Australian Competition & Consumer Commission v Signature Security Group Pty Limited

Background 2 The respondent sells security systems suitable for domestic and small business users. In its advertising prior to July 2000 it quoted a price of $295.00 for the provision and installation of its basic system. More elaborate systems were available at higher prices. Purchasers of the security systems were required to commit to one of a number of service plans for monitoring and maintenance of the system, again at specified prices.

Introduction of the GST 3 Commencing on 1 July 2000 a goods and services tax ('GST') was introduced under the provisions of A New Tax System (Goods and Services Tax) Act 1999 (Cth) ('GST Act'). The GST Act imposed a GST of 10 per cent on taxable supplies of goods and services. It is not necessary here to detail how the GST is collected and how tax credits may be claimed. It is sufficient to note that although the supplier of goods and services is responsible for the payment of the GST to the revenue authorities, it is the consumer who is intended to carry the financial burden, which will be reflected in the price paid by the consumer. In other words, the GST Act does not impose any obligation on a consumer to pay GST. Implementation of the policy that the consumer should bear the ultimate burden relies on commercial reality that the cost of the GST will, sooner or later, be reflected in the price payable by the consumer. It is not in dispute that the respondent's business involved the provision of taxable supplies and that at all relevant times after the introduction of the GST the basic security system supplied by the respondent could only be obtained by paying a total amount of $324.50, an amount that included $29.50 attributable to the GST. 4 On the introduction of the GST, a supplier could have decided not to increase its prices by the expected 10 per cent but rather to carry the burden of the GST itself, even if only for an interim period. The more usual approach however (and the approach adopted by the respondent), would be that the supplier would increase its prices by 10 per cent thus giving effect to the policy of the GST Act. In the circumstances, it is not surprising that a supplier would wish its customers to understand that the price increase resulted from the imposition of the GST and would quote its prices so as to achieve this. Neither the Trade Practices Act nor the GST Act prohibits quoting a price in a manner that identifies the component of the price that is attributable to the GST. In doing so, however, it is necessary to ensure that there is no breach of the Trade Practices Act and, in particular,nothing misleading or deceptive or likely to mislead or deceive in the way in which the price is quoted. 5 In the period following the introduction of the GST the respondent commissioned advertisements for its security systems and services in the Yellow Pages, 2001 edition, in the Yellow Pages on-line web service and on Melbourne, Sydney and Perth radio in which a dollar amount was stated that did not include the GST component of the price. Although on most of the occasions referred to in the pleadings the GST was referred to (with varying prominence), the amount of that component was not quantified. The ACCC contends that quoting a price on a GST exclusive basis contravenes various provisions of the Trade Practices Act.

Undertakings given under s 87B of the Trade Practices Act 6 The ACCC's position on such conduct was drawn to the respondent's attention in late 2000. Following negotiations between the parties the respondent gave and the ACCC accepted, on 19 and 21 December 2000 respectively, the following written undertakings: 'A. Conduct Undertakings

(i) Signature Security Group, its agents and employees will ensure that: · future advertising, price displays or other forms of promotion, does [sic] not contain GST exclusive pricing and that any price displayed will include a price inclusive of the amount of GST payable and that the GST inclusive price will be given at least equal prominence with the display, if any, of the components of the price; and · when future reference is made to prices and/or fees applicable to the provision of goods and services by Signature Security Group, such prices and/or fees will comply with the Trade Practices Act 1974. (ii) Signature Security Group will use its best endeavours to ensure that advertising within the print edition of Yellow Pages will be amended, at the earliest possible opportunity, so as not to include GST exclusive prices. (iii) Signature Security Group will advise the Commission in writing when steps have been taken to amend future advertisements in the print edition of the Yellow Pages to comply with undertaking (i) above, and provide the Commission with copies of all Signature Security Group's advertisements to be published in the print edition of the Yellow Pages.

(iv) Signature Security Group shall create and maintain, at its own expense, a trade practices compliance program … in accordance with Annexure A.' (original emphasis) 7 Annexure A of the undertakings contained a detailed compliance program to remain in effect for three years and which imposed obligations on the respondent to report to the ACCC. In the written document the undertakings were expressed to be given in response to the ACCC's concerns; the respondent made no admission that it had contravened the Trade Practices Act.

Respondent's alleged breach of the Trade Practices Act 8 The ACCC has identified four distinct categories of representation by the respondent that it claims contravene the Trade Practices Act. In its written submissions the four categories are described as follows: '(I) A representation as to the price of goods or services with no reference at all to the GST component. … In each case the representation was oral, made by a sales representative of the Respondent and related to the base price ($295) of the Respondent's security system. In [one instance] additional oral representations were made relating to the price of an extra sensor and the cost of monitoring, in each case on a GST exclusive basis with no reference to the GST component. (II) Brochures distributed by the Respondent and entitled "Signature Security Systems Authorised Dealer" contained a representation that the cost of installation of the system was "from just $295". Adjacent to the price was an asterisk and, in significantly smaller print on a second page, the explanation signified by the asterisk included the words "plus GST where applicable". In each brochure, prices for various service plans were also quoted on a GST exclusive basis with an asterisk leading, once again, to the same explanation. … (III) Advertising by the Respondent in the Yellow Pages and on radio contained a representation that the price of the Respondent's product was "$295 plus GST". … An oral representation to a similar effect in relation to the base price for the system and for the installation of an extra detector is pleaded … A representation to a similar effect by way of a written quotation in respect of various service plans is pleaded. … (IV) A sales representative of the Respondent … represented to a customer … that the Respondent had a special arrangement in place whereby it did not have to quote GST inclusive prices and could quote to customers GST exclusive prices.' 9 In addition to these representations, the ACCC alleges that the respondent has breached the undertakings referred to in [6] above.

Legislative provisions 10 The provisions of the Trade Practices Act that the respondent is alleged to have breached are: '52(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. … 53 A corporation shall not, in trade or commerce, in connexion with the supply or possible supply of goods or services or in connexion with the promotion by any means of the supply or use of goods or services: … (d) represent that the corporation has a sponsorship, approval or affiliation it does not have;

(e) make a false or misleading representation with respect to the price of goods or services; … (g) make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy. … 53C A corporation shall not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services, 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 specifies the cash price for the goods or services.' 11 The ACCC's power to accept the undertakings given by the respondent arises under s 87B of the Trade Practices Act. This section also provides that such undertakings may be withdrawn at any time but only with the consent of the ACCC. If the ACCC considers that the undertakings have been breached it may apply to the Court for an order under s 87B(4) which provides: 'If the Court is satisfied that the person has breached a term of the undertaking, the Court may make all or any of the following orders:

(a) an order directing the person to comply with that term of the undertaking; (b) an order directing the person to pay to the Commonwealth an amount up to the amount of any financial benefit that the person has obtained directly or indirectly and that is reasonably attributable to the breach; (c) any order that the Court considers appropriate directing the person to compensate any other person who has suffered loss or damage as a result of the breach ; (d) any other order that the Court considers appropriate.'

Evidence and issues 12 The ACCC provided evidence of each of the alleged representations. The respondent did not deny the allegations or challenge the evidence of the ACCC except in respect of the representation alleged in category IV. The timing of those representations is important particularly in relation to the alleged breach of the undertakings given by the respondent. I accept that representations occurred at the following times: Category I: On 13 February 2001, Gillian Tang, a graduate administrative assistant with the ACCC, obtained a telephone quote of $295 for a security system with two sensors. She was told that it would be $150 for each extra sensor and $1 a day for monitoring. At no point was she advised of any payment in respect of GST. Category II: Brochures in the form described in category II were distributed to Ms S Robertson (see [13] below) on 12 January 2001, Mr Colin Jepson, a Client Service Operative with the Australian Taxation Office, on 13 February 2001 and Ms Trudie Enks, a public servant, on 15 February 2001. Category III: Representations that the price of the basic security system was '$295 plus GST' were made by advertisements in the Yellow Pages and on radio at various times in the period from July 2000 to January 2001, as well as on two further occasions, once orally and once in writing. Category IV: The representation alleged in category IV arises from a conversation said to have taken place on 12 January 2001 between a customer and an employee of the respondent, respectively, Suzanne Robertson and Barbara Hicks. 13 Ms Robertson's account of the conversation between her and Ms Hicks and the events leading up to it can be summarised briefly. She was interested in obtaining a security system for premises from which she was proposing to conduct a business. Following some preliminary telephone enquiries, on 12 January 2001, Ms Robertson and Ms Hicks met at the premises for the purposes of Ms Hicks giving advice and a quote for a security system. They discussed various options that Ms Robertson rejected as too expensive. Ms Hicks then handed her a brochure and said 'We have a basic system that costs $295'. After some discussion of the features of the basic system Ms Robertson decided to purchase it. As Ms Hicks was filling out the Alarm Services Agreement Ms Robertson noticed that she had written the price as '$295 + $29.50'. When Ms Hicks confirmed that the GST was extra, Ms Robertson protested, 'you are not allowed to quote like that. It is against the law to quote the GST separately to the price.' According to Ms Robertson, Ms Hicks replied, 'Yes we can, we have a special arrangement that allows us to quote like this.' When Ms Robertson expressed disbelief, Ms Hicks allegedly said, 'No, that's the way it is'. 14 Despite her annoyance at the way the price was quoted Ms Robertson decided to proceed with the transaction and signed the agreement. In fact the system was never installed because, for reasons that are not relevant here, Ms Robertson did not go ahead with the proposed business. Ms Robertson, however, was sufficiently annoyed with the respondent to send an email message of complaint to the ACCC on 16 January 2001. In this message Ms Robertson summarised the exchange with Ms Hicks and quoted the response attributed to Ms Hicks concerning the 'special arrangement' that was said to allow the respondent to quote prices exclusive of GST. 15 Ms Hicks' recollection was slightly different. She agreed that she met with Ms Robertson at the time and place indicated by Ms Robertson. She recalled giving Ms Robertson a brochure but could not recall the substance of their conversation either when inspecting the premises or when filling out the agreement. She denied however that she told Ms Robertson that the respondent had a 'special arrangement' and stated that she would have remembered such an unusual suggestion. Ms Hicks also denied that she would have responded to a customer by saying, 'That's the way it is'. In cross-examination she commented that it was not terminology that she would use and elaborated, 'In my mind that sounds quite rude. I would never say to a customer, "That's the way it is" because I'm trying to make a sale. I'm not trying to insult somebody so I wouldn't have said that'. 16 While I accept that in the normal course of events, Ms Hicks would not have made such a comment I am persuaded by the (virtually) contemporaneous evidence of the email message Ms Robertson sent to the ACCC that a conversation along the lines recalled by Ms Robertson did occur. Ms Robertson was confident in her recollection. She was not shaken on cross-examination and was not challenged on the truth of what she had said in her email. Ms Robertson displayed a confident familiarity with the GST that may have prompted Ms Hicks to respond defensively. Whatever the reason for the discrepancy between the two accounts, I accept that of Ms Robertson.

Price 17 Although those who make taxable supplies of goods and services may wish to separate the amount payable in respect of GST from the balance payable in respect of goods or services, in my opinion the 'price' is the total amount payable. This view is consistent with the definitions of price in the Trade Practices Act s 4, the GST Act s 9-75, the views expressed by Heerey J in Australian Competition and Consumer Commission v Nationwide News Pty Ltd (1996) ATPR 41-519 ('Nationwide') at 42,493-4 and Branson J in Australian Competition and Consumer Commission v Dell Computers Pty Limited [2002] FCAFC 434 ('Dell') at [10]-[14]. On this basis the expression, '$295 plus GST' is a compound statement of the price. The reference to GST is not a qualification in the way that the common expression, 'conditions apply' is a qualification of an otherwise unequivocal offer as was, for example the offer of a 'free' mobile phone considered in Nationwide.

Section 52 of the Trade Practices Act 18 It was conceded by the respondent that after 1 July 2000, advertising the price of the basic security systems as $295 without reference to the additional $29.50 payable as a result of the GST was misleading and deceptive. The respondent however rejects the ACCC's submission that the representation in category III, i.e. referring to the price of the security system as '$295 plus GST', is also misleading and deceptive. I propose to deal with this issue before dealing with category II as my decision in regard to category III will affect the way in which I analyse the issues in relation to category II. 19 It has been pointed out on more than one occasion that s 52 'is a comprehensive provision of wide impact'; Brown v Jam Factory Pty Ltd (1981) 53 FLR 340 at 348. In order to prove an offence under the section it is not necessary to show an intention to mislead or deceive or negligence. Whether conduct is misleading or deceptive or likely to mislead or deceive is a question of fact which the court must determine for itself. It is not necessary for there to be evidence of any member of the public actually being misled or deceived although evidence that this has occurred may be persuasive; Taco Company of Australia Inc v Taco Bell Pty Limited (1982) 42 ALR 177. In Equity Access Pty Ltd v Westpac Banking Corporation (1989) 16 IPR 431 ('Equity Access') at 441 it was stated that: 'Conduct of a corporation causing mere confusion or uncertainty in the minds of the public … is not necessarily coextensive with misleading or deceptive conduct … Since actual deception need not be shown the court must consider whether a reasonably significant number of potential purchasers would be likely to be misled or deceived'. 20 It is also not to the point that the misleading or deceptive impression may or will be corrected before any contract is entered into. Whether a representation is misleading or deceptive (or likely to be so) depends on the circumstances in which it is made and not on what might happen in the future; St Luke's Health Insurance v Medical Benefits Fund of Australia Ltd (1995) ATPR 41-428; Minister for Health and Aged Care v Harrington Associates Ltd [2000] FCA 1723. 21 It is important to consider the class or classes of persons who must be misled before it is established that there must be a breach of s 52. In Parkdale Custom Built Furniture Proprietary Limited v Puxu Proprietary Limited (1982) 149 CLR 191 at 199 Gibbs CJ commented that: 'Although it is true, as has often been said, that ordinarily a class of consumers may include the inexperienced as well as the experienced, and the gullible as well as the astute, the section must in my opinion by [sic] regarded as contemplating the effect of the conduct on reasonable members of the class. The heavy burdens which the section creates cannot have been intended to have been imposed for the benefit of persons who fail to take reasonable care of their own interests. What is reasonable will or [sic] course depend on all the circumstances.' 22 The Chief Justice's emphasis on reasonable person is supported by a more recent decision of the High Court in Campomar Sociedad, Limitada v Nike International Limited (2000) 202 CLR 45 at 85 - 87. The High Court stated: 'Where the persons in question are not identified individuals to whom a particular misrepresentation has been made or from whom a relevant fact, circumstance or proposal was withheld, but are members of a class to which the conduct in question was directed in a general sense, it is necessary to isolate by some criterion a representative member of that class. The inquiry thus is to be made with respect to this hypothetical individual why the misconception complained has arisen or is likely to arise if no injunctive relief be granted. In formulating this inquiry, the courts have had regard to what appears to be the outer limits of the purpose and scope of the statutory norm of conduct fixed by s 52. Thus in Puxu, Gibbs CJ observed that conduct not intended to misled or deceive and which was engaged in "honestly and reasonably" might nevertheless contravene s 52. Having regard to these "heavy burdens" which the statute created, his Honour concluded that, where the effect of conduct on the class of persons, such as consumers, was in issue, the section must be "regarded as contemplating the effect of the conduct on reasonable members of the class." ' 23 The class of persons to which an advertisement for a security system is addressed would seem to be very large. Even those who have little of material value to protect might wish to acquire the personal security that such a system may afford. It cannot be assumed, however, that the desire to protect property or to improve personal security is accompanied by any sophistication about advertisements or any particular level of literacy and numeracy beyond the minimum required to understand the relevant advertisements. Given the intense and prolonged publicity that accompanied the introduction of the GST in Australia I would consider however that persons to whom such advertisements are addressed would know that the acronym 'GST' refers to a tax or at least that it indicates some additional cost. 24 The representations in category III that the price of the basic security system is '$295 plus GST' would, in my opinion, indicate to such persons that in addition to the stated amount, the price would also include an additional amount attributable to the GST. Whether or not such persons have the knowledge and numeracy required to calculate the additional amount signified by the reference to 'GST', it seems to me that, provided the reference to GST is given more or less equal prominence or emphasis, they would not be misled. Whatever such a statement of the price indicates, it surely must indicate that the price is not $295. Even if the relevant persons did not understand the reference to 'GST' it would surely be clear that something in addition to $295 is payable. It may be that this manner of quoting the price is confusing and uncertain but as indicated in the reference to Equity Access above, this does not necessarily indicate misleading or deceptive conduct. One may speculate that the only reason for expressing a price in this manner would be to present it in a more attractive way to a customer, however intention is neither necessary nor sufficient for a breach of s 52. 25 In view of the opinion I have formed concerning the statement of price as '$295 plus GST' the question whether the representation in category II is misleading or deceptive will depend upon whether the GST component of the price has been sufficiently drawn to the attention of persons to whom such advertisements are addressed by the asterisk and the statement in fine print. 26 I agree with the respondent's submission that George Weston Foods Ltd v Goodman Fielder Ltd (2001) 49 IPR 553 ('the Wonder White case') is authority for the fact that an asterisk can be sufficient to draw the attention of a consumer to a qualification of a representation. That case concerned, inter alia, the packaging of the respondent's bread which declared in large typeface 'Now Twice the Fibre*'. Moore J observed that: 'the asterisk is prominent and would be taken to signify some qualification or explanation of the words used. One could expect a consumer interested in the fibre content to seek out the qualification or explanation. Not only is the explanation within 2 cm of the words used on the package (albeit in much smaller type) but it is repeated elsewhere on the packaging.' 27 I do not disagree with this observation but it is specific to the circumstances that his Honour was considering. In any particular case however the question remains whether the asterisk and its link to the additional information are sufficiently prominent to prevent the primary statement being misleading and deceptive or likely to mislead or deceive. The degree of prominence required may well vary with the potential of the primary statement to be misleading and deceptive. It seems to me that a representation that the price of goods is $295 is seriously misleading if the truth is that they are never available at that price. Even an astute observer noticing the asterisk and realising that it directs the reader to additional information might be led to believe that the goods were available for $295 at least in some circumstances. It is unlikely that such an observer would immediately conclude that they were never available at that price. In those circumstances it would take an extremely prominent reference to the additional information to prevent such a representation from being misleading. 28 The reference to the GST in the category II advertisements could hardly be described as prominent. The asterisk refers the reader of the advertisement to a different page where the fine print, and it is very fine print, states 'plus GST where applicable'. Furthermore this statement appears after other information and could be easily missed. While an astute reader may peruse the fine print with sufficient care to notice the addition to the price represented by the GST, it is not unlikely that even a reasonably careful reader might miss the reference, such is the disproportion between the '$295' and the words in fine print on a different page. Such an insignificant and limited reference is grossly insufficient to draw the attention of the reader to the fact that $295 is not the total price payable for the goods and that the goods can never be obtained for $295. Even if a reader did notice the words in fine print the overall impression created by the bold assertion of a price of $295 is not likely to be dispelled by the reference to the GST. In my opinion, statement of the price in the form of category II is misleading and deceptive or likely to be so.

Section 53(e) of the Trade Practices Act 29 The ACCC submits that representations in categories I, II and III also contravene s 53(e) of the Trade Practices Act. Because of the view I have expressed concerning the GST component being part of the price, the reasons for my conclusions in relation to s 52, in relation to the statements in categories I, II and III, also lead to the conclusion that the representations in categories I and II also contravene s 53(e) and that those in category III do not.

Sections 53(d) and 53(g) of the Trade Practices Act 30 The ACCC submitted that the conduct referred to in category IV contravened ss 52, 53(d) and 53(g) of the Trade Practices Act. I have accepted that Ms Hicks claimed the respondent had a 'special arrangement' allowing it when quoting a price to specify an amount that is, on my analysis, only part of the price without mention that another part of the price is attributable to GST. This amounts to a claim that the respondent had approval for conduct that would otherwise be in breach of s 52 and s 53(e). There is no doubt that the respondent did not have (and could not have had) such approval. While the cases in which s 53(d) has been successfully invoked (see the cases referred to in Miller's Annotated Trade Practices Act, 23rd edn, at 472-3) generally relate to situations in which the person claimed to be in breach of the section has been claiming (expressly or implicitly) sponsorship, approval or affiliation in a situation that would otherwise involve the tort of passing off, I see no reason why the section should not extend to the circumstances under consideration here. In this respect I am conscious of the views of Lockhart and Gummow JJ in Accounting Systems 2000 (Developments) Limited v CCH Australia Limited (1993) ATPR 41-269 at 41,645 that the Trade Practices Act being of a remedial character 'should be construed so as to give the fullest relief which the fair meaning of its language will allow'. 31 I am not, however, of the view that the conduct in category IV is in breach of s 53(g). The ACCC submitted that Ms Hicks' statement amounted to a false representation that a purchaser of the respondent's goods or services had no right to be provided with a 'GST inclusive price'. For reasons I have already expressed I do not accept that the obligation on the respondent to refrain from misleading or deceptive conduct or from making false representations as to price translates into a right of the purchaser to be given a GST inclusive price. My opinion as to the application of s 53C is not inconsistent with this conclusion. I do not accept that the Trade Practices Act requires that prices always be expressed as a single amount that is on a GST inclusive basis; see [37] below.

Section 53C of the Trade Practices Act 32 The ACCC has alleged that, irrespective of whether the respondent's conduct falls within s 52, in each of categories I, II and III, it is a breach of s 53C. Put simply the ACCC's argument is that the reference to $295 is a reference to 'an amount that, if paid, would constitute a part of the consideration for the supply of the goods'. It was submitted that the 'cash price' for the respondent's basic security system is $295 plus the GST amount of $29.50 making a total of $324.50. Consequently it was submitted the respondent was in breach of the obligation imposed by s 53C. 33 Section 53C was introduced into the Trade Practices Act by the Trade Practices Revision Bill 1986 (Cth). Paragraph 93 of the explanatory memorandum to that Bill states 'the new section 53C prohibits a corporation advertising part only of the consideration payable for goods and services without disclosing the total consideration for which the goods and services may be purchased outright. This provision is directed at a trader advertising that a consumer may buy a product for a low deposit without disclosing the total price payable'. 34 The section was considered in Trade Practices Commission v Autoways Pty Limited (1990) ATPR 41-051. The case was concerned with advertisements for the sale of motor vehicles. The advertisements in question disclosed only the deposit and the weekly payment in respect of the vehicles. In reasons for decision Pincus J noted at 51-676 that the policy of the section is 'to cause advertisers to tell the whole story and at least in one respect - if selling goods on time payment - they must say how much you could buy the goods by paying the cash price. This is likely to be of assistance, particularly to the less sophisticated buyers, in determining whether a purchase is desirable, and also in comparing the desirability of one purchase against that of another.' 35 In Dell at [19] Branson J (with whom I agreed) stated that s 53C: "is concerned with representations with respect to an amount that it is represented would constitute a part of the consideration for the supply of goods or services. A representation that an amount is the whole consideration for the supply of goods and services when in fact it will constitute only part of the consideration falls squarely within the terms of s 53(e); I do not consider that it also falls within the terms of s 53C." 36 The respondent submitted that the section should be confined to circumstances such as those identified by Pincus J and submitted that the section was not intended to apply to a situation such as that presently under consideration. In my view this submission is correct. For the reasons advanced by Branson J (with whom I agreed) the section is directed to representations concerning part-payments for the supply of goods and services not with a representation that an amount is the whole payment; see Dell. 37 For the reasons expressed by Branson J the conduct in category I which I have already found is in breach of s 53(e) is not in breach of s 53C. In that category the representation is that $295 is the whole of the consideration when in fact it constitutes only part. The conduct in categories II and III is different in that, the statement that the price is "$295 plus GST" (irrespective of whether the reference to GST is near or far from the reference to $295) indicates that $295 is part only of the price. That being so, in my opinion, s 53C requires that the cash price for the goods must also be specified. A failure to do so will be in breach of s 53C. Contrary to the ACCC's submissions however, I do not accept that s 53C requires that the cash price be stated as a GST inclusive price. It is not necessary for me to formulate a test to determine if a statement is a statement of cash price in conformity with s 53C. In my opinion, however, a statement to the effect that the price is $295 plus GST of $29.50 would be in conformity with s 53C.

Section 87B of the Trade Practices Act 38 The conduct complained of in categories I and IV consists of representations allegedly made after the respondent had given the undertakings pursuant to s 87B of the Trade Practices Act. The undertakings were given by the respondent on 19 December and accepted by the ACCC on 21 December 2000. Accordingly they took effect from 21 December 2000. With the exception of the Yellow Pages advertising referred to in category IV the conduct complained of and described in each category all took place after 21 December 2000. Having found on the evidence that the conduct complained of took place, and being satisfied that the undertakings were properly given by the respondent and properly accepted by the ACCC it is clear to me that the respondent's conduct is inconsistent with the terms of the written undertakings given pursuant to s 87B. 39 The ACCC seeks orders pursuant to s 87B(4) of the Trade Practices Act; see [11] above. The respondent has submitted that to show that it has breached its undertakings it is necessary to show that it intentionally conducted itself in a manner inconsistent with the undertakings. The ACCC submits that the test is an objective one. In other words, the ACCC submits that intent is not a relevant consideration and that it is sufficient for it to show that the respondent's conduct is inconsistent with a term of the undertakings. 40 I agree with the ACCC's submissions in this regard. Section 87B was introduced into the Trade Practices Act by the Trade Practices Legislation Amendment Bill 1992 (Cth). Paragraph 55 of the explanatory memorandum to that Bill states: 'This provision provides legislative recognition of a practice already adopted by the Commission in appropriate cases. The content of an undertaking will be a matter for agreement between the Commission and the person giving the undertaking.' 41 The purpose of a corporation giving undertakings to the ACCC is, at least in part, to avoid unnecessary litigation by voluntary undertakings that the corporation will not engage in conduct of the type precluded by the terms of the undertakings. It would be strange if the effect of the undertakings were to give the ACCC rights resulting from breach only where the conduct is intentional in circumstances where intention is not an element of the alleged offence under the Trade Practices Act. Such an interpretation would severely limit the efficacy of such undertakings which presumably are designed to prevent the alleged contravening conduct in any form, whether deliberate, inadvertent or otherwise. In any event if it were intended that intention be a necessary element of breach it would be easy for the parties to incorporate this in the undertakings. 42 I therefore find that, to the extent that the respondent's conduct is inconsistent with the terms of the written undertakings given pursuant to s 87B (see [6] above) it is in breach of those undertakings for the purposes of s 87B(4). On the facts as conceded or found it is therefore clear that the respondent has breached both parts of undertaking A(i) in that it has failed to quote prices inclusive of the GST amount and it has otherwise not complied with the Trade Practices Act.

Relief 43 The ACCC seeks declarations that the respondent breached the Trade Practices Act in the promotion of its security systems to the public and injunctions restraining it from the conduct complained of. The ACCC also seeks a number of related orders, including an order that the respondent publish corrective advertising. 44 The ACCC is now satisfied that the respondent has instituted an acceptable trade practices compliance program and modified its advertisements satisfactorily. The ACCC also states that it does not press its application for an order in terms of s 87B(4)(b) directing the respondent to pay to the Commonwealth an amount reasonably attributable to financial benefit it has derived from its breach of the undertakings given.

Corrective advertising 45 The respondent contends that corrective advertising is inappropriate in the circumstances of this case as its pricing policy has changed significantly. Specifically, its basic back to base alarm system is now priced from $399 inclusive of GST. The respondent submits that because of this the corrective advertising sought by the ACCC would itself be likely to mislead or deceive consumers about the price of the respondent's products. 46 I agree with the respondent's submissions concerning the possible confusing effect of corrective advertising at this stage. The purpose of corrective advertising is to protect the public interest and it is not intended to be punitive in nature. In Australian Competition & Consumer Commission v On Clinic Aust Pty Ltd, Men Only Medical Clinic Pty Ltd & Potent-C Clinics (1996) 35 IPR 635Tamberlin J observed that: '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 adverting 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.' 47 I respectfully agree with Tamberlin J's comments which are in line with the established body of judicial reasoning on this point; see also Janssen Pharmaceutical Pty Ltd v Pfizer Pty Ltd (1986) ATPR 40-654, Makita (Australia) Pty Ltd v Black and Decker (Australasia) Pty Ltd (1990) 12 ATPR 41-030 at p.51,477; Australian Competition & Consumer Commission v Hungry Jack's Pty Ltd [1996] FCA 955. 48 The further decision of Tamberlin J in Trade Practices Commission v Optus Communications Pty Ltd (1996) 34 IPR 176 is also apposite. In declining to order corrective advertising his Honour placed weight on the fact that the immediate purpose of the advertising had been spent and that the lapse in time between the misrepresentations and any form of corrective advertising would make that remedy futile and would not advance the protection of customers. 49 The ACCC has not pointed to any persons or class of persons who are presently labouring under an ongoing misapprehension arising from the respondent's misleading advertising. In this case it appears that the only purpose corrective advertising could serve would be to punish the respondent by forcing it to advertise its earlier contraventions of the Trade Practices Act. It is abundantly clear that corrective advertising should not be ordered for this reason and I therefore decline to make any order that the respondent engage in corrective advertising.

Declarations and orders 50 For reasons expressed above I am satisfied that the ACCC is entitled to declarations that: (b) the respondent's conduct in categories I and II contravened ss 52 and 53(e) of the Trade Practices Act; (c) the respondent's conduct in categories II and III contravened s 53C of the Trade Practices Act; (d) the respondent's conduct in category IV contravened ss 52 and 53(d) of the Trade Practices Act; and (e) the respondent has breached undertaking A(i) given on 19 December 2000.

I am also satisfied that the ACCC is entitled to an order that the respondent comply with the undertakings it gave on 19 December 2000 or at least those that are still live undertakings. It would be appropriate for the parties to have the opportunity to agree on the precise form of declarations and orders that should be made in accordance with these reasons. 51 For these reasons I propose to order that: 1. The proceeding be stood over to a date to be fixed for the purpose of making orders including an order or orders as to costs; 2. The parties are to provide to the Associate to Stone J by 28 February 2003 an agreed minute of the declarations and orders to be made (including the order or orders as to costs) and if agreement has not been reached by that date, the minutes of order for which they respectively contend and brief outlines of submissions in support of those orders. I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.

Associate: Dated: 13 January 2003 Counsel for the Applicant: Mr B McClintock QC with Mr R Renehan

Counsel for the Respondent: Mr M Walton SC with Ms E Collins

Solicitor for the Respondent: Formerly Andersen Legal. Since 2 July 2002 Ms J Kelly.