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Federal Court judgments

Federal Court judgments

By Dan Star QC

Consumer Law Environment Judgment Practice & Procedure 

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Consumer law

Construction of disclosure obligation in the Franchising Code – civil penalties

In Ultra Tune Australia Pty Ltd v Australian Competition and Consumer Commission [2019] FCAFC 164 (20 September 2019) the appellant (Ultra Tune) appealed against the trial judge’s decision that it contravened a disclosure obligation owed to franchisees in cl 15(1) of the Franchising Code (Schedule 1 to the Competition and Consumer (Industry Codes – Franchising) Regulation 2014 (Cth)) and the imposition of penalties for that and other admitted contraventions of the disclosure obligations in the Franchising Code. Ultra Tune is a franchisor for motor vehicle engine repair and maintenance services provided by a national network of approximately 200 franchises. It admitted various contraventions of the Franchising Code but disputed other claims of contraventions pressed by the respondent (ACCC). 

The disputed contraventions gave rise to a question of construction as to the proper meaning of the expression “sufficient detail” in cl 15(1)(b) of the Franchising Code (at [19]). The Full Court dismissed Ultra Tune’s appeal on the contested contraventions and upheld the trial judge’s construction (at [46]-[48]). Further, Allsop CJ and Jagot and Abraham JJ said at [47]: “The facts of the particular case will determine the issue of sufficiency which lends support to the primary judge’s observation at [104], that a franchisor would be well advised to err on the side of candour”.  

However, the appeal against penalty was allowed and the Full Court reduced the trial judge’s penalty of $2,604,000 to $2,014,000. The Full Court disagreed with the trial judge that the disclosure contraventions were in or towards the worst category of case (at [60]). Ultra Tune’s contravening conduct was characterised and assessed by the Full Court as “egregious inadvertence” (at [59] and [70]-[72]).

Consumer law, torts and trade marks  

Whether conduct in the course of an industrial dispute (i) infringed trade mark, (ii) was misleading or deceptive or (iii) injurious falsehood – “in trade or commerce” requirement for misleading or deceptive conduct

In National Roads and Motorists’ Association Limited v Construction, Forestry, Maritime, Mining and Energy Union [2019] FCA 1491 (11 September 2019) the applicant (NRMA) brought a proceeding alleging that the respondent (MUA) engaged in trade mark infringements, misleading or deceptive conduct and committed the tort of injurious falsehood. The Court dismissed the NRMA’s case on all bases. The impugned conduct occurred in an industrial dispute relating to the wages and conditions of employees of a ferry business owned by the NRMA. The NRMA’s claims included that, as part of the industrial dispute, the MUA used the NRMA’s word and device marks, and made false or misleading statements which were detrimental to, and designed to injure the NRMA and its brand. 

In relation to the claims of misleading or deceptive conduct, the central issue was whether the conduct was “in trade or commerce”. The Court considered and applied the principles from the seminal High Court case of Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 (at [132]). The Court also discussed the body of case law which indicates that it is not the intention of ss18 and 29 of the Australian Consumer Law (or its predecessor) to govern public or political debate (at [133]-[149]). It was held that the relevant conduct of the MUA was not conduct “in trade or commerce” (at [154]). Griffiths J explained at [135]: “It was properly acknowledged by [Counsel for the NRMA] that there is no precedent which establishes that the conduct of a trade union or its members in campaigning for improved wages or conditions of employment constitutes conduct ‘in trade or commerce’. Conduct in the course of an existing employment relationship is unlikely to constitute conduct ‘in trade or commerce’ even where it is the conduct of the parties to the relationship itself . . . Similarly, I consider that statements by an employer to its employees in the context of a proposed enterprise agreement will not generally constitute conduct ‘in trade or commerce’. By analogy, representations made by a trade union in the context of an industrial campaign in relation to the existing conditions of employment of employees will generally fall outside conduct that is ‘in trade or commerce’”. 

The claim based on the tort of injurious falsehood failed because the relevant statements and representations were not made maliciously and because the NRMA did not establish actual damage in the relevant legal sense (at [191]-[219]).

Evidence and industrial law 

Accessorial liability – inferences and the rule in Blatch v Archer

In Fair Work Ombudsman v Hu [2019] FCAFC 133 (16 August 2019) the Full Court dismissed the appellant’s (FWO) appeal. The underlying case concerned whether workers who picked mushrooms were “casual employees” and were not paid in accordance with the relevant award. One respondent admitted contravening s45 of the Fair Work Act 2009 (Cth) (FW Act), which provides “A person must not contravene a term of a modern award”. The FWO appealed the trial judge’s decision that other respondents were not “knowingly involved” and therefore a person involved in a contravention within the meaning of s550 of the FW Act. The majority concurred with the trial judge’s refusal to infer that the relevant person lacked certain knowledge (namely, the trial judge could not infer that Mr Marland knew that the employees were casual employees) (at [33]-[48]).

Certain potentially relevant witnesses (including Mr Marland) were not called to give evidence by the respondents. An issue raised in the appeal issue was whether the trial judge erred in applying the principles in Jones v Dunkel too narrowly and erred in not applying the approach in Blatch v Archer (1774) 1 Cowp 63, (1774) 98 ER 969. The former case is more well-known than the latter. The rule in Blatch v Archer sought to be invoked by the FWO was Lord Mansfield’s statement that:

“. . . [i]t is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted”.

The majority held that on the facts of the present case, it lead to no different result whether recourse is had to the observations of Kitto J in Jones v Dunkel or those of Lord Mansfield in Blatch v Archer (at [55]). Flick and Reeves JJ explained at [56]: “Although on the facts of the present case considerable reservation may be expressed as to whether an adverse inference was available to be drawn against Mr Marland, by reason of him being in possession of sufficient information to arouse a not inconsiderable suspicion as to the employees being casual employees, and thus a ‘basis for concluding‘ (cf. Hellicar [2012] HCA 17 at [168], (2012) 247 CLR [at 413]) that he in fact knew that the employees were casual employees, neither Blatch v Archer nor Jones v Dunkel can be relied upon to ‘convert conjecture and suspicion into inference’: cf. Council of the Law Society of the ACT [2015] ACTCA 20 at [56]. The more so is this the case in the present appeal in circumstances where there was no comparable basis for imposing upon the Respondents the same expectation as to ‘fairness’ in the conduct of the litigation as was assumed (but not decided) to be imposed upon the Australian Securities and Investments Commission in Hellicar: [2012] HCA 17 at [147] and [152], (2012) 247 CLR at 406 to 407”.

The dissenting judgment of Bromberg J principally concerned the proper construction of cl 15 of the Horticultural Award 2010. Flick and Reeves JJ disagreed with Bromberg J’s approach and held that recourse to the industrial context out of which cl 15 emerged cannot be relied on as a means of construing cl 15 contrary to the clear terms employed (at [30]).

Administrative law and environment law

Appeal from AAT – the precautionary principle

In State of Queensland (Department of Agriculture and Fisheries) v Humane Society International (Australia) Inc [2019] FCAFC 163 (18 September 2019) the Full Court dismissed an appeal on a question of law from a decision of the Administrative Appeals Tribunal (AAT). The primary decision under review by the AAT was the decision of the Great Barrier Reef Marine Park Authority to grant two permissions under the Great Barrier Reef Marine Park Regulations 1983 (Cth) to the applicant to use and enter the Marine Park (i) to conduct a program to take animals or plants that pose a threat to human life or safety, being the Queensland Shark Control Program; and (ii) to conduct a research program comprising certain specified studies. The AAT varied the decision under review and the appellant challenged the AAT’s decision on various administrative grounds, all of which were dismissed by the Full Court.

Among other matters, there was consideration of the “precautionary principle”. The precautionary principle is one of the “principles of ecologically sustainable use” in s3AB of the Great Barrier Reef Marine Park Act 1975 (Cth). Section 3(1) of that Act defines the “precautionary principle” to mean “the principle that lack of full scientific certainty should not be used as a reason for postponing a measure to prevent degradation of the environment where there are threats of serious or irreversible environmental damage”. The precautionary principle is also defined in the same terms in s391(2) of the Environment Protection and Biodiversity Conservation Act 1999 (Cth). Allsop CJ and Greenwood and Robertson JJ rejected the ground of appeal that the AAT misunderstood or erred in applying the precautionary principle (at [119]-[128]). ♦

Dan Star QC is a Senior Counsel at the Victorian Bar, ph (03) 9225 8757 or email danstar@vicbar.com.au

The full version of these judgments can be found at www.austlii.edu.au. Numbers in square brackets refer to paragraph numbers in the judgment.


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