Re Arlington Nominees Pty Ltd v Down Under Exhausts Pty Ltd [1986] FCA 40 (26 February 1986)

FEDERAL COURT OF AUSTRALIA

Re: ARLINGTON NOMINEES PTY. LTD.
And: DOWN UNDER EXHAUSTS PTY. LTD.
No. WA G10 of 1986
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Toohey J.

CATCHWORDS

Trade Practices - misleading or deceptive conduct - application for interlocutory injunction - respondent engaged in comparative advertising - obligation to ensure accuracy - whether serious question to be tried as to whether advertising misleading or deceptive - consideration of balance of convenience

Trade Practices Act 1974 ss. 52, 80

HEARING

PERTH
26:2:1986

ORDER

The respondent be restrained and an injunction is hereby granted restraining the respondent, its servants or agents until trial of this action or further order from publishing or causing to be published whether by the medium of television, radio, newspapers, periodicals, posters, brochures, pamphlets or otherwise any statement purporting to give a comparison of the cost of complete exhaust systems or mufflers which is in the form of annexure A to the affidavit of Raymond Della-Polina sworn 17 February 1986 and filed herein or in a like form and which fails to state accurately the cost of the product of the applicant and any differences in the products of the applicant and the respondent and whether fitting or extras are included in the applicant's and the respondent's prices.

The costs of the hearing of the application for interlocutory relief be reserved.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

The applicant and the respondent are both involved in the competitive business of selling motor vehicle parts and accessories. Each has branches in various suburbs.

2. The respondent has engaged in comparative advertising by advertising in The West Australian newspaper the price of its own mufflers and exhaust systems for a range of vehicles, compared with the prices said to be charged by several of its competitors including the applicant. The applicant contends that the advertising is misleading or deceptive and seeks an interlocutory injunction to restrain the respondent from advertising in any manner which fails to state accurately the cost of the applicant's product, any differences between that product and the respondent's product and whether fitting or extras are included in the price.

3. Each party has filed affidavits in support of its case. No deponent has been required to attend for cross-examination. The matter therefore must be determined on the affidavits presently before the Court. Oversimplifying the matter somewhat, the case for each of the parties may be put this way. The applicant says that it has a price for its mufflers and exhaust systems for various vehicles, a price that includes fitting. It has a catalogue in which the correct prices of its products are listed and these catalogues are in its stores. It also advertises its prices in the Sunday Times newspaper. The respondent says that the prices identified as the applicant's prices in the respondent's newspaper advertising were obtained by accountants in the firm of K.M.G. Hungerfords who, at the respondent's request, telephoned the applicant's branches and obtained prices for exhaust systems for the various vehicles mentioned in its advertisements. Its advertisements make it clear that it obtained the applicant's prices by survey.

4. While the applicant was in no position to respond by affidavit to the various affidavits filed on behalf of the respondent when the hearing began yesterday, it contends that on any view of the matter the respondent's advertisements are misleading or deceptive. In particular, it claims that references by the respondent to the applicant's prices did not make a fair comparison in that the components of the exhaust systems supplied by the respondent were not the same or of similar quality to that supplied by the applicant. By way of illustration, questions arise as to the comparative cost of Hills mufflers and Repco mufflers fitted to exhaust systems. Questions also arise as to the quality of the exhaust systems and the extent to which the fitting of systems and any extras are included in the various prices shown by the respondent in its advertisements. These are matters that I am in no position to resolve at this stage. It is enough to say that, by its affidavits and notwithstanding the affidavits filed on behalf of the respondent, the applicant has shown that there is a serious question to be tried as to whether the respondent has engaged in misleading or deceptive conduct.

5. The courts have on more than one occasion emphasised the responsibility of anyone who engages in comparative advertising to ensure that any statements made are correct and are not misleading. See State Government Insurance Commission v. J.M. Insurance Pty. Ltd. (1984) ATPR 40-465 at 45,362 and the cases mentioned therein.

6. The question then becomes one of where the balance of convenience lies. The applicant contends that it is suffering damage by reason of the respondent's advertisements but that this damage is not easily capable of assessment in money terms. An interlocutory injunction, it is said, is the only way of protecting the applicant until a substantive hearing takes place. In answer, the respondent argues that, even if the price of the applicant's products as shown in the respondent's advertisements is not entirely accurate, no one is really misled for, even on the applicant's figures, its prices are higher than those charged by the respondent. To some extent this argument begs the question for comparative prices can be misleading unless the products are in all material respects identical.

7. Comparative advertising would seem to be an important part of the respondent's business but I do not think that an injunction, suitably framed, should interfere with the legitimate prosecution of that business. In the absence of some injunctive relief, the applicant does stand to suffer damage which will be difficult to assess if the matter proceeds to trial.

8. The applicant has given the usual undertaking as to damages. It has suggested a form of interlocutory injunction which is suitable, with minor amendments. It is, I think, as precise as the evidence and argument presently permit. The order I propose is in the following terms but I shall give counsel an opportunity to speak to the precise terms of the injunction:

"That the respondent be restrained and an injunction is

hereby granted restraining the respondent, its servants
or agents until trial of this action or further order
from publishing or causing to be published whether by
the medium of television, radio, newspapers,
periodicals, posters, brochures, pamphlets or otherwise
any statement purporting to give a comparison of the
cost of complete exhaust systems or mufflers which is
in the form of annexure A to the affidavit of Raymond
Della-Polina sworn 17 February 1986 and filed herein or
in a like form and which fails to state accurately the
cost of the product of the applicant and any
differences in the products of the applicant and the
respondent and whether fitting or extras are included
in the applicant's and the respondent's prices."

9. The costs of the hearing of the application for interlocutory relief will be reserved.