Sola Tube Australia Pty Ltd v Solar Bright International Pty Ltd
[2017] FCCA 657
•12 April 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SOLA TUBE AUSTRALIA PTY LTD v SOLAR BRIGHT INTERNATIONAL PTY LTD | [2017] FCCA 657 |
| Catchwords: CONSUMER LAW – Misleading or deceptive conduct – whether the unauthorised use of an energy efficiency logo amounted to misleading or deceptive conduct in contravention of ss.18 and 29(1)(a) of Schedule 2 to the Competition and Consumer Act 2010 (Cth) – whether the use of diagrams on websites and marketing brochures would mislead or deceive the ordinary and reasonable class of consumers in contravention of ss.18 and 29(1)(a) of Schedule 2 to the Competition and Consumer Act 2010 (Cth) into believing that the product works as illustrated on those diagrams – whether the use of advertising language on websites and marketing brochures would mislead or deceive the ordinary and reasonable class of consumers in contravention of ss.18 and 29(1)(a) of Schedule 2 to the Competition and Consumer Act2010 (Cth) into believing that the product works as described – use of energy efficiency logo would be likely to mislead or deceive consumers – use of diagrams and advertising language on websites and marketing brochures would not be likely to mislead or deceive consumers. |
| Legislation: Competition and Consumer Act 2010 (Cth), s.2, sch.2 – ss.18, 29 |
| Cases Cited: Australian Olympic Committee Inc. v Telstra Corporation Ltd (2016) FCA 857 Flexopack S.A. Plastic Industry v Flexopack Australia Pty Ltd (2016) 118 IPR 239 Global One Mobile Entertainment Pty Ltd v ACCC [2012] ATPR 42-419 Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] ASAL 55-196, [2009] ATPR 42-290, [2010] ALMD 6785 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 Australian Competition and Consumer Commission v Valve (No 3) [2016] ATPR 42-518, 337 AJR 647 Butcher v Lachlan Elder Realty (2004) 218 CLR 592 Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 Optical 88 Ltd v Optical 88 Pty Ltd (No.2) (2010) 275 ALR 526 Campbell v BackofficeInvestments Pty Limited (2009) 238 CLR 304 Australian Competition and Consumer Commission v Telstra Corporation Ltd (ACN 051 775 556) (2007) 244 ALR 470 Taco Company of Australia Inc. v Taco Bell Pty Ltd (1982) 42 ALR 177 |
| Applicant: | SOLA TUBE AUSTRALIA PTY LTD |
| Respondent: | SOLAR BRIGHT INTERNATIONAL PTY LTD |
| File Number: | SYG 586 of 2015 |
| Judgment of: | Judge Emmett |
| Hearing dates: | 27 March 2017 28 March 2017 |
| Date of Last Submission: | 30 March 2017 |
| Delivered at: | Sydney |
| Delivered on: | 12 April 2017 |
REPRESENTATION
| Counsels for the Applicant: | Mr Andrew Fox Ms Catherine Bembrick |
| Solicitors for the Applicant: | Gorton IP |
| Counsel for the Respondent: | Mr Hamish Bevan |
| Solicitors for the Respondent: | Actuate Legal |
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT sydney |
SYG 586 of 2015
| SOLA TUBE AUSTRALIA PTY LTD |
Applicant
And
| SOLAR BRIGHT INTERNATIONAL PTY LTD |
Respondent
REASONS FOR JUDGMENT
Introduction
The applicant, Sola Tube Australia Pty Ltd sues the respondent, Solar Bright International Pty Ltd, alleging that the respondent has engaged in conduct in contravention of s.18 and s.29(1)(a) of the Australian Consumer Law (“the ACL”), which is Schedule 2 to the Competition and Consumer Act 2010 (Cth).
The applicant seeks a declaration that the respondent has engaged in conduct in contravention of the ACL and an order for delivery up of various material as well as corrective advertising and costs.
The applicant is a wholesale and retail supplier in Australia of building products and materials including tubular skylight products which it also installs and maintains.
The respondent is a supplier of skylight products, including the tubular “MAXLIGHT” skylight. The respondent is a company incorporated in Australia and its sole director is Mr Shawkat Paul Yako, a former employee of the applicant.
At the heart of the applicant’s claims are allegations that representations made by the respondent on its website and brochures for the sale of the MAXLIGHT skylight are misleading and deceptive. The applicant also alleges that the use of an Energy Star logo on the respondent’s packaging is also misleading and deceptive.
The MAXLIGHT skylight is a tubular skylight that is made up of a clear perspex dome known as the “Raycatcher Dome” (“the Dome”), designed to be installed on to the roofline of a customer’s property; together with a tube or cylinder connecting the Dome to an opening in the property’s ceiling; and a window-style opening designed to be installed into the ceiling on an internal room within a customer’s property.
Since at least 2014, the respondent has marketed and sold the MAXLIGHT skylight, including through a website, and in brochures entitled “MAXLIGHT Series”.
The MAXLIGHT product is distributed in physical packaging being a large squarish box. The respondent sells and markets the MAXLIGHT skylight both directly to consumers and by using third party distributors.
The representations were summarised by counsel for the applicant’s written closing submissions as follows:
“1. Representations to the effect that the MAXLIGHT skylight is “Energy Star” rated as depicted on the respondent’s packaging and website and including the use of the Energy Star logo (“the Energy Star Representations”).
2. Representations on the respondent’s website and brochure for the MAXLIGHT product that the Raycatcher Dome is able to capture “low angle” light and “reflect heat” (“the Raycatcher Dome Representations”).
3. Representations made in three diagrams used by the respondent on its website and brochures for the MAXLIGHT product, to the effect that the MAXLIGHT skylight captures low-angle light and reflects heat (“the Raycatcher Diagram Representations”).”
Legal Principles
Counsel for the applicant, Mr Andrew Fox, summarised the relevant legal principles in relation to contravention of ss.18 and 29 of the ACL as follows:
“The purpose of the statutory prohibitions in ss 18 and 29 of the ACL is to protect the public from deception: Scandinavian Tobacco Group Eersel BV v Troja Trading Company Pty Ltd [2015] FCA 1086; (2015) 115 IPR 246 at [101] per Allsop CJ.
The relevant principles when assessing whether conduct is false or misleading, or misleading or deceptive (or likely to mislead or deceive) are set out in a number of cases, including recently in ACCC v Valve (No 3) [2016] FCA 196 at [207]-[228] per Edelman J, and Flexopack S.A. Plastics Industry v Flexopack Australia Pty Ltd [2016] FCA 235 (Flexopack) at [259]-[277] per Beach J.
In determining whether conduct contravenes ss 18 and 29 of the ACL it is first necessary to identify the class of consumers to whom the conduct is directed: Campomar Sociedad, Limitada v Nike International Limited (2000) 202 CLR 45 at [103]; Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at [36].
The question then is whether the impugned conduct is misleading or deceptive to, or is likely to mislead or deceive, an ordinary and reasonable member of that class: Campomar Sociedad, Limitada v Nike International Limited (2000) 202 CLR 45 at [103]. Using the “ordinary or reasonable” member of the class construct avoids using the very ignorant or the very knowledgeable individual to assess effect or likely effect; it avoids using those credited with habitual caution or exceptional carelessness; it also avoids considering the assumptions of persons who are extreme or fanciful: Flexopack at [261].
The objective characteristics that one attributes to ordinary or reasonable members of the relevant class may differ depending on the medium for communication being considered, “there is scope for diversity of response both within the same medium and across different media.” Flexopack at [261].
For the purposes of the section one must then identify the relevant conduct and consider whether that conduct, considered as a whole and in context, is misleading or deceptive or likely to mislead or deceive: Flexopack at [262]. Whether the conduct is misleading or deceptive to, or is likely to mislead or deceive, an ordinary and reasonable member of that class is a question of fact to be determined having regard to all of the contextual circumstances in which the conduct occurred: Global One Mobile Entertainment Pty Ltd v ACCC [2012] FCAFC 134 at [108].
The principles to be applied in determining whether conduct is misleading or deceptive were set out in ACCC v Dukemaster Pty Ltd [2009] FCA 682 (Dukemaster) at [10] as follows:
“a. A contravention is established by “conduct” which is misleading or deceptive or likely to mislead or deceive. “Conduct” can include making a statement.
b. The “conduct” must lead, or be capable of leading, a person into error and the error or misconception must result from “conduct” of the person and not from other circumstances for which the person is not responsible.
c. Conduct is likely to mislead or deceive if there is a “real or not remote chance or possibility regardless of whether it is less or more than fifty per cent.”
d. The section is concerned with the effect or likely effect of conduct on the minds of those in relation to whom the question of whether the conduct is misleading or deceptive falls to be tested.
e. It is wrong to select particular words or acts which, although misleading in isolation, do not have that character when viewed in context.
f. Contravention does not depend on intention. The question is whether the statement conveys a meaning which is false.
In relation to advertising, significance may be attributed to the “dominant message” of the advertisement when assessing whether it is misleading or deceptive: ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640 (TPG) at [52].
Ultimately, in all the circumstances the conduct must lead a consumer into error, or be likely to lead the consumer into error: Parkdale v Puxu at 198 per Gibbs CJ. As the High Court expressed the issue in TPG (at [39]) conduct is misleading or deceptive, or likely to mislead or deceive, if it has a “tendency to lead into error”.
For the purposes of s 18, the words “likely to mislead or deceive” demonstrate that it is not necessary to show actual deception. It is also not necessary to adduce evidence from persons to show that they were actually mislead or deceived: Flexopack at [265].
There is also no requirement, in order to establish a s 18 contravention, that the conduct or its effect must endure up to the “point of sale.” Relatedly, “it is not necessary to show any actual or completed transaction entered into.” Flexopack at [269].
Further, it is not necessary for the Applicant to establish any reputation in relation to the products in issue. Rather, the question is whether consumers are likely to be misled or deceived by the respondent's conduct: Woodtree Pty Ltd v Zheng (2007) 164 FCR 369 at [34] per Heerey J; see also Flexopack at [272].”
The relevant legal principles are also usefully summarised by Wigney J in Australian Olympic Committee Inc. v Telstra Corporation Ltd (2016) FCA 857 at [132] (“AOC v Telstra”):
“(a) Section 18 of the Australian Consumer Law is not limited to misleading and deceptive representations. The question is whether the respondent’s conduct, which may include acts, omissions, statements or silence, is misleading or likely to mislead or deceive: Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at 655 [49] (per French CJ, Crennan, Bell and Keane JJ).
(b) Conduct is misleading or deceptive if it has a tendency to lead a person into error, or to believe what is in fact false. Conduct is likely to mislead or deceive if there is a real or not remote chance or possibility that it will have that effect: Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 87-88. It is insufficient for the impugned conduct to only cause confusion or wonderment: Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at 87 [106] citing the judgment of a majority of the Full Court in Taco Company of Australia Inc v Taco Bell Pty Ltd [1982] FCA 170; (1982) 42 ALR 177 at 201 (per Deane and Fitzgerald JJ).
(c) The question whether conduct is misleading or deceptive is an objective question of fact that is to be determined on the basis of the conduct of the respondent as a whole viewed in the context of all relevant surrounding facts and circumstances. Viewing isolated parts of the conduct of a party “invites error”: Butcher v Lachlan Elder Realty (2004) 218 CLR 592 at 625 [109] (per McHugh J); Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at 341-342 [102] (per Gummow, Hayne, Heydon and Kiefel JJ).
(d) The question involves the characterisation of the relevant conduct. Evidence that persons have in fact been misled or deceived by the conduct is not an essential element, however, it can in some cases be relevant and material: Parkdale Custom Built Furniture v Puxu Pty Ltd (1982) 149 CLR 191 at 198 (per Gibbs CJ).
(e) The tendency of the conduct or representation to mislead or deceive is to be considered or tested against the ordinary or reasonable members of the class to whom the representation was made or the conduct directed. The question is whether a substantial, or at least a reasonably significant, number of that class is likely to be misled or deceived: see Optical 88 Ltd v Optical 88 Pty Ltd (No 2) [2010] FCA 1380 at [336]-[342]. The focus on ordinary or reasonable members of the relevant class of consumers means, in effect, that possible extreme, unreasonable or illogical reactions can be put to one side.
(f) It is not necessary to prove that the respondent intended to mislead or deceive, however evidence of such an intention may constitute evidence that the conduct was likely to succeed in misleading or deceiving, and may make a finding of contravention more likely: Yorke v Lucas (1985) 158 CLR 661 at 666 (per Mason ACJ, Wilson, Deane and Dawson JJ) .
(g) Where the conduct or representation is in the form of an advertisement, the “dominant message” or “general thrust” of the advertisement is important. It is nevertheless important to have regard to the whole advertisement because context is or may be important. It may also be relevant to have regard to the external context in which a consumer is likely to view an advertisement: TPG Internet at 653-655 [45]-[49] (per French CJ, Crennan, Bell and Keane JJ).
(h) In considering whether a representation involving association is conveyed by an advertisement, it must be kept in mind that even vague suggestions are capable of evoking or conveying an association. The association need not be indicated in a manner which is very obvious, but can consist of a subtle or pervasive suggestion: Pacific Dunlop Limited v Hogan (1989) 23 FCR 553 at 586 (per Burchett J); Twentieth Century Fox Film Corporation v The South Australian Brewery Co Limited (1996) 66 FCR 451; Seven Network Ltd v News Interactive Pty Ltd [2004] FCA 1047 at [17]-[18].
(i) Where the conduct or representation is in the form of words, it would be wrong to fix on some words and ignore others which may provide relevant context and give meaning to the impugned words. It is necessary to have regard to the whole document: Butcher at 638-639 [152] (per McHugh J).
(j) In assessing or characterising the relevant conduct or representation, it is necessary to have regard to any relevant disclaimer. The substance, effect and prominence of the disclaimer must be considered in the context of the conduct or representation as a whole: Australian Competition and Consumer Commission v Telstra Corporation [2007] FCA 1904; (2007) 244 ALR 470 at 494 [116] citing the judgment of the Full Court in Keen Mar Corp Pty Ltd v Labrador Park Shopping Centre Pty Ltd [1989] FCA 54.
(k) The question must ultimately be whether any disclaimer communicates information in such a way or in such a manner that the effect of any otherwise misleading conduct or representation is reversed or erased: Butcher at 638-639 [152] (per McHugh J). A disclaimer in a document or on a website may be more effective than one on, for example, a television advertisement as the latter is likely to be more transient, ephemeral or less noticeable: TPG Internet at 654 [47] (per French CJ, Crennan, Bell and Keane JJ).
(l) There may be some circumstances where an express disclaimer inconsistent with the message otherwise conveyed will not prevent the conduct or representation from being misleading or deceptive, or might even reinforce that message: Telstra at [114]. Each case must be considered having regard to its own facts and circumstances.”
Findings of Fact
The findings below are based on the evidence before me, including an Agreed Statement of Facts filed in Court on 27 March 2017.
The trademark “Energy Star” is a mark owned at all materials times since 5 March 1999 by the United States Environmental Protection Agency (“the USEPA”).
The respondent used the Energy Star logo on one version of its brochure in relation to the MAXLIGHT and on some of its packaging.
Tubular skylights are used to bring light into rooms. Their operation is described in general terms in the Skylight Industry Association’s Code of Practice a copy of which was annexed to the affidavit of Brett Christopher Dickson, sworn 30 April 2016 as follows:
“Tubular skylights capture sunlight, bounce the light down the highly reflective light well and diffuse it at ceiling level.”
The applicant relied on the evidence of the following witnesses:
1. Brett Christopher Dickson, a director of the applicant.
2. Darrieux Willenberg, a private investigator.
3. Steven John Coyne, an expert in the operation of light.
4. Bradley John Gorton, the managing director of the applicant’s solicitors.
5. Craig Douglas, an investigator.
6. Michael Cowman, a skylight installer and premier dealer of the applicant’s products.
Each of Mr Dickson, Mr Gorton and Mr Coyne was cross-examined by counsel for the respondent, Mr Hamish Bevan.
Each of the applicant’s witnesses was frank and cooperative in cross-examination. I found each to be a reliable witness.
The respondent did not call any oral evidence.
Mr Dickson provided an overview of the skylight industry and the operation of tubular skylights.
Information about tubular skylights is made available through brochures, websites, displays, and through contact with stores.
Skylight products are purchased by a wide range of people including homeowners, builders and contractors, property developers, architects, interior designers, sub-contractors, home builders or home renovators, re-sellers and distributors of products, building material distributors and hardware stores such as Bunnings, Mitre10 and independent hardware stores.
A typical, reasonable and ordinary consumer of tubular skylights has the following qualities:
1. Is a home-owner.
2. Is aged between their late 20s to early 60s.
3. Is concerned with improving living arrangements in the home.
4. Has a budget of around $300 to $5,000 to spend on a skylight.
5. Wants to understand how the skylight they are purchasing works and how much light the skylight will give to the relevant space.
6. Inform themselves online about potential products to purchase by viewing websites and brochures supplied by skylight suppliers.
7. Relies on a sales consultant to provide advice about which product to purchase and to explain how the skylight will work and the technology it uses.
8. Has a look around what’s out on the market before approaching a sales person.
9. Will often have a sales person visit their home for an in-house quotation having made telephone contact.
10. Is very interested in the way the product looks, particularly from the inside.
The MAXLIGHT skylight is not an inexpensive product that is purchased fleetingly and on a whim, such as a snack or a cold beverage. It is necessary before installation to know the pitch of the roof, how big is the space between the roof and the ceiling, if there is any obstruction in the roof space and the size of the space to be illuminated.
Mr Willenberg attended the premises of the respondent and one of the respondent’s distributors in March 2016 and discussed the operation of the MAXLIGHT product with sales representatives. He was given a copy of the 2014 MAXLIGHT brochure. That brochure was entered into evidence as Exhibit 7A. Exhibit 7A is the same as Exhibit 2R which does not contain the Energy Star logo.
The three components of the MAXLIGHT tubular skylight (being the Dome, the reflective tube and the diffusor) are shown in the 2014 MAXLIGHT brochure marked Exhibit 1R. Exhibit 1R also has on it the Energy Star logo.
At some stage in 2014, the respondent produced another version of the MAXLIGHT skylight brochure, a copy of which was marked Exhibit 2R. Exhibit 2R did not include the Energy Star logo.
The affixing of the Energy Star logo to Exhibit 1R and its removal from Exhibit 2R was the only difference between Exhibit 1R and Exhibit 2R.
The applicant commenced this proceeding on 9 March 2015.
On 20 May 2015, the respondent entered into a Deed with the applicant without admission as to liability. By that Deed, the respondent undertook not to make any representation to the effect that its Australian-made range of MAXLIGHT skylight products are Energy Star rated or have been awarded an Energy Star unless it does so with the licensed authority or approval of the USEPA.
On 3 August 2015, the parties entered into a Heads of Agreement which contained a term, again without admissions as to liability, that the respondent would immediately and forever refrain from representing that its MAXLIGHT product or any other skylight product is Energy Star rated or has been awarded an Energy Star unless it has the licensed authority approval or certification of the USEPA.
In November 2015, the respondent produced a third version of its brochure, a copy of which is marked as Exhibit 3R. Exhibit 3R was available on the respondent’s website from November 2015 and distributed to the respondent’s distributors and sales representatives in February 2016.
Exhibit 3R contains a different diagram to those contained in Exhibit 1R and Exhibit 2R. Exhibit 3R does not contain the Energy Star logo. Exhibit 3R also contains slightly different information about the Dome.
Copies of Exhibits 1R, 2R and 3R are attached to these Reasons and marked Schedule 1, 2 and 3 respectively.
Mr Gorton gave evidence that he visited two shopping centres on 2 February 2016 and 23 February 2016. Mr Gorton took a brochure from a stand at the respondent’s display of the 2014 MAXLIGHT brochure, being the same as Exhibit 2R. He said that there were no other brochures for the MAXLIGHT skylight being offered at the displays.
In cross examination, Mr Gorton said that,
i)On about 1 September 2016, he was instructed by his wife, the applicant’s solicitor, to get another copy of the respondent’s brochure and to purchase a MAXLIGHT skylight if possible.
ii)Mr Gorton attended the premises of Solar Path, a distributor of the respondent, on 2 September 2016 where he told a representative that he was interested in purchasing a MAXLIGHT skylight.
iii)The representative suggested to Mr Gorton that a representative attend Mr Gorton’s premises to measure the space and recommend what size of skylight would be needed for his house.
iv)Mr Gorton paid a deposit for a MAXLIGHT skylight on 2 September 2016 and obtained another copy of the MAXLIGHT brochure, being the same as Exhibit 2R.
v)The MAXLIGHT ordered by Mr Gorton was not in stock on 2 September 2016.
vi)At a later date, Mr Gorton attended a garage of the premises of Solar Path where a box containing the Dome was loaded into the back of his car.
vii)Mr Gorton had made several attempts prior to that time to chase up the delivery of his MAXLIGHT skylight from Solar Path.
viii)The box containing the Dome collected by Mr Gorton from Solar Path did not have the Energy Star logo on it.
None of the evidence elicited in cross examination referred to in the preceding paragraph was in Mr Gorton’s affidavit evidence.
Mr Douglas gave evidence by affidavit that he visited the website of one of the respondent’s distributors and was able to print out a copy of the 2014 MAXLIGHT brochure that was in similar form to Exhibit 2R and did not contain the Energy Star logo.
Mr Cowman gave evidence by affidavit that on 7 July 2016, he attended the office of the respondent and asked to purchase a MAXLIGHT skylight which he did. The packaging of that skylight displayed the Energy Star logo and used the phrase “Energy Rated”. A copy of that box was tendered by the applicant and marked Exhibit 8A.
The Energy Star Representation
The applicant asserted that to use that Energy Star logo involved the respondent in conduct that was misleading or deceptive or likely to mislead or deceive thereby contravening s.18 and s.29(1)(a) of the ACL. Relevantly, those sections provide that:
“18 Misleading or deceptive conduct
(1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
…
29 False or misleading representations about goods or services
(1) A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:
(a) make a false or misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use; …”
The applicant relies on s.29(1)(a) insofar as it alleges that the respondent made a false or misleading representation that the MAXLIGHT skylight is of a particular quality by its use of the Energy Star. That “quality” was that by using the Energy Star logo on its advertising brochure, as reflected in Exhibit 1R, and on its packaging of the Dome the respondent was representing that the respondent’s MAXLIGHT skylight was approved energy rated and certified.
The Energy Star logo was placed on the brochure in the same line and proximity to other approvals and memberships such as the Housing Industry Association, the Clean Energy Council, the Skylight Industry Association and the fact that the product was made in Australia. I accept that a consumer would find those relationships all to be positive for the respondent as it would find the fact that the respondent was asserting that it had an Energy Star rating. Whilst the ordinary consumer may not know what the Energy Star rating specifically approves or conveys, I accept that the consumer would understand that it was a good thing that the respondent appeared to have that certification.
The respondent admitted that the relevant representations were made by it in trade or commerce.
The respondent submits that there was no evidence that the Energy Star certification has any meaning to Australian consumers or that its use of the Energy Star had a tendency to lead people into error. The respondent contended that the applicant failed to discharge its burden to establish the necessary and sufficient causal link between the respondent’s conduct and any alleged error on the part of the consumers. In particular, the respondent submitted that if a logo has no relevant meaning or significance to consumers in Australia, then Australian consumers cannot be led into error as a result of the use of that logo, irrespective of whether its use by the respondent had been approved by the USEPA.
Whilst I accept there is no evidence that any consumer would be misled by reference to the Energy Star logo on the packaging before purchasing a MAXLIGHT skylight product, on 7 July 2016, Mr Cowman purchased a skylight in a packaged box with the Energy Star logo on it and with the use of the phrase “Energy Rated” under the statement “Advantages of Solar Bright Skylights”, being Exhibit 8A.
In the circumstances, I am satisfied that a significant number of reasonable or ordinary consumers would be led, or may be capable of being led, into a misconception that the respondent’s MAXLIGHT skylight was energy rated by reason of the use by the respondent of the Energy Star logo. Such a consumer would be deceived into believing that the respondent’s product had received a positive energy rating by use of the Energy Star logo.
As stated above, given the positioning of the Energy Star logo on the brochure, being Exhibit 1R, and the prominence of the Energy Star logo on the box containing the Dome, being Exhibit 8A, the respondent is conveying that it has an energy rating that is positive for the MAXLIGHT skylight and that there has been some certification or approval to that effect.
Based on Mr Cowman’s purchase on 7 July 2016 of the respondent’s MAXLIGHT skylight in a box displaying the Energy Star logo, the applicant asks the Court to draw the inference that the brochure (in the nature of Exhibit 1R showing the Energy Star logo) and the packaging of the Dome with the Energy Star logo were readily available, despite the undertaking and the Heads of Agreement entered into by the respondent on 20 May 2015 and 3 August 2015 respectively. The applicant submits that the Court should draw the inference that the respondent continued to market the MAXLIGHT skylight with the use of the Energy Star logo.
I may have been prepared to draw such inference. However, during the cross-examination of Mr Gorton, being the managing director of the applicant's solicitors, it emerged that he had in fact bought a MAXLIGHT skylight on 2 September 2016 and collected it a week or so later, in a box package that has no Energy Star logo. As stated above, that purchase did not form any part of Mr Gorton's evidence in chief.
Nor was there any reference or suggestion in any of the evidence presented by the applicant that a purchase had taken place where the MAXLIGHT skylight came in a box without the Energy Star logo.
Whilst I accept the applicant would wish to put its best case forward, such conduct does not suggest full and frank disclosure to the Court about the activities of the respondent in circumstances where the applicant is asking the court to draw an inference that the respondent continued to market the MAXLIGHT skylight by use of the Energy Star logo. However, the applicant tendered only one box with the Energy Star logo. The applicant in its evidence did not refer to any other box, despite knowing that it had one in its possession that did not have the Energy Star logo.
Nor was there any evidence from the applicant that it brought Mr Cowman's purchase to the attention of the respondent with a suggestion that in fact the respondent’s undertaking was not being met.
But for Mr Bevan's skilful cross-examination, that evidence would not have been uncovered, and the Court may well have been prepared to draw the adverse inference advocated for by the applicant. However, in the circumstances, I do not draw such an inference.
Nevertheless, it would appear that the respondent has not been as diligent as it might have been in ensuring that it met the terms of the Deed of Undertaking and the Heads of Agreement. There was no evidence of any audit conducted by the respondent to ensure compliance with the terms of those documents.
An undertaking was tendered to the Court on 28 March 2017 and marked Exhibit 24R (“the Undertaking”). The Undertaking to the Court stated that, without admission as to liability, the respondent would not make any representation (including but not limited to product packaging) to the effect that its Australian-made range of MAXLIGHT skylight products are Energy Star rated or were awarded an Energy Star unless it has the licence, authority or approval of the USEPA and that those products have been in fact Energy Star rated or awarded an Energy Star by the USEPA.
However, in my view, the Undertaking alone is not sufficient sanction upon the respondent having regard to the fact that prior undertakings have been insufficient to ensure compliance (even though the prior undertakings were given to the applicant and not to the Court). Such conduct is to be condemned, particularly when there is no suggestion that such conduct was engaged in by mistake. Energy ratings are a matter of great community interest these days and are matters that would be relevant to most consumers, including a significant number of the respondent's ordinary and reasonable consumers. Energy efficiency ratings are commonly and regularly used in advertising by product manufacturers as qualities that enhance their products.
For those reasons, the respondent should be required to deliver up all brochures and advertising material relating to the MAXLIGHT skylight, including its packaging, that makes use of the Energy Star logo. To whom delivery up should be made is a matter to be further considered, together with any other relief sought by the applicant, including declaratory relief and corrective advertising.
Raycatcher Dome Representations
The representations relied on by the applicant as misleading and deceptive are statements regarding the performance of the respondent's Dome in its various MAXLIGHT skylight brochures. Since September 2014, the following representations have been made in relation to the Dome:
“i. ‘Minimises midday light intensity’ (applicant submits that it must be heat reducing)
ii. ‘Advanced optical dome engineered to capture the sunlight and bring it down into the tube, even during low-light hours’ (applicant submits this suggests the Dome has engineered features)
iii. ‘Captures low light angle’
iv. ‘Durable Injection moulded device, designed to capture sunlight even during low-light hours in the morning, late afternoon or during the winter, it also blocks midday light intensity’”
(Emphasis added).
Further, since at least November 2015, the following representations have been made in relation to the Dome:
“i. ‘Smart dome reflects some low light angle’ (applicant submits this means significant amount of reflection, not just consequential from being a piece of plastic)
ii. ‘Firstly our advanced optical Raycatcher Dome is engineered to capture the most sunlight possible during the day. Even reflecting some of the light when the sunlight is on a low angle’
(Emphasis added).
The applicant submits that, based on the evidence of Mr Steven Coyne, the Dome does not capture “low angle light”, or “minimise” or “block” midday light intensity.
The applicant submits that the amount of light captured by the Dome is so miniscule as to be effectively de minimis, such that there is no basis for the representations made since November 2015.
The respondent submits that it is wrong to fix upon the words identified by the applicant in isolation and then seek to attribute to the particular construction to be negated. The respondent submits that the words must be considered in context (see ACCC v Valve (No 3) [2016] FCA 196 at [212] per Edelman J (“ACCC v Valve”); Flexopack S.A Plastic Industry v Flexopack Australia Pty Ltd [2016] FCA 235 at [262] per Beach J; Global One Mobile Entertainment Pty Ltd v ACCC [2012] FCAFC 134 at [108] per Greenwood, Logan and Yates JJ; ACCC v Dukemaster Pty Ltd [2009] FCA 682 at [10] per Gordon J; ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640 at 655 [49] per French CJ, Crennan, Bell and Keane JJ (“TPG”) ; Butcher v Lachlan Elder Realty (2004) 218 CLR 592 at 625 [109] per McHugh J (“Butcher”)).
The applicant must show that a substantial, or at least reasonably significant, number of the class of consumers identified (see paragraph 23 above) is likely to be misled or deceived. The ordinary or reasonable consumer of skylights, in particular tubular skylights, is the relevant class (see ACCC v Valve at [215] and [218]; Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at 87 [103] per the Court (“Campomar”); Optical 88 Ltd v Optical 88 Pty Ltd (No.2) [2010] FCA 1380 [336] – [342] per Yates J (“Optical”); AOC vTelstra at [132] per Wigney J).
The applicant tendered an expert report by Mr Steven Coyne marked Exhibit 13A. Mr Coyne is a physicist working as an independent lighting consultant, with specialised knowledge in photometry and optical design of lighting products.
In cross-examination, Mr Coyne stated that his field of specialised knowledge related to a “detailed knowledge of lighting from the way it interacts with objects, and is measured, so photometry and the applied optics, and then also from the way in which we see that light as well, so from some of the vision science as well.”
Mr Coyne agreed that he did not have any training, study or experience in sociology, consumer perception or consumer behaviour. Further, Mr Coyne agreed that he did not hold himself out as an expert in the field of consumer behaviour.
In relation to his expertise, Mr Coyne explained his methodology used in the provision of his opinion in relation to the performance characteristics of the MAXLIGHT skylight. Mr Coyne agreed one must make sure that one has very precise measurement in conducting photometry and lighting experiments.
Mr Coyne’s experiments were conducted with a stable source of light, being a laser beam, although he stated that with a light source there is uncertainty in the stability in the power supply that is relevant when doing measurements. Mr Coyne agreed that in doing a test report or a diagram, for example, one is very precise in the figures put down on the diagram and that the numbers put down are those physically read. Mr Coyne then stated that there was a 5% to 15% uncertainty associated with his measurements.
Mr Coyne’s laboratory measurements showed that between 5% and 7% of light reflected off the outside of the dome. The measurements also showed that between the angles of 71 degrees and 75 degrees, between 7% and 10% of light reflected off the inside of the dome and then downwards. Mr Coyne made no measurements below 75 degrees.
Further, Mr Coyne agreed that, if one had a MAXLIGHT skylight in a house somewhere, how it would actually work in practice at a particular spot would depend on the location of the property in terms of longitude and latitude, the pitch of the roof and the surrounding environment. Mr Coyne stated that “all building materials, as in natural light entry for any buildings is always restricted or influenced by the external environment”. Mr Coyne agreed that it may depend on whether or not you have a clear view to the horizon or whether it is broken up by some trees or other buildings.
Mr Coyne’s report provides in some detail the tests he conducted on the Raycatcher Dome.
Mr Coyne opined that, regardless of any light angle, the measurement results indicated that the majority of the light is always transmitted passing directly through the dome. That opinion is not inconsistent with some of the light being reflected down the tube.
Mr Coyne also opined that at very low angles of light, there is evidence of light reflected from the back inner surface of the dome, although the proportion of the light reflected is only approximately 7% of the incident light and that 74% of the light is transmitted through and away from the dome.
Mr Coyne agreed that “daylighting” is using sunlight and skylights to lighten or enhance the lighting of an interior space and that it can be done in a number of different ways. In his report, Mr Coyne said that his test results indicated that the Dome behaved “optically as expected (in terms of direction and proportion of light) for a sheet of relatively constant thickness curved acrylic sheet (or similar material) with polished surfaces. In other words, the MAXLIGHT dome does not behave in any special way but as a normal sheet of acrylic. Visual inspect of the MAXLIGHT dome does not find any evidence of technology which would be required to achieve such an outcome.”
Mr Coyne concluded that the MAXLIGHT Dome does not “capture” (or direct) low angle light in the manner claimed in Exhibits 1R, 2R and 3R. The applicant relied on the conclusion of Mr Coyne that the MAXLIGHT skylight was not able to “capture” (or direct) any significant amount of light even at low angles of the sun. Mr Coyne concluded that there is no situation where the Dome would “minimise” or deflect midday light intensity in the manner claimed.
Mr Coyne’s report is full of technical expressions and terms. Plainly, the words used in Exhibits 1R, 2R and 3R are not intended to be technical expressions with quantitative or qualitative parameters. As stated above, the definition in the Skylight Industry Association’s code of practice of tubular skylight is that “tubular skylights capture sunlight, bounce the light down the highly reflective light well and diffuse it at ceiling level.”
In my view, the words used by the respondent in Exhibit 1R, 2R and 3R and the website do no more than elaborate on that practice code. I do not accept the applicant’s submission that the Dome reflects a significant amount of low light angle. The words themselves simply state “some low light angle”. Mr Coyne does not suggest that there is absolutely no capturing of low light angle or reflection of sunlight down the tube when the sun is on a low angle.
Moreover, the words form a small part of the overall content of the brochures in Exhibits 1R, 2R and 3R. The words form less than a quarter of one of the eight pages of the brochure. The brochure purports to explain how the skylight works.
The words complained of by the applicant are in a section headed “Cutting edge technology in daylighting”. That page contained the words complained of, together with a diagram also complained of, as well as depictions of the flashing to be used, the silver tube and the optical diffusion system.
Thereafter, there is a page given over to “Performance, quality plus choice” which relates to the ceiling diffusers to be installed, as does the following page titled “Add style & elegance”. Turning the brochure over, the next page is headed “Ingenuity meets convenience”. That page depicts a light dimmer, an electric light inside a tube and a combination skylight and ventilation.
Some of the statements complained about are confined to the respondent’s website. Again, I do not accept that any potential consumer would read those words as reflecting particular scientific technical data. Rather, it is brief advertising language that a consumer would expect to read. Moreover, the language used is in line with the Skylight Industry Association’s code of practice description in general terms of the operation of a tubular skylight. In my view, the heading “Cutting edge technology in daylighting” is nothing more than advertising puffery.
I accept the submission of counsel for the respondent that the ordinary reasonable person to whom the brochures are directed appreciates from the whole context that the dominant message is that the MAXLIGHT skylight is a tubular skylight that brings light into a room by the combined effect of the Dome, the tube and the diffuser. This it does.
In my view, the ordinary reasonable consumer identified by the applicant would not be misled or deceived in reading those words or led into error in reading those words as to what it was that the MAXLIGHT skylight would be able to do. They are plainly advertising words used to gain the consumer’s attention.
As French CJ observed in Campbell v BackofficeInvestments Pty Limited (2009) 238 CLR 304 at 319 [25], characterisation of conduct “generally requires consideration of whether the impugned conduct viewed as a whole has a tendency to lead a person into error” (see also TPG at [49] per French CJ, Crennan, Bell and Keane JJ).
The task of characterisation is to be undertaken with the object of the ACL in mind, namely, “to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection” (see s.2 Competition and Consumer Act 2010 (Cth); Optical at [342] per Yates J).
Accordingly, I am not satisfied that the ordinary or reasonable consumer would be misled or deceived, or likely to be misled or deceived, as to the qualities of the MAXLIGHT skylight as conveyed on the respondent’s brochures or its website.
Raycatcher Diagram Representations
The Raycatcher Diagram Representations are contained in the diagrams identified in Exhibits 1R, 2R and 3R and the respondent’s website.
Exhibits 1R and 2R have the same diagrams used from at least September 2014 to around 24 November 2015 and that diagram is as follows:
On its website, the respondent used the following diagram from at least 24 November 2015:
Exhibit 3R used the following diagram since 24 November 2015:
This diagram was expressed on the brochure to be “Image of light for illustration purposes only”.
The applicant contends that each of the diagrams is misleading and deceptive or likely to mislead or deceive because each of the diagram represents to consumers that the Dome has the capacity to:
(a)Deflect a significant amount of low angle light into the skylight cylinder.
(b)Reflect a significant amount of heat away from the Dome and skylight cylinder.
The applicant submits that the amount of low angle light deflected in (a) is represented as “significant” because of the thickness of the blue arrows in each diagram which represent the “late pm” and “early am” deflection by the Dome into the cylinder during those periods.
The applicant submits that the reflection of heat away from the Dome and skylight cylinder in (b) is represented as “significant” because of the wide red arrows which the applicant says represent that significant amount of light and all the associated heat occurring at midday is reflected away from the Dome; and, that the thin red arrows in the third diagram represent that all, or a significant amount, heat occurring at late pm and early am, is reflected away from the Dome.
I do not accept those submissions of the applicant.
In relation to the third diagram, the brochure clearly says “Image of light for illustration purpose only” immediately under the diagram. That disclaimer forms part of the matrix of the conduct alleged to be misleading or deceptive and must therefore be included in the Court’s consideration of the conduct as a whole. A disclaimer on a document or website has been taken to be more effective that one on television where it may be less noticeable (see ACCC v Valve at [214]; Butcher at [152] per McHugh J; ACCC v Telstra Corporation Ltd (ACN 051 775 556) [2007] FCA 1904 at [116] per Gordon J; TPG at [47] per French CJ, Crennan, Bell and Keane JJ; AOC vTelstra at [132 (i)-(l)] per Wigney J). In my view, for the reasons below, even without the disclaimer, the diagrams do not contravene the ACL for the reasons claimed.
In relation to all the diagrams, the lines in the diagrams are thick in order for a consumer to be able to see what it is the respondent is saying occurs. I do not accept that any reasonable ordinary consumer would understand the depiction or the diagrams to suggest that all heat is reflected from the dome at midday and that all light is deflected down the tubes.
The respondent does not suggest that the diagram depicted on the first inside page of the brochures under the heading “How it works” is objectionable. To my mind, the smaller diagrams on the next page under “Cutting edge technology in daylighting”, about which the applicant complains, when read with the ‘How it works’ diagram are clearly intended to be no more than an emblematic representation of what a tubular skylight is doing as opposed to a flat skylight.
Similar to the descriptive words used by the respondent to which the applicant objects, the diagrams represent about an eighth of one page of an 8-page brochure and must be read in context as a whole.
The third diagram with the smaller red arrows pointing up, to my mind, is somewhat confusing. However, I do not accept they would lead the ordinary reasonable consumer into error as to what it is that the Dome does.
I do not accept the applicant’s submission that the representations are more prominent than any other representations that have been made about the MAXLIGHT product’s features and benefits elsewhere in the brochures or on the website. It is insufficient for the representations to only cause confusion or wonderment. In Campomar, the Court referred to Dean and Fitzgerald JJ in Taco Company of Australia Inc. v Taco Bell Pty Ltd (1982) 42 ALR 177, where their Honours said at 201:
“The question whether particular conduct causes confusion or wonderment cannot be substituted for the question whether the conduct answers the statutory description contained in s 52”
The third diagram in my view borders on confusion and wonderment at what those red arrows mean at all.
However, I accept that the dominant message of the brochures and the diagrams is that the MAXLIGHT skylight is a tubular skylight that brings light into the room by the combined effect of the dome, the tube and the diffuser. I accept the submission of the counsel for the respondent that this message is reinforced by the structure and composition of the brochure.
In my view, the ordinary reasonable consumer would read and understand the words and images in context, as being illustrative of the general concept that the skylight reflected some of the sunlight when the sun is high in the sky and reflected some of the sunlight down the tube when the sun is at a low angle; as well as deflecting some of the heat from the Dome at midday.
The applicant alleges that the Raycatcher Dome Representations and the Raycatcher Diagram Representations are false, misleading or deceptive because:
“In order to have the advanced optical performance characteristics (of the representation), (the MAXLIGHT skylight product) must have optical features which enhance the product to perform in the manner claimed, which optical features (it) has not possessed at any material time.”
I accept the respondent’s submission that the applicant’s case is dependent upon construing the impugned statements as being “advanced optical performance characteristics”; and that the extracted images convey implied representations about “significant” deflection of “low light angle light” and reflection of “heat” and that these implied representations also relate to “advanced optical performance characteristics”; and that “certain optical features” are essential.
As stated above, I do not accept that the ordinary and reasonable consumer would in context understand those to be representations conveyed to them by the words and diagrams in the respondent’s brochures and website. The applicant provided no evidence to suggest that certain “optical features” are essential.
I accept that the ordinary and reasonable consumer would understand from the whole context that the images are not technically detailed drawings or plans to be taken literally. The ordinary and reasonable consumer reader would understand that the diagrams are emblematic conveying in simple terms the skylight reflected some of the sunlight when the sun is high in the sky and reflected some of the sunlight down the tube when the sun is at a low angle. I also accept that on the evidence before me, the MAXLIGHT skylight does not work to the contrary.
Accordingly, none of the Raycatcher Dome Representations or the Raycatcher Diagram Representations is made out as conduct in contravention either of s.18 or s.29 of the ACL.
I certify that the preceding one hundred and eight (108) paragraphs are a true copy of the reasons for judgment of Judge Emmett
Associate:
Date: 12 April 2017
Schedule 1
Exhibit 1R
Schedule 2
Exhibit 2R
Schedule 3
Exhibit 3R
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