Australian Competition & Consumer Commission v Murray

REASONS FOR JUDGMENT 1 On 11 October 2002 I found proved against the defendants Sidney James Murray and his company Will Writers Guild Pty Ltd (WWG) six charges involving contravention of s 59(2) of the Trade Practices Act 1974 (Cth) (the Act): Australian Competition and Consumer Commission v Murray [2002] FCA 1252. 2 The circumstances giving rise to the offences are set out in my earlier judgment. In substance they involved the sale of licences or franchises to conduct a will writing business in Western Australia, South Australia (and the Northern Territory), Victoria, Tasmania and New South Wales (and the Australian Capital Territory). The sale of each licence or franchise was made with a representation, express or implied, that the business could be conducted lawfully. In fact the business infringed the provisions of State legislation prohibiting the carrying on of legal practice by persons not admitted as legal practitioners. 3 Since the offences are federal offences the provisions of s 16A of the Crimes Act 1914 (Cth) are applicable. That section provides in part: "(1) In determining the sentence to be passed, or the order to be made, in respect of any person for a federal offence, a court must impose a sentence or make an order that is of a severity appropriate in all the circumstances of the offence. (2) In addition to any other matters, the court must take into account such of the following matters as are relevant and known to the court: (a) the nature and circumstances of the offence; (b) other offences (if any) that are required or permitted to be taken into account; (c) if the offence forms part of a course of conduct consisting of a series of criminal acts of the same or a similar character - that course of conduct; (d) the personal circumstances of any victim of the offence; (e) any injury, loss or damage resulting from the offence; (f) the degree to which the person has shown contrition for the offence; (i) by taking action to make reparation for any injury, loss or damage resulting from the offence; or (ii) in any other manner; (g) if the person has pleaded guilty to the charge in respect of the offence- that fact; (h) the degree to which the person has co-operated with law enforcement agencies in the investigation of the offence or of other offences; (j) the deterrent effect that any sentence or order under consideration may have on the person; (k) the need to ensure that the person is adequately punished for the offence; (m) the character, antecedents, cultural background, age, means and physical or mental condition of the person; (n) the prospect of rehabilitation of the person; (p) the probable effect that any sentence or order under consideration would have on any of the person's family or dependants. 4 The basic principles applicable are not in dispute and are usefully summarised by Weinberg J in Australian Competition and Consumer Commission v Dimmeys Stores Pty Ltd [1999] FCA 1175 at [8] to [11]. 5 At the time the offences were committed the relevant maximum penalties were $200,000 for a company and $40,000 for an individual. 6 There are features of this case which indicate that substantial penalties are called for. 7 The offences involved large amounts of money both in total ($329,000) and in terms of their impact on each complainant. 8 The offences were committed on six separate occasions over a period of nine months in the five States. 9 The impact on complainants has been substantial and lasting. Their involvement with the defendants has resulted in some of them having to mortgage or dispose of substantial family assets. There have been feelings of depression and lack of self-confidence which often comes when people realise they have been duped. In some instances there have been strains on marriages and other personal relationships. 10 Mr Murray was quite reckless as to whether or not the business he was promoting could be lawfully carried on by non-lawyers. The first sale he made was in March 1999 to Mr and Mrs Ferguson of Perth. In early May 1999 a solicitor friend of Mr Ferguson suggested he obtain an opinion from a barrister as the friend thought the business might be in breach of the Western Australian Legal Practitioners Act 1893 (WA). Mr Ferguson obtained a written opinion dated 29 May 1999 from Mr C P Shanahan of counsel. In essence Mr Shanahan was of the opinion that there was a contravention of the Legal Practitioners Act and that the Fergusons should discontinue the business. Mr Ferguson immediately contacted Mr Murray who said that the lawyer giving advice must be a "fucking idiot" and that he had Queen's Counsel's advice to the contrary and would supply a copy. He asked Mr Ferguson to fax a copy of the opinion, which Mr Ferguson did. However, Mr Murray never forwarded a copy of the Queen's Counsel's opinion that he claimed he had. 11 A few days later Mr Murray telephoned Mr Ferguson and said that he had given the solicitor the wrong instructions. He said that the concept was not to write the wills out for the client but only to watch and assist the client with the completion of the will form that was in the kit. Mr Ferguson told him that that was nowhere near the concept that Mr Murray had previously described and that no one was going to pay another person $100 to have them sit down and watch them complete a "two bob will form". Mr Ferguson asked what the computer programs were for (Mr Murray had told the Fergusons that computer programs would be provided). Mr Murray again swore at him and hung up. 12 Mr Murray obtained advice from a Queensland barrister Mr Gary J Radcliff in the circumstances described at [105] to [108] of my earlier judgment. 13 At best Mr Radcliff's advice was equivocal. Mr Shanahan's advice was clearly negative. Yet this did not deter Mr Murray from subsequently making sales to Mr Vessigner of Hobart and Messrs Fisher and Mansfield of Sydney. 14 Mr Murray was not frank with his legal advisors and in particular with Mr Chalmers, his Queensland solicitor. Mr Chalmers was not aware that the tape was to be played to prospective customers and had never heard the tape or read a transcript of it. As to the subsequent advice of Mr Radcliff, it seems likely that he did not hear the tape or read a transcript of it but relied on the description of it by Mr Murray. 15 At the penalty hearing it was submitted on behalf of Mr Murray that these inadequate instructions were really his legal advisors' fault for not asking him the right questions. I do not accept this. The tape was a central part of the modus operandi of this business, both for the recruiting of licensees and for the licensees in turn to obtain customers. I think Mr Murray did not make it available to his legal advisors because he well knew that the tape was a clear holding out that unqualified people were able to perform the functions of a solicitor. 16 The defendants relied on alleged impecuniosity. As to WWG, it ceased trading in about October 1999 pending the outcome of these proceedings and a civil proceeding brought by the Commission and has not resumed trading. Its only activity was the will writing business which, in the light of the findings in the present proceeding, is now worthless. Its only asset is a 1999 Mercedes Benz C200 motor car under a hire purchase agreement. The vehicle was purchased for $65,000 in early 2000 and $35,500 was owing as at 20 December 2002. 17 In submissions on behalf of the defendants it was said that "(c)ogent evidence has been put before this Court to show that neither Mr Murray nor WWG has the means to pay any substantial fines imposed by this Court". In an affidavit sworn 11 December 2002 Mr Murray deposed that he suffered ill health to such an extent that he cannot carry out full-time employment (I shall return to this subsequently), that he does some part-time work for his son on a consultancy basis, that "most of what was earned during 2000 and 2001 was channelled back into the business" and that he does "not own any real estate or stocks or shares. All that I have are personal effects, clothing and the like". The affidavit exhibited personal income tax returns of Mr Murray which showed total income (before deductions) in the following amounts (years to 30 June): 1999 $26,000 2000 $26,704 2001 $22,296 18 The tax return of WWG for 1999 showed gross income of $161,500, which corresponds with the amounts received from the complainants Ferguson, Greene, Page and Boylon. Cost of goods sold consists of "purchases" $14,599.52, which presumably would include the printing costs of the materials, and freight and cartage $561.44. Total expenses were $174,461.49 including: Management fee $105,070.00 Motor vehicle expenses $1,177.95 Rent $394.13 Telephone $3,488.49 Travelling expenses $14,612.92 Wages $10,875.00 19 That pattern is repeated for the WWG tax return for 2000. Total income was $168,451 which was mainly constituted by "other sales of goods and services" $167,500 which corresponds with the payments made by the complainants Vessigner, Fisher and Mansfield. Total expenses were $175,211 made up of: Cost of Sales $19,355.00 Rent $6,687.00 Motor vehicle expenses $5,972.00 Repairs and maintenance $5,042.00 All other expenses $138,155.00