Pascoe, M. v National Futrax Pty Ltd

[1995] FCA 244

IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY )   No. NG 93 of 1995
GENERAL DIVISION               )

Between:MICHAEL PASCOE & ANOR

Applicants

And:NATIONAL FUTRAX PROPRIETARY LIMITED & ORS

Respondents

EX TEMPORE JUDGMENT

EINFELD J                 SYDNEY          22 FEBRUARY 1995

First applicant's application

On 17 February 1995 the applicants presented an application and statement of claim alleging that the respondents had, in an advertisement placed in the Daily Telegraph Mirror on 15 February, been responsible for conduct by the first respondent company which breached sections 52, 53(c) and 53(d) of the Trade Practices Act, and the equivalent sections of the New South Wales Fair Trading Act.  The assertion was that the individual respondents aided and abetted the first respondent in relation to that conduct.

At the time of the presentation to the Court of those pleadings, the applicants sought and were granted leave to serve short notice of a motion for urgent relief, and as a consequence the matters came before the Court this morning.  An amended application and statement of claim were presented, as well as a
fresh motion for urgent relief and a set of proposed orders.  The applicants also presented a motion for further directions in relation to the action as a whole and a set of proposed orders in this regard.  The first, second, third, and sixth respondents presented motions for the summary dismissal or striking out of the second applicant's claim as disclosing no reasonable cause of action or as frivolous, vexatious, or an abuse of the process of the Court.  In circumstances that are now not necessary to traverse, the application of the first applicant, a journalist working for the second applicant, for an order for the publication of what can be described briefly as a corrective advertisement, in a form set out in the proposed orders, in the same newspaper at the earliest possible time, has been taken first.

The dispute arises as a result of a comment made by Mr Pascoe in a television show called Business Sunday, which is aired on the Nine Network on Sunday mornings.  It appears that in the edition of the show on 10 February there was a general expose or examination of the activities of the first respondent and those associated with it, including its shareholders and directors.  The report of this examination was presented by Mr Pascoe.  A video of the show is in evidence and I have viewed it.  It concerned the offering for sale of a computer program that sought to persuade its purchasers that there was a relatively simple computer‑conducted way of making profit on stock market dealings.  What Business Sunday analysed was a television commercial of this computer program, significantly featuring the news reader Ross Symonds who, in express terms and in his own voice, mouth and words, is seen not only to be endorsing the product presented by the first respondent, but also to have personally profited from his own personal use of the product.  Although I am often sceptical of the effect that such advertising has on the viewing public, especially one that appears to be suggesting that there is an easy way of conquering the rigours and mysteries of the stock market through simple, relatively unsophisticated and untrained computer activity, by people sitting in their own homes, nonetheless it must be said that of its kind, this commercial is calmly and persuasively presented.

It was against this background that Business Sunday sought to examine the substance and nature of the first respondent as a company, and what it had to say about this seductively presented product.  At the conclusion of the Business Sunday presentation, the first applicant, as the presenter, was seen and heard to use the words, as is not disputed:

It's a pretty amazing business.

Thereafter on 15 February, the first respondent placed the advertisement, which is the subject of the proceedings, quoting this comment by Mr Pascoe and unmistakably claiming that he was by this statement approving, recommending or endorsing the activities of the first respondent.

There can be no doubt, and it is not disputed here, that his comment at the conclusion of Business Sunday could not possibly be open to any such interpretation.  I accept the applicant's submissions that the comment was at best sarcastic, and that any reasonable viewer would not have drawn the conclusion that Mr Pascoe was giving his approval to the activities which he had just been spending quite some time attempting to reveal as of questionable quality.

The advertisement is actually divided into two halves, though there is no formal division.  The first half seeks to promote the computer program as one that would enable purchasers to conduct their own businesses from their own homes for one hour a day.  It says that the program has a proved success;  that it is easy to use;  that there is no selling; that there is no experience needed; and that it costs $8000.  The second half of the advertisement, covering approximately the same space and in the same type of print, promotes Michael Pascoe's involvement by saying:

On Business Sunday, Michael Pascoe claims after seeing the record of results from the National Futrax program, "It's a pretty amazing business."

The advertisement requests interested people who would like to know more about what the advertisement repeats is "this amazing business program," to call a telephone number for a free information pack. 

The respondents concede that there is a strong case that this advertisement is misleading.  However, they emphasise that this matter is and should be dealt with as an interlocutory matter and not as a matter for final relief.  They have, in correspondence, offered an undertaking, which the applicants rejected, that the advertisement would not be repeated in that form. 

Quite obviously it could not be repeated in that form if for no other reason than that, published now, it is quite unlikely that anyone would remember what Michael Pascoe had said about it in a program which is now already almost two weeks ago.  The question of whether the matter is interlocutory or final is of a little importance to lawyers, but probably not of much importance in the result.  Obviously, on an interlocutory basis the matters that need to be considered are whether there is a serious question to be tried, an arguable case for relief in effect, and where the balance of convenience lies.  On the other hand, if the matter is dealt with on a final basis, the respondents say they would have been deprived, and have in fact been deprived, of the opportunity of presenting evidence in response to and defence of the strong case of misleading advertising.  I should add that they do not put forward any evidence or even an outline of potential evidence which they say would be likely to weaken the strong case for a declaration that the advertisement was misleading.

As I have said, this controversy does not need to trouble me today.  It arises because, as I raised early in the case, where a corrective advertisement is sought on an interlocutory basis  -- especially where, as here, the applicants concede that it is unlikely that after the publication of a corrective advertisement any further relief will be sought or necessary, particularly damages -- the effective consequence of the resolution of the interlocutory dispute will be to finalise the case as a whole.

There are some disputes about the involvement of the second applicant whose application for immediate interlocutory relief has been stood down temporarily.  But whether or not a corrective advertisement was published, it seems unlikely that the second applicant could obtain relief in damages.  Hence, except for some formal matters, the litigation appears likely to conclude at the end of the interlocutory proceedings.

However, because of the attitude which the respondents take and because they claim not to be in a position to meet the application for final relief, I am prepared to proceed, in form as well as in substance, on the basis that this is an application by the first applicant for an interlocutory mandatory injunction for a corrective advertisement.  An undertaking is given as to damages by the applicant on that basis.  I should also note that although the respondents have submitted a slightly varied form of words for the advertisement, the applicant's willingness to accept the alternative words in principle means that there is no need for me to arbitrate on the form of an advertisement.  The question is whether it should be ordered in this particular case at this particular time.
From the nature of the original advertisement the applicant said it was likely that the first applicant was attempting to obtain a quick profit from the marketing of its computer product on the back of his endorsement.  In those circumstances he said that there should be no lingering doubt in the minds of the public that they should respond without any possibility of being influenced by the applicant's endorsement.  The product is quite expensive.  According to the television analysis by Business Sunday, the brochure of the company seeks some 400 sales, and at a cost of about $8000 per sale, this would generate $3 million plus in revenue.  The argument was therefore that this makes for a matter of very great seriousness.

On the basis that this was an argument to protect the public, the first applicant conceded that he was not seeking, and could not be heard to seek, relief as the protector of the public interest.  However, he is certainly entitled to seek relief as a protector of his own reputation, especially as he is apparently a leading presenter in the Business Sunday program which, I think I can reasonably note, has amongst its audience around Australia, people who are involved in business or commercial enterprise and who might make adverse judgments of him if he were to be endorsing products or entrepreneurs that had any question raised about them at all.

It is not possible for me to accept that the revelations on the original Business Sunday program were true because there is no evidence to support it whatsoever.  Accordingly, I must proceed upon the basis that the advertisement seeks to obtain benefit from the endorsement of a television journalist, and that therefore the respondents believed that Mr Pascoe's endorsement would do them some useful good in the marketplace.  Whether that is true or not is not for me to determine today.  The first applicant says that actual or potential customers may be misled by the possibility that he is endorsing their product, and it is my view that this proposition could not seriously be and probably is not seriously contested by the respondents.

The evidence establishes that on two occasions after the appearance of the advertisement, namely, twice on the Today program on 16 February in short pieces, and on Business Sunday on 19 February in a much longer piece which I have viewed and is in evidence, Mr Pascoe made perfectly clear that his comment "This was an amazing business" was certainly not intended as a recommendation or endorsement by him of this company or of its stock market computer program.  As I say, my viewing of the original program would have led to no other conclusion.  Thus the respondents argue that there is no serious risk now that consumers would be misled.

Because this is an interlocutory proceeding that has come on at short notice, there is, of course, no evidence of the market place at all.  On the other hand there is no evidence of the response which the respondents had to the advertisement for the sending of the free information packs.  That matter is dealt with
by the respondents today by saying they have not had the opportunity in the short time available to provide that evidence.

I must say that I have grave doubts about that explanation.  The advertisement appeared on 15 February: it is now one week later.  Four affidavits have been presented in these proceedings most of which attempt to attack the methods used by Mr Pascoe to try to obtain interviews with leading figures in the first respondents' business, and allege against him trespass, invasions of privacy and other forms of misbehaviour.  It seems to me that it would have been very simple for the respondents to have added a paragraph to one or other of the affidavits saying that they had received no calls as a result of this advertisement or the number of calls which they had received.  Instead the respondents say that they have not had an opportunity to examine this matter.  Accordingly, although it seems to me to be a matter of some importance, I shall put it to one side in my considerations because, as it eventuates, it is not necessary to rely upon it.

The respondents also say that the power to order corrective advertising must be used protectively and not punitively.  As I understood this argument, it is that because the first applicant has had now the two opportunities on the Today show and one on the Business Sunday program on 19 February to make his position extremely clear, no member of the public could remain in any doubt about the matter.  An order for an advertisement must therefore be inferred to be penal.
For my part, I am unable to accept that argument, just as I am unable to accept that there is no serious risk that consumers would be or would have been misled by the advertisement.  The purpose of corrective advertising in short order after the appearance of a misleading advertisement is, as has been said in other cases: eg Trotman Australia Pty Ltd v Hobsons Press (Australia) Pty Ltd & Anor [1971] 22 IPR 397, the general public interest in a market place free of falsities or doubtful manipulations of the facts. As I see it, a concession or the fact, as here, that there is a strong case that the advertisement is misleading leads to a most arguable case, to say the least, of a risk that consumers would have been misled by the advertisement into believing that Mr Pascoe was endorsing or approving the respondents' product. The public interest, if not Mr Pascoe's reputation, demands that this matter should be put right at the earliest possible time.

The respondents also submitted that damages would be adequate relief.  This argument was put on the basis that, on the evidence, there is no reason to accept or believe, still less to find, that either the company or the individual respondents could not pay any damages awarded.  Certainly the original Business Sunday program on 12 February and the later one on 19 February do, if the facts stated in them about the respondents were accepted as true, give ground for concern at least that damages would not easily be obtainable if awarded.  But I do not think, as I said earlier, that I can legitimately take into account the reports of television programs as establishing facts when there is no sworn evidence, available to be tested, to assert them in the first place.

However, the first applicant does not really put his case on that basis.  What he says is that damages are not a satisfactory remedy in this case because they would be effectively impossible to quantify.  What that really means is that he has probably not lost any quantifiable amount of his reputation by the misleading, deceptive, or false conduct.  It is often a difficult question to deal with.  The premise upon which it operates, indeed on which these whole proceedings operate, is that by enlisting, alongside another television identity, Ross Symonds, the apparent approval of Michael Pascoe for the respondents' business, harm would be done not merely to the public as possible customers for their product but also to the reputation of Mr Pascoe as apparently supporting or approving what he actually believes, if the program is to be accepted, is a very doubtful business indeed.

If such a conclusion could reasonably be drawn from the advertisement, as I believe is the case, and if it were left uncorrected, then Mr Pascoe may indeed suffer some harm to his reputation and would prima facie be entitled to an award of damages.  However, I agree that in this particular case damages would be difficult to quantify.  It would of course be possible from discovery and other mechanisms available in the Court to ascertain what the response to the advertisement had been, but it is not merely the people who telephoned for a free information pack who would have read the advertisement.  There would have been people, I would not doubt, who read both the advertisement and saw the Business Sunday program.  If such people had connected the company being critically analysed in the program with that which was advertising in the Daily Telegraph Mirror, they may have come to the conclusion that Mr Pascoe was in fact endorsing the product for payment whereas his program was attempting to throw doubt upon its commercial viability and substantive worth.  If as I think more likely, they had drawn the conclusion that I think must be drawn from watching the program, they would have come to the conclusion that Mr Pascoe was not a supporter of this business but a denigrator of it.  In those circumstances it is hard to see what damage would be suffered from the advertisement at all, still less how it would be measured in an order for financial relief.

I do not believe that damages would be an adequate remedy in this particular case and that the only way of dealing with the matter is to order the advertisement sought.  The respondents agree that if it is to be done it should be done promptly and I think that submission should be accepted.  That is why I am delivering this judgment ex tempore.  I disagree with the respondents' argument that the placing of an advertisement now would serve no useful purpose and that it would only be penal or punitive.  If the respondents were able to pay for an advertisement in the Daily Telegraph Mirror three days after the original program, they should have little or no difficulty in paying for another
advertisement of the same size and type very shortly after today's hearing.

In my view, such an order could not be described as punitive but as contradicting or helping contradict the possibility of the public concluding that in some way Mr Pascoe supports or approves of the business and the product which he has now, in two Business Sunday programs and a Today program, positively indicated that he does not.  It should be noted in this connection that the respondents now concede that Mr Pascoe is not a supporter of and does not approve the first respondent's product.

I agree with the submission of the first applicant that the advertisement concerned was pitched at inexperienced and, generally speaking, commercially unsophisticated and computer untrained people.  Extraordinarily, it did not make even a passing reference, even an indirect intimation, that this product was associated with stock market activity; it did not even say that somebody would make a profit.  But it did assume that people saw or at least knew the Business Sunday program and knew Michael Pascoe.  And if anybody had seen both the advertisement and the original program, they would have learned that this was a business, endorsed by Ross Symonds, in which for an outlay of $2000 an untrained person sitting at home could, and in Mr Symonds' case allegedly did, result in a profit of some $70,000 in a very short time.  Together this would be more than enough to tell potential customers that, with the endorsement of both Messrs Symonds and Pascoe the business may very well be one which
should commend itself to them.  Mr Pascoe is entitled to a clear declaration to the same audience that he has no connection with this company and does not approve this product at all.

I therefore order that the first respondent publish within seven days at its own expense an advertisement in the Daily Telegraph Mirror of the same full page size and in the same type as the one which appeared in the name of the first respondent in that newspaper on 15 February 1995.  The advertisement shall be in the form set out in the short minutes of order with such variations in wording as the parties may agree.

(After discussion and later in the day)

Motion of respondents

When this matter was called on this morning there was separate representation amongst the list of respondents.  The respondents who have actually contested this motion of the first applicant are the first, second, third and sixth respondents.  The second and third respondents are the directors of the first respondent company.  According to the evidence, the sixth respondent is the general manager of the company with sole responsibility for the day-to-day running and activity of all aspects of its business, including advertising responsibilities.  It was the sixth respondent who actually placed the advertisement, and it appears that the second and third respondent did not know of the advertisement before it was placed and appeared.
The fourth and fifth respondents, who are son and father respectively, were separately represented, and both have presented motions for their dismissal from the proceedings, supported by affidavits stating that they have nothing to do with this company in a structural, administrative or legal sense, and that their only association with it, if at all, is commercial and professional.

I have stood down these motions until 3.15pm today to enable the applicant to state a position and to meet the motions.  If there is no conflicting evidence to that which appears in the affidavits supporting the motion and such other evidence as may be led at the time, it seems to me likely that the fourth and fifth respondents will be dismissed from the suit, if not today then very shortly.  They have played no role at all in the proceedings today.

(After discussion)

The applicants' motion requesting directions for the further preparation of the matter should in my opinion be adjourned to enable the parties to consider what if any future this action has.  It is pointless, as far as I can see, for the Court to entertain further aspects of this litigation if, as I suspect, the matter has no future after the corrective advertisement is published, but I shall leave the matters on foot and stand them over to a convenient date shortly so that an opportunity can be

given for these matters to be quietly considered.