Australian Competition and Consumer Commission v AMV Holding Ltd [2009] FCA 605 | Case summary

Federal Court of Australia|2009-06-05|Before: Moore J

REASONS FOR JUDGMENT 1 On 8 April 2009, I made the orders set out as Annexure B to these reasons. These reasons for decision record why, in my view, it was appropriate for the Court to grant declaratory relief as set out in those orders. I note that much of the material in these reasons has been taking from a joint submission which was helpfully prepared by the parties. 2 In January 2009, the Australian Competition and Consumer Commission commenced proceedings against the respondent, AMV Holding Ltd, alleging that AMV had engaged in misleading and deceptive conduct in promoting certain content services through what the ACCC referred to as "BLiNG" advertisements published in 2008 in a magazine published by ACP Magazines Limited ("Dolly" magazine) and in certain magazines published by Pacific Magazines Pty Limited ("Girlfriend" magazine and "TV Hits" magazine). (The relevant advertisements are set out as Annexure C to these reasons.) The ACCC alleged that in promoting the relevant content services, AMV acted in contravention of sections 52(1) and 53(aa), (e) and (g) of the Trade Practices Act 1974 (Cth) (TPA). The ACCC sought declaratory and injunctive relief and other orders. 3 The parties agreed to settle the matter, and the orders I made, which are set out as Annexure B to reasons, were made by consent. Both parties were represented by counsel. 4 The agreed facts alleged by the ACCC in the statement of claim are set out as Annexure A to these reasons. On the basis of these facts, the ACCC alleged that by causing the "BliNG" advertisements to be published, the respondent: · engaged in conduct in trade or commerce that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 52 of the TPA; · in connexion with the supply and promotion of content services, made false representations with respect to the particular standard, quality, value or grade of the content services being promoted, in contravention of s 53(aa) of the TPA; · in connexion with the supply and promotion of content services, made false or misleading representations with respect to the price of the content services being promoted, in contravention of s 53(e) of the TPA; and · in connexion with the supply and promotion of content services, made false or misleading representations concerning the existence of consumers' rights, in contravention of s 53(g) of the TPA. 5 The relevant statutory provisions in the proceedings are s 52 and s 53 of the TPA, which provide as follows: Section 52: Misleading or deceptive conduct

(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

A corporation shall not, in trade or commerce, in connexion with the supply or possible supply of goods or services or in connexion with the promotion by any means of the supply or use of goods or services: (a) falsely represent that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use; (aa) falsely represent that services are of a particular standard, quality, value or grade; (b) falsely represent that goods are new; (bb) falsely represent that a particular person has agreed to acquire goods or services; (c) represent that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits they do not have; (d) represent that the corporation has a sponsorship, approval or affiliation it does not have; (e) make a false or misleading representation with respect to the price of goods or services; (ea) make a false or misleading representation concerning the availability of facilities for the repair of goods or of spare parts for goods; (eb) make a false or misleading representation concerning the place of origin of goods; (f) make a false or misleading representation concerning the need for any goods or services; or (g) make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy. 6 The power to grant declaratory relief is set out in s 21 of the Federal Court of Australia Act 1976 (Cth), which provides: Declarations of right (1) The Court may, in relation to a matter in which it has original jurisdiction, make binding declarations of right, whether or not any consequential relief is or could be claimed. (2) A suit is not open to objection on the ground that a declaratory order only is sought. 7 There is a line of authority that in litigation of this type, the Court should make declarations by consent only after being satisfied that it is appropriate that the orders should be made. This line of authority was helpfully the summarised comparatively recently by Reeves J in Australian Competition and Consumer Commission v Grove & Edgar Pty Limited [2008] FCA 1956 at [18]-[21]: When the Court is asked to make declarations of right by consent it is required to scrutinise the orders sought to satisfy itself that it has the power to make those orders and to ensure, after due consideration, that they are appropriate: see ACCC v Real Estate Institute Industry of Western Australia Inc[1999] FCA 18; (1999) 161 ALR 79 at [1] and [17], ACCC v Virgin Mobile Australia Pty Ltd (No. 2) [2002] FCA 1548 at [1] and BMW Australia Limited v ACCC(2004) FCAFC 167, (2004) 207 ALR 452, (2004) ATPR 42-012 ( 'BMW' ) at [35]. On this aspect it should be noted that there is a long held view that a declaration, being a judicial act, should only be made on evidence and not simply on admissions or deemed admissions: see Bank of Kuwait and the Middle East v Ship MV Mawashi Al Gasseem (No.2) (2007) FCA 815 at [10] per Mansfield J and the cases referred to therein, particularly the observations of Kiefel J in ACCC vDataline.Net.Au Pty Ltd [2006] FCA 1427, (2006) 236 ALR 665. The strictures mentioned above mean, among other things, that the Court has to ensure that the declaration sought is directed to determining a legal controversy and not to answering abstract or hypothetical questions: see Ainsworth at 582. Further the Court is required to ensure that the party seeking the declaration has a real interest in seeking that relief: see Forster at 437 and Ainsworth at 582. And, finally, the Court has to ensure that there are sufficient consequences flowing from the making of the declaration that it is appropriate for it to exercise its discretion to do so. This latter aspect may include the public interest in having such a declaration made to indicate the Court's disapproval of particular conduct, assist in clarifying the law on a particular matter, or assist to inform consumers about a particular matter of concern: seeMedical Benefits Fund of Australia Limited v Cassidy [2003] FCAFC 289, (2003) 135 FCR 1, (2003) ALR 402 ('MBF') at [50] - [52]; ACCC v Info4PC.com Pty Ltd (deregistered) [2006] FCA 1534 at [8], ACCC v Goldy Motors Pty Ltd[2000] FCA 1885 at [30] and [34]; Tobacco Institute at 99-100,ACCC v Midland Brick Co Pty Ltd [2004] FCA 693; (2004) 207 ALR 392 at [21] and ACCC v Pacific Dunlop [2001] FCA 740 at [59]- [69]. However, the Court should not impede settlements by refusing to give effect to the terms of settlements made by the parties where the proposed orders are within the Court's jurisdiction and appropriate. Thus, the Court should be slow to substitute its own view of the orders or undertakings for those which have been agreed by the parties as part of the terms of settlement: see ACCC v Real Estate Institute Western Australia (above) at [22], ACCC v Virgin Mobile Australia Pty Ltd (No. 2) (above) at [2] and ACCC v Info4PC.com (above) at [18]. 8 However it is necessary, in my opinion, to bear in mind the cautionary observations of Kiefel J in Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (2006) 236 ALR 665 at [58]-[59]: ... The practice [of refusing to make declarations on deemed admissions] is one of long standing and might be seen as derived from views about litigation which pre-date more recent concerns expressed by the courts as to the costs of unnecessary litigation, the management of cases and efficiency overall. Views expressed in older cases may not take account of the increase in the use made of declaratory orders in developing areas of law which may involve matters of public interest. A caution with respect to the use of older authority is made in the White Book Service 2003 to the English Civil Procedure Rules 1998 (40.20.2). It may no longer be correct to have a practice which operates as a prohibition in every case of default and preferable to consider the circumstances pertaining to the particular case and the purpose and effect of the declaration. Millett J made declaratory orders in Patten v Burke Publishing Co Ltd [1991] 1 WLR 541 where justice to the plaintiff required it. The order however operated principally inter partes and it might be doubted whether it would be of interest to other persons. Cases such as this, involving the protection of consumers, are of public interest. Declarations are often utilised in such cases to identify for the public what conduct contributes a contravention and to make apparent that it is considered to warrant an order recognising its seriousness. It is however important that there be no misunderstanding as to the basis upon which they are made. This could be overcome by a statement, preceding the declarations, that orders are made 'upon admissions which [the respondent in question] is taken to have made, consequent upon non-compliance with orders of the Court'. 9 It may be that these observations are capable of having a wider field of operation (beyond orders made on deemed admissions), particularly when the party adversely affected by the declaratory orders is represented by experienced counsel, as is the case in the present proceedings. However, approaching the matter in an orthodox way, I was satisfied that the declarations I made were justified having regard to the facts conceded by the respondent which, in large measure, were evident in any event from the copies of the advertisements relied on by the ACCC in its application. 10 For the preceding reasons I made the orders in Annexure B on 8 April 2009. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore.

Associate: Dated: 5 June 2009 Counsel for the Applicant: R Higgins

Solicitor for the Applicant: Australian Government Solicitor

Solicitor for the Respondent: Colin Biggers & Paisley

Date of Joint Written Submission: 3 April 2009

Date of Publication of Reasons for Judgment: 5 June 2009

AMV caused to be published advertisements which promoted Content Services provided through the premium number 19 44 00 (the BLiNG Advertisements) in the:

1.1. May 2008 issue of Dolly magazine (the First BLiNG Advertisement), a copy of which is annexed to the Statement of Claim and marked 'A';

1.2. June 2008 issue of Dolly magazine (the Second BLiNG Advertisement), a copy of which is annexed to the Statement of Claim and marked 'B';

1.3. July 2008 issue of Dolly magazine (the Third BLiNG Advertisement) with a further BLiNG Advertisement also being published in the same issue (the Fourth BLiNG Advertisement), copies of which are annexed to the Statement of Claim and marked 'C' and 'D' respectively;

1.4. May 2008 issue of Girlfriend magazine (the Fifth BLiNG Advertisement), a copy of which is annexed to the Statement of Claim and marked 'E'; and

1.5. May/June 2008 issue of TV Hits magazine (the Sixth BLiNG Advertisement), a copy of which is annexed to the Statement of Claim and marked 'F'.

2.2.1. "hunks": comprising wallpaper images of men;

2.2.2. "top stuff": comprising wallpaper images, including puppies, cartoons and motifs;

2.2.3. "cute wallpapers": comprising wallpaper images of small animals;

2.2.5. "Free 4 U": including mobile video galleries and games, and accompanied by text reading: "No subscriptions! No rip-offs! 100% free access;

2.2.6. "hotties": comprising images of men, accompanied by text reading: "No subscriptions! 1000's of hotties on your mobile";

2.2.7. "animations": comprising cartoon images and words;

2.2.9. "play on mobile juke box", comprising ringtones or full length tracks advertised by reference to an artist's name and a song title (for example, "Rihanna: Don't Stop the Music"); and

2.3. contains multiple colourful images and text in varying font styles and sizes against a colourful background.

At the top of the First BLiNG Advertisement, the following text is written in large font:

Beneath the text described at paragraph 3, the following text is written in very small font:

Hot wallpapers, tones, movies & more! Subscribe to BLiNG! For just $4/week

At the foot of the First BLiNG Advertisement, the following text is written in very small font:

BLiNG! Is a subscription club offering pics, tones, animations & more for just $4 per week until you send STOP to 19 44 00. Java Games cost $8 per week. HUNKS CLUB & FREE 4 U: Free to access no subscriptions. Customers will also incur normal operator SMS & browsing charges. Play On tones are not recorded by the original artist and no representation is made to this effect. You must be over 14 to use this service. For customer support call 1300 857 633 or help@blingmob.com. A $4 subscription fee applies to all new users. BLiNG! Is a brand of AMV Group PO Box 2952 London WC1N 3XX, UK.

The Second BLiNG Advertisement was in the same terms as the First BLiNG Advertisement.

7.2.1. "Hunks": comprising wallpaper images of men;

7.2.2. "Top Stuff": comprising wallpaper images including puppies, cartoons and motifs;

7.2.3. "cute wallpapers": comprising wallpaper images of small animals;

7.2.5. "Animations": comprising cartoon images and words;

7.2.6. "Java Games": comprising video games, accompanied by the text: "txt the itemcode to 194400" and "Subscribe to BLiNG! games for $8/week"; and

7.2.7. "play on mobile juke box", comprising ringtones or full length tracks advertised by reference to an artist's name and a song title (for example, "Gabrielle Cilmi - Sweet About Me"); and

7.3. contains multiple colourful images and text in varying font styles and sizes against a colourful background.

At the top of the Third BLiNG Advertisement, the following text is written in large font:

Beneath the text described at paragraph 8, the following text is written in very small font:

Hot wallpapers, tones, movies & more! Subscribe to BLiNG! for just $4/week

At the foot of the Third BLiNG Advertisement, the following text is written in very small font:

BLiNG! is a subscription club offering pics, tones, animations & more for just $4 per week until you send STOP to 19 44 00. Java Games cost $8 per week. Customers will also incur normal operator SMS & browsing charges. Play On tones are not recorded by the original artist and no representation is made to this effect. You must be over 14 to use this service. Users under 15 must seek the account holders (sic) permission. For customer support call 1300 857 633 or help@blingmob.com. A $4 subscription fee applies to all new users. BLiNG! is a brand of AMV Group PO Box 2952 London WC1N 3XX, UK

11.2.1. comprising several untitled images of men, each with a code printed over the image;

11.2.2. "Great Animation": comprising cartoon images and words;

11.2.3. "Top Stuff": comprising wallpaper images including puppies, cartoons and motifs;

11.2.4. "play on mobile juke box", comprising ringtones or 'full length tones' advertised by reference to an artist's name and a song title (for example, "Gabrielle Cilmi - Sweet About Me"); and

11.2.5. "Mobile Games": comprising video games, accompanied by the text: "Join BLiNG! Games Club for $8/week"; and

11.3. contains multiple colourful images and text in varying font styles and sizes against a colourful background.

At the top of the Fourth BLiNG Advertisement, the following text is written in large font:

to order any item: txt the itemcode to 19 44 00 BLiNG!

Beneath the text described at paragraph 12, the following text is written in small font:

At the foot of the Fourth BLiNG Advertisement, the following text is written in very small font:

BLiNG! Is a subscription club offering pics, tones, animations & more for just $4 per week until you send STOP to 19 44 00. BLiNG! Java Games cost $8 per week. Customers will also incur normal operator SMS & browsing charges. You must be over 14 to use this service. A $4 subscription fee applies to all new users. For customer support call 1300 857 633 or help@blingmob.com. BLING! Is a brand of AMV Group PO Box 2952 London WC1N 3XX, UK.

15.2.1. "Hunks Babes Hunks": comprising wallpaper images of men;

15.2.2. "Top Stuff": comprising wallpaper images including puppies, cartoons and motifs;

15.2.3. "Animations": comprising cartoon images and words;

15.2.5. "Steamy Celebrity": comprising images of celebrities, accompanied by text reading "100% no subscriptions!";

15.2.6. "YMCA mobile video hunks": comprising video images of men; and

15.2.7. "play on mobile juke box", comprising poly tones, ringtones or 'full length tones' advertised by reference to an artist's name and a song title (for example, "Rihanna: Don't Stop the Music"); and

15.3. contains multiple colourful images and text in varying font styles and sizes against a colourful background.

At the top of the Fifth BLiNG Advertisement, the following text is written in large font:

Beneath the text described at paragraph 16, the following text is written in very small font:

Hot wallpapers, tones, movies & more! Subscribe to BLING! For just $4/week

At the foot of the Fifth BLiNG Advertisement, the following text is written in very small font:

BLiNG! is a subscription club offering pics, tones, animations & more for just $4 per week until you send STOP to 19 44 00. Naked Celebrity is a non-subscription service. BLiNG! Java Games cost $8 per week. Customers will also incur normal operator SMS & browsing charges. Play On tones are not recorded by the original artist and no representation is made to this effect. You must be over 14 to use this service. For customer support call 1300 857 633 or help@blingmob.com. A $4 subscription fee applies to all new users. BLING! Is a brand of AMV Group PO Box 2952 London WC1N 3XX, UK.

19.2.1. "Hunks": comprising wallpaper images of men;

19.2.2. "Top Stuff": comprising wallpaper images including puppies, cartoons and motifs;

19.2.3. "Hollywood Babes": comprising wallpaper images of women;

19.2.5. "Mobile Java Games": comprising video games;

19.2.6. "Bare Celebrity": comprising images of celebrities, accompanied by text reading "no subscriptions! Hot celebs on your mobile";

19.2.7. "Mini Vids": comprising videos of men and women; and

19.2.8. "play on mobile juke box", comprising polytones, ringtones or 'full length tones advertised by reference to an artist's name and a song title (for example, "Rihanna: Don't Stop the Music"); and

19.3. contains multiple colourful images and text in varying font styles and sizes against a colourful background.

At the top of the Sixth BLiNG Advertisement, the following text is written in large font:

Beneath the text described at paragraph 20, the following text is written in very small font:

Hot wallpapers, tones, movies & more! Subscribe to BLING! for just $4/week

At the foot of the Sixth BLiNG Advertisement, the following text is written in very small font:

SEGA Rally and the SEGA logo are registered trademarks of SEGA Corporation. (c) MMVI New Line Productions, Inc. Shadowalker (c) 2007 Glu Mobile Ltd. All Rights Reserved. BLiNG! is a subscription club offering pics, tones animations & more for just $4 per week until you send STOP to 19 44 00. BLiNG! Java Games cost $8 per week. Customers will also incur normal operator SMS & browsing charges. You must be over 14 to use this service. Ringtones are not recorded by the original artist and no representation is made to this effect. A $4 subscription fee applies to new members. Bare Celebrity is a non-subscription service. For customer support call 1300 857 633 or help@blingmob.com. BLiNG! is a brand of AMV Group PO Box 2952 London WC1N 3XX, UK

Terms and conditions which apply in relation to Content Services promoted by the BLiNG Advertisements are stated at the website www.blingmob.com.

The statement of claim alleges and particularises six distinct advertisements (respectively the first to sixth advertisement).

The ACCC alleges that the BLiNG Advertisements were misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act, in that:

25.1.1. represented that any consumer responding to the BLiNG Advertisements would, by sending an SMS message at a standard SMS cost to the premium number 19 44 00, purchase a one-off service, (for example, one ringtone, wallpaper or game), when in fact, the consumer:

25.1.1.1.in sending an SMS to the premium number 19 44 00, requests access to a subscription service charged at premium rates;

25.1.1.2.requires a WAP enabled mobile telephone to receive any service advertised by the BLiNG Advertisements;

25.1.1.3.pays an initial sign-up fee of $4 and a subscription fee of between $4 - $8 per week which are billed to his or her mobile telephone account;

25.1.1.4.incurs standard SMS and data costs levied by his or her telecommunications service provider in addition to the weekly subscription fee; and

25.1.1.5.in order to end his or her subscription, must send an SMS message to the content provider which contains the word "stop"; and

25.1.2. represented that the sounds being made available to consumers to acquire as ringtones were sounds of original recordings of well known songs when in fact the sounds are reproductions of well known songs.

The ACCC alleges, that, further or in the alternative, the BLiNG Advertisements were misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act in that:

26.1.1. failed to disclose or failed sufficiently to disclose that a consumer responding to the BLiNG Advertisements would, by sending an SMS message at a standard SMS cost to the premium number 19 44 00:

26.1.1.1.request access to a subscription service charged at premium rates;

26.1.1.2.require a WAP enabled mobile telephone to receive any service advertised by the BLiNG Advertisements;

26.1.1.3.pay an initial sign-up fee of $4 and a subscription fee of between $4 - $8 per week which are billed to his or her mobile telephone account;

26.1.1.4.incur standard SMS and data costs levied by his or her telecommunications service provider in addition to the weekly subscription fee; and

26.1.1.5.in order to end his or her subscription, need to send an SMS message to the content provider which contains the word "stop"; and

26.1.2. failed to disclose or failed sufficiently to disclose that a consumer responding to the BLiNG Advertisements would by purchasing a ringtone acquire a reproduction of an original song.

ANNEXURE B THE COURT DECLARES THAT:

The Respondent (AMV), while engaged in trade or commerce within Australia or between Australia and a place or places outside Australia, contravened s 52 of the Trade Practices Act 1974 (Cth) (the Act) by causing to be published advertisements, promoting BLiNG Content Services (the BLiNG Advertisements) which: 1.1. represented that any consumer responding to the BLiNG Advertisements would, by sending an SMS message at a standard SMS cost to the premium number 19 44 00, purchase a one-off service, (for example, one ringtone, wallpaper or game), when in fact, the consumer: 1.1.1. in sending an SMS to the premium number 19 44 00, requests access to a subscription service in relation to which an initial sign-up fee of $4 and a subscription fee of between $4 - $8 per week which are billed to his or her mobile telephone account; 1.1.2. requires a WAP enabled mobile telephone to receive any service advertised by the BLiNG Advertisements; and 1.1.3. incurs standard SMS and data costs levied by his or her telecommunications service provider in addition to the weekly subscription fee; 1.2. failed to clearly and prominently bring to the attention of consumers that in order to end a subscription, the consumer must send an SMS message to the content provider which contains the word "stop"; and 1.3. represented that the sounds being promoted by the BLiNG Advertisements for consumers to acquire as ringtones were sounds of original recordings of well known songs when in fact the sounds are reproductions of well known songs.
AMV, while engaged in trade or commerce within Australia or between Australia and a place or places outside Australia, contravened s 53(aa) of the Act by causing the BLiNG Advertisements to be published in connexion with the supply and promotion of Content Services in circumstances where the BLiNG Advertisements made false representations with respect to the particular standard, quality, value or grade of the Content Services being advertised.
AMV, while engaged in trade or commerce within Australia or between Australia and a place or places outside Australia, contravened s 53(e) of the Act by causing the BLiNG Advertisements to be published in connexion with the supply and promotion of Content Services in circumstances where the BLiNG Advertisements made false or misleading representations with respect to the price of the Content Services being advertised.
AMV, while engaged in trade or commerce within Australia or between Australia and a place or places outside Australia, contravened s 53(g) of the Act by causing the BLiNG Advertisements to be published in connexion with the supply and promotion of Content Services in circumstances where the BLiNG Advertisements made false or misleading representations concerning the availability of the Content Services being advertised.

Trade Practices Act 1974(Cth)ss 52, 53

Australian Competition and Consumer Commission v AMV Holding Ltd

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