FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Clarion Marketing Pty Ltd [2009] FCA 1441 

TRADE PRACTICES – trade promotion involving a scratch card competition promoting the Respondent’s mobile phone content service – whether Respondent engaged in misleading and deceptive conduct – whether the Respondent contravened s 52, s 53(e) or s 53(g) of the Trade Practices Act 1974 (Cth).    

Held:	(1) The Respondent contravened s 52 and s 53(e) of the Trade Practices Act 1974 (Cth); (2) The Applicant was entitled to declaratory and injunctive relief as well orders for correcting advertising pursuant to s 86C of the Trade Practices Act 1974 (Cth). 

Trade Practices Act 1974 (Cth) ss 52(1), 53(e) 53(g), 86C 

Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 cited
Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 cited
Parkdale Custom Built Furniture Proprietary Limited v Puxu Proprietary Limited (1982) 149 CLR 191 cited
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No. 1) (1988) 39 FCR 546 cited
Campomar Sociedad Limitada & Anor v Nike International Limited & Anor (2000) 202 CLR 45 applied
Medical Benefits Funds of Australia Ltd & Anor v Cassidy & Anor (2003) 135 FCR 1 applied
Australian Competition and Consumer Commission v Chen (2003) 132 FCR 309 cited  

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v CLARION MARKETING AUSTRALIA PTY LTD (ACN 128 028 642) 

NSD 486 of 2009

NICHOLAS J
4 DECEMBER 2009
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA		
NEW SOUTH WALES DISTRICT REGISTRY		
general division	NSD 486 of 2009	

BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant
	
AND:	CLARION MARKETING AUSTRALIA PTY LTD
(ACN 128 028 642)
Respondent

JUDGE:	NICHOLAS J	
DATE OF ORDER:	4 dECEMBER 2009	
WHERE MADE:	SYDNEY	

THE COURT ORDERS THAT:

1.	Each party file and serve a written submission not exceeding 5 pages in length in relation to the appropriate form of orders within 7 days of today.
2.	Each party is to append to its written submission a minute of the orders it submits are appropriate having regard to these Reasons for Judgment. 

Note:	Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. 
The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA		
NEW SOUTH WALES DISTRICT REGISTRY		
general division	NSD 486 of 2009	

BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant
	
AND:	CLARION MARKETING AUSTRALIA PTY LTD
(ACN 128 028 642)
Respondent

JUDGE:	NICHOLAS J	
DATE:	4 DECEMBER 2009	
PLACE:	SYDNEY	

REASONS FOR JUDGMENT
INTRODUCTION
1		This proceeding concerns a trade promotion conducted by the Respondent between January and October of this year involving the distribution of “scratch cards”.  These scratch cards were aimed at obtaining subscriptions to the Respondent’s “Moby Planet” mobile phone content services.  
2		The Applicant, the Australian Competition and Consumer Commission, commenced these proceedings in May of this year.  It alleges that, by causing the scratch cards to be published, the Respondent has contravened s 52(1), s 53(e) and s 53(g) of the Trade Practices Act 1974 (the Act).  The Applicant claims declaratory and injunctive relief together with orders requiring the Respondent to publish corrective advertising in a number of forms.  The Respondent opposed the grant of any relief, irrespective of whether or not the Respondent is found to have contravened the relevant provisions of the Act.  
3		It was common ground at the hearing that the precise form of any relief that might be granted should be the subject of further argument following publication of Reasons for Judgment.  I propose to indicate my views as to the appropriate form of relief that should be granted in general terms which will provide context for any further argument that might occur. 
4		The Respondent is a provider of premium mobile phone content which includes ringtones, mobile alerts, games and jokes.  This content is referred to in the Respondent’s promotional material as “Moby Planet mobile content”.  The Respondent supplies this content to mobile phone users for a fee pursuant to subscription agreements between it and mobile phone users.  
5		Pursuant to arrangements between the Respondent and its subscribers’ mobile phone service providers (eg. Telstra, Optus, Vodafone), the costs of the subscription are included in the bill from the service provider to the mobile phone user which is then collected by the mobile service provider and ultimately passed on to the Respondent.  
6		When a mobile phone user subscribes to the Moby Planet service, he or she incurs a $10.00 fee which entitles the user to their first six days of Moby Planet mobile content.  Another $10.00 fee is incurred every six days until such time as the user takes steps to terminate the subscription.  This should occur once the user sends an SMS message consisting of the word “STOP” to a particular telephone number.  There is evidence which suggests that some users had difficulty in terminating their subscriptions to the Moby Planet service.  There is no claim made by the Applicant based upon that matter and I shall say nothing more about that. 
7		In January of this year the Respondent caused a large number of scratch cards to be included as inserts in a wide range of magazines and newspapers which were then circulated throughout Australia.  These publications included metropolitan newspapers, national magazines and various regional publications.  The list of publications is extensive and I will not reproduce it in these Reasons for Judgment.  It includes the Daily Telegraph, the Sun Herald, the West Australian, New Idea, Woman’s Day, TV Week, Reader’s Digest and Ralph.  The distribution of the scratch cards began in January 2009 and continued through to October 2009.  
8		There was an application for interlocutory relief brought by the Applicant in June of this year which was heard by Jacobson J.  His Honour granted some interlocutory relief and took steps to ensure the proceedings were listed for an early final hearing.    
THE SCRATCH CARDS
9		The scratch cards took two forms.  The first, referred to in evidence as the “yellow” scratch card, was distributed in the period January to March 2009.  A colour reproduction of an example of the yellow scratch card appears in Appendix “A” to these Reasons for Judgment.  As is apparent from that reproduction, the front of the scratch card is brightly coloured while the back is in black and white.  In the bottom left-hand corner of the front of the scratch card is a rectangular panel of grey latex which may be scratched away to reveal what lies beneath it.  A colour representation of the same scratch card with the latex panel removed appears in Appendix “B” to these Reasons for Judgment.
10		The second scratch card, referred to in the evidence as the “red” scratch card, was distributed in the period April to October 2009.  A colour reproduction of an example of the red scratch card appears in Appendix “C” to these Reasons for Judgment.  A colour representation of a red scratch card with the latex panel removed appears in Appendix “D” to these Reasons for Judgment.  
11		The colour reproductions of the scratch cards appended to these Reasons for Judgment are not the same size as the actual cards.  The approximate dimensions of the cards were 153mm x 175mm in the case of the yellow card and 150mm x 153mm in the case of the red one.  
12		There are other differences between the yellow and red scratch cards though some of these are not material for present purposes.  I will refer to the material differences later in these Reasons for Judgment.  
13		Near the top of each scratch card the words “Subscribe to Moby Planet for your chance to” appear in small print followed by, immediately beneath them and in large block print, the words “WIN THIS BRAND NEW MERCEDES SLK”.  Below this statement is a picture of the Mercedes SLK.
14		In the case of the red scratch card, the latex panel appears toward the centre of the front of the card.  It incorporates three boxes containing question marks.  Adjacent to the boxes is the statement: “MATCH 3 TO WIN” and immediately below it, “reveal 3 identical symbols under the panel and you’re a guaranteed WINNER!”.  When the latex panel is scratched away the three matching symbols appear together with a prize code and an instruction to SMS the prize code to 19948889.  Immediately below that, but in extremely small print, the following appears:
Mobile subscription service at $10 every 6 days.  See back for Terms and Conditions.  Customer service call 1300 558 851
15		Toward the bottom of the red scratch card appears the names and pictures of various other prizes.
16		In the case of the yellow scratch card, the front of the card is arranged somewhat differently.  The latex panel appears near the bottom left hand corner beneath the names and pictures of the various prizes.  On the opposite side of the card this statement appears:
Match 3 symbols and you are guaranteed to win a listed prize!*
The asterisk refers to two lines of small print at the foot of the card which include these statements:
Mobile subscription service at $10/6 days.  See back for Terms and Conditions.
17		When the latex panel on the yellow cards is scratched away the prize code and SMS instructions appear but, unlike the red scratch cards, there is no reference to any mobile subscription service.  
18		The reverse side of the yellow and red cards are in substantially the same form.  The numbers to which winners are directed to SMS their prize code are different but nothing turns on that.  In the box that records the 4 steps that must be undertaken to claim a prize there appears step 2 which in the case of the yellow card states:
2.  SMS with your mobile phone (standard carrier chargers apply) the prize code under the panel to 191213 to subscribe to MobyPlanet mobile content service.
In the case of the red card, these same words also appear but are followed by the words:
at a cost of $10 every 6 days.
SCOPE OF THE SCRATCH CARD PROMOTION
19		Altogether, there were approximately 10 million scratch cards distributed by the Respondent.  Of these, about 5 million were yellow cards and about 5 million were red cards.  It is common ground that a substantial number of people were led to subscribe to the Respondent’s Moby Planet service through the distribution of the scratch cards.  The evidence as to the number of people who subscribed was given by Lesley Hynes, the Marketing Manager for the Respondent.  Ms Hynes was the only witness called by the Respondent and she was not cross-examined.  
20		According to Ms Hynes’ first affidavit, by 14 May 2009 some 108,110 consumers had subscribed which she said was equivalent to 1.125% of the 8,600,343 scratch cards distributed up to that time.  She went on to depose in the same affidavit that approximately 75% to 80% of consumers “… opt out of the Moby Planet services immediately after sending an SMS to claim their prize and/or during their initial 6 day subscription period.”  
21		In a later affidavit, Ms Hynes deposed to another 1,399,657 cards having been distributed since she made her first affidavit, resulting in a total of 114,418 subscriptions overall.  Of that number, there were 3,561 subscribers who had not opted out of the service, as at 15 September 2009.  She calculated the overall rate at which consumers took up subscriptions as a percentage of the total number of cards distributed at 1.14%.  She again estimated the percentage of consumers opting out during their initial subscription period at approximately 75% to 80%.  I accept this evidence of Ms Hynes.  
22		There was no evidence to indicate whether a success rate of about 1.1% of cards distributed would be considered high or low by people who were responsible for organising this promotion or another like it.  I would infer that there are many people who are unlikely to have any interest in promotions of this kind and who do not bother themselves with inserts of this kind.  On the other hand, I would not be prepared to infer that there were many people who, having read the scratch cards, made a considered decision not to participate in the competition.  
THE PRIZE POOL
23		The number of prizes in the competition appears on the reverse side of the scratch cards in a block of fine print at the bottom.  The types of prizes and their numbers are shown to be:
Prize Type	Number	
SLK200 Kompressor Sports Car	5	
$10,000 cash	10	
$1,000 cash	100	
Apple iPods	100	
Sony Bravia LCD	100	
Sony Digital Cameras	100	
LG Home Theatre Systems	100	
Flexibreak Weekend Holiday Vouchers	9,999,485	

24		The total number of prizes on offer was therefore 10 million.  According to the Respondent’s evidence, none of the people who claimed a prize won either the motor vehicle or any of the electronic appliances.  It was said that one person won $1,000 cash, but this was the only occasion upon which any person won what the Respondent described as a “major” prize.  All other people who claimed a prize “won” what I shall refer to as a holiday voucher.  As is apparent from the figures appearing in para [23] above, the probability of any person winning any other type of prize was extremely small.  Conversely, there was an extremely high probability that the “winners” in this competition would receive nothing more than a holiday voucher.  
PRIZE COLLECTION
25		A consumer who wished to collect a prize had first to send an SMS consisting of the prize code appearing underneath the latex panel on the scratch card to the appropriate number.
26		The transmission of that SMS triggered a series of automated responses.  The following were sent back to the sender:
(a)	two free SMS responses (at no cost to the player) with the following information:
(i)	confirmation of being a winner and details of a unique code (which the player must write on the back of the card before sending it to the Respondent to collect the prize);
(ii)	a welcome to Moby Planet message and details of the opt-out procedure, free information number and costs of subscription; and
(b)	two SMS (billed at $5.00 per SMS) containing the Moby Planet mobile content.
27		The evidence did not suggest that consumers were given any opportunity to opt-out prior to receiving the two SMS containing Moby Planet mobile content.  I find that the reverse was true; it was not possible for a consumer who took the first step of sending the SMS consisting of the prize code to avoid being charged for the first two SMS containing Moby Planet mobile content at a total cost of $10.00.
THE RELEVANT STATUTORY PROVISIONS
28		The terms of s 52(1) of the Act are well known but will I set them out for completeness:
	A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
29		Section s 53 of the Act relevantly provides: 
	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:

…

(e)	make a false or misleading representation with respect to the price of goods or services;
…

(g)	make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy.
30		The general principles to be applied in determining whether a corporation contravenes s 52 are well settled.  I approach this case having regard to the following principles.
31		A corporation may be found to have contravened s 52 even though it lacked any intention to mislead or deceive: Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 228 per Stephen J.  
32		But if it is established that the corporation did intend to mislead, a Court may be more likely to find that the conduct complained of was misleading: Campomar Sociedad Limitada & Anor v Nike International Limited & Anor (2000) 202 CLR 45 at 63.
33		Conduct may be misleading or deceptive if it induces error but it is not sufficient merely to show that it may have led to confusion or caused people to wonder: Parkdale Custom Built Furniture Proprietary Limited v Puxu Proprietary Limited (1982) 149 CLR 191 at 198 per Gibbs CJ.
34		In order to establish that conduct is misleading or likely to mislead it is usually necessary to show that it conveys, in all the circumstances of the case, a misrepresentation: cf. Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202 per Deane and Fitzgerald JJ; Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No. 1) (1988) 39 FCR 546 at 555 per Lockhart J. 
35		Evidence that some people may have been misled is not essential but it is admissible and may be persuasive if given: Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202 per Deane and Fitzgerald JJ.
36		In the present case the representations complained of are alleged to have been made to the general public or a broad cross-section thereof.  In Campomar Sociedad Limitada & Anor v Nike International Limited & Anor (2000) 202 CLR 45, the High Court stated at 84-85:
102	It is in these cases of representations to the public, of which the first appeal is one, that there enter the “ordinary” [the phrase “ordinary purchaser” was used by Mason J in Puxu (1982) 149 CLR 191 at 210] or “reasonable” [the term used by Gibbs CJ in Puxu (1982) 149 CLR 191 at 199] members of the class of prospective purchasers. Although a class of consumers may be expected to include a wide range of persons, in isolating the “ordinary” or “reasonable” members of that class, there is an objective attribution of certain characteristics. Thus, in Puxu [(1982) 149 CLR 191 at 199], Gibbs CJ determined that the legislation did not impose burdens which operated for the benefit of persons “who fail[ed] to take reasonable care of their own interests”. In the same case, Mason J concluded that, whilst it was unlikely that an ordinary purchaser would notice the very slight differences in the appearance of the two items of furniture in question, nevertheless such a prospective purchaser reasonably could be expected to attempt to ascertain the brand name of the particular type of furniture on offer [Puxu (1982) 149 CLR 191 at 210-211].

103	Where the persons in question are not identified individuals to whom a particular misrepresentation has been made or from whom a relevant fact, circumstance or proposal was withheld, but are members of a class to which the conduct in question was directed in a general sense, it is necessary to isolate by some criterion a representative member of that class. The inquiry thus is to be made with respect to this hypothetical individual why the misconception complained has arisen or is likely to arise if no injunctive relief be granted. In formulating this inquiry, the courts have had regard to what appears to be the outer limits of the purpose and scope of the statutory norm of conduct fixed by s 52 [cf Environment Agency v Empress Car Co (Abertillery) Ltd [1999] 2 AC 22 at 30-31]. Thus, in Puxu, Gibbs CJ observed that conduct not intended to mislead or deceive and which was engaged in “honestly and reasonably” might nevertheless contravene s 52 [Puxu (1982) 149 CLR 191 at 197].  Having regard to these “heavy burdens” which the statute created, his Honour concluded that, where the effect of conduct on a class of persons, such as consumers, was in issue, the section must be “regarded as contemplating the effect of the conduct on reasonable members of the class” [Puxu (1982) 149 CLR 191 at 199].

37		There are a number of matters that emerge from the High Court’s statement of principle in Campomar that will guide a Court in determining whether there has been a contravention of s 52 in a situation where the representations complained of have been made to the general public or a section thereof.
38		First, it is necessary to identify the relevant class of people to whom the scratch cards were distributed.  It is clear that the relevant class was very wide comprising readers of a broad range of newspapers and magazines with widespread appeal and circulation.  It would include people who had not previously received premium mobile phone content and who were unfamiliar with the nature of such services, the manner in which they are activated or the prices charged for them. 
39		Secondly, it is necessary to identify the members of that class with a view to postulating a hypothetical individual to whom the attributes of the class can be attributed.  That person will be an “ordinary and reasonable” member of that class who takes reasonable care of his or her own interests.  But that is not to say that he or she will always be alert to the existence of fine print that might qualify in important ways more prominent statements which capture their attention to begin with.  
40		Thirdly, it is necessary to inquire why, in the case of such a hypothetical individual, misconception has arisen in the past, or is likely to rise in the future, with a view to determining whether such misconception is correctly seen as resulting from the Respondent’s conduct.  The misconception should not be seen as resulting from the Respondent’s conduct where it is the product of some extreme or fanciful assumption made by the individual concerned that would not be attributed to ordinary or reasonable members of the relevant class.  
EVIDENTIARY ISSUES
41		There was limited evidence called by the parties and none of the witnesses who made affidavits were cross-examined.  Leaving aside the likely effect of the scratch cards upon the hypothetical individual, the areas of dispute were relatively confined.  There were two areas in which there was disagreement as to the effect of the evidence.  
42		First, there was a difference between the parties which is reflected in the evidence as to what was the value of one of the seven different prizes identified on the scratch cards.  This particular prize, which is what I have referred to as the holiday voucher, was said by Mr White SC, who appeared with Ms Higgins for the Applicant, to have little or no value and, in particular, to be worth substantially less than the upfront cost of subscribing to the Respondent’s Moby Planet service.  
43		Secondly, there was a debate as to the weight that should be given to the documentary evidence relied upon by the Applicant as evidence of actual deception or confusion.  Mr Webb SC, who appeared with Mr Bevan for the Respondent, submitted that the evidence in question should be given little or no weight.  I will return to both these issues later in these Reasons for Judgment.  
DID THE RESPONDENT CONTRAVENE SECTION 52 OF THE ACT?
44		The central issue in this case is whether the Respondent contravened s 52(1) of the Act by engaging in conduct that was misleading or deceptive, or likely to mislead or deceive.  This in turn depends upon whether the scratch cards gave rise to one or more representations and whether, if they did so, any such representation was misleading or deceptive or likely to mislead or deceive.  
45		The scratch cards invited readers to scratch away the latex panel so as to disclose three symbols beneath it.  Having regard to the various statements on the cards referred to by me in para [13] – [16] above, I think the clear message conveyed by the cards was that any person who scratched away the latex panel of the card would become a player in a genuine game of luck or chance, the outcome of which would determine his or her entitlement to receive a listed prize.  
46		A most curious feature of this competition was that there were three matching symbols beneath the latex panel on every scratch card, though there is no suggestion that this would have been known to any of the players.  There was, therefore, no luck or chance involved in matching the three symbols.  Everyone who played was bound to win a prize.  This gives rise to the Applicant’s first submission.  
47		The Applicant says that consumers were misled into believing that there was a genuine contest involved in trying for a prize when, in fact, everyone who scratched away the latex panel found, inevitably, that there were three matching symbols entitling them to a prize.  I think that the scratch cards were, in this particular respect, misleading and deceptive and likely to mislead and deceive.  This has broader significance in two respects.  
48		First, I think it likely that many people who discovered the three matching symbols would have been genuinely surprised and excited by the prospect that they had actually won a prize.  From that moment they would have quite reasonably understood that all that remained for them to do was ascertain which particular prize they had won.  I think the sense of anticipation created helps explain why a significant number of people are likely to have sent an SMS message containing their prize codes to the designated numbers without understanding that this resulted in them becoming subscribers to the Moby Planet service at a cost of $10.00 for six days.
49		Secondly, I think the impression conveyed by the scratch cards was that the prizes people had won were valuable.  How valuable the different prizes were to particular individuals it is impossible to say except in the case of the cash prizes.  For example, a digital camera might be worth less to someone who already owned one than to someone who was looking to purchase one.  But I think most players would have understood that they had won a prize that was at least worth collecting.  
50		The Applicant submitted that a “holiday” voucher did not entitle the “winner” to a holiday at all and, further, that a “holiday” voucher was worth little, if anything, to most consumers.
51		I accept the first part of this submission.  It is desirable to look once again at the scratch cards to see precisely how this prize is described.  On the front side of the scratch card the prize is identified as “HOLIDAYS” and immediately underneath that word the expression “Flexibreak vouchers” appears in small type.  There is no reason to believe that the expression “Flexibreak vouchers” would mean anything to most readers of the scratch cards except, perhaps, when used in conjunction with the word “HOLIDAYS”, as a reference to a particular brand of voucher entitling the holder to a holiday of some description. 
52		Moreover, I do not consider the rather cryptic reference to either minimum spend or the Flexibreaks website appearing in fine print on the reverse of the scratch cards would be likely to lead to any different conclusion, even if closely studied by the reader.  Of course, holidays vary in many ways; by destination, duration, standard of accommodation, standard of service and in many other respects.  In terms of value, a voucher entitling a person to a holiday at a destination that they have no interest in travelling to might well be regarded as worthless by that person but still remain capable of being properly described in a promotion of this kind as a valuable prize.  But that is not what has occurred here.
53		Precisely what use could be made of a holiday voucher is not at all clear from the evidence, which includes copies of a sample voucher with printed terms and conditions appearing on its reverse side, together with terms and conditions of use made available online at the website of a business involved in their sale and promotion.  To the extent that the vouchers gave rise to any entitlement to accommodation at any of the participating hotels listed at that website, it is clear that, at best, the voucher would only entitle the bearer to “one free night” if he or she paid for the first night of accommodation.  The vouchers did not entitle their holders to holidays of any description and the false representation conveyed by the scratch card to that effect was misleading and deceptive and likely to mislead or deceive.  
54		As to the second part of the Applicant’s submission, it is necessary to bear in mind that the cost of claiming any prize was considerable in that a person was required, amongst other things, to take out a subscription to the Respondent’s MobyPlanet service at a cost of $10.00 for six days of service.  The question arises as to whether it is in any sense appropriate to describe that person as a winner if the value of the voucher is less than the cost that must be incurred to claim it.  
55		Each of the prizes referred to in the scratch cards is assigned a value in the block of small print appearing at the foot of the reverse side of the yellow cards.  The most expensive of the prizes is the Mercedes motor vehicle valued at $102,055.  The holiday vouchers have a value assigned to them of $1.00.  No value is assigned to the holiday vouchers in the red card even though values are assigned to all other prizes.  
56		The evidence called by the Respondent indicated that the initial allocation of 5,000 vouchers was purchased by it at a cost of $1.00 per voucher and this most likely explains where the assigned value came from.  Subsequent allocations of these vouchers appear to have been purchased by the Respondent at a cost of $1.50 per voucher.  Either way, I would infer that the actual cost of these vouchers to the Respondent probably reflects their approximate value in the hands of most of the players.  
57		There was no evidence called to indicate the number of vouchers which were actually redeemed by the 29,005 or so people who received them.  The Respondent sought to establish that the value of each voucher was in the region of $80 to $230 but I do not accept the evidence relied upon by the Respondent to that effect.  There was no attempt in the evidence or submissions to explain how that range was arrived at.  
58		In light of the cost of the vouchers to the Respondent, the value assigned to them by the Respondent on the scratch cards and in light of my own consideration of the terms and conditions governing their use, I find that the vouchers were likely to have little, if any, value to most people.  It follows that most people who claimed their prize were required to incur subscription and other costs in order to do so which substantially exceeded the value of the prize they had won.  
QUALIFYING STATEMENTS
59		The various “MATCH 3 TO WIN” and similar statements appearing on the scratch cards must, of course, be read in the context of the other statements appearing on them including the qualifying statements to which I have referred. 
60		In Medical Benefits Funds of Australia Ltd & Anor v Cassidy & Anor (2003) 135 FCR 1, Stone J (with whom Moore and Mansfield JJ agreed on this issue) rejected a submission by the Appellant in that case that various written disclosures appearing in billboard advertisements appropriately qualified more prominent statements appearing upon them which would otherwise convey a misleading representation.  Her Honour said at [35]-[37]:
[35]	MBF submits that irrespective of the impression conveyed by the main part of the advertisements the written disclaimers were sufficiently prominent to bring the obstetrics waiting period to the attention of a person viewing the advertisements.

[36]	In support of its submissions MBF points to the decision of Moore J in George Weston Foods Ltd v Goodman Fielder Ltd (2000) 49 IPR 553 (Wonder White Case). In that case Moore J held that an asterisk can be sufficient to draw the attention of a consumer to a qualification of a representation. That case concerned, inter alia, the packaging of bread which declared in large typeface “Now Twice the Fibre*”. Moore J observed, at 572, that:

“the asterisk is prominent and would be taken to signify some qualification or explanation of the words used. One could expect a consumer interested in the fibre content to seek out the qualification or explanation. Not only is the explanation within 2 cm of the words used on the package (albeit in much smaller type) but it is repeated elsewhere on the packaging.”

[37]	While the Wonder White Case is authority that an asterisk leading to a qualification of a representation may be effective to neutralise an otherwise misleading or deceptive advertisement, whether this is so is a matter for determination in the specific circumstances of any particular case. The qualifying material must be sufficiently prominent to prevent the primary statement being misleading and deceptive or likely to mislead or deceive; Australian Competition and Consumer Commission v Signature Security Group Pty Ltd (2003) 52 ATR 1 at [26]-[27].
61		The Respondent relied upon the words “Subscribe to Moby Planet for your chance to WIN …” appearing at the top of the front of both types of scratch cards as sufficient to convey to ordinary and reasonable consumers that it was necessary for them to subscribe to Moby Planet in order to collect a prize.  I do not accept this submission.  Having regard to their overall appearance, the scratch cards do not sufficiently bring home to the minds of ordinary and reasonable consumers that it is necessary for them to subscribe to the Moby Planet service to win a prize.  Indeed, the statement to the effect that by matching three symbols the player is guaranteed to win a listed prize is literally inconsistent with the small print relied upon by the Respondent.  
62		The additional statements appearing in fine print at the foot of the front of the yellow scratch card and underneath the latex panel of the red one are also insufficient to convey to ordinary and reasonable consumers that it was necessary for them to subscribe to Moby Planet in order to collect a prize.  These statements are neither clear nor prominent enough to convey to players that the prizes come at significant cost in the form of a subscription to the Moby Planet service.  
63		As to the back of the scratch cards, it is by no means clear why people who scratched away the latex panel to discover that they were “winners” of one of the listed prizes should even bother to look at the reverse side of the scratch card before sending the SMS consisting of their “prize code” to the Respondent.  I consider many ordinary and reasonable people would be unlikely to do so.  All the information necessary for them to send this SMS appears on the front of the scratch card.  Many people would have been surprised and delighted to have won any of the prizes shown on the scratch cards which they would have attributed to good luck.  Why would they then bother looking at the reverse side of the card before sending the SMS unless there was reason to believe there was some catch?  In fact, there was a catch in that those people sending the SMS to claim their prizes were subscribing to the Moby Planet service and incurring the cost that entails.  And while many people may have appreciated that sending the SMS involved taking on such a subscription, I consider that many others would have been oblivious to that fact.  I think it likely that many people were caught out in this way.  
64		In arriving at these conclusions I have not overlooked Mr Webb’s submission that people can read the scratch cards at their leisure, including the qualifying statements.  I think the answer to this submission is found not only in the qualifying statements’ lack of clarity and prominence, but also in the fact that everyone who played the game was encouraged to believe that by good luck they had won a valuable prize which was at the very least worth collecting.  In the excitement of believing that they were a winner of a valuable prize I think it unlikely that a person would have proceeded to read the scratch card in the careful and leisurely manner suggested by the Respondent, at least not before he or she had first sent the SMS consisting of the prize code.  
ADDITIONAL MATTERS
3G iPhone
65		The prizes identified on the front of the yellow scratch card included a “3G iPhone”, while the reverse side instead referred to Apple iPods.  The Respondent accepted that the front side of the yellow scratch card was, in this respect, incorrect and that the yellow scratch card should have referred to Apple iPods rather than 3G iPhones.  The error was corrected in the red scratch cards.  There was some evidence from Ms Hynes that this error was the result of a mistake on the Respondent’s part.  
66		I accept that the description of this particular prize on the front side of the yellow scratch cards was the result of a mistake and was subsequently corrected by the Respondent.  But even if this error was the product of an innocent mistake, it does not follow that the misdescription of this prize on the front side of the yellow scratch card did not give rise to a contravention of s 52 by the Respondent.  I find that it did give rise to such a contravention.  The fact that it was the result of an innocent mistake may be relevant to the question of relief and I will return to it when considering that question.  
Standard carrier charges
67		The Applicant also submitted that the Respondent contravened s 52 and s 53(e) by representing that the cost of collecting a prize was limited to “standard carrier charges”.  It referred to the statement appearing in the box on the reverse side of the card which appears in parenthesis.  It was common ground that the standard charge for sending an SMS was between about 18 cents and 25 cents.  The Applicant submitted that the representation was misleading given the subscription costs of $10.00 also payable by consumers collecting prizes.
68		There are differences between the yellow and red cards that are material to this particular complaint.  The only disclosure of the Moby Planet subscription costs appearing on the reverse side of the yellow card is in the block of fine print at the bottom of the page.  This is not called up by any asterisk.  In the case of the front of the yellow card, the Moby Planet subscription costs are stated in two separate places.
69		In the case of the red card there is a disclosure of the subscription costs in the same sentence in which the reference to standard carrier charges appears.  I think this provides a complete answer to the Applicant’s complaint based upon the reference to “standard carrier charges” in the case of the red card.  It would not be reasonable for a consumer to focus on the words appearing in the first part of that sentence while ignoring the quite specific disclosure appearing in the remainder of it.  
70		In the case of the yellow card I consider the qualifying statements relied upon by the Respondent are neither clear nor prominent enough to correct what to my mind is a misleading representation as to the costs involved in subscribing to the Moby Planet service. The statement appearing in the box on the reverse side of the card conveys that the costs of subscribing to the Moby Planet service attracts standard carrier charges when in fact it attracts much higher charges.  As I have already mentioned, the qualifying statement appearing in the fine print at the bottom is not called up by any asterisk.
71		  I accept the Applicant’s submission recorded at para [67] above that there has been a contravention of both s 52 and s 53(e) of the Act in relation to the yellow card. I reject that submission in so far as it extents to the red card.  
SMS/WAP enabled mobile telephone
72		The Applicant submitted that the scratch cards conveyed a further misleading representation which is referred to in its submissions as “the functionality misrepresentation”.  It was submitted that the scratch card required people to subscribe to Moby Planet both to claim their prize and to receive Moby Planet mobile content.  Consumers who did not have WAP enabled mobile phones could not receive all forms of Moby Planet content.  They were instead supplied with SMS messages comprising jokes, trivia and other material said to be of inferior quality.  It was submitted on behalf of the Applicant that some people whose mobile phone was not WAP enabled would have taken out a subscription not knowing that they would be unable to receive the full range of Moby Planet content and that they would instead receive something different and inferior to it.
73		The Respondents answer to this is that the scratch cards convey no representation as to the nature or quality of the content that is to be made available to subscribers. Leaving aside one reference to “fantastic Moby Planet content” appearing in the block of fine print at the bottom of the reverse side of the cards, this seems to me to be correct.  In my opinion the case based upon “the functionality misrepresentation” is not made out.  
74		The rules of the competition appear to have excluded consumers who did not have SMS/WAP enabled mobile phones from participating. The reverse side of both cards contains a statement to the effect that the competition is only open to people who, amongst other things, “have a current Australian SMS/WAP enabled mobile telephone and service.” Yet consumers who did not have a WAP enabled phone (many of who would have been oblivious to this condition) and who sent the SMS consisting of the prize code were not told they were ineligible and were charged $10.00 in return for a subscription. 
75		It may be that by accepting subscriptions from people with mobile phones that were not WAP enabled, the Respondent impliedly represented, contrary to the fact, that they were legally entitled to participate. Ignoring the rules of its own competition may not have mattered to the Respondent in circumstances where these people won a holiday voucher, but if one of them had been lucky enough to win the Mercedes SLK the Respondent’s attitude may have been quite different.
76		There is a difficulty in that I do not consider that a case along the lines of that described in para [74] and [75] has been pleaded.  Accordingly, I do not propose to say anything more about it. 
Evidence of Deception and Confusion
77		A considerable amount of documentary evidence was tendered by the Applicant which it relied upon as evidence of deception and confusion arising out of the conduct complained of in this proceeding.
78		Mr Webb submitted that the evidence should be given no weight.  I agree with his submission that much of the material relied upon by the Applicant does not prove actual deception or confusion.  Most of the material consisted of records of communications from consumers who appeared to believe that the Respondent’s conduct was unscrupulous but which did not go much beyond that.  I give evidence of that kind no weight.  
79		However, included in the material relied upon by the Applicant are records of a number of complaints which are evidence of actual deception.  In particular, this evidence reveals a number of examples of people who looked at the front of the card only before scratching away the latex panel and sending an SMS consisting of the prize code to the Respondent.  It is quite clear from that evidence that some people did this without appreciating that by sending such an SMS they were subscribing to the Moby Planet service and incurring the costs which that entails.  I should add that I would have arrived at the same conclusions in relation to the Respondent’s contravention of the Act in the absence of this evidence.  But it does tend to underscore the correctness of the conclusion reached by me in para [63] above.  
Relief
80		The Applicant seeks declarations that the Respondent has contravened s 52, s 53(e) and s 53(g) of the Act.  I consider that there is a significant public interest in these proceedings and that it is appropriate for the Court to make declarations which identify the particular contraventions of the Act of which the Respondent has been found guilty.  There is ample authority to justify the making of a declaration in a case such as this: Australian Competition and Consumer Commission v Chen (2003) 132 FCR 309 at [35]-[36] per Sackville J.  
81		The declarations should identify with some precision the facts that have led the Court to the conclusion that a particular contravention has occurred.  I would not make a declaration that did no more than declare that the Respondent had contravened a provision of the Act.
82		On the question of injunctive relief Mr Webb submitted that there was no evidence of any threatened repetition of the conduct alleged to have given rise to a contravention of the Act.  However, I consider it appropriate to grant injunctive relief for a number of reasons.
83		First, there is no suggestion that the Respondent ever proffered any form of undertaking not to engage in the relevant conduct whether on a “without admissions” basis or otherwise.  I take this into account.
84		Secondly, there was no evidence from any officer of the Respondent from which I could conclude that there was unlikely to be any repetition of the relevant conduct.  Ms Hynes gave no such evidence and there was no evidence from any director of the Respondent on that issue.  I take this into account.  
85		Thirdly, there is a public interest to be protected here.  Even if I was of the view that there was only a small likelihood of the Respondent engaging in a repetition of the relevant conduct I would still grant injunctive relief.  The harm that might be caused to members of the public in the event that there was any repetition of the relevant conduct is potentially quite serious.
86		I think the declaratory and injunctive relief should extend to the misleading description of prizes referred to by me in para [53] and [66]. While I accepted evidence that the reference to the 3G iPhone on the front of the yellow card was the result of a mistake, I have taken into account the fact that the holiday prize was also described in misleading and deceptive terms. 
87		Mr Webb also submitted that the Respondent’s activities are now regulated by an industry code of conduct the effect of which is to either eliminate or greatly reduce the risk that consumers will be induced to subscribe to the Moby Planet service without knowing they are doing so and without a proper understanding of the costs involved. 
88		At best this submission answers only one part of the case against the Respondent.  Moreover, it appears to assume that it would be open to the Respondent to lead consumers down a particular path with a view to collecting a prize in the mistaken belief that there is little or no cost involved in doing so provided that they were disabused of that belief at some moment before the subscription costs are incurred.  In these circumstances the Respondent’s conduct would still involve a contravention of the Act albeit one less likely to result in any significant damage.  
89		Having taken the submission recorded at para [87] into account I remain of the view that injunctive relief should be granted.  
90		I should add that what I have said about the form of the declaration applies to the form of the injunction.  It must identify with some precision the particular conduct in which the Respondent is restrained from engaging.
91		That brings me to the issue of corrective advertising.  The Applicant seeks orders under s 86C of the Act requiring the Respondent to publish, at the Respondent’s expense, advertisements of two types. 
92		First, the Applicant says that the Respondent should be required to send a corrective advertisement via SMS to all current subscribers to the Moby Planet service who took up their initial subscription as a consequence of their participation in the competition.
93		Secondly, the Applicant says that the Respondent should also be required to publish corrective advertisements in the newspapers and magazines in which the Respondent caused the scratch cards to be included in the first place.
94		In deciding what relief, if any, should be granted under s 86C I am guided by the observations of the Full Court in Medical Benefits Funds of Australia Ltd & Anor v Cassidy & Anor (2003) 135 FCR 1.  I refer in particular to the Reasons for Judgment of Stone J (with which Moore and Mansfield JJ agreed) at para [45]-[58] and the authorities referred to by her Honour in those paragraphs.
95		As I have already found, as at 15 September 2009 a total of 114,418 people had subscribed to the Moby Planet service as a consequence of their participation in the competition. Only 3,561 people had continued with their subscriptions up to that date. The vast majority of people opted out soon after taking out their initial subscription but this did not enable them to avoid payment of the initial $10.00 subscription fee.
96		I agree that it is appropriate that a corrective advertisement be sent by SMS to all current subscribers to the Moby Planet service who took up their initial subscription as a consequence of their participation in the competition. It was submitted for the Respondent that compliance with such an order would give rise to a contravention of the industry code of conduct previously referred to.  I am not satisfied this is correct.
97		I think the more significant question is what to do in relation to the large number of people who opted out soon after taking out their initial subscription. In my view many of these people may be entitled to either a refund or compensation from the Respondent on the ground that they were induced to take out their initial subscription by the Respondent’s misleading and deceptive conduct.  As Stone J accepted in Medical Benefits Funds of Australia Ltd & Anor v Cassidy & Anor (2003) 135 FCR 1 at para [59] in the context of the orders for corrective advertising which had been sought in that case:
… there is utility in informing those people who were misled (be the group large or small) of the true position and thus putting them in the position to assess any rights they may have as a result.
98		In my opinion an order for corrective advertising should be made aimed at bringing the key findings of the Court to the attention of people who took out subscriptions to the Moby Planet service but who have since terminated their subscriptions.  This would enable them to assess any rights they may have if they so choose.  
99		One way of bringing such findings to the attention of at least some of those people is by the publication of a corrective advertisement in various newspapers and magazines in which the scratch cards were inserted.  Another possibility is for the Respondent to write to each person who claimed a prize (there were approximately 29,000 such people) advising them of the Court’s findings.  The latter possibility has not been addressed by either party and I raise it for their consideration.  It seems to me that a combination of advertisements in newspapers and magazines and a letter of the kind I have mentioned may be a sensible and effective way of conveying an appropriate message to those people who were affected by the Respondent’s conduct.  
100		I propose to give both parties the opportunity to make further submissions in relation to the appropriate form of orders.  What I propose to do is order that within 7 days of today each party file and serve a written submission not exceeding 5 pages in length addressing that issue.  Each party should append to its written submissions a minute of the orders it submits are appropriate having regard to these Reasons for Judgment.  My present inclination is to order the Respondent to pay the Applicant’s costs of this proceeding but that is an issue that may also be addressed in the written submissions.  

I certify that the preceding one-hundred  (100) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholas.	

Associate:

Dated:	4 December 2009

Counsel for the Applicant:	Mr S White SC and Ms R Higgins	
		
Solicitor for the Applicant:	Australian Government Solicitor	
		
Counsel for the Respondent:	Mr RJ Webb SC and Mr HPT Bevan	
		
Solicitor for the Respondent:	Axis Legal Pty Ltd	

Date of Hearing:	23 November 2009	
		
Date of Judgment:	4 December 2009	

Appendix A

Appendix B

Appendix C

Appendix D