The Real Thing Food Supplements CC v Media Tag Pty Ltd

1. [1]

   The plaintiff, The Real Thing Food Supplements CC, is a “Close Corporation” incorporated in South Africa. I will refer to it as the “TRT Corporation”. TRT Corporation makes in South Africa a range health food supplements using the brand name “The Real Thing”.

2. [2]

   Mr David Allen, the sole director of TRT Corporation, describes the nature of the company’s business as follows:

3. [3]

   TRT Corporation has never had a presence in Australia. It has never advertised, promoted or sold its goods directly in Australia.

4. [4]

   TRT Corporation’s exports to Australia took place between October 2013 and June 2015. The first defendant, Media Tag Pty Ltd, acted as distributer of certain TRT Corporation products to a number of Woolworths stores in Sydney, Brisbane and Adelaide on a trial basis.

5. [5]

   Two trials took place. The first commenced in November 2013 and the second in March 2014.

6. [6]

   Between November 2015 and June 2017 Media Tag arranged for products similar to those it had distributed on behalf of TRT Corporation to be manufactured in Australia and sold to Woolworths.

7. [7]

   These proceedings, brought against Media Tag and its two directors Mr Graham Meyerowitz and Mr Mark Lasarow, concern those sales.

8. [8]

   At the outset of the hearing Mr Marshall SC, who appeared with Mr Bevan for TRT Corporation, informed me that TRT Corporation did not press a large number of the claims it had hitherto made.

9. [9]

   The case TRT Corporation presses is that:

   1. (1)

      Media Tag represented to Woolworths that, in effect, the goods it was supplying to Woolworths were those of TRT Corporation;

   2. (2)

      Woolworths was induced by that representation to purchase the goods from Media Tag;

   3. (3)

      those representations constituted misleading or deceptive conduct within the meaning of and in contravention of s 18 of the Australian Consumer Law;

   4. (4)

      Messrs Lasarow and Meyerowitz were knowingly involved in that contravention; and

   5. (5)

      by making the representations Media Tag engaged in the tort of passing off.

10. [10]

    Mr Marshall accepted that if TRT Corporation could not establish its misleading or deceptive conduct case, it would not be able to establish its passing off case.

11. [11]

    For that reason, debate before me focused on the misleading or deceptive conduct case.

Decision

1. [12]

   TRT Corporation has failed to establish its case. The proceedings must be dismissed.

What happened

1. [13]

   In September or October 2013 TRT Corporation engaged Media Tag to import TRT Corporation products for the purpose of a trial with Woolworths.

2. [14]

   TRL Corporation had never before sold its goods in Australia, whether directly or through a distributor.

3. [15]

   TRT Corporation provided sample labels for five of its supplement products sold in South Africa so that they could be relabelled by Media Tag to comply with Australia labelling requirements.

4. [16]

   Media Tag engaged an organisation known as Brooke-Taylor & Co to assist it with those labelling requirements.

5. [17]

   Media Tag provided Brooke-Taylor with the labels used by TRT Corporation to sell in South Africa products known as “The Real Thing Wheat Grass Powder”, “The Real Thing Veggie Superfoods”, “The Real Thing Barley Grass Powder” and “The Real Thing Green Power Powder”.

6. [18]

   Brooke-Taylor amended the South African labels to comply with Australian labelling standards. These labels were attached to product used for the Woolworths trial. I will refer to them as “the Trial Labels”.

7. [19]

   Media Tag sent the Trial Labels to TRT Corporation in South Africa. TRT Corporation arranged for the Trial Labels to be printed in South Africa and placed on products prior to shipment to Media Tag in Australia.

8. [20]

   Each label contained three panels. The centre panel comprised the main label. The left panel described the product in general terms and proclaimed its virtues. The right panel contained detailed nutritional information.

9. [21]

   Taking the Wheat Grass Powder Trial Label as an example:

   1. (1)

      the centre panel described the product as “The Real Thing Wheat Grass Powder | 100% Organic Wheat Grass Powder”;

   2. (2)

      the left panel was headed “What is The Real Thing Wheat Grass?”. It gave a general description of it as a “superfood” with particular characteristics, and contained a subheading “Why Is There Nothing Like the Real Thing?”;

   3. (3)

      the right panel set out detailed “Nutritional Information”;

   4. (4)

      a sentence at the foot of the right panel stated the product was “made in South Africa from imported products” (with no reference to TRT Corporation itself); and

   5. (5)

      a sentence the foot of the left panel stated that the product was distributed by Media Tag.

10. [22]

    Thus, the Trial Label for Wheat Grass Powder was in the following form:

11. [23]

    The Trial Label was attached to a container which had this appearance (but without the red oval which was placed on this image for emphasis):

12. [24]

    The Trial Labels and containers of the other products (Veggie Superfoods, Barley Grass Powder, Green Power Powder and Green Power Tablets) were different in detail, but generally in the same format.

13. [25]

    The amount of TRT Corporation product used in the Woolworths trials was modest.

14. [26]

    The initial trial took place between October and December 2013. For that trial, Media Tag delivered to TRT Corporation a purchase order dated 20 October 2013 for 504 units of product. A second trial took place the following year. For that trial, Media Tag delivered to TRT Corporation a purchase order dated 20 February 2014 for 720 units of product.

15. [27]

    The total amount paid by Woolworths for the trial products was $6,075.37.

16. [28]

    In its purchase orders during the two trial periods, Woolworths described the products by reference to the names to which I have referred (Wheat Grass and so on) preceded either by the words “Real Thing” or the descriptor “R/T”.

17. [29]

    In about April or May 2015, Woolworths decided to order further product.

18. [30]

    Thus Mr Meyerowitz said in his affidavit:

19. [31]

    On 1 June 2015 Mr Meyerowitz sent an email to Mr Allen stating that he had “met with Woolworths last week and I’m expecting to get an order from [Woolworths] for [TRT Corporation’s] products”. Mr Meyerowitz sought a quotation for the supply of between 5,000 and 15,000 units of TRT Corporation’s Veggie Superfood, Wheat Grass and Barley Grass products.

20. [32]

    Mr Allen replied on 12 June 2015 saying that the price for the Wheat Grass and Barley Grass product would be R110 per unit. During the Woolworths trials, TRT Corporation had supplied product at R70 per unit. Mr Allen’s email also said that TRT Corporation could not supply the Veggie Superfood product “for the time being” as its formula “is changing within the next year”.

21. [33]

    Negotiations continued by email for some time.

22. [34]

    Ultimately on 21 August 2015 Mr Meyerowitz and Mr Allen spoke on the telephone. The men have differing recollections as to the detail of this conversation but both agree that Mr Meyerowitz sought a price of R50 per unit and that Mr Allen said that TRT Corporation could not supply product at that price.

23. [35]

    Mr Allen’s recollection was that he said:

24. [36]

    There the matter rested so far as concerns dealings between TRT Corporation and Media Tag.

25. [37]

    Mr Meyerowitz said in his affidavit that his communications with Mr Allen “indicated to me that Media Tag could not continue its business with Woolworths as it had previously”.

26. [38]

    He continued:

27. [39]

    Accordingly, using locally sourced products, Media Tag arranged to produce health supplement products to be branded, amongst other names “Wheat Grass Powder”, “Veggie Superfood Powder”, “Barley Grass Powder” and “Green Power Powder”: the same names as the products of TRT Corporation that Media Tag had distributed during the Woolworths trials.

28. [40]

    In his affidavit Mr Meyerowitz continued:

29. [41]

    Woolworths commenced placing purchase orders on Media Tag for these products in November 2015.

30. [42]

    The product that Media Tag supplied Woolworths from November 2015 was in containers which differed in appearance from those supplied during the Woolworths trial. The Media Tag containers had the appearance of the centre and right image below; compared to the TRT Corporation’s containers which had the appearance of the image to the left:

31. [43]

    Between November 2015 and June 2017 (when Woolworths ceased ordering product; see [69] below), Media Tag used three different labels for its products.

32. [44]

    Taking the Wheat Grass Powder product as an example, the first label used by Media Tag from November 2015 to February 2016 was in this form:

33. [45]

    Like the Trial Label the Media Tag Label has three panels.

34. [46]

    The getup and colours used on the Media Tag Label are different from those used in the Trial Label.

35. [47]

    However like the Trial Label, the product is described in the centre panel as “Wheat Grass Powder | 100% Organic Wheat Grass Powder”.

36. [48]

    Instead of the words “The Real Thing” the words “Just Greens” are used and the product is described as “100% Australian made and grown”.

37. [49]

    In the top left had corner of the centre panel appear the initials “TRT”.

38. [50]

    Mr Meyerowitz said in his affidavit:

39. [51]

    The left hand panel is headed “What’s In Just Greens Wheat Grass?” (compared to “What Is The Real Thing Wheat Grass” on the Trial Label) but contains text corresponding closely to that which appears on the left panel of the Trial Label (save that the subheading “Why Is There Nothing Like The Real Thing?” has been changed to “Why Is There Nothing Like Just Greens?”).

40. [52]

    At the foot of the left panel it is stated that the product is “[m]anufactured in Australia and solely and distributed by” Media Tag.

41. [53]

    The right hand panel, like that in the Trial Label, is headed “Nutritional Information” and replicates the panel on the Trial Label.

42. [54]

    In about February 2016 Media Tag changed the labels for its products.

43. [55]

    Again using the Wheat Grass Powder label as an example, it was changed to have this form:

44. [56]

    In the centre panel the words “Grasses & Greens” have been substituted for “Just Greens” and the words “The Real Thing” have been added above the main label “Wheat Grass Powder | 100% Certified Organic Wheat Grass Powder”.

45. [57]

    In the left panel, the heading “What’s In Just Greens Wheat Grass?” has been changed to “What Is The Real Thing Wheat Grass?”; the exact words used in the corresponding panel in the Trial Label.

46. [58]

    Further, the subheading “Why Is There Nothing Like Just Greens?” has been changed to “Why Is There Nothing Like The Real Thing Wheat Grass?;” the same subheading used in the Trial Label (save that the words “Wheat Grass” are added to the end).

47. [59]

    The right panel headed “Nutritional Information” remains almost identical to that in the Trial Label.

48. [60]

    Mr Meyerowitz explained the reason for this change as follows:

49. [61]

    Mr Meyerowitz’s reference to Woolworths still having “erroneous product descriptions such as ‘R/T’ or ‘Real Thing’” on its purchase orders is a reference to the fact that, in the purchase orders Woolworths sent to Media Tag between November 2015 and July 2016 (which is the latest purchase order in evidence before me), Woolworths had described the items it was ordering from Media Tag with those product descriptions; just as it had done in relation its purchase orders during the trial period).

50. [62]

    In cross-examination Mr Meyerowitz said that he had tried to persuade Woolworths to change this product description on its purchase orders.

51. [63]

    Thus he said:

52. [64]

    Later, Mr Meyerowitz gave this evidence in response to questions from me:

53. [65]

    This second form of label remained current from February 2016 to August 2016. However TRT Corporation’s solicitor gives evidence that she saw products so labelled on Woolworths’ shelves in November 2016 and again in March 2017.

54. [66]

    The final label change made by Media Tag, again using Wheat Grass Powder as an example, was as follows:

55. [67]

    In this iteration of the label, in the centre panel the words “The Real Thing” have been removed and substituted with the words “Work Out Life”. Corresponding changes have been made to the heading and subheading in the left panel (although the wording remains virtually the same as in the earlier iterations and as in the Trial Label).

56. [68]

    The right hand panel was unchanged.

57. [69]

    Mr Meyerowitz said that Woolworths has not ordered any product since June 2017 and that his “impression is that Woolworths has lost interest” in Media Tag’s products and “will no longer buy them”.

Misleading or deceptive conduct

1. [70]

   As I have said, in effect, TRT Corporation alleges that from November 2015, Media Tag represented to Woolworths that the goods it was supplying to Woolworths were those of TRT Corporation.

2. [71]

   The particular representations alleged in the Further Amended Commercial List Statement are that Media Tag represented to Woolworths that:

3. [72]

   Argument before me focussed on alleged representations (a) (i), (ii) and (b). There was no evidence before me that the quality of Media Tag’s products was inferior to those of TRT Corporation.

4. [73]

   In effect, TRT Corporation’s case is that Media Tag sought to impersonate it and pass its products off to Woolworths as those supplied during the Woolworths trial, and thus as those of TRT Corporation.

5. [74]

   TRT Corporation’s case is advanced solely on the basis of the manner in which Media Tag labelled the products it sold to Woolworths. There is, for example, no evidence that Media Tag used brochures or other forms of advertising or promotion to elicit business from Woolworths.

6. [75]

   As the above analysis shows, Media Tag labelled its products in a manner which was in many respects similar to the manner in which TRT Corporation’s products were labelled during the course of the Woolworths trial.

7. [76]

   As the form of the labels used by Media Tag suggests, and as Mr Meyerowitz’s evidence confirms (see especially at [50] and [60] above), this was deliberate conduct by Media Tag.

8. [77]

   There is substance in Mr Marshall’s submission that:

9. [78]

   However, the colouring and get up of the labels is different, as is the physical configuration of the containers in which the product was supplied.

10. [79]

    The labels also make clear that the product is made by Media Tag in Australia; rather than in South Africa as the Trial Labels stated.

11. [80]

    But much of the wording, particularly in the side panels, is the same. And the second iteration of Media Tag’s labels actually used the words “The Real Thing” - the brand used by TRT Corporation for its products which were supplied to Woolworths by Media Tag during the trials.

12. [81]

    This may have amounted to sharp conduct.

13. [82]

    But the question here is whether Media Tag’s labels conveyed the representation alleged.

14. [83]

    To make out its case that, by its labels, Media Tag represented to Woolworths that its products were manufactured by or under the authority of TRT Corporation, or had the sponsorship of TRT Corporation, or that Media Tag was affiliated with TRT Corporation, it would be necessary for TRT Corporation to prove that Woolworths knew of TRT Corporation and knew that the products supplied during the trial were those of TRT Corporation.

15. [84]

    In that respect, the case is similar to, although not precisely the same as that considered by Katzmann J in Moroccanoil Israel Ltd v Aldi Foods Pty Ltd [2017] FCA 823. As her Honour said at [347] (adapted to this case as appropriate):

16. [85]

    TRT Corporation recognises this.

17. [86]

    Thus, it alleges in its Further Amended Commercial List Statement:

18. [87]

    TRT Corporation’s case is that by reason of the trial sales of its products to Woolworths, TRT Corporation itself (not just its products) “had goodwill and reputation within Australia” in respect of products it manufactured in South Africa.

19. [88]

    TRT Corporation must show that such goodwill and reputation was known to Woolworths. That is because its case is that Media Tag represented to Woolworths that Media Tag’s goods were manufactured by, or had an association with, TRT Corporation; and that Woolworths was thereby induced to purchase product from Media Tag.

20. [89]

    But there is no evidence that Woolworths had any knowledge of TRT Corporation’s identity.

21. [90]

    So far as the evidence reveals, all that Woolworths knew about the products supplied to it by Media Tag during the Woolworths trials was that they were “made in South Africa from imported products”.

22. [91]

    The evidence does not establish what Woolworths made of these words. It may have understood that the product was made in South Africa by a South African corporation with an existing product line. Or it may have concluded that Media Tag had arranged for the product to be manufactured in South Africa on its behalf. I can only speculate about what Woolworths made of these words.

23. [92]

    TRT Corporation has not at any time taken steps to establish reputation in the Australian market place. It has never had any presence in the Australian market place, whether with the sale of its own products, or through any corporate activity under its control. The only manner in which TRT Corporation might have obtained a reputation for its products in Australia was through the actions of Media Tag.

24. [93]

    But I see no basis to conclude that TRT Corporation itself had any reputation in Australia that could warrant a conclusion that Media Tag’s labelling misled Woolworths into thinking that Media Tag’s product had any connection with TRT Corporation.

25. [94]

    For this reason alone TRT Corporation’s case must fail.

26. [95]

    There is a further problem.

27. [96]

    TRT Corporation alleges that Woolworths purchased goods from Media Tag in reliance on the allegedly misleading or deceptive representations made by Media Tag in the labelling of its products.

28. [97]

    But Woolworths decided to purchase further product in April or May 2015 (see [29] and [30] above), long before it saw the labelling on the product supplied by Media Tag from November 2015. Media Tag’s labelling played no role in that decision.

29. [98]

    I can only speculate as to whether, from November 2015, Woolworths decided to continue to order product from Media Tag by reason of the manner in which Media Tag labelled that product. The evidence suggests that it did not. Throughout the relevant period, the Woolworths purchase orders continued to be in the same form as during the Woolworths trial, and Woolworths continued to order product from Media Tag whether Media Tag’s labels contained the initials “TRT”, the words “The Real Thing” or neither of these descriptors.

30. [99]

    For these reasons, my conclusion is that TRT Corporation’s misleading or deceptive conduct claim must fail.

Passing off

1. [100]

   For the same reasons, and as Mr Marshall accepted during argument, TRT Corporation’s case in passing off cannot succeed.

2. [101]

   That is because, to establish the tort of passing off, it is necessary for TRT Corporation to establish that its products had a reputation with (in this case) Woolworths.

3. [102]

   It is not necessary that TRT Corporation have a place of business or a business presence in Australia or that its goods are sold here. But it must establish that it has:

4. [103]

   TRT Corporation has not established that it had such a reputation.

5. [104]

   To establish the tort of passing off, TRT Corporation must also establish that Media Tag represented to Woolworths that its products were those of TRT Corporation.

6. [105]

   It has failed to do this.

Conclusion

1. [106]

   The proceedings must be dismissed with costs.