Australian Competition & Consumer Commission v CG Berbatis Holdings Pty Ltd

(i) conducted by a trade practices law specialist in the terms of the Seminar outline annexed; and

(ii) which addresses the unconscionable conduct provisions of the Act and, in particular, section 51AA; and

(b) within one week of attending the Seminar, notify the Applicant of that attendance.

2. The Respondents pay one third of the Applicant's costs of the proceedings to be taxed if not agreed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

(i) where weaker party did not fully understand transaction;

(ii) where there is no real opportunity for the weaker party to bargain;

(v) using a position of power to impose unreasonable conditions

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

AND: CG BERBATIS HOLDINGS PTY LTD (ACN 008 799 040)

REASONS FOR JUDGMENT ON ANCILLARY RELIEF AND COSTS 1 On 26 September 2000 declarations were made in these proceedings that the corporate respondents had engaged in unconscionable conduct in contravention of s 51AA of the Trade Practices Act 1974 and that the various individuals named as respondents had been directly or indirectly knowingly concerned in or party to that contravention. The Australian Competition and Consumer Commission (ACCC) was given liberty to propose further or ancillary relief in relation to the conduct the subject of the declarations. The application was otherwise dismissed and the parties directed to file written submissions as to costs. Minutes of proposed orders and submissions as to those orders and the costs orders that should be made were subsequently lodged. Oral submissions were heard on 14 December. 2 The facts of the case are set out in the primary judgment and it is unnecessary to review or summarise them here.

The Ancillary Relief 3 In addition to the declaratory relief already awarded, the ACCC seeks injunctions against each of the respondents, orders for publication of a notice advertising the outcome of the proceedings and for the natural person respondents each to attend a Trade Practices Compliance Seminar. The ACCC also asks the Court to set out its findings of fact in the proceedings for the purposes of s 83 of the Trade Practices Act. 4 Dealing first with the injunctions, the orders proposed are in the following terms: "4. The First, Second and Third Respondents, by its officers, employees, agents or whosoever, be restrained for the period of three years from the date of this Order, from engaging in conduct which requires as a condition of the grant of a new lease to a tenant or their assignees, that the tenant do release the Respondents from any claims arising under their existing lease in circumstances where the Respondents know, or ought to know, that the tenant is suffering from a situational disadvantage and thereby to engage in conduct that is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories, in contravention of s 51AA of the Trade Practices Act 1974. 5. The Fourth, Fifth, Sixth, Seventh and Eighth Respondents, be restrained for the period of three years from the date of this Order, from being directly or indirectly knowingly concerned in or a party to conduct, in trade or commerce, which requires as a condition of the grant of a new lease to a tenant or their assignees, that the tenant do release the Respondents from any claims arising under their existing lease in circumstances where the Respondents know, or ought to know, that the tenant is suffering from a situational disadvantage and thereby to engage in conduct that is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories, in contravention of s 51AA of the Trade Practices Act 1974." The ACCC says that the injunctions are in clear terms, are capable of being obeyed and are in the public interest. 5 Injunctions can be granted under s 80 to restrain conduct of the kind prohibited by s 51AA. The section does not, however, establish a presumption in favour of their grant whenever a contravention is made out. Factors relevant to the exercise of the discretion are: (a) whether or not it appears to the Court that the person intends to engage again or to continue to engage in contravening conduct; (b) whether or not the person previously engaged in conduct of that kind; and (c) whether or not there is an imminent danger of substantial damage to any person if the first mentioned person engages in conduct of that kind. See generally ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 256-7 (Lockhart J) and 268 (French J). 6 The ACCC submits that the grant of the injunctions is in the public interest to prevent the recurrence of the same or similar conduct as that declared to contravene the Act given that: (a) the first to fourth respondents continue to be the registered proprietors of land on which shopping centres are located including Farrington Fayre Shopping Centre; (b) the fourth to sixth respondents continue to hold office as directors of the relevant first to third respondents; (c) the seventh respondent remains a registered company; and (d) the eighth respondent continues to be concerned in an advisory capacity in the retail tenancy market and continues to hold office as a director of the seventh respondent. 7 The determination whether to make the orders sought, which are opposed in this case, does not involve the kind of limited judgment made in respect of a consent order which requires the Court to determine whether the agreed orders are within power or appropriate. To that extent reference by the ACCC in its submissions to comments about proposed consent orders in Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 161 ALR 79 and Australian Competition and Consumer Commission v McCaskey (2000) ATPR 41-780 are of limited assistance. 8 In this case the conduct found to be unconscionable arose out of a particular set of circumstances which occurred more than four years ago. Although these proceedings were contested there is nothing to indicate any significant risk of repetition of the conduct concerned. It may be that there is a risk of unconscionable conduct occurring again in the future but the specific constellation of facts which gave rise to the findings in connection with the Roberts is not of such common occurrence that there is a real risk the owners and their representatives will go down that path again. 9 A further weighty factor against the grant of the injunctions in this case is the nature of their subject matter and their necessary imprecision. The orders proposed operate upon the circumstance of a tenant "suffering from a situational disadvantage". This was a term used in the judgment to describe a class of disadvantage arising from particular circumstances rather than any inherent weakness or infirmity on the part of the tenant. It is nevertheless not a term which has that degree of precision which would enable it usefully to define the boundaries of an injunctive order. The injunction also refers to "conduct that is unconscionable within the meaning of the unwritten law". Again, given the imprecise and evaluative nature of that term the Court ought to treat with caution any attempt to embody it in an injunction the breach of which would attract penalties for contempt of court. That is not to say that there can be no case in which unconscionable conduct is made the subject of injunctive relief expressed in terms which do not require the application of any evaluative judgment about the conduct restrained. But the present case is one in which, in my opinion, injunctions would serve no useful purpose and would present some difficulty in compliance and therefore enforcement. 10 The publication order sought is an order requiring the respondents to publish twice at their expense in a manner at such times as the Court thinks appropriate, a notice in the West Australian newspaper in the following terms: "PUBLIC NOTICE FARRINGTON FAYRE SHOPPING CENTRE TREATMENT OF RETAIL TENANT BY SHOPPING CENTRE OWNERS WAS UNCONSCIONABLE The Federal Court has found that the owners of the shopping centre formerly known as the Farrington Fayre Shopping Centre in Leeming and their adviser acted unconscionably towards a tenant of the shopping centre, and in doing so contravened section 51AA of the Trade Practices Act 1974. In 1996 and 1997, the tenant was attempting to sell its business. The owners knew that the tenant would be unable to sell the business without a new lease, but refused to grant the lease unless the tenant withdrew from legal proceedings it had taken against the owners. The Court found in legal action taken by the Australian Competition and Consumer Commission that it was unconscionable for the owners to take advantage of the tenant's situation in this way. The Court made orders restraining the owners and their adviser from treating tenants in a similar fashion again, requiring them to attend a seminar about unconscionable conduct and requiring them to publish this notice." In considering this proposal I take judicial notice of the fact that the outcome of the proceedings was in fact quite adequately reported. There is no particular benefit to be derived from the insertion of the public notice beyond the reannouncement of a win for the ACCC. 11 I do think however that there is some utility in the order proposed for a trade practices compliance seminar for the fourth, fifth, sixth and eighth respondents. They are still operating in or in connection with the relevant industry and should be sensitised to the kinds of issues which are likely to be of importance in determining, in their dealings with tenants, whether they are at risk of engaging in unconscionable conduct. Given that the relevant conduct was a contravention of s 51AA I do not consider that the order should mandate reference to s 51AC which was subsequently enacted, although it would no doubt be sensible if the seminar were to cover that section as well. 12 Finally there was a request for me to set out findings of fact for the purposes of s 83 of the Act. Whilst I would not suggest that that is something that can never be done, a claim for an order in such terms should be approached with caution. The findings of fact are set out in the primary judgment. To separately detail extracted findings of fact in a necessarily concise form in a formal order runs the risk of possible disconformity between the judgment and the relief. I do not propose to separately set out findings of fact.

Costs 13 There is no doubt that while costs normally follow the event, they may be apportioned by reference to outcomes on particular aspects of a case. Apportionment is particularly relevant where a number of discrete cases are run together. 14 The ACCC succeeded in establishing unconscionable conduct in relation to the Roberts but failed to establish unconscionable conduct in respect of the other two tenants concerned. It failed also in the misleading or deceptive conduct case although that added little or nothing to the length of the trial. There is a common factual background which cannot be apportioned as between successful and unsuccessful elements of the case. It would have been equally necessary to success in any of them. I have regard to that common factual background as a matter in respect of which the ACCC should be able to recover costs. 15 In this case I propose to apportion costs on the basis of a global fraction rather than offsetting fractions of the costs on each side. In my opinion, in the circumstances, it is appropriate that the respondents pay one third of the ACCC's costs to be taxed if not agreed. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French.

Counsel for the Applicant: Mr NW McKerracher QC

Solicitor for the Applicant: Australian Government Solicitor

Counsel for the First to Sixth Respondents: Mr HR Robinson

Solicitor for the First to Sixth Respondents: Haydn Robinson Counsel for the Seventh and Eighth Respondents: Mr JR Johnson Solicitor for the Seventh and Eighth Respondents:

Ilbery Barblett Date of Hearing: 14 December 2000

Date of Judgment: 20 December 2000