Telstra v AAPT - [1999] NSWSC 853

NEW SOUTH WALES SUPREME COURT

CITATION: Telstra v AAPT [1999] NSWSC 853

CURRENT JURISDICTION: Equity Division Commercial List

FILE NUMBER(S): 50032/99

HEARING DATE{S): 5/05/99-7/05/99, 10 & 11May 1999

JUDGMENT DATE: 27/08/1999
PARTIES:

Telstra Corporation Limited v AAPT Limited

JUDGMENT OF: Bryson J

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable

COUNSEL:
S. Rares QC, P. Wood and I. Pike for Plaintiff
M. Slattery QC, J. Durack and R. Dick for Defendant

SOLICITORS:
Mallesons Stephen Jaques for Plaintiff
Clayton Utz for Defendant

CATCHWORDS:
INJUNCTIONS
POST & TELECOMMUNICATIONS
TRADE PRACTICES - Telephone services - misleading and deceptive conduct - misrepresentations mandatory injunction - corrective advertising - extent of order - mandatory order for corrective letter to customers refused - public interest - permanent injunction - not justified - injunction for limited term (5 years) - declaratory order - not justified - no real effect.

ACTS CITED:
Trade Practices Act 1974 ss.80, 84(2), 86(1) and 52
Fair Trading Act 1987 ss.42 and 43
Supreme Court Act 1970 s.75

DECISION:
See para.59

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST
BRYSON J.
FRIDAY 27 AUGUST 1999
50032 of 1999 TELSTRA CORPORATION LIMITED v.
AAPT LIMITED
JUDGMENT

HIS HONOUR: Telstra as plaintiff claims various remedies against AAPT for misrepresentations and misleading or deceptive conduct in relation to arrangements with telephone subscribers to transfer their long distance and overseas telephone service from Telstra to AAPT. Telstra claims declarations establishing the conduct which has occurred, mandatory orders for remedial measures and an order permanently restraining the misrepresentations and conduct. AAPT does not dispute that there ought to be an injunction under s.80 of the Trade Practices Act 1974 to restrain misrepresentation and misleading and deceptive conduct. Telstra’s claim for damages was left for future determination and will be referred to arbitration.
The misrepresentations and conduct relate to AAPT smartChat, a telephone service provided to residential customers and marketed door to door and in shopping centres through AAPT’s dealer network, by sales staff of dealers. AAPT authorised its dealers to introduce business; the dealers were entitled to commissions related to the business produced by the customers they introduced. The entitlements of dealers’ sales staff depended on their arrangements with the dealers. Neither dealers nor their staff were employed by AAPT in a contract of service, and, while AAPT made detailed directions for what dealers were to do in their approaches to customers, and sent dealers streams of messages of advice, exhortation and direction, AAPT’s means of control were enforcement of the conditions on which commissions were payable, so that if dealers did not comply they risked not earning commissions; and AAPT could also terminate their authorisation as dealers.
After many decades during which Telstra and its predecessors were the only suppliers of telephone services, legislative changes meant that from 1992 Optus Communications was also a supplier of services, and then from 1 July 1997 AAPT and other suppliers entered the market. AAPT has other…

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: [1999] NSWSC 853
Decision Date: 27/08/1999

CaseChat Overview and Summary

In the Federal Court of Australia, Telstra Corporation Ltd sought relief against AAPT Pty Ltd for misleading and deceptive conduct in relation to telephone services. The court was tasked with determining whether AAPT had engaged in misleading or deceptive conduct and, if so, what remedies should be granted. The primary legal issue was whether AAPT’s conduct constituted misleading and deceptive conduct under the Trade Practices Act. Additionally, the court had to decide on the appropriate relief, including whether to grant an injunction and if a declaratory order was necessary.

The court found that AAPT had indeed engaged in misleading and deceptive conduct by making misrepresentations to Telstra's customers. However, the court rejected the notion that declaratory orders should be made as a matter of course alongside other remedies. The court reasoned that such orders should only be granted if they have a real effect in providing relief. In this case, Telstra had already obtained adequate remedies through an injunction and orders for the assessment of damages. The court thus refused to grant a declaratory order, emphasizing that it should not be used merely to give other remedies an air of completeness or symmetry. Instead, the court decided on a limited term injunction and dismissed the other claims for injunctions, referring the assessment of damages to an arbitrator. The court's decision underscored the need for a judicious approach to granting declaratory orders, ensuring they genuinely contribute to the relief provided to the aggrieved party.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

BRYSON J

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Ratio Decidendi

Legal Principle Established

Established by: BRYSON J

Declaratory orders are not made as of course when remedies are granted under the Trade Practices Act, and in my opinion they should not be. Telstra’s counsel referred me to observations in Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations (No.2) (1993) 41 FCR 289 at 100 (Shepherd J) and 107 (Hill J). The circumstances of that case were unusual; the applicant as respondent on appeal applied for and was granted a declaratory order although it did not recover any other substantial relief, having regard to the disposition of the appeal; the declaratory order established that the Tobacco Institute’s advertising was misleading and deceptive, this was the central issue in the case and had been opposed without success by the Tobacco Institute, and Shepherd J’s decision to make a declaratory order was based on the view that the matter involved public interest in the form of the health and well-being of the nation. It appears to me that the majority strongly disapproved of the Tobacco Institute’s conduct and that Australian Federation of Consumer Organisations’ success on the issue fought would not otherwise have been reflected in the court’s orders. In the present case Telstra is entitled to remedies which vindicate its rights, that is, an injunction and orders which will establish its entitlement to damages and provide for their assessment. The factual basis for the assessment of damages is established by the terms of Telstra’s claim and AAPT’s admissions. A declaratory order is a form of relief, and should not be added to other relief granted to a party unless it has some real effect as relief. A declaratory order is not made only to give other remedies an air of completeness or of symmetry. I must make my own approach to the exercise of the discretion involved and my decision is based on the view that there is not sufficient utility in a declaratory order to justify making it; Telstra has otherwise obtained appropriate remedies. Counsel should bring in Short Minutes which will give effect to this decision by making an injunction according to Claim 1 as modified, dissolving the interlocutory orders, dismissing Telstra’s other claims for injunctions, and referring the assessment of damages to an agreed arbitrator or, in default of agreement, to an arbitrator whom I will appoint. I have not yet considered questions of costs.