Australian Competition & Consumer Commission v Virgin Mobile Australia

REASONS FOR JUDGMENT 1 These proceedings were commenced by the Australian Competition and Consumer Commission ("ACCC") by application and statement of claim filed in the Court on 3 May 2002. In the application the ACCC claims various forms of injunctive, declaratory and ancillary relief, including corrective advertisements, cancellation of agreements and refunds and probation orders, against Virgin Mobile Australia Pty Ltd ("Virgin Mobile") arising out of the advertising of mobile phone services. It is alleged in the statement of claim that various advertisements, of which some twenty seven are identified, were published in the period from October 2001 to March 2002 and have breached ss 53C, 52 and 53 of the Trade Practices Act 1976 (Cth). The substance of the complaint goes to representations said to have been conveyed by the advertisements about the cost of particular agreements in relation to the use of Nokia telephones. 2 A defence was filed on 16 July 2002. On the defence as it presently stands much of the statement of claim is admitted. It is said, however, that the provision of the telephone and services packages advertised was subject to numerous terms and conditions and that before consumers entered into agreements to obtain such packages, those terms and conditions were provided and/or otherwise made available or notified to them. The characterisation of the advertisements as misleading or deceptive or otherwise in breach of provisions of the Act is denied. 3 The pleadings as they presently stand suggest a fairly limited area of factual inquiry at the trial. However, senior counsel for Virgin Mobile has indicated that it is likely the defence will be amended to bring in contentions relating to the system for the marketing and sale and the context in which representations complained of were made and that this will involve witness testimony. 4 On 1 August 2002, a notice of motion was filed seeking an order that the proceedings be transferred to the New South Wales District Registry of the Court at Sydney pursuant to s 48 of the Act and that, in the alternative, the trial of the proceedings be held at Sydney pursuant to O 30 r 6. The directions that were given on 15 July 2002, required the filing of a defence, which has been done, and the filing and serving of answers or objections to a request for further and better particulars in the statement of claim, which has also been done. There was a further direction that on or before 19 August the respondent provide discovery on affidavit of specified classes of documents except to the extent that such discovery was rendered unnecessary by agreements as to facts or documents between the parties. Inspection was to be carried out by 25 August. This was against the background of a further direction that any motion to transfer the proceedings was to be filed and served by 29 July with a return date today. The proceedings have reached the stage at which discovery is in preparation but there are endeavours being made to reach an agreement as to facts so that the extent of discovery may be limited. However, the parties are unable to indicate how extensive the discovery will be. 5 In support of the motion for transfer there has been filed an affidavit by Mr Maskell, an employed solicitor at Baker and McKenzie, who are the solicitors for Virgin Mobile. They have their offices in Sydney and Melbourne. It is said that they were instructed to act for the respondent in these proceedings and in respect of discussions which took place between the ACCC and Virgin Mobile prior to the commencement of these proceedings. 6 Virgin Mobile is a company registered in New South Wales. Its principal place of business is located at Pitt Street in Sydney. It carries on the business of retail supply of mobile telephones and mobile telephone services. During the period from October 2001 to the date of swearing of the affidavit it conducted its business by way of its own retail outlets, telephone sales, the retail outlets of unrelated companies who act as its agents, also known as affinity partners, and through its Web site. 7 The retail outlets which are owned by the company are at three locations in Sydney and at Cheltenham, Melbourne and South Yarra in Victoria. Telephone sales are conducted from a call centre located at the company's principal place of business in Sydney. The retail outlets which act as agents or affinity partners are also listed. There is a long line of names which include Kmart, Coles, Harvey Norman, David Jones, Tandy and a number of others. The Web site is administered by Virgin Mobile from its principal place of business. According to the affidavit the purpose of the agency arrangements is to allow the company to promote and sell its goods and services to consumers throughout Australia without having to establish retail outlets of its own in every state and territory. I take it therefore that the nature of the marketing operation is national in its scope. Virgin Mobile does not have its own retail outlets in Western Australia but promotes and sells its goods and services through affinity partner arrangements there. 8 The advertisements complained of are said to be concerned with offers by Virgin Mobile to consumers to join what is called the Dial High Club. That is a package offer that was launched in September 2001. It is said to be based on customers spending a minimum amount per month on mobile telephone calls and/or short message services. The customer may purchase a mobile telephone from Virgin Mobile or use the customer's own phone. There is a variety of different packages available as part of the Dial High Club. 9 The approximate percentages of Dial High Club members located in each State and Territory are set out in the evidence and of those 40 per cent are located in New South Wales and 13 per cent in Western Australia. It is said that in causing the publication of the advertisements which are referred to in the statement of claim Virgin Mobile engaged a number of businesses to do creative art work, advertising and media services. They are all located in New South Wales, although I interpolate that, on the face of the pleadings, it is not at all apparent that that has any bearing on any issue likely to be agitated before the Court. At the date of swearing the affidavit also, Virgin Mobile employs 298 people as full-time employees, 20 part-timers, 4 as contractors and 25 casuals. All of those people perform their roles from the principal place of business in Sydney or from the retail outlets and call centres located in Sydney and in Victoria. 10 It is said that Virgin Mobile intends to file and serve statements of evidence from at least two employees in its sales department to demonstrate the systems and procedures for the entire sales process. That includes all steps from an initial inquiry by a potential customer to the execution of an agreement with that customer. In addition, it also expects to file and serve evidence about the cost of some of the relief sought by the ACCC, such as corrective advertising, notices to affected consumers and a proposed community service order. This would be provided by persons from a supplier of the relevant service in Sydney - for example, from an advertising agency. 11 As to the first matter, that is evidence to demonstrate the systems and procedures for the entire sales process, it appears from the submissions that were made by counsel for Virgin Mobile, and certainly is consistent with my own reading of the pleadings, that that evidence is only likely to be relevant in the context of an amendment to the defence. However, I accept, for the purposes of this motion, that such an amendment will be made. 12 In the submissions made by Virgin Mobile in support of the application for transfer, it refers to the fact that its principal place of business is in Sydney. It has engaged solicitors in Sydney to provide advice about its response to the initial complaint. The relevant documents to be reviewed in order to comply with the order for discovery are held in New South Wales. The conduct complained of is national conduct with a preponderance, if at all, in New South Wales. The ACCC and its solicitors have offices in Perth and Sydney. Virgin Mobile's defence will require evidence to be given as to all of the relevant conduct to establish the circumstances in which customers entered into agreements with it in order to determine whether they were misled. The witnesses who can give evidence as to the systems and procedures concerning the information provided to customers before any agreement was made reside in New South Wales. Virgin Mobile intends to adduce evidence as to the costs of complying with the orders which the ACCC seeks. In those circumstances, it is said there is no particular connection with Western Australia and if the proceedings are not transferred Virgin Mobile will be burdened with increased costs and witnesses will be required to travel to Perth. 13 The ACCC has filed an affidavit sworn by Cherie Susanne Noye, an assistant director of the Perth regional office. It refers to the nature of the advertisements and the sales which are the subject of the application. The majority of the advertisements are said to have been broadcast nationally within Australia. There are annexures and reference to the scope of that advertising to support that proposition. Within the ACCC if proceedings are commenced the office that investigates the alleged breach of the Act will usually commence and conduct the proceedings relating to that alleged breach subject to the conduct having some connection with the State in which proceedings are commenced and, the ACCC accepting that, it is appropriate for the office to run the proceedings. 14 The Perth office of the ACCC investigated the alleged breaches of the Act, and on 24 April the ACCC decided to commence proceedings and instructed the Perth office to take steps to that end. The Perth office has spent time and resources investigating and handling the matter. It was considered the appropriate office to commence and conduct the proceedings. If the proceedings are moved to another State the ACCC will have to have its officers in Sydney familiarise themselves with the matter. The solicitors for the ACCC are the firm of Phillips Fox which is a franchise of a national partnership. If the proceedings are transferred there will be a substantial cost, it is said, to the ACCC in briefing new solicitors. 15 The application is made under s 48 of the Federal Court of Australia Act 1976 which provides: "The Court or a Judge may, at any stage of a proceeding in the Court, direct that the proceeding or a part of the proceeding be conducted or continued at a place specified in the order, subject to such conditions (if any) as the Court or Judge imposes." In O 10 r 1(2)(f) provision is made for the Court to: "direct that the proceeding be transferred to a place at which there is a Registry other than the then proper place. Where the proceeding is so transferred, the Registrar at the proper place from which the proceeding is transferred shall transmit all documents in his charge relating to the proceeding to the Registrar at the proper place to which the proceeding is transferred;" The leading authority governing the discretion to transfer is the judgment of the Full Court in National Mutual Holdings Pty Ltd v Sentry Corporation (1988) 19 FCR 155, and at page 162 it is said inter alia: "The Court must, however, be satisfied, after considering all relevant matters, that there is sound reason to direct that the proceeding be conducted or continued elsewhere. Its starting point is that the proceeding has been commenced at a particular place. Why should it be changed? On the one hand, if the party who commenced the proceeding chose that place capriciously the Court would be justified in giving no weight to the choice of place. At the other end of the scale, a proceeding may have continued for some time at the place of commencement with many steps having been taken there, for example, filing of pleadings and affidavits, discovery and inspection. Due weight would be given by the Court to such matters before directing that the proceeding should continue at a different place." I was referred to particular authorities, including the judgment of Mansfield J in BWK Elders (Australia) Pty Ltd v Westgate Wool Company Pty Ltd (No 6) [2002] FCA 807, which tended to focus on the circumstances surrounding the legal representation for one of the parties and the decision of O'Loughlin J in Australian Competition & Consumer Commission v Pauls Ltd [2002] FCA 71, which I was invited to conclude was incorrect insofar as it followed Cycles & Wheelmen Pty Ltd v Beltech Corporation Ltd (1988) 80 ALR 279. 16 In the exercise of this kind of discretion detailed analysis of prior decisions which turn on their own facts is generally unrewarding. There is a danger in doing so that one ends up encrusting the discretion with all manner of rules or guidelines when it is plainly a discretion to be exercised having regard to considerations of sound case management, the national character of the Court and practical considerations including the convenience of the parties. One other case to which I would make passing reference is Australian Competition and Consumer Commission v Internic Technology Pty Ltd (1998) ATPR 41-646, a judgment of Lindgren J given on 14 July 1998. There a representative proceeding involving alleged misrepresentations on the Internet was instituted by the ACCC in Sydney. The respondent sought transfer to the Victorian District Registry in Melbourne, being its place of residence and the location of its witnesses. The ACCC gave evidence that although it was a national body interrelated matters were dealt with in Canberra with Sydney as its closest centre. Lindgren J found the issue finely balanced but decided against transferring. That is an indication of how fine the judgments can sometimes become in this kind of case. 17 Having had regard to the evidence and considered the pleadings, I observe that Virgin Mobile conducts a national operation which extends to and through retail outlets in Western Australia. On the present state of the pleadings there is little dispute as to factual matters, but I accept that there is likely to be introduced, pursuant to an amendment to the defence, evidence from at least two employees of Virgin Mobile in Sydney as to the system surrounding the implementation of contracts and agreements relating to the so-called Dial High Club. I am not able to put much weight one way or the other on the issue of discovery. The full scope of discovery is not yet resolved as the parties have not concluded the process of determining whether or not and to what extent they are going to be able to reach an agreement as to facts which may limit the need for discovery. 18 The location of Virgin Mobile's solicitors in Sydney is a matter to which I am not inclined to give great weight. In today's world of electronic communications there has been a virtual shrinkage of the distance between urban centres in Australia for the purpose of the effective operation of this kind of litigation. That shrinkage is made possible by the Internet and by email and other forms of electronic communication including video‑link. The inconvenience which is said to accompany the need to defend an action in Perth with solicitors, albeit from an international firm based in Sydney, does not weigh greatly in the balance, and in fact I am not satisfied that any significant inconvenience is demonstrated. 19 The choice of location by the ACCC was not capricious and it is not suggested that it was. The Perth office had the conduct of the initial investigation. Whether that was because of a local complaint or because of an allocation of a task involving a national marketing operation to the Perth office by the ACCC headquarters in Canberra does not appear and is really neither here nor there. 20 At the present time. I am not satisfied that any reason has been demonstrated which would justify me in ordering the transfer of the proceedings to Sydney. Having said that, I have regard to the flexibility that the Court has in giving directions both as to venue of the trial in whole or in part and also the possibility of receiving evidence from witnesses via video‑link. The latter, of course, is an option which will depend very much upon the parties' assessment of the importance of judgments as to credibility where such witnesses are concerned, which may be more difficult where examination or cross‑examination is conducted by video‑link than otherwise. However, those practical steps which might need to be taken further down the track in relation to the place of taking of some or all of the evidence and whether or not a video‑link is necessary can be determined when the practical issues affecting the conduct of the trial have crystallised, and that will only happen when the pleadings have reached their final state and all the affidavits have been filed. I propose therefore to dismiss the motion. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French.