ACCC v Woolworths Group Ltd [2020] Fcafc 162 PDF

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FEDERAL COURT OF AUSTRALIA Australian Competition and Consumer Commission v Woolworths Group Limited (formerly called Woolworths Limited) [2020] FCAFC 162 Appeal from:

Australian Competition and Consumer Commission v Woolworths Limited [2019] FCA 1039

File number:

VID 818 of 2019

Judgment of:

FOSTER, WIGNEY AND JACKSON JJ

Date of judgment:

29 September 2020

Catchwords:

CONSUMER LAW – whether statements featured on the labels affixed to the packaging of disposable crockery and cutlery products that those products were “Biodegradable and Compostable” conveyed representations that those products were capable of biodegrading and composting because of the nature of the materials of which they were composed – whether, in all the circumstances and in the context in which such statements were made, either in the alternative or in addition, they conveyed representations as to future matters, namely, that those products would biodegrade and compost within a reasonable time if they are disposed of and treated in accordance with established methods and processes

Legislation:

Australian Consumer Law, ss 4, 18, 29 and 33 Trade Practices Act 1974 (Cth), s 51A Explanatory Memorandum, Trade Practices Revision Bill 1986 (Cth)

Cases cited:

Ackers v Austcorp International Ltd [2009] FCA 432 Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (No 2) (1999) 95 FCR 302 Australian Competition and Consumer Commission v Kimberly-Clark Australia Pty Ltd [2019] FCA 992 Australian Competition and Consumer Commission v Purple Harmony Plates Pty Limited [2001] FCA 1062 Australian Competition and Consumer Commission v We Buy Houses Pty Ltd [2017] FCA 915 Bill Acceptance Corporation Ltd v GWA Ltd (1983) 50 ALR 242 BMW Australia Ltd v Brewster (2019) 374 ALR 627 CIC Insurance Limited v Bankstown Football Club Limited

(1997) 187 CLR 384 Digi-Tech (Australia) Ltd v Brand [2004] NSWCA 58; (2004) 62 IPR 184 Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd [2014] NSWCA 158 GlaxoSmithKline Australia Pty Ltd v Reckitt Benckiser (Australia) Pty Limited (No 2) [2018] FCA 1; (2018) 133 IPR 190

Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 McGrath v Australian Naturalcare Products Pty Ltd (2008) 165 FCR 230 Samsung Electronics Australia Pty Ltd v LG Electronics Australia Pty Ltd [2015] FCA 227; (2015) 113 IPR 11 Sykes v Reserve Bank of Australia (1998) 88 FCR 511

Thompson v Mastertouch TV Services Pty Limited (1977) 15 ALR 487 Willett v Thomas [2012] NSWCA 97 Division:

General Division

Registry:

Victoria

National Practice Area:

Commercial and Corporations

Sub-area:

Regulator and Consumer Protection

Number of paragraphs:

145

Date of hearing:

25 February 2020

Counsel for the Appellant:

Mr CD Golvan AM QC and Ms C van Proctor

Solicitor for the Appellant:

Norton Rose Fulbright Australia

Counsel for the Respondent:

Mr CA Moore SC and Ms G Keesing

Solicitor for the Respondent:

Ashurst Australia

Australian Competition and Consumer Commission v Woolworths Group Limited (formerly called Woolworths Limited) [2020] FCAFC 162

ORDERS VID 818 of 2019 BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Appellant

AND:

WOOLWORTHS GROUP LIMITED (ACN 000 014 675) (FORMERLY CALLED WOOLWORTHS LIMITED) Respondent

ORDER MADE BY:

FOSTER, WIGNEY AND JACKSON JJ

DATE OF ORDER:

29 SEPTEMBER 2020

THE COURT ORDERS THAT: 1.

The appeal be dismissed.

2.

The appellant pay the respondent’s costs of and incidental to the appeal.

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

Australian Competition and Consumer Commission v Woolworths Group Limited (formerly called Woolworths Limited) i [2020] FCAFC 162

REASONS FOR JUDGMENT THE COURT: 1

This appeal concerns the promotion and sale of certain disposable products by Woolworths Group Limited (formerly called Woolworths Limited) (Woolworths), a major Australian supermarket chain.

2

In the period between November 2014 and November 2017 (the relevant period), Woolworths sold in its Australian supermarkets and through its online store a range of disposable cutlery and crockery under the label “Select Eco” (the products).

3

The disposable cutlery comprised knives, forks and spoons and the disposable crockery comprised a variety of plates and bowls.

4

The Select Eco cutlery was made of Crystallised Polylactic Acid (CPLA). CPLA is a material made from polylactic resin which, in turn, is made from fermented corn starch, talc (or chalk) and other additives.

5

The Select Eco crockery was made of bagasse (as to 98.8%) and certain chemicals. Bagasse is a fibrous matter that remains after sugarcane or sorghum stalks are crushed in order to extract their juice.

6

Both CPLA and bagasse are non-toxic organic materials and, upon decomposition in an appropriately managed environment, both may be used as a soil additive.

7

The packaging in which the products were sold featured the statement “Biodegradable and Compostable”. That packaging also contained the statement: “Made from a renewable resource”.

8

An example of the packaging in which the products were sold is the packaging for the 10 BBQ Select Eco plates set which is reproduced below:

Australian Competition and Consumer Commission v Woolworths Group Limited (formerly called Woolworths Limited) 1 [2020] FCAFC 162

9

The Australian Competition and Consumer Commission (ACCC) considered that, by offering for sale and selling the products in packaging which featured the statements specified at [7] above and which resembled the get-up typified by the packaging reproduced Australian Competition and Consumer Commission v Woolworths Group Limited (formerly called Woolworths Limited) 2 [2020] FCAFC 162

at [8] above, Woolworths represented to consumers that the products would biodegrade and compost within a reasonable time when disposed of: (a)

Using domestic composting; or

(b)

In circumstances ordinarily used for the disposal of such products, including conventional Australian landfill

and thereby engaged in misleading and deceptive conduct or conduct that was likely to mislead or deceive in contravention of s 18 of the Australian Consumer Law (ACL). We shall refer to these alleged representations as “the par 4 pleaded representations” . 10

Accordingly, on 2 March 2018, the ACCC instituted a proceeding against Woolworths in this Court in which it claimed declarations, injunctions, pecuniary penalties, publication orders and costs in respect of alleged contraventions of ss 18, 29(1)(a), 29(1)(g) and 33 of the ACL constituted by Woolworths’ conduct in offering for sale and selling the products in the packaging which we have described at [7] and [8] above.

11

After a four day trial in September 2018, the learned primary judge dismissed the ACCC’s proceeding with costs (Australian Competition and Consumer Commission v Woolworths Limited [2019] FCA 1039).

12

The ACCC appealed her Honour’s decision and by this judgment, we determine that appeal. For the reasons which follow, we have decided to dismiss the appeal with costs. THE ISSUES AT TRIAL

13

The ACCC articulated its case in the Amended Concise Statement filed by it on 17 April 2018 (ACS). Woolworths answered that case in the Concise Response filed by it on 2 May 2018.

14

After describing the products, the packaging in which those products were sold and the suppliers and manufacturers of those products to Woolworths, the ACCC set out the par 4 pleaded representations (at par 4 of the ACS).

15

The ACCC then contended that the par 4 pleaded representations were representations as to future matters (par 13 of the ACS) and that Woolworths did not have reasonable grounds for making those representations (pars 5 to 10 and 13 of the ACS). The ACCC also argued that, in the circumstances of this case, s 4 of the ACL was engaged (par 13 of the ACS) with the consequence that the par 4 pleaded representations should be taken to be misleading. Australian Competition and Consumer Commission v Woolworths Group Limited (formerly called Woolworths Limited) 3 [2020] FCAFC 162

16

The ACCC also relied upon an alternative case which it pleaded in pars 11 and 14 of the ACS in the following terms: 11.

Further or alternatively to paragraphs 5 to 10 above, the Environmental Claim Representations [being the representations pleaded at par 4 of the ACS] were false or misleading or deceptive or likely to mislead or deceive because the Select Eco Products were not biodegradable and compostable within a reasonable period of time when disposed of: i.

using domestic composting; or

ii.

in circumstances ordinarily used for the disposal of such products, including conventional Australian landfill.

… 14.

17

Further or alternatively to paragraph 13, the Environmental Claim Representations were false or misleading or deceptive or likely to mislead or deceive for the reasons set out in paragraph 11 above.

In addition to relying upon s 18 of the ACL, the ACCC alleged that, by making the par 4 pleaded representations, Woolworths: (a)

Made false or misleading representations that the products were of a particular quality, in contravention of s 29(1)(a) of the ACL;

(b)

Made false or misleading representations that the products had performance characteristics, uses or benefits, in contravention of s 29(1)(g) of the ACL; and

(c)

Engaged in conduct that was liable to mislead the public as to the nature, characteristics or suitability for purpose of the products, in contravention of s 33 of the ACL.

18

At all relevant times, ss 18, 29(1)(a), 29(1)(g), 29(2), 29(3) and 33 of the ACL were in the following terms: 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.

(2)

Nothing in Part 3–1 (which is about unfair practices) limits by implication subsection (1). Note:

For rules relating to representations as to the country of origin of goods, see Part 5–3.

Australian Competition and Consumer Commission v Woolworths Group Limited (formerly called Woolworths Limited) 4 [2020] FCAFC 162

… 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; or

… (g)

make a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits; or

… (2)

For the purposes of applying subsection (1) in relation to a proceeding concerning a representation of a kind referred to in subsection (1)(e) or (f), the representation is taken to be misleading unless evidence is adduced to the contrary.

(3)

To avoid doubt, subsection (2) does not: (a)

have the effect that, merely because such evidence to the contrary is adduced, the representation is not misleading; or

(b)

have the effect of placing on any person an onus of proving that the representation is not misleading.

… 33

Misleading conduct as to the nature etc. of goods

A person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose or the quantity of any goods. Note: 19

A pecuniary penalty may be imposed for a contravention of this section.

Woolworths admitted making the statements which we have set out at [7] above on the packaging in which the products were sold.

However, it denied that those statements

conveyed the par 4 pleaded representations or the representations pleaded at par 11 of the ACS. Woolworths also denied that those statements constituted representations with respect to future matters and, for that reason, also denied that it was obliged to make any enquiries to substantiate the truth of those statements. It contended that the statements in question were statements about the characteristics or inherent features of the products and, as such, were statements of present fact. It argued that all of the products were, in fact, biodegradable and compostable and that, for that reason, the statements which it made about them were true.

Australian Competition and Consumer Commission v Woolworths Group Limited (formerly called Woolworths Limited) 5 [2020] FCAFC 162

20

Woolworths also contended that, if, contrary to its primary argument, the statements on the packaging were representations as to future matters, it had reasonable grounds for making them and, for that reason, did not contravene s 18 of the ACL.

21

Woolworths also denied that it contravened any of s 29(1)(a), s 29(1)(g) or s 33 of the ACL by offering for sale and selling the products in the packaging described at [7] and [8] above. THE JUDGMENT OF THE PRIMARY JUDGE

22

The primary judge concluded that the ACCC had failed to prove that, by the labelling on the packaging of the products, Woolworths made the par 4 pleaded representations or the representations alleged in par 11 of the ACS. Her Honour found that, by that labelling, all that Woolworths represented was that two of the inherent features of the products were that they were biodegradable and compostable, and nothing more. The primary judge also found that these representations were statements of present fact, were not representations with respect to future matters and were true. Accordingly, her Honour dismissed the ACCC’s case. These findings are her Honour’s primary conclusions and constitute the ratio decidendi of her decision.

23

The primary judge also considered the question of whether, if, contrary to her primary findings, the relevant statements on the packaging of the products did constitute representations in the terms alleged by the ACCC at par 4 of the ACS and were also representations as to future matters, the ACCC had proven that Woolworths did not have reasonable grounds for making those representations. Her Honour found that, if she assumed those two matters (contrary to her primary findings), the ACCC had proven that Woolworths did not have reasonable grounds for making the par 4 pleaded representations.

24

The primary judge also addressed the ACCC’s alternative case (as to which, see pars 11 and 14 of the ACS) upon the assumption that she was wrong in her primary conclusions. Had it been relevant, her Honour would have concluded that the par 11 representations were not misleading or deceptive or false because, had they been made, they would have been true.

25

At [13]–[49] of her Reasons, the primary judge described the products, explained how Woolworths came to purchase and offer those products for sale and described where and how those products were displayed. Her Honour noted that the products were sold both online and in store.

Australian Competition and Consumer Commission v Woolworths Group Limited (formerly called Woolworths Limited) 6 [2020] FCAFC 162

26

At [43], her Honour described the positioning of the products in Woolworths’ stores in the following terms: … They were located in an aisle and on shelves amongst other disposable crockery and cutlery products, serviettes and other products intended for use in eating and drinking. They were displayed close to Woolworths’ “Essentials” range of similar products, including paper crockery and plastic cutlery, and also appear, from the photographs, to be located amongst a number of other brands of mostly plastic products.

27

The primary judge noted (at [46]) that there were no instructions on the packaging of the products on how to dispose of them nor was there any indication as to whether consumers needed to do anything to the products before disposing of them.

28

At [51]–[77], the primary judge outlined the issues in dispute and briefly addressed each party’s submissions as to those issues.

29

At [57], her Honour noted that the ACCC’s allegation that the products were represented as being capable of biodegrading and composting “… within a reasonable period of time …” was an allegation of implied representation. The ACCC accepted that the words “… within a reasonable period of time …” did not appear on the packaging but nonetheless asserted that those words should be implied as part of what was represented when proper regard is paid to the context and circumstances in which the products were sold.

30

At [78]–[144] of her Reasons, the primary judge identified the relevant statutory provisions (ss 4, 18, 29(1)(a), 29(1)(g) and 33 of the ACL) and the relevant legal principles upon which she proposed to act.

31

At [85]–[136], her Honour discussed a number of authorities concerning “future matters”. She did so by reference to three aspects which she mentioned at [85] thus: There are three aspects of the applicable principles to be considered:

32

(a)

what is meant by a “representation with respect to any future matter” in s 4;

(b)

what is the onus borne by the representor for the purposes of s 4; and

(c)

if that onus is discharged, what the applicant must prove, in relation to reasonable grounds.

At [86], her Honour said that she accepted Woolworths’ submissions as to the meaning of the phrase “representation with respect to any future matter” (as to which, see [54] of the primary judge’s Reasons). She also noted that the approach which she took to the meaning of Australian Competition and Consumer Commission v Woolworths Group Limited (formerly called Woolworths Limited) 7 [2020] FCAFC 162

that phrase is consistent with the approach taken by Gleeson J in Australian Competition and Consumer Commission v Kimberly-Clark Australia Pty Ltd [2019] FCA 992 (KimberlyClark) at [276]–[286] esp at [285]. 33

At [87]–[91], her Honour said: Woolworths submits the phrase is concerned with: … representations, such as predictions, promises, forecasts and opinions as to future events where the factual matter represented is not capable of being true or false at the time the representation is made (because it lies in the future). (Original emphasis.) The ACCC submits that language is too narrow, and does not accommodate authorities which have applied...