FEDERAL COURT OF AUSTRALIA

ACCC v Monza Imports Pty Ltd [2001] FCA 1455

TRADE PRACTICES – applicant claimed declaratory, injunctive and other relief in respect of alleged contraventions by respondent of s 65C(1)(a) of the Trade Practices Act – evidence that respondent co-operated fully in relation to contravention when informed of it – respondent at all times willing to give undertaking in terms substantially the same as injunctive orders sought in application – parties reached settlement – application for final orders by consent – those orders included an order that the respondent pay the applicant’s costs – whether appropriate for Court to refuse to make orders or refuse to make costs order on the basis that the respondent was always willing to give a suitable undertaking and do everything necessary to rectify the consequences of its contravention – whether appropriate to make findings of fact for the purposes of s 83 of the Act.

Trade Practices Act 1974 (Cth), ss 65C(1)(a), 83

Trade Practices Commission v Cue Design Pty Ltd (1996) ATPR 41-475 referred to

Australian Competition and Consumer Commission v Apollo Optical (Aust) Pty Ltd [2001] FCA 1456 referred to

Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc [1999] FCA 18 referred to

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v MONZA IMPORTS PTY LTD

W 277 of 2001

CARR J

17 OCTOBER 2001

PERTH

BY CONSENT THE COURT DECLARES AND ORDERS THAT:

1.         The respondent has breached s 65C(1)(a) of the Trade Practices Act 1974 (“the Act”) by having supplied sunglasses designated “SPY iSiS”, (“the Sunglasses”) in trade or commerce which were intended to be used or were likely to be used by consumers but which did not comply with the consumer product safety standard in respect thereof.

2.         The respondent, whether by itself, its servants or agents or otherwise howsoever, be restrained for a period of three (3) years from the date of this order from supplying sunglasses or fashion spectacles which are intended to be used by, or of a kind likely to be used by, consumers and which do not have an unobstructed viewing area of the dimensions as required by Clause 2.1.2 of the Australian Standard AS 1067.1 – 1990 (“the Standard”) as varied from time to time or such other standard as may be applicable from time to time.

3.         The respondent:

            (a)        attend within four (4) weeks of the date of this Order on at least one (1) occasion upon the relevant retail premises of each retailer to whom it has supplied the Sunglasses (“the Attendances”);

            (b)        if it ascertains that the retailer is still offering the Sunglasses for sale, verbally advise the manager of those retail premises of the Sunglasses’ non-compliance with the Standard, and request them to withdraw them from sale; and

            (c)        within seven (7) days of the completion of the Attendances, advise the applicant in writing of the details of the retail premises upon which it attended and whether the Sunglasses had been withdrawn from sale, and if not, the details of the retail premises where the Sunglasses had not been withdrawn from sale.

4.         The respondent pay a refund to the retailers of the full wholesale purchase price of all the Sunglasses that have been returned to the respondent by such retailers where the Sunglasses have been withdrawn from sale by them or where the Sunglasses have been returned to such retailers by consumers and where those retailers have duly refunded consumers the full retail purchase price of the Sunglasses.

5.         The respondent accept and pay any requests by consumers for a refund of the full retail purchase price of the Sunglasses supplied either directly or indirectly by the respondent upon return of the Sunglasses to the respondent and reimburse consumers for the cost of any postage or freight costs incurred by consumers in returning the Sunglasses to the respondent.

6.         The respondent take all reasonable steps to cause to be displayed in all retail outlets where the Sunglasses were sold, in-store notices of not less than A4 size, in the form set out in Annexure “A” and provide each such store with sufficient copies of the product safety notice set out in Annexure “B” and request such retailers to provide a copy of the latter notice to consumers as and when requested by them.

7.         The respondent, at its own expense, cause to be published in a major weekend newspaper in each State or Territory in which the Sunglasses have been sold or supplied to consumers, whether by the respondent or by a retail outlet supplied by the respondent, a product safety notice in the form set out in Annexure “B” and further that the respondent take all reasonable steps to ensure that each such notice shall be:

            (a)        of a size not less than 2 columns wide by 20cm deep;

            (b)        in text which is in a type size not less than 8 point;

            (c)        within the first ten pages of the newspaper; and

            (d)        published within seven (7) days of the making of this Order.

8.         The respondent, at its own expense, cause to be published in each magazine set out in Annexure “D”, a product safety notice in the form set out in Annexure “B” and further that the respondent shall take all reasonable steps to ensure that each such notice shall be:

            (a)        no smaller in size than the largest of the advertisements placed by the respondent in the relevant magazine advertising the Sunglasses for sale;

            (b)        within the first ten (10) pages of the magazine; and

            (c)        published in the next reasonably available issue of the magazine.

9.         The respondent within three (3) months of the making of these orders implement a Trade Practices Compliance Program in the terms set out in Annexure “C” hereto and such program shall continue for a minimum of three (3) years following its implementation.

10.       The respondent pay the applicant’s costs in the amount as agreed between them, or in the absence of agreement, as taxed.

Annexure “A”

Annexure ‘B’

Annexure C

TRADE PRACTICES CORPORATE COMPLIANCE PROGRAM

The trade practices corporate compliance program (“the Program”) to be

implemented by the Respondent shall have the following features

1.         The Respondent will use reasonable endeavours to ensure that the Program will comply with Australian Standard on Compliance Programs AS 3806-1998 and be tailored to suit the Respondent’s circumstances.

2.         The Respondent will place responsibility for the implementation and effectiveness of the Program with senior management.

3.         The Respondent will appoint a Trade Practices Compliance Officer within two (2) months of this order.  The Trade Practices Compliance Officer will have appropriate knowledge of trade practices law or receive training in trade practices law from a firm of solicitors or compliance professionals with experience in trade practices law.

4.         The Respondent will require the Trade Practices Compliance Officer to review all goods supplied by the Respondent or proposed to be supplied by the Respondent to ensure that they comply with any applicable consumer product safety standards.

5.         The Respondent will require the Trade Practices Compliance Officer to maintain a documentary record of the compliance reviews of all goods supplied by, or proposed to be supplied by, the Respondent.  Such documentary record will include:

            (a)        a description of the goods examined;

            (b)        identification of the relevant consumer product safety standard applying to the examined goods and specification of any applicable clause, section or part of such standard;

(c)        written advice that the relevant goods have been reviewed and cleared by the Trade Practices Compliance Officer and the date of that review; and

(d)        written advice of any possible contravention(s) of sections 65C of the Trade Practices Act 1974 (Cth) (“the Act”) that were identified by the Trade Practices Compliance Officer upon examination of the relevant goods and the action taken to address such possible contravention(s).

6.         The Respondent will ensure that the documentary records of the compliance reviews are available to the Australian Competition and Consumer Commission to be reviewed from time to time.  These records are to be available from one week after the review date and for a period of three years after that date and will be provided to the Australian Competition and Consumer Commission within five working days of a written request. 

7.         Prior to the implementation of the Program, the Respondent will ensure that the Program is approved by a firm of solicitors or compliance professionals with expertise in trade practices law.

8.         The Respondent will ensure that a firm of solicitors or compliance professionals with expertise in trade practices law conducts training concerning s 65C of the Act to the Respondent and its directors, staff, representatives and agents, on three separate occasions during the three year period commencing from the date of this order.  The first of these training programs will be completed within four calendar months of this order and the remaining two annually thereafter.   

9.         The Respondent will provide written notification to the Australian Competition and Consumer Commission of having conducted each trade practices training program within ten days of the completion of such program.

10.       The Respondent will ensure that a firm of solicitors or compliance professionals with expertise in trade practices law review the Program on two occasions with a view to identifying deficiencies and implementing improvements to the Program.  The firm of solicitors or compliance professionals conducting the review are to set out the findings of the review in a report to be provided by the Respondent.  The first of these reviews will be conducted within twelve months of the date of commencement of this order and the second twelve months after the initial review.

11.       Copies of the reports referred to in paragraph 10 above are to be provided to the Australian Competition and Consumer Commission within ten days of the Respondent receiving such reports.  Should the report identify deficiencies in the Program, the Respondent will make the necessary alterations to the Program within three weeks of receiving the said report.  Such alterations and their implementation are to be notified to the Australian Competition and Consumer Commission within tens days of implementation.

Annexure “D”

MAGAZINES IN WHICH RESPONDENT ADVERTISED

SUNGLASSES

TRACKS

UNDERGROUND SURF

REASONS FOR JUDGMENT

1                     On 4 July 2001 the applicant filed an application, accompanied by a statement of claim, seeking a declaration that the respondent (a wholesaler) had breached s 65C(1)(a) of the Trade Practices Act 1974 (Cth) (“the Act”) in relation to the supply of certain sunglasses.  The applicant also sought an injunction, ancillary orders concerning the withdrawal of the sunglasses from sale, orders that the respondent pay refunds, orders for corrective advertisements, an order that the respondent implement a Trade Practices Compliance Program and formal findings of fact for the purposes of s 83 of the Act.

2                     In its statement of claim the applicant relevantly pleaded that the respondent had supplied 259 pairs of sunglasses known as “SPY iSiS” (“the Sunglasses”) to 57 retailers around Australia which were intended to be used by consumers or were of a kind likely to be used by consumers.  The applicant alleged that the Sunglasses were goods of a kind in respect of which there was a prescribed Consumer Product Safety Standard declared pursuant to s 65E(1) of the Act as a Consumer Product Safety Standard for the purposes of s 65C of the Act, namely Australian Standard AS1067.1-1990 (“the Standard”).  The applicant further pleaded that the Sunglasses did not comply with the Standard in that the circular viewing area centred on the datum centre (as defined in the Standard) of each of the lenses in the Sunglasses (“the field-of-view”) was 26.5 mm whereas clause 2.1.2 of the Standard specifies the field-of-view of the Sunglasses to be a minimum of 30.0 mm.  The parties have engaged in negotiations and on 31 July 2001 (on the eve of a directions hearing scheduled for 1 August 2001) faxed to the Court a minute of proposed consent orders together with the respondent’s defence in which the respondent admitted all of the allegations made in the statement of claim.  Also on 31 July 2001, the respondent filed an affidavit affirmed by one of its officers concerning the facts of the matter.

3                     At the directions hearing on 1 August 2001 I raised some concerns with counsel for each of the parties.  My first concern was that it appeared from the respondent’s affidavit that at all times the respondent had been prepared to take all necessary steps to remedy its default and to do anything which the applicant might consider was required in that regard.  In fact, it appeared from the respondent’s affidavit that it had already carried out some of those steps.  I asked counsel for the applicant whether, in those circumstances, the proceedings were necessary.  I was concerned about the appropriateness of the Court making the proposed orders if the same result could easily have been achieved by the statutory undertaking process (under s 87B of the Act) without using up the resources of the parties and the Court by resorting to litigation.  I had in mind also whether, for example, the applicant should be denied the costs order in its favour which was contained in the minute of proposed consent orders.  Counsel made a limited oral submission in that regard to which I do not need to refer.  Another matter which I raised was whether, as the proposed consent orders contemplated, it was appropriate for the Court to make findings of fact for the purposes of s 83 of the Act in a matter which had not gone to a hearing.  I raised certain other matters, some of which were of a drafting nature. 

4                     I invited the parties to file and exchange submissions on the concerns which I had raised. 

5                     Each of the parties has filed written submissions and a fresh minute of consent orders has been filed which accommodates some of the concerns which I had raised.

6                     These reasons relate to the balance of those concerns.

Whether the proceedings were unnecessary

7                     In its submissions the applicant says that it considered whether to accept an undertaking from the respondent under s 87B of the Act as an alternative to instituting these proceedings, but after weighing a number of relevant factors, decided to litigate.  The applicant says that one important factor was the seriousness of the breach of the Act in that it related to the breach of a mandatory product safety standard and involved issues of public safety in relation to the supply of sunglasses which was continuing and involved the supply of 259 pairs to 57 retailers over a period of nearly a year.

8                     The applicant stated in its submissions that it had previously accepted a number of undertakings under s 87B from other persons, over a five year period, which arose from the supply of sunglasses not complying with the relevant Product Safety Standard, but despite those undertakings breaches of the relevant Product Safety Standard continued.  During the same period the applicant had accepted a number of other more informal but similar undertakings relating to the supply of sunglasses.  The applicant had decided that, given the continued breaches of the Standard, neither the statutory undertakings nor the more informal arrangements had had the desired effect of educating traders and protecting the public. 

9                     The applicant made further submissions concerning the appropriateness of issuing these proceedings rather than accepting an undertaking under s 87B which it is not necessary for me to summarise.

10                  The respondent, in its written submissions referred to the manner in which it had responded when the applicant had raised the question of its contravention of s 65C(1)(a) of the Act.  The respondent acknowledged that there “… was clearly no impropriety involved in the institution of the Court proceedings” but it submitted that the matter should have been resolved by the acceptance of its offer to provide a written undertaking pursuant to s 87B of the Act, that there was no basis for the applicant to conclude that the respondent would not abide by such an undertaking especially where it had acted promptly and responsibly when the matter was drawn to its attention.  The respondent argued that it would have been more appropriate for the applicant to achieve its object, of prompting awareness of the fact that sunglasses must conform with the relevant Standard amongst traders and the community at large, by instituting proceedings against any trader who had breached an undertaking given to it under s 87B of the Act, rather than by instituting the present proceedings. 

my reasoning

11                  I accept the applicant’s submissions, and in particular those which I have summarised above relating to matters of public safety and its experience with undertakings in this particular area of business. 

12                  Furthermore, in an authority cited by the respondent, Trade Practices Commission v Cue Design Pty Ltd (1996) ATPR 41-475 at 41,834 O’Loughlin J said this:

“In my opinion, it is not for the court to express a view that the Commission should have or should not have proceeded under s 87B; the section clearly states that it is the Commission who “may accept a written undertaking” (s 87B(1)).  The court has no involvement until (if at all) it is satisfied, on application made by the Commission, that a person has breached an undertaking (s 87B(4)).”

13                  It is true that that case involved a criminal prosecution, but I do not think that that makes any difference. 

14                  I respectfully agree with O’Loughlin J’s view and will take a similar approach in the particular circumstances of this case.  However, I should not be taken as ruling out the possibility that in different circumstances a Court might take into account the Commission’s refusal to accept a statutory undertaking when deciding whether to make orders such as those proposed in this matter or to award costs in its favour, even when such orders are proposed on a consent basis.

15                  In the circumstances of this case I do not think that the Commission brought these proceedings unnecessarily or acted unreasonably in doing so.

the declaration

16                  I was concerned about the prospect of making the proposed declaration purely on the basis of the respondent’s admissions of the applicant’s allegations in its statement of claim.  I appreciate that in the context of trade practices matters the Court has in several other cases been prepared to do so.  But it seemed to me that, in this matter, it would not be difficult to tender some evidence that the contravention described in the proposed declaration had in fact occurred.  On 8 October 2001, at a directions hearing in a very similar matter (Australian Competition and Consumer Commission v Apollo Optical (Aust) Pty Ltd in respect of which judgment was delivered today, [2001] FCA 1456) I suggested to the applicant that it might file an affidavit exhibiting the relevant portions of the Standard and the test results of any scientific test for compliance with the Standard.  The applicant agreed to do so.  Such an affidavit was filed in relation to this matter and to the Apollo matter.  I made a direction that the affidavit stand as evidence in both matters.

17                  I am not suggesting that such a course is necessary in relation to proposed consent declarations in all trade practices matters, but I thought that it was appropriate in these matters where it would not be difficult or expensive to put on the necessary evidence.

18                  The affidavit contains evidence which confirms the correctness of the factual allegations pleaded in the statement of claim and admitted in the respondent’s defence.  In those circumstances, I consider that it is appropriate to grant a declaration in the terms sought. 

the injunctions

19                  I have examined the terms of the proposed injunctions in paragraphs 2 to 9 of the minute of consent orders.  I consider that it is appropriate to grant orders in the terms proposed.  But in relation to the order requiring the respondent to implement a trade practices compliance program, paragraph 1 of the compliance program proposed will be modified so that it is expressed in terms of the respondent using reasonable endeavours – see Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc [1999] FCA 18 at [35].

findings of fact

20                  The applicant asks that the Court make findings of fact for the purposes of s 83 of the Act.  The respondent consents to such findings being made, but made limited submissions to the effect that they were unnecessary.  The findings of fact sought are in the following terms:

“1.       The Respondent is in the business of, inter alia, supplying sunglasses to retailers for resale to consumers.

 2.        One of the models of fashion spectacles supplied by the Respondent to retailers is labelled “SPY iSiS” (“the relevant sunglasses”).

 3.        The relevant sunglasses failed to comply with Australian Standard AS1067.1 – 1990 as the circular viewing area centred on the datum centre is less than 30.0 mm. 

 4.        During the period between 14 June 2000 and 29 May 2001, the Respondent supplied, in trade or commerce, two hundred and fifty-nine (259) pairs of the relevant sunglasses to the retailers listed in Annexure “A” to the Statement of Claim filed in Federal Court No W277 of 2001.”

21                  Section 83 of the Act provides as follows:

“In a proceeding against a person under section 82 or in an application under subsection 87(1A) for an order against a person, a finding of any fact by a court made in proceedings under section 77, 80, 80A or 81, or for an offence against section 79, in which that person has been found to have contravened, or to have been involved in a contravention of, a provision of Part IV, IVA, IVB, or V is prima facie evidence of that fact and the finding may be proved by production of a document under the seal of the court from which the finding appears.”

22                  The applicant submitted that it would be useful for the Court to avail itself of “this option” in this matter “… as it means that any third parties that have suffered loss or damage arising from the Respondent’s breach of the relevant Standard are able to avail themselves of such findings of fact in order to prove a breach of the Act, and thus obviating the need to occupy the time of the Court and to incur the expense of proving the breach all over again.”

23                  The applicant submitted that the fact that it was not aware of any third parties that have suffered loss or damage did not detract from the fact that findings of fact were a useful mechanism, served an important public function and would be available to be relied upon by third parties at some future time. 

24                  I was not referred to any authority on the question whether a Court should take the step of making formal findings of fact by consent for the purposes of s 83. 

25                  I am inclined to the view that the Parliament intended “… a finding of any fact by a court …” to mean a finding made after a hearing.  The apparent purpose of the provision is to save inconvenience and expense in requiring a matter to be proved more than once, but at the same time protecting the interests of a respondent by conferring on such a finding only the status of prima facie evidence in subsequent proceedings. 

26                  However, it is not necessary for me to decide the point because I do not think that it is appropriate in the present matter to make the findings of fact sought. 

27                  Although I have taken the precaution of obtaining some affidavit evidence to ensure that it is appropriate to make the declaration as between the parties in this matter, that evidence, although probably stronger than prima facie evidence, is not much stronger.  I have not overlooked the admissions made by the respondent in its defence.

28                  Furthermore, I accept the respondent’s submission that there appears to be no real apprehension that claims will be made, or, that if they are made, the respondent will deal with such claims inappropriately.  As a matter of discretion, I decline to make the formal findings of fact sought by the applicant. 

costs

29                  The parties propose an order that the respondent pay the applicant’s costs fixed in the amount as agreed between them, or in the absence of agreement, as taxed.  In my view, that order is appropriate. 

Conclusion

30                  There will be orders in terms of the minute of consent orders lodged on 24 August 2001, amended consistently with the above reasons.

A/g Associate:

Dated:              17 October 2001