Australian Competition & Consumer Commission v Hungry Jack's Pty Ltd [1996] FCA 955

Federal Court of Australia|1996-08-15|Before: Tamberlin J, Carr J

C A T C H W O R D S TRADE PRACTICES - supply of goods not complying with prescribed consumer product safety standard - sunglasses - cheap sunglasses sold promotionally by hamburger chain - not suitable for driving - Australian Standard required warning to that effect - no warning given to some purchasers - whether degree of divergence from Australian Standard presents risks to drivers and other members of the public - whether pre-trial corrective advertising and other publicity sufficient to warn purchasers who bought without required warning - whether further corrective advertising required - purpose of further corrective advertising to protect the public interest rather than to be punitive - whether permanent injunctive relief should be granted. Trade Practices Act 1974 (Cth) ss.65C, 80A Janssen Pharmaceutical Pty Ltd v. Pfizer Pty Ltd (1986) ATPR 40-654 Makita (Australia) Pty Ltd v. Black and Decker (Australasia) Pty Ltd (1990) 12 ATPR 41-030 Australian Competition and Consumer Commission v. On Clinic Australia Pty Ltd (Tamberlin J, unreported, 15 August 1996, Judgment No. 721 of 1996). AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v. HUNGRY JACK'S PTY LTD No. WAG 163 of 1996 CARR J PERTH 5 NOVEMBER 1996

THE COURT ORDERS AND DECLARES THAT:

The respondent, by supplying sunglasses to consumers which were branded "Shades" has, in trade and commerce, supplied goods that were intended to be used, or were likely to be used, by consumers and which did not comply with the prescribed Consumer Product Safety Standard relating to the goods, namely Australian Standard AS 1067.1-1990 by reason of their failure to be labelled "For protection against ultraviolet radiation in sunlight for specified environments. NOT SUITABLE FOR DRIVING", contrary to s.65C(1) of the Act.
The respondent shall, at its own expense, cause to be published in a major daily newspaper in the States of Victoria, Queensland, South Australia and Western Australia and in the Northern Territory and the Australian Capital Territory respectively an advertisement in the form of Annexure "A" hereto and further that the respondent shall take all reasonable steps to ensure that each such advertisement shall be: (i) of a size not less than three columns wide by 20 cm deep; (ii) in text which is in a type size not less than 12 point; (iii) within the first six pages of the newspaper; and (iv) published once in each such newspaper within seven days of the making of this order.
The respondent, at its own expense, shall cause television advertisements to be broadcast on each television station in Australia on which television advertisements promoting the respondent's "Shades" sunglasses were broadcast prior to 18 October 1996. The television advertisements shall contain the information set out in Annexure "A" hereto (save that the last paragraph may, at the option of the respondent, be omitted) and further the respondent shall take all reasonable steps to ensure that each such advertisement shall: (A) be of at least ten seconds duration; (B) contain the information set out in Annexure "A" (save that the last paragraph may, at the option of the respondent, be omitted) in both printed and spoken form; (C) be broadcast four times per week on each such television station including on Saturday and on Sunday in each week for two weeks, with the first such advertisement being broadcast within seven days of the making of this order;

(D) be broadcast between 6.00pm and 10.30pm on weekdays and between 12 noon and 10.30pm on weekends; (E) be broadcast to the same areas to which television advertisements promoting the respondent's "Shades" sunglasses were broadcast prior to 18 October 1996. 4. Within three days of the making of this order, the respondent shall display, clearly and prominently, in each Hungry Jack's store or other outlet at which "Shades" sunglasses have been supplied, a sign of a size no less than 50 cm x 30 cm in the terms of Annexure "A" hereto and shall continue to display such sign until 30 November 1996. 5. The respondent shall pay the applicant's costs. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

ANNEXURE "A" HUNGRY JACK'S IMPORTANT NOTICE TO PURCHASERS OF "SHADES" SUNGLASSES "SHADES" SUNGLASSES ARE NOT SUITABLE FOR DRIVING Some of the "SHADES" sunglasses sold by Hungry Jack's in its recent promotion were not correctly labelled as required by the Australian Standard AS 1067-1990. The sunglasses should have been labelled "SPECIFIC PURPOSE SUNGLASSES. For protection against ultraviolet radiation in sunlight for specified environments" and "NOT SUITABLE FOR DRIVING". Purchasers of the "SHADES" sunglasses should note: THE SUNGLASSES ARE NOT SAFE FOR DRIVING AND SHOULD NOT BE USED WHEN DRIVING. REFUNDS: Purchasers of the "SHADES" sunglasses which were not properly labelled who wish to obtain a refund of the purchase price may do on presentation of the "SHADES" sunglasses at any Hungry Jack's store.

IN THE FEDERAL COURT ) OF AUSTRALIA ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) No. WAG 163 of 1996 GENERAL DIVISION ) B E T W E E N : AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant and HUNGRY JACK'S PTY LTD ACN 008 747 073 Respondent CORAM: CARR J. PLACE: PERTH DATE: 5 NOVEMBER 1996 REASONS FOR JUDGMENT Introduction The principal matters to be decided in this application are the nature and extent to which the respondent should be ordered to publish corrective advertisements to mitigate the consequences of its admitted contravention of s.65C(1)(a) of the Trade Practices Act 1974 (Cth) ("the Act"). The contravention was to supply goods (sunglasses) in respect of which there is a prescribed consumer product safety standard and which did not comply with that standard. As the relevant standard involves questions of public safety, the hearing of the application was expedited. The application was filed on 18 October 1996, expediting orders were made by consent on 24 October 1996 and the application was heard on 1 November 1996. For the same reason, delivery of this judgment has been expedited. Consequently these reasons will not be as full as they might otherwise have been. Factual Background There is very little factual dispute between the parties. The following narration of the factual background reflects, unless otherwise indicated, what was common ground. The respondent conducts the business of retailing hamburgers and like products under the style "Hungry Jack's" at some 162 restaurants throughout Australia. Some of the restaurants are conducted by franchisees. In about May 1996 the respondent decided to promote sales by selling sunglasses from its restaurants. The sunglasses were to be sold for $1.95 per pair if a customer bought a meal but could also be purchased, without a meal, for $5.00. The promotion was known as the "Shades" promotion. To that end, the respondent placed an order with a company called Playcorp Pty Ltd ("Playcorp") for 600,000 pairs of sunglasses at a price of $1.037 each. The sunglasses were sourced from a manufacturer in China. The Shades promotion started on 18 September 1996 accompanied by television advertising on Channel 7 in Perth, Melbourne, Brisbane and Adelaide and Channel 10 in Perth. On 18 September 1996 a Mr C Kennington, merchandising manager of Cancer Foundation of Western Australia (Inc) saw one of the television advertisements. Mr Kennington bought a pair of the sunglasses from a Hungry Jack's restaurant in Perth. On 19 September 1996 Mr Kennington complained to the Australian Competition and Consumer Commission (which I shall refer to variously as the ACCC or the applicant) that the sunglasses were not marked in accordance with Australian Standard 1067.1-1990 ("the Australian Standard"). Relevantly, the Australian Standard provides that in the case of sunglasses having lenses with luminous transmittance values below 8 percent, those sunglasses shall be labelled "NOT SUITABLE FOR DRIVING". A lens with a luminous transmittance value of 8 percent blocks out 92 percent of light. On 20 September 1996 the ACCC sent a letter to the respondent referring to the Shades promotion and asking for copies of any test results conducted in relation to the Australian Standard which might show that the sunglasses met that Standard. On 24 September 1996 Playcorp responded to that letter by forwarding to the ACCC test results in respect of the Shades sunglasses from three Hong Kong laboratories and from a company called Unisearch Ltd ("Unisearch"). Unisearch is one of only two laboratories in Australia which is registered to test sunglasses to the Australian Standard. The following is a summary of those test results (together with the result of a test commissioned by the Cancer Foundation of Western Australia (Inc) and conducted by Australian Radiation Laboratory:

Number of pairs Name of Laboratory Result of tested Test

Hong Kong 3 TBV Stanger Asia Ltd Not tested for luminous (28 July 1996) transmittance 10 Merchandising Testing 6.2% luminous Laboratories (HK) Ltd transmittance (30 July 1996) 1 Inchcape Testing Tested for variation in Services density but not (29 July 1996) luminous transmittance 1 Unisearch Ltd Right lens 7.9% luminous (8 August 1996) transmittance; left lens 7.0% luminous transmittance. Result: "fail" [the concluding paragraphs of Unisearch Ltd's report stated that these sunglasses should be marked "Specific purpose sunglasses Type (b) For protection against ultraviolet radiation in sunlight for specified environments", and concluded "these lenses shall also be accompanied with the following warning: "NOT SUITABLE FOR DRIVING"]. 1 Australian Radiation Right lens 6.6% Laboratory Left lens 6.7%

The ACCC had, in the meantime, purchased sunglasses from the respondent's restaurants at Mt Lawley and Belmont (suburbs of Perth). Those sunglasses were not labelled "NOT SUITABLE FOR DRIVING". On 24 September 1996 the ACCC faxed a letter to Playcorp drawing attention to the provisions of the Australian Standard and s.65C(1)(a) of the Act. In that letter the ACCC asked Playcorp what action it proposed to take in the circumstances and, in particular, what, if any, corrective advertising was to be published. Then followed a series of telephone calls and correspondence between the ACCC and Playcorp, Playcorp and the respondent and between the ACCC and the respondent. Playcorp and the respondent agreed to: . place corrective stickers on the sunglasses over a label which at the time of supply to the respondent was stuck on the sunglasses and read "Meets ANZI Z80.3 General Purpose UV Requirements". [There is no evidence of the existence of a standard of this description]; . label the plastic container in which the Shades were sold as follows: "SPECIFIC-PURPOSE SUNGLASSES For protection against ultraviolet radiation in sunlight for specified environments. NOT SUITABLE FOR DRIVING" . to place advertisements in "The Australian" newspaper at least three times over two consecutive weeks. The ACCC was not satisfied with the measures proposed. There ensued two further offers from the respondent which included placing correctional signs in the restaurants and the insertion of a warning in the respondent's television advertising. Throughout this period the ACCC, through its officers in the States and Territories concerned, monitored the nature and extent of the steps which the respondent took to inform the public that the Shades sunglasses were not suitable for driving. The evidence of those ACCC officers discloses that, while some corrective advertising both in the restaurants, in the newspapers and on television had been carried out, this was not consistent throughout Australia. The ACCC, not being satisfied with the nature and extent of the measures being taken by the respondent, filed this application on 18 October 1996. The Applicant's Contentions In its application, the ACCC seeks a declaration that the respondent, by supplying the sunglasses contravened s.65C(1) of the Act, a permanent injunction and certain specific orders for remedial advertising (both in the media and in the restaurants) which would include an advertisement offering a refund of the purchase price for the sunglasses. The respondent does not oppose the making of a declaration substantially in the terms sought by the applicant but opposes the application for a permanent injunction and contends that the nature and extent of the corrective advertising sought by the ACCC far exceed what is appropriate in the circumstances. The applicant's case, in summary, is as follows: . that a very large number of purchasers (probably over 150,000) bought the sunglasses without the warning that they were not suitable for driving; . there is expert evidence that the risk to the safety of members of the public at large (including drivers) from persons driving whilst wearing sunglasses which do not comply with the Australian Standard is "not insignificant";

. in the absence of the respondent being able to demonstrate that there was no risk, the public should receive adequate warning; . there was evidence that teenagers and young adults between the ages of 17 to 25 years are a "notoriously" high risk group who need protection and from whom protection may be needed. The evidence showed that 30% of road fatalities in Australia came from that age group which had been targeted by the Shades promotion; . the Shades promotion had been the subject of saturation television advertising with either no warnings or no suitably relevant warning on the topic of non-compliance with the Australian Standard; . to have any realistic effect, the corrective advertising should be on a level consistent with or similar to the original advertising and this could only be achieved on television; . the steps which the respondent had taken and which it proposed to take were obviously inadequate to alert customers who had bought Shades sunglasses without the correct labelling attached stating that they were not suitable for driving; . the cost of the advertising sought by the ACCC (which on the respondent's evidence was about $203,000) was modest when compared to the maximum penalty of $200,000 for contravention of s.65C(1) of the Act. Furthermore, the respondent had benefited in an undisclosed amount from the increased sales of its meals and also from the sales of the sunglasses themselves. The Respondent's Contentions The respondent admitted that it had contravened s.65C(1) as claimed by the applicant but denied that it should be subjected to the orders sought by the ACCC. In summary, the respondent contended that there was no significant risk to public safety and that there had been adequate communication to the relevant purchasers of the warning that the sunglasses were not suitable for driving. This resulted, so it was put, from a combination of the corrective material published in newspaper advertisements, on television and in the restaurants themselves, certain news reports and other like publicity generated on television and radio since the applicant's enquiries commenced. In those circumstances, the respondent submitted that its proposed display of prominent notices in each of its restaurants until 30 November 1996 would suffice. The respondent contended that its expert evidence showed that the sunglasses are no more dangerous than sunglasses which conform to the Australian Standard and that the cost of corrective advertising sought by the applicant was substantial and might have a punitive effect by damaging the respondent's reputation. Furthermore, so it was submitted, the public was likely to infer from the fact that the sunglasses were sold as part of a "$2 promotion", that they were novelty items and were not likely to be used whilst driving. The main thrust of the respondent's submissions was that there had not been demonstrated, on the evidence, a sufficient degree of risk to warrant the nature and extent of the remedial advertising sought by the applicant. The Expert Evidence on Risk Associate Professor Dain's Evidence Professor Dain (who signed the Unisearch Ltd report containing the results referred to above) is an associate professor in the School of Optometry at the University of New South Wales. What was described as his "abridged" Curriculum Vitae runs to nine pages. The length, depth and breadth of his experience in matters of optometry is most impressive. Professor's Dain's expertise in the field was not challenged. I set out below an extract from Professor Dain's affidavit: "7. In general terms, the Australian Standard recognises that people buy sunglasses mainly to protect themselves against glare and ultraviolet radiation. At the same time the Australian Standard is designed to ensure that, in satisfying those two needs, further problems are not introduced by the lenses. This would include problems relating to the refractive requirement of the lenses, such as distorting vision or making vision blurred or uncomfortable, and potential hazards from sunglasses relating to issues of coloration and luminous transmittance. 8. The issue highlighted by the Unisearch test of 8 August 1996 with respect to the sunglasses in question is that of the luminous transmittance of the lenses. The test results for luminous transmittance shows 7.9% for the right lens and 7.0% for the left. These are figures rounded to the first decimal place. We have a registered uncertainty for figures below 20% of 0.4. We reported an average for the lenses of 7.4%, which is a rounded average from the original figures. The right lens could be rounded to 8% and the left to 7%. Only one pair of sunglasses was submitted for testing. 9. The Australian Standard adopts a minimum limit of 8% for sunglasses which can be used for driving. Below that limit sunglasses must be marked that they are not suitable for driving. The relevant percentage is a percentage of the total amount of light, it is a ratio between how much visible light is arriving at the sunglasses and how much is passing through the lenses to the other side. 10. 8% is the minimum limit adopted by all sunglasses standards throughout the world as far as the use of sunglasses in driving is concerned. It is the universally accepted point at which it is considered that the risks from the use of sunglasses whilst driving have become great enough that people [are] required to be warned against the use of such sunglasses whilst driving. 11. The universally accepted minimum limit, including the limit set by the Australian Standard, for luminous transmittance for any sunglasses at all is 3%. 12. The setting of the 8% limit for luminous transmittance in the Australian Standard as the minimum safe level for sunglasses used for driving relates to what happens when you go from a lighter area into a darker area, such as under trees, under bridges or into shadows, and you either have to take the sunglasses off or you have to see into the dark area. The eye takes a finite time to compensate for the changing light conditions and the darker the sunglasses are, the longer [the] eye takes to adapt. 8% is also the minimum safe level for viewing dark areas with the sunglasses on. 13. Even for an experienced person it is not possible to tell simply by looking at a pair of sunglasses what level of luminous transmittance the sunglasses have. Nor is it possible to tell by looking at the sunglasses whether they would be dangerous for driving. It is, therefore out of the question for a member of the public to make such a judgement. For this reason standards on sunglasses require sunglasses with a luminous transmittance less than 8% to be marked as not suitable for driving. ..."

[Professor Dain then referred to a second issue, relating to the difference in density between the two lenses tested. Although I admitted these paragraphs into evidence, I do not have to rely upon them for the disposal of this case and I have not done so.] "16. Whilst there is no question that the more the percentage figure for luminous transmittance falls below 8%, the greater the risk from a person using the sunglasses for driving, I am not aware of any research or material which demonstrates in any mathematical sense how that risk increases as the figure for luminous transmittance falls. What can be said is that the minimum figure adopted by the Australian Standard of 8% is the universally accepted minimum level below which the risks from using the sunglasses whilst driving become great enough to require a warning against their use and that the sunglasses tested by Unisearch as showing a result of 7% in one lens clearly fell below that minimum level and into the area of real risk ..." [Professor Dain then referred to the Merchandise Testing Laboratories (HK) Ltd report of 30 July 1996]. "18. From the MTL report it is clear that the lenses do not meet the general purpose requirements of the Australian Standard. The MTL report indicates that ten sunglasses were tested for transmittance properties and shows a result for the sunglasses for luminous transmittance of 6.2%. It must be assumed from the MTL report that the figure for luminous transmittance is an average figure taken from the sample of ten tested. The uncertainty of measurement is not available to assist in interpretation of the figures. 19. The 6.2% figure shown in the MTL report raises a number of issues. In the first instance, it is a significantly lower percentage than the percentage revealed on the Unisearch test and the risks in connection with that figure would consequently be greater. ... 20. Further, if the figure of 6.2% in the MTL report is the average result and the Unisearch test revealed a pair of sunglasses at 7.4% then the chances of finding a pair of sunglasses around the 5% level for luminous transmittance must be considered significant. At 5% you would be more than half way to the absolute bottom limit allowed for sunglasses in any circumstances, let alone driving. ..." [Professor Dain then referred to the Australian Radiation Laboratory test showing 6.6% luminous transmittance for the right lens and 6.7% for the left lens, and the need to ensure with a manufacturer or supplier that there were proper methods in place to guard against significant variations between batches.] "23. It is for this reason that, if we tested a lens for luminous transmittance at or about 8%, although that would be reported as a pass, which is what we are required to do in terms of out NATA registration, we would flag to the supplier, under the heading of a non NATA endorsed comment, that, given normal batch variation it is possible that some other lenses within the batch might fail. To be confident of having general purpose sunglasses you should not be aiming for an 8% luminous transmittance result but a figure of say 10% or 12% which would make due allowance for the expected level of batch variation. 24. There is a further issue that is relevant to the use of sunglasses whist (sic) driving and that is the question of automotive windscreen and side window tinting. The standards which have been set for the tinting of windscreens or windows have been set in the knowledge that there is a bottom limit of 8% prescribed for sunglasses used for driving. When you add dark sunglasses to a dark windscreen or side window then the issues of changing light conditions become even more complex." In his oral evidence Professor Dain was taken to Professor G. Smith's affidavit. Professor Smith is an expert who was called by the respondent. Professor Smith in his affidavit said that he doubted whether there would be a significant difference in visual performance between a lens with an 8% luminous transmittance and one of 6% transmittance except in the most extreme circumstances, such as where a person wearing sunglasses is driving a car with tinted windscreens at night. Professor Dain said that he disagreed with that conclusion. Professor Dain gave his reasons for his own conclusion that the difference was significant. Those included: . the body of [professional opinion] which set the bottom limit at 8%; . all the evidence which led to the formation of that opinion; . the difference in relative terms between 8% and 6%; . the problem of "creeping standardisation"; and . the fact that visual acuity was only one aspect of a person's visual ability needs. There was also the need to see relatively large objects having relatively little contrast. [Later in cross-examination Professor Dain explained that this was a reference to large objects of a similar colour, for example, somebody crossing the road rather than the words on a road sign.] Professor Dain acknowledged that Professor Smith was quite right in his observation concerning visual acuity but said "... that's only part of the story." There was, so he said, the problem of coping with a driver going from one condition to another in terms of the time to adapt to the conditions. This was not covered by the study relied upon by Professor Smith to support his observations. In cross-examination, Professor Dain acknowledged that it was almost impossible to identify precisely what was the acceptable limit for luminous transmittance when setting the standard for sunglasses. In other situations, where the limit was known, some margin is provided. Where the limit is not known he said "... you tend to provide more of a margin to be safe." When asked whether the Australian Standard involved a margin, Professor Dain responded "we hope so". I took this to be a reference to the near impossibility of identifying precisely where the acceptable limit was to be found. Professor Dain said that the limit had previously been 15% but had been reduced to 8% in 1990. It was suggested to Professor Dain in cross-examination that there were not very many other national standards for sunglasses. However, the respondent now accepts that the Australian Standard also applies in the United States of America, the United Kingdom, New Zealand and Germany. Professor Dain said that there is also in existence a Draft European Standard and a Draft International Standard. In further cross-examination Professor Dain made it clear that the Australian Standard, although making allowance for people doing unusual things (such as using sunglasses at night) was set at a point "... where the perceived risks have become great enough to demand action." He said that on a grey overcast day, late in the day, even 20% luminous transmittance may not be safe. Professor Dain readily conceded that there was no specific research which identified 8% as a point of risk. However, he was unshakeable in his disagreement with Professor Smith about the impact upon visual acuity of driving in certain circumstances, whilst wearing sunglasses having a luminous transmittance substantially below 8%. The scientific evidence to which Professor Dain referred was to the effect that there is an increasing risk with decreasing luminous transmittance. Professor Dain said that the task of a standards-writing organisation was to decide, on the balance of probabilities and concerns, where that limit should be. In Australia, the original proposal for the 1990 amendment was 10% but 8% was chosen in view of the adoption of that level by other countries. It was quite clear, so he said, that performance reduced as luminous transmittance was reduced. The essence of Professor Dain's evidence was that while the increased risk arising from the reduction of luminous transmittance could not be measured, it was certainly there and it was significant. It was then put to Professor Dain that a different rounding and averaging process might have been engaged in. If each of the lenses had been rounded up to the nearest percentage point i.e. to 8 and then averaged, the sample tested by Unisearch Ltd would have reached 8%. Professor Dain made it clear that although the Australian Standard did not actually deal with how rounding and averaging should be done, Unisearch Ltd would not, in the circumstances posited, have passed the sample as complying with the Australian Standard. In my view, this attack on the method of rounding and averaging fails. Given the safety policy underlying the Australian Standard, a method of rounding up followed by averaging would not, in my opinion, coincide with that underlying policy. I consider that the method applied by Unisearch was a fair one. Associate Professor George Smith Professor Smith is an associate professor within the Department of Optometry and Vision Sciences at the University of Melbourne. He has taught in that Department as a lecturer since 1974, as a senior lecturer since 1 January 1982 and as an associate professor since 1 January 1995. Professor Smith's teaching duties include the teaching of optical subjects and eye safety components of the optometry and vision sciences courses. He also supervises post-graduate students. Professor Smith is a member of ten committees of Standards Australia including a committee which looks after sunglass standards. Those committees deal with optics, lighting, radiation and visual ergonomics. Through this involvement, Professor Smith reviews overseas standards for Standards Australia. There was no challenge to Professor Smith's expertise in the relevant area. Professor Smith, in his affidavit, referred to the uncertainties in the measurement of luminous transmittance and the permissibility of rounding up percentages of such transmittance. For example, a measurement of 7.5% could be rounded up to 8%. Next Professor Smith referred to the fact that luminous transmittance is not an absolute transmittance of the lens. Any particular luminous transmittance had, so Professor Smith deposed, to be defined for a given type of light source. Professor Smith said that there was no absolute answer to the question - what level of luminous transmittance is safe and what is unsafe? He said that in general the lower the light level the more difficult it is to see things, but high light levels can also be a hazard, a nuisance and decrease visibility. Professor Smith then said: "Whether there is a significant difference between a luminous transmittance of 8% and say 6% depends upon a number of factors, but mainly the ambient light level and personal factors such as age. (d) Over the years, there have been a number of investigations into the effect of light levels on visual acuity and performance. At low luminances (brightness), visual acuity is poor but improves progressively as luminance increases. Above a luminance of 30 cd/m2, visual acuity changes very little with luminance (e.g. Leibowitz (1952)). Now while the day time ambient luminance depends upon the nature of the scene and atmospheric conditions, luminances in direct sun will be in the range of about 3,000 to 10,000 cd/m2. To attenuate the lower level to 30 cd/m2, we would need a sunglass lens with a transmittance of 1%. This estimate is supported by research directly looking at the preferred transmittances of sunglasses and their effect on acuity (Luria (1984)). He showed that transmittances as low as 2.5% did not affect the vision of a sample of young observers. However, in that study, the oldest group (older than 39 year[s] of age) did begin to have poorer acuity for transmittances below about 10%, but the loss even with a transmittance as low as 2.5% was only marginal. (e) Finally, when setting safety standards, it is a general rule to take worse case conditions. In setting the limits for sunglasses, factors would have been taken into account that increased risks, for example, older people with poorer vision and driving a car with tinted windscreens while wearing sunglasses. 10. Summing up, taking into account all the above facts, I doubt that there would be a significant difference in visual performance between a lens with a[n] 8% luminous transmittance and one of, say 6% transmittance, except in the most extreme circumstances, such as where a person wearing sunglasses is driving a car with tinted windscreens at night." In his oral evidence, Professor Smith rejected the proposition that the standards contained in the Australian Standard represented a universally accepted minimum limit. He said: "... there is a tendency for the larger dominating countries or organisations to set the standards for the whole world. So it's not as if we have all democratically decided that is what the number should be, so it is not universal in that sense." However, Professor Smith conceded that the scientific community would agree that 8% is a reasonable limit for sunglasses for general purposes. In examination-in-chief Professor Smith was asked: "Introducing circumstances of shade and the like what do you say about the level of 8%? --- If in the shadier areas the light level would get below, say, 30 candelas per square metre then I would say, yes, there could be some reduction in visual performance, but whether that would be sufficient to reduce driver performance is another question altogether because when we drive we do compensate for things that might change. For example, if we go into a dark tunnel or into a shaded area we might even slow up because of that reduction in reaction time, so in driving there is this compensation if the light level drops a little bit, so I don't think its an important point." In cross-examination Professor Smith conceded that he could not identify any country which had an accepted minimum limit of below 8%. He accepted that 8% was an appropriate figure, but in the next answer stated that he "personally" believed that 8% is higher than it needs to be. He acknowledged that the figure of 8% was set because people will wear sunglasses where they should not wear them. In later cross-examination there was the following exchange: "But if you look at a population as large as 150,000 and assume that in that population there are some people who will drive in some conditions with glasses that are at 5% rather than 8%, there is some risk there, is there not? --- There is probably some increased risk once you get below 30 candelas per square metre. I would agree that, yes."

My Assessment of the Expert Evidence I must say that I was most impressed by Professor Dain's evidence. Apart from everything else, where concessions were required he made them. That is not to say that I was unimpressed by Professor Smith's evidence. In the end, it came down to a situation of two experts disagreeing about whether Shades with a luminous transmittance of less than 8% presented a significant safety risk for (and for that matter, from) drivers who use such sunglasses. In those circumstances, given the logical and scientific appeal of Professor Dain's evidence, the concession made by Professor Smith (referred to immediately above) and the safety policy underlying the Australian Standard, I prefer to accept Professor Dain's assessment, and I do so. In so doing, I take into account the fact that the degree of luminous transmittance deficiency from the Australian Standard has been assessed in respect of only 13 pairs of the Shades sunglasses out of a total "population" of 600,000 pairs. In other words, this was a sample of 0.002% of the total "population". I think I can take judicial notice of the fact that, statistically, such a small sample might disguise fairly wide variations within the rest of the "population" from the results achieved by the sample. Professor Dain referred to this matter in paragraphs 20 and 23 of his affidavit. I accept that such possibilities are important where public safety is concerned and there are so many purchasers involved. The matter is not only the safety of the driver who unwittingly uses such sunglasses, but also those who might be injured by him or her. In my view, the evidence establishes that there is a significant risk that a driving accident or several driving accidents may occur if drivers unwittingly wear these sunglasses in road conditions which change suddenly from bright sunlight to shadow i.e. under bridges, under trees or other like shadows. The respondent relied upon evidence that older drivers require more light, that the Australian Standard introduced a margin to allow for this, and that the present matter concerned younger persons who "will not be at that margin of risk". The respondent, through its counsel, said that it was not right to speak of there being an increased risk upon reduction of luminous transmittance from 8% to 6%. This was because the Australian Standard had been set on the basis that it was not possible to say precisely where the plateau (reached at a very low level of light between 30 to 100 candela per square metre) of improvement in visual capability ceases and visual perception starts to fall away. The Committee which sets the Australian Standard had, so it was put, taken that into account and had not set the Australian Standard at the point where the plateau starts to fall away. The respondent submitted that the expert evidence thus supported its position that there was no risk between the Shades sunglasses and those which complied with the Standard. I reject that submission because I rely, (for reasons which I have given) on Professor Dain's overall opinion. In addition, I refer to paragraph 16 of Professor Dain's affidavit in which he states that he is not aware of any research or material which demonstrates in any mathematical sense how the risk increases as the figure for luminous transmittance falls. I repeat my reference to Professor Dain's oral evidence where he expresses a hope that the Standard has been set at such a level which builds in a margin. The fact remains that nobody can demonstrate the extent of that margin. In the context of a matter involving risk to the public safety of what may well be many thousands of users, I do not consider that the evidence shows that there is no such risk. Furthermore, there is uncontradicted evidence that 30% of fatalities on Australian roads come from the group of teenagers and young adults aged between 17 to 25 years. That fact has to be balanced against any margin in their favour built into the Australian Standard. It also lessens the weight to be attached to Professor Smith's proposition that allowance must be made for drivers who slow down when driving into darker areas from bright daylight. That describes the behaviour of a more mature driver. I find that, on the evidence to which I have referred and which I have accepted, Shades sunglasses with a luminous transmittance of less than 8% have been sold by the respondent to a very large number of its customers without any warning that they were not suitable for driving. I find further that if those glasses are worn by drivers, the result will be a significant risk to their safety and to the safety of other members of the public. Reasoning and Conclusions I agree with Mr C G Colvin, counsel for the respondent, that the question is - what is necessary in order to inform those customers who were sold sunglasses without the warning, that they were not suitable for driving? Also, I agree with Mr Colvin that this boils down to three issues. First, an assessment of the degree to which consumers were misinformed. Secondly, an assessment of the degree to which consumers may act upon that misinformation to their detriment. Thirdly an assessment of the degree to which corrective advertising is required (I have slightly restated Mr Colvin's third proposition) to mitigate that risk.

The respondent submits that the fact that the sunglasses were sold for $2 each by a supplier of hamburgers as a promotion was "a very important contextual circumstance as to whether consumers would be expecting the sunglasses to be suitable for use for driving". Mr Colvin, on the respondent's behalf, submitted that Hungry Jack's "is clearly not a supplier of optical wear". In my view, the answer to that submission is that the respondent chose a course of business conduct whereby it became a supplier of optical wear. It sold several hundred thousand pairs of sunglasses. Some of the sunglasses, it is true, were sold for $2. However, there was evidence that the respondent sold the sunglasses, without food, for $5 and more per pair. I do not think that the evidence supports Mr Colvin's submission. I am prepared, however, to accept that some purchasers, paying $2 or $5 or thereabouts, for a pair of sunglasses might not expect them to be suitable for use for driving. But I do not place much weight on that matter. The question is how great is the risk to the purchasers who were not warned, of being involved (or involving others) in an accident contributed to by the wearing of the Shades? The respondent relies upon what it describes as "significant corrective advertising". It says that the message that these sunglasses are not suitable for driving has been communicated to those consumers who purchased them without the caution. I have read Mr James Wilson's affidavit (and the annexures to that affidavit) in that regard. I have also viewed the video tapes which comprise two of the annexures to that affidavit. I deal with the video tapes first. They comprise a two minute report which appeared on HSV Channel 7 News on 24 September 1996 and another news item on the same channel on 25 September 1996. Mr Wilson claims that the effect of this television publicity and corrective advertising is shown in the sales figures set out in paragraph 25 of his affidavit. The applicant says that other factors may have caused what Mr Wilson describes as "an immediate softening in sales" after 25 September 1996. In relation to another matter, Mr Colvin, in his closing address, said that it would be "meaningless" to attribute variations in sales to any one event. I do not regard the evidence as sufficient to establish whether or not those factors caused or contributed to the reduction in sales reflected in the table in paragraph 25 of Mr Wilson's affidavit. However, I must take into account the fact that there were these two television news reports and the further fact that they conveyed the impression that the Shades were unsafe, when I assess how much further, if any, corrective advertising is required. Similarly, I take into account the further media publicity received in the form of radio programmes and news and television news broadcasts, particulars of which are set out in paragraphs 30 and 31 of Mr Wilson's affidavit with full text in the annexures. The respondent relies also, to some extent, upon an advertisement which it has placed in the newspapers listed in paragraph 23 of Mr Wilson's affidavit. That advertisement has been published on three occasions in October 1996 in newspapers having large circulations in Brisbane, Adelaide, Melbourne and Perth. Nevertheless, I do not place a great deal of weight upon the impact which that advertisement may have had. First, it is a very small advertisement (Exhibit JAW6 showed the advertisement in actual size). Secondly, the evidence is that an extremely high proportion of the respondent's annual expenditure on advertising is for advertising on television. A confidentiality order was made in respect of that percentage and the gross amount of such expenditure. However, I can say that the respondent expends a very large amount on advertising each year. The percentage of that expenditure spent on television advertising is very high indeed. The figures are contained in Exhibit TPB2 to the affidavit of Mr Timothy Burrows sworn 1 November 1996. A photocopy of that exhibit, with the figures deleted, is on the Court file. The original exhibit which includes the figures, has been placed in a sealed envelope. The short point is that when the respondent wants to send a message to its customers it uses commercial television in very strong preference to newspapers. It seems to be common ground (after allowing for the adjustment to be made to Mr Mitchell's affidavit - see p.2 of the transcript) that an advertisement published in the above newspapers in three consecutive weeks on either the same or equivalent days would reach the hands of a fairly high percentage of the population over the age of 18 years (for example 60.8% in Western Australia). But I am not prepared to infer from this evidence that there would be the same degree of likelihood that the respondent's main body of customers would have read this advertisement in those newspapers. The respondent has carefully targeted its customers by using television. I think I can infer from this (and I do so infer) that newspaper advertisements, and in particular such small advertisements, would be a relatively ineffective means of communicating with such customers. I have viewed two television advertisements for the Shades promotion broadcasted on behalf of the respondent in the earlier stages of that promotion. I have also viewed what appear to be identical television advertisements with what the respondent describes as a "pull-through" (and the applicant describes as a "banner") comprising a message to the effect that Shades are not suitable for driving. That message is shown very briefly and in very small print. I doubt whether, had I not been looking for it, I would have noticed the warning. I discount heavily the effect, if any, which that modification to the television advertising may have made. I have read the evidence from the respondent about the steps which it has taken to issuing warnings at the points of sale in its restaurants. However, I have had regard to a body of evidence from the ACCC officers concerning either the absence or the limited visibility of this point of sale advertising placed by the respondent in its restaurants up to the time of the hearing. I shall not detail that evidence, but there was quite a lot of it. I acknowledge that some of those officers saw the corrective point of sale advertising. My assessment is that such advertising would have had some effect, but only of a very limited nature. It was not what one would describe as prominent advertising and, for example, there was very little evidence that drivers placing their orders from their cars were given a warning at the ordering point. I discount the impact of this type of advertising prior to the hearing date, fairly heavily. That is not to say that it may not have a very useful role in conveying the warning message in future. In that regard I refer to the exhibit to Ms Lio's affidavit of 30 October 1996 in respect of the posters (Exhibit MML2 to that affidavit) which the respondent, so Ms Lio swore, had distributed to all the respondent restaurants for display by the eve of the hearing. This is the only further corrective advertising which the respondent is prepared voluntarily to arrange. I accept the evidence of the respondent that, on average, its customers visit their restaurants 2.8 times per month. Nevertheless, the nature of the advertising in the restaurants is such that I do not place much reliance, at this stage of my reasoning, on that percentage. There may be some significant number of new customers who were attracted to the respondent's restaurants by the Shades promotion but who have not returned. An average figure does not provide this kind of information nor does it show whether there is an even spread of regular customers rather than some who visit very often and others who visit very rarely. Viewing the evidence overall, I find that it is likely that there is a substantial (or at the very least a significant) number of the respondent's customers who, having bought these sunglasses without being warned that they were not suitable for driving, may wear them while driving. I have already held that in those circumstances there is a significant risk of an accident occurring when they drive from bright sunlight into a shady or dark area. I do not think that sufficient has been done to warn those customers. What further corrective advertising would be appropriate? There does not seem to be any disagreement between the parties about the legal principles to be applied. Both parties agree that the purpose of corrective advertising is to protect the public interest, not to punish the respondent: Janssen Pharmaceutical Pty Ltd v. Pfizer Pty Ltd (1986) ATPR 40-654, Makita (Australia) Pty Ltd v. Black and Decker (Australasia) Pty Ltd (1990) 12 ATPR 41-030 at p.51,477 and Australian Competition and Consumer Commission v. On Clinic Australia Pty Ltd (Tamberlin J, unreported, 15 August 1996, Judgment No. 721 of 1996). In the context of a contravention of s.52 of the Act Tamberlin J, in the On Clinic case (at p.11) observed: "In the context of advertising it is necessary to examine the nature, extent and intensity of the advertising and the media in which it has been released with a view to deciding whether there could reasonably be any current misapprehension as a result of the advertisements." I accept the general application of that observation to the circumstances of this case. However, in this particular case there are two further matters which require particular attention. In the On Clinic case the question was whether certain positive representations were misleading or deceptive. In the present matter, the problem is that a warning which should have been given, to the effect that these sunglasses are not suitable for driving, was not given. There is also the risk to public safety in this matter which was not present in the On Clinic matter. The respondent accepts that all of their purchasers should have been told that by accepted Australian Standards these sunglasses are not suitable for driving. In my view, it would be appropriate for the respondent to be ordered to publish advertisements on television and in major newspapers to warn those customers who bought shades without the prescribed warning that those sunglasses are not safe for driving. The respondent (in Mr Wilson's affidavit at paragraphs 28 and 29) refers to what it describes as its "loss" incurred in relation to this promotion. It would seem that the respondent quantifies its loss at $855,000 less approximately $311,000 (which I was told from the bar table was the correct figure in the third last line of paragraph 29) amounting to approximately $544,000. Paragraph 28 of Mr Wilson's affidavit shows that, from the outset, the respondent budgeted for a "loss" of approximately $179,000 in respect of this promotion. However, that figure was based entirely on the difference between the sales of sunglasses on the one hand and the cost of the sunglasses and advertising the promotion on the other hand. Neither in that calculation, nor in the calculation of actual "loss" is any account taken of increased sales of hamburgers and other like goods. In effect, I was told, that it was too difficult to produce such figures to be weighed in the balance against the "loss". Counsel for the respondent also asked me to take into account the likely cost of further corrective advertising and I have done so. The figure (see Ms Orr's affidavit of 30 October 1996) for television advertising is estimated at $113,500.00 and for the newspaper advertising at $90,900. Those figures have been based on the orders which the ACCC seeks in its application. In approaching what would be an appropriate level of further corrective advertising, I have tried to take into account all of the evidence contained in some 25 affidavits. In particular, I have taken into account the following factors: . that some but by no means all of the respondent's customers who were not warned will by now have received a warning either from watching one or other of the television advertisements or reports, listening to the radio, reading the signs in the restaurants or reading the newspapers referred to above; . that although there is a significant safety risk in using the sunglasses while driving in certain circumstances, there is a difference of scientific opinion about the extent of that risk; . television advertising (I accept Mr Brophy's evidence in that regard) is a far more effective means of targeting the respondent's customers than any other media; . that at the heart of this matter is the question of public safety; and . at the same time even matters of public safety involve some consideration of financial resources available. In that regard I have paid close attention to the confidential financial information to which I have referred above. The cost of the remedial advertising which I propose to order is a very small percentage of the respondent's annual television advertising budget. It is such a small percentage that I consider most people would regard it as being insignificant. Conclusion I consider that it would be appropriate for the respondent to be ordered to place the advertisement substantially in the form referred to in paragraph 4 of the application in the relevant major daily newspapers, not over three consecutive weeks but once, as soon as possible, and in any event within seven days of the making of this order. I propose to order that the respondent cause television advertisements to be broadcast on the relevant television stations for four times per week for two weeks rather than for the four weeks sought by the applicant. I accept the applicant's evidence that the respondent promoted the Shades on television very heavily. But I reject the submission that, in all the circumstances, the corrective television advertising should be of similar level. The corrective television advertisements should focus on the warning that the sunglasses are not suitable for driving. Time in such television advertisements is obviously of the essence and accordingly the respondent will not be required to refer to the matter of refunds, though it may do so, if it chooses. For similar reasons, unless the respondent wishes to do so, there need not be any reference to the Australian Competition and Consumer Commission in the newspapers or on television. The respondent is prepared to give an undertaking to the Court that, in effect, it will not contravene in this manner ever again. It has further undertaken to pay any claims for a refund by consumers who did not receive the required warning. It is prepared to consent to a declaration that it contravened s.65C(1) of the Act and it is prepared to display a prominent sign in all of its restaurants. It has been prepared to do these things from the time when this matter first came before the Court on 24 October 1996. In those circumstances I do not think that it would be appropriate to grant the permanent injunction which the applicant seeks in paragraph 2 of its application. There will be a declaration in terms of paragraph 1 of the application save that the words between "Shades" in line 2 and the word "has" in line 6 will be omitted. I will hear counsel on the question of costs. I certify that this and the preceding thirty (30) pages are a true copy of the Reasons for Judgment of Justice Carr. Associate: Date: 5 November 1996 Counsel for the Applicant: Mr N W McKerracher Solicitor for the Applicant: Australian Government Solicitor Counsel for the Respondent: Mr C G Colvin Solicitor for the Respondent: Freehill Hollingdale & Page Date of Hearing: 1 November 1996 Date of Judgment: 5 November 1996

Trade Practices Act 1974(Cth)

At a glance

Court

Decision date

Before

Source

Judgment (10 paragraphs)

Legislation Cited (1)