Cadbury Schweppes Pty Ltd v Kenman Developments Pty Ltd

[1990] FCA 829

IN THE FEDERAL COURT OF AUSTRALIA )

VICTORIA DISTRICT REGISTRY	1	No. 270 of 1990
GENERAL DIVISION	1

BETWEEN :  CADBURY SCHWEPPES PTY.
LTD.

Applicant

AND:	KENMAN	DEVELOPMENTS
PTY. LTD.

First Respondent

AND :  HERAKLIS KENOS

Second Respondent

m:  NICHOLAS KENOS

Third Respondent

m:  SP IRO MANDYLAS

Fourth Respondent

CORAM :	Jenkinson J.
PLACE :	Melbourne
DATE :	26 September, 1990

The applicant, by its counsel Mr. Middleton, has

REASONS FOR JUDGMENT

I take first the injunction sought in respect of the alleged passing off of the well known Cadbury's chocolate block in its well known packaging by means of the blue or purple coloured packaged block of the respondents* chocolate which is contained in a set of three blocks in exhibit JLCl to the affidavit of Julie Lorraine Castle sworn 21 September

1990.

brought to attention all, I think, of the circumstances which ought to be taken into consideration when making a comparison of the kind which the law of passing off and the law relating to misleading conduct under the Trade Practices Act require. It is, as he submitted, not merely a matter of looking at the two items of merchandise side by side. All that one can gather by evidence of the circumstances in which either or both of the items are presented to the consumer - that is in a case where one is dealing with retail sale - have to be taken into account. I have, I hope, given consideration to all the circumstances which the evidence suggests would be likely to contribute to a mistake, whether conscious or semi-conscious, on the part of a consumer who was about either to reach out and take for the purpose of buying or to pass on from one of the respondents' fine milk packs. I have taken into account the evidence of the psychologist, though not the last paragraph of his affidavit. But when every proper weight is given to those considerations - and many of them, if not all

make - I remain still convinced that the occasions on which	of them, strongly favour the case that the applicant seeks to
any consumer would be misled would be very few indeed. The appearance of the two packs are, as I would find, quite different in their impact on the uninstructed eye, that is to say the eye which had not previously ever seen either before. The overwhelming majority of consumers would of course be persons to whom the applicant's block was a very familiar sight indeed, whether the consumer was a person who ate chocolate, or ate Cadbury's chocolate, or not. The Cadbury's pack get-up is, as I would find, extremely well known throughout the community, known in the subconscious sense as well as in any conscious sense, and I think the risk of any mistaken act by a consumer under the influence of the respondents' packaging is remote in the extreme.
Even if, contrary to my impression, there could be said to be an arguable question of fact to be tried, it seems to me that the balance of convenience, either as between the two parties or in terms of public interest, is strongly inclined against the making of an injunctive order. The respondent is prepared to give an undertaking with respect to the keeping of accounts pending the hearing and determination of the proceeding. If, ultimately, the applicant is successful, the damage to the applicant extending beyond the time of trial and, ex hypothesi, the time of permanent injunctive relief, is likely in my opinion to be very small indeed. And such damage as it may be considered that the
adequately compensated by damages or account of profits, for applicant suffers between now and then can be, in my view,
the calculation of which the records undertaken to be kept will provide a good deal of assistance. To interrupt the marketing of the respondent's product by interlocutory injunctive order would be likely to cause quite serious damage, but damage extraordinarily difficult accurately to estimate. Accordingly, I am not prepared to make any interlocutory order in respect of what one might call the passing off aspect of the claims for interlocutory relief.
So far as the other class of claims is concerned, I take first the claim for interlocutory restraint of the use of the word "milk", or the phrase "fine milk", on the packaging of chocolate put into trade by the respondent, which does not satisfy the food standards prescribed by the code which in turn is given legal effect under the Victorian legislation. Undoubtedly, on the evidence, there is a strong case for the conclusion that the chocolate presently being sold under that kind of packaging, that is to say packaging which features the word "milkw, does not satisfy the code standard for what the code calls "milk chocolate". The code provides its own definition of what shall be considered to be milk chocolate. There is also a strong case, as it seems to me, for the conclusion that consumers looking at the packaging of the kind shown in exhibit &Cl, that is to say the blue or purple packaged chocolate in exhibit JLC1, would take, and reasonably take, the wrapping to be asserting that within was milk chocolate, although the word "chocolate" does not appear on
the packaging. But while that establishes, it may be, a prima facie case of breach of Victorian food standards legislation,
it does not establish in my opinion the case of misleading conduct. What is shown is that the consumer is likely to be led into the belief that what is within the package is milk chocolate. I do not have, as I consider, evidence to constitute, at any rate, a substantial arguable case that to apply that description, namely the description "milk chocolate" to what is inside this packet, is to apply a false or misleading description. What consumers generally, or any particular class of consumers, apart from the class of consumers who are thoroughly familiar with the relevant provisions of the code, think is meant by the expression "milk chocolate" I do not know, and I do not consider that the evidence provides me with the means of knowing. And accordingly I do not find an arguable,case - or at any rate, I do not find a substantial arguable case - of misleading conduct in that respect.
Again, convenience - either the convenience of the consumer or convenience as between the parties - does not seem to me to justify interlocutory intervention. The harm, if there be harm, to consumers is likely to be trifling. The customer who pays the small amount of money for the chocolate and finds it not to his taste will have lost nothing but the price of one packet. Those who find what is inside to be to their taste will presumably buy the chocolate again.
Similar considerations apply in relation to the complaint that, whereas the chocolate in this particular packet is within the defined meaning of the expression "compounded chocolate", there is nothing on the packaging to give any warning at all to the consumer that what is within is "compounded chocolate".
I am inclined to think that I am justified in coming to the conclusion that the ordinary meaning, the popular vernacular meaning of the expression "compounded chocolate" is a chocolate containing a compound of what is ordinarily to be found in chocolate, eating chocolate, and another substance or other substances, and as meaning a form of chocolate commonly recommended for use, in this country, in cooking. If that be correct, there then arises the question as to whether conduct is properly to be described as misleading, which puts into trade, and particularly into retail trade in close physical association with what I will call ordinary chocolate, the compounded chocolate got up to look in all respects like ordinary chocolate. It may be that there is an arguable case for saying that that is misleading conduct, but it will be, in my opinion, sufficient, in the circumstances of this case, to await for the time being the expected performance by the respondent of the proposal it has said it has to change the packaging, the wrapping, in such a way that, within a matter of two or three weeks, its compounded chocolate will be going on to the market in wrapping which includes in a fairly prominent position the expression "compounded chocolate". It
does not seem to me to be necessary or appropriate to exact an undertaking, or to make an order. I will adjourn to a date to
be fixed the further hearing of the claims for interlocutory relief; and, if the applicants are dissatisfied with the course of events that occur hereafter, they will be able to come back to the Court, if they do not decide that a more effective measure might be to communicate with the persons responsible for administering the Food Act. At all events, so far as the interests which this Court exercising this jurisdiction is concerned to consider, it does not seem to me to be necessary to make an order in relation to this question of compounded chocolate. And the same, I think, is true of the claim made in respect of the substance sold packaged as is shown in the same exhibit in the yellow wrapping that the substance so wrapped is not chocolate either within the meaning of the code or, as Mr. Middleton submits, within the ordinary meaning or ordinary conception of chocolate. It, the evidence indicates, contains no cocoa at all, and Mr. Middleton's submission is that a substance which has no cocoa component cannot, as a matter of ordinary English, be described as chocolate. He also relies on the circumstance that this substance does not answer the code definition. There is, I think, an arguable case that to sell this substance so wrapped in association with undoubted chocolate and items proclaiming themselves on their wrappings to be chocolate, is to engage in misleading conduct, that is to say conduct tending to mislead the consumer into the belief that what is within the wrapping is white coloured chocolate. As I
think it is a strong case, but it is an arguable case, I say, I think it is an arguable case, and I do not say that I
think. But again, the respondent has indicated an intention to add to the wrapping of this substance the word "confectionery", and in those circumstances I do not think that anything more is required than that the application for interlocutory relief be adjourned to a date to be fixed.
I have great difficulty with formulating any finding at all as to what, in the minds of consumers, is necessarily involved in the word "chocolate". If the contentions that have been advanced by the applicant in this hearing were to be fully examined at a trial, I find it very very difficult indeed to predict the ultimate outcome. I do not suggest that there are not what may prove to be quite important questions in the administration of the consumer protection provisions of the Trade Practices Act involved in the case, or the series of cases, that the applicant presents, but it does not seem to me that on an interlocutory hearing any substantial reason has been shown for intervention by the Court pending the hearing. The likelihood that those persons who have a knowledge of the code, considered as a class, would be in some way misled in any of the ways suggested by the applicant seems to me to be very remote. Those who fell into that class would be likely,
I would have thought, to be persons among the least
susceptible to being misled in the ways that the applicant has to suggest would occur. And, to the general consumer, it seems to me that he will be pending trial sufficiently
protected by his own sense of taste. Accordingly, I will make an order that the further hearing of the applicantr S claims for interlocutory relief be
adjourned to a date to be fixed by any party on reasonable notice to the other parties. Is there to be a substitution, Mr. Middleton, or an addition?

Discussion ensued.
There will be an order that Kenman Foods Pty.

Limited be added as a respondent and that the title of the proceeding be amended accordingly. There will be an order that the applicant amend the originating application and the statement of claim as it may be advised by filing and serving on or before 3 October an amended application and an amended statement of claim.

Yes, well I will not make any of those sorts of orders. Do you want any further directions about pleadings?

MR. MIDDLETON: It may be convenient to have the defence, directions as to the defence, and then we could come back for a directions hearing, perhaps, your Honour.,

HIS HONOUR: And then an order that each respondent file and

serve his defence and any cross-claim on or before, 17
October, 1990.

Order that the directions hearing be adjourned until

29 October, 1990.

To reserve the costs is, I understand, always an unsatisfactory answer from, perhaps, the parties' point of view and their advisers. On the other hand, from the Court's point of view, it is some comfort to know that if at trial the judge dealing with the interlocutory application has been, as it were, quite wrong in one way or another, that will not at any rate have any permanent consequences in relation to costs. And, therefore, I think I should in this case order that each party's costs of the hearing of the applicant's claims for interlocutory relief, to and including this day, be reserved.

I certify that this and the 9
preceding pages are a true copy
of the Reasons for Judgment of
the Honourable Mr. Justice

Jenkinson.