Trade Practices JUDGMENT No, ..n229../ - misleading or SY eecvccncteeD deceptive conduct application for interlocutory reliet Trade Practices Act 1974 (Cth) s.52 BUDGET RENT A CAR SYSTEM PTY LIMITED v ALLEN DEWHIRST, KAY RENT A CAR PTY LIMITED and DINERS CLUB LIMITED NO. VG.217 OF 1984 Davies, J 16 August 1984 Melbourne IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIAN DISTRICT REGISTRY ) No. VG.217 of 1984 ) GENERAL DIVISION ) BETWEEN : BUDGET RENT A CAR SYSTEM PTY LIMITED Applicant AND 3 ALLEN DEWHIRST, KAY RENT A CAR PTY LIMITED and DINERS CLUB LIMITED Respondents ORDER JUDGE MAKING ORDER : Davies, J DATE OF ORDER : leo August 1984 WHERE MADE : Melbourne THE COURT ORDERS : UPON the third named respondent, Diners Club Limited, undertaking by 1ts counsel, not to distribute or cause to be distributed the brochure that 1s exhibit VLR 1 to the atfidavit of Vicki Louise Richardson sworn 6 August 1984 until the hearing and determination ot the application, or further order, the application for interlocutory relief against the third named respondent 1s by consent dismissed. The costs of and incidental to this application are reserved. IN THE FEDERAL COURT OF AUSTRALIA VICTORIAN DISTRICT REGISTRY No. VG.217 of 1984 GENERAL DIVIS10N BETWEEN BUDGET RENT A CAR SYSTEM PTY LIMITED Applicant ho Nf : ALLEN DEWHIRST, KAY RENT A CAR PTY LIMITED and DINERS CLUB LIMITED | Respondents ORDER JUDGE MAKING ORDER Davies, J DATE OF ORDER 16 August 1984 WHERE MADE 3 Melbourne UPON the applicant by its counsel undertaking to abide by any order the Court may make as to damages 1n case the Court should hereinafter be of opinion that the first and second named respondents shall have sustained any by reason ot this order which the applicant ought to pay THE COURT ORDERS : 1. Until the nearing and determination of this application or further order the respondents, Allen Dewhirst and Kay Rent A Car Pty Limited and each ot them be restrained by themselves, their servants and agents from circulating or distributing or causing to circulate or distribute the brochures which are exhibit DML 2 to the affidavit of Duncan McAllister Leitch sworn 7 August 1984 and exhibit WDK 5 to the affidavit of William David King sworn 15 August 1984. 2. The costs of and incidental to this application are reserved. 3. The directions hearing is adjourned to Friday, 24 August 1984. 4. Liberty 1s reserved to apply generally. IN THE FEDERAL COURT OF AUSTRALIA VICTORIAN DISTRICT REGISTRY No. VG.217 of 1984 GENERAL DIVISION BETWEEN 3 BUDGET RENT A CAR SYSTEM PTY LIMITED Applicant ha Ed ci | ALLEN DEWHIKST, KAY RENT A_CAR PTY LIMITED and DINERS CLUB LIMITED Respondents REASONS FOR JUDGMENT (ex tempore) CORAM : Davies, J 16 August 1984 This 1s an application for an interlocutory injunction. The application 1s brought by Budget Rent A Car System Pty Lamited ("Budget") against Kay Kent A Car Pty Limited ("Hertz"), which operates the Hertz Rent A Car business, and against one of its officers. For the past four years, budget has promoted a scheme which involved two cards : one called the "Budget Lucky 13 Club" and the other the "Budget 35.5 Club". The first of the cards was distributed on behalf of Budget by Diner's Club International and was to be used in association with the Diner's Club credit card. The other was distributed by American Express, to be used in association with the American Express credit card. NI When so used, the Club 13 card obtained for its user certain benefits; for example, a Holden Commodore Station Wagon could be obtained from Budget for only $47 per day, that figure to include personal accident insurance, comprehensive insurance and unlimited kilometres. That was a saving upon the ordinary cost which, for a Holden Commodore Station Wagon, was $59 per day and in respect of which extras, such aS insurance, had _ to be paid. The use of the Budget 35.5 Club card with the American Express card obtained similar benefits. Both the Lucky 213 Club and the 35.5 Club cards were distributed by Diner's Club and by American Express with brochures which described the benetits to be obtained by their use. The respondents Dewhirst and Hertz have now commenced to distribute through Duiner's Club International and American Express a card called Hertz Club Key card. That card is being distributed together with a brochure which describes the benefits to be obtained from the use of the card. Save for minor differences, the use of the card with Hertz obtains benefits similar to those obtained by the use of the other cards with Budget. The differences pointed out to me by Mr H. Jolson, of counsel, who appeared for Hertz, were that, with the use of the Hertz card, stamp duty 15 included in the overall charge, which, for example, 1s tor a Falcon Station Wagon, $47 per day, the same figure as that for the Holden Commodore Station Wagon; secondly, that there is an ability to use the Hertz card internationally and not merely in the Paciric area, as with the Budget car; and, thirdly, that the use of the Hertz card gives a special opportunity to win the tree use of a BMW vehicle for one year. Budget complains that there are certain aspects of the brochure distributed with the Hertz card which are misleading or deceptive or likely to misiead or deceive and therefore which breach s.52 ot the Trade Practices Act 1974 (Cth). The first of such statements 1s "While other car rental comanies simply otfer youa discount, we offer you a Club Key card." In my opinion, this statement 15 an incorrect statement or fact, 1f read strictly in accordance with its terms. It suggests that other car rental companies do not offer a similar card. The statement 1s misleading, having regard to the fact that one of the main competitors, Budget, nas for years operated a card system which offers substantially similar benefits. The next statement which is challenged reads : "It puts you way ahead even before you start, because 1t works like no other card." In my opinion, this statement 1s also wrong and, 1t read strictly according to its terms, 1S misleading. 'The evidence before me shows that there 1s such similarity between the benerits otfered by Budget and Hertz that there 1s no proper basis for the statement that the Hertz Club Key card worxs like no other card. The next statement challenged 1s a heading which reads : "The key to a wider range of vehicles". It was suggested by Mr R. Merkel, QC, senior counsel for the applicant, that this statement indicated that Hertz had a wider range or vehicies than other car rental companies. lt does not seem to me that, in the context, the heading clearly carries that meaning. It appears to me that another equally valid reading ot the heading 1s that the card offers a wider range of vehicles to a hirer of vehicles because it brings down the price and therefore makes a wider range of vehicles available to the hirer. The next statement that is challenged reads "You'11l tand that other car rental companies may offer you a discount on their standard cars, but at Hertz we also ofter you a discount on cars like the luxurious BMW 318 1 and 520 1." Again, I think that this statement 18 1n terms wrong and misleading for the use of the Budget cards does obtain from Budget discounts on its luxury range of vehicles. I am, therefore, of the opinion that 1f the brochure is read strictly according to its terms, it 1s misleading and deceptive. I would add, aindeed, that no attempt to explain the terminology of the brochure has been put forward and there 1s no affidavit or other evidence to suggest that the representations in the brochure were made in good faith. In my opinion, the real issue in the case, therefore, 1s whether the sentences in the brochure to which I have referred are to be read as mere puffing which would be disregarded by users of Diner's and American Express credit cards, particularly ies) having regard to what was already Known through SHudget's advertising, or whether they should be iooked upon as having more substance. I was at first inclined to take the view that the statements in both the Diner's and Budget brochures would not be taken seriously by a reader. However, I have taken note of the evidence that the Budget promotion has been a very successful promotion and that the revenue brought 1n through the use of the Budget cards now runs to millions of dcilars andI have also taken note of the fact that Hertz has entered into a serious advertising campaign, presumably for the purpose of attracting business. I have therefore come to the conclusion that the statements made in the brochures should be given weight and that' they do have a significant effect. In this light, 1t seems to me that the statements complained about cannot be looked upon as mere puffing. They are not statements which are mere exaggeration or statements incapable ot ohjective proot, rather they are statements of fact and they are wrong. I have therefore come to the view that, on the evidence presently betore me, the applicant has made out a probability of success at the trial. The next question to which I must turn my attention 138 whether or not the discretion to grant an interlocutory injunction should be favourably exercised. On the whole, I think ont that the injunction should be granted. It seems to me that if it is not granted it will be daitficult for the applicant to establish the extent of any damage suffered from the misleading advertising and that it will be simpler tor the respondent, 1f it 18 ultimately successful in the hearing, to establish what its damage is by reason of having to cnange its advertising programme. I recognise that there has been no evidence put to me which shows with any clarity that Budget has lost any particular sum from the advertising to date or even, indeed, that its sales have diminished. That 1s, I think, a fact which tends rather to point to the difficulty of demonstrating precisely what damage flows from advertising of this type. As I have said, 2f an injunction 1s granted, the respondent will be able to change its advertising and the costs of doing that can be assessed. The factor which has most concerned me on the exercise of the discretion 1s a matter which was not relied upon by Mr Jolson for the Hertz respondents, and that 1s the form ot Budget's own brochure with respect to its Lucky 13 Club. That brochure on its first and facing page states that the Lucky 13 Club cuts the cost ot Budget car rental by more than 30 per cent, a very dramatic statement. When one looks inside the brochure, 1t 1s difficult to see how that 1s correct, except to a most limited extent. It 1s, indeed, a little difficult, when one looks at the contents of the brochure, to see precisely what benefits are being obtained. The brochure strates that one may rent any Budget car up to and including a Commodore Wagon for only $47 per day, but 1f one looks at the standard rental charges, one sees that, apart from the rental for the Commodore Wagon, all other rentals are about $47 per day or less, so that most of the cars have a basic rental the same or less than that put forward as the discounted rental. It 1s clear, of course, trom the brochure, that personal accident insurance, comprehensive insurance and unlimited kilometres are all benefits that may be optained, but, for my own part, I must say 1t 18 very difficult to relate what appears on the tront of the brochure to what 1s said within it or indeed to get any very clear 1dea as to precisely what benetits the use of the card gives. I would not make the same comment about the brochure with respect to the Budget 35.5 Club, for that is drawn in quite different terms. In the result, therefore, 1 have the impression that the Budget brochure might very well be, 1n a different way, as Misleading to the public as the Hertz brochures. I have considered whether, in those circumstances, it would be proper to grant an injunction. However, I have come to the view that the interests of the public, as well as the interests of Budaet, should be considered and that it is in the interests of the public that advertising should not be misleading and deceptive and I have considered that the fact that some of the budget advertising arguably is also misleading and deceptive, 1S not a good reason for refusing to grant an injunction preventing the Hertz brochures' trom being distributed. For those reasons [ am disposed to grant an interlocutory injunction. Upon Mr Merkel's undertaking on behaif ot his client that the applicant will pay any damages which the respondents Allen Dewhirst and Hertz may suffer by reason of my order and which the applicant may hereafter be called upon to pay, should the Court see fit so to order, I order that until the hearing and determination of this application or further order that the respondents, Allen Dewhirst and Hertz and each of them be restrained by themselves, thelr servants and agents from circulating or distributing or causing to circulate or distribute the brochures which are exhibit DML 2 to the atfidavit of Duncan McAllister Leitch sworn 7 August 1984 and exhibit WDK 5 to the affidavit of William David King sworn 15 August 1984. \ certity that this and the sven C7) preceding pages are a true copy of the reasons for judgment herein of The Honour- oeble Mr. Justice J DO PAWES Associate Dated 2/9/84 afe/ve