Baxter, M. , v British Airways P.l.c

[1988] FCA 308

Re: MELANIE BAXTER and RUSSELL MCILWAINE
And: BRITISH AIRWAYS P.L.C. and QANTAS AIRWAYS LIMITED
No. G350 of 1986 Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Burchett(1) J.

CATCHWORDS

Trade Practices - misleading and deceptive conduct - brochure advertising around-the-world air tickets - inability to fly to Tel Aviv though mentioned as a destination in the brochure - situation made clear before ticket purchased - effect of admission of breach by airline - question for the court whether brochure likely to mislead someone into taking a step to his disadvantage - discretion as to injunction - whether any damage sustained - whether disappointment and distress from denial of expectation of benefit aroused by brochure was sufficient - remoteness - measure stated in Gates' case - application dismissed - appropriate costs order where breach of Act but no damage.

Trade Practices Act, 1974, ss.52, 53, 82.

HEARING

SYDNEY

#DATE 24:6:1988

Counsel for the Applicant: Mr A.J. Sullivan.

Solicitors for the Applicant: Messrs McDonell Moffitt

Counsel for the Respondent: Mr M.B. Smith.

Solicitors for the Respondent: Messrs Mallesons Stephen

ORDER

The application be dismissed.

The applicants pay one half of the costs of the respondent British Airways P.L.C. as taxed or agreed.

NOTE: Settlement and entry of orders is dealt with in Order 36

of the Federal Court Rules.

JUDGE1

This case is concerned with the complexities of bookings

for air travel. Some years ago, the respondents jointly put out a glossy brochure the cover of which bore the emblems of British Airways and Qantas (as I shall call them), together with the statement:

"British Airways recommend (sic) that you fly Qantas around the world. And vice versa."

1. The brochure advertised the availability of a joint around-the-world ticket utilizing the schedules of both airlines. Early in the brochure, a warning was uttered:
   
   

"All fares and conditions effective 1st June, 1985 and subject to alteration without notice."

Then there is the statement:

"You can fly to almost everywhere and s almost anywhere the two airlines do, as long as you keep travelling in the same direction all the way around the world, and end up where you started.

Which, given the 224 possible destinations, could make it the longest, laziest, most satisfyingly circuitous trip of a lifetime."

The possibility is mentioned of covering a sector by other means, and picking up the flight at a later point. There is a reference to "our comprehensive list" (of destinations). That list comprises 224 towns or cities, including San Francisco, New York, London and Tel Aviv. The concluding pages of the brochure advise the would-be traveller that his "first stop" is at his "Travel Agent, British Airways or Qantas Travel Centre." He is told: "obviously, it'll help us if you have a rough idea where you want to go." The reader is also warned that there are "ticketing restrictions and regulations. Please read this before you purchase your ticket" - and of the existence of general rules which include:

"Travel must be in a continuous global direction around the world, either east-bound or west-bound on the services of Qantas, British Airways or United Airlines. ...

RESERVATIONS AND TICKETING.

All passengers. All nominated destinations must be ticketed when the ticket is purchased.

First or Business Class passengers. There is no advance reservation requirement.

Economy Class passengers. The first sector must be booked and the ticket issued at least 21 days in advance. The remainder of the itinerary can be booked at any time en route.

...

Re-routing/Re-issue. Once the ticket has been issued, voluntary changes to any or all of the sectors of the itinerary will be permitted only once. Subsequent changes, requiring the re-issue of the ticket, will incur a service charge of US$25.OO for each new coupon raised in the voluntary change."

1. Apart from the slogan "Qantas and British Airways. Together around the world", the last message in the brochure is:
   
   

"For more detailed information of the conditions of this fare, please contact your Travel Agent, British Airways or Qantas Travel Centre."

1. In November 1985, the second applicant, Mr McIlwaine, obtained a copy of the brochure from the Sydney sales office of British Airways. He and Miss Baxter, the first applicant, were considering an overseas holiday. They decided that they would like to travel to San Francisco, New York, London and Tel Aviv, being, as they understood after reading the brochure, destinations to which they could travel on an around-the-world ticket. Mr McIlwaine contacted a Mrs King, an employee of Jetset Tours, a travel agency, and asked her to arrange bookings. That was on 27th November 1985.

2. Mrs King, on the same day, made bookings which included a British Airways flight, on 7 January 1986, from London to Tel Aviv, and an Olympic Airways flight from Tel Aviv to Athens on 17 January to enable the applicants to catch a Qantas flight home to Sydney from Athens, leaving on 19th January. But although she was able to put those bookings into the British Airways computer, it appears that she was immediately advised that the back-tracking from Tel Aviv to Athens, which they involved, was impermissible under the conditions of the around-the-world ticket. Accordingly, the bookings, as recorded by the computer, were changed within 24 hours to substitute a British Airways flight from London to Athens on 6 January, in order to enable the applicants to fly from Athens to Tel Aviv and return, either by Olympic Airways or El Al, the Israeli airline. It appears that Mrs King initially contemplated Olympic Airways, but after she had discussed the matter with Mr McIlwaine, it was decided that return tickets would be purchased from El Al. This cost $64O, but the purchase of return tickets additional to the around-the-world tickets avoided the problem of resuming the journey at an airport west of the previous destination reached on the easterly trip around the world.

3. Before purchasing the around-the-world tickets, the purchase of which was not finalised until 18th December 1985, Mr McIlwaine remonstrated with Mr Imer, the New South Wales sales manager of British Airways, pointing out that the brochure named Tel Aviv as an available destination, notwithstanding that, on examination, it had been found impossible to devise an itinerary which would take in Tel Aviv without the purchase of additional tickets. Mr Imer said he was unable to relax the rule, but would speak to the marketing manager and "get back" to Mr McIlwaine.

4. When the marketing manager did ultimately agree to a relaxation of the rule to permit reinstatement of the booking from London to Tel Aviv on the basis that the applicants would pay the sector fare from Tel Aviv to Athens and would then be permitted to continue the around-the-world journey from Athens, it is unfortunate that Mr Imer contented himself with dictating a letter to that effect on 18 December, the very day the tickets were purchased. That letter was not typed until 23 December, and was posted to Mr McIlwaine's Sydney address on the 24th, the applicants having left Sydney on the commencement of their around-the-world journey on the 21st. No attempt was made to notify them en route. The letter was not received until after their return.

5. While the applicants were in New York, terrorists attacked the El Al check-in counters at both Rome and Vienna airports. There was newspaper speculation that similar attacks might occur at Madrid and Athens airports. The applicants decided that they were not prepared to run the risk of checking-in for an El Al flight at Athens. As a result, they changed their itinerary, flying to Nice and spending a holiday driving from Nice to Rome, taking in the sights between those cities, and flew home from Rome. They were unable to obtain a refund of the amount spent to purchase the El Al ticket.

6. Following the applicants' return to Sydney, Mr McIlwaine entered into correspondence with British Airways concerning what he alleged to have been its false representation that Tel Aviv was an available destination. Mr McIlwaine claimed that the applicants would have been prepared to travel from London to Israel by British Airways, as they had very much wished to do, and that they had incurred the considerable cost of the trip "principally so that Miss Baxter and I could have a holiday in Israel." He sought "a substantial offer of compensation to Miss Baxter and myself", and an apology. He threatened action under the Trade Practices Act. Mr McIlwaine also wrote to the chairman of British Airways, Lord King, stating that he had "purchased a British Airways (with Qantas or Air New Zealand) first class R.W.T. (around-the-world ticket) on a number of occasions". The letter asserted that British Airways had engaged "in illegal marketing", and was liable for damages. It asked Lord King to advise what action he proposed to take to "prevent this type of conduct being repeated".

7. No apology or compensation being offered, the applicants commenced these proceedings by application on 21 August 1986. The application was not limited to the compensation previously requested (with an apology), but sought as well that the respondents be restrained, to put it shortly, from engaging in conduct likely to mislead a person into the belief that Tel Aviv is an available destination upon the purchase of a British Airways and Qantas around-the-world ticket, and from distributing the brochure to which I have referred. Damages and costs were also sought. By an amended application, filed at the hearing, there was added a prayer for a declaration that the respondents "engaged in conduct which was misleading or deceptive or was likely to mislead or deceive a member of the public into the belief that Tel Aviv is an available destination upon the purchase of a 'B.A./QF R.W.T.' air ticket."

8. At the commencement of the hearing, the applicants sought leave, which was granted, to discontinue as against the second respondent, Qantas Airways Limited. The claim was pursued against British Airways P.L.C.

9. The applicants based their claim on s.52 of the Trade Practices Act 1974 ("A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive"), and on s.53 (aa) and (c)("A corporation shall not, in trade or commerce, in connexion with the supply or possible supply of goods or services or in connexion with the promotion by any means of the supply or use of goods or services ... (aa) falsely represent that services are of a particular standard, quality or grade ... (c) represent that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits they do not have").

10. I turn first to the question whether there has been a breach of s.52. I do not think that s.53 (aa) is pertinent, and if the availability of Tel Aviv as a destination should be regarded as a use or benefit, within s.53(c), in respect of the service of air travel promoted by British Airways, the questions whether there was a relevant representation and whether the service does not have the use or benefit represented must, I think, be determined by the same considerations, in substance, as are applicable in relation to the claim under s.52.

11. British Airways disputed the alleged breach, contending that at most the brochure was unfortunately worded and introduced an element of confusion into its readers' understanding of the services available. It was pointed out that the brochure should be read as a whole (Parkdale Custom Built Furniture Proprietary Limited v. Puxu Proprietary Limited (1982) 149 CLR 191 at 199; Pappas v. Soulac Pty Ltd (1983) 5O ALR 231 at 234), and that when it had been so read, the reader could not have been left with a definite assurance that he would be able to include Tel Aviv as a destination. In the first place, the brochure would have warned him that the conditions were effective as at 1 June 1985, not necessarily six months later, and that they were subject to alteration without notice. Furthermore, although the 224 destinations were described as "possible destinations", the brochure also said:
    
    

"You can fly to almost everywhere and s almost anywhere the two airlines do" (emphases added).

If that was not a clear warning that not all the 224 destinations were actually achievable, it at least introduced a doubt about the matter. Then it was said that the requirement to keep travelling in the same direction, which the brochure emphasised, would have to be borne in mind by a reasonable reader who was provided, not only with a list of destinations, but also with a map showing British Airways and Qantas routes. An examination of the map would immediately have raised the question whether destinations shown at the ends of routes, and destinations shown as by-passed by routes, could be reached without the purchase of additional tickets for side trips. The brochure did not purport to make the reader master of every aspect of the requirements of the ticket. It made clear the fact that there were "ticketing restrictions and regulations", and asked the person addressed to read a series of rules and qualifications, concluding with the message:

"For more detailed information of the conditions of this fare, please contact your Travel Agent, British Airways or Qantas Travel Centre."

1. It was not possible to purchase the around-the-world ticket except through a travel agent or one of the two airlines. I infer that it was expected any outline of an intending passenger's requirements, given to a travel agent or a booking officer of one of the airlines, would lead to the clearing up of any doubt or misunderstanding, and I think this expectation was reasonable. In the case of the applicants, the first response received by them from their travel agent informed them of the true position.

2. At the same time, the evidence called on behalf of British Airways showed that it responded to Mr McIlwaine's complaint about the brochure. According to Mr Imer's evidence, which I accept, a new edition of the brochure was brought out, and the original brochure, the subject of the complaint, was withdrawn from use in May 1986. That was well before the proceedings were commenced. It is true that Mr McIlwaine was able to obtain copies of the brochure from travel agents a number of months later, but it would have been a Herculean task to remove every copy from every agency. Particularly having regard to the fact that the brochure could not in itself lead to the purchase of any ticket without the purchaser being exposed to knowledgeable assistance in the planning of his itinerary, and the unlikelihood that anyone would be seriously inconvenienced by the alleged misrepresentation, I cannot regard the steps taken by British Airways to replace the brochure as other than reasonable. In any case, there is evidence from a passenger tariff manager of Qantas that the joint arrangement, under which the around-the-world ticket was sold, was itself terminated in October 1986. It is perhaps significant that, although there is evidence of the obtaining, in September and October 1986, of copies of the original brochure from travel agents, and although the copy of the brochure which actually led to the present proceedings had been obtained from the sales office of British Airways, there is no suggestion that any copy of that brochure was obtainable from British Airways after May 1986.

3. While the withdrawal of the brochure is clearly relevant to any exercise of my discretion, if a case is made out, to make a declaration or grant an injunction, it was relied on by the applicants as an admission that the brochure was in fact misleading. Furthermore, Mr Imer in cross-examination was asked, without objection, whether the fact was that the brochure was withdrawn because it was recognised by British Airways that it was misleading, and answered in the affirmative.

4. However, there is clear authority that such an admission is not conclusive, as the issue is one to be determined by the court: Rhone-Poulenc Agrochimie SA v. UIM Chemical Services Pty Ltd (1986) 12 FCR 477 at 487, 5O4; and see Shoshana Pty Ltd v. 1Oth Cantanae Pty Ltd (1988) ATPR 49,164 at 49,171 (a passage unaffected by the reversal of this decision on appeal - see (1988) ATPR 48,981).

5. I have not found it easy to resolve the question whether, by the issue of the brochure, British Airways was in breach of s.52 or s.53. Few people could read the brochure, giving it any attention, without appreciating the necessity to check whether an intended destination (apart, perhaps, from those on well-known through routes where no possibility of back-tracking could be involved) was available, or was still available, as a destination for a passenger flying in accordance with a particular proposed itinerary. Certainly, it is difficult to think that Mr McIlwaine, an experienced air traveller who had flown on around-the-world tickets prior to these events and did so again afterwards, would not have had at least an inkling of this necessity. At the same time, I readily accept his evidence, and Miss Baxter's, that they were disappointed to discover the particular complication affecting Tel Aviv.

6. The language of s.52 naturally evokes the question: misled or deceived into what? Not only is this so linguistically, but also the policy which may be perceived in the provision suggests a similar view of it. It is concerned with conduct which misleads or deceives someone into taking some step to his disadvantage. The legislature is not concerned with conduct, as it were in gross, but with conduct which leads to an undesirable result. (See the Rhone-Poulenc Agrochimie case (supra) at 49O, per Bowen C.J.; and see Money v. Westpac Banking Corporation, unreported, French J, 28 March 1988, at 25-26, and cases there cited.)To say that is not to give the section a narrow construction, as people may be misled into a wide variety of actions which the section comprehends. An example is bait advertising, the immediate effect of which may merely be the inconvenience caused to persons induced to travel to a particular shop, but which may consequentially expose the would-be purchaser to the blandishments associated with other products on display.

7. In the present case, I do not think the brochure can realistically be regarded as in the nature of bait advertising. It would only be a tiny proportion of the potential purchasers of around-the-world tickets who would be interested in the inclusion of Tel Aviv in their itinerary. Nor is Tel Aviv in any way emphasised as a selling feature in the brochure. At the same time, as I have pointed out, the brochure contains a number of warnings that further information requires to be sought. Nevertheless, I think there is one respect in which the brochure must be regarded as misleading, though the number of persons who could be affected would probably be small. A potentiality to mislead even a small number of persons in respect of a product as expensive and as important to the individual as an around-the-world ticket, cannot simply be put to one side as of no moment.

8. The circumstance in which it seems to me the brochure could possibly mislead someone in a significant respect arises from the ability to make changes in respect of the ticket after purchase. The brochure refers to "re-routing", as to which it states:
   
   

"Once the ticket has been issued, voluntary changes to any or all of the sectors of the itinerary will be permitted only once. Subsequent changes, requiring the re-issue of the ticket, will incur a service charge of US$25 for each new coupon raised in the voluntary change."

An intending traveller who read this, and who also noticed that Tel Aviv was named as a possible destination, might make a booking without nominating Tel Aviv, perhaps having his ticket issued showing a sector as simply "London-Sydney", leaving until after his arrival in England the making of decisions as to the various places in Europe and the Middle East to which he would desire to fly. As the ticket has a validity period of a year, I think this possibility, though likely to affect but a small number of people, is a real one. Such a person might have been induced to buy the around-the-world ticket, rather than some other ticket, in part because of a misunderstanding, induced by the brochure, that he could include Tel Aviv when re-routing his return journey. Though uncertain of his full European and Middle Eastern itinerary, he may have particularly desired to go to Tel Aviv. The fact is that at all relevant times, it would have been impossible for him to have done this without the purchase of an additional ticket, and, as a practical matter, a return ticket Athens-Tel Aviv-Athens. On the same basis, I think there was a breach of s.53 (c).

1. It is therefore necessary to consider the question of making a declaration and issuing an injunction, as sought in the amended application. Both of these forms of relief are discretionary. A declaration was not sought until the amendment made at the hearing, and would now relate to events long past. An injunction was originally sought, but there was no application for any interlocutory injunction, and it is difficult to see any purpose which would be served by an injunction at the present time. The brochure has been superseded. Perusal of the correspondence before action makes it clear that what was really sought was compensation.

2. On the issue of damages, it was conceded that, immediately the applicants attempted to make bookings and obtain their tickets, they were made aware of the fact they would not be able to fly to Tel Aviv upon those tickets. But it was submitted that two aspects of the matter sounded in damages. Counsel for the applicants, who put everything that could possibly have been urged on their behalf, suggested that I should be satisfied that the applicants suffered disappointment and distress upon learning that their hopes of realizing a holiday in Israel could not be fulfilled, simply by the use of the around-the-world tickets, without any extra side trip. It was not of course that they could not visit Israel, but that they could not do so by the purchase of the particular tickets they proposed to purchase, without also purchasing, at a cost of $32O each, additional tickets for the return journey on the Athens/Tel Aviv sector, and consequentially incurring the delay of a stop-over in Athens on the way to Tel Aviv. (On the return journey, a stop-over would presumably have been involved in any travel arrangement they might have contemplated, since there is no direct flight from Tel Aviv to Sydney).

3. The disappointment and distress alleged could have been engendered only by a brief period of anticipation, since the evidence does not suggest the brochure had been obtained earlier than a short time before, and certainly in the same month as, the instruction was given to the travel agent to make the bookings on 27 November 1985. How long after the obtaining of the brochure it was that the resolve was formed to holiday in Israel, has not been established by the evidence. Some time must have been taken in consideration of the brochure. Any period of anticipation before the true position became clear must have been very short indeed. In any case, the knowledge gained of the true position did not dash the applicants' hopes of holidaying in Israel. They simply learned what was required and the cost that would be involved, after a period which may possibly have been about a week of entertaining a misconception. So far were they from suffering the disappointment of their hopes of holidaying in Israel, that they in fact made, within a few days, bookings which would have enabled them to holiday there. I am quite unable to see, as regards this aspect of the matter, that any damage was sustained.

4. To avoid any misunderstanding, I should add that nothing that I have said should be thought to indicate any disagreement with the dictum of Wilcox J. in Steiner v. Magic Carpet Tours Pty Ltd (1984) ATPR 45,639 at 45,642 that "s.82 is sufficiently wide to include the loss of enjoyment of a holiday and the distress and inconvenience caused by the unavailability of proposed accommodation." See also his Honour's discussion of related questions in Flamingo Park Pty Ltd v. Dolly Dolly Creation Pty Ltd (1986) 65 ALR 500 at 524-5. I also accept that if any damage is shown the court must do its best to quantify the loss, even if a degree of speculation and guess-work is involved: Enzed Holdings Ltd v. Wynthea Pty Ltd (1984) 57 ALR 167 at 183. However, the joint judgment of the Full Court at the same page adds:
   
   

"We emphasize, however, that the principle applies only when the court finds that loss or damage has occurred. It is not enough for a plaintiff merely to show wrongful conduct by the defendant."

1. The other matter relied upon by the applicants is the eventual loss of the holiday in Israel, and of the cost of the air tickets purchased from El Al for the proposed return flight on the Athens/Tel Aviv sector. But that seems to me much too remote. It was not anything done or omitted by British Airways which led the applicants to vary their itinerary to eliminate Israel from it. They changed their minds because of the terrorist attacks upon El Al check-in counters. They did not suffer these losses because of any misrepresentation, or because they were misled or deceived, but because of their own decision, with full knowledge of the true facts, firstly, to travel to Israel by way of Athens, doing so by El Al rather than by Olympic Airways as had been initially intended, and secondly, to change their itinerary and substitute a trip from Nice to Rome. They cannot, in these circumstances, receive damages as if the statute inserted a term in the contracts constituted by the purchase of the tickets that the purchase of those tickets would enable them to travel to Tel Aviv. Any damages recoverable under s.82 of the Trade Practices Act must be in respect of loss or damage suffered by the conduct in question, and will not generally include damages assessed as if there had been a bargain to confer upon an applicant the benefit misrepresented to him: Gates v. City Mutual Life Assurance Society (1986) 16O CLR 1.

2. I am unable to find that any damages have been sustained by the applicants. This conclusion applies to s.53 as much as to s.52, as is made clear by Gibbs CJ in Gates' case at 7. See also the joint judgment at 15.

3. For these reasons, I dismiss the application. Bearing in mind, however, my finding that the brochure did involve breaches of the Act, and in all the circumstances of the case, I do not think the applicants should be ordered to pay the whole of the costs of British Airways. I order the applicants to pay one half of the costs of the respondent British Airways.