Berlaz Pty Ltd v Howe and Company Pty Ltd

[1988] FCA 745

JUDGMENT No. .MA%

IN THE FEDERAL COURT OF AUSTRALIA	1
QUEENSLAND DISTRICT REGISTRY	1 QLD G372 Of 1988
GENERAL DIVISION	)

BETWEEN:	BERLAZ PTY LTD
AND :	HOWE & COMPANY PTY LTD

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+kf 2 1 DEC1988 g

PINCUS J.

REASONS FOR JUDGMENT

This is an applicatlon for an interlocutory injunction in proceedings alleging breaches of s.52 and s.53(a) of the Trade Practices Act 1974. The applicant is a distributor of certain leather care products made in New Zealand, and the respondent the largest supplier of upholstery leather in Australia. The applicant’s complaint is the respondent is falsely denigrating the products the applicant distributes.

other hand, as to the central factual question - whether the	products distributed by the applicant have positively harmful
characteristics - the evidence is virtually all one way. There is positive and detailed evidence in favour of the applicant on that point and nothing specific against it. One might have expected that if there were any solid reason to think the products
distributed by the applicant to be harmful to leather, the
respondent could have come up with some specific examples of
harmful effects. It did not do so, nor did it suggest that an adjournment should be granted to enable it to fill the gap. What follows as to the facts, however, is based on the material presently before the Court and (although I do not trouble repeatedly to say so) is written with a consciousness that the evidence at the trial might throw a different light on the matter.

The material filed on behalf of the applicant is rather more elaborate than that filed on behalf of the respondent; the latter is somewhat sketchy. It is necessary to keep in mind that the proceedings are of an interlocutory character only and that what I have to say about the facts is merely provisional. On the

The leather care products in question go under the brand

name Pelle and are manufactured in New Zealand by a company called Fine Leather Care Products Ltd; they are sold in aerosol cans, the

propellant being a mixture of butane and propane.

On 4 February 1987 after some preliminary discussions, MC Bruce Trevena, the managing director of the applicant, wrote to a MC Fennell of the respondent inquiring whether the Pelle range of leather care products had been tested by or on behalf of the respondent. At that stage it was planned to launch the range in

Australia in March. Mr Fennell replied to MC Trevena's letter by phoning to say that the respondent's technicians had not completed their tests; he also asked that consideration be given to packing the Pelle products under the respondent's label.

In March 1987, Mr Trevena again wrote to MC Fennell

about he Pelle range, asking for an indication that he

respondent would accept the product as a cleaning system on Howe
finished upholstery leathers. The letter also further discussed
the possibility of the Pelle range's being marketed by the

respondent.

In May 1987, a firm of consulting textile technologists,

David J. Heffer and Associates, prepared a report	on the Pelle
range, saying, among other things, that there were	no "negative

side effects". From my reading of the report, it seems to say

that to the extent that the products, properly used, have any

effect at all on leather goods, that effect is beneficial. The

report was ent o the respondent and there were further

discussions between Mr Trevena and the respondent represented by

NK Van ROO. On 17 July 1987, Mr Van ROO sent a letter to Mr

TKeVena with respect to Pelle leather care products, including the following:

"We	can acknowledge and agree that the product as
tested has extremely good results. However at this
stage we are not prepared to put our recommendation or endorsement in writing.
In November 1987 there was issued a magazine called "The

Australasian Supplier". It included a section on upholstery

leathers "sponsored" by the respondent and others. With respect

to care of leather, the text included the following:

"Regular cleaning can be done simply by using a damp

cloth, taking care not o soak the leather. Modern

leathers do not require to be 'fed' and therefore

the temptation to apply saddle soap or wax polishes

should av ided. be Spray olishes ould be

avoided at all costs as these contain silicone and

after a period of time will produce an unpleasant

sticky surface."

The applicant particularly objects to the last sentence

just quoted, on the basis that one or more of its products could

be described as a "spray polish". "Silicone" is a name applied to a category of substances consisting of large organic molecules containing the element silicon. According to Mr Trevena, Pelle

products do not contain any such substance.

The passage just quoted was not included in the magazine

for the first time in November 1987. It had been included in an earlier issue put out in April or Nay 1987. However, the applicant did not object to the earlier issue, because it contained also a special supplement concerning Pelle products, which was of a laudatory character.

About the same time as the issue of the magazine to

which exception is taken appeared, a furniture manufacturer called

Moran of Melbourne Pty Ltd sent a circular to retailers about

Pelle leather cleaner informing them that there had been discussions between "Bridge of Weir" Leather Company and Howe Leather regarding Pelle products and that the managing director of

"Bridge of Weir" advised against their use:

"due t o the possible breakdown of the finishes on

lea r,	caused	by	the	the	aerosols	r
propellants".

On 14 December 1987 Nr Trevena wrote to the respondent complaining

about this and saying that MC Trevena had been told by MC John Moran that the letter was circulated at the request of the respondent.

MC Harrison Q . C . , with whom MC Baston appeared for the applicant, pointed out that one would have expected the assertion just mentioned to be challenged if it were untrue; the respondent appears not to have denied its responsibility for the circular put out by Moran of Melbourne Pty Ltd.

According to Mr Trevena, the respondent has, in 1988, published brochures about care of leather, including the sentence quoted and referred to above concerning spray polishes containing silicone. It has also affixed labels to leather products urging people not to use "spray packs" for leather care and suggestlng that dirt be removed by using a soft cloth dampened with warm water and "Softly" or "Howe Leather Cleaner".

The applicant says there has been, this year, a
considerable downturn in the sales of Pelle products and that its

agents have shown a tendency to give the product up. As an

example, Edmonds Howie Pty Ltd of North Cheltenham, Victoria wrote	in July 1988 to Mr Trevena resigning as the applicant's Melbourne
agent and saying, among other things, that "both John Moran and Howe Leather companies have hindered the acceptance of the product
...

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One of the points taken on behalf of the respondent by

MC McMurdo was that the situation complained of has now existed

for well over a year. MC Harrison, however, submits that I should infer that this application was begun (on 30 November 1988) in response to more recent events.

In August 1988, at a meeting of the Western Australian Furniture Guild, according to information given to Mr Trevena, MC Fennel1 again said that Pelle products were not suitable for use on upholstery leather, because of the propellant. On 30 September

1988, solicitors for the applicant wrote to the	respondent
complaining of some of the matters mentioned above, and	in

particular of the suggestion that "Spray polishes should be avoided at all costs as these contain silicone". A retraction was

sought. On 17 October 1988 solicitors for the respondent wrote in

a conciliatory fashion offering to print a statement "to mitigate

the aspects unsatisfactory to your client". The applicant's

solicitors replied making what seem to me rather extreme

suggestions as to the form of the retraction and got no response. After further unproductive correspondence, these proceedings were begun.

1. Labels

Mr Harrison pressed for an order that the respondent be

required to ask makers of leather goods to whom it supplied

leather care labels not to affix them pending the trial of these proceedings. The basis of the argument is that the label falsely

implied that "spray packs" are harmful to leather.

The claim is an unusual one, in that the form of label

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does not mention Pelle products by name, and the respondent is

said to be acting unlawfully in advising, without giving a reason,

against the use of a whole category of	products.	It is as if a
car manufacturer put in its handbook:	"Do	not use any wax or

cutting compounds on the car but clean it with soap and water

only". I can see that a reader of this sort of statement might

suspect that the advice is based on the idea that certain products
are harmful, but the label here in question does not say, nor

necessarily imply, that spray packs are harmful. The advice given

would still be good if spray packs did no actual harm, but were

not as beneficial as the recommended products.

There is no evidence as to the relative merits of the

use of the product called "Softly"	or	"Howe Leather Cleaner", on
the one hand as against the	applicant's	product, on the other.

I do not say that the applicant's case on this aspect is

hopeless, but it seems to me unpromising and that it would be

wrong to grant relief on this basis at an interlocutory stage.

2.   The Publication "All About Leather"

The sentence I have quoted above, concerning silicone,

appears in a trade publication "All About Leather" which includes material to the same effect as that in the Australasian Supplier referred to above.

The applicant seeks an order pendente lite of a

mandatory kind requiring the respondent to send recipients of the

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publication a statement to the effect that Pelle spray products do

not contain silicone and are suitable for use on leather products

and that the statement on p.10	of that publication does not apply
to Pelle products.

Mr I.R. Jones, a solicitor acting for the respondent,

has made an affidavit saying that he has been told by Mr Fennel1

that there are "up to ten ranges of leather care products released

to the Australian market which are in the form of aerosol or spray

applications". Mr Jones ays that ests conducted by the

respondent on such products have shown them to contain silicone
"which is extremely harmful to leather products as it attacks the
finish of the leather and lifts that surface". Those tests, so Mr

Jones says, have also disclosed that the propellants used contain

solvents "which are also extremely dangerous to leather care

products as they attack the finish	of	the leather	and lift its
surface".

I must say I find this evidence rather odd. It is, of

course, irrelevant what products other than those distributed by

the applicant contain. I should have expected that, if the

respondent had had tests conducted suggesting that Pelle products

are harmful to leather, the details would have been placed before

me; but	there is no information as to who conducted the relevant
tests, whether the results were	in writing or matters of that

sort; nor, as I have pointed out, was it suggested that an

adjournment would have enabled this information to be produced.

In the circumstances discussed above, which include	that
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a letter	was	written	last year	on	behalf	of	the	respondent
acknowledging	that	he	product	in	question	"as	tested	has

extremely good results" and that Hr Jones' firm recently offered

to print a statement which would "operate to mitigate the aspects

unsatisfactory" to the applicant, the passage in H T Jones'

affidavit borders on frivolity. The specific and etailed

evidence on behalf of the applicant should not be treated as

rebutted, or indeed thrown into doubt, by what Hr Jones says.

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That is, there is a strong prima facie case that it

would be misleading to say of the products distributed by the

applicant that they "should be avoided at all costs" as containing

silicone and as producing, after a period	of	time, an unpleasant
sticky surface.

That, however, is not the end of the matter, for M r

HcHurdo points out that there has been considerable delay. The precise statements complained of were first published by or with

the authority of the respondent, as aupplement o "The

Australasian Supplier", a year ago. Further, Hr Jones says that

there are "up to ten ranges" of leather care products, so that the

statement about sprays generally should not necessarily	be taken
to be referring to Pelle products.

On the other hand, for the reasons I have mentioned, Mr

Jones, affidavit is not so drawn as to instill confidence in its

accuracy. Hr TKeVena gave evidence before me to the effect that '

there are only two other major suppliers of leather care products

and that the	applicant's	product has a substantial share of the
market.	I am inclined to think that	it is right to assume, at

this stage of the proceeding, that many readers of the general

criticism of spray products promulgated by the respondent would

take them as referring to, amongst others, Pelle products.

In the circumstances, I do not think the applicant's

delay should preclude	it	from obtaining relief against what are,
on the	face of	it, damaging and untrue statements about Pelle

products, pending the trial.

The form of relief is discussed below.

3.   Oral Statements

There is some evidence, referred to above, that the

respondent's personnel have made oral statements advising against the use of Pelle products on the ground of likelihood of damage to

the leather caused	by	aerosols or propellants. Again, there has
been substantial delay, but	I am inclined to think	it is just to

issue an injunction to restrain the making of further such

statements pending the trial. In overlooking or excusing the

delay, I am influenced by the unsatisfactory nature of the

evidence advanced on behalf of the respondent on the issue of the

truthfulness of what it has said.

4.   Form of Relief

The conclusion at which I have arrived is that the

i	respondent should be restrained until trial from making further
representations in the words of the sentence quoted above,
beginning "Spray polishes should avoided be ... " or
representations to similar effect, without excepting Pelle leather
care products. I think the respondent should also be restrained
until trial from representing that Pelle products are unsuitable for use on or likely to harm leather products.

The draft handed to me by Mr Harrison, as to the

representation about silicone, suggests that the injunction should

except representations contained in documents not in he

possession of the respondent, and I will adopt that.

A more difficult question is whether any positive steps

should be taken. Mr McMurdo pointed to the difficulty which is likely to rise if the respondent seeks to prove at the trial that

Pelle products contain silicone or produce an unpleasant sticky

surface after a period of time. He argued that it would be

unreasonably onerous to force the respondent to deny the truth	of	.
such assertions at this stage, before the facts are fully out. But the applicant's complaint about the respondent's assertions is, as the respondent has pointed out in relying on delay, now	fairly old.	If the respondent had any specific evidence that use
of Pelle products was damaging to leather,	it	should have been

produced before me, or at least alluded to in a specific way. In

,

my opinion, the respondent should be required to send to people

who have received from	it, directly or otherwise, any document
containing the sentence "Spray polishes should be avoided	at all

costs as these contain silicone and after a period of time will

b . L . . ..

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1 produce an unpleasant sticky surface“ or words to that effect a

correcting statement explaining that the respondent does not

intend to suggest that the use of Pelle products on leather should

be avoided or that it is likely to produce an unpleasant sticky

I; surf ace.

The matter will be adjourned to 2.30 p.m. today to

enable counsel to agree on a form of order.

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I certify that this and the	I I	preceding
pages are	a true copy	of the reasons for

judgment herein of His Honour

Mr. Justice Pincus

Dated 15 December 1988 w e

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