Telstra Corporation Ltd v Cable & Wireless Optus Ltd

[2001] FCA 1238

FEDERAL COURT OF AUSTRALIA

Telstra Corporation Limited (ACN 051 775 556) v Cable & Wireless Optus Limited (ACN 052 833 208) FCA [2001] 1238

V888 of 2001

TELSTRA CORPORATION LIMITED (ACN 051 775 556)  v  CABLE & WIRELESS OPTUS LIMITED (ACN 052 833 208),  OPTUS NETWORKS PTY LTD (ACN 008 570 330),  and  OPTUS MOBILE PTY LTD (ACN 054 365 696)

RYAN J
MELBOURNE
4 SEPTEMBER 2001

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V888 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:

RYAN J

DATE OF ORDER:

4 SEPTEMBER 2001

WHERE MADE:

MELBOURNE

THE COURT ORDERS:

1.THAT UPON the applicant by its Counsel giving the usual undertaking as to damages, the respondents and each of them by their servants and agents or otherwise be restrained until the hearing and determination of this application or further order;

(a)from publishing or causing to be published any advertisement to the effect that the Optus mobile telephone network has doubled or substantially increased in size over the past two years or any other period;

(b)from otherwise making a representation to the effect set out in sub-paragraph (a) above;

PROVIDED HOWEVER that nothing in this Order shall preclude the respondents from;

(c)publishing any advertisement containing, or otherwise making, a reasonably accurate representation to the effect that the number of base stations or transponders constituting the Optus mobile telephone network has doubled or substantially increased over the last two years or any other period specified in such advertisement or representation;

(d)publishing or distributing the advertisements already prepared for publication in Tennis News for September 2001, Australian Tennis Magazine for September 2001, The Broncos Magazine for September 2001 and Business Advantage for September 2001 referred to in paragraph 5(b) of the affidavit of Stuart Salier sworn 29 August  2001 and filed herein.

2.THAT the directions hearing herein be adjourned to 14 September 2001.

3.THAT liberty be reserved to any party to apply on not less than 48 hours notice in writing to the other parties.

4.THAT the costs of all parties of and incidental to the motion on notice dated 27 August 2001 be costs in the cause.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V888 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:	RYAN J
DATE:	4 SEPTEMBER 2001
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. The applicant, Telstra Corporation Limited (“Telstra”) has moved for an interlocutory injunction restraining the respondents Cable & Wireless Optus Limited, Optus Networks Pty Ltd and Optus Mobile Pty Ltd (hereinafter collectively called “Optus”) from making certain representations.  The representations have been defined as follows in the statement of claim;

   “The Representations are in writing and have appeared in a series of advertisements published by the respondents in each and every State and Territory of Australia over the period since about 29 July 2001.  The advertisements include (but are not limited to):

   (i)an advertisement which has appeared in newspapers, on billboards, at public transport stops and shelters, and elsewhere in the period since about 29 July 2001, and which contains the following words:

   “And with an average of two new base stations built every working day, not to mention a network that’s doubled in size in the last two years, we’re working hard to reduce drop-outs”,

   (“the First Advertisement”).

   (ii)an advertisement which has appeared in newspapers, on billboards, at public transport stops and shelters, and elsewhere in the period since about 29 July 2001, and which contains the following words:

   “In two years, we’ve doubled the size of the Optus Mobile Network”,

   (“the Second Advertisement”).

   (iii)an advertisement which has appeared in newspapers, on billboards, at public transport stops and shelters, and elsewhere in the period since about 24 August 2001, and which contains the following words:

   “Where you experience drop-outs, we build new base stations.  And where it’s congested, we increase the capacity of existing ones.  It’s all part of our commitment to constantly improve the Optus Mobile Network.  And through our efforts, the network has doubled in size over the last two years to bring you better mobile coverage.   Third Advertisement”).”

2. Telstra accepts that Optus may have built an average of two new base stations every working day and may have doubled the number of base stations in its mobile telephone network but contends that it is misleading and deceptive for Optus to claim that, in any relevant period, it has “doubled the size” of its network.  The publication of the contentious advertisements first came to Telstra’s attention on 7 August 2001.  Thereafter Telstra and its solicitors have communicated with Optus and its solicitors with a view to procuring the cessation of the advertisements to which Telstra has taken exception.  However, no undertaking acceptable to Telstra has been proffered by or on behalf of Optus. 

3. Telstra’s principal complaint is that the words “a network that’s doubled in size”, “we’ve doubled the size of the Optus Mobile Network” or “the network has doubled in size over the last two years” convey an enlargement of the geographic area or extent of the region in which it is possible to make and receive, on a mobile telephone, calls which are connected by means of the Optus operating system.  It is said that there is a marked difference between “doubling the size of the Optus system” which connotes a geographical expansion and “doubling the number of base stations” which concededly improves the quality or density of a system without necessarily effecting any change or increase in its geographic reach or “coverage”.

4. The evidence discloses that there are three mobile telephone networks in Australia, one maintained by each of Telstra and Optus and another operated by a third company, “Vodafone”.  Each of the three companies offers a separate digital mobile telephone service using its own network based on the Global System for Mobile Communications (“GSM”) standard which has been developed in Europe.  Each company’s network is land-based and uses a series of radio base stations to send and receive radio signals to and from mobile telephone handsets held by subscribers.  The base stations are usually connected by cable to switching centres which, in turn, connect with a fixed telephone network for routing of calls.  The function of base stations within a mobile telephone network has been explained in these terms by Gregory Scott Young, Telstra’s Group Manager, Core Products and Platforms;

   “9.A digital mobile network is constructed using a series of base stations which each provide coverage and radio call capacity for a specific area.

   10.Base stations are constructed for several reasons.  One is to enable the network coverage to be extended in terms of the geographical reach of the network.  Another reason is to enable the network to cater for higher levels of traffic, for example where an existing base station may not have the capability of dealing with all of the mobile traffic in its area.  Another reason is to increase the level or depth of coverage provided by the network within a given area, particularly in relatively dense locations such as inner metropolitan areas and city centres.  Finally, additional base stations are used to manage the quality of the radio signal, for example, to minimise interference.  It is the combination of network capacity and signal quality, along with the level of coverage provided at a given location and time that impacts and determines the likelihood of mobile calls to or from mobile handsets in that area dropping out, suffering interference, or failing.

   11.In light of the matters set out in paragraph [10] above, the number of base stations in a digital mobile network may be doubled without any corresponding increase in the geographic coverage of that network.

   12.There are a number of factors which affect the extent of the coverage provided by any particular base station.  These factors include the elevation of the position on which the base station is constructed, the height of the base station radio antennas on the tower or building structure, the environment surrounding the base station (for example, whether there are obstacles such as building structures or other natural geographical obstacles), and the curvature of the earth.  A GSM base station with antennas on a typical 50 metre tower, above an otherwise relatively flat countryside with minimal obstacles would be capable of providing coverage for a radius of typically up to about 10 kilometres for a customer with a handheld mobile telephone.  Distances in excess of this are possible when the base station is elevated on a hill or similar above the surrounding terrain.”

5. Exhibited to Mr Young’s affidavit are “coverage” maps published by Optus in December 1999 and July 2001 for its mobile network in each of Western Australia, Queensland and New South Wales and the Australian Capital Territory.  The later of each of those maps designates by four different colours areas in which there is;

   “(i)     handheld coverage as at July 2001”

   “(i)     Car Kit with external antenna coverage as at July 2001”

   “(ii)     Future coverage planned for roll out by April 2002”

   “(iv)    “No coverage at this time.  MobileSat reach available.”

6. Mr Young has contended, by reference to those maps, that, far from doubling between December 1999 and July 2001, the geographical coverage of the Optus network has in some respects diminished. 

7. Another affidavit relied on by Telstra is that of Peter Burr, its Consumer Segment Manager, OnAir.  His affidavit includes these paragraphs;

   “6.Broadly speaking, apart from pricing-related matters, Telstra, Optus and Vodafone seek to differentiate their services to customers by reference to the coverage and performance of their digital network.  Coverage means the area within which customers can make and receive calls when using a particular network.

   7.From a marketing perspective, the term ‘coverage’ can be used in varying ways.  It can mean:

   ·     geographical spread;

   ·     population reach;

   ·     depth;

   ·     ‘drop-outs’.

   8.By geographical spread, I am referring to a mobile telephone working in the places where a person wants to go.  By population reach, I am referring to the proportion of the Australian population living within the geographical area covered by the mobile telephone network.  By depth, I am referring to a mobile phone working irrespective of the terrain (such as in Sydney or Brisbane, where the terrain is very hilly and it is difficult at times to make and receive calls).  By ‘drop-outs’, I am referring to network congestion where, in areas of concentrated mobile use, the telephone will not work.

   Importance of ‘Coverage’ as a Claim

   9.Factors influencing customers in relation to their choice of network include:

   ·     coverage;

   ·     handset price;

   ·     call rates;

   ·     bonus options (such as ‘free minutes’);  and

   ·     quality of service (among others).

   10.In deciding which mobile telephone network to connect to, customers are likely to be influenced by the extent of the coverage offered by the competing networks.  If the telephone does not work in the area where a customer requires it to be used, it is of no use.”

8. Mr Burr’s affidavit proceeded to suggest that each of Telstra, Optus and Vodafone markets its network “coverage” by reference to geographic spread, as, for example, by publishing “coverage” maps on internet websites and by reference to population reach.  The latter form of promotion was said to be exemplified by Telstra’s claim that its network reaches 95% of the Australian population, by the claim of Optus that its network reaches 93% or 94% of the same population, and the claim of Vodafone that “our GSM service now covers up to 92% of the Australian population and is still growing.”  The evidence also suggests that the term “coverage” is used in at least two different senses in promotional material issued by the rival companies in this market.  Thus, on its website, Telstra has cautioned consumers;

   “Remember:  choosing your mobile phone network can be even more important than choosing your mobile phone because the coverage and performance of your network will actually determine where you can use your mobile phone and how well it works.”  (original emphasis)

9. On the other hand, Vodafone’s website exhibits the following text;

   “At Vodafone we provide mobile digital services of the highest quality, giving you maximum coverage with fewer drop-outs.  Our GSM service now covers up to 92% of the Australian population and is still growing.

   For those who live or work outside these areas, Vodafone’s Globalstar service has got you covered 100% across the continent.

   Vodafone Globalstar is an integrated digital and satellite mobile service that provides 100% mobile coverage across Australia and up to 200 nautical miles off the mainland and Tasmania.  That means, whether you live, work or travel in remote areas, you’ll be able to stay in touch.”

10. An illustration of Telstra’s use of “coverage” in the same qualitative sense is provided by the statement on its website that;

    “In the Competitive Network Drive Survey, Telstra MobileNet GSM digital was found to have the best in-building coverage and clearest reception in more places across the capital cities of Melbourne, Sydney, Brisbane, Adelaide and Perth.”  (original emphasis)

11. Telstra also relied on a report by DBM Consultants Pty Ltd based on a survey of 600 people who were either parties to mobile telephone contracts which were about to expire or who were not parties to any such contracts.  The report contained this table and explanatory statement;

“Table 5:  Satisfaction With Carrier’s Coverage
Aspect of Coverage	Mobile Phone Service Provider				Total
Telstra	Optus	Vodafone	Other
Geographic Coverage	80	68	68	63	73
In-Building Coverage and Clarity of Reception	75	66	70	58	70
Call Dropouts	70	59	60	49	64
Call Congestion	85	62	77	61	74

Source:	Mobile Phone Quantitative Questionnaire
Question:	How satisfied are you with your mobile phone carrier’s ...?
Base:	All in-market users.
Call Congestion:	80% of in-market Telstra customers are satisfied with Telstra’s geographic coverage.

This table suggests that satisfaction with Telstra’s coverage is greater relative to other carriers.  Telstra customers were most satisfied with Telstra’s level of call congestion (85%) satisfied) and geographic coverage (80%).  Call dropouts generated the lowest satisfaction level for Telstra (70%), although this was still higher than for other carriers.

Overall, 64% of in-market mobile phone users were satisfied with their carrier’s call dropouts, compared with 70% or more for other aspects of coverage.  In-market users that did not make business calls were generally more likely to be satisfied with their carrier’s coverage.  Satisfaction with coverage was lowest for Optus, and service providers other than Telstra, Optus and Vodafone, who mainly use Optus’ network.”

1. In the course of the communications referred to at [2] of these reasons, it was contended in a letter dated 7 August 2001 from Telstra to Optus that;

   “In Telstra’s view, ordinary readers would consider a reference to the network having “doubled in size” to mean that the geographical size or coverage area of the network has doubled in size or possibly, that the number of people that the network reaches has doubled.

   Further, these are the two typical measures used by Telstra, Optus and Vodafone in advertising and marketing material when describing the “size” of their networks.

   In relation to the geographical coverage or size of the Optus mobile network, Telstra has estimated the land coverage of the Optus mobile network as at 1 September 1999 from its published coverage maps and has estimated this land coverage as at 1 July 2001 from its published coverage maps.

   Telstra’s information and evidence suggests that it is not possible that the geographical size or coverage of the Optus mobile network has doubled in the last two years.  Telstra has significant doubts as to whether the increase in geographical coverage in the last two years would have been more than 15%.

   Similarly, Optus currently claims that its Optus mobile network covers 93% or 94% of the Australian population [ We understand that Optus claimed in coverage maps dated July 1998 that its network reached 92% of the Australian population in July 1998.  Again, the percentage of the Australian population able to access the Optus mobile network has not doubled in the last two years.”

2. Optus, by its Corporate Counsel, Mr Salier, replied by letter dated 10 August 2001 contending, so far as is relevant;

   ·“Optus disagrees with your contention that “ordinary readers would consider a reference to the network having ‘doubled in size’ to mean that the geographical size or coverage area of the network has doubled in size or possibly, that the number of people that the network reaches has doubled”.

   ·Optus also disagrees that ‘geographical size’ or ‘number of people reached’ are the two typical measures used by Telstra, Optus and Vodafone when describing the “size” of their networks.

   ·The simple fact is that Optus has, over the previous two years, more than doubled the number of base stations which comprise the Optus Mobile Network.

   ·It is accurate, therefore, to state that the Optus Mobile Network has doubled in size, because it is base stations which comprise the Network.

   ·Consumers are unlikely to presume that the advertisement is referring to the number of people reached by the network, because as you rightly point out, it is well advertised by Optus (and for that matter, other carriers including Telstra) that its current reach is in the vicinity of 94%.  It is highly unlikely that customers could be confused that this is what the advertisement is referring to when the reach is already close to 100% - that is, how could this be doubled?

   ·For the same reason, consumers are unlikely to be confused that the advertisement is referring to the geographical extent of the network.  Why would Optus be interested in rolling out its Network to the remote parts of Australia if it already has coverage to 94% of the population?

   ·In any event, even if customers perhaps were wondering from the headline on what basis Optus is making the claim, the copy which follows the headline is instructive:

   “We’re ... building an average of two new base stations every working day.  In fact, over the last two years we’ve doubled the size of the Optus Mobile Network, and we’ll continue to invest in new base stations to bring you even better coverage.”

   The claim about which you complain, when read in context, is clearly making reference to the number of base stations (old and new) which comprise the Optus Mobile Network.  This is the basis on which Optus makes its claim.”

3. Mr Nettle QC, who appeared with Mr J Moore of Counsel for Optus, submitted that an objective review of all its relevant promotional statements revealed a consistent emphasis on an improvement in the quality of the transmission from one mobile telephone to another within the geographical area in which it operates by increasing the number of base stations within that area.  Paul Kitchin, the Director, Consumer Mobile Marketing for Optus has deposed that the advertising campaign of which the First, Second and Third Advertisements form part, has been undertaken to coincide with the “mandatory availability of mobile number portability” which is to commence on 25 September 2001.  That refers to arrangements whereby a subscriber to a mobile telephone service will be able to change from one provider to another without changing his or her mobile telephone number.  Mr Kitchen further referred to research by the Dangar Research Group (“Dangar”) undertaken on behalf Optus which revealed;

   “that the term ‘coverage’ of the mobile network is multi-faceted and that, for the period from January to March 2001;

   (a)66% of respondents regarded the inability to make a connection on the first attempt to be the most common problem associated with mobile telephone coverage;

   (b)57% of respondents regarded call drop-out as the major coverage issue;

   (c)22% of respondents regarded poor sound quality as the major coverage issue;  and

   (d)9% of people associate the term coverage with the geographical area or size of the mobile network (otherwise referred to as ‘footprint’).”

1. Optus also adduced evidence from Ms Dangar, a principal of Dangar, whose affidavit contained these paragraphs;

   “7.From the results of studies and research undertaken by Dangar for Optus in the past five years, Dangar has been able to establish that:

   (a)the word ‘coverage’ can mean a number of things to mobile telephone users, for example, total geographic size (i.e. footprint), the number of customers on the network and, most commonly, the density of coverage in particular areas;  and

   (b)the meaning of the word coverage to mobile telephone customers in metropolitan areas is influenced by the problems experienced by those customers.  That is, the weight of association given by those consumers to the factors outlined above varies according to the specific problems which they experience.

   8.The studies undertaken by Dangar reveal the following;

   (a)the most commonly encountered problems for mobile telephone users are call non-connections (i.e. the inability to make a call) and call “drop-outs” in areas which customers are located on a day-to-day basis, namely the metropolitan areas;

   (b)mobile telephone users are typically aware that transmission of a mobile telephone call takes place via base stations, also known as transmitters and mobile towers;

   (c)the quality of the coverage to mobile phone users is associated with the presence and number of base stations installed in particular areas by telecommunications carriers.

   (d)increasing the number of base stations will improve the quality of mobile telephone coverage to users by reducing non-connections and the number of call drop-outs within the network;  and

   (e)customers predominantly associate the size of a telecommunications carrier’s network or the extent of its coverage to mean the number of base stations installed by the carrier within particular areas.”

2. Ms Dangar went on to depose to a study conducted in May and July in 2001 involving 80 to 90 people in “study groups” of 7 or 8 each and revealed that;

   “Non-connections and call-drops were the overwhelming major concerns of participants in the discussion.  The association between the number of base stations installed and the quality of mobile telephone coverage was made by most if not all participants.”

3. In the light of the whole of the evidence adduced on behalf of Optus, Mr Nettle submitted that the thrust of the Optus campaign, including the First, Second and Third Advertisements is that, by increasing the number of base stations, Optus had improved the quality of its network.  He likened increasing the number of base stations to increasing the number of cylinders in a car engine and thereby increasing its size.  However, I am not sure that such an analogy is apt because, presumably, doubling the number of cylinders increases, at least to some extent the size or physical extent of the engine.  If such an increase could be achieved within the confines of, say, an existing four-cylinder engine block, it would be more accurate to speak of increasing the “capacity” of the engine. 

4. It was also put on behalf of Optus that the pre-existing reach of its network to 93% or 94% of the Australian population is so well known to prospective purchasers of a mobile telephone service that they could not possibly be misled into believing that a network so close to maximum coverage had been doubled in size or capacity.  It was further argued that, because the Optus campaign was so closely directed at the inception on 25 September of compulsorily portable telephone numbers, the overwhelming concern of persons who are targeted by the Optus campaign should be understood to be with quality of transmission and the capacity of the service within the existing geographical area.  In the unlikely event, so the argument went, that a reader of the Optus advertisements were left wondering whether there had been an increase in the “geographic footprint” of the Optus network, any possibility that such a reader would be misled or deceived would quickly be dispelled by reference to the Optus website or the State “coverage” maps. 

5. Accordingly, it was submitted that Telstra’s prospects of success in an ultimate trial of the action were “weak”.  Mr Nettle frankly acknowledged that Telstra’s concerns would be assuaged by substituting for the expression “the network has doubled in size over the last two years”, some such statement as “the number of base stations of the network has doubled over the last two years”.  However, he contended that the use of the offending words should be seen as the marketing formula which Optus has chosen, after expensive advice, to adopt.  The Court, so it was said, should hesitate long before restraining, in the middle of an expensive campaign, conduct of this kind by an organisation like Optus which is in fierce competition with Telstra. 

   Is there a serious question to be tried?

6. In my view, there is at least an inherent ambiguity in a representation that a mobile telephone network has doubled in size over a specified period.  The evidence canvassed earlier in these reasons indicate that references to “coverage” or “size” of a network can be taken, even by professional participants in the industry, to signify either the geographical spread or area of the network on the one hand, or, on the other, the number of base stations which constitute the network.  As a matter of ordinary English, a statement that a network has doubled or otherwise increased in size conveys that it has spread more widely.  The metaphor which informs the word “network” suggests that to increase the size of the net is to enlarge the area it can cover and not to increase the number of interstices so as to produce a net with a finer or denser mesh.  In Tobacco Institute of Australia Limited v Australian Federation of consumer Organisations Inc (1992) 38 FCR 1, this passage occurs in the judgment of Hill J at 50;

   “However, as was observed by Sheldon and Sheppard JJ in CRW Pty Ltd v Sneddon (1972) AR (NSW) 17 at 28 (the context was the Consumer Protection Act 1969 (NSW)):

   “An advertisement published in a newspaper is not selective as to its readers.  The bread is cast on very wide waters.  The advertiser must be assumed to know that the readers will include the shrewd and the ingenuous, the educated and the uneducated and the experienced and inexperienced in commercial transactions.  He is not entitled to assume that the reader will be able to supply for himself or (often) herself omitted facts or to resolve ambiguities.  An advertisement may be misleading even though it fails to deceive more wary readers.”

   Where, as in the present case, the advertisement is capable of more than one meaning, the question of whether the conduct of placing the advertisement in a newspaper is misleading or deceptive conduct must be tested against each meaning which is reasonably open.  This is perhaps but another way of saying that the advertisement will be misleading or likely to mislead or deceive if any reasonable interpretation of it would lead a member of the class, who can be expected to read it, into error;  Keehn v Medical Benefits Fund of Australia Ltd (1977) 14 ALR 77 at 81 per Northrop J and cf the approach taken by Mason J in Parkdale [Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191].”

7. Since the interpretation of the subject advertisements as conveying a representation about the geographical size or area of the Optus network is a reasonable one, it must then be asked whether it is likely to lead into error a member of the class who would be likely to read one of the advertisements.  The class, I consider, consists of prospective purchasers of mobile telephone services and those who might be induced to make such a purchase.  The class is not confined to existing subscribers or those who are otherwise familiar with the similarities and distinguishing features of the three systems presently available in Australia.

8. It may be that further evidence derived from a survey of members from the class will demonstrate that only a minuscule number of them are concerned with the geographical area or spread of the competing networks and so likely to be misled by the subject advertisements understood in the way just indicated. However, having regard particularly to the results reproduced at [14] above that 9% of respondents to the Dangar survey commissioned by Optus associated “coverage” with “geographical area or size”, the evidence, as it stands, suggests that the potential of the advertisements to mislead members of the relevant class is more than negligible. Accordingly, I am satisfied, after reviewing the presently available evidence, which is necessarily attenuated, that Telstra has established a serious question to be tried.

   Balance of Convenience

9. It was contended on behalf of Optus that, in the absence of interlocutory relief, the loss to be sustained by Telstra, if ultimately successful at trial, is likely to be small.  The grant of an interlocutory injunction, on the other hand, would cause significant loss to Optus by disrupting its advertising campaign and consequently denying it the opportunity to benefit from advertising space for which it had paid and which would be rendered unusable.  I am not persuaded by these considerations that the balance of convenience is against the grant of interlocutory relief.

10. In the first place, the loss to Telstra, if the presumptively misleading advertisements continue, will be difficult, if not impossible, to measure and compensate by an award of damages.  As well, the potential loss to Telstra is not the only consideration.  As Merkel J pointed out in a judgment in litigation between, effectively, the same parties, in Telstra Corporation Limited v Optus Communications Pty Ltd (1997) ATPR 41-451 at 43,517;

    “However, there is a shorter and simpler answer to the point made by Optus. In my view, for the reasons set out above, the continued publication of the commercials in their present form is likely to result in a serious risk of harm to the public. Optus has not satisfied me that, by reason of the Optus Guarantee, the public will not, or is unlikely to, suffer harm or loss if the commercials continue.”

11. Nor am I persuaded that an interlocutory injunction in the form which I propose to grant will cause excessive or unreasonable disruption of the Optus advertising campaign.  It seemed to be accepted at the hearing that existing advertisements containing the offending representation were, in any event, to be removed from billboards and bus shelters by last Saturday, 1 September.  Moreover, there is evidence furnished on information and belief by Mr Salier, that;

    “(a)the words: ‘In two years, we’ve doubled the size of the Optus Mobile Network’ are being or are proposed to be used by Optus in four publications which were planned by Optus before Telstra first complained of the use of the above words on 7 August 2001;

    (b)those planned publications are the Tennis News (September 2001 edition);  Australian Tennis Magazine (September 2001 edition), The Broncos Magazine (September 2001 edition) and Business Advantage (which is an Optus newsletter - September 2001 edition) (‘Publications’);

    (c)there is a lead time of approximately three weeks which is required between the date of submission of a planned advertisement to the advertising agency and publication and distribution of that advertisement;

    (d)in respect of the Publications, the advertisements were submitted by Optus to the advertising agency prior to any complaint being made by the applicant;

    (e)the Publications are either in the process of being printed or distributed;

    (f)the Publications that have been distributed cannot be recalled;

    (g)in respect of the one publication that is currently being printed, it is a subscription-based service and I am therefore not presently aware whether or not the printing could be halted and what cost might be involved in doing so;

    (h)the interests of third parties (such as publishers of the magazine) would be prejudiced if Optus was required by the injunction sought to withdraw the Publications from circulation.”

12. My inference that there are no other irrevocable arrangements to publish advertisements containing the offending representation was confirmed by Mr Nettle during the hearing.  I propose to except from the interlocutory injunction the Optus advertisements appearing in each of the publications referred to in sub-par (b) of the paragraph of Mr Salier’s affidavit from which I have just quoted.  That course should minimise, if not eliminate, the risk to Optus of prepaid advertising space being rendered unusable or of part of its advertising budget being otherwise thrown away.

13. The second submission advanced by Optus in relation to the balance of convenience was that an interlocutory injunction would deny it the ability to emphasise “an undoubted fact - that the size of the network, in terms of number of base stations, has doubled in the last two years.”  However, the injunction which I propose to grant will not prevent Optus from emphasising the growth in the number of its base stations and the consequential improvement in the quality of its reception and transmission of calls.  All it will prevent is a continuation, pending trial, of the prima facie misleading representation that the Optus network has doubled in geographic size or area.  As Merkel J said, in Telstra v Optus (supra) at 43,517;

    “First, the injunctions sought will not prevent advertising of the Optus Guarantee which does not sail on the wrong side of, or too close to, the s.52 wind. In particular, advertisements will not be misleading if they state clearly that it is by a customer taking advantage of the Optus Guarantee, rather than cheaper prices, that will result in cheaper total bills.”

14. Counsel for Optus sought to distinguish the earlier Telstra v Optus case from the present by stressing that the earlier case concerned “comparative advertising”.  I am not persuaded that s 52 of the Trade Practices Act requires a stricter view to be taken of expressly comparative advertising as against other forms of promotion.  In a sense, in a highly competitive environment like the mobile telephone market, all advertising is impliedly comparative.  As Hill J said in Trade Practices Commission v Telstra Corporation Ltd (1993) ATPR 41-256 at 41,454;

    “The point being made is that errors in comparative advertising may have a greater potential to mislead consumers than statements made in ordinary advertising which may be perceived as mere "puffs".

    It is unnecessary to elevate what is said in those cases into a principle of law. Whether conduct is misleading or deceptive must depend upon all the facts and those facts include, in the case of advertising, the entire context in which the advertising appears.”

15. Indeed, Optus might have avoided the misleading effect of the present representations had it chosen to make them in the context of express comparison with its competitors because it, presumably, would then have acknowledged that the geographic area or spread of each of the rival networks is more or less equivalent.

16. Finally, Optus sought to meet the contention on behalf of Telstra that there was a positive balance of convenience in its favour by saying that any migration of subscribers from Telstra to Optus as a result of the offending advertisements would be readily reversible when the subscribers found out that they had been misled in respect of geographic coverage.  I am not persuaded that this is self-obviously so.  As I understand the evidence, significant numbers, at least of new subscribers, enter into contracts under which there is no immediate charge for the handset.  Instead, the handset is provided by the network operator and the cost is amortised by adding it to charges for calls made and received over the life of the contract, usually three years.  For subscribers in those circumstances, it may not be easy to change from one service provider to another, at least without making a lump sum payment or incurring some other cost to discharge the obligation in respect of the handset.

17. For all of these reasons, as well as the fact, earlier indicated, that Telstra has made out a strong prima facie case of contravention of s 52, I consider that the balance of convenience favours a limited form of interlocutory relief.

    Conclusion

18. Having regard to my finding that there is a serious question to be tried, and because the balance of convenience favours it, there being no discretionary reasons for refusing the grant of interlocutory relief, I propose, as already indicated, to impose a limited restraint on advertising on Optus until trial or further order.  To avoid even minimal disruption of the Optus advertising campaign for longer than is absolutely necessary, I shall facilitate a speedy trial after considering minutes of orders which the parties may suggest as conducing to that end.  Those minutes should be brought in at the adjourned directions hearing or earlier, if either party invokes the liberty to apply which I shall reserve.  The costs of all parties of and incidental to the motion for interlocutory relief will be costs in the cause.

I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Ryan.

Associate:

Dated:             4 September 2001

Counsel for the Applicant:	Mr P Anastassiou with Dr M Collins
Solicitor for the Applicant:	Mallesons Stephen Jaques
Counsel for the Respondent:	Mr G Nettle QC with Mr J Moore
Solicitor for the Respondent:	Minter Ellison
Date of Hearing:	29 August 201
Date of Judgment:	4 September 2001