Windsurfing International Inc v Sailboards Australia Pty Ltd

Federal Court of Australia|1998-11-06|Before: Drummond J

THE COURT DECLARES THATthe first respondent is guilty of contempt of court constituted by its having breached the undertakings given on its behalf to this Court on 2 July 1998:

By taking steps, by the actions of a person identifying himself as "Nathan", to obtain payment of charges for advertising services in "The National Federal State and Local Government Advertiser", as follows:

(a) On 31 July 1998, the person identifying himself as "Nathan" telephoned the Menzies School of Health Research in Darwin to obtain payment of an invoice for advertising or directory services issued by the first respondent on 11 May 1998.

(b) On 11 August 1998, the person identifying himself as "Nathan" telephoned the Menzies School of Health Research in Darwin to obtain payment of the said invoice.

(i) hold any written order from the Menzies School of Health Research for the advertising services or directory entry the subject of the said invoice;

(ii) provide to the Menzies School of Health Research any copy of any order for such advertising services or directory entry either prior to or with the demands or requests for payment made by the first respondent on 31 July 1998 and on 11 August 1998.

By the second respondent and by its employee named "Brent" between 19 August 1998 and 21 August 1998 both included instructing Josephine Ann Unsworth to engage in the following conduct in connection with the supply or possible supply to persons of advertising in "The National Federal State and Local Government Advertiser" by Australia's Flag Publishing:

(a) to represent to persons that advertisements or directory entries had previously been ordered or agreed to by those persons or on behalf of those persons when they had not been so ordered or agreed; and

(b) to send to those persons documents which misled, or were likely to mislead, those persons as to the effect of signing or returning those documents.

By engaging between 19 August 1998 and 21 August 1998 by its employee Josephine Ann Unsworth in the following conduct:

(a) representing to persons that advertisements or directory entries had previously been ordered or agreed to by those persons or on behalf of those persons when they had not been so ordered or agreed; and

(b) sending to those persons documents which misled, or were likely to mislead, those persons as to the effect of signing or returning those documents.

THE COURT DECLARES THATthe second respondent is guilty of contempt of court by breaching the undertakings given by him to this Court on 2 July 1998 by:

Instructing Josephine Ann Unsworth on 20 or 21 August 1998 to engage in conduct of the kind described in paragraph 2 of the declaration in respect of the first respondent above.

Being a party to and knowingly concerned in the conduct of the first respondent described in paragraph 2 of the declaration in respect of the first respondent.

Until trial or earlier order, the first respondent be restrained, whether by itself, its employees, agents or howsoever, in connection with the supply or possible supply or promotion of the supply of print advertising or internet advertising or the making of an entry in a directory, from engaging in any of the following conduct:

(a) representing to any person (which includes a corporation, business or government department) that an advertisement or directory entry had previously been ordered or agreed to by that person or by a person on behalf of that person, when it had not been so ordered or agreed to;

(b) sending to any person a document which misleads, or is likely to mislead that person as to the effect of signing or returning that document;

(c) representing to any person that an advertisement or directory entry is to be included in a new edition of a publication in which, or an update of an internet site at which, that person had previously advertised or displayed an entry, when that person had in fact never previously advertised or displayed an entry in the relevant publication or at the relevant internet site;

(d) where, in response to a representation as described in (a) and (c) above, or where a person receives a document referred to in (b) above, a person makes an order for a print advertisement or internet advertisement or entry in a directory:

(i) invoicing a person for the advertisement or directory entry;

(ii) making a demand, orally or in writing, for payment for the advertisement or directory entry;

(iii) threatening, orally or in writing, to commence legal proceedings with a view to obtaining payment for the advertisement or directory entry;

(iv) threatening, orally or in writing, to place the name of the person on a list of defaulters or debtors with a view to obtaining payment for the advertisement or directory entry; or

(v) threatening, orally or in writing, to invoke any collection procedure with a view to obtaining payment;

(e) where, after an invoice is issued, or a demand or threat is made as described in (d) above, a person makes payment to the first respondent, accepting that payment; and

(f) representing, relying on or claiming that the signature of any person on any document brought into existence after the date of this order constitutes an authorisation of, or request or order for, either advertising services or a directory entry unless:

(i) upon each page of the document, at least 3 cm from the top or bottom of the page, there appears in bold type no smaller than 28 point, the words:

"This is an order for advertising/directory services. If you sign this you enter into a binding contract to pay $(insert cost of entry or service)"; and

(ii) the document clearly sets out full details of the service or entry to be provided and the date or dates of publication.

Until trial or earlier order, the second respondent be restrained, whether by himself, his employees, agents or howsoever, in connection with the supply or possible supply or promotion of the supply of print advertising or internet advertising or the making of an entry in a directory, from engaging in, or being knowingly concerned directly or indirectly in, any of the following conduct:

(b) sending to any person a document which misleads, or is likely to mislead that person as to the effect of signing or returning that document;

(i) invoicing a person for the advertisement or directory entry;

(ii) making a demand, orally or in writing, for payment for the advertisement or directory entry;

(iii) threatening, orally or in writing, to commence legal proceedings with a view to obtaining payment for the advertisement or directory entry;

(iv) threatening, orally or in writing, to place the name of the person on a list of defaulters or debtors with a view to obtaining payment for the advertisement or directory entry; or

(v) threatening, orally or in writing, to invoke any collection procedure with a view to obtaining payment.

(e) where, after an invoice is issued, or a demand or threat is made as described in (d) above, a person makes payment to the first respondent, accepting that payment; and

(i) upon each page of the document, at least 3 cm from the top or bottom of the page, there appears in bold type no smaller than 28 point, the words:

"This is an order for advertising/directory services. If you sign this you enter into a binding contract to pay $(insert cost of entry or service)"; and

(ii) the document clearly sets out full details of the service or entry to be provided and the date or dates of publication.

Until trial or earlier order, the first respondent and the second respondent be restrained, whether by themselves, their respective employees or agents or howsoever, in connection with the supply or possible supply or the promotion of the supply of print advertising or internet advertising or the making of an entry in a directory, from taking any step with a view to obtaining the payment of any charge for advertising services or for the making of an entry in a directory unless:

(a) the first respondent or the second respondent holds a written order for the services or directory entry that clearly requests the services or entry to be provided, and is signed by a person authorised to do so by the person from whom the payment is claimed ("the original order");

(b) the original order predates any facsimile transmission or other correspondence from the first respondent or the second respondent to the person that requests, inter alia, confirmation of the content of the proposed advertising or entry; and

Until trial or earlier order, the first respondent be restrained, whether by itself, its servants or agents or otherwise howsoever, from sending to any person:

(a) a document requesting the person to proof or check a directory entry or advertisement where the person had not previously ordered or requested such directory entry advertisement; or

(b) a document that purports to be a confirmation of a directory entry or advertisement where the person had not previously ordered or requested such directory entry or advertisement.

The second respondent, whether by himself, his servants or agents or otherwise howsoever, be restrained, until trial or earlier order, from causing or procuring or from being in any way directly or indirectly knowingly concerned in any corporation sending to any person:

(a) a document requesting the person to proof or check a directory entry or advertisement where the person had not previously ordered or requested such directory entry advertisement; or

(b) a document that purports to be a confirmation of a directory entry or advertisement where the person had not previously ordered or requested such directory entry or advertisement.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

AND: GOLDSTAR CORPORATION PTY LTD (ACN 080 935 262)

The applicant in the action applies on motion for the punishment of the respondents for their contempts constituted by their failures to comply with the undertakings that each gave to the Court; interlocutory injunctions are also sought against both respondents by the same motion.

On 2 July last, the applicant in the action applied to the Court for interlocutory injunctions restraining each respondent from engaging in certain conduct in connection with the supply of advertising services consisting of, among other things, the making of representations to any person that an advertisement had previously been ordered by or for that person from the first respondent when no such order had in fact been placed. A judge of the court that day ordered that undertakings offered by each respondent be accepted and that the applicant's application for interlocutory relief be adjourned. A copy of the document headed "Undertakings by the First and Second Respondents" which were accepted by the Court on 2 July 1998 is annexed to these reasons.

There are obvious deficiencies in the drafting of the undertaking due to lack of care on the part of those responsible for its preparation to convert the forms of interlocutory orders sought in the applicant's application into undertakings by each respondent. As a result, the document records that the respondents, firstly, "hereby undertake … from engaging in … any of the following conduct …" and, secondly, that they "hereby undertake … from taking any step with a view to obtaining the payment of any charge for advertising services or … unless …". However, I do not think there is any doubt that each respondent understood that each was undertaking to the Court not to engage in the various kinds of conduct spelled out in the undertakings. These undertakings are signed by the second respondent on his own behalf and on behalf of the first respondent as "its duly authorised officer". The second respondent said he was present in Court when they were given. He also said that on the afternoon of 2 July, he told a gathering of the first respondent's staff of that day's court hearing and how they had to carry out their duties henceforth to avoid in effect any breach of the undertakings occurring. He plainly understood the import of those undertakings. The material before me indicates that the second respondent, from commencement of the first respondent's operations in December 1997 to 28 June last, is recorded in ASIC records as the sole director and secretary of the first respondent. In an affidavit sworn by him and filed on 28 October last in connection with the proceedings now before me, the second respondent stated that "I am … the Managing Director of" the first respondent. I infer that he held that position continuously throughout the period from late June to date. His understanding of the effect of the undertakings he signed on behalf of the first respondent can therefore be imputed to it.

By the statement of charge, the applicant alleges that the first respondent breached paras (a) and (b) of the first undertaking by sending, four days after it was given, a facsimile to Distribution Resource Management Pty Ltd purporting to be confirmation of a prior order for an advertisement to be published in "The National Federal State and Local Government Advertiser", when the recipient had not previously placed any such order. The statement of charge also alleges that the first respondent breached para (f) of the first undertaking and the second undertaking by reason of the conduct of a person identified as "Nathan" who took steps to obtain payment to the first respondent of charges for advertising services in "The National Federal State and Local Government Advertiser": on 31 July 1998 and again on 11 August 1998 Nathan attempted to obtain payment of an invoice for advertising or directory services issued by the first respondent on 11 May 1998 to the Menzies School of Health Research in Darwin. It is further alleged that on neither 31 July nor 11 August 1998 did either respondent hold an order answering the description in either of paras (a) or (b) of the second undertaking and also that neither respondent had provided to the Menzies School of Health Research, either prior to or with any demand for payment, a copy of the original order. The statement of charge, although referring to para (f) of the first undertaking, does not, however, particularise any breach of that part of that undertaking. It should also be noted that the statement of charge alleges breaches of the undertakings only by the first respondent.

The supplementary charge alleges that between 19 and 21 August 1998 the first respondent by its employee, Ms Unsworth, committed numerous breaches of paras (a) and (b) of the first undertaking, firstly, by instructing Ms Unsworth when she was soliciting orders from persons for advertising in "The National Federal State and Local Government Advertiser" to represent to those persons that advertisements or directory entries had previously been ordered by or on behalf of those persons, when they had not been so ordered, and by sending to those persons documents which were likely to mislead those persons as to the effect of signing those documents. The supplementary statement of charge further alleges that the first respondent also breached these same undertakings when Ms Unsworth obeyed the first respondent's instruction and engaged in the conduct referred to. This conduct is alleged to have consisted of "at least a 120 telephone calls" made by Ms Unsworth in which she represented to the person called that advertising or directory services had been previously ordered or agreed to or arranged when they had not and by her sending at least thirty facsimile transmissions to persons after such telephone calls containing advertisements for those persons, which advertisements had not previously been ordered by those persons. It is said that each facsimile misrepresented that it was a confirmation of a previous order. The supplementary statement of charge further alleges that the second respondent was both a party to this conduct engaged in by the first respondent in contravention of the undertakings and was also knowingly concerned in that conduct.

When the matter came before me on 2 October for directions, the first respondent was not represented, although the second respondent appeared in person. I then set a timetable for the delivery of material which the second respondent indicated was acceptable to him. When the proceedings came before me for hearing on Monday last, counsel previously engaged by both respondents, instructed by the solicitor on the record for both, asked leave for himself and the solicitor to withdraw on the ground that their retainers had been withdrawn. The second respondent offered no objection to such leave being granted. The matter proceeded with the second respondent representing himself, the first respondent being unrepresented. If it be necessary, there is evidence before me that the first respondent was served with the notice of motion and supporting material on 7 October, something not disputed by the second respondent, who has been, at all material times, its managing director. The second respondent did express concern at the matter proceeding against the first respondent because there was, as he put it, a third party who was a shareholder in the first respondent who was not aware of the present proceedings. The second respondent did not apply for leave to appear for the first respondent. Nor did he seek an adjournment of the motion as against the first respondent and, in any event, such an adjournment would have been unjustifiable in view of what took place on 2 October and the fact that the first respondent, until the morning of the hearing, had solicitors and counsel acting for it in the present proceedings.

In an affidavit sworn by the second respondent and filed by his former solicitor on 28 October last, he deals with some of the allegations contained in the applicant's material. He does not, however, challenge any of the applicant's evidence save that led from Ms Unsworth: he denies ever having the conversation with her to which she deposes and he adds that he has no recollection of ever having met her. He also says that, after giving the undertakings to the Court, that same afternoon he held a meeting of staff then present in the first respondent's offices, told them that he had just come back from a court case and instructed them that no-one was to send out any contracts unless a request for advertising had already been received by the first respondent. He added that "[s]traight away afterwards I departed for overseas. Since giving the undertakings concerned I have travelled extensively overseas". His passport indicates that he departed Australia on 3 July and travelled overseas for some considerable time thereafter. His passport indicates that he departed from Bangkok on 19 August 1998, but there is no Australian arrival stamp after an earlier entry on 10 June 1998.

Except for Ms Unsworth and Ms Willis, I have no hesitation in accepting the uncontradicted evidence of the applicant's witnesses. Ms Unsworth, who only worked for the first respondent from 19 August to 21 August 1998, described in detail her activities. She was employed by a person named "Brent". In his evidence, the second respondent describes Brent as the person he left in charge of the first respondent's operations while he was overseas from 3 July last. He says he is unaware of Brent's full name or current whereabouts and also says that, in accordance with what he describes as common practice in the telemarketing industry of telemarketing operators using aliases, Brent used the alias "Nathan Webber" while working for the first respondent. The second respondent also described Brent in the course of the hearing as the first respondent's manager.

Ms Unsworth says that when she started work on 19 August, Brent gave her a written "sales pitch or spiel" which she was to use when she telephoned business leads. Although no example of this "spiel" was produced in evidence, she described it as containing a statement which, in effect, required her to falsely represent to the person being called that she was following up an order earlier placed by that person for advertising in "The National Federal State and Local Government Advertiser" to advise that the artwork for the advertisement was now ready which she wanted to send to the person for approval before publication. She describes detailed instructions she received from Brent, obviously designed to extract written confirmation from the person being called of an earlier order for advertising placed by the person when in fact no such order had been given. She says that when Brent overheard her using her own Christian name when calling persons, he told her to use an alias. She says, contrary to the second respondent's evidence, that in her fairly extensive experience in telemarketing she had never previously been asked or told not to use her own first name. She describes other instructions given her by Brent designed to mislead persons she telephoned into thinking she had previously been in contact with them about placing advertising in the first respondent's publication. She says she telephoned forty to fifty businesses on each of the three days she worked for the first respondent and says Brent told her that she was required to send out ten faxes each day she worked.

She also says that on the morning of 20 August 1998, Brent introduced her to the second respondent and that, a little later, while she was telephoning business leads, the second respondent remonstrated with her for departing from the written "spiel" and insisted that she "stick to the spiel". He admitted he learned of the existence of a written sales "spiel" circulating among some of the first respondent's employees at about this time; he said he had it destroyed.

Ms Willis went to the first respondent to be interviewed for a job as a telemarketer on either 20 or 21 August 1998. She was interviewed by a person she names as "Brett" who told her how she would have to go about performing her duties. He discussed with her a written "spiel" to be used by telemarketers. She saw Ms Unsworth, whom she knew from having worked together with another employer previously, working at the premises. She was only at the premises for about an hour or so and did not take the job offered her. But she says that either Brett or Ms Unsworth told her that the owner was away but was expected back that day. She describes the arrival, during the hour or so she was at the first respondent's premises, of a man with whom Brett spoke at some length and who she identified in court as the second respondent.

Ms Unsworth was cross-examined briefly by the second respondent. Her evidence is corroborated in a number of respects by that of Ms Willis, whose evidence the second respondent did not attack. Ms Unsworth's evidence is, moreover, consistent with that of the deponents relied on by the applicant who were contacted by her and other telemarketers working for the first respondent. I accept Ms Unsworth as a reliable witness.

The applicant relies, in support of the allegations in paras 3 and 4 of the statement of charge, on the evidence of Mr and Mrs Jarrard of Distribution Resource Management Pty Ltd. That company received a facsimile sent on behalf of the first respondent on a "National Federal State and Local Government Advertiser" letterhead by a Samantha Davey on 6 July 1998. Mr Hudson acknowledges that this woman was working for the first respondent as a telemarketer in early July 1998. However, I am not prepared to find, to the standard of proof necessary to establish a contempt of court, that this facsimile or anything said in the follow-up conversation Samantha Davey had with Mrs Jarrard contains a clear representation of the kind the subject of para (a) or (b) of the first undertaking.

The applicant relies, in support of the allegations in paras 7 and 8 of the statement of charge, on the evidence of Ms Basset, Ms Henderson and Ms Jackson. Their evidence shows that, in early May 1998, a person or persons acting on behalf of the first respondent procured from Ms Henderson, Business Manager at the Menzies School of Health Research, her signature to a facsimile on "The National Federal State and Local Government Advertiser" letterhead approving an advertisement on behalf of the School to be inserted in the first respondent's publication; this, in turn, led to the despatch by the first respondent to the School, for the attention of Ms Henderson, of the first respondent's invoice dated 11 May 1998. Ms Henderson said she signed the confirmation on this facsimile in the belief that the advertisement had previously been ordered by another staff member of the School. That was not in fact the case. This evidence also shows that a person acting on behalf of the first respondent, who gave his name as "Nathan", contacted the School's accounts officer, Ms Bassett on 25 May, 1 June, 31 July, 6 August and 11 August in persistent attempts to procure payment by the School of this invoice. Ms Basset, after discussion with Ms Henderson, in late May had prepared a purchase order in respect of the invoice in the mistaken belief that the School had ordered the advertisement and that the original purchase order had been misplaced. Before this purchase order was completed, however, Ms Bassett and Ms Henderson received information suggesting that the first respondent engaged in falsely representing that it had orders for advertising in its "National Federal State and Local Government Advertiser". They then cancelled the purchase order and decided not to pay the first respondent's invoice. Ms Jackson, to whom Ms Bassett reported, took telephone calls from "Nathan" on 1 June and 11 August 1998, which Ms Bassett had originally received but which she transferred to Ms Jackson. On both occasions, "Nathan" pursued payment of the invoice.

As I have said, there is no dispute as to the accuracy of this body of evidence. The second respondent, moreover, identified the name "Nathan Webber" as an alias used by the first respondent's manager, "Brent". The evidence is that he was the only person employed by the first respondent who used the name "Nathan". I am satisfied beyond reasonable doubt that, by the approaches made on its behalf by the person named "Nathan" to each of Ms Basset on 31 July and 11 August 1998 and to Ms Jackson on 11 August 1998, that the first respondent breached its second undertaking of 2 July 1998 in the manner alleged in paras 7 and 8 of the statement of charge. I am further satisfied, having regard to the circumstances in which the original facsimile and invoice were received by the School from the first respondent and by "Nathan's" persistence in pursuing payment of the invoice that, at best for the first respondent, the breaches of this undertaking which occurred on 31 July and 11 August 1998, were at the very least the result of reckless disregard by the first respondent of the obligation it assumed by giving the undertakings: it failed to take any action of the kind that was incumbent upon it as a result of having given its undertaking to the Court to ensure, so far as that was reasonably practicable, that its staff would not engage in conduct proscribed by its undertaking. That the person "Nathan" or "Brent", who was the person the second respondent left with responsibility for managing the first respondent's operations in his absence, should engage in such conduct reinforces me in this view. As Burchett J observed in Windsurfing International Inc v Sailboards Australia Pty Ltd (1986) 19 FCR 110 at 117, where a company gives an undertaking to the Court, it has a "clear duty" to see to it that those by whom it acts are aware of its obligations pursuant to the undertakings to the Court. In making a finding of contempt constituted by breach of an undertaking to the Court, the Restrictive Practices Court in Re Galvanized Tank Manufacturers' Association's Agreement [1965] 1 WLR 1074 at 1090 observed:

We would, however, emphasise that a company, which has given an undertaking to the court, must be treated as having failed lamentably and inexcusably in its elementary duty if it fails to take adequate and continuing steps to ensure, through its responsible officers, that those officers themselves, and anyone to whom they may delegate the handling of matters which fall within the scope of the undertaking, do not forget or misunderstand or overlook the obligations imposed by such undertaking.

As to the supplementary statement of charge, I have already indicated my acceptance of the evidence of Ms Unsworth. I am satisfied from her evidence that the first respondent is guilty by reason of the instructions given to Ms Unsworth both by the man "Brent" and by the second respondent himself, to which I have already referred, and by the implementation by Ms Unsworth of those instructions, of deliberately breaching paras (a) and (b) of the first respondent's first undertaking, as alleged in paras 4 and 5 of the supplementary statement of charge.

I am also satisfied beyond reasonable doubt, from the evidence of Ms Unsworth, that the second respondent, by reason of the instructions he gave Ms Unsworth on the morning of 20 or 21 August 1998, to "stick to the spiel", instructions implemented by Ms Unsworth, himself deliberately breached paras (a) and (b) of the first undertaking which he personally gave to the Court on 2 July 1998.

The second respondent's answer to the charges, in addition to denying any involvement with Ms Unsworth, is to assert that even if conduct in breach of the undertaking by the first respondent may have occurred after 2 July, he left the country on 3 July and remained outside Australia for a substantial period. He says he should not be held responsible for the actions of employees of the first respondent in his absence. He says there is a high turnover of employees and that many employees frequently worked from their homes rather than under supervision at the office of the first respondent. He points out that employees worked on commission, the suggestion being that if conduct which might amount to a breach of any of the first respondent's undertakings was engaged in by employees, it was done without the first or second respondent's authority and to serve the personal objectives of those employees in closing sales upon which their remuneration depended.

Even if this evidence is accepted, far from exculpating the first respondent in respect of the contempt charges, it serves only to confirm that at best for that respondent it made no genuine attempt at all to try to ensure employees would not put it in breach of its undertakings.

I have already referred to the very limited action the second respondent claims he took immediately after the undertakings were given to the Court and before he went overseas by way of instructing staff as to how they should perform their duties to avoid any breach of the undertakings. The brief, almost Delphic instruction which he says he gave once and then only orally to those of the first respondent's employees who happened to be at its offices on the afternoon of 2 July was wholly inadequate to convey to them just what was involved in the undertakings given to the Court earlier that day by the first respondent, let alone to impress upon them the importance of conducting themselves in a way which would not put the first respondent in breach of those undertakings.

So cursory is the only action which the second respondent claims was taken to draw the attention of staff to how they should conduct themselves to avoid putting the first respondent in breach of its undertakings that I infer that, even if the second respondent did say something along the lines he claims to the first respondent's staff, he never intended that they would depart from what the evidence shows was the first respondent's longstanding and misleading style of business. That such an inference can be drawn to the requisite degree of conviction is emphasised by the evidence that "Brent", the person selected by the second respondent to manage the first respondent's operations in his absence overseas, himself repeatedly engaged after 2 July in conduct plainly contrary to what had been undertaken by the first respondent and second respondent.

I have found the second respondent in breach of the undertaking which he personally gave to the Court by reason of the instructions he gave Ms Unsworth on 20 or 21 August last. It follows that the charge in para 7 of the supplementary statement of charge that the second respondent was knowingly concerned in the breaches by the first respondent of its own undertaking constituted by Ms Unsworth's actions in so far as that charge relates to her actions implementing the instructions she received from the second respondent personally is made out. Although I have reservations about accepting that the second respondent gave the instructions he claims he did to staff on the afternoon of 2 July 1998, I am not prepared to reject what he says and make a positive finding that he failed to take any action to draw to the attention of staff the need to so conduct themselves as to avoid putting the first respondent in breach of its undertakings. However, I have explained why, even accepting what the second respondent says, the inference can be drawn beyond reasonable doubt that the second respondent never intended that the first respondent's staff would change their mode of operating on behalf of the first respondent. It follows that the second respondent is guilty of participation in all of the conduct of the first respondent set out in paras 4 and 5 of the supplementary statement of charge.

I turn now to the application for wide-ranging interlocutory injunctive relief.

The special principles governing the grant of interlocutory injunctions under s 80(2) the Trade Practices Act 1974 (Cth) are well-established. See Ricegrowers Co-operative Ltd v Howling Success Australia Pty Ltd (1987) ATPR 40-778 at 48,492 and ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 110 ALR 47 at 54 - 58.

I am satisfied that the applicant has a strong arguable case that the first respondent has engaged in activities in which the second respondent has been a knowing participant which constitute breaches of ss 52, 53(bb) and 64(2A) the Trade Practices Act in respect of the manner in which the first respondent's employees sought to get payment from various organisations for advertisements to appear in "The National Federal State and Local Government Advertiser", "The Municipal Trades and Services Directory" and in "The Child Abuse Review" which the first respondent also purported to publish.

The applicant submits that the material, which includes that relied on in support of the contempt charges, shows a course of conduct engaged in over a significant period by the first respondent with the following features:

· A representative from the NFSLGA would phone the client's switchboard and ask for the name of the marketing manager and the company's fax number.

· A short time later, the client would receive a fax from the NFSLGA, marked to the attention of the relevant marketing manager, asking that person to check the proof of the advertisement contained in the fax and to return the signed authorisation. In many cases it was claimed by the NFSLGA that the advertisement would be "going to print" that day.

(a) sign the authorisation and fax it back to the NFSLGA, thinking that they or someone else in the office had previously ordered the advertisement, as suggested by the fax, and had simply forgotten about it; or

(b) place a call to the NFSLGA to inquire as to the origin of the advertisement, only to be told that the advertisement has been booked by someone in the office (the marketing manager's name would usually be quoted) some months ago. The client, having no recollection or evidence of any such orders being placed with the NFSLGA, would then ask to see an order number or order form relating to the advertisement. At this point, the NFSLGA representative would inform the client that they "would have to check upstairs with the copy department" for the original order form, and would contact them once it was located. To date, no clients have been presented with evidence that they placed an order with the NFSLGA.

· The next point of contact would usually be an invoice from the NFSLGA requiring payment for the account. Most accounts are priced between $395 and $1000.

· Many clients have experienced difficulties when refusing to authorise the advertisement or pay the account, in that they are threatened with legal action for non-payment of the account, or abused by persons identifying themselves as either Grant Hudson or John James. It is also alleged that many Goldstar staff are using false names in their dealings with clients. MSC - 14;

In view of the evidence of Ms Nankervis and that of Dr Isdale, who reports on conversations he had with the second respondent on 22 and 23 June last in which the second respondent pursued Dr Isdale's organisation for payment for advertisements, I am also satisfied that the applicant has an arguable case that the first respondent has engaged in conduct, in which the second respondent is a knowing participant, that constitutes a breach of s 60 the Trade Practices Act.

So far as the balance of convenience is concerned, the consideration which, in my opinion, calls for dominant weight to be given to it in the circumstances of this case, is the public interest. The injunctions, if granted, will not prevent the first respondent carrying on business until trial, although they will restrict the manner in which it will be able to do that. That business is confined, according to the second respondent, to selling advertising in three works each published only once a year. The second respondent said the first respondent had been operating its business for about a year and a half, with only one edition of the Advertiser and of the Review so far published, with no editions of the Directory yet published. I have referred to the strong case revealed by the evidence that both respondents have engaged in conduct detrimental to the public interest over a substantial period of time. That conduct, especially when coupled with the respondents' cavalier disregard of the undertakings each gave to the Court not to engage in conduct of the kind now sought to be enjoined, in my opinion, justifies the grant of the injunctions sought, subject to two qualifications.

The first qualification is in respect of the applicant's claim for an interlocutory injunction requiring the respondents to file a list of all persons who have been sent a certain kind of invoice by or on behalf of the first respondent since 1 January 1998 in respect of advertising services or directory entries. The applicant justifies this claim by submitting that s 64(4) the Trade Practices Act confers on a person deceived into paying for unsolicited services the right to recover any such payment; counsel for the applicant submits that this injunction is not a form of discovery but rather an aid to determining who has accrued rights under the Act so that the applicant can promptly advise them of those rights. Counsel's submissions, it seems to me, show that the applicant is seeking to use the procedures of the Court, not to further the litigation, but rather for a purpose foreign to that objective, ie, to use the Court's powers to extract from the respondents, under the sanction of the draconic remedy of contempt of court, information not intended to be used in the litigation but rather to be passed on to strangers for their own personal use or benefit. I therefore do not consider that, in terms of s 80(2), it is desirable to grant this particular interlocutory order.

The second qualification is this: neither in written nor oral submissions did the applicant seek to justify its entitlement to the order sought in para 6 of the notice of motion. No such order will be made.

However, there will be injunctions against the respondents in the terms sought by paras 3, 4 and 5 of the notice of motion filed 16 September 1998.

I certify that this and the preceding eleven (11) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Drummond.

Counsel for the Applicant: Dr ML Robertson

Solicitor for the Applicant: Australian Government Solicitor

Date of Hearing: 2 November 1998

Date of Judgment: 6 November 1998

Trade Practices Act 1974(Cth)

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Judgment (102 paragraphs)

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Legislation Cited (1)

Cases Cited (2)

Cited By (1)