Re Peter James Dawson v World Travel Headquarters Pty Ltd [1981] FCA 2; (1981) 53 FLR 455 (3 February 1981)

FEDERAL COURT OF AUSTRALIA

Re: PETER JAMES DAWSON
And: WORLD TRAVEL HEADQUARTERS PTY. LTD. [1981] FCA 2; (1981) 53 FLR 455
Nos. W.A. G.21-26 of 1980
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Fisher J.(1)

CATCHWORDS

Trade Practices - Procedure - Fines - Relevant considerations and mitigating circumstances - No fraudulent intent - Charges arising out of one and the same fault - Costs.

Federal Court Rules 0.49 and 5.

Trade Practices Act 1974 s.58(b), s.79.

Trade Practices - Consumer protection - Accepting payment for services - Intention to supply materially different services - Change of holiday tour itinerary after issue of brochure - Purchase of tour - Terms of contract - Payments made to travel agent - Whether authority to accept - Whether deposit "payment or other consideration" - Whether services materially different - Payment from one person on behalf of two - Only one acceptance - Penalty - Costs - Trade Practices Act 1974 (Cth), ss. 58(b), 79, 84(2). The defendant, which operated a substantial business in the travel industry, was charged with six contraventions of s. 58(b) of the Trade Practices Act 1974 in that it had accepted payment for services when at the time of such acceptance it intended to supply materially different services. The defendant distributed to the public a brochure setting out details of tours it offered for sale. In respect of one tour, the Swingaway Asia Group Holiday G.P.E., it subsequently altered the itinerary both as to the date of departure and the time spent in Singapore but it did not alter the brochure. One C. paid for that holiday for herself and her mother (both of whom are referred to as the consumers) by deposit on 9th and 10th May, 1979, and as to the purchase price on 18th and 31st May, 1979. These payments were made to Jetset Tours a travel agent.

Held: (1) Section 58(b) of the Act refers to services which at the relevant time the consumers could reasonably expect to receive and in respect of which they made their payments. In so far as there was any uncertainty the services to be provided would be a matter for objective determination by the court.

Smith v. Hughes (1871), LR 6 QB 597, referred to.

Meaning of the word "accept" in s. 58(b) discussed.

(2) The court had to decide whether the alterations to the itinerary as shown in the brochure were sufficiently brought to the attention of the consumers at the relevant time, as, if they had been, the services for which they paid would have been amended.

(3)(a) The alteration to the departure date had been sufficiently brought to the attention of the consumers at relevant times. (b) The alteration to the itinerary in respect of loss of time in Singapore had not been sufficiently brought to the attention of the consumers at the time of the payments made on 9th, 10th and 18th May, 1979. A doubt existed in respect of the position on 31st May, 1979, and the information pertaining to that date would be dismissed.

(4) Although the payments had been made to Jetset Tours, in the circumstances this amounted to receipt by the defendant as there was sufficient evidence of implied authority in Jetset Tours to accept such payments.

(5) The payments by way of deposit received by the defendant were payments for services within s. 58(b) of the Act.

Brien v. Dwyer (1978), 141 CLR 380, referred to.

(6) The services in respect of which payment was accepted were materially different from those which the defendant intended to supply and did in fact supply.

(7) Although on each relevant date 9th, 10th and 18th May, 1979, money was accepted by the defendant in respect of two consumers, only one breach of s. 58(b) occurred on each date.

(8) The court was required to have regard to the deterrent effect of any fines but, taking into account, inter alia, (a) that the conduct of the defendant was not dishonest; (b) that the defendant was conscious of its obligation to its customers; (c) there was no evidence of any person being prejudicially affected; and (d) the effect on the defendant of the publicity attendant upon the proceedings, appropriate penalties were $3,000 in respect of the contravention occurring on 9th May, 1979, and $100 in respect of the contraventions occurring on 10th May, 1979, and 18th May, 1979.

Hartnell v. Sharp Corporation of Australia Pty. Ltd. (1975), 5 ALR 493; Eva v. Southern Motors Box Hill Pty. Ltd. [1977] FCA 2; (1977), 30 FLR 213; Quinn v. Given [1980] FCA 23; (1980), 41 FLR 416; Trade Practices Commission v. Stihl Chain Saws (Australia) Pty. Ltd. (1978) ATPR 40.091, referred to.

HEARING

Adelaide, 1980, August 5-8, 11-12; November 28;
December 13; 1981, February 3. 3:2:1981
INFORMATIONS.

The defendant entered a plea of not guilty to six informations alleging contraventions of s. 58(b) of the Trade Practices Act 1974.

E.M. Franklyn Q.C. and P. Kirby, for the prosecutor.

B.A. Beaumont Q.C. and T.M. Jucovic, for the defendant.

Cur. adv. vult.

Solicitor for the prosecutor: B.J. O'Donovan, Commonwealth Crown Solicitor.

Solicitors for the defendant: Murphy & Moloney.
T.J. GINNANE
Orders accordingly.

DECISION

On 28 November 1980 I delivered my reasons for my finding that on three occasions in the month of May 1979 the defendant contravened the provisions of s.58(b) of the Trade Practices Act 1974 ("the Act"). I then adjourned the proceedings to enable counsel to tender evidence in mitigation and to address on the question of fines and costs. The matter was called on for further hearing on 18 December 1980.

It is necessary to deal at the outset with the fate of charges G.22 and G.24 of 1980. I indicated in my earlier reasons why I doubted the propriety of convicting the defendant on these charges. Counsel for the defendant adopted my tentative approach in my earlier reasons and did not present argument.

The Counsel for the prosecutor submitted that because the defendant entered into contractual arrangements with two persons, Mrs. and Miss Court, it was proper for it to be convicted in respect of the payment it accepted on each occasion from each of these two persons. I accept his contention that the defendant entered into two contracts, but in my opinion there was on each day only one "acceptance of payment for services", although for services to be rendered to two persons. There was no discrepancy between the services which it intended to supply to each of the women and no difference in the services in respect of which it accepted payment from each of them. Moreover there was on each day only a single point of time at which its intention was relevant. It had but one intention and received but one payment, although in relation to two persons and two contracts. I need not further repeat what I said in my earlier reasons for my tentative opinion, which I now confirm, that these two charges should be dismissed.

On the matter of the appropriate fines to be imposed there was of course much relevant evidence given at the trial which it is appropriate for me to take into account. At the request of the prosecutor and with the consent of the defendant I gave a direction pursuant to the provisions of Order 49, rule 5 of the Rules of the Court. The prosecutor in consequence of such direction relied upon the evidence already given at the trial and the defendant called one witness, its managing director Mr. Cooper.

Mr. Cooper's evidence, which was virtually unchallenged, was in the first instance to the effect that the defendant had not previously been convicted or charged under the Act or under any similar consumer protection legislation. Furthermore he pointed to the very small profit margin which the defendant generally enjoyed on tours of this nature, and the discounted cost of an individual booking. In respect of the tour in question its overhead cost to the defendant per tourist exceeded its income per head, that is, the defendant made a loss in respect of this tour. He also gave evidence concerning the fail-safe system instituted by the defendant which had earlier been deposed to by Mr. Schultz and to which I referred in my reasons. He spoke of the measures which had now been taken to ensure that, as far as possible, it operated effectively. He satisfied me that the defendant was aware of its obligation to ensure that consumers were not misled and was concerned to overcome what he said were considerable practical difficulties. His evidence confirmed the view that I expressed at the trial that there was nothing fraudulent or dishonest in the defendant's conduct. The prosecution in fact conceded that the defendant did not have "any evil intent". The true position is that it had been negligent in failing to ensure that its fail-safe system achieved its intended objective. In consequence of such failure, the alterations to the itinerary were not at the appropriate time drawn to the attention of prospective tourists, or at least two of them.

In the somewhat exceptional circumstances surrounding these charges it seems proper to me that I take into account on the question of fines the following matters:

(a) The objectives of the legislation and in particular its policy of consumer protection.

(b) The absence of fraudulent or dishonest intent and of deliberation on the part of the defendant.

(c) The degree of negligence in its conduct.

(d) The extent of the carelessness and wilfulness of its conduct.

(e) The extent to which its conduct has or is likely to have prejudiced consumers.

(f) The efforts which it has made to correct the situation.

(g) The deterrent effect of the conviction and fines.

In respect of these propositions I refer to and draw support from what Smithers J. said in respect of penalties in Hartnell v. Sharp Corporation of Australia Proprietary Limited (1975) 5 ALR 493 and Eva v. Southern Motors Box Hill Proprietary Limited (1977) 15 ALR 428. I also rely on the reasons of the Full Court of this Court in Quinn v. Given (1980) ATPR 42,131.

On the evidence in this matter, including the additional evidence tendered in mitigation I can not find that the conduct of the defendant was in any way dishonest or deliberate. The essence of the contravention was the failure of its fail-safe system, which on the evidence had been established deliberately by the defendant to ensure that in its relations with potential customers there was no lack of consensus. Moreover the failure of the system on this particular occasion did not occur at the principal place of business of the defendant, that is in Sydney, where steps were taken which if they had been correctly transmitted to purchasers of the tour, would have ensured that they were aware of the loss of a day in Singapore. The system in effect failed not in transmitting the information from Sydney to Perth but thereafter in the steps taken to ensure that the customers in that city and Jetset Tours were aware of the alterations. The evidence of Mr. Schultz and Mr. Cooper has satisfied me that the defendant is conscious of its obligations towards customers and has taken steps and is continuing to take steps to ensure that as far as possible it does not fall down in its conduct. I regard these facts as mitigating the offence and as well the fact that there is no evidence that in respect of this tour any other person was prejudicially affected by the defendant's conduct. I take into account the effect upon the defendant, a company of considerable standing, of the convictions and the publicity attendant upon the hearing and earlier judgment in this matter.

However I must emphasize that as Smithers J. said in Trade Practices Commission v. Stihl Chain Saws (Australia) Proprietary Limited (1978) ATPR 40.091 at page 17, 896, penalties "should reflect the will of Parliament that the commercial standards laid down in the Act must be observed but not be so high as to be oppressive." It is also necessary to have regard to the deterrent effect of the fines, particularly in the area of promotion of tourism by brochures and other advertisements. Experience, as exemplified by Court decisions at least in the United Kingdom, indicates it can truly be said that the industry is accident-prone and frequently the consumer is substantially prejudiced, though not always, it must be acknowledged by a fault on the part of the producer of the brochure or advertisement.

Having regard to all the facts and circumstances of the matter I consider that a fine of $3,000 is appropriate in respect of charge G21 of 1980 which relates to the contravention occurring on 9 May 1979. In respect of the two charges relating to subsequent dates in respect of which I propose to convict, it is my opinion, notwithstanding a submission to the contrary by the prosecutor, that they arise out of one and the same fault on the part of the defendant. Once that fault, namely the failure to convey the exact nature of the alteration to Mrs. Don occurred, it manifested itself on the two subsequent occasions when a further payment was made. In my opinion a fine of $100 is appropriate in respect of each of these two occasions which are the subject of charges G23 and G25 of 1980 respectively. These fines are to be paid to the District Registrar of this Court within 21 days of this date.

On the question of costs counsel for the defendant submitted that in the absence of fraud and by virtue of the fact that the prosecution related to a new and untried section of the Act concerning which there was extensive legal argument, it was appropriate that each party bear its own costs. I cannot accept this submission. The prosecutor is, taking the charges together as a whole, entitled to an order for some but not the whole of its costs. It has asked, in the light of the fact that a number of its charges will be dismissed, for three quarters of its costs of the proceedings as a whole. In my opinion, in the circumstances of the matter. justice will be done if the defendant is directed to pay to the prosecutor two thirds of its costs, the same to be taxed if not agreed.

The Court orders that

1. The information relating to Charges G22, G24 and G26 in each instance of 1980 are all dismissed.

2. The defendant is convicted of committing the contraventions of s.58(b) of the Trade Practices Act 1974 more particularly referred to in Charges G21, G23, and G25 in each instance of 1980.

3. The defendant is ordered to pay a fine of $3,000 in respect of the contravention referred to and charged in G21 and a fine of $100 in respect of each of the contraventions referred to in Charges G23 and G25.

4. The fines to be paid to the District Registrar of this Court within 21 days of this date.

5. The defendant to pay to the prosecutor two thirds of its costs with respect to the informations and charges, the same to be taxed if not agreed.