Luxottica Retail New Zealand Limited v Specsavers New Zealand Limited HC Auckland CIV 2010-404-5439

[2011] NZHC 596

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2010-404-5439

UNDER  the Fair Trading Act 1986

AND UNDER                  the Declaratory Judgments Act 1908

BETWEEN  LUXOTTICA RETAIL NEW ZEALAND LIMITED

Plaintiff

ANDSPECSAVERS NEW ZEALAND LIMITED

Defendant

Hearing:         14 and 15 June 2011

Counsel:         IM Gault and RA Havelock for plaintiff

BD Gray QC and PDM Johns for defendant

Judgment:      22 June 2011 at 4:00 PM

JUDGMENT OF ASSOCIATE JUDGE FAIRE

[on applications to strike out claim and for summary judgment on defence and

on counterclaim]

Solicitors:           Bell Gully, PO Box 4199, Auckland 1140

MinterEllisonRuddWatts, PO Box 3798, Auckland 1140

LUXOTTICA RETAIL NEW ZEALAND LIMITED V SPECSAVERS NEW ZEALAND LIMITED HC AK CIV 2010-404-5439 22 June 2011

The applications

[1]      Two applications were listed for determination. They are:

(a)      The  defendant’s  application,  dated  8 October  2010,  which  seeks summary judgment against the plaintiff in respect of the defendant’s counterclaim; and

(b)The  defendant’s  application,  dated  7 February  2011,  which  seeks orders striking out the plaintiff’s claim, leave to seek summary judgment against the plaintiff in respect of the plaintiff’s claim and summary judgment against the plaintiff in respect of the plaintiff’s claim.

[2]      In the course of argument Mr Gray sought leave to withdraw the defendant’s application for summary judgment against the plaintiff in respect of the defendant’s counterclaim.  Counsel agreed that I should grant leave to withdraw the application and reserve costs.  Orders to that effect are made at the conclusion of this judgment.

Background

[3]      The plaintiff and defendant are competitors in retail optometry.   They are involved in the marketing and sale of prescription glasses to the public.  The plaintiff OPSM, is part of the global Luxottica group of companies, which operates OPSM branded stores in New Zealand.  The defendant is also part of a global group and it operates   Specsavers   branded   stores   in   New   Zealand   through   a   franchise arrangement. The defendant entered the New Zealand market in late 2008.

[4]      This proceeding relates to two similar comparative advertising campaigns conducted by the defendant in May and August 2010. The first advertising campaign consisted of a television commercial and a print advertisement published in various newspapers.    The second advertising campaign featured only a television advertisement.

[5]      The advertisements compared the prices of two pairs of progressive glasses at the plaintiff’s stores with the price of two pairs of progressive glasses at the defendant’s stores.   The advertisements say that the plaintiff’s prices, which are directly referred to, were obtained through two mystery shopping campaigns that were conducted prior to each advertising campaign.

[6]      The  defendant  instructed  GAPbusters  Worldwide  to  seek  out  mystery shoppers, who were instructed to visit a sample of OPSM stores throughout New Zealand.   The mystery shoppers were required  to be existing spectacle wearers within the prescription range of up to -3.0 to +3.0.  The shoppers were instructed to visit an OPSM store and to insist upon and purchase two pairs of the cheapest frames with the cheapest progressive lenses available at the store that met their existing prescription.

[7]      In  the  period  March  2010  to April  2010  eight  mystery  shoppers  visited OPSM stores and made 14 purchases of progressive glasses.  In July 2010 at least five mystery shoppers visited OPSM stores and made 16 purchases of progressive glasses.

[8]      The  glasses  and  sales  receipts  that  the  mystery  shoppers  obtained  were provided  to  GAPbuster  Worldwide,  which  passed  the  information  on  to  the defendant.  The defendant used the results of the first mystery shopping exercise to make comparative advertising claims in the first advertising campaign and the results of the second mystery shopping exercise to make comparative advertising claims in the second advertising campaign.

[9]      The plaintiff’s solicitors wrote to the managing director of the defendant on

14 May 2010 and following the defendant’s television commercial.  The letter set out specific complaints about the television commercial and gave notice to the defendant that the plaintiff considered that the comparative claims contained in the commercial were misleading and deceptive or likely to mislead and deceive potential customers for prescription glasses in breach of the Fair Trading Act 1986.   It sought further information and undertakings.

[10]     It evoked a response from the solicitors acting for the defendant on 17 May

2010.    That,  in  essence,  set  out  the  defendant’s  position,  which  was  that  the television advertisements were not a comparison of quality or style.  They compared the price of two pairs of the cheapest frames with the cheapest progressive lenses available at OPSM and Specsaver stores.  The defendant alleged that no claim was made about the quality or style of the glasses.   The advertisements, they claimed, simply promoted the defendant’s product on the basis of price alone.

[11]     The  response  letter  drew  attention  to  the  fact  that  a  similar  television commercial had been run in Australia earlier in 2010 and following completion of the mystery shopping project.  They pointed out that the commercial was challenged by the plaintiff and an application for an urgent interlocutory injunction was sought but was declined.

[12]     The content of the first television commercial and print advertisement was similar to a Specsavers television commercial  previously broadcast in Australia. That advertising used the same images of glasses beneath the heading OPSM.   In January 2010 the plaintiff’s Australian company issued proceedings in Australia against the defendant’s Australian company in respect of that commercial.   The proceeding included an application for an interlocutory injunction.  That was heard on  a  Pickwick  basis  on  20 January  2010.    The  plaintiff  failed.    McDougall J concluded that the case the plaintiff sought to make out was so weak that it did not justify the grant of interlocutory injunctive relief.   The proceeding was ultimately settled by the parties in May 2010.

[13]     A copy of the written brief provided to the mystery shoppers and copies of the receipts received in relation to each of the 14 shopping experiences relied upon was made available.

[14]    The advertisements relate to progressive glasses.   They are prescription spectacles with progressive focus lenses that are manufactured so as to correct near and far-sightedness.   Both plaintiff and defendant supply various grades of progressive lenses.  They vary in price.  More expensive lenses may be thinner or tougher than cheaper options.   Both parties also supply various options on lenses

such as reflective coatings, tints or transitions which causes lenses to darken in bright light.  These extras commonly come at an additional cost to a purchaser.  The other component of the glasses is the frame.   Both plaintiff and defendant supply customers with a wide range of frames across a correspondingly wide range of price points.

[15]     I was provided with a DVD of the television commercials.

[16]     Mr Gault,  in  his  written  submission,  summarises  what  appeared  in  the television and print commercial and described the position in the following way, which I understood to be accepted as correct by Mr Gray.

10.      In the first TVC [commercial], Specsavers stated that:

“At  Specsavers  you  can  get  two  pairs  of  our  lowest  priced progressive glasses and pay no more than $399 in any store you visit.

But at OPSM we found that two pairs of their cheapest progressives varied by over $200 from store to store, anywhere up to $976 for two pairs”

11.      On  screen,  the  prices  were  in  large  bold  font  but  the  “UP  TO”

appearing above $976 was in half size font.

12.      The print advertisement had materially identical content.

[17]     To that summary must be added that there is a subscript in the advertisement which provides:

Based on 14 mystery shopper purchases nationally between 16/3/10 and

26/4/10.

[18]     Mr Gault’s summary in his submissions dealing with the second advertising campaign said:

14.      In the second TVC, Specsavers stated that:

“At Specsavers you can get two pairs of progressive glasses for as

little as $399.

But at OPSM stores visited mystery shoppers found the price of two pairs of the cheapest progressives varied by over $300, paying as much as $892 for two pairs.”

15.On screen, again the prices were in large bold font but the words “AS LITTLE AS” and “AS MUCH AS” were in half size font.

[19]     To that summary must be added that the subscript provides:

Based on 16 mystery shoppers nationally between 19/7/10 and 27/7/10.

[20]   The plaintiff applied for an interlocutory injunction against the second advertising  campaign.   The application  was  not  pursued  as  the  advertising was shortly to end, as recorded in a minute of Rodney Hansen J made on 18 August

2010.  The plaintiff had previously threatened an interlocutory injunction against the first advertising campaign but did not proceed with it following correspondence between the parties’ solicitors in which it was advised on behalf of the defendant, before any application for an injunction was made, that the advertising would cease.

The Court’s approach to strike out applications

[21]     Rule 15.1 of the High Court Rules provides:

15.1   Dismissing or staying all or part of proceeding

(1)     The court may strike out all or part of a pleading if it—

(a)       discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or

(b)       is likely to cause prejudice or delay; or

(c)       is frivolous or vexatious; or

(d)       is otherwise an abuse of the process of the court.

(2)     If the court strikes out a statement of claim or a counterclaim under subclause (1), it may by the same or a subsequent order dismiss the proceeding or the counterclaim.

(3)     Instead of striking out all or part of a pleading under subclause (1), the court may stay all or part of the proceeding on such conditions as are considered just.

(4)     This rule does not affect the court’s inherent jurisdiction.

[22]     The general  principles  to  be applied  in  a strike out  application  are well known.  They were confirmed in Attorney-General v Prince and Gardner where the Court of Appeal said:1

A striking-out application proceeds on the assumption that the facts pleaded in the statement of claim are true.  That is so even although they are not or may not be admitted.  It is well settled that before the Court may strike out proceedings the causes of action must be so clearly untenable that they cannot possibly succeed (R Lucas & Son (Nelson Mail) Ltd v O’Brien [1978]

2 NZLR 289 at pp 294-295; Takaro  Properties  Ltd  (in  receivership)  v

Rowling [1978] 2 NZLR 314 at pp 316-317); the jurisdiction is one to be exercised sparingly, and only in a clear case where the Court is satisfied it has the requisite material (Gartside v Sheffield, Young & Ellis [1983] NZLR

37 at p 45; Electricity Corporation Ltd v Geotherm Energy Ltd [1992] 2

NZLR  641);  but  the  fact  that  applications  to  strike  out  raise  difficult questions  of  law,  and  require  extensive  argument  does  not  exclude jurisdiction (Gartside v Sheffield, Young & Ellis).

[23]     The  principles  referred  to  above  were  endorsed  in  Couch  v  Attorney- General.2

[24]     The court can have regard to evidence either put forward in opposition or support of the application provided it does not contradict that which is pleaded in the statement of claim: Attorney-General v McVeagh.3

[25]     Applications are determined primarily on the pleadings.   The Court may consider affidavits if they disclose, despite what is contained in the pleadings, a cause of action that may succeed.  If that is so, the Court may instead of striking out the pleading give the plaintiff an opportunity to amend so as to plead a tenable cause

of action properly.  However, it was said in Marshall Futures v Marshall:4

There may, of course, be circumstances where the pleading is so bad that the Court should not allow this opportunity and simply strike out the relevant pleading leaving it to the plaintiff to come again if within time and capable of putting his house in order.

1      Attorney-General v Prince and Gardner [1998] 1 NZLR 262 (CA) at 267.

2      Couch v Attorney-General [2008] NZSC 45; [2008] 3 NZLR 725.

3      Attorney-General v McVeagh [1995] 1 NZLR 558 (CA) at 566.

4      Marshall Futures v Marshall [1992] 1 NZLR 316 at 324.

The Court’s approach to a summary judgment application by a defendant

[26]     Rule 12.2(2) of the High Court Rules requires that the defendant satisfy the court that none of the causes of action in the plaintiff’s statement of claim can succeed.

[27]     It was said in Westpac Banking Corporation v MM Kembla (NZ) Ltd5  when dealing with the predecessor of r 12.2(2), namely r 136(2):

[58]      The applications for summary judgment were made under R 136(2) of the High Court Rules which permits the Court to give judgment against the plaintiff “if the defendant satisfies the Court that none of the  causes  of  action  in  the  plaintiff’s  statement  of  claim  can succeed”.

[59]     Since R 136(2) permits summary judgment only where a defendant satisfies the Court that the plaintiff cannot succeed on any of its causes of action, the procedure is not directly equivalent to the plaintiff's summary judgment provided by R 136(1).

[60]      … R 136(2) [the present r 12.2(2)] permits a defendant who has a clear answer to the plaintiff which cannot be contradicted to put up the evidence which constitutes the answer so that the proceedings can be summarily dismissed. …

[61]      The   defendant   has   the   onus   of   proving   on   the   balance   of probabilities that the plaintiff cannot succeed. Usually summary judgment for a defendant will arise where the defendant can offer evidence which is a complete defence to the plaintiff’s claim. Examples, cited in McGechan on Procedure at HR 136.09A, are where the wrong party has proceeded or where the claim is clearly met by qualified privilege.

[62]      Application for summary judgment will be inappropriate where there are disputed issues of material fact or where material facts need to be ascertained by the Court and cannot confidently be concluded from affidavits. It may also be inappropriate where ultimate determination turns on a judgment only able to be properly arrived at after a full hearing of the evidence. Summary judgment is suitable for cases where abbreviated procedure and affidavit evidence will sufficiently expose the facts and the legal issues. Although a legal point may be as well decided on summary judgment application as at trial if sufficiently clear (Pemberton v Chappell [1987] 1 NZLR 1), novel or developing points of law may require the context provided by trial to provide the Court with sufficient perspective.

[63]      Except in clear cases, such as a claim upon a simple debt where it is reasonable to expect proof to be immediately available, it will not be

5      Westpac Banking Corporation v MM Kembla (NZ) Ltd [2001] 2 NZLR 298 (CA) at [58]-[64].

appropriate to decide by summary procedure the sufficiency of the proof  of  the  plaintiff’s  claim.  That  would  permit  a  defendant, perhaps more in possession of the facts than the plaintiff (as is not uncommon where a plaintiff is the victim of deceit), to force on the plaintiff’s case prematurely before completion of discovery or other interlocutory steps and before the plaintiff's evidence can reasonably be assembled.

[64]      The defendant bears the onus of satisfying the Court that none of the claims can succeed. It is not necessary for the plaintiff to put up evidence at all although, if the defendant supplies evidence which would satisfy the Court that the claim cannot succeed, a plaintiff will usually have to respond with credible evidence of its own. Even then it is perhaps unhelpful to describe the effect as one where an onus is transferred. At the end of the day, the Court must be satisfied that none of the claims can succeed. It is not enough that they are shown to have weaknesses. The assessment made by the Court on interlocutory application is not one to be arrived at on a fine balance of the available evidence, such as is appropriate at trial.

[28]     The passages to which I have made reference were approved by the Privy

Council in Jones v Attorney-General.6

[29]     Rule  12.4(3)  permits  a  defendant  to  make  an  application  for  summary judgment at the time the statement of defence is served on the plaintiff, or later with the leave of the Court.  No guidelines are laid down in the rule for the granting of leave.  However, factors relevant to the exercise of the discretion will often be:

(a)       The  merits  of  the  applicant’s  case  and  whether  it  calls  for  a

determination at this time rather than delaying it until trial; (b)           Whether there is any explanation for the delay; and

(c)       Whether there is any risk of a miscarriage of justice.

Where  such  cases  arise,  it  is  usual  to  hear  the  application  for  leave  and  the application for summary judgment at the same time because the merits of the application almost certainly will be important in determining the discretion to grant

leave.

6      Jones v Attorney-General [2004] 1 NZLR433 (PC) at 437.

[30]     Mr Gault drew attention to the fact that no specific explanation for the delay had been provided by the defendant.  The defendant had simply taken the position that the delay was not material.  Mr Gault recognised, however, that of importance in this particular case, and in the scheme of things because the delay is not great, is the overall merit of the application.   It is for that reason that I intend to concentrate specifically on that aspect of the summary judgment application.

The statement of claim

[31]     The plaintiff pleads that both advertising campaigns breached ss 9 and 13(a)

and (g) of the Fair Trading Act 1986.

[32]     Section 9 of the Fair Trading Act 1986 provides:

9         Misleading and deceptive conduct generally

No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

[33]     Section 13(a) and (g) of the Fair Trading Act 1986 provide respectively:

13       False or misleading representations

No person shall, in trade, in connection with the supply or possible supply of goods or services or with the promotion by any means of the supply or use of goods or services,—

(a)       make  a  false  or  misleading  representation  that  goods  are  of  a particular kind, standard, quality, grade, quantity, composition, style, or model, or have had a particular history or particular previous use; or

…

(g)       Make a false or misleading representation with respect to the price of any goods or services; …

[34]     With respect to the first advertising campaign, the statement of claim pleads as follows:

7.Accordingly,  the  Specsavers  first  TVC  and  print  advertisement represent that:

(a)       The comparative price for two pairs of the lowest priced progressive glasses as shown on screen and in print is $399 at Specsavers compared with $976 at OPSM.

(b)       The compared progressive glasses shown on screen and in print are the lowest priced progressive glasses available at Specsavers and OPSM respectively.

(c)       The compared progressive glasses shown on screen and in print are products of equivalent or substantially similar quality.

(d)       The compared lowest priced progressive glasses are supplied with PENTAX standard progressive lenses.

(e)      The price of OPSM’s cheapest progressive glasses is approximately 2.5 x more expensive than Specsavers’ lowest price progressive lenses.

[35]     A similar pleading is made in respect of the second television commercial save that the following changes are made:

(a)      The reference to “and in print” in (a), (b) and (c) of the particulars is

omitted;

(b)      The reference in (a) to the price of $976 is replaced with the price of

$892; and

(c)      In (e) the reference to “2.5 x” is replaced by “2 x”.

[36]   The plaintiff pleads an alternative representation in respect of the first advertising campaign, namely that:

OPSM’s prices for two pairs of the cheapest progressive glasses as shown on screen and in print vary from approximately $755 to $976 from store to store, whereas Specsavers’ price for two pairs of the lowest price progressive glasses is shown on screen and in print does not vary.

[37]     A slightly different formulation of the alternative representation is made in respect of the second television campaign, where the allegation is made that the television commercial:

Represents that OPSM’s price for two pairs of the cheapest progressive

glasses as shown on screen vary from approximately $590 to $892 whereas

Specsavers’ price for two pairs of the lowest price progressive glasses no range is given above $399.

[38]   The statement of claim next pleads the respects in which the pleaded representations are said to be misleading and deceptive or likely to mislead and deceive.  In relation to the first campaign, that is particularised as follows:

(a)       The price comparison is based on only 14 so-called mystery shopper purchases at 10 OPSM stores and no mystery shopper purchases in Specsavers stores.

(b)       The  mystery  shoppers  did  not  purchase  the  OPSM  progressive glasses shown on screen and in print.

(c)       The mystery shopper sample size is too small and haphazard to be a statistically reliable sample from which the claims made in the advertisements can be made.

(d)       The OPSM progressive frames shown on screen and in print are not available for sale at OPSM stores in New Zealand.

(e)       The OPSM progressive frames shown on screen and in print are not the lowest priced progressive frames.

(f)       The mystery shoppers did not purchase the lowest price progressive glasses available.

(g)       The  one  mystery  shopper  who  paid  $976  for  two  pairs  did  not purchase  the  cheapest  progressive  glasses,  and  the  glasses  had “extra” options, namely a coating.

(h)       The  14  mystery  shoppers  purchased  different  combinations  of frames and lenses and paid between $536 and $976 for two pairs.

(i)        OPSM progressive glasses are not supplied with PENTAX  standard progressive lenses.

[39]     In relation to the second campaign a similar allegation is made save that:

(a)       the number of purchases referred to in particular (a) is increased to 16; (b)    the pleading in (d) is not repeated;

(c)       in relation to (g) the figure is changed from $976 to $892; and

(d)      in (h) again the change is from “14 mystery shoppers purchased” to

“16 mystery shoppers purchased”.

Legal principles

[40]     The  Fair  Trading Act  1986  is  aimed  primarily  at  the  protection  of  the consumer. A business competitor is entitled to take action where an infringement has occurred, both for its own benefit and in the wider interests of the public:   Taylor Bros Ltd v Taylors Group Ltd.7

[41]     This  case  involves  comparative  advertising.     Comparative  advertising promotes  the  products  of  a  business  by  unfavourably  comparing  those  of  a competitor with its own.   There is nothing wrong in principle with comparative advertising.  Provided that it is accurate and does not involve half-truths it promotes competition and helps consumers make informed choices: Gillette Australia Pty Ltd v Energiser Australia Pty Ltd; Specsavers Pty Ltd v The Optical Superstore Pty Ltd

(No 2).8

[42]     Comparative advertising carries risks with it.  It may be misleading because it creates a “half-truth” by omitting material necessary in order to make the comparison fair: Hoover (Aust) Pty Ltd v Email Ltd.9

[43]     However,  a  robust  approach  is  called  for  when  determining  whether television commercials are false, misleading or deceptive.  That is because the public is accustomed to the puffery of products in advertising: Energizer Australia Pty Ltd v Gillette Australia Pty Ltd.10

[44]     The issue of whether advertising is misleading or deceptive is a question to be determine on a overall assessment, having regard to the effect of the advertising on reasonable members of the public in all the circumstances: Energizer NZ Ltd v

Panasonic New Zealand Ltd.11

7      Taylor Bros Ltd v Taylors Group Ltd [1988] 2 NZLR 1 (CA) at 39.

8      Gillette Australia Pty Ltd v Energiser Australia Pty Ltd [2002] FCAFC 223; (2002) 193 ALR

629 at [20]; Specsavers Pty Ltd v The Optical Superstore Pty Ltd [2010] FCA 566.

9      Hoover (Aust) Pty Ltd v Email Ltd (1991) 104 ALR 369 at 375.

10     Energizer Australia Pty Ltd v Gillette Australia Pty Ltd (2001) 189 ALR 480.

11     Energizer NZ Ltd v Panasonic New Zealand Ltd HC Auckland CIV 2009-404-4087,

16 November 2009.

[45]     The test is objective and the court must determine the question for itself: Taco

Co of Australia Inc v Taco Bell Pty Ltd.12

[46]     The likelihood of recipients of a representation being mislead or deceived is not a matter to be proved by evidence.   It is a jury question for the trier of fact: Domain Names Australia Pty Ltd v .au Domain Administration Ltd.13

[47]     Evidence of opinions based on expert appreciation of consumer behaviour will rarely be of assistance in litigation where the court’s primary concern is with the behaviour to be expected of, and judgments likely to be made by, ordinary people in the community intent on making a relatively modest purchase in a conventional way:

Cat Media Pty Ltd v Opti-Healthcare Pty Ltd.14

[48]     What is important is a consideration of the whole advertisement.   It is not right to select some words only and to ignore others which provided the context which give meaning to the particular words: Geddes v New Zealand Dairy Board.15

[49]     The focus is upon what is said and done, rather than on what is not said or done.  The legal obligation is to avoid falsehood.  It is not an obligation to provide compendious explanations: Geddes v New Zealand Dairy Board.16

The issues

[50]     The  applications  raise  the  following  specific  issues  for  determination, namely:

(a)       Is it reasonably arguable that:

(i)The advertisement made the representations that are pleaded by the plaintiff in the statement of claim?

12     Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202.

13     Domain Names Australia Pty Ltd v .au Domain Administration Ltd [2004] FCAFC 247.

14     Cat Media Pty Ltd v Opti-Healthcare Pty Ltd [2003] FCA 133 at [55].

15     Geddes v New Zealand Dairy Board [2005] NZCA 159 at [80].

16     Ibid, [81].

(ii)If  so,  that  they were  misleading  or  deceptive,  or  likely to mislead or deceive?

(b)Are there any material disputes as to relevant facts?  This must not be confused with a dispute as to the effect of those facts.

The pleaded representations

[51]     I now deal with each of the pleaded representations to see if, in fact, they are representations arising from the advertisement.   Each pleaded representation is set out in [34] and [35] of this judgment, but for ease of reference is repeated.

The comparative price for two pairs of the lowest price progressive glasses as shown on screen and in print as $399 at Specsavers compared with $976 at OPSM

[52]   I am of the view that the advertisement would not make this specific representation.  My reasons for that conclusion are these:

(a)      There is not one price noted for OPSM progressive glasses in the advertisement.  The text in the advertisement states that OPSM price is “up to $976”;

(b)The subscript and the text in the print advertisement refer to the prices found at OPSM.  They make it plain that they are found as a result of the mystery shoppers; and

(c)      The fact that OPSM may be able to sell progressive glasses for $652 as asserted by its New Zealand sales director, Ms Ephraims, is not the issue.  The advertisement refers to what was found as a result of the request to purchase by the mystery shoppers.

[53]     The plaintiff submits that the evidence of the purchase at $976 contains conflicting material.  It is suggested that this purchase was not a purchase based on the instruction and the advertisement, namely at the cheapest price.  Three affidavits have been sworn in relation to this transaction.  The purchaser was Mrs Deslie Field.

The shop assistant who served Mrs Field was Ms Yi-Chun Lee.  Ms Lee confirmed the  instructions  she  received  from  Mrs Field  about  the  purchase  twice  in  her affidavit.  In the first reference she said:

I think Mrs Field told me she wanted two pairs of the cheapest glasses with progressive lenses.

[54]     An issue has arisen as  to whether Mrs Field was expressly told that the purchase of lenses with invisible ultra treatment would be at an additional cost. Nowhere  in  Ms Lee’s  affidavit  does  she  say  that  she  told  Mrs Field  that  that treatment would incur an extra cost.  Mrs Field has sworn an affidavit in which she said:

I explained to Lee that I wanted glasses with the cheapest progressive lenses

… I told her again that I only wanted spare glasses so I did not want to pay any more than necessary.

[55]     Ms Lee  then  explained  how  a  possible  means  of  purchase  involving  a discount could be handled and, after checking the figures, she selected the cheapest option that was given to her.

[56]     There is,  next,  an  affidavit  from  Kathleen  Donna Cook,  who recounts  a telephone discussion she had with Mrs Field in November 2010.  The purpose of her call was apparently to ask Mrs Field whether she was aware that the glasses she purchased including an extra coating treatment.  She said that Mrs Field could not remember the part of the conversation with the shop assistant in which the extra coating was discussed.  She apparently told Ms Cook that she thought she was not aware that she was agreeing to purchase glasses which included this treatment, but was not certain. Ms Lee’s affidavit contains no statement that she advised Mrs Field that lenses without the ultra lens treatment would be cheaper.

[57]     The position, then, is that there is nothing before the Court to indicate that Ms Lee advised Mrs Field that there would be an extra charge for the ultra lens treatment.  The evidence discloses that what Mrs Field paid was the lowest price for two pairs of progressive glasses that were offered to her by Ms Lee. This is entirely in line with the tenor of the advertisement, which states (emphasis added): “But at OPSM stores visited mystery shoppers found the price of two pairs of the cheapest

progressives varied by over $300, paying as much as $892 for two pairs”; and “But

.at OPSM we found that the price for 2 pairs of their cheapest progressives varied by over $200 from store to store, anywhere up to $976 for 2 pairs”.  The inclusion of these specific details necessarily limits the scope of this advertisement to what was found at the particular OPSM stores visited by the mystery shoppers on the days that they  went.   As  the  advertisement  did  not  purport  to  represent  all  of  the  stock available at OPSM, whether it comprehensively reflected this is not in issue. As

stated in Luxottica Retail v Specsavers:17

Whether the comparison is a valuable exercise is thus open to doubt. But that is not the point. The point is whether the advertisement is misleading or deceptive ... It could only be misleading or deceptive ... if it did not state accurately results obtained from the mystery shopping exercise. Since the figures that it states are available from the exercise, and justified by the results obtained, it does not seem to me to be seriously arguable that the advertisement is misleading or deceptive in that respect.

[58]     In the second advertising campaign, the figure is reduced to $892.  There is evidence of a transaction involving a Mr Anthony Dickason at a store in Remuera where he purchased two pairs of progressive glasses from OPSM for $892.   The shop  assistant  who  served  him,  Ms Bridget  Garbett,  confirms  that  Mr Dickason asked for the cheapest progressive glasses available.  He was offered anti-reflective coating, which he refused.   Ms Garbett confirms that she offered Mr Dickason a package deal  on  the Ray-Ban  frames,  not  realising there  were cheaper options. Ms Muir, who is a registered optometrist and a Vice-President of product and IT at the plaintiff’s Australian company, suggests that most customers would understand that Ray-Bans are not the cheapest frames available.  However, I consider that even if Mr Dickason was aware that Ray-Bans are generally an expensive brand, he may have been under the impression that they were significantly reduced in this case. Whatever his reasoning, I accept Mr Gray’s submission that is mere speculation. The evidence is that Mr Dickason made it clear that he required the cheapest glasses. He chose what was presented to him as the cheapest lenses available.  He rejected optional extras that were offered.   He had particular frames represented to him as being the cheapest under a special package deal.  Clearly, there is no misleading or

deceptive conduct in describing the price paid by Mr Dickason of $892 as being

17     Luxottica Retail v Specsavers [2010] NSWSC 37 at [36].

what was found to be the cheapest price for progressive lens glasses at the time of the purchase.

The compared progressive glasses shown on screen and in print are the lowest priced progressive glasses available at Specsavers and OPSM

[59]     Mr Gray  submitted  that  this  particular  was  not  capable  of  making  the representation alleged.  He submitted that to do so the Court would need to find that by depicting specific frames, the advertising was capable of being understood to mean that those specific frames alone were the actual lowest priced frames available for each store.   Mr Gray submitted, in my view correctly, that consumers would understand that there are a range of frames available and that those shown were merely intended to be representative.  I do not accept Mr Gault’s submissions that the frames in the advertisement were at least among the lowest progressive glasses available as flowing from the advertisement itself.  He referred to evidence from his client company’s optometrist as to available frames.  That all avoids the fact that the advertisement refers specifically to the findings  made as a result of requests to purchase made by the mystery shoppers.  I conclude that the advertisement was not capable of making the representation which is alleged at that is part of the statement of claim.

The compared progressive glasses shown on screen and in print are products of equivalent or substantially similar quality

[60]     Mr Gault invited me to imply that the comparison of prices did involve a comparison of quality.   Logically, there is little point in comparing the prices of vastly different products, so it may be inferred that they are of approximately similar quality. However, as mentioned above at [57], the scope of this advertisement is explicitly limited to what was offered to customers as the cheapest retail prices.  The advertisement makes no reference at all to quality.  Further, the material before the Court indicates that there is a large range of types of lenses and frames and coatings available.  There is simply no foundation for the proposition that an advertisement, which is directed to price, implies similar quality.

[61]     Application was made to amend to include a specific allegation of lesser quality.  For the reasons I have just covered, there is no justification for this.

The compared lowest priced progressive glasses are supplied with PENTAX standard progressive lenses

[62]     Both advertisements contain the subscript stating that “complete with PENTAX standard progressive lenses.    Prices  for other lens  types  and  extra options  may differ.”  Mr Gault invited me to conclude that the viewer of this advertisement would make a connection between PENTAX lenses and the OPSM glasses shown.  PENTAX lenses are a brand name for lenses used exclusively by Specsavers.  I agree that there is a small risk that a viewer may wrongly believe that both glasses depicted in the advertisement are supplied with PENTAX standard progressive lens, when in fact they are not.

The price of  OPSM’s  cheapest  progressive glasses  is  approximately 2.5  x  more

expensive than Specsavers’ lowest price progressive lenses

[63]     Mr Gault submitted that the advertisements create an overriding impression for viewers that  OPSM’s cheapest  progressive  glasses  are,  in  terms  of  the first advertising campaign 2.5 times more expensive than Specsavers’ and, in relation to the second, 2 times more expensive than Specsavers’.   To get to that position he ignores the qualifying explanations contained in the voice-over and subscript text. Mr Gray  drew  attention  to  the  fact  that  the  advertising  does  not  make  any representation about the overall or average difference between OPSM’s prices and those of Specsavers.  The advertising identifies that OPSM charged a range of prices by  reference  to  an  upper  limit  of  the  prices  that  were  charged  to  the  mystery shoppers.  I cannot read into the advertisement any representation of a general nature indicating an average approximate price difference between the two produces. Counsel did address on a mathematical exercise and what the percentage difference might be.  I simply do not find that helpful in this case because I do not believe that exercise would be carried out by a viewer who was confronted with the advertisement.  What the advertisement says is clear.  It makes no precise statement about  average  differences.    It  simply  refers  to  the  purchase  price  for  cheapest

Specsavers progressive glasses and the range found when the mystery purchasers sought to purchase progressive glasses from OPSM.

[64]     I next consider the alternative representation pleaded.

OPSM’s prices for two pairs of the cheapest progressive glasses as shown on screen and in print vary from approximately $755 to $976 from store to store, whereas Specsavers’ price for two pairs of the lowest price progressive glasses is shown on screen and in print does not vary

[65]     It should be noted that the concerns under this particular relate to the latter point, that Specsavers’ prices do not vary, rather than the specific price range stated. Mr Gault submitted that the advertisement focussed on the variation in OPSM’s prices without any reference to any specific amounts by which Specsavers own prices can vary.  That overlooks the qualifiers that Specsavers will vary if lenses or other extra options are chosen and the words “as much as”.  I do not consider that this is a representation that is made by the advertisement.

[66]     Mr Gray invited me to take account of the inconsistency that exists between some of the particulars which assert a representation that OPSM’s lowest price is contained in the advertisement, and with what is set up in the alternative pleading, namely that the OPSM’s price varies in the manner described.

[67]     This is not a complicated advertisement with lots of words or connotations that can arise from what is disclosed.   When one stands back and considers the advertisement, I am left with the clear impression that the defendant advances its lowest price for two pairs of progressive glasses and advises those viewers of the television advertisements and readers of the print of what has been discovered as a result of mystery shoppers making requests of OPSM stores for the cheapest priced progressive lens glasses.  No error in the information provided in the advertisement has been established.

Are there errors of fact?

[68]     I next consider the allegations of fact contained in paragraphs 10 and 15 of the statement of claim and which I have summarised in [38] and [39] of this judgment.  Strictly speaking, it is probably not necessary to consider them in view of the findings I have made that, with one exception, there is no representation made in the way that has been pleaded.  However, some comment on the allegations of fact is now made.

[69]     I deal with the first particular as set out in [38](a). This allegation is based on the fact that the price comparisons were based on a specific number of mystery shoppers at OPSM stores and that no mystery shoppers made purchasers at Specsavers stores.  As a matter of fact this is true.  However, the advertisements are not misleading and deceptive in this respect because the specific facts are expressly stated in the advertisement.

[70]     I deal next with the statements of fact which are set out in [38](b), (d) and (e). I accept Mr Gray’s submission that the facts as stated in these paragraphs may be true, but the OPSM glasses depicted in the advertising campaign very closely resemble OPSM’s lowest priced progressive glasses.  The overall impression given by the advertisement cannot, therefore, be misleading.

[71]     So far as the question of purchasers in relation to the second advertising campaign  are  concerned,  purchases  were  made  so  that  the  allegations  in  the statement of claim which are represented at [38](b) and (d) are simply incorrect.

[72]     I next refer to the allegation of fact contained in the pleading set out in paragraph 38(c) in this judgment.  The advertising does not make any claim based on statistical analysis such as averages.   The number of shoppers would seem to be irrelevant, especially as the advertising specifies the number of shoppers involved.  It is hardly unusual for advertising of this sort to contain very small sample sizes.  If there is no statistical analysis, then I fail to see why the analysis that was undertaken by Professor Triggs, in this case, can assist me.     Certainly, it would not reflect the usual way that prospective customers would analyse such representations.

[73]     I refer to the allegation and what I have set out in [38](f).  The evidence is that OPSM’s own employees were asked by the mystery shoppers to make available for purchase two pairs of the lowest priced progressive glasses available.  What was sold was the lowest price that was in fact made available to the mystery shoppers. The theoretical presence of a lower price that OPSM could have offered is not relevant, particularly when the price was not made available to the customer who asked for it at the time.

[74]     I refer to the pleaded fact set out in [38](g).  The evidence before me is that the shoppers who purchased glasses for $976 and $892 did so having asked for the cheapest progressive glasses.   What they received was as a result of that specific request.

[75]     I refer next to the allegation of fact in [38](h). Whilst that statement is true, it does not render the advertisement misleading or deceptive.

[76] I refer to the allegation of fact contained in [38](i). I have already, in analysing the representations, noted that a viewer of the advertisement might well form the view that a PENTAX lens was supplied by OPSM, or could be supplied by OPSM. I am not satisfied, however, that this error is anything other than de minimis in the whole scheme of things. What was explained to me in the evidence is that PENTAX is a brand name only. OPSM has its own brand, which would have similar, if not identical, characteristics to those of the PENTAX standard progressive lenses. Therefore, I conclude there is nothing in this allegation that justifies the relief sought in the statement of claim.

[77]     The matters raised in this application are not dissimilar to those that were litigated before the Federal Court.  I have already recorded that the court concluded that there was no serious question to be tried and that, in that court’s view, the case was so weak that it did not justify the grant of an interlocutory injunction.  I cannot see, in this case, how allowing these matters to go to trial would put or place the trial court in any better position that I am to analyse the allegations of representation and breach that have been made.  I am therefore satisfied that the defendant has satisfied the onus of proof that allows for summary judgment in respect of the cause of action

pleaded in the statement of claim to be entered in favour of the defendant.  Indeed, one wonders why, where the events have already been, in part, considered by another court, and, in fact, relate to advertising campaigns that concluded in August 2010, the matter is being pursued.  One can only hope that the parties might take on board the advice of the Court of Appeal in Geddes v New Zealand Dairy Board where the

Court said:18

[77]     The first point to emphasise is that the commercial law of New Zealand is “based on the premise that society’s resources are best allocated  in  a  competitive  market  where  rivalry  between  firms ensures maximum efficiency in the use of resources”: Tru Tone Limited v Festival Records Retail Marketing Limited [1988] 2 NZLR

352 at 358; Telecom Directories Limited v Ad.Viser (NZ) Limited

(1992) 5 TCLR 60 at 62. The normal response to a trade rival’s

allegedly  innovative  product  or  service  should  be  a  trade  or marketing response, not a rush to the court door with “some arguable item  in  the  competitor’s  promotional  material  which  might  be labelled misleading or deceptive”: Squibb & Sons (NZ) Limited v ICI NZ Limited (1988) 3 TCLR 296 at 324.

Judgment and orders

[78]     I enter judgment and make the following orders:

(a)       Judgment  is  entered  on  the  plaintiff’s  statement  of  claim  for  the

defendant; and

(b)      The    defendant’s    application    for    summary     judgment    on    its

counterclaim is dismissed and costs are reserved.

[79]     I had the opportunity of discussing the cost outcome with counsel in the event I ruled as I have.  Counsel were agreed that the appropriate order was one based on Category 2 Band B.   Accordingly, I order that the defendant is entitled to cost in respect of the proceeding and on the summary judgment application based on Category 2 Band B together with disbursements as fixed by the Registrar.

[80]     To ensure that the counterclaim is not lost sight of, the proceeding shall be listed in the chambers list at 2:15pm on 5 August 2011.  In the event that the parties

18     Geddes v New Zealand Dairy Board, above n 15.

are able to resolve matters and a notice of discontinuance is filed before that time,

then appearances will be accordingly excused.

JA Faire

Associate Judge