Federal Court of Australia

THE COURT ORDERS THAT:

In relation to the First respondent

UPON THE APPLICANTS undertaking to the Court that except with the agreement of the respondents they will not sell (except in the ordinary course of business) or encumber in any way, or part with possession of (except in the ordinary course of business) their assets, and that they will ensure and maintain their assets and undertakings and that they will pay to any party restrained or affected by the restraints imposed by the injunction sought by the applicants, or any continuation thereof, such compensation as the Court may in its discretion consider in the circumstances to be just, such compensation to be assessed by the Court or in accordance with such directions as the Court shall make and will pay any such sum in such manner as the Court may direct:

l. The First Respondent hereby undertakes that until 4pm (WST) on Monday 15 December 1997 or until further order:

l.l From 3.00pm (Eastern Summer Time) on Thursday 13 November 1997 it will not:

(a) print, reprint or distribute any further copies within Australia of the documents annexed hereto and marked with the letters "B", "C", "D" or "E" or documents containing statements to the effect of the representations set out in 1.1 (b) or 1.1 (c) below;

(b) make any oral representations to the Australian public that cellulose insulation properly manufactured and installed by the applicants in accordance with the requirements of Standards Australia in an Australian domestic roof space is a potential fire hazard;

(c) make any oral representations to the Australian public that over time the fire retardant chemicals leach out of cellulose insulation properly manufactured and installed by the applicants in accordance with Standards Australia in an Australian domestic roof space thereby presenting a potential fire hazard.

1.2 By notice in writing to be dispatched within 5 days from the date of this order it will :

(a) instruct all state managers of Bradford Insulation in Australia to direct all of their staff who deal with the Australian public in relation to insulation including sales staff and sales representatives not to:

(i) distribute further copies within Australia of the documents annexed and marked "B", "C", "D" and "E" or documents containing statements to the effect of the representations set out in paragraph 1.1 (b) or 1.1 (c);

(ii) make any oral representations to the Australian public that cellulose insulation properly manufactured and installed by the applicants in accordance with the requirements of Standards Australia in Australian domestic roof space is a potential fire hazard.

(iii) make any oral representations to the Australian public that over time the fire retardant chemicals leach out of cellulose insulation properly manufactured and installed by the applicants in accordance with Standards Australia in an Australian domestic roof space thereby presenting a potential fire hazard.

(b) request the operators of the Bradford Toll Free Hotline in Australia and the authorised distributors of its Bradford insulation products within Australia not to:

(i) distribute further copies within Australia of the documents annexed and marked "B", "C", "D" and "E" or documents containing statements to the effect of the representations set out in paragraph l.l (b) or l.l (c);

(ii) make any oral representations to the Australian public that cellulose insulation properly manufactured and installed by the applicants in accordance with the requirements of Standards Australia in Australia domestic roof space is a potential fire hazard;

(iii) make any oral representations to the Australian public that over time the fire retardant chemicals leach out of cellulose insulation properly manufactured and installed by the applicants in accordance with Standards Australia in an Australian domestic roof space thereby presenting a fire hazard.

2. There be liberty to the parties to apply.

3. Costs be reserved.

In relation to the Fifth respondent

UPON THE APPLICANTS' undertaking to the Court that except with the agreement of the respondents they will not sell (except in the ordinary course of business) or encumber in any way, or part with possession of (except in the ordinary course of business) their assets, and that they will ensure and maintain their assets and undertakings and that they will pay to any party restrained or affected by the restraints imposed by the injunction sought by the applicants, or any continuation thereof, such compensation as the Court may in its discretion consider in the circumstances to be just, such compensation to be assessed by the Court or in accordance with such directions as the Court shall make and will pay any such sum in such manner as the Court may direct, it is ordered:

l. The fifth respondent by itself and its directors hereby undertakes that until 4.00 pm (WST) on Monday 15 December 1997 or until further order:

1.l it will not:

(a) print, reprint or distribute any further copies within Australia of the documents annexed hereto and marked with the letters "B" and "C" or documents containing statements to the effect of the representations set out in 1.1 (b) or 1.1 (c) below;

(b) make any oral representations to the Australian public that cellulose insulation properly manufactured and installed by the applicants in accordance with the requirements of Standards Australia in an Australian domestic roof space is a potential fire hazard;

(c) make any oral representations to the Australian public that over time the fire retardant chemicals leach out of cellulose insulation properly manufactured in accordance with Standards Australia in an Australian domestic roof space thereby presenting a potential fire hazard.

1.2 By notice in writing to be given within five business days from the date of this order it will direct all staff including sales staff and sales representatives not to:

(a) distribute further copies within Australia of the documents annexed hereto and marked "B" and "C" or documents containing statements to the effect of the representations set out in paragraphs 1.1 (b) or 1.1 (c);

(b) make any oral representations to the Australian public that cellulose insulation properly manufactured and installed by the applicants in accordance with the requirements of Standards Australia in an Australian domestic roof space is a potential fire hazard;

(c) make an oral representations to the Australian public that over time the fire retardant chemicals leach out of cellulose insulation properly manufactured and installed by the applicants in accordance with Standards Australia in an Australian domestic roof space thereby presenting a potential fire hazard.

2. There be liberty to the parties to apply.

3. Costs be reserved.

GENERAL DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIAN DISTRICT REGISTRY	wag 117 of 1997

BETWEEN:	COC PTY LTD (ACN 058 817 771) First Applicant
	MORCANNA HOLDINGS PTY LTD (ACN 009 450 597) Second Applicant
	ceil comfort home insulation pty ltd (acn 003 239 763) Third Applicant
	THERMO-SEAL INSULATION PTY LTD (ACN 000 864 068) Fourth Applicant
	NATURAL FIBRE PTY LTD (ACN 055 452 910) Fifth Applicant
AND:	CSR LTD (ACN 000 001 276) First Respondent
	fibreglass and rockwool insulation manufacturers' association of australia incorporated Second Respondent
	carter holt harvey INSULATION PTY limited (acn 009 455 452) Third Respondent
	aci australia limited (acn 004 093 092) Fourth Respondent
	GERADO HOLDINGS PTY LTD (ACN 009 089 472) Fifth Respondent

JUDGE:	R D NICHOLSON J
DATE:	11 NOVEMBER 1997
PLACE:	PERTH

REASONS FOR JUDGMENT

HIS HONOUR: The applicants seek an interim injunction against the first and fifth respondents. An interim injunction is to be approached by the Court as a type of interlocutory injunction so the same principles are applicable: cf Meagher, Gummow and Lehane, "Equity Doctrines and Remedies" (3rd ed) p 605 par 2183.

The proceeding in which the claim for an interim injunction is advanced seeks recovery in respect of loss and damages pursuant to s 52 of the Trade Practices Act 1974 (Cth) ("the Act") in respect of alleged misleading and deceptive conduct by the respondents including the first respondent. The source of authority for the making of the injunction is therefore s 80 of the Act. The consequence of this is that in addition to the application of the principles normally applicable to the grant of an interim injunction, there are the considerations which arise as a consequence of the foundation of the injunction lying in that section and the Act.

The alleged representations which the applicants claim to be misleading and deceptive are express and implied representations to the effect that the applicants' cellulose insulation is a fire danger.

The following considerations arise from the argument.

Strength of applicant's case

The respondent concedes for the purpose of this application alone that there is a serious question to be tried. That case is whether the applicants have and will continue to suffer damage as a result of the production and distribution of brochures and making of oral representations by the first and fifth respondents, to existing or potential consumers of insulation products, regarding the applicants' cellulose insulation to the effect the product presents a significant fire danger or a not insubstantial fire danger. Absent on this occasion from the balancing of factors therefore is any finding of fact concerning the strength of the applicants' case. On the interlocutory application the first respondent will seek to bring evidence to show the scientific basis of the applicants' case is misfounded. Whether that case can itself be made out must await the interlocutory application.

Character of alleged offending material

For the first respondent it is contended the substance of the complaint has been in the market place since 1992. That substance states the CSIRO found cellulose insulation to be of a considerably higher flammability factor than the respondent's insulation. It is the case four of the applicants together with a further applicant instituted proceedings (WAG 149 of 1995) in which the application for interim injunction has been dismissed. I accept the submission for the first respondent there is an identity of complaint between that proceeding and the present proceeding in the sense there is a similarity of foundation in the alleged representations said to be misleading and deceptive.

However, the representations complained of in this application occur in brochures appearing from March 1997 and principally since August 1997 through to the end of October 1997. Those brochures are new publications in 1997. They have not been in the market place since 1992. There is therefore a fresh basis for the present proceeding.

Delay

On behalf of the first respondent it is submitted there is an unexplained delay from 1992 in the applicants seeking to prevent such representations in the market and this should disentitle the applicants to relief. On an application under s 80 of the Act, delay will not automatically preclude the granting of an injunction where the public interest is involved: cf Gollel Holdings Pty Ltd v Kenneth Maurer Funerals Pty Ltd (1987) 9 IPR 109 at 122. Here the brochures are recent and constitute a new activity in relation to which there is no relevant delay.

Loss and damage

It is said on behalf of the first respondent there is no evidence of loss. For the applicants reliance is placed upon two matters. Firstly, there is evidence of past losses which prima facie are losses deriving from conduct the subject of complaint in proceeding WAG 149 of 1995. Secondly, it is said the Court should take a common-sense approach and infer from the character of the representations that the applicants' product involves a fire risk are likely to lead from loss of sales.

In response for the first respondent it is said sales are an inadequate basis of judging loss and the evidence which is available shows the profits of the applicants are in an upward trend.

In an application for an interim injunction under s 80 of the Act it is not necessary an applicant show he or she has suffered or will suffer damage. The case brought by the applicant, for the purposes of an interim application, shows a probability there may be loss suffered in any event.

Whether damages would be a sufficient remedy

For the first respondent it is submitted there is no evidence of irreparable harm or any evidence damages would not be adequate for a period of six weeks, being the period of delay which the first respondent proposes prior to hearing of an interlocutory injunction. However, as submitted for the applicants, their business is coming into a busy summer period being the high selling season for insulation. It is difficult for any applicant to prove trade lost. It cannot therefore be said on an interim application that damages will be a sufficient remedy.

Public interest

For the first respondent it is submitted there is no evidence members of the public will be misled. However, in the case of an application for an interim injunction under s 80 of the Act a special consideration is the public interest arising under the Act in that, when the Act proscribes conduct, it creates a public interest in such conduct not continuing. Here it is accepted there is a serious issue to be tried. There is no undertaking to desist from such conduct during the period prior to the hearing of the interlocutory application. The public interest in the conduct desisting will not be met other than by the granting of an interim injunction: see Irwell Pty Ltd v Demand Sales Pty Ltd (1982) ATPR 40-332 at 44,035 and Glev Pty Ltd and Glev Franchises Pty Ltd v Kentucky Fried Chicken Pty Ltd [1994] FCA 916; (1994) ATPR 41-299 at 41,981.

Difficulty in compliance

The affidavit of Mr R G Johnston, being the only material put on for the first respondent and filed during the hearing, refers to the brochures being distributed on an extensive, Australia wide basis. I do not consider that evidence founds an inference of futility if an interim injunction is granted. It would require communication of the substance of the interim injunction to be made to the points of distribution but there is nothing to show that would be impossible or excessively difficult.

Urgency

It is submitted for the first respondent there is no issue of urgency which justifies the intervention of a court. However that overlooks the fact the conduct admitted to giving rise to a serious issue to be tried (without any finding being made as to the strength of the case) would continue. It is the continuance of the conduct proscribed by the Act which creates the condition for intervention.

In my opinion because of the provisions of the Act and the public interest in proscribed conduct not continuing together with the other factors referred to above on behalf of the applicant, the balance of convenience lies in favour of the grant of the interim injunction against the first respondent subject to the applicants providing an appropriate undertaking.

So far as concerns the fifth respondent the same considerations arise and interim relief should lie against it also.

I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice R D NICHOLSON

Associate:

Dated: 11 November 1997

Counsel for the Applicants:	S Owen-Conway QC
Solicitor for the Applicants:	McCallum Donovan & Sweeney
Counsel for the First Respondent:	A N Siopis
Solicitor for the First Respondent:	Bennett & Co
Counsel for the Fifth Respondent:	P R Eaton
Solicitor for the Fifth Respondent:	Marks Healy Sands
Date of Hearing:	10 November 1997
Date of Judgment:	11 November 1997