Australian Competition & Consumer Commission v Hughes

Federal Court of Australia|2002-03-18|Before: Allsop J

THE COURT DECLARES THAT: 1. The respondent has in trade or commerce through the use of telephonic services, engaged in conduct that was misleading or deceptive, or was likely to mislead or deceive, contrary to section 52 of the Trade Practices Act 1974 (Cth) (the Act) by publishing or causing to be published advertisements at the "Crowded Planet" internet site located and associated with the domain name http://www.crowded.org/ (the site) representing to the public that: (a) Crowded Planet could supply newer oral contraceptives at lower prices resulting in consumers saving money; (b) users of Microgynon AE 50 ED - "Can miss one"; and (c) the use of Noriday AE 28 has "nil side effects". 2. The respondent has, in trade or commerce through the use of telephonic services, in connexion with the supply or possible supply of goods or services or in connexion with the promotion of supply or use of goods or services, made a false or misleading representation with respect to the price of oral contraceptives, that Crowded Planet could supply certain contraceptives at lower prices resulting in consumers saving money, contrary to section 53(e) of the Act by publishing or causing to be published advertisements at the site representing to the public the matters set out in paragraph 1(a) above. 3. The respondent has, in trade or commerce through the use of telephonic services, in connexion with the supply or possible supply of goods or services or in connexion with the promotion of supply or use of goods or services represented that Microgynon AE 50 ED and Noriday AE 28 have performance characteristics, uses or benefits they do not have contrary to section 53(c) of the Act by publishing or causing to be published advertisements at the site representing to the public the matters set out in paragraphs 1(b) and (c) above. 4. The respondent has in trade or commerce through the use of telephonic services, engaged in conduct that was misleading or deceptive, or was likely to mislead or deceive, contrary to section 53(c) of the Act by offering oral contraceptives for sale on the site without publishing, or causing to be published, on the site the following information: (a) that it is illegal for Crowded Planet to supply oral contraceptives listed on the site, being those in Attachment "A", to persons in Australia without a prescription; (b) that there are significant health risks in taking some oral contraceptives without first obtaining medical advice about the suitability of those medications for use by the particular individual; (c) that within Australia free medical assistance, including where appropriate the issuing of a prescription, is available to Australian citizens and permanent residents who are contemplating using oral contraceptives; (d) that it is significantly less expensive to obtain oral contraceptives upon prescription from a pharmacy in Australia than it is to buy them from the respondent; (e) that it is illegal for Crowded Planet to supply oral contraceptives listed on the site, being those listed in Attachment "A", in the United States; (f) that it is illegal for Crowded Planet to supply "Norlevo" in Australia; and (g) that it is illegal for a person to acquire the oral contraceptives listed on the site, being those listed in Attachment "A", in Australia without a prescription.

THE COURT ORDERS THAT: 5. The respondent be restrained, by himself, his servants, agents or otherwise howsoever, from offering for sale and/or selling and/or supplying oral contraceptives in Australia, without disclosing in relation thereto in any promotional medium used by the respondent including any internet site, in clear readable type of at least font size 20 in Times New Roman:

a) that it is illegal to supply the oral contraceptives Microgynon 50 ED, Loette, Levlen ED, Triquilar ED, Logynon ED, Norimin 28 day, Brenda 35 ED, Marvelon 28, Femoden ED, Microval, Noriday 28 day, Diane - 35 and Norlevo to persons in Australia without prescription;

b) that it is illegal for a person to acquire the oral contraceptives Microgynon 50 ED, Loette, Levlen ED, Triquilar ED, Logynon ED, Norimin 28 day, Brenda 35 ED, Marvelon 28, Femoden ED, Microval, Noriday 28 day, Diane - 35 and Norlevo in Australia without a prescription.

c) that there are significant health risks in taking some oral contraceptives without first obtaining medical advice about the suitability of those medications for use by the particular individual;

d) that within Australia free medical assistance, including where appropriate the issuing of a prescription, is available to Australian citizens and permanent residents who are contemplating using oral contraceptives; and

e) that it is significantly less expensive to obtain oral contraceptives upon prescription from a pharmacy in Australia than it is to buy them from the respondent.

The respondent be restrained, by himself, his servants, agents or otherwise howsoever, from offering for sale and/or selling and/or supplying the oral contraceptives in Attachment "A" to persons in the United States of America.
The respondent pay the applicant's costs Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

Oral Contraceptive Active Ingredient/s Microgynon 50 ED Levon orgestrel Ethinylestradiol Loette Levon orgestrel Ethinylestradiol Levlen ED Levon orgestrel Ethinylestradiol Triquilar ED Levon orgestrel Ethinylestradiol Logynon ED Levon orgestrel Ethinylestradiol Norimin 28 day Norethisterone Ethinylestradiol Brenda 35 ED Cyproterone acetate Ethinylestradiol Marvelon 28 Desogestrel Ethinylestradiol Femoden ED Gestodene Ethinylestradiol Microval Levon orgestrel Noriday 28 day Norethisterone Diane - 35 Cyproterone Acetate Ethinylestradiol Norlevo Levon orgestrel

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

AND: RICHARD DAVID HUGHES trading as CROWDED PLANET

1 Before the Court is an application brought by the Australian Competition and Consumer Commission (the Commission) under sections 52 and 53 of Part V of the Trade Practices Act 1974 (Cth) (the Act) in which declaratory orders are sought in relation to the respondent's past conduct, and, on the basis of these, other orders are sought in respect of the respondent's possible future conduct. 2 The conduct giving rise to the application involved the offering for sale of oral contraceptives through an internet-based website bearing the name, "Crowded Planet". The website was controlled by Mr Hughes, who had control, in particular, over the content of the site. Mr Hughes offered for sale through the Crowded Planet website a range of oral contraceptive tablets for supply in certain countries, which were listed in a "drop down menu" on the site, including, for present purposes, Australia and the United States, in circumstances justifying the making of the orders sought under the Act. 3 I propose to refer in these reasons to the respondent as Mr Hughes, although Mr Hughes has referred to himself in affidavit and other documentation in these proceedings as "David Zero Population Growth Hughes". 4 It is convenient first to set out factual matters borne out by the evidence. 5 There has existed on the internet a website operating under the name "Crowded Planet." 6 The internet is a worldwide network of computers, personal computers and servers linked for the transmission of telephone and data services. To obtain access to this network in Australia or elsewhere telephonic facilities are used, whether by cable or other means. A domain or host may be set up in Australia or elsewhere and, in either case, may be accessed by means of telephonic facilities from Australia or elsewhere. 7 The Crowded Planet website has carried offers for the sale of contraceptives. The contraceptives so offered for sale on the website are discussed in more detail later in these reasons. 8 The respondent, Mr Hughes, controls and has at all relevant times controlled the Crowded Planet website. In cross-examining a witness before me, Mr Hughes described himself as "the person responsible for the Crowded Planet website." In an affidavit dated 25 October 2001 he stated: "I am co-founder and chief cook and bottlewasher with …. Crowded Planet." In the light of the conduct of the case it is not in genuine dispute that the respondent controls, controlled and is and was responsible for the content of the Crowded Planet website. 9 The Commission has brought its case on the basis of the website in the form that it was in at the commencement of the proceedings at the end of August 2000, although it is apparent from all the evidence, and indeed from what was said by Mr Hughes in evidence and submissions, that the website had a variety of formats and addresses over time. The paper print-out of the form of the website relied upon was annexure MCF 10 to the affidavit of Matthew Charles Finn, an officer of the Commission. 10 By the time of the hearing before me the website was not accessible or active in any of the forms in which it had appeared. 11 It is unnecessary to deal with the circumstances in which the Commission came to learn of the activities of Crowded Planet. 12 On the website in the form in which it was at the time of the commencement of these proceedings, there had appeared a statement representing, in effect, that the Crowded Planet site and service had received the approval or endorsement of the Commission, and that the Commission had recommended approval of Crowded Planet's operations. That statement was quite false. On 9 November 2000 a Judge of this Court ordered Mr Hughes to publish a correction on the website in respect of this statement and made certain declarations in terms of Part V of the Act as to the misleading and deceptive nature of the statement. Whilst it is said by the Commission that Mr Hughes did not comply in other respects with these orders, it is accepted that he subsequently published or caused to be published words on the site which included the words in the corrective statement that was an attachment to the 9 November 2000 orders. On this basis the Commission has not pressed paras 1 - 3 of the amended application. 13 The balance of the grounds of the application rely on ss 52, 53(c) and 53(e) of the Act. Paragraphs 4 to 7 seek declaratory orders as to contraventions of the Act alleged from the content of the website. Paragraphs 10, 11 and 12 (paragraphs 8 and 9 not being pressed) seek orders restraining Mr Hughes in differing terms. Orders in paragraph 12 are sought in the alternative to those sought in paragraphs 10 and 11. 14 I will first deal with the misleading statements on the website. 15 The website contained the statement: "Save on doctors. Save on dispensing fees. Let us become your regular supplier of newer contraceptives at lower prices." 16 Paragraphs 4(a), 5 and 7(d) of the application dealt with this statement and the following relief was there claimed: 4. A declaration that the Respondent has in trade or commerce through the use of telephonic services engaged in conduct that is misleading or deceptive, or is likely to mislead or deceive, contrary to section 52 of the Act by publishing or causing to be published advertisements at the site representing to the public that: (a) Crowded Planet can supply newer oral contraceptives at lower prices resulting in consumers savings [sic] money; … 5. A declaration that the Respondent has, in trade or commerce through the use of telephonic services,… in connexion with the supply or possible supply of goods or services or in connexion with the promotion of supply or use of goods or services made a false or misleading representation with respect to the price of oral contraceptives, that Crowded Planet can supply certain contraceptives at lower prices resulting in consumers saving money, contrary to section 53(e) of the Act by publishing or causing to be published advertisements at the site representing to the public the matters set out in paragraph 4(a) above. … 7. A declaration that the Respondent has in trade or commerce through the use of telephonic services engaged in conduct that is misleading or deceptive, or is likely to mislead or deceive, contrary to section 52 of the Act by offering oral contraceptives for sale on the site without publishing, or causing to be published, on the site the following information: …. (d) that it is significantly less expensive to obtain oral contraceptives upon prescription from a pharmacy in Australia than it is to buy them from the Respondent. … 17 The website also contained a listing for an oral contraceptive called Microgynon 50ED about which the following was said: "Safest for healthy young women, very active party animals, sportswomen, and/or forgetful. Can miss one." 18 Paragraphs 4(b) and 6 of the application dealt with this statement and the following relief was there claimed: 4. A declaration that the Respondent has in trade or commerce through the use of telephonic services engaged in conduct that is misleading or deceptive, or is likely to mislead or deceive, contrary to section 52 of the Act by publishing or causing to be published advertisements at the site representing to the public that: … (b) users of Microgynon AE 50ED - "Can miss one"; … 6. A declaration that the Respondent has, in trade or commerce through the use of telephonic services, … in connexion with the supply or possible supply of goods or services or in connexion with the promotion of supply or use of goods or services represented that Microgynon AE 50EDand Noriday AE 28 have performance characteristics, uses or benefits they do not have contrary to section 53(c) of the Act by publishing or causing to be published advertisements at the site representing to the public the matters set out in paragraphs 4(b) and (c) above. … 19 The website also contained a listing for an oral contraceptive called Noriday 28 which was said to have "nil side affects". 20 Paragraphs 4(c) and 6 of the application dealt with this statement and the following relief was claimed in 4(c), the relief in paragraph 6 being set out in [18] above: 4. A declaration that the Respondent has in trade or commerce through the use of telephonic services engaged in conduct that is misleading or deceptive, or is likely to mislead or deceive, contrary to section 52 of the Act by publishing or causing to be published advertisements at the site representing to the public that: … (c) the use of Noriday AE 28 has "nil side effects". … 21 In addition to these specific statements, complaint is made that the respondent has engaged in misleading or deceptive conduct by failing to include on the site certain warnings and information. Paragraphs 7(a) to (c) and (e) to (g) deal with these matters and contain the following claims for relief (para 7(d) relates to price and has been dealt with above): (a) that it is illegal for Crowded Planet to supply oral contraceptives listed on the site, being those listed in attachment 'B' [which is attachment 'A' to the orders accompanying these reasons] to persons in Australia without a prescription; (b) that there are significant health risks in taking some oral contraceptives without first obtaining medical advice about the suitability of those medications for use by the particular individual; (c) that within Australia free medical assistance, including where appropriate the issuing of a prescription, is available to Australian citizens and permanent residents who are contemplating using oral contraceptives; and/or … (e) that it is illegal for Crowded Planet to supply oral contraceptives listed on the site, being those listed in Attachment 'B' [annexure A to the orders accompanying these reasons] in the United States; (f) that it is illegal for Crowded Planet to supply [the oral contraceptive] 'Norvelo' in Australia; (g) that it is illegal for a person to acquire the oral contraceptives listed on the site, being those listed in Attachment 'B' [annexure A to the orders accompanying these reasons], in Australia without a prescription. 22 In addition to (and on the basis of) the above declaratory relief, the Commission seeks orders pursuant to s 80 of the Act in the following terms: 10. … that the Respondent be restrained, by himself, his servants, agents or otherwise howsoever from offering for sale and/or sellingand/or supplying oral contraceptives in Australia, being substances described in Schedule 4 of the Poisons List, proclaimed under s.8 of the Poisons and Therapeutic Goods Act 1966 (NSW). 11. … that the Respondent be restrained, by himself, his servants, agents or otherwise howsoever from offering for sale and/or selling and/or supplying the oral contraceptives listed in Attachment "B" [annexure A to the orders accompanying these reasons] in the United States of America. …… 23 The relief sought in the alternative to orders 10 and 11 was set out in paragraph 12 of the application. It was a long order structured upon the requirement of Mr Hughes to disclose on any site or promotional medium certain things. It claimed the following: 12. Alternatively to 10 and/or 11 an order pursuant to section 80 and/or 80A of the Act that the Respondent be restrained, by himself, his servants, agents or otherwise howsoever from offering for sale and/or supplying oral contraceptives to persons in Australia and/or the United States of America, without disclosing on the site (or any other web site, or promotional medium used by the Respondent for the sale or supply of oral contraceptives) in font size 20 in Times New Roman font: (a) that it is illegal for Crowded Planet to supply oral contraceptives listed on the site, being those listed in Attachment "B", [annexure A to the orders accompanying these reasons] to persons in Australia without a prescription; (b) that there are significant health risks in taking some oral contraceptives without first obtaining medical advice about the suitability of those medications for use by the particular individual; (c) that within Australia free medical assistance, including where appropriate the issuing of a prescription, is available to Australian citizens and permanent residents who are contemplating using oral contraceptives; (d) that it is significantly less expensive to obtain oral contraceptives upon prescription from a pharmacy in Australia than it is to buy them from the Respondent; (e) that it is illegal for Crowded Planet to supply oral contraceptives listed on the site, being those in Attachment "B" [annexure A to the orders accompanying these reasons], in the United States; (f) that it is illegal for Crowded Planet to supply Norvelo in Australia; (g) that it is illegal for a person to acquire the oral contraceptives listed on the site, being those listed in Attachment "B" [annexure A to the orders accompanying these reasons], in Australia without a prescription. 24 At the hearing, the Commission led witnesses, including expert medically-qualified witnesses, some of whom were cross-examined by Mr Hughes. Mr Hughes himself gave evidence and was cross-examined. Written submissions were received from the parties after the hearing of the matter. Paragraphs 4(a) and 5: misleading or deceptive conduct or conduct likely to mislead or deceive - price 25 I have set out above the statement that appeared, at the top of the first page of the website as it appeared at the time of commencement of the action, that customers could save time and money, "save on doctors" and on dispensing fees, and invited Crowded Planet to become the customers' "regular supplier of newer contraceptives at lower prices". 26 The statement clearly conveys a representation that the site's operators can supply newer oral contraceptives at lower prices resulting in consumers saving money. I recognise what was said by the Full Court in Ramset Fasteners (Aust) Pty Ltd v Advanced Building Systems Pty Ltd (1999) 164 ALR 239, 268 that sometimes it is unnecessary, and may be artificial, to speak of a representation where it is more realistic simply to ask whether the conduct is misleading, without resort to any sophisticated analysis. Here, however, in conduct centred upon use of the written word, the notion of representation is apt. 27 The representation is likely to affect a broad class of persons, being the internet-using public interested in purchasing contraceptives, including in particular, the Australian internet-using public who are so interested. The references to Australia include the Wollongong, New South Wales, contact details that were given for Crowded Planet. There are other references on the face of the site tying the organisation to Australia, including the information given as to preferred currency in respect of payment details. Included in the class referred to above would be women and girls who have in the past been refused, or never before sought, a prescription for oral contraceptives by, or from, a medical practitioner. Such persons may have no benchmark of comparison of normal Australian prices with the prices listed by Crowded Planet. 28 The Crowded Planet prices were given in United States dollars. They were set out alongside each product on the list of products. 29 To the extent that the site made unqualified statements that customers could purchase contraceptives at lower prices, the Commission seeks a declaration concerning the misleading nature of this in respect of Australian customers. Mr Hughes has produced no evidence to assist in this question. At the completion of all the evidence, and not before, Mr Hughes stated [T 196] that: …If any customer identified themselves as Australian they were emailed with a suggestion that it would be cheaper for them to go to their local chemist and their local doctor. If they still insisted on ordering through the site, most but not all Australians were given twice the quantity, to make up for the fact that the prices, not in the beginning but for most of the site's life, the prices were quite high in relation to Australian prices. 30 Coming at the stage in proceedings that it did, I treat this statement with some caution. Mr Hughes has produced nothing that is evidence before me that this was the practice of Crowded Planet. The statement in its terms accepts that the prices on the site were higher than would be paid locally. 31 The Commission led witnesses who produced evidence of the comparative normal price for the relevant products in Australia. 32 Dr Therese Foran is a medical director of FPA Health (formerly Family Planning New South Wales) with at least 20 years experience in the field of sexual and reproductive health. She produced a report on the information provided in the Crowded Planet site (as produced to her and personally accessed by her in 2000), which report dealt with comparative pricing and which also set out her opinion on the safety of providing the pharmaceutical products supplied by the website without prior prescription by a medical practitioner. I deal with her opinion in the latter regard later. Dr Foran's report dealt with the preparations offered on the site in three categories : (a) Combined Oral Contraceptive Pills containing both oestrogen and progestogen in both high and low dose preparations, (b) Progesterone-Only Oral Contraceptive Pills, and (c) Emergency or "Postcoital" Contraceptive Pills. As to each category, she said that the prices listed on the site were, in the Australian dollar equivalent, "substantially more expensive than the Australian recommended prices". She provided a comparison between the prices listed on the site (in US and then Australian dollars, the latter sum arrived at by an approximate doubling of the US dollar amount to reflect, I take it, the approximate exchange rate at that time) and the prices at which those pills (or their equivalent) were sold by FPA Health, which determines its prices by setting these against an average price sold by pharmacies across Sydney. The Crowded Planet prices, it appears from that comparison, were at least four times, and sometimes more, the average retail prices charged in New South Wales. Mr Hughes did not challenge this evidence in his cross-examination of Dr Foran. Dr Foran expressed a concern that, in her opinion, the fact that the Crowded Planet prices listed were so much greater raised a concern that the majority of women in Australia accessing supply by means of the website may well be women who have been refused supply through conventional prescription or other means and may therefore constitute a higher proportion of women potentially at risk. 33 The Commission also led the evidence of one of its investigating officers, Ms Pickering, who was also cross-examined. Ms Pickering's affidavit deposed to her having attended upon various pharmacies in the Sydney area in October and November 2000, where she produced to the attendant pharmacists the list of substances appearing on the Crowded Planet site and requested from them a price for each of the items that were available in Australia. Certain of the chemists were unable to find prices for some of the products, which were thought either to be unavailable in Australia or to be not products themselves but rather known ingredients of other products. Ms Pickering also accessed the internet site of a corporation called Pharmacy Direct, her search revealing prices for relevant medications available through that corporation's outlets. A comparative analysis of the prices that the pharmacists were able to provide, or the Pharmacy Direct website revealed, with the prices (in Australian dollar approximate equivalents) stated on the Crowded Planet site reveals that the prices there are, again, some four times higher. Dr Foran's and Ms Pickering's evidence on price is consistent and complementary. 34 I accept the evidence of Dr Foran and Ms Pickering as to the normal price of prescription contraceptives in Australia as compared to those offered for sale through the Crowded Planet site. The prices listed were, as I have said, about four times the prices at which such products are available from pharmacies in Australia upon prescription or from Dr Foran's organisation FPA Health. I find that the representation as to price that was contained on the site was misleading or deceptive or would be likely to mislead or deceive a reasonably significant number of members of the class that would be affected by the representation, that is, Australian purchasers of oral contraceptives. 35 The particular reference to "sav[ing] on doctors" by ordering through the site is also apt to convey a certain representation, to Australian resident consumers, as to the comparative price of obtaining relevant oral contraceptives. This representation is inaccurate. Persons will not necessarily save on fees by using the site, since people are able in this country to obtain a prescription for contraceptives without paying doctor's fees. That this is so was demonstrated by Professor Deborah Saltman in her evidence. Professor Saltman is highly qualified and experienced. She is a Professor of the University of Sydney and Head of the General Practice Professorial Unit there. Professor Saltman produced a report, annexed to her affidavit, in relation to the matters dealt with in paras 7(b) and 7(c) of the amended application, dealing with the risks of taking oral contraceptives without medical intervention. She was cross-examined by Mr Hughes. 36 In her report, Professor Saltman makes clear that in Australia free access for patients to general practice services for which they do not have to pay out of pocket is very good and improving, with a national average of over 70% of all services, including specialists, direct billed. The national average for non-specialist general practitioner bulk-billing rates is over 86% of all services. Obtaining prescription contraceptives requires only general practice services. Professor Saltman was not cross-examined by Mr Hughes on this point and I accept what she has said. I deal further with this issue below.

Paragraphs 4(b) and 6: misleading or deceptive conduct or conduct likely to mislead or deceive - Microgynon users "can miss one" 37 I have earlier set out the statement that appeared on page 2 of the website to the effect that users of the high dose contraceptive Microgynon 50 ED "can miss one". 38 Dr Foran's report dealt with Microgynon 50 ED and the statement made on the website. She stated that the assertion was: …somewhat irresponsible and inaccurate as the failure rate with missed pills is much more dependent on where the pill is missed in the packet rather than the dose itself. A Pill missed close to either end of the Pill free week is just as dangerous whether a woman is taking a high dose or a low dose pill and additional measures to avoid an accidental pregnancy would always be advised if a Pill was missed at this time - even on a high dose Pill such as Microgynon 50. [emphasis in original] 39 Professor Saltman was cross-examined by Mr Hughes as follows [T106 and T109: 11]: The advice for people taking low dose pills is that they must not miss one, you would agree with that? --- Yes. Conversely, someone who is taking a high dose pill, can they miss one? --- Once again the evidence is mixed about the length and duration of protection. We can really only go on what the Therapeutic Goods Authority suggests, which is a 12 hour window period is the length of time that is to some degree safe. On the list [Attachment A] the POPs [progesterone-only pills], the mini pills, they're very low dose, they only use one hormone. Can you let one of those go, can you miss one for 12 hours in one of those? --- The advice is not to, to miss [sic]. … Does it flow conversely that the high dose pills - women may be able to miss one? --- No. 40 Mr Hughes' only submission on this issue was that the information that women on high dose contraceptives could miss taking one was taken from a book by a United Kingdom-based author that was, at some time, for sale through the website. Neither the book nor any other evidence was produced by Mr Hughes. 41 I accept the Commission's submission on this point, based as it is on the evidence, which I accept, of Dr Foran and Professor Saltman, that the statement is misleading. It is misleading in that it could lead users of that contraceptive to underestimate the risk of contraceptive failure if a dose is missed, especially if missed at a particular point in the user's cycle. 42 There has also, by publication of the statement, been a representation that the product has a performance characteristic, use or benefit that it does not have, contrary to s 53(c) of the Act.

Paragraphs 4(c) and 6: misleading or deceptive conduct or conduct likely to mislead or deceive -Noriday has nil side effects 43 I have earlier set out the statement that appeared on page 2 of the website, alongside the listing for the progesterone-only product Noriday 28, that the product had "Nil side-effects". 44 There was a great deal of evidence on the various risks and side effects of contraceptives generally. Dr Foran dealt in her report with Noriday 28 and with the above statement on the website, stating that progesterone-only pills [POPs] generally, such as this, are extremely safe preparations, although there were some contra-indications and certain things could interfere with or affect the effectiveness of the preparation, which has quite different instructions for use. She stated that POPs are not usually recommended in the usual doses for women over a certain weight (70 kgs), before stating: There is also a significant incidence of irregular bleeding occurring during its use of which a woman should be informed prior to its use - certainly not the "nil side-effects" described. In fact about 40% of women experience irregular bleeding on progesterone only pills - which varies from no bleeding at all to quite prolonged bleeding. Benign ovarian cysts are also more common in women using Progesterone only pills. A small number of women who are extremely sensitive to progestogens may also experience such side effects as depression, acne and irritability. 45 Mr Hughes cross-examined Dr Foran at some length about Noriday 28. Dr Foran agreed with Mr Hughes' proposition that POPs or mini pills (such as Noriday 28) were often described as having very small side effects. Mr Hughes clearly intended to submit that in the minimal space available on the website, such a statement was reasonable; the following exchange took place in cross-examination: If you had pages and pages to write about it, of course, you wouldn't say anything about nil side effects, but if you only had a tiny space, if you were only given three words, would it be fair to describe the mini pill as having nil side effects? --- No, I don't think it would be fair to say it has nil side-effects. There is a side-effect that's almost invariable on mini pill preparations and that's irregular cycles. Everybody who takes the mini pill has a cycle irregularity. Now, that can vary from no periods at all to irregular timing in the cycles but it's almost invariable, so almost everybody who takes a mini pill has a side effect. … [W]hat would you say if you only had three or four words in a tight space? --- …I guess if I was really pressed, I would say that they have minimal side effects. 46 The above exchange took place in the context of Dr Foran further outlining the various side effects, particularly as to bleeding patterns, and in the context of her saying that she would be very reluctant to try and summarise anything in three to four words for such a complex matter. 47 Mr Hughes submitted that he had obtained the information about side effects from the same publication that he had relied upon in relation to the Microgynon 50 statement, saying that he was not sure whether the author had said "nil side-effects" or "negligible side-effects". He made no further submissions on the matter, save to indicate in his written submissions that Dr Foran had made some concession in her statement "minimal side-effects". Dr Foran's evidence was clear enough in the context in which it was given. There is no need to analyse the difference between "nil" and "minimal" side-effects, except to say that I accept the Commission's submission that there is a considerable difference in this context, given the evident range and severity of possible side effects that Dr Foran described and that even had the side-effects been described as "minimal", the subject matter is complex enough that such a statement would be unsatisfactory and inadequate. As it is, the statement as it appeared is misleading or deceptive. It is plain that POPs such as Noriday 28 may have serious side effects for particular users, and that at least one irregularity or side-effect is invariable. 48 There has also once again, by publication of the statement, been a representation that the product has a performance characteristic, use or benefit that it does not have, contrary to s 53(c) of the Act.

Paragraph 7 of the amended application 49 The various paragraphs of ground 7 allege that it was misleading or deceptive, or likely to mislead or deceive, to offer contraceptives for sale in the manner engaged in without including various qualifying or warning statements. Before dealing with the submissions under these headings it is necessary to turn briefly to the approach to dealing with the question of when it is that a failure to disclose a matter will be misleading or deceptive. The Commission submitted that, particularly where it is a matter that consumers may rely upon, the absence of certain references will make an unqualified offer to supply misleading or deceptive. It says that listing by the relevant authorities of a substance as a prescription-only substance is an indication that the regulatory authorities view the substance to have properties that require it to be supplied only after medical intervention. 50 It is established that the significance of such an omission always falls to be considered in the context in which the failure to speak or publish arises. The primary question is simply whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive or that is likely to mislead or deceive. The context may or may not include facts giving rise to a reasonable expectation that a matter will be disclosed. See Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31; cf Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477, 489-90. A failure to disclose may render what is disclosed but a half truth: Mikaelian v CSIRO (1999) 163 ALR 172, 189 ([76]) per Hill J; see generally the cases cited by his Honour at [75]. In Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 111 ALR 649, Hill J said (at 666): … if the circumstances are such that a person is entitled to believe that a relevant matter affecting him or her adversely would, if it existed, be communicated, then the failure to so communicate it may constitute conduct which is misleading and deceptive because the person who ultimately may act to his or her detriment is entitled to infer from the silence that no danger of detriment existed. 51 In Ramset Fasteners (Aust) Pty Ltd v Advanced Building Systems Pty Ltd, supra, the Full Court agreed (at 268, [66]) with the conclusion of the primary judge that the failure of the appellant to warn its customers that use of its products in a particular way might constitute an infringement of the respondent's patent was misleading or deceptive conduct in contravention of s 52. The Full Court said (at [67]) that the appellant had acted misleadingly when it promoted and sold its equipment in the way that it did, without informing customers of the liability they may incur, and that this was conduct calculated to cause a mistaken impression about a significant consequence of the transaction proposed to those customers. 52 The Full Court's statements are apposite to the conduct in this case.

Paragraphs 7(a) and (g) - illegal to supply or acquire without a prescription in Australia 53 I accept the submissions of the Commission. The supply of the pharmaceuticals in question without a prescription was illegal as is obtaining or attempting to obtain possession of them without a prescription: see generally ss 4, 10(3) and 16(1)(b) of the Poisons and Therapeutic Goods Act 1966 (NSW). The evidence was that the Schedule 4 of the Poisons List, proclaimed under s 8 of the Poisons and Therapeutic Goods Act 1966 (NSW) was reflective of the position in each State and Territory. The essence of the deception for the consumer is that she is not told something reflecting a considered view of the relevant authorities that the substance should only be supplied after medical intervention. Mr Hughes was quite aware, moreover, that supply of these substances without a prescription was unlawful.

Paragraph 7(e) - illegal to supply or acquire without a prescription in the United States 54 The Commission led evidence on this issue from a Mr Matelski, a Washington D.C. based attorney. Mr Matelski gave evidence to the Court from the United States by video link. Mr Hughes cross-examined Mr Matelski. Mr Matelski is an experienced attorney who, since 1976, has practised mainly in the area of food and drug law in the United States, and whose work involves advising clients in relation to matters which included the laws and regulations of the United States Food and Drug Administration (the FDA) and the Drug Enforcement Administration, applications for new drugs to the FDA and complaints to the FDA about practices of other companies in the pharmaceutical industry. He has given speeches on the legal regulation of the advertising of prescription drugs over the internet. I accept that he has specialised knowledge of the laws of the United States relating to the importation and supply of pharmaceutical and other products in the United States. 55 I accept Mr Matelski's expert evidence. None of the relevant contraceptive substances listed can be supplied in the United States, except upon prescription. Australian-manufactured contraceptive substances cannot legally be supplied there without FDA approval. While he disputed some of the evidence, I find that Mr Hughes knew this to be the case. In any event, it is misleading, and likely to cause a significant detrimental consequence to United States customers, to offer these substances for sale without a qualification to the effect that without FDA approval and a prescription their importation or supply is unlawful in that country.

Paragraph 7(b) - health risks in absence of medical advice 56 Dr Foran and Professor Saltman both gave very clear evidence as to the risks associated with the use of oral contraceptive drugs and the need for medical intervention in the process. 57 I need only summarise that evidence. Their evidence conveyed a great concern for the manner in which oral contraceptives were supplied by Mr Hughes, even in respect of those who might generally be said to be low risk persons. That evidence, as I see it, gives substance to the Commission's concerns as to the activities of the respondent viewed as a whole. 58 Dr Foran structured her report by placing the contraceptives offered on the site in categories according to risk. She stated at the outset of her affidavit that she considered the oral contraceptive pill an extremely safe preparation for the majority of women, and that, in her opinion, the present regulations on supply were probably over-cautious, particularly for "emergency" ("post-coital") contraceptives "which have negligible health risks". She stated that she would personally feel comfortable if, after an initial period of assessment by a medical practitioner, subsequent prescriptions for combined and progesterone-only pills were able to be supplied for longer periods, and that subsequent supply could be made for periods of time by paramedical personnel. Mr Hughes, naturally, agreed with this. However, Dr Foran's evidence went a great deal further than this. She stated that: 5. The problem is that while the Oral Contraceptive Pill, particularly the Combined Oral Contraceptive Pill, is a very safe preparation for the overwhelming majority of women, there are a small number of women for which it constitutes a quite significant health risk. That is, there are a group of women who should not be taking these preparations under any circumstances and a larger group of women for whom it may cause significant side-effects or health risks. There would appear to be no mechanism in identifying these women in a direct supply situation such as exists over the internet. [emphasis in original] 59 Even in relation to preparations ("emergency" contraceptives) the supply of which without prescription would not, in Dr Foran's opinion, constitute any significant health risk, there was a concern, she said, in that it was not clear from the website how much information would be supplied to the customer on how to take the preparation correctly, which may lead to contraceptive failure or side-effects. 60 Dr Foran detailed the invariable side-effects inherent in the second category that she considered, progesterone-only preparations, even though these are "extremely safe preparations", and noted various features of these that rendered them unsuitable, for health reasons, for certain categories of persons. They also have very different instructions for use. 61 In relation to combined oral contraceptives, Dr Foran stated that as these contain oestrogen they are more effective at preventing pregnancy and allow for better cycle control, but the oestrogen content "does increase the number of potentially dangerous side-effects which could be experienced by the women using [them]". She stated that there exist classes of women who "should never be prescribed a combined oral pill because of the real risks of significant side-effects". She detailed some of the classes and, in places, the possible consequences for such persons of use of these preparations. I need not reproduce that list. It is fairly extensive, and the attendant side effects are clearly serious, including a tendency to cause breast, ovarian and uterine cancers to develop more rapidly. She stated that: There are also a larger group of women in which the Pill should be used with care and who require close monitoring. This would include women with high blood pressure, severe depression, diabetes, and women using drugs which may interfere with the efficacy of the Pill. 62 Dr Foran noted the increased risk of clotting disease and side-effects attendant on the high dose preparation Microgynon 50 ED. Turning to the remaining pills listed, being low-dose pills, she stated: 20. Despite the fact that these pills are low dose, they should never be prescribed to the higher risk women detailed previously. Even in women who do not have any risk factors on commencement of the Pill a number can subsequently develop problems such as high blood pressure, or circumstances may change (increasing age or increasing smoking habit) which may make its use more dangerous. Again in the information section some misinformation is given - in the section for Levlen 30 ED for example, the Pill is described as good for "young mums" - unfortunately not if they happen to be breastfeeding. 63 Dr Foran concluded that in her opinion the availability of in particular the combined contraceptives on the website that she saw: …may constitute a real risk to some women who may access this supply. I am also concerned by the degree of misinformation contained within the website and by the relative expense of the preparations obtained by this method. 64 I do not read anything that Dr Foran said under cross-examination as detracting in any way from the report that she produced, although she confirmed her opinion that Norlevo, an "emergency" contraceptive, was "very, very safe" and could be used as a non-prescription drug. 65 Professor Saltman's evidence, as contained in her report, was comprehensive. The report concentrated on various reasons why, in her opinion, it is essential that the initial and continuing prescribing of oral contraceptives is conducted under the auspices of a medical practitioner. Professor Saltman made clear that a patient about to commence on a combination oral contraceptive requires specialised medical information about the way oral contraceptives work, that their "mechanism of action is quite complex and has an impact on their efficacy and potential side-effect profile". The explanations of how they prevent pregnancy are quite technical and require training to understand, let alone deliver, them and to provide meaningful answers to patients' questions. She stated that the initial choice of contraceptive should also be based on a comparison of individual drug efficacy and side-effect profile, things that needed to be explained to a woman. She stated that there exists a range of contra-indicating conditions; a patient may be unaware that she is suffering these, so that it is essential that a practitioner reviews each patient's individual history and makes a decision on the appropriate contraceptive "based on the seriousness of potential contra-indications". It is clear that choice of prescription is very much dependent upon assessment of the individual patient. Some of the conditions are quite technical and their identification and management of their possible ongoing effect would require specialised knowledge. Moreover, every year new contra-indications are added to the existing list. 66 Along with contra-indications, Professor Saltman listed co-morbidities or attendant risks. These are numerous, clearly quite serious, and cover a number of subject matters which I need not list. She also noted the need for ongoing management and periodic assessment: continual monitoring is essential as various conditions may arise or be exacerbated. This was something Dr Foran made clear in her oral evidence, when asked about repeat prescriptions. It was also noted that a good relationship with a medical practitioner is essential to on-going management of a patient on long-term medication such as oral contraceptives, the issue of long-term prescription being very different to that for one-off treatments or medications such as are dispensed over the counter in pharmacies. This relationship, she opined, "is not available to a patient over telephonic supply services". She also dealt briefly with "emergency" contraceptives, noting mainly that it is not effective after 24 hours has passed. Professor Saltman was firm and clear about her evidence under cross-examination. 67 Mr Hughes submitted, very late in the hearing [Tp 196], the following: …If any customer from Australia or the United States or anywhere identified themselves as never using the pill, they were advised by email to not order off the site but to go to a doctor to get their first prescription but to use the site for…repeats. 68 As I have said, I am somewhat circumspect about this rather convenient statement given the manner and timing of its making. I have been given no evidence beyond Mr Hughes' unsworn assertion from the bar table that this was the practice of Crowded Planet. I reject this 'evidence'. Even if it were true it would not do away with the risk to consumers. Only if the consumer identified herself in that way would she be advised of these matters. 69 In the light of the evidence that has been led, I accept the Commission's submission that it is misleading or deceptive, or it is likely to mislead or deceive, to offer prescription oral contraceptives for sale or supply in Australia without publishing the fact that there are health risks potentially or actually involved and that self-prescription without obtaining initial and ongoing or periodical medical advice is potentially harmful to health. It is this health risk to the public that assists in persuading me that the orders sought, otherwise justified, are appropriate in the circumstances.

Paragraph 7(c) - free medical assistance available within Australia 70 I have already referred to the question of the easy availability in Australia of free medical assistance for general services such as examination for purposes of prescription for contraceptives. In the context particularly of published statements that it is possible to "save on doctor's fees", and in the context of the health risks concerned in self-prescription, I accept the Commission's submission that where there is, via the internet, an offer to supply prescription-only drugs, it is misleading not to disclose that free medical advice and prescription is readily available. Thus, I am prepared to find that in the circumstances of this case, it was or would be misleading to offer for sale, in the manner engaged in, prescription-only oral contraceptives without disclosing that within Australia such drugs can be obtained by accessing, very easily, free general practice or other medical assistance and thereby obtaining a prescription.

Paragraph 7(d) - less expensive to obtain by prescription in Australia 71 On the evidence, it is or would have been significantly less expensive to obtain oral contraceptives upon prescription from a pharmacy in Australia than it is or would have been to purchase these same contraceptives from the respondent. 72 The question is whether it is (or was) misleading or deceptive within the terms of s 52 to offer such drugs for sale without publishing information to this effect. The Commission did not develop this submission other than to say that it is in the context of an existing representation as to price that it is misleading not to disclose that the substances in question are available at a significantly lower price from any pharmacy. On one view, and perhaps without the background of the accompanying representations, this might be seen as a remarkable submission. It would amount to a suggestion that the consumer protection afforded by Part V of the Act extends to requiring persons to advise consumers that their money could go a great deal further if it were spent elsewhere. 73 The submission, in as much as it was developed, was, however, intended to be context-dependent: the suggestion that consumers in Australia will save money by buying contraceptives through the site rather than obtaining them on prescription from a pharmacy is, without a relevant quantifying statement, misleading. In this context, I accept the submission.

Paragraph 7(f) - it is illegal for Crowded Planet to supply Norlevo in Australia 74 The respondent's position was that no application to register Norvelo (or its equivalent manufactured by a different corporation) has been made in Australia and it was thus neither legal nor illegal to supply it in this country, although (it was said) a similar product (referred to as "Plan B") is legal in the United States and equivalent products are legal in most European countries. No evidence was produced directed towards this issue, although Mr Hughes cross-examined witnesses on the point. 75 The Commission submitted that Mr Spong's affidavit of 14 December 2000 shows the illegality of the supply of Norlevo. Mr Spong, who was not called for cross-examination, swore the affidavit as Acting Section Head with responsibility for the Australian Register of Therapeutic Goods (maintained under s 17 of the Therapeutic Goods Act 1989 (Cth)) at the Therapeutic Goods Administration. Mr Spong deposed to having searched the Register in December 2000, which search revealed no records of any current or cancelled product with the name "Norlevo" or with "Norlevo" as part of any other name. 76 On the available evidence I accept the Commission's submission that, given the nature of these products, there was an obligation, so as not to engage in misleading the public through the offer, to qualify any internet-based offer that included the Australian public by disclosing that [involvement in] its supply in this country is unlawful

The statutory basis for relief 77 Mr Hughes makes the representations on the web-site available to consumers by the use of telephonic services in Australia and overseas. The evidence discloses that the website as at 30 August 2000 had an address "www.crowded.org" indicating a United States based site or domain name. The site itself contains the representations which I have earlier dealt with. They are placed on the site using postal, telegraphic or telephonic services and are made available for people to see by those people visiting the site. People can visit the site from all States in Australia, the United States and elsewhere by the use of telephonic services. 78 Thus, Mr Hughes places on a computer site overseas misleading or deceptive material with the intention that consumers in Australia, the United States and elsewhere will use telephonic services to access that information and rely upon it. 79 Thus, relief is available under the Trade Practices Act by reason of ss 5 and 6 of the Act, notwithstanding the lack of a presence of a corporation. 80 It is plain from the website itself and the facts giving rise to the complaints of the Commission that what was being done was in trade and commerce: the selling of goods.

Relief 81 I have earlier outlined the orders, and alternative orders, that are sought. Paragraphs 10 and 11 of the amended application are as follows: 10. An order pursuant to section 80 of the Act that the Respondent be restrained, by himself, his servants, agents or otherwise howsoever from offering for sale and/or selling and/or supplying oral contraceptives in Australia, being substances described in Schedule 4 of the Poisons List, proclaimed under s.8 of the Poisons and Therapeutic Goods Act 1966 (NSW). 11. An order pursuant to section 80 of the Act that the Respondent be restrained, by himself, his servants, agents or otherwise howsoever from offering for sale and/or selling and/or supplying the oral contraceptives listed in Attachment "B" [Attachment A to these reasons] in the United States of America. 82 As I have said, in paragraph 12 the Commission seeks, as alternative relief, orders under ss 80 and/or 80A of the Act restraining Mr Hughes, by himself, his servants, agents or otherwise howsoever, from offering for sale and/or supplying oral contraceptives in Australia and/or the United States, without disclosing on the Crowded Planet site (or any other website or promotion used by him for the sale or supply of oral contraceptives) the matters dealt with in paragraph 7 of the application. 83 The orders in paras 10 and 11 are widely framed. The orders sought in para 12 are not quite as far-reaching. 84 I am satisfied that the orders which should be made should allow a minimum of room for debate. I am also satisfied that the public health interest requires that orders be made protecting the public. 85 Towards the end of the hearing, I asked Mr Hughes whether there was anything that he wished to put to the Court about his future intentions in relation to the sort of orders that were sought in para 12 of the application, and whether he would be likely to comply with the regime of qualifying statements covered by that paragraph. I asked this in the context of his contempt committal in relation to previous orders to amend the website, and the submission of the Commission, preferring the para 10 and 11 orders, that evidence of his past conduct indicated that he would not comply with any orders simply requiring corrective or qualifying statements to be placed on his website or websites. Mr Hughes had earlier said that he had not previously given a great deal of thought to the legality or otherwise of what he was doing. He said, amongst other things, that in the future he would wish to do something useful in the area of family planning for the rest of his life, and that he had (at this time) "no firm ambition to restart Crowded Planet or Crowded Planet website by any other name". He concluded by stating that he was "thinking of non-website directions", including, possibly, attempting to become an agent for the wholesaling of Norlevo in Australia without supplying the public, and that, he repeated, he had "no intention to restart a website called Crowded Planet or called anything else". However, detracting from this somewhat is the fact that Mr Hughes did soon thereafter (in cross-examination) state that there were some matters that he needed to clear up, including refunds, having apparently charged some people without supplying them and that his intention "when I get set up again is to contact those customers by email and ask them whether they want the pills or whether they want a refund" [emphasis added]. 86 In its final submissions, received after the hearing, the Commission has expressed a clear preference that the orders sought in paras 10 and 11 be made, reiterating its submission that Mr Hughes has shown by his conduct in respect of the interlocutory orders, and the Court should infer, that the probability is that Mr Hughes will ignore any order to include specified warnings even in the face of sanctions for contempt (although I note that in not pressing the first three paragraphs of the amended application, the Commission has stated that it recognised a measure of compliance by Mr Hughes with the orders to publish corrective statements). The Commission says that despite any apparent expression of contrition by Mr Hughes during the hearing, he has continued to contest the proceedings, has not since their conclusion offered any form of undertaking to address the Commission's concerns, and has shown a dangerous and misconceived attitude to the availability of prescription contraceptives, an attitude evident in his cross-examination of expert witnesses. It is submitted that self-diagnosis and self-prescription of oral contraceptives by supply without prescription as through Mr Hughes carries significant health risks which are not eliminated and are only partly ameliorated by the posting of warnings on the website. 87 In its written submissions in reply to Mr Hughes' final submissions, the Commission made only one point: that the statements of contrition made during the hearing by Mr Hughes do not reflect his considered view of his conduct in the matters the subject of these proceedings. 88 In his final submissions, some time after the hearing, there is some reference by Mr Hughes, to there having been "nil seizure", at least for a time, in respect of orders supplied by Crowded Planet to the United States. 89 Moreover, the penultimate paragraph of Mr Hughes' final submissions relates to the question of the likely compliance with any order in the terms sought. Mr Hughes there states (under the heading "Commitment") his beliefs as to the limits of Australia's ecologically sustainable population, and then states: Nevertheless the Respondent will promise to have nothing more to do with [birth control pills] and family planning when births equal deaths and abortions are less than 10% of births and when the number of Emmigrants equals the number of Immigrants when the human population of Australia is stable. 90 I read this submission, dated some time after matters of future intention were canvassed at the hearing, as a clear expression of the fixed intention of Mr Hughes, evident during the hearing, to continue to give expression to his obviously firmly held views about local and global population growth and family planning, and what he sees as the role of contraceptives in this picture. The orders sought of course do not seek to constrain this sort of activity and expression of opinion, nor would such orders be sought or granted. The Commission's case is that Mr Hughes is entitled to conduct his activities as he sees fit, provided that he does not do so in a manner that constitutes a contravention of Commonwealth legislation designed to protect the public. 91 On the basis of Mr Matelski's evidence that not only is a prescription required for the drugs listed in the schedule to the application to be sold in the United States, but also FDA approval is necessary, it is clear that the activity of offering these drugs for sale in the United States is inherently misleading because it is unlawful to do so (there being no FDA approval for these particular proprietary brands). For this reason order 11 as sought will be made. 92 However, notwithstanding an initial attraction towards it, I think order 10 is too broad and travels beyond the conduct complained of in Australia. I propose in substance to make an order, with some modification, as set out in para 12 of the application dealing with Australia. 93 The respondent is to pay the Commission's costs. I certify that the preceding ninety-three (93) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop.

Dated: 18 March 2002 The applicant appeared in person

Solicitor for the Respondent: Australian Government Solicitor

Date of Hearing: 2 and 3 August 2001, last submissions filed 5 November 2001

Trade Practices Act 1974(Cth)ss 5, 6, 52, 53, 80, 80A

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