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[1985] FCA 399
General information, not legal advice.
Federal Court of Australia
1985-08-21
Neaves J
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CATCHWORDS TRADE PRACTICES - Consumer protection - Prosecutions - - Advertisements promoting tennis tournament - False
representations that services of a particular quality - Pleas of guilty - Factors relevant to penalty.
Nos. ACT G 57, 59, 61, 83, 85, 87, 89, 91. 93, 95, 97, 99, 102, 103, 105, 180, 182, 184, 186, 188, 190, 192, 194, 196, 198, 200 and 202 of 1984
MICHAEL JOHN KILEY v. INTERNATIONAL MANAGEMENT GROUP OF AMERICA PTY. LIMITED
JUDGE MAKING ORDER : Neaves J. DATE OF ORDER : 21 August 1985 WHERE MADE : Canberra
The fines be paid to the District Registrar of the Court within 21 days from the date of this order.
The derendant Lysfar Pty. Limited pay the costs of che prosecutor of and incidental to the proceedings in respect of the otfences of which
Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
BETWEEN : MICHAEL JOHN KILEY Prosecutor AND: INTERNATIONAL MANAGEMENT GROUP
JUDGE MAKING ORDER 3 Neaves J. DATE OF ORDER ? 21 August 1985 WHERE MADE Canberra
The defendant International Management Group of America Pty. Limited be convicted of an offence against sections 53(aa) and 79 of the Trade Practices Act 1974 being the offence alleged in
The defendant International Management Group of America Pty. Limited pay a fine of $2,000 in respect of that offence.
The fine be paid to the District Registrar of the Court within 21 days from the date of this order.
The defendant International Management Group of America Pty. Limited pay the costs of the
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA Nos. ACT G 57, 59, 61, 83. 85, 87, 89, 91, 93. 95, 97, 99, 102, 103, 105,
} ) AUSTRALIAN CAPITAL TERRITORY ) ) 180. 182, 184, 186, 188, ) ) )
BETWEEN : MICHAEL JOHN KILEY Prosecutor AND: INTERNATIONAL MANAGEMENT GROUP
Prosecutions have been brought in the Court pursuant
to sections 79 and 163 of the Trade Practices Act 1974 ("the
Act") against Lysfar Pty. Limited and International Management Group of America Pty. Limited in respect of contraventions of
the provisions of section 53 of the Act which, so far as
"A corporation shall not, in trade yx commerce, in connexion with the supply or possible supply of .... services or in connexion with the promotion by any means of the supply or use of .... services -
(aa) falsely represent that services are of a particular standard, quality or grade;
Lysfar Pty. Limited is charged with 27 offences, International
The defendants pleaded guilty to the charges against
them and the proceedings against both defendants were, by
The prosecutions arise out of a series of advertisements which were published in the "Canberra Times" newspaper between 24 August and 16 November 1983 (both dates inclusive) promoting @ tennis tournament called the Rio International Challenge which was to be held, and which was in fact held, at the National Indoor Sports Centre at Bruce in
the Australian Capital Territory on 24, 25 and 26 November
Each of the charges alleges that the defendant falsely represented in a specified advertisement published in the "Canberra Times" that the Rio International Challenge would be of a particular quality namely that "Ivan Lendl would play John McEnroe in a tennis match on each of the three nights of the said Rio International Challenge whereas the said Ivan Lendl and John McEnroe were scheduled to play each other on one only of the three nights of the competition which comprised the said
Lysfar Pty. Limited ("Lysfar") was incorporated in the Australian Capital Territory on 11 February 1982. It was
apparently a shelf company. As from 1 March 1982 Coralie Faye Wood and Edgar dames Hutchins became its only shareholders and directors and have remained such at all times since that date, The company's business consists in the promotion by advertisement in the press and otherwise of theatrical and
other functions and events taking place in the Australian
Capital Territory and is said to be the major such business in the Territory. The company continued the business which had previously been conducted in partnership over a period of some
10 years by its present shareholders and directors.
International Management Group of America Pty. Limited ("I.M.G.") is a subsidiary of a company incorporated in the
United States of America. Its business consists, in the main,
of managing sporting personalities and entertainers and, ona smaller scale, the promotion of sporting events. It has carried on business in Australia for approximately 6 years. It was' the organiser of the Rio International Challenge, that
tournament being sponsored by Rio, a division of Dunlop Olympic
I.M.G, antered into a contract with Lysfar under which the latter company undertook, in relation to the Rio
International Challenge, to arrange press conferences, to
publish advertisements and to provide other related promotional services. Me James Erskine, a director of I1.M.C., informed officers of the Trade Practices Commission at an interview on 4 July 1984 in relation to the matter that the terms of the contractual arrangement hetween 1.M.G. and Lysfar provided for
the payment to Lysfar of a fee of $3,000 plus costs incurred.
Mr Erskine also said that on 26 April 1983 a meeting
was held at which Miss Wood, Mr Hutchins, Mr Graham Hannan, an employee of I.M.G., and himself were present. Miss Wood and Mr Hutchins were then informed that Mr John McEnroe and Mr Ivan Lendl and two other top tennis players would play each other in a round-robin singles competition in Canberra. Ie was only ever envisaged that Mr McEnroe and Mr Lendl would play against
On 22 August 1983 4 luncheon for the press was held at which some detarls of the tennis tournament were announced.
What was called a press kit or handout was supplied by I.M.c. to those attending. The following extract 1s taken from one of
"Rio is pleased to announce their sponsorship for the third year of the RIO INTERNATIONAL CHALLENGE.
To be played as a round-robin four-man tournament, Rio is pleased to announce that the 1983 Challende will feature a clash between the two giants of world Tennis, John McEnroe and Ivan Lendl,
The Fivalry between these two great plavers is now legendary and their meeting in Canberra will be yet another shot in the psychological warfare that these two have conducted over the last two years.
Both McEnroe, the world's No.1 player and current Wimbledon Champion, and Ivan Lendl, the world's No.2 ranked player are using the event as part of their preparation for their attack on the 1983
Iwo further world class players will join McEnroe and Lendl to complete the field. The announcement of these players will take place after the U.S. Open.
The Rio International Challenge will be played on Thursday 24, Friday 25 and Saturday 26 November, with play commencing at 7.30 p.m. It will be televised nationally by the Seven Network.
Prizemoney for this year's Rio International Challenge has been dramatically increased to $100,000 with players competing for a first prize of $50,000.
Another document included in the kit read as follows - ""McENROE v. LENDL
tennis-Czechoslovakia's Ivan Lendl holds a7 - 6 .advantage over John McEnroe in career head to head matches.
Lendl dominated McEnroe in 1982 winning all four contests:
semi final of Volvo Masters final of WCT finais (Dallas) semi final of Canadian Open semi final of U.S. Open
winning 3 out of 4 contests. After losing to Lendl in the final of the Volvo Masters, he won their
final of U.S. Pro Indoors final of WCT finals (Dallas) semi final at Wimbledon
The stage is now set for these two champions to continue their rivalry in New York, Canberra and Melbourne.
Lendl more than ever is determined to regain the momentum he has lost in 1983 and McEnroe is equally determined to maintain his world number one
advertisements appeared in the "Canberra Times". Evidence was given by Mr William Brassell, who was at the time employed by Lysfar as a publicity officer, that he was present at the press luncheon on 22 August 1983 and that at that time or immediately thereafter he was handed by Mr Hannan a graphic artist's rough
sketch to be used as the basis for advertising material. That
sketch bore the words "The greatest clash outside Parliament" above line drawings of faces representing Messrs McEnroe and Lendl and below those representations the words "Be there Nov. 25, 26, 27" and "Rio International Challenge". Mr Erskine, in his interview with officers of the Trade Practices Commission on 4 July 1984, stated that, while I.M.G. did not authorise any particular advertisement to be published, it did provide
advertising copy and information to be included in the
Mr Brassell added additional wording to the graphic artist's rough sketch, altered the dates of the tournament and composed the layout of the advertisement. He then arranged for the advertisement to be published on 24 August 1983. The wording appearing below the facial representations in the
"LENDL v McENROE NATIONAL INDOOR ARENA Be there Nov 24, 25 26 John McEnroe and Ivan Lendl will face each other here
in Canberra over three gruelling days. There'1ll be no love lost as each player fights for his reputation.
Together with two other champions, they'1ll turn on the best tennis this city has seen."
The words "LENDL v McENROE" were in large bliock type and were
The nightly starting time of play in the tournament was omitted from the advertisement published on 24 August 1983. In advertisements subsequently published that information was added. The format of the advertisement was changed so that the words ""LENDL v McENROE" were inserted, again in prominent block type. between the line drawings of the two faces. In the same space and immediately below the players' names were the words "NIGHTLY AT 7.30". The following letterpress which had appeared in the first advertisement was deleted from the next
two advertisements which were published on 27 and 31 August
"John McEnroe and Ivan Lendl will face each other here in Canberra over three qruelling days. There'1ll be no love lost as each player fights for his reputation."
It is clear that those words were deleted solely to reduce the
Advertisements also appeared in the "Canberra Times" on 3, 7, 10, 14, 17, 21, 24 and 28 September 1983 andl, 5, 6, 8 and 12 October 1983. Those advertisements were similar in
format and wording to the advertisements published on 27 and 31 August 1983 but with the deletion of the following letterpress
"Together with two other champions, they'1ll turn on the best tennis this city has seen."
The purpose ain deleting those words was, again, to reduce the
Further changes were made in the form of advertisement that was published on 15, 19, 20, 22, 26 and 29 October 1983 and 2, 5 and 10 November 1983. Those advertisements included words to the effect that after the singles qame each night
there would be a doubles match featuring members of the
The wording was again altered in the advertisements published on 12 and 16 November 1983. Those advertisements followed the same general format as those lastly referred to in that they uncluded references to a doubles match to be played each night but they included, after the words "LENDL v McENROE"
and the reference to the time and place of the tournament, the
following - "IN A ROUND-ROBIN COMPETITION WITH TWO OTHER INTERNATIONAL PLAYERS" The advertisements, however, still contained the words
The change in the wording of the advertisement to refer toa round-robin competition took place tollowing a complaint to Miss Wood by an officer of the Consumer Affairs Bureau of the Department of Territories and Local Government by telephone on 9 November 1983. That complaint was also the subject of a
Lysfar is charged in respect of each of the 27 advertisements to which I have referred. I.M.G. is charged in
respect of the advertisement which was published on 24 August
Mr Brassell was informed on 16 November 1983 by an officer of the Consumer Affairs Bureau that the form of the advertisement was still unsatisfactory. Thereafter the advertisement was altered so as to contain the names of the four singles players who were to participate in the round-robin competition and, in the case of the advertisements published on 23, 24, 25 and 26 November 1983, the names of the players who were to oppose each other in each singles match. I am left with the impression that Mr Brassell did not, even on 16
November 1983, appreciate the respects in which the
advertisements were misleading and that the form of the advertisements which were published after that date was
suggested by the officer of the Consumer Affairs Bureau.
i have already referred to what Mr Erskine said to Miss Wood and Mr Hutchins on 25 April 1983 and to the material appearing in the. press kit issued on 22 August 1983. Miss Wood and Mr Hutchins were questioned by officers of the Trade Practices Commission in relation to the matter on 20 February 1984. "It 1s clear from what then took place that certainly by 22 August 1983, that is to say before any of the advertisements were published, 1t was not the understanding of either Miss Wood ot Mr Hutchins that Mr McEnroe and Mr Lendl would play each other a game of singles tennis on each night of the tournament. Mr Hutchins also said that the draw was to be arranged by I.M.G., his understanding being that Mr McEnroe
would play Mr Lendl on the Thursday night, 24 November 1983.
Mr Brassell agreed Chat it was always his understanding that, although Mr McEnroe and Mr Lendl would play on each night of the tournament, they would only play each other once during the tournament. He said that it was
intended, from the beginning, that there be two other singles
players in the tournament but their names did not become known to him until much closer to the opening date of the tournament. He also said that it was intended that Messrs McEnroe and Lendl would meet on the Thursday night, 24 November 1983, but that Mr McEnroe declined to play against Mr Lendl on that night
because of illness. The draw was changed a few days before the
opening of the competition and the match between those two players was then scheduled for Saturday night, 26 November
When 16 became apparent that Mr McEnroé and Mr Lendl would not be playing against each other on 24 November 1983 but on 26 November 1983 the public was informed on 22 and 23 November 1983 by advertisements in "the "Canferra Times" and through the news service of television station CTC 7 of the change in the draw. Patrons who had purchased tickets for the Thursday night were not advised that they couid return their tickets and obtain a refund if they were dissatisfied with the changed draw. However, patrons who took the initiative and complained were given the option of doing so. A few patrons, about 6 in all, took advantage of that option. A request for a refund made after the event by a person who had attended the matches on 24 November 1983 and complained that those matches
did not include a match between Mr McEnroe and Mr Lendl was
Mr Brassell, in his evidence, said that he was not informed that the tournament was to take the form of a round-robin competition until some time after the press luncheon on 22 August 1983 and by that time a number of the advertisements had been published. He agreed, however, that the press kit, a copy of which he received on 22 August 1983, clearly referred to the tournament as a round-robin tournament. His only explanation was that he could not have read the documents in the press kit properly and, in any event, he knew
nothing about tennis and did not understand how a round-robin
fompetition wags played. H to what a round-robin competition wags until some time later when 1t came to his attention that the tournament was, in fact, to be a round-robin competition. If did not find his evidence on this aspect of the matter convincing. I think he was aware. at all times that it was to be a round-robin competition though
I accept that he may not have fully appreciated what a
Mr Brassell also said that in preparing the first advertisement he used the material contained in the press kit.
He said that he took the sentence used in the advertisement, namely "John McEnroe and Ivan Lendl will face each other here
in Canberra over three gruelling days", from the documents in
that kit. However, he was unable to show from an examination of those documents where those words appeared. He denied that they were his own words and identified their source as being an employee of I.M.G. That that was their source was not disputed by I.M.G.
The capacity of the National Indoor Sports Centre as set up for the tournament was in excess of 3,500 persons. The number of tickets sold was 10,054 being 3,402 for the Thursday night, 3,106 for the Friday night and 3,546 for the Saturday night. The prices charged were $15.10 for a single ticket and $37.60 for a family ticket admitting 2 adults and 2 children,
Group bookings could be made at the concessional rate of 311.90
per ticket. The gross takings were said by the prosecution to be in the region of $150,000. Counsel for the defendants said that this figure was too hiagh but no details of the actual
Following enquiries into the matter by officers of the Trade Practices Commission in February 1984 advertisements were placed in the "Canberra Times" on 2 and 5 May 1984. The advertisements stated that, 1f a ticket had been purchased for Friday, 25 November 1983 in the mistaken belief that a match would then be played between Mr McEnroe and Mr Lendl and the ticket holder was dissatisfied because that match did not take place on that night, a refund of the price paid would be made or, alternatively, the ticket holder might receive a free ticket for a tournament featuring leading tennis players to be held in Canberra in November 1984. To take advantage of the offer a ticket holder was required to produce his ticket butt or provide a statutory declaration attesting to the fact that he attended the tournament on 25 November 1983 and was dissatisfied. Some 18 persons or organizations claimed a refund in respect of tickets purchased and some 12 other persons accepted replacement tickets. No similar offer was made in respect of dissatisfied patrons who attended on
matters which he submitted should be taken into account in
witigation. He relied on the circumstance that neither of the defendants and neither of the directors of Lysfar had been
convicted of any offence against the Trade Practices Act 1974
oy of any similar offence. He referred to Lysfar as a small proprietary company but no material as to its financial affairs was put before the Court. He also submitted that neither defendant had engaged in any deliberate attempt to mislead the public or to lead the public to believe that Messrs McEnroe and Lendl were to play each other on each night. He also referred to the fact that both defendants had pleaded guilty, thus avoiding a lengthy and potentially expensive hearing. It was also submitted that the series of advertisements should be seen as a single course of conduct. He also referred to the amendments made to the form of advertisement after complaint was made by the Consumer Affairs Bureau and to the small number of persons who sought refunds. Reliance was also placed on the
moderately small outlay involved in purchasing tickets for the
It was also submitted for the defendants that anyone interested in, and with a knowledge of, tennis would not have been misled into believing that Messrs McEnroe and Lendl were to play each other on each night. This submission postulates that the reader of the advertisements knew that the tournament was to be a round-robin competition but those words did not
appear in any of the advertisements until the one published on
12 November 1983 and they were only inserted because a
complaint had been wade that the prior advertisements were
The matters to be taken into account in fixing the appropriate penalty for a@ contravention of the consumer protection provisions of the Act must, of course, depend upon the circumstances of the particular case. Helpful guidance is, however, to be found in what has been said ina number of
decisions of this Court. In Eva v. Mazda Motors (Sales) Pty.
Limited (1977) ATPR 40-020 Smithers J. at p.17, 309 referred to
the following as relevant factors in respect of a contravention
(a) The importance of the untrue statements in relation to any transaction which may possibly proceed under the influence of the incorrect representation;
{b) The degree that the representation departs from the truth;
(c) The degree of wilfulness or carelessness in the making of the incorrect
(d) The extent that the representation was disseminated;
(e) Whether any and what efforts have been made to correct any false impressions which may have been created; and
See also Dawson v. World Travel Headquarters Pty. Limited (1981) ATPR 40-193 (Fisher J.) at p.42, 632. Another factor is the deterrent effect of any penalty imposed. The penalty,
however, mugt not be go high as to be oppressive in the
I have taken into consideration the matters urged on the defendants' behalf by their counsel. Nevertheless it would not be proper, in my opinion, to treat the defendants' conduct as amounting to anything less than serious breaches of the Act. The advertisements conveyed in the clearest terms that Messrs McEnroe and Lendl were to play each other on each of the three nights of the tournament - indeed they are capable of no other meaning. They were totally inapt to convey to the public that four singles players were to compete in a round-robin competition. The first advertisement, that published on 24 August 1983, expressly stated that those players would "face each other .... over three gruelling days" and, although those words did not appear in the later advertisements, the message that they conveyed to the reader, was, to my mind, to the same
potential patrons that Messrs McEnroe and Lendl would play each other on each of the three nights would obviously be helpful in promoting the tournament. I find it hard to accept that the advertisements took the form they did because of Mr Brassell's ignorance or confusion as to the form of the competition
contemplated. After all, it was fairly clearly set out in the
documents comprising the press kit and, if he was confused as
to what was involved in a round-robin competition, it would not have been difficult to find out. However, having said that, I am prepared to deal with the matter on the basis that Mr Brassell did not deliberately set out to mislead the public but was guilty of a high degree of carelessness in failing to ensure that the advertisements for which he was responsible did not contain representations that were false. I have not overlooked that I.M.G. accepted that the words which I have quoted from the first advertisement were supplied to Mr
As neither Miss Wood nor Mr Hutchins gave evidence it is not possible to say what part they played in promoting the tournament. Both were, however, present at the meeting with Mr Erskine on 26 April 1983 when they were made aware of the form the competition would take. It is fair to say that neither of them appears to have taken any initiative to have the advertisements corrected. This may be explained in the case of Mr Hutchins by the absence of any evidence that he saw the advertisements. Miss Wood, however, had her attention directed to them by an officer of the Consumer Affairs Bureau. It was following that complaint that Mr Brassell made some changes to the form of the advertisement but they were changes which left the advertisement in a misleading form. After the tournament had concluded Miss Wood addressed a letter dated 2 December 1983 to the Consumer Affairs Bureau commenting
generally on the complaint that had been made. The letter
failed to deal adequately with the real cause of complaint and did not acknowledge that she, as a principal in Lysfar engaged in the conduct of its business, had any responsibility in the matter. bd
clearly of importance to those contemplating patronising the tournament. There was a substantial departure from the truth. The representation was disseminated to the public albeit only to the public within the circulation area of the "Canberra Tames" newspaper. Some effort was made to correct the false impression which the advertisements gave but only days before
the tournament was to take place and only at the instigation of
Taking all these matters into consideration I have reached the following conclusions. Lysfar is convicted of each of the 27 offences with which it is charged. ~ I.M.G. is convicted of the offence with which it is charged. A total
A fine of $2,000 in respect of the first charge, that is the charge relating to the advertisement published on 24 August
A fine of $2,000 is imposed on I.M.G. in respect of
The fines are to be paid to the District Registrar of the Court within 21 days from the date of the orders herein. Lysfar and I.M.G. are to pay the costs of the prosecutor of and
incidental to the proceedings in respect of the offences of
I certify that this and the preceding 19 pages are @ true copy of the Reasons for Judgment herezn of the Honourable Mr. Justice