Re Budget Rent A Car System Pty Limited v WTH Pty Limited [1987] FCA 419 (24 November 1987)

FEDERAL COURT OF AUSTRALIA

Re: BUDGET RENT A CAR SYSTEM PTY. LIMITED
And: W.T.H. PTY. LIMITED
No. G376 of 1987
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Lockhart(1), Wilcox(1) and Einfeld(1) JJ.

CATCHWORDS

Trade Practices - Section 52; misleading or deceptive conduct - falsity of advertising.

Trade Practices Act, 1974: s. 52.

HEARING

SYDNEY
24:11:1987

Counsel for the Appellant: R. Merkel, Q.C., J. Garnsey,

W. Covell

Solicitors for the Appellant: Corrs Pavey Whiting & Byrne

Counsel for the Respondent: C.R. Einstein

Solicitors for the Respondent: Freehill Hollingdale & Page

ORDER

The appeal be allowed;

The orders of this Court at first instance be set aside;

The application be dismissed;

The respondent pay the appellant's costs of the proceedings, at first instance and of this appeal;

Liberty be reserved to the appellant to apply to a single Judge of this Court in connection with the undertaking as to damages given by the respondent on 14 April 1987.

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

DECISION

This is an appeal from a decision of a single Judge of this Court on 23 July 1987 granting injunctive and other relief against the appellant ("Budget") in respect of the publication of an advertisement which appeared in its name on Television Channel 9 Sydney at 9.05 a.m. on Monday, 13 April 1987. The publication of the advertisement was said by the respondent ("Avis") to have constituted misleading or deceptive conduct under s. 52 of the Trade Practices Act 1974.

2. The case is unusual in that it was established to the satisfaction of the learned trial Judge that the transmission of the advertisement occurred inadvertently, the advertisement having been withdrawn by Budget on the previous Friday, 10 April and replaced by another advertisement about which no complaint is made. Under those circumstances it has been argued that the publication which took place on 13 April was not the "conduct" of Budget, within the meaning of s. 52, and that the grant of an injunction to restrain further publication was unnecessary and inappropriate.

3. Although these submissions raise questions of importance in relation to the operation of the Trade Practices Act, it is not necessary to resolve them in the present case because we are of the opinion that the claim of falsity is not made out.

4. The case arises out of an advertising war between Budget and Avis in relation to the hire of motor cars. It appears that in January 1987 Avis introduced a series of hire rates under the title "Avis Super Saver". These provided that the daily rate would decrease as the period of hire increased. Thus, in the case of group, or category, B cars - Ford Lasers and Toyota Corollas - the rate for a hire of 3-6 days was stated to be $41, for over 7 days $39, for over 14 days $36 and for over 21 days $33. In February 1987, Avis embarked upon a vigorous advertising campaign to acquaint members of the public with these new rates. The campaign included a TV commercial featuring a young woman dressed in an Avis uniform. In response to a male voice-over question "How does an Avis girl handle fame?" the Avis woman replied:

"When I did the TV ad I really didn't know what to
expect. All my friends ribbed me, but Avis ran
out of Lasers so here I am again. And the Super
Saver rates still apply - rent for 3 days or more
and you can get up to 30% off our normal rates.
So a Ford Laser can drop to as low as $33 a day.
If you can get better than that, you can have my
shirt. See, I've still got it."

5. Budget responded to this challenge, perhaps predictably, by offering to take the shirt. It made two separate TV advertisements making a direct comparison between its rates and those of Avis. There were some differences in their wording. We need not refer to the first version, which was replaced on about 6 April by the second version ("Budget's commercial") which is the advertisement the subject of these proceedings. That version read:

"While Budget continues to bring you new innovative
products like Plan-Ahead, Freedom Checks, Credit
Cards and Home Delivery we still know what made us
top. To prove it we're introducting Dollar Driver
rates. Now you can rent our Holden Gemini for as
low as $29.00 a day (on screen: $29.00 per day -
for 4 days or more). Even if you used the Avis
Super Saver for 3 weeks you'd pay more than that,
which is why I'm wearing their shirt. Budget's
Dollar Driver rates will always drive your dollar
further (on screen: Budget Rent-a-Car drives your
dollar further)."

6. On 6 April 1987 Avis management authorised the reduction of its rate for group B vehicles, under the Avis Super Saver plan, to $29 per day. There is no evidence as to whether this reduction was notified to Avis stations or as to the rates actually charged by them, although Avis did adduce evidence from Mrs. D.M. Vandervalk, its National Marketing Services Manager, that on 9 April she telexed all Avis State Managers and State Franchise Managers informing them that effective immediately, all group B Super Saver rates from two days hire upwards, had been amended from $29 to $28 per day. However, the old advertising material, showing the earlier Super Saver rates, continued to be displayed, and on the same day Budget adopted the same rate for its group B vehicles. Following extensive correspondence between the solicitors for the parties, Budget decided to make a third TV advertisement, apparently intending to avoid a direct comparison of rates. This advertisement, not the subject of preesent complaint, was made and distributed on Friday, 10 April. As mentioned, it was intended to replace the earlier advertisement; but by some misadventure, not explained in the evidence, the earlier commercial was screened on one station on one occasion the following Monday. The learned trial Judge held that this publication constituted misleading conduct and made an order restraining its further publication.

7. At this time Avis operated 24 company owned rental stations and had franchises to approximately 180 other stations. There was no evidence as to what action, if any, any of the various State Managers and State Franchise Managers took as a result of the 9 April telex. Mrs. Vandervalk conceded in evidence that the various franchisees were free to disregard her direction as to hiring rates and that it was possible that they did so.

8. There were two aspects of the Avis case on falsity. First, Budget's commercial was said to have clearly indicated that Avis' "Super Saver" rate for three weeks of a group B vehicle was more than $29 per day, when in fact on 13 April, it was $28 per day. Secondly, Budget's commercial was alleged to have implied that it was necessary to take such a vehicle for three weeks before the new Super Saver rates applied, whereas in fact the new Super Saver rates applied to a hiring for as few as three days.

9. There was very little evidence before the trial Judge as to the rates actually charged by Avis for group B vehicles on teh day of Budget's commercial. The solicitor for Budget contacted seven Avis stations seeking a quotation for the hire of a group B vehicle. Only one station, at Melbourne airport, quoted a rate as low as $28 per day. The only evidence as to actual hirings at $28 per day consisted of seven contracts, all made at Melbourne airport - a "company owner" station. It is common ground that there was no evidence whatever as to the rates actually charged at other stations notwithstanding that, as early as 9 April, Budget, through its solicitors, challenged the genuineness of the claimed reduction in the relevant hiring rate. This was a matter entirely within the knowledge of Avis and its failure to adduce evidence as to actual hiring charges leads to the inference that such evidence, if produced, would not have supported its case.

10. It is important to observe that the claim made in Budget's commercial about Avis used the words "you'd pay more than that". The reference was to what members of the public would be required to pay, not to the amount of the relevant hire rate formally adopted by Avis. Ordinarily, it might be supposed, these would be the same amounts but the evidence shows that it would be unsafe in this case to proceed upon that assumption. There was no material before the trial Judge upon which it could be concluded that it was untrue for Budget to say that users of the Avis Super Saver scheme would have to pay more than $29 per day for a vehicle in the class of the Holden Gemini - that is a group B vehicle.

11. The second aspect of the claim of falsity depends upon the proper construction of the sentence in Budget's commercial referring to three weeks. Contrary to the submission of Avis, this sentence does not say that an Avis customer must use the Super Saver scheme for three weeks to qualify for Super Saver rates. It simply says that, even if one took the lowest rate available under the Super Saver scheme - that is the rate applicable to a hiring of more than three weeks - the cost would be greater than $29 per day. That statement was true, if comparison be made with the original Super Saver rates; and, there was no evidence that, except in relation to Melbourne airport, any lesser rates were in fact available, whatever the length of hire.

12. The appeal should be allowed, the orders made by the trial Judge should be set aside and in lieu thereof it should be ordered that the application be dismissed. The respondent must pay the costs here and below. Liberty should be reserved to the appellant, if so advised, to apply in connection with the undertaking as to damages given by the respondent on 14 April 1987.