The Representation
26 Having identified the audience to whom the representations were made, it is necessary to identify the representation or representations that are conveyed by the catalogues and the flyer. That requires considering the words used in the advertisement in their context and in their entirety, and giving those words a fair and reasonable meaning. It is not appropriate to give the words a strained, false or unreasonable meaning. Rather, the words ought to be understood in their ordinary sense.
27 The words will not be studied closely by the reasonable reader, but they will be read by that reader for the purpose of determining what it is that the retailer is offering.
28 If the words are qualified in any way, then that qualification must be recognised and given effect to as an ordinary and reasonable reader would. The words may have more than one meaning. If they do, the question to be determined is whether each meaning that is reasonably open amounts to a representation that is misleading or deceptive, or likely to mislead or deceive.
29 The applicant contended that there was no significant difference between the strike through price/sale price advertisement and the was price/now price advertisement. It contended that both conveyed savings representations and would have led a reasonable potential purchaser to believe that, in respect of each of the items that were subject to a strike through price or was price, the potential purchaser would save an amount, being the difference between the strike through price/sale price or the was price/now price, if the purchaser were to purchase the item during the period referred to in the catalogues or the flyer.
30 I think the first of those submissions is undoubtedly correct. There is no relevant distinction between the strike through/sale price advertisement and the was/now price advertisement. I do not think that the respondent contended otherwise. The issue in this case is whether the words, character, and numbers used in the catalogues and flyer conveyed the savings representation as defined by the applicant, or whether they conveyed the meaning given by the respondent, or some other meaning, to the relevant class of persons.
31 As I have said, it was contended by the respondent that the class of persons who would have read the advertisements comprised two groups; those persons who are aware of the possibility of obtaining a discount below the ticketed price on an item of jewellery because of their knowledge of the respondent's ongoing practice of giving discounts in the jewellery industry, and those customers who are unaware of the possibility of obtaining such a discount. The respondent contended that because of their knowledge of industry practice, a reader who falls into the first segment of the class could not be misled by the advertisements.
32 It was contended that for these "aware" customers, the statements in the sales catalogues would only have represented different initial offer prices and would not have constituted any representation as to the savings that the customer could obtain. The respondent submitted that the two prices merely constituted different prices from which one might start to negotiate, and that this would have been appreciated by the aware customer. Moreover, it was contended that the applicant had not established the size of the unaware class.
33 Persons who regularly buy jewellery of this kind are likely to be familiar with the manner in which retailers advertise that jewellery. On the other hand, persons who rarely buy jewellery of the kind advertised, but who read the advertisement to determine whether they should respond to the advertisement, are unlikely to be aware of the manner in which some retailers advertise jewellery and that some retailers offer discounts on the ticketed prices.
34 It follows, therefore, as the respondent has contended and the applicant has I think agreed, that the readership group will comprise both aware and unaware potential customers. The aware group, as noted earlier, will include those who are fully aware of marketing in the industry and some who are partly aware.
35 In Australian Competition and Consumer Commission v Ascot Four Pty Ltd [2008] FCA 1295; (2008) 250 ALR 467, Mansfield J considered a proceeding brought by the present applicant against Ascot Four Pty Ltd, which then operated the Zamel's retail jewellery chain. In that proceeding Mansfield J had to consider similar advertising, including advertising that had a strike through price and a sale price. His Honour determined that the relevant class in that case included reasonable consumers who might purchase the type of jewellery contained in the advertisement and were unaware of any discount culture in the jewellery market.
36 I agree with his Honour's reasoning and his conclusion. These advertisements would have been read by a very wide audience, which consisted of persons who might be likely to purchase jewellery of the kind and in the price range advertised. Those persons include persons who were aware and persons unaware of the manner in which Zamel's and other retailers advertised jewellery.
37 It is not possible to determine whether the majority of those readers were in the class of aware persons or unaware persons, but it is possible to say that the class would consist of both. Once that determination is made the question is: what would the advertisement mean to the two subclasses? It may be, as the respondent has contended, that the aware persons would know that they could buy the advertised jewellery at any time at the sale price or the now price, or at least at a price less than the was or strike through price. I accept that those persons would not be, nor be likely to be, misled or deceived by the advertisements.
38 However, an unaware person would understand the catalogues and the flyer in a different way. Unaware persons would read the catalogues and the flyer as meaning that if they purchased an item of jewellery contained in the catalogues or the flyer, during the period mentioned in the catalogues or flyer, they would save the amount between the two prices. In my opinion, that is the only reasonable reading available to a person who is unaware of the manner in which Zamel's and other retailers advertise their jewellery.
39 The respondent contended that the savings representation was not made out because the catalogues and flyer only referred to offer prices not sales prices. The respondent contended, in its written closing submissions:
39. … Specifically, the respondent contends that the statements in the sales catalogues made representations that the Strikethrough/Was Prices were the offer prices in the pre-catalogue periods.
40. The respondent is a jewellery retailer. It advertises jewellery by publishing and distributing catalogues. Some jewellery in the catalogues is advertised with a "Was $X"/Now $Y" price. The "Was" price is higher than the "Now" price. The "Was" price reflects the ticketed price in the period prior to the catalogue sale period.
41. The interests of retailers and consumers are served by goods being marked with price tags. This is true even in industries where discounting is widespread. The jewellery industry is one such industry. Other industries where discounting is commonly known to be rife include cars, consumer electronics and white goods.
42. The respondent marks all of its jewellery with price tags. The prices on those tags are set on the basis that they represent a competitive price compared to the price at which the respondent's competitors offer equivalent goods for sale. They represent the price at which the respondent is willing to sell the relevant goods without further discussion or negotiation.
43. The fact that goods are regularly discounted in an industry such as the jewellery industry does not, nor could it logically, dictate that the prices on the tags be constantly updated to reflect the last discounted price at which items were sold at any store or in that store or an average of discounted prices for those items across all stores. Discounts are not consistent and will not necessarily be applicable to all customers.
40 Before addressing whether the ticketed price and the advertised prices are merely offers, it is necessary to again address the audience to whom the advertising is directed.
41 The audience consists of the aware and unaware customers. The brochures and flyer could not be simply addressed to the aware customers because, as the respondent contended, the strike through or was price is known to them to be a price that will be discounted by the respondent. Moreover, the way in which the materials were distributed (by letterbox drop and availability in store and online) could not have restricted the addressing of the materials to simply the aware customers. The aware customers know that they will not make the savings represented in the catalogues or flyer by purchasing in the relevant sales period. The advertising cannot be directed to them because, as the respondent contended, they would not be induced by the representations to purchase the items. The most that the advertising could mean to the aware customers is that the items can be bought at the sale price or now price without having to negotiate to that price.
42 If a retailer that has a vigorous ongoing discounting policy (and for reasons I will give later, the respondent is such a retailer) engages in dual price advertising, the advertising must be for attracting the unaware customers. It is the unaware customers who, thinking the items advertised can be bought at a lower price than outside the sale period, will be induced to buy during the sale period.
43 The respondent is partly right. The catalogue offers the items mentioned in the catalogue for sale. The sale price or the now price is an offer. Indeed it may be that it is not even an offer but only an invitation to treat: Spencer v Harding [1870] LR 5 CP 561; Partridge v Crittenden [1968] 2 All ER 421. But whether the advertisement was an invitation to treat or an offer does not matter. It was no more in representational terms than a representation that the sale price and now price was the price the customer would pay for the item if the customer went into one of Zamel's stores and asked to purchase the item during the sale period. However, that does not mean that the statement that the strike through or was price is also only a statement of a previous offer.
44 The representation in the brochure is that the customer would have paid the strike through price or was price before the sale period started. The unaware customer cannot think that the strike through price, or was price, was an offer price that was subject to negotiation, because that would be to give to the unaware customer knowledge that would make that customer an aware customer. Those persons who read the catalogues and the flyer and who are unaware that Zamel's give a discount in respect of the items outside the sale period, must understand a reference to a strike through price or a was price as a reference to a price at which the items could be purchased, not an offer price.
45 It follows that I reject the respondent's contention that the reader, whether aware or unaware, would read the catalogues and flyer as representing that the strike through price, or was price, was merely the price at which the item of jewellery was offered for sale for a reasonable period prior to the relevant sales period. In particular, an unaware person would not understand the catalogues or flyer advertising a strike through price, or a was price, as merely an offer price.
46 In my view, the purpose of the advertising is to bring to the reader's attention the stark differences between the strike through or was price, and the sale price or now price. As the applicant contended, that is why the two prices appear in juxtaposition. They are presented in that way for the potential consumer to compare the two prices and to encourage potential consumers to buy within the period identified in the catalogues and the flyer.
47 My reasons in this regard are consistent with Mansfield J's reasons in Australian Competition and Consumer Commission v Ascot Four Pty Ltd, which were approved by the Full Court in Ascot Four Pty Ltd v Australian Competition and Consumer Commission [2009] FCAFC 61; (2009) 176 FCR 106.
48 In the latter case, the Full Court said at [25]:
… But when the reasons are read as a whole it is clear that the primary judge considered that the strike through price meant the price at which the items had been offered for sale and which the relevant consumer of the items would have paid before the sale (in the same sense as explained by Moore J in Prouds Jewellers 75 IPR 306; [2008] FCA 75, namely, the price the consumer would have expected to pay before the sale). This is apparent from the primary judge's focus, in his description (at [100]) of the representation, upon the saving to be made by the consumer him or herself.
49 In my opinion, the representation made in the catalogues and the flyer is the same representation as that made in Australian Competition and Consumer Commission v Ascot Four Pty Ltd, and is of the kind identified by the Full Court in the passage above.
50 The respondent contended that the representation alleged by the applicant had not been made in the catalogues and the flyer for two reasons. First, the respondent submitted that the strike through price or the was price represented the price at which the item had previously been offered for sale. That is, the strike through and was prices were simply "offer" prices. Secondly, the respondent contended that the applicant had failed to establish that readers of the catalogues and the flyer would have understood the dual pricing used in the catalogues and the flyer as representing that the consumer would save the difference between the two prices (i.e. the difference between the strike through and the sale price, and the difference between the was price and the now price).
51 In respect of the first contention, the respondent relied upon Moore J's decision in Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd [2008] FCA 75; (2008) 75 IPR 306 and the decision of the Full Court approving that decision in Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd [2008] FCAFC 199.
52 At first instance Moore J, considering the position of the consumer unaware of the availability of a discount from the ticketed or market price of jewellery items when confronted with advertising involving dual pricing, said at [37]:
It is to be recalled that ACCC invited consideration of a consumer who did not appreciate that discounts were or would be available resulting in a price less than the regular marked price. I accept that this hypothetical consumer would, when seeing a "was" price in juxtaposition with a "now" price in relation to an item of jewellery which the consumer might be interested in purchasing, contemplate what savings he or she might achieve if the item was purchased during the sale. However, I doubt that such a hypothetical consumer would have viewed the "was" price as either a bare sale or a bare offer price as a matter of characterisation. Rather, it is probable, in my opinion, that the hypothetical consumer would have seen the two prices (the "was" and the "now" price) in juxtaposition and, in the context of considering what savings might be achieved, would have understood that before the sale to which the catalogue related, he or she would have bought the item for the "was" price had it been purchased then. But now, during the sale period, he or she would be able to buy the item at the "now" price. The difference between those two prices would be seen by the hypothetical consumer as the savings that would be achieved by him or her by purchasing an item during the sale period. The focus of the hypothetical consumer's consideration of the pricing in the catalogue would, in the context of savings to be made, be on the benefits flowing to him or her by the sale to which the catalogue was directed. Implicit in this analysis is that the "was" price was the price at which the goods were being offered for sale in the period between the promotional sale and thus the price at which they would then have been bought.
53 Justice Moore considered the effect of that finding on the case as pleaded. He said:
[45] In my opinion, the relevant hypothetical consumer would have made the erroneous assumption that had he or she sought to buy any one of the 17 items in the period immediately before the Summer of Love catalogue sale commenced (viz. 29 January 2006) he or she would have purchased it at the "was" price. That assumption would be erroneous because, notwithstanding that such a consumer would probably have purchased an item at the offer price, none of the items were, at that time, being offered for sale at the "was" price. It is improbable, in my opinion, that the hypothetical consumer would have viewed the "was" price as the price at which the goods would have been purchased by him or her at some indeterminate time before the sale such as the period preceding 25 December 2005 for 15 of the items, or 13 November 2005 or 4 December 2005 when two items had been offered for sale at the "was" price.
[46] However, does this conclusion lead to the ultimate conclusion that the Level of Saving Representations, as pleaded, was made? It is convenient, at this point, to digress and mention one matter raised by Prouds. It is important to the disposition of this case. Prouds submitted that the issues in this case were narrow with precise allegations in respect of 17 items and five specific representations. Prouds submitted the proceedings were not "an at-large inquiry" as to whether using "was" and "now" pricing is, in any way, misleading. Prouds referred to several authorities. In its written outline of closing submissions, it referred to Truth about Motorways Pty Ltd v Macquarie Infrastructure Investment Management Pty Ltd (1998) 42 IPR 1 at 3, Phoenix Court Pty Ltd v Melbourne Central Pty Ltd [2007] FCA 1101, Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR 41-522 per Burchett J at 42,679. In oral submissions Prouds referred to Astrazeneca Pty Limited v GlaxoSmithKline Australia Pty Limited [2006] FCAFC 22, which was said to demonstrate that a matter raising s 52 can turn on the specificity of pleadings. Prouds' submission must, at a level of generality, be accepted.
[47] The pleading alleged that the Level of Savings Representations were false because they erroneously represented the amount a consumer would save. As pleaded, the saving falsely represented was the difference between the amount represented by the "now" price and the amount usually paid by consumers in the eight weeks preceding the publication. The case advanced by ACCC was based on the actual sales to consumers which, overwhelmingly in relation to most of the 17 items and entirely for the remainder, were at a sale price less than the "was" price. However, in my opinion, this is not the representation conveyed to the relevant hypothetical consumer by the juxtaposition of the "now" and the "was" price as they appeared, in context, in the catalogue. As I indicated earlier, the hypothetical consumer would not, in my opinion, have contemplated that the "was" price concerned what consumers actually paid if contemplating what savings the particular hypothetical consumer would achieve. That is, the hypothetical consumer would not have taken the "was" price as signifying the price actually paid by consumers including consumers who knew that discounting and bargaining was a feature of the jewellery industry and, accordingly, had negotiated or secured a price less than the regular market price. The hypothetical consumer would, when considering what savings might be made by purchasing during the sale, have viewed the "was" price as the price he or she would have paid had they bought the item before the sale period. Though, as I earlier indicated, this would have involved an erroneous assumption, it is not the case ACCC pleaded and presented.
[48] Accordingly, the representation as pleaded by ACCC is not established in relation to the Summer of Love catalogue. The case of ACCC was based on the "was" price being treated as a reference to prices actually paid including prices paid by consumers who were aware of discounting and negotiated a price less than the regular market price. It is not, in my opinion, an assumption that should be made.
54 The proceeding before Moore J was decided on the applicant's pleadings and the case advanced by the applicant. Moore J found, as he said in [47] of his reasons, that the savings representation he identified in the second last sentence of that paragraph was not the case pleaded and presented by the applicant. However, in this case, the applicant has pleaded the case that Moore J found was erroneous.
55 The Full Court approved Moore J's decision, holding that it was open to him to find "that the relevant hypothetical consumer who was ignorant that discounted prices lower than the market prices were readily available from Prouds [the respondent] would have focused on the benefits available to him or her during the currency of the sale promoted by one or other of the catalogues": at [31].
56 In Australian Competition and Consumer Commission v Ascot Four Pty Ltd it was accepted that the then owner of Zamel's, Ascot Four Pty Ltd, had offered for sale the items in that catalogue at the strike through price before the sale period. The Full Court in Ascot Four Pty Ltd v Australian Competition and Consumer Commission considered the decision of Moore J and of the Full Court in Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd and said at [22]:
[22] The reasoning of Moore J and the Full Court in Prouds Jewellers turned on the ACCC's particular pleadings of the representations allegedly made and why they were false. As noted, Moore J rejected the idea that the "was" (or strike through) price would be seen as a "bare" offer or sale price. Rather, the purchaser unaware of the discount culture would have understood the two prices in juxtaposition to represent that he or she would obtain the benefit of a saving between the "was" (or strike through) price (being the price the purchaser unaware of the discount culture would have paid before the sale) and the "now" (or sale) price. In that context Moore J accepted that "the 'was' price was the price at which the goods were being offered for sale in the period before the promotional sale and thus the price at which they would then have been bought" (at [37]). Accordingly, Moore J's conclusions do not support Ascot Four's submission, as summarised in 14 above, that the strike through price represented no more than an offer price (see further 29 below).
57 Thus the Full Court in Ascot Four Pty Ltd v Australian Competition and Consumer Commission distinguished Moore J's decision and the decision of the Full Court in Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd on the way in which the case was pleaded and presented, and the particular finding made by Moore J. I accept the applicant's contention that the savings representation in the catalogues and the flyer is the same as that found by Mansfield J to have been made in Australian Competition and Consumer Commission v Ascot Four Pty Ltd. It follows that I accept the applicant's contention that the unaware potential customer would have understood the strike through and sale prices, and the was and now prices, as representing the saving between the two prices that would have been available to the consumer. That is the same representation found to have been made in Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd.
58 The representation pleaded by the applicant is not that the hypothetical consumer would understand the catalogues and the flyer as representing a saving between the now or sale price and the prices actually paid by consumers immediately before the sale. This was the representation that Moore J found the ACCC had pleaded in Australian Competition and Consumer Commissioner v Prouds Jewellers Pty Ltd: see at [47] - [49]. However, in that case Moore J found that the hypothetical consumer would, when considering what saving might be made by purchasing during the sale period, have viewed the was price as the price he or she would have paid had they bought the item before the sale period. His Honour found that while this would have involved "an erroneous assumption" on the part of the hypothetical customer, it was not the case that the ACCC had pleaded: at [47].
59 As I have said, the representation alleged by the applicant in this case is that the hypothetical consumer would have saved the difference between the strike through and the sale price, and between the was price and the now price. This is the same representation that was found by Mansfield J in Australian Competition and Consumer Commissioner v Ascot Four Pty Ltd: at [100]. In that case Mansfield J found that the representation was misleading and deceptive because sales of the relevant items in the period preceding the sales periods were at prices less than the strike through price. His Honour said at [110], "[t]he evidence shows that the defendant's strike through price had never been its actual previous price in respect of any of the items and had never been its normal previous price."
60 Contrary to the respondent's submission, the strike through price or was price was not displayed to indicate an historical price that was no longer a relevant price for the particular item of jewellery. I also reject the respondent's contention as contained in paragraph 65 of its amended defence that the strike through price and was price represent the offer price of the items of jewellery prior to the relevant sales period. The strike through price and the was price are shown to tell the class of persons who read the catalogues and the flyer that the strike through price and the was price were the prices at which the items could have been purchased before the relevant sales period.
61 I also reject the respondent's second contention, namely that the applicant failed because it did not lead any evidence from a consumer from the class of persons to whom the representations were made (i.e. readers of the catalogues and the flyer) that the consumer understood the dual pricing in the catalogues and the flyer as the applicant contended. The respondent contended that the evidence it led from Mr Murphy, the Chief Executive Officer of the respondent, was that he was not aware of any consumer complaints concerning the respondent's pricing, which meant that the applicant's failure to call any evidence as to the understanding of the audience leads to the conclusion that the applicant's case was bound to fail.
62 The applicant is not bound to call the evidence contended for by the respondent, but may of course do so if the evidence is available and if the applicant considers that the evidence would assist the Court in reaching its decision as to whether the representations amount to misleading or deceptive conduct: Taco Company of Australia Inc v Taco Bell Pty Ltd at 202 per Deane and Fitzgerald JJ. The applicant is entitled to ask the Court to make a finding as to what a reasonable member of the class of persons identified by the Court would make of the advertisement and would understand the representation contained in the advertisement to mean. The Court must determine, objectively, the representation that was conveyed, and whether the representation is misleading or deceptive, or likely to mislead or deceive. Evidence that members of the public have actually been mislead is neither conclusive nor necessary: Australian Competition and Consumer Commission v Ascot Four Pty Ltd at [90] and [97] per Mansfield J; Ascot Four Pty Ltd v Australian Competition and Consumer Commission at 34; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd at 198-199 per Gibbs CJ; Taco Company of Australia Inc v Taco Bell Pty Ltd at 202 per Deane and Fitzgerald JJ. The applicant proceeded on that basis. It follows then that the evidence led by the respondent from Mr Murphy is not dispositive.
63 I accept the applicant's contention that the representation that was made in the impugned catalogues and flyer is that a purchaser of an item of jewellery in the catalogue or flyer period would make a saving, which is represented by the difference between the strike through price and the sale price, and between the was price and the now price. The savings representation is made out.
64 The last question to be determined is whether, as a matter of fact, the savings representation I have found to have been made in the catalogues and the flyer is misleading or deceptive, or likely to mislead or deceive. To answer this question it will be necessary, having regard to the authorities, to consider the evidence adduced by both parties, including the sales data for the relevant items in the periods leading up to the catalogues and the flyer.