FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Info4PC.com Pty Ltd (Deregistered) [2006] FCA 1534

PROCEDURE – consent orders – whether within power of Court to make – whether appropriate

Federal Court of Australia 1976 (Cth) s 43(1)

Federal Court Rules O 18 r 4, O 35 r 10

Australian Competition and Consumer Commission v Goldy Motors Pty Ltd [2000] FCA 1885

Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd [2004] FCA 693

Australian Competition and Consumer Commission v Real Estate Institute of Western Australia (1999) 161 ALR 79

Australian Competition and Consumer Commission v Virgin Mobile Australia Pty Ltd (No 2) [2002] FCA 1548

Rural Press Limited v Australian Competition and Consumer Commission [2003] HCA 75

Thomson Australia Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150

Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (1993) 113 FCR 257

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v INFO4PC.COM PTY LTD (ACN 094 149 149) (DEREGISTERED) and JAMES HAMILTON RAE

S17 OF 2001

NICHOLSON J

16 NOVEMBER 2006

PERTH

THE COURT ORDERS THAT:

The Minute of Consent Orders be accepted by the Court, such minute reading as follows:

‘The Court makes:

1.         A declaration that the Second Respondent, by reason of his involvement in the conduct set out in paragraphs 1.1, 1.2 and 1.3 below was directly or indirectly, knowingly concerned in, or party to, and is thereby within the meaning of sections 82 and 87 of the Trade Practices Act 1974 (Cth) (“the Act”), a person involved in each of the following contraventions of the Act by Info4PC.com Pty Ltd (“Info4PC”), namely:

1.1              in trade or commerce, advertising for supply new computers:

1.1.1   in The West Magazine (in the West Australian), 30 September 2000 at the price of $299.00;

1.1.2   in Australia PC World, November 2000, page 139 at the price of $299.00; and

1.1.3   on the website http://www.info4pc.com.au from 3 October 2000 until at least 31 January 2001 at the price of $299.00 and $499.00

when in fact there were reasonable grounds of which Info4PC was aware or ought reasonably to have been aware, for believing that it would not be able to offer those computers at the specified prices for a reasonable period in reasonable quantities having regard to the market for new computers in Australia, and having regard to the nature of the advertisements specified at paragraphs 1.1.1, 1.1.2 and 1.1.3, in contravention of section 56 of the Act;

1.2              in trade and commerce, accepting payments from 30 September 2000 until 14 December 2000 for computers, where at that time there were reasonable grounds of which Info4PC was aware or ought reasonably to have been aware, for believing that it would not be able to supply such computers within the 8 to 10 week period specified by Info4PC or otherwise within a reasonable time, in contravention of section 58 of the Act; and

1.3              in trade or commerce, representing from 3 October 2000 until 31 January 2001 on the website http://www.info4pc.com.au that computers would be delivered between 8 to 10 weeks of payment having cleared, when in fact there were no reasonable grounds for making such representation, in contravention of section 52 of the Act.

2.                 An order that the undertakings referred to in order 1 of the orders of this Honourable Court made on 21 March 2001 cease and the Second Respondent’s passport be returned to him.

3.                 An order that the Second Respondent pay the Applicant’s costs of these proceedings in the amount of $12,165.00.’

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

REASONS FOR JUDGMENT

1                     The applicant (the Commission) seeks the following orders against the second respondent (Mr Rae):

1.                  a declaration;

2.                  an order that the undertakings referred to in order 1 of the Orders of this Court made on 21 March 2001 cease and Mr Rae’s passport be returned to him; and

3.                  an order that Mr Rae pay the Commission’s costs of these proceedings in the amount of $12 165.

2                     Pursuant to an agreement between the parties, the Commission and Mr Rae have filed a minute of proposed consent orders dated 18 October 2006, setting out the orders that the Commission and Mr Rae propose in order to resolve these proceedings (Minute of Consent Orders).  Pursuant to the orders made at the directions hearing dated 18 October 2006, Mr Rae has now filed and served a further amended defence.

3                     The effect of the further amended defence is to produce in the pleadings a blanket admission of the allegations.  The effect of the admissions is to trigger the application of O 18 r 4 of the Federal Court Rules (FCR) which provides:

‘4(1)    If an admission is made by a party, whether by a pleading or otherwise, the Court may pronounce any judgment or make any order to which the applicant is entitled on the admission.

4(2)     The Court may exercise its powers under sub-rule (1) notwithstanding that other questions in the proceeding have not been determined.’

4                     The nature of the proceedings is as follows.  The Commission alleges that, Mr Rae was directly or indirectly knowingly concerned in or party to contraventions of ss 52, 56 and 58 of the Trade Practices Act 1974 (Cth) (the TPA) by the first respondent (Info4PC) whose conduct included:

1.                  during the period September 2000 to January 2001 advertising computers at discounted prices (being $299 and $499) in exchange for a commitment from the purchaser to complete a questionnaire with 20 questions a month for two years (the ‘lifestyle survey’);

2.                  advertising that the computers would be delivered in 8 to 10 weeks;

3.                  during the period from 19 October 2000 to 14 December 2000, accepting payments from approximately 3000 consumers for computers when Info4PC had not secured either funding for, or supply of, sufficient computers to enable supply; and

4.                  failing to supply the computers, aside from an initial 250 computers that had been obtained by Info4PC from Dell Australia Pty Ltd (formerly Dell Computer Pty Ltd) (Dell).

5                     Info4PC was deregistered on 14 January 2003 and therefore is no longer a party to these proceedings.

6                     The proceedings continue solely against Mr Rae, who has now filed a further amended statement of defence admitting the allegations against him.  Mr Rae admits all the matters alleged in the further amended statement of claim. 

7                     The Commission recognises that, notwithstanding the agreement reached between the parties as to the terms of the proposed consent orders, it is for the Court to determine whether or not it has the power to make the orders proposed, and whether, in all the circumstances it is appropriate to do so. 

8                     The Court must not exceed its power in the making of consent orders.  The parties cannot by consent confer power to the Court to make orders which the Court lacks the power to make:  Thomson Australia Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 at 165 and followed by French J in Australian Competition and Consumer Commission v Real Estate Institute of Western Australia (1999) 161 ALR 79 at [19] (ACCC v REIWA). 

9                     In considering proposed consent orders the Court should not impede settlements between parties legally represented and able to understand and evaluate the desirability of agreeing to that settlement.  It should not refuse to give effect to the terms of settlement by refusing to make orders or accept undertakings where they are within the Court’s jurisdiction and are otherwise unobjectionable.  Nor should it simply substitute its own view of the orders or undertakings which it would have made if those proffered fall within the range of an appropriate disposition of the case:  ACCC v REIWA at [22] and Australian Competition and Consumer Commission v Virgin Mobile Australia Pty Ltd (No 2) [2002] FCA 1548 at [2].

10                  So far as concerns the declaration proposed in the Minute of Consent Orders, I consider it is within power and appropriate for the Court to make the declaration for the following reasons.  In the present proceedings the declaration sought is directed to the determination of a legal controversy and not to answering abstract or hypothetical questions by reason that, firstly, in its further amended statement of claim, the Commission identifies and particularises the alleged representations and conduct giving rise to liability under the TPA and asserts that by those representations and conduct, Info4PC has contravened the TPA and Mr Rae has been directly or indirectly knowingly concerned in or party to those contraventions.  Mr Rae admits his liability under the TPA in his further amended defence.  Secondly, the Commission, as a public body charged with enforcing the TPA, has a real interest in seeking the relief (Australian Competition and Consumer Commission v Goldy Motors Pty Ltd [2000] FCA 1885 at [30] (ACCC v Goldy Motors)), and Mr Rae is in the position of a proper contradictor (in that he has a true interest in opposing the declaration sought).  Thirdly, the factual foundation for the declarations is set out in the further amended statement of claim which Mr Rae has admitted.

11                  It is appropriate for the Court to exercise its discretion to make the proposed declaration because there are sufficient consequences flowing from the making of such a declaration.  This is a case involving the public interest such that the declarations will serve to confirm Mr Rae’s involvement in a contravention of the TPA and may be of some assistance to the Commission in carrying out the duties which are conferred upon it by the TPA (ACCC v Goldy Motors at [34]).  The declaration will serve to mark the Court’s disapproval of particular conduct engaged in contravention of the TPA (Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (1993) 113 FCR 257 at 268). 

12                  As stated by Lee J in Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd [2004] FCA 693 at [21]:

‘… it may be said that there is some utility in declaring contraventions of the Act to have occurred in order to define and publicise the type of conduct that constitutes a contravention of the Act and to set out clearly the foundation on which the consequential orders by way of injunction and pecuniary penalty, including those based on accessorial liability, are grounded.’

In Rural Press Limited v Australian Competition and Consumer Commission [2003] HCA 75, Gummow, Hayne and Heydon JJ (with whom Gleeson CJ and Callinan J agreed) observed that where the Court declares conduct to be in contravention of the TPA close attention should be paid to the form of the declaration, particularly those ‘by consent’. 

13                  The orders ceasing the undertaking given by Mr Rae and the handing up of his passport were necessary when made to maintain the status quo while the proceedings continued.  It is now appropriate that they should cease. 

14                  With regard to the order for costs, the power to award costs arises under s 43(1) of the Federal Court of Australia 1976 (Cth).  The parties have agreed in proposed order 3 of the Minute of Consent Orders that Mr Rae pay an agreed sum of $12 165 as a contribution to the Commission’s costs.

15                  The outline of submissions of the Commission also establishes that the making of the orders in the Minute of Consent Orders is appropriate in the light of the evidence before the Court.  It is not necessary to traverse those submissions given the admissions made and the terms of FCR O 18 r 4.  It is sufficient to say that is the position. 

16                  In forming the above views, I have relied upon the outline of submissions of the Commission to which Mr Rae, consistently with the admissions made by him, has chosen not to file any contradicting submissions.  In my opinion the submissions of the Commission correctly approach the issues in any event.

17                  For these reasons I consider that the Minute of Consent Orders should be accepted.  Accordingly, on the publication of these reasons, I will sign that minute pursuant to FCR O 35 r 10 directing the District Registrar to draw up, sign and seal an order in accordance with the terms of the Minute of Consent Orders. 

Associate:

Dated:         16 November 2006