REASONS FOR JUDGMENT 

Introduction

1                     On or about 6 February 1997 the second respondent, an officer of the first respondent (“the CFA”) holding the position of Manager Community Risk Management signed a letter in the form of a bulletin which was circulated throughout various offices and brigades within the CFA and which was also made available to certain persons outside the CFA.  The bulletin was in the following terms:

“FIRE EQUIPMENT MAINTENANCE

SERVICING BULLETIN

______________________________________________________________

To be Inserted rear of Bulletin Section (EXTINGUISHER & FIRE HOSE SERVICING MANUAL)

06 February 1997

The Brigade Secretary/

Fire Equipment Maintenance Officer

(As Addressed)

Dear Sir/Madam,

RE:  FOAM SPRAY FIRE EXTINGUISHERS

As some of you maybe aware a product has been introduced onto the Victorian Market by Fire Watch, a Company which is based at Carrum Downs.  This product is a foam spray fire extinguisher resembling an AFFF extinguisher, being the same colour but has an atomising/spray type nozzle rather than an aerating nozzle.  At this stage it has an A & B classification, although in most cases it fails to meet the criteria of the B classification under the Australian Standards or the requirements of the Australian Standards for building control or Dangerous Goods legislation. 

One other concerning factor is that this product has been promoted on a number of occasions at such events as field days and four wheel drive shows.  It has been indicated at some of these functions that this extinguisher maybe a non conductor.  This opinion maybe passed on innocently as the extinguisher meets the criteria in accordance with European testing.  I must point out to all brigades that it does not meet that criteria with respect to Australian Standards.  It is a water based product which you realise is a conductor of electricity so under no circumstances is this product to be used on wide electrical hazards. 

Under its present rating schedule the only application within the Australian Standards, would be for A Class hazards.  The extinguisher does have a number of applications but I would strongly recommend that brigades not become involved in the distribution or recommendation of this product. 

If you have any further queries please contact your Client Services Offices at Ballarat, Bendigo or Geelong.

Yours faithfully,

D. Owen
Manager
Community Risk Management

DISTRIBUTION:  CLIENT SERVICES OFFICES

                          FIRE EQUIPMENT MAINTENANCE SERVICING BRIGADES

                          MANNED FIRE STATIONS

                          REGIONAL HEADQUARTERS

                          TRAINING FISKVILLE

                          INFORMATION SERVICES CFA HEADQUARTERS

                          JOINT FIRE EQUIPMENT MAINTENANCE COMMITTEE MEMBERS”

(emphasis in original)

The applicants claim that the distribution of the bulletin to purchasers and prospective purchasers of its fire extinguishers constituted a contravention of s 52 and s 53 of the Trade Practices Act 1974 (Cth) (“Trade Practices Act”) and also resulted in the commission by the respondents of the torts of defamation and injurious falsehood.  

2                     The applicants complain about the following passages in the bulletin:

(a)        “At this stage it has an A & B classification, although in most cases it fails to meet the criteria of the B classification under the Australian Standards or the requirements of the Australian Standards for building control or Dangerous Goods legislation”.

(b)        “Under its present rating schedule the only application within the Australian Standards, would be for A Class hazards”.  

(c)        “The extinguisher does have a number of applications but I would strongly recommend that brigades not become involved in the distribution or recommendation of this product”. 

3                     The applicants first became aware of the existence of the bulletin around 20 March 1997.  Mr Roger Munday, the managing director of the applicants, complained to the respondents that there were statements and implications in the bulletin which were untrue and he sought correction by the publication of a further bulletin.  This did not occur.

4                     The applicants claim that they have suffered loss and damage as a result of the publication of the bulletin which although intended to have limited distribution to officers and persons associated with the CFA, achieved a wider distribution beyond the CFA.

Background to the applicants and the Firewatch portable foam spray extinguisher

5                     The first applicant was incorporated in Australia on 8 September 1995 and the second applicant was incorporated in Australia on 2 February 1996.  They were incorporated as the vehicles for Firewatch Ltd, a New Zealand company (“Firewatch NZ”), to expand its operations into Australia.  At the present time the second applicant, a subsidiary of the first applicant, is the only trading entity in Australia.  The principal of the Firewatch group of companies Mr Munday commenced working in the fire protection industry in the United Kingdom around 1970.  In 1988 he founded Firewatch NZ which is the second largest fire protection equipment provider in New Zealand.  In 1987 while in the United Kingdom Mr Munday was shown a foam spray fire extinguisher which contained a 6% solution of aqueous film forming foam compound (called “AFFF”) in water.  The extinguisher was manufactured by a company more recently known as Kidde Thorn Fire Protection Limited (“Kidde Thorn”) and it complied with the relevant British Standard BS 5423.  The extinguisher was suitable for use in relation to class A and class B fire risks.  Class A fires are fires which involve carbonaceous solids such as wood, cloth, paper and mini‑plastics and class B fires are fires which involve flammable and combustible liquids such as petrol, oils and solvents.  The extinguisher was a variation of the traditional aerated foam type of extinguisher as it contained the same mixture of water and a foam compound but it discharged its contents in a fine atomised spray rather than in an aerated manner.  The extinguisher passed the British Standard’s test for water based extinguishers in respect of non‑conductivity of electricity.

6                     In 1989 Firewatch NZ commenced importing the Kidde Thorn AFFF extinguisher into New Zealand and it became a popular product.  In 1993 Mr Munday decided to enter and compete in the Australian fire protection market.  He intended at that stage to sell predominantly the Kidde Thorn AFFF extinguisher and in early 1994 Kidde Thorn commenced a process of obtaining Australian Standards certification for the various models of extinguisher Firewatch NZ intended to sell in Australia.  On 31 January 1995 Standards Australia Quality Assurance Services Pty Limited (“SAQAS”) granted Kidde Thorn the right to use the Australian Standards mark on four models of its Kidde Thorn AFFF extinguisher on the basis that they complied with Australian Standard AS 1841.4. On 13 December 1995 SAQAS granted that right in respect of a further four models.  The models were as follows:

I will explain these classifications and ratings later in these reasons but briefly the letter classification identifies the class of fire for which the extinguisher is effective and the numerical rating refers to the amount of fire an extinguisher will extinguish. 

7                     The Kidde Thorn AFFF extinguisher was not given an Australian Standard certification in respect of class E risks which related to fires which, irrespective of the type of fuel that caused the fire, involved live electrical equipment.  In order to obtain an E rating under Australian Standard AS 1850‑1994 (the relevant standard at the time but now superseded by AS 1850:1997) an extinguisher must have no electrical conductivity when its contents are discharged onto an electrified plate carrying 100,000 volts when the plate is separated from the extinguisher nozzle by a distance of 250mm.  This was a more stringent test than the equivalent electrical tests in Europe and the United Kingdom which required the discharge of the contents of the extinguisher onto a plate carrying 35,000 volts when the plate is separated from the extinguisher nozzle by a distance of one metre.  The Kidde Thorn AFFF extinguishers subsequently sold in Australia bear a label depicting in graphic form that the extinguishers should not be used on electrically energised fires.

8                     Firewatch NZ started to bring Kidde Thorn AFFF extinguishers into Australia in September 1995.  A total of 1700 units were purchased by Firewatch NZ from Kidde Thorn and onsold to the second applicant (“Firewatch Victoria”).  Each Kidde Thorn AFFF extinguisher brought into Australia was branded “Firewatch”, bore the Standards Australia Standardmark, displayed a notation that it complied with Australian Standard AS 1841.4 and displayed the performance rating that had been given to it by SAQAS.  I refer to this extinguisher hereafter as the Firewatch extinguisher.

9                     Firewatch Victoria conducts the business of selling and servicing fire protection equipment on its own behalf and through a network of owner operated businesses called Firewatch Agents.  Approximately 90% of the income earned by Firewatch Victoria from the sale of fire equipment is derived from the sale of fire extinguishers and the AFFF extinguisher is the only extinguisher that carries the Firewatch name and logo.  Firewatch Victoria also generates income from selling Firewatch agencies, the fee for which is presently $36,000.  By February 1997 Firewatch Victoria had engaged four agents and at the time of trial had seventeen agents operating throughout Victoria.

10                  Firewatch Victoria introduced the Firewatch extinguisher to the CFA in the following circumstances.  In October 1996 Messrs Graham Underhill and Grant Meads from Firewatch Victoria arranged a meeting at the CFA’s headquarters at Mount Waverley to demonstrate the Firewatch extinguisher.  The meeting was attended by Mr Robert Smith, a CFA fire safety officer and project leader and Mr John Mealia, a risk manager at the CFA’s Bendigo branch.  After some discussion those present went to the car park where a number of the extinguishers were discharged.  There is some dispute about what was discussed but that dispute is not of any significant relevance to the issues before the Court and I do not need to make any specific finding as to which version of the discussion I accept.  According to Mr Underhill, Mr Smith said that although the Firewatch extinguishers had ratings at the lower end of the rating scale, in his view there were weaknesses within the rating system itself which meant that some extinguishers had a higher performance rating than they deserved and conversely others had a lower performance rating than that which he believed they deserved.  Mr Smith said that he made the statement regarding weaknesses in the rating system as a general comment prior to seeing the Firewatch extinguishers and did not relate that comment specifically to the Firewatch extinguishers.  There was also discussion about whether the Firewatch extinguishers could be used in road accidents.

11                  A second meeting was arranged in December 1996 at the CFA’s training ground at Carrum Downs but this meeting was cancelled.  Four extinguishers were left with Mr Smith and Mr Mealia at the October meeting but they were not tested further as Mr Smith had not had a chance to fire them.  The only extinguisher which Mr Smith had used was a 2 litre extinguisher which he had demonstrated to a CFA officer.  Mr Smith said that at that time the testing of the Firewatch extinguishers was a low priority over the summer fire danger period and he did not have time to conduct any tests.  The extinguishers were collected by Mr Underhill in early February 1997.  Mr Smith said that at the time Mr Underhill picked up the Firewatch extinguishers from him he was not sure whether he had prepared the bulletin but by that time the CFA, including himself and Mr Owen, had received a number of comments from members of the public in relation to statements made by the applicants or their franchisees that the Firewatch extinguishers were non‑conductors of electricity because they complied with European Standards. 

12                  The applicants claimed that the distribution of the bulletin dampened demand for the Firewatch extinguisher.  The applicants produced statistics between October 1995 and December 1997 which showed that although total sales were in a generally upwards trend, in the quarter April to June 1997 there was a significant drop in the revenue from the sales of the Firewatch extinguisher which did not thereafter increase substantially with the increase in total turnover.  The applicants contended that had the rate of growth in the Firewatch extinguisher sales not been interrupted by the bulletin Firewatch Victoria would have earned about $20,000 per quarter in addition to what it did earn in each of the June, September and December 1997 quarters.  It was said that the Firewatch extinguisher was sold on a mark up of 25% of cost so that on sales lost during 1997 Firewatch Victoria was deprived of a profit of $20,000.  Firewatch Victoria has also refunded the purchase price of Firewatch extinguishers to a number of customers.  The loss of $20,000 per quarter claimed by the applicants was said by Firewatch Victoria’s general manager Mr Michael Murnane to be not the precise figure, although he did not accept that it was just speculation.  He said it was based in part on an extrapolation from the circumstances of Firewatch’s New Zealand business and that he had a “feeling” about the figures.  Although he initially said in his affidavit that from October 1995 to March 1997 the sale of Firewatch extinguishers broadly followed the income pattern of the sale of all the equipment by Firewatch Victoria he accepted in cross‑examination that that statement was not correct.  He also accepted that in a number of situations customers who did not buy Firewatch extinguishers because of the effect of the bulletin bought other extinguishers from Firewatch Victoria. 

Background to the CFA

13                  The CFA is incorporated pursuant to the Country Fire Authority Act 1958 (Vic).  By virtue of s 20 of that Act the CFA has the following general duty:

“The duty of taking superintending and enforcing all necessary steps for the prevention and suppression of fires and for the protection of life and property in case of fire and the general control of all stations and of all brigades and of all groups of brigades shall, subject to the provisions of this Act, so far as relates to the country area of Victoria be vested in the Authority.” 

The CFA may also from time to time, as allowed by s 23(1)(h) of the Country Fire Authority Act:

“establish and maintain or contract for the establishment and maintenance of fire alarms and other apparatus for the prevention or suppression of fires and, without affecting the generality of the foregoing, contract with the owner of any land building or premises for the maintenance by the Authority of fire alarms and other apparatus as aforesaid on such land building or premises.”

14                  One of the functions which the CFA carries out is the provision of a fire equipment maintenance service to private enterprise as well as to the public sector.  The CFA provides this service to factories, retail outlets, schools, hospitals and facilities which handle or store hazardous material.  However, not every CFA brigade carries out this service.  Of the approximately 1200 CFA brigades, approximately 350 are involved in the provision of fire equipment maintenance services.  These brigades are mainly staffed by volunteers and the brigade closest to the client is selected to provide the service.  In most cases a client will pay the brigade directly and the brigade is then permitted by the CFA to retain the payment to cover its expenses in providing the service.  If a client pays the CFA directly for the provision of a fire equipment maintenance service carried out by a brigade the CFA then pays the amount to that brigade which provides the service. 

15                  It is important to understand the manner in which the fire equipment maintenance service is provided by the servicing brigade.  The service involves the provision of labour and the provision of equipment.  Fire equipment maintenance servicing brigades are not permitted to sell fire equipment to clients in the first instance or to advise clients on the type of equipment they should purchase.  If such situations arise, clients are referred to the permanent offices of the CFA.  Any recommendation of fire equipment is the responsibility of the Regional Officer/Municipal Building Surveyor.  However, fire equipment maintenance servicing brigades are permitted to replace fire equipment for a client if in the course of providing maintenance it is apparent that the equipment being serviced is no longer safe or is unserviceable.  In such circumstances the brigade is required to provide the client with an equivalent product and in the case of fire extinguishers the brigade is required to replace the extinguisher with an extinguisher of an equivalent or greater rating.

16                  The CFA has a preferred supplier of fire equipment, Quell Limited (“Quell”) with whom it had entered into an agreement in December 1996.  A brigade in replacing unsafe or unserviceable equipment is not obliged to provide Quell equipment.  Provided the fire equipment offered by another supplier meets the requirements of the relevant legislation and standards, fire equipment maintenance services brigades may purchase equipment from other suppliers as replacement equipment.  The advantage of providing equipment obtained from the preferred supplier is that commission is derived by the CFA, an advertising payment is received and discounts are available to brigades on such purchases.  A significant number of brigades choose to deal with suppliers other than the CFA preferred supplier.

17                  The second respondent, Mr David Owen has been employed by the CFA since 1977.  Since 1996 Mr Owen has been the Manager of the Community Risk Management Section which is part of the Risk Management Department of the CFA.  That section is involved in a number of activities including the development of policies for structural and industrial fire safety, developing and implementing community education programs and fire safety programs, supervising the servicing of private firefighting equipment including portable fire extinguishers by CFA brigades throughout Victoria and the management of hazardous and dangerous goods.  Mr Owen is responsible for the management of these activities.  The Community Risk Management Section is divided into a number of areas including client services.  In this area, the responsibilities of the personnel in it include responsibility for fire equipment maintenance.

18                  Mr Smith is the project leader of the client services area of the Community Risk Management Section and it was in that capacity that Mr Smith drafted the bulletin and submitted it to Mr Owen for signature as manager of Community Risk Management. 

The genesis of the bulletin

19                  Some weeks prior to the date of the bulletin Mr Owen had instructed Mr Smith to prepare a bulletin identifying the concerns the CFA had regarding the electrical rating of the Firewatch extinguisher and the fact that it did not have what Mr Owen called the basic rating of the higher classification relating to the building regulations and the dangerous goods regulations.  I took this to be a reference to the fact that the Firewatch extinguisher did not have the level of ratings for the B classification required by those regulations for particular types of hazards or fires.

20                  Prior to drafting the bulletin Mr Smith had inspected but not tested four Firewatch extinguishers which had the following capacities, classifications and ratings:

·                    9 litre        –   3A 10B

·                    6 litre        –   2A 5B

·                    4 litre        –   2A 2B

·                    2 litre        –   1A 2B.

21                  After Mr Smith had examined the fire extinguishers which were demonstrated to him in October 1996 he formed the view that the extinguishers should not be supplied by the CFA’s fire equipment maintenance servicing brigades to CFA customers for extinguishing any hazards other than those falling within class A.  It was for that reason that he drafted the bulletin in the terms which he did.  As the note at the bottom of the bulletin indicates, it was sent internally to various divisions of the CFA and in particular to the fire equipment maintenance servicing brigades.  As the top of the bulletin indicates it was to be inserted in the rear of the bulletin section of the CFA’s Extinguisher and Fire Hose Servicing Manual which is a technical reference manual required to be used by CFA personnel.  It was never intended by Mr Smith or Mr Owen that the bulletin be distributed to the general public.

22                  Mr Smith was concerned about two aspects of the Firewatch extinguishers at the time he drafted the bulletin.  Although they were approved for many A class hazards under the Australian Standard applicable under the Building Code of Australia 1990 namely AS 2444 and the Australian Standard approved for the purposes of the Dangerous Goods (Storage and Handling) Regulations 1989 (Vic),namely AS 1940, he was concerned that they were only approved for a limited number of class B hazards.  Mr Smith understood that the applicants serviced clients principally in the domestic market and understood that they were seeking to supply and service extinguishers for use in commercial and industrial installations and schools.

23                  The second matter about which Mr Smith had a concern at the time he drafted the bulletin was that CFA officers including himself and Mr Owen had received a number of comments from members of the public and members of the CFA that statements were being made by Firewatch representatives at field days and four wheel drive shows about the non‑conductivity of the Firewatch extinguishers.  Mr Smith was aware that they did not have a class E classification which meant they were not suitable for use on electrically energised fires.  Mr Smith spoke to Mr John Ferguson, the operations manager of Fire Equipment Services about the Firewatch extinguishers and he reported to a Fire Equipment Maintenance Advisory Committee meeting on 5 February 1997 that advice was to be circulated advising that the Firewatch extinguisher was not suitable for use on electrical fires.  Fire Equipment Services is a business unit of the Metropolitan Fire and Emergency Services Board (previously called the Metropolitan Fire Brigade) involved in the servicing of fire equipment.  The minutes of that meeting record Mr Owen as pointing out that the Building Code of Australia “calls for the Australian Standards and these extinguishers are not Aust Standards approved”.  Mr Owen accepted that the minute in these terms was not accurate but that he had something else in mind and was speaking in more general terms.  It appears from other evidence that what Mr Owen had in mind was that the Firewatch extinguisher was not approved under the Australian Standards for use on electrically energised fires.

24                  At the time Mr Owen signed the bulletin he was personally aware of the issue relating to the suggestion that Firewatch extinguishers were suitable for use on electrically energised fires.  He had attended a Land Rover field day at Wandin in November 1996 at which there was a display of Firewatch extinguishers.  He heard and observed the Firewatch representative say that the Firewatch extinguisher was good for vehicles and for A class fires and that although it did not have an Australian Standards electrical rating, it was tested to 35,000 volts, was European rated and could be used on 240 volt installations.

25                  Although the bulletin was intended to have limited distribution within the CFA it was also published or made available to persons other than the addressees specified at the foot of the bulletin.  The applicants rely on the following publications:

·                    in about April 1997 the Doveton Brigade distributed copies to the applicants’ customers and potential customers in the Doveton area including Ross Grant of Highway Tyre Service Pty Ltd;

·                    in about May 1997 the Eildon Brigade distributed copies of the bulletin to the applicants’ customers and potential customers in the Eildon area including Ian Kemp of Ian Kemp Marine Pty Ltd and Eildon Boat Club, Lake Eildon;

·                    in about May 1997 to Lindy Moss of Omni Vox Productions and Chris Sleigh of the Sleigh Group of Companies;

·                    in about February 1997 to CFA Brigades and in and subsequent to February 1997 to Brigade Fire Equipment Maintenance Officers;

·                    in and subsequent to February 1997 to Fire Equipment Maintenance Contractors and their employees;

·                    in about April 1997 to George Boden of Watchkeeper Security Services Pty Ltd;

·                    on or after 3 March 1997 to the Eildon Boat Club and its members and to businesses located at the Eildon Boat Club complex;

·                    in about March 1997 to C & K Boat Repairs;

·                    on or about 21 March 1997 to Mrs J Coupe a former secretary of a brigade;

·                    in and subsequent to February 1997 to the applicants’ competitors Tyco and National Fire and Security and through them to other persons who purchased and used, or who were likely to purchase and use, the Firewatch extinguisher;

·                    on or after 3 March 1997 to the owner and staff of the Jerusalem Creek Boat Harbour, Eildon;

·                    on or after 3 March 1997 to the owner and staff of the Darlingford Marina, Eildon.

The Australian Standards

26                  A considerable body of evidence was led by both applicants and respondents as to the merits of the Firewatch extinguisher and its comparison with other types of foam extinguishers.  Having regard to the issues which arise in relation to the publication of the bulletin it is not necessary to analyse at any length or make any findings in relation to the performance characteristics of the Firewatch extinguisher or its merits or demerits in relation to any other brand or type of extinguisher.  Put shortly, the issues which arise for determination depend upon an understanding and analysis of various Australian Standards and whether the Firewatch extinguisher complies with various provisions of those standards.

27                  At the time the Firewatch extinguisher received its Australian Standards accreditation there were four Australian Standards which applied to portable foam fire extinguishers:

·                    AS1841.4‑1992

Portable fire extinguishers Part 4:  Foam type

This standard specifies the requirements for the manufacture of portable rechargeable fire extinguishers of the foam type.  Extinguishers designed to this standard are required to pass the tests set out in the standard in relation to construction characteristics and also to pass a B class test fire given in AS 1850.

·               AS 1850‑1994

Portable fire extinguishers – classifications, rating and performance testing. 

This standard specifies the various classifications and ratings applicable to portable fire extinguishers.  (This standard has now been superseded by AS 1850‑1997).

·               AS2444‑1985

Portable fire extinguishers and fire blankets – selection and location. 

This standard specifies the type of portable fire extinguishers which should be located in particular situations.  (This standard has now been superseded by AS 2444‑1995).

·               AS 1940‑1993

This standard specifies the type of portable fire extinguisher which should be used in locations where dangerous goods are stored.

28                  Under the standards, extinguishers are given alphabetical and numerical designations.  The alphabetical designation relates to the classification of the type of fire for which the extinguisher has been found effective.  There are, relevantly, six classes of fires:

(a)                class A     –   fires involving carbonaceous solids such as wood, cloth, paper, rubber and many plastics;

(b)               class B      –   fires involving inflammable and combustible liquids;

(c)                class C     –   fires involving combustible gases;

(d)               class D     –   fires involving certain combustible metals;

(e)                class E      –   fires which are electrically energised;

(f)                 class F      –   fires involving combustible cooking oils or fats.

29                  Extinguishers are also given ratings by reference to numbers which indicate the approximate relevant extinguishing potential of the extinguisher under the prescribed test conditions.  The rating numbers used for class A fires are 1, 2, 3, 4, 6 and 10.  The rating numbers used for class B fires are 2, 5, 10, 20, 30, 40, 60 and 80.  The rating indicates the extent of a fire an extinguisher will extinguish.  To determine the rating of a portable fire extinguisher, tests are carried out under controlled conditions and the higher the rating number, the greater relative extinguishing potential or capacity of the extinguisher under the prescribed test conditions.

30                  Fire extinguishers which are given an E classification are those which have been tested to 100,000 volts to ensure that there is no electrical conductivity.  The extinguisher can therefore be used to extinguish fires involving live electrical equipment.  Fire extinguishers are required to have affixed to them details of their classification and rating.

31                  Clause 4.1 of AS 1850‑1994 provided:

“CLASSIFICATION AND RATING   Extinguishers for which a B classification and rating is sought shall comply with the following test and the full requirements of the Standard appropriate to the extinguishant under test.  A 2B test fire shall be used for rating carbon dioxide fire extinguishers only.”

The test is then specified but it is not relevant for present purposes.  Table 4.1 sets out the size of the fire to be extinguished for each rating in the following terms:

FLAMMABLE LIQUID TEST FIRE TRAY DIMENSIONS

AND EXTINGUISHER DISCHARGE ITEMS

 32                  As at 6 February 1997 AS 2444-1995 was effectively applicable to portable fire extinguishers insofar as they are placed and located in buildings because reg 1.7 of the Building Regulations 1994 (Vic) provides that the Building Code of Australia 1990 is adopted by, and forms part of, the Regulations.  Section E 1.6 of the Building Code of Australia 1990 provided as follows:

“E 1.6 Portable Fire Extinguishers

(a)               Portable fire extinguishers containing an extinguishing agent suitable for the risk being protected must be installed in every building, except within sole‑occupancy units of a Class 2 or 3 building or a Class 4 part, as necessary to allow effective initial attack on a fire by occupants.  (emphasis in original)

(b)               Portable fire extinguishers satisfy (a) if –

(i)                 they are provided and installed in accordance with AS2444 except water‑type extinguishers need not be installed in a building or part of a building served by a fire hose reel; and

(ii)               extinguishers provided for other than Class A fires are suitably located adjacent to the relevant risk; and

(iii)             where water‑type extinguishers are provided, they are located, wherever practicable, adjacent to required exits”.

Section A of the Building Code of Australia 1990 and Table 1 of Specification A1.43 provided that AS 2444‑1985 is the applicable standard for selection and location of portable fire extinguishers.  The 1985 version of that standard was superseded by AS 2444‑1990 which came into effect on 11 June 1990 and that version was in turn superseded by AS 2444‑1995 which has been in force since 5 January 1995 and is the current version.  Thus although the Building Code of Australia 1990, as at the date of the bulletin, referred to the 1985 version of AS 2444 the operative standard as at the date of the bulletin was AS 2444‑1995.  Although there are some differences for present purposes between the 1985 and the 1995 version nothing substantial turns on those differences. 

33                  The Building Code of Australia 1990 was replaced on 1 August 1997 by the Building Code of Australia1996 which states under s E 1.6:

“Portable fire extinguishers must be provided as listed in Table E 1.6 and must be selected, located and distributed in accordance with AS2444.”

34                  Australian Standard 2444‑1985 which set out the criteria for selection of portable fire extinguishers and specified requirements for their location and distribution distinguished between light, ordinary and high hazards.  Clause 1.3 of the 1985 Standard included the following definitions:

“1.3.3  Light hazard – where the amount and type of combustibles present are such that fires of only small initial size may be expected.  Light hazards are classified as follows:

(a)               Class A hazards include premises such as offices, schoolrooms, churches and assembly halls.

(b)               Class B areas where flammable liquids are stored in containers not exceeding 5 L in capacity, and the total quantity stored in any one fire compartment does not exceed 25 L.

1.3.4    Ordinary hazard – where the amount and type of combustibles present are such that fires of only moderate initial size may be expected.  Ordinary hazards are classified as follows:

(a)               Class A ordinary hazards include mercantile storage and display areas, showrooms and workshops.

(b)               Class B areas where flammable liquids are stored in containers where the surface area of the liquid does not exceed 2m², or in container storage, not exceeding a total of 250 L in containers not greater than 20 L capacity.

1.3.5    High hazard – where the amount and type of combustibles present are such that fires of large initial size may be expected.  High hazards are classified as follows:

(a)               Class A high hazards include woodworking areas, warehouses with high‑piled storage, foam plastics processing and storage.

(b)               Class B areas where flammable liquids are stored in containers where the surface area of the liquid exceeds 2m², or in container storage exceeding a total of 250 L.” 

Clauses 1.3.4, 1.3.6 and 1.3.7 of the 1995 standard is in similar terms as follows:

“1.3.4  Light hazard – where the amount and type of combustibles present are such that fires of only small initial size may be expected.  Typical light hazards include the following:

(a)       Premises such as domestic/residential, offices, schoolrooms, churches and assembly halls which constitute a Class A fire risk.

(b)       Areas where flammable liquids are stored in containers not exceeding 5 L in capacity, and the total quantity stored in any one fire compartment not exceeding 25 L, a quantity which constitutes a Class B fire risk.

1.3.6    Ordinary hazard – where the amount and type of combustibles present which constitute fires of only moderate initial size.  Typical ordinary hazards include the following:

(a)       Mercantile storage and display areas, showrooms and workshops which constitute a Class A fire risk.

(b)       Areas where flammable liquids are stored in open‑top containers in which the exposed surface area of the liquid does not exceed 2 m²; or in container storage, not exceeding a total of 250 L in containers each not greater than 20 L capacity, the total constituting a Class B fire risk.

1.3.7    High hazard – where the amount and type of combustibles present are such that fires of large initial size may be expected.  Typical high hazards include the following:

(a)       Woodworking areas, warehouses with high‑piled storage in excess of 4.5 m, foam plastics processing and storage which constitutes a Class A fire risk.

(b)       Flammable liquids which are stored in open‑top containers where the exposed surface area of the liquid exceeds 2 m², or in container storage exceeding a total of 250 L which constitutes a Class B fire risk.”

Section 2 of AS 2444‑1995 sets out a number of factors affecting the selection of portable fire extinguishers.  Clause 2.3.3 provides that in office areas where a class A fire could be expected and water or foam extinguishers or fire hose reels are provided consideration should also be given to the presence of electrical equipment such as typewriters, computers and associated equipment.  The standard does not provide a mandatory requirement for domestic applications but cl 2.3.4.1 provides that where it is decided to install a fire extinguisher in the home a minimum classification and rating 1A:5B(E) is recommended.  AS 2444‑1985 was in similar terms except that it provided that in office areas a class A hazard will be present and that an extinguisher with an electrical “(E)” marking was recommended.

35                  Section 4.3 of AS 2444‑1985 deals with class B fires in the following terms:

“4.3.1  Extinguisher Protection Only

For Class B hazards where only extinguisher protection is provided, extinguishers shall be distributed in accordance with the appropriate degree of hazard and one of the sets of corresponding factors set out in Table 4.2.

TABLE 4.2

DISTRIBUTION OF PORTABLE FIRE EXTINGUISHERS

FOR CLASS B HAZARDS WHERE EXTINGUISHERS

ARE THE ONLY PROTECTION

Clause 4.3.1 of AS 2444‑1995 is in almost identical terms and Table 4.2 of AS 2444‑1995 is in identical terms.

4.3.2    Supplementary extinguisher protection  For Class B hazards where extinguisher protection is supplementary to a fixed automatic fire suppression system, extinguishers shall be distributed in accordance with the appropriate degree of hazard and one of the sets of corresponding factors set out in Table 4.3.

TABLE 4.3

DISTRIBUTION OF PORTABLE EXTINGUISHERS

SUPPLEMENTING A FIXED AUTOMATIC

FIRE SUPPRESSION SYSTEM

Clause 4.3.2 of AS 2444‑1995 is in almost identical terms and Table 4.3 of AS 2444‑1995 is in identical terms but with the addition of a column with figures for maximum floor areas.  It is of no consequence for present purposes whether AS 2444‑1985 or AS 2444‑1995 is applied or adopted in construing the bulletin. 

36                  There are two regulations in the Dangerous Goods (Storage & Handling) Regulations 1989 (Vic) which are relevant to the provision of portable fire extinguishers.  Regulation 601 is headed “Compliance with AS 1940 requirements” and provides that:

“(1)     An occupier and licensee must ensure that the storage and handling of dangerous goods of Classes 3.1, 3.2, 3.3 and 3.4 comply with the requirements of AS 1940.” 

Regulation 3.14(3) provides:

“Where a rating for a portable fire extinguisher is specified in these Regulations or in the conditions of a licence, the occupier must supply a portable fire extinguisher with a rating of not less than that determined by tests conducted in accordance with AS 1850.”

37                  The relevant provisions of AS 1940‑1993 are contained in the following sections:

“10.3.1    Application  Fire extinguishers shall be provided in accordance with this Section (10) as appropriate to the particular type of installation.

10.3.2      Standards  Any fire extinguishers shall comply with the appropriate Standard listed in Table 10.2, and shall be mounted in accordance with AS2444.

TABLE 10.2

STANDARDS FOR PORTABLE

FIRE EXTINGUISHERS

NOTES:

1.           Wheeled mobile free extinguishers are not listed in this Table because Standards for them are not yet available.  This omission should not be interpreted as precluding their use.

2.       For halon fire extinguishers see Clause 10.2.1, Note 2.

10.3.3      Type and Rating

The type and rating of any extinguisher required by this Standard shall be as follows:

(a)       Where the term ‘powder‑type extinguisher’ is used it shall mean a portable powder‑type fire extinguisher having a rating of at least 2A 60B(E).

(b)       Where the term ‘foam extinguisher’ is used it shall mean a portable foam fire extinguisher having a rating of at least 2A 20B.

(c)       Fewer extinguishers may be provided in a specific area in order to reduce the total number of extinguishers nominated, provided that the overall rating is equivalent.” 

None of the Firewatch extinguishers was given a rating of 2A 20B; they had either 2B, 5B or 10B ratings. 

Circulation of the bulletin

38                  The bulletin was sent internally to various divisions and persons within the CFA and in particular to the Fire Equipment Maintenance Servicing brigades but it achieved wider circulation although it was never intended by Mr Smith and Mr Owen that it be distributed to the general public.  At the time the bulletin was distributed there was no direction to CFA personnel that documents such as the bulletin were not to be distributed to the general public.  There had apparently been a direction in some earlier rules or documents of the CFA that documents such as the bulletin were confidential but such a direction was not in the Rules or standing orders current as at 6 February 1997.  Mr Owen said it was the policy of the CFA that memoranda such as the bulletin were not to be given or shown to members of the general public and although that policy was not stated in writing he said it was expected that brigade members would not show internal documents of the CFA such as the bulletin to members of the general public.

39                  On 1 August 1997 the CFA undertook to the Court that it would within seven days notify each of its brigades in writing that the bulletin was not to be distributed or shown to members of the general public by any officer of the CFA or any member of any brigade.  There is no suggestion that that undertaking has not been observed.

The construction of the bulletin

40                  The applicants complain about the following passages in the bulletin:

(a)        “At this stage it has an A & B classification, although in most cases it fails to meet the criteria of the B classification under the Australian Standards or the requirements of the Australian Standards for building control or Dangerous Goods legislation”.

(b)        “Under its present rating schedule the only application within the Australian Standards, would be for A Class hazards”.  

(c)        “The extinguisher does have a number of applications but I would strongly recommend that brigades not become involved in the distribution or recommendation of this product”.

The applicants complain that these representations concerning the performance characteristics of the Firewatch extinguisher are false, misleading or deceptive or likely to mislead or deceive because they say:

(a)        in all cases the Firewatch extinguisher meets the criteria of the B classification under the Australian Standards and the requirements of the Australian Standards for Building Control and Dangerous Goods legislation;

(b)        under its rating schedule the Firewatch extinguisher has application within the Australian Standards for A and B class hazards;

(c)        the Firewatch extinguisher has and continues to have an A and B classification and designated performance ratings which have been endorsed by SAQAS;

(d)        the view expressed in the recommendation that brigades not become involved in the distribution or recommendation of the Firewatch extinguisher was not honestly or reasonably held. 

41                  I turn first to the statement that:

“At this stage it has an A & B classification, although in most cases it fails to meet the criteria of the B classification under the Australian Standards or the requirements of the Australian Standards for building control or Dangerous Goods legislation”. 

The applicants contended that the reference to the “Australian Standards” where first appearing in this sentence was to be read as a reference to the Standard for classifications, rating and performance testing of portable fire extinguishers – AS 1850.  The respondents contended that the reference was to be read as a reference to the Australian Standards applicable under the Building Code of Australia and the Dangerous Goods (Storage and Handling) Regulations, namely AS 2444 and AS 1940.  I am satisfied that the applicants’ contention is correct.  It is AS 1850 which identifies and prescribes the circumstances in which the A and B classifications are to be designated.  The construction for which the respondents contended fails to pay sufficient regard to the disjunctive “or” after the first reference to the “Australian Standards”.  The Australian Standards for “building control” and for “Dangerous Goods legislation”are standards which apply for different circumstances and in different situations and, although it may not have been what either Mr Smith or Mr Owen intended, I am satisfied that when the bulletin refers to the product failing “to meet the criteria of the B classification under the Australian Standards” it is referring and it is to be read as referring, to that standard which prescribes the circumstances under which a B classification is to be given to a fire extinguisher.  The use of the disjunctive “or” where appearing twice in the sentence under consideration makes it clear  that the reference to “Australian Standards” where first appearing is to be read as a reference to standards other than the standards for building control and the standards for dangerous goods legislation.  Mr Ryan, who appeared for the respondents, submitted that one should read “or” as the equivalent of “that is to say” or “in other words”.  So to read the sentence is to corrupt and distort the normal and accepted meaning of “or”.  I reject that construction of the sentence. 

42                  It is then necessary to ask what is meant by the statement “although in most cases it fails to meet the criteria of the B classification” under AS 1850?  The respondents contended that what is said is that the extinguisher fails to meet most of the rating levels set out in Table 4.1 of AS 1850.  Those rating levels are 2B, 5B, 10B, 20B, 30B, 40B, 60B and 80B.  As at 6 February 1997 the 2 litre and the 4 litre Firewatch extinguishers had a 2B rating, the 6 litre Firewatch extinguisher had a 5B rating and the 9 litre Firewatch extinguisher had a 10B rating.  In those circumstances said the respondents, the 2 litre and the 4 litre extinguishers met only one out of eight ratings, the 6 litre extinguisher met only two out of eight ratings and the 9 litre met only three out of eight ratings.

43                  The applicants submitted that the reference to “in most cases” was a reference either to most of the extinguishers of a particular size failing to meet the criteria for some reason or alternatively that it was a reference to most sizes, that is to say, most of the 2, 4, 6 and 9 litre sizes (three out of the four sizes) did not meet the criteria of the B classification. 

44                  Although the relevant AS 1850 standard for present purposes is the 1981 standard it is of no consequence for present purposes which standard is applied notwithstanding that the 1981 standard has nine rating levels whereas the 1994 standard has only eight rating levels.  A reference to the penultimate paragraph in the bulletin is of no assistance in the construction of the earlier sentence in the first paragraph as, on any view, the first sentence in the penultimate paragraph is incorrect as under the rating schedule in Table 4.1 of AS 1850‑1981 and AS 1850‑1994 each of the sizes of the Firewatch extinguisher does have an application for B class hazards, albeit at the lower range of the ratings.

45                  I do not consider that the bulletin bears the construction in the respect contended for by the applicants.  The structure of the sentence under consideration is such that having identified that the Firewatch extinguisher has an A and a B classification it then refers to that part of the B classification where there are a number of criteria specified.  As it is the B classification in AS 1850 which is being referred to, it is necessary to look for the “criteria” of the B classification.  In my opinion that is, and is read as, a reference to the various rating levels specified for the B classification in Table 4.1. 

46                  The applicants submitted that there was nothing in this sentence which touched upon the issue of the ratings provided in AS 1850 and that the subject matter of ratings was dealt with in the penultimate paragraph of the bulletin.  I do not accept this submission.  The fact that the extinguisher has a B classification is an acknowledgment or an acceptance of the fact that it is entitled to be given at least one of the ratings in Table 4.1.  The reason for this is that the manufacturing standard AS 1841.4‑1992 provides in cl 7 that extinguishers designed to this standard:

“… shall be required to pass a ‘B’ class test fire given in AS 1850 …” 

Thus, the fact that the statement that the extinguisher has a B classification is an acceptance and recognition of the fact that it has passed a B class test fire given in AS 1850 so that it has been given at least one of the ratings specified in Table 4.1.  

47                  The applicants submitted that the reference to “the criteria of the B classification” was not a reference to the range of ratings specified in Table 4.1 but rather a reference to the requirements which are set out, and which have to be complied with, before a B classification can be obtained.  Thus, it was said that the general requirements for fire tests set out in s 2 of AS 1850‑1994 must be met.  These requirements set out the nature of the test fires to be extinguished, the number of test fires which must be extinguished, the manner in which the extinguishers are to be stored, the temperature at which they are to be stored before the test and the nature of the test conditions which must apply.  It was said that the failure to meet the criteria of the B classification was a reference to a failure to meet the full requirements for which a single class B classification is sought.  The difficulty with this construction is that if an extinguisher fails to meet the requirements specified as to the nature of the tests and the storage and temperature requirements then it will not achieve a B classification at all, that is to say, it will not achieve a B classification with any rating.  I therefore consider that the reference to the criteria of the B classification when used in juxtaposition with the expression “in most cases” is a reference to the various rating levels of the B classification set out in Table 4.1.

48                  The construction I have found applicable to the opening words of the first statement of which complaint is made leads to the conclusion that the reference to the failure of the extinguisher in most cases to meet the requirements of the “Australian Standards for building control” is, again a reference to the failure of the extinguisher to meet most of the various rating levels set out in relation to light, ordinary and high hazards in Table 4.2 of AS 2444‑1985.  Table 4.2 sets out the minimum ratings where a portable fire extinguisher is the only protection and I consider that table is the appropriate table to be used to construe the statement.  Table 4.3 sets out the minimum ratings where a portable fire extinguisher is a supplement to a fixed automatic system but I do not consider that to be the table to be referred to in this context as the bulletin is addressing the fire extinguisher as a stand alone piece of equipment.

49                  The remaining passage to consider in the first statement of which complaint is made is the reference to the failure of the extinguisher in most cases to meet the requirements of the Dangerous Goods legislation.  It is not immediately clear whether the reference is to the requirements of the Australian Standards for Dangerous Goods legislation or is simply to Dangerous Goods legislation.  I am satisfied that this part of the bulletin should be construed as meaning, and would be read as meaning, that in most cases the extinguisher fails to meet the requirements of the Dangerous Goods legislation.

50                  Of the eight models of the Firewatch extinguisher, four have a 2B rating, two have a 5B rating and two have a 10B rating.  The rating levels for the B classification in Table 4.1 are 2, 5, 10, 20, 30, 40, 60 and 80.  According to the construction which I have given to the first sentence complained of in the bulletin the sentence is not false, misleading or deceptive or likely to mislead or deceive because each of the eight models fails to meet most of the rating levels set out in Table 4.1 of AS 1850‑1981 and AS 1850‑1994.  Each of the eight models also fails to meet most of the requirements (that is to say most of the rating levels) of the Building Code of Australia because Table 4.2 in AS 2444‑1985 sets out rating levels for the B classification of 5, 10, 20, 30, 40, 60 and 80.  The eight models do not meet any of the requirements or provisions of the Dangerous Goods (Storage & Handling) Regulations as cl 10.3.3(b) requires a rating for a foam extinguisher to be at least 2A 20B and the maximum class B rating applicable to the Firewatch extinguisher is 10B.

51                  The conclusion I have reached is confirmed by the report of Mr Eoin Shearer who was appointed as an expert pursuant to O 34 r2 of the Federal Court Rules.  His report which was tendered in evidence responded to a number of questions.  One question asked was whether under the ratings given to the Firewatch extinguisher (set out in par 7 of these reasons), as at 6 February 1997:

(a)        the only application within the Australian Standards for the applicants’ fire extinguishers was for A class hazards.

(b)        the applicants’ fire extinguishers had application within the Australian Standards for B class hazards.

Mr Shearer answered this question as follows:

“In considering these two questions, it is evident that the portable fire extinguishers in question have more application and are more effective on A class hazards as evidenced by the ratings achieved.

Generally 9L water based extinguishers which are considered the standard unit for installation in commercial and industrial premises are assigned a 2A rating and the 4L and 6L units both achieve this level.

Consequently when a Class A capability is required by Standards (ie AS 2444) Models TG 161, TG 360, TG 363, TG 161D, TG 363G and TG 360D would meet this performance requirement and thus be acceptable.

However, to complicate the issue, Class A extinguishers are primarily red in colour as against the blue of the Firewatch units.  This may cause problems in the field particularly in the areas of training and recognition for these units.

The B Class classification is more complex.  The 2B rated extinguishers are not called up in any Australian Standard due to their very limited effectiveness on this class of fire.  The 5B units are limited to very light loadings of inflammable liquid and thus are only acceptable in certain limited circumstances, (see Question 1(c)).  The 10B units (TG 161 and TG 161G) have a more general application under AS 2444 but are still limited to ‘light hazard’ within the context of that Code.

Basically in conclusion, the Firewatch extinguishers are predominantly A Class units with a limited B Class potential and if sited and used correctly should fulfil their designed function.”

52                  I turn to the next statement in the bulletin of which complaint is made.  I reach a different conclusion in relation to the first sentence of the penultimate paragraph of the bulletin: 

“Under its present rating schedule the only application within the Australian Standards would be for A class hazards.” 

The respondents submitted that in the context in which it appears the sentence should be read as stating that – under its present rating schedule the only application within the Australian Standards acceptable to the CFA would be for A class hazards.  It was submitted that the sentence should be read this way as the bulletin was being distributed to fire brigades and having regard to the fact that the earlier reference stated that the extinguisher has a B classification and that it meets some of the rating levels in respect of that B classification.  I am unable to read the sentence this way whether I consider the sentence in the context of distribution to fire brigades or distribution to persons not part of fire brigades, which occurred in this case.  It is not what the sentence says on a fair reading of the bulletin.  The sentence is simply saying that having regard to the rating schedule in AS 1850‑1994, that being the “present rating schedule”, the only application for the Firewatch extinguisher is in respect of A class hazards and there is no application for the Firewatch extinguisher for B class hazards.  So read and understood the sentence is plainly incorrect.  All eight models of the Firewatch extinguisher have a rating for B class hazards.  In this respect there has been a contravention of s 52 of the Act.  I have not considered s 52 and s 53 of the Trade Practices Act separately as in the circumstances s 53 does not have a separate or differential application. 

53                  I turn to the last sentence in the bulletin of which complaint is made:

“The extinguisher does have a number of applications but I would strongly recommend that brigades not become involved in the distribution or recommendation of this product.”

The applicants submitted that the view expressed in this recommendation was not honestly or reasonably held by the persons responsible for the publication of the bulletin, namely Mr Smith and Mr Owen.  I do not accept this submission. 

54                  The respondents submitted that there was an ample basis upon which the recommendation was made.  This basis related to the limited application of the Firewatch extinguisher under AS 2444, the fact that it had no application under AS 1940 and the fact that it did not have an “E” classification but was being marketed in what the respondents said was a confusing way so as to suggest to some people that the extinguisher would be suitable on electrically energised fires.

55                  I am satisfied that the recommendation was made honestly by both Mr Smith and Mr Owen.  They both presented as truthful witnesses and I am satisfied that the concerns which they expressed about the Firewatch extinguishers were honestly held by them before the bulletin was signed and sent out.  I am also satisfied that in the circumstances there was a reasonable and rational basis for them to make the recommendation.  The issue of the use of the Firewatch extinguishers on electrically energised fires had been brought to the attention of Mr Smith and Mr Owen.  Further, Mr Owen had been present at one field day and had observed what was said about the use of the Firewatch extinguisher on 240 volt installations.  Although Mr Smith and Mr Owen were either mistaken or confused in relation to the language used in the bulletin I am satisfied that at the time the bulletin was finalised, signed and sent to the addressees they had present in their minds a concern about the limited application of the Firewatch extinguisher in relation to building and dangerous goods regulations having regard to the ratings which had been given to the various models as a result of the Australian Standard tests.  Those ratings had no application under AS 1940 and a limited application under AS 2444.  Mr Owen also had a concern that CFA brigade personnel might replace a class B extinguisher rated 20 and above with a nine litre Firewatch extinguisher which would not meet the required coverage because it only had a 10B rating. 

56                  The area of responsibility of Mr Owen and Mr Smith in the Community Risk Management Department of the CFA included supervising the servicing of private firefighting equipment including portable fire extinguishers by CFA brigades and the management of hazardous and dangerous goods.  It was reasonable in the context of the discharge of the responsibilities of that section that Mr Owen and Mr Smith make the recommendation they made in the bulletin having regard to the information then available to them in relation to the marketing of the Firewatch extinguisher and the ratings the various models had been given as a result of the Australian Standards tests. 

Was the bulletin distributed in trade and commerce?

57                  There were a number of levels or categories of distribution and publication of the bulletin.  The publications upon which the applicants rely do not need to be considered separately as they can be grouped into a number of categories.  First there was the distribution to the addressees specified in the bulletin and other CFA brigades which were within the structure and the organisation of the CFA.  Secondly, there was the distribution by CFA members to consumers or potential consumers such as occurred through the Eildon brigade which distributed the bulletin to persons in the Lake Eildon area.  Thirdly, there was a distribution to and through non‑CFA organisations and associates such as Tyco and National Fire and Security.  There is no evidence as to how or in what circumstances the bulletin was given to or received by Tyco or National Fire and Security.

58                  The respondents submitted that the bulletin was not distributed in trade and commerce, that it did not have a trading or commercial character and that it was distributed as a matter of public safety as the CFA was concerned with protecting persons who might purchase or use Firewatch extinguishers.  The respondents relied on the construction of the reference in s 52 to conduct “in trade or commerce” preferred by the majority of the High Court in Concrete Constructions (NSW) Pty Limited v Nelson (1990) 169 CLR 594.  In that case the majority of the Court (Mason CJ, Deane, Dawson and Gaudron JJ) considered two possible constructions of s 52.  In the wider construction the expression “in trade or commerce” contemplated conduct in the course of activities which were not, by virtue of their nature of a trading or commercial character but which were undertaken in the course of, or as incidental to, the carrying on of an overall trading or commercial business.  In the narrower construction the expression “in trade or commerce” would be limited to conduct:

“which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character”.  (p 603) 

The majority preferred the second more limited construction and continued at 603: 

“So construed, to borrow and adapt words used by Dixon J. in a different context in Bank of N.S.W. v. The Commonwealth (1948) 76 C.L.R. 1, at p.381, the words ‘in trade or commerce’ refer to ‘the central conception’ of trade or commerce and not to the ‘immense field of activities’ in which corporations may engage in the course of, or for the purposes of, carrying on some overall trading or commercial business.” 

The majority said further at 603–604:

“Indeed, in the context of Pt V of the Act with its heading ‘Consumer Protection’, it is plain that s.52 was not intended to extend to all conduct, regardless of its nature, in which a corporation might engage in the course of, or for the purposes of, its overall trading or commercial business. …What the section is concerned with is the conduct of a corporation towards persons, be they consumers or not, with whom it (or those whose interests it represents or is seeking to promote) has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character.  Such conduct includes, of course, promotional activities in relation to, or for the purposes of, the supply of goods or services to actual or potential consumers, be they identified persons or merely and unidentifiable section of the public.  In some areas, the dividing line between what is and what is not conduct ‘in trade or commerce’ may be less clear and may require the identification of what imports a trading or commercial character of an activity which is not, without more, of that character.” 

In that case the conduct of the construction company:

“… consisted of an internal communication by one employee to another employee in the course of their ordinary activities in and about the construction of a building.” (604‑605)

It was submitted by the respondents that the publication of the bulletin did not have a trading or commercial character either in the distribution throughout the CFA or in the distribution to potential consumers and consumers.  The submission was demonstrated by reference to Mr Bruce Luckman a member of the Eildon Brigade and it was said that he was not trying to sell anything or gain any servicing business but was rather motivated by a desire to protect the well‑being of those who received the bulletin.  It was said that Mr Luckman and his fellow members distributed the bulletin as a matter of public safety.   

59                  So far as the distribution to the servicing brigades and their contractors was concerned it was submitted that what was done was to provide the members with information which they might use in the course of providing products and services to consumers in trade or commerce.  It was said that the provision of the information to the members did not have a trading or commercial character. 

60                  The applicants submitted that the distribution of the bulletin to the addressees specified in it was a distribution in trade or commerce because the CFA provided fire equipment maintenance services which were carried out by brigades and contractors and the bulletin was distributed to them as an incident of that service.  It was submitted that the bulletin was distributed to the persons who would service the extinguishers of the CFA’s customers.

61                  The applicants relied on the observations of Wilcox J in Barto v GPR Management Services Pty Limited (1991) 33 FCR 389 in support of the proposition that the internal distribution of a document within an organisation was in trade or commerce.  Wilcox J noted that the majority of the High Court in Concrete Constructions (NSW) Pty Limited v Nelson (supra) had rejected the construction that conduct “in trade or commerce” is:

“conduct in the course of the myriad of activities which are not, of their nature, of a trading or commercial character but which are undertaken in the course of, or as incidental to, the carrying on of an overall trading or commercial business”.  (p392) 

Wilcox J continued (at 393):

“I admit to some difficulty in discerning precisely what activities the majority regard as being ‘in trade or commerce’ and what activities it would not.  It is clear enough, on the one extreme, that conduct which is not inherently commercial activity, such as driving a truck or giving information about the safety of a building site, is not conduct ‘in trade or commerce’ simply because, in the particular case, it is performed in the course of a larger activity for commercial gain.  It seems equally clear, on the other extreme, that conduct which would plainly be conduct ‘in trade or commerce’ if carried vis-à-vis a stranger does not lose that characteristic simply because the party with whom the corporation is dealing happens to be an employee.” 

Wilcox J dismissed the application to strike out that part of the statement of claim relating to the claim under s 52 of the Trade Practices Act, the circumstances being that the corporate respondent had renegotiated a contract of employment with the applicant in the course of which representations were made about the employment which amounted to misleading conduct contrary to s 52 of the Trade Practices Act.  Wilcox J said at 394:

“If the above analysis is correct, it seems to me correct to hold that the conduct of a corporation in the course of negotiations for the employment of senior staff is conduct potentially falling within s 52.  It is true that an employment contract does not directly produce income but the making of such a contract is part of the total activities in trade or commerce of the corporation.  Critically, it is intrinsically commercial conduct.  It is directed to the creation of a contractual relationship. 

This latter observation is more consistent with the wider construction of “in trade and commerce” rejected by the majority in Concrete Constructions (NSW) Pty Limited v Nelson (supra) than with the majority’s formulation relating to conduct or activities “which, of their nature bear a trading or commercial character”.  In Martin v Tasmania Development and Resources (unreported, 7 May 1999) Heerey J did not follow Barto and I respectfully adopt his Honour’s reasoning.  In any event I am satisfied that in the particular circumstances which provided the context for the distribution of the bulletin, its primary distribution to the addressees specified in it constituted conduct in trade and commerce. 

62                  An internal communication within an organisation which is intended to be read only by addressees within the organisation ordinarily is not a dissemination which has a trading or commercial character as explained by the High Court in Concrete Constructions (NSW) Pty Limited v Nelson (supra):  see also Unilan Holdings Pty Ltd v Kerin (1992) 35 FCR 272, 276–277; Plimer v Roberts (1997) 150 ALR 235.  Were it otherwise the whole of a corporation’s or organisation’s internal communications could be opened up to scrutiny under Pt V of the Trade Practices Act.  In the ordinary course this is not an issue as such internal documents are not seen by consumers external to the organisation.  However each case of an internal communication must be considered by reference to the reason why it comes into existence and the purpose it is intended to achieve.  More specifically I would not expect an internal communication between the CFA administration or one of its full‑time departments and its other divisions and brigades to be an aspect of conduct in trade or commerce for the purposes of s 52 of the Act.  It would not be conduct, to paraphrase the majority in Concrete Constructions (supra) at 604:

“towards persons … with whom it has or may have dealings in the course of those activities … which of their nature bear a trading or commercial character.” 

63                  The present case falls into that area identified by the majority in Concrete Constructions (supra) where the dividing line between what is and what is not conduct “in trade or commerce” is less clear.  Although an internal CFA communication will ordinarily not have a trading or commercial character there was added to the bulletin a recommendation to brigades that as part of their trading or commercial activity they not be involved in the distribution or recommendation of the Firewatch extinguisher.  In that context the primary distribution of the bulletin was conduct “in trade or commerce”.  More particularly was this so where the bulletin was distributed further to persons outside the CFA organisation and reached consumers and potential consumers.

64                  Although the bulletin was an internal document it had “a trading or commercial character” in the sense that it was intended to influence servicing brigades not to be involved in the distribution or recommendation of the Firewatch extinguisher.  Putting the matter another way, the bulletin had more than “an internal character”; it was intended to have a consequence or impact on trading and commercial activities.  It was intended that in dealings or potential dealings with consumers fire equipment maintenance servicing brigades would be influenced not to become involved in the distribution or recommendation of the product. 

65                  It follows that a similar conclusion should be reached in relation to the dissemination or publication of the bulletin by fire equipment maintenance servicing brigades and CFA officers to consumers or potential consumers such as Lindy Moss, the Eildon Boat Club and the operator of the mooring facility at Jerusalem Creek.  It is no doubt true that a substantial part of the motivation of the CFA and its officers in publishing of the bulletin was for the purpose of ensuring public safety but such a consideration does not mean that the publication and distribution of the bulletin was not conduct “in trade or commerce”. 

66                  In any event fire equipment maintenance servicing brigades either in their own right or through contractors were involved in activities of servicing portable fire extinguishers for reward and deriving income from those activities.  For this reason as well the bulletin was sent to those brigades on the basis that it was expected or anticipated that they might become involved in the distribution of the fire extinguishers.  Although they were prohibited from making initial recommendations and the initial supply of such extinguishers they had the right and the opportunity to replace extinguishers and to this extent Firewatch extinguishers were within the range of products which it was open to them to supply.

67                  It was submitted by the respondents that it could not be said that the bulletin was distributed by the CFA to its own members and contractors in trade or commerce because the distribution was done for the purposes of providing information they might use in carrying out work in trade or commerce.  However, the distinction drawn is artificial because if information is provided for the purpose of it being used for carrying out work in trade or commerce it has, in my opinion, a trading or commercial character. 

Injurious falsehood

68                  It was said in Ratcliffe v Evans [1892] 2 QB 524 at 527–528:

“That an action will lie for written or oral falsehoods, not actionable per se nor even defamatory, where they are maliciously published, where they are calculated in the ordinary course of things to produce, and where they do produce, actual damage, is established law.  Such an action is not one of libel or of slander, but an action on the case of damage wilfully and intentionally done without just occasion or excuse, analogous to an action for slander of title.  To support it, actual damage must be shewn, for it is an action which only lies in respect of such damage as has actually occurred.” 

69                  In Joyce v Motor Surveys Limited [1948] Ch 252; Roxburgh J said at 254 that the phrase “maliciously published” in this passage meant:

“the wilful and intentional doing of damage without just occasion or excuse.” 

70                  The matter was put somewhat differently in Greers Limited v Pearman & Corder Limited (1922) 39 RPC 406 where Scrutton LJ said at 417:

“The only question in this case is – is there any evidence on which the Jury could find that the statements were made maliciously?  ‘Maliciously’ not in the sense of illegally, but in the sense of being made with some indirect or dishonest motive.  Honest belief in an unfounded claim is not malice; but the nature of the unfounded claim may be evidence that there was not an honest belief in it.  It may be so unfounded that the particular fact that it is put forward may be evidence that it is not honestly believed.” 

71                  In short it is an essential part of a cause of action of injurious falsehood that the relevant words be published wilfully with an intention to harm or for an ulterior motive. 

72                  The applicants alleged that the respondents published the bulletin intending to cause damage to the applicants by inducing purchasers and prospective purchasers of the fire extinguishers to refrain from purchasing or otherwise dealing with the applicants. 

73                  I am quite satisfied neither Mr Smith nor Mr Owen, nor indeed any other officer of the CFA who disseminated the bulletin such as Mr Luckman, intended to harm or do damage to the applicants or their fire extinguishers.  I am satisfied that there was no indirect or dishonest motive in publishing and distributing the bulletin other than in the interests of protecting public safety.  Although Mr Smith and Mr Owen were incorrect in one of the statements set out in the bulletin and in other respects used ambiguous language in it, nevertheless, I am satisfied that they honestly believed that what they were saying in the bulletin was correct. 

74                  An example of the response of brigade members of the CFA to the Firewatch extinguishers is found in what occurred with the Eildon brigade.  That brigade’s area of activity covers the Eildon area and includes the Eildon Boat club complex at or near which approximately 400 houseboats would each have at least 80kg of gas in cylinders and many would carry at least 300 litres of fuel.  Mr Luckman received the bulletin in his capacity as Fire Equipment Maintenance Officer of the Eildon brigade which is a fire equipment maintenance service brigade.  He tabled the bulletin at a brigade meeting on 3 March 1997 and members raised their concerns about the low ratings of the Firewatch extinguishers.  Mr Luckman said:

“As a result of this concern, the brigade members agreed at the meeting that the Bulletin should be shown to businesses located in the Eildon Boat Club complex.  A number of those businesses have employees who are members of the CFA’s Eildon brigade.  This decision was made because we considered that there were considerable risks to life and property associated with the use of Firewatch Extinguishers at these businesses due to the nature of the business and very low ratings of those extinguishers.”

In cross‑examination Mr Luckman said that at the meeting one member raised the matter that in replacing extinguishers with Firewatch extinguishers they would be taking off extinguishers with high ratings and replacing them with extinguishers with a lower rating.  Mr Luckman said the brigade members’ response was:

“The members of the brigade and myself were very concerned that they were taking off fire extinguishers that had a very high rating and putting on something that had a very low rating when those boats have LP gas cylinders on them and some of them have got as much as 500 litres of fuel on them”.   

Mr Smith said that prior to 6 February 1997 comments had been made to him by various CFA personnel of concerns following their attendance at field days and four wheel drive shows that claims had been made that the Firewatch extinguisher complied with the European Standard for electrical conductivity but did not comply with the Australian Standard.  Mr Smith was concerned that it was stated on the Firewatch extinguisher or in the handout that the Firewatch representative was distributing that it met the European Standard but that that standard was not relevant in Australia.  Mr Smith said that he gave recommendations to brigades about what products they should distribute and what products they should not distribute only if he was concerned about the product.  Mr Smith’s concerns came from the field days and the way in which the Firewatch extinguisher was marketed.  Mr Smith was also concerned about the Firewatch extinguisher because he was concerned that it did not have the performance of a conventional foam extinguisher.  The Firewatch extinguisher has an atomising/spray type nozzle which means that rather than producing a foam it produces a fine atomised mist.  It is no part of my reasons to form a view or to make a finding on how the Firewatch extinguisher performs compared with other foam extinguishers.  The only relevant point is that Mr Smith, at the time of the bulletin, had a belief, which I find was an honest belief, that the Firewatch extinguisher performed differently from other extinguishers. 

75                  Mr Owen was likewise concerned as he observed that it had been said at a Land Rover field day that the Firewatch extinguisher was good for vehicles for A class fires and although it did not have an Australian Standard electrical rating it was tested to 35,000 volts and European rated and therefore could be used on 240 volt installations.  Mr Owen’s major concern was what he saw as the confusion in the general community about the use of the Firewatch extinguisher on electrically energised fires and he saw it as part of the CFA’s public safety role to raise the issue.  The instructions Mr Owen gave Mr Smith as to the preparation of the bulletin were to identify the concern of the CFA regarding the electrical rating and the concern that the Firewatch extinguisher did not have the level of ratings for the B classification required by the Building Regulations and the Dangerous Goods Regulations.  Mr Owen also had a concern that CFA brigade personnel might replace a class B extinguisher rated 20 and above with a nine litre Firewatch extinguisher which would not meet the required coverage because it only had a 10B rating.

76                  I am quite satisfied that what motivated Mr Smith and Mr Owen to draft and publish the bulletin was a concern about public safety and the use to which consumers might use the Firewatch extinguisher.  There was no indirect purpose or motive in the publication of the bulletin nor was there any wilful act or intention to damage or harm the applicants or their fire extinguisher.

77                  The applicants submitted that I should find malice in the publication and distribution of the bulletin because I should not accept that persons with the qualifications of Mr Smith and Mr Owen and with the experience and understanding they had of ratings and classifications would make the mistakes which have occurred in the bulletin.  However, the fact that Mr Smith and Mr Owen made a mistake does not of itself constitute malice.  The applicants submitted that it was what they called the excessive subject‑matter in the bulletin which evidenced the existence of malice.  They relied on Adam v Ward [1917] AC 309 and FAI General Insurance Ltd v ARIA Insurance Brokers Ltd (1992) 108 ALR 479 for the proposition that excessive language used in a publication may be used as evidence of malice.  That principle may well be, but in the instant case before me there was no excessive rhetoric or hyperbole and to the extent to which the language used in the bulletin was either confusing, misleading or incorrect, I am satisfied, especially having heard in detail from Mr Owen and Mr Smith and having heard their reasons for the publication of the bulletin, that there was no malice which intruded into the publication of the bulletin.  The cause of action based on injurious falsehood is not made out.

Defamation

78                  The applicants made the following allegations in their further amended statement of claim:

“17.     Further or alternatively to paragraphs 13 to 16 hereof, by distributing and publishing the Bulletin in the manner alleged the Respondents have falsely and maliciously published, of and concerning Applicants as sellers and distributors of foam fire extinguishers, the words set out in the Schedule.

18.       Those words in their natural and ordinary meaning were meant and were understood to mean that:

(a)        the Applicants sell and distribute and are prepared to sell  and distribute Foam Spray Fire Extinguishers that they know do not comply with relevant legislative requirements.

(b)        the Applicants obtained and attempted to obtain orders for their Foam Spray Fire Extinguishers by making false and misleading statements about the performance characteristics of the Extinguishers.

(c)        the Applicants have caused Australian Standards to improperly endow their Fire Extinguishers with a B classification.

(d)        the classification given to the Applicants’ Foam Spray Fire Extinguishers by Australian Standards was only temporary;

(e)        the Applicants’ Foam Spray Fire Extinguishers would inevitably lose their B classification.

19.       Further, those words were calculated to and did disparage the Applicants in the business of selling and distributing foam fire extinguishers.” 

I take the reference to “the words set out in the schedule” to be a reference to the whole of the bulletin as there was no schedule attached or annexed to the further amended statement of claim. 

79                  The bulletin clearly makes statements in respect of the Firewatch extinguisher but it is less clear whether the bulletin is making statements about the applicants themselves or, more particularly, the second applicant.  A distinction should be drawn between words which reflect upon a person’s goods and words which reflect upon a person as a person.  The distinction was explained in South Hetton Coal Company Limited v North‑Eastern News Association Ltd [1894] 1 QB 133 at 138‑139 where Lord Esher MR said:

“It may be published of a man in business that he conducts his business in a manner which shews him to be a foolish or incapable man of business.  That would be a libel on him in the way of his business, as it is called – that is to say, with regard to his conduct of his business.  If what is stated relates to the goods in which he deals, the jury would have to consider whether the statement is such as to import a statement as to his conduct in business.  Suppose the plaintiff was a merchant who dealt in wine, and it was stated that wine which he had for sale of a particular vintage was not good wine; that might be so stated as only to import that the wine of the particular year was not good in whosesoever hands it was, but not to imply any reflection on his conduct of his business.  In that case the statement would be with regard to his goods only, and there would be no libel, although such a statement, if it were false and were made maliciously, with intention to injure him, and it did injure him, might be made the subject of an action on the case.  On the other hand, if the statement were so made as to import that his judgment in the selection of wine was bad, it might import a reflection on his conduct of his business, and shew that he was an inefficient man of business.  If so, it would be a libel.” 

(See also Gatley on Libel and Slander 9^th ed. at p.62.) 

80                  The respondents submitted that the words in the bulletin related only to the applicants’ goods and it was said that the only reference to the conduct of the applicants was in relation to the presentation or promotion of the Firewatch extinguisher as a non‑conductor of electricity.  That statement in the bulletin is not the subject of complaint by the applicants. 

81                  I have considered the words set out in the bulletin and have reached the conclusion that they related only to the Firewatch extinguisher and not to the manner in which the applicants conducted their business.  The words are critical of the applicant’s goods but they do not bear a meaning which disparages the applicants.  The words set out that the Firewatch extinguisher does not meet the criteria of certain legislation but they say nothing in respect of the knowledge of the applicants or the manner in which the applicants sell and are prepared to sell and distribute the Firewatch extinguisher.  The only statement made about performance characteristics related to the non‑conductivity of the extinguisher but that is not the subject of complaint.  There is nothing in any of the words which can give rise to the imputation that the applicants have caused Australian Standards to endow the Firewatch extinguisher with a B classification improperly.  There are no words in the bulletin which carries any imputation that the classification given to the Firewatch extinguisher was only temporary and that it was inevitable that the extinguisher would lose its B classification.  For these reasons I do not consider that the words in the bulletin carry any of the imputations alleged by the applicants.

82                  I am satisfied that the bulletin reflected upon the products of the applicants and not upon the applicants themselves. 

Qualified privilege

83                  If I am wrong in concluding that the words in the bulletin do not carry defamatory imputations of the applicants it is then necessary to consider the defence raised by the respondents that:

“any distribution of the Bulletin was the subject of qualified privilege because the firstnamed respondent had an interest and/or duty in distributing the Bulletin and the recipients had an interest in receiving the Bulletin.” 

There was little dispute between the parties as to the relevant principles which applied in relation to the defence of qualified privilege.  The ingredients of the defence of qualified privilege were identified by Lord Atkinson in Adam v Ward (supra) at 334 in the following terms:

“It was not disputed, in this case on either side, that a privileged occasion is, in reference to qualified privilege, an occasion where the person who makes a communication has an interest or a duty, legal, social, or moral, to make it to the person to whom it is made, and the person to whom it is made has a corresponding interest or duty to receive it.  This reciprocity is essential.” 

In Bruton v Estate Agents Licensing Authority [1996] 2 VR 274 Batt J adopted this passage and said at 292:

“The comprehensive formula of Lord Atkinson is often usefully analysed, so far as the publisher is concerned, under the heads of performance of a duty, protection of an interest, and common interest”. 

84                  The nature of the interest possessed by the recipient of the publication was expressed by Griffith CJ in Howe & McColough v Lees (1910) 11 CLR 361 at 369 as follows:

“Again:  ‘interest’ does not mean an interest in the particular subject matter as to which the communication is made, but an interest in knowing the fact communicated, in other words, an interest in the subject matter to which the communication is relevant, as for instance the solvency of a probable customer.” 

The interest must be something more than a matter which would interest the public to hear.  As Smithers J said in Australian Broadcasting Corporation v Comalco Ltd (1986) 12 FCR 510 at 541:

“The reciprocal duty and interest will not arise from the mere fact that the publisher has information which would interest the public to hear.  There must be an interest of a particular kind.  The kind of interest which will justify the publication is an interest arising from some particular quality in the subject.” 

More recently in Bruton v Estate Agents Licensing Authority (supra) Batt J said at 293–294:

“Although the word ‘interest’ is not used in any technical sense, it has, as stated in Fleming, op. cit., p. 569, been narrowly construed as meaning ‘something much more than mere curiosity as to the private business or affairs of other persons’ and as referring to ‘a real and direct personal, trade, business or social concern’ (Telegraph Newspaper Co. Ltd. v. Bedford (1934) 50 C.L.R. 632 at 662), ‘such as would assist in the making of an important decision or determining of a particular course of action’:  Austin v. Mirror Newspapers Ltd. [1986] A.C. 299 at 311.” 

85                  The respondents submitted that the CFA had a legal, moral or social duty to publish the bulletin and that such duty could be derived from s 20 of the Country Fire Authority Act.  The applicants submitted that there was no relevant reciprocity of interest in the recipients. 

86                  I am satisfied that on each occasion on which the bulletin was published as established by the evidence it was published on an occasion of qualified privilege.  Those occasions were the occasions on which the bulletin was published to each of the addressees of the bulletin as set out in the bulletin and also the occasions upon which persons such as Mr Luckman and other members of the CFA published the bulletin either to persons who owned fire extinguishers or who were potential purchasers or users of fire extinguishers.  I include within this category the persons who owned and operated the Eildon Boat Club, the Jerusalem Creek facility and the Darlingford marina.  In my opinion, they had an interest in receiving the bulletin because they were involved with persons who owned house boats and who could be reasonably expected to be interested in the use of portable fire extinguishers.  They also had an interest in ensuring that people who had access to, and used their facilities, had available to them appropriate and adequate fire fighting equipment.  So far as the distribution to CFA officers and members and its contractors is concerned, I am satisfied that there was a common interest for the same reason. 

87                  The applicants also relied upon a distribution of the bulletin to Mrs J Coupe, a former secretary of the CFA Bayles brigade.  There was no evidence that she saw or read the bulletin.  Her husband, the captain of Bayles brigade opened the letter containing the bulletin and read it because he was captain of the brigade.  Thus in this instance the occasion on which the bulletin was published was still one of qualified privilege.

88                  Although the applicants relied upon a distribution of the bulletin to the applicants’ competitors Tyco and National Fire and Security there was no evidence of any such distribution directly to those companies.  It is apparent that National Fire and Security came into possession of the bulletin as its representative Mr Harrison gave a copy of it to Lindy Moss of Omni Vox Productions.  A National Fire and Security representative also delivered a copy of the bulletin to George Boden of Watchkeeper Security.  There was no evidence as to how those representatives obtained a copy of the bulletin.  Although Mr Smith and Mr Owen did not intend the bulletin to be published to persons other than the addressees specified in it a number of persons within CFA brigades passed it on either to persons with whom they had maintenance contracts or persons who either had or might have had an interest in acquiring a portable fire extinguisher.  Such a publication to such persons occurred on an occasion of qualified privilege. 

89                  But what if such a person passed it on to a competitor of the applicants such as Tyco or National Fire and Security?  In such circumstances I do not consider that the CFA would be responsible for such republication.  I am satisfied that all CFA personnel who distributed the bulletin only intended to distribute it to persons who had an interest in acquiring portable fire extinguishers or were involved with such persons such as the operators or managers of the Eildon Boat Club, Jerusalem Creek mooring facility and the Darlingford marina.  I do not consider that any CFA officer intended the person to whom he or she distributed the bulletin to pass it on to anyone who did not have an interest in acquiring a portable fire extinguisher.  Nor do I consider that it was the natural and probable result of the distribution of the bulletin by CFA officers to such persons that it would be given to the applicants’ competitors such as Tyco and National Fire and Security. 

90                  A person who publishes a libel is only responsible for a republication of the libel if that person authorised the repetition of the libel or intended that the libel be repeated or the repetition was the natural and probable consequence of the initial publication or the person was under a moral duty to convey the libel to the other person:  cf Speight v Gosnay (1891) 60 LJQB 231 at 232; Sims v Wran [1984] 1 NSWLR 317, 320; John Fairfax & Sons Limited v Cojuangco (1988) 165 CLR 346, 350; Slipper v British Broadcasting Corporation [1991] 1 QB 283, 289‑295; Jones v Amalgamated Television Services Pty Ltd (1991) 23 NSWLR 364, 267‑368; Williams v John Fairfax Group Pty Ltd (1991) 7 BR 160, 162‑164; Gatley on Libel and Slander, (op cit) 155‑159.  The interest and concern of the CFA and its officers at all times was that of public safety and the protection of property and person by the availability of adequate fire fighting equipment.

91                  I do not consider that the defence of qualified privilege is negatived by any malice on the part of the CFA or any of the persons who published or republished the bulletin.  There is no evidence that any occasion on which the bulletin was published or republished was misused.  Again, the applicants submitted that there has been an excessive publication having regard to the subject matter referred to in the bulletin.  For the reasons to which I have already referred in the context of injurious falsehood I am not satisfied that there was either an excessive publication or a use of language such as to raise an inference that there was malice which brought about or intended that publication.  Although Mr Smith and Mr Owen used incorrect terminology which in one respect was wrong and in other respects was ambiguous, that circumstance, of itself, is insufficient to raise an inference of malice.  In Clark v Molyneux [1877] 3 QB D 237 Cotton LJ said at 249:

“In order to shew that the defendant was acting with malice, it is not enough to shew a want of reasoning power or stupidity, for those things of themselves do not constitute malice:  a man may be wanting in reasoning power, or he may be very stupid, still he may be acting bona fide, honestly intending to discharge a duty.”

92                  A useful analysis of the circumstances in which malice may negative a defence of qualified privilege is found in the judgment of Lord Diplock in Horrocks v Lowe [1975] AC 135.  At 150‑151 Lord Diplock said:

“Apart from those exceptional cases, what is required on the part of the defamer to entitle him to the protection of the privilege is positive belief in the truth of what he published or, as it is generally though tautologously termed, ‘honest belief.’  If he publishes untrue defamatory matter recklessly, without considering or caring whether it be true or not, he is in this, as in other branches of the law, treated as if he knew it to be false.  But indifference to the truth of what he publishes is not to be equated with carelessness, impulsiveness or irrationality in arriving at a positive belief that it is true.  The freedom of speech protected by the law of qualified privilege may be availed of by all sorts and conditions of men.  In affording to them immunity from suit if they have acted in good faith in compliance with a legal or moral duty or in protection of a legitimate interest the law must take them as it finds them.  In ordinary life it is rare indeed for people to form their beliefs by a process of logical deduction from facts ascertained by a rigorous search for all available evidence and a judicious assessment of its probative value.  In greater or in less degree according to their temperaments, their training, their intelligence, they are swayed by prejudice, rely on intuition instead of reasoning, leap to conclusions on inadequate evidence and fail to recognise the cogency of material which might cast doubt on the validity of the conclusions they reach.   But despite the imperfection of the mental process by which the belief is arrived at it may still be ‘honest,’ that is, a positive belief that the conclusions they have reached are true.  The law demands no more.

            Even a positive belief in the truth of what is published on a privileged occasion – which is presumed unless the contrary is proved – may not be sufficient to negative express malice if it can be proved that the defendant misused the occasion for some purpose other than that for which the privilege is accorded by the law.  The commonest case is where the dominant motive which actuates the defendant is not a desire to perform the relevant duty or to protect the relevant interest, but to give vent to his personal spite or ill will towards the person he defames.  If this be proved, then even positive belief in the truth  of what is published will not enable the defamer to avail himself of the protection of the privilege to which he would otherwise have been entitled.  There may be instances of improper motives which destroy the privilege to which he would otherwise have been entitled.  There may be instances of improper motives which destroy the privilege apart from personal spite.  A defendant’s dominant motive may have been to obtain some private advantage unconnected with the duty or the interest which constitutes the reason for the privilege.  If so, he loses the benefit of the privilege despite his positive belief that what he said or wrote was true. 

            Judges and juries should, however, be very slow to draw the inference that a defendant was so far actuated by improper motives as to derive him of the protection of the privilege unless they are satisfied that he did not believe that what he said or wrote was true or that he was indifferent to its truth or falsity.  The motives with which human beings act are mixed.  They find it difficult to hate the sin but love the sinner.  Qualified privilege would be illusory, and the public interest that it is meant to serve defeated, if the protection which it affords were lost merely because a person, although acting in compliance with a duty or in protection of a legitimate interest, disliked the person whom he defamed or was indignant at what he believed to be that person’s conduct and welcomed the opportunity of exposing it.  It is only where his desire to comply with the relevant duty or to protect the relevant interest plays no significant part in his motives for publishing what he believes to be true that ‘express malice’ can properly be found.” 

(See also Barbaro v Amalgamated Television Services Pty Ltd (1985) 1 NSWLR 30 at 50‑51). 

93                  I am not satisfied that Mr Smith, Mr Owen or any other person who republished the bulletin acted recklessly in so doing or that they were indifferent to the truth of what they published.  There is no suggestion that there was any intention to do harm to the applicants or that Mr Smith or Mr Owen or any of the other persons were activated by personal spite or ill will towards the applicants.  Nor is there any suggestion that there was any substantial motive in obtaining some advantage to the CFA unconnected with the duty or interest which constituted the reason for the privilege.  In short, there was no misuse of the occasions which gave rise to the qualified privilege.  The onus is on the applicants to prove malice in order to deprive the respondents of the defence of qualified privilege and that onus has not been discharged by the applicants.  The cause of action in defamation is not made out.

Assessment of loss and damage

94                  The evidence led in relation to the damage suffered by the applicants was limited.  It demonstrated that there was a loss of turnover for the quarter April to June 1997 and although Mr Murnane the general manager of the second applicant and a director of both applicants, said that there was a continuing loss of $20,000 per quarter he was compelled to say that his conclusion was based on “a feeling”.  He put it this way:

“You have a feel for what is likely to happen within a business, what your expectations may have been based on previous experience within the industry or in a type of business that we’re running.” 

Although there had been previous operations by the Firewatch group in business it had only commenced business in October 1995.  The loss of $20,000 per quarter, in any event, is a loss of turnover and at the most the loss of gross profit per quarter is $5,000, the gross profit being 25%.   

95                  However, it is also necessary to establish that there is a causal relationship between the loss alleged and the contravening conduct relied upon.  I am prepared, for present purposes, to infer that the loss for the April – June 1997 quarter was brought about by the dissemination of the bulletin.  However, there are a number of statements in the bulletin which may have contributed to that situation.  I have found that the only statement made which was misleading or deceptive or likely to be mislead or deceive was the statement that under its present rating schedule the only application within the Australian Standards for the Firewatch extinguisher was for A class hazards.  The bulletin also referred to the fact that the Firewatch extinguisher failed to meet the criteria of the B classification under the Australian Standards or the requirements of the Australian Standards for building contract or Dangerous Goods legislation.  Further, the bulletin referred to the issue of the Firewatch extinguisher not meeting the criteria for use on electrical hazards under the Australian Standards and recommended that brigades not become involved in the distribution or recommendation of the extinguisher.  To the extent to which the drop in turnover was caused by persons reading these passages and being thereby influenced not to purchase a Firewatch extinguisher the resultant damage does not occur through any fault of the CFA or any contravention of s 52 or s 53 by the CFA.

96                  It should also be remembered that the Firewatch extinguisher was primarily marketed as an extinguisher with an A classification.  Mr Murnane said that the extinguisher was a class A rated extinguisher and he amplified this statement by saying:

“It has a B rating but I guess from a marketing point of view we take it as being a class A extinguisher with an additional class B rating”.   

When he was asked whether he meant that it was primarily directed at a class A market his answer was “primarily, yes”.   

97                  In all those circumstances I consider that any damage sustained by the applicants as a result of the contravention of s 52 by the CFA is small and I assess that damage at $5,000.

98                  Although an injunction was sought in the application I do not consider that this is now a case appropriate for the grant of a permanent injunction.  On 5 August 1997 the CFA circulated all the addressees of the bulletin and directed that the bulletin was not to be distributed or shown to members of the public by any officer of the CFA or member of any brigade.  It is not suggested that there has been any further distribution or publication of the bulletin after 5 August 1997, nor is there any suggestion that the CFA intends to make any further distribution or publication of it.

Should there be a correcting publication?

99                  I have given consideration to whether I should order that the CFA publish a correcting bulletin or publish some other correcting statement.  There are a number of matters which militate against a corrective publication.  The bulletin was not published to the public at large.  Although it was distributed widely within the CFA it was not every brigade which distributed the bulletin beyond its members.  The only specific evidence about such distribution by a brigade was in relation to the Doveton and Eildon brigades.  I am conscious of the distribution outside the CFA to the other persons to whom I have already referred and I take that into account.  It should also be remembered that the CFA undertook on 1 August 1997 that it would within seven days, notify each of its brigades in writing that the bulletin was not to be distributed or shown to members of the general public and there is no suggestion that that undertaking has not been observed.  I am also conscious, as Mr Murnane said, that from a marketing point of view the Firewatch extinguisher is primarily directed at a class A market.  I have also found that it was not misleading or deceptive to state in the bulletin that:

“At this stage it has an A and B classification, although in most cases it fails to meet the criteria of the B classification under the Australian Standards or the requirements of the Australian Standards for building control or Dangerous Goods legislation.”

100               If I were to order the publication of a correcting statement it would have the potential for confusion and further misunderstanding as it would be necessary to refer back to the bulletin and explain which statement was incorrect.  In doing so it would be necessary to ensure that the explanation did not relate to or affect any other statement in the bulletin.  Having regard to the nature of the ratings given to the various models of the Firewatch extinguisher within the B classification it would be necessary in any correcting publication to explain that although the Firewatch extinguisher has an application within the Australian Standards for B class hazards, that application is limited having regard to the level of the ratings certified and having regard to the limited application of the Firewatch extinguisher under AS 2444 (by virtue of the provisions of the Building Regulations and the Building Code of Australia) and the fact that it has no application under AS 1940 (made applicable by the Dangerous Goods (Storage and Handling) Regulations).  It would also be necessary, in my opinion, for any correcting publication which would appear under the name of the CFA to make it clear that the CFA, although correcting a misstatement, did not endorse or recommend the distribution of the Firewatch extinguisher and was not changing its earlier recommendation.  In order to ensure that there was no further misunderstanding it would also be necessary to make it clear that the Firewatch extinguisher does not have an “E” classification and is not approved for use in Australia in relation to electrically energised fires.  Otherwise there would be a risk that potential consumers who read the correcting publication might think that it superseded the earlier bulletin.

101               I do not propose to order that the CFA publish a correcting bulletin because of the limited respect in which I have found the contents of the whole of the bulletin misleading or deceptive.  The contents of any correcting publication would have to refer to the earlier bulletin in the manner to which I have referred and it would then be necessary to explain in some detail the limited application of the Firewatch extinguisher to class B fires.  There is a risk that any correcting publication in the terms to which I have referred would confuse the issue rather than clarify it.  I therefore consider in all the circumstances that it is not appropriate to order a correcting publication.

The second respondent

102               The proceedings were brought against the second respondent Mr Owen on the basis that he was the author of the bulletin.  However, no submissions were addressed to the issue whether Mr Owen’s conduct was such as to bring him within the provisions of s 75B of the Trade Practices Act.  It was not suggested that at the time the bulletin was signed by Mr Owen and authorised for distribution by him that he was aware that what was in the bulletin of which complaint is made was false.  In order for Mr Owen to be brought within the terms of s 75B(1) (a) it must be shown that he intentionally aided, abetted, counselled, or procured a contravention of s 52 and that he had knowledge of the falsity of the relevant representation.  In order for Mr Owen to be brought within the terms of s 75B(1)(c) it must be shown that he was an intentional participant, that is he was knowingly concerned in or party to the contravention and had knowledge of the essential elements constituting the contravention:  Yorke v Lucas (1985) 158 CLR 661 at 666‑670. 

103               I am not satisfied that Mr Owen had the relevant intention or the relevant knowledge of the falsity of the relevant representation or of the essential elements constituting the contravention.  The High Court in Yorke v Lucas (supra) did not consider the scope of the expression “induced … the contravention” in s 75(1)(b) but the Full Court of the Federal Court, (1983) 49 ALR 672 at 781 considered that the expression connoted:

“some act of compulsion by force or threat of force or some act of persuasion or stimulation aimed at ensuring that an act is committed which constitutes a contravention”. 

104               These expressions are not apposite to Mr Owen’s role in the preparation and publication of the bulletin.  The proceeding against the second respondent should be dismissed.

105               There will be a declaration as to contravention of s 52 of the Act by the CFA by distributing the bulletin containing the statement that “under its present rating schedule the only application within the Australian Standards” for the applicants’ various models of extinguisher would be for A class hazards.  The first respondent should be ordered to pay the second applicant $5,000 damages and the first respondent should pay the applicant’s costs of the proceeding including reserved costs.

Associate:

Dated:              8 June 1999