FEDERAL COURT OF AUSTRALIA

Australian Competition & Consumer Commission v Cadbury Schweppes Pty Ltd [2004] FCA 516

TRADE PRACTICES – misleading and deceptive conduct – labelling and packaging – cordials – depictions of real fruit on labels – no real fruit of those kinds used in cordials – whether label, packaging and appearance of cordial amounted to misrepresentation – whether sufficient for label to contain words ‘flavoured cordial’ – relevance of repealed regulations governing food labelling

TRADE PRACTICES – remedies – declarations – whether appropriate – form of declaration – injunctions – whether appropriate – whether proposed conduct in contravention – discontinuance or repackaging of cordials – width of injunction based on past conduct alone – whether appropriate to order implementation of compliance program

COSTS – applicant partially successful – applicant conducted proceeding in unnecessarily complex manner – whether order for less than full costs appropriate

Trade Practices Act 1974 (Cth) ss 52, 53(a), 55, 80

Evidence Act 1995 (Cth) ss 76, 79, 80(b)

Federal Court of Australia Act 1976 (Cth) s 43(2)

Australian Competition & Consumer Commission v Francis [2004] FCA 487 applied

Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75 (2003) 203 ALR 217 followed

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v CADBURY SCHWEPPES PROPRIETARY LIMITED

V 177 of 2002

GRAY J

30 APRIL 2004

MELBOURNE

THE COURT DECLARES THAT:

1.         The respondent, by supplying to supermarket retailers in Australia from October 2001 until 14 March 2002 for sale to the public flavoured cordial under the Cottee’s brand with a label containing:

(a)        the words ‘banana mango flavoured cordial’;

(b)        pictorial representations of bananas and mangoes; and

(c)        a logo containing a caricature of a monkey with a half-peeled banana
                        and an unpeeled banana and the words ‘Go Bananas’

and without taking sufficient steps to inform potential purchasers that the cordial did not contain bananas or mangoes, represented to potential purchasers that the cordial contained bananas and mangoes, and thereby in trade or commerce:

(i)         engaged in conduct that was likely to mislead or deceive, contrary to s 52(1);

(ii)        in connection with the supply or promotion of the cordial, falsely
                        represented that the cordial was of a particular composition, contrary
                        to s 53(a); and

(iii)       engaged in conduct that was liable to mislead the public as to the nature or characteristics of the cordial, contrary to s 55

of the Trade Practices Act 1974 (Cth).

2.         The respondent, by supplying to supermarket retailers in Australia from October 2001 until 14 March 2002 for sale to the public flavoured cordial under the Cottee’s brand with a label containing:

(a)        the words ‘apple kiwi flavoured cordial concentrate’; and

(b)        pictorial representations of kiwi fruit

and without taking sufficient steps to inform potential purchasers that the cordial did not contain kiwi fruit, represented to potential purchasers that the cordial contained kiwi fruit, and thereby in trade or commerce:

(i)         engaged in conduct that was likely to mislead or deceive, contrary to s 52(1);

(ii)        in connection with the supply or promotion of the cordial, falsely
                        represented that the cordial was of a particular composition, contrary
                        to s 53(a); and

(iii)       engaged in conduct that was liable to mislead the public as to the nature or characteristics of the cordial, contrary to s 55

of the Trade Practices Act 1974 (Cth).

THE COURT ORDERS THAT:

1.         The respondent pay 70 per cent of the applicant’s costs of the proceeding.

2.         The application be otherwise dismissed.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

The nature of the proceeding

1                     This proceeding raises issues of the effect of certain provisions of the Trade Practices Act 1974 (Cth) (‘the Trade Practices Act’) in relation to the packaging and labelling of two cordial products.  The applicant, the Australian Competition and Consumer Commission (‘the Commission’) contends that the labels concerned made representations to the public that were misleading or deceptive or likely to mislead or deceive (s 52(1)), falsely represented that the products were of a particular composition (s 53(a)) and were liable to mislead the public as to the nature or characteristics of the products (s 55). 

2                     Among the issues that arise are issues as to the nature of the relief, if any, that should be granted.  It is not open to the Court to impose any financial penalties in respect of contraventions of the provisions of the Trade Practices Act invoked.  The Commission sought declaratory and injunctive relief and costs.

3                     The focus of the respondent was on the presence on the labels of the two products of pictures of fruit, when the products themselves did not contain any extract of the fruit depicted.  Both parties placed reliance on the regulatory history of the use of pictures of real fruit on labels. 

The products

4                     The respondent is a manufacturer and seller of a wide range of products, including cordials.  Its range of cordials includes some containing extracts from fruit that are used to supply the flavour of the cordial, at least in part.  Other cordials may contain fruit extracts, but they will not be from fruits of the intended flavours.  The intended flavours will be imparted by the addition of artificial flavouring agents.

5                     In October 2001, the respondent began to sell to supermarkets in Australia, for sale to members of the public, a product called ‘banana mango flavoured cordial’.  This product was packaged in 2 litre clear plastic containers, each with an integral handle.  The product is clearly visible through the clear plastic.  It is a translucent liquid of a vivid yellow, with a slight greenish tinge.  What appears to have been intended as the principal label faces the viewer if the handle of the container is to the viewer’s right.  The background to this label appears to be a colour photograph, showing parts of at least three bananas and parts of at least six mangoes.  It must be said that the mangoes depicted are not readily recognisable as such, because substantial parts of their skins are shown as an orange colour, with which I am unfamiliar as a colour associated with mangoes. 

6                     Overlying the picture are various features.  At the top, is a red banner with the word ‘new’.  This banner slightly overlaps a larger blue banner with the words ‘jug pack’.  Again, slightly overlapping that and situated beneath it is a caricature logo, apparently intended to depict a happy monkey.  In one hand, the monkey is grasping a representation of a half-peeled banana.  Below the monkey’s head and right hand is a blue banner, bordered in orange, with the words ‘go bananas’.  Immediately below that banner is a small caricature depiction of a banana.  In about the middle of the label is a panel with a white background, a blue stripe across its top and a red stripe across its bottom, with the word ‘Cottee’s’ against the white background between the two stripes.  The lower part of this panel overlaps a large blue panel, containing the words ‘banana mango’ in large type and the words ‘flavoured cordial’ immediately underneath, in type that is considerably smaller.  Contiguous with this banner is a banner of paler blue with the words ‘Australia’s favourite cordial’ in type larger than that of the words ‘flavoured cordial’, but smaller than the words ‘banana mango’.  In the bottom right hand corner of the label is the information as to the quantity of the product, ‘2 Litres’.  With the exception of these words and the brand name ‘Cottee’s’, all of the lettering on the front label is printed in upper case.  With the exception of the brand name ‘Cottee’s’, which is printed in black, all of the words appearing on the front label are printed in white. 

7                     The label on the back of the container, with the handle to the left of the viewer, has an upper panel of deep blue and a lower panel of pale blue.  The upper panel contains the Cottee’s brand logo, the words ‘jug pack’, some puffery and some instructions.  The lower panel contains the words ‘banana mango flavoured cordial’.  Again, the words ‘flavoured cordial’ appear below and in type smaller than the words ‘banana mango’.  In considerably smaller type are some further instructions, a list of ingredients, some manufacturer’s information and some nutritional information.  The information as to volume is repeated and there is a bar code for pricing purposes.  The list of ingredients reveals the product to contain water, sugar, food acids (330, 331), reconstituted fruit juice (apple or pear), flavours, preservatives (211, 223) and colour (102).  As is apparent from the list of ingredients, and common ground in the present proceeding, the banana mango flavoured cordial contains no element derived from either bananas or mangoes. 

8                     Also in about October 2001, the respondent began to distribute to supermarkets in Australia, for sale to members of the public, a product called ‘apple kiwi flavoured cordial concentrate’.  This product is packaged in a 375 millilitre aluminium can.  The contents of the can are not visible from the outside.  The label covers the surface of the can, with the exception of the top and the bottom.  To read most of the inscriptions on the label, it is convenient to lay the can on its side.  This was because it was intended to present the product to potential purchasers by stacking the cans horizontally in gravity feed dispensers.  Again, there is what is apparently a photographic depiction of fruit, used as background to the label.  The fruit concerned are apples and kiwi fruit.  It is possible to discern parts of at least three apples and seven kiwi fruit.  The apples are predominantly red and appear as whole fruit.  The kiwi fruit all appear as cut, so that green flesh and black seeds are shown.  The base colours for panels or banners on the label are dark blue and light blue, similar to those appearing on the banana mango flavoured cordial, as well as light green and red.  The Cottee’s brand logo appears in two places, in a form similar to that on the banana mango flavoured cordial.  To the right of each brand logo, there is a line drawing of a bottle with an integral handle, into which is being poured a can of light green liquid, surrounded by a red circular band, containing the words ‘jug pack refill’.  To the left of each brand logo, there is the instruction ‘makes 2 litres just add water’.  More importantly, the words ‘apple kiwi’ are printed in white against the deep blue background on two occasions, in different sizes.  In each case, immediately beneath them in the light green appear the words ‘flavoured cordial’ in smaller type.  Below them, again in the light green, appears the word ‘concentrate’, in type that appears to be of the same size as the words ‘apple kiwi’.  On one side of the label, the words ‘Australia’s favourite cordial’ are again printed against the pale blue background, immediately under the word ‘concentrate’.  The label also contains nutritional information, instructions, puffery and manufacturer information.  The list of ingredients appears in the colour of the aluminium surface of the can, on a panel that is of the light green colour.  This makes it hard to read without turning the can so that light reflects on the lettering.  The ingredients list shows that the product contains water, sugar, food acid (330), apple juice concentrate, preservative (211), flavours and colours (102, 133).  It therefore appears, and is common ground in the proceeding, that the apple kiwi flavoured cordial concentrate does contain a significant quantity of an element derived from apples, but does not contain anything derived from kiwi fruit.

9                     On 22 March 2002, this proceeding was commenced by the filing of the application and statement of claim.  Even before the filing of the application, the respondent reacted quickly to remove the cause of complaint.  It ceased to manufacture or to distribute the banana mango flavoured cordial altogether.  To some extent, it did so because it regarded the product as not having been very successful.  The respondent continued to manufacture and distribute the apple kiwi flavoured cordial concentrate, but changed the labelling.  The result is that, since 14 March 2002, the respondent has not distributed, to supermarkets or otherwise, the packaging about which the Commission complains in this proceeding.

The regulatory history

10                  Counsel for the Commission tendered in evidence a collection of Commonwealth and State regulations governing food labelling.  He also provided a detailed analysis of these regulations as part of the Commission’s written contentions of fact and law.  It is sufficient to say that, from the early 1960’s until 2000, initially by means of regulations in the various states and subsequently under Commonwealth regulations, the use of a pictorial representation indicating or suggesting the presence of fruit on a label attached to a package containing flavoured cordial was prohibited specifically.  In the case of cordials containing specified minimum percentages of fruit products, the display of pictures of the fruits concerned was permitted.  Cordials that did not contain extracts of fruit for flavouring purposes, but only artificial flavours, were required to use the label ‘flavoured cordial’. 

11                  In 2000, the regulatory environment changed.  Instead of specific prohibitions on the use of pictures of fruit, the question of truth in labelling came to be dealt with by reference to the provisions of the Trade Practices Act and similar State legislation.  That is to say, the question became not whether a particular element of a label infringed a specific provision, but whether the label, in the context of the package, misrepresented the composition or attributes of the package in a way that misled or deceived, or was likely to mislead or deceive members of the public.

12                  As a result of the change in the regulatory environment, the respondent decided that it could use pictorial representations on the labels of the two products with which this case is concerned, if it took steps to ensure that it did not mislead or deceive members of the public.  The principal decision-maker in this respect was Glen Ian Rogers, the Product and Process Development Manager in the Food and Beverage Division of the respondent.  He took the view that simply to publish pictures of bananas and mangoes on the label of the banana mango flavoured cordial, and to publish pictures of kiwi fruit on the label of the apple kiwi flavoured cordial concentrate, would be to mislead and deceive, unless each label itself showed that the cordial concerned did not contain banana or mango products or kiwi fruit products respectively.  Mr Rogers took the view that to use the phrase ‘flavoured cordial’ prominently on the labels would be a significant step to inform potential buyers that there was no real banana or mango in the one, or real kiwi fruit in the other.  Mr Rogers took this view because of the history of the use of the phrase ‘flavoured cordial’ to indicate that a cordial was artificially flavoured, as had been required by regulations.  He took into account the list of ingredients on the label of each product.  In the case of the banana mango flavoured cordial, he also took into account the fact that the container was transparent and that the  contents would appear to most consumers to be artificially coloured.

The relief sought

13                  By its further amended application, filed on 16 June 2003, the Commission sought relief in the following form:

‘1.        A declaration that the Respondent, by supplying to supermarket
            retailers in Australia from October 2001 until 14 March 2002 for
            sale to the public flavoured cordial under the Cottee’s brand with
            front panel labelling containing:

            (a)        the words “Banana Mango Flavoured Cordial”;

            (b)        pictorial representations of bananas and mangoes; and

            (c)        a motif comprising a monkey character with a peeled and
                        unpeeled banana and the words “Go Bananas”

            (“the Banana Mango cordial product”), thereby representing to those
            retailers and the public that the Banana Mango cordial product was
            made from and contains bananas and mangoes, when in fact the
            Banana Mango cordial product was not made from and did not
            contain bananas or mangoes, has, in trade or commerce engaged in
            conduct:

            (i)         that was misleading or deceptive or was likely to mislead or
                        deceive contrary to section 52 of the Act;

            (ii)        in connection with the supply or promotion of the Banana
                        Mango cordial product which falsely represented that the
                        Banana Mango cordial product was of a particular
                        composition contrary to section 53(a) of the Act; and

            (iii)       that was liable to mislead the public as to the nature or
                        characteristics of the Banana Mango cordial product contrary
                        to section 55 of the Act.

2.         A declaration that the Respondent, by supplying to supermarket
            retailers in Australia from October 2001 until 14 March 2002 for
            sale to the public flavoured cordial under the Cottee’s brand with
            labelling containing:

            (a)        the words “Apple Kiwi Flavoured Cordial Concentrate”; and

            (b)        pictorial representations of kiwi fruit and apples,

            (“the Apple Kiwi cordial product”), thereby representing to those
            retailers and the public that the Apple Kiwi cordial product was made
            from and contains kiwi fruit as well as apples, when in fact the Apple
            Kiwi cordial product was made from and contained apples and not
            kiwi fruit, has, in trade or commerce, engaged in conduct:

            (i)         that was misleading or deceptive or was likely to mislead or
                        deceive contrary to section 52 of the Act;

            (ii)        in connection with the supply or promotion of the Apple Kiwi
                        cordial product which falsely represented that the Apple Kiwi
                        cordial product was of a particular composition contrary to
                        section 53(a) of the Act; and

            (iii)       that was liable to mislead the public as to the nature or
                        characteristics of the Apple Kiwi cordial product contrary to
                        section 55 of the Act.

3.         An injunction restraining the Respondent, whether by itself, its
            servants, agents or otherwise howsoever, from supplying the Banana
            Mango cordial product to retailers or to the public unless the Banana
            Mango cordial product is made from bananas and mangoes.

4.         An injunction restraining the Respondent, whether by itself, its
            servants, agents or otherwise howsoever, from supplying the Apple
            Kiwi cordial product to retailers or to the public unless the Apple
            Kiwi cordial product is made from kiwi fruit as well as apples.

5.         An injunction restraining the Respondent whether by itself, its
            servants, agents or otherwise howsoever, in trade or commerce, from
            promoting or supplying any cordial or drink product to retailers or
            to the public labelled with pictures of real fruit where the cordial or
            drink product is not made from or contains the fruit pictured.

6.         Alternatively, an injunction restraining the Respondent for a period of
            12 months from the date of this order whether by itself, its servants,
            agents or otherwise howsover, [sic] in trade or commerce, from
            promoting or supplying any cordial product to retailers or to the
            public which represents that the cordial product is made from or
            contains fruit that the product is not made from or contains.

7.         An injunction restraining the Respondent whether by itself, its
            servants, agents or otherwise howsoever, in trade or commerce, from
            promoting or supplying any fruit cordial or drink product to
            retailers or to the public unless the contents of the container
            correspond with the representations in the labelling on the container
            as to the contents of the container.

8.         An injunction requiring the Respondent to implement a program that
            complies with Australian Standard on Compliance Programs AS 3806
            designed to prevent the repetition of the conduct declared to be in
            contravention of Part V of the Act within 3 calendar months of the
            Court’s order.

9.         Costs.

10.       Such further or other orders as the Court considers appropriate.’

The pleadings

14                  The Commission’s amended statement of claim, filed on 8 July 2002, is quite short.  After pleading a description of the label of the banana mango flavoured cordial, which referred to pictorial representations of bananas and mangoes and to the ‘Go Bananas’ logo, the Commission alleged as follows:

‘4.        The Respondent represented to retailers and to the public by means
            of the said labelling that the Banana Mango cordial product:

            (a)        was made from bananas and mangoes; and/or

            (b)        contained bananas and mangoes.

PARTICULARS

            The front label of the Banana Mango cordial product:

            (a)        prominently contains the words “banana mango” and
                        “flavoured cordial”; and

            (b)        also contains pictorial representations of real bananas and
                        mangoes; and

            (c)        also contains the motif “Go Bananas” comprising a monkey
                        character with a peeled and unpeeled banana.

5.         The representations referred to in paragraph 4 were false and/or
            were misleading or deceptive, or were likely to mislead or deceive,
            in that the Banana Mango cordial product:

            (a)        was not made from bananas and mangoes; and/or

            (b)        did not contain bananas and mangoes.’

15                  After a description of the label of the apple kiwi flavoured cordial concentrate, which referred to pictorial representations of kiwi fruit and apples, the Commission alleged:

‘7.        The Respondent represented to retailers and to the public by means
            of the said labelling that the Apple Kiwi cordial product:

            (a)        was made from apples and kiwi fruits; and/or

            (b)        contained apples and kiwi fruits.

PARTICULARS

            The front label of the Apple Kiwi cordial product:

            (a)        prominently contains the words “apple kiwi” and “flavoured
                        cordial concentrate”; and

            (b)        also contains pictorial representations of real apples and kiwi
                        fruits.

8.         The representations referred to in paragraph 7 were false and/or were
            misleading or deceptive, or were likely to mislead or deceive, in that
            the Apple Kiwi cordial product:

            (a)        was not made from kiwi fruits; and/or

            (b)        did not contain kiwi fruits.’

16                  The pleading then referred to ss 52(1), 53(a) and 55 of the Trade Practices Act.  Attached to the amended statement of claim were photographs of the front and rear labels of the banana mango flavoured cordial and the label of the apple kiwi flavoured cordial concentrate respectively. 

17                  In its defence, the respondent admitted supplying the banana mango flavoured cordial and the apple kiwi flavoured cordial concentrate to supermarkets nationally from October 2001 to 14 March 2002.  It admitted the elements of the labels pleaded by the Commission.  It admitted that the banana mango flavoured cordial was not made from and did not contain bananas or mangoes and that the apple kiwi flavoured cordial concentrate was not made from and did not contain kiwi fruits.  In relation to the banana mango flavoured cordial, the respondent pleaded:

‘(b)      … that it represented to retailers and to consumers that the
            Banana Mango Flavoured Cordial was a flavoured cordial product
            which had the flavour of bananas and mangoes.

PARTICULARS

                        (A)       The label on the front and back of the Banana Mango
                                    Flavoured Cordial described the cordial product as
                                    “Banana Mango Flavoured Cordial”.

                        (B)       Retailers and consumers were aware, as is the fact,
                                    that a flavoured cordial product is and was at all
                                    material times a product which contains flavouring
                                    substances that give the product the flavour of the
                                    item or items named and/or depicted on the labelling
                                    of the product and that a flavoured cordial product
                                    need not be made from the item or items named and/or
                                    depicted on the labelling.

                        (C)       The ingredients list on the label of the Banana Mango
                                    Flavoured Cordial listed flavours as an ingredient and
                                    did not list bananas or mangoes.

                        (D)       The cordial, which could be seen through the
                                    packaging, did not have the appearance of banana or
                                    mango juice.’

18                  As to the apple kiwi flavoured cordial concentrate, the respondent said:

‘(b)      … that it represented to retailers and to consumers that
            the Apple Kiwi Flavoured Cordial was a flavoured cordial product
            which had the flavour of apples and kiwi fruits.

PARTICULARS

                        (A)       The labelling on the container of the Apple Kiwi
                                    Flavoured Cordial described the cordial product
                                    as “Apple Kiwi Flavoured Cordial”.

                        (B)       Retailers and consumers were aware, as is the fact,
                                    that a flavoured cordial product is and was at all
                                    material times a product which contains flavouring
                                    substances that give the cordial the flavour of the
                                    item or items named and/or depicted on the labelling
                                    of the product and that a flavoured cordial product
                                    need not contain and need not be made from the item
                                    or items named and/or depicted on the labelling.

                        (C)       The ingredients list on the container of the Apple Kiwi
                                    Flavoured Cordial listed flavours and apple juice
                                    concentrate as ingredients and did not list kiwi fruit.’

19                  It is apparent from its pleading, and from the form of the declarations sought, that the Commission relied on three elements of the banana mango flavoured cordial label as bringing about the contraventions of the Trade Practices Act that it alleged.  These elements were the presentation of pictures of real bananas and mangoes and the use of the ‘Go Bananas’ logo, in conjunction with the words ‘banana mango flavoured cordial’.  In the case of the apple kiwi flavoured cordial concentrate, there was no equivalent of the ‘Go Bananas’ logo, and the emphasis was on the pictorial representation of real kiwi fruit in conjunction with the words ‘apple kiwi flavoured cordial concentrate’.  The respondent attempted to overcome the effects of these elements by reliance on a particular meaning of the phrase ‘flavoured cordial’ and the ingredients list in each case, as well as the appearance of the cordial itself in the case of the banana mango flavoured cordial.

20                  At the trial, it became common ground that the list of ingredients would not prevent the labels being misleading and deceptive if they were otherwise so.  The respondent conceded that the small print of the ingredients list, and the fact that it provided information as to the absence of the relevant fruit only by omission from the list, made it necessary to disregard the ingredients list on a consideration of the issues.  The respondent’s defence therefore rested upon the phrase ‘flavoured cordial’ and, in the case of the banana mango flavoured cordial, the appearance of the product itself.

21                  The issues were clear and simple.  They involved an examination of the packaging of each product and the formation of a view as to whether the packaging misrepresented the nature or composition of the product concerned.  As the pleadings stood and still stand, no issue arises of the packaging of either product acquiring a misleading or deceptive character by reason of being placed in any particular context within a supermarket. 

The evidence

22                  Three witnesses were called.  On behalf of the Commission, one of its project officers, Heidi Ann Snell, gave evidence of cordial products on display in some supermarkets.  I ruled inadmissible a large part of her evidence, which was said by counsel for the Commission to be directed to the context in which the two products the subject of this proceeding were displayed for sale.  Because the Commission had pleaded only that the labels of the two products by themselves gave rise to misrepresentations, and not that they gave rise to misrepresentations as a result of being displayed in conjunction with other goods, the question of context was irrelevant.  Further, it was not shown that the respondent was in any way concerned with the manner in which its products were to be displayed, with the exception that there was some material, described below, about the ‘Go Bananas’ campaign.  I did accept the tender through Ms Snell of a collection of labels of various products, on the basis that it might be said that the labelling of other products provided some information to consumers generally, against which they could evaluate the labels of the particular products.  The respondent also tendered its own collection of labels for the same purpose.  In the result, I have not found the labels of other products to be particularly helpful.

23                  The Commission also called to give evidence Gregory John Whitwell, Associate Professor of Marketing in the Department of Management, Faculty of Economics and Commerce, at the University of Melbourne.  Counsel for the respondent objected to Associate Professor Whitwell’s evidence, on the basis that it did not amount to an expert opinion.  I accept that the subject matter of Associate Professor Whitwell’s evidence is within his specialised knowledge, based on his study and experience, and that the opinions he expressed are wholly or substantially based on that knowledge.  Although much of what Associate Professor Whitwell said is common knowledge, this is no longer a factor rendering opinion evidence inadmissible.  See ss 76, 79 and 80(b) of the Evidence Act 1995 (Cth). 

24                  I have no difficulty in accepting the following propositions, which emerged from Associate Professor Whitwell’s evidence.  The purpose of a label on a consumer product is to make the product attractive to potential consumers.  In doing this, pictures are often important in attracting attention, helping to persuade and assisting memory.  They may be more effective than words.  Where, as in the case of cordial, many consumers are likely to devote little time or effort to a decision about whether, or what, to purchase, reliance on a visual impression, formed after a brief observation, might be decisive. 

25                  The only witness called on behalf of the respondent was Mr Rogers.  His evidence concerned the regulatory history and its role in the decision, which he made, to authorise the labelling of the two cordial products in the way I have already described.

26                  As I have already mentioned, the various regulations that formerly governed food product labelling were in evidence.

Were there misrepresentations?

27                  To a considerable extent, both parties to the present proceeding attempted to perpetuate the effect of aspects of the former regulatory regime.  The Commission sought to establish that the use of pictorial representations of fruit on the label of a product that did not contain any product of that fruit was itself a misrepresentation as to the contents of the product.  The respondent sought to establish that the use of the description ‘flavoured cordial’ was sufficient to communicate to consumers generally that the product concerned was artificially flavoured, and not flavoured by means of the use of the products of real fruit.  In my view, both attempts failed. 

28                  In dealing with the likely effect on consumers generally of a representation, it is necessary to have in mind some model of consumer.  Inevitably, in relation to cordial products, there will be a range of consumers.  At one end, there will be those to whom the content of the product is of very great relevance.  They may be people who, or whose children, have allergies to particular ingredients or tendencies to suffer behaviour modification as a result of consuming particular ingredients.  Such consumers are likely to have a high ‘involvement’ (in Associate Professor Whitwell’s terminology) in the decision whether to purchase a particular product.  They are likely to examine a list of ingredients with great care, in order to ensure that the one ingredient they seek to avoid is absent.  As a consequence, they are unlikely to be influenced by a fleeting impression, whether created by pictures or otherwise.  At the other end of the range will be people who care not at all about the content of the product.  It makes no difference to them whether it contains real fruit of the kind suggested by the label or not.  Those consumers will not be misled by the label either, because any representation made by the label will not be operative in their decision.  Between these two ends of the range, there will be many consumers who are interested, to a greater or lesser degree, in the ingredients of the products they buy.  Although interested, a significant body of those consumers will not consult a list of ingredients.  They will not see the need to invest sufficient time or effort in the purchase of a product which is likely to be relatively cheap and therefore easily replaceable if it turns out not to suit their taste.

29                  In my view, there is likely to be a significant element among purchasers of cordial products who would prefer to purchase a cordial flavoured by means of real fruit and who are prepared to make their decisions on the basis of a fleeting impression from the labelling and packaging of the product, rather than to consult the ingredients list.  The question, therefore, is whether persons of that kind are liable to be influenced in their purchase of the products the subject of this proceeding by being induced by the labelling and packaging to believe that those products contain and are flavoured by real fruit.  In answering this question, it is obvious that the entirety of the packaging and labelling must be taken into account.  It is not sufficient to say that the presence of pictures of real fruit, even in the absence of any other feature, would convey in every case a representation that the product contained that fruit.

30                  I am of the view that the front of the banana mango flavoured cordial container is likely to convey to some consumers that the cordial contains extracts of bananas and mangoes.  The most important element in conveying that impression is the pictorial representation of bananas and mangoes.  To a lesser extent, the ‘Go Bananas’ logo, particularly the words ‘Go Bananas’ themselves, would enhance that impression.  The ‘Go Bananas’ logo was intended to be used in the marketing of a range of the respondent’s products, of which the common element was to be the flavour of bananas.  Counsel for the respondent endeavoured to argue that the logo was not capable of conveying a representation that the product concerned contained any extract of real bananas, because of the colloquial meaning of the phrase.  It is true that ‘Go Bananas’ is often used to mean to lose inhibitions.  The Macquarie Dictionary defines it as a colloquial expression meaning ‘to become uncontrollably angry.’  It is also undeniable that the use of the word ‘bananas’, especially in conjunction with a product name that incorporates the word ‘banana’ is apt to contribute to an impression that the real fruit itself has been used in the product.  In conjunction with the use of the words ‘banana mango’ in large print (the largest on the label), the pictures of bananas and mangoes and the ‘Go Bananas’ logo would convey to some reasonable potential purchasers the impression of real bananas and real mangoes.

31                  Although the colour of the product is artificial in appearance, I do not think that it sufficiently dispels the impression that would be created otherwise.  There is no reason why a naturally-flavoured product could not be made to look an artificial colour by the addition of other additives.  For reasons that I give in [33], I do not think that the use of the phrase ‘flavoured cordial’ in smaller type than ‘banana mango’, either alone or in conjunction with the colour of the product, is sufficient to dispel the impression of real fruit. 

32                  The question is much more difficult in relation to the apple kiwi flavoured cordial concentrate.  This is because of the depiction of two kinds of fruit, one of which is present in the product.  It is also because of the absence of anything equivalent to the ‘Go Bananas’ logo.  The pictures of kiwi fruit are sufficiently prominent, and sufficiently recognisable, to create an impression in the minds of some reasonable consumers as to the presence of extracts of kiwi fruit in the product.  If the can were displayed in a vertical position, the effect would be greater than if it were displayed in a horizontal position.  Even if this were done, I would still regard the presence of pictures of cut kiwi fruit as conveying the impression of the presence of real kiwi fruit in the product.  That impression would be marginal if the major part of the label, containing the words ‘apple kiwi flavoured cordial concentrate’ were presented directly to the viewer’s eye.  If the use of a gravity feed dispenser had the effect of making it more difficult to present a particular side of the can consistently, as I suspect it would, the impression would be heightened.  For reasons that I give in [33], the use of the phrase ‘flavoured cordial’, in smaller type than the phrase ‘apple kiwi’ and the word ‘concentrate’, is insufficient to dispel the impression.  There is no issue of the effect of the colour of the product, as it is invisible.  In conjunction with the use of the words ‘apple kiwi’ in the name of the product, I am of the view that the pictures of cut kiwi fruit on the can of apple kiwi flavoured cordial concentrate would convey to some reasonable prospective purchasers a representation that the product contained some extract of real kiwi fruit.

33                  There was no evidence to suggest that the use of the phrase ‘flavoured cordial’ would be likely to convey to all, or even to most, reasonable consumers the proposition that each of the two products was not a cordial flavoured by means of the real fruit represented.  The evidence does suggest that, because of the previous regulatory environment, the phrase ‘flavoured cordial’ does have something of a technical meaning.  That is not to say that it is a technical meaning likely to be understood by members of the public generally.  Indeed, in my view, there are likely to be many people who would assume that a ‘flavoured cordial’ could be flavoured by the use of real fruit as a flavouring agent.  For these reasons, I reject the respondent’s defence that the use of the phrase ‘flavoured cordial’ was sufficient to overcome any effect that the depiction of real fruit might have. 

34                  On the basis of the overall impression of the packaging and labelling of each of the two products the subject of this proceeding, I am of the view that each was capable of conveying to a significant body of reasonable consumers a representation that the product concerned contained extracts of the real fruit depicted.  In the case of the banana mango flavoured cordial, such a representation was false, in that the cordial contained no extract of banana or of mango.  In the case of the apple kiwi flavoured cordial concentrate, the representation was false, in that the cordial contained no kiwi fruit extract.  In each case, it is likely that some reasonable consumers would be misled or deceived by the representation and influenced by it to purchase the product concerned on the basis that it contained the real fruit represented.  It follows that the Commission has succeeded in establishing that the respondent has contravened ss 52(1), 53(a) and 55 of the Trade Practices Act in respect of each product.  In the absence of evidence that anyone has been misled or deceived, it is appropriate to limit the finding, and any consequent declaration, in relation to the contravention of s 52(1) to a finding of engaging in conduct that was likely to mislead and deceive.

35                  The Commission has not established these contraventions on the basis on which it sought to establish them.  It has not established that the use of pictures of real fruit, by itself, and in all circumstances, will be sufficient to convey a false representation about the contents of the product.  As I have said, it is necessary to examine the whole of the packaging and labelling of the product concerned before a decision can be made.  The real problem, as I see it, is that the respondent did not take sufficient steps in its labelling to overcome the effect of the pictures of fruit.  As I suggested to counsel for the Commission in the course of argument, if the words ‘Australia’s favourite cordial’ were to have been replaced (using lettering of the same size) by the words ‘contains no real banana or mango’ on the banana mango flavoured cordial or the words ‘contains no real kiwi fruit’ on the label of the apple kiwi flavoured cordial concentrate, no contravention would have been established.  Counsel for the Commission accepted this proposition.  The fact that the Commission did not establish a contravention in the terms of the case it put is significant in the context of the relief sought, to which I now turn. 

The declarations

36                  In Australian Competition & Consumer Commission v Francis [2004] FCA 487 at [92] – [119], I set out my views on the practice, apparently well established, of making what would otherwise be meaningless declarations, from which no consequences flow, in cases brought under the Trade Practices Act.  On the basis of what the High Court of Australia did in Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75 (2003) 203 ALR 217, I accepted that the practice of making declarations is to be followed, subject to the fact that a declaration is always a discretionary remedy.  I also concluded that a mere declaration of contravention of a particular provision is, as the majority of the High Court described it in Rural Press at [90], a ‘bad precedent’.  If a declaration is to be made, it should at least contain some indication of how and why the conduct complained of is a contravention. 

37                  I have been troubled in the present case as to whether, in the exercise of the discretion, I should make a declaration at all.  As I have said, the Commission appears to have used this proceeding as an attempt to reintroduce the earlier regulatory environment, in the sense that it wishes to establish that the use of pictures of real fruit as a labelling device is sufficient to give rise to contraventions of the relevant provisions of the Trade Practices Act in every case.  It has not established that proposition, in my view.  Inevitably, a declaration will mention the subject of pictures of real fruit.  It is possible that the Commission might then use such a declaration to persuade others that they are not permitted to use pictures of real fruit in the labelling of any product that does not contain that fruit.  For the Commission to attempt to use a declaration in that way would amount to a misuse of it.

38                  The respondent opted to contest the issue of contravention.  Declarations in an appropriate form will at least establish that it failed in that regard.  On balance, it is appropriate to make declarations, but in a form different from those proposed by the Commission.

39                  In relation to the banana mango flavoured cordial, I propose to make a declaration in the following form:

The respondent, by supplying to supermarket retailers in Australia from October 2001 until 14 March 2002 for sale to the public flavoured cordial under the Cottee’s brand with a label containing:

(a)        the words ‘banana mango flavoured cordial’;

(b)        pictorial representations of bananas and mangoes; and

(c)        a logo containing a caricature of a monkey with a half-peeled banana
            and an unpeeled banana and the words ‘Go Bananas’

and without taking sufficient steps to inform potential purchasers that the cordial did not contain bananas or mangoes, represented to potential purchasers that the cordial contained bananas and mangoes, and thereby in trade or commerce:

(i)         engaged in conduct that was likely to mislead or deceive, contrary to s 52(1);

(ii)        in connection with the supply or promotion of the cordial, falsely
            represented that the cordial was of a particular composition, contrary
            to s 53(a); and

(iii)       engaged in conduct that was liable to mislead the public as to the nature or characteristics of the cordial, contrary to s 55

of the Trade Practices Act 1974 (Cth).

40                  In relation to the apple kiwi flavoured cordial concentrate, I propose to make a declaration in the following terms:

The respondent, by supplying to supermarket retailers in Australia from October 2001 until 14 March 2002 for sale to the public flavoured cordial under the Cottee’s brand with a label containing:

(a)        the words ‘apple kiwi flavoured cordial concentrate’; and

(b)        pictorial representations of kiwi fruit

and without taking sufficient steps to inform potential purchasers that the cordial did not contain kiwi fruit, represented to potential purchasers that the cordial contained kiwi fruit, and thereby in trade or commerce:

(i)         engaged in conduct that was likely to mislead or deceive, contrary to s 52(1);

(ii)        in connection with the supply or promotion of the cordial, falsely
represented that the cordial was of a particular composition, contrary
to s 53(a); and

(iii)       engaged in conduct that was liable to mislead the public as to the nature or characteristics of the cordial, contrary to s 55

of the Trade Practices Act 1974 (Cth).

Injunctions

41                  The injunctions sought in pars 3 and 4 of the further amended application are no longer necessary.  The banana mango flavoured cordial has been removed from the range of products sold by the respondent.  The apple kiwi flavoured cordial concentrate has been repackaged.  The law does not prevent the respondent from selling such a product.  As long as the current packaging does not infringe any of the relevant provisions of the Trade Practices Act, it would be a misuse of the Court’s power to ban the sale of the product.  The terms of the injunctions were inappropriate in any event.  The function of the Court is not to compel the respondent to change the composition of its products.  It is only to ensure that, if they are to be sold, they are to be sold with packaging and labelling that do not misrepresent their contents. 

42                  The injunction sought in par 5 is far too wide.  It would seek to accomplish what the Commission has failed to accomplish in this proceeding, namely a complete prohibition on the use of pictures of fruit in labelling, unless the product concerned contained the fruit depicted.  The Commission is not entitled to any such order.  The injunctions sought in pars 6 and 7 are also far too broad and would constitute a totally unnecessary restraint on the respondent’s freedom to manufacture and sell its products.  As I have said, the issue is misrepresentation as to the contents of the products.

43                  I am aware that s 80(4)(a) of the Trade Practices Act removes from being a governing consideration the requirement that there be threatened or intended conduct in determining whether an injunction should be granted.  Nonetheless, the absence of any threat or intention to continue the conduct concerned must be relevant to the exercise of the discretion whether to grant an injunction.  In the present case, as I have said, the respondent has discontinued the banana mango flavoured cordial altogether.  It is unlikely to resume the manufacture and sale of that product.  The evidence was that the product itself was not regarded as of a sufficiently high standard for it to continue to be part of the respondent’s range.  In view of the findings and the declaration made in this proceeding about the apple kiwi flavoured cordial concentrate, it is extremely unlikely that the respondent would adopt the earlier packaging for that product again.  An injunction restraining the respondent from continuing to make the same representations in relation to the same products would serve no purpose at all.

44                  The injunction sought in par 8 of the further amended application would impose on the respondent a requirement to implement a compliance program in accordance with Australian Standard AS 3806.  The Commission made no attempt to establish whether or not the respondent has such a program.  The respondent’s evidence is that Mr Rogers is well aware of the obligation of the respondent to comply with the provisions of the Trade Practices Act.  In making the decision to insert the words ‘flavoured cordial’ in the label of each product, Mr Rogers was endeavouring to ensure compliance.  It is true that he did not seek the advice of lawyers before making the decision.  It is also unclear just what legal advice might have contributed to an assessment of whether labels would give rise to a misrepresentation.  In my view, the need to require the implementation of a compliance program has not been established.

45                  For these reasons, I would not make any of the injunctions sought by the Commission, or any injunction in any form in the present proceeding.

Costs

46                  As the losing party in this proceeding, the respondent would normally be expected to pay the Commission’s costs of the proceeding, in accordance with the usual rule that costs follow the event.  Section 43(2) of the Federal Court of Australia Act 1976 (Cth) makes it clear that, in the absence of a specific statutory provision, the costs of a proceeding are in the discretion of the Court.  In the present case, I am of the view that it would be unjust to visit upon the respondent the whole of the Commission’s costs of the proceeding.

47                  From an early stage, right through to the trial, it has been apparent that the issues raised by the pleadings in this case were simple.  At a directions hearing at an early stage of managing the case, I drew the attention of counsel for the Commission to the fact that the central issue raised could be determined by an examination of the labels and the packages, and that only about half a day would be necessary for the trial.  Without seeking to amend its statement of claim to raise additional issues, the Commission pressed consistently for the case to be run in a far more complex manner.  It pursued issues of the discovery of documents and sought to persuade the Court that the parties needed to file witness statements and to call expert witnesses.  It sought to introduce evidence which was inadmissible because of the state of the pleadings.  The Commission’s conduct of the case had the effect of making it more complex and longer than it needed to be.  I do not think that the Commission should be entitled to the additional costs thereby imposed on the respondent of having to prepare to meet unnecessary evidence.  The case could have been conducted perfectly well without the evidence of Ms Snell.  Although I took the view that the evidence of Associate Professor Whitwell was admissible, it was of marginal assistance and the case would have been determined in the same way without it.  The trial was perhaps longer than a half day, because of the desire of the respondent to introduce evidence of the regulatory history and of the process by which the decision to approve the labelling of the two products was made.  As I have said, the tender of labels of other products by both parties was something that I did not find very helpful. 

48                  For these reasons, I take the view that an order for costs in favour of the Commission should not be for the whole of its costs.  Rather than impose on a taxing officer the need to sort item from item, to determine what ought not to have been incurred, it is better that I make a global assessment.  On the basis of my impression as to the extent of the extra costs generated by the manner in which the Commission conducted the case, I take the view that the respondent is entitled to a discount of 30 per cent of what it would otherwise have been obliged to pay.  I therefore propose to order that the respondent pay 70 per cent of the Commission’s costs of the proceeding.

Conclusion

49                  The orders that I make, therefore, will be declarations in the forms I have set out in [39] and [40] above, an order that the respondent pay 70 per cent of the Commission’s costs of the proceeding, and an order otherwise dismissing the application.

Associate:

Dated:              30 April 2004