Cat Media Pty Ltd v Sue McCoy No. Scgrg-99-501 Judgment No. S387

CAT MEDIA PTY LIMITED v SUE McCOY,
TRADING AS “LASER, SKIN AND VEIN CLINIC”
[1999] SASC 387

Master’s Appeal: Civil

MULLIGHAN J This is an appeal against the decision of a Master refusing to grant an interim injunction restraining the respondent from certain conduct.
The appellant is a company incorporated in New South Wales which is the proprietor of the business known as “Skin Doctors Dermaceuticals” and “Beauty News Australia”, both of which names are registered in that State. It is alleged that after research and development, a product was manufactured and distributed in the form of a topical cream to be applied to the skin which was designed to reduce the appearance of networks of small veins appearing on the surface of the skin, commonly referred to as “spider veins”. The product is called “Vein Away”. It was launched in August 1998 and the appellant alleges that it is a cosmetic with the main ingredient being vitamin K. The appellant claims to have distributed the product through a large chain of pharmacies in this country and that it has been the top selling health and beauty product in that chain. It is claimed that the appellant has received many letters from satisfied purchasers of the product testifying as to its success.
The respondent is a medical practitioner carrying on practice at her clinic at Melbourne Street, North Adelaide under the name of “Laser, Skin and Vein Clinic”. She is the registered proprietor of that business name. It is alleged that the respondent conducts a business which includes treating the appearance of veins on the surface of the skin, including spider veins.
On 8th March 1999 Channel 7 broadcast a television programme in Adelaide called “Nightly News” which included a segment about the product and included what appears to be part of an interview with the respondent. A transcript of this segment is as follows:
“The News Reader; Graeme Goodings said:
‘If you’re at all vain about your veins, we hope you won’t watch this next story, in vain.’
‘Volunteers are being sought to test a new cream which claims to get rid of unsightly spider veins.’
The Reporter; Narelle Hill said:
‘They are an embarrassment for millions of women the world over.”
The Patient; Vera said:
‘When the grandchildren, the little girls come to visit they said “Vera what are those funny marks on your legs.”
The Reporter; Narelle Hill said:
‘Yet simply rub on “Vein Away” and those unsightly veins will disappear in just 33 days, or so the sales pitch goes. The product has been a popular seller in chemists and beauty salons, now an Adelaide study is set to test if the so called “miracle” cream lives up to its name.’
The respondent said:
‘There is nothing that we can see has any medical basis that would effectively cure spider veins, but we can’t give that a categorical no it won’t work until it’s been tried.’
The Reporter, Narelle Hill said:
‘If the cream is as good as it sounds it could mean the end to saline injections which are currently the most successful form of treatment.’
The respondent said:
‘It’s slightly painful, it’s time consuming and doesn’t work the same for everyone, so if there were a cream that worked it would be just miraculous.’
The Reporter, Narelle Hill said:
’50 volunteers are being sought to take part in the month-long trial. Patients will use “Vein Away” on one leg and a placebo or fake cream on the other. Neither the patient nor doctor will know which cream is which until after the study is complete. Researchers are looking for women who have similar spider veins on both legs and haven’t had any previous treatment. Seven Nightly News will bring you the test results next month, Narelle Hill, Seven Nightly News.’”
When the reporter, Ms Hill, said “researchers are looking for women” and so on, the following was displayed on the screen:
“Volunteers
h     Spider Veins
h     Similar both legs
h     No previous treatment
Phone       8267 2034”

This telephone number is that of the clinic run by the respondent.

It is alleged that between 8th March 1999 and 4th May 1999 tests were conducted on various persons on behalf of the respondent and that she was overseas from 13th March 1999 and 12th April 1999.
On 19th March 1999, solicitors for the appellant wrote to the respondent and alleged that she was undertaking a trial over four weeks of the product using volunteers recruited by the Seven Network, that she had claimed that she was independent although her clinic was in direct competition with the product, including because she removed spider veins by saline injections. Various complaints and assertions were made about the proposed trial. It was alleged that during the broadcast, which has been mentioned, the respondent failed to disclose that she ran the clinic at which the trial was being conducted and that it was not independent. She was accused of making misleading statements and portraying the product in an unbalanced manner. In the letter, the solicitors went on to say what the respondent should have done and made further allegations against her of a serious nature, including conspiracy to cause economic injury to the appellant.
The solicitor sought written undertakings from the respondent to the effect that the trial of the product be immediately terminated, that she not publish or cause to be published the fact that the trial had been terminated at the request of their client and that their client be involved in any future trial by supplying the product. Further, that their clients review product content, monitor compliance with agreed control protocol and ensure that the product is properly applied. Undertakings were also sought to ensure that the appellant have access to the results of the study, that the respondent not make any further comment concerning the products of the appellant unless results of properly conducted clinical studies are to be published by her and that she refrain from any involvement with the Seven Network in connection with its story concerning the product.
The respondent was informed that unless she gave those undertakings by 5.00 pm on 23rd March 1999, legal proceedings would be commenced against her seeking injunctive relief and damages.
The respondent did not reply to that letter or give any of the undertakings which had been sought. The solicitors for the appellant also wrote to the Seven Network on the same day making similar allegations about the product and threatening legal proceedings if the Network intended to broadcast any material disparaging the product. Solicitors for the Network replied to that letter on 13th April 1999 indicating that any complaints of the appellant were a matter between the appellant and the respondent and denying any legal responsibility.
On 22nd April 1999 the solicitors for the appellant again wrote to the respondent and, inter alia, threatened legal proceedings unless she gave the undertakings which were required. Their solicitors wrote to her again on 29th April 1999 and requested a different undertaking, namely that the appellant be provided with a copy of the results of any trial and be given a reasonable opportunity, of not less than 72 hours and preferably seven days within which to consider them before the results were published. She was informed that if such an undertaking was not given, injunctive relief would be sought.
The respondent did not reply to any of those letters.
On 4th May 1999 a member of the staff of the solicitors for the appellant in Adelaide, Ms Abbott, telephoned the clinic of the respondent and asked if the trial was being conducted. She was told by, presumably, a member of staff, that the trial was over, it had been completed about a month ago and that the results were being considered and were not yet available.
The matters of fact to which reference has been made were deposed to in affidavits which were before the learned Master.
These proceedings were commenced by summons on 5th May 1999. The appellant sought relief, presumably in the form of mandatory injunctions requiring the respondent to provide to the appellant all documents of any nature containing evidence of the results of tests constituting the trial of the product and all samples used in the conduct of tests. It is unnecessary for present purposes to consider if these forms of relief are known to the law. The appellant also sought an injunction restraining the appellant from publishing or disclosing, in effect, the results of the tests.
On 7th May 1999 a different Master made an interim injunction, ex parte without the knowledge of the respondent, restraining her from publishing or disclosing documents evidencing the results of tests of the product until 20th May 1999.
The order and other documents were then served on the respondent. She has not filed any answering affidavits. She did file and serve an appearance and after being served with the order with injunction and other documents, she was represented at the various hearings before the Court. On 20th May 1999 the injunction was continued until 23rd June 1999. By that time the respondent had instructed her solicitors.
The learned Master heard argument on 22nd June 1996 and both parties were represented. He discharged the interim injunction and declined to grant an interlocutory injunction as sought by the appellant having concluded that the appellant had not demonstrated that there was a serious question to be tried. He said:
“I do not think on any view of the facts or law it can be said that either the statements attributed to the [respondent] in the transcript of the news report can be categorized as potentially false and misleading or as constituting an injurious falsehood. Nor do I consider that the transcript of the news report or any correspondence that has been exchanged since then gives rise to the possibility that the announcement of any results by the [respondent] of the tests made by the [respondent] will possibly constitute either misleading or deceptive conduct or an injurious falsehood.”
The appellant applied to, and obtained from, a Judge of the Court, a further interim injunction until 29th June 1999 in similar terms to that discharged by the learned Master pending a proposed appeal against the order of the learned Master discharging the injunction. The basis of that order was that unless an interim injunction was granted, the appeal would be rendered nugatory. The learned Judge did not regard it as necessary to consider the merits of the application for an interim or interlocutory injunction. On 29th June 1999 the injunction was extended until the making of a decision on this appeal.
Since the institution of the appeal, the appellant has filed and served a statement of claim which specifies the nature of the causes of action of the appellant and the relief sought as well as the material facts upon which the causes of action are based and particulars of various allegations. The respondent has not filed a defence. It is submitted that I should have regard to the statement of claim which specifies the appellant’s claim in detail and I have done so.
The appellant alleges that, by her conduct, the respondent made various representations during the course of the television programme. It is alleged that in doing so she engaged in trade or commerce in conduct which was misleading or deceptive or was likely to mislead or deceive in contravention of s52 of the Trade Practices Act 1974 (Cth). Further, or in the alternative, it is alleged that in making some of the representations the respondent engaged in trade and commerce in conduct that was likely to mislead the public as to the nature, the characteristics or the suitability for its purpose of the product in contravention of s55 of the Trade Practices Act or s63 of the Fair Trading Act 1987. Further in the alternative, it is alleged that other representations were made in contravention of s51A of the Trade Practices Act and s54 of the Fair Trading Act. These allegations may be briefly summarized as pleaded.
It is alleged that the respondent made representations by conduct, namely that she practised in medicine or was a medical researcher, that she had no commercial interest in discussing the product or in giving the interview which was part of the television broadcast, that she would conduct the trial of the product, that it would be independent of her and that she had no commercial interest in the outcome of the trial, that the trial need be no more than 33 days, that the product was a treatment of the cause of spider veins or a cure for spider veins and that the product could not, or was highly unlikely to, reduce the appearance of spider veins. Some of these alleged representations were said to be implied and others were said to be both express and implied.
The appellant claims damages pursuant to s82 of the Trade Practices Act and compensation pursuant to s87(1) of that Act in respect of the conduct which is said to be in contravention of s52 and s55 of that Act. The appellant also claims damages pursuant to s84 of the Fair Trading Act and compensation pursuant to s85 of that Act in respect of conduct in contravention of s56 and s63 of that Act and an injunction restraining the respondent from publishing or disclosing the results of the trial of the product.
It is convenient to first consider the second ground of appeal which is that the learned Master should have drawn the inferences adverse to the respondent because she had not replied to the letters or filed any answering affidavits or a defence. It is submitted that this matter enabled the learned Master to draw inferences as follows:
“[1].............. the defendant’s tests were not conducted in a manner which was independent because the defendant was a commercial competitor of the plaintiff;
[2]the invitation to the public to be involved in independent tests was misleading or deceptive or likely to mislead or deceive;
[3]............. the results of the tests would be misleading because the defendant failed to apply the plaintiff’s product for the recommended period of application;
[4]the results of the tests would be misleading because the defendant would have been unable to establish a genuine ‘double blind’ study;
[5]............. the defendant intended to publish the results of her tests;
[6]the defendant’s description of the plaintiff’s product as medical in nature and that it purported to cure a medical condition was liable to mislead the public as to the nature and characteristics of the plaintiff’s product;
[7]............. the results of the tests, if published, would be misleading or deceptive or likely to mislead or deceive;
[8]the defendant’s comment that ‘if there were such a cream that worked it would be just miraculous’ was a comment which was misleading or deceptive or likely to mislead or deceive contrary to section 52 of the Trade Practice Act and its State equivalent or was liable to mislead the public as to the nature or suitability for the purpose of the plaintiff’s product contrary to section 55 of the Trade Practice Act and its State equivalent;
[9]............. that the plaintiff had suffered loss as a result of the television interview;
[10]that the plaintiff was likely to suffer further loss if the results of the test were published; and
[11]........... that the plaintiff would not be adequately compensated for the loss it would suffer if the results of the test were published by an award of damages.”

Reliance is placed upon the observation of Lord Diplock in British Railways Board v Herrington [1972] AC 877. The House of Lords was concerned with an appeal by a railway authority against a judgment awarding damages for the benefit of a young child who climbed over a broken fence and was injured on an electrified railway line. No evidence was called by the railway authority, Lord Diplock said at p930:

“The appellants, who are a public corporation, elected to call no witnesses, thus depriving the court of any positive evidence as to whether the condition of the fence and the adjacent terrain had been noticed by any particular servant of theirs or as to what he or any other of their servants either thought or did about it. This is a legitimate tactical move under our adversarial system of litigation. But a defendant who adopts it cannot complain if the court draws from the facts which have been disclosed all reasonable inferences as to what are the facts which the defendant has chosen to withhold.”

Attention was also drawn to the observation of Lord Lowry in Regina v Inland Revenue Commissioners & Anor, Ex Parte T.C. Coombs & Co [1991] 2 AC 283 at p300:

“Another fact is the sparseness of the evidence adduced by the revenue. In our legal system generally, the silence of one party in face of the other party’s evidence may convert that evidence into proof in relation to matters which are, or are likely to be, within the knowledge of the silent party and about which that party could be expected to give evidence. Thus, depending on the circumstances, a prima facie case may become a strong or even an overwhelming case. But, if the silent party’s failure to give evidence (or to give the necessary evidence) can be credibly explained, even if not entirely justified, the effect of his silence in favour of the other party, may be either reduced or nullified.”

It may be said that the observations in both of those cases reflect the reasoning process to be applied when weighing evidence, deciding what facts are proved by the evidence, including what inferences may be safely drawn from proven facts. However, the mere failure to respond to an allegation does not mean that the allegation is proved. I refer to the well known observation of Lord Mansfield in Blatch v Archer (1774) 1 Cowp 63 at p65; 98 ER 969 at 1970:
“..... all evidence is to be weighed according to the proof which it was in the power of one side to produce, and in the power of the other to have contradicted.”

This maximum, of course, relates to the weighing of evidence, not the mere making of allegations. There must be evidence upon which an inference can be drawn: see The Insurance Commissioner v Joyce (1948) 77 CLR 39. Dixon J said at p61:

“It is proper that a court should regard the failure of the plaintiff to give evidence as a matter calling for close scrutiny of the facts upon which he relies and as confirmatory of any inferences which may be drawn against him. But it does not authorize the court to substitute suspicion for inference or to reverse the burden of proof or to use intuition instead of ratiocination.”

Whether an adverse inference should be drawn was discussed in Jones v Dunkel & Anor (1959) 101 CLR 298. Menzies J summarised the position as follows at p312:

“In my opinion a proper direction in the circumstances should have made three things clear: (i) that the absence of the defendant Hegedus as a witness cannot be used to make up any deficiency of evidence; (ii) that evidence which might have been contradicted by the defendant can be accepted the more readily if the defendant fails to give evidence; (iii) that where an inference is open from facts proved by direct evidence and the question is whether it should be drawn, the circumstance that the defendant disputing it might have proved the contrary had he chosen to give evidence is properly to be taken into account as a circumstance in favour of drawing the inference.”

That it is in the assessment of evidence that the failure to give evidence may be significant is also made clear in Weissensteiner v The Queen (1993) 178 CLR 217: see Mason CJ, Deane and Dawson JJ at pp227-229.
Applying these principles, none of the inferences which the appellant contends should have been drawn could be made by reason of lack of response by the respondent. They are not inferences but allegations requiring an evidential base.
What then is the evidence? Evidence before the learned Master established that the respondent is a medical practitioner. It may be inferred from the television broadcast, the publication of the telephone number of the clinic of the respondent and the evidence of Ms Abbott that the respondent conducted a trial of the product.

It may also be inferred from the occupation of the respondent, what she said in the broadcast and the nature of her clinic that she carried on a practice which, in the present context, may be described as a business, and which provided treatment for spider veins. I would hesitate before accepting that she was, in a relevant sense, in competition with the appellant but it is unnecessary for present purposes to decide that matter. The broadcast comprised a combination of different segments which is not apparent from the transcript. The news reader appeared at a desk on his own in the segment which introduced the report. The reporter appeared alone, and in a segment in a public street. In other segments she spoke over images of the condition of spider veins and a pharmacy displaying the product for sale. The patient also appeared on her own in a different location. The respondent was seated in another place. The segments involving the respondent were very brief and no‑one else was shown or heard. She spoke only the words mentioned in the transcript. It is obvious that the various segments occurred at different times and there is no evidence to suggest that when she spoke the respondent was aware of what the others said or did. There is no evidence from which an inference to that effect could be drawn.
The evidence before the learned Magistrate could not lead to the conclusion that the respondent made express or implied representations by conduct beyond what she said herself. There is no basis disclosed in the evidence, or from which it may be inferred from the evidence, that she repeated or accepted any representations made by those who participated in the other segments of the television broadcast. There was no basis in the evidence to draw the inferences for which the appellant contends.
It may be seen that the only words spoken by the respondent are not disparaging of the product. Nothing said by her was misleading or deceptive or likely to mislead or deceive anyone seeing and hearing the television broadcast.
The appellant also contends that it should be inferred from all of the circumstances, including the failure of the respondent to respond, that the adverse inference should be drawn because the respondent said and did nothing when other segments of the television broadcast were made. This is said to be misleading or deceptive conduct by silence. There may be circumstances in which mere silence may amount to misleading or deceptive conduct: Inderby Pty Ltd & Anor v Quinert (1995) ATPR (Digest) 46-141. No such circumstances are established by the evidence in the present case. If the television broadcast was one continuous segment all in the presence of the respondent, failure by her to correct untrue or misleading statements about her opinions, her work, the product or the trial, could possibly found an action in damages and for injunctive relief, although in the circumstances, it is unnecessary to decide if such a conclusion could be reached. However, the evidence discloses no such conduct on her part. There is no reason to conclude that she was ever aware of what the participants in the other segments said or did when she spoke. All that can be attributed to her, on the evidence, is what she said and did in her own segment.
The appellant further contends that the learned Master erred in characterizing the issues to be tried as potentially false or misleading statements or statements constituting an injurious falsehood and that he should have considered s63 of the Fair Trading Act which provides:
“s63... A person shall not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose or the quantity of any goods.”

It is said that the publication of the test results could constitute conduct contrary to this section. There is no basis for this contention. Nothing said by the respondent in the television broadcast could lead to that conclusion. There is no evidence concerning the trial which suggests that the respondent has or will engage in conduct which will mislead the public. The nature of the trial as revealed by the disclosure of others in the television broadcast does not lead to that conclusion.

The appellant seeking interlocutory relief in the form of an injunction must satisfy the court that there is a serious question to be tried in the proceedings and, if so, that the balance of convenience favours the grant of the injunction: see OD Transport Pty Ltd v Western Australian Government Railways Commission (1986) 71 ALR 190 per French J at p193 and the cases therein referred to by him. For a serious question to be tried, there must be some evidence going to each of the elements making up a cause of action under the relevant sections of the Trade Practices Act [or, I would add, the Fair Trading Act]: OD Transport at p202 and the cases referred to therein.
As has been seen, the learned Master decided that there is no serious question to be tried. In my view, he is correct in that conclusion. Nothing which the respondent said or did or failed to do could lead to the contrary conclusion.
I dismiss the appeal.

[1999] SASC 387

16 September 1999