FEDERAL COURT OF AUSTRALIA Trade Practices – Prosecution – advertisements - misrepresentations – motor vehicles advertised with incorrect features and savings – aiding and abetting by advertising agent – pleas of guilty – undertakings to pay compensation to purchasers – undertaking to implement improved compliance program – whether publicity initiated by Commission was adverse – penalty Trade Practices Act 1974 (Cth), ss 28, 53(a), 53(c), 53(e), 79(1), 79(2) Crimes Act 1914 (Cth), ss 16A, 16A(2), 19B ACCC v Nationwide News Pty Ltd and Others (1996) 18 ATPR 41-519 applied Given v C.V. Holland (Holdings) Pty Ltd (1977) 29 FLR 212 applied Darwin Bakery Pty. Ltd. v Sully (1981) 51 FLR 90 applied Ducret v Colourshot Pty Ltd and Another (1981) 35 ALR 503 applied Ducret v Nissan Motor Co. (Australia) Pty. Ltd. (1979) 38 FLR 126 cited Eva v Mazda Motors (Sales) Pty Ltd (1977) 1 ATPR 40-020 applied Eva v Southern Motors Box Hill Pty Ltd (1997) 1 ATPR 40-026 cited Trade Practices Commission v Cue Design Pty Ltd & Anor (1996) 18 ATPR 41-475 applied Trade Practices Commission v Stihl Chain Saws (Aust.) Pty Ltd (1978) 2 ATPR 40-091 applied Trade Practices Commission v Sun Alliance Australia Limited (1994) 16 ATPR 41-286 cited Matter No. SG93 of 1997 AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v NISSAN MOTOR COMPANY (AUSTRALIA) PTY. LTD. & THOMAS MARK WIGHTMAN VON DOUSSA J ADELAIDE 28 AUGUST 1998 IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY SG93 of 1997 BETWEEN: australian competition and consumer commission prosecutor AND: nissan motor company (australia) pty. ltd. First defendant thomas mark wightman Second defendant JUDGE: VON DOUSSA J DATE OF ORDER: 28 august 1998 WHERE MADE: ADELAIDE THE COURT ORDERS THAT: 1. Nissan Motor Company (Australia) Pty. Ltd be convicted on counts 1, 3 and 6, and that fines be imposed as follows: (a) Count 1 (contravention of s 53(a) of the Trade Practices Act 1974 (Cth)): $30,000 (b) Count 3 (contravention of s 53(e) of the Trade Practices Act 1974 (Cth)): $50,000 (c) Count 6 (contravention of s 53(a) of the Trade Practices Act 1974 (Cth)): $50,000 2. That Thomas Mark Wightman be convicted on count 7 and that a fine of $10,000 be imposed. 3. That the question of costs be adjourned until 9.15 a.m. central standard time on 2 September 1998. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY SG93 of 1997 BETWEEN: australian competition and consumer commission prosecutor AND: nissan motor company (australia) pty. ltd. First defendant thomas mark wightman Second defendant JUDGE: VON DOUSSA J DATE: 28 august 1998 PLACE: ADELAIDE REASONS FOR JUDGMENT The first defendant, Nissan Motor Company (Australia) Pty. Ltd. ("Nissan") has entered pleas of guilty on the following charges laid by the Australian Competition and Consumer Commission ("ACCC"), namely: (a) that on 21 September 1996 at Adelaide in contravention of s 53(a) of the Trade Practices Act 1974 (Cth) ("the Act") in connection with the supply of goods, it falsely represented that the goods were of a particular style and model ("the first charge"). (b) that on 10 November 1996 at Adelaide in contravention of s 53(e) of the Act in connection with the supply of goods it made a false or misleading representation with respect to the price of the goods ("the second charge"). (c) that on about 10 October 1996 at Adelaide in contravention of s 53(a) of the Act in connection with the supply of goods, aided and abetted by Thomas Mark Wightman ("Mr Wightman"), it falsely represented that goods were of a particular style or model ("the third charge"). The second defendant, Mr Wightman, has entered a plea of guilty to one charge laid by the ACCC, namely that on about 31 October 1996 at Adelaide he aided and abetted the contravention of s 53(a) of the Act by Nissan in that in connection with the supply of goods Nissan falsely represented that the goods were of a particular style or model. The pleas of guilty have been entered by Nissan, and accepted by the ACCC, on the basis of a Statement of Agreed Facts. Mr Wightman, by his counsel, has informed the Court that he accepts the Statement of Agreed Facts as accurate. In addition, both the ACCC and Nissan have tendered substantial affidavit evidence. Information deposed to in those affidavits must be read subject to the Statement of Agreed Facts. The first charge arises out of an advertisement which appeared in The Advertiser Newspaper on 21 September 1996. The offending advertisement formed part of a full page advertisement appearing under the heading "Nissans 30th Anniversary Sale Continues...". The advertisement was authorised by the zone manager for South Australia, Mr Peter Phillips. The advertisement represented that a vehicle described as a Patrol RX Turbo Diesel was for sale through Metropolitan dealers at a price of $39,990. The model of vehicle displayed in the advertisement was a Nissan Patrol RX 4.2 litre Diesel (a "Patrol RX 4.2"), and the vehicle was styled with over fender flares and wider wheels than the Patrol RX Turbo Diesel which was offered for sale in the advertisement. The vehicle offered at the stated price was a Patrol RX 2.8 litre Turbo Diesel (a "Patrol RX 2.8"). Particulars to the charge allege that the representation contained in the advertisement would have led a reasonable person likely to be buying a four wheel drive vehicle to believe that the vehicle offered for sale at $39,990 was styled with over fender flares and wider wheels. However, the representation was false in that a Patrol RX 4.2 was not offered for sale at $39,990, and there was no Patrol RX 2.8 with over fender flares and wide wheels unless these were fitted as optional extras. In short, the pictorial representation of the vehicle advertised showed the wrong vehicle. The second charge arose out of a television broadcast which occurred on Channel 7 in Adelaide on 10 November 1996. The advertisement represented that consumers would save "a whopping $6,290 on a brand new RX Turbo Patrol at only $39,990 including free airconditioning". The representation described the amount of $6,290 as "end of year" savings. The particulars of the charge allege that the advertisement would have led a reasonable person likely to be buying a four wheel drive vehicle to believe that the savings had only become available in the last three months of the year. In fact Patrol RX 2.8 vehicles, which had been offered to consumers for sale prior to 1 October 1995 at the price of $44,065, had since 1 October 1995 been offered for sale through dealers at $39,990. The advertisement was therefore false or misleading in that the only true "end of year" saving was the value of the free airconditioning, being $2,195. The third charge arose out of the publication in The Advertiser on 10 October 1996 of a further advertisement concerning a Patrol RX 2.8. The same pictorial representation of a Patrol RX 4.2 styled with over fender flares and wide wheels which had been used in the advertisement subject to the first charge was again depicted in the advertisement, and erroneously described as for sale at $39,990. On this occasion, the advertisement appeared under the heading "Just wait'til you drive it from your local Nissan Dealer", and advertised a "PULSAR LX SEDAN OR HATCH", and a "PATROL RX TURBO DIESEL". However, in small print running vertically up the right hand side of the advertisement adjacent to the picture of the Patrol RX 4.2 appeared the following disclaimer "Pic. for illustration purposes only". This advertisement was repeated in editions of The Advertiser on 15, 17, 19, 22, 24, 26, and 31 October 1996. The third charge was laid as a representative one covering the October advertising campaign of which it formed part. The charge against Mr Wightman also relates to the October advertising campaign. The charge that he aided and abetted Nissan alleges that as the marketing director of Wightman Advertising Pty Ltd ("Wightman"), the company engaged to arrange the advertising, he suggested that the disclaimer be added to the advertisement adjacent to the incorrect photograph of the Patrol RX 4.2. The following summary is taken substantially from the Statement of Agreed Facts. Nissan is and was in 1996 a wholly owned subsidiary of Nissan Motor Co. Ltd. of Japan. Nissan is an importer and distributor in Australia of passenger and light commercial vehicles and replacement parts. Until 1993 Nissan Motor Manufacturing Co. (Australia) Pty. Ltd. manufactured passenger and light commercial vehicles in Australia at its manufacturing facility in Clayton in Victoria. On 26 March 1993 that company was wound up. Between 1993 and 1996 the scale of the Australian operation of Nissan Motor Co. Ltd., conducted in Australia through subsidiaries, was substantially reduced. This led to a reduction in staff numbers throughout Australia, and relevantly, to this case in South Australia. Nissan, in 1996, had a national dealership network of independently owned dealers. There were 24 Nissan dealerships in South Australia. In the Adelaide Metropolitan area at that time there were four Nissan dealers, with a fifth dealer situated on the outskirts of the Metropolitan area. These five dealers are referred to as the Metropolitan dealers. In 1996 Nissan had a national advertising agent, Whybin TBWA Pty Ltd ("Whybin") of Melbourne. Whybin created, coordinated and managed Nissan's national advertising for electronic and print media programs. However, advertising on a State by State basis had traditionally been controlled by Nissan Co-operative Committees which comprised dealer representatives from the particular State and Nissan representatives. There was a Co-operative Committee in South Australia which comprised four representatives from the Metropolitan dealerships, and two representatives from Nissan. One Nissan representative was Mr Phillips. The South Australian Co-operative Committee exclusively engaged Wightman, and had done so since 1993. Mr Wightman was the principal of this company which carried out retail sales advertising in the print and electronic media throughout South Australia for the Co-operative Committee. With the exception of advertisements published or broadcast wholly at the direction of individual dealers, all decisions regarding Nissan retail advertising in South Australia were made through the Co-operative Committee which met on a monthly basis. The cost of co-operative advertising conducted through the Co-operative Committee was met as to 50 per cent by Nissan and the remaining 50 per cent was shared between the Metropolitan dealers. In 1996 Nissan was celebrating its 30th anniversary as a motor vehicle supplier in Australia. As part of the anniversary advertising, a number of new initiatives were promoted for the Patrol range of vehicles. Special badging, and the provision of airconditioning to the RX models of the Patrol were introduced in October 1996, and became additional incentives in respect of the Patrol RX 2.8 offered at $39,990. The advertisements the subjects of the charges were intended to promote the Patrol RX 2.8 model with these added incentives. A Patrol RX 4.2 at that time had a recommended retail price of $49,990. In early September 1996, the Co-operative Committee planned an advertising campaign including the advertisement the subject of the first charge. That advertisement was to appear on 21 September 1996. On 20 September 1996 Wightman forwarded to a member of the Co-operative Committee and to Nissan a copy of the first proof of the advertisement for change or approval. On 20 September 1996, Mr Phillips was away from work on sick leave. That morning he had undergone a general anaesthetic as part of a diagnostic procedure. He was discharged from hospital at about 1.00pm. The preceding day he had arranged for the member of the Co-operative Committee to whom a copy of the proof was sent to attend the premises of Wightman to inspect the entire colour layout of the advertisement and to give the Co-operative Committee's final approval. On his release from hospital Mr Phillips telephoned that person to check that the inspection had occurred. He was informed that it had not. The Committee member asked if could pick up Mr Phillips and transport him to Wightman to check the layout. This occurred, and another dealer representative Co-operative Committee member also attended. The proof which Wightman had sent to both Nissan and the committee member on 20 September 1996 did not contain a photograph of a Patrol RX 2.8. It showed another vehicle which was described as "positional only". This occurred as Wightman was unable to locate a photograph of the correct model, and was awaiting receipt of a photograph of a Patrol RX 2.8 from Whybin in Melbourne. Mr Wightman was absent from his office when Mr Phillips and the other two committee members attended. Mr Wightman had delegated responsibility for the advertisement to other staff who showed Mr Phillips and the other two committee members the layout of the advertisement on a computer screen. The layout at that stage did not include a picture of a Patrol RX 2.8. A Wightman staff member explained that Wightman was still processing a photograph of such a vehicle which had just been received from Whybin in Melbourne. Mr Phillips was shown a photograph and informed that it was the photograph that would be processed digitally and inserted in the advertisement. The photograph, a small one, was in fact a photograph of a Patrol RX 4.2 litre diesel which showed over fender flares and wide wheels. Apart from the over fender flares and wide wheels a Patrol RX 4.2 is identical in external appearance to a Patrol RX 2.8. It is possible to fit over fender flares and wider wheels to a Patrol RX 2.8 as accessories at a cost of approximately $1,200. The Statement of Agreed Facts asserts that Whybin sent the wrong photograph to Wightman. In oral evidence given before this Court, Mr Phillips acknowledged that he failed to notice these distinguishing features, perhaps because he was at the time feeling unwell. On 3 October 1996, the ACCC wrote to Nissan's company secretary, Mr A E Paine, in Melbourne informing Nissan of a complaint that had been received in relation to the advertisement, and sought Nissan's comment. On 22 October 1996 Nissan responded, and at the same time wrote to Wightman, Whybin, all regional managers, and Mr Phillips expressing concern about the complaint that an advertisement had depicted an incorrect Patrol model, and requested that advertising agencies implement system changes to prevent any repetition. On 29 October 1996, Wightman wrote to Nissan apologising for "the extreme embarrassment" caused to Nissan by the placement of the incorrect photograph in the offending advertisement. Wightman said that it had structured a series of checks and verifications for all photographic material and had revamped its systems of approval for advertisements. On 31 October 1996 the advertisement the subject of the charge against Mr Wightman appeared in The Advertiser. The same advertisement had appeared as part of the October campaign first on 10 October 1996, and on six intervening occasions. Mr Phillips on behalf of the Co-operative Committee gave approval to the advertisement used in the October campaign. This occurred on 9 October 1996. When Mr Phillips attended Wightman to review the layout and proof of the advertisement Mr Phillips had just been made aware by Mr Paine that the advertisement on 21 September 1996 had contained a picture of the wrong Patrol model. The proof for the October campaign again showed a Patrol RX 4.2. Mr Phillips said the proof showed the wrong photograph. There was not time to arrange for a photograph of a Patrol RX 2.8 to be obtained and processed. Space had been booked with The Advertiser by Wightman for the advertisement commencing the next day. If the advertisement were not inserted, the space would be paid for nonetheless. The proof of the advertisement had to be lodged by 5.00pm that evening. The Statement of Agreed Facts records that: "Wightman told Phillips that there was insufficient time available to obtain the correct photograph and that, in the circumstances, the appropriate thing to do would be to place the notation 'Pic. for illustration purposes only' beside the photograph of the incorrect vehicle. Wightman suggested to Phillips that the use of the expression 'Pic. for illustration purposes only' would overcome the problem and was a common practice in the industry and had been approved by the Motor Traders Association." The Statement of Agreed Facts also records: "In relation to the inclusion of the disclaimer it would appear that Nissan accepted and acted upon the advice of Mr Wightman. There would have been a time delay but no significant cost in obtaining a further transparency from Melbourne or taking a photograph of the correct vehicle in Adelaide." Mr Phillips approved the insertion of the words "Pic for illustration purposes only" as a disclaimer, and the advertisement was then run on eight occasions in October. Those circumstances give rise to the third charge against Nissan and the charge against Mr Wightman. Mr Wightman, in an interview with officers of the ACCC said that on 9 October 1996 he was extremely busy as he was preparing to leave on an overseas trip the following day. However, in submissions before this Court, Mr Wightman's counsel accepted that the advertisement appeared in the form that it did with the disclaimer against the wrong pictorial representation of the Patrol vehicle, not because of the pressure of events happening on 9 October 1996, but because Mr Wightman considered that the insertion of the disclaimer would "cover us legally" - the expression used by Mr Wightman in his interview with officers of the ACCC. Mr Wightman added that he intended to correct the picture when he returned from overseas, but in the meantime he did not consider the advertisement was misleading, because of the disclaimer. Mr Wightman returned from overseas prior to the end of the October advertising campaign, but the photograph used in the remaining advertisements was not altered. The Statement of Agreed Facts says that: "The position of the Office of Business and Consumer Affairs in South Australia was that the use of a disclaimer was only appropriate when advertising second-hand vehicles." The ACCC contend that where a particular second-hand vehicle is being advertised it will often be impracticable for a photograph of the actual vehicle to be used in an advertisement, and in these circumstances it is appropriate to depict in an advertisement a representation of the same make and model of vehicle, together with a disclaimer. Such an advertisement does not mislead or deceive as to the model and features of the vehicle being offered. In the present case the ACCC contend, correctly in my opinion, that to depict a vehicle in an advertisement that shows a model or accessories that differ from the vehicle being offered for sale is misleading or deceptive, and that the misleading or deceptive feature of the advertisement is not removed by a disclaimer such as the one used in the offending advertisements. The disclaimer does not notify the reader that the vehicle offered is a different model, or does not have some of the accessories shown in the advertisement. The second charge against Nissan concerns the television advertisement. The transcript of the advertisement was prepared by Wightman and approved by the Co-operative Committee. The advertisement promoted end of year savings and claimed that consumers would "save a whopping $6,290 on a brand new Patrol RX 2.8 at only $39,990 including free airconditioning". The advertisement was screened on approximately 27 to 31 times each week over four weeks between 10 November and 3 December 1996. The RX Turbo 2.8 Patrol available at $39,990 had been available at that price since 1 October 1995. Even though the recommended retail price exceeded $44,000, the only end of year saving was $2,195 for the free airconditioning. The offending advertisements were published only in South Australia. The Advertiser newspaper has a circulation throughout South Australia. Whilst the offending advertisements advertised vehicles offered by Metropolitan dealers, readers throughout the State could have been influenced by them, and induced to approach a Metropolitan dealer. Similarly, the advertisements transmitted through Channel 7 had wide exposure in South Australia. Evidence placed before the Court indicates that the Patrol RX 2.8 was one of 26 models of all terrain vehicles on the market in Australia in 1996. Twelve companies, including Nissan, were distributing these vehicles. In total in 1996, 50,269 all terrain vehicles were sold throughout Australia. In South Australia 2,683 were sold, and of those, 292 were sold by Nissan. In South Australia the sales of Patrol RX 2.8 totalled 75 units. Of these 17 were sold between 1 September and 31 December 1996, the four month period during which the offending advertisements were published. In 1990 and 1991 before Nissan Motor Manufacturing Co. (Australia) Pty Ltd ceased the Australian manufacture of Nissan vehicles, the Nissan organisation had in excess of 11 per cent of the market share of retail sales of motor vehicles in Australia. By 1996 this had dropped to 3.7 per cent. In the five financial years concluding on 30 June 1996 Nissan sustained cumulative losses of almost $160 million. The loss in the financial year ended 30 June 1996 was $5.1 million. There were substantial staff reductions during the period from 1990 until 1996. In South Australia the staff employed by Nissan reduced from 17 to 2. Whilst I accept that this staff reduction placed additional pressures on Mr Phillips, the circumstances which led to the publication of the offending advertisement indicates that if that pressure played any part in the mistakes which occurred, it was at the most only indirect and minor. The ACCC accepts that the mistakes which occurred in the advertisements were not deliberate, and that Nissan and Wightman did not intend to mislead or deceive. However the offences created by s 53 of the Act are offences of strict liability: Given v C. V. Holland (Holdings) Pty Ltd (1977) 29 FLR 212 and Darwin Bakery Pty Ltd v Sully (1981) 51 FLR 90. Even though the offences were not deliberately committed, the ACCC contends that the offences by Nissan are serious as a substantial corporation like Nissan, which in 1996 had a turnover of some $716 million, should have had in place staff education and compliance programs that ensured that mistakes of the kind which occurred did not happen. An effective compliance program should have included checks which picked up negligent errors and oversights in proposed advertisements. Counsel for the ACCC submitted that the evidence showed a high level of negligence in the checking which actually occurred, both in relation to the printed advertisements and those in the electronic media. The absence of a foolproof compliance program had added significance, it was submitted, in this case because in 1979 Nissan was convicted in the Federal Court of Australia on charges brought under s 53(c) of the Act: see Ducret v Nissan Motor Co. (Australia) Pty Ltd (1979) 38 FLR 126, ATPR 40-111. On that occasion Nissan had advertised in brochures and motor magazines in 1977 that Patrol motor vehicles were fitted with rear stabiliser bars. Some of the models sold between April 1977 and March 1978 were not fitted with the bars. Nissan had pleaded guilty to eight charges brought under s 53(c). In imposing penalty Northrop J observed (38 FLR at 133): "Lax or inefficient management control between departments of a corporation cannot amount to a defence of a breach of s 53(c) of the Trade Practices Act, nor can it mitigate against the seriousness of the offences committed". Nissan therefore had direct experience of the need for a comprehensive compliance program. Further, the ACCC contended that the offence by Mr Wightman was serious for the reason that he was made aware on 9 October 1996 that the pictorial representation of the vehicle intended to be used in the advertisement was not that of a Patrol RX 2.8. Affidavit evidence from Mr Paine, which I accept, indicates that prior to 1996 Nissan's national advertising was arranged and coordinated through a national advertising agency other than Whybin. Nissan and the other advertising agency had in place a program under which all advertisements run either nationally through that advertising agency, or through Co-operative Committees in particular States where advertisements were vetted by specialist trade practice lawyers. However, when that national advertising agency was replaced by Whybin, the South Australian Co-operative Committee continued to engage Wightman. It was only after the present offences had been brought to the attention of Mr Paine that he learned through enquiries that the South Australian Co-operative Committees' advertisements were no longer being vetted by lawyers and that Wightman did not have in place a procedure for having advertisements vetted by lawyers. Mr Paine has frankly informed the Court that he is unable to explain how it came to pass that such a lapse occurred. Nissan accepts that the lapse was unacceptable, and has expressed its regret that the offending advertisements were published. From the time that the offences were brought to the attention of Mr Paine by the ACCC, Nissan has co-operated with the ACCC in its enquiries. Before this Court pleas of guilty were entered by it. In addition, Nissan has, in conjunction with its lawyers, formulated a comprehensive compliance program which has a special relationship to the offences committed. This program has been discussed with the ACCC which acknowledges that it is appropriate. The compliance program has been promulgated throughout the Nissan company, which has also conducted information and training programs with staff based on the ACCC's approved "Best and Fairest" training program. Basic features of the compliance program include an expressed commitment by the managing director and chief executive officer to the implementation of the program, designation of specific responsibilities to senior managers who are required to vet proposed advertisements which are then subject to legal clearance by external lawyers. In addition, Nissan has caused a compact disc to be created of the Nissan vehicle photograph library, which includes all current model photographs of the Nissan vehicle range. This CD is suitable for insertion into a variety of different computer systems. The disc will be available to advertising agencies to ensure that the correct representation of vehicles is available for use in all future Nissan advertisements. Mr Paine's affidavit evidence also outlines the customer service and support systems that are available to Nissan customers, which he says, have received critical acclaim. Nissan has not received any direct complaint in respect of the offending advertisements (other than from the ACCC). Nevertheless, a solicitor on its behalf has made enquiries in relation to each of the 17 Patrol RX 2.8 vehicles that were sold between 1 September 1996 and 31 December 1996. Those enquiries suggest that 11 of the purchasers were highly unlikely to have been motivated by the offending advertisements. The motivation of four of the purchasers is unknown. Two of the purchasers informed the dealers at the time of their transactions that they were motivated by "television" and "The Advertiser". However, the enquiries do not disclose whether the purchasers were actually misled or deceived by the advertisements. Notwithstanding the outcome of these enquiries, Nissan has agreed with the ACCC, and by undertaking to this Court, that it will make an ex gratia payment of $2,000 to each of the 17 purchasers. The ACCC accepts that this is an appropriate compensation package. The undertaking requires that within seven days of the conclusion of the proceedings Nissan will use its best endeavours to locate each of the customers and offer the compensation in a form approved by the Director of Public Prosecutions on behalf of the ACCC. The terms of the undertaking to the Court are available for public inspection. Against this background I turn first to the imposition of penalty on Nissan. Section 79(1) provides for the imposition of a fine on a person guilty of an offence against Part V of the Act, (within which s 53 falls). In the case of a person not being a body corporate the fine shall not exceed $40,000, and in the case of a person being a body corporate the fine shall not exceed $200,000. Section 79(2) provides that where a person is convicted of two or more offences constituted by contraventions of the same provision of Part V, and it appears to the Court that the contraventions have been of the same nature or a substantially similar nature, and to have occurred at or about the same time, the Court shall not, in respect of those offences, impose fines that, in the aggregate, exceed the maximum fine that would be applicable in respect of one offence against that provision of Part V. Nissan contends that the first and third charges fall within the provisions of s 79(2). I do not accept this submission. In my opinion the offences did not relevantly occur "at or about the same time": see Ducret v Colourshot Pty Ltd and Another (1981) 35 ALR 503, at 508-9. Smithers J there said that: "The relevant frame of reference is ... two offences so close together in time that there is a basis in reality for attributing to them a unity in the commission of the actus reus of each ... I regard those offences which were committed at intervals of not less than four days of each other as offences occurring otherwise than at about the same time as each other." Moreover, I do not consider the offences are of the same or of a substantially similar nature. The publication of the advertisement the subject of the first charge arose through the failure of Mr Phillips to recognise that a photograph of the wrong model of vehicle had been shown to him. The circumstances the subject of the second charge are quite different. Mr Phillips then knew that the representation of the vehicle which would appear in the advertisement was not a Patrol RX 2.8. He nevertheless authorised the insertion of the advertisement, although under the influence of erroneous advice from Mr Wightman. Section 16A of the Crimes Act 1914 (Cth) lays down general sentencing principles that apply to the present offences, as each of them is a "federal offence". The Court must impose a sentence that is of a severity, appropriate in all the circumstances of the offence. In arriving at a penalty of appropriate severity the Court is to take into account such of the matters set out in s 16A(2) as are relevant, and are known to the Court. Those matters include the nature and circumstances of the offence, that an offence formed part of a course of conduct consisting of a series of offences of a similar character (as is the case with the third charge), the personal circumstances of any victim, the extent of injury, loss or damage resulting from the offence, the degree to which a person has shown contrition, the fact that a plea of guilty as been entered, and the degree to which the defendant co-operated with the law enforcement agencies. Further, the deterrent effect of a sentence is of particular importance where the offence is one against the consumer protection provisions of Part V of the Act. In Eva v Mazda Motors (Sales) Pty Ltd (1977) 1 ATPR 40-020 at p 17,309, Smithers J said: "There can be no doubt that Parliament intended that serious contraventions of the Act should be punished by substantial penalties. The terms of the Act reveal an intention on the part of the Parliament that the standards of commercial probity which it enjoins should actually be the standards prevailing in trade and commerce. Its purpose is not that such contravention as may occur should be punished but that contraventions shall not occur. Accordingly, subject to the observation above concerning the risk of an appropriate penalty being oppressive in a particular case, it seems clear that penalties imposed by the court ought to be such as to reflect the degree of culpability involved and to have a deterrent quality." Smithers J again emphasised the importance of the deterrent quality of a sentence in Trade Practices Commission v Stihl Chain Saws (Aust.) Pty Ltd (1978) 2 ATPR 40-091 at p 17,896, where in relation to a breach of the provision of Part IV of the Act he observed: "The penalty should constitute a real punishment proportionate to the deliberation with which the defendant contravened the provisions of the Act. It should be sufficiently high to have a deterrent quality, and it should be kept in mind that the Act operates in a commercial environment where deterrence of those minded to contravene its provisions is not likely to be achieved by penalties which are not realistic. It should reflect the will of Parliament that the commercial standards laid down in the Act must be observed, but not be so high as to be oppressive." In the present case Nissan has entered pleas of guilty, and it has throughout, co-operated with the relevant law enforcement agency, the ACCC. It is accepted that there was no intention to mislead or deceive. Moreover, Nissan has adopted a responsible corporate attitude to its obligations under the consumer protection provisions of the Act by volunteering a compensation package to potential victims of the false advertising, even though there is reason to suspect that in some instances the purchasers of the relevant model of vehicle during the period of the advertisements may not have been influenced by them. I accept the evidence from Mr Paine that extensive efforts have now been made to devise and implement a compliance program that should ensure that errors of the kind which occurred will not happen in the future. Even though the false advertisements did not give rise to any direct complaints to Nissan, the evidence of the ACCC shows that a complaint was made to it. The potential victims of false advertising of this kind comprise the members of the community to whom the advertisements are addressed, who have an interest in purchasing the product in question. It is likely, as Nissan submits, that the falsity of the advertisements in The Advertiser was likely to be revealed to a potential purchaser before the transaction occurred. That, however, would not necessarily be the case in relation to the television advertisements. Even in relation to the false advertisements which appeared in the newspaper, they had the potential to attract people to the Nissan dealers in the false expectation of obtaining a particular model of vehicle at a price that was not in reality available. Evidence was put before the Court on behalf of Nissan as to its losses in the five year period preceding the commission of the offences. It is not suggested that Nissan is not in a position to pay any fine that might be imposed for the offences, and in the circumstances I do not treat the evidence of its trading losses as a matter of significance in imposing penalty. I consider the more important consideration to be that the company had a turnover in excess of $716 million in the preceding financial year. It was therefore a substantial supplier of goods to Australian consumers, and the company is plainly of a size where staff training programs and effective compliance procedures should be in place. The shortcomings in the compliance program operating at the time of these offences contributed to the happening of each offence. In fixing penalty, this factor is an important one, but care must be taken not to punish Nissan more than once for the shortcomings. Whilst the offences attract separate penalties, this common feature of the offending must be recognised. Having made that observation about the operations of Nissan nationally, it is significant that the offences in question concern only the South Australian market, and resulted from an aberration that occurred in relation to the application of compliance measures which were in place in respect of advertisements elsewhere in Australia. It is also relevant that in South Australia, although Nissan's national procedures were not being followed, the Co-operative Committee had a basic system of checking advertisements in place, which should have detected the error which occurred. Counsel for Nissan submitted that the Court should impose sentence on the basis that the offending advertisements were not part of Nissan's advertising program, but were the idea of the Co-operative Committee. In a sense this is so, but Nissan met 50 per cent of the cost of advertising undertaken by the Co-operative Committee, and, through Mr Phillips, was directly involved in it. It is notable that after the offences were detected, the new compliance program was designed by Nissan to cover the activities of the Co-operative Committees, and Mr Paine acknowledged that the former compliance program was intended to do so. Advertisements arranged through the Co-operative Committee were part of the promotion of Nissan products, carried out under the authority of Nissan. When this matter came before the Court on 27 July 1998 Nissan entered its pleas, and submissions were made. The Court reserved its decision on penalty. On 28 July 1998 the ACCC issued a media release, the substance of which formed the basis of newspaper and electronic media reports around Australia in the following days. The solicitors for Nissan immediately protested to the ACCC that the media release was inaccurate, and misleading. The Court was asked to relist the matter, and this occurred on 24 August 1998. On Nissan's behalf submissions were made that Nissan had received adverse publicity in consequence of the allegedly misleading and unfair media release. It was also submitted that the media release was unfair as it did not report all the matters put in mitigation in submissions on Nissan's behalf. If a defendant is the subject of media publicity, initiated by the prosecutor, that is inaccurate and on that account the defendant suffers damage that would not have occurred had the media reliance been fair and accurate that is a factor which may go to mitigation of penalty: Eva v Southern Motors Box Hill Pty. Ltd. (1977) 1 ATPR 40-026 at 17,366, 30 FLR 213 at 222-223. However, "adverse" means something more than fair reporting; there must be unfair or incorrect reporting: Trade Practices Commission v Cue Design Pty Ltd & Anor (1996) 18 ATPR 41-475 at 41,836, and ACCC v Nationwide News Pty Ltd and Others (1996) 18 ATPR 41-519 at 42,507. In the present case the media release included statements, referring to Nissan's undertakings, that Nissan would: "· Write to affected purchasers advising of the findings and that they still have a right of private action; and · Offer $2,000 to the purchasers in compensation for the saving they thought they were getting" Nissan argues that the words in italics are misleading, because the undertakings did not require letters to the customers in precisely these terms, and consequently the media release was unfair. The text of the media release did not repeat precisely the words of the undertaking, and for that reason it was not strictly accurate. Undoubtedly, it is desirable that media releases of the kind in question should be accurate, but it is not always easy to copy the exact text of documents admitted into evidence as it is necessary to summarise evidence to produce a meaningful document of reasonable length. The inaccuracies identified by Nissan in this case arise from an attempt to produce an informative, but short summary. I do not consider there to be any substance in the submissions that the media release was misleading, or that the resultant publicity was "adverse". The undertakings expressly say that "Nissan acknowledges that these undertakings in no way derogate from the rights and remedies available to any other person arising from the alleged conduct." As a matter of fact, it was correct that payment of the compensation package did not prevent private action by the purchasers. Further, the undertakings say that Nissan accepts that compensation is payable to customers "in circumstances as alleged in proceedings in the Federal Court…wherein it is alleged persons believed or were likely to believe that the vehicle as advertised…" had the features and savings represented in the advertisements. Any difference between the strict meaning of the text of the undertakings, and the substance of the media release was at the most trifling, and did not render the effect of the media release unfair. The ACCC has a statutory function under s 28 of the Act to make available to the public information in relation to matters that affect consumers. No criticism is made by Nissan of the fact that the ACCC issued a media release on 28 July 1998 concerning the hearing of the prosecution in the Federal Court and the pleas of guilty entered by Nissan. The criticism is directed to the content of this particular release. Nissan is clearly correct in its submission that the proceedings were still "pending" before the Court on 28 July 1998, and that a media release issued whilst proceedings are pending must have no tendency to prejudice or embarrass those proceedings. It is not suggested that the media release here had such a tendency, but nevertheless it is said that the failure to refer to matters raised in mitigation resulted in unfair and therefore adverse publicity. It is true that not every matter raised in mitigation is referred to in the release. On the other hand there is no reference to important matters of aggravation referred to by the ACCC in its submissions. The release contains an accurate summary of the charges, a report on the pleas of guilty, and a reference to the undertakings and compensation packages agreed to by Nissan. The release in addition says: "Nissan stopped the advertising immediately it was contacted by the ACCC. Expressing its regret that this type of incident had occurred, Nissan has agreed to enter into enforceable undertakings…" Important aspects of the pleas in mitigation are thereby included in the release. Overall, I do not think the substance and effect of the release was unfair, or that it led to "adverse" publicity. I do not propose to make any allowance for adverse publicity in fixing penalty. However, when the question of costs for the hearing on 24 August 1998 is argued, the inaccuracies in the media release will be a relevant consideration. The maximum penalties provided by the Act are intended for offences of the most serious kind against Part V. Offences of that kind would involve deliberate conduct intended to mislead or deceive, and to materially benefit the defendant. In the present case the offences were not intentional, and insofar as the company's conduct may have brought about an unintended benefit through potential customers being misled, that benefit has been removed by the compensation package. In relation to the first charge I accept the submission of the ACCC that there was negligence in a serious degree on the part of Nissan. There should have been a compliance program in place in South Australia which included a double checking system, that would have prevented the offence occurring. It is in this respect that the earlier conviction of Nissan is of significance. However, I take into account the fact that the offence probably would not have occurred had Mr Phillips not been on sick leave at the time and suffering the after effects of a general anaesthetic. In my opinion there should be a conviction imposed on the first charge, and a fine of $30,000. On the second charge, in relation to the television advertisement, it is necessary to reflect the fact that the advertisement was run on numerous occasions over a four week period. The evidence adduced on Nissan's behalf does not provide a satisfactory explanation for why the advertisement in its misleading form was allowed to go to air. That it did so again reflects the absence of a compliance program which required advertisements of that kind to be vetted by people with sufficient knowledge and experience to detect a potential breach of the Act. I consider there should be a conviction and fine of $50,000 imposed on the second charge. I consider the conduct the subject of the third charge to be more serious than the conduct the subject of the first charge. The advertisement was run on eight occasions. It was published at a time when Nissan, through Mr Phillips, knew that the picture of the vehicle being advertised showed a model, and accessories, that were not in fact being offered. I take into account the fact that Mr Phillips was advised that the disclaimer would avoid illegality. However, he should have been sufficiently educated as to the requirements of the law to have realised that the disclaimer would not remove the misleading potential of the advertisement. Further, the circumstances which permitted the advertisement to be published highlight the need for a compliance program with proper vetting procedures. I consider there should be a conviction on the third charge and a fine of $50,000. I turn now to the position of Mr Wightman. Wightman is an Adelaide based advertising agency. It is the family business of Mr Wightman. Substantial information was given to the Court as to the personal circumstances of Mr Wightman. He has been a successful businessman. He is of good character, and has involved himself extensively in the affairs of his community. He co-operated with the ACCC in its enquiries, and he has expressed remorse for what happened. His intention to plead guilty was not made known to the ACCC until the eleventh hour, but I think there is force in the submission of his counsel that he felt obliged to defer his decision on the charges until Nissan indicated its intentions. Mr Wightman gave evidence that he believed that the use of the disclaimer was effective in law to prevent the advertisement being misleading or deceptive. Having regard to this evidence, and to Mr Wightman's character and antecedents, counsel on his behalf urged that the provisions of s 19B of the Crimes Act should be applied, and the proven charge dismissed without recording a conviction. Section 19B empowers a court, in the case of a person charged with an offence against the laws of the Commonwealth, to discharge an offender without proceeding to a conviction if the court is of the opinion that it is inexpedient to inflict any punishment having regard to: "(i) the character, antecedents, cultural background, age, health or mental condition of the person; (ii) the extent (if any) to which the offence is of a trivial nature; or (iii) the extent (if any) to which the offence was committed under extenuating circumstances." Counsel stresses that the three requirements set out above are expressed disjunctively. Counsel submits that the Court should proceed either under paragraph (i) or (iii). In Trade Practices Commission v Sun Alliance Australia Ltd (1994) 16 ATPR 41-286 at p 41,850, it was recognised that the provisions of s 19B can apply to a charge brought under the consumer protection provisions of the Act. However, in the case of strict liability offences of the kind created by s 53, I think it would be a rare case that the provisions of the section would be extended to a person responsible for the preparation of a misleading and deceptive advertisement where it was part of the business of that person to prepare advertisements of goods and services. In the present case I do not consider that the offence was committed under extenuating circumstances. I agree with the ACCC that the offence should be viewed as a serious one having regard to the fact that Mr Wightman had been notified that he had the wrong photograph. Counsel for Mr Wightman initially submitted to the Court that the actual profits made by Wightman from the preparation of the offending advertisement were about $1,000, and that the fine should bear some relationship to this level of profit. This estimate of net profit was disputed by the ACCC. Additional factual material was produced by Mr Wightman in support of counsel's estimate. This shows that the October advertising campaign cost $23,939.77 from which Wightman received a gross profit fee of $3,905.77. To this figure Wightman applies its annual ratio of operating expenses to gross profit to arrive at a net profit of $1,132.67. The ACCC submits that insofar as the level of profits received by Wightman might be relevant to the offence committed by Mr Wightman, the Court should have regard to the gross profits, not the net profits. The size of the commercial operation conducted by a defendant charged with a contravention of Part V of the Act, and the ability of the defendant to pay a monetary fine, are relevant considerations in fixing penalty. The gross profits of the defendant are more relevant to the first of these considerations than net profits, and net profits will be more relevant than gross profits to the second consideration. However, it is Mr Wightman, not his company that is charged, and in this type of case, the seriousness of the offence and its potential to harm consumers must be the primary concern, not the financial benefit received from the transaction by the offender. I accept Mr Wightman's evidence that he was under the belief at the time that the disclaimer would have the consequence that no breach of the law occurred. However, that belief was the result of a want of adequate thought or consideration of the circumstances on his part. In the advertising industry, advertising agents are "gatekeepers" who have a responsibility to consider whether advertising material prepared by them for their clients, complies with consumer protection legislation. I do not think that the basis for Mr Wightman's belief, that such a disclaimer could be used in the case of a new vehicle, justified his belief. Had he reflected on the situation he should have realised that the disclaimer he inserted in the advertisement would not draw attention to the misleading or deceptive features of the representation of the vehicle. Notwithstanding Mr Wightman's character and antecedents, I consider that a conviction should be recorded, and a punishment imposed. There will be a conviction recorded and fine of $10,000. I will hear the parties on the question of costs. I certify that this and the preceding twenty (20) pages are a true copy of the reasons for judgment herein of the Honourable Justice von Doussa Associate: Date: 28 August 1998 Counsel for the Prosecutor : Mr C Kourakis QC Solicitor for the Prosecutor : Australian Government Solicitor Counsel for the First Defendant : Mr P Jopling QC Solicitor for the First Defendant : Deacons Graham & James Counsel for the Second Defendant : Mr G Hevey Solicitor for the Second Defendant : Johnson Winter & Slattery Dates of hearing : 27 & 28 July and 24 August 1998 Date of judgment : 28 August 1998