Foxtel Management Pty Ltd v Australian Video Retailers Association

DIRECTIONS FOR DETERMINATION OF FINAL RELIEF 1 On 8 December 2004, I gave reasons for judgment in these proceedings ([2004] FCA 1613), and made the following interim orders: '1. The respondent Australian Video Retailers Association ('AVRA') be restrained until further order from further publishing and distributing, and further causing to be published and distributed, each of the three sets of advertising materials described in the reasons for judgment as the first, second and third advertisements. 2. The proceedings the subject of the claims of the applicant Foxtel Management Pty Limited ('Foxtel') be stood over until 15 December 2004 at 2:15pm for the purpose of determination of the scope and text of the final orders to be made in favour of Foxtel, including orders as to damages and costs of the principal proceedings. 3. Foxtel as cross-respondent be restrained until further order from publishing and causing to be published the representations categorised in the reasons for judgment as: (i) the 'movie availability misrepresentations'; and (ii) the 'comparison misrepresentations' and any material in or to the effect of those representations. 4. The proceedings the subject of the cross-claims of AVRA be stood over until 15 December 2004 at 2:15pm for the purpose of determination of the final orders to be made in favour of AVRA, including orders as to damages and costs of the proceedings the subject of the cross-claim. 5. Submissions in writing of each party as to the text of the final orders to be made be delivered to my Chambers by 4:00pm on 14 December 2004. 2 On 20 December 2004, issues as to the scope of final relief were the subject of oral submissions of the parties, based largely upon comprehensive written submissions provided to the Court on that occasion. I will adopt in these reasons the same abbreviations as I used in my reasons for judgment, observing that as appears from the heading to these reasons, AVRA has changed its corporate designation to 'Australian Video Rental Retailers Association Ltd', that having occurred on 8 November 2004. 3 Since the time of those oral submissions, the following steps have been respectively taken by the parties: (i) on 21 December 2004, AVRA sent to recipients of the so-called pro-rental kit, with the exception of 20 or so members of AVRA who are not also members of the so-called DVD or video buying group or franchise group, a notification in the following terms: 'On 8 December 2004 the Federal Court of Australia handed down its decision in the FOXTEL v AVRRA case. The Court found that both FOXTEL and AVRRA had engaged in misleading or deceptive conduct, in contravention of the Trade Practices Act. The Court found that certain representations contained in the Pro Rental Kit, which was distributed to DVD and video libraries earlier this ear, were misleading or deceptive in contravention of the Trade Practices Act. AVRRA has been restrained from making those, or similar, representations. The Court also found that FOXTEL had engaged in misleading or deceptive conduct in certain respects. The Court is yet to make final orders about the relief that AVRRA and FOXTEL are entitled to. Given that AVRRA has been found to have engaged in misleading or deceptive conduct, in contravention of the Trade Practices Act, DVD and video libraries that display the Pro Rental Kit (or parts of it) could also be found to have engaged in such conduct. AVRRA therefore strongly recommends that if you are still displaying any material that was included in the Pro Rental Kit (eg posters, brochures or DVD and video slicks), you immediately remove that material from public display and destroy it as soon as is practicable. Should you have any questions about this matter, please contact AVRRA. Contact: Ross Walden Executive Director Level 1, 3 Brady Street Mosman NSW 2088 Phone: (02) 9960 0046 Fax: (02) 9960 0041'; and (ii) two days later, that notification was sent also to those 20 or so remaining members. 4 Subsequently I received on 7 January 2005 from Foxtel's solicitors open correspondence between Foxtel's and AVRA's solicitors, together with a document headed 'Further Revised Short Minutes of Orders', which included suggested orders in replacement for those which accompanied my reasons for judgment of 8 December 2004. One letter from Foxtel's solicitors to AVRA's solicitors dated 6 January 2005 contained the following: '… As you will recall, there was some "without prejudice" discussion between the parties during the period between 21 December 2004 to 23 December 2004. Despite the fact that our client was substantially successful in its claim, that it believes it is entitled to orders for corrective advertising against your client and that your client withdrew its claim for corrective advertising in its final submissions, on further consideration our client saw the force of his Honour's suggestion in all the circumstances. We attempted, unsuccessfully, to convey this message to you by telephone on 24 December 2004. …' The suggestion referred to above was made to the parties informally for mutual consideration in the light of exigencies of commercial reality. 5 Subsequently on 14 January 2005, Foxtel's solicitors advised the Court by letter which included the following: '… If the Court is considering making corrective advertising orders against either party, and will require FOXTEL to undertake some kind of corrective advertising, we repeat the request in our letter of 7 January 2005 that FOXTEL be given an opportunity to be heard on further evidence and submissions relating to those orders. That evidence will include a Fourth Affidavit of Patrick Delany sworn 21 December 2004, a copy of which we now enclose for the purpose of assisting His Honour in His Honour's consideration of the form of final orders. If the court is not considering making corrective advertising orders against FOXTEL, then FOXTEL will not require an opportunity to be heard and looks forward to receiving the orders in due course. …' 6 At the same time my Associate was provided with that further affidavit of Mr Delany sworn on 21 December 2004, which in summary indicated the following: (i) if Foxtel was to be ordered to write to all of the people to whom the Welcome Brochure and/or Television Brochure was or were originally sent in February 2004, which AVRA proposed, the printing and mailing/distribution costs would vary from $1.8 to $2.88 million, depending upon whether each was sent to the same or different addresses; (ii) the newspaper corrective advertising sought by AVRA would be in the order of $41,000, plus production costs in the order of $25,000; and (ii) the television corrective advertising sought by AVRA would be in the order of $46,000. 7 Foxtel also filed in Court an affidavit of Michael Steele sworn 17 December 2004 which contained a number of media releases, including the following: (i) 'News Release' issued by AVRA's solicitors on 8 December 2004 headed 'Foxtel's TV Advertising Found Misleading'; (ii) Australian Financial Review published on 9 December 2004 containing an article headed 'Foxtel loses cases with video stores'; (iii) Australian Financial Review published on 19 December 2004 containing an article headed 'Foxtel wins against industry group'; (iv) Sydney Morning Herald published on 8 December 2004 headed 'Foxtel and AVRA claim victories'; and (v) Letter of complaint sent by Foxtel's solicitors to AVRA's solicitors concerning the content of the first two of those publications. It is of concern to the Court that AVRA's solicitors caused my reasons for judgment of 8 December 2004 to have been reported to the media to the extent appearing in their so-called 'News Release' of 8 December 2004. 8 Whilst AVRA presumably has no legal control in relation to the ongoing conduct of independently operated video stores to whom it sold the promotional materials which I found to be misleading and deceptive, I remain to be persuaded that AVRA has taken sufficiently appropriate steps to rein in and discourage the further propagation of the misleading and deceptive material which it sold to those stores. Perhaps however updated evidence in that regard may be adequate. 9 Difficult issues still remain as to what further orders should be made in order to give effect to my reasons, particularly given the events which have or may have transpired since the hearing on 20 December 2004. There remains also outstanding the claims of both parties as to damages. For either party to establish damages, in contexts such as the present, would doubtless be a formidable task. In any event, it is presently difficult to comprehend what damage AVRA has sustained, given in particular its status as a company limited by guarantee. Moreover, the reality in the case of Foxtel's pursuit of further relief by way of damages is that damages may well be an inadequate remedy, bearing in mind the difficulty of establishing loss and damage, other than perhaps damages of a punitive nature. Nevertheless of course, the parties are entitled to pursue remedies in damages if they so choose, and I will make procedural directions to that end, if and when so requested by either party on the presentation of short minutes of proposed orders. 10 The corrective advertising orders originally sought by Foxtel against AVRA appear at [101] - [102] of my reasons for judgment. AVRA submitted that the same are not 'entirely appropriate in the circumstances of this case'. At [102] of my reasons I suggested a text of corrective advertising but in regard to that AVRA submitted that to require an apology would do 'nothing to correct any misleading impression, and can only be seen as a form of punishment and humiliation'. 11 AVRA has indicated that it would accept orders to the following effect: (i) that it cause a one-page statement, in the next available issue of the Video Retailing Magazine produced on its behalf, substantially in the form of Schedule 1 to their written submissions of 20 December 2004; and (ii) that it cause to be printed a one-page poster in accordance with Schedule 1, and further cause copies of that poster to be sent to all entities or persons who purchased the pro-rental kit, with the request that those entitles or persons display the poster in their video and DVD stores. Schedule 1 is reproduced below: 'SCHEDULE 1 CORRECTIVE NOTICE The Australian Video Retailers Association ("AVRA") has been found by the Federal Court of Australia to have engaged in misleading or deceptive conduct in relation to certain statements made by it in advertisements relating to the Foxtel Box Office Service. AVRA accepts that it was not correct for AVRA to state or imply that a subscriber of Foxtel Box Office would not be able to view a movie for six or twelve months minimum after the same movie became available for rent or purchase on DVD or video. AVRA further accepts that a subscriber to digital Pay TV need not pay $2,000 or more in order to access Fox Box Office. In fact, subscription over six months to Fox Box Office can cost as little as $543.65 for a six month contract. This corrective statement has been placed pursuant to an Order of the Federal Court of Australia and is paid for by AVRA.' 12 The second proposed order would provide dubiously adequate relief in favour of Foxtel in relation to AVRA's false and misleading campaign (to the extent that I have made findings in that regard), in that AVRA has no constituent power or authority to compel its members to display any such poster in their stores, much less in any particular place or position of prominence within or externally to their stores. The inherent likelihood is that the store owners would largely ignore any such requests in any event unless and until Foxtel moves, should it decide to do so, against each of them individually for appropriate curial relief. Nevertheless there is no good reason why I should not make orders at least to the effect acknowledged by AVRA to be open for me so to do. The remainder of the orders foreshadowed by Foxtel, which of course I have already set out in [101] of my reasons of 8 December 2004, if still to be pressed by Foxtel, will then need to be addressed in the light of principles prevailing in relation to mandatory injunctions. 13 Moreover I am concerned as to the specificity of scope of the ten orders sought by Foxtel in paragraph 3 of its 'Further Revised Short Minutes of Order', each of which calls for the Court's further interpretation of the AVRA promotional material complained of. An order of the scope which I have already made on an interim basis identified the material complained of, without dividing the same into individual facets divorced from the context of that material. Whilst I will hear further submissions on the matter, the vice of the ten specific orders sought places an onus on the Court to reach a variety of views upon the purported scope of operation of AVRA's material complained of, the specific text of each such orders being divorced, as I have said, from the wider context in which the material complained of originally appeared. 14 On the other hand, in addition to injunctive relief already granted in certain respects, AVRA for its part seeks the following corrective advertising relief against Foxtel to be published 'in each relevant media in which the misleading and deceptive conduct was found to have occurred': '5. Foxtel, within 28 days of the date of this Order, at its own expense, send or cause to be sent by mail, to all persons to whom the Welcome Brochure or the Television Brochure were originally sent, a letter in the form set out in Schedule [3] to this Order. 6. Foxtel, within 28 days of the date of this Order, at its own expense, cause to be published in each of the "Herald Sun" newspaper, the "Adelaide Advertiser" newspaper and the Brisbane "Courier Mail" newspaper, a notice in the form of Schedule [2] to this Order, such notice to be in legible type of at least 12 point Times New Roman font. 7. Foxtel, within 28 days of the date of this Order, at its own expense:- (a) cause to be broadcast on each of its FBO channels, a notice in the form of Schedule [2] to this Order, such notice to be broadcast for a continuous period of not less than 30 seconds during the hours of 5:00pm to 10:00pm (EST); (b) cause an identical notice to be broadcast as set out in (a) above, each day thereunder for a period of not les than [28] days. 8. Foxtel, within 28 days of the date of this Order, at its own expense, cause to be published on its website, in accordance with (a) to (f) below, a notice in the form set out in Schedule [3] of these Orders:- (a) the notice should appear immediately upon access by a consumer to that part of Foxtel's website dealing with Foxtel's digital service; (b) the notice should appear in an automatically generated active pop-up window or message box whereby a member of the public is required to interact with the window or message box to close it; (c) the notice should be legible and the type should be at least 12 point Times New Roman font, and right and left justified; (d) the notice should have a bold type prominent heading at least 18 point; (e) the notice should be not less than 30% of the size of the computer screen; (f) the notice should remain in place for a continuous period of not less than [28] days.' Schedule 2 is reproduced below: 'SCHEDULE 2 CORRECTIVE NOTICE The Federal Court of Australia has found that Foxtel has engaged in misleading or deceptive conduct in contravention of the Trade Practices Act 1974 (Commonwealth) in relation to its Fox Box Office ("FBO") service. Foxtel accepts that it was misleading or deceptive to represent that FBO shows or can show:- (a) all of the latest blockbuster movie titles; (b) all movies that are released on DVD and video; and (c) movies at and from the time they are initially released on DVD and video. In fact:- (a) many of the latest blockbuster movie titles are not and may never be available on FBO; (b) many movies that are available on DVD and video are not and will never be available on FBO; and (c) movies that have been released for the first time on DVD and video cannot be viewed on FBO for some period of time after their initial release on DVD and video. This corrective statement has been placed pursuant to an Order of the Federal Court of Australia and is paid for by Foxtel.' Schedule 3 is also reproduced below: 'SCHEDULE 3 CORRECTIVE NOTICE The Federal Court of Australia has found that Foxtel has engaged in misleading or deceptive conduct in contravention of the Trade Practices Act 1974 (Commonwealth) in relation to its Fox Box Office ("FBO") service. Foxtel accepts that it was misleading or deceptive to represent that FBO shows or can show:- (a) all of the latest blockbuster movie titles; (b) all movies that are released on DVD and video; and (c) movies at and from the time they are initially released on DVD and video. In fact:- (d) many of the latest blockbuster movie titles are not and may never be available on FBO; (e) many movies that are available on DVD and video are not and will never be available on FBO; and (f) movies that have been released for the first time on DVD and video cannot be viewed on FBO for some period of time after their initial release on DVD and video. The Federal Court of Australia has also found that Foxtel has engaged in misleading or deceptive conduct in contravention of the Trade Practices Act 1974 (Commonwealth) in comparing its FBO service to the renting of a DVD or video. Foxtel accepts that it was misleading or deceptive for it to represent that DVD and video libraries charge, or may charge, their members who represent DVD's and videos, fees that:- (a) Foxtel does not ever charge Foxtel digital subscribers who view movies on FBO; or alternatively (b) are unlike, or bear no comparison to, any fees or charges that Foxtel charges or may charge Foxtel digital subscribers who view movies on FBO. This corrective statement has been placed pursuant to an Order of the Federal Court of Australia and is paid for by Foxtel.' 15 To make orders of the above dimension against Foxtel, in contrast to the order AVRA puts forward as supposedly appropriate to be made against itself in order to accommodate my reasons, would be disproportionate to the circumstances relevantly involved, and should not in my opinion be entertained in principle. For me to do so would create the impression that AVRA had achieved a substantial vindication by the outcome of the proceedings, as it sought to do inaccurately by its unfortunate news release of 8 December 2004. 16 I have sought to set out the above summaries of material provided to me by the parties since my reasons for judgment of 8 December 2004. The subsequent lapse of time during the Court's recess, and the events which I have recorded since those reasons for judgment were published, have caused me concern as to making any of the final orders sought, pending the parties having the opportunity to present their present updated respective positions in terms of relief. It may be moreover that Foxtel may wish to seek redress against some individual video stores by reason of ongoing flagrancy of conduct. 17 Though reluctant to put the parties to further cost, and leaving aside the conduct of individual stores, I will list that matter for mention at 9.30am on 9 February 2005. My present inclination is to confine further orders to material to be published on the respective websites of the parties, as well as statements of reasonable prominence in the magazines the publication whereof they respectively control and as to dispatch to video store owners of a poster in or to the effect accepted by AVRA to be appropriate (ante), but I would seek submissions and draft orders from both parties on the issue. As I have indicated, I am unsure as to where each party presently stands since the last time the issues as to final orders were last debated. I should add that it is not immaterial that Foxtel's previously impugned website was in fact altered prior to the hearing, and is therefore not a matter of ongoing complaint in the proceedings. My concern is of course to implement the true purpose of corrective advertising as stated in authorities such as Australian Competition and Consumer Commission v Purple Harmony Plates Pty Ltd [2001] FCA 1062 at [38]. 18 Once all other matters relating to final relief have been resolved, I will address all outstanding issues as to costs. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Conti.