Commerce Commission v Progressive Enterprises Ltd - [2010] NZCA 374

IN THE COURT OF APPEAL OF NEW ZEALAND
CA333/2009
[2010] NZCA 374
BETWEENCOMMERCE COMMISSION
Appellant

ANDPROGRESSIVE ENTERPRISES LIMITED
Respondent

Hearing:29 April 2010

Court:Chambers, Arnold and Ellen France JJ
Counsel:J B M Smith and J B Orpin for Appellant
D J Goddard QC and J R E Keenan for Respondents

Judgment:16 August 2010 at 2.30 pm

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BThe appellant must pay the respondent costs for a complex appeal on a band B basis and usual disbursements. We certify for two counsel.

REASONS OF THE COURT
(Given by Arnold J)
Introduction
[1] The Commerce Commission (the Commission) laid 18 informations under ss 17(a) and 40 of the Fair Trading Act 1986 (FTA) against Progressive Enterprises Ltd (Progressive) arising out of the supply of cereals whose packets carried offers of prizes which were no longer available as the relevant competition had closed. In the District Court, Judge Barry Morris convicted Progressive.[1] On appeal, Asher J quashed the convictions, on the ground that the offence required a particular mental element and that the Commission had not proved that Progressive offered the prizes with that intention.[2]
[1]Commerce Commission v Progressive Enterprises Ltd DC Manukau CRI-2007-092-6035, 14 April 2008.
[2]Progressive Enterprises Ltd v Commerce Commission (2008) 12 TCLR 284 (HC).
[2] The Commission then sought leave to appeal to this Court. Asher J granted leave on the following two questions:[3]
(a)What is the mens rea requirement in s 17(a) of the Fair Trading Act 1986?
(b)If s 17(a) of the Fair Trading Act 1986 imposes a mens rea requirement, is it possible under ss 17 and 45 of the Fair Trading Act 1986 to aggregate the mental states of knowledge and intention of different servants or agents of a company in order to create a requisite composite mens rea?
[3]Progressive Enterprises Ltd v Commerce Commission HC Auckland CRI-2008-404-165, 14 May 2009 at [16].

Background
[3]       The case was determined by the Courts below on the basis of an agreed summary of facts. The factual summary which follows is drawn largely from Asher J’s substantive judgment.
[4]       Progressive owns 148 Foodtown, Countdown and Woolworths supermarkets across New Zealand. It addition, it has an interest as franchisor in other chains. It markets various in-house products in all its supermarkets under the “Signature Range” brand, including breakfast cereals. Progressive contracted Daymon Associates (Daymon) to handle the development, sourcing, promotion and advertising of its in-house brands, including the Signature Range line of products. Daymon is a worldwide sales and marketing company which specialises in the development and promotion of in-house brands. The events which form the basis of the charges occurred while Daymon was still managing the Signature Range line of products, although partway through Progressive gave Daymon formal notice that it would be terminating the arrangement in the following year and doing the work itself.
[5]       In mid-2006 Daymon proposed to Progressive that it launch a new “Lighten Up” sub-brand of the Signature Range cereals by means of a…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Commerce Commission v Progressive Enterprises Ltd

Details

AGLC: Commerce Commission v Progressive Enterprises Ltd [2010] NZCA 374
Case: [2010] NZCA 374
Decision Date: 16 August 2010

CaseChat Overview and Summary

In the Court of Appeal of New Zealand, the Commerce Commission (the Commission) brought an appeal against Progressive Enterprises Ltd (Progressive) regarding the supply of cereals with prize offers that were no longer available. Progressive was convicted in the District Court, but on appeal, Asher J quashed the convictions, finding that the offence required a particular mental element which the Commission had not proven. The Commission sought leave to appeal to this Court on two questions: the mens rea requirement in s 17(a) of the Fair Trading Act 1986 and whether it was possible to aggregate the mental states of different servants or agents of a company to create a requisite composite mens rea.

The Court of Appeal held that s 17(a) required proof of a specific intention to not provide the gifts, prizes or other free items or to not provide them as offered. The Court emphasised that the statutory language was decisive and that it could not ignore the plain language of s 17 on the ground that the Commission's preferred interpretation would better serve the Act's purpose of consumer protection. The Court also held that the mental element requirement could not be met by aggregating the mental states of several of Progressive's employees or agents to create a composite mens rea. Accordingly, the appeal was dismissed, and the appellant was ordered to pay the respondent's costs for a complex appeal on a band B basis and usual disbursements. The Court certified for two counsel.

Orders