oe CATCHWORDS Trade Practices - false representations - plea of guilty - imposition of fine - inexperienced employee - meaning of "new" in printed order form - relevance of other contemporaneous representations. Trade Practices Act s.53(b). CRAIG JACKSON HENDERSON v BOWDEN FORD PTY. LTD. S.A. No. G5 of 1979, Fisher J. Adelaide 5 October 1979. IN THE FEDERAL COURT _OF AUSTRALIA ) ) SOUTH AUSTRALIA DISTRICT REGISTRY ) S.A. No. G5 of 1979 ) ) GENERAL DIVISION IN THE MATTER OF THE TRADE PRACTICES ACT 1974 SECTION 53(b) BETWEEN: CRAIG JACKSON HENDERSON Informant - and - BOWDEN FORD PTY. LIMITED Defendant ORDER JUDGE MAKING ORDER: Fisher J. DATE OF ORDER: 5 October 1979. WHERE MADE: Adelaide THE COURT ORDERS THAT: 1. The defendant is guilty of a contravention of s.53(b) Trade Practices Act 1974, 1s convicted, and 1s fined $1,000.00. 2. The fine be paid to the District Registrar of this court within 21 days of the above date. 3. The defendant pay the informant's costs with respect to this information. '9 IN THE FEDERAL COURT OF AUSTRALTA SOUTH AUSTRALIA DISTRICT REGISTRY S.A. No. G5 of 1979 GENERAL DIVISION IN THE MATTDR OF THE TRADE PRACTICES AcT 1974 SECTION 53(b) BETWEEN: CRAIG JACKSON HENDERSON Informant - and - BOWDEN FORD PTY. LIMITED Defendant CORAM: Fisher J. 5 October 1979 REASONS FOR JUDGMENT ON PENALTY The defendant Bowden Ford Pty. Limited ("the defendant") is a company incorporated in South Australia. It was charged with two contraventions of the Trade Practices Act 1974 ("the Act") arising out of the same circumstances. It has by 1ts counsel pleaded guilty to the charge that it "did, 1n contravention of s.53(b) of the Trade Practices Act 1974, in trade or commerce, in connection with the supply of goods, namely a Ford Escort Ghia motor vehicle, falsely represent that the said motor vehicle was new". A further charge to the effect that the defendant "did, in contravention of s.53{a) of the Trade Practices Act 1974, in trade or commerce, 1n connection with the supply of goods, namely a Ford Escort Ghia motor vehicle, falsely represent that the said motor vehicle was a 1978 model" was dismissed upon the informant tendering no evidence. It remains for me to determine the appropriate penalty in circumstances where the maximum fine which can be imposed by the court in respect of a contravention of s.53 is, in the case of a body corporate, $50,000. The contravention occurred in the following circumstances, which were proved by affidavits filed by both the informant and the defendant and not subjected to any challenge. The defendant i 1s a member of a group of companies which has been operating since January 1968, and it claims to be the leading Ford dealer in South Australia. It deals in both new and used vehicles. From its premises at 229 Wakefield Street, Adelaide 1t currently sells new vehicles, and it deals in second-hand vehicles from outlets at Hillcrest, Enfield, Salisbury, Beverley and Reynella, all of which are suburbs of Adelaide. During the 11 years of its operations, more than 15,000 new vehicles have been sold and more than that number of used vehicles. The contravention arose out of a trans- action between one Kenneth George Rosewarne ("Rosewarne") and a salesman in the employ of the defendant, Peter Edward Robinson ("Robinson"), 2n the month of July 1978. For a number of years prior to that date it had been the practice of the defendant to hold regular training sessions for its salesmen, in the course of which the salesmen are instructed to ensure the accuracy of their representations as to the year and model of vehicles. Unfortunately for the defendant, Robinson had been employed by it for only 3 weeks, and he was in his first position as a salesman at the time of the offence. He had not, at the time 1n question, completed the full training course conducted by the defendant. Rosewarne visited the premises of the defendant on 1 July 1978, where he met Robinson and discussed with him the purchase of a Ford Cortina motor vehicle. He was shown a Ford Escort with manual transmission and told "it's the latest model". He decided to purchase a Ford Escort with automatic transmission but was told by Robinson that this model was not in stock and would not be available for about four weeks. Accordingly Rosewarne signed an order form for a Ford Escort with automatic transmission. On 3 July Rosewarne returned to the defendant's premises and enquired of Robinson whether he would have to pay more if there was an increase in the price before the vehicle he had ordered was delivered. He was told that he would have to pay any increase in price prior to delivery. When he informed Robinson that he was not happy about this, Robinson said that there was a new Ford Escort Ghia waiting to come from the workshop to the showroom. Rosewarne enquired on two occasions on this day if it was the latest model, and was told that it was. He decided to accept the Ford Escort Ghia on the basis that 1t would be delivered to his home on the following Wednesday, 5 July 1978. When the vehicle was brought to his home on that date by Robinson, Rosewarne again enquired 1f 1t was the latest model. Robinson repeated his earlier statement in the following words; "yes, it's the latest model", Rosewarne then signed an order form headed "Retail Buyers Order - New Ford Vehicle". The only references to the word "new" in the order form are contained in this heading and in the formal offer to purchase, and in each instance on one occasion only. About four weeks latezr the Ford Escort Ghia was involved in an accident, 1n consequence of which Rosewarne became aware for the first time of the information set out on the compliance plate affixed to the vehicle, to the effect that it was manufacturec an October 1976. There was evidence before me from Richard Morris Levy, the General Field Manager Central Regional Office, of the Ford Motor Company Limited ("Ford") that the vehicle in question was delivered to the defendant 2n the month of April 1977, and that Ford continued to manufacture vehicles of that type until July 1977. Thereafter Ford manufactured what was accepted to be another model of Ford Escort Ghia motor vehicles, the main differences being an increased engine capacity and fuel tank capacity. Thus as at July 1978 the Ford Escort Ghia sold to Rosewarne was not the current model, but a model the manufacture of which had ceased. It was a superseded model in that it was not the latest model, even though the probabilities were that it was still available for purchase by the public. These are the facts on the basis of which the defendant pleaded guilty to a charge of having falsely represented on 5 July 1978 at the home of Rosewarne that the vehicle sold to Rosewarne was "new". The charge that it had falsely represented that the vehicle was a current model was dismissed upon no evidence being tendered 2n support thereof. It 1s apparent that the only representation made on 5 July 1978 1n terms that the vehicle was "new" was contained in the order form. In the light of the plea of guilty, it must be taken as conceded by the defendant that to describe the vehicle in question in the order form as "new" was a false representation. It was not "new" for the reason that 1t was a superseded model, in the sense in which I have above used that expression. Difficulties inherent 1n ascertaining the appropriate meaning to attach to the word "new", and particularly whenit appears in an order form were dealt with by the Full Court of this Court in Annand & Thompson Pty. Ltd. v Trade Practices Commission (1979) 25 A.L.R. Ql. On 5 July 1978 and on earlier occasions in answer to enquiries by Rosewarne, Robinson had stated thatthe vehicle was the latest model. These representations were also false, but the charge in the information which 1s before me 1s not based on any of those statements. It is in these circumstances that counsel for the defendant submitted that the admitted offence was merely a technical breach of the Act, in that the false representation was to be found in the order form, which form was the document of Ford and not the defendant. I cannot accept this submission. The essence of the false representation was the placing before Rosewarne by Robinson of this order form in respect of a sale of this particular vehicle. Moreover this offence is in my opinion to be considered against the background of a number of enquiries by Rosewarne, both on the occasion of the offence and earlier, whether he was purchasing the latest model, and Robinson's positive answers to these enquiries. In two cases before this court and its predecessor the Australian Industrial Court,Smithers J. gave consideration to the factors relevant Lo Lhe amount of Lhe appropriale penally. I refer to Hartnell v Sharp Corporation of Australia Pty. Limited (1975) 5 A.L.R. 493 and Eva v Southern Motors Box Hill Pty. Ltd. (1977) 15 A.L.R. 428. In the former case the matters which he regarded as important were the importance of the untrue statement, the degree of wilfulness or carelessness in the making of this statement, the degree of untruthfulness, the extent to which the statement had been disseminated, what efforts, 1f£ any, had been made to correct the situation and the extent to which 1t could be corrected, and the deterrent effect of any penaity. In the latter case he added one further criteria, namely the effect on the defendant of adverse publicity. Wath respect I adopt his approach and I have given consideration to these criteria in so far as they are applicable. It is in my opinion crucial to bear in mind that the legislature regards very seriously offences under this Act, imposing in the case of corporations a maximum penalty of $50,000. I have also to bear 1n mind that it is conceded that this is not the first time that the defendant has contravened this type of legislatation, aun that 1t committed an offence on 9 February 1976 against the Unfair Advertising Act (S.A.) for which it was fined $175. In this matter the representation in the order form was in respect of this vehicle undoubtedly untrue and did have an important bearing on the mind of Rosewarne. It was false in respect of a topic upon which the latter sought reassurance on a number of occasions. I do not see the deception as deliberate but rather as the consequence of the lack of control and the carelessness of the defendant in permitting such an inexperienced salesman, who had not completed the defendant's training sessions, to make sales to the public. I can, and do, take into account the difficulties of an inexperienced employee in completing an order form containing such an ambiguous word as "new" and the problem of adapting that form to fit truthfully diverse c1rcumstan- ces. Fortunately for the defendant, the false representation did not go beyond Rosewarne, who has been compensated to the extent of $875 by the defendant for the loss he claims to have suffered. I take into account the fact that the defendant has paid this compensation and that it had instituted training sessions as a procedure to achieve compliance with the provisions of the Act. However to accord with the legislature's direction a substantial penalty must be imposed. In this area the deterrent aspect is most important and this must be taken into account. In all the circumstances I think an appropriate penalty 1s a fine of $1,000 which the defendant must pay together with the costs of the informant, to be taxed if not agreed. The order of the court 1s that a conviction be entered against the defendant and a fine of $1,000 imposed. I order that the fine be paid to the District Registrar of this court within 21 days of this date and that the defendant pay to the informant its costs to be taxed if not agreed. { certify that this and the 6 preceding pages are a true copy of the Reasons for Judgment of Mr. Justice Fisher Zh fy ., preety ; : naan pated: 3 Gclbe, /P7F ,