(xx) one of the machines sited in Queensland was averaging sales of 400 of the bottles per week;
(yy) investors in New South Wales would sell at least 60 to 100 of the bottles per week;
(zz) some sites were selling over 100 of the bottles in a busy day;
(aaa) some sites were selling over 500 of the bottles in a busy week;
(bbb) other investors were selling in excess of 500 of the bottles per week;
(ccc) on average the machines of current investors were selling 70 to 80 of the bottles per day;
(ddd) some sites were selling more than 40 of the bottles per day;
(eee) some sites were selling more than 60 of the bottles per day;
(fff) some sites in Queensland were selling 100 of the bottles per day;
(ggg) one of the machines was in use at the Darling Harbour Fish Markets and was selling 120 of the bottles per day on some days;
(hhh) poor to average stores sold 350 to 400 of the bottles per week and good to excellent stores could sell 800 to 1,000 of the bottles per week;
(iii) a small scale store would sell a couple of hundred of the bottles per week;
(jjj) there was about 40 per cent to 50 per cent profit in being an investor;
(kkk) there was a lot of money to be made from the distribution business;
(lll) the potential for sale by the distributor for New South Wales was well over 300 of the machines, with the distributor's profit being $600,000.00;
(mmm)the potential for sales by the distributor for Victoria was well over 200 of the machines, with the distributor's profit being $400,000.000;
(nnn) the distributor for New South Wales would make a profit of $2,000.00 on each of the machines sold in that state, or $10,000.00 for every territory of five of the machines, sold by the distributor;
(ooo) the distributor for Victoria would make a profit of $3,000 on each of the machines sold in that state, or $10,000 for every territory of five of the machines, sold by the distributor;
(ppp) the supply of oranges for juicing by use of the machines would be maintained throughout the entire calendar year;
(qqq) the business concept was sound;
(rrr) there was an investor who had already purchased ten (10) of the machines;
(sss) one investor had purchased 100 of the machines at the Franchise and Investment Expo at the Sydney Convention and Exhibition Centre, Darling Harbour held during March 1999;
(ttt) well over 100 of the machines had been sold at the Brisbane Expo and about 140 of the machines as a result of the Sydney Expo;
(uuu) Michigan, or alternatively Queensland Juice Company had around 100 of the machines sited in Queensland;
(vvv) there was a warehouse facility available at Homebush, New South Wales, for use by investors for storage of the bottles prior to delivery to retail fruit outlets;
(www)investors could expect to make well in excess of the written profit projections;
(xxx) the machines being offered to investors would be installed and operational at nominated or agreed retail fruit outlet sites within short periods thereafter;
(yyy) the machines that had been purchased by investors had been installed at nominated or agreed retail fruit outlets;
(zzz) Coles had sought to enter into an agreement with Michigan or alternatively Queensland Juice Company in relation to the use by Coles of the machines;
(aaaa) impliedly, that the business being sold to the investors, including the machines, involved an established and tested business concept or system, which had already proven to be successful for other investors.
7 Paragraphs 24, 25 and 26 of the pleading are as follows:
24. Insofar as the representations referred to in paragraph 23 of this pleading were representations as to future matters, the Respondents impliedly represented that there were reasonable grounds for making those representations.
25. By the representations referred to in paragraph 23 of this pleading, the Respondents invited persons to engage or participate in a business activity requiring the investment of moneys and the performance by them of work associated with the investment.
26. In reliance upon the representations referred to in paragraph 23 of this pleading and induced thereby, persons made payments or gave other consideration to (Michigan) or alternatively (Queensland Juice Company) or alternatively (Yeppoon) for the purchase of the businesses, the purchase of the distribution businesses, the supply of the machines, the supply of the bottles, and the provision of services associated with the machines and the provision of services associated with the bottles, namely those services referred to in paragraph 22 of this pleading, which payments or consideration were accepted by (Michigan) or alternatively (Queensland Juice Company) or alternatively (Yeppoon).
8 The extreme diversity of the pleading reflects the fact that ACCC impugns the conduct of one or more respondents in dealing with no fewer than fourteen different investors (treating Mr and Mrs Kirkwood as one investor). The circumstances surrounding each investment were unique to it. The factual bases of the claims against the various respondents also differ. In the original application, ACCC primarily claimed relief of the protective kind, designed to restrain or avoid future breaches of the Act and/or to facilitate public warnings as to the respondents' activities. However par 7 of the prayer for relief sought:
Findings pursuant to section 83 of the Trade Practices Act 1974 (Cth) of the facts that constitute the respects in which the conduct of the Respondents referred to in the Statement of Claim is in contravention of the provisions of Part V of the Trade Practices Act 1974 (Cth).
9 It emerged in the course of the hearing that although the relief sought was of the protective kind, ACCC had in mind the possibility that it might subsequently seek compensation on behalf of investors pursuant to subss 87(1A) and (1B) of the Act, relying in any such claim upon the provisions of s 83 of the Act. Section 87 of the Act, as it was prior to the amendments made by the Trade Practices Act Amendment Act (No 1) 2001 (Cth), provided as follows:
(1) …
(1A) Without limiting the generality of section 80, the Court may, on the application of a person who has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in (whether before or after the commencement of this subsection) in contravention of a provision of Part IVA, IVB or V or on the application of the Commission in accordance with subsection (1B) on behalf of such a person or 2 or more such persons, make such order or orders as the Court thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in subsection (2)) if the Court considers that the order or orders concerned will compensate the person who made the application, or the person or any of the persons on whose behalf the application was made, in whole or in part for the loss or damage, or will prevent or reduce the loss or damage suffered, or likely to be suffered, by such a person.
(1B) Where, in a proceeding instituted for an offence against section 79 or instituted by the Commission or the Minister under section 80, a person is found to have engaged (whether before or after the commencement of this subsection) in conduct in contravention of a provision of Part IVA, IVB or V, the Commission may make an application under subsection (1A) on behalf of one or more persons identified in the application who have suffered, or are likely to suffer, loss or damage by the conduct, but the Commission shall not make such an application except with the consent in writing given before the application is made by the person, or by each of the persons, on whose behalf the application is made.
(1C) An application may be made under subsection (1A) in relation to a contravention of Part IVA, IVB or V notwithstanding that a proceeding has not been instituted under another provision of this Part in relation to that contravention.
(1CA) An application under subsection (1A) may be commenced:
(a) in the case of conduct in contravention of Part IVA - at any time within 2 years after the day on which the cause of action accrued; or
(b) in any other case - at any time within 3 years after the day on which the cause of action accrued.
(1D) For the purpose of determining whether to make an order under this section in relation to a contravention of Part IVA, the Court may have regard to the conduct of parties to the proceeding since the contravention occurred.
(2) The orders referred to in subsection (1) and (1A) are:
(a) an order declaring the whole or any part of a contract made between the person who suffered, or is likely to suffer, the loss or damage and the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, or of a collateral arrangement relating to such a contract, to be void and, if the Court thinks fit, to have been void ab initio or at all times on and after such date before the date on which the order is made as is specified in the order;
(b) an order varying such a contract or arrangement in such manner as is specified in the order and, if the Court thinks fit, declaring the contract or arrangement to have had effect as so varied on and after such date before the date on which the order is made as is so specified;
(ba) an order refusing to enforce any or all of the provisions of such a contract;
(c) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to refund money or return property to the person who suffered the loss or damage;
(d) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to pay to the person who suffered the loss or damage the amount of the loss or damage;
(e) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, at his or her own expense, to repair, or provide parts for, goods that had been supplied by the person who engaged in the conduct to the person who suffered, or is likely to suffer, the loss or damage;
(f) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, at his or her own expense, to supply specified services to the person who suffered, or is likely to suffer, the loss or damage; and
(g) an order, in relation to an instrument creating or transferring an interest in land, directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to execute an instrument that:
(i) varies, or has the effect of varying, the first-mentioned instrument; or
(ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the first-mentioned instrument.
…
10 Section 83 provides:
In a proceeding against a person under section 82 or in an application under subsection 87(1A) for an order against a person, a finding of any fact by a court made in proceedings under section 77, 80, 80A or 81, or for an offence against section 79, in which that person has been found to have contravened, or to have been involved in a contravention of, a provision of Part IV, IVA, IVB or V is prima facie evidence of that fact and the finding may be proved by production of a document under the seal of the court from which the finding appears.
11 In the course of the hearing, ACCC amended its prayer for relief to that which now appears in exhibit 13. By reference to that exhibit and to the statement of claim, it can be seen that the first prayer as against each of the respondents is for "findings/declarations" concerning the misrepresentations allegedly made to the various investors. There are seventy-nine different representations allegedly made to fourteen investors (again treating Mr and Mrs Kirkwood as one investor). Although there were common themes in the representations, there were also differences. Not all representations were made by all respondents. In some cases legal responsibility for representations will depend upon issues of agency.
12 Causes of action involving numerous claimants are by no means unknown to the law. Techniques have been developed to deal with them including, in particular, the class action. Those techniques focus on common issues with a view to resolving them in a way which will be binding on all parties. Issues peculiar to individual claimants may then be resolved separately. This approach assumes substantial common issues. Superficially, there are common issues in the investors' claims. They are principally:
® the apparent similarity of the representations made to different claimants by one or other of the respondents; and
® the accuracy or otherwise of certain common themes in those representations.
13 However, when one looks more closely at the evidence, these "similarities" are shown to be illusory. This is for two main reasons. Firstly, all potential claims will involve allegations of loss as a result of reliance upon representations which were essentially untrue. In any proceedings seeking compensation for such loss, the extent to which each claimant's state of mind concerning the relevant investment was formed in reliance upon the impugned conduct will be the key to recovery. That will involve an assessment of the conduct of the representors in the context in which it occurred. That representations in broadly similar terms were made to different investors will not necessarily lead to the conclusion that each investor relied upon such representations in the same way, to the same extent or at all. In the present case, for example, many investors received documentary representations in identical or very similar forms. In most, if not all cases, these representation were followed up by other, more specific representations. In all probability the earlier, and arguably common, representations ceased to operate on the decision-making process of the particular investor when the more specific representations were made. This was not a case in which each investor merely responded to the same advertisement. There was substantial personal contact between each of them and one or more of the respondents, involving oral representations which were unique in each case. Secondly, it is at least possible that some of the representations were misleading when made to some investors but not when they were made to others.
14 Some examples of the differences in the positions of the various investors are:
® Mr Rotheram, on any view of the evidence, purchased his machines from Queensland Juice Company and not from Michigan, although he had previously agreed to acquire machines from Michigan. The change in arrangement was brought about by a secret transaction between him and Mr Semos. He can hardly have relied upon representations made as to the arrangements made by Michigan for the siting of machines purchased from it.
® Mr Ellis acquired distribution rights for the juicing machines, swapping those rights for an interest which he had, pursuant to an agreement with Michigan, in the marketing of slush (iced drink) machines. He agreed to the swap because he was dissatisfied with the slush machine business and saw the juicing machine business as a better prospect. He was clearly aware of the uncertain nature of the arrangements with retailers for the siting of the orange juicing machines. Allegedly misleading representations as to such arrangements were important in inducing other investors to enter the Michigan scheme.
® Mr Carter purchased six machines for a total investment of $71,940. All six were sited, and Mr Carter appears to have been quite satisfied with his investment until the price of oranges rose unexpectedly. It will be difficult for Mr Carter to rely, in any compensation claim, upon misrepresentations as to siting arrangements.
® Ms Lasser deliberately chose not to deal with Michigan and understood that she was acquiring her machines from Mr Semos and/or Queensland Juice Company. This was because either Mr Doherty (on Ms Lasser's version) or Ms Lasser (on Mr Doherty's version) had learnt something unfavourable about Mr Laski. Either Ms Lasser decided not to deal with him or his company or Mr Doherty decided that he did not wish to do so.
® Neither Ms Lasser nor Mr Kwon received documentary representations.
® Mr Nemes was an undischarged bankrupt and apparently proposed to trade through a company, NTD Constructions Pty Ltd. He was not a director of that company, presumably because of his position as an undischarged bankrupt. No director was called. Mr Nemes referred to it as "his" company. Nonetheless one would think that there would be issues concerning reliance arising out of this anomalous situation.
15 Clearly, ACCC's purpose in seeking findings/declarations is related to proceedings which may be commenced in the future, seeking compensation on behalf of investors, and not to any present claim to protective relief. That relief includes injunctions, orders for the publication of notices and orders that the natural persons who are respondents undertake education and training courses concerning compliance with the Act. The injunctive relief seems to go beyond what might be thought reasonable in order to demonstrate that the respondents had contravened the Act and to protect the public from similar misconduct. Injunctions are sought to restrain quite specific conduct which could easily be avoided by anybody who was intent upon continuing to market this scheme. One would have thought it better to identify the common elements of the representations and to frame the injunctive relief upon a more general basis. A member of the public could only be confused by such a plethora of legalese as is presently sought. I suspect that the injunctive relief has been tailored to give apparent support to the prayer for declaratory relief.
16 There is no express power in the Act to grant declaratory relief of the kind here sought. However, s 21 of the Federal Court Act 1976 (Cth) (the "Federal Court Act") confers a general power to make binding declarations of right. Such relief would not generally be granted under the general law if the only purpose in seeking it was its possible use in other anticipated proceedings. Various policy considerations militate against such a course. For present purposes, the most compelling is that it cannot be said with certainty that any of these declarations will ever be put to any valuable use. It is not certain that claims for compensation will be made on behalf of any of the various investors. Even if such a claim is made, it is unlikely that all of the representations which have been alleged by any one investor will have to be proven on the balance of probabilities. As I have previously observed, a claim for compensation will focus upon those matters which induced a particular investor to part with his or her funds. It is likely that in many cases, earlier representations will have been overtaken by later, more specific representations. This is particularly true of the various documentary representations.
17 Had the investors sought to recover compensation they may have done so by way of class action, assuming sufficient common issues. I doubt whether there are sufficient common issues to justify a class action. The facts surrounding arrangements made by Michigan and/or Queensland Juice Company with various retailers would have been common, but that is a relatively small part of the case. Some common documentation was used, but it is by no means clear that such documentation constituted a major incentive for some or all investors to enter into the scheme. This case is really made up of fourteen claims, each based primarily upon dealings between one or more respondents and each of the investors. In other words, fourteen different claims have been joined in the same proceedings. This has been done under the guise of a claim for injunctive relief which is, of course, designed, not to protect those who have already entered the scheme, but those who have not.
18 It is appropriate for ACCC to seek to demonstrate that past misconduct has contravened the Act and to obtain orders which will assist it in preventing future misconduct and in warning the public. However such relief would have been designed to identify and prohibit the substance of the alleged misrepresentations rather than the various forms in which it was made to particular investors.
19 ACCC may have considered that it was not asking the Court to do any more than it would have had to do in the sum total of the fourteen cases. This is incorrect. In determining whether or not an individual investor had acted in reliance upon a representation, it would not have been necessary to determine whether every conceivable representation made to that investor was established on the balance of probabilities. It would only have been necessary to determine whether or not it was possible to infer from the whole of the evidence that particular factual representations had been made and acted upon by the investor.
20 It is likely that the structure of the case made it more difficult for the respondents than was necessary. A respondent faced with the prospect of an extended trial, involving many claims against numerous respondents, may well decide that he or she cannot afford to be represented. None of the respondents in this case was represented at the trial. On the other hand, a respondent faced with a case concerning his or her own involvement in the matter may be able to afford the cost of a much shorter trial. The decision as to legal representation may also be affected by the relief sought. Where no substantial financial relief or penalty is sought against a respondent, he or she might well choose not to incur the costs of such representation. For this reason, too, the course adopted by ACCC in this case was undesirable.
21 Numerous other difficulties arose in the course of this trial, resulting from the unfortunate joinder of causes of action, but it is not necessary to go into them in detail. I should say that as the difficulties emerged, counsel for ACCC tried very hard to assist, but in the end, it was beyond even their substantial experience. I received very little assistance in terms of marshalling the evidence to reflect the cases of the various investors or to demonstrate the ways in which evidence concerning one investor or one respondent might affect other aspects of the case. Having tried to so marshal the facts myself, I entirely understand why they chose not to do so. It is not always possible to reduce fundamentally flawed proceedings to a form in which they can be resolved in accordance with received views and expectations as to the integrity of the judicial process. I should also say that I accept some responsibility for these unfortunate circumstances. Had I acquired a deeper understanding of the case in the course of its management prior to trial, I would have taken steps to resolve the problem.
22 The point of all of this is simply that ACCC should not have sought to conduct proceedings designed to advance individual claims under the guise of seeking quite different forms of relief. Had the matter been identified as a series of claims for compensation by, or on behalf of investors, the difficulties would have been obvious and appropriate orders made at an early stage. This was not done because the proceedings appeared to be something other than that which they were. The problem has arisen because ACCC has tried to make ss 83 and 87 do rather more than they were intended to do. Parliament certainly contemplated that there would be issues resolved in proceedings brought by ACCC which would be relevant in subsequent claims brought by, or on behalf of persons who suffered loss as a result of the conduct in question. However I do not accept that it was intended that ACCC should simply run a large number of quite separate proceedings under the guise of seeking more general relief. I do not mean to imply any misconduct by ACCC. I have no doubt that it was motivated by a desire to do its duty, both towards the public and towards individual investors. However the course which was adopted was, in the circumstances of this case, inappropriate.
23 ACCC may have been influenced in its conduct of these proceedings by a line of cases which includes the decision of Pincus J in Trade Practices Commission v Friendship Aloe Vera Pty Ltd (1988) ATPR 40-892, that of Drummond J in ACCC v The Shell Company of Australia Ltd (1997) 72 FCR 386 and that of Lindgren J in ACCC v Giraffe World Australia Pty Ltd (1998) 84 FCR 512. Those cases established that ACCC may not commence proceedings on behalf of other persons pursuant to subs 87(1B) until a determination has been made that the respondent had contravened a relevant provision of the Act. Drummond J held that ACCC could not, in an initiating application for relief other than relief pursuant to s 87, seek relief pursuant to subs 87(1B) in anticipation of its establishing a relevant contravention. Although I appreciate the textual justification for that view, I consider that the application and subsequent pleadings in a case are primarily designed to give notice to the respondent of the case which he or she must meet. I would have thought that ACCC might properly indicate in those documents that should a relevant contravention be established, a claim would be made pursuant to subs 87(1B).
24 Given these difficulties it is necessary to determine how I should proceed. These proceedings are primarily for declaratory and injunctive relief. Whilst the power to grant an injunction pursuant to Part VI is arguably wider than is the power under the general law (see in particular subss 80(4) and (5)), it is still discretionary, as is any power to make a declaration. A court will not generally make such orders unless they will serve some useful purpose. ACCC does not demonstrate such a purpose merely by indicating a possible future claim for compensation on behalf of investors. I have some doubts as to the availability of much of the relief sought in exhibit 13. I will deal with that matter at a later stage. Whilst injunctive relief of some kind may be appropriate, it is difficult to see any value in those presently sought. In the circumstances it may be better to consider the facts of the case, making appropriate findings. I will then adjourn the matter to enable the parties to make appropriate submissions as to relief. In considering the evidence, however, I propose to be selective, identifying those aspects which may be arguably relevant for the purposes of this action as presently constituted. However I will also keep in mind the possibility of subsequent claims for compensation.