Singtel Optus v Telstra [2004] FCA 859 (6 July 2004)

TRADE PRACTICES – misleading and deceptive conduct – television and print advertisements – extent to which complex material may be simplified by engaging messages

Telecommunications Act 1997 (Cth) Pt 23
Trade Practices Act 1974 (Cth) ss 52 & 80

Campomar Sociedad Limitada v Nike International Ltd [2000] HCA 12; (2000) 202 CLR 45 applied
Duracell Australia Pty Ltd v Union Carbide Australia Ltd (1988-89) 14 IPR 293 referred to
Medical Benefits Fund of Australia Ltd v Cassidy [2003] FCAFC 289; (2004) 205 ALR 402 applied
National Exchange Pty Limited v Australian Securities & Investments Commission [2004] FCAFC 90 applied
St Luke’s Health Insurance v Medical Benefits Fund of Australia Ltd (1995) 17 ATPR 41-428 referred to
Stuart Alexander & Co (Interstate) Pty Ltd v Blenders Pty Ltd (1981) 37 ALR 161 applied
Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 applied
Telstra Corporation Ltd v Optus Communications Pty Ltd (1996) 36 IPR 515 referred to
Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1 applied
Trade Practices Commission v Optus Communications Pty Ltd (1996) 64 FCR 326 referred to

SINGTEL OPTUS PTY LIMITED ABN 90 052 833 208 v
TELSTRA CORPORATION LIMITED ACN 051 775 556
N877 of 2004

JACOBSON J
6 JULY 2004
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 877 of 2004

BETWEEN:	SINGTEL OPTUS PTY LIMITED ABN 90 052 833 208 APPLICANT
AND:	TELSTRA CORPORATION LIMITED ACN 051 775 556 RESPONDENT
JUDGE:	JACOBSON J
DATE OF ORDER:	6 JULY 2004
WHERE MADE:	SYDNEY

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 877 of 2004

BETWEEN:	SINGTEL OPTUS PTY LIMITED ABN 90 052 833 208 APPLICANT
AND:	TELSTRA CORPORATION LIMITED ACN 051 775 556 RESPONDENT

JUDGE:	JACOBSON J
DATE:	6 JULY 2004
PLACE:	SYDNEY

1 In about April 2004 the respondent ("Telstra") launched a substantial advertising campaign based upon rewards for combining an eligible home telephone service with one or more of an eligible mobile, an eligible internet service or an eligible subscription television service ("reward options"). More rewards are available for combining two eligible services than are available for combining one eligible service with an eligible home telephone.

2 The conditions for eligibility are complex and I will refer to them later. Subject to one exception, it is a condition of eligibility that all of the combined services be charged on a single bill.

3 The applicant ("Optus") claims that, in a variety of different ways, Telstra’s advertising material inadequately articulates or misstates the conditions of eligibility for the rewards or the particular rewards that are available and generally gives a misleading impression as to the availability of a choice of rewards. Optus claims that there are inaccuracies in 11 print or electronic advertisements and three television advertisements. For ease of reference I will annex and number each of the print and electronic documents that were in evidence. There were 13 print or electronic advertisements but two were not said to be misleading.

4 Optus claims declaratory and injunctive relief under ss 52 and 80 of the Trade Practices Act 1974 (Cth) ("the Act") as well as other orders including, in particular, an order for corrective advertising.

5 The underlying theme of the advertisements is depicted in fairly simple terms using imagery which emphasises "freedom", "choice", "options" and, of course, the rewards themselves. The thrust of the advertising material is to present in simple terms, often with the use of pictures and a table ("the pictorial"), the particular benefits which can be obtained by a customer by combining or bundling the home phone bill with one or other of the services. A typical example of the pictorial is as follows:

6 As Allsop J said in his judgment on Optus’ claim for interlocutory relief, the matter raises an important conceptual issue in dealing with advertising of this kind under s 52 of the Act. The issue is the extent to which parties may be allowed to simplify into engaging and attractive messages, material which is inherently complex.

7 The essence of Optus’ complaint is that the advertising material creates a misleading impression by highlighting the attractive features of the campaign while at the same time underemphasising or inadequately or inaccurately stating the conditions of eligibility for the particular rewards that are available. At the heart of Optus’ case was the claim that the advertisements convey the impression that customers have the freedom to choose one of a number of rewards whereas in truth such choice is only available in very limited circumstances.

8 Optus relies on the well-established principle that an advertisement may be misleading because it creates a misleading impression by highlighting appealing aspects, even though on careful analysis the whole of the material is true and accurate; see Telstra Corporation Ltd v Optus Communications Pty Ltd (1996) 36 IPR 515 ("Telstra v Optus") at 523-524, (1997) ATPR 41-541 at 43,514 (Merkel J).

9 Pursuant to Part 23 of the Telecommunications Act 1997 (Cth), Telstra is obliged to set out the available rewards and the conditions of eligibility in a standard form of agreement. The relevant conditions are contained in Clause 2 of the Telstra Reward Options section of Telstra’s Standard Form of Agreement ("SFOA").

10 Clause 2.1 of the SFOA provides that a customer may request Telstra Reward Options if he or she chooses to have all charges for nominated services consolidated into one account on a single bill.

11 The only exception to this is that "BigPond Cable" and "BigPond ADSL" services cannot, at present, be included on a single bill with a fixed telephone line. However, they are eligible services for the purpose of the reward options; see clause 2.1(c).

12 Clause 2.3 provides that a customer must nominate at least one eligible fixed telephone service and one of three other services to be eligible for reward options. The three other services are an eligible mobile service, an eligible internet service or an eligible pay-TV service.

13 Not all fixed telephone services are eligible. They are limited by clause 2.7 to three services. These are Home Line Plus, Home Line Advanced or ISDN Home.

14 There is a restriction on the type of mobile services that are eligible. It is only those which are post-paid (ie, paid in arrears) with a minimum monthly access charge of $20.00 that are eligible.

15 The eligible internet services are to be found in clause 2.10. They are BigPond Dial-up, Broadband Satellite or ISDN services with a minimum monthly access charge of at least $20.00.

16 However, different conditions apply to BigPond Broadband Cable or ADSL services. The eligibility conditions for these are fixed by clause 2.10 as a minimum monthly access charge of $59.95.

17 Eligible pay TV services are stated in clause 2.12. They are any subscription television service supplied by Telstra or Telstra Pay TV Pty Ltd. Those companies offer directly to customers the subscription services supplied by Foxtel and Austar. Importantly, although analog services were available to customers through Telstra before 1 March 2004, since that date any new subscriber is obliged to take the digital service.

18 Four different types of rewards are available each month. However, clause 2.13 provides that any unused monthly rewards are lost at the end of the billing period, that is, at the end of the month.

19 The four reward options are specified in clause 2.15. They are a number of free nominated local calls at a price of 17.5c, a number of free SMS calls, credited amounts of Family Calls which are calls between fixed line services and mobile phones (or between mobile services) listed on the same bill, and Mobile Link credits which are a form of credit available in specified circumstances to mobile phone customers.

20 SMS calls are short message service calls. Ordinarily, they are made only between mobile telephones. However, there is a new and more sophisticated variation called "Talking Text" which enables a Telstra customer to receive an SMS call over his or her fixed telephone and to send a reply; see [62] below.

21 The value of reward options for which a customer is eligible each month depends upon the number of eligible services which the customer has on a single bill.

22 Clause 2.16 provides that where a customer has one eligible fixed phone and one additional eligible service, the maximum value of the rewards is 50 free local calls, 50 free SMS calls, a credit of $15 of Family Calls or $15 Mobile Link Credits.

23 Where the customer has two additional eligible services, the rewards increase to a maximum of 125 free local calls, 125 free SMS calls, a credit of $25 of Family Calls or $25 Mobile Link Credits.

24 Most of the advertisements feature only three alternative rewards, namely free local calls, SMS calls or Family Calls up to a stipulated amount. The amount stated is 50 local calls, 50 SMS calls or $15.00 of Family Calls but where two or more services are bundled with the fixed phone, the reward rises to 125 local calls, 125 SMS calls or $25.00 of Family Calls.

25 The first misrepresentation is said to be that the pictorial contains a logical and factual error in the way in which the table depicts the choice of rewards that are available.

26 The pictorial is said to convey the representation that if a customer has an eligible fixed line plus any one of the three other services (i.e. mobile, internet or subscription TV) he or she can choose any one of the three rewards (i.e. 50 free local calls, 50 free SMS calls or $15 of free Family Calls).

27 This is said to be false because unless the customer selects a mobile phone as the additional service to be combined on the single bill, he or she cannot choose SMS or Family Calls as the reward option.

28 There is said to be a similar logical and factual error in the pictorial depicting the rewards available for combining the fixed line service with two additional services. If the customer does not select a mobile phone as one of those additional services, only one of the three nominated rewards is available. Thus, Optus submits that the advertisements are misleading because they are incorrect factually and because they give an impression of choice of reward options which are not in fact available.

29 Second, it is said that the reward options advertisements do not adequately state that customers are not entitled to a reward if one of the Telstra services which they intend to have bundled on a single bill is Telstra’s broadband internet service and their plan is less than $59.95 per month.

30 This misrepresentation is said to arise from the description of the eligible service as a broadband plan with "unlimited" uploads and downloads. However, in an earlier advertising campaign launched shortly before the reward options campaign, Telstra promoted cheap access to BigPond broadband at $29.95 per month. This was for limited access of 200 MB per month but the plan which was promoted was described as "uncapped" and Optus claims that this had a "hangover effect" on the reward options campaign.

31 Third, it is said in the claim pleaded in the Further Amended Statement of Claim, that the advertisements do not accurately state that customers who would otherwise be entitled to choose reward options will not be entitled to do so if one of the three Telstra services which they intend to bundle on a single bill is Telstra’s broadband internet service and they have a BigPond cable connection or an ADSL connection.

32 In fact, as appears from clause 2.1(c) of the SFOA, those customers are eligible for reward options even though they cannot presently obtain a single bill. Thus, the effect of Optus’ argument on this issue was that the advertisements do not accurately state the true position.

33 Fourth, Telstra is said to have misrepresented that BigPond cable and ADSL broadband internet services can be bundled on a single bill with the fixed line phone. This aspect of the claim is related to the third misrepresentation relied upon by Optus. The argument as put by senior counsel for Optus was that the advertisements convey the impression that there are advantages in having a single bill which are not available to the BigPond cable and ADSL customers.

34 Fifth, Telstra is said to have misrepresented that it has available a BigPond Dial-up internet, ISDN or satellite post paid plan of $20.00 per month whereas in truth the cheapest plan currently available is $24.95 per month. The misrepresentation is said to be made in statements appearing in advertisements that customers are eligible for rewards if they combine a BigPond dial up internet, ISDN or satellite post paid plan of $20.00 or more per month with their fixed line phone. This is said to convey a representation that there is a $20 plan available.

35 Sixth, it is said that the advertisements do not adequately state that Foxtel digital or Austar digital, obtained directly from Telstra, are now the only subscription television services which can be bundled for the purpose of eligibility for reward options.

36 This claim was put in a variety of different ways, depending on the form of the particular advertisement, because, as I have said, the true position is that existing subscribers for analog services who bundled those services on a single bill before 1 March 2004 are eligible for reward options.

37 It is necessary to determine the effect of the representations on the ordinary or reasonable member of the class of persons who is likely to read and consider the advertisements. The class includes the astute and the less well informed but it excludes the unreasonable reactions of members at either end of the spectrum which makes up the class of readers or viewers of the advertisements; Campomar Sociedad Limitada v Nike International Ltd [2000] HCA 12; (2000) 202 CLR 45 at [103] – [106] ("Nike"); National Exchange Pty Limited v Australian Securities & Investments Commission [2004] FCAFC 90 ("National Exchange") at [18] and [68].

38 In assessing whether an advertisement is misleading the whole context must be taken into account. However, it is appropriate to bear in mind that many readers will not study the advertisements closely but will absorb the general thrust; see Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1 at 4 (Sheppard J).

39 Even if every sentence, considered separately, is true the advertisement may create a misleading impression because factors are omitted which should be mentioned or because the message is composed to highlight the appealing aspects; Telstra v Optus at 523.

40 Where a false dominant impression is conveyed, it will be a question of fact as to whether this is ameliorated by an accurate qualification contained elsewhere in the advertisement; see Medical Benefits Fund of Australia Ltd v Cassidy [2003] FCAFC 289; (2004) 205 ALR 402 ("MBF v Cassidy") at [36] – [41] (Stone J); see also National Exchange.

41 The use of small print or a brief subscript to an advertisement may be inadequate to alert a reasonable person to all relevant conditions; see MBF v Cassidy at [36] – [41], National Exchange at [51] ff, Telstra v Optus at 523-524.

42 The question of whether the advertisements are misleading is to be determined at the time of publication of the advertisements. The fact that the full terms may be explained when a reader or viewer contacts the publisher of the advertisement is not relevant to the question of whether the advertisement is misleading; see St Luke’s Health Insurance v Medical Benefits Fund of Australia Ltd (1995) 17 ATPR 41-428 at page 40,823 (Northrop J); see also MBF v Cassidy at [43]. However, it will be relevant to the question of whether injunctive relief is to be granted if the advertisement is found to be misleading.

43 An impression obtained from an earlier but related advertisement may need to be taken into account in determining whether a later advertisement is misleading; see Duracell Australia Pty Ltd v Union Carbide Australia Ltd (1988-89) 14 IPR 293 at 299 (Burchett J). This principle might be described, somewhat inelegantly, and perhaps inaptly, as "the hangover effect" of earlier advertising.

Advertisement No 1 – Broadband Internet at Dial-up Prices (Annexure page 27)

44 This advertisement was used in Telstra’s campaign to promote cheaper broadband connection. It does not form part of the Telstra reward options advertising campaign but Optus relies on it for the hangover effect. The advertisement was published in the Australian on 8 March 2004. No doubt, other advertisements in the same form were published on other occasions.

45 The advertisement promotes BigPond broadband at $29.95 per month. Optus relies on the statement that the service is available on the Cable Uncapped 128 Plan. Optus submits that in ordinary usage, or at least in colloquial usage, "uncapped" has the same meaning as "unlimited". Hence it is said that the impression is conveyed that readers may obtain unlimited broadband access at $29.95.

46 This impression is then said to be carried forward to the reward options campaign so as to give rise to the misrepresentation that the relevant condition can be satisfied by combining a broadband $29.95 plan with a fixed line service.

47 In my opinion, the hypothetical member of the class of persons who would read this document is likely to be more astute than many members of the public. He or she may have dial-up internet access or, at very least, would have some familiarity with the sort of internet access plans provided by Telstra or other service providers. The reasonable member of the class would therefore know that access plans are typically differentiated and advertised on the basis of price and download (and perhaps also upload) limits.

48 Any reasonable member of the class of readers would see quite plainly that the $29.95 plan is limited to 200 MB per month on a 12 month contract.

49 Moreover, the reasonable reader would see, as part of the thrust of the advertisement, that other plans are offered including in particular a plan at $59.95 per month for unlimited uploads and downloads. These words appear in bold under the highlighted boxed figure showing the $29.95 plan. There could be no question of the reasonable reader forming the impression that broadband access is available for uploads or downloads at $29.95 per month.

50 Furthermore, the reasonable reader would not be left with the impression that "uncapped" is the same as "unlimited". Telstra was, quite clearly, using the word "unlimited" in a different way from "uncapped"; the former refers to the amount of data that one can download or upload and the latter refers to the speed of download or upload of data. Telstra used the word unlimited in a different sense to uncapped by referring firstly to the Cable Uncapped Plan which was available for limited access at $29.95. This was contrasted with the unlimited plan at $59.95 per month.

51 Even if the class of readers is broader than I have indicated above, it does not seem to me that there would be a hangover effect in later advertisements. There is evidence that the general public has become familiar with the concept that access plans for telecommunications products are differentiated by reference to price and usage and, in particular, that there is a difference between limited access and unlimited access plans. The wording to which I referred in the previous plan would make it plain to all but the most obtuse reader that the $29.95 plan does not cover unlimited use.

52 It follows in my view that I must reject the submission that this advertisement creates a hangover effect which flows through to the advertising campaign for Telstra reward options.

Advertisement No 2 – "It’s nice to get something back" – (Annexure page 28)

53 The advertisement appeared in the Daily Telegraph on 26 May 2004. It was also run in the same newspaper several days earlier. An advertisement in this form continues to be published but one change has been made to the current version. It now states that BigPond and ADSL are not available on a single bill.

54 The issue which is posed by this advertisement, and by the other advertisements in this proceeding, is different from the issue which arose in cases such as MBF v Cassidy. The present case is not one where there is a positive misrepresentation in the main part of the advertisement which is corrected elsewhere, perhaps in small print.

55 Here, the main part of the advertisement provides the ordinary or reasonable reader with information that he or she may be eligible for reward options when that person has a home phone plus two other eligible services bundled on a single bill.

56 The small print in the advertisement does not correct a misrepresentation made in the body of the advertisement. Rather, it tells the reader the conditions under which he or she can get what is advertised in the body of the advertisement.

57 The questions which arise are, whether the impression created by the advertisement is misleading because it contains a logical and factual error as to the number of rewards available and whether the conditions of eligibility are sufficiently spelled out in the small print. Each of the six misrepresentations which Optus relied upon was said to be conveyed by this advertisement.

58 The advertisement does not contain the pictorial but it does offer three alternative rewards and it states in the body of the advertisement that they are available if a home phone is bundled with two other eligible services. Thus, the advertisement was said to be affected by the logical and factual error to which I have referred. That is, it is said to convey the impression of freedom of choice which is not available unless a mobile phone is bundled with the home line.

59 This misrepresentation is said to come about because a reader would not necessarily have strong powers of concentration and the patience to go through the fine print. It turns upon whether the reasonable reader would appreciate that, in the ordinary case, SMS calls can only be sent or received on a mobile phone and that Family Calls are only available between home phones and mobiles.

60 It is true that the advertisement is aimed at a very wide audience which probably includes the gullible and the not so well informed. However, it seems to me that both of the points raised by Optus can be easily addressed.

61 It is plain that there is a general understanding among users of SMS services, that is to say, among the relevant target audience, that SMS calls can only be sent or received on mobile phones. They are commonly understood in the target audience as two way text messages between compatible mobile phones.

62 More sophisticated users of SMS services would know about Telstra’s recent introduction of "Talking Text" which enables SMS messages, converted to voice, to be received over a fixed phone. Those persons would also know that Talking Text provides a choice of seven pre-recorded forms of reply which can be sent from a fixed line. Those persons would therefore be able, if they wish, to obtain the reward option of free SMS calls without bundling a mobile phone.

63 As to the free Family Calls, clearly enough, this is not a commonly understood term and the ordinary reader would need to look for a definition before being able to work out whether he or she may be eligible for such a reward.

64 In my view, the ordinary reader who may be interested in the availability of reward options would realise that it is necessary to look at the print appearing at the foot of the advertisement to see what conditions apply. The print states in sufficiently clear font that Family Calls are voice calls between a home phone and a bundled mobile phone.

65 It follows from what I have said about the general understanding of SMS calls and from the definition of Family Calls that only the most obtuse reader would be misled. The ordinary reader would realise fairly quickly that in the ordinary case it is necessary to bundle a mobile phone with a home phone to be eligible for the reward of SMS calls or Family Calls.

66 It is true that this removes the freedom of choice which is mentioned in this, and other advertisements forming part of the campaign. However, in my opinion, it would be obvious to the ordinary reader, after a few moments of thought, that the choices are more limited than might initially be thought. In any event, a degree of robustness is required in assessing the advertisement because the public is accustomed to some puffing of products and benefits in mass advertising; see Stuart Alexander & Co (Interstate) Pty Ltd v Blenders Pty Ltd (1981) 37 ALR 161 at 164 (Lockhart J); see also Telstra v Optus at 523.

67 The second complaint made by Optus about this advertisement was that the print states that the conditions of eligibility include a dial-up internet or ISDN post paid plan of $20.00 or above per month. This was said to contain a misrepresentation that there is a $20.00 plan. As I have said previously, the minimum plan is $24.95 per month.

68 However, in my opinion, this statement does not convey an implied representation that Telstra has a $20.00 plan. It merely informs the reader of the minimum amount of the required plan to be eligible for the rewards. That is to say, the statement spells out the condition of eligibility for the rewards and does not make any representation as to what is or is not available as a plan.

69 The statement is no more than an accepted way of stating a price point and it is for the customer to determine whether or not he or she has a plan which is for an amount of $20 or above. By stating the condition in this way Telstra retains some flexibility in setting the amount of the plan in future. Thus, for example, should Telstra wish to change the plan to $21.95 or $22.95 this would still enable a customer to qualify for the rewards which flow from bundling dial-up internet or ISDN as an eligible service.

70 The third complaint was that the advertisement conveys a misrepresentation as to the dollar amount of the plan of the eligible broadband service. However, the advertisement plainly states the condition of eligibility of the broadband service to be bundled with the home phone as a plan of $59.95 per month. There can be no suggestion of any representation that the condition may be satisfied by a $29.95 broadband plan or indeed by any broadband plan less than $59.95 per month.

71 The fourth complaint was the alleged misrepresentation about the eligible subscription television service. The advertisement does not set out the full conditions of eligibility for the service. It describes the condition of eligibility as Foxtel or Austar from Telstra. It states that Foxtel digital or Foxtel is the subscription service that is provided.

72 Optus submits that this is misleading in two principal ways. The first is failure to make clear to readers that since 1 March 2004 subscribers need to take up the digital service to qualify for the reward option. The second is the failure to inform customers who subscribed for analog pay TV through Telstra before 1 March 2004 that they can migrate to a single bill and receive rewards notwithstanding that only digital is available to new subscribers.

73 Optus relied on the following concessions made by Telstra’s head of advertising, Mr Wild, in cross-examination:-

74 However, the short answer to Optus’ contention, both in relation to this advertisement and to the others which were in evidence is that they do not contain a representation as to the particular type of service, whether analog or digital, that is available or which may be bundled as an eligible service.

75 In any event, the onus was upon Optus to establish that Telstra’s conduct was misleading. There was nothing to suggest that anyone was misled. There was nothing to suggest that the condition stated in Telstra’s SFOA clause 2.12, which covers analog and digital, is not observed. Nor was there any admissible evidence that the Foxtel or Austar analog service could be obtained from suppliers other than Telstra.

76 At very most, the statements about the eligible subscription TV service are liable to cause some confusion as to what is necessary to meet the condition. However, it is well established that to confuse the relevant hypothetical reader does not amount to misleading or deceptive conduct; see Nike at [103] – [106]; Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 201.

77 The fifth complaint deals with the claim that Telstra is promoting the advantages of a single bill which are not available to all customers. This covers the related claim that the advantages are not available to BigPond cable and ADSL customers.

78 Although the advertisement refers to bundling on a single bill, it does not convey the impression that there are advantages to be obtained from such a service. Instead, the requirement of a single bill is stated as a condition of eligibility for rewards. Accordingly, there is no representation, express or implied, that there are benefits to be obtained from a single bill.

79 It is true that some of Telstra’s other promotional material such as its online product catalogue extols the benefits of a single bill. But I do not see that this has any relevance to the impression which an ordinary or reasonable reader would obtain from the present advertisement.

80 It is also true that the rewards are open to some customers who have bundled products that are not available on a single bill, (i.e. BigPond Cable or BigPond ADSL). However, I do not see that the failure to mention this in the advertisement renders it misleading. The fact that some additional customers are eligible even though they were not told of this in the advertisement cannot in my opinion make it misleading.

81 In its written submissions, Optus contended that this advertisement, and other similar advertisements, were misleading because the imagery which is used to depict the available rewards does not draw to the customer’s attention the fact that unused calls are forfeited at the end of each month. However, the print which appears at the end of the advertisement (or elsewhere in the other print advertisements) is sufficiently clear to bring this to the attention of the reasonable reader.

82 It follows that I am of the view that the advertisement is not misleading. It states with sufficient accuracy what the conditions of eligibility are and the particular rewards that are available in a way which is sufficiently obvious to customers or potential customers. To the extent that it does not do so, the advertisement produces at most, confusion rather than deception.

83 It is relevant to a consideration of the advertisement (and of all the others) that it does not directly encourage people to acquire services. Instead, it informs customers what they can do if they acquire the services. The advertisement, as with all the others, was directed in part to Telstra’s existing customers in order to obtain their loyalty.

84 There is no misrepresentation in the advertisement of Telstra’s conditions for eligibility and, in my view, the ordinary or reasonable reader would not consider that rewards are available which are not in truth available.

Advertisement No 3 – "It’s nice to get something back" – (Annexure page 29)

85 This advertisement was published in the Sydney Morning Herald on 26 May 2004. It is no longer being published.

86 The advertisement is in similar terms to Advertisement No 2. No other considerations arise. In my opinion, it is not misleading.

87 This advertisement appeared in the Daily Telegraph on 29 May 2004. It is still being published.

88 It is directed at customers or potential customers of Telstra shops and features a particular brand of mobile phone.

89 It does not contain the logical or factual error of which Optus complained because the only reference to a reward is for free local calls. Thus, there can be no misrepresentation as to the availability of a choice of rewards.

90 It states that BigPond Cable and ADSL will be transferred to a single bill when available. This accurately reflects the conditions in Telstra’s SFOA. It removes any suggestion that customers may be misled into thinking that rewards are not available to the subscribers for those two forms of service.

91 The advertisement makes no mention of subscription television services and accordingly no issue arises about the type of eligible pay TV which is an eligible service.

92 All other issues raised by Optus about the inadequacies and consequent misrepresentations in the advertisement have been dealt with in addressing Advertisement No. 2.

Advertisement No 5 – Brochure "Be free to choose your reward" – (Annexure page 31)

94 This brochure was mailed out to approximately 5.5 million residential Telstra customers in late April or early May 2004. Any remaining copies of the brochure are apparently available through Telstra shops or dealers.

95 The brochure contains the pictorial. For reasons stated above, I do not consider that the brochure would convey to the ordinary or reasonable reader the error to which Optus pointed.

96 The brochure was part of a mass advertising campaign and was directed at the widest possible audience. Nevertheless, the nature of the document is such that the ordinary or reasonable reader would be expected to read most of the brochure if he or she wished to understand the offer made in the pictorial.

97 I do not consider that the words in the introduction "it’s easy to qualify – have a look at the section below", refer the reader directly to the pictorial. It seems to me that this is a reference to the material under the heading "It’s easy to qualify".

98 That section sets out the conditions of eligibility which Optus claimed to be misleading in the ways to which I have referred.

99 However, I do not consider that the complaints can be sustained. With the exception of the condition of eligibility for broadband, the issues are covered by what I said in relation to Advertisement No 2. The material stated under the sections "It’s easy to qualify" and "things you need to know" sufficiently set out the conditions of eligibility.

100 Moreover, "Family Calls" are explained in the orange text, which is of reasonable size, under the pictorial.

101 There is also an explanation of Talking Text which would inform the more sophisticated reader of the availability of this product. Those persons would therefore know that they can obtain the free SMS reward without bundling a mobile phone to their home phone.

102 The condition of eligibility for broadband is stated to be a BigPond broadband plan with unlimited uploads and downloads. Optus submitted that this was misleading because it was capable of creating the impression in the mind of the reasonable reader that the condition could be satisfied by a $29.95 plan. This was said to flow from the hangover effect of the earlier, cheap access, broadband campaign.

103 However, for reasons stated when dealing with advertisement No 1, I do not consider that there is any hangover effect from the previous campaign.

104 In any event, the evidence discloses that the ordinary member of the public who would be interested in subscribing for broadband and bundling it with a home phone, (i.e. the relevant hypothetical reader), would well understand the way in which access plans are differentiated. That is to say, he or she would know that there is a difference between limited use and unlimited use access plans.

105 It follows that the ordinary or reasonable reader would not form the impression that a $29.95 plan may be bundled with a home phone as an eligible service for the purpose of the rewards campaign. Accordingly, I am of the view that the brochure is not misleading.

106 As can be seen from the other advertisements, Telstra has now departed from the "unlimited" plan description. The more recent advertisements all refer specifically to a $59.95 plan. Thus, there can be no possible suggestion of misleading conduct in the more recent description of the condition of eligibility for the broadband service.

107 This brochure is still current and is available in Telstra shops. The section at the back of the document commencing with the words "Introducing new reward options" is similar to the brochure which is Advertisement No 5.

108 Nothing needs to be added to what I have already said. I do not consider that the brochure is misleading or deceptive.

109 This brochure explains the Talking Text service. No complaint was made that it was misleading.

Advertisement No 8 – bookend advertisement – "When you give ... you should receive" (Annexure page 43)

110 This advertisement appeared in the Sydney Morning Herald on 31 May 2004. A similar form of the advertisement appeared after the judgment in the interlocutory application which was delivered on 3 June 2004.

111 The terms and conditions of eligibility for rewards are stated on the left hand side of the page which also contains the pictorial. The rewards are stated on the right.

112 The only reward which is highlighted on the right is free local calls. However, there is a statement that this "is just one of the rewards you can choose".

113 It is unnecessary to set out the conditions which are stated. They include broadband at $59.95 per month. They also include Foxtel digital or Austar from Telstra. It was submitted that the advertisement understates and overstates the condition of eligibility because it does not make clear to new subscribers that only digital is available and it does not inform subscribers who took their subscription before 1 March 2004 that they can migrate to a single bill.

114 However, it is unnecessary to say anything further about these complaints which follow from Mr Wild’s evidence as I have already dealt with them when considering advertisement No 2.

115 For reasons stated above, in my opinion, the advertisement is not misleading.

Advertisement No 9 – "Dive In – Amazing broadband internet at dial-up prices" (Annexure page 47)

116 This advertisement appeared in the Sydney Morning Herald on 8 June 2004. It was part of Telstra’s earlier campaign for cheaper broadband access but it contains in a box at the foot of the colour portion a reference to the reward options program.

117 Optus’ complaint is that the ordinary reader would be misled because he or she would form the impression that it is possible to qualify for the reward of 125 free local calls by subscribing for broadband at $29.95 per month.

118 The target for this advertisement is narrower than the audience targeted by the newspaper advertisements for the reward options campaign. It is a similar audience to that which was the subject of Advertisement No 1 which was the advertisement for cheaper broadband.

119 However, I do not think that anything turns upon the need to identify with precision the ordinary or reasonable reader of advertisement No 9. This is because a cursory glance at the box for free local calls tells the reader in reasonable size font that the qualifying condition is a BigPond broadband plan of $59.95 per month or more.

120 Accordingly, in my opinion, it is fanciful to think that anyone apart from a reader at the extreme end of the scale of gullibility and carelessness would form the impression that rewards are open to subscribers on the $29.95 plan. The reaction of such a person is of course excluded from consideration of what may amount to misleading conduct; see Nike at [102] and [105].

121 The information in readable size print at the foot of the advertisement states that ADSL and Cable are not currently available on a single bill but are still eligible for offer and will be migrated to a single bill when technically possible. This states the condition fully but, as I have said, the failure to do so in other advertisements is not misleading.

Advertisement No 10 – bookend advertisement – "When you give .." (Annexure page 48)

122 This advertisement appeared in the Daily Telegraph on 14 June 2004. It is similar to the bookend advertisement which is Advertisement No 8 above.

123 Unlike Advertisement No 8, the present advertisement states that BigPond cable and ADSL will be transferred to a single bill when available. This removes the possibility of a misleading statement as to the qualifying conditions but as I have said previously, I do not consider that any failure to mention it was misleading.

124 For reasons stated above, in relation to Advertisement No 8, I do not consider this advertisement to be misleading.

Advertisement No 11 – Insert headed "Price Dive – amazing broadband internet at dial up prices" (Annexure Page 50)

125 This advertisement is an insert for inclusion with daily newspapers. It forms part of the cheaper broadband advertising campaign but it makes reference to reward options on the last page of the insert.

126 It seems to me that any suggestion that the ordinary or reasonable reader would form an impression that rewards are offered to subscribers to the $29.95 plan is excluded by the explanation under the caption "Amazing reward options".

127 This states in reasonably clear font that the condition of eligibility for reward options for broadband access is that the price per month for the plan be over $59.95 per month.

128 Potential subscribers for broadband internet are reasonably familiar with the fact that plans are differentiated by reference to volume of downloads and uploads as well as price. The reference to a plan of over $59.95 quite plainly tells the reasonable reader that reward options may be available to subscribers for such a plan. There is no representation that rewards are offered to subscribers for the $29.95 plan. Indeed, any such representation is excluded by what appears in the explanation of "amazing reward options".

Advertisement No 12 – Insert "Want up to 125 free local calls .." (Annexure page 52)

131 It contains a form of the pictorial and an explanation of the conditions is set out below the pictorial description of the conditions and the rewards.

132 No criticism can be made of the statement of eligibility for broadband as a plan of $59.95 or above. It is an accurate statement of the conditions contained in the SFOA and clearly differentiates the plan from the $29.95 plan for limited access.

133 Nor can there be any complaint about the statement that BigPond ADSL and Cable are not available on a single bill. This is an accurate statement even though customers are not told of the contractual condition under which rewards are offered to such subscribers notwithstanding that a single bill is not presently available. I do not see that it is necessary for Telstra to say so in the advertisement. It is sufficient that Telstra is contractually bound to provide the rewards in the absence of a single bill.

134 The statement of the condition relating to pay TV access is at most incomplete or perhaps confusing. But it is not misleading.

Advertisement 13 – Nine MSN Website – "Get 125 free SMS every month" (Annexure page 54)

136 The only issue in relation to this advertisement which has not already been addressed is the information which is provided about the condition for subscription television as an eligible service.

137 Optus submits that the information suffers from a number of defects. In the page headed "Reward Options" under "Things you need to know", note 5, the reader is told that the condition is Foxtel digital or Austar digital from Telstra. This is said to be incomplete, inter alia, because it makes no reference to analog subscribers who signed up before
1 March 2004.

138 On the page headed "Reward Options" "Eligible Services" the condition is described as Foxtel or Austar from Telstra without any reference to the current requirement for a digital subscription.

139 On page 2 of 2 under the heading "Pay TV services from Telstra" the reader is informed that all Foxtel and Austar packages may be included.

140 Optus complains that these items of information either understate or overstate the condition of eligibility or, alternatively, they are self-contradictory.

141 There is force in the proposition that the information is internally inconsistent and unclear. This is particularly so when the last-mentioned statement (i.e. all Foxtel or Austar packages may be included), is compared with what appears earlier as I have set out at [137] and [138].

142 But I do not consider that any of these statements either considered separately, or when read as a whole by the ordinary or reasonable reader looking at the site, gives rise to any implied representation that there are conditions of eligibility which are contrary to those stipulated in the SFOA.

143 I consider it likely that the reasonable reader could be confused as to what are the precise conditions of eligibility for rewards when bundling the subscription TV service. However, this does not amount to misleading or deceptive conduct.

144 This commercial is no longer being broadcast by Telstra. The commercial creates or reinforces the imagery of freedom by showing a person on a beach throwing a frisbee.

145 It illustrates the eligible services which may be bundled by showing icons of a mobile phone, a BigPond logo on a computer and a television set and some wording. The images are similar to those which are shown in the brochure which is Advertisement No 5.

147 The advertisement runs for 30 seconds and there is a disclaimer lasting for four seconds which states:-

148 I do not consider that this advertisement contains a misrepresentation. It does not suffer from the logical or factual error, for which Optus contends, because only one reward is advertised. Thus, there can be no misrepresentation of freedom of choice.

149 Whilst it does not spell out all of the conditions of eligibility, the impression which the reasonable viewer would obtain is that there are some limitations which apply. It is true that the written disclaimer or limitation is in some respects cryptic and the viewer may be unlikely to absorb what it says. Nevertheless, in my opinion, it is sufficient to alert the viewer to the fact that there are limitations which may be significant; cf Trade Practices Commission v Optus Communications Pty Ltd (1996) 64 FCR 326 ("Trade Practices Commission v Optus") at 339 (Tamberlin J).

151 This commercial is still being broadcast. It is similar to the first but it advertises as the reward $25.00 worth of free Family Calls.

153 The visual images and voice-over do not make it clear to the viewer that he or she is only eligible for free Family Calls if the services which are bundled include a mobile phone.

154 Whilst this is adverted to in the cryptic text set out above, it is unlikely that a viewer would absorb the thrust of this limitation as it is stated in less than four seconds out of a thirty second commercial.

155 Nevertheless, as with the first commercial, in my opinion the ordinary or reasonable viewer would obtain the impression that there are conditions of eligibility for the rewards.

156 It seems to me that the reasonable viewer would appreciate that there are conditions which may be significant; cf Trade Practices Commission v Optus at 339.

158 This commercial has been broadcast since the interlocutory hearing. It is in similar terms to the second TV commercial except that it advertises free SMS calls instead of free Family Calls.

159 It seems to me that it does not raise any different questions from those addressed in relation to the second TV commercial.

161 I have come to the view that none of the advertisements are misleading or deceptive in contravention of s 52 of the Act. It follows that I do not need to consider whether the fact that Telstra will explain the terms and conditions of eligibility and the available rewards when a customer telephones to enquire about them might overcome the effect of any misleading conduct; cf St Luke’s Health Insurance v MBF.

162 The conceptual issue to which I referred in the introduction, namely the extent to which complex material may be simplified by engaging messages has, in general terms, been answered favourably to Telstra. The answer to the question will turn on questions of fact and degree. It will be necessary to consider the reaction of the relevant hypothetical person to the overall thrust of the advertisement. The greater the simplification of the message in the highlighted part of the advertisement, the greater the need will be to ensure that the other parts of the advertisement sufficiently bring home to the reader or viewer the true nature of the message.

163 In the present case, in my opinion, the "silhouette" contained in the pictorial, when considered with the balance of each advertisement is sufficiently close to stating the conditions of eligibility and the rewards to avoid the stigma of being declared misleading.

164 It is relevant to bear in mind what Allsop J said in his interlocutory judgment (see [2004] FCA 726) at [13] – [15] as follows:-

165 In my opinion, although Optus’ case was not, as his Honour said, fanciful, a full consideration of the advertisements on a final basis reveals that the reward options advertising campaign is not fundamentally misleading and it does not contravene s 52 of the Act.

166 The orders I propose to make are that the application be dismissed with costs.

I certify that the preceding one hundred and sixty-six (166) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.

Counsel for the Applicant:	I M Jackman SC with R Cobden

Solicitor for the Applicant:	Minter Ellison

Counsel for the Respondent:	T F Bathurst QC with M J Collins

Solicitor for the Respondent:	Mallesons Stephen Jaques

Date of Hearing:	23 June 2004

Date of Judgment:	6 July 2004

Federal Court of Australia

Singtel Optus v Telstra [2004] FCA 859 (6 July 2004)