The decision in Nextra Australia Pty Limited v Fletcher involved an allegation of misleading or deceptive conduct under the Australian Consumer Law in relation to a blog post. It evaluated whether a blog post can be considered to be made in trade or commerce, even though it was not made on a site that conducted business. Consideration was also given as to whether a particular blog post was misleading or deceptive, and the relevant class of consumers targeted by the blog post.
Nextra Australia Pty Ltd (Nextra) is the franchisor of a newsagency franchise system throughout Australia. Nextra operates under the brands “Nextra” and “News Extra”. Nextra published a flyer (Flyer) encouraging newsagents to join the Nextra Group.
The respondent, Mark Fletcher, is a director and 50% shareholder in NewsXpress Pty Ltd (NewsXpress), which is the franchisor of a separate newsagency franchise system throughout Australia under the brand name “newsXpress”. The newsXpress Group is a competitor of the Nextra Group.
Mr Fletcher also operates an internet blog known as the “Australian Newsagency Blog” (the Blog). In response to the Flyer, on 27 April 2011 Mr Fletcher posted an article on the Blog entitled “Nasty campaign from Nextra misleads newsagents” (the Blog Post).
Nextra complained that the Blog Post stated or alternatively implied that Nextra had distributed false information in the Flyer and that it intended to or had the effect of creating a sense of fear. Further, Nextra complained that the Blog Post represented:
- Some or all of the newsagents mentioned in the Flyer had not in fact switched to Nextra or to News Extra.
- The Flyer was deceptive by reason that the Flyer failed to differentiate between the franchisees who had switched to Nextra and the franchisees who had switched to News Extra.
- One of the franchisees listed in the Flyer was in fact insolvent, and such insolvency was by reason of the Nextra franchise system.
- The testimonials contained in the Flyer were either false or out of date.
- The Nextra franchise system did not in fact improve the gross profit of any of the franchisees listed in the Flyer.
Nextra also claimed further that Mr Fletcher had no reasonable basis to make these representations in the Blog Post. As such, Nextra claimed that Mr Fletcher, as the author of the Blog Post, engaged in misleading or deceptive conduct and sought an injunction that the Blog Post be removed.
In his defence, Mr Fletcher admitted that his Blog is read (and intended to be read) widely by newsagents and other persons associated with the newsagency industry throughout Australia. That said, Mr Fletcher submitted that the Blog Post was not conduct in trade or commerce. Instead, Mr Fletcher submitted that the purpose of the Blog Post was for information and discussion by participants in the newsagency industry and interested members of the public, as opposed to trade and commerce.
Mr Fletcher claimed that the Flyer issued by Nextra was misleading for a number of reasons, including but not limited to the fact that the Flyer contained factual inaccuracies, made inappropriate comparisons to newsXpress, created a false sense of urgency amongst newsagents by the claim that many stores were changing from the newsXpress franchise to Nextra or News Extra and used the words “believe the industry rumours” and “sometimes rumours are true” and intentionally failed to state what was meant by such statements or rumours. In that context, his Blog Post was a response to and was required to be read in conjunction with the Flyer and when read as a whole was fair, accurate, appropriate and a justified response to the Flyer.
Further, Mr Fletcher claimed that at the time of publication of the Blog Post, a Nextra franchise listed in the Flyer had gone out of business. As such, the relevant part of his Blog Post was a fair and justified query in light of the claims made in the Flyer and testimonials concerning gross profits of those who had switched to membership of Nextra’s franchise. Mr Fletcher also claimed that Nextra could not readily rely on direct comparisons between its brand “News Extra” with his “newsXpress” brand, and that such comparisons could be misleading.
Was the posting of blog conduct in trade or commerce?
The decision acknowledged that where a person works in a particular industry, it would not always be conduct “in trade or commerce” for such a person to engage in an activity relating to that industry. Justice Collier gave an example:
It is possible that a person who worked in a particular industry, and who wrote an informative article dealing with an aspect of that industry where that article was subsequently published in a trade or industry magazine, would not be engaging in conduct in trade or commerce. Similarly, self-publication by a person of articles or thought pieces relevant to a particular industry – on, for example, a blog – do not necessarily constitute conduct in trade or commerce where, for example, it is clear that the particular blog permits ventilation of personal opinions by the publisher on topics in which he or she is interested, and is provided for the interest of readers.
However, in the context of this matter, Justice Collier was satisfied that Mr Fletcher used the Blog to promote his own commercial interests. In turn, the Blog Post was not conduct separate from Mr Fletcher’s trading or commercial relationships. Whilst the Court acknowledged that Mr Fletcher did not post the Blog on behalf of his business, the Blog Post was a clear response to the Flyer issued by the competition. As a result, Justice Collier was satisfied that the Blog Post constituted conduct in trade or commerce.
What is the relevant class of consumers likely to be misled?
The Court considered that the class of consumers who could be misled were those members of the newsagency community. Further, the Court considered that the class of consumers was not confined to the limited group of newsagents who received the Flyer and could compare it to the Blog Post.
Mr Fletcher submitted that the relevant class of consumers should have been restricted to “newsagents who are sufficiently inclined to read the Blog”. However, the Court rejected such a narrow definition, as the Blog is openly accessible to members of the public with an interest in accessing it, and the Blog was targeted to the newsagent community.
Interestingly, though, other decisions have drawn a distinction between the class of consumers, say, who viewed and advertisement on television as opposed to those who may have seen that same advertisement online. For example, in the recent Telstra v Optus decision that referred to an advertisement aired on television and hosted on Youtube/ Optus’ website, the relevant Court highlighted a distinction between consumers who may have viewed the advertisement in one medium as opposed to the other. The underlying point is that consumers who view an advertisement on television have that advertisement “imposed upon them” and have “low attention” to detail, as opposed to consumers who “voluntarily and proactively” go to a particular website to view content.
The Court generally agreed with Nextra’s submissions, finding that the Blog Post conveyed the imputations that Nextra had alleged Mr Fletcher had made, and that those imputations were misleading or deceptive. Consideration was given to the representations said to have been made by Mr Fletcher in the Blog Post, and reference was made to the Flyer.
In turn, the Court was inclined to order that the Blog Post be removed forthwith from the Blog, and Mr Fletcher be restrained from publishing the Blog Post in any other form.
Whilst Nextra had sought for Mr Fletcher to publish a retraction of the Blog Post and an apology (which he had refused to do and provide), the Court was not inclined to order that Mr Fletcher should publish either an apology or corrective advertising.
The decision provides some interesting observations about conduct occurring online. In this instance, what may have initially appeared to be the comments of a private individual could actually be construed to be comments and representations made in trade or commerce. Would the matter have been decided differently if Mr Fletcher had posted the same Blog Post on someone else’s blog? Possibly, as one of the factors the Court considered was how Mr Fletcher previously used his Blog for commercial purposes.
Whilst some cases have drawn distinctions between classes of consumers who view information and advertising online as opposed to other media, here the Court did not draw such a distinction and gave a broad interpretation to the relevant class of consumers – the newsagent community generally. Such an interpretation, if applied in other matters, could have serious ramifications in the imposition of damages and lead to higher amounts of damages being awarded.
From a broader perspective, the decision reminds businesses, and their representatives, to be careful when making claims about a competitor’s business, goods or services. There are inherent risks when making such claims, unless of course such claims can be substantiated or are of a very broad nature. As this case demonstrates, not only can a business can be held responsible for their advertising campaigns, a business and its representatives can also be held responsible for their comments online and in social media. Getting regular advice and conducting monitoring and moderating assists in minimising risk and avoiding liability.