Given v CV Holland (Holdings) Pty Ltd

29 FLR 212

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(Judgment by: Franki J)

Between: Given
And: CV Holland (Holdings) Pty Ltd

Court:

Judge:
Franki J

Subject References:
Trade Practices
Prosecution
False representation
Motor vehicle mileage
Particular quality
Representation
Mens rea
Onus of proof
Defences

Legislative References:
Trade Practices Act 1974 - s 4; s 53(a); s 79; s 84(2); s 85

Hearing date: 1 June 1977
Judgment date: 27 June 1977

Sydney

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Judgment by:
Franki J

The defendant was charged with an offence under s. 79 of the Trade Practices Act 1974. It was alleged that the defendant had falsely represented the mileage of a motor vehicle. T. entered into a hire-purchase agreement in respect of this vehicle.

When T. inspected the vehicle its odometer registered 23,700 miles. However, he subsequently learned from the previous owner of the vehicle that it had travelled approximately 69,000 miles.

No representation of any kind other than the appearance of the figures on the odometer was alleged. Nor was there any suggestion that any officer of the company had drawn the attention of any customer to the odometer reading.

Section 53(a) of the Act prohibits, inter alia, a false representation that goods are of a particular quality.

Held:

(1)

The mileage a particular car has travelled is a particular quality of that car.

(2)

Placing the car on display for sale with mileage shown on the odometer in a used-car dealer's yard, where the vehicle is placed with the intention that it will be inspected by prospective purchasers is, in the absence of any special circumstances, a representation by the used-car dealer that the car has travelled the number of miles shown on the odometer.

(3)

A representation which is in fact not correct comes within the words of the section even if it is not false to the knowledge of the person making the representation, and even if the person making the representation is a servant of the company of insufficient significance in the company for his knowledge, according to the principles of common law, to be deemed to be the knowledge of the company.

Sternberg v. The Queen (1953), 88 C.L.R. 646, and Davidson v. Watson (1954), 28 A.L.J. 63, followed.

(4)

The odometer reading was not in fact correct and the display of that reading in the circumstances in which it was displayed constituted a false representation that the vehicle was of a particular quality.

(5)

As to the submission on behalf of the defendant that mens rea was a necessary ingredient which the informant had to establish: (a) the presumption that mens rea is an essential ingredient in every offence is liable to be displaced either by the words of the particular statute creating the offence, or by the subject matter with which it deals; (b) notwithstanding the extraordinarily heavy burden which ss. 53(a) and 84(2) appear to place upon corporations and the magnitude of the penalty provided by s. 79, the legislature intended to displace the presumption that mens rea is a necessary ingredient.

Tesco Supermarkets Ltd. v. Nattrass, [1972] A.C. 153 , considered.

PROSECUTION for an offence under s. 79 of the Trade Practices Act 1974.

It was alleged that the defendant, in contravention of s. 53(a) of the Trade Practices Act 1974, falsely represented that a motor vehicle was of a particular quality in that it represented that a motor vehicle sold by it had travelled 23,700 miles when it fact it had travelled substantially in excess of that mileage.

The following judgment was delivered.

The defendant C. V. Holland (Holdings) Pty. Ltd. is charged with an offence under s. 79 of the Trade Practices Act 1974-1976 ("the Act") particularized in the summons as follows

" ... in that you did, in contravention of s. 53(a) of the said Act, in trade or commerce in connection with the supply of goods, falsely represent that the said goods were of a particular quality in that you on that day falsely represented to Trevor Gregory Thomas that a Holden Kingswood Sedan registered number EQM 689 supplied by you had travelled 23,700 miles when in fact the said sedan had travelled substantially in excess of that mileage".

On 1st December, 1975, the then Attorney-General consented to the institution of these proceedings.

The defendant, a company selling used cars at Rockdale, pleaded not guilty. A Mr. Thomas gave evidence, which I accept. He said that he went to the defendant's second-hand used-car yard at Rockdale on Sunday 15th December, 1974, to look for an automatic Holden car. He saw a purple automatic HQ Holden there and he examined it. He said that he observed that the odometer showed a mileage of 23,700, which he described as "a reasonably low mileage". The odometer is that part of a speedometer which shows the total number of miles travelled.

Mr. Thomas said that he had not previously purchased a car from the defendant but he had purchased the one he then owned from a man who had become an employee of the defendant. He said that he spoke to that employee on the telephone and arranged to meet him at the car yard. Mr. Thomas said that he went to the car yard on 18th December, 1974. After a conversation about the possibility of an N.R.M.A. inspection, the employee said:

"I don't think it is necessary. For $25 they don't do much anyway and the car seems okay".

Mr. Thomas said that he took the Holden for a test drive, and then arranged with the defendant to trade in the car he then owned, and a hire-purchase transaction was arranged for the difference in price. The defendant was described in the hire-purchase agreement as a "dealer".

On 27th January, 1975, whilst it was being driven, the rear wheel and axle came off and the car had to be towed to Mr. Thomas' home. On 31st January, 1975, trouble developed in the differential, and again the car had to be towed to Mr. Thomas' home.

Mr. Thomas said that he noticed that the front seats were covered with plastic seat covers and when he removed these he observed that the seats were frayed. Mr. Thomas arranged to drive the car to the defendant's premises where it was inspected by a mechanic employed by the defendant. Mr. Thomas said that he made some inquiries from an employee of the previous owner of the car about the number of miles the car had travelled, and thereafter Mr. Thomas had a conversation with Mr. Quigley, the managing director of the defendant company, about the number of miles the car had travelled.

Mr. Thomas said that he showed Mr. Quigley some documents that he had obtained from the previous owner of the car and Mr. Quigley said he would look into the matter. Mr. Thomas said that he and Mr. Quigley subsequently had a conversation in which Mr. Quigley said:

"The speedometer had been taken out and another one put back in its place".

Senior counsel for the informant alleged in opening that the defendant had turned the odometer back some 45,000 miles. In his final address senior counsel for the defendant invited me to accept the comment Mr. Thomas said that Mr. Quigley had made to him as an explanation of what took place. Mr. Thomas also said that after his second conversation with Mr. Quigley, the vehicle again stopped on the road and had to be towed to Mr. Thomas' home. Mr. Thomas thereafter complained to the consumer affairs and the trade practices authorities.

Mrs. Thomas, the wife of Mr. Thomas, said in evidence, that, when she inspected the car before Christmas 1974 in the defendant's used-car yard, the odometer showed about 23,000 miles.

The Holden which Mr. Thomas acquired from the defendant had been owned previously by a company. Mr. Birch, who had been senior sales representative for that company, gave evidence that it had acquired the car new in July 1972, and that he had been the regular driver of it until October 1974, when it was traded in. Mr. Birch said that the odometer had not exhibited any mechanical defect whilst he had been driving the car, and showed 69,012 miles when the car was traded in. Mr. Birch also said that he had inspected the car at the defendant's premises, after it had been traded in, and the odometer then recorded about 23,000 or 24,000 miles. I am satisfied that when traded in the odometer recorded 69,012 miles and that the vehicle had travelled approximately that distance.

An attempt was made by the informant to introduce evidence in relation to odometer readings on two other vehicles. It was argued for the informant that this evidence was relevant upon the principles that apply to the admission of similar facts. Proceedings under s. 79 are criminal proceedings and, I consider, that before a defendant can be convicted, the informant must prove each ingredient of the offence charged beyond reasonable doubt, according to rules which apply in any other criminal charge. I admitted certain evidence directed to establishing similar facts but I rejected other evidence and on the evidence admitted, I consider that no similar facts were established against the defendant.

I am satisfied that the mileage a particular car has travelled can fairly be described as a particular quality of that car. Senior counsel for the defendant referred me to a number of cases, particularly those dealing with the expression "merchantable quality", but I do not consider that any of these are of significant help in determining the meaning of the word "quality" in s. 53(a), because they are concerned with the meaning of the word "quality" in the phrase "merchantable quality". I have also given consideration to a number of the cases dealing with the words

" ... a word not having direct reference to the character or quality of the goods ... "

appearing in s. 24(1)(d) of the Trade Marks Act 1955-1973, and to the corresponding words in s. 16(1)(d) of the Trade Marks Act 1905-1948, and to the words in the corresponding section of the corresponding English Act. These cases do not afford any significant assistance, because of the combination of the word "quality" with the words "character or".

The words "of a particular quality" in s. 53(a) have to be read in their context. I do not consider it is possible to define the word "quality" even in that limited context. Its meaning must be ascertained in relation to the goods whose quality is being considered, and this is particularly clear when one looks at the definition of goods in s. 4 of the Act where goods are defined, unless the contrary intention appears, as including:

"(a)

Ships, aircraft and other vehicles;

(b)

animals, including fish;

(c)

minerals, trees and crops, whether on, under or attached to land or not; and

(d)

gas and electricity".

This case is concerned with a particular quality of a motor vehicle. The Shorter Oxford Dictionary gives the following meanings amongst others, for "quality" in relation to things:

"An attribute, property, special feature. The nature, kind or character (of something)".

In my opinion the number of miles a particular vehicle has travelled describes a particular attribute, or a special feature of that vehicle, and therefore describes a particular quality of that vehicle.

I pass now to consider whether the reading on the odometer of a used motor vehicle is a representation of the miles that vehicle has travelled when that vehicle is displayed by a dealer in its used-car yard. It was made clear by senior counsel for the informant that no verbal representation, or representation of any kind other than the mere appearance of the figures on the odometer was alleged. There was no suggestion that any officer of the company had drawn the attention of any customer to the odometer reading. However, the defendant had taken the step of placing the car on display for sale in its used-car yard and the odometer reading was there for prospective purchasers to observe. I do not consider that any statement or assertion by a servant or agent of the company, with an intention to convey information to a prospective purchaser is necessary in this case. I consider that the step of placing the car on display for sale with a mileage shown on the odometer in a used-car dealer's yard, where the vehicle is placed with the intention that it will be inspected by prospective purchasers is, in the absence of any special circumstances, a representation by the used-car dealer that the car has travelled the number of miles shown on the odometer. In Reg. v. Hammertons Cars Ltd. [1976] 1 W.L.R. 1243, the Court of Appeal considered s. 1(1)(b) of the United Kingdom Trade Descriptions Act 1968. That section draws a distinction between a person who in the course of trade or business

(a)

applies a false trade description to any goods and

(b)

supplies or offers to supply any goods to which a false trade description is applied.

I consider s. 53(a) of the Act does not draw any such distinction. In the last-mentioned case the court was considering whether a false odometer or mileometer reading was a false trade description and said

" ... in most cases of the kind now before the court the mileometer reading is on the motor car for the prospective purchaser to see and to take into consideration when deciding to buy".^[F1]

As to s. 1(1)(a) and (b) of the Trade Descriptions Act, see generally Cottee v. D. Seaton (Used Cars) Ltd. [1972] 1 W.L.R. 1408, at pp. 1414-1418.

The defendant also argued that if the Holden vehicle had travelled 169,000 miles, the odometer would have shown that it had travelled only 69,000 miles since after 99,999 miles the odometer automatically returns to 0. However the correct reading on the odometer when the vehicle was purchased was about 69,012 and so the reading of 23,700 was not correct, whether the vehicle had travelled 69,012 miles or 169,012 miles.

The next matter to consider is whether the words "falsely represent" in s. 53(a) of the Act are satisfied if the representation is not correct, or whether it must be known to be false by the person making the representation. It was also argued for the defendant, that, since it was a corporation, the representation must be one false to the knowledge of a person of sufficient seniority in the company to be able to bind the company.

I am satisfied that, if a representation is in fact not correct, it comes within the words of the section, even if it is not false to the knowledge of the person making the representation, and even if the person making the representation is a servant of the company of insufficient significance in the company for his knowledge, according to the ordinary principles of the common law, to be deemed to be the knowledge of the company.

There is nothing novel in equating "false" with "contrary to fact". For example, s. 234(d) of the Customs Act 1901-1973 provides that no person shall make any entry which is false in any particular. The section provides a penalty of two hundred dollars.

The High Court considered the section in Sternberg v. The Queen (1953) 88 C.L.R. 646, and in Davidson v. Watson (1954) 28 A.L.J. 63, and held that "false" there meant "contrary to fact". In the latter case the court said:

"For clearly, if the entry is objectively false in a particular the offence is committed and guilty knowledge or belief forms no ingredient in the offence".^[F2]

I am satisfied that the odometer reading was in fact not correct, and that the display of that reading in the circumstances in which it was displayed, constituted a false representation that the vehicle was of a particular quality.

I pass now to consider s. 85 of the Act. This section provides certain defences, s. 85(1) and (2), which reads as follows:

"(1)

Subject to sub-section (2), in a prosecution under this Part in relation to a contravention of a provision of Part V, it is a defence if the defendant establishes--

(a)

that the contravention in respect of which the proceeding was instituted was due to a mistake, to reliance on information supplied by another person, to the act or default of another person, to an accident or to some other cause beyond his control; and

(b)

that he took reasonable precautions and exercised due diligence to avoid the contravention.

"(2)

If a defence provided by sub-section (1) involves an allegation that a contravention was due to reliance on information supplied by another person or to the act or default of another person, the defendant is not, without leave of the Court, entitled to rely on that defence unless he has, not later than seven days before the day on which the hearing of the proceeding commences, served on the person by whom the proceeding was instituted a notice in writing giving such information that would identify or assist in the identification of the other person as was then in his possession."

The defendant argued that mens rea was a necessary ingredient which the informant had to establish and this argument was put on a number of grounds. In my opinion, it is very significant that it is not a defence to establish that a contravention of s. 53(a) was due to a mistake, or to reliance on information supplied by another person, or to the act or default of another person, or to an accident or to some other cause beyond the control of the defendant. It is also necessary for the defendant to establish that he took reasonable precautions and exercised due diligence to avoid the contravention. Section 84(2) provides:

"Any conduct engaged in on behalf of a body corporate by a director, agent or servant of the body corporate or by any other person at the direction or with the consent or agreement (whether express or implied) of a director, agent or servant of the body corporate shall be deemed, for the purposes of this Act, to have been engaged in also by the body corporate".

Section 4 defines "engage in conduct", unless the contrary intention appears, as including:

"do, refuse to do, or refrain from doing, any act, including the making of a contract or arrangement or the entering into an understanding, and 'engaging in conduct' has a corresponding meaning".

Section 84(2) was considered in Ballard v. Sperry-Rand (1975) 6 A.L.R. 696. In a joint judgment Spicer C.J., Dunphy and St. John JJ., said that the criminal responsibility of a corporation under the Trade Practices Act, is by virtue of s. 84(2), extended to include responsibility for the acts of a servant.^[F3] It is to be noted that the word servant in s. 84(2) is not limited to any particular grade of servant, and, in particular, it is not limited to those servants whose status and authority at common law would make their acts, in the matter under consideration, the acts of the company whose servants they were.

My attention was drawn to a number of cases dealing with mens rea and the defendant relied upon these as establishing that there is a presumption that mens rea, or knowledge of the wrongfulness of the act, is an essential ingredient of every offence. Amongst other cases, it relied on Lim Chin Aik v. The Queen [1963] A.C. 160 . However, in that case the Privy Council proceeded upon the basis that the application of the rule that mens rea is an essential ingredient in every offence is liable to be displaced either by the words of the particular statute creating the offence, or by the subject matter with which it deals, and both must be considered. I consider that the judgment of the House of Lords in Tesco Supermarkets Ltd. v. Nattrass [1972] A.C. 153 is particularly helpful. In this case the House of Lords was considering a prosecution based on the provisions of s. 11(2) and a defence based on the provisions of s. 24(1) of the United Kingdom Trade Descriptions Act 1968. A very important issue was whether the offence created by s. 11(2) was one of strict liability or whether "mens rea" was a necessary ingredient. Section 11(2) provided:

"If any person offering to supply any goods gives, by whatever means, any indication likely to be taken as an indication that the goods are being offered at a price less than that at which they are in fact being offered he shall, subject to the provisions of this Act, be guilty of an offence".

Section 24(1) provided:

"In any proceedings for an offence under this Act it shall, subject to subsection (2) of this section, be a defence for the person charged to prove-

(a)

that the commission of the offence was due to a mistake or to reliance on information supplied to him or to the act or default of another person, an accident or some other cause beyond his control; and

(b)

that he took all reasonable precautions and exercised all due diligence to avoid the commission of such an offence by himself or any person under his control."