The Relevant Case Law
22 A representation is misleading if it leads or is likely to lead the person or persons to whom it is made into error (Miller and Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at 368 [15]). That is to say, there must be a sufficient causal link between the conduct and the error on the part of the persons exposed to it (TPG at 651-652 [39]). There is no meaningful difference between the phrases "misleading or deceptive" and "mislead or deceive" as used in s 18(1) of the ACL and "false or misleading" as used in s 29(1)(i) and s 29(1)(m) of the ACL (see Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd (2014) 317 ALR 73 at 81 [40] per Allsop CJ).
23 As the Full Court (French, Heerey and Lindgren JJ) said in SAP Australia Pty Ltd v Sapient Australia Pty Ltd (1999) 169 ALR 1 (SAP) at 14 [51]:
… The characterisation of conduct as "misleading or deceptive or likely to mislead or deceive" involves a judgment of a notional cause and effect relationship between the conduct and the putative consumer's state of mind. Implicit in that judgment is a selection process which can reject some causal connections, which, although theoretically open, are too tenuous or impose responsibility otherwise than in accordance with the policy of the legislation. In some cases there will be a selection process analogous to that which arises under s 82 of the TP Act in a determination of whether or not a claimed loss was caused by a contravention: State Government Insurance Corp at FCR 562.
24 A representation is likely to mislead or deceive if it may be expected to or has a capacity or tendency to mislead or deceive. In such a case, likelihood means a real and not remote chance or possibility of having that effect (Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 at 87 per Bowen CJ, Lockhart and Fitzgerald JJ).
25 Whether an advertisement is misleading is a question of fact to be decided having regard to all of the circumstances of the particular case (Australian Competition and Consumer Commission v Telstra Corporation Ltd (2004) 208 ALR 459 (ACCC v Telstra) at 475 [49] per Gyles J). The Court must form a view as to what message would be conveyed to the target audience (ACCC v Telstra at 475 [49]).
26 At par 18 of its Written Submission in Chief dated 26 November 2014, the ACCC summarised the relevant principles in relation to the publication of advertisements as follows (footnotes omitted):
The relevant principles may be conveniently summarised as follows:
18.1. When considering an advertisement through the eyes of a reasonable consumer, the court must take into account that "an advertisement published to the world at large is designed and calculated to be seen and read by a wide range of persons", especially in the case of internet advertisements;
18.2. The range of persons will include the shrewd and the ingenuous, the educated and the uneducated, the experienced and inexperienced in commercial transactions; it will include the astute, the informed, those who are sceptical and read the small print, those who are intelligent and those who are well informed, and it will also cover many who do not possess those characteristics and those who are less informed and those with average intelligence;
18.3. the question whether or not an advertisement is misleading is to be tested by the effect on a person, not particularly intelligent or well informed, but perhaps of somewhat less than average intelligence and background knowledge;
18.4. the court is not entitled to assume that the reader "will be able to supply for himself or herself omitted facts or to resolve ambiguities", and an advertisement may be misleading even though it fails to deceive more wary readers.
27 I think that the ACCC's summary which I have extracted at [26] above is an accurate summary of some of the relevant principles. I accept that summary as far as it goes.
28 In the present case, the impugned conduct comprises:
(a) Advertisements;
(b) Promotional activity;
(c) The presentation of certain webpages and the structure and layout of an online booking flow or process; and
(d) The presentation of pages on the airlines' mobile sites and the structure and layout of the mobile sites' booking flow or process.
29 Some of the conduct which is criticised is not properly characterised as the publication of advertisements. However, whatever label is placed upon the conduct, it is necessary for the Court, when endeavouring to assess the conduct against the statutory prohibitions, to identify the class of consumers likely to be affected by the conduct (Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 (Puxu) at 199 per Gibbs CJ). It is the "ordinary" or "reasonable" members of that class who must be considered (Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435 (Google) at 443 [7] per French CJ, Crennan and Kiefel JJ) and Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 (Nike) at 85 [102]-[103] per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ). The extremely stupid, the unusually gullible and those whose reactions are extreme or fanciful would not be included. The question is whether a not insignificant number of those persons are likely to have been led into error by the conduct as a matter of inference (Global One Mobile Entertainment Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 134; [2012] ATPR 42-419 at [108] per Greenwood, Logan and Yates JJ).
30 The ACCC submitted that, in the present case, the relevant class of consumers was the public at large.
31 While it is true that the airlines' websites were accessible to all members of the public who had access to the internet, it seems to me that the relevant class of consumers here comprised those members of the public who were interested from time to time in purchasing passage for a particular journey from a low cost airline.
32 The ACCC contended that, without disclosing the existence of the booking and service fee and the terms upon which that fee would be required to be paid, both airlines were likely to mislead reasonable or ordinary members of the class which I have described at [31] above into thinking (erroneously) that fares were available at the prices published on the airlines' websites regardless of which of the available payment methods was chosen by the consumer in any given case.
33 A critical element in the ACCC's argument is the proposition that, by the conduct of each airline, a dominant message was conveyed. The ACCC characterised the means by which that dominant message was conveyed as a "representation". The ACCC said that the substance of the representation must be discerned by considering it in context. That context includes the medium in which the presentation is expressed (Australian Competition and Consumer Commission v Singtel Optus Pty Ltd [2010] FCA 1177 (ACCC v Singtel Optus) at [5] per Perram J). I agree that the alleged contravening conduct must be assessed in context. Whether the present cases should be regarded as falling within the "dominant message" category of cases is a matter of contest. The airlines submitted that the "dominant message" analysis was not apt in the present cases because, unlike advertisements, where the consumer's mind is engaged only fleetingly with the subject matter, the potential purchaser of a cheap air fare will focus carefully on the booking process and tarry at particular points in that process for as long as may be necessary for that purchaser to satisfy himself that he has secured the best available deal. They submitted (correctly) that whether the "dominant message" analysis is apt is essentially a question of fact.
34 In Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 199, Deane and Fitzgerald JJ said:
It is, in the circumstances, unnecessary that we form or express any concluded view on the question whether it is a principle of the law of passing-off that deception must continue, or be likely to continue, to the "point of sale". As a matter of principle and of logic, it is difficult to see why it should be. For the purposes of the present appeal, it suffices to say that, even if such a limitation should be recognized in the law of passing-off, we see no ground for importing it into the provisions of s 52 of the Act. In our view, it is sufficient to enliven s 52 that the conduct, in the circumstances, answers the statutory description, that is to say, that it is misleading or deceptive or is likely to mislead or deceive. It is unnecessary to go further and establish that any actual or potential consumer has taken or is likely to take any positive step in consequence of the misleading or deception. That is not to say that evidence of actual misleading or deception at the point of sale and of steps taken in consequence thereof is not likely to be both relevant and important on the question whether the relevant conduct in fact answers the statutory description and as to the relief, if any, which should be granted.
(See also SAP at 14 [51] per French, Heerey and Lindgren JJ where the Full Court held that conduct may be misleading if it leads a consumer into error even though the true position is disclosed before the transaction is concluded.)
35 At 654-656 [47]-[52] in TPG, French CJ, Crennan, Bell and Keane JJ said:
47 This case is in stark contrast to Puxu in three respects. First, TPG's target audience 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. Here, the advertisements were an unbidden intrusion on the consciousness of the target audience. The intrusion will not always be welcome. The very function of the advertisements was to arrest the attention of the target audience. But while the attention of the audience might have been arrested, 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" [TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 289 [103]]. 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.
48 Secondly, the Full Court did not recognise that the tendency of the advertisements to mislead was to be determined, not by asking whether they were apt to induce consumers to enter into contracts with TPG, but by asking whether they were apt to bring them into negotiation with TPG rather than with one of its competitors on the basis of an erroneous belief engendered by the general thrust of TPG's message.
49 It might be said, as TPG did, that consumers, acting reasonably in their own interest, could be expected to obtain a clear understanding of their rights and obligations before signing up with TPG; but to say that is to confuse the question whether the consumer has suffered loss with the anterior question as to whether the advertisement, viewed as a whole, has a tendency to lead a consumer into error. Thus, in Campbell v Backoffice Investments Pty Ltd [(2009) 238 CLR 304 at 318 [24]; [2009] HCA 25] French CJ noted that the question of characterisation as to whether conduct is misleading is "logically anterior to the question whether a person has suffered loss or damage thereby". French CJ observed that characterisation of conduct "generally requires consideration of whether the impugned conduct viewed as a whole has a tendency to lead a person into error" [Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at 319 [25]]. As observed earlier in these reasons, questions of carelessness by consumers in viewing advertisements may be relevant to that question of characterisation.
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 [Trade Practices Commission v Optus Communications Pty Ltd (1996) 64 FCR 326 at 338-339; SAP Australia Pty Ltd v Sapient Australia Pty Ltd (1999) 169 ALR 1 at 14 [51]; Australian Competition and Consumer Commission v Commonwealth Bank of Australia (2003) 133 FCR 149 at 171-172 [47]. See also Bridge Stockbrokers Ltd v Bridges (1984) 4 FCR 460 at 475]. 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.
51 Thirdly, this 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 [TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 289 [103]], that "many persons will only absorb the general thrust" is to recognise the effectiveness of the selective presentation of information by TPG. The Full Court erred in failing to appreciate the implication of that finding.
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 [Arnison v Smith (1889) 41 Ch D 348 at 369; Gould v Vaggelas (1984) 157 CLR 215 at 252; [1985] HCA 68; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 199, 210-211]. 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.
36 In ACCC v Telstra, at 478 [58], Gyles J said:
One aspect of this branch of the law which can be regarded as settled by authority is that advertising which is misleading is caught by the Act even if the effect of it is, or is likely to be, dispelled prior to any transaction being effected.
(See also Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1 (Cassidy) at 11 [17] per Mansfield J and at 18-19 [43] per Stone J.)
37 To similar effect were the following remarks made by Perram J in ACCC v Singtel Optus at [26]:
Nor, contrary to Optus' submissions, is the misleading nature of the advertisement reduced by the statements Optus makes, or seeks to have made on its behalf, at the point of sale. As I have explained above, when dealing with the objections to the evidence, it is an error to ask whether consumers who purchased the product were misled. This is for practical reasons set out above - the capacity of the advertisement to induce people to begin dealing with Optus (rather than others) without necessarily closing the transaction - and also for the textual reason that s 52 simply does not contain any limitation about what it is that consumers must be misled into doing to contravene the prohibition. Accepting in Optus' favour that some kinds of statements were made to consumers through the sales process and website this does not undo, in this case, the plainly misleading and deceptive nature of the advertisement. In that regard, I have found the evidence about the traffic across the website of little utility. For completeness, I reject also Optus' contention, based on its survey evidence, that the time taken by consumers to make broadband purchasing decisions and their reliance upon on-line and other forms of research means that the advertisement should not be seen as being misleading. This is largely for the reasons already given - it gives no weight to the initial inducement the advertisement provides to head down the path with Optus and puts at nil the negative consequences for consumers and competitors alike of that form of enticement. Of course it is true that the purchase of a broadband plan is a substantial purchase rather than an impulse purchase although even that fact was kept in fairly small print at the bottom of the page. But even so, this is not sufficient to overcome the very misleading nature of the principal message.
38 The ACCC submitted that, where a price is advertised on the home page of a website and there is no disclosure of additional fees which have the effect of increasing the price until the consumer has been drawn into the website and commenced the booking process, the belated disclosure cannot negate or correct the effect of the otherwise misleading price representation on the home page. The ACCC claimed that this submission was supported by the observations of Gordon J in Australian Competition and Consumer Commission v Nonchalant Pty Ltd (In Liq) [2013] FCA 605 at [34]-[35]. I think that the remarks which her Honour made at those paragraphs related specifically to the case with which her Honour was then dealing. Of course, her Honour's observations may be apt to be applied in other cases. Whether that is so will depend upon the particular facts and circumstances of each case. However, I do not think that a principle of general application as wide as the ACCC's submission can be extracted from the authorities.
39 In the case where a headline representation is sought to be qualified by other material, the qualifying material must be sufficiently prominent to prevent the headline representation from being misleading. The degree of prominence required will vary with the potential for the primary statement to be misleading (Cassidy at 17-18 [37]-[41] per Stone J). The overall impression created by the representation must be assessed.
40 In considering the impact of headline representations with qualifying information for the purposes of the New Zealand statutory provisions which correspond with s 18 and s 21 of the ACL, the New Zealand Court of Appeal in Godfrey Hirst NZ Ltd v Cavalier Bremworth Ltd (2014) 3 NZLR 611 (Godfrey Hirst) at 627-628 [59] held that:
In considering whether headline representations such as these breach ss 9 and 13(i) of the Act the following principles should guide a court:
(a) Overall impression: it is the "dominant message" or "general thrust" of the advertisement that is of crucial importance [ACCC v TPG, above n 46, at [45], [51] and [52]; Australian Competition and Consumer Commission v Signature Security Group Pty Ltd [2003] FCA 3, (2003) ATPR 41-908 at [28] [ACCC v Signature Security].
(b) Wrong only to analyse separate effect of each representation: as a corollary from (a), when assessing the mental impression on consumers created by a number of representations in a single advertisement, it is insufficient only to analyse the separate effect of each representation [ACCC v TPG, above n 46, at [52], citing Arnison v Smith (1889) 41 Ch D 348 (CA) at 369; Gould v Vaggelas [1985] HCA 75, (1985) 157 CLR 215 at 252; Puxu (High Court), above n 17, at 199 and 210-11]. The overall impression cannot be assessed by analysing each separate representation in isolation.
(c) Qualifying information sufficiently prominent?: whether headline representations are misleading or deceptive depends on whether the qualifications to them have been sufficiently drawn to the attention of targeted consumers [ACCC v Signature Security, above n 67, at [25]]. This includes consideration of:
(i) the proximity of the qualifying information [ACCC v Signature Security, above n 67, at [26], citing George Weston Foods Ltd, above n 30, at [46]];
(ii) the prominence of the qualifying information [ACCC v Signature Security, above n 67, at [27]; National Exchange Pty Ltd v Australian Securities and Investment Commission [2004] FCAFC 90, (2004) 49 ACSR 369 at [51]-[52] [National Exchange v ASIC]] and
(iii) whether the qualifying information is sufficiently instructive to nullify the risk that the headline claim might mislead or deceive [Medical Benefits Fund of Australia Ltd v Cassidy [2003] FCAFC 289, (2003) ATPR 41-971 at [35]-[41]; Energizer NZ Ltd, above n 10, at [81]].
(d) Glaring disparity: where the disparity between the headline representation and the information qualifying it is great, it is necessary for the maker of the statement to draw the consumer's attention to the true position in the clearest possible way [National Exchange v ASIC, above n 71, at [55], [58] and [62]; ACCC v Signature Security, above n 67, at [27]].
(e) Tendency to lure consumers into error: applying principles (a) to (d), the question for the court is whether the advertisement viewed as a whole has a tendency to entice consumers into "the marketing web" by an erroneous belief engendered by the advertiser, even if the consumer may come to appreciate the true position before a transaction is concluded [ACCC v TPG, above n 46, at [50], citing Trade Practices Commission v Optus Communications Pty Ltd (1996) 64 FCR 326 (FCA) at 338-9; SAP Australia Pty Ltd v Sapient Australia Pty Ltd [1999] FCA 1821, (1999) 169 ALR 1 at [51]; Australian Competition and Consumer Commission v Commonwealth Bank of Australia [2003] FCA 1129, (2003) 133 FCR 149 at [47]; and Bridge Stockbrokers Ltd v Bridges (1984) 4 FCR 460 (FCAFC) at 475]. Enticing consumers into "the marketing web" includes, for example, attracting them into premises selling the advertiser's product. Once a prospective customer has entered, he or she will often be more likely to buy. The misleading advertising would then have contributed to any sale. It must follow that rival traders would also have been prejudiced, although protecting them is not the aim of ss 9 and 13 [Trust Bank Auckland v ASB Ltd [1989] 3 NZLR 385 (CA) at 389; Commerce Commission v Noel Leeming Ltd HC Christchurch AP196/96, 21 August 1996 at 4-5; Zennith Publishing Ltd v Commerce Commission HC Auckland AP139/98, 20 November 1998 at 11-12; Taco Company of Australia Inc, above n 6, at 197-199; Commerce Commission v ABC Motor Group [2005] DCR 262 (DC) at [10]. That consumers could be expected to understand fully the limitations of the warranties by the time they actually purchased a carpet is no answer to the question whether the advertisement was misleading.
41 I find this distillation of appropriate guidelines most helpful. I intend to consider the present cases with these guidelines in mind.