FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Jewellery Group Pty Limited [2012] FCA 848

Citation:	Australian Competition and Consumer Commission v Jewellery Group Pty Limited [2012] FCA 848	
		
Parties:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v THE JEWELLERY GROUP PTY LIMITED	
		
File number:	SAD 57 of 2011	
		
Judge:	LANDER J	
		
Date of judgment:	16 August 2012	
		
Catchwords:	TRADE PRACTICES – misleading and deceptive conduct – dual pricing – “strike through price” juxtaposed with “sale price” – “was price” juxtaposed with “now price” – identification of relevant audience – relevant audience comprised customers aware or partially aware of discounting practices and customers unaware of discounting practices – whether representation conveyed that consumers would save an amount being the difference between “strike through price” and “sale price” or “was price” and “now price” – whether “strike through price” or “was price” was merely a representation of historical offer prices – assessment of actual sales at or near “strike through” or “was price” prior to sale period – whether representation false – whether representation misleading or deceptive or likely to mislead or deceive 	
		
Legislation:	Competition and Consumer Act 2010 (Cth) s 6A
Trade Practices Act 1974 (Cth) ss 52, 53(e)
Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth) sch 7 	
		
Cases cited:	Ascot Four Pty Ltd v Australian Competition and Consumer Commission (2009) 176 FCR 106
Astrazeneca Pty Limited v GlaxoSmithKline Australia Pty Limited [2006] FCAFC 22
Australian Competition and Consumer Commission v Ascot Four Pty Ltd (2008) 250 ALR 467
Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd (2008) 75 IPR 306
Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd [2008] FCAFC 199
Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2011] FCA 1254
Briginshaw v Briginshaw (1938) 60 CLR 336
Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45
Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR 41-522
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191
Partridge v Crittenden [1968] 2 All ER 421
Phoenix Court Pty Ltd v Melbourne Central Pty Ltd [2007] FCA 1101
Puxu Pty Ltd v Parkdale Custom Built Furniture Pty Ltd (1980) 31 ALR 73
Spencer v Harding [1870] LR 5 CP 561 
Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177
Truth about Motorways Pty Ltd v Macquarie Infrastructure Investment Management Pty Ltd (1998) 42 IPR 1 	
		
Date of hearing:	28, 29, 30 November 2011	
		
Place:	Adelaide	
		
Division:	GENERAL DIVISION	
		
Category:	Catchwords	
		
Number of paragraphs:	154	
		
Counsel for the Applicant:	Mr S Doyle	
		
Solicitor for the Applicant:	Thomsons Lawyers	
		
Counsel for the Respondent:	Mr R Whitington QC with Mr T Cox	
		
Solicitor for the Respondent:	Minter Ellison	

IN THE FEDERAL COURT OF AUSTRALIA		
SOUTH AUSTRALIA DISTRICT REGISTRY		
GENERAL DIVISION	SAD 57 of 2011	
 
BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant
	
AND:	THE JEWELLERY GROUP PTY LIMITED
Respondent

JUDGE:	LANDER J	
DATE OF ORDER:	16 AUGUST 2012	
WHERE MADE:	ADELAIDE	

THE COURT ORDERS THAT:

1.	The applicant bring in short minutes of order to reflect these reasons. 

Note:	Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA		
SOUTH AUSTRALIA DISTRICT REGISTRY		
GENERAL DIVISION	SAD 57 of 2011	
 
BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant
	
AND:	THE JEWELLERY GROUP PTY LIMITED
Respondent

JUDGE:	LANDER J	
DATE:	16 AUGUST 2012	
PLACE:	ADELAIDE	

REASONS FOR JUDGMENT
1		The applicant is established under s 6A of the Competition and Consumer Act 2010 (Cth) and is entitled to sue in its corporate name.  It has brought this application seeking declarations that the respondent has engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 52 and s 53(e) of the Trade Practices Act 1974 (Cth) (TPA).  The applicant also seeks orders for civil penalties in relation to the pleaded contraventions.  The Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth) repealed the TPA, but Item 6 of Schedule 7 to the amending Act provides that the TPA as in force immediately before 1 January 2011 continues to apply to acts that occurred before that date.
2		While the trial of this proceeding concerned both the question of liability and the question of relief, the parties agreed that it was appropriate to defer the question of relief until such time as the Court had ruled on whether there had been a contravention of the TPA, so as to enable the parties to make submissions on the question of declarations and penalties if I were of the opinion that a contravention had been established.  Accordingly, these reasons address only the question of liability.  
3		For the reasons that follow, I find that the respondent has contravened the TPA.
Facts
4		The respondent is a company incorporated in Australia that carries on business as a retailer of jewellery under various names including Zamel’s.  At the relevant times it operated between 93 and 101 stores throughout Australia under the name Zamel’s.  The stores are owned and operated by the respondent, which employs approximately 1,000 people.
5		The respondent also operates retail jewellery business under the names of Mazzucchelli’s, Vivien’s and Budgens, but this proceeding only concerns that part of the respondent’s business that operates under the name Zamel’s.
6		The proceeding relates to six catalogues and a flyer, that were published and distributed between November 2008 and May 2010.  The catalogues were published in the period leading up to Christmas in 2008 (the pre-Christmas 2008 catalogue), in February 2009 (the February 2009 catalogue), in May 2009 (the May 2009 catalogue), in July 2009 (the July 2009 catalogue), in the period leading up to Christmas in 2009 (the pre-Christmas 2009 catalogue), and in May 2010 (the May 2010 catalogue).  The flyer was published in January 2010 (the flyer).
7		In paragraph 20 of the statement of claim the applicant refers to a “February 2010” catalogue.  However, there is no other reference to this catalogue in the statement of claim, and the parties’ submissions did not address such a catalogue.  It may be assumed, therefore, that the reference to this catalogue is a mistake.
8		The respondent admits it published and distributed the catalogues and the flyer over the pleaded period.  It further admits that each of the catalogues was distributed nationally by letterbox drop (with approximately 3 million copies or more distributed for each catalogue), with an additional 200,000 copies made available at Zamel’s stores.  It further admits that each of the catalogues was made available to the public on the Zamel’s website for a period of time.  It admits that 48,000 copies of the flyer were available at Zamel’s stores throughout Australia.  The flyer was also available to the public on the Zamel’s website for a period of time.
9		It is not disputed that the catalogues and the flyer promoted the 44 separate items of jewellery that are the subject of this proceeding.  The catalogues and the flyer did so by including an image of the item, the item number, and a statement of two prices.  In some of the catalogues, the higher price in characters was struck through with a line (strike through price), and a lower price in larger and heavier typeface was described as the “sale price” (sale price).  In the other catalogues and the flyer, the higher price was struck through with a line preceded by the word “was” (was price), and a lower price in larger and heavier typeface was preceded by the word “now” (now price).  Both forms of pricing, “strike through/sale pricing” and “was/now pricing”, are sometimes referred to as “dual pricing.”
10		The strike through price and sale price appeared in respect of the items of jewellery included in the pre-Christmas 2008 catalogue, the February 2009 catalogue, the May 2009 catalogue, and the July 2009 catalogue.  The was price and the now price appeared in respect of items of jewellery included in the pre-Christmas 2009 catalogue, the May 2010 catalogue, and the flyer.
11		The identities of the particular items of jewellery that were marketed by the respondent in the catalogues and flyer, and the manner in which they were marketed, are attached to these reasons as Schedule A.
The Applicant’s Pleaded Case
12		The applicant’s pleaded case is contained in paragraphs 65 and 66 of the amended statement of claim:
C.	The Savings Representation

65.	By each statement of:

65.1	a Strikethrough Price and Sale Price;

65.2	a Was Price and Now Price,

in respect of each item of jewellery in a catalogue as set out in paragraphs 21 to 64 hereof, Zamel’s represented that consumers would save an amount being the difference between the Strikethrough Price and Sale Price or the Was Price and Now Price if the item were purchased during the relevant catalogue sale period (the Savings Representation).

66.	In respect of those items of jewellery the subject of the Savings Representation, contrary to that representation, consumers to whom that representation was made would not have saved an amount being the difference between the Strikethrough Price and Sale Price, or the Was Price and Now Price if they purchased the items during the relevant catalogue sales periods.

Particulars

(a)	In the period immediately preceding the relevant catalogue sale period, the items of jewellery the subject of the Savings Representation were sold either not at all, or only in very limited numbers, at the Strikethrough or Was Price.  Relevant sales data in relation to the jewellery items referred to in paragraphs 21 to 64 above have been provided by way of a separate document entitled ‘Particulars of Sales Relied upon’; and

(b)	From at least 10 November 2008, for the items of jewellery the subject of the Savings Representations, Zamel’s adopted and implemented a price negotiation policy, pursuant to which its representatives were authorised to sell items of jewellery at prices less than the Was Price or the Strikethrough Price that appeared in each relevant catalogue.

The Respondent’s Pleaded Case
13		The respondent pleaded to paragraphs 65 and 66 of the amended statement of claim in paragraphs 65 and 66 of its amended defence:
65.	The Respondent denies the allegation pleaded in paragraph 65 of the Statement of Claim and says further that:

(a)	those items of jewellery the subject of the Savings Representation (as that term is defined in paragraph 65 of the Statement of Claim) were offered for sale at the Strikethrough Price (as that term is defined in the Statement of Claim):

(i)	immediately prior to the relevant catalogue sale period; and

(ii)	for a reasonable period of time prior to the relevant sale period;

(b)	the Savings Representation represented that the Respondent’s offer price to consumers was the Strikethrough Price (as that term is defined in the Statement of Claim)):

(i)	immediately prior to the relevant catalogue sale period; and

(ii)	for a reasonable period of time prior to the relevant sale period.

66.	As to paragraph 66 of the Statement of Claim, the Respondent:

(a)	repeats paragraph 65 of this Defence;

(b)	in relation to the ‘Particulars of Sales Relied upon’ referred to in the particulars to paragraph 66 of the Statement of Claim:

(i)	says that sales data for jewellery item PLU 953344 for the Pre Christmas 2008 catalogue (as that term is defined in the Statement of Claim) is incorrect, in that the data set out in the applicable table for the period 18 July 2008 to 15 November 2008 is duplicated; but

(ii)	says that the ‘Particulars of Sales Relied Upon’ are otherwise an accurate record of the sales by the Respondent of the jewellery item referred to; and

(c)	otherwise denies the allegations set out therein.

The Applicant’s Case
14		The applicant’s case is that, by making the statement of a strike through price and a sale price, or a was price and a now price, in respect of each of the items of jewellery in the catalogues and flyer, Zamel’s represented that consumers would save an amount of money, being the difference between the strike through price and sale price, or the was price and now price, if the items were purchased during the relevant catalogue sale period.  The applicant’s case is that those representations, which the applicant has called the “savings representations”, were false because during the relevant period, the consumers to whom the representations were made would not have saved an amount being the difference between the strike through price and sale price, or the was price and now price, if they purchased the items during the relevant catalogue sale period.
15		The applicant submits that consumers to whom the representations were made would not have saved the amount between the strike through price and the sale price, or the was price and the now price, because the effect of the evidence, and in particular the respondent’s sales data, is that in respect of all 44 items of jewellery there were either no or only a very small percentage of sales at the strike through price, or was price, in the four months leading up to the relevant period for each catalogue and the flyer.  Accordingly, the applicant submits that a significant number of potential customers would not have paid the strike through price, or was price, if they purchased one of the 44 items prior to the sale period and so would not have made the savings represented in the catalogues and the flyer.
16		The applicant contended that the sales data was on its own sufficient to establish that a potential customer would not have paid the strike through price, or the was price, if he or she purchased the item in the period leading up to the sale period.  However, to the extent that the respondent sought to divide the consumers to whom the representations were made into two sub-classes – the discount aware customers and the discount unaware customers – for the purpose of arguing that discount aware customers could not be misled by the savings representation, the applicant also pointed to the respondent’s “price negotiation policy”; a policy that encouraged employees of the respondent to offer or negotiate discounts with potential customers who came into Zamel’s stores.  The applicant submitted that the existence of this policy meant that even discount unaware customers would have paid less than the strike through price, or was price, prior to the sales periods contained in the catalogues and the flyer. 
The Respondent’s Case
17		The respondent denies that the brochures and flyer contained the “savings representation” in the terms pleaded in the amended statement of claim, but contends that the representation in the catalogues and flyer was no more than a representation that the particular items had been offered for sale at the strike through price, or was price, immediately before the relevant catalogue or flyer sale period.
18		The respondent also contends that even if the catalogues and flyer contain the savings representation as pleaded and contended for by the applicant, the applicant has failed to establish that the savings representation is false and therefore has failed to establish that the respondent has engaged in conduct that is misleading or deceptive or likely to mislead or deceive.
The Issues
19		The parties’ respective cases distil the issues.  There is no dispute about the form of the catalogues or flyer, or the publication of those catalogues and flyer.  The issues in this proceeding are whether or not the catalogues and flyer contained within them the representations contended for by the applicant (the savings representations) and, if so, whether the representations are, or are likely to be, false or misleading to the relevant audience.  That requires the Court to determine the representations conveyed in the catalogues and flyer and the audience to whom the representations were made: Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202 per Deane and Fitzgerald JJ.  
The Audience
20		In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, Gibbs CJ said at 199:
Section 52 does not expressly state what persons or class of persons should be considered as the possible victims for the purpose of deciding whether conduct is misleading or deceptive or likely to mislead or deceive.  It seems clear enough that consideration must be given to the class of consumers likely to be affected by the conduct.  Although it is true, as has often been said, that ordinarily a class of consumers may include the inexperienced as well as the experienced, and the gullible as well as the astute, the section must in my opinion by [sic] regarded as contemplating the effect of the conduct on reasonable members of the class.  The heavy burdens which the section creates cannot have been intended to be imposed for the benefit of persons who fail to take reasonable care of their own interests.  What is reasonable will or [sic] course depend on all the circumstances.  The persons likely to be affected in the present case, the potential purchasers of a suite of furniture costing about $1,500, would, if acting reasonably, look for a label, brand or mark if they were concerned to buy a suite of particular manufacture.

See also Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; (2000) 202 CLR 45 at [102]-[103]; and Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 200 per Deane and Fitzgerald JJ.
21		In this case the persons likely to be affected are those who are potential purchasers of jewellery of a kind in the price range of the jewellery advertised in the catalogues and the flyer.  Members of that class of persons will include persons who regularly buy, and persons who rarely buy, jewellery of that kind.  It will include astute and not so astute purchasers.  In Puxu Pty Ltd v Parkdale Custom Built Furniture Pty Ltd (1980) 31 ALR 73, Lockhart J said at 93 that the relevant class will include “the astute and the gullible, the intelligent and the not so intelligent, the well educated as well as the poorly educated, men and women of various ages pursuing a variety of vocations.”  However, the class will not include persons who are reckless or who have no regard for their own interests.  The members of the class of prospective purchasers are reasonable persons: Campomar Sociedad, Limitada v Nike International Ltd at [102].  They will include persons who are familiar with the kind of advertising contained in the catalogues and the flyer.  Those persons will know that advertising of this kind is engaged in by some retailers.  
22		However, not all potential purchasers would have seen advertising of this kind; the class will include potential purchasers who are considering this advertising for the first time. These members of the class would not be aware that some retailers engage in discount advertising, in the form of dual pricing advertising, to lure potential purchasers into their premises.  But more particularly they would not be aware the same jewellery retailers are prepared to sell items of jewellery at a discount and sometimes at a substantial discount on the ticketed prices (the strike through/was prices).
23		The purpose of the catalogues and the flyer, and advertisements of the kind that are the subject of this proceeding, is to induce persons to purchase jewellery.  The advertisements are directed at a very wide group of people, and are calculated to be read by as many people as possible.  Because the advertisements address such a wide audience, the audience must include all of the persons to whom I have previously referred.
24		Those in the relevant audience who lack experience of advertising of this kind would be unaware of the significance of the strike through price or the was price, and would be unaware of the number of times in any year the retailer offered, for sale, jewellery at sale prices rather than strike through prices, or now prices rather than was prices.
25		The range of persons who would read these catalogues and the flyer would include persons with knowledge over a wide spectrum.  Some persons would be quite familiar with the way in which non-luxury jewellery industry retailers operate, while some persons would have a moderate understanding, and some persons no understanding.
The Representation
26		Having identified the audience to whom the representations were made, it is necessary to identify the representation or representations that are conveyed by the catalogues and the flyer.  That requires considering the words used in the advertisement in their context and in their entirety, and giving those words a fair and reasonable meaning.  It is not appropriate to give the words a strained, false or unreasonable meaning.  Rather, the words ought to be understood in their ordinary sense.
27		The words will not be studied closely by the reasonable reader, but they will be read by that reader for the purpose of determining what it is that the retailer is offering.
28		If the words are qualified in any way, then that qualification must be recognised and given effect to as an ordinary and reasonable reader would.  The words may have more than one meaning.  If they do, the question to be determined is whether each meaning that is reasonably open amounts to a representation that is misleading or deceptive, or likely to mislead or deceive.
29		The applicant contended that there was no significant difference between the strike through price/sale price advertisement and the was price/now price advertisement.  It contended that both conveyed savings representations and would have led a reasonable potential purchaser to believe that, in respect of each of the items that were subject to a strike through price or was price, the potential purchaser would save an amount, being the difference between the strike through price/sale price or the was price/now price, if the purchaser were to purchase the item during the period referred to in the catalogues or the flyer.
30		I think the first of those submissions is undoubtedly correct.  There is no relevant distinction between the strike through/sale price advertisement and the was/now price advertisement.  I do not think that the respondent contended otherwise.  The issue in this case is whether the words, character, and numbers used in the catalogues and flyer conveyed the savings representation as defined by the applicant, or whether they conveyed the meaning given by the respondent, or some other meaning, to the relevant class of persons.
31		As I have said, it was contended by the respondent that the class of persons who would have read the advertisements comprised two groups; those persons who are aware of the possibility of obtaining a discount below the ticketed price on an item of jewellery because of their knowledge of the respondent’s ongoing practice of giving discounts in the jewellery industry, and those customers who are unaware of the possibility of obtaining such a discount.  The respondent contended that because of their knowledge of industry practice, a reader who falls into the first segment of the class could not be misled by the advertisements.
32		It was contended that for these “aware” customers, the statements in the sales catalogues would only have represented different initial offer prices and would not have constituted any representation as to the savings that the customer could obtain.  The respondent submitted that the two prices merely constituted different prices from which one might start to negotiate, and that this would have been appreciated by the aware customer.  Moreover, it was contended that the applicant had not established the size of the unaware class.
33		Persons who regularly buy jewellery of this kind are likely to be familiar with the manner in which retailers advertise that jewellery.  On the other hand, persons who rarely buy jewellery of the kind advertised, but who read the advertisement to determine whether they should respond to the advertisement, are unlikely to be aware of the manner in which some retailers advertise jewellery and that some retailers offer discounts on the ticketed prices.
34		It follows, therefore, as the respondent has contended and the applicant has I think agreed, that the readership group will comprise both aware and unaware potential customers.  The aware group, as noted earlier, will include those who are fully aware of marketing in the industry and some who are partly aware.
35		In Australian Competition and Consumer Commission v Ascot Four Pty Ltd [2008] FCA 1295; (2008) 250 ALR 467, Mansfield J considered a proceeding brought by the present applicant against Ascot Four Pty Ltd, which then operated the Zamel’s retail jewellery chain.  In that proceeding Mansfield J had to consider similar advertising, including advertising that had a strike through price and a sale price.  His Honour determined that the relevant class in that case included reasonable consumers who might purchase the type of jewellery contained in the advertisement and were unaware of any discount culture in the jewellery market.
36		I agree with his Honour’s reasoning and his conclusion.  These advertisements would have been read by a very wide audience, which consisted of persons who might be likely to purchase jewellery of the kind and in the price range advertised.  Those persons include persons who were aware and persons unaware of the manner in which Zamel’s and other retailers advertised jewellery.
37		It is not possible to determine whether the majority of those readers were in the class of aware persons or unaware persons, but it is possible to say that the class would consist of both.  Once that determination is made the question is: what would the advertisement mean to the two subclasses?  It may be, as the respondent has contended, that the aware persons would know that they could buy the advertised jewellery at any time at the sale price or the now price, or at least at a price less than the was or strike through price.  I accept that those persons would not be, nor be likely to be, misled or deceived by the advertisements.
38		However, an unaware person would understand the catalogues and the flyer in a different way.  Unaware persons would read the catalogues and the flyer as meaning that if they purchased an item of jewellery contained in the catalogues or the flyer, during the period mentioned in the catalogues or flyer, they would save the amount between the two prices.  In my opinion, that is the only reasonable reading available to a person who is unaware of the manner in which Zamel’s and other retailers advertise their jewellery.
39		The respondent contended that the savings representation was not made out because the catalogues and flyer only referred to offer prices not sales prices.  The respondent contended, in its written closing submissions:
39.	… Specifically, the respondent contends that the statements in the sales catalogues made representations that the Strikethrough/Was Prices were the offer prices in the pre-catalogue periods.

40.	The respondent is a jewellery retailer.  It advertises jewellery by publishing and distributing catalogues.  Some jewellery in the catalogues is advertised with a “Was $X”/Now $Y” price.  The “Was” price is higher than the “Now” price.  The “Was” price reflects the ticketed price in the period prior to the catalogue sale period.

41.	The interests of retailers and consumers are served by goods being marked with price tags.  This is true even in industries where discounting is widespread.  The jewellery industry is one such industry.  Other industries where discounting is commonly known to be rife include cars, consumer electronics and white goods.

42.	The respondent marks all of its jewellery with price tags.  The prices on those tags are set on the basis that they represent a competitive price compared to the price at which the respondent’s competitors offer equivalent goods for sale.  They represent the price at which the respondent is willing to sell the relevant goods without further discussion or negotiation.

43.	The fact that goods are regularly discounted in an industry such as the jewellery industry does not, nor could it logically, dictate that the prices on the tags be constantly updated to reflect the last discounted price at which items were sold at any store or in that store or an average of discounted prices for those items across all stores.  Discounts are not consistent and will not necessarily be applicable to all customers.

40		Before addressing whether the ticketed price and the advertised prices are merely offers, it is necessary to again address the audience to whom the advertising is directed.
41		The audience consists of the aware and unaware customers.  The brochures and flyer could not be simply addressed to the aware customers because, as the respondent contended, the strike through or was price is known to them to be a price that will be discounted by the respondent.  Moreover, the way in which the materials were distributed (by letterbox drop and availability in store and online) could not have restricted the addressing of the materials to simply the aware customers.  The aware customers know that they will not make the savings represented in the catalogues or flyer by purchasing in the relevant sales period.  The advertising cannot be directed to them because, as the respondent contended, they would not be induced by the representations to purchase the items.  The most that the advertising could mean to the aware customers is that the items can be bought at the sale price or now price without having to negotiate to that price.
42		If a retailer that has a vigorous ongoing discounting policy (and for reasons I will give later, the respondent is such a retailer) engages in dual price advertising, the advertising must be for attracting the unaware customers.  It is the unaware customers who, thinking the items advertised can be bought at a lower price than outside the sale period, will be induced to buy during the sale period.
43		The respondent is partly right.  The catalogue offers the items mentioned in the catalogue for sale.  The sale price or the now price is an offer.  Indeed it may be that it is not even an offer but only an invitation to treat: Spencer v Harding [1870] LR 5 CP 561; Partridge v Crittenden [1968] 2 All ER 421.  But whether the advertisement was an invitation to treat or an offer does not matter.  It was no more in representational terms than a representation that the sale price and now price was the price the customer would pay for the item if the customer went into one of Zamel’s stores and asked to purchase the item during the sale period.  However, that does not mean that the statement that the strike through or was price is also only a statement of a previous offer.
44		The representation in the brochure is that the customer would have paid the strike through price or was price before the sale period started.  The unaware customer cannot think that the strike through price, or was price, was an offer price that was subject to negotiation, because that would be to give to the unaware customer knowledge that would make that customer an aware customer.  Those persons who read the catalogues and the flyer and who are unaware that Zamel’s give a discount in respect of the items outside the sale period, must understand a reference to a strike through price or a was price as a reference to a price at which the items could be purchased, not an offer price.
45		It follows that I reject the respondent’s contention that the reader, whether aware or unaware, would read the catalogues and flyer as representing that the strike through price, or was price, was merely the price at which the item of jewellery was offered for sale for a reasonable period prior to the relevant sales period.  In particular, an unaware person would not understand the catalogues or flyer advertising a strike through price, or a was price, as merely an offer price.
46		In my view, the purpose of the advertising is to bring to the reader’s attention the stark differences between the strike through or was price, and the sale price or now price.  As the applicant contended, that is why the two prices appear in juxtaposition.  They are presented in that way for the potential consumer to compare the two prices and to encourage potential consumers to buy within the period identified in the catalogues and the flyer.
47		My reasons in this regard are consistent with Mansfield J’s reasons in Australian Competition and Consumer Commission v Ascot Four Pty Ltd, which were approved by the Full Court in Ascot Four Pty Ltd v Australian Competition and Consumer Commission [2009] FCAFC 61; (2009) 176 FCR 106.
48		In the latter case, the Full Court said at [25]:
… 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.

49		In my opinion, the representation made in the catalogues and the flyer is the same representation as that made in Australian Competition and Consumer Commission v Ascot Four Pty Ltd, and is of the kind identified by the Full Court in the passage above.
50		The respondent contended that the representation alleged by the applicant had not been made in the catalogues and the flyer for two reasons.  First, the respondent submitted that the strike through price or the was price represented the price at which the item had previously been offered for sale.  That is, the strike through and was prices were simply “offer” prices.  Secondly, the respondent contended that the applicant had failed to establish that readers of the catalogues and the flyer would have understood the dual pricing used in the catalogues and the flyer as representing that the consumer would save the difference between the two prices (i.e. the difference between the strike through and the sale price, and the difference between the was price and the now price). 
51		In respect of the first contention, the respondent relied upon Moore J’s decision in Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd [2008] FCA 75; (2008) 75 IPR 306 and the decision of the Full Court approving that decision in Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd [2008] FCAFC 199.
52		At first instance Moore J, considering the position of the consumer unaware of the availability of a discount from the ticketed or market price of jewellery items when confronted with advertising involving dual pricing, said at [37]:
It is to be recalled that ACCC invited consideration of a consumer who did not appreciate that discounts were or would be available resulting in a price less than the regular marked price.  I accept that this hypothetical consumer would, when seeing a “was” price in juxtaposition with a “now” price in relation to an item of jewellery which the consumer might be interested in purchasing, contemplate what savings he or she might achieve if the item was purchased during the sale.  However, I doubt that such a hypothetical consumer would have viewed the “was” price as either a bare sale or a bare offer price as a matter of characterisation.  Rather, it is probable, in my opinion, that the hypothetical consumer would have seen the two prices (the “was” and the “now” price) in juxtaposition and, in the context of considering what savings might be achieved, would have understood that before the sale to which the catalogue related, he or she would have bought the item for the “was” price had it been purchased then.  But now, during the sale period, he or she would be able to buy the item at the “now” price.  The difference between those two prices would be seen by the hypothetical consumer as the savings that would be achieved by him or her by purchasing an item during the sale period.  The focus of the hypothetical consumer’s consideration of the pricing in the catalogue would, in the context of savings to be made, be on the benefits flowing to him or her by the sale to which the catalogue was directed.  Implicit in this analysis is that the “was” price was the price at which the goods were being offered for sale in the period between the promotional sale and thus the price at which they would then have been bought.

53		Justice Moore considered the effect of that finding on the case as pleaded.  He said:
[45]	In my opinion, the relevant hypothetical consumer would have made the erroneous assumption that had he or she sought to buy any one of the 17 items in the period immediately before the Summer of Love catalogue sale commenced (viz. 29 January 2006) he or she would have purchased it at the "was" price.  That assumption would be erroneous because, notwithstanding that such a consumer would probably have purchased an item at the offer price, none of the items were, at that time, being offered for sale at the "was" price.  It is improbable, in my opinion, that the hypothetical consumer would have viewed the "was" price as the price at which the goods would have been purchased by him or her at some indeterminate time before the sale such as the period preceding 25 December 2005 for 15 of the items, or 13 November 2005 or 4 December 2005 when two items had been offered for sale at the "was" price.

[46]	However, does this conclusion lead to the ultimate conclusion that the Level of Saving Representations, as pleaded, was made?  It is convenient, at this point, to digress and mention one matter raised by Prouds.  It is important to the disposition of this case.  Prouds submitted that the issues in this case were narrow with precise allegations in respect of 17 items and five specific representations.  Prouds submitted the proceedings were not "an at-large inquiry" as to whether using "was" and "now" pricing is, in any way, misleading.  Prouds referred to several authorities.  In its written outline of closing submissions, it referred to Truth about Motorways Pty Ltd v Macquarie Infrastructure Investment Management Pty Ltd (1998) 42 IPR 1 at 3, Phoenix Court Pty Ltd v Melbourne Central Pty Ltd [2007] FCA 1101, Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd  (1996) ATPR 41-522 per Burchett J at 42,679.  In oral submissions Prouds referred to Astrazeneca Pty Limited v GlaxoSmithKline Australia Pty Limited [2006] FCAFC 22, which was said to demonstrate that a matter raising s 52 can turn on the specificity of pleadings.  Prouds' submission must, at a level of generality, be accepted.

[47]	The pleading alleged that the Level of Savings Representations were false because they erroneously represented the amount a consumer would save.  As pleaded, the saving falsely represented was the difference between the amount represented by the "now" price and the amount usually paid by consumers in the eight weeks preceding the publication.  The case advanced by ACCC was based on the actual sales to consumers which, overwhelmingly in relation to most of the 17 items and entirely for the remainder, were at a sale price less than the "was" price.  However, in my opinion, this is not the representation conveyed to the relevant hypothetical consumer by the juxtaposition of the "now" and the "was" price as they appeared, in context, in the catalogue.  As I indicated earlier, the hypothetical consumer would not, in my opinion, have contemplated that the "was" price concerned what consumers actually paid if contemplating what savings the particular hypothetical consumer would achieve.  That is, the hypothetical consumer would not have taken the "was" price as signifying the price actually paid by consumers including consumers who knew that discounting and bargaining was a feature of the jewellery industry and, accordingly, had negotiated or secured a price less than the regular market price.  The hypothetical consumer would, when considering what savings might be made by purchasing during the sale, have viewed the "was" price as the price he or she would have paid had they bought the item before the sale period.  Though, as I earlier indicated, this would have involved an erroneous assumption, it is not the case ACCC pleaded and presented.

[48]	Accordingly, the representation as pleaded by ACCC is not established in relation to the Summer of Love catalogue.  The case of ACCC was based on the "was" price being treated as a reference to prices actually paid including prices paid by consumers who were aware of discounting and negotiated a price less than the regular market price.  It is not, in my opinion, an assumption that should be made.

54		The proceeding before Moore J was decided on the applicant’s pleadings and the case advanced by the applicant.  Moore J found, as he said in [47] of his reasons, that the savings representation he identified in the second last sentence of that paragraph was not the case pleaded and presented by the applicant.  However, in this case, the applicant has pleaded the case that Moore J found was erroneous.
55		The Full Court approved Moore J’s decision, holding that it was open to him to find “that the relevant hypothetical consumer who was ignorant that discounted prices lower than the market prices were readily available from Prouds [the respondent] would have focused on the benefits available to him or her during the currency of the sale promoted by one or other of the catalogues”: at [31].  
56		In Australian Competition and Consumer Commission v Ascot Four Pty Ltd it was accepted that the then owner of Zamel’s, Ascot Four Pty Ltd, had offered for sale the items in that catalogue at the strike through price before the sale period.  The Full Court in Ascot Four Pty Ltd v Australian Competition and Consumer Commission considered the decision of Moore J and of the Full Court in Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd and said at [22]:
[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).

57		Thus the Full Court in Ascot Four Pty Ltd v Australian Competition and Consumer Commission distinguished Moore J’s decision and the decision of the Full Court in Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd on the way in which the case was pleaded and presented, and the particular finding made by Moore J.  I accept the applicant’s contention that the savings representation in the catalogues and the flyer is the same as that found by Mansfield J to have been made in Australian Competition and Consumer Commission v Ascot Four Pty Ltd.  It follows that I accept the applicant’s contention that the unaware potential customer would have understood the strike through and sale prices, and the was and now prices, as representing the saving between the two prices that would have been available to the consumer.  That is the same representation found to have been made in Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd.
58		The representation pleaded by the applicant is not that the hypothetical consumer would understand the catalogues and the flyer as representing a saving between the now or sale price and the prices actually paid by consumers immediately before the sale.  This was the representation that Moore J found the ACCC had pleaded in Australian Competition and Consumer Commissioner v Prouds Jewellers Pty Ltd: see at [47] – [49].  However, in that case Moore J found that the hypothetical consumer would, when considering what saving might be made by purchasing during the sale period, have viewed the was price as the price he or she would have paid had they bought the item before the sale period.  His Honour found that while this would have involved “an erroneous assumption” on the part of the hypothetical customer, it was not the case that the ACCC had pleaded: at [47].
59		As I have said, the representation alleged by the applicant in this case is that the hypothetical consumer would have saved the difference between the strike through and the sale price, and between the was price and the now price.  This is the same representation that was found by Mansfield J in Australian Competition and Consumer Commissioner v Ascot Four Pty Ltd: at [100].  In that case Mansfield J found that the representation was misleading and deceptive because sales of the relevant items in the period preceding the sales periods were at prices less than the strike through price.  His Honour said at [110], “[t]he evidence shows that the defendant’s strike through price had never been its actual previous price in respect of any of the items and had never been its normal previous price.”
60		Contrary to the respondent’s submission, the strike through price or was price was not displayed to indicate an historical price that was no longer a relevant price for the particular item of jewellery.  I also reject the respondent’s contention as contained in paragraph 65 of its amended defence that the strike through price and was price represent the offer price of the items of jewellery prior to the relevant sales period.  The strike through price and the was price are shown to tell the class of persons who read the catalogues and the flyer that the strike through price and the was price were the prices at which the items could have been purchased before the relevant sales period. 
61		I also reject the respondent’s second contention, namely that the applicant failed because it did not lead any evidence from a consumer from the class of persons to whom the representations were made (i.e. readers of the catalogues and the flyer) that the consumer understood the dual pricing in the catalogues and the flyer as the applicant contended.  The respondent contended that the evidence it led from Mr Murphy, the Chief Executive Officer of the respondent, was that he was not aware of any consumer complaints concerning the respondent’s pricing, which meant that the applicant’s failure to call any evidence as to the understanding of the audience leads to the conclusion that the applicant’s case was bound to fail.  
62		The applicant is not bound to call the evidence contended for by the respondent, but may of course do so if the evidence is available and if the applicant considers that the evidence would assist the Court in reaching its decision as to whether the representations amount to misleading or deceptive conduct: Taco Company of Australia Inc v Taco Bell Pty Ltd at 202 per Deane and Fitzgerald JJ.  The applicant is entitled to ask the Court to make a finding as to what a reasonable member of the class of persons identified by the Court would make of the advertisement and would understand the representation contained in the advertisement to mean.  The Court must determine, objectively, the representation that was conveyed, and whether the representation is misleading or deceptive, or likely to mislead or deceive.  Evidence that members of the public have actually been mislead is neither conclusive nor necessary: Australian Competition and Consumer Commission v Ascot Four Pty Ltd at [90] and [97] per Mansfield J; Ascot Four Pty Ltd v Australian Competition and Consumer Commission at [34](iii); Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd at 198-199 per Gibbs CJ; Taco Company of Australia Inc v Taco Bell Pty Ltd at 202 per Deane and Fitzgerald JJ.  The applicant proceeded on that basis.  It follows then that the evidence led by the respondent from Mr Murphy is not dispositive. 
63		I accept the applicant’s contention that the representation that was made in the impugned catalogues and flyer is that a purchaser of an item of jewellery in the catalogue or flyer period would make a saving, which is represented by the difference between the strike through price and the sale price, and between the was price and the now price.  The savings representation is made out. 
64		The last question to be determined is whether, as a matter of fact, the savings representation I have found to have been made in the catalogues and the flyer is misleading or deceptive, or likely to mislead or deceive.  To answer this question it will be necessary, having regard to the authorities, to consider the evidence adduced by both parties, including the sales data for the relevant items in the periods leading up to the catalogues and the flyer.
Was the Representation Misleading or Deceptive?
65		Having identified the relevant class as including unaware consumers, and having identified the representation as a representation that unaware consumers would save an amount being the difference between the two prices indicated in respect of each of the relevant items, if purchased during the sales period, the question remaining is whether or not the representation constituted conduct that was misleading or deceptive, or conduct that was likely to mislead or deceive.
66		Conduct will be misleading or deceptive if it induces or is likely to induce error: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd at 198 per Gibbs CJ.  It is not enough that the conduct may cause confusion.  Where a representation is made it will not amount to misleading or deceptive conduct, or conduct which is likely to mislead or deceive, unless it contains a misrepresentation: Taco Company of Australia Inc v Taco Bell Pty Ltd at 202 per Deane and Fitzgerald JJ.  The intention of the person said to have made the misleading or deceptive statement is irrelevant.
67		The question in this case is whether the representation, which I have found to have been made in each of the catalogues and the flyer, was misleading or deceptive amounting to a contravention of s 52.  If the representation was “misleading or deceptive” then it was also “false or misleading” and thus amounts to a contravention of s 53(e): Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2011] FCA 1254 at [19] per Murphy J.
68		As I have said, the applicant is not required to call evidence that customers have actually been misled.  Whether or not conduct is misleading is a question of fact to be determined objectively “by considering what is said and done against the background of all surrounding circumstances”: Taco Company of Australia Inc v Taco Bell Pty Ltd at 202 per Deane and Fitzgerald JJ.  However, the applicant has the obligation to establish on the evidence that the relevant unaware consumers would not have saved an amount being the difference between the two prices, if those consumers purchased the items during the relevant period identified in the catalogues or the flyer.
69		In Australian Competition and Consumer Commissioner v Ascot Four Pty Ltd Mansfield J, and the Full Court in Ascot Four Pty Ltd v Australian Competition and Consumer Commissioner, found the relevant representation to be false, based upon the evidence that none of the 11 items in question had been sold at the was price in the period leading up to the catalogue period.  Mansfield J said at [114], which the Full Court approved in Ascot Four Pty Ltd v Australian Competition and Consumer Commissioner at [26], that:
… The primary findings of fact set out above are sufficient to demonstrate that each of the representations was false or 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 1 July 2005 up to the sale period (in the case of the count 1 item, from 4 November 2005) at anywhere near the strike through price.

70		The inference, which was drawn by Mansfield J and by the Full Court, is that in circumstances where none of the sales in the period prior to the sales period identified in the catalogues or the flyer were at or near the strike through or was price, it can be inferred that a consumer would not have paid the strike through or the was price, had that consumer purchased the relevant item in the pre-sales period.
71		The applicant relied upon similar evidence to that tendered in Australian Competition and Consumer Commissioner v Ascot Four Pty Ltd for a finding that the representation contained in the catalogues and the flyer was false.  Specifically, the applicant relied upon schedules that showed that the sales data for the 44 items identified in the catalogues and the flyer established that, in respect of a number of items, there were no sales at or near the strike through or was price in the four month period leading up to the sales periods identified in catalogues and the flyer and, in relation to the balance of the items, there was only a relatively immaterial percentage sold at or near the strike through or was price.  
The Investigation
72		The applicant received a complaint alleging conduct in contravention of the TPA in relation to Zamel’s January 2010 catalogue.  The complaint was that the catalogue contained misleading price advertising.
73		On 28 January 2010, Susan Jacquier, the Assistant Director of Enforcement Operations in South Australia for the applicant, wrote to the Managing Director of the respondent advising of the complaint and drawing the respondent’s attention to ss 52 and 53(e) of the TPA.
74		Ms Jacquier requested that the Managing Director of the respondent provide the information and documents requested in a schedule to the letter by Friday 12 February 2010.  No reply was received and she wrote again on 17 February 2010, requesting the information be provided by 22 February 2010.
75		On 5 March 2010, the respondent’s solicitors, Minter Ellison, responded to the letter dated 17 February 2010, asserting that Ms Jacquier’s first letter of 28 January 2010 was not received until the respondent received a copy of that letter with her second letter of 17 February 2010.  In their reply, the respondent’s solicitors provided information in relation to the respondent’s procedures for advertising and, in particular, preparation of catalogues.  Specific information was given in relation to the January 2010 catalogue.  The solicitors provided copies of the relevant catalogues that are the subject matter of this proceeding.
76		On 9 March 2010, Ms Jacquier wrote to Minter Ellison pointing out that the respondent had not complied with her request, in that the respondent had not provided some of the information contained in the schedule to her letter of 28 January 2010.  She requested the respondent reply by 16 March 2010.  The respondent provided further information by its solicitors on 16 March 2010.
77		On 8 April 2010, the then Chairman of the applicant, Graeme Samuel, issued a notice pursuant to s 155(1)(a) and (b) of the TPA, addressed to the respondent, requiring the respondent to furnish the information and produce the documents in that notice.
78		On 5 May 2010, the applicant received a response including a CD-Rom, which contained some of the relevant information sought by the applicant.
79		In or about May 2010, Ms Jacquier attended the Zamel’s store located on the corner of James Place and Rundle Mall Adelaide, and obtained a copy of Zamel’s May 2010 catalogue, which she exhibited to an affidavit that she affirmed on 30 June 2011.
80		On 2 September 2010, Mr Samuel issued a second notice pursuant to s 155(1)(a) and (b) of the TPA, addressed to the respondent, requiring the respondent to furnish further information.
81		On 20 September 2010, that notice was amended.  On 23 September 2010, Minter Ellison furnished further information, including a further CD-Rom, in response to the second notice as amended.
82		The information, which was provided in response to the notices, included the ticketed price and sale price of items of jewellery sold by the respondent in the period sought in the notice.
The Analysis of the Information provided by the Respondent
83		Mr McCarthy is employed by the applicant as a Senior Investigation Officer in the Office of Enforcement Operations in South Australia.  He was made aware at an early stage that a complaint had been made in relation to the respondent’s advertising, and that Ms Jacquier was investigating that complaint.
84		After receipt of information from the respondent’s solicitors in response to the first and second s 155 notices, he copied the data that was provided on two CDs, for the purpose of creating a graph of the 44 items of jewellery referred to in the statement of claim.  The graph was to be based on the data included in the CDs in response to those notices.
85		He then created schedules to show sales of each of the 44 items in the period of four months prior to the sales periods of each of the catalogues and the flyer.  He then identified the number of sales for each of those periods at the strike through or was price, including those sales of items within 10% of the strike through or was price.  In the end result he created a document that was tendered in the trial as Exhibit A7.  The contents of that document are annexed to these reasons as Schedule B.
86		Mr McCarthy’s work showed that of the 44 items referred to in the statement, 22 of those items were, in at least one relevant period prior to a sales period identified in a catalogue or flyer, never sold at the strike through or was price.
87		For all items except one, the number of sales that actually occurred at the strike through (or was) price was no greater than 10% of the total sales of that item, during the period prior to the sales period.
88		The respondent contended, and in due course led evidence, that the proper comparison was not over a period of four months prior to the publication of the catalogues or flyer but a period of 12 months.  In that respect they relied upon the evidence of the Chief Executive Officer of the respondent, Mr Adrian Murphy.
89		Both Ms Jacquier and Mr McCarthy were cross-examined on their affidavits.  It was suggested in argument that the sample that Ms Jacquier had instructed Mr MrCarthy to adduce was “skewed or biased”.  The respondent challenged Mr McCarthy’s evidence not as to its veracity, because he worked on information provided by the respondent, but as to the premises upon which he proceeded.  Mr McCarthy was also challenged as to why he had not carried out an investigation into all of the 55 items of jewellery in the catalogue and flyer.  However, it was Ms Jacquier, after discussion with Mr McCarthy, who decided that for the purpose of the applicant’s case the applicant should review 44 items of the 55 items in the catalogues and flyer and review the sale price of those items for four months before the commencement period of each catalogue and flyer.  But in any event I do not accept that criticism of the applicant’s case.  An inquiry into 44 items out of 55 items in the catalogue and flyer was, in my opinion, probative of the fact that the applicant sought to prove, namely that there were either none or very few sales of those 44 items at the strike through or was price.
90		In cross-examination, Mr McCarthy was shown a document (referred to by counsel for the respondent as “the coloured schedule”) which had been created by the respondent and was in similar form to Exhibit A7, but addressed all 55 items.  Of those extra 11 items, one had no sales whatsoever, and one had 7.5% of all sales at or within 10% of the strike through price and was price.  The remainder of the items had from 11.5% to as high as 60.6% of sales at or within 10% of the strike through or was price.
91		Mr McCarthy said frankly he excluded those items because they would not establish that which the applicant wished to establish; that Zamel’s did not sell at, or within 10% of, the strike through or was price.  He said, in answer to a question as to the method he adopted:
The method was to identify all of the items that were identified in the May catalogue.  As I said, I can’t recall specifically excluding them, but the items where there were a larger percentage of sales made at the was strike-through, or within 10 per cent of the was strike-through price, those items may not have been included because the purpose of the analysis overall is to show that Zamel’s either – show that either the items did not sell at the was strike-through price, or in such small quantities, within 10 per cent of the strike-through price.

92		He later said that he did not include one item because there were 20 sales at the strike through or was price, which accounted for 20.7% of all sales of that item.  He was pressed in cross-examination with other items when there had been sales at or near the strike through or was price.  He did not use, and the applicant did not use, those items for the purpose of the applicant’s claim of misleading and deceptive conduct.
93		He was shown Mr Murphy’s affidavit, which Mr McCarthy said he had read.  Mr Murphy’s workings related to a 12 month period prior to each catalogue and flyer.  It also included post catalogue sales.  However, Mr McCarthy had not analysed or reviewed the contents of the data referred to in that affidavit.  
94		I think Mr McCarthy gave his evidence frankly and honestly and I accept his evidence.
95		More importantly, I cannot see anything wrong with Mr McCarthy’s or the applicant’s approach.  They took 80% of the items in the catalogue, which they analysed for the purpose of proving the applicant’s case.  The applicant was entitled to identify those items that supported its contention that the savings representation was false.
96		The fact that a higher percentage of some of the 20% of the remaining items sold at the strike through price or was price did not harm the applicant’s case.  As far as the applicant’s case was concerned, those other items were irrelevant.
97		There can be no criticism of the way in which Mr McCarthy proceeded.  He proceeded in accordance with the agreement with Ms Jacquier and they judged that a period of four months was the appropriate period to determine the extent of relevant sales at the strike through or was price.  He, or Ms Jacquier, or both, deemed that an inquiry into 44 items was appropriate.  In my opinion, that judgment cannot be criticised.
98		It must be borne in mind that the period over which the catalogues and flyer were being considered was between 17 November 2008 and 10 May 2010.
The Respondent’s Evidence
99		The respondent tendered Mr Murphy’s affidavit, which was sworn on 28 September 2011.
100		Mr Murphy was first introduced into the jewellery industry in April 2004, when he became a consultant to Michael Hill International, which had stores in Australia, New Zealand and Canada, and was considering entering into the market in the United States of America.  Mr Murphy’s role apparently was to project manage the centralisation of the company’s operations.  In or around November 2004, he became Group Merchandising Manager, responsible for all buying activities and functions.  Subsequently he became Group Supply Chain Executive, responsible for the distribution, manufacturing and merchandising across Michael Hill’s international operations.  He resigned from Michael Hill to become the Chief Executive Officer at Zamel’s on 29 June 2009.
101		Zamel’s operates a chain of 101 jewellery stores across all states in Australia and the Australian Capital Territory, and employs approximately 1,000 employees across those stores.
102		Mr Murphy’s evidence was that there are two ends of the retail market for jewellery in Australia, being a market for value for money and low cost jewellery (discount market), and a market for luxury brands and high cost jewellery (luxury market).  He said there was an overlap between the two markets.  Zamel’s and its immediate competitors are in the discount market.  Customers in the discount market, he said, are generally more regular purchasers of jewellery and are not driven by branding and prestige so much as value and price.  He said, “The typical Zamel’s customer wants to spend but is highly responsive to getting a ‘deal’.”
103		He was asked in evidence-in-chief as to his experience in these matters.  He said that in his observations Zamel’s have three types of customers.  The first are regular purchasers of jewellery who buy at Zamel’s and its competitors based on considerations of value and price.  These customers, he said, know the prices that are being charged by the jewellery stores and shop around for the best deal.  They use the information acquired to seek discounts at Zamel’s and its competitors.  They are aware that Zamel’s has regular sales periods when ticketed prices drop and they are more likely to wait for those sales.  They are aware of promotions at Zamel’s competitors and use that information to try and drive discounts.  They obtain quotations from the competitor stores, again to seek discounts.  They typically do not pay the ticketed price whether or not there is an ongoing promotion.
104		The second type of customer are first-time customers or customers who purchase jewellery only occasionally.  They do not shop regularly, do not have good product knowledge, do not monitor competitors’ prices, do not actively seek discounts at Zamel’s, and typically buy jewellery at the ticketed price “whether there is an ongoing promotion or not”.
105		The third type of customer is in the luxury market and buys on brand and prestige over value for money, is prepared to pay a premium for the brand, and does not seek discounts on these items.  He said in cross-examination that each of the types are “equally as important as one another”.  He said each is a material part of Zamel’s business.  He said no research has been done by Zamel’s to determine the proportion of customers who would raise with the staff about obtaining a better price.  However, he said the second type of customer would be of more value to Zamel’s gross profit, and that is why Zamel’s have encouraged staff not to talk about price.  The second type of customer, who does not know of discounts that are available, is the type of customer Zamel’s want to encourage to come in to the store.
106		He said luxury items made up about 10% of sales.  A luxury item is seen as an item that typically sells at or in excess of $5,000.  Zamel’s, however, does not sell the brand names such as “Tiffanys” or “Bvlgari” or brands of that kind.  A customer cannot get a well-known brand at Zamel’s.
107		I think it appropriate to have no further regard to Mr Murphy’s evidence in relation to the buyers in the luxury market because the advertisements contained in the catalogues and flyer did not include luxury items and were not directed to buyers in the luxury market.  Mr Murphy did say that luxury items were included in the catalogues but did not point to any luxury items in the subject catalogues and flyer.
108		Mr Murphy’s evidence of the other two types of customers of Zamel’s seems to me to fit the description of the aware and the unaware customer, which the parties addressed in their submissions in relation to the question of contravention.  There is no reason not to accept his evidence in relation to the customer description.
109		Mr Murphy said that the discount market is highly competitive, and it is “often necessary for Zamel’s sales staff to negotiate down from the price at which an item of jewellery is offered, in order to secure a sale.”  In part, he said, this was a result of Zamel’s “price match guarantee”, meaning that it will match the price of any item advertised by any competitor.  Also, it is a result of the first type of customer in the discount market often seeking to negotiate on price.
110		Zamel’s, therefore, provides sales staff with the discretion to offer discount on products at certain levels if necessary to secure a sale.  It publishes a “merchandise availability table” to its staff to assist them to know the discounts they might offer.  He said in his evidence-in-chief that staff are trained to use the negotiation on price as “a technique of last resort”, and only when it is necessary to secure a sale.  Mr Murphy said in his oral evidence that about 90%-95% of customers would negotiate and 5%-10% of customers would not.
111		He also said the staff are trained in accordance with “professional selling standards”, and direct training is given to store managers and assistant store managers one day per month by regional managers.  The retail staff are trained by the store manager and assistant store manager on a daily basis.   The effect of his evidence was that staff are trained to effect a sale at the best possible price from Zamel’s point of view.  They are trained to offer finance to consumers, but the staff are trained that selling items on finance has the effect of discouraging discount.  The retail staff are trained to sell “add on” products to improve margins.  The company has a “Jewellery Group Incentive Scheme”, the purpose of which is to reward the store manager and assistant store manager in recognition of the contribution that they make to the business in driving the performance of the store and achieving targets, amongst other thngs.  The training system of discouraging discussion about price was not implemented until April 2010.  The training took place over six months.
112		Store managers and assistant store managers are eligible to receive individual sales commissions in addition to the bonus under the scheme.  Store managers and assistant store managers who remain continuously employed receive a bonus which is split 80% to the store manager and 20% to the assistant store manager.
113		The bonus depends upon the store achieving its full month sales budget; the wages remaining within budget; the gross profit being achieved; and the store achieving a stock take variance to sales ratio <0.25% of sales for the financial year.  The sales staff also receive bonuses in accordance with a sliding commission structure, based on volume of sales, starting at 0.4% and rising to 2.0%.
114		Mr Murphy was cross-examined about Zamel’s staff raising the issue of price.  He admitted that there were a number of circumstances where staff were encouraged to raise the issue of price.  He said if they cannot sell at the retail price the staff had a riding instruction to discount the item themselves or otherwise obtain a further discount with the approval of the store manager, which he said was typical of the jewellery industry at large.  Discounts are given so the customer does not leave the store without the goods.  In cross-examination, he was shown Zamel’s Pricing Guidelines that were current during the relevant period.  They provided:
Price Matching

	We have a policy of Price Matching.
Ÿ	We will match the competitor price when:
◦	The product is identical.
◦	The customer provides a quote card from another jeweller, or advertising evidence (e.g. a catalogue) showing the competitive price.

In Store Negotiation

	Store staff and managers can negotiate with their customers using the following table of maximum discounts:

CATEGORY	STAFF	STORE
MANAGER	TOTAL	
GOLD UNDER $1000	10%	25%	35%	
GOLD OVER $1000	10%	15%	25%	
ALL SILVER	10%	25%	35%	
DIAMONDS – BRANDED	10%	0%	10%	
UNBRANDED DIAMONDS/
PRECIOUS/PEARLS UNDER $2000	10%	20%	30%	
UNBRANDED DIAMONDS/
PRECIOUS/PEARLS OVER $2000	10%	10%	20%	
WATCHES/CLOCKS	10%	10%	20%	

	These discounts are off the full Recommended Retail price (not on already marked down price).
	When an item is on promotion (reduced or advertised) no further discount can be applied unless price matching.
	Regional Managers no longer have any further markdown ability but no sale should be lost until your Regional Manager has been involved.

Interest Free Sales

	Interest Free sales are increasing in popularity and are forming a major part of our business.  It must be noted that the average cost of an interest free sale to the Company is approximately 10% of the financed amount.
	Please ask early in the sales process as to a customer’s payment method & ensure that the extra 10% cost is taken into account when offering discount.  That is the maximum discount should include the cost of Interest Free.  For example if a customer wants to negotiate a lower price on a gold product under $1,000 it would be a maximum of 25% if interest free is used.
Ÿ	So please consider this early in the sales process when negotiating on price so as to minimize discounting.

115		Mr Murphy accepted that the policy was current during the relevant period.  The price negotiation policy, which had been published by management, was current up until about May 2010 when it was withdrawn because discounts were being offered too readily.
116		Mr Murphy sought to suggest in paragraphs 26 and 27 of his affidavit that Zamel’s did not have a vigorous discounting policy and that it actively discourages staff from negotiating on price.  I reject that evidence.  It is inconsistent with the objective evidence in Exhibit A7.  It is also inconsistent with Zamel’s own Pricing Guidelines.
117		In July/August 2009, Zamel’s lawyers, Minter Ellison, prepared a document which related to dual pricing which was entitled, “Dual Pricing Guideline”.  The Guideline states:
A number of high profile retailers (including jewellers) have been the subject of Australian Competition and Consumer Commission (ACCC) investigations and court action for using misleading ‘dual pricing’.

118		The Guideline describes the dual pricing as:
Essentially, ‘dual pricing’ advertising is any advertising (whether it be in-store, in catalogues or in the media) where a comparison is made between a current price and a previous higher price.

119		The Guideline provides:
Dual pricing is closely scrutinised by the ACCC.  A number of high profile retailers (including jewellery retailers) have been investigated by the ACCC as a result of dual pricing practices, and some have faced court action, in particular where the ‘was’ price used in advertising was not ‘genuine’.

Dual pricing is not illegal when used correctly, and The Jewellery Group is keen to continue representing genuine price savings to consumers.  However, establishing the true and correct ‘was’ price can be difficult, in particular because jewellery products are subject to regular discounting, fierce competition and fluctuating acquisition prices.

This guideline provides a background to dual pricing regulation, and sets out the minimum requirements that should be met by The Jewellery Group whenever dual pricing is used.

120		The Guideline addresses s 52 of the TPA and states:
When dual pricing is used, a representation is made to consumers that they will receive a genuine saving.  Where the ‘was’ price is not genuine, the advertised saving risks being false, misleading or deceptive, in breach of the Trade Practices Act.

121		The Guideline continues:
The Jewellery Group must ensure that any dual price advertising meets the minimum requirements set out this guideline.

When can dual pricing be used?

Dual pricing can be used where a true and accurate ‘was’ price can be established.  The first assessment that should always be made is whether or not a genuine saving exists.

The rule that should generally apply to all dual pricing representations made is that an advertised item must have been:

1.	Offered for sale at the ‘was’ price
2.	For a reasonable period of time
3.	Immediately before the promotion.

If each of these three conditions cannot be satisfied for an item, alternative pricing representations should generally be considered for the item (although there may be exceptions to this general rule, as referred to in the ‘Exceptions’ section at the end of this guideline).

Are actual sales at the ‘was’ price needed?

Provided that an item has been genuinely offered for sale at the ‘was’ price, then actual sales at the ‘was’ price are not always required, but having actual sales at any ‘was’ price is best practice.

Where limited or no sales have occurred at the ‘was’ price, The Jewellery Group must ensure that evidence is kept as to how the ‘was’ price was promoted, for example, copies of catalogues, in-store tickets or price lists containing the ‘was’ price, and for how long the price was offered.

Being able to demonstrate that actual sales have occurred at the ‘was’ price immediately prior to the promotion can enable The Jewellery Group to rely on a shorter ‘reasonable period’ for the purpose of establishing the ‘was’ price.

The ‘time’ and ‘volume’ tests

No threshold is defined in the Trade Practices Act or established by the courts as to what constitutes a ‘reasonable period’ for dual pricing.  What is and what is not a reasonable length of time will vary from industry to industry and from item to item.

As a general rule, to establish an accurate ‘was’ price, The Jewellery Group should ensure that the ‘was’ price for an item reflects:

	the price the item has been offered for uninterrupted sale for a period of approximately 8 weeks prior to the sale; or

	where the price has varied across the 8 week period, the lowest price the item has been offered for sale during that time.

This 8 week period is not formal requirement, but reflects comments made by the ACCC and the courts as to what may be reasonable within the jewellery industry.

A period of less than 8 weeks is likely to be reasonable if a high volume of actual sales has occurred at the ‘was’ price.  By applying a ‘volume test’, an established price will be easier to identify (being the price at which a volume of sales have occurred), negating the need to rely on a period of time to establish a ‘was’ price.  Where high sales are relied upon to establish a price (as opposed to a period of time) evidence of sales must be kept, and sales should have occurred in all or most of The Jewellery Group’s stores where the dual price will be used.

Generally, it is best practice to satisfy both the reasonable period and volume test, in that actual sales at a ‘was’ price (even if it has been the offer price for a period of 8 weeks) will assist in demonstrating that the ‘was’ price is genuine (although there may be exceptions to this general rule, as referred to in the ‘Exceptions’ section at the end of this guideline).

122		The Guideline, which was effectively the respondent’s solicitors’ advice to the respondent, stated unequivocally that the item must have been offered for sale at the was price for a reasonable period of time immediately before the promotion.
123		The Guideline addressed what constituted a reasonable period of time, for an item that had had a was price.  The respondent, it was advised, should ensure the was price reflected the price the item had been offered for uninterrupted sale for a period of approximately eight weeks prior to the relevant sale period.  If the price of the item had varied across that eight week period, the lowest price at which the item had been offered for sale should be adopted as the was price.
124		The respondent did not adopt Minter Ellison’s advice, but adopted the previous “offer price” rather than sales price.  Mr Murphy said that the respondent does not look to the previous sales price, but the offer price during the eight week period.  The actual sale price, Mr Murphy said, was not part of the criteria used in dual-price advertising.
125		Mr Murphy directed his attention to Mr McCarthy’s affidavit and the 44 items that Mr McCarthy had addressed for the purpose of Exhibit A7.  Mr Murphy said that he instructed Mr Lachlan Gunn, the Chief Financial Officer of Zamel’s, to review Mr McCarthy’s graphs against the sales history data maintained by Zamel’s on its internal systems.  Notwithstanding his criticism of Mr McCarthy’s affidavit, Mr Murphy did not ever read Mr McCarthy’s affidavit.  I did not admit the evidence of Mr Murphy that criticised Mr McCarthy’s analysis and evidence, but treated the evidence as a submission.  Mr McCarthy instructed the respondent’s chief financial officer, Mr Lachlan Gunn, to review Mr McCarthy’s work.  He also had Mr Gunn provide a document that showed the total number of sales for each item at the strike through or was price for a period of 12 months before the catalogues and flyer relied upon in the applicant’s statement of claim.  
126		Mr Murphy was cross-examined about aspects of his affidavit that were not admitted in evidence but which, as I said earlier, were to be treated as submissions.
127		His evidence in this regard was quite unsatisfactory.  He had no understanding of Mr McCarthy’s methodology, and indeed no understanding of the criticisms to which he had sworn in his own affidavit.  He agreed on a number of occasions that he had not bothered to read Mr McCarthy’s affidavit.  All he could say was that he would have to refer to Mr Gunn who had done the work within the respondent.  Mr Gunn was not called.
128		It is not necessary to address Mr Murphy’s evidence in relation to Mr McCarthy’s analysis and the detail in which he has addressed that issue in his affidavit, because in due course the criticisms he made were not put to Mr McCarthy because in fact they were not valid or they were irrelevant.
129		The respondent tendered other analyses of the respondent’s sales, in addition to the analysis by Mr Gunn that was exhibited to Mr Murphy’s affidavit.  However, none of these analyses cast any doubt upon the premises upon which Mr McCarthy relied or indeed the work he had undertaken.
130		The fact is Mr McCarthy’s analysis is of 44 items and, for the reasons that I have given, that is a sample which is not inappropriate.  He did not “round down” items in his analysis.
131		Mr Murphy also gave evidence of Zamel’s trade practice compliance.  That evidence will need to be considered on the next hearing.
132		The respondent called Heather Lois McDowell, its diamond and colour stone buyer.  Mrs McDowell is an accredited Gemmologist holding tertiary qualifications and is a member of Gemmological Association of Australia.  She is also a registered valuer.  She has been employed in the jewellery industry since about 1984 and has extensive experience.
133		She is responsible for product selection and ordering for Zamel’s promotions, and has been since about July 2009.
134		Since July 2009, a significant aspect of her role has been to review the promotional pricing used in Zamel’s promotions to ensure that it complies with the respondent’s trade practices compliance obligations.
135		At a meeting conducted by Mr Murphy, she and the other attendees were provided with the “Dual Pricing Guideline” that was prepared by Minter Ellison in relation to dual pricing, discussed earlier in these reasons.
136		Mrs McDowell’s role in the compliance process requires her to identify the jewellery items that are to be promoted using dual pricing, by applying the following methodology:
(a)	if an advertised jewellery item is an item of new stock, which has not previously been offered for sale, I indicate that was/now pricing is not available;

(b)	if the item will have been offered for sale at its current price for less than eight weeks prior to the promotion commencing, I indicate that was/now pricing is not available; and

(c)	if the item will have been offered for sale at its current price for eight weeks or more prior to the promotion commencing, I mark that was/now pricing is available.

137		Since July 2009, after the proofs of each catalogue or flyer are prepared, she cross-checks the proof against the prices listed in the appropriate periods.
138		Since early 2010, the document that she cross-checks against also included a field indicating the name of the last promotion the particular item appeared in.
139		Since late 2010, that is, after the last of the catalogues and flyer that are the subject of this proceeding, the respondent has added a further field to indicate if dual pricing is able to be used in the promotion of the item.
140		In cross-examination, she agreed that the document prepared by Minter Ellison said that best practice in dual pricing would require consideration of actual sales.  However, Mrs McDowell admitted that the practice that was put in place had no regard to actual sales.
Findings
141		First, I find that the evidence of Ms Jacquier and Mr McCarthy is to be preferred to the evidence of Mr Murphy.  Mr Murphy was very much a witness in his own cause and his evidence was tailored to exonerating the respondent.  Wherever there is a dispute between Ms Jacquier and Mr McCarthy on the one hand and Mr Murphy on the other hand, I accept the applicant’s evidence and reject Mr Murphy’s evidence.
142		Ms McDowell’s evidence was largely uncontroversial.  Indeed in some respects it assisted the applicant.  She understood Minter Ellison’s advice in the only way it could be understood, but the respondent did not follow the advice.
143		I accept the applicant’s evidence.  In particular, I accept that it was appropriate for the applicant to analyse the 44 items it selected.  I accept both of the applicant’s witnesses in this regard.  I do not agree that the applicant had to analyse all 55 items and that an analysis of anything less than that number of items meant that the analysis was skewed or biased.
144		I accept the applicant’s evidence that it was appropriate to have regard to the actual sales of the 44 items prior to the publication of the relevant brochure or the flyer over a period of four months.  That period was appropriate because it was long enough to obtain an understanding of the sales history of the item.  The period was longer than that suggested as relevant by the respondent’s solicitors who would have used an eight week period to determine the actual sales.  It was also an appropriate period having regard to the fact that the relevant sales periods occurred more than once a year, so that if a longer period was used, that longer period might include distortions caused by previous catalogue-identified sales periods.  I reject the respondent’s evidence to the contrary.
145		I find that the respondent pursued a vigorous discounting policy in other than the sales periods.  That policy meant that the 44 items were rarely sold at the ticketed price.  As a consequence, the strike through price and was price was rarely paid by a Zamel’s customer.
146		The magnitude of the advertising budget spent on, and in relation to, the catalogues and flyer that are the subject of this proceeding was significant.  Mr Murphy said that the approximate cost of the production and distribution of a catalogue run of approximately three million catalogues is around $400,000.  The campaign planning documents of the respondent that relate to a Mother’s Day campaign in April 2010 and May 2010 show a budget that allocates $345,000 to catalogue costs, and a total budget of $1,014,500.  The brochure and flyer were also viewable on-line.
147		If, as Mr Murphy said, 5-10% of people did not negotiate upon price, then the size of the totally unaware class to whom the savings representations were made was approximately 150,000 to 300,000 people.  I think it was greater than that figure, but I cannot say by how much.
148		It would not be right to assume that all of the increased sales would be by unaware customers.  Some aware customers would respond and make purchases.  But the amount spent on advertising of this kind indicates, in my opinion, that the size of the audience that comprised the unaware customers was, at the time of each of the publications, significant.  It is not possible to precisely determine the size of that audience, but it is possible to say that it was significant enough to warrant the attention of a $400,000 per run advertising campaign.
149		The savings representations contained in the brochures were made to a significant unaware audience.
150		I find that the sales recorded in Exhibit A7 are accurate and can be relied upon.  I reject the respondent’s contention that Exhibit A7 was not accurate and could not be relied upon.
151		The schedule clearly demonstrates that so few sales were made at the strike through or was price that it must be inferred that almost all consumers, whether aware or unaware, would have purchased the particular item for less than the strike through or was price.
152		A significant number of the unaware readers of the catalogues and the flyer would not have paid the strike through or was price and achieved the represented savings, if they had purchased any of the 44 items of jewellery advertised in the catalogues or the flyer before the relevant catalogues or flyer were published and before the sale period.  They would not have done so because the items were sold at a non-sale price, which was less than the strike through or was price, or because of Zamel’s price negotiation policy, which provided discounts to consumers in respect of all of the items of jewellery for sale.  The savings representation was false and thereby the respondent engaged in conduct that was misleading and deceptive or, at least, likely to be misleading or deceptive.
153		In my opinion the applicant has established to the appropriate level of satisfaction (Briginshaw v Briginshaw (1938) 60 CLR 336) that the respondent has contravened s 52 and s 53(e) of the TPA.
Conclusion
154		I will hear the parties as to what orders should be made in light of my findings on the question of liability.  The applicant should bring in short minutes of order to reflect these reasons.

I certify that the preceding one hundred and fifty-four (154) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander.	

Associate:

Dated:	16 August 2012

SCHEDULE A

1.	Item 315622 – Madonna Pendant
	An item of jewellery identified by an image of a pendant and item number 315622 was included in:
(a)	the Pre-Christmas 2008 catalogue at page (7), with a Strikethrough Price of $99 and a Sale Price of $49.50;
(b)	the May 2009 catalogue at page (4), with a Strikethrough Price of $119 and a Sale Price of $69.95;
(c)	the May 2010 catalogue at page (7), with a Was Price of $139 and now price of $69.
2.	Item 341727 – Oval Bracelet
	An item of jewellery identified by an image of a bracelet and item number 341727 was included in:
(a)	the May 2009 catalogue at page (8), with a Strikethrough Price of $95 and a Sale Price of $49.95;
(b)	the Pre-Christmas 2009 catalogue at page (10), with a Was Price of $95 and a Now Price of $49;
(c)	the May 2010 catalogue at page (8), with a Was Price of $95 and a Now Price of $69.
3.	Item 428342 – Mum Locket
	An item of jewellery identified by an image of a locket and item number 428342 was included in:
(a)	the Pre-Christmas 2008 catalogue at page (5), with a Strikethrough Price of $189 and a Sale Price of $89.95;
(b)	the May 2009 catalogue at page (1), with a Strikethrough Price of $275 and a Sale Price of $149;
(c)	the Pre-Christmas 2009 catalogue at page (6), with a Was Price of $275 and a Now Price of $129;
(d)	the May 2010 catalogue at page (7), with a Was Price of $275 and a Now Price of $149.
4.	Item 475475 – Dicurb Chain
	An item of jewellery identified by an image of a chain and item number 475475 was included in the May 2010 catalogue at page (8) with a Was Price of $95 and a Now Price of $69.
5.	Item 503375 – Belcher Bracelet
	An item of jewellery identified by an image of a bracelet and item number 503375 was included in:
(a)	the Pre-Christmas 2008 catalogue at page (12), with a Strikethrough Price of $59 and a Sale Price of $29;
(b)	the Pre-Christmas 2009 catalogue at page (10), with a Was Price of $65 and a Now Price of $29;
(c)	the May 2010 catalogue at page (8), with a Was Price of $65 and a Now Price of $45.
6.	Item 543033 – Belcher Bracelet
	An item of jewellery identified by an image of a bracelet and item number 543033 was included in:
(a)	the May 2009 catalogue at page (1), with a Strikethrough Price of $179 and a Sale Price of $99.95;
(b)	the Pre-Christmas 2009 catalogue at page (8), with a Was Price of $179 and a Now Price of $129;
(c)	the May 2010 catalogue at page (8), with a Was Price of $179 and a Now Price of $89.
7.	Item 565721 – 2 Tone Flower Ring
	An item of jewellery identified by an image of a ring and item number 565721 was included in the May 2010 catalogue at page (6), with a Was Price of $179 and a Now Price of $119.
8.	Item 595926 – Omega Chain
	An item of jewellery identified by an image of a chain and item number 595926 was included in the May 2010 catalogue at page (8), with a Was Price of $95 and a Now Price of $69.
9.	Item 599464 – 2 Tone Drop Earrings
	An item of jewellery identified by an image of a bracelet and item number 599464 was included in:
(a)	the Pre-Christmas 2009 catalogue at page (4), with a Strikethrough Price of $149 and a Sale Price of $79.95;
(b)	the May 2009 catalogue at page (4), with a Strikethrough Price of $169 and a Sale Price of $89.95;
(c)	the Pre-Christmas 2009 catalogue at page (10), with a Was Price of $189 and a Now Price of $99;
(d)	the May 2010 catalogue at page (6), with a Was Price of $189 and a Now Price of $99.
10.	Item 601245 – 3 Tone Drop Earrings
	An item of jewellery identified by an image of a bracelet and item number 601245 was included in:
(a)	the May 2009 catalogue at page (4), with a Strikethrough Price of $159 and a Sale Price of $79.50;
(b)	the Pre-Christmas 2009 catalogue at page (6), with a Was Price of $189 and a Now Price of $99;
(c)	the May 2010 catalogue at page (6), with a Was Price of $189 and a Now price of $85.
11.	Item 662411 – Bangle
	An item of jewellery identified by an image of a bracelet and item number 662411 was included in:
(a)	the February 2009 catalogue at page (4) with a Strikethrough Price of $95 and a Sale Price of $49.95;
(b)	the May 2010 catalogue at page (8), with a Was Price of $95 and a Now Price of $55.
12.	Item 793810 – Butterfly Pendant
	An item of jewellery identified by an image of a pendant and item number 793810 was included in:
(a)	the Pre-Christmas 2009 catalogue at page (11), with a Was Price of $139 and a Now Price of $69;
(b)	the May 2010 catalogue at page (7), with a Was Price of $139 and a Now Price of $69.
13.	Item 889410 – Dragonfly Pendant
	An item of jewellery identified by an image of a pendant and item number 889410 was included in:
(a)	the Pre-Christmas 2008 catalogue at page (12), with a Strikethrough Price of $89 and a Sale Price of $49.95;
(b)	the Pre-Christmas 2009 catalogue at page (11), with a Was Price of $99 and a Now Price of $45;
(c)	the May 2010 catalogue at page (8), with a Was Price of $99 and a Now Price of $49.
14.	Item 896670 – Yellow CZ Dress Ring
	An item of jewellery identified by an image of a ring and item number 896670 was included in:
(a)	the Pre-Christmas 2008 catalogue at page (12), with a Strikethrough Price of $49 and a Sale Price of $29;
(b)	the May 2009 catalogue at page (8), with a Strikethrough Price of $49 and a Sale Price of $29.95;
(c)	the Pre-Christmas 2009 catalogue at page (11), with a Was Price of $49 and a Now Price of $19;
(d)	the May 2010 catalogue at page (8), with a Was Price of $49 and a Now Price of $19.
15.	Item 899740 – Silver CZ Earrings
	An item of jewellery identified by an image of earrings and item number 899740 was included in:
(a)	the Pre-Christmas 2009 catalogue at page (9), with a Strikethrough Price of $89 and a Sale Price of $49.95;
(b)	the May 2009 catalogue at page (1), with a Strikethrough Price of $99 and a Sale Price of $49.50;
(c)	the Pre-Christmas 2009 catalogue at page (10), with a Was Price of $99 and a Now Price of $59;
(d)	the January 2010 flier with a Was Price of $99 and a Now Price of $49;
(e)	the May 2010 catalogue at page (8), with a Was Price of $99 and a Now Price of $39.
16.	Item 926246 – White Gold Earrings
	An item of jewellery identified by an image of earrings and item number 926246 was included in the May 2010 catalogue at page (4), with a Was Price of $1195 and a Now Price of $699.
17.	Item 955344 – CZ Bracelet
	An item of jewellery identified by an image of a bracelet and item number 955344 was included in:
(a)	the Pre-Christmas 2008 catalogue at page (9), with a Strikethrough Price of $119 and a Sale Price of $59.50;
(b)	the May 2009 catalogue at page (6), with a Strikethrough Price of $129 and a Sale Price of $59.95;
(c)	the Pre-Christmas 2009 catalogue at page (8), with a Was Price of $129 and a Now Price of $59;
(d)	the May 2010 catalogue at page (8), with a Was Price of $129 and a Now Price of $59.
18.	Item 961896 – Flower CZ Ring
	An item of jewellery identified by an image of a ring and item number 961896 was included in:
(a)	the May 2009 catalogue at page (8), with a Strikethrough Price of $75 and a Sale Price of $34.95;
(b)	the Pre-Christmas 2009 catalogue at page (10), with a Was Price of $75 and a Now Price of $29;
(c)	the May 2010 catalogue at page (8), with a Was Price of $75 and a Now Price of $35.
19.	Item 975748 – Star CZ Earrings
	An item of jewellery identified by an image of earrings and item number 975748 was included in the May 2010 catalogue at page (8), with a Was Price of $29 and a Now Price of $19.
20.	Item 1023886 – 2 Tone Snake Ring
	An item of jewellery identified by an image of a ring and item number 1023886 was included in:
(a)	the May 2009 catalogue at page (5), with a Strikethrough Price of $99 and a Sale Price of $49.95;
(b)	the May 2010 catalogue at page (6), with a Was Price of $129 and a Now Price of $69.
21.	Item 1023902 – Domed Ring
	An item of jewellery identified by an image of a ring and item number 1023902 was included in the May 2010 catalogue at page (6), with a Was Price of $349 and a Now Price of $249.
22.	Item 1024199 – Purple CZ Dress Ring
	An item of jewellery identified by an image of a ring and item number 1024199 was included in:
(a)	the Pre-Christmas 2008 catalogue at page (12), with a Strikethrough Price of $65 and a Sale Price of $29;
(b)	the Pre-Christmas 2009 catalogue at page (10), with a Was Price of $79 and a Now Price of $29;
(c)	the May 2010 catalogue at page (8), with a Was Price of $79 and a Now Price of $35.
23.	Item 1025717 – Cultured Freshwater Pearl Bracelet & Necklace Set
	An item of jewellery identified by an image of a bracelet and necklace and item number 1025717 was included in the May 2010 catalogue at page (1), with a Was Price of $399 and a Now Price of $199.
24.	Item 1076843 – Belcher Bracelet
	An item of jewellery identified by an image of a bracelet and item number 1076843 was included in the May 2010 catalogue at page (7), with a Was Price of $1149 and a Now Price of $849.
25.	Item 1097450 – CZ Ring
	An item of jewellery identified by an image of a ring and item number 1097450 was included in:
(a)	the February 2009 catalogue at page (4), with a Strikethrough Price of $95 and a Sale Price of $59.95;
(b)	the May 2009 catalogue at page (1), with a Strikethrough price of $95 and a Sale Price of $54.95;
(c)	the Pre-Christmas 2009 catalogue at page (8), with a Was Price of $119 and a Now Price of $59;
(d)	the May 2010 catalogue at page (8), with a Was Price of $119 and a Now Price of $59.
26.	Item 1122035 – Euroball Earrings
	An item of jewellery identified by an image of earrings and item number 1122035 was included in:
(a)	the May 2009 catalogue at page (6), with a Strikethrough Price of $39 and a Sale Price of $27.95;
(b)	the Pre-Christmas 2009 catalogue at page (11), with a Was Price of $49 and a Now Price of $24.95;
(c)	the May 2010 catalogue at page (8), with a Was Price of $49 and a Now Price of $29.
27.	Item 1126176 – White Gold Diamond Circle Pendant
	An item of jewellery identified by an image of a ring and item number 1126176 was included in:
(a)	the July 2009 catalogue at page (3), with a Strikethrough Price of $475 and a Sale Price of $279;
(b)	the Pre-Christmas 2009 catalogue at page (2), with a Was Price of $475 and a Now Price of $225;
(c)	the May 2010 catalogue at page (4), with a Was price of $475 and a Now Price of $199.
28.	Item 1152347 – Diamond Dress Ring
	An item of jewellery identified by an image of a ring and item number 1152347 was included in the May 2010 catalogue at page (8), with a Was Price of $129 and a Now Price of $89.
29.	Item 1152370 – Diamond Dress Ring
	An item of jewellery identified by an image of a ring and item number 1152370 was included in:
(a)	the Pre-Christmas 2009 catalogue at page (8), with a Was Price of $199 and a Now Price of $149;
(b)	the May 2010 catalogue at page (8), with a Was price of $199 and a Now Price of $149.
30.	Item 1153642 – Ladies Crystal Set Gold Tone Watch
	An item of jewellery identified by an image of a watch and item number 1153642 was included in the May 2010 catalogue at page (6), with a Was Price of $139 and a Now Price of $95.
31.	Item 1158989 – White Gold Pendant
	An item of jewellery identified by an image of a pendant and item number 1158989 was included in the May 2010 catalogue at page (4), with a Was Price of $1195 and a Now Price of $699.
32.	Item 1159003 – White Gold Diamond Earrings
	An item of jewellery identified by an image of earrings and item number 1159003 was included in the May 2010 catalogue at page (4), with a Was Price of $599 and a Now Price of $299.
33.	Item 1159011 – White Gold Pendant
	An item of jewellery identified by an image of a pendant and item number 1159011 was included in the May 2010 catalogue at page (4) with a Was Price of $449 and a Now Price of $199.
34.	Item 1160399 – Wheat Slider Chain
	An item of jewellery identified by an image of a chain and item number 1160399 was included in the May 2010 catalogue at page (6), with a Was Price of $249 and a Now Price of $149.
35.	Item 1162635 – 2 Tone Bracelet
	An item of jewellery identified by an image of a bracelet and item number 1162635 was included in the May 2010 catalogue at page (7), with a Was Price of $1049 and a Now Price of $499.
36.	Item 1164276 – Flat Anchor Chain
	An item of jewellery identified by an image of a chain and item number 1164276 was included in the May 2010 catalogue at page (6), with a Was Price of $799 and a Now Price of $449.
37.	Item 1164649 – Figaro Chain
	An item of jewellery identified by an image of a chain and item number 1164649 was included in the May 2010 catalogue at page (6), with a Was Price of $699 and a Now Price of $349.
38.	Item 1164904 – Double Diamond Long Curb Chain
	An item of jewellery identified by an image of a chain and item number 1164904 was included in the May 2010 catalogue at page (6), with a Was Price of $199 and a Now Price of $99.
39.	Item 1165604 – White Gold Belcher Bracelet
	An item of jewellery identified by an image of a bracelet and item number 1165604 was included in the May 2010 catalogue at page (7), with a Was Price of $425 and a Now Price of $199.
40.	Item 1165679 – Diamond Long Curb Chain
	An item of jewellery identified by an image of a chain and item number 1165679 was included in the May 2010 catalogue at page (6), with a Was Price of $325 and a Now Price of $159.
41.	Item 1165687 – Rose Gold Belcher Bracelet
	An item of jewellery identified by an image of a bracelet and item number 1165687 was included in the May 2010 catalogue at page (7), with a Was Price of $499 and a Now Price of $249.
42.	Item 1165729 – Singapore Chain
	An item of jewellery identified by an image of a chain and item number 1165729 was included in the May 2010 catalogue at page (6), with a Was Price of $375 and a Now Price of $185.
43.	Item 1166099 – Wheat Bracelet
	An item of jewellery identified by an image of a bracelet and item number 1166099 was included in the May 2010 catalogue at page (6), with a Was Price of $399 and a Now Price of $199.
44.	Item 1166149 – Dolphin Bracelet
	An item of jewellery identified by an image of a bracelet and item number 1166149 was included in the May 2010 catalogue at page (7), with a Was Price of $399 and a Now Price of $169.

SCHEDULE B

A. Item	B. Catalogue	C. Was/
Strikethrough Price	D. Sales at Was/
Strikethrough price	E. Sales within
10% of Was/
Strikethrough Price	F. Total sales during period considered by McCarthy	G. D expressed as a percentage of F	
315622	Pre Christmas 2008	$99	1	0	36	2.78%	
	May 2009	$119	0	0	29	0	
	May 2010	$139	2	0	28	7.14%	
341727	May 2009	$95	1	0	21	4.76%	
	Pre Christmas 2009	$95	4	0	59	6.78%	
	May 2010	$95	18	0	187	9.63%	
428342	Pre Christmas 2008	$189	1	0	18	5.56%	
	May 2009	$275	0	0	11	0	
	Pre Christmas 2009	$275	1	0	16	6.25%	
	May 2010	$275	0	0	3	0	
475475	May 2010	$95	8	0	92	8.70%	
503375	Pre Christmas 2008	$59	14	0	159	8.81%	
	Pre Christmas 2009	$65	8	2	168	4.76%	
	May 2010	$65	1	0	68	1.47%	
543033	May 2009	$179	2	0	46	4.35%	
	Pre Christmas 2009	$179	2	0	118	1.69%	
	May 2010	$179	8	0	145	5.52%	
565721	May 2010	$179	1	0	29	3.45%	
595926	May 2010	$95	3	0	73	4.11%	
599464	Pre Christmas 2008	$149	2	0	52	3.85%	
	May 2009	$169	2	0	84	2.38%	
	Pre Christmas 2009	$189	2	0	53	3.77%	
	May 2010	$189	0	0	20	0	
601245	May 2009	$159	4	3	95	4.21%	
	Pre Christmas 2009	$189	1	0	58	1.72%	
	May 2010	$189	2	0	51	3.92%	
662411	February 2009	$95	8	0	127	6.30%	
	May 2010	$95	7	2	70	10%	
793810	Pre Christmas 2009	$139	0	0	22	0	
	May 2010	$139	2	0	49	4.08%	
889410	Pre Christmas 2008	$89	1 and 1 at greater than strikethrough price	2	54	3.70%	
	Pre Christmas 2009	$99	4	0	122	3.28%	
	May 2010	$99	6	0	71	8.45%	
896670	Pre Christmas 2008	$49	0	0	96	0	
	May 2009	$49	2	0	75	2.67%	
	Pre Christmas 2009	$49	1	0	28	3.57%	
	May 2010	$49	2	0	81	2.47%	
899740	Pre Christmas 2008	$89	1	4	190	0.53%	
	May 2009	$99	3	1	105	2.86%	
	Pre Christmas 2009	$99	2	0	105	1.90%	
	January 2010 Flyer	$99	0	0	0	0	
	May 2010	$99	1	1	18	5.56%	
926246	May 2010	$1,195	0	0	11	0	
955344	Pre Christmas 2008	$119	0	0	61	0	
	May 2009	$129	4	2	51	7.84%	
	Pre Christmas 2009	$129	1	2	132	0.76%	
	May 2010	$129	3	0	64	4.69%	
961896	May 2009	$75	8	1	117	6.84%	
	Pre Christmas 2009	$75	6	1	123	4.88%	
	May 2010	$75	2	0	69	2.90%	
975748	May 2010	$29	0	0	107	0	
1023886	May 2009	$99	4	1	66	6.06%	
	May 2010	$129	4	0	53	7.55%	
1023902	May 2010	$349	0	0	47	0	
1024199	Pre Christmas 2008	$65	0	0	30	0	
	Pre Christmas 2009	$79	0	0	54	0	
	May 2010	$79	3	0	66	4.55%	
1025717	May 2010	$399	9	0	69	13.04%	
1076843	May 2010	$1,149	2	0	76	2.63%	
1097450	February 2009	$95	8 and 1 at greater than strikethrough price	1	198	4.55%	
	May 2009	$95	1	0	49	2.04%	
	Pre Christmas 2009	$119	1	1	139	0.72%	
	May 2010	$119	6	0	93	6.45%	
1122035	May 2009	$39	0	0	8	0	
	Pre Christmas 2009	$49	8	1	130	6.15%	
	May 2010	$49	11	0	136	8.09%	
1126176	July 2009	$475	0	0	14	0	
	Pre Christmas 2009	$475	0	0	23	0	
	May 2010	$475	1	0	48	2.08%	
1152347	May 2010	$129	2	0	55	3.64%	
1152370	Pre Christmas 2009	$199	0	1	13	0	
	May 2010	$199	3	0	61	4.92%	
1153642	May 2010	$139	2	1	27	7.41%	
1158989	May 2010	$1,195	0	0	3	0	
1159003	May 2010	$599	0	0	13	0	
1159011	May 2010	$449	0	0	15	0	
1160399	May 2010	$249	2	0	130	1.54%	
1162635	May 2010	$1,049	0	0	4	0	
1164276	May 2010	$799	0	0	13	0	
1164649	May 2010	$699	0	0	12	0	
1164904	May 2010	$199	4	0	50	8%	
1165604	May 2010	$425	1	0	11	9.09%	
1165679	May 2010	$325	4	2	62	6.45%	
1165687	May 2010	$499	0	0	11	0	
1165729	May 2010	$375	2	0	36	5.56%	
1166099	May 2010	$399	1	0	15	6.67%	
1166149	May 2010	$399	0	0	8	0