Hurley v McDonald's Australia Ltd [2000] FCA 138

FEDERAL COURT OF AUSTRALIA

Hurley v McDonald's Australia Ltd [2000] FCA 138 JANETTE LYN HURLEY v McDONALD'S AUSTRALIA LIMITED Q276 OF 1999 SPENDER, DRUMMOND, KATZ JJ 18 FEBRUARY 2000 BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY Q276 OF 1999

BETWEEN: JANETTE LYN HURLEY

Applicant

AND: MCDONALD'S AUSTRALIA LTD

Respondent

JUDGES: SPENDER, DRUMMOND & KATZ JJ

DATE OF ORDER: 18 FEBRUARY 2000

WHERE MADE: BRISBANE

THE COURT ORDERS THAT: 1. Leave to appeal is refused. 2. Applicant to pay the respondent's costs of the motion including any reserved costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY Q276 OF 1999

BETWEEN: JANETTE LYN HURLEY

Applicant AND: MCDONALD'S AUSTRALIA LTD

Respondent

JUDGES: SPENDER, DRUMMOND & KATZ JJ

DATE: 18 FEBRUARY 2000

PLACE: BRISBANE

REASONS FOR JUDGMENT THE COURT: 1 At the hearing of this appeal on 16 February, the Court indicated that it would refuse leave to appeal from the decision of Dowsett J, given on 5 November 1999, by which his Honour refused the applicant leave to amend her reply by the insertion of paras 2(c), 2(d), 2A and 2B. The Court indicated that it would deliver its reasons for that conclusion on 18 February 2000. These are those reasons. 2 These are representative proceedings in which the applicant and the claimants whom she represents claim, inter alia, that each of them entered into a contract with the respondent, McDonald's Australia Ltd ("McDonald's"), the terms and conditions of which were published by the respondent on notice boards in, and printed on tray mats distributed through, a chain of restaurants it operates throughout Australia. 3 The present application for leave only concerns aspects of the applicant's claim in contract, although it is relevant to note that she and the claimants also make other claims - in particular, under the Trade Practices Act 1974. The claimants say that they received game stamps during the course of a competition in 1999 known as "Monopoly McMatch and Win" ("the 99 Competition"), which they dealt with in accordance with the "How to Play", "How to Win" and "How to Claim Your Prize" sections on a document entitled "Prizes and Conditions of Entry" which was printed on the rear of the tray mats distributed at McDonald's stores. McDonald's challenges the accounts by the claimants as to where, when and from whom they received the game stamps on which they rely. The claim under the Trade Practices Act focuses on the claimants' reliance on representations that: "Game stamps distributed by the respondent, its servants or agents on or after 4 June 1999 and collected by customers were valid for use in the Competition, By the collection of the game stamps distributed by the respondent on or after 4 June 1999, and complying with the other terms and conditions of the Competition: i. The claims for prizes by customers would be accepted by the respondent; and ii. In that event, the respondent would allot to the customer the prize relevant to the matched game stamps." 4 McDonald's have admitted: "that there was a condition of entry to the 1999 Competition printed on the traymat that to be eligible to win a 'collect and win' prize, customers were required to collect game stamps issued during the course of the 1999 Competition, match them with the corresponding 'property' on the front of the traymat, peel the backing to expose the sticky back of the game stamp, stick the game stamp to the traymat where indicated, match the colour and name of the property, collect all properties of the same property set, fill out the details on the reverse side of the traymat, ask the McDonald's restaurant manager for a redemption envelope, complete the details on the redemption envelope and post by certified mail at their cost to the relevant address, have the entry verified, and otherwise achieve compliance with and be subject to the complete conditions of entry set out in the document headed 'Prizes and Conditions of Entry'." 5 The resolution of the factual issue as to where, when and from whom the claimants received the game stamps on which they rely is highly relevant, if not crucial, to the success of the claims under the Trade Practices Act. 6 The 99 Competition was based on the game of Monopoly. Under that Competition, customers of McDonald's were to be given "game stamps" upon purchase of certain food products. The game stamps were to correspond with items of real estate on the London Monopoly board and the object was to obtain game stamps that corresponded with all of the properties in a particular colour group. Upon doing so, and complying with the procedural requirements of the 99 Competition, a customer would be entitled to a prize that corresponded with that particular colour group. 7 The "Prizes and Conditions of Entry" published on notice boards in McDonald's stores commenced under the heading "How to Play": "Collect Monopoly McMatch and Win Game Stamps at any McDonald's Family Restaurant. You will receive one Game Stamp for every medium carbonated soft drink, regular shake, large orange juice, medium fries and hash brown purchased during the course of the Game. You will receive two Game Stamps for every large carbonated soft drink, large shake, large fries and apple pie and (any promotional pie whilst stocks last) purchased during the Game. Game stamps are attached to your cup, fry box, pie box or hash brown bag. To play, simply peel the label off your container to reveal your Game Stamp(s). If you have received a double Game Stamp separate down the centre perforation." (the emphasis is in the original) 8 Under the heading "How to Win", the "Prizes and Conditions of Entry" said: "1. Collect and Win: Match the property Game Stamps to the corresponding property printed on the front of your Traymat. Peel the backing to expose the sticky back of your Game Stamp. Stick it to the Traymat where indicated, making sure the Game Stamp matches both the colour and name of the property. Collect all properties of the same property set to win the prize shown, subject to verification and conditions. …". 9 And under "How to Claim Your Prize", the "Prizes and Conditions of Entry" said: "1. Collect and Win". Fill out the details on reverse side of the Traymat, immediately behind your winning set of properties. Ask the McDonald's Restaurant Manager for a redemption envelope in order to claim your prize. Complete all details on this envelope. Cut out your winning entry, place it in this envelope and post by Registered Mail (at your cost), to be received by Sunday 15th August 1999. Once your entry has been verified you will be notified by telephone or mail, with delivery details. You need only detach your winning entry. Continue to collect for further prizes. (the emphasis is in the original) …" 10 There were also later set out in "Prizes and Conditions of Entry", a number of conditions and a description of non-food and food prizes. It is necessary to set out only some of those conditions: "1. Information on HOW TO PLAY and HOW TO CLAIM YOUR PRIZE in Monopoly McMatch and Win (the 'Game') form part of these Conditions of Entry. … 3. The Game commences Friday 4th June 1999 and closes on Sunday 1st August 1999 or earlier if Game Stamps run out. 4. All prize claims and entries become the property of the Promoter and the Promoter's decision on all matters pertaining to this Game is final. No correspondence will be entered into." (the emphasis is in the original) 11 Condition 5 set out non-food prizes, which included 8 Honda HR-V Sport manual 4WD's, as well as other substantial prizes. Condition 7 indicated that the total value of all prizes was $24,599,499. The conditions continued: "9. Printing and other quality control errors will not invalidate an otherwise valid prize claim. Prize claims will be subject to security and verification checks at the absolute discretion of the Promoter. Prize claims are ineligible if mutilated, illegible, stolen, forged, reconstructed, altered, incomplete or tampered with in any way, or if they fail any of the Promoter's security and verification checks. McDonald's Restaurant staff are unable to verify any claims other than Instant Win food prizes. 10. Unless otherwise due to fraud or ineligibility under these terms and conditions all prize claims in excess of the advertised prize pool will be honoured. … 17. To the extent permitted by law, the Promoter, its franchisees, employees and agents shall not be liable for any claims, losses, damages, injuries, costs and expenses suffered sustained or incurred (including but not limited to indirect or consequential) as a result of, or arising out of, or in any way connected with this Promotion and/or its prizes. 18. Maximum number of Game Stamps printed will be one hundred million (100,000,000). … 21. NSW Permit No. TC99/2053, VIC Permit No. 99/59 issued on 12/03/99 ACT Permit No. TP98/2873, NT 99/617, SA T99/737." 12 The applicant, Mrs Hurley, claims to represent a group of identified and unidentified customers of McDonald's who claim to have won prizes in the 99 Competition. McDonald's has rejected their claims. McDonald's contends that the rejected claims are based on game stamps that were not applicable to the 99 Competition, having instead been issued in 1998 in connection with an earlier competition of a similar kind. Alternatively, McDonald's says that, if the game stamps in question were in fact issued in 1999, they were issued as the result of a mistake. If the rejected claims were accepted, McDonald's would be faced with having to provide for more prizes than they had announced. For example, they would be required to provide in excess of 11,000 motor vehicles by way of prizes, in lieu of the intended 8 motor vehicles. 13 The game stamps intended to be issued in connection with the 99 Competition differ in material respects from those which had been issued in connection with the competition conducted in 1998. McDonald's, as part of the particulars of its defence, stated: "Only game stamps printed as part of the 1999 game and distributed to customers by or on behalf of McDonald's as part of the 1999 Competition were eligible for the designated prizes in the 1999 Competition. As part of the design of the competition, for verification and security purposes, all relevant 1999 game stamps were printed with the following three distinct characteristics: (a) "m" code; (b) golden arches; and (c) black light security". 14 It appears that one or more of the game stamps in respect of which the claimants claim prizes lack the "m" code and golden arches features of the 1999 printed stamps. 15 The rejected prize claims utilize game stamps which, it seems clear, were not intended by McDonald's to be applicable to the 99 Competition. Very serious problems have arisen because, while the same general format had been adopted in an earlier competition in 1998, the relevant numbers of winning game stamps had been altered. In the earlier competition, the number of Mayfair stamps was the control factor for the major prizes, but many millions of Park Lane stamps were issued in 1998. On the other hand, in the 99 Competition, Park Lane stamps were to be the control factor for a major prize, and a large number of Mayfair stamps were issued. 16 The amendments which are the subject of this application should be seen in context. In McDonald's defence, it pleaded: "19. In answer to the whole of the Further Further Amended Statement of Claim, McDonald's says that the following were also conditions of entry to the 1999 Competition (a) that the promoter's (McDonald's) decision on all matters pertaining to the 1999 Competition would be final; (b) that all prize claims would be subject to the security and verification checks at the absolute discretion of the promoter (McDonald's); (c) that the claims made in the 1999 Competition would be ineligible if they failed any of the promoter's (McDonald's) security and verification checks; (d) that the prize claims made in the 1999 Competition would be ineligible if mutilated, illegible, stolen, forged, reconstructed, altered, incomplete or tampered with in any way; (e) that to the extent permitted by law, McDonald's, its franchisees, employees and agents would not be liable for any claims, losses, damages, injuries, costs and expenses suffered sustained or incurred (including but not limited to indirect or consequential) as a result of, or arising out of, or in any connected with the 1999 Competition and/or its prizes." 17 It will be seen that 19(a) pleads reliance on Condition 4 in the "Prizes and Conditions of Entry", 19(b), (c) and (d) plead reliance on Condition 9 and 19(e) on Condition 17. 18 Paragraph 20 of McDonald's defence provided: "20. In further answer to the whole of the Further Further Amended Statement of Claim, McDonald's says that: (a) the purchasers…[i.e. the claimants] have made claims for prizes in reliance upon game stamps not issued on the items…sold during the course of the 1999 Competition; (b) the claims for prizes submitted by the purchasers…have failed the security and verification checks of McDonald's applied by it to the 1999 Competition in accordance with the conditions of entry referred to in paragraph 3(a) hereof; (c) McDonald's has determined that the purchasers…have not satisfied the conditions of entry to the 1999 Competition; (d) there were prize claims made in the 1999 Competition which were ineligible by reason of incompleteness, mutilation, illegibility, theft, forgery, reconstruction, alteration or tampering; (e) for the foregoing reasons the claims for prizes submitted by [the claimants] were not valid and were ineligible for the award of prizes in the 1999 Competition." 19 The proposed amendments disallowed by Dowsett J were paras 2(c), 2(d), 2A, and 2B: "2. As to the allegations in paragraph 19(a) and paragraph 20(c) of the Amended Defence, the applicant and group members say: … (c) further or alternatively, upon the true construction of the condition any decision of the respondent on matters of fact is final only if the decision is made in good faith and is fair and reasonable; (d) further or alternatively, it was an implied term of the agreements between the applicant and group members on the one hand and the respondent on the other, necessary to give efficacy to the agreement, that a decision of the respondent on matters pertaining to the competition would be final only if made reasonably and in good faith, or alternatively, reasonably; … (g) alternatively, the determination of the respondent referred to in paragraph 20(c) of the Amended Defence was partly a determination of fact, namely that the key game stamps of the applicant and group members were not collected by the applicant and group members in the course of the 1999 Competition." 20 Paragraph 2A relevantly provided: "(a) In deciding to reject the claims of the applicant and the group members on the grounds referred to in paragraph 2(g) herein, the respondent failed to act reasonably, fairly and in good faith. Particulars (i) the security checks and verifications upon which the respondent relied were incapable of determining whether the claimants collected the key game stamps during the competition; (ii) the respondent made no attempt to ascertain from the group members (other than a very few) the circumstances in which the group members had obtained the key game stamps, but proceeded on the assumption that each claimant was either mistaken or fraudulent; … (b) In the premises, such decision was not final."