Budget Rent-A-Car System Pty Ltd v Kay Rent-A-Car Pty Ltd - [1985] FCA 212

CATCHWORDS

Trade Practices - misleading and deceptive conduct

- whether

advertising brochures amount o contravention of the Act.

Trade Fractices Act 1974

s.52

BUDGET RENT-A-CAR SYSTEM PTY. LTD.

and

KAY RENT-A-CAR PTY. LTD.

V. No. G 81 of 1985

Northrop J.

Melbourne

24 May 1985

* Not considered approprlate for further distribution.

IN THE FEDERAL COURT OF AUSTRALIA

) )

VICTORIA	DISTRICT	REGISTRY	)	V.	No.	G 81 of 1985
)

DIVISION

GENERAL

I ,

I	BETKEEN:
!
I

BUDGET RENT-A-CAR SYSTEM

PTY.

LTD.

Applicant

and

KAY RENT-A-CAR

PTY.

LTD.

Respondent

COURT:

NORTHROF J.

m: 24 MAY 1985

PLACE

: MELBOURNE

MINUTE OF ORDER OF THE COURT

THE COURT ORDERS THAT the application be dismissed with costs.

(Settlement and entry	of Orders is dealt with by 0.36 of the
Federal Court Rules.)

IN THE FEDERAL COURT OF AUSTRALIA

)

VICTORIA DISTRICT REGISTRY

)	V. No. G 81 of 1985

GENERAL DIVISION

)

BUDGET RENT-A-CAR SYSTEM

PTY. LTD. Applicant

and

KAY RENT-A-CAR PTY. LTD.

Respondent

COURT:

NORTHROP J.

U:	24 MAY 1985

PLACE:

MELBOURNE

REASONS FOR

JUDGMENT

The applicant is a corporation

which,

f o r

many

years, has carried on the business of, inter alia, renting

motor vehicles Including

cars, vans and trucks under the name

"Budget". Hereinafter the applicant will be referred to as "Budget". The respondent is a corporation which, for many years, has carried on the business of, inter alia, renting

motor vehicles includlng cars,

vans and trucks under the name

"Hertz". Hereinafter the respondent will be referred to as "Hertz". Over many years, Budget and Hertz together wlth a small number of other companies, have been keen competltors

in the market

of renting motor cars.

- 2 -

In 1985, Budgct proposes to carry on under and by

reference to the name "Budget", the buslness of provldlng

chauffeur driven hire cars to the public.

With that object

vlew,

Budget

has applied

for

and

has obtained the

appropriate licences under Victorlan State legislation to

enable it to carry

on that business

In Melbourne. It is

carrying on that type of business In Perth. It proposes

carry on that type

of buslness in other capital cities.

Hertz has no licences under State legislation enabling It

engage In the business	of providing chauffeur driven	hire
cars to the public.

Since October 1984, Hertz has had on display from

its desks at airports,

pamphlets advising a chauffeur drive

service.

This pamphlet has been available to the public

from

those desks and

also from travel agents to whom Hertz had

supplied copies of the pamphlet.

k similar pamphlet had been

distributed in similar ways since October

1983,

but

had

become out of

print.

On the

front of the current pamphlet

there is depicted

a Mercedes motor car

wlth a New South Haales

hire car

number plate

wlth a

unlformed chauffeur standing

alongside

the front passenger

door.

The chauffeur

standlng beneath a Hertz identlfication sign. At the top of

the front page

in bold type

are the words "Hertz Chauffeur

Drlve". At the bottom of

the front page is the Hertz

sign.

- 3 -

On the top of the reverse side of the pamphlet in bold type are the words "A Hertz Class Service that costs less than it

looks.

The following information is then set out:

"You fly first class in the air, because

you

expect better service and more comfort.

Now you can travel first class on the ground

with Hertz Chauffeur Drlve and receive all the

service and comfort

you deserve.

It's easier than standing in line f o r a

taxi

and gives

you more tlme to prepare notes for

important meeting.

And because you're charged by the

hour, in the

end lt could cost less than

you think.

A6 you'd

expect from such a prestigious

servlce,

it's

only

available on the

most

prestigious cars, the

"S" Class Mercedes, "SEL"

Class Mercedes

and the Rolls-Royce Silver Shadow.

Hertz Chauffeur Drive is also an ideal way to

welcome a visiting V.I.P., launch a new

promotion

or top off a special occasion llke anniversaries or

birthdays.

For bookings at

all capltal city areas phone

(008) 33 1333 (local

call fee only),

Melbourne (03) 347 3322.

At the bottom

of the reverse side

of the pamphlet is

a Hertz

sign and the words "Kay Rent-A-Car Pty. Ltd.

(Inc. in Vic.)".

Budget commenced the'se proceedlngs on 29 March 1985. Budget claimed that in distributing the

1984 pamphlet,

Hertz, in contravention of section 52 of the Trade

Practices

Act 1974 ("the Act"), was

engaging

conduct

that

was

misleading or deceptive

or was llkely to mislead or deceive.

Budget sought interlocutory relief restraining

Hertz

from

distrlbuting the 1984

pamphlet and

from advertising to the

effect of

the material

contained in that

pamphlet.

The

motion for interlocutory relief cane

on for hearing on 1

and

- 4 -

2 April 1984. During the course of

the hearing of the

motion, it became apparent that the real issue between the

parties involved a determination

of the question whether the

service advertised by

Hertz

was in contravention of section

52 of the Act when the service was

not provided by a

motor

vehicle owned by

Hertz and where the chauffeurs driving those

vehicles were not employed by Hertz. As a result, on 2 April

1985, the pat-ties agreed that the Court should treat the

motion as the trial of the action. As a result, much of the

material before the Court became

it-relevant.

In addition

the

facts already stated, the

followlng facts are

found.

Hertz provides

the

Hertz

Chauffeur Drive Eervice pursuant

to agreements entered into

between Hertz and other

corporatlons which provide

chauffeur hire car

service

under

the

name

"Astra".

The

service is provided in each capital city. Under

the service,

where a potential client seeks the Hertz Chauffeur Drive directed by Hertz to the client and the cllent pays Hertz.

service, Hertz arranges for Astra to provide the car and

chauffeur. The actual service is provlded by Astra. The

service is not limited to journeys to or from alrports, but

extends to Include other commencing and terminating pomts.

The chauffeurs are provlded with Hertz account books which

are signed by Hertz account holders. If the client pays the chauffeur direct, a recelpt should be given in the name of Hertz, but it may be glven in the name of Astra. Astra for instance, does not accept Bankcard, but Hertz does. The

- 5 -

amount chargcd by Hcrtz is the oamc as the normal Astra

charge. Hertz does not

advertise

the

name

Astra

when

arranging

this service. This is

provided for in

the

agreements. To the uninitiated, neither the appearance of the hire car, nor the uniform of the chauffeur suggests that

the car is owned by Hertz,

or for that matter, by Astra, or

that the chauffeur is an employee of Hertz, or for that

matter, an employee

of Astra, If in fact that is the case.

By	internal directions, the staff of Hertz are required to

offer and

provide the Hertz Chauffeur Drive service in

manner that does not disclose the name

Astra.

Astra, on the

other hand, is required

to encourage its clients seeking to

make use of a rent-a-car, to seek the servlce of Hertz.

is fair comment that under its agreements with Astra,

Hertz

is obtaining the

use

of a chauffeur drlven hire cat- without

having to obtain licences to enable it to

do so

lawfully.

Normally this service

is llmited to clients

who have an

account with Hertz, but can be provided to any person.

The essential feature

of the complaint by Budget is

illustrated by its application. By paragraph 2(a) of its application, Budget is seeking injunctions restraining Hertz from making statements in the terms or to the effect of representations that:

" ( 1)

Hertz is providing

to the public its

own

chauffeur drive hire

car service;

(ii) The "Hertz Chauffeur Drive" service is

modern first class exclusive and prestigious

set-vice which is

only

available

the

I	public through Hertz;

- 6 -

(lii) Thc

"Hertz

Chauffeur Drive" service

constituted by chauffeurs, cars and services

of and provided by

Hertz;

(iv) The "Hertz Chauffeur Drive" service has

the

same reliability quality repute

and goodwill

as the Hertz car rental service;

(v) The only cars available

to be provided by

persons

seeklng

chauffeur

drive

vehicles

from Hertz are the "S" Class Mercedes, "SEL"

Class Mercedes, and the Rolls Royce Silver

Shadow.

The essential

feature of

the complaint by Budget is that

contained in paragraphs (i) and (iii)

This complaint is made clear

by a

reference to

parts of paragraphs

4 and 5 of the statement of claim.

Paragraph 4 alleges that the terms

of the

1984 pamphlet

contain representations in the terms or to

the effect of the

representations set out in paragraph

2(a) of the appllcation.

Under paragraph 5 of

the statement of clalm, Budget alleges

that at all relevant times:

"(a) The "Hertz

Chauffeur

Drive" service

was

provided by Astra

Hire Cars;

(b)	The "Hertz Chauffeur Drive" service was not provided by Hertz;

"Hertz

Chauffeur

Drlve"

service

constituted no more than a booking facility

provided

Hertz

to the

public for the

booking of Astra Hlre Cars;

(d) Any member of

the public could

at any time

book an Astra Hire Car with an Astra

chauffeur; ...

(f)

The "Hertz Chauffeur Drive" service was not

constituted

chauffeurs

cars

and

the

set-vices of

Hertz;

(g)

The "Hertz Chauffeur Drive" service was

constituted by chauffeurs

cars

and the

services of Astra Hire Cars; ..."

- 7 -

The material before the Court does not support any

claim based on paragraphs 2(a)(iv) and (v)

of the application

and the cot-responding

paragraphs

4(d)

and

(e)

the

statement of claim and nothlng further need	be said about
those aspects of the application.

Counsel for Budget made a detailed examination of

the 1984

pamphlet. It is accepted that in law, a person

cannot operate a

chauffeur driven

hire car servlce without

having obtained a

licence under relevant State legislation.

Counsel contended that

on a consideration of the whole of the

pamphlet, the impression conveyed is that there is

a unity of

identity between Hertz and the person responsible for the day

to day control, administratlon, conduct and provision

f the

chauffeur drlver service. Impliclt in this contentlon is

that Hertz has the necessary State llcences to conduct those

services. Counsel contended that

the

pamphlet advertised

that Hertz was responsible for the operation and conduct

the chauffeur drive

hire car service.

He contended that

those representations were all

false and thus contravened

section 52 of the Act.

The contentions made on behalf

of Budget are not

accepted.

The pamphlet is directed to persons

who

normally

would fly first class and

on arrival at an airport, would

seek a similar first class set-vice of travel by road. It is

dlrected also to persons who would tend to travel first class

If travelling by air.

As an alternative to a rent-a-car,

i.e. a self-drive car, Hertz offers persons coming wlthin

- 8 -

this class, an alternatlve servlce, namely,

a chauffcur drive

service.

my opinlon, the words in the pamphlet

"Hertz

Chauffeur Drive" are descriptive of the

service

being

offered, a servlce being offered by Hertz. There is no

room

for an inference or an implication that the cars

s o

provlded

are owned by

Hertz and that the chauffeurs drlving those cars

are employed by Hertz. There is no room for an inference or Implication that Hertz 1s responsible for the day to day

control,

administration,

conduct

and

provision

the

chauffeur drive service, nor that

Hertz

has the necessary

State licences to conduct those services.

By the pamphlet,

Hertz is advertising to the class

of persons

to whom the

pamphlet is directed that the service will

be first class

and prestigious and

can be booked and paid for

through Hertz

and that Hertz has a direct business association wlth

the

service provided and will be responsible for the standard of the service provided. The use of the word "Class" at the top of the reverse side of the pamphlet emphaslses the nature of

the

service.

There

much force In the

contention

counsel on behalf of Hertz that

the

pamphlet

less

misleading

and

eceptive

than advertisements

where

operator advertises the conduct

of a buslness where the name

of the advertiser 1s

used by a franchisee under a

franchise

agreement

such as where

franchisees of Budget

operate

rent-a-car services under the

name Budget. The important

feature depicted by the pamphlet is that	Hertz is provldlng a
service. Hertz provides that service.	The pamphlet is not

misleading or deceptive wlth respect

the

servlce

provided.

The Hertz customer gets his account in the name

- 9 -

Hertz and pays Hertz. It is immaterial whether Hertz owns the cars, leases the cars, employs the chauffeurs, or engages the chauffeurs as independent contractors. It is providing a service which is the service described in the pamphlet.

In	my opinion, Budget has not made out its case.

The application is dismissed with costs.