Ti THE FEDERAT, COURT OP AUSTRALIA BRISBAND...... seseeses DISTRICT REGISTRY B Xo. -228.. of 1976 GENERAL ,..-..+.1.-- DIVISLON JUDGE(S) MAKING ORDER : DATE OF ORDER : WHERE MAD : THE COURT ORDERS THAT: In the matter of: TRADE PRACTICES ACT 1974 BETUERY : TERENCE. JAMES, GUTHRIE....... se eeececeeeres .. Anformant..... ANY : UNIMERSAL .TELECASTERS....... QUEENSLAND ,.LIMITED, .......... ST. JOHN J. 12 October 1977 Brisbane 1. The defendant company is convicted. 2. The defendant company is to pay a penalty of $2,000 (two thousand dollars). 3. The defendant company is to pay the informant's costs. Date Entered: DISTRICT AEGISTRAR. wropnee —_— IN THE FEDERAL COURT ) GENERAL DIVISION WEDNESDAY, ) B. No. 228 of 1976 . OF AUSTRALIA ) In the matter of - THE TRADE PRACTICES ACT 1974 BETWEEN: REASONS FOR JUDGMENT 12 OCTOBER, 1977. TERENCE JAMES GUTHRIE Informant - and - UNIVERSAL TELECASTERS QUEENSLAND LIMITED Defendant ST.JOHN J. BRISBANE The defendant company is charged that it did in contravention of Section 53(e) of the Trade Practices Act 1974, in trade or commerce, in connection with the promotion by advertising of the supply of goods, to wit Falcon motor cars, make misleading statements concerning the existence of price reductions, the said misleading statements being made in and by an advertisement published and screened by the Television Station TVQ Channel 0 at Brisbane in the said State, the said statements being misleading in that the said statements contained the words and sentences, "Dr. Jim's lovely tax cuts are guaranteed till only April 30, so if you haven't been out to Metro Ford by then you could be a deadset April Fool. Metro Ford offer immediate delivery of automatic Falcon 500 sedans that save you $335.00. If you don't take delivery by April 30 you're up for an extra 335 bucks in tax.". It was alleged, by way of particulars, that the statements were misleading in that the words meant that the existence of a reduction in price in such vehicles would not continue after 30 April, 1975 so that a purchaser after that date would have to pay an additional $335 in sales tax on such a vehicle whereas the true position was that a reduction in price was to continue though at a reduced e amount. I have already given judgment in two prosecutions relating to the same advertisement in Terence James Guthrie v Metro Ford Pty. Limited B. No.224 of 1976 and Terence James --/2 Guthrie v Doyle Dane & Bernbach Pty. Limited B. No.226 of 1976. In those judgments I dealt with the issues of the misleading nature of the advertisement and the argument that the statement was not one concerning the existence of a price reduction. The evidence in the instant case as to those issues is identical with the evidence in those two cases and I repeat my finding that in my view the advertisement was misleading and concerned the existence of a price reduction. The advertisement consisted of a video-tape cassette made by Doyle Dane and Bernbach Pty. Limited on the instructions of Metro Ford Pty. Limited. The goods advertised were Ford motor cars. It was argued for the defendant company that the statement was not the defendant company's statement but a statement by Metro Ford Pty. Limited and it was only statements made by the defendant which were a contravention. This involves the proposition that the repetition of a misleading statement made by some other person is not an offence. Section 85(3), to which I advert later, is sufficient to deal with this argument, if the plain words of the section were not sufficient. ° After making, early 1n March, 1975, the cassette was delivered to the defendant company where it was inspected by playing it through on a video-tape machine by Mr. Yardley --/3 we eee of the defendant company. His position was that of sales service manager and his duties included inspection of advertisements with a view to avoiding, inter alia, contravention of the Trade Practices Act. The date of the alleged offence is 15 April, 1975 and there 1s no contest that the advertisement was shown on that date on the defendant company's television station Channel 0 in Brisbane. Early in April, 1975, perhaps during the first week of that month, the advertisement was seen by Mr. Paterson, who had up until shortly before that time worked for a hire purchase company and was familiar with the nature and extent of the sales tax cuts. After seeing the advertisement, at approximately 7.30 in the evening, he telephoned Channel O, stated that he wished to complain about a misleading advertisement and the person taking the call suggested he telephone the sales manager on the next day. At about 10.30a.m. on the following day, Mr. Paterson had a conversation with the man who identified himself as Mr. Terry Garry, the sales manager of the television station. He informed Mr. Garry that the advertisement was misleading, "in as much as sales tax would not increase by $335 on the Falcon in May". Mr. Garry questioned Mr. Paterson as to his knowledge of sales tax and the latter replied quoting his experience with the finance company and his awareness of the sales tax position. Mr. Garry said that the advertisement would be reviewed. On 15 April, 2/4 Mr. Paterson noted that the same advertisement was being used and he again telephoned television station Channel 0 and a technician informed him that he should ring the next day. He did not do so, but telephoned the Trade Practices Commission. Having observed Mr. Paterson in the witness box and listened to his evidence I came to the view that anyone speaking to Mr. Paterson whether by telephone or otherwise would gain no other impression but that he was a responsible citizen and would appear to be informed on the subject matter on which he spoke. I accept his evidence in its totality. Mr. Garry was not called. On 9 April, 1975 Mr. Wise, an officer of the Trade Practices Commission, having had brought to his notice a complaint in respect of the advertisement, telephoned Channel O and was connected with Mr. Terry Garry. He identified himself with the Trade Practices Commission and informed Mr. Garry that he had received a complaint about the Metro Ford advertisement but he was unable to specify the nature of the complaint. Mr. Garry sent by post a script of the advertisement to Mr. Wise. On 15 April, 1975 Mr. Wise checked the script against the television advertisement which he watched and listened to and found them to be exactly the same. On 21 April, 1975 he attended the premises of Channel O and had a conversation with Mr. Terry Garry. --/5 The defendant company has given evidence in reliance on Section 85(1) and 85(3) by way of defences, as well as submitting that the prosecution had not made out its case. The advertisement, of course, was about the goods of Metro Ford Pty. Limited. Mr. Fitzgerald Q.c. submits that the goods referred to in Section 53 of the Act are the goods of the person making the statement that is misleading. This interpretation does not readily occur to one on a reading of the section and there are no words indicating such a restricted meaning. Further,it would appear that the submitted interpretation is at variance with Section 85(3) which is in these terms: "g5(3) In the proceeding under this Part in relation to a contravention of a provision of Part V committed by the publication of an advertisement, it 1s a defence if the defendant establishes that he is a person whose business it is to publish or arrange for the publication of advertisements and that he received the advertisement for publication in the ordinary course of business and did not know and had no reason to suspect that its publication would amount to a contravention of a provision of a that Part." It would appear to me that by providing for such a defence the legislature recognises that an advertiser can be guilty of an offence in respect to an advertisement of other persons goods and for repetition of a statement made originally by some other pe' 9n. .-/6 Coming now to the relevant facts relating to a defence under Section 85(3) I am of the view that by 15 April, 1975 the defendant company had reason to suspect that its publication would amount to a contravention because of Mr. Garry's conversation with Mr. Paterson in which Mr. Garry was alerted to the true position in relation to sales tax after 30 April, 1975. As to the defence based on Section 85(1) I am satisfied that the defendant company has established, on the civil onus, the facts necessary to satisfy paragraph (a) of Section 85(1). In seeking to prove that the defendant company took reasonable precautions to avoid a contravention, as 1s required of it by Section 85(1) (b) a number of witnesses were called. Mr. Archer, the General Manager of Channel 0, gave evidence that with the coming into force of the Trade Practices Act a system of vetting television advertisements was brought into being. The initial vetting was to be carried out by Mr. Yardley who had had a good deal of practical experience in the advertising world and Mr. Yardley was supplied with a booklet which would appear to obtain an adequate summary of Parts IV and V of the Act. At some later stage Mr. Yardley acquired a copy of the Act but it is not clear when he did so. The instructions to Mr. Yardley, were, that he should in cases of doubt that he could not resolve, refer the -of7 matter to Mr. Archer or to Mr. Lusk, the company secretary and the person who assumed Mr. Archer's role when Mr. Archer was absent. Mr. Yardley gave evidence that he had vetted the advertisement in question, had thoughtit to state the sales tax position accurately and did not form the view that the advertisement was misleading. Having done that, he certified that in his view it did not offend against the Trade Practices Commission by a notation on the cassette container. The advertisement was discontinued on 21 April, 1975 and at no time was Mr. Yardley informed that there had been any complaint about the advertisement. Included amongst the precautions to be taken I am of the view there should have been instructions to check the accuracy of any statement, the ultimate source of which was a government department, by enquiry of the relevant department. Additionally, there should in my view have been a precaution that in the event of any complaint being made to the effect that the contents of an advertisement were misleading, that complaint should be immediately referred to the person or persons whose duty it was to take precautions to avoid contravention of the Act. Further, the obvious precaution of insisting upon advertiser's verifying the factual content of their advertisements should have been taken. --/8 Due diligence was not exercised in relation to the investigation of Mr. Paterson's complaint. Proper investigation would have led to the advertisement being withdrawn before the date of the alleged offence, 15 April, 1975. On behalf of the defendant company a number of submissions have been made to me on the interpretation of Section 84(2) and the meaning of "another person" in Section 85. These submissions were based upon an interpretation contrary to that arrived at in Ballard v Sperry Rand Australia Ltd. 6 A.L.R. 696. In my view "another person" does not include a director, servant or agent of the: corporation, as was decided in that case. Further, for the same reasons as expressed in that report, Tesco Supermarkets Ltd. v Mattrass 1972 A.c. 153 has no application because of the presence of Section 84. I hold that the defendant company has not made out a defence and, applying the criminal onus of proof, I convict the defendant company. a