Australian Competition & Consumer Commission v Signature Security Group Pty Limited

Federal Court of Australia|2003-04-29|Before: Stone J

The respondent, during the period January and February 2001, by representing that its security systems were available at specified prices which were exclusive of the goods and services tax ('GST') component, and which made no reference to the GST component payable has, in trade or commerce:

(a) engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 52 of the Trade Practices Act 1974 (Cth) ('Act'); and (b) in connection with the supply or possible supply of its security systems, or in connection with the promotion of the supply or use of its security systems, made false or misleading representations with respect to the price of its security systems in contravention of s 53(e) of the Act.

(b) in connection with the supply or possible supply of its security systems, or in connection with the promotion of the supply or use of its security systems, made false or misleading representations with respect to the price of its security systems in contravention of s 53(e) of the Act; and (c) in connection with the supply or possible supply of its security systems, or in connection with the promotion of the supply or use of its security systems, made a representation with respect to an amount, namely the specified price, that, if paid, would constitute part of the consideration for the supply of the security system, without specifying the cash price for the security system in contravention of s 53C of the Act.

The respondent, during the period July 2000 to February 2001, by representing in brochures distributed by it, in advertisements in the Yellow Pages and in advertisements broadcast on radio stations, that its security systems were available for a specified price 'plus GST' has, in trade or commerce, in connection with the supply or possible supply of its security systems, or in connection with the promotion of the supply or use of its security systems made a representation with respect to an amount, namely the specified price, that, if paid, would constitute part of the consideration for the supply of the security system, without specifying the cash price for the security system in contravention of s 53C of the Act. 4. The respondent, on 12 January 2001, by representing that it had an arrangement which allowed it to quote prices exclusive of GST, when it had no such arrangement, has, in trade or commerce: (a) engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 52 of the Act; and (b) in connection with the supply or possible supply of its security systems, or in connection with the promotion of the supply or use of its security systems, represented that it had an approval that it did not have in contravention of s 53(d) of the Act. 5. That the respondent, by its conduct as set out in Declarations 1, 2 and 3 above, and insofar as such conduct was engaged in after 21 December 2000, has breached a term of the written undertakings given by it to the applicant pursuant to s 87B of the Act, namely that it would ensure that future advertising, price displays or other forms of promotion, not contain GST exclusive pricing and that any price displayed would include a price inclusive of the amount of GST payable and that the GST inclusive price would be given at least equal prominence with the display, if any, of the components of the price. 6. The respondent, by its conduct as set out in Declarations 1, 2 and 3 above, and insofar as such conduct was engaged in after 21 December 2000, has breached a term of the written undertakings given by it to the applicant pursuant to s 87B of the Act, namely that it 'will ensure that when future reference is made to prices and/or fees applicable to the provision of goods and services by Signature Security Group, such fees and/or prices will comply with the Trade Practices Act 1974'.

There be no order that the respondent comply with the written undertakings given by it to the applicant pursuant to s 87B of the Act. 8. The respondent, by itself, its servants or agents be restrained for a period of two years from the date of this order in connection with the supply or possible supply of, or the promotion of the supply of, its security systems, from making representations that its security systems are available at specified prices which are exclusive of the GST component, and which make no reference to the GST component payable. 9. The respondent, by itself, its servants or agents be restrained for a period of two years from the date of this order in connection with the supply or possible supply of, or the promotion of the supply of, its security systems, from specifying prices which are exclusive of GST without also clearly and expressly specifying the amount of GST payable for its security systems. 10. The respondent, by itself, its servants or agents be restrained for a period of two years from the date of this order in connection with the supply or possible supply of, or the promotion of the supply of, its security systems, from making representations that it has an arrangement in place whereby it is allowed to quote prices exclusive of GST.
The respondent pay the applicant's costs of the proceeding. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

BETWEEN: AUSTRALIAN COMPETITION & CONSUMER COMMISSION

background 1 On 13 January 2003 I delivered judgment in this matter finding, in the main, in favour of the applicant (see [2003] FCA 3). I ordered that the parties provide an agreed minute of the declarations and orders to be made (including the order or orders as to costs) in light of my reasons for judgment or, in default of agreement, minutes of order for which they respectively contend and brief outlines of submissions in support of those orders. As the parties were unable to reach agreement, they subsequently provided short minutes of the orders for which they respectively contend and submissions in support of those orders.

reasoning 2 The ACCC initially sought declarations that the respondent breached the Trade Practices Act 1974 (Cth) ('Act')in the promotion of its security systems to the public and injunctions restraining the conduct of which it complained. The ACCC also sought a number of related orders, including an order that the respondent publish corrective advertising. In my reasons for judgment I decided that corrective advertising was not an appropriate remedy in this matter. It is however, now common ground that the Court ought to grant the declaratory relief sought by the applicant. The dispute over the relief to be granted now focuses on the length of any injunctions; the enforcement of a s 87B undertaking; and costs.

Injunctions 3 The applicant seeks injunctions restraining the respondent from engaging in conduct that I have found to be in breach of the Act. The respondent does not oppose this application other than to submit that the injunctive restraint should be limited to two years. The nature of the power to grant an injunction conferred by s 80 of the Act was considered by the Full Court in ICI Australia Operations Pty Limited v Trade Practices Commission (1992) 38 FCR 248. At 268, French J observed that: 'There is room in the statutory framework and the policy that underlies it for an injunction which is intended not to restrain an apprehended repetition of contravening conduct but to deter an offender from repeating the offence. That deterrence is effected by attaching to the repetition of the contravention the range of sanctions available for contempt of court. The possibility remains open, by virtue of s 80(3), that after a suitable period unmarked by further contravention the party restrained may apply to the court to rescind the order. The remedy is flexible and may be applied in service of a variety of functions to support the policy of the Act.' 4 This is not a case where I consider that injunctions are required to restrain further contravention but rather one that falls into the latter category referred to by French J. It is common ground that the respondent has now instituted a trade practices compliance program that is acceptable to the applicant. Moreover, as the respondent pointed out, the conduct that is the subject of the present proceeding occurred more than two years ago and there has been no suggestion of any repetition. In these circumstances, a permanent injunction is not warranted. The remedy under s 80 of the Act is flexible and had the respondent failed to institute appropriate measures to prevent a recurrence of its contravening conduct I may have been more inclined to make such an order leaving it to the respondent to apply to the Court to rescind such an order at some future time. To my mind, however, a period of two years as suggested by the respondent is ample time for injunctive relief to serve the legitimate purpose of deterring a repetition of the offence.

Enforcement of s 87B undertaking 5 In my reasons for judgment in this matter I found that the respondent had breached one of a number of undertakings given on 19 December 2001 under s 87B of the Act. The relevant undertaking, A(i), was to the effect that the respondent would ensure that future advertising and price displays do not contain GST exclusive pricing and that any price displayed be an amount that includes the amount of GST payable and that this price will be given at least equal prominence with the display, if any, of the components of that price. I commented that I was satisfied that the ACCC was entitled to an order that the respondent comply with those of its undertakings that 'are still live undertakings'. I did not make any finding as to which, if any, of the undertakings given by the respondent were 'live'. Perhaps, with hindsight, I should have been more precise in my expression. The reference to a 'live' undertaking was tautologous in that it presupposes that an undertaking to which it applies should continue to bind the respondent. It was not intended to imply that an undertaking should continue to bind the respondent merely because it had been breached. 6 The ACCC now seeks an order directing compliance with undertaking A(i). In addition it seeks additional orders designed to buttress that order. It submits that the undertaking remains extant and that there has been no application by the respondent, pursuant to s 87B(2) to withdraw or vary it. Section 87B(2) provides that a person who has given an undertaking under s 87B(1) may vary or withdraw it at any time but only with the consent of the ACCC. The Act does not entitle the Court to require the ACCC to give consent. The Court does however have a discretion as to the orders it may make if the ACCC seeks an order under s 87B(4) on the basis that a person has breached an undertaking given under s 87B(1). In the present circumstances it is not necessary for me to decide if the circumstances in which the ACCC refused to consent to the withdrawal or variation of an undertaking might be relevant to the exercise of that discretion. 7 The undertakings for which s 87 provides may be given in a variety of circumstances. For example they may be given for the purpose of obtaining an authorisation under s 88(9) of the Act; re QIW Ltd (1995) 132 ALR 225. They may be given in order to settle a dispute between the ACCC and another party as to alleged infringements of the Act. It is a matter for the ACCC as to whether it accepts undertakings (TPC v Cue Design Pty Ltd (1996) ATPR 41-475) even if its refusal to do so may be taken into account by the Court in some circumstances; ACCC v Monza Imports Pty Ltd [2001] FCA 1455. As the independent statutory body charged with the administration of the Act there may be good reasons for the ACCC refusing to accept an undertaking and electing to pursue a matter in the courts. 8 Similarly s 87 does not preclude the ACCC commencing proceedings against a person who has given an undertaking, even if the person is abiding by that undertaking. Nevertheless the ability of the ACCC to accept undertakings, and to seek orders under s 87B(4) if they are breached, is an important aspect of its ability to regulate behaviour that it believes is contrary to the Act without resort to litigation. An undertaking may be given for that purpose in circumstances where there is a genuine dispute as to whether, as a matter of law, the conduct complained of is in contravention of the Act. In such a case a person may refuse to give an undertaking leaving the ACCC to decide if it wishes to commence proceedings. 9 I am satisfied as to the enforceability of undertakings given under s 87B where there is a dispute that the parties have elected to resolve by undertakings rather than in proceedings before the Court. I am not convinced however that the section was intended to apply to undertakings in circumstances such as this where the controversy between the parties has been resolved by the Court and where the effect of enforcing an undertaking would be to impose on a party obligations in excess of those imposed by the Act. Even if such an order is permitted under s 87B(4)(a), in the exercise of my discretion I would decline to make it.

Costs 10 It is trite to say that costs are in the discretion of the court and that ordinarily costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order; see Hughes v Western Australian Cricket Association (1986) ATPR 40-748 at 48,136 per Toohey J. 11 The applicant, while not entirely successful, was substantially successful in this litigation. The applicant outlined four categories of conduct which allegedly breached certain provisions of the Act, which are set out at par [8] of my initial judgment as well as breaches of s 87B undertakings. For each category the respondent's conduct was found to have breached at least one section of the Act, although not in every case all sections put forward by the ACCC. The respondent was also found to have breached the s 87B undertakings it gave to the applicant. Ultimately the respondent was found to have breached ss 52, 52(d), 53(e), 53C and an undertaking it gave pursuant to s 87B(4) of the Act. In the absence of special circumstances justifying a different order it is appropriate that the respondent should pay the ACCC's costs. 12 The respondent submits, however that there are special circumstances here that justify a departure from the usual course. An affidavit of Ms Joanne Kelly, sworn on 26 February 2003 and filed on 10 March 2003 annexes a series of open and without prejudice correspondence between the parties' solicitors in the period from 16 March 2001 and 8 June 2001. The correspondence outlines the respondent's attempts to settle the proceeding, primarily by way of providing certain undertakings to the court, albeit without admissions. On 21 May 2001 the respondent offered to provide further undertakings without admissions but on the basis of the ACCC undertaking to the respondent that it would not take any prosecution proceedings against the respondent in relation to its past conduct. That offer was rejected by the ACCC. The respondent alleges that the ACCC's refusal to accept its undertakings should be taken into account in the respondent's favour in formulating any costs order in this proceeding and that consequently each party should bear its own costs of the proceeding. 13 I do not accept this submission which overlooks the ACCC's responsibility as the independent statutory body charged with the administration of the Act. The ACCC is not in the same position as a private litigant and there may well be good reasons of public interest (that would not apply between private litigants) why it might refuse to settle a matter; see the comments of Carr J in ACCC v Goldy Motors Pty Limited (2001) ATPR 41-801 at [34]. I see no reason why, in this case, the usual rule as to costs should not apply and for this reason I will order that the respondent pay the ACCC's costs. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.

Associate: Dated: 29 April 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.

Trade Practices Act 1974(Cth)ss 52, 53, 53C, 87B

At a glance

Court

Decision date

Before

Source

Judgment (15 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (4)