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CATCHWORDS
Trade Practices - Prosecution - representations that goods
"usually" or "normally sell at about" a specified price -
whether referring to prices at which goods usually offered by
defendant, or to "nominal retail price" in a particular
market or retail value generally - allegedly false
representation as to "current value" in "certificates of
origin" - whether representations of "particular standard" or
"quality" - whether a case to answer - Trade Practices Act
1974 (Cth) ss.53(a), 53(e), 79 - Crimes Act 1914 (Cth) s.5
Trade Practices Act 1974 (Cth): ss..53(a), 79
Crimes Act 1914 (Cth): s.5
VG Nos. 86,94,98,122,123, 124, 125, 126, 127, 128, 129, 130,
131, 132, 133, 134, 135, 136 of 1984
ALAN RAYMOND DUCRET v. CHAUDHARY'S ORIENTAL CARPET PALACE
PTY. LTD.
ALAN RAYMOND DUCRET v. S. T. CHAUDHARY
Ryan J.
17 July 1987
Melbourne
eon
on
ah en ae are ateene an meeetocent
a >
Spe eee
. a rs
—
ae ee -
-—~----—I
IN THE FEDERAL COURT OF AUSTRALTA
teors un
VICTORIA DISTRICT REGISTRY VG Nos. 86,94,98,122,123,
)
)
)
) 124, 125, 126, 127, 128,
)
)
GENERAL DIVISTON 129, 130, 131, 132, 133,
134, 135, 136 of 1984
Between: ALAN RAYMOND DUCRET
(Prosecutor)
ve
And: CHAUDHARY'S ORIENTAL
CARPET PALACE PTY. LTD.
am en ee
fu a,
navy
Thee
(Defendant)
(VG Nos.94,98,122,123,
124,125.126.127,128,129
and 130 of 1984)
Between: ALAN RAYMOND DUCRET
(Prosecutor)
Lat POTD eee et Se
iG >
And: S. I. CHAUDHARY
e
(Defendant )
»
(VG Nos. 86, 131, 132,
133, 134, 135, 136 of
1984)
Judge Making Order: Ryan J.
4 riot
Date of Order: 17 July 1987
Where Made: Melbourne :
COIS I gee
> * ve
, .
MINUTES OF ORDER
ai
THE COURT ORDERS THAT:
ery or at
i ate
eats
TI
t
2 mes
-FR
—— — =~ ea
1S]
Ll. The summonses numbered VG 86, 94, 98, 123, 125, 127,
128, 129, 130, 131, 132, 133, 134 and 136 be dismissed.
2. The prosecution pay the defendants' costs reserved by
Keely J. on 9 December 1985 and three-quarters of the
defendants' other costs.
NOTE: Settlement and entry of orders is dealt with in Order h.
36 of the Federal Court Rules. f.
f
>
'
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C
t
&
:
€
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VG Nos. 86,94,98,122,123,
GENERAL DIVISION
129, 130, 131, 132, 133,
Coram:
Date:
)
) 124, 125, 126, 127, 128,
)
} 134, 135, 136 of 1984
Between: ALAN RAYMOND DUCRET
(Prosecutor)
And: CHAUDHARY'S ORIENTAL
CARPET PALACE PTY. LTD.
(Defendant)
(VG Nos.94,98,122,123,
124,125.126.127,128,129
and 130 of 1984)
Between: ALAN RAYMOND DUCRET
(Prosecutor)
And: S. I. CHAUDHARY
(Defendant)
(VG Nos. 86, 131, 132,
133, 134, 135, 136)
Ryan J.
17 July 1987
REASONS FOR JUDGMENT
On 30 April 1983 there was published in the "Age"
Newspaper an "advertising feature" entitled "Chaudhary's
Persian Rugs". It consisted of four articles of an editorial
kind on p.15 of that issue of the newspaper which were
accompanied by two photographs and a cartoon. The whole of
the editorial content was admittedly published with the
knowledge and approval of Mr. Chaudhary on behalf of the
Company. The first article under the heading "A 400-year-old
family carpet company offers value for money", traced the
background to the business developed by Mr. Shahid Chaudhary
as a trader in Persian and oriental rugs. Mr. Chaudhary is
the defendant against whom the summonses numbered VG 86, 131,
132, 133, 134, 135 and 136 have been issued on information
out of this Court pursuant to the Trade Practices Act 1974
("the Act"). The remaining summonses presently before the
Court have been issued, also pursuant to the Act, against
Chaudhary's Oriental Carpet Palace Pty. Ltd. ("the Company")
of which Mr. Chaudhary is, and has at all relevant times been
the managing director.
In that first article on p.15 of the "Age" for 30 April
1983 the following passage appeared:
"Always ambitious to progress and to sell the
carpets -— the young Shahid Chaudhary established
his own showroom in Singapore with nine carpets
and about the equivalent of $5000 Australian in
hand.
In his first year of business he lost about
$27,000, he said, 'because I was trying to sell
to the public instead of to wholesalers. The
dealers opposed me at every angle'.
In his second year he broke even
--. while still
selling direct to the public.
In his-third"year, still selling to the public, he —~
showed a profit of 3 per cent and a turnover of
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the equivalent of $2 million, and about 10 times
more business than during year two.
His theory is: 'If you sell for a small profit
margin, at the end of the rainbow you find
success.'
He said he learnt that technique by understanding
the advertising styles and marketing policies of
large chain stores and supermarkets which work on
small margins to make big profits."
A second article on the same page described the development
of traditional patterns of so-called Persian rugs. and
techniques used in making them. A third article contained
recommendations for the cleaning of carpets and a guide to
indications of their quality. The fourth article was
directed specifically to a bargain sale which the Company was
to commence on the day of publication. It is appropriate to
set out the text of that article in full:
"BARGAINS TO BE FOUND AT THE CHAUDHARY CARPET AND
RUG SALE
Prices have been slashed on Persian and oriental
carpets and rugs at the Chaudhary Oriental Carpet
Company retail outlet in High Street, Armadale.
The company's managing director, Mr. Shahid
Chaudhary, said prices had been cut by up to 95
per cent on some of the 18,000 carpets that would
be offered to the public when his store opens at
9 am today.
Mr. Chaudhary is flying in staff from his other
stores around Australia to cope with the
anticipated crowds and security guards have been
hired to control the queues allowing them into
the store in manageable numbers and to keep an
eye on the carpet stock that will be displayed
bazaar- style on the pavement outside.
The experienced staff of 18 will be on hand to
advise buyers on their choice and to help in
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selection. Mr. Chaudhary believes the sale,
which will run until all the sale stock has been
sold, 18 the biggest in history.
'The carpets represent the stock of a leading
department store and are worth millions of
dollars', he said. 'The present distributors
have been told by suppliers to clear them as
quickly as possible, selling them at a loss if
need be. The cost of the wool in many now on
offer is worth more than the price we are asking
for the finished rug."
As an example of the bargains to be found in his
store he said there were 2000 small rugs each
originally priced at $250 being 'given away' at
$12.50.
Genuine Iranian Harun Kashans, sized 6 ft by 4 ft,
have been reduced from $4000 to $497 each.
Princess Bokhara hall-way runners, in all colours
and sizes and carrying life-time guarantees have
been cut from $985 to $297 each. Pak Tree of
Life rugs, 6 ft by 4 £t, in a range of colours
and featuring tree and bird designs, have been
reduced from $985 to $199 each.
Mr. Chaudhary expects crowds of thousands' to
attend his sale and he intends keeping the store
open from 9 am to 9 pm on Saturday and from 9 am
to 9 pm on Sunday. He advises keen buyers to
start queuing outside an hour before the opening.
Carpets can be bought with cash, Bankcard or
cheque.
'All our Persian and = oriental carpets are
rectangular, and we stock every size in the book,
small and large carpets, runners, hall rugs and
door mats are available,' said Nr. Chaudhary
Every carpet is hand-made and fully imported from
Iran, Afghanistan, Turkey, Pakistan and Russia,
the world's main centres for the best Persian and
oriental rugs.
Mr. Chaudhary said every carpet carried a label on
the back giving details on where it was made, its
certificate of authenticity, its original price -
and its sale price.
The Chaudhary company previously had been selling
large mumbers of carpets to retail stores
throughout Australia, but it now felt it was ina ~
position to go direct to the public, and by so
doing was offering huge stocks and many items at
'practically more than half price; at give-away
prices'.
The Chaudhary Co. was the biggest supplier of
Persian and oriental carpets and _= rugs in
Australia, Mr. Chaudhary said.
He has just returned from a trip to Afghanistan,
Iran and Pakistan to buy more stock to replenish
the large volumes now being sold throughout
Australia.
The Chaudhary Company was also one of the biggest
manufacturers of oriental and Persian carpets in
Pakistan and its rugs come direct from the
weavers to Australia.
'Demand for these products in Australia is greater
than production,' he said."
On the following pages of the newspaper there were
eight full page advertisements featuring different types of
carpets to be offered at the Company's sale. One such
advertisement on p.19 reproduced a large photograph of a rug
under the banner headline "Supplier Sells Direct to Public at
a Loss! - over 89% discount." A panel partly superimposed
over the photograph of the rug contained the legend in large
bold type "Usually $4675 Sale Price $1759 Now Only $497" with
a cross drawn through each of the first two prices. At the
top of the photograph was the recital "Limited Quantity of
Iranian Harun Kashan" and below the photograph there was
printed in smaller italic type "Genuine Iranian Harun Kashan
and Hamadan 180cm x 120 cm (6' x 4') and 244 cm x 152.5 cm
(8'x 5°)". In smaller type again, at the bottom left corner
of the main display panel was the legend "Goods photographed
are representative of quality and range only". A smaller
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panel at the foot of the page, which was identical to that
appearing on four of the other seven pages of advertisements,
proclaimed "$1.3 MILLION worth of the finest Persian and
oriental carpets to be sold AT A LOSS!"
The charge against the Company in respect of that
advertisement as set out in the summons numbered VG 98 of
1984 was:
"Phat on or about 30th April 1983 at Melbourne in
the State of Victoria the Defendant, being a
corporation within the meaning of the fTrade
Practices Act 1974, did commit an offence against
section 79{1) of the said Act, in that in
contravention of section 53(e) of the said Act,
it did in trade or commmerce in connection with
the promotion by advertising of the supply of
goods described as Hamadan carpets make a
misleading statement with respect to the price of
the said goods in that in an advertisement in
'The Age' newspaper bearing date 30th April 1983
it did state that the price for the said carpets
was:
'Usually $4,675
Sale Price $1,759
Now Only $497'."
Particulars of that charge as substituted pursuant to leave
granted by Keely J. on 9 December 1985 are in the following
terms:
"1. On or about 30th April 1983 the Defendant,
caused to be published in The Age
newspaper an advertisement advertising a
quantity of rugs described therein as
'genuine Iranian Harun Kashan and Hamadan
Carpets 180cm x 120cm (6' x 4') and 244cm
x 15275cem (8' x 57)".
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The statement in the said advertisement
with respect to the price of the said
carpets was -
'usually $4,675.00
Sale price $1,759.00
Now only $497.00'.
The said statement with respect to the
price referred to, or was capable of
referring to, or would have led an
ordinary member of the public to believe
that it referred to, the Hamadan Carpets
of the sizes specified in the said
advertisements.
The said statement with respect to the
price of the said Hamadan Carpets of the
specified sizes was misleading in that the
statement indicated —
a) that the usual retail price of the
same in Melbourne, or
b) that a fair retail price of the same
in Melbourne - was $4,675.00
which was not the case.
In fact the usual retail price of the said
Hamadan Carpets of the specified sizes in
Melbourne was between $300 and $520, anda
fair retail price of the same in Melbourne
would have been between $300 and $520.
Alternatively, the said statement was
misleading in that it indicated that the
fair retail value of Hamadan Carpets of
the specified sizes in Melbourne was
$4,675 which was not the case.
In fact the fair retail value of Hamadan
Carpets of the specified sizes in
Melbourne would have been between $300 and
$520.
Further or in the aiternative, the said
statement was misleading in that the same
indicated that the purchase price of
$497.00 was the subject of a large
discount from -
a) the usual retail price of the same
~ins-Melbourne shown as $4,675.00, or
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17.
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ape
b) a fair retail price of the same in
Melbourne shown as $4,675.00, or
c) the fair retail value of the same in
Melbourne shown as $4,675.00,
which was not the case."
A similar charge is made against Mr. Chaudhary in the
summons numbered VG 86 of 1984 in which it is alleged that
he, contrary to s.5 of the Crimes Act 1914 was knowingly
concerned in the commission of the offence with which the
Company was charged in VG No. 98. The particulars of the
charge against Mr. Chaudhary, also as substituted by leave of
Keely J. on 9 December 1985 reproduced mutatis mutandis,
those set out above. Similar charges are made against the
Company and Mr. Chaudhary respectively in the summonses
numbered VG 129 and 131 of 1984 which are related to another
of the Company's advertisements which was published in the
"Age" of 7 May 1983. That advertisement reproduced on a
smaller scale the photograph which had illustrated the
reference to "Genuine Iranian Harun Kashan and Hamadan" rugs
on p.19 of the "Age" of 30 April 1983, accompanied by a
similar text including a reproduction of what counsel has
called a "stylized price ticket" bearing the same legend,
"Usually $4,675 Sale Price $1759 Now only $497" with crosses
through the first two prices.
Similar charges, with substantially identical
substituted particulars have been made against the Company
in summonses numbered VG 125 and 123 of 1984 and against Mr.
Chaudhary in VG 133 and 132, in respect of others of the
Company's advertisements which appeared respectively 1n the
Sydney "Sun-Herald" of 12 June 1983 and in "The Sunday Times"
published in Perth on 21 August 1983. Each of those
advertisements included a section reproducing exactly the
text and art work of that part of the advertisement in the
"age" of 7 May 1983 which I have just described.
Two other charges laid against the Company and Mr.
Chaudhary respectively are the subject of summonses numbered
VG 130 and 136 of 1984 and are related to another part of the
advertisement in the "Age" of 7 May 1983. That part
consisted of a similar "price ticket" drawn as having a hole
at the top, which bore the legend "Usually $250 Sale Price
$125 Now Only $12.50". As with the other "price tickets" in
the Company's advertisements, crosses were drawn through the
first two prices. The price ticket was partly superimposed
over an illustration of a rug accompanied by the text
"Superfine Hatchli Wedding Rugs Approx. 76cm x 6lem (2 1/2' x
2°)." Paragraphs 4 and 5 of the particulars in VG 130,
again substituted by leave of Keely J. granted on 9 December
1985 are as follows:
"a, The said statement with respect to the
price of the said Superfine Hatchli
Wedding Rugs of the specified sizes was
misleading in that the statement indicated
a) that the usual retail price of the
same in Melbourne, or
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b) that a farr retail price of the same
in Melbourne - was $250.00
which was not the case.
5. In fact the usual retail price of the said
Superfine Hatchli Wedding Rugs of the
specified sizes in Melbourne was between
$30 and $50, and a fair retail price of
the same in Melbourne would have been
between $30 and $50."
Mr. Fajgenbaum Q.C., who appears with Mr. Brett for both
defendants has submitted at the close of the case for the
prosecution that there is no case to answer in respect of any
of the charges based on the newspaper advertisements which I
have just described.
To make out any of the charges as detailed in the
substituted particulars the prosecutor has to prove that the
advertisement in question contained a statement indicating
what was the usual retail price or a fair retail price or the
fair retail value of carpets of the size and description
specified in the relevant part of the advertisement. If he
establishes the making of one or other of those statements
the prosecutor must then prove it to have been misleading.
In my view, on the evidence as it stands, the Court could not
find that any of the advertisements contained a statement
which indicated either the usual retail price or a fair
retail price or the fair retail value of a rug to which that
advertisement referred.
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11.
I consider that the only interpretation which can
reasonably be placed on the two figures which have heen
crossed out in each advertisement is that they represent
respectively the price at which carpets of that size and
description had been offered for sale in the usual way of
business by the Company, (or by the department store from
which they had come), and the lower price at which such
carpets had been offered in the course of some previous
"sale" at reduced prices, again by the Company or the
department store.
Indications internal to the advertisements themselves
which support that interpretation include the fact that the
crossed out prices are invariably depicted within the
confines of a single price ticket, apparently purporting to
reproduce tickets or tags to be found on the carpets
themselves. As well, each of the advertisements contains,
prominently displayed, a reference to the level of "discount"
being offered and expressed as "Over 89% Discount" and "Up to
95% Discount". The "discounts" are demonstrably referable to
the first crossed-out price in each advertisement, and in my
view it would be a strained and unnatural use of the term to
speak of a specific price as representing a certain
percentage "discount" from the usual retail price, or a fair
retail price or the fair retail value in a given area.
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Among. the considerations which militate against the
construction that the first of the crossed-out prices
referred to the usual or a fair retail price or a fair retail
value of the relevant carpet in Melbourne or anywhere else,
1s the fact that the editorial feature which introduced the
extensive advertisements in the "Age" of 30 April i983,
recited that "Prices have been slashed on Persian and
oriental carpets and rugs at the Chaudhary Oriental Carpet
Company retail outlet in High Street Armadale. The Company's
managing director, Mr. Shahid Chaudhary said prices had been
cut by up to 95 per cent on some of the 18,000 carpets that
would be offered to the public when his store opens at 9 am
today." That recital provided a context which pointed
strongly to the conclusion that what were being reduced were
prices previously assigned to the actual carpets on offer.
Support for that view is also afforded by the fact that the
money amount preceded by the word "usually" was the first of
a descending triad of prices, the other two of which were
incapable of referring to retail prices at the generality of
outlets in Melbourne and elsewhere.
In addition, the evidence of experts in the oriental
carpet trade given as part of the case for the prosecution
clearly established that a retail price, or a fair retail
price or a fair retail value of a given type and size of rug
even in Melbourne could only reasonably be expected to occur
within a range of money amounts. As one of those experts,
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13.
Mc. Gaidzkar, indicated in respect of a "Hamadan" rug
purchased in response to the advertisement of 30 April 1983,
"Again, you have to have flexibility. I would imagine
retailing a rug like that for anything between $500 and
$1000." To the same effect another expert, Miss Scollay, when
asked "If you wanted to put a usual price you would have to
give a range?" replied "I would agree. It does not make
sense to say something has a usual price."
These considerations make it inherently unlikely that
the attribution to rugs of a particular type and size of a
money amount as specific as $4,675, or $250 would connote to
the ordinary reader a retail price generally, or a fair
retail value of such rugs. A related consideration is that
the advertisements in which those money amounts' were
attributed to rugs having quite specific features of design,
origin and sizes, contain nothing which acknowledged
expressly or by implication that rugs answering' those
specific descriptions were available for purchase by retail
elsewhere in Melbourne or any other market.
Some further, small, support for the conclusion to
which I have come is provided by the evidence of Mr. Jackson
who responded to the advertisement of 30 April 1983 and took
a copy of it with him to the Company's shop on that day. Of
that visit Mr. Jackson said (emphasis added):
sree
14.
"tT went down with the article and I asked him (Mr.
Chaudhary) and pointed to the ad, have they got
any of the carpets the ones reduced from $4,675
to $497 and asked whether they had any in stock T
could take a look at."
The effect of that evidence was confirmed by Mr. Jackson's
mother who was present during his conversation with Mr.
Chaudhary. The words to which I have added emphasis make it
clear that Mr. Jackson understood the advertisement to mean
that the Company had reduced its carpets of that kind from
$4,675 to $497, and not that it was offering for $497 carpets
which would cost $4,675 if purchased from other retailers.
It is true, as Mr. Balfe Q.c., who appears with Mr. Vickery
for the prosecution, has pointed out, that an advertisement
by the Company which appeared in the "Age" of 29 April 1983
and which foreshadowed the more extensive advertisements of
the following day contained the statement "Department Store
Supplier Quits $1,300,000 worth at a LOSS! Up to 95% off*-
e.g. Rugs worth $250 will be sold for $12.50". However, I do
not consider that the assertion there as to the "worth" of
some of the rugs to be offered can be allowed the effect of
converting what were prima facie references to prices
previously assigned to specific types and sizes of rugs into
statements about the retail value of such rugs in Melbourne
or generally. The same observation applies with even more
force to the statement attributed to Mr. Chaudhary in the
editorial feature in the "Age" of 30 April 1983 that "The
carpets represent the stock of a leading department store and
are worth millions of dollars". Those two assertions about
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ere odeateend bed
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° of its belief& about some certain types and sizes of
carpets, and about its stock as a whole,
|
but fall short of
providing a context in which
"Usually $4,675" or "Usually
$250"
could be understood as a reference to the usual retail
price or a fair retail price of each of the relevant rugs in
Melbourne or elsewhere. A passage which clearly detracts
from such a context occurs in the third sentence after that
i
just quoted from the editorial feature of 30 April 1983 which
reads (emphasis added):
"As an example of the bargains to be found in his
| store he (Mr. Chaudhary) said there were 2000
small rugs each originall
riced at $250 being
'given away' at $12.50."
In my view, the whole of the Company's advertising campaign
was designed to achieve its effect by contrasting the newly
offered prices with much higher "usual" or "original" prices
assigned to the same carpets (whether genuinely or not it is
unnecessary for present purposes to decide). That view
derives some support, again only small,
from the evidence of
Jackson who said that when her son attended at the
Company's premises
Mrs.
in response to the advertisement of 30
April he asked a salesman, Mr. Ali Khan, about the price of
\
rugs of a type and size not featured in the advertisement,
"Ali Khan said that they were $598 and Bruce then said what
was the original price or something to that effect, and he
said about $1600."
————————— ot
| "worth" are capable of being a representation by the Company
its
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16.
For these reasons, I uphold the submission that the
defendants have no case to answer in respect of the charges
contained in the summonses numbered VG 86, 98, 123, 125, 129,
130, 131, 132, 133 and 136. Accordingly, those summonses
must be dismissed.
The charge against the Company which is contained in
the summons numbered VG 94 of 1984 arises out of an oral
statement allegedly made by the Company's salesman, Mr. Ali
Khan to Mr. Jackson. The charge is formulated as follows:
"That on or about 30th April 1983 at Melbourne in
the State of Victoria Chaudhary''s Oriental Carpet
Palace Pty. Ltd. a corporation within the meaning
of the Trade Practices Act 1974, of 1005 High
Street, Armadale in the said State did commit an
offence against section 79(1) of the said Act in
that in contravention of section 53(e) of the
said Act, at did in trade or commerce in
connection with the possible supply of a
'princess Bokhara' rug to Bruce Grant Jackson
make a false statement with respect to the price
of the said rug by way of an oral representation
made by a servant or agent of the Defendant to
Bruce Grant Jackson that the normal price of the
said rug was about $1,600."
New particulars of that charge were also substituted by leave
granted by Keely J. and are in the following terms:
"L. On or about 30th April 1983 Bruce Grant
Jackson ('Jackson') approached ai Sales
Assistant employed by the Defendant at the
premises of the Defendant in connection
with the possible supply to him of a
(a
17.
'Princess Bokhara' rug made in Pakistan
measuring approximately 17lcem by 123cm
('the rug').
2. The said Sales Assistant represented to
Jackson that the normal retail price of
the rug in Melbourne was about $1,600.
3. At the time of the making of the
representation referred to in paragraph 2
hereof, the said Sales Assistant was
acting in his capacity as a servant or
agent of the Defendant.
4. The said representation was false in that
the normal retail price in Melbourne of a
rug of the size and quality referred to
was in the order of $220 to $550 and not
$1,600 as represented."
Counsel for the defendants have also submitted that the
Company has no case to answer in respect of that charge as
defined by the substituted particulars. The evidence adduced
by the prosecution in support of that charge was in
relatively short compass and confined to the testimony of Mr.
Jackson himself and his mother, neither of whom was cross-—
examined. As I have already indicated, Mr. Jackson went to
the Company's shop on 30 April 1983 armed with a copy of the
advertisements from the "Age" of that day and in the course
of examining what stock was left came upon a grey-green rug
of a type and size not featured in the advertisement. Mr.
Jackson approached Mr. Ali Khan who was apparently acting as
a salesman, and, as he said "I had that rug in my hand and I
asked him about the rug". Mr. Jackson went on to say "I
asked him about the rug and first of all I said, 'what are
the price of these rugs?'" According to Mr. Jackson, Mr. Ali
Khan indicated a price of $598 whereupon Mr. Jackson asked
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18.
him "What do they normally sell at?" Again according to Mr.
Jackson, Mr. Ali Khan replied "About $1600" and in response
to a further question said, "It is a fine quality Pakistani
carpet". Mrs. Jackson's recollection of the relevant parts
of her son's conversation with Mr. Ali Khan was expressed as
follows:
"Bruce asked him about the rug and what it was
like and whether it was a good buy and Ali Khan
told us that it was a good Pakistan rug and he
said that the price was $598, I think it was, and
that they normally were selling for about $1600.
He asked him what the price had been and he said
about $1600 and then I think that was all we
asked him at that stage.
He asked him what the price was of the rugs and
Ali Khan said that they were $598 and Bruce then
said what was the original price or something to
that effect and he said about $1600."
The short question which is raised by the submission on
behalf of the Company is whether as a matter of law it is
possible to find on that evidence that whatever it was that
Mr. Ali Khan said about the sum of $1600 amounted to a
representation about the normal retail price in Melbourne of
the rug which Mr. Jackson showed him. In my view the
evidence, as it stands, whichever parts of it be accepted,
cannot sustain an affirmative answer to that question.
Part of the context in which Mr. Jackson's inquiries
were made to Mr. Ali Khan is provided by the newspaper
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advertisements of 30 April 1983. They, as I have already
held, contained representations about the prices at which
carpets of the size and types described in the advertisement
had been offered for sale in the usual way of business by the
Company, or by the department store from which the carpets
had come. In that context the natural interpretation to put
on an inquiry as to what rugs of a type and size not featured
in the advertisement "normally sell at", is that it was
directed to the price of that type and size of rug which
corresponded to the first of the crossed out prices in the
advertisement. Support for that interpretation is provided
by the evidence already canvassed to the effect that it was
impossible to specify a single specific price as the usual
retail price in Melbourne of rugs of a particular size and
type. On the other hand, there is nothing in the evidence as
it stands which warrants the inference that Mr. Ali Khan
thought that Mr. Jackson was inquiring about the normal
retail selling price in Melbourne generally of rugs of the
size and quality of the "Princess Bokhara" which Mr. Jackson
was holding. Significantly, Mr. Jackson did not indicate in
his evidence, that his inquiry was directed to the price at
which similar rugs were normally sold at all or most other
retail outlets in Melbourne. Likewise there was nothing in
Mr. Ali Khan's response to the inquiry, or elsewhere in the
evidence, to suggest that he claimed, or was held out as
having, any knowledge of the prices normally charged by other
Melbourne retailers for rugs of that'kind. Indeed, there is
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20.
no indication that either Mr. Jackson or Mr. Ali Khan at the
relevant time ever directed his mind to the question of
whether rugs like the grey/green "Princess Bokhara" could be
purchased at other Melbourne retail outlets.
It follows therefore that the submission on behalf of
the Company in respect of the charge in VG 94 of 1984 is also
upheld and that summons must likewise be dismissed.
The third group of charges in respect of which it has
been submitted that there is no case to answer arise out of
the issue of four "Certificates of Origin" two of which
referred to the "Princess Bokhara" rug supplied to Mr.
Jackson, and two of which referred to the "Hamadan" rug
supplied to the same purchaser.
The first issue of "Certificates of Origin" to Mr.
Jackson occurred on 12 May 1983. In respect of that related
to the "Princess Bokhara" rug, the statement of the charge
contained in the summons numbered VG 122 of 1984 was as
follows:
"That on or about 12th May 1983 at Melbourne in
the said State Chaudhary's Oriental Carpet Palace
Pty. Ltd. a corporation within the meaning of the
Trade Practices Act 1974, of 1005 High Street,
Armadale in the said State did commit an offence
against section 79({1) of the said Act in that in
contravention of section 53(a) of the said Act,
it did in trade or commerce in connection with
the supply of a 'Princess Bokhara' rug to Bruce
Grant Jackson falsely represent to the said Bruce
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21.
Jackson that the said rug was of a
particular quality which 1t was not, namely that
it had a current value of $1,675."
The following particulars were given of that charge:
"1,
On or about 30th April 1983 Bruce Grant
Jackson ('Jackson') purchased a 'Princess
Bokhara' rug made in Pakistan measuring
approximately 171 cm. x 123 cm. ('the
rug') from the Defendant.
At or about the time of the sale referred
to in paragraph 1 hereof, a servant and/or
agent of the Defendant orally represented
to Jackson that the Defendant would
provide to Jackson a document describing
and setting out the particulars of the
rug.
On or about 12th May 1983 the Defendant
provided to Jackson a document entitled
'Certificate of Origin' dated i2th May
1983 which purported to describe and give
particulars of the rug.
The said 'Certificate of Origin' contained
the statement:
'Current Value .... $1,675".
The statement tfeferred to in paragraph 4
hereof was false in that the current value
of the rug was considerably less than
$1,675.
By reason of the matters aforesaid, the
Defendant falsely represented to Jackson
that the rug was of a particular quality
which it was not, namely that it had a
current value of $1,675, such
representation being made in connection
with the supply of the rug to Jackson."
In VG 135 of 1984 Mr. Chaudhary is charged with having
been knowingly concerned in the commission by the Company of
the
"Certificate of Origin" to
offence with which it is charged in VG 122.
whe
which those two charges
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related was on a printed standard form with several
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handwritten insertions. It read (hand written sections
underlined):
"Certificate of Origin
CHAUDHARY'S ORIENTAL CARPET PALACE
Certify that the below mentioned carpets are
Guaranteed:
Genuine Handmade Oriental Rugs
Genuine Fast Colours
To last a lifetime in normal use
Could be changed anytime for the same value as
long as it is undamaged
With the following characteristics:-
1. Country of origin PAKISTAN (LAHORE)
2. Colour GREY
3. Design PRINCESS BOKHARA - CAMEL FOOT
4. What the colour and design represent
POWER AND MIGHT
5. Size 6° x 4' Date 12-5-83
6. Current Value $1,675
7. Owner's Name Bruce Jackson
8. Address 31 Woodcrest Road, Vermont
For Directors Signature S. I. Chaudhary
CHAUDHARY'S ORIENTAL CARPET PALACE"
A similar "Certificate of Origin" was issued on 12 May 1983
in respect of the "Hamadan" carpet also purchased by Mr.
Jackson. Only the handwritten details of the charatteristics
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numbered 1, 2, 3, 4, 5, and 6 caused that certificate to
differ from the certificate in respect of the "Princess
Bokhara" rug. The "current value" ascribed to the "Hamadan"
rug 1n the certificate of 12 May 1983 related to that rug was
$4,875. Curiously, the statements of charge and particulars
in the summonses numbered VG 128 and 134 against the Company
and Mr. Chaudhary respectively in respect of the "Certificate
of Origin" of the "Hamadan" rug dated 12 May 1983 allege that
the ascription to it of a current value of $4,875 constituted
a false representation that the "Hamadan" rug was of a
particular standard which it was not, whereas' the
corresponding statements of charge in respect of the very
similar certificate for the "Princess Bokhara" rug alleges
that by giving a current value to that rug the Company
represented that it was of a particular quality.
A similar difference occurs in the formulation of the
charges against the Company in the summonses numbered VG 124
and 127 of 1984 which refer to later "Certificates of Origin"
of the "Princess Bokhara" and "Hamadan" rugs respectively
which were sent to Mr. Jackson by post in July 1983. The
printed text of those certificates although exhibiting
differences in styles and sizes of type was the same as that
of the earlier certificates. The handwritten insertions in
respect of the "Princess Bokhara" rug differed from those of
the earlier certificate for the same rug and included the
following (handwritten insertions again underlined):
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24.
"1. Country of origin Pakistan
2. Colour Superfine
3. Design Tekky
4. What the colour and design represent
Tradition
5. Size 6 x 4
6. Current Value $1300-"
The later certificate in respect of the ""Hamadan" rug also
differed markedly from the earlier certificate for the same
rug, and in particular ascribed a current value of $4,150
instead of $4,875. Both of the later certificates were
signed not by Mr. Chaudhary but by another employee of the
Company, a Mrs. Crabtree.
Part of the evidence referable to the "certificates of
origin" is that in the editorial part of the "advertising
feature" in the "Age" of 30 April 1983 the following
paragraph appears:
"Mr. Chaudhary said every carpet carried a label
on the back giving details on where it was made,
its certificate of authenticity, its original
price - and its sale price."
On each of the succeeding pages of advertisements the word
"Guaranteed" was prominently printed and surrounded by a
standard form of stylized scroll.
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25.
Mr. Jackson's evidence on this matter was that on his
second visit to the Company's premises on 1 May 1985:
"I started to leave the premises but I remembered
reading through page 15 of the advertisement that
they do give out certificates for authenticity
for the rugs, which I had not got at that stage.
So I went back up to the sales desk and Mr.
Chaudhary was standing nearby. I said, 'It says
in your advertisement that you give out
certificates for authenticity. Would I be able
to have the two to cover these two rugs?' He
said to me, 'We cannot give you those at this
stage but we will mail those out to you in the
mail.'"
Mr. Jackson also testified that he received the two later
certificates in the mail early in July 1983. Mrs. Jackson
gave the following evidence of what occurred when she
attended at the Company's shop on 12 May 1983 to collect her-
son's "Princess Bokhara" rug which had been returned for
repair:
"Then I said to the girl Bruce had asked for
certificates of authenticity and he asked me if
they were ready could I pick them up also.
What did she say to you? --- Well, she referred
then to Mr. Chaudhary and she said: would you be
able to write the certificates out now? He said
yes, so I produced the invoices or receipts which
I had."
Mrs. Jackson went on to indicate that she inserted her son's
name and address in the certificate related to the
Bokhara"
"Princess
rug and that the rest of the handwriting on that
certificate was Mr. Chaudhary's. The first certificate for
the ""Hamadan" rug underwent a similar process and Mrs.
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26.
Jackson deposed as follows to the insertion of the figures
after the printed words "Current Value" on that certificate:
"What did he write on where it has got 'current
value'? --- He wrote $2875.
Green writing it seems to be? --- Right.
Yes? --- And I was watching him over the desk and
as he wrote that I said: I thought that carpet
was supposed to be valued at $4000-odd.
What did he say to you? -~- And he said: oh yes,
and just changed the 2 to a 4.
Who changed the 2 to a 4? --- Mr. Chaudhary.
Yes, and having done that what did he do? -—-- He
just completed the certificate and handed it to
me."
According to a record of interview between the prosecutor,
Mr. Ducret, and Mr. Chaudhary, parts of which were admitted
in evidence, the following exchange occurred between them
about the "certificate of origin" for Mr. Jackson's "Princess
Bokhara" rug:
Ducret: "The certificate states that the
'current value' of the carpet is $1675.
What is meant by 'current value' on that
certificate?".
Chaudhary: "Replacement value. We inflate the
discounted sales price by about three
times for insurance purposes. The carpet
is worth about three times the amount we
sell them for during sales. The figure
represents my belief as to the true value
of the carpets."
The corresponding questions and answers in respect of the
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27.
certificate signed by Mr. Chaudhary for Mr. Jackson's
"Hamadan" rug were as follows:
Ducret: "Is that your handwriting and signature
on the certificate marked 'D', Mr.
Chaudhary?"
Chaudhary: "Again, only my signature and the
writing down to '5. Size' and the date.
The figure was '$2875' and someone wrote 4
over the two. The four is not my writing.
We used to sell Hamadans at $2875. I
would not have written $4875 because we
did not sell them at that price."
Ducret: "The certificate marked 'D' states that
the 'current value of the carpet is
$4875'. What is meant by 'current value'
on that certificate?"
Chaudhary: "Same as before."
That part of the record of interview which embodies Mr.
Ducret's inquiry about the discrepancies between the later
cetificate for the "Hamadan" rug signed by Nrs. Crabtree and
the earlier one signed by him, records the following question
and answer:
Ducret: "The certificate marked 'E' states that
the 'current value' of the carpet is
$4150. Why is that different to the
'current value' on the certificate marked
'pr rau
Chaudhary: "I wouldn't have a clue. I would not
have given a certificate without having
seen the rug, therefore the genuine
certificate is the one I signed."
To permit a full understanding of the submission on behalf of
the defendants that there is no case to answer on any of the
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28.
charges arising out of the issue of the "Certificates of
Origin", it is necessary to set out certain parts of s.53 of
the Act which is invoked in relevant statements of the
charges:
"53. A corporation shall not, in trade or
commerce, in connection with the supply or
possible supply of goods or services or in
connexion with the promotion by any means of the
supply or use of goods or services —
(a) falsely represent that goods are of a
particular standard, quality, grade,
composition, style or model or have had a
particular history or particular previous
use;
(aa) falsely represent that services are of a
particular standard, quality or grade;
(b) falsely represent that goods are new;
(c) represent that goods or services have
sponsorship, approval, performance
characteristics, accessories, uses or
benefits they do not have;
(d) represent that the corporation has a
sponsorship, approval or affiliation it
does not have;
(e) make a false or misleading statement with
respect to the price of goods or
services."
It was first submitted by Mr. Fajgenbaum that the evidence
precluded the conclusion that any of the "certificates of
origin" were given "in connexion with the supply" of the rugs
because the supply was complete as soon as Mr. Jackson paid
for the rugs. In support of that submission he referred to
the definition of "supply" in s.4 of the Act. However, in my
opinion, even if the "supply of goods" within the meaning of
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29.
s.53 has been completed when a sale of those goods has been
concluded, a representation may still be made "in connexion"
with that supply even if made after it. The sufficiency of
the alleged link between the representation and the supply is
a question of fact. I consider that the evidence as it
stands, having regard to the inferences available to be drawn
from the use by the Company of a standard printed form of
"certificate of origin", the material in the "advertising
feature" and accompanying advertisements in the "Age", and
the statements made by Mr. Chaudhary in the record of
interview can permit that question to be answered in favour
of the prosecution.
It was next submitted in respect of the charges based
on the issue of the "certificates of origin" for the
"Princess Bokhara" rug, that the ascription of a "current
value" to that rug was not a representation that it was "of a
particular quality" within the meaning of s.53(a) of the Act.
It was urged that a particular quality was something to be
attributed to an article by reference only to its intrinsic,
observable characteristics and could not depend, as value
must, on reference to, or comparison with, other objects.
In Given v. C. V. Holland (Holdings) Pty. Ltd. (1977)
29 FLR 212 Franki J. was concerned with the question of
whether a representation as to the number of miles travelled
by a motor car was one as to "a particular quality" of that
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car within the meaning of s.53(a) of the Act. His Honour
rejected an argument that assistance in answering that
question could be derived from cases dealing with the
expression "merchantable quality" and went on to say, at 215:
"The words 'of a particular quality' in s.53(a)
have to be read in their context. I do not
consider it is possible to define the word
'quality' even in that limited context. Its
Meaning must be ascertained in relation to the
goods whose quality is being considered, and this
is particularly clear when one looks at the
definition of goods in s.4 of the Act where goods
are defined, unless the contrary intention
appears, aS including: '(a) Ships, aircraft and
other vehicles; (b) animals, including fish; (c)
Minerals, trees and crops, whether on, under or
attached to land or not; and (d) gas and
electricity'.
This case is concerned with a particular quality
of a motor vehicle. The Shorter Oxford
Dictionary gives the following meanings amongst
others, for 'quality' in relation to things: 'An
attribute, property, special feature. The
mature, kind or character (of something)'.
In my opinion the number of miles a particular
vehicle has travelled describes a particular
attribute, or a special feature of that vehicle,
and therefore decribes a particular quality of
that vehicle."
On that view the number of dollars an article is worth if
represented, as in the "certificates of origin" it was to
be a "characteristic" of that article could be said to
describe a particular quality of the article.
That passage which I have just quoted from Given v. C.
V. Holland (Holdings) Pty. Ltd. was subsequentlly applied-.by-—-_.-_-
Franki J. himself in Thompson v. J. T. Fossey Pty. Ltd.
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31.
(1978) 20 ALR 496 at 501, and was cited with approval
by Lockhart J. in Doolan V. Waltons utd. (1981) 39 ALR 408
where his Honour observed at 411:
"In Given v. C. V. Holland (Holdings) Pty. Ltd.
(1977) 15 ALR 439, a prosecution under 5.79
before the 1977 amendment to the Act which
introduced, amongst other words, the word
'composition', Franki J. construed the words in
s.53(a) 'particular quality' as meaning a
particular attribute or a special feature. His
Honour took the same view in Thompson v. J. T.
Fossey Pty. Ltd. (No. 1) (1973) 20 ALR 496 and
id not regard the 1977 amendments as requiring a
different construction. Keely J. adopted a
similar view of the words 'particular quality'
before the 1977 amendments in Thompson v. Rile
McKay Pty. Ltd. (No. 2) (1980) ALR 7. His
Honour he that to represent goods as 'wrought
iron' was to represent that they included
decorative scroll work of solidity and rigidity,
and that such a representation was one that the
goods were of a 'particular quality'.
I take the same view as Franki and Keely JJ.
Indeed, to construe 'quality' in para. (a) in the
sense of an attribute, property or special
feature is in accordance with a_ generally
understood and accepted meaning of the word. One
1s reminded of the words of Portia in The
Merchant of Venice, Act IV, Scene 1:-
'The quality of mercy is not strain'd,
It droppeth as the gentle rain from heaven
Upon the place beneath: it is twice bless'd;
It blesseth him that gives and him that
takes: ... '
It may be correct to say, as Waltons does, that
the representations alleged here are more
precisely described as representations that goods
are of a 'particular composition' rather than of
a 'particular quality'; but the components of
s.53(a) are not mutually exclusive. They may
overlap; indeed one can think of many instances
where they do."
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32.
Those authorities suggest to me that a wide meaning has been
given to 'quality' in s.53(a) —- a meaning which extends
beyond the degree or grade of excellence which a thing can be
said upon physical examination to possess in comparison with
others of a simzlar kind, and which includes the virtues,
attributes, properties and special feature of the thing. I
am confirmed in that view by the fact that the Act by
s.53(aa) contemplates that a representation may be made that
services as well as goods, are of a particular quality.
In my opinion "standard" as used in s.53 of the Act
connotes a marrower concept than "quality". "Standard" is
defined in the relevant sense in the Shorter Oxford English
Dictionary as "a definite level of excellence, attainment,
wealth or the like, or a definite degree of any quality,
viewed as a prescribed object of endeavour or as the measure
of what is adequate for some purpose". An example of a
representation that goods were of a particular standard
within the meaning of s.53(a) of the Act is to be found in
Gilmour v. Bannister Nominees Pty. Ltd (1982) 4 ATPR 40-325
where a statement was made that a concrete pumping machine
was "to contractors' standard".
Notwithstanding the differences in width between
"quality" and "standard" as used in s.53(a), I consider that
a representation as to each of them in respect of goods is
capable of being made by attributing to the goods a value
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33.
expressed as an amount of money. Whether such an attribution
constitutes a representation of that kind 1s a matter of fact
to be determined on the evidence in each case. Mr.
Fajgenbaum argued that the factual question is concluded in
the present case in favour of the defendants because the
reference to "current value" in the "certificates of origin"
on their proper construction says nothing about the rugs
being of a particular quality, (even in the wider sense of
that word which I favour) or of a particular standard. The
reference is confined, so it was argued, to an indication
that the rug in question could be exchanged for another from
the Company's stock marked with a usual price not higher than
the current value specified in the certificate. I am not
disposed to uphold that argument. I consider in the light of
the evidence as it stands that each "certificate of origin"
may be construed as guaranteeing two distinct groups of
matters in respect of the carpet to which it refers: (a) that
it is a genuine handmade oriental rug with genuine fast
colours that, as long as it is undamaged, can be exchanged at
any time for another from the Company's stock having a value
(indicated by its usual marked price) not higher than the
current value indicated as characteristic (6) of the subject
carpet; and (b) that it genuinely possesses each of the
characteristics numbered 1 to 6 as filled up in the body of
the certificate. The factual question therefore remains
whether a representation in a "certificate of origin" that
the subject rugs had a "current value" of a specified money
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34.
amount can on the evidence be held to be a representation
that the rug was of a particular quality or of a particular
standard. On the whole of the evidence as it stands,
including the statements attributed to Mr. Chaudhary in the
record of interview, I consider such a conclusion to be open
(without expressing any view as to whether or not I would
draw it) in respect of the alleged representations that the
"Princes Bokhara" rug was of a particular quality.
However, it is by no means equally clear that the
necessary conclusion is available on the question of whether
the assignment of a current value of either $4,875 or $4,150
to the "Hamadan" rug was a representation that the rug was of
a particular standard. It is conceivable that goods might
have a definite degree of some measurable characteristic
which is so widely accepted in the relevant trade as being
linked to a specific monetary value, that to ascribe that
value to them is inferentially to represent that they are of
the standard linked to that value. However, the evidence as
it stands in the present case falls far short of establishing
any link of that kind between any "value" which may be
attributed to oriental rugs of a given size and the
"standard" of such rugs in the sense in which I consider that
word to be used in s.53 (a). Indeed, the evidence so far in
tends to negative the existence of any link of that kind.
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35.
Accordingly, I overrule the submission that the
defendants have no case to answer on the charges in the
summonses numbered VG 122, 124 and 135 of 1984 but uphold the
submission in respect of the charges in VG 127, 128 and 134
which must therefore be dismissed.
I certify that this and the
preceding 34 pages are a true
copy of the Reasons for
Judgment of the Honourable Mr.
Justice Ryan.
Dated: "7% "cy -9¥7
SO rege be
Associate
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IN THE FEDERAL COURT OF AUSTRALIA
ATTACHMENT "A"
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Coram: Ryan J.
Date: 17 July 1987
Counsel for the Prosecutor:
Solicitor for the Prosecutor:
Counsel for the Defendants:
Between:
VG Nos. 86,94,98,122,123,
124, 125, 126, 127, 128,
129, 130, 131, 132, 133,
134, 135, 136 of 1984
ALAN RAYMOND DUCRET
And:
(Prosecutor)
CHAUDHARY'S ORIENTAL
Between:
CARPET PALACE PTY. LTD.
(Defendant )
ALAN RAYMOND DUCRET
And:
(Prosecutor)
S. I. CHAUDHARY
(Defendant)
Jd. R. Balfe Q.C. and
P.N. Vickery
Commonwealth Director of
Public Prosecutions
and R.A.
Solicitors for the Defendants: Weigall
Dates of Hearing:
13-17, 20 July 1987
J. I. Fajgenbaum Q.C. and
Brett
& Crowther
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ATTACHMENT "A"
IN THE FEDERAL COURT OF AUSTRALIA
)
)
VICTORIA DISTRICT REGISTRY )
)
GENERAL DIVISTON )
)
Between:
VG Nos. 86,94,98,122,123,
124, 125, 126, 127, 128,
129, 130, 131, 132, 133,
134, 135, 136 of 1984
ALAN RAYMOND DUCRET
(Prosecutor )
: CHAUDHARY'S ORIENTAL
Between:
And:
CARPET PALACE PTY. LTD.
{Defendant )
ALAN RAYMOND DUCRET
(Prosecutor)
S. I. CHAUDHARY
Coram: Ryan J.
Date: 17 July 1987
(Defendant)
Counsel for the Prosecutor: J. R. Balfe 9.C. and
P.N. Vickery
Solicitor for the Prosecutor: Commonwealth Director of
Public Prosecutions
Counsel for the Defendants: |
"and R.A.
Solicitors for the Defendants: Weigall
Dates of Hearing: 13-17, 20 July 1987
J. I. Faj
genbaum Q.C. and
Brett
& Crowther
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