Budget Rent-A-Car System Pty Ltd v. Kay Rent-A-Car Pty Ltd [1985] FCA 212

Federal Court of Australia|1985-05-24|Before: Northrof J, Northrop J

The applicant is a corporation which, for many years, has carried on the business of, inter alia, renting motor vehicles including cars, vans and trucks under the name "Budget". Hereinafter the applicant will be referred to as "Budget". The respondent is a corporation which, for many years, has carried on the business of, inter alia, renting motor vehicles including cars, vans and trucks under the name "Hertz". Hereinafter the respondent will be referred to as "Hertz". Over many years, Budget and Hertz together with a

small number of other companies, have been keen competitors

In 1985, Budgct proposes to carry on under and by reference to the name "Budget", the business of providing Chauffeur driven hire cars to the public. With that object in view, Budget has applied for and has obtained the appropriate licences under Victorian State legislation to enable it to carry on that business in Melbourne. It is carrying on that type of business in Perth. It proposes' to carry on that type of business in other capital cities. Hertz has no licences under State legislation enabling it to engage in the business of providing chauffeur driven hire

Since October 1984, Hertz has had on display from its desks at airports, pamphlets advising a chauffeur drive service. This pamphlet has been available to the public from those desks and also from travel agents to whom Hertz had supplied copies of the pamphlet. A similar pamphlet had been distributed in similar ways since October 1983, but had become out of print. On the front of the current pamphlet there is depicted a Mercedes motor car with a New South Wales hire car number plate witha " uniformed chauffeur standing alongside the front passenger door. The chauffeur is standing beneath a Hertz identification sign. At the top of the front page in bold type are the words "Hertz Chauffeur

Drave". At the bottom of the front page is the Hertz sign.

On the top of the reverse side of the pamphlet in bold type are the words "A Hertz Class Service that costs less than it looks." The following information is then set out:

"You fly first class in the air, because you expect better service and more comfort.

Now you can travel first class on the ground with Hertz Chauffeur Drive and receive all the service and comfort you deserve.

It's easier than standing in line for a taxi and gives you more time to prepare notes for an important meeting.

And because you're charged by the hour, in the end it could cost less than you think.

As you'd expect from such a prestigious service, it's only available on the most prestigious cars, the "S" Class Mercedes, "SEL" Class Mercedes and the Rolls-Royce Silver Shadow.

Hertz Chauffeur Drive is also an ideal way to welcome a visiting V.I.P., launch a new promotion or top off a special occasion like anniversaries or birthdays.

For bookings at all capital city areas phone (008) 33 1333 (local call fee only), or in Melbourne (03) 347 3322." At the bottom of the reverse side of the pamphlet is a Hertz

sign and the words "Kay Rent-A-Car Pty. Ltd. (Inc. in Vic.)".

Budget commenced theSe proceedings on 29 March 1985. Budget claimed that in distributing the 1984 pamphlet,

Hertz, in contravention of section 52 of the Trade Practices

Act 1974 ("the Act"), was engaging in conduct that was misleading or deceptive or was likely to mislead or deceive. Budget sought interlocutory relief restraining Hertz from distributing the 1984 pamphlet and from advertising to the effect of the material contained in that pamphlet. The

motion for interlocutory relief came on for hearing on 1 and

2 April 1984. During the course of the hearing of the

motion, it became apparent that the real issue between the

parties involved a determination of the question whether the service advertised by Hertz was in contravention of section 52 of the Act when the service was not provided by a motor vehicle owned by Hertz and where the chauffeurs driving those vehicles were not employed by Hertz. As a result, on 2 April 1985, the parties agreed that the Court should treat the

motion as the trial of the action. As a result, much of the

In addition to the facts already stated, the following facts are found. Hertz provides the Hertz Chauffeur Drive service pursuant to agreements entered into between Hertz and other corporations which provide a chauffeur hire car service under the name "Astra". The service is provided in each capital city. Under the service, where a potential client seeks the Hertz Chauffeur Drive service, Hertz arranges for Astra to provide the car and chauffeur. The actual service is provided by Astra. The service is not limited to journeys to or from airports, but extends to include other commencing and terminating points. When the service is provided, the account for the service 15s

directed by Hertz to the client and the client pays Hertz.

The chauffeurs are provided with Hertz account books which are signed by Hertz account holders. If the client pays the chauffeur direct, a receipt should be given in the name of Hertz, but it may be given in the name of Astra. Astra for

instance, does not accept Bankcard, but Hertz does. The

amount charged by Hertz is the same as the normal Astra charge. Hertz does not advertise the name Astra when arranging this service. This is provided for in the agreements. To the uninitiated, neither the appearance of the hire car, nor the uniform of the chauffeur suggests that the car is owned by Hertz, or for that matter, by Astra, or that the chauffeur is an employee of Hertz, or for that matter, an employee of Astra, 1f in fact that is the case. By internal directions, the staff of Hertz are required to offer and provide the Hertz Chauffeur Drive service in a manner that does not disclose the name Astra. Astra, on the other hand, is required to encourage its clients seeking to make use of a rent~-a-car, to seek the service of Hertz. It is fair comment that under its agreements with Astra, Hertz is obtaining the use of a chauffeur driven hire car without having to obtain licences to enable it to do so lawfully. Normally this service is limited to clients who have an

account with Hertz, but can be provided to any person.

The essential feature of the complaint by Budget is illustrated by its application. By paragraph 2(a) of its application, Budget is seeking injunctions restraining Hertz from making statements in the terms or to the effect of

"(1) Hertz is providing tao the public its own chauffeur drive hire car service;

(ii) The "Hertz Chauffeur Drive" service is a modern first class exclusive and prestigious service which is only available to the

(2ii) The "Hertz Chauffeur Drive" service is constituted by chauffeurs, cars and services

(iv) The "Hertz Chauffeur Drive" service has the same reliability quality repute and goodwill as the Hertz car rental service;

persons seeking chauffeur drive vehicles from Hertz are the "S" Class Mercedes, "SEL"

Class Mercedes, and the Rolls Royce Silver Shadow."

The essential feature of the complaint by Budget is that

This complaint is made clear by a reference to parts of paragraphs 4 and 5 of the statement of claim. Paragraph 4 alleges that the terms of the 1984 pamphlet contain representations in the terms or to the effect of the representations set out in paragraph 2(a) of the application.

Under paragraph 5 of the statement of claim, Budget alleges

"(a) The "Hertz Chauffeur Drive" service was provided by Astra Hire Cars;

(b) The "Hertz Chauffeur Drive" service was not provided by Hertz;

(c) The "Hertz Chauffeur Drive" service constituted no more than a booking facility provided by Hertz to the public for the booking of Astra Hire Cars;

(d) Any member of the public could at any time book an Astra Hire Car with an Astra

(f£) The "Hertz Chauffeur Drive" service was not constituted by chauffeurs cars and the services of Hertz;

(g) The "Hertz Chauffeur Drive" service was constituted by chauffeurs cars and the services of Astra Hire Cars; ..."

The material before the Court does not support any claim based on paragraphs 2(a)(iv) and (v) of the application and the corresponding paragraphs 4(d) and (e) of the statement of claim and nothing further need be said about

Counsel for Budget made a detailed examination of the 1984 pamphlet. It is accepted that in law, a person cannot operate a chauffeur driven hire car service without having obtained a licence under relevant State legislation. Counsel contended that on a consideration of the whole of the pamphlet, the impression conveyed is that there is a unity of identity between Hertz and the person responsible for the day to day control, administration, conduct and provision of the chauffeur driver service. Implicit in this contention is that Hertz has the necessary State licences to conduct those services. Counsel contended that the pamphlet advertised that Hertz was responsible for the operation and conduct of the chauffeur drive hire car service. He contended that those representations were all false and thus contravened

The contentions made on behalf of Budget are not accepted. The pamphlet is directed to persons who normally would fly first class and on arrival at an airport, would seek a similar first class service of travel by road. It is directed also to persons who would tend to travel first class 1f travelling by air. As an alternative toa rent-a-car,

i.e. a self-drive car, Hertz offers persons coming within

this class, an alternative service, namely, a chauffcur drive service. In my opinion, the words in the pamphlet "Hertz Chauffeur Drive" are descriptive of the service being

offered, a service being offered by Hertz. There is no room

for an inference or an implication that the cars so provided are owned by Hertz and that the chauffeurs driving those cars are employed by Hertz. There is no room for an inference or amplication that Hertz 1s responsible for the day to day control, administration, conduct and provision of the chauffeur drive service, nor that Hertz has the necessary State licences to conduct those services. By the pamphlet, Hertz is advertising to the class of persons to whom the pamphlet is directed that the service will be first class and prestigious and can he booked and paid for through Hertz and that Hertz has a direct business association with the service provided and will be responsible for the standard of the service provided. The use of the word "Class" at the top of the reverse side of the pamphlet emphasises the nature of the service. There is much force in the contention by counsel on behalf of Hertz that the pamphlet is less misleading and deceptive than advertisements where an operator advertises the conduct of a business where the name of the advertiser 1s used by a franchisee under a franchise agreement such as where franchisees of Budget operate rent-a-car services under the name Budget. The important feature depicted by the pamphlet is that Hertz is providing a service. Hertz provides that service. The pamphlet is not misleading or deceptive with respect to the service 50

provided. The Hertz customer gets his account in the name of

Hertz and pays Hertz. It is immaterial whether Hertz owns the cars, leases the cars, employs the chauffeurs, or engages the chauffeurs as independent contractors. It is providing a

service which is the service described in the pamphiet.

4 J certify that this and the €/G4°7 { 8) preceding pages are « true copy of the

At a glance

Court

Decision date

Before

Source

Judgment (55 paragraphs)