Re Trade Practices Commission v Walplan Pty Ltd and Neville Eric Mckerrow [1985] FCA 389; (1985) 7 FCR 495 (18 October 1985)

FEDERAL COURT OF AUSTRALIA

Re: TRADE PRACTICES COMMISSION
And: WALPLAN PTY LTD and NEVILLE ERIC McKERROW (1985) 7 FCR 495
No. Qld G59 of 1985
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Pincus J.(1)

CATCHWORDS

Trade Practices - allegation of misleading advertising and the like - offer of undertaking to comply with relevant provisions - whether proceedings should continue.

Injunction - whether proper to make order in terms of Act relied on by applicant - obligation of Court to accept undertaking - proper form of injunction.

Trade Practices Act, ss.52, 53

Practice and Procedure - Undertakings to comply with relevant legislation - Whether proper that court make order in terms sought - Principles to be applied - Trade Practices Act 1974 (Cth), ss 52, 53. Held: (1) In determining whether to accept undertakings similar to those sought by way of injunction, the court should apply the principles which govern the grant of an injunction. In so doing it should be mindful, inter alia, that it is undesirable to make an order which leaves unresolved the central issue in the case.

(2) Where the respondents offered (without any admission) undertakings to comply with statutory provisions with which they were obliged to comply in any event, it was inappropriate to make an order in such terms. The undertakings failed to identify sufficiently what the respondents must refrain from doing, and, in the event of a breach thereof, contempt proceedings might give rise to a fresh question for the court, leaving unresolved the initial issue in dispute between the parties.

Thomson Australian Holdings Pty Ltd v. Trade Practices Commission [1981] HCA 48; (1981) 148 CLR 150; World Series Cricket Pty Ltd v. Parish (1977) 16 ALR 181; Epitoma Pty Ltd v. Australasian Meat Industry Employees Union (1984) 3 FCR 55; Mikasa (NSW) Pty Ltd v. Festival Stores (1971) 18 FLR 260; Australian Consolidated Press Ltd v. Morgan [1965] HCA 21; (1965) 112 CLR 483, referred to.

HEARING

Brisbane, 1985, October 4, 18. 18:10:1985
APPLICATION

Application seeking injunction to restrain breaches of Trade Practices Act 1974.

J A Logan, for the applicant.

A J H Morris, for the respondents.
Cur adv vult

Solicitors for the applicant: Australian Government Solicitor.

Solicitors for the respondents: Gilshenan & Luton.
SMW

DECISION

The applicant seeks an injunction restraining breaches of the Trade Practices Act alleged to have been committed by the respondents in a business of dealing in used cars. By their defence, the respondents offered certain undertakings, as follows:-

"1. That the first respondent will not, in trade
or commerce, engage in conduct in respect of
the advertising of any used motor vehicle
for sale that is misleading or deceptive or
is likely to mislead or deceive.

2. That the first respondent will not, in trade
or commerce, make in respect of the supply
or possible supply of any used motor vehicle
any false or misleading statement with
respect to the price of any such used motor
vehicle.

3. That the first respondent will not, in trade
or commerce, make in respect of the supply
or possible supply of any used motor vehicle
any false or misleading statement concerning
the existence of any warranty with respect
to any such used motor vehicle, and

4. That the second respondent will not
knowingly be concerned in, or party to, any
of the actions referred to undertakings 1, 2
and 3 above carried out by the first
respondent."

2. In its reply, the applicant said it would accept undertakings in rather similar terms. Subsequently, the solicitors for the applicant wrote to the solicitors for the respondents saying that the applicant would agree to accept the precise undertakings offered by the respondents, but only on the basis that there was a finding, or were admissions, of contraventions of the Act.

3. Counsel have had the matter mentioned before me for the purpose, inter alia, of obtaining a direction whether the Court would accept the undertakings set out above, without any finding or admission. If the undertakings are not acceptable to the Court, on the basis mentioned, then the matter is simply to be tried. The argument for the respondents is that since they offer to undertake precisely in the terms the applicant desires, the matter should go no further.

4. The parties are, as appears from what has been said, agreed as to the form. In determining whether to accept undertakings in this form, I am to apply the principles which govern the grant of an injunction: Thomson Australian Holdings Pty. Ltd. v. Trade Practices Commission (1981) 37 ALR 66. One of those principles, as to a consent injunction, is that the Court is justified in refusing to make the orders consented to "if they do not conform to legal principle" - ibid at p.75. The upshot is that I am entitled to consider the propriety of the form of undertakings proffered as if I were asked to grant injunctions in that form.

5. In framing the terms of an injunction, two principles which sometimes appear to conflict have to be reconciled.

6. The first is that it is undesirable to make an order against the respondent which leaves unresolved the central issue in the case. For example, in such a case as this it would be unorthodox simply to order that the respondent not breach s.52 of the Trade Practices Act. That would make the contempt proceedings the occasion on which the question whether the respondent's conduct had ever breached the section would be decided. I refer to World Series Cricket Pty. Ltd. v. Parish (1977) 16 ALR 181 at pp 191-192 (per Bowen C.J.) and pp 204-205 (per Brennan J.) and to Epitoma Pty. Ltd. v. A.M.I.E.U. (No. 2) (1984) 54 ALR 730 at p 741. Those were cases in which the Full Court considered the form of interlocutory relief, but they provide guidance as to the proper form of injunctions generally. The order made in Mikasa (N.S.W.) Pty. Ltd. v. Festival Stores (1971) 18 FLR 260 (affirmed [1972] HCA 69; 127 CLR 617) appears to be of an unusual kind.

7. The second principle is that the injunction should not restrain conduct which is lawful. This is illustrated by Thomson's case (supra), in which it was held that the terms of an injunction under s.45 of the Trade Practices Act 1974 had to be limited to instances in which the conduct restrained had the purpose, or actual or likely effect, mentioned in the section. The majority criticised the orders made below as lacking "the essential feature which distinguishes conduct amounting to a contravention of Part IV from conduct which does not amount to such contravention" (p.75). But to the extent that the order is drawn so as to incorporate the words of the statute, one who comes to Court to prove breach of the order may be faced with having to prove for the first time that what the respondent has been doing from the outset is unlawful. Of course, he may be relieved of the necessity of doing so by an estoppel, arising out of findings made when the injunction was granted.

8. The undertakings proposed here do not simply restrain any breach of the relevant provisions. They may be described as follows:-

1. - restrains any breach of s.52 by the first
respondent, in respect of the advertising of
a used motor vehicle for sale.

2. - restrains any breach of s.53(e) by the
first respondent, in respect of the supply
or possible supply of a used motor vehicle.

3. - restrains any breach by the first
respondent of s.53(g), in respect of the
supply or possible supply of a used motor
vehicle, as to the existence of a warranty
with respect to such vehicle.

4. - restrains the second respondent from being
involved in a contravention by the first
respondent of one of the provisions already
mentioned, within the meaning of s.75B(c) of
the Act.

9. Of course, the respondents are bound by the statutory provisions mentioned, undertaking or no. The principal legal effect of the giving of the undertakings would be that in the event of a breach the applicant would have available to it the possibility of proceedings for contempt, in which sanctions of a kind different from those mentioned in the Trade Practices Act could be applied. However, in such proceedings, the respondent would not be held guilty on the basis of a doubtful construction of the undertaking; it would have to be shown that the undertaking in question, and the breach, were clear: Australian Consolidated Press Ltd. v. Morgan [1965] HCA 21; (1965) 112 CLR 483 at pp 506, 515, 516.

10. In the Morgan case (supra), Barwick C.J. said that ordinarily the Court should not, in proceedings alleging contempt in respect of an interlocutory injunction, "attempt to resolve ... the question or questions which is or are to be litigated before it, no doubt at greater length and with greater attention to detail, at the hearing of the suit" (pp.489-490). If an injunction is granted, or an undertaking accepted, by way of final relief, and contempt proceedings follow, the possibility of postponing consideration of the question whether a breach has been shown does not exist; the judge hearing the contempt proceedings would have to decide in those proceedings, if necessary at great length and with great attention to detail, whether there has been a breach.

11. It should be kept in mind that even if there has been a full hearing, and complete findings are made, on the basis of which a final injunction has been granted, contempt proceedings may raise a difficult question as to whether what is complained of is unlawful. That may well be so unless the conduct complained of in the contempt proceedings is identical with, or very much the same as, that on the basis of which the injunction was granted. That is a reason for not making too much of the fact that here no admissions are offered. However, the fact that none are made should be taken into account in finding whether the undertakings are acceptable. I am of opinion that they are not, largely because they involve too great a departure from the first principle mentioned above.

12. It does not appear necessary to make any order at this stage. I hold that the undertakings offered are not acceptable, because they do not sufficiently identify what it is that the respondents must refrain from doing.