The ACCC v Kingsland Meatworks and Cellars Pty Ltd1 case involves interesting considerations about the use of a place of origin in a company or brand name, and when this may be considered misleading and deceptive and a false representation concerning the place of origin of goods.  This decision is particularly interesting given credence claims is one of the ACCC’s current areas of priority.

Lessons

  • If you use a place of origin in your company or brand name, and this conveys a representation that goods are sourced from that place, at least a significant proportion of the goods must be sourced from that location.  Whilst his discussion on this point was obiter, Murphy J considered 70% was an acceptable amount.
  • If you sourced a significant proportion of your goods from the place of origin in your company or brand name when you commenced trading but for various reasons ceased sourcing from that location later, at the time you cease sourcing a significant proportion of your goods from the location, the use of the place of origin in your company or brand name may be considered a breach of the Australian Consumer Law (ACL).

The Allegations

The ACCC brought proceedings against Kingisland Meatworks & Cellars Pty Ltd (King Island Meatworks), alleging it made false or misleading representations and was misleading and deceptive about the place of origin of the meat it sold.  The ACCC contended that the use of the name “King Island” conveyed to consumers that the meat being offered for sale by King Island Meatworks, or at least a significant proportion of it, was grown or raised or was otherwise from King Island.  The ACCC also brought proceedings against the manager and sole director of King Island Meatworks for being knowingly concerned in or a party to the breaches.  The Court agreed with the ACCC and found King Island Meatworks and its manager and sole director contravened the ACL.

The Facts

King Island Meatworks had promoted its business as “King Island Meatworks and Cellars” or “King Island Meatworks”, through various mediums including on its shop signage, by its logo, on its website, and in newspaper advertisements.  It also used the words “King Island” in its newspaper advertisements and on its website, and its domain name was www.kingislandmeats.com.au.

When King Island Meatworks had first began trading as a butcher in 2001, it had sourced a significant proportion of its beef, around 70%, from King Island.  In mid-2002, it stopped selling beef from King Island as it was unable to obtain sufficient supply from the King Island abattoir.  Following a letter from the ACCC expressing concerns about the description of the business, King Island Meatworks made some small purchases of King Island beef from 2011.

The Decision

The Court held that through the various mediums King Island Meatworks conveyed the representation that all, or at least a significant proportion, of the meat that it sold was grown or raised on or was otherwise from King Island.  The Court held this was not factually correct, as for a period of time until February 2011 none of the meat it sold was sourced from King Island, and thereafter only very limited amounts were sourced from King Island.

The Court recognised that King Island beef is positioned in the premium end of the Australian beef market, and it found the name “King Island Meatworks and Cellars” was specifically chosen because of the good reputation of meat from King Island and to convey the King Island origin representation.

The Court held that when the manager and sole director chose and first used the name King Island Meatworks and Cellars in relation to his business, the conduct was not misleading because the majority of the meat the business sold came from King Island.  This obiter from Murphy J suggests that if 70% or more of the goods of a business is sourced from the place of origin, it is arguable that the use of that place of origin in the company or brand name will not be misleading.

Arguments by King Island Meatworks

King Island Meatworks put forward a number of arguments which were rejected by the Court.  These included:

  1. The signs could have alternative meanings, such as that the proprietor was from King Island.
  2. Other butcher shops included a place in their name, such as “Perth Meats”, and these cannot be argued to say anything about the place of origin of the meat in the shop.  The Court disregarded the argument, as these places did not have a reputation for meat production, and so a consumer would understand the name to be no more than a description of the location of the shop.
  3. A consumer in King Island Meatworks’ shop would find meat identified as being from places other than King Island.  The Court held King Island Meatworks’ conduct had induced a potential customer into the shop, it was not the point that any misleading impression as to the origin of the goods was then corrected.
  4. The newspaper advertisements featured meats identified as coming from locations other than King Island, and so a reasonable consumer would understand that a significant proportion of the meat sold was not sourced from Kind Island.  The Court disagreed as the majority of the advertisements did not identify the place of origin.

Orders

The Court found King Island Meatworks had breached s18 and 29(1)(k) of the ACL and ordered:

  • declarations of contravention;
  • that King Island Meatworks be restrained for three years from representing that its meat is grown or raised or is otherwise from King Island when it is not;
  • that King Island Meatworks publish corrective notices at its premises;
  • that King Island Meatworks pay a pecuniary penalty of $50,000 and pay the ACCC’s costs.