DIRECTOR GENERAL DEPARTMENT OF FAIR TRADING v OLIVER

• 18 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

HULME J Friday, 25 February 2005

DIRECTOR GENERAL FAIR TRADING v Michael Geoffrey OLIVER and 2 ORS JUDGMENT 1 HULME J: By Summons filed on 28 October 2002 the Plaintiff sought orders against each Defendant that is Mr and Mrs Oliver and Australasian Publications and Advertising Pty Ltd (hereinafter referred to as "APA") which, in summary, would restrain them from being engaged in business as a publisher, advertising agent or collector of debts and from a variety of activities such as soliciting the placing of, or seeking payment for, advertising and from seeking payment for any good or service not provided or in advance of it being provided and from making any commercial publication or using the publication names "Statewide Firefighters" and "National Police Bulletin". In common with other claims in this area of law the Plaintiff sought to restrain a wide variety of particular activities which could be said to be associated with those which I have mentioned. 2 When the matter came on for hearing on 18 October last, Mr Oliver appeared and consented to the orders sought. There was no appearance on behalf of Mrs Oliver on that day although I was satisfied that she was aware that the matter was to then proceed and I allowed that to occur. Counsel for the Plaintiff indicated that, "unless there is a change in the status of the company at the end of the proceedings no orders will be sought" against the Third Defendant. No later attention was given to the position of the Third Defendant. 3 The Plaintiff relied on a great deal of written material and, despite the matters referred to in the immediately preceding paragraph, at the conclusion of the hearing which proceeded into a second day, I reserved my decision. Some of the material consisted of affidavits, some of statements and some of other documentary material. Consideration of this material satisfies me of the following. 4 The Third Defendant was the publisher of publications entitled "National Police Bulletin" and "Statewide Firefighters". The publications would not seem to have had any wide circulation. 5 Affidavits from librarians at the Hawkesbury City Council Library, the Parramatta City Library, the Ryde Library and the Blacktown City Council Library establish that neither of the magazines are held in those libraries or in their branches nor have any requests been made of those librarians by representatives of the publications to have the libraries hold copies. 6 An affidavit from a librarian in the Serials Section of the State Library of New South Wales, Ms Richards, deposed to there being an obligation under the Copyright Act on every publisher in New South Wales to deposit a copy of every serial title in the State Library and that searches of the Library's internal database and the National Bibliographic Database have not revealed any record of either publication. Ms Richards said that receipt of the first issue results in an entry into the National Bibliographic Database. 7 Ms Richards also commented on various features of copies of the publications which had been shown to her. Shown by an inspector from the Department of Fair Trading two copies of the National Police Bulletin, Ms Richards observed that neither had on its cover any identifying volume number, issue number or date although inside the front cover of one, there was a reference to "Volume 3, 2003". She said that the absence of any such reference was unusual for a serial publication. 8 Ms Richards also observed that the Bulletins did not display an International Standard Serial Number. An ISSN is issued by the National Library of Australia and by convention is usually printed on the outside or inside of a front cover. Nor did the Bulletin contain any information as to the name of the printer, frequency of publication and in one copy there was no physical address. 9 Ms Richards observed that inside the front cover of one of the copies of the National Police Bulletin it was claimed that the magazine was distributed "Free of Charge throughout Australia to Police Stations, Police Departments, Public Libraries and Medical Centres." She observed that for a publication with such a wide distribution it appeared amateurish, the layout being of low quality, spacing poor and the margins inconsistent. 10 Shown two copies of "Statewide Firefighters", Ms Richards observed that they contained no ISSN and one copy contained no date, volume or issue number or name of printer, frequency of publication and no information with respect to the ACN or ABN numbers of the publisher. She observed that this magazine also seemed of poor quality.

11 There was evidence from the printer of the magazines, a Mr Herbert, showing that the numbers of the magazines printed were as follows:-

National Police Bulletin Date Invoice Description Number Oct 1999 300 Nov 1999 Summer 2000 300 Sep 2000 Vol 3, 2000 300 Nov 2000 Vol 3, 2000 200 Dec 2000 Vol 3, 2000 200 Dec 2000 No. 3, 2000 200 Dec 2000 No. 3, 2000 50 May 2001 180 May 2001 2001 200 May 2001 180 June 2001 Vol 1, 2001 180 June 2001 2001 (NSW) 50 June 2001 All States 65 June 2001 Vol 2001 200 June 2001 250 December 2001 Vol 2, 2001 500 April 2002 Vol 2, 2002 500 August 2002 Volume 2002 1,000 12 The above table reflects 18 invoices. Mr Herbert said that there were 19 occasions of printing the National Police Bulletin between August 1999 and August 2002. "Statewide Firefighters" was printed on 5 occasions, and the corresponding details of its printing were:- Statewide Firefighters Date Invoice Description Number Nov 1999 Summer 2000 250 Dec 1999 Summer 2000 232 June 2001 180 June 2001 150 Nov 2001 330 13 In some other respects the company's operations were on an extended scale. Not unusually its income was of the order of $10,000 to $30,000 per fortnight. 14 The Third Defendant engaged, although it would seem on a commission basis, a number of persons who acted as telemarketers. The company's principal method of operations was for one of its employees to ring someone engaged in a business which did, or was likely to advertise in other publications and falsely represent that there had been some prior arrangement to advertise in either the "Statewide Firefighters" or "National Police Bulletin". Later, and irrespective of whether there had been a denial of any such arrangement, an invoice would be sent seeking payment for such advertising, often accompanied by a proof of the advertisement proposed. Sometimes there would be follow-up calls complaining of non-payment of the amount invoiced. 15 On occasions there would be a representation that the "Statewide Firefighters" or "National Police Bulletin" was associated with, as the case may be, some firefighting organisation or the police. 16 Examples of the evidence of these matters were as follows. A Miss Kerrie Gilles deposed to being the Executive Secretary to the Marketing Director of Johnson & Johnson, Medical. She said that in early October 1997 she received a telephone call from a person who identified himself as James Thomas and conversation to the following effect occurred:-

JT: "James Thomas calling from the National Police Bulletin. Thanks for supporting the police. I will be sending an invoice through to you for the advertising."

KG: "No. You did not speak to me about any advertising."

KG: "No, you must be mistaken. If you send the paperwork to me I will see if I can find out who it is."

JT: "Yes I will. Thank you again for supporting the police." 17 According to Miss Gilles Mr Thomas then hung up and later that day she received a second call from the National Police Bulletin from a male person whose name she did not recall. There was conversation:-

Male "This is the National Police Bulletin. I am just ringing up to let you know that the advertisement is going into the journal and the size of the advertisement will be two columns by 10cm. I also want to let you know that the invoice will be $495. I just want to confirm your mailing address. Is it PO Box 134, North Ryde?"

KG: "Yes, the mailing address is correct but I do not know what you are talking about." 18 Miss Gilles said that the male person immediately hung up the telephone and approximately 2 weeks later she received by post an invoice from National Police Bulletin dated 15 October 1997 for $495.00 together with an advertising proof for Johnson & Johnson Medical. The invoice asserted that Miss Gilles had authorised the advertising. Miss Gilles asserted that she had not done so. 19 Dr Peter Ireland, a dental surgeon, said that on 31 March 1998 he received a telephone call from a male whose name he did not recall and there was conversation as follows:-

Male: "This is the Statewide Fire Fighters calling. Thank you for advertising with the magazine."

PI: "Well I have actually advertised with the New South Wales Police News and that is all the advertising I want unless your magazine is linked in some way." 20 According to Dr Ireland the conversation then ended and he did not authorise any advertising during the conversation. However, on 3 April 1998 he received an invoice/statement from Statewide Fire Fighters for $295 which asserted that Peter Ireland was the authority for the advertising. The invoice was accompanied by an advertising proof which said, inter alia, "Thank you for supporting Statewide Fire Fighters". 21 A Ms McKay said she was the proprietor of a bakery business and on 26 November 1997 received a telephone call from a male person who identified himself as Laurie Phelps who said:-

LP "This is Laurie Phelps calling from the State Wide Fire Fighters. I want to thank you for your support in the past. The Fire Fighters appreciate it. I would now like to check the details of your business, your business name and address. … my superior will ring you back later today to confirm what I have discussed with you." 22 Ms McKay said later that day she received another call from a male who said:- "This is the State Wide Fire Fighters calling. My associate Laurie Phelps spoke to you earlier today. I want to check your business details. I also want to thank you for your support." 23 Ms McKay repeated her business details, the caller said "the cost will be $195" and hung up before Ms McKay had a chance to query what the $195 was for. The effect of her evidence was that in neither conversation did she authorise any advertising. On 1 December she received an invoice from State Wide Fire Fighters for the amount of $295 which invoice showed Laurie Phelps as the sales representative and the person giving authority as Ms McKay. She said that the invoice was accompanied by an advertising proof which had been rewritten from an advertisement placed some months previously in another publication. 24 Mr Harold Courbold said he was a director of Occold Holdings Pty Ltd. In June 1999 he received a telephone call to the following effect:- "Hello my name's Richard Johnson from the State Fire Fighters. I was wondering if your company would be interested in making a contribution for the great job done by our state fire fighters. For $295 your company gets an acknowledging advertisement in the State Fire Fighters Magazine." 25 Mr Courbold said he could not recall whether he agreed to the advertisement or simply said he would consider it but in September received another call from Mr Johnson who said words to the effect "I am just calling to finalise the contribution your company promised to the State Fire Fighters early in the year". Mr Courbold said that after some further conversation Mr Johnson became aggressive and Mr Courbold agreed to make the contribution which was in fact debited to a credit card account on 13 October 1999. In January 2000 Occold received a copy of the State Wide Fire Fighters magazine accompanied by an invoice. Mr Courbold observed that the jacket of the magazine was labelled "Summer 2000" while the front page inside was labelled "Summer 1999". The magazine contained the following disclaimer:- "The Statewide Firefighters is not financially supported by, or associated with any Federal or State Firefighters organisation, Government or similar institution and is no way affiliated with, nor do we seek the aid of any charitable organisation. Revenue through advertising is used to satisfy all costs associated with printing, publishing and distribution of the Statewide Firefighters." 26 There was much other evidence along similar lines. 27 It was submitted on behalf of the Plaintiff that the evidence disclosed a practice of systematic false invoicing and of the making of false representations calculated to encourage the payment of the invoices. It was contended that thereby a variety of provisions of the Fair Trading Act, 1987 were breached. In particular reference was made to sections 42, 44(d), 58(2) and, to a lesser extent, 43(1). So far as is presently relevant, these provide:- 42(1) A person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. 43(1) A supplier shall not, in trade or commerce, in connection with the supply or possible supply of goods or services to a customer, engage in conduct that is, in all the circumstances, unconscionable. 44 A person 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: (a) … (d) falsely represent that a particular person has agreed to acquire goods or services. 58(2) A person shall not, in trade or commerce, assert a right to payment from another person for unsolicited services unless the person asserting the right has reasonable cause to believe that there is a right to payment. 28 Although I do not suggest that no customer agreed to acquire the advertising services offered by the Company or that every discussion by a company employee with every potential customer took a form similar to the above examples, I am satisfied that the manner in which the Third Defendant's business was conducted as described above, if it did not amount to, involved wholesale breaches of each of the above sections. 29 In so concluding, I do not need to rely on the evidence as to the number of copies of the publications which were printed or the evidence as to its circulation. There is much to be said for the view that the existence of the publications at all was simply a device calculated to mislead. 30 There was also evidence of 2 notices pinned to notice boards in the premises occupied by the Third Defendant which notices were available to be read by the Third Defendant's employees and telemarketers generally. Photographs of the notices in evidence are not completely decipherable but one seems clearly to include the following (I set it out as precisely as possible):- "Where does it go to - emergency department librarys, Schools, (indecipherable) free Public Distribution 95,000 copies Quarterly 4 times (indecipherable)

When did we authorise - we contacted you in November last year

How much does fire fighters get - nothing our aim is to keep the Public eye on fire…

Whom authorised this - I don't have that information in front of me. I will have a quick look and ring you back.

How much does it cost - $---.00 including GST & is entirely tax deductible.

Can we cancil? - Yes we are not here to twist your arm Wot is your phone number and address (BullShit (indecipherable)

Where are you based - (Sydney) CBD No more details." 31 A comparison of the terms of this document with the evidence of calls by telemarketers on behalf of the Third Defendant leads to the conclusion that the notice was an instruction or example of what it was the company wished its telemarketers to say in response to not unexpected questions from persons canvassed. The notice aids in reaching the conclusion, as I do, that the misrepresentations and other breaches of the Act that occurred were not accidental or the product of errors on the part of the telemarketers but deliberately orchestrated or concurred in by the Third Defendant and those who controlled it. 32 During the course of the hearing, the First Defendant accepted that he was responsible for the company's activities but contended that his wife was not responsible for what had occurred. I do not accept this latter claim. 33 At all times since its incorporation the Second Defendant was the sole shareholder of the Third Defendant. Between 3 June 1997 and 25 June 1998, the Second Defendant was its sole director and its secretary. 34 She then ceased to occupy these positions but I do not regard that fact of any great significance. After 8 July 2002, one John Kristan was the director and secretary of the company. He had not previously been a director of any company and came to undertake these roles after being approached by the First Defendant in a bar and asked to be a director in return for salaries or fees. Mr Kristan was unemployed at the time. Late in November 2002, Mr Oliver again spoke to Mr Kristan informing the latter that "We are transferring your directorship from Australasian Publications and Advertising Pty Limited to a new company". Mr Kristan said that his knowledge of the operations of both companies was limited to what Mr Oliver told him. In light of this evidence there is no reason to think that any presently significant part of Mrs Oliver's role was taken over by the two other persons who were directors between June 1998 and July 2002. 35 There was other evidence of the Second Defendant's involvement in the administration or activities of the Third Defendant. I need not detail all of it but I mention some. In March 1998, Mrs Oliver leased the company's post office box. According to answers she gave when interviewed on behalf of the Plaintiff, it was she who, at an early stage of the printer's involvement, requested a quote from him and that both the editor and the printer of the magazines took instructions from her husband and herself. 36 It was Mrs Oliver who wrote to Occold Consulting on 16 March 2000 threatening legal action after Mr Corbould wrote to a number of other persons who had apparently advertised in "Statewide Firefighters" suggesting he had been misled. (Although the letter of 16 March purports to have been signed "pp Michael Oliver", a comparison of the handwritten signature with that in Tab 29 to Exhibit LAC 2 indicates that the person signing was Mrs Oliver.) 37 In what seem to have been preliminary discussions prior to the Third Defendant engaging a new bookkeeper, a Mr Brown in August 2002, the Second Defendant provided Mr Brown with information about the company, (although it must be acknowledged that detailed information as to Mr Brown's duties and the company was later provided by Mr Oliver and another bookkeeper). 38 When interviewed on behalf of the Plaintiff and asked what her involvement in the production of the publications was, she replied, "I don't know. I don't know. I do the banking and oversee the staff." However, later Mrs Oliver said that she did not oversee the day to day duties of the telemarketers. Mrs Oliver said also that at the time there were 3 telemarketers employed and 3 girls in collections or administration. 39 The size of the Third Defendant's operation and office also argues in favour of the view that anyone regularly present, as Mrs Oliver seems to have been, must also have had a fair idea of what was occurring. I infer that she must have been aware of the terms of the first notice quoted. The terms of the second pinned on the board also indicate substantial involvement by Mrs Oliver in events within the office. The terms were:- "Australasian Publications & Advertising Pty Ltd 10 Angus Street Meadowbank NSW 2114 Notice to all Administration staff … 3. Absolutely NO PRIVATE INCOMING OR OUTGOING CALLS are to be made unless in the case of an emergency. This rule has been totally ignored by everybody… Michael & Samantha have answered private calls for everybody (on many, many occasions) …" 40 In at least 2000 and early 2001 the Second Defendant seems to have derived income both by way of wages and receipt of other moneys from the Third Defendant or its activities. Documents produced by the First Defendant's bank show that on 19 January 2001, $7,224.80 was withdrawn from the company's account and that the sum represented the total of amounts to be paid to 11 persons, 2 of whom were "Michael" and "Samantha", the latter to receive $541.00. The bank was told that if there were any queries, Samantha was to be telephoned. 41 On 13, 20 and 27 June 2001 respectively, $1,620, $2,460 and $1,475 were deposited to the bank account of the Second Defendant. Details of the makeup of these sums persuade me that the probability is that the funds represented moneys received from persons advertising with the Third Defendant. 42 I am satisfied that Mrs Oliver was at least knowingly concerned in the operations of the Third Defendant and in the systemic contraventions of the Fair Trading Act to which I have referred. 43 Given the extent to which the activities of the Third Defendant contravened the provisions of that Act it is appropriate that injunctive relief be granted. The question arises however as to how wide that should be. 44 The orders sought in the summons were in the following terms:-

1. An order pursuant to s.65 of the Fair Trading Act 1987 that each defendant be permanently restrained from conducting or being engaged in (whether [without in any way limiting the scope of the foregoing] in a personal capacity, as a sole trader, in a partnership, as an employee, through another person, through the agency of another person, through the agency of a chain of other persons, through a company [whether or not that company is one of which the defendant is an officer and whether or not that company is one of which the defendant is a shareholder] through the agency of a company [whether or not that company is one of which the defendant is an officer and whether or not that company is one of which the defendant is a shareholder], or otherwise) any of the following types of businesses: (a) a publisher (in or through any medium, including [without limitation] print, telephonic services, television, radio, the internet an e-mail); (b) advertising agent; (c) collector of debts or purported debts (howsoever arising or allegedly arising)

2. An order pursuant to s.65 of the Fair Trading Act 1987 that each defendant be permanently restrained from conducting or being engaged in (whether [without in any way limiting the scope of the foregoing] in a personal capacity, as a sole trader, in a partnership, as an employee, through another person, through the agency of another person, through the agency of a chain of other persons, through a company [whether or not that company is one of which the defendant is an officer and whether or not that company is one of which the defendant is a shareholder], through the agency of a company [whether or not that company is one of which the defendant is an officer and whether or not that company is one of which the defendant is a shareholder], or otherwise) the following: (a) soliciting the placing of any advertising; (b) invoicing for any advertising: (c) demanding or requesting any payment for any advertising. (e) asserting any right to payment for any advertising; (f) invoicing for payment for any good or service which was not ordered or requested in advance of being provided; (g) demanding or requesting any payment for any good or service which was not ordered or requested in advance of being provided; (h) asserting any right to payment for any good or service which was not ordered or requested in advance being provided; (i) invoicing for payment for any good or service which has not already been provided; (j) demanding or requesting any payment for any good or service which has not already been provided; (k) asserting any right to payment for any good or service which has not already been provided; (l) making any commercial publication (in or through any medium, including [without limitation] print, telephonic services, television, radio, the internet and e-mail); (m) using, or allowing or suffering the use of any person of, the publication names Statewide Fightfighters (sic) and National Police Bulletin or any similar name; (n) training any person in respect of advertising or publishing; (o) training any person working in the advertising industry; (p) training any person working in the publishing industry; (q) offering or providing any consultancy service to any person or business in the advertising industry; (r) offering or providing any consultancy service to any person or business in the publishing industry.

3. Costs. 45 It Is not difficult, when regard is had to the Defendants' method of operations, to see the need for wide ranging constraints being imposed upon them. It is impossible to conclude other than that they formulated and pursued a deliberate plan of dishonesty. There is no evidence of any change of morality or intention to reform. A deal of the methodology employed could be readily adapted to business other than one providing, or purportedly providing, advertising. Experience has shown that repeat offending in this area is not impossible - see e.g. Director-General of the Department of Fair Trading v Sims [1999] NSWSC 1243 at [24]; Commissioner for Fair Trading v Oliver [2004] NSWSC 722 46 On the other hand, the individual Defendants are entitled to earn an income and no order should be made which is wider than necessary. There is no evidence of what fields either of the these Defendants may be trained or have experience in. Thus I am not persuaded that If, for example, Mrs Oliver had worked in publishing all her life, that field of endeavour, in all its manifestations, should be forever closed to her. The difficulty is to formulate orders which, hopefully, will provide adequate protection to the public against further dishonesty and yet not be an unnecessary or oppressive burden on the Defendants. 47 Faced with these considerations, at times judges have imposed limits on the time during which orders should operate. However, such a course seems to me to involve a conclusion as to the likelihood of repetition and that the evidence does not justify any longer restraint. In the circumstances of this case, and largely influenced by my conclusion of deliberate dishonesty, the ease with which such an approach can adapt to changing situations, the absence of evidence of any intention to reform and the absence of any evidence of what other fields of endeavour the Defendants have experience in or may wish to pursue, the conclusion at which I have arrived is that, subject to the qualification mentioned in the following paragraph, I should make the orders sought by the Plaintiff but grant liberty to apply. That liberty is not intended to convert the other orders into purely temporary ones but will permit the Defendants to seek qualifications to the orders in the event that, in circumstances not presently envisaged, the orders prove unnecessarily and unduly restrictive. And even though the First Defendant did not seek such liberty, given the nature of the orders, and the position and interests of the Plaintiff, it seems to me not unfair to the Plaintiff to include such a further order. 48 The orders sought suffer from a degree of prolixity which is unnecessary and accordingly undesirable. While retaining the breadth of relief sought, I have accordingly, somewhat reformulated the wording advanced. Accordingly I order:-

1. That each of the First and Second Defendants be permanently restrained from conducting or being engaged in (whether [without in any way limiting the scope of the foregoing] in a personal capacity, as a sole trader, in a partnership, as an employee, through another person, through the agency of another person, through the agency of a chain of other persons, through a company [whether or not that company is one of which the defendant is an officer and whether or not that company is one of which the defendant is a shareholder] through the agency of a company [whether or not that company is one of which the defendant is an officer and whether or not that company is one of which the defendant is a shareholder], or otherwise) any of the following: (a) a business of publisher (in or through any medium, including [without limitation] print, telephonic services, television, radio, the internet an e-mail); (b) a business of advertising agent; (c) a business of collector of debts or purported debts (howsoever arising or allegedly arising) (d) soliciting the placing of, or invoicing, demanding, requesting, or asserting any right to payment for, any advertising; (e) invoicing for payment for any good or service which was not ordered or requested in advance of being provided or which had not already been provided at the time of such invoicing; (f) demanding or requesting any payment for any good or service which was not ordered or requested in advance of being provided or which had not already been provided at the time of such demand or request; (g) asserting any right to payment for any good or service which was not ordered or requested in advance being provided or which had not already been provided at the time of such asserting; (h) making any commercial publication (in or through any medium, including [without limitation] print, telephonic services, television, radio, the internet and e-mail); (i) using, or allowing or suffering the use of any person of, the publication names Statewide Fightfighters (sic) and National Police Bulletin or any similar name; (j) training any person in respect of advertising or publishing; (k) training any person working in either the advertising or publishing industries; (l) offering or providing any consultancy service to any person or business in the advertising or publishing industries;

2. Grant liberty to the Second and Third Defendants to apply. 49 Given the Plaintiff's attitude vis-a-vis the Third Defendant, referred to in paragraph 2 above, I have not included the Third Defendant in those orders. However, it seems appropriate to give the Plaintiff a further 7 days in which to indicate with finality its attitude to the Third Defendant. Accordingly, I will add to the above orders:-

3. Grant liberty to the Plaintiff to apply within 7 days of these orders for an order against the Third Defendant. 50 There being nothing which appears to argue to the contrary so, the Plaintiff having succeeded, he is entitled to an order for costs. Accordingly I also order:

4. The Second and Third Defendants are to pay the Plaintiff's costs of the proceedings, as agreed or assessed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.