The Dominant Message
148 AGL's submission that regard should be had to all of the matters bearing on the effect of its communications with the Category 3 and Category 5 Consumers is correct. When the alleged misleading or deceptive conduct consists of words, it is inappropriate to select some words only and to ignore others which provide the context giving meaning to the particular words: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 199.
149 However, this does not mean that all matters communicated by a representor are to be taken to have the same weight or effect, or that later qualifying words will neutralise the effect of an earlier misrepresentation. Some words and representations may have a more dominant effect than others. That effect may be so dominant or persuasive as not to be neutralised by other statements made on the same occasion, or as part of the overall representation, which are less prominent. The ACCC invoked the concept of the dominant message, contending that the offered discount in conjunction with the fixed term gave rise to such a message.
150 Aspects of this issue were considered by the High Court in Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640. Advertisements of TPG displayed prominently an offer to supply a broadband internet service for $29.99 per month but other less prominent statements in the advertisements qualified that offer by requiring the consumer, at an additional cost, to "bundle" the service with other telephony services. The question in the case was whether the prominent and misleading statement in the advertisements was saved from that effect by less prominent qualifications stated elsewhere in the advertisements. The majority of the High Court (French CJ, Crennan, Bell, Gageler and Keane JJ) upheld the decision of the trial Judge that the advertisements were misleading or deceptive. The majority said:
[51] [T]his is not a case where the tendency of TPG's advertisements to lead consumers into error arose because the target audience might be disposed, independently of TPG's conduct, to attend closely to some words of the advertisement and ignore the balance. The tendency of TPG's advertisements to lead consumers into error arose because the advertisements themselves selected some words for emphasis and relegated the balance to relative obscurity. To acknowledge, as the Full Court did, that "many persons will only absorb the general thrust" is to recognise the effectiveness of the selective presentation of information by TPG. …
[52] It was common ground that when a court is concerned to ascertain the mental impression created by a number of representations conveyed by one communication, it is wrong to attempt to analyse the separate effect of each representation. But in this case, the advertisements were presented to accentuate the attractive aspect of TPG's invitation relative to the conditions which were less attractive to potential customers. That consumers might absorb only the general thrust or dominant message was not a consequence of selective attention or an unexpected want of sceptical vigilance on their part; rather, it was an unremarkable consequence of TPG's advertising strategy. In these circumstances, the primary judge was correct to attribute significance to the "dominant message" presented by TPG's advertisements.
(Citations omitted)
151 AGL submitted that the concept of dominant message was inapplicable in this case and sought to distinguish TPG Internet on several bases. The ACCC does not allege that the Initial Representation was misleading or deceptive at all. Secondly, the advertisements made by TPG were made publicly and described at [47] as "an unbidden intrusion on the consciousness of the target audience" whereas, with the possible exception of those who had telephoned AGL with the intention of cancelling their supply arrangements or to complain or query some aspect of their present supply, the CSR Statements were made to persons who were, at the time of their call, seemingly willing to contract with AGL for the supply of electricity. Related to this consideration is that, unlike the representations in TPG Internet, the CSR Statements were not made to bring consumers into initial negotiations with AGL.
152 It was not necessary for the Court in TPG Internet to consider the effect of the other information available to the consumers before entering into a contract for the supply of internet services. This was because:
[50] It has long been recognised that a contravention of s 52 of the TPA may occur, not only when a contract has been concluded under the influence of a misleading advertisement, but also at the point where members of the target audience have been enticed into "the marketing web" by an erroneous belief engendered by an advertiser, even if the consumer may come to appreciate the true position before a transaction is concluded. That those consumers who signed up for TPG's package of services could be expected to understand fully the nature of their obligations to TPG by the time they actually became its customers is no answer to the question whether the advertisements were misleading.
(Citations omitted)
153 In addition to making these points of distinction, AGL emphasised the last sentence in [50]. It submitted that the Category 3 and Category 5 Consumers could, by reading the Welcome Pack itself, and by making other comparisons readily available to them, have understood fully the true position with respect to their rates.
154 I agree that there are relevant distinctions between this case and TPG Internet. But that does not mean it is inappropriate to have regard to the dominant effect of the CSR and WP Statements when considering what was, in context, represented to the Category 3 and Category 5 Consumers. Despite AGL's submission, I consider that the cases concerning advertisements which contain a prominent misleading representation qualified by a later less prominent representation do provide assistance by analogy. Those cases indicate that, in general, the qualifying information must be sufficiently clear and sufficiently prominent if it is to neutralise the misleading effect of the primary statement: Medical Benefits Fund of Australia Ltd v Cassidy [2003] FCAFC 289; (2003) 135 FCR 1 at [37]; National Exchange Pty Ltd v Australian Securities and Investments Commission [2004] FCAFC 90 at [51]. Account must be taken of the tendency of consumers to absorb the general thrust of what is communicated to them rather than the detail, even when that detail is contained in writing. As Murphy J observed at first instance in Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2011] FCA 1254 at [59], the degree of prominence required to dispel a false dominant message increases with its potential to mislead. When the disparity between the primary message and the true position is great, attention must be drawn to the true position in the clearest possible way.
155 In the present case the offered discount in consideration for the consumer's commitment to AGL for the fixed term was, in my opinion, the dominant part of the statements made by the CSRs. That is evident in the call scripts. It also evident in the six taped conversations of the CSRs with consumers. With one exception, in each case, the CSR commenced the relevant part of the conversation by telling the consumer of the percentage discount offered and the two year term, and only then continued with other features of the plan. These were that the discount would be from the consumer's energy usage charges, that there was a maximum "exit fee" of $75.00, that the consumer would receive a Welcome Pack and that the consumer had 10 business days after receiving the Welcome Pack in which to cool off. The CSRs did not mention "rates" until after the callers had indicated their willingness to enter into the offered plans. The responses of the consumers indicate that it was the offered discount which they found attractive.
156 The exception which I mentioned is the conversation with Consumer Five who was already on an energy plan. The two year term was mentioned later in the conversation with that consumer but that may be attributed to the fact that the consumer was negotiating for a higher discount.
157 AGL submitted that the dominant message on which the ACCC relied was a matter of implication or inference and accordingly logically contradictory. I do not accept that submission. The dominant message was contained in the express words of the CSR Statements and the WP Statements.
158 A conclusion that the discount was at the heart of the message conveyed by the CSR Statements and the Welcome Pack Statements is not counter intuitive. The report of Mr Price at [42] refers to a market survey indicating that price was "overwhelmingly the main driver of [consumers' decisions] to change supplier". The survey also indicated that "all retailers viewed price as the single biggest factor in a pitch to a new customer". The survey to which Mr Price referred for these statements was carried out in 2008, some 3-4 years before CSR and WP Statements were made. However, there is no reason to suppose that there has been a change of consumer attitude in the interim. I observe that in another context (the submissions concerning misrepresentation by silence) AGL itself submitted that the matter of "predominant relevance and interest to consumers was their energy usage charges, and not their rates".
159 It is also pertinent to the assessment of the dominant effect of the CSR Statements that they were made in the course of one on one telephone conversations and in the context of the CSR seeking to have consumers agree then and there to enter into an energy plan with AGL. In that context, it is natural to conclude that consumers would have paid particular attention to the offer of a discount, and to the amount of that discount.
160 In [52] in TPG Internet, the majority appear to suggest that consumers' absorption of only the general thrust of an advertising message by reason of "selective attention or an unexpected want of sceptical vigilance on their part" may indicate that an advertisement did not have a dominant message. Considerations of that kind cannot be said to be pertinent presently and I did not understand AGL to suggest that they were.
161 I do not consider that the other statements in the Welcome Pack to which AGL drew attention can reasonably be regarded as neutralising the impression engendered by the CSR Statements. On the contrary, the overall thrust of the Welcome Packs is likely to have confirmed the consumers' understanding from the CSR Statements. As already noted, the Welcome Letters confirmed that the consumer would receive a discount from "usage charges", something which consumers would reasonably have expected in any event. The Letters do not give any indication that the charges would or may vary from customer to customer by some factor other than the consumers' individual levels of consumption and did not purport to qualify in any way the CSR Statements.
162 The Welcome Letters assured the consumer that he or she "can feel good knowing that you joined over 3 million account holders who have also chosen AGL" for, amongst other things, "competitively" priced energy. That statement would have tended to reassure consumers that the prices they would be charged would be competitive.
163 The Welcome Letters did refer to AGL's Fair Pricing and Fair Contracting Promises, saying that these would help ensure that the consumer would always get a "fair deal" from AGL. Again, this is a statement of a reassuring kind. It is pertinent however that the reference to the Fair Pricing Promise (upon which AGL particularly relied in this submission) did not indicate anything about the content of that Promise, let alone forewarn consumers that an inference could be drawn from it that the rates which would apply in their case may not be AGL's generally prevailing rates, or that AGL had more than one set of rates applicable to residential premises.
164 The Welcome Letters did not indicate to consumers where they could locate the Fair Pricing Promise and the Offer Summary did not contain any reference to it. The Promise was in fact located, in Version 2 of the Welcome Pack, in cll 6.5 and 6.6 on page 23 of the brochure containing AGL's General Terms. These clauses are set out earlier in these reasons.
165 Reading the General Terms to cll 6.5 and 6.6 would have required more than usual persistence by consumers. Depending on the sequence in which consumers read the documents comprising the Welcome Pack, they may have had to read up to 50 pages before finding the Fair Pricing Promise in cl 6.6 of AGL's General Terms. Had a reader got that far, he or she would not have seen an express indication that the rates in his or her case may be different from the rates which AGL applied to consumers generally, or different from the rates under AGL's SRC. Such a consumer would have seen only that, if the rates when varied by AGL were greater than the higher of two rates, one of which was the "Published Tariff" and the other a rate which would not readily be calculable by a consumer, he or she could, on notice, terminate the contract. The consumer would then have had to go on a further 19 pages in the General Terms to find the definition of "Published Tariff" to learn that it meant, in one of its alternatives, the "Charges" (not the rates) payable under AGL's "Standard Retail Contract" applicable to the "Supply Address". The consumer would then have had to read still further to find the definitions of those terms. He or she would have had to note that the term "Charges" was defined to mean "charges, fees and other amounts payable by you as set out in these General Terms, the Offered Fee Schedule, or any applicable Ancillary Product terms and conditions" and did not include any specific reference to "rates". If the reader was sufficiently astute, he or she may then have inferred that AGL's ability to vary its charges included the ability to vary its rates in a differential way so that they no longer matched its SRC Rates. However, consumers who were not on the lookout for this possibility are in my opinion unlikely to have appreciated that AGL's General Terms left open this possibility.
166 The inference which AGL submitted should be drawn may be obvious to a lawyer intent on investigating this very question but, in my opinion, would not have been obvious to the ordinary consumer. I find that it is improbable that the ordinary reasonable Category 3 and Category 5 Consumer would have gone through the process I have outlined and have come to that understanding of the position.
167 The task for the astute consumer receiving Versions 1 or 3 of the Welcome Pack would have been slightly easier. Clauses 6.5 and 6.6 in those Welcome Packs provided as follows:
[6.5] Variation of Charges Generally
Subject to clause 6.9, we may vary your Charges or introduce new Charges for any reason.
[6.6] Fair Pricing Promise
If we vary your Charges so that your total bill is higher than it would be under our Standard Retail Contract applicable to the Supply Address, then you may elect to terminate this Energy Plan in accordance with clause 13.
As can be seen, the terminology in cl 6.6 adverted to the possibility that the consumer's charges may be higher than would be applicable if a SRC applied.
168 Again, however, the task for the consumer in reading through the documentation in the Welcome Pack to locate cl 6.6 was not insignificant. That is especially so given the absence of anything to alert the consumer to the fact that he or she might find in cl 6.6 an indication that AGL contemplated applying in his or her case a category of rates which differed from the rates under the SRC.
169 I should also mention cl 6.4 of the Welcome Pack to which Counsel for AGL drew attention. That clause indicated that the continued application of the "Category of Tariff" which formed the basis of AGL's offer depended on the continuance of a number of circumstances. AGL submitted that this too should have indicated to consumers that it had more than one category of rate. That may be so. However, for similar reasons given in relation to the Fair Pricing Promise contained in cl 6.6, I do not consider that cl 6.4 can be regarded as detracting from the dominant message communicated by the SCRs and the Welcome Packs to consumers.
170 It is true that cll 6.4 to 6.6 in the General Terms were "there to be read", using the words of Gleeson CJ, Hayne and Heydon JJ in Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 at [49] upon which AGL relied. However, Butcher concerned a representation made to the purchasers of a property in a real estate sales brochure rather than to the large number of consumers to whom AGL's General Terms were directed. Further, the circumstances just summarised distinguish the present case from cases such as Butcher in which the disclaimer, being contained in a short document with little printed content, is readily apparent.
171 It is particularly pertinent in my opinion, that the statements in the Welcome Pack upon which AGL relied were not made contemporaneously with the CSR Statements giving rise to the consumers' initial impression. Nor were they made orally, which may have served to bring to the consumers' attention the fact that AGL had different sets of rates which may not always be uniform. By the time consumers received the Welcome Packs they had already "committed" themselves to AGL on the basis of their initial impression created by the CSRs' sales pitch. The WP Statements were plainly not adapted to "undoing" or correcting that impression. In some circumstances consumers may give more attention to a written document than to oral statements, but that is not this case.
172 For these reasons, I do not accept that the Welcome Packs should be regarded as having neutralised the impression created in particular by the CSR Statements.