Given v C.V. Holland

Federal Court of Australia|1987-06-10|Before: Thompson Vv J, French J, Prench J

Background information relating to the development of the standard is set out in its Appendix E. The Code of Safe Design Practice first published in 1969 recognised that the most useful approach for the prevention of fires involving children's nightclothes, was to promote garments free from flowing fabrics which were prone to ignite when coming into contact with fires or heating appliances. Close fitting garments tend to burn more slowly because of restricted air space surrounding the fabric. In further elaboration of this principle, it was stated that loose flowing garments, whether in the form of night dresses, dressing gowns, pyjamas with bell-bottom trousers or loose sleeves, sloppy jackets or shirts, are likely to come into contact with inadequately guarded home heating appliances. Frills and appliques attached to garments, especially along the edges, are more readily ignited than the bulk of the fabric. The standard

While Category 1 garments are defined largely by reference to the combustion characteristics of their fabrics and dimensional requirements for trims and appliques, Category 2 is

features required by section 3. That is to say, as a _ loose

flowing garment, it does not possess that fundamental design feature to which the codes of safe design practice have been directed since 1969. As the AWTA Textile Testing Report shows,

its danger is not mitigated in this case by the use of a low

Having regard to the long established and central importance of close fitting design as a criterion of reduced fire danger it is not possible, in my opinion, to describe this garment as "Styled to Reduce Fire Danger". I am satisfied that the

representation conveyed by the labels attached to the five subject

It is clear from the statement of agreed facts that

Wills purchased the five garments in question from Splendid for supply to Cooksiey, that they were so supplied and that they

carried labels with the message "Styled to Reduce Fire Danger".

Counts 1 and 2 allege breaches of para. 53(a) of the Act being false representations made "by means of the labels attached to the said goods". The first count characterises the supply of the mislabelled goods to Cooksley as one such representation. The second count treats the occasion of the display or sale by Cocksley to the prosecutor as another such representation by

Wills. The prosecutorial policy underlying the inclusion of both,

rather than the selection of one of these two counts is not

Counsel for Wills submitted that it was a complete defence to the first two counts that his client was not the author of the text which appeared on the labels and neither knew of nor adopted it. In support of this submission he relied upon observations in the joint judgment of Mason ACJ, Wilson, Deane and

Dawson JJ., in Yorke v Lucas (1985) 158 CLR 661 at 666:-

"It is, of course, established that contravention of that section [5.52] does not require an intent to mislead or deceive and even though a corporation acts honestly and reasonably, it may nonetheless engage in conduct that is misleading or deceptive or is likely to mislead or deceive: Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd [(1978) 140 CLR 216, at p.228); Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [(1982) 149 CLR 191, at p.197). That does not, however, mean that a corporation which

perper 6 to do no more than pass on information supplie

another mus nevertheless be engaging in misleadin or deceptive conduc e information turns out to e alse. If the circumstances are such as _ to make it apparen a e corporation Ss not the source o the ormation and tha t express or implie isclaims

or wha 8 worth, we ver muc oubt tha the corporation can properly be said to be itself engagin in conduct that is sisteadin or deceptive." (emphasis

The observations relied upon were incidental to the principal question in that case which concerned the need to show knowledge and intent to establish accessorial liability under s.75B of the Act. That is, accessorial liability in relation to

misleading and deceptive conduct, a term which covers a wider

range of behaviour than the term "falsely represent" used in para.53(a). And the question in this case is whether that term

applies to the supply of a false label without knowledge of its text.

It is well settled that for contraventions of s.53, as

for s.52, there is no requirement for a guilty mind - Given v C.V.

Holland (Holdings Pty Ltd) (supra), 443 (Franki J.); Riley McKay Pty Ltd v Bannerman (1977) 15 ALR 561, 566 (Bowen CJ); Darwin

Bakery Pty Ltd v Sully (1981) 36 ALR 371, 376 (F.C.) In each of the cases cited, the question whether a guilty mind was an element of the contravention followed upon a finding or hypothesis that

the respondent had made the relevant representation. In Given v

Holland (Holdings) Pty Ltd (supra) the dealer's conduct in placing

a motor vehicle in his yard with a certain mileage displayed on the odometer was held to be a representation that the vehicle had travelled that number of miles (at p.442-443) and in Riley McKay Pty Ltd v Bannerman (supra), which concerned the validity of a notice issued under s.155 of the Act, the comments made by Bowen CJ about para.53(a) proceeded upon the express hypothesis that a representation had been made. In Darwin Bakery Pty Ltd v Sully (supra) which arose under para.53(e), the question of mens rea was predicated on the common assumption that the Bakery had made a misleading statement upon the publication of certain advertisements in newspapers circulating in the Northern

These authorities do not therefore provide an answer to the question raised in this case. Where goods manufactured and mislabelled by one party are on-sold to a wholesaler who, without knowledge of the labels or their text, sells to a retailer, can it be said that the wholesaler has represented anything in relation to the labels? This does not raise an issue of mens rea. It is a problem of construction posed by the question - what conduct is encompassed by the words "falsely represent" in para.53(a)? In interpreting that phrase, it is necessary to bear in mind that para.53(a), unlike s.52, carries penal consequences and is

addressed to a class of conduct more narrowly defined than that

The innocent carriage of a false representation from one person to another in circumstances where the carrier is and is seen to be a mere conduit, does not involve him in making that representation. Nobody would expect that the postman who bears a misleading message in a postal article has any concern about its content or is in any sense adopting it. The same is true of the messenger boy or courier service. When, however, a representation is conveyed in circumstances in which the carrier would be regarded by the relevant section of the public as adopting it, then he makes that representation. It will be a question of fact

in each case, but in my opinion the wholesaler who resells goods

labelled without attribution of authorship can be taken in ordinary circumstances to adopt the text of those labels. Whether

the position is different where the labels disclose the author of

their text does not arise in this case. This approach does not deny the application of the defences conferred by s.85. Indeed, by analogy with the argument in relation to mens rea, _ the availability of those defences supports the view that the term "falsely represent" as used in para.53(a) includes the innocent implied adoption of a false statement. Section 85 discloses a

legislative concern with protecting reasonable, but not merely

I have drawn a distinction between the guilty state of

mind and the external elements of "representing". In Wilkinson v

Katies Fashions (Aust) Pty Ltd (1986) 67 ALR 137, 141 it was contended for the defendant that the Darwin Bakery case is authority for the proposition that knowledge of the falsity of a statement one makes is not an element of a contravention of s.53, but is not authority for the proposition that knowledge of the content of a false statement is not an element of such

contravention. In rejecting that distinction Jenkinson J. said:-

",..by associating itself with the representation made by another, whose existence is not disclosed to those to whom the representation is made, a corporation may itself make that representation. The act which constitutes the making by a corporation of a representation may be merely the disclosure to those to whom the representation is made of the identity of that corporation in circumstances which indicate to consumers that the corporation is thereby placing itself in the position of maker of the representation".

Although his Honour may have referred to a narrower range of

representational conduct than that propounded in these reasons,

they are, I think, consistent with his approach which while not purporting to be exhaustive was, in my respectful opinion, correct. I am concerned here not with the question whether a representation has been made to the ultimate consumer, but whether in the circumstances it can be said that a representation has been made at all. This requires a consideration of the external

elements of the conduct of the alleged representee.

On these principles applied to the circumstances of this case, the sale by Wills to cCooksley involved it in making a representation in the terms of the labels. The question now

arises at what time or times and to whom the representations were

There seems to be little controversy that the display of labelled goods for retail sale can amount to a representation by the retailer in terms of the words appearing on the label without any specific attention being directed to the words and without any statement by the trader - Weitmann v Katies Ltd (1977) 29 FLR 336, 344 (Pranki J.). And if it is not the retailer's but a manufacturer's label that is in question, it will still amount to a representation by the retailer where the conjunction of the retailer's own label and that placed on an article by the manufacturer signifies an assumption by the retailer of

responsibility for the factual assertion contained in the

manufacturer's label - Wilkinson v Katies Fashions (Aust) Pty Ltd (supra) at 144-145. The latter case involved the sale of garments bearing a misleading content label affixed by a manufacturer and a brand label attached by the retailer. Jenkinson J. left open the case where it appeared whether by label or otherwise, that a person other than the retailer was the manufacturer and that the retailer was not the source of the information or content of the label and did not profess to assert any belief in the truth of the information. But in the absence of an express disclaimer, it is difficult to imagine how the display by a retailer of goods bearing a content label with no clue as to the identity of its author, would not amount to a representation by that retailer. In

the present case the label in question bears no indication of its author's identity but the bald assertion that the garment is

It also seems well established that the making of a representation for the purposes of para.53(a) does not always

require that it be communicated to or received by any specific

person - Thompson v Riley McKay Pty Ltd (1980) 29 ALR 267, 273 (Franki J.), 276 (Deane J.), 286 (Fisher J.). On this basis the

act of representation involved with the display of labelled goods by a retailer may be complete upon the display during a time that the goods are available for inspection by the public, whether or not the labels are read by any consumer. The position of the wholesaler so far as ultimate display is concerned is similar to

that of the retailer. It is no answer to a case against a

wholesaler, based upon retail display of mislabelled goods, for the wholesaler to say that it had no control over the goods beyond the point of sale to the retailer - Barton v Croner Trading Pty

Ltd (1984) 54 ALR 541, 553; Korczynski v Wes Loftus (Aust) Pt Ltd (1985) 62 ALR 225, 229 (Jenkinson J.).

In Barton v_ Croner Trading Pty Ltd (supra) and Korczynski v Wes Loftus (Aust) Pty Ltd (supra), the offending labels were fixed to the goods by the defendant. In the present

case the labels were fixed by the manufacturer although there is no indication on the garment as to their source. In my opinion however, the sale of such anonymously labelled goods by a wholesaler without any disclaimer as to their content, amounts to a statement by the wholesaler to the retailer and to the ultimate consumer that the text of the labels is correct. I am prepared to accept as a matter of judicial notice that consumers today are aware that there are rules of law designed for their protection as consumers. It is in that contemporary legal and factual context that the conduct of the vendor of goods, whether he be manufacturer, wholesaler or retailer, must be viewed. Where the wholesaler sells goods bearing a label with the serious claim that they are "Styled to Reduce Fire Danger", he must be taken to have adopted or "assumed responsibility for" that claim, that is, to have made that representation, both to the retailer and, at the

representations attributed to it on 6 March 1987 at the time of the supply of the goods to Cooksley and on 2 July 1986 when the

goods were displayed for purchase and purchased by the prosecutor.

As to the third count against Wills, I have no difficulty in concluding that on 6 March it supplied goods to Cooksley which, in terms of the information, were of a kind likely to be used by a consumer and which did not comply with the

The question that then arises is whether Wills has made out its defences under s.85. The defences common to all three counts are those provided by paras.85(1)(b) and (c). The

defendant has the onus of establishing them on the balance of

probability - Brown v Riverstone Meat Co. Pty Ltd (1985) 60 ALR

595, 603 (Wilcox J.); Adams v Eta Foods Limited [1987] ATPR 40-831, 48,964 (Gummow J.).

In this case there is no evidence of the labelling of goods shown in the sample range and no evidence that any one from Wills actually read the labels on the goods delivered by Splendid. That is to say there is no evidence of reliance upon information provided by Splendid. In my opinion therefore, the defence under

The defence under para.85(1)(c) in this case depends

i. That the contravention was due to the actual default of Splendid. 2. That Wills had taken reasonable precautions and

exercised due diligence to avoid the contravention.

Iam prepared to accept that the evidence shows that the mislabelling of the goods by Splendid was the sine qua non of the contraventions with which Wills is charged. The question then is whether Wills took reasonable precautions and exercised due diligence to avoid the contravention. The precautions and diligence required by the section must not be designed as a general matter in the business of the company but "to avoid the contravention". That is to say they must be directed to a result, the avoidance of a state of affairs which could give rise to a

contravention - Adams v Eta Foods Limited (supra) at 48,972.

It was the uncontradicted evidence of Ramsey, the merchandise manager for Wills, that he would usually view a forward range of samples before any order was placed. It was at this point that he would check their labelling. He was, in general terms, aware of the requirements for labelling of children's nightclothes and the three categories of garments designated for that purpose. When his superior, Mr David O'Brien,

made out orders he would "ninety per cent of the time" apply to

"These goods must comply with the consumer care labelling

requirements as provided under Section 63 of the Trade Practices Act."

It is not possible on the evidence to conclude that Mr Ramsey inspected the samples of the size 0 Jolie nightdresses, or that the order for the particular goods was stamped by Mr O'Brien. It is clear that beyond spot checks on individual items when garments arrived at Wills' premises pursuant to the order, there

was no system of inspecting a sample of each size and style of the nightclothes supplied. What are "reasonable precautions" and "due diligence" with respect to possible mislabelling will depend upon the circumstances of the case. Where product safety labelling is involved, this standard is high and I am quite satisfied that

Wills did not meet the necessary standard of care in this case.

In relation to the third count, Wills relies upon sub-s.85(4). But in my opinion that defence must also fail in this case because of the company's inability to satisfy the requirement that it "could not with reasonable diligence have

ascertained" that the goods did not comply with the relevant

In my opinion therefore the offences are made out in respect of all three counts and the defendant will be convicted

accordingly. I will allow the parties time to be heard as_ to

I certify that the preceding thirty two (32) pages are a true copy of the Reasons for Judgment

Solicitors for the Prosecutor: Director of Public Prosecutions

Solicitors for the Defendant: Messrs. Parker & Parker

MacFarlane v John Martin & Co. Ltd [1977] ATPR 40-034

Pty Ltd (supra) and as used in the later cases, the word has borne the meaning for which Donald and Heydon contend, that is to say an "indicated" or "certain" standard. This approach, in my respectful view, is consistent with the ordinary meaning of the word. It is not necessary therefore to import into the collocation "particular standard" the requirement that the standard be, as Taperell Vermeesch & Harland suggest, "generally recognised". It may be that "particular" has little more function than the indefinite article in qualifying "standard". It may be that it excludes global descriptions embracing a_ range of standards or qualities such as "This item is of a very high standard" (cf.MacFarlane v John Martin & Co. Ltd [1977] ATPR 40-034). The limits of its operation need not be decided here. It follows and is consistent with the view that I expressed in Gardam v Splendid Enterprises Pty Ltd [1987] ATPR 40-779 at 48,501 that it is not necessary to show that the represented standard has any statutory significance. In particular, it is not necessary to establish that it is a declared consumer product safety standard. As to the word "standard" itself, I respectfully adopt the meaning attributed to it by Ryan J. in Ducret v Chaudhary's Oriental Carpet Palace Pty Ltd (supra), and in particular the concept of "a

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