Australian Competition and Consumer Commission v Kimberly-Clark Australia Pty Ltd

THE KCFC WIPES and WIPES GENERALLY 10 The KCFC wipes were made from a "Hydraspun" basesheet produced by a process of "hydroentangling". This involved blasting a mix of fibres arranged in a loose web with fine jets of water, causing the fibres to entangle and bond together without the use of a chemical binder or bonding agent. The basesheet was then converted to make the finished KCFC wipe product by applying a liquid, folding or interleaving the basesheet, cutting the product to size, and packaging the finished product. The KCFC wipes were packaged for use moist and intact. The design was for the bonding process to be reversed, and the wipes to break down, with agitation in water such as might occur as the wipes made their way through the sewerage. 11 During the relevant period, there were no Commonwealth or State laws or guidelines of any regulatory authority directed at assessing whether products were suitable to be flushed. The KCFC wipes were tested against relevant industry guidelines, which the Commission argued were insufficient. 12 The KCFC wipes passed "flushability" tests set by the third edition of industry guidelines published by the International Nonwovens and Disposables Association (INDA) and the European Disposables and Nonwovens Association (EDANA). The guidelines were entitled "Guidelines for Assessing the Flushability of Disposable Nonwoven Products: A Process for Assessing the Compatibility of Disposable Nonwoven Products with Plumbing and Wastewater Infrastructure" (GD3 Guidelines or GD3). GD3 prescribed seven successive tests, each of which had to be passed. The tests were designed to assess whether a product was compatible with the ordinary operation of household and municipal sewage systems. 13 The testing occurred at a large purpose built Fate of Materials Centre (FOMC) constructed within a Kimberly-Clark facility in Wisconsin in the United States. 14 Testing was not confined to testing under industry guidelines applicable at relevant times. The FOMC included impressive full scale replica household toilets and drain lines. As the primary judge stated: [139] Mr Lortscher [a senior research scientist at the Kimberly-Clark Corporation (KCC) and head of the FOMC] … gave affidavit evidence of "field testing", including in the form of a "wet well" study in which he compared the performance of three flushable wipe products, including a competitor product, by supplying wipes to the 17 restrooms serving 1,000 staff at the KCC Wisconsin facility. He also referred to an onsite lift station pump where, since 2009, KCC has evaluated the compatibility of its products with the pump. In cross-examination, Mr Lortscher gave evidence on onsite field testing, drop studies in sewers, collection studies at treatment plants and onsite septic systems. [140] The ACCC submitted that, in the absence of supporting documentation, this evidence should be given very little or no weight. In my view, the evidence supports a conclusion that Mr Lortscher did not confine his relevant testing of KCC products to the INDA/EDANA Guidelines but also conducted testing by which he evaluated the sewerage systems themselves. 15 Many wipes are not designed to be flushable. These include baby wipes, cosmetic wipes, household cleaning wipes and industrial wipes. These wipes derive "wet strength", or the ability to remain moist without breaking down, through a variety of methods, including constructing them from material with long fibres, the introduction of plastic material and the use of wet strength resin. These wipes have been found in substantial quantities in the sewerage, including in fatbergs. These wipes were not designed to be compatible with sewage systems and were shown to perform substantially worse than the KCFC wipes in the GD3 tests.

THE FLUSHABILITY REPRESENTATION 16 Grounds 1 to 6 of the Notice of Appeal related to the "flushability" representation.

Ground 1 17 The first ground of appeal was as follows: The trial judge erred by applying an incorrect test (proof of actual harm) instead of the correct test (risk of harm) to determine whether the representation that the "KCFC wipes were suitable to be flushed down the toilet and into sewerage systems in Australia" was false or misleading. Particulars The trial judge found (at paragraph [275]) that the representation had been made. The trial judge then proceeded on the basis that the representation would only be false or misleading if the KCFC wipes in fact contributed to, or caused, actual harm to household plumbing (including septic tanks) or the sewerage network (including, in particular at paragraphs [14], [152], [154(4)], [315]). The correct question was whether there was a real risk that the KCFC wipes would contribute to or cause harm (including blockages) to household plumbing (including septic tanks) or to the sewerage network. 18 There are two reasons why this ground should be rejected: (1) First, the Commission's case at trial was plainly based on it needing to prove harm in order for it to succeed. The Commission did not run a case that the flushability representation was misleading on the basis that it was not suitable for the KCFC wipes to be flushed because they posed a risk of harm. (2) Secondly, the primary judge in any event considered the risk of harm posed by KCFC wipes but concluded that the risk was not shown to be materially greater than the risk posed by toilet paper, which the parties accepted was "flushable". It necessarily followed that the KCFC wipes could not be unsuitable to flush on the basis of the risk of harm that they posed. 19 The primary judge's reasons focus on whether the KCFC wipes caused harm because her Honour's reasons are responsive to the case put forward by the Commission.

The Commission's case 20 At [16] of its Concise Statement, which identified the case it was bringing, the Commission identified the consequences of the flushability, characteristics and disintegration representations as: (a) consumers were given the false or misleading impression by KCA that KCFC wipes were suitable to be flushed down the toilet into sewerage systems in Australia, and consumers were misled about a fundamental characteristic of the product they were purchasing; and (b) Australian consumers purchased and flushed KCFC wipes down the toilet. When products other than toilet paper, including products such as the KCFC wipes, are flushed into Australian sewerage systems they contribute to blockages in household and municipal sewerage systems and to the problems faced by water authorities in their operation of sewerage systems. 21 In the closing oral address at the trial, after referring to sub-paragraphs (a) and (b) of [16] of the Concise Statement, senior counsel for the Commission stated that its case was to be understood in the following way: In other words, the product is not suitable because of the harm occasioned to household and municipal sewerage systems and to the problems faced by water authorities in their operation of those systems; a clear association between the suitability [or flushability] representation and the harm that the applicant contends is caused by the flushing of this product. 22 A short while later the Commission stated: So it's quite clear, in our respectful submission, that the parties understood and conducted the trial on the basis that that suitability or flushability representation was one in which - it was said was false because the products were not suitable in that they caused harm or contributed to harm to the drain lines and the sewer network. 23 In its written closing submissions at trial, the Commission contended that suitability (or flushability) and damage were "two sides of the same coin" and "inextricably linked". Sections B and C of Part III of the Commission's written closing submissions addressed the flushability representation (emphasis in original): (1) Section B was headed "Scope of the Suitability [Flushability] Representation - harm to the system". Section B made reference to Annexure A which contained the "key evidence filed by the parties going to the question of harm to household systems … for the purpose of the Suitability [Flushability] Representation". (2) Section C was headed "Scope of the Suitability [Flushability] Representation - harm to the environment". Section C made reference to Annexure B which contained the "key evidence filed by the parties going to the question of harm to municipal systems … for the purpose of the Suitability [Flushability] Representation". 24 The only reasonable interpretation of the content of Sections B and C of the Commission's written submissions is that the flushability representation was said to be misleading because the KCFC wipes caused or contributed to harm. For example, Section B contended that the representation "entail[ed] that harm is not caused to" the household system or the municipal system. There was no part of the written closing submissions which advanced a case that the flushability representation was misleading because the KCFC wipes were unsuitable by reason of them posing a "real risk of harm". 25 In closing oral addresses, the primary judge asked whether the Commission needed to prove "significant harm", to which the Commission responded that it did not, "we just have to prove that it was not suitable because it caused harm, and - obviously not de minimis harm". 26 The primary judge raised whether it would be sufficient for her to conclude that she could not be confident that the KCFC wipes were suitable to be flushed, albeit she could not reach a positive conclusion that they caused harm. The Commission submitted that her Honour "would have to cross the Elbe", a reference to the Allied forces' difficult crossing of the Elbe river in Germany in April 1945, heralding the end of World War II. No doubt the phrase was intended to indicate that the primary judge would need to conclude that the KCFC wipes caused harm, being harm which was more than de minimis. 27 The Commission's closing oral address did not at any point state that, even if the KCFC wipes were not shown to have caused harm, they were nevertheless unsuitable for flushing because they posed a real risk of harm. That would have been an alternative case which should have been in the Concise Statement and the subject of express written and oral submissions if it was intended to have been run. No attention was given by either side to such a case in their submissions before the primary judge. 28 A case that the KCFC wipes were unsuitable because they posed a real risk of harm is quite different to one based on the wipes causing harm. It raises quite different questions, in particular what level of risk would need to be established before it could be said that the wipes were unsuitable for flushing. 29 It is one thing for a consumer to be led to believe that something is flushable when, although flushable in the sense that it can be flushed into the sewerage, it causes actual harm to sewage systems or the environment. It is quite another for the consumer to be led to believe that something is flushable in the sense just mentioned without disclosing that it poses a risk of harm to the sewerage or the environment. The Commission chose to run the former case and not the latter. 30 If the case had been put that the KCFC wipes were unsuitable to be flushed because they posed a risk of harm, it is self-evident that the respondent would have run its case differently. It could be expected to have introduced different evidence and cross-examined differently. By way of example, the respondent might have adduced direct evidence comparing the degree of risk posed by KCFC flushable wipes with those of other products, including toilet paper. Evidence and submissions would have been directed to the level of risk which needed to be established in order for the representation that the wipes were flushable to be misleading. 31 The case cannot be run for the first time on appeal.

The primary judge addressed risk of harm 32 In any event, the primary judge addressed the question of whether the KCFC wipes posed a risk of harm. The primary judge concluded, and it was not in issue in the appeal, that most matter introduced into the sewerage entails a risk of harm to what has long been an imperfect system because of, amongst other things, wear and tear and blockages: J[10], [43]. The evidence established that even toilet paper and faecal matter contributed to blockages: J[145]. Toilet paper and faecal matter does not necessarily breakdown in household drain lines and can find its way into municipal sewage pipes to the point of ending up on screens in treatment plants: J[306]. The reason for this is that the drain line from a toilet to the boundary of a property, maintained by a home owner, does not involve mechanical agitation of water but feeds by gravity into the municipal sewerage to which it is connected. As one witness observed, the physical forces in a household drain line are not sufficient to break up toilet paper. The toilet paper might sit in the drain line for some time before inching its way along with successive flushes. It might remain in the drain line for long periods without water and become dry. And faecal matter does not necessarily disperse. As the witness observed "different faecal matter disperses in different ways, if you will". Most drain lines have imperfections on which material, including toilet paper and faecal matter, can snag and cause blockages. 33 Once material makes it into the municipal sewerage, the game changes. The pipes in the municipal system generally increase in diameter to accommodate the fact that the system must deal with material flushed from multiple homes. The flow in municipal sewers is sometimes also assisted by mechanical pumps. In the municipal sewerage the mechanical forces are greater resulting in the greater dispersion of toilet paper and faecal matter. 34 Given that the sewerage is intended to be used to receive and transport material which is flushed, and that all material including toilet paper and faecal matter introduced into the sewerage entails a risk of harm, it becomes necessary for a risk of harm to rise to a certain level before it can be said that a representation that a material is "flushable" is misleading by reason of the level of risk which the material poses to the system. It was uncontroversial that toilet paper caused blockages and thus necessarily posed a real risk of harm: J[241]. It was also uncontroversial that toilet paper was "flushable" in the sense of being suitable to be flushed into the sewerage. It followed that the KCFC wipes would at least have to pose a risk of harm which was greater than the risk posed by toilet paper for it to pose a risk of sufficient degree for it to be unsuitable for flushing. 35 One aspect of the Commission's case, particularly relevant to the "disintegration" representation, but also relevant more generally, was that the characteristic of being "easily dispersible" was critical to a product intended for disposal into the sewerage: J[253]. Even here, however, the Commission did not propose any basis by which a product with inferior qualities of dispersion, such as the KCFC wipes, might present a materially greater risk of harm than toilet paper. As the primary judge stated at J[255]: In order to be meaningful, the test of "easily dispersible" requires definition. To the extent that it refers to the behaviour of toilet paper, it begs the question whether a product that has inferior properties of break up and disintegration to toilet paper might nevertheless not present any materially greater risk of harm than toilet paper. To the extent that it refers to behaviour that avoids increased risk of harm to the sewerage system, the ACCC did not propose relevant criteria. 36 Her Honour's conclusion that the risk of harm posed by the KCFC wipes was not greater than the risk of harm posed by toilet paper was expressed at J[295] to J[297] in the following way: [295] I accept that the KCFC wipes did not break down as easily as toilet paper. Further, all things being equal, the KCFC wipes were likely to disperse more slowly than toilet paper within the sewerage system. [296] Concerning household systems, I do not accept that these characteristics presented a real risk of harm over and above the risk posed by toilet paper in the light of the evidence that toilet paper also does not break down or disperse in the household drainline and having regard to the minimal evidence that any such harm eventuated. [297] Concerning the municipal wastewater systems, in the absence of evidence that any such harm eventuated, I do not accept that the characteristics of KCFC wipes identified by the ACCC presented a risk of harm materially greater than the risk posed by toilet paper. 37 The Commission submitted that these and other paragraphs demonstrated that the primary judge approached the matter on the basis that harm needed to be demonstrated in order for a conclusion to be reached that KCFC wipes posed a risk of harm. 38 The primary judge noted that the risk of an occurrence is different from the cause of an occurrence. Her Honour stated at J[147]: The risk of an occurrence is a different thing from the cause of an occurrence: Amaca Pty Ltd (under NSW administered winding up) v Booth [2011] HCA 53; (2011) 246 CLR 36 at [41]. In the context of the common law of negligence, in Roads and Traffic Authority v Royal [2008] HCA 19; (2008) 245 ALR 653, Kiefel J (as her Honour then was) said (at [144]): The present state of authority does not accept the possibility of risk of injury as sufficient to prove causation. It requires that the risk eventuate. Kitto J in Jones v Dunkel [[1959] HCA 8; (1959) 101 CLR 298] said that one "does not pass from the realm of conjecture into the realm of inference" unless the facts enable a positive finding as to the existence of a specific state of affairs. Spigelman CJ pointed out in Seltsam Pty Ltd v McGuiness [[2000] NSWCA 29; (2000) 49 NSWLR 262], with respect to an increased risk of injury, that the question is whether it did cause or materially contribute to the injury actually suffered. 39 The appellant submitted, on the basis of this paragraph, that the primary judge's approach was "unnecessarily restrictive". The Commission said that her Honour accepted that there was a risk of harm but reasoned that this risk did not demonstrate that the KCFC wipes were not suitable to be flushed in the absence of proving that harm in fact eventuated. It was submitted that her Honour "approached the question of 'harm' as might be done in a damages claim in negligence, elevating the inquiry to proof of causation as opposed to assessing falsifiability under the consumer law". 40 The primary judge was not expressing the view at J[147] that the KCFC wipes could not be shown to be unsuitable for flushing by reason of the risk of harm posed unless actual harm was shown to have eventuated. Her Honour was responding to the case which the Commission put, namely that the KCFC wipes caused harm, and pointing out that actual harm is not proved merely by establishing that KCFC wipes posed a risk of harm. 41 When the primary judge came to consider the degree of risk posed by the KCFC wipes at J[296] and J[297], she reasoned that they were not shown to pose any risk of harm materially greater than the risk posed by toilet paper. That conclusion was not based on reasoning that it was legally necessary to establish that harm eventuated before a conclusion could properly be reached that the wipes were unsuitable for flushing by reason of them posing a risk of harm. The primary judge's conclusion that the KCFC wipes were not shown to pose a materially greater risk than toilet paper was supported or facilitated by the fact that the Commission did not establish that the KCFC wipes caused harm. It was not erroneous to take into account, as the primary judge did, whether any harm in fact eventuated in assessing the level of risk posed by the KCFC wipes. 42 Consistently with the Commission's case that it had to establish that the wipes caused something more than de minimis harm, and the fact that toilet paper posed a risk, the Commission did not submit at trial that the mere existence of a risk of harm proved the falsity of the representation that the KCFC wipes were flushable. 43 On appeal and in the context of ground 1, the Commission characterised its case as a "circumstantial" and "multifaceted" one in which the various "streams of evidence", comprising integers of an "overall mosaic of evidence", had to be assessed "holistically". There was no submission to similar effect made at trial. The Commission submitted that the primary judge failed properly to assess its circumstantial case. The Commission submitted (footnotes omitted): … By focussing, for example, on the relatively low number of consumer complaints made directly to KCA … the trial judge erred in not considering the evidence holistically. Indeed, "the probative force of a mass of evidence may be cumulative" and a "circumstantial case can be proved if the tribunal of fact considers that the evidentiary mosaic coheres into a clear design". When deciding whether an available inference has been proved according to the requisite standard … all of the circumstances established by the evidence are to be considered and weighed together as a whole and not piecemeal. The ACCC submits that, in the present case, the circumstantial evidence taken as a whole amply demonstrates that the KCFC Wipes were not suitable to be disposed of via the sewerage system because of the risks they presented, including in the form of causing or contributing to blockages and increased maintenance. 44 That submission is not made out. The primary judge dealt with the various "streams of evidence" individually as one would expect in logically ordered reasons for decision. Neither that fact, nor the content of the reasons, indicate that her Honour considered and weighed the evidence in a "piecemeal" way or failed to deal with the evidence "holistically". The primary judge carefully assessed all of the evidence and made findings and drew inferences having regard to the evidence as a whole.

Grounds 2 and 3 45 The second and third grounds of appeal attacked the primary judge's findings which were submitted to be "internally inconsistent, at odds with the factual findings actually made at trial and against the weight of the evidence". The grounds were: 2. The trial judge's findings that the KCFC wipes did not present "a real risk of harm over and above the risk posed by toilet paper" (at paragraph [296]) and that the KCFC wipes did not present "a risk of harm materially greater than the risk posed by toilet paper" (at paragraph [297]) were inconsistent with and against the weight of the evidence. 3. The trial judge erred in failing to find that there was a real risk that flushing the KCFC wipes down the toilet would contribute to, or cause, harm (including blockages) to household plumbing (including septic tanks) or to the municipal sewerage network. Particulars The facts as found by the trial judge (including, in particular, at paragraphs [14], [91], [92], [97], [105], [142], [145], [152], [154(2)], [156], [165], [292], [295], [302], [308]) and the uncontested evidence as referred to in the judgment (including, in particular, the evidence of Drinkwater at [96], Wilson at [99] and [116], Hurley at [106], Kerr at [107], and Sheridan at [108]), together with the inferences properly drawn from the facts and the evidence, required that finding to be made. 46 One problem with the Commission's argument in respect of this aspect of the appeal is that much of the evidence was directed to problems caused by wipes generally, rather than the KCFC wipes which had been designed with the object of being flushable. Each of the witnesses referred to in the particulars to ground 3 gave evidence which did not distinguish between KCFC (or other GD3-compliant) wipes and wipes generally when observing that wipes caused blockages. 47 The evidence amply demonstrated that wipes caused blockages, but not that the KCFC wipes caused blockages. The primary judge summarised some of the evidence of blockages in the following way: [148] As the evidence above reveals, in sewerage systems, a blockage may happen in many different ways for many different reasons. [149] A large volume and range of non-flushable products are deposited in the sewerage system and have been found to cause or contribute harm to the sewerage system, or increased maintenance costs. These include disposable nappies, feminine hygiene products, paper towels and an array of clearly non-flushable products which, in the evidence, included a curtain and dishtowels. [150] The Australian water authorities themselves are most concerned with "wet wipes", which includes a large volume and range of wipes apart from wipes that are marketed as "flushable". They include baby wipes, household cleaning wipes and facial cleansing wipes. There is substantial and florid evidence that non-flushable wipes such as baby wipes and industrial cleaning wipes have negative impacts upon the system. Collection studies have identified wipe products that have caused harm or are likely to cause harm, without identifying KCFC wipes. 48 The primary judge addressed the Commission's submissions in relation to the evidence given by the wastewater authority employees at J[318] to [320], rejecting the submission that the evidence demonstrated the highly unsuitable nature of KCFC wipes: [318] … [T]he ACCC referred to the evidence from the wastewater authority witnesses as to damage caused by "flushable" wipes. However, as set out above, that evidence was not directed to "flushable" wipes but, rather, to wipes generally. In circumstances where there is ample evidence of wipe products that are significantly different in composition, size and wet strength to the KCFC wipes, the evidence of the wastewater authorities does not provide a basis to conclude that the sewerage systems have suffered damage caused by "flushable" wipes. [319] Contrary to the ACCC's submission, I do not accept that the evidence of the wastewater authority employees demonstrates the highly unsuitable nature of "flushable" wipes, including the KCFC wipes, to be disposed of via the toilet. [320] Rather, the evidence goes to a different issue, which is the unsuitable nature of wipes more generally to be flushed down the toilet. 49 As to the primary judge's findings referred to in the particulars to ground 3, most of these can be summarised as her Honour concluding that the KCFC wipes were shown to disperse more slowly than toilet paper and thus necessarily to pose a greater risk of harm than toilet paper. For example, her Honour stated: [91] If a product does not break down quickly in a sewer or septic system, it can cause blockages and clogging. Mr Lortscher agreed that the "dispersability" of a product is critical in determining whether it might cause a problem in the sewer and household drainline. [92] As a matter of logic, the more quickly an item disperses after flushing, the lower the chance that it will catch or "snag" on an imperfection in the system as it travels towards the treatment plant. … [97] If the wipe does not break down and passes through the household drainline intact, it presents a risk that it will cause or form part of a blockage as the wipe is transported through the system. 50 The primary judge also referred to the lack of evidence that the KCFC wipes caused harm, notwithstanding that they posed a greater risk of snagging and clumping than toilet paper: [151] Against this evidence of behaviour that presents a substantial risk of harm to the sewerage system from products other than the KCFC wipes, the ACCC did not point to a single sewerage blockage (that is, beyond the household drainline) for which there was evidence that it would not have occurred if KCFC wipes (or even wipes marketed as flushable) had not been flushed into the system. [152] In those circumstances, the evidence that KCFC wipes posed a greater risk of snagging and clumping with other materials in the sewerage system than toilet paper does not justify an inference that the risk eventuated in the form of blockages to the sewerage system or increased costs in maintaining that system, except in the instances documented in KCA's consumer complaint records. However, those records are only weak evidence of the impact of KCFC wipes on household drainlines because they contain only the information that the relevant consumer chose to supply to KCA and there was no opportunity to test the veracity of that information during this proceeding. Those records do not support an inference of a wider problem. [153] Further, it is significant that no evidence was adduced from a single consumer or plumber of a blockage resulting from the use of KCFC wipes. As earlier noted, Mr Drinkwater's evidence was that 90 percent of blockages occur in pipes around the house and leading from the house with the first, say, hundred metres. Given the substantial volume of evidence adduced from water authorities, the availability of the KCA records that identified the consumers who made complaints and the hundreds of millions of KCFC wipes concerned, this omission casts doubt on the probability that KCFC wipes caused or contributed to the alleged harm. 51 The primary judge's reasoning in these passages is unremarkable. Her Honour concluded that the KCFC wipes broke down more slowly than toilet paper and, accordingly, posed a greater risk of snagging or clumping and thus causing blockages. Her Honour noted, however, that this did not necessarily mean that KCFC wipes posed a materially greater risk of harm than toilet paper: J[255]. The primary judge was not satisfied that the increased risk of harm was material. It was not erroneous to have regard to the paucity of evidence of harm in reaching the conclusion that the risk posed by KCFC wipes was not materially greater than the risk posed by toilet paper. 52 In submitting that the primary judge's fact-finding and reasoning as to the risks posed by KCFC wipes was "internally inconsistent, at odds with the factual findings actually made at trial and against the weight of the evidence" the Commission placed emphasis on the primary judge's findings at J[105] and J[145], where the primary judge stated: [105] Sydney Water experiences approximately 20 blockages within sewage pumping stations per month. There is no reason to doubt that wipes and other non-wipe materials contribute to these blockages. … [145] Having regard to the substantial sales of KCFC wipes in the relevant period and the likelihood that those KCFC wipes were flushed in accordance with the "flushable" claim, it is reasonable to infer on the balance of probabilities that the KCFC wipes contributed to blockages in the sewerage system in an unknown number of instances, and to maintenance costs. However, even faecal matter and toilet paper contribute to sewerage blockages. Thus, as noted above, in the UK Water Study, organic material and the bulk of toilet paper captured with the blockage samples was washed out of the sample. 53 In these paragraphs, the primary judge concluded that blockages are contributed to by material introduced into the sewerage, including by wipes, toilet paper and faecal matter. Because most material introduced into the sewerage contributes to blockages, it necessarily follows that KCFC wipes contribute to blockages. What the Commission does not address is why that should lead to the conclusion that the KCFC wipes are not flushable, in circumstances where toilet paper is flushable and KCFC wipes were not shown to pose a materially greater risk of harm than toilet paper. 54 The Commission did not adduce evidence which quantified the higher risk posed by KCFC wipes or establish that the risk was materially greater than the risk of harm posed by toilet paper. As for drain lines, the evidence indicated that toilet paper also did not break down. It was not shown why the longer period for KCFC wipes to break down had any relevance. As for the sewerage, where turbulence causes toilet paper to break down significantly more quickly than KCFC wipes, it was not shown that the slower break down rate of KCFC wipes had any material consequence. 55 The KCFC wipes were not shown to pose a materially higher risk of causing blockages or even to comprise a substantial part of the material found in fatbergs. The composition tests performed on fatbergs tended to suggest that the main contributor was material like paper towels, fat and grease, and wipes which were not designed to be or marketed as flushable, such as baby wipes and cosmetic wipes. As noted earlier, these wipes were differently constructed to KCFC wipes and not designed with the objective of them breaking down when agitated in water. 56 The Commission sought to make good its argument on grounds 2 and 3 by pointing to various "streams of evidence" in its "multifaceted approach", which although addressed individually in the Commission's submissions, need to be assessed "holistically". For example, the Commission relied on documents created by KCA employees. Of these, the primary judge concluded at J[165] that they demonstrated: an awareness on the part of some KCA employees that the KCFC wipes had probably caused harm in particular instances and that there was a risk that the KCFC wipes could cause or contribute to sewerage blockages, but not a belief or knowledge that the risk was so substantial that the wipes should not be labelled "flushable". 57 The Commission also relied on the primary judge's reference to internal documents revealing "an ongoing concern about the performance of the KCFC wipes": J[163]. The Commission relied on these as demonstrating that KCA was aware of the potential for harm. One would expect KCA to be aware of the potential for harm and to generate documents assessing whether its product was "flushable". KCA was, after all, seeking to develop a product which was compatible with sewage systems and safe to flush. As one would expect, the documents are consistent with an endeavour to improve the product. None of that establishes that the product was unsuitable to be flushed or that the product posed a materially greater risk of harm than toilet paper. The primary judge had the benefit of extensive cross-examination of Dominique Chandler, KCA's Marketing Sector Lead for the Family Care division, who had overall responsibility for managing KCA's portfolio of Family Care products, including the KCFC wipes from October 2013 until May 2018. 58 The Commission relied on a change in KCA's internal position on whether KCFC wipes were suitable for septic tanks. Its position concerning the Out & About Wipes changed in 2015 from "[c]loths breakdown in sewerage system or septic tank" to the words "[c]loths suitable for use in properly maintained sewerage systems and commercial septic tanks". 59 In this context, the Commission also relied on the consumer complaints received by KCA about KCFC wipes not breaking down in household septic tanks. It was submitted that, given the timing and the nature of the relevant complaints, the trial judge should have inferred that KCA's position changed to acknowledge the unsuitability of KCFC wipes for domestic septic systems. It was submitted that the following paragraphs of the primary judge's reasons demonstrated that her Honour's "reasoning process … miscarried": [146] The ACCC contended that there is a "wealth of evidence" to support an inference that KCFC wipes contributed to or caused harm to household plumbing and the sewer network. It relied on the following matters: … (4) KCA's October 2015 amendment to the packaging for the "Out and About" wipes from "[c]loths breakdown in sewerage system or septic tank" to the words "[c]loths suitable for use in properly maintained sewerage systems and commercial septic tanks". The ACCC described the new language as an implied warning that the product was not suitable for domestic septic tanks. … [154] As to the other matters relied upon by the ACCC: … (2) I accept that KCA's October 2015 packaging change indicates its view that it should not recommend to consumers that the KCFC wipes be flushed into a domestic septic tank but this is not sufficient to support the inference contended for by the ACCC. 60 The primary judge's reasoning was sound. Her Honour accepted that KCA changed its view about the suitability of flushing KCFC wipes in a system with a domestic septic tank. The reason why the KCFC wipes might not be suitable for domestic septic tanks is explained below. Assessed together with all of the other evidence, that conclusion was plainly insufficient to infer that the KCFC wipes contributed to or caused harm to household plumbing or the sewer network. 61 The primary judge did not err in failing to conclude that the KCFC wipes were not suitable to be flushed when it had not been established that the KCFC wipes caused harm or posed a materially greater risk of harm than toilet paper. That conclusion was supported by the findings in relation to the design and testing of the KCFC wipes and the absence of evidence of harm.

Ground 4 62 Ground 4 was: The trial judge erred in inappropriately dealing with the evidence of complaints reported to the Respondent that household plumbing (including septic tanks) had been blocked by KCFC wipes, in determining whether the KCFC wipes were suitable to be flushed down toilets. Particulars The trial judge found that the reported consumer complaints were insufficient to support "a conclusion that the KCFC wipes are unsuitable for flushing": see paragraph [11]. The trial judge relied on the small number of reported consumer complaints to find that the risk of harm "materialised" only to an "insignificant extent": see paragraphs [11], [14]. The trial judge should have relied on the reported consumer complaints as evidence in support of the conclusion that the disposal of the KCFC wipes via the toilet and sewerage system gave rise to a real risk of harm: see paragraphs [14], [152], [153], [309]. 63 The Commission submitted that the primary judge should have "proceeded on the basis that the consumer complaints were but an integer of the overall mosaic of evidence … which, as a whole was capable of supporting a conclusion that the KCFC wipes were not suitable for flushing in contributing to a real risk of harm". 64 The primary judge examined the evidence of complaints contained in KCA's consumer complaints records and concluded at J[152]: … [T]hose records are only weak evidence of the impact of KCFC wipes on household drainlines because they contain only the information that the relevant consumer chose to supply to KCA and there was no opportunity to test the veracity of that information during this proceeding. Those records do not support an inference of a wider problem. 65 At J[153], the primary judge stated: Further, it is significant that no evidence was adduced from a single consumer or plumber of a blockage resulting from the use of KCFC wipes. As earlier noted, Mr Drinkwater's evidence was that 90 percent of blockages occur in pipes around the house and leading from the house with the first, say, hundred metres. Given the substantial volume of evidence adduced from water authorities, the availability of the KCA records that identified the consumers who made complaints and the hundreds of millions of KCFC wipes concerned, this omission casts doubt on the probability that KCFC wipes caused or contributed to the alleged harm. 66 The consumer complaints numbered 26. As the primary judge observed, hundreds of millions of wipes were sold over the relevant period. The Commission served and tendered the 26 complaints during the course of the trial. The Commission did not call any of the individuals who made the complaints or any plumber or other person who might have given direct evidence about the relevant underlying facts. 67 The Commission submitted that all but two of the complaints related to blockages in septic tanks. One of the two complaints identified as not relating to septic tanks was a blockage on "acreage", which referred also to a pump, suggesting that it too related to a septic tank. The net result is that, on the Commission's submissions, there was only one complaint that was likely to have related to a drain line. That blockage appears to have been caused by wipes catching on a tree root which had broken into a drain line. In circumstances where 90% of blockages occur in drain lines and hundreds of millions of wipes were sold in the relevant period, this untested evidence was hardly a sound basis for reaching the conclusion that KCA breached civil penalty provisions by falsely representing that KCFC wipes were flushable, whether on its own or assessed as part of a multi-faceted case drawing on a mosaic of evidence. Indeed, the fact that the Commission could only come up with 26 complaints, only one of which clearly related to a drain line, rather suggests that the KCFC wipes were suitable to be flushed into domestic drain lines. 68 Although an attempt was made in closing submissions at trial to run a case that the flushability representation was misleading because the KCFC wipes caused harm to septic tanks, it plainly formed no part of the pleaded case. On appeal, it was submitted that septic tanks were referred to in the Concise Statement. That is true. They were referred to because "septic system" was mentioned in the marketing material quoted in the Concise Statement. For example [5] of the Concise Statement included: KCA also made statements on the packaging of KCFC Wipes and on its website likening various KCFC Wipes products to toilet paper, including: "often, dry toilet paper alone doesn't provide a good enough clean"; that KCFC Wipes were "lightly moistened toilet tissue wipes, to be used with your regular toilet paper to feel extra clean and fresh, everyday"; and on its website that KCFC Kids Wipes were "made from a specially designed material which will break up in the sewerage or septic system like toilet paper". 69 However, when it came to identifying the harm suffered, it is clear that the harm identified was restricted to sewage systems not sewage and septic systems. The Concise statement at [16], set out at [20] above, made it clear that the case was about sewage systems. That is why the evidence focussed on the rate of dispersion of KCFC wipes. It was only during the course of the trial that the complaints concerning septic tanks were relied upon by the Commission. 70 So far as concerns septic tanks, the question is about how quickly material biodegrades in a chemical process, not how quickly it disperses through a mechanical process of agitation. There is no significant agitation of water in a septic tank. Rather, material which is flushed into the tank settles and, hopefully, biodegrades. 71 The Commission also submitted that, although it did not know how many complaints were made, retailers, such as Woolworths and Coles, were passing on complaints made to them by consumers. The only foundation in the evidence for that submission was an internal email which referred to concerns aired by Big W which related to negative press concerning the KCFC wipes. It is not clear what the negative press was about, but it is well known that concerns have been expressed in relation to the environmental impact of wipes. There was no evidence of any retailer having received a single complaint about a blockage caused by KCFC wipes or wipes generally.

Ground 5 72 Ground 5 was: The trial judge erred in finding that the GD3 Guidelines were an "appropriate framework for assessing flushability" (paragraphs [154(4)] and [325]). Particulars The trial judge found that there was no evidence to substantiate the risk of harm to household and municipal sewerage systems by (i) wipes only being required to pass the benchmark set by the GD3 "slosh box" test; and (ii) the omission from the GD3 Guidelines of a sewer disintegration test, and therefore was in error in finding at paragraphs [154(4)] and [325] of the judgment that the GD3 Guidelines were an "appropriate framework for assessing flushability". 73 The primary judge stated at J[326]: While there is continuing disagreement about an appropriate standard or standards for flushability, in the absence of substantial evidence of harm caused by flushing the KCFC wipes, in my view, the INDA/EDANA GD3 Guidelines were a reasonable benchmark for making a claim of flushability. Their reasonableness is demonstrated by the fact that they were developed by scientists to test for performance on several dimensions relevant to performance in the sewerage system, they have been adopted or followed in several respects by the UKWIR Test Protocol and the 2017 IWSFG standard and they have not been demonstrated to produce harmful outcomes. 74 The Commission submitted that her Honour's conclusion that the GD3 Guidelines were an appropriate framework for assessing flushability "masks a number of complexities". First amongst the masked complexities was that the reference to "scientists" overlooked the fact that the scientists were employees of the manufacturers of the wipes. This fact did not escape the primary judge. It was obvious from the evidence and submissions that the industry guidelines were prepared by industry participants. At J[195], the primary judge recorded: KCA adduced detailed evidence concerning the history and development of the INDA/EDANA Guidelines. That history goes back to 2000, when Dr McAvoy and a team of research scientists at Proctor & Gamble, another manufacturer of non-woven products, commenced work to develop flushability testing protocols. That work included both laboratory work and field testing. 75 The primary judge noted that the GD3 Guidelines were "evidently a proactive endeavour on the part of manufacturers including KCC to avoid regulation which might constrain their business": J[229]. The scientists who were involved in developing the guidelines were no less scientists because of the fact that they were employed by the industry participants who wanted to develop flushability testing protocols. 76 The Commission's submission also fails to recognise that the primary judge dealt extensively with the GD3 Guidelines and the various criticisms made of them by the Commission from J[195] to J[256]. Her Honour concluded at J[256]: I accept KCA's submission that the INDA/EDANA GD3 Guidelines represent a conscientious and scientific effort to establish an appropriate framework for assessing flushability, having regard to the difficulty in forming fixed and categorical views in relation to all aspects of flushability testing procedures and protocols within sewerage systems. 77 The Commission also relied on the trial judge's finding at J[192] that the "disintegration test is a more demanding 'slosh box' test than the 'slosh box' test contained in GD3". It was submitted that the trial judge erred in "overlooking" her conclusion in J[192], and the fact that the scientists were employees of the manufacturers, to conclude that the GD3 Guidelines were an "appropriate framework for assessing flushability". The primary judge did not overlook either matter. In any event, the Commission did not establish that the KCFC wipes would have failed the international group of wastewater representatives (IWSFG) disintegration test. Nor did the Commission adduce evidence of the relative impacts on the sewerage of material which passed the 'slosh box' test but failed the IWSFG disintegration test. 78 The Commission submitted that there were numerous other problems with the guidelines. Three were identified in written submissions (footnotes omitted): … First, in the absence of a binding Australian or international standard to assess whether a wipe is "flushable", the manufacturers simply developed their own guidelines, comprising testing methods and pass criteria. The manufacturers were both judge and jury. The tests underlying the GD3 Guidelines were not the subject of independent peer review, including as to the appropriateness of the pass criteria. Second, the GD3 Guidelines do not reliably measure "flushability" and thus cannot be a proxy for "suitability". The Guidelines do not replicate, nor account for, real world sewerage conditions. This is despite the fact that the KCA's expert evidence was that "the 'ordinary operation' of the sewerage system would include defects". Further, the GD3 slosh box disintegration test produces greater turbulence than occurs in municipal sewer pipes and KCFC Wipes break down more easily in this test than in actual sewer conditions. Third, the pass rate for the disintegration test only required 25% or more of the wipe to pass through a 12.5mm sieve after 3 hours. This means that a wipe which breaks up around the edges could pass the test with up to 75% of the wipe remaining in one piece. This casts further significant doubt on its reliability as a test for flushability. 79 As to the first criticism, the primary judge was, as already mentioned, plainly aware that the manufacturers were developing their own guidelines. Whilst it is correct that the GD3 Guidelines were not peer reviewed, earlier versions were. Thus, her Honour recorded: [196] In about 2002, Dr McAvoy approached the Water Environment Research Foundation (WERF) to conduct a peer review of draft testing protocols developed by the Proctor & Gamble project team. WERF is a not-for-profit organisation which funds and arranges for research on water and wastewater treatment systems on behalf of its subscribers, which include wastewater utilities and wastewater equipment manufacturers. Approximately 160 wastewater utilities in the USA, as well as Sydney Water, QUU, SA Water and Water Corporation of Western Australia have been subscribers of WERF. [197] WERF appointed four wastewater treatment experts, from three tertiary institutions and a water consultancy firm (peer review committee), to review the draft protocols. [198] Following a review of the protocols and a site evaluation visit to Proctor & Gamble's laboratory, the peer review committee concluded that the document "represents a fundamentally sound approach and provides sufficient methodological detail for the development of a successful and scientifically defensible product-testing program". … [208] After the conclusion of the "pilot program", INDA and EDANA invited wastewater experts from the USA and Europe to conduct a peer review of GD1. In addition to the four peer reviewers of the WERF report, several persons including Mr Drinkwater were invited to review GD1. [209] After a process of engagement with the peer reviewers, the final version of GD1 was published in June 2008. It was 202 pages long, including 138 pages describing the technical specifications for the 23 test methods, being eight "Tier 1" tests (which were compulsory), eight "Tier 2" tests, and seven "Tier 3" tests. 80 As to the second criticism, the GD3 Guidelines were informed by various "real world" tests as her Honour recorded at J[195], set out above. It is also relevant to note that KCC had conducted real world testing at its facility: J[139]. 81 The third criticism is ultimately mere ipse dixit. In any event, the primary judge was plainly cognisant of the fact that the GD3 disintegration test was not as demanding as the IWSFG disintegration test and gave careful consideration to that matter in reaching her conclusion. No error has been demonstrated in the primary judge's reasoning.

Ground 6 82 Ground 6 was: The trial judge impermissibly inferred (at paragraph [90]) that because the Appellant did not tender the unpublished results of collection studies prepared by members of Water Services Association of Australia, those studies would not have assisted the Appellant's case. 83 The Commission submitted that this inference should not have been drawn. 84 Ground 6 can be disposed of without examining whether the inference should not have been drawn. The inference drawn by the primary judge was not shown to be material to the ultimate decision. The Commission failed to establish its case that the KCFC wipes caused harm. The inference drawn at J[90] could not have affected the result.

THE CHARACTERISTICS AND DISINTEGRATION REPRESENTATIONS 85 Grounds 7 and 8 concern the characteristics and disintegration representations: 7. In reaching the conclusion at paragraph [273] that the Respondent did not represent that the KCFC wipes have similar characteristics to toilet paper or would break up or disintegrate in a timeframe and manner similar to toilet paper, the trial judge erred by failing to take into account, or by failing to give sufficient weight to, the following representations made by the Respondent: a. KCFC wipes are "flushable"; b. KCFC wipes "break down in sewerage system or septic tank"; c. KCFC wipes are "able to be flushed in the toilet"; d. KCFC wipes are "completely flushable"; e. KCFC wipes "will break up in the sewerage or septic system like toilet paper" (This representation only relates to KCFC Kids Wipes); f. KCFC wipes are "safe to flush" (This representation only relates to KCFC Kids Wipes); g. KCFC wipes are "suitable for use in properly maintained sewerage systems and commercial septic tanks" (This representation only relates to KCFC Out and About Wipes); and the following pictorial representation: 8. The trial judge ought to have found that: a. the Respondent made the following representations concerning the KCFC wipes: i. KCFC wipes "had similar characteristics to toilet paper when flushed, as they would behave in a similar way to toilet paper in that they break up or disintegrate in a manner or timeframe similar to toilet paper when flushed" (the Characteristics Representation); ii. KCFC wipes "would break up or disintegrate in a timeframe and manner similar to toilet paper" (the Disintegration Representation); and b. the Characteristics Representation and the Disintegration Representation were false or misleading. Particulars The relevant facts found by the trial judge include that "KCFC wipes had inferior properties of breakdown and dispersion than toilet paper when flushed", paragraph [14]; and "toilet paper breaks down more quickly and easily than KCFC wipes and the rate of breakdown is a significant characteristic when considering flushability, paragraph [292]. 86 The primary judge's conclusions must be shown to be erroneous for them to be disturbed on appeal. For the reasons which follow no error has been shown in her Honour's reasoning. 87 The totality of the packaging and website statements or representations are set out at J[121] to J[125]. In ground 7, the Commission focussed attention on eight representations. The primary judge correctly focussed on what the ordinary reasonable consumer would have understood from all of the conduct. 88 Of the eight representations relied upon by the Commission, six do not mention toilet paper or compare the KCFC wipes with the characteristics or performance of toilet paper. 89 The fifth representation, referred in ground 7(e), that the KCFC wipes "will break up in the sewerage or septic system like toilet paper" is the only statement which directly compared the KCFC wipes to toilet paper. This representation appeared on the website www.kleenex-cottonelle.com.au at various times during the relevant period. A page entitled "Kids Cleansing Cloths FAQs" contained 19 questions and answers. The representation was contained in the following passage on the page (emphasis added): What are Kleenex Cottonelle Flushable Cleansing Cloths for kids? Kleenex Cottonelle Flushable Cleansing Cloths for kids are pre-moistened wipes that deliver a cleaner clean than using dry toilet paper alone. They are made from a specially designed cloth­like material that will break up in both the sewerage and septic systems so they are flushable. They are available in a 42 sheet resealable refill. Is it safe to flush Kleenex Cottonelle Flushable Cleaning Cloths for kids? Yes. Kleenex Cottonelle Flushable Cleaning Cloths for kids are made from a specially designed material which will break up in the sewerage or septic system like toilet paper. However, do not flush an excessive amount of wipes at one time (no more than two wipes per flush). Kleenex Cottonelle Flushable Cleaning Cloths for kids meet the EDANA Guideline for flushability. How many wipes can I flush at once. Sewage systems and stream flow conditions are different from door to door. Some extreme cases show that just one sheet can plug a toilet, so our advice is don't flush these wipes if the water stream in the toilet is weak, and also don't flush many sheets at once (we recommend that no more than two wipes are used per flush). 90 As can be seen the statement mentioning toilet paper was immediately followed by the word "however", acting to qualify the statement which had just been made. The context indicated that the KCFC wipes could be used to complement the use of toilet paper and that the product was different to toilet paper. The product was so different that no more than two wipes should be flushed at once. The reasonable consumer would have understood that, like toilet paper, the products break up in the sewerage or septic system. The reasonable consumer would not have understood that they broke up in the same way as toilet paper having regard to the surrounding context, particularly the direction not to flush any more than two wipes. The primary judge's conclusion at J[268] to that effect has not been shown to involve error. 91 The image, being the eighth representation, must be seen in context. The context included that the KCFC wipes were different to toilet paper, including through look and feel: J[120]; J[126] to J[128]. The representation itself says nothing about the equivalence of KCFC wipes to toilet paper. Next to the image, the Sensitive Wipes and the Cotton Fresh Wipes had the following words: Often, dry toilet paper alone doesn't provide a good enough clean. That's where KLEENEX Cottonelle Flushable Cleansing Cloths come in: Lightly moistened toilet tissue wipes, to be used with your regular toilet paper to feel extra clean and fresh, everyday. 92 The Sensitive Wipes (Out & About) had almost identical words: J[123]. 93 The Kids Wipes contained the following words: Making the transition to self wiping is easier with KLEENEX Cottonelle Flushable Cleansing Cloths for Kids. The lightly moistened toilet wipes are gentle, soft and conveniently sized to help little hands clean their bottoms better. Used with regular toilet paper, your kids will be extra clean and fresh, everyday. 94 The image did not, of itself, or together with the other representations read in context, convey that KCFC wipes "had similar characteristics to toilet paper when flushed" or that they "would break up or disintegrate in a timeframe and manner similar to toilet paper". 95 It follows that the primary judge was correct to conclude that the characteristics and disintegration representations were not made.

CONCLUSION 96 The appeal should be dismissed. I certify that the preceding ninety-six (96) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Perram, Murphy and Thawley.