Ascot Four Pty Ltd v Australian Competition & Consumer Commission [2009] FCAFC 61 (26 May 2009)

Ascot Four Pty Ltd v Australian Competition & Consumer Commission [2009] FCAFC 61

TRADE PRACTICES – misleading and deceptive conduct – false or misleading representations about the price of jewellery items – dual pricing – publication and distribution of catalogues relating to jewellery sales – strike through price and sale price – meaning conveyed by representations in catalogue

Held: appeal dismissed

Trade Practices Act 1974 (Cth), s 75AZC(1)(g)

Australian Competition & Consumer Commission v Allans Music Group Pty Ltd [2002] FCA 1552 distinguished
Australian Competition and Consumer Commission v Carrerabenz Diamond Industries Pty Ltd [2008] FCA 1103 distinguished
Australian Competition & Consumer Commission v Prouds Jewellers Pty Ltd [2008] FCAFC 199 distinguished
Australian Competition & Consumer Commission v Prouds Jewellers Pty Ltd (2008) 75 IPR 306; [2008] FCA 75 distinguished
Australian Competition and Consumer Commission (ACCC) v Terania Pty Ltd [2008] FCA 732 distinguished
Ducret v Chaudhary's Oriental Carpet Palace Pty Ltd (1987) 16 FCR 562 distinguished
MFA v The Queen (2002) 213 CLR 606; [2002] HCA 53 applied
Trade Practices Commission v Cue Design Pty Ltd and Cue & Co Pty Ltd (1996) 85 A Crim R 500 distinguished

Miller, Russell V. Miller’s Annotated Trade Practices Act (29^th ed.). Sydney: Thomson Law Book Co, 2008

ASCOT FOUR PTY LTD v AUSTRALIAN COMPETITION & CONSUMER COMMISSION
SAD 141 of 2008

BLACK CJ, RYAN AND JAGOT JJ
26 MAY 2009
SYDNEY (HEARD IN ADELAIDE)

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SAD 141 of 2008

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

ASCOT FOUR PTY LTD
Appellant

AND:

AUSTRALIAN COMPETITION & CONSUMER COMMISSION
Respondent

JUDGE:	BLACK CJ, RYAN AND JAGOT JJ
DATE OF ORDER:	26 MAY 2009
WHERE MADE:	SYDNEY (HEARD IN ADELAIDE)

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SAD 141 of 2008

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

ASCOT FOUR PTY LTD
Appellant

AND:

AUSTRALIAN COMPETITION & CONSUMER COMMISSION
Respondent

JUDGE:	BLACK CJ, RYAN AND JAGOT JJ
DATE:	26 MAY 2009
PLACE:	SYDNEY (HEARD IN ADELAIDE)

1 On 21 August 2008 the primary judge found the appellant, Ascot Four Pty Ltd (Ascot Four), guilty on 11 counts of making a false or misleading representation about the price of goods contrary to s 75AZC(1)(g) of the Trade Practices Act 1974 (Cth) (Australian Competition and Consumer Commission v Ascot Four Pty Ltd (2008) 250 ALR 467; [2008] FCA 1295). Under s 75AZC(1)(g) it is an offence for a corporation, in trade and commerce, in connection with the supply of goods or the promotion of the supply of goods, to make a false or misleading representation about the price of goods.

2 The judge found that Ascot Four had represented that there would be a saving of the difference between two prices with respect to 11 items of jewellery (identified as the "strike through price" and the "sale price"). However, because Ascot Four had never sold any of the items at or near the strike through price before the advertising of the sale price, there was no such saving. Accordingly, Ascot Four had made a false or misleading representation about the price of the 11 items of jewellery.

3 By its notice of appeal Ascot Four claimed that the primary judge had erred, in that the primary judge should have found that: - (i) both the strike through price and sale price represented an offer price only (alleged to be consistent with the approach in Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd (2008) 75 IPR 306; [2008] FCA 75, upheld by the Full Court in Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd [2008] FCAFC 199), (ii) Ascot Four had offered the 11 items of jewellery for sale at the strike through price before the advertisement of the sale price, and (iii) accordingly, Ascot Four had not contravened s 75AZC(1)(g) of the Trade Practices Act with respect to the 11 items of jewellery.

4 There was no dispute about the relevant facts. Ascot Four is a corporation. It operates a retail jewellery business involving a chain of 69 stores trading under the name "Zamel’s" (at [1]). In November 2005 Ascot Four caused to be published a Christmas sale catalogue for a sale between 24 November and 24 December 2005 (the sale period). The catalogue was advertised by a variety of means (at [2]).

5 The Christmas sale catalogue advertised a large number of items of jewellery for sale (at [11]). Each of the 11 items of jewellery in question was advertised in the Christmas sale catalogue by a sale price in large print coloured red and a strike through price in smaller print coloured black. The strike through price was always higher than the sale price (at [13] to [15]).

6 Ascot Four offered each of the 11 items of jewellery for sale in its stores during the sale period. During that period, but for some immaterial variations, each of the 11 items had a ticket showing the sale price. Before the sale period each item also had a ticket showing a price (or prices) (at [15]). The phrase "before the sale period" means the period from 1 July 2005 to 23 November 2005 (except for the item the subject of count 1 which had only been offered for sale from 4 November 2005). In summary, the primary judge found (at [83]) that Ascot Four:

(i) The gate bolt ring bracelet was advertised as having a sale price of $675 and a strike through price of $1,350. Before the sale period the ticketed price was $995 which changed to $1,350 at the start of the sale period. Before the sale period five items were sold at prices between $708 and $995. During the sale period 26 items were sold at prices between $450 and $845 (at [16] to [18]). The primary judge thus found that this item "had not been offered for sale at the strike through price until the sale period, and had never been sold at the strike through price" (at [21]).

(ii) The matching bolt ring bracelet was advertised as having a sale price of $295 and a strike through price of $595. Before the sale period the ticketed price was $595 (with an exception during August 2005 when the item was ticketed at $295). Before the sale period 54 items were sold at prices between $192 and $300. During the sale period 49 items were sold at prices between $198 and $315 (at [22] to [27]). The primary judge thus found that this item "prior to the sale period had never been sold at more than $300 or at or near the strike through price, and during the sale period its highest sale was at $315" (at [27]).

(iii) The two-toned bracelet was advertised as having a sale price of $99 and a strike through price of $250. Before the sale period the ticketed price was $250 (with an exception during a sale from 14 July to 2 August 2005 when the item was ticketed at $195). Before the sale period 152 items were sold at prices between $33 and $165. During the sale period 144 items were sold at prices between $69 and $165 (at [28] to [31]). The primary judge thus found that this item "had never been sold at or near the strike through price prior to the sale period, although its ticketed price for much of the time prior to the sale period was at the strike through price" (at [33]).

(iv) The dolphin charms bracelet was advertised as having a sale price of $85 and a strike through price of $225. Before the sale period the ticketed price was $225 (with some unexplained exceptions at $150 and $195). Before the sale period 147 items were sold at prices between $55 and $149. During the sale period 241 items were sold at prices between $57 and $150 (at [34] to [37]). The primary judge thus found that this item "in the period leading up to the sale period ...had never been sold at the ticketed or strike through price of $225" (at [39]).

(v) The heart charms bracelet was advertised as having a sale price of $75 and a strike through price of $150. Before the sale period the ticketed price was $150. Before the sale period 24 items were sold at prices between $69 and $99. During the sale period 125 items were sold at prices between $49 and $79 (at [40] to [43]). The primary judge thus found that this item "had never been sold at the strike through price prior to the sale period, or indeed during the sale period" (at [45]).

(vi) The padlock bracelet was advertised as having a sale price of $349 and a strike through price of $695. Before the sale period the ticketed price was $695 (with one immaterial exception from 6 to 25 October 2005 when the price was higher). Before the sale period 70 items were sold at prices between $234 and $425. During the sale period 87 items were sold at prices between $234 and $350 (at [46] to [49]). The primary judge thus found that this item "had never been sold at the strike through price" (at [51]).

(vii) A 55 cm chain was advertised as having a sale price of $2,650 and a strike through price of $5,350. Before the sale period the ticketed price was $5,350 (with a few unexplained exceptions). Before the sale period 30 items were sold at prices between $989 and $3,495. During the sale period 24 items were sold at prices between $1,725 and $3,425 (at [52] to [55]). The primary judge thus found that this item "had never been sold at the ticketed price or the strike through price" (at [57]).

(viii) The 45 cm reversible chain was advertised as having a sale price of $550 and a strike through price of $1,125. Before the sale period the ticketed price was $1,125 (with a few unexplained exceptions). Before the sale period 32 items were sold at prices between $334 and $725. During the sale period 12 items were sold all at $550 except one at $525 (at [58] to [60]). The primary judge thus found that this item "had never been sold at the ticketed price or the strike through price" (at [62]).

(ix) The 10.5 mm bolt ring bracelet was advertised as having a sale price of $745 and a strike through price of $1,675. Before the sale period the ticketed price was $1,675 (with a few unexplained exceptions mainly at a lower price of $1,200). Before the sale period 34 items were sold at prices between $521 and $1,100. During the sale period 17 items were sold at prices between $600 and $1,095 (at [63] to [66]). The primary judge thus found that this item "had never been sold prior to the sale period at the ticketed or strike through price" (at [68]).

(x) A second 55 cm chain was advertised as having a sale price of $775 and a strike through price of $1,550. Before the sale period the ticketed price was $1,550 (with a few unexplained exceptions at higher prices). Before the sale period 56 items were sold at prices between $519 and $1,135. During the sale period 61 items were sold at prices between $581 and $1,135 (at [72]). The primary judge thus found that this item "had never been sold prior to the sale period at the ticketed price or at the strike through price" (at [74]).

(xi) A further bracelet was advertised as having a sale price of $169 and a strike through price of $350. Before the sale period the ticketed price was $350 (with a few unexplained exceptions). Before the sale period 58 items were sold at prices between a few dollars less than $159 and $250. During the sale period 79 items were sold at prices between $118 and $285 (at [75] to [78]). The primary judge thus found that this item "had never been sold prior to the sale period at the ticketed price or at the strike through price" (at [80]).

8 The Australian Competition and Consumer Commission (the ACCC) alleged that Ascot Four’s publication of the Christmas sale catalogue represented either that: - (i) it had sold each of the 11 items at the strike through price within a reasonable time before the sale period, or (ii) the purchase of each item during the sale period would result in a saving of the difference between the sale price and the strike through price. The ACCC also alleged that each representation was false or misleading because none of the 11 items had been sold for more than the highest prices shown in the sales evidence, all of which were well below the strike through price (at [82]).

9 The primary judge identified the relevant issue in conventional terms, namely, "whether the content of the Christmas sale catalogue, as relevant to the 11 counts, and in all the circumstances, conveys or would convey to ordinary or reasonable members of the public who may seek to acquire the 11 jewellery items from the defendant either of the two representations" (at [87]).

10 The primary judge held that the Christmas sale catalogue made a representation about the price of each of the 11 items. The catalogue conveyed to the consumer a representation about the relationship between the sale price and the strike through price (at [99]). According to the primary judge, the representation "was that by purchasing the several jewellery items in which there was a catalogue sale price and a strike through price, there would be a saving of the difference between the catalogue sale price and the strike through price" (at [100]). This representation was made, the primary judge said, to "a significant section of the ordinary and reasonable consumers who potentially would or might purchase one or more of the 11 jewellery items" (at [106]).

11 The primary judge rejected, at [109], the second and third of Ascot Four’s three suggested alternative hypotheses that the strike through price represented Ascot Four’s previous or normal ticketed price, a competitor’s price or the value of the item. Regarding the first of these hypotheses (being the hypothesis potentially relevant to the principal grounds of appeal), the primary judge said (at [110]) that it:

12 The primary judge found the representation (that by purchasing the several jewellery items in which there was a catalogue sale price and a strike through price, there would be a saving of the difference between the catalogue sale price and the strike through price) to be false and misleading because "having regard to the previous sales of each of the 11 jewellery items, the purchase of any of those 11 items during the sale period would not result in a saving to the purchaser of the difference between the sale price and the strike through price. In no case had the defendant sold any of those items in the period from 1 July 2005 up to the sale period (or in the case of the count 1 item, from 4 November 2005) at anywhere near the strike through price" (at [114]). Accordingly, the primary judge found Ascot Four guilty on each of the 11 counts.

13 Ascot Four submitted that the primary judge made no finding about the first alleged representation (that the Christmas sale catalogue represented that Ascot Four had sold each of the 11 items at the strike through price within a reasonable time before the sale period). Hence, the first basis of Ascot Four’s alleged liability had not been sustained. The second basis of its alleged liability (namely, that the Christmas sale catalogue represented that the purchase of each item during the sale period would result in a saving of the difference between the sale price and the strike through price) was indeterminate unless meaning was given to the strike through price. However, the primary judge did not make any express finding about the precise meaning conveyed by the strike through price. The finding in [100] of the primary judge’s reasons (quoted at [10] above) makes no such finding. Subsequently, in [110] of the reasons, it becomes apparent that the primary judge assumed that the strike through price was the price at which a sale or sales had been made. In so doing the primary judge erred.

14 Ascot Four observed that in Prouds Jewellers, being a case on similar facts, Moore J and the Full Court had ascribed to a hypothetical consumer, who was unaware of the discount culture in the retail jewellery industry, a willingness to purchase an item at the ticketed or offer price without negotiation for a reduction to that price ((2008) 75 IPR 306; [2008] FCA 75 at [18] and [2008] FCAFC 199 at [31]). Contrary to the primary judge’s conclusion, said Ascot Four, consumers both aware and unaware of the discount culture in this retail market would treat the sale price as well as the strike through price as an offer price (and not a price at which the items had actually been sold) for the following reasons:

(i) The relevant analysis is at the time of a proposed purchase. The meaning of the representation cannot be determined by reference to actual sale prices which would not have been known to consumers. In other words, the representation conveyed cannot be derived from the conduct alleged to make the representation false. The first and critical question is the meaning conveyed by the strike through price. The primary judge did not address this question.

(ii) There would be a natural tendency to treat the strike through price as a comparator and thus to compare like with like (that is, by comparing the sale price currently offered with the strike through price previously offered).

(iii) A consumer aware of the discount culture would not think that the strike through price was the sale price negotiated as there would be many different negotiated price outcomes. Such a consumer would treat the strike through price as the previous starting point for negotiation.

(iv) A consumer unaware of the discount culture would have treated the strike through price as the price at which that consumer would have bought the item before the sale. Because this type of consumer would not have sought or obtained any discount, the price at which he or she would have bought the item would also be treated as the offer price before the sale period. This approach is consistent with the conclusions of Moore J in Prouds Jewellers 75 IPR 306; [2008] FCA 75 at [38] and [39].

15 Ascot Four thus argued that the primary judge should have treated the strike through price as the offer price in the period before the sale and tested the alleged falsity of the representation against that meaning. According to Ascot Four this approach would have been consistent with what the Full Court said in Prouds Jewellers [2008] FCAFC 199 at [30]:

16 Ascot Four contended that the present case was indistinguishable from Prouds Jewellers other than that Ascot Four had in fact offered each of the items in counts 2 to 11 for sale at the strike through price before the sale period. Given the importance of consistency in this area of law, the primary judge’s decision should be reversed. At the least, the primary judge should have found that there was sufficient doubt about how the relevant class of consumers might have interpreted the representation so that the case against Ascot Four had not been proved beyond reasonable doubt. Once it is accepted that the strike through and sale prices represented offer prices, the proceeding on counts 2 to 11 should be dismissed because the primary judge found that Ascot Four had offered these items for sale at the strike through price for a substantial period of time between 1 July and 23 November 2005. As to count 1, the ACCC had not proved that the item was not offered for sale at the strike through price before the sale period.

17 Ascot Four placed substantial weight on the decisions in Prouds Jewellers to support its case that the primary judge had erred. In Prouds Jewellers 75 IPR 306; [2008] FCA 75, Moore J (at [37]) considered the position of a consumer unaware of the availability of discounts from the ticketed or marked price of jewellery items when confronted by advertising involving dual pricing (that is, a strike through or "was" price and a sale or "now" price):

18 Moore J concluded (at [45]) that such a consumer would have understood the Prouds Jewellers’ catalogues as representing that had he or she bought one of the relevant items immediately before the sale, the cost of the item would have been at the "was" (or strike through) price. Importantly, in making that finding, his Honour considered (at [36]) that the evidence did not establish that such a consumer would have received a discount and thus paid any less than the previous offer price. On those facts, without more, it would seem that the representation as to saving was not shown to be false, as the saving would be the difference between the "was" price and the "now" price. Moore J (at [41] and [49]) identified, however, that the items were not even being offered for sale at the "was" (or strike through) price in the relevant period prior to the sale. On this reasoning, the representation as to saving would be false on the basis that the "was" price was not the offer price immediately before the sale, and therefore would not have been the price paid by any customer. But this was not the case pleaded against Prouds Jewellers. The case pleaded with respect to the "level of saving representation" was that the consumer would understand the catalogue as representing a saving between the "now" (or sale) price and the prices actually paid by consumers immediately before the sale (at [47] to [49]). Accordingly, the alleged representation with respect to a level of saving, as pleaded, was not made out. Nor, for the same reason, was the pleaded representation about the previous selling price made out, as it also depended on the "was" (or strike through) price meaning the price actually paid by consumers immediately before the sale. Nevertheless, other false and misleading representations were conveyed, described as the "usual price representations" and the "advertised price representations".

19 The orders of Moore J were the subject of an appeal and cross-appeal (Prouds Jewellers [2008] FCAFC 199). In the appeal the ACCC relied on the decision of the primary judge in the present case. On this basis, the ACCC submitted that Moore J had erred with respect to the "level of saving representation" by focusing on the amount the individual consumer would have paid rather than what the relevant classes of consumers would have understood the catalogue as conveying (at [20] to [23]). The Full Court did not accept these submissions. The Full Court held that it was open to Moore J to find that the relevant consumer would focus on the benefits available to him or her during the sale period (at [31]). In so doing the Full Court commented on the primary judge’s reasoning in Ascot Four (at [31] to [35]) on the basis that the facts with respect to counts 2 to 11 were the same as those for count 1 (namely, that the items had never been offered for sale at the "was" (or strike through) price during the sale period). The Full Court’s principal conclusion followed in these terms (at [36]):

20 On the same basis the Full Court dismissed the ACCC’s appeal with respect to the "previous selling price representation" holding (at [42]) that:

21 The parties in the present case accepted that, contrary to the Full Court’s comments in and the facts of Prouds Jewellers, Ascot Four had offered for sale the items in counts 2 to 11 at the strike through price before the sale period.

22 The reasoning of Moore J and the Full Court in Prouds Jewellers turned on the ACCC’s particular pleadings of the representations allegedly made and why they were false. As noted, Moore J rejected the idea that the "was" (or strike through price) would be seen as a "bare" offer or sale price. Rather, the purchaser unaware of the discount culture would have understood the two prices in juxtaposition to represent that he or she would obtain the benefit of a saving between the "was" (or strike through) price (being the price the purchaser unaware of the discount culture would have paid before the sale) and the "now" (or sale) price. In that context Moore J accepted that "the ‘was’ price was the price at which the goods were being offered for sale in the period before the promotional sale and thus the price at which they would then have been bought" (at [37]). Accordingly, Moore J’s conclusions do not support Ascot Four’s submission, as summarised in [14(iv)] above, that the strike through price represented no more than an offer price (see further [29(iv)] below).

23 Given that the representation conveyed by the sales catalogues relates to the sale period, Moore J’s findings in Prouds Jewellers 75 IPR 306; [2008] FCA 75 about the time before the sale period can only be understood as findings about what a potential purchaser would think would have been paid had he or she purchased the item before the sale period. In other words, the strike through price did not indicate the actual sale price but a prospective purchaser’s expectation of the price he or she would have paid. This difference between the representation Moore J found and that pleaded by the ACCC led to the dismissal of the ACCC’s allegations.

24 The Full Court found Moore J’s conclusions to be open on the evidence (at [31]). It is true that the Full Court also referred to the "was" price as "referring only to the price at which the item in question had been offered for sale" (at [36] and see also [42]), but this was in the context of deciding whether the "was" price represented an actual sale price or an offer price. The need for this appraisal arose out of Moore J’s decision that the ACCC had wrongly relied on the "actual sale price" conception of the "was" price. Preferring the offer price to the actual sale price interpretation, and thereby accepting Moore J’s decision, the Full Court was not required to consider whether the offer price was the price at which the goods were in fact offered for sale and thus the price at which they would have been bought (as per Moore J at [37]).

25 The present case involves different facts. In contrast to Prouds Jewellers, the strike through price was in fact the ticketed price (or offer price) for the items the subject of counts 2 to 11 before the sale period. In this context, the primary judge found that the sale catalogue conveyed a representation that purchasers of the 11 items during the sale period would make a saving of the difference between the sale price and the strike through price. However, there had never been a sale of any item at or approaching the strike through price before the sale period. It may be accepted that the primary judge’s characterisation of the representation does not contain an express finding about the meaning of the strike through price. But when the reasons are read as a whole it is clear that the primary judge considered that the strike through price meant the price at which the items had been offered for sale and which the relevant consumer of the items would have paid before the sale (in the same sense as explained by Moore J in Prouds Jewellers 75 IPR 306; [2008] FCA 75, namely, the price the consumer would have expected to pay before the sale). This is apparent from the primary judge’s focus, in his description (at [100]) of the representation, upon the saving to be made by the consumer him or herself.

26 Contrary to Ascot Four’s submissions, the primary judge’s approach does not determine the meaning of the representation by reference to actual sales prices which would have been unknown to consumers (that is, the error of deriving the representation conveyed from the conduct said to make the representation false). It was open to the primary judge to characterise the dual pricing advertising as conveying a representation involving a saving by reference to the difference between the sale price and the strike through price on the basis (albeit implicit from the reasons) that the strike through price represented (at least to a significant section of the relevant class of consumers) more than a bare offer, namely, the price at which they would have bought the item before the sale period. By giving this meaning to the representation, the primary judge did not impute to consumers knowledge of actual sales prices before or during the sale period. Rather, the primary judge found that the strike through price would be understood by some potential purchasers as meaning something other than the mere ticketed or offer price. The representation as found was false because no consumer ever paid the strike through price (or anything close to it) before the sale period. Hence, consumers of the type assumed by the primary judge, when they read the sale catalogue, would have formed an erroneous belief about the price they would have had to pay. In other words, contrary to the representation, the strike through price did not mean anything other than the mere ticketed or offer price. In this sense (as the primary judge said), when juxtaposed with the sale price, the strike through price would not have been regarded by a prospective purchaser who had not been misled, as relevantly bearing on a decision whether or not to purchase at the sale price.

27 The other decisions on which Ascot Four relied (cited at [30] of the Full Court’s decision in Prouds Jewellers [2008] FCAFC 199 and at [15] above) do not lead to any conclusion contrary to that reached by the primary judge on the facts of the present case. None of the decisions tested the extent of the potential representation conveyed by dual pricing because none involved facts where the strike through price had been the ticketed or offer price. Australian Competition and Consumer Commission v Carrerabenz Diamond Industries Pty Ltd [2008] FCA 1103 involved a plea of guilty in circumstances where it was admitted that the items had never been offered for sale at the strike through price. Nevertheless, the plea of guilty was to each allegation including that "each advertisement would have led [the consumer] to believe that if they purchased the diamond in question in each instance, that they would obtain a substantial saving, which amounted to the difference between those two prices" (at [6]). Trade Practices Commission v Cue Design Pty Ltd and Cue & Co Pty Ltd (1996) 85 A Crim R 500 also involved guilty pleas in circumstances where the items had never been offered for sale at the higher price. Again, the same situation (that is, no previous offer for sale at the higher price) existed in Australian Competition and Consumer Commission (ACCC) v Terania Pty Ltd [2008] FCA 732. Ducret v Chaudhary's Oriental Carpet Palace Pty Ltd (1987) 16 FCR 562 also did not call for determination of the question whether the representation extended beyond a mere offer, albeit for different reasons.

28 For similar reasons the decision on which the ACCC relied, Australian Competition & Consumer Commission v Allans Music Group Pty Ltd [2002] FCA 1552, is of limited assistance. That case involved a plea of guilty to a charge of misleading and deceptive conduct by dual price advertising. Allans Music admitted that the method of advertising misled consumers by falsely representing that a saving would be obtained in the sale period between the "was" and "now" prices.

29 Ascot Four’s submissions do not indicate any error by the primary judge. Adopting the order of submissions recorded in [14] above:

(i) The primary judge asked and answered the "first and critical question" of the meaning conveyed by the representation which included consideration of both the sale price and the strike through price and their juxtaposition in the sale catalogue. While the primary judge did not expressly find that the strike through price represented both the ticketed (or offer) price and the price which would have been paid before the sale, so much is apparent from the reasons (as discussed at [25] above).

(ii) The primary judge’s approach recognised (and, indeed, was wholly based on) an understanding of the fact that this method of advertising invites a comparison of like with like. This supports the conclusion that the primary judge treated the strike through price as representing other than a bare ticketed or offer price, whereas a comparison of the two prices in the sale catalogue by a consumer who had not been misled (that is, a consumer who knew that the marked prices were "negotiable") would see the comparison as having no real relevance to his or her decision to buy the item during the sale period. The primary judge’s approach to the representation thus did not involve any inconsistency in treatment of the sale price and the strike through price.

(iii) The primary judge accepted that a purchaser aware of the discount culture in this market would know that he or she could negotiate a price lower than the ticketed or offer price both before and during a sale. The primary judge did not see this as detracting from his conclusion that a significant section of ordinary and reasonable consumers would have understood the advertising to mean something different. This conclusion was open to the primary judge.

(iv) The primary judge found that the consumer unaware of the discount culture in this market would not have understood the strike through price as representing a mere ticketed or offer price with no real relevance to the decision to purchase the item during the sale period. This consumer would have expected to save the difference between the strike through price and the sale price, when in fact this anticipated saving was illusory. In other words, while the strike through price did represent an offer price, to many customers it also represented the price they would have expected to have paid before the sale (see [25] above). This cannot be considered a true representation when the evidence shows that no sales had ever been made at or near the strike through price before the sale. It was open to the primary judge to make this finding, which was in fact consistent with Moore J’s reasoning in Prouds Jewellers [2008] FCA 75; [2008] 75 IPR 306; FCA 75.

30 The different result from that in Prouds Jewellers is explained by the different allegations and evidence before the Court in the present case. As noted, the ACCC failed on the relevant aspect of the claim in Prouds Jewellers because it pleaded that the representation was the saving between the sale price and the amount actually paid by consumers before the sale period. The present case is different. The ACCC’s allegation in the present case depended on the strike through price representing the price that would have been paid before the sale period. This allegation does not depend on purchasers being imputed with knowledge of actual sales prices. The primary judge’s characterisation of the representation was consistent with Moore J’s approach to that issue. This is because the latter half of the representation as found by Moore J at [37] ("and thus the price at which they would then have been bought"), on the facts of the present case, was false. In other words, it was open to Moore J in Prouds Jewellers 75 IPR 306; [2008] FCA 75 to find that on the facts, the possibility could not be excluded that the consumer unaware of the potential for obtaining a discount would in fact have paid the ticketed price. In this case, however, where for whatever reason there were no recorded sales at or near the strike through price, it is simply implausible that any customer, no matter how ill-informed about bargaining opportunities, would have paid that price.

31 Ascot Four’s submission that the primary judge should have found sufficient doubt about how the relevant class of consumers might have interpreted the representation cannot be sustained in the face of the primary judge’s findings. The primary judge accepted that not every ordinary and reasonable potential purchaser would have understood the sale catalogue as conveying the representation as to a saving. However, he was satisfied beyond reasonable doubt that a significant section of these ordinary and reasonable consumers would have so understood the sale catalogue. The latter finding was sufficient, essentially, for the reason the primary judge gave at [102] (that is, s 75AZC(1)(g) of the Trade Practices Act does not require it to be shown that every consumer would have given the material the same meaning and effect). Thus, no error is disclosed.

32 The different facts with respect to count 1 do not lead to a different conclusion for that count. As explained by the primary judge, the item identified in count 1 had never been offered for sale at the strike through price until the day the sale period started and had never been sold at the strike through price. These facts as found were sufficient to sustain the conclusion that Ascot Four had contravened s 75AZC(1)(g) of the Trade Practices Act. Given the representation as to a saving found by the primary judge, the facts also establish the requirement of falsity. Ascot Four’s submissions to the contrary are unpersuasive. The primary judge’s conclusion on count 1 was supported by the evidence and consistent with the allegations of the ACCC.

33 For these reasons grounds 1 to 3 and 7 to 9 in the notice of appeal are not sustainable.

(i) As to ground 4 (that the representation related to the value of the jewellery), as the primary judge said (at [108] and [109]), the fact that some consumers may have given the sale catalogue that meaning does not mean that the representation as to saving found by the primary judge was not made to a significant section of the relevant class of consumers.

(ii) As to ground 5 (that the finding of the primary judge that Ascot Four’s strike through price had never been its sale price in respect of any of the items was contrary to the agreed fact that such items had been offered for sale at the strike through price prior to the sale period), the primary judge’s reference to "normal previous price" in [110], read in context, is not inconsistent with the agreed facts. The primary judge accepted that (other than with respect to count 1) the items had been ticketed or offered for sale at the strike through price before the sale period. The reference to "normal previous price", in the context of [110], means the prices at which items had in fact been sold.

(iii) As to ground 6 (that the primary judge failed to give proper weight to the absence of any evidence that the juxtaposition of the strike through price and the sale price conveyed the meanings alleged in the ACCC’s particulars to the charges), the weight to be given to the evidence (or lack of evidence from actual consumers about the meaning they gave to the representations in the sale catalogue) was a matter for the primary judge. Evidence from consumers is not essential for misleading and deceptive conduct to be established (Miller, Russell V. Miller’s Annotated Trade Practices Act (29^th ed.). Sydney: Thomson Law Book Co, 2008 at [1.52.155]). As the primary judge said (at [97]), the decision whether the sale catalogue made a representation about price is to be determined objectively.

(iv) As to ground 10 (that the verdicts of the primary judge were unsafe and unsatisfactory), apart from the principal submissions advanced above, Ascot Four did not indicate any basis on which it could be concluded that the verdicts were unsafe and unsatisfactory. To the contrary, and for the reasons given, on the whole of the evidence, the primary judge’s conclusions and entry of verdicts of guilty on all 11 counts, were not only open but correct (see MFA v The Queen (2002) 213 CLR 606; [2002] HCA 53 at [25]).

I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Black and Justices Ryan and Jagot.

Counsel for the Appellant:	R J Whitington QC and M Livesey QC

Solicitor for the Appellant:	Fisher Jeffries

Counsel for the Respondent:	M A Griffin QC and R Perrotta

Solicitor for the Respondent:	Commonwealth Director of Public Prosecutions

Date of Hearing:	27 February 2009

Date of Judgment:	26 May 2009

Federal Court of Australia - Full Court

Ascot Four Pty Ltd v Australian Competition & Consumer Commission [2009] FCAFC 61 (26 May 2009)