Madden v Seafolly Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Madden v Seafolly Pty Ltd [2014] FCAFC 30

Citation: Madden v Seafolly Pty Ltd [2014] FCAFC 30
Appeal from: Seafolly Pty Ltd v Madden [2012] FCA 1346
Parties: LEAH MADDEN v SEAFOLLY PTY LTD
File number: VID 1108 of 2012
Judges: MARSHALL, RARES AND ROBERTSON JJ
Date of judgment: 24 March 2014
Catchwords:

TRADE PRACTICES – misleading or deceptive conduct claimed where allegations of copying of swimwear designs – whether statements conveyed the meanings contended for – whether statements expressions of opinion or of fact – whether impugned conduct was in trade or commerce – whether representations in connection with the supply of goods for the purposes of 53(a) of the Trade Practices Act 1974 (Cth) – whether damages awarded under s 82 of the Trade Practices Act 1974 (Cth) incorrectly assessed

TRADE PRACTICES – cross-claim of misleading or deceptive conduct – whether finding of fact to support conclusion of primary judge that representations were true

DEFAMATION – defamatory allegations made – whether justification or qualified privilege made out 

Legislation:

Trade Practices Act 1974 (Cth), ss 52, 53(a), 82

Defamation Act 2005 (Vic), ss 6, 26
Fair Trading act 1987 (NSW), ss 42, 44(a)
Fair Trading Act 1989 (Qld), ss 38, 40

Cases cited:

Adam v Ward [1917] AC 309
Advanced Building Systems Pty Ltd v Ramset Fasteners (Australia) Pty Ltd (1995) AIPC 91-129; (1995) ATPR (Digest) 46-144
Amalgamated Television Services Pty Ltd v Marsden (1998) 43 NSWLR 158
Australian Broadcasting Corporation v Comalco Ltd (1986) 12 FCR 510
Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 304 ALR 186
Barnes & Co Ltd v Sharpe (1910) 11 CLR 462
Bateman v Slatyer (1987) 71 ALR 553
Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304
Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45
Channel Seven Adelaide Pty Ltd v Manock (2007) 232 CLR 245
Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594
Cryeng Pty Ltd v Loyola [2011] FCA 956
Cush v Dillon (2011) 243 CLR 298
David Syme & Co Ltd v Hore-Lacy [2000] 1 VR 667
Dwyer v Esmonde (1878) 2 LR Ir 243
Dynamic Hearing Pty Ltd v Polaris Communications Pty Ltd (2010) 273 ALR 696

Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486
Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82

Hamilton v Clifford [2004] EWHC 1542 (QB)
Harbour Radio Pty Limited v Trad (2012) 247 CLR 31
Hunt v Star Newspaper Co Ltd [1908] 2 KB 309
JLW (Vic) Pty Ltd v Tsiloglou [1994] 1 VR 237
Jones v Skelton [1963] SR (NSW) 644
Lloyd v David Syme & Co Ltd [1986] AC 350
Loveday v Sun Newspapers Ltd (1938) 59 CLR 503
Loyola v Cryeng Pty Ltd [2012] FCAFC 71
Norton v Hoare [No 1] (1913) 17 CLR 310
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191
Penton v Calwell (1945) 70 CLR 219
Pervan…

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Details
Case
[2014] FCAFC 30
Decision Date

CaseChat Overview and Summary

In Madden v Seafolly Pty Ltd, the appellant, Ms. Madden, appealed against a judgment of the primary judge which found that she had breached sections 52 and 53(a) of the Trade Practices Act 1974 (Cth) by making misleading and deceptive statements. The appellant contended that the primary judge had erred in several respects, including by treating her publications as a single course of conduct, mischaracterising her representations as statements of fact rather than expressions of opinion, and failing to consider the nature of the media used for the publications. The appellant also argued that the primary judge erred in awarding damages to the respondent, Seafolly Pty Ltd, for reputational damage, as there was no evidence to support such a finding. In relation to the cross-claim, the appellant submitted that the primary judge erred in finding that Seafolly had justified the imputation relied upon by the appellant in her cross-claim that she had acted maliciously.

The central legal issues in this appeal were whether the primary judge correctly interpreted the Trade Practices Act and whether the award of damages was justified. The court had to determine if the primary judge's approach to the Trade Practices Act claim was correct in six respects, including whether the judge mischaracterised Ms. Madden's representations, and whether the statements were made in connection with the supply of goods or services. The court also had to consider if the award of damages was correctly assessed, and whether the primary judge erred in finding that Seafolly had justified the imputation relied upon by Madden in her cross-claim that Seafolly had acted maliciously.

The court found that the primary judge's approach to the Trade Practices Act claim was correct, and that the appellant's submissions did not demonstrate any error on the part of the primary judge. The court held that the primary judge's characterisation of the appellant's representations as statements of fact was not erroneous, as they were understood by the readers as conveying a statement of fact rather than an opinion. The court also found that the primary judge's determination of the award of damages was not incorrect, as there was evidence to support the finding that Seafolly had suffered reputational damage. In relation to the cross-claim, the court held that the primary judge did not err in finding that Seafolly had justified the imputation relied upon by Madden in her cross-claim that Seafolly had acted maliciously.

The orders made by the court were as follows: The parties were required to file agreed short minutes to give effect to these reasons within 14 days of the date of this judgment. If short minutes could not be agreed, each party should file the short minutes for which that party contended within 21 days of the date of this judgment together with any written submission, of not more than five pages, in support of the orders for which that party contended.

Orders

Orders of the court

1. The parties file agreed short minutes to give effect to these reasons within 14 days of the date of this judgment. If short minutes cannot be agreed then each party should file the short minutes for which that party contends within 21 days of the date of this judgment together with any written submission, of not more than five pages, in support of the orders for which that party contends.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The notice of appeal filed on 20 December 2012 and amended on 19 February 2013 listed the following grounds of appeal:Appeal against Judgment on the claim1.The learned trial judge erred in holding that the Respondent to the proceeding (Madden) by her conduct referred to in paragraphs [10] to [15] of the Reasons for Judgment (the alleged statements) breached ss 52 and 53(a) of the Trade Practices Act 1974 (Cth) (Trade Practices Act), and ought to have held that Madden had not breached that Act.2.The learned trial judge erred in law in that despite correctly stating in paragraph [62] of the Judgment, that he was required to consider each of the alleged statements separately to determine whether or not they conveyed the representations alleged and otherwise contravened the Act, he failed to do so (see paragraphs [50] – [59], [67] and [83] of the Judgment).3.The learned trial judge erred in holding that the alleged statements would have been understood by those who read them to convey a statement of fact rather than the expression of an opinion by Madden (see paragraphs [66]; [67]; [50] – [60] of the Judgment).4.The learned trial judge erred in holding that the alleged statements would have been understood by those who read them to convey a statement of fact rather than the expression of an opinion and in doing so he took into account irrelevant considerations including (a) the content of articles written in trade journals; (b) subsequent responses from unidentified readers of those articles; and (c) Madden’s intention (see paragraphs [55] – [57] and [60] of the Judgment).5.The learned judge erred in law in holding that if the alleged statements were merely an expression of Madden’s opinions they were not honestly held (paragraph [66], [68] of the Judgment) and were malicious in circumstances where his Honour found that Madden had believed, albeit erroneously, that the Applicant in the proceeding (Seafolly) had copied her garments (see paragraphs [60] and [69] of the Judgment).6.The learned trial judge erred in law in holding that if the alleged statements were merely an expression of Madden’s opinions they were not honestly held in that he took into account the letter from Seafolly stating that the allegations were unfounded sent on 3 September 2010 (see paragraph [71] of the Judgment) after the alleged statements were made (see paragraphs [11] to [15] of the Amended Statement of Claim).7.The learned trial judge erred in law in finding that a failure by Madden to make further enquiries as to the truth of the alleged statements was sufficient to support a finding of malice and lack of honest belief (see paragraphs [66], [68] and [69] of the Judgment).8.The learned trial judge erred in law in holding that the alleged statements were made in trade and commerce, and ought to have found that they were not made in trade and commerce (see paragraphs [80] – [83] of the Judgment).9.The learned trial judged erred in law in holding that the alleged statements were statements within the meaning of section 53(a) of the Trade Practices Act (see paragraphs [74] – [75] of the Judgment).10.The learned trial judge erred in law in holding that Seafolly had suffered damage as a result of the conduct of Madden and erred in awarding the sum of $25,000 in damage (see paragraph [97] of the Judgment) to its reputation where his Honour found, consistent with the weight of evidence, that Seafolly had been wholly unaffected by the alleged statements (see paragraphs [87] and [88] of the Judgment) and had not suffered any pecuniary or economic loss, or any ongoing damage (see paragraph [95] of the Judgment).11.The learned trial judge erred in finding that he had power to award damages to Seafolly pursuant to section 82 of the Trade Practices Act for damage to its reputation in circumstances where he also found that Seafolly had suffered no actual damage.12.The learned trial judge erred in finding that Seafoly Seafolly had suffered damage to its reputation when there was no or insufficient evidence to support such a finding (see paragraph [114] of the Judgment).13.The learned trial judge erred in law in that in determining what relief to grant Seafolly he took into account the reputation of Seafolly’s employees (see paragraph [153] of the Judgment), a matter irrelevant to any pleaded cause of action. 14.The learned trial judge erred in law in that he failed to consider the argument raised by Madden that Seafolly was not the owner of reputation in the trade mark “SEAFOLLY” as elaborated in paragraphs [116] to [119] of the Respondent’s Closing Written Submissions filed in the proceeding.Appeal against judgment on the cross-claim15.For the reasons stated in grounds 5, 6 and 7 hereof, the learned trial judge erred in law in finding that Seafolly had justified the imputation relied upon by Madden in her cross-claim that she had acted maliciously.16.For the reasons stated in grounds 5, 6 and 7 hereof, the learned trial judge erred in law in finding that Seafolly’s statements which were the subject of Madden’s cross-claim under section 52 of the Trade Practices Act were not likely to mislead or deceive (see paragraph [151] of the Judgment).17.The learned trial judge ought to have found that Seafolly had breached section 52 of the Trade Practices Act and ought to have upheld the cross-claim on that basis (see paragraphs [151], [152] of the Judgment).

Ratio Decidendi

Legal Principle Established

The issues which arise on the appeal are as follows.(1)Whether the primary judge’s approach to the Trade Practices Act claim was correct in six respects: (i)whether the primary judge erred by considering the publications together as a single course of conduct and by treating the readers of the publications as if they were a single class;(ii)whether the primary judge mischaracterised Ms Madden’s representations as statements of fact rather than statements of opinion;(iii)whether the primary judge erred in determining what representations were conveyed by each publication by neglecting to take the nature of email and Facebook media into account;(iv)whether the primary judge erred in determining what a reasonable member of the class to which a publication was directed would reasonably understand it to convey because he had determined, or been assisted in determining, the meaning of the publications by reference to dubious presumptions as to the actual understanding of unidentified persons who posted comments, journalists who received the 2 September email and readers of two trade journals, none of whom gave evidence at the trial;(v)whether the primary judge erred in determining how members of each class to whom each of the publications was directed would have reasonably understood them by taking into account his conclusion as to Ms Madden’s intention in making the publications;(vi)whether the primary judge erred in concluding that even if the representations were expressions of opinion, they contravened the Trade Practices Act because Ms Madden was reckless in forming them and acted precipitately.(2)Whether Ms Madden’s ‘personal’ Facebook statements were ‘in trade or commerce’ for the purposes of the Trade Practices Act. (3)Whether the statements by Ms Madden were in connexion with the supply of goods or services within the meaning of s 53(a) of the Trade Practices Act. (4)Whether the primary judge erred in the award of damages. (5)In relation to Ms Madden’s cross-claim, whether the primary judge erred in finding that Seafolly had made out the defence of justification. (6)In relation to the appellant’s cross-claim, whether the appellant should have leave to add a ground of appeal as follows:The learned trial judge erred in law in upholding Seafolly’s defence of qualified privilege.and, if leave were granted, whether that ground was made out.(7)Whether the primary judge erred in finding that Seafolly’s publications were true and therefore not apt to mislead and, accordingly, that Ms Madden’s cross-claim under the Trade Practices Act also failed.(8)Whether order 1.6 was wrong as a matter of what the email in fact said.ConsiderationWhether the primary judge’s approach to the Trade Practices Act claim was correct As to (1), the primary judge’s approach to the Trade Practices Act claim, Senior Counsel for Ms Madden submitted that the primary judge’s reasoning was infected with two principal errors. The first was that his Honour treated three distinct publications with distinct characteristics compendiously. Secondly, it was submitted that his Honour erred in identifying the dividing line between fact and opinion in the s 52 jurisprudence by distinguishing, in effect, a mere expression of opinion on the one hand from everything else on the other. It was submitted that in this latter respect the primary judge should have drawn the dividing line between a fact, a statement of established or historic fact, on the one hand, and matters of comment upon facts, including the possible or probable existence of the facts and opinions, on the other. Reliance was placed on Channel Seven Adelaide Pty Ltd v Manock (2007) 232 CLR 245 at [35], Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486 and Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304.