FEDERAL COURT OF AUSTRALIA

.au Domain Administration Ltd v Domain Names Australia Pty Ltd

[2004] FCA 424

TRADE PRACTICES – misleading and deceptive conduct – notices regarding registration of domain names – representation to public – attributes of hypothetical addressee – no requirement that significant numbers be misled – “unsolicited services” – services not yet provided – whether actionable

WORDS AND PHRASES – “unsolicited services”

Trade Practices Act 1974 (Cth) ss 52, 64

10^th Cantanae Pty Ltd v Shoshana Pty Ltd (1987) 79 ALR 299 not followed

A G Spalding & Bros v A W Gamage Ltd (1915) 32 RPC 273 cited 

Australian Competition and Consumer Commission v Optell Pty Ltd (1998) 41 IPR 49 distinguished

Australian Securities and Investments Commission v National Exchange Pty Ltd (2003) 202 ALR 24 discussed

Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 applied

Elders Trustee and Executor Co Ltd v E G Reeves Pty Ltd (1987) 78 ALR 193 applied

Erven Warnink Besloten Vennootschap v J Townend & Sons (Hull) Ltd [1979] AC 731 cited

Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 applied

Lubrano v Gollin & Co Pty Ltd (1919) 27 CLR 113 cited

McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd (1980) 33 ALR 394 applied

Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 applied

Rizzo v Fitzgerald (1988) 19 FCR 175 not followed

Rizzo v Wall (unreported, Pincus J, 25 November 1987) considered

Saville Perfumery Ltd v June Perfect Ld (1941) 58 RPC 147 cited

Siddons Pty Ltd v Stanley Works Pty Ltd (1991) 29 FCR 14 not followed

Snoid v Handley (1981) 38 ALR 383 not followed

Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 applied

Weitmann v Katies Ltd (1977) 29 FLR 336 not followed

Wells v John R Lewis (International) Pty Ltd (1975) 25 FLR 194 distinguished

.AU DOMAIN ADMINISTRATION LIMITED v DOMAIN NAMES AUSTRALIA PTY LTD and CHESLEY PAUL RAFFERTY

V 656 of 2003

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v DOMAIN NAMES AUSTRALIA PTY LTD and CHESLEY PAUL RAFFERTY

V 926 of 2003

FINKELSTEIN J

8 APRIL 2004

MELBOURNE (via video link to Perth)

REASONS FOR JUDGMENT

1                     Two actions are being heard together.  One is a representative proceeding in which .au Domain Administration Limited (.au Domain) is the representative party.  The respondents in that action are Domain Names Australia Pty Ltd (DNA) and its sole director, Mr Rafferty.  The second action is brought by the Australian Competition and Consumer Commission (ACCC) and is against the same respondents.  Each action arises out of the same facts and in each action the applicants make similar claims.  For those reasons the parties have agreed that there should be one trial. 

2                     The actions are concerned with the Internet and domain names.  Put simply, the Internet is a worldwide system of interconnected computer networks.  A domain name is essentially a unique name that identifies a particular site on the Internet.  .au Domain administers domain names in Australia.  DNA was established in October 2002 by Mr Rafferty.  As part of its business DNA sends notices to Australian businesses inviting them to register particular domain names.  For a fee it then facilitates the registration of the domain name requested by a respondent.  It is the notices which are at the heart of this dispute.  .au Domain and ACCC allege that notices sent in June, July and September 2003 were false or misleading in several respects.  They seek declarations that DNA has contravened s 52 of the Trade Practices Act 1974 (Cth) and that Mr Rafferty was involved in those contraventions.  They also seek injunctions restraining further breaches.  There is a subsiduary claim that by sending the notices DNA breached s 64(2A) of the Trade Practices Act.  Section 64(2A) prohibits a corporation in trade or commerce from “assert[ing] a right to payment from a person for unsolicited services unless the corporation has reasonable cause to believe that there is a right to payment”.  The applicants contend that the notices sent by DNA claimed the right to receive from the recipients the fee for the registration of their existing domain name.

3                     To understand the issues that arise in this case it is necessary to know something about the Internet and the nature and use of domain names.  The Internet can best be described as an expansive worldwide network of computers which serves to interconnect innumerable smaller linked computer networks through the global telecommunications infrastructure.  The computers are linked through an Internet host that is usually a commercial organisation called an Internet Service Provider (ISP).  An ISP allows subscribers to connect to the Internet through the ISP’s computer which acts as a “server” of information. Each computer on the network can communicate with the others by using machine language conventions known as “Internet Protocols”.   

4                     The most common method of communication over the Internet is through the medium of the World Wide Web (the Web).  Computers linked to the Web exchange and store information by means of an Internet Protocol known as “Hypertext Markup Language” (HTML).  Information is stored on the Web in various formats, including text, still images, sound and video.  The Web also houses documents in the form of “web pages”.  Web pages are created with HTML and can contain text, images, other files and links to other web pages.  A collection of web pages is referred to as a “web site”.  Every web page has a unique address called a “Uniform Resource Locator” (URL).  An Internet user who wishes to access a web page can do so by entering the relevant URL address into a “browser” (a software program used for viewing information on the Internet). 

5                     A domain name forms part of the URL web address.  Take, for example, the court’s URL web address: http://www.fedcourt.gov.au. The domain name component of the address is: fedcourt.gov.au.  It comprises a series of alpha-numeric characters that translate a somewhat less-decipherable string of numbers; an “Internet Protocol number” (IP number).  IP numbers are essentially unique web addresses signifying the location of individual computers connected to the Internet.  Computers which share a common part of an IP number are said to be in the same “domain”. 

6                     A domain name enables people to access a web page by typing in words or letters instead of the full sequence of digits comprising an IP number.  A system of databases called the “Domain Name System” (DNS) serves to cross-reference and link domain names to IP numbers.  The DNS itself is hierarchical.  “Top Level Domains” are, as their name suggests, at the top of the hierarchy.  They comprise “generic Top Level Domains” (gTLDs) and “country code Top Level Domains” (ccTLDs).  gTLDs are domain names which may, for example, end in “.com”, “.net”, “.org”, “.gov”, “.mil”, “.biz” and “.info” (these abbreviations refer to “Commercial”, “Network”, “Organisation”, “Government”, “Military”, “Business” and “Information” respectively and often denote the content of the web page to which they relate).  ccTLDs are domain identifiers for different countries.  Examples include “.au” which signifies Australia, “.nz” for New Zealand and “.uk” for the United Kingdom.  At the next level are “second-level domains” (2LDs), which are further classified as “open 2LDs” and “closed 2LDs”.  Open 2LDs are, subject to eligibility rules, open to all sectors of the community and include domain names ending in “.com.au” and “.net.au” (for businesses and commercial entities such as companies), “.org.au” (for charities and non-profit organisations), “asn.au” (for incorporated associations, political parties, unions and clubs) and “.info.au” (which was, until recently, open to any business or individual for any purpose but is now no longer available).  Closed 2LDs are restricted to defined sectors and include domain names ending in “.edu.au” (for educational institutions) and “.gov.au” (for federal, state and local government bodies).      

7                     There is a system for the registration of domain names.  The pre-requisites for registration will differ according to the domain in which the name is sought to be registered.  The Internet Corporation for Assigned Names and Numbers (ICANN) is an American non-profit organisation which has assumed responsibility for the administration of the DNS and the management of the Internet.  ICANN has “delegated” the authority to administer levels of the DNS and, in particular, most ccTLDs.  By a sponsorship agreement with ICANN, .au Domain, a not for profit company, is the “delegated authority” for the administration of the “.au” ccTLD in Australia.  .au Domain also has the function of accrediting and licensing “Registrars”.  A Registrar can license “.au” domain names.  A Registrar is also responsible for registering domain names and for maintaining a Registry database of registered domain names.  A Registrar may appoint a “Reseller” to act as an agent for the Registrar and deal directly with the proposed “Registrant”.  However, a Reseller cannot effect the registration of the domain name itself.  If the Registrar approves the domain name and the application for a domain name is successful, the Registry is updated and the details of the Registrant’s ISP number and domain name are added to the “authoritative nameserver”.  This latter step ensures that other computers on the Internet can find the new domain name. 

8                     A Registrant of a domain name is the exclusive licence-holder of the domain name for the period of the licence.  The grant of a licence does not, however, preclude another person registering a domain name in a different gTLD or 2LD.  For example, where a domain name ending in “.com” has been registered, a person other than the Registrant may register that name in another domain such as “.com.au”. 

9                     DNA plays an unusual role in the registration of domain names.  It is not a Registrar.  Nor is it a Reseller.  DNA merely “facilitates” the registration of domain names.  It does so by “entering the details of the gTLD or ccTLD to be registered onto the website of a Registrar…and…sending an electronic request to a Registrar to register that domain name”.  For this it charges a modest fee. 

10                  I have mentioned that these proceedings are about notices sent by DNA inviting recipients to register particular domain names.  In all, complaint is made about four different forms of notice.  Copies of two notices are, for convenience, annexed to these reasons.  The other notices are substantially the same as the second annexure.   

11                  The first notice was sent in June 2003 to over 41,000 “Australian businesses” located in Victoria, Queensland and South Australia (the June notice).  Each recipient of the June notice held an existing registered domain name ending in “.com.au”.  According to DNA, the notice was solely concerned with the registration of the “.com” equivalent of the recipient’s existing “.com.au” domain name.  In July 2003, DNA sent two forms of notice to approximately 175,000 Australian businesses who were in Victoria, the Australian Capital Territory, New South Wales, Queensland, South Australia and Western Australia (the July notice).  One form of the July notice had a “payment section” (which the recipient could return to DNA with the payment amount) and the other, at least according to the form of notice attached to .au Domain’s statement of claim, apparently did not have such a section.  DNA says that each July notice was concerned with the registration of one or other of the following: (1) the “.net.au”, “.biz”, or “.info” variant of the recipient’s existing “.com.au” domain name; (2) the “.com.au” or “.net.au” variant of the recipient’s existing “.com” domain name; (3) the recipient’s recently expired “.com.au” or “.com” domain name; or (4) a domain name ending in “.com.au” or “.com” in respect of recipients who did not hold any existing domain name or, alternatively, in respect of recipients who did not hold an existing domain name “substantially similar” to the domain name mentioned in the notice.  In September 2003 DNA sent another batch of notices to approximately 418,000 Australian businesses which were located in the Australian Capital Territory, New South Wales, Queensland, Victoria, South Australia and Western Australia (the September notice).  These notices were said to offer the registration of domain names ending in “.com” and “.com.au”.  Most of the recipients of the September notice did not hold an existing domain name or, alternatively, did not hold an existing domain name which was similar to that in the notice.  However, some people who received the September notice held an existing registered domain name that was substantially similar to that in the notice; the difference being that the domain name in the notice contained a different gTLD or 2LD and, in some cases, an abbreviation of the part of the recipient’s existing domain name which described the recipient’s business. 

12                  Turning now to the claims, the whole basis of each applicant’s case as regards s 52 rests on the words and layout of the notices.  On the question of s 52, I am going to guide myself by the following principles.  Most of them are uncontroversial:

1. Conduct will be misleading or deceptive if it conveys a false representation.
2. The question whether conduct is misleading or not is an objective question of fact which the court must determine for itself against the background of all relevant facts.  Accordingly, while evidence of deception may be led it is not essential to the case. 
3. Whether conduct is misleading does not, however, depend upon the defendant’s intention, for a corporation which acts honestly and lawfully may contravene s 52.  But if there is an intention to mislead the court may more easily infer that the conduct was in fact misleading. 
4. Conduct which does no more than cause confusion or uncertainty is not misleading or deceptive.  Section 52 is directed to something else. 
5. For there to be a contravention of s 52 the conduct must cause (in the sense explained in point 6) an erroneous assumption or misconception.  That is, there must be a “sufficient nexus” between the conduct and the error or misconception. 
6. Nevertheless, it is not necessary to show that anyone has in fact been misled.  It is enough that the conduct is likely to mislead or deceive in the sense that there is a real chance or possibility of deception. 
7. Where the conduct involves the making of a statement which is literally true or accurate the conduct may still be misleading.  It all depends upon the circumstances.

13                  The precise manner in which these principles are applied will differ from case to case.  In particular, the way in which the court will determine whether certain conduct has the capacity to cause error or misconception will vary dependent upon the nature of the case before the court.  Here I have in mind the two broad categories of case brought under s 52.  The first is an action by a plaintiff who complains that he has been misled by the defendant’s conduct and seeks redress.  Section 52 appears in Pt V of the Trade Practices Act.  Part V is headed “Consumer Protection” and it is with consumers that s 52 is principally concerned.  In this type of case the plaintiff has the burden of proving that the impugned conduct was misleading and that he altered his position (that is, was induced) as a result.  In most cases it will not be difficult to determine whether the defendant’s conduct amounts to misleading conduct.  Nor will it be difficult to determine whether the conduct induced the plaintiff to act to his detriment. 

14                  The second category is where the plaintiff has not been, and does not fear being, deceived or misled.  Such a plaintiff brings a s 52 action for a different purpose.  He may be in competition with the defendant and is seeking to protect his business from unfair competition (as he might in a passing off action).  Or the plaintiff may be a statutory authority such as the ACCC which brings the action to vindicate the public interest.  In this type of case the plaintiff usually alleges that the conduct is likely to cause a third party to be misled or deceived.  The question whether the conduct is likely to mislead a third party cannot be resolved in the same way as in an action where the plaintiff seeks to establish that he personally has been misled.  In such a situation it is necessary to keep in mind the two further classes of action identified by Deane and Fitzgerald JJ in Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177, 202-203.  The first concerns a case where there is an “express untrue representation made only to identified individuals”.  I take the judges’ reference to the case of an “express representation” to refer to an action that is founded on the literal meaning of a representation about a fact (including the non-existence of a fact) or state of affairs.  An express representation may be made by words, through the use of symbols for conveying information or by other conduct.  An express representation must be distinguished from an implied or inferred representation - “[a]n implication is included in and part of that which is expressed:  an inference is something additional to what is stated”:  Lubrano v Gollin & Co Pty Ltd (1919) 27 CLR 113, 118.  Deane and Fitzgerald JJ said that as regards this first class of case, the task of deciding (1) whether a representation conveys a false representation and (2) whether the representation has caused error or misconception, should be “uncomplicated”.  Most actions where the plaintiff alleges that he has been misled will fall into the first (express representation) class.

15                  The second class identified by Deane and Fitzgerald JJ concerns a case where the alleged misrepresentation is not express and is not made to identified individuals, but is made to the public at large or to a section of the public.  As regards this class, Deane and Fitzgerald JJ said that determining whether conduct may lead to error should involve the following process.  First, it is necessary to identify the relevant section (or sections) of the public by reference to which the issue is to be tested.  Second, once the section of the public is identified the issue is to be considered by reference to all who come within the section.  This may include the astute and the gullible, the intelligent and the not so intelligent, the well educated and the poorly educated.  Third, it is permissible (but not essential) to have regard to evidence that some person has in fact been misled, though this evidence will not be conclusive.  Finally, it is necessary to enquire whether any proven misconception has arisen because of the misleading or deceptive conduct.

16                  In Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 the High Court (at 84) approved the observations of Deane and Fitzgerald JJ regarding the manner in which a plaintiff should go about establishing whether or not particular conduct has produced error or misconception.  In addition, the High Court (at 85-86) laid down two further rules.  First, where the persons allegedly misled are not identified individuals but are members of a class it is necessary to isolate “a representative member” of the class and enquire whether this hypothetical individual is likely to be deceived.  Second, when considering the likely effect of the misrepresentation on this hypothetical person he (or she) should be judged as an “ordinary” or “reasonable” member of the class.  In this way, reactions to the representation that are “extreme” or “fanciful” will be disregarded. 

17                  The High Court’s decision in Campomar Sociedad has settled some issues arising out of s 52 and raised others.  One unresolved issue concerns a matter of characterisation.  How is one to distinguish between a case which involves a representation made to identified individuals and a case where the representation is made to the public or to a section of the public?  I had occasion briefly to consider this problem in Australian Securities and Investments Commission v National Exchange Pty Ltd (2003) 202 ALR 24, at 27-28.  There the defendant had made false representations to approximately 5,000 shareholders of a major public company.  Each shareholder to whom the representations were made was identifiable by name and address.  I treated the case as one where the representation had been made to identified individuals.  If I were to adopt that approach in the instant case, it would be characterised as a case concerning representations to identified individuals, although the notices in issue were despatched to several hundred thousand businesses.  

18                  Upon further reflection I suspect I was probably in error in the National Exchange case, although the error was not one which could have affected the result.  There can be no doubt that when the impeached conduct is directed towards an indeterminate group or to a group defined by general or collective criteria the case should be treated as one involving a representation to the public at large or to a section or class of consumer.  It seems that the same approach should be followed when the case involves a representation to an identifiable group and the plaintiff is alleging not that he was misled but that members of the group (whether great or small in number) were misled by the conduct.  In Elders Trustee and Executor Co Ltd v E G Reeves Pty Ltd (1987) 78 ALR 193, 241 Gummow J indicated that he would treat this type of claim as a “representation to the public” case.  This approach, which is the approach I propose to adopt, invites attention to the nature of the claim and not the identity of the person to whom the representation is directed. 

19                  I appreciate that on one view the approach might be criticised for applying too fine a distinction.  There will be cases where a person other than the representee brings the action and the group to whom the allegedly misleading representation was made is so small that it cannot sensibly be described as a class or a section of the public.  In that circumstance it may be neither possible nor necessary to identify a hypothetical member of the group for the purpose of deciding the likely effect of the impugned conduct.  If no hypothetical individual is identified the court must determine the likely effect of the conduct on the actual members of the group.  There will also be cases on the margin where it will not be clear whether they should be treated as “representation to the public” cases.  But the difficult cases are likely to be few and far between.

20                  I also appreciate that the approach I am required to adopt has the potential of producing anomalous results, at least at the theoretical level.  Let it be assumed that the proprietor of a business brings an action against a competitor complaining that one of the competitor’s advertisements, sent only to a handful of customers, contained allegedly false statements about the origin of the competitor’s products.  In order to succeed the plaintiff would have to establish that a hypothetical member of the group of customers would have been misled by the advertisement.  On the other hand, if a member of the group were to bring an action complaining that he personally had been misled by the advertisement, he would need to prove that only he had been misled.  The anomaly is that by virtue of the different tests it is possible that the individual complainant might lose his action but the proprietor of the business may succeed, or vice versa.  This would be a very strange result. 

21                  Another potential difficulty arises because the class to whom the impugned conduct is directed will often comprise a diverse group.  That is, the members of the group might include the uneducated, the inexperienced, the ignorant and the unthinking as well as the educated, the intelligent and the informed consumer.  How then is one to identify and give characteristics to Campomar Sociedad’s hypothetical individual?  Logic demands that if one is dealing with a diverse group then, for the purpose of determining whether particular conduct has the capacity to mislead, it is necessary to select a hypothetical individual from that section of the group which is most likely to be misled.  If the court is satisfied that this hypothetical individual is likely to have been misled by that conduct, that would be sufficient. 

22                  The final point in relation to “representation to the public” cases concerns the requirement, which has been stated in many decisions both at first instance and on appeal, that for the representation to be actionable it must be shown that significant numbers of the group to whom the representation is directed are likely to have been misled or deceived.  This requirement can be traced back to the decision of Franki J in Weitmann v Katies Ltd (1977) 29 FLR 336, an early s 52 case.  The applicant was a clothing designer and wholesaler.  The clothing bore a particular brand name which the applicant used as a trade mark.  The respondent, a clothing retailer, imported clothing with a similar mark.  The applicant sought injunctive relief, alleging that the sale of the imported clothing would contravene s 52.  The application failed because the judge held that the particular mark, the name of a geographic location, did not indicate that the clothing sold by the respondent originated from the applicant.  In giving his reasons, however, the judge went further than the case required.  He said (at 339) that in a s 52 case the principles relating to a passing off action were “in a general sense … particularly relevant with regard to determining whether certain conduct is misleading or deceptive”.  He went on to say (at 343) that in such a case he was required to “consider whether a reasonably significant number of potential purchasers would be likely to be misled or deceived just in the same way as this question should be considered in a passing off action”.

23                  Franki J was correct in stating that in a passing off action it is necessary for the plaintiff to show that a large number of consumers are liable to be deceived by the defendant’s use of a particular name or get up:  Saville Perfumery Ltd v June Perfect Ld (1941) 58 RPC 147, 175-176.  This is hardly surprising.  The basis for a passing off action is a proprietary right in goodwill established through the use of a name or get up in connection with the plaintiff’s goods:  A G Spalding & Bros v A W Gamage Ltd (1915) 32 RPC 273, 284; Erven Warnink Besloten Vennootschap v J Townend & Sons (Hull) Ltd [1979] AC 731 at 741-742, 754.  The action is for damage done or threatened to be done to that property by the defendant.  That is the reason the plaintiff must show that a significant number of people are likely to be misled.  Unless many people are misled it is unlikely that the plaintiff’s goodwill will be damaged.

24                  In my opinion, however, Weitmann v Katies Ltd borrowed from the law relating to passing off without due regard to the difference between a passing off action and a claim based on s 52.  In Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216, 226 Stephen J warned against such reasoning.  He said that a s 52 case is not (unlike in passing off) founded upon protection of a trader’s goodwill, but is directed to preventing the very deception of the public which operates to injure that goodwill.  Put another way, a passing off action is concerned with deception or confusion of the public as to the source of goods, whereas the policy behind Pt V of the Trade Practices Act is designed to prevent the deception of consumers of goods or services:  cf McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd (1980) 33 ALR 394, 410.  Moreover, as Mason J said in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, 205:  “[t]he operation of s 52 is not restricted by the common law principles relating to passing off”.

25                  It seems to me that there is simply no warrant for imposing a requirement that in a “representation to the public” case significant members of the public must be misled by the impugned conduct before there can be a contravention of s 52.  First, s 52 does not prescribe this requirement.  Second, there is no reason in principle why the requirement should exist.  Third, it would be strange if a court were to determine that certain conduct had the capacity to mislead (and did in fact mislead a handful of people) but nevertheless held that the conduct was not actionable because an insufficient number of people were misled. 

26                  These reasons are not, of course, enough for me to disregard the previous case law on the topic because the position is that a number of Full Court decisions have followed Franki J’s dictum, albeit without any analysis.  The decisions include, among others:  Snoid v Handley (1981) 38 ALR 383; 10^th Cantanae Pty Ltd v Shoshana Pty Ltd (1987) 79 ALR 299; Siddons Pty Ltd v Stanley Works Pty Ltd (1991) 29 FCR 14.  But there is a way out.  I am of opinion that the dictum cannot survive the High Court’s decision in Campomar Sociedad.  By laying down the rule that in a “representation to the public” case the question whether conduct is misleading or deceptive is to be assessed by reference to the reaction of the hypothetical representative member of the class to whom the representation is directed, the High Court has left no scope for the operation of the requirement that it must also be shown that a significant number of members of the class have been misled.  That is, the two requirements cannot sit side by side.  I take the position now to be that the dictum imposed in Weitmann v Katies Ltd has been overtaken. 

27                  I have said enough about the legal principles that should be applied to resolve the present controversy.  It is now convenient to consider the effect of the notices.  Do they convey misleading representations as has been alleged?  Although the issues raised by the two cases overlap to a considerable extent (which is why the cases are being tried together) there are important differences in the way each applicant puts its case.  And this necessitates their separate consideration.  .au Domain makes complaint about the two July notices and the September notice.  Those notices are substantially the same.  ACCC bases its claim on the June, July (the form with the “payment section”) and September notices.  The June notice is in important respects different from the other two. 

28                  It is convenient to look first at the way ACCC puts its case.  I have mentioned that the June notice went to Australian businesses which had an existing domain name ending in “.com.au”.  ACCC argues that the June notice conveyed the following representations:  (a) the registration of the recipient’s existing registered domain name had expired or would expire if payment of the amount mentioned in the notice was not made on or before the “Return By” date of 30 June 2003; (b) DNA was offering to re-register or renew the recipient’s existing domain name; (c) the notice was an invoice to re-register or renew the recipient’s existing name; (d) the recipient was under an obligation to pay the amount referred to in the notice in order to maintain registration of the recipient’s existing domain name; and (e) DNA had a right to payment from the recipient for Internet domain name registration services.

29                  In relation to the July notice ACCC alleges that the following representations were conveyed to all recipients of the notice except those who did not hold an existing domain name or did not hold an existing domain name substantially similar to the one in the notice:  (a) registration of the recipient’s existing domain name had expired or would expire if payment of the amount mentioned in the notice was not made on or before the “Closing Date” of 30 July 2003; (b) DNA was offering to re-register or renew the recipient’s existing domain name; (c) the notice was an invoice to re-register or renew the recipient’s existing domain name; (d) the recipient was under an obligation to pay the amount referred to in the notice in order to maintain registration of the recipient’s existing domain name; and (e) DNA had a right to payment from the person for Internet domain name registration services.

30                  ACCC makes the same allegations in relation to the September notice in the case of recipients who had an existing domain name which was substantially similar to the domain name mentioned in the notice (the only minor change being that the relevant “Closing Date” was 12 September 2003).  In respect of the recipients who had no registered domain name or who did not hold a domain name substantially similar to the name in the notice, ACCC only alleges that through the September notice DNA asserted a right to payment from those recipients. 

31                  .au Domain puts a different case.  In its statement of claim it alleges that DNA made to all recipients of the relevant notices (the two versions of the July notice and the September notice) the following representations:  (a) the notices were notices, alternatively invoices for, the renewal of an existing registered domain name in respect of which the recipient of each notice was the Registrant; (b) the domain names to which the notices related were due for renewal; (c) DNA had a “pre-existing commercial relationship” with the recipient of each notice whereby the renewal of the domain name to which the relevant notice related could only be effected by the recipient dealing through DNA in accordance with the provisions of the notice; (d) in respect of the notices referring to a domain name ending in “.au”, that DNA was an accredited Registrar, alternatively an appointed Reseller or otherwise carried the approval or sponsorship of .au Domain; (e) in respect of the notices referring to a domain name ending in “.au”, that DNA was the accredited Registrar, alternatively the appointed Reseller of the domain name to which the notice related; (f) the recipient of each notice risked losing their existing registered domain name if they failed to act as stated in the notice and return the payment section of the notice together with the specified amount (or, alternatively, with the necessary credit card details if the payment was to be made by credit card) by the “Closing Date” in the notice; and (g) registration of the domain name to which each notice referred for a two year period would be facilitated by DNA within a reasonable time from the payment of the specified amount if the recipient returned the “payment section” of the notice by the closing date.

32                  In its written submissions .au Domain characterised the alleged representations somewhat differently.  It attributed certain representations to particular notices.  It alleged that the two versions of the July notice falsely represented that:  (a) an existing registered domain name held by the recipient of each notice was due for renewal and that each notice was, in effect, an invoice for such renewal; (b) registration of the domain name to which each notice referred would be facilitated by DNA if the recipient acted as required by the notice; and (c) if the recipient did not act as required by the notice, he risked losing his existing registered domain name.  It alleged that the September notice falsely represented that:  (a) an existing registered domain name held by the recipient of the notice was due for renewal; and (b) registration of the domain name in the notice (a domain name which was similar to the business or company name of the recipient) would be facilitated by DNA within a reasonable time if the recipient acted as required by the notice.

33                  The first question then is whether a hypothetical representative member of each group who received an impugned notice would be misled by it.  If our hypothetical recipient is likely to fall into error only because he did not react in the way an “ordinary” or “reasonable” person would react, the notice would not be misleading. 

34                  Having stated the question which I am required to answer I am confronted with an immediate difficulty.  How am I to judge the likely reaction of an ordinary or reasonable member of each group of recipients?  I can only undertake that task after making some assumptions about the individual’s knowledge of the Internet and of the system for the registration of domain names.  What are the assumptions that can legitimately be made?  Unfortunately I have very little evidence to go on.  I know that the notices were sent to “Australian businesses”, that is to say, to individuals, partnerships, companies and institutions that conduct some form of business in Australia.  Most recipients of the notices (but not necessarily each person who read the relevant notice) had an existing domain name which was similar or very similar to the domain name listed in the notice.  Apart from the fact that the recipients are businesses, most with a domain name, I have been told nothing else about them.  But to do justice in the case it is necessary to know more.  There are some facts which can legitimately be found on the basis of common experience especially if they are facts which could not reasonably be disputed.  For the purposes of this case I propose to make the following assumptions.  Within the class from which the hypothetical individual is drawn there will be members (perhaps only a few) who know a good deal about the system of registration of domain names and members (whom I believe account for a significant number) who know little or nothing about the registration system save for the fact that a domain name can be registered.  In the absence of any evidence (and there is none) I am not, however, prepared to infer that any member of any group knew of the existence or role of an accredited Registrar or an appointed Reseller.  I am prepared to assume that some members would be aware that it is possible to obtain separate registration for substantially similar domain names such as fedcourt.gov.au, fedcourt.net.au and fedcourt.com.  Conversely, there will be a significant number who will not appreciate that these different but nonetheless closely similar names are capable of separate registration.

35                  When one considers the nature of the representations put forward by both .au Domain and ACCC (apart from the representations raising the “demand for payment” or “invoice” point which I will deal with later) it is immediately apparent that there is an unstated premise which underlines most of them.  The premise is that each notice is likely to cause a recipient who had a registered (or recently expired) domain name erroneously to conclude that the domain name mentioned in the notice is the recipient’s actual registered domain name.  If this premise is not made good then the s 52 actions will fail.  If the premise is established it will not automatically follow that the principal representations will be made out, although it is likely that they will be. 

36                  On this aspect it is important to observe that there is no express statement that the domain name mentioned in each notice is the recipient’s registered domain name.  Can such a statement be implied or inferred from the terms of each notice?  I will put to one side for the moment the June notice because it is materially different from the others.  In relation to the other notices, I am of the view that the answer to the question just posed is in the affirmative.  I have based this conclusion on the following features of the notices.  First the listed name only differs from the registered name by reason of a change to the gTLD or the 2LD.  This is important because the hypothetical recipient may not read the notice closely.  A brief reading of the notice will not necessarily alert the reader to the difference between the domain name in the notice and his registered domain name.  Not only is it likely that a person who reads the notice quickly will believe that the name in the notice is his registered domain name, a closer but not studious reading will produce the same state of mind.  Someone reading the notice closely but not studiously will notice the “Reference Number”.  The “Reference Number” suggests that the subject of the notice, that is, the “Domain Name Registration” refers to an existing registration which has been assigned a particular number.  The reader’s false impression will be further reinforced by the “Closing Date”, which suggests that the recipient has an existing domain name registration which should be renewed by that date or else it may lapse and may not thereafter be capable of renewal.  The notice also refers to a “MPID” number.  While the reader may not know what this number refers to (I certainly do not understand this reference because no evidence was led to explain it), its existence also reinforces the suggestion that the listed domain name is a registered name which may be identified by its “MPID” reference.  For many of the foregoing reasons, it is equally likely that a recipient whose domain name had recently expired would be led into similar error. 

37                  It should be clear that I have in part based my conclusion on the inference that each hypothetical group member will not study the contents of a notice closely.  I should explain in more detail why I have approached the case on this basis.  Recipients who have more than a working knowledge of the Internet and domain names (for example, the witnesses called by DNA) may notice the difference between their registered domain name and the name listed in the notice.  They may also realise that the name in the notice does not refer to, and is not intended to refer to, their registered domain name.  On the other hand, many who receive the notice will know very little about the Internet and the use and registration of domain names.  These recipients will include first time users of the Internet and unsophisticated Registrants of domain names.  It is also necessary not to lose sight of the fact that the notice stipulates that the cost of registering a domain name for a two year period is $237 including GST.  This is a relatively small sum.  The degree of attention which will be paid to the notice will in part be a reflection of the cost of the service to which it relates.  It is also important to appreciate that among the recipients will be large organisations equipped with an accounts department (or the like) the function of which is to deal with the payment of accounts.  I suppose that in many cases the notice would be forwarded to this department for processing.  When the notice is dealt with by a person in the accounts department there is a greater risk that the reader will have little or no knowledge about the Internet, the registration of domain names, or the fact that it is possible to obtain registration of very similar domain names. 

38                  I propose now to consider whether the applicants have established the making of the specific representations which they have alleged.  In my view .au Domain has made out a case for three false representations.  The first is that each notice is a notice for the renewal of an existing registered domain name of which the recipient was the registrant.  The second is that the domain name to which each notice related was due for renewal by the “Closing Date” referred to in the notice.  The third is that the recipient of the notice risked losing the registration of its existing registered domain name if it did not take steps to have it renewed such as by requesting DNA to renew the name and by returning the bottom portion of the notice with payment for the requested sum. 

39                  .au Domain asserts one representation which does not depend upon the recipient being misled into thinking that each notice relates to his existing registered domain name.  The alleged representation is that the registration of the domain name to which each notice refers will be facilitated within a reasonable time following the recipient’s request for its registration and payment of the stipulated amount.  The alleged representation is somewhat ambiguous.  I assume that by use of the expression “would be facilitated” .au Domain means that obtaining registration of the name will be less difficult than might otherwise be the case.  I will proceed on that assumption.  The aspect of the representation which is said to be false is that if there is a request for the registration of the name that registration may not be possible or it may not be effected within a reasonable period.  I think there are at least two answers to the assertion that the representation, if made, is false.  First, the notice says that:  “[c]urrent eligibility and allocation rules apply”.  By this statement the representee is being told that in some (undefined) situations registration may not be possible.  Those situations could encompass a number of contingencies, including the representee’s “eligibility” for having a name registered and whether the name listed in the notice is itself “eligible” for registration.  So I reject the assertion that there is a representation to the effect alleged.  In any event, the evidence indicates that, except de minimus, all names were registered within a reasonable period. 

40                  It is not necessary for me to dwell at any length on the reasons for rejecting the remaining alleged representations. It is sufficient if I confine myself to the following observations.  If a recipient formed the view that he had a “pre-existing commercial relationship” (whatever that may mean) with DNA, that was not a view that could reasonably be formed on the basis of what is stated in the notices.  At any rate, I think it unlikely that any recipient formed such a view, and I would not attribute it to the hypothetical individual.  Further, I decline to accept any representation which depends upon the recipient’s knowledge of accredited Registrars or appointed Resellers.  I have already explained that there is no basis upon which I could conclude that any recipient was aware of the existence of these positions let alone that DNA might have held either of them.  The alleged representation that each notice constituted an invoice is also not made out.  I will soon explain why this is so when dealing with the claims based on s 64(2A) of the Act. 

41                  Turning to ACCC’s case, for reasons which will by now be obvious, I am of opinion that the July and September Notices convey the following false representations.  First, that the registration of the recipient’s existing domain name had expired or would expire if payment was not made by the “Return Date”, namely 30 June 2003.  Second, that DNA was offering to re-register or renew the recipient’s existing domain name.  Third, that the recipient would be required to pay the amount mentioned in the notice in order to maintain the registration of his existing domain name. 

42                  On the other hand, I reject ACCC’s claim in so far as the other asserted representations said to be contained in the July and September notices are concerned (representations (c) and (e)).  In one way or another those representations depend upon it being shown that each notice amounted to an invoice or that DNA had right to payment of the amount specified in each notice.  Those representations are not made out for reasons which will become clear when I deal with the s 64(2A) case.

43                  Moving on to the June notice, I make the following observations.  The notice contains a “Reference Number”, an “MPI Number” and a “Return By” date in lieu of a “Closing Date”.  The heading of the notice is different from that contained in the later notices.  The heading states: “www.[recipient’s business name].com is unregistered” and, underneath this: “Domain Unregistered”.  Beneath the heading can be found the following paragraph contained within a shaded box:  “The .com version of your .com.au domain name is currently unregistered.  It is important to have your .com and .com.au domains registered, complete the slip below to secure your domain for a 2 year period.”  The notice then purports to explain the consequences of failing to register a “.com” domain name.  It states: 

“Failure to register the domain may:

Ø      Confuse people who are unsure of the difference between .com.au and .com domains.  If you do not have the .com version registered and they type .com rather than .com.au (as some people do) they will not be directed to your website.

Ø      Allow personal email intended for you that is sent to the .com domain to be directed to somebody else.

Ø      Affect your image - .com is the most registered domain, the most prestigious and desired domain.

Ø      Allow cybersquatters, competitors, disgruntled staff or clients or any other applicants the opportunity to register the domain.

Ø      Allow other legitimate registrants (possibly from anywhere around the world) if they have a similar name to register the domain.”

If payment is received by the “Return Date”, the respondent to the notice is entitled to “receive 5% discount off [DNA’s] normal pricing.” 

44                  I do not believe that the June notice gives rise to representations (a) to (d) alleged by the ACCC.  I put to one side for the moment (as I have in relation to the other notices) the alleged representation that DNA had a right to payment from the recipient for Internet domain name registration services.  Each recipient of the June notice held an existing domain name ending in “.com.au”.  The heading and first sentence of the paragraph contained within the shaded box make it clear that the notice is concerned with the unregistered status of the “.com” variant of the recipient’s registered “.com.au” domain name.  Unlike the other notices, the June notice refers to two domain names; a “.com” domain name and a “.com.au” domain name.  An ordinary reader is unlikely to form the view that his current “.com.au” domain name is unregistered.  Moreover, the part of the notice which sets out the supposed consequences of not registering a “.com” domain name, together with the reference to a five per cent discount if payment is effected by the “Return By” date, tend to indicate that the notice is in the nature of an offer to register the “.com” variant of the recipient’s existing “.com.au” domain name.  In other words, the notice is not concerned with the registration of the recipient’s registered “.com.au” domain name.  I am, however, tentatively of the view that the June notice is misleading for a different reason.  Read in context, the notice seems to convey the representation that the recipient has previously registered a “.com” version of his “.com.au” domain name and that this registration is due for renewal.  ACCC does not seek to impugn the June notice along these lines. 

45                  This brings me to the final point which is the s 64(2A) part of the case.  In order to succeed the applicants must establish, among other things, that by the notices DNA “assert[ed] a right to payment” from the recipient of the sum mentioned in the notices and that the payment demanded was for “unsolicited services”.

46                  The applicants contend in the first instance that, by reason of their form, the notices assert a right to payment.  They say that, in effect, the recipient of each notice is told that he is required to pay the stipulated registration fee.  Wells v John R Lewis (International) Pty Ltd (1975) 25 FLR 194 and Australian Competition and Consumer Commission v Optell Pty Ltd (1998) 41 IPR 49 are authorities called in aid of this argument.  These cases concern s 64(2A) (and its predecessor) and are relevant to the issue under consideration.  But while they are relevant to that issue they do not provide much assistance.  In the first place the cases are concerned with different documents and are therefore little more than illustrative of circumstances in which a person may assert a right to payment.  In the second place in Australian Competition and Consumer Commission v Optell Pty Ltd the unsuccessful respondents were not represented and if they had been it is likely there may have been a different result.

47                  In my opinion not only do the notices contain no express assertion of a right to payment (a proposition which is not disputed) they make no such assertion by implication.  I am of opinion that the notices only tell a recipient that if he wishes to obtain the registration of the name mentioned in the notice, he is required to pay the specified amount.  If the recipient does not wish to have the name registered he is under no obligation to pay the amount in question.

48                  That is not, however, an end to the matter.  Section 64(5)(e) provides that for the purposes of the section “a corporation shall be taken to assert a right to a payment from a person for unsolicited … services … if the corporation … (e) sends any invoice or other document stating the amount of the payment or setting out the price of the … services … and not stating as prominently (or more prominently) that no claim is made to the payment, or to payment of the price … as the case may be.” 

49                  The notices, when either taken as a whole or when considered in part, cannot be described as invoices.  Most dictionaries define an invoice as a written account of the particulars of goods sold or sent to a purchaser, consignee, etc or of services provided together with the value or price or charge being specified.  The notices contain no such statements.  That said, each notice might be described as a document which states the amount to be paid for a particular service but which does not expressly state that no claim is being made for payment of that amount.  On this basis, and by reason of the deeming provision, the notice might be taken to be an assertion of a right to payment.  I note that DNA says (with some justification) that this cannot be the intended effect of s 64(5)(e) because it would, for example, result in every advertising brochure that specified the price of goods or services as constituting an assertion of a right to payment.  Accordingly, DNA says that the word “document” in s 64(5)(e) should be read down as meaning a document in the nature of an invoice or demand for payment.  For reasons which will soon be apparent, it is not necessary to resolve this issue.  Nor is the position as bleak as DNA would have it.

50                  The only question that must be resolved in this case is whether there is any claim for payment for “unsolicited services”.  In ordinary parlance the term “unsolicited services” is a reference to services which have been provided without there having been any prior request (including a request by contract) for their provision.  If this be the meaning of the expression in s 64(2A) then it follows that DNA could not have breached the section because it has not provided any services at the time the notices were received. 

51                  At this point it is necessary to refer to the definition of the expression “unsolicited services” referred to in s 64(1).  “Unsolicited services” are defined in s 4 to mean “services supplied to a person without any request made by him or her or on his or her behalf”.  This takes us to the definition of “services” contained in the same section.  They are defined to include “any rights …, benefits, privileges or facilities that are, or are to be, provided, granted or conferred …”. 

52                  Having regard to these definitions the question that arises is whether the definition of “services” (which includes services that “are to be … provided”) is to be incorporated into the definition of “unsolicited services”.  If it can be incorporated then s 64(2A) will apply to a case where there is a demand for payment in respect of services which are both unrequested and unsupplied. 

53                  There are two cases which have considered this issue.  The cases are Rizzo v Wall (unreported, Pincus J, 25 November 1987) and Rizzo v Fitzgerald (1988) 19 FCR 175 (also a decision of Pincus J).  Each reached a different conclusion.  In Rizzo v Wall Pincus J held that the section does not apply unless services have been supplied.  In Rizzo v Fitzgerald he found the opposite.  In this state of affairs I am bound to reach my own conclusion as if unconstrained by precedent. 

54                  I am of opinion that the entire definition of “services” cannot be integrated into the definition of “unsolicited services”.  If one were to incorporate the definition of “services” that would give rise to an irreconcilable inconsistency.  “Unsolicited services” are confined to services which have been supplied in the past, but the definition of “services” includes those services which may be supplied in the future.  Such an inconsistency cannot be allowed.  The inconsistency can only sensibly be avoided by either: (1) importing into the meaning of “unsolicited services” that part of the definition of “services” that is otherwise consistent with the meaning of “unsolicited services”; or (2) not incorporating the meaning of “services” into the definition of “unsolicited services” at all on the basis that there is a contrary intention to its incorporation.  It is unnecessary for me to resolve which approach is correct.  It is sufficient for the purposes of this case to hold that, on either approach, s 64(2A) has no application to unprovided services.

55                  The construction which I favour means that s 64(2A) will operate in the same way as regards unsolicited services as it does in relation to unsolicited goods.  “Unsolicited goods” are defined in s 4 to mean “goods sent to a person without any request made by him or her or on his or her behalf”.  The definition of “goods” does not refer to goods to be supplied.  As the respondents point out, if Pincus J’s later interpretation of s 64(2A) were to be applied the prohibition against asserting a right to payment for unsolicited services would be broader than the prohibition against asserting a right to payment for unsolicited goods.  There is no obvious reason why this should be so.

56                  There will be declarations in each action to give effect to these reasons.  The declarations will include one to the effect that Mr Rafferty has been involved in the contraventions of s 52 by DNA.  There will also be injunctions restraining DNA and Mr Rafferty from further breaching the legislation.  It is appropriate that these injunctions remain in place for three years.  Both .au Domain and ACCC seek an order that DNA write to all recipients of the notices advising them of the misleading aspects of their contents.  As presently advised I am by no means satisfied that there is any utility in making an order of this kind, but if the parties so wish I will hear further submissions on this issue.  .au Domain and ACCC should bring in short minutes of orders within three working days.

Associate:

Dated:              8 April 2004

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