Microwave Safety Systems Pty Ltd v Commissioner for Fair Trading, Department of Commerce

Supreme Court of NSW|2007-11-05|Before: Harrison J

CITATION : Microwave Safety Systems Pty Ltd v Commissioner for Fair Trading, Department of Commerce [2008] NSWSC 37

DECISION : Declare that the warrant issued by the second defendant on 17 April 2007 and executed by the first defendant on 19 April 2007 at Croydon is invalid.

CATCHWORDS : SEARCH WARRANT - validity - whether investigator had belief on reasonable grounds that there was evidence of a breach of a provision of the Fair Trading Act 1987 - facts material to decision to issue or to decline to issue warrant - whether disclosure in application for warrant of reasonable grounds for a belief as to contravention - invalid issue of warrant.

LEGISLATION CITED : Fair Trading Act 1987 Law Enforcement (Powers and Responsibilities) Act 2002

Ballis v Randall [2007] NSWSC 422 Bartlett v Weir [1994] FCA 1143; (1994) 72 A Crim R 511 Beneficial Finance Corporation v Commissioner of Australian Federal Police [1991] FCA 92; (1991) 31 FCR 523 Bradrose Pty Ltd v Commissioner of Police; Ex parte Bradrose Pty Ltd [1989] Qd R 304 Chong v Schultz [2000] FCA 582; (2000) 112 A Crim R 59 Commissioner for Fair Trading v Microwave Safe Australia Pty Ltd and Another [2006] NSWSC 287 Commissioner of Police v Barbaro [2001] NSWCA 57; (2001) 51 NSWLR 419 Coward v Allen [1984] FCA 53; (1984) 52 ALR 320 Dunesky v Elder [1994] FCA 1006; (1994) 54 FCR 540 CASES CITED : George v Rockett [1990] HCA 26; (1990) 170 CLR 104 Karina Fisheries Pty Ltd v Mitson [1990] FCA 154; (1990) 26 FCR 473 Lego Australia Pty Ltd v Paraggio [1994] FCA 1286; (1994) 52 FCR 542 Ousley v The Queen [1997] HCA 49; (1997) 192 CLR 69 Parker v Churchill [1986] FCA 88; (1986) 9 FCR 334 R v Curran [1983] 2 VR 133 R v Tillett (1969) 14 FLR 101 State of New South Wales v Corbett [2007] HCA 32 Williams v Keelty [2001] FCA 1301; (2001) 111 FCR 175 Wright v Queensland Police Service [2002] QSC 46; [2002] 2 Qd R 667

Microwave Safety Systems Pty Ltd (Plaintiff) PARTIES : Commissioner for Fair Trading, Department of Commerce (First Defendant) Narelle Tyerman (Second Defendant)

COUNSEL : J E Richards with K A Stern (Plaintiff) M C Bracks (First Defendant)

SOLICITORS : Axis Legal (Plaintiff) Office of Fair Trading, Department of Commerce (First Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION PROGRESSIVE LIST

12074 of 2007 Microwave Safety Systems Pty Ltd v Commissioner for Fair Trading, Department of Commerce and Narelle Tyerman

JUDGMENT Introduction 1 On 17 April 2007 Robert Leslie Laughton, a Senior Investigator with the New South Wales Office of Fair Trading, applied for a search warrant to enter premises at 2 Cromwell St Croydon ("the premises"). Mr Laughton said that he had reasonable grounds for believing that certain matters justified the application. These matters were then set out under the heading "DESCRIPTION OF OFFENCES". That material included the following paragraphs:

"3.1 On and around 20 February 2007 www.microwavesafe.net contained a document entitled "Microwave Oven Radiation Leakage Limits - Guidelines" that was in the nature of an official information bulletin sourced from and approved by bodies such as ARPANSA, Standards Australia and the National Health and Medical Research Council and was designed solely to assist employers meet their workplace safety obligations, rather than being an advertisement for Microwave Safety Systems Pty Ltd. Such representation constitutes a contravention of section 44 (f) of the Fair Trading Act, 1987 . . .

3.3 During the period 12 January 2007 to 17 April 2007 there appeared statements on www.microwavesafe.net that claim that employers, in order to meet their duty of care towards employees, needed to have microwave ovens in the workplace tested regularly for radiation leakage. Such representation constitutes a contravention of section 44(j) of the Fair Trading Act, 1987 . . .

3.4 During the period 12 January 2007 to 17 April 2007 www.microwavesafe.net contained a document styled Fact Sheet, and then titled "Standards/Guidelines" that is in the nature of an official information bulletin sourced from and approved by bodies such as ARPANSA, Standards Australia, Worksafe Victoria and the National Health and Medical Research Council and was designed solely to assist employers meet their workplace safety obligations, rather than being an advertisement for Microwave Safety Systems Pty Ltd. Such representation constitutes a contravention of section 44 (f) of the Fair Trading Act, 1987. . .

3.5 During the period 12 January 2007 to 17 April 2007 there appeared statements on www.microwavesafe.net that claimed that Australian Standards relating to microwave ovens (being AS/NZ 60335.2.25) required such ovens used in the workplace to be tested for radiation leakage beyond the testing required for the approval of such items for sale by retail. Such representation constitutes a contravention of section 44(j) of the Fair Trading Act, 1987. . .

3.11 On 5 February 2007 Microwave Safety Systems Pty Ltd . . . made false or misleading representation [sic] to the New South Wales Medical Board concerning the need for the company's services. The correspondence was signed by Carole Sandham, National Office Manager, "Microwave Safety Systems". Such representation constitutes a contravention of section 44(j) of the Fair Trading Act, 1987 . .

3.12 On 6 February 2007 Microwave Safety Systems Pty Ltd . . . made false or misleading representation [sic] to the NSW Office of Fair Trading concerning the need for the company's services. The correspondence was signed by Carole Sandham, National Office Manager, "Microwave Safety Systems". Such representation constitutes a contravention of section 44(j) of the Fair Trading Act 1987 . . ."

2 Mr Laughton's application also indicated that he sought to be able to perform the following specific functions on entry:

"To search for, examine and seize documents and things including:

· Business records including letters, memoranda, reports, facsimiles, customer files, advertising copy, sales and purchase records, correspondence to or from any person in relation to advertising or publishing, contracts, agreements or offers related in any way to advertising or publishing, internal correspondence, training manuals and information sheets, including "scripts" and other instructions to staff, business cards, records of meetings, invoices, receipts, accounting, diaries, telephone message pads, banking and financial records, contractor contracts and employment records.

· Electronic data and storage equipment including, emails, computer software, computer records, computer systems, peripherals, electronic devices and electronic and storage media containing information or used (or intended to be used) and documents and information on the use and operation of computer systems, peripherals, electronic devices, and electronic and storage media.

· Correspondence to and from ARPANSA, Standards Australia, Worksafe Victoria and the National Health and Medical Research Council with respect to radiation safety and any publication produced by such organisations.

· Test reports including those relating to the testing of clients' microwave ovens and the verification of test equipment used by Microwave Safety Systems Pty Ltd."

3 At 10.13am on 17 April 2007 the second defendant, having considered the application, found that there were reasonable grounds for issuing the warrant and issued it. The relevant particulars of the grounds on which she relied to justify the issue of the warrant appear to correspond to the particulars of further information required by her and which Mr Laughton provided orally. Those particulars are set out in handwriting at the foot of the application and are as follows:

"One suspect, Jason Sotirios, will be charged with contempt of Supreme Court orders and an imprisonment term will be sought. All the offences are not indictable but schedule 2 of the Law Enforcement (Powers and Responsibilities) Act 2002 give authority to issue search warrants under s. 19A of the Fair Trading Act 1987. The matters came to the attention of the Department of Fair Trading when an employee of Microwave Safety Systems P/L contacted departmental legal offices to obtain permission to use the official information in their advertising. Department officers told the company not to use the information. The company is not cooperative and will not produce documents or required material to the Department of Fair Trading. The unlawful conduct continues as at 17.4.07. I am satisfied the items to be searched for are at the subject premises."

4 The plaintiff contends that the issue of the warrant was flawed by jurisdictional error and/or error of law on the face of the record and is liable to be quashed or declared invalid. The basis of that contention was the alleged failure by Mr Laughton to comply with the requirements of s 19A of the Fair Trading Act, 1987 ("the Act") and the Law Enforcement (Powers and Responsibilities) Act 2002 ("LEPRA 2002"). In particular, the plaintiff alleged that Mr Laughton: -

4.2 repeatedly relied upon asserted contraventions of offences in the application without including any material that could support the existence of reasonable grounds for believing there to be a contravention of the Act;

4.3 acted unreasonably in making the application and in a manner that no reasonable investigator would have acted in the circumstances;

4.4 failed to state explicitly or implicitly in the application that he believed on reasonable grounds that evidence of the asserted contraventions of the Act upon which he relied was on the premises to be searched.

5 At the heart both of the matters giving rise to Mr Laughton's application for the issue of the warrant in the first place, and the matters that form the basis for the plaintiff's contention that the issue of the warrant was invalid in the second place, is a significant dispute about whether or not what is known as "the MORLL document", and which became exhibit B, appeared on the plaintiff's website between 12 January 2007 and 17 April 2007. The first defendant asserted that it had. The plaintiff maintained that it had not. That dispute needs to be resolved as a preliminary issue. The factual basis for each of the other descriptions of offences in the application for the warrant will be examined after that.

The MORLL document and communications concerning it

6 Exhibit B is a document entitled "Microwave Oven Radiation Leakage Limits" ("MORLL"). It is important to record the terms of that document in full as follows:

GUIDELINES The Radiation Health Committee has set limits for allowable levels of radiation leakage from microwave ovens. This limit is also outlined in the Australian Standard AS 60335.2.25

"The Radiation Health Committee retains the role of setting the allowable limit for microwave leakage from microwave ovens (50W/m2 at 0.05 m)" (5mW/cm2) www.arpansa.gov.au/rhs_pubs.htm

Tests have confirmed that it is possible for microwave ovens that show no obvious signs of physical damage to emit radiation levels that exceed the emission limit.

The most practical way to accurately determine whether the above limit are [sic] being met is to have the microwave ovens tested in accordance with The National Health & Medical Research Council - 'Procedures the Testing Microwave Ovens (1985)'.

Although not mandatory, many organisations undertake microwave oven radiation testing as part of a Preventative Maintenance or Risk Management program to ensure compliance with the above limit.

Small leakage detectors used by many electricians should not be used as they do not comply with Australian Standard and National Health & Medical Research Council Guidelines.

With offices throughout Australia, compliance inspections may be arranged through Microwave Safety Systems , Australia's only ISO 9001 Accredited Quality Endorsed specialist microwave radiation testing organisation, whose many Government and Corporate clients have been undertaking inspections since 1995.

To arrange inspections or for further information call

Ph: 1300 305 303 or visit www.microwavesave.net

7 At 12.49pm on 11 January 2007, Marie McAuley sent an internal email to Robert Laughton on the subject of Microwave Safe. It was in the following terms:

"A Dennis Derizo [sic] . . . rang Legal on the 11 January. His company has bought the assets from Microwave Safe and he now wants to advertise them. He wants to check the contents of the advertisement with the Office of Fair Trading.

He said the advertisement had been approved by DIPNR in Western Australia and he is checking with each state.

Kit suggested that you would be the best person to deal with this."

8 At 12.05pm the following day Dennis Dorizas sent an email to Robert Laughton in reference to "advertising material", which was in the following terms:

As mentioned during our conversation, we purchased the assets of the former Microwave Safe Australia last year after it went into liquidation. During this time we have managed to get our organisation ISO 9001 Accredited and Quality Endorsed.

As part of the purchase we obtained copies of the legal documents that were part of the court case such as the court judgment and various affidavits. We then passed these on to our lawyers together with some older advertising material so they could amend it to ensure it is in line with what the judge had ordered. Our lawyers then came back to us and it has been amended to what is attached.

The Microwave Safety Systems Branch in WA has sent the attached to your office in Western Australia (Department of Consumer and Employment Protection) who have said that the advertising is in line with their consumer protection laws.

As our organisation is Accredited and Quality Endorsed, we would like to ensure that the advertising does not breach any fair-trading laws in NSW.

If at your convenience, you could review the attached brochure and outline if it breaches any laws that would be greatly appreciated.

Thank you for your consideration in this matter. It is greatly appreciated."

9 References in that email to "the attached" and "the attached brochure" are references to a copy of exhibit B.

10 At 12.20pm on the same day, Robert Laughton replied to that email in the following terms:

On the face of this, I have real concerns with the form and content of this statement. It appears to be very similar to the "Workplace Bulletin" issued by Microwave Safe Australia Pty Ltd and I therefore caution you on your company's use of the document. The document has many aspects common to MSA's promotion. OFT convinced the Supreme Court of NSW that MSA's approach was false or misleading.

I need further information from you as to how you intend to distribute the document in order for Fair Trading to probably (sic) appraise it.

For the record, the NSW Office of Fair Trading has no connection with the WA Department of Consumer and Employment Protection.

As I previously suggested, it may be worth your while to meet with OFT investigators before your company makes any representations with respect to the testing of microwave ovens in the workplace."

11 This email was followed by a second at 12.41pm as follows:

"Further to my previous email to you, the document you provided to me (and your email) identifies the trader's name as "MICROWAVE SAFETY SYSTEMS" - please note that this name is not a registered business name in New South Wales.

I would also be grateful if you would explain the use and reference to www.microwavesafe.net and provide to me any information from ARPANSA, WorkCover Authority and Standards Australia to which you rely upon (sic)."

12 Mr Dorizas replied to Mr Laughton by email at 2.04pm that day. That reply was in the following terms:

"Thank you for your response. It is much appreciated.

We have yet to distribute any material as were [sic] thought we would firstly get approval from your office, even though our lawyers had approved it.

I will take this back to my lawyers and give them an earful. As you can appreciate they have charged us a considerable sum of money to amend this material and if it breaches certain fair trading acts, then I feel they have some explaining to do.

Also, thank you for your information regarding the business registration. I just called the business registrations department of your office and they advised me that seeing our organisation is a Pty Ltd company there is no need to register it as a business. If this is incorrect, your advice would be appreciated.

Regarding the domain name, this was purchased as part of the assets following liquidation.

Thank you for your knowledge and expertise on this matter. I will be in contact next week."

13 At 8.59am on 15 January 2007, Mr Laughton replied to Mr Dorizas' email three days earlier. That reply was in the following terms:

"I am happy to discuss further with you. It is important to us both that you get this business operating correctly from the start.

I need to clarify the information you received from OFT. It is true that you do not need to register a business name in New South Wales, if you are trading as a company. However, you must identify the full name of the company in ALL applications of the name, including advertising, invoicing etc. In your company's case, it is illegal for it to trade as "MICROWAVE SAFETY SYSTEMS". You have two options; 1. Identify the name "MICROWAVE SAFETY SYSTEMS PTY LTD", or register "MICROWAVE SAFETY SYSTEMS".

14 At some stage Mr Laughton made a file note of a telephone conversation he had with Mr Kalde, the solicitor for the plaintiff. That document is as follows:

FILE NOTE MICROWAVE SAFETY SYSTEMS PTY LTD Rob Kalde KQ Lawyers 4862 2020 0419272981

Mr Kalde rang me on 14 March 2007 and left a voicemail message on my telephone. The message stated:

"My instructions from my client, Microwave Safety Systems, is that their marketing plan is undergoing a wholesale revision and will take entirely fresh angles. They are going back to first principles. Therefore they do not need to meet with you on Friday. What they presented to you won't be occurring so they don't see a great requirement to meet with you, unless you have a different prospective (sic)".

Robert Laughton Senior Investigator Fair Trading Investigations

15 Affidavit and oral evidence was given about these emails. Mr Laughton insisted that he found a copy of exhibit B on the plaintiff's website on about 11 January 2007. Evidence given on behalf of the plaintiff was that a copy of exhibit B was never on the website but was provided to Mr Laughton by email. This dispute becomes evident from a review of the affidavit evidence and the transcript of the proceedings before me. 16 Rozy Dorizas is the sole director of the plaintiff, which was incorporated on 14 June 2006. She said "The MORLL document has never been on MSS's website": see par 6 of her affidavit sworn 13 July 2007.

"On 12 January 2007 MSS sent an electronic version of the MORLL document to Mr Laughton as an attachment to an email. I wanted to obtain some feedback from the New South Wales Office of Fair Trading before the MORLL document was used in New South Wales. The MORLL document has not been used in New South Wales."

18 At par 12 of her affidavit she continued in the following terms:

"MSS sent a soft copy of the MORLL document to Mr Laughton. It was sent to Mr Laughton as an electronic file attached to an email. It was necessary for MSS to send the MORLL document to Mr Laughton because there was no copy of that document on MSS's website."

19 Ms Dorizas also said at par 16 that she was not contacted at any stage by Mr Laughton or any other person employed by the Office of Fair Trading in relation to any concerns that Mr Laughton, or any other person employed there, may have had prior to the execution of the warrant on 19 April 2007.

20 Robert Kalde is a solicitor who has acted for Rozy Dorizas and the plaintiff from time to time. Sometime in early January 2007 he received an email from the plaintiff attaching marketing materials that the plaintiff intended to send to its clients. He telephoned Robert Laughton sometime in late February 2007 to discuss the material which included exhibit B. Mr Laughton said to him:

"I don't like it. It looks exactly the same as the material from Microwave Safe Australia. I think Mr Dorizas should come in for a meeting so we can talk about it."

21 Mr Kalde then asked Mr Laughton specifically what aspect of the material offended the Act. Mr Laughton replied:

"There are all sorts of problems with it. It's the whole thing and it would be better if you just come in for a meeting."

22 Although Mr Kalde did not have instructions to commit to a meeting, he said Mr Laughton "earmarked" a date in mid-March 2007 for a proposed meeting, which he recalled was to be on about 16 March 2007. Mr Laughton telephoned him a few days prior to the date of the proposed meeting. Mr Kalde told him, "A meeting won't be necessary because Microwave Safety Systems is going to have a fresh look at its material before anything goes out to the public". Mr Laughton's file note confirms this.

23 Mr Kalde said that at no stage during that conversation did Mr Laughton indicate that he was uncomfortable with the explanation as to why no meeting would be necessary, or that there would be any problems for the plaintiff. At no stage after that telephone conversation did Mr Kalde speak to Mr Laughton about a complaint or proposed complaint against the plaintiff from either Mr Laughton or anyone else on behalf of the first defendant.

24 Jason Crosson is employed part-time by the plaintiff as its operations manager. Mr Crosson had previously been a defendant in legal proceedings commenced by the first defendant. Dennis Dorizas is the sole shareholder of the plaintiff. On about 9 January 2007, at the request of Rozy Dorizas, Mr Dorizas consented to Mr Crosson describing himself as "Dennis Dorizas" when communicating with the first defendant. Rozy Dorizas formed the view that if Jason Crosson gave his own name, the enquiry may not be dealt with fairly.

25 Jason Crosson is married to Rozy Dorizas. On 11 January 2007 he telephoned the first defendant and left a message that "Dennis Dorizas" had called. He left the plaintiff's telephone number. On 12 January 2007 he became aware that Mr Laughton had left a telephone message for Dennis Dorizas. In response, Mr Crosson telephoned Mr Laughton at approximately 10.35am and had a conversation with him posing as Dennis Dorizas. In his affidavit of 18 July 2007, Mr Crosson deposed to the following conversation:

"Mr Crosson: Hello Robert, my name is Dennis Dorizas from Microwave Safety Systems. Thank you for returning my call.

Mr Crosson: Robert, last year MSS bought the assets of a company Microwave Safe Australia which I believe the OFT had a few problems with.

Mr Laughton: Yes. We had many problems with Microwave Safe Australia. I don't know if you are familiar with these?

Mr Crosson: Yes I'm familiar with these and that is why I am calling you. Since MSS bought the assets from MSA, the company has managed to get itself ISO accredited and prior to doing any advertising in NSW we would like to get approval from the OFT that the advertising does not breach any Fair Trading laws.

Mr Laughton: Is Mr Crosson involved in the new company?

Mr Crosson: He comes in on a part-time basis and does work on the computers. What we want to ensure Robert is that MSS gets off on the right foot in NSW.

Mr Laughton: Well I am happy that you are coming to us regarding this instead of us coming to you. May I suggest that it might be worth your while coming to see us.

Mr Crosson: It would be Rozy who would attend any meeting as she is the director. However, she has just had a baby so any proposed meeting may take some time.

Mr Crosson: Firstly what we would like to do is make sure that any advertising material that MSS intends on sending out in NSW is correct and not in breach of any Act. Would you mind if I email you a copy of the proposed material?

Mr Laughton: That would be fine. My email address is robert.laughton@oft.commerce.com.au.

Mr Crosson: Thank you. I will get something off to you shortly."

26 Mr Crosson said that neither he nor Mr Laughton referred to the plaintiff's website nor was any aspect of the website discussed during that conversation. Mr Crosson said that Mr Laughton did not say that he was looking at the plaintiff's website during the conversation. Mr Crosson said that exhibit B was not on the plaintiff's website when he spoke to Mr Laughton on 12 January 2007. He denied telling Mr Laughton that the document was ever on the plaintiff's website. Mr Crosson said that exhibit B has never been on the plaintiff's website. Mr Crosson said that at 12.05pm on 12 January 2007 he emailed a copy of exhibit B to Mr Laughton as an attachment. The terms of that email are set out above at par [8].

27 On about 25 January 2007 Mr Crosson telephoned Mr Laughton and identified himself as Dennis Dorizas. He told Mr Laughton that the plaintiff's lawyers, who had advised it about the brochure based on the judgment in the MSA proceedings, would be contacting him to discuss the matter further. Mr Laughton told Mr Crosson that he was happy to have a chat with the plaintiff's solicitors at any time on the following Monday. Other than that, Mr Crosson had no contact with Mr Laughton after receiving his email of 15 January 2007, referred to above at par [13].

28 Mr Laughton swore an affidavit on 27 June 2007. Mr Laughton said that on 11 January 2007 he received the email that is referred to above at par [7]. Mr Laughton said that he immediately telephoned Mr Dorizas and had a conversation. That conversation is set out at paragraph 10 of his affidavit. Mr Crosson said that Mr Laughton's version of that conversation was not accurate. Mr Laughton's version of the conversation is as follows:

"Mr Laughton: Mr Dorizas, our Legal Services Branch told me that you had called seeking our approval for some advertising. What is the name of your business?

"Mr Dorizas": It's Microwave Safety Systems (MSS). The advertisement is posted on our website.

"Mr Dorizas": It's on our website at www.microwavesafe.net.

Mr Laughton: I found a document titled Microwave Oven Radiation Leakage Limits - is that the one?

Mr Laughton: I have only had a quick look at the document. I should caution you because the document bears a striking similarity to the Workplace Safety Bulletin that was distributed by MSA in 2005/2006 and is the subject of Court orders. I was the investigator involved in the investigation of the conduct of MSA during that time, which led to declarations and orders being made against the company. Are you aware of those proceedings and if so have you read the judgment?

"Mr Dorizas": Yes, I know all about that, but our lawyers have given us advice that the document is okay. They have checked the document against the judgment. Your office in Western Australia has approved the wording and we are seeking your approval also.

Mr Laughton: In any event it is up to you to seek your own legal advice - Fair Trading will not give approval for such things. I am again cautioning you that this document contains statements that were deemed by the Supreme Court to be misleading or deceptive and I am concerned about it. I suggest that you come into my office and we'll discuss it. That will give me time to look at it closely.

"Mr Dorizas": We paid our lawyers big money and I am annoyed that they may have got it wrong. I will go back to them. We don't need to meet at this time."

29 Mr Laughton did not keep a note of that conversation "because it was done by emails". Mr Laughton said that the first person that rang him identified himself as Dennis Dorizas and that he had no reason to believe that he was any other person. He agreed that that person told him that he had some advertising material on which he wanted some comment from the Office of Fair Trading and that that person said he would send it to him by email. He agreed with the suggestion that he provided his email address for that purpose. Mr Laughton insisted that he had already seen a copy of exhibit B the day before - that is to say, 11 January 2007.

30 I asked Mr Laughton, "Why was it necessary for him to email it to you if you had access to it from the day before?" Mr Laughton replied, "I have no idea . . . He sent it to me quite by surprise". Mr Laughton agreed that he did not indicate any surprise in his two emails sent in response to the one attaching a copy of exhibit B. Mr Laughton's computer was rebuilt subsequently in a way that precluded the production of electronic records that could confirm whether or not he viewed a copy of exhibit B on the plaintiff's website on 11 or 12 January 2007.

31 Mr Laughton agreed in cross-examination that in none of the emails sent by him did he refer to the fact that he had located a copy of exhibit B on the plaintiff's website. For example, at page 68 of the transcript:

"Q. You don't make any comments having seen it on the internet at all, do you? A. No, I don't, not in that email, no I don't.

Q. You don't make any such comment in any email, do you? A. I don't actually say what I am doing.

HIS HONOUR Q. Well, the answer the question is "no"? A No, I don't."

32 Mr Laughton agreed that he had asked "Mr Dorizas" in his email how he intended to distribute the document. It was put to him that that was because he was not then aware of any distribution of it. Mr Laughton gave an answer that included, "I suspected they were going to distribute it in the wider area".

33 Mr Laughton again gave evidence that he had seen the document on the plaintiff's website on 11 January 2007 and that he thought there were problems with it. The following questions and answers then appear at transcript page 71:

"Q. Did it not occur to you to make reference to the fact that you say you saw it on the website? A. Well, at this particular part in the discussions with MSS I had no more - I had no immediate concern about the matter than that this was a business that may be unaware of the ramifications of that, the judgment Justice Studdert. I gave them the benefit of the doubt. I am also an investigator and I don't always give things away."

"Q. If you thought on 12 January that MSS may not have understood the judgment, why did you not in this email state expressly if you had seen it on the website that that was advertising or something that you thought was in breach of the Fair Trading Act? A. Again, I didn't think it was important in terms of - well, I will repeat what I said before. I am an investigator and I don't give up all information to people I investigate. Whilst it was important in terms of my ongoing investigation at that time, I wasn't overly concerned that it was on the website. I thought we could fix it.

HIS HONOUR Q. It was on the website and you thought you could fix it? A. With the company, together with the company.

Q. But isn't the fact that on your evidence it was on the website already that formed the basis of the application for the issue of the warrant? A. Yes, but by that stage your Honour I had formed a view that they had ceased communicating with me. They were unwilling to come in and talk to me about their operations so it went on from there."

34 I then asked Mr Laughton some questions about the words "before your company makes any representations with respect to the testing of microwave ovens in the workplace" as they appear in his email sent at 12.20pm on 12 January 2007. I suggested to Mr Laughton that one reading of those words indicated that in his view at that time the plaintiff had not made any representations with respect to the testing of microwave ovens in the workplace. Mr Laughton said, "In hindsight that is how it could be read". He went on to say, "That is not what I meant to say".

35 Mr Laughton said that he had precisely the same conversation with "Mr Dorizas" on 12 January 2007 as he had had the day before. At page 81 of the transcript he described it as a "similar conversation". However, Mr Laughton did not refer in his affidavit to the second conversation. He was asked about it as follows:

"Q. Is the conversation on the 12th conversation that you have only recalled in the course of being cross-examined on your affidavit?

A. No, no. I decided that when I was putting that affidavit together that it served no purpose. The affidavit was already getting quite substantial and there was areas [sic] in it that I thought were starting to impact on the investigation rather than the matter before the Court at this time."

36 Mr Laughton did not recall whether he printed anything, including a copy of exhibit B, off the plaintiff's website on either 11 January or 12 January 2007. However, he did recall printing a copy of exhibit B from the attachment to "Mr Dorizas'" email on 12 January 2007.

37 Mr Laughton was then taken to the terms of his email sent on 15 January 2007. This appears at transcript pages 88-89 as follows:

"Q. Could you turn to page 60 of exhibit A please? That is the email response to your last email at page - that is your response to the writer of the email appearing at page 58 of exhibit A, isn't it? A. Yes.

Q. You raise no concerns about anything that was, to your understanding, on the MSS web site in that email, do you? A. No, I don't, because I took it on face value that the lawyers were going to deal with it and MSS was taking on board my comments hence their comment that "we will talk to our lawyers about it." I am happy with that.

Q. You were happy with this email? A. I was happy with their comment in the previous email that they were going to talk with their lawyers about it.

Q. You were also happy to discuss further the contents of the document at page 53 of exhibit A with MSS, weren't you? A. Yes, of course I was.

Q. At this point in time on 15 January there was nothing suggested to you that MSS was doing anything other than getting advice from its lawyers about the advertising, is that correct? A. Yes.

Q. At that point in time you had no concern with MSS, is that correct? A. Of course I had concerns but I believed that they were dealing with it and taking it on board. As I said I believed they were a new company at this time and I was trying to help them.

Q. Well, why didn't you mention the website in this email or any of your other emails? A. I didn't see it as necessary because he had already directed me to the document on the website."

38 Mr Laughton was extensively cross-examined on several other areas as well. It is unnecessary to refer to this material in detail.

39 The plaintiff and the first defendant each lead evidence from an appropriately qualified expert with a view to establishing, if it could be established, that a copy of exhibit B either was, or was not, on the plaintiff's website when Mr Laughton said he saw it and subsequently. Mr Daniel gave affidavit evidence for the plaintiff and Mr Carson gave affidavit evidence for the first defendant. In addition, both gentlemen gave evidence concurrently before me.

40 This procedure operated very effectively in this case. However, it did not provide a conclusive answer to the enquiry one way or the other. That emerges from the following evidence at page 162 of the transcript:

"HIS HONOUR: I note you both agreed, in fact, with Mr Carson's opinion expressed at paragraph 36 of his affidavit that the evidence is not conclusive to make a statement of certainty one way or another. Is it possible, without guessing or speculating but relying upon whatever information you have, to express an opinion about the probabilities, or is it a question of we either know it is there from the material, or the material is insufficient for us to form a view about anything else?

WITNESS CARSON: I would say the material is insufficient to form a view.

WITNESS DANIEL: I would also agree with that. I feel if there was other information that we could be provided, that we would have a stronger opinion on that.

HIS HONOUR: Is a fair summary of the material you've reviewed this: that if the inadequacies you've both identified were eradicated and you could be satisfied you had all the material, then clearly enough you would have a certain answer?

HIS HONOUR: But in the absence of some of the material, it's only speculation about what that other material my reveal?

41 In my view, the evidence is strongly weighted in favour of the conclusion, and I find, that a copy of exhibit B never appeared on the plaintiff's website. There are a number of reasons for this.

42 First, the terms of the internal email from Marie McAuley to Robert Laughton on 11 January 2007 reflect an enquiry by Dennis Dorizas made in advance of the placing of an advertisement rather than after it had been placed. Ms McAuley's words "he now wants to advertise them" strongly support that view.

43 Secondly, the making of the enquiry at all suggests caution on the part of the plaintiff. The result in the previous litigation would have been well known to Mr Crosson. The similarity between exhibit B and the document that had come under unfavourable notice in the previous litigation was obvious. It was certainly obvious to Mr Laughton. I find it difficult to accept that the representatives of the plaintiff would not also have been aware of the similarity even notwithstanding assurances to the contrary allegedly given to the plaintiff by its legal advisers. It seems unlikely in those circumstances that a document in the form of exhibit B would have been posted on the plaintiff's website if there were any possibility that it would attract further unfavourable attention of the first defendant.

44 Thirdly, the terms of the email sent to Mr Laughton at 12.05pm on 12 January 2007 attaching a copy of exhibit B suggest that it was provided to Mr Laughton for his consideration, particularly because he did not already have it. The words, "If at your convenience, you could review the attached brochure and outline if it breaches any laws" are more consistent, in my view, with the provision of a document that Mr Laughton did not already have than with the alternative.

45 Fourthly, and similarly, that email is, in effect, a note or memorandum of the conversation to which it refers. It makes no reference to the fact that Mr Laughton already had a copy of exhibit B downloaded by him from the plaintiff's website and in fact makes no reference to the website at all.

46 Fifthly, the terms of Mr Laughton's email sent at 12.20pm on the same day also strongly suggest that Mr Laughton was telling the plaintiff what it should or should not do with exhibit B, and do not in any sense in my view amount to, or reflect, a concern about what had already been done. The words, "it may be worth your while to meet with OFT investigators before your company makes any representations" hardly seem consistent with any other view. Earlier words such as, "I need further information from you as to how you intend to distribute the document" give a similar impression.

47 Sixthly, Mr Laughton's subsequent email at 12.41pm refers to "the document you provided to me". Although those words are not incapable of standing with a suggestion that Mr Laughton also downloaded the document from the plaintiff's website, they sit more comfortably with the proposition that Mr Laughton's only copy of exhibit B was the one sent to him electronically on behalf of the plaintiff earlier that day.

48 Seventhly, the words of the email sent to Mr Laughton at 2.04pm that day in terms suggest that the copy of exhibit B had not by then been placed on the plaintiff's website. The words, "We have yet to distribute any material" support this. This is particularly so, in my opinion, having regard to the fact that if that statement were untrue, it was capable immediately of being refuted by reference to the website. It seems highly unlikely, and plainly illogical, for Mr Crosson, even in the guise of Mr Dorizas, to have made a false statement in those circumstances.

49 Eighthly, none of Mr Laughton's emails refers specifically to him having discovered a copy of exhibit B on the plaintiff's website, and no reading of them, in the absence of a specific reference, gives rise to an inference that he did so. Given the fact that, on Mr Laughton's evidence, the existence of a copy of exhibit B on the plaintiff's website so significantly excited his interest and attention, it is difficult to accept that no hint of that fact would be found in what he wrote. This is so even notwithstanding Mr Laughton's protestations that, as an investigator, he was inclined when appropriate to withhold information. The role being performed by Mr Laughton between 11 January and 15 January 2007 was in response to enquiries made on behalf of the plaintiff and was hardly investigative.

50 Ninthly, Mr Laughton made no separate diary note or record of having discovered a copy of exhibit B on the plaintiff's website. If it was sufficiently important to support Mr Laughton's subsequent application for a search warrant, it is difficult to understand why in the circumstances he did not make some contemporaneous note of its discovery.

51 Tenthly, it seems to me to be inherently improbable that Mr Crosson, or indeed anyone, on behalf of the plaintiff would ask the first defendant, and Mr Laughton in particular, for approval for advertising that was potentially contentious if it had already been posted on the plaintiff's website. That is precisely the effect of Mr Laughton's version of the conversation he said he had with Mr Crosson, referred to above at par [28]. I reject that version of the conversation.

52 Finally, both Rozy Dorizas and Jason Crosson gave evidence that a copy of exhibit B had never been posted on the plaintiff's website. I have no reason to reject that evidence and I specifically accept it. I am particularly fortified in that view by the absence of a specific reference by Mr Laughton to his having discovered a copy of exhibit B on the plaintiff's website in any of his emails to the plaintiff.

53 The description of offences in the application for the warrant also included reference to a letter to the New South Wales Medical Board received by it on 5 February 2007, and a letter in similar terms to Fair Trading - Renting Services received on 6 February 2007. Those letters are respectively in the following relevant terms:

Just a reminder to advise that the radiation test results on your microwave ovens, regarding compliance with Radiation Health Committee limits, expires next month.

As per our 2 or 3 year contract with your organisation, one of our radiation technicians will be in contact with you next month to undertake the inspections."

"Microwave Safety Systems once again looks forward to providing you with an ISO Accredited Quality Endorsed Service.

Just a short note to remind you that the test results on your microwave ovens regarding compliance with the radiation leakage limits set by the Radiation Health Committe e, will expire next month.

Should your organisation wish to ensure it is still compliant with the above limits, please review the following information, amend any incorrect details and sign as indicated.

. . . Microwave Safety Systems looks forward to providing you with an ISO Accredited Quality Endorsed Service."

54 On 7 March 2007 the New South Wales Medical Board wrote to the first defendant regarding the first of these letters in the following terms:

"The NSW Medical Board had received a letter from Microwave Safety Systems advising that they had taken over the services provided by Microwave Safe Australia. Attached is a copy of the letter and with compliments slip for your information.

The Board noted in the Sydney Morning Herald on 20 April 2006 that Fair Trading had a successful prosecution against Jason Crosson's company Microwave Safe Australia Pty Ltd, with Justice Timothy Studdert 'agreeing that employers reading the bulletin would think there was a legal requirement for regular testing for radiation leaks, but there was no such duty'.

A technician from Microwave Safety Systems arrived at the Board's office on 2 March 2007 to test the two microwaves. When challenged he advised that the contact person at his company was Jason (later confirmed to be Jason Crosson) following a telephone call to the company. A person called John then telephoned the Board and advised the testing was required to comply with the Radiation Health Committee limits. He was advised the Board would discuss this matter with their own electricians and the Board would not authorise testing to occur by Microwave Safety Systems.

This information is brought to your attention in the public interest.

55 The second of these letters was forwarded to the first defendant and came to the attention of Mr Laughton in due course.

56 Mr Laughton said in his evidence that s 8 of the Fair Trading Act enabled the Office of Fair Trading to accept complaints and to make the appropriate inquiries in respect of those complaints. He said that he "took the matter to be formal complaints". However, he conceded at transcript page 107 that the application made no reference to complaints. That evidence is as follows:

"Q. And you do not refer to any complaint in your application do you? A. No I don't."

57 Mr Laughton's application for the issue of the warrant also relied upon an allegation that the plaintiff had failed to cooperate with him in his enquiries and investigations. He deposed at paragraph 34 of his affidavit to a conversation he had with the second defendant at the time he was applying for the issue of the warrant. That conversation is as follows:

"Second defendant: Have you asked Microwave Safety for these documents? Have they been cooperative?

Mr Laughton: Yes I have asked them for certain documents to support their claims and they have ignored me. I have had many discussions and correspondence with them to encourage them to meet with me, but they don't feel it necessary. I'll point out to you that the Fact Sheet that I referred to in the Application is still published on Microwave Safety Systems website this morning when I checked. I came to the view that they are uncooperative and I am concerned about the continuing risk to the public."

58 According to the plaintiff's submission, Mr Laughton misrepresented to the second defendant that the plaintiff had been "not cooperative": see above at par [3]. The plaintiff submitted that this was misleading and invalidated the warrant. According to the plaintiff, the only matter possibly amounting to lack of cooperation that Mr Laughton could point to was that the plaintiff did not provide him with the things that he requested in his email sent at 12.41pm on 12 January 2007: see above at par [11]. No further materials or documents were ever requested by Mr Laughton or anyone else at the first defendant. Moreover, the plaintiff was not told not to use any information, with the limited exception of the caution expressed by Mr Laughton in his email sent at 12.20pm on 12 January 2007: see above at par [10].

59 The application also relied upon " numerous meetings with Dennis Dorizo [sic] and his lawyer. Conduct continues as at 17.4.07 ". The plaintiff submits that this is a further material misrepresentation. This is because the last communication by telephone from Mr Kalde, after various attempts on both sides to arrange a face-to-face meeting between Mr Laughton and the plaintiff, indicated (even on Mr Laughton's own note) that he did not see the need to meet with Mr Laughton at that time and that Mr Laughton should tell him if he did not agree with this view. Mr Laughton did not do so. In the plaintiff's submission it cannot, therefore, be open to him later to suggest any lack of cooperation from the plaintiff or its solicitor.

60 The plaintiff made further detailed submissions on this topic to which it is unnecessary to refer. It is sufficient to observe that the plaintiff's contention is that there were no reasonable grounds upon which Mr Laughton could have formed a belief that the plaintiff had been uncooperative in any way at all.

61 I agree. In my opinion, "uncooperative" in the relevant sense incorporates notions of obstruction, avoidance, and unresponsiveness and often also an inappropriate lack of candour. None of these elements was, in my opinion, evident in the present case. The fact that Mr Laughton was unable, without the assistance of the plaintiff, easily to satisfy himself about all matters that troubled him, is not necessarily coextensive with a lack of cooperation on the part of the plaintiff. The fact that Mr Crosson masqueraded as Mr Dorizas does not alter my opinion in this regard.

62 Section 19A of the Fair Trading Act, 1987 is in the following relevant terms:

" 19A Powers of search and seizure under search warrant

"authorised officer" has the same meaning as in the Law Enforcement (Powers and Responsibilities) Act 2002 .

(2) An investigator may apply to an authorised officer for the issue of a search warrant if the investigator believes on reasonable grounds that there is evidence of a contravention of a provision of this Act on any place or land.

(3) An authorised officer to whom such an application is made may, if satisfied that there are reasonable grounds for doing so, issue a search warrant authorising any investigator:

(a) to enter the place or land specified in the warrant, and

(b) to search for evidence of a contravention of a provision of this Act, and

(7) Division 4 of Part 5 of the Law Enforcement (Powers and Responsibilities) Act 2002 applies to a search warrant issued under this section.

(8) Nothing in this section limits any of the other functions that may be exercised by an investigator under this Division.

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:

(f) represent that the person has a sponsorship, approval or affiliation the person does not have,

(j) make a false or misleading representation concerning the need for any goods or services,

64 The plaintiff relied upon the following principles:

64.1 First, the courts have, from the earliest days, insisted upon a rule of strict construction of the law governing search warrants given the intrusion into privacy thereby authorised - see most recently Kirby J in State of New South Wales v Corbett [2007] HCA 32 at [15]. 64.2 Secondly, strict compliance with the statutory conditions governing the issue of search warrants is insisted upon - George v Rockett [1990] HCA 26; (1990) 170 CLR 104 at 110-111.

64.3 Thirdly, a warrant issued by a subordinate authority should disclose jurisdiction on its face - R v Tillett (1969) 14 FLR 101 at 106.

64.4 Fourthly, the information upon which the warrant is issued must set out the matters upon which the application, and warrant, relies. It will not be sufficient merely to set out a summary or set of conclusions from such material - R v Tillett (supra) at 108.

64.5 Fifthly, it is a condition precedent to the exercise of the power to issue a warrant that the statutory conditions are satisfied - R v Tillett (supra) at 108. In this case, s 19A(3) requires that the issuing officer is satisfied that there are reasonable grounds for issuing the warrant, which in turn requires satisfaction that the investigator believes on reasonable grounds that there is evidence of a contravention of a provision of the Act on the place to be searched.

64.6 Sixthly, in order to be valid, a warrant must refer to a particular offence and authorise seizure by reference to that offence. Seizure cannot relate to offences in general, or even offences under a particular provision, in general - R v Tillett (supra) at 113.

64.7 Seventhly, it is by reference to the means of identification of the object of the search that the sufficiency of reasonable grounds for believing must be judged - the broader and less specific the description of things to be searched for, the more difficult it is likely to be to satisfy the requirement of reasonable grounds for believing that a thing answering the description will provide evidence of commission of an offence - George v Rockett (supra) at 117-118.

64.8 Eighthly, the purpose of the statement of the offence in the warrant is to set the bounds to the area of search that the warrant authorises - Beneficial Finance Corporation v Commissioner of Australian Federal Police [1991] FCA 92; (1991) 31 FCR 523 at 533-534.

64.9 Ninthly, the issuing officer must reach her own conclusion on the material before her - R v Tillett (supra) at 106.

At a glance

Court

Decision date

Before

Source

Judgment (248 paragraphs)

Parties

Cases Cited (27)