• Any

.au Domain Administration Ltd vDomain Names Australia Pty Ltd

[2004] FCA 424

TRADE PRACTICES – misleading and deceptive conduct– notices regarding registration of domain names – representation topublic– attributes of hypothetical addressee – no requirement thatsignificant numbers be misled – "unsolicited services"– servicesnot yet provided – whether actionable



WORDS AND PHRASES– "unsolicited services"







Trade Practices Act 1974(Cth)ss 52,64









10^th Cantanae Pty Ltd vShoshana Pty Ltd(1987) 79 ALR 299 not followed

A G Spalding &Bros v A W Gamage Ltd(1915) 32 RPC 273 cited

Australian Competitionand Consumer Commission v Optell Pty Ltd(1998) 41 IPR 49distinguished

Australian Securities and Investments Commission vNational Exchange Pty Ltd[2003] NSWCA 71;(2003) 202 ALR 24 discussed

CampomarSociedad, Limitada v Nike International Ltd[2000] HCA 12;(2000) 202 CLR 45applied

Elders Trustee and Executor Co Ltd v E G Reeves Pty Ltd[1987] FCA 332;(1987) 78 ALR 193 applied

Erven Warnink Besloten Vennootschap v JTownend & Sons (Hull) Ltd[1979] AC 731 cited

Hornsby BuildingInformation Centre Pty Ltd v Sydney Building Information Centre Ltd[1978] HCA 11;(1978)140 CLR 216 applied

Lubrano v Gollin & Co Pty Ltd[1919] HCA 61;(1919) 27CLR 113 cited

McWilliam’s Wines Pty Ltd v McDonald’s System ofAustralia Pty Ltd[1980] FCA 159;(1980) 33 ALR 394 applied

Parkdale Custom BuiltFurniture Pty Ltd v Puxu Pty Ltd[1982] HCA 44;(1982) 149 CLR 191applied

Rizzo vFitzgerald (1988) 19 FCR 175 notfollowed

Rizzo vWall (unreported, Pincus J, 25November 1987) considered

Saville Perfumery Ltd v June Perfect Ld(1941) 58 RPC 147 cited

Siddons Pty Ltd v Stanley Works Pty Ltd(1991) 29 FCR 14 not followed

Snoid v Handley[1981] FCA 180;(1981) 38 ALR383 not followed

Taco Company of Australia Inc v Taco Bell Pty Ltd[1982] FCA 136;(1982) 42 ALR 177 applied

Weitmann v Katies Ltd(1977)29 FLR 336 not followed

Wells v John R Lewis(International) Pty Ltd(1975) 25 FLR 194distinguished

















.AU DOMAIN ADMINISTRATIONLIMITED v DOMAIN NAMES AUSTRALIA PTY LTD and CHESLEY PAULRAFFERTY



V 656 of 2003





AUSTRALIAN COMPETITIONAND CONSUMER COMMISSION v DOMAIN NAMES AUSTRALIA PTY LTD and CHESLEY PAULRAFFERTY



V 926 of 2003









FINKELSTEINJ

8 APRIL 2004

MELBOURNE (via video link to Perth)

REASONS FOR JUDGMENT

1Two actions are being heard together. One is a representative proceedingin which .au Domain Administration Limited (.au Domain)is therepresentative party. The respondents in that action are Domain Names AustraliaPty Ltd (DNA) and its sole director, Mr Rafferty. The second action isbrought by the Australian Competition and Consumer Commission (ACCC) and isagainst the same respondents. Each action arises out of the same facts and ineach action the applicants make similar claims. For those reasons the partieshaveagreed that there should be one trial.

2The actions are concerned with the Internet and domain names. Put simply,the Internet is a worldwide system of interconnectedcomputer networks. Adomain name is essentially a unique name that identifies a particular site onthe Internet. .au Domain administersdomain names in Australia. DNA wasestablished in October 2002 by Mr Rafferty. As part of its business DNAsends notices to Australianbusinesses inviting them to register particulardomain names. For a fee it then facilitates the registration of the domain namerequested by a respondent. It is the notices which are at the heart of thisdispute. .au Domain and ACCC allege that notices sentin June, July andSeptember 2003 were false or misleading in several respects. They seekdeclarations that DNA has contraveneds 52 of theTrade Practices Act1974(Cth) and that Mr Rafferty was involved in those contraventions. They also seek injunctions restraining further breaches. Thereis a subsiduaryclaim that by sending the notices DNA breacheds 64(2A) of theTradePractices Act.Section 64(2A) prohibits a corporation in trade or commercefrom "assert[ing] a right to payment from a person for unsolicited servicesunless thecorporation has reasonable cause to believe that there is a right topayment". The applicants contend that the notices sent by DNAclaimed the rightto receive from the recipients the fee for the registration of their existingdomain name.

3To understand the issues that arise in this case it is necessary to knowsomething about the Internet and the nature and use ofdomain names. TheInternet can best be described as an expansive worldwide network of computerswhich serves to interconnect innumerablesmaller linked computer networksthrough the global telecommunications infrastructure. The computers are linkedthrough an Internethost that is usually a commercial organisation called anInternet Service Provider (ISP). An ISP allows subscribers to connect totheInternet through the ISP’s computer which acts as a "server" ofinformation. Each computer on the network can communicatewith the others byusing machine language conventions known as "Internet Protocols".

4The most common method of communication over the Internet is through themedium of the World Wide Web (the Web). Computers linkedto the Web exchangeand store information by means of an Internet Protocol known as "HypertextMarkup Language" (HTML). Informationis stored on the Web in various formats,including text, still images, sound and video. The Web also houses documents inthe formof "web pages". Web pages are created with HTML and can contain text,images, other files and links to other web pages. A collectionof web pages isreferred to as a "web site". Every web page has a unique address called a"Uniform Resource Locator" (URL). AnInternet user who wishes to access a webpage can do so by entering the relevant URL address into a "browser" (a softwareprogramused for viewing information on the Internet).

5A domain name forms part of the URL web address. Take, for example, thecourt’s URL web address:http://www.fedcourt.gov.au. The domainname component of the address is: fedcourt.gov.au. It comprises a series ofalpha-numeric characters that translatea somewhat less-decipherable string ofnumbers; an "Internet Protocol number" (IP number). IP numbers are essentiallyunique webaddresses signifying the location of individual computers connectedto the Internet. Computers which share a common part of an IPnumber are saidto be in the same "domain".

6A domain name enables people to access a web page by typing in words orletters instead of the full sequence of digits comprisingan IP number. Asystem of databases called the "Domain Name System" (DNS) serves tocross-reference and link domain names to IPnumbers. The DNS itself ishierarchical. "Top Level Domains" are, as their name suggests, at the top ofthe hierarchy. They comprise"generic Top Level Domains" (gTLDs) and "countrycode Top Level Domains" (ccTLDs). gTLDs are domain names which may, forexample,end in ".com", ".net", ".org", ".gov", ".mil", ".biz" and ".info"(these abbreviations refer to "Commercial", "Network", "Organisation","Government", "Military", "Business" and "Information" respectively and oftendenote the content of the web page to which they relate). ccTLDs are domainidentifiers for different countries. Examples include ".au" which signifiesAustralia, ".nz" for New Zealandand ".uk" for the United Kingdom. At the nextlevel are "second-level domains" (2LDs), which are further classified as "open2LDs"and "closed 2LDs". Open 2LDs are, subject to eligibility rules, open toall sectors of the community and include domain names endingin ".com.au" and".net.au" (for businesses and commercial entities such as companies), ".org.au"(for charities and non-profit organisations),"asn.au" (for incorporatedassociations, political parties, unions and clubs) and ".info.au" (which was,until recently, open toany business or individual for any purpose but is now nolonger available). Closed 2LDs are restricted to defined sectors and includedomain names ending in ".edu.au" (for educational institutions) and ".gov.au"(for federal, state and local government bodies).

7There is a system for the registration of domain names. The pre-requisitesfor registration will differ according to the domainin which the name is soughtto be registered. The Internet Corporation for Assigned Names and Numbers(ICANN) is an American non-profitorganisation which has assumed responsibilityfor the administration of the DNS and the management of the Internet. ICANN has"delegated"the authority to administer levels of the DNS and, in particular,most ccTLDs. By a sponsorship agreement with ICANN, .au Domain,a not forprofit company, is the "delegated authority" for the administration of the ".au"ccTLD in Australia. .au Domain also hasthe function of accrediting andlicensing "Registrars". A Registrar can license ".au" domain names. ARegistrar is also responsiblefor registering domain names and for maintaining aRegistry database of registered domain names. A Registrar may appoint a"Reseller"to act as an agent for the Registrar and deal directly with theproposed "Registrant". However, a Reseller cannot effect the registrationofthe domain name itself. If the Registrar approves the domain name and theapplication for a domain name is successful, the Registryis updated and thedetails of the Registrant’s ISP number and domain name are added to the"authoritative nameserver". Thislatter step ensures that other computers onthe Internet can find the new domain name.

8A Registrant of a domain name is the exclusive licence-holder of the domainname for the period of the licence. The grant of alicence does not, however,preclude another person registering a domain name in a different gTLD or 2LD. For example, where a domainname ending in ".com" has been registered, a personother than the Registrant may register that name in another domain such as".com.au".

9DNA plays an unusual role in the registration of domain names. It is not aRegistrar. Nor is it a Reseller. DNA merely "facilitates"the registration ofdomain names. It does so by "entering the details of the gTLD or ccTLD to beregistered onto the website ofa Registrar...and...sending an electronic requestto a Registrar to register that domain name". For this it charges a modest fee.

10I have mentioned that these proceedings are about notices sent by DNAinviting recipients to register particular domain names. In all, complaint ismade about four different forms of notice. Copies of two notices are, forconvenience, annexed to these reasons. The other notices are substantially thesame as the second annexure.

11The first notice was sent in June 2003 to over 41,000 "Australianbusinesses" located in Victoria, Queensland and South Australia(the Junenotice). Each recipient of the June notice held an existing registered domainname ending in ".com.au". According toDNA, the notice was solely concernedwith the registration of the ".com" equivalent of the recipient’s existing".com.au" domainname. In July 2003, DNA sent two forms of notice toapproximately 175,000 Australian businesses who were in Victoria, the AustralianCapital Territory, New South Wales, Queensland, South Australia and WesternAustralia (the July notice). One form of the July noticehad a "paymentsection" (which the recipient could return to DNA with the payment amount) andthe other, at least according to theform of notice attached to.au Domain’s statement of claim, apparently did not have such asection. DNA says that each Julynotice was concerned with the registration ofone or other of the following: (1) the ".net.au", ".biz", or ".info" variant oftherecipient’s existing ".com.au" domain name; (2) the ".com.au" or".net.au" variant of the recipient’s existing ".com"domain name; (3) therecipient’s recently expired ".com.au" or ".com" domain name; or (4) adomain name ending in ".com.au"or ".com" in respect of recipients who did nothold any existing domain name or, alternatively, in respect of recipients whodidnot hold an existing domain name "substantially similar" to the domain namementioned in the notice. In September 2003 DNA sentanother batch of notices toapproximately 418,000 Australian businesses which were located in the AustralianCapital Territory, NewSouth Wales, Queensland, Victoria, South Australia andWestern Australia (the September notice). These notices were said to offertheregistration of domain names ending in ".com" and ".com.au". Most of therecipients of the September notice did not hold anexisting domain name or,alternatively, did not hold an existing domain name which was similar to that inthe notice. However, somepeople who received the September notice held anexisting registered domain name that was substantially similar to that in thenotice;the difference being that the domain name in the notice contained adifferent gTLD or 2LD and, in some cases, an abbreviation ofthe part of therecipient’s existing domain name which described the recipient’sbusiness.

12Turning now to the claims, the whole basis of each applicant’s caseas regardss 52 rests on the words and layout of the notices. On thequestion ofs 52, I am going to guide myself by the following principles. Most of them are uncontroversial:

1.Conduct will be misleading or deceptive if it conveys a falserepresentation.

2.The question whether conduct is misleading or not is an objective question offact which the court must determine for itself againstthe background of allrelevant facts. Accordingly, while evidence of deception may be led it is notessential to the case.

3.Whether conduct is misleading does not, however, depend upon thedefendant’s intention, for a corporation which acts honestlyand lawfullymay contravenes 52. But if there is an intention to mislead the court maymore easily infer that the conduct was in fact misleading.

4.Conduct which does no more than cause confusion or uncertainty is notmisleading or deceptive.Section 52 is directed to something else.

5.For there to be a contravention ofs 52 the conduct must cause (in thesense explained in point 6) an erroneous assumption or misconception. That is,there must be a "sufficientnexus" between the conduct and the error ormisconception.

6.Nevertheless, it is not necessary to show that anyone has in fact beenmisled. It is enough that the conduct is likely to misleador deceive in thesense that there is a real chance or possibility of deception.

7.Where the conduct involves the making of a statement which is literally trueor accurate the conduct may still be misleading. It all depends upon thecircumstances.

13The precise manner in which these principles are applied will differ fromcase to case. In particular, the way in which the courtwill determine whethercertain conduct has the capacity to cause error or misconception will varydependent upon the nature of thecase before the court. Here I have in mind thetwo broad categories of case brought unders 52. The first is an action bya plaintiff who complains that he has been misled by the defendant’sconduct and seeks redress.Section 52 appears inPt V of theTradePractices Act.Part V is headed "Consumer Protection" and it is with consumersthats 52 is principally concerned. In this type of case the plaintiff hasthe burden of proving that the impugned conduct was misleadingand that healtered his position (that is, was induced) as a result. In most cases it willnot be difficult to determine whetherthe defendant’s conduct amounts tomisleading conduct. Nor will it be difficult to determine whether the conductinduced theplaintiff to act to his detriment.

14The second category is where the plaintiff has not been, and does not fearbeing, deceived or misled. Such a plaintiff bringsas 52 action for adifferent purpose. He may be in competition with the defendant and is seekingto protect his business from unfair competition(as he might in a passing offaction). Or the plaintiff may be a statutory authority such as the ACCC whichbrings the action tovindicate the public interest. In this type of case theplaintiff usually alleges that the conduct is likely to cause a third partytobe misled or deceived. The question whether the conduct is likely to mislead athird party cannot be resolved in the same wayas in an action where theplaintiff seeks to establish that he personally has been misled. In such asituation it is necessary tokeep in mind the two further classes of actionidentified by Deane and Fitzgerald JJ inTaco Company of AustraliaInc v Taco Bell Pty Ltd[1982] FCA 136;(1982) 42 ALR 177, 202-203. The first concernsa case where there is an "express untrue representation made only to identifiedindividuals". I takethe judges’ reference to the case of an "expressrepresentation" to refer to an action that is founded on the literal meaningofa representation about a fact (including the non-existence of a fact) or stateof affairs. An express representation may be madeby words, through the use ofsymbols for conveying information or by other conduct. An expressrepresentation must be distinguishedfrom an implied or inferred representation- "[a]n implication is included in and part of that which is expressed: aninferenceis something additional to what is stated":Lubrano v Gollin &Co Pty Ltd[1919] HCA 61;(1919) 27 CLR 113, 118. Deane and Fitzgerald JJ said thatas regards this first class of case, the task of deciding (1) whether arepresentation conveysa false representation and (2) whether the representationhas caused error or misconception, should be "uncomplicated". Most actionswhere the plaintiff alleges that he has been misled will fall into the first(express representation) class.

15The second class identified by Deane and Fitzgerald JJ concerns acase where the alleged misrepresentation is not express and isnot made toidentified individuals, but is made to the public at large or to a section ofthe public. As regards this class, Deaneand Fitzgerald JJ said thatdetermining whether conduct may lead to error should involve the followingprocess. First, it is necessaryto identify the relevant section (or sections)of the public by reference to which the issue is to be tested. Second, once thesectionof the public is identified the issue is to be considered by referenceto all who come within the section. This may include theastute and thegullible, the intelligent and the not so intelligent, the well educated and thepoorly educated. Third, it is permissible(but not essential) to have regard toevidence that some person has in fact been misled, though this evidence will notbe conclusive. Finally, it is necessary to enquire whether any provenmisconception has arisen because of the misleading or deceptive conduct.

16InCampomar Sociedad, Limitada v Nike International Ltd[2000] HCA 12;(2000)202 CLR 45 the High Court (at 84) approved the observations of Deane andFitzgerald JJ regarding the manner in which a plaintiff should go aboutestablishing whether or not particular conduct has produced error ormisconception. In addition, the High Court (at 85-86) laiddown two furtherrules. First, where the persons allegedly misled are not identified individualsbut are members of a class it isnecessary to isolate "a representative member"of the class and enquire whether this hypothetical individual is likely to bedeceived. Second, when considering the likely effect of the misrepresentationon this hypothetical person he (or she) should be judged asan "ordinary" or"reasonable" member of the class. In this way, reactions to the representationthat are "extreme" or "fanciful"will be disregarded.

17The High Court’s decision inCampomar Sociedad has settledsome issues arising out ofs 52 and raised others. One unresolved issueconcerns a matter of characterisation. How is one to distinguish between a casewhich involvesa representation made to identified individuals and a case wherethe representation is made to the public or to a section of thepublic? I hadoccasion briefly to consider this problem inAustralian Securities andInvestments Commission v National Exchange Pty Ltd[2003] NSWCA 71;(2003) 202 ALR 24,at 27-28.There the defendant had made false representations toapproximately 5,000 shareholders of a major public company. Each shareholdertowhom the representations were made was identifiable by name and address. Itreated the case as one where the representation hadbeen made to identifiedindividuals. If I were to adopt that approach in the instant case, it would becharacterised as a case concerningrepresentations to identified individuals,although the notices in issue were despatched to several hundred thousandbusinesses.

18Upon further reflection I suspect I was probably in error in theNational Exchange case, although the error was not one which could haveaffected the result. There can be no doubt that when the impeached conductisdirected towards an indeterminate group or to a group defined by general orcollective criteria the case should be treated asone involving a representationto the public at large or to a section or class of consumer. It seems that thesame approach shouldbe followed when the case involves a representation to anidentifiable group and the plaintiff is alleging not that he was misledbut thatmembers of the group (whether great or small in number) were misled by theconduct. InElders Trustee and Executor Co Ltd v E G Reeves Pty Ltd[1987] FCA 332;(1987) 78 ALR 193, 241 Gummow J indicated that he would treat thistype of claim as a "representation to the public" case. This approach, which isthe approach I propose to adopt, invites attention to the nature of the claimand not the identity of the person to whom the representationis directed.

19I appreciate that on one view the approach might be criticised forapplying too fine a distinction. There will be cases wherea person other thanthe representee brings the action and the group to whom the allegedly misleadingrepresentation was made is sosmall that it cannot sensibly be described as aclass or a section of the public. In that circumstance it may be neitherpossiblenor necessary to identify a hypothetical member of the group for thepurpose of deciding the likely effect of the impugned conduct. If nohypothetical individual is identified the court must determine the likely effectof the conduct on the actual members of thegroup. There will also be cases onthe margin where it will not be clear whether they should be treated as"representation to thepublic" cases. But the difficult cases are likely to befew and far between.

20I also appreciate that the approach I am required to adopt has thepotential of producing anomalous results, at least at the theoreticallevel. Let it be assumed that the proprietor of a business brings an action against acompetitor complaining that one of the competitor’sadvertisements, sentonly to a handful of customers, contained allegedly false statements about theorigin of the competitor’sproducts. In order to succeed the plaintiffwould have to establish that a hypothetical member of the group of customerswould havebeen misled by the advertisement. On the other hand, if a member ofthe group were to bring an action complaining that he personallyhad been misledby the advertisement, he would need to prove that only he had been misled. Theanomaly is that by virtue of thedifferent tests it is possible that theindividual complainant might lose his action but the proprietor of the businessmay succeed,or vice versa. This would be a very strange result.

21Another potential difficulty arises because the class to whom the impugnedconduct is directed will often comprise a diverse group. That is, the membersof the group might include the uneducated, the inexperienced, the ignorant andthe unthinking as well as theeducated, the intelligent and the informedconsumer. How then is one to identify and give characteristics toCampomarSociedad’s hypothetical individual? Logic demands that if one isdealing with a diverse group then, for the purpose of determining whetherparticular conduct has the capacity to mislead, it is necessary to select ahypothetical individual from that section of the groupwhich is most likely tobe misled. If the court is satisfied that this hypothetical individual islikely to have been misled bythat conduct, that would be sufficient.

22The final point in relation to "representation to the public" casesconcerns the requirement, which has been stated in many decisionsboth at firstinstance and on appeal, that for the representation to be actionable it must beshown that significant numbers of thegroup to whom the representation isdirected are likely to have been misled or deceived. This requirement can betraced back tothe decision of Franki J inWeitmann v Katies Ltd(1977)29 FLR 336, an earlys 52 case. The applicant was a clothing designerand wholesaler. The clothing bore a particular brand name which the applicantusedas a trade mark. The respondent, a clothing retailer, imported clothingwith a similar mark. The applicant sought injunctive relief,alleging that thesale of the imported clothing would contravenes 52. The applicationfailed because the judge held that the particular mark, the name of a geographiclocation, did not indicate thatthe clothing sold by the respondent originatedfrom the applicant. In giving his reasons, however, the judge went further thanthecase required. He said (at 339) that in as 52 case the principlesrelating to a passing off action were "in a general sense ... particularlyrelevant with regard to determiningwhether certain conduct is misleading ordeceptive". He went on to say (at 343) that in such a case he was required to"considerwhether a reasonably significant number of potential purchasers wouldbe likely to be misled or deceived just in the same way asthis question shouldbe considered in a passing off action".

23Franki J was correct in stating that in a passing off action it isnecessary for the plaintiff to show that a large number of consumersare liableto be deceived by the defendant’s use of a particular name or get up:Saville Perfumery Ltd v June Perfect Ld (1941) 58 RPC 147, 175-176. This is hardly surprising. The basis for a passing off action is a proprietaryright in goodwill establishedthrough the use of a name or get up in connectionwith the plaintiff’s goods:A G Spalding & Bros v A W Gamage Ltd(1915) 32 RPC 273, 284;Erven Warnink Besloten Vennootschap v J Townend& Sons (Hull) Ltd[1979] AC 731 at 741-742, 754. The action is fordamage done or threatened to be done to that property by the defendant. That isthe reason theplaintiff must show that a significant number of people arelikely to be misled. Unless many people are misled it is unlikely thattheplaintiff’s goodwill will be damaged.

24In my opinion, however, Weitmann v Katies Ltdborrowed from the lawrelating to passing off without due regard to the difference between a passingoff action and a claim basedons 52. InHornsby Building InformationCentre Pty Ltd v Sydney Building Information Centre Ltd[1978] HCA 11;(1978) 140 CLR216, 226 Stephen J warned against such reasoning. He said that as 52case is not (unlike in passing off) founded upon protection of a trader’sgoodwill, but is directed to preventing the verydeception of the public whichoperates to injure that goodwill. Put another way, a passing off action isconcerned with deceptionor confusion of the public as to the source of goods,whereas the policy behindPt V of theTrade Practices Act is designed toprevent the deception of consumers of goods or services: cfMcWilliam’s Wines Pty Ltd v McDonald’s System of Australia PtyLtd[1980] FCA 159;(1980) 33 ALR 394, 410. Moreover, as Mason J said inParkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd[1982] HCA 44;(1982)149 CLR 191, 205: "[t]he operation ofs 52 is not restricted by thecommon law principles relating to passing off".

25It seems to me that there is simply no warrant for imposing a requirementthat in a "representation to the public" case significantmembers of the publicmust be misled by the impugned conduct before there can be a contravention ofs 52. First,s 52 does not prescribe this requirement. Second, thereis no reason in principle why the requirement should exist. Third, it wouldbestrange if a court were to determine that certain conduct had the capacity tomislead (and did in fact mislead a handful of people)but nevertheless held thatthe conduct was not actionable because an insufficient number of people weremisled.

26These reasons are not, of course, enough for me to disregard the previouscase law on the topic because the position is that anumber of Full Courtdecisions have followed Franki J’s dictum, albeit without anyanalysis. The decisions include, amongothers:Snoid v Handley[1981] FCA 180;(1981) 38 ALR 383;10^th Cantanae Pty Ltd v Shoshana PtyLtd(1987) 79 ALR 299;Siddons Pty Ltd v Stanley Works Pty Ltd(1991) 29 FCR 14. But there is a way out. I am of opinion that the dictumcannot survive the High Court’s decision inCampomar Sociedad. Bylaying down the rule that in a "representation to the public" case the questionwhether conduct is misleading or deceptive isto be assessed by reference to thereaction of the hypothetical representative member of the class to whom therepresentation isdirected, the High Court has left no scope for the operationof the requirement that it must also be shown that a significant numberofmembers of the class have been misled. That is, the two requirements cannot sitside by side. I take the position now to bethat the dictum imposed inWeitmann v KatiesLtd has been overtaken.

27I have said enough about the legal principles that should be applied toresolve the present controversy. It is now convenientto consider the effect ofthe notices. Do they convey misleading representations as has been alleged? Although the issues raisedby the two cases overlap to a considerable extent(which is why the cases are being tried together) there are importantdifferencesin the way each applicant puts its case. And this necessitatestheir separate consideration. .au Domain makes complaint about thetwoJuly notices and the September notice. Those notices are substantially thesame. ACCC bases its claim on the June, July (theform with the "paymentsection") and September notices. The June notice is in important respectsdifferent from the other two.

28It is convenient to look first at the way ACCC puts its case. I havementioned that the June notice went to Australian businesseswhich had anexisting domain name ending in ".com.au". ACCC argues that the June noticeconveyed the following representations: (a) the registration of therecipient’s existing registered domain name had expired or would expire ifpayment of the amountmentioned in the notice was not made on or before the"Return By" date of 30 June 2003; (b) DNA was offering to re-register or renewthe recipient’s existing domain name; (c) the notice was an invoice tore-register or renew the recipient’s existingname; (d) the recipient wasunder an obligation to pay the amount referred to in the notice in order tomaintain registration ofthe recipient’s existing domain name; and (e) DNAhad a right to payment from the recipient for Internet domain name registrationservices.

29In relation to the July notice ACCC alleges that the followingrepresentations were conveyed to all recipients of the notice exceptthose whodid not hold an existing domain name or did not hold an existing domain namesubstantially similar to the one in the notice: (a) registration of therecipient’s existing domain name had expired or would expire if payment ofthe amount mentioned inthe notice was not made on or before the "Closing Date"of 30 July 2003; (b) DNA was offering to re-register or renew therecipient’sexisting domain name; (c) the notice was an invoice tore-register or renew the recipient’s existing domain name; (d) therecipientwas under an obligation to pay the amount referred to in the notice inorder to maintain registration of the recipient’s existingdomain name;and (e) DNA had a right to payment from the person for Internet domain nameregistration services.

30ACCC makes the same allegations in relation to the September notice in thecase of recipients who had an existing domain name whichwas substantiallysimilar to the domain name mentioned in the notice (the only minor change beingthat the relevant "Closing Date"was 12 September 2003). In respect of therecipients who had no registered domain name or who did not hold a domain namesubstantiallysimilar to the name in the notice, ACCC only alleges that throughthe September notice DNA asserted a right to payment from thoserecipients.

31.au Domain puts a different case. In its statement of claim italleges that DNA made to all recipients of the relevant notices(the twoversions of the July notice and the September notice) the followingrepresentations: (a) the notices were notices, alternativelyinvoices for, therenewal of an existing registered domain name in respect of which the recipientof each notice was the Registrant;(b) the domain names to which the noticesrelated were due for renewal; (c) DNA had a "pre-existing commercialrelationship" withthe recipient of each notice whereby the renewal of thedomain name to which the relevant notice related could only be effected bytherecipient dealing through DNA in accordance with the provisions of the notice;(d) in respect of the notices referring to a domainname ending in ".au", thatDNA was an accredited Registrar, alternatively an appointed Reseller orotherwise carried the approvalor sponsorship of .au Domain; (e) in respect ofthe notices referring to a domain name ending in ".au", that DNA was theaccreditedRegistrar, alternatively the appointed Reseller of the domain name towhich the notice related; (f) the recipient of each noticerisked losing theirexisting registered domain name if they failed to act as stated in the noticeand return the payment sectionof the notice together with the specified amount(or, alternatively, with the necessary credit card details if the payment was tobe made by credit card) by the "Closing Date" in the notice; and (g)registration of the domain name to which each notice referredfor a two yearperiod would be facilitated by DNA within a reasonable time from the payment ofthe specified amount if the recipientreturned the "payment section" of thenotice by the closing date.

32In its written submissions .au Domain characterised the allegedrepresentations somewhat differently. It attributed certain representationstoparticular notices. It alleged that the two versions of the July notice falselyrepresented that: (a) an existing registereddomain name held by the recipientof each notice was due for renewal and that each notice was, in effect, aninvoice for such renewal;(b) registration of the domain name to which eachnotice referred would be facilitated by DNA if the recipient acted as requiredby the notice; and (c) if the recipient did not act as required by the notice,he risked losing his existing registered domain name. It alleged that theSeptember notice falsely represented that: (a) an existing registereddomain name held by the recipient ofthe notice was due for renewal; and(b) registration of the domain name in the notice (a domain name which wassimilar to the businessor company name of the recipient) would be facilitatedby DNA within a reasonable time if the recipient acted as required by thenotice.

33The first question then is whether a hypothetical representative member ofeach group who received an impugned notice would bemisled by it. If ourhypothetical recipient is likely to fall into error only because he did notreact in the way an "ordinary"or "reasonable" person would react, the noticewould not be misleading.

34Having stated the question which I am required to answer I am confrontedwith an immediate difficulty. How am I to judge the likelyreaction of anordinary or reasonable member of each group of recipients? I can only undertakethat task after making some assumptionsabout the individual’s knowledgeof the Internet and of the system for the registration of domain names. Whatare the assumptionsthat can legitimately be made? Unfortunately I have verylittle evidence to go on. I know that the notices were sent to "Australianbusinesses", that is to say, to individuals, partnerships, companies andinstitutions that conduct some form of business in Australia. Most recipientsof the notices (but not necessarily each person who read the relevant notice)had an existing domain name whichwas similar or very similar to the domain namelisted in the notice. Apart from the fact that the recipients are businesses,mostwith a domain name, I have been told nothing else about them. But to dojustice in the case it is necessary to know more. Thereare some facts whichcan legitimately be found on the basis of common experience especially if theyare facts which could not reasonablybe disputed. For the purposes of this caseI propose to make the following assumptions. Within the class from which thehypotheticalindividual is drawn there will be members (perhaps only a few) whoknow a good deal about the system of registration of domain namesand members(whom I believe account for a significant number) who know little or nothingabout the registration system save for thefact that a domain name can beregistered. In the absence of any evidence (and there is none) I am not,however, prepared to inferthat any member of any group knew of the existence orrole of an accredited Registrar or an appointed Reseller. I am prepared toassume that some members would be aware that it is possible to obtain separateregistration for substantially similar domain namessuch as fedcourt.gov.au,fedcourt.net.au and fedcourt.com. Conversely, there will be a significantnumber who will not appreciatethat these different but nonetheless closelysimilar names are capable of separate registration.

35When one considers the nature of the representations put forward by both.au Domain and ACCC (apart from the representations raisingthe "demand forpayment" or "invoice" point which I will deal with later) it is immediatelyapparent that there is an unstated premisewhich underlines most of them. Thepremise is that each notice is likely to cause a recipient who had a registered(or recentlyexpired) domain name erroneously to conclude that the domain namementioned in the notice is the recipient’s actual registereddomain name. If this premise is not made good then thes 52 actions will fail. If thepremise is established it will not automatically follow that the principalrepresentations will be madeout, although it is likely that they will be.

36On this aspect it is important to observe that there is no expressstatement that the domain name mentioned in each notice is therecipient’sregistered domain name. Can such a statement be implied or inferred from theterms of each notice? I will putto one side for the moment the June noticebecause it is materially different from the others. In relation to the othernotices,I am of the view that the answer to the question just posed is in theaffirmative. I have based this conclusion on the followingfeatures of thenotices. First the listed name only differs from the registered name by reasonof a change to the gTLD or the 2LD. This is important because the hypotheticalrecipient may not read the notice closely. A brief reading of the notice willnot necessarilyalert the reader to the difference between the domain name inthe notice and his registered domain name. Not only is it likely thata personwho reads the notice quickly will believe that the name in the notice is hisregistered domain name, a closer but not studiousreading will produce the samestate of mind. Someone reading the notice closely but not studiously willnotice the "Reference Number". The "Reference Number" suggests that the subjectof the notice, that is, the "Domain Name Registration" refers to an existingregistrationwhich has been assigned a particular number. The reader’sfalse impression will be further reinforced by the "Closing Date",whichsuggests that the recipient has an existing domain name registration whichshould be renewed by that date or else it may lapseand may not thereafter becapable of renewal. The notice also refers to a "MPID" number. While thereader may not know what thisnumber refers to (I certainly do not understandthis reference because no evidence was led to explain it), its existence alsoreinforcesthe suggestion that the listed domain name is a registered name whichmay be identified by its "MPID" reference. For many of theforegoing reasons,it is equally likely that a recipient whose domain name had recently expiredwould be led into similar error.

37It should be clear that I have in part based my conclusion on theinference that each hypothetical group member will not studythe contents of anotice closely. I should explain in more detail why I have approached the caseon this basis. Recipients whohave more than a working knowledge of theInternet and domain names (for example, the witnesses called by DNA) may noticethe differencebetween their registered domain name and the name listed in thenotice. They may also realise that the name in the notice does notrefer to,and is not intended to refer to, their registered domain name. On the otherhand, many who receive the notice will knowvery little about the Internet andthe use and registration of domain names. These recipients will include firsttime users of theInternet and unsophisticated Registrants of domain names. Itis also necessary not to lose sight of the fact that the notice stipulatesthatthe cost of registering a domain name for a two year period is $237 includingGST. This is a relatively small sum. The degreeof attention which will bepaid to the notice will in part be a reflection of the cost of the service towhich it relates. It isalso important to appreciate that among the recipientswill be large organisations equipped with an accounts department (or the like)the function of which is to deal with the payment of accounts. I suppose thatin many cases the notice would be forwarded to thisdepartment for processing. When the notice is dealt with by a person in the accounts department there is agreater risk that thereader will have little or no knowledge about theInternet, the registration of domain names, or the fact that it is possible toobtain registration of very similar domain names.

38I propose now to consider whether the applicants have established themaking of the specific representations which they have alleged. In my view .auDomain has made out a case for three false representations. The first is thateach notice is a notice for the renewalof an existing registered domain name ofwhich the recipient was the registrant. The second is that the domain name towhich eachnotice related was due for renewal by the "Closing Date" referred toin the notice. The third is that the recipient of the noticerisked losing theregistration of its existing registered domain name if it did not take steps tohave it renewed such as by requestingDNA to renew the name and by returning thebottom portion of the notice with payment for the requested sum.

39.au Domain asserts one representation which does not depend upon therecipient being misled into thinking that each notice relatesto his existingregistered domain name. The alleged representation is that the registration ofthe domain name to which each noticerefers will be facilitated within areasonable time following the recipient’s request for its registration andpayment of thestipulated amount. The alleged representation is somewhatambiguous. I assume that by use of the expression "would be facilitated".au Domain means that obtaining registration of the name will be lessdifficult than might otherwise be the case. I will proceedon that assumption. The aspect of the representation which is said to be false is that if there is arequest for the registrationof the name that registration may not be possibleor it may not be effected within a reasonable period. I think there are atleasttwo answers to the assertion that the representation, if made, is false. First, the notice says that: "[c]urrent eligibility andallocation rulesapply". By this statement the representee is being told that in some(undefined) situations registration may notbe possible. Those situations couldencompass a number of contingencies, including the representee’s"eligibility" for havinga name registered and whether the name listed in thenotice is itself "eligible" for registration. So I reject the assertion thatthere is a representation to the effect alleged. In any event, the evidenceindicates that, except de minimus, all names were registeredwithin areasonable period.

40It is not necessary for me to dwell at any length on the reasons forrejecting the remaining alleged representations. It is sufficientif I confinemyself to the following observations. If a recipient formed the view that hehad a "pre-existing commercial relationship"(whatever that may mean) with DNA,that was not a view that could reasonably be formed on the basis of what isstated in the notices. At any rate, I think it unlikely that any recipientformed such a view, and I would not attribute it to the hypothetical individual.Further, I decline to accept any representation which depends upon therecipient’s knowledge of accredited Registrars or appointedResellers. Ihave already explained that there is no basis upon which I could conclude thatany recipient was aware of the existenceof these positions let alone that DNAmight have held either of them. The alleged representation that each noticeconstituted aninvoice is also not made out. I will soon explain why this is sowhen dealing with the claims based ons 64(2A) of the Act.

41Turning to ACCC’s case, for reasons which will by now be obvious, Iam of opinion that the July and September Notices conveythe following falserepresentations. First, that the registration of the recipient’s existingdomain name had expired or wouldexpire if payment was not made by the "ReturnDate", namely 30 June 2003. Second, that DNA was offering to re-registeror renewthe recipient’s existing domain name. Third, that the recipientwould be required to pay the amount mentioned in the noticein order to maintainthe registration of his existing domain name.

42On the other hand, I reject ACCC’s claim in so far as the otherasserted representations said to be contained in the Julyand September noticesare concerned (representations (c) and (e)). In one way or another thoserepresentations depend upon it beingshown that each notice amounted to aninvoice or that DNA had right to payment of the amount specified in each notice.Those representationsare not made out for reasons which will become clear whenI deal with thes 64(2A) case.

43Moving on to the June notice, I make the following observations. Thenotice contains a "Reference Number", an "MPI Number" anda "Return By" date inlieu of a "Closing Date". The heading of the notice is different from thatcontained in the later notices. The heading states: "www.[recipient’sbusiness name].com is unregistered" and, underneath this: "Domain Unregistered".Beneaththe heading can be found the following paragraph contained within ashaded box: "The .com version of your .com.au domain name iscurrentlyunregistered. It is important to have your .com and .com.au domains registered,complete the slip below to secure yourdomain for a 2 year period." The noticethen purports to explain the consequences of failing to register a ".com" domainname. It states:

"Failure to register the domain may:

Confuse people who are unsure of the difference between .com.au and.com domains. If you do not have the .com version registeredand they type .comrather than .com.au (as some people do) they will not be directed to yourwebsite.

Allow personal email intended for you that is sent to the .comdomain to be directed to somebody else.

Affect your image - .com is the most registered domain, the mostprestigious and desired domain.

Allow cybersquatters, competitors, disgruntled staff or clients orany other applicants the opportunity to register the domain.

Allow other legitimate registrants (possibly from anywhere aroundthe world) if they have a similar name to register thedomain."

If payment is received by the "Return Date", the respondent to the notice isentitled to "receive 5% discount off [DNA’s] normalpricing."

44I do not believe that the June notice gives rise to representations (a) to(d) alleged by the ACCC. I put to one side for themoment (as I have inrelation to the other notices) the alleged representation that DNA had a rightto payment from the recipientfor Internet domain name registration services. Each recipient of the June notice held an existing domain name ending in".com.au". The heading and first sentence of the paragraph contained within theshaded box make it clear that the notice is concerned withthe unregisteredstatus of the ".com" variant of the recipient’s registered ".com.au"domain name. Unlike the other notices,the June notice refers to two domainnames; a ".com" domain name and a ".com.au" domain name. An ordinary reader isunlikely toform the view that his current ".com.au" domain name isunregistered. Moreover, the part of the notice which sets out the supposedconsequences of not registering a ".com" domain name, together with thereference to a five per cent discount if payment is effectedby the "ReturnBy" date, tend to indicate that the notice is in the nature of an offer toregister the ".com" variant of the recipient’sexisting ".com.au" domainname. In other words, the notice is not concerned with the registration of therecipient’s registered".com.au" domain name. I am, however, tentativelyof the view that the June notice is misleading for a different reason. Read incontext, the notice seems to convey the representation that the recipient haspreviously registered a ".com" version of his ".com.au"domain name and thatthis registration is due for renewal. ACCC does not seek to impugn the Junenotice along these lines.

45This brings me to the final point which is thes 64(2A) part of thecase. In order to succeed the applicants must establish, among other things,that by the notices DNA "assert[ed] a rightto payment" from the recipient ofthe sum mentioned in the notices and that the payment demanded was for"unsolicited services".

46The applicants contend in the first instance that, by reason of theirform, the notices assert a right to payment. They say that,in effect, therecipient of each notice is told that he is required to pay the stipulatedregistration fee.Wells v John R Lewis (International) Pty Ltd(1975) 25 FLR 194 andAustralian Competition and Consumer Commission vOptell Pty Ltd(1998) 41 IPR 49 are authorities called in aid of thisargument. These cases concerns 64(2A) (and its predecessor) and arerelevant to the issue under consideration. But while they are relevant to thatissue they do not providemuch assistance. In the first place the cases areconcerned with different documents and are therefore little more thanillustrativeof circumstances in which a person may assert a right to payment. In the second place inAustralian Competition and Consumer Commission vOptell Pty Ltd the unsuccessful respondents were not represented and if theyhad been it is likely there may have been a different result.

47In my opinion not only do the notices contain no express assertion of aright to payment (a proposition which is not disputed)they make no suchassertion by implication. I am of opinion that the notices only tell arecipient that if he wishes to obtain theregistration of the name mentioned inthe notice, he is required to pay the specified amount. If the recipient doesnot wish tohave the name registered he is under no obligation to pay the amountin question.

48That is not, however, an end to the matter.Section 64(5)(e) providesthat for the purposes of the section "a corporation shall be taken to assert aright to a payment from a person for unsolicited... services ... ifthe corporation ... (e) sends any invoice or other document stating theamount of the payment or setting outthe price of the ... services ...and not stating as prominently (or more prominently) that no claim is made tothe payment, or topayment of the price ... as the case may be."

49The notices, when either taken as a whole or when considered in part,cannot be described as invoices. Most dictionaries definean invoice as awritten account of the particulars of goods sold or sent to a purchaser,consignee, etc or of services provided togetherwith the value or price orcharge being specified. The notices contain no such statements. That said,each notice might be describedas a document which states the amount to be paidfor a particular service but which does not expressly state that no claim isbeingmade for payment of that amount. On this basis, and by reason of thedeeming provision, the notice might be taken to be an assertionof a right topayment. I note that DNA says (with some justification) that this cannot be theintended effect ofs 64(5)(e) because it would, for example, result inevery advertising brochure that specified the price of goods or services asconstitutingan assertion of a right to payment. Accordingly, DNA says that theword "document" ins 64(5)(e) should be read down as meaning a document inthe nature of an invoice or demand for payment. For reasons which will soon beapparent,it is not necessary to resolve this issue. Nor is the position asbleak as DNA would have it.

50The only question that must be resolved in this case is whether there isany claim for payment for "unsolicited services". Inordinary parlance the term"unsolicited services" is a reference to services which have been providedwithout there having been anyprior request (including a request by contract)for their provision. If this be the meaning of the expression ins 64(2A)then it follows that DNA could not have breached the section because it has notprovided any services at the time the notices werereceived.

51At this point it is necessary to refer to the definition of the expression"unsolicited services" referred to ins 64(1). "Unsolicited services" aredefined ins 4 to mean "services supplied to a person without any requestmade by him or her or on his or her behalf". This takes us to the definitionof"services" contained in the same section. They are defined to include "anyrights ..., benefits, privileges or facilities thatare, or are to be,provided, granted or conferred ...".

52Having regard to these definitions the question that arises is whether thedefinition of "services" (which includes services that"are to be ... provided")is to be incorporated into the definition of "unsolicited services". If it canbe incorporated thens 64(2A) will apply to a case where there is a demandfor payment in respect of services which are both unrequested and unsupplied.

53There are two cases which have considered this issue. The cases areRizzo vWall (unreported, Pincus J, 25 November 1987)andRizzo vFitzgerald (1988) 19 FCR 175 (also a decision ofPincus J). Each reached a different conclusion. InRizzo v WallPincus J held that the section does not apply unless services have beensupplied. InRizzo v Fitzgerald he found the opposite. In thisstate of affairs I am bound to reach my own conclusion as if unconstrained byprecedent.

54I am of opinion that the entire definition of "services" cannot beintegrated into the definition of "unsolicited services". Ifone were toincorporate the definition of "services" that would give rise to anirreconcilable inconsistency. "Unsolicited services"are confined to serviceswhich have been supplied in the past, but the definition of "services" includesthose services which maybe supplied in the future. Such an inconsistencycannot be allowed. The inconsistency can only sensibly be avoided by either:(1)importing into the meaning of "unsolicited services" that part of thedefinition of "services" that is otherwise consistent withthe meaning of"unsolicited services"; or (2) not incorporating the meaning of "services" intothe definition of "unsolicited services"at all on the basis that there is acontrary intention to its incorporation. It is unnecessary for me to resolvewhich approachis correct. It is sufficient for the purposes of this case tohold that, on either approach,s 64(2A) has no application to unprovidedservices.

55The construction which I favour means thats 64(2A) will operate inthe same way as regards unsolicited services as it does in relation tounsolicited goods. "Unsolicited goods" aredefined ins 4 to mean "goodssent to a person without any request made by him or her or on his or herbehalf". The definition of "goods" doesnot refer to goods to be supplied. Asthe respondents point out, if Pincus J’s later interpretation ofs 64(2A) were to be applied the prohibition against asserting a right topayment for unsolicited services would be broader than the prohibitionagainstasserting a right to payment for unsolicited goods. There is no obvious reasonwhy this should be so.

56There will be declarations in each action to give effect to these reasons.The declarations will include one to the effect thatMr Rafferty has beeninvolved in the contraventions ofs 52 by DNA. There will also beinjunctions restraining DNA and Mr Rafferty from further breaching thelegislation. It is appropriatethat these injunctions remain in place for threeyears. Both .au Domain and ACCC seek an order that DNA write to allrecipientsof the notices advising them of the misleading aspects of theircontents. As presently advised I am by no means satisfied that thereis anyutility in making an order of this kind, but if the parties so wish I will hearfurther submissions on this issue. .au Domainand ACCC should bring inshort minutes of orders within three working days.

Associate:



Dated:8 April 2004

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