@ "" SUDGMENT No. XT 7 V7. NOT FOR GENERAL DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY ) NSW G.504 of 1987 ) ) GENERAL DIVISION CORAM: PLACE: DATE: THE COURT ORDERS THAT: BETWEEN: HOSPITALS CONTRIBUTION FUND OF AUSTRALIA LIMITED Applicant AND: SWITZERLAND AUSTRALIA HEALTH FUND PTY LIMITED trading as "HEALTH AUSTRALIA" Respondent WILCOX J SYDNEY 12 NOVEMBER 1987 MINUTES OF ORDER 1. The operation of Order 2 made on 4 November 1987 be varied so as to suspend its operation in respect of television and radio advertising until Sunday 15 November 1987 and so as to suspend its operation in respect of the distribution of brochures in the form of Exhibit M in this proceeding until the hearing of the appeal or until further order of the Court. 2. Liberty be granted to either party to apply in relation to Order 1 herein on two days' notice. 3. Leave be granted to either party to apply by Notice of Motion returnable at 10.15 am on Thursday 19 November 1987 in respect of corrective advertising. Any such Notice of Motion, specifying the precise orders sought is to be filed and served by 1 pm on Monday 16 November 1987. 4. All questions of costs be stood over to Thursday 19 November 1987. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. NOT FOR GENERAL DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSW G.504 of 1987 GENERAL DIVISION BETWEEN: HOSPITALS CONTRIBUTION FUND OF AUSTRALIA LIMITED Applicant AND: SWITZERLAND AUSTRALIA HEALTH FUND PTY LIMITED trading as "HEALTH AUSTRALIA" Respondent CORAM: WILCOX J PLACE: SYDNEY DATE: 12 NOVEMBER 1987 EXTEMPORE REASONS FOR JUDGMENT The motion before the Court is for an order that Order 2 made by me on 4 November 1987 be unconditionally stayed pending the outcome of the appeal lodged by the applicant, Hospitals Contribution Fund of Australia Limited, or unt1l further order. Apparently Hospitals Contribution Fund has lodged an appeal in relation to the findings that I made and the orders pronounced on 4 November. I am told that preliminary inquiries have been made and that it appears possible, with the active co-operation of the parties, for the appeal to be heard before the end of term. I approach the present application upon the basis that this co-operation will be forthcoming and that, in fact, arrangements will be able to be made for a Full Court to hear the appeal within that period. However, I propose to give liberty to apply in case this turns out to be unduly optimistic, so that the situation can be reviewed in the light of that further circumstance. I think that there 1s no doubt that the Court has power to further stay the operation of the order, or any part of it, for such further period as is reasonable under the whole of the circumstances, including particularly the circumstance that there is an appeal. Evidence has been led on behalf of the applicant as to the problems which it would experience in complying with the order as from the close of business today, which is the position unless I accede in some way to the current application. I approach the matter upon the basis, which is of course usual, that the judgment appealed from is correct and that the successful party is entitled to the benefit of that judgment. The contrary has not been submitted. I also bear in mind that I am concerned with litigation which is not purely private litigation, although undoubtedly each of the parties has a significant commercial interest in the matter. The claim is brought under s.52 of the Trade Practices Act 1974 and the major purpose of that legislation is to provide protection for members of the public. I therefore have to take into account that, to the extent that I might accede to the present application and permit the further publication of material which is false and misleading, I am exposing members of the public to the possibility of being misled. However, in considering the matters which have been argued today and which turn entirely upon advertisements using the phrase "best value", I think that it is correct to say, as Mr Gyles has done, that so far as the evidence indicates, until the recent entry into the New South Wales health market by the respondent, the statement may well have been true. I say "may well have been true" because I have no evidence to enable me to form any judgment whatever as to whether, before Health Australia came along, the HCF benefits did provide best value. It is also true that the evidence indicates that the advertising campaign in which this phrase has been used has been prepared some time ago and before Health Australia entered into the New South Wales market. This does not mean that it is correct for HCF to continue a campaign which is no longer true, but simply that, in considering what 1s reasonable, I must take into account that, so far as I know, the claim may well have been true when the campaign was formulated. In other words, I think that there 1s a distinction between such a case on the one hand and a case where an advertiser, who decides to embark on comparative advertising, either makes a claim which is known to be false or makes a claim without bothering to check the alleged facts. I have no reason to think that HCF did either of these things. The above considerations, of course, involve some measure of conflict and it 1s necessary to strike a balance between what 1s reasonable to HCF on the one hand and, on the other hand, what the public interest requires and the rights of Health Australia. There are a number of relatively minor forms of advertising in relation to which I am not persuaded that there should be any further suspension: they include posters, larger display panels, railway posters, bus panels, T-shirts, drink coasters, standard letters to members of the applicant's fund, press advertisements and plastic rulers. They are referred to in para.4 of the affidavit of Max Roger Williams, the Marketing and Promotion Manager of the applicant, sworn on 11 November. The order which I made on 4 November was an order restraining HCF from publishing, or causing to be published, any representation of a particular nature. I appreciate that there may necessarily be some delay in having advertisements on railway properties or bus panels changed. If, however, HCF gives instructions for such change and there 1s some delay caused by factors outside its control, it seems to me that it would be impossible to argue that, after the date of the instruction, HCF has either published, or caused to be published, the representation. If there is ever any question about this, then it will have to be determined upon the basis of what instructions have been given not later than today. In relation to other items, to the extent that they have already passed outside HCF's control, then nothing can be done about it. To the extent that they are under control, I see no reason why publication should not cease. There is no suggestion that there has been insufficient time for appropriate instructions to be given; and indeed Mr Williams said in his evidence, in respect of a number of these items, that they have already been withdrawn. Two further categories can be considered together, namely television and radio advertisements. These have apparently been written and time booked on the basis of a campaign to extend over a number of weeks. The last day for the television campaign is 29 November and for the radio campaign 6 December. In his affidavit, Mr Williams said that to change television advertisements and radio advertisements would require a day for withdrawal, but a minimum of one week for replacement of the promotional material. If advertisements are withdrawn and not replaced, so that the time is not used, according to Mr Williams, a cancellation fee may be charged. I had in mind that some such delay would necessarily occur when, on 4 November, I suspended the operation of the orders then made for a period of a week. The evidence given by Mr Williams is that, on the day following the orders, that is to say on 5 November, he informed the company's advertising agent that he required him to be on stand-by to arrange studios and production facilities because, if HCF did not win the appeal, it would need to make immediate changes. He has said in evidence today that the advertising agent has been instructed to produce new material, and that he is acting on that right now. He said that it would take one or two days to do the necessary voice-overs once the studio time was available. I regard the evidence in this matter as not being satisfactory. There is no indication as to when the agent was instructed to proceed with the production of new promotional material. The evidence which has been given regarding the instruction on 5 November tends to suggest that, although the agent was given a preliminary warning that something might happen, he was not then instructed to actually do anything. Suffice it to say that, on Mr Williams' own evidence, the period of about a week would have been adequate to replace the promotional material and that the Fund has now had eight days. I appreciate a practical problem in that, if an instruction were given forthwith to the various television and radio stations, having regard to their programming schedules and the fact that they are scattered widely throughout Australia, it may be impossible to prevent the commercials being shown during a short period after that instruction. Apparently, according to the booking schedule which I have, time is booked in slots of a week, commencing on a Sunday. Consequently, I think that the appropriate course to take 1n regard to television and radio advertisements is to further suspend the operation of the order up to and including Saturday next, 14 November. That leaves the matter of brochures, which 1s the most difficult problem. Apparently some 300,000 brochures were printed. They have been widely distributed to some 6000 outlets. These brochures use the words "best value" ina number of places. I think it would not be practicable simply to "white out" the words. This would have to be done so many times, and would be so obvious, as to destroy the appeal of the brochures completely. Mr Williams has said, and I accept this evidence, that to publish new brochures of an appropriate standard would take a minimum of four weeks. I can understand this, because the material would have to be quite substantially rewritten and there would be a period of printing time. Mr Williams has also spoken of problems in obtaining the necessary supplies of paper at short notice at this time of the year. I think that the position is that, if the brochures were withdrawn immediately and new brochures were substituted, they would not be available until about the time when the appeal will be heard. If the appeal succeeds in relation to the "best value" claim, then the expense of the new brochures would be wasted. On the other hand, as Mr Esler has pointed out, the brochures are important because they repeat the claim of "best value" and they do so very close to the point of sale. I think that the appropriate course for me to take 1s to allow the brochures to continue to be used until the hearing of the appeal but subject to liberty to apply in the event of any failure by the appellant to bring on the appeal at the earliest possible time. In saying this, I would indicate, however, that it may be dangerous for the appellant to assume that, if the appeal fails in this respect, 1t would automatically get a further four weeks to prepare new brochures from that date. This will, of course, be a matter for the Full Court, if it is asked to suspend any order that it might make or to further vary the order that I make. I think that it would be wise for the appellant to put in hand arrangements, at least against the contingency that it fails in this aspect of the appeal. This is a matter for its judgment. I merely make the point that 1t would be dangerous to assume that there would be a further suspension. I am influenced, in thinking that the brochures ought to be allowed to be circulated, largely because it seems to me that they do contain a deal of information which the consumer is entitled to have; for example, explaining the difference between basic cover and top cover. It is true, as Mr Esler has said, that it would be possible to put out quite quickly a document which sets out this information, perhaps in roneoed form, perhaps in printed form, but without pictures and the necessity for colour separations. I can, however, understand the reluctance of HCF to be associated with a document which would fall so far below what people have come to expect. Such an association might be thought to adversely affect HCF's standing as a health insurer. Had this been a case where the claim, when originally made, had been known to be false, I think that I would not have allowed that last factor to influence me, but I have to bear in mind that, so far as the evidence shows, the brochure might well have been correct when printed. The orders that I propose to make are as follows. I note the undertaking by the parties to co-operate in doing all things necessary to have the applicant's appeal heard before the end of term. I order that the operation of Order 2 made on 4 November 1987 be varied so as to suspend its operation in respect of television and radio advertising until Sunday 15 November 1987 and so as to suspend its operation in respect of the distribution of brochures in the form of Exhibit M until the hearing of the appeal or further order of the Court. I grant liberty to either party to apply in relation to these orders on two days' notice. I grant leave to either party to apply by Notice of Motion returnable at 10.15 am on Thursday 19 November in respect of corrective advertising. Any such Notice of Motion, specifying the precise orders sought, 1s to be filed and served by 1 pm on Monday 16 November. I will stand over to Thursday the 19th all questions of costs. I certify this and the eight (8) preceding pages to be a true copy of the Reasons for Judgment of his Honour Justice Wilcox. Associate: (Lore fee Date: 8 December 1987 Counsel for the Applicant: Solicitors for the Applicant: Counsel for the Respondent: Solicitors for the Respondent: Date(s) of hearing: 10. Mr R V Gyles QC with Mr N A Cotman Baker & McKenzie Mr P F Esler Clayton Utz 12 November 1987