FEDERAL COURT OF AUSTRALIA

Singtel Optus Pty Limited v Telstra Corporation Limited [2004] FCA 726

SINGTEL OPTUS PTY LIMITED v TELSTRA CORPORATION LIMITED

N 877 of 2004

ALLSOP J

3 JUNE 2004

SYDNEY

THE COURT ORDERS THAT:

1.        The application for interlocutory relief be dismissed.

2.        The respondent's costs be its costs in the cause.

3.        The applicant's costs up to and including 31 May 2004 be its costs in the cause.

4.        The costs of the applicant after 31 May 2004 and up to and including 3.30pm on 3 June 2004 be reserved to be dealt with by the primary judge at the hearing.

5.        The exhibits may be returned on Friday, 4 June 2004 or thereafter.

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

REASONS FOR JUDGMENT

1                     In this matter interlocutory relief is sought by [11] of an application dated 24 May 2004 and filed on that date, that is, last Thursday.  Short minutes of order have been handed up and I have had them marked MFI 1 and those marked short minutes can be returned to the applicant as a record of specific orders sought subject to what might have been my variation had I been prepared to make all three orders.

2                     The matter has been pleaded in an amended statement of claim filed on 31 May 2004.  The substance of the complaint by the applicant is that the respondent has engaged in an advertising campaign, the particular details of which are set out in [6] of the amended statement of claim, which is said to be misleading or deceptive or likely to mislead or deceive in contravention of s 52 of the Trade Practices Act 1974 (Cth) (the Act).

3                     The elements of falsity alleged are set out in [8] and [9] of the amended statement of claim.  Mr Cobden who appears for the applicant has helpfully taken me through the various advertisements and identified the substance of the complaints.  Exhibits A and 3 can be taken as to a degree representative of one aspect of the complaints made.  What the respondent is plainly seeking to do by the advertising it has undertaken is to attract customers to its business who may be new customers, or who may be customers of other telecommunications carriers as well as providing incentives to its own existing customers, to remain as customers.

4                     This has been done in this campaign by an advertising message based around what can be perceived to be an advantage of having a single bill based on the platform of a home phone bill.  If one, according to the advertising campaign, combines in that one bill one or more of the three additional types of services identified in the advertising, certain benefits will accrue to that subscriber.  Those benefits are said to be in the alternative.  For instance in exhibit A, two types of regime are identified.  If one combines any one of a mobile phone plan, certain Internet connection services or Foxtel or Austar then benefits by way of free calls, free SMS services or free family calls up to a certain sum are available.  The benefits increase if two or more of those three are combined with the phone bill.

5                     The essence of the campaign is the advantages that can be brought to the customer by combining the home phone bill with one or more other services.  The precise detail of the terms and conditions of the offer are set out in the exhibit to the affidavit of Mr Wild filed on behalf of the respondent.  The application complains that there are aspects of the advertising in the brochure, which is, exhibit A and in advertising such as exhibit 3, which is textually inaccurate.  For instance, it is said that in exhibit A there is no identification of the cost of the types of broadband plans which are required for satisfaction of the second of the three alternative inclusions on the home phone bill.

6                     It is said that there is no clarity in terms of what are family calls.  Also, it is said that depending upon the existing state of a mobile phone account and depending on whether or not a mobile phone account is combined with a home phone account there may be less than a choice of three.  Indeed in some circumstances it is said that there will be a choice only of one of the benefits.  The detail of these textual inaccuracies are contested in large part by the evidence set out in Mr Wild's affidavit. 

7                     Complaint is also made of television advertising which was screened in front of me today to the effect that there is an inadequate qualification by superscript or subscript in the advertisements and by a failure to qualify the simplicity, indeed the engaging simplicity, of the advertising with the relevant qualifications as to the terms of the benefits and in some circumstances the limitations of the benefits.  I have indicated generally some of those limitations.  Others are that the SMS services to be accurate in their representations may include the use of the home phone in what is a new service provided by Telstra called “Talking Text”, whereby SMS messages can be sent by mobile phones to a conventional phone with equipment within the system enabling those messages to be converted into a voice message sent from the phone rather like a conventional recorded phone call.

8                     It is also said that in relation to Bigpond cable and ADSL, by which Telstra provides broadband to customers, that at least at the present time in relation to those methods of bringing broadband internet connection to customers the technology is such that a single bill cannot be provided.  However, it should be noted that in those circumstances the benefits said to accrue if a single bill was chosen for those broadband services will still be provided.

9                     The above is perhaps an inadequate summary of the detail of the complaints.  The complaints raise an important conceptual issue in dealing with advertising of this kind under s 52 of the Act, that is, the extent to which parties should be allowed to simplify into engaging and attractive messages material, which is inherently complex.  The very nature of advertising is such that the greater the qualification, the greater the precision, the greater the detail, the less the effect. 

10                  This is especially so in attempting in visual advertising of no more than 30 seconds to attract a viewer and to communicate a fundamental message.  Much the same question arises in attracting the attention of members of the public on Saturday morning or Sunday afternoon in their perusal of newspapers.

11                  The extent to which detail can be assumed as necessary or the extent to which qualification must be made at the original point of engagement is often a difficult question of judgment.  It is generally speaking quintessentially a matter for a final hearing.  That is not always the case.  One can sometimes find advertising, which in its simple engagement is plainly misleading and is only made not misleading by reference to further detail.

12                  Here, the matter is not straightforward.  The applicant has put forward some criticisms of this advertising, which may in the end turn out to be justified.  I note in that respect, though I do not do so by way of recognition of an admission, that there has been some response over the last couple of weeks to complaints made by solicitors for the applicant.

13                  But it is important in my view in this case to recognise that there is a fundamental element of the engagement of the consumer by the advertising which is straightforward and not gainsaid by the attack on it by the applicants and that is that for a body of conduct engaged in, there are real advantages to be gained pursuant to the benefits to be provided by Telstra.  Those benefits may not be precisely what have been set out in the advertisements.  I do not make a finding about that.

14                  There may be textual inaccuracies, which are of more or less importance, but I do not think at this level of generality and at the level of interlocutory analysis that the advertising campaign is such as could be said to be fundamentally misleading.  That said, and with that judgmental analysis, one turns to whether or not interlocutory relief should be given.

15                  Another way of putting what I have said is that the applicant has revealed a case which is not fanciful in any way and about which there is and will be real argument at a final hearing but I do not think it is in any way a powerful case as to a fundamentally misleading advertising campaign. 

16                  It is important to understand that this matter has been set down before a judge of this court in under three weeks.  The textual or other inaccuracies if any in this advertising will be agitated on a final basis at that time.  If there are matters, which the trial judge is of a view, are misleading, the ability of the Court to order not only positive corrective advertising but the reaching out to people who may or may not have been misled is a powerful tool under the Act to protect the public.  Given the recency of the advertisements and the ability of such positive orders to reach out to persons who may have had a particular interest in and been swayed by some particular aspect of the advertising, I am not persuaded that the most important consideration for the balance of convenience in cases such as this, that is, the protection of the public, is such as requires interlocutory orders to be made prior to the final hearing.

17                  That view is also affected by the recognition that orders of the kind sought in [11] of the application and MFI1 would cause a significant disruption to the business of the respondent in a way that if the trial judge dismissed the application would be very hard to remedy on the application of any undertaking as to damages.  Even more difficult in those circumstances, that is, the hypothesised failure of the application at final hearing would be remedying the hardship that would almost certainly be caused to third party dealers whose livelihoods depend upon the selling of Telstra phones, plans and the like.

18                  Set against that is the affect on the applicant's business should this advertising campaign continue and should the trial judge make final orders.  I think it is difficult to identify the extent of that damage on those hypotheses in part because it is not clear what, if any, part of the advertising would be found to be misleading. 

19                  The positive tool provided for by the Act of requiring not only corrective advertising but the reaching out to potential customers who have been misled provides at least a strong foundation for the view that should I not grant an injunction today, but should the primary judge at the hearing be of a view that injunctive relief should be given on a final basis, there will be tools and mechanisms to assist the applicant in proving its loss and damage.

20                  In that context I note, not in any pejorative sense whatsoever, but in terms of their resources of proving those matters, that the applicant and the respondent are both well resourced, sophisticated and experienced commercial entities and if the proof of loss and damage is one which puts the respondent to considerable cost by way of discovery or other detail in the examination of its records then that is the price of its successful resistance to the interlocutory injunction.

21                  Bearing in mind all those matters and weighing them, I do not think it is appropriate to grant any interlocutory relief.  As is plain from the first half of my reasons, that it is not and should not be taken in any context as an expression of view by me that some conduct may not be found by the primary judge to have been misleading or deceptive in some fashion.  For those reasons I dismiss the application for interlocutory relief.

22                  I do not propose to give any detailed reasons as to costs.  I do not think I should reserve costs.  I think the best way of dealing with costs when one can is to deal with them as one goes unless that is likely to lead to injustice in the future.  If the respondent's costs be its costs in the cause, I see no injustice in the future. 

23                  The applicant's costs up to and including 31 May 2004 shall be its costs in the cause, and I order that costs thereafter be reserved and be dealt with by the primary judge at the hearing.  Therefore, I order that the costs of the applicant after 31 May 2004 and up to and including 3.30 pm on 3 June 2004 be reserved for attention by the trial judge. 

Associate:

Dated:              18 June 2004