FEDERAL COURT OF AUSTRALIA

AUSTRALIAN COMPETITION & CONSUMER COMMISSION

v

GIRAFFE WORLD AUSTRALIA PTY LTD

[1999] FCA 1161

NG 421 of 1998

NG 711 of 1998

SUMMARY

In accordance with the practice of the Federal Court in certain cases of public interest, I have prepared a brief summary to accompany the Reasons for Judgment that are being delivered today.  But the only authoritative pronouncement of my reasons is that contained in the full Reasons for Judgment.  This summary is necessarily incomplete.

Giraffe World Australia Pty Ltd (“Giraffe World”) has been engaged in a business in Sydney, and other Australian cities, of selling a mat or mattress, suitable to be connected to an electricity supply (“the Mat”).  In association with that activity it has been promoting a “Giraffe Club” and a “Grow Rich System”.  A person was introduced to the product and to the possibility of becoming a member of the Giraffe Club and the Grow Rich System through presentations at “Happiness Circle” meetings.

Giraffe World claimed that when connected to a source of electricity, the Mat emitted negative ions which would benefit the health of a person who slept on it.  If a person bought a Mat and joined the Giraffe Club and the Grow Rich System, that person could earn commissions by introducing others, and yet further commissions if those people also joined the Giraffe Club and the Grow Rich System and introduced yet further newcomers. 

I have concluded that Giraffe World was promoting a pyramid selling scheme in contravention of s 61 of the Trade Practices Act 1974.  As well, I have concluded that it was engaging in referral selling in contravention of s 57 of that Act.

The Australian Competition and Consumer Commission (“the Commission”) also alleged that in its selling of the Mat, particularly at the Happiness Circle Meetings, Giraffe World engaged in misleading and deceptive conduct, and represented that the Mat had approvals, performance characteristics, uses or benefits it does not have, in contravention of ss 52 and 53(c) of the Act.  Ultimately, Giraffe World accepted that on the evidence, it could not support some of the representations that had been made.  But some 60 individuals testified that their health had improved in various ways after using the Mat.  The Commission led a considerable body of scientific evidence directed to showing that there were no reasonable grounds for thinking that the use of the Mat would produce health benefits.  The Commission suggests that in light of the expert testimony, the individuals who have testified to the benefits of using the Mat are the sincere but mistaken victims of autosuggestion.

Giraffe World sought to portray the case as a battleground between conventional and alternative health care systems, and between the approaches of modern Western science and medicine on the one hand and an older Oriental approach to human health and wellbeing on the other.  But my function has been limited to deciding the issues presented for decision, by applying the law to the facts proved by evidence.

I have concluded that on the expert evidence before me, and the submissions made to me, Giraffe World contravened the Act to the extent that it represented to prospective buyers that there was medical, scientific or other objective support for the proposition that the Mat would operate, by means of negative ions, to benefit their health.

Much of the Commission’s concern has apparently become academic: in more recent times Giraffe World has appointed an administrator, has ceased operating, and has vacated its former business premises.  I did not have the benefit of submissions in opposition to those of the Commission in relation to a substantial part of the litigation, because Giraffe World had instructed its solicitors to cease incurring costs in connection with the proceedings. 

I will stand over the Commission’s proceeding to a date for the making of orders in accordance with the Reasons for Judgment published today.  However, in relation to a related proceeding brought by Giraffe World against the Commission for defamation, I dismiss that proceeding with costs.

                                                                                                            LINDGREN J

                                                                                                            26 AUGUST 1999