Case: Campomar Socieded, Limitada v Nike International Ltd [2000] HCA 12 ; (2000) 202 CLR 45
Outcome: applied
was an issue between the ACCC and Teracomm about the attributes of the target audience of Dolly , all teenage girls aged between 14 and 17. The ACCC submitted they were likely to be sufficiently gullible or vulnerable to fail to understand (either wholly or partially) the message conveyed in the advertisements including the message about the cost and nature of the service. Teracomm submitted they were savvy, technologically literate adolescents who would have well understood the advertisements. It is sufficient, when dealing with this question, to repeat (without using quotations) what I said in Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd [2008] FCA 75 at [16] and [19]. The leading authority on the question of how the audience is identified and what characteristics or attributes it may have, is the judgment of the High Court in Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12 ; (2000) 202 CLR 45: see also Campbell v Backoffice Investments Pty Ltd [2009] HCA 25 at [26]. 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. 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] FCAFC 90 ; (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. In my opinion, the ACCC's contentions in this matter can be approached on the footing that there would have been a material number of readers of Dolly who would not have paid particular attention to matters of detail and would not have had a familiarity or understanding of these services. Those readers would have been or would have been likely to have been misled by the advertisements. It is not necessary for the advertisements to be characterised in this way (in order to found a conclusion that Teracomm engaged in proscribed conduct) for the advertisements to have resulted in readers acquiring the content offered by Teracomm. However they did though not in great numbers (roughly averaging 180 in the period May to September 2008). I am fortified in expressing this conclusion by the uncontested evidence of Teracomm concerning the take-up rate. It was to the effect that typically 40% to 70% of customers unsubscribed within the first hour of signing up. Presumably these customers did so either because they noted the commentary at the bottom of the advertisement to the effect that it was a subscription and how to unsubscribe or they learnt that from the confirmation message or both. They may have known it was a subscription service for these reasons. Those who did not unsubscribe then remained, on average, a customer for just under three weeks.