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Federal Court of Australia - Full Court Decisions |
Last Updated: 28 June 2004
FEDERAL COURT OF AUSTRALIA
BMW Australia Limited v Australian Competition & Consumer Commission [2004] FCAFC 167
TRADE PRACTICES – product safety – prescribed safety
standard – vehicle jacks – standard prepared by standards body and
proclaimed
by gazettal – standard required ‘Warning: do not get
under a vehicle that is supported only by a jack: use vehicle support
stands’, or words to the same effect, to be marked on jack and similar
warning in written instructions – whether ‘Warning:
do not get
bodily under a vehicle that is supported by a jack’ amounted to words to
the same effect – vehicle not suitable
for use of vehicle support stands
unless raised by a trolley jack – whether prescribed warning ambiguous or
absurd –
whether prescribed safety standard invalid – whether
standard required to satisfy test of being reasonably necessary to prevent
or
reduce risk of injury – form of orders – whether declaration,
prohibitory injunction, audit of trade practices compliance
program, recall of
products and advertising were appropriate orders
WORDS AND PHRASES
– ‘to the same effect’
Trade Practices Act 1974
(Cth) ss 65C, 65E, 80, 86C
Trade Practices Amendment Act (No. 1)
2001 (Cth)
Federal Court of Australia Act 1976 (Cth) s
23
Australian Competition and Consumer Commission v BMW Australia
Limited [2003] FCA 727, (2003) ATPR 41-944 reversing
Hamlyn v Norman
Ross Stores Pty Ltd (1985) ATPR 40-514 referred to
Trade Practices
Commission v BMW Australia Ltd (1985) ATPR 40-620 referred
to
Australian Competition & Consumer Commission v Francis [2004] FCA 487 approved
Rural Press Ltd v Australian Competition and Consumer
Commission [2003] HCA 75, (2003) 203 ALR 217 followed
Australian
Competition and Consumer Commission v Real Estate Institute of Western Australia
Inc [1999] FCA 1387, (1999) 95 FCR 114 referred to
Australian
Competition and Consumer Commission v Danoz Direct Pty Ltd [2003] FCA 881,
(2003) ATPR (Digest) 46-241 referred to
Australian Competition and
Consumer Commission v Virgin Mobile Australia Pty Ltd (No 2) [2002] FCA 1548, (2003) ATPR (Digest) 46-230 referred to
Australian Competition &
Consumer Commission v Econovite Pty Ltd [2003] FCA 964, (2003) ATPR
41-959 referred to
Australian Competition and Consumer Commission v Rural
Press Ltd [2001] FCA 1065 at [33], [2001] FCA 1065; (2001) ATPR 41-833 referred
to
Rural Press Ltd v Australian Competition and Consumer Commission
[2002] FCAFC 213, (2002) 118 FCR 236 referred
to
BMW
AUSTRALIA LIMITED (ACN 004 675 129) v AUSTRALIAN COMPETITION AND CONSUMER
COMMISSION
V609 of 2003
GRAY, GOLDBERG AND
WEINBERG JJ
28 JUNE 2004
MELBOURNE
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
|
BETWEEN:
|
BMW AUSTRALIA LIMITED (ACN 004 675 129)
APPELLANT |
|
AND:
|
AUSTRALIAN COMPETITION AND CONSUMER
COMMISSION
RESPONDENT |
|
DATE OF ORDER:
|
|
|
WHERE MADE:
|
THE COURT ORDERS THAT:
1. The appeal be allowed in part.
2. The orders in paragraphs 1, 2, 3, 4 and 5 of the order made on 16 July 2003, as amended on 4 August 2003, be set aside.
3. The matter be remitted to the primary judge for consideration of the appropriate orders, consequent upon the reasons for judgment of the Full Court and any further findings that his Honour may make bearing upon the appropriate orders.
4. There be no order as to the costs of the appeal.
Note: Settlement
and entry of orders is dealt with in Order 36 of the Federal Court Rules.
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
|
AND:
|
REASONS FOR JUDGMENT
THE COURT:
1 This appeal is concerned with a prescribed product safety standard, requiring specified words of warning on vehicle jacks and specified safety instructions accompanying vehicle jacks. The appellant contends that, even though its safety warning on its vehicle jacks and in its instructions for their use do not use the precise terms prescribed, they nevertheless comply with the safety standard. Alternatively, the appellant alleges that the prescribed safety standard is invalid.
2 The appeal is from the judgment of a single judge of the Court in Australian Competition and Consumer Commission v BMW Australia Limited [2003] FCA 727, (2003) ATPR 41-944. The judgment of the learned primary judge resulted in orders wholly or substantially in a form sought by the respondent to the appeal, the Australian Competition and Consumer Commission (‘the Commission’). The orders are in the form of a declaration and injunctions. One injunction restrains the appellant for a period of three years from supplying vehicles fitted with vehicle jacks, and vehicle jacks, and vehicle jack instructions, that do not comply with the prescribed product safety standard. Other injunctions require an audit of the appellant’s trade practices compliance program, a recall of non-complying vehicle jacks and vehicle jack instructions, and the publication of advertisements. His Honour also ordered that the appellant pay the respondent’s costs of the proceeding at first instance.
The legislation
3 Section 65C of the Trade Practices Act 1974 (Cth) (‘the Trade Practices Act’) provides, so far as relevant to this appeal, as follows:
‘(1) A corporation shall not, in trade or commerce, supply goods that are intended to be used, or are of a kind likely to be used, by a consumer if the goods are of a kind:
(a) in respect of which there is a prescribed consumer product safety standard and which do not comply with that standard;
...
(2) The regulations may, in respect of goods of a particular kind, prescribe a consumer product safety standard consisting of such requirements as to:
...
(c) the form and content of markings, warnings or instructions to accompany the goods;
as are reasonably necessary to prevent or reduce risk of injury to any person.’
Section 65E of the Trade Practices Act provides:
‘(1) The Minister may, by notice in writing published in the Gazette, declare that, in respect of goods of a kind specified in the notice, a particular standard, or a particular part of a standard, prepared or approved by Standards Australia International Limited or by a prescribed association or body, or such a standard or part of a standard with additions or variations specified in the notice, is a consumer product safety standard for the purposes of section 65C or a consumer product information standard for the purposes of section 65D.
(2) Where a notice is so published, the standard, or the part of the standard, referred to in the notice, or the standard or part of a standard so referred to with additions or variations specified in the notice, as the case may be, shall be deemed to be a prescribed consumer product safety standard for the purposes of section 65C or a prescribed consumer product information standard for the purposes of section 65D, as the case may be.
(3) Subsection (1) does not authorise the publication of a notice in relation to goods of a particular kind if the standard or the part of the standard referred to in the notice, or the standard or the part of the standard so referred to with additions and variations specified in the notice, is inconsistent with a standard prescribed in relation to goods of that kind by regulations made for the purposes of section 65C or 65D.’
The prescribed product safety standard
4 In the Commonwealth of Australia Gazette No. GN 11, dated 19 March 1997, there was published Consumer Protection Notice No. 5 of 1997, dealing with ‘consumer product safety standard – vehicle jacks’. The relevant terms of the notice were:
‘I, GEOFFREY DANIEL PROSSER Minister for Small Business and Consumer Affairs, pursuant to section 65E(1) of the Trade Practices Act 1974, hereby:
...
(c) DECLARE that, in respect of the goods of a kind specified in Division 1 of the Schedule to this Notice, the standards approved by the Standards Association of Australia specified in Division 2 of the Schedule, as varied by the variations specified in Division 3 of the Schedule, are consumer product safety standards for the purposes of section 65C of the Act.
(d) DECLARE that the standard first mentioned in Division 2 of the Schedule shall cease to have effect on and from 1 January 1999.
S C H E D U L E
Division 1: Particulars of Goods
Vehicle jacks with a nominated capacity up to and including 8 tonnes
Division 2: The Standards
Either
Australian Standard 2693 - 1987 "Vehicle Jacks", approved by the Standards Association of Australia on 4 May 1987;
or
Australian/New Zealand Standard 2693 – 1993 "Vehicle Jacks", approved by Standards Australia on 17 May 1993, as amended by Amendment 1 of 11 April 1994’.
5 Australian/New Zealand Standard 2693:1993, dealing with vehicle jacks, contains a number of requirements for vehicle jacks, except for trolley jacks, which are specified in a separate Australian Standard, and airbag jacks. There are requirements as to design and performance. Clause 7 of the standard deals with marking and instructions. It provides relevantly as follows:
‘7.1 Jack marking Jacks shall be permanently and legibly marked with the following information:
...
(e) Clear and adequate instructions regarding the operation of the jack.
...
(g) A warning notice as follows, or words to the same effect:
‘WARNING: DO NOT GET UNDER A VEHICLE THAT IS SUPPORTED ONLY BY A JACK: USE VEHICLE SUPPORT STANDS.’
...
7.3 Instructions In addition to the instructions marked upon the jack in accordance with Clause 7.1(e), the following shall be supplied with the jack:
...
(b) Safe usage instructions--recommendations for safe usage of the jack, including the following:
...
(iii) No person should place any portion of their body under a vehicle that is supported only by a jack; use vehicle support stands.’
The warnings used by the appellant
6 The proceeding at first instance was conducted in relation to a particular model of the appellant’s motor vehicle range, the BMW 318i, manufactured in 2002. Among the information marked on the vehicle jacks supplied with each BMW 318i appeared the words:
‘WARNING: DO NOT GET BODILY UNDER A VEHICLE THAT IS SUPPORTED BY A JACK!’
7 An owner’s manual, supplied with each BMW 318i, contained substantial instructions under the heading ‘Wheel-changing’. This section of the manual included detailed instructions on the use of the vehicle jack, including the instruction:
‘Use the jack only for wheel-changing.’
8 The section on wheel-changing included the following advice:
‘When the car has been jacked up, do not lie under it or start the engine since either could lead to potentially fatal accidents.’
9 Elsewhere in the manual appears the advice:
‘When the car has been jacked up, do not get under it ... since [this] could lead to potentially fatal accidents’.
10 It is common ground that no reference to ‘vehicle support stands’ appears either on the vehicle jacks themselves or in the owner’s manual in relation to their use in conjunction with the vehicle jack.
The appellant’s case
11 Both at first instance and on appeal, the appellant’s case began with the proposition that the words appearing on the BMW 318i vehicle jack, despite the absence of any reference to vehicle support stands, were ‘to the same effect’ as the product safety standard required. Alternatively, the appellant said that s 65C of the Trade Practices Act and the prescribed safety standard, on their proper construction, had the purpose of requiring only such warnings as are reasonably necessary to prevent or reduce the risk of injury to any person. To require that vehicle jacks supplied with BMW 318i vehicles contain the whole of the words required by the product safety standard would be to defeat this purpose, because of the risk that would be created by any attempt to use vehicle support stands with those vehicle jacks. Alternatively, the appellant said that the terms of the warning in the prescribed standard were ambiguous. If misunderstood, they would increase the risk of injury to the public. The standard should therefore be interpreted to permit the appellant to use its own warning, so as to avoid ambiguity or absurdity. It was beyond the power of the Minister under s 65E of the Trade Practices Act to declare an ambiguous or absurd warning to be part of a prescribed
standard. Alternatively, the Court should have exercised its discretion to decline to grant the relief, as the remedy is more dangerous than the breach.
12 It was common ground at the trial that there is the danger of injury, arising from the possibility that the car will fall off the vehicle jack, if anybody should place any part of his or her person underneath a BMW 318i while it is supported only by the vehicle jack supplied. The evidence showed that the design of the BMW 318i made it unsuitable to be supported by vehicle support stands. Its independent wheel suspension meant that there was no axle under which vehicle support stands could be placed. There were no specific parts of the vehicle’s construction under which vehicle support stands could be placed. There were four points designed and placed so that the vehicle jack supplied could be placed underneath them, for the purpose of jacking up the vehicle. These points were on each side, just behind the front wheel and just in front of the rear wheel. Their positioning conforms with the purpose of the vehicle jack stated in the owner’s manual, which is that it should be used to change tyres.
13 The appellant’s stated concern was that the prescribed standard warning might lead people to use the jack to elevate the vehicle, and then to attempt to place vehicle support stands underneath the vehicle, while it was supported by the jack. There was a fear expressed that, in order to do so, people might place themselves under the car, while it was supported only by the jack. The appellant conducted an experiment, in which one side of a car was jacked up using the vehicle jack and a vehicle support stand was placed under that side of the car. The jack was then removed and used to jack up the other side of the car. Not surprisingly, this caused the side of the car that was supported by the vehicle support stand to fall off the vehicle support stand. This experiment was the subject of a video, complete with professional voice-over, which was shown both at the trial and to the Full Court.
The judgment below
14 The primary judge made findings of fact in the following terms:
‘The BMW 318i contains a specific vehicle jack in the boot of the car. There are four jacking points under the vehicle to be used with the specific vehicle jack. There are two points on each side of the vehicle, located behind the front wheels and in front of the rear wheels. There are no points on the vehicle designed for the use of vehicle support stands. The BMW 318i has independent suspension and does not have a solid axle to be used in conjunction with vehicle support stands. Reinforced points under the vehicle, suitable for the use of support stands, can only be found by getting underneath the vehicle after raising it with a trolley jack or workshop hoist. There is a risk that injury will occur if the BMW specific vehicle jack is used to either place support stands under the vehicle or to investigate whether there are points underneath the vehicle for support stands.
Like many other vehicle models, the BMW 318i does not come equipped with vehicle support stands. Maintenance on the vehicle is intended by BMW to be effected by skilled mechanics using hoists at workshops rather than by vehicle owners using support stands.
The vehicle and the jack are designed so that a wheel can be replaced with a spare wheel without any part of a person’s body being placed under the vehicle.’
15 His Honour accepted that a person with no knowledge of vehicle support stands may conclude, on a literal reading of the warning, that vehicle support stands can be used in conjunction with a specific vehicle jack. He did not accept that people would be induced by the prescribed safety standard warning to get under the vehicle supported by a jack in conjunction with a vehicle support stand. Nor did he accept that the appellant’s warning would be more successful in preventing injury of this kind. His Honour declined to say that the prescribed safety standard was invalid, pointing out that it was better that the experts who wrote the standard, rather than the Court, should resolve issues of safety in relation to the use of vehicle jacks. His Honour also pointed out that the appellant had attempted to have the prescribed safety standard amended, but its attempt had been rejected by Standards Australia.
16 The primary judge also rejected the contention that the appellant’s warning was ‘to the same effect’ as the prescribed safety standard’s warning. This was because of the lack of any equivalent to the words ‘use vehicle support stands’. Accepting that a purposive approach to construction of subordinate legislation was appropriate, his Honour did not accept that the purpose was to prevent the supply of goods to consumers which pose a risk of injury to persons using them. Relying on Hamlyn v Norman Ross Stores Pty Ltd (1985) ATPR 40-514 at 46, 162, his Honour held that s 65C is aimed at ensuring compliance with standards prescribed by or under Pt V of the Trade Practices Act. Relying on Trade Practices Commission v BMW Australia Ltd (1985) ATPR 40-620 at 47,004, his Honour pointed out that the prescribed safety standard is not itself a legislative instrument, but is picked up and applied by the Trade Practices Act. His Honour held that, where the mandated warning is otherwise clear, it is not appropriate to amend its wording by using a purposive interpretation of the Trade Practices Act and the standard, particularly if the mischief could be remedied in another way. His Honour rejected the appellant’s contentions that the warning was manifestly dangerous, or that it created an absurdity. The disparity between the two sets of words was sufficient to reject the contention that the one was ‘to the same effect’ as the other.
17 As to the construction of s 65C and s 65E of the Trade Practices Act, the primary judge said:
‘In my view, s65E(3) and the deeming provision made in s65E(2) make it clear that the declaration route under s65E is an alternative and distinct path to producing a consumer production standard capable of being enforced as a regulation to the Act under s65C(2). The Minister is not required, in making the s65E declaration, to form a view that the standard is reasonably necessary to prevent or reduce the risk of injury. Standards Australia International Limited or a like prescribed body would have already completed that task. It is important to note that the declaration under s65E is not made on the whim of the Minister but effectively upon expert advice. It is beside the point that the s65E declaration is immune from the legal challenge that may be made to a regulation made under s65C(2). The reality is that the imprimatur of a specialist standards body is the means by which the Minister acts to assume the necessity of the standard for the purpose of protecting consumers. Viewed in that context, the submission of BMW that a s65E declaration must objectively withstand the test provided for by regulations under s65C(2) is not a preferable construction.’
18 The primary judge thought it appropriate to make the declaration sought and to grant the injunction sought, because the appellant’s vehicle jack warning did not comply with a valid prescribed safety standard. He also considered that the recall and publication of advertisements orders were appropriate. In relation to the question of an audit of the appellant’s trade practices compliance program, his Honour said:
‘However, a real question arises whether BMW should be ordered to appoint an external auditor to audit its compliance program. I have no doubt that at all times BMW acted in what it believed was in the best interests of its consumers. It resisted the ACCC’s attempt to compel it to place extra words on the jack warning in circumstances where it considered that those extra words were inappropriate and could potentially lead to injury. The words are arguably problematic because vehicle support stands cannot be used in conjunction with the BMW specific vehicle jack. The words were, on one view, capable of being read by persons who would attempt to use the jack to raise the vehicle in an effort to insert vehicle support stands under it. It is possible that, under that scenario, an injury might occur. I perceived BMW to have a genuine concern for the safety of its customers in the way it pursued its defence of the proceeding in the Court. However, I have formed the view that BMW should be ordered to appoint an external auditor to audit its compliance program for the following reasons:
• there is no reference in BMW’s 1997 version of its Trade Practices Compliance program of the need to comply with s65C of the Act; and
• the upgraded program was not tendered in the hearing.’
The orders made
19 The orders originally pronounced by the primary judge were amended on a subsequent occasion by another judge. This appeal does not provide an occasion for examining whether it was appropriate for another judge to amend the orders. Both parties were content that the amended orders expressed the intention of the Court and that they should be considered as the orders from which the appeal is brought. The orders are in the following terms:
‘THE COURT DECLARES THAT:
1. The Respondent, by supplying, during 2002, BMW 318i vehicles equipped with a vehicle jack and a vehicle owner manual, has in trade or commerce, supplied goods that were intended to be used, or were of a kind likely to be used, by a consumer and which did not comply with the prescribed consumer product safety standard relating to vehicle jacks, namely Australia and New Zealand Standard AS/NZS 2693:1993 Vehicle Jacks, contrary to section 65C(1)(a) of the Trade Practices Act 1974 (Cth).
THE COURT ORDERS THAT:
1. On and from 13 August 2003 the Respondent by itself, its employees, agents and servants or otherwise howsoever, be restrained for a period of 3 years from 13 August 2003, from supplying:
(a) vehicles fitted with vehicle jacks that do not comply with the prescribed consumer product safety standard;
(b) vehicle jacks that do not comply with the prescribed consumer product safety standard; and
(c) vehicle jack instructions, in addition to the instructions marked on the vehicle jack itself, that do not comply with the prescribed consumer product safety standard.
2. The Respondent appoint, within 3 calendar months of the date of this order, and retain for a period of 3 years, an independent external auditor with experience in trade practices law and approved by the Applicant to:
(a) audit the Respondent’s Compliance Program during September 2004, and again during September 2005, and again during September 2006; and
(b) provide written reports to the Applicant and the Respondent in relation to each audit within 14 days of the completion of the audit.
3. The Respondent conduct a recall, in accordance with the recall program detailed at Annexure 'A', of:
(a) BMW vehicle jacks; and
(b) Vehicle jack instructions, in addition to the instructions marked on the BMW vehicle jacks,
which do not comply with Australia/New Zealand Standard AS/NZS 2693:1993 Vehicle Jacks.
4. On or before 27 August 2003, the Respondent, at its own expense, cause to be published in a major daily newspaper in each State and Territory, in which any BMW vehicle jack and vehicle jack instructions were supplied by the Respondent, a notice in the form of Annexure ‘C’ hereto and further that the Respondent take all reasonable steps to ensure that each notice be:
(a) within the first 5 pages of the newspaper or magazine;
(b) of a size not less than three columns wide by 20cm deep;
(c) in text which is in a type not less than 12 point;
(d) in black text on a white background; and
(e) published again in the newspapers once per week over two further consecutive weeks.
5. On or before 27 August 2003, the Respondent, at its own expense, cause to be published on its internet site located at url (universal resource locator) <<http://www.bmw.com.au>>('the BMW website') a notice outlining the Court’s findings and attaching a link to a notice in the form of Annexure 'C'. This notice will be:
(a) on the home page of the BMW website;
(b) of a size that occupies at least 20% of the home page and is not less than three columns wide by 20cm deep;
(c) in text which is in a type not less than 12 point;
(d) in black text on a white background;
(e) placed on the BMW website; and
(f) maintained on the BMW website for a period of not less than 30 continuous days.
6. The Respondent pay the Applicant’s costs of the proceeding, such costs to be agreed between the parties and paid within 28 days, or in default of agreement, to be taxed.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
Annexure "A"
RECALL PROGRAM
The Respondent ('BMW') will implement a recall program as follows:
1. By 13 August 2003, BMW will take all reasonable steps to identify all owners of the BMW 318i, 2002 model, vehicle jacks for BMW 318i, 2002 model, vehicles fitted with a vehicle jack at the date of this Order ('the BMW jack owners') including obtaining information available to it from State and Territory motor vehicle registries located in Australia.
2. By 27 August 2003, BMW will send by registered mail to the BMW jack owners that it has identified pursuant to paragraph 1 above, a letter in the form of Annexure "B".
3. By 27 August 2003, BMW will, at its own expense, cause to be published:
3.1 in a major daily newspaper in each State and Territory in which any BMW vehicle jack and vehicle jack instructions were supplied by the respondent, a notice in the form of Annexure "C" hereto, which notice BMW will take all reasonable steps to ensure is:
(a) within the first 5 pages of the newspaper or magazine;
(b) of a size not less than three columns wide by 20cm deep;
(c) in text which is in a type not less than 12 point;
(d) in black text on a white background; and
(e) published again in the newspapers once per week over two further consecutive weeks.
3.2 on its internet site located at url (universal resource locater) <<http://www.bmw.com.au>> ('the BMW website'), a notice outlining the Court's findings and attaching a link to a notice in the form of Annexure "C". This notice will be:
(a) on the home page of the BMW website;
(b) of a size that occupies at least 20% of the home page and is not less than three columns wide by 20cm deep;
(c) in text which is in a type not less than 12 point;
(d) in black text on a white background;
(e) placed on the BMW website; and
(f) maintained on the BMW website for a period of not less than 30 continuous days.
4. By 27 August 2003, BMW will issue a [sic] service bulletins to all of its authorised BMW dealers and service centres in Australia:
(a) providing a copy of Annexures "B" and "C";
(b) setting out any steps the dealer and service centres may need to take to assist consumers; and
(c) in a form agreed with the Australian Competition and Consumer Commission ('ACCC').
5. By 10 September 2003 BMW will provide a written report to the ACCC, prepared by a suitably qualified compliance professional who is independent of BMW and has no conflict of interest or duty in providing audit services to it, detailing BMW's adherence to paragraphs 1 to 3 of this Recall Program.
Annexure "B"
[to be typed on BMW's letterhead]
Insert date
Insert name and address
Insert VIN, Rego, make & model
Dear insert name
WARNING - BMW VEHICLE JACK SAFETY RECALL
The Australian Competition and Consumer Commission ('the ACCC') recently brought proceedings in the Federal Court of Australia against BMW (Australia) Limited ('BMW'). BMW imported and supplied vehicle jacks with various BMW models to dealers and consumers throughout Australia.
The Federal Court has found that the BMW 318i, 2002, model, vehicle jack and vehicle owner manual do not comply with the Australian and New Zealand safety standard (namely AS/NZS 2693:1993 - 'Vehicle Jacks'), in breach of the Trade Practices Act 1974 (Cth). The Federal Court has granted an injunction against BMW in relation to its vehicle jacks and owner manuals and made orders that BMW recall the offending vehicle jacks and manuals. The offending vehicle jacks are not marked as follows:
"WARNING: DO NOT GET UNDER A VEHICLE THAT IS SUPPORTED ONLY BY A JACK: USE VEHICLE SUPPORT STANDS".
The offending vehicle owner manuals contain vehicle jack instructions, which do not include the following direction:
"No person should place any portion of their body under a vehicle that is supported only by a jack; use vehicle support stands."
BMW Australia has voluntarily extended the scope of the Court orders to cover other BMW models that did not comply with the applicable standard.
Our records and enquiries indicate that you own a BMW vehicle that was supplied with an offending jack and owner manual.
As required by the Federal Court, BMW is required to provide you with a replacement jack label and owners' manual insert. BMW wishes to ensure that the recall is conducted as efficiently and with as little inconvenience to you as possible.
Enclosed with this letter is new jack labelling and an insert for your vehicle's owner manual, which will together ensure that your vehicle jack and the instructions in your owner manual comply with the vehicle jack safety standard.
You must either attach the jack labelling and add the insert to the owner manual yourself, following the enclosed instructions, or contact your nearest BMW dealer to arrange for a mutually convenient time for them to do so for you. Enclosed with this letter is a current list of all BMW Dealers and authorised Service Centres within Australia. For the safety of any person using the vehicle jack, it is important that the labelling is affixed and insert added as soon as possible.
We apologise for any inconvenience but assure you of our best efforts to maintain your driving pleasure and satisfaction with BMW vehicles. If you have any questions relating to this recall please do not hesitate to contact your nearest BMW Dealership or Service Centre.
The ACCC is responsible for the administration of the Trade Practices Act 1974 (Cth). This includes the enforcement of compulsory consumer product safety standards (such as the vehicle jack safety standard) that have been declared under the Act. For further information on the role and functions of the ACCC, visit its website at http://www.accc.gov.au.
Yours sincerely
Annexure "C"
The Australian Competition and Consumer Commission ("the ACCC") recently brought proceedings in the Federal Court of Australia against BMW (Australia) Limited ("BMW").
BMW imported and supplied vehicle jacks and vehicle owner manuals providing instructions in the use of vehicle jacks with the BMW 318i, 2002 model, vehicles to dealer and consumers throughout Australia.
The Federal Court has found that the BMW 318i, 2002 model, vehicle jack and the instructions in the use of the vehicle jacks provided in the vehicle owner manuals do not comply with the Australian and New Zealand safety standards (namely AS/NZS 2693:1993 - 'Vehicle Jacks'), in breach of the Trade Practices Act 1974 (Cth). The offending vehicle jacks are not marked as follows: "WARNING: DO NOT GET UNDER A VEHICLE THAT IS SUPPORTED ONLY BY A JACK: USE VEHICLE SUPPORT STANDS". The offending vehicle owner manuals contain vehicle jack instructions which do not include the following direction: No person should place any portion of their body under a vehicle that is supported only by a jack; use vehicle support stands." The Federal Court has granted an injunction against BMW in relation to its vehicle jacks and owner manuals and made orders that BMW supply all customers affected with a replacement jack label and owners' manual insert.
In addition to the BMW 318i, 2002 model vehicles which were the subject of the Federal Court proceedings, there are other BMW models which BMW has agreed to treat in the same way. These models are:
E46, 3 series;
E39, 5 series;
E38, 7 series;
E65, 7 series; and
E53, X5.
If you have purchased a BMW vehicle jack or one of these BMW models, please contact us and arrangements will be made to supply you with the relevant replacement label and owners manual replacement insert.
You can contact us at:
[insert contact details here]
Vehicle jacks supplied by BMW are intended by BMW to be used only for jacking a vehicle to enable the changing of wheels and tyres. They are not intended by BMW to be used for jacking a vehicle for any other purpose whatsoever. BMW discourages consumers from lying under or placing any part of their body under vehicles. BMW recommends that if consumers need to get under a vehicle they first obtain specialist advice as to the equipment to be used and always ensure that the vehicle is supported by vehicle support stands compliant with Australian Standard for Support Stands (AS/NZS 2538:1995).
This corrective statement and recall notice has been placed pursuant to an order of the Federal Court of Australia. It is a result of action taken by the ACCC against BMW for contravention of section 65C of the Trade Practices Act 1974 (Cth) and is paid for by BMW (Australia) Limited.’
‘To the same effect’
20 It is obvious that the appellant must fail in its contention that the warning printed on the vehicle jacks it supplied was ‘to the same effect’ as the warning required by the prescribed safety standard. There are two significant variations. They are related. The appellant’s warning omits the word ‘only’ and any reference to vehicle support stands. There is nothing to suggest to those who use the jacks that a possible alternative to getting under a vehicle supported by a jack is to support the vehicle by using vehicle support stands. Such a suggestion answers the question that springs to mind when the instruction ‘do not get under a vehicle that is supported only be a jack’ has been read: ‘How do I, or how could I, get under the vehicle?’ The inclusion of the suggestion was obviously considered to be important by those who formulated the prescribed safety standard. If it is omitted, the words used are not ‘to the same effect’ as those prescribed.
21 It is not to the point to say that the appellant does not supply vehicle support stands with its vehicles. Nor is it to the point to say, as the appellant attempted to do, that the meaning of the phrase ‘vehicle support stands’ might not be understood widely, and that there is a separate standard relating to vehicle support stands. The prescribed standard requires a reference to vehicle support stands, and the failure to include such a reference means that the standard has not been met. That is so notwithstanding that some people might not understand the nature of vehicle support stands. It may be, however, that some special warning is required when reference is made to vehicle support stands in the context of this particular vehicle. That is a matter to which we shall return when we consider the form of orders that ought to have been made.
22 It should also be pointed out that the requirement of the prescribed safety standard with respect to instructions accompanying the jack contains no option to use words ‘to the same effect’. The appellant was obliged to insert the reference to vehicle support stands, in precisely the terms prescribed, in that part of its owner’s manual that contained the instructions on how to use the vehicle jack.
23 In relation to the wording on the jack, the appellant cannot succeed in establishing that it used words ‘to the same effect’ by endeavouring to show that, with its vehicles, no occasion arose to refer to vehicle support stands. The prescribed safety standard requires a reference to vehicle support stands. Even if it were established that vehicle support stands could not be used with the particular vehicle (and the primary judge’s findings tend to suggest that vehicle support stands could be used, so long as the vehicle were raised by means of a trolley jack), it could not be said that the appellant’s warning was ‘to the same effect’ as the prescribed one. The adoption of a purposive construction does not assist this aspect of the appellant’s argument. No purposive construction would lead to the conclusion that the words ‘to the same effect’ were really intended to mean ‘to the same effect (if applicable)’. On no view can the omission of a vital element of the prescribed warning lead to the conclusion that a warning with the words concerned omitted is a warning ‘to the same effect’.
24 Although the primary judge did not make a finding to this effect, it is also possible that the inclusion of the word ‘bodily’ in the warning on the appellant’s vehicle jacks may be a further factor leading to the conclusion that the appellant’s warning is not ‘to the same effect’ as the warning required by the prescribed safety standard. The warning required by the prescribed safety standard warns a reader not to ‘get’ under a vehicle. The addition of the word ‘bodily’ might cause some readers of the appellant’s warning to conclude that the warning was only against lying under a vehicle, and that extending limbs under a vehicle when it was supported by the jack would not be dangerous.
Ambiguity and absurdity
25 The primary judge did say at [53]:
‘The words were, on one view, capable of being read by persons who would attempt to use the jack to raise the vehicle in an effort to insert vehicle support stands under it.’
26 In this passage his Honour may have been expressing the view that the words of the prescribed safety standard warning could be interpreted so as to authorise a person getting under the vehicle, while it was supported only by the jack, for the purpose of placing vehicle support standards under it. That was not necessarily a finding that the words used were ambiguous. It was rather a finding that some persons might ignore the first part of the warning, in attempting to place support stands under the vehicle, and thereby expose themselves to danger. The question is, having made that finding, what consequences, if any, ought to have followed from it?
27 However small the risk that any person might interpret the prescribed warning in this way might be, this was a factor which, in our view, ought properly to have been taken into account by the primary judge when considering what orders were in the circumstances to be made. It does not follow, however, that the prescribed safety standard warning could simply be ignored, to be replaced by a form of wording that suited the appellant, or that it considered adequate.
28 In addition the appellant has failed to establish that the warnings required by the prescribed safety standard give rise to any absurdity. The reference to vehicle support stands is intended to provide an answer to a question that might come to the mind of a reader as to how to get under a vehicle if it is not to be done while the vehicle is supported only by the jack. It at least has the effect of dissuading people from placing bricks or blocks of wood under a vehicle, by drawing to their attention the existence of an alternative, approved and safer way of supporting the vehicle, if it should be necessary to get under it. Far from being absurd, the reference to vehicle support stands is an important part of the safety message, and should not be omitted.
The validity of the prescribed safety standard
29 It is always open to a party against whom a contravention of a provision of delegated legislation is alleged to seek to establish that the provision is invalid. The appellant attempted to do that in the present case, contending that the power of the Minister to prescribe a product safety standard by legislation did not extend to the particular provisions of the prescribed product safety standard relating to vehicle jacks, because they were not conducive to safety.
30 We agree with the primary judge that the Court should be very cautious in finding that a particular prescribed product safety standard has been prescribed invalidly, when the issue is whether the standard concerned really promotes safety. As his Honour pointed out, the standard is produced by a body of experts. It is likely that the standard was produced after an examination of a range of information about safety studies and after the consideration of a range of issues about the formulation of the standard. In the present case, from the material before the Court, it is apparent that the standard was prepared by a technical committee, on which were represented the following bodies: Australian Automotive Aftermarket Association; Australian Automobile Association; Australian Federation of Consumer Organizations; Business and Consumer Affairs, New South Wales; Department of Defence, Australia; Federal Bureau of Consumer Affairs, Australia; Federal Chamber of Automotive Industries, Australia; Federation of Automotive Product Manufacturers, Australia; Metal Trades Industry Association of Australia; Ministry of Consumer Affairs, Victoria; Motor Trades Association of Australia; Retail Traders Associations of Australia; and Roads and Traffic Authority, New South Wales.
31 It is also apparent from the terms of the prescribed safety standard that it is the subject of periodic review and is kept up to date by the issue of amendments or new editions from time to time. Suggestions for improvements are invited. As the primary judge found, the appellant made such a suggestion in relation to the very warnings the subject of this proceeding. Its suggestion was considered and rejected. In these circumstances, the Court should not be eager to set aside the expertise that has gone into the preparation of the prescribed safety standard, and to substitute its own view.
32 This is particularly the case when the standard is applicable to vehicle jacks supplied with motor vehicles generally, but is suggested to be unsuited to the particular requirements of one model, or even one make, of motor vehicle. Even if it were the case that the prescribed safety standard produced some possible undesirable consequences when applied to vehicle jacks supplied with the BMW 318i, that would provide no ground for saying that the relevant provisions of the prescribed safety standard were invalid. It might be a matter to take into account when the Court came to consider what orders ought to be made.
33 In our view, the primary judge construed correctly the relationship between s 65C and s 65E of the Trade Practices Act. His Honour was correct to hold that s 65E has the effect of deeming a standard prescribed pursuant to it to be a safety standard. It is not to be construed by reference to the purpose of s 65C. The fact that the preparation of a standard has been entrusted to Standards Australia International, and has then been the subject of a notice by the Minister, is itself sufficient to make the standard a prescribed safety standard. The standard does not have to be submitted independently to the test of satisfaction of the purpose inherent in s 65C.
34 The appellant has therefore failed to establish the invalidity of the relevant provisions of the prescribed product safety standard in relation to vehicle jacks.
The orders made
35 With the exception of the order relating to the auditing of the appellant’s trade practices compliance program, the primary judge does not appear to have considered the exercise of his discretion in relation to the other orders. He expressed the view that the mere fact that the appellant’s vehicle jack warning did not comply with a valid prescribed safety standard made it appropriate to make the declaration sought and to grant the injunction sought. Both a declaration and an injunction are discretionary remedies. In Australian Competition & Consumer Commission v Francis [2004] FCA 487 at [92] – [113], Gray J expressed his views about the practice, which appears to have become established, of making declarations merely recording the fact of a contravention of a provision of the Trade Practices Act. If it were considered to have been appropriate to make a declaration in the present case, the form of the declaration that was sought and made could only be described as a ‘bad precedent’. See Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75, (2003) 203 ALR 217 at [89] – [90]. At the very least, such a declaration should disclose the basis on which the vehicle jack and the owner’s manual supplied failed to comply with the prescribed consumer product safety standard relating to vehicle jacks. The declaration made by the primary judge was silent on that issue.
36 In our view, his Honour should also have considered whether an injunction was appropriate as a matter of discretion. If so, his Honour should have considered carefully the terms of the injunction. By s 80(1) of the Trade Practices Act, the Court is given a wide discretion as to the terms of an injunction. Section 80(4)(a) removes the normal rule that an injunction is only to be granted to restrain threatened or impending conduct, in the case of a restraining injunction. Section 80(5) removes the same rule in the case of a mandatory injunction. In such cases, it is clear that the terms of any injunction based only on past conduct should be limited to restraining a repetition of precisely that conduct. The case of an injunction based on an intention to commit further conduct is different. There, the terms can be cast more widely, in order to catch conduct of any kind threatened or intended.
37 The injunction granted in the present case is in the form of a restraining injunction. By its terms, it restrains the respondent from supplying vehicles, vehicle jacks and vehicle jack instructions respectively, without compliance with the prescribed consumer product safety standard. The form of the injunction follows the form of s 65C of the Trade Practices Act, in that it expresses a prohibition on supplying goods (vehicles, vehicle jacks and vehicle jack safety instructions), subject to a qualification. The result is that, if the qualification should be met, the prohibition is lifted. A more direct, and less complex, means of achieving the end sought to be achieved by the injunction might have been to grant a mandatory injunction, requiring the appellant to place the prescribed warnings on any of its vehicle jacks and in any of the instructions accompanying them.
38 In addition to the prescribed warnings, the primary judge should have given consideration to the possible need for the manual to direct the owner’s attention to the fact that this particular BMW model has independent suspension and therefore cannot be used with ordinary vehicle support stands unless they are put in place under the vehicle whilst the vehicle is jacked up or elevated by a different type of jack, perhaps a trolley jack. In other words, a clear warning should be given that vehicle support stands should not be put in place by a person using only the supplied jack to elevate the car. Precisely how that warning should be expressed is a matter for the primary judge after hearing appropriate submissions from all parties.
39 A relevant factor to consider in determining whether to grant an injunction pursuant to s 80 of the Trade Practices Act is whether the existing sanctions for the conduct to be the subject of the injunction, found in the Trade Practices Act itself, require to be supplemented by the availability of the range of sanctions applicable to contempt of court. The purpose of granting an injunction to restrain conduct already prohibited by legislation can only be to add to whatever consequences the legislation attaches to that conduct the additional consequences of a possible finding of contempt of court by failure to comply with an injunction. In each case, it is a question whether the conduct concerned warrants the application of those more stringent consequences.
40 His Honour made the orders set out in par [19] of these reasons for judgment, having found that, at all times, BMW acted in what it believed to have been the best interests of its consumers and that BMW had a genuine concern for the safety of its customers.
41 Nevertheless, his Honour formed the view that BMW should be ordered to appoint an external auditor to audit BMW’s compliance program because there was no reference in the 1997 version of the program to the need to comply with s 65C of the Act and because no upgraded program was tendered in the hearing. His Honour said that s 86C provided legislative authority for an order to be made for an external audit.
42 We do not consider that s 86C does provide legislative authority for an order to be made for an external audit, but even if it did, we do not consider that the primary judge, in exercising his discretion, took into account the relevant matters which bore on the exercise of his discretion to order an external audit. Section 86C was introduced into the Trade Practices Act by the Trade Practices Amendment Act (No. 1) 2001 (Cth). Section 86C provides:
‘(1) The Court may, on application by the Commission, make one or more of the orders mentioned in subsection (2) in relation to a person who has engaged in contravening conduct.
(2) The orders that the Court may make in relation to the person are:
(a) a community service order; and
(b) a probation order for a period of no longer than 3 years; and
(c) an order requiring the person to disclose, in the way and to the persons specified in the order, such information as is so specified, being information that the person has possession of or access to; and
(d) an order requiring the person to publish, at the person’s expense and in the way specified in the order, an advertisement
in the terms specified in, or determined in accordance with, the order.
(3) This section does not limit the Court’s powers under any other provision of this Act.
(4) In this section:
‘community service order’, in relation to a person who has engaged in contravening conduct, means an order directing the person to perform a service that:
(a) is specified in the order; and
(b) relates to the conduct;
for the benefit of the community or a section of the community.
‘contravening conduct’ means conduct that:
(a) contravenes Part IV, IVA, IVB, V or VC or section 75AU or 75AYA; or
(b) constitutes an involvement in a contravention of any of those provisions.
‘probation order’, in relation to a person who has engaged in contravening conduct, means an order that is made by the Court for the purpose of ensuring that the person does not engage in the contravening conduct, similar conduct or related conduct during the period of the order, and includes:
(a) an order directing the person to establish a compliance program for employees or other persons involved in the person’s business, being a program designed to ensure their awareness of the responsibilities and obligations in relation to the contravening conduct, similar conduct or related conduct; and
(b) an order directing the person to establish an education and training program for employees or other persons involved in the person’s business, being a program designed to ensure their awareness of the responsibilities and obligations in relation to the contravening conduct, similar conduct or related conduct; and
(c) an order directing the person to revise the internal operations of the person’s business which lead to the person engaging in the contravening conduct.’
43 Prior to the introduction of s 86C, orders had been made for an external audit of a compliance program but the legislative basis for such an order does not appear to have been considered. In Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc [1999] FCA 1387, (1999) 95 FCR 114, French J made an order by consent which provided for the implementation of a compliance program in a form annexed to his order which included, inter alia, a provision that the Institute would appoint an external compliance officer who was to approve the compliance program.
44 French J approved of the compliance program but did not give any specific consideration to the appointment of the external officer.
45 In Australian Competition and Consumer Commission v Danoz Direct Pty Ltd [2003] FCA 881, (2003) ATPR (Digest) 46-241 the appointment of an external auditor was not opposed although objection was taken to the auditor reporting to the Commission. Dowsett J at [267] considered ‘that some external reporting is desirable’ but did not otherwise address the issue of the basis for an external audit.
46 In Australian Competition and Consumer Commission v Virgin Mobile Australia Pty Ltd (No 2) [2002] FCA 1548, (2003) ATPR (Digest) 46-230 French J ordered by consent that the company implement a trade practices corporate compliance program and that it cause an audit of the compliance program to be undertaken by an independent external professional or organisation with trade practices law experience who was acceptable to the Commission. As in Real Estate Institute, French J did not give any specific consideration to the legislative basis for the appointment of the external auditor.
47 In Australian Competition & Consumer Commission v Econovite Pty Ltd [2003] FCA 964, (2003) ATPR 41-959 French J again ordered that the respondent implement a trade practices corporate compliance program which was to be ‘implemented by an independent external professional or organisation, with trade practices law experience and who is acceptable to the Applicant [the Commission], or otherwise approved by the Court’. His Honour also ordered that the respondent cause a review of that compliance program to be undertaken annually for three years by ‘[a]n independent external professional or organisation, with trade practices law experience and who is acceptable to the Applicant, or otherwise approved by the Court’ and that external person or entity report to the Commission to confirm that the audit had been conducted. These orders were not opposed by the respondent and were in substance consented to. French J, again, did not address specifically the basis of the order for the appointment for the external auditor. However, he qualified or modified the form of the orders which he had made earlier as he did not consider that the Commission should have a complete veto on who the external auditor should be.
48 In ACCC v Rural Press Ltd [2001] FCA 1065, (2001) ATPR 41-833 Mansfield J expressed reservations at [33] about ordering a trade practices compliance program which had as a component a reporting process which provided for an external third party to measure the performance of the primary obligations proposed. His Honour continued:
‘Presumably, then, if it were not satisfied that the trade practices compliance program was being properly implemented, the ACCC would then move the Court for an order that the non-complying party would be dealt with for contempt of Court. It should not be a means of empowering the ACCC to negotiate privately about the proper means of implementing the order of the Court. I am not confident that it is appropriate for the Court, which has directed a party to undertake certain conduct such as a trade practices compliance program over a number of years, which conduct may be in part exhortatory and in part of only generally described, to impose the ACCC in effect as a supervisor of compliance with that order. However, as I have determined not to accede to the ACCC’s submission to make orders under s 80 imposing trade practices compliance programs on Rural Press, Bridge and Waikerie Printing in this matter, I do not need to resolve whether I would have included the suggested reporting term in any such order.’
49 On appeal, Rural Press Ltd v Australian Competition and Consumer Commission [2002] FCAFC 213, (2002) 118 FCR 236 at [173], the Full Court agreed with Mansfield J’s reservations and said:
‘The Court should not delegate to a third person the task of specifying the obligations that are the subject of injunctive orders.’
50 This issue was not canvassed in the judgment of the High Court on appeal Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75, (2004) 203 ALR 217.
51 It may be that s 80 of the Act, or s 23 of the Federal Court of Australia Act 1976 (Cth), considered separately or together, provides a statutory basis for the appointment of an auditor of a compliance program. However no submissions were made by reference to those sections and we limit our conclusion to the opinion that s 86C does not provide a legislative basis for the appointment of an external auditor to audit a compliance program.
52 Even if there be a legislative basis enabling an order to be made for an external auditor, the matter to which his Honour referred did not warrant or justify the appointment of an external audit. The fact that there was no reference to a need to comply with s 65C in the 1997 program and the fact that the upgraded program was not tendered in the hearing are not relevant to a consideration whether an external auditor should be appointed. A number of matters might bear upon such an appointment, such as a wilful refusal by a corporation to put certain matters into its compliance program, or a documented history of the failure of a compliance program, or the inability of the compliance program to permeate through the various levels of authority in the corporation.
53 The primary judge did not give any consideration to discretionary factors in relation to the orders made in pars 3, 4 and 5 of the order, relating to the recall program and the publication of advertisements in newspapers and on its website. The appellant had advanced a genuine case that the safety risks consequent upon its failure to comply with the prescribed safety standard did not warrant a recall. His Honour does not appear to have considered those issues. Although the publication of the advertisements is less onerous, his Honour should also have taken into account any discretionary considerations relating to them.
Conclusion
54 For these reasons, we would allow the appeal in part. We would set aside the declaration made by the primary judge, and the orders in pars 1, 2, 3, 4 and 5 of those orders, as amended. We would leave undisturbed the order that the appellant pay the costs of the proceeding at first instance. We would remit the matter to the primary judge for the purpose of enabling him to consider what orders are appropriate, consequent upon the reasons for judgment of the Full Court and any further findings that his Honour may make bearing upon the appropriate orders.
55 This means that the appellant has succeeded in part on its appeal. It has failed in relation to the principal issues of the appeal, and succeeded only in relation to the question of the exercise of discretion in relation to the orders made, both as to whether they should have
been made and as to their form. For this reason, we would make no order as to the costs of the appeal.
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I certify that the preceding fifty-five (55) numbered paragraphs are a true
copy of the Reasons for Judgment herein of the Court.
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Associate:
Dated: 28 June 2004
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Counsel for the Appellant:
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Mr Peter Jopling QC with Mr Peter Willis
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Solicitor for the Appellant:
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Minter Ellison
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Counsel for the Respondent:
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Mr Charles Scerri QC with Ms Kate Anderson
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Solicitor for the Respondent:
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Phillip Fox
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Date of Hearing:
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16 December 2003
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Date of Judgment:
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28 June 2004
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URL: http://www.austlii.edu.au/au/cases/cth/FCAFC/2004/167.html