Re David Golf and Engineering Pty Ltd v Austgolf Corporation Pty Ltd [1992] FCA 639; (1992) 15 Atpr 41-207 (22 December 1992)

FEDERAL COURT OF AUSTRALIA

Re: DAVID GOLF AND ENGINEERING PTY LTD
And: AUSTGOLF CORPORATION PTY LTD
No. V G502 of 1992
FED No. 976
Number of pages - 5
Trade Practices
[1992] FCA 639; (1992) 15 ATPR 41-207

COURT

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Heerey J.(1)

CATCHWORDS

Trade Practices - comparative advertising - incorrect statements as to competitor's prices - correcting letter sent - whether order for corrective advertising appropriate.

Australia v Switzerland Australia Health Fund Pty Ltd [1988] FCA 333; (1988) ATPR 49, 108

HEARING

MELBOURNE
22:12:1992

Counsel for the applicant: Mr R I Rosenberg

Solicitor for the applicant: Sackville Wilks and Co.

Counsel for the respondent: Mr D G Collins

Solicitor for the respondent: Corrs Chambers Westgarth

DECISION

HEEREY J. I have decided that upon undertakings by the respondent in terms of paragraph 1(c), (d) and (e) of the notice of motion, and an undertaking that, until a new price list is published by the respondent, it will inform persons placing orders for bag tags in accordance with the instructions contained in paragraphs 1, 2 and 3 of the memorandum which is exhibit CW3 to the affidavit of Craig Colin Watt sworn 21 December 1992, the application will be dismissed.

2. This dispute arises between competing manufactures of golfing equipment including bag tags. These are plastic tags bearing the name of a golf club used by golfers to attach to their bags as an indication of current membership. The tags are usually purchased by the clubs themselves.

3. Towards the end of November the respondent published a brochure to some 1500 golf clubs throughout Australia promoting its bag tag, and drawing a comparison between its prices and those charged by the applicant. The brochure stated:
"We are cheaper than our major competitor as the table below shows."

4. Prices are then set out. The problem, which has from the start been conceded by the respondent, is that the prices attributed to the applicant were overstated. There were two reasons for this; an out of date price list of the applicant was used and there was no reference to the fact that the applicant's prices included 20 per cent sales tax whereas the prices quoted by the respondent did not.

5. A prompt complaint was made to the applicant's solicitors and as a consequence two remedial steps were taken by the respondent. The first of these was to send a letter to the golf clubs to whom the offending brochure had been sent in these terms:

"Dear Sir,
WE MADE AN ERROR
You will have received our recent notice relating to the bag
tag. In that notice we compare our prices to those of David
Golf's. The prices attributed to David Golf in that notice
are not correct. Unfortunately due to our error the prices
attributed to David Golf represented their prices of last
year and do not reflect their current prices. Accordingly
please completely disregard any comparison between our
prices and those of David Golf's. If you wish to place an
order with us and the price comparison between ourselves and
David Golf is important to you then we suggest that you
contact David Golf to ascertain their current price."

6. The other step was to instruct staff of the respondent to advise anybody who placed an order for bag tags to ask if they were buying tags as a result of the brochure and, if it was indicated that such was the case, to tell such persons that the respondent had been advised by the solicitors for David Golf that the respondent's price comparison was in error, that David Golf had a new price list, that they should contact David Golf for the new prices, and that the respondent was prepared to cancel or delay the order in the meantime.

7. The applicant contends that there should be an order for corrective notification to the recipients of the brochure. The applicant says that the letter that was sent was inadequate in that it stated one of the reasons for the error but not the other, that is to say the differing treatment of sales tax, and also did not set out the prices themselves. The applicant also complains that the correcting letter was not sent out until 10 or 11 December despite earlier assurances that it had been sent out and, in any case, its solicitors, who were in early contact with the solicitors for the respondent, complained about the terms of the letter for the reasons I have mentioned.

8. This is not really a question of balance of convenience in the usual sense in which a court has to consider questions of interlocutory relief but, rather, the appropriateness of the statutory remedy of corrective advertising. In particular the court has to bear in mind such lapse of time as has occurred and the market context in which the order would take effect.

9. The Full Court of this Court in Hospital Contribution Fund of Australia v Switzerland Australia Health Fund Pty Ltd [1988] FCA 333; (1988) ATPR 49, 108 considered a claim for corrective advertising and at page 49, 117 pointed out the significance of the passing of time since the last misleading advertisement (five weeks in that case) and the fact that an order for corrective advertising is one to be used protectively and not by way of punishment.

10. I think in the present case that while there is some substance in the criticism that was made of the correcting letter the fact is that the respondent conceded its error promptly and took active steps to remedy or, at least, substantially mitigate any damage that might have been caused. I appreciate that this is only an interlocutory hearing but I must say that on the material before me I cannot find any reasonable basis for imputing underhand conduct or bad faith to the respondent. As far as I can see at the moment the most likely explanation is the one that appears on the surface, that is to say it was a simple error which had to be corrected and was corrected.

11. The letter that was sent would operate as a substantial antidote to the incorrect statements in the brochure because the bold assertion of the respondent's price advantage wuld be seen to the reader of the letter as something which could no longer be relied on. One of the grounds put by the respondent against an order for corrective advertising is that the form of letter proposed by the applicant includes details of the applicant's prices. These details include reference to discounts for quantity orders but not all of those details were it seems published by the applicant at the time the brochure was sent out.

12. But I think the most important factor weighing against granting the remedy the applicant seeks is the fact that this is a highly competitive and volatile market and there is evidence on affidavit that the respondent proposes to reduce its prices and produce a new price list in January. I think in those circumstances, bearing in mind that, practically speaking, by the time the list of golf clubs was obtained from the Australian Golf Union and the impending Christmas break passed the suggested correcting letter could not be sent out until some time next month, there would be a significant potential for confusion among recipients receiving corrective material about price lists which were no longer current.

13. I think, therefore, that the most practical course is to dismiss the application on receipt of the undertakings in the form I have mentioned.

14. I want to make it clear that I am not speaking at all disparagingly of the applicant and its advisers for bringing these proceedings because I can understand the commercial reasons why it was important to them. But at the same time it has to be borne in mind that the turnover and profits involved with this item are, on the evidence, quite small and quite disproportionate to the sort of costs which would be involved in a full scale trial and therefore some permanent resolution of the dispute ought to be attempted.

15. I will make an order in the usual terms for mediation before a Registrar.

16. I direct that the parties file and serve a list of discoverable documents by 19 February 1993.

17. The direction hearing is adjourned to 26 February 1993.

18. Costs are reserved.