SC Johnson & Son Pty Limited v Reckitt Benckiser

REASONS FOR JUDGMENT (REVISED FROM TRANSCRIPT) 1 On 15 November 2012 I published my reasons for judgment in which I found that the respondent had contravened s 18 of Sch 2 of the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law) by representing, by means of packaging, that a refill (referred to as the first version of the New NaturGard Refill) to be used in its automatic indoor insect control systems (AIIC systems) contained active ingredients, some part of which was natural: SC Johnson & Son Pty Limited v Reckitt Benckiser (Australia) Pty Limited [2012] FCA 1266. The matter is now before me to determine the form of final relief that should be granted as well as the question of costs. In that latter respect I have already expressed a provisional view that the applicant should have 50% of its costs. 2 The parties have provided written outlines of submissions and also presented oral arguments. The applicant seeks both declaratory and injunctive relief. It is content with the order for costs I have provisionally proposed. The injunctive relief it seeks has two aspects. The first is that the respondent be restrained from selling, offering for sale or promoting a refill for its AIIC systems by reference to the words "90% natural ingredients" or similar words regarding the natural ingredients in the refill without including a statement in close proximity and of equal prominence to those words that identifies the proportion of the synthetic ingredients present in the refill. 3 The second aspect is that an order should be made requiring the respondent to either recall from sale any remaining units of the first version of the New NaturGard Refill or amend the packaging of the those products to bring them into line with the requirements of the first injunction it seeks. 4 The applicant submits that both forms of injunction are warranted in light of my findings in [136] of the reasons. It submits that in circumstances where the Court has found that aspects of the product's packaging are likely to mislead or deceive consumers, the Court should make orders that require all stocks of the product to be recalled or the packaging of the product to be amended so that the consequences of the contravention are contained to the extent that that is possible. It submits that, if the number of the contravening refills is substantial, considerations of consumer protection make a mandatory injunction all the more important. In its written submissions it also submits that, correspondingly, if the number of such products is not substantial the burden on the contravener is less than it might otherwise be. I should say at once that I am unable to see how the second proposition follows from the first, and I doubt that it is valid in any event. There is no evidence before me that makes clear the burden that would be placed upon the respondent by making the mandatory injunction that the applicant seeks. In a sense the applicant is as well-placed as the respondent to adduce such evidence. 5 I do, however, have before me evidence given by Mr Tedesco, the respondent's Marketing Director, that the contravening refills were sold to the trade in June, July and August 2012. As at 8 October 2012 he was able to say that approximately 50% of the contravening refills were still available in the market but that the great majority of them were expected to have been sold by November 2012. No additional or more accurate information has been placed before the Court. 6 The respondent submits that the relief to be granted to the applicant should be confined to a declaration respecting its contravention. It submits that injunctions would be inappropriate. It also submits that each party should bear its own costs of the proceeding. 7 The respondent submits that an injunction restraining the further sale or promotion of the contravening product would be both unnecessary and inappropriate given that, on the evidence, no more refills in the packaging of the first version of the New NaturGard Refill have been manufactured and there is no risk of further contravention in this regard including by way of inadvertent distribution. It submits that the case for granting a mandatory injunction for product recall or packaging amendment is not justified. It submits that the contravening conduct ended before a letter of demand was received from the applicant and that, on the evidence, refills in the form of the impugned packaging have all but disappeared from the marketplace. In those circumstances it submits that to require it to search for what is likely to be a tiny number of cans, if any, in order to recall or amend packaging would be out of proportion to any benefit to be obtained and would have the effect of punishing the respondent for the contravention rather than serving any legitimate public purpose of preventing further misleading conduct. The respondent also points to the fact that the order is impractical because retailers, who now own these products, may decline to cooperate. 8 On the question of costs, the respondent submits that, while the applicant can be seen to have had success on the case it brought, it failed on its "primary claims" and those claims occupied substantially all of the hearing and of the documentary evidence. It points to the fact that the applicant's letter of demand did not make any demand in relation to the New NaturGard Refill and that the second version of the refill had already been adopted. In my view that submission proceeds on a misreading or misunderstanding of the applicant's letter of demand. However, the evidence does suggest that the second version of the New NaturGard Refill had been adopted and was being marketed by the time the applicant's letter of demand had been received. The respondent also submits that the first version of the New NaturGard Refill was not at the forefront of the applicant's case. In my view the first version of the New NaturGard Refill was integral to the applicant's case as presented. 9 The respondent also disagrees with the form of the declaration sought by the applicant. It proposes a declaration in more general terms than that proposed by the applicant. The form of the declaration that the applicant seeks makes express reference to the respondent having "represented, contrary to the fact, that part of the active ingredients of that product is natural". The respondent submits that this adds nothing to the effect of the declaration but may convey the impression that the Court has found that the representation would have been conveyed to every person who encountered the product. It submits that the Court found that at least consumers who were "engaged" with the product would have seen the statement on the back of the refill can concerning the percentage of synthetic active ingredients it contained. Thus it submits that only a limited group of consumers has been found to have been misled or deceived or to be in danger of being misled or deceived.