Commissioner for Fair Trading & anor v H.M.S. Direct Limited & ors

CATCHWORDS : FAIR TRADING ACT - STATUTORY INJUNCTION - FOREIGN CORPORATIONS AND INDIVIDUALS FORWARDING MAIL TO NEW SOUTH WALES - DECEPTIVE AND MISLEADING CONTENT - INTERCEPTION OF MATERIAL - PREVENTION OF LOSS BY POTENTIAL VICTIMS - DECLARATORY RELIEF - UTILITY OF FURTHER ORDERS LEGISLATION CITED : Fair Trading Act 1987 ACCC v IMB Group P/Ltd 1999 ATPR 41-688 CASES CITED : ACCC v Goldy Motors P/Ltd 2001 ATPR 41-801 Director General, Dept of Fair Trading v Boss Communications Corp & Ors (File S11146/01) PARTIES : Commissioner for Fair Trading, Department of Commerce v H.M.S. Direct Limited, Hallstone Products Pty Limited and David Stucky FILE NUMBER(S) : SC 10759/03 COUNSEL : P. Renehan (Plaintiff) No appearances (Defendants) SOLICITORS : D.I. Catt (Plaintiff)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

10759/03 - COMMISSIONER FOR FAIR TRADING, DEPARTMENT OF COMMERCE v H.M.S. DIRECT LIMITED, HALLSTONE PRODUCTS PTY LIMITED and DAVID STUCKY.

1 HIS HONOUR: This is a summons brought by the Commissioner for Fair Trading of the Department of Commerce, who was formerly the Director General of the Department of Fair Trading. Proceedings are brought pursuant to the Fair Trading Act 1987. 2 The summons is supported by voluminous affidavit material, and there is no need to refer to that in detail. It suffices to observe that there has been received in New South Wales a considerable amount of mail emanating, so the evidence demonstrates, from two corporations, the first and second defendants, HMS Direct Limited and Hallstone Products Pty Limited respectively, and a third defendant, David Stucky, described and identified as holding most of the significant offices in those corporations. The corporations and Mr Stucky are resident in Canada. 3 The content of the material which has been lawfully examined before delivery demonstrates that there is constituted by the despatchers in each instance conduct in contravention of s 42 of the Fair Trading Act. That section prohibits conduct which is misleading or deceptive. 4 The defendants have not appeared in answer to the summons. There has been some correspondence between the department and solicitors apparently instructed for limited purposes on behalf of the defendants. Expressly, they are not instructed to appear on the summons. 5 The plaintiff Commissioner seeks orders of four types. The first type is declaratory, and as I have indicated in the course of the hearing, I am persuaded that such orders may be made and should be made. It is clearly in the public interest that such declarations be made. In helpful submissions by Mr Renehan of counsel, I have been taken to several analogous cases under Federal legislation, and I would respectfully adopt these observations. 6 In ACCC v IMB Group Pty Limited 1999 ATPR 41-688, Drummond J observed: "Proceedings brought by the ACCC, as well as by private litigants alleging contraventions of the provisions of the Trade Practices Act here in question, do not involve matters concerned only with the private rights of the parties to the particular litigation. …….

It would still be open to the Court, given the public interest nature of the proceedings brought by the ACCC, to make declarations that conduct to which the Respondents were involved in the past did contravene one or other of the provisions of the Trade Practices Act relied on: the Respondents' activities were directed to a large number of members of the public and were carried on over a significant period of time. They attracted (and still appear to attract) widespread public support. If those activities do involve contraventions of the Trade Practices act, there is in my opinion a legitimate public interest to be vindicated by the ACCC pursuing the case to judgment with a view to obtaining a judicial pronouncement that the Respondents' activities did infringe the Act whether or not the circumstances are such as to require anything more than the making of declarations to that effect.

In ACCC v Goldy Motors Pty Limited 2001 ATPR 41-801, Carr J wrote: "I think that there are sufficient consequences flowing from the making of the disputed declarations in this matter to warrant making the orders sought. They will serve to vindicate the Applicant's claim that the Respondent has contravened section 53(g)." The provisions of the Trade Practices Act are relevantly mirrored in the Fair Trading Act.

7 The second type of order is what has come to be called statutory injunction. They are authorised by s65 of the Fair Trading Act. The third type of order relates to the destruction of now intercepted mail, the volume of which is considerable. One group is said to amount to 198,000 items and another group some 5,000 items. 8 The fourth type of order sought is for costs. 9 I have hesitated about making orders of the second and third types, by reason of the absence of the defendants from the jurisdiction and the unlikelihood of their coming within it. 10 In response to my inquiry about precedent, attention was drawn to Director General, Department of Fair Trading v Boss Communications Corp & Ors (File S11146/2001) where Canadian corporations and residents were involved. The issues were somewhat different but injunctions were ordered against the foreign corporation pursuant to s65. The defendants did not appear and orders were made in accordance with short minutes contended for by the plaintiff. No reasons for judgment were recorded. 11 I am persuaded that making orders is not futile, for the reason that disobedience potentially could be the subject of proceedings to punish for civil contempt, and one of the remedies available would be the imposition of a fine. 12 A fine, pursuant to various legislative and regulatory structures can be converted into a judgment for the sum involved, and there are complementary facilities between courts of nations such as Australia and Canada whereby such judgments can be enforced. I am therefore persuaded that it is appropriate to make the injunctive orders. 13 There is specific power under s 72(1) vested in the Court to make orders where there is a finding that there is a likely sustaining by some person of loss or damage, and it is appropriate as against the person, in this case the three defendants, who engaged in the conduct, to make orders to reduce loss or damage to the firstmentioned person. Such would potentially be sustained by response to invitations in the mailed material to forward sums of money to the despatcher. 14 The proposal is that I order them to destroy the unsolicited material currently held in New South Wales. The practicalities against them so doing are obvious, but there is no reason to expect that they cannot appoint agents for this purpose, and indeed counsel for the plaintiff has indicated that his client would be willing to assist in achieving that aim. 15 I should observe that the mail is presently under the control of the plaintiff, having been passed to it by Australia Post authorities. I also observe that the occasions on which the Australia Post can destroy intercepted mail are circumscribed by statute, and the present circumstances are not within the scope of them. 16 Given the nature of the misleading and deceptive conduct, and the range of it, which is broadly described in some circles as a mail scam, I am persuaded not only of the misleading and deceptive conduct in the material to date, but that injunctive orders should be made with a view to preventing further conduct of that nature. 17 Accordingly, I make orders in accordance with the short minutes attached to Mr Renehan's submission, viz:

1. that the sending of certain unsolicited mail by the First Defendant, H.M.S. Direct Limited, from Canada to Sydney for distribution to addressees in New South Wales and elsewhere, being the unsolicited mail produced by Australia Post to the Plaintiff pursuant to Notices to Produce dated 29 November 2002 and 31 January 2003, under the names "XPress Priority" and "Express Class - Office of Property Transfer", constituted a contravention of section 42 of the Fair Trading Act 1987 ('the "Act").

2. that the sending of certain unsolicited mail by the Second Defendant, Hallstone Products Limited, from Canada to Sydney for distribution to addressees in New South Wales and elsewhere, being the unsolicited mail produced by Australia Post to the Plaintiff pursuant to Notices to Produce dated 29 November 2002 and 31 January 2003, under the names "XPress Priority" and "Express Class - Office of Property Transfer", constituted a contravention of section 42 of the Act.

3. that the First Defendant, H.M.S. Direct Limited, by itself, its servants or agents, be restrained from sending unsolicited mail to Sydney for distribution to addressees in New South Wales or elsewhere, where: (i) such unsolicited mail involves the sale or offer for sale of one of a range of goods and/or benefits; and (ii) such sale or offer for sale is subject to payment before receipt of such goods and/or benefits and the payment gives rise to an entitlement to receive a particular good or benefit.

4. that the Second Defendant, Hallstone Products Limited, by itself, its servants or agents, be restrained from sending unsolicited mail to Sydney for distribution to addressees in New South Wales or elsewhere, where: (i) such unsolicited mail involves the sale or offer for sale of one of a range of goods and/or benefits; and (ii) such sale or offer for sale is subject to payment before receipt of such goods and/or benefits and the payment gives rise to an entitlement to receive a particular good or benefit. 5. that the Third Defendant, David Stucky, by himself, his servants or agents, or through any corporation or by any other means, be restrained from sending unsolicited mail to Sydney for distribution to addressees in New South Wales or elsewhere, where: (i) such unsolicited mail involves the sale or offer for sale of one of a range of goods and/or benefits; and (ii) such sale or offer for sale is subject to payment before receipt of such goods and/or benefits and the payment gives rise to an entitlement to receive a particular good or benefit. 6. that the Defendants, in New South Wales, destroy the unsolicited mail currently held by the Plaintiff under the names "XPress Priority" and "Express Class - Office of Property Transfer". 7. that the Defendants pay the Plaintiff's costs. **********

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