Wilde, Juris v. Menville Pty Ltd & Ors [1981] FCA 7

JURIS WILDE v. KEVIN WILLIAM HARRICK (VG Nos. 40, 50, '56,

JURIS WILDE v. DAVID ROBERT KIRKHAM (VG Nos. 64 and 68 of 19380)

VG Nos. 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 44, 45, 46, 47, 48, 49, 50, 54, 55, 56, 63, 64, 65, 66, 67, 68 of 1980.

Between: JURIS WILNE And: Between: JURIS WILDE And: MENVILLE PTY. LTD. Between: JURIS WILDE And: Between: JURIS WILDE And: MENVILLE PTY. LTD. Between: JURIS WILDE And:

JURIS WILDE Prosecutor KEVIN WILLIAM HARRICK Respondent

Between: JURIS WILDE And: MENVILLE PTY. LTD. Between: JURIS WILDE And: Between: JURIS WILDE And: Between: JURIS WILDE And: MENVILLE PTY. LTD.

pleaded guilty to fourteen charges under the Trade Practices

Act 1974. Three of those charges related to contraventions of that part of s.53(a) of the Act which provides that a corporation shall not in trade or commerce, in connection with the promotion of the supply of goods falsely represent that

Three of the charges related to contraventions of s.53B of the Act which provides that a corporation shall not publish an advertisement seeking a person or persons for employment, whether by the corporation or by another person, that contains a statement that is false or misleading in a

Eight of the charges relate to contraventions of s.59(2) of the Act which provides that where a corporation invites persons to engage or participate or to offer or apply to engage or participate in a business activity requiring the investment of moneys by the person concerned and the

performance by them of work associated with the investment of

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moneys by the persons concerned the corporation shall not make

a statement that is false or misleading in a material particular with respect to the profitability or risk of the

The defendant Pagonis has pleaded guilty to six charges of being knowingly concerned in the Commission by the company of contraventions of the Act. Three of these were contraventions of the provisions of s.53(a) of the Act and

The defendant Harrick has pleaded guilty to five charges of being knowingly concerned in the commission by the company of contraventions of the Act, one under s.53(a) one

The defendant Kirkham has pleaded guilty to two charges of being knowingly concerned in the commission by the company of one contravention by it of the provisions of s.53B

. The defendants are each convicted of the offences to

In respect of these offences the company is fined a total of $75,000 in respect of the fourteen informations laid

against it. The defendant Pagonis is fined a total of $18,500

in respect of the six informations laid against him with provision that in default of the payment of the fines imposed he shall suffer the period of imprisonment referable to the fines stated in the order. Should he default in the payment of all six fines the total period of imprisonment would be eighteen months, The defendant Harrick is fined a total of $19,000 in respect of the five informations laid against him with provision tnat in default of the payment of any of the fines immposed he shall suffer the period of imprisonment referable to that fine stated in the Order. Should he default in the payment of all five fines the total period of imprisonment would be eighteen months. The defendant Kirkham is fined a total of $8,000 in respect of the two informations laid against him with provision that in default of the payment of any of the fines imposed he shall suffer the period of

imprisonment referable to that fine stated in the Order. Should he default in the payment of both fines the total

• The Company, Menville Pty. Ltd., which was incorporated under the law of Victoria, carried on business at 315 Latrobe Street Melbourne as a dealer in used Motor Trucks doing much of its business under its registered business name "Latrobe Truck Sales" The company held a licence as a motor

trader under the Motor Car Traders Act 1973 of the State of

Victoria. The defendant Harrick was at all material times a

The defendant Pagonis was at all material times the person in relation to whom a business name "Latrobe Street Transport Consultants" was registered under the Vactorian

On numerous occasions between July 1979 until March

1980 the company promoted the sale of trucks by presenting to

potential purchasers composite propositions under which it offered to them positions as owner drivers with established carrying firms or companies described as "permanent" or "on contract". Such positions did not exist. The twenty-seven cases now before the Court concern transactions with ten men nine of whom were induced to purchase trucks from the company by false and misleading statements concerning the availability of such "positions". They were imposed upon by one or other of the personal defendants who secured and betrayed their confidence. The propositions were brought to the notice of the potential purchasers by evocative advertisements substantially in the form of the one set out in the discussion

of the various cases before the Court which appears below.

upon the prospect of assured work and income, to men hungry

for work. It was this which the defendants exploited.

Persons attracted by the advertisement had its message confirmed by one or other of the individual defendants. They would confirm that the earnings stated in the advertisements were genuine and convey the impression that they were able to arrange for the customer to obtain a position with an established transport company with which the necessary work to produce those earnings was assured and the position was permanent or on contract. The stated prospective earnings if realised, would have been adequate to maintain a good vehicle and to provide a satisfactory livelihood. Nine of the ten men who responded to the advertisements gave evidence. Most of them appeared to be in the category of unsophisticated workingman, fearing no evil in their dealings with other men. Those who induced them to buy trucks knew, in a number of cases, that to buy the trucks they had to mortgage their houses and of course enter into large obligations to finance companies. In various cases the trucks were shown to be unreliable, and in one case, and probably in others the price

In the commission of the offences the defendants were able to inject a semblance of reality into the notion that they could provide permanent contract work or positions because there were a number of transport organizations in and around Melbourne which carried out transport work for large business entities such as B.H.P., G.M.H., C.R.A., McEwans and

others and who did engage owner drivers to carry the freight

of those entities in Victoria and Interstate. These carriers engaged regular drivers but appear to have been willing to give work to other drivers when it was available on the same sort of basis as work given to cabs on the rank. It was there that the customers of the company fitted, if anywhere. But the trucks on the rank were many and the work available for new drivers was sporadic and inadequate. The result was that those who had purchased trucks from Latrobe Truck Sales soon found that despite their best efforts the earnings were far below what had been held out to them as certain, and in most cases that their costs were beyond their means. Their efforts to survive involved them in excessively hard work, loss of money, the wrecking of their family financial structure, the prospect of long years of work to pay off the burdens incurred

The defendant company operating through the personal defendants was quite ruthless in representing the transactions they proposed as attractive viable propositions. The trouble was that the work promised was just not available. The evidence before me does not disclose the actual earnings of truck drivers who were regular drivers of the transport companies. Except in one instance I do not know how the defendants fixed upon the amounts of earnings which they stated their truck purchasers would earn. I think they had a general knowledge of cartage rates and chose figures on an

optimistic estimate of what continuous operations with a good

truck might be expected to bring in. But their customers were in no position to obtain such regular work. Certainly for them there was nothing in the nature of a position, with assured

regular work either on contract, or permanent employment or

In the case of work to which the customer Voges was referred, namely, work with Beacon Transport Company who carried out deliveries for McEwans of Melbourne, the defendant

Pagonis had been informed by one Simpson the Manager of Anchor Transport Company, which like Beacon Transport Company was a division of the Coulson Transport Group, that some drivers for Beacon made about $500 per week and that Beacon did have enough work to provide carrying work for additional drivers. Simpson seemed tentative about the nature of the evidence he gave. He expressed the view, which was difficult to understand, that the figure he stated should not have been advertised. Nevertheless he did say and I believe that he did mention the figure of $500 and to that extent Pagonis had justification fer stating to Voges that $500 was the possible gross weekly earnings to be achieved with Beacon Transport Company. It would seem however, that even 1f that gross sum were earned $125 of it would be payable to Beacon as commission. Simpson certainly said nothing about a permanent position. There is a charge against the Company but no charge

against any of the personal defendants in respect of the Voges

From what I have been informed on behalf of the defendants, relief in the civil courts to those who have suffered losses seems unlikely. The only one of the nine men who bought trucks and suffered losses who obtained his money back was a Greek man a relation of whom is said to have conveyed to the defendants that repayment would be the better course of valour and whose message was believed. The tenth man did not purchase a truck, as before he completed the purchase, he discovered for himself that he had been misled. He had

however paid a deposit of $500 which he has not recovered.

The first group of proceedings relates to a transaction with one Kelly and comprises VG No. 31 of 1980 and VG No. 32 of 1980. VG 31 concerns a contravention by the company of s.53(a) of the Act on 4 July 1979. Section 53(a) of the Act provides that a corporation shall not in trade or commerce in connection with the supply cr possible supply of goods or services or in the connection with the promotion by any means of the supply of goods or services falsely represent that goods have had a particular history. The charge was that in the circumstances postulated in the section the company falsely represented to one Kelly that a Bedford motor vehicle numbered KXD 854 had a particular history, namely that it had

belonged to a man who had recently died and its sale was being

handled for his family. VG No. 32 of 1979 1s a charge against one, Michael Anthony Pagonis that he was knowlingly concerned in the commission of the offence the subject of the last mentioned proceeding VG No. 31 of 1979 in that it was he who actually made the representation referred to therein. The charge is brought under s.5 of the Crimes Act 1914 (Commonwealth) which provides that any person who is in any way directly or indirectly, knowingly concerned in the commission of an offence against any law of the Commonwealth,

shall be deemed to have committed that offence and shall be

The second group of proceedings also relates to the transaction with Kelly and comprises VG No. 33 of 1979 and VG No. 34 of 1980. VG No. 33 concerns a contravention by the

company of s.59(2) of the Act. That section provides as

"59(2) Where a corporation, in trade or commerce, invites, whether by advertisement or otherwise, persons to engage or participate, or to offer or apply to engage or participate, in a business activity requiring the investment of moneys by the persons concerned and the performance by them of work associated with the investment, the corporation shall not make, with respect of the profitability or risk or any other material aspect of the business activity, a Statement that is false or misleading in a material particular."

The charge against the company was that the defendant company

did contravene section 59(2) of the Act in that it did in

trade or commerce invite Leon Paul Kelly tc participate in a

business activity requiring the investment of monies by him and the performance by him of work associated with the investment and did with respect to the profitability or risk or any other material aspect of business activity make Statements that were false or misleading in a material particular, namely, that, on or about the 6th July 1979 the company did make statements as to the profitability or risk or other material aspect of the business activity in that it did

by its servant or agent Michael Anthony Pagonis make

(a) that there was a guaranteed earning of at least $20,000 per year if the said Leon Paul Kelly purchased a Bedford motor vehicle registered number KxXD~-854 from La Trobe Truck

(b) that with the weekend work that would be available the said Leon Paul Kelly should

(c) that if he, Leon Paul Kelly, purchased a Bedford motor vehicle registered number KXD-854 he would carry on the contract held by

published by the defendant which was in the following terms:-

"OWNER DRIVER 1 Perm. Position $2000 P. Mnth. This is a permanent position with one of Melbourne's leading transport companies. Position is to take over 5 ton 45 cub. met.

p-m. but can be higher depending on ability. For interviews ph. 60-1663."

Evidence was called from which it appeared that Kelly was attracted by this advertisement and called on the company where Pagonis made statements in substance in accordance with those alleged in the summons. There can be no doubt that Kelly was led to believe that regular work of a reliable kind with substantial companies such as Pioneer, Phillips, B.H.P. and I.B.M. wouJd be available to him through the defendant company's arrangement with such companies if he bought the Bedford truck and was willing to work and that such work would

have a permanent character and that his earnings would be as

stated. Mr. Kelly bought the truck for $10,000. He was told to report to Karyall, a carrying company which engaged in truck deliveries to do such work as it could obtain. Mr. Kelly found that there were no contracts with the substantial companies who had been referred to. He had to be content with such work as Karyall allotted to him. He earned nothing like the promised earnings. "In addition, although he had been told the truck was in good condition the differential and gear box and other parts gave up in a few months and he was involved in expenses for repairs of close to $8000. Mr. Kelly had to give up looking to Karyall for work because of the inadequate amount of work and earnings therefrom. He now looks for his

own work and is carrying on as an independent carrier.

to buy the Bedford truck by a belief inspired by the defendant

that the defendant could put him in the way of work of a permanent nature which would return him a very satisfactory income. There was no justification for the defendant painting this optimistic picture. It took advantage of Mr. Kelly's desperate desire for employment to lead him into a seriously losing. proposition by misrepresentations as to the realities

VG No. 34 is a charge against Michael Anthony Pagonis that he was knowingly concerned in the commission of

the offence the subject of the last mentioned proceedings VG

No. 33 of 1980 in that 1t was he who actually made the false and misleading statements the subject of that offence. The

charge is brought pursuant to s.5 of the Crimes Act 1914.

The third group of proceedings relates to a transaction with one Athanasiades and comprises VG Nos. 35, 36 and 37 of 1980. Proceeding VG 35 concerns a contravention of s.53(a) of the Act by the company. The charge is that contrary to the provisions of that section the company did on or about 12 July 1979 falsely represent to Samuel Athanase Athanasiadis that goods namely a Daihatsu motor vehicle registered No. ACV-402 would have a new engine and new gear box in it and did on or

about 25 July 1979 falsely represent to the said Athanasiadis

Pagonis that he was knowingly concerned in the commission of the offences the subject of proceeding VG 35 of 1980 in that

on or about 12 July 1979 and 25 July 1979 it was actually he

who made the false representations referred to in those proceedings. The proceedings were brought pursuant to s.5 of

Proceedings VG 37 of 1980 concerned a charge against

the company in respect of a contravention of s.59(2) of the Act in that it invited the said Athanasiadis to participate in

business activity requiring the investment of monies by him

and the performance by him of work associated with the investment did with respect to the profitability or risk or other material aspect of the business activity make statements that were false and misleading in a misleading particular, namely that by way of advertisement and verbal statements of the said Pagonis statements were made to the said Athanasiadis that three positions as owner driver were available and that

the earnings which he would obtain therein were $400 per week.

OPPORTUNITIES There are now 3 posns. avail. for reliable people wishing to become Owner Drivers working 5 day week metro area. Earnings on own ability can be as high as $450 p.w. Guar. min. $325

p.w. This is definitely a perm. contract posn. For further information and interview

ph. manager. 60-1663." Attracted by this advertisement Mr. Athanasiadis attended at Latrobe Truck Sales and was interviewed by Mr. Pagonis mentioned above. Pagonis told him that if he had the truck which Latrobe Truck Sales was willing to sell him he would make $400 per week clear with the opportunity of increasing that to $600 per week if he worked on Saturdays and Sundays. Mr. Athanasiadis asked how much the job with the truck would cost and was told $7,500 to $8000. The arrangement made was

for the purchase by Athanasiadis of a Dyna truck but during

the negotiations a Diahatsu was substituted which Athanasiadis

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was told was a better truck with a new engine and a new gear box. From what was said Athanasiadis understood that he would look to Latrobe Truck Sales for the job. He was told to report to Allbright Messenger Trucks. He "was told not to drive too fast because the engine was new. He was told to check the oil and water each morning. On the way to Allbright Messengers the truck broke down in the middle of Tullamarine freeway, apparently it boiled for want of water. On arrival

at Allbright Messenger Services he told the manager he was

from Latrobe Truck Sales sent by Michael Pagonis who said that Allbright Messengers had a job for him at $500 per week clear. The Manager said he did not know Pagonis save that Pagonis had rung him up about two weeks before and asked 1f he had another driver's position. It would seem that Allbright had said

yes" and that the driver might make $400 per week but he

would only earn as much as he worked and that Allbright was only working on deliveries and that he would have to pay 25%

That evening the 4th and 5th years dropped so Mr. Athanasiadis arranged for a mechanic to examine them. The mechanic's view was that the engine and gear box were certainly not new. As a result Athanasiadis took the truck back to Latrobe truck Sales who agreed to repair it. This

took some time and Latrobe Truck Sales lent him another truck

and sent him to Anchor Transport Services where he spoke to

Mr. Simpson. Simpson said he could not possibly make $400 per

week, that Anchor would take 25% of what he earned and Athanasiadis would have to pay $40 per month insurance and $20

In due course Athanasiadis received his Daihatsu truck back from Latrobe Truck Sales. He later worked with Omega Transport for about ten days. But despite his efforts his earnings with these transport companies or getting such work as he could for himself did not at any stage reach $400 per week and or anything approaching that amount. After about six months the truck broke down again. Athanasiadis repaired it himself but it was thereafter nearly every week to the mechanic. After a year the gear box and engine collapsed. Athanasiadis did not have the money to repair the truck and 1t

The fourth group of proceedings relates to a transaction with one Lefebure and comprises VG No. 38, 39 and

40 of 1980. Proceeding VG No. 38 concerns a contravention of

s.59(2) of the Act by the Company. The charge was that it did in trade or commerce invite Serge Lindsay Lefebure to participate in a business activity requiring the investment of moneys by him and performance by him of work associated with the investment and did with respect to the profitability or risk or any other material aspect of the business activity make statements that were false or misleading in a material

Particular. Mr. Lefebure was attracted to the Company by an

advertisement published by it in the Melbourne "Sun" newspaper

"OWNER DRIVERS NEW BUSINESS OPPORTUNITIES There are now 3 posns. avail. for realiable people wishing to become Owner Drivers working 5 day week Metro. area. Earning on own ability can be as high as $450 p.w. Guar. min. 325 p.w. This is definitely a perm. contract posn. For further information and interview ph. manager 60 1663." In the first instance the false oral statements were actually made by the said Pagonis and were to the effect that the advertised guaranteed minimum weekly earnings of $325 per week were genuine and that Mr. Lefebure could earn as high as $550

per week. He informed Lefebure that Latrobe Truck Sales

carried on business as a transport company under the name

"Guardian Business Consultants" and that he would be operating,

from 315 LaTrobe Street. That was the address of both Latrobe Truck Sales and Guardian Business Consultants. After these conversations Mr. Lefebure was told to come back next day. This he did and was met by Pagonis who said "Congratulations you have been successful to the job. Just step into my office and we will fill out the necessary paperwork.". This was done. Thereafter Pagonis produced a Mazda Truck stating that this was the best available and that "It will cost you $10,000 and you will be guaranteed work.". Mr. Lefebure asked where did

he work, where was his first job and who was going to train

him. He was told to report to one Derek at Karyall at 71

Southern Road Road Mentone. Mr. Lefebure said "Why do I have to go to Karyall. You have always told me that IE will be operating from 315 LaTrobe Street". He was told that if he went to Karyall they would fulfil the second part of the agreement and give him a two-way radio and give him his weekly pay. Lefebure went to Karyall Transport and Derek told him

the rules were that he had to be at Mentone at eight o'clock

every morning and the work was distributed from there. He said "You work and you get paid. If there is no work you do

not get paid". Lefebure said he had been guaranteed $325 per

week "and now you are telling me something different" Derek said, "Who told you that" - "I said the people at Latrobe . Truck Sales" and Derek said - "Latrobe Truck Sales and us are

two different bodies, we are not related at all" Derek then said "You work for four weeks without getting paid and you get your first week's payment in the fifth week". Mr. Lefebure endeavoured to get work from Karyall, earning $630 in seventeen days. He said "I saw I was getting nowhere with Karyall. You had to be there at eight o'ciock in the morning, sitting in your truck twiddling your thumbs, get a job at eleven o'clock, they sent you over to the other side of town then when you were there you had to ring them and every time you had to drive back to Mentone, sit again for three or four hours before you get another hour's job. So in fact you were on your feet for twelve to thirteen hours a day to get three or four hours work.". Mr. Lefebure decided 1t was costing him

too much to continue. He complained bitterly to Pagonis for

he was not earning anything like $325 a week. Pagonis asked him to come in and said "I will get you something better this time" Lefebure went in and was introduced to the defendant Kirkham, who said "I will arrange something with Associated Owner Drivers and you will earn big money this time." So Lefebure reported to Associated Owner Drivers where Kirkham introduced him to the Director who said "You come here, 1f there is a job we will give it to you". He pointed out that Associated Owner Drivers had nothing to do with Latrobe Truck Sales. Lefebure persisted in his attendance at Associated Owner Drivers. The work there was very limited. He went looking for work on his own account but found little. Persevering with the work with the truck was involving him in heavy expenses. He came to the conclusion that he would have lost his house and everything he had because of the repair bills and other expenses. So he decided that he should sell the truck and get back to his ordinary occupation of accountant. Throughout the transaction he incurred much hard

VG No. 39 of 1980 is a charge against the said Pagonis brought pursuant to s.5 of the Crimes Act 1914 that he was knowingly concerned in the commission of the offence the subject of proceeding VG No. 38 which arose out of the

William Harrick brought pursuant to section 5 of the Crimes Act 1914 that he was knowingly concerned in the commission of the offence the subject of VG No. 38 of 1980. To that charge the defendant has pleaded guilty, but there are no details of

the actual conduct engaged in by him in the commission of the

offence. He was of course a director of the company.

In the fifth category 1S a proceeding which relates to a transaction with one Voges and comprises VG No. 41. It concerns a contravention of s.59(2) of the Act by the Company. The charge is that contrary to the provisions of that section the company invited one Barry Robert Voges to participate ina business activity requiring the investment of monies by him and the performance by him of work associated with that investment and made statements with respect to the profitability of the business activity that were false or misleading in a material particular.

The circumstances were that in response to an advertisement published by the company on or about 15 August 1979 Voges telephoned the Company premises and spoke to one Kirkham. Voges inquired about certain positions which had been advertised for owner drivers. He was told that he would be required to purchase a truck for about $10,000 and that there were various positions that were available with an

annual income of $20,000 to $26,000. Later he attended the

company's premises and spoke to Kirkham. Kirkham told Voges

that if he bought the truck the company would get him a permanent contract position with McEwans where he would carry out forty delivery "drops" per day at $2.20 per drop which worked out at around $20,000 per year. He said that Latrobe Truck Sales was part of Coulsens (a large transport Organization) and because of that they were able to "get trucks with McEwans". Voges said he would invest and take the job. Finance to $7000 was arranged with Custom Credit Limited and the balance of $3000 was arranged through the ANZ Bank on the security of Voges' house. Voges was referred not to McEwans but to Beacon Transport which had a contract with McEwans. No contract with Beacon Transport was available to Voges but Beacon Transport was willing to and did include him amongst carters which it would engage to do deliveries as the work was available. But there were too many trucks and too few deliveries. Voges persevered for some two months but there were much fewer than forty deliveries per day. His earnings for the whole of September 1979 were $600 and thereafter he averaged some $200 - $220 per week gross. He found he was losing money with no prospects of improving his position and decided to sell the truck and try to obtain other work. 'He sold the truck for $6000 and lost about $4000 in the transaction and acquired an obligation to pay off this $4000

transaction with one Zerafa and comprises VG No. 44, and 45 of

(b) the fine be paid to the Registrar of the Court by l

(c) in default of payment of such fine within the time

In proceeding VG No. 56 of 1980 against the defendant Harrick pursuant to s.5 of the Crimes Act and s.59(?) of

(b) the fine be paid to the Registrar of the Court by 1 June 1983;

({c) in default of payment of such fine within the time

fixed the defendant be imprisoned for three months.

1. In proceeding VG No. 63 of 1980 against the company

(b) the company shall pay the amount of sucn fine to the Registrar of the Court within 30 days of this date or should a later date be fixed by this Court

by such later date. In proceeding VG No. 64 of 1980 against the defendant

Kirkham pursuant to s.5 of the Crimes Act and s.59(2) of

(b) the fine be paij to the Registrar of the Court by 1

(c) in default of payment of such fine within the time so fixed the defendant be imprisoned for five

months. In proceeding VG No. 65 of 1980 against the defendant Harrick pursuant to s.5 of the Crimes Act and s.59(2) of the Act,

{b) the fine be paid to the Registrar of the Court by l

{c) in default of payment of such fine within the time so fixed the defendant be imprisoned for four

In proceeding VG No. 66 of 1980 against the company

(b) the company shall pay the amount of such fine to the Registrar of the Court within 30 days of this date or should a later date be fixed by this Court

In proceeding VG No. 67 of 1980 against the defendant

Harrick pursuant to s.5 of the Crimes Act and s.53B of

(b) the fine be paid to the Registrar of the Court by l

(c) in default of payment of such fine within the time

3. In proceeding VG No. 68 of 1980 against the defendant Kirknam pursuant to s.5 of the Crimes Act and s.53B of

(b) the fine be paid to the Registrar of the Court by 1

(c) in default of payment of such fine within the time so fixed the defendant be imprisoned for four

In each of the above proceedings it is further ordered

Menville Pty. Ltd. the company shall pay the costs of the proceedings including the proofs of the acts and matters

defendant that defendant pay the costs of those proceedings so far as they relate to work performed additionally to that performed in the particular proceedings against the company to which those

the question of granting relief pursuant to s.21B(d) of the Commonwealth Crimes

I certify that this and the sixty-seven (67) preceding pages are a true copy of the reasons for Judgment and Order of the Honourable Mr. Justice Smithers.