> THE FEDERAL COURT OF A Peers a LEW SOUTH WALES REGISTRY GENER, Hoe = re Hed —> = io " ee - No. GltS cf 123 weer eS 'TRADE PFACTICES COMMISF IN applicint THE EealING CREUTRE "PUY, LC Mitr wm First responisat ERTAN SUTTEPEIETD Second «<espenaent QRRIGEND TH vy hig Honcur Mr, Justice Beaumont , dane 4. Delete the words "Ac tb: Ltuce thesefor "Dusing". I Lad Associate to tue Hloncurrble ty, Fustace yes . HR Daa err \A ws a nC Si ili aeadatel CATCHWORDS ' Trade Practices (Restrictive) - Resale price maintenance - penalty - factors to be taken into account. Trade Practices Commission v. The Heating Centre Pty. Ltd. and Brian Butterfield No. G165 of 1983 Beaumont, J. 18 April 1985. Sydney. ee ter IN THE FEDERAL CoURT OF AUSTRALIA Ne te dal NEW SOUTH USLES FoCrIstTey ! No. Gleco of 1963 a] GENMSRAL DIVISTCGN }t ° PEIWEEN : TRADE PPACTICES COMMISSToN Applicant . aniD: THE HEATING CENTFS PTY. LIMITED : Pirst resyondentF , + omy - ANU: BRIAN BUTTERFIELD Second respondent a es rd * Judge making orders: Beaumont, Jd. - Date order mace: 18 April 1985. : Where made: Sydney oie THE COURT ORDERS THAT: i. I note the undertakings to the Court given on g g behalf of tha cespondents and contained in tne appeniix to e net name gg MEAS GMP ay wR EM My oe, . Order that the first respenaent pay o the ct i) + sig seen Commonwealth of Australi1a within 30 days a pecuniary penalty s eee ee ee ee ee ST -_ = oe Spe Pood see fe Te P + oes fa tie bAgaatl WE gh Dt SlS.0O0.UG in cessect wf the aatce.3 alles in paras.6-10 of the statement of claim. qT Ve ay thak hoa Feypot PA ae "yer ce feder that the fle3st ragpondenct are Connorwealth oF Australia within 3% iayv3 a gecuniary of €15,000.08 ain regoect of the marter3 alleyac in oarae. 14-13 cf the statesmen ~J 5. Ceder that pursuant to 3.7 the Commcenweaith of Australia azainst the firzt ces ct he sum ofr $40,009.90. von Lor 5. Order that the second resrcncent pay th of Australia within 30 days @ pecuniary alleged in paras.6-10 of the statement of claim. . Ocder chat the second respondent pay cee oe Pe en eine ~ erates see . to the penalty matrvers 1 Ay ny ry We em) fib] aa 42 bu us) a Gq ed 4 nn a Vv ae) a 42 or wo 6? mS 4 Leeda 4S Q v 7 nm a a uy et yo mi et ey 1 Bs [3 " th, 'D Cu vy H ~ Mai ba 4 mt i fe) tL fa m short . | nO ee & c & ny x | " 3 SS 4 ty 's) is) ne) 43 J 4 fad E1 sy a cm rl mot ia) moo pvp UO oF iP g ao rf ra 4 v Wt 4 rt 4 ™ fey & Qo OQ, «ih wi 4a OM Wy ted mw Loy in SS ee oO co] wont 4d c! rey sy oS fou i] C qu a tl j = & t~ SG im 43 fo) Lo uy ee es Es) ra ry at a m ny OF : ' . ial a Sa bau m3 ry oO a *) 4 Oo fe) od Day : i? ed a td uu hy ie] t u at Rey a yh yop aN So | m , A aber > pore any ' 1 7 i) oS Gs ay Lay j oO fi] wv oe We Far] ha a uu 43 . AD fod op Oo 7" dR © ad t Ju qd 13) i) qu 3 a 4) n i) wm Me Sy . i ba a ort tL as o ie) 4? ay 1 Q Qa vp fa] "2 12 od b ya LM oH ' acd 3 fa 1 ay wv fe) . a 5 {4 rat . ce cg isa) +3 m | c m ph Mm ff tt ia \ mood fis & bp n i 4 oO uu fy im rd Gy St 0 i at a wm 7 wa a wu Di dt Oo & Jd 3S ow ud | mm Db a ne ee =I ha m | fin a . c bev) c as id \ goo a4 =H g a 2 ! wv a ™ ZI 8S DS a na bE a ' S . ty cl Qo u | Qo tre O wv rd E 4+ vu . ri { - £ rt 42 w ba . ou } . ~ a yo ret . nm re] ia) baat ion t . m € wWo@ nm a} Bo tu ao to, Tetons a SAlaS, ann thei at PANT nia Ste thyads + wt" ch ne a: an " we a eB A Pan LT ee oS 4 . i sk Es 1 e t : : IN THE FEDERAL TIURT OF AUSTSALTA , 3 i ~ NEW SOUTH NALES RESTSTRY : ilo. S165 cof Lie3 . 1 F GENEPAL DIVIZTON \ F BETWEEN : DRADE PRACTICES COMMISSION ; Applicant : AND: THE HEATING CENTRE OTY. LIMITED z First respondent AND s BRIAN BUTTESPTELD g COPAM: Seaumont, d. é yOPAM DATED: 10 April 1985. ' REASONS FOR FULGMEN (ON PENALTY) i In a judgment given on 13 December 1984, ait was declared that the firat respondent had ensaged in the F practice of cesale © Tile Fice in cont & : Sct, 1974 ("tha Act") ' ~ OT se cere ce ner oe ee nee - oe eee - wee 2 ~~ % 2. £ : L$-18 and 22-25 vsspecctively o1 the ataterent of claim: 1t ' was further declarcad that the second respondent nad arzasd and abettea Was knoving by soncsenec in these x : . csontraventions .sea 3.758 at the Acvl. The questions of F penalties to be waid by the resrcndents ta the Conorvsonwealch 2) a : and of costs wers adfourned. Tha pactica have now adduced . evidence and made submissions on these questions. 2 Ths 4 convvaventiong of 3.48 establizhned ina the : proceedings involved dealings with thres retailers, The contraventions a:4 bFo be vecarded in the context cf the Toliowing gerarks made in "the esarlies 7 i po.18-19); : maié a séparata finding or : and alsewhore because the » t claim allages distinct wre the circumstances that the conduc relied on ain some cuses is tne same will. in accordance with the course * of authority on the quescion, be caken : into account on penalty. At any rate, for : the purpose cf fixing a pecuniary penalty, i the respondents' conduct. when viewed as a 5 whole. may be seen as the engagement in . the proscribed eractice of ceaale erica . maintenance during the pertod in question 2 rathec than a series of isclated : contraventions." . 2 See Trade Peactices Commission v. Mobil 911 . Australia Limited £1985 Colourshet Pty. Limited ( Hie eg gem ae ud w co Be Gu wo ire r rt ta un Lo] a ta c wt a) ' wi ron ~co tw Tah, ON Cnetnmaereine ene oe we ee ee ee - be arg "7 t b H i3 F t i the i3 : ween yr ence WIRE MEIN Ee emcee Pres Oe oF: Pe TRS Wd The general aAppesoach to the present type of rase vas expla Mobil, supra (at p.46,J07): y "The seriousness with which t gia a views a contravention af Pt or tf t may be founa in the mraximum penalty of $250.000 in the case of a body corporate. The penalty should be such as to dster net only the pacticular offender but others who may be aisposed to engage in pronibited conduct of a similar kind. The range of penalties imposed in cases of eesale price maintenanc may be gauged from the sc ; oungzel for the apoli : nalties as low a3 53 (Tra i Cosa. ss Lon : vy. Goranjs Pacific Pty. Utd, (1965) ATER - 40-430) anaes high as $120,000 Trade Eractices Commission v. Pre Industiies Sales Fty. Eta. 1.15378) ATPR 49-099), Clearly much depends on the delibecateness of the cfrfendsr's rondust, the exten: to Which resale price maintenance has sean carriea on and the damage caused to anyone by that conduct. Ac the sam2 tires one must mot losa sight of tne ract that sec. 76 of the Act 13 net directly concerned with comoensation; that is the cole of ec, 2. There is the wider puplic interest 1n ensuring that the provisions of the Act are observed. ane erio usness of a contcavention may aigo be measured by the dagree to which it was initiated or acquiesced in by senior management." In the present case, the conduct complained of was instigated by the second respondent as managing dicector of tig. 2 first raspondent, He victually the respondent, ae eee ee orn en ne vr a5 ole or at least Q fu ~ ct cu we of the first * f ean ANS poe gett re ten aati ee oR weeps we eo The extent - the restendents' eampalgn, 43 dsale: newsletter dac-. 1 March 11882 (see the sarlier reagons for dudamer: at pelo) inizcates that the respondents' policy . eliminacing tne peactice or Thecs are obvyirus difficulties in attempting te a a ne] ret aq t t fa a a CT ur 'g cr he} fh ps ea rae or ra pu x ul a a fat) financial loss was 3ut l=cad: Me. SGindsay was forced to treat with another vt il outlet to acquire peoducta at erices in excess of => wholesale acing rate (ae6 the earlier reasons at p.l- ; in both cases. ic is likely that 'D a ch EGY a ct re ep RK ry fi) fas eu a be ta ales . 1:2 lost Déecauze of the respondents' a a ec aod ee - 5. E, OTe URE, HE Lerusal tO supeiy. ¥ i 15 iunevitably obszu : Bpeculate as to chel k prices actually pari by z ¢ paid if che resvondents had mot sngaged in resale price " maintenance. wk £ io . - . In this connection. some cefecence should be made ° to othe size of the first vespondent's operaticns and its : vans market - that of slay ? £ eclod now in question, the combustion heaters oe ee ¥ units. In that parici, the % _ = a First rcespondent sola the following numbers of i combustion heaters to the retailers in vespest oF which ty contraventions of 5.48 have been made out: Seen vie ye F Mr, Lindsay - nil. Burning Log Fisaplace Foecialists Pty. Limited - § approximately 120 heaters, the ttajyoritvy of which were Kenc Tile Firss. peta a Goldan "Tecors Pty, FLinited - 24 neaters., the majority of which were Kent Tile Fires. L boo, t In the financial year ended 30 June 1982, ths total © value of sales of slow combustion heaters made by the first 5 res2ondent was s2,560,800.00. OF this amount. sales made to é Burning Log Ficeplace Specialists Pty. Limited and co Golden nm O. ? Decors Pty. Lirited totalled 3655,0U9.90 ace $13-000.00: respectively. The second respcniant estrzvuves taat. in this ; meriod, the rirst respondent anicyeca LS per ranc of the ; wholesale macket foc slow tombustion or sclid fui heaters. ~ On the other hand. as was said im the earlie: teasons for : jJuzgment, the Kent Tile Pare was a most aucecesoful produc Lh " and was, apparently, the market leader. 4 Reference should next be mace toa nuvbes of : matters which the cessondents ask to ACCOUNT : on the question of penalcy. in the first slace, they point : fo the coneiderable exeense (Soms 959,009.°0) alrealy : awneurred aun the defence of these proceedings. They alsa if vefae to the detrimental affect on the cariuct of the & ' business of the first respondent suftered as a re3ulr of the : tame committsd to tnese proceedings by Messrs, Butterfield. ; I propose to take both these matters ints account when fixing penalties. é Then the first cespondent says that ceagard should : be haa to its financial position in azsessing any penalty. Ps At the respondents' request, the details of the first . respondent's financial affairs have been kept confidential : buc it will sutftica for present purpoges ta gay that the - first vespondnt nas a comfortable surglus of assets over _ liabilities. It is trading profitably and, subject tc the 5 usual seagzonal downturn in the 3ummer moncna, there 3 no PATA ST omer « ezason bo expéct tnat lt wll. noc lontinue to yenerate it : - 4 reasonaple teaaing prefits. Cn the other hang, the Furst & $ respondant i3 owned and controlled Bs the gscon4t resconueny i . § whose Tinanctal position, now worsened by a divorces a : settlement, 15 such that he is unasle to iniert furthes $ - r Tunds tnto the first respondent. On the whols. [nf terug at : its capacity to pay a gukstarntial penalty, it wouli be fair + ' to treat the first rcespondent's business reed it) un * ct a its) fu un cw u aodevately succeszful ome and to a 1 ASS, FY tir if. o oO Lod Q Qo . Q a bs] a a] wu $a res) fo] het uu eT ie) us} fay es) o rs lon ie)5 oO a te ot pp fo rl $ of anount. *, mm 1 tak Lh 4 t Tne respondents also submit that the Coucc should % tawé ainto account in theirs favou: the fact thac. at the & & commencereant of the hearing, ths recpandents proferred an © 3 l= es rae! . undertaking to ths Court that they would not enyage in the A practice of cesale price maintsnancs (see the 23arlier Pa Tozrm appended to cthsse .aasons. I propose to cake this Bane B fu ct cr a ry joe is] ov [e) so a a [e) cct although it must Re visweain the = context of the earlier aggressive behaviour of the second i Fs respondent and the adverse findings I have made as to niz r % credit. In all the circumstances. I consider that an appropriate osnalty to be paid by ths firs c@cpondent is the sum of $40,000.0¢, To reflect the selative yravity of ] PO eee ett Le a te rer rt eee ~~ one me ro nee ion) the contraventions., TI prepose to apsortiin tie seraltyv as TOLLOWS : as co the aealings with Mr. Lindsay and burmirg Log Fireplace Spaciaiists Pr. Limiried a sanalc-y an the sum a] i] a o rn uu as} ow Mt in pe st BH fa wb fom i) GS Dp Dp w am cr mY b io] cr pe i) ue co '3 a My, ur re an . oO c oO Ps eee el 2 alte See As to the serond respondent, I sronecses to take inte : account in his favour the amount of the penalties ordered to i e : t be said by the first respondent. At the same Cime, 3ince he is alone was responsible for the contraven ct i % a n a. fu i Q th iy M x D F; must bear gome penalty himself. in the circumstances. I ! C c : consider that a penalty of 33.500.00 is proses. I would i eroposs to aoportion the senalty as follows: a5 to the : dezlings with My Lindsay and Burning logy FPiraplace r 4 Seecialists Fry. Limited a penalty in the tum of 31,250.90 : in each case; as to the dealings with Golden Cscors Ptr. ' Limited a penalty in the sum oF $1,000.00. " é I should add that in his afftdavit sworn 4 March ; 1985 and vead on the issue of penalty, I cejected avidence 5 from the second resvondent ta the erfect that the present '- litigation contributed to the breakdown of his rarriage. In f my view, the sentence in question (see para.l6 of the : affidavit) vas bad in form as stating a conclusion but. in any event, it is, in my view, an irrelevant consideration 390 : fay as concerns penaity in proceedings of the present kind. Seren + ne ee ee sot tees ce ee - Le Sp B . by . tt a te £ r. " te Ey Fad — sf rivets . o <7 .m r 7 a > . = ~ ee " Costjs wera vegarved foc fFuetuer asyonenc. The a oe > - . es) 4c = owe ede eo Phesas cre 4 . g2sition 15 thac the applicant has succeeded in thease cur of . tne five cmints ff has vharyed against tas .e¢ scandens Ter ¥ *E =-~77% $n - a3 a+ - ot - ay soapy "= : all the circumstances, 2 thtuk that a falr aptertionmesns at r, costs would be achiaved aif I we ob we cue rs AD in ti oO S, mm ei mts pay ons-hailt of the a»pplicart's costa, on 13 See ye nt: ra cee} % t a wo 3. Order that the first respondent pay TO Th Commonvealth of Australia wit et eee by f. D Gs oa far a] tg wa fe if a c oe] i ty mr4 fu cay » rey fo ct ng oF $15,000.00 in vespect of the matters alleged ayainst it in paraz.14-18 of the statement of claim. € a) ess rh cae "ede Tarte. 2g pueda oy egies tye Pop fer iat mye sery, wel neem UR HYO BeBN a eee OT MGRE SO REE protean Se ae ote. Ae nw game eet we mA 19, +. Order that tae first vespoauent to tne Cemmenvealth of Austcalia within 3G days A pecunsary penalty OF $10,002,U9 adn saspect of the matter: alleres against it in paras.,22-25 of the statement of clain. 5. Order that pursuant to s.77 of the Trede Trectices Act, 1974 judgrent be antered for the applicant on bahalf of the Commonwealth of Australia against the first respondent e, Order that the Secomt respondent rcavy to the Comeonvealth of Australia within 30 davs a secuntacy penalty 7. Order that the second esspondent pay to thea Cormonwealth of Aust¢faita within 30 days 4 pecuniary penaity of 31,250.00 in respect of his involvement in the Es Su ct cot oO rs wn allegqad in paras.14-18 of the statement of claim. om , Order that the second respondent pay to the Commonwealth of Australia within 30 days a pecuniary penaity of $1,000.00 in respect of his involvemenc in ths matters alleged in paras.22-25 of the statement of clair. ~ i ~ eee rename Os FTES BT pe SF ATES "mmr wt ee a pry ateeten AOMe wae yet rot gt fees Seu a wee oe ale Oeaerc that UP SUATC vO €.77 of the Trade Fy a ices c = Dur =F FAD = Ac fa 974 aqmenct 9s entered For ths APpP.tlant a >. u =t H BS vadme 5 2 cates 2 way a2 Tiana = 10, Order applicant's costs. { certify that this and the \0 preceding pages aro qt"vo Cupy of the reasons for judgmert here:n of Tire ifa.u :abie Mr Justice Beat'mont HK Neues Dated 1G@-4-5S Associate Ree et ene ee re me ee -- -: onie-nall of the nN a! . ( ae L i A Lf _ 4 Jk . \ 7 ¥\- > (~ hee < « tN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTPY GENERAL DIVISION NO. G165 of 1983 BETWEEN: TRADE PRACTICES COMMISSION Applicant AND: THE HEATING CENTRE PTY. LIMITED First Respondent BRIAN BUTTERFIELD Second Respondent UNDERTAKINGS TO THE COURT 1. The first respondent by its Counsel undertakes to the Court that 1t will not by its servants or agents or otherwise howsoever engage in the practice of resale price maintenance in contravention of the Trade Practices Act, 1974 as amended in relation to free standing, solid fuel, slow combustion heaters identified by the name "Kent Tile Fire" and Flue Kits therefor. 2. The second respondent by his Counsel undertakes to the Court- (a) Not to be knowingly concerned in or party to the practice of resale price maintenance in contravention of the Trade Practices Act, 1974 as amended in relation to free standing, solid fuel, slow combustion heaters identified by the name "Kent Tile Fire" and Flue kits therefor; and wowe wee a wy ae aoe "UROL DUS At CERAM TE STFA CREW "MAST AT OED Se Mh RARE San ALL. ME De ARTI RAT USFS ORDEAL CREE ORE TT © PETE TE ARR Lhe ae (b) Not to aid, abet counsel or procure or induce or attempt to induce such conduct by the first respondent in relation to the said heaters identified by the name "Kent Tile Fire" and Flue Kits therefor. ee eneah OE ete tart ton oe Reba 1! TAIRA a SP ret TER pee eS LSP 2 eae Sree MRS METER UF CDE et BaF FR TEN