Case Law: Seafolly Pty Ltd v Madden [2012] FCA 1346 (Trade Practices)

The Federal Court has handed down its judgment in the case of Seafolly Pty Ltd v Madden [2012] FCA 1346, ruling that the Respondent has, in trade or commerce, engaged in conduct that was misleading and deceptive.

The applicant, Seafolly, alleged that the respondent, Ms Leah Madden, made a number of false allegations against it, relating to the design of ladies’ swimwear marketed by Seafolly - specifically, that Ms Madden made public statements which suggested wrongly that Seafolly had copied some of her designs.

Seafolly’s Further Amended Statement of Claim pleaded causes of action:

· For misleading and deceptive conduct;

· In injurious falsehood; and

· For copyright infringement.

Ms Madden cross-claimed against Seafolly for defamation and misleading and deceptive conduct. These were based on the statements in Seafolly’s press releases that she had made her various allegations against Seafolly with the intent of maliciously damaging Seafolly.

In its defence to the cross-claim, Seafolly pleaded Polly Peck (Polly Peck Holdings Plc v Trelford [1986] 1 QB 1000) and contextual truth defences. In response to this, Tracey J found that Ms Madden did act maliciously in the sense recognised by the authorities, and did so in circumstances where she must be taken reasonably to have known (or been blind to the issue) that her statements would be damaging to Seafolly’s commercial reputation. What was said by Seafolly was substantially true, and therefore, the Court chose to uphold Seafolly’s defence of justification. It was also reasoned that the statements were not protected by the defence of fair comment.

Tracey J concluded that Seafolly’s claim that Ms Madden’s statements about it having copied her garments being made maliciously for the purpose of injuring Seafolly were true and were not apt to mislead. As such, Ms Madden’s cross-claim under the TP Act also failed.

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