FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Clarion Marketing Australia Pty Ltd [2009] FCA 666

TRADE PRACTICES – misleading and deceptive conduct – interlocutory relief – whether serious question to be tried – balance of convenience

Held: interlocutory relief granted

Trade Practices Act 1974 (Cth)

Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; [2006] HCA 46 referred to

Australian Communications and Media Authority v Mobilegate Ltd A Company Incorporated in Hong Kong [2009] FCA 539 distinguished

Campomar Sociedad Limitada v Nike International Limited (2000) 202 CLR 45; [2000] HCA 12 referred to

Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 referred to  

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v CLARION MARKETING AUSTRALIA PTY LTD ACN 128 028 642

NSD 486 of 2009

JACOBSON J

9 JUNE 2009

SYDNEY

THE COURT ORDERS THAT, PENDING FINAL HEARING OR FURTHER ORDER:

1.          On or before 10.00am on Friday 19 June 2009, upon receipt of a SMS message from a consumer responding to the promotion by the Respondent of mobile telephone premium content services (Content Services) by means of scratch cards, prior to the consumer incurring any charge with respect to the supply of a content service, the Respondent must:

1.1              at no charge to the consumer, send the consumer the following subscription SMS   confirmation message:

Free Msg Must subscribe 2 Mobyplanet 2 get prize $10 every 6 days. Flexibreak prize worth $80 or more (min spend reqd). Subscribe reply Yes.

                        and

1.2              receive a response from the consumer to the SMS confirmation message, which response confirms that the consumer consents to subscribe to the content service.

2.         On or before 5.00pm on 10 June 2009, the Respondent write to third parties concerned with the implementation of Order 1 herein, informing those third parties of the orders of this Honourable Court, and requesting that all necessary steps be taken to give effect to Order 1 herein, a copy of which correspondence is to be copied to the Applicant.

3.         Reserve liberty to apply on 24 hours notice.

4.         Costs be costs in the cause.

5.         Vacate the directions hearing of 18 June 2009.

6.         Stand the directions hearing over to 9.30 am on Thursday 25 June 2009, to be referred to as the scheduling conference in accordance with Practice Note 30.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1                                             This is an application for interlocutory injunctive relief in a Fast Track matter.  The proceeding is concerned with the publication by the respondent, Clarion Marketing Australia Pty Ltd (Clarion), of cards commonly known as “scratch cards” or “scratchies” that are said to be misleading or deceptive. 

2                                             The urgency comes about by reason of the fact that over eight million of the scratch cards are in circulation and a further large number of approximately 1.3 million cards will be distributed this Thursday 11 June 2009. 

3                                             Clarion is a content service provider which provides its services to users of mobile phones through short message services and other means of communication.  Clarion has promoted its Moby Planet Content Service through the publication of a yellow scratch card which was later replaced by a red scratch card.

4                                             I am satisfied that there is a serious question to be tried that both of the scratch cards are misleading and deceptive in contravention of s 52 of the Trade Practices Act 1974 (Cth).  A number of misrepresentations are alleged by the ACCC.  However, for the purposes of the present application, it is only necessary to refer to two of them. 

5                                             The first is that the cards misrepresent to consumers that if they match the necessary symbols, they will be able to claim a prize by sending an SMS to Clarion (at normal SMS charges) whereas in truth a subscriber is required to pay a $10 “joining fee” which may be valid for six days, and a subscription fee of $10 every six days to obtain the content promoted by Clarion.

6                                             The second is that the prize most likely to be won is a voucher for a “FlexiBreak weekend holiday” which entails the payment of a sum of money to a hotel operator or other party in order to obtain the benefit offered by the voucher. 

7                                             The cost to Clarion of the voucher is $1 but the value to a successful subscriber will depend upon whether, in the usual circumstances, the subscriber wishes to pay for one night’s accommodation to get a second night free. 

8                                             In Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; [2006] HCA 46 at [65], Gummow and Hayne JJ said that it is enough for a plaintiff to show a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo pending trial;  how strong the probability need be depends on the practical consequences likely to flow from the relief.

9                                             Although Mr Webb SC who appeared for Clarion conceded that there is a serious question to be tried, he submitted that the likelihood of success at the trial is not great.  He pointed in particular to the observations of the High Court in Campomar Sociedad Limitada  v Nike International Limited (2000) 202 CLR 45; [2000] HCA 12 at [101] to [103], and he emphasised the full wording of the scratch cards and the leisurely circumstances in which a hypothetical, reasonable consumer will be likely to be able to study the full details. 

10                                          I accept Mr Webb’s submission that the observations of Logan J in Australian Communications and Media Authority v Mobilegate Ltd A Company Incorporated in Hong Kong [2009] FCA 539 at [1] and [28] are distinguishable from the present matter. 

11                                          However, I am satisfied that there is a sufficient likelihood of success to justify the relief for which the ACCC ultimately contended, or relief substantially in that form.  In coming to this view, I have taken into account, in particular, the balance of convenience which, in my opinion, justifies the relief when weighed in the balance with the serious question to be tried.  The relief which is sought does not in a practical sense determine the substance of the matter in issue; compare Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533.  It merely requires Clarion to send an SMS to a scratch card winner informing him or her that to claim a prize it is necessary to pay the subscription fees to which I have referred, as well as to give some indication of the value of the prize that has been won.  The “winner” is then given the opportunity to proceed or withdraw. 

12                                          The cost of complying with this order is relatively minor and it is in conformity with an industry code which is shortly to come into operation.  It takes into account the public interest character of the proceedings and the serious questions to which I have referred above.

13                                          I have heard argument as to the appropriate form of the order and I have taken into account the evidence of Ms Lesley Hynes in her affidavit sworn 9 June 2009.  The orders I will make are as set out in the short minutes of order handed up by Ms Higgins for the Commission, save that the form of the SMS message set out in paragraph 1.1 is to be as follows:

Free Msg Must subscribe 2 Mobyplanet 2 get prize $10 every 6 days. Flexibreak prize worth $80 or more (min spend reqd). Subscribe reply Yes.

14                                          The costs order that I make is that costs be costs in the cause.

Associate:

Dated:         9 June 2009