Instant Rewards Pty Ltd v Baker Motors Pty Ltd [2003] NSWSC 312

New South Wales Supreme Court

CITATION : Instant Rewards Pty Ltd v Baker Motors Pty Ltd [2003] NSWSC 312 HEARING DATE(S) : 11 April, 2003 JUDGMENT DATE : 11 April 2003 JURISDICTION: Equity Division JUDGMENT OF : Palmer J DECISION : Mandatory injunction refused with costs.

CATCHWORDS : MANDATORY INJUNCTION - DISCRETION - Plaintiff seeks mandatory injunction that Defendant perform advertising contract by providing free services to the public - Defendant has strong prima facie case that contract procured by misleading and deceptive conduct - balance of convenience - if mandatory injunction granted Defendant would obtain whole of relief sought before trial. LEGISLATION CITED : Trade Practices Act 1974 (Cth) - s.52 CASES CITED : - Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499 - Shepherd Homes Limited v Sandham [1971] Ch 340 PARTIES : Instant Rewards Pty Ltd t/a Merchant Sampler Advertising - Plaintiff Baker Motors Pty Ltd - Defendant FILE NUMBER(S) : SC 2059/03 COUNSEL : M. Elliott - Plaintiff J.G. Renwick - Defendant SOLICITORS : Henry Davis York - Plaintiff James G. Sloan - Defendant

Ex tempore

1 By its Amended Notice of Motion the Plaintiff seeks a mandatory interlocutory injunction compelling the Defendant to honour an alleged obligation to provide free services in respect of 1,268 coupons contained in a coupons booklet produced by the Plaintiff and entitled "1073 Border FM Presents Merchant Sampler". I will deal with the application for that injunction first and then I will consider the other relief which the Plaintiff seeks in its Amended Notice of Motion. 2 The Plaintiff carries on business of producing and selling to the public books which contain coupons offering free products or services. The way in which the Plaintiff operates its coupon business is as follows. It invites merchants conducting businesses in a particular region to sign an advertising agreement pursuant to which the Plaintiff produces an advertisement for the merchant on a coupon which appears in the Plaintiff's coupon book distributed for that region. The coupon entitles the purchaser of the coupon book to a free product or service of the merchant to a stated value. 3 If the merchant agrees to the proposal, the merchant enters into an advertising agreement with the Plaintiff. Coupons are printed in accordance with the advertising agreement and included in a coupon book which is then sold to the public in that particular region. 4 The Plaintiff's evidence is that in early February 2003, one of its sales representatives, a Mr Griffiths, travelled to the Albury/Wodonga area for the purpose of soliciting business from merchants in that area in order to procure advertising contracts which are the basis for the issuing of the Plaintiff's coupon books. 5 Mr Griffiths says that he attended at the business premises of the Defendant. The Defendant carries on business under the name Baker Motors mainly as a car dealer but it also provides car maintenance services. 6 Mr Griffiths' evidence is that when he arrived at the premises of Baker Motors he explained to the counter clerk that he was an advertising representative and asked to speak to the service manager. Mr Griffiths' evidence is that a few minutes later he was introduced to Mr Kenneth Bailey and told him that he was offering free advertising on behalf of the Plaintiff and was looking for a motor vehicle dealership with a workshop to benefit. Mr Griffiths says that he told Mr Bailey: "We advertise merchants in a book like this. We are currently compiling a book for the Albury, Wodonga area. We will cover the cost of all the art work, printing and distribution of the book. If you have a logo, we will place that on at no charge. All we ask is that you make an offer to the customer to encourage them into their business, something that is of a gift nature, something free." 7 He says that he handed Mr Bailey the voucher book that he carried as a sample and drew his attention to coupons within that book which contained offers from another motor vehicle dealership. 8 He says that, having looked through that coupon book and another two sample voucher books containing offers by other motor vehicle dealerships, Mr Bailey said: "So this doesn't cost us anything" , to which Mr Griffiths replied: "That's right other than your offer in the book, it is absolutely without charge of any kind" . 9 He says that Mr Bailey reviewed advertising samples that were shown to him and then selected one of them which was a sample advertisement in respect of a lubrication service and oil change. He says that he then showed Mr Bailey the advertising agreement, that Mr Bailey read the conditions, and then asked Mr Griffiths: "What do you require from us?" . Mr Griffiths says that he responded: "I will complete all the paperwork, all I need is your business card so that I can take down the necessary details." 10 A short time later, after Mr Bailey had left him for a few minutes, he had another conversation with Mr Bailey in which he asked Mr Bailey the normal value of the lubrication service and oil change offer which Mr Griffiths says Mr Bailey had agreed to include in the coupon booklet. Mr Bailey responded, "It is valued at $120.00" . Mr Griffiths says that he then handed Mr Bailey the advertising agreement which Mr Bailey appeared to read and then signed. 11 The Defendant included a coupon offering the free service by the Plaintiff in a coupon book which was sold by the Plaintiff to members of the public in the Albury/Wodonga area. Some time later, the Plaintiff contacted the Defendant when the Defendant refused to honour a voucher for a lubrication service and oil change which had been included in the coupon book. 12 The Defendant's position may be summarised thus. The Defendant says that Mr Bailey, who was its service manager, had no authority to enter into the advertising contract which he signed. The Defendant says (and Mr Bailey has also given evidence to this effect) that it was represented to Mr Bailey that all that he was signing was something which would enable a proof of the advertisement to be sent by the Plaintiff to the Defendant for approval. The Defendant says that the conduct of the Plaintiff in procuring Mr Bailey's signature on the advertising agreement was misleading and deceptive and that it has a defence to the Plaintiff's claim to enforce the contract, that defence being under s.52 of the Trade Practices Act 1974 (Cth) and, no doubt, other defences as well. 13 The significance of the advertising contract which was signed by Mr Bailey must be understood. The form of the advertising contract is contained on one page. The print is somewhat small, although it is legible with some effort. The first clause of the contract states that the Plaintiff, "… at its own expense and ABSOLUTELY WITH OUT CHARGE OF ANY KIND TO THE MERCHANT shall make known to the public attention the advertising message of the merchant, as herein set forth printing and distributing Coupon Books bearing the Merchant's trade name and advertising message printed upon one of the coupons contained in such books, each said coupons to be honoured redeemed by the merchant in the manner herein after set forth." 14 The terms of the advertisement to be included in the coupon booklet are set out in Clause 6. The term during which the coupon is to be valid is for a period of seven months from the date of the advertising contract, which is 3 February 2003. Clause 7 provides: "Distribution of coupon Books containing the above Coupon shall be limited in number from one to 3,000 Coupon Books. Each Coupon shall have printed thereon the date on which the free offer contained therein expires."