Download Progressive-Enterprises-Limited-v-Commerce-Commission-Judgment-of-Asher-J-High-Court-Auckland-23-December-2008.pdf

Contents : IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CRI-2008-404-0165 PROGRESSIVE ENTERPRISES LIMITED Appellant v COMMERCE COMMISSION Respondent Hearing: 17 November 2008 Appearances: D Goddard QC and M Harris for Appellant J Dixon for Respondent Judgment: 23 December 2008 at 5:00 pm JUDGMENT OF ASHER J This judgment was delivered by me on 23 December 2008 at 5:00 pm pursuant to Rule 540(4) of the High Court Rules .. Registrar/Deputy Registrar .. Date Solicitors: Gilbert Walker PO Box 1595 Shortland Street Auckland Meredith Connell PO Box 2213 Auckland Copy: D Goddard QC PO Box 1530 Wellington 6140 PROGRESSIVE ENTERPRISES LIMITED V COMMERCE COMMISSION HC AK CRI-2008-404-0165 23 December 2008 Table of Contents Paragraph Number Introduction 1 Background 2 The charges 23 The District Court decision 25 The issue 26 Submissions 31 Does s 17 create a strict liability offence 35 The words of s 17 35 The statutory framework 37 The purpose of the Act 44 The case law 48 Conclusion as to mens rea 54 Can the mental states of employees be combined and attributed to the company under s 17 57 The state of mind of a company 60 The words of s 17 63 The statutory framework 64 The purpose of the Act 67 The case law 69 Conclusion 89 Result 91 Costs 92 Introduction 1 Progressive Enterprises Limited ( Progressive ) appeals its conviction in the District Court at Manukau on 17 charges laid under ss 17(a) and 40 of the Fair Trading Act 1986. The charges arise from Progressive s supply of goods bearing an offer of prizes when as Progressive accepts the prizes were in fact no longer on offer and would not be provided. The central issues are whether mens rea is required to establish an offence under s 17 and if so what is required to prove that mens rea. Background 2 An agreed summary of facts was presented to the District Court. No evidence was adduced. 3 Progressive owns 148 Foodtown Countdown and Woolworths supermarkets nationwide as well as an interest as franchisor in other chains. Progressive markets certain in-house products in all its supermarkets under its Signature Range brand. The conception development sourcing promotion and advertising of its in-house brands including the Signature Range line of products was contracted to a third party Daymon Associates ( Daymon ). The events in question took place while Daymon was still managing the Signature Range line of products although during the course of the promotion Progressive gave Daymon informal notice that it would be terminating the arrangement in the following year. 4 The in-house products marketed under the Signature Range brand included various cereals. In mid-2006 Daymon proposed to Progressive that it launch the Signature Range cereals by a promotion that offered trips to the Hunter Valley in Australia as prizes ( the promotion ). A roundel (a round printed sticker) offering the opportunity to enter a draw for one of 5 uplifting trips to Hunter Valley Australia was affixed to the front of all the cereal packs involved in the promotion ( the cereal packs bearing promotional roundels ). Thus customers would be informed by the roundels that they could win one of five trips to the Hunter Valley. The roundels did not identify the dates on which the competition began or closed. 5 During the course of the promotion each cereal pack bearing a promotional roundel contained a pamphlet setting out the details of the competition including the closing date. Details of the competition would thus only be seen once the cereal pack was purchased and opened. To enter the competition a purchaser was required to fill in part of the pamphlet with his or her name and address which would then be placed in a box for the ultimate draw. 6 A piece of printed plastic known as a wobbler which gave details of the prizes offered would hang from the relevant shelves in the supermarket. 7 Neither the roundel the wobbler nor indeed any of the point of sale advertising for the promotion stated the closing date for the competition. The closing date could only be discovered after the cereal was purchased the package opened and the pamphlet read. 8 The cereals involved in the promotion were produced by two New Zealand cereal manufacturers Hubbard Food Limited ( Hubbard ) and Smart Foods Limited ( Smart Foods ). Daymon arranged for Hubbard and Smart Foods to prepare the promotional material for the cereal packs which were to be delivered with the cereal packs when they were delivered to Progressive supermarkets. 9 The cereal packs bearing the promotional roundel and containing the competition pamphlet first began appearing on supermarket shelves in the week commencing 2 July 2006. More of these cereal packs ap

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