COMMONWEALT 4 OF AUSTRALTA_ GENERAL DIVISION MEMBER OF THE BENCH: IN Tie PEDErAT COUPT ORDER _OF HE COURT: 1. 2. Oe AVS UAL i } Nos. VG 12 and 24 of 1977 In the matter of - THE TRADE PRACTICES ACT 1974 Between - GEOFFREY JOHN FVA Informant And - PRESTON MOTORS PTY LTD. Defendant SMITHERS, J. This Court doth find and crder - In proceedings by summons upon the information of Geoffrey John Eve No. VG 12 of 1977 that on or avout the 4th day of August 1975 at Campbelifieid in the State of Victoria the defendant Preston Motors Fty. Ltd. did in contravention of s. 53 (a) of the Trade Practices Act 1974, 1n trade or commerce 1n connection with the supply of goods falsely revrescnt that the goods were of a particular stanaard, in that in the course of tradirg in used cars in connecticn with the cupply of a used Holden Kingcwooc movor car the said corporation falsley represenced to Noelene Valda Daley that the saz motor car was of a particular stanccrd, the defendant is convicted of tne offence of so contravening such sectior ana 1s fined $10,000 aad ordered to vay the costs of the informant as taxed by ihe Registrar; In procecding by summons upon the information of Geoffrey John Eve No. VG 24 of 1977 that on or ehout the 6th day of Ausust 1975 at Campbelliicla in the Statc of Victorza the ceferiant Preston Motors Pty. Ltd. did in contravention cf s. 5% (a) of tre Trade DATE: Practices Act 1974, ix trade or commerce, in connection with the supply of goods falsely represent that the goods were of a particular standard, in that in the course of trading in used cars in connection with the supply of a used Holden Kingswood motor car the said corporation falsely represented to John Daley that the said motor car was of a particular standard. the defendant is convicted of the offence of so contravening such section and is fined $2,000 and is ordered to pay the costs of the informant as taxed by the Registrar; Leave is reserved to the informant to seek ancillary relief pursuant to s. 87 of the Trade Practices Act if so advised. Qth June 1977. COMMONWEALTH OF AUSTRALTA IN_THE FEDERAL COURT } Nos. VG 12 and 24 of 1977 OF AUSTRALIA GENERAL DIVISION In the matter of - THE TRADE PRACTICES ACT 1974 Between - GEOFFREY JOHN EVA Informant And - PRESTON MOTORS PTY. LTD. Defendant MEMBER OF THE BENCH: Smithers, J. DATE: Qth June 1977 REASONS FOR JUDGMENT In these proceedings the defendant is charged with two infringements of s. 53 (a) of the Trade Practices Act. It is alleged that the defendant in trade or commerce in connection with the supply of goods, namely a Holden Kingswood sedan then registered number ICQ 430, did on two occasions, namely the 5th and 6th August 1975, falsely represent to one Noelene Valda Daley and one John Daley, that the said car was of a particular standard, namely an ex-G.M.H. executive car. At the hearing the defendant pleaded guilty to the informations arising out of these representations. The defendant conducts a large business selling new and second-hand cars at a number of retail outlets and at the time of the offences employed some 91 salesmen. On or about the 4th August 1975 Mrs. Daley visited the Campbellfield branch of the defendant as part of her efforts to purchase a used Kingswood sedan on behalf of her husband. She was shown one such sedan by one Ken David Priest, a salesman employed at the branch but was not satisfied with it. After referring by telephone with enother Preston Motors outlet, Priest then informed Mrs. Daley that there would be an ex-G.M.F. executive car arriving at the yard on the following day. Mrs. Daley returned on the following day and was shown the vehicle that is described 1n these informations. It was then registered number ICQ 430. On two separate occasions the Daleys drew attention to the car being a 1975 mcdei yet having a 1975 registration number and asked for an explanation. On both occasions Priest explained that it was an executive car and "they have their personalised number plates.",. The car never had been in any sense a G.M.H. executive car. It was manufactured by G.M.H. and sold to Queensland dealers in 1973. In August 1973 the dealers leased it to Avis Rent-a-Car Systems Pty. Ltd. (hereinafter called "Avis") who used it until 28th November 1974 in cheir car rental business by hiring it out to members of the public on hire and drive yourself terms. Avis returned the ter tu the dealers in November 1974. The car was stolen and driven to Victorza where it was recovered by G.M.H. The registration was cancelled on 11th December 1974. It was re-registered on 26th February 1975 and purchased by a trader known as Auto Trade Wholesalers who on the 28th February 1975 sold it to the defendant. From then until purchased by the Daleys it was used by staff members of the defendant for various purposes and travelled some 5000 Kilometres. When Mr. Priest required the vehicle to show to Mrs. Daley it was with the defendant's branch at Preston. It is said it was sent from Preston to Campbellfield without the normal documentation and that this contributed in some way to the making of the false representation. It is to be noted, however, that had the normal documentation been with the car the only additional information of significance which Mr. Priest would have had would have been that the car had been purchased by Preston Motors Pty. Ltd. from Auto Trade Wholesalers. It would not have been revealed that Avis had control of the vehicle for some 14 months and it would not have been revealed that G.M.H.,although the original owners, had had but a fleeting association with it at the end of 1974. It would seem that when negotiating with Mr and Mrs. Daley, Mr. Priest had no information about the car othcr than could be gained by looking at it. But Mr. Priest made up for his lack of knowledge by providing a history of his own for che car and supporting it by corroborative narrative proceeding from his own imagination. Not only did he invent a background for the car but he deflected a quite vital question from Mrs. Daley and on the following day repeated this exercise in relation to Mr. Daley. The incident was quite dishonest and was grossly unfair to Mr. and Mrs. Daley as its victims. The explanation for the loss of the original registration number of this car, which had never been the car of any executive of C.M.H. disclosed a ruthless and resourceful approach to the business of deception. For their servant's misconduct in the matter the defendant is responsible in accordance with s. 84 (2) cf the Trade Practices Act which provides that any conduct engaged in on behalf of a body corporate by a servant of the body corporate shall be deemed, for the purposes of the Act, to have been engaged in also by the body corporate. When Mrs. Daley inspected the car she noticed that there was attached to it what is known as the "L" form. This formis required by the Victorian Motor Car Traders Act 1973 to be attached to a used car on sale by a used car dealer. Its apparent purpose is to convey information to potential purchasers of the identity of the previous owner of the car. In this case, however, no entry was made in the "L" form of any information whatever as to any previous owner. Possible difficulties associated with supplying the particulars required by the prescribed "L" form are discussed in the Reason; for Judgment in Eva v. Seuthern Motors (Box Hill) Pty. Ltd. No. VG9Q of 1977 publishe' this day. But they afford little excuse for not Iaking some attempt to supply the required particulars, or, wwe ew we WwW if that was found difficult, to comply with the spirit of the enactment, namely to supply the potential purchaser with the identity of some previcus owner from whom he can make enquiries as to the history of the car. To do nothing in the matter left the salesman completely to his own devices in the matter of the history of the vehicle. But it may well be that in the case of a car with a history such as that of the car in question, merely to complete an "L" form by complying with the technical requirements would leave a salesman quite ignorant of the real history of the car. It is in this respect that the particular resvonsibility of management arises. It requires no imagination on the part of persons associated with this business to realise that purchasers are interested in and likely to enquire into the history of a used car offered to them. And it would be apparent to experienced managers that to leave a salesman uninformed of the relevant facts was caiculated to call his imagination into play with false representation as the result. On this matter I refer to what is said in the Reasonifor Judgment in Eva v. Southern Motors (Box Hill) Fty. Ltd. (supra). It is said in defence of the company that it has a good reputation and without prior convictions and so far ag is known in the last four years at least free from any civil claims. It is said that it gives generous warranties, also that it has circularised salesmen from time to time but certainly on 12th May 1975 to the effect that che authorities administering the various Consumer Acts are severe in their interpretation of the law and zealous in their pursuit of possible offenders and that care in advertising is essential. It 1s said that it is current practice for an "operational auditor" and a "financial auditor" to carry out spot checks in branches to ensure "that the company's policies are carried out". It was also said that convictions might embarrass the Gefendant in relation to the retention of the company's licence to trade as a motor car trader. It was put to the Court that the company had suffered from adverse publicity in relation to their prosecutions but in this respect the Court was not referred to any particular items or sources of adverse publicity. But overall there is not detectable a real recognition of the necessity to assert to the sales staff in compelling terms, upon pain of serious consequences, the simple proposition that the trutn must be told. In this case Management failed to give the salesman adequate information as to the history and quality of the goods but 1t is far from clear that even if they had the offence would have been avoided. Perhaps the required standards of veracity are not attainable in large organisations. If so, compiience with the requirements of the Trade Practices Act wi1l depend upon the institution of procedures designed in recognition of human frailties of a proportion of their erployecs. The motor car industry is very large; the goods in which it deals are essential to almost every family and business; as single items of purchase they are expensive and in nearly every purchase there are inevitable uncertainties. To a great extent the trade is conducted by large and successful groups with very high turnovers. In the light of the foregoing and in order to reflect the will of Parliament, substantial penelties must be imposed. The false representations were made on successive days to different persons but they were made in respect of only one transaction of sale. It might therefore have been an acceptable procedure to impose one conviction of a penalty fixed in recognition of two offences having bee committed. However, it is my view that on the second day the salesman having had time to reflect on his misconduct of the previous day, might have used the occasion to retract. He did not do so, but went through with the fraud with full deliberation. I consider, therefore, that the appropriate penalty for the incident as a whole is $12,000. Accordingly the penalty imposed in respect of the offence committed on the 5th August 1975 'No. VG 12 of 1977) is $10,000 and that committed on the th August 1975 (No. VG 74 of 1977) is $2.UC0 in each case with cust...