FEDERAL COURT OF AUSTRALIA ACCC v Apollo Optical (Aust) Pty Ltd [2001] FCA 1456 TRADE PRACTICES – applicant claimed declaratory, injunctive and other relief in respect of alleged contraventions by respondent of s 65C(1)(a) of the Trade Practices Act – evidence that respondent co-operated fully in relation to contravention when informed of it – respondent at all times willing to give statutory undertaking under s 87B – parties reached settlement – application for final orders by consent – those orders included an order that the respondent pay the applicant's costs – whether appropriate for Court to refuse to make orders or refuse to make costs order on the basis that the respondent was always willing to give statutory undertaking and do everything necessary to rectify the consequences of its contravention – whether appropriate to make findings of fact for the purposes of s 83 of the Act. Trade Practices Act 1974 (Cth), ss 65C(1)(a), 83 Trade Practices Commission v Cue Design Pty Ltd (1996) ATPR 41-475 referred to Australian Competition and Consumer Commission v Monza Imports Pty Ltd [2001] FCA 1455 referred to AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v APOLLO OPTICAL (AUST) PTY LTD W 278 of 2001 CARR J 17 OCTOBER 2001 PERTH IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY W 278 OF 2001 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant AND: APOLLO OPTICAL (AUST) PTY LIMITED (ACN 069 019 825) Respondent JUDGE: CARR J DATE OF ORDER: 17 OCTOBER 2001 WHERE MADE: PERTH BY CONSENT THE COURT DECLARES AND ORDERS THAT: 1. The respondent has breached s 65C(1)(a) of the Trade Practices Act 1974 ("the Act") by having supplied fashion spectacles designated "CAB 55 002", ("the Spectacles") in trade or commerce which were intended to be used or were likely to be used by consumers but which did not comply with the consumer product safety standard in respect thereof. 2. The respondent, whether by itself, its servants or agents or otherwise howsoever, be restrained for a period of three (3) years from the date of this order from supplying sunglasses or fashion spectacles which are intended to be used by, or of a kind likely to be used by, consumers and which do not have an unobstructed viewing area of the dimensions as required by Clause 2.1.2 of the Australian Standard AS 1067.1–1990 ("the Standard") as varied from time to time or such other standard as may be applicable from time to time. 3. The respondent use all reasonable endeavours: (a) where it has not already so attended, to attend within four (4) weeks of the date of this Order on at least one (1) occasion upon the relevant retail premises of each retailer to whom it has supplied the Spectacles ("the Attendances"); (b) if, in the course of the Attendances, it ascertains that the retailer is still offering the Spectacles for sale, verbally to advise the manager of those retail premises of the Spectacles' non-compliance with the Standard, and request them to withdraw them from sale; (c) within seven (7) days of the completion of the Attendances, to advise the applicant in writing of the details of: (i) the retail premises upon which it attended in the course of the Attendances, and whether the Spectacles had been withdrawn from sale, and if not, the details of the retail premises where the Spectacles had not been withdrawn from sale; (ii) the retail premises upon which it was unable to attend in the course of the Attendances due to the closure of such retail premises; and (iii) the details of the retail premises upon which it attended prior to the making of these orders, and whether the Spectacles had been withdrawn from sale, and if not, the details of the retail premises where the Spectacles had not been withdrawn from sale. 4. The respondent pay a refund to the retailers of the full wholesale purchase price of all the Spectacles that have been returned to the respondent by such retailers where the Spectacles have been withdrawn from sale by them or where the Spectacles have been returned to such retailers by consumers and where those retailers have duly refunded consumers the full retail purchase price of the Spectacles. 5. The respondent accept and pay any requests by consumers for a refund of the full retail purchase price of the Spectacles supplied either directly or indirectly by the respondent upon return of the Spectacles to the respondent and reimburse consumers for the cost of any postage or freight costs incurred by consumers in returning the Spectacles to the respondent. 6. The respondent take all reasonable steps to cause to be displayed, for a period of not less than two weeks from the date of this order, in all retail outlets where the Spectacles were sold, in-store notices of not less than A4 size, in the form set out in Annexure "A" and provide each such store with sufficient copies of the product safety notice set out in Annexure "B" and request such retailers to provide a copy of the latter notice to consumers as and when requested by them. 7. The respondent, at its own expense, cause to be published in "The Weekend Australian" newspaper a product safety notice in the form set out in Annexure "B" and further that the respondent take all reasonable steps to ensure that each such notice shall be: (a) of a size not less than 2 columns wide by 20cm deep; (b) in text which is in a type size not less than 12 point; (c) within the first 17 pages of the newspaper; and (d) published within fourteen days of the making of this Order. 8. The respondent within three (3) months of the making of these orders implement a program of compliance with Part V of the Act in the terms set out in Annexure "C" hereto. 9. The respondent continue to implement the program of compliance with Part V of the Act for a period of no less than 5 years from the date of these orders. 10. The respondent be at liberty to vary the program of compliance with Part V of the Act, by written agreement with the applicant. 11. The respondent have liberty to apply to the Court to vary the program of compliance with Part V of the Act by reason of changes in the law or otherwise by reason of changed circumstances. 12. The respondent pay the applicant's costs fixed in the amount as agreed between them, or in the absence of agreement, as taxed. Annexure "A" Annexure 'B' Annexure C TRADE PRACTICES COMPLIANCE PROGRAM The Part V trade practices corporate compliance program ("the Program") to be implemented by the Respondent shall have the following features 1. The Respondent will use reasonable endeavours to ensure that the Program is tailored to suit the respondent's circumstances having regard to Australian Standard on Compliance Programs AS 3806-1998. 2. The Respondent will place responsibility for the implementation and effectiveness of the Program with senior management. 3. The Respondent will appoint a Trade Practices Compliance Officer within two (2) months of this order. The Trade Practices Compliance Officer will have appropriate knowledge of trade practices law or receive training in trade practices law from a firm of solicitors or compliance professionals with experience in trade practices law. 4. The Respondent will require the Trade Practices Compliance Officer to review all goods supplied by the Respondent or proposed to be supplied by the Respondent which are subject to the product safety standard for sunglasses and fashion spectacles, AS 1067.1-1990 ("the Standard"), to ensure that they comply with the requirements of the Standard. 5. The Respondent will require the Trade Practices Compliance Officer to maintain a documentary record of the compliance reviews of all goods supplied by, or proposed to be supplied by, the Respondent which are subject to the Standard. Such documentary record will include: (a) a description of the goods examined; (b) written advice that the relevant goods have been reviewed and cleared by the Trade Practices Compliance Officer and the date of that review; and (c) written advice of any possible contravention(s) of section 65C of the Trade Practices Act 1974 (Cth) ("the Act") that were identified by the Trade Practices Compliance Officer upon examination of the relevant goods and the action taken to address such possible contravention(s). 6. Prior to the implementation of the Program, the Respondent will ensure that the Program is approved by a firm of solicitors or compliance professionals with expertise in trade practices law. 7. The Respondent will ensure that a firm of solicitors or compliance professionals with expertise in trade practices law conducts training concerning s 65C of the Act to the Respondent and its directors, staff, representatives and agents, on three separate occasions during the three year period commencing from the date of this order. The first of these training programs will be completed within four calendar months of this order and the remaining two annually thereafter. 8. The Respondent will provide written notification to the Australian Competition and Consumer Commission of having conducted each trade practices training program within ten days of the completion of such sessions. 9. The Respondent will ensure that a firm of solicitors or compliance professionals with expertise in trade practices law review the Program on two occasions with a view to identifying deficiencies and implementing improvements to the Program. The firm of solicitors or compliance professionals conducting the review are to set out the findings of the reviews in reports to be provided by the Respondent. The first of these reviews will be conducted within twelve months of the date of commencement of this order and the second twelve months after the initial review. 10. Copies of the reports referred to in paragraph 9 above are to be provided to the Australian Competition and Consumer Commission within ten days of the Respondent receiving such reports. Should the report identify deficiencies in the Program, the Respondent will make the necessary alterations to the Program within three weeks of receiving the said report. Such alterations and their implementation are to be notified to the Australian Competition and Consumer Commission within tens days of implementation. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY W 278 OF 2001 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant AND: APOLLO OPTICAL (AUST) PTY LIMITED (ACN 069 019 825) Respondent JUDGE: CARR J DATE: 17 OCTOBER 2001 PLACE: PERTH REASONS FOR JUDGMENT 1 On 4 July 2001 the applicant filed an application, accompanied by a statement of claim, seeking a declaration that the respondent (a wholesaler) had breached s 65C(1)(a) of the Trade Practices Act 1974 (Cth) ("the Act") in relation to the supply of certain fashion spectacles. The applicant also sought an injunction, ancillary orders concerning the withdrawal of the spectacles from sale, orders that the respondent pay refunds, orders for corrective advertisements, an order that the respondent implement a Trade Practices Compliance Program and formal findings of fact for the purposes of s 83 of the Act. 2 In its statement of claim the applicant relevantly pleaded that the respondent had supplied fashion spectacles designated "CAB 55 002" ("the Spectacles") to two retailers (Myer Stores Limited and Harris Scarfe Limited) around Australia which were intended to be used by consumers or were of a kind likely to be used by consumers. The applicant alleged that the Spectacles were goods of a kind in respect of which there was a prescribed Consumer Product Safety Standard declared pursuant to s 65E(1) of the Act as a Consumer Product Safety Standard for the purposes of s 65C of the Act, namely Australian Standard AS1067.1-1990 ("the Standard"). The applicant further pleaded that the Spectacles did not comply with the Standard in that the circular viewing area centred on the datum centre (as defined in the Standard) of each of the lenses in the Spectacles ("the field-of-view") was 23.5 mm whereas clause 2.1.2 of the Standard specifies the field-of-view of the Spectacles to be a minimum of 30.0mm. The parties have engaged in negotiations and on 29 August 2001 faxed to the Court a minute of proposed consent orders. On the same date the respondent filed its defence in which it admitted all of the allegations made in the statement of claim. The respondent had earlier (on 20 July 2001) filed an affidavit affirmed by one of its officers concerning the facts of the matter. 3 At a directions hearing on 8 October 2001 I raised some concerns with counsel for each of the parties. My first concern was that it appeared from the respondent's affidavit that at all times the respondent had been prepared to take all necessary steps to remedy its default and to do anything which the applicant might consider was required in that regard. In fact, it appeared from the respondent's affidavit that it had already carried out some of those steps. I raised the question whether, in those circumstances, the proceedings were necessary. I was concerned about the appropriateness of the Court making the proposed orders if the same result could easily have been achieved by the statutory undertaking process (under s 87B of the Act) without using up the resources of the parties and the Court by resorting to litigation. I had in mind also whether, for example, the applicant should be denied the costs order in its favour which was contained in the minute of proposed consent orders. Another matter which I raised was whether, as the proposed consent orders contemplated, it was appropriate for the Court to make findings of fact for the purposes of s 83 of the Act in a matter which had not gone to a hearing. I raised certain other matters, some of which were of a drafting nature. 4 I invited the parties to file and exchange submissions on the concerns which I had raised. 5 Each of the parties has filed written submissions. Whether the proceedings were unnecessary 6 In its submissions the applicant adopted almost all of the submissions which it made on this point in similar proceedings, Australian Competition and Consumer Commission v Monza Imports Pty Ltd [2001] FCA 1455, in which reasons for judgment were published today. In summary, the applicant said that it considered whether to accept an undertaking from the respondent under s 87B of the Act as an alternative to instituting these proceedings, but after weighing a number of relevant factors, decided to litigate. The applicant said that one important factor was the seriousness of the breach of the Act in that it related to the breach of a mandatory product safety standard and involved issues of public safety in relation to the supply of spectacles. 7 The applicant stated in its submissions that it had previously accepted a number of undertakings under s 87B from other persons, over a five year period, which arose from the supply of sunglasses not complying with the relevant Product Safety Standard, but despite those undertakings breaches of the relevant Product Safety Standard continued. During the same period the applicant had accepted a number of other more informal but similar undertakings relating to the supply of sunglasses. The applicant had decided that, given the continued breaches of the Standard, neither the statutory undertakings nor the more informal arrangements had had the desired effect of educating traders and protecting the public. 8 Furthermore, the applicant drew the Court's attention to the fact that the respondent had previously provided an administrative undertaking to the applicant pursuant to s 87B on 27 March 1997. That undertaking contained an acknowledgment by the respondent that it had previously supplied sunglasses which did not comply with the Standard. The contravention which is the subject of these proceedings occurred, so the applicant pointed out, within a period of eight months following the expiry of the undertaking given by the respondent in 1997. As part of that undertaking the respondent undertook that it had instituted, and would continue to maintain, a Trade Practices Compliance Program "to prevent so far as is reasonably possible, any contraventions of the Act by Apollo, its directors, servants or agents". The applicant also drew the Court's attention to the fact that there was no reference in the respondent's submissions to it having obtained a copy of the Standard either during the term of the s 87B undertaking, or at any point after its expiration. 9 The respondent, in its written submissions referred to the matters of fact deposed to in certain paragraphs of its affidavit filed on 20 July 2001. There are various matters referred to in that affidavit. The first is that in 1997 when the respondent was advised that a particular model of sunglasses did not comply with the minimum luminous transmittance requirements of the Standard, it immediately withdrew from sale the balance of a total of 16 pairs of such sunglasses which had been distributed to retail outlets in Queensland and Western Australia. It also gave an undertaking under s 87B and fully complied with the terms of that undertaking. Next the respondent said that on 25 October 2000 it received a document from the applicant's Perth office headed "Safety Standard for Sunglasses and fashion Spectacles: Guide for Suppliers" which did not make any reference to the requirement of a minimum circular viewing area. That document is in evidence. I note that, as the applicant points out, the Guide contains a statement that it is intended to be read in conjunction with the Standard. Then the respondent drew attention to the steps which it took immediately upon receipt of the first communication from the applicant in relation to the circumstances of this matter, and its willingness to give an undertaking. There is evidence before the Court to suggest that the respondent is not a particularly large company in financial terms. In its submissions the respondent explained that it agreed to the orders proposed by the applicant because it could not afford the further conduct of legal proceedings in Perth (its business is based in Sydney), particularly given the extensive and expensive corrective advertising being sought by the applicant at the relevant time. 10 The applicant made further submissions concerning the appropriateness of issuing these proceedings rather than accepting an undertaking under s 87B which it is not necessary for me to summarise. my reasoning 11 I accept the applicant's submissions, and in particular those which I have summarised above relating to matters of public safety, its experience with undertakings in this particular area of business and the fact that the respondent had admitted a previous contravention of the Standard which had been the subject of an undertaking in 1997 which included the implementation of a trade practices compliance program. I note that it is common ground that the respondent complied with that undertaking, but I consider that these were relevant factors for the applicant to take into account and in doing so it was entitled to give them substantial weight. 12 Furthermore, in an authority cited by the respondent, Trade Practices Commission v Cue Design Pty Ltd (1996) ATPR 41-475 at 41,834 O'Loughlin J said this: "In my opinion, it is not for the court to express a view that the Commission should have or should not have proceeded under s 87B; the section clearly states that it is the Commission who "may accept a written undertaking" (s 87B(1)). The court has no involvement until (if at all) it is satisfied, on application made by the Commission, that a person has breached an undertaking (s 87B(4))." 13 It is true that that case involved a criminal prosecution, but I do not think that that makes any difference. 14 I respectfully agree with O'Loughlin J's view and will take a similar approach in the particular circumstances of this case. However, I should not be taken as ruling out the possibility that in different circumstances a Court might take into account the Commission's refusal to accept a statutory undertaking when deciding whether to make orders such as those proposed in this matter or to award costs in its favour, even when such orders are proposed on a consent basis. 15 In the circumstances of this case I do not think that the Commission brought these proceedings unnecessarily or acted unreasonably in doing so. the declaration 16 I was concerned about the prospect of making the proposed declaration purely on the basis of the respondent's admissions of the applicant's allegations in its statement of claim. I appreciate that in the context of trade practices matters the Court has in several other cases been prepared to do so. But it seemed to me that, in this matter, it would not be difficult to tender some evidence that the contravention described in the proposed declaration had in fact occurred. On 8 October 2001, at a directions hearing I suggested to the applicant that it might file an affidavit exhibiting the relevant portions of the Standard and the test results of any scientific test for compliance with the Standard. The applicant agreed to do so and such an affidavit was filed in relation to this matter and to the Monza matter. I made a direction that the affidavit stand as evidence in both matters. 17 I am not suggesting that such a course is necessary in relation to proposed consent declarations in all trade practices matters, but I thought that it was appropriate in these matters where it would not be difficult or expensive to put on the necessary evidence. 18 The affidavit contains evidence which confirms the correctness of the factual allegations pleaded in the statement of claim and admitted in the respondent's defence. In those circumstances, I consider that it is appropriate to grant a declaration in the terms sought. the injunctions 19 I have examined the terms of the proposed injunctions in paragraphs 2 to 9 of the minute of consent orders. At the directions hearing referred to above I raised the question whether it was appropriate that the injunction then proposed in paragraph 2 of the minute of proposed consent orders should be a permanent injunction. The parties agreed that it should be for a period of three years. The paragraph has been amended accordingly. I consider that it is appropriate to grant orders in the terms proposed. findings of fact 20 The applicant asks that the Court make findings of fact for the purposes of s 83 of the Act. The respondent consents to such findings being made. The findings of fact sought are in the following terms: "1. The Respondent is in the business of, inter alia, supplying fashion spectacles to retailers for resale to consumers. 2. One of the models of fashion spectacles supplied by the Respondent to retailers is labelled "CAB 55 002" ("the Spectacles"). 3. The Spectacles failed to comply with Australian Standard AS1067.1 – 1990 as the circular viewing area centred on the datum centre is less than 30.0 mm. 4. During the period between 1 November 2000 and 12 April 2001, the Respondent supplied, in trade or commerce, four hundred and thirty (430) pairs of the Spectacles to the retailers specified in the Particulars to paragraph 7 of the Statement of Claim filed in Federal Court No W278 of 2001." 21 Section 83 of the Act provides as follows: "In a proceeding against a person under section 82 or in an application under subsection 87(1A) for an order against a person, a finding of any fact by a court made in proceedings under section 77, 80, 80A or 81, or for an offence against section 79, in which that person has been found to have contravened, or to have been involved in a contravention of, a provision of Part IV, IVA, IVB, or V is prima facie evidence of that fact and the finding may be proved by production of a document under the seal of the court from which the finding appears." 22 The applicant submitted that whether or not evidence had been contested and tested should not be the determinant as to whether the Court should make findings of fact. The determinant should be whether the Court considers the making of findings of fact to be appropriate in all the circumstances of the case, including the policy objectives reflected in the terms of s 83. That policy, so it was submitted, was to provide a means whereby third parties in subsequent actions for damages would be able to avail themselves of prima facie evidence of facts relevant to that application. Such a purpose would be served, so the applicant submitted, whether or not the findings of fact had been made following a contested hearing. I interpolate to observe that this submission, in my view, misses the point. It is obvious that third parties will be helped in subsequent applications for damages if they have prima facie evidence available to them. The question is whether it is appropriate for the Court to take the step proposed in this particular matter where findings of fact are based on admissions and uncontested affidavit evidence. 23 I was not referred to any authority on the question whether a Court should take the step of making formal findings of fact by consent for the purposes of s 83. 24 I am inclined to the view that the Parliament intended "… a finding of any fact by a court …" to mean a finding made after a hearing. The apparent purpose of the provision is to save inconvenience and expense in requiring a matter to be proved more than once, but at the same time protecting the interests of a respondent by conferring on such a finding only the status of prima facie evidence in subsequent proceedings. 25 However, it is not necessary for me to decide the point because I do not think that it is appropriate in the present matter to make the findings of fact sought. 26 Although I have taken the precaution of obtaining some affidavit evidence to ensure that it is appropriate to make the declaration as between the parties in this matter, that evidence, although probably stronger than prima facie evidence, is not much stronger. I have not overlooked the admissions made by the respondent in its defence. costs 27 The parties propose an order that the respondent pay the applicant's costs fixed in the amount as agreed between them, or in the absence of agreement, as taxed. In my view, that order is appropriate. Conclusion 28 There will be orders in terms of the minute of consent orders lodged on 29 August 2001, amended consistently with the above reasons. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of Justice Carr. A/g Associate: Dated: 17 October 2001 Counsel for the Applicant: Mr N E Gvozdin Solicitor for the Applicant: Australian Government Solicitor Counsel for the Respondent: Ms K G Perry Solicitor for the Respondent: Messrs Blake Dawson Waldron Date of Hearing: The application was dealt with on the papers filed Date of Judgment: 17 October 2001