Consumer NZ Incorporated v Z Energy Limited
[2024] NZHC 2018
•23 July 2024
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2023-485-771
[2024] NZHC 2018
UNDER the Fair Trading Act 1986 BETWEEN
CONSUMER NZ INCORPORATED
First Plaintiff
THE ENVIRONMENTAL LAW INITIATIVE
Second Plaintiff
LAWYERS FOR CLIMATE ACTION NZ INCOROPORATED
Third Plaintiff
AND
Z ENERGY LIMITED
Defendant
Hearing: 15 July 2024 Appearances:
J Every-Palmer KC / B Hamlin / P Comrie-Thomson for the Plaintiffs
V L Heine KC / N K Swan / T D Smith for the Defendant
Date of Judgment:
23 July 2024
JUDGMENT OF ASSOCIATE JUDGE BRITTAIN
This judgment was delivered by me on 23 July 2024 at 4 pm.
Pursuant to r 11.5 of the High Court Rules.
…………………..
Registrar/Deputy Registrar
Solicitors:
Wyn Williams, Queenstown Chapman Tripp, Wellington
Counsel:
Stout Street Chambers, Wellington Clifton Chambers, Wellington Thorndon Chambers, Wellington
CONSUMER NZ INC v Z ENERGY LTD [2024] NZHC 2018 [23 July 2024]
Introduction
[1] The defendant, Z Energy Limited (Z), is an importer and distributor of petroleum products in New Zealand. In 2022, Z began an advertising campaign referred to as “Moving with the Times”. In this proceeding, the plaintiffs allege that aspects of the advertising campaign amount to misleading or deceptive conduct in breach of s 9 of the Fair Trading Act 1986 (FTA). The plaintiffs acknowledge that they have no private interests at stake and say that they bring the proceeding in the public interest.
[2] The plaintiffs claim that statements made by or on behalf of Z in the advertising campaign, and in other public statements, conveyed a range of false impressions to the New Zealand public. The impressions are pleaded to be representations by Z and are grouped into four categories. Each category of representations is pleaded as a separate cause of action of misleading or deceptive conduct:
(a)first cause of action — the “emissions reduction representations”, which relate to steps Z was taking to reduce emissions;
(b)second cause of action — the “getting out representations”, which relate to Z’s intention to reduce or end its sale of petroleum products;
(c)third cause of action — the “charging station representations”, which relate to Z’s investment in electric vehicle charging stations; and
(d)fourth cause of action — the “operational emissions representations”, which relate to the emissions from Z’s operation of its business.
[3] The plaintiffs allege that the impressions/representations1 were false and resulted in Z increasing its sales of petroleum products.
[4] Z has applied for an order requiring the plaintiffs to provide further particulars of the claim. These particulars predominantly relate to:
1 The terms “impression” and “representation” can be used interchangeably. In this judgment I will use the pleaded term “representation”.
(a)the definition of the advertising campaign;
(b)the link between specific advertisements/public statements and the pleaded representations;
(c)the facts that support the allegations that the representations were false; and
(d)the link between each particular representation and the particular falsification.
[5]The application for further particulars is determined in this judgment.
Legal principles
Misleading and deceptive conduct
[6] Section 9 of the FTA provides that no person shall “…in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive”. Whether the impugned conduct is misleading or deceptive is a question of fact to be answered objectively by the Court. The conduct is assessed as a whole in the context of the relevant surrounding facts and circumstances. 2 The context can include the style of information.3
[7] The High Court of Australia, when considering similar Australian legislation, summarised the steps involved in determining whether there has been misleading or deceptive conduct:4
(a)identify with precision the contravening conduct;
(b)consider whether the identified conduct was in trade;
2 Red Eagle Corp Ltd v Ellis [2010] NZSC 20, [2010] 2 NZLR 492 at [28].
3 See generally, Godfrey Hirst NZ Ltd v Cavalier Bremworth Ltd [2014] NZCA 418, [2014] 3 NZLR 611 at [59].
4 Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd [2023] HCA 8, (2023) 97 ALJR 388 at [80].
(c)consider what meaning that conduct conveyed; and
(d)determine whether that conduct, in light of the meaning, was misleading or deceptive or likely to mislead or deceive.
Pleading
[8] The correct approach to pleading in New Zealand was summarised by the Court of Appeal in Price Waterhouse v Fortex Group Ltd.5 In complex cases, properly drawn and particularised pleadings are an essential road map for the court and the parties. The court and opposite parties are entitled to be fairly informed of the essential basis of a claim or defence, and all necessary ingredients of it. A statement of claim must be sufficiently detailed to state a clear issue and inform the opposite party of the case to be met, to enable a reasonable degree of pre-trial briefing and preparation. This requires a common-sense judgment of what the pleadings convey, in the context of the case, to a sensible legal mind.
[9] Counsel for the plaintiffs and counsel for the defendant both relied on the High Court’s judgment in Financial Markets Authority v Warminger,6 a case dealing with an alleged false or misleading appearance of trading under s 11B of the Securities Markets Act 1988.
[10] Asher J described the pleadings in that case as setting out with precision the particular actions of the defendant that were said to constitute a misleading appearance. It was pleaded that those actions created a false or misleading appearance in terms of the relevant legislation, but it was not pleaded how that was so.7 The Judge stated that inferential assertions were unacceptable, and a bridge was required between the pleading of the facts and the conclusion of a misleading appearance.8
5 Price Waterhouse v Fortex Group Ltd CA 179/98, 30 November 1998 at 17–19.
6 Financial Markets Authority v Warminger [2016] NZHC 1193.
7 At [12].
8 At [13] and [16].
[11] Although Asher J was dealing with different legislation and a different context, the requirement to avoid pleadings that require assumptions or inferences is applicable in this case. Inferences should be properly pleaded.9
[12] The parties agree that the broad range and scope of the allegations of misleading or deceptive conduct pleaded in this case are unprecedented. Both counsel referred to Australian authorities which confirm the general principles applicable to pleading summarised above.10 However, those decisions arose in different circumstances and do not assist in determining how the principles should be applied to this case. Therefore, I do not traverse those decisions.
The pleadings in this case and the further particulars requested
The structure of the statement of claim
[13] The amended statement of claim dated 28 March 2024 (the claim) comprises 124 paragraphs. It has been prepared with care. The claim is divided into sections, delineated with headings. The key sections are:
(a)“The climate crisis” — this section comprises 20 paragraphs of pleaded facts, from [10] to [29]11 , relating to climate change and New Zealand’s emission reduction targets;
(b)“Z Energy’s growing emissions” — this section comprises 10 paragraphs of pleaded facts, from [30] to [39], relating to Z Energy’s business and emissions from 2019 to 2023;
(c)“Z Energy’s relevant initiatives” — this section comprises 22 paragraphs of pleaded facts, from [40] to [61], relating to actions by Z in respect of:
9 See also Australian Parking and Revenue Control Pty Ltd v Reino International Pty Ltd [2016] FCA 744 at [73].
10 The cases referred to with particular reference include: National Exchange Pty Ltd v Australian Securities and Investments Commission [2004] FCAFC 90, (2004) 49 ACSR 369; Swiss Re International SE v Simpson [2018] NSWSC 233, (2018) 354 ALR 607; Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15; and Barclay Mowlem Construction Ltd v Dampier Port Authority & Anor [2006] WASC 281, (2006) 33 WAR 82.
11 “[ ]” denotes a references to a paragraph in the statement of claim.
(i)a biodiesel production facility;
(ii)electric vehicle charging stations;
(iii)free fuel with electricity rewards;
(iv)investment in low carbon initiatives; and
(v)membership of professional associations related to climate change;
(d)“Z Energy’s statements” — this section comprises the critical pleading of the statements alleged to form the basis of Z’s misleading or deceptive conduct. This section of the claim contains four subsections:
(i)[62] to [65] plead Z’s modes of advertising;
(ii)“Moving with the Times advertisements” — [66] to [78] plead approximately 25 specific statements in various advertisements that formed part of the advertising campaign;
(iii)[79] pleads the consequences of the advertising campaign for Z, including an increase in retail sales of petroleum products;
(iv)“Other public statements” — [80] to [101] plead approximately 34 specific statements made by or on behalf of Z in other public forums, predominantly on websites;
(e)“Increased sales” — this section comprises two paragraphs, [102] and [103], that plead that the statements in [66] to [101] contributed to Z increasing its retail fuel sales between 2019 and 2023;
(f)“Ongoing conduct by Z Energy” — this section contains only [104], which is a pleading that Z continues to make some of the statements pleaded earlier;
(g)the remaining four sections of the claim comprise the four causes of action. Each cause of action adopts the same structure:
(i)the earlier pleadings in [1] to [104] are adopted;
(ii)the statements and related images made by Z, cross-referenced to some or all of the earlier pleadings of Z Energy’s statements, are pleaded to individually and collectively convey specific representations;
(iii)the representations are pleaded to have been made in trade;
(iv)the representations are pleaded to be misleading or deceptive to members of the public on specified grounds, which amount to falsifications; and
(v)the number of statements from Z Energy’s statements and the number of pleaded representations and falsifications varies with each cause of action.
Z’s request for further particulars
[14] Z’s notice of application specifies 19 categories of particulars that are sought. Some of those categories are replications for each cause of action. A copy of the schedule of the particulars attached to Z’s application is attached to this judgment as sch 1.
[15] In submissions, Z refined its position, largely grouping the requested particulars into four categories:
(a)a definition of the “Moving with the Times” advertising campaign;
(b)the factual basis of the representations in each cause of action;
(c)the factual basis of the falsifications in each cause of action; and
(d)the connections between the representations and the falsifications in each cause of action.
That categorisation is helpful for analysing Z’s request for particulars.
[16] In addition, I will consider two other specific requests for particulars, in respect of:
(a)[67(d)] and [69(d)], which I will deal with first; and
(b)[113(c)] and [118(d)], which I will deal with last.
Paragraphs [67(d)] and [69(d)] of the claim
[17] Z’s notice of application does not seek further particulars of the pleading of the statements in the “Moving with the Times advertisements” section and the “Other public statements” section. However, in submissions counsel for Z criticised two pleadings from the “Moving with the Times advertisements” section.
[18] In [67(a)] to [67(c)] and [69(a)] to [69(c)], the plaintiffs plead specific statements from two advertisements, followed by pleadings in [67(d)] and [69(d)] that the plaintiffs rely on the advertisements as if pleaded in full. Ms Heine KC submitted that any other specific statements from the two advertisements that are relied on should be separately pleaded.
[19] None of the other paragraphs in the “Moving with the Times advertisement” section include a pleading that the plaintiff relies on the advertisement or publication as if pleaded in full. It is not apparent why it is necessary to treat the advertisements that are the subject of [67] and [69] any differently.
[20] For the plaintiffs, Mr Every-Palmer KC submitted that the pleading of reliance on the advertisement in full was necessary to cover style and imagery. Both advertisements in question were produced to the Court. The imagery appears unremarkable, and the text is long. If there are other specific statements that the plaintiffs rely on in those two advertisements then they should be pleaded.
Definition of the advertising campaign
[21] Paragraph [66] of the claim provides a general description of the “Moving with the Times” campaign, as:
… a series of messages about the characteristics of Z Energy and the products it supplied, which included:
(a)a collaboration with musician Rob Ruha, known for his environmental credentials, to use a new song “That’s where I’ll be”, whose message was optimism about the journey Z Energy and Aotearoa New Zealand were on;
(b)“We’re in the business of getting out of the petrol business” as a key slogan and message in the campaign; and
(c)an emphasis on four areas where Z Energy was said to be making significant change:
(i)reduction of Z Energy’s emissions;
(ii)a biofuel manufacturing plant;
(iii)electric vehicle chargers; and
(iv)investment in an electricity retailer.
[22] Z seeks further particulars designed to compel the plaintiffs to define the Moving with the Times campaign, including its duration. Z proposes the following definition:
Copies of all advertisements and other promotional material across all media, including (without limitation) print, television, radio, online, and outdoor, from 1 January 2022 to 31 December 2023 that:
(a) Contain or repeat, exactly or in substance, the statements pleaded at paragraphs 66-79 of the amended statement of claim…
[23] I do not accept that it is necessary for the plaintiffs to adopt a formal definition of the advertising campaign. As it stands, [66] adequately describes the “Moving with the Times” campaign. The pleading provides sufficient context for the specific pleadings of advertisements and statements that follows in [67] to [78]. Those specific pleadings include the date of the subject advertisement.
[24] Z’s position is that the inadequate definition of the advertising campaign has consequences for [76] and [79] of the claim. Paragraph [76] is a catch-all pleading of other advertising that “substantially repeated the key messages set out in paragraphs [66(b)] and [66(c)] and/or were substantially the same as the advertising listed at
paragraphs [66] to [75] above”. Z does not challenge the use of a catch-all pleading, but criticises the failure to plead the particular statements from the advertisements in
[67] to [75] which convey the key messages set out in [66(b)] and [66(c)].
[25] The key messages in [66(b)] and [66(c)] are clearly pleaded. Paragraph [76] is not confusing. Mr Every-Palmer confirmed that it is the plaintiffs’ intention to file an amended pleading following discovery, and if discovery discloses further advertisements that contain statements consistent with the key messages in [66(b)] and [66(c)] then those particular statements will be added to an amended claim. That approach is acceptable.
[26] Following completion of discovery it will be open to Z to seek confirmation that there are no other particular statements relied on by the plaintiffs in addition to those already pleaded in [67] to [75]. It is premature to require any further particulars in respect of [76].
[27]Paragraph [79] of the claim states:
79 As a consequence of the Moving with the Times campaign, Z Energy:
(a)improved the reputation of the Z Energy brand with the Aotearoa New Zealand public including consumers who were potential customers of Z Energy branded retail fuel sites, including in relation to its impact on climate change;
(b)was rated as Aotearoa New Zealand’s most preferred retail fuel brand; and
(c)increased its retail sales of petroleum products through Z Energy branded retail fuel sites.
[28] Z seeks further particulars to explain which statements in the “Moving with the Times advertisement” section and the “Other public statements” section led to the consequences pleaded in paragraph [79] and to explain the causal link. Z also seeks particulars of the period of time during which the consequences occurred.
[29] Mr Every-Palmer argued that the connection between: the particular statements pleaded in the “Moving with the Times advertisement” section and the “Other public statements” section; and the consequences pleaded in [79]; is adequate given that s 9 of the FTA requires a consideration of the defendant’s conduct as a whole.
[30] In my view, [79] does not sit well located in the “Moving with the Times advertisements” section of the claim, which otherwise focuses on describing the statements by or on behalf of Z that are alleged to be misleading or deceptive.
[31] Paragraph [79] more logically corresponds with the “Increased sales” section of the claim at [102] and [103]. Together, [79], [102] and [103] plead the alleged consequences of the advertising campaign and Z’s other public statements, including the alleged increase in Z’s sales of petroleum products from 2019 to 2023. If [79] is relocated in the “Increased sales” section of the claim, then no further particulars are required. Together, those three paragraphs fairly inform Z of the alleged consequences of the advertising campaign and Z’s other public statements.
The factual basis of the representations in each cause of action
[32] The first, third and fourth causes of action all rely on statements from both the advertising campaign and Z’s other public statements. The second cause of action relies solely on statements from the advertising campaign. There is significant crossover between all four causes of action in respect of the subject conduct by Z.
[33] It is conceivable that the plaintiffs could have brought one cause of action for misleading and deceptive conduct. The plaintiffs’ decision to divide its claims into four causes of action, with logical distinctions between the representations, was sensible and makes the claim more manageable.
[34] Each cause of action includes a paragraph that connects Z’s conduct (the statements) with the impressions allegedly conveyed by that conduct (the representations). For example, the opening words of [106] in the “emissions reduction representations” cause of action states:
The statements and related images made by Z Energy referred to at paragraphs
[66] to [101], individually and collectively conveyed the impression that:
…
[35] Ms Heine submitted that there is no adequate link between the individual statements pleaded in [66] to [101] and the nine representations pleaded in [106], being impressions conveyed by those statements. Z seeks clarification of whether each
statement is relied on individually or collectively, and if collectively, in what combinations.
[36] For the plaintiffs, Mr Every-Palmer submitted that the approach taken to the pleading is justified because of the requirement at trial to focus on the whole of Z’s conduct. Ms Heine acknowledged that the question for trial is the overall impression created by Z’s conduct as a whole.
[37] I consider that the connection between the statements pleaded in [66] to [101] and the pleaded representations is presently insufficient to fairly inform Z of the nature of the claim. For example, in respect of each representation pleaded in [106], it is reasonable to expect the plaintiffs to identify which particular statements from [66] to
[101] are relied on.
[38] It will be adequate if the plaintiffs identify the particular statements from [66] to [101] that are alleged to individually and collectively convey each representation. The simplest method for doing that is to specify the relevant paragraphs and subparagraphs from [66] to [101] relied on when each representation is pleaded. This should be done for all four causes of action.
[39] This identification need not descend into the level of detail of combinations sought by Z, which should remain a matter for evidence. It is unnecessary for the plaintiffs to specify whether each statement is relied on individually and collectively, or in what combinations. To require that pleading now would unduly constrain the plaintiffs. It would require the plaintiffs to consider and commit to nuanced arguments on a significant range of advertisements and public statements. The plaintiffs should be permitted some degree of flexibility in how they present their case, which will become apparent when evidence is served.
[40] The amended pleading will fairly inform Z of the advertisements and public statements, and particular statements within the advertisements and public statements, that are relied on to support each pleaded representation. I do not see any realistic danger of Z being taken by surprise.
The factual basis of the falsifications
[41] Z seeks a pleading of the factual basis for each falsification in the first, second and third causes of action.
[42] The pleading of the falsifications in each cause of action appear to largely correspond directly to the pleading of the representations. For example:
(a)[106(a)] pleads that “Z Energy was making changes to its business that would materially reduce the emissions created by it, including from the fuel that it sells”; and
(b)[108(a)] pleads that “Z Energy was not making any changes that would materially reduce its total emissions, including from the fuel that it sells”.
[43] Many of the pleaded representations, and therefore the corresponding falsifications, contain a subjective element. For example, [106(a)] and [108(a)] refer to “materially” reducing emissions. Other words used in the representations and falsifications that introduce subjectivity are “plan”, “intention”, “significant”, “substantial” and “meaningful”. Ms Heine described these allegations as “generalised”.
[44] In my view, the particulars requested go too far and are unnecessary to fairly inform Z of the nature of the claim it must meet. The allegations in the four causes of action are not advanced in a factual vacuum. The causes of action must be read in the context of the earlier pleadings, including the sections on “Z Energy’s growing emissions”, “Z Energy’s relevant initiatives” and “Increased sales” together with [79]. These pleadings provide sufficient particulars of the facts relied on to support the falsifications.
[45] It is unnecessary and undesirable for the plaintiffs to add cross-referencing to paragraph [108], [113] and [118] to call up paragraphs from the sections on “Z Energy’s growing emissions”, “Z Energy’s relevant initiatives” and “Increased sales” together with [79].
[46] Cross-referencing in each subparagraph in [108], [113] and [118] to specific paragraphs from the sections on “Z Energy’s growing emissions”, “Z Energy’s relevant initiatives” and “Increased sales” together with [79] would need to be extensive, and make the pleading difficult to follow. That level of specificity should await the evidence.
[47] The particulars requested by Z are not necessary to define the scope of the discovery required. The parties are already engaged in settling categories for tailored discovery.
The link between each particular representation and the corresponding falsification
[48] I accept Ms Heine’s submission that there needs to be an express link between the representations and the falsifications, for example linking the falsifications in [108] to the representations in [106]. The same applies to [111]/[113] and [116]/[118]. That is a much simpler exercise of cross-referencing.
Paragraphs [113(c)] and [118(d)]
[49] In respect of the second cause of action, Z also seeks further particulars of the allegation in [113(c)] that Z had increased both its sales of petroleum products and its market share, relating to:
(a)the relevant time period; and
(b)the brands of petroleum products.
[50] This request is repeated in respect of paragraph [118(d)] in the third cause of action.
[51] The particulars of the relevant time period are found in [102] and the link is obvious. The request for particulars of petroleum brands descends into an unnecessary level of detail. No further particulars are required.
When the amended statement of claim should be filed
[52] Mr Every-Palmer submitted that an amended statement of claim should await completion of discovery. Ms Heine submitted that the categories of tailored discovery cannot be settled until the amended pleading is filed. I do not accept either proposition.
[53] The amendments to the claim that are required as a result of this judgment are technical in nature. Amendment can be done immediately, and there is no reason to delay filing an amended pleading until discovery has been completed, which is likely to take a significant period of time.
[54] It may be necessary for the plaintiffs to file a further amended statement of claim following the conclusion of discovery, however the requirement of filing two further pleadings, when the first of them only requires technical changes to the pleading, is not unduly burdensome.
[55] As I have already commented, the discovery process should not be held up while the plaintiffs prepare their amended claim. The amended claim will not expand the range of Z’s conduct that is in issue. It will not alter the scope of discovery. The parties should proceed to settle the categories of tailored discovery as soon as possible. If they are unable to do so, then the Court can assist.
Costs
[56] Regarding costs, Mr Every-Palmer submitted that if Z is considered to be the successful party with this application, then costs should lie where they fall, or be reserved. Ms Heine submitted that costs should be reserved to be determined at the conclusion of the proceeding, to follow the substantive result.
[57]At this stage, all that is necessary is for costs to be reserved.
Orders
[58] The plaintiff shall file and serve an amended statement of claim, incorporating the further particulars required by paragraphs [20], [38] and [48] of this judgment, by 9 August 2024.
[59]Costs are reserved.
[60] The parties shall file a joint memorandum by 23 August 2024, seeking further directions for the proceeding, or a list call or case management conference if appropriate.
Associate Judge Brittain
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