Budget Rent a Car Systems Pty Ltd v Trans Australian Airlines

[1985] FCA 241

NOTE: - NOT APPROPRIATE FOR REPORTING OR FOR GENERAL CIRCULATION

(Am)

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IN THE FEDERAL COURT OF AUSTPALIA	1
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VICTORIA	DISTRICT	REGISTRY	)	NO. VG 117 OF 1985
)

GENERAL DIVISION	)
BETVEEN :

BUDGET RENT A CAR SYSTEM PTY LIMITED Appllcant

and

ALLEN DEWHIRST, KAY RENT-A-CAR FTY LIMITED

and

TRANS AUSTRALIA AIRLINES Re 5P ondent s

MINUTES OF ORDER

COURT: Moodward J .

DATE: 2 3 May 19PE.

FLACE: Melbourne

THE COURT ORDERS THAT:

1. The first and second respondents be restrained froin

making representations or causlng to be made

representations to the public whether by way of

advertising, the circulation a d distrLbution of

magazines pamphlets or any other document or by way of

oral or any written statements, and the first respondent

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from causing to be made such representations, in the

terms-or to the effect that the second respondent has

established itself as the leader in the rental car

market f o r luxury cars.

2.	The first and second respondents	pay the appllcant's
costs of the action.

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

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..

NOTE: - NOT AFFROPRIATE FOR REPORTING OR FOR GENERAL CIRCULATION

(AEW)

IN THE FEDERAL COURT OF AUSTRALIA	) )
VICTORIA DISTRICT REGISTRY	) NO. VG 117 OF 1985 I
)

DIVISION GENERAL )

I

BETI.JEEN :

FtJDGET RENT A CAR SYSTEM FTY LIMITED Applicant

and

ALLEN DEWIIRST, KAY FENT-A-CAR FTY LIMITED

and

TRANS AUSTP.?.LIA AIRLIIiES Respondents

COURT : Woodward 3.

DATE : 23 May 1985

PLACE : Melbourne

! EX-TEMPORE JUDGMENT

In this matter I have reached a flrm vlew and I propose

to deliver judgment now.

The claim is ons for an interlocutory injunction to

restraln what is alleged to be a breach of s . 5 2 of the Trade

Fractices hct 1974. The parties are agreed that this hearlng

should be treated as the trial of the actlon, since all relevant

facts are before me. The matter arises in the field of car

rentals, which has already seen a number of similar actions

instituted and contested. In this particular case the Hertz

company, wholly owned by Kay Rent-A-Car Pty Limlted, has placed In

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a publication brought out by Tram Australia Airlines, which is a

half share holder in Kay Rent-A-Car Fty Limited, a statement to

the effect that "Hertz has established itself as the leader in the

rental car market for luxury cars".

It 1 s , I think, signlflcant that this statement is

expressed as bemg a direct quotation from the managing director

cjf Hertz Australia, and thht it appears in a publication of the

company which is a half owner of Hertz. So it is not as though It

is something that has been stated casually - for example, in an

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interview by a journalist with the managlng director. It 1s more in the nature of deliberate advertising copy, in view cvf the

publication in which It finds Itself.

It lias been conceded, upon examlnation by counsel for

the respondents, that thls statement, as a matter of fact, cannot

be supported. However, Dr Fannam has sought to defend the

application in a number of other ways; firstly, he hzs sald that

the statement is vague in its content and not such that the Court

ought to be concerned about it. He suggests that to sag Hertz has

established itself as leader in the rental car market for luxury cars is to say no more than that it is the best in that fleld. I cannot agree with that. I think that to talk of a 'leader' m a notorlously competitive limited market, where there cohld only be

one, two or three possible leaders in a given field, and to make a

deliberate statement claiming the leadership I n that field, is to

make a direct statement that the company being described has the

largest market share; and	in this case It	is clear that that is
far from the truth.

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There 15, admittedly, some room for douht about the

precise definitlon of luxury cars; but it is clear that, however

the word is to be interpreted, the claim cannot be substantiated;

and it has not been attempted on behalf of Hertz to substantiate

it. So I think that, taken on its face, it is a claim that this

company has achieved the market leadership n one important aspect

of the rental car market, and that statement is false. Hhether It

is also mlsleadlng in a material way is another matter which Dr

Fannam challenges. He suggests, because of the limited audlence

to whlch this publication has gone, namely, the people who a r e

members of the TAA Flight Deck Club, or wb.0 otherwise have

occaslon to use the TAA Fllght Deck lounges at alrpot-ts, that that

m some way makes a difference and renders lezs ziqnificar,t the

falsity of the statement which was made. Again, I cannot accept -

that. I think that a statement is beincj made to a signlflcant

segment of the precise niarket which would be interested in clalns

about market leadership.

I do not believe that clalms of market leadershlp are

lightly made, or are thought to be of no signiflcance In the business or advertlsing worlds. A clalm to be a market leader

suggests proved performance and acceptability. Indeed, I think

the well-known adage that nothing succeeds like success

exemplifies well enough the point that I am concerned to make -

that it is a very useful ploy in a highly competitive field to be

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able to claim that experience has shown that yours is the service

most in demand. To make that claim to the people who would be

reading thls partlcular publication is, I think, a slgnlficant

I publicatlon of the claim.

It was to some extent suggested that the Court ought not

be concerned with this matter because It is a 'one-off' publicatlon, there is nothlng to indicate that it is golng to be repeated to other people or in other publications, end that, the

document having been distributed, there would he little point	I n
an injunction at thls stage.

However, a1r;hough I thlnk there is somethng l n that

argument, I am inclined to believe, because of prevlous experience

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of this partlcular industry whlch has been drawn httention t o by

other ~udges Gf this Court, that if e claim like that is made In one publication and is not challenged, there 1 s qsite a distlnct

posslbllity that it might be repeated elsewhere. If a case is

made out that the claim is false and has a likelihood to mislead,

then it seems to me that the applicant 1 s entitled to the

injunctlon sought.

In saylng what I have, I am conscious of the

undeslrability of this Court becoming a censor of a series of

competitive advertisements in thls or any other industry. I think

the courts will always be reluctant to be involved where It can

fairly be contended that the claims made are In the nature of

puffmg, or are not likely to be taken as statements of precise

fact by the persons reading them. I am interested to have drawn

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to my attention by Dr Pannam a statement which was made as long

ago as 1895 in the House of Lords in the case of White v Mellin

(1895) A.C. 154 at 165, where Lord Herschell L.C. Indicates the

undesirabllity of courts of law being,

' I . . . turned into a machinery for advertising rival

productions by obtaining a judicial determination	which
of the two was the better."

That is a slightly different point from the one that I am

concerned to make. There, his Lordship was anxious that the

Court's determination should not be quoted in advertlslng

material; courts should try to avold being used for that Furpose.

Similarly, I think that the courts do not want to be In

the position of regularly belng asked to look over the shoulder of

those preparlng competlng advertising material in order to rule on

the propriety of such material. I have given full weight to Dr

Pannam's submisslon along those lines, and. I have also boine In

mind what has been said by other Judges of this Court In recent

decisions, about the robust nature of advertislng, in this field

in particular, and the desirahility of tolerating a reasonahle

degree of vlgour - which was referred to by Northrop J in the case

of Eudqet Rent A Car System Pty Ltd v W.T.H. Ftv Limited (tradinq

as Avis Australia), an unreported decision of 10 April this year.

I refer also to the judgment of Lockhart J in the.' case

of W.T.H. Fty Limited (tradlns as Avis Australla v Budset Rent A Car System Pty Ltd a decision of 4 July 1984 which, so far as I am

aware, is still unreported, where his Honour referred to the

highly competitive nature of the motor vehlcle rental business,

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which may brlng those engaged in it close to the edge of

misleading or deceptive conduct. He went on to say that they

should not cross the fine line that dlvides such conduct from fair

competitive behaviour.

I concede, as Dr Pannam says, that these things have to

be very much a matter of impression, but my fmding is that, in

this case, Hertz has crossed the flne line that divides robust but

fair competitive advertlsing from misleading and eceptlve

conduct, and that it is approprlate that the injunction sought

should be granted, with costs.

I hereby certlfy that this and the

five ( 5 ) preedinq pages are a

true and accurate copy of the Reasons

for Judgment herein of

The Hon. Mr Justice Woodward

-v=---- Associate

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Dated: 2 3 May 1985

..

Counsel f o r Applicant:	Mr H. Merkel Q . C . with
Mr R.A. Finkelstein
Solicitors for Applicant:	Messrs Corrs Favey Whiting
& Eyrne
Counsel for Flrst and Second	Dr C.L. Fannam Q.C.
Respondents:	with Mr A . J . Myers
Solicltors f o r First and	Messrs Moules
Second Respondents:
Counsel for Third Respondent:	Mr J .V. Kaufman
Sollcltors for Third Respondent:	Messrs Fhillips, Fox and
Masel

Hearlng Date: 23 May 1985

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