Australian Competition & Consumer Commission v Berrivale Orchards Ltd [1997] FCA 460

IN THE FEDERAL COURT OF AUSTRALIA) ) NEW SOUTH WALES DISTRICT REGISTRY) No NG 313 of 1997 ) GENERAL DIVISION ) BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant AND: BERRIVALE ORCHARDS LIMITED (ACN 908 077 889) Respondent CORAM: LINDGREN J PLACE: SYDNEY DATE: 23 May 1997 REASONS FOR JUDGMENT (ex tempore) INTRODUCTION There are before the Court two motions. One is brought by the applicant ("the ACCC") against the respondent ("Berrivale") by notice of motion filed on 28 April 1997. It seeks, in paras 1 and 2, the following relief: "1. Pending the hearing or determination of the Application or further order, the Respondent be restrained from supplying to retailers or to the public fruit juice labelled as 'Cherry Berry 100% Fruit Juice', where: (a) the fruit juice does not contain 100% cherry and berry juice; or (b) the fruit juice comprises, or partly comprises, apple juice. 2. Pending the hearing or determination of the Application or further order, the Respondent within 48 hours of the date of this order use its best endeavours to cause the removal of all Berrivale fruit juice labelled 'Cherry Berry 100% Fruit Juice', and without reference to the fact that the fruit juice contains apple juice (except in small print in the list of ingredients), from the shelves of supermarkets and other retail outlets within Australia where: (a) the fruit juice does not contain 100% cherry and berry juice; or (b) the fruit juice comprises, or partly comprises, apple juice." The second motion is brought by notice of motion filed on 12 May 1997, again by the ACCC against Berrivale, in which the following order is sought: "1. Pending the hearing or determination of the Application or further order, the Respondent be required at its own expense within 14 days of the date of this order to place advertisements, in the terms of the Annexure hereto, in each major metropolitan daily newspaper circulating in each State or Territory in which Berrivale 'Cherry Berry 100% Fruit Juice' products are supplied. The advertisements must: (a) be at least 2 columns by 160mm in size; (b) be printed in at least 10 point text; (c) be placed in the general news section of each newspaper; and (d) be placed in two issues of each newspaper, one being a weekend issue. Copies of the advertisements so placed are to [sic] provided to the Applicant within 21 days of the date of this order." The corrective advertisement referred to in this second motion is as follows: "CORRECTIVE ADVERTISEMENT This is a corrective advertisement required by the Australian Competition and Consumer Commission and concerns claims made on the label of 'GlenPark Cherry Berry 100% Frit Juice' supplied by Berrivale Orchards Limited. The product is marketed in a one litre pack and a two litre plastic container on which the words 'Cherry Berry 100% Fruit Juice' appear prominently with graphics of cherries and berries. The product actually comprises 98% apple juice, 1% blackcurrant juice and 1% cherry juice. Following discussions between Berrivale and the ACCC, Berrivale agreed to place stickers on the one litre packs and the two litre containers of 'Cherry Berry 100% Fruit Juice' advising consumers that the product contained 98% apple juice. The ACCC has instituted proceedings in the Federal Court seeking orders for refunds to consumers who claim to have been misled by the labelling on 'Cherry Berry 100% Fruit Juice' on proof of purchase. Such consumers are therefore advised to retain products purchased without a sticker and the receipt for the purchase. (Berrivale logo) (ACCC logo)" BACKGROUND The proceeding was commenced by application filed on 24 April 1997 supported by a statement of claim. The general nature of the allegations made by the ACCC will appear in the following brief account. The case relates to the marketing by Berrivale of a two litre plastic bottle of juice and a one litre "tetra pak" of the same juice. On the front of each container there appears the following: GlenPark ALL JUICE CHERRY BERRY 100% FRUIT JUICE Below this material there appears what is referred to as a "graphic". It is a picture of berries and cherries. On the back or side of the containers is the following statement of "ingredients": "RECONSTITUTED APPLE (98%), CHERRY (1%) AND BLACKCURRANT (1%) JUICES". The ACCC contends that there is a contravention of section 52 of the Trade Practices Act 1974 and also of section 53(a) of that Act in the label on the front of both containers. The contention is that a buyer is led to believe that the contents are 100 per cent cherry and berry juice, while the truth is that the product is, as to 98 per cent, apple juice. The ACCC points to the fact that both products are inexpensive and are likely to be bought by consumers without much deliberation, and certainly without a careful reading of the material on the back or side of the containers. The evidence shows that the recommended retail price of the two litre plastic bottle is $3.09 and the recommended retail price of the one litre tetra pak is $1.49. The products are purchased in supermarkets and other outlets. In relation to the interlocutory relief sought, the parties accept that there are two issues: firstly, whether there is a serious question to be tried as to whether contravention of one or other of the two provisions to which I have referred exists of a kind in respect of which the ACCC would obtain final injunctive relief; and, secondly, whether the balance of convenience favours the granting of interlocutory relief. In relation to the first question, I have already indicated, in part, the kind of case sought to be made by the ACCC. In addition, the ACCC emphasises that in the picture on the front of each package, there is no fruit other than berries and cherries. Senior counsel for Berrivale, on the other hand, submits that the marketing of the product is, by way of illustration, akin to the marketing of a drug, contending that it would surely not be misleading or deceptive to sell a drug by reference only to its dominant or active chemical without mention of its passive chemical. He submits that the juice in question in the present case does not look like apple juice, does not smell like apple juice, and does not taste like apple juice, but has the appearance, smell and taste of cherries and berries. Again, Berrivale emphasises that it is not in contest that the product comprises 100 per cent fruit juice, and further that the ACCC does not suggest that the product has less value because it comprises 98 per cent apple juice rather than 100 per cent cherry and berry juice. The questions before me are, of course, to be determined on the basis that this is an interlocutory application and that I am not to make findings of fact. I think that it is arguable that the products are misleading or deceptive and that the label makes a false representation as to the composition of the fruit juice. It suffices to say that there is a serious question to be tried that a person reading the label quickly would be caused to think that the contents were "all" juice of a berry and cherry kind. This conclusion requires me to attend to the issue of the balance of convenience. The evidence on this matter on both sides was rather extensive. Much of the background is to be found in an affidavit of Ashley Sherwood Roff sworn 16 May 1997. Mr Roff is the Company Secretary and General Counsel of Berrivale. I will give a short account of his affidavit. Mr Roff says that he has responsibility within Berrivale for compliance with the Trade Practices Act and for liaison with the ACCC. As well, he says that he is responsible for reviewing manufacturing processes and labelling to ensure compliance with the National Foods Standard Code and the Trade Practices Act. He gives a detailed account of the way in which the products manufactured by Berry are distributed. In part, that evidence is relevant to show what is, perhaps, obvious enough: that it is not possible to affix corrective stickers instantly on all product items on all the supermarket shelves throughout Australia. Indeed, products once sold by Berrivale become the property of the supermarket chains or other buyers. Mr Roff also makes the point that at any moment of time, stocks of a product still owned by Berrivale are not only at its factories, but may be on trucks en route to supermarkets or the warehouses of supermarket chains. Mr Roff says that in or about mid-1996 he was asked to review the labelling of the product in question. He says that, as a result, a decision was taken to replace the existing labels with new ones. The change was initiated on 22 July 1996. His affidavit gives an account of the steps taken to implement the change, including the briefing of a firm called "Labelmakers", and the obtaining of quotations, artwork, approval of artwork, and the production of the new labels. Paragraph 18 of Mr Roff's affidavit is as follows: "18.It was intended that the new labels would be introduced as soon as the old labels had run out in the manufacturing and packaging process. It was expected that the new labels would have been introduced to this process by approximately early 1997. However, the sales of the juice were slower than had been projected. In addition, whilst new print plates for the combi packs were created in September 1996, Southcorp Packaging did not (as they had been requested to do) change the print plates in the next print run. A print run in March 1997 was carried out utilising the old 'Cherry Berry' plates." On or about 11 April 1997 Mr Roff received a letter of that date from the Australian Government Solicitor, in effect raising the ACCC's complaint about the label which is attacked in the present proceeding. In consequence, Mr Roff took immediate action. White stickers in the form of a disc were printed and were dispatched, in the first instance, to branches of Berrivale. The stickers state: "Contains 98% Real Apple Juice". They were dispatched on or about 29 April 1997. Branch managers were instructed that all existing stocks of the juice, including those in retail outlets and warehouses, must have the stickers affixed to the labels on the containers. I need not detail the steps taken during late April and early May with a view to ensuring that the stickers were affixed to the stock held by Berrivale and on the shelves of supermarkets. Mr Roff gives an account of the information given to him by various representatives of Berrivale in the respective States and Territories as to the situation as at or about 9 May 1997. Mr Roff says in para 32 of his affidavit: "By reason of the above: 32.1The vast majority of the juice with the old labels will have been stickered by Thursday 22 May 1997. 32.2By approximately the end of May 1997 it would be expected that all stock in retail outlets will have the new labels." I should say that the ACCC does not take issue with the proposition that the affixing of the disc sticker overcomes the allegedly misleading and deceptive effect of the label on the front of the containers. Evidence was led by the ACCC with a view to showing that, notwithstanding Mr Roff's evidence, a random check of shops revealed that there remained on shelves a substantial number of items of the products to which the correcting disc had not been affixed. However this was countered in due course by evidence led by Berrivale of the up to date position in those shops which had been visited by the representatives of the ACCC. When I say "up to date", I mean as at 20 May 1997. The following summary of the affidavit evidence in this respect demonstrates the position: "SUPERMARKETS/STORES TO VISIT Doncaster, Victoria ACCC [Berrivale] Doncaster Shopping Town Complex, Coles 2/5-6/5 [SIC - 8/5] 20/5/97 Doncaster Shopping Town complex, Franklins 6 No stickers 10 with 1 without Camberwell, Victoria 6 " " 6 with 0 without Riverside Road Angus Tuckerbag 3 No stickers No Bottles Greenslopes, Queensland 40 No stickers All Stickered x 23 Greenslopes Shopping Mall Logan Road, Coles 15 No stickers All Stick'd x 18 Belconnen, ACT 10 " " 3 Unstickered Belconnen Mall, Woolworths 20 " " 26 Stickered Belconnen Mall, Coles NIL BOTTLES No Bottles Queanbeyan, NSW " " No Bottles Riverside Plaza, Coles 10 No stickers All Stickered x 8 Adelaide, SA {10 with } All Stickered x 19 Sefton Park, Woolworths {10 without} 14 with 2 without Sefton Park, Franklins 6 No Stickers 8 with 4 without North Adelaide, Foodland 6 " " 14 with 0 without Central Market, Coles 6 " " 17 stickered Coburg, VIC 12 " " 28 stickered Coburg, Coles 20 No stickers 7 stickered Brunswick, VIC 17 No stickers Unknown Brunswick, Coles 2 No stickers " " Brunswick, Franklins No Bottles Darlinghurst Sydney, NSW Oxford Street, Clancy's Townsville, QLD Kmart Plaza, Nathan Street, Aitkenvale, Coles (note statement taken speak to Lomas) Rising Sun Shopping Centre, Mundingburra, Coles (speak to Nicholls and/or McCall) Darwin, NT Casurina Shopping Centre, Coles Casurina Shopping Centre, Woolworths