MR. JUSTIOR WOC tay 7 IN THE FEDERAL COURT OF AUSTRALIA , V No. G 44 of 1978 GENERAL DIVISION V No. G 45 of 1978 m V No. G 46 of 1978 VICTORIA DISTRICT REGISTRY V No. G 47 of 1978 V No. G 48 of 1978 V No. G 49 of 1978 V No. G 50 of 1978 V No. G 51 of 1978 BETWEEN: ALAN RAYMOND DUCRET Informant and NISSAN MOTOR CO. (AUSTRALIA) PTY. LTD. Defendant ORDER JUDGE MAKING ORDER: Northrop J. DATE OF ORDER: 5 March, 1979. WHERE MADE: Melbourne THE COURT ORDERS THAT:1. In matter V No. G 44 of 1978 That the defendant is guilty of a contravention of s.53(c) Trade Practices Act 1974, is convicted and fined $3,000.00 2. In matter V No. G 45 of 1978 That the defendant is guilty of a contravention of s.53(c) Trade Practices Act 1974, is convicted and fined $5,000.00 3. In matter V No. G 46 of 1978 That the defendant is guilty of a contravention of s.53(c) Trade Practices Act 1974, 1s convicted and fined $4,000 00 4. In matter V No. G 47 of 1978 That the defendant is guilty of a contravention of s.53(c) Trade Practices Act 1974, is convicted and fined $2,000.00 5. In In In In 2. INMatter V No. G 48 of 1978 That the defendant is guilty of a contravention of s.53(c) Trade Practices Act 1974, is convicted and fined $5,000.00 matter V No. G 49 of 1978 That the defendant is guilty of a contravention of s.53(c) Trade Practices Act 1974, 1s convicted and fined $2,000.00 Matter V No. G 50 of 1978 That the defendant is guilty of a contravention of s.53(c) Trade Practices Act 1974, 1s convicted and fined $2,000.00 matter V No. G 51 of 1978 That the defendant is guilty of a contravention of s.53(c) Trade Practices Act 1974, 1s convicted and fined $3,000.00 That the defendant pay the informant's costs with respect to each of the informations. IN THE FEDERAL COURT OF AUSTRALIA V No. G 44 of 1978 GENERAL DIVISION V No. G 45 of 1978 9 V No. G 46 of 1978 VICTORIA DISTRICT REGISTRY V No. G 47 of 1978 V No. G 48 of 1978 V No. G 49 of 1978 V No. G 50 of 1978 V No. G 51 of 1978 BETWEEN: ALAN RAYMOND DUCRET Informant and NISSAN MOTOR CO. (AUSTRALIA) PTY. LID. Defendant NORTHROP J. REASONS FOR JUDGMENT 5 March, 1979. With the consent of the parties, eight separate informations against the defendant were heard concurrently. The defendant, by its Counsel, entered a plea of guilty to each information, Each information alleged a breach of s.53(c) Trade Practices Act 1974 as amended, the relevant provisions of which read: "53. A Corporation shall not, in trade or commerce,... in connection with the promotion by any means of the supply ... of goods ... (c) represent that goods ... have ... accessories ... they do not have;" Each information alleged that the goods being supplied were Datsun Patrol Motor Vehacles, the supply of which was being promoted by means of advertisements representing to named andividuals that the vehicles had accessories namely rear stabiliser bars, which they did not have. At the hearing the parties by consent presented a statemenr of agrecd facts. in addition, exhibits were tendered and the defendant led evidence from an expertwitness concerning the nature of stabiliser bars, their us? ar? the effect of the ahsanen eof stabiliser pers ar Sk - wha 7 tiches. The defendant is u corporation within the meaning of s.53 of the Trade Practices Act 1974 and is a wholly owned subsidiary of Nissan Motors Co. Ltd. of > 2. Japan. The defendart carries on business as an importer and distributor of, inter alia, fully assembled Datsun Patrol Motor Vehicles (Datsun Patrols). In the course of its business the defendant markets Datsun Patrols through a chain of distributors and dealers throughout Australia. Prior to 1st February 1977 Datsun Patrols manufactured in Japan were fitted with stabiliser sbars on both front and rear suspensions, but between lst February 1977 and 3lst July 1977 the rear stabiliser bars were not fitted to some models of Datsun Patrols. After the 3lst July 1977 the rear stabiliser bars were fitted again during manufacture. Between lst February 1977 and the end of October 1977, 1424 Datsun Patrols imported into Australia by the defendant did not have rear stabiliser bars fitted. Those vehicles were sold by the defendant to is distributors and dealers throughout Australia. During the twelve month period April 1977 to March 1978, distributors and dealers sold 1153 of these vehicles, the great bulk being sold in the months of July to November inclusive. During the same twelve months approximately 3118 Datsun Patrols, including the 1153 Datsun Patrols not fitted with the rear stabiliser bars, were sold by the distributors and dealers of the defendant. The defendant promoted the supply of Datsun Patrols by means of brochures and by means of advertisements placed in magazines directed to members of the public interested in motor vehicles capable of operating on rough terrain. An earlier brochure supplied by the defendant described the suspension of the Datsun Patrol as follows: "Suspension: Front and rear: Longitudinal Semi~Elliptic Leaf Spring Torsion Bar Type Stabilisers", In January 1977 the defendant commenced preparing core ntiarp to be ancors tte in 7 new brochure premot>-' Datsun Patrols, The wechanical lutormation was proviced by the Sales and Marketing Department of the defendant to an Advertising Agent, and on or about 18th May 1977 3. an order was placed by that Agerit for the printing of some ten thousand copies of the brochure. The printing was done on 6th and 7th July 1977 and the completed brochures were delivered to the Parts Department of the defendant on llth July 1977. The brochure is on glossy paper and contains a number of attractive photographs seven of which depict a Datsun Patrol operating in rough outback conditions and one of which depicts the Datsun Patrol operating on a country highway. Words associated with the photographs use the descriptions "Dawn Patrol", "Mountain Patrol", "River Patrol" and "Highway Patrol", The brochure describes a Datsun Patrol and the purposes for which it can be used, as the following extracts from the brochure illustrate:- "In whatever form you want it - as a workhorse around your farm, as a dual purpose vehicle for both off road and highway travelling, as an effective way to reach that secluded beach or for carting your gear to the remote corners of a forest, there's a Datsun Patrol that can handle it, And when the terrain gets out of shape there's no need to worry about the Patrol. Its ladder-~ type chassis and all-welded box-type side members are built tough for that really rough treatment. Its six cylinder engine offers the best torque on the market giving you the power as well as the strength. Even on the highways, the Datsun Patrol is at hore. With leaf springs and stabiliser bars on both front and rear suspensions, you can cruise in comfort all day. Load it up, knock it about, the Datsun Patrol has the guts to come back for more". Along with the specifications set out in the brochure is the following: "Suspension Front and rear: Longitudinal Semi-Elliptic Leaf Springs Porsion Gar Tyra Gott sere -ronk and ..: ar On an unspecified date in June 1977, the defendant first became aware that some models of the Datsun Patrols were being imported into Australia witheut 4. 4. rear stabiliser bars being fitted. The Service Department of the defendant discovered the absence of the rear stabiliser bars and immediately issued and distributed a service bulletin dated 21st June 1977 to inform the distributors, dealers and other departments of the defendant of the omission of the bars. The bulletin therefore was distributed to the Sales and Marketing Department of the defendant, but despite the fact that it had authorised the printing of the brochures and despite the fact that the brochures had not then been printed, that Department took no steps to make the necesSary corrections to the statements contained in the brochures. The service bulletin was headed: "NISSAN PATROL REAR STABILISER" and contained the following information: "We advise that as a running change the rear stabiliser was deleted from G60, 94ZG60 and 62ZG60 versions of Nissan Patrol from February 1977 Production. The stabiliser remained as standard fitment on 60 model. However, it has been decided to reintroduce the stabiliser for all Patrol models and this is expected to become effective August 1977 Production. It should be noted that claims cannot be accepted in respect of those vehicles for which the stabiliser was not standard equipment." On 12th July 1977 the Parts Department of the defendant, which by then must have had delivered to 1t a copy of the service bulletin dated 2lst June 1977, commenced distribution of the brochure. The brochure was supplied by the defendant to its distributors and dealers throughout Australia at a cost of ten cents each brochure and was made available by the distributors and dealers to the public without cherge. In the month of October 1977, through the same Advertising Agent, the defendant caused an advertisement for Datsun Patrols to be inserted in each of three magazines namely "OFF ROAD", "TREADS and "OVERLANDER". Each of these maca7zin-s anpnears to be directed to that section cf the public interested in operating motor vehicles off made roads and 1n rough terrain. The magazines contain articles and photographs depicting the pleasures of those types of activities and contain advertisements by which various . 5. 5. motor vehicles are depicted as being the most suitable for those types of activities. In each case the advertisement inserted by the defendant consisted of a full page with an attractive photograph of two Datsun Patrols in an idyllic off road setting. At the top of the page in large lettering were the words "Gutsy DATSUN PATROL" while in two of the magazines the description of the Datsun Patrol included the following: "Next, consider some of the other gutsy features of the Patrol like the steel frame. And the stabiliser bars back and front." In the third magazine the equivalent description was as follows: "Next, consider some of the other gutsy features of the Patrol like the steel ladderbox frame which is 1" thick and all welded. And the stabiliser bars, back and front." The advertisements appeared in (1) The December 1977/January 1978 issue of "OFF ROAD" and some 33,400 copies went on sale in newsagents and bookstores throughout Australia on and after 23rd December 1977; (2) The January 1978 issue of "TREADS" and some 29,580 copies went on sale in newsagents and bookstores throughout Australia on and after 20th January 1978; (3) The December 1977/January 1978 issue of "OVERLANDER" and some 33,000 copies went on sale in newsagents and bookstores throughout Australia in and after the month of January 1978. The iunformant did not rely upon the display of the brochures and the advertisements in the magazines as constituting the representation within the meaning of s.53(c) Trade Practices Act 1974. Each information before the Court alleges a particular representation to a named person, It is necessary, therefore, to make reference to the material before the Court relating to each information. 6. 6. v. No. G 44 of 1978. On or about the 14th September 1977, Christopher Kinrade, accompanied by his father went to the premises of a Datsun dealer at Ferntree Gully, Vic., and was given a copy of the brochure. He saw the statements contained therein relating to the existence of stabiliser bars. Subsequently the father purchased a Datsun Patrol from another Datsun dealer. On inspection, Christopher Kinrade discovered there was no stabiliser bar fitted to the rear of the purchased vehicle. He then went to a third Datsun dealer and there inspected a number of other Datsun Patrols, none of which had rear stabiliser bars fitted. He took no further action. V. No. G 45 of 1978. On or about the 23rd September 1977 Alfred James went to the premises of a Datsun dealer at Alice Springs, N.T., and was given a copy ot the brochure. He saw the statements contained therein relating to the existence of stabiliser bars. A few days later he purchased a Datsun Patrol from that dealer. On driving the vehicle over rough terrain he noticed it was difficult to handle and that the rear tended to jump and sway. He then discovered that the vehicle was not fitted with a rear stabiliser bar. He complained to the dealer and was told nothing could be done about it. In January 1978 the dealer again refused to fit a stabiliser bar on the ground that a Nissan Service Bulletin stated that claims for a rear stabiliser bar would not be allowed. Finally, in April 1978 the dealer fitted a rear stabiliser bar at no cost to Mr. James. Vv. No. G 49 of 1978. On or about the 16th January 1978 Mr. James was in Adelaide. He purchased a copy of the December 1977/ January 1978 issue of "Off Roads" and saw therein the advertisement for Datsun Patrols. On the 17th January 1978 he made a complaint to the Trade Practices Commission in Adolaids and left a copy of the advertiserent with the Cen She sae V. No. G 46 of 1978. On or about the 7th October 1977 Peter Wentt actended the premises of a Datsun dealer at Frankston, VYic., - 7. 7. and was given a copy of the brochure. He saw the statements therein relating to the existence of stabiliser bars. By comparison, a brochure for Toyota four wheel drive "vehicles disclosed that the Toyota vehicles did not have stabiliser bars. This was a feature which influenced him in purchasing a Datsun Patrol later that month. He discovered that a rear stabiliser bar was not fitted to his Datsun Patrol but took no further action, V. No. G 47 of 1978. In January 1978 Edward Morgan purchased a copy of the December 1977/January 1978 issue of the "Overlander" and saw the advertisement relating to Datsun Patrols. V. No. G 48 of 1978. In early January 1977 Edward Morgan went to a Datsun dealer at Springvale, Vic., and was given a copy of the brochure. He saw the statements contained therein relating to the existence of stabiliser bars, Later that month he purchased a Datsun Patrol from another Datsun dealer. At the time of the purchase he noticed that the rear stabiliser bar was missing and complained to the Salesman, and was told that he should see the Services Manager. Subsequently he was informed that the rear stabiliser bar was no longer standard equipment but on advice from the dealer, telephoned the defendant and spoke to a person who claimed to be from the Public Relations section of the defendant. This person said that Nissan in Japan had deleted the bar from production and that the vehicle was not meant to be equipped with a rear stabiliser bar and that there was nothing that could be done about 1t. Vv. No. G 50 of 1978. On 8th February 1978 the informant, an officer of the Trade Practices Commission, at Footscray, Vic., purchased a copy of the January 1978 assue of "Treads" and saw therein the advertisement for Datsun Patrols. V. No. G 51 of 1978. Or or abave bal Mt Mae sa 197° veyin Meiuoonr Vawkner, Vic., visited thu. premises of a Datsun dealer and was given a copy of the brochure. He saw the stalomerts contained therein relating to the existence of stabiliser 8. 2 senceneemer nr ee 8, bars. Later that month he purchased a Datsun Patrol. He discovered that the vehicle had no rear stabiliser bar but took no further action. On or about the 24th May 1978 the Datsun dealer wrote to him stating that it would fit a rear stabiliser bar on his vehicle at no cost to him. It is necessary to complete the summary of the material presented to the Court and having general application. The manufacturing company did not notify the defendant of its intention to cease fitting, during manufacture, the rear stabiliser bar to certain models of Datsun Patrols. When it discovered the absence of rear stabiliser bars, the defendant requested, successfully, the manufacturing company to fit the bars to all models, but of necessity some delay occurred, see Service Bujletin dated 21st June 1977. In any event the lead time involved resulted in some Datsun Patrols which had not been fitted with rear stabiliser bars being imported until October 1977 while Datsun Patrols not fitted with rear stabilisers remained in stock in Australia until April 1978. The defendant contends that, save as to the Material related by Mr. Morgan and in relation to which the defendant had made enquiries of its officers but has no knowledge, the defendant did not until so informed by the informant on or about the 12th April 1978, have any knowledge of any complaint by any purchaser of a Datsun Patrol concerning the absence of a rear stabiliser bar. This may have resulted from the statement contained in the Service Bulletin of 21st June 1977. Following an interview with the informant, the defendant issued a technical Service Bulletin dated 13th April 1978 to its distributors in which it was stated that rear stabiliser bars would be fitted on owner complaint under warranty provisions. By a Sales Bulletin dated 23rd May 1978 the defendant notified all ats Victorian dealers to inspect all of their stocks of Datsun Patrols and to fit rear stabiliser bars to any which had no rear stabiliser bars fitted and not to sell any Datsun Patrol which was not fitted with such a bar. My y a, r A to ane - 1ts purcnasers of affected venicles that 1t would fit rear Stablliser bars at no cost to the purchaser if the vehicle was returned to the distributor or dealer. 9. een wee ' - Nee ee nn een ern eae denadieemendaetimeamenetadinmnaaehemmabetnendmannaiianenaan seen 9. On the evidence given by Mr. Marsden, the production evaluaticn manager of the defendant, the Court finds that the Nissan Patrol is a vehicle designed on the basis that eighty per cent of its use is for off highway purposes and twenty per cent for highway purposes and accordingly its suspension is designed to cope with rough road factors. The purpose of the rear stabiliser bar is to assist in resolving the problem of controlling centrifugal force employed through cornering, particularly on rough surfaces, and to assist in keeping the vehicle on a level basis when being driven on uneven ground. Ona normal highway the absence of a rear stabiliser bar does not affect adversely the safety or road handling ability of a Datsun Patrol but under off highway conditions, particularly 1f the vehicle is heavily laden and is being driven over deeply rutted tracks, there could be a greater tendency of body roll in the absence of such a bar. Even in the light of these findings, although the safety of the vehicle is not adversely affected, it is apparent that the defendant considered the existence of rear Stabiliser bars as an important selling point. The emphasis in the brochure and the advertisements that a Datsun Patrol is emminently suited for off highway work and is fitted with stabiliser bars front and rear supports that view. Likewise the fact that the defendant, on discovering the absence of the stabiliser bars on some models, took immediate steps to ensure that in future all models of Datsun Patrols would be fitted with rear stabiliser bars during manufacture, shows that the defendant considered the existence of the rear stabiliser bars to be an important selling point. Under s.79 Trade Practices Act 1974 the defendant is liable to a fine not exceeding $50,000.00 on each information. For the moment the effect of s.79(2) of the Act is put to one side. As said earlier each information alleges a representation to a specified person and it 1s necessary to look at each information separately but at the same time conssdersties wag- oaiverp to tio facts cemen to ali antormatia.s. «1: fV ee va lc ce (Galo) Plo. (1974-1977) 1 A.T.P.R. 17302 and in Eva v. Southern Hotors Box Hill Pty. Ltd. (1977) 15 A.L.R. 428 Smithers J. considercd Matters relevant in considering penalties to be imposed 10. 10. for breaches of sec.79 of the Act. In the former of those cases the informations related to advertisements generally while in the second of those cases the offences related to representations to specified persons. In Particular in the present case, the extent of the dist- ribution of the brochures and the advertisements is not relevant in considering the penalty to be imposed. In the present cases, the method of making the representation is relevant, particularly in the brochure and the specifications contained in the brochure. At the same time each information alleges a representation to a specified person. Accordingly in considering penalties the fact that the brochures and the advertisements had wide circulation is not relevant. Notwithstanding this the offences are most serious. The statement of a substantial selling point is false. The defendant discovered the falsity before the brochures were printed but did nothing to correct the statements appearing in the brochure and did nothing to give a warning to persons reading the brochure. Although it took steps to ensure that in the future the bars would be fitted, it directed its distributors and dealers that claims by the public relating to the absence of rear Stabiliser bars would not be met under warranty and accordingly not installed at the expense of the defendant. It continued the deception contained in the brochure. Subsequently it included the false statements in the advertisements. Only after investigation by the Trade Practices Commission did the defendant take any steps to rectify the position and to fit stabiliser bars to Datsun Patrols apart from during manufacture. In two cases the persons to whom the representations were made, upon complains: after purchasing a Datsun, were told nothing could be done to rectify the position in one case by the dealer and in the other by the dealer and the defendant. The persons who purchased the magazines containing the advertisements knew before the time of purchase that 411 Datsun Patrols 3 it! wool TL thea - the fine to be imposed in tnae.e cuses 1s uf a lessor amount. Lax or inefficient uaanagenent control between departments of a corporation cannot amount to a defence of a breach of s.53(c) of the Trede Practices Act, nor can it 11. Zl. mitigate against the seriousness of the offences committed. The section imposes upon a corporation an absolute duty not to make representations that goods have accessories they do not have. In the present case the defendant knew of the absence of the rear stabiliser bars before the brochures were printed and months before the advertisements were inserted in the magazines. The breachs of the provisions of the Act were compounded by the direction given to the distributors and dealers of the defendant that claims would not be accepted in respect of those vehicles for which the stabiliser bars were not standard equipment. All this occurred long before any of the representations were made. It is clear that in the absence of action taken by the Trade Practices Commission, the defendant would have maintained that position. The object of the Act is to protect the public from actions of this kind. It is appropriate that a more severe fine should be imposed in those informations where the person to whom the representation was made was not ' able to obtain redress initially. In one case, the person to whom the representation was made compared that represencation with a representation concerning another type of vehicle and the representation that stabiliser bars were fitted on Datsun Patrols whilst not on the other vehicle influenced his thinking in a decision to purchase a Datsun Patrol. Having regard to all the facts and circumstances already set out including the fact that the defendant has now fitted stabiliser bars to the vehicles previousi, sold, I would impose the following fines: Vv. No. G 44 of 1978 $3000.00 V. No. G 45 of 1978 $5000.00 V. No. G 46 of 1978 $4000.00 Vv. No. G 47 of 1978 $2000.00 V. No. G 48 of 1978 $5000.00 Vv. No. G 49 cf 1978 $2000.00 V. No. G 50 of 1978 : $2600.00 V. No. G 51 of 1978 $3000.00 hes er . Sse ow te ee ad te ob amposed On tie cor shaw 2 as ee tb tha atl MaX2mu, Loe that would be applicahle an resp-.ct of one offence by the defendant and accordingly there is no need to consider what 2 plication, if any, sec.79 sub-sec. (2) Trade Practices , 12. 12. Act has to the facts of the present case, Accordingly convictions are entered and fines imposed as indicated and in each case the defendant is ordered to pay the informant's costs, I certify that this and the Laver receding paves 8 & true cony cf %5 5 * 7 Leustwal Reasons for Judgment herein of Usd www Mr. Justice dadrrefe AsSoowte Bee nem ae ee