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Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (Corrigendum dated 15 November 2006 &amp [2006] FCA 2010; 24 November 2006) [2006] FCA 1427 (3 November 2006)

Last Updated: 27 November 2006

FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2006] FCA 1427

CORRIGENDUM

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v DATALINE.NET.AU PTY LTD (ACN 075 400 529), AUSTRALIS INTERNET PTY LTD (ACN 090 539 432), WORLD PUBLISHING SYSTEMS PTY LTD (ACN 075 141 007), JOHN LYNDEN RUSSELL, NEALE FRANCIS BANKS, JEFFERSON LITCHFIELD AND SARA MARY MOORE
QUD 277 OF 2001

KIEFEL J
3 NOVEMBER 2006 (CORRIGENDUM 15 NOVEMBER 2006 & 24 NOVEMBER 2006)
BRISBANE

CORRIGENDUM

1. In the Corrigendum dated 15 November 2006 in the Reason for Judgment of the Honourable Justice Kiefel given on 3 November 2006 at Corrigendum point 21 delete the words ‘pars 116-117’ and replace with the words ‘pars 116-118’.

Associate
24 November 2006

FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2006] FCA 1427

CORRIGENDUM

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v DATALINE.NET.AU PTY LTD (ACN 075 400 529), AUSTRALIS INTERNET PTY LTD (ACN 090 539 432), WORLD PUBLISHING SYSTEMS PTY LTD (ACN 075 141 007), JOHN LYNDEN RUSSELL, NEALE FRANCIS BANKS, JEFFERSON LITCHFIELD AND SARA MARY MOORE
QUD 277 OF 2001

KIEFEL J
3 NOVEMBER 2006 (CORRIGENDUM 15 NOVEMBER 2006)
BRISBANE

CORRIGENDUM

1. In the cases cited on the title pages the following cases should be as follows: Chanel Limited v Ayad [2005] FCA 820 Considered; Faithful v Woodley (1889) 43 Ch D 287 Considered; Street v Crump (1883) 25 Ch D 68 Considered and Wallersteiner v Moir [1974] 1 WLR 991 Referred to.
2. In the Orders of the Honourable Justice Kiefel given on 3 November 2006 at Order 9 (h) delete the word ‘representing’ and replace with the word ‘Representing’.
3. In the Orders of the Honourable Justice Kiefel given on 3 November 2006 at Order 9 (h) delete the full stop and replace with a semi-colon.
4. In the Orders of the Honourable Justice Kiefel given on 3 November 2006 at Order 16 add ‘to’ to read ‘with respect to their’.
5. In the Reasons for Judgment of the Honourable Justice Kiefel given on 3 November 2006 at page 3, paragraph 6, line 1 delete the word ‘then’ and replace with ‘than’.
6. In the Reasons for Judgment of the Honourable Justice Kiefel given on 3 November 2006 at page 9, paragraph 22, line 4 delete the word ‘some’.
7. In the Reasons for Judgment of the Honourable Justice Kiefel given on 3 November 2006 at page 13, paragraph 32 delete the word ‘pars’ and replace with ‘paragraphs’.
8. In the Reasons for Judgment of the Honourable Justice Kiefel given on 3 November 2006 at page 14, paragraph 35, line 2 delete the word ‘order’ and replace with ‘Order’.
9. In the Reasons for Judgment of the Honourable Justice Kiefel given on 3 November 2006 at page 15, paragraph 36, line 4 add the words ‘(‘ASC v Macleod’)’ to read ‘p 312 (‘ASC v Macleod’)’.
10. In the Reasons for Judgment of the Honourable Justice Kiefel given on 3 November 2006 at page 15, paragraph 37 delete the word ‘(No.1)’ and add ‘(‘Wallersteiner v Moir’)’ so that the case reads ‘Wallersteiner v Moir [1974] 1 WLR 991 (‘Wallersteiner v Moir’)’.
11. In the Reasons for Judgment of the Honourable Justice Kiefel given on 3 November 2006 at page 18, paragraph 45, line 3 delete the word ‘Limited’ and replace with ‘Ltd’.
12. In the Reasons for Judgment of the Honourable Justice Kiefel given on 3 November 2006 at page 19, paragraph 46 delete ‘1516’ and replace with ‘151’.
13. In the Reasons for Judgment of the Honourable Justice Kiefel given on 3 November 2006 at page 20, paragraph 48 delete the word ‘submitts’ and replace with ‘submits’ and delete the word ‘courts’ and replace with ‘Courts’ and delete the word ‘Booth’ and replace with ‘Booth’.
14. In the Reasons for Judgment of the Honourable Justice Kiefel given on 3 November 2006 at page 21, paragraph 51 replace the word ‘being’ with the word ‘been’.
15. In the Reasons for Judgment of the Honourable Justice Kiefel given on 3 November 2006 at page 26, paragraph quote 64 replace the word ‘Mammum’ with the word ‘Mannum’ and add a comma after the word ‘area’.
16. In the Reasons for Judgment of the Honourable Justice Kiefel given on 3 November 2006 at page 31, insert a line between paragraphs (b) and (c).
17. In the Reasons for Judgment of the Honourable Justice Kiefel given on 3 November 2006 at page 33, paragraph 84, line 1 delete the comma beside the word Systems.
18. In the Reasons for Judgment of the Honourable Justice Kiefel given on 3 November 2006 at page 33, paragraph 86 delete the word ‘Veridos’ and replace with ‘Veridas’.
19. In the Reasons for Judgment of the Honourable Justice Kiefel given on 3 November 2006 at page 35, paragraph 90, line 13 add the word ‘he’ so that the line reads ‘Mr Litchfield is that he be restrained from engaging in all of the conduct which Dataline’.
20. In the Reasons for Judgment of the Honourable Justice Kiefel given on 3 November 2006 at page 36, paragraph 92 delete the words ‘(‘BMW v ACCC’) at p 465 par 35 a’ and replace with ‘at p 465 par 36 (‘BMW v ACCC’) the’.
21. In the Reasons for Judgment of the Honourable Justice Kiefel given on 3 November 2006 at page 40, paragraph 107 after FCA 1455 at the words ‘(‘ACCC v Monza Imports’)’ and after the words pars 116-117 add the words ‘(‘ACCC v Leahy (No.3)’)’.
22. In the Reasons for Judgment of the Honourable Justice Kiefel given on 3 November 2006 at page 42, paragraph 110 (a) delete the words ‘the nature’ and replace with ‘The nature’.
23. In the Reasons for Judgment of the Honourable Justice Kiefel given on 3 November 2006 at page 42, paragraph 110 (b) delete the word ‘any’ and replace with ‘Any’.
24. In the Reasons for Judgment of the Honourable Justice Kiefel given on 3 November 2006 at page 42, paragraph 110 (c) delete the word ‘the’ and replace with ‘The’.
25. In the Reasons for Judgment of the Honourable Justice Kiefel given on 3 November 2006 at page 42, paragraph 110 (d) delete the word ‘whether’ and replace with ‘Whether’.
26. In the Reasons for Judgement of the Honourable Justice Kiefel given on 3 November 2006 at page 44, paragraph 116 delete the word ‘consumers’ and replace with ‘Consumers’.

Associate
15 November 2006

FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2006] FCA 1427

PRACTICE & PROCEDURE - operation of O 35 r 2 (2)(c) - whether operates to deem statement of claim to be admitted - whether additional evidence admissible - whether additional relief possible - meaning of ‘entitlement’ to orders - application of rule to discretionary relief, declarations, injunctions and pecuniary penalties.

DECLARATORY RELIEF - whether should be made on deemed admissions - whether conveys impression of Court finding - whether explanatory statement necessary - form of declarations - prolixity - order to contain the gist of the contravention.

INJUNCTIONS - future conduct - whether utility where no further connection to the business or similar business in which contravening conduct occurred - whether need be limited to the contravening conduct - where the purpose is use in any further contempt proceedings - whether should be made on deemed admissions - whether to require party to cease litigation against a third party - adverse publicity orders - appropriateness of requiring persons to attend trade practice compliance seminars not convened by contravening corporation.

PENALTIES - factors relevant - relevance of other contravening conduct to the assessment of penalty - relevance of the financial position of the person subject to penalty - where financial position result of litigation.

UNCONSCIONABLE CONDUCT - what amounts to - whether conduct viewed as cumulative.

TRADE PRACTICES - s 83 - use of findings of fact - whether order to be made where deemed facts.

RESALE PRICE MAINTENANCE - penalty.

COSTS - order for fixed sum - factors relevant - impecuniosity of respondents.



WORDS - PHRASES - ‘entitlement’



Federal Court Amendment Rules 2004 (No. 4); 2004 (No. 281)
Federal Court of Australia Act 1976 (Cth) s 21
Trade Practices Amendment Act (No. 1) 2001 (Cth)
Trade Practices Act 1974 (Cth) ss 45, 48, 51AA, 51AC, 52, 53, 55, 55A, 60, 76, 76(1), 80, 83, 86C, 86D

Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433 Referred to
Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2) [2002] FCA 559; (2002) 190 ALR 169 Cited
Australian Competition and Consumer Commission v Australian Communications Network Pty Ltd [2005] FCA 988 Considered
Australian Competition and Consumer Commission v Danoz Direct Pty Ltd [2003] FCA 881; (2003) 60 IPR 296 Referred to
Australian Competition and Consumer Commission v Leahy (No 3) (2005) 215 ALR 301; (2005) FCA 265 Considered
Australian Competition and Consumer Commission v Maritime Union of Australia [2001] (114 FCR 372); FCA 1549 Applied
Australian Competition and Consumer Commission v Monza Imports Pty Ltd (2001) ATOR 41 – 843; at 43, 440; FCA 1455 Considered
Australian Competition and Consumer Commission v NW Frozen Foods Pty Ltd (1996) ATPR 41–515 at 42, 444 – 42, 445 Applied
Australian Competition and Consumer Commission v Z-Tech Computers Pty Ltd (1997) 78 FCR 197 Referred to
Australian Competition and Consumer Commission v 1Cellnet LLC [2005] FCA 856 Cited
Australian Securities Commission v Macleod (1994) 54 FCR 309 Cited
Beach Petroleum NL v Johnson (No.2) (1995) 57 FCR 119 Applied
BMW Australis Pty Ltd v The Australia Competition and Consumer Commission [2004] FCAFC 167; (2004) 207 ALR 452 Applied
Chanel Limited v Ayal [2005] FCA 820 Considered
Charles v Shepherd [1892] 2 QB 622 Cited
Faithful v Woodley (1889) 43 CLD 287 Considered
GPI Leisure Corp Ltd v Yuill, unreported decision Cited
Hadid v Lenfest Communications Inc [2000] FCA 628 Referred to
ICI Australia Operations Pty Limited v Trade Practices Commission [1992] FCA 474; (1992) 38 FCR 248 Considered
Luna Park Sydney Pty Ltd v Bose [2006] FCA 94 Referred to
Macquarie Bank Ltd v Seagle (2005) 146 FCA 400 Cited
Metzger v Department of Health and Social Security [1977] 3 All ER 444 Cited
New Brunswick Railway Co v British and French Trust Corporation Limited (1939) AC 1 Cited
Norman v Butler (1894) 10 WN (NSW) 151 Cited
Patten v Burke Publishing Co Ltd [1991] 1 WLR 541 Referred to
Phonographic Performance Ltd v Maitra [1988] 2 All ER 638 Considered
Roberts v Booth (1893) 1 Ch 52 Considered
Rural Press Ltd v Australia Competition and Consumer Commission [2003] HCA 75; (2003) 216 CLR 53 Applied
Smith v Buchan (1888) 58 LT 710 Referred to
Street v Crump (1884) 25 ChD 68 Considered
Sung Li Holdings Ltd v Medicom Finance Pty Ltd (1995) 13 ACLC 955 Referred to
Trade Practices Commission v CSR Ltd (1991) ATPR 41 – 076 Applied
Wallersteiner v Moir [1974] 1 WLR 911 Referred to
Warramunda Village Inc v Pryde [2001] FCA 61; (2001) 105 FCR 437 Cited
Watson Specialised Tooling Pty Ltd v Stevens [1991] 1 Qd R 85 Cited
Wiedenhofer v The Commonwealth [1970] HCA 54; (1972) 122 CLR 172 Cited
Young v Thomas (1892) 2 Ch 134 Referred to



Australian Law Reform Commission Report No. 89, January 2000 ‘MANAGING JUSTICE – A Review of the Civil Justice System’ Cited
White Book Service 2003 to the English Civil Procedure Rules 1998 (40.20.2) Cited
Zamir and Woolfe in ‘The Declaratory Judgment,’ 2^nd edn Sweet and Maxwell, 1993 Considered





























AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v DATALINE.NET.AU PTY LTD (ACN 075 400 529), AUSTRALIS INTERNET PTY LTD (ACN 090 539 432), WORLD PUBLISHING SYSTEMS PTY LTD (ACN 075 141 007), JOHN LYNDEN RUSSELL, NEALE FRANCIS BANKS, JEFFERSON LITCHFIELD AND SARA MARY MOORE
QUD 277 OF 2001

KIEFEL J
3 NOVEMBER 2006
BRISBANE

THE COURT ORDERS THAT:

1. The applicant have leave to proceed against the first respondent.

UPON THE ADMISSIONS WHICH THE FIRST, FOURTH, FIFTH, AND SIXTH RESPONDENTS ARE TAKEN TO HAVE MADE, CONSEQUENT UPON THEIR NON-COMPLIANCE WITH ORDERS OF THE COURT, IT IS DECLARED THAT:

2. The first respondent engaged in unconscionable conduct, in contravention of s 51AC of the Trade Practices Act 1974 (Cth), by preventing or dissuading its customers from obtaining independent advice with respect to terms of its contract for the supply of internet-related services where those terms had the potential for adverse consequences for the customer, such conduct being a misuse of its bargaining power.
3. The first respondent, in connection with the supply of internet-related services, engaged in conduct that was unconscionable, in contravention of s 51AC of the Trade Practices Act 1974 (Cth), by threatening to cease the supply of internet-related services to customers if the customer did not enter into a further agreement with the first respondent or carry on its business with its customers in the manner and at a level of performance required by the first respondent, when the first respondent had no entitlement to make such demands, such conduct being a misuse of its bargaining power.
4. The fourth respondent was knowingly concerned in the contravention referred to in Order 2.
5. The first respondent, in connection with the supply of internet-related services, engaged in conduct that was unconscionable, in contravention of s 51AC of the Trade Practices Act 1974 (Cth), by unreasonably refusing to a request from the EDIT Group to approve the assignment of its business to a third party and at the same time seeking the transfer the EDIT Group’s contracts with its customers to the second respondent, such conduct being a misuse of its bargaining power.
6. The fourth respondent was knowingly concerned in the contravention referred to in Order 4.
7. The first respondent, in connection with the supply of internet-related services, engaged in conduct that was unconscionable, in contravention of s 51AC of the Trade Practices Act 1974 (Cth), by wrongfully ceasing the supply of services to its customer HTE and then offering to acquire its contracts with its customers, such conduct being a misuse of its bargaining power.
8. The fourth respondent was knowingly concerned in the contravention referred to in Order 6.
9. The first respondent contravened s 52 of the Trade Practices Act 1974 (Cth) by:

(a) Representing to customers that it would provide ongoing training in the use of its services and software and provide skilled technical support at all times when it did not have the intention of doing so;

(b) Representing to customers that complaints about the efficiency or quality of its internet services were insignificant, caused by matters beyond its control, or did not exist at all, when the complaints were well founded;

(c) Representing to customers that it was entitled to make charges with respect to their customers’ use of the internet-related services it provided, when they had ceased to access the services;

(d) Representing to customers that they had accessed a greater amount of data then they in fact had;

(e) Representing to customers that it was entitled to make charges against their credit card accounts when it had no authority to do so and no contractual basis for doing so;

(f) Representing to customers that they could purchase unlimited access to its services, when it had limited the ability of customers to access those services;

(g) Representing to customers of its customers, that the reason they were being directed from their provider’s website was because there was a business relationship between it and their provider which entitled it to do so, when that was not the case; and

(h) representing to customers and to the EDIT Group that the second respondent would pay commission if they entered into a partnership agreement with the second respondent and the first respondent would procure the second respondent to pay commission, when there was no intention to do so.

such representations being likely to mislead or deceive the persons to whom they were addressed.
10. The fourth respondent was knowingly concerned in the contraventions referred to in Order 9.
11. The fifth respondent was knowingly concerned in the contravention referred to in Order 9 (a).
12. The sixth respondent was knowingly concerned in the contraventions referred to in Order 9 (c) and (d).

UPON THE ADMISSIONS WHICH THE SECOND, FOURTH AND SEVENTH RESPONDENTS ARE TAKEN TO HAVE MADE, CONSEQUENT UPON THEIR NON-COMPLIANCE WITH ORDERS OF THE COURT, IT IS DECLARED THAT:

13. The second respondent contravened s 52 of the Trade Practices Act 1974 (Cth) by:

(a) Representing to the public that it had the approval of the Australian Competition and Consumer Commission to the terms and conditions of its contracts for the supply of internet-related services, when that was not the case;

(b) Representing to customers that it was entitled to make charges against their credit card accounts when it had no authority to do so and no contractual basis for doing so;

(c) Representing to customers that they could purchase unlimited access to its services, when it had limited the ability of customers to access those services; and

(d) Representing to customers and to the EDIT Group that it would pay commission if they entered into a partnership agreement with it, when it had no intention of doing so;

such representations being likely to mislead or deceive the persons to whom they were addressed.
14. The fourth respondent was knowingly concerned in the contraventions referred to in Order 13.
15. The seventh respondent was knowingly concerned in the contravention of Order 13 (b).

UPON THE ADMISSIONS WHICH THE THIRD, FOURTH AND SEVENTH RESPONDENTS ARE TAKEN TO HAVE MADE, CONSEQUENT UPON THEIR NON-COMPLIANCE WITH ORDERS OF THE COURT, IT IS DECLARED THAT:

16. The third respondent contravened s 52 of the Trade Practices Act 1974 (Cth) by representing to customers that it was entitled to make charges with respect their customers’ use of internet-related services it provided, when they had ceased to access the services.
17. The fourth respondent was knowingly concerned in the contravention referred to in Order 16.
18. The seventh respondent was knowingly concerned in the contravention referred to in Order 16.

AND THE COURT ORDERS THAT:

19. The fourth respondent be restrained from requiring or encouraging retail providers of internet-related services not to sell the services to consumers at a price less than the price specified by any business with which he is connected.
20. Pursuant to s 76 of the Trade Practices Act 1974 (Cth) the fourth respondent pay to the Commonwealth within 30 days a pecuniary penalty of $5000 in respect of his involvement in the contraventions by the first and second respondents of resale price maintenance on 4 December 1999, in contravention of s 48 of the Trade Practices Act 1974 (Cth).
21. The first, second and fourth respondents pay the applicant’s costs of these proceedings fixed in the sum of $521 410.

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

REASONS FOR JUDGMENT

1 In this matter the applicant (‘the ACCC’) seeks declarations and injunctions, pecuniary penalties and other orders. The orders are sought under O 35A of the Federal Court Rules (‘the FCR’) which provides for orders on judgments where a party is in default. Order 35A r 3(2)(c) in particular provides that an applicant might obtain judgment against a respondent in default for the relief that the applicant ‘appears entitled to on the statement of claim’ and which the Court is satisfied that it has the power to grant. Questions are raised as to the operation of that rule and to its application where discretionary relief is sought. Issues are also raised about the form of the relief sought, particularly so far as concerns the declaratory and injunctive orders.

THE BACKGROUND TO THE ORDERS SOUGHT

2 These proceedings were commenced by the ACCC in 2001. They principally concern the conduct of the first respondent (‘Dataline’), the second respondent (‘Australis’) and the fourth respondent, Mr Russell. Dataline was a wholesale internet provider to virtual internet service providers (‘VISPs’) who in turn sold services to consumers. Australis was such a provider. Both companies were effectively controlled by Mr Russell. The other personal respondents were employees, either of Dataline or Australis.
3 Progress in the proceedings was slow. The corporate respondents, Mr Russell, and the seventh respondent, Ms Moore, filed a defence in May 2002. The matter came before the Court on a number of occasions on the issue of discovery, which was complicated by the fact that most of the information sought by the ACCC was to be found on the hard drives of Dataline’s computers, some of which had been seized under an Anton Piller Order and on CD Roms kept by it. A series of orders were made against those respondents requiring particular discovery. The orders were not complied with.
4 On 10 September 2003 the ACCC applied for further orders for discovery combined with a self-executing order, that in the event of non-compliance the defence be struck out. In the event this occurred, the matter was to be listed for trial on affidavits. The rule under which the ACCC then proceeded was O 10 r 7(1)(b) of the FCR which provided that, where a respondent fails to comply with an order of the Court directing them to take a step in the proceedings, an applicant could seek an order or judgment against that party.
5 On 25 September 2003 I made orders in accordance with the motion. The respondents did not comply with the orders, but there was some dispute about this. On 11 October 2004 the ACCC applied for an order declaring that the defence of those respondents stood as struck out by virtue of the order of 15 September 2003 and that judgment be given against the respondents pursuant to O 35A r 3(2)(c) of the FCR which had come into operation. Following a series of hearings I made an order recognising that the defences had been struck out in consequence of the respondent’s non-compliance and adjourned the hearing of the application for judgment (see [2005] FCA 153). It is that application with which I am presently concerned. Orders are also now sought against the fifth respondent, Mr Banks, and the sixth respondent, Mr Litchfield. Mr Banks is in default, having not filed an appearance or a defence. Mr Litchfield has not filed a defence. They do not oppose the orders sought against them. Dataline and Australis are now in liquidation. The ACCC has been granted leave to proceed against Australis and seeks an order for leave to proceed against Dataline. Neither liquidator opposes any of the orders sought and does not wish to be heard upon the matter.

THE APPLICATION AND STATEMENT OF CLAIM

6 The declaratory and injunctive orders now sought are far more extensive then those the subject of the application filed at the commencement of these proceedings and range over some 22 pages. The orders sought in the application initiating the proceedings were declarations that Dataline and Australis had engaged in conduct in contravention of a number of provisions of the Trade Practices Act 1974 (Cth) (‘the TPA’). The declarations sought against Dataline were in a form which identified contraventions of ss 51AA or 51AC; 52; 53; 55; 55A; 60; 48 and 45 by conduct on the part of the respondents but they did not identify what that conduct was.
7 A fewer number of declarations was sought against the third respondent, World Publishing Systems Pty Ltd (‘World Publishing Systems’). The declarations sought against the other respondents were that they had aided, abetted, counselled and procured, or were knowingly concerned in, or a party to, the contraventions of the corporate respondents. Pecuniary penalties were sought against Dataline, Australis, Mr Russell and Mr Litchfield. Injunctions were sought against each respondent to restrain the conduct referred to in the declarations.
8 The statement of claim is 52 pages in length. It explains that Mr Russell was a Director and Manager of the companies Dataline, WPS Pty Ltd, World Publishing Systems and Australis. Dataline was a wholly owned subsidiary of World Publishing Systems which in turn was a subsidiary of WPS. Australis was owned by WPS. The respondents, Mr Banks, Mr Litchfield and Ms Moore, were employees of Dataline or Australis and Ms Moore was a Secretary and Director of Australis at certain times relevant to the proceedings. Dataline carried on the business of selling internet-related services. This included:

(a) The sale by it of wholesale internet providers services (‘the Services’) to VISPs for resale by the VISPs to their customers (‘the Consumers’);
(b) The supply by it to VISPs of the right to use a certain-line computer program (Pandora) in the administration of the VISPs business of re-selling the services to the VISP’s Consumers (the ‘VISP’s Business’); and
(c) The supply of technical support services to VISPs and their Consumers to assist them in the use of the Services and the use of Pandora.

9 The Services comprised internet access services, electronic mail services, electronic commerce services and web-hosting services. Dataline operated a domain name service computer which associated each VISP’s domain name with a particular dataline service computer. That computer contained information about the access by Consumers to the VISP’s websites, which they designed, developed and maintained themselves, and access to electronic mail. The VISPs supplied to their Consumers the details necessary to enable the Consumer to establish a telephone connection between the Consumer’s computer and Dataline’s network. This involved the use of the Pandora program. The program was written by Mr Russell and others, including Mr Litchfield, for Dataline and incorporated a database which recorded details of the Consumer’s credit card information, the terms upon which they were to be charged and the amount of time they spent using the Services. It facilitated the connection or disconnection of Consumers to the Services and the invoicing of them. Dataline’s network was connected to other upstream elements of the internet using Telstra. The Consumer’s telephone connection to Dataline’s network was subject to published ‘Session Limits’ whereby the connection was terminated after a specified period of time.
10 The statement of claim gives as examples of VISPs seven businesses which had contracts with Dataline. The VISPs’ contracts provided that Dataline would provide Services to the VISP in question for two years; that the VISP would use Pandora exclusively and accurately for the administration of the VISP’s business (‘the Pandora term’), including the VISPs’ Consumer accounts; that the VISP would pay fees each month – a network fee based upon a deemed minimum number of Consumers connected in any given month; an amount for each quantity of data provided using the Services purchased by the VISP and resold to Consumers; and a fixed fee for technical support. Fees were calculated by reference to Pandora. It was provided that, should the VISP fail to pay the fees on time, attempt to move or re-delegate the VISP domain name, cease to trade, become insolvent, or breach the VISP contract, Dataline was authorised by the VISP to take control of the VISP’s Consumers (‘the default term’).
11 As an alternative to this system of fees VISPs could acquire a quantity of Services, in advance, for fixed prices which enabled them to resell the Services to Consumers by way of ‘Plans’ which provided a specified duration and quantity of access to the Services.
12 The statement of claim alleged that Dataline had the power to intercept and deal with electronic mail to and from Consumers and VISPs, to communicate with VISPs’ Consumers, to modify the VISP websites, to access and modify the data entered into Pandora by the VISPs, including Consumer credit card information and could prevent VISPs and their Consumers from using the Services.
13 It is from this background, of Dataline’s technical power, that the statement of claim turns to the conduct of that company and Australis in the period from late 1999. It largely concerns its dealings with its VISPs. The pleading alleges contraventions of the TPA by reference to that conduct – unconscionable conduct, misleading and deceptive conduct and extends to resale price maintenance and price fixing.
14 The statement of claim proceeds to identify conduct, on the part of Dataline and Australis, from which the allegations of contraventions of the TPA are later drawn. It commences with the allegation that Dataline included the ‘default terms’, and the ‘Pandora term’ and refused to negotiate any other terms and in some cases sought to prevent or dissuade VISPs from receiving independent advice. It is alleged to have done so for the purpose of enabling it to engage in conduct to which reference is later made under the sub-headings ‘Dataline Inefficiency’, ‘Performance Complaints’, ‘Pandora Manipulation’, ‘Unauthorised Credit Card Debits’, part of ‘Restrictive Session Limits’, ‘Email Vetting’, ‘Web Site Modifications’, ‘Threats’, part of ‘Australis Partnership Agreement’ and ‘Post-Termination Conduct’. Mr Russell is alleged to have had that purpose.
15 In relation to the first topic (‘Dataline Inefficiency’) it is explained that the Dataline servers were insufficient and that this resulted in a large number of complaints. It is alleged that the quality of the Services provided by Dataline was very poor in a number of respects. In summary, these inefficiencies were alleged to be attributable to the inability of Dataline’s facilities and modems to service the number of Consumers securing access to the Services. The problems led to numerous VISPs and their Consumers making complaints to Dataline. The response provided by Dataline employees, at the direction of Mr Russell, was variously to say that the problem was with Telstra, with Microsoft Windows, with the computer or modem the VISP or Consumer was using. They were told that theirs was the only complaint. This advice (‘the Inefficiency Advice’) is alleged to have been false and misleading because it made no reference to the true cause. It is alleged to have been the subject of a direction by Mr Russell to one named employee and to other technicians between June 1999 and the end of February 2001.
16 The statement of claim alleges that the Pandora program was used or misused in a number of respects (the ‘Pandora Manipulation’). In summary they are:

(a) That Dataline charged VISPs with respect to Consumers who had ceased to be Consumers and whom the VISP sought to have disconnected or had in fact been disconnected. The particulars which are provided list some sixteen electronic mails said to identify the Consumers concerned;
(b) That Dataline overstated the volume of data accessed by two VISPs, by a feature incorporated in Pandora, for the purpose of obtaining monies to which it was not entitled. Mr Russell and Mr Litchfield are alleged to have had that purpose; and
(c) That each of World Publishing Systems, Dataline and Australis, with the knowledge of Mr Russell and Ms Moore, made unauthorised debits from Consumers. Mr Russell is alleged to have requested Ms Moore and other Dataline and Australis staff to make the debits. Five categories of conduct in this connection are described:

(i) Three Consumers are alleged to have been debited where no Service was used by them, using their credit card information stored in Pandora. This is alleged to have occurred between December 1999 and March 2000 and involved sums exceeding $770 in total. WPS was here involved;
(ii) Eight Consumers are alleged to have been debited twice for the same Service, between January 2001 and May 2001, in amounts in the order of $17, $25, $50 and $69. Australis was involved in this conduct;
(iii) Nine Consumers were debited in favour of Australis in circumstances where their VISP’s had already been authorised to do (Australis). This conduct occurred between November 2000 and March 2001 and included amounts in the order of $17, $22, $25 and $46;
(iv) Fifteen Consumers’ accounts were debited in favour of Australis for Services purportedly provided by Australis, where they had previously obtained Services from another internet service provider, the business of Dataline acquired. Presumably it had already been paid for. This occurred between September 2000 and August 2001 and involved amounts in the order of $16 and $17 and up to $300; and
(v) Five Consumers’ accounts were debited for Services purportedly provided by Australis where they were former Consumers of a VISP which made a partnership agreement with Australis. This occurred between November 2000 and March 2001 and involved amounts of $16, $17, $24 and one of $250.

17 The statement of claim also alleged conduct in connection with Dataline’s enforcement of restrictions upon the time for access to Services and quantity of data that could be obtained (‘Restrictive Session Limits’). From about November 1999 one of the bases upon which Dataline and Australis sold Services to its VISPs was access to Services for an unlimited duration and an unlimited quantity of data for a monthly fee. The VISPs then resold the Services to Consumers from about February 2000. It is alleged that from about February 2000 Australis and Dataline identified certain Consumers who had used the unlimited plans in excess of duration limits and data quality limits secretly set by Australis and Dataline. For about one month from that time Dataline, with Australis’ consent, enforced a session limit of 15 minutes and from April 2000, a limit of between 15 to 30 minutes, as applying to these Consumers. They continued to offer unrestricted access without disclosing their intention to engage in this practice. From about September 2000 Dataline additionally reduced the general session limit applying to other customers to 30 minutes, which is alleged to have been too short to be practicable, and resulted in some of the complaints to which reference has been made.
18 The statement of claim alleges that Dataline used its power, as earlier described, to intercept, copy, forward and block electronic mails between VISPs and their Consumers (‘Email Vetting’). Some Consumers are identified, but the allegation is not further particularised.
19 It is alleged that Dataline was able, due to its power to modify some VISP websites (‘Web Site Modifications’), to divert the Consumer so that it dealt with Australis. Some six sites are identified. In addition some third party advertising was placed on some VISPs’ websites in exchange for payment to Dataline or Australis presumably without authority. Mr Russell is alleged to have directed these modifications.
20 Dataline is alleged to have threatened VISPs with cessation of Services or disconnection if the VISP:

(a) Did not enter into a replacement VISP agreement;
(b) Did not enter the Consumer’s credit card information into Pandora;
(c) Did not resell Services to certain Consumers on the terms of the Dataline plans;
(d) Did not pay to Dataline debits owing to Dataline by an unrelated VISP, the business of which had been purchased by the VISP;
(e) Did not pay monies owing to Dataline strictly by the due date specified in the VISP contract;
(f) Did not resell the Services and in the manner of the price specified by Dataline;
(g) Did not improve its attitude with respect to the VISP businesses;
(h) Did not improve the performance of its VISP business; or
(i) Did not stop complaining to Dataline about the inefficiencies or quality of the Services.

21 Each allegation is particularised with between one and three instances of the conduct. Mr Russell is said to have been involved in all of this conduct; Ms Moore in the conduct in (e); and Mr Banks in (i).
22 The next allegation involves replacement VISP contracts between VISPs and Dataline with partnership contracts with Australis, by which the VISPs would transfer their existing Consumers to Australis (the ‘Australis Partnership Agreement’). After some such agreements were entered into, Australis and Dataline dealt with the VISPs’ website in such a way that any person accessing it was then taken to the Australis website. This is alleged to have been done without the consent or knowledge of the VISPs. Australis and Dataline are alleged to have done so to avoid payment of commissions to the VISPs and to gain the opportunity to market the Services at the expense of those VISPs. In accordance with partnership agreements the VISPs sold the Services, on behalf of Australis, to new Consumers. Australis did not pay the commissions to the VISP for previous or new Consumers. Neither Dataline nor Australis intended that the commissions be paid. The total number of Consumers, of the two VISPs identified with regard to this allegation, is 368 and 610 respectively.
23 The statement of claim turns to ‘post-termination conduct’ of the VISPs’ contracts for purported breaches. Dataline is alleged to have prevented the VISPs from having access to, or using, the Services or Pandora. It and/or Australis sent electronic mail to each of the terminated VISPs’ Consumers representing that the terminated VISP had breached its contract with Dataline and/or Australis; that the VISP was an agent of those companies and the Consumer was therefore a customer of Dataline or Australis; that Dataline was entitled to and had asked Australis to administer their accounts with Dataline; and that payments to the VISP would not be honoured. Five communications are identified as relevant and are alleged to have been sent out by Mr Russell. The advices are alleged to have been false.
24 Pursuant to the contracts between Dataline and the VISPs, the latter was entitled to assign its business with Dataline’s consent, which was not to be unreasonably withheld. It is alleged that Dataline refused, unreasonably, to grant the consent sought by one VISP (‘the EDIT Group’) and at the same time offered to have EDIT Group’s contract with its Consumers assigned to Australis, in return for commission on revenue received by Australis. Eighty-two Consumers were transferred and Australis or Dataline continued to charge them. It did not pay any commissions and had not intended to do so.
25 The statement of claim then refers to conduct by Dataline in connection with ‘HTE’. In June 1999 Dataline agreed with HTE to host HTE’s communication websites. In December 1999 Dataline ceased hosting the website and ceased the supply of Services to HTE without the right to do so. Thereafter Dataline and/or Australis offered to acquire HTE’s contracts with its Consumers in return for a commission upon the revenue received by Australis. Again it is alleged there was no intention to do so. HTE refused to deal on this basis. Dataline then modified HTE’s computer password system (the computer having been delivered to Dataline in accordance with the hosting agreement) so that it could not access its website and it was required to erase the hard disc drive of its computer before it could use it.
26 The last allegation is in relation to Australis’ conduct and is of a false and misleading representation to the public in January 2001, in a leaflet which was widely circularised. The statement was to the effect that the terms and conditions of its contracts had been filed with the ACCC and, impliedly, had been authorised by it. This was not the case.

Resale Price Maintenance

27 It is alleged that from November 1999 Dataline sold Services to VISPs on eight different plans. In the period to June 2000 plans were offered to VISPs on six occasions on the basis of a retail price which Dataline specified. There is one occasion identified, a communication from Mr Russell to VISPs dated 4 December 1999, when the plans were offered for sale on the express condition that the VISPs did not resell them to their customers for a price less than the specified retail price. Mr Russell acted for Dataline in this regard and it was his purpose to induce VISPs not to sell at the lesser price. The VISPs are alleged to have acted in accordance with Dataline’s requirements. Each of Australis, Mr Russell and Mr Litchfield are said to have been aware of, or complicit in, the contravening conduct.
28 It is alleged that Australis was a related body to Dataline and was in competition with the VISPs. The conduct of Dataline and the VISPs in connection with retail price maintenance is also alleged to constitute price fixing. No additional relief is however sought in this regard.

Misleading and Deceptive Conduct

29 The following representations are alleged to have been made and to have been false:

(a) That Dataline would provide ongoing training to the VISPs in the use and resale of the Services, Pandora and other software;

(b) That Dataline would provide skilled technical support at all times; and

(c) That the inefficiency complaints were either not significant or did not exist.

30 Further misrepresentations by Dataline or Australis are alleged to have been made. The pleading here directs the reader back to previous allegations. I shall attempt to summarise them or the representation/s contained in them:

(d) Those contained in the ‘Inefficiency Advices’ made by Dataline;

(e) That Dataline was entitled to make the charges with respect to former Consumers;

(f) That the volume of data, which Dataline overstated, was in fact accessed by the VISP or its Consumer;

(g) That it, or Australis or World Publishing Systems, was entitled to make the unauthorised debits;

(h) That the Dataline Unlimited Plan allowed unlimited access (Australis is alleged to have made a like representation);

(i) Where a Consumer was diverted to the Australis web site, that Australis and the VISP had an established business relationship or affiliation;

(j) Following upon the representation in (i), that Dataline was entitled to the benefit of the VISPs’ web sites;

(k) That Australis would pay commissions under the Australis Partnership Agreement and Dataline would procure Australis to do so;

(l) The statements by Australis or Dataline to consumers about terminated VISPs; and

(m) That Dataline would pay commission to the EDIT Group and to HTE or that it would procure Australis to do so.

Proceedings by Dataline and Australis

31 The statement of claim identifies two proceedings brought by Dataline in the District Court of Queensland and one in the District Court of Western Australia and one brought by both Dataline andAustralis in the District Court of Queensland against VISPs. In the proceedings damages were sought against the VISPs for breach of the VISP agreement or for breach of the Australis Partnership Agreement. Australis also claimed damages with respect to certain statements alleged to have been made by the VISPs.

Unconscionable Conduct, Undue Harassment and Coercion

32 It is alleged that Dataline and Australis engaged in the conduct alleged for the purpose of obtaining the benefit of the business of Consumers which might otherwise have been retained by the VISPs. The conduct, which is alleged to have been unconscionable, within the meaning of s 51AA or s 51AC of the TPA, is listed by reference to a series of previous pars in the pleading. Eighteen instances of conduct are identified by this means. In effect most of the pleading is incorporated here. The conduct may be shortly identified as involving:

(a) The refusal to negotiate amendments to terms;
(b) The inclusion of the default terms, the Pandora terms and the refusal to negotiate above referred to;
(c) The advice provided in response to the complaints about performance (the ‘Inefficiency Advice’);
(d) Charging for former Consumers;
(e) Making unauthorised debits;
(f) Promising unlimited duration of access to the Services, whilst intending not to provide them;
(g) Reducing the General Session Limit;
(h) Vetting electronic mail;
(i) Modifying web sites to take a Consumer to Australis;
(j) Making the threats alleged;
(k) The conduct in connection with the Australis Partnership Agreement;
(l) The post termination conduct;
(m) The conduct in connection with the EDIT Group and with HTE;
(n) The misrepresentation about the ACCC approval;
(o) Resale price maintenance;
(p) Price fixing; and
(q) The misleading and deceptive conduct.

33 Certain of the conduct of Dataline and Australis is alleged to amount to the use of undue harassment or coercion, within the meaning of s 60 of the TPA, in connection with the supply or possible supply of the Services to the VISPs or to their Consumers. That conduct is identified as:
• The threats;
• The requirement that the EDIT Group assign its contracts;
• The cessation of Services and other conduct affecting HTE; and
• The bringing of the legal proceedings.

Involvement of the non-corporate respondents

34 Mr Russell is alleged to have had knowledge of, been complicit in, or to have directed, the conduct generally. The involvement of the others may be summarised as follows:

• Ms Moore is alleged to have been involved in the unauthorised credit card debits, pleaded as a misrepresentation of entitlement; and a threat to cease or disconnect the Services if monies owing were not paid.
• Mr Litchfield is alleged to have been involved in resale price maintenance and, inferentially, price fixing; the misrepresentation that complaints about the insufficiency of Services were not significant; that overstated data was in fact used; and that there was an entitlement to charge former Consumers.
• Mr Banks is alleged to have made the representation about Services and training being provided at all times; and to have made the threat to cease supply of the Services if complaints did not stop.

THE OPERATION OF ORDER 35A

35 When the application for the self-executing order was made by the ACCC O 10 r 7 of the FCR provided for the procedure on default. Rule 8 of that order provided that a default judgment could be entered by the Registrar where there was a claim for a debt or liquidated damages. No express provision was made for claims for unliquidated damages or other types of claims. Order 35 provided generally that the Court:

‘may, at any stage of any proceedings, on the application of any party, pronounce such judgment or make such order as the nature of the case requires, notwithstanding that the applicant does not make a claim for relief extending to that order in any originating process.’

36 That Order required evidence to be given supporting the claim before orders could be made in favour of an applicant, even in the case of a default judgment. As Drummond J observed in Australian Securities Commission v Macleod (1994) 54 FCR 309 at p 312, the English practice was otherwise. In addition to permitting entry of judgment by a court officer in certain classes of cases, such as claims for liquidated demands, entry of judgment for unliquidated damages, detention of goods, possession of land, and mixed claims, the English rules permitted judgment with respect to ‘other claims’ in cases of default of appearance or defence. Order 27 rule 11 of the English rules provided that, if a defendant made default in delivering a defence, a plaintiff could set down the action on motion for judgment and ‘such judgement shall be given as upon the statement of claim the court or a judge shall consider the plaintiff to be entitled to’. Until a meeting of judges in the late 1880s, there was some uncertainty about whether proof was required of the facts alleged in the statement of claim. Smith v Buchan (1888) 58 LT 710 records the judges’ resolution that the Court not require evidence. Bowen LJ in Young v Thomas (1892) 2 Ch 134 at p 137 explained the rationale for the rule to be that the facts alleged were taken to have been admitted by the defendant.
37 Whilst expressed in mandatory language, the rule was held to be discretionary: see Wallersteiner v Moir (No.1) [1974] 1 WLR 991; Charles v Sheppard [1892] 2 QB 622 at 624. This accords with the approach taken by Gibbs J to a similar rule: see Wiedenhofer v The Commonwealth [1970] HCA 54; (1972) 122 CLR 172.
38 Prior to the addition of O 35A to the rules of this Court the Supreme Court Rules (New South Wales) provided for judgments in default of appearance or defence in the same classes of cases as the English rule referred to above. Part 17 r 9(1) provided generally that:

‘1. Whatever claims for relief are made by a plaintiff, where a defendant is in default, the court may, on application by the plaintiff give such judgment against that defendant as the plaintiff appears to be entitled to on his statement of claim.’

Those rules have been replaced by the Uniform Civil Procedure Rules for New South Wales from August 2005. Judgment may now be entered for a plaintiff ‘according to the nature of his or her claim for relief’. It is not necessary to examine the new provisions. For present purposes it is apparent that former rules formed the basis for the introduction of O 35A to the rules of this Court. The rules of other States also provided for judgment to be entered as was ‘justified on the pleadings’ (r 288, Uniform Civil Procedure Rules 1999 (Qld)) and ‘upon the statement of claim’ (r 21.04 Supreme Court (General Civil Procedure) Rules (Vic)).
39 The Australian Law Reform Commission (‘the ALRC’) published a report ‘MANAGING JUSTICE – A Review of the Civil Justice System’ (ALRC Report No. 89, January 2000). In relation to the Federal Court Rules dealing with default judgment, and after referring to the decision in ASC v Macleod and the rules in other States, it was said (at 7.215):

‘The Commission supports the existing arrangements for claims for unliquidated damages, which require evidence to quantify the loss. Further, claims for a discretionary remedy such as an injunction or a declaration require affidavit evidence. However, there is a good reason to relax the rules to allow default judgment for a liquidated claim to be entered on the pleadings.’

The ALRC made a recommendation accordingly.

40 The terms of O 35A, which are set out below, do not follow the recommendations of the ALRC. In the Explanatory Statement to the Federal Court Amendment Rules 2004 (No. 4); 2004 (No. 281) it is said that the new O 35A brings together the various rules dealing with orders and judgments in default that exist in the current rules. With respect to r 3(2)(c), it is explained that this was a rule which had been used in other State and Territory Supreme Courts for many years and it was noted that the relief that may be granted under the rule is not limited to a judgment for a debt or liquidated damages.
41 Rule 2(2) of O 35A, which provides for the circumstances in which a respondent is in default for the purposes of the rule, is in these terms:

‘(2) For this Order, a respondent is in default if the respondent has not satisfied the applicant’s claim and:

(a) the time for the respondent to enter an appearance has expired and the respondent has failed to enter an appearance; or
(b) the time for the respondent to file a defence has expired and the respondent has failed to file a defence; or
(c) the respondent fails to attend a directions hearing; or
(d) the respondent fails to comply with an order of the Court in the proceeding; or
(e) the respondent fails to file and serve a pleading as required by Order 11; or
(f) the respondent fails to serve a list of documents or an affidavit or other document, or does not produce a document as required by Order 15; or
(g) the respondent fails to do any act required to be done by these Rules; or
(h) the respondent fails to defend the proceeding with due diligence.’

42 The orders which may be made where a party is in default are contained in r 3(2)(c):

‘3(2) If a respondent is in default, the Court may:

(c) if the proceeding was commenced by an application supported by a statement of claim or the Court has ordered that the proceeding continue on pleadings -- give judgment against the respondent for the relief that:

(i) the applicant appears entitled to on the statement of claim; and

(ii) the Court is satisfied it has power to grant;
...’

43 Order 35A was introduced after the making of the self-executing order and the event of default on the part of the respondents. The initial approach taken by the ACCC was to have the matter set down for judgment upon affidavit evidence. It later applied for judgment under O 35A. No issue is taken about its ability to do so. There are however some issues raised concerning the application of the rule. Principal amongst them is the question whether claims for discretionary relief are contemplated by the rule. Three preliminary issues are also raised in submissions for Mr Russell and Ms Moore namely:

(a) Whether the allegations in the statement of claim are taken to be admitted;

(b) Whether the ACCC is permitted to depart from the original application in respect of the relief it now seeks; and

(c) Whether the Court is entitled to go beyond the statement of claim and take into account further evidence.

44 In relation to the first question, it is submitted that the position is not clear. The suggested uncertainty appears to be based upon some decisions which refer to the defendant being deemed to have admitted the claims, not the allegations. Reference is made to cases such as Watson Specialised Tooling Pty Ltd v Stevens [1991] 1 Qd R 85 at pp 93 – 94. The reference to the admission of a claim may have been intended as the consequence of the application of the rule. There is no doubt that the English practice is based upon deemed admissions of allegations in the statement of claim and the Court’s assessment of the orders to which the applicant is entitled. It is only allegations of fact which can be the subject of admission. The rule does not deem a respondent to have conceded the relief sought.
45 Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433 and Luna Park Sydney Pty Limited v Bose [2006] FCA 94 confirm that the rule permits regard to be had to the face of the statement of claim in order to determine whether the relief sought is made out. Those decisions and a number of others of this Court confirm that no evidence needs to be adduced: see Australian Competition and Consumer Commission v 1Cellnet LLC [2005] FCA 856; Macquarie Bank Ltd and Anor v Seagle [2005] FCA 1239; (2005) 146 FCR 400. The statement in Chanel Limited v Ayad [2005] FCA 820 at par 21, that evidence is required on a motion for default judgment, was made by reference to the decision in ASC v Macleod, which concerned the rules prior to the introduced O 35A. The decision in Australian Competition and Consumer Commission v Australian Communications Network Pty Ltd [2005] FCA 988 at par 18 appears to have proceeded upon the basis that resort to O 35A was not necessary, given findings which had already been made and which were sufficient to support the orders sought.
46 In Faithfull v Woodley (1889) 43 Ch D 287 at p 289, North J said that he was unaware of any case in which relief not asked by the statement of claim had been given against a defendant who did not appear at trial. The defendant’s admission, under the default rule ‘must be taken as made only for the purpose of the relief which is asked for by the statement of claim’. North J’s concern in that case appears to be that the defendant was not notified of the orders sought (and see Norman v Butler (1894) 10 WN (NSW) 1516 where the matter was adjourned for this reason). So understood, it is not the rule which requires refusal, but fairness in the conduct of litigation. What is required in that regard may differ from case to case.
47 An approach that does not deny the prospect of any additional, or different, relief being granted under O 35A is consistent with the general provisions of O 35, which permits judgment to be given regardless of whether the particular claim for relief is made. Order 35A does not itself deny the right to relief which may arise from admissions of the matters alleged in the statement of claim. No general rule prohibiting additional or varied relief should be implied. Whether it is permitted in any particular case should depend upon the nature of the case, the orders sought and whether the respondent is, or can be taken to be, cognizant of the prospect of such an order being made. All these considerations are within the discretion maintained by the terms of O 35A. In the present case the principal change in the relief sought is in the content of the declarations and injunctions and argument has been addressed by the respondents to them.
48 The terms of the rule do not however suggest recourse to affidavit evidence, in addition to the facts alleged in the statement of claim, as appropriate. The case law supports this view. Judgment must be entered according to the pleading alone: Young v Thomas at p 137. The ACCC does not deny this as a general approach, but submitts that evidence was allowed by the courts of Chancery to support the relief sought in the statement of claim, facts which were not customarily alleged in the statement of claim. It referred to Street v Crump (1883) 25 Ch D 68 and Roberts v Booth [1893] 1 Ch 52 (‘Roberts v Booth’) as evidencing that practice. It does not appear to me that those cases provide much support for the view that further evidence could be taken into account. In the firstmentioned case North J allowed for evidence of a party’s consent to an order affecting him, after observing that the court could only make an order to which the plaintiff was entitled on the pleadings. In Roberts v Booth an affidavit was allowed to show that no part of the debt, the subject of the proceedings, had been paid, a question about that fact having arisen.
49 Stronger support for the view that some evidence might be permitted, concerning the appropriateness of the relief sought, is obtained from Phonographic Performance Ltd v Maitra [1988] 2 All ER 638 (‘Phonographic Performance v Maitre’). Lord Woolf MR (at p 644) confirmed the general rule that ‘judgment on default is given upon the facts pleaded in the statement of claim and that affidavit evidence to supplement or support those facts is not appropriate as the pleaded facts are deemed to be admitted’. His Lordship went on:

‘...However, that cannot be rigidly applied where the judge has to exercise a discretion whether to grant the relief sought. Where an injunction is sought facts relevant to the grant of that injunction, which are not deemed to be admitted, should be brought to the attention of the judge by way of affidavit or otherwise. Further, if the judge is aware of matters relevant to the exercise of his discretion, he can seek an appropriate explanation before coming to any decision. ...’

50 It may be accepted that some further affidavit material may be accepted by the Court in relation to the relief sought. The fourth and seventh respondents accept this to be the case and that the rule would not prohibit such an approach. They seek to rely upon evidence as to their present circumstances. This does not however mean that any evidence can be tendered. Evidence which would alter the pleaded case should not be admitted.
51 Evidence as to costs, an order for fixed sum being sought, can be relied upon. Evidence of company searches and of communications with the liquidators of Dataline and Australis, of the existence of the District Court proceedings referred to in the statement of claim may be seen as necessary in relation to the utility of the orders sought. Regard should not be had to evidence of facts which could have being, but were not, pleaded concerning the conduct of the respondents. Regard will not be had to the evidence of a further purpose, in connection with Dataline’s conduct in resale price maintenance, to undercut its VISPs’ prices. The evidence, which confirms that the practice of resale price maintenance was undertaken by Dataline and Mr Russell, will be considered separately in these reasons. Reliance is sought to be placed by the ACCC on affidavits previously filed, including some by Mr Russell, from which conclusions might be drawn about the level of non-compliance by some of the respondents. It is sought to be relied upon in connection with the determination of the amount of a pecuniary penalty. The admission of this evidence should be determined by reference to relevance. Regard should be had to the evidence as to the present circumstances of each of Mr Russell and Ms Moore.

DECLARATORY RELIEF

52 Phonographic Performance v Maitre and other cases recognise that a rule such as r 3(2)(c) may extend to equitable relief and relief which involves the exercise of a discretion. This is in addition to the discretion given by the rule itself to the making of orders of any kind. The fourth and seventh respondents did not submit that O 35A r 3(2)(c) could never apply to discretionary remedies, but rather that it could do so only if the facts pleaded establish something that could be characterised as an ‘entitlement’. An example given was an order for specific performance of a contract, where there was an assumption of a prima facie entitlement, at least where no defences barring the remedy were raised.
53 The preferable course may be to view the ‘entitlement’, of which the rule speaks, as distinct from the particular relief which might be considered appropriate to it. What the rule requires is that there be shown, on the face of the statement of claim, a right to some form of relief. The matters alleged in the statement of claim must permit the conclusion that some relief may be possible, even if the grant of it is subject to other considerations. Such a conclusion is at least possible in cases where declarations and injunctions are sought. An applicant may establish some right or legal interest or legal conclusion capable of resolving a controversy, which might properly be expressed in the form of a declaration, or establish the infringement of a right or a standard set by a statute. Subject to considerations which might weigh against the grant of relief of those kinds, the applicant may be said to have an ‘entitlement’. It does not have to be absolute for the purposes of the rule, which is discretionary in nature in any event.
54 The application of the rule to a claim for a declaration would, however, have the consequence that the declaration is made upon deemed admissions. The courts have in the past expressed the view that it may be inappropriate to make declarations where there is a default in pleadings. Zamir and Woolfe in ‘The Declaratory Judgment,’ 2^nd edn Sweet and Maxwell, 1993 at par 7.30 refer to the courts’ reluctance to make declarations as being based upon a desire to avoid making points res judicata without having heard argument. This was the view expressed in New Brunswick Railway Co v British and French Trust Corporation Limited (1939) AC 1 at p 22, and see Metzger v Department of Health and Social Security [1977] 3 All ER 444 at p 451; GPI Leisure Corp Ltd v Yuill, unreported decision of Young J, New South Wales Supreme Court Equity Division 6 August 1997, BC 970 4052.
55 There is another concern of the courts, which was explained by Buckley LJ in Wallersteiner v Moir (at p 1029):

‘...It has always been my experience and I believe it to be a practice of very long standing, that the Court does not make declarations of right either on admissions or in default of pleading. A statement on this subject of respectable antiquity is to be found in Williams v Powell [1894] W.N.141, where Kekewich J, whose views on the practice of the Chancery Division have always been regarded with much respect, said that a declaration by the court was a judicial act, and ought not to be made on admissions of the parties or on consent, but only if the court was satisfied by evidence. If declarations ought not to be made on admissions or by consent, a fortiori they should not be made in default of defence, and a fortissimo, if I may be allowed the expression, not where the declaration is that the defendant in default of defence has acted fraudulently. Where relief is to be granted without trial, whether on admission or by agreement or in default of pleading, and it is necessary to make clear upon what footing the relief is to be granted, the right course, in my opinion, is not to make a declaration but to state that the relief shall be on such and such a footing without any declaration to the effect that that footing in fact reflects the legal situation.’

56 In Sung Li Holdings Ltd v Medicom Finance Pty Ltd (1995) 13 ACLC 955 Young J observed that the courts are always particularly careful, when making declaratory orders, not to make the order merely on admissions because otherwise the agreement between the parties will assume the dignity of the solemn adjudication by the Court. His Honour said:

‘The reason for this is that even if the declaration only binds the parties as a matter of res judicata, other members of the community may consider that it is the view of the court and the declaration "will have effects on the community that extend far beyond the interests of the original plaintiff and defendant".’

57 In the present case the firstmentioned difficulty is not present. Submissions have been made as to the declarations sought. The question is whether declarations should be made on deemed admissions, given that there has been no adjudication by the Court on the facts and the declarations may give the impression that there has.
58 The power to grant declarations (s 21 Federal Court of Australia Act 1976 (Cth)) is unconfined. Order 35A itself imposes no constraints upon the relief sought. Refusals to make declarations in cases of default are based upon a practice, not a rule of law. The practice is one of long standing and might be seen as derived from views about litigation which pre-date more recent concerns expressed by the courts as to the costs of unnecessary litigation, the management of cases and efficiency overall. Views expressed in older cases may not take account of the increase in the use made of declaratory orders in developing areas of law which may involve matters of public interest. A caution with respect to the use of older authority is made in the White Book Service 2003 to the English Civil Procedure Rules 1998 (40.20.2).
59 It may no longer be correct to have a practice which operates as a prohibition in every case of default and preferable to consider the circumstances pertaining to the particular case and the purpose and effect of the declaration. Millett J made declaratory orders in Patten v Burke Publishing Co Ltd [1991] 1 WLR 541 where justice to the plaintiff required it. The order however operated principally inter partes and it might be doubted whether it would be of interest to other persons. Cases such as this, involving the protection of consumers, are of public interest. Declarations are often utilised in such cases to identify for the public what conduct contributes a contravention and to make apparent that it is considered to warrant an order recognising its seriousness. It is however important that there be no misunderstanding as to the basis upon which they are made. This could be overcome by a statement, preceding the declarations, that orders are made ‘upon admissions which [the respondent in question] is taken to have made, consequent upon non-compliance with orders of the Court’.

Dataline

60 The following are the declarations sought, in outline:

1. That Dataline engaged in unconscionable conduct in contravention of s 51AC of the TPA. Some 24 instances of such conduct are given;

2. That Dataline engaged in conduct which was misleading or deceptive or was likely to mislead or deceive, in contravention of s 52 TPA. Some 42 representations are identified;

3. That Dataline used undue harassment or coercion in contravention of s 60 TPA. Four species of conduct are identified;

4. Dataline engaged in the practice of resale price maintenance in contravention of s 48;

5. That Australis engaged in conduct that was unconscionable in contravention of s 51AC TPA. Some nine instances are particularised;

6. That Australis engaged in conduct that was misleading and deceptive or was likely to mislead or deceive in contravention of s 52 TPA. Some fifteen representations are listed;

7. That Australis used undue harassment or coercion in contravention of s 60 TPA. Three aspects of its conduct are identified in this regard;

8. That Australis was knowingly concerned in the resale price maintenance engaged in by Dataline;

9. That World Publishing Systems engaged in conduct, on one occasion, which was misleading or deceptive or likely to mislead or deceive, in contravention of s 52 of the TPA;

10. That Mr Russell, in his various capacities in connection with Dataline, Australis and World Publishing Systems, was knowingly concerned in all of the contraventions of Dataline and Australis the subject of the preceding orders;

11. That Mr Banks was knowingly concerned in thereof the misrepresentations of Dataline; and

12. That Mr Litchfield was knowingly concerned in two contraventions of Dataline and Australis.

61 The declarations sought with respect to resale price maintenance are supported by facts alleged in the statement of claim and are in a proper form. No issue is taken with them. They may be excepted from the discussion which follows.
62 There are a large number of individual declarations sought with respect to the unconscionable conduct and the misrepresentations. The statement of claim identifies each separate type of conduct as itself amounting to a contravention. Contrary to the submission of the ACCC they are not pleaded to have a cumulative effect. If it was possible to draw such a conclusion, it has not been stated. The approach taken in submissions was not to support the making of each declaration, but to identify that part of the statement of claim from which it is said to be drawn, by reference to a schedule. As a result the impression given is that many of the declarations are of findings of fact. The declarations against Dataline and Australis are also expressed in such a way as to suggest that there may have been other, unidentified, conduct which contravenes the TPA. The statement in the draft orders that the conduct referred to only includes that identified in the declaration should be disregarded.
63 In Australian Competition and Consumer Commission v Danoz Direct Pty Ltd [2003] FCA 881; (2003) 60 IPR 296 at par 260 Dowsett J pointed out that the courts are protective of the remedy of the declaration. In his Honour’s view the courts must ensure:

‘that this very useful device is not deprived of its efficacy by over-use or inappropriate use ... it is important that any declaration be framed so as to convey a limited and accurate message to those who have an interest in its subject matter. It is unlikely that any good purpose will be served by numerous declarations which merely reflect the various misrepresentations and the various occasions on which they were made. The most effective form of declaration will accurately reflect the impugned conduct in a concise way. Complete accuracy is essential. ...’

The remedy of a declaration is not appropriate to record conclusions reached by the Court in the course of its reasons: Warramunda Village Inc v Pryde [2001] FCA 61; (2001) 105 FCR 437.
64 In Rural Press Ltd v Australia Competition and Consumer Commission [2003] HCA 75; (2003) 216 CLR 53, the trial judge had made declarations, in general terms, that the respondents had contravened sections of the TPA and that one respondent was indirectly or directly knowingly concerned in the contraventions of one of the corporate respondents. The majority observed at par 90 that the declarations ‘spoke merely of "an arrangement" having a purpose and effect, without giving any content to that expression and without indicating the gist of the findings of the primary judge identifying the arrangement’. Their Honours went on to say that declarations of this kind provide a ‘bad precedent’ and they should not have been agreed to even if ‘by consent’ of the parties. The declaration which was recast by the parties and approved by their Honours (at par 93) was in these terms:

‘(a) A declaration that the first, second and fifth respondents contravened s 45(2) of the Act by making and giving effect to an arrangement that contained provisions under which:
(i) the fifth respondent ceased soliciting, advertising and newsworthy information from the Mammum area for inclusion in its regional newspaper, the River News, and to cease promoting the sale of the River News in the Mammum area;
(ii) the first and second respondents agreed not to publish a regional newspaper in the Riverland area.

as these provisions constituted an exclusionary provision within the meaning of s 4D of the Act, and had the purpose and likely effect of substantially lessening competition in the market for the supply of regional newspapers in the Murray Bridge district in South Australia.’

65 The orders sought by the ACCC in its application would not meet the requirements of such an order. The ACCC explained that the length and the complexity of the orders now sought against the corporate respondents were brought about by the approach required by that decision. With some exceptions it does not seem to me that that case contemplates anything like the form of the declarations sought. No attempt has been made to convey the gist of the conduct in question. In some cases a reader is required to range over a series of allegations in order to determine what the conduct is. It is not apparent why the particular conduct on the part of Dataline is said to be unconscionable. If this exercise had been undertaken it may have been evident that some of it could not be so characterised.
66 Contrary to the view apparently held by the ACCC, not every species of harsh or even unfair conduct amounts to unconscionable conduct within the meaning of s 51AC of the TPA. I shall not set out that section in full. Suffice it to say, for present purposes, that it concerns the misuse by the corporate respondents of a bargaining position of strength in the context of the supply or possible supply of goods and services. Accepting that Dataline had a strong bargaining position, the question is what it did in its dealings with the VISPs in relation to the supply of Services.
67 I have summarised the conduct alleged (at par 32 of these reasons). The conduct includes a number of misrepresentations, which could not themselves amount to unconscionable conduct: the ‘Inefficiency Advice’; that Dataline had an entitlement to charge former Consumers or to make unauthorised debits; the promises of unlimited access to Services; statements about VISPs who had had their contracts terminated; and the statements about the ACCC’s approval of Dataline’s form of contract. Declarations of unconscionable conduct having been engaged in are not warranted with respect to the other allegations of misleading and deceptive conduct, resale price maintenance and price fixing. The reduction of session limits, the vetting of electronic mails and modification of websites so that a Consumer was taken to Australis might amount to other wrongs, but they are not contraventions of the TPA.
68 The ACCC may consider that much of Dataline’s enterprise was often conducted in an unethical manner and in contravention of the TPA in a number of respects. That does not however mean that the operation of its business is itself unconscionable conduct within the meaning of s 51AC. The conduct alleged is not drawn together in such a way as to permit a wider view of Dataline’s conduct overall and I am not sure that that would be possible.
69 That leaves for consideration the conduct summarised in subpars (a), (b), (j), (k) and (m) at par 32 above.
70 The conduct which concerns the contract with Dataline’s VISPs, or the negotiations leading to them, might be said to be conduct in connection with the supply or possible supply of services and to come within s 51AC. The extent to which Dataline was willing to negotiate terms and conditions is a relevant matter under s 51AC(3)(j) in determining whether there has been a contravention, but it does not of itself mean there has been unconscionable conduct. The fact that the Dataline’s contract with its VISPs contained the default terms and the Pandora terms does not mean that Dataline abused its position in obtaining consent to a contract containing them, without more being alleged. The statement of claim does allege that ‘in some cases’ Dataline prevented or dissuaded VISPs from receiving independent expert and professional advice. This is said to have occurred with respect to four contracts. It may be inferred that Dataline misused its position of power in order that VISPs would not be informed of the effect of the terms, particularly the default terms, and the undesirability of entry into a contract which contained them. An order is therefore appropriate.
71 The reference to threats to cease the Services or disconnect the VISPs immediately raises the prospect that there has been some wrongful conduct or pressure applied. The circumstances in which the threats were to be carried out are referred to at par 20 of these reasons. The allegation is not made with respect to a future supply of Services and raises the question whether s 51AC was intended to apply to conduct in connection with the cessation of Services. I can see no reason to limit the operation of the section, given that its terms would appear to extend to such a case. A declaration will be made as to Dataline’s conduct, in a shortened form. Declarations against Mr Banks and Ms Moore with respect to that conduct are not pursued.
72 The dealings with the EDIT Group, which involved the refusal to permit it to assign its business to a third party, coupled with the suggestion that it instead assign its contracts to Australis, also involves the misuse by Dataline of its position in connection with the supply of services. The possible involvement of Australis is not clear. The wrongful cessation of HTE’s services, followed an offer that its customers be transferred to Dataline, also comes within the section.
73 The reference to the Australis Partnership Agreement commences with an allegation that there was a ‘request’ that the existing VISPs enter into a new agreement to transfer their existing Consumers to Australis in order that they obtain commissions as an agent of Australis. The wrongful conduct alleged appears to be in what was done subsequent to the agreement and by diverting the VISP’s Consumers. There is nowhere alleged that Dataline put pressure upon a VISP to enter into the agreement. Rather it would appear they were induced to do so, by misrepresentations.
74 Section 60 provides that a corporation shall not use physical force or undue harassment or coercion in connection with the supply or possible supply of goods or services to a consumer or the payment for goods or services by a consumer. ‘Harassment’ in this context means persistent disturbance or torment; and ‘coercion’ carries the connotations of force or compulsion or threats of it, which negate choice or freedom to act: see Australian Competition and Consumer Commission v Maritime Union of Australia [2001] (114 FCR 372); FCA 1549; at pars 60 and 61. The conduct constituted by the threats, and that with respect to the EDIT Group and HTE, are also relied upon as contraventions of s 60. Whilst the conduct contravenes s 51AC, and is unconscionable, it is not apparent to me how it is said to come within the meaning of s 60 and, if it did, why further declarations, characterising the same conduct in a different way, are necessary.
75 The only additional conduct on the part of Dataline relied upon in this regard is that in commencing and prosecuting the proceedings against the VISPs. This conduct might contravene the section, if the proceedings were baseless. In that circumstance their continuance might amount to undue harassment. However all that is pleaded in connection with them is that they were commenced. Nothing is alleged about the subject matter of the litigation from which a conclusion, that they were without foundation and brought for an improper purpose, could be drawn. A contravention is not established.
76 I turn then to the conduct alleged to have contravened s 52 of the TPA and the declarations sought with respect to it. I do so by reference to the summaries at pars 29 and 30 of these reasons. The declarations sought are far more extensive and extend to every false statement alleged to have been made by Dataline. Not all of them could be said to be capable of misleading and deceiving VISPs by inducing, or being capable of inducing, error on their part. The representations about VISPs whose contracts had been terminated falls into this category. There is a further representation said to have been made by Dataline to HTE, that it would pay commission to it. There does not appear to be a factual basis for this pleaded. In other respects the declarations do not explain, in a summary way, what would have been conveyed to a VISP by what was said, nor are they expressed in a way which is self contained and capable of being easily read. The summary avoids this approach and I will make declarations by reference to it.
77 There will be additional orders that Mr Russell was knowingly concerned in these contraventions; that Mr Banks was knowingly concerned in the misrepresentations about the support, service or training that Dataline would provide. The orders sought against Mr Litchfield connect him with the misrepresentations that the inefficiency advice was correct; that Dataline was entitled to make the charges with respect to former Consumers and that overstated data had in fact been accessed. On my reading of the statement of claim the representation in connection with the inefficiency of the service was limited to one that the inefficiency complaints were not significant. Because of the form of order I propose to make, it is not practicable to make a declaration that he was knowingly concerned with respect to one aspect of the conduct, nor does it appear to me to be necessary that such an order be made.

Australis

78 Declarations are sought that the following conduct (in summary) on the part of Australis was unconscionable:

(a) Debiting Consumer’s credit cards without authority;

(b) Offering Services upon terms which allowed unlimited access and then reducing the duration of use and failing to disclose it;
(c) Procuring some VISPs to replace their existing contracts with Dataline with an agreement with Australis in return for a monthly commission which it did not intend to pay;

(d) Making the representations about terminated VISPs;

(e) Engaging in the conduct with respect to the EDIT Group and procuring Dataline’s conduct in that regard;

(f) Procuring Dataline’s conduct with respect to HTE;

(g) Falsely representing to the public that the ACCC had approved the terms and conditions of its contract; and

(h) Commencing and prosecuting a proceeding in the District Court of Queensland against a VISP.

79 It follows from my reasons with respect to the declarations sought against Dataline that the misrepresentations in (a), (b), (c) and (d) do not convert to unconscionable conduct. With respect to the action alleged to have been brought by Australis against a VISP there is insufficient evidence alleged to support a finding of unconscionable conduct, for the reasons earlier mentioned. The case against Australis in connection with the EDIT Group is limited by the statement of claim to the fact that it did not pay commission after Dataline had ceased the supply of Services, with the following allegation that it did not intend to do so. This is not sufficient to amount to unconscionable conduct. The declaration with respect to the EDIT Group and the following declaration concerning the conduct towards HTE are also expressed in terms that Australis procured Dataline’s conduct. This has no factual foundation in the statement of claim and would not in any event amount to unconscionable conduct towards a Consumer, as s 51AC envisages. That leaves the declaration concerning the misrepresentation to the public about the ACCC’s approach. This warrants a declaration that it contravenes s 52, but it does not itself constitute unconscionable conduct.
80 Declarations are sought with respect to the following misrepresentations alleged to have been made by Australis:

(a) That it had the approval of the ACCC to the terms and conditions of its contract;

(b) That it was entitled to make the unauthorised debits;

(c) That it offered a plan of Services which provided unlimited access to the Services;

(d) That it intended to pay commissions with new partnership Consumers;

(e) The statements about terminating VISPs; and

(f) That it intended to pay a commission to the EDIT Group and HTE.

81 Declarations concerning the representations, in a summary form, are appropriate with respect to all but the representations concerning the terminated VISPs and HTE. As I have earlier observed, it is not apparent how this could have misled a VISP in the way contemplated by the section.
82 There will also be declarations that Mr Russell was knowingly concerned in all of the misrepresentations and Ms Moore in the misrepresentation referred to in (b).
83 Declarations are sought concerning the commencement and prosecution of the court proceedings against the VISPs and for being knowingly concerned in the contraventions of Dataline in resale price maintenance. The firstmentioned cannot be made, because of the course of the evidence to which I have referred. It is appropriate to make that with respect to resale price maintenance.

World Publishing Systems

84 Only one declaration is sought against World Publishing Systems, - that it misrepresented its entitlement to make debits to Consumers’ credit cards. The extent of the conduct alleged in the statement of claim might not warrant the making of a declaration if only World Publishing Systems was involved in it. World Publishing Systems was however engaging in the same conduct as Australis and Dataline at about the same time and directed by the same persons. A declaration is therefore appropriate.
85 There will also be declarations that each of Mr Russell and Ms Moore were knowingly concerned in the contravention of World Publishing Systems.

INJUNCTIONS

86 Neither Dataline nor Australis continue in business and injunctions are not sought against them or against World Publishing Systems. Injunctions are sought against the other respondents. Mr Russell continues to operate in the area of the supply of internet-related services with another company, Veridas Communications Pty Ltd (‘Veridos’), in which he deposes he has no interest. Ms Moore says that her involvement with Dataline and Australis was as a secretary and she was a director of Australis in name only. She worked for those companies between January 1999 and December 2000 and has had no association with them, World Publishing Systems or Mr Russell since January 2002 and has no connection with the internet industry. There is no evidence as to the present circumstances of Mr Banks and Mr Litchfield, although I note that Mr Litchfield is a computer programmer. It is not apparent whether either of them now have a connection with the business providing internet-related services or whether they intend to do so in the future.
87 I shall deal with the mandatory injunctions sought against each of Mr Russell, Mr Banks, Mr Litchfield and Ms Moore to attend a trade practices compliance program and against Mr Russell to establish a domain name for the purpose of an adverse publicity order separately in these reasons. The injunctions otherwise sought against Mr Russell seek to restrain him ‘by himself, his servants or agents or otherwise howsoever in connection with the Dataline business or Australis business or any similar business from in any way directly or indirectly aiding, abetting, counselling or procuring or being knowingly concerned in or a party to any corporation engaging in any of the following conduct’ and may be summarised as follows:

(a) Conduct of the same or a similar kind to those the subject of declarations as to unconscionable conduct;

(b) Representations of the same or a similar kind to those the subject of declarations;

(c) Conduct of the same or a similar kind to that the subject of declarations concerning contraventions of s 60; and

(d) Acts of the same or similar kind to resale price maintenance.

A further injunction is sought against him by which he is required to take all reasonable steps to discontinue the three actions brought by Dataline and Australis.
88 Injunctions, in similar terms, are sought against Mr Banks restraining him from making misrepresentations in connection with the Dataline business, the Australis business or any similar business as those made by Dataline in relation to the training and support it would provide in connection with the use of the Services and software, or a representation. Mr Litchfield is sought to be restrained from engaging in conduct of the same or similar kind as all of the unconscionable conduct in which Dataline was involved and from making misrepresentations that the inefficiency advice was correct; that Dataline was entitled to make charges with respect to former consumers; and that overstated data had in fact been accessed. The injunction sought against Ms Moore is that she be restrained from making representations of the same or similar kind made by Australis and World Publishing Systems, made namely that they were entitled to make unauthorised debits.
89 The Court is given wide powers by s 80 of the TPA to grant injunctions. It is not necessary that it be shown that a person threatens further infringing conduct before an order may be made: see subs (4) and (5). That is not to say that that factor remains irrelevant to the exercise of the discretion whether to grant an injunction in a particular case. The section is not mandating the grant of an injunction in every case. The question whether a declaration has utility is one which remains to be considered.
90 The injunctions might serve some purpose in connection with Mr Russell, who continues to work in the same type of business as that conducted by Dataline and Australis. The same cannot however be said of Ms Moore, Mr Litchfield and Mr Banks. It is not obvious why injunctions against them are thought to be necessary, in addition to the making of declarations concerning their past conduct. Their involvement was in connection with the particular business conducted by Dataline and Australis and was limited to particular statements. Ms Moore has no connection with any similar business. I am not satisfied that any real purpose would be served by injunctions against Mr Banks and Mr Litchfield, even if they agree to such orders. In relation to their future conduct I would have thought that their involvement in these proceedings would serve as a sufficient deterrent not to engage in such conduct in the future. Moreover they are not legally represented. One of the orders sought against Mr Litchfield is that be restrained from engaging in all of the conduct which Dataline engaged in and which has even held to be unconscionable That was not the case brought against him (see at par 34 above).
91 The terms of the injunctions sought against these respondents also point up their lack of utility. They are specifically connected with the Dataline business which has now ceased. Clearly it is not possible in this case to formulate an injunction which encapsulates the particular type of conduct which it is sought to prevent them from engaging in the future.
92 The same comments, with respect to the terms of the injunction, are relevant to those sought against Mr Russell. A problem in the way in which they are framed is that they have only the context of the particular business conducted by Dataline. This is sought to be overcome by the reference to ‘any similar business’ and conduct of a ‘similar kind’. Even if it were possible to reformulate an injunction, by identifying the particular type of conduct in question, as has sought to be done with respect to the declarations made, an injunction which is extended by these phrases would be both unwarranted and uncertain. The ACCC justifies the use of these terms by reference to ICI Australia Operations Pty Limited v Trade Practices Commission [1992] FCA 474; (1992) 38 FCR 248 at p 261, where Lockhart J said that it would be legitimate in some cases to grant an injunction in those terms. His Honour went on however to say that the desirability of injunctions in those terms depends upon the circumstances of the case and the extent to which the judgment has resolved the issue. It may be accepted that in some cases injunctions in those terms may be appropriate. This may be so where the operation of the order may be gleaned from the context of the particular case and the findings made, which is what I take his Honour to be saying. Those features are not present in this case. In BMW Australis Pty Ltd v The Australia Competition and Consumer Commission [2004] FCAFC 167; (2004) 207 ALR 452 (‘BMW v ACCC’) at p 465 par 36 a Full Court said that where an injunction is not based upon threatened future conduct, but upon past conduct, it should be limited to ‘restraining a repetition of precisely that conduct’.
93 I do not think injunctions in the terms sought would be appropriate. There is another reason why they should not be granted, even if they were redrawn. The purpose of an injunction, where it involves conduct already prohibited by statute, is to add the possibility of a finding of contempt by a failure to comply with the injunction, as the Court observed in BMW v ACCC (at par 39). That is clearly the purpose of these injunctions. They are however to be based upon facts which are deemed to be admitted and not found. The explanatory preface, which I have proposed with respect to the declarations to be made, cannot work in connection with an injunction. Declarations are a statement as to what has occurred. Injunctions would require Mr Russell to take action or not to engage in particular conduct. It would not be sensible for the Court to say that it was acting upon deemed admissions but nevertheless was prepared to require a person to do something or to regulate their conduct in some way.
94 The allegation against Mr Russell concerning resale price maintenance may be viewed differently. On that matter there is evidence from Mr Litchfield which is to the effect that, in a series of meetings held whilst he was employed by Dataline, there was discussion of the price at which VISPs were to be required to resell network plan to their customers. He enquired on one occasion of Mr Russell as to whether they could proceed upon this basis. Mr Russell confirmed that he had no interest in whether he was entitled to do so and intended to deal in this way with the VISPs. The evidence suggests a practice of resale price maintenance, which would extend beyond the one occasion pleaded. It is however possible to take the evidence as confirming only the case as pleaded. The use of the evidence would not involve a departure from the procedure under O 35A, and the use of the procedure appropriate to an application for judgment under O 35 where evidence is tendered. Its use in connexion with O 35A would be to allay any concerns, on the part of the Court, as to whether to make an order. I should add that the evidence has not been challenged. An injunction is in these circumstances appropriate.
95 There are further reasons for refusing the orders sought against Mr Russell which would require him to discontinue the proceedings brought in the District Courts. In the first place Mr Russell does not have control of those proceedings, there being liquidators appointed to each of Dataline and Australis. There are insufficient particulars about the litigation from which a conclusion, that there had been conduct which contravened the TPA, could be drawn. The injunction sought would interfere in the conduct of proceedings between those companies and the VISPs, who are not parties to these proceedings.

TRADE PRACTICE COMPLIANCE PROGRAM

96 The ACCC seeks an order requiring each of the personal respondents to attend a trade practices compliance program to be conducted by a panel nominated by Australian Compliance Institute Incorporated. The seminar, which is to take place on a date and at a place nominated by the Institute, is to consist of presentations with respect to many aspects of the TPA. They extend, impermissibly in my view, beyond the areas of contravention (see in this regard ACCC v Z-Tech Computers Pty Ltd (1997) 78 FCR 197 at p 204). If any orders were made in this regard they would need to be considerably more limited than the draft orders.
97 Orders of this kind were not sought in the application filed in commencement of the proceedings. It contemplated, as s 86C does, that the corporate respondents be required to implement a compliance program. Section 86C provides for the making of a ‘probation order’, which is defined to include:

‘(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 their 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.’

98 The ACCC accepts that there may be some doubt as to whether the section empowers the Court to require a person’s attendance at such a program. The section contemplates the contravening respondent undertaking a program, in the course of and as part of its business. The purpose of the section is plainly enough to make a corporation’s officers and employees aware of the provisions of the TPA in the context of the business in which the contravening conduct has occurred, in order to reduce the likelihood of further contravention. In that process the culture of the enterprise may also be improved. There is no suggestion in this section that orders of the kind sought are contemplated. The fact that the definition is said to ‘include’ the two orders referred to above does not provide a warrant for the implications the ACCC seeks.
99 The ACCC submits that the orders come within the wide powers of s 80. Even if that were the case, I do not consider it a proper use of the Court’s power to require the physical attendance of a person for the purpose of re-education. There are a number of objections to it, not the least being the use made of the authority of the court to effect this outcome. It is one thing for a corporation to require its employees to attend a seminar as part of its business; it is quite another for the Court to do so. There are also questions about the utility of an order which can only require the physical attendance of a person and which cannot require them to listen attentively or concentrate. It raises questions as to supervision and enforcement.

ADVERSE PUBLICITY ORDERS

100 The ACCC seeks orders under s 86D of the TPA against Mr Russell, consequent upon his participation in resale price maintenance and the imposition of a penalty, to which reference will later be made. The section provides that in such a circumstance the Court may require a person to publish an advertisement in the manner and in the terms specified in the order, at their expense.
101 The section is described as one for punitive orders. It commenced on 26 July 2001 (the Trade Practices Amendment Act (No. 1) 2001 (Cth)) and the ACCC concedes that it applies only to conduct after that date. These proceedings were commenced on 21 December 2001. The statement of claim alleges one occasion of resale price maintenance, on 4 December 1999.
102 The orders sought against Mr Russell would require him to establish a website, register a domain name for two years and post the document which is scheduled to the draft orders upon it. In that document he advises of his denial of the allegations of all of the conduct alleged against him; that despite the denials the ACCC has succeeded; and of the penalty he has been ordered to pay for his participation in resale price maintenance. He is also to be required to post an electronic mail to each of Dataline’s former VISPs and Veridas’ VISPs and post a link to the adverse publicity order with any internet service provider business he becomes involved with. He is to submit the adverse publicity order to three well-known search engines, to enable it to be known to anyone seeking information about Dataline, Australis or him. He is to inform the ACCC about compliance with the orders.
103 The statement of claim does not provide a proper basis for the making of these orders. It does not identify conduct occurring after the commencement of the section. If the ACCC uses a summary procedure it must accept the limitations of the pleading which was largely un-particularised. Indeed the reason for the requirement of the order is not identified with respect to the contravening conduct and penalty, but with statements made on a website, with which Mr Russell is connected, and which were made during the course of the proceedings.
104 To these observations I would add that I would not be inclined to make orders of this breadth. They extend to conduct which was not the subject of the contravention. They would require Mr Russell to access Dataline files which would be in the possession of its liquidator. They have the potential to adversely affect the business of Veridas by its customers being provided with adverse information about Mr Russell. If I were not already concerned about the excess of orders sought in these proceedings, these orders would cause me that concern. I am unable to avoid the conclusion that the ACCC’s pursuit of these orders is motivated by its desire to equalise the statements it believes were made by Mr Russell about its conduct of this litigation. It identifies ten statements made on a website operated by him. Each of them is critical of the ACCC and its conduct of the litigation.

SECTION 83

105 Section 83 of the TPA provides:

‘In a proceeding against a person under section 82 or in an application under subsection 87(1A) for an order against a person, a finding of any fact by a court made in proceedings under section 77, 80, 81, 86C or 86D, or for an offence against a provision of Part VC, in which that person has been found to have contravened, or to have been involved in a contravention of, a provision of Part IV, IVA, IVB, V or VC is prima facie evidence of that fact and the finding may be proved by production of a document under the seal of the court from which the finding appears.’

106 It is not plain that the section contemplates the making of an order. It is intended to facilitate the use of findings made in previous proceedings. Whether they amount to findings would be a matter for consideration in later proceedings. In any event the order sought is not appropriate in proceedings brought under O 35A.
107 Section 83 has been considered in connection with agreed statements of fact: Australian Competition and Consumer Commission v Monza Imports Pty Ltd (2001) ATOR 41 – 843; at 43, 440; FCA 1455; Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2) [2002] FCA 559; (2002) 190 ALR 169 at p 173 par 16 and Australian Competition and Consumer Commission v Leahy (No 3) (2005) 215 ALR 301; (2005) FCA 265 at pars 116 – 118. In ACCC v Monza Imports (at par 25) Carr J expressed the view that a ‘finding of any fact by a court’ meant a finding made after a hearing. In ACCC v Leahy (No. 3) Goldberg J (at par 118) said that even if this was not correct, where facts have not been the subject of critical analysis it is inappropriate to make orders allowing for an extended use of findings of fact, particularly use of those facts as prima facie evidence in related proceedings, as envisaged by s 83. I respectfully agree. Deemed admissions add another element of potential unfairness to a party against whom they may be applied and whom had not agreed with them.

RESALE PRICE MAINTENANCE – PECUNIARY PENALTIES

108 The ACCC seeks orders that Dataline and Australis each pay pecuniary penalties in the sum of $250 000 and Mr Russell the sum of $100 000 for their part in the contravention of s 48 of the TPA, having engaged in the practice of resale price maintenance. The conduct by Dataline, in which Australis and Mr Banks were knowingly concerned, was at the direction of Mr Russell, on behalf of Dataline, to VISPs not to sell the Dataline Services to their customers at a price less than Dataline specified. The allegation in the statement of claim is limited to one occasion.
109 The ACCC submits that the Court should proceed to make an order under s 76 of the TPA as it often does on the basis of agreed facts. The use of deemed facts is somewhat different and the question arises as to whether it is appropriate to proceed to make an order for a penalty under that section. The discretion involved here is not however that associated with the other forms of relief which might involve considerations of the appropriateness as to the relief itself. The discretion is that given by O 35A itself, as to whether to make an order for penalty to which the ACCC is otherwise entitled, and involves the application of the rule. In my view the evidence of Mr Litchfield on this topic, to which I have earlier referred, overcomes any difficulty and confirms that an order is appropriate.
110 Section 76(1) of the TPA obliges the Court to consider the following factors when determining an appropriate pecuniary penalty:

(a) the nature and extent of the respondents’ acts;

(b) any loss or damage suffered as a result of those acts;

(c) the circumstances in which they took place; and

(d) whether the respondents have previously been found to have been engaged in similar conduct by the Court in proceedings under pt VI of the TPA.

111 The act here in question is limited to one occasion and the context was the provision of internet-related services to retail Consumers. There is no evidence as to what effect this had upon Consumers. There is no evidence of prices in the market for the Services at the time. There is no evidence to suggest the respondents have previously engaged in similar conduct.
112 The additional factors referred to by French J in Trade Practices Commission v CSR Ltd (1991) ATPR 41 – 076 at 51,152 – 51,153 concern the contravening corporation and have regard to its power in the market and its corporate culture. There is little that can be said about these factors on the bare facts of this case. There is nothing to suggest that Dataline or Australis had any significant power in the market. It may be inferred that the contravention was deliberate. It arose out of the conduct of the person controlling the company. There is no suggestion that the corporate respondents had a corporate culture conducive to compliance. The history of these proceedings would suggest they did not have a disposition to cooperate with the authorities.
113 With respect to the further factors identified by Heerey J in Australian Competition and Consumer Commission v NW Frozen Foods Pty Ltd (1996) ATPR 41–515 at 42, 444 – 42, 445, the fact that the respondent corporations are both in liquidation should be taken into account. It is not suggested however that the imposition of a penalty would have an adverse effect upon creditors. The factors also require the deterrent effect of the penalties are taken into account.
114 The factors listed are not exhaustive. The ACCC submits that the following additional factors should be considered:

(a) That the respondents’ practice of resale price maintenance more readily facilitated the unconscionable conduct in which they are also engaged;

(b) That the respondents also engaged in unreasonable harassment or coercion in connection with the acts of resale price maintenance; and

(c) The respondents failed to properly perform their obligations of discovery.

115 Their reference is not obvious to me. It was said that the other conduct of Dataline allowed it and Australis to take the business of Consumers away from VISPs. Australis was then able to compete with VISPs and deal with Consumers at a lower price. This is referred to in the evidence of Mr Banks, which I consider should not be taken into account, as it impermissibly extends what is alleged in a statement of claim by adding another purpose, namely that of undercutting Australis’ competition. It is submitted that the conduct of the respondents also constituted undue harassment or coercion, within the meaning of s 60 of the TPA, and for this reason the pecuniary penalty should be increased. If a penalty was to be increased for this reason it would not be because it involves the contravention of another section but because of the nature of the conduct in question. A penalty for resale price maintenance is to be made by reference to that conduct and not its characterisation as other conduct. In any event it is not plain to me that the bare fact of a direction to VISPs as to the price they are to charge their Consumers, and that no lesser price should be charged, constitutes a threat. The ACCC’s submission, that the Court should increase the penalty for resale price maintenance because the respondents failed to perform their obligations of discovery and comply with orders of the Court, causes me concern, for the reason that it was made. In my view that would be an improper use of the power to impose a penalty. There are other sanctions for the respondents’ conduct in the proceedings before the Court and they have been applied.
116 The ACCC submits that although there was only one act of resale price maintenance, its operation was extensive. It points to previous statements made by the respondents in submissions in the course of proceedings and in affidavits by Mr Russell. From these materials it may be gleaned that there were between 60 and 100 VISPs, that 26 independent VISPs of Dataline had approximately 5000 customers and that Australis had 2500 customers. At one point the respondents’ solicitors stated that somewhere in excess of 15 000 consumers had received internet services from Australis.
117 None of the decisions to which the ACCC has referred provides support for the level of penalty sought to be applied in a case involving one contravention, albeit one having a significant sphere of operation. In relation to the corporate respondents, I would have been inclined to order the payment of a penalty in the sum of $25 000 each, had they not been in liquidation. I accept that a penalty is not a debt provable in liquidation and would not have an adverse effect upon creditors. It seems to me however that a penalty is meaningless where a company is being wound up. The only purpose it could have is that of deterrence and that is provided by my finding of what orders would have been made were the companies likely to have continued in existence.
118 So far as concerns Mr Russell, the penalty appropriate for his participation could in my view be no more than $10 000. He has no assets to speak of and I infer that his parlous financial position has been substantially brought about by the costs of these proceedings. Given his circumstances I propose to make an order that he pay a penalty of $5 000.

RESOLUTION OF INTERLOCUTORY ORDERS

119 Two orders are sought in this regard: that the ACCC retrieve and retain the hard disc drives held in the Registry of the Court following upon the Anton Piller order made in January 2002; and that the orders of confidentiality made in September 2002 be discharged. The firstmentioned order is sought on the basis that the material would be used for the purpose of these proceedings only. It is not obvious to me why the ACCC seeks this material, to which the liquidator of Dataline would be entitled, when these proceedings are being brought to a conclusion. It is not explained why it seeks a discharge of the confidentiality orders. The fact that it would not misuse the information about Dataline’s process does not provide a reason for the discharge of the orders. I do not propose to make either of the orders sought.

LEAVE TO PROCEED AGAINST DATALINE

120 For the purposes of this application I will make the order sought.

FIXED COSTS

121 The ACCC seeks an order for costs under O 62 r 4(2)(c) in the sum of $521 410 against Dataline, Australis, Mr Russell and Ms Moore. No orders are sought against Mr Banks or Mr Litchfield. The ACCC points to orders of this kind having been made on applications under O 35A and to the appropriateness of such an order where a respondent corporation is in liquidation and the personal respondents have little by way of assets. In the latter regard, I would not be prepared to make an order for costs of this magnitude against Ms Moore, given that it involves extensive conduct on the part of Dataline, Australis and Mr Russell in which she is not said to have been involved and her limited part in these proceedings. Although at some point she has been represented by the same solicitors who acted for Dataline, Australis and Mr Russell, there is nothing to suggest that she had any real understanding of the proceedings or was involved in the direction they took.
122 The purpose of the rule is to avoid the expense, delay and aggravation involved in protracted litigation which might arise out of taxation and the powers appropriate to be used in complex cases: Beach Petroleum NL v Johnson (No.2) (1995) 57 FCR 119 at p 120. It has been accepted that the impecuniosity of the corporate respondents is a relevant consideration in determining whether to make an order under the rule: Hadid v Lenfest Communications Inc [2000] FCA 628 at pars 25 – 26. The approach to the making of such an order is not one akin to the process of taxation itself.
123 The costs incurred by the ACCC in the pursuit of this litigation total some $820 000. The sum sought by way of order represents what it would likely have recovered on a party and party taxation. There is nothing to suggest that the rates of charge are excessive. There is evidence that they are somewhat less than that charged in litigation of this nature. The reason why such substantial costs have been incurred is explained by reference to the complexity of the case and the substantial number of applications which became necessary, particularly with respect to discovery.
124 Different views might be held as to whether the proceedings needed to be so complex and whether it was necessary to pursue all the claims and all of the respondents. Similar questions might be addressed to this application, which was very much complicated by the extensive orders sought. The respondents, whilst observing that the costs are substantial, do not pursue this line of argument and do not seek orders which would deny the ACCC some proportion of its costs. The only question is whether the matter should proceed to taxation. The charges themselves do not appear unreasonable and in the circumstances taxation would not appear to be warranted. The order sought should be made.

Associate:

Dated: 3 November 2006