Loyalty Pacific P/L v Jewel Food Stores P/L Summary

997

JlpGMENT NO. ....,.,....,,.... I ,

IN THE FEDERAL COURT OF AUSTRKGIA

VICTORIA DISTRICT REGISTRY	No. VG 426 of 1994
GENERAL DIVISION)
B E T W E E N :

LOY?iLTY PACIFIC PTY LIMITED

Applicant

- and -

JEWEL FOOD STORES PTY LIMITED

Respondent

JUDGE :	Heerey J
DATE:	1 December 1994
PLACE :	Melbourne

EX TEMPORE REASONS FOR JUDGHENT

I have listened carefully to the thorough argument

Mr Harrowell has advanced, but I see no basis for discharging the injunction I made yesterday. As I said in the course of argument, there is no doubt that there is plenty of room for argument as to the benefit of the Fly Buy scheme, and the value in money terms of it to various hypothetical consumers may vary. It may well be that some people are better off buying groceries at a cheaper supermarket like Jewel. But that is not really the point of this case.

There was an advertisement which contained a very specific

claim, namely that according to the Department of Consumer

Affairs in one Fly Buy program you would have to spend around

$17,000 over four years to earn one Melbourne to Sydney return

ticket. The respondent in no way resiles from that assertion.

It has not, for example, urged upon the Court the alternative

of ,an advertisement in the next few days excluding that

offending sentence. More importantly, to my mind, the

respondent has been on notice since well before these

proceedings were commenced that the applicant alleged the

advertisement was misleading and-deceptive. If the

advertisement was prepared on the basis of an actual statement

by the Department of Consumer Affairs to the effect alleged,

then it would have been a very simple matter to produce that

document, and it would have been a complete refutation of the

applicant's claim.

What has happened is that the respondent has produced a large number of press cuttings and the like, but nothing resembling a statement of the kind referred to in the advertisement. On the face of it, and I stress that I am deallng with this on an

interlocutory hearing, and not making any final decision, it

would appear that the advertisement was prepared to convey the

appearance of recording an authoritative statement by the

Department, without any basis at all.

The advertisement was solely concerned with an attack on the applicant's Fly Buy scheme. Therefore the injunction does not have the effect of - as it was put - "knocking Jewel out of the pre-Christmas traden. No doubt Jewel has its ordinary advertising program and that of course is quite unaffected by this injunction.

There was mention of the consumer interest, but I think here

the consumer interest coincides with that of the competing

trader. The consumer is entitled to expect marketing

information and advertising that is accurate, so that choices

that are made are not made as a result of misleading or

deceptive conduct.

Because there is room for almost endless argument as to who are "typical" consumers, and how much they would need to spend to benefit from the Fly Buy Scheme, a statement purporting to come from an authoritative and independent body like the Department of Consumer Affairs would have all the more impact. There is special importance for consumers and competitors alike in the truthfulness of such a statement.

I do not see any significance in the fact that the Federation of Australian Commercial Television Stations (FACTS) has approved the advertisement and declined to revoke its approval. While I accept that FACTS is an independent body and in some circumstances its approval may be relevant, it is clear that its approval in terms is made subject to the Trade

Practices Act.

There is no suggestion that FACTS engaged in

an inquiry of the nature which this Court has to in

ascertaining whether the statements made in the advertisement

are factually correct.

So for those reasons I decline to discharge the injunction. I will reserve the costs. In a sense this is in substance really a continuation of yesterday's hearing.

I certify that this and the

preceding 3 (three) pages

are a true copy of the

reasons for judgment of his

Honour Mr Justice Heerey.

Auuearances

Counsel for the applicant:	R Merkel QC with I
Martindale
Solicitor for the applicant:	Dunhill Madden Butler
Counsel for the respondent:	J G F Harrowell
Solicitor for the respondent:	Hunt & Hunt
Date of hearing:	1 December 1994

In the Federal Court of Australia, Loyalty Pacific P/L filed an application against Jewel Food Stores P/L, challenging an advertisement that was deemed misleading and deceptive. The matter was heard in the Victoria District Registry of the General Division by Justice Heerey. The central dispute was whether an advertisement by Jewel Food Stores, which implied that a significant amount of spending was required to benefit from a competitor's loyalty scheme, was misleading and potentially deceptive to consumers.

The primary legal issue was whether the advertisement by Jewel Food Stores was indeed misleading or deceptive, as claimed by Loyalty Pacific P/L. The court had to determine if the advertisement's claim about the amount of spending required to benefit from a competitor's Fly Buy program was accurate and substantiated, and if it misled consumers. The court also had to consider whether the injunction, which restrained Jewel Food Stores from airing the advertisement, should be discharged.

Justice Heerey declined to discharge the injunction. The court found that the advertisement made a specific claim about the amount of spending required to earn a reward under the Fly Buy program, which Jewel Food Stores did not dispute. The court noted that there was no evidence produced by Jewel Food Stores to substantiate the claim, despite being on notice of the allegation of misleading conduct. The court emphasised that the truthfulness of statements made by authoritative bodies like the Department of Consumer Affairs was particularly important for consumers and competitors. Furthermore, the approval of the advertisement by the Federation of Australian Commercial Television Stations (FACTS) did not alter the court's assessment, as it did not engage in a factual inquiry into the advertisement's content.

The court's reasoning was grounded in the importance of truthful marketing information and the protection of consumer interests. By refusing to discharge the injunction, the court upheld the importance of accurate advertising and the need to prevent misleading conduct that could affect consumer choices. The court reserved the matter for costs, indicating that the issue would be revisited in subsequent proceedings.

Loyalty Pacific P/L v Jewel Food Stores P/L

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established