FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v AI Constructions (ACT) Pty Ltd [2010] FCA 1377

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 Babar Café and Bar (Woden) (the Restaurant), contravened section 53C of the Trade Practices Act 1974 (Cth) by:

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

1.2    making the Price Representation on Sundays and Public Holidays;

1.3    charging customers of the Restaurant the price listed on the Restaurant’s menu plus a 10% surcharge of the Menu Items supplied on Sundays and Public Holidays;

1.4    noting the existence of the 10% surcharge at the bottom of the Restaurant’s menu by the publication in small print of the following statement:

    ‘10% surcharge Sundays & public holidays’; and

1.5    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.

THE COURT ORDERS THAT:

2.    The Respondent be restrained for a period of 5 years, whether itself or by its servants or agents, from publishing and providing 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 the sum of $20,000 in respect of the Respondent’s contravention of the Trace Practices Act 1974 (Cth).

4.    The Respondent pay the Applicant’s costs in the amount of $4,500.00.

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 proceedings were commenced on 6 September 2010. The applicant, the Australian Competition and Consumer Commission (ACCC), seeks declarations, an injunction and the payment of a penalty in respect of the respondent’s breach of s 53C of the Trade Practices Act 1974 (Cth) (TP Act). The facts on which this application is based are set out in the affidavit of Michael Oblan Azize, sworn on 2 December 2010, and in the annexures to that affidavit.

2    I am also assisted by the written brief in support of the interlocutory application that was filed by the applicant under the fast track procedures in this Court. Section 53C of the Trade Practices Act requires that:

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

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

(b)     the promotion by any means of the supply of goods or services to a person (the relevant person), or of the use of goods or services by a person (the relevant 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; and

(d)     if, in relation to goods,

(i)    the corporation does not include in the single price a charge that is payable in relation to sending the goods from the supplier to the relevant person; and

(ii)     the corporation knows, at the time of the representation, the minimum amount of a charge in relation to sending the goods from the supplier to the relevant person that must be paid by the relevant person

specifies that minimum amount.

3    The respondent company operated a café and bar in Woden in the Australian Capital Territory, trading as Babar Café and Bar. The evidence before me shows that, as at 2 February 2010, an investigator of the applicant attended the respondent’s restaurant and observed that the Menu stated in small print, at the bottom of the page, “10% surcharge on Sundays and public holidays’’. Other investigators of the applicant attended the respondent’s restaurant on 9 April 2010 and observed that the reference to the 10% surcharge was still evident on the menu.

4    The investigators spoke to an individual at the café who identified herself as the owner’s mother. They provided her with a letter that set out the requirements of s 53C of the TP Act. A copy of that letter, addressed to “The Manager”, was exhibited to the affidavit of Mr Azize. The letter encloses a copy of s 53C. It describes in simple language the obligations that are imposed by the section and advises that:

As a follow-up to this letter, the ACCC will be conducting an audit of pricing representations made to customers in restaurants and cafes within the Canberra area. It is expected that this audit will take place within the next six weeks.

5    On 28 May 2010 the same investigators attended the Babar Café and found that the reference to the 10% surcharge still appeared in the menu. One of the investigators, Ms McIntosh, spoke to a person who identified herself as “Jade,” the manager of the café. Ms Mackintosh explained the requirements of s 53C to the manager. A file note of the visit and that conversation was also in evidence.

6    On 1 June 2010, Mr David Kinsella, an investigator with ACCC, received a phone call from a person from the respondent’s restaurant who identified himself as “Spiro”. Spiro informed Mr Kinsella that he was awaiting receipt of compliant menus which had been ordered. An Australian Securities and Investigation Commission (ASIC) search of the respondent identified a Spiro Apostolopoulos as the respondent’s director and secretary. It is reasonable to assume that Mr Apostolopoulos had made the phone call on 1 June 2010.

7    A further visit to the respondent’s restaurant was made by a Mr Arthur Mitchell on 20 June 2010, which was a Sunday. An invoice issued by the Babar Café and Bar for that date shows that, in relation to breakfast and coffee charged at $20.10, a surcharge of $2.01 was added, making a total of $22.10. It is clear from this evidence that the surcharge was not only still appearing on the restaurant menu but that the surcharge was also being charged. On 30 June 2010, an infringement notice stipulating a penalty of $6600, was issued. That infringement notice was attached to a letter addressed to the respondent at 35A Burwood Road, Burwood, New South Wales. The infringement notice required payment of the penalty by 28 July 2010. Prior to the due date, a letter with the address “Babar Café & Bar, 33 Whyalla Street, Fyschwick, ACT 2904” on the top right hand corner was received from the respondent seeking a withdrawal of the penalty. That letter was dated 16 July 2010. The letter alleged that information about non-compliance was not received before the infringement notice was received on 30 June 2010.

8    The respondent’s position appears to have been that, following earlier discussions with the ACCC, he thought he was entitled to continue charging the surcharge pending the receipt of the compliant menus, which had been ordered. I can see no basis in the material that had been provided to the café for this conclusion. The ACCC refused to withdraw the infringement notice and, by letter dated 22 July 2010, advised Mr Apostolopoulos of its decision and reminded him that the infringement notice expired on 28 July 2010 and the payment of the penalty had to be made by that date. That letter was sent to an address in Fyshwick, which was the address on the letter that had been received by ACCC from Mr Apostolopoulos asking for the infringement notice to be withdrawn. A copy of the letter of 22 July 2010 was also emailed to Mr Apostolopoulos at the following address: spiro@ babar.com.au.

9    As the payment was not received by the specified date, the applicant, commenced proceedings in this Court to recover the penalty and seek declaratory relief. The matter came before me on 5 November 2010 for a scheduling conference at which time there was no appearance by the respondent. I was satisfied by an affidavit of service at the hearing that the respondent had been notified of the scheduling conference. On that date I ordered that the proceedings be set down for hearing on Monday, 6 December 2010 and that the applicant was to serve a copy of the orders on the respondent by 9 November 2010.

10    The order of the Court also noted that the date for hearing had been set down in the absence of the respondent, and that the Court would consider any application by the respondent to vacate the hearing date, provided the application was made prior to 16 November 2010. No such application has been received. I am satisfied by an affidavit of service filed by the applicant that the orders of 5 November 2010 were duly served on the respondent. On 3 December 2010, the applicant filed a notice of motion seeking the orders sought in the application on the basis of summary judgment against the respondent in anticipation of the respondent’s failure to appear. When the matter was called for hearing today there was no appearance by the respondent. The matter was called outside the Court and I am satisfied that the respondent has not appeared. In the circumstances, I proceeded to hear the application in the notice of motion, having dispensed with the time otherwise required for service of that notice of motion.

11    I am satisfied on the evidence before me that the respondent has contravened s 53C in the manner alleged by the applicant and that the declarations that the applicant seeks should be made. After some discussion with Mr O’Donovan, who appeared for the applicant, I am also satisfied that an injunction to restrain the respondent from similar breaches for a period of five years is appropriate both to restrain the respondent and to impress upon him and others the necessity to comply with the provision of the Trade Practices Act.

12    The applicant seeks an order that the respondent pay a pecuniary penalty in the sum of $20,000 in respect of the contravention of the TP Act. The amount of any penalty is, of course, a matter for the discretion of the Court. Mr O’Donovan submitted that it was appropriate having regard to the initial amount of penalty stipulated in the infringement notice, being $6600, and the respondent’s complete failure to cooperate in any way with the applicant in these proceedings. Mr O’Donovan drew my attention to the decision of Jagot J in Australian Competition and Consumer Commission v Gourmet Goody’s Family Restaurant Pty Ltd (2010) FCA 1216. The case concerned an infringement notice, also in the amount of $6600, issued in respect of a non-compliance with s 53C in circumstances where the respondent also failed to pay the penalty within the prescribed time.

13    In that case, however, the respondent cooperated with the ACCC and accepted that some increment over the basic penalty amount was appropriate since the infringement notice had not been complied with. The amount of penalty assessed in that case was $13,200. In this case the applicant is seeking an additional $6800 to reflect the respondent’s total lack of cooperation, which has necessitated the applicant bringing these proceedings. The applicant also seeks an order that the respondent pay its costs in the amount of $4500.

14    The documentation that has been submitted to the Court is sufficient to satisfy me that considerable costs must have been incurred in preparing that documentation. There have also been two appearances in Court that must have contributed considerably to the applicant’s costs. It is always with some hesitation that the Court orders costs in a fixed amount without the benefit of affidavit evidence. Nevertheless, the evidence to which I have referred, in terms of appearances and documentation is sufficient to justify the amount sought and I do not consider it necessary for the applicant to incur further costs to demonstrate in a more formal way that the costs have been incurred. I have, therefore concluded that the penalty in the amount the applicant seeks, and costs in the amount it seeks, are appropriate in this case.

15    For all of these reasons I shall make the declarations and orders sought by the applicant.

Associate:

Dated:    6 December 2010