REA and Domain both claim victory in court case
15 Feb 2017
A year-long legal battle between Realestate.com.au and Domain.com.au, Australia’s two leading real estate sites, which started over a series of advertisements, has come to an end with a Federal Court ruling, namely that some of the advertisements were misleading, while others amounted to nothing more than “advertising puffery”.
The result: this week both Fairfax Media and News Corp claimed the judgement as a victory for themselves, with blanket coverage across all of their respective mastheads.
It all started a year ago. REA Group (ASX: REA), the owners of Realestate.com.au, instituted legal action against Fairfax Media-owned (ASX: FXJ) Domain last year, alleging that advertisements claiming Domain was:
+ Australia’s No. 1 property app;
+ Australia’s best property app, and
+ had more listings in the Sydney and Melbourne markets,
were misleading and deceptive.
The first hearing took place in February last year. Then we heard both sides claiming to be Australia’s No. 1 property app, depending on the metrics that were being used, with several measurement options being offered by both companies.
To settle the dispute, the court appointed a forensic accountant to perform an audit of the listings on both apps, but the results were inconclusive: it turned out Domain had the most listings in some categories, while REA’s app had the most listings in others.
A month later, in March 2016, both companies were back in court when REA Group sought a “semi-permanent injunction to prevent Fairfax from ever using the phrase ‘No. 1 real estate app’”, after two more advertisements appeared in the Fairfax-owned Sydney Morning Herald and The Age newspapers.
Fairfax said it based the claim on “all version” ratings and reviews in the Apple and Google Play app stores. But, REA Group lawyers rejected that measurement, arguing that Domain shouldn’t be entitled to advertise “all version” ratings when the ratings were lower for its current version.
In a decision running to 61 pages, which ultimately amounted to a split decision, Justice Bernard Murphy found that, overall, Domain engaged in a level of “puffery” common in advertising, but that it did not deliberately engage in conduct that was misleading or deceptive.
However, he did find in favour of REA Group’s claims that two advertisements were misleading, because the footnotes weren’t prominent enough to capture the attention of people reading the advertisements, and that the claims that Domain had the most listings in Sydney on the web and on the property app couldn’t be sustained.
With respect to Domain’s claim that it has “Australia’s highest-rated property app”, Justice Murphy found in favor of Fairfax, writing: “Based on the “all versions” ratings, it is plain that the Domain app had a clear ascendancy over the REA app for a significant period preceding the advertisements.”
At the time of writing, the Domain app has a rating of 3.5 out of 5 stars on the Apple App Store for both “current versions” and “all versions” of the app, compared with 3 stars out of 5 stars for the “current versions” and “all versions” of the Realestate.com.au app.
Likewise Domain currently has a higher rating than Realestate.com.au in the Google Play app store.
The ruling, which technically entitles Fairfax Media to claim damages from REA Group for court costs and for having to put its advertising campaign on hold for twelve months, has done little to end the ongoing feud that had recently descended into a mudslinging match between the two companies.
The Federal Court ruling came a day after REA Group released its financial results, which revealed Realestate.com.au’s monthly audience was more than twice the size of Domain’s. However, in a statement Domain Group CEO Anthony Catalano welcomed the judgment.
“I’ll have more to say on the detail in a few weeks. I have said before, REA’s strategy is ‘litigate and imitate’.
For a business that spends an extraordinary amount of time telling the media how much bigger they are than Domain, they spend a lot of time and money watching us,” Catalano said.
Chief executive of REA Group Tracey Fellows also said the action had been worthwhile. “We believe that today’s judgment is a good outcome and justifies the reason we took action in the first place,” Fellows said.
In December last year, two weeks after the Sydney Morning Herald proclaimed the Domain brand had set an audience record by reaching 4.7 million people, the News Corp-owned The Australian newspaper, which owns a controlling stake in REA Group, alleged that Domain was “buying ad space on pornographic and illegal-download websites to inflate its audience figures”.
Fairfax responded to The Australian story by labelling it as gutter journalism, and hit out at REA Group’s declining share prices, which another Sydney Morning Herald story said had dropped from “a peak of $65.77 in July … to just $45.50 by November, wiping more than $1.6 billion off the value of News Corp’s holding in REA Group”; The Australian followed up with two more stories alleging Domain links to porn sites.