Budget Rent a Car System Ltd v W.T.H. Pty Ltd

[1987] FCA 746

CATCHWORDS

TRADE PRACTICES - S e c t l o n 5 2 ; m i s l e a d i n g or d e c e p t i v e c o n d u c t -

f a l s i t y of a d v e r t i s i n g .

Trade Practices A c t , 1 9 7 4 : S . 5 2 .

BUDGET RENT A CAR SYSTEM PTY. LIMITED V . W . T . H . PTY. LIMITED

G 376 of 1987

LOCKHART, WILCOX and EINFELD JJ.

24 NOVEMBER 1987

SYDNEY

\

I N THE FEDERAL COURT OF AUSTRALIA )

)

NEW SOUTH	WALES	DISTRICT	REGISTRY	)	No. G 376 of 1987
1

GENERAL DIVISION	)
ON APPEAL FROM A SINGLE J U D G E OF THE
FEDERAL COURT OF AUSTRALIA

BETWEEN :	BUDGET RENT A CAR SYSTEM PTY.
LIMITED

A p p e l l a n t

AND :  W.T.H. PTY. LIMITED

Respondent

COURT :	LOCKHART. WILCOX and EINFELD JJ.
DATE ORDER MADE:	2 4 NOVEMBER 1987
WHERE MADE :	SYDNEY

MINUTE OF ORDER

THE COURT ORDERS THAT:

1. T h e a p p e a l b e a l l o w e d ;

2 . T h e o r d e r s of t h i s Cour t a t f i r s t i n s t ance b e set a s i d e ;

3 .                  T h e a p p l i c a t i o n b e d i s m i s s e d :

4 . T h e r e s p o n d e n t p a y t h e a p p e l l a n t ' s costs o f t h e p r o c e e d i n g s ,

a t f i r s t i n s t ance and of t h i s a p p e a l :

5. L l b e r t y b e r e s e r v e d t o t h e a p p e l l a n t t o a p p l y t o a s i n g l e

J u d g e of t h i s C o u r t i n connection w i t h t h e u n d e r t a k i n g a s t o

damages g i v e n b y t h e r e s p o n d e n t on 14 A p r l l 1 9 8 7 .

NOTE :  S e t t l e m e n t a n d e n t r y of o r d e r s is d e a l t w i t h i n O r d e r 36 of

t h e F e d e r a l C o u r t Rules .

IN THE FEDERAL COURT OF AUSTRALIA )

)

NEW SOUTH WALES DISTRICT REGISTRY	)	No. G 376 of 1987
1

DIVISION	GENERAL	)
ON APPEAL FROM A SINGLE JUDGE OF THE
FEDERAL COURT OF AUSTRALIA

BETWEEN :  BUDGET RENT A CAR SYSTEM PTY.
LIMITED

Appellant

AND :	W.T.H. PTY. LIMITED
-

Respondent

CORAM :	LOCKHART, WILCOX and EINFELD JJ.
DATE :	24 NOVEMBER 1987

REASONS FOR JUDGMENT

THE COURT:

This is an appeal from a decision of a single Judge of this Court on 23 July 1987 grantlng in]unctive and other relief agalnst the

appellant ("Budget") in respect of the publication of an advertisement
which appeared in its name on Television Channel 9 Sydney at 9.05 a.m.

on Monday, 13 April 1987. The publication of the advertlsement was

said by the respondent ("Avis")	to have constltuted mlsleading or
deceptive conduct under	S . 5 2 of the Trade Practlces Act 1974.

The case is unusual in that it was establlshed to the

satisfaction of the learned trial Judge that the transmlssion of the advertisement occurred inadvertently, the advertlsement having been withdrawn by Budget on the previous Friday, 10 April and replaced by another advertisement about which no complaint 1s made. Under those circumstances it has been argued that the publication whlch took place on 13 April was not the "conduct" of Budget, within the meaning of S.

52, and that the grant of an injunction to restrain further

publication was unnecessary and inappropriate.

Although these submissions raise questions of lmportance in

relation to the operation of the Trade Practlces Act, it 1s not necessary to resolve them in the present case because we ale of the opinlon that the claim of falsity is not made out.

The case arises out of an advertlsing war between Budget and Avis in relation to the hire of motor cars. It appears that In

January 1987 Avls	introduced a series of hire rates under the title
"Avis Super Saver".	These provided that the dally rate would declease

as the period of hire increased. Thus, in the case of group, 01-

category, B cars - Ford Lasers and Toyota Corollas - the rate €or a

hire of 3-6 days was stated to be $41, for over 7 days $39, fol over

14 days $36 and for over 21 days $33. In February 1987, Avls embarked

upon a vigorous advertising campaign	to acqualnt members of the public
wlth these new rates.	The campaign included a TV commercial featuxinq
a young woman dressed in an Avis uniform. In response to	a male

voice-over question "How does an Avis girl handle fame?" the Avls

woman replied:

"When I did the TV ad I really didn't know what to

expect. All my friends ribbed me, but Avis ran

out of Lasers so here I am again. And the Super Saver rates stlll apply - rent for 3 days or more

..

3 .

and you can get up to 30% off our normal rates. So a Ford Laser can drop to as low as $ 3 3 a day. If you can get better than that, you can have my

shirt. See, I've still got it."

Budget responded to this challenge, perhaps predictably, by offering to take the shirt. It made two separate TV advertlsements

making a direct comparison between its rates and those of Avis. There

were some differences in their wording. We need not refer to the

first version, which was replaced on about 6 April by the second version ("Budget's commercial") which is the advertisement the subject

of these proceedings. That version read:

"While Budget continues	to bring you new innovative
products like Plan-Ahead, Freedom	Checks, Credit

1s why I'm wearing their shirt. Budget's Dollar Driver rates will always drive your dollar further (on screen: Budget Rent-a-Car drives your dollar further)."

Cards and Home Delivery we still know what made us which
top. To prove it we're introducting Dollar Driver
rates. Now you can rent our Holden Gemini for as
low as $29.00 a day (on screen: $29.00 per day -

for 4 days or more). Even If you used the Avis

On 6 April 1987 Avls management authorised the reduction of

its rate for group B vehicles, under the Avis Super Saver plan, to $29

per day. There is no evidence as to whether this reduction was

notified to Avis stations or as to the rates actually charged by them,

although Avis did adduce evidence from Mrs. D.M. Vandervalk, its National Marketing Services Manager, that on 9 April she telexed all Avis State Managers and State Franchise Managers Informing them that effective immediately, all group B Super Saver rates from two days hire upwards, had been amended from $ 2 9 to $ 2 8 per day. However, the old advertising material, showing the earlier Super Saver rates,

> ~'

continued to be displayed, and on the same day Budget adopted the same

rate for its group B vehlcles. Following extensive Correspondence

between the sollcltors for the parties, Budget decided to make a third TV advertisement, apparently intendlng to avold a direct comparlson of rates. This advertisement, not the sub~ect of present complaint, was

made and distributed on Friday,	10 April. As mentioned,	it was
intended to replace the earlier	advertisement;	but by some

misadventure, not explained In the evidence, the earlier commercial

was screened on one station on one occasion the following Monday. The learned trial Judge held that this publrcation constituted misleading

conduct and made an order restraining its further publication.

At this time Avls operated 2 4 company owned rental stations and had franchises to approximately 180 other statlons. There was no evidence as to what action, if any, any of the varlous State Managers and State Franchise Managers took as a result of the 9 April telex. Mrs. Vandervalk conceded in evidence that the varlous franchisees were

free to disregard her direction as to hlrlng rates and that it was

possible that they did so.

There were two aspects of the Avls case on falslty. Flrst,

Budget's commercial was said to have clearly indicated that Avis' "Super Saver" rate for three weeks of a group B vehicle was more than $ 2 9 per day, when in fact on 13 April, it was $ 2 8 per day. Secondly, Budget's commercial was alleged to have implied that it was necessary to take such a vehicle for three weeks before the new Super Saver

rates applied, whereas in fact the new Super Saver rates	applied to a
hiring for as few as three days.

There was very little evidence before the trial Judge as to

the rates actually charged by Avis for group B vehlcles on the day of

Budget's commercial.	The solicitor for Budget contacted seven Avis
stations seeking a quotation for the hire of a group B vehlcle.	Only
one station, at Melbourne airport,	quoted a rate as low as $28 per
day. The only evidence as to actual hirings at $28 per day consisted of seven contracts, all made at Melbourne airport	- a "company owner"
station.	It 1s common ground that there was no evidence whatever as

to the rates actually charged at other stations notwithstandlng that, as early as 9 April, Budget, through its solicitors, challenged the

genuineness of the claimed reduction in the relevant hiring rate.

This was a matter entlrely within the knowledge of Avis and its failure to adduce evidence as to actual hirlng charges leads to the inference that such evidence, if produced, would not have supported

its case.

It is important to observe that the claim made in Budget's

commercial about Avis used the words "you'd pay more than that". The

reference was to what members of the publlc would be requlred to pay, not to the amount of the relevant hire rate formally adopted by Avis.

Ordinarily, It might be supposed, these would be the same amounts but	the evidence shows that it would be unsafe in thls case to proceed
upon that assumption. There was no material before the trial Judge upon which it could be concluded that it was untrue for Budget to say that users of the Avis Super Saver scheme would have to pay more than $29 per day for a vehicle in the class of the Holden Gemlni - that is a group B vehicle.

The second aspect of the claim of falslty depends upon the

proper construction of the sentence in Budget's commerclal referring

to three weeks.	Contrary to the submission of Avls, this sentence
does not say that an Avis customer must use the Super	Saver scheme for

three weeks to qualify for Super Saver rates. It simply says that,

even l f one took the lowest rate available under the Super Saver scheme - that is the rate applicable to a hirlng of more than three weeks - the cost would be greater than $29 per day. That statement was true, if comparlson be made with the original Super Saver rates; and, there was no evidence that, except in relation to Melbourne airport, any lesser rates were in fact available, whatever the length of hire.

The appeal should be allowed, the orders made by the trial
Judge should be set aslde and in lieu thereof it should be ordered

that the application be dlsmissed. The respondent must pay the costs

here and below. Liberty should be reserved to the appellant, if so

advised, to apply in connection with the undertaking as to damages

given by the respondent on 14 April 1987.

I	certlfy that this and the precedlng
flve ( 5 ) pages are a	true copy of the
Reasons for Judgment herein	of the Court.
Associate /M+

Dated:  2 4 November 1987

.

7.

Counsel for the Appellant: R. Merkel, Q.C., J. Garnsey,
W. Cove11

Solicitors for the Appellant:	Corr-s Pavey Whlting & Ayrne
Counsel for the Respondent:	C.R.  Elnstein
Solicltors for the Respondent:	Freehill Holllngdale & Page
Date of Hearlng:	12 October 1987
Date of Judgment:	2 4 November 1987