The Full Federal Court today dismissed an appeal by Domain Names Australia Pty Ltd and its sole director, Mr Chesley Paul Rafferty, against the decision earlier this year by Justice Finkelstein that the company had contravened the Trade Practices Act 1974 and that Mr Rafferty was involved in that contravention.
The Australian Competition and Consumer Commission began proceedings against Domain Names Australia Pty Ltd and Mr Rafferty in October 2003 alleging, amongst other things, that the company had breached section 52 of the Act by sending out misleading or deceptive notices inviting the recipient to register a particular Internet domain name.
In many cases the name referred to in the notice was similar to the recipient's existing Internet domain name. An example of the type of notice is attached (see below).
The trial court found that the form of notice conveyed the following false representations:
- the registration of the recipient's existing domain name had expired or would expire if payment was not made by the 'Return Date'
- Domain Names Australia Pty Ltd was offering to re-register or renew the recipient's existing domain name
- the recipient would be required to pay the amount mentioned in the notice to maintain the registration of his existing domain name.
The trial court declared that Domain Names Australia Pty Ltd had breached section 52 the Act and that Mr Rafferty was involved in the contravention. It ordered the company and Mr Rafferty be restrained for a three year period from engaging in future offending conduct of this nature and that the parties pay the ACCC's costs of the proceedings.
In their unanimous judgment, Justices Wilcox, Heerey and R D Nicholson of the Full Federal Court dismissed the appeal by Domain Names Australia Pty Ltd and Mr Rafferty and ordered them to pay the ACCC's costs of the appeal.
ACCC Chairman, Mr Graeme Samuel, welcomed the Full Federal Court's decision and the approach which was taken by the court in rejecting the company's contention that evidence had to be led from actual recipients of the notice.
Mr Samuel noted the Full Court had observed one batch of notices were sent to approximately 418,000 Australian businesses and the court had expressed the view that to lead evidence from, say, 50 recipients of the notice would be an expensive exercise and would occupy substantial court time for no benefit.
Rather the Full Federal Court reaffirmed the trial judge's approach that whether the conduct was likely to be misleading or deceptive could be tested upon a hypothetical recipient of the notice imbued with varying degrees of knowledge. In the present case it was possible to attribute some recipients with very little knowledge about the Internet and the use and registration of domain names and, as such, it was open to conclude that these persons were likely to be misled.
Mr Samuel reaffirmed the ACCC's intention to vigorously and quickly deal with widely communicated deceptive conduct.
"The matter first came to ACCC's attention around mid 2003 with proceedings being instituted in October that year", Mr Samuel said. "The trial of the matter was held in November 2003 with judgment delivered in April 2004. Subsequently the company and Mr Rafferty appealed the trial court's decision. This appeal was heard in August 2004 culminating in dismissal of the appeal today.
"An early trial of this matter was facilitated by the ACCC's decision to run its case by reference to the contents of the notices as opposed to leading evidence from a large numbers of consumers. The decision of the Full Court retains this avenue for future conduct in suitable cases".