215 CATCHWORDS Trade Practices - misleading or deceptive conduct - false representation - application for anjunctions to restrain publication, distribution or other use for advertising purposes of a certain "brochure" or "folder" and to require recovery of all such folders from those to whom sent - interpretation of certain words therein - relevant section of the public said to be informed group. Trade Practices Act 1974 ss.52, 53(d) and 80. PARKVIEW (KEPPELL) PTY, LTD. v. MYTARC PTY. LIMITED No. Qid. G83 of 1984. 31 August 1984 McGregor J. Brisbane IN THE FEDERAL COURT OF AUSTRALIA ) ) QUEENSLAND DISTRICT REGISTRY ) No. QLD G83 of 1984 ) GENERAL DIVISION ) BETWEEN PARKVIEW (KEPPELL) PTY. LTD. Applicant MYTARC PTY. LIMITED Respondent Judge Making Order: McGregor J. Date of Order : 31 August 1984 Where Made: 3 Sydney ORDER THE COURT ORDERS THAT: 1. The application is dismissed. 2. The applicant is to pay the respondent's costs. IN THE FEDERAL COURT OF AUSTRALIA ) ) QUEENSLAND DISTRICT REGISTRY ) No. QLD G83 of 1984 ) GENERAL DIVISION ) BETWEEN "* PARKVIEW (KEPPELL) PTY. LTD. Applicant AND MYTARC PTY. LIMITED Respondent McGregor J. Date: 31 August 1984 REASONS FOR JUDGMENT On 2 August 1984 PARKVIEW (KEPPELL) PTY. LTD. (Parkview) pursuant to s.80 of the Trade Practices Act 1974 (the Act) sought an injunction and certain ancilliary orders against MYTARC PTY. LIMITED (Mytarc) for alleged contraventions by the latter of s.52 and s.53(d) of the Act. Those sections provide - "52. (1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. (2) Nothing 1n the succeeding provisions of this Division shall be taken as limiting by implication the generality of sub-section (1). 53. 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 - (d) represent that the corporation has a sponsorship, approval or affiliation it does not have; Since at least 1976 Parkview has operated a tourist resort at Great Keppel' Island (Great Keppel) off the Queensland coast approximately on the same latitude as Rockhampton. The lands upon which the resort is situated are leased pursuant, so it is said, to the Land Act (Q.) by subsidiaries of Parkview. All of the shares in Parkview are held beneficially for Australian National Airlines Commission trading as Trans Australia Airlines. In about 1978 Parkview and its subsidiaries started a publicity campaign to attract teenage holiday makers to Great Keppel. This campaign, according to uncontradicted evidence, has been successful. There has been a high occupancy rate at the resort. The campaign has been largely based upon "the concept that it caters for energetic people wishing to be physically anvolved in active pursuits". Executives who were said to have played a significant part in this operation were Ralph Gordon Conley (Conley), Walter Alfred Chapman Franklin (Franklin) and Ernest Allan Menadue (Menadue) referred to later. Mytarc is a private company incorporated in Queensland, originally as a non-trading shelf company. In about March 1984 1t was selected to take over and promote under the name "Whitsunday 100" (Whitsunday) an existing tourist resort known as "Happy Bay", Long Island (one of the Whitsunday Islands group immediately off the Queensland coast opposite Proserpine). Its directors include Menadue, Franklin, and James McElroy (McElroy). Franklin was formerly a travel services manager for TAA. On 14 September 1976 he was appointed to the Board of Parkview. Thereafter, he claims, he became quite closely associated with the promotion of and formulation of policies concerning Great Keppel. He retained his position on the Board until July 1979. At some stage after 1976 he became National Marketing Manager for TAA. In October 1980 Franklin left that company to join Ansett Transport Industries. Menadue was an employee of TAA for some 35 years from 17 July 1947 to 19 July 1982 at which time he retired; in September 1976 he became a Board member of Parkview though then currently the Queensland State Accountant for TAA. Subsequently, the position of Manager Resort Operations was created and he was appointed to it by TAA. On 7 January 1980 he relinquished his position of accountant at which time Associated TAA Companies became a separate department of TAA Queensland under his control. He alleges that as manager of resort operations for TAA he was responsible for the day to day operation of each of TAA's resorts; Resort Managers were directly responsible to him. In his affidavit dated 6 August 1984, he outlined his responsibilities as a director of Parkview. He claims that during the extensions to the Great Keppel Resort during the period from 1980 to 1982 he was required to maxe decisions in respect of the queries of architects, builders and engineers or his own requirements. He claimed that he was the only resident director in Queensland who was fully employed on resort work during the period January 1980 to July 1982. On retirement from TAA he rejoined the Board of Tara Holiday Village Pty. Ltd. of which he had previously been Chairman whilst TAA had an interest i.e. from 1977 up until 1980. Menadue stated in his affidavit that "travel agents and the like in the tourist and travel industry" could be under no misapprehension concerning the fact that Whitsunday is being promoted in opposition to and in competition with Great Keppel with "respective supports being by Ansett and TAA to the two companies which operate the respective islands". From approximately 1977 to 1979 Blackbook Nominees Pty. Limited traded as The Campaign Palace in the business of an advertising agency. Its services were employed in the Great Keppel project. It ceased to work for TAA or in the promotion of Great Keppel. It became and is involved in the Whitsunday project. Some time before 13 July 1984, Parkview became aware of certain advertising material put out in a brochure which is Exhibit A in these proceedings and which, it was claimed, was Misleading or deceptive within the meaning of s.52 of the Act. The claim is more particularly specified in the application to which earlier I referred and later still in the Statement of Issues agreed upon between the parties. The following passage contains the material the subject of the present complaint by Parkview - "Goodbye Happy Bay. Hello Whitsunday 100. Let's face it, Happy Bay was a nice little resort but like so many other small family concerns it wasn't exactly jumping and 1t was hardly the name on everybody's lips. Certainly it had a very beautiful setting. A long white beach, mature coconut palms (hundreds of them in fact). Huge shady poinsettias. Surrounded by National Park with its beautiful rainforest and hills and valleys. And right in the middie of The Whitsunday Passage. Beautiful. But no fun. Enter those wonderful people who brought you Great Keppel Island and Tara Village. And in no time at all Happy Bay is Whitsunday 100. A full on one hundred percent tropical, not sub-tropical, island resort all geared up for the eighteen to thirty-five year old market. Complete with state of the art disco/night club. A completely refurbished central complex with a little bit of help from Sydney's Public Art Squad. Upgraded guest rooms. And for the first time beautiful, cool, clear, deep bore drinking water. All presented in the layback style of Jim (not Mr.) McElroy of Las Palmas, Gold Coast fame and his equally lay-back and oh-so-young team: Trevor the Chef, James the beach boy, Andrew in charge of boating and the delightful Robin co-ordinating entertainment and activities. Free entertainment from top bands like Mental as Anything, Moving Pictures, Dragon and Goanna. Free activities like Hobie catting, surf skiing..." On the uncontradicted, unchallenged evidence, the brochures were prepared for, addressed and, I gather, sent only to travel agents and not members of the public generally. . By telex dated 13 July 1984 Parkview requested that the brochure be withdrawn. Mytarc replied on 17th idem denying any intention to suggest an association between Parkview and Whitsunday. It pointed out that Whitsunday was being promoted in opposition to Great Keppel and that two former directors of Parkview who had been involved in the original promotion of Great Keppel (Menadue and Franklin) had become directors of Mytarc which was then promoting Whitsunday; that The Campaign Palace was mow involved in the marketing of Whitsunday. It then refused, although not expressly, to withdraw the material. Parkview thereupon commenced these proceedings. Its application dated 2 August 1984 included the following paragraphs which set out orders sought - "1. An injunction restraining the respondent, its servants or agents from publishing, distributing or in any way using for advertising purposes a folder entitled "WHITSUNDAY 100. THE TROPICAL ISLAND THAT MAKES GREAT KEPPEL LOOK LIKE A VICARAGE TEA PARTY", and which contains within it the passage "ENTER THOSE WONDERFUL PEOPLE WHO BROUGHT YOU GREAT KEPPEL ISLAND." 2. An injunction requiring the respondent to recover to the extent that it 1s able from such entities to whom 1t has been sent by the respondent, its servants or agents all stocks of the said folder." On 8 August 1984, at a directions hearing, there being an agreement that there were not to be any pleadings, it was ordered that the parties settle issues to be determined by this Court. Those issues have now been filed and (omitting the paragraphs referring to relief sought by Parkview) included the following - "L. (a) Whether the sentence in the folder: "Enter those wonderful people who brought you Great Keppel Island and Tara Village" 1s misleading or deceptive or is likely to mislead or deceive; (b) If so, whether the respondent has engaged in conduct that is misleading or deceptive or is likely to mislead or deceive by publishing and distributing the folder; (c) (dd) ..e. 2. (a) Whether the sentence: "Enter those wonderful people who brought you Great Keppel Island and Tara Village" taken in the context of the folder is a representation that the organisation responsible for running Whitsunday 100 has a sponsorship approval or affiliation it does not have; (b) Whether the respondent has in trade or commerce acted contrary to the provisions of Section 53(d) of the Trade Practices Act; (c) ...." Counsel for Parkview claimed in submissions that the operative (offensive) words were - ",...those...people who brought you Great Keppel Island...." He submitted those words were misleading or deceptive and offend against s.52(1) because - "(a) The "people" who "brought" Great Keppel Island is the Applicant company and not any company or person associated with Whitsunday 100; (b) Alternatively, if the "people" are the natural persons who were the force behind the Applicant company only some of those people are involved with Whitsunday 100; (c) Alternatively, the words "...enter those... people... refer to the people mentioned in the brochure who are "Jim (not Mr.) McElroy, Trevor the Chef, Jamie the Beach Boy, Andrew and Robin". These are not the "people" who "brought" Great Keppel Island." In the alternative, he argued that those operative words falsely represented that the organisation or people who "bring" Whitsunday 100 has sponsorship, approval or affiliation from the organisation or people who "brought" Great Keppel Island. He submitted that therefore Mytarc was in breach of s.53(d). He referred to McDonald's System of Australia Pty. Ltd. v. McWilliam's Wines Pty. Ltd. (1979-1980) 28 ALR 236; Tec & Tomas (Aust.) Pty. Ltd. v. Matsumiya Computer Co. Pty. Ltd. (1984) 53 ALR 167; Apple Computer Inc. v. Computer Edge Pty. Ltd. (1984) 53 ALR 225. Senior counsel for Mytarc referred to the evidence that the brochure was prepared for and distributed only to travel agents. The latter would, he said, be more inclined to assess it as advertising material not to be read literally. He referred to Parkdale Custom Built Furniture Pty. Ltd. v. Puxu Pty. Ltd. 149 C.L.R. 191 (Parkdale) per Gibbs C.J. at p.198; Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. (1977-1978) 140 C.L.R. 216. He referred to the evidence of agents as to their understanding of the brochure; the Court would have to determine what a reasonable travel agent would make of it; they in effect would be under no misapprehension. He contended that the statement in the brochure was, on the evidence of the activities of Franklin and Menadue, factually correct. He submitted that the application should be dismissed. However, without making any concession to Parkview's case, he undertook there would be no reference in future brochures to "wonderful people" or "words conveying anything similar". It is necessary first to make certain general observations as to s.52 and its operation. Conduct of a corporation acting honestly and reasonably may nevertheless be misleading; though a breach of s.52 1s not established by proving conduct which has caused merely confusion. The question it raises is not simply whether persons were misled but whether the conduct complained of is such that it could be described as misleading or deceptive or likely to mislead or deceive even though no one is in fact misled. Further, proof that persons were infact misled or deceived is not conclusive proof of a breach of the section. See Parkdale per Gibbs C.J. at pp.197-199. A statement made which 1s literally true may at the same time be misleading and deceptive: Hornsby Building case per Stephen J. at p.227. 10. Conduct has to be examined against the background of surrounding facts and circumstances. It was said in Taco Company of Australia Inc. v. Taco Bell Pty. Ltd.(1982) 42 ALR 177 at p.202 - "Irrespective "*of whether conduct produces or is likely to produce confusion or misconception, it cannot, for the purposes of s.52, be categorized as misleading or deceptive unless it contains or conveys, in all the circumstances of the case, a misrepresentation. veee ... whether or not conduct amounts to a misrepresentation is a question of fact to be decided by considering what 1s said and done against the background of all surrounding circumstances." In the same case there is reference to the necessity to identify the relevant section of the public to whom a statement, where that is the conduct relied upon, is addressed. Here travel agents constituted the relevant section as the brochures were prepared for and distributed only to them, and not to members of the public generally. Further, representations which may be misleading or capable of deceiving uninformed persons may not be misleading or deceptive where they are uttered or conveyed to informed persons, an educated audience. In this case, on the evidence which is unchallenged, the brochure which contains the critical words was to be distributed only to travel agents who, ina sense, might be described as an educated informed group; yet within their ranks there will be those who are better informed than others; and even some who may or may not know the details of the proprietorship and sponsorship history of the two 11. resorts, Great Keppel and Whitsunday. A travel agent whose premises are in Brisbane or its environs or Southport might be more likely to be aware of the identity of those who conduct these resorts than, say, a travel agent in Ballarat, Lismore or Perth. Perhaps some less well informed travel agent who has heard of Great Keppel might possibly read this brochure as promoting Whitsunday by drawing some lustre from what might be implied to have been a successful operation. Other persons will not know or be interested in who sponsored or "brought" any of these islands. It may be mentioned there is little evidence of anyone being misled or deceived. I have not had the benefit of hearing cross-examination of the deponents of affidavits. So I make a decision on the affidavit evidence and what are largely undisputed facts. I find that Messrs Franklin and Menadue did play a noticeable part in the development of Great Keppel, and then transferred, with The Campaian Palace, to serve Mytarc in its Whitsunday project; and that TAA and Ansett were respectively associated with these two projects. From the evidence provided by Mytarc, including that quoted by Menadue, I have formed the view that the above facts would be well known to advertising agents who receive the brochure. A_ reading of the brochure does not suggest, and I am not persuaded, that the other people mentioned - Jim, Trevor the 12. Chef, James the beach boy, Andrew and Robin - would be thought to be "wonderful people" or those who "brought you Great Keppel Island and Tara Village". I do not accept that the conduct of Mytarc 1s to be described as misleading or deceptive or in any way a breach of s.52; nor could it be said that Mytarc was representing that it had sponsorship, approval or affiliation which it did not have in breach of s.53(d). Very few travel agents, if any, and then only those less informed, could possibly be misled. Thus, even if, against my view, there was misleading or deceptive conduct, in the exercise of the discretion which s.80 confers, I would not accept that any of the orders Parkview seeks should be made. In reaching this decision I am assisted by the undertaking given on its behalf by senior counsel for Mytarc that the theme as to the "wonderful people" will not be repeated in future brochures. The application is dismissed with costs. | certify chat this and the Preceding Pages are a true C Reasons c i ' as for Judgment herein Te Justice McGregor, 2leveq lan Opy of the of his Honour