CATCRWORODS TRADE PRACTICES - publication of advertisement seeking person for employment - false or misleading in a material particular ~ plea of guilty - pecuniary penalty - relevant considerations in imposition of pecuniary penalty - injunction - whether imprisonment should be imposed in default of payment of penalty Trade Practices Act 1974 s.53B PETER JAMES DAWSON v. AUSTRALIAN CONSOLIDATED RESERVES PTY. LTD. PETER JAMES DAWSON v. BRETT JAMES CLUGSTON THE TRADE PRACTICES COMMISSION v. AUSTRALIAN CONSOLIDATED RESERVES PTY. LTD., BRETT JAMES CLUGSTON, ANTHONY JOHN COOK Nos. WAG 21 of 1982 WAG 22 of 1982 WAG 10 of 1983 Toohey J. Perth 13 July 1983 IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION Nos. WAG 21 of 1982 WAG 22 of 1982 WAG 10 of 1983 BETWEEN: (No. WAG 21 of 1982) PETER JAMES DAWSON Prosecutor and AUSTRALIAN CONSOLIDATED RESERVES PTY. LTD. Defendant (No. WAG 22 of 1982) PETER JAMES DAWSON Prosecutor and BRETT JAMES CLUGSTON Defendant (No. WAG 10 of 1983) THE TRADE PRACTICES COMMISSION Applicant and AUSTRALIAN CONSOLIDATED RESERVES PTY. LTD. First Respondent BRETT JAMES CLUGSTON Second Respondent ANTHONY JOHN COOK Third Respondent Oo R D_ E R JUDGE MAKING ORDER Toohey J. DATE OF ORDER 13 July 1983 WHERE MADE 3 Perth THE COURT ORDERS THAT : 1. The defendant Australian Consolidated Reserves Pty. Ltd. 1s convicted of committing the contravention of s.53B of the Trade Practices Act 1974 more particularly referred to in charge WAG 21 of 1982. 2. The defendant Australian Consolidated Reserves Pty. Ltd. is ordered to pay a fine of $2000 in respect of the contravention referred to in that charge. 3. The defendant Brett James Clugston is convicted of committing the contravention of s.53B of the Trade Practices Act 1974 more particularly referred to in charge WAG 22 of 1982. 4. The defendant Brett James Clugston is ordered to pay a fine of $1000 in respect of the contravention referred to in that charge. 5. The defendants will pay the fines to the District Registrar of this court within 21 days of this day. 6. The respective defendants will pay to the prosecutor the costs of the proceedings in charges WAG 21 of 1982 and WAG 22 of 1982 other than the costs of the hearing of 9 February 1983, those costs to be taxed. Liberty to the prosecutor to apply within 21 days for an order against the defendant Brett James Clugston for imprisonment in default of payment of the fine imposed in charge WAG 21 of 1982. In application WAG 10 of 1983 there be injunctions perpetually restraining {a) the first respondent or any of the respondent's directors, officers, servants or agents from breaching s.53B of the Trade Practices Act 1974 by publishing or causing to be published an advertisement seeking a person or persons for employment, whether by the respondent or by any other person, that contains a statement that is false or misleading in a material particular. (b) the second respondent as a director, officer, servant or agent of Australian Consolidated Reserves Pty. Ltd. or any other corporation from counselling, inducing or being knowingly concerned in a contravention by any such corporation of s.53B of the Trade Practices Act 1974 by publishing or causing to be published an advertisement seeking a person or persons for employment, whether by the respondent or by any other person, that contains a statement that is false or misleading in a material particular. (c) the third respondent as a director, officer, servant or agent of Australian Consolidated Reserves Pty. Ltd. or any other corporation from counselling, inducing or being knowingly concerned in a contravention by any such corporation of s.53B of the Trade Practices Act 1974 by publishing or causing to be published an advertisement seeking a person or persons for employment, whether by the respondent or by any other person, that contains a statement that is false or misleading 1n a material particular. 9. The respondents pay the costs of application WAG 10 of 1983. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION Nos. WAG 21 of 1982 WAG 22 of 1982 WAG 10 of 1983 BETWEEN: (No. WAG 21 of 1982) PETER JAMES DAWSON Prosecutor and AUSTRALIAN CONSOLIDATED RESERVES PTY. LTD. Defendant (No. WAG 22 of 1982) PETER JAMES DAWSON Prosecutor and BRETT JAMES CLUGSTON Defendant (No. WAG 10 of 1983) THE TRADE PRACTICES COMMISSION Applicant and AUSTRALIAN CONSOLIDATED RESERVES PTY. LTD. First Respondent BRETT JAMES CLUGSTON Second Respondent ANTHONY JOHN COOK Third Respondent CORAM: TOOHEY J. 13 JULY 1983 REASONS FOR JUDGMENT There are three matters before the court. By consent they were heard together. Application WA No. G21 of 1982 alleges an offence by Australian Consolidated Reserves Pty. Ltd. ("the company") against the Trade Practices Act 1974, in particular that the defendant, trading as Bridgewater Importers, contravened s.53B of the Act in that 1t "did cause to be published an advertisement seeking a person for employment by the said Australian Consolidated Reserves Pty. Ltd. which advertisement did contain a statement that was misleading in a material particular". To that allegation the company has pleaded guilty. Application WA No. G22 of 1982 alleges that Brett James Clugston was knowingly concerned in the commission of an offence against a law of the Commonwealth, the offence in question being that alleged against the company. To that allegation Mr. Clugston, a director of the company, has pleaded guilty. Some time after the lodging of these informations the Trade Practices Commission sought an injunction against the company, against Mr. Clugston as "a director, officer, servant or agent" of the company and against Anthony John Cook as "a director, officer, servant or agent" of the company. The three respondents have consented to an order in terms of the application but I shall say something more of those terms later. These matters have had a long and unnecessarily tortuous history, considerably inflating the time and therefore the costs involved. Because I have taken the question of costs into account in arriving at appropriate penalties to be amposed, and with a view to avoiding a repetition of the way in which these matters have been approached, I shall say something of that history. The unformations were lodged on 14 July 1982. There was a directions hearing on 26 July at which the only order requested was that a date for the hearing of the summonses be fixed by the District Registrar. That order was made. Later when a date was sought by the parties, one was fixed for 16 December 1982. On that day each defendant pleaded guiity to the charge against it and him respectively. At the request of the parties the matters were adjourned until 9 February 1983 to enable affidavits to be filed pursuant to order 49 rule 5 of the Federal Court Rules and submissions to be made. When the matters came on for hearing on 9 February the court was informed that there had been some delay in the preparation of affidavits to be filed on behalf of the prosecutor, that these had only recently been made available to the defendants' counsel and that it was agreed that counsel would need time to consider whether answering affidavits should be filed. The court expressed its concern that,a date having been fixed two months in advance, the necessary affidavits had not been filed. The matters were then adjourned. They were relisted for hearing on 10 March 1983. Meanwhile on 4 March an application for an injunction against the defendants and against Mr. Cook was filed. The three matters came on for hearing on 10 March. On this occasion affidavits had been filed on behalf of the prosecutor but none on behalf of the defendants. At the hearing counsel for the defendants tendered an affidavit sworn by Mr. Clugston and offered as evidence in each of the prosecutions. During the course of submissions by counsel for the prosecutor, complaint was made by the defendants' counsel that allegations were being made against the defendants that went beyond the offences with which they had been charged and to which they had pleaded guilty. In the end counsel for the defendants sought a further adjournment on the ground that if the court was to be asked to take notice of some of the facts alleged in the affidavits, being facts said to go beyond the scope of the offences, further material in answer should be filed on behalf of the defendants. There was some debate between counsel as to 4. when the prosecutor's affidavits had been made available, part of the problem being that they had been offered to the defendants originally in an unsworn form. It was undesirable to proceed to conclude the matter on such an unsatisfactory basis and the two summonses and the application for an injunction were further adjourned. All three matters came on for hearing again on 24 June 1983 when submissions were concluded and the court reserved its decision on the question of penalty. In the ordinary course these matters would have been listed once and, pleas of guilty having been entered, a date would have been fixed for the filing of affidavits and the making of submissions. However, for the reasons given, the parties have been before the court on five occasions. Furthermore, the prosecutor in the offence proceedings has failed affidavits that both in number and volume go beyond what the court might reasonably expect. In the injunction proceedings the applicant has filed an affidavit which itself is not so long but which has annexed to it a mass of material. There are allegations against the defendants delving into areas of their conduct that, in my view, are not relevant to the offences themselves or to the circumstances surrounding them. It 1s important that these matters be seen in their true context. While I have no sympathy for the defendants so far as the offences themselves are concerned, they might well have been surprised, having pleaded guilty to the charges against them, at the nature and extent of the affidavits then filed on behalf of the prosecutor. . What is alleged against the company is that on 15 July 1981 it caused to be published in the West Australian newspaper under the employment classification an advertisement which included the following : "A GIRL FRIDAY (And 4% other days a week) Young super girl 18/25 yrs with silver tongue and golden mouth to work in direct customer liaison and orders in the RETAIL DIVISION of a large Australian importer. Envisaged to $260 pw initially. Good telephone manner Mrs Wilson 362 2955 " The advertisement was alleged to be misleading in the following respects and the company, by its plea of guilty, must be taken to have acknowledged that the advertisement was so misleading. There was in fact no vacancy for a "girl friday", for which there could be a successful applicant; there was no vacancy for which a successful applicant would be engaged as an employee; there was no vacancy for which a successful applicant would be engaged at an initial wage of $260 a week; there was no vacancy for which a successful applicant would be engaged in work as an employee for 54 days a week; there was no vacancy for which a successful applicant would be engaged to work in the retail division of a large Australian importer; and finally the advertisement failed to disclose that what the company was seeking was someone to operate as its agent, to be remunerated by commissions earned on sales made of certain goods the company was handling. By his plea of guilty Mr. Clugston admitted being knowingly concerned in the publication of the advertisement and in its misleading nature. Not only was the advertisement misleading in the respects indicated but there were aspects associated with an application for the position that give rise to some concern. A picture emerges from the affidavit of Denise Clark, a young woman who responded to the advertisement of 15 July. When she telephoned to enquire about the advertisment she received rather evasive replies and was asked to attend for an interview. When she did so, she along with a number of other persons who were present were handed forms in which they were asked certain particulars about themselves. At the interview that followed she was told that the work involved meeting people, perhaps handing out pamphlets and the handling of various goods. She was also told that she would be paid a commission for the first 4 or 5 weeks, 7. then a retainer if considered suitable. But in that event a fee of $35 was payable. The next day she was telephoned by Robert John Ingram, then a sales representative, to say that she was to be given a chance and was to attend for a further interview and to bring $35 with her. The $35 was said to be by way of insurance against damage to the goods she would be handling. At the second interview she repeated to Ingram a request she had made earlier for information about wages but again received the most evasive of replies. In the end she signed the form and paid the $35. She then received what might loosely be described as a training session at which it was at last made clear that the company was operating in the direct selling of various household articles and products. By this time it was apparent to Miss Clark that the advertised position had very little to do with the notion of a "girl friday". She said she did not propose to continue and asked for her money back. She asked several times but was told that it was in a night safe and that no refund could be made until the directors had been consulted. The next day she demanded a refund of the $35 but did not receive it. With some additions, that might be thought to be an adequate statement of the offences with which the defendants have been charged. It is, I think, proper to have regard to the fact that the advertisement was placed at a time of relatively high unemployment and was likely to attract those who were desperate for work and who might be unsophisticated in their reaction to the advertisement. They were likely to be people unable to afford the $35 demanded of them. But the material filed on behalf of the prosecutor goes beyond what I regard as necessary to inform the court of relevant circumstances and to furnish the court with the material appropriate to determine penalties. A lengthy affidavit sworn by the prosecutor in each of the prosecutions refers to other complaints made to the Trade Practices Commission concerning advertisements by the company, advertisements different to the one the subject of this prosecution. It also refers to complaints made to the Commission's Hobart office and to the Commissioner for Consumer Affairs in Western Australia, Annexed to the prosecutor's affidavit is a great deal of Material mainly bearing upon the other complaints and describing, in critical terms, the activities of the company. Other affidavits relate to these matters and to the common understanding of the term "girl friday". Several affidavits have been filed on behalf of the defendants. In the main they seek to explain that the defendants did not believe the advertisement to be misleading. The tenor of the affidavits is such as to lead one to conclude that the company and Mr. Clugston have much to learn about standards of commercial morality, frankness and fair dealing. This impression was confirmed when Mr. Clugston, at the request of the prosecutor, was cross-examined on his affidavits. Perhaps the most that can be said is that the defendants have now learnt a lesson. As indicated earlier, the respondents to application WAG 10 of 1983 have consented to an injunction in terms of the application. That application 1s supported by an affidavit sworn by Peter James Dawson, an officer of the Trade Practices Commission and the prosecutor in the other matters before the court. It has annexed to it a great deal of material. Both affidavit and material are for the most part identical with Mr. Dawson's affidavits and the exhibits thereto in the prosecutions. However it does go further by referring to some 91 advertisements published on behalf of the company in the employment classification of the West Australian between August 1982 and January 1983. These advertisements are different from the one the subject of the prosecutions, but are said by the Trade Practices Commission to be misleading in suggesting employment and wages when no more than a commission arrangement was intended. Mr. Dawson's affidavit also refers to questions asked in the Legislative Assembly and Legislative Council of the Western Australian Parliament, the answers to which contain critical references to 10. the activities of Bridgewater Importers. While I have reservations about the relevance of the parliamentary material, evidence of continuing advertise- ments by the company is material to the granting of an injunction, had such a step been opposed. Even though the respondents have consented to an injunction, it is also relevant when considering the scope of the injunction sought by the Commission. The application claims the following relief. (a) An injunction restraining the company, its directors officers servants or agents from breaching s.53B of the Trade Practices Act by publishing an advertisement seeking a person for employment, that contains a statement that is false or misleading in a material particular. (b) An injunction restraining Mr. Clugston, as a director, officer, servant or agent of the company or any other corporation, from counselling, inducing, or being knowingly concerned in a contravention by any such corporation of s.53B by an advertisement of the sort described in para. (a). (c) An injunction restraining Mr. Cook in similar terms. Having regard to the material in Mr. Dawson's affidavit, I am satisfied that the injunction referred to in para. {a) above is appropriate. 11. Having regard to Mr. Dawson's affidavit concerning the continuing activities of the company and the involvement of Mr. Clugston and Mr. Cook as directors, I am also satisfied that the injunctions sought against them are appropriate. In each case the injunction is in its terms directed at the particular respondent as a director, officer, servant or agent of the company or of any other corporation; it is not directed at them in any other capacity. The prosecutor acknowledged that the willingness of the company and Mr. Clugston to consent to an injunction from the time one was sought 1s a mitigating factor in considering the appropriate penalties to be imposed. I accept that approach. It is also a relevant consideration that the defendants will be ordered to pay the costs of the prosecutions and of the injunction application. These, in addition to the costs which they will have to pay to their own solicitors, will be considerable. I also take into account that from the outset the defendants pleaded guilty to the charges against them, that there has already been considerable publicity surrounding the prosecutions and no doubt there will be more following the imposition of penalties. The fact remains that the defendants did publish a misleading advertisement and even if one disregards entirely the allegations made in respect of other advertisements, that in question was one 12. likely to mislead a section of the public, particularly vulnerable by reason of the unemployment situation. I propose that there should be a fine of $2,000 against the company and a fine of $1,000 against Mr. Clugston, in addition to which they will be ordered to pay the costs of the prosecutions other than the costs of the hearing on 9 February 1983, which was adjourned because of the prosecutor's failure to provide the necessary affidavits. In application WAG 10 of 1983 there will be an order for injunctions in terms of the application and an order that the respondents pay the costs of those proceedings. In some prosecutions before the Federal Court, a question has arisen as to the power and obligation of the court to impose a penalty of imprisonment in default of payment of a fine imposed upon an individual. The matter was most recently discussed by Fisher J. in Reardon v. Aquajet Holdings (SA) Pty. Ltd. (1982) ATPR 40-328. As an appeal to the High Court is pending in one of those prosecutions, I propose to adopt the course taken by Fisher J. and to give the prosecutor liberty to apply within 21 days for an order against the defendant Clugston for imprisonment in default of payment of his fine. I certify that this and the eleven preceding pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Toohey AsSociate Dated: 13 July 1983