Case: Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12 ; (2000) 202 CLR 45
Outcome: referred to
leading authority on this question is the judgment of the High Court in Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12 ; (2000) 202 CLR 45. In considering the nexus between the conduct and the likely misleading or deception of the prospective purchasers in the case of representations to the public it is necessary to isolate who are the "ordinary" or "reasonable" members of the class of prospective purchasers. In Campomar the Court explained that this process involves an objective attribution of certain characteristics. Such a person would not fail to take reasonable care of their own interests. It is necessary to isolate by some criterion a representative member of that class to determine whether a misconception is likely to arise from the conduct alleged (see [103]). Section 52 contemplates the effect of the conduct on reasonable members of a class. The parties did not dispute the applicable principles in determining the relevant audience though there was an issue about the result in the facts of this case. ACCC submitted, correctly (and it was an agreed fact), that the audience for each catalogue was the public at large but went on to submit that at least one material section of this audience would have been misled or deceived by Prouds' conduct, namely consumers without experience in purchasing jewellery and without knowledge of the Australian jewellery industry or Prouds' pricing or promotion practice. As noted earlier, discounting is common in the jewellery industry and is a feature of Prouds' business model. Discounting occurs both during promotional periods in relation to the items being promoted and also in relation to items being offered for sale at the regular marked price. Ultimately, ACCC described this material section of the public as: "a consumer without experience in purchasing jewellery and without knowledge of Australian jewellery industry or Prouds' pricing or promotion practice. It is a consumer who would be quite happy to pay the full "regular market price", and who if unhappy with that price would either go elsewhere or wait for a price promotion of the item in question. In short, it is a consumer who is ignorant that discounts are or would be available below a regular marked price" . I accept that the evidence establishes there are consumers with these various characteristics and, at base, consumers who would be ignorant that discounted prices are or would be available lower than the regular marked price. Support for this conclusion is found in the evidence concerning historical sales at the regular marked price. Schedule 4 reveals a material percentage of sales at the "was" price even though they were the minority of sales and often a small minority. It is probable that those sales were, in many instances, to consumers who were unaware that discounts were available. It is tolerably clear that in identifying the hypothetical individual contemplated by the joint judgment in Campomar and in considering the effect of the impugned conduct on that individual, the Court can identify from a general and diverse group which may constitute the audience, a hypothetical individual who is most likely to be misled but only in the sense used in the following quotation. That is, one can test the effect of the conduct on a subclass of that general and diverse group. So much is apparent from the judgment of the Full Court in Domain Names Australia Pty Ltd v .au Domain Administration Ltd [2004] FCAFC 247 ; (2004) 139 FCR 215. The Full Court said (at [24]): [The trial judge] (at [16]) summarised the text formulated by the High Court in Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12 ; (2000) 202 CLR 45 at [103] - [105] in these terms: "First, where the persons allegedly misled are not identified individuals but are members of a class it is necessary to isolate "a representative member" of the class and enquire whether this hypothetical individual is likely to be deceived. Second, when considering the likely effect of the misrepresentation on this hypothetical person he (or she) should be judged as an 'ordinary' or 'reasonable' member of the class. In this way, reactions to the representation that are 'extreme' or 'fanciful' will be disregarded." Having identified the test his Honour then said (at [21]): "How then is one to identify and give characteristics to Campomar Sociedad 's hypothetical individual? Logic demands that if one is dealing with a diverse group then, for the purpose of determining whether particular conduct has the capacity to mislead, it is necessary to select a hypothetical individual from that section of the group which is most likely to be misled. If the court is satisfied that this hypothetical individual is likely to have been misled by that conduct, that would be sufficient." The appellants' complaint appears to be that his Honour should have considered the effect of the notices on the "ordinary or reasonable" recipient. However in our view his Honour accurately summarised the Campomar test. There is no inconsistency between testing the effect of the representation by reference to ordinary or reasonable members of the class and by reference to the hypothetical individual. The attribution of characteristics to the ordinary and reasonable members of the class must be objective in order to allow for the wide range of persons who would in fact make up the class: National Exchange Pty Ltd v Australian Securities and Investments Commission (2004) 49 ACSR 369 at [68] per Jacobson and Bennett JJ. Within a large class there may be a number of subclasses of ordinary and reasonable people. Thus in the present case there may be ordinary and reasonable persons who were well informed about the internet and the domain name registration system and other persons, equally ordinary and reasonable, who were not. The issue of how a Court determines whether conduct was misleading or deceptive was addressed by the High Court in Campomar . As noted earlier, the Court indicated the hypothetical person would not fail to take reasonable care of their own interests. Section 52 contemplates the effect of the conduct on reasonable members of a class. The Court noted that in an assessment of the reactions or likely reactions of the "ordinary" or "reasonable" members of the class of prospective purchasers of mass-marketed products for general use, the Court may well disregard assumptions by persons whose reactions are extreme or fanciful (at [105]).