FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Jutsen (No 3) [2011] FCA 1352

THE COURT ORDERS THAT:

1.    The proceeding stand over to a date to be fixed for the purpose of hearing submissions in relation to the precise form of declaratory and injunctive relief and the pecuniary penalties sought by the applicant.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

REASONS FOR JUDGMENT

BACKGROUND

1        The Australian Competition and Consumer Commission (ACCC), the applicant in this proceeding, alleges that each of the respondents has participated in a pyramid selling scheme in contravention of the prohibition contained in s 65AAC of the Trade Practices Act 1974 (Cth) (the Act). The ACCC relies upon s 6(3) of the Act which extends the operation of those provisions to natural persons in certain circumstances. The ACCC also alleges that the respondents contravened s 52(1), s 53(c) and s 53(d) of the Act. Again, the ACCC relies upon s 6(3) of the Act as extending the operation of those provisions to natural persons. The ACCC seeks declarations, injunctions and pecuniary penalties against each of the respondents.

2        At the hearing of this proceeding the respondents represented themselves. They raised extensive objections to evidence, cross-examined the ACCC’s witnesses and made closing submissions. None of the respondents gave evidence.

3        The respondents are members of what is referred to in the evidence as “TVI Express” or what I shall refer to in these reasons as the “TVI Express System”. A brief summary of the TVI Express System is contained in my earlier interlocutory judgment delivered on the last day of the hearing (Australian Competition & Consumer Commission v Jutsen (No 2) [2010] FCA 982) which I will set out again by way of introduction.

4        The TVI Express System is a system which purports to offer discounted accommodation and travel opportunities to members, as well as income earning opportunities. To become a member of the system, a person must apply either through the TVI Express website located at URL www.tviexpress.com or by providing a completed application form to an existing member. In addition, a membership fee of US$250 must be paid. A person who becomes a member of the system is allocated a unique user ID and a position on what is known as a “Traveller Board”. They also receive a travel certificate which is said to entitle them to free accommodation for 6 nights and 7 days, a free companion flight, a virtual back office, access to an online travel portal, a self-replicating website and access to business tools.

5        The TVI Express System is designed to allow a member to earn income by recruiting new members to the scheme so that he or she may move up the Traveller Board and what is known as the “Express Board”. Each of these has 4 levels, with room for 8 user IDs at level 1, 4 user IDs at level 2, 2 user ID’s at level 3 and 1 user ID at level 4. New members enter the Traveller Board at level 1 and cannot progress up the levels until all 8 level 1 positions are filled. To reach level 4, a member must have ‘sponsored’ at least 2 new members. When all positions on the Traveller Board are filled, the person situated at level 4 exits the Traveller Board and enters level 1 of an Express Board. Upon exiting the Traveller Board, he or she receives a credit of US$250 in their e-Wallet and an e-Voucher purportedly worth US$250.

6        The Express Board operates in a similar fashion except that in order for a member to exit the Express Board, at least 2 other people in the Express Board must be people who were sponsored to become members of the TVI Express System by the first member. These people are known as “downlines”. Upon exiting the Express Board, a member receives a credit of US$10,000 in their e-Wallet and re-enters the Express Board at level 1. A member who has exited the Express Board also becomes entitled to receive a percentage of group revenue generated by membership fees derived by the member and the member’s downlines.

TVI EXPRESS LIMITED

7        Since some time in 2009 the website at URL www.tviexpress.com (the TVI Express website) has made available information relating to the TVI Express System including that which I have already set out. Precisely where the server which hosts the TVI Express website is situated is not clear but the entity ultimately responsible for operating it appears to be a company known as TVI Express Limited or TVI Express Ltd (TVIEL). TVIEL is incorporated in Cyprus. The evidence indicates that, as at 2 July 2010, its sole director was a person called Shahnaz Rafan, a citizen of Singapore.

8        The TVI Express website is a vital part of the TVI Express System and an important souce of information about the TVI Express System. The evidence established that the information available at the TVI Express website in May and June 2010 included a power point presentation entitled “Welcome to TVI Express – Touching Lives Globally” (the TVI Express Power Point).

9        The TVI Express Power Point begins with a description headed “Who We Are?” which states:

We are an International Direct Selling Company having Alliances and Channel partners all across the World. Headquartered in London, UK we are one of the fastest growing Companies in the Network Marketing Industry today and are creating waves with our superb and revolutionary line of products meshed with a Global Business Opportunity.

Our turnkey Business system is the finest in the industry which has been acclaimed and validated by Experts from around the globe.

10        According to the TVI Express Power Point, the head office of TVIEL is shown being in Limassol, Cyprus with other premises situated at Stockley Park, Heathrow, United Kingdom. On the same page of the TVI Express Power Point there is reference made to another company, TVI Express Holidays Private Limited at an address in Wilson Garden, Bangalore, India.

11        The TVI Express Power Point identifies what it describes as “The Three Megatrends” and states that “TVI has combined the three most growing and popular trends today to form a Business concept which leverages the power of each of them”. The trends identified are, travel and tourism, the internet and the home based business phenomenon. This is followed by statements that:

TVI Express will help you have the best vacations of your life, take you to places which have existed only in your dreams till now, and give you an Opportunity to earn thousands of dollars week, after week, after week.

It doesn’t matter who you are, what you do or what your background is. Anybody in this World can succeed with TVI’s unrivalled Travel and Earn Program!

12        The TVI Express Power Point identifies various benefits “[y]ou receive when you become a Distributor”. These are said to consist of “6 Nights/7 Days Vacation in one of the 3-5 star Hotels/Resorts across the world (excluding taxes) … Free companion flight ticket … [and] Discounts on various travel deals …”.

13        The next page of the TVI Express Power Point identifies various benefits “[y]ou receive when you become a Member”. These include “Lifetime access to our upcoming promotional deals and programs … Free Self Replicating Website … Free access to high quality Business Tools [and] Virtual Office to manage your Business.”

14        On the following page the names and trade marks of various travel related businesses appear including well known hotel chains, cruise lines, airlines and car hire operators. These businesses are identified as “Our Channel Partners”, with whom, it is said, “TVI Express has indirect, third party tie-ups”.

15        The next page is headed “PACKAGE PRICING”. It refers to a “one time cost of $250” and includes the following statements:

    Valued at thousands of dollars, TVI’s unrivalled ‘Travel and Earn’ package is available for only $250.

    TVI also provides you a Global Business Opportunity to create a solid income pipeline for you and your family generating thousands of dollars rolling your way every single week.

16        The TVI Express Power Point describes TVI as having made $3.0 million in sales in “the first month of pre launch (January 2009)” and states that TVI, having launched in 10 countries worldwide, was now in 150 countries worldwide. Various countries are identified including Australia, United Kingdom and India.

17        There follows a page headed “How Do You Earn Money?” It is said that TVI Express offers multiple ways to earn weekly and monthly income. Four ways of making money are identified.

18        The first of these is “Revolving Matrix”. This is initially described in these terms:

All Team members make their way to the top of Compensation plan through Revolving Matrix system which makes you earn US $10,000 over and over again. This system ensures your success and helps you to capitalize on the efforts of all team members present in the boards.

19        The Revolving Matrix system is said to consist of two boards, the Traveller Board and the Express Board. I have already explained what these are in general terms. It is said that a member who exits the Traveller Board earns “a $250 commission and an eVoucher worth $250, which accounts [sic] to a total benefit of $500 (double your investment).”

20        Once a member exits the Traveller Board, he or she then moves to the Express Board. People who join an Express Board are designated “Silver Associate” in rank. The TVI Express Power Point explains that a person who moves to the top level of the Express Board receives US$10,000 and also becomes entitled to re-enter the Express Board with a view to doing so again and again.

21        The TVI Express Power Point goes on to explain that people who cycle out of the Express Board are also entitled to “Residual Income”. This is said to be in addition to the US$10,000 “Board payouts”. The following statements also appear:

The income starts from 5% and goes upto [sic] 10% on every sale in your organization till INFINITE levels

and

You start earning 5% of the group revenue from sales in your already existing network. The residual income is different from Board payouts and gets activated when you cycle out of the Express Board the very first time. Even if you don’t cycle in Boards after that, this income would never stop and will have you earn millions of dollars by duplicating your leaders and group sales.

22        The TVI Express Power Point explains that the rate of residual income goes up to 10% “as you advance through different ranks in the compensation plan”. The various ranks within the system begin with Associate, followed by Silver, Gold, Diamond, International Diamond, Platinum and end with Presidential Associate, the highest possible rank. The entitlement to share in what is referred to as “Group Sales” is as follows:

Gold Associate – 5%

Diamond Associate – 7%

International Diamond – 8.5%

Platinum Associate – 10%

Presidential Associate – 10%

23        The TVI Express Power Point also explains how a member with the rank of Presidential Associate is entitled to share in “the Company’s Global Revenue by participating in the Power Pool”. According to the TVI Express Power Point:

The Power Pool allows Presidential Associates [to] have their piece of Share in the Global Revenue of the company. The power pool concept ensures regular leveraged income inflow giving you an opportunity to hold a prime position in [the] Advisory Board of the Company.

The Power Pool is said to be 2% of the Global Revenue which it makes available for distribution amongst all Presidential Associates.

24        The TVI Express Power Point then goes on to describe various other incentives which TVI Express distributes “ranging from Luxury cars to Private Jets and Splendid Villas in exotic locations of the world”. It is not necessary to go into the detail of these incentives though I should note that in all cases the entitlement to such incentives depends upon the number of people in a particular member’s group who cycle out from the Express Board.

25        The TVI Express Power Point also includes the following description of the “TVI Plan”:

TVI Plan Mechanics

The Science of Leverage

Pays out a total of 72%

(Industry Average is 40-50%)

72% of every dollar earned is paid back to the Distributors

No stocking or retailing required!

26        Toward the end of the TVI Express Power Point the following appears:

Why You Should Join TVI?

1.    Stable, debt free Company

2.    Solid Backing by a successful and established Business Group

3.    Universal Line of Products

4.    Opportunity to build a Global Business from home

5.    Unmatched Compensation Plan

6.    Worldwide Recognition

7.    Only Company in the World to distribute high end incentives including Private Jets and yachts

8.    No monthly purchases with an opportunity to turn a one time $250 investment into hundreds of thousands of dollars rolling your way every single week

9.    No stock, retailing, product selling.

10.    Fast income with earnings at every step.

27        The defence filed by the respondents admits that each of them has owned a membership with TVI Express since October 2009. The evidence does not reveal anything more as to the circumstances in which the respondents became members. Each of them was assigned a user ID when they joined. The evidence establishes that Ms Jutsen’s user ID was “tedditudes”, Ms Brownlee’s was “travelrocks” and Mr Scanlon’s was “diamondey”. It also establishes that Ms Jutsen and Ms Brownlee held the rank of “International Diamond Associate” while Mr Scanlon held the rank of “Diamond Associate”. This entitled Ms Jutsen and Ms Brownlee to residual income or, as it was also described, commission in the amount of 8.5% of Group Sales while Mr Scanlon, as a Diamond Associate, was entitled to residual income at the rate of 7% of Group Sales. Group Sales in this context appears to refer to revenue comprising membership fees paid to TVI Express by, taking Mr Scanlon as an example, all those members who Mr Scanlon sponsored, all those who they in turn sponsored, and so forth.

28        The self replicating websites of each of the respondents was the subject of evidence. These websites are found at the TVI Express website. Ms Jutsen’s self replicating website was at www.tviexpress.com/tedditudes, Ms Brownlee’s at www.tviexpress.com/travelrocks and Mr Scanlon’s at www.tviexpress.com/diamondey. A principal feature of the self replicating websites was that they enabled prospective members to complete online application forms which already included details of their sponsor’s name and user ID. The self replicating websites also contain various facilities referred to in the TVI Express Power Point as “high quality Business Tools” and “Virtual Office to manage your Business”. The whole of that functionality appears to be concerned with the management of membership, recruitment and related financial aspects of the TVI Express System.

TVI TEAM OZ

29        “TVI Team Oz” is an association of some kind between Ms Jutsen, Ms Brownlee and Mr Scanlon. The evidence established that beginning in about April 2010, they worked in close collaboration promoting TVI Express under the name TVI Team Oz.

30        On 13 April 2010 the internet domain name www.tviteamoz.com was registered by Ms Brownlee in the name of Ms Jutsen. The evidence established that the website at www.tviteamoz (the TVI Team Oz website) was operational not long thereafter.

31        The home page of the TVI Team Oz website included a welcome message, a slogan consisting of the words “Taking the Nation on Vacation” and a “Website Disclaimer” in the following terms:

This website is owned by a team of independent members of TVI Express and is not an official company website. Income projections are not a guarantee. As with any legitimate business venture, income is achievable only through proper work ethic, persistence and determination.

32        The TVI Team Oz website included various webpages. Among these was a version of the TVI Express Power Point found at the TVI Express website. It was not in precisely the same terms as that found at the TVI Express website but they were both very similar. The information to which I have already referred that appeared in the TVI Express Power Point also appeared in the document located on the TVI Team Oz website.

33        Another webpage at the TVI Team Oz website was entitled “TVI EXPRESS FREQUENTLY ASKED QUESTIONS”. There were nineteen questions and answers in all including a number that explained the workings of the TVI Express System. They included:

1.    How much does it cost?

    The cost to join TVI Express is USD 250 if paid using prepaid vouchers and is USD 275 if paid by Liberty Reserve or Credit Card. It’s a one time out of the pocket expense for a lifetime membership and does not include any recurring charges.

2.    How fast can I get started after I sign up?

    Instantly. You immediately receive your membership backoffice and one click access to all various booking and search engines to start planning your next holiday. You also receive your very own Marketing Package and a self replicating website to start promoting the TVI Express Opportunity and build your way to the financial freedom.

3.    Do I need to sell any products?

    No. You don’t need to sell any products. TVI Express is a unique e-commerce opportunity allowing you to build the Business around the globe sitting at your home. However, we do support leaders who take initiatives to promote the opportunity offline conducting seminars and workshops about the Opportunity.

34        The webpage also described TVI Team Oz as “a team of independent business owners”. It stated:

All commissions and earnings are paid by the company known as TVI Express Limited (www.tviexpress.com) and not by Team Oz. As with any business, should you choose to join TVI Express Limited as a member within our team known as Team Oz, you do so at your discretion and of your own free will, and agree that you and only you will be responsible for your own results, through your actions and/or inactions. This Team Oz website provides the tools, training and resources necessary for its team members to achieve positive results, however, results may vary from person to person, depending on the amount of effort the individual puts into [sic] achieve his/her own results. By choosing to join and submitting your enrolment form, you agree to indemnify Team Oz and/or TVI Express Limited from any and/or all liabilities.

Team Oz the team is not an entity, nor a company, nor a business. Team Oz is just a name used to refer to our growing team of Independent Business Owners who are members of the TVI Express Limited company.

Team Oz the team is not in any way related to TVI Express Limited other than by way of each individual’s membership with TVI Express Limited.

Team Oz the team, this website (www.tviteamoz.com), its administrators, or anyone related to this website, does not guarantee your success, nor does it take responsibility for your success, your future, or any decision you make moving forward with the TVI Express business opportunity.

Any queries you have or any issues you may be experiencing with your TVI Express membership should be directed to TVI Express Customer Support by emailing support@tviexpress.com or by calling the Customer Support no. at +44 203 384 3830. This Customer Support information is also available on the TVI Express homepage (www.tviexpress.com).

35        There was a substantial amount of other material available for download at the TVI Team OZ website. It included membership application forms and documents containing detailed information concerning various options for payment of membership fees and training materials. In particular, the relevant pages include various documents purportedly written by Ms Jutsen and Ms Brownlee.

36        I should point out that the membership application is headed “TVI Express Sign Up Form” which makes provision for the inclusion of the new member’s name, contact details and payment details. While the document refers to “TVI Express”, it does not refer to “TVI Team Oz”.

37        The material available for download also included various power point presentations that were prepared for the purpose of training. These materials invited people to register with TVI Team Oz, to subscribe to TVI Team Oz’s Newsletter and to follow TVI Team Oz on Facebook. They also included details of upcoming events such as meetings and “webinars” and examples of what are described as “impact statements” and “testimonials”. These appear to have been used to train presenters in how best to explain to prospective members the advantages in joining the TVI Express System. Very considerable emphasis was placed upon investment strategy and financial success. This is an example of such a statement:

Hello, my name is Peter Cooke. I’m married to the most beautiful woman on the planet and have 3 fantastic boys, aged between 5 & 13. I work full-time as a successful Banker in the retail sector of one of the large banks in Sydney’s CBD. I was first introduced to TVI Express by a close work colleague … to whom I will be for ever grateful. The reason I’m building TVI Express is to enable me to spend more quality time with my boys who, right now, don’t see enough of their dad. I see TVI Express as another investment strategy and a business to helping others achieve financial success. My Goal is to be Diamond by 1st August 2010 … Thank you! ;-)

(original emphasis removed)

The TVI Team Oz newsletters

38        It was possible to register at the TVI Team Oz website to receive by e-mail copies of TVI Team Oz’s newsletters. Each of the newsletters was written with a view to promoting the activities carried on by the respondents under the name TVI Team OZ and the TVI Express System. There are various examples of such newsletters in evidence.

39        They include one dated 19 April 2010. The respondents’ names appear on this and other newsletters in a way that plainly suggests that the contents of the documents have been prepared and approved by the respondents. The 19 April 2010 newsletter advises of the launch of the TVI Team Oz website and includes details of upcoming events scheduled to take place in New South Wales and Queensland.

40        There is also a newsletter dated 9 May 2010 which refers to launches which had apparently taken place in Brisbane, Melbourne and Perth and various launches which were planned to take place in New Zealand. The clear message conveyed by this newsletter and others like it was that TVI Team Oz was growing rapidly.

41        There are a number of other statements appearing in the newsletter dated 9 May 2010 that are of particular relevance. One is a statement to the effect that Mr Scanlon had spent hours of his time preparing various tutorials which were to be made available at the TVI Team Oz website. Another is a statement to the effect that a link to the TVI Team Oz Facebook page had been placed on the TVI Team Oz website. The newsletter also contained the following information for members:

Product Related Questions

We are getting a lot of product related questions ie. What is the product?. First of all the product is of a virtual nature. Other virtual products are itunes and currency trading software. These products are delivered to your computer the minute you hit pay now. Our product is no different being the travel portal that gets delivered to you the minute you click proceed now. It's like having your very own “Webjet” or “Travelocity”. You can access your very own travel portal by clicking on “Travel Express”. Please take the time to explore your travel portal and familiarise yourself with the deals available to you.

Travel Related Questions

We are also getting a lot of questions in relation to the travel. Please remember that we are all members and independent business owners and have the same level of access to the information. Members did not sign-up here to function as travel agents or help desk representatives. TVI has the infrastructure in place to answer all travel-related questions, so please direct your questions to TVI Express rather than to your upline sponsor. Equip yourself with a phone card that will allow you to make low-cost international calls so you can call TVI directly. We are in business, we need to think and operate like a business.

42        It is significant that the respondents received “a lot of questions” aimed at identifying precisely what product TVI Express was engaged in selling. It is described by the respondents in their newsletter as a “virtual product”. They compare the product – without specifying what it really is – to “itunes” (sound recordings) and “currency trading software” (computer software). Of course these are examples of commodities that are bought, sold or licensed. Here, there were no such commodities being bought, sold or licensed by the respondents or anyone else. Indeed, the TVI Express Power Point makes the position abundantly clear: “No stocking, retailing or product selling”.

43        It is also apparent from the newsletter that there were many people who were asking questions of the respondents about travel. In response they were told that they should not contact the respondents but instead contact TVI Express. For reasons that will become apparent, I infer that there were many people who had bought memberships who wanted to take advantage of their travel certificates but who found it impossible to do so.

The TVI Team Oz Facebook Group/Page

44        The evidence includes downloads of various pages of the TVI Team Oz Facebook group and page. These pages identified Ms Brownlee, Mr Scanlon and Ms Jutsen as administrators and officers of the group, though Ms Jutsen is referred to as “Teddi Tudes”. Mr Scanlon is also identified as the creator of the Facebook group.

45        The first page of the material in evidence includes a statement that the group – meaning TVI Team Oz – “is open to anyone who wants to create unlimited wealth and abundance and uplift the well-being of the global community utilizing our online business”. Below this is Mr Scanlon’s e-mail address as well as a link to a website at www.myplanb.com.au.

46        A large number of messages posted to the TVI Team Oz Facebook page are in evidence. These messages, posted between 16 March 2010 and 14 May 2010, are essentially messages of congratulations to people who have progressed on the TVI Boards. The messages include a large number posted in the name TVI Team Oz and others posted in the name of Ms Brownlee and Mr Scanlon which make repeated reference to payouts or earnings of $500 and $10,000 by people who have exited the TVI Boards. What is particularly significant about these messages is that there is no mention in them of holidays or travel opportunities associated with membership of TVI Express. The entire focus of these communications is upon making money by cycling through the TVI Boards.

TINA BROWNLEE’S WEBSITE

47        Ms Brownlee operated a website located at the URL http://www.tbrownlee.com. The home page of Ms Brownlee’s website included the following headlines:

Tina Brownlee My Experience in Network Marketing

HOW TO MAKE MONEY | RESIDUAL INCOME FROM HOME | NETWORK WITH MY TEAM

and:

UNSTOPPABLE | UNTOUCHABLE | UNBREAKABLE

This is the TVI Team Oz!! Our team is on FIRE!!

Join this team now and live the rest of your life in PARADISE!!

48        Ms Brownlee’s website also included details of forthcoming events including various presentations to be conducted by Mr Scanlon. There is a note to the listing for one such event suggesting that the reader “email either Teddi and /or Tina if … interested in attending this event.”

49        Also available for download at the website were the various forms including a “Board Placement Form”, “Event Registration Form” and “Sign-up Form”, “Summary of E-vouchers table” and “TVI Presentation (powerpoint)”.

50        The website also incorporated links to various other websites which appear to be Ms Brownlee’s self-replicating website, the TVI Team Oz Facebook page and the website at URL www.travelrocks.com.au. It also includes various testimonials including one from Ms Jutsen – who is described as “International Diamond Associate” – that “[i]t has changed my financial reality in a big way … [i]t is a very simple to follow system and the income is fast.” There are also testimonials from other members of TVI Express. I shall not refer to any of them in detail at this stage but they all emphasize the money making opportunities presented by TVI Express. They do not make reference to holiday or travel opportunities of any kind.

MS JUTSEN’S WEBSITES

51        The ACCC pleaded that Ms Jutsen had operated the websites known as “Vortex Mom” and “Wordpress” which promoted the opportunity to join TVI Team Oz. In its defence, the respondents admitted that Ms Jutsen established these websites and that she uploaded “personal data on or about the day the websites were established”. The evidence of Ms Anderson showed that the Votex Mom website simply redirected those who accessed it to the website at www.meetplanb.com which I describe in greater detail below.

52        The Wordpress website was a blog operated by Ms Jutsen. In its defence, the respondents said that “the Wordpress [w]ebsite was [Ms] Jutsen’s personal blog and not associated with TVI Express or TVI Team Oz”. The following words appeared on the Wordpress website:

when was the last time you turned a $700 out-of-pocket investment into US$20,000 in 12 weeks?

53        Below those words was a link to the Vortex Mom website which, as I have already explained, redirected to the MeetplanB website.

THE MEETPLANB.COM WEBSITE

54        The evidence establishes that the respondents posted content relating to TVI Express at various locations on the website at www.meetplanb.com. The evidence includes material downloaded from that website entitled “MeetPlanB.com – Presented by TVI Team Oz”. This includes a document written by Ms Jutsen which espouses the benefits of the TVI Express System. The document, which makes no reference to any alleged travel opportunities or entitlements associated with the business, includes the following statements:

When I found this business, I was a bit sceptical. But because the person who introduced the idea was someone I trusted implicitly, I decided to give it a go and made a pact with myself that I was going to give it all my energy and focus because, if even half of what it promises is true, then I want to be in a position to reap the rewards.

Within one week of being in the business I made US$1500. Within that short period, I had put about 25 people in my business and it was growing at an unbelievably rapid rate which is something that I’ve never seen in any of the businesses that I’ve tried in the past. I handed in my resignation and gave my employer 3 weeks notice. I am now doing this business full time.

After six weeks of being in the business, I earned my first US$10,000 pay-out plus $5,000 Travel Voucher, and activated my residual income. I am once again positioned to make another US$10,000 in another two to three weeks, and continuously in this revolving matrix system.

I have proven to myself that this business works and more importantly, I have proven to my team that this business is real and true and they are in a fantastic position to create unlimited income for themselves and their family too. After just 12 weeks, my team is over 500 memberships strong and growing with lots of my team members earning their board pay-outs.

And I did all this in the comfort of my home, in the company of people that I love and matter most to me.

This is not just a home-based business…this is an anywhere-you-are-based business! All you need is your phone, your laptop and internet connection.

This is the most FUN business I’ve ever built and the people that I meet are incredible people with extraordinary dreams and an unstoppable drive to succeed!

My team extends from Australia, to Canada, the US, Mexico, Hungary, the Czech Republic, Norway, the Middle East, China and the Philippines!

Be part of our expanding global team today!

Call me to discuss what options are available to you now!

Make everyday an awesome day!

Teddi

MR SCANLON’S “WEBINAR”

55        On 21 April 2010 Mr Scanlon took part in a “webinar”. This was a live on-line presentation by him that was transmitted across the internet to people who had registered to receive it. A recording of Mr Scanlon’s webinar is in evidence as well as a transcript of what he and other participants said. Mr Scanlon was introduced by Ms Webber who welcomed participants from New South Wales, other states and other countries. Amongst other things Ms Webber explained how successful she had been in the TVI Express System and the wonderful opportunity it presented. She said nothing about holiday or travel opportunities.

56        During his lengthy presentation Mr Scanlon described Ms Jutsen as “the founder of TVI”. He then provided an explanation of the TVI Express System, referring to the three popular “mega trends” which he identified as travel and tourism, the internet and home based businesses. Mr Scanlon then said:

So you get so much more because TVI also provides a viable business opportunity to create a solid income pipeline for you and your family, generating thousands of dollars, rolling your way, week after week.

So before I show you what is the Ferrari of home-based business. Let me share your basic concepts with you. Let me ask you, is a Ferrari any use in your garage with no fuel? Probably not. It’s not going to go anywhere. So you need a reason to be involved with TVI and it’s probably the reason that got you in front of this Webinar is a good reason to be involved with TVI. And that reason is going to fuel this business. It’s going to fuel what you do and what you achieve, who you help, who you talk to. It’s, it’s going to do all sorts of things for you. But what is your reason? So as I present this opportunity to you, please keep your reason at the back of your mind.

Now, TVI had a company-breaking record. It had never been done in network marketing before. It was only launched fifteen months ago in January of 2009 and did $3,000,000 worth of sales in the first month of pre-launch. TVI launched in ten countries worldwide and they are now in a hundred and fifty countries and counting. Actually, it’s more then a hundred and seventy now, excuse me. And why so many in such a small time? That’s more then ten countries a month. It’s more then twenty. Well, no, ten, I’m getting carried away, guys. Um. because it’s built on phone calls and emails, It’s a viral business. It’s a very synergistic business. So, you know, you can um, earn a lot of money. We offer one of the strongest compensations in the plan, in the industry with multiple ways to earn income weekly and monthly.

TVI is all about multiple strengths [sic] of income and there’s four of those.

57        This was followed by a detailed explanation by Mr Scanlon of how the TVI Boards work and the different sources of income available to members of the TVI Express System. Toward the end of Mr Scanlon’s presentation he explained why members of his audience should join TVI Express. He stated:

So why should you join TVI? Well, it’s a stable, debt-free company. It’s going to be around for a lot longer if you achieve your short term and medium term financial goals and long term. It’s got a solid backing by a successful and established business group. A universal line of products here, guys, it’s travel. Everyone travels. Business, pleasure, seasonally, family overseas, all sorts. It’s an opportunity to build a global business from home. Do you know how powerful your phone and your Internet is put with this system? It’s an unmatched compensation plan that’s got worldwide recognition because those from the outside looking in, that haven’t bothered to get a hundred per cent of the information, are wondering what it is that we do and how we do business. And you’ve just seen it. You’ve got a clear vision of who we are, what we are and how we make our money.

We’re the only company in the world to distribute high end incentives including private jets and yachts. Number eight is my favourite. This is so refreshing. You thought the revolutionary matrix, the revolving matrix was a paradigm shift in networking. This one, no monthly purchases, with an opportunity to turn a one time US$250 investment into hundreds of thousands of dollars rolling your way every single week. There’s no stocking, no retailing, product selling, at all. It’s a virtual product. It’s delivered to you straightaway, in your back office. You’ve got fast income earnings at every step with those matrixes.

Mr Scanlon concluded his presentation with the following observations:

[I]f you’re looking for a way to improve the quality of your life in and around what you’re, what you’re currently doing, and you have no idea and you’ve got no idea still what it is that you want to do or who you want to be, there is something here that is low risk, legitimate. It can give you as much money as millions of dollars in the bank, returning six per cent a month, can give you.

THE MELBOURNE PRESENTATION

58        On 29 April 2010 Ms Jutsen and Ms Brownlee participated in a presentation held in North Carlton, Victoria. The presentation was recorded by an ACCC investigator and a transcript of what was said is in evidence. During the course of this presentation Ms Brownlee said to the gathering of people in attendance words to this effect:

This business is obscene. And its obscene because its embarrassing talking about the results … As I said, its become embarrassing to talk about …

59        These remarks were no doubt prompted by the income earning opportunities that Ms Jutsen and Ms Brownlee were about to describe. Ms Brownlee then introduced Ms Jutsen.

60        In the early part of her presentation Ms Jutsen said:

O.K. So, what you’re here for is a business. O.K. Nobody invited you here, I hope to, for a job interview, it’s not a job. It’s a business. So I hope you’re coming here with a mindset that you are coming into a business and you want to find out how you can probably do something more in and around, in and around what you’re currently doing that will create an extra stream of income for you. Is that correct? Yeah. Maybe just a little bit.

O.K. Would an extra $500 make a difference? $500 a month extra? Yes. Would an extra $1.000 a month extra make a difference? Yes. How about $10,000, would that make a difference? Money doesn’t buy happiness, they say. Although I shopped today, I was very happy. But it does give you options. It changes the restaurant that you choose, where you’re going to eat. It changes the school where your children go to. It changes the level of health care that you want. So money gives us options. That’s what it does.

…

Now let’s talk about the package pricing. How much do you think that’s worth? Access to discounts and a business that will create you thousands of dollars on a regular basis, what would that be worth to you? Any guesses? Well, valued at thousands of dollars, TVI’s unrivalled travel and earn programme is available to you for only US$250. O.K. You have to take into account, because it’s US dollars, you have to take into account any transaction fees involved, like services and processing fees, including your bank fees, because it’s, you know, it’s US dollar currency and we have Australian dollars, obviously there’s, there is a currency exchange. So there’s currency conversion fees and exchange rate fluctuations, so total one time joining cost is around about the US$300 mark. O.K. So there’s fees involved when you take the membership, but that’s all it is. It’s a one time joining cost. And that’s what you get. You get your office, you get your discount, travel, travel discount access and you’ve got a business that will earn you money.

61        Ms Jutsen continued:

O.K. Let’s talk about the money. How do you earn money? Who wants to know how to earn the money? Two of you. O.K. TVI offers one of the strongest compensation plans in the industry with multiple ways to earn weekly and monthly income. Tina talked about the multiple sources of income. Who wants more then one source of income? Yes. Absolutely. In this business alone, one business, one company you have the opportunity to earn money always. O.K.

62        Ms Justen then went on to explain how TVI Express provided multiple sources of income which, she explained, consist of “the Revolving Matrix”, “Residual Income” and the “Power Pool”.

HOLIDAY AND TRAVEL OPPORTUNITIES

63        I have previously referred to various benefits which a person is said to receive upon joining TVI Express. I should say more about these. To begin with I observe that there was no evidence to indicate that any member of TVI Express had actually obtained the benefit of a 6 Nights/7 Days Vacation or a companion flight arranged through TVI Express.

6 Nights/7 Days Vacation in one of the 3-5 star hotels/resorts across the world (excluding taxes)

Announcements by TVI Express

64        The evidence includes copies of various announcements which appeared on the TVI Express website. The first of these is dated 11 August 2009. It shows that, until that time, there had been no facility through which members could take advantage of the 6 Nights/7 Days Vacation. But the announcement did state that “[f]inally, the ever promised free package is here!”. It then explained what steps members should take for the purpose of “pre-booking” their “free package”. This involved completing a pre-booking form including details of the proposed date, country and city of travel. The announcement added: “Once you are done with the pre-booking formalities, enter the Credit Card details and you will be registered for the free package”.

65        I think it is clear from this announcement that up until 11 August 2009 there were no facilities available to members to take up the 6 Nights/7 Days Vacation offered to them as an inducement to join TVI Express. Indeed, it is also clear from the announcement that the pre-booking system described did not allow for the making of any actual bookings. It was merely intended, at best, to elicit information about members’ travel preferences. At worst, it was nothing but a rouse aimed at making it difficult, if not impossible, for members to take advantage of the 6 Nights/7 Days Vacation to which they were supposedly entitled as members of the TVI Express System.

66        As I have noted, the pre-booking system required members to enter credit card details. Why they should be required to do this in circumstances where nothing more than their travel preferences was being sought is hard to fathom. It is likely that many people would be discouraged from utilising the pre-booking system in circumstances where there was no indication given as to the purpose of supplying credit card information or what, if any, charges might thereafter be applied to their credit cards.

67        There were subsequent announcements published on the TVI Express website concerning members’ 6 Nights/7 Days Vacation entitlements. On 27 September 2009 an announcement was published that stated:

Booking requests have been placed on hold until 31 October as we are compiling the data collected so far to generate the list of preferred destinations using the choices entered in our pre-booking database This data is being used to streamline our booking processes to make it much more easier [sic] for members to avail holidays.

Then, on 31 October 2009, an announcement was published which included the following:

The site may experience aburptions [sic] for another 48-72 hrs or may even face complete downtime during this period ... through the medium of this update, we also want to let you know that we are very much aware of the challenges we have and want to assure you that our teams are working hard to get these sorted out as soon as possible. Once the site is stabilised we will be sending out the monthly e-zine with more updates on international expansions, new booking system, and the forthcoming plans.

This was followed by a further announcement which stated:

The instability of our website over the last month led to the delay in resumption of the booking system.

…

We request our members to enable us to utilise this extra time in developing a more envisioned vacation experience by enriching our product development team with themes for an exhilarating vacation so that these vacations are not just “free” accommodations imposed by the senior management but are as lively as any other self planned dream family holiday.

68        On 1 February 2010 a further announcement was published:

We are pleased to announce the launch date of our much awaited stand alone booking portal on 1 March 2010. The initial booking system we launched couldn't support booking requests ... [we] are conducting final implementations and stringent tests so that there is no scope for glitches once we make the systems live. ...

69        Last of all, so far as the evidence discloses, an announcement was published on 9 June 2010. It included the following statements:

Finally the ever awaited online booking portal is here. The past few months have been extremely busy and loaded with a lot of hard work and devotion which were put together to achieve the most anticipated. Like any product launch, in this one too, we had to undergo the phases of improvisation, development consideration, reconsideration, development again at times and finally FINALIZATION!

…

There is a fixed charge of US$150 per booking which goes towards the taxes and processing charges and as per the booking terms & conditions, has to be borne by the member. It can be paid either through Liberty Reserve online while making [the] reservation or through a Booking Voucher (worth USD150) which can be purchased beforehand from the company…

Attempts to book 6 Nights/7 Days Vacation

70        There was evidence of attempts made by Ms Anderson, a Senior Investigator with the ACCC, to take advantage of the 6 Days/7 Nights Vacation. She gave detailed evidence of steps taken by her to obtain and then redeem a travel voucher issued in the name of TVI Express. The membership details that she used for this purpose had been provided to her by a colleague, another Senior Investigator, who had paid $330.00 to Ms Jutsen to join TVI Express. I do not propose to recount in every detail the many steps that Ms Anderson had to go through in order to obtain the travel voucher. The process was tortuous. Nevertheless, she apparently succeeded in securing a confirmation of a booking for a hotel accommodation in Coffs Harbour. Ms Anderson’s persistence was rewarded when she received an e-mail message congratulating her on having completing her booking. It also included a link to a booking certificate which was available for download. Ms Anderson downloaded the booking certificate which included a summary of the booking she had previously made. Attached to the certificate was a list of terms and conditions. At the bottom of the page on which they appeared the letters “RCI” appeared. RCI was referred to in the terms and conditions though there was no indication given as to who or what that was.

71        On 23 June 2010 Ms Anderson received an e-mail which referred to the booking made by her through the TVI Express website. The e-mail stated:

This is to bring into your notice that the booking made by you through TVI Express’s booking portal has been cancelled due to a technical issue.

We deeply regret the consequent inconvenience.

Arrangements have been made to provide you with an accommodation at the same location on the same dates, shall [sic] you be interested, kindly let us know the same and we will provide you with the list of hotels available to choose from.

In-case you are no longer interested availing the package on the same date or location anymore then please intimate us the same and we will do the needful to refresh your booking forms so that you can book afresh once the booking portal is back after 2-3 days.

Thanking you for your cooperation!

72        On two later occasions, in June and July 2010, Ms Anderson followed the same tortuous proceeding to book accommodation through the TVI Express website. Both attempts were unsuccessful. Each of them culminated in Ms Anderson receiving a message that “the booking engines are under maintenance”.

The travel portal

73        As previously mentioned, one of the benefits that it was claimed members of TVI Express would be able to obtain was access to the “travel portal” which could be used to book discount travel and holiday services. The evidence establishes that the travel portal was essentially a search engine which allowed its users to book various travel related services. The interface of the travel portal featured a number of icons for each of the different types of service such as air, car, cruises, hotels and “last minute deals”. However, the deals that were available through the travel portal were in substance the same as those which were available to the general public through the free website operated by the well known travel business, Travelocity. A division of Travelocity known as World Choice Travel (WCT) offered to businesses the various booking tools used by Travelocity which could then be used by the business on its website accompanied by its own branding. Commissions could then be earned by the business upon its customers using the booking tools, but no further discounts were available to such customers than were available on the free Travelocity website.

74        I infer from the evidence that TVI Express has used Travelocity’s booking tools to create the travel portal, perhaps, though not necessarily, as a result of an agreement with WCT. I am satisfied there was no added value to be obtained through the use of the travel portal when compared to what was freely available on the Travelocity website. In fact, there was evidence to suggest that some of the services available through the travel portal could be obtained at cheaper prices through other freely available on-line providers. I am satisfied that the travel portal provided little, if any, value to members of TVI Express.

Companion flight

75        The TVI Express Power Point featured a slide with the heading “What Do You Receive when you become a Distributor”. Under that heading were the words “Free companion flight ticket*” with the asterisk importing the qualification that upon purchasing one domestic ticket, another domestic ticket to the same location would be available for free. There was no evidence to suggest that any member of the TVI Express System had ever obtained the benefit of the free companion ticket. On the other hand, there was evidence from the ACCC investigators, Ms Anderson and Ms Choucair, which revealed that their attempts to obtain the free companion ticket proved fruitless. There was no facility available on the TVI Express website to allow members to redeem their free companion ticket. And the ACCC investigators’ attempts to take advantage of the promised free companion flight by making inquiries of what is referred to on the TVI Express website as “support” led nowhere. Indeed, in Ms Couchair’s case, a protracted chain of communications in which she was required to engage for that purpose culminated in a message from a person described as a member of the “Client Support Team” that the “Companion free flight ticket is currently on hold”. I am satisfied that the promise of a free companion flight also provided little, if any, value to members of TVI Express.

MS BRENDA WETERE’S EVIDENCE

76        As I have mentioned, none of the respondents gave evidence. They did, however, call one witness, Ms Brenda Wetere. Ms Wetere did not make an affidavit or statement but I permitted the respondents to call Ms Wetere anyway and her evidence was given on the voir dire to enable the ACCC to consider its position. Ultimately, the ACCC took no objection to Ms Wetere’s evidence and it was received as evidence in the respondents’ case. Ms Wetere was then cross-examined. In addition, the ACCC called evidence in reply which addressed aspects of Ms Wetere’s evidence.

77        Ms Wetere’s evidence is particularly significant not only because it is the only evidence given by a genuine member of TVI Express but also because it is evidence from someone who appears to have been quite successful in recruiting other members.

78        Ms Wetere described herself as a “multi-level marketer” who has achieved the rank of International Diamond in the TVI Express System. She first joined TVI Express in February 2010 as a result of a presentation made to her by Ms Brownlee to whom Ms Wetere paid a $330 joining fee. This presentation was conducted by Ms Brownlee by reference to the TVI Express Power Point that I previously described.

79        Ms Wetere was asked about Ms Brownlee’s presentation. She gave the following evidence:

When I saw this presentation initially, I thought it was definitely value for money, as I had been in other network marketing companies and they had been more expensive, and this seemed a better opportunity for myself and my family at the time.

[A]s a family, we had always wanted to travel. I had never been off – I was born on Norfolk Island, so I’d only ever been to Norfolk Island, New Zealand, and Australia. So my motivation for joining network marketing companies since 1985 was primarily for a residual income and to travel. So the main purpose of the business that appealed to me was travel and to earn an income.

Asked what benefit came with membership of TVI Express Ms Wetere explained:

My understanding on joining with what that membership gave me was a travel voucher, a back office, which allowed me to promote the business, and also have my own travel portal, which would allow me to redeem my travel voucher for my seven nights, eight days’ accommodation. I will be able to log into my back office and redeem that voucher. It would also give me information on how to build the business, because that’s what I have paid for, access to my back office, and it will also give me promotional tools on how to build the business, which, of course, the presentation is in our back office that we could print out.

80        Ms Wetere gave evidence that she had “exited the Express Board” seven times thereby earning $70,000 (excluding residual income). She also explained that while Ms Brownlee, as her introducing member, was higher up the line than Ms Wetere, she had out earned Ms Brownlee.

81        Ms Wetere also gave evidence that she received an invoice dated 24 February 2010 from TVI Express. A copy of the document is in evidence. It appears to have been issued to Ms Wetere by TVI Express Limited of Limassol, Cyprus. The invoice shows that an amount of $275.00 was paid for a single TVI Express membership. Ms Wetere’s membership ID is also shown on the invoice. I infer that this was provided to her by Ms Brownlee on behalf of TVI Express.

82        Ms Wetere was asked in her evidence in chief what she understood she was getting in return for her payment. She gave this evidence:

What I understood when I was – after I paid my money, that I would get an official receipt from TVI for my tax purposes, because it is – to me, I understood that it would be a business like the other multi-level marketing businesses that I had joined previously and always paid my taxes on. So I treated this exactly the same from word go, and I would get an official receipt from TVI, which, your Honour, you have now.

…

So I would get that, I would receive my travel voucher which would entitle me to the benefits of my accommodation which my family and myself could enjoy, and of course, I would get a back office which I would be able to join members through and be able to promote and run my own business.

83        Asked what other benefits she thought she was receiving from her membership in TVI Express, Ms Wetere gave the following evidence:

What other benefits have you derived? --- From the business itself?

Yes? --- Of course financial benefits. I’ve gone from also paying a bill off at $200 a week to be able to now pay my bills on time, and I don’t take that lightly. I don’t say that I wasn’t a hard worker before because I definitely was, but I also have worked hard in this business. I live on four to five hours’ sleep a night, so I have worked this business hard, day and night, to earn the income that I’ve received.

Are there any other benefits? --- Definitely meeting the different people. I have a lot of different nationalities in my business, and of course, being able to help a lot of people get out of the financial rut that they’re also in and give them hope and dreams. We have a lot of people that are on the dole that have been able to save the money and join this business because it’s affordable for them to join, and also earn the income, and like I gave my own evidence, that I was on workers comp, and once you tick the box that you’ve been on workers comp before, although they’re not supposed to discriminate against you, they also don’t want to use you, you being a liability for their company and they won’t employ you. So this has also given a couple of people who have been on workers comp the opportunity to take charge and make money and travel also.

She also explained that her husband was a bus driver, that it was always his goal to be able to “get on planes”, and that TVI Express gave him the opportunity to do this. While the evidence indicates that he is also a member of TVI Express it does not disclose how much income he has derived through his membership.

84        As to Ms Wetere’s desire to travel, it is useful to look at the testimonial which I infer she provided to Ms Brownlee for inclusion on Ms Brownlee’s website. It indicates how exciting Ms Wetere found the TVI Express business and how much money she was making from it. Nothing at all is said by her in her testimonial about any travel related benefits or opportunities associated with her membership.

85        Ms Wetere gave evidence that she travelled with her husband and two children to Jakarta between 5 August and 10 August 2010. It seemed to me that she was seeking at this point in her evidence to characterise this trip to Jakarta as a family vacation made possible through the redemption of their travel certificates. It was only in cross-examination that she said that she did not go on a vacation at all, but a conference organised by “Travel Ventures Express”. She described this conference as a “travel seminar”. It also became clear in the course of Ms Wetere’s cross-examination that she did not redeem her travel vouchers on-line but that she instead made her accommodation arrangements through Travel Ventures Express in Jakarta.

86        There was evidence in reply called by the ACCC which puts Ms Wetere’s evidence concerning her trip to Jakarta in proper context. Before referring to that evidence it is useful to refer to the terms of the travel certificates referred to by Ms Wetere in her evidence. These are in standard form and headed “Certificate of Membership”. They purport to certify that the member named in the document “is a member in good standing of TVI Express and is entitled to the membership benefit of six nights and seven days vacation package.” They include a certificate number and an expiry date as well as an introduction indicating that it may be redeemed at http://www.tviexpress.com/redemption/. They also include the following information:

Statement of Purpose

This certificate is valid for a registration validation form offering 6 nights and 7 days accommodation for two, in a three to five star property across the globe. After you redeem the certificate, your only cost is the hotel room taxes. The offer is NOT connected with any timeshare presentation or sales pitch of any kind.

To redeem the certificate, simply click on “Redeem Certificate”. Simple redemption instructions are clearly printed on each certificate. No member should rely upon representations other than included on the certificate.

Redemption Instructions

You can redeem this certificate until the expiry date below. Redemption after the expiry will not be accepted. Simply click on “Redeem Certificate” to go through the terms and conditions. Once you accept the terms and conditions, fill up the online pre-booking form. Allow 10 to 14 days for us to complete and issue a list of hotels at your preferred destination.

87        The ACCC’s evidence in reply established that a TVI Express conference was held in Jakarta on 8 August 2010 at the Gajah Madu Plaza in Jakarta. An announcement concerning the conference appeared on the TVI Express website. It included the following statement:

You may also utilize your free package travel certificate if you are willing to attend this training program in Indonesia. We have tie ups with Marlyn Hotel [sic] and Twin Plasa Hotel [sic] in Jakarta.

88        It may well be that Ms Wetere and her husband were each provided hotel accommodation in Jakarta for the purpose of attending the conference at reduced rates. What relationship, if any, the fact that they possessed travel certificates issued by TVI Express had to the cost of their accommodation in Jakarta is not clear. There is no evidence to indicate what rates they would have had to pay for the rooms they occupied on top of what they were required to pay in any event. Ms Wetere’s evidence was that she paid $25.00 per day for each of two rooms and it was suggested, by implication at least, that this involved a substantial saving. However, the evidence in reply from the ACCC suggested that rooms in the hotel were likely to be available at a modest cost anyway. I do not regard Ms Wetere’s evidence as establishing that travel certificates issued by TVI Express could be redeemed by members of TVI Express in order that they might enjoy vacation accommodation of six nights and seven days at their preferred destinations.

89        As to Ms Wetere’s progress on the TVI Boards, she gave evidence that she had exited the Express Board seven times entitling her to US$70,000 together with residual income of “probably about five, six thousand” dollars. She said that she had personally introduced six people to TVI Express but she had difficulty estimating how many people in all were her downlines. She also gave evidence that the TVI Express System allows people to take up multiple positions on the TVI Boards by joining TVI Express more than once. She was asked why someone would want to do this. Ultimately, after considerable prevarication, she accepted that the reason why a person would take on more than one position on the board was to hasten the process of passing through it.

90        Asked whether she gave presentations to induce others to join the TVI Express System Ms Wetere said that she would not say that she gave such presentations to induce others to join. Asked if she gave such presentations to encourage others to join she said that she “wouldn’t say encourage”.

91        I did not consider Ms Wetere a satisfactory witness. It was apparent that she was keen to persuade me that her business (and, by implication, the respondents’ businesses) was ethical and law abiding. Even so, there are aspects of her evidence which I consider important to the resolution of the issues in this case.

92        First, I infer from Ms Wetere’s evidence that the most important factor which led her to join TVI Express was a desire to make money. I consider she would have understood the TVI Express System to be a “multi-level marketing” system from which she would be able to make a considerable amount of money in both the short and long term. I do not accept that the main reason, or a main reason, she or her husband joined TVI Express was so that they could take advantage of any of the travel discounts or other related benefits mentioned during the course of the presentation. She struck me as someone who was determined to make as much money as she could by selling as many memberships in the TVI Express System as she could to people who would also do the same.

93        Secondly, contrary to the evidence she gave, I infer that Ms Wetere regularly conducted presentations aimed at inducing or encouraging people to join TVI Express not so that they might enjoy travel benefits or opportunities allegedly provided by TVI Express, but so that they would make money for themselves and Ms Wetere by selling more memberships.

THE RELEVANT STATUTORY PROVISIONS

94        The statutory provisions relevant to this proceeding are set out below. The Australian Consumer Law (ACL), which is to be found at Schedule 2 to the Competition and Consumer Act 2010 (Cth) (the new name of the Act), took effect on 1 January 2011. However, when I refer in these reasons to the Act, it is to the Act as it stood at relevant times which was prior to the ACL taking effect. The Act as it stood prior to the commencement of the ACL continues to apply to this proceeding as a result of the Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010 (Cth), Sch 7 Subitem 7(1).

95        Division 1AAA of Part V of the Act is entitled “Pyramid Selling”. It consists of the following provisions upon which the ACCC relies:

65AAA    This Division sets out the meanings of a pyramid selling scheme and other related concepts. A corporation is prohibited from engaging in certain conduct in relation to a pyramid selling scheme (see sections 65AAC and 75AZO).

65AAB        In this Division:

    new participant, in a pyramid selling scheme, includes a person who has applied, or been invited, to participate in the scheme.

    participant, in a pyramid selling scheme, means a person who participates in the scheme.

    participate, in a pyramid selling scheme, means:

    (a)    establish or promote the scheme (whether alone or together with another person); or

    (b)    take part in the scheme in any capacity (whether or not as an employee or agent of a person who establishes or promotes the scheme, or otherwise takes part in the scheme).

    participation payment has the meaning given by paragraph (a) of the definition of pyramid selling scheme in subsection 65AAD(1).

    payment, to a person or received by a person, means:

    (a)    the provision of a financial or non-financial benefit to or for the benefit of the person; or

    (b)    the provision of a financial or non-financial benefit partly to or for the benefit of the person, and partly to or for the benefit of someone else.

    pyramid selling scheme has the meaning given by section 65AAD.

    recruitment payment has the meaning given by paragraph (b) of the definition of pyramid selling scheme in subsection 65AAD(1).

65AAC    (1)    A corporation must not participate in a pyramid selling scheme.

    (2)    A corporation must not induce, or attempt to induce, a person to participate in a pyramid selling scheme.

65AAD    (1)    In this Act:

        pyramid selling scheme means a scheme with both the following characteristics:

        (a)    to take part in the scheme, some or all new participants must make a payment (a participation payment) to another participant or participants in the scheme;

        (b)    the participation payments are entirely or substantially induced by the prospect held out to new participants that they will be entitled to a payment (a recruitment payment) in relation to the introduction to the scheme of further new participants.

    (2)    A scheme may be a pyramid selling scheme:

        (a)    no matter who holds out to new participants the prospect of entitlement to recruitment payments; and

        (b)    no matter who is to make recruitment payments to new participants; and

        (c)    no matter who is to make introductions to the scheme of further new participants.

    (3)    A scheme may be a pyramid selling scheme even if it has any or all of the following characteristics:

        (a)    the participation payments may (or must) be made after the new participants begin to take part in the scheme;

        (b)    making a participation payment is not the only requirement for taking part in the scheme;

        (c)    the holding out of the prospect of entitlement to recruitment payments does not give any new participant a legally enforceable right;

        (d)    arrangements for the scheme are not recorded in writing (whether entirely or partly);

        (e)    the scheme involves the marketing of goods or services (or both).

65AAE    (1)    To decide whether a scheme that involves the marketing of goods or services (or both) is a pyramid selling scheme, a court may have regard to the following matters in working out whether participation payments under the scheme are entirely or substantially induced by the prospect held out to new participants of entitlement to recruitment payments:

        (a)    the extent to which the participation payments bear a reasonable relationship to the value of the goods or services that participants are entitled to be supplied under the scheme (as assessed, if appropriate, by reference to the price of comparable goods or services available elsewhere);

        (b)    the emphasis given in the promotion of the scheme to the entitlement of participants to the supply of goods and services by comparison with the emphasis given to their entitlement to recruitment payments.

    (2)    Subsection (1) does not limit the matters to which the court may have regard in working out whether participation payments are entirely or substantially induced by the prospect held out to new participants of entitlement to recruitment payments.

96        The ACCC relied upon s 6(3) of the Act as it stood following amendments which took effect from 15 April 2010 after the Trade Practices Amendment (Australian Consumer Law) Act (No 1) 2010 (the Amending Act) commenced. Section 6(3) states:

(3)    In addition to the effect that this Act … has as provided by another subsection of this section, the provisions of Part IVA, of Divisions 1, 1AAA, 1AA and 1A of Part V and of Divisions 2 and 3 of Part VC have, by force of this subsection, the effect they would have if:

    (a)    those provisions … were, by express provision, confined in their operation to engaging in conduct to the extent to which the conduct involves the use of postal, telegraphic or telephonic services or takes place in a radio or television broadcast; and

    (b)    a reference in those provisions to a corporation included a reference to a person not being a corporation.

97        The ACCC also relied upon s 52, s 53(c) and s 53(d) in Division 1 of Part V of the Act. Section 52(1) provides that a corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Section 53 relevantly provides:

A corporation shall not, in trade or commerce, in connexion with the supply or possible supply of goods or services or in connexion with the promotion by any means of the supply or use of goods or services:

…

(c)    represent that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits they do not have;

(d)    represent that the corporation has a sponsorship, approval or affiliation it does not have;

…

APPLICATION OF SECTION 65AAC TO THE RESPONDENTS

98        The ACCC alleges that TVI Team Oz is a pyramid selling scheme in which each of the respondents has participated. Further, or alternatively, the ACCC alleges that the TVI Express System is a pyramid selling scheme in which each of the respondents has participated.

99        Section 65AAC provides that a corporation must not participate in a pyramid selling scheme or induce, or attempt to induce, a person to participate in a pyramid selling scheme. Each of the respondents is, of course, a natural person. However, as I have already mentioned, the ACCC relies on s 6(3) of the Act which has the effect of extending the operation of s 65AAC so that it also prohibits conduct on the part of a natural person to the extent that his or her conduct involves, inter alia, the use of “postal, telegraphic or telephonic services”. Significantly, this has only been so since 15 April 2010 when the Amending Act took effect.

100        The expression “postal, telegraphic or telephonic services” as used in s 6(3) of the Act extends to conduct involving the use of the internet. I think this must be so having regard to the very broad way in which the word “telegraphic” is defined in most of the well known dictionaries. For example, The Macquarie Dictionary (3rd ed, The Macquarie Library, 1997) at p 2176 defines telegraph as:

1. an apparatus, system or process for transmitting messages or signals to a distance, especially by means of an electrical device consisting essentially of a transmitting or sending instrument and a distant receiving instrument connected by a conducting wire, or other communications channel, the making and breaking of the circuit at the sending end causing a corresponding effect, as on a sounder, at the receiving end.

The word “telegraphic” ought to be given a correspondingly broad meaning. It is open to the Court to take judicial notice of the fact that the internet is a “telegraphic” apparatus or system used to transmit and receive electronic communications: see s 144(1) of the Evidence Act 1995 (Cth).

ARE THE TVI EXPRESS SYSTEM AND TVI TEAM OZ SCHEMES?

101        Under s 65AAD(1) a pyramid selling scheme is a scheme which has two essential characteristics. But before turning to those characteristics, it is necessary to inquire whether TVI Team Oz or the TVI Express System is a “scheme” within the meaning of that section.

102        The word “scheme” is not defined in the Act. In Australian Competition and Consumer Commission v Wordplay Services Pty Ltd (2004) 210 ALR 562 Finn J, who was also concerned with the application of s 65AAD to what the ACCC alleged was a pyramid selling scheme, applied the meaning given to the word by Mason J in Australian Softwood Forests Pty Ltd v Attorney-General for New South Wales; Ex Relatione Corporate Affairs Commission (1981) 148 CLR 121 at 129. Mason J said that “all that the word ‘scheme’ requires is that there should be ‘some programme, or plan of action’”. The Macquarie Dictionary (3rd ed, The Macquarie Library, 1997) at p 1900 includes a definition to like effect, namely, “a plan or design to be followed”.

103        I am satisfied that the TVI Express System is a “scheme” for the purposes of s 65AAD. In particular, it is a scheme, described in detail in the TVI Express Power Point and other material to which I have referred which explains how the scheme works.

104        I do not consider that TVI Team Oz is a “scheme” in its own right. It seems to me that TVI Team Oz is nothing more than a name under which the respondents participate in the TVI Express System and that it is the only scheme to which s 65AAC could apply in the circumstances of this case. The respondents’ involvement in what they referred to as TVI Team Oz is merely a manifestation of their involvement in the TVI Express System.

IS THE TVI EXPRESS SYSTEM A PYRAMID SELLING SCHEME?

105        The first characteristic of a “pyramid selling scheme” is that some or all new participants must make a payment (a “participation payment”) to another participant or participants in the scheme: see s 65AAD(1)(a).

106        It is clear that prospective members of the TVI Express System are required to make payments to other participants in the scheme if they are to take part in it. The evidence is sketchy as to what has happened to money received by the respondents when signing up new members but there is no doubt that large amounts of money have been received. Some of the money received by the respondents has almost certainly been transferred overseas. In particular, there was unchallenged evidence that between 16 February 2010 and 17 May 2010, Ms Jutsen transferred $296,985 to a bank account in Hong Kong. I infer that this represented the proceeds of membership fees collected from new members who also wished to participate in the scheme. Ms Wetere’s evidence also establishes that Ms Brownlee received such payments. I infer that Mr Scanlon, who held the rank of Diamond Associate, also received such payments. I am satisfied that the scheme, namely, the TVI Express System, possesses the first of the essential characteristics of a pyramid selling scheme.

107        The second essential characteristic is that participation payments are entirely or substantially induced by the prospect held out to new participants that they will be entitled to a payment in relation to the introduction to the scheme of further new participants: s 65AAD(1)(b).

108        The language of s 65AAD(1)(b) raises two issues of statutory construction. The participation payments must be “entirely or substantially induced” by the prospect that new participants will be entitled to receive payments “in relation to” the introduction to the scheme of new participants. In Wordplay Services Finn J considered what is meant by the word “substantially” as it appears in s 65AAD. His Honour said at [109]-[110]:

109.    It has been recognised in a number of legislative contexts that the word “substantial” is imprecise and ambiguous and that “its meaning must be taken from its context”: Radio 2UE Sydney Pty Ltd v Stereo FM Pty Ltd (1982) 44 ALR 557 at 563; Tillmans Butcheries Pty Ltd v Australasian Meat Industries Employees’ Union (1979) 27 ALR 367. The present setting is no different. It also is well accepted that where the word “substantially” is used in a composite formula such as “wholly or substantially”, it must (a) be construed “alongside the word ‘wholly’ and not by reference to what it does not mean”: Commissioner for Superannuation v Scott (1987) 13 FCR 404 at 408; 71 ALR 408 at 413; 12 ALD 38 at 43; Minister for Immigration and Multicultural Affairs v Graovac [1999] FCA 1690; … and (b) be coloured by that proximity.

110.    The use of the composite formula in s 65AAD recognises that there may be a number of inducements to make a participation payment, and if such be the case, their relative significance must be considered. A participation payment could, for example, be induced substantially by the s 65AAD “prospect” held out while another and lesser inducement was the use or enjoyment of the goods or services being provided. Where multiple prospects are held out, if a particular prospect is to be characterised as the substantial inducement, it must be the predominant inducement: cf Graovac at [11]. This said, I consider it is unlikely to be helpful to engage in further adjectival elaboration of the word “substantially” in this setting bearing in mind that what one is characterising is a reason for action.

109        Turning to the effect of the words “in relation to” as they appear in s 65AAD(1)(b), “[i]t is clear that a payment for the introduction to the scheme of further new participants will be a payment in relation to the introduction of the new participants”: Australian Communications Network Pty Ltd & Anor v Australian Competition and Consumer Commission (2005) 146 FCR 413 (Heerey, Merkel and Siopis JJ) at [33]. In that case the Full Court referred to the legislative history behind Division 1AAA of Part V of the Act and the mischief at which it is directed. The Full Court observed (also at [33]) that it is made clear by the relevant Explanatory Memorandum “that it was intended that a payment that is, in substance, a payment for the introduction of new participants is an aspect of the vice or mischief aimed at by the legislative scheme”.

110        The Full Court said (at [43]):

…the vice inherent in pyramid selling schemes is the reward that, as a matter of substance, is given directly or indirectly, for the introduction of new participants, rather than a reward based on sales or other such activities by a participant or others introduced by participants.

111        It also remarked (at [46]):

The real vice inherent in pyramid selling schemes appears to be that the rewards held out are substantially for recruiting others, who in turn get their rewards substantially for recruiting still more members, and so on. If there is no underlying genuine economic activity the scheme must ultimately collapse and many people will have been induced to pay money for nothing. We see the purpose of the legislation as directed at proscribing schemes where the real or substantial rewards held out are to be derived substantially from the recruitment of new participants, as distinct from rewards for genuine sales of goods or services.

112        On the view I take of the facts in the present case, it is not necessary for me to consider whether the relevant inducement must be “the predominant inducement”. I say this because I am satisfied that the single most important inducement held out to prospective members of the scheme in this case was the prospect of them making money, large amounts of it, by encouraging other people to join who would have to pay a membership fee to do so.

113        In arriving at this conclusion I have had regard to the two matters referred to in s 65AAE(1). As to the first of these, I have considerable difficulty determining the value, if any, of any services that participants are to be entitled to be supplied under the scheme. The value of goods is clearly nil because there is no suggestion that new members are entitled to any goods in return for their US$250 payment. On the other hand, it is asserted by the respondents that new members also receive various other entitlements to receive travel related services.

114        As to the 6 Nights/7 Days Vacation referred to in the travel certificate which new members are able to download from the TVI Express website, I am satisfied that it too is of little, or no, value. There was no evidence of any person having successfully redeemed his or her travel certificate to take a holiday to a destination of his or her choice. The inference which I draw from the evidence is that the scheme has been designed to be operated in a way that makes it extremely difficult, it not impossible, for people to redeem their travel certificate for the purpose of taking such a holiday. For that reason, travel certificates which may be downloaded by new members are likely to be of little or no value to them.

115        As to the other travel benefits allegedly made available to members of TVI Express, there is the free companion flight referred to in the TVI Express Power Point and the “travel portal”. For reasons previously explained, I think these provided little or no benefit to members of TVI Express.

116        I have also had regard to the emphasis given in the promotion of the scheme to the entitlement of participants to be supplied goods or services in comparison to the emphasis given to their entitlement to recruitment payments. In their promotions of the scheme TVIEL and the respondents have placed great emphasis on the entitlement of members to receive income based upon the number of new members introduced by them or by other members who they have in turn introduced. In each of the presentations referred to in the evidence there has been much greater emphasis given to the opportunity to make money by inducing other people to join the scheme than to the entitlement of members to receive any goods or services.

117        It is beyond question that new participants in the TVI Express System are led to believe that they will receive payments for the introduction of further new participants. Indeed, the only way a participant can earn any income in the TVI Express System is through the introduction of new members to the scheme.

118        I am satisfied that the TVI Express System was a pyramid selling scheme for the purposes of s 65AAC of the Act. I am satisfied that each of the respondents participated in the pyramid selling scheme after 15 April 2010 by maintaining their memberships in the TVI Express System, by actively promoting the TVI Express System to prospective new members and by collecting membership fees from new members who they had encouraged to sign-up. Each of the respondents utilised various websites to promote the TVI Express System, to transmit their TVI Team Oz newsletters and to disseminate other promotional material in electronic form (including Mr Scanlon’s webinar) by way of the internet to existing and prospective members. This conduct on the part of the respondents involved the use of “postal, telegraphic or telephonic services” within the meaning of s 6(3)(a) of the Act. In the result, I am satisfied that each of the respondents has contravened s 65AAC of the Act as made applicable to them by virtue of s 6(3)(a) of the Act.

MISREPRESENTATIONS

119        I turn now to the ACCC’s claims that each of the respondents has contravened s 52(1) and s 53(c) and (d) of the Act. Here again the ACCC relies upon s 6(3) of the Act so as to extend the operation of the relevant prohibitions to conduct engaged in by the respondents.

The Vacation Representation

120        The first of the representations complained of by the ACCC is what it refers to as the vacation representation. I have already referred to the evidence concerning this representation. As pleaded by the ACCC, the representation is to the effect that each person who became a member of the TVI Express System would receive accommodation for a vacation of six nights and seven days in a 3 to 5 star hotel or resort at no charge, other than taxes.

121        The relevant statement as it appears in the TVI Express Power Point does not expressly indicate that the vacation does not include airfares. Nor does it expressly indicate that the vacation need not be at the member’s preferred destination or, at least, one of his or her preferred destinations.

122        The TVI Express Power Point and all other promotional material used by the respondents to encourage people to take up membership in the TVI Express System are directed at a wide audience. I think a reasonable and ordinary member of the class of person to whom these materials are directed would be likely to understand that, first, the vacation included the costs of airfares to or from the relevant destination and, second, that the destination would be a destination that was one drawn from a list of the member’s preferred destinations.

123        In that regard, I doubt that there would be many people who would not be surprised when told that their travel certificate could only be redeemed for the purpose of paying for accommodation in Jakarta and that, even then, it would not cover the cost of airfares. That the travel certificate covered accommodation costs only is a matter first disclosed in the travel certificate itself, which can only be obtained after a new member has signed up and paid his or her membership fees.

124        The ACCC has put this part of its case somewhat differently. Having pleaded the vacation representation in the terms previously referred to the ACCC then alleges that “[m]embers of the public in Australia who became members of the TVI [Express] System did not receive accommodation for a vacation of six nights and seven days in 3 to 5 star hotel or resort at no charge other than taxes”. The particulars of falsity that are given state that “[t]he value of the vacation the subject of the vacation representation was nugatory” for various reasons including the following:

    When a member of the TVI Express System sought the benefit of the offer for six nights and seven days vacation, the member was issued by the TVI Express Website with a redemption certificate of no value.

    When a member who had received such a redemption certificate sought to redeem it, the TVI Express Website published to the member a notice “bookings are temporarily on hold”.

    No other practical mechanism existed for a participant to claim or receive the vacation.

125        The word “nugatory” as used in the ACCC pleading means “of no value”. On the basis of the evidence to which I have referred I am satisfied that the alleged entitlement to the vacation referred to in the travel certificates issued to new members was, at least so far as the majority of them were concerned, likely to be of no value.

126        In coming to this conclusion I have considered the whole of the evidence relating to this issue including the evidence of Ms Anderson and Ms Wetere. I do not accept that it merely shows that the inability of members to obtain the benefit of the promised vacation was of a temporary nature or that it was due to a technical problem of a limited duration. The inference that I have drawn is that the TVI Express System was designed and operated by those most responsible for it (whether this includes any of the respondents I cannot say) with the intention of making it extremely difficult, if not impossible, to redeem and use travel certificates for their stated purpose.

127        I am therefore satisfied that the vacation representation was misleading or deceptive or likely to mislead or deceive ordinary and reasonable members of the class of person to whom it was directed. Such people would not expect the travel certificates to be of no value to them given the terms of the vacation representation.

128        The respondents argued that, while the vacation representation may have been made by TVIEL, it was not made by them. In this regard the respondents argued that the powerpoint presentation contained on the TVI Team Oz website entitled “Welcome to TVI Express – Touching Lives Globally” (which was for the present purposes in identical terms to the TVI Express Power Point) conveyed representations by TVIEL and not by any of the respondents.

129        In support of this submission the respondents referred to various authorities and, in particular, the following passage in Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 where the majority (Gleeson CJ, Hayne and Heydon JJ) said (at [38]-[40]):

38.    … In Yorke v Lucas [(1985) 158 CLR 661 at 666], Mason A-CJ, Wilson, Deane and Dawson JJ said that a corporation could contravene s 52 even though it acted honestly and reasonably:

    “That does not, however, mean that a corporation which purports to do no more than pass on information supplied by another must nevertheless be engaging in misleading or deceptive conduct if the information turns out to be false. If the circumstances are such as to make it apparent that the corporation is not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is worth, we very much doubt that the corporation can properly be said to be itself engaging in conduct that is misleading or deceptive.”

39.    In applying those principles, it is important that the agent’s conduct be viewed as a whole. It is not right to characterise the problem as one of analysing the effect of its “conduct” divorced from “disclaimers” about that “conduct” and divorced from other circumstances which might qualify its character. Everything relevant the agent did up to the time when the purchasers contracted to buy the Rednal land must be taken into account. It is also important to remember that the relevant question must not be reduced to a crude inquiry: “Did the agent realise the purchasers were relying on the diagram?” To do that would be impermissibly to dilute the strict liability which s 52 imposes.

40.    For the following reasons, the agent did not engage in conduct towards the purchasers which was misleading. Whatever representation the vendor made to the purchasers by authorising the agent to issue the brochure, it was not made by the agent to the purchasers. The agent did no more than communicate what the vendor was representing, without adopting it or endorsing it. That conclusion flows from the nature of the parties, the character of the transaction contemplated, and the contents of the brochure itself.

The respondents also referred me to the judgment of Gardam v George Wills & Co Ltd (1988) 82 ALR 415 (French J).

130        However, I do not think these authorities or the principles referred to in them, assist the respondents in this case. Far from purporting to do no more than pass the information in the relevant document on for what it was worth, I am satisfied that each of the respondents has adopted and endorsed the contents of the document in its entirety. Here the document was made available by the respondents at the TVI Team Oz website in order to advertise their own businesses and the opportunities allegedly available to members of the TVI Express System. Ordinary and reasonable members of the public who visited the TVI Team Oz website would naturally expect that TVI Team Oz, the respondents, would have investigated these opportunities for themselves and that they would have made the information relevant to those opportunities available because they understood it to be accurate and reliable. There was nothing appearing elsewhere on the TVI Team Oz website that suggested that this might not be so. While there were statements in the nature of disclaimers on the TVI Team Oz website, none of them said anything at all about the travel related benefits associated with membership of the TVI Express System.

131        I am satisfied that the vacation representation was made by each of the respondents and that it was misleading or deceptive or likely to mislead or deceive. I am also satisfied that the vacation representation was made by the respondents in trade or commerce and by means of telegraphic services within the meaning of s 6(3)(a) of the Act. I am therefore satisfied that each of the respondents has contravened s 52(1) of the Act.

132        I am also satisfied that, in making the vacation representation, each of the respondents has, in trade or commerce, in connexion with the supply or possible supply of services provided to prospective members of the TVI Express System, represented that such services have a benefit that they did not in fact have, namely, that they provided to the person to whom such services were supplied the benefit of a vacation of the kind described in the vacation representation when this was not the case or, in other words, where the services supplied or to be supplied did not possess the benefit they were claimed to possess.

The Channel Partners Representations

133        I previously referred to the inclusion in the TVI Express Power Point of the reference to various “Channel Partners” with which, it is said, “TVI Express has indirect, third party tie ups”. There was no evidence to establish what the expression “Channel Partners” as it appears in the context of this document is likely to convey to ordinary and reasonable members of the class of consumer to whom it is directed. The use of the word “Partners”, it seems to me, is likely to have implied the existence of an association between TVI Express and the other entities or businesses identified by the other trade names or marks appearing on the relevant page and that such names and marks were used with the approval of the entities or businesses by which they were owned. It seems to me that the message that would be conveyed by the language used is that the association was an established one, that the relevant entities or businesses had agreed to collaborate with TVI Express in some way, and that each of the relevant entities or businesses had given TVI Express approval to use its trade name or mark to advertise or promote the existence of such an association.

134        That the TVI Express Power Point was intended, at least by the first and third respondents, to be understood in this way is in my view apparent from a number of statements made by Ms Jutsen and Mr Scanlon during the course of her Melbourne presentation and his webinar. Ms Jutsen said:

These are just some of our travel partners as you can see these are all recognisable names. Does anyone know Avis? Absolutely. Hyatt, the Hilton, the Marriott? These are all 5 star quality companies. We do not deal with fly by nighters. OK. So TVI Express has indirect and third party ties ups with these companies. And not only that, there’s going to be more of these companies that are going to be partnering with TVI Express, because as I said, TVI is a fast growing company.

In the webinar Mr Scanlon said:

I mean, look at our channel partners that are involved with us as well. You might recognise these companies. We get to experience their brands, their products, at discount prices, because that’s what TVI is about, giving great quality products to the consumers at a great price.

135        The vague reference to “indirect, third party tie ups” in both the TVI Express Power Point and the verbal statement made by Ms Jutsen is not in my view sufficient to overcome the very powerful message that arises from having described these other entities and businesses as “partners”.

136        Considered as a whole, I think the TVI Express Power Point was likely to convey to an ordinary and reasonable member of the relevant class that an association existed between TVI Express and these other entities and businesses whose trade names and marks were used by TVI Express and that such use occurred with their permission and approval.

137        I am satisfied on the basis of the evidence called from Mr Moodliar of Hertz Limited that the Channel Partners representation was false so far as the Hertz Group of companies was concerned. Evidence was given by Mr Robertson and Mr Clark in relation to Carnival Cruise Lines. That evidence, which I accept, establishes that the Carnival Cruise Lines Group of companies did not have any association of the kind I have described with TVI Express nor has that group given its permission or approval to TVI Express in relation to the use of their names or marks. Evidence was also given by Mr Kamarulzaman in relation to Malaysia Airline Systems Berhad (Malaysia Airlines). I am satisfied on the basis of his evidence that Malaysia Airlines did not have any association of the kind I have described with TVI Express and nor has it given any permission or approval to TVI Express in relation to the latter’s use of the Malaysia Airline’s name or marks.

138        The ACCC sought to prove that the use of various other names and marks appearing in the TVI Express Power Point were also used without approval. However, one of these, Royal Caribbean Cruises, was not pleaded, others were not pressed and the remainder (Avis, Swiss International Airlines and KLM) must fail due to a lack of admissible evidence establishing that the relevant representation was misleading or deceptive in those particular cases.

139        In the result, however, I am satisfied that the ACCC is entitled to succeed against the respondents for contravention of s 52(1) and s 53(d) of the Act based upon the evidence which establishes the absence of any relevant association with, or any relevant approval from, the Hertz Group, Carnival Cruise Lines and Malaysia Airlines.

140        I propose to stand over the proceeding to a date to be fixed for the purpose of hearing submissions in relation to the precise form of declaratory and injunctive relief and the pecuniary penalties sought by the ACCC.

Associate:

Dated:    28 November 2011