FEDERAL COURT OF AUSTRALIA

Australian Competition & Consumer Commission v Black on White Pty Ltd & Ors [2001] FCA 372

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v BLACK ON WHITE PTY LTD (ACN 061 507 248) AND OTHERS

QG 110 of 1997

SPENDER J

BRISBANE

4 APRIL 2001

THE COURT MAKES FINDINGS OF FACT AS FOLLOWS:

1.             The First Respondent, trading as the "Australian Early Childhood College" ("the College"), in trade or commerce, advertised to prospective students in the College's promotional material from late 1996 to about August 1997 (namely, the 1997 College Handbook; a brochure entitled "Your Career in Childcare"; and a leaflet), that the following courses offered by the College:

          · Advanced Diploma of Early Childhood Education and Science (CNADS);

          · Diploma of Early Childhood Education (CNDEC);

          · Certificate IV in Early Childhood Education (CNECE);

          · Certificate IV in Early Childhood Development Traineeship (CNECT);

          · Certificate IV in Early Childhood Development (CNCED);

          · Certificate IV in Early Childhood Practices (CNECP); and

          · Certificate III in Early Childhood Skills (CNECS);

          (“the 1997 courses”);

          were accredited:

(a)          by the Vocational Education Training and Employment Commission of Queensland ("VETEC") pursuant to the Vocational Education, Training and Employment Act 1991 (Qld); and

(b)     nationally pursuant to the National Framework for the Recognition of Training Agreement ("NFROT"), being an agreement between the Commonwealth and the various State and Territory governments.

2.      The 1997 courses were not accredited by VETEC or nationally.

3.             The First Respondent, by advertising that the 1997 courses had VETEC and national accreditation when they did not:

(a)          engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of section 52 of the Trade Practices Act 1974 (Cth) ("the Act");

(b)         made false or misleading representations that the 1997 courses were of a particular standard, quality, value or grade, in contravention of subsection 53(aa) of the Act;

(c)         made representations that the 1997 courses had approval, uses or benefits they did not have, in contravention of subsection 53(c) of the Act;

(d)         engaged in conduct that was liable to mislead the public as to the nature, the

(e)         characteristics or the suitability for their purpose with respect to the 1997 courses, in contravention of section 55A of the Act.

4.      The First Respondent, trading as the College, in trade or commerce, advertised to prospective students in the College's promotional material from late 1996 to about August 1997 (namely, the 1997 College Handbook; a brochure entitled "Your Career in Childcare"; and a leaflet), that the College qualified for the use of the VETEC and national accreditation logos in relation to the 1997 courses.

5.      The First Respondent was not qualified to use the VETEC and national accreditation logos in documents advertising the 1997 courses.

6.      The First Respondent, by advertising that the College qualified for the use of the VETEC and national accreditation logos when it did not:

(a)          engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of section 52 of the Act;

(b)         made false or misleading representations that the 1997 courses were of a particular standard, quality, value or grade, in contravention of subsection 53(aa) of the Act;

(c)         made representations that the 1997 courses had approval, uses or benefits they did not have, in contravention of subsection 53(c) of the Act;

(d)         engaged in conduct that was liable to mislead the public as to the nature, the characteristics or the suitability for their purpose with respect to the 1997 courses, in contravention of section 55A of the Act.

Fehlberg                                                                                                                                                                                                                       ~

7.      The First Respondent represented to Mr Grant Fehlberg, Mrs Beverly Fehlberg and  Ms Colleen Fehlberg ("the Fehlbergs") that the most Ms Fehlberg would lose for cancelling her enrolment would be $100 for administration costs.

8.      The First Respondent, by making the representation referred to in paragraph 7 above engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act, in that:

(a)          the enrolment form provided that by executing the document the enrollee “must pay to the College the full amount of the tuition and that this amount will be payable regardless of whether the [enrollee] commence[s] the course or otherwise”;

(b)         the General Regulations provided:

“The student may cancel enrolment at any time prior to sixty (60) days of the student's most preferred course and date (i.e. Preference 1) and receive a full refund less $100 administration charge (and less the $75 accommodation booking fee if applicable). A request for cancellation must be in writing and received by the College Administration prior to the above date. Verbal requests for cancellation shall not be valid for any reason. No refund is made in any other situation.”

9.      In light of the Fehlbergs' conversation with the First Respondent's employee, the Fehlbergs had a reasonable expectation that the terms contained in the enrolment form and the general regulations would be drawn to their attention. By failing to draw the Fehlbergs' attention to the terms contained in the enrolment form and the general regulations, the First Respondent engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act.

10.    The First Respondent's reliance upon a term in its enrolment form purporting to render a student liable for the full tuition fee whether the student commenced the course or not (and/or the term in the general regulations purporting to permit cancellation only if received more than 60 days prior to commencement of the first preferred course) was not reasonably necessary for the protection of its legitimate interests.

11.    The First Respondent, by including the term referred to in paragraph 8(a) above in its enrolment form without bringing that term to the attention of Ms Fehlberg, engaged in unconscionable conduct, in contravention of section 51AB of the Act.

12.         The First Respondent, by:

(a)          accepting Ms Fehlberg's enrolment form and taking the deposit;

(b)         further, refusing to accept the cancellation of enrolment and by refusing to refund the deposit paid;

(c)         further, demanding payment of the full amount of the tuition fees;

(d)         further, instituting court proceedings against Ms Fehlberg and Mrs Fehlberg claiming the full amount of the tuition fees;

          engaged in unconscionable conduct, in contravention of section 51AB of the Act.

Santos

13.    The First Respondent represented to Ms Gricelda Santos that if she changed her mind about the course offered by the First Respondent she would only lose her deposit.

14.The First Respondent, by making the representation referred to in paragraph 13 above:

(a)          engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act;

(b)         made a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy, in contravention of section 53(g) of the Act;

          in that the enrolment form signed by Ms Santos provided that Ms Santos was immediately liable for payment of the full tuition fee whether she commenced her course or not.

15.    In light of Ms Santos' conversation with the First Respondent's employee, Ms Santos had a reasonable expectation that the term contained in the enrolment form would be drawn to her attention. By failing to draw Ms Santos' attention to the term contained in the enrolment form, the First Respondent engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act.

16.    The First Respondent's reliance upon a term in its enrolment form purporting to render a student liable for the full tuition fee whether the student commenced the course or not (and/or the term in the general regulations purporting to permit cancellation only if received more than 60 days prior to commencement of the first preferred course) was not reasonably necessary for the protection of its legitimate interests.

17.    The First Respondent, by including the term referred to in paragraph 16 above in its enrolment form without bringing that term to the attention of Ms Santos, engaged in unconscionable conduct, in contravention of section 51AB of the Act.

18.        The First Respondent, by:

(a)          accepting Ms Santos' enrolment form and taking the deposit;

(b)         further, refusing to accept Ms Santos' cancellation of enrolment and by refusing to refund the deposit paid;

(c)         further, demanding payment of the full amount of the tuition fees from Ms Santos;

(d)         further, instituting court proceedings against Ms Santos claiming the full amount of the tuition fees;

          engaged in unconscionable conduct, in contravention of section 51AB of the Act.

Romero

19.    The First Respondent's reliance upon a term in its enrolment form purporting to render a student liable for the full tuition fee whether the student commenced the course or not (and/or the term in the general regulations purporting to permit cancellation only if received more than 60 days prior to commencement of the first preferred course) was not reasonably necessary for the protection of its legitimate interests.

20.    The First Respondent, by including the term referred to in paragraph 19 above in its enrolment form without bringing that term to the attention of Ms Abelina Romero, engaged in unconscionable conduct, in contravention of section 51AB of the Act.

21.    The First Respondent, by:

(a)          accepting Ms Romero's enrolment form and taking the deposit;

(b)         further, refusing to accept Ms Romero's cancellation of enrolment and by refusing to refund the deposit paid;

(c)         further, demanding payment of the full amount of the tuition fees from Ms Romero;

(d)         further, instituting court proceedings against Ms Romero claiming the full amount of the tuition fees;

engaged in unconscionable conduct, in contravention of section 51AB of the Act.

McPherson

22.    The First Respondent represented to Ms Mandy McPherson and Mr Gordon McPherson that it would not accept Ms McPherson's application for enrolment until further notification was received from or on behalf of Ms McPherson.

23.    The First Respondent, by making the representation referred to in paragraph 22 above when it did not intend to act in accordance with its representation, engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act.

24.    The First Respondent's reliance upon a term in its enrolment form purporting to render a student liable for the full tuition fee whether the student commenced the course or not (and/or the term in the general regulations purporting to permit cancellation only if received more than 60 days prior to commencement of the first preferred course) was not reasonably necessary for the protection of its legitimate interests.

25.    In light of Ms McPherson's conversation with the First Respondent's employee, Ms McPherson had a reasonable expectation that the term contained in the enrolment form would be drawn to her attention. By failing to draw Ms McPherson's attention to the term contained in the enrolment form, the First Respondent engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act.

26.    The First Respondent, by including the term referred to in paragraph 24 above in its enrolment form without bringing that term to the attention of Ms McPherson, engaged in unconscionable conduct, in contravention of section 51AB of the Act.

27.    The First Respondent, by:

(a)          accepting Ms McPherson's enrolment form and taking the deposit;

(b)         further, refusing to accept the cancellation of enrolment and by refusing to refund the deposit paid;

(c)         further, demanding payment of the full amount of the tuition fees;

(d)         further, instituting court proceedings against Ms McPherson and Mrs Louise McPherson claiming the full amount of the tuition fees;

          engaged in unconscionable conduct, in contravention of section 51AB of the Act.

Kinloch

28.    The First Respondent represented to Mrs Helen Kinloch that Ms Lynette Kinloch's acceptance into the nominated course would depend on the First Respondent reviewing Ms Kinloch's application to see if she was suitable and that she would be notified in writing that her application had been processed.

29.    The First Respondent's reliance upon a term in its enrolment form purporting to render a student liable for the full tuition fee whether the student commenced the course or not (and/or the term in the general regulations purporting to permit cancellation only if received more than 60 days prior to commencement of the first preferred course) was not reasonably necessary for the protection of its legitimate interests.

30.    In light of Mrs Kinloch's conversation with the First Respondent's employee, Mrs and Ms Kinloch ("the Kinlochs") had a reasonable expectation that they would be informed that on signing the enrolment form they would be immediately bound to pay the full tuition fees without a right of cancellation. By failing to draw the Kinlochs' attention to the term contained in the enrolment form, the First Respondent engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act.

31.    The First Respondent, by including the term referred to in paragraph 29 above in its enrolment form without bringing that term to the attention of the Kinlochs, engaged in unconscionable conduct, in contravention of section 51AB of the Act.

32.    The First Respondent, by:

(a)          processing Ms Kinloch's enrolment form and taking the deposit;

(b)         further, refusing to accept Ms Kinloch's cancellation of enrolment and by refusing to refund the deposit paid;

(c)         further, demanding payment of the balance of the full amount of the tuition fees (and the administration fee);

(d)         further, instituting court proceedings against Ms Kinloch and Mrs Kinloch for recovery of the balance of the full amount for the tuition fees (and the administration fee);

          engaged in unconscionable conduct, in contravention of section 51AB of the Act.

Coombes

33.    The First Respondent, by refusing to refund the tuition fees for a course which Ms Debbie Coombes (nee McGregor) had enrolled in and which had been cancelled by the First Respondent, engaged in unconscionable conduct, in contravention of section 51 AB of the Act.

34.    The First Respondent's reliance upon a term in its enrolment form purporting to render a student liable for the full tuition fee whether the student commenced the course or not was not reasonably necessary for the protection of its legitimate interests.

35.    The First Respondent, by including the term referred to in paragraph 34 above in its enrolment form without bringing that term to the attention of Ms Coombes, engaged in unconscionable conduct, in contravention of section 51AB of the Act.

Robaldo                                                                                                                                                                                                                         ~

36.        The First Respondent represented to Mrs Sandra Robaldo that:

(a)          the First Respondent was going to introduce a deferred payment plan in March 1997;

(b)         Ms Sabrina Robaldo would qualify for the plan once it was introduced;

(c)         until the plan came into operation, fees would have to be paid by instalment but thereafter the remaining amount would be deferred under the plan.

37.    The First Respondent, by making the representations referred to in paragraph 36 above engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act, in that:

(a)          each of the representations referred to in paragraph 36 above was a representation with respect to a future matter within the meaning of section 51A of the Act; and

(b)         the First Respondent did not intend to make good the representations or had no

(c)         reasonable grounds for making the representations.

38.    The First Respondent, by making the representations referred to in paragraph 36 above made false or misleading representations concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy, in contravention of section 53(g) of the Act, in that:

          (a)     the scheme subsequently proposed by the First Respondent:

(i)                was not a deferred payment plan;

(ii)             was not the deferred payment plan which had been offered by the First Respondent;

(iii)           did not operate like the HECS system;

(b)         the student was obliged to seek a loan from the ANZ bank (satisfying the usual requirements of a bank when providing a loan);

(c)         those persons who approached the ANZ bank (including Mrs Robaldo) were told that the bank did not know of any such scheme;

(d)         having regard to the fine print in the general regulations, the First Respondent had no intention of offering a deferred payment plan in the manner represented to the students.

39.    The First Respondent, by:

(a)          accepting Ms Robaldo's enrolment form and taking the deposit;

(b)         further, failing to provide a deferred payment plan that operated in a manner similar to the HECS system;

(c)         further, requiring Ms Robaldo to pay the outstanding balance of her tuition fee (and nominating the ANZ bank as the financial institution from which deferred student loans for tertiary students, or similar, were available); and

(d)         further, demanding payment of the balance of the tuition fee by letter from Dun & Bradstreet;

          engaged in unconscionable conduct, in contravention of section 51AB of the Act.

Cobb

40. The First Respondent represented to Mrs Sarah Cobb that:

(a)          the deferred payment plan would commence in March and would operate like the HECS system; and

(b)         Ms Emma Cobb could start the course in February and be transferred to the deferred payment plan when it started.

41.    The First Respondent, by making the representations referred to in paragraph 40 above engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act, in that:

(a)          each of the representations referred to in paragraph 40 above was a representation with respect to a future matter within the meaning of section 51A of the Act; and

(b)         the First Respondent did not intend to make good the representations or had no reasonable grounds for making the representations.

42.    The First Respondent, by making the representations referred to in paragraph 40 above made false or misleading representations concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy, in contravention of section 53(g) of the Act, in that:

(a)          the scheme subsequently proposed by the First Respondent:

(i)          was not a deferred payment plan;

(ii)        was not the deferred payment plan which had been offered by the First Respondent;

(iii)     did not operate like the HECS system;

(b)         the student was obliged to seek a loan from the ANZ bank (satisfying the usual requirements of a bank when providing a loan);

(c)         those persons who approached the ANZ bank were told that the bank did not

(d)         know of any such scheme;

(e)         having regard to the fine print in the general regulations, the First Respondent had no intention of offering a deferred payment plan in the manner represented to the students.

43.    The First Respondent, by:

(a)          accepting Ms Cobb's enrolment form and taking the deposit;

(b)         further, failing to provide a deferred payment plan that operated in a manner similar to the HECS system;

(c)         further, requiring Ms Cobb to pay the outstanding balance of her tuition fee (and nominating the ANZ bank as the financial institution from which deferred student loans for tertiary students, or similar, were available);

(d)         further, demanding payment of the balance of the tuition fee by letter from Dun & Bradstreet;

          engaged in unconscionable conduct, in contravention of section 51AB of the Act.

Cassells

44.    The First Respondent, by demanding the immediate payment of the balance of Ms Anna Cassells' fees and nominating the ANZ bank as the financial institution which she was to approach to obtain an interest only student loan, engaged in unconscionable conduct, in contravention of section 51AB of the Act.

Rye

45.    The First Respondent represented to Ms Jodie Rye that:

(a)          it would offer students a deferred payment plan in late March/early April 1997;

(b)         if Ms Rye commenced paying her tuition fees by fortnightly instalments she would be switched to the deferred payment plan when it became available; and

(c)         the deferred payment plan would operate like the HECS system.

46.    The First Respondent, by making the representations referred to in paragraph 45 above engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act, in that:

(a)          each of the representations referred to in paragraph 45 above was a representation with respect to a future matter within the meaning of section 51A of the Act; and

(b)         the First Respondent did not intend to make good the representations or had no reasonable grounds for making the representations.

47.    The First Respondent, by making the representations referred to in paragraph 40 above made false or misleading representations concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy, in contravention of section 53(g) of the Act, in that:

(a)          the scheme subsequently proposed by the First Respondent:

(i)          was not a deferred payment plan;

(ii)        was not the deferred payment plan which had been offered by the First Respondent;

(iii)     did not operate like the HECS system;

(b)         the student was obliged to seek a loan from the ANZ bank (satisfying the usual requirements of a bank when providing a loan);

(c)         those persons who approached the ANZ bank (including Ms Rye) were told that the bank did not know of any such scheme;

(d)         having regard to the fine print in the general regulations, the First Respondent had no intention of offering a deferred payment plan in the manner represented to the students.

48.    The First Respondent, by:

(a)          accepting Ms Rye's enrolment form and taking her deposit;

(b)         further, requiring Ms Rye to pay the outstanding balance of her tuition fee (and nominating the ANZ bank as the financial institution from which deferred student loans for tertiary students, or similar, were available);

(c)         further, demanding payment of the balance of the tuition fee by letter from Dun & Bradstreet;

          engaged in unconscionable conduct, in contravention of section 51AB of the Act.

THE COURT DECLARES AS FOLLOWS:

49.    The Third Respondent was knowingly concerned in or party to the First Respondent's contraventions of the Act referred to in paragraphs 1, 2, 3, 4, 5, 6, 10,  11, 12, 16, 17, 18, 19, 20, 21, 24, 26, 27, 29, 31, 32, 33, 34, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, and 48 above.

50. The Fourth Respondent was knowingly concerned in or party to the First Respondent's contraventions of the Act referred to in paragraphs 1, 2, 3, 4, 5 and 6 above.

THE COURT ORDERS THAT:

51.         Except in respect of the matters the subject of the findings contained in paragraph 50 above, the application by Australian Competition and Consumer Commission against the fourth respondent be dismissed.

52.         The applicant pay one-third of the costs of the fourth respondent of and incidental to the application, including any reserved costs, to be taxed if not agreed.

53.         There be no order as to costs as between the applicant and the first and second respondents.  The third respondent pay the applicant’s costs of and incidental to the proceedings, including reserved costs, to be taxed if not agreed.

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

REASONS FOR JUDGMENT

1                     In this matter I published my reasons for judgment on 6 March 2001 and adjourned the matter to 28 March 2001 so as to permit the applicant to bring in short minutes of orders to give effect to my finding of contraventions of the Act by the first respondent and by the third respondent, and to my finding that the fourth respondent, Nicholas James Poteri, was knowingly concerned in the contraventions of the company in respect of what might be termed the “accreditation representations”.  I also directed that I would then hear the parties as to what costs orders should be made.

2                     I have had regard to the short minutes of orders brought in by the Australian Competition and Consumer Commission (the ACCC).  Having regard to the evidence before me and my findings, it is appropriate to make the findings of fact set out in those minutes in paragraphs 1 to 48 inclusive, and I do so.

3                     On the question of costs, it was submitted by the ACCC that the Court should order that the third and fourth respondents should pay the applicant’s costs of and incidental to the proceedings including reserved costs to be taxed if not agreed or, alternatively, the liability of the fourth respondent be limited to 80 per cent of those costs, and that there by no orders as to costs with respect to the first and second respondents.   The fourth respondent seeks an order that the ACCC pay his costs of the proceedings.

4                     As those submissions indicate, there is marked disagreement as to the appropriate orders to make by way of costs. 

5                     The principal issues for determination in the proceedings are fairly set out in the submissions by the ACCC concerning costs:

“The following principal issues arose for determination in the proceedings:

(a)         whether the First Respondent contravened sections 52, 53 and/or 55A of the Trade Practices Act 1974 (“the Act”) by advertising that the child care training courses offered by it during 1997 were accredited in Queensland, and nationally (the “accreditation representations” issue): Amended Statement of Claim paras.7-11;

(b)         whether the First Respondent contravened sections 52 and/or 53 of the Act in its dealings with any of the following persons:

(i)            the Fehlbergs: Amended Statement of Claim Case 1 paras.13-25;

(ii)          Ms Santos: Amended Statement of Claim Case 2 paras.38-52;

(iii)        the McPhersons: Amended Statement of Claim Case 4 paras.71-85;

(iv)        the Kinlochs: Amended Statement of Claim Case 10 paras.256-267;

(v)          the Robaldos: Amended Statement of Claim Case 6 paras.122-138;

(vi)        the Cobbs: Amended Statement of Claim Case 7 paras.149-167; and

(vii)      Ms Rye: Amended Statement of Claim Case 9 paras.224-236;

(the “other representations and conduct” issue);

(c)          whether the First Respondent engaged in unconscionable conduct in contravention of section 51AB of the Act in its dealings with the following persons:

(i)            the Fehlbergs: Amended Statement of Claim Case 1 paras.13-37;

(ii)          Ms Santos: Amended Statement of Claim Case 2 paras.38-62, 65-70;

(iii)        Ms Romero: Amended Statement of Claim Case 3 paras.38-61, 63, 65-70;

(iv)        the McPhersons: Amended Statement of Claim Case 4 paras.71-98;

(v)          the Kinlochs: Amended Statement of Claim Case 10 paras.256-281;

(vi)        Ms Coombes: Amended Statement of Claim Case 5 paras.99A-121;

(vii)      the Robaldos: Amended Statement of Claim Case 6 paras.122-148;

(viii)    the Cobbs: Amended Statement of Claim Case 7 paras.149-187;

(ix)        Ms Cassells: Amended Statement of Claim Case 8 paras.188-223; and

(x)          Ms Rye: Amended Statement of Claim Case 9 paras.224-255;

(the “unconscionable conduct” issue);

(d)         whether the Second, Third and Fourth Respondents aided or abetted, counselled or procured, or were knowingly concerned in or party to (Amended Statement of Claim para. 289), the contraventions of the Act involving:

(i)                       the accreditation representations issue

(ii)                     the other representations and conduct issue and the unconscionable conduct issue (cases 1-10 inclusive).”

6                     In addition, the ACCC sought injunctive relief.

7                     A large part of the evidence was concerned with the ACCC successfully establishing that the first respondent had engaged in the conduct referred to in paragraphs 1(a), 1(b) and 1(c).  I concluded that the second respondent was not a party to the contraventions of the Act by the first respondent pursuant to s 75B of the Act, but that the third respondent was knowingly concerned in or a party to virtually all of the contraventions of the first respondent.

8                     So far as the fourth respondent is concerned, I held that the fourth respondent was knowingly concerned in the contraventions by the first respondent in relation to the accreditation representations.  I declined to make any injunctive orders as, in my view, they would serve no useful purpose. 

9                     When delivering my reasons, I indicated my view that there was an element of “scapegoating” involved in the prosecution of the proceedings against the fourth respondent.  This comment was meant to indicate my view that the fourth respondent was liable as an accessory under s 75B of the Act, consistent with the principles expressed by Pincus J in Australian Trade Practices Commission v Friendship Aloe Vera Pty Ltd (1988) 82 ALR 557.  However, other employees of the first respondent were, on the evidence, knowingly concerned in some of the contraventions of the first respondent within the requirements established by Yorke v Lucas (1984-1985) 158 CLR 661.  Each of the statement of Pamela Anne Preston, and the statements of Anne McDonald contain the statement:

I, …wish to make the following voluntary statement.  I provide the information in this statement on the understanding it will not be used for the purpose of instituting legal proceedings against me, in relation to any offences I may have committed arising out of the matter referred to in this statement.  The information I supply is given by me for the sole purpose of applying to the Director of Public Prosecutions for an undertaking pursuant to section 9 (6) of The Director of Public Prosecutions Act 1983”:  See exhibits 14, 26, 27 and 28.

10                  It is likely that the fourth respondent was pursued by the Australian Competition and Consumer Commission because he is the son of the second and third respondents.  However, in my opinion, the circumstance that other persons who were employed by the first respondent may have committed contraventions of the Act by being knowingly concerned in the contraventions of the first respondent, is not a relevant consideration in the determination of the appropriate order that should be made by way of costs as between the ACCC and the fourth respondent. 

11                  There is no dispute between the parties as to the relevant principles:

(i)                 Section 43(1) and (2) of the Federal Court of Australia Act 1976 confers power on the Court to award costs in proceedings within the Court’s jurisdiction and confers a discretion on the Court in respect of those costs.

(ii)               The discretion conferred upon the Court by s 43(2) is absolute and unfettered provided that it must be exercised judicially, not arbitrarily, capriciously or upon grounds unconnected with the proceedings.  See Trade Practices Commission v Nicholas Enterprises Pty Ltd (No. 3) (1979) 42 FLR 213 at 219 per Fisher J.

(iii)              Moreover, in exercising the discretion conferred upon it the Court must consider the particular facts of the case before it.  Gladstone Park Shopping Centre Pty Ltd v Ross Wills (1984) 6 FCR 496 at 505 per Davies J.

(iv)             In the ordinary case costs will follow the event, and a successful party will receive his costs unless there are special circumstances present which justify some other order.  Hughes v Western Australian Cricket Assoc. (Inc.) (1986) ATPR 40-748 at 48, 136 per Toohey J citing Ritter v Godfrey (1920) 2 KB 47 with approval; and also Gladstone Park Shopping Centre Pty Ltd v Ross Wills (1984) 6 FCR 496 at 505 per Davies J and at 509 per Beaumont J.

(v)               In circumstances in which a party has succeeded on only parts of its claim, the circumstances may make it reasonable that the successful party bear the expense of litigating the portion of the proceedings upon which that party has not been successful Hughes v Western Australian Cricket Assoc. (Inc.) (1986) ATPR 40-748 at 48, 136 per Toohey J citing Forster v Farquhar (1893) 1 QB 564 with approval.

(vi)             A successful litigant who failed on certain issues in a proceeding may not only be deprived of the costs on the issues on which it was unsuccessful, but may be ordered to pay the other party’s costs of those issues.  Hughes v Western Australian Cricket Assoc. (Inc.) (1986) ATPR 40-748 at 48, 136 per Toohey J citing Cretazzo v Lombardi (1975) 13 SASR 4 at 12 with approval.

(vii)            The Court may order a wholly successful party to pay the other party’s costs in whole or in part where circumstances exist which justify ordering the successful party to pay the costs of the unsuccessful party.  Trade Practices Commission v Nicholas Enterprises Pty Ltd (No. 3) 1979 42 FLR 213 at 219 per Fisher J.

(viii)          Where a successful party’s conduct of the case unreasonably prolongs proceedings or where that party unreasonably persists in an allegation, or in maintaining a denial, for which there is no foundation, again some apportionment may be appropriate and it may be a proper exercise of the discretion to make the apportionment so as to not merely deprive the successful party of the appropriate proportion of its costs, but order the successful party to pay the other party’s costs on those issues.  Cummings v Lewis (1993) 41 FCR 559 at 599-604 per Cooper J (especially at 603) cited with approval in Koninklijke Phillip Electronics NV v Remmington Products Australia Pty Ltd [1999] FCA 1225 at [17] per Lehane J.

12                  Each case, of course, has to be based on its own facts, but the approach in J. McPhee and Son (Australia) Pty Limited & Ors v Australian Competition and Consumer Commission [2000] FCA 754,a judgment of the Full Court consisting of Black CJ, Lee and Goldberg JJ given on 8 June 2000 is a helpful example in the circumstances of this case.  The Court said, at [2]:

“…the only order which was the subject of the appeal was the order for the payment of pecuniary penalties.  Nevertheless, the appeal was conducted on the basis that there was a direct challenge to the finding of contraventions of the Act and most of the five day hearing was taken up with oral submissions on the issues of liability and the contraventions of the Act found against the appellants.  As well, substantial written submissions were filed by the appellants and the respondent on the issue of liability and the contraventions found by the primary judge.

The appellants submitted that the costs of the appeal should follow the event or, in the alternative, that the costs of the appeal be apportioned to reflect the fact that the appeal was not wholly successful.  The respondent submitted that the appellants should pay all of its costs of the appeal or alternatively that the appellants should pay no less than 90% of its costs.

As well as contesting the findings of contravention the appellants made oral and written submissions in relation to the amount of the penalties determined.  As they were successful on this issue, in a significant respect, it is appropriate that any order for costs reflect that measure of success.  However, because the issues of liability and contraventions of the Act occupied most of the hearing and also were the subject of a substantial part of the written submissions we conclude that the appropriate order is that the appellants pay 90% of the respondent’s costs of the appeal including reserved costs.  It follows that we do not accept that, for the purposes of the principle that costs ordinarily follow the event, “the event” was resolved in favour of the appellants; from the viewpoint of costs, the major aspect of “the event” was determined against the appellants.”

13                  In this case, as between the applicant and the fourth respondent, the applicant was successful in respect of the “accreditation representations” issue, but failed on the “other representations and conduct” issue and the “unconscionable conduct” issue.

14                  In my view, notwithstanding the caveat of Jacobs J in Cretazzo v Lombardi (1975) 13 SASR 4 against the apportionment of costs according to the success or failure of one party or the other on various issues of fact or law which arise in the course of a trial, this case really was one of discrete issues involving allegations of discrete contraventions.  It seems to me that any costs order should reflect the fact that the applicant was successful concerning its allegations based on the accreditation question, but that the fourth respondent was successful in respect of defending the allegations of the other contraventions in which he was said to be knowingly concerned. 

15                  While perforce it has to be a rather broad-brush assessment, I think that one-third of the trial was occupied with the matters on which the applicant succeeded, and that two-thirds of the trial was concerned with the matters on which it failed.   Rather than order the fourth respondent pay one-third of the applicant’s costs and the applicant pay two-thirds of the respondent’s costs, it seems to me to be more efficient and appropriate in the circumstances simply to order that that applicant pay to the fourth respondent one-third of his costs of and incidental to the proceeding, including any reserved costs, to be taxed if not agreed.

16                  I further order that there be no order as to costs as between the applicant and the first and second respondents.  The third respondent should pay the applicant’s costs of and incidental to the proceedings, including reserved costs, to be taxed if not agreed.

Associate:

Dated:              4 April 2001