NATURE AND CIRCUMSTANCES OF THE CONTRAVENING CONDUCT
92 The nature of the contravening conduct comprised the publication and distribution of advertising and promotional materials which contained the impugned representations described in the declarations, in circumstances where Dulux did not have reasonable grounds for making the representations.
93 In my view, the nature of the contravening conduct is serious. This is because there was a substantial incongruity between the nature and content of the impugned representations and the basis upon which Dulux made the representations. However, albeit that the contravening conduct is serious, it is not so serious as to place the conduct at the upper range of seriousness. I find the contravening conduct to fall into the lower to middling range of seriousness.
94 I deal first with the nature and content of the impugned representations.
95 First, the impugned representations were directed toward, and misrepresented, the major selling point of the two heat reflective paint products. The representations were not directed toward incidental aspects of the paint products.
96 The impugned representations made bold claims as to the benefits to be derived by consumers in using the heat reflective paints, rather than the equivalent standard paint; and these claims were expressed in persuasive terms. In some of the marketing and advertising materials, Dulux used powerful images and suggestive colours to represent the cooling benefits that a consumer could expect to receive by using the heat reflective paints, rather than standard paints, to paint the roof or exterior walls of his or her home. Thus, for example, the image used in the InfraCool colour card shows red heat arrows penetrating the roof of the house painted with ordinary black roof paint into the room below where a thermometer displays an internal temperature of 35ºC. By contrast, the roof which has been painted with InfraCool black paint is depicted as being totally effective in deflecting the red heat arrows so that the room below the roof shows a thermometer with an internal temperature of 25ºC. Further, the colour scheme Dulux used in the image further emphasises the beneficial effect of using InfraCool paint, rather than standard paint, by using red and orange to depict the interior of the room beneath the roof painted with standard paint and blue to depict the interior of the room beneath the roof painted with InfraCool paint.
97 The promotional materials such as, for example, the standees and the colour card for Heat Reflect paint adopted a similar approach in representing the significant interior temperature reduction to be derived by using Heat Reflect paint, rather than the equivalent standard paint, to paint the exterior walls of a room. These materials also depict red heat arrows being successfully deflected by the Heat Reflect paint from entering the interior of the room protected by that paint, but, by contrast, passing through the wall of a room adjacent to a wall painted with the standard paint. Also, cool colours are used to depict the interior of the room adjacent to a wall painted with Heat Reflect paint, while warm red and orange colours are used to depict the interior of a room adjacent to the wall painted with standard paint.
98 Secondly, in some instances, Dulux sought to enhance the persuasive power of the impugned representations by utilising technical terms and graphs. Thus, for example, the representations on the colour card for InfraCool paint made reference to scientific terms such as "total solar reflectance" (TSR) data and "spectral reflectance performance" (SRP). There was reference to the fact that TSR and SRP were assessed in accordance with the ASTM. There was also an accompanying graph which purported to reflect the substantial reduction in surface temperature of the roof by using InfraCool paint, rather than standard paint of the same colour.
99 Thirdly, the impugned representations were not of a character which a consumer could verify for himself or herself by carrying out his or her own research.
100 These circumstances, together with the fact that Dulux is a well-known and reputable manufacturer of paint, meant that it was more likely that an ordinary or reasonable consumer would give credence to the asserted superior performance capabilities of the heat reflective paints, over the equivalent standard paints, referred to in the impugned representations.
101 It is in this context, that the basis upon which Dulux acted in making the representations is to be assessed.
102 It is apparent from the content of the marketing and advertising materials that Dulux appreciated that the main selling point of the heat reflective paints for a consumer was the benefit to be obtained by applying heat reflective paints, rather than standard paints, to a roof or exterior walls in reducing the interior temperature of the house or room. This is because a consumer would not be particularly attracted by the prospect of having a roof or wall with a cooler surface temperature if that did not translate into a cooler room.
103 In relation to the InfraCool paint, it is agreed that, prior to making the InfraCool Representation in about June 2009, Mr Schultz was aware of, and reviewed scientific articles about cool roof technology from the United States of America, and some marketing materials from producers of heat reflective paint in Australia. It was also agreed that Dulux had worked with Shepherd, a United States company, which had acquainted Dulux with the ASTM calculator and Dulux had acquired some knowledge about heat reflective paint in working with Shepherd. Further, it was agreed that Allunga Exposure Laboratory in the United States had carried out some tests for Dulux, measuring the comparative reduction in the surface temperature of a roof painted with Dulux InfraCool paint, and standard roof paint.
104 Dulux had also in January 2008, carried out a trial on a house in Highgate, South Australia, by painting the roof of the house with InfraCool paint over an existing but weathered standard paint and measuring the resulting comparative changes in temperature of the roof surface and the attic space beneath the roof. Dulux had also carried out another trial by painting part of the metal roof of its AcraTex factory in South Australia with InfraCool paint.
105 However, it was also agreed that, prior to making the InfraCool Representation, Dulux never carried out any tests to measure the respective interior temperature of the rooms of a house whose roof had been painted with either InfraCool paint or standard roof paint of the same colour.
106 It was agreed that while the information available to Mr Schultz and Dulux provided some basis to believe that applying heat reflective paint to the roof of a house may reduce the interior temperature of that house, depending on climate conditions and the attributes of the house, that information did not comprise reasonable grounds for making the InfraCool Representation.
107 Further, the agreed facts also show that the marketing and advertising materials, containing the InfraCool Representation, were, in May or June 2009, approved for release to the public by a meeting of Dulux's technical and marketing managers, without them having first taken legal advice as to whether, in making the InfraCool Representation, Dulux was complying with its obligations under the TPA.
108 In relation to the Heat Reflect wall paint, the agreed facts show that Ms Palazzotto involved Ms Wright of the Dulux legal division in the approval process for the marketing and advertising materials for that paint. However, it is also apparent from the agreed facts that Ms Palazzotto and Ms Wright relied upon the advice of the technical staff as to whether the performance claims made about the Heat Reflect paint could be substantiated.
109 The agreed facts also show that the technical staff at Dulux did not carry out any tests which measured any actual reduction in room temperature in respect of a room whose exterior walls had been painted with Heat Reflect paint, compared to the equivalent standard paint. Rather, Dulux relied upon the use of the ASTM calculator in assessing the performance characteristics of the Heat Reflect paint in circumstances where it was not appropriate to use that calculator. Also, Dulux tested surface temperature reduction by using small painted panels and a test rig. It was also agreed that this was an inadequate test to support the impugned representations. Further, Mr Schultz, on 4 October 2011, in providing what he regarded as substantiation for the claim that Heat Reflect paint would keep "your home cooler", referred to research from the United States of America which it was agreed did not support the scope of the impugned representations.
110 It is apparent from the agreed facts that the technical managers involved in the development of the two heat reflective paints did not have formal educational qualifications in that paint and its associated technology, and that they only had limited expertise and understanding of the measurement techniques associated with heat reflective paint. This is especially evident from the use by the technical managers of the ASTM calculator in assessing the attributes of Heat Reflect paint, when that calculator was not appropriate for that purpose. In other words, the technical managers did not have the necessary training, experience or expertise to provide to the marketing personnel with well informed and proper advice as to the performance capabilities of the heat reflective paint.
111 Further, it is apparent that the technical managers, both in June 2009, when they approved the InfraCool marketing and advertising materials, and in June 2011 to October 2011, when they participated in the approval process for the Heat Reflect paint materials, did not understand the extent of rigour required in the testing of the heat reflective paints for that information to satisfy the requirement that Dulux have reasonable grounds for making claims as to the attributes of the Dulux products in question.
112 These deficiencies render Dulux's contraventions serious, but as I have said, comprises conduct which falls within the range of lower to middling range of seriousness, rather than at the higher end.
113 Dulux contended in mitigation of the seriousness of Dulux's conduct, that the InfraCool and Heat Reflect paints did, in fact, deliver cooling benefits to the consumers who purchased these paints beyond the benefits which they would have derived had they purchased standard paints, albeit that those benefits were not to the extent of the benefits which Dulux had represented.
114 Dulux relied upon the joint expert report in support of that contention.
115 In my view, the joint expert report does not comprise sufficiently probative evidence to support the breadth of the submission made by Dulux.
116 The joint expert report is heavily qualified and the experts say no more than that the application of heat reflective paints, rather than standard paints of the same colour, may result in the reduction of room temperature. It is to be observed that the joint expert report is not founded on actual tests carried out by the experts as to the relative cooling benefits to be derived of painting roofs and walls with InfraCool and Heat Reflect paints, rather than equivalent standard paints.
117 However, the experts do, subject to the heavy qualifications referred to, express an opinion in respect of the possible potential reduction in the internal temperature of a room beneath a roof painted with heat reflective paint in place of standard paint of the same colour. That scenario ("Scenario A" in the joint expert report) most approximates the scenario referred to in the impugned representations. The experts express the qualified view that, in that particular scenario, the possible potential interior temperature reduction in the case of a house with a poorly ventilated roof, depending upon the assessment methodology used, could be between 0.5ºC-3.3ºC (using one means of assessment) or between 0.4ºC-1ºC (using another means of assessment). In the case of a better insulated roof, there could be an internal temperature reduction of between 0.2ºC-1.1ºC (using the first means of assessment) or between 0.1ºC-0.3ºC (using the second means of assessment).
118 The joint expert report is even more qualified in relation to expressing an opinion on the potential impact of heat reflective wall paint on the internal temperature of an adjacent room. The report recognised that there was an absence of data upon which to found such an opinion. However, the experts proceeded to make an estimate in respect of a hypothetical house in Sydney using the Los Angeles irradiation data for Sydney, and extrapolating from data in respect of the painting of a roof with heat reflective paint. The experts observed that the estimate should be regarded as an "upper bound" estimate because it neglected factors which reduced the extent to which heat reflective wall paint could lower solar heat gain. These factors included overhangs, adjacent houses and nearby trees and vegetation. In any event, subject to those and other qualifications, the experts estimated that the application of heat reflective paint to external west, east and south facing walls of a house in Sydney would be less effective at reducing internal temperature than the application of heat reflective roof paint to the roof of that house. The experts estimated that the application of heat reflective paint to those walls would generate an interior room temperature reduction in old houses of approximately 46% of that which may be achieved by the application of heat reflective paint to the roof, and 35% in newer houses.
119 Applying those discounts to the figures referred to in [117] above, demonstrates a very small potential reduction in temperature.
120 I, therefore, place little weight on this submission by Dulux.
121 I find, therefore, that the contravening conduct was serious and fell within the lower to middling range of seriousness.