Telstra Corporation Limited v Cable & Wireless Optus Limited - [2001] FCA 1478

FEDERAL COURT OF AUSTRALIA
Telstra Corporation Limited v Cable & Wireless Optus Limited [2001] FCA 1478
TRADE PRACTICES – misleading or deceptive conduct – interlocutory injunction sought restraining respondent from making representations in relation to mobile telephone services – advertising campaign using words “No Risk Switch” – whether serious question to be tried that advertisement misleading or deceptive – consideration of standard of ordinary or reasonable person – balance of convenience – public interest element.
WORDS & PHRASES – no risk
Trade Practices Act 1974 (Cth): s 52, s 53(g)
Campomar Sociedad, Limitada v Nike International Limited (2000) 202 CLR 45 referred to
Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1 applied
Farquhar v Bottom [1980] 2 NSWLR 381 referred to
CRW Pty Ltd v Sneddon (1972) AR (NSW) 17 applied
Eighth SRJ Pty Ltd v Merity (NSW SC, unreported, 25 March 1997) referred to
Trade Practices Commission v Optus Communications Pty Ltd (1996) 64 FCR 326 applied
Vodafone Pty Ltd v Hutchison Telecommunications (Australia) Ltd [2001] FCA 1155 referred to
TELSTRA CORPORATION LIMITED v CABLE & WIRELESS OPTUS LIMITED & ORS
V 1086 of 2001
GOLDBERG J
19 OCTOBER 2001
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 1086 of 2001

BETWEEN:

TELSTRA CORPORATION LIMITED
(ACN 051 775 556)
Applicant

AND:

CABLE & WIRELESS OPTUS LIMITED
(ACN 052 833 208)
First Respondent

OPTUS NETWORKS PTY LTD
(ACN 008 570 330)
Second Respondent

OPTUS MOBILE PTY LTD
(ACN 054 365 696)
Third Respondent

JUDGE:

GOLDBERG J

DATE:

19 OCTOBER 2001

PLACE:

MELBOURNE

REASONS FOR JUDGMENT

The applicant (“Telstra”) has applied for an interlocutory injunction restraining the respondents (“Optus”) from making certain representations in relation to the mobile telephone services they offer to the public.
Telstra owns and operates two mobile telephone networks in Australia which are:
·a digital mobile telephone network based on the European developed Global System for Mobile (“GSM”) communications standard;
·a Code Division Multiple Access (“CDMA”) digital mobile network which was introduced in or about 1999 to replace Telstra’s analogue mobile telephone network.
There are other owners and operators of mobile telephone networks in Australia. Vodafone Pty Ltd and Optus own and operate digital telephone networks based on the GSM standard and Orange (the brand name for Hutchison) owns and operates a digital mobile telephone network based on the CDMA system. Each owner/operator supplies mobile telephone services to end‑user customers and, according to Mr Peter Burr, a Telstra manager, there are currently in excess of nine million consumer telephone connections in use in Australia. Prior to 25 September 2001, if an end‑user customer of one of the mobile telephone providers wanted to change from one provider to another provider the user could not transfer the number used on the former network to the new network. On or about 25 September 2001, mobile number portability (“MNP”) was introduced to the mobile telephone networks. MNP enables mobile telephone users to change mobile telephone service providers and retain their…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2001] FCA 1478
Decision Date: 19 OCTOBER 2001

CaseChat Overview and Summary

The Federal Court of Australia was asked to decide whether Optus' advertising campaign for their mobile telephone services, which included the phrase "Optus No Risk Switch," was misleading or deceptive conduct under the Trade Practices Act 1974 (Cth). Telstra argued that the advertisements suggested users would not face any financial consequences when switching to Optus, which was not true because users might still incur charges from their previous provider if they terminated their service before the contract ended. The court had to determine whether the advertisements were likely to mislead or deceive ordinary or reasonable persons, and whether the balance of convenience favoured granting an interlocutory injunction to prevent further dissemination of the advertisements.

The court found that there was a serious question to be tried that the advertisements were misleading or deceptive. The "Optus No Risk Switch" phrase, combined with the overall layout and focus of the advertisements, could reasonably be interpreted as suggesting there was no risk in switching to Optus, which was not accurate because users might still incur charges from their previous provider. The court considered the impact of the advertisements on a wide range of potential users, including those who might not be fully informed about the charges involved in switching providers. The court also noted that even though Optus had taken steps to inform users about potential charges, these steps might not be sufficient to dispel the misleading impression created by the advertisements.

Considering the balance of convenience, the court found that the potential harm to consumers from continuing the advertisements outweighed the disruption to Optus' advertising campaign. The court granted an interlocutory injunction to restrain Optus from advertising in a manner that included the "Optus No Risk Switch" phrase unless they clearly disclosed potential costs and penalties involved in switching providers, and clarified that "no risk" referred only to the absence of penalties charged by Optus if a user left within ten days.

Orders