Talmax Pty Ltd v Telstra Corporation Limited

(1997) 2 QdR 444

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(Judgment by: Fitzgerald P, Davies JA, Moynihan J)

Talmax Pty Ltd
v Telstra Corporation Limited [App. 2983/1996]

Court:

Judges:
Fitzgerald P
Davies JA
Moynihan J

Subject References:
Trade and commerce
Trade practices and related matters
Consumer protection
Misleading, deceptive or unconscionable conduct
Particular classes of conduct
Claimed sponsorship or endorsement
Misrepresentation that sportsman consented to use of name, image and reputation in advertising and supported and sponsored by advertiser
Trade and commerce
Enforcement and remedies
Actions for damages
Assessment of damages
Other matters
Diminution of commercial opportunity
Matters relevant to assessment

Legislative References:
Trade Practices Act 1974 - s. 82; s. 52

Case References:
Taco Co. of Australia Inc. v. Taco Bell Pty Ltd - (1982) 42 A.L.R. 177, 202 followed
Morgan v. Odhams Press Ltd - [1971] 1 W.L.R. 1239
Siddons Pty Ltd v. The Stanley Works Pty Ltd - (1991) 29 F.C.R. 14, 20
FAI General Insurance Co. Ltd v. RAIA Insurance Brokers Pty Ltd - [1992] A.T.P.R. 41-176 at pp. 40,409-40,410 considered
Sellars v. Adelaide Petroleum N.L. - (1994) 179 C.L.R. 332 applied.

Hearing date: 15 October 1996
Judgment date: 25 October 1996

Brisbane

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Judgment by:
Fitzgerald P
Davies JA
Moynihan J

APPEAL

D. F. Jackson Q.C ., with him P. R. Dutney Q.C ., for the appellants.

The trial judge erred in analysing the advertising supplement in detail in order to determine whether or not properly construed by the careful reader it constituted an actual endorsement. He erred in concluding that the second appellant's prior association with the respondent rendered consent to the use of his image for corporate advertising purposes unnecessary, particularly where the use of the photograph was contrary to the sponsorship agreement. The question of whether the advertising supplement was misleading or deceptive or constituted passing off is a question of impression.

P. A. Keane Q.C ., S .- G ., with him N. J. O'Bryan , for the respondent.

It is necessary that there be a misrepresentation about the nature and extent of the association between the second appellant and the respondent. Absent such a misrepresentation there is no actionable conduct. The material did not overstate the nature and extent of the association and did not convey an implied representation that the second appellant endorsed the respondent's products or services or otherwise supported it.

The material did represent an association between the second appellant and the respondent by reason of their respective involvements in Australian swimming and with one another in various respects. That association did exist.

C.A.V.

THE COURT

This is an appeal against a judgment of a Judge of the Trial Division on 14 March 1996 dismissing an action brought by the appellants against the respondent. The appellants seek an injunction, damages and costs. It is convenient to postpone consideration of the terms of the injunction sought until later. It is also convenient to discuss the dispute as one between the second appellant, Kieren John Perkins, and the respondent; in their oral submissions before this Court, neither party was concerned to differentiate between Mr Perkins and the first appellant, Talmax Pty Ltd, which the trial judge described as "a management company formed to take advantage of opportunities to commercially exploit [his] name, image and reputation". ^[1] : His Honour added that the respondent admitted that Mr Perkins "is a well-known and respected sporting identity whose face and name was widely recognised throughout Australia and Queensland in particular", and that he "has gained recognition for his numerous, significant achievements in swimming at a world class level, including several world records and medal-winning performances at Olympic Games and Commonwealth Games".

The dispute arose out of a colour supplement "Telecommunications '94" inserted in the Courier Mail newspaper of 12 March 1994 on behalf of the respondent. The lefthand side of the front page of the supplement was concerned with "Preselection", a process which was to allow telephone users to determine whether to continue with the respondent or to select a competitor about to enter the market as "the carrier they want to provide their long-distance and international telephone calls", and the supplement promoted the selection of the respondent. The other side of the front page included the material complained of by the appellants at the top of the page and, below that, an index of what was to be found inside the supplement and an advertisement for an advertising agency. The material complained of by the appellants consisted of a large colour photograph of Mr Perkins at the end of a swimming pool, quite obviously at the finish of a race, and the text set out below. In the photograph, Mr Perkins was wearing a swimming cap on which the respondent's logo and a dolphin were clearly visible, and a large advertisement for the respondent on part of the end of the pool could also be plainly seen. The text underneath the photograph was as follows:

" Kieren leads charge by Telecom Dolphins

Brisbane's favourite son Kieren Perkins returns to the famous Chandler Aquatic Centre next week for the Telecom Australian Open Swimming Championships, which Australian Swimming believes will be the biggest and the best ever staged. Kieren, who has been training hard this season, is looking forward to showing off his remarkable talents in front of his home crowd.

Although Kieren has admitted he may not be in world record- breaking shape, Chandler remains one pool in which he would dearly love to break a world record -- the Telecom Australia Open Championships is a golden opportunity.

Other key members of the Telecom-sponsored 'Dolphins' will also compete at Chandler.

Kieren has set world marks in Barcelona, Edmonton, Auckland, Canberra, Blacktown and Warringah Aquatic Centre over three years which have seen him climb to the top of the international swimming ladder.

Two other goals remain in Perkins' sights and if he continues on his winning way he'll surely achieve them -- to win Commonwealth Games gold in Victoria and to win World Championship gold in Rome in September.

Perkins was recently named the Telecom Australian Swimmer of the Year and received a Yamaha Jet-ski."

The trial judge rejected a submission that the publication conveyed the impression that Mr Perkins "endorsed or supported the respondent, generally or in its competition ... for subscribers". His Honour tested this issue by considering the meaning which the material complained of would convey to a "careful reader" who undertook an "analysis of the supplement" and "would have observed a contrast with other articles which clearly were endorsements". That was an incorrect approach in circumstances in which the material complained of was an advertisement directed to the general public by inclusion in a newspaper with a wide circulation; the "target" readership accordingly included "the astute and the gullible, the intelligent and the not so intelligent, the well educated as well as the poorly educated, men and women of various ages pursuing a variety of vocations", and the appellants could rely on any meaning which was reasonably open to a significant number of the newspaper readership. ^[2]

The trial judge also made another critical error. At the material time, the respondent had a sponsorship agreement with Australian Swimming Incorporated, the controlling body of the sport of swimming in Australia. Pursuant to that agreement, the respondent was the sponsor of the forthcoming "Telecom Australian Open Swimming Championships", which were referred to in the "article" which concerned Mr Perkins. Further, the respondent had "naming rights" to the "National Swim Squad", which was agreed to be known as the "Telecom Dolphins Swim Squad", and, with specified exceptions, "to any team representing Australia in international competition ..." and "any team that swims as the 'Australian Team' in domestic competition", each of which was agreed to be known as the"Telecom Dolphins". The appellants' final statement of claim alleged that there was no "association" between Mr Perkins and the respondent, i.e., at the time when the advertising supplement was published. In its defence, the respondent asserted that Mr Perkins was "a member of Australia's national swimming squad", which "has been and is publicly known by the name 'Telecom Dolphins'". There was no suggestion by either pleading that there was at the time of the publication, or would be at the time of the "Telecom Australian Open Swimming Championships", an "Australian [Swimming] Team", or that Mr Perkins was or would be a member of such a team. Mr Perkins gave evidence, and the trial judge found, that he had never been a member of the "National Swim Squad". Mr Perkins' evidence in chief also included the following:

"MR DUTNEY: From time to time you have been a member of Australian swimming teams; is that correct?-- It is.

For the purpose of becoming a member of an Australian swimming team in recent years has it been necessary to sign an agreement with Australian Swimming?-- Yes.

Prior to March 1994 what was the nearest in date of Australian teams you were a member of?-- It was the 1993 Pan Pacific team which swam in August of 1993.

Would you have a look at this document? Is that a copy of the team agreement you signed for the Pan Pacific in 1993 with cover letter from your solicitors under which it was sent to Australian Swimming?-- Yes, it is."

While the first question and answer were relevant to establishing Mr Perkins's standing, the other questions and answers were not related to any issue raised by the pleadings, and no cross-examination was directed to any aspect of this segment of Mr Perkins's evidence. In the circumstances, it was incorrect of the trial judge to hold that "[i]t was not proved that Perkins was not a member of an Australian team on 12 March 1994 [the date of publication] .... Perkins was not asked whether he was a member of an Australian team during March". His Honour went on to erroneously hold that "although the photo and article represent that Perkins was a member of the Telecom Dolphins on 12 March 1994, this representation is not shown to have been false ...".

By mis-stating that Mr Perkins was a member of the "Telecom Dolphins", which it was expressly stated were "Telecom-sponsored", the respondent plainly misrepresented that, at the time, Mr Perkins was a member of a group which it sponsored. That false impression was quite deliberately fostered by the use of Mr Perkins's photograph with the respondent's name and its logo (on Mr Perkins's swimming cap) prominently displayed. Further, the article attributed attitudes and aspirations to Mr Perkins. The respondent submitted that there was no evidence that Mr Perkins did not express the views attributed to him, but that is of little consequence in the circumstances. There was no suggestion that there had been any communication between the respondent and either appellant prior to publication, and the judgment below records that the respondent admitted that it did not seek permission for the publication from either appellant.

However, the trial judge held that the publication did not misrepresent that Mr Perkins had consented to the respondent's association of his name, image and reputation with its advertising. His Honour held that a reader of the publication could not have legitimately inferred such a consent on the basis that the publication would otherwise have been unlawful because the law is otherwise. ^[3] It was said that "[s]uch a mistake could not convert the article into conduct contravening s. 52 ^[4] " [of the Trade Practices Act 1974 (Cth)]. The appellants did not challenge that finding before this Court.

The judgment then continued:

"The next question is whether readers would have assumed that, in accordance with decency or usual practice, permission would have been given. ^[5]

By swimming at an international event wearing a cap carrying the Telecom Dolphins' logo, and by accepting the award as Telecom Swimmer of the Year, Perkins had very publicly associated himself with Telecom and its sponsorship of Australian swimming. That being so, readers are unlikely to have considered that common decency or usual practice required Telecom to obtain a consent before proclaiming the extent of its support for Australian swimming and Perkins in an advertisement. It is more likely that readers would have supposed that that public affiliation with Australian swimming in general and Perkins in particular entailed a liberty in Telecom to publicize it. In other words, if they reflected on the matter at all, readers are likely to have regarded an entitlement to publish the article and photo as a benefit incidental to the sponsorship and the award. And, in my opinion, intuitive or subconscious reactions would not have resulted in a different state of mind in a significant number of readers.

In short, given the association with Telecom which Perkins chose to accept, it seems unlikely that many readers would have thought or assumed that ordinary practices or the proprieties required Telecom

to obtain consent before including the article and photo in the supplement"

His Honour added that the article and photo in the supplement "did not amount to an approbation of Perkins by Telecom"; it will be necessary to come back to that issue, but it is desirable to observe at this juncture that the trial judge's opinion on the point was based on the application of an erroneous test, as has earlier been noted.

Finally, in dealing with the question whether the publication misrepresented that Mr Perkins had consented to it, his Honour said:

"This brings me to the more difficult issue whether, in all the circumstances, the text impliedly asserts permission to use the name and image.

The style of the article suggests that it could be the report of an interview with Perkins. In particular, the second and third paragraphs might be thought to contribute to such an impression:

'Kieren, who has been training hard this season, is looking forward to showing off his remarkable talents in front of his home crowd. Although Kieren has admitted he may not be in world record-breaking shape, Chandler remains one pool in which he would dearly love to break a world record -- the Telecom Australia Open Championships is a golden opportunity.'

Perkins is referred to by his first name in the headings of the article and in another paragraph of it, as well as in these two paragraphs. These references tend to reinforce the impression of a personal interview.

As the case was fought, it does not matter whether Perkins talked to someone from Telecom or to anyone at all, saying he had been training hard, was looking forward to showing off his talents, was not in world-record breaking shape, and wanted to break a world record at Chandler. The only significance of such words lies in any potential they had to lead readers to suppose that Perkins had permitted his name and image to be associated with the advertisement.

Perceptions of readers will have been influenced by a variety of experiences and outlooks. And readers cannot be expected to pause and carefully think about whether the impression this sort of article immediately creates is logically appealing. But, on balance, it is hard to imagine that many readers would have derived from the article a representation of assent to the association of Perkins with the advertisement. The text does not suggest, for example, that the words attributed to Perkins were spoken to a Telecom representative. And, once again, Telecom's sponsorship is a complicating factor, colouring the way in which messages could have been received.

Some cases evidence a ready judicial inclination to find a misrepresentation of consent where, without their authority, celebrities are associated with promotions of goods and services. ^[6]

However, in this case, in my opinion, it is not proved that a significant number of readers would have inferred that Perkins or Talmax had consented to the publication. I doubt that many readers would have reacted, consciously or subconsciously, in that way. So it is not surprising that not a single reader testified to having understood the article as implying assent by Perkins or Talmax to the publication."

It is significant that, in that passage, it is stated that "readers cannot be expected to pause and carefully think about whether the impression this sort of article creates is logically appealing", whereas in earlier rejecting another element of the appellants' case his Honour had done so by reference to an "analysis" of the supplement by a "careful reader". It is convenient to return immediately to the issue then under consideration.

As previously mentioned, the appellants submitted that the material complained of conveyed that Mr Perkins supported the respondent in the "preselection" process. The trial judge found that "Perkins did not in fact commend Telecom, its products or services", but, as earlier stated, applied the wrong test concerning whether the publication was relevantly misleading. His Honour held that, while "the article and the photograph were included in the supplement to influence customers to choose Telecom in the [preselection] ballot ... by associating Perkins, a popular, successful, local, sporting celebrity, with Telecom", its emphasis was "on the material support Telecom has given to Australian swimming and the benefits Perkins had derived through that sponsorship ...". The judgment continued:

"... The article aims to entice readers to support Telecom because Telecom has supported Australian swimming and Kieren Perkins. That is the plain thrust of the presentation.

The article and photo are not an implied representation that Perkins supports or has supported Telecom, and, in my opinion, it is unlikely that readers would have thought otherwise."

The respondent argued, correctly, that the trial judge's conclusions were based upon an "impression" of the effect of the publication, and submitted that an appellate court should not set aside such a finding merely because it disagreed, and that demonstrated error by the primary judge was necessary before the appeal court would substitute its different impression. Whatever the general validity of such propositions, they have no present significance because of the trial judge's mistaken approach which plainly must have influenced his view of the impression to be gained from the publication. It is, therefore, appropriate for this Court to form its own impression.

As has been said, the trial judge accepted that "the article and the photo were included in the supplement to influence customers to choose Telecom in the [preselection] ballot". His Honour was also correct, in our opinion, that for that purpose emphasis was given to "the material support Telecom has given to Australian swimming and the benefits Perkins has derived through that sponsorship ...". However, to our mind, it attributes far too much subtlety to both the publication and the respondent's motives to find a distinction in what was conveyed in the article between the respondent's support for Australian swimming and Mr Perkins and his support for the respondent. We are of opinion that the ordinary reader would have gained the impression that Mr Perkins supported the respondent in the "preselection" process by the respondent's use of its association with Perkins in that context. We are fortified in this conclusion by the circumstance that it is an obvious inference that such an impression was the manifest purpose of the offending material. ^[7]

Once this point is reached, while it seems of less importance whether there was a misrepresentation that Mr Perkins consented to the publication, a conclusion that such an impression was not created by the offending material could not be reached without considerable difficulty. In our opinion, taken as a whole, the material complained of gives a clear impression that the respondent had Mr Perkins's consent to what was published.

In his reasons for judgment, the trial judge also rejected a conclusion that the publication misrepresented that Mr Perkins endorsed or supported Telecom'"generally". That point was not relitigated on appeal.

In summary, therefore, we are of opinion that the respondent's publication misrepresented that Mr Perkins was sponsored by it, had consented to its use of his name, image and reputation in its advertising, and supported it in the forthcoming "preselection" process. It was not in dispute that such misrepresentations would have contravened s. 52 of the Trade Practices Act . Although the appellants also asserted a cause of action in passing-off, no suggestion was made that the relief claimed on that basis was different from that which can be granted under the Trade Practices Act .

The respondent did not submit that an injunction in appropriate terms should not be granted against it in these circumstances. ^[8] Its conduct on this occasion was exacerbated by the fact that, some months earlier, it had apologised for using Mr Perkins's image in an advertisement without his consent, and asserted that it had "instituted processes to ensure that there is no repeat of this incident ...".

Under s. 82 of the Trade Practices Act , the respondent is also liable to either appellant for loss or damage suffered by its misrepresentations in contravention of s. 52. The trial judge did not assess damages, and there is little material upon which this Court can do so.

No suggestion was made that any of the misrepresentations adversely affected Mr Perkins's reputation. Broadly stated, the damages claim was based upon the premise that the publication diminished the opportunity to commercially exploit his name, image and reputation. In general terms, it was said that it is disadvantageous to expend celebrity in promoting an entity, product or service on a single occasion; each association to which a famous person lends himself or herself utilises a part of his or her "credibility" for advertising purposes. More specifically, the misrepresentation of an association between Mr Perkins and the respondent eliminated or diminished the prospect of an association between him and some other prospective "clients". No attempt was made to prove a particular lost opportunity, but some evidence was led which indicated that (i) Mr Perkins "had already done some appearances" for the respondent's competitor in the preselection process and (ii) he received substantial, but extremely variable, amounts for permitting the use of his name, image and reputation. It is not possible to determine any specific amount as having present relevance.

Nor is it necessary to do so. Loss of an opportunity to exploit commercial advantage is "loss or damage" within s. 82(1) of the Trade Practices Act ^[9] , and so, logically, is diminution of such opportunity. What is called for in the present circumstances is an assessment of the possible extent to which Mr Perkins's commercial advantage was generally diminished and of the possibility that he lost the chance of a particular opportunity of exploitation of that advantage. ^[10] "[W]here there has been an actual loss of some sort, the common law does not permit difficulties of estimating the loss in money to defeat an award of damages". ^[11] On our assessment, the damages related to the possibilities to which reference has been made should be set at $15,000.

We would therefore allow the appeal with costs to be taxed, and set aside the order for costs made below. An injunction, in terms to be agreed or decided after further written submissions, should be granted against the respondent, which should also be ordered to pay damages of $15,000 and the appellants' taxed costs of and incidental to the action, including reserved costs.

Solicitors: Biggs & Biggs (appellants); Freehill Hollingdale & Page (respondent).

G. D. O'SULLIVAN
BARRISTER