King hit for beef that’s not from the Island
On 14 August 2012 the Federal Court in Victoria found that the Melbourne-based butcher and retailer had contravened both the Australian Consumer Law (ACL) and the equivalent provisions of the former Trade Practices Act (TPA), by engaging in misleading conduct since at least July 2008.
While there might be a few mainland cattle farmers jealous at how quickly the Court accepted King Island’s reputation as a source of high quality beef, the decision otherwise serves as a strong reminder about the need for businesses to be cautious about the way in which the source of products is represented to consumers. The lesson is even more salient for those selling produce that is commonly understood to vary in quality depending on its origin.
The action in this case was brought by the ACCC, who alleged that because the business promoted itself as “King Island Meatworks and Cellars” or “King Island Meatworks” in its logos, on signage at its shop, in newspaper advertisements, as well in its internet domain name and website, it had conveyed a representation that all, or at least a significant proportion of the meat it sold was grown or raised on King Island (which the Court accepted as having a reputation for excellent beef production).
In fact, although the business purchased a lot of its beef from a King Island abattoir when it began trading in 2001, the vast majority of beef it sold since approximately 2002 had not been sourced from King Island.
In contrast, the Court heard evidence from a director of JBS Australia Pty Limited (JBS), the owner of the registered trade mark “King Island Beef – Australia’s Premium Natural Beef”, who gave evidence that JBS’ usage of that trade mark was restricted to beef from cattle that have spent a minimum of 6 months grazing on the Island.
Taking this evidence into account, the Court found that King Island Meatworks promoted itself in a way that conveyed a connection with King Island which amounted to a breach of both:
· the prohibition on false or misleading representations concerning the place of origin of goods sold (s 29(1)(k) of the ACL and the former s 53(eb) of the TPA); and
· the general prohibition on conduct that is misleading or deceptive (s 18 of the ACL, and the former s 52).
In doing so, the Court also dismissed arguments from King Island Meatworks about its obligations under section 144(1) the Corporations Act 2001, which required it to ‘prominently display’ its registered business name. In rejecting what his Honour described as an “adventurous submission”, Murphy J quite sensibly held that any statutory obligation on a business to display its name does not inoculate it against the consumer protection laws, and that all businesses are required to choose a name that won’t convey a false or misleading representation to customers.