REASONS FOR JUDGMENT
TAMBERLIN J:
28 I have read the Judgment of Ryan and Kiefel JJ in this matter and agree with their Honours' reasoning and order that the appeal be dismissed with costs. I will add some brief remarks.
29 The substance of the appellant's case is that the primary Judge, Finn J, failed to consider the question of whether s 65AAC has any extraterritorial operation and ignored the statutory and common law presumptions as to extraterritoriality.
30 First, the appellant refers to s 21(1)(b) of the Acts Interpretation Act 1901 (Cth) which relevantly provides as follows:
"21(1) In any Act unless the contrary intention appears:
…
(b) References to localities, jurisdictions and other matters and things shall be construed as references to such localities, jurisdictions and other matters and things in and of the Commonwealth."
31 The appellant submits that the provisions of the Trade Practices Act 1974 (Cth) ("the TPA") should be read as if the words "in and of the Commonwealth" are incorporated by reason of the above provision. It is said that s 65AAD, which defines the characteristics of a pyramid selling scheme, must be read to require that the pyramid selling scheme itself, as opposed to the act of participation in such a scheme referred to in s 65AAC, must have a territorial nexus with Australia, that is, the scheme must involve a payment in Australia or an inducement in Australia or must affect Australian consumers.
32 The appellant seeks to enlist support for his submission from the general objective of the TPA, which is expressed in s 2 to be to "enhance the welfare of Australians through the promotion of competition and fair trading provision for consumer protection." (Emphasis added)
33 This case is not one in which the Australian legislation makes unlawful an activity which may be lawful under the law of another country so as to impact on the sovereignty of that other country in relation to offences committed by Australian citizens: see the remarks of Holmes J in American Banana Co v United Fruit Co 213 US 347 (1909) at 355-356.
34 Next, the appellant refers to the common law presumption concerning extraterritoriality expressed by Dixon J in Wanganui-Rangitikei Electric Power Board v Australian Mutual Provident Society (1934) 50 CLR 581 at 601:
"But, in the absence of any countervailing consideration, the principle is, I think, that general words should not be understood as extending to cases which, according to the rules of private international law administered in our Courts, are governed by foreign law."
35 The appellant submits that if the provisions concerning pyramid selling were read literally, they would make marketing schemes taking place entirely within foreign jurisdictions unlawful. Therefore, a foreign corporation carrying on an unrelated business in Australia would contravene s 65AAC of the TPA and the penal provision in s 75AZO by participating in a marketing scheme having the defined characteristics of a pyramid selling scheme even though the scheme operated entirely outside the territorial boundaries of the Commonwealth and Australians could not participate in it. It is said that the common law and statutory presumption is against a construction that would produce such a result.
36 In Meyer Heine Pty Ltd v The China Navigation Co Ltd (1966) 115 CLR 10 at 24 (Meyer Heine), which is referred to by the appellant, Kitto J, with whom Windeyer and McTiernan JJ agreed, drew an inference from s 9(b) of the Australian Industries Preservation Act 1906 (Cth) that the legislation was only intended to apply to territorial offences. The basis for Kitto J's conclusion was that s 9(b) referred to a purely notional offence, namely, an offence which would have been committed if the act done outside Australia had been done within Australia. The section is clearly framed in reliance on the premise that when conduct is otherwise made an offence it is only such conduct in Australia that is included. Consequently, it was necessary to expand the range of conduct by express provision. For this reason, Meyer Heine turned on a narrow question of construction that has no relevance to the present case.
37 More relevant to the present circumstances is the decision of Lockhart J in Trade Practices Commission v Australian Iron & Steel Pty Ltd (1989) 22 FCR 305 (Australian Iron & Steel). That decision concerned s 50 of the TPA, which prohibited a corporation from acquiring shares in the capital of a body corporate if, as a result of the acquisition, the corporation would be in a position to dominate a market for goods or services in Australia. The circumstances before his Honour concerned the acquisition by a company incorporated in Australia of a target company in New Zealand. The latter company was incorporated in New Zealand and there was no allegation that it had carried on business in Australia or had any other nexus with Australia. The decision proceeded on the basis that the acquisition could have an adverse effect on the market within Australia. For present purposes, the relevant point in this case was the applicant's contention that the reference in s 50 to a "body corporate" should be limited to mean only an Australian body corporate. At 318-322, his Honour considered the extraterritorial operation of s 50. At 319-320, his Honour said:
"In my opinion the body corporate, the shares in or assets of which are sought by the acquiring corporation, need not be only a body corporate incorporated in or carrying on business or otherwise present in Australia. It is the conduct constituted by the acquisition of shares in the capital of or of assets of a body corporate that is prohibited by s 50(1). The existence of the body corporate which is the subject of the proposed merger or takeover is an essential component of that prohibited conduct and the extraterritorial operation of s 50 which is achieved by s 5(1) necessarily includes that body corporate wherever it is incorporated or carrying on business. The relevant territorial nexus with Australia is derived from the statutory requirement that the corporation which is the subject of the prohibition imposed by s 50(1) must be incorporated or carrying on business within Australia (s 5(1)) and that the conduct must affect a market in Australia in the manner mentioned in s 50(1).
I see no reason to confine the statutory prohibition to shares in the capital of or assets of an Australian body corporate. It would strangle the evident legislative purpose of s 50 if the body corporate which is the subject of the takeover or merger had to be an Australian body corporate; and as I said earlier it is not that body corporate which is the subject of the legislative prohibition but the acquiring corporation which must be incorporated in or carry on business in Australia." (Emphasis added)
38 This decision was referred to by Merkel J in Bray v F Hoffman-La Roche (2002) 118 FCR 1 at [52].
39 In my view, the analysis of Lockhart J in Australian Iron & Steel is applicable in the present circumstances. Just as, in that case, there was no requirement for the insertion of a requirement that the target body corporate can only be an Australian body corporate, there is no requirement in the present case for the pyramid selling scheme to be established in Australia or for a payment to be made in Australia by a participant in the scheme or for the scheme to affect Australians.
40 The prohibition in s 65AAC applies to the act of participation in a pyramid selling scheme. In the present case, the act of participation which forms the basis of the proceeding has occurred in Australia by reason of the conduct in Australia of Worldplay Services. The fact that this conduct has taken place in Australia is sufficient in itself to establish the necessary territorial nexus with Australia. There is no necessity to incorporate any unexpressed requirement of territorial connection into the definition of a pyramid selling scheme in s 65AAD or to read the expression in a restrictive manner, namely, to mean a scheme established in Australia or to inject a requirement that participants must be in Australia or must make a payment in Australia to another participant in Australia. This would alter the language of the provision without any justification.
41 The gist of the contrary argument for the appellant is that although there is a prohibition on participation in a pyramid selling scheme in Australia, a further restriction is necessarily incorporated into the definition of a pyramid selling scheme in s 65AAD. It is said that the definition of a pyramid selling scheme has an independent in-built territorial limitation. Therefore, one must read down the provision so that if the scheme does not operate in Australia or affect Australian consumers, the prohibition does not apply.
42 In s 5(1) of the TPA, the provisions concerning pyramid selling schemes are extended to the engaging in conduct outside Australia by bodies that are incorporated or carrying on business within Australia. In the present case, the act of participation in fact takes place in Australia so there is no need for any extension to provide a territorial basis for the law. Moreover, there is an additional nexus, namely, that the participating body corporate is incorporated in Australia. There is no evident reason why the Australian Government could not, for example, prohibit a pyramid selling scheme that was created and given effect in the United States but which targeted Australian citizens or corporations. Australia has an interest in regulating the situation where Australians are cheated overseas or where a corporation incorporated within Australia carries out an act in the United States that is contrary to Australian law.
43 Moreover, as counsel for the respondent points out, the protection of consumers outside Australia from the acts of corporations participating in pyramid selling schemes within Australia can be perceived to promote the welfare of Australians by enhancing foreign confidence in Australia's ability to promote competition and fair trading outside Australia. It would detract from Australia's reputation and standing in the international business community if Australia were to be seen as a safe haven for the organisation and administration of such schemes.
I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.