22]. 52 The parties originally agreed that the respondent would be required to cause to be published on the homepage of its website and in various printed publications a notice in the terms set out in Annexure B to the orders. However, I am advised that prior to the publication of these reasons the respondent in anticipation of orders to that effect being made, variously published notices in accordance with the agreement reached with the applicant. 53 For completeness I have set out below what the respondent did in this respect. 54 At its own expense, the respondent: (a) caused to be published on the homepage of the website accessible via the uniform resource locator address www.cutpriceimports.com.au, a notice in terms of Annexure B and which was such notice to be maintained for a period of 45 days thereafter, and used its best endeavours to ensure that such notice: (i) was viewable immediately on the computer screen upon access to the website and did not require any scrolling or further links to be viewed; and (i) was of a size that consisted of at least 40% of the images on the screen, (b) caused to be published a notice in terms of Annexure B in editions of: (i) The Northern Territory News; and (ii) the "Child" magazine published by Copeland Publishing Pty Ltd in Perth, Sydney, Melbourne, Adelaide and Brisbane, (c) and used its best endeavours to ensure that such notice: (i) was within the first 25% of pages of each publication; and (ii) was of a size not less than 15% of the page on which the notice appeared. 55 These publication notices served both to protect and educate consumers and to prevent a repetition of the contravening conduct. Importantly, the publication notices specifically targeted consumers who may have been affected by the respondent's conduct during the relevant period of the breaches.

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (31 paragraphs)

Parties

Legislation Cited (6)

Cases Cited (30)