Consideration
71 In this case, context is of importance in evaluating whether the alleged representations were impliedly made because the imputations alleged by the ACCC do not arise on the express terms of the language used, if considered by reference to the language alone and without regard to context. However, when assessed in context, in my view the ordinary and reasonable members of the relevant class would have understood the promotional statements to convey the representations alleged.
72 First, the eDMs advertised the Tax Time Promotion together with other promotions that Kogan was conducting at the time, including the EOFY sale, which was a two-price comparison sale. Examples of the eDMs are at Annexure "B". Looking at the eDMs as a whole, the dominant message conveyed was a reduction or discount on the prices of the products offered for sale from the prices at which those products had previously been offered or would be offered for sale in the future. That dominant message was conveyed by the combination of the following in the layout of the eDMs:
(a) the feature of the advertisements was the display of the TAXTIME banner in a prominent position either at the top or at the bottom of the page;
(b) the Tax Time Promotion was also offered concurrently with the EOFY sale, which was a two-price comparison promotion and advertised under headings such as "EOFY deals", "EOFY SALE ONLY UNTIL JUNE 30", "Top 10 EOFY deals", "Blockbuster EOFY deals" and "the Best of the Big Brands: the hottest deals of EOFY";
(c) the promotional statements - "use code TAXTIME to reduce prices by 10% at checkout" - appeared in the same context as the promotion of two-price comparative pricing for products, e.g. "was/now", "price/RRP", "now/beat the price rise" and statements such as "ALREADY ON SALE", "Already Huge Discounts - Reduce By an Extra 10%!";
(d) in some instances, the two-price comparisons appeared in conjunction with the statement "using code TAXTIME"; and
(e) as well, the advertised prices for products to which the Tax Time Promotion applied were asterisked, identifying that the price was intended to refer to the discounted price.
73 The eDMs and SMSs sent to subscribing consumers enabled the consumer to click directly through to the website. The eDMs also explicitly and implicitly compared prices to which the Tax Time Promotion discount applied with other prices, from which the ordinary and reasonable member of the relevant consumer class was likely to conclude that the price which would be discounted using the Tax Time Promotion code was the price at which the product had been available for sale before the promotion or would be available for sale after the promotion. As stated, the eDM messages also included statements such as:
(a) under the heading "ALREADY ON SALE", the words "Already Huge Discounts - Reduce By an Extra 10%!";
(b) "#frugalfriday - 48 hours left!" at the top of the page; and
(c) "Big Brand Tech Bargains Ends Midnight Tonight!" at the top of the page, with the words "Use Code TAXTIME to reduce prices by 10% at checkout" and the words "ends midnight" at the bottom of the page.
74 Secondly, Mr Shafer's evidence was that the discount/coupon code form of promotion does not make a comparison against any previous or future price for the product or any competitor price for the product. But the advertised prices of products to which the Tax Time Promotion applied implicitly conveyed a two-price comparison because the advertised prices were the prices with the Tax Time Promotion discount of 10% already applied, with an asterisk noting "using code TAXTIME". In some cases, the comparison was explicit. For example, an advertisement for smartphones showed the Galaxy S9 phone with the price $809 "don't pay $1199" and the iPhone 8 plus "from $1106*" "don't pay $1229", both appearing beside the words "using code TAXTIME".
75 Thirdly, the Tax Time Promotion was a themed promotion that was time-specific and time-limited, from which consumers would have understood that there was a limited opportunity to obtain the reduced price.
76 Fourthly, some of the products advertised as part of the EOFY sale included products to which the Tax Time Promotion was shown also to apply. For example, the advertisement for small fridges showed:
77 I accept the ACCC's submissions that the advertisements for the Tax Time Promotion, considered in context, blurred what Kogan described as the "key difference" between coupon codes and two-price comparisons, being that a coupon code "operates at the checkout after the price identified on the website, whereas the price comparison promotion offers a reduction before the checkout". Further, although the ACCC did not dispute that the ordinary and reasonable member of the relevant class of consumers may have had some experience with two-price comparison advertising and/or discount or coupon codes generally, Kogan did not adduce evidence of any other coupon code promotions it offered or give any examples of such promotions, aside from evidence about how the Tax Time Promotion operated. In other words, it cannot be taken from the form of the advertising of the Tax Time Promotion that the ordinary and reasonable consumer would have understood that the discount at checkout was not a discount on either the price at which the product was offered for sale by Kogan before the promotion commenced or the price at which the product would be offered for sale after the promotion had concluded. Rather, in my view, the ordinary and reasonable consumer in the relevant class would be likely to have understood that the Tax Time promotion offered a 10% discount at checkout on past prices or future prices for the products to which the coupon code could be applied.
78 There was evidence given by Mr Shafer about the variability of Kogan's prices, the frequency with which those prices changed and the reasons for the variability. Even if the ordinary and reasonable consumer in the relevant class understood that prices regularly changed on Kogan's website, such knowledge does not gainsay the implication of the representations alleged.
79 There was also evidence given by Mr Shafer that coupon code promotions were "commonly used" by other major retailers in or around June 2018, including eBay, Amazon and Alibaba and that Australian consumers could find out from websites such as OzBargain, Cuponation Australia and Finder - Coupon Code finder what discount code promotions or other deals were on offer from the various online retailers, and in this way were able to compare the offers. Mr Shafer deposed that consumers were also able to compare prices for various products sold by Kogan and its competitors on dedicated price comparison websites such as GetPrice and Google Shopping, though as Mr Shafer agreed in cross-examination, these websites would not enable a consumer to track changes in a retailer's prices over a period of time. The ACCC made submissions as to why the Court should give little weight to this evidence but it is unnecessary to address those submissions. Even if consumers understood how discount codes worked generally and could or did compare the coupon code promotions on offer at any one time, it does not follow that consumers would not have understood the promotional statements to convey the representations alleged.
80 Further, contrary to Kogan's submission, the recreation of the checkout process did not make it clear that the Tax Time Promotion code "operated separately and in addition to any discount offered by Kogan relative to past prices for the specific product" in that the prices at steps 2, 3, 4 and 5 outlined above at [36] displayed "was/now" or strike-through prices where, if the Tax Time Promotion code was applied at step 4, then at step 5 the "was" stayed the same but the "now" price was reduced by a further 10%. Also at steps 4 and 5, the website displayed the words "your total savings in this order" with a dollar amount, described if the consumer hovered their cursor over the icon, as "[t]he total savings is the sum of all the savings on, and discounts that have been applied to, the items in your order". If the Tax Time Promotion code was applied at step 4, the total savings displayed at step 5 would increase, but the savings from the Tax Time Promotion code were not identified separately. Further, step 4 required consumers both to enter the discount code and click the button "add discount" to obtain the Tax Time Promotion discount, which would take the consumer to step 5. If a consumer entered the code and then clicked "checkout" without also clicking "add discount", the code would not be applied and the consumer would be taken straight to step 6. Step 6 (the checkout page) did not display the "was" amount, the savings or whether any discount codes had been applied. Mr Shafer in cross-examination stated that the customer "might" also have seen the price reduction from the Tax Time Promotion at step 6 (and the recreation might have missed that feature), but he agreed he couldn't be confident about that. It is also reasonable to infer from Kogan's evidence that 48% of all sales orders during the Tax Time Promotion were made without the discount code that consumers may have been confused about how the discount code applied, in that consumers may have expected that the discount had already been applied to the products prior to checkout because the advertised price in the eDMs included the "TAXTIME" discount already applied, and thus may not have understood they were required to add the coupon code at checkout. As stated, whilst consumers in the relevant class may have had some experience with two-price comparison advertising and coupon code promotions generally, the distinction between the two forms of promotion was blurred in the Tax Time Promotion because the advertisements for the Tax Time Promotion, which was a discount code promotion, used two-price comparisons including "was/now" pricing and "don't pay" price comparisons in conjunction with the statement "using code TAXTIME".
81 Neither Woolworths nor Specsavers advances Kogan's case. In Woolworths, the ACCC alleged that the respondent, which marketed its products as "Biodegradable and Compostable", represented to consumers that the products would biodegrade and compost within a reasonable period of time. Justice Mortimer did not accept the ACCC's argument that the words on the labelling represented that the products would breakdown or compost "within a reasonable period of time", holding there was simply no objective basis for the ACCC's asserted temporal aspect of the representations: Woolworths at [195]. That case, however, turns on its own facts. In that case, the packaging in issue carried the label "biodegradable and compostable". Justice Mortimer accepted that the phrase conveyed the representation that the products were capable of biodegrading if sent to landfill or a rubbish dump and could be composted by one or more of the composting methods likely to be familiar to consumers, but did not consider there was a temporal aspect incorporated into the representations themselves: Woolworths at [193]. Her Honour held that what consumers might or might not understand about the time biodegradation processes or composting processes might take was beside the point in terms of the Court determining what was conveyed to consumers by the representations: Woolworths at [193]. Her Honour also considered that the ACCC's case attributed to consumers who were purchasing the products in question, which were clearly labelled as not suitable for re-use, a level of reflection, knowledge and consideration that her Honour did not consider was objectively realistic in the context in which the products were likely to have been purchased: Woolworths at [194]. Her Honour reasoned that the products were intended to be disposed of after one use and the use of the phrase "biodegradable and compostable" on the labelling did not convey anything about how long the products might take to degrade, or turn into compost. Her Honour considered it unrealistic to assume consumers who were purchasing the products would have turned their minds to such matters: Woolworths at [194]. In contrast, in this case, for the reasons already given, I have concluded that looking at the eDMs as a whole, the dominant message conveyed was a reduction or discount on the prices of the products offered for sale from the prices at which those had previously been offered or would be offered for sale in the future. In other words, the form of the advertising did convey a "temporal aspect" to the representations, unlike in Woolworths where the Court held that the phrase "biodegradable and compostable" "spoke to the capacities and inherent qualities of the Products, and no more": Woolworths at [195].
82 In Specsavers, the respondent advertised a promotion offering certain discounts on spectacle frames with the purchase of prescription lenses. The applicant alleged that the advertisements conveyed a representation that the goods were on sale for the relevant discount off the normal price at which they had been sold or offered for sale for a "reasonable period" before the advertisements. The text of the advertisement recited:
'Why buy 2 pairs of spectacles when you can usually buy
1 pair for the price of 2 pairs elsewhere'
'70% off all frames up to $200
with the purchase of prescription lenses. Offer valid to 31/12/09. Not available with any other offer'
'40% of all frames above $200
*with the purchase of prescription lenses. Offer valid to 31/12/09. Not available with any other offer'
'Buy Better Elsewhere?
I DON'T THINK SO!'
83 The applicant's primary contention was that references in the advertisements to "40% off" and "70% off" necessarily conveyed representations that the goods were "on sale" for the relevant percentage discount off their "normal" price, or the price at which the goods had been sold or offered for sale for a reasonable period before the publication of each advertisement. Justice Ryan rejected the alleged representation, holding that the representation was that an item (the frames) was available at a lower price if the consumer chose to buy it at the same time as, or in conjunction with, another item (the lenses): Specsavers at [13]. His Honour found that the offer was of quite a different nature to price comparison advertising and did not involve a previous price comparison or compare the prices of the relevant frames with their former or future prices: Specsavers at [18]. That is not the case in this case for the reasons already given.
84 I also reject Kogan's contentions concerning what the consumer would have understood the "reasonable period" to mean. The ACCC's case was that the terminology of "a reasonable period" was not to delineate a fixed period for which prices must remain stable before or after a promotion, but to capture the expectations of reasonable consumers that a reduction in prices or discount be a genuine reduction or discount, from the price at which products were or would be available for sale before and after the promotion. The ACCC contended that what is reasonable would depend upon the products and circumstances in respect of which the representations were made but that did not, as Kogan contended, render the representations vague or lacking in an objective basis such that it could not be conveyed to an ordinary or reasonable consumer.
85 In response, Kogan first argued that the ordinary and reasonable consumer in the relevant class would know that prices on the Kogan website are subject to regular change. There was evidence to support the likelihood of such knowledge given by Mr Shafer, who deposed to the fact of, and reason for, variability in prices of products available on Kogan's website and the frequency of change. However, as submitted by the ACCC, there was nothing in Mr Shafer's evidence to suggest that the general price variability in Kogan's products bore any resemblance to the magnitude, direction and timing of price changes of the affected products before and after the Tax Time Promotion - that is, deliberate price increases and decreases timed to coincide with the Tax Time Promotion. Furthermore, Kogan did not dispute the accuracy of Annexure 3 to the ACCC's concise statement, which showed that the prices of most of the 621 affected products remained unchanged, in most cases for at least 11 to 13 days before 26 June and after 2 July 2018. Kogan instead argued that annexure DS-1 to Mr Shafer's first affidavit, of which Annexure 3 was a subset, was evidence of a small (approximately 4,408 products), non-representative sample of the products on the Kogan website that were subject to the Tax Time Promotion (78,111 products in total) and it showed, in any event, there was significant price variability for the vast majority of products on the Kogan website in the two weeks before the relevant period. That may be so, and it may be expected that the ordinary and reasonable consumer would expect some price variability, but Kogan's submissions missed the point. Whilst price variability might be expected, the ordinary and reasonable consumer who saw the advertisements would not have understood the "price" to be a price increased by Kogan so as to offset any genuine 10% discount from the promotion. Contrary to Kogan's submission, the finding that the representations alleged were made does not conflate the impugned conduct with the character of that conduct as misleading in relation to the 621 affected products, but rather is to identify what is conveyed by the promotional statements in the context in which they appear.
86 It follows that I also reject Kogan's submission that no ordinary and reasonable consumer would understand the representations alleged by the ACCC were conveyed by the promotional statements in the context where the alleged representations must apply to the whole of the 78,111 products that were subject to the Tax Time Promotion, and in the context of their knowledge that Kogan continually runs promotions and the prices on the Kogan website are subject to regular change. The point made by the ACCC was that in respect of the 621 affected products, the prices of those products were intentionally increased the day before the Tax Time Promotion and intentionally decreased on 2 July 2018, thereby eroding a genuine 10% discount.
87 I also reject Kogan's submission that no weight should be placed on the consumer complaints relied on by the ACCC and consider that some weight can, and should, be given to the consumer complaints: Coles at 82 [45]. Whilst not all of the complaints relate to the affected products, and as pointed out by Kogan, the number of complaints relative to the numbers of consumers to whom the marketing material was sent (approximately 10 million emails and 1 million mobile numbers) is miniscule and, in some instances, it would appear some of the complaints were not well-founded, each of the complaints is consistent with ordinary and reasonable consumers in the relevant class being aware of the prices before the Tax Time Promotion and understanding the statements as meaning that the prices from which they would receive a 10% discount were the prices at which the products had been advertised for sale before the Tax Time Promotion so as to provide a genuine 10% discount. To the extent that consumers making those complaints became aware of the price decreases following the Tax Time Promotion, their response to the price decreases is also consistent with their having understood the Tax Time Promotion in the way described by the Limited Time Discount Representation.
88 It appears also that staff at Kogan were conscious that the Tax Time Promotion may be understood in the way described by the 10% Discount Representation and the Limited Time Discount Representation. The evidence was as follows:
(a) on 29 May 2018, Kogan's director of marketing, Casey Dunn, instructed marketing staff by email that "We'll be running a 20% off Dick Smith AU eBay promo… The dates for adjusting and freezing prices are still to be determined… Between the 27th and 30th we'll run coupon offers on Kogan AU… When it comes to creating the eDMs, we need to be careful with the messaging in the artwork and subject lines. e.g. - can't say 'save' or 'discount' - can say things like 'Take 10% off with code XXX'…";
(b) although Mr Dunn changed his mind about whether Kogan could use the expression "10% off", he continued to refer to the promotion in those terms. On 26 June 2018, Mr Dunn instructed marketing staff by email that "10% off storewide starts tomorrow… You'll need to be very careful with the SMS wording, because prices have been increased", but when marketing staff proposed an SMS including the words "10% off almost everything!" (consistently with Mr Dunn's advice on 29 May 2018), Mr Dunn replied "Can't say 10% off". Marketing staff then emailed Kogan executives (including Mr Shafer) with the wording that was ultimately used in the SMS, saying "as discussed with [Mr Dunn], we can't use '10% off' messaging as some prices may have increased";
(c) Kogan's internal marketing department described the Tax Time Promotion as a "10% off discount", and Ruslan Kogan, Kogan's CEO, described it to Mr Shafer and others as a "10% off code for end of financial year"; and
(d) Kogan's marketing department appeared to recognise that it should not continue to advertise sale products if the prices of those products were increased. For instance, on 29 May 2018, when advised of the Tax Time Promotion, a member of the marketing staff, Caroline Lawson, asked "what will this mean in terms of EOFY SKUs [end of financial year stock keeping units]?", to which Mr Dunn replied "It's very likely that we'll need to raise some of the prices in the collection in mid-late June. If and when we do, we'll take all of the banners that link to it down and replace them with something else. e.g. 'EOFY Special: Get free shipping with code XYXY'"; Ms Lawson replied "so we won't be actually advertising the sale collection if prices go up, just specific categories which has stayed low or free shipping etc? This sounds like a good plan" and Mr Dunn replied "exactly".
89 Such evidence carries no probative weight in itself save that it is supportive of the representation alleged by the ACCC.
90 Finally, I also reject Kogan's submission that the alleged implied representations failed to grapple with the relevant contextual matters, namely the end of the financial year and changes to GST legislation that occurred on 1 July 2018. First, the GST changes did not come into effect until 1 July 2018 and, in the circumstances, the ordinary and reasonable members of the target audience would not have expected the listed price during the Tax Time Promotion (which ended on 30 June 2018) to have increased as a consequence of the introduction of that legislation. Secondly, the EOFY sale was a relevant contextual matter, advertising discounted prices to the end of the financial year with express price comparisons, including for products subject to the Tax Time Promotion.
91 Accordingly, I accept the ACCC's submission that the representations are both reasonably open and likely to be the meaning drawn by a not insignificant number of ordinary and reasonable consumers in the relevant class.