Trade Practices Commission v C.G. Smith Pty Ltd & Ors [1978] FCA 6

) NEW SOUTH WALES DISTRICT REGISTRY ) No. G44 of 1977

JUDGE MAKING CRDER: Bowen C.J. DATE OF ORDER: 17th February 1978

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Act 1974 BETWEEN : TRADE PRACTICES COMMISSION Applicant AND: C.G. SMITH PTY. LIMITED

This is an application by Ian Fairweather to be released from an undertaking given to the Court on 21st July 1977 in proceedings commenced by order nisi by the Trade Practices Commission ("the Commission") against C.G. Smith Pty. Limited ("the Company"), Ian Fairweather and Roger Gregory Matson. The Commission sought injunctions to restrain the Company from engaging in trade or commerce in the conduct of advertising interests in land in a manner which was alleged to be misleading and an injunction to restrain Mr. Fairweather

and Mr. Matson from aiding or abetting the Company or any

person to engage in such conduct or being knowingly concerned

When the matter came on before Franki J. on 2ist July 1977 at 10.15 a.m., the Commission was represented by Mr. Bennett of Counsel amd the three respondents were represented by Mr. Hilbery of Counsel. An adjournment was sought in order to discuss settlement. After about one and three-quarter hours, the matter came on again before Franki J.

and terms of settlement, signed by the respective Counsel,

By these terms, the parties agreed to orders in the terms of documents annexed to the terms and marked "A", "B" and "C". Annexure "A" provided for an injunction against the Company in the terms sought and also for an order that the Company disclose to each person who had paid money, certain information by sending by post within twenty-one days a letter in a form set out. Annexure "B" provided for an injunction restraining Mr. Fairweather and Mr. Matson in the terms sought. Annexure "C" provided for an order that jointly and severally

In addition, the terms of settlement provided that the Commission agreed to file with the Court a letter in the form of a document annexed and marked "D". This document, while disclaiming any authority to authorise or to clear

advertisements contained a statement that the Commission had

no objection to the test of a printed form of an advertisement

Pursuant to the terms of settlement, the respondents, by their Counsel, gave undertakings to the Court as set forth in a document annexed and marked "E". These

"THIS COURT DOTH NOTE THE UNDERTAKINGS TO THE COURT jointly and severally, by the first, second and third respondents, that they will -

• vefund to each person who completes and posts to the first respondent a document in the terms of the form set out in annexure "A" to these terms of settlement, the money paid by such person to the first respondent or to Fairmat Finance Co., such refund to be made within 21 days of the receipt by the first respondent of the said

• provide the applicant within 28 days with a list of the persons who have paid money to the first respondent or to Fairmat Finance Co. in respect of an interest in the said land.

» provide the applicant on or before Ist day of December 1977 with a list of persons responding

to the said letter and a statement of the steps taken with regard to each."

Pursuant to the terms, it was finally ordered that the parties

These orders of 21st July 1977 were entered on 24th August, 1977. No step was taken prior to their being entered to challenge or question them. They were consent

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On 5th October 1977 a notice of motion was issued by the Commission against Mr. Fairweather and Mr. Matson seeking an order that they be committed to prison for contempt of Court in that they had disregarded and committed

a breach of their undertaking given on 21st July 1977.

This motion came on for hearing before me on 26th October 1977. The Commission was represented by Counsel. Mr. Matson appeared in person. Mr. Fairweather did not appear. He had been on a plane destined to leave Australia but had been apprehended in Darwin, where he was then in custody.

The motion came again before me on 27th October 1977. Mr. Fairweather was then before the Court in custody. He was released on certain conditions. The motion came on before me for further hearing on 4th and 8th November and the 5th, 6th

When the hearing was in progress on 9th December 1977, Mr. Fairweather applied to be discharged from the undertaking. It was decided that, as the motion for contempt had proceeded so far, Mr. Fairweather should tender his evidence in support of his application to be discharged from the undertaking along with any other evidence he wished to tender in his case in relation to the motion for contempt. It would be evidence in the contempt motion and evidence on which he would base his application to be discharged. The hearing accordingly continued on the 9th December 1977 and 2nd and

3rd February 1978. It concluded on 3rd February 1978,

when I reserved my decision on the motion and Mr. Fairweather's

The grounds on which Mr. Fairweather claimed he should be discharged from the undertaking were that it was given by Mr. Hilbery without his knowledge, consent or

instructions and that Mr. Hilbery was at the time unaware

of the bad financial position of the Company, Mr. Fairweather

Mr. Hilbery and Mr. Fairweather both gave oral evidence in relation to the matter. In my opinion, Mr. Hilbery endeavoured to give a frank and honest account of what occurred, though his recollection at times proved faulty. I would not be prepared to act upon the testimony of Mr. Fairweather on contentious matters where he was not

instructed to act for the Company, Mr. Fairweather and Mr. Matson in the proceedings commenced by the Commission by order nisi.

2. That the matter was handled by Mrs. Coonan, principal of the firm, assisted by Mr. Leo. |

3. The firm briefed Mr. Hilbery of Counsel to appear for all

| 1. That the firm of Solicitors, Coonan and Associates, were

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After interlocutory injunctions had been granted against the three respondents, a conference with Mr. Hilbery was held on 6th July 1977 at which Mr. Matson and Mr. Fairweather were both present.

Mr. Hilbery further discussed the case in telephone conferences with Mr. Fairweather on Sunday 10th and

There was another conference with Mr. Hilbery on 15th

July 1977 at which Mrs. Coonan, Mr. Leo and Mr. Fairweather were present.

On 20th July 1977 Mr. Hilbery received draft terms of settlement from Mr. Bennett. These were substantially

in the form ultimately handed up on 2ist July 1977. On 21st July 1977, they were amended in small but not unimportant respects at the instance of Mr. Hilbery designed to make them more favourable to the respondents.

After receiving the draft terms on 20th July 1977, Mr. Hilbery had a conference with Mrs. Coonan about the draft, during which Mrs. Coonan spoke to Mr. Matson on the telephone about the terms.

On 21st July 1977, Mr. Fairweather was not present because he had to be in Court at Parramatta. During the conference held during the adjournment on 21st July 1977, the draft terms were discussed at some length between Mr. Hilbery, Mrs. Coonan, Mr. Leo and Mr. Matson. Some amendments

were later put to Mr. Bennett and agreed to by him. The terms agreed upon, which were signed by both Counsel and

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Mr. Fairweather. He had no clear recollection as to detail, but attached that to recollection of a telephone call to Mr. Fairweather on 20th July 1977. Later,

after referring to a copy of his memorandum of fees,

he thought that he was mistaken in thinking a telephone call was made to Mr. Fairweather on that day. He outlined various Matters arising in his dealings with Mr. Fairweather and Mr. Matson which led him to believe that they consulted together, that they both spoke for the Company and that when Mr. Fairweather was not there, Mr. Matson spoke

Mr. Matson was not in fact a director. He believed he

was entitled to take instructions from Mrs. Coonan in respect of all three respondents and that he had instructions, not only from Mr. Matson but from Mrs. Coonan, to agree to the terms, including the undertaking on behalf of each of his clients.

Mrs. Coonan was not called in relation to Mr. Fairweather's application.

At the 21st July 1977, Mr. Hilbery was not informed and

was not aware that the Company or either of the individual respondents was in any financial difficulty. What was

the financial position of the Company or the individuals

at that time was not established by the evidence. However, the Company went into liquidation on 17th August 1977 and

Mr. Matson became bankrupt on his own petition presented

Mr. Matson visited Mr. Fairweather at his home after Court hours on 21st July 1977, taking with him a copy of the terms of settlement. The matter was discussed. Mr. Fairweather expressed anger at the personal obligation placed upon

After the 2lst July 1977, Mr. Fairweather joined with

Mr. Matson in carrying out the terms of settlement,

including the sending out of the letter required by

Fairweather in cross-examination, agreed he had attended

a conference with Mr. Hilbery at which a compromise of the

proceedings brought by the Commission was discussed.

Prior to 2lst July 1977 he knew that an attempt was to be

made to settle the proceedings and that this would involve the

giving of an undertaking that money would be refunded to

persons who claimed it. He asserted that he did not understand

he would be personally involved. He said he realised that Mr.

Matson and Mr. Hilbery were going to attempt to reach a settlement

with the Commission on 21st July 1977. When asked whether he

content that morning to leave things to Mr. Matson and

Hilbery, he said: "I was not content to, but I had to."

In my view, Mr. Hilbery was justified in relying upon

instructions from Mr. Matson and Mrs. Coonan in relation

to the settlement, including the undertaking to be given by

Counsel's general authority extends to the giving of an undertaking on behalf of his client. He cited Matthews v. Minister (1887) 20 Q.B.D. 141. That case referred to the compromise of an action, but the compromise did not involve the giving of any undertaking. It has been held the Court will not accept an undertaking offered by Counsel on behalf of his client, in circumstances where Counsel states he has

no authority from his client to give it (Smith v. Beeman

(1842) 6 Jur. 222). In Marsden v. Marsden (1972) 2 Ail E.R. 1162,

undertakings were given by Counsel on behalf of a wife as part of a compromise with her husband. Subsequently the wife moved to set the compromise aside and her application was successful. In that case the authority of Counsel

was limited by express instructions unknown to the other side. He compromised contrary to his instructions. The applicant informed the Court of her intended application to set aside the compromise a day or two prior to the original order being entered. The actual application was lodged on the day the order was entered. Although precise times could not be determined, her application was treated as one which had

In the present case, I have come to the conclusion that Mr. Fairweather was aware before the 2lst July 1977 that, in order to effect a settlement of the proceedings, undertakings regarding refunds, including undertakings by the Company, Mr.

Matson and himself would have to be given. He left it to

Mr. Matson and Mr. Hilbery to secure the best terms they could. In my view, in all the circumstances, it was within Mr. Hilbery's authority to give the undertakings which he did. Furthermore, Mr. Fairweather, with knowledge of the settlement, took the benefit of the consent orders which had been made. The Commission and, indeed, the Company

and Mr. Matson, were properly entitled to rely upon the fact that the undertaking was given on Mr. Fairweather's behalf as part of the settlement. The orders were duly

entered. The Commission's proceedings were finalised by the

application to be discharged from the undertaking be dismissed