Cassidy & Anor v Medical Benefits Fund of Australia & Anor

INTRODUCTION 1 1 July 2000 was a significant date for the Australian health insurance industry. On that day the Federal Government initiative 'Lifetime Health Cover', which had been announced on 11 May 1999, was scheduled to commence. The commencement was in fact delayed until 15 July 2000. By this initiative the Federal Government sought to reduce the strain on the public health system by encouraging Australians to take out private hospital cover. In effect the initiative meant that Australians aged between 31 and 65 who took out private hospital cover on or before 30 June 2000 were not required to pay a graduated system of premiums which increased with age. Those who joined after that date and were over the age of 30 became subject to the graduated system of premiums. 2 The 30 June deadline received widespread publicity. Members of the public were encouraged to purchase private health cover before that date. The private health funds including the first respondent, Medical Benefits Fund of Australia Ltd ("MBF"), not surprisingly embarked on aggressive advertising campaigns to encourage prospective customers to purchase their particular health insurance products. To this end MBF employed the second respondent, John Bevins Pty Ltd ("the John Bevins agency"), to design television and print advertisements. A number of these advertisements are the subject of the present proceedings. 3 The applicants, Mr Brian Cassidy (the first applicant) and the Australian Securities and Investment Commission (the second applicant) (which by an instrument of delegation in writing dated 9 June 2000 delegated its powers to Mr Cassidy under Division 2 Part 2 of the Australian Securities and Investment Commission Act 1989 (Cth) ("ASIC Act")), apply to this court for orders under ss 12GD and 12GE of the ASIC Act and for declarations under s 21 of the Federal Court of Australia Act 1976 (Cth) arising from conduct in the advertising campaign which is alleged to be misleading and deceptive in contravention of ss 12DA, 12DB and 12DF of the ASIC Act. 4 Specifically, it is said by the applicants that by television commercials, which screened between May 2000 and July 2000, MBF made misleading or deceptive representations that it would waive all waiting periods applying in respect of pregnancy and obstetrics for consumers who purchased Health Insurance products before the 30 June deadline ("the waiver representation") and further that consumers who purchased health insurance could claim expenses relating to pregnancy the day after the insurance was purchased ("the join today, claim tomorrow representation"). Further it is said that by printed advertisements displayed in newspapers in New South Wales, the Australian Capital Territory, Queensland, Tasmania and the Northern Territory and on billboards at railway stations in New South Wales and Queensland between August 2000 and September 2000 MBF made the misleading or deceptive representation that if a pregnant woman transferred from another private health fund to MBF, she would be covered for expenses related to the pregnancy from the date of transfer ("the transfer representation"). The advertisements in issue are more fully described below. John Bevins, an advertising agency, is said to have been knowingly concerned in, or a party to, the allegedly misleading and deceptive conduct of MBF through its involvement in the creation of the disputed advertisements.

THE FACTS 5 In about January 2000 MBF began its advertising campaign, in line with the Government initiative, to encourage people without private health insurance to join MBF. The campaign is said to have officially begun on Sunday 6 February 2000 with the publication in major metropolitan newspapers around Australia of a full-page advertisement. It is useful to describe this advertisement as it encapsulates the nature of the MBF campaign. In large capitalised bold type it read "THREE PEOPLE. ONE BIG DAY." It was intended to introduce the public to three characters whose 'stories' MBF said they would document in advertisements in the upcoming months to show how they each prepared for their "respective big day", ie 1 July 2000 when 'Lifetime Health Cover' was to commence. The three characters (who were described in smaller text at the bottom of the page) were Clair, who was preparing for her wedding day, Lisa, a fitness fanatic who was preparing for a surfing adventure in Maui, and most relevantly Steve, an "excited father-to-be" whose wife Judy had become pregnant "late last year". Each was said to be a member of MBF although each had a different membership category. The campaign was intended to run for a number of months and it was envisaged that consumers would follow each of the character's stories leading up to 1 July.

The Television Commercials 6 On around 6 February MBF also launched its television advertising campaign. The television commercials here relevant were intended to be viewed together with the newspaper campaign. There was an initial introductory commercial describing the three characters and reminding viewers of their own "big day". The commercials were screened in chapters which were progressively released and which tracked the progress of the characters. Each character had a separate commercial for each of their respective chapters. The corresponding chapters in the life of each character were shown concurrently over time. 7 The four commercials that contained Clair's story began by showing Clair organising her wedding whilst at the same time trying to maintain her health and keep up a fitness regime with a trainer. There were only two initial episodes in Lisa's story which showed her preparing for a trip to Maui by purchasing new equipment and getting physiotherapy for a back injury. Each of these initial chapters ended with the words "To be continued…" appearing on the screen and a voice over reminder to viewers that "Lifetime Cover starts July 1" with a contact number for MBF shown. 8 The penultimate chapter of Clair's story followed her on her wedding day as she prepared for the ceremony, went to a dentist and purchased prescription glasses from an optometrist. This chapter ended with a voice over stating "Join any MBF hospital cover before June 30 and they'll waive the two and six month waiting periods" and in small print at the bottom of the screen the words "12 month waiting periods such as pre existing conditions and obstetrics still apply" appeared for a few seconds. Clair's story concluded with an advertisement that congratulated "MBF Members Clair and Robert" with images of the post wedding scenes and ended with a voice over that outlined the type of MBF cover they had and told viewers "if you join by this Saturday, MBF will waive the two and six month waiting periods". The words "12 month waiting periods such as pre existing conditions and obstetrics still apply" also appeared in small print at the bottom of the screen for a few seconds. 9 The four chapters of Steve and Judy's story contained the two commercials which the applicants claim conveyed misleading or deceptive representations. The initial chapters showed Steve and Judy shopping for their baby, images of Judy having an ultrasound and the images from that ultrasound, Steve at work as a police officer expressing his concerns about the pregnancy and Steve and Judy attending antenatal class. Text appeared on the screen in the second chapter which said that Steve's MBF health cover helped pay for antenatal classes. Both initial chapters ended with the words "To be continued…" appearing on the screen and the voice over stating "Steve's big day is fast approaching and so is yours. Lifetime Cover starts July 1" with a phone number for MBF provided. It was the final two chapters that were said to contain the misleading or deceptive representations, that is the waiver representation and the join today, claim tomorrow representation.

The Waiver Representation 10 The third chapter in Steve and Judy's story depicted the day on which their baby was born. It began with the text on the screen stating "Steve and Judy's big day didn't go as planned." Judy, in a hospital bed is shown looking anxious and in pain, explains that "the artificial induction hasn't worked…and so we're off to have a caesarian". This was followed by images of Steve hugging Judy, an anaesthetist putting a needle into Judy for an epidural and Judy being wheeled into surgery with Steve following. The text "Fortunately, they had MBF FamilyFirst with their doctor of choice" appears on the screen. This was followed by Steve coming into the waiting room and announcing that "It's a girl". He is then shown holding his newborn baby in a carry box with a close up of the baby. Judy is then shown in a hospital bed waiving and smiling - she announces happily "I'm a mum". The final scenes are of Steve and Judy saying their daughter was "just beautiful" and kissing. The text "Congratulations Steve and Judy and Georgia Madison" appears on the screen with the voice over saying "Join any MBF hospital cover before 30 June and they'll waive the two and six month waiting periods [phone number given]" (emphasis added). The final screen shows the MBF logo with a phone number displayed and the words "or visit a Member Centre" in small text underneath. Below that, at the bottom of the screen, text approximately half the size appears, for under 5 seconds. The text reads "12 month waiting periods such as pre existing conditions and obstetrics still apply."

The Join Today, Claim Tomorrow Representation 11 The finale of Steve and Judy's story depicted them getting used to taking care of their baby at home. It began with the text "Congratulations to MBF Members Steve and Judy (and Georgia)" while Judy talks about the questions they have to ask themselves about their baby to take care of her such as "Is she hungry or is she wet?". The images shown are of the couple bathing their baby and holding her outside their home. These were followed by a time-lapse sequence of Steve and Judy decorating the nursery. The text "Your big day is July 1" then appears on the screen with a 'Lifetime Health Cover' umbrella logo. A montage of images of Steve and Judy from the other commercials and including an underwater image of Judy swimming whilst pregnant is then shown while the voice over states: "Steve and Judy's MBF Family First is a unique type of health cover, because it's the only cover for families that gives them extra benefits for having simple health checks. They can also claim on things like sports gear and natural therapies, and of course, quality hospital cover with their doctor of choice. And if you join by July 1, MBF will waive the 2 and 6 month waiting periods." Following an image of the newborn baby clasping an adult finger, and during the voice over, the text "Join today. Claim tomorrow" (emphasis added) appeared on the screen with the words "12 month waiting periods such as pre existing conditions and obstetrics still apply" appearing at the bottom of the screen, approximately half the size of the emphasised text above. This screen appears for under 5 seconds. The commercial concluded with an image of Steve and Judy holding their baby in front of their home 'rocking' the baby and laughing. This fades to the MBF logo with a phone number and the text "or visit a Member Centre".

The Newspaper Advertisements: The Transfer Representation 12 The newspaper advertisements, the subject of these proceedings and which contained the 'transfer representation', were published between or about August and September 2000, that is, after the Lifetime Health Cover campaign leading up to 1 July had concluded. The newspaper advertisements depicted a semi naked and heavily pregnant woman and displayed the words in bold, large type superimposed over the image: "Are you sure your health cover is going to deliver?" At the bottom of the page underneath the image in significantly smaller type appeared the words: "Does your hospital insurance cover you for things like pregnancy, a knee replacement, or major heart surgery? If not, it could be a big price to pay for paying less up front. And a good reason why switching to MBF pays - once you've served your waiting periods*. Contact MBF today, complete a few details, and we'll assist with the rest, including advising your old fund." In type approximately one half the size below this at the bottom of the advertisement appeared the words: "*Conditions apply. There is a 12 month waiting period for some services including pregnancy and cover is for in-patient hospital services only…" 13 Advertisements in this form were displayed in newspapers in New South Wales, the Australian Capital Territory, Queensland, Tasmania and the Northern Territory.

The Billboard Advertising in New South Wales and Queensland 14 It was not in issue that in September 2000 MBF displayed on outdoor railway billboard advertisements that had been prepared by the John Bevins agency. These also depicted a heavily pregnant semi naked woman and had the words "Are you sure your health cover is going to deliver?" printed adjacent to the image. In significantly smaller print at the bottom of the poster appeared the words "Does you health insurance cover you for things like pregnancy, a knee replacement or major heart surgery? If not you'll find that switching to MBF pays - once you've served your waiting period you're covered*." In print approximately one half the size directly below appeared the words "*Conditions apply, including a 12 month waiting period." There was no evidence as to the exact size of the railway billboards. Suffice to say that each billboard was large enough that if a person of average eyesight stopped to examine one, where it was displayed with good lighting, the text would have been large enough to read without difficulty.

Joining MBF Before 1 July 2000 15 The first respondent led a significant amount of evidence on the procedure for becoming an MBF member applicable in the period leading up to July 1 2000 and concerning information provided to prospective customers. Members of the public were able to obtain information about MBF products and apply to join MBF at "MBF member centres", retail outlets from which MBF sold its insurance policies, received claims from existing members and provided services to members. These MBF member centres were staffed by trained sales and service consultants who provided information (including the documents described below) and assistance to prospective and existing members. They were trained for approximately 3 weeks in the 'sales process'. Part of this sales process was to explain MBF's terms and conditions including the applicability of waiting periods. MBF also maintained telephone call centres to answer telephone enquiries relating to membership. The staff of these call centres were also trained to explain the terms and conditions of MBF's policies including the waiting periods for MBF products. However, it was possible for people to join MBF without speaking to any MBF staff at all by simply filling out and submitting an application form, copies of which were distributed widely. It would also not be impossible that sales staff or telephone call centre staff might omit or at least truncate the information they were trained to provide the public in respect of waiting periods at least in busy periods. 16 The primary document that MBF provided to prospective members was a document described as the "Your choice!" booklet. This was a 38 page document which provided comprehensive details in relation to MBF health cover, how to join and what the benefits were. The booklet detailed the nature of the various MBF packages with text and tables to show prospective customers what was covered by each package. MBF sales and service consultants primarily referred to this booklet when dealing with prospective members. The last section of the booklet, entitled "MBF Healthcare Cover Guidelines", consisted of about 5 text packed pages (in quite small print) which summarised some of the key terms of the MBF By-laws, relating to membership rights and conditions, which bound all MBF members. On the fourth page of this section there appeared the heading "Obstetrics and new born infants cover" under which were the words "A waiting period of 12 calendar months applies to all memberships, whether single, couple or family." The 12 month waiting period for obstetrics was mentioned again two pages later. In the inside back cover of the booklet there was a fold out section entitled "Membership application and AutoPay authority" the last section of which was a 'declaration' for the applicant to sign. Above the space for the signature appeared (amongst others) the words: "I understand that if I or any dependant is joining MBF or upgrading cover: · waiting periods may apply (depending on the level of cover), including: · … · … · obstetric conditions - 12 months …" The term "waiting periods" was explained earlier in the booklet under the headings "More about MBF Hospital Cover" and "Extras Cover". The booklet itself was updated a number of times in the year 2000 but the aspects relating to waiting periods remained a constant feature. 17 MBF also used the document identified as the "QuickJoin" brochure in its campaign leading up to 1 July. This was a shorter fold out document that contained an application form and a summary of some of the terms and conditions of MBF's policy. The bottom quarter of the front cover read "Join today, benefit tomorrow!". Below that in text half the size it said, "All waiting periods up to 6 months waived", followed by text at the bottom of the page one half size smaller again stating "Other waiting periods still apply. Offer ends 1 July 2000." Waiting periods were described again on the back cover (which formed part of the document to be kept for the applicant's own record rather than the application form) and the 12-month waiting period for pregnancy was mentioned. There was no mention of waiting periods on the form the prospective member was to tear off and fill out, however, the 'Declaration' section, under which the applicant signed, contained the sentence (amongst others) "I agree to be bound by MBF's By-laws, a summary of which is in the MBF booklet, Your choice!". The "QuickJoin" form was circulated widely throughout Australia during the relevant time. It was available from display stands in certain shops and supermarkets, MBF centres, gymnasiums, community groups. It was also mailed to former members and inserted into certain newspapers and magazines. 18 It was also possible, from about 9 or 10 April 2000, for people to join MBF in the relevant period via the MBF internet website. The website contained details relating to "obstetrics and new born infants cover" and details of MBF's "waiting periods". Wherever these expressions appeared on the website they were hyperlinked to web pages that explained the expression. The user of the website could thus find out about the 12 month waiting period that applied in relation to obstetrics by using the hyperlink. Membership could be acquired on-line by completing an on-line membership application form. At the end of this form applicants were asked to read the terms and conditions of cover (ie the same information appeared there as appeared in the "Your choice!" booklet, see para 16 above). The application was processed after the prospective member pointed the mouse at, and clicked on, the phrase "I agree and wish to apply" which appeared as a button under the on-line "Declaration and authorisation" section of the form (which, amongst other things, mentioned the 12 month waiting period for obstetrics). An application form could also be printed out, filled in by hand and sent to MBF to be processed. 19 Once a person joined MBF by any of these methods he or she was sent a 'welcome pack' that contained a booklet that recapped some of the benefits of MBF's health cover, a letter and a brochure entitled "MBF Healthcare Cover Guidelines: Important information for you to know." This brochure was an information packed 14 page document that provided a summary of the MBF By-laws. On page 10 it restated that there was a waiting period of 12 calendar months for all memberships for obstetrics and new born infants. This was briefly noted again on page 14. The letter sent to the new members advised them to read the brochure and contained the sentence "As you've taken advantage of our special offer, we've waived all 2 and 6 month waiting periods (however other waiting periods still apply)." 20 It is noted that the documents provided to the public as prospective members and the documents provided to new members both contained information about the "MBF Guarantee". Stated simply, the guarantee was that new members could obtain a refund within 30 days of joining, regardless of the reason. 21 Approximately 125,000 new members joined MBF during the period from 28 May 2000 and 15 July 2000.

Evidence of Misled or Deceived Consumers 22 On 12 June 2001, in an interim judgment in this case, I found that "evidence from relevant persons who joined health funds conducted by MBF in the relevant period and relied upon the television or newspaper advertising in so doing would be of forensic utility because such evidence is relevant although not determinative of the issue whether conduct was misleading or deceptive" (see Cassidy & Anor v Medical Benefits Fund of Aust Ltd & Anor [2001] FCA 700). In accordance with this ruling the applicant led evidence of two couples who claimed to have been misled or deceived when purchasing health cover from MBF in the relevant period: the Sorrensens and the O'Briens.

The Sorrensens 23 David and Megan Sorrensen were residents of the Sunshine Coast in Queensland when in early to mid 2000 they contemplated taking out health insurance. They heard there would be consequences to them if they did not take out health insurance by 30 June, although they were unclear what those consequences would be. Both were aware that waiting periods usually applied when a person joined a health fund. 24 The Sorrensens visited a local MBF office and spoke to a staff member for no more than 5 minutes. The staff member did not, they said, mention waiting periods but did give them a "Your choice!" brochure and an application form. Cover in relation to pregnancy was a concern for them as they were planning to have a child together at some stage. Mr Sorrensen (who did most of their health cover research) understood that a 12 month waiting period usually applied for pregnancy. After concluding that the products offered by MBF and a competitor were very similar the Sorrensens decided to join MBF based on their understanding of MBF's 'Steve and Judy' commercials. They gave evidence that when they saw a television commercial that depicted a pregnant woman in hospital giving birth coupled with (what they thought at the time) was a representation that MBF were waiving 6 and 9 month waiting periods, they assumed, wrongly as it turned out, that the waiting period for pregnancy had been waived. In early June Mr Sorrensen filled out an application form (which he dropped off at the MBF office) and subsequently received a 'welcome pack'. 25 On 8 July 2000 they became aware that Mrs Sorrensen was pregnant. In July they saw a doctor whose receptionist told Mr Sorrensen what the doctor's fees would be and suggested that they check whether they were covered by MBF as there was usually a 12 month waiting period for pregnancy. Although there was some suggestion that he had made inquiries as early as 10 July, Mr Sorrensen maintained that he waited until October to speak to MBF. He was then told that the membership did not cover pregnancy until the 12 month waiting period expired. The Sorrensens sent MBF a letter of complaint dated 24 October 2000 in which they wrote "Upon reading some of the literature from your Maroochydore office and upon seeing advertisements on television, we chose MBF". Under cross-examination Mr Sorrensen acknowledged that the literature he had been given had in fact referred to a 12 month waiting period for pregnancy. He said, however, that he had not read it carefully (despite not being particularly rushed when completing the form) and had not see those references at the time.

The O'Briens 26 Jamie and Alexandra O'Brien (formerly Alexandra Picchianti) became MBF members in early July 2000. They were motivated to do so by the increase in premiums they would have to pay if they did not join before 30 June 2000. 27 They planed to start a family together some time in the future and Mr O'Brien was concerned that he may need health insurance for an injured knee. He also believed that his wife might need dental treatment in the future. 28 Mrs O'Brien was particularly concerned about being covered for the medical costs of pregnancy. She had been a member of a health fund when she had previously had children. 29 Mr and Mrs O'Brien investigated a number of health funds in early 2000. They found there was not much difference between them in terms of either cost or level of cover. At some stage they looked at an MBF brochure. Neither of them could recall having read anything about waiting periods. In about May or June 2000 the O'Briens saw some of the chapters in the 'Steve and Judy' series of MBF television commercials. They decided to join MBF. They did so, they said, on the basis of the representations they gleaned from those advertisements. Specifically, they concluded that the normal waiting period was to be waived because (i) the commercials depicted a pregnant woman in hospital giving birth to her baby and portrayed details of her pregnancy such as her difficulties during labour which meant she required a caesarean and (ii) because at the same time the commercials said MBF was waiving waiting periods. 30 Mr O'Brien sought to join MBF close to the 30 June deadline. However he encountered long queues at the local MBF office and had great difficulty contacting MBF by phone. Hence he took a "QuickJoin" form from a pile at the office to fill out at home. He submitted it to the MBF office in early July having heard the deadline had been extended because of the overwhelming number of people seeking to join health funds. Like the Sorrensens, the O'Briens received from MBF documents containing references to the 12 month waiting period for pregnancy. However, they only flicked through these documents and did not read them fully or comprehend the relevant references to waiting periods. They relied entirely, they said, on the representation they understood the television commercials to be making and took no care to examine the documentation they received either before or after joining MBF.

The Involvement of the Advertising Agency 31 The advertising agency in this case, the John Bevins agency, was employed by MBF in about September 1999 to run their Lifetime Health Cover advertising campaign. There were at least seven employees of the agency directly involved in producing the advertisements and a number of other employees and consultants worked on parts of the campaign. 32 The concept which the agency developed was to show how MBF health cover helped real MBF members to keep fit and healthy while undergoing real events. The 30 June deadline brought with it a tight timetable to develop and release the whole series of television, radio and print media advertisements in a 6 month period. The original plan was that the television commercials focus on the MBF brand rather than that any particular retail offers be made to prospective members. This changed in April 2000 when MBF requested that the commercials actually make a specific retail offer to consumers. 33 The disputed print advertisements were also created by the John Bevins agency. However, they were part of MBF's 'interim campaign', a later campaign that did not form part of the Lifetime Health Cover campaign. This later campaign was undertaken to keep the brand "MBF" in the minds of any prospective members. Mr John Bevins, the founder of the agency, gave evidence that this campaign was only targeted at people who were already members of other health funds and who might consider switching to MBF. 34 The John Bevins agency had done work for MBF prior to the Lifetime Health Cover campaign and was aware of the need for MBF to produce advertising that complied with the Trade Practices Act 1974 (Cth). As a result, the practice of the agency was to send a copy of the advertisements to MBF for a legal sign off by MBF lawyers before advertisements were screened or printed. In consequence no MBF advertisements were published in 2000 without approval from the MBF's internal legal team. In addition to this, all commercials were required to be approved by Commercials Advice Pty Ltd (CAD), the commercial arm of the Federation of Commercial Television Stations (FACTS). CAD sets out guidelines for disclaimers and other text on screen which the consultant producer of the 'Steve and Judy' television commercials, Meredyth Judd, claimed were, in her opinion, complied with. The guideline stated "Disclaimers must be clearly legible and easily comprehensible and held on screen for long enough for all text on screen, not just any disclaimer, to be read by the average viewer to avoid rendering a commercial potentially misleading under the Trade Practices Act." It also provided a recommended text font and size for disclaimers and some additional factors to ensure the text could be read. However, the decision to put the disclaimer in the disputed advertisements in text smaller than the other text on the screen was made by an employee of the John Bevins agency. The evidence suggests that the decision to show the information about waiting periods in the text rather than incorporate it in the voice over came about because it was said that it would have taken too long if read by the voice over. A consequence of the use of smaller print in the text relating to waiting periods for pregnancy was that it was less likely to be seen. It does not seem to have occurred to anyone employed by the John Bevins agency or MBF before the advertisements were screened and published that the advertisements were capable of being misleading or deceptive. 35 Each of the senior staff members of the John Bevins agency involved in the production of the advertisements who gave evidence claimed that they did not believe these advertisements to be in any way misleading or deceptive when they viewed the final version prior to publication. It must be said that there was nothing for the advertising agency to gain by creating misleading and deceptive advertisements. Mr John Bevins (the creative director), Mr Ray Simmons (the account director) and Mr Ian McDonald (who shared the role of account director) each claimed that they would not have allowed the advertisements to go into the media had they thought them to be misleading or deceptive. Mr Bevins is a respected advertising man. He said in evidence that he believed that the offer in the television commercials was clear, that is, that the 2-6 month waiting periods were being waived but not the 12 month waiting periods. He claimed that he did not see the connection between the images of childbirth and the waiver of waiting periods. Mr Bevins believed that people looking into health insurance for pregnancy would understand that MBF had waiting periods and know that a 2-6 month waiting period would not relate to pregnancy. However, he admitted that he did not understand the complex system of MBF waiting periods himself at first and that his present beliefs were those of someone who had learned to understand the waiting periods that applied to MBF membership. Mr McDonald, also an experienced advertising man, gave evidence that the market at which the television commercials was directed consisted primarily of people who already had health cover or had health cover previously and so would understand such things as waiting periods. With respect to the print advertisements, Mr Bevins gave evidence that they were directed at people who already had health cover and who might consider switching to MBF. They were not primarily directed at pregnant women. The television and print advertisements were just intended to catch the eye and draw an emotional parallel between the pregnant woman and health insurance 'delivering'. He did not think people would join MBF solely on the basis of one advertisement but would research the products before purchasing them.

THE RELEVANT CONSUMER PROTECTION PROVISIONS IN THE ASIC ACT 36 The relevant provisions of the ASIC Act which the applicants allege have been contravened are as follows: "s 12DA Misleading or deceptive conduct (1) A corporation must not, in trade or commerce, engage in conduct in relation to financial services that is misleading or deceptive or likely to mislead or deceive. … s 12DB False or misleading representations (1) A corporation must not, in trade or commerce, in connection with the supply or possible supply of financial services, or in connection with the promotion by any means of the supply or use of financial services: … (c) represent that services have sponsorship, approval, performance characteristics, uses or benefits they do not have; … (g) make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy. s 12DF Certain misleading conduct in relation to financial services A corporation must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of any financial services." 37 It is noted that the ASIC Act has been superseded by the Australian Securities and Investments Commission Act 2001 (Cth). However there is, for the present purposes, no relevant difference. 38 Sections 12DA, 12DB(1)(c) and (g) and 12DF are in almost identical terms to the respective provisions of ss 52, 53(c) and (g) and 55A of the Trade Practices Act 1974 (Cth). Cases on the provisions of the Trade Practices Act are accordingly relevant to the interpretation of the provisions of the ASIC Act. 39 It was not in dispute that the respondents were both corporations involved in trade or commerce within the meaning of the ASIC Act. 40 Section 12BA of the ASIC Act defined financial service in the following terms: "'financial service' means a service that: (a) consists of providing a financial product; or (b) is otherwise supplied in relation to a financial product." It was not disputed that advertising health insurance products, such as those provided by MBF, amounted to conduct related to the supply of financial services.

DID MBF ENGAGE IN MISLEADING OR DECEPTIVE CONDUCT? 41 The primary issue in the case is whether MBF's conduct in causing the publication of advertisements for health insurance where the advertisements used images of a pregnant woman apparently covered by MBF policies but where the product advertised did not cover an insured person for the hospital costs of pregnancy until after a waiting period of at least 12 months had elapsed was in the circumstances misleading or deceptive. The specific representations made through the advertisements were the 'waiver representation', the 'join today, claim tomorrow representation' and the 'transfer representation' as outlined above. The principles for determining when conduct is misleading and deceptive conduct were set out by a full Court of this Court (Hill, RD Nicholson and Emmett JJ) in S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 168 ALR 396 at 402-403 (see also Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177; Telstra Corporation Limited v Optus Communications Pty Limited (1997) ATPR 41-541 per Merkel J at 43,514).

Relevant section of the public 42 Firstly, in accordance with the principles established in the cases referred to above, the relevant section of the public or class of persons to whom the representations have been made must be identified. The class of persons to whom the representations are conveyed is necessarily wide (see CRW Pty Ltd v Sneddon (1972) AR (NSW) 17 per Sheldon and Sheppard JJ at 28; Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations (1992) 38 FCR 1 per Hill J at 50). It can be said that effectively every consumer who read a newspaper, took a train and/or watched television was likely to have been exposed to the advertisements. The applicants therefore submitted that the relevant class of persons was 'the general public'. The respondents, however, contended that the relevant class was 'persons who are interested in and considering taking out private health insurance'. In my view nothing turns upon which of these formulations is accepted. Given that the 30 June deadline and publicity surrounding the introduction of the new system of insurance lifetime rating was drawn to the attention of all consumers it can be said that generally each of the television, print and billboard advertisements was directed at the general public. With respect to each of the representations, the audience included, to use the words of Sheldon and Sheppard JJ in CRW Pty Ltd v Sneddon (1972) AR (NSW) 17 at 28, "the shrewd and ingenuous, the educated and the uneducated and the experienced and inexperienced in commercial transactions." 43 The full High Court recently, in Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 at 85, [103], commented that: "Where the persons in question … are members of a class to which the conduct in question was directed in a general sense, it is necessary to isolate by some criterion a representative member of that class. The inquiry is thus to be made with respect to this hypothetical individual why the misconception has arisen or is likely to arise …" Further, at 86, [105] their Honours said: "[I]n an assessment of the reactions or likely reactions of the 'ordinary' or 'reasonable' members of the class of prospective purchasers of a mass marketed product for general use the court may well decline to regard as controlling the application of s 52 those assumptions by persons whose reactions are extreme or fanciful ... The initial question which must be determined is whether the misconceptions, or deceptions, alleged to arise or to be likely to arise are properly to be attributed to the ordinary or reasonable members of the classes of prospective purchasers." 44 The breadth of persons exposed to the advertisements in this case means the statutory question is to be tested by considering whether a 'reasonable' person (concerned about their health cover) who saw the advertisements and who was "not particularly intelligent or well informed, but of somewhat less than average intelligence and background" although not "unusually stupid" (see Annand & Thompson Pty Ltd v Trade Practices Commission (1979) 40 FLR 165 at 176 per Franki J) was (or was likely to be) misled or deceived by the advertisements. I would not restrict the class to persons interested in private health cover generally or specific cover for pregnancy. However the class of persons to whom representations were made included such persons.

The effect of the representations made in the advertisements 45 In Telstra Corporation v Optus Communications (supra) Merkel J reviewed the authorities on how, generally, the Court is to approach television and print advertisements. In reviewing certain comparative television advertisements which Optus had caused to be published his Honour said, at 43-514: "[The advertisements] will be seen by the casual but not overly attentive viewer viewing a free-to-air program with only marginal interest in the advertisements shown between the segments of the program. In that context it will be the first impressions conveyed to that viewer, rather than an analysis of the cleverly crafted constituent parts of the commercial which will be determinative. The observations I have referred to above are of particular relevance to television advertising where the message is basically one of the impression conveyed. In television and print advertising where a false dominant impression is conveyed, its message will not be ameliorated by the accuracy of the detailed message which is derived from a careful analysis of all of the constituent parts of the advertisement." His Honour's comments are particularly relevant here. Thus it is necessary to determine whether it was reasonably open to ordinary or reasonable members of the public to form the view that the television commercials or print advertising that immediate MBF cover for hospital expenses for pregnancy was available for members who joined without the necessity of a waiting period. 46 In reviewing the effect of the representations at issue it is essential to consider the entire context in which they were conveyed. In this regard it is important to view the conduct of the respondent in making the representations as a whole (see Gibbs CJ in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 199).

The Television Commercials 47 Of course a person who read the specific disclaimer that a waiting period was relevant to pregnancy would not be misled. But that is not a complete answer to the present claim. This is a case where it is the entire affect of the representations within the commercials and particularly the first impression which the commercials give that makes them misleading. The television commercials use provocative and striking images related to childbirth, linked with their simplified retail message to entice consumers into purchasing their product. The 'waiver' representation was made by a retail offer which was voiced following the emotive images of a woman in labour going into surgery with her concerned husband by her side followed by happy images of the newborn child. The drama is then connected with the voice over informing viewers that certain waiting periods would be waived. Similarly, the 'join today, claim tomorrow' representation followed a montage of pregnancy related images. It is easy to see how a consumer casually viewing the commercials between television programs would be left with the impression that MBF were waiving waiting periods for pregnancy related expenses and also that a person may make a claim on their insurance the day after they join. The fact that consumers were forced to make a decision on whether to purchase private health insurance in what was a quite short period of time leading up to the 30 June deadline explains why this first impression was so significant. Lee J recently commented in ACCC v Target Australia Pty Ltd (2001) ATPR 41-840 at [15], "it is often the case that the first impression will be the lasting impression" (see also Stuart Alexander & Co (Interstate) Pty Ltd v Blenders Pty Ltd (1981) 37 ALR 161 per Lockhart J). The first impression given by the commercials in this case was that they related to pregnancy and as such, the relevant representations made by MBF was immediately linked to pregnancy. That was the impression that was likely to stay with viewers as they approached the 30 June deadline. 48 The respondents argued that the only representation made by the commercials was that the 2-6 month waiting periods were being waived and no other period. While a close consideration and examination of the constituent parts of the advertisements shows that this is true, the argument ignores the impression given by the images of pregnancy and the statements otherwise made in these advertisements. The first and the overall impression given by the television advertisements was false.

The Newspaper Advertising 49 The question whether the print advertising was misleading or deceptive is more difficult. 50 In support of the submission that the print advertisements were misleading or deceptive there are the following matters: (a) The context of the print advertisements, like that of the television commercials is pregnancy. Hence the immediate impression that is given is that MBF will cover those who join its fund for the hospital cover applicable to pregnancy. (b) The advertisement proclaims in large print face, (and the print face is many times larger than the print which follows) that MBF will deliver cover and suggests that in this respect MBF differs from other funds. The word "deliver", while intended as a pun, does reinforce the context of pregnancy. 51 In support of the submission that the print advertisements were not misleading or deceptive there are the following matters: (a) The text following the photograph of a pregnant woman is text which it might be expected the reader would read, if only because the large size text "Are you sure your health cover is going to deliver?" is clearly not of itself complete. That text is, it can be conceded, in smaller print than the main question posed, but the smaller print size is not so small that it might be expected a reader would overlook what is said. This text makes it clear that cover is only available once the waiting period is served. (b) Finally, there is the even smaller print which explains why the asterisk follows the expression "waiting periods". If this were the only reference to waiting periods it might well be overlooked, because the print size is so small. However, it is not the only reference to waiting periods, but rather explanatory of it. 52 It is clear law that the use of a qualifying statement in an advertisement will not necessarily nullify a misrepresentation otherwise contained in it. The question will always be whether the overall effect of the advertisement is such that it is not misleading or deceptive. An example of a case where a disclaimer in the circumstances was held not to render an otherwise misleading advertisement such that it ceased to mislead can be seen in the judgment of Tamberlin J in Trade Practices Commission v Optus Communications Pty Ltd (1996) ATPR 41-478. That was a case where the qualification appeared in a television commercial and was held to be so fleeting that a reasonable viewer would not (or might not) appreciate that there was an exclusion which flew in the face of the dominant representation made by the commercial. The case is analogous to the position with the television commercials in the present case. But whereas in my view the qualification in those commercials did not overall detract from the message, particularly where the qualification did not form part of the information provided by the voice over and the images of pregnancy which were portrayed and anyway was in smaller print than the text otherwise shown, I think that the same cannot be said of the qualification in the print advertisements. 53 Print advertisements give the reader more time to study the content. They have not that character of transience which television commercials have. There may well be cases where an asterisk which accompanies a false representation and which points to further text might not overall save the advertisement from being found to be misleading or deceptive. But that is not, in my view the case here. Rather, I think the case is analogous to George Weston Foods Ltd v Goodman Fielder Ltd (2000) 49 IPR 563 where Moore J held that a representation concerning the fibre content of bread which was followed by an asterisk which signified a qualification was not misleading or deceptive as readers would take the time to read the small print on the packaging which contradicted what would otherwise be an initial superficial impression. 54 I am conscious of the fact that the asterisk explanation is contained in quite small print. As Davies J said in TPC v QDSV Holdings Pty Ltd (t/as Bush Friends Australia) (1995) ATPR 41-371 at 40,115: "Size is important. The larger the print the more it catches the eye … As a matter of strict theory, if words … are misleading and deceptive, qualifying words which are added to render the message accurate should be in the same sized print, for the qualification is just as important as the description itself." 55 If the asterisk had accompanied a representation that was otherwise misleading, I would have found that the asterisked words would not have saved the advertisement from being misleading or deceptive. However, the asterisked explanation in this case was intended to add to a perfectly correct statement, namely that waiting periods had to be served and this correct statement was not in the small text in which the asterisked explanation was printed, but in a larger text. 56 In my view the newspaper advertisements were not misleading or deceptive.

The Billboard Advertisements. 57 The billboard advertising is in a different situation to the print advertising. The billboards on which the advertising appeared were not facing streets. They were erected at railway stations. Whereas a billboard facing a street is intended to be viewed mainly by motorists or others in cars as they pass by that is not quite the same as a billboard at a railway station. Such a billboard may be scrutinised by train passengers waiting for their train or merely perused in a perfunctory way. It may be merely noticed in passing by passengers on a train, unless the train happens to stop directly at the carriage in which they sit or stand. Some at least of the persons who see sufficient of the advertising to read it will read it with care. But others will not. At least for those in the latter category, words which are to be found on the billboard in print many times less in size than the print in which the message of the advertisement is to be found are likely to be overlooked. 58 The visual context of the billboard advertising is again pregnancy. There is a photo of a pregnant woman and text which asks whether the health cover of the fund of which the reader is a member "delivers". The representation of these words is clear. MBF is a fund that covers its members for pregnancy. The qualification that there is a waiting period and the additional asterisked qualification that in the case of pregnancy the waiting period is 12 months (in even smaller print) do not detract from the message which is intended to be conveyed fleetingly to some at least of the passengers who pass it. It is for this reason that I think that the billboard advertisement stands in a different position to the newspaper advertisements and is misleading or deceptive or likely to mislead or deceive train passengers, other than those who have the opportunity to scrutinise it carefully. 59 Further, although it is a fact that persons joining MBF would most likely be told of waiting periods by MBF staff or read of them in MBF literature if they attempted to join, this does not mean that the billboard advertising, itself misleading, ceases to be so. The only relevance is that a particular member of the public might not be misled when joining and might not be found to have relied upon any antecedent misleading advertisement. The advertisement itself might nevertheless be misleading. 60 It is useful to consider here the submission put on behalf of MBF that persons who were misled would only have been misled because they failed to exercise reasonable care. The submission was particularly made with respect to the witnesses who gave evidence that they, in fact, had been misled by the television advertisements, evidence which confirmed, although it did not determine, that these advertisements were misleading or deceptive. 61 It was submitted that a reasonable member of the public, or of that part of the public which was interested in purchasing hospital insurance at the relevant time, would understand the seriousness of the transaction into which the person might enter and expect a degree of formality in becoming a member including the making of disclosures and the entry into a written contract which would document the terms and conditions governing the membership relationship. It was said that a reasonable prospective member would thus go beyond the advertisement to satisfy himself or herself of the conditions attaching to the insurance product that he or she was purchasing. 62 I do not accept this submission at least so far as it seeks to convert an advertisement which itself is misleading into an advertisement that is not. First, it does not take into account the rush to join health funds which existed around 30 June 2000 and which caused lengthy queues of persons seeking to join, a situation which might well have led to a particular prospective member not being told of waiting periods. Secondly, it presupposes prospective members of health funds are relatively sophisticated and have experience concerning those products, when this might be the case with some prospective members, but not others. Thirdly it amounts to a submission that misleading conduct can be excused just because it may be corrected by later documents which may qualify or contradict the misleading conduct, whether or not those later documents are read and whether or not it might happen that they are not received or that a practice to refer to waiting periods in verbal discussion might be overlooked in a particular case. 63 Where a misrepresentation is made, there will usually be a likelihood that members of the public who are acting quite reasonably will rely upon it. Indeed, they will usually be entitled to assume that the representation made to them is repeated in written material they are given or in documents that they might sign. That was the case here. Indeed, I accept the evidence of the Sorrensens and the O'Briens that they did interpret the television commercial as representing that waiting periods for pregnancy were being waived and that this interpretation remained, notwithstanding that they were given other written material which if read would have contradicted it and that they signed a membership form which indicated that they had joined on the conditions of membership contained in documents not read. 64 There may be a case where an applicant is so negligent in protecting his or her own interests that the applicant will not be found to have been induced by a representation to enter into a particular contract. I adverted to such a case in my judgment in Argy v Blunts and Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112 at 138. But that is not the case with either the Sorrensens or the O'Briens. 65 In my view the television advertising the subject of the present proceedings and the billboard advertising was misleading and deceptive and indeed the witnesses who gave evidence were induced to join MBF as a result of reliance upon the misleading and deceptive television advertising. 66 I would accordingly make the declaratory orders sought against MBF.

Other contraventions of the ASIC Act. 67 The applicant submitted that each representation also constituted a contravention of s 12DB(1)(c) of the ASIC Act as being conduct in connection with the supply or possible supply of financial services (ie health insurance) in which a representation was made that the services had a benefit (ie the provision of health insurance in respect of pregnancy from the date of purchase) which they did not have. It follows from the reasons provided above that this submission is successful. 68 Similarly, it follows that the publication of these advertisements also contravened s 12DB(1)(g) of the ASIC Act as being conduct in connection with the supply of financial services in which false representations were made concerning the existence of a right (that is the right to claim from MBF expenses related to pregnancy from the date of purchase). 69 Also, and finally, each representation constituted a contravention of s 12DF of the ASIC Act as being conduct in which the suitability for purpose or the characteristics of the service were misrepresented. MBF was, by its advertisements, representing that new members could claim expenses related to pregnancy as soon as they joined the fund when, in fact, MBF would not provide that service until they had been members for 12 months.

Whether the John Bevins Agency was "knowingly concerned in, or a party to the contravention." 70 The applicant seeks declaratory and injunctive relief against the John Bevins Agency by way of accessorial liability under s 12GD(e) of the Act. That section relevantly provides: "12GD. Injunctions (1) If, on the application of the Minister, the Commission or any other person, the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute: … (a) a contravention of a provision of this division; or… (e) being in any way, directly or indirectly, knowingly concerned in, or a party to, the contravention by a person of such a provision; … the Court may grant an injunction in such terms as the Court determines to be appropriate." 71 Section 12GD(e) is in almost identical terms to s 75B of the Trade Practices Act and cases decided under that Act are relevant to s 12GD(e). 72 The leading authority on s 75B is the decision of the High Court in Yorke v Lucas (1985) 158 CLR 661 where it was held that a person could not be found to be knowingly concerned in a contravention unless the person had knowledge of the essential facts constituting the contravention (see per Mason ACJ, Wilson, Deane and Dawson JJ at 670). Brennan J, who agreed with the majority of the Court said at 677: "But s 75B(a) does not require knowledge of the acts constituting the contravention and of the circumstances which give those acts the character which s 52 defines, namely … s 75B(a) does not extend liability for a s 52 contravention to a person who procures the corporation to engage in contravening conduct if that person is honestly ignorant of the circumstances that give that conduct a contravening character. Nor, in my opinion, does par. (c) of s 75B impose a stricter liability … The requirement of knowledge under par. (a) is no less stringent under par. (c)." (emphasis added) 73 The question, therefore, is whether the applicant has shown that the John Bevins Agency knew of the essential elements of the conduct that constituted the relevant offence. The question is not whether the agency, or those employed by it subjectively appreciated that the advertisements were false or misleading. If it were, I would find that they had no liability. I accept the evidence led that none of those who gave evidence formed the view that the advertisements were misleading. None intended to mislead or deceive the public. 74 The applicants submit that it was sufficient to constitute an offence under s 12GD(e) that it be shown that the John Bevins Agency through its officers and employees:

Injunctive Relief. 79 The applicants sought injunctive relief requiring the respondents to conduct compliance programs and report to the ACCC in respect of existing programs. Injunctive relief was also sought to prevent the respondents from engaging in similar conduct in the future. 80 I am satisfied that MBF has instituted an extensive compliance program and that an order in the terms sought would not be of real utility. In the case of the John Bevins Agency it relied upon the legal advisors of its clients. In any event, the present problem did not arise because of any lack of a compliance program, but rather a lack of appreciation that the advertisements placed were capable of being misleading. I would refuse to grant this relief. 81 I do not think that there would be any utility in enjoining either MBF or the John Bevins Agency from again infringing the Act. I have indicated that I would grant declaratory relief. I do not think that either MBF or the John Bevins Agency is likely to repeat the conduct in question. In fact, it is not irrelevant in the case of the John Bevins Agency to note that it no longer acts for MBF. And MBF in particular has a quite extensive compliance program designed to ensure that it does not contravene. The John Bevins agency also has a compliance program which it put into place as a consequence of the institution of these proceedings. There is a difficulty also in the form an injunction would take. It is clear that no injunction should be granted unless the conduct enjoined is expressed in language which is clear and unambiguous: ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 259-262. No doubt I could order that MBF, for example, not engage in conduct that is misleading in breach of the legislation. But such an order, even if in force before the present conduct was engaged in, would not have been likely to have prevented it, for the reasons that it would not seem that those responsible in MBF appreciated that the advertising was misleading. I would not find that the advertising was deliberately misleading. Further, an injunction in that form would add nothing to the prohibition contained in the legislation, save that it would subject the party against which it was directed to the additional sanction of contempt for contravention. On the whole, the present is not, in my opinion, the appropriate case for injunctive relief.

Should corrective advertising be ordered? 82 The applicant seeks orders that MBF screen at its own expense advertisements correcting the misrepresentations and further that it be ordered to write to all persons who purchased MBF health insurance products between 28 May 2000 and 15 July 2000 and between 13 August 2000 and 1 October 2000 (the latter period being the period in which the print advertising and billboard advertising appeared) advising them that consumers may have been misled and that MBF will, for persons who were misled waive all waiting periods in respect of pregnancy related services. The applicant also seeks an order that the John Bevins agency circulate to all members of the Advertising Federation of Australia a notice advising them of the Court's finding of contravention and providing details of the convention and referring members to information available from the ACCC. 83 The applicant relies upon s 12GE of the Act which relevantly provides: "if, on the application of the Minister or the Commission, the Court is satisfied that a person has engaged in conduct constituting a contravention of a provision of Subdivision D (sections 12DA to 12DN), the Court may make either or both of the following orders: (a) an order requiring that person or a person involved in the contravention to disclose to the public, to a particular person or to persons included in a particular class of persons, in such manner as is specified in the order, such information, or information of such a kind, as is so specified, being information that is in the possession of the person whom the order is directed or to which that person has access; (b) an order requiring that person or a person involved in the contravention to publish, at his or her own expense, in a manner and at times specified in the order, advertisements the terms of which are specified in, or are to be determined in accordance with, the order." 84 It may be noted that this section was repealed in 2001 and took substantially the same form as s 80 of the Trade Practices Act. 85 I do not think that the present is an appropriate case to order MBF to make good the representation by sending letters to all members of the public who joined in the relevant periods. Such an order was made by Spender J in Australian Competition and Consumer Commission v World Netsafe Pty Ltd [2000] FCA 1827, but the circumstances of that case were different and the order was made in a case where the Respondent had entered no appearance or defence. 86 While there will have been persons, like the Sorrensens and the O'Briens, who were misled into purchasing MBF products by the present advertisements, it is likely that most consumers were not, if only because they will not have relied upon the advertisements, but rather upon other information and literature given to them by MBF. If corrective advertisements are placed with television stations the nature of the misleading conduct will be drawn, anyway, to the attention of the public and if they were misled they will be able to take such advice as they may receive in the circumstances of their case. 87 As French J pointed out in ACCC v Real Estate Institute of Western Australia Inc (1999) ATPR 41-719, a case decided by reference to ss 80 and 80A of the Trade Practices Act, injunctive relief should not be granted as a penalty or as punishment. The purpose of such advertising is to bring the outcome of the proceedings to the attention of the public as consumers, although not as such merely to announce a win for the ACCC, but rather as an aid in the enforcement of the primary orders and to prevent repetition of the conduct in question. His Honour expressed a doubt as to whether an appropriate purpose of such an order would be solely the education of the public. 88 There is no doubt that the Court has a wide discretion, limited only by the requirement that the relief be appropriate in both form and in its terms. Lee J in ACCC v Target (supra) said at [19]: "The purpose sought to be achieved by corrective advertising is to raise public awareness - both for consumers and competitors - as to the type of conduct that may contravene the Act, and as to the outcome of the particular litigation [reference omitted]. Corrective advertising may be a particularly appropriate remedy where the conduct that breached s 52 consisted of media advertisements. Matters to be considered in the present case were that the advertisements were broadcast nationally, and repetitively, to a large number of consumers. The nature and prominence of the advertisements presents the inference that a number of people may have been misled or deceived, such people being unaware the conduct was misleading or deceptive and being unaware of their right to a remedy [references omitted]." 89 The question then is whether it is appropriate in the interest of consumer protection, although not punishment, to order corrective advertising having regard to the scope of people likely to have been affected by the misleading or deceptive representations. 90 It was submitted on behalf of MBF that the conduct had occurred now a considerable time ago and was "stale". The initial effect of the advertising had, it was said, evaporated. The time for it had passed. Indeed there was some risk, it was suggested, that the advertising would rather increase MBF's business than protect consumers. 91 On the whole I think there is utility in requiring MBF to publish both on television and in newspapers circulating in the area where the television advertising was screened an advertisement which will not merely remind the public that MBF had engaged in conduct which was misleading but also alert consumers to the importance of questioning advertisements and the insurance industry of the importance that their advertising not mislead or deceive consumers. Such advertising will, also, make consumers aware, if they themselves were induced to purchase insurance on reliance of the advertisements, that they might have some remedy. Further, the general complexity of the health insurance products and particularly waiting periods means that even if consumers had forgotten the actual advertisement, a corrective advertisement will assist them to understand the importance of waiting periods in the future and increase the awareness of consumers accordingly. 92 The precise terms of the advertising were not the subject of any detailed submissions. For this reason I would not make the order at this stage but rather hear such submissions as the parties may care to make about the form of the advertising. 93 The case for an order directed at the John Bevins agency directing it to circulate a notice to all members of the Advertising Federation of Australia is different. Such an order would not, as such, assist in informing the public. Rather it would seem directed at punishing the agency by reporting it to its peers and announcing a win for the applicants. In refusing to make such an order I take into account that the agency no longer acts for MBF, that something over two years have passed and, more significantly, that members of the Federation will in any event learn of the orders made against MBF from the newspaper advertising and, it may be presumed, from press releases of the ACCC. 94 My attention was drawn to a speech given by Professor Fels, the Chairman of the Commission to members of the Advertising Federation of Australia in which Professor Fels made specific reference to the present case, noting that the Commission was seeking orders against the John Bevins Agency. There was also an article, apparently written by Professor Fels in the February 21-27 2002 edition of the Business Review Weekly which made reference to the fact that the proceedings against the Agency were on the basis that it was knowingly involved in false and misleading and deceptive advertising of health insurance. It might be said that while the Commission is entitled to tell the public that proceedings have been brought and the general nature of those proceedings, there is a danger that wide dissemination of the fact before a hearing might in a particular case injure, perhaps irreparably, the person against whom the proceedings are brought. 95 Be that as it may, I think that it can be accepted that the speech to the Federation coupled with news of the outcome of the proceedings will clearly ensure that the members of the Federation will be aware of the result of the present proceedings without yet further publicity being given to the matter in a case where the breach was not deliberate and where the Agency relied upon both the legal advisors of MBF and the fact that the advertisement had been the subject of vetting by CAD, both matters which had the present been a prosecution would have constituted a defence under s 12G(1)(c)(ii) of the Act.

COSTS 96 In my view the costs of the application should follow the event. I will accordingly when making orders, order that the respondents pay the applicant's costs.

OTHER ORDERS 97 I would direct the applicant to prepare and file within 7 days of the delivery of these reasons short minutes of order to reflect these reasons. The respondent MBF should prepare and file within three days thereafter a note of amendments if any, it would propose to the draft orders, particularly the form of remedial advertising. I would stand the matter over to a date to be fixed with the parties to hear such submissions as the parties shall wish to make as to the form of the orders. I certify that the preceding ninety-seven (97) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill.

Associate: Dated: 9 September 2002 Counsel for the Applicant: DJ Fagan SC with M Painter

Solicitor for the Applicant: Australian Government Solicitor

Counsel for the First Respondent: JR Sackar QC with DR Sibtain

Solicitor for the First Respondent: Blake Dawson Waldron

Counsel For the Second Respondent DJ Hammerschlag with E Frizell

Date of Hearing: 3 and 4 June 2002

Date of Judgment: 9 September 2002