FEDERAL COURT OF AUSTRALIA Australian Competition and Consumer Commission v Keshow (No.2) [2005] FCA 989 TRADE PRACTICES – representative action by ACCC – motion seeking compensation orders pursuant to s 87(1A) of the Act – motion reliant upon findings of fact as between applicant and respondent given in earlier judgment – whether necessary to rely upon s 83 Trade Practices Act 1974 (Cth), s 83 Trade Practices Amendment Act (No.1) 2001 (Cth) Fenech v Sterling (1983) 79 FLR 244 distinguished Jones v Sterling (1982) 63 FLR 216 distinguished Trade Practices Commission v Sterling (1980) 28 ALR 497 cited Australian Competition and Consumer Commission v Black on White [2002] FCA 739 cited Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 cited Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 cited Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 applied Commercial Bank of Australia v Amadio (1983) 151 CLR 447 cited AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v RAMON KESHOW NTD 19 of 2004 MANSFIELD J 21 JULY 2005 DARWIN IN THE FEDERAL COURT OF AUSTRALIA NORTHERN TERRITORY DISTRICT REGISTRY NTD 19 OF 2004 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT AND: RAMON KESHOW RESPONDENT JUDGE: MANSFIELD J DATE OF ORDER: 21 JULY 2005 WHERE MADE: DARWIN THE COURT ORDERS THAT: 1. The Respondent pay compensation pursuant to section 87(1A) of the Trade Practices Act 1974 (Cth) to each of the following persons named in the following amounts: Ingrid White $10,440 Roseanne Dixon $2,080 Deanne Williams $6,930 Louanne Patterson $680 Marlene Doolan $720 Rosina Dickson $4,000 Fiona Turner $1,080 Muriel Palmer $600 in the manner referred to in order 3 hereof. 2. The Respondent pay to the Applicant costs of and incidental to its Notice of Motion of 23 June 2005. 3. The Respondent pay the amounts referred to in order 1 hereof to the 'Australian Government Solicitor Trust Account' at Australian Government Solicitor, Level 20, 25 Grenfell Street, Adelaide SA 5000 within 30 days of the date of these orders. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NORTHERN TERRITORY DISTRICT REGISTRY NTD 19 OF 2004 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT AND: RAMON KESHOW RESPONDENT JUDGE: MANSFIELD J DATE: 21 JULY 2005 PLACE: DARWIN REASONS FOR JUDGMENT 1 On 5 May 2005 I gave judgment in this matter declaring that the respondent had, in the manner specified in the orders then made, engaged in conduct that was in all the circumstances unconscionable in contravention of s 51AB of the Trade Practices Act 1974 (Cth) (the TP Act) and had also, in the manner described in the orders, engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 52 of the TP Act. As a consequence of those findings, I granted an order restraining the respondent from engaging in certain specified conduct for a period of time, and pursuant to s 86C of the TP Act requiring the respondent to undertake a trade practices compliance program. 2 By motion of 23 June 2005 the applicant now seeks orders pursuant to s 87(1A) of the TP Act on behalf of Ingrid White, Roseanne Dixon, Deanne Williams, Louanne Patterson, Marlene Doolan, Rosina Dickson, Fiona Turner and Muriel Palmer as persons who have suffered loss or damage by the conduct of the respondent which I found to have been in contravention of ss 51AB and 52 of the TP Act that will compensate those persons for the loss or damage they suffered. The amount of compensation sought in respect of each of those persons is in the following amounts: Ingrid White $10,440 Roseanne Dixon $2,080 Deanne Williams $6,930 Louanne Patterson $680 Marlene Doolan $720 Rosina Dickson $4,000 Fiona Turner $1,080 Muriel Palmer $600 3 I shall refer to each of those persons collectively as 'the complainants'. I am satisfied that the complainants have each consented in writing to the making of the application on their behalf. For reasons which are apparent from the reasons for judgment given on 5 May 2005, each of the complainants has suffered loss or damage by conduct of the respondent engaged in contravention of a provision of Pt IVA (namely s 51AB) and Pt V (namely s 52) of the TP Act. The procedural requirements imposed by s 87(1B) for the applicant to have made this application are therefore satisfied. The respondent has received due notice of the motion and of the material in support of it. On 4 July 2005 he provided to solicitors for the applicant a facsimile copy of certain proposed orders sought by the applicant upon which he had signed his consent to those orders. 4 The first issue which arises is whether the Court may, on the present motion, act on the findings of fact made as between the applicant and the respondent in the reasons for judgment delivered on 5 May 2005. Section 83 of the TP Act provides that in an application under s 87(1A), a finding of any fact against a person by a court made in proceedings (inter alia) under s 80 in which that person has been found to have contravened a provision of, inter alia, Pt IVA or Pt V is prima facie evidence of that fact. Section 83 then provides that the finding may be proved by production of a document under the seal of the court from which the finding appears. The original application against the respondent was instituted on 15 September 2004. It was instituted, inter alia, under s 80 of the Act, and so (subject to the means of proof) the findings of fact made on 5 May 2005 would be prima facie evidence of the facts so found by reason of s 83. 5 Counsel for the applicant has raised the question whether, for the purposes of this motion, it is necessary for the reasons for judgment in which the relevant findings of fact are made to be under the seal of the Court if they are to be used as prima facie evidence of those findings. At present the reasons for judgment do not themselves bear the seal of the Court, but only the order which was made on 5 May 2005 to give effect to the reasons for judgment. 6 In my view, it is unnecessary to rely at all upon s 83 in the present circumstances. That is because the motion is in the proceedings in which the respondent was found to have contravened ss 51AB and 52 of the TP Act. Such a motion has been possible where the Australian Competition and Consumer Commission (the ACCC) is the applicant only since the Trade Practices Amendment Act (No.1) 2001 (Cth), which came into operation on 26 July 2001. It amended s 87(1A) to enable the ACCC to make claims for compensation on behalf of persons who have suffered loss and damage by conduct contravening the TP Act provided the requirements of s 87(1B) are satisfied. Those requirements include the consent of the persons who have suffered loss, in this instance the complainants. The necessity for the consent of the complainants provides the assurance of knowing that they do not wish to prove facts in support of the claim for compensation different from the facts as found in the action. If that were the case, the consent would be withheld and they (or any of them) could bring separate proceedings for compensation. 7 Before s 87(1A) was so amended, where the ACCC had successfully brought proceedings for a contravention of the TP Act, a separate action for compensation was necessary: see e.g. Fenech v Sterling (1983) 79 FLR 244; Jones v Sterling (1982) 63 FLR 216. Because those applicants were not party to the initial proceedings in which the contravention had been established (see Trade Practices Commission v Sterling (1980) 28 ALR 497), the respondents were not bound by the findings of fact made in the initial proceedings. Section 83 was relied upon to make the findings of fact in the initial proceedings prima facie evidence of those facts in the compensation claim. As is customary in the case of court documents, s 83 also prescribed the means of proof of those findings of fact by requiring the court documents containing them to be appropriately authenticated under the seal of the court. That regime is of course still available in appropriate circumstances. 8 As mentioned, in this matter the motion is in the proceedings in which the findings of fact relied upon have been met. The motion has the same applicant and the same respondent. There is no issue as to the authenticity of the findings of fact relied upon. There are findings already made as between the applicant and the respondent which (in the absence of special circumstances) will still bind them. The respondent has not suggested that they should not be acted upon. I propose therefore to determine the motion, including having regard to the findings of fact made in the judgment of 5 May 2005 as findings of fact already made between the parties. I note that Spender J in Australian Competition and Consumer Commission v Black on White [2002] FCA 739 proceeded in the same manner. If it were necessary to do so, I would secure the seal of the Court on the reasons for judgment of 5 May 2005, but I do not think that it is. 9 Section 87(1A) should be given effect according to its terms: see e.g. Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388. The Court is empowered to make such orders as it thinks appropriate against the respondent provided it considers the orders will compensate the complainants for the loss and damage they suffered as a result of the respondent's conduct. The measure of their loss and damage is made in accordance with the TP Act, and is not constrained by analogy with the measure of damages under the law or torts or the law of contract: Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494. The loss may include the detriment or disadvantage of being bound to a contract induced by unconscionable conduct or by misleading or deceptive conduct: Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31. In this matter, it should reflect the fact that each of the transactions into which each of the complainants entered with the respondent flowed from his unconscionable conduct and misleading and deceptive conduct. The applicant does not seek orders setting aside those various transactions, as they are clearly at an end. However, in the case of certain of the complainants, a question may arise as to whether the loss or damage suffered includes the whole of the payments made to the respondent and also as to whether, if the compensatory order is for the full amount of the payments made, such an order should be conditional upon the return to the respondent of the goods he provided to each of the complainants: see Deane J in Commercial Bank of Australia v Amadio (1983) 151 CLR 447 per Deane J at 481. 10 In the light of those general observations, it is necessary to address the circumstances of each of the complainants separately: (a) Ingrid White 11 Ingrid White paid the respondent $5680 through an account in the name of National Maths Academy (NMA) between 16 September 1998 and 21 May 2004. She received no educational materials from the respondent. I am satisfied her payments to NMA constitute her loss and damage. In addition, she paid the respondent $4760 through an account in the name of Drysdale Correspondence Schools (DCS), between 14 September 2001 and 21 May 2004. She again received no educational materials from the respondent. I am satisfied her payments to DCS also constitute her loss and damage. 12 On 3 June 2004, the respondent gave Ingrid White a colour television and a tape recorder. She had not contracted to buy them. She did not solicit them. They were unrelated to her earlier dealings with the respondent, which concerned the provision of educational materials. I do not propose to reduce Ingrid White's loss and damage to reflect the value of those items, or to make her entitlement to compensation conditional upon their return. In my view, on the findings made on 5 May 2005, they can be isolated from the two contracts under which Ingrid White paid the respondent $10,440. If they were not a gift but upon some form of bailment, the respondent may be entitled to recover them. That is a matter for him. As they were unsolicited, the respondent would also have to confront the obstacles which would arise under s 65 of the TP Act in the event that he sought to recover them, including the time limitation applicable to recovery action under subss 65(2) and (4)(b). 13 In my judgment Ingrid White's loss and damage is $10,440. The applicant has made no claim for loss and damage for her having been deprived of that sum over a period of time and to the present. (b) Roseanne Dixon 14 Roseanne Dixon paid the respondent $2080 through an account in the name of NMA between 24 September 1998 and 14 November 2003. She received three of eight instalments of educational books and tapes, but no tape recorder or bookshelf. It is not clear which of the eight educational modules were provided. The value of the three modules received by Roseanne Dixon is unclear. So too is the cost to the respondent, although it was clearly not very much. The respondent has not sought to adduce evidence on those matters on this motion. Indeed, he has not disputed that compensation orders should be made in the amounts of the respective payments. In my judgment, having regard to the findings in [3] of the reasons for judgment of 5 May 2005, the compensation to be awarded to Roseanne Dixon for her loss and damage is $2080. 15 The respondent gave (or lent) to Roseanne Dixon further unsolicited items, namely a baby's dress in 1999 and a portable stereo and a DVD disk in 2003. For the reasons referred to in [12] above, I do not propose to reduce Roseanne Dixon's compensation by the amount of their value (even assuming I could put some value on them) or to make her compensation entitlement conditional on her returning those items to the respondent. (c) Deanne Williams 16 Deanne Williams paid the respondent $6080 through an account in the name of NMA $6080 between 24 September 1998 and 22 July 2004. She received two modules only of the educational materials, but again no tape recorder or bookshelf. In addition, she paid the respondent through an account in the name of Easy Buying Service (EBS), $850 between 29 May 2003 and 31 December 2003. She did not order through the respondent any particular goods to be purchased on lay-by, nor did the respondent have any record of any such order. Subsequently, in May 2004, the respondent provided her with a DVD player and a television set. Those items were unsolicited. 17 For the same reasons as those given in [12] above, notwithstanding that Deanne Williams received two modules of educational materials, in my view her loss and damage flowing from the conduct of the respondent which contravened the TP Act is the $6080 paid to the respondent through NMA. For the reasons referred to in [12] above, I also consider that she should be compensated for $850 paid to the respondent through EBS, and I do not propose to reduce her compensation by the value of the unsolicited items provided to her some six months after she had ceased making periodical payments, or to make her compensation entitlements conditional on her returning those items to the respondent. In my view she should be compensated by the respondent in the sum of $6930. (d) Louanne Patterson 18 Louanne Patterson paid the respondent $680 through an account in the name of NMA between 24 September 1988 and 6 May 1999. During that period, she received only one of eight educational modules. For the reasons given in [12] above, in my view she should be compensated for the loss and damage suffered by reason of the respondent's conduct in contravention of the TP Act for the sum of $680, notwithstanding the receipt of that one educational module. (e) Marlene Doolan 19 Marlene Doolan paid the respondent $720 through an account in the name of NMA between 25 September 1998 and 21 May 1999. She received a number of educational materials and a tape recorder during the period she maintained those payments, although she did not receive the full set of educational materials. The periodical payment form was cancelled at her request following a further conversation with the respondent in May 1999. 20 I found that Marlene Doolan understood the effect of the periodical payment form which she executed in September 1998. Notwithstanding that, I reached the conclusion in the reasons for judgment of 5 May 2005 that the respondent's conduct in entering into the transaction with her was unconscionable, as was his conduct in then receiving the periodical payment forms. I also found that his dealings with her contravened s 52 of the TP Act for the reasons then given. Having regard to the findings made as to the nature and content of the educational materials, and those matters, and in this instance also to the respondent's consent to the amount of the compensation claimed on behalf of Marlene Doolan being awarded to her against the respondent, as a matter of practical justice I have reached the view overall that Marlene Doolan should be compensated for her loss and damage by reason of the respondent's conduct in contravention of the TP Act for the amount of the payments made to him, namely $720. (f) Rosina Dickson 21 Rosina Dickson paid the respondent $4000 through an account in the name of NMA between 10 August 2000 and 1 October 2003. She received only one set of educational materials in that time. In Mid 2003, the respondent provided to her a watch and a portable stereo. They were unsolicited goods. They were not items which it was the business of NMA to supply. The watch worked only for a brief period and the stereo did not work. 22 For the reasons given above, in my view Rosina Dickson should be compensated for the amount of the payments she made to the respondent, notwithstanding the supply to her of one module of educational material. I also consider that the unsolicited goods should not lead to a reduction in her compensation both for the reasons given in [12] above and because on the evidence they had no real value. Nor do I consider that her compensation entitlement should be conditional upon her returning those unsolicited items to the respondent. (g) Fiona Turner 23 Fiona Turner paid the respondent $1080 through an account in the name of EBS between 15 May 2003 and 8 January 2004. She cancelled the periodical payment form because she had received no goods from the respondent. Subsequently, he contacted her to collect a DVD player from a hotel in Alice Springs. That was an unsolicited item after the contract had come to an end. The evidence suggests that the DVD player eventually given to her had a retail purchase value of no more than $200. It could not have been provided to her to satisfy the contractual obligation. The respondent did not keep any record to indicate that, following May 2003 he procured and appropriated any particular item or items to be held on her behalf and to be provided to her when their cost or price was satisfied. For the reasons given in [12] above, I think her compensation should be for the full amount of her payments to the respondent notwithstanding the subsequent provision of that unsolicited item, and that her compensation entitlement should not be conditional on her returning that item to the respondent. (h) Muriel Palmer 24 Muriel Palmer paid the respondent $600 through an account in the name of EBS between 4 June 2003 and 21 January 2004. She did not order a particular item or items from the respondent. Following the contract made in May 2003, the respondent did not acquire or appropriate any particular item or items to be held on her behalf pending her periodical payments reaching the cost or price of that item or items. In December 2003 he provided to her a DVD player. That item was not ordered by her. It was not acquired by the respondent and held by him as a lay-by supplier. On the evidence, its normal retail price would not have exceeded $200. I accept that it was an unsolicited item. For the same reasons as given earlier in respect of Fiona Turner, in my view Muriel Palmer's compensation should be assessed at the full amount of her payment to the respondent, namely $600. I have also taken into account the respondent's consent to the making of a compensation order in that amount in her favour. That compensation should not be reduced by reason of the provision to Muriel Palmer of a DVD player in December 2003, nor made conditional upon its return. CONCLUSION 25 Accordingly, I order that the respondent pay to each of the complainants referred to in [2] hereof compensation in the amounts there specified. To facilitate the payment of the compensation so ordered to be paid, I propose to direct that the respondent pay the total of the compensation ordered to the 'Australian Government Solicitor Trust Account' and addressed to Australian Government Solicitor, Level 20, 25 Grenfell Street, ADELAIDE SA 5000 within 30 days of the date of this order. The respondent should also pay the applicant's costs of and incidental to the notice of motion. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield. Associate: Dated: 19 July 2005 Counsel for the Applicant: N Wilson Solicitor for the Applicant: Australian Government Solicitor Counsel for the Respondent: The respondent did not appear Date of Hearing: 5 July 2005 Date of Judgment: 21 July 2005