Budget Rent a Car System Pty Ltd v Dewhirst, Allen

Trade Practices - misleading o r deceptive	conduct -
appllcatlon for interlocutory relief
Trade Practices Act 1974 (Cth) s . 5 2

BUDG!ZT RENT

A C A R SYSTEM PTY L I M m

v ALLEN DEWHIRST.

KAY RENT A CAR PTY LIMITED and DINERS CLUB LIMITED

NO. VG.217 OF 1984

Davles, J

16 August 1984

Melbourne

IN THE FEDEXAL COURT

OF AUSTRALIA )

VICTORIAN	DISTRICT	REGISTkY	l	No. VG.217 of 1984
)

DIVISION

GENERAL

)

BETWEEN :

BUDGET RENT A CAR SYSTEM

PTY LIMITED

Appllcant

AND	A-DEWHIRST, KAY RENT A C A R PTY LIMITED a n d DINERS CLUB LIMITED

Respondents

JUDGE MAKING ORDE3i

bavles, J

DATE OF ORDER

l6 August

1984

MADE	WHERE	Melbourne
THE COUkT ORDERS

the thlrd named respondent, ljlners Club Limlted, undertaklng by Its counsel,

not to dlstrlbute or cause to be dlstrlbuted the

brochure that

1s exhlbit VLR 1 to the atfidavlt of Vlcki L o u s e

Rlchardson

sworn

August

1984

untll

the

hearlng

and

determlnatlon of the

appllcatlon,

or further order, the

appllcatlon

for

lnterlocutory rellei aqalnst the third named

respondent 1s by consent dlsmlssed.

The costs of and incldental to thls appllcatlon

are reserved.

IN THE FEDERAL COURT

OF AUSThALI

A )

)

VICTORIAN DISTRICT	REGISTRY	1	No. VG.217 of 1984
)
GENERAL DIVISlON	)

BETWEEN	B U W E T RENT A	CAR SYSTEM
-	PTY LIMITED

Applicant

ANrJ	ALLEN DEWHIRST, KAY RENT
A CAR PTY LIMITED and
DINERS CLUB LIMITED

Respondents

JUEGE MAKING ORDEX	Davies, J
BATE OF ORDER	16 August 1984
WHERE MADE	Melbourne

the applicant by It

S counsel undertaking to abide by any

order the Court may make as to damages In

case the Court should

heremafter be

oplr.lon

that

the

flrst

and

second

named

respondents

shall

have sustalned any by reason

of thls order

uhlch the appllcant	ought to pay
-	THE COURT ORDERS

1 .

Until the nearlng

arid drtermlnatlon of

thls appllcatlon or

further order the respondencs. Allen Dewhlrst and

Kay Rent A Car

Pty Llmited and each

of them be restrained by themselves, thelr

servants and agents from clrculatlng or

dlstrlbutlng or causlng

to clrculate or dlstrlbute the brochures which

are exhlblt DML 2

to the affldavlt

Duncan McAlllster Leltch sworn

7 August 1984

and exhlblt WIK	5 to the affidavir:	of Wllllam Davld King sworn	15
August 1984.

2. The costs of and lncldental tcj thls appllcatlon are reserved.

3.	‘The dlrectlons hearlnq	1 s ad~ourned to Frlday,	24 August
1984.

4. Liberty 1 s reserved to apply generally.

IN THE FEDERAL COURT

OF AUSTRALIA )

)

VICTORIAN DISTRICT	REGISTfiJ	)	No. VG.217 of 1984
)
GENERAL DIVISION	)

tllX'W1'WCE:N :

DUDGEX' RENT A CAR SYSTEM

=LIMITED

Appllcant

=EN	UEWHIRST, KAY RENT
A-CAR	PTY LIMITED and

DlNERSCLUB LIMITED

Respondents

REASONS FOR JUDGMENT

( e x tempore)

CORAM : Davles, J

16 Auqust 1984

Thls

1 s an applicatlon for

interlocutory Injunction.

The appllcation 1 s brought by Budget Rent

A Car System Pty

Llmlted ("Budget")

agalnst Kay kent A Car Pty Limited ("Hertz"),

whlch operates the Hertz Rent	A Car buslness, and against one of
its offlcers.

For the past four

years, budget has promoted a scheme whlch

Involved two cards

one called the "Budqet Lucky

13 Club" and

the other the "Budget

35.5 Club". The flrst of the cards was

dlstrlbuted on behalf

of Buduet by Dlner's Club International and

was to be used In assoclatlon wlth the

Dmer's Club credlt card.

The

other was dlstrlbuted

h!J

Amerlcan Express, to

be used In

assoclation wlth the Amerlcan Express credlt card.

When

used, the Club

13 card obtalned for Its user

certaln beneflts; for example, a Holden Commodore Station Wagon could be obtalned from Budget for only $47 per day, that flgure to Include personal accldent Insurance, comprehenslve Insurance

and unllmlted kllometres. That was a savlng upon the ordlnary

cost whlch, for a Holden Commodore Statlon

Elagon, was $59 per day

and in respect

of whlch extras, such

Insurance, had to be

pald.

The use of

the Budget 35.5

Club card wlth the Amerlcan

Express card obtalned sxmllar beneflts.

Both the Lucky

1 3 Club and the

35.5

Club cards were

dlstrlbuted

Ijlner's

C l u b

and

Amerlcan

Express

wlth

brochures whlch described the henerlts	to be obEalned	by thelr
use.

The respondents Dewhlrst and Hertz

have now

commenced to

dlstrlbute

through

Dlner's

Club

Internatlonal

and

American

Express a

card called Hertz Club Key

card.

That card

1 s belnq

distrlbuted together wlth

a brochure whlch descrlbes the beneflts

to be obtalned from the use

of the card.

Save for mlnor dlfferences. the use of the card with Hertz

obtalns beneflts slmllar to those obtalned by the use

of the

other cards wlth Budaet. The dlfferences polnted out to

me by Mr

H. Jolson, of counsel, who appeared for

Hercz, were that, wlth

the use of the Hertz card,

stamp duty 15 lncluded In the overall

charge, whlch, for example, IS

for a Falcon

S t a t i o n Nagon, $47

per day, the same flqure

as that for the holden Commodore Statlon

Wagon; secondly,

that there 1 s

an ablllty to use the Hertz card

internatlonally and not merely In the Paclilc area, as wlth the Budget car; ana, thlrdly, that the use of the Hertz card gives a

special opportunlty to wln the	iree	use of a BMW vehlcle for one
year.

Budget complalns that there are certaln aspects

of the

brochure dlstrlbuted wlth the Hertz card whlch

are mlsleadlng or

deceptlve

or llkely

to mlslead or decelve and therefore whlch

breach 5.52 of the Trade Practlces Act 1974 (Cth).

The first of such statements 1s :

"Whlle other car rental comanles slmply

offer you a

dlscount, we offer you a Club Key Card."

In my oplnlon, thls statement 1 s an lncorrect statement or fact, If read strlctly in accordance wlth Its terms. It suggests that

other car rental companles

do not offer a slmllar card.

The

statement 1s

mlsleading, havlnq regard to the fact that one

the maln competltors, Budget. nas

for years operated

card

system whlch offers ubstantially slmllar benefits.

The next statement whlch

1 s challenged reads :

"It puts you way ahead even before	you start,
because It works llke no other card."

In my oplnion, thls statement

1s also wronq and, 1t read StKlCtly

accordlng to Its terms,

1 s

mlsleadlng.

The

evldence before me

shows that there 1s such slmllarlty becween the benerlts offered

by Budget and

Hertz that there

1s no proper basls for the

statement that the Hertz Club Key card worKs llke

no other card.

The next statement challenged

a headlnq whlch reads

"The key to

a wlder range of vehlcles".

It was suggested by Mr

R. Merkel, QC, senlor

counsel

f o r

the

appllcant,

that

thls

statement lndlcated that Hertz had a wlder ranqe

of vehlcles than

other car rental companles. It does not seem to me that, In the context, the headlng clearly carrles that meanlng. It appears to me that another equally valld readlng or the headlng 1s that the

card offers a wlder range

of vehlcles to a hlrer of vehlcles

because

It brlnqs down the prlce and therefore makes a wlder

range of vehlcles avallable to the hlrer.

The next statement that 1 s challenged reads :

"You'll ilnd that other car rental companles may

offer you

a dlscount on thelr standard cars, but

at Hertz we also otter you a discount on cars llke

the luxurlous BMW 318 1 and 520 1."

Again, I thlnk

that

thls

statement

1 s In

terms

wrong

and

mlsleadlng for the use

of the Budget cards does obtaln from

Budget discounts on Its

luxury

range

of vehlcles. I am,

therefore, of the

oplnlon that If the brochure

1 s read strlctly

accordmg to Its terms,

~t 1 s mlsleadlng and deceptlve.

would add, Indeed, that no attempt

explaln

the

termlnology of the brochure has

been put forward and there

1 s

affldavlt or

other evldence to suggest that the representatlons

In the brochure were made ln

qood falth.

In my

oplnlon, the real Issue

In the

case, therefore, 1s

whether the sentences

In the brochure to whlch

I have referred

are

to be

read as

mere pufflng whlch wouid be dlsregarded by

users of Diner's and Amerlcan Express credlt cards, partlcularly

having

regard to what

was

already

Known

through

Budget's

advertising, or whether they should be iooked upon	as having more
substance.

I was

flrst

lncllned

take

the

view

that

the

statements In both the Dlner's and Budget brochures would not

taken seriously by a reader. However,

I have taken note

of the

evldence that the Budget promotion has been

very successful

promotlon and that the revenue brought In through the use of the

Eudqet cards

now runs to milllons

of dcilars and

I have also

taken note

the fact that

Hertz has entered

Into a serious

advertlslng campalqn. presumably for the purpose	of attractlnq
buslness.

I have therefore come to the concluslon that the statements

made In

the brochures should be glven welsht and that they

have a

slgnlflcant effect. In thls

llqht, it seems to me that

the statements complalned about cannot

looked upon

as mere

puffing.

They are not statements whlch are mere exaggeration

statements

Incapable

o t oh!ectlve

proof,

rather

they

are

statements of fact and they

are wrona.

I have

therefore come to the

m e w that, on the evldence

presently betore me, the appllcdnt has made out d probability of

success at the trlal.

The next questlon to whlch I must turn my attentlon

whether or not

drscretlon

urant

an Interlocutory

~n~unction

should be favourably exerclsed. On the

whole, I thlnk

that the ~n~unctlon

should be uranted. It seems to me that If It

not

granted

It wlll be

dllflcult

for

the

appllcant

establlsh the extent of any damage suffered from the mlsleadmg advertlslng and that It wlll be slmpler tor the respondent, If it

1s ultlmately successful In the hearlnq, to establlsh what Its

damage 1s by reason of havlng	to	cnange	Its	advertlslng
programme.

I recognise that there has been

no evldence put to me which

shows wlth

any clarity that Budget has lost any partlcular

sum

from the advertlslng to date or even, Indeed. that Its sales have dlmlnlshed. That 1s. I thlnk, a fact whlch tends rather to polnt

to the difflculty

demonstratlng precisely what damage flows

from advertlslng of thls type.

As I have sald, lf an lnjunctlon

1s granted, the respondent wlll be able to change Its advertlslng

and the costs

of dolng that can be assessed.

The factor whlch has most concerned me on the exerclse of

the dlscretion 1s a matter whlch was not relled upon by

Mr Jolson

for the

Hertz respondents, and that 1 s the form

ot Budget's own

brochure wlth respect to Its Lucky

13 Club. That brochure on Its

flrst and faclng page states that the Lucky

13 Club cuts the cost

ot Budget car rental by more than

30 per cent,

a very dramatlc

statement. When one looks lnslde the brochure, It

1s dlfflcult

to see how that IS correct, except

t o a most llmlted extent.

It 15,

Indeed, a llttle dlfflcult. when one

l o o ~ s

at the

contents of the brochure,

to see preclsely what beneflts are

belng obtalned.

The brochurt= srates that one may rent any Budget

1 .

car up to and lncludlng a Commodore Wagon for only $47 per day, but If one looks at the standard rental charges, one sees that, apart from the rental for the Commodore Wagon, all other rentals

are about

$47 per day or

less, so that most of

the cars have a

baslc rental the same	or less than that put	forward as the
discounted rental.

It 1 s

clear, of course,

trom the brochure, that personal

accldent

Insurance,

comprehenslve

Insurance

and

unllmlted

kllometres are all beneflts that

may be oatalned, but, for my own

part, I must say It

IS very dlfflcult to relate what appears on

the front of the brochure

what 1 s said wlthln It or Indeed to

get any very clear Idea s

to preclsely what benetlts the use

the card glves.

I would not make the same comment

about the

brochure wlth respect to the Budget	35.5 Club, for that is drawn
In qulte dlfferent terms.

In the result, therefore,

have the lmpresslon that the

Budget brochure mlght very well

be, In a different

way, as

mlsleading

the

publlc

as the Hertz brochures.

have

consldered whether, In those circumstances, ~t would be proper to

grant an ln~unctlon.

However, I have come to the vlew that the Interests

of the

public, as well as

the Interests of Budset, should be considered

and that

It 1 s In

the Interests of the

public that advertlslng

should not be mlsleadlng and deceptlve and I have consldered that

the fact

that some

of the budget advertlslng arguably is also

mlsleadlng and deceptlve,

1 s not

a good reason for refuslng to

d .

grant

an ~ n ~ u n c t ~ o n

preventlna the Hertz brochures from belng

dlstrlbuted.

For those reasons

1 am disposed to urant

an lnterlocutory

Inlunctlon.

Upon Mr

Merkel's undertaklng on behalf

ot hls cllent that

the appllcant

wlll pay any damages whlch the respondents Allen

Dewhlrst and Hertz may suffer by reason

of my order and whlch the

appllcant may hereafter be called upon to pay, should the Court

see

flt so to

order,

I order t h a t until

the

hearlny

and

determlnatlon of this appllcatlon or further order that the

respondents,

Allen

Uewhlrst

and

tiertz and

each of them

restralned

themselves,

thelr

servants

and

agents

from

clrculatlng or dlstrlbuting or causlny to circulate or dlstrlbute the brochures whlch are exhlblt DML 2 to the affldavlt of Uuncan

McAlllster Leltch sworn 7 August

1984 and exhlblt WDK

5 to the

affldavlt of Wllllam Davld

Klnq sworn 15 August 1984.

I ce;t!ty

that this and the

J W W I

( 7 )

preceding pages arc a true copy of the masons for ludgrnent herem of The Honour-

oble Mr. Judlce J c', p d w , ~ ~

Assoclate

[1984] FCA 279

16 Aug 1984