Australian Competition and Consumer Commission v Henry Kaye and National Investment Institute Pty Ltd [2004] FCA 1363
Summary
1. In accordance with the practice of the Federal Court in some cases of public interest, the following summary has been prepared to accompany the reasons for judgment delivered today. The summary is intended to assist the public in understanding of the decision of the Court. It is in no way a complete or authoritative statement of the conclusions reached by the Court or the reasons for those conclusions. The only authoritative statement of the Court’s reasons is that contained in the published reasons for judgment. The published reasons for judgment and this summary will be available on the Internet at www.fedcourt.gov.au.
2. In September 2003, the first respondent, Mr Kaye announced the “Henry Kaye” or “$1 million Challenge”, which was to consist of five free seminars during which Mr Kaye proposed that one person should be chosen from the attendees at each seminar and that he would teach them to become property millionaires. Certain conditions were said to attach to this proposal. Mr Kaye also set out a further challenge, whereby he claimed he would turn 1,000 ordinary Australians into property millionaires within 12 months. The challenge and the free seminars were advertised by radio advertisements broadcast from 10 September 2003 to 18 September 2003 on Fox FM in Melbourne and 2 Day FM in Sydney. The challenge was also advertised on an Internet site and in The Australian Financial Review, The Sydney Morning Herald, The Sunday Telegraph, The Age and The Herald Sun Newspapers.
3. The Australian Competition and Consumer Commission (“the Commission”) brought proceedings against Mr Kaye and the National Investment Institute Pty Ltd (“NII”) in relation to these advertisements, alleging a breach of s 52 of the Trade Practices Act 1974 (Cth) (“the TPA”). These proceedings were stayed against NII by operation of the Corporations Act 2001 (Cth), following the appointment of an administrator to the company on 25 November 2003. This Court’s jurisdiction pursuant to the TPA is, generally speaking, limited to corporations, however, by virtue of s 6(3) of the TPA, s 52 of the Act has operation against Mr Kaye as an individual in respect of the radio and Internet representations. Mr Kaye’s liability for the newspaper representations was dependent on the Commission establishing that he was an accessory (pursuant to s 75B of the TPA) to any breach of s 52 by NII.
4. The Commission sought declaratory, injunctive and other relief against Mr Kaye; alleging that Mr Kaye made a number of misrepresentations in the advertisements, including that he would make 5 ordinary Australians into property millionaires in just 6 months using no money down, no debt and no equity.
5. In my reasons for judgment, I found that all but one of the representations alleged by the Commission were contained in the advertisements, and that by operation of the TPA those representations were false and misleading in the relevant sense. In relation to the newspaper advertisements, I was not satisfied that Mr Kaye was an accessory to NII’s breach of s 52. The relief that I have indicated I would grant in respect of these breaches includes a permanent injunction, whereby Mr Kaye is restrained from making the representations or representations substantially similar to them in the future. I have also determined that declaratory relief is appropriate in the circumstances of the case, although the precise terms of the declarations are yet to be finalised. The relief ordered marks the Court’s disapproval of the conduct found to contravene the TPA.
