Dynamic Hearing Pty Ltd v Polaris Communications Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Dynamic Hearing Pty Ltd v Polaris Communications Pty Ltd [2010] FCAFC 135

Citation: Dynamic Hearing Pty Ltd v Polaris Communications Pty Ltd [2010] FCAFC 135
Appeal from: Polaris Communications Pty Ltd (ACN 006 102 601) v Dynamic Hearing Pty Ltd (ACN 098 876 212) [2009] FCA 890
Parties: DYNAMIC HEARING PTY LTD (ACN 098 876 212) v POLARIS COMMUNICATIONS PTY LTD (ACN 006 102 601) and PLANTRONICS PTY LTD (ACN 080 486 193)
File number: VID 753 of 2009
Judges: MOORE, BESANKO AND GORDON JJ
Date of judgment: 19 November 2010
Catchwords: TRADE PRACTICES – where appellant and respondent were both suppliers of acoustic shock protection devices – where appellant conducted study and published report comparing appellant’s device with respondent’s device – where study was represented as properly conducted scientific test – where report said to imply that respondent’s device was unsuitable for use in call centres and did not meet intelligibility standards required by Telstra – where trial judge found appellant had engaged in misleading or deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) and s 9 of the Fair Trading Act 1999 (Vic) – where trial judge found appellant had made false or misleading representations in contravention of s 53(a) of the Trade Practices Act 1974 (Cth) and s 11 of the Fair Trading Act 1999 (Vic) – whether it is duty of appeal court to consider evidence relevant to alleged errors by trial judge and decide for itself proper conclusion – whether trial judge in better position than appeal court to assess evidence of specialised and highly technical nature – whether study had been properly conducted scientific test – whether report contained representations to effect that respondent’s device unsuitable for use in call centres and did not meet Telstra intelligibility requirements.
Held: Appeal dismissed.  The trial judge was correct in finding that the representations to the effect that the study was a properly conducted scientific test were false or misleading and amounted to misleading and deceptive conduct.  The trial judge was correct in finding that the report contained representations as to the suitability of the respondent’s device and that these representations were false and misleading and amounted to misleading and deceptive conduct.
Legislation: Federal Court of Australia Act 1976 (Cth) ss 24, 28
Trade Practices Act 1974 (Cth) ss 52, 53
Fair Trading Act 1999 (Vic) ss 9, 12
Cases cited: Astrazeneca Pty Limited v GlaxoSmithKline Australia Pty Limited [2006] ATPR 42-106; [2006] FCAFC 22
Branir v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424
Coulton v Holcombe (1986) 162 CLR 1
CSR Ltd v Della Maddalena (2006) 224 ALR 1; [2006] HCA 1
Fox v Percy (2003) 214 CLR 118
Metwally v University of Wollongong (No 2) (1985) 60 ALR 68
S W Hart & Co Pty Ltd v Edwards Hot Water Systems (1985) 159 CLR 466
Turbo Tek Enterprises Inc v Sperling Enterprises Pty Ltd (1989) 23 FCR 331
Vawdrey Australia Pty…
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Details
Case
[2010] FCAFC 135
Decision Date

CaseChat Overview and Summary

In the matter of Dynamic Hearing Pty Ltd v Polaris Communications Pty Ltd, the appeal revolved around a comparison report published by the appellant, Dynamic Hearing, regarding acoustic shock protection devices. The report compared the appellant's device, M15D, with the respondent's device, SoundShield, and was represented as a properly conducted scientific test. The report implied that the SoundShield device was unsuitable for use in call centres and did not meet the intelligibility standards required by Telstra. The trial judge found that the appellant had engaged in misleading or deceptive conduct under the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1999 (Vic), as well as making false or misleading representations under the same statutes.

The primary legal issues were whether the appeal court should independently assess the evidence and determine the proper conclusion, whether the trial judge was in a better position to evaluate the highly technical evidence, and whether the study was a properly conducted scientific test. Additionally, the court needed to determine if the report contained representations indicating that the respondent's device was unsuitable for use in call centres and did not meet Telstra's intelligibility requirements.

The appeal court found that the primary judge was correct in concluding that SoundShield complied with Telstra's intelligibility requirements and was suitable for TT4-compliant operation concerning speech intelligibility. The court determined that the comparison report was misleading and deceptive because the appellant did not follow the randomisation table in the test protocol and the test did not include a suitable control condition. However, the court found that the primary judge erred in concluding that the appellant failed to adequately inform itself of the appropriate settings for SoundShield in the test conditions or to enlist the assistance of a suitably trained person. The court concluded that this error did not justify altering the primary judge's orders regarding the test setup representations.

The appeal was dismissed, and the appellant was ordered to pay the respondent's costs of the appeal.

Orders

Orders of the court

1. The Appellant be granted leave to appeal in so far as may be necessary.

2. The Appeal be dismissed.

3. The Appellant pay the First Respondent’s costs of the appeal.

4. There be no order as to the costs of the Appeal as between the Respondents.

Note:

Background

Background to the litigation

In these reasons I will refer to Dynamic Hearing Pty Ltd as the appellant, Polaris Communications Pty Ltd as the respondent and Plantronics Pty Ltd as Plantronics.BACKGROUND The case before the primary judge related to a comparison report concerning acoustic shock protection devices. These devices are amplifiers which are commonly used to limit the level of sounds heard by call centre workers and to reduce the risk of acoustic shock which the workers sometimes experience. The devices which were compared used digital signal processing. Since 2001, the respondent has sold a limiting amplifier called SoundShield. That device is designed through the use of internal settable controls to be inter-operable with a wide range of host telephones and any type of headset. Since September 2006, Plantronics has sold a competing limiting amplifier called M15D, which is designed solely for use with equipment made by Plantronics. The M15D was developed as a result of collaboration between Plantronics and the appellant which commenced in early 2005. The collaboration was called the “Tecate” project and it was designed to produce a limiting amplifier to compete with SoundShield and, in particular, to compete with SoundShield in relation to Telstra which was a major customer for limiting amplifiers. Telstra had its own requirements for limiting amplifiers and those requirements were set out in Telstra’s specification TP TT404B51 called, “Specification – Headset & Limiting Amplifier, Acoustic Protection” (“TT4”). In early 2005, the respondent was a supplier of devices to Telstra and, in fact, it had been sole supplier to Telstra since December 2001. The arrangement was due to come to an end in December 2004, but in fact it continued until mid-2005. In the course of the Tecate project, the digital signal processing software for the M15D was developed. That software was known as ADRO. In mid-2005, the appellant distributed a report entitled “Comparisons of Acoustic Protection Devices – Plantronics ADRO® M15D versus the Polaris SoundShield®” (“comparison report”). The tests which were carried out for the purposes of the comparison report were performed in May 2005. The primary judge found as follows (at [75]):On 10 May 2005 Dynamic undertook the speech intelligibility test the subject of the comparison report. The test used a Plantronics H51 TT3 headset with each of the devices set to the lowest limiting setting. Headset profile 1 was used in SoundShield. The combination of lowest limiting setting and headset profile 1 in SoundShield was its general market mode and not that used in Telstra call centres. Similarly, the lowest limiting setting of M15D was its proposed general market mode and not the proposed Telstra mode. The testing used the same input levels for each device. Before carrying out this test, Professor Blamey did a pre test for intelligibility with himself as the subject. There is no challenge to these findings. The tests were carried out by Ms Christi Wise. Ms Wise was not called as a witness at the hearing, although documents which she had completed in May 2005 (for example, test lists, score sheets) were tendered in evidence.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In my opinion, the primary judge was correct in concluding that SoundShield complied with Telstra’s intelligibility requirement and was suitable for TT4-compliant operation so far as speech intelligibility is concerned.CONCLUSIONS I have held that the primary judge erred in one respect in connection with a particular of the respondent’s case that the test set up representations were misleading or deceptive. However, the error found does not justify any change to the primary judge’s orders with respect to the test set up representations. I reject the other grounds of appeal. In the circumstances, the appeal must be dismissed. The appellant must pay the respondent’s costs of the appeal. I have had the benefit of reading the draft reasons for decision of Besanko J. There were two categories of representations in issue: what were described as unsuitability representations and test set up representations. In relation to the two unsuitability representations, I agree that the appeal should be dismissed for the reasons given by Besanko J: see [116] to [130] of Besanko J’s reasons for judgment. In relation to the three test set up representations, I agree that the primary judge was correct to conclude that the comparison report was misleading and deceptive because the appellant did not follow the randomisation table in the test protocol: the second test set up representation: see [99] to [106] of Besanko J’s reasons for judgment. I also agree that the primary judge was correct to conclude that the comparison report was misleading and deceptive because the test, upon which the comparison report was based, did not contain a suitable control condition: see [88] to [98] of Besanko J’s reasons for judgment. However, I wish to add some brief observations of my own: see section (A) below. In relation to the failure of the appellant to inform itself adequately of the appropriate settings for SoundShield in the test conditions or to enlist the assistance of a person appropriately trained in the installation of SoundShield, I have reached a different conclusion to Besanko J: see section (B) below. I have adopted the defined terms and acronyms used in the reasons of Besanko J.A. ABSENCE OF SUITABLE CONTROL CONDITION The primary judge concluded that the comparison test was not a “properly conducted scientific test” because there was no suitable control condition: see [186]–[189] and [235] of the primary judge’s reasons for judgment. As noted by Besanko J, on appeal, the appellant submitted that there was no need for a control condition because the two devices were being compared for performance as against each other. I agree with Besanko J that the appellant’s submission should be rejected. I would, however, reject the appellant’s submission solely on the third basis given by Besanko J. The submission that no control condition was necessary was not put at trial by the appellant and is a point which, if taken below, may have affected the evidence that was given.

Ratio Decidendi

Legal Principle Established

The primary judge concluded that this matter and Telstra’s past and continuing custom for SoundShield and the fact there were very few complaints of intelligibility problems in relation to SoundShield’s set up by appropriately trained installers was sufficient to support the conclusion that SoundShield complies with Telstra’s intelligibility requirement.SoundShield is not suitable for TT4-compliant operation and is not G616 compliant The comparison report was concerned only with intelligibility for speech. G616 has no intelligibility requirement. The primary judge found that nothing in the comparison report gave rise to any implication about SoundShield’s compliance with G616. The primary judge found that the comparison report did give rise to an implication that SoundShield was not suitable for TT4-compliant operation. The primary judge referred to the word “suitable” in the pleaded representation and said that he understood that to mean capable of meeting the intelligibility standard required by TT4, “as opposed to being TT4 compliant in the more general sense”. The pleaded representation arose by implication from the comparison report because of the sentences in the report set out in [17] (third paragraph, second and third sentences) above. The primary judge said: That is because, while speech intelligibility (90% at 55 dBA) is only one TT4 requirement, non-satisfaction with it results in a device’s non-compliance, even if all other requirements are satisfied. The representation was misleading or deceptive because SoundShield was suitable for TT4-compliant operation so far as speech intelligibility was concerned. The primary judge reached that conclusion relying on the matters referred to in [69] above. THE NATURE OF THE APPEAL The jurisdiction of this Court to hear appeals from judgments of single judges of the Court is conferred by s 24(1)(a) of the Federal Court of Australia Act 1976 (Cth). The powers of the Court are contained in s 27 and s 28. The appeal to this Court is by way of rehearing and the review of the primary judge’s findings of fact is to be conducted in accordance with the principles stated in Warren v Coombes (1979) 142 CLR 531. The powers of the Court include the power to affirm, reverse or vary the judgment appealed from and to give such judgment, or make such order, as, in all the circumstances, it thinks fit, or refuse to make an order. Each party made submissions about the error which must be shown before this Court will interfere with the decision and orders of the primary judge. The appellant referred to the fact that the appeal was an appeal by way of rehearing (Astrazeneca Pty Limited v GlaxoSmithKline Australia Pty Limited [2006] ATPR 42-106; [2006] FCAFC 22). It also referred to the following passage in the reasons for judgment of Kirby J in CSR Ltd v Della Maddalena (2006) 224 ALR 1 at 7 [16]; [2006] HCA 1:Requirements and limitations: The form of rehearing so provided “shapes the requirements, and limitations, of such an appeal”. The relevant “requirements” are that the appellate court is obliged to conduct a thorough examination of the record and a real rehearing. It is not confined to reconsideration of the record in order to correct errors of law, although that will certainly be encompassed in such an appeal. It is required to consider suggested errors of fact-finding. Experience teaches that many errors of this kind arise at first instance, more perhaps than errors of law. Having conducted a rehearing as so described, the appellate court is obliged to “give the judgment which in its opinion ought to have been given in the first instance”. This involves, where, as here, there is no jury, conducting a thorough review of the primary judge’s reasons and engaging in the tasks of “weighing conflicting evidence and drawing … inferences and conclusions”.(Citations omitted.)