FEDERAL COURT OF AUSTRALIA Stalyce Holdings (Aust) Pty Ltd v Channel Seven Melbourne Pty Ltd [2001] FCA 212 STALYCE HOLDINGS (AUST) PTY LTD v CHANNEL SEVEN MELBOURNE PTY LTD and CHANNEL SEVEN SYDNEY PTY LIMITED N 179 OF 2001 TAMBERLIN J SYDNEY 28 FEBRUARY 2001 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 179 OF 2001 BETWEEN: STALYCE HOLDINGS (AUST) PTY LTD APPLICANT AND: CHANNEL SEVEN MELBOURNE PTY LTD FIRST RESPONDENT CHANNEL SEVEN SYDNEY PTY LIMITED SECOND RESPONDENT JUDGE: TAMBERLIN J DATE: 28 FEBRUARY 2001 PLACE: SYDNEY REASONS FOR JUDGMENT 1 In this matter the applicant seeks orders from the court restraining the respondents, which are two television channels, from broadcasting certain material. The specific orders which are sought are: 1. An order that, until 5.00pm on 28 March 2001, the respondents be restrained from broadcasting or publishing any material that states or represents that:- (i) the "Clean Team Radiator Coolant" manufactured by the applicant does not comply with the appropriate Australian and/or international standards for engine coolants for car engines; (ii) the coolant manufactured by the applicant has the potential to destroy the aluminium component of car engines; (iii) the coolant manufactured by the applicant has the potential to cause damage to car engines; or (iv) the coolant manufactured by the applicant is inferior to coolants manufactured by other manufactures. 2. An order that, until 5.00pm on 28 March 2001, the respondents be restrained from broadcasting or publishing any material that states or represents that tests carried out for the respondents on the applicant's coolant:- (i) have been carried out in accordance with appropriate and relevant Australian and international standards; (ii) are accurate; (iii) show that the coolant manufactured by the applicant is defective; (iv) show that coolant manufactured by the applicant caused damage to car engines; or (v) show that coolant manufactured by the applicant is inferior to coolants manufactured by other manufacturers. 3. An order that the respondents deliver to the applicant's solicitor, within 7 days: (i) 2.5 litres of the Clean Team radiator coolant referred to as sample no. 52553 in the draft report of Cetec Pty Limited, on radiator coolant testing for Channel Seven dated February 2001, and (ii) 2.5 litres of the Clean Team radiator coolant referred to as sample no. 52559 in that report. 2 As can be seen restraining orders are sought, until 5.00 pm on 28 March 2001, from broadcasting material relating to Clean Team Radiator Coolant. The basis of the application is that there will be misleading and deceptive statements made in the broadcast and for this purpose reliance is placed on what I am told is a draft of the interview which has been produced to the court. I will not set out here the details of the statement in the proposed interview. 3 The application is opposed on a number of grounds. In particular, reliance is placed on the provisions of s 65A of the Trade Practices Act 1974 ("the Act"). On the material before me I am satisfied that this section applies in relation to the television channels. 4 The application which was originally filed has been amended to enable the applicant to rely on the provisions of s 75B of the Act which refers to a person involved in the contravention of the Act, in the sense that they have aided, abetted, counselled, or procured the contravention. It is submitted, in relation to this provision, that the television channels or the interviewers or agents should have been aware that the statements proposed to be made in the interview are misleading or deceptive or are misrepresentations. The submission, more fully framed, is that the respondents should have been aware, or were on notice, that there were misrepresentations likely to be made. 5 The question which has arisen in relation to the misrepresentations arises from the fact that a person or persons who are said to be experts have prepared a draft report in relation to radiator coolant testing for Channel Seven. I am informed that a copy of that draft report was first furnished in the course of the hearing. One of the authors of that report is Dr Vyt Garnys who is the managing director of Cetec Consulting Enterprises in Technology. His qualifications are stated on the draft report. The second author is a senior consultant who appears to have scientific qualifications. 6 The concern of the applicant is that unless a restraint is placed on the broadcasting of this material considerable detriment will be suffered by the product and consequently the applicant. Included in the anticipated detriment are the possible return of stocks of coolant held by major distributors, the possible frustration of negotiations with a multi-national company involving the possible endorsement of their coolant. In addition there is also reliance placed on the adverse impact upon the general reputation of the applicant should the material go to air in its present form. 7 At the heart of the argument in relation to the misrepresentation is the suggestion that it is apparent from the draft report that it was not carried out in accordance with the Australian Standard although the report on its face states, in two places, that the tests were carried out in accordance with the Australian Standard which refers to and incorporates the relevant American Standard. The latter sets out additional requirements to those in the Australian Standard. 8 On reading the application it is clear that there are strong adverse comments made in relation to various brands of coolant which relate to possible corrosive effects on radiators. The concern of the applicant is that its product is identified and shown in, to say the least, an unfavourable light in the proposed program. In the course of the hearing counsel for the applicant has pointed to the provisions of the Australian Standard and has also referred to tests which have been carried out over the years on the applicant's coolant including most importantly and more recently a report carried out in January 2001 by Dupont Australia in which the coolant appears to satisfy the requirements of the Standard. There is a certificate from Dupont to that effect. 9 In relation to the question of whether or not there was a misrepresentation, I think that there is a serious question to be tried as to misleading conduct although on the evidentiary material before me at the present time I am not convinced that the case can be described as a strong one. However I do think there is a question which has been raised of sufficient substance to satisfy the required threshold. 10 In relation to the question of the balance of convenience, I have already referred to the arguments which have been put forward on behalf of the applicant as to the anticipated damage or loss that will be suffered. In response to this, the respondents indicate that there is a suitable alternative remedy available namely an action in defamation and reference is made to s 65A of the Act as embodying a legislative indication of the public interest. 11 The respondents point to the importance of the public interest in protecting the freedom of speech inherent in the expression of opinions, particularly by public information providers. Reference is made to statements in the cases indicating the great importance which is attached by courts to freedom of expression and particular reference was made to the judgment of Hunt J in Chappell v TCN Channel 9 (1988) 14 NSWLR 155 especially at 163-164 where his Honour emphasises the importance of the right of a defendant to have freedom of speech protected. In addition reference was made by both parties to the decision of French J of this Court in Advanced Hair Studio Pty Limited v TVW Enterprises (1987) 18 FCR 1, particularly to the discussion by his Honour of s 65A at p 6 and to the references to accessorial liabilitytogether with the question of whether there has been an activity in trade and commerce. His Honour at the close of that decision at pp 16 and 17 refers to the exercise of discretion and to the balance of convenience. 12 I should say that on behalf of Channel Seven no particular prejudice has been shown except inconvenience in developing the broadcast. Reliance has been placed on the broad public interest and on the fact that the research which had been carried out by its independent contractors indicated that the tests were carried out in accordance with the Australian Standard. In particular in Advanced Hair Studio French J said: "In my opinion, there are elements of the case advanced by the applicant which, while they may raise arguable issues, have a doubtful prognosis. The balance of convenience tends in favour of the applicants on economic impact. There is also a real risk that the telecast may result in the propagation of false factual material. Those factors are, I think, redressed by the opportunity for response and in the public interest in avoiding unnecessary restrictions on the free flow of information." 13 In my opinion, the latter sentence in his Honour's judgment indicates again the great weight that is placed in the free flow of information in the exercise of the discretion to grant an injunction restraining expression. There has been an opportunity afforded to the applicant to respond to the questions which have been raised and indeed, on the evidence of Mr O'Sullivan, there has been an opportunity to participate in an interview, but this has been declined. In all the circumstances it is my view in the present case that on the balance of convenience the preferable course is that the injunction should not be granted and accordingly I refuse the application. 14 As to the costs of appearance by the respondent yesterday, I think it was not unreasonable for the respondent, having been notified, to appear in court and I do not think they should be deprived of costs which they have incurred in respect of their appearance yesterday. True it is that the application was one that could have been made ex-parte but I think the general interests of justice were best served by having representatives putting opposing points of view in the case. Accordingly I think that the costs ought to follow the event of this application for interlocutory injunction. I therefore award costs to the respondents of the application. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. Associate: Dated: 15 March 2001 Counsel for the Applicant: C M Harris Solicitor for the Applicant: Eddy & Moloney Counsel for the Respondent: T S Hale SC M S White Solicitor for the Respondent: Corrs Chambers Westgarth Date of Hearing: 28 February 2001 Date of Judgment: 28 February 2001