Foster v Australian Competition and Consumer Commission (ABN 83 975 695 966) [2006] FCAFC 21 (10 March 2006)

Last Updated: 13 March 2006

FEDERAL COURT OF AUSTRALIA

Foster v Australian Competition and Consumer Commission (ABN 83 975 695 966) [2006] FCAFC 21

TRADE PRACTICES – Enforcement and Remedies – Declarations – Injunctions – Whether Court has power under s 80 of Trade Practices Act 1974 to grant injunction prohibiting what would otherwise be lawful activity – Nature of power to grant injunction "in such terms as the Court determines to be appropriate" – Need for nexus between proven contravention of Part V of Trade Practices Act and the prohibition embodied in the injunction.

Trade Practices Act 1974 (Cth) s 48, Pt V ss 65C, 76 and s 80,
Federal Court of Australia Act 1976 (Cth) ss 22 and 23

Statute Law (Miscellaneous Provisions) Act (No 1) 1983 (No 39, 1983) Explanatory Memorandum
Statute Law (Miscellaneous Provisions) Act (No 1) 1983 (No 39, 1983) 2^nd Second Reading Speech


Australian Competition and Consumer Commission v Goldy Motors Pty Ltd (2001) ATPR 41-801
Australian Competition and Consumer Commission v Chen [2003] FCA 897; (2003) 201 ALR 40
Australian Competition and Consumer Commission v Francis [2004] FCA 487
House v The King [1936] HCA 40; (1936) 55 CLR 499
Thomson Australia Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 151
Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197
ICI Australia Operations Pty Ltd v Trade Practices Commission [1992] FCA 474; (1992) 38 FCR 248
Australian Memory Pty Ltd v Brien [2000] HCA 30; (2000) 200 CLR 270
Hewlett Packard v GE Capital [2003] FCAFC 256; (2003) 203 ALR 51
OD Transport Pty Ltd v WA Government Railways Commission (1987) 13 FCR 500
BMW Australia Limited v Australian Competition and Consumer Commission [2004] FCAFC 167; (2004) 207 ALR 452
Australian Competition and Consumer Commission v Dermalogica Pty Ltd [2005] FCA 152; (2005) 215 ALR 482


PETER CLARENCE FOSTER -v- AUSTRALIAN COMPETITION AND CONSUMER COMMISSION (ABN 83 075 695 966)

QUD 355 of 2005

RYAN, FINN and ALLSOP JJ
10 MARCH 2006
SYDNEY (heard in BRISBANE)

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QUD 355 of 2005

On appeal from a Judge of the Federal Court of Australia

BETWEEN:	PETER CLARENCE FOSTER Appellant
AND:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION (ABN 83 075 695 966) Respondent
JUDGES:	RYAN, FINN and ALLSOP JJ
DATE OF ORDER:	10 MARCH 2006
WHERE MADE:	SYDNEY (heard in BRISBANE)

THE COURT ORDERS THAT:

1.	The appeal be dismissed.
2.	The appellant pay the respondent’s costs of the appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QUD 355 of 2005

On appeal from a Judge of the Federal Court of Australia

BETWEEN:	PETER CLARENCE FOSTER Appellant
AND:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION (ABN 83 075 695 966) Respondent

JUDGES:	RYAN, FINN and ALLSOP JJ
DATE:	10 MARCH 2006
PLACE:	SYDNEY (heard in BRISBANE)

REASONS FOR JUDGMENT

THE COURT:

1 This is an appeal from one of some 52 orders, including declarations and injunctions, made by a single Judge of the Court. The orders were made distributively against ten respondents. The first respondent, Chaste Corporation Pty Ltd (In Liquidation) ("Chaste") had, between October 1999 and December 2001, carried on business as a manufacturer of a weight loss tablet called "TRIMit." The other corporate respondent was the third respondent, Orlawood Pty Ltd ("Orlawood") which was the sole registered shareholder in Chaste, holding that share as trustee of the Webb Family Discretionary Trust which had been established by the second respondent, Braddon Ralph Webb ("Webb"). The learned primary Judge found that Chaste had effectively been entirely controlled by Webb and the fourth respondent, the present appellant, Peter Clarence Foster ("Foster"). His Honour also found that Chaste had engaged in resale price maintenance in contravention of s 48 of the Trade Practices Act 1974 (Cth) ("the Act"). There were findings, as well, that Chaste had made misleading and deceptive representations in relation to the buy-back of TRIMit tablets from area managers appointed as distributors to whom the tablets had been sold as stock. His Honour found at [97];
‘Mr Foster, Mr Webb and/ or Orlawood were knowingly concerned in the making of the buy back guarantee representations throughout the operations of Chaste. The representations were misleading and deceptive.’

2 Further findings were made at first instance that Chaste had made representations that were misleading and deceptive about the efficacy of TRIMit and that it had been approved by the Therapeutic Goods Administration ("the TGA"). As to Foster’s knowledge of, and participation in, that conduct, his Honour found at [119];
‘Mr Foster played an active part in the misrepresentations which were made as to the efficacy of TRIMit. He scripted media and newspaper releases and provided instructions in relation to media campaigns. He provided instructions to Dr D’Alton and met with him in Fiji and Vanuatu. Mr Foster and Mr Cousins consulted on the wording of the Clinical trial brochure while in Fiji and resolved to use its publication as an antidote to an article which contained very clear criticism of any efficacy representations for HCA and Chromium as weight loss aids.’

3 The third category of conduct found to have contravened Pt V of the Act comprised representations as to the genuineness of Chaste’s business and the concealment of Foster’s involvement in it. The following findings under this head were made between [128]-[134] of the reasons below in relation to Foster;

• ‘The fact that all key personnel involved in the Chaste business knew that it was being operated according to the detailed directions and for the purposes of Mr Foster. Mr Webb, Mr McMullan, Mr Cousins, Mr Cooper and Dr D’Alton each had reason to believe that Mr Foster’s purposes were not in accordance with the ordinary commercial expectations of the area managers and concealed his involvement from them.

Mr Foster had convictions in relation to the unlawful sale and promotion of weight loss products, and a reputation as the instigator of dubious and failed schemes for profit for the conduct of businesses promoting and selling weight loss products.
When area managers and creditors enquired as to the personnel involved in Chaste, Messrs Webb, Cousins, McMullan and office personnel, instructed by Mr Webb and Mr Foster, answered in a manner which was clearly calculated to conceal the presence of Mr Foster as the key controller of the Chaste system.
Mr Xenodakis said that he clearly understood from discussions with Mr Webb and Mr Foster that he was not to mention Peter Foster’s involvement in Chaste. He thought potential purchasers of TRIMit distribution areas would be less likely to buy an area if they knew Peter Foster was involved.
... ... ....
I find that from its inception Chaste’s business was conducted by Mr Foster and Mr Webb for the purpose of extracting the maximum possible revenue from unsuspecting area managers who had hoped to participate in a genuine business opportunity in selling a researched and effective weight loss aid to retailers. I find that Chaste never retained adequate funds to enable it to provide future expenditure for the benefit of the business or area managers as it represented it would. Regard was never had for the long term viability of Chaste.
I find that Mr Foster, Mr Webb and/or Orlawood were knowingly concerned in representing to area managers that participation in a Chaste distributorship was a genuine business opportunity when in fact, and to their knowledge, it was a high risk activity which was geared to distribute the gross income to Mr Foster, Mr Webb and associated entities whilst retaining the minimum amount of funds for conducting a short term business.’

4 In respect of the relief claimed against Foster, the learned primary Judge made these observations at [146] of his reasons;
‘The fourth respondent agreed that he had been knowingly involved in the resale price maintenance contravention. He also agreed that he had breached Part IV of the Act. However, he opposed declarations being made in the terms sought. The fourth respondent argued that declarations were unnecessary in circumstances where they would be declaring facts rather than parties’ rights. I do not accept this argument. It is appropriate to make declarations in circumstances to vindicate a party’s claim, and or to serve the public interest in clearly spelling out the contravening conduct.’

5 After referring to three authorities in this Court, Australian Competition and Consumer Commission v Goldy Motors Pty Ltd (2001) ATPR 41-801, Australian Competition and Consumer Commission v Chen [2003] FCA 897; (2003) 201 ALR 40 and Australian Competition and Consumer Commission v Francis [2004] FCA 487, his Honour continued, at [150]-[151] of his reasons;
‘... ... When regard is had to the underlying policy of the Act which is concerned with the public interest, it is appropriate for the Court to exercise its power to grant declaratory relief to mark its disapproval of the contravening conduct. Furthermore, in the circumstances of this case, where the declarations sought are directed to the determination of a legal controversy and not to answering abstract or hypothetical questions, the applicant, as the public body charged with enforcing the Act, has a ‘real interest’ in seeking the relief, and the relief sought is not ‘purely hypothetical’, I consider that it is appropriate to make the declarations sought.
I consider that it is appropriate to make the declarations sought against the fourth respondent. I consider that there is utility in making the proposed declarations, as they will serve the public interest by making the public aware of Mr Foster’s conduct. Furthermore, I consider that the declarations sought are appropriate to mark the Court’s disapproval of Mr Foster’s conduct. The declarations are set out below.’

6 In addition, the learned primary Judge acceded to the submission of the present respondent, the Australian Competition and Consumer Commission ("the ACCC") that it was appropriate to impose on Foster a pecuniary penalty of $150,000 under s 76 of the Act in respect of his being knowingly concerned in, or party to, and aiding and abetting, conduct by Chaste which constituted engaging in resale price maintenance in contravention of s 48. In that context, these observations were made at [233]-[243] of his Honour’s reasons;
‘[233] A penalty of $150,000 is at the high end of the scale of penalties imposed for contraventions of Part IV of the Act. Nevertheless, I consider the factors which support a penalty of this kind:

(1) the level of Mr Foster’s involvement as the controller of the company, with primary responsibility for the offending acts in the company’s contravention, as the designer of Chaste’s business which was based upon the resale price maintenance conduct;
(2) the deliberateness with which the fourth respondent engaged in the contravening conduct;
(3) the unusual circumstances in which the conduct occurred, being not in the course of operation of a genuine business, but as an integral part of a scheme to attract persons as area managers for the purposes of paying money to the first respondent for the use of the second and fourth respondents;
(4) the importance of general deterrence in conduct of this nature;
(5) the importance of specific deterrence in respect of the fourth respondent;
(5) the absence of any acknowledgment by the fourth respondent of his contravention, or a willingness to cooperate with the applicant in its investigation; and
(6) the amount of money derived by the fourth respondent from the scheme he devised, based upon the resale price maintenance contraventions, of which the proposed penalty of $150,000 is a small proportion.

The nature and extent of the contravening conduct
[234] The nature of the contravening conduct is set out above in relation to the first respondent.
[235] The fourth respondent designed and controlled all aspects of the company’s operations, and was responsible for the contravening elements of the Chaste operations, including drafting the documents containing the resale price maintenance contraventions and directing their use. He thereby aided and abetted Chaste to engage in the conduct and was directly knowingly concerned in, and party to the conduct. He profited to the extent that he extracted more than $1 million from the company’s revenue to his own ends.
The amount of loss or damage caused, effect on the functioning of the market and other economic effects of the conduct
[236] The loss and damage caused and the effect of the conduct on the functioning of the market are discussed above in relation to the first respondent. The thrust of the scheme was that artificially inflated profit margins were used to sell the scheme to area managers. The promoted profitability of the TRIMit product for retailers was based upon the premise that the resale price maintenance conduct would continue. For end consumers, the harm of the resale price maintenance conduct was that retail prices were artificially inflated for the product. This harm was additional to that caused by the marketing of TRIMit on the false basis that it was efficacious. I find that each of the elements of the TRIMit scheme was deliberately designed by the fourth respondent.
The circumstances in which the conduct took place
[237] The circumstances in which the conduct took place is described above, in relation to the first respondent.
[238] I find that Mr Foster, while concealing his own involvement, together with Mr Webb, controlled and directed the company’s operations.
Whether the person has previously been found by the Court to have engaged in any similar conduct
[239] Mr Foster has not previously been found by the Court to have contravened the resale price maintenance provisions of the Act.
The deliberateness of the contravention and the period over which it extended
[240] The conduct was deliberate and persisted for two years through a network of sales representatives and area managers. Mr Foster, together with Mr Webb, controlled every aspect of Chaste’s operations from its establishment up until its failure.
[241] The conduct ended with the failure of Chaste in November 2001. Up until that time, Chaste continued to sell stock on the contravening conditions.
Whether the contraventions arose out of the conduct of senior management or at a lower level, and whether the company has a corporate culture conducive to compliance with the Act
[242] The conduct was devised, established, implemented, promoted and controlled by Chaste’s director, Mr Webb and its consultant, Mr Foster, for their own benefit, and without regard to the company, area managers, retailers or customers. Mr Foster was in effect a shadow director of the first respondent. Mr Foster received over $1 million in revenue from Chaste between December 1999 and November 2001.
Whether the contravenor has shown disposition to cooperate with the authorities responsible for the enforcement of the Act in relation to the contravention
[243] Mr Foster has shown no disposition to cooperate with the applicant, or to admit his conduct.’

7 The injunction which is the sole focus of attack on the present appeal was in these terms;

‘2.7 The fourth respondent be restrained, for five years from the date of this order, from being directly or indirectly knowingly concerned in the promotion or conduct by a corporation of any business relating to weight loss, cosmetic or health industry products or services of any kind.’

8 His Honour’s omission to give reasons for granting that relief is explained, in part, by this observation at [70] of the reasons below;
‘It is only necessary to discuss the facts which constitute the contravening conduct for the purpose of making findings in relation to the first, second, third and fourth respondents. In the case of the fourth respondent, it is only necessary to make those findings for the purpose of considering whether it would be appropriate to make the declarations sought against the fourth respondent. As I have already indicated, the fourth respondent consents to injunctions against him in relation to his contraventions of Part V of the Act but has argued that no declarations should be made.’

9 It is also explicable by the way in which the question of injunctive relief had been addressed in the course of oral submissions at first instance by, respectively, Senior Counsel for the ACCC and Senior Counsel for Foster. In the first place, this exchange occurred between Mr Savage SC, Senior Counsel for Foster and his Honour during the hearing on 14 June 2005;

MR SAVAGE:	The second issue is what I will call the Section 52 case, and there the applicant seeks two types of orders. The first are declaratory orders and the second are injunctive orders.
HIS HONOUR:	Yes.
MR SAVAGE:	The parties are agreed, subject to the dispute about the declaratory orders, on the terms of the injunctive orders.
HIS HONOUR:	Yes.
MR SAVAGE:	I say that because they are related in the sense that the injunctive orders in part required Mr Foster to deliver these orders to people. So we are agreed about the terms, subject to that, of the injunctive orders; we are not agreed about the declarations, by which I mean it is our contention that the so-called declarations aren't properly to be made by the Court. They are not declarations of right; they are really declarations of fact, which your Honour is asked to make precedent to the injunctions which are otherwise agreed. So there's a debate about the appropriateness of that.
HIS HONOUR:	About the wording of the declarations?
MR SAVAGE:	No, about whether one would make declarations - - -
HIS HONOUR:	At all?
MR SAVAGE:	- - - at all in a case such as this where they are not declaring the rights of the parties; they are merely declaring the precedent facts.
HIS HONOUR:	I see.
MR SAVAGE:	Which may or may not support the injunctions which are otherwise agreed and where there's no proper contradictor.
HIS HONOUR:	You just say there's no need to make any declarations?
MR SAVAGE:	There's no need to make any declarations.
HIS HONOUR:	But even if there was a need, these aren't the appropriate declarations?
MR SAVAGE:	Yes. And, again, that is a relatively confined debate - - -
	... ... ...
	The injunctions that are now agreed between the parties are different in scope than the ones in the Statement of Claim, but your Honour need not concern yourself with that because the terms of them are agreed.

10 Two days later, on 16 June 2005, this discussion took place between his Honour, Mr Savage and Mr Couper SC, Senior Counsel for the ACCC;

MR COUPER:	‘The second point of contention, I think, is this that if your Honour were to go to page 6 of the proposed short minutes, there's an order number 5, an injunction which your Honour will see is in terms restraining the fourth respondent for five years from being directly or indirectly knowingly concerned in that the motion, and so forth, of the businesses there of the type specified. There is, as I understand it, an argument as to the breadth of that injunction. That's the second point between us - - -’
MR SAVAGE:	‘I think what we say is that given the injunctions that were sought in the statement of claim, and given the injunctions the form of which is now agreed, other than that numbered 5, it is unnecessary in this case to make that declaration - that injunction, simply because if your Honour looks at the other injunctions, they regulate the conduct of the fourth respondent, no matter what he does.’
HIS HONOUR:	‘So there doesn't need to be a specific order?’
MR SAVAGE:	‘There doesn't need to be a specific order because there is no difference in what he can do in any industry in which he chooses, and these things, of course, will lead to arguments about what constitutes what sort of industry, or what sort of product.’

11 After that preliminary discussion, Mr Couper is recorded at p 102 of the transcript of 16 June 2005 as having made these submissions about injunctive relief;

MR COUPER:	... ... Can we turn then to the injunction, your Honour. As we apprehended, and our friends will correct us if we are wrong I am sure, it is not suggested that the court doesn't have power under section 80 of the Act to make a declaration in that form.
HIS HONOUR:	Injunction.
MR COUPER:	Sorry, injunction in that form. The only submission is, as we apprehended, that that injunction is unnecessary because of the form of the other injunctions. We can be brief with our submissions, your Honour. As your Honour will see, it is a restraint from being directly or knowingly concerned for five years in the promotion of conduct by a corporation of any business in those fields, dealing with those types of products.
	Our submission is that that form of injunction is the appropriate way of, as it were, cutting off at the knees any attempt by Mr Foster by some indirect means to promulgate the same sort of scheme which was promulgated in this case. The scheme in this case was characterised by the concealment of Mr Foster's involvement, the putting up of front men, and the denial of Mr Foster's involvement to anybody who bothered to ask the question.
HIS HONOUR:	I think what is put against you is that if the other orders stand and if Mr Foster otherwise complies with those orders, why should he be otherwise enjoined from carrying on that business, because he wouldn't be setting up the scheme which you talk about.
MR COUPER:	Your Honour, in answer to that we say this - that whilst the other orders are broader in scope in this respect, that they extend beyond businesses in the relevant field of weight loss and so forth, and they deal with situations where Mr Foster chose to, to put it colloquially, branch out into some other field of endeavour other than the slimming or health products field, then he is required, if representations are to be made, to comply with those other injunctions. So whilst it's true that the other injunctions overlap the health products field, our submission is that the health products field is the one in which he has - slimming, weight, health products is the one in which he has engaged as a matter of history.
HIS HONOUR:		‘What history have I got? I've just got the failed attempt plus - - - ‘
MR COUPER:	‘Cyber Natural, this attempt, and the attempt to move on to the UK. And because - if we can put it bluntly - that seems to be the field in which he seems comfortable in deceiving people, the appropriate way of dealing with that is to remove him from that field for five years. If he then chooses to seek to branch out into other fields, then it wouldn't be appropriate to restrain him from dealing in any field of endeavour in an unqualified way. If he chooses to branch out into other fields, then there are restraints imposed upon him as to what he can say in terms of, for example, paragraph 7, when dealing with the attributes of any product or service.’
	‘So in our submission the injunctions work in conjunction - with respect to the field in which he has engaged in such a deceitful way, the injunction in paragraph 5 shuts him out for five years.’
HIS HONOUR:	‘But if he complied with paragraphs 6, 7, 8 and 9 especially, he couldn't launch the scheme which you say he launched in this - - -’
MR COUPER:	‘We accept that, sir. It is, I suppose, one would have to say, a boots and braces approach. If your Honour regards that as being an unnecessary approach, there's not a great deal more we can say about it. That's the basis on which we put it.’

12 At the outset of his answering submissions on 16 June 2005, Mr Savage SC made these general observations;

MR SAVAGE:

‘... our position has been that we have offered undertakings in accordance with the injunctions sought in the Statement of Claim. We couldn't do more than that because, of course, we couldn't agree the injunctions nor, if your Honour looks at the injunctions sought in the Statement of Claim, were they ever injunctions that were likely to be given by the Court. They were far too wide. So that was our position. Now, we were rebuffed about that. It was said, "Oh, well, that's not satisfactory". We were only given the final injunctions in the afternoon prior to the first day of this hearing and we have made it perfectly plain what our position was on that since. So that's the extent to which – your Honour said a little while ago, "Well, there hasn't been any co-operation". In a sense, and we will come back to it a little later, we never, for example, were given notice of intent to cross-examine anybody. We have made this offer and that's how, in our respectful submission, we should be treated in the further hearing of these particular matters.’

13 Then, after contending that "the utility of the relief is found in the injunctive orders of the Court, not in the declarations", Mr Savage urged that;
‘Your Honour doesn't need to make any findings, because the injunction – because we consent to the injunctions sought other than in respect of injunction five.
And then injunction five, we simply submit that it is unnecessary given the other injunctions which we accept.’

14 Mr Savage’s final submission in relation to the proposed injunction which became [27] of his Honour’s orders was recorded in these terms at p 126 of the transcript;
‘Now, if one accepts for the purposes of argument, that the other orders will be made, that the injunction orders that are consented to, in our submission it's really as your Honour put it, if those orders are made, then it will prevent the type of activity that's apprehended. And if one says, "Well, that type of activity, we apprehend it will go on even though the orders are made", then really it's just a submission about futility. If those orders won't be effected, why will any orders be effected? And what is the basis for preventing one from operating lawfully in one area, rather than the other?
The purpose of relief granted by the Act has to have some relevant nexus with a prevention of apprehended breaches of the Act. It has to be directed to something. Just to say, "Oh, well, it's sufficient that you previously participated unlawfully in some activity, and participate on these other proposed orders, it is sufficient to prohibit you altogether from particular areas", is, in our submission, not a sufficient nexus. But that's all we wish to advance in relation to that order 5.’

15 Mr Couper, in his final address, was content to say "we have said what we can say about the injunction. There’s no point in repeating that."
16 The following grounds were articulated in Foster’s notice of appeal;
‘1. The Court below erred in granting the said injunction when there was no evidence that the Appellant was engaging or proposing to engage in conduct that constituted or would constitute a contravention of the Trade Practices Act 1975 ("the Act").
2. The Court below erred in granting the said injunction when there was insufficient nexus between the contravention alleged by the Respondent and the said injunction.
3. The Court below erred in granting the said injunction as the Act does not give the Court jurisdiction to prevent the Appellant from promoting or otherwise being involved in a corporation when the said promotion or involvement would not constitute a contravention of the Act.
4. The Court below erred in not giving reasons for the grant of an injunction of a width which has the effect of preventing the Appellant from carrying on what would otherwise be legal activity.’

17 Counsel for Foster in the course of his oral submissions on the hearing of the appeal drew attention to the fact that the learned primary Judge had given "no reasons as to appropriateness". However, shortly after that reference Mr Taylor accepted that ground 4 of the notice of appeal set out above had been abandoned. As we understood it, the reference to the absence of reasons was in aid of a contention that the Court’s discretion had miscarried when it granted the injunction in terms of par 27 of his Honour’s order. Accordingly, the exercise of discretion was said to be reviewable according to the well-known principle enunciated by Dixon, Evatt and McTiernan JJ in this passage from House v The King [1936] HCA 40; (1936) 55 CLR 499 at 504-505;
‘... ... The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred. ...’

18 It was in that context that Counsel for Foster pointed to the absence of reasons for granting an injunction in the form of par 27 as preventing it from appearing how the primary Judge reached the result embodied in his order. However, for the reasons explained below, even accepting the absence of reasons, we are unable to regard the grant of the contentious injunction as unreasonable or plainly unjust so as to permit us to impute an error in the exercise of discretion to determine whether the terms of par 27 were appropriate.
19 The extracts from the transcript reproduced at [9]-[15] of these reasons may indicate that his Honour had proceeded on the mistaken assumption that Foster had consented to an injunction in terms of par 27. However, any such mistake, if it occurred, could be rectified by the trial Judge having recourse to O 35 r 7(2)(d) or (e) of the Rules of this Court. At all events, the suggested mistake is not relied on as a ground of the present appeal.
20 On the hearing of the appeal, Mr Taylor of Counsel for Foster candidly conceded that the power of the Court to grant an injunction in the form of that reproduced at [7] above had not been at the forefront of Foster’s case at first instance. Indeed, it was only tangentially raised by the reference by Mr Savage SC to "some relevant nexus" in the second of the paragraphs from his submission which we have set out at [14] above. However, Mr Taylor, in his submissions on the appeal focused on the question of power and, as the point has been fully argued on each side, we find it convenient to deal with it at this stage of our reasons.
21 The first premise of Mr Taylor’s submission was that the injunction in the terms appearing at [7] above went beyond the power conferred on this Court by s 80 of the Act. That section provides, so far as it is relevant;

‘(1) Subject to subsections (1A), (1AAA) and (1B), where, on the application of the Commission or any other person, the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute:
(a) a contravention of any of the following provisions:

(i) a provision of Part IV, IVA, IVB, V or VC;
(ii) section 75AU or 75AYA;

(b) attempting to contravene such a provision;

(c) aiding, abetting, counselling or procuring a person to contravene such a provision;
(d) inducing, or attempting to induce, whether by threats, promises or otherwise, a person to contravene such a provision;
(e) being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or
(f) conspiring with others to contravene such a provision;

the Court may grant an injunction in such terms as the Court determines to be appropriate.
(1AA) Where an application for an injunction under subsection (1) has been made, whether before or after the commencement of this subsection, the Court may, if the Court determines it to be appropriate, grant an injunction by consent of all the parties to the proceedings, whether or not the Court is satisfied that a person has engaged, or is proposing to engage, in conduct of a kind mentioned in subsection (1).

..........

(2) Where in the opinion of the Court it is desirable to do so, the Court may grant an interim injunction pending determination of an application under subsection (1).
(3) The Court may rescind or vary an injunction granted under subsection (1) or (2).
(4) The power of the Court to grant an injunction restraining a person from engaging in conduct may be exercised:

(a) whether or not it appears to the Court that the person intends to engage again, or to continue to engage, in conduct of that kind;
(b) whether or not the person has previously engaged in conduct of that kind; and
(c) whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person engages in conduct of that kind.

(5) The power of the Court to grant an injunction requiring a person to do an act or thing may be exercised:

(a) whether or not it appears to the Court that the person intends to refuse or fail again, or to continue to refuse or fail, to do that act or thing;
(b) whether or not the person has previously refused or failed to do that act or thing; and
(c) whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person refuses or fails to do that act or thing.

(6) Where the Minister or the Commission makes an application to the Court for the grant of an injunction under this section, the Court shall not require the applicant or any other person, as a condition of granting an interim injunction, to give any undertakings as to damages.
(6A) Subsection (6) does not apply to an application by the Minister for an injunction relating to Part IV.’

22 It was not disputed on the hearing of the appeal that the power to grant injunctive relief in consequence of a contravention of the Act is exclusively conferred by s 80 and is in no sense derived from the general conferral of jurisdiction to grant injunctive relief which is found in ss 22 and 23 of the Federal Court of Australia Act 1976 (Cth); see Thomson Australia Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 151 at 163. It was further observed in the same passage of the joint judgment in Thomson Australia Holdings;
‘The parties by consent cannot confer power upon the Court to make orders which the Court lacks power to make. As we have seen, the relevant jurisdiction of the Court in relation to the granting of an injunction is limited to the hearing and determination of actions in which application is made for the making of orders under s.80 (1) restraining a person from engaging in conduct of a specified kind. The orders made (which were the orders sought) restrain the defendants from engaging in conduct that does not necessarily constitute a contravention of Pt IV. The paragraphs are not limited to restraining the defendants from making an arrangement or arriving at an understanding or giving effect to an arrangement or understanding where the arrangement or understanding has the purpose or would have or be likely to have the effect of substantially lessening competition or restraining the defendants from engaging in conduct giving effect to such a provision. The orders therefore lack the essential feature which distinguishes conduct amounting to a contravention of Pt IV from conduct which does not amount to such a contravention.’

23 However, at the time when Thomson Australia Holdings was decided, s 80(1) of the Act was in the following terms;
‘1) The court may, on the application of –

(a) the Minister,
(b) the Commission; or
(c) subject to sub-section (1A) – any other person
grant an injunction restraining a person from engaging in conduct that constitutes or would constitute –

(d) a contravention of a provision of Part IV or V;

(e) attempting to contravene such a provision;

(f) aiding, abetting, counselling or procuring a person to contravene such a provision;
(g) inducing or attempting to induce a person, whether by threats, promises or otherwise to contravene such a provision;
(h) being in anyway, directly or indirectly knowingly concerned in or party to, the contravention by a person of such a provision;

or
(j) conspiring with others to contravene such a provision.’

24 The amendment which led to s 80 being reformulated in substantially the terms set out at [21] above came into force in 1983. The Explanatory Memorandum which accompanied the Bill for the amending Act recited;
‘The effect of the amendment is to widen the courts power to grant injunctive relief which is at present generally limited to restraining a contravention of the Act. The amended provision will enable the court to grant more effective injunctive relief, including mandatory injunctions and other injunctive relief. [Statute Law (Miscellaneous Provisions) Act (No 1) 1983 (No 39, 1983), Explanatory Memorandum]’

25 To similar effect, the perceived deficiencies in s 80 as it existed before the amending Act were described as follows in the then Attorney-General’s Second Reading Speech in support of the amending Bill;
‘This power is seriously inadequate. First it merely enables the Federal Court to enjoin a person from doing that which he is already under a legal obligation not to do. Secondly, the Federal Court’s power effectively to prevent repetition of the conduct is restricted – in proceedings for breach of an injunction it could be necessary to prove all the elements of a contravention (including, where applicable, the effect on competition). Thirdly, the Federal Court is not able to make orders corrective of the results of the contravention (except in the case of corrective advertising provided for in s.80(A)). [Statute Law (Miscellaneous Provisions) Act (No 1) 1983 (No 39, 1983), Second Reading, 18 May 1983].’

26 Although he acknowledged that the 1983 amendments had given the Court a wider power to grant injunctions than had previously been conferred by s 80, Mr Taylor for Foster contended that the power does not extend to completely prohibiting what would otherwise be lawful activity. It was sought to support that contention by reference to this observation by Merkel J in Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 at 203;
‘First, the power is confined by reference to the scope and purpose of the TPA and in particular s 80. It is within the scope and purpose of s 80 to grant injunctive relief which is designed to prevent a repetition of the conduct for which the relief is sought.
Secondly there is a contextual limitation within s 80 itself. As the jurisdiction to grant an injunction is enlivened by an alleged or actual contravention of a provision of Part IV, IVA or V of the TPA, there must be a sufficient nexus or relationship between the contravention and the injunction granted. It is that nexus or relationship that enables determination by the Court of whether the injunction sought is "appropriate".
Thirdly, there is the constitutional limitation which requires that the injunction granted be related to the case or controversy the subject of the proceeding.’

27 Counsel for Foster also referred to ICI Australia Operations Pty Ltd v Trade Practices Commission [1992] FCA 474; (1992) 38 FCR 248 where Gummow J observed, at 267;
‘Section 80(1) confers upon the court the power to grant an injunction where it is satisfied that a person has engaged or is proposing to engage in conduct that constitutes or would constitute conduct of the description in pars (a)-(f). The power of the court to grant an injunction is controlled by the words "in such terms as the Court determines to be appropriate".’

28 However, that passage does no more than indicate what is obvious from the structure of s 80(1) in its present form, namely that the Court’s satisfaction that the respondent has engaged in, or is proposing to engage in, one or other of the forms of conduct identified in pars (a) to (f) enlivens the power to grant an injunction "in such terms as the Court determines to be appropriate." The appropriate terms of an injunction in a particular case are not, as a matter of construction, limited by reference to the conduct in which the Court has been satisfied the respondent has engaged or is proposing to engage. That is made doubly clear by the express provisions of s 80(4).
29 It is true that in the paragraph immediately following that quoted at [27] Gummow J in ICI v Trade Practices Commission went on to indicate his view of the range of the terms which the Court might determine to be appropriate after it had attained the satisfaction mandated by the earlier words of s 80(1). His Honour continued;
‘Thus, the terms of the injunction will not be "appropriate" if, on its face, it operates upon a range of conduct some of which does, but some of which does not, have the relationship required by s 80 with contravention of the Act. The injunction should not prohibit conduct falling outside the boundaries drawn by s 80: see Thomson Australian Holdings Pty Ltd v Trade Practices Commission [1981] HCA 48; (1981) 148 CLR 150 at 161. The same limitation applies to mandatory injunctive relief. It is, in my view, no support for the grant of an injunction which, from the outset, has an operation outside the boundaries of s 80, to say that it is open for the party enjoined to apply under s 80(3) to vary the injunction so as to bring its operation wholly within proper limits. The party in question should not be placed under any such obligation in the first place.’

30 His Honour’s reference to terms having "an operation outside the boundaries of s 80" is no more than a paraphrase of the actual words of the subsection "such terms as the Court determines to be appropriate." That paraphrase, we consider with respect, does not illuminate the amplitude which should be given, as a matter of construction, to the grant of power. In our view, a more helpful guide to resolving the question of construction is afforded by this observation, also from ICI v Trade Practices Commission, of Lockhart J (with whom French J agreed) at 256;
‘In my opinion subss (4) and (5) are designed to ensure that once the condition precedent to the exercise of injunctive relief has been satisfied (ie contraventions or proposed contraventions of Pt IV or V of the Act), the court should be given the widest possible injunctive powers, devoid of traditional constraints, though the power must be exercised judicially and sensibly.’

31 This approach of Lochkhart J accords with the view often expressed by the High Court that discretions or powers entrusted to Courts should be read liberally for the relevant statutory purpose, without making implications or imposing limitations not found in the express words: Australian Memory Pty Ltd v Brien [2000] HCA 30; (2000) 200 CLR 270 at [77] and see generally for the cases Hewlett Packard v GE Capital [2003] FCAFC 256; (2003) 203 ALR 51 at [187].
32 French J had earlier made the following observation to the same effect in OD Transport Pty Ltd v WA Government Railways Commission (1987) 13 FCR 500 at 508;
‘... the effect of the 1983 amendment to s 80(1) was to free the power conferred by the section from the constraint that the injunction granted under it must restrain a person from engaging in conduct that constitutes or would constitute a contravention of Pt IV or V or one of the species of accessorial participation there listed.
The discretion of the court in formulating the terms in which a final injunction may be granted under s 80(1) is as wide as the phrase "as the court determines to be appropriate".
That is not an unlimited discretion and must at least be confined by reference to the scope and purposes of the Act -- Water Conservation and Irrigation Commission (NSW) v Browning [1947] HCA 21; (1947) 74 CLR 492, 505; Murphyores Incorporated Pty Ltd v The Commonwealth [1976] HCA 20; (1976) 136 CLR 1 at 23.’

33 The final authority invoked by Counsel for Foster was BMW Australia Limited v Australian Competition and Consumer Commission [2004] FCAFC 167; (2004) 207 ALR 452. In that case there was a finding at first instance, affirmed on appeal, that a motor vehicle jack did not comply with s 65C of the Act by carrying a warning which conformed with a consumer product safety standard prescribed by the regulations made pursuant to s 65C(2). The learned primary Judge granted an injunction restraining the appellant, BMW, from supplying vehicles, vehicle jacks and vehicle jack instructions without complying with the prescribed consumer produce safety standard. In the judgment of the whole Full Court (Gray, Goldberg and Weinberg JJ) it was observed, at [36]-[39];
‘[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 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.
... ... ...
[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.’

34 It will readily be seen that the facts in BMW v ACCC were far removed from those of the present case. Their Honours’ remarks clearly went to the exercise of a discretion in formulating an injunction under s 80 in appropriate terms. They were not concerned with whether there was power to grant an injunction in the terms favoured by the primary Judge. Moreover, their Honours clearly implied that BMW’s contravention of s 65C had been solely in the past. By contrast, the evidence and the findings at first instance in the present case gave rise to a real fear that Foster would, unless restrained, commit further conduct of the same general kind. Hence, it was appropriate in the words used at the end of [36] which we have just quoted from BMW v ACCC, for the terms of the injunction to "be cast more widely, in order to catch conduct of any kind [sc. similar to the established contravention] threatened or intended."
35 In our view, the need, suggested by the authorities, for a nexus between the contravention of the Act which the Court has found and the terms of the restraint which it then decides to impose is a specific reflection of Lockhart J’s insistence that the power be exercised "judicially and sensibly." It goes to the appropriateness of the relief contemplated by the concluding words of s 80(1), not to the extent of the power to grant it. If the Court considers that a complete prohibition, whether permanently or for a specified period, on a respondent’s engaging in a particular field of commercial activity or industry is required to protect the public from conduct of the kind which constituted the contravention, s 80 is wide enough to support such a prohibition as a matter of power. This analysis of s 80 conforms, we consider, with that recently undertaken by Goldberg J in Australian Competition and Consumer Commission v Dermalogica Pty Ltd [2005] FCA 152; (2005) 215 ALR 482 at 504 [110].
36 Mr Taylor for Foster appeared tacitly to acknowledge that, unless he established the first premise of his argument, namely that the power conferred by s 80 is limited to preventing a repetition of the precise contravention alleged in the instant case, the present injunction would be defensible as cast in terms which it was open to the Court below to determine to be appropriate. At all events, it was not seriously argued on the appeal that the evidence at first instance and the findings of the learned primary Judge were incapable of supplying an appropriate nexus with the contentious injunction in the terms in which his Honour granted it. In those circumstances, it is not to the point that individual members of this appellate Court, if deciding the matter for themselves at first instance, might have formulated the injunction differently.
37 It should also be noted that no ground of appeal raised, and no argument was addressed to, the wording of the order in question, should the substantive question of power be decided (as we have) against the appellant.

Conclusion

38 For the reasons which we have endeavoured to explain, it was within the power conferred by s 80(1), for the Court to grant an injunction in terms of par 27. Although his Honour did not express his reasons for adopting the formulation of the injunction which had been proffered by the ACCC, we consider that the evidence relevant to Foster’s conduct and the findings made by the learned primary Judge in that respect afford a demonstrable nexus between the proven contravention of the Act and the terms of the injunction granted. In those circumstances, we are unable to infer that his Honour was affected by extraneous or irrelevant matters, or failed to take into account some material consideration. Accordingly, the appeal must be dismissed with costs.

I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Court.

Associate:



Dated: 10 March 2006

Counsel for the Appellant:	Mr M J Taylor
Solicitor for the Appellant:	Patrick Murphy
Counsel for the Respondent:	Mr S Couper QC with Ms M Brennan
Solicitor for the Respondent:	Australian Government Solicitor
Date of Hearing:	22 February 2006
Date of Judgment:	10 March 2006