FEDERAL COURT OF AUSTRALIA

Australian Competition & Consumer Commission v Abel Rent-a-Car Pty Ltd

[1999] FCA 314

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v ABEL RENT-A-CAR LTD & ANOR

Q 34 OF 1999

DRUMMOND J

23 MARCH 1999

BRISBANE

THE COURT ORDERS THAT:

1.                  Unless otherwise earlier ordered the first respondent, by its officers, servants and agents or otherwise, within 45 days of today alter all its signage, including depot, billboard and vehicle signage:

(a)                which includes the text specifying a price of $29 per day or any other price for rental of any vehicle, by adding beside that text the additional text prominently stating “plus mileage” or, alternatively, text prominently stating the number of kilometres included, without further charge, in that rental price;

(b)               which includes text specifying a price of $29 per day or any other price for rental of any vehicle, and that price is not available for that vehicle each day of the week, by adding beside that text additional text prominently stating the days of the week for which that vehicle is available at that rental price;

(c)                which includes the text specifying a price of $29 per day for trucks, by deleting the reference to trucks;

(d)               which includes the text specifying free delivery by deleting reference to same;

(e)                the first respondent have liberty to apply on notice to the applicant to extend the 45 day period referred to above.

2.                  Unless otherwise earlier ordered, the first respondent, by its officers, servants and agents or otherwise, within 48 hours from 4.00 pm on 24 March 1999:

(a)                take or cause to be taken all action necessary to ensure that all of its existing advertising brochures not already in its possession but which are in the possession of its servants or agents, being advertising brochures containing the text “Abel $29*” and/or free delivery or any similar text but without the altered text referred to in Orders 1(a), (b), (c) and (d) are recalled into the possession of the first respondent.

(b)               the first respondent have liberty to apply on notice to the applicant to extend the 48 hour period referred to above.

3.                  Until the final determination of this action or until otherwise earlier ordered, the first respondent, by its officers, servants and (after expiry of the period referred to in Order 2) also by its agents be restrained from distributing any advertising brochures (including existing brochures) which contain the text “Abel $29*” or any similar text and/or text specifying free delivery but without the altered text referred to in Order 1(a), (b), (c) and (d) and are now in or which may, in accordance with Order 2, be recalled into its possession.

4.                  Unless otherwise earlier ordered, the first respondent, by its officers, servants and agents or otherwise, within 14 days of the date of this order cause to be modified each page of its Internet website located at http://www.abel.com.au and any other website it may operate or maintain from time to time as follows:

(a)                where any page of the site includes the text “free insurance” or any similar text, by adding beside that text and in the same size and style of that text the additional text:  “excess applies”;

(b)               where any page of the site includes text specifying a price for rental of any vehicle, by adding beside that text the additional text prominently stating “plus mileage” or, alternatively, additional text prominently stating the number of kilometres included without further charge in that rental price;

(c)                where any page of the site includes text specifying a price for rental of any vehicle, and that price is not available for that vehicle each day of the week, by adding beside that text additional text prominently stating the days of the week for which that vehicle is available at that rental price;

(d)               where any page of the site includes text specifying $29 in relation to trucks, by deleting the reference to trucks;

(e)                where any page of the site includes text specifying free delivery, by deleting reference to same;

(f)                 the first respondent have liberty to apply on notice to the applicant to extend the 14 day period referred to above.

5.                  Until the final determination of this action or until otherwise earlier ordered the first respondent, by its officers, servants and agents, be restrained, other than in respect of representations required to be modified by the preceding orders:

(a)                from making further representations that trucks or particular models of trucks are available for rental at $29 per day, provided the respondents are permitted 48 hours from 4.00 pm on 24 March 1999 to modify existing invoices;

(b)               from making further representations that it offers delivery of hired vehicles free of charge to hirers;

(c)                liberty to the first respondent to apply to dissolve or modify the injunctions in paragraphs (a) and (b) if it does intend to offer trucks for rental at $29 per day or free delivery of hired vehicles.

6.         Costs of and incidental to the application for interlocutory relief reserved to the trial judge.

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

REASONS FOR JUDGMENT

1                     The Australian Competition and Consumer Commission applies for interlocutory injunctions against the respondents who it alleges have engaged in conduct in contravention of ss 52, 53 and 56 the Trade Practices Act 1974 (Cth), in connection with the first respondent’s vehicle hire business.  The second respondent is a director of the first respondent.

2                     Very extensive interlocutory orders are claimed by the ACCC in its application, but it became apparent during the hearing, that there are only a small number of core issues in respect of which interlocutory intervention is, I think, justified. 

3                     The respondents who offered undertakings not acceptable to the applicant did not consent to any interlocutory orders, but they indicated that they could not effectively resist orders being made on all save one matter, subject to being allowed reasonable time to comply with the orders the Court does make.

4                     I am satisfied that the applicant has made out an arguable case that the respondents respectively have engaged in or been involved in conduct contravening s 52 of the Act in the following respects:  firstly, by the first respondent advertising cars for hire at $29 per day (and at other daily rates) without any qualification, when in truth, cars are only made available at the base rate of $29 (or other base rate), plus mileage charges, and so far as concerns cars offered at the base rate of $29, are only made available at that rate on Monday through to Thursday of each week.

5                     I do not think that the evidence that the first respondent makes cars available at $29 (and at other base rates) without an additional mileage charge in respect only of the first 25 to 50 kilometres or so detracts from the case the applicant has made out, that the unqualified use by the first respondent in its advertising of the $29 rate or other specific base rate arguably constitutes conduct in contravention of s 52.  I reach that conclusion in the absence of any evidence suggesting that there is any significant number of consumers who hire cars to use them over distances as little as 25 to 50 kilometres overall.

6                     Secondly, I consider the applicant has made out an arguable case of contravention of s 52 by the first respondent advertising trucks for hire at $29 per day when it has no trucks for hire at that rate, even with additional charges.  Thirdly, I consider the applicant has made an arguable case of conduct contravening s 52 by the first respondent advertising that it offers free delivery of hire vehicles, when there is no real foundation for it continuing to make that representation, as it has done.

7                     The respondents do not really contend that the applicant has, on the material before me, failed to make out an arguable case of the contraventions of s 52 of the Act in these three respects.

8                     The time the conduct complained of has continued and the limited undertakings offered favour the conclusion that there is a sufficient risk of further such conduct as would justify interlocutory intervention.  There is nothing in the respondents’ material sufficient to suggest that the balance of convenience favours denial of interlocutory orders directed to the continuance of these three classes of conduct.  The public interest character of proceedings like the present is also relevant in favouring the grant of interlocutory relief to the applicant.

9                     The applicant also contends that it should have interlocutory relief that will stop the first respondent referring in its advertising to free insurance being included in its advertised vehicle hire charges.  Here, the respondents submit that the applicant’s material is insufficient to make out an arguable case that what the first respondent has done involves conduct in contravention of s 52.  The respondents submit that if one has regard to what the first respondent says in its advertising about free insurance, from the viewpoint of the reasonable person referred to in Trade Practices Commission v Optus Communications Pty Ltd (1996) ATPR 41-478, no false impression is created by that statement.  They say this in view of what they contend is the expectation of reasonable people interested in hiring vehicles of the kind offered by the first respondent that free insurance could still be expected to involve an insurance excess to be met by the hirer, if a claim is made on that insurance in respect of a hirer’s use of a hired vehicle.  I disagree.  The applicant’s evidence is that the first respondent only made insurance available with a substantial excess to be borne by the hirer which ranged from $1,500 to $2,000.  Moreover, the evidence indicates that the first respondent insists on covering this excess before a hiring starts either by taking a provisional credit for its amount from the hirer’s credit card, or by the hirer instead paying a significant daily excess waiver fee.  The second respondent deposes that this approach, with the insistence by the first respondent on taking something in the nature of security for the full amount of the excess if waiver fees are not paid, is common in the vehicle hire industry.  However, he merely swears to this being the case.  He does not proffer any supporting information.

10                  In my view, it is clear from the extensive evidence of the applicant on the point and notwithstanding the general contradictory evidence from the second respondent, that the applicant has an arguable case that potential consumers of the first respondent’s services would not understand the representation of free insurance, which the first respondent uses in much of its advertising, as a representation that the insurance offered is subject to a substantial excess with respect to which hirers must make arrangements satisfactory to the first respondent before a vehicle will be hired.

11                  There is nothing raised in the respondents’ material to suggest that the balance of convenience favours denial of an injunction of the limited kind sought by the applicant, which would require the first respondent to accompany any free insurance representation with a suitably prominent qualification that “excesses apply”.  The applicant is entitled to an appropriate injunction here also.

Associate:

Dated:              23 March 1999