NOT FOR DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION No. WA Gl of 1987 BETWEEN TRADE PRACTICES COMMISSION Applicant and NORTON HOLDINGS PTY. LIMITED First Respondent and EUAN ANGUS McKENZIE Second Respondent CORAM: TOOHEY J. 12 January 1987 : -- EX TEMPORE REASONS FOR JUDGMENT Last week the Court granted an injunction to restrain the respondents from operating two accounts; one, an account with . the Commonwealth Trading Bank and the other, an account with the First Federal Building Society. The Trade Practices Commission seeks an extension of those injunctions, and also, by way of interlocutory relief, the granting of injunctions against the respondents restraining them from promoting a scheme which goes by various names, but can be conveniently referred to as the Metro Marketing Scheme. I am satisfied that the Commission has demonstrated not only that there is a serious question to be tried as to misleading or deceptive conduct on the part of the respondents but that there is a prima facie case. Mr. McKenzie, the second respondent, has spoken at some length about the way in which the scheme works, but nothing that he has said has really dealt with the essential complaint made by the Commission. This is that the advertisements placed by the respondents, and the documents which are sent to persons who respond to those advertisements, suggest activities to be carried out, which are quite different from those which the person responding learns when, and only when, he or she has paid $40. And clearly the amounts which a person may earn cannot be derived from filling envelopes, as the advertisement suggests; nor can they be earned merely by doing what is set out in the exhibits PJD 8 and PJD 9. It only becomes apparent when one has paid one's $40 that moneys can only be earned by others responding ina similar way. I am quite satisfied that the advertisements and the initial documents are misleading or deceptive and indeed that they almost certainly contravene other sections of the Trade Practices Act 1974. The question then 1s what relief should be granted to the Commission by way of injunctions at this stage. So far as the existing injunctions are concerned, they really are subsumed in what 1s sought in the application itself, and so 1t 1S enough to turn to the aunterlocutory relief which is claimed in the injunction. As aqainst the first respondent it seems to me that an injunction in terms of para.(a) is appropriate with one or two qualifications. I would grant an injunction pending the hearing of this application or until further order - and, interpolating, I do that to give the first respondent an opportunity to return to the Court if it can demonstrate that the injunction should not continue until trial. I would also delete the words that appear at the foot of p.3, "or otherwise howsoever", because I think that casts some cloud of uncertainty over what it is that the respondents may do or not do. Otherwise the injunction will lie in terms of the application. I have expressed some doubts about the operation of the word "promoting", but it seems to me that it is probably as appropriate as any in the circumstances. For myself I cannot think of a more satisfactory way of expressing the injunction. So far as para.(b) is concerned, there will also be an injunction in the terms of that paragraph. Mr. McKenzie has expressed a concern as to the effect of an injunction upon the other operations with which he is involved. It seems to me that there is no reason why the injunction should have that result. There are various ways in which, through the bank and the building society, he can ensure that activities unrelated to those complained of by the Commission may be the subject of separate accounts. There is not a great deal to be achieved, it is true, in freezing either account, given the smallness of the amount standing to the credit in each case. But nevertheless it is an inference - indeed it is more than an inference because of what was said by Mr. McKenzie - that a substantial amount of the moneys paid into both accounts were from the operation of the scheme. With a view to preserving those moneys as best it can be done in the circumstances and to provide for compensation, inadequate though that may be if the Commission succeeds in its substantive application, I am satisfied that an injunction should lie in terms of para.(b). As against the second respondent, much of what I have said in regard to the first respondent applies ~ equally. Again though I would insert after the words, "application" in line 2, the words, "or until further order" so that Mr. McKenzie can return to the Court if he seeks to vary or set aside the terms of the injunction. Equally an injunction should lie in terms of para.(b). I should add that Mr. McKenzie gave certain undertakings, not in a formal way, as to what he could do regarding shelving the operation of the scheme for the time being and returning moneys that he may receive between now and the time this matter comes on for hearing. Nothing that I have said in the course of these reasons and nothing in the order I propose to make should dissuade him from doing that. Indeed he may need to do 1t in any event to comply with the terms of the injunction and to ensure that he is not in breach of it. But given the stage at which those matters were referred to by him and the concern that appears from the documents filed by the Commission, it seems to me that the injunctions should lie. Those matters to which Mr. McKenzie has referred, he can certainly put into operation if he so chooses. There will be a further order that the costs of today's hearing he reserved. I certify that this and the preceding 4 pages are a true copy of the reasons for . : judgment herein of the . - Honourable Mr. Justice Toohey. . -. Associate Dated: 12 January 1987