Ballance Agri-Nutrients Limited v Quin Environmentals (NZ) Limited
[2019] NZHC 490
•19 March 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-2438
[2019] NZHC 490
BETWEEN BALLANCE AGRI-NUTRIENTS LIMITED
PlaintiffAND
QUIN ENVIRONMENTALS (NZ) LIMITED
Defendant
Hearing: 26 February 2019 Counsel:
J Edwards, J Rae and PE Coulter for plaintiff CT Patterson and EJ Grove for defendant
Judgment:
19 March 2019
JUDGMENT OF FITZGERALD J
This judgment was delivered by me on 19 March 2019 at 4 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Russell McVeagh, Auckland
Stace Hammond Lawyers, Auckland (J Cochrane)
Ballance Agri-Nutrients Limited v Quin Environmentsls (NZ) Limited [2019] NZHC 490 [19 March 2019]
[1] This case concerns fertilizer, and more particularly, fertilizer advertising. The broader context to these proceedings, however, is a dispute between industry players as to the preferred test methodologies for assessing the quality and efficacy of certain fertilizer products sold in the New Zealand market.
[2] The applicant, Ballance Agri-Nutrients Ltd (Ballance) seeks an interim injunction against the respondent, Quin Environmentals (NZ) Ltd (Quin). Both companies sell fertilizer. Ballance says Quin has made a number of representations in advertising Quin’s brand of fertiliser that are in breach of the Fair Trading Act 1986 (the Act). Ballance wants to stop Quin from continuing to make those representations pending the substantive hearing in these proceedings.
Factual background
[3] By way of a preliminary observation, the affidavit materials filed in support of and in opposition to Ballance’s application contain much technical and scientific detail about the fertilizer product at issue, the relevant testing methodologies in relation to it, the pros and cons of the various testing methods used (both here and overseas), and the comparative properties of the relevant fertilizer products.1
[4] The issues on this application are, however, narrow. Namely, whether there is a serious question to be tried that Quin’s advertising creates an overall impression which is false or misleading, or likely to mislead, and if so, whether an interim injunction ought to be granted. These proceedings are not the appropriate forum to resolve an industry debate about which fertilizer testing procedures are most appropriate and therefore ought to be continued or adopted in New Zealand. That is a matter for the industry and its industry body. I have therefore confined this factual background section to the matters I consider relevant to the key issues I must determine.
1 All deponents also purported to give expert opinion evidence, but had not stated that they had read and agreed to comply with the High Court Rules code for expert witnesses. Nevertheless, for the purposes of this interim injunction application, I recognise the expertise of the deponents of the affidavits in the area of soil science and fertilizers generally. Broader observations by some deponents about the purpose and nature of industry standards in New Zealand for fertilizers can be gleaned from the face of the relevant standards themselves.
The regulation of fertilizers in New Zealand
[5] Fertilizer is not subject to any detailed legal standards or codes in New Zealand. However, in 1992, with the support of Federated Farmers, the Fertiliser Quality Council was formed and established the Fertmark scheme, which includes a code of practice (the Code).2 The Code contains standards for the marketing and production of fertilizers in New Zealand (Fertmark Standard).3 Observance of the Code is a condition of Fertmark accreditation. Being a Fertmark accredited company means the company can used the Fertmark logo in the marketing of certified products.4
[6] The Fertmark Code and Standard remains the only such code and standard in New Zealand in relation to fertilizers.
[7] The Fertmark Standard contains a number of “product classifications”. These are essentially definitions of certain product types by name. The Fertmark Standard contains a table of product names, together with a statement of what attributes or tests a product must meet to be described by that name. The Fertmark Standard explains the product classifications as follows:
Where it is intended to describe a product using a name in the following table of Fertmark Product Classifications, then the product must conform to the appropriate description and quality standard. Similarly, where products are described using a name from the Fertmark Product Classifications table they will have values declared for each of the defined characteristics.
[8] One of the fertilizer products in the Fertmark Standard product classification table is “Reactive phosphate rock for direct application” (RPR). The table includes a “meaning” of the product, together with “Declarations”, or the attributes, which a product must have to be classified as a RPR under the Fertmark Standard. Relevantly for the present application, the Fertmark Standard product classification for a RPR requires 30 percent of the declared total phosphorous in the product (which must be not less than 10 percent of the product overall) to be soluble in two percent citric acid.
2 In 2000, the Ministry of Agriculture and Fisheries commended “Federated Farmers Fertmark for the comprehensiveness of its code”, and by its 2000 letter, proposed to “recognise” the code as being an appropriate guide for industry for managing the risks under the Agricultural Compounds and Veterinary Medicines Act.
3 Code, cl 1.1.
4 Code, cl 1.7.
[9] Annexure A to the Fertmark Standard is a document titled “Industry Agreed Reference Test Methods”. It sets out the test methods to be used to determine a product’s attributes. The document sets out a testing method for determining the citric solubility of a direct application phosphorous rock. Relevantly for the present application, the test is to be carried out over a 30-minute period on the product in an “as received” condition; i.e. as a rock, not in a ground up form.5 This is because the product is applied in New Zealand in a rock format, and not ground up in a powder.6 I will refer to this test as the “Fertmark Citric Solubility Test”.
[10] The evidence filed in this case confirms that New Zealand is the only country still using the 30-minute Fertmark Citric Solubility Test.
[11] Dr Quin, Quin’s sole director and shareholder, and an accepted expert in the area of fertilizers, in an April 2018 article titled “How to define a true RPR”, commented on the Fertmark Citric Solubility Test as follows:
In the case of both New Zealand and Australia, it was determined that the simplest, reasonably accurate laboratory method to ensure that a particular DAPR [direct application phosphorous rock] would maintain pasture production as well as the same amount of P as soluble phosphate on acid soil, and therefore be described as an RPR, was whether or not at least 30% of the total P content of the DAPR would dissolve in a dilute organic acid (2% citric acid) in a short 30-minute extraction.
[Emphasis added]
[12]Dr Quin goes on in his April 2018 article to state that:
Although this citric P definition is not controlled legally, it is sufficiently strongly industry-recognised in both countries that using the term RPR to describe DAPRs [direct application phosphorous rocks] that do not meet the 30% citric P test is unacceptable in the market, as both Ballance and Ravensdown have found to their cost in recent years.
[Emphasis added]
[13] Dr Quin suggests in his reply affidavit that this aspect of his article references a historical position only. I disagree. Reading the article as a whole, and a number of other articles published in recent years by Dr Quin, there is recognition that the Fertmark Standard and the Fertmark Citric Solubility Test remains the industry
5 Some overseas testing employs both a one-hour long test period, and tests ground up product.
6 Quin’s sole director and shareholder described this approach in a 1996 article as a “more sensible approach” given it tested the product “as it was to be sold”.
recognised standard and test in New Zealand. What is equally clear, however, is that Dr Quin strongly believes the Fertmark Citric Solubility Test is now past its use-by date, and there are more up-to-date and effective testing methods that Fertmark can and should be adopting.7 It was this dispute over the preferred method for testing for a RPR in New Zealand which occupied much of the affidavit evidence filed on the application.
The Quin Product and advertising
[14] In late August 2018, Quin imported a cargo of 15,000 tonnes of direct application phosphorous rock, with the intention of selling it over a six-month period. I will refer to the product as the “Quin Product”.
[15] Quin then went about marketing the Quin Product. Three advertisements in particular are the subject of Ballance’s claims.
[16] The first is what is defined in the statement of claim as the “Waikato Times Advertisement”. This contains the following representations:
“Simply the best all-round RPR in the world, bar none in Dr Quin’s expert view”.
“12.7% P, 30% citsol P, 5% dolomite, 1.1% S, 35% CA and only 18ppm cadmium (140 mg Cd/kg P – half the industry’s self-imposed limit)”.
“Unbeaten liming equivalent of 580 kg pure lime per tonne of RPR” “STRAIGHT RPR ONLY”
“Just get a group together and order a total of 800t Quinfert Algerian RPR (plus S if required) and specify which port you want it to be discharged at. We will do the rest!”
[17] The second are statements on Quin’s website on 21 September 2018 (defined in the claim as the “Website Advertisement”) that:
“As a result, I have decided to get back into true RPR importing – at the wholesale level – and provide reputable companies with a product which has
7 A further affidavit filed on behalf of Quin, sworn by Mr Mike Brown, who Ballance also responsibly accepts has expertise in this area, is also somewhat critical of the Fertmark Citric Solubility Test, stating that in his view that “there are however much improved tests for assessing RPR now available.”
my full confidence and support. This RPR I have selected comes from the ‘Djelbel Onk’ area of the Algerian RPR deposit. This is truly massive RPR deposit – quite possibly the biggest in the world – and has the ideal combination of characteristics. It has a good total P level of 12.7%, 30.5% citric solubility, and only 18 ppm Cd (which equates to only 140 micrograms of Cd per kg of P, only half what the NZ industry regards as an acceptable limit”.
[18] The third is an amended version of the Website Advertisement (defined in the claim as the “Additional Website Advertisement”), which contains the following representations:
“On the subject of RPR, Quinfert Algerian RPR is rated as a highly reactive phosphate rock suitable for direct application by the International Fertilizer Development Centre (IFDC) in Muscle Shoals, Alabama, United States, the world authority on direct use of phosphate rocks as fertilisers.”
“At its minimum, the citsol is about 35%, at its maximum the citsol can be only 28%. Either way, this has NO EFFECT on its effectiveness as an RPR fertiliser.”
“Reported percentages may vary (between 28-37%) due to the presence of phosphatic dolomite. No negative effect on field performance as a P fertiliser can be expected.”
“This RPR I have selected comes from the ‘Djelbel Onk’ area of the Algerian RPR deposit. This is a truly massive RPR deposit – quite possibly the biggest in the world – and has the ideal combination of characteristics.”
“QUIN ENVIRONMENTALS NOW PROVIDES TWO QUINFERT RPR GRADES (V1 and V2)”
“V1 or ‘HRPR’ was field-tested by the IFDC, and rated by them as a Highly Reactive Phosphate Rock. It performed even better than North Carolina RPR in published response trials conducted by the IFDC. It contains 12.7% P, 35% Ca, 0.8% Mg (as free dolomite present in the deposit) and 1.3% S.”
[19] I will refer to the above advertisements collectively as the “Quin Advertisements”.
Testing of the Quin Product
[20] On becoming aware of the Quin Advertisements, Ballance commissioned testing of the Quin Product, or obtained test results which had been commissioned by Quin itself.
[21] Ballance has adduced in evidence what it says are in-house Ballance test results from 2016 of a product from the Algerian overseas supplier of the Quin Product. These record Fertmark Citric Solubility Test results of 26.2 percent and 27.3 percent respectively. Dr Blennerhassett, the Innovation Leader for Ballance, says in his affidavit sworn in support of the application, that Ballance had considered purchasing the Algerian product in 2016, but did not do so, as it did not meet the Fertmark Standard.
[22] Dr Blennerhassett goes on to explain that after it became aware of Quin’s advertising of the Quin Product, Ballance was then provided with results of three test samples of the Quin Product commissioned by Quin from Eurofins Food Analytics NZ Ltd. Dr Blennerhassett states that those test results show citric solubility of considerably less than 30 percent.
[23] Ballance also relies on three further test results it says it conducted on samples of the Quin Product obtained by Ballance, which record test results of just over 25, 26 and 27 percent citric solubility respectively. Ballance has also produced test results reported to an entity known as “Avoca” which Dr Blennerhassett says had also undertaken testing of the Quin Product. The test result records citric solubility of
29.4 percent.
[24] Dr Quin does not directly challenge these test results, though notes the Eurofins test results appear to be from “a group of research samples I gave Eurofins to check effects of unrepresentative sampling”. Mr Patterson, counsel for Quin, criticises the reliability of the evidence of the test results, noting that in the case of the in-house Ballance test results, those who actually conducted the tests have not sworn affidavits in support of Ballance’s application. He further submits that the test results were in some instances unclear on their face as to the methodology used and the test result for Avoca was not clearly linked to the Quin Product at all.
[25] While having some sympathy with the evidential points raised by Mr Patterson, I am conscious this is an interim injunction application, in which hearsay evidence can be permitted.8 Further, the courts will have regard to the fact that evidence in support
8 See High Court Rules 2016, r 7.30 and Evidence Act 2006, s 20.
of interim injunctions is often collated in a short timeframe and will not necessarily be of the same detail as evidence at a full trial. Dr Blennerhassett deposes that the tests were carried out using the Fertmark Citric Solubility Test and there is no evidence that that was not the case. I also take into account that Quin does not strongly suggest the Quin Product meets the Fertmark Citric Solubility Test. Rather, Mr Patterson confirmed that the test result primarily relied on by Quin to substantiate its citric solubility test result claims is testing carried out by an international testing agency named SGS, which records citric solubility of 35.2 percent. It is accepted, however, that this test is carried out on a “ground up” sample and not an “as received” sample.
[26] I am accordingly satisfied it is arguable that the Quin Product does not meet the Fertmark Citric Solubility Test.
Ballance’s complaints
[27] Given the existence of and requirements in the Fertmark Standard, and the test results summarised above, Ballance says that “in context”, the overall impression of the Quin Advertisements is likely to lead consumers to believe (in summary) that:
(a)The Quin Product is a RPR as defined in the Fertmark Standard;
(b)It has a citric solubility of at least 30 percent when tested using the Fertmark Citric Solubility Test;
(c)It is the best all-round RPR in the world, bar none;
(d)It has the ideal combination of characteristics of a RPR;
(e)The Quin Product is better than North Carolina RPR; and/or
(f)citric solubility test results do not affect a product’s effectiveness as a RPR fertilizer.
[28] Ballance says the Quin Advertisements misrepresent the Quin Product in two key ways:
(a)First, it suggests its fertiliser is a RPR fertiliser as defined by the Fertmark Standard when it is not; and
(b)Second, it suggests the fertiliser has phosphorus levels of at least 30 percent citric solubility using the Fertmark Citric Solubility Test, when, as noted above, independent tests using that method have shown it does not.
[29]More broadly, Ballance alleges Quin’s further statements at [27] (c), (d) and
(e) above are misleading as the Quin Product cannot properly be marketed in New Zealand as an “RPR”.
Approach to interim injunction application
[30]The legal principles are not in dispute and may be briefly stated.
[31] There are three stages to the consideration of an application for an interlocutory or interim injunction:9
(a)First, the applicant must establish there is a serious question to be tried, or that its claim is not vexatious or frivolous;
(b)Second, the balance of convenience must be considered; and
(c)Finally, an assessment of the overall justice of the position is required as a check.
[32] When assessing whether there is a serious question to be tried, the Court must consider:10
(a)What each of the parties claims the facts to be;
(b)What the issues are between the parties on these facts;
9 NZ Tax Refunds Ltd v Brooks Homes Ltd [2013] NZCA 90 at [12].
10 Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 at 133.
(c)The law applicable to those issues; and
(d)Whether there is a tenable resolution of the issues of fact and law on which the plaintiff may be able to succeed at trial.
[33] In terms of whether an advertisement is false and misleading or likely to mislead, an objective approach is to be taken. Conduct is likely to mislead or deceive if it might well happen; there must be a real risk of it occurring, rather than a mere possibility. Further, it is an advertisement’s dominant message that is important. “Fine print” will not resolve the situation if it is not clear and prominent enough to cure the overall impression created by the advertisement.11
[34] Evidence of consumers actually being misled or deceived is admissible, but it is not essential or necessary.12
Parties’ submissions13
[35] Ballance says that farmers expect all representations regarding fertiliser will comply with the Fertmark Code and Standard. It says given farmers are not in a position to carry out their own testing of fertiliser efficacy, they rely on the Fertmark Standard, being the only industry standard, in making purchasing decisions.
[36] Ballance submits that it has established a serious question to be tried, highlighting that:
(a)A number of tests demonstrate that Quin’s representations are incorrect; and
(b)The legal test requires only an examination of whether a representation is likely to mislead; proof of an intention to mislead is unnecessary.
11 See, generally, Godfrey Hurst v Cavalier Bremworth Ltd [2014] NZCA 418, [2014] 3 NZLR 611 at [59].
12 Global Sportsman Pty Ltd v Mirror Newpapers Pty Ltd (1984) 2 FCR 82 at 87.
13 I have included a very brief summary only of the parties’ submissions. In doing so, I mean no disrespect to the helpful written and oral submissions presented for both parties.
[37] Ballance also submits the balance of convenience favours an injunction. It stresses the harm to farmers who could continue to pay a premium for a product that does not deliver the benefits advertised. It further notes that Quin may have harmed the market for fertiliser by unfairly eroding the market share of other producers of RPR. While Quin can resume its current form of advertising if successful at the substantive hearing, Ballance says the effect of the representations on farmers and Quin’s competitors is less likely to be regained. Ballance stresses that Quin will still be able to sell its products. All it seeks is amendments to the Quin Advertisements in the period prior to the substantive hearing.
[38] Quin submits it has not misrepresented its fertiliser. First, it says it has not made any express claims in its advertising that it meets the Fertmark Citric Solubility Test. Quin also says the Fertmark Standard is not legally binding and it is not clear that apart from one company, any RPR manufacturer or retailer considers itself bound by the Standard’s specifications. Quin further submits that industry experts, including both the creator of the Fertmark Citric Solubility Test and Ballance itself, have accepted the test is no longer the optimal measure of the soluble phosphorous content of certain RPRs. Quin is also sceptical of the testing relied on by Ballance and as noted, points to what it says are a number of deficiencies in the test results adduced in evidence by Ballance in support of its application.
[39] Quin says that given what it says are deficiencies in the Fertmark Citric Solubility Test, there is no evidence that farmers or other fertiliser manufacturers or retailers are in fact worse off. Accordingly, even if there is a serious question to be tried, this suggests the balance of convenience does not warrant effectively shutting down Quin’s business until the substantive hearing.
Undertaking
[40] During the hearing itself, Quin offered to provide an undertaking to the Court to the effect that pending the substantive hearing, further clarity would be provided in its advertising as to the basis upon which the Quin Product has been tested for citric solubility – essentially to make it clear that it was not the Fertmark Citric Solubility Test.
[41] Following the hearing, Dr Quin, both personally and on behalf of Quin, provided an undertaking to the Court in the following terms:
I, BERTRAM FRANCIS QUIN, of Auckland, Director, hereby undertake personally and on behalf of Quin Environmentals (NZ) Limited that until such time as these proceedings conclude, or the Court or the Plaintiff agree to the release of this undertaking (whichever is the earlier), neither of us will publish reference to Quin Environmentals (NZ) Limited’s RPR product (“the Product”) having been tested by way of any form of citric acid testing (or words to such effect), or refer to the Product having any citric acid solubility percentage, without including in the same publication an explanatory note clearly stating whether the relevant testing has been conducted by the FQC’s (Fertmark) test, or, if some other testing has been used, the type of testing used and any key differences between the testing used and the FQC’s (Fertmark) test (in particular any difference in the reaction time if different than 30 minutes, and whether the sample has been ground or unground).
[42]Ballance responds that the undertaking is insufficient because:
(a)The undertaking does not preclude Quin from referring to its fertilizer as a RPR per se;
(b)The terms of the undertaking are too vague, making it unclear where “in the same publication” any explanation will be and whether the publication will contain equivocating language to further confuse consumers; and
(c)The undertaking shifts the burden to farmers to ascertain for themselves the values of various fertiliser testing regimes.
Discussion
[43] I have found it helpful first to address the issue of whether there is a serious question to be tried that the Quin Advertising is misleading because it conveys an overall impression that the Quin Product meets the Fertmark Citric Solubility Test. I will then move to the question of whether the Quin Advertising is misleading because it holds out the Quin Product as a RPR.
Representations regarding “citsol” test
[44] The Waikato Times Advertisement makes reference to a “citsol” test result, namely “30%”. The Website Advertisement references “30.5% citric solubility”. The Additional Website Advertisement refers to a range of between 28-37 percent. There is no express reference to Fertmark or its testing regime.
[45] I interpolate to observe that reference to the above percentage figures in the Quin Advertising have obviously been included for a reason. I proceed on what is likely to be a fairly uncontentious proposition that companies would not make statements in advertising which are not considered by them relevant to or of some importance to their target market. I therefore proceed on the basis that it is at the very least arguable that a reference to a “citsol" test result in fertiliser advertising is likely to be taken note of by consumers and relied on.
[46] Having chosen to reference citric solubility test results in its advertising, I am satisfied there is a serious question to be tried that those references, in the context of the New Zealand market, create an overall impression that the Quin Product meets the Fertmark Citric Solubility Test. As explained earlier in this judgment, the Fertmark Standard and its Citric Solubility Test are the only long-standing standard for fertilizer of this type in New Zealand.
[47] I fully appreciate that Dr Quin, who Ballance responsibly accepts is an appropriately qualified expert in this area, is critical of the Fertmark Citric Solubility Test. He, and it seems, some others in this area, consider there are now better and more accurate tests available. Nevertheless, the issue for this Court is not the efficacy or otherwise of the Fertmark Citric Solubility Test. The issue is whether Quin’s Advertisements create an overall impression that is false and misleading, or liable to mislead. Given the uniqueness and longevity of the Fertmark Standard and Citric Solubility Test in New Zealand, I am satisfied there is a clearly arguable case that the citric solubility percentage test results reported in the Quin Advertisements are likely to mislead consumers that the Quin Product meets the Fertmark Citric Solubility Test.
[48] The next question is whether Quin’s undertaking to include further clarification in its advertising going forward is sufficient to remove the “sting” of the arguably misleading conduct.
[49] I acknowledge Ballance’s concerns about the undertaking. Whether any amended advertisements convey an arguably misleading overall impression will depend on the overall content, format and impression created by the particular advertisement, which cannot be assessed in a vacuum. Nevertheless, the essence of Ballance's complaint in this aspect of its claim is that by referencing percentage-based test results, Quin incorrectly creates an impression that the Quin Product meets the Fertmark Standard. If, in accordance with the undertaking given, Quin makes it clear in the same advertisement14 whether the relevant testing has been conducted in accordance with the Fertmark Standard or some other testing methodology, and records any key differences between the testing methodologies (and in particular, the length of the reaction time and whether the sample was ground or unground), this will, in my view, remove the essential “sting” of the alleged misleading content. Quin will no doubt seek and take advice on matters such as “small print” and the like not being sufficient if the overall impression is nevertheless misleading or likely to mislead.
[50] I do not accept Ballance's submission that the explanatory note proposed in the undertaking unfairly puts the burden on farmers to form their own view on the test method used. Ultimately, with such an explanatory statement, it will be clear that the Quin Product has not been tested in accordance with, and therefore does not meet, the Fertmark Citric Solubility Test. Depending on the value or reliance farmers put on the Fertmark Standard and Citric Solubility Test, they will then be able to make a choice as to whether they wish to purchase the Quin Product. I am also not persuaded that any difficulty in monitoring Quin’s ongoing representations in compliance with the undertaking means the undertaking should not be accepted. In any widespread marketing campaign, a competitor may have to deploy not insignificant resources to monitor that campaign. There is nothing in this case to suggest anything particularly onerous or unusual will be required.
14 Being how I interpret the reference to the “same publication” in the undertaking.
[51] I note Ballance's position that at the time any representation is made as to any form of citric solubility test results, Quin will need to have evidence to substantiate that claim (i.e. it will not be sufficient for such evidence to be gathered “after the event”). That is a requirement of s 12A of the Act, of which Quin is presumably aware. Ballance queries whether the SGS test results are a truly representative sample of the Quin Product. Ballance’s complaint in its statement of claim, however, is not that the
30.5 percent citric solubility test result referenced in the Quin Advertisements cannot be substantiated at all; rather it is, as noted, that the reference to 30.5 percent creates an overall misleading impression that test result has been achieved using the Fertmark Citric Solubility Test. Compliance with the undertaking will be sufficient, in my view, to remove that concern on an interim basis.
[52] Accordingly, and putting aside the undertaking, there is a serious question to be tried that the Quin Advertisements are false and misleading, or liable to mislead, given their reference to citric solubility test results creates an overall impression of compliance with the Fertmark Standard.
[53] In the absence of the undertaking, I would not have been persuaded that the balance of convenience meant an interim injunction should not have been granted. Quin makes relatively high level statements only in its affidavit material that granting an interim injunction would effectively put it out of business. That is not the case. As counsel for Ballance submits, the outcome Ballance seeks is not that the Quin Product can no longer be sold, but simply that amendments are made to the advertising going forward. The fact that, prior to these proceedings being filed, Quin had already made some amendments to its advertisements, and is prepared through the undertaking to make further amendments, demonstrates that it is quite open to Quin to make these changes without adversely affecting its business model.
[54] On the basis of the terms of the undertaking given, I therefore do not make any formal orders on this aspect of Ballance’s application.
Representing the product as a “RPR”
[55] The second key aspect of Ballance’s claim is whether it is misleading for the Quin Product to be described as an “RPR” at all. The statement of claim alleges that
in the context of the New Zealand market and the Fertmark Standard, the overall impression created by the Quin Advertisements is to lead consumers to believe that the product “is an RPR as defined in the Fertmark code of practice”.
[56] I am conscious of and influenced by Dr Quin’s own statements as recently as April 2018, to the effect that it is unacceptable in the market to use the term “RPR” when describing a product which does not meet the Fertmark Citric Solubility Test.
[57] I accept Ballance’s argument that advertising the Quin Product simply as a “RPR” in New Zealand, without anything further, will arguably create an overall impression that it is a “RPR” for the purposes of what Dr Quin himself recognises is a “strongly industry-recognised standard” in New Zealand. Accordingly, I am therefore satisfied there is a serious question to be tried that representing the Quin Product in a New Zealand marketing campaign as a “RPR,” without a suitable explanatory note clarifying that this is not a “RPR” as defined in the Fertmark Standard, is arguably misleading or liable to mislead.
[58] Given the terms of the undertaking provided are aimed at express references to citric solubility test results, I consider it appropriate for Quin to have an opportunity to propose a further undertaking dealing with a suitable explanatory note to accompany any advertising of the Quin Product as a “RPR” per se. Absent any suitable undertaking, I am likely to make interim orders preventing the product being advertised in New Zealand as a “RPR” without a qualification that it is not a “RPR” as defined in the Fertmark Standard. Again, on the question of the balance of convenience, what is required is a relatively simply amendment to Quin’s advertising, rather than any suggestion of closing its business down.
[59] As noted earlier in this judgment, the remaining aspects of the advertisements said to be arguably misleading or liable to mislead were not pressed strongly by Ballance. They essentially stand or fall with the representations discussed above. For example, Ballance submits that if the product could not be described as a RPR at all, then it would follow it could not describe the product as “the best RPR in the world according to Dr Quin”.
[60] For completeness however, and in terms of the suggested misrepresentation of the Quin Product being the best RPR in the world (and putting aside the reference to “RPR” as discussed above), I am not persuaded, at least on an interim basis, that relief ought to be granted on this aspect of the application. In my view, claiming that the product is “the best RPR product in the world, according to Dr Quin’s expert opinion”, is likely to be understood by consumers to be a prime example of hyperbole or “puffery”.15 By way of an unrelated example, a restaurant advertising itself as the “best Italian restaurant in the world bar none” is likely to be similarly construed by consumers. Further, the representation is qualified by being “in Dr Quin’s expert opinion”. Accordingly, the representation is sufficiently clear that this is Dr Quin’s own view, rather than the view of any independent body or person. I am satisfied farmers and other consumers will be able to make up their own mind as to whether they put any stock on such hyperbole.
[61] Accordingly, on the basis any reference to the Quin Product being an “RPR” will be appropriately qualified to make it clear that this is not a RPR in accordance with the Fertmark Standard, then no orders are required on the alleged misrepresentations pleaded at [42](c), (d), (e) and (f) of the statement of claim.
Result
[62] Given the Waikato Times Advertisement, the Website Advertisement and the Additional Website Advertisement do not contain the explanatory statement offered in Quin’s undertaking, or the further explanatory statement discussed at [58] above, I grant an interim injunction restraining Quin (whether by itself or through any agent) from further publishing or distributing those forms of the advertisements.
[63] Pending any further orders which might be necessary on Ballance’s application, Quin is invited to proffer a suitable form of undertaking as envisaged at
[58] above to cure what I consider to be an arguably misleading impression created by referring to the Quin Product as an “RPR” in the New Zealand market. Absent a suitable undertaking from Quin, I will proceed to make orders on this aspect of the
15 Explained in Kate Tokeley (ed) Consumer Law New Zealand (2nd ed, LexisNexis NZ, Wellington, 2014) at 148 as “exaggerated comments… [which] might promote a product as being the greatest example of the product ever, or a life-changing purchase.”
application. Quin may submit any further undertaking it is prepared to give within five working days of this judgment. Ballance may submit a memorandum in response within a further two working days. Plainly it would be preferable for the parties to seek to agree the form of the undertaking, in light of the findings made in this judgment. I would expect that with experienced counsel and common sense, an agreed position will be reached.
Costs
[64] Ballance has been partly but not wholly successful on its application for an interim injunction. In my view, it is nevertheless the successful party overall, given its proceeding have resulted in the undertaking set out at [41] above being provided by Quin, together with the prospect of an additional undertaking as discussed at [58] above (failing which further orders will be made on its application).
[65] An initial but non-binding view is accordingly that Ballance is entitled to costs on the application, though perhaps reduced slightly to reflect the fact it was not successful on all aspects of its claim.
[66] The parties are encouraged to agree costs. Should the parties not be able to agree, Ballance may file a memorandum on costs within 15 working days of the date of this judgment. Quin may file a response within a further 5 working days. No memoranda is to be longer than 5 pages in length. I will thereafter determine costs on the papers.
Fitzgerald J
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3
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