Specsavers Pty Ltd v The Optical Superstore Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Specsavers Pty Ltd v The Optical Superstore Pty Ltd [2010] FCA 151

Citation: Specsavers Pty Ltd v The Optical Superstore Pty Ltd [2010] FCA 151
Parties: SPECSAVERS PTY LTD (ACN 097 147 932) v THE OPTICAL SUPERSTORE PTY LTD (ACN 095 737 894)
File number(s): NSD 119 of 2010
Judges: KATZMANN J
Date of judgment: 22 February 2010
Catchwords: PRACTICE AND PROCEDURE – confidentiality –principles affecting prohibition of publication of evidence relating to a witness under s 50 of the Federal Court of Australia Act –excluding principal from knowledge of agents – onus of proof - overarching purpose of the Federal Court of Australia Act
Legislation: Federal Court of Australia Act 1976 (Cth) ss 37M, 50
Civil Procedure Act 2005 (NSW) s 72
Cases cited: Australian Broadcasting Commission v Parish (1980) 29 ALR 228
Hogan v Australian Crime Commission (2009) FCAFC 71
Luxottica Retail Australia v Specsavers [2010] NSWSC 54
Warner-Lambert Co v Glaxo Laboratories Limited [1975] RPC 354
Date of hearing: 22 February 2010
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 57
Counsel for the Applicant: D Studdy SC
Solicitor for the Applicant: Minter Ellison
Counsel for the Respondent: M O’Bryan
Solicitor for the Respondent: Maddocks

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 119 of 2010
BETWEEN:

SPECSAVERS PTY LTD (ACN 097 147 932)
Applicant
AND:

THE OPTICAL SUPERSTORE PTY LTD (ACN 095 737 894)
Respondent

JUDGE:

KATZMANN J

DATE OF ORDER:

22 FEBRUARY 2010

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.Order 7 of the Orders made on 15 February 2010 be varied by:

(i)        Replacing subparagraph (a) with the following:

(a)The identity of the mystery shoppers referred to in paragraph 4 of the affidavit of Zeina Ajaka, sworn 9 February 2010, together with The Optical Superstore stores they visited, the store managers and store assistants involved, and any other information contained in Confidential Exhibit ZA-1, may be disclosed to:

(i)external solicitors and counsel for the Respondent only upon receipt of a signed confidentiality undertaking in the form annexed to these orders and marked ‘A’;

(ii)the manager of a store at which the mystery shopper made the purchase upon receipt of a signed confidentiality undertaking in the form annexed to these orders and marked ‘B’;

(iii)the individual sales assistant identified as having assisted the Mystery Shopper upon receipt of a signed confidentiality undertaking in the form annexed to these orders and marked ‘C’;

(iv)Ms Margaret Douglas upon receipt of a signed confidentiality undertaking in the form annexed to these orders and marked ‘D’; and

(v)Mr Ian Melrose upon receipt of a signed confidentiality undertaking in the form annexed to these orders and marked ‘E’.

(ii)       Deleting subparagraph (b).

(iii)      Replacing subparagraph (c) with the following:

(c)The identity of the Mystery Shoppers, The Optical Superstore stores they visited, the managers and sales assistants involved and the fact that they are assisting with this proceeding shall…

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Details
Case
[2010] FCA 151
Decision Date

CaseChat Overview and Summary

Specsavers Pty Ltd, an optical retailer, initiated legal proceedings against The Optical Superstore Pty Ltd, another optical retailer, alleging misleading and deceptive conduct under Australian consumer law. The dispute centred on the confidentiality of the identities of 'mystery shoppers' who conducted undercover purchases to verify the truth of The Optical Superstore's advertising claims. The Federal Court was tasked with determining whether certain individuals could be excluded from the confidentiality regime regarding the identity of the mystery shoppers, which was initially ordered to protect the privacy and safety of these individuals.

The central legal issue before the court was whether the confidentiality order, which protected the identity of the mystery shoppers, should be varied to allow certain individuals, including the principals of The Optical Superstore, access to this sensitive information. The court needed to balance the confidentiality interests of the mystery shoppers against the necessity for The Optical Superstore to obtain information relevant to its defence.

The court held that the confidentiality regime should not be extended to include the principals of The Optical Superstore, Ms Douglas and Mr Melrose. It found that their exclusion from knowledge of the mystery shoppers' identities was not necessary to prevent prejudice to the administration of justice. The court reasoned that the information required by The Optical Superstore to prepare its defence could be obtained without compromising the confidentiality of the shoppers. Furthermore, the court noted that the principles of confidentiality in the Federal Court Act should be interpreted narrowly, and the onus was on The Optical Superstore to demonstrate the necessity of such disclosure. Ultimately, the court concluded that the existing confidentiality regime was sufficient and that extending it to include Ms Douglas and Mr Melrose would not serve the overarching purpose of the Federal Court Act, which includes ensuring fair and just administration of justice.

The court made orders varying the existing confidentiality regime to allow certain individuals, including Ms Douglas and Mr Melrose, access to the identity of the mystery shoppers under strict conditions. These conditions included the requirement for recipients of such information to sign confidentiality undertakings. The court also rejected The Optical Superstore's request to expedite the disclosure of evidence, finding no compelling reason to alter the established timetable. Costs were awarded to be costs in the cause, reflecting the absence of any argument from Specsavers regarding costs.

Orders

Orders of the court

1. Order 7 of the Orders made on 15 February 2010 be varied by:

(i) Replacing subparagraph (a) with the following:

(a) The identity of the mystery shoppers referred to in paragraph 4 of the affidavit of Zeina Ajaka, sworn 9 February 2010, together with The Optical Superstore stores they visited, the store managers and store assistants involved, and any other information contained in Confidential Exhibit ZA-1, may be disclosed to:

(i) external solicitors and counsel for the Respondent only upon receipt of a signed confidentiality undertaking in the form annexed to these orders and marked ‘A’;

(ii) the manager of a store at which the mystery shopper made the purchase upon receipt of a signed confidentiality undertaking in the form annexed to these orders and marked ‘B’;

(iii) the individual sales assistant identified as having assisted the Mystery Shopper upon receipt of a signed confidentiality undertaking in the form annexed to these orders and marked ‘C’;

(iv) Ms Margaret Douglas upon receipt of a signed confidentiality undertaking in the form annexed to these orders and marked ‘D’; and

(v) Mr Ian Melrose upon receipt of a signed confidentiality undertaking in the form annexed to these orders and marked ‘E’.

(ii) Deleting subparagraph (b).

(iii) Replacing subparagraph (c) with the following:

(c) The identity of the Mystery Shoppers, The Optical Superstore stores they visited, the managers and sales assistants involved and the fact that they are assisting with this proceeding shall otherwise remain confidential.

Note:

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Specsavers substantially relies on the affidavit of Ms Peach, who, in turn, largely relies on the opinions of others. Her evidence, which is unchallenged, is to the effect that if the identity of the shoppers were disclosed, particularly in small and regional areas:(a)their future usefulness as informants could be compromised, because the company is likely to flag them to their shop assistants for special treatment;(b)as the pool from which those shoppers is drawn is limited, that would adversely affect Specsavers’ ability to test the truth of the boasts of its competitors in their future advertising;(c)the shoppers are afraid of possible reprisals and this could inhibit their cooperation in the future; and(d)the shoppers who are paid for the “mystery shopping” exercises would lose a significant amount of money (the amount is un-stated), with the loss of assignments. The evidence of The Optical Superstore The Optical Superstore relies on evidence drawn from an affidavit of Michelle Elizabeth Dixon, a partner in the firm of solicitors which acts on its behalf in this case. She states that:Extending the Current Confidentiality Regime to include Ms Douglas and Mr Melrose will not cause any harm or prejudice to the mystery shoppers or the Applicant. Neither Mr Melrose nor Ms Douglas works in the respondent’s stores, and therefore neither has direct contact with mystery shoppers. She argues that the proper conduct of the defence of the proceeding will be materially impaired unless the variation is made. She states:The following questions arise in the proceeding:a. in what regions of Australia were the Respondent’s advertisements broadcast;b. which products of the Respondent were referred to in the advertisements; c.were those products available for sale at the Respondent’s stores in the regions of Australia in which the advertisements were broadcast;d. what products were purchased by the mystery shoppers; and e.in what stores were the products purchased by the mystery shoppers? She goes on to state that:A further question that may arise in the proceeding is what products were requested by the mystery shopper, although there may be debate about the ultimate relevance of that question…. She asserts that in preparing the defence on the respondent’s behalf, she has to seek information and take instructions relating to each of those questions. As the ultimate owners of the Optical Superstore are Ms Douglas and Mr Melrose and it is they who provide all the instructions to the solicitors in relation to the proceeding, as well as all the information she needs to take instructions from them concerning the questions that I mentioned earlier, numbered (a), (b) and (c). She goes on to recite in her affidavit that:The Respondent sells a large range of spectacle frames and lenses and consumers have a very wide choice of frame and lens specifications. Ms Douglas and Mr Melrose are the source of her instructions about the technical specifications of the different spectacles that the Optical Superstore sells. Further, Ms Douglas and Mr Melrose created the television advertisements that are the subject of this proceeding, and therefore understand better than anyone else what constitutes the products that were advertised. She goes on to say that:[T]he Respondent’s store managers were not involved in the creation or broadcasting of the advertisements.

Decision

Reasons for decision

Because this case is to be determined according to whether the evidence meets the test in s 50 of the Federal Court Act, the judgment of McDougall J in Luxottica Retail Australia Pty Ltd v Specsavers Pty Ltd is of limited assistance. The test here, as I have already stated, is whether the prohibition of disclosure is necessary in order to prevent prejudice to the administration of justice. Having considered the arguments of both parties and the competing public interest considerations, including the objectives in s 37M of the Federal Court of Australia Act, I am not satisfied that the disclosure of the information to Ms Douglas and Mr Melrose in the circumstances envisaged by the form of order The Optical Superstore proposes would prejudice the administration of justice and even if I were, I could not be satisfied that such an order is necessary to prevent that prejudice. Conclusion I therefore vary the orders made on 15 February and make orders in accordance with order 2 of the Respondent’s Proposed Short Minutes of Order, which I shall initial and place on the file. The remaining question concerns the Respondent’s proposed order 3. That order would require Specsavers to serve its evidence two or more working days earlier than the timetable previously fixed by the court. There is no good reason why the timetable should be so varied. The Optical Super Store will have sufficient time to consider the evidence if the current timetable remains in place. Costs In all the circumstances, and in the absence of argument to the contrary, costs should be costs in the cause.

Ratio Decidendi

Legal Principle Established

Mr Studdy for Specsavers argued that:The respondent’s preparation of its defence would not be impaired. (a) Relying on the affidavit of Ms Dixon, Mr Studdy argued that none of the matters to which she referred would require evidence from the two principals of the company and so excluding them from the classes of persons to whom the information could be disclosed would not impede The Optical Superstore in the preparation of its defence. By way of an example, the information concerning the regions in Australia where the respondent’s advertisements were broadcast is information that could be obtained from records and would certainly not require disclosure of the identities of the mystery shoppers. Additionally, the question whether the products were available for sale at the respondent’s stores in the regions where the advertisements were broadcast could be settled, he assumed, by looking at business records and from evidence given by store managers and assistants. The question of which products of the respondent were the subject of the advertisements is something that Specsavers addresses in its proposed form of variation of the order, specifically the proposed new subparagraph (2B). Mr O’Bryan disputed the argument that there was no need to discuss the details of the case, including store locations, with the principals and insisted that when the particular matters were considered in the context of all of the evidence set out in Ms Dixon’s affidavit, that was abundantly clear. (b)Disclosing the names of the stores would disclose the identity of the mystery purchasers. Mr Studdy argued that if the name of the store were disclosed, it would be easy to trace the identity of the purchaser through the records of the store. Although he appeared to accept that this should not happen merely if the store names were disclosed to the principals, he appeared to base his argument on the risk of inadvertent disclosure. When he was asked whether the information about the stores could be revealed and the name and patient number of the individual shoppers masked, bearing in mind there were only about 20 purchasers, he professed that he did not know whether that would be sufficient to alleviate his client’s concerns. I also floated with him the question of whether or not he could reveal a list of the stores but, once again, he said he did not know whether the mere provision of that list could be used to discover the identity of the purchasers and maintained that it was premature to be looking at these issues but that everything would be clearer once the applicant put on its evidence. Mr O’Bryan insisted that it was necessary for his client, that is, the principals of his client, to know the particular stores involved with the particular purchasers to prepare the defence. (c) Mr Studdy argued that not only was there a problem for the privacy concerns of the individual mystery shoppers if their identities were further revealed, but there was also a potential harmful impact on other businesses that use mystery shoppers in the conduct of their enterprises, for example, to check the prices of competitors. (d) With respect to the additional orders that The Optical Superstore seeks, Mr Studdy argued that it was inappropriate for his client to be forced to produce invoices before 1 March, at which time it was going to put on its evidence. As this was only a short time away, there could be no serious prejudice to the respondent.