Wallace, J.R. v. Brodribb, A.F. & Ors [1985] FCA 76

Federal Court of Australia|1985-03-11|Before: Spender J

TRADE PRACTICES - Bait advertising - advertisement of vehicle at a special price - nature of intention required by 5.5611) of the

Trade Practices Act 1974 - whether failure to supply the

contravention of ¢.56(2) of the Trade Practices Act 1974 -

meaning of "offer" under s.56 of the Trade Practices Act.

Reardon v. Morley Ford Pty Ltd (1980) 33 A.L.R. 417

JOHN RALPH WALLACE (Prosecutor) v. ALAN FRANCIS BRODRIBRB (Defendant) Qld G49 of 1984

JOHN RALPH WALLACE (Prosecutor) v. HUGH ROBERTSON BROOKS Qld G50 of 1984

JOHN RALPH WALLACE (Prosecutor) v. WALPLAN PTY LTD Qld G51 and G52 of 1984

IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) GENERAL DIVISION ) QLD G49 of 1984

In each of the matters Qld G49, G50, G51 and G52 of 1984, the defendant is not

The prosecutor to pay the costs of and incidental to the proceedings, to be taxed if not otherwise agreed.

IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) GENERAL DIVISION ) QLD G49 of 1964

On 11 May 1984, four informations were laid by John Ralph Wallace, an officer of the Trade Practices Commission in

Brisbane, alleging offences against the "bait advertising"

provisions of the Trade Practices Act 1974 ("the Act").

The first information, G5l of 1984, against Walplan Pty Ltd ("Walplan") alleged that the corporation, contrary to sub-s. 56(1} of the Act, in trade or commerce advertised for supply at a special price goods, namely a 1980 Ford XD alloy head sedan, that 1t did not intend to offer for supply at that price for a period that was and in quantities that were reasonable having regard to the nature of the market in which it carried on business and the nature of the advertisement. The particulars of that charge are that on 16 May 1983 the corporation failed, when requested by

Philip John Larter, to offer such goods for sale at that price.

The second information against Walplan, G52 of 1984, was based on an alleged contravention of sub-s. 56(2) of the Act and asserted that the company having in trade or commerce advertised goods, namely a 1980 Ford XD alloy head sedan, for supply at a special price did fail to offer such goods at that price for a period that was and in quantities that were reasonable having regard to the nature of the market in which it

carried on business and the nature of the advertisement. The

particulars of that charge are that on 14 May 1983, Walplan, in

an advertisement in the "Daily Sun" newspaper advertised that it wovld supply at a special price of $3490 a 1980 Ford XD alloy head sedan and that the company did not intend to so offer the said goods for supply at that price for a period that was and in quantities that were reasonable having regard to the nature of

the market in which it carried on business and the nature of the

The next information, G50 of 1984, alleged that one Hugh Robertson Brooks ("Brooks") was knowingly concerned in the

offence of Walplan founded on the alleged contravention of sub-s.

The fourth information, G49 of 1984, was against Alan Francis Brodribb ("Brodribb") and alleged that Brodribb similarly was knowingly concerned in the commission of the offence by Halpian constituted by the alleged contravention of sub-s. 56(2)

The four informations, by consent, were heard together.

The facts, either admitted or as I find, are these.

Walplan is a corporation within the meaning of the Act and trades as "Matilda Car Co.". Walplan was engaged at all relevant times as a used car dealer. In May 1983 1% carried on business at two addresses in Brisbane - one yard at Underwood and

a second yard with which the four informations were directly

concerned, at 808 Beaudesert Road, Coopers Plains. At all

relevant times, Mr Brodribb was manager of the Coopers Plains yard and Mr Brooks was one of the two directors of, and a shareholder in, Waliplan. A Mr Ray Scott was the sales manager at the Coopers Plains yard and a Mr Charles Martin was a salesman employed by Walplan at that yard. The other director and

principal shareholder of Walplan was one Linda Smith who is the

common law wife of Mr Neville McKerrow, an undischarged bankrupt and the general manager of Matilda Car Co. It is fair to say

that Mr McKerrow, whilst neither a shareholder nor a director of

Walplan, plays a significant part in the day to day operations of that company and, in particular, was directly concerned with the

supervision of sales staff and all aspects of the advertising of

Mr Brooks was concerned primarily with the supervision

of the financial aspects of the various transactions of the

The "Daily Sun" was and is a daily morning newspaper circulating in the south-east of Queensland and, as at May 1983, had a large circulation. In the edition of the "Daily Sun" of Saturday 14 May 1983 a full page advertisement inserted by the Matilda Car Co. appeared. The advertisement featured four motor

vehicles together with photographs of the vehicles.

The advertisement was headed "Free Gold Coast Holiday plus a day trip to Lone Pine Sanctuary for the kids with Tracey

Wickham with every car sold in May at Coopers Plains". There

then followed photographs and descriptions of each of the four

cars, the first of them being a Toyota Corolla Station Wagon, the

second a Ford Fairlane, the third a Holden Gemini Sedan and the

fourth car with which these informations are directly concerned,

The description accompanying that vehicle was in the

"Ivory duco, matching Brown interior, carpets, heater and demister, radial tyres. 27 other Falcons and Commodores in stock. One only at this price. FREE family Gold Coast holiday

Then in quite large type "Full Price $3490" and underneath the

photograph of the Ford Falcon vehicle appears "Wkly $26.37".

Underneath the pictorial display and at the foot of the

advertisement appears this information "Trade your old car as

full deposit. Phone 277.6885. Over 200 cars in stock. 8038

Beaudesert Rd, Coopers Plains. Matilda Car Co." In smaller

printing at the bottom right of the advertisement appear four

"* Weekly repayments calculated on 10% deposit over 48 months to approved purchasers

All vehicles in stock at date of compiling advertisement

Tt wag admitted by Mr D. Jackson of Counsel who appeared for all defendants that Walplan did, in trade or commerce,

advertise goods namely the 1980 Ford XD alloy head Sedan for

On the morning of 14 May 1983, a Mr Philip John Larter and his wife went first to the Underwood yard of the defendant company and then went to the yard at Coopers Plains which is the location referred to in the advertisement of that morning's "Daily Sun". There they met a Mr Charles Martin who they knew was employed by the defendant company as a salesman. The

circumstances of the acquaintanceship between Mr and Mrs Larter

For three years up until June 1980 Mr Larter conducted a service station businesa on the Gold Coast and whilst he wags in that business he bought two motor vehicies, an MGB and a Ford Mustang which he resold. He was not a licenced motor dealer. Mr Larter said in respect of those vehicles that they were purchased to be worked on in the workshop in duil periods. At the time of operating the garage business Mr Larter knew Mr Charles Martin who conducted a car yard on the Gold Coast. Mr Larter saw him from time to time at the garage and had conversations with him concerning the appraisal of motor vehicles and, in addition, had a "spotting" arrangement with Mr Martin. Mr Larter recalls on one accasion receiving commission in respect of one sale which came about through his efforts. Their association did not end on

the sale of the garage business in June 1930. Mr Martin shortly

thereafter became President of a Parents and Friends Association

and Mrs Larter was the Secretary of that committee.

I am satisfied also that on an occasion between Mr Martin's commencing work at Matilda Car Co. at one or other of its yards in January 1983 and the first inspection of the XD Falcon on 14 May 1983, there was a casual conversation between Mr Larter and Mr Martin in the course of which Mr Martin's occupation at Matilda Car Co. was mentioned. In that discusslon, reference was made to the vehicles advertised by that company being at very cheap prices. Mr Larter asked if the vehicles were any good to which Mr Martin replied that some of them were and

some of them weren't and that he should come out and have a look

After speaking with Mr Martin at the Coopers Plains yard on the Saturday morning of 14 May 1983, Mr Larter had a

conversation with Mr Ray Scott, the sales manager, and then left

On the afternoon of Monday 16 May 1983, after obtaining the sum of $3490.00 in cash, Mr Larter returned to the Coopers Plains yard in the company of hls employer, Mr Gary Cannon. On that afternoon he spoke with Mr Martin again and he then spoke with another person to whom he gave the $3490.00. At the time of that conversation, Mr Brooks was close by in the office and had a

part to play in the dealings there, as did Mr Brodribb.

On that afternoon the money was returned to Mr Larter

On Wednesday 18 May 1983, the advertised 1980 Ford XD

alloy head Sedan was sold for cash by the defendant company to a

Mr Thornbury and with that sale Mr Thornbury received the advertised holiday on the Gold Coast.

It is common ground that there was a declining to sell to Mr Larter on Monday 16 May 1983 and the central point in these four informations is whether the defendant company was entitled to decline to deal with Mr Larter. More particularly, it is necessary to determine whether one can infer from the failure to supply to Mr Larter on16 May 1983 that the company, when it inserted the advertisement on 14 May 1983, did not intend to

offer the vehicle for supply at that price, and whether the

declining to sell to Mr Larter constituted a failure to offer for

supply goods that had been advertised at a special price.

Suprisingly, little turns on questions of credibility in respect of these four informations. While I will later deal in detail with the various accounts, I should say something at this

I am satisfied that none of the witnesses who gave evidence was dishonest and that the variations in the accounts of the several dealings involving this motor vehicle are to be

expected and indeed reflect no more than ordinary human

experience when parties are seeking to recollect quite short

transactions after the passage of time. The recollection of Mr Brooks of these matters was not sought until August 1983, some three months after the events; Mr Brodribb was not asked to give his recollection until January 1984, some eight months after the events; and Mr Martin was not approached for his recollection until February 1984, In addition Mr Martin has, since the events

Ido not accept the assertion by Mr Brooks that there was a qualified admission by Mr Larter that he was a "backyard" dealer. Iam satisfied that at no stage was Mr Larter a "backyard" dealer and that there was nothing that could be

construed as any sort of admission in that respect made by him on

Mr Brooks, in the witness box, manifested an inability clearly to comprehend questions. He exhibited a lack of mental acuity and a slowness of expression which indicated plainly to me that, notwithstanding there was no conscious dishonesty on his

part, his recollection of events and conversations could not be

Mr Martin frankly conceded that he had but a vague recollection of his Involvement in the various conversations and it is true to say that his recollection was hazy. However, ina number of respects, I regard his evidence as important. T am satisfied that he was aware of Mr Larter's earlier involvement in the qarage business, his involvement in the selling of a small

number of secondhand motor vehicles to the public in that

business and in his involvement as a "spotter" in the sale of secondhand motor vehicles. Also Tf accept that Mr Larter had indicated to Mr Martin an interest in the low prices at which Matilda Car Co. were offering used cars and that Mr Martin

communicated something of his knowledge of Mr Larter to other

persons employed at Matilda Car Co. I also accept his evidence that the general operation of the Matilda Car Co. was that the

ears that were advertised were Intended for sale to members of

I accept, without reservation, the evidence of the three

efficers of the Trade Practices Commission who gave evidence

before me, the informant Mr Wallace, Mr O'Neil] and Miss Hollis.

The evidence of both Mr Larter and his wife was honest and forthright and I accept it except that, contrary to Mr Larter's evidence, I accept that there was a4 casual meeting between Mr Martin and Mr Larter prior to the events of 14 May 1983, at which meeting there was a discussion about the Matilda Car Co. and the possibility of obtaining bargains from that source. I do not treat Mr Larter's denial of this meeting and conversation as telling in any way against his honesty. It is not the sort of event which would be indelibly imprinted on one's

memory. For Mr Martin to recall this meeting and for Mr Larter

to deny its occurrence is not something which causes me

I accept the evidence of Mr Dalgarno, the retail sales

manager of Eagers Retail Pty Ltd, and the evidence of Mr Brodribb

Section 56 of the Act proscribes "Bait Advertising" and

"56.(1) A corporation shall not, in trade or commerce, advertise for supply at a special price goods or services that the corporation does not intend to offer for supply at that price for a period that is, and in quantities that are, reasonable having regard to the nature of the market in which the corporation

carries on business and the nature of the advertisement.

(2) A corporation that has, in trade or commerce, advertised goods or services for

supply at a special price shall offer such goods or services for supply at that price for a period that is, and in quantities that are, reasonable having regard to the nature of the market in which the corporation

carries on business and the nature of the advertisement."

Sub-section 56(3) provides for two defences where there

has been unintentional non-supply, and hag no application to the

Bait advertising is the advertising of a product or service at a special price which the advertiser does not Intend to honour. The advertiser intends that the advertised product or service be unavailable at the special price or available at that price only in quite limited quantities. The purpose of bait

advertising 13 to en-ice customers to the place of business of

the advertiser where they might be persuaded to purchase other goods of the advertiser or induced to purchase goods similar to

"Loss leader" advertising where goods are advertised at a price which does not reflect a profit does not constitute bait advertising if the advertising is accompanied by a genuine intention to sell the goods at the advertised price in reasonable quantities and for a reasonable period. The intention of "loss Jeader" advertising is to attract customers to the premises of the advertiser, the expectation being that, in addition to purchasing the products advertised at the "loss leader" price, those potential customers will purchase other goods or services

on which a profit will be made which will more than compensate

The practice of bait advertising smacks of fraud. The deceit of the advertiser is in causing the prospective purchaser to seek the advertised bargain, which in a practical sense does not exist. The prospective purchaser in a real sense is the

victim of a confidence trick, and is put to inconvenience and

Competitors of the bait advertiser also are affected by

the dishonesty of the advertiser's gaying one thing and intending

The obligation of which sub-s. 56(1) speaks has three aspects: the advertised special price, the supply of the goods or gervices in reasonable quantities, and the supply of those

There is no reason why the operation of sub-s. 56(1) should be confined to the advertising of a quantity of goods or services, even though a common area of operation of sub-s. 56(1) exists where a quantity of goods or services of a particular type is advertised. Regard has to be had to the nature of the advertisement. What sub-s. 56(1) requires is that there be no mere tokenism Insofar ag the quantity of the goods advertised is

concerned and that the period during which the special price is

The advertisement of the 1980 Ford XD alloy head Sedan

at a price of $3490 states "One only at this price".

Where one is dealing with the sale of a single item at a special price, what the section requires is that that item be genuinely available for sale for a period that is reasonable, having regard to the market in which the corporation carries on business and the nature of the advertisement. The relevant intention must be assessed at the time of the advertisement although frequently the existence or otherwise of that intention

may only be gleaned from the evidence afforded by conduct

In determining the corporation's intention, it is to he noted that the section draws a distinction between "advertising" and "offering". The function of the section is to require the advertiser, at the time of making the advertisement, to have the intention to make available to potential purchasers in reasonable

quantities the advertised goods or services at that special

In my view, "offer" in sub-s. 56(1) is not used in the contractual sense of the word but is used in the ordinary

In this regard, I respectfully disagree with the views of Smithers J. in Reardon v. Morley Ford Pty Ltd (1980) 33 A.L.R.

In that case, the crucial questlon was whether a display in the showroom of the respondent corporation of a 3.3 Falcon sedan with a 86,600 label on it, which figure was the special price at which the respondent had advertised that particular model vehicle, was accompanied by a genuine intention to supply the

Smithers J. concluded that the conduct in displaying the vehicle so labelled "would be all that was required of a trader genuinely offering the vehicle in quantity to all and sundry." However, from the circumstances in that case which included the

repeated rejection by the sales staff of the proposition that the

3.3 Falcon should be offered for the advertised price, anda belief by some of the sales staff that they were not authorised

to sell the 3.3 Falcons at that price, Smithers J. found: "These

circumstances have led me to conclude beyond reasonable doubt that Morley (the managing director of the respondent corporation)

gid not intend to offer the 3.3 Falcon for supply in accordance

I agree with that learned Judge's conclusion that the

obligation imposed by s.56 ig such that, where a corporation advertises goods or services for supply at a special price, the advertiser must be prepared to enter into a binding contract at

that advertised price, and there must be the reality of an

auntention to supply, rather than a colourable charade.

Having said that, it seems to me that reference to technical distinctions between invitations to treat and offers capable of immediate acceptance introduces unnecessary difficulties. Section 56 is intended to have a broad reach and no benefit ts secured by giving the phrase "offer to supply" anything other than its ordinary and non-technical meaning. According to the Shorter Oxford Dictionary "offer" means, in the sense of the word generally prevalling, "to tender for acceptance

or refusal, to hold out (a thing) toa person to take if he

Consistent with that meaning, if a corporation in trade or commerce advertises for supply goods or services at a special

price, 3.56(1) obliges that corporation to make available the

advertised goods or services at the advertised price for a period

The failure to make known the availability of the goods at the special price or to act otherwise than as a genuine trader who intended to honour the advertisement would act, would be circumstances relevant to whether there existed at the time of

the advertisement the intention to make available in reasonable

In this case the advertisement states that there is "One only at this price" and "Prices remain for 1 week". The advertisement itself directs attention to the period for which the vehicle will be available at the advertised price. That

period would be reasonable, having regard to the nature of the

It 1s admitted that there was a declining to sell to Mr Larter on 14 May 1983. In those circumstances it is necessary to

determine the persons to whom the advertisement was directed.

advertisement in the "Daily Sun" of 14 May 1983 was an advertisement directed to the whole world and sub-s. 56(1) reauired the advertiser to have the intention to offer to sell the advertised goods at the special price to the whole world. It was said that if there was a declining to sell to any person at all, that would be evidence indicating the absence of that

intention and, further, would constitute a failure to supply

On the other hand it was contended by counsel for the respondents that the proper view of the advertisement in the "Daily Sun" on 14 May 1983 was that it was directed to a market consisting of the retail purchasers of secondhand motor vehicles. In particular, it was not an advertisement which was addressed to

a class of persons which included unlicenced motor dealers.

It is necessary in the light of those contentions to

deal in some particularity with the various accounts of what

Mr Larter said that when he went to the Coopers Plains yard on the morning of 14 May 1983, he first had a general conversation about personal matters with Mr Martin and then asked him "Is that XD over there the one that is for sale?" to which Martin replied "Yes". He then asked Martin "Is it still for sale?" to which Martin said "Yes". Martin later said "I'll go and find out.". Martin then went away and another person named Scott returned and asked Larter what sort of car was he looking for,and Larter said "Something like that Xb". Larter said to Scott "Since I'm not interested in the trip you advertise, what discount could I expect". Scott replied "There is no trip, no discount. It's got to be a cash sale, no cheques and no holding deposits". Scott asked him "Do you buy this sort of thing?" to

which Larter replied "Yes, I would, but it would not worry you".

particular vehicle had a reading of 188,502 kms on its odometer, was unregistered, without a roadworthy certificate, had no

battery, had dents and scratches on most panels ,and was ina

The evidence of Mr Dalgarno is relevant to this aspect

Mr Dalgarno was called by the prosecution as an expert on the value of used motor vehicles. He is the retail sales manager for Eagers Retail Pty Ltd, and has been in the motor industry for some 27 years. He has never seen the vehicle in question. He indicated that a conservative figure for the retail value of a 1980 Ford XD alloy head motor vehicle which had travelled 188,502 kms would be in the vicinity of 36500. He conceded that that appraisal was based on the assumption that there was in existence a roadworthy certificate for the vehicle and that it had been prepared for retail sale. He gave evidence that he would not buy a secondhand motor vehicle without appraising it physically first. Mr Dalgarno agreed that if the vehicle were unregistered and without a roadworthy certificate, the value would undoubtedly be affected. Similarly, the presence of dents and scratches in every panel would also have an affect

as would the absence of maintenance. Nonetheless he remained of

the opinion that the vehicle would have a greater wholesale value

In ene area which is important, Mr Dalgarno was asked in

cross-examination by Mr D. Jackson, the following series of

"You are employed by a licenced motor dealer, obviously?

Have you had in your experience some dealings with people who can be called backyard motor dealers, in other words, unlicenced people?

Answer: We have a company policy we do not sell to unlicenced dealers.

Answer: Well, I should imagine the repercussions, if anything, should happen ina transaction if a car had been purchased from us. I work for a reputable company. It is a franchised company who are rather jealous of their reputation in the motor industry. That

company makes policies, and being an employee, I have to abide by those policies."

On the following Monday, 16 May 1983, at about 5.30 p.m., Mr Larter, in company with Mr Cannon, went to the Coopers Plains yard of Matilda Car Co. and saw Mr Martin. Larter said to Martin "Is the XD still for sale?" to which Martin replied "Yes, I think it is. I'11 find out for you". Another person then came to the door and said "Yes, it's for sale, but have you got the cash?" to which Larter replied "Yes". Larter then went with this

other man into a small office where they both sat at a desk.

Larter handed the money to this person who commenced to count the money when another person, who the evidence establishes as Mr Brodribb, came in and sat at a vacant chair at the table. Larter

Hoe .-+ Mr Brodribb ...said, 'What do you intend to do with the car?' and I. said, 'I

have lost my company car. I intend to fix this one up and drive it'.

Carry on please? - - - And he said, 'I think you are a back-yard dealer. We don't have to sell you the car. We are not going

to,' and he picked up the money off the table and gave it back to me.

Did you make any reply about whether you were a back~yard dealer" - - - 'Yes. I said, I'm not a back-yard dealer. You can call Charles

Martin, who has been in my house, and I have nowhere to do mechanical repairs'."

Mr Brodribb handed the money back to Mr Larter who took his money

Mr Martin in his evidence said that he had sold lots of

advertised cars. He was asked: "Did you know of any special instructions relating to its [the advertised car's] sale?

Were there any instructions given to you in relation to cars in the yard which were advertised, that they were not to be sold?

Answer: No, never. Were there any instructions given to you?

Answer: Every car was available for saie in the yard."

Mr Brodribb said that the company's policy with respect to cars that were advertised was that the advertised cars were

The records of the Matilda Car Co. in relation to the advertised Ford sedan indicate that it had been purchased for 33400 earlier in the month in question. In Mr Brodripb's opinion

the car waa certainly not worth any more money than that.

walking into the office where Mr Larter was sitting at a desk. His recollection is that Ray Scott was sitting opposite Mr Larter discussing the purchase of the vehicle. He cannot recall what was being said but he does recall stepping in and asking Mr Larter what he wanted to do with the car and he said in evidence: "T believed him to be a backyarder". He said he had obtained that belief from speaking to Charles Martin. He said that he turned and spoke to Mr Brooks and asked him what he wanted to do and Mr Brooks told him "Give him back the money. He's a dealer". Mr Brodribb indicated in cross-examination that he attended to the transaction because he believed the man was a backyarder but at no stage did he hear Mr Larter say that he was a backyard dealer. He also said that, in May 1983, "The reason I did not

wish to sell the car to him was because I believed him to be a

"At that time, were you of the view that, as manager of that yard, you were entitled to refuse to deal with a ... would-be purchaser

who produced that sum in cash and asked to buy that vehicle?

general member of the public and did not want it as his own vehicle, yes."

Insofar as Mt Brooks' evidence is concerned, while I am not prepared to accept the accuracy of his recollection, he was forthright and open in his expressions of opinion. His attention was specifically directed to his perception of his obligations in

respect of the sale of advertised vehicles. Mr Morley Q.C. asked

Which circumstances? - - - If I could not get them set on finance, if they did not complete the sale with cash, or I could not

get them set on finance; I could not deliver the vehicle.

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