CATCHWORODS Contempt of Court - motion alleging breach of undertaking given in settlement of earlier proceedings - whether ambiguity in terms of undertaking relevant to motion for contempt - whether steps had been taken to comply with undertaking - whether steps taken need be reasonable or adequate. Practice and Procedure - evidence by trap orders - whether such evidence admissible - whether notice of such orders need be given to opposite party - whether unfairness of trap orders relevant to admissibility or weight. Federal Court of Australia Act, 1976 (Cth.) s.3l. IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G. 59 of 1980 ) GENERAL DIVISION ) IN THE MATTER OF THE TRADE PRACTICES ACT (1974) BETTY VERONICA BRYANT, BRYANT'S HOTELS PTY. LIMITED APPELLANTS (RESPONDENTS )} KEITH HARRIS & CO. LIMITED, UNITED BEVERAGES PTY. LIMITED, JUSFRUTE LIMITED RESPONDENTS (APPLICANTS) REASONS FOR JUDGMENT FRANKI J. 27 November 1980 I have had the opportunity of reading the draft reasons for judgment of Lockhart J. He has stated the facts fully and it 1s unnecessary for me to restate them. I agree, in general, with his conclusions of Fact and law. I only wish to make observations on two aspects of this appeal. The first 1s upon the construction of the undertaking. e 3 IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G59 of 1980 ) GENERAL DIVISION ) IN THE MATTER OF THE TRADE PRACTICES ACT (1974) BETTY VERONICA BRYANT, BRYANT'S HOTELS PTY. LEMITED. Appellants (Respondents) KEITH HARRIS & CO. LIMITED, UNITED BEVERAGES PTY. LIMITED, JUSFRUTE LIMITED Respondents (Applicants) ORDERS JUDGES MAKING ORDERS: FRANKI,NORTIUROP AND LOCKHART JJ. WHERE MADE: AT SYDNEY. DATE OF ORDERS: THURSDAY 27 NOVEMBER 1980. THE COURT ORDERS THAT: 1. The appeal is allowed. 2. The order of the trial Judge of 25 June 1980 is set aside. 3. The motion dated 3 June 1980 is dismissed. 4, The respondents pay the costs of the appellants of this appeal and of the motion. In Australian Consolidated Press Ltd. v. Morgan (1964) 112 C.L.R. 483 the High Court was considering an appeal in which the appellant had been ordered to pay a fine for breach of an interlocutory undertaking "that it will not until the hearing of the suit or until further order by itself 1ts servants or agents publish in any form whatsoever any gallup poll results in respect of which the plaintiffs or either of them have the copyright." Windeyer and Owen JJ., who constituted the majority of the court, in upholding the appeal did so upon the ground that, having regard to the ambiguous language of the undertaking, it could not be said that a breach had been established. Windeyer J. at p.506 sald: "But it seems to me impossible to say that the undertaking was clear or that a breach of i1t was certainly established. I agree in the view that my brother Owen expresses in the judgment that he is about to deliver that on this ground, 1f on no other, the appeal should be allowed." Owen J. at pp.515-516 cited, inter alia, the following passage from the judgment of Luxmoore J. in Iberian Trust Ltd. v. Founders Trust and Investment Co. (1932) 2 K.B. 87 at p.95: "'In terms, the order does not direct the defendant company to do anything-it says: "that the plaintiff do have a return of the said shares within fourteen days". Am I to spell out of that an order on the defendant company to do something? I think not. If the Court is to punish anyone for not carrying out 1ts order the order must in unambiguous terms direct what is to be done'". His Honour then referred to Redwing Ltd v. Redwing Forest Products (1947) 177 L.T. 387 and said: "The defendant in a passing off action had given certain undertakings which were embodied in an order of the Court. The plaintiff alleged that the undertakings had been broken and sought to have the defendant's directors attached for contempt of court and the defendant's property sequestrated. Jenkins J. refusing the application, said: 'I cannot say I think that the undertakings contained in the order were clearly drawn and I cannot say I regard the questions of construction involved in them as entirely easy guestions, but in my judgment, a defendant cannot be committed for contempt on the ground that upon one of two possible constructions of an undertaking being given he has broken his undertaking. For the purpose of relief of this character I think the undertaking must be clear and the breach must be clear beyond all question.'" His Honour continued at p.516: "With these statements of general principle I agree. In my opinion the ambiguity of and lack ef precision in the appellant's undertaking which, it should be remembered, was originally drawn by the respondents! solicitors in the District Court proceedings are such that a fanding of contempt should not be made." In my Opinion the undertaking being considered by us has not been broken. If I had been of the opinion that the undertaking insofar as the words "without taking stens to bring to the attention of the person who made the request" should have been construed so as to require more than "steps" to be taken, or to require "reasonable" or "adequate" or "adequate and continuing steps" to he taken then I would have held that the undertaking fell within the category where "having regard to the ambiguous language of the undertaking it could not be said that a breach had been established". I do not consider that it could possibly be said that the steps taken by the respondent were of a colourable nature only. _ This case illustrates the need for great precision in undertakings which the Court is asked to accept, particularly where the offer and acceptance of an undertaking 1s the basis for the proceedings being dismissed by consent. The second aspect upon which I want to make some observations is that of "trap orders". The general question of trap orders is dealt with in Halsbury's "Laws of England", 3rd edition, volume 38 para. 1053 and in Kerly's, "Law of Trade Marks and Trade Names", 10th edition 1972, para 15-113 and para 16-78. If attention is not drawn early to the circumstances of a trap order the person seeking to rely on the trap order runs the risk that that evidence will not be accepted. This is particularly so where only one or two trap orders are involved. A good illustration of this is what was said by Harman J. in Cellular Clothing Coy. Ld. v. G. White & Coy. Ld. (1953) 70 R.P.C. p.9 at p.15, following on the passage cited by Lockhart J. In that case the defendants had not been advised of the trap order until six weeks and four weeks respectively after the two trap orders. At p. 15 Harman J. said: "Now that is exactly the way in which trap orders should not be given. It 1s exactly the way which many Judges have said makes the Court distrustful of the trap. Two orders of this kind-standing as the only evidence of passing-off which remains in this case if T reject the August 9th incident, as I do-are, in my judgment, not nearly of strong enough a character to support a claim for an injunction of this sort. What exactly happened, I do not know. Something like what the Plaintiffs' witnesses say may have happened, but whether they brought home to the attention of the two assistants the fact that they were really asking for the Plaintiffs' goods, or did not do so, I am left entirely in the dark. I think it would be quite wrong if I accepted such fragile evidence, with no confirmation at all, and which has been sedulously concealed from the Defendants contrary to all the practice, of which the Plaintiff Company and their advisers must be well aware. They, being a very large concern, must have been concerned in many actions of this sort. It would not be right to rely on that to support a claim for an injunction." On the other hand Elwes J. in Showerings Ld v. Cheltenham & Hereford Breweries Ld. (1958) R.P.C. 446, in a case where the defendant had not been informed at the time the trap orders had been given, said at p.447: "I think I ought to make the order as prayed in this case. I was troubled when the decision of Harman,J., was cited to me in the case of Cellular Clothing Coy v. White, (1953) 70 R.P.C. 9. I have, of course, paid the closest attention to the observations of that learned Judge, and have done my best to understand them as they were applied to the issues raised in that case. It seems to me that what liarman, J., was saying in that case fo) was that the failure by the plaintiffs to observe the practice of the Chancery Division relating to trap orders resulted in the evidence being quite unsatisfactory and not acceptable to him. I have reached a conclusion that, if the evidence in this case had come before Harman, Je, the same criticisms would not have applied. One cannot say that the evidence in this case 1s unsatisfactory. It has been suggested to me that there is no difference between one trap order and fifty trap orders. That seems to me to be an unfounded suggestion. Here, for the protection of their business, the Plaintiffs have sent out a team of trappers, and it seems obvious that they sent that team into an area where they felt, with justice, that their interests were being prejudiced by what was going on in public houses of a particular brewery company. It 1s obvious from the affidavits that those suspicions were well founded, because the number of successful traps was very large. It seems to me that that evidence as it is presented to me in this case is very strong, and that I would be going against the weight of the evidence if I did not act on it. I have accordingly reached the conclusion that the Plaintiffs are entitled to the interim relief for which they ask and that I ought to make the order." See also Fox's Glacier Mints Ld. v. Joblings (1932) 49 R.P.C. 352, Procea Products Ld. v. Evans & Sons Ld. (1951) 68 R.P.C. 210, and Showerings Ltd. v. The Blackpool Tower Co. Ltd. [1975] 1 F.S.R. 40. In summary, notice should be given concerning the details of any trap order at the time of the trap order, or so soon thereafter as 1s reasonably practicable, hearing in mind the problem that notice may adversely affect the collection of evidence by the plaintiff (see generally O.T. Co. v. Muir (1914) 31 W.N.(N.S.W.) 87 at 88). If appropriate notice is not given the plaintiff runs the risk that the evidence will not be accepted. I would allow the appeal, set aside the order of 25 June 1980, dismiss the motion of 3 June 1980 and order that the respondents pay the appellants' costs of the proceedings for contempt at first instance and of this appeal. T certify that this and the & preceding pages are a true copy of the Reasons for Judgment herein of his honour Mr. Justice FRANK] | /) C KG fey 1 Bi rO- sociate pated: 27 Ne&cury rl ITC IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT EGISTRY ) N.S.W. No. G59 of 1980 ) GENERAL DIVISION ) ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: BETTY VERONICA BRYANT and BRYANT'S HOTELS PTY. LIMITED Appellants (Respondents) and KEITH HARRIS & COMPANY LIMITED, UNITED BEVERAGES PTY. LIMITED and JUSFRUTE LIMITED Respondents (Applicants) NORTHROP J. REASONS FOR JUDGMENT 2.7 NOVEMBER 1980 Bryant's Hotels Pty. Limited 1s a corporation under the Trade Practices Act 1974 as amended, and conducts the business of a licensed hotel known as the "Strata Motor Inn" at Cremorne. Betty Veronica Bryant 1s a director of the company and is the licensee of the Strata Motor Inn. The company and Mrs. Bryant are hereinafter called "the appellants". At the hotel dranks are sold at a number of different bars. The only orange juice supplied at the bars us Berri orange juice. Keith Harris & Co. Limited, United Beverages Pty. Limited and Jusfrute Limited (hereinafter called "the respondents") are each companies and are engaged in the business of the distribution and marketing of orange juice. In December 1979 the respondents commenced proceedings against the appellants alleging that the appellants were engaging 1n conduct which contravened the provisions of the Trade Practices Act 1n that they were supplying to customers of the hotel who asked for Orchy orange juice another orange juice, mamely Berri orange juice, without informing the customer who requested Orchy orange juice that the appellants sold Berri orange Juice only and not Orchy orange juice. The proceedings in the Federal Court were commenced and on 13 December 1979 the following order was made by the court: ORDER Judge making Order: Sheppard, J. Date of Order: 13 December 1979 Where made: Sydney THE COURT NOTES: 1. The undertaking to the court by the Respondents by their Counsel that in relation to their conduct of the business of hotelier at the Strata Motor Inn not to supply, in response to a request for "ORCHY" orange Juice, or for "ORCHY", or for "ORCHY" or ""ORCHY" orange juice mixed with any other drink, any other brand of orange juice or any beverage containing any other brand of orange juice without taking steps to bring to the attention of the person who made the request, either prior or subsequent to that request, that the orange juice intended to be supplied 1s not "ORCHY" or "ORCHY" orange juice. 2. That it will be sufficient compliance with the requirement to take steps as specified in the above undertaking, if the bar attendant to whom the request 1s made either or both: (2) points out to the person placing the order a sign displayed on the premises or on his person containing the words, "We sell Berri Orange Juice not 'ORCHY'", or "We sell (name of brand or other description) orange juice not 'ORCHY'" and (11) says to that person words including the sentence, "We sell Berri Orange Juice not 'ORCHY'", or "We sell (name of brand or other description) orange juice not 'ORCHY'", or "We don't sell 'ORCHY'", or the substance of any of those expressions. THE COURT ORDERS (BY CONSENT) THAT - 3. The application be dismissed. 4. The respondents pay the Applicants' costs. " The undertaking referred to in the Order has some unusual features both as to form and substance. In form it merely notes the undertaking to the court by the appellants. It does not draw a distinction between the appellant company and the appellant Mrs. Bryant and makes no reference to the appellant company giving an undertaking that "it by its servants and agents" will not do specified things. The unusual features of substance are referred to later in these reasons. On many occasions between 9 May 1980 and 9 June 1980 the respondents caused persons to go to the various bars at the Strata Motor Inn and to request persons working at the bars for a drink to be supplied with Orchy orange juice. On each occasion the person supplying the orange juice supplied to the person placing the order Berri orange juice without pointing out to that person a sign displayed on the premises or on the person supplying the Berri orange juice containing the words "We sell Berri orange Juice not Orchy" or saying to the person placing the order "We sell Berri orange jJulce not Orchy" or words to that effect. These requests for Orchy orange juice are hereinafter referred to as "trap orders". Each of the persons placing the order for Orchy orange juice had, prior to placing the order, seen signs displayed on the premises of the Strata Motor Inn containing the words "We sell Berri orange juice not Orchy". The signs were placed above the bars and on the orange Juice dispensers from which the orange juice was taken. The signs were prominently displayed. In at least one trap order the customer saw a badge on the person supplying the orange juice containing the words "We sell Berri orange juice not Orchy", but the person supplying the orange juice did not point to that sign prior to supplying the orange Juice. By Notice of Motion dated 3 June 1980 taken in the proceedings which had been commenced in the Federal Court in December 1977, the respondents sought the following orders, namely: 1. That the appellant Mrs. Bryant be dealt with by the court by attachment or committal or by fine or sequestration of her property or by such other means as the court deems proper for her contempt in not complying with the undertakings made to the court on 13 December 1979 and noted by the court in the order of the court made on that day. 2. That the appellant company be dealt with by the court by fine or sequestration of its property or such other means as the court deems proper for its contempt in not complying with the undertakings made to the court on 13 December 1979 and noted by the court in the order of the court made that day. Subscribed to the Notice of Motion was a statement of charge specifying the contempts alleged. In each case, the contempt specified related to a particular transaction which in substance alleged that the appellants, in relation to conduct of the business of hotelier at the Strata Motor Inn supplied in response to requests for Orchy orange Juice another brand of orange juice without taking steps to bring to the attention of the person making each request, either prior or subsequent to that request, that the orange juice intended to be supplied was not Orchy orange juice (emphasis added). The motion came on for hearing before the Federal Court on 19 and 20 June 1980 and by judgment given on 25 June 1980 the court found that the appellants and each of them were in contempt of court and ordered that they pay the respondents' costs of the motion as between solicitor and client. The appellants have appealed as of right from that order and in substance the appeal 1s directed to the issue of whether the appellants were in contempt of court. The respondents gave a Notice of Contention, but at the hearing of the appeal did not proceed with the issue therein raised. The motion alleged a wilful breach of the undertakings given but was not based upon a contumacious or defiant contempt of court. The proceedings on the motion were civil in nature, not criminal, generally see Australian Consolidated Press Ltd. v. Morgan (1964-5) 112 C.L.R. 483 per Barwick C.J. at pp.489-490 and per Windeyer J. commencing at p.496. On the hearing of the motion much evidence was given relating to the nature, size and positioning of the signs in the bars of the hotel and to the fact that although prominently displayed and readily seen, there were places in the bars where a customer could not see or read a sign. likew1se, much evidence was given of actions taken by the managerial officers of the appellant company in directing employees of the company on what they should do 1f a customer requested the supply of Orchy orange juice. In my opinion the matters raised by that latter evidence do not bear upon the issue of whether a contempt of court has occurred, but may be relevant to an issue relating to the nature of any contempt committed. This aspect is referred to later in these reasons. There waS no suggestion that the appellant Mrs. Bryant personally supplied orange juice to a customer in a manner which did not comply with the undertakings or any of them which had been made to the court on her behalf. There was no suggestion that the persons supplying the orange juice requested by the persons making the trap orders were her servants or agents. Accordingly, in my opinion, the respondents may have failed to make out a case of contempt of court against the appellant Mrs. Bryant, but since this contention wads not made on behalf of the appellants, I do not express any concluded view thereon. For the purposes of this appeal I am prepared to make the inference that each of the persons who supplied Berrl orange juice to the persons requesting to be supplied with Orchy orange juice wasS a servant or agent of the appellant company. In order to determine whether the appellant company has committed a contempt of court, 1t is necessary to construe the undertakings given and to determine whether, on the undisputed facts, the appellant company has committed a breach of any of those undertakings. In his reasons for judgment, the learned trial Judge said: "In my opinion the substance of the undertaking 1s contained, and only contained in paragraph 1. Paragraph 2 provides a method selected by the parties for carrying it out. If what 1s provided for in paragraph 2 is done, there can be no breach. But, if it 18 not done, the question still remains whether the respondents have complied with the undertaking otherwise. Paragraph 2 does not provide the only means of compliance. The proper construction of the undertaking 1s, I think, made clear by the words in paragraph 1, 'either prior or subsequent to that request'. It 1s thus contemplated that the undertaking may be complied with by the taking of steps prior to any request for Orchy orange juice being made. Paragraph 2 is only applicable where a request has been made. If 1t 1s complied with, as I have said, the respondents will not be in breach because they will have taken steps, but taken those steps subsequent to and, not prior to, the request. There will be no breach because of the parties' agreement that, 1f there is compliance with paragraph 2, steps within the Meaning of paragraph 1 have been taken. But that does not mean that the respondents may not comply with the undertaking given by them 1n paragraph 1 by taking steps prior to any request being made." Before the Full Court all parties accepted that proposition and with respect I agree with that construction. His Honour then stated that to be a sufficient compliance, the steps taken prior to a request being made Must be reasonable in the circumstances. He held that the notices displayed before the service of the Notice of Motion on the appellants did not amount to the taking of reasonable steps by the appellants to warn customers that Orchy orance Juice was not sold. In forming that opinion he relied upon the fact that the signs seemed to be more of an advertisement for Berri than an indication that Orchy was not sold. The positioning of the signs was such that they could not be seen by every person in the bars and that the signs could not necessarily come to the attention of customers when they approached bars. The first step in determining the appeal 1s to consider the terms of the undertaking. The undertaking 1S in writing and its meaning 18 to be ascertained according to the ordinary rules of construction. The undertakings do not proscribe the sale of orange juice other than Orchy orange Juice to persons who request to be supplied Orchy orange juice. The undertaking 1S given by the appellants "in relation to their conduct of the business of hotelier at the Strata Motor Inn". The obligations arise only when there 1s a request by a customer for Orchy orange juice or any of the variations thereof specified in the undertakings. In response to such a request, the appellants are not to supply any other brand of -10- orange juice "without taking steps to bring to the attention of the person who made the request ... that the orange juice intended to be supplied 1s not Orchy" orange juice (emphasis added). If those were the only operative words of the undertakings, there would be much force in a ahaha that in response to a request for Orchy orange juice, the appellants by themselves, their servants or agents thereafter would be obliged to do something to bring to the attention of the person making the request that the orange juice to be supplied was not Orchy orange juice. Paragraph 2 of the undertaking does not of itself impose obligations upon the appellants. That paragraph specifies conduct that constitutes sufficient compliance with the requirement to take steps as specified. Of necessity the steps so specified must be taken subsequently to a request being made for Orchy orange juice. As far as whether a contempt has been committed or not, steps taken by management prior to any request being made to direct employees of the appellant company what to do if and when a customer requests Orchy orange Juice cannot be steps taken subsequent to the request. Those steps, however, could be relevant in determining the nature of any contempt which otherwise occurred. The steps specified in paragraph 2 must be taken by the person to whom the request 1S made. Despite the use of the word "and" between sub-paragraphs (1) and (11), the steps described in each of those sub-paragraphs are true alternatives and need not be cumulative, see the words "either or both" appearing -~ll- ummediately before sub-paragraph (1). In the present case, the facts are not in dispute. As far as the trap orders are concerned, the persons to whom the requests were made did not, subsequent to the requests, take steps as specified 1n paragraph 2. The real issue for determination 1s whether the appellants took steps prior to the requests being made. As indicated earlier, the undertakings are directed to an obligation to do something in response to a request, namely not to supply orange juice without taking steps "either prior or subsequent to that request" (emphasis added). Steps taken prior to the request may be a sufficient compliance with the requirements of the undertaking, and if so it 1s irrelevant that further steps are not taken subsequent to the request being made. In the present case, the very words which are specified by paragraph 2 as constituting sufficient compliance with the requirement to take steps as specified in the undertakings when contained in a sign displayed on the premises, have been used on signs displayed prominently in each of the bars of the hotel. The appellants, by placing those signs in the bars, have taken steps to bring to the attention of persons in the bars that the appellants sell Berrl orange Juice nor Orchy. The steps taken are wider than those required to be taken pursuant to the undertakings. Of necessity they are in the nature of advertisements for Berri -12- orange juice. They are directed to all customers, and not airected only to those customers who request Orchy orange juice. The effectiveness of the steps taken to bring to the attention of persons requesting Orchy orange juice is well 1lliustrated by the fact that each of the persons making trap orders saw the signs and understood them before making the request. To some extent the true issue raised by the motion was clouded by the contentions made by counsel for the respondents. First he contended that the steps to be taken prior to a request being made had to be steps which in all the circumstances were reasonable and that ain determining what was reasonable 1t was necessary to apply an objective test, not a test subjective to the person making the request. He then contended that on the undisputed facts, 1t was possible, objectively, that persons could request Orchy orange juice without having seen the signs. It was contended further that having regard to the absence of steps taken by employees of the appellant company after a request for Orchy orange juice, the court should draw the inference that persons, other than those making the trap orders, had requested Orchy orange julce without their attention being drawn to the fact that the appellants sold Berri orange juice not Orchy, either prior or subsequent to the request being made. In my opinion those contentions should not be accepted. By their undertakings, the appellants are required to take steps to bring specified matters to the attention of specified persons. The persons so specified are those who request to be supplied with Orchy orange juice. The appellants can take the specified steps prior to the request being made and in those circumstances the fact that no steps are taken subsequent to the request 1S immaterial. There is no evidence that any person requested Orchy orange juice prior to seeing the signs. No inference can be drawn that there were such persons. In any event, even 1f such a person requested to be supplied with Orchy orange juice without having seen the signs, 1t does not necessarily follow that the appellants have committed a breach of the undertakings. Their obligation 1s not in the form not to supply without bringing the specified facts to the attention of the person making the request. Their obligation 1s in the form not to Sia ply without taking steps to bring the specified facts to the attention of the person making the request. In this respect, the state of mind of the person so requesting 1s irrelevant. In other words, a subjective test 1s not relevant. But that is a very different situation to the present where the persons making the request had seen and understood the signs prior to so requesting. In the present ~14- circumstances the steps taken by the appellants had brought the specified facts to the attention of the persons requesting Orchy orange juice. It 1s not necessary in this case to consider the uncertainties that lurk in the words of the undertaking, especially the words "without taking steps to bring to the attention of the person who made the request ... prior ... to that request" ansofar as those uncertainties arise from an uncertain denotation, see Australian Consolidated Press Ltd. v. Morgan, supra, per Windeyer J. at p.503. The obligations imposed on the appellants by their undertakings are very different from a common type of obligation imposed by an injunction or undertaking granted or given in a passing off action. This can be illustrated by a reference to Showerings Ltd. v. Fern Vale Brewery Co. itd. (1958) R.P.C. 484. In that case there was an obligation imposed upon the defendants that they would not do: "(as regards the Defendants other than the Defendant Company whether by themselves or any of them and as regards all the Defendants whether by their servants or agents or any of them or otherwise howsoever) the following acts or any of them that 1s to say sell or offer for sale or supply ain response to requests for 'Babycham' any drink not being the Plaintiffs' 'Babycham' champagne perry unless 1t 1s made plain to the customer that the drink supplied 1s not *Babycham' champagne perry." - 15 - Those obligations are to be contrasted with those in the present case, namely not to supply, in response to the request, without taking steps to bring specified facts to the attention of the person making the request prior to the request being made. If by the taking of those steps, the person making the request had his attention brought to the specified facts, how can 1t be said that the appellants had not taken steps to bring those specified facts to the attention of the person making the request? In my opinion the respondents have failed to make out a case of contempt of court against the appellant company. Having regard to the opinions already expressed, it 1s neither necessary nor desirable that I express an opinion on any of the other matters argued on the appeal. I would allow the appeal with costs, set aside the order made on 25 June 1980, dismiss the motion dated 3 June 1980, and order the respondents to this appeal to pay the costs of the hearing of that motion. IT certify that +15 and the rages are a true copy of the preceding fF re , 1 Teasons for Judgment herein of his Hono Mr. Justice Nev thr-p i, . Whtha mes) tu XU 3 'Associate Dated: of 7/ [do So IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) NO. G 59 OF 1980 ) GENERAL DIVISION ) IN THE MATTER OF THE' TRADE PRACTICES ACT (1974) BETTY VERONICA BRYANT, BRYANT'S HOTELS PTY. LIMITED APPELLANTS (RESPONDENTS) KEITH HARRIS & CO. LIMITED, UNITED BEVERAGES PTY. LIMITED, JUSFRUTE LIMITED RESPONDENTS (APPLICANTS) REASONS FOR JUDGMENT 27 November 1980 LOCKHART J. This 1S an appeal from a judgment of a single judge of this Court who held that Betty Veronica Bryant and Bryant's Hotels Pty. Limited ("the appellants") were in breach of an undertaking given to the Court on 13 December 1979 and that they were in contempt of Court. His Honour made no orders on the motion taken out by Keith Harris &Co. Limited, United Beverages Pty. Limited and Jusfrute Limited ("the respondents") that the appellants be dealt with for contempt of court except that the appellants pay the costs of the respondents as between solicitor and client. The motion for contempt arose this way. On 10 December 1979 the respondents commenced proceedings in this Court against the appellants alleging breaches by them of ss. 52 and 53 (c) of the Trade Practices Act -2- 1974. The respondents are associated companies and have for some years carried on business as distributors and sellers of an orange juice known as "Orchy". The appellant, Bryant's Hotels Pty. Limited ("the second appellant") conducts a hotel business at Cremorne known as the Strata Motor Inn ("the Hotel"). The Hotel is a licenced hotel and has three bars. The appellant, Betty Veronica Bryant ("the first appellant"), 1s a director of the second appellant and is the licensee of the Hotel. At all material times the second appellant sold an orange juice known as "Berri" from each of 1ts bars; it did not sell "Orchy" orange juice. In the proceedings commenced in December 1979 the respondents alleged that the appellants were supplying "Berri" orange juice to customers who asked for "Orchy" without telling them that the Hotel did not sell "Orchy". The matter did not proceed to a hearing. It was settled on terms which involved the appellants giving an undertaking to the Court and orders being made by consent as follows:- "THE COURT NOTES: 1. The undertaking to the court by the Respondents by their Counsel that in relation to their conduct of the business of hotelier at the Strata Motor Inn not to supply, in response to a request for "ORCHY" orange juice, or for "ORCHY", or for "ORCHY" or "ORCHY" orange juice m2xed with any other drink, any other brand of orange juice or any beverage containing any other brand of orange juice, without taking steps to bring to the attention of the person who made the request, either prior or subsequent to that request, that the orange -3- juice intended to be supplied is not "ORCHY" or "ORCHY" orange juice. 2. That it will be sufficient compliance with the requirement to take steps as specified in the above undertaking, 1f the har attendant to whom the request 1s made either or both: . (1) points out to the person placing the order a sign displayed on the premises or on his person containing the words, "We sell Berri Orange Juice not 'ORCHY'", or "We sell (name of brand or other description) orange juice not 'ORCHY'" and (11) says to that person words including the sentence, "We sell Berri Orange Juice not 'ORCHY'", or "We sell (name of brand or other description) orange juice not 'ORCHY'", or "We don't sell "ORCHY'", or the substance of any of those expressions. THE COURT ORDERS (BY CONSENT) THAT - 3. The application be dismissed. 4. The Respondents pay the Applicants' costs." The formal order was entered on 3 January 1980. It was served on the first appellant on 8 January 1980 and on the second appellant on 14 Februry 1980; but the documents served did not comply with the Rules of this Court in that they were not endorsed with statements that in the event of failure to observe the undertaking the appellants might be liable to be punished for contempt of Court: 0. 40, R. 13 (3). This omission led to the reservice of the order on the first appellant on 17 May 1980 and on the second appellant on 19 May 1980. On 3 June 1980 a notice of motion was filed by the solicitors for the respondents seeking orders that the appellants be dealt with for -4- contempt of court in not complying with the undertaking given to the Court on 13 December 1979. At the same time a Statement of Charge was filed specifying the alleged contempt: 0. 40 R. 6. The Statement of Charge provides, 1n substance, that on 9,10, 12, 17, 22, 24, and 29 May 1980 the appellants, in relation to the conduct of the business of hotelier at the Hotel supplied, in response to requests for "Orchy" orange juice, another brand of orange juice, without taking steps to bring to the attention of the person making each request, either prior or subsequent to the request, that the orange juice intended to be supplied was not "Orchy". The evidence adduced by the respondents included affidavits from a number of law students in the part-time employ of the solicitors for the respondents who, on the days mentioned in the Statement of Charge, visited the Hotel and placed orders for ""Orchy" orange juice at one or more of the bars. Their evidence was to the effect that on each occasion when they requested "Orchy" or "Orchy" orange juice they were served with an orange juice dispensed from a "Perri" orange Juice container, and that on no occasion did any of the bar attendants say that the Hotel did not sell "Orchy" or that it sold only "Berri" orange juice. It 1S common ground that signs were hung from the ceilings in the bars of the Hotel stating that "Berri" and not "Orchy" orange juice was sold, that similar signs were placed on the "Berri" orange juice dispensers and that badges were provided to the bar attendants saying Puch the same thing. I shall say more of this later. ee eS -5- The proper construction of the undertaking given to the Court on 13 December 1979 was argued on this appeal. I take as a starting point what the learned primary Judge said in his reasons for judgment, the correctness of which was accepted by all parties:- "In my opinion the substance of the undertaking is contained, and only contained in paragraph 1. Paragraph 2 provides a method selected by the parties for carrying it out. If what 1s provided for in paragraph 2 1s done, there can be no breach. But, 1f it 1s not done, the question still remains whether the respondents have complied with the undertaking otherwise. Paragraph 2 does not provide the only means of compliance. The proper construction of the undertaking is, I think, made clear by the words in paragraph 1, 'either prior or subsequent to that request'. It as thus contemplated that the undertaking may be complied with by the taking of steps prior to any request for Orchy orange juice being made. Paragraph 2 1s only applicable where a request has been made. If at 1s complied with, as I have said, the respondents will not be in breach because they will have taken steps, but taken those steps subsequent to and, not prior to, the request. There will be no breach because of the parties' agreement that, 1f there 1s compliance with paragraph 2, steps within the meaning of pargaraph 1 have been taken. But that does not mean that the respondents may not comply wath the undertaking given by them in paragraph 1 by taking steps prior to any request being made." There was some debate before us as to whether the undertaking should be construed so that the requisite steps to be taken by the appellants had to be "reasonable" steps. This was the approach adopted by the learned primary Judge. What the appellants must do to comply with the undertaking is to take steps to bring to the attention of persons who request "Orchy" orange juice that the orange juice intended to be supplied is not of that kind. -6- Plainly, the terms of the undertaking require that compliance with it 1s to be determined when a person has requested "Orchy" orange juice. This 1s done by reference, not to some hypothetical customer, but to the person who in fact makes the request. These steps may be taken before or after the making of the request. Whether the person who makes the request attends to or heeds what he 1s told or shown is irrelevant. For it to be said that one has taken steps to bring something to someone's attention means simply what 1S says. I see no necessity to import concepts of the steps being "reasonable" (or "adequate" or "adequate and continuing" - see Re Galvanised Tank Manufacturers' Association's Agreement [1965] 2 All E.R. 1003 per Megaw P. at p. 1009). Nor does it necessarily mean that any step, no matter how slight, may be sufficient. A merely colourable compliance with the undertaking 1s no compliance at all. A second question of construction was raised by counsel for the respondents who submitted that, on the proper construction of the undertaking, 1t was an irrelevant consideration whether the appellants introduced or followed a system for the purpose of bringing to the attention of persons who request "Orchy" orange Juice that the orange juice untended to be supplied is not "Orchy". It was submitted that the only relevant matters for consideration were, as to the taking of steps prior to the making of any request, the hanging and placing of signs in the bars and, after the making of any request, the conduct of the bar attendants in response to the request. It was submitted that the measures adopted by the appellants to ensure that the bar attendants made the appropriate response -7- to the request for "Orchy" were irrelevant. I will refer later to the particular system adopted by the appellants; but it is sufficient for present purposes to say that 1t involved Mr. Bryant, the general manager of the second appellant, giving instructions to the bar managers and staff; signs being placed near the "Bundy cards" where bar attendants signed on and off duty; and notices being placed on cash registers in the bars and in the pay envelopes of staff - all to the effect that customers who asked for "Orchy" were to be told that it was not supplied. In my opinion the submission 18S fallacious. The undertaking is not one to in fact bring to the attention of persons who request "Orchy" orange juice that another orange juice will be supplied; but to take steps to bring that matter to their attention. This necessarily involves to my mind the necessity of looking at the system, 1f any, implemented by the appellants to see whether the undertaking 1s complied with. I turn to the submissions of counsel for the appellants relating to the trap orders. He submitted that the evidence of the law students who laid the trap orders for ""Orchy" orange juice should not have been admitted by the learned primary Judge or, alternatively, should not have been relied upon or accepted by him, because notice was not given immediately thereafter by the respondents to the appellants of the laying of those orders and the results. He submitted that if the appellants had been notified there would have been opportunity for them to investigate the matter, in particular, by interviewing the staff concerned. The appellants point to the fact that the appellants engage some five permanent and -8- forty-five casual bar attendants and that most of them are transient people who owe no particular allegiance to the appellants; hence it was important that they receive immediate notice of the trap orders. As Harman J. said in Cellular Clothing Co. Limited v. G. White & Co. Limited (1953) 70 R.P.C. 9 at p. 14:- «ee1t has been pointed out again and again that,...although trap orders are a necessity they are to some extent an odious necessity and they have to be looked at, therefore, with the greatest suspicion. There are I do not think it right to say rules, but there 1s a practice which has grown up around these orders to the effect that, 1f you wish to rely on them and nothing else, you must either support them by some written evidence or you must at least bring them to the notice of the person, the assistant or whoever it 1s that 1s trapped, at once, because otherwise the answer of the assistant always 1S, as 1t was in this case, that he or she does not remember the incident, and the Court 1s thereby not at all assisted to find out what the truth is. The fact that an assistant a month or so later says she does not remember the incident only proves the honesty of the assistant; but, 1f the matter 1s drawn to her attention within 24 hours, then she cannot say that in a Court, and at least I have the satisfaction of knowing what her reaction was soon afterwards." In 0.T. Co. v. Muir (1914) 31 W.N.(N.S.W.) 87 Harvey J. said at p. 88 with reference to test purchases made by private detectives of cordials at a hotel bar in Sydney:- "Evidence of this sort must always be scrutinized with the greatest care, and especially where from the nature of the circumstances 1t will not be likely that the persons charged could recall to their minds the specific instances, and they can only deal with them in a general manner. It 1S most desirable, wherever it can be done fairly, that a plaintiff who is setting out to collect a -9- set of test sales, should at the earliest possible opportunity consistently with his plan of campaign, give notice to the defendant. In this case I do not think defendant has in any way been prejudiced by any want of notice, because when he did get notice of some of the sales within a fortnight, it apparently did not assist his witnesses in any material respect...I think solicitors who employ a private detective for the purpose of making the test sales should regard the principle which the Court has laid down, which 1s that sales must be prosecuted with the most scrupulous fairness, and it is the1r duty to the defendant, when putting detectives on to do the work, to give them notice at the first possible opportunity they conveniently can of the evidence on which they are going to rely. The fullest disclosure is the best. They cannot make it too full as soon as they can do it consistently with the interests of their clients." The law students visited the Hotel on 9, 10, 12, 17, 22 , 24 and 29 May 1980. The proceedings were instituted on 3 June when copies of the notice of motion, relevant affidavits and the f€tatement of Charge were served on the appellants. On no view of the matter could there be a complaint as to delay in relation to the visit to the Hotel on 29 May, some five days before the commencement of the proceedings. Although the appellants' counsel says that prejudice could have been sustained by the appellants because some of the staff who were on duty on the occasions in question were no longer in their employ, it appears to me that no proper enguiries were made of the staff, or former staff of the appellants to ascertain their whereabouts or their version of the incidents. Counsel for the respondents submitted that 1t would not have been right to commence these proceedings with the evidence based on a single 1solated incident as it was necessary, or at least prudent, to obtain Pes ~10- evidence of a reasonable number of visits to the Hotel to ascertain whether there was only one failure or a pattern of failure to take steps to bring the relevant matters to the attention of persons who requested "Orchy". This submission 18s sound. The very concept of taking steps to bring matters to the attention of customers in the Hotel suggests the necessity of adopting some system which could not be properly tested by one or two visits. The following passage from the judgment of Dankwerts J. in Showerings Limited v. Fern Vale Brewery Co. Limited & Ors. 1958 R.P.C. 484 at 486 1s in point (that was a case of trap orders for the supply of alcohol at a hotel known as the "Red Cow"):- "Criticisms have been made against the Plaintiffs of the way 1n which this motion has been launched, but those criticisms seem to me to be unjustified. It seems to be quite correct, as urged by Mr. Aldous, that it was not right to launch a motion of this sort on one single isolated incident; the Plaintiffs were bound to test the matter by several visits to the 'Red Cow' to see whether there was simply one mistake, or a regular practice, and after they had done that, they were entitled to consult their legal advisers both before the motion was launched and before a letter was written to the Solicitors acting for the Defendants. Therefore, I do not accept the strictures which have been suggested in regard to their conduct." The criticisms made by the appellants in the present case as to the way in which this motion was launched are, in my opinion, urjustified. Although counsel for the appellants submitted that the evidence of the trap orders should not have been admitted by the learned primary Judge, objection was not takeMat the hearing to the reception of that evidence; nor was this Court referred to any authority for the proposition that -ll- unfairness in the laying of trap orders or in the anstitution of proceedings consequent upon them leads to the inadmissibility of evidence relating to them. Plainly, any unfairness 1s relevant to the weight to be given to the evidence, especially 1f it 1s not corroborated from other sources. I turn to the critical question in the case namely, whether the steps taken by the appellants complied with the requirements of the undertaking. After the undertaking was given to the Court on 13 December 1979 by counsel for the appellants on their behalf they took steps to implement legal advice given by their solicitors. Mr. Bryant gave evidence that early in January 1980 the bar Managers were told to instruct all bar attendants that, if anybody asked for ""Orchy" orange juice, they were to be told that they sold only "Berri" not "Orchy". He said that a sign was prepared and placed near the "Bundy cards" where the staff signed on and off each shift. That sign instructed the staff:- "NOTICE 1. Before serving orange Juice to any customer who has ordered a particular brand of orange juice other than Berri, you must tell the customer that this hotel only sells Berri brand orange juice. 2. Specifically, any customer ordering ORCHY or Orchy orange juice, must be told that this hotel does not stock that brand. 3. Failure to comply with this notice may result in -12- dismissal. Bar Manager" Mr. Bryant said that the notice was put up near the "Bundy" in the first week in January and 1s still there. He said that the same notice was placed in the pay packets of every member of the staff. Also a document was placed on all the cash registers (there are about 12 of them) in the Hotel's bars in the first week of January and has since been retained there. It says:- "MEMO TO: ALL BAR STAFF FROM: MANAGER 1. Any customer ordering any brand of Orange Juice other than Berri Orange Juice must be told, before he is served his drink, that this hotel only serves Berri Orange Juice. 2. Specifically, any customers ordering Orchy or Orchy Orange Juice must be told that this hotel does not serve that product." Mr. Bryant said that the instructions given by him to the bar Managers and by them to the bar attendants are continuing instructions in the sense that the bar managers report back to him from time to time as to whether the anstructions are being followed; and that, in the result, customers who ask for "Orchy" are told that only "Berri" orange juice is sold. Notwithstanding what Mr. Bryant said, the evidence of the trap orders suggests that the instructions were not being carried out by the bar attendants. Further, a Miss Van Ness was called by the appellants to give -13- evidence. She has been employed by the second respondent as a bar attendant since about February this year. She said that if she hears a customer ask for "Orchy" orange Juice she tells him it 1s not supplied in the Hotel and that "Berri" 1s supplied. She said that a "poem" was recited by her and other bar attendants in this context: "We sell "Berri" and not "Orchy". The learned primary Judge held that Miss Van Ness did not always recite this poem when asked for "Orchy" orange juice. The evidence of Mr. Bryant and Miss Van Ness is not entirely consistent as to when certain of the controls were instituted; in particular, the placing of the sign near the "Bundy cards" and the inclusion of notices in the pay packets of staff. Miss Van Ness said that she received this notice in her pay envelope about a fortnight before she gave evidence (i.e. early June) but that she could not remember having received one earlier, although she may have done so. She said also that the notice near the "Bundy" cards was first put up about three weeks before she gave evidence (1.e. about late May). This evidence does not sit easily with the evidence of Mr. Bryant. The apparent inconsistency no doubt has a number of possible explanations but, in my opinion, the evidence does not enable the conclusion to be properly made that the relevant controls to which I have referred were introduced by the respondents as early as January 1980. I do not suggest that Mr. Bryant's evidence is untruthful; but the conflict on some of these matters between himself and Miss Van Ness; the failure of the system, at least when the trap orders were made; and the vague and general nature of the evidence lead on behalf of the -14- appellants to establish the introduction and monitoring of the system ,does not f111 me with any sense of satisfaction either that the system was introduced as early as January 1980 or that 1t was properly controlled or monitored. The learned primary Judge did not make specific findings on this aspect of the matter, but a reading of his judgment suggests to me that the reservations which I have expressed were probably shared by his Honour. Another step taken by the respondents to ensure compliance with the undertaking was the provision of badges to bar attendants being circular metal badges about 3 1/2 inches in diameter painted white and anscribed in red with the words "We sell Berri orange juice, not Orchy". Mr. Bryant said that they were first handed out when received by the appellants towards the end of January 1980. However he conceded that they were frequently not worn by bar attendants until the present proceedings were commenced and that he has taken steps to ensure that they are worn now. Miss Van Ness said that she has always worn the badge when on duty. The learned primary Judge held that the evidence of both Mr. Bryant and Miss Van Ness established that not all bar attendants wore the badges, and that Miss Van Ness wore hers on her waist which would not always be visible to customers at the bar. His Honour placed little weight upon the badges as constituting compliance with the terms of the undertaking. It has not been established that his Honour's finding in this respect should be interfered with. This leaves the remaining steps taken by the appellants to comply -15- with the undertaking namely, hanging signs from the ceiling of each of the three bars and placing signs on the top of fruit and soft drink dispensers. I shall refer to these in some detail because the outcome of the case turns on them. Signs were hung from the celling in front of the bar counters, a little above eye level, at intervals corresponding to the positions where customers ordered and were served with their drinks. The bars operate on a self-service principle. There 2S occasional service to the tables when business 18 slack. The signs are about sixteen inches long and four and one half inches wide and are printed on a whitish background. They bear the words "We sell Berri orange juice, not Orchy". The words "We Sell Berri" appear 1n black print, the words "orange juice" in brown print and the words "Not Orchy" in grey print. The word "Berri" 218 in larger print than any other word and 1s surrounded by an orange circle. The words "Not Orchy" are printed in grey and are fainter than any other words on the sign. There were three signs in the public bar, two in the "Upper Deck" bar and two in the "Tavern" bar. These signs were present at all times material to these proceedings. The evidence suggests that they could not be seen when standing directly at or leaning against the bar counters or from one or two positions in the bars. It is clear from the evidence, especially the evidence of Mr. Playfair, one of the law students employed by the solicitors for the respondents, and of Mr. Bryant that the signs were prominent and clearly ~16- visible to people standing or sitting in the bars or approaching the bar counters. Indeed the signs were visible to customers standing as close as six inches to the counters and as far away as the furthest walls of the bar. Few people congregated in the one or two corners of the bars from which the signs were not readily visible. The learned primary Judge concluded that the signs were more of an advertisement for "Berri" than an indication that "Orchy" was not sold. He said:- "It 1s not for me to give advice to the respondents but the least they should have done was to see to it that there was no disparity in the size, colour or boldness of the print when it came to the critical part of the message, namely, that the establishment did not sell 'orchy'. The grey print on the first type of sign is the most substantial offender in this respect. To be added to the considerations so far mentioned is the positioning of the signs. They could not be seen by every person in the respondents' bars nor would they necessarily come to the attention of customers when they approached the bars themselves." I have examined the signs both in Court during the hearing of the appeal and later in chambers. It 1s true that they are an advertisement for "Berri" orange juice. Indeed, the manufacturer of that brand of orange juice prepared the signs for the appellants. But that does not mean that they do not adequately inform people that ""Orchy" orange juice 1s not sold un the Hotel. It 1s true that the words "Not Orchy" are in grey print and are not as clear to the eye as the other words on the sign. They were cleverly got up and do not inspire one to ask for "Orchy". However, a glance at them, and that is all they would receive from most customers in -17- the Hotel's bars, tells one clearly enough that "Berri" orange juice 15s, and "Orchy", 18s not sold in the Hotel. There 1s no suggestion in the evidence that the words "Not Orchy" are otherwise than clearly visible to the eye. Indeed, the students who laid the trap orders saw them clearly before ordering their drinks.Nor must it be forgotten that the signs are placed prominently about the serving points in each of the bars. In addition to the signs that hang from the ceilings, the appellants placed free-standing signs on top of each of the dispensers behind the bar counters from which "Berri" orange Juice 1s sold. These signs are larger than the hanging signs and contain the same words as they do. The words "Not Orchy" and "We Sell Berri"" are printed in black print, the words "Orange Juice" being in an orange colour. The words "Not Orchy" are in the smallest print on the sign but are clearly visible to the eye both close up and from a distance. In the "Upper Deck" bar there are, in addition to the "Berri" orange juice dispensers, two soft drink dispensers. The same sign appeared on top of them. Those signs were visible to customers standing at the bar counters or otherwise within the bars. Doubtless, the most effective means of bringing to the attention of customers who ask for "Orchy" orange juice the fact that 1t 1s not sold in the Hotel is that they be told this by the bar attendants; but one cannot ignore the fact that the bar trade at the Hotel is large. It requires the employment of a large number of employees on shifts in the three bars and there 1s a high rate of turn-over among casual employees. However, the undertaking 1s complied with by the -18- appellants if the appropriate steps are taken not only after, but before, the request for "Orchy" 1s made. Hence the importance of the hanging signs and those placed on the "Berri" orange juice dispensers. These Signs in each of the bars were clearly visible to customers. They would tell anybody who wanted to order "Orchy" that he could not get it at the Hotel. It goes too far to say that the steps taken by the appellants in relation to the signs did not comply with the undertaking. They were not perfect; but they answer the description of steps taken to bring to the attention of persons requesting "Orchy" orange Juice that the orange juice intended to be supplied was not ""Orchy". If 1t were necessary to import standards of reasonableness or adequacy as to the steps to be taken by the appellants, and I do not think it 1s, then, for the reasons I have given, those standards have been complied with. In the result, I would allow the appeal, set aside the order of 25 June 1980, dismiss the motion of 3 June 1980 and order that the respondents pay the appellants' costs of the proceedings at first instance and of this appeal. | certify that this and the Aduentzen (1 7) preceding pages are a true ccry of the Reasons for Judgment herein of his Honour Mr Justice Lockhart. Life: Le. wendy v Assoc.ate Dated 27 Neu 1480