Luxottica Retail New Zealand Ltd v Specsavers New Zealand Ltd
[2012] NZCA 357
•8 August 2012
| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA449/2011 [2012] NZCA 357 |
| BETWEEN LUXOTTICA RETAIL NEW ZEALAND LIMITED |
| AND SPECSAVERS NEW ZEALAND LIMITED |
| Hearing: 25 July 2012 |
| Court: Randerson, Wild and Venning JJ |
| Counsel: I M Gault and R M Flanagan for Appellant |
| Judgment: 8 August 2012 at 10 a.m. |
JUDGMENT OF THE COURT
A The appeal is allowed.
BThe summary judgment in favour of the respondent is set aside.
CThe costs orders in the High Court are set aside. The appellant is entitled to costs against the respondent in the High Court on the summary judgment application on a category 2 band B basis together with disbursements as fixed by the Registrar.
DThe respondent must pay costs to the appellant as for a standard appeal on a band A basis with usual disbursements.
___________________________________________________________________
REASONS OF THE COURT
(Given by Randerson J)
Introduction
The appellant, Luxottica, supplies optometry services and optical products in retail stores throughout New Zealand under the brand name OPSM. The respondent Specsavers has a similar business in New Zealand. Both companies also trade in Australia.
In 2010, Specsavers ran advertising campaigns in both New Zealand and Australia on television and in the print media promoting Specsavers’ lowest price progressive glasses. Luxottica maintains that the advertisements amounted to a direct price comparison with its own progressive glasses which was misleading and breached the Fair Trading Act 1986.
Luxottica launched legal proceedings in both New Zealand and Australia against Specsavers seeking injunctive and other relief. The proceedings in Australia were settled but, in New Zealand, Specsavers sought summary judgment against Luxottica and also applied to strike out Luxottica’s proceedings. Specsavers also sought summary judgment on a counter-claim against Luxottica.
In a judgment delivered on 22 June 2011,[1] Associate Judge Faire entered judgment in favour of Specsavers on Luxottica’s claim but did not rule on the strike-out application brought by Specsavers. The application by Specsavers for summary judgment on its counter-claim was withdrawn.
[1]Luxottica Retail New Zealand Ltd v Specsavers New Zealand Ltd HC Auckland CIV-2010-404-5439, 22 June 2011.
The issue in this appeal is whether Judge Faire was right to grant summary judgment against Luxottica on its claim. To do so, the Court must be satisfied that none of Luxottica’s claims could succeed.[2]
Background facts
[2]Westpac Banking Corporation v MM Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA).
The Specsavers’ television commercials (TVC’s) were broadcast in May and August 2010. A related print advertisement was also published at the time of the first TVC. “Mystery shoppers” were engaged to visit OPSM stores with instructions to purchase the cheapest available OPSM progressive glasses. The instructions also specified that the shoppers were to have a prescription range of “up to -3.0 to +3.0”. The mystery shoppers visited a number of OPSM stores:
· In March/April 2010, eight mystery shoppers made 14 purchases of OPSM progressive glasses.
· In July 2010, five or more mystery shoppers made 16 purchases of OPSM progressive glasses.
In the first TVC for Specsavers, the voiceover stated:
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.
In the image on screen, the prices of $399 for Specsavers and $976 for OPSM were prominently displayed beside each other. The words “Up to” appeared just above the figure of $976 for the OPSM glasses but in smaller print.
On screen, a subscript in small print (shown for approximately six seconds of the 30 second duration of the TVC) stated:
Based on 14 mystery shopper purchases nationally between 16/3/10 and 26/4/10.
A further subscript in small print said:
Complete with PENTAX standard progressive lenses. Prices for other lens types and extra options may differ.
The content of the print advertisement was materially identical to this first TVC.
The second TVC was slightly differently expressed. The voiceover stated:
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.
Again, the allegedly comparative prices of $399 for Specsavers and $892 for OPSM were prominently displayed side by side. The words “As little as” in relation to the Specsavers price and the words “As much as” for the OPSM price were placed immediately above the respective prices but in much smaller print.
In the second TVC, a subscript about different lens types appeared in the same form as in the first TVC. In addition, a subscript in small print (displayed for approximately six seconds of the total of 30 seconds) stated:
Excludes health insurance rebates. Based on 16 mystery shoppers nationally between 19/7/10 and 27/7/10.
The content of the first TVC and print advertisement was similar to a Specsavers TVC previously broadcast in Australia in respect of which Luxottica Australia issued proceedings in Australia. These were settled in May 2010. The New Zealand proceedings were issued in mid-August 2010. An application for interim relief was not pursued following an undertaking by the defendant.
The essence of Luxottica’s claim
Alleged breaches of the Fair Trading Act
Luxottica alleged that Specsavers had breached ss 9, 13(a) and (g) of the Fair Trading Act. Those sections provide:
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.
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;
…
(g)Make a false or misleading representation with respect to the price of any goods or services;
…
The first TVC and print advertising
Luxottica’s statement of claim pleaded that the disputed advertising contained a number of representations which were misleading or deceptive (or were likely to mislead or deceive) in identified respects. It is unnecessary for us to set out all of the identified representations and all of the respects in which they are alleged to have been misleading or deceptive. Most relevantly for present purposes, Luxottica maintains that, in substance, the first TVC and print advertising was likely to mislead or deceive:
· By conveying the impression that the cheapest pairs of OPSM progressive glasses cost $976 while the cheapest pairs at Specsavers were $399. (We will refer to this as “the headline comparison”.)
· Alternatively, by conveying the impression that the cheapest pairs of OPSM progressive glasses were priced at around $796 (based on the price of $976 less the $200 described in the TVC as the amount by which the price for OPSM glasses varied from store to store). The price of $796 for OPSM glasses was again compared with the cheapest progressive glasses at Specsavers of $399. (We will refer to this as “the variation comparison”.)
The evidence in the High Court established that, of the 14 purchases of OPSM glasses, the prices paid varied from $536 to $976. About half the purchases were broadly in the $700 to $800 range. Apart from the top price of $976, three others were over $900 but these were all related to mystery shoppers whose eyesight prescriptions were outside the range defined in their instructions. The evidence was that more expensive lenses were required for these shoppers. Luxottica accepts that its lowest price for two pairs of progressive glasses during the relevant period was $652.[3]
The second TVC
[3]It is not entirely clear how the mystery shopper was able to purchase at $536 in the light of evidence that the cheapest price at the time was $652.
Luxottica’s claim in relation to the second TVC is similar. The advertising was alleged to be likely to mislead or deceive:
· By conveying the impression that the cheapest pairs of OPSM progressive glasses cost $892 while the cheapest pairs of Specsavers were $399 (the headline comparison).
· Alternatively, by conveying the impression that the cheapest pairs of OPSM progressive glasses were priced at around $592 (based on the OPSM price of $892 less the $300 described in the TVC as the amount by which the price for OPSM glasses varied from store to store). The price for OPSM glasses of $592 was again to be compared with the cheapest progressive glasses at Specsavers of $399 (the variation comparison).
The evidence in relation to the purchases underlying the second TVC is incomplete. Specsavers has supplied details of only 12 of the total of 16 purchases. Of the 12 identified, nine were at, or very close to, the lowest price for two pairs of OPSM glasses at $652. The remaining three prices were $699, $792 and $892. The last price was the only one mentioned in the second TVC.
The evidence was that the top price of $892 was for glasses with Ray-Ban frames which are more expensive frames. The $699 purchase was cancelled and replaced with a purchase at $652, and the $792 purchase had more expensive lenses than the cheapest available.
The findings in the High Court
A large number of affidavits were filed in the High Court. These included executives from Luxottica, expert witnesses retained by Luxottica as well as numerous affidavits from the mystery shoppers and the Luxottica sales representatives who were involved in the sales at issue. The Judge considered each of the allegations pleaded, focussing primarily on the literal truth of the content of the advertisements.
In relation to the headline comparison in the first TVC, the Judge found there was no representation that the comparative prices for two pairs of the cheapest progressive glasses at Specsavers was $399 and $976 for the OPSM glasses. His reasons were:[4]
(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.
[4]At [52].
The Judge went on to emphasise that the tenor of the advertisements was to describe what was found at the particular OPSM stores visited by the mystery shoppers on the days they went there. He found that this necessarily limited the scope of the advertisement, adopting the conclusion reached in the proceedings in Australia that there was no inaccuracy in the description of the results obtained from the mystery shopping exercise and that, in consequence, it was not seriously arguable that the advertisements were misleading or deceptive.[5]
[5]Luxottica Retail v Specsavers [2010] NSWSC 37 at [36].
As to the headline comparison in the second TVC, the Judge discussed the evidence about the highest price paid of $892. He accepted that, despite the fact that the price included Ray-Ban frames which were not the cheapest OPSM progressive glasses, there was no misleading or deceptive conduct because the mystery shopper had asked for the cheapest progressive glasses available. The Judge did not deal specifically with the headline comparison issue but we assume he would have adopted the same conclusion and reasoning as he did for the first TVC.
The Judge dealt with the variation comparison in relation to both TVC’s in this way:
[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.
The Judge also considered other alleged representations but, with one exception, found that none of them was capable of conveying a misleading or deceptive representation. The exception was the finding that there was a small risk that a viewer might wrongly believe that the glasses depicted in the advertisements were supplied with PENTAX standard progressive lenses when the evidence showed that the OPSM brand did not use PENTAX lenses. The Judge found, however, that any error in that respect was de minimis in the whole scheme of things.
The appellant’s approach on appeal
Mr Gault submitted on behalf of Luxottica that the issue of whether advertising is misleading or deceptive is a question to be determined on an overall assessment having regard to the effect of the advertising on reasonable members of the public. The mind of the representee is likely to work more by impression than by analysis. He submitted that comparative advertising carries particular risks for the advertiser and that qualifying material must be sufficiently prominent.
Mr Gault contended the Judge was wrong to conclude that the scope of the representations made in the advertising was limited to stating the results of the mystery shopper requests. This approach was, he submitted, unduly narrow and misjudged the overall impression of the comparative advertisements on reasonable members of the public. Inappropriate weight was placed on the fine print qualifying material. As well, the Judge was wrong to ignore or overlook the independent expert evidence of one of Luxottica’s expert witnesses, Mr Alastair Gordon.
In developing these submissions, Mr Gault relied on Australian authorities which have emphasised that comparative advertising may be misleading because it conveys a half-truth by omitting material necessary in order to make the comparison fair. In such circumstances, the fact that statements may be literally true does not preclude a finding of misleading or deceptive conduct, or the likelihood of such conduct.
Mr Gault also submitted that aspects of the advertisements were not even literally true in some respects but, in the view we take of this matter, it is unnecessary for us to deal with the submissions in that respect.
Respondent’s case
Mr Gray QC on behalf of Specsavers supported the Judge’s decision, submitting that he had correctly understood and applied the law relating to summary judgment applications and those relating to claims under the Fair Trading Act. He emphasised that whether advertising material is capable of being misleading or deceptive is a question of law which may properly be determined at summary judgment stage. Although summary judgment did not appear to have been granted in any comparable cases of comparative advertising, the Judge was entitled to draw comparisons with interim relief cases including the decision in the Australian litigation between the same parties.
Mr Gray submitted that the Judge had not overlooked the impact of the advertisements on the viewer, referring us to the Judge’s reference[6] to the effect that the primary concern of the Court is with the behaviour to be expected of, and judgments likely to be made, by ordinary people in the community on making a relatively modest purchase.[7] Counsel submitted that the Judge was also correct to rely upon the observations of this Court in Geddes v NZ Dairy Board[8] which we discuss at [40] below.
[6] At [47].
[7]Citing the observations of Branson J in Cat Media Pty Ltd v Opti-Healthcare Pty Ltd [2003] FCA 133 at [55].
[8]Geddes v New Zealand Dairy Board CA180/03, 20 June 2005 at [79] citing Stuart Alexander & Co (Interstate) Pty Ltd v Blenders Pty Ltd (1981) 53 FLR 307 at 311.
It was also submitted for Specsavers that, as he was required to do, the Judge stood back and considered the whole of the advertisement and their impression on the average consumer.[9] The Judge had correctly assessed the advertisements as making a simple claim that Specsavers’ lowest priced progressive glasses were always $399, whereas, at OPSM, they ranged up to $976.
[9] At [48] and [67].
Addressing evidential issues, Mr Gray submitted that evidence of opinions based on market research and expert appreciation of consumer behaviour would rarely be of assistance in litigation. On that basis, the Judge was entitled to make his own assessment of the evidence and disregard the expert evidence.
Finally, Mr Gray submitted that criticisms of the statistical validity of the purchases made by the mystery shoppers were misplaced. The advertisements in question simply reported the findings of the mystery shoppers and did not purport to be a survey.
Legal principles
There is no material dispute as to the principles to be applied. In terms of this Court’s decision in Westpac Banking Corporation v MM KemblaNew Zealand Ltd,[10] where a defendant seeks summary judgment, the defendant bears the onus of satisfying the court that none of the claims can succeed. An 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. Summary judgment may also be inappropriate where the ultimate determination turns on a matter of judgment which can only properly be arrived at after a court hearing of the evidence.[11]
[10]Westpac Banking Corporation v MM Kembla New Zealand Ltd, above n 2.
[11]Westpac Banking Corporation v MM Kembla New Zealand Ltd, above n 2, at [52]–[64].
Mr Gray accepted that the proper approach for appellate courts to adopt on appeal is that established by the Supreme Court in Austin, Nichols & Co Inc v Stichting Lodestar:[12]
[16] Those exercising general rights of appeal are entitled to judgment in accordance with the opinion of the appellate court, even where that opinion is an assessment of fact and degree and entails a value judgment. If the appellate court’s opinion is different from the conclusion of the tribunal appealed from, then the decision under appeal is wrong in the only sense that matters, even if it was a conclusion on which minds might reasonably differ. In such circumstances it is an error for the High Court to defer to the lower Court’s assessment of the acceptability and weight to be accorded to the evidence, rather than forming its own opinion.
[12]Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [16] (footnotes omitted).
The general approach under the Fair Trading Act is well established by authority both in New Zealand and in Australia under the equivalent s 52 of the Trade Practices Act 1974 (Cth). 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.[13] The test as to whether there has been misleading or deceptive conduct is objective and the court must determine the question for itself.[14] Whether the representation at issue is likely to mislead involves an assessment of risk. That risk must be real and more than a mere possibility but need not necessarily be assessed on the balance of probabilities.[15] Proof of an intention to mislead is unnecessary.[16] While evidence of actual misleading or deception is admissible and may be persuasive, it is not essential.[17]
[13]Taylor Bros Ltd v Taylors Group Ltd [1988] 2 NZLR 1 (CA) at 39.
[14]Taco Co of Australia v Taco Bell Pty Ltd (1982) 42 ALR 177 (FCA) at 202.
[15]Bonz Group (Pty) Ltd v Cooke [1994] 3 NZLR 216 (HC) at 229.
[16]Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 (HCA) at 198.
[17]Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 87.
In the case of an advertisement, it is important to consider the whole advertisement. The focus is upon what is said rather than what is unsaid. The legal obligation is to avoid falsehood; there is no obligation to provide compendious explanations.[18]
[18]Geddes v New Zealand Dairy Board, above n 8, at [80] and [81].
In principle, comparative advertising can be helpful to consumers if carried out correctly. But advertising which is literally true may be misleading or deceptive by conveying a half-truth, for example by making comparisons which, in all the circumstances, are unfair. We also accept Mr Gault’s submission that the focus must be on the overall impression likely to be received by a member of the public viewing a television commercial or reading an advertisement in the print media.
We have found it helpful to consider the recent discussion of the authorities in this field by Allan J in an interim judgment delivered on 16 November 2009: Energizer NZ Ltd v Panasonic New Zealand Ltd.[19] The judgment arose in relation to comparative advertising in the retail battery market which has generated a substantial body of litigation, both in this country and in Australia. The case concerned advertising in a supermarket flyer and on television claiming that the defendant’s battery was the longest lasting alkaline battery of its type.
[19]Energizer NZ Ltd v Panasonic New Zealand Ltd HC Auckland CIV-2009-404-4087, 16 November 2009.
Of particular relevance here are the Judge’s comments on comparative advertising and the risks such advertising carries for the advertiser. Allan J said:
[45]Comparative advertising, which arises in this case at least by implication, has been said to carry particular risks for the advertiser. In Energizer Australia Pty Ltd v Gillette Australia Pty Ltd(2001) 189 ALR 480 at 498, Conti J, sitting in the Federal Court of Australia said at [47]–[48]:
[47] Indulgence in comparative advertising, which is the character of the advertising here at issue, has been traditionally recognised by this court as an undertaking potentially fraught with risk. Comparative advertising 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(1991) 104 ALR 369 at 375 per Gummow J. In referring to that dictum, Merkel J observed in Telstra Corp v Optus Communications Pty Ltd(1997) 36 IPR 515; ATPR 41–541 at 43,515 that “… there are obviously greater dangers in the “half truth” or the unqualified literal truth in comparative advertising.
[48] But the problem for the comparative advertiser is not confined to the omission of material. In Stuart Alexander & Co (Interstate) Pty Ltd v Blenders Pty Ltd(1981) 37 ALR 161 at 163, Lockhart J said as follows:
When a person produces a television commercial that not only boosts his own product but, as in this case, compares it critically with the product of another so that the latter is shown up in an unfavourable light by the comparison, in my view he ought to take particular care to ensure that the statements are correct.
Allan J went on to state that those who engage in comparative advertising do not assume a greater legal duty adding that comparative advertising may serve a useful function if it provides consumers with accurate information about competing products which leads in turn to better informed consumer choices and more effective competition.[20] However, as Allan J observed, a comparative advertiser may expect its material to be subject to close scrutiny by a trade creditor and that advertising of that character gives less room for advertising puffery.[21]
[20]At [46] and [47] citing the observations of Greig J in Telecom Corp of New Zealand Ltd v Clear Communications Ltd (1992) 4 NZBLC 102,839 (HC) at 102,843 and the general effect of the judgment of Heerey J in the Full Court’s decision in Gillette Australia Pty Ltd v Energizer Australia Pty Ltd (2002) 193 ALR 629 (FCA).
[21]Citing Lindgren J, a member of the Full Court in Gillette v Energizer, above n 20, at [44].
Importantly for the present case, the identification of the class of consumers likely to be affected by the alleged misleading advertising is an important consideration. As Allan J said:[22]
[44]It is well settled that the Court must consider the class of consumers likely to be affected by the impugned conduct. Where, as here, the challenged advertising is aimed at the general public, it must be borne in mind that the advertisements may be viewed by the inexperienced as well as the experienced and the gullible as well as the astute. But the overall assessment is to be conducted having regard to the effect of the advertisement on reasonable members of the public. What is reasonable will depend on all the circumstances of the case.
[22]At [44] (footnotes omitted).
Similar observations were made by Tipping J in Marcol v Commerce Commission:[23]
The mind of the representee is likely to work more by impression than analysis and to be prone to some looseness of thought.
[23]Marcol Manufacturers Ltd v Commerce Commission [1991] 2 NZLR 502 (HC) at 507.
In expanding on the importance of viewer perception, Allan J observed that television advertisements present their own problems, particularly in relation to the circumstances in which such advertisements are likely to be viewed. He drew attention to observations made by Lindgren J in Eveready Australia Pty Ltd v Gillette Australia Pty Ltd (No 4):[24]
I have reviewed each of the 10 second, 15 second and 30 second Duracell television commercials more than once, and have tried to assess their likely impact on members of the public in the circumstances in which they would have been likely to view them. Those circumstances are not the circumstances in which I viewed the commercials. First, it would be very unlikely that members of the public would have viewed any of the commercials in isolation: rather, they would almost certainly have viewed them after and before viewing other things on the television screen. Second, unlike myself, they would not have viewed the commercials with a special interest in them and many would probably have viewed the commercials against a background of distractions, such as domestic activity or simply pre-occupation with other more interesting concerns. Third, members of the viewing public would not know in advance that the commercials were about to commence.
[24]Eveready Australia Pty Ltd v Gillette Australia Pty Ltd (No 4) (2000) ATPR ¶41-751 (FCA) at [38].
Finally, addressing the significance of qualifications or explanations contained in advertising of this kind, Allan J noted that whether a qualification or explanation (perhaps identified by an asterisk) may be effective to neutralise an otherwise misleading or deceptive advertisement will be a matter for determination in the specific circumstances of each particular case.[25] He added that the qualifying material must be sufficiently prominent to prevent the primary statement from being misleading and deceptive or being likely to mislead or deceive.[26]
[25]At [52] citing Medical Benefits Fund of Australia v Cassidy (2003) 205 ALR 402 (FCA) at [37].
[26]At [53] citing Australian Competition and Consumer Commission v Signature Security Group Pty Ltd (2003) ATPR ¶41-908 (FCA) at [26] and [27].
On the facts of the case before him, Allan J concluded that only the most attentive and astute viewer would notice a qualifying footnote relied upon. He considered that most members of the public would overlook the footnote and focus upon the main text and the picture of the battery at issue. He therefore proceeded to consider the plaintiff’s primary claim on the basis that, for practical purposes, it was unqualified by the footnote. He also found that the principal claim made in the advertisement, while literally true, nevertheless gave rise to a serious question that the statement made was likely to be misleading or deceptive in all the circumstances. Interim relief was granted to the plaintiff accordingly.
Discussion
We were provided with a DVD of the TVC’s along with a printed version of them. We have also considered a copy of the advertisement published in the print media. We have concluded the Judge was wrong to decide at summary judgment stage that Luxottica could not establish any of its claims.
While a realistic and robust approach is undoubtedly required in assessing Luxottica’s claims after trial when all the evidence has been heard, we were not referred to any case of this kind where summary judgment has been given against the plaintiff at the outset. Although the threshold issue of whether the material in question is capable of breaching the Fair Trading Act is a question of law for the Judge, it will often be difficult to divorce that question from the issue of whether there has been a breach in fact in all the circumstances. It would be relatively unusual to find that a plaintiff’s claims cannot succeed where issues of judgment are involved and where the evidence is incomplete and has not been tested at trial. We note that in the parallel proceeding launched by Luxottica in Australia, McDougall J was not dealing with an application by Specsavers for summary judgment. His remarks cited by the Judge were made in refusing an application by Luxottica for interim injunctive relief. Luxottica’s claim was not struck out.
Although a court will not necessarily be assisted by expert evidence in a case of this kind, the Judge had before him the uncontested evidence of an experienced expert, Mr Gordon. His view was that many consumers would simply read the TVC’s as indicating that OPSM typically charged $976 (in the case of the first TVC) or $892 (in the second) for two pairs of glasses while the direct equivalent price for Specsavers was $399. Based on his experience, Mr Gordon considered the half-size font containing the small print qualifications or explanations was likely to be missed by many viewers.
Even if consumers registered the small print, Mr Gordon’s view was that it was likely they would interpret the advertising as meaning the OPSM price in-store would be close to $976 or $892 respectively. Consumers would not register a wide range of prices which would begin to make the price stated meaningless. In explanation, Mr Gordon considered the references to “Up to” $976 or “As much as” $892 combined with the material referring to price variations of “over $200” or “over $300” did not give viewers any clear understanding of the range of prices at OPSM and was likely to be hard to interpret.
Finally, and importantly, Mr Gordon pointed to the “anchoring and adjustment” effect of the advertisements. By that he meant that the references to the OPSM price, even if viewed as a maximum, would tend to anchor that price in the mind of the consumer as the top price available for the OPSM product. If the consumers were concentrating sufficiently to compute the range in the 30 second TVC’s, they would suggest a range which started with the top price, with a bottom point calculated by reference to the range of price variations described. This meant for the first TVC a range of $776 to $976 and, for the second, $592 to $892 (reflecting the price variations of $200 and $300 respectively).
We have viewed the advertising material for ourselves and are in general agreement with the views expressed by Mr Gordon. The Judge does not mention Mr Gordon’s views at all in his decision. While, in the end, it is a matter of judicial assessment, we do not consider Mr Gordon’s views ought to have been put entirely to one side in the assessment of the merits at summary judgment stage.
Luxottica had only to establish an arguable case. We are satisfied that it did so. In simple terms, we accept Mr Gault’s submission that the headline comparison in the advertisements did not compare “apples with apples”. The most obvious feature of the advertisements is the prominently displayed comparative prices of the two brands. Taking the first TVC as an example, the price of the Specsavers at $399 was juxtaposed with the $976 price for the OPSM product. The comparison was of the “apparently” fixed price of $399 for the Specsavers brand with the top price of $976 for the OPSM product. No reference was made to the lowest price of $652 for the OPSM product (or to the lower figure of $536 which was the lowest price actually paid).
The “anchoring” effect of the top price for the OPSM brand is, we think, significant. We accept Mr Gault’s submission that it is arguable the attention of consumers would not have been drawn to, or focused upon, the fine print and that the “take home” message to the consumer would be that the comparative prices for the products were $399 and $976 respectively for the first TVC and $399 and $892 for the second TVC. The true comparison of lowest prices was between $399 and $652 in each case.
Alternatively, it is arguable that a consumer who appreciated the significance of the references to “Up to” or “As much as” the stipulated price for the OPSM glasses, together with the references to the $200 or $300 price variations, would conclude that the range for the OPSM range of glasses was of the order of $776 to $976 in the case of the first TVC or $592 to $892 for the second. Thus the variation comparison is also arguably misleading in respect, at least, of the first TVC. As Mr Gault submitted, by understating the range, the price is effectively over-stated.
Although the primary focus of Mr Gault’s argument was based on the impression conveyed by the headline and variation comparisons, we consider it is clearly arguable that the figures used were factually inaccurate and did not represent the cheapest prices available for OPSM progressives. For example, the top price of $976 referred to in the first TVC was for glasses with an optional extra of a special lens coating which increased the price. And, as noted at[21] above, the top price of $892 referred to in the second TVC was for glasses with Ray-Ban frames which are more expensive than OPSM’s cheapest frames. On this basis too, it is arguable that the advertising did not relate to the cheapest available Specsavers and OPSM products and was therefore misleading.
These factual inaccuracies are properly issues for trial. So too, the potential for distortion of the stated range of prices through the purchases made by shoppers with a higher prescription than the + 3.0/- 3.0 range and through purchases with more expensive lenses and frames than the cheapest available.
But as the authorities show, even if the representations are literally true, this may not be sufficient to preclude a finding of misleading or deceptive conduct or the likelihood of such conduct. Where it is arguable that the qualifying material and small print may be overlooked by the consumer (which is a particular risk in the case of a fleeting TVC where a viewer may be distracted by a range of other factors), it is the overall impression conveyed to the average consumer by the advertisements which is critical. We consider the Judge gave insufficient weight to these factors and did not sufficiently recognise that the impression conveyed to viewers by television advertisements is arguably rather different from that received by a Judge who has the opportunity in a courtroom or in chambers to take in and carefully analyse all the detail (large or small and irrespective of how long the material would appear on screen when viewed by a potential customer).
Result
For the reasons given, the appeal is allowed. The summary judgment entered in favour of the respondent is set aside.
In the High Court, the respondent was awarded costs against the appellant on the proceeding and on the summary judgment application on a category 2 band B basis. Those costs orders are set aside. The appellant is entitled to costs against the respondent in the High Court on the summary judgment application on a band B basis together with disbursements as fixed by the Registrar.
The respondent must pay costs to the appellant in this Court as for a standard appeal on a band A basis with usual disbursements.
Solicitors:
Bell Gully, Auckland for Appellant
Minter Ellison Rudd Watts, Auckland for Respondent
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