Trade Practices Commission v Lamova Publishing Corp Pty Ltd [1979] FCA 59; (1979) 42 FLR 60 (19 September 1979)

FEDERAL COURT OF AUSTRALIA

TRADE PRACTICES COMMISSION v. LAMOVA PUBLISHING CORP. PTY. LTD. (1979) 42 FLR
60
Trade Practices - Practice - Injunctions - Statutes

COURT

FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
Lockhart J.(1)

CATCHWORDS

Trade Practices - Consumer protection - Misleading or deceptive conduct - Aiding, abetting, counselling and procuring misleading or deceptive conduct - Unsolicited telex directory entries - Unauthorized directory entries - Injunctions - Ancillary orders - Trade Practices Act 1974 (Cth), ss. 52, 75B, 80, 87.

Practice - Procedure - Injunctive relief - Form of order - Restraint of misleading or deceptive conduct - Restraint of persons "knowingly concerned in, or party to", misleading or deceptive conduct - Trade Practices Act 1974 (Cth), ss. 75B, 80.

Injunctions - Trade practices - Form of order - Restraint of persons "knowingly concerned in, or party to", misleading or deceptive conduct - Trade Practices Act 1974 (Cth), ss. 75B, 80.

Statutes - Construction - "Conduct" - Ambit of - Trade Practices Act 1974 (Cth), s. 52 (1). The Australian Telecommunications Commission ("Telecom") is a statutory body established under s. 4 of the Telecommunications Act 1975 (Cth). It is responsible for telex services within Australia and provides telex subscribers with an annual copy of an official Telecom telex directory. This is free of charge to subscribers. Any person wishing to publish a directory of subscribers to any Telecom service may do so only by authority of Telecom given pursuant to s. 93 of the Telecommunications Act 1975. No such authority had been given to the respondents.

Complaints and inquiries from Telex subscribers were received by the applicant. They related to documents received by the subscribers. These documents were in the form of invoices and were from the respondent Lamova Publishing Corp. Pty. Ltd. The documents were headed "Classified Telex Directory". The documents each consisted of two pages and on the front appeared the words: "Acceptance of entries subject to conditions overleaf. No claim is made to payment." The documents were unsolicited by subscribers.

The court accepted evidence that the relevant officers of at least two subscribers to the Telecom telex service assumed, when they received the document, that it was an account which was due for payment, being the annual subscription for entries in the Telecom telex directory. They both approved and made payment to the respondent company at its address appearing on the document.

Injunctions were sought under s. 80 of the Trade Practices Act 1974 to restrain the respondent company from engaging in misleading and deceptive conduct in contravention of s. 52(1). It was also sought to restrain the second and third respondents from aiding and abetting the respondent company to commit such contravention.

Held: In granting injunctions against all respondents: (1) The first respondent engaged in trade or commerce by the conduct of sending by prepaid post documents in similar form to the document referred to above.

(2) Conduct by the first respondent was misleading or deceptive, or was likely to mislead or deceive, by inducing recipients of the document to believe that: (a) The respondent company was lawfully entitled to print, publish or circulate a directory of subscribers to, or persons provided with, any telex service supplied by Telecom; (b) the directory referred to in the document was, or was to be, printed, published or circulated by Telecom, or had its sponsorship or approval; (c) the recipients had previously subscribed to the directory referred to in the document, and were liable to renew the subscription to that directory; (d) the recipients were under an obligation to pay the amount referred to in the document.

(3) The second and third respondents, who were at all material times directors of the respondent company and played an active part in the management of its affairs, counselled and procured, and were knowingly concerned in the conduct engaged in by the respondent company, and therefore were involved within the meaning of s. 75B of the Act in that contravention of s. 52 of the Act by the respondent company.

(4) The receipt by the respondents of money was not only the purpose or object of the exercise, but it was inevitably an integral and inseverable part of the exercise itself, that as a whole, constituted the misleading or deceptive conduct.

(5) The whole of the relevant transaction must be looked at in order to ascertain whether the conduct is misleading or deceptive within the meaning of s. 52 of the Act.

Annand & Thompson Pty. Ltd. v. Trade Practices Commission (1979), 40 FLR 165, applied.

HEARING

Sydney, 1979, September 14, 19. 19:9:1979
APPLICATION.

Application for injunctive relief under s. 80 of the Trade Practices Act 1974 to restrain the first respondent from engaging in conduct in contravention of s. 52(1), and to restrain the second and third respondents from aiding or abetting the first respondent to commit such contravention.

G. Q. Taperell, for the applicant.

No appearance for the respondents.

Solicitor for the applicant: B. J. O'Donovan (Commonwealth Crown Solicitor).

P. H. MORRISON

DECISION

September 19.

LOCKHART J. delivered the following written judgment.
This is an application for injunctive relief under s. 80 of the Trade

Practices Act 1974 (Cth) to restrain the first respondent, Lamova Publishing Corp. Pty. Ltd., from engaging in conduct in contravention of s. 52 (1) of the Act and to restrain the second and third respondents from aiding or abetting the first respondent to commit such contravention. (at p62)

2. On 5th September, 1979, I made ex parte injunctions against the respondents and directed service upon the respondents of that order, the application and of all affidavits in support by 12 noon on 6th September. I gave leave to the applicant, the Trade Practices Commission, to serve short notice of the application returnable before me on 7th September. (at p62)

3. On 7th September there was no appearance by or on behalf of any of the respondents notwithstanding that they were served in accordance with my orders made on 5th September. I continued the injunctions previously made up to the hearing of the proceedings or further order and fixed 14th September, 1979, for the final hearing of the proceedings. I directed the applicant to serve a copy of that order upon the respondents. (at p62)

4. That order was complied with and, on 14th September, 1979, again there was no appearance by or on behalf of any of the respondents. I then continued the injunctions previously granted other than one injunction which had in the meantime become unnecessary. I then adjourned the final hearing of the proceedings until today and again gave directions as to service of the order made on 14th September upon the respondents. I am satisfied that those directions have been complied with and again there is no appearance by or on behalf of any of the respondents. (at p62)

5. On 14th September, 1979, I gave leave to the applicant to amend the name of the first respondent from Lamova Pty. Ltd. to Lamova Publishing Corp. Pty. Ltd., the company having changed its name from the former to the latter on 13th August, 1979. I shall refer to the first respondent as Lamova. (at p62)

6. The Australian Telecommunications Commission - Telecom Australia - is a statutory body established under s. 4 of the Telecommunications Act 1975 (Cth). It is responsible for the telex service within Australia. In conjunction with the telex service a system of telex numbers and answer-back codes has been maintained since the service commenced. Each subscriber to the telex service is allocated a telex number and an answer-back code. Both of them are unique to that particular subscriber within the Australian system. (at p62)

7. The use of the telex number on the telex service allows any one service to communicate directly with any other service. The answer-back code is used to indicate to the caller that the number he has tried to contact is free and available to take a message. Subscribers to the telex service are billed monthly in respect of a rental charge and metered calls. There is no reference on these bills to a subscription fee for an entry in a directory of telex subscribers. (at p62)

8. Each subscriber is supplied each year free of charge with a copy of the official Telecom Australia telex directory. Since Telecom Australia took over the responsibility for the telex service from the Postmaster-General's Department on 1st July, 1975, it has distributed a telex directory annually. The directory is published by the Australian Government Publishing Service and is printed by the Commonwealth Government Printer. (at p63)

9. About 50,000 copies are printed annually and one copy is sent to each subscriber to the telex service. Any person wishing to publish a directory of subscribers to any Telecom Australia service may do so only by authority of Telecom Australia given pursuant to s. 93 of the Telecommunications Act 1975. No such authority has been given to any person or company to publish any directory of Australian telex subscribers. (at p63)

10. However, authority has been given to some persons and corporations to use the Telecom Australia telex directory for the purpose of publishing international telex directories. No such authority has ever been given to Lamova. The current official Telecom Australia directory bears among other things the following on its front cover:

Australia 1979
Telexdirectory
The Telecom Australia logo (at p63)

11. On 16th August, 1979, 10,500 envelopes were lodged for posting at the Randwick post office on behalf of Lamova. The mailing fee of $2,100 was paid by cheque drawn on the banking account of Lamova with the Australia and New Zealand Banking Group Ltd. at its Kent and Market Streets branch. The envelopes were franked and dispatched from the Randwick post office that day to the addressees whose names appeared through a visible "window" on the envelopes. Apart from the name of the addressees each envelope bears the words "If not claimed within seven days, please return to Lamova Publishing Corp. Pty. Ltd., 432 Kent Street, Sydney, N.S.W. 2000". (at p63)

12. The man who brought the envelopes to the post office for dispatch said to the postal clerk who received them on 16th August, 1979, that he would bring in a further 5,000 articles the following day. There has been no posting of 5,000 articles by or on behalf of Lamova from the Randwick post office. From about 22nd August, 1979, onwards the applicant's Sydney office has received about sixteen complaints and inquiries which have come direct from telex subscribers or have been sent by Telecom Australia to the Department of Consumer Affairs of New South Wales and other regional offices of the applicant. (at p63)

13. These complaints and inquiries have been made by institutions and businesses in different parts of Australia and relate to documents which they have received and which are in the form of invoices from Lamova relating to "Classified Telex Directory". The inquiries received have been directed towards ascertaining whether or not the "invoices" were rendered by a firm acting for or on behalf of Telecom Australia. The complaints received have been concerned with the fact that the complainants have had these "invoices" connected with directory entries sent to them without any solicitation on their part. (at p64)

14. From about 18th August, 1979, quantities of mail have been received by Australia Post for delivery to Lamova at 432 Kent Street, Sydney. At that address the name of the company does not appear on the directory of tenants in the foyer of the building. None of the mail which has been received by Australia Post and has been addressed to Lamova has been delivered to the company at the address given on the various pieces of mail. Mail addressed to Lamova is held at the offices of Australia Post at 173 Pitt Street, Sydney. I am satisfied that a large number of subscribers to Telecom Australia have received through the post from Lamova a document entitled: "Classified Telex Directory", such document being Ex. A in these proceedings; it consists of two pages, one is an original and the other a blue-coloured duplicate with printed "TERMS AND CONDITIONS" on the back of the duplicate. I shall refer to the document for convenience as the account. (at p64)

15. There is evidence before me which I accept as truthful and reliable that the relevant officers of at least two subscribers to Telecom Australia telex service, namely the Australian Conference Association and Redken International (Pacific) Inc., upon receiving the account assumed that it was an account which was due for payment being the annual subscription for their respective entries in the telex directory published on behalf of Telecom Australia. They approved the account for payment and caused the account and cheque for payment therefor to be posted to Lamova at its address appearing on the account, namely 432 Kent Street, Sydney. (at p64)

16. The impression conveyed to me upon reading the account in the light of the facts to which I have referred is that it is issued by Lamova as the company engaged by Telecom Australia to produce the official directory of telex subscribers, and that it is an account or invoice for the annual renewal of the subscriber's entry or entries in the telex directory. My impression is substantially if not precisely the same as that of the two witnesses to whom I have referred. The same two witnesses swore that they did not notice the words printed in small print on the account namely, "Acceptance of entries subject to conditions overleaf. No claim is made to payment", or the words printed in pale grey ink on the reverse of the blue duplicate, "TERMS AND CONDITIONS". (at p64)

17. When I first read a copy of the account, which was before I read the affidavits of the two witnesses, I too did not notice any of those words. I am satisfied that the second and third respondents are and at all material times have been directors of Lamova and that they played an active part in the management of its affairs, including the conduct complained of in these proceedings. (at p65)

18. In my opinion, the conduct of Lamova is misleading and deceptive, and is likely to mislead or deceive within the meaning of s. 52(1) of the Act. In my opinion Lamova contravenes s. 52 of the Act, in that in August 1979 it engaged in trade or commerce in conduct of sending by pre-paid post documents in similar form (except for the words or figures which are typewritten, handwritten or otherwise inserted on the document) to the document Ex. A, and that conduct was misleading or deceptive, or was likely to mislead or deceive, by inducing recipients of the document to believe: (a) That Lamova was lawfully entitled to print, publish or circulate a directory of subscribers to, or persons provided with any telex service supplied by Telecom Australia. (b) That the directory referred to in Ex. A was or was to be printed, published or circulated by Telecom Australia, or had its sponsorship or approval. (c) That the recipients had previously subscribed to the directory referred to in Ex. A, and were liable to renew the subscription to that directory. (d) That the recipients were under an obligation to pay the amounts referred to in Ex. A. (at p65)

19. In my opinion, the second and third respondents aided, abetted, counselled and procured, and were knowingly concerned in the conduct engaged in by Lamova to which I have referred, and therefore were involved within the meaning of s. 75B of the Act in that contravention of s. 52 of the Act by Lamova. (at p65)

20. In my opinion the applicant has established its case for the granting of injunctive relief under s. 80, against all respondents, for contraventions of s. 52, in the case of Lamova, and for aiding, abetting, counselling and procuring, and being knowingly concerned in that conduct, so far as concerns the second and third respondents. (at p65)

21. The applicant seeks, amongst other injunctions, an injunction restraining the respondents from, in substance, dealing with, whether by depositing with their banks or presenting for payment or otherwise, cheques or other remittances that may be received by Lamova from the persons to whom Ex. A has been sent, on the basis that the receipt of the cheques and their presentation for payment is a part of the very conduct complained of. (at p65)

22. Other bases to attract the injunctive relief were also relied on, but in my opinion it is correct to say that the receipt of cheques and other remittances by Lamova, dealing with them by presentation to the banks for payment and otherwise, is an integral part of the very conduct that is misleading or deceptive, or likely to mislead or deceive. It is not a case where the receipt of money is the purpose of a particular exercise, the exercise itself being a contravention of s. 52, but the receipt of money not constituting such a contravention, one cannot fragment the relevant steps involved in the exercise engaged in by the respondents in this case, into the printing, publishing and circulation of Ex. A, and separately, the receipt of the fruits of the exercise, namely very substantial sums of money. (at p66)

23. Nothing is more basic to trade or commerce than the circulation of funds, the receipt of cheques, and their presentation for payment by the recipients. The very document, Ex. A itself, is designed for the purpose of generating funds to Lamova, the source of the funds being subscribers to Telecom Australia's telex service. Not only is the receipt of money the purpose or object of the exercise, it is inevitably an inseverable part of the exercise itself that as a whole constitutes the misleading or deceptive conduct. (at p66)

24. That it is necessary to look at the whole of the relevant transaction is clear from the reasons for judgment of Franki J. in Annand & Thompson Pty. Ltd. v. Trade Practices Commission (1979) 40 FLR 165 (at p66)

25. Mr. Taperell, who appears for the applicant, has very properly drawn my attention to the provisions of s. 87 of the Act, which empowers the court in appropriate cases to make orders, amongst other things, for the compensation of persons for loss or damage, or for the prevention or reduction of loss or damage, whether or not injunctive relief is granted under s. 80, where a contravention of the provision of Pt IV or Pt V is established. In my opinion, s. 87 does not restrict the ambit of the operation of s. 52, and I see nothing in s. 87 which would support a construction of s. 52 that would exclude from the ambit of the proscribed conduct, the receipt and dealing with cheques, remittances and moneys received by Lamova from subscribers to the telex service. (at p66)

26. Section 52 itself is of course in marked contrast to s. 53 which prohibits the making of specified representations. Section 52, although including much if not perhaps all of the conduct referred to in s.53, has a much wider operation. (at p66)

27. Accordingly, I make the orders referred to in the short minutes of order initialled by me and placed with the papers. I reserve liberty to any party to apply in relation to any matter arising out of these orders including any application that the applicant may wish to make in the future for an order under s. 80A of the Act if that order should prove in due course to be appropriate. (at p66)

ORDER

Injunctions and orders accordingly.