Trade Practices Commission v Annand & Thompson Pty Ltd [1978] FCA 42

Could you please make the following alterations to the

"....the general manager who used...." -",....he did so in the prescence...."

Trade Practices Act 1974 - misleading conduct - "new" motor vehicle - injunction refused -

) ) QUEENSLAND DISTRICT REGISTRY ) No. G.10 of 1978 ) )

SYDNEY REASONS FOR JUDGMENT ST.JOHN J. TUESDAY, 2) JUNE, 1978

This is an application by the Trade Practices Commission (the Commission) for an injunction under sub-section 1 of Section 80 of the Trade Practices Act 1974 restraining the respondent from representing that motor vehicles are of more recent manufacture than in fact they are in contravention cf Section

The facts relied upon to support the application are the circumstances surrounding the sale of 2 Jeep motor vehicles

to two separate purchasers ana a subsequent interview between officers of the Commission and the Managing Director and a Branch

The respondent company 1s one registered in Queensland pursuant to that Statc's Companies Act 1934 and counsel for the respondent conceded that the transactions relating to tho

two motor vehicles were "in trade or commerce" within the

In August, 1977, Mario Ezric Andrado telephoned an employee of the respondent company, one Brian Thompson, and asked the price of a certain style of Jeep vehicle. On the next day

he attended the premises and was takon for a drive ina demonstration model. Having enquired the price of the @Gemonstration model he informed Mr. Thompson that he thoughLl 1t was too expensive and he would rather purchase a new short wheel base Jeep. He then paid a holding deposit and filled out the order form which described the vchicle he sought to purchase as "new". Mr. Andrado subsequently took delivery of a Jeep but of the long wheel base variety, he having bcen told that the short wheel base variety was not available. Having arranged to trade in a vchicle in part payment Mr. Andrado paid the balance of the amount in excess of $6,000

to the respondent and took delivery of a long wheel base

Jeep vehicle on 2 September, 1977. On 3 September, 1977 a friend of Mr. Andrado Crew his attention to a small plate affixed to the forward side of the fire wall of the vehicle

It is necessary to digress in order to cxplain the presence of this plate. Thomas Arthur P1lice, scnior mechanical

engineer since 1974 with the Queensland Main Roads Department

Grew attention to a number of regulations made pursuant to sub-sections (1) and (2) of Section 70 of the Queensland Traffic Act, 1949 (as amended). Those sub-sections give the Governor-in-Council wide powers to make regulations

dealing with, inter alia, things specified in the schedule

to the Act referred to. Clause 13 of the schedule provides

that regulations may be made providing for, regulating and

controlling the construction and maintenance of vehicles

in accordance with conditions or specifications prescribed.

Clause 1 of the schedule to Part 13 of the Traffic Reguiations

1962 provides that every vehicle driven or used upon a road

shall be constructed and equipped as provided in the schedule.

Clause 86(D) of the said schedule to Part 13 1s in the following

"86D. Every motor vehicle manufactured on or after the First Day of January, 1972, shall have fitted a compliance plate approved by

the Australian Motor Vehicle Certificate Board. Such plate shall be affixed in a conspicuous position on the vehicle and shall not be removed or modified witheut the approval of the Commissioner of Main Roads nor shall such plate be defaced in any way."

"Compliance plate" is defined by Clause 4(1)(d) of the said

"An identification plate, as approved by the Australian Motor Vehicle Certificate Boaid for affixing to the motor vchicle to which it is attached."

Mr. Price deposed to the fact that each State of Australia has similar but not identical legislation recognising the existence of compliance plates approved by the said Board (hereinafter referred to as the A.M.V.C.B.). The A.M.V.C.B. has laid down that compliance plates are metal plates which contain information relating to the description of the motor vchicle, its date of manufacture, its scrial number and the numbers of the Design Rules with which it has bcen manufactured to comply. It is common ground that the object of a compliance plate is to identify the vehicle in such a way as will make 1t apparent to anyone concerned to Know what Design Rules were in force at the time of the affixing of the plate. It is not inspected to determine whether or not it is in such condition by officers of the Main Roads Department but approval has been given to "manufacturers"

The quotation marks around "manufacturer" are there because the A.M.V.C.B. has adopted a special definition of the word "manufacturer" which need not bear any relationship to the real meaning of the word. According to that definition the "manufacturer" 1s the name of the person or company to whom the privilege of affixing compliance plates has been granted. In the case of imported vehicles it would normally be the importer. It can thus be seen that "manufacturer" as it appears on the compliance plate may be completely misleading to any person not familiar to the definition adopted by the A.M.V.C.B.. Further, the A.M.V.C.B. has laid down that the

date of manufacture to be inserted on the plate 1s the date

the motor vehicle is available in Australia in a condition which will enable it to be registered. It will be readily

seen that this date 1s also completely artificial and would

be misleading to any person not familiar with its special meaning. In addition to 1t being misleading in relation to imported vehicles it could be misleading in relation to any vehicle. The vehicle may have been assembled for a number

of years cxcept for the addition of some component necessary

for registration and when that component is affixed a compliance plate could also be affixed showing the date of manufacture

as some years after it had been in fact manufactured.

The presence of the compliance plate 1s not inany way relicd upon by the Commission to support the application for an injunction. I refer to them as a possible source of problems for motor dealers when vehicles are displayed for sale with

the plate visible to a prospective purhcaser; see Given v

C.V. Holland (Holdings) Pty. Ltd. 15 A.L.R. 439 per Franki J.

on displaying a vehicle with an odometer reading which had been "wound back". Respondent's counsel has submitted that these plates 1n some way, because of their presence, operate in the reverse way to the effect of the odometer in the case cited. It is submitted that their presence negatives the description of the vehicles as "new". Had there been evidence that either of the purchasers knew of their existence and the information contained on them that submission may have substance. However, as there 1s no such evidence in

relation to either purchaser the submission must fail.

Reverting now to the circumstances surrounding the sale to Mr. Andrado, 1t becomes clear that the issue in the case 1s whether or not in the circumstances it was misleading to describe that particular vehicle which had been completcly assembled and ready for registration from the month of

January, 1975 as a "new" vehicle in September, 1977.

The second set of circumstances concerns the purchase of a similar vehicle by Ian Richard Watson in January, 1977.

There again Mr. Watson dealt with a salesman employed by

the respondent on the basis that the vehicle was new in a part of the premises of the respondent reserved for the sale of new vehicles as opposed to second hand vehicles.

However, in Mr. Watson's case there was a more explicit representation of the newness of the vehicle because Mr. Watson informed the salesman that he had driven a similar vehicle which he described as then being a couple of years old and the salesman remarked that he would notice the difference in power between that vehicle and the new vehicle. Other evidence indicated that there had been no model change since 1974 and therefore there would be no difference in

the power output of the two vehicles. The salesman's comment

as to power difference implies a difference in engine between

Various documents described the vehicle sold as new and the salesman referred to the vehicle as a new vchicle. Mr. Watson had various complaints about the condition and performance

ef his vchicle and in March, 1977 took 1t to a used car

d@ealer, anformed the dealer that he had purchased the vehicle only a couple of months beforehand and was offered $5,500

for it which offer he accepted. Later that dealer refused

to complete the purchase stating that the vchicle was not

two months old but two ycars old and this he had ascertained

by reference to the compliance plate which had shown "1/75".

There is ample evidence before me that depending upon storage conditions, newly manufactured vehicles deteriorate in degrees varying according to the conditions in which they are stored and to the nature of the substance from which various parts are made. For example, one of the vehicles purchased had

a faulty petrol pump and expert cvidence was given to the effect that the rubber diaphragm in such pumps deteriorates with the effluxion of time. I accept that some degree of deterioration takes place and serious deterioration takes place in bad storage conditions particularly in conditions where salt air has access to the vehicles. The question

to be resolved of course 1s whether the description of the vehicles as "new" vehicles was misleading within the meaning

The word "new" can mean both "not second-hand" and "of recent origin": see John McGrath Motors (Canberra) Pty. Limited v Appleber 110 C.L.R. 656. It 1s clear in the instant case that neither vehicle was a second-hand vchicle. Whether

the description of both vehicles as "new" was misleading

or is likely to mislead or deceive within the meaning of

Section 52 is a question of fact. There was expert evidence

before me to the effect that within the motor trade, traders in motor vehicles regarded the use of the word "new" as appropriate to describe a vehicle which was the current model, had not previously been owned by a person other than the

farm selling it, and had not been previously registered.

This "trade" meaning 1s not to be taken as the yardstick

when considering the meaning of "misleading" in relation

Both the vehicles, the subject matter of this action detcriorated to some extent as a result of storage and I am of the view that the lapse of time in each case between the affixing of the compliance plate and ultimate sale (two years or more) was of too long a duration to ecnable the respondent to describe them as "new" without that term being misleading or deceiving. I am therefore of the view that in the two instances there has been a breach of

It remains now to consider whether in the cxercise of my discretion an injunction should be granted in the terms

Part of the applicant's case was that when the Commission's officer interviewed the respondent's managing director and

Mr. Ellis, the general manager of the Breakfast Creek Branch of the respondent company and words were spoken by one of them which could be understood to mean that the respondent's

salesman would not be instructed to advise potential customers

of the length or period a vehicle had been in existenec.

The respondent through its counsel suggested that the officer was incorrect when he attributed the words to the managing director and suggested that they should have been attributed to the general manager. Evidence was also given by the general manager and the managing director to this effect. I do not think I have to resolve this conflict because it 1s clear that, even if it was the general manager that used the words he did so in the presence of the managing director, there

is no suggestion that the managing director indicated lack

of agreement and by his silence approved, having regard to the subject matter of the interview. At the hearing the managing director offered an undertaking to the Court to instruct the respondent's salesman in such a way as would lead to prospective purchasers being made aware of the length of time the vehicle was in existence, where that course was

I see no reason why I should not treat this undertaking at its face value and discount the force of the attitude expressed to the Commission's officer because 1t was obviously

There has been tendered before me a Trade Practices Commission Circular No.10 entitled "Consumer Protection Advertising Guidelines". Reference 1s made to Section 2& and the

powers of the Commission therein and some pages of the document are directed to an expression "misleading" or "deceptive"

in Section 52 of the Act. The document wes tendered by the

respondent and, on it was based a submission that a particular section at page 16 of the document considered the description

of a motor vchicle as "new" and referred to R. v Ford Motor

Co. Ltd. (1974) 3 All E.R. 489. According to the summary of that case the word "new" could have been accurately applied to the vchicles in question in this case. However, there was no evidence that the respondent or any of its employees relied upon this guide line in formulating any policy in relation to the description of the vehicles it

Although I have come to the view that the two vehicles could not properly bear the description "new" I can appreciate

that motor dealers would have some diffaculty in determining whether that adjective was appropriate. It would no doubt be uscful to the motor trade 1f I could set a time limit on the length of time a vehicle could be in existence before it could no longer be described as new but the task is impossible and in addition every case resolves itself into a qucstion of fact. Also, there may be force in the respondent's point that blemishes caused by storage on vehicles, the primary purpose of which 1s work may not make that vehicle not "new". It would appear to me that the motor dealers' difficulties could be avoided if the prospective purchasers' attention was drawn to the length of time the vehicle had been in existence thereby qualifying the adjective "new" if it had

The respondent's counsel argued that the decision of this

Court in Universal Telecasters (Q1d.) Lamited v Terence James

Guthrie,(Full Court delivered 4 April, 1978) supported a

submission that the respondent company was not liable for the acts of its servants. On my reading of the majority judgments the contrary to that submission 1s supported

and Section 84(2) has the effect of making the respondent

In addition to the matiers already adverted to I take into account the following:- 4s (a) The respondent is in business in large measure as a motor dealer and the only two complaints

(b) The particular vehicle, the Jeep, 1s one in which model changes are not frequent, thereby

(c) There 1s not sufficient evidence for me to conclude

In all the circumstances I do not think that it 1s neccssary to grant the injunction sought and I dismiss the application. I stand the matter over to a date to be fixed to hear argquwrent as to costs and for any further applications that either of