FEDERAL COURT OF AUSTRALIA

Australian Competition & Consumer Commission v Goldy Motors Pty Ltd

[2000] FCA 1885

TRADE PRACTICES – representations about opportunity to purchase motor vehicles free of Goods and Services Tax – representation that no finance application would be refused – obscure qualification in small print concerning prior approval of purchasers to whom finance would be granted – whether the representations concerned “the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy” [s 53(g) of the Trade Practices Act].

PRACTICE AND PROCEDURE – costs – negotiations between applicant and respondent concerning terms of undertaking to be given by respondent to applicant and appropriate remedial steps to be taken by respondent – applicant fixed deadline for negotiations to be completed – respondent requested extensions of deadline – applicant granted two such extensions but matter not resolved – proceedings instituted – matter settled on basis that respondent admitted contravening s 52 and s 53(e) of the Trade Practices Act, but not s 53(g) – some of the remedial steps originally sought by the applicant were not included in the terms of settlement – respondent consented to declarations to the effect that it had contravened s 52 and s 53(e), but contended that its conduct should not be the subject of declarations that it had contravened s 53(g), if it were found to have done so – whether as a matter of discretion such additional declarations should be made – appropriate costs order.

A New Tax System (Goods & Services Tax) Act 1999 (Cth)

Trade Practices Act 1974 (Cth), ss 52(1), 53(e), (g)

Henderson v Pioneer Homes Pty Ltd (1980) ATPR 40-159 applied

Forster v Jododex Pty Ltd (1972) 127 CLR 421 applied

Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 applied

Oshlack v Richmond River Council (1998) 193 CLR 72 applied

Gardner v Dairy Industry Authority of New South Wales (1977) 18 ALR 55 distinguished

Messiter v Hutchinson (1987) 10 NSWLR 525 distinguished

Rivers v Bondi Junction-Waverley RSL Sub-Branch Ltd (1986) 5 NSWLR 362 distinguished

Metcalfe v NZI Securities Australia Ltd (unreported, Federal Court of Australia, Sackville J, 29 June 1995) referred to

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v

GOLDY MOTORS PTY LTD

W 123 OF 2000

CARR J

20 DECEMBER 2000

PERTH

Upon the undertaking of the respondent to use its best endeavours to cause the Motor Trades Association, at the cost of the respondent, to distribute to all of its members who are motor vehicle dealers and to the proprietors of the businesses conducted under the names “South City” at 1900 Albany Highway, Maddington, Western Australia, “Wagon City” at 1787 Albany Highway, Kenwick, Western Australia, “Motor King” at 1872 Albany Highway, Maddington, Western Australia and “Easy Fleet” at 484 Albany Highway, Victoria Park, Western Australia, a circular in terms of Attachment A to these orders, the Court:

1.         Orders and declares that on 14 June 2000 in respect of a statement by the respondent concerning the effects of A New Tax System (Goods & Services Tax) Act 1999 (Cth) and related ancillary legislation on new motor vehicles sold by it, the respondent, in trade or commerce, engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 52(1) of the Trade Practices Act 1974 (Cth) (“the Act”).

2.         Orders and declares that on 14 June 2000 in respect of a statement by the respondent concerning the effects of A New Tax System (Goods & Services Tax) Act 1999 (Cth) and related ancillary legislation on new motor vehicles sold by it, the respondent, in trade or commerce in connection with the supply or possible supply of new motor vehicles made misleading representations in contravention of s 53(e) of the Act.

3.         Orders and declares that on 14 June 2000 in respect of a statement by the respondent concerning the effects of A New Tax System (Goods & Services Tax) Act 1999 (Cth) and related ancillary legislation on new motor vehicles sold by it, the respondent, in trade or commerce in connection with the promotion of the supply of new motor vehicles, made false or misleading representations in contravention of s 53(g) of the Act.

4.         Orders and declares that on 14 June 2000 in respect of a statement by the respondent concerning the approval of applications for finance for used motor vehicles sold by it, the respondent in trade or commerce engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 52(1) of the Act.

5.         Orders and declares that on 14 June 2000 in respect of a statement by the respondent concerning the approval of applications for finance for new and used motor vehicles sold by it, the respondent in trade or commerce in connection with the promotion of the supply of new and used motor vehicles, made false or misleading representations in contravention of paragraph 53(g) of the Act.

6.         Orders that for a period of 5 years from the date of this order the respondent whether by itself, its servants or agents or any of them or otherwise howsoever, be restrained from publishing:

            (a)        the abbreviation “T.A.P.” or any similar abbreviation in any advertisement; and

            (b)        the words “no finance application refused” or any similar words in any advertisement without a clear and prominent statement of any qualification to those words.

7.         Orders the respondent to conduct a trade practices compliance programme in the form outlined in Attachment B to these orders.

8.         Orders that the respondent pay the applicant’s costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

ATTACHMENT A

CIRCULAR

Important Notice to Motor Vehicle Dealers

Use of abbreviation "T.A.P." in advertisements breaches the Trade Practices Act

In a newspaper advertisement in June 2000, a member of the Association, stated "no finance application refused".  The statement included an asterisk with a qualification in smaller print "T.A.P." meaning "to approved purchasers".  In a recent investigation the Australian Competition & Consumer Commission concluded that it was likely that the overall impression created by such an advertisement for some readers may be that no finance application will be refused. The creation of such a misleading impression is a breach of the Trade Practices Act.

In proceedings in the Federal Court, Goldy Motors Pty Ltd has admitted that it breached the Trade Practices Act by publishing the advertisement.

The Association is aware that others may be using a similar form of advertising.  Members are reminded of their obligation under the Trade Practices Act to ensure that advertising is not misleading or deceptive. Contraventions of the Act may lead to serious consequences, including fines, obligations to make refunds or pay compensation, court orders and requirements to publish corrective advertising.

All businesses should have a procedure in place to ensure that advertisements are checked to ensure they do not create a misleading impression.

It is recommended that members take steps to make sure that advertisements are carefully reviewed before they are published. In checking advertisements it is important to keep in mind the average reader or listener and consider the impression that your advertising \Vil1 create.

Simple easy to read brochures explaining your obligations under the Trade Practices Act can be obtained by contacting the Australian Competition & Consumer Commission, 3rd Floor Eastpoint Plaza, 233 Adelaide Terrace Perth WA 6000. Telephone 93253622 Facsimile 93255976.

[1088CD/1h]

ATTACHMENT B

The Respondent will within three calendar months of this order:

1.         Appoint a senior manager of its business as the person responsible for implementation of the terms of this order relating to ongoing compliance with the Act ("the Trade Practices Compliance Officer").

2.         Ensure that the Trade Practices Compliance Officer receives training in the application of the provisions of ss.52 and 53 of Part V of the Trade Practices Act 1974 (Cth) ("the Act") to advertisements from a firm of solicitors or compliance professionals with experience in trade practices law.

3.         Establish a system by which all print, radio and television advertisements published by the Respondent are reviewed prior to their publication to ensure compliance with ss.52 and 53 of the Act, will maintain a documentary record of such review, and will make available to the Applicant within 14 days of a written request a copy of any extract from such record that is reasonably required by the Applicant.

4.         Establish a system to ensure that its employees from time to time responsible for supervising the publication of advertisements by the Respondent receive training in the application of the provisions of s.52 and 53 of the Act to the publication of advertisements by the Respondent.

5.         Within one month of the first and second anniversaries of this order cause a written report in respect of the steps taken by the Respondent under paragraphs 1, 2 and 4 to be provided by an independent legal practitioner with experience in trade practices law to the Applicant.

[W97/1 060CD/fmh ]

REASONS FOR JUDGMENT

introduction

1                     In this application the parties have by agreement resolved all but three of the issues between them.  The three unresolved issues are: (a) whether, in addition to committing three admitted contraventions of certain provisions in Part V of the Trade Practices Act 1974 (Cth) (“the Act”), by engaging in the same conduct the respondent committed two further contraventions of another provision in that Part; (b) if so, whether the Court should, in addition to making three declarations concerning the admitted contraventions upon which the parties are agreed, make two further declarations; and (c) what costs order should be made.

factual and procedural background

2                     On 14 June 2000 the respondent, which carries on business selling new and used motor vehicles, caused a full page advertisement to be published in “The West Australian” newspaper (“the Advertisement”).  Very near the top of the advertisement there appeared, in large letters, the words “last chance to buy … G.S.T. FREE!!” beside a representation of a desk calendar showing the date “June 30^th 2000”.  Just above that message, within a shape resembling an old-fashioned legal seal there appeared the words:

“NO

FINANCE

APPLICATION

REFUSED!^*

^* t.a.p.”

3                     I was informed at the hearing of this matter that ‘T.A.P.” stands for “To Approved Purchasers”.

4                     Below these words were set out photographs and details of some twenty-three used motor vehicles and seven new motor vehicles. 

5                     The Advertisement immediately came to the notice of the applicant which, on 15 June 2000, wrote to the respondent expressing its concerns about it.  There ensued further correspondence and meetings between the parties with a view to reaching an agreement whereby, among other things, the respondent would give an undertaking pursuant to s 87B of the Act.  The parties were unable to resolve the matter and on 26 July 2000 the applicant filed this application which was accompanied by a statement of claim.  On 9 August 2000, at the first directions hearing, orders were made by consent which included an order that the matter be listed for a preliminary conference before a Registrar as soon as practicable.  Two fairly lengthy such conferences took place before Deputy Registrar E M Stanley on 29 August and 5 September 2000.  The Deputy Registrar was told at the conclusion of the second conference that the matter had been settled “except as to costs”. 

6                     As scheduled at the first directions hearing, the application came before me again for directions on 13 September 2000.  On that occasion the respondent was given leave to file its defence in Court.  That defence showed that there was substantial agreement between the parties and that only the three above-mentioned issues remained to be resolved.  I made programming orders for the applicant to file and serve a minute of proposed final orders and for both parties to file affidavits and outlines of submissions with the application then to be listed for hearing.  The application was heard on 14 December 2000.

the pleadings

7                     In summary, the applicant claims that by causing the Advertisement to be published the respondent made two representations.  The first, which I shall call “the GST Representation”, was said to represent that all of the effects of the Goods and Services Tax (“the GST”) [enacted by the A New Tax System (Goods and Services Tax) Act 1999 (Cth)] on used and new motor vehicles could be avoided by buying before 1 July 2000.  The second representation, which I shall call the “Finance Representation”, concerned the statement “No finance application refused!” to which I have referred above.  In its statement of claim the applicant claims that by making the GST Representation the respondent engaged in conduct that was misleading or deceptive (or both) or likely to mislead or deceive (or both) and had thereby contravened s 52 of the Act.  The same complaint is made in relation to the Finance Representation.  The applicant further alleges that by making each of the GST Representation and the Finance Representation the respondent contravened s 53(g) by making a false or misleading representation concerning the existence, exclusion or effect of a condition with respect to the price of the respondent’s goods on and after 1 July 2000 and (respectively) with respect to finance applications for their goods.  The applicant also alleges that by making the GST Representation the respondent contravened s 53(e) by making a false or misleading representation with respect to the price of their goods on or after 1 July 2000.

8                     In its defence the respondent admits that the publication of the Advertisement was at its request and with its full knowledge and approval.  It says that the Advertisement was prepared as two advertisements, one relating to used motor vehicles and one to new motor vehicles and that it did not intend the heading relating to used motor vehicles to apply to that part of the Advertisement which related to new motor vehicles.

9                     The respondent admits that, by publishing the Advertisement, it was likely to have created the impression for some readers that after 30 June 2000 there would be a material increase in the market price of new motor vehicles and that such a purchaser, by purchasing a new motor vehicle before 1 July 2000 could avoid that price increase, which would not be the case for a purchaser who was liable to pay sales tax.  It admits that by such conduct it contravened s 52 and s 53(e) of the Act, but denies having contravened s 53(g).

10                  As to the Finance Representation, the respondent admits, essentially, that in the Advertisement it made an implied representation that every person who applied for finance in order to buy a new or used motor vehicle from it would have their application approved.  It admits that by doing so it contravened s 52 of the Act, but not s 53(g).  Under the terms of the (partial) settlement of this matter the respondent is to give an undertaking to cause a circular to be distributed to all of the members of the Motor Trades Association and to four motor vehicle retailers who, presumably, are not members of that Association.  The circular refers to the use by the respondent of the abbreviation “T.A.P.” in the Advertisement, the applicant’s investigations and these proceedings.  It then reminds the members of the Association of their obligation under the Act to ensure that advertising is not misleading or deceptive.  It contains other paragraphs which it is not necessary to recite.

11                  Bearing in mind the nature of the contraventions admitted and the public benefit purposes of the provisions which have been contravened, I have no doubt that the acceptance of such an undertaking is both within the jurisdiction of the Court and appropriate.  It will be accepted.

12                  The parties are also agreed that declarations should be made that the respondent contravened s 52(1) and s 53(e) of the Act in relation to the GST Representation and that it had contravened s 52(1) in relation to the Finance Representation.

13                  The parties have also agreed on the terms of an injunction restraining the respondent from publishing the abbreviation “T.A.P.” or any similar abbreviation in any advertisement, and from publishing the words “No finance application refused” or any similar words in any advertisement without a clear and prominent statement of any qualification to those words.  Finally, the parties have agreed that the Court should direct the respondent to conduct an agreed trade practices compliance programme.

14                  I am satisfied that this Court has jurisdiction and power, and that it is appropriate, subject to making some minor editing changes to the proposed declarations and specifying a time limit in relation to the second last order referred to above, to make the declaratory and other orders which I have just described.  In relation to the time limit for the injunction, I think that it is reasonable that the respondent should, after five years of compliance, no longer be under the threat of proceedings for contempt of court.

the issues to be decided

15                  The first issue is whether the respondent has committed two contraventions of s 53(g).  The second issue is, if the respondent has committed either or both of these further two contraventions, whether the Court should make the additional declaration or declarations sought by the applicant to the effect that by making the GST Representation or the Finance Representation (or both) the respondent contravened s 53(g) of the Act.  The third issue is what order for costs should be made.

16                  In oral submissions, counsel for the respondent suggested (as I understood his submissions) that I should consider first whether, on the assumption that the respondent had twice contravened s 53(g), it would be a proper exercise of the Court’s discretion to grant the declarations sought in that regard.  If not, the Court would not need to consider whether there had actually been such contraventions.  No authority was cited to support such an approach.  I do not think that the course proposed by the respondent’s counsel is an appropriate one.  I propose to consider and decide whether there have been the contraventions of s 53(g) as alleged by the applicant.  If I so find, I will then consider the circumstances relating to any such contravention or contraventions, and the discretionary matters relevant to the question whether any further declarations should be made.

section 53(g)

17                  The applicant submits that s 53(g) of the Act is concerned with misrepresentations about the existence or effect of contractual rights and obligations.  That is common ground between parties.  In relation to the misrepresentations contained in the Advertisement, the applicant contends that s 53(g) requires a comparison between the actual transaction which is being promoted and the representations made in the Advertisement about that transaction.  It refers to the statement “LAST CHANCE TO BUY … GST FREE!!” immediately followed by a calendar bearing the words “June 30, 2000”.  The applicant contends that the Advertisement represented that a prospective purchaser might enter into a contract with the respondent for the purchase of a vehicle from the respondent prior to 30 June 2000 which would be free of GST, when in fact there might have been GST payable in respect of such a contract.  That would have been the case, so the applicant submits, if the motor vehicle were supplied on or after 1 July 2000, or finance were obtained which required the purchaser to repay the money borrowed after 1 July 2000.  Thus, so the applicant contends, the Advertisement contained misleading representations about the effect of the terms of the sale transaction being promoted on the total price payable by a purchaser under the contract.

18                  As to the Finance Representation, the applicant says that the Advertisement represented that a prospective purchaser of a vehicle from the respondent would have the right to obtain finance to fund the purchase of any of the advertised vehicles i.e. that under the sale transaction being promoted, a purchaser would have the right to purchase a vehicle with finance provided by or arranged through the respondent.  This was not the case, because only approved purchasers would have had their applications for finance approved by the respondent.  The applicant points to the fact that by its defence the respondent admits that the Advertisement was misleading.

19                  The respondent denies that it has contravened s 53(g).  It contends that the respective representations concern (a) the taxation consequences of purchasing a new motor vehicle and (b) whether an application for finance would be refused.

20                  It says that such representations do not concern the “existence, exclusion or effect of a condition, warranty, guarantee, right or remedy” within the meaning of those expressions in s 53(g).  The respondent submits that this is not a case where the terms of conditions of a contract are the subject of the respective representations.

21                  It was common ground between the parties that a purchaser who purchased a vehicle from the respondent before 30 June 2000 would have to pay GST if the motor vehicle were supplied on or after 1 July 2000 and would also have to pay GST on each instalment repayment (made on funds borrowed or otherwise made available to finance the purchase) on or after 1 July 2000.

my reasoning

22                  Section 53(g) relevantly provides that a corporation shall not in trade or commerce in connection with the promotion by any means of the supply or use of goods or services:

“(g)     make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy.”

23                  In its statement of claim the applicant claims that the GST Representation was a false or misleading representation concerning the existence, exclusion or effect of a condition with respect to the price of the respondent’s goods on and after 1 July 2000.  In its submissions there is no reference to any exclusion but rather to the existence or effect of the condition or conditions relating to the total price payable by a purchaser to the respondent under any contract entered into before 1 July 2000.  In respect of the Finance Representation the applicant pleads that it was a false or misleading representation concerning the existence, exclusion or effect of a condition or right with respect to finance applications for the respondent’s goods.

24                  There has been some debate about the sense in which the expression “condition” in s 53(g) is to be understood – see Henderson v Pioneer Homes Pty Ltd (1980) ATPR 40-159 at 42,244.

25                  However, in my view, contractual terms governing the price of a motor vehicle and an unqualified right to finance for the purchase of the vehicle would each be sufficiently fundamental to the transaction as to amount to conditions.  If not, they would of course be warranties.  There were no submissions from the respondents to the effect that these terms were warranties rather than conditions, and that there had been no reference to warranties in the statement of claim.  The essence of the respondent’s defence is that this is not a case where the terms or conditions of a contract were the subject of the respective representations.

26                  I have found the decision in Henderson of considerable help in deciding this issue.  Henderson involved an advertisement for a house and land package in which statements were made to the effect that the vendor would arrange the necessary loans for the purchaser to be repayable at not more than $45 per week.  At 42,244-245 Smithers J said this:

“… the advertisement is concerned not with a transaction which has been entered into by the parties.  It is one of those cases referred to in the opening words of sec. 53 where, whatever statements are made in the advertisement, are made in connection with the promotion of the supply of services.  In this context, the only conditions which are relevant are those which the advertisement states will be part of the transaction being promoted if the parties actually enter into it.

. . .

The concept invoked by sec. 53(g) is that of a transaction being promoted.  In relation thereto, what does exist is the collection of rights and duties which will be acquired or assumed by the parties to the transaction being promoted as between the proposed vendor and the proposed purchaser, if they enter into the transaction which the promoter actually has in mind, and is promoting. 

. . .

When sec. 53(g) refers to a condition which is existing or not existing, or stated accurately or otherwise it is inevitably referring to a condition to be observed by one of the parties in the actual transaction in the mind of the promoter and which he is actually promoting.  The conditions in the transaction being promoted are to be identified as those which the vendor is actually offering, not what he says in his advertisement that he is offering.  If the advertisement states that one of those conditions is of a particular kind, but that condition is not included in the bundle of rights and duties in the transaction which the vendor intends to make, then it is correct to say that that condition does not exist and the statement that a transaction with that condition in it is being offered is false or misleading.”

27                  I think that a fair reading of the Advertisement is that any person purchasing a motor vehicle from the respondent between 14 and 30 June 2000 would have the right to do so free of GST and also the right to have any application for finance accepted.  That is, the contract to be entered into between the parties would contain conditions to that effect.  It was common ground that the respondent would “pass on” to purchasers any GST liability in respect of motor vehicles delivered on or after 1 July 2000 and in respect of instalment repayments on or after that date of funds borrowed or otherwise made available to finance such a purchase.  The respondent has conceded that each of the GST Representation and the Finance Representation was misleading and deceptive.  In my opinion, what was represented was not to be included in the bundle of rights and duties in the transactions which the respondent intended to make.

28                  I reject the respondent’s submission that this is not a case where the terms or conditions of a contract were the subject of the representation.  In my view, they were.  Accordingly, in my opinion, by making each of the GST Representation and the Finance Representation the respondent contravened s 53(g).

Whether the further declarations should be made

29                  The respondent points out, correctly, that even if it has contravened s 53(g), the granting of declarations is a matter of discretion.  It argues that in this case no significant practical consequence would be served by the making of the declarations and accordingly the Court should decline to grant them.

30                  Applying the principles explained in Forster v Jododex Pty Ltd (1972) 127 CLR 421 at 437-438; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581-582 and Gardner v Dairy Industry Authority of New South Wales (1977) 18 ALR 55 (also a decision of the High Court of Australia) it seems to me that:

1.         The declarations sought are directed to the determination of a legal controversy and not to answering abstract or hypothetical questions.  In its statement of claim the applicant identified the conduct in which the respondent has now admitted it engaged, and asserted that by such conduct the respondent had twice contravened (among other provisions) s 53(g) of the Act.  The respondent denied those claimed contraventions.  I think that the applicant is entitled to have the Court resolve the issue.  In some cases it might be appropriate simply to make findings of fact including findings that a respondent has contravened a provision of, relevantly, Part V of the Act.  Such findings might be of evidentiary value in subsequent proceedings – see s 83.  But in this case, subject to the other discretionary matters referred to below, I think that the applicant, having proved its case against the respondent, should be granted a declaration vindicating its claim.

2.         The applicant, as the public body charged with enforcing the Act, has a “real interest” in seeking the relief;

3.         The relief is not “purely hypothetical”; and

4.         The respondent is “a proper contradictor”.

31                  There remains the question, discussed in Gardner, about whether the Court’s declarations can produce any foreseeable consequence for the parties.  In Gardner the relevant legislation had been repealed and replaced.  With due respect, there was patently no point in making the declaration sought in that case.  This case is, in my opinion, relevantly different to Gardner. 

32                  Counsel for the respondent submitted that the agreed declarations and injunctions covered the field of activity which had been engaged in by the respondent.  He further submitted that, in the absence of a dishonest or flagrant contravention of the Act, the granting of these further declarations was “an entirely unnecessary exercise”.  In that regard he relied upon the observations of Sackville J in Metcalfe v NZI Securities Australia Ltd (unreported, Federal Court of Australia, 29 June 1995) at 5.  I do not think that conduct which is to be the subject of agreed declarations and which, at the same time, constituted further contraventions of other provisions of the Act, needs to be dishonest or flagrant before a court may, in its discretion, grant additional declarations of such further contraventions.  Sackville J in Metcalfe was simply using this as an example of a reason why a declaration might be granted.  He was not suggesting that such circumstances comprised a universal condition precedent for the grant of such declaratory relief.

33                  The respondent also relied upon the decision of the New South Wales Court of Appeal in Rivers v Bondi Junction-Waverley RSL Sub-Branch Ltd (1986) 5 NSWLR 362 (which involved a challenge to an annual election) as an example of a case where the appellant had made out his case on the merits but was denied declaratory relief.  In my view, Rivers is clearly distinguishable.  There were so many factors which pointed to that relief being inappropriate, namely, a delay of six months before the proceedings were instituted, the fact that the next annual elections were due when the judgment at first instance was given, and by the time the appeal was heard it was common ground that fresh elections (the second since the challenged election) had been held strictly in accordance with the respondent’s articles of association and resolutions of its board.  Furthermore (see at 373) the Court was reluctant to intervene in the internal affairs of a corporation where no practical result could be achieved.  In my opinion, the present case is materially different from Rivers. 

34                  I think that there are sufficient consequences flowing from the making of the disputed declarations in this matter to warrant making the orders sought.  They will serve to vindicate the applicant’s claim that the respondent has contravened s 53(g) and may be of some assistance to it in future in carrying out the duties which are conferred upon it by the Act.  There is some degree of public interest in the determination and declaration that the respondent by its conduct has contravened this further provision.  Section 53(g) is a piece of legislation of some importance to consumers and others engaged in trade and commerce.  As counsel for the applicant submitted in reply, s 52 and s 53(e) are concerned with other aspects of the relevant conduct.  The declarations may also, perhaps in a small way, assist in clarifying the law – see Zamir & Woolf “The Declaratory Judgment” (2 Ed) at 4084.

35                  For the foregoing reasons there will be the additional declarations sought by the applicant.

costs

36                  The respondent contends that there are two exceptional circumstances in this matter which warrant an order that the applicant pay all of its costs and, furthermore, on an indemnity basis.  First, the respondent submits that the conduct of the Commission in seeking declarations as to contraventions of s 53(g) gave rise to a needless and unnecessary dispute.  In view of my conclusions that it is appropriate to grant the declarations sought, it is not necessary for me to consider this submission further.

37                  Secondly, the respondent contends that these proceedings are the result of the applicant insisting upon an undertaking in terms proposed by it as the only means of resolving the proceedings without litigation.  It says that the undertaking insisted upon by the applicant contained certain provisions which the applicant no longer seeks.  [These matters are all the subject of uncontradicted affidavit evidence].  Those provisions were as follows:

·          an offer of refunds to be made by the respondent;

·          a requirement that the refunds (or compensation) be offered to any consumer who could prove to the satisfaction of the applicant that they were induced by the Advertisement into purchasing a new vehicle in the belief that the price of new vehicles would rise with the introduction of the GST;

·          corrective advertisements to be published in newspapers in which it was to be stated that consumers might seek a refund for the purchase; and

·          a statement that the respondent had made a claim that was wrong, without any reference to “the unintentional nature” of the heading expressing the GST Representation.

38                  The respondent relies upon the fact that it had made it clear to the applicant, before the proceedings were instituted, that it would admit contraventions of the Act and

(a)        publish the advertisements sought by the applicant;

(b)        implement a trade practices compliance programme (of a kind now agreed); and

(c)        offer compensation.

39                  The respondent contends that in circumstances such as this where it was apparent that, before commencement of the proceedings, the prospective respondent conceded liability and would conform to the relief to which the applicant would be entitled in the proceedings, the case was exceptional and the applicant should be ordered to pay the respondent’s costs, citing Messiter v Hutchinson (1987) 10 NSWLR 525.

40                  The applicant submits that as the successful party, it ought not to be deprived of its costs unless it has been guilty of some sort of misconduct.  It says that it has not been guilty of any misconduct relating to the litigation or the circumstances leading up to it.  It points to the fact that it is a statutory authority responsible for administering the Act in the public interest.  I would interpolate here to say that if other circumstances pointed to a costs order being made against it, I would not give very much weight to the fact that the applicant is a statutory authority responsible for administering the Act in the public interest.

my reasoning

41                  I accept the applicant’s submission that before the institution of the proceedings there were negotiations, that it gave the respondent extensions of time within which to consider the proposed undertaking, but that the negotiations became protracted and remained unresolved when the application was lodged.  I do not think that it “misconducted” itself in the sense referred to by McHugh J in Oshlack v Richmond River Council (1998) 193 CLR 72 at 97-98.

42                  Counsel for the respondent complained on its behalf that the applicant had invited it to negotiate, the respondent had engaged in negotiation, but in reality the applicant was not prepared to negotiate at all.  The applicant, so it was put, was at all times insisting upon an undertaking substantially in the terms which it had proposed to the respondent on 26 June 2000.  I do not think that the evidence establishes that.  The changes which (until virtually on the eve of the proceedings being commenced) the respondent sought to the terms of the undertaking were so fundamental that it is not possible for me to assess what the applicant’s response would have been if the respondent had demanded somewhat lesser amendments.

43                  In my view, the applicant acted reasonably when it commenced these proceedings.  In its letter of 30 June 2000 to the respondent the applicant put it on notice that the applicant reserved its rights to issue proceedings notwithstanding the ongoing negotiations.  On 4 July 2000 it confirmed that the contents of its letter of 30 June 2000 still applied.  On 14 July 2000, by its letter of that date, the applicant told the respondent that it intended to institute proceedings in this Court.  The applicant had a statutory duty to enforce the law and it had allowed time for negotiations.  In a letter sent as late as 19 July 2000, the respondent’s solicitor contended that there had been no breach of the Act in relation to the GST Representation.  In relation to the Finance Representation, the respondent (in the same letter) offered simply an undertaking that it would not, in future, use the abbreviation “T.A.P.” in its advertisements.  It made no admission of any contravention of the Act by having made the Finance Representation.  It was only after the applicant’s further letter of 19 July 2000, advising the respondent that these proceedings were about to be instituted, that the respondent’s solicitor, on 21 July 2000, sent to the applicant an amended draft of the proposed undertaking in a form which he was going to “recommend to [his client].”

44                  That date was a Friday.  The application was lodged on the following Wednesday.  The respondent complains that the applicant did not follow up with the respondent’s solicitor whether it was prepared to accept his recommendations, before proceeding to file the application.  In my view, it might equally be said that, given the history of the matter, it was for the respondent to confirm to the applicant that it was prepared to give the undertaking with only the somewhat lesser amendments.  In any event, even those lesser amendments were substantial.  For example, the respondent was not prepared to give a clear acknowledgment that it had contravened ss 52 and 53(e).  The respondent was still insisting on changes of substance to the public apologies.  In my view, the respondent did not misconduct (in the relevant sense) itself when it proceeded to file this application.  It had made its position clear on 30 June 2000 and again on 4 July 2000. 

45                  Another relevant factor on the question of costs is that although the final version of the respondent’s amended draft undertaking acknowledged (on the assumption that the respondent would have accepted its solicitor’s advice) that the making of the Finance Representation was a contravention of s 53(g), the respondent later denied that in its defence.

46                  The respondent relied on the fact that its solicitor had, on 1 August 2000, telephoned the applicant’s solicitor offering to resolve the matter by giving appropriate undertakings on a consent basis and requesting a meeting between the parties and their respective legal advisers.  The applicant’s solicitor had at first agreed to contact her client and arrange a convenient time, but shortly thereafter had telephoned the respondent’s solicitor to advise that the applicant was not prepared to attend such a meeting because there had already been “too many meetings”.  In the circumstances of this matter, I do not consider that the applicant’s refusal to negotiate at that stage is to be given very much weight at all in relation to the question who should bear the costs of the application.  It is clear that within a few weeks thereafter the applicant participated in negotiations which resulted in a partial settlement. 

47                  The respondent pointed to the fact that in its last set of amendments proposed before the proceedings commenced, it had deleted reference to refunds so that it would only be obliged to provide compensation to relevant purchasers.  In paragraph 8 of its application the applicant had only sought arrangements for compensation, not refunds.  I would not regard that difference as being relevantly significant.  I note from the affidavit sworn by the respondent’s solicitor that on 24 August 2000 (some four weeks after this application was filed) a director of the respondent sent letters to persons who had purchased new motor vehicles from it between 14 June 2000 and 30 June 2000 offering appropriate compensation.  It did the same to those persons whose application for finance had been rejected during that period.

48                  Counsel for the respondent submitted that the terms of the undertaking which its solicitor was prepared to recommend were stronger than the proposed consent orders.

49                  I do not think that the differences between the undertakings sought by the applicant before instituting proceedings and the omission from the terms of settlement of the provisions which I have summarised at paragraph 37 above sufficiently detract from the overall success achieved by the applicant in bringing these proceedings.  It is quite clear that the applicant has been substantially successful in the proceedings. 

50                  I would distinguish Messiter v Hutchinson from the present case because in that case the plaintiff was quite clearly offered more money ($120,000) than she eventually recovered ($100,000).

51                  Another relevant factor which I have taken into account, as counsel for the applicant invited me to do, was to compare the limited admission made by the respondent in paragraph 6 of the final version of the draft undertaking in relation to the GST Representation (page 46 of Exhibit A1), with the extent of the admissions in the defence i.e. that that representation constituted conduct in contravention of ss 52 and 53(e).  On the uncontradicted evidence, I am not satisfied that the applicant would have achieved the results which it has achieved, had it not instituted these proceedings.

52                  I certainly reject any suggestion that the applicant’s conduct has been so unreasonable as to warrant an indemnity costs order against it. 

53                  On the contrary, I think that costs should follow the event.  That is, the applicant, in the circumstances to which I have referred above, has not misconducted itself, has been substantially successful and should have its costs.  There will be orders accordingly.

Associate:

Dated:              20 December 2000