VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
civil DIVISION
CIVIL CLAIMS LIST		VCAT REFERENCE NO. C3589/2020
CATCHWORDS	
Section 18 of the Australian Consumer Law – “100% money back guarantee” expressed in two forms on the trader’s website – whether the guarantee applied to all products sold through the website – section 236 of the Australian Consumer Law – reliance 	

APPLICANT	Karen Pead	
RESPONDENT	Premium Pet Food Online Pty Ltd (ACN: 611 050 143)	
WHERE HELD	Melbourne	
BEFORE	Deputy President I. Lulham	
HEARING TYPE	Hearing	
DATE OF HEARING	25 June 2021	
DATE OF ORDER	19 July 2021	
DATE OF REASONS	19 July 2021	
CITATION	Pead v Premium Pet Food Online Pty Ltd (Civil Claims) [2021] VCAT 771	

Order

The proceeding is dismissed.

I. Lulham
Deputy President
APPEARANCES:		
For Applicant	In person	
For Respondents	Mr. Amiti, director	

Reasons

1.	I reserved my decision so that I could examine the respondent’s website as it existed in April 2020.

The dispute

2.	The respondent manufactures many types of dog food and sells it to the public via its website. 

3.	In April 2020 Ms Pead bought from the respondent, online,  a 20 kg bag of its “Turkey Dry Food with Hemp Oil”. The price was $179.50, which included postage. This was Ms Pead’s first purchase from the respondent.

4.	The respondent also sells 4 kg bags of that dog food for $39.95, but charges for postage. 

5.	Evidence was not given about the cost of postage, but for the purposes of the exercise and relying on general knowledge I estimate that non-express parcel post of a 4 kg bag would cost about $9.40.

6.	A consumer who buys the 20kg bag pays $20.25 less than if they bought five 4kg bags over time, and saves postage. So the respondent’s price points give consumers an incentive to buy the larger bag.

7.	Ms Pead has two dogs. Her older dog has a skin condition which Ms Pead puts down to an immunity deficiency, and it scratches excessively. Before buying the respondent’s product, Ms Pead had tried all manner of veterinary treatments on the dog but to no avail. She had also experimented with many different dog foods. Whilst she accepts that the respondent’s dry food does not purport to be “medicinal” or “prescription”, Ms Pead did think it would be healthy and that it might assist the older dog’s skin condition. The presence of hemp oil was a factor in her thinking.

8.	Pet dogs can be fussy eaters – working dogs, not so much – and $179.50 is a significant sum to spend on one purchase of untried dog food. 

9.	Ms Pead gave evidence that she was influenced to try the respondent’s dog food by this statement on the first page of the respondent’s website:  

“Try Our Dry Food Today 100% Money Back Guarantee

Over 20 Years of Love & Care For All Dogs”

10.	Ms Pead observed that her older dog’s itchiness did not improve when it ate the respondent’s dog food. Her younger dog, a cavalier spaniel, simply did not like the dog food. 

11.	In those circumstances Ms Pead sought a refund under the Money Back Guarantee.

12.	The respondent replied that the guarantee only applied to 4 kg bags.

13.	Initially Ms Pead felt she had been cheated. A disproportionately vigorous exchange of correspondence ensued, and I suspect the dispute might have been resolved without a VCAT hearing had the parties communicated with a bit more restraint. Whilst the threatened  defamation proceedings and intervention orders did not come to pass, an indication of the parties’ animosity was that Ms Pead sued the respondent for $2,000.00, the excess over $179.50 essentially being for disappointment, inconvenience and distress. There was, of course, no legal basis for claiming more than $179.50 and that is the amount I am dealing with.

14.	When Ms Pead filed a screenshot of a portion of the website with the Tribunal as evidence in this case, she included a page which said

“Try Our Dry Food Today 100% Money Back Guarantee

Only available for 4KG orders!”

	on which she overlaid the words, “They changed (it)”. 

15.	However during the hearing Ms Pead conceded that the respondent had not changed the page or the website, and that in fact text limiting the guarantee to 4 kg bags appeared on another page of the website when she bought the dog food. Her complaint became that the guarantee that appeared to apply to all products was on the first page of the website, whereas the text that limited the guarantee to 4 kg bags appeared on a subsequent page and would only be seen by a persistent consumer who was prepared to do several “clicks” through the website.

16.	I advised the parties at the end of the hearing that I would reserve my decision so that I could examine the website as it existed in April 2020, by using The Wayback Machine. 

17.	Now that I have done so, I make the following observations. 

18.	I confirm that the first page of the website contained  those words “Try Our Dry Food Today 100% Money Back Guarantee/Over 20 Years of Love & Care For All Dogs”.

19.	The website did not contain  many pages, and it does not take many  clicks to get to the other text. As I navigated through the website, there was content extolling the quality and properties of the dog food, and there was then a red button labelled “view pricing”. Immediately above the red button were these words:  

“100% No-Risk Money Back Guarantee!

You are fully protected by our 100% Money Back Guarantee(Max 4KG’s). If your furry little friend doesn’t like the food over the next 30 days, then we will gladly refund your money. No questions asked!”

20.	A click on the red button  takes you to a page which is a bit like an order form, in which a customer could input their name and address, state whether they were ordering a 4 kg or 20 kg bag, and insert details as to the method of payment. This order form page does not contain any money back guarantees.

21.	In my view the references to the money back guarantee could not amount to a term of the contract under which Ms Pead bought the dog food. In legal theory a contract is a legally enforceable agreement that comes into existence when three elements are present: an offer, acceptance of the offer, and the passing of consideration from one party to the other such as the payment of a price. When retailers appear to offer goods for sale, by displaying them in a shop or by advertising them, at law they are not making the offer which the potential customer could accept and thus create a contract. Instead, the retailer is making what is called an “invitation to treat”: it is inviting potential customers to make an offer to the retailer, and as a result the contract is not created unless the retailer accepts the potential customer’s offer. 

22.	Arising from this concept of the invitation to treat, in contract law favourable descriptions of goods or services are generally seen as non-promissory, rather than statements which are capable of being a term of the contract. Generally, a statement in an advertisement is an invitation to treat, and is not an offer by the advertiser. 

23.	As the contractual analysis is left behind, the legal issue becomes whether the way in which the respondent expressed its money back guarantee amounted to misleading or deceptive conduct, in breach of the prohibition in section 18 of the Australian Consumer Law. It is important that the respondent published two sets of words concerning the money back guarantee – on the first page, one apparently applying to all  sizes of bags, and on the later page, one applying to “max 4kgs” and having a time limit of 30 days.
24.	Section 236 of the Australian Consumer Law provides that a person who suffers loss or damage “because of” conduct which contravenes the prohibition of section 18 may recover that loss or damage. The phrase “because of” shows that it is not enough that a trader breaches section 18. Instead,  the misleading conduct must cause the loss or damage suffered by the consumer. The conduct causes the loss when the consumer relies on the conduct. 

25.	As I said in paragraph 9, Ms Pead said that she was influenced to buy the 20 kg bag of dog food by the money back guarantee as expressed on the first page of the website. She appreciated that $179.50 was a sizeable sum for un-tried dog food, given her knowledge that dogs can be fussy eaters, and the guarantee struck her as imposing the risk of the dog food proving to be unsuitable for her dogs on the respondent. Ms Pead did not see the second formulation of the guarantee, limited to 4 kg bags and having the 30 day time limit.

26.	In considering Ms Pead’s claim that the respondent engaged in misleading and deceptive conduct in its website, the Tribunal must consider whether a “hypothetical ordinary person” would be misled or deceived by the website. The Tribunal is not to consider whether Ms Pead idiosyncratically was misled where other reasonable persons would not have been misled.

27.	The Tribunal must also consider the statements in the website in context. The law on misleading and deceptive conduct has long recognised the way in which words and images in advertisements, on labels and in promotional material can be perceived by readers, and the difference between the degree of attention that consumers give to such words in their particular context. 

28.	A hypothetical ordinary consumer might barely glance at the label on a can of beans on a supermarket shelf, and form an impression from the overall appearance of the label. That impression might be incorrect. However there might be ‘fine print’ on the back of the can which contained accurate information which would have corrected the consumer’s misunderstanding.  

Because consumers are not expected to read cans of beans in great detail, a Court might find that the consumer of a can of beans was misled and deceived by the attention-grabbing aspects of the label, even if accurate information also appeared on the label.  

29.	On the other hand, a potential purchaser of land who received a disclosure document from the vendor under the Sale of Land Act which revealed information about easements, land tax and the like is expected to thoroughly read that document, and that potential purchaser would be hard pressed to establish that they had been misled by a photograph of the land on the cover of the statement when the written contents of the disclosure document contained accurate information. 

30.	Ms Pead gains some benefit from this distinction, as the purchase of dog food is – objectively – a trivial transaction compared to the proposed purchase of real estate. In that sense Ms Pead is somewhat more likely to be found to have been misled by the respondent’s website than if she was entering into a more significant transaction. 

31.	However, having gone through the website on the Way Back Machine, I must reject Ms Pead’s argument that the guarantee limited to the 4 kg bags was only seen after several “clicks” through the website. Ms Pead sought to create the impression that the limitation was almost an exemption clause disguised in fine print. In reality, it simply appeared after the first page, and it was prominently displayed right above an eye catching red button. It would be the last thing one would see before entering the order form. The words “(Max 4KG’s)” are a bit inelegant but are quite clear in their meaning. A hypothetical ordinary consumer would see the limited money back guarantee. If a consumer relied on a guarantee, it would be on the limited guarantee.

32.	Because the law looks at whether reasonable persons would be misled, it is expected that people must take some care to protect their own interests. It follows that Ms Pead is expected to have looked at the respondent’s website as a whole, which would have shown her the limited guarantee. 

33.	A hypothetical reasonable consumer who looked at the respondent’s website as a whole would see that the website contained one guarantee, which was expressed on the two pages. That is, there were not two guarantees, one wider than the other. Because there is one guarantee, the narrower words, which give less rights to the consumer by limiting the guarantee to the smaller bag and by imposing a 30 day time limit, override the broader words. It follows that, objectively, Ms Pead was not misled and deceived by the respondent because it simply and correctly asserted that the guarantee did not apply to the 20 kg bag purchased by Ms Pead.

34.	As Ms Pead conceded, in the hearing, that the limited guarantee was on the website when she bought the food, it is simply not the case that Ms Pead would have to have taken unreasonable steps to find that limited guarantee. If a person’s own negligence prevents them from seeing the limited guarantee on the respondent’s website, it could be said that any false impression gained by  that person arose from their own negligence and not from any misrepresentation by the respondent. 

35.	For the reasons above, Ms Pead’s claim must be dismissed. As a reasonable consumer she was expected to read the website as a whole; the limited guarantee was clearly visible on the website and was not buried in fine print or only accessible by the reader with the energy to make many clicks on the website; and even given that consumers are not expected to read a dog food website in the same way as they would read a disclosure document in a purchase of real estate, the limited guarantee is sufficiently clear.

36.	I would simply add that there is a commercial justification for the respondent to limit the guarantee to 4 kg bags of the dog food. That is, it is not an irrational limitation which does not protect legitimate interests of the respondent. This is because the respondent bears the cost of postage on the 20 kg bag. Not only does it charge about 10% less for the larger bag, but it also bears the postage. A consumer is presented with the choice of buying a 4 kg bag at a higher price to  try the product for the first time, or of taking the risk of buying the 20 kg bag at the lower price. The consumer makes that choice – the consumer is not compelled to do anything by the respondent.

37.	For the above reasons, the claim for $179.50 is dismissed. As I said above, the balance of the claim for disappointment and the like had no legal basis anyway, but if it had, my finding that the respondent’s website was not misleading and deceptive would compel the dismissal of that claim as well.

I. Lulham
Deputy President

19 July 2021