FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Gourmet Goody’s Family Restaurant Pty Ltd [2010] FCA 1216

THE COURT DECLARES THAT:

1.         The Respondent has, in trade or commerce, and in connection with the supply of goods (the Menu Items) to customers of its restaurant “Steersons Steakhouse” (the Restaurant),  contravened section 53C of the Trade Practices Act 1974 (Cth) by:

(a)       publishing menus stating the price at which the menu items would be supplied to the customers of the Restaurant, from Monday to Saturday when those days were not Public Holidays (the Price Representation);

(b)      making the Price Representation on Sundays and Public Holidays;

(c)       charging customers of the Restaurant the price listed on the Restaurant's menu plus a 10% surcharge for the Menu Items supplied on Sundays and Public Holidays;

(d)      noting the existence of a 10% surcharge at the bottom of the Restaurant's menu by the publication in small print of the following statement:

“A 10% surcharge applies on Sundays and public holidays.”; and

(e)       not specifying on the Restaurant's menu, in a prominent way and as a single figure, the single price for the supply of the Menu Items on Sundays and Public Holidays.

AND THE COURT ORDERS THAT:

2.         The Respondent for a period of 5 years, whether itself or by its servants or agents, be restrained from publishing and supplying menus to customers on Sundays and Public Holidays without specifying, in a prominent way and as a single figure, the single price of goods offered for supply on Sundays and Public Holidays.

3.         The Respondent pay to the Commonwealth of Australia a pecuniary penalty in respect of the Respondent’s contravention of the Act, fixed in the sum of $13,200, such amount to be paid within 28 days of the date of these orders.

4.         The Respondent pay the Applicant's costs of the proceedings, agreed in the sum of $1,500, such amount to be paid within 28 days of the date of these orders.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

THE COURT DECLARES THAT:

1.         The Respondent has, in trade or commerce, and in connection with the supply of goods (the Menu Items) to customers of its restaurant “Georges Bar and Grill” (the Restaurant),  contravened section 53C of the Trade Practices Act 1974 (Cth) by:

(a)       publishing menus stating the price at which the menu items would be supplied to the customers of the Restaurant, from Monday to Saturday when those days were not Public Holidays (the Price Representation);

(b)      making the Price Representation on Sundays and Public Holidays;

(c)       charging customers of the Restaurant the price listed on the Restaurant's menu plus a 10% surcharge for the Menu Items supplied on Sundays and Public Holidays;

(d)      noting the existence of a 10% surcharge at the bottom of the Restaurant's menu by the publication in small print of the following statement:

“A 10% surcharge Sundays and Public Holidays.”; and

(e)       not specifying on the Restaurant's menu, in a prominent way and as a single figure, the single price for the supply of the Menu Items on Sundays and Public Holidays.

AND THE COURT ORDERS THAT:

2.         The Respondent for a period of 5 years, whether itself or by its servants or agents, be restrained from publishing and supplying menus to customers on Sundays and Public Holidays without specifying, in a prominent way and as a single figure, the single price of goods offered for supply on Sundays and Public Holidays.

3.         The Respondent pay to the Commonwealth of Australia a pecuniary penalty in respect of the Respondent’s contravention of the Act, fixed in the sum of $13,200, such amount to be paid within 28 days of the date of these orders.

4.         The Respondent pay the Applicant's costs of the proceedings, agreed in the sum of $1,500, such amount to be paid within 28 days of the date of these orders.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1                                             These two proceedings involve fast track applications by the Australian Competition and Consumer Commission (ACCC) against two corporations involved in the restaurant industry.  The applications allege a contravention of s 53C of the Trade Practices Act 1974 (Cth) that, in effect, the respondents each published menus in which they did not specify in a prominent way and as a single figure, the single price for the goods supplied in their restaurant. 

2                                             Section 53C(1) of the Trade Practices Act relevantly provides that:

A corporation must not, in trade or commerce, in connection with:

(a)        the supply or possible supply of goods or services to a person…

make a representation with respect to an amount that, if paid, would constitute a part of the consideration for the supply of the goods or services unless the corporation also:

(c)        specifies, in a prominent way and as a single figure, the single price for the goods or services; …

3                                             These proceedings arose because the respondents each published menus which were provided to customers, amongst other days, on Sundays and public holidays.  The menus did not specify in a prominent way and as a single figure the single price for the supply of items on the menus on Sundays and public holidays.  Instead, there was a statement at the bottom of each menu in small print as follows:

·                    “A 10% surcharge applies on Sundays and public holidays” (in proceeding NSD 1158 of 2010); and

·                    “A 10% surcharge Sundays and Public Holidays” (in proceeding NSD 1160 of 2010).

4                                             This is the first return date of the application.  In both proceedings, the respondents came before the Court on the basis that they admitted the essential allegations against them and, accordingly, consented to the making of the declarations and orders as proposed in the fast track applications.  The respondents and the ACCC had agreed both an appropriate pecuniary penalty, namely the sum of $13,200 in each proceeding, and a figure in respect of the payment of the ACCC’s costs, namely the sum of $1,500 in each proceeding.

5                                             The parties have helpfully tendered in both sets of proceedings an agreed statement of facts.  Those facts are also supported by an affidavit of Matthew Stuart Blunn (a solicitor employed by the Australian Government Solicitor, the solicitors for the ACCC) sworn 6 September 2010.  Mr Blunn has also helpfully provided written submissions setting out the relevant principles. 

6                                             Mr Blunn has drawn my attention to the fact that these proceedings will be the first occasion on which the Court has imposed a penalty under s 76E of the Trade Practices Act.  For that reason, it is important that I record that I am satisfied on the agreed statement of facts that the penalty which the parties have agreed between themselves is an appropriate reflection of the circumstances of the culpability of each respondent in the proceedings.  In reaching this conclusion I have had regard to the fact that a principal object of a penalty under s 76 is deterrence.  In NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285, the Full Court said (at 294-295)

The Court should not leave room for any impression of weakness in its resolve to impose penalties sufficient to ensure the deterrence, not only of the parties actually before it, but also of others who might be tempted to think that contravention would pay, and detection lead merely to a compliance program for the future.

7                                             Mr Blunn’s submissions identify the relevant principles in relation to penalties where there has been an agreement between the parties.  The basic proposition is that it is a matter for the Court to determine the appropriate penalty.  Nevertheless, it is in the public interest for parties to be encouraged to reach some form of sensible resolution of their dispute.  Accordingly, if the parties by so doing come to a proper or appropriate figure reflecting the true circumstances of the breaches, then provided it is satisfied that the figure is appropriate, there is no reason for the Court to depart from that position and select some other figure.  As stated in NW Frozen Foods (at 291):

A proper figure is one within the permissible range in all the circumstances.  The Court will not depart from an agreed figure merely because it might otherwise have been disposed to select some other figure, or except in a clear case.

8                                             In this case, the agreed facts (which are substantially the same in both sets of proceedings) record that for a period of time the respondents published menus which did not identify a single price for the menu items in respect of trading on Sundays and public holidays.  Instead, there was a base price identified with a small note at the end of the menu to the effect that a 10% surcharge would apply on Sundays and public holidays.  The ACCC issued infringement notices to the respondents in relation to these circumstances on 30 June 2010 in each case.  Under those notices, the maximum penalty would have been $6,600.  On 12 July 2010, the solicitors for the respondents sent a letter to the ACCC stating that they had rectified the menus, enclosing new copies of the menus and seeking withdrawal of the notices.  However, on 22 July 2010, the ACCC notified the respondents that the notices would not be withdrawn.  The time to pay under the notices expired on 28 July 2010 with the consequence that even if the respondents had wished to pay the penalty under the notice, there was no opportunity for them to do so.  The proceedings accordingly were commenced on 6 September 2010. 

9                                             As stated above, this is the first return date of the fast track application and by reason of discussion between the parties before and on today’s date the matter has effectively been resolved between them.  On this basis, I am satisfied that I should make orders as proposed by the parties and as identified in the fast track applications.  I am also satisfied that there is power to do so. 

10                                          The orders should be made to reflect the importance of general deterrence in a case such as this.  As the ACCC said, representations as to price are made by cafes and restaurants to consumers virtually every day.  It is important in these circumstances that the declarations and orders reflect the public policy underlying the Trade Practices Act and the importance of general deterrence.  Specific deterrence of the respondents themselves is not a weighty consideration in this case because as soon as the respondents were notified of the problem by the ACCC, they took immediate action to rectify the problem by rectifying the menus.

11                                          The penalty of $13,200 (which is clearly at the low end of the scale, given the maximum penalty is $1.1 million), reflects the overall low level of culpability of the respondents, in that the breach was rectified as soon as it was drawn to their attention.  That having been said, general deterrence remains critical, and accordingly, the agreed penalty of $13,200 in each matter is appropriate. 

12                                          For these reasons, I make the orders as sought by the ACCC in the fast track application in each proceeding. 

Associate:

Dated:         8 November 2010