Federal Court rules on "the best" form of puffery

What you need to know

• An advertising claim that has a definite, specific or quantifiable meaning is more likely to be relied upon by the target audience and, unless capable of substantiation, risks being misleading or deceptive in contravention of the Australian Consumer Law (ACL).

• In contrast, a claim whose meaning is subject to a number of potential interpretations is more likely to be interpreted by the target audience as mere puffery and less likely to be relied upon.

• Whether a broad claim of superiority (eg “the best”) will be considered definite or indefinite will very much depend on the overall context in which it is made.

What you need to do

• When assessing advertising claims, businesses should consider the overall context in which a claim is made, including the interplay of the claim with other claims which appear in proximity to it.
• As always, continue to ensure that any disclaimers are used only to qualify a claim and not to contradict the dominant message of the claim.
• Remember that claims made in the context of comparative advertising campaigns invariably invite closer scrutiny from both courts and competitors.
• Be careful when relying on “puffery” as the position is not always clear!

Background

Realestate.com.au (majority owned by News Corp Australia) and Domain (owned by Fairfax Media Limited) are well-known rivals in the property listings industry.

Realestate commenced proceedings in the Federal Court against Domain alleging that six of Domain’s advertisements across a number of newspapers and other advertising platforms contravened the ACL’s prohibitions on misleading or deceptive conduct.

The Court held that Domain had breached the ACL in respect of two of these advertisements.

The Court considered whether the meaning of each advertising claim was sufficiently definite and, if so, whether the evidence substantiated the claim. The Court considered whether ordinary and reasonable members of the target audience would understand the claim as having a single meaning or whether it was open to different possible interpretations. Those claims whose meanings were open to different interpretations were likely to be considered vague, indefinite and mere puffery by the target audience. Such claims did not require evidence to substantiate them (indeed, given the range of possible meanings, it was not clear what evidence would be required).

Domain’s advertising claims and the Court’s analysis of them are summarised below:

When is an advertising claim likely to constitute mere puffery?

The advertising claims which included a reference to “the most property listings” and “highest rated property app” were found to convey definite representations, with the former being interpreted as a specific representation about the number of properties listed on the Domain app and the latter being a representation of the number of ratings for the app. The evidence did not establish that Domain had in fact achieved the greatest number of listings and, accordingly, the former claims were found to contravene the ACL. The Court was, however, satisfied that ratings as measured by the Apple iTunes store, amongst other outlets, established Domain as the highest rated property app.

The Court held that the claim “the best property listings” was not sufficiently definite and would be understood by the target audience as mere puffery.

The decision serves as a reminder that each case turns upon its facts and depends on the context and target audience. The Court noted that when claims such as “the best” are proposed, it is useful to ask “the best in what way?”. While it was acknowledged that superiority claims may sometimes have a definite meaning which must be substantiated with evidence, in this case, there were too many possible answers to the question of why the Domain app was “the best” property listings app for that claim to be considered sufficiently definite. For example, were the property listings of a higher standard or better presented, were the properties listed located in better socio-economic areas, was the app easier to access and use, and so on.

The Court is yet to make orders in relation to issues of relief and it is not yet known whether either of the parties have appealed the decision. Watch this space for further updates!

Authors: Ben Teeger, Lawyer; Anita Cade, Partner