Universal Telecasters (Qld) Ltd v Guthrie, Terrence James [1978] FCA 18

UNIVERSAL TELECASTERS (QLD) LIMITED v. TERRENCE JAMES GUTHRIE

) ) QUEENSLAND DISTRICT REGISTRY ) No. Qld. 2 of 1977 ) )

Appeal upheld. Conviction quashed. Respondent to pay the costs of

the appellant both of the appeal and before the trial judge.

) ) QUEENSLAND DISTRICT REGISTRY ) No. Qld. 2 of 1977 ) )

Act 1974 BETWEEN : UNIVERSAL TELECASTERS (OLD) LIMITED Appellant AND: TERRENCE JAMES GUTHRIE , Respondent CORAM: Bowen C.J., Nimmo and Franki JJ.

BOWEN C.J.: I have read the reasons for judgment prepared by Franki J. I agree with his conclusions and, speaking generally, with his reasons. However, I feel I should express

The first concerns the question whether a television station which broadcasts an advertisement for one of its customers "makes" any statement which forms part of that advertisement. The word "make" is a word with a wide range of meanings. One meaning is "to cause to exist; to

produce by action; bring about". Another is "to cause to be,

render" (see Shorter Oxford Dictionary 3rd Edn. (1973)

p-1263). In one sense, when a 'television station broadcasts an individual saying something, it is the individual who makes the statement; the station broadcasts his statement. However, the meaning of the word "make" is such that it

is wide enough to cover the broadcasting of the statement.

It appears to be used in s.53(e) of the Trade Practices Act

But it is argued that where it appears that the statement is put forth by or on behalf of another and not by or on behalf of the television station, the station

where the television station broadcast a statement by an

individual along the following lines - "Today the Federal Treasurer

said 'Sales cax on all motor vehicles will be reduced by twenty-five per cent as from lst July next'". It was argued that the television station in this instance should be held to make the statement about the Treasurer and his announcement but should not be held to make the statement regarding sales tax. Where there are express words such as those in the illustration or where there are express words of adoption or exclusion, this may, perhaps, be a proper line to draw. If so,

then logically it would seem difficult to distinguish the case

where, by necessary implication the statement was made

for or on behalf of another. 'These will be matters for decision when an appropriate case arises. In the fields

of consumer protection legislation and television broadcasting, it appears to me that any doctrine of necessary implication,

if it is proper to import it at all, will have to be

the reaction of particular viewers. Obviously one difficuity would

be to lay down a rule for determining when such an implication should be made. Would the mere fact that it was an advertisement which, in the nature o* things, featured the name of the advertiser be sufficient? The television medium is such that the impact is immediate and ephemeral. A viewer cannot go back over the broadcast. For him it is necessarily a matter of impression. If one sought to find a test by which one might determine whether the implication should or should not be made, should one test it by asking whether

the judge would make that implication if he were the viewer or, leaving the judge on one side, whether an ordinary reasonable person viewing it would make that implication or whether some less sophisticated or less perceptive viewer would do so.

None of these tests would appear to me to be satisfactory.

The relevant provisions of the Trade Practices Act are

directed to protecting all viewers including those who are particularly susceptible to the influence of persuasion by

advertisement. The fact that a statement is clearly an

advertisement for a particular advertiser would not seem to constitute a sufficient basis in the circumstances to justify a holding that the statement was not made by

While the terms of the advertisement in the present case may fairly raise the inference that the statemenc in it is the statement of Metro Ford, there is insufficient

material in it to raise the inference that it is not also the statement of Universal Telecasters. Even if it be

proper to distinguish statements on the basis they are

expressly or by necessary implication statements of the advertiser

and not of the television station, the statement in this

It may be suggested that this interpretation places a heavy burden upon television stations. However, it is no douht because of this burden that the defences in s.85 are provided. Thus a television station may, by way of defence, show that it is its business to publish or arrange for publication of an advertisement, that it received the advertisement for publication in the ordinary course of business and that it did not know and had no reason to suspect that its publication would amount to a contravention

Counsel for Universal Telecasters sought to obtain some support for his argument upon the interpretation of "make" in s.53(e) by reference to the use of the word "publish" in s.85(3). I do not consider that the use of the word "publish" in s.85(3) requires s.53(e) to be construed in the manner suggested. It may be noted that s.85(3) provides a defence which is available in respect of the offences

provided for in other paragraphs of 8.53, besides s.53(e).

The second aspect concerns the defence under s.85(1) that Universal Telecasters "took reasonable precautions and used due diligence". While these are plain English words, which have to be applied as they stand, it appears to me that two responsibilities which Universal Telecasters would have to show it had discharged, in order to establish this defence, would be that it had laid down a proper system to provide against contravention of the Act and that it had provided adequate supervision to ensure the system was properly carried out. Universal Telecasters did institute a system and did provide for supervision. The mere fact that its system and supervision has proved inadequate to prevent error, does not necessarily establish that its system is defective. Even the best systems may break down due to human error. It is necessary to make a judgment about the system

The system of having advertisements checked by Mr. Yardley before transmission appears to have been basically a sound one, although it would have been stronger if it had not placed so much weight upon his mere personal knowledge and reaction to the advertisements which he viewed. However, I would not be prepared to hold that the system was defective in not requiring an advertisement, such as that in the present case, to be checked with the relevant Government Department or in not requiring the advertisement to be verified by the advertiser. The failure to provide a better system of dealing with telephone complaints made at the time, in the evening, when the advertisement was to be broadcast, raises a more difficult question. It is, in my opinion, not enough for Universal Telecasters to show that it had a careful system of vetting advertisements before it put them to air. In the cese of advertisements which are to be broadcast during the evening period on more than one day, I tnink a proper system should include some procedure whereby a complaint made during this period that an advertisement 1s misleading or otherwise contravenes the

Trade Practices Act will be referred promptly to an appropriate

officer. No system had been established which made adequate provision for this. In this respect I think the Company

The third aspect concerns the defence under s.85(3), that it was the business of Universal Telecasters

to publish or arrange for publication of advertisements and

that it received the advertisement for publication in the ordinary course of business and did not know and had no reason to suspect that its publication would amount to a

There is no doubt that the business of Universal Telecasters fell within the section and that it received the advertisement for pablication in the ordinary course of business. The question is whether Universal Telecasters established that it did not know and had no reason to suspect that publication of the

It appears to me that after Mr. Paterson's warning to Mr. Garry, the sales manager of Universal Telecasters, Mr. Garry had reason to suspect that publication of the advertisement would amount to a contravention. Did Universal

The question whether a corporation has knowledge or reason to suspect something is a difficult one. A defence such as this is designed to excuse a corporation which has published a misleading advertisement if, in doing so, it was not blameworthy. It seems clear enough that if an employee, for example a lift driver or a telephonist, had knowledge or reason to suspect something, it would be wrong to attribute

this to the corporation. On the other hand, if an employee in

an executive position had knowledge or reason to suspect something, it might be thought that it would be fair

were to be approached in this way, the problem would be

Trade Description Act 1968 (U.K.), the House of Lords in

Tesco Supermarkets Limited v. Nattrass [1974 A.C. 153

adopted a different approach. Their Lordships applied the

"organic" theory (see Gower, The Principles of Modern

Company Law, 3rd Edn. (1969) Chapter 8). The view was

taken that what natural persons were to be treated in law

as being the corporation were to be found by identifying

those natural persons who, by the memorandum and articles

of association or as a result of action taken by the directors or by the corporation in general meeting pursuant to its articles, were entrusted with the exercise of the powers

of the corporation. (Tesco's Case, supra, per Lord Diplock

at pp.199~200; cf. per Lord Reid at pp.170-171 and Lord Dilhorne at p.187). In that case, the principle was applied in determining whether the company had taken "all reasonable precautions" and exercised "all due @iligence". It would seem that the principle would apply equally in determining whether, under our corresponding legislation, a corporation had knowledge of or reason to suspect something (See generally

Halsbury's Laws of England, 4th Edn. Vol. 7 p.451 para.757).

be applied, Mr. Garry would fall outside the persons who are to be treated as the corporation in the case of Universal

of the Trade Practices Act has altered the position as it

was discussed in Tesco's Case, supra. Section 84 provides that where it is necessary to establish the intention of the corporation, it is sufficient to show that a servant oz agent had the particular intention (s.84(1)). It further provides that any conduct engaged in on behalf of the corporation by a director, agent or servant shall be deemed to have been engaged in also by the corporation (s.84(2)). It would seem that s.84 does alter the position as it was Giscussed in Tesco's Case, supra, in two respects, first, so far as the intention of a corporation is concerned and,

secondly, so far as conduct engagec in on behalf of a

corporation is concerned. It does not touch the question of

knowledge or reason to suspect, nor does it touch the situation where consideration has to be given not to some act on behalf of the corporation but to failure to act.

In other words, in the areas which we have to consider in relation to Mr. Garry's knowledge and reason to suspect

that the advertisement would amount to a contravention, s.84 has no application. We are left then with the application

of the principle discussed in Tesco's Case, supra. Applying

this principle, it appears that Mr. Garry falls outside the class of persons who are to be regarded as the corporation and that, in the circumstances, Universal Telecasters has

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QUEENSLAND DISTRICT REGISTRY No. QLD.2 of 1977 GENERAL DIVISION

ON APPEAL from a Single Judge of the Federal Court of Australia

BETWEEN UNIVERSAL TELECASTERS QLD. LIMITED Appellant AND

This is an appeal from an Order made by a single Judge o° this Court cn 12 October 1977 by which the appellant company was convicted of contravening s.53(e) of the Trade Practices Act 1974 and faned $2,000 and ordered to pay the respondent's costs. Section 53(e) reads as follows : *A corporation shall not, in trade or commerce, in connexion with the supply or possible supply of goods or services or in connexion with the promotion by any meazs of the supply or use of goods or services - make false or misleading

statements concerning the existence of or amounts of, price reductions;?'.,

The charge which lcad to the conviction was that on or about 15

April 1975 at Brisbane in the State of Queensland the appellant,

'a corporation as defined in the Trade Practices Act 1974 did in

contravention of s.53(¢), in trade or commerce, in connection with the promotion by advertising of the supply of goods, to wit Falcon motor cars, make misleading statements concerning the existence of price reductions, the said misleading statements being made in and by an advertisement published and screened by the Television Staticn TVQ Channel O at Brisbane in the State of Queensland, the saic statements being misleading in that the said statements contained the words and sentences, "Dr, Jir's lovely tax cuts are guaranteed till only April 30, so if you haven't been out to Metro Ford by then you could be a deadset April Fool. Metro Ford offer immediate delivery of automatic Falcon 500 sedans that save you $335.00, If you don't take delivery by April 30 you're up for an extra 335 bucks in tax.", which made the statements misleading in thal the said words and sentences meant and implied that the existence of a reduction in price for such vehicles on account of sales tax cuts would not continue after 30 Aprii 1975 so that a purchaser would then have to pay an additional $335.00 in sales tax on such a vehicle whereas the true position was that a reduction in prace on account of sales tax cuts was to continue (though at a reduced amount) after 30 April 1975 so that a purchaser would not have to pay $335.00 addztional sules

The appellant conducts the television station TVQ Channel O al Brisbane, On 15 April 1975 it transmitted through its television facilities the advertisement about Falcon motor cars

with the text as quoted in the charge. This advertisement

referred to sales tax reductions on motor vehicles which had been announced by the Treasurer, Dr. Jim Cairns, on 28 January 1975. The tax reductions were operating on 15 April 1975 although it was not until 18 April 1975 that they received legal sanction by retrospective legislation, Prior to the reductions coming into effect on 29 January 1975, sales tax was payable on new passenger motor cars at the rate of 274%. in anticipation of the legislation, following the Treasurer's announcement, sales tax 1n respect of those vehicles from 29 January to the end of April 1975 was to be at the rate of 15%

and thereafter at an additional rate of 23% for each succeeding

month until 1t was reslored to 273% after the end of August 1975.

At the hearing of the charge evicence was given that one s.B. Paterson on viewang a telecast of the advertisement early in April 1975 rang the station at about 7.30 p.m. and had a conversation with a person, who, when informed that he wished

to complain about what he considered a misleading advertisement, was advised to ring either the station manager or station sales manager the following day. This he did soon after 9 a.m. and was advised that the sales manager was unavailable. He rang again at 10.30 a.m. and was put through to a person who tantroduced himself as Terry Garry, sales manager', Paterson informed Garry that he considered the advertisement was misleading inasmuch as sales tax would not increase by $335.00 on the Falcon in May. Garry then questioned Paterson as to his knowledge of whether or not sales tax would increase, and, if so, by what amount and Paterson answered 'that on the basis that

I had until recently been employed by a finance company ard I

was aware of the proposals in relation to sales tax increases

in May'. Garry then said that the had had a look at the ad.

or they had had a look at the ad.' and intimated that the advertisement had been reviewed but an the light of Paterson's conversation with him, 'they would again review the advertisement

On 9 April 1975 Mr. A.A. Wase of the Trade Practices Commission, as a result of a telephone call "Srom a Mr. Meldrum about the advertisement, rang Channel 0, asked the telephonist to connect him to whoever was responsible for answering inquiries on advertisements shown on that channel. He was connected to Garry. Wise identified himself and his place of employment and informed Garry that a complaint on the Metro Ford advertisement had been received, Garry, after stating that he was the sales manager of the appellant, asked what was wrong with the advertisement, Wise replied, 'I do not know, that is why I would like to obtain the transcript of the advertiscment if I could'. Garry then said, 'I cannot see anything blatantly wrong with the advertisement, I will send you a copy in the mailt., At that time Wise was not aware of the text of the advertisement. On 15 Apvil 1975 Wise checked the text of an advertisement televised by Channel O at 7.45 p.m. on that date and found the wording to be exactly the same as the wording of the text of the advertisement he had received from Garry.

In the evening of the same day, Paterson again viewed the advertisement televised by Channel 0O. He again rang the station and asked to speak to someone in authority. The person

he spoke to identified himself as a technician, He suggested

that Paterson ring the following morning, when he could then

speak to the manager, the sales manager or perhaps Fonda Metassa,

the speaker of the text of the advertisement, if he so desired. Paterson did not again contact Channe] O but rang the Trade Practices Commission on 16 April 1975. On that day Wise rang and arranged a meeting with Garry for 21 April 1975. Up to that stage Wise had not notified Garry or anybody else at Channel © that the Trade Practices Commission considered the

advertisement to be a contravention of the Act.i i)
|

On 21 April 1975 Wise called on Garry at the Channel O studios and advised him that the Trade Practices Commission had an objection to the advertisement. Garry thereupon said the

advertisement 'would be withdrawn at once', and it was.

At the hearing before this Court, senior counsel for the appellant sought to have the Order of 12 October 1977 sct aside on the following five grounds : Firstly, that the appellant did not make the statements contained in the advertisement, Secondly, that the advertisement was not misleading concerning the existence of a price reduction, Thirdly, the respondent, having treated the appellant as a principal offender, had not proved essential elemenis of the charge such as that the appellant 1s a corporation within the meaning of the statute, which, if it made the statements, made them in its trade or commerce, Fourthly, s.85(3) of the Act affords a defence, assuming that the offence were otherwise established, to a person in

advertisement in the ordinary course of its business and did not know and had no reason to suspect its publacation would amount to a contravention, and the appellant was such a person,

Pifthily, s.85(1) of the Act affords an alternative defence 'which is in substance that the offence, if it occurred, occurred despite reasonable precautions and due diligence

The first ground on which it is contended that the Order should be set aside is based on the undisputed fact that the advervisement was prepared by an advertising agency, Doyle Dane & Bernback Pty. Limited, on the instructions of the advertiser, Metro Ford Pty. Limited and then sent to the appellant to be telecast. In those circumstances, it 1s argued, it was the advertising agency that made the statements and all that the appellart did was provade the means by which they were published, This argument suggests thal the tere preparation by the advertising agency constitutes the making of the statements.

In the context of Part V of the Act, I consider that the making of statements involves more than that and requires their dissemination by one means or another to potential consumers. In the present case the text of the advertisement was disseminated to potenlial consumers by the appellant an its telecast which made no reference to the advertising agency.

In my view the making and publishing of the statements in this Case were contemporaneous and mutually inclusive. Sucha state of affairs appears to me to have been contemplaled by the

legislature for s.85(3) provides a defence to a person whose

business is to publish or arrange for the publication of

advertisements and who received an advertisement for publication

in the ordinary course of business but did not know and had no reason to suspect that 11s publication would amount to a contravention of Part V of the Act. It foliows that, 2n my

view, this ground for setting aside the Order must be rejected,

The secoud ground raised by counsel is that the advertisement was not misleading 'concerning the existence of prace reductions! because, he argued, tne words, 'If you don't take delivery by April 30 you're up for an extra 335 bucks in tax' related not to the then existing price reductions but to the cessation of those reductions at a future date. I consider this argument is misconceived because it seeks to limit the application of the words 'the existence of price reductions! to present price reductions, There is nothing in the context in which the words are used to warrant such a restrictive interpretation, In my view the intention of the legislature is to prohibit a corporation from making misleading statements

concerning the existence of price reductions regardless of

whether tney are presently operating or are to operate at some

The third ground relied on by counsel is that the respondent failed to prove an essential element in the offence charged, namely, that the appellant 1s a 'tradang corporation! formed within the limits of Australia (see paragraph (b) of the definition of 'corporation! in s.4 of the Act). He adnitted

that the appellant is a corporation formed within the limits of

Australia but argued that it is not a 'trading corporation', The expression 'trading corporation! 1s defined in s.4 to mean 'a trading corporation within the meaning of paragraph 51(xx) of the Constitution! bul for present purposes that definition does not assist. No single test for determining whether or not a particular corporation is a 'trading corporation! 1¢ to be found in the judgments delivered in the case of The Qucen v. Trade Practices Tributal ex parte St. George County Council (1973) C.L.R. 533 which was cited by counsel for the appe.lant. Some of the yudges in that case considered that the descor:ption 'trading corporation! refers to the activities of the corporation at the relevant time, others to the purpose for which the corporation was formed, In the presenl case the activities of the appellant on 1£ April 1975 were those o° a corporation operating a commercial television station for profit. Its principal and almost exclusive activity was selling its services to advertisers. Although the Memorandum of Association of the appellant was not tendered an evideuice

it may be inferred from its activities that 11 was formed for

The appellant televised the advertisement, the subyect of the offence charged, in the ordinary course of the business activities 1t was conducting and for which 31t had been incorporated. In such circumstances I consider that the evidence establishes beyond reasonable doubt that the appellant was at the relevant time a 'trading corporation! within Lhe

The fourth ground for setting aside the Order under appeal is based on s.85(3) of the Act which reads :

'In a proceeding under this Part 1n relation to the contravention of a provision of Part V committed by the publication of an advertisement, it 1s a defence if the defendant establishes that he 1s a person whose busincss 1t 3s to publish or arrange Sor the publication of advertisements and that he received the advertisement for publication in the ordinary course of business and did not know and had no reason to suspect that its

publication would amount to a contravention of a provision of that Part.?

Before i.e sub-section affords a defence to the appellant it must establish that on the balance of probabilities it dad not know and had no reason to suspect that the publication of the advertisement would amount to a contravention of Part V of the Act. Since a company has no mind of its own the question immediately arises ~- Whose lack of knowledge and whose lack of

reason to suspect is relevant? In Tesco Supermarkets Linited

v. Nattrass (1972) A.C. 153 Lord Read said at p.170,

'I must start by considering the nature of the personality which by a fiction the law attributes to a corporation.

A laving person has a mind which can have knowledge «cast. Archer stated that complaiants between 9 a.m. and 5 p.m, were channelled to the appropriate executive but there was no system for logging them. He further stated that any calls wade outside those hours were

to be logged by the technicians o1 duty if they thought they were complainis. Since the prine tiie for television viewing 15s outside normal office hours one would have expected the appellant to have foreseen the probability of telephone complasnts particularly in the evening. To have made no more positive provision than to require technicians to log what they considered to be complaints, in my view, amounts lo a defaciency in the system and a fazlure to take reasonable precautions to avoid contraventions of Part V. T consider provision should have heen made whereby such complaints could be referred to someone in authority to enable prompt investigatlon. In the instant case Paterson rang the station on the night of 9 April 1975 and

specifically stated that he wished to complain about what he

considered to be a misleading advertisement, but neilher that

Archer, to whom full power to manage and operate the station had been delegated by the directors of the appellant, delegated to Garry, an executive of the company, full power to receive complaints about advertising matter, including complaints that telecast advertisements were in contravenlion of the AcL, between

9 a.m. ard 5 p.m., but made no similar delegation in relation to complaints made to the station outside those hours and duiing the prime viewing time. For this reason, I find that the appellant has no+ discharged the onus imposed upon it by s.85(1)(b) and is

therefore not entitled to rely on the defence the sub-section

The appellant having failed on ali five grounds, I would dismiss

AWN dh PEE GOV UE AVL dba QUEENSLAND DISTRICT REGISTRY No. Qld. 2 of 1977 GENERAL DIVISION

BETWEEN UNIVERSAL TELECASTERS QLD. LIMITED Appellant AND TERRENCE JAMES GUTHRIE Respondent Coram: Bowen C.d., Nimmo and Franki JJ. JUDGMENT FRANKI J. The appellant, Universal Telecasters Qld.

Limited, appeals from a conviction and fine imposed by a Single judge of this Court. The appellant was charged with a breach of s.53(e), of the Trade Practices Act 1974

"A corporation 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-...(e) make false or misleading statements concerning the existence of, or amounts of, price reductions."

The offence charged was that on or about 15 April 1975, in contravention of s.53(e) of the Act, in trade or commerce, 1n connection with the promotion dy advertising of

the supply of goods, to wit, Falcon motor cars, the appellant

made misleading statements concerning the existence of price

reductions. It was alleged that the misleading statements were made 1n and by an advertisement published and screened by the appellant and that the statements were misleading in that they contained the words and sentences, "Dr. Jim's lovely tax cuts are guaranteed till only April 30, so if you haven't been out to Metro Ford by then you could be a dead set April Fool. Metro Ford offer immediate delivery of automatic Falcon 500 sedans that save you $335.00. If you don't take delivery by April 30, you're up for an extra 335 bucks in tax." It was further alleged that the statements were misleading in that the words and sentences meant and implied that the existence of a reduction in price fcr such vehicles on account of sales tax cuts would not continue after 30 April 1975 so that a purchaser would then have to pay an additional $335.00 in sales tax on such a vehicle, whereas the true position was that a reduction in price on account of sales tax cuts was to continue (though at a reduced amount) after 30 April 1975 so that a purchaser would not have to pay $335.00 additional sales tax but a lesser sum.

The advertisement the subgect of the prosecution was an advertisement of Metro Ford Pty. Limited and it had been prepared for that company by Doyle Dane and Bernbach Pty. Limited, advertising agents. The appellant had no part in the preparation of the advertisement other than to permit it to be made in its studios for which it received a fee. Metro Ford Pty. Limited and Doyle Dane and Bernbach Pty. Limited have already been convicted in respect of the same advertisement

although an appeal by Doyle Dane and Bernbach Pty. Limited is

The chief executive of the appellant, who was directly responsible to the board of directors, was the general manager of the station, Mr. Archer. Mr. Lusk, the company secretary was the

next most senior executive and he acted in Mr. Archer's place

we when Mr. Archer was away. Mr. Garry was the sales manager and Mr. Yardley the sales service manager.

The advertisement was telecast on 15 April 1975, ata time when Mr. Archer was overseas and Mr. Lusk was acting in his place. A Mr. Paterson, a full-time university student who had recently left the hire purchase industry, saw the advertisement, apparently during the first week in April, and telephoned the station at about 7.30 p.m. at night. He asked to speak to either the programme director or the person in charge at the time, but he was told that no one was available to talk to him, although he said he wished to complain about what he considered to be a misleading advertisement. The suggestion was made to him that he should telephone the station manager or the station sales manager the next day. Mr. Paterson did ring at about 9 a.m. the next day and later that morning spoke to Mr. Garry, the sales manager at the time, and said he considered that the advertise- ment was misleading because sales tax would not increase by $335.00 in May. Mr. Garry had in fact resigned on 4 April 1975, although he did not leave until May 1975. Mr. Garry told Mr. Patersor. that the advertisement would be reviewed. Subsequently, on 15 April 1975 Mr. Paterson again saw the advertisement and again rang the appellant at night and askec to speak to someone in charge, but the person who answered the phone identified himself as a technician and suggested that Mr. Paterson should ring the next day. Mr. Paterson however decided to ring the Trade Practices Commission. On 9 April 1975 a Mr. Wise, an officer of the Trade Practices Commission received a telephone call from a Mr. Meldrum concerning the advertisement and as a result of this on 9 April 1975 Mr. Wise rang the appellant and asked to speak to whoever was responsible for answering enquiries about advertisements shown on the channel. This call was transferred to Mr. Garry. Mr. Wise told Mr. Garry

that he had received a complaint about the subject advertisement

but said that he did not know what was wrong with it. It was arranged that Mr. Garry would send Mr. Wise a copy of the advertisement by post. On 16 April 1975 Mr. Wise made an appointment to see Mr. Garry on 21 April 1975 and after that meeting the advertisement was not telecast again.

(1) 'The appellant did not make any statement but only published a statement of another.

(2) The advertisement was not misleading concerning the existence of a price reduction but was rather a statement as to some future event.

(3) The appellant was treated as a principal offender and essential elements in the offence were not proved, for example, that the appellant was a corporation within the meaning of the Act.

I rroceed to consider whether it was estaylished that the appellant made a false or misleading statement. Although the phrase "make false or misleading statements" rather suggests that there may very well be a difference between making a statement and publishing the statement of somebody else, I have come to the concluson that, 1n general, where a television station telecasts an advertisement that contains certain spoken words, it is proper to hold that the television station has made a statement. Section 85(3) of the Act also points in the

same direction. I consider that by telecasting the advertise-

D. ment the appellant made the statement as alleged. Similar legislation elsewhere often contains some provision either excluding a television station or newspaper from its operation or providing a defence in one way or another, often somewhat comparable with the defence provided by s.85(3) of the Act. Illustrations of such legislation are - Consumer Protection Act, 1969 (N.S.W.) s.32; Combines Investigation Act (Canada) s.33C;

Uniform Deceptive Trade Practices Act 1964 and 1966 Rev. ss. 2(11) and 4 adopted by certain States in the United States of America

(See Uniform Laws Annotated Vol. 7, 1970, p.325, West Publishing Co.).

Whether the advertisement was misleading concerning concerning the existence of a orice >: >eduction

I next consider the submission that the advertisement was not musleading concerning the' existence of a price reduction but was rather a statement as to some future event. The offence charged is that the appellant made "misleading statements concerning the existence of price reductions" and the particulars given were that the statement was misleading because the price would not increase by $355.00 after 30 Aprit 1975. The appellant admitted that the sales tax reduction which had been $335.00 would be 23% less after 30 April 1975. Bearing in mind the definition in s.4 that price includes a charge of any description, I am satisfied that the word "price" in s.53(e) in relation to the subject appeal covers an amount included in respect of sales tax. No attack was made on the way the charge was framed and particularised in the information and I note regulation 78K of the Conciliation and Arbitration Regulations. I consider that the charge can be best described as an allegation that the statement concerning price reductions was misleading because 1t was misleading as to the duration for which the then current price reduction of $335.00

would exist. I do not consider that the statement was a

Oo. promise as to future conduct or a prediction or statement as to the future but rather a statement of an existing fact that the then price reduction of $335.00 due to sales tax cuts had a limited life and would cease at 30 April 1975. I consider that it was a false statement as to an existing fact. I regard this as consistent with the views I expressed in Thompson v. Mastertouch

Whether all essential elements in the offence had been vroved

The appellant next submitted that it had been treated as a principal offender but the prosecution had not established that it was a corporation within the meaning of the Act. It was submitted in. this regard that the relevant question was whetker the appellart was a trading corporation formed within the limits of Australia. It was admitted that the appellant is, and at all material times was, a company incorporated in Queensland and conducted tke television station TVQ Channel 0. It is clear that the appellert derived its revenue from telecasting advertisements. I consider that no relevant help is to be found in the judgment of the High Court in The Queen v. Trade Practices Tribunal;

Ex parte St. George County Council (1974) 130 C.L.R. 533. That case concerned the position of a county council established under the Local Government Act,1919 'N.S.W.) for "local government purposes" and not the position of a public company incorporated under the Companies Act, 1961 (N.S.W.). Applying the appropriate standard of proof in criminal cases I consider that on the evidence the appellant derived its revenue from telecasting advertisements and was a trading corporation within the meaning of those words in the Act.

I pass now to consider the defence provided by s.85(3).

' "(3) In a proceeding under this Part in relation to a contravention of a provision of Part V committed by the publication of an advertisement, it 1s a defence if the defendant establishes that he is a person whose business it 1s to publish or arrange for the publication of advertisements and that he received the advertimment for publication in the ordinary course of business and did not know and had no reason to suspect that its publication would amount to a contravention of a provision of that Part."

I consider that the defence provided by this section, which need only be established on the balance of probabilities, 1s available whether or not a defendant is able to show that he took reasonzble precautions and exercised due diligence to avoid any relevant contravention. What 1s necessary under this defence is not a setting up and policing of a system, but in relation to a particular advertisement, that he did not know and had no reason to suspect that its publication would amount to a contraventicn of a provision of Part V. Nowhere in the Act is it said that the knowledge of any seivant 1s the knowledge of a company or that a company shall be deemed to suspect something if any servent of the company suspects it. In my opinion the persons relevant for consideration in deciding whether a company "did not know and had no reason to suspect" are those who are to be treated as the company itself. The basic test 1s whether "he employee is one who, by the memorandum and articles of association or as a result of action taken by the directors cr by the corporation in general meetings pursuant to its articles, has been entrusted with the exercise of the powers of the corporation - (See Tesco Supermarkets Ltd. v. Nattrass [1972] A.C. 193 at pp. 199-200 and also at pp.171, 174-175 and 187). In the case before us, I am satisfied that the board of directors,

Mr. Archer and at least during Mr. Archer's absence, Mr. Lusk

came within this category. In my opinion, with regard to the

matter under consideration Mr. Garry should not be regarded as the contpany.

Mr. Garry had his attention drawn to the advertisement twice and I consider that he should be held to have had reason to suspect that the publication of the advertisement would amount to a contravention of the Act put 'the question is not whether he had reason to suspect but whether the company had reason to suspect. Mr. Garry had not been delegated a general power to deal with all complaints. For example where any complaint concerning any possible breach of the broadcasting legislation was involved, or a complaint involved anything to do with trade practices, his instructions were to refer the matter to Mr. Archer or Mr. Lusk.

Mr. Garry does not fall within the word "defendant" in s.85(3) although he was a "superior servant" of the appellant. (See Tesco's Case at pp.185, 190 and 198). Although he had reason to suspect that the publication of the advertisement would amount to a contravention of Part V of the, Act the fact that he had reason to suspect did not mean the appellant had reason to suspect. In my opinion, Mr. Garry was not the company for the purposes of s.85(3) and I consider that the defence under s.85(3) has ween

"(1) Subgect to sub-section (2), in a prosecution under this Part in relation to a contravention of a provision of Part V, it 1s a defence if the defendant establishes- -

(a) that the contravention in respect of which the proceeding was instituted was due to a mistake, to reliance « information supplied by another p: to the act or default of another person, to an accident or to som

cause beyond his control; and (b) that he took reasonable preca

(2) If a defence provided by sub-section (1) involves an allegation that a contravention

was due to reliance on information supplied by another person or to the act or default of

another person, the defendant is not, without leave of the Court, entitled to rely on that aefence unless he has, not later than 7 days before the day on which the hearing of the proceeding commences, served on the person by whom the proceeding was instituted a notice

in writing giving such information that would identify or assist in the identification of the other person as was then in his possession."

The trial judge held that he was satisfied that the defendant company had established, on the civil onus, the facts necessary to satisfy s.85(1)(a) but he was not satisfied that the requirements of s.85(1)(b) had been estaHished. His Honour did not indicate what was the basis for his finding that the facts necessary to satisfy s.85(1)(a) had been established. The defendant had nad no part in the preparation of the advertise- ment other than to allow it to be made in its studios. Insofar as the telecasting of the advertisement constituted the making of a false or misleading statement within the terms of s.53(e), the only part that the defendant had in this contravention was the telecasting of an advertisement in the preparation of which it had played no part. The real substance of the contravention was, I consider, the reliance on information supplied by another person or persons or the act or default of another person. It seemed common ground in the proceedings before the tril judge that sufficient notice had been given under s.85(2) by the notice which the defendant had given to the Commonwealth Crown Solicitor

wherein it identified various other persons in accordance with

(1) Metro Ford Pty. Limited of 150 Leichhardt St., Brisbane and its officers and employees.

(2) Doyle Dane & Bernbach Pty. Limited of 18th Floor, Bank of New South Wales Building, 260 Queen Street, Brisbane and its officers

Since the case proceeded before the trial judge in the way it did, I consider that whether or not this notice was adequate to satisfy s.85(2), this Court should proceed upon the basis that the notice was adequate or alternatively, that the trial judge by acting as he did, gave leave to rely on the defence provided in s.85(1).

It is also necessary to consider s.34. Section 84(1)

"(1) Where, in a proceeding under this Part in respect of any conduct engaged in by a body corporate, being conduct in relation to which a provision of Part V applies, 1t is necessary to establish the intention of the body corporate, it is sufficient to show that a servant cr agent of the body corporate by whom lhe conduct was engaged an had that intention.

(2) Any conduct engaged in on behalf of a body corporate by a director, agent or servant of the body corporate or by any other person at the direction or with the consent or agreement (whether express or implied) of a director, agent or servant of the body corporate shall be deemed,for

the purposes of this Act, to have been engaged in also by th: body corporate."

Section 84(1) deals only with a situation where it is necessary to establish the intention of a body corporate and, in my opinion, is not relevant to a consideration of the defence under s.85(1). Section 84(2) applies to conduct engaged in on behalf of a body corporate by a director, agent or servant but it does not make the failure of an agent or servant of the company the failure of the body corporate. In my view the provisions of s.84(2) do not have any relevance in the subject case to a defence under s.85(1) in deciding whether "he" took reasonable precautions and exercised due diligence to avoid the contravention.

The learned trial judge decided that the defendant had not taken reasonable precautions because he held that amongst other precautions to be taken there should have been instructions to

check the accuracy of any statement the ultimate source of which

was a government department by enquiry of the relevant department. Additionally his Honour found that there should have been a precaution that, in the event of any complaint being made to the effect that the contents of an advertisement were misleading, that complaint should be immediately referred to the person or persons whose duty it was to take precautions to avoid contra- vention of the Act. His Honour also held that what he referred to as the "obvious precaution" of insisting upon advertisers verifying the factual content of their advertisements should have been taken. His Honour also found that due diligence was not exercised in relation t the investigation of Mr. Paterson's complaint.

A section similar to s.85(1) was considered by the House of Lords in Tesco Supermarkets Ltd. v, Nattrass, supra. The section there under consideration was s.24 of the Trade Descriptions

Act 1968 (U.K.). So far as is relevant, this section provided:-

"In any proceedings for an offence under this Act it shall, ... be a defence for the person charged to prove -

(a) that the commission of the offence was due to ... rejJiance on information supplied to him or to the act or default of another person... and

(b) that he took al] reasonable precautions and exercised ali due diligence to avoid

the commission of such an offence by himself or any person under his control.

The statements made in relation to who was "another person" by members of the House of Lords in that case are not directly applicable to the Australian Act because of the provisions of s,84(2) of the Act, but 1n my opinion, what is said about s.24(1)(o) of the Trade Descriptions Act is directly applicable to s.85(1)(b) of the Act. The only relevant difference is that the English Act refers to "all reasonable precautons" and "all due diligence" whereas the Australian Act omits the word "all" in both places and so provides a somewhat lesser standard

In Tesco's Case the defendant was a body corporate owning supermarket stores and it sought to raise a defence which involved establishing that it had taken all reasonable precautions and exercised all due diligence to avoid the commission of the offence charged, which was broadly, that the defendant in offering to supply goods, gave an indication by means of a notice that the goods were offered at a price less than that at which they were in fact being offered. It was found that the manager of the store and a shop assistant had failed adequately to perform the tasks which had been assigned to them by the defendant company but that nevertheless the defendant company had satisfied the requirements of s.24(1)(b), which involved the duty of setting up an efficient system for the avoidance of offences under the Act and a proper operation of the system. It was pointed out that s.24(1)(b) required

diligence from the employer personally and not anyone else.

Lord Reid sa'd (at pp.172 and 174) that as a matter of construction

there was no reason for reading unto the section in place of

the word "he" the words "he and all persons to whom he has delegated responsibility." See also Lord Morris of Borth-y-Gest at p.179, Viscount Dilhorne at pp.185-186, Lord Diplock at pp.197-200 and 203. I quote the following passage from

"The fallacy lies in the next step of the argument. Where Parliament in creating an offence of 'strict liability' has also provided that it shall be a defence if the person upon whom the duty is imposed proves that he exercised all due diligence to avoid a breach of the duty, the clear intention of Parliament 1s to mitigate the injustice, which may be involved in an offence of strict liability, of subjecting to punishment a careful and conscientious person who 1s in no way morally to blame. To exercise due diligence to prevent something being done is to take all reasonable steps to prevent it. It may be a reasonable step for an employer to instruct a superior servant to supervise the activities of inferior servants whose physical acts may in the absence of supervision result in that being done which

it is sought to prevent. This is not to delegate the employer's duty to exercise

To treat the duty of an employer to exercise gue diligence as unperformed unless due diligence was also exercised by all his servants to whom he had reasonably given all proper instructions and upon whom he could reasonably rely to carry them out, would be to render the defence of due diligence nugatory and so thwart the clear intention of Parliament in providing 2t."

See also Halsbury's Laws of England, 4th ed., vol.7, par.757.

s.24(1)(b) of the Trade Descriptions Act 1968 in Nattrass v. Timpson Shops Ltd. [1973] Crim. L.R. 197 and held that following Tesco's Case. the two basic responsibilities which it was said had to be established to satisfy therequirements of the section were the installation of a proper system to provide against the commission of such offences and the provision of adequate supervision to see that the system was properly carried out.

Sherratt v. Geralds The American Jewellers Ltd. (1970) 114 S.J. 147 was decided before Tesco's Case and I doubt whether the two cases are entirely consistent since Sherratt's Case seems to be cirected not so much to the institution of any system but rather tc an isolated act. In any event in Sherratt's Caso no precautiors had been taken by the defendant.

I consider that 1n the case of a company seeking to come within s.85(1)(b) it 1s necessary to establish whether the empioyee in question had the status and authority whim in law made his act in the matter under consideration, the act of the company so that the employee was to be treated as the company itself. I am now directing this comment only to s.85(1)(b) because so far as the commission of an act is concerned, s.84(2) deems the conduct of a director, agent or servant of the body corporate to be also the conduct of the body corporate.

I pass now to consider what relevant steps the appellant

took. It will be recalled that Mr. Archer was the general manager

of the station and the top executive, Mr. Lusk was the company secretary and acted as the chief executive if Mr. Archer was away. Mr. Garry was the sales manager and Mr. Yardley was the sales service manager. The Trade Practices Act 1974 came into operation on 1 October 1974 and in October 1974 the appellant took some steps designed to prevent the station committing any preach of the Act. Mr. Archer sent a memorandum dated 23 October 1974 to a number of people including Mr. Yardley, Mr. Lusk and Mr. Garry. The memorandum set out that all commercial advertisements to be transmitted must be vetted before they were telecast and placed the responsibility for vetting upon Mr. Yardley, except where the advertisement had the approval of the Federation of Australian Commercial Television Stations (F.A.C.T.S.). There were also instructions that the film department had to advise Mr. Yardley when film was received which did not have F.A.C.T.S. approval and that the film department was to introduce a system on their cards to show that the material had been checked. The memorandum referred to a booklet summarising the Trade Practices Act and to Mr. Archer having a copy of the full Act and contained instructions that, in the event of any doubt about the legality of a commercial, the person responsible for the initial vetting should report the doubt to Mr. Lusk or Mr. Archer who would seek legal advice if necessary. Mr. Yardley was given a copy of a booklet produced by an advertising agent which contained a summary of the Trade Practices Act 1n layman's terms. Mr. Archer also had discussions with Mr. Yardley concerning what he was to do in relating to the "vetting" and how he was to carry out the task which was explained to him. Mr. Archer also answered queries from Nr. Yardley about some advertisements and Mr. Archer asked Mr. Yardley on occasions whether a particular advertisement had been checked or not. Upon the receipt of an advertisement from an advertising agent the

video tape was transferred to a video tape cartridge which was

used for the actual transmission. Mr. Yardley in evidence

swore that he played the particular video tape before it was telecast and marked it as correct for transmission. Mr. Archer's signature appears on a label on the video tape box containing

the relevant advertisement with a notation "0.K. T.P.C." which aundicated that the advertisement had been checked and was considered "0.K." by him so far as concerned the Trade Practices Commission.

Mr, Yardley was not an executive. He did not attend executive meetings, but he was a senior employee. He had been employed by the company since 1965 and had been sales service manager since 1967. Mr. Archer gave evidence that Mr. Yardley was a very reliable person who paid great attention to detail and who had a lot of practical experience in the advertising industry.

The trial judge did not say that he regarded any of the defendant's witnesses as unreliabie or untruthful.

I am satisfied that a proper system had been instituted for "vetting" advertisements before they were telecast and that the system was adequately supervised.

In the case before us I consider that the taking of reasonable precautions did not require thet an advertisement be checked with a government department or verified by the advertiser.

It seems reasonable that some system was required for dealing with complaints made during the hours of transmission about advertisements alleged to be false or misleading. I pass to consider whether any adequate system had been introduced for dealing with such complaints. The evidence of Mr. Archer showed that Mr. Gerry had a limited responsibility to deal with complaints. The complaints about the subject

advertisement ultimately reached him. Mr. Garry was a senior

employee who had been employed by the appellant for 10 years. The appellant maintained a system of logging complaints made outside office hours, although the particular complaints made by Mr. Paterson were not recorded. Apparently no system existed of logging complaints made during office hours but all complaints made during those hours of which there is any evidence reached Mr. Garry. However Mr. Garry is not to be treated as the appellant in relation to dealing with all complaints because the instructions he had were to refer certain types of complaints to Mr. Archer or Mr. Lusk. Those to be referred included any concerning a possible breach of the broadcasting legislation or anything concerning trade practices. The systen, such as it was, that had been instituted with regard to! complaints broke down. One significant feature of the breakdovn was the failure by Mr. Garry to refer the matter to Mr. Lusk. Although the system required that complaints made outside office hours be recorded there was no evidence that any rules had beer formulated and conveyed to those employees likely to be involved concerning the use to be made of these records. In my opinion no adequate system was shown to exist for dealing with complaints and, in addition, there was no evidence before the learned trial judge of any adequate supervision of the procedure which did exist for Ceal:ng with complaints. I consider that the defence provided by s.85(1) has not been

However, because of my opinion that the defence under s.85(3) has been established, the orders I propose are:-

1. Appeal upheld

3. Respondent to pay the costs of the appellant both of the appeal and before the trial judge.

gervicy vhat vais end the s.xleew preciding pages are a true copy of the Peasons for Judgment herein of his Ifonour