(4) AAPT is a competitor of Telstra in relation to the supply of long distance telephone services. AAPT is not affiliated with Telstra nor is it a part of Telstra ."
38 The letter was to conclude by enclosing a change of carrier form, apparently for a change to Telstra, and a reply paid envelope addressed to Telstra.
39 The information which such a letter would furnish is information which would become obvious to all but the irretrievably obtuse subscriber fairly early in the period after preselection as the subscriber received a series of communications including telephone accounts and claims for payments. Although it is a human truth that some customers respond with inertia to events in the telephone services market, the business is conducted, as is notorious from its advertising, on the basis that the customers, or the customers who are worth having, are aware of the balance of their interests and the significance of prices, which change frequently, and prices are a subject on which participants in the industry address customers and potential customers continuously and stridently. There may be some customers to whom the four statements in the proposed letter would actually communicate something previously unknown, but they can be very few and of no particular commercial significance.
40 The communication of new information to customers is unlikely to be a real effect of sending out letters of this kind. The true and only significant result which I expect would be achieved if this order is made is that AAPT would be required to post out to the customers it has gained over the last two years a form appropriate for them to change their preselection to Telstra accompanied by a Reply Paid envelope addressed to Telstra. This, in my judgment is altogether excessive, and it would be oppressive to require AAPT to communicate with its customers in this way. It is quite open to Telstra to communicate with customers, past customers and potential customers in any proper terms; it in fact does communicate with persons who have been preselected away from Telstra, and it can distribute its own information and forms.
41 In deciding which orders I should make I have to hold a balance so as to do justice and make an appropriate judicial response to the enormities and breaches of the law which have occurred, but not to intervene inappropriately in the workings of competition among participants in the industry. It is a concern of mine that in pressing for unusual remedies, Telstra may have gone further than seeking to attain justice and it may have sought to impose burdens and disadvantages on AAPT which will unduly disturb the competitive balance. I am concerned that the Court should not make an order which will have that effect.
42 In presenting Telstra's claim for mandatory orders requiring remedial measures, Telstra's counsel sought findings which would establish a high degree of involvement and responsibility of AAPT's management in the misrepresentations and conduct complained of. The contention that AAPT has not done anything adequate to remedy the effect of the past conduct was part of this position. The most effective remedy is that the customer should understand what has happened; the consequential steps of deciding that the outcome is unsatisfactory and should be changed are steps for the customer and they are steps which a customer who believed that his business had been obtained by deception would be very likely to take. Sending out the "welcome kit" appears to me to have been as effectual remedial action as could well be devised.
43 Another aspect of the position taken by Telstra's counsel was the contention that AAPT's marketing campaign was inherently at risk of misleading and deceiving customers. In support of this contention Telstra's counsel pointed to the forms of initial application for service and their "Opt Out" format, to the form in Exhibit A which is appropriate simply to effect a change of long distance carrier whenever preselection is available, and the confusion which it was submitted arose from simultaneously marketing both override access and preselection. In my view all these steps were reasonable measures to take in addressing the market and it was not correct to contend that the campaign was inherently at risk. The risk is created by dishonest behaviour of sales agents, and there is no reason to find that AAPT inspired or brought about that behaviour.
44 In this connection it was contended that AAPT's controls over its dealers and their agents were completely ineffective, and that the signs in the evidence of endeavours to control their behaviour showed an absence of any true or effective effort. In my view this is quite incorrect as a matter of fact; there is no basis for finding that the offending conduct was tolerated, treated as acceptable, or regarded with complacency in view of perceived benefits derived from it. Any such benefits would be illusory as no trader could have any real interest in obtaining an alienated customer base. The evidence shows activity in attempting to exercise control; in retrospect various respects in which the activity could have been more intense can be suggested, but I see no basis for a finding that it was not sincerely undertaken.
45 Complaints about dealers were dealt with thoroughly. Some dealers were terminated. One was taken over by a reliable dealer. Mr Paul Glendenning was employed as Manager, National Dealers until his employment was terminated in January 1999. He was responsible for AAPT's relations with dealers; he showed activity and vigour but he too was terminated for not being sufficiently effective. Telstra's counsel was able to point to dealers who could well have been but were not terminated, but this hindsight is not an indication that the activity and control which did lead to the termination of some dealers were not sincerely intended, or were not effective.
46 The contention that the misleading and deceptive conduct was systemic throughout AAPT and was not confined to dealers was not made out; indeed in my view there is no real basis for that contention. Mr John Anthony Matic was the officer of AAPT with responsibility for the affairs with which this litigation deals: at the time of the hearing his position was Group Director, Commercial and Consumer Division. The manner in which cross-examination of Mr Matic was conducted constituted a vigorous attack on his sincerity and personal suitability for the conduct of AAPT's affairs, and in my judgment this attack was entirely unsuccessful.
47 The incidence of complaints is not well represented in AAPT's records; it seems clear that making a full written record of complaints received has never been an objective of AAPT's management. When telephone verification procedures were carried out under this Court's interlocutory orders and were carefully recorded about 10%, a surprisingly high proportion of the persons spoken to, gave a negative answer to Question 4. That is to say, they did not understand that the override code option was available to them; presumably only the preselection option was presented. The figure of 10% was presented in submissions as if it were a very far-reaching demonstration of the inadequacy of AAPT's business methods. I do not see it in that way. As AAPT's commercial object was to gain preselection customers it should be in no way surprising that a high proportion of the customers who signed application forms should not have been aware of the override option. The figure of 10% is not an indication that that proportion of customers have overall dissatisfaction with their dealings with AAPT.
48 The court-ordered questioning procedure showed that 37% of the subscribers spoken to indicated that they did not wish to give effect to the preselection forms which they previously signed. 21% wanted to continue as AAPT customers using the override code, but did not want to continue with preselection to AAPT. 16% did not want AAPT's service at all. These proportions are strikingly high, but they are not proof that those proportions or a high proportion were subjected to deception. Mr Matic sought when challenged with the figure of 37% to make the best he could of the proportions who wished to adhere to their arrangements; this was the point of his greatest difficulty. The figure of 37% is not an indication of the proportion who believed they had been deceived; it includes all who after an interval said, for whatever reason, that they did not wish to adhere to the arrangement to change their preselected long distance carrier.
49 Telstra's counsel contended that the maximum number of people potentially misled is nearly 200,000. This submission was quite incorrect and very greatly overstated. There is no way of coming to a clear view about the number of customers which AAPT has obtained through misrepresentation and misleading and deceptive conduct, but I infer that it is a small proportion of those obtained through the dealer network. The scale of the problem is that some thousands of customers have probably been obtained by misleading and deceptive conduct, they all have had the opportunity to realise that this is so and to complain; many have complained and the means of taking their business away from AAPT if they are truly dissatisfied are already to hand for them. This rather indeterminate conspectus of the numbers involved presents a very different view to counsel's reference to a maximum of 200,000 potentially misled customers.
50 I accept AAPT's evidence that AAPT on 5 May 1999 had 70,027 smartChat customers who came through the dealer network. 50,075 of these had completed application forms for preselection, and another 19,952 had completed application forms to obtain override dialling services and had later moved to preselection on their own initiative. In addition to those 70,027 customers a further 17,237 signed up for preselection but were never preselected because they did not ever in fact dial the override code. (The customers who signed up for preselection but did not ever dial the code are excluded under the Safety Net procedure; in the months when the Safety Net procedure was not in effect such customers were preselected.)
51 As well as action directly related to changing their long distance telephone company back to the supplier they wish for, customers have access to the Telecommunications Industry Ombudsman. Further, Telstra took and advertised initiatives to combat misleading conduct, so that customers who are concerned to complain had ready access to Telstra by telephoning its "Slamming Hotline."
52 The likelihood is that customers who have been preselected to AAPT as a result of misrepresentation are aware of their opportunity to return to their previous carrier. There can be very few who are still labouring under the effects of misrepresentation. The barriers to corrective action are slight and any dissatisfied subscriber who was not completely inert would soon pass them. A subscriber must take some initiative to do so but the means to do so are as close as the telephone. The customer affidavits show instances of customers adverting to difficulties fairly readily and without much delay. It would usually be clear to the customer within a month or so at the most if the customer had been deceived.
53 This is a case where strong measures are clearly required to prevent misrepresentation and misleading and deceptive conduct. The injunction which I propose to make constitutes appropriately strong measures and to go further would be an excessive judicial response.
54 In Claims 5 and 5(a) in the Summons Telstra claims declarations which will establish that AAPT has, by engaging in conduct alleged in the Points of Claim, engaged in conduct that is misleading or deceptive in contravention of s.52 of the Trade Practices Act 1974 and ss.42 and 43 of the Fair Trading Act 1987 NSW. These declarations would simply state the legal effect of the facts on which the injunction is based.
55 The Supreme Court has jurisdiction to make binding declarations of right. In Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581 it was said, in the leading judgment, "It is now accepted that superior courts have inherent power to grant declaratory relief." (Mason CJ, Dawson, Toohey and Gaudron JJ). This power is declared by s.75 of the Supreme Court Act 1970 and is available for exercise in the present proceedings where the court is invested with Federal jurisdiction by subs.86(1) of the Trade Practices Act 1974. The power is a discretionary power and is subject to limits stated in Ainsworth at 582 which do not prevent the Court from making a declaration in this case; the declaration sought is not abstract or hypothetical, and Telstra has a real interest in the subject matter. The making of the declarations claimed is, in my opinion, within power and is discretionary. Cf RAIA Insurance Brokers Ltd v FAI General Insurance Co. Ltd (1993) 41 FCR 164 at 177-178 (Beaumont and Spender JJ).
56 Declaratory orders are not made as of course when remedies are granted under the Trade Practices Act, and in my opinion they should not be. Telstra's counsel referred me to observations in Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations (No.2) (1993) 41 FCR 289 at 100 (Shepherd J) and 107 (Hill J). The circumstances of that case were unusual; the applicant as respondent on appeal applied for and was granted a declaratory order although it did not recover any other substantial relief, having regard to the disposition of the appeal; the declaratory order established that the Tobacco Institute's advertising was misleading and deceptive, this was the central issue in the case and had been opposed without success by the Tobacco Institute, and Shepherd J's decision to make a declaratory order was based on the view that the matter involved public interest in the form of the health and well-being of the nation. It appears to me that the majority strongly disapproved of the Tobacco Institute's conduct and that Australian Federation of Consumer Organisations' success on the issue fought would not otherwise have been reflected in the court's orders.
57 In the present case Telstra is entitled to remedies which vindicate its rights, that is, an injunction and orders which will establish its entitlement to damages and provide for their assessment. The factual basis for the assessment of damages is established by the terms of Telstra's claim and AAPT's admissions. A declaratory order is a form of relief, and should not be added to other relief granted to a party unless it has some real effect as relief. A declaratory order is not made only to give other remedies an air of completeness or of symmetry.
58 I must make my own approach to the exercise of the discretion involved and my decision is based on the view that there is not sufficient utility in a declaratory order to justify making it; Telstra has otherwise obtained appropriate remedies.
59 Counsel should bring in Short Minutes which will give effect to this decision by making an injunction according to Claim 1 as modified, dissolving the interlocutory orders, dismissing Telstra's other claims for injunctions, and referring the assessment of damages to an agreed arbitrator or, in default of agreement, to an arbitrator whom I will appoint. I have not yet considered questions of costs.