The relevant class and the likely characteristics of persons comprising it
127 Where, as in the present case, the impugned conduct or representation is directed to the public generally or a section of the public, the question as to whether the conduct is misleading or deceptive or likely to mislead or deceive, or the representation false and misleading, must be approached by the Court considering the likely characteristics of the persons who comprise the class to whom the conduct or representation is directed, and the likely effect of the conduct or representation on a hypothetical ordinary or reasonable member of the class, disregarding reactions that might be regarded as extreme or fanciful: Puxu at 199; Campomar at [102]; Google Inc at [7]; TPG FFC at [22].
128 Identifying an ordinary or reasonable member of the class of business owners involves "an objective attribution of certain characteristics" against the background of the membership of the class: Campomar at [102]. It is necessary to "isolate by some criterion a representative member of that class" and determine whether the misconceptions or deceptions alleged to arise, or to be likely to arise "are properly to be attributed to the ordinary member of the [class]": Campomar at [103] and [105].
129 In the present case the target audience of the impugned advertisements, and thus the relevant class for the purpose of identifying a hypothetical ordinary and reasonable class member, is business owners who are employers and who search for employment-related advice on the internet.
130 The primary judge recognised (at TJ [273]) that the alleged representations must be viewed through the prism of an ordinary or reasonable member of the class of business owners. It is clear from that and other passages that his Honour understood that it was necessary to determine and attribute to the ordinary or reasonable class member the likely characteristics of the persons comprising the class. For example, his Honour found (at TJ [274]) that an ordinary or reasonable business owner should be attributed with "some knowledge of basic features of the internet and the Google search engine and its operations…"
131 However, as we later explain, we consider the primary judge erred by attributing to the ordinary or reasonable business owner too high a level of shrewdness or wariness, digital literacy, and/or commercial sophistication; and also erred in the view he reached as to the level of attention or scrutiny that the ordinary or reasonable business owner was likely to give to the advertisements. Then, having done so, the primary judge appeared to conceive that there was only one "reasonable" reaction to the Google Ads; being that an ordinary or reasonable business owner taking reasonable care of his or her own interests would have discerned that each of the Google Ads was an advertisement for privately provided employment-related advice which was not associated with any government agency. In our respectful view the primary judge erred in that reasoning and that conclusion.
132 First, we have no difficulty in accepting Employsure's contention that the ordinary or reasonable business owner should be attributed a higher level of shrewdness, acumen, digital literacy and/or commercial sophistication than that of the public at large. That is so because the class comprises persons with sufficient acumen to own and operate a business with employees. But that does not take things very far in regard to the level of such characteristics that should properly be attributed to the ordinary or reasonable business owner.
133 The class of persons who own businesses and have at least some employees encompasses a wide cross-section of the public, which includes a broad range of individuals running a vast range of businesses. The class is inherently heterogeneous and the characteristics of an ordinary or reasonable class member must take into account its diversity.
134 The evidence also shows that: (a) the majority of Employsure's customer base were small businesses; (b) Employsure's "Tier 1" service was expressly designed for businesses with five or less employees; (c) Employsure had been informed by one of its consultants that, based on ABS data, English may not be the first language of about 30% of business owners and operators (although the evidence does not establish the truth of that); and (d) Mr Mallett said that Employsure was established on the premise that small to medium enterprises can require external employment relations support. Finally, we would infer from the fact that the person is seeking employment-related advice on the internet that the business of the ordinary or reasonable class member is not large enough to have its own human resources expertise. In our view it is likely that the class includes many quite small businesses.
135 Small businesses with five or less employees will include, for example, tradesmen and women, corner stores, small hairdressing salons and barbershops, small shops and cafes, and small courier businesses. We do not accept that running such a business necessarily requires that the owner be intelligent or shrewd, have a high level of acumen, be digitally literate or commercially sophisticated, or have any amount of experience in running a business, particularly when one keeps in mind that the Google Ads were not published only to business owners who ran their businesses well. Some small businesses are the first attempt by the owner to begin trading and he or she may have no or limited exposure to employment issues. In addition, the owners of some small businesses will not have English as his or her first language.
136 The authorities provide that advertisements published to a broad cross-section of the community must be considered through the eyes of an ordinary or reasonable member of the target audience. The consideration must take into account that the advertisements were intended to be seen and read by a wide range of business owners, including those who are intelligent or shrewd and those who are gullible; the wary and the unwary; those who are well educated and those who are not; those who have a good facility in English and those who do not; those who are experienced in running business and those who have less or no prior experience; and those who are digitally competent or commercially sophisticated and those who are not. An advertisement may be misleading even if it fails to deceive the intelligent, the shrewd, the wary, the well-educated, the experienced, the digitally competent or commercially sophisticated: CRW Pty Ltd v Sneddon [1972] AR (NSW) 17 at 28 (Sheldon and Sheppard JJ) cited with approval in Coles Fresh Bread at [46]; Tobacco Institute at [49]-[50] (Hill J); Telstra Corporation Limited v Cable and Wireless Optus Limited [2001] FCA 1478 at [21]-[25] (Goldberg J).
137 What constitutes an extreme, fanciful or unreasonable reaction to an advertisement must be informed by the characteristics of the relevant class, and is specific to the particular facts of the case. What is a "reasonable" reaction will depend upon all the circumstances: Puxu at 199 (Gibbs CJ). In National Exchange Pty Ltd v Australian Securities and Investments Commission [2004] FCAFC 90; (2004) 49 ACSR 369 at [24], cited with approval by the Full Court in TPG FFC at [23(f)], Dowsett J (with whom Jacobson and Bennett JJ generally agreed) explained:
Whilst it is true that members of a class may differ in personal capacity and experience, that is usually the case whenever a test of reasonableness is applied. Such a test does not necessarily postulate only one reasonable response in the particular circumstances. Frequently, different persons, acting reasonably, will respond in different ways to the same objective circumstances. The test of reasonableness involves the recognition of the boundaries within which reasonable responses will fall, not the identification of a finite number of acceptable reasonable responses.
138 To similar effect, in National Exchange (at [67]-[68]) Jacobson and Bennett JJ approved the well-known passage in Taco Bell at 202 where their Honours referred (at [67]) to "the need to consider the question of whether conduct is misleading by reference to all those who come within the class including the astute and the gullible". Their Honours noted (at [68]) that in Campomar at [102]-[103] the High Court:
…referred to the attribution of characteristics to the ordinary or reasonable members of the class and to the need to isolate the hypothetical member of the class who has those characteristics. The attribution is to be objective in order to allow for the wide range of persons who would, in fact, make up the class. It is also to allow for unreasonable reactions of members at either end of the spectrum which makes up the class.
139 In Domain Names Australia Pty Ltd v .au Domain Administration Ltd [2004] FCAFC 247; (2004) 139 FCR 215 at [26] (Wilcox, Heerey and RD Nicholson JJ), cited with approval in James Hardie Industries NV v Australian Securities and Investment Commission [2010] NSWCA 332; (2010) 274 ALR 85 at [88] (Spigelman CJ, Beazley and Giles JJA)), where the Full Court said:
The attribution of characteristics to the ordinary and reasonable members of the class must be objective in order to allow for the wide range of persons who would in fact not make up the class: National Exchange at [68]. Within a large class there may be a number of subclasses of ordinary and reasonable people. Thus in the present case there may be ordinary and reasonable persons who were well informed about the Internet and the domain name registration system and other persons, equally ordinary and reasonable, who were not.
140 In relation to the approach to be taken in s 18 cases when gullibility of class members is relevant, the primary judge referred with approval (at TJ [242]) to the observations of Colvin J in Australian Competition and Consumer Commissioner v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 3) [2019] FCA 72; (2019) 368 ALR 441 at [622]-[623]. In our respectful view the primary judge did not, however, apply that approach. We say that because Colvin J said (at [623]):
If the audience for the conduct in issue comprises the less educated, the gullible or those prone to misconceptions then a determination as to whether the conduct is misleading or deceptive is to be undertaken in that context. The legislation does not afford protection for a member of the audience who responds unreasonably, but unreasonableness is to be evaluated having regard to the characteristics of the audience members in the particular case.
141 We consider the primary judge's consideration of whether the Google Ads conveyed the Government Affiliation Representations failed to properly take into account the broad range of persons in the target audience of the advertisements and their diversity, and that with such a broad and diverse class a range of responses may be "reasonable".
142 Second, the primary judge erred in the view he reached as to the level of attention and scrutiny that an ordinary and reasonable business owner taking reasonable care of his or her own interests would give to the advertisements.
143 The primary judge's erroneous approach can be seen (at TJ [240]) in his reference to the observations in Puxu by Gibbs CJ (at 199) and Mason J (as his Honour then was) (at 209-211). Gibbs CJ observed that the burden imposed by s 52 of the TPA (and now s 18 of the ACL) "cannot have been intended to be imposed for the benefit of persons who fail to take reasonable care of their own interests". Mason J reasoned (at 210-211) that whilst it was unlikely that an ordinary purchaser of domestic furniture would notice the very slight differences in the appearance of the two relevant items of furniture in that case, nevertheless such a prospective purchaser could reasonably be expected to attempt to ascertain the brand name of the particular type of furniture on offer. His Honour said (at 209) that with "furniture of this price range in the order of $1,500 for a three-piece lounge suite one would in the ordinary course expect persons within the admittedly wide range of potential purchasers to exercise somewhat more vigilance than may be the case for the purchase of items of less financial significance having less impact on the appearance of the home".
144 In reference to those observations the primary judge said:
(a) (at TJ [240]):
…I consider that these observations are particularly apposite (by way of analogy) with the facts and circumstances in the present proceeding where the relevant class of consumers is business owners, including small business owners, who use the internet to seek employment related advice.
(Emphasis added.)
(b) (at TJ [281]):
…a reasonable business owner who wished to contact the FWO or FWC or other similar government agency would be expected to take reasonable steps to verify that they are calling the correct number. The point is well illustrated by Puxu and the observations of Mason J which are set out at [240] above. The object of the consumer protection provisions is not to protect persons who do not take reasonable steps in their own self-interest. As already highlighted, the Google Ads indicate on their face that they are an advertisement and from a body which, at the very least, does not clearly identify itself as a government agency.
(Emphasis added.)
145 The facts of the present case are, however, starkly different to those in Puxu and we consider the primary judge erred in treating Puxu as particularly apposite to or analogous to the present case. As French CJ, Crennan, Bell, and Keane JJ said in TPG HCA (at [46]):
Puxu was a case in which the claim of misleading conduct rested "solely on the fact that the appellant sold goods which were virtually identical in appearance to those sold by the respondent." The case was determined on the basis that potential purchasers of furniture costing substantial sums of money were able to inspect the furniture which was on display in the retailer's showroom. The majority of the Court took the view that purchasers would, acting reasonably, pay attention to the label, brand or mark of the suite they were minded to buy and, as a result, would not be misled by similarities in the getup of rival products.
The plurality said that it was in that particular context that the observations of Gibbs CJ, that the section was not intended for the protection of people who "fail to take reasonable care of their own interests", should be understood.
146 The purpose of each Google Ad, placed as it was at the top of the list of search results, was to arrest the attention of a business owner conducting an employment-related internet search and to have them contact Employsure by clicking on the hypertext or calling the telephone number (in relation to those advertisements in which a telephone number was provided). We accept that this case is not the same as TPG HCA as there is no question about whether qualifications in the advertisements are sufficiently prominent to dispel an express statement or dominant message. But what the plurality in TPG HCA said about the level of attention and scrutiny a consumer is likely to give to advertisements remains relevant. As in TPG HCA (at [47]), the audience of business owners in the present case who made a Google search in response to which one of the Google Ads appeared "did not consist of potential purchasers focused on the subject matter of their purchase in the calm of the showroom to which they had come with a substantial purchase in mind". The Google Ads also appeared in circumstances where Mr Mallett accepted that many small business owners who contacted Employsure fell into "what might be described as the urgent category", who may have "need[ed] immediate help" (at TJ [268]).
147 To adopt the words of the plurality in TPG HCA at [47]:
…while the attention of the audience might have been arrested [by the advertisement], it cannot have been expected to pay close attention to the advertisement; certainly not the attention focused on viewing and listening to the advertisements by the judges obliged to scrutinise them for the purposes of these proceedings. In such circumstances, the Full Court rightly recognised that "many persons will only absorb the general thrust." That being so, the attention given to the advertisement by an ordinary and reasonable person may well be "perfunctory", without being equated with a failure on the part of the members of the target audience to take reasonable care of their own interests.
(footnote omitted)
It is the impression or thrust conveyed to a viewer, particularly the first impression, that will often be determinative of the representation conveyed: Tobacco Institute at 4; Telstra v Optus at 523-524; Singtel Optus at [38]; TPG first instance at [38] approved in TPG HCA at [47].
148 In our view the ordinary or reasonable business owner presented with the Google Ads was unlikely to have noticed or paid much attention to those features of the advertisements and their context that Employsure sought to rely upon to argue that they did not convey the Government Affiliation Representations. An ordinary or reasonable business owner taking reasonable care of his or her own interests may have given only perfunctory attention to the advertisement and, if interested in receiving free advice, may have immediately responded to the "call to action" by clicking on the hypertext or calling the telephone number, rather than carefully scrutinising the advertisement so as to pick up and attach significance to those parts.
149 We consider the primary judge erred by equating the level of attention and scrutiny required of an ordinary or reasonable business owner in relation to the Google Ads to be seen as having taken reasonable care of his or her own interests, with that of a prospective purchaser of expensive furniture (as in Puxu).
150 Nor did the tendency of Google Ads to lead the ordinary or reasonable business owner into error arise because he or she might be disposed, independently of Employsure's conduct, to attend closely to some words of the advertisement and to ignore others. In large part it arose because:
(a) Employsure's use of "keywords" meant that the advertisements' headlines said either "Fair Work Ombudsman Help - Free 24/7 Employer Advice", "Fair Work Australia - Free Fair Work Advice - fairworkhelp.com.au" or "Fair Work Commission Advice - Free Employer Advice", in blue font, in the largest and most prominent typeface in the advertisement; and
(b) the advertisements omitted any reference whatsoever to Employsure. They did not state anywhere that the free help or advice offered in the headline was, in fact, not to be provided by the named government agency but by some (unnamed) private entity.
151 To again use the words of the plurality in TPG HCA (at [52]), the impression conveyed to ordinary or reasonable business owners that the free advice was to be provided by the named government agency, or by some other entity affiliated with that agency, was not "a consequence of selective attention or an unexpected want of sceptical vigilance on their part; rather, it was an unremarkable consequence of [Employsure's] advertising strategy". In our view the primary judge erred in failing to recognise the effectiveness of Employsure's marketing strategy in relation to the presentation of information in the Google Ads.