FEDERAL COURT OF AUSTRALIA

Madden v Seafolly Pty Ltd (No 2) [2014] FCAFC 49

THE COURT ORDERS THAT:

1.    The appeal be allowed in part.

2.    On or before 15 May 2014 the appellant file and serve a further amended notice of appeal so as to include the additional ground: “That the learned trial judge erred in upholding Seafolly’s defence of qualified privilege.”

3.    The orders made by the primary judge on 29 November 2012 be varied as follows:

(a)    in declaration 1 by adding:

(1)    immediately before declarations 1.7 and 1.10 and after “thereby representing” or “when, in fact” (as the case requires) the words “in respect of each of the publications referred to in declarations 1.3, 1.4, 1.5 and 1.6”;

(2)    adding immediately above and before declaration 1.9 the words “and in respect of each of the publications referred to in declarations 1.3, 1.4 and 1.5, thereby also representing”;

(3)    adding immediately above and before declaration 1.12 the words “and, in respect of each of the publications in declarations 1.3, 1.4 and 1.5, when, in fact”;

(b)    in order 2 by deleting “$25,000” and substituting “$20,000”;

(c)    by deleting orders 4 and 5 and in lieu thereof substituting the following order:

“THE COURT DECLARES THAT:

4    The applicant/cross-respondent (Seafolly), in trade or commerce, engaged in conduct that was misleading and deceptive and was likely to mislead or deceive in contravention of s 52 of the Act, by publishing and causing to be republished:

4.1    on and after 2 September 2010 a press release headed “Seafolly vows to take legal action over claims made by White Sand Swimwear” containing the words set out in [19] of the reasons for judgment published on 29 November 2012 (the Reasons);

4.2    between 8 and 13 September 2010 a press release headed “Seafolly Australia confirms legal action against White Sands Swimwear” containing the words set out in [31] of the Reasons;

and thereby representing that:

4.3    the respondent (Ms Madden) had knowingly made false claims that her competitor, Seafolly, has copied some of her swimwear, with the malicious intention of damaging Seafolly;

4.4    Ms Madden made false claims of copying by Seafolly which were recklessly indifferent to the truth of such allegations and did so with the malicious intent of damaging Seafolly;

when, in fact, Ms Madden believed in the truth of what she published.”

4.    The proceedings be remitted to the primary judge for the purpose of making orders as to the damages to which the appellant is entitled on her cross-claim and as to the costs of the proceedings including the cross-claim.

5.    The appellant pay 85% of the respondent’s costs of the appeal provided that there be no order for costs in respect of the submissions the subject of the order made on 24 March 2014.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1    On 24 March 2014, we published our reasons for judgment on the appeal, ordered the parties to file agreed short minutes to give effect to those reasons and, in default of agreement, each party to file the short minutes for which she or it contended together with short written submissions in support: Madden v Seafolly Pty Ltd [2014] FCAFC 30. In the event, the parties agreed on some but not all of the orders that ought be made.

2    The disagreements are unfortunate. The small monetary sums remaining at stake together with the obligations imposed by Pt VB of the Federal Court of Australia Act 1976 (Cth) should have promoted a common sense resolution rather than the protraction of the parties’ hostilities.

3    The parties acknowledged that Seafolly repaid to Ms Madden, with interest, $5,000 in respect of the reduction of its damages from $25,000 to $20,000 that Rares and Robertson JJ (over the dissent of Marshall J) assessed as appropriate on appeal. We need only deal with the areas of disagreement in what follows.

The form of declaration 1.6

4    Rares and Robertson JJ set out at [2014] FCAFC 30 [31] the orders made by the primary judge. They held that, as was common ground on the appeal, the primary judge erred in making declaration 1.6 in a form that declared that Ms Madden’s publication of her 2 September 2010 email conveyed representation 1.9. That was because, unlike the other publications complained of by Seafolly, the email sent by Ms Madden on 2 September 2010 to, among others, a number of journalists, did not convey a representation that Seafolly had used underhand means to obtain photographs of (Ms Madden’s) White Sands swimwear and copied the White Sands garments in order to create the Seafolly garments from those photographs.

5    Rares and Robertson JJ suggested that declaration 1.6 be deleted and a further declaration be made in the same terms but without incorporating declaration 1.9. Ms Madden suggested adding a chapeau above declaration 1.9 to make clear that it related only to the other publications the subject of declarations 1.3, 1.4 and 1.5. Seafolly suggested deleting declaration 1.6 and repeating the text of all of declarations 1.1, 1.2, 1.6, 1.7, 1.8, 1.10 and 1.11. The disagreement is trivial and should not have occurred.

6    The declarations can be reworked so as to make clear that declarations 1.9 and 1.12 relate only to declarations 1.3, 1.4 and 1.5. We consider that the simplest way to achieve this is to insert two chapeaux into declaration 1 immediately above declarations 1.9 and 1.12 to the effect above.

The relief on the cross-claim

7    Next, the Full Court found that Ms Madden succeeded on her cross-claim (misdescribed as her “cross-appeal” by Rares and Robertson JJ at [173]). The parties agreed that a declaration should be made that Seafolly had engaged in misleading or deceptive conduct that followed the structure of the declarations in Seafolly’s favour. There was a debate between the parties as to whether only one or both of the representations pleaded by Ms Madden should be included in the declaration. That appears to have arisen because Rares and Robertson JJ discussed in dealing with the cross-claim ([2014] FCAFC 30 at [165]-[168]) only the first of the two representations identified at [120]. However, both of those representations reflected the two imputations, the truth of which Seafolly had failed to justify ([2014] FCAFC 30 at [138]). Accordingly, both were misleading and deceptive and a declaration should be made to reflect that finding.

8    Seafolly also contended that the order for remittal should leave open whether Ms Madden was entitled to any other relief. That was not appropriate. The Full Court decided that the cross-claim should be remitted for the assessment of loss or damage based on Seafolly’s conduct in publishing the two false representations and the orders made will reflect that.

Other disputes

9    The parties in their submissions debated whether the orders allowing the appeal should be qualified by the words “in part”. They should be.

10    Seafolly contended that the Full Court should not set the primary judge’s costs order aside but leave to him the question of whether it be varied. That submission must be rejected. The primary judge’s orders for costs were final orders. His Honour would not have power to vary them. Moreover, the discretionary considerations that his Honour took into account in ordering that Ms Madden pay the costs of the application and cross-claim have now changed substantially as a result of the appeal and a fresh exercise of the discretion is necessary. That exercise may also be affected by the assessment of damages that his Honour will make on the material in evidence at the trial that was not before us on appeal.

Costs of the appeal

11    Seafolly inappropriately attempted to dissect the reasons of the Full Court and attributed mathematical calculations to the discussions of issues on the appeal in those reasons as indicative of what costs orders ought be made. It contended that this “analysis” supported the tentative indication that Rares and Robertson JJ had given at [173] that Ms Madden could be ordered to pay 90% of the costs of the appeal overall. Ms Madden argued that she was entitled to an order for costs. That was because her appeal had succeeded in reducing the award of damages against her and her cross-claim had been upheld.

12    In our opinion, while Ms Madden did have some success on appeal, most of the substantive issues that were argued as to her liability were resolved adversely to her. Those issues took up the vast bulk of the submissions and hearing of the appeal and Ms Madden vigorously pressed them. Had she confined her case on appeal to the issues on which she succeeded the position would have been different. Having raised multiple, complex issues on which she failed, we are of opinion that Ms Madden should pay 85% of the costs of the appeal.

13    There should be no order for costs in respect of the submissions the subject of these reasons.

Associate:

Dated:    1 May 2014