FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Snowdale Holdings Pty Ltd [2016] FCA 541

ORDERS

THE COURT ORDERS THAT:

1.    The application is adjourned to a date to be fixed for the making of orders and fixing of penalties attendant upon the findings made in these reasons for judgment.

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

REASONS FOR JUDGMENT

SIOPIS J:

1    Snowdale Holdings Pty Ltd (Snowdale), the respondent, carries on, and during the period 8 April 2011 to 9 December 2013 carried on, the business in Western Australia of producing eggs from laying hens on a very large scale.

2    At various times during the period 8 April 2011 to 9 December 2013 (the relevant period), Snowdale packed eggs that it produced at two of its egg production farms into cartons containing labels which used the term “free range eggs” to describe the eggs contained in the cartons. Snowdale sold those cartons of eggs to retailers for sale to their customers under the brand names: Swan Valley Egg Farm, Swan Valley Egg Co, Carabooda Lovingly Hand Packed free range eggs, free range eggs by Ellah, Wanneroo Free Range Eggs and Mega Free Range Eggs. Free range eggs are sold at a premium price.

3    The retailers included well-known supermarket chains, such as Woolworths and Coles. The retailers placed the cartons of eggs supplied by Snowdale on their supermarket shelves and in that way the labels on the cartons became visible to consumers. In addition to the words “free range eggs”, many of the labels contained other words and some also contained pictures. I will refer in detail to the labels used on and in the cartons which are the subject of complaint in this case later in these reasons.

4    At times during the relevant period, Snowdale also operated a website which it used to market and advertise the eggs under the brand name “free range eggs by Ellah”. Snowdale also published a poster during the relevant period which advertised its Swan Valley Egg Co eggs as free range eggs.

5    The eggs which Snowdale sold and promoted as free range eggs during the relevant period came from laying hens that were housed in four industrial sized structures which were referred to during the proceeding as “barns” or “sheds” located on a property at Carabooda (referred to during the proceeding as the “Carabooda farm”); and, for a significant part of that period, also from a shed located on a property in the Swan Valley (referred to as the “Swan Valley farm”).

6    Each of the four sheds at the Carabooda farm was 96.4 m long and 13.6 m wide. The shed at the Swan Valley farm was 82.8 m long and 11 m wide.

7    Each of the sheds at Carabooda had the capacity to house about 18,000 laying hens, whilst the shed at the Swan Valley farm had the capacity to house about 12,740 laying hens. Adjacent to each of the sheds was a vacant area of land which was fenced. There were openings on one side, and later, at Carabooda, on both sides, of the sheds which gave the hens a means of access to the vacant areas of land adjacent to each of the sheds. These openings were, and are, called “pop holes” and the purpose of the pop holes was to permit hens to use the pop holes as a means of exiting the shed to access the adjacent area of land, called the “range” or the “open range”. The number of pop holes at the sheds at Carabooda increased during the period in question. I will deal with the farming conditions in more detail later in the reasons.

8    The Australian Competition and Consumer Commission (ACCC), the applicant, claims that in, during the relevant period, selling, marketing and advertising the eggs produced under the farming conditions which prevailed in relation to the five sheds referred to above, as “free range eggs”, Snowdale engaged in conduct which was misleading or deceptive, or likely to mislead or deceive, and so contravened the Australian Consumer Law (the ACL) in Sch 2 of the Competition and Consumer Act 2010 (Cth).

9    In short, the ACCC alleged that, during the relevant period, the impugned farming conditions were such as to restrict the ability and propensity of the hens to leave the sheds and access the open ranges, so that, in respect of each shed, most hens did not actually leave the shed on most days. In those circumstances, said the ACCC, it amounted to misleading or deceptive conduct to represent that the eggs produced in those farming conditions were “free range eggs”.

10    The respondent denies the claim.

11    I set out below a number of background facts.

background

12    Mr Barry Cocking is, and was, at all material times, a director of Snowdale. Mr Cocking was, during the relevant period, responsible for the operation of the egg production business carried on by Snowdale. During the relevant period, Snowdale sold approximately 71% of the eggs it produced as free range eggs, and charged a higher price for those eggs than if they had been sold as “barn laid” or “cage free” eggs. Until November 2011, when they moved to Guildford, Mr Barry Cocking and his wife, Mrs Chimene Cocking, lived in a house located at the Swan Valley farm.

13    Ms Ellah Cocking is the daughter of Mr and Mrs Cocking. Ms Ellah Cocking was assigned some management responsibility in respect of the free range eggs production business carried on at the Swan Valley farm from sometime in early 2011. As I will discuss in greater detail later in these reasons, Ms Ellah Cocking featured strongly in Snowdale’s strategy to market its “free range eggs by Ellah” brand of eggs. The “Ellah” referred to in the brand name “free range eggs by Ellah” is a reference to Ms Ellah Cocking.

14    The process used to produce the eggs sold as free range eggs in the sheds on the two farms referred to above was, in outline, as follows.

15    The birds which ultimately became the laying hens housed in the relevant sheds at Carabooda and Swan Valley were bought by Snowdale as day old chicks. From November 2011, Snowdale bought the day old chicks from the Altona Hatchery, which delivered them to the Carabooda farm. Mr Dennis Green was the person at Altona Hatchery who, at Mr Cocking’s request, dealt with Mr Cocking in relation to the sale of the day old chicks.

16    The day old chicks were then raised in two rearing sheds at Carabooda for about 16 weeks. A flock of the birds was then transferred to one of the free range sheds at Swan Valley and Carabooda, where they were trained for a further period of four to five weeks. The training included conditioning the hens to use the food, water and nesting facilities within each shed. The nesting facilities were provided by a nesting box which was part of a continuous structure which ran down the middle of the shed for almost the entire length of the shed. The hens would lay the eggs in the nesting boxes and the eggs would then be conveyed to a collection point. The floor of each of the sheds which housed the hens was slatted so that the manure produced by the hens would pass through the slats on to a conveyor belt beneath the slatted floor. The food for the hens was provided in the shed using a feeding system which Mr Cocking described as a “chain feeding” system, which was essentially a chain of small pans in which the food was placed and then circulated around the shed. There was also within the shed a system which provided drinking water for the hens, referred to as water lines, which comprised pipes hung from the roof stretching horizontally throughout the length of the shed. Attached to these pipes at regular intervals were further downward pipes at the end of which was an opening referred to as a “nipple”, which the birds would access in order to drink the water. The shed was temperature controlled. It had cooling fans and foggers which produced a fine mist of water through the shed to cool it down.

17    When the flock of laying hens in a shed had reached the end of their laying lives, they were “euthanized”. The sheds were then cleaned out, and a new flock of young birds was taken from the rearing sheds and placed in the shed to replace the previous flock.

18    During the relevant period, there was in operation the Code of Practice for Poultry in Western Australia (Department of Local Government and Regional Development, March 2003) (the Model Code). The Model Code states:

2.1.1    Egg production

The three basic housing systems for egg production are defined below. It is recognised that individual marketing definitions for table eggs may require more specific descriptions for the housing systems.

2.1.1.1    Cage systems

Birds in cage systems are continuously housed in cages within a shed.

2.1.1.2    Barn Systems (Non-cage Systems)

Birds in barn systems are free to roam within a shed which may have more than one level. The floor may be based on litter and/or other material such as slats or wire mesh.

2.1.1.3    Free-Range Systems (Non-cage Systems)

Birds in free-range systems are housed in sheds and have access to an outdoor range.

19    That Model Code included specifications in relation to farming practices including guidelines for stocking densities and pop hole availability for free range systems as defined by the Model Code. Thus, the Model Code provided for a stocking density inside the sheds of up to 30 kg per square metre of stocking space. On the basis that an adult laying hen weighed about 2.1 kg, that resulted in a density of just under 15 birds per square metre. The Model Code also provided for a standard of 500 hens in a shed per metre of pop hole.

20    In April 2011, at the beginning of the relevant period, Snowdale was producing eggs sold and marketed as free range eggs from sheds 5, 6, 7 and 8 at Carabooda. There were other sheds on the farm, but they were not used for the production of eggs marketed as free range eggs. As mentioned, each of the sheds 5, 6, 7 and 8 was 96.4 m long and 13.6 m wide and had the capacity to house 18,000 laying hens each. Until July 2013, there were pop holes located along the south side of each of sheds 5, 6, 7 and 8 but, after July 2013, the number of pop holes at those sheds increased. I will deal with the farming conditions at those sheds in greater detail later in these reasons.

21    In April 2011, the Swan Valley farm shed was 82.8 m long and 11 m wide, having an internal area of approximately 910 m². This shed was referred to as shed 1 at the Swan Valley farm. At that time, there were 10 pop holes located in the northern side of the shed. Also, in April 2011, there was a large undivided area of land immediately adjacent to the north of that shed which had not been divided into separate areas by fencing. The pop holes in shed 1 at Swan Valley were immediately adjacent to this large undivided area of land. Subsequently, fences were installed and three ranges were created, referred to as range A, range B and range C. In April 2011, the shed was empty and undergoing renovations. The shed was used later in the year to house hens whose eggs were sold as free range eggs. I will deal with the farming conditions in relation to the Swan Valley shed in greater detail later in these reasons.

22    At some time in 2011, Snowdale commenced aggregating at the Swan Valley farm, eggs which were produced at the four sheds at Carabooda and shed 1 at the Swan Valley farm. The eggs were packed into cartons. Snowdale sold those cartons of eggs at a premium price to retailers for sale to their customers under the brand names: Swan Valley Egg Farm, Swan Valley Egg Co, Carabooda Lovingly Hand Packed free range eggs, free range eggs by Ellah, Wanneroo Free Range Eggs and Mega Free Range Eggs. Free range eggs were sold at a premium price by retailers to their customers.

23    In packing the eggs into the cartons, Snowdale did not have regard to the origin of the eggs. Thus, for example, eggs from hens housed in the Carabooda sheds were included among the eggs packed in the cartons labelled “free range eggs by Ellah”.

24    In September 2011, two environmental health officers, from the City of Wanneroo, Mr Phillip Wesley and Mr Wayne Harris visited the Carabooda farm as a consequence of an odour complaint from market gardeners. The two officers had a conversation with a person they understood to be the manager of the farm about the propensity of the hens to exit the sheds at Carabooda and enter the open ranges adjacent to the sheds. I will deal with this conversation later in these reasons.

25    On 28 February 2012, Mr Cocking sent an email to councillors of the City of Swan in support of an application for retrospective approval to increase the number of hens that Snowdale would be permitted to keep for egg production at the Swan Valley farm from 24,000 to 80,000 hens. In the email, Mr Cocking advised that the Swan Valley farm had been operating at full capacity of 80,000 hens.

26    In July 2012, Mr Peter Groot became the farm manager at Carabooda. His employment ended in February 2015. During his tenure as farm manager at Carabooda, Mr Groot provided weekly reports by email to Mr Cocking. These reports included progress reports on the chicks in the rearing sheds and egg production reports in respect of the production sheds, including sheds 5, 6, 7 and 8. Mr Groot also made observations in those reports about other developments at the Carabooda farm.

27    On 28 March 2013, a substantiation notice to give information and produce documents was issued by the ACCC to Snowdale under s 219(2) of the ACL. The substantiation notice asked a number of specific questions about the farming conditions relating to the production of the eggs which Snowdale sold as free range eggs. Among the questions asked was a question about stocking density in the free range sheds. The question, and the answer given by Mr Cocking on behalf of Snowdale in its response dated 10 May 2013, was as follows:

b.    In relation to each of the free range chicken sheds and associated yard areas identified in response to questions 3.a. above state:

i.    the highest internal stocking densities since 1 January 2013 and describe how those density figures have been calculated, including the number and average weight of adult hens housing each shed at that time.

Response

14 birds per square metre

Density calculated using floor area and bird weight (approx 2 kg per bird)

28    The calculation method for the highest internal stocking density used by Mr Cocking in the response to the substantiation notice, therefore, indicated that the highest internal stocking density since January 2013 for each of sheds 5, 6, 7 and 8 was calculated on the basis of a flock size of approximately 18,000 hens.

29    Snowdale’s response also stated that the internal area of each of the sheds 5, 6 and 7 was 1,311 m². However, the internal area of shed 8 was said to be 1,088 m². I observe, however, that the ACCC subsequently pleaded, and Snowdale subsequently admitted, that the internal area of shed 8 was also 1,311 m².

30    Snowdale’s response also reported that the indoor area of shed 1 at Swan Valley was said to be 910 m², and, consequently, that the highest internal stocking density since January 2013 for Swan Valley, was calculated on the basis of a flock size of about 12,740 hens in that shed.

31    There was also annexed to the Snowdale response a diagram of the relevant sheds at Carabooda and Swan Valley. In respect of each of the sheds at Carabooda the diagram stated there were “approximately 18,000” hens. In respect of the shed at Swan Valley the diagram stated that there were “approximately 12,750” hens.

32    In addition, Snowdale’s response to the substantiation notice indicated that the dimensions of the outside access areas for each shed were as follows:

Response

The outside areas for each respective free range shed have been estimated for the purposes of replying to the ACCC’s notice.

Carabooda Shed 4 – 2,000m²

Carabooda Shed 5 – 3,500m²

Carabooda Shed 6 – 2,300m²

Carabooda Shed 7 – 2,500m²

Carabooda Shed 8 – 2,600m²

Swan Valley Shed 1 – 13,000m²

33    At the trial, Mr Cocking also admitted in cross-examination, that the size of the outdoor access areas which he had provided in the response were inflated. In fact, the areas of the outdoor ranges reported by Mr Cocking were inflated by between 22% to 37% in respect of each outdoor range at Carabooda and about 50% in respect of Swan Valley.

34    Mr Cocking also explained in evidence, that his reference in the response to shed 4 at Carabooda being a free range shed was a mistake. He said that at the time that he provided the response, he only intended in the future to use shed 4 for the production of free range eggs.

35    On 18 April 2013, Mr Wesley and Ms Catherine Fleming, also an environmental health officer from the City of Wanneroo, visited the Carabooda farm in response to an application made by Snowdale to undertake the production of caged eggs. They had a conversation with Mr Cocking and Mr Groot, the farm manager, about the extent to which the hens in the free range sheds exited the sheds. I will deal with that conversation later in these reasons.

36    On 21 April 2013, three days after the visit from the environmental health officers, Mr Groot in his weekly report to Mr Cocking made the following comment:

The meeting with the City of Wanneroo seemed to go well although got a bit hairy when they asked to see the gates that let the birds out of the sheds. The sooner Cataby is up and running and Carabooda becomes cage free the better I think. All doubts gone.

37    In May 2013 at the latest, Snowdale published material on its website, which promoted the sale of eggs sold and marketed as “free range eggs by Ellah” packaged in the cartons which carried the labels referred to at [73] to [82] below. The website address was www.eggsbyellah.com.au. I will refer in more detail to the published material on the website below.

38    In late June or early July 2013, Snowdale entered into a lease with the Department of Conservation and Land Management for the lease of an area of Crown land of about 75 ha which was adjacent to the Carabooda location. Thereafter, Mr Cocking authorised the construction of fenced runs from each of sheds 5, 6, 7 and 8 to this open tract of land.

39    In July 2013, the number of pop holes at each of the four Carabooda sheds was increased. Thereafter, there were five pop holes on the northern side of each shed - which until then had no pop holes – and five pop holes on the southern side of each shed.

40    Further, following the addition of the five pop holes to the northern side of each shed, there was a reconfiguration of the range areas available for access by the hens which were adjacent to each shed. A new range was also established adjacent to the northern side of shed 8. I will deal in more detail with the question of the outdoor ranges later in these reasons.

41    On 14 August 2013, the ACCC issued a notice under s 155(1)(b) of the Competition and Consumer Act 2010 (Cth) (the s 155 notice) requiring Snowdale to provide information and furnish documents about, among other things, the conditions in which it produced the eggs which it marketed and sold as free range eggs.

42    In August and September 2013, Snowdale published the poster advertising the Swan Valley Egg Co Value Pack of free range eggs for Father’s day. That poster is described in more detail below.

43    By 1 September 2013, the fencing for the runs linking each of sheds 5, 6, 7 and 8 at the Carabooda farm to the newly leased 75 ha tract of land had been completed. There was an issue at trial about the extent to which the hens actually used the 75 ha area of land, and I will deal with this later in these reasons.

44    On 30 September 2013, Snowdale closed the free range farming operation at the Swan Valley location.

45    By notices dated 11 October 2013 and 24 October 2013, Snowdale responded in writing to the s 155 notice issued by the ACCC to Snowdale.

46    From about October 2013 to December 2013, the number of pop holes were increased again at each of the sheds at Carabooda.

47    On 24 October 2013, at approximately 11:00 am, two officers from the ACCC attended at a property adjoining the Carabooda farm and observed the Carabooda farm from that property. Those officers were Mr Martin Howard and Ms Brenda Banister-Jones.

48    On the next day, Mr Howard in the company of Ms Alicia Le’Roy, also an officer of the ACCC, returned to the property adjoining the Carabooda farm at approximately 9:20 am, and observed the sheds on the Carabooda farm from that property. Ms Le’Roy took photographs and a video recording of sheds 5, 6, 7 and 8 at the Carabooda farm.

49    On 25 October 2013 and 28 October 2013, Mr Cocking attended the offices of the ACCC and was asked questions about the farming conditions at the free range sheds at Carabooda and Swan Valley at an examination pursuant to s 155(1)(c) of the Competition and Consumer Act (the s 155 examination).

50    On 28 October 2013, Mr Howard and Mr Adrian Bettella attended the property adjoining the Carabooda farm at approximately 1:20 pm.

51    On 1 November 2013 at about 3:50 pm, Ms Banister-Jones and Mr Howard attended the property adjoining the Carabooda farm and observed sheds 5, 6, 7 and 8. Ms Banister-Jones took photographs and made a video recording.

52    On 9 December 2013, the ACCC commenced this proceeding. Some time prior to the trial of this matter, Snowdale ceased carrying on egg production from sheds 5, 6, 7 and 8 at Carabooda.

53    To the extent that the foregoing paragraphs contain statements of fact, I make findings of fact to that effect.

THE claim made BY THE ACCC

54    The ACCC alleged that during the period 8 April 2011 to 9 December 2013, Snowdale by supplying, or causing to be supplied, eggs in the free range egg cartons referred to at [65] to [82] below, and by publishing, or causing to be published, the Snowdale website and the Snowdale poster, represented that the eggs supplied in the free range egg cartons were produced:

(a)    by laying hens that were farmed in conditions so that the laying hens were able to move around freely on an open range on an ordinary day; and/or

(b)    by laying hens most of which moved about freely on an open range on most days.

Particulars

An “ordinary day” is every day other than a day when on the open ranges weather conditions endangered the safety of the laying hens or predators were present or the laying hens were being medicated.

55    The ACCC alleged that by making the representation (which it referred to as “the free range representation”), Snowdale engaged in misleading or deceptive conduct, or conduct likely to mislead or deceive, because the eggs contained in the free range egg cartons were produced by hens:

(a)    that were farmed in conditions so that the laying hens were unable to move around freely on an open range on an ordinary day; and/or

(b)    most of which did not in fact move about freely on an open range on most days.

56    In support of the allegation referred to in [55] above, the ACCC alleged that the cumulative effect of the flock sizes, the dimensions and interior contents of the sheds, the size, placement and use of the pop holes, the presence of physical obstacles in the sheds, and the size and condition of the outdoor ranges, during the relevant period, reduced the ability and propensity of the hens, during that period, to exit sheds 5, 6, 7 and 8 at Carabooda and shed 1 at Swan Valley and move around freely on the open ranges; so that most hens did not, in fact, move about freely on an open range on most days.

57    The ACCC alleged that Snowdale’s conduct contravened s 18(1) of the ACL, as well as s 29(1)(a) of the ACL and s 33 of the ACL.

58    Section 18(1) of the ACL provides that:

A person must not, in trade or commence, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

59    Section 29(1)(a) of the ACL provides that:

A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:

(a)    make a false or misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use.

60    Section 33 of the ACL provides that:

A person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose or the quantity of any goods.

61    The ACCC alleged that, in addition to contravening s 18 of the ACL, Snowdale also contravened s 29(1)(a) because the representation that it made was a false or misleading representation as to the quality of the eggs which it had sold as free range eggs; and, also, that those eggs had a particular history.

62    Further, the ACCC alleged that Snowdale contravened s 33 of the ACL because the representation that it made was liable to mislead the public as to the nature or characteristics of the eggs which it sold as free range eggs.

snowdale’s impugned publications

63    As mentioned, the ACCC have relied upon three categories of publications produced by Snowdale as giving rise to the alleged free range representation. These publications comprised eight types of labels which were affixed to the cartons of eggs, the contents of Snowdale’s website and a poster. It is common cause that the publications were made.

The egg carton labels

64    There are eight different types of carton labels which are the subject of the proceeding. All eight of the impugned printed labels contain the words “free range eggs” and six of the eight carton labels contain additional words and images. I will refer below to each of the labels.

Swan Valley Egg Farm cartons

65    The labels in the first category of labels have an orange background. The label comprises a photograph of a young girl in a field with several hens. There is also a logo of a white hen standing outside on a banner which states: “Swan Valley Egg Farm”. The label also prominently contains the words across the top of the picture “Premium Free Range Eggs”. These labels were attached to the cartons which contained large (600 g), extra large (700 g) and jumbo (800 g) sized eggs. These labels were used during the whole of the relevant period. A copy of the label is Annexure 1 to these reasons for judgment.

Swan Valley Egg Co cartons

66    The labels in the second category of labels have a photograph of a single hen standing alone in a grassy open field. Beneath the picture of the single hen are the words: “premium free range eggs”. The picture also contains a logo of a hen in silhouette adjacent to the words: “Swan Valley Egg Co”. Beneath those words are the words: “Quality & Freshness Guaranteed by Farmer” and then a signature: “Barry Cocking”. These labels were attached to cartons which contained large (600 g) and extra large (700 g) sized eggs. These labels were used from May 2011 to September 2013. A copy of the label is Annexure 2 to these reasons for judgment.

Swan Valley Egg Co Value Pack cartons

67    The labels in the third category of labels have a blue and white background. This label was attached to the top of the carton of 18 eggs (1 kg). The label features stylised illustrations of three hens outside an American prairie style barn with sprigs of greenery, a butterfly and a flower and clouds. The largest of the three hens is very prominent. The words “Free Range Eggs” in stylised font are printed on this hen; and the words “Swan Valley Egg Co” are adjacent to that hen. Adjacent to the stylised illustrations is a paragraph of words under the heading: “Free Range Eggs”. The words are:

Our hens live in large sheds on our local WA egg farm. Inside they have comfy nest boxes and are fed a mix of naturally grown WA grains. Outdoors they are free to exercise in our paddocks…WA FARMER Barry Cocking [In the form of a signature.]

68    Below the stylised picture, the following phrases appear in a line, each of which is adjacent to a stylised picture of a love heart: “local WA farm”, “hormone free”, “natural WA grains”, and “comfy nest boxes”.

69    The label on the front of the carton bears the words “free range” in stylised print with a picture of a smiling egg, with the following phrases, each of which is also adjacent to a stylised picture of a love heart: “free to exercise”, “farm direct”, “farm fresh” and “least food miles”. This label was used from April 2013 to December 2013. A copy of the label is Annexure 3 to these reasons for judgment.

Carabooda Lovingly Hand Packed cartons

70    The labels in the fourth category of labels contains the words: “12 lovingly hand packed free range eggs direct from our farm” which dominate the label. The label has on the left side a stylised illustration of a hen under a smiling sun and cloud; and on the right side a picture of three smiling eggs and three love hearts with a speech bubble stating: “assorted sizes”. At the bottom of the label are the following words: “Our delicious free range eggs are hand packed just as they are - straight from the hen house to you” and “Enjoy the goodness of free range eggs at their freshest and most natural state”, separated by a small stylised illustration of the front of an American prairie style barn. This label was used during the whole of the relevant period. A copy of the label is Annexure 4 to these reasons for judgment.

Wanneroo Free Range Egg cartons

71    The labels in the fifth category of labels are half light green and half dark green. The light green side contains the words: “Wanneroo Free Range Eggs”, and beneath those words are the words: “fresh local Western Australian eggs”. The dark green side comprises a photograph of nine eggs in a group nestled in straw. The cartons come in large (600 g), extra large (700 g) and jumbo (800 g) sizes. The label was attached to the cartons containing those eggs. These labels were used during the whole of the relevant period. A copy of the label is Annexure 5 to these reasons for judgment.

Mega Free Range Eggs cartons

72    The layout of the labels in the sixth category of labels is very simple. The label has a white background which contains the words: “Mega Free Range Eggs” written in green. The eggs come in a “XXXL” (900 g) size and the label was attached to the cartons containing those eggs. This label was used during the whole of the relevant period. A copy of the label is Annexure 6 to these reasons for judgment.

Petite free range eggs by Ellah cartons

73    The labels in the seventh category of labels are white and pink and were used on cartons containing 700 g eggs. The label on the outside of the carton contains the words: “petite free range eggs by Ellah”, with “Ellah” written in large pink script. These words, particularly, the word, “Ellah”, dominate the label. Adjacent to the words is a stylised picture of a hen and an egg. Beneath that picture, the words: “12 petite free range eggs” appear; and beneath those words are the words: “Born and raised on our Swan Valley farm means I know eggs, and my eggs are the freshest and best. Love Ellah xox”. On the side of the carton are the words: “Eggs lovingly produced by Ellah” and the address of the Swan Valley farm.

74    On the inside carton cover is a predominantly pink label which bears a photograph of Ms Ellah Cocking with a single hen and a dog in a grassy outdoor area. Beneath that photograph are the words:

I now have my own free range hens that lay the freshest eggs. I am usually at the farmers markets so come and say hello.

75    The label (the new generation farmer label) also bears three other photographs of Ms Cocking as a child, and the following text:

I’m a new generation farmer, passionate about the care and welfare of my girls. To find out more go to www.eggsbyellah.com.au Love Ellah xox

76    This label was used from May 2011 to December 2013. A copy of the label and the new generation farmer label is Annexure 7 Pts 1 and 2 to these reasons for judgment

Free range eggs by Ellah cartons

77    The labels in the eighth category of labels were used on cartons of eggs sold as “free range eggs by Ellah” containing the following sizes and varieties of eggs: 350 g, 600 g, 700 g, “Ellah’s extra large 700 grams” and “Ellah’s 800 grams”. The labels used for the different sizes and varieties bear the following unique features.

78    In respect of 350 g eggs, the label has a pink background and bears a stylised silhouette of two black hens and two white eggs as well as the words: “6 perfect free range eggs 350 grams net weight”. Beneath those words are the following words: “Born and raised on our Swan Valley farm means I know eggs, and my eggs are the freshest and the best. Love Ellah xox”. Below one of the hens are the words: “Six perfect free range eggs by Ellah”. On the inside cover of the carton is the new generation farmer label. These labels were used from April 2013 to December 2013.

79    The label for the 600 g eggs, has a purple background and bears the words: “free range eggs by Ellah”, a silhouette of a black hen and a white egg as well as the words: “12 great free range eggs 600 grams net weight”, and beneath those words are the words: “Born and raised on our Swan Valley farm means I know eggs, and my eggs are the freshest and the best. Love Ellah xox”. On the inside cover of the carton is the new generation farmer label. These labels were used from April 2013 to December 2013.

80    The label for the 700 g eggs has a pink background and bears a stylised silhouette of a black hen and a white egg as well as the words: “12 perfect free range eggs 700 grams net weight”, “Born and raised on our Swan Valley farm means I know eggs, and my eggs are the freshest and the best. Love Ellah xox”. On the inside cover of the carton is the new generation farmer label. These labels were used from May 2011 to December 2013.

81    The label for the extra large 700 g eggs has a dark blue background and bears a stylised silhouette of a pink hen and a white egg as well as the words: “10 extra large free range eggs 700 grams net weight”. Beneath those words are the words: “Born and raised on our Swan Valley farm means I know eggs, and my eggs are the freshest and the best. Love Ellah xox”. On the inside cover of the carton is the new generation farmer label. These labels were used from May 2011 to December 2013.

82    The label for the 800 g eggs has a dark blue background and has the words: “free range eggs by Ellah”. Adjacent to those words is a silhouette of a pink hen and a white egg and the words: “12 impressive free range eggs 800 grams net weight”; and below those words are the words: “Born and raised on our Swan Valley farm means I know eggs, and my eggs are the freshest and the best. Love Ellah xox”. On the inside cover of the carton is the new generation farmer label. These labels were used from April 2013 to December 2013. A copy of the label and the new generation farmer label is Annexure 8 Pts 1 and 2 to these reasons for judgment.

The Website

83    As mentioned, from May 2013, Snowdale advertised the eggs which it sold and marketed as “free range eggs by Ellah”, on its website.

84    The style of the website was in the form of a written message from Ms Ellah Cocking to the reader. The following words appeared on the opening page of the website:

Hello. I’m Ellah!

Welcome to my new website.

I’m a new generation egg farmer, passionate about the care and welfare of my girls. My happy free range hens lay the freshest eggs, ensuring you receive perfect eggs straight from my farm to your fridge. Click on the links above to find out more! Love Ellah xox

85    The pages of the website contained text and stylised drawings of an American prairie style barn and a single tractor and some hens on an open range. The website also contained photographs of Ms Ellah Cocking as an adult and also photographs of her as a child, and photographs and video recordings of hens on the open range adjoining shed 1 at the Swan Valley farm. The ACCC referred in its statement of claim, specifically, to the following text on the website:

(i)    I am dedicated to raising happy healthy hens and producing delicious free range eggs;

(ii)    My happy free range hens lay the freshest eggs, ensuring you receive perfect eggs straight from my farm to your fridge;

(iii)    We get our girls as day old chickens, all cute fluffy and small. They then stay in the barn so that we can control the climate and ensure that they are eating and drinking enough. Once they are old enough, they move into their new homes in my free range paddock. Here they have a barn that provides them with food, water, nesting boxes and shelter from the elements. They also have a big open paddock that allows them to roam freely, bask in the sun and scratch around in the dirt;

(iv)    My hens are fed a mix of grains and wheat (with no nasty additives), as well as whatever they dig up outside;

(v)    Happy healthy hens + freedom to roam + a little bit of love = The Perfect Egg; and

(vi)    My free range hens are happy, healthy and well looked after.

86    In addition, the webpage contained the following statements:

(i)    On my farm we have combined the right mix to produce the perfect eggs; and

(ii)    They share the paddock with their “bodyguards” two gorgeous alpacas Leonardo and Pierro who are always on the lookout.

87    The reference to the alpacas was a reference to the alpacas at the Swan Valley farm. After April 2014, the contents of the website was amended and the statements referred to at [85] at (ii) and (vi) above were removed.

88    The ACCC also referred to images and video recordings on the website of laying hens on an open range. A cached copy of the relevant website pages is Annexure 9 Pts 1, 2, 3 and 4 to these reasons for judgment.

The Poster

89    During the period August to September 2013, Snowdale published a poster which advertised the eggs which it sold in its Swan Valley Egg Co Value Pack (referred to at [67] above). The poster contained the words: “Father’s day special 18 Free Range Eggs”. Beneath those words was a picture of the Swan Valley Egg Co Value Pack. A copy of the poster is Annexure 10 to these reasons for judgment.

the issues

90    The claim made by the ACCC raises the following main issues:

(a)    Did Snowdale’s publications give rise to the free range representation alleged by the ACCC?

(b)    If so, was the free range representation false? That question gives rise to the following questions.

(c)    What were the farming conditions during the relevant period at each of sheds 5, 6, 7 and 8 at the Carabooda farm and shed 1 at the Swan Valley farm?

(d)    What was the cumulative effect of the farming conditions on the ability and propensity of the hens to exit the sheds and move around freely on the open ranges?

(e)    Did most of the hens move about freely on the open ranges on most days?

THE WITNESSES

91    The ACCC called evidence from Mr Wayne Leslie Harris, Mr Phillip Ross Wesley, Ms Catherine Fleming, Mr Martin Wyndham Howard, Ms Brenda Arlene Banister-Jones, Mr Anthony Gerard Hilton, Ms Alicia Margaret Le’Roy, Mr Adrian Joseph Bettella and Mrs Rosa Tricoli. Each was cross-examined. The ACCC also called an expert witness, Dr Raf Freire.

Mr Wayne Leslie Harris

92    Mr Harris is a coordinator of health services with the City of Wanneroo. Mr Harris visited the Carabooda farm with his colleague, Mr Phillip Wesley, on 14 September 2011, to investigate an odour complaint. Mr Harris was a satisfactory witness and I accept his evidence.

Mr Phillip Ross Wesley

93    Mr Wesley is a senior environmental health officer with the City of Wanneroo who attended at Carabooda farm on two occasions – once with Mr Harris and then with Ms Fleming. Mr Wesley gave evidence and was cross-examined. Mr Wesley was a good witness. I accept his evidence.

Ms Catherine Fleming

94    Ms Fleming is and was, at the relevant time, an environmental health officer with the City of Wanneroo. Ms Fleming gave evidence and was cross-examined. Ms Fleming visited the Carabooda farm on 18 April 2013 in the company of Mr Wesley. Ms Fleming was a somewhat nervous witness who gave evidence to the best of her ability. I accept Ms Fleming’s evidence.

Mr Martin Wyndham Howard

95    Mr Howard gave evidence and was cross-examined. He was in late October and early November 2013, an assistant director in the enforcement operations WA branch of the ACCC. Mr Howard visited the neighbouring property to the Carabooda farm with other colleagues on four occasions, namely, 24, 25, 28 October 2013 and 1 November 2013. Mr Howard annexed to his affidavit a disc which included about 70 photographs which he had taken on one of these visits. Mr Howard was a satisfactory witness, who was prepared to make reasonable concessions about the extent of his recollection. I accept Mr Howard’s evidence.

Ms Brenda Arlene Banister-Jones

96    Ms Banister-Jones is an investigation officer with the ACCC in the enforcement operations WA branch. Ms Banister-Jones observed the Carabooda farm from the neighbouring property on two occasions, namely, 24 October 2013 and 1 November 2013. On 1 November 2013, Ms Banister-Jones took photographs and made a video recording of her observations of the Carabooda farm. Ms Banister-Jones gave evidence and was cross-examined. Ms Banister-Jones was a satisfactory witness and I accept Ms Banister-Jones’ evidence.

97    Ms Banister-Jones also deposed to an affidavit which exhibited aerial images of the Swan Valley farm and Carabooda farm at different times which had been obtained from a website, www.Nearmap.com.au. Ms Banister-Jones was not cross-examined on this affidavit.

Mr Anthony Gerard Hilton

98    Mr Hilton is a director of the ACCC, who gave evidence and was cross-examined. Mr Hilton made two affidavits which were uncontroversial and which annexed, among other things, the notices issued to Snowdale and Mr Cocking by the ACCC and the responses thereto, the impugned publications and the transcript of Mr Cocking’s s 155 examination by the ACCC. Mr Hilton was cross-examined about an investigation in 2011 of Snowdale which the ACCC had commenced and then terminated. Mr Hilton was a satisfactory witness and I accept his evidence.

Ms Alicia Margaret Le’Roy

99    Ms Le’Roy gave evidence and was cross-examined. On 25 October 2013, Ms Le’Roy was a senior investigator employed by the ACCC, and she, along with Mr Howard, visited the neighbouring property to the Carabooda farm. Ms Le’Roy took photographs and made a video recording of her observations of the Carabooda farm. The video recording was played in Court and the video recording showed images of sheds 5, 6, 7 and 8 and the adjacent outdoor ranges. Ms Le’Roy was a satisfactory witness and I accept her evidence.

Mr Adrian Joseph Bettella

100    Mr Bettella gave evidence and was cross-examined. He was in October 2013, an assistant director in the enforcement operations WA branch of the ACCC. He observed the Carabooda farm on one occasion, namely, on 28 October 2013. He gave evidence to the best of his ability. However, the weight to be given to his evidence is questionable because, on his evidence, he did not walk sufficiently far along the border of the neighbouring property to have a good view of the free range sheds on the Carabooda farm.

Mrs Rosa Tricoli

101    Mrs Tricoli is the owner of a property which is on the northern boundary of the Swan Valley farm. Mrs Tricoli gave evidence and was cross-examined. Mrs Tricoli said that from about August 2011, she observed the Swan Valley farm on almost a daily basis by standing on milk crates and looking over the fence into the adjacent yard which was the yard adjacent to shed 1 - the free range shed at Swan Valley.

102    Mrs Tricoli was cross-examined. Mrs Tricoli was not cross-examined on her evidence of the observations that she made. Rather, an attack was made on her evidence on the basis that she was biased against Mr and Mrs Cocking. Mrs Tricoli said that she had at one time been very friendly with Mr and Mrs Cocking and was the godmother of one of their daughters. However, the relationship had subsequently broken down. Mrs Tricoli said that she had opposed the application which Snowdale had made to the State Administrative Tribunal for a retrospective grant of a licence to keep a large number of chickens on the property. Mrs Tricoli said that she had opposed the application because of the stench which the farm had created in the vicinity. Mrs Tricoli said in cross-examination, that she had told Mr and Mrs Cocking that she objected to the smell of the chicken farming operations and that she had suggested to Mr and Mrs Cocking that they move the chicken farming operations out of the Swan Valley, but she denied she had said she wanted them out of the Swan Valley so that she could subdivide her land as a means of providing money for her grandchildren.

103    Mrs Tricoli was a forthright witness and gave her evidence to the best of her ability. However, in the end, I did not find Mrs Tricoli’s evidence to be of assistance.

Mr Peter Groot

104    Mr Peter Groot was the farm manager at Carabooda farm. He was originally on the list of persons due to give evidence as part of Snowdale’s case. However, Mr Groot was not available when called. The ACCC then tendered Mr Groot’s affidavit of 15 December 2014.

Dr Raf Freire

105    I deal at some length with the evidence of Dr Freire and Snowdale’s criticisms of that evidence later in these reasons. I find that Dr Freire was an impressive witness, and I have accepted his evidence.

SNOWDALE’S WITNESSES

106    There were 35 persons who gave evidence as part of Snowdale’s case. Not all of the witnesses were cross-examined. The main witnesses, however, were Mr Barry Cocking, Ms Ellah Cocking and Mr Dennis Green.

107    Snowdale called as witnesses a number of Mr Barry Cocking’s relatives. These persons were:

(1)    Mr Barry Barton, his father-in-law;

(2)    Mrs Maureen Barton, his mother-in-law;

(3)    Mr Alexander Cocking, his son;

(4)    Mrs Chimene Cocking, his wife and director of Snowdale;

(5)    Ms Ellah Cocking, his daughter;

(6)    Ms Emilia Cocking, his daughter;

(7)    Mr Jeremy Fischer, employee of Snowdale at the Swan Valley farm and Ms Ellah Cocking’s husband;

(8)    Ms Emma Slavin, the sister-in-law of Ms Chimene Cocking;

(9)    Mr Paul Grogan, who is Mr Cocking’s nephew and who was employed by Snowdale at the Carabooda farm.

108    Mr Wayde Knight, an insurance broker for Snowdale also gave evidence. Mr Knight is the fiancé of Mr Barry Cocking’s niece.

109    Mr Benjamin Whelan, a former part-time delivery driver for Snowdale, who worked at the Swan Valley farm, also gave evidence. Mr Whelan was at the time of the trial, in a relationship with Mr Cocking’s daughter, Ms Emilia Cocking.

110    In addition, Snowdale adduced evidence from the following persons who had worked on, or visited, either one or both of the Carabooda farm and the Swan Valley farm during the relevant period:

(1)    Ms Lisa Jackson, a shop assistant at the shop at the Swan Valley farm;

(2)    Ms Michaela Wolpers, a family friend of Mr and Mrs Cocking and daughter of Ms Paula Christensen;

(3)    Ms Paula Christensen, a family friend of Mr and Mrs Cocking;

(4)    Mr Kimberley Holmes, an agribusiness manager employed by Rural Bank;

(5)    Mr Allister Milne, a former employee of Snowdale at the Swan Valley farm;

(6)    Mr Max Babe, a truck driver in Mr Roger Susac’s business, who collected chicken manure from the Swan Valley and Carabooda farms;

(7)    Mr Christopher Anthony, an electrician, who was the principal of the business, Beechboro Electrical, Refrigeration & Air-conditioning Services, who performed electrical work at the Swan Valley and Carabooda farms;

(8)    Mr Peter Berryman, a finance broker who, between March 1996 and December 2013, worked as a finance broker for Westminster National and who provided finance broking services to Snowdale during that period;

(9)    Mr Steven Guest, a delivery driver employed by Snowdale, who collected eggs from the Swan Valley and Carabooda farms;

(10)    Mr Justin Anthony, an electrician employed in his father’s business, Beechboro Electrical, Refrigeration & Air-conditioning Services, who performed electrical work at the Swan Valley and Carabooda farms;

(11)    Mr Brian Miles, a valuer, who visited and provided valuations of the Swan Valley farm in November 2009 and November 2012;

(12)    Mr Roger Susac, the owner of a trucking and heavy machinery business, who collected chicken manure from the Swan Valley and Carabooda farms;

(13)    Ms Jenny Pinto, a freelance bookkeeper, who was employed by Snowdale on a part-time basis;

(14)    Mr Darren Deveraux, an employee of Snowdale at the Swan Valley farm since September 2013, who on multiple occasions between April 2011 and September 2013, visited the Swan Valley farm for social reasons;

(15)    Mr Trevor Gellatly, a shearer that visited the Swan Valley farm once in October 2011 and once in October 2012 to shear the two alpacas;

(16)    Mr Kim Siow, a director of Agri Enterprises, who visited Swan Valley farm;

(17)    Mr Carl Knapp, an employee of a packaging supplier, who had visited both the Swan Valley and Carabooda farms on one occasion each to discuss Snowdale’s packaging needs;

(18)    Mr Kevin Cousins, a former employee of Snowdale, who worked at the Swan Valley and Carabooda farms from November 2001 until January 2013;

(19)    Mr Chau Vo, an egg distributor, who visited the Swan Valley and Carabooda farms to collect eggs for distribution;

(20)    Mr Eric Vo, brother and employee of Mr Chau Vo, who visited the Swan Valley and Carabooda farms to collect eggs for distribution;

(21)    Mr Evo Slots, a director of B&M Slots Pty Ltd, a company that supplied and installed poultry equipment at the Carabooda Farm;

(22)    Mr Rodney Nowell, a sub-contractor, who lived at the Carabooda farm for approximately four weeks in 2011 while installing a nesting box system and egg conveyor at the Carabooda farm.

111    The witnesses who were not cross-examined were: Ms Slavin, Mr Whelan, Ms Jackson, Mr Babe, Mr Guest, Mr Susac, Ms Pinto, Mr Deveraux, Mr Gellatly, Mr Knapp.

112    The vast majority of these witnesses were called by Snowdale to give evidence of the number of hens which each person saw on the outside range areas at sheds 5, 6, 7 and 8 at the Carabooda farm, and at shed 1 at the Swan Valley farm.

113    I deal with the evidence of these witnesses later in these reasons.

Mr Barry Cocking

114    As mentioned, Mr Cocking is a director of Snowdale and was, during the relevant period, responsible for, and actively involved, in the management of the egg production business of Snowdale.

115    Mr Cocking gave evidence and was cross-examined. Mr Cocking was an unimpressive witness. I have found his evidence to be unreliable.

116    One manifestation of Mr Cocking’s unreliability emerged from the disparity between the pre-trial statements which Mr Cocking, on behalf of Snowdale, made in Snowdale’s responses to the ACCC’s substantiation notice and the s 155 notice, and the facts that subsequently emerged. Thus, it emerged that Snowdale’s response to the substantiation notice exaggerated the size of the outdoor range area at Swan Valley by about 50%. Mr Cocking, on behalf of Snowdale, said that the free range yard at Swan Valley was approximately 13,000 m². However, at the trial, nearmap photographs established that the free range yard was 6,489 m². Likewise, it emerged that Snowdale’s substantiation notice response exaggerated the size of the outdoor ranges at Carabooda by on average 30%.

117    Further, in Snowdale’s response to the substantiation notice, Mr Cocking also included shed 4 at Carabooda as a free range shed. Later, he said that he had been mistaken and shed 4 had never housed hens, which laid eggs that were sold as free range eggs.

118    Also, in Snowdale’s response dated 18 October 2013, to the s 155 notice, Mr Cocking had said that there was a policy of one pop hole being kept open 24 hours per day at both Carabooda and Swan Valley. Mr Groot’s evidence was that the pop holes were all closed at night at Carabooda. During his cross-examination, Mr Cocking said that at the time he gave his answer, that was his understanding, but he subsequently found out that at Carabooda, the farm manager changed the policy and did not leave a single pop hole open 24 hours per day.

119    There were also disparities in the information given by Mr Cocking in Snowdale’s response to the substantiation notice and his evidence about the number of pop holes at Carabooda. I refer to that evidence later in these reasons.

120    Also, whilst giving evidence, Mr Cocking sought in an obvious way to tailor his evidence in a manner which he thought would assist Snowdale’s case. Mr Cocking refused to make concessions which he thought would damage Snowdale’s case, even when the requirement to make concessions was obvious.

121    An example of this occurred when Mr Cocking was being cross-examined about the number of hens that were placed in shed 1 at Swan Valley. It was suggested to Mr Cocking that he had in February 2012, advised the councillors of the City of Swan that he had been operating the Swan Valley farm at its full capacity of 80,000 hens since June 2007.

122    Mr Cocking was taken to his email of 28 February 2012 to the councillors of the City of Swan which contained statements to that effect. Mr Cocking obstinately refused to accept the objective evidence as disclosed by the terms of the email that he wrote, and insisted that he was not referring to the number of hens actually in the sheds at Swan Valley since June 2007, but rather to the capacity of the sheds. I deal in greater detail with this email later in these reasons.

123    Another instance of Mr Cocking refusing to acknowledge the obvious, because he perceived the answer would harm Snowdale’s case, was when Mr Cocking denied in cross-examination, that the purpose of installing the additional five pop holes was to ease access for the hens to the free range yards. Mr Cocking insisted that they were put in to effectuate what he referred to as a “paddock redistribution”.

124    The unreliability of Mr Cocking’s evidence was further revealed when he was cross-examined in relation to the extent of Snowdale’s discovery of documents.

125    Snowdale gave discovery of a number of documents authored by Mr Groot. In the discovery affidavit, the documents were described as “untitled documents”. In fact, the documents were weekly reports by Mr Groot referring to significant events that occurred at the Carabooda farm, including the progress of the birds in the rearing sheds, egg production performance and impending tasks on the farm. Discovery and inspection was given of the Groot reports as stand-alone single documents, and not as annexures to emails.

126    Shortly prior to trial, the ACCC’s solicitors sought, by a letter, discovery specifically of egg production records for the free range sheds for the purpose of estimating the number of hens in each shed; and also discovery of email communications between Mr Cocking and the farm managers at the Carabooda and Swan Valley farms. No such discovery was given by Snowdale.

127    During cross-examination, Mr Cocking admitted that the Groot reports had been emailed to him and that he would have replied to Mr Groot by email.

128    Senior Counsel for the ACCC then asked Mr Cocking to bring to Court the following day copies of the email responses that he had made to Mr Groot in response to his emailed reports. Senior Counsel also asked Mr Cocking to explain why the Groot reports had been discovered and produced for inspection in a form which did not disclose that each of the reports was part of an email communication to him by Mr Groot. Mr Cocking replied that he would have forwarded the emails from Mr Groot on to Snowdale’s solicitors and he would not have himself separately printed the reports attached to Mr Groot’s emails.

129    When asked in Court on the following day to produce the email responses he had made to Mr Groot’s emails, Mr Cocking said that he had not looked for them at his home on the previous day. However, later in the day in Court, counsel for Snowdale said that the only documents that his instructing solicitors had been given were the documents which had been discovered and produced for inspection, namely, the single pages comprising the Groot reports without any accompanying documents.

130    During an adjournment, Mr Cocking and Snowdale’s solicitors conducted a search of Mr Cocking’s computer. That search produced four emails from Mr Groot to Mr Cocking and the documents were produced to the Court. Those emails attached a Groot report for the week in question as well as a detailed spreadsheet report containing a daily record of the eggs which had been produced in each of the sheds at Carabooda in the relevant week. However, there were no emails in respect of any of the other 31 Groot reports. Nor was any email produced comprising a response by Mr Cocking to any of Mr Groot’s emails attaching his report and egg production spreadsheet.

131    During subsequent cross-examination, Mr Cocking ultimately admitted that, contrary to his previous evidence, he had not produced to Snowdale’s solicitors the emails which Mr Groot had regularly sent him containing the reports and egg production spreadsheets. He also admitted that, contrary to his previous evidence, he had printed the Groot reports as a separate document, and he had given the printed Groot reports to Snowdale’s solicitors in a file for the purpose of discovery and inspection.

132    This episode not only undermined the reliability of Mr Cocking’s evidence as to the material he gave to Snowdale’s solicitors for the purpose of giving discovery, but it also illustrated that Mr Cocking had taken deliberate steps to conceal the existence of the spreadsheets that identified details of egg production by separating them for the Groot reports before providing those reports to Snowdale’s solicitors.

133    The emergence of the egg production spreadsheets during the trial gave rise to Mr Cocking giving more unsatisfactory evidence.

134    Prior to trial, the ACCC’s solicitors, in an attempt to agree facts, invited Snowdale to provide an estimate of the hen numbers in each shed based upon the egg production numbers for each shed. Snowdale declined to do so. At the trial, Mr Cocking gave evidence that he did not know the size of the flocks in the sheds, and that, save for the limited flock sizes, pleaded in relation to sheds 5, 6, 7 and 8 at Carabooda, Snowdale did not keep records of the flock sizes.

135    However, during cross-examination, Mr Cocking was asked whether, based on the spreadsheet for the egg production of 98,418 eggs for the week ending 30 September 2012, it would be possible to estimate the flock size of the hens in the sheds at Carabooda. It was put to Mr Cocking that a total of 98,418 eggs in one week would “tell you that there were 16,400 hens, approximately”. Mr Cocking agreed that it was possible to estimate the number of hens based upon egg production.

136    The following cross-examination then took place:

Mr Cocking, 98,418 eggs in one week would tell you that there were 16,400 hens, approximately. Would you agree with that?---I don’t have a calculator with me, no, but could be, yes.

It’s a simple calculation though, isn’t it? If you’re saying, as you said last week, approximately one hen is going to lay six eggs a week, it’s pretty easy to work out from a total number of eggs how many hens were likely to have been in that shed in that week, isn’t it?---Mmm.

Do you agree?---Yes, but as I say, I don’t have a calculator to divide it out exactly.

So - - -?---But if you’re assuming – if you’re assuming 16,000 – okay. Yes.

All right. And you’ve chosen not do that exercise in relation to the records that you have to establish the flock sizes?---I’m missing the point. I don’t understand the question.

Well, we’ve just done an exercise with one Excel spreadsheet that tells us that in the week ending 23 September 2012 there are approximately 16,400 hens in shed 5?---Approximately. I – possibly, yes.

And you have elected not to do that exercise in relation to other Excel spreadsheets of this type in order to be able to assist the court about the flock sizes in those barns during the relevant period; correct?---I – I – I’ve never done an exercise like that, no.

137    Later in the cross examination, the following exchange occurred:

You told us earlier that you never tried to do a calculation of flock sizes based on the number of eggs that were laid by chickens in a barn; is that correct?---Can you give me the question again, thank you?

Well, I showed you the Excel spreadsheets with the egg numbers and I put to you that the respondent had chosen not do a calculation from egg numbers to be able to tell the court what the flock sizes were throughout the period, correct?---Because in those flocks in those sheds we didn’t know what the birds were in the shed. So we couldn’t – we didn’t have the bird number to do the calculation.

But you can work out the bird number from the number of eggs, can’t you?---No. It’s not precise. It’s a pointless exercise.

But you can estimate it, can’t you?---It’s a pointless exercise. We’ve never done that. As you see in Peter Groot’s – there he said it’s up two per cent; up two per cent on what? Up two per cent on last week is the information that we needed to know.

138    Mr Cocking was then taken to a paragraph of his affidavit which had been deleted in which Mr Cocking had undertaken an exercise in calculating the number of hens in the Swan Valley shed by reference to egg production numbers in order to show that there were only 8,000 hens in the shed at Swan Valley. Then the following exchange occurred:

So you did that exercise for Swan Valley. Correct?---Yes.

When the answer suited you. Correct?---No.

But you’ve made no effort to do that exercise in relation to Carabooda barns, have you?---No.

And your evidence before, about never having done that exercise, was false. Correct?---Yes. I didn’t remember doing this.

139    Because of the unreliability of Mr Cocking’s evidence, I have approached Mr Cocking’s evidence with considerable caution.

Ms Ellah Cocking

140    Ms Ellah Cocking gave evidence and was cross-examined. Ms Cocking was also an unsatisfactory witness.

141    Ms Cocking was cross-examined about her participation in Snowdale’s marketing strategy to promote the sale of eggs under the brand name “free range eggs by Ellah”. It emerged during that cross-examination, that Ms Cocking was content to provide consumers with misleading information as part of that marketing strategy in order to promote Snowdale’s business interests.

142    Ms Cocking was taken to statements on Snowdale’s website which, said the ACCC, sought to create the impression that she had a farm, that she looked after, and was concerned about the welfare of, the hens on her farm which she referred to as “her girls”, that the eggs in the “free range eggs by Ellah” cartons were laid by those hens, and that the farm was the Swan Valley farm. Among the statements on the Snowdale website, to which the ACCC referred, were:

I’m a new generation farmer, passionate about the care and welfare of my girls. My happy free range hens lay the freshest eggs, ensuring you receive perfect eggs straight from my farm to your fridge.

…

Once they are old enough they move to their new homes in my free range paddock.

143    Ms Cocking was also taken to publications in August 2011, November 2011 and March 2012 referring to interviews that Ms Cocking had given to journalists in which Ms Cocking made statements which created the impression that the eggs sold under the label “free range eggs by Ellah”, were the product of hens on “her farm”.

144    Ms Cocking accepted that the references to “her farm” in the publications were references to the Swan Valley farm.

145    However, in fact, as mentioned, after the middle of 2011, when the eggs from Carabooda and Swan Valley were aggregated at Swan Valley, the “free range eggs by Ellah” cartons were filled with eggs indiscriminately without regard to their origin, with the consequence that those cartons comprised mostly eggs from the Carabooda farm.

146    The following exchange occurred during cross-examination:

Okay. Now, when you spoke to the reporter, you described the farm in such a way as to communicate to consumers what those chickens that laid those eggs – what their environment was; correct?---Yes.

And you knew that that was important to some consumers, didn’t you?---I do.

And you knew that people are very interested in the extent to which chickens are actually going outside?---Yes.

And you wanted to show them a nice yard that had hens roaming around in it; correct?---Yes.

And all of the marketing was focused on you and your farm; correct?---Yes.

But the eggs that were in Ellah cartons also came from Carabooda hens, didn’t they?---Yes. They did.

…

147    Later in the cross examination, the following exchange occurred:

When you put on your website - - -?---Yes.

- - - all of the stuff about your farm and photos and videos that you did later on

- - -?---Yes. Yes.

- - - at the time you put the photos and videos up, on 23 February - - -?---Yes.

- - - 2013, by that time most of the eggs came from Carabooda; correct?---Yes. That’s correct.

148    Ms Cocking was indifferent about having created the misleading impression that the eggs sold as “free range eggs by Ellah” were laid by the hens on her farm, which she called “my girls”, and for whose welfare she was concerned, when in fact most of those eggs had been laid by other hens. During cross-examination, the following exchange occurred:

The eggs in here more probably, if we do it by the numbers, came from Carabooda?---Not necessarily in the beginning because I wasn’t supplying hardly anywhere.

Yes. But when you were supplying there were four, five, six, seven, eight – four sheds at Carabooda?---Yes.

With between 14 and 18,000 chickens in it?---Mmm.

And your shed - - -?---Yes.

- - - that had between 8 and twelve, the probability is most of these eggs would have been from Carabooda; correct?---Yes. Some of them would have come from Carabooda.

Most of them?---If the numbers say that.

Well, do the numbers not say that?---I’m not sure. You’re - - -

Did you have as many free range hens as your father did at Carabooda?---No.

Not by a long shot?---No. But they’re still the free range hens.

149    And later, the following cross-examination occurred:

But when you’re talking about my girls - - -? Mmm.

- - - and a little bit of love - - -?---Yes.

- - - you were communicating to consumers - - -?---Mmm.

- - - that they came from your chickens, weren’t you?---The entire farm is a family business, so I would say that they’re all our chickens.

150    Further, Ms Cocking tailored her evidence to support Snowdale’s case. There were occasions when Ms Cocking was obstinate and refused to give a straight answer to a question when the answer was obvious, but she thought the answer would harm Snowdale’s case.

151    One example of this was when Ms Cocking refused initially to accept in cross-examination, that her reasons for installing ramps at the pop holes in shed 1 at Swan Valley was to make it easier for the hens to get in and out of the shed. The following exchange occurred during cross-examination:

…And why did you have them put in?---I don’t know if there was anything behind it, but it was just an idea of mine to ramp it out a bit. There was no real reasoning behind it.

But you must have had some purpose for doing it, because it would have involved somebody doing some work?---Yes, I just wanted to try it out I think. It was my paddock and I was trying different things.

But why would you try that? What did you think it might do?---I couldn’t tell you. I just did it. There was no real reasoning behind it.

152    A further example of Ms Cocking declining to give an answer, when the answer was obvious, occurred at 256 of the transcript when she was being cross-examined on her evidence that ranges A, B and C had been used throughout the relevant period as outdoor range areas. Ms Cocking was taken to a close up of a nearmap aerial photograph of the area, comprising what was referred to as ranges A, B and C, which was adjacent to shed 1 at the Swan Valley farm. That photograph clearly showed that there was a gap between the edge of the shed and the end of a fence which only partially extended along the southern border of range C and the end of the shed. An acknowledgment of the existence of a gap would have been adverse to Ms Cocking’s evidence that range C had been used at that time as an outdoor range area.

153    The following cross-examination took place:

Actually, to orient you, I will start you at 123. The next one is a close-up. So starting at 123?---Yes.

This is 23 January 2012. If we go over the page now, we get a closer-up?---Yes.

And this gives you a very good view of the gap between the fence at the south of range C and the end of the barn, doesn’t it?---It does.

And there’s nothing there, is there?---It’s – I couldn’t tell you.

I beg your pardon?---I’m not sure.

You’re not sure?---No.

154    Likewise, Ms Cocking was, at 274 and 275 of the transcript, taken to another nearmap aerial photograph which was taken on 14 May 2013 – about 6-7 weeks after the issue of the substantiation notice. That photograph showed the presence for the first time of hens on the area known as range B. The photograph also showed that the vegetation in the range B area had been substantially denuded save for some vegetation on the right-hand side of the range B area. This was in contrast to earlier nearmap aerial photographs of the range B area which showed fairly lush vegetation in that area, which would indicate the absence of hens. The following exchange occurred:

And again this is obviously still after the substantiation notice, and we see a lot of chickens; is that right?---That’s correct.

And if you look at the photograph that is not a close-up, can you now see a fence between Range B and Range C?---Yes. I can.

And can you now see that Range B is almost as denuded as Range A?---No. That wouldn’t be the case.

Well, look at the photograph?---I am looking at the photographs. I see a lot of vegetation running up the right-hand side and then I can’t see the rest of the other side because of all of the shade from the trees and the house.

Okay. What about the area that is not in shade to the north of that?---You - - -

Do you agree that that looks as denuded as the Range A area?---No. Range A is completely flat. There is no - - -

I’m asking you about the area to the north of the shade?---Yes.

Do you agree with me that that looks - - -?---No. I don’t. Range A, like I was saying, is completely – the land is completely flat because it’s barren whereas range B, there’s shapes, I guess I would say, that appear to be vegetation.

155    Ms Cocking refused in cross-examination to acknowledge the obvious.

156    In my view, Ms Cocking’s refusal to answer questions was because she perceived that a truthful answer would harm the interests of Snowdale.

157    I find that Ms Cocking tailored her evidence to promote what she thought would advance Snowdale’s case.

158    I have approached the evidence of Ms Cocking with considerable caution.

Mr Dennis Green

159    Mr Green presented an expert report. For the reasons which I discuss later in these reasons, I place no weight on the expert report of Mr Green, and approach his evidence generally with considerable caution.

DID SNOWDALE MAKE THE REPRESENTATION IN THE TERMS ALLEGED?

160    I now deal with the question of whether the publications referred to by the ACCC conveyed the free range representation pleaded by the ACCC. As mentioned, that representation was that during the period 8 April 2011 to 9 December 2013, Snowdale by supplying or causing to be supplied eggs in the free range egg cartons referred to above, and by publishing, or causing to be published, the Snowdale website and the Snowdale poster, represented that the eggs supplied in the free range egg cartons were produced:

(a)    by laying hens that were farmed in conditions so that the laying hens were able to move around freely on an open range on an ordinary day; and/or

(b)    by laying hens most of which moved about freely on an open range on most days.

Particulars

An “ordinary day” is every day other than a day when on the open ranges weather conditions endangered the safety of the laying hens or predators were present or the laying hens were being medicated.

161    The onus is on the ACCC to establish the representation which it pleaded. If it fails to establish that the representation was made, the ACCC’s case fails. Somewhat unusually, and unnecessarily, for a respondent, Snowdale, at para 43 of its defence, pleaded an alternative representation, namely that by its conduct it had represented that the laying hens were farmed in conditions whereby they had access to an open range. This is a meaning consistent with the meaning of “free range” farming adopted by the Model Code.

162    This presumably reflects Mr Cocking’s view as to the meaning of “free range eggs”. In cross-examination, Mr Cocking said that “free range” farming meant “[b]irds not in a cage. Inside a barn. Free access inside the barn. Access outside.”

163    I will deal with Snowdale’s submissions in detail in due course.

164    However, it is apparent that the difference in the pleaded positions of the parties was the following. The ACCC contended that the expression “free range eggs” meant that the hens were farmed in conditions such that the hens were able to access and most actually did access, and move around freely on, an outdoor range on most days. Conversely, Snowdale’s pleaded position was that it was sufficient if the hens were housed in sheds which had a means of access to an outdoor range, regardless, as to the extent the hens actually used that access to go outside on to the outdoor range.

165    In considering whether the Snowdale publications gave rise to the representation the ACCC pleaded, it is necessary to apply the principles which the courts have developed to determine whether impugned conduct is misleading or deceptive, or is likely to mislead or deceive, under the ACL and its predecessor, the Trade Practices Act 1974 (Cth). I now set out below a summary of the relevant principles.

166    In assessing whether conduct is misleading or deceptive or likely to mislead or deceive, the impugned conduct must be identified and considered as a whole, and regard must be had to the full factual context in which that impugned conduct occurred (Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435 (Google Inc) at [89] and [102]).

167    For the conduct to be misleading or deceptive, or likely to mislead or deceive, the impugned conduct must have the tendency to lead the consumer into error.

168    Where, as in this case, it is alleged that the impugned conduct comprises the making of a representation to the public at large, the conduct must be judged by the effect of the conduct upon ordinary or reasonable members from the class of consumers to whom the representation was addressed (Google Inc at [118]). This will require the Court to identify the class of consumers to whom the representation was addressed and then consider objectively how ordinary or reasonable members of the class would understand the representation (Campomar Sociedad Limitada v Nike International Limited (2000) 202 CLR 45 at [105]).

169    In some instances, the words and images comprising a representation may be capable of conveying different meanings to different people. The question then is whether the meaning contended for is reasonably open and might be drawn by a significant number of persons to whom the representation was addressed.

170    The following observations of Weinberg J in CPA Australia Ltd v Dunn (2007) 74 IPR 495 at [28], are germane:

Statements that are capable of more than one meaning may be misleading or deceptive provided that the meaning for which the applicant contends is one that would be reasonably open, and might be drawn by a significant number of those to whom the representation is made. In the same way, a statement may contain a representation that is implied, rather than express. That is why a statement that is literally true can be misleading or deceptive.

171    Also, in Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd (2014) 317 ALR 73 (Coles) at [46], Allsop CJ approved the following observations by Hill J in Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1 at 50:

Where, as in the present case, the advertisement is capable of more than one meaning, the question of whether the conduct of placing the advertisement in a newspaper is misleading or deceptive conduct must be tested against each meaning which is reasonably open. This is perhaps but another way of saying that the advertisement will be misleading or likely to mislead or deceive if any reasonable interpretation of it would lead a member of the class who can be expected to read it into error…

172    Allsop CJ then went on to observe in relation to those observations at [47]:

These comments are of particular importance in assessing the evidence in this case. Where advertising material uses simple phrases and words evoking attractive notions, but without necessarily precise meaning, ambiguity or reasonably available different meanings may well arise. Context and the "dominant message" will be important. If one or more of the reasonably available different meanings is misleading, the conduct may well be misleading or deceptive, or false and misleading.

173    The phrases to which Allsop CJ referred in Coles were: “Baked Today, Sold Today”, “Freshly Baked”, “Baked Fresh”, “Freshly Baked In Store” and “Coles Bakery”, and these phrases were used in advertisements by Coles to advertise bread for sale in its stores.

174    In the case of Australian Competition and Consumer Commission v Turi Foods Pty Ltd (No 4) [2013] FCA 665 (Turi Foods (No 4)), the ACCC claimed that the respondent had engaged in misleading or deceptive conduct by representing that chickens housed by the respondent in large sheds were “free to roam”. The ACCC contended that the representation was that the chickens had “substantial space available allowing them to roam around freely”. Tracey J observed at [94]:

A number of preliminary observations should be made. The first is that the central question, in each case, is whether the meaning, contended for by the ACCC might reasonably be drawn by a significant number of the persons to whom the representation was directed. This formulation admits the possibility that more than one meaning might reasonably be open. So long as one of those meanings is the one contended for by the ACCC it will have made good this part of its case.

Snowdale’s submissions

175    Snowdale submitted that the expression “free range eggs” was not an expression which had a fixed meaning in the minds of an ordinary or reasonable consumer, and was one which would mean different things to different people. Snowdale contended that, in effect, the free range representation pleaded by the ACCC comprised three separate, but related representations, namely, that the eggs were produced by laying hens:

(1)    that were farmed in conditions where they are able to move around freely on an open range on an ordinary day, and that most of the hens did so on most days,

(2)    that were farmed in conditions where they were able to move around freely on an open range on an ordinary day,

(3)    most of which moved around freely on an open range on most days.

176    Snowdale contended that the Court should reject the meaning contended for by the ACCC on a number of grounds.

177    First, contended Snowdale, the relevant class of persons to whom the free range representation was addressed were retail purchasers of eggs. This class of persons, said Snowdale, would be drawn from all walks of life and would not have any particular attribute that distinguished them from the general public. Snowdale contended that the meaning to be attributed to the free range representation had to be considered in this context.

178    Snowdale also said that an ordinary or reasonable member of that class of consumers, when choosing eggs to purchase, would come across cartons of eggs from other suppliers stacked alongside the Snowdale cartons on the shelves of the supermarket and would be unlikely to be influenced by the prominence of the words “free range eggs” on the egg cartons.

179    Snowdale went on to say that in that context the ordinary or reasonable consumer would form an impressionistic view of the words “free range eggs” rather than engage in the “relatively complex semantic manoeuvring” inherent in the meaning pleaded by the ACCC. Rather than conclude the words “free range eggs” meant what the ACCC had pleaded, said Snowdale, it was more likely that the ordinary or reasonable consumer would conclude that the words meant that “hens are not kept in cages” or “the hens have access to the outdoors” or that “the hens can go outdoors if they want” or “a not insignificant number of hens go outside” or “a not insignificant number of hens choose to go outside”.

180    Further, Snowdale submitted that the ACCC had contended, in an undifferentiated way, that each of the egg cartons, website and poster gave rise to the same representation. Snowdale said that there was a significant difference in the images, get up, and written content of each of the materials referred to by the ACCC. Thus, for example, there was no additional language or pictures on the “Mega Free Range Eggs” carton (Annexure 6); whereas, for example, in addition to the words “free range eggs” on the Swan Valley Egg Co Value Pack carton (Annexure 3) there were pictures and other words which included the following words:

(a)    Our hens live in large sheds on our local WA egg farm; and

(b)    Outdoors they are free to exercise in our paddocks.

181    Snowdale contended that the presence of these additional words “plainly do not convey the meaning that eggs supplied in the free range egg cartons were produced by laying hens most of which moved freely about on an open range on most days”. Snowdale said that the representation pleaded by the ACCC ignored the fact that Snowdale expressly stated that the “hens live in large sheds”. It appeared, said Snowdale, that the representation pleaded by the ACCC was the product of the conflation of all the words and images on all the cartons, the website and the poster. Snowdale submitted that this was an erroneous approach. The proper approach, said Snowdale, was to consider each of the cartons, the website and the poster separately in order to determine whether the pleaded representation was made. In that regard, said Snowdale, outside of the meaning that the ACCC attributed to the words “free range eggs”, the words and images on the website did not support the representation pleaded by the ACCC.

182    Next, Snowdale contended that the “convoluted” language of each of the forms of the representation pleaded by the ACCC showed that the representation did not arise from the natural or ordinary meaning of “free”, “range” or “free range” and the Court should reject the ACCC’s contention that an ordinary or reasonable consumer would understand the representation in the manner contended for by the ACCC, because the ACCC had not introduced any survey or other evidence which showed that the representation was understood in that way.

183    Then Snowdale contended that against that “evidentiary void”, the Model Code’s definition of free range could not be ignored. That definition is “[b]irds in free-range systems are housed in sheds and have access to an outdoor range”.

184    Further, Snowdale contended that the use of the concept “most days” in the representations pleaded by the ACCC, meant the meaning contended for by the ACCC was unacceptably uncertain. Snowdale rhetorically asked whether the concept of “most days” referred to four days in a week, 16 days in a month or 183 days in a year. Snowdale contended that on the ACCC’s case, it would be engaging in misleading or deceptive conduct if the hens did not go outside on “most days”, even if it meant that going outside would endanger their health and safety. There can be no sensible meaning attributed to the words “free range” that would convey to a consumer the notion that hens must go outside in conditions that would endanger their health. Snowdale contended that it did not follow that, because the concept of a free range focuses on hens being outdoors, that a significant number of consumers were likely to expect that “most hens would go outside on most days”. Snowdale contended that what was significantly more probable was that consumers understand that the expression “free range” conveys the meaning that laying hens can choose to go outside and that not insignificant numbers of them do.

185    Snowdale said it be would be an “absurd result” if, on one scenario, 4,001 hens in a flock of 8,000 hens went outside on six days in a 10 day period, equating to 24,006 visits to the range; while, on another scenario, the same number of total visits to the range could be made by 2,400.6 hens visiting the range on each of the 10 days. Thus, if the ACCC’s submission was accepted, the total visits in each scenario would be identical, but there would be misleading or deceptive conduct only in relation to the second scenario.

186    Snowdale also contended that the ambiguity in the use of the concept of “most days” was dangerous because the ACCC has sought an injunction precluding Snowdale from using the words “free range” in respect of eggs that were not produced by laying hens, most of which move freely on an open range on most days. Snowdale contended that the ambiguity would leave unclear the form of conduct which would expose Snowdale to the consequence of a breach of the Court’s order.

Consideration

187    In my view, the class of consumers to whom the representations on the cartons, website and poster were addressed were purchasers and potential purchasers of eggs from retail stores and supermarkets. I find that the members of that class would be drawn from all sections of the community and would include a significant number of persons who were concerned about the welfare of laying hens and the conditions in which they were kept, and who would be motivated by that concern to seek out eggs labelled as “free range eggs” and would be prepared to pay more to buy those eggs.

188    I also find the following to be the relevant context in which the impugned conduct is to be considered. The Snowdale egg cartons with the impugned labels are placed on the shelves in a store or supermarket in a manner visible to consumers. The statement on the Snowdale egg carton labels that the eggs are “free range eggs” is there to differentiate those eggs from the other categories of eggs which are also available for sale to consumers. These categories would include eggs laid by uncaged hens and sold as “cage free” or as “barn laid”. This differentiation between the categories of eggs also finds expression in the premium price that is charged by retailers for free range eggs. Contrary to Snowdale’s submissions, I find that, in that context, an ordinary or reasonable consumer would have regard to the term “free range eggs” on the egg cartons, when making a decision whether to purchase eggs labelled as “free range eggs”, rather than the other available categories of eggs.

189    There is, as Snowdale contended, a substantial difference in the content of the published material which the ACCC relied upon as giving rise to the representation it pleaded. Thus, for example, the “Mega Free Range Eggs” label contains no illustrations, whereas there are other labels, as well as the poster, that contain writing and also illustrations; and the website, of course, contains words and photographs. However, in my view, although there are very substantial differences in the get up and content of each of the publications referred to by the ACCC, each of the publications has a common feature. That common feature is the use of the words “free range eggs”. In other words, notwithstanding that the ACCC has pleaded the influential effect of the other words and images in the Snowdale publications in conveying the pleaded representation, I understand the ACCC to contend that Snowdale’s use of the words “free range eggs” in each label, on the website, and in the poster, is, in itself, sufficient to give rise to the representation the ACCC has pleaded. I will proceed on that basis.

190    It is the case that there is some awkwardness in the manner in which the ACCC has pleaded the representation upon which it relies and which it refers to as the “free range representation”. This is because each of the two composite elements of the free range representation alleged are pleaded as separate representations, and then in combination as a third representation. However, despite the awkwardness of the pleading, and contrary to Snowdale’s contention, I am of the view that the ACCC has pleaded a representation which was open to be entertained by a significant number of consumers to whom it was addressed.

191    It is, in my view, clear enough that the ACCC has alleged that the representation made by Snowdale by using the words “free range eggs” is that the eggs were laid by hens which are farmed in conditions such that the hens were able to, and most hens actually did, go outdoors and roam freely on an open range on most days.

192    For the following reasons, I am of the view that the meaning of the term “free range eggs” pleaded by the ACCC is reasonably open and might reasonably be drawn by a significant number of the class of consumers to whom the representation is directed. I refer to these consumers as the “relevant consumers”. That is not to say that there are not other possible meanings of the expression “free range eggs”. Rather, as Tracey J said in Turi Foods (No 4) at [94]:

So long as one of those meanings is the one contended for by the ACCC it will have made good this part of its case.

193    In my view, a significant number of relevant consumers might reasonably understand the term “free range eggs” to mean eggs laid by “free range” hens. Likewise, in my view, the term “free range” hens, might reasonably evoke in the minds of that significant number of consumers, the predominant image or notion of hens roaming freely in a spacious outdoors environment, in which each hen is able to give expression to her natural behavioural traits.

194    In other words, a significant number of relevant consumers, might reasonably understand the essential or defining characteristic of a “free range” hen (or, to put it another way, of a hen that lays “free range eggs”) to be that the hen regularly spends time roaming outdoors in a spacious environment in which the hen is able to express her natural behavioural traits. That understanding or meaning is, in my view, sufficiently reflected in the ACCC’s pleaded representation, namely, that free range eggs are eggs laid by hens farmed in such conditions that most of the hens are able to, and do actually, roam freely on an outdoor range on most days. Therefore, in my view, the meaning of “free range eggs” as pleaded by the ACCC, is reasonably open and might reasonably be drawn by a significant number of relevant consumers.

195    A further indication that the meaning of “free range eggs” as pleaded by the ACCC, is a meaning which might reasonably be drawn by a significant number of relevant consumers, is found in the images and get up which Snowdale, itself, has chosen to use on its egg carton labels. Thus, the images and get up which Snowdale has used on its egg carton labels, portray the very same image or notion of a “free range” hen, which underlies the meaning of “free range eggs”, which I have held might reasonably be drawn by a significant number of relevant consumers, namely, a hen roaming freely in a spacious outdoor environment in which the hen is able to express her natural behavioural traits.

196    Thus, for example, the stylised images used on the Swan Valley Egg Co Value Pack (Annexure 3) show three hens in a spacious outdoor environment. The style of the images suggest a bucolic, small scale farming environment, with a single American prairie style barn as the hen house and the happy hens roaming outside in a spacious environment. The tone of the get up is one of a happy and benign outdoors environment, there are a few clouds floating by, there is a butterfly, there is a smiling egg, and there are love hearts, evocative of contented hens which happily spend their time on an outdoor range, engaging in their natural behavioural traits, and of a caring attitude by the named farmer, Barry Cocking, to his hens.

197    Likewise, the same impression and tone is conveyed by the images and get up that Snowdale has chosen to use on its label for the “12 lovingly hand packed free range eggs” brand name (Annexure 4). On this label, there is one hen roaming outdoors, there is a benign smiling sun looking down on the hen as a cloud floats by. Again, there is a single American prairie style barn which conjures up images of the open spaces of the American prairies. Again, there are love hearts and smiling eggs, conveying the message to consumers that the eggs were laid by contented hens which happily spend their time on an outdoor range, engaging in their natural behavioural traits.

198    The label chosen by Snowdale for the Swan Valley Egg Co carton (Annexure 2), also, reflects a hen roaming freely in a spacious and benign outdoors environment. There is on that label the picture of a single hen roaming in a spacious and luxuriant green field stretching all the way to the horizon, with no other object in sight.

199    There is no suggestion in the images and get up used on any of the Snowdale egg carton labels that the laying hens are, in fact, housed in steel industrial style sheds about 100 m long and that the hens in those sheds would have to compete with another 12,000 or 17,000 other hens, as the case may be, before the hen could even exit the shed to enter an open range.

200    It is apparent, therefore, that Snowdale, in fact, recognises the words “free range eggs” may be understood by consumers to carry the meaning pleaded by the ACCC, and which I have held might reasonably be drawn by a significant number of relevant consumers; and that Snowdale has in its labelling sought to adopt and foster that meaning in order to induce the consumer to believe that the eggs marketed by Snowdale as “free range eggs” are produced in the conditions reflected in that meaning. It is somewhat incongruous, therefore, for Snowdale now to seek to deny the meaning of “free range eggs” which it has itself, in its promotional material, adopted and propagated in order to induce consumers to purchase those eggs at a premium price.

201    In my view, the words “our hens live in large sheds on our local WA egg farm” or “outdoors they are free to exercise”, which appear on the Swan Valley Egg Co Value Pack cartons (Annexure 3), do not assist Snowdale. The use of the words “large sheds” is not sufficiently specific to engender in the mind of an ordinary or reasonable consumer reading the label, the industrial sized sheds in which the hens are actually housed. This is particularly so in circumstances where the actual image on the Swan Valley Egg Co Value Pack shows a much more benign single American prairie style barn, and contains the other words and images to which I have referred in [196] above, which are calculated to induce in the mind of the consumer a very different image of the farming conditions in which the laying hens are kept. Likewise, the words “outdoors they are free to exercise” would not in the mind of an ordinary or reasonable consumer, reflect the fact that most of the hens might never, in fact, get outdoors on most days because of the large number of other hens competing for the opportunity to do so. Rather, the words would suggest to an ordinary or reasonable consumer that most of the hens do get outdoors on most days where they are free to exercise.

202    In my view, contrary to Snowdale’s submissions, it was not necessary for the ACCC to have adduced survey evidence or evidence from any person who deposed to understand the expression “free range eggs” to have the meaning pleaded by the ACCC. An argument similar to that made by Snowdale was made by Coles in Coles. Allsop CJ rejected Coles’ argument. At [45], Allsop CJ observed as follows:

Evidence that someone was actually misled or deceived may be given weight. The presence or absence of such evidence is relevant to an evaluation of all the circumstances relating to the impugned conduct. Where the conduct and representations are to the public generally and concern a body of simple direct advertising, the absence of individuals saying they were misled may not be of great significance. There was no such evidence here. The ACCC was criticised for that. That criticism is unfounded. The objective assessment of advertising using ordinary English words in an attempt to persuade can be undertaken without the lengthening of a trial by the bringing of witnesses of indeterminate numbers. Language, especially advertising, seeking to raise intuitive senses and associations, can have its ambiguities and subtleties. The task of evaluating the objective character and meaning of the language in the minds of reasonable members of the public is not necessarily one that will be assisted in any cost-effective manner by calling members of the public. The question is one for the Court: Taco Company of Australia v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202.

203    In my view, the observations of Allsop CJ apply equally in this case. In any event, as I have already said, the images and get up associated with “free range eggs” used by Snowdale in its labels and advertising, in itself, provided evidence that Snowdale, itself, appreciated that a significant number of relevant consumers might reasonably understand the term “free range eggs” to have the meaning pleaded by the ACCC.

204    Snowdale’s contention that the definition in the Model Code “cannot simply be ignored” was founded on the premise that there was an evidentiary void as to the meaning of “free range eggs” which precluded the Court finding that the expression had the meaning pleaded by the ACCC. The observations of Allsop CJ in Coles, referred to in [202] above, demonstrate that Snowdale’s premise is fatally flawed.

205    In any event, as I have previously said, even if it could be said that the meaning of “free range” farming used in the Model Code might reasonably be entertained by a substantial number of relevant consumers as applying to the expression “free range eggs” (which I do not accept), this would not be of assistance to Snowdale because of my finding that the meaning of “free range eggs” pleaded by the ACCC might also reasonably be drawn by a substantial number of relevant consumers. It is, as Tracey J observed in Turi Foods (No 4) sufficient that the meaning pleaded by the ACCC was one of several meanings that is reasonably open, and might reasonably be drawn by, a significant number of the class of consumers to whom the representation is directed (see [174] above).

206    I also do not accept Snowdale’s arguments as to the alleged difficulties and “absurdity” attendant upon the use of the word “most” in the ACCC’s pleaded representation. These arguments fall into the category of complex semantic manoeuvring deprecated by Allsop CJ in Coles at [45].

207    Further, if an injunction were to be issued, and Snowdale was in doubt as to whether most hens were moving about freely on the open ranges on most days, the answer would be for Snowdale to cease marketing the eggs laid by hens found in those conditions as “free range eggs”.

was the free range representation false?

208    The next question is whether the free range representation, which I have found that Snowdale has made, was false. This question depends upon the farming conditions and whether most of the hens in sheds 5, 6, 7 and 8 at Carabooda, and shed 1 at Swan Valley, moved around freely on an open range on most days.

THE farming conditions

209    The ACCC pleaded a number of facts in relation to the farming conditions at each of Carabooda and Swan Valley in support of its overall contention that the cumulative effect of the farming conditions reduced the ability and propensity of the hens to exit the sheds and move around freely on an open range on an ordinary day, so that most of the hens did not in fact move around freely on an open range on most days.

210    At trial, the ACCC relied upon the expert evidence of Dr Freire to make good its allegations as to the cumulative effect of the farming conditions.

211    However, because this was an issue between the parties, it is necessary first to make findings as to the farming conditions which prevailed at sheds 5, 6, 7 and 8 at the Carabooda farm and shed 1 at the Swan Valley farm.

The farming conditions at Carabooda

212    I deal first with the farming conditions at sheds 5, 6, 7 and 8 at Carabooda.

The flock sizes

213    The ACCC pleaded that, during the relevant period, the number of hens housed in each shed, or, as it was referred to at the trial, “the flock size” in each shed, was as follows:

(a)    between 11,795 and 18,000 hens in shed 5;

(b)    between 14,477 and 18,000 hens in shed 6;

(c)    18,000 hens in shed 7; and

(d)    between 16,852 and 18,000 hens in shed 8.

214    Snowdale denied the allegation and claimed that each of the sheds 5, 6, 7 and 8 had a capacity to house 18,000 hens and then pleaded that:

(a)    at 15 July 2013, there were 12,040 hens in shed 5 which reduced to 11,819 hens on 9 December 2013;

(b)    at 12 November 2012, there were 17,000 hens in shed 6 which reduced to 14,447 hens on 9 December 2013; and

(c)    at 4 February 2013, there were 17,500 hens in shed 8 which reduced to 16,855 hens on 9 December 2013.

215    One would have thought that the number, or at least the approximate number, of hens that were placed in each of the sheds would have been a matter of historical record and would have been the subject of an agreed statement of facts. However, as I have mentioned, one particularly surprising aspect of this case was that Mr Cocking claimed that Snowdale did not keep any records which recorded the number of hens in the sheds, other than in relation to the restocking of sheds 6, 8 and 5 which took place in November 2012, February 2013 and July 2013 respectively.

216    I make the following findings in relation to the flock sizes at Carabooda during the relevant period. It was common cause that each of sheds 5, 6, 7 and 8 at Carabooda had the capacity to house 18,000 hens. I find that, save for the restocking of shed 5 on 21 July 2013, each of the sheds that was restocked during the relevant period was restocked with no fewer than 17,000 hens.

217    I base that finding on the following factors.

218    First, in his evidence at the s 155 examination, Mr Cocking said that as a rule he stocked the sheds at or near maximum stocking densities.

219    During cross-examination, before he appreciated that he had given that evidence at his s 155 examination before the ACCC, Mr Cocking sought to deny that proposition. However, he was then taken to that evidence, and he then conceded that his answer to the s 155 examination was truthful. I find that, as a general rule, Mr Cocking did seek to operate the egg production business at maximum stocking densities, and that he, therefore, restocked the sheds at or close to the capacity of the sheds.

220    Secondly, the records recording the number of hens used to restock the sheds at Carabooda that were produced, were for the period 23 September 2012 to 1 September 2013. The records comprised the Groot reports and checklist records. Those records show that three sheds were restocked during that 12 month period. The order of the restocking during that 12 month period, was shed 6, shed 8 and shed 5. The inference is that shed 7 was restocked shortly before September 2012 - the commencement of that 12 month period; and that shed 5 had been restocked shortly before shed 7. The egg production records for the week ending 7 October 2012 which were produced by Mr Cocking during the trial (see [130] above) show that egg production during that week in shed 5 and shed 7 was about the same - at a level of between 95,000 to 97,000 eggs each per week. Within a month or so after the date of that record, shed 6 was restocked. This shed was restocked near to capacity with 17,000 hens. About three months thereafter, in February 2013, shed 8 was restocked. This shed was also restocked near to capacity with 17,500 hens.

221    I infer from the combination of Mr Cocking’s evidence that, as a general rule, the sheds were stocked close to capacity and the fact that the records of the restocking of sheds 6 and 8 are consistent with that practice, that shortly before September 2012, when shed 7 was restocked, Mr Cocking had acted consistently with his general practice and restocked shed 7 close to capacity. I infer further, from the fact that in October 2012, both shed 5 and shed 7 were producing about the same number of eggs, each of shed 5 and shed 7 had been stocked with a similar number of hens. Accordingly, I infer that prior to September 2012, each of shed 5 and shed 7 had been restocked at or near capacity.

222    I also infer from the foregoing, that the flock size of any other flock that was put into any of the four sheds at Carabooda during the period April 2011 to July 2013 was at, or close to, capacity.

223    As to the restocking of shed 5 in July 2013, the Groot reports and the checklist records produced by Snowdale show that on 21 July 2013, shed 5 was restocked with 12,040 hens. The ACCC contended that this stocking number should be accepted. The ACCC contended that the fact that shed 5 was stocked at a number significantly below the capacity of the shed was to be explained by the fact shed 5 was the only shed that was restocked after the issue of the substantiation notice; and that this was one of a number of responses which Mr Cocking made to the farming conditions once he realised that he was under investigation by the ACCC. I accept the submission of the ACCC. This would be consistent with the other steps Mr Cocking took around that time such as adding more pop holes to sheds 5, 6, 7 and 8 at Carabooda and the leasing of the additional land at Carabooda.

224    I find, therefore, that, save in respect of the restocking of shed 5 in July 2013, each of sheds 5, 6, 7 and 8 had been, during the period April 2011 to December 2013, restocked with hens to a capacity of no less than 17,000 hens.

The pop holes

225    The ACCC pleaded that from 8 April 2011 to about July 2013, there were, at the most, five pop holes in each of sheds 5, 6, 7 and 8 at Carabooda and that the pop holes varied in width between 1.5 m and 1.9 m and were of an approximate height of 50 cm. The open range for each shed was adjacent to the south side of the shed. In its defence, Snowdale pleaded that there were five pop holes in each of the four sheds during that period.

226    In its closing submissions, the ACCC submitted that the Court should find that there were fewer than five pop holes at the four Carabooda sheds prior to July 2013.

227    The ACCC relied on the evidence of Mr Wesley, Mr Harris and Ms Fleming about conversations they had with Mr Cocking and others on their visits to Carabooda prior to July 2013, as evidence of admissions made by Snowdale as to the number of pop holes.

228    The first admission relied on was said to have been made during a conversation between Mr Harris and Mr Wesley and a person, they assumed to be the farm manager, in September 2011. Mr Harris’ evidence is that during the conversation, the assumed farm manager pointed to a shed and said that it was a free range shed, Mr Harris or Mr Wesley asked if the chickens could get out of the shed, and in response, the assumed farm manager said: “There is an exit half way down the shed, but the chickens prefer to stay inside.” I find the conversation in those terms occurred. However, in light of the uncertainty as to the identity of the person to whom Mr Harris and Mr Wesley spoke in September 2011, I am not prepared to regard his statement as an admission which is admissible against Snowdale.

229    The second admission relied on is said to have been made during a conversation of 18 April 2013 between Mr Wesley, Ms Fleming, Mr Cocking and Mr Groot, when Mr Cocking said:

Those are free range sheds. There are two openings per length of shed which allowed them to get into the yards.

230    Mr Wesley deposed that he attended the Carabooda farm on 18 April 2013 at approximately 2:00 pm or 3:00 pm and the weather was fine. Mr Wesley said that he and Ms Fleming met Mr Cocking and “his new farm manager”, who I have found was Mr Groot. Mr Wesley said that the four of them walked down the east border of the property past a number of sheds, and he heard a conversation to the following effect between Ms Fleming, Mr Groot and Mr Cocking:

Catherine Fleming:    Are they all in cages?

[Mr Groot]:    No we have free-to-range.

[Mr Cocking]:    Those are free range sheds. There are two openings per length of shed which allow them to get into the yards.

231    Mr Wesley went on to say that he had a clear and unobstructed view of the “yards” between the sheds and he did not see any hens in the outside areas.

232    Mr Wesley said that at some time during the visit Mr Cocking had said:

The hens don’t go outside because they have been grown in the shed, so when they are offered an outside range they don’t go out.

233    Mr Wesley also said that, unlike other free range farms he had previously visited, the yard areas were overgrown with a lot of weed growth and bush growth.

234    Ms Fleming said that she visited the Carabooda farm on 18 April 2013 with Mr Wesley. The weather was mild with a slight breeze. Ms Fleming said that on arrival they were met by Mr Cocking and the farm manager, who as I have said, was Mr Groot. Ms Fleming said that they walked down the side of the property and that when walking around the farm she had a clear and unobstructed view of the yard areas adjacent to the sheds but did not see any hens outside. Ms Fleming recalls a conversation during which either Mr Cocking or Mr Groot said words to the effect of:

These hens are free to range. They do not go outside because they are too frightened to go out because of predators. There are gaps in the barn wall for the hens to go out if the hens want to go out.

235    Ms Fleming said she remembered the conversation because she had never previously given any thought to hens outside being attacked by predators; and she had not previously heard of the expression “free to range”.

236    Snowdale contended that I should accord the evidence of Mr Wesley and Ms Fleming no weight because there were inconsistencies between the accounts given by each of the witnesses in question. I do not accept that submission. The inconsistencies to which Snowdale referred were minor and would be expected in an account given by two different people of the same event which had occurred some time ago.

237    In any event, the fact that such a conversation occurred in relation to the propensity of the hens to go outdoors is supported by Mr Groot’s email report to Mr Cocking which was written within three days of the visit by Mr Wesley and Ms Fleming. As mentioned, that report stated:

The meeting with the City of Wanneroo seemed to go well although got a bit hairy when they asked to see the gates that let the birds out of the sheds. The sooner Cataby is up and running and Carabooda becomes cage free the better I think. All doubts gone.

238    Mr Cocking did not address the conversation with Mr Wesley and Ms Fleming in his affidavit. In cross-examination, Mr Cocking said that he did not remember the conversation.

239    I accept the evidence of Mr Wesley and Ms Fleming as to the events which occurred at Carabooda farm on 18 April 2013.

240    I find that the conversation with Mr Cocking and Mr Groot in the terms deposed to by Mr Wesley and Ms Fleming occurred. I find that the statements made by, and in the presence of, Mr Cocking, being the director of Snowdale and the driving force behind Snowdale, who had overall responsibility for the business operations of Snowdale, are admissible as admissions by Snowdale.

241    In cross-examination, the ACCC challenged Mr Cocking’s evidence that prior to July 2013, there were five pop holes on the south side of each of sheds 5, 6, 7 and 8 as being a recent invention, because Snowdale’s solicitors had on 22 December 2014 advised the ACCC’s solicitors, that their instructions were that their client had no present recollection of the number and dimension of the pop holes at Carabooda for the period 8 April 2011 to about July 2013. Mr Cocking strongly denied the proposition that his answer was a recent invention.

242    The other evidence as to the number of pop holes prior to July 2013 is confusing. Snowdale’s response in May 2013 to the substantiation notice referred to six pop holes down the length of one side of the sheds. There was also a plan which accompanied that notice which showed the location of each pop hole. Also, in the s 155 examination in 28 October 2013, Mr Cocking again referred to six pop holes running down just one side of the sheds. Then, in December 2014, Mr Cocking instructed Snowdale’s solicitors that he had no recollection of the number of pop holes in the sheds. Finally, in cross-examination, Mr Cocking said that prior to July 2013 there were five pop holes down one side of the sheds. There is also the evidence of Mr Grogan that in 2011, 2012 and 2013, there were at least eight pop holes running down each side of the sheds at the Carabooda farm. However, although I have in other respects accepted the evidence of Mr Grogan, I place no weight on this evidence because no one else deposed to, or even suggested, that before July 2013 there were that many pop holes, or that the pop holes were on both sides of the sheds. Mr Grogan must have been confused about the dates to which he was referring.

243    As mentioned, the evidence as to the number of pop holes prior to July 2013 is not satisfactory. However, I find that the evidence of Mr Cocking’s admission to Mr Wesley and Ms Fleming is likely to have been the most reliable. That evidence was given in circumstances where the two environmental health officers were at the Carabooda farm and it would have been possible for the two officers to verify, there and then, if Mr Cocking’s statements were accurate. In those circumstances, it was more likely that Mr Cocking would have reported accurately on the number of pop holes in each of the sheds.

244    Further, evidence of there being some anxiety on the part of Mr Cocking and Mr Groot during that conversation is provided by the email report which Mr Groot sent to Mr Cocking, referred to at [237] above, where Mr Groot refers to things getting “a bit hairy”.

245    I find, therefore, that based on the evidence of Mr Cocking’s admission in the conversation with Mr Wesley and Ms Fleming on 18 April 2013, that there were two pop holes down the southern side of each shed until July 2013 and the pop holes varied in width between 1.5 m and 1.9 m and were of an approximate height of 50 cm.

246    The ACCC pleaded, and Snowdale admitted that, from about July 2013 to October 2013, there were 10 pop holes, being five pop holes along both the southern and northern sides of each of the sheds, and the pop holes were of the same dimensions as mentioned above. I find accordingly.

247    The parties agreed, and I find accordingly, that in October 2013, more pop holes were added, with the consequence that, for the last two months or so of the relevant period, there were the following number of pop holes of the following dimensions:

From about October 2013 until 9 December 2013, the Carabooda barns had the following pop hole openings:

(a)    16 pop holes, 8 on each long side of the rectangular barn, each measuring between 371cm and 452cm wide and between 72cm and 75cm high (Barn 5);

(b)    29 pop holes, 14 on the south side and 15 on the north side of the barn, each measuring between 340cm and 409cm wide and between 72cm and 75cm high (Barn 6);

(c)    27 pop holes, 14 on the south side and 13 on the north side of the barn, each measuring between 314cm and 574cm wide and between 71cm and 78cm high (Barn 7); and

(d)    34 pop holes, 16 on the south side and 18 on the north side of the barn, each measuring between 157cm and 335cm wide and between 71cm and 79cm high (Barn 8).

248    From 8 April 2011 to 9 December 2013, the pop holes at shed 5 and shed 7 were approximately 40 cm above ground level. From 8 April 2011 to May 2012, the pop holes at shed 6 were approximately 40 cm above ground level, with that distance being increased to approximately 80 cm to 84 cm after May 2012. From 8 April 2011 to January 2013, the pop holes at shed 8 were approximately 40 cm above ground level, with that distance increasing to between approximately 64 cm and 100 cm after January 2013.

The internal structures

249    I also find that throughout the relevant period, there was, stretching down the centre of each of the four sheds, a continuous nesting box structure. There was a gap between the end of the nesting box structure and the wall of the shed at only one end of the shed. The ACCC led no evidence-in-chief as to the width of that gap. There was inconsistent evidence adduced in cross-examination of Snowdale’s witnesses as to the size of the gap, which varied between roughly “two metres” from Mr Grogan to “probably six metres” from Mr Cocking. I prefer the evidence of Mr Grogan who was the farm manager at Carabooda and, therefore, the person whose testimony is likely to be more reliable.

250    The nest boxes had smooth sloping roofs. There was also conflicting evidence about the height of the nest boxes. This evidence varied from Mr Cocking who estimated that the nest boxes were 600 mm in height to Mr Green who estimated that they were 1.2 m in height. I again accept Mr Grogan’s evidence who estimated that they were between 600 mm to 700 mm in height.

The open ranges

251    During the period 8 April 2011 to July 2013, the area of land adjacent to each shed which would have been accessible to hens which exited the sheds via the pop holes was 2,205.59 m² (shed 5), 1,789.58 m² (shed 6), 1,677.12 m² (shed 7) and 1,778.12 m² (shed 8). I observe that these figures are derived from the nearmap images which were adduced in evidence. As I have previously mentioned, the figures for the outdoor ranges given by Snowdale in its substantiation notice response had overstated the size of these outdoor ranges by an average of 30%.

252    Following the addition of the five pop holes to the northern side of each shed in July 2013, a restructure of the open ranges occurred. In short, this entailed dividing each of the open ranges between sheds 5 and 6, 6 and 7, and 7 and 8 approximately in half horizontally and adding an additional range adjacent to the newly installed pop holes on the northern side of shed 8. As a consequence of the reconfiguration, the areas immediately adjacent to each shed and accessible to the hens were:

    Shed 5 - 1,919.03 m²;

    Shed 6 - 1,692.08 m²,

    Shed 7 - 1,923.17 m², and

    Shed 8 - 2,361.37 m².

253    There was no dispute between the position finally pleaded by the parties in relation to the facts as to the size of the open ranges referred to in [251] and [252] above, and I find accordingly.

254    Also, as mentioned, in about July 2013, Snowdale leased the 75 ha area of land adjacent to sheds 5, 6, 7 and 8 at Carabooda, and runs were erected from each of those sheds to the vacant area of land. The runs extended for about 100 m from each shed to the open 75 ha range. However, there was no fencing within the 75 ha area to keep the flocks in each of the four sheds separate once the hens emerged from the run from each shed.

255    The ACCC contended that Mr Cocking did not have an expectation that the hens would use the 75 ha area as an open range in which to roam, and that the land was only leased for show so as to make it look like the hens would roam around on it.

256    During cross-examination, Mr Cocking denied that the leased area was “just for show” and that the purpose of leasing the leased area and erecting the fences was to make the area look like hens could run around in it. Mr Cocking said that the purpose of the leased area was so that the hens could have access to that area.

257    Further, during cross-examination, it also was put to Mr Cocking that hens would not range as far as the 100 m or so that the leased area was from the sheds. Mr Cocking denied that proposition. Mr Cocking was then taken to the evidence he gave at his s 155 examination on 28 October 2013, when he said that chickens “don’t seem to range that much”.

258    In response, Mr Cocking said that his opinion had subsequently changed because of the feedback that he had received about hens having been seen in the leased area, and articles he had read.

259    I do not accept that the explanation Mr Cocking gave in cross-examination supports his claim that, at the time he leased the area of land, he had an expectation that the hens would use that land as an open range. This is because the events Mr Cocking relied upon post-date July 2013, when he leased the land.

260    Further, during cross-examination, Mr Cocking was not able to offer a convincing explanation as to why no fencing had been installed in the 75 ha area, which would keep the flocks from each of the sheds apart, when he had previously given evidence that the flocks were always kept apart.

261    Further, Mr Cocking’s evidence as to his purpose for leasing the land is not reflected in the contemporary objective evidence comprising the following observation made by Mr Groot in a report he made to Mr Cocking on 3 June 2013:

A thought with the government land at the end of the property would be by the time you spend 20-40 K clearing so it looks like poultry could run around on it and the 10-20 K on fencing to make woolies or greenies happy with it chicken wise the government will say “Oh it’s cleared now we can use it again. Thank you and bye.”

262    Accordingly, I find that Mr Cocking’s purpose in leasing the 75 ha area of land, and in undertaking the fencing of the runs from the sheds and other works, was to make it look as if it was a range in which the hens could roam. I find that Mr Cocking did not expect that the area of land would actually be used by large numbers of hens on a regular basis as an open range within which to roam.

263    I find that there were trees growing in the open ranges adjacent to sheds 5, 6, 7 and 8, other than the range constructed to the north of shed 8 as part of the restructure of the ranges that occurred in July 2013. I find that, save for that range to the north of shed 8, the open ranges would have been attractive to the hens.

The farming conditions at Swan Valley

264    I now deal with the farming conditions at Swan Valley.

The flock size

265    The first question is the flock size of the hens in the Swan Valley shed during the relevant period.

266    In its statement of claim, the ACCC alleged that there were between approximately 8,000 and 12,740 laying hens in the Swan Valley shed between 8 April 2011 and 30 September 2013.

267    In its defence, Snowdale pleaded that the Swan Valley shed as at 2 July 2012 housed approximately 8,500 laying hens and, in August 2013, it housed approximately 8,000 laying hens. Mr Cocking gave evidence to that effect.

268    There was some confusion in the evidence about when the laying hens were first moved into shed 1 at the Swan Valley farm. Ms Ellah Cocking gave evidence that the hens were not moved into the Swan Valley shed until after the establishment of range A. The nearmap aerial photographs taken of the Swan Valley farm showed that clearing work for the establishment of range A was still underway in the week commencing 12 July 2011, but no fencing establishing range A was in place. However, a photograph which appeared in a newspaper article dated 19 August 2011, showed the man-made shade shelter which Ms Cocking had erected in range A, was in place on that date.

269    I, accordingly, find that the establishment of range A was completed and that the first flock of hens were moved into shed 1 at Swan Valley sometime between 12 July 2011 and 19 August 2011.

270    Mr Cocking said that he did not keep records of the number of birds placed in the sheds and to his knowledge no other person kept these records at the Swan Valley farm. Mr Cocking deposed in his affidavit that there were three flocks which had been in shed 1 at Swan Valley during the period from July 2011 to 30 September 2013. The first flock was comprised of hens who had been raised from day old chicks bought from Inghams, which had been an aggressive flock. The second flock which went into shed 1, said Mr Cocking, numbered, to the best of his belief, about 8,500 hens and the third flock numbered about 8,000 hens.

271    Mr Cocking said that, based on shed records he had seen, he believed that the second flock of hens in shed 1 were 33 weeks old on 2 July 2012. On the basis of the evidence that the hens were usually transferred from the rearing sheds to the production sheds when they were 16 weeks old, I find that the second flock of hens were moved into shed 1 in late February-early March 2012. Mr Cocking said that the second flock were cleared out shortly after 3 June 2013 and a third flock was placed in the shed on about 26 July 2013. I find accordingly.

272    I find that shed 1 during the relevant period, was stocked with three different flocks and that on each occasion the shed was stocked with hens at capacity, or near to capacity, and that each new flock was no less than 12,000 hens.

273    I have come to that conclusion for the following reasons.

274    First, as I have previously mentioned, Mr Cocking gave evidence during the s 155 examination on 28 October 2013 that, paraphrasing, as a general rule he sought to operate at the maximum stocking densities.

275    Further evidence that it was Mr Cocking’s commercial objective to operate at capacity or close to full capacity, is to be found in the email letter, dated 28 February 2012, which he had sent to councillors for the City of Swan. The circumstances surrounding the writing of the letter were that Snowdale had previously obtained approval for 24,000 birds to be housed at the Swan Valley farm, Snowdale had exceeded that limit, and Mr Cocking was now, on behalf of Snowdale, seeking retrospective approval from the City of Swan for 80,000 birds to be housed at that farm. Mr Cocking sent the email to the councillors prior to the council meeting at which a retrospective application to operate the Swan Valley farm at a capacity of 80,000 birds was to be considered. The alternative was that Snowdale would be required to revert to operating at a capacity of 24,000 birds.

276    During cross-examination, Mr Cocking was taken to the email. Mr Cocking admitted that at the date of the email, the full capacity of the Swan Valley farm, including shed 1, was 80,000 birds.

277    At para 3 of the email, Mr Cocking wrote:

I believe this is proven by the City of Swan complaints register as I was operating with 80,000 birds for 25 months (just over 2 years) during which time the Council received no complaints.

278    Later on in the email, Mr Cocking said:

I’m currently operating with 80,000 birds and dropping to 24,000 birds will not relocate my farm any quicker.

279    Further, at point 28 of that email, Mr Cocking said:

My farm has been operating at full bird capacity (80,000 birds) since June 2007.

280    During cross-examination, Mr Cocking said that the email did not convey the message that he was and had been operating the Swan Valley farm at full capacity. He said that the email stated no more than that the capacity of Swan Valley was 80,000 hens.

281    I reject that explanation as the email speaks for itself. I find that Mr Cocking had operated the egg production operations at Swan Valley at full capacity since 2007. That would include operating the free range shed, being shed 1, at full capacity.

282    I observe that the email was written after shed 1 had been stocked in July/August 2011.

283    In cross-examination, Mr Cocking accepted that the first flock in shed 1 had been about 12,000 hens.

284    Also during cross-examination, Ms Ellah Cocking was taken to a newspaper article in the Australian newspaper published on 19 August 2011, the opening sentence of which states:

If you hear Ellah Cocking talk about “the girls” on the family farm, she is referring to 12,000 egg laying hens, not to her mother and younger sister.

285    Ms Cocking said that the statements she had made to the journalist from the Australian newspaper were correct and that there were about 12,000 birds which were placed in shed 1 at Swan Valley. I find, therefore, that shed 1 was stocked at or near to capacity when the first flock was placed in the shed.

286    As to the size of the second flock, Mr Cocking’s 28 February 2012 email to the City of Swan councillors was written at the same time that the second flock was being moved into shed 1. I find that, consistent with Mr Cocking’s practice, for 4½ years up to that date, he would also have restocked that shed with hens up to or close to capacity.

287    In his affidavit in support of his claim that the size of the third flock moved into shed 1 in July 2013 was about 8,000 hens, Mr Cocking referred to a written report he had received from the Department of Agriculture and Food headed: “Report on Case Investigation”. The report refers to a visit undertaken on 15 August 2013 of shed 1 at Swan Valley by Mr Tom Hollingsworth. The report refers to “8,000 [hens] housed in a barn” on plastic slats.

288    Mr Cocking referred to this report in the context of giving evidence that he could not remember the number of hens that were housed in the Swan Valley shed, but this report served to remind him of that number. I place no weight on that report. The report does not disclose the basis upon which Mr Hollingsworth concluded that there were 8,000 hens in the shed, and does constitute evidence that Mr Hollingsworth engaged in an independent counting exercise himself.

289    Rather, I prefer to place weight on the evidence that Mr Cocking’s policy was, as a general rule, to operate the Swan Valley and Carabooda farms at full capacity or close to full capacity.

290    This conclusion is also supported by reports made by Mr Groot to Mr Cocking in July 2013. In his report of 14 July 2013, Mr Groot asked Mr Cocking how many hens he wanted delivered to shed 1 at Swan Valley. This was at a time that shed 1 at Swan Valley was empty in anticipation of a new flock being moved into the shed. There is no evidence of Mr Cocking’s reply to that email from Mr Groot. However, in his report the following week, namely, 21 July 2013, Mr Groot advised Mr Cocking that the staff at Swan Valley should be ready to receive birds into shed 1 that weekend. He then stated: “There should be about 12,500 birds to come down in 5½ truck loads.” I find, accordingly, that shed 1 was restocked in July 2013 with no less than 12,000 hens.

291    I find that during the period that the free range operations were undertaken on the Swan Valley farm, shed 1 was stocked with hens at or close to full capacity.

The pop holes

292    As to the number of pop holes at the Swan Valley shed, in its response to the substantiation notice, Snowdale had said that there were 10 pop holes in shed 1 at Swan Valley. Eight of the pop holes opened on to range A and the other two pop holes opened on to range C. During cross-examination, Ms Cocking and Mr Cocking agreed that the pop holes opening on to range C were never opened. The eight pop holes which opened on to range A had ramps which the hens could use to access the open ranges. The end of these ramps were about 40 cm from ground level.

293    I find, therefore, that throughout the time, during the relevant period, that there were hens in shed 1, there were eight pop holes which led on to range A, and a further two pop holes that led on to range C, which were never opened. Further, it was common cause that the width of each pop hole was 1.8 m, the height of each pop hole was 50 cm, and that there were ramps from each of the eight pop holes ending about 40 cm from the ground. I find accordingly.

The internal structures

294    My findings in relation to the existence of the central nesting box structures in sheds 5, 6, 7 and 8 at Carabooda, also apply to shed 1 at the Swan Valley farm. Mr Cocking said that the nest box structures were the same at Carabooda and Swan Valley.

The open range

295    In her evidence-in-chief, Ms Ellah Cocking said that she managed the free range hens and the free range paddock from the time the first flock was placed in shed 1 until the free range operations at the Swan Valley farm stopped in September 2013. Ms Cocking was assisted by Mr Allister Milne and others.

296    Ms Cocking stated in her affidavit that the large tract of land which was adjacent to shed 1 was divided into three separate open ranges, which she referred to as range A, range B and range C. Range A was the first area which was fenced and a fence was subsequently installed to designate a boundary between range B and range C. After the fencing was complete, range A was an open range area of approximately 1,006.76 m², range B was an open range area of approximately 1,517.11 m² and range C was an open range area of approximately 3,954.09 m².

297    I find that range A was the area of land which abutted shed 1 and was accessed by the eight pop holes that were opened. During the period leading up to the placing of the first flock into shed 1, Ms Cocking and others created range A by removing big bushes and pig melons and bringing in grass from other areas in order to get grass growing in the paddock. Ms Cocking also procured the building of a shade shelter within the boundary of range A.

298    There was a difference between the parties as to when the fencing of range B and range C was completed, and whether, and in what numbers, the hens accessed range B and range C.

299    Ms Cocking’s evidence-in-chief about the extent to which the hens accessed range B and range C was at a high level of generality, saying no more than that she operated an unspecified rotational plan, and that in addition to accessing range A, the hens also accessed the open ranges in range B and range C during the whole period that she managed the free range operation at Swan Valley.

300    I do not accept the evidence of Ms Cocking. I prefer the objective evidence comprising the nearmap aerial photographs of the Swan Valley farm which span a period from August 2011 to May 2013. These photographs were put to Ms Cocking during cross-examination.

301    These photographs show that before November 2012 there was no fence which separated the ranges which Ms Cocking referred to as range B and range C. The nearmap photograph for November 2012 shows for the first time that there is a clearing for the erection of a fence dividing the then undivided tract of land into the separate outdoor ranges referred to as range B and range C.

302    Further, the nearmap photographs prior to 14 May 2013 displayed an unfenced gap between the eastern side of shed 1 and a fence which stretched a part of the way along the southern border of the range referred to as range C. The first nearmap photograph that showed the fencing up to the eastern edge of the shed had been completed and the unfenced gap eliminated, was taken in the week of 14 May 2013. This indicates that until 14 May 2013, there was a gap in the fence on the southern border area of range C.

303    Accordingly, I find that before May 2013 it was possible for hens, had they been permitted to roam in range C, to have passed through the gap. Further, until a fence was installed between range B and range C, hens released into range B would have been free to roam into an area without a properly fenced border. In light of Ms Cocking’s evidence that hens were not permitted to roam in an unfenced area, I find that range B and range C would not have been used by Ms Cocking as a rotational area in which hens roamed in an unspecific rotation referred to by Ms Cocking in her evidence-in-chief.

304    Further, and significantly, the first of the nearmap photographs which clearly showed the presence of hens in range B is the nearmap photograph taken in the week of 14 May 2013.

305    The aerial photographs which were taken at times prior to May 2013, showed that range A was substantially devoid of vegetation, but the vegetation in the adjoining range B and range C was relatively lush. During her cross-examination, Ms Cocking had also said that hens were capable of destroying vegetation within 48 hours.

306    It was put to Ms Cocking that the contrast between the relatively lush vegetation in the land comprising range B and range C, and the substantially denuded range A, in the earlier aerial photographs, indicated that, contrary to her evidence, the hens had not, prior to May 2013, roamed rotationally in range B and range C, but had only been roaming in range A.

307    Ms Cocking rejected that proposition, and stated that the difference between the state of the vegetation in range A and the rest of ranges B and C was to be explained by reason that the hens did not like the vegetation in ranges B and C.

308    I reject Ms Cocking’s evidence. That evidence is inconsistent with the objective evidence provided by the nearmap photograph taken in the week of 14 May 2013. That nearmap photograph shows, for the first time, hens clearly in the area of range B and that range B has been substantially denuded of vegetation so as to resemble range A in appearance.

309    Accordingly, I find that prior to March 2013 and, therefore, before the substantiation notice was issued, Snowdale did not use the areas referred to as ranges B and C to permit the hens to roam, but that the hens were restricted to roaming within range A. This finding is also consistent with the evidence of the witnesses who gave evidence about seeing hens at Swan Valley. The vast majority of witnesses saw hens on range A and nowhere else.

310    I also find that range A was unattractive in appearance. The area of land was sparsely vegetated, with few trees naturally growing in the range. It was the resulting absence of natural shade that led Ms Cocking to construct the shade shelter. Further, it was also necessary for Ms Cocking to introduce plastic garden pools into the range A area and to put wheat and hay out in the area to attract the hens outside.

the effect of farming conditions

311    In order to prove the falsity of the free range representation, the ACCC relied upon the evidence of Dr Freire. Dr Freire provided an expert report dated 16 February 2015 and a supplementary report dated 6 April 2015.

Dr Freire’s evidence

312    In summary, it was Dr Freire’s opinion that it was reasonable to expect that during the relevant period, about 8% to 20% of the hens in shed 1 at the Swan Valley farm and sheds 5, 6, 7 and 8 at the Carabooda farm would have moved about freely on the open range on an ordinary day, but that the percentage would have been slightly higher at Carabooda after October 2013 when more pop holes were introduced. Dr Freire was briefed with the pleading, which included the definition of “ordinary day” referred to by the ACCC. Dr Freire uses the term “ordinary day” in his opinion. Dr Freire has used that term in the sense used by the ACCC in its statement of claim.

313    Dr Freire concluded that it was extremely unlikely that most of the laying hens in sheds 5, 6, 7 and 8 at the Carabooda farm and shed 1 at the Swan Valley farm during the relevant period, would have moved about freely on an open range on an ordinary day.

314    Dr Freire is an expert in poultry behaviour, and holds the position of a senior lecturer at Charles Sturt University, Wagga Wagga, New South Wales in the School of Animal and Veterinary Sciences. Dr Freire has a doctorate from Edinburgh University in pre-laying behaviour of laying hens. He has spent time working as a post-doctorate researcher at Bristol University, United Kingdom, and also at the United States of America Department of Agriculture at Purdue University. He has observed the behaviour of chickens in groups as part of his applied research.

315    Dr Freire’s opinion was directed towards opining upon the ability and propensity of the laying hens to access and move about the open ranges in the physical farming conditions that existed at Carabooda and Swan Valley during the relevant period.

316    In his report, Dr Freire first identified in a general sense the major factors which affected the hens’ ability and propensity to exit the sheds and move around freely on the open range. These factors were the flock size, the shed size, number of pop holes, and the number of birds per metre of pop hole.

317    Dr Freire said that flock size significantly affected the ability and propensity of the hens to exit a shed. He said that in barns with thousands of laying hens, the hens would have to move past unfamiliar hens and would find that behaviour “aversive”. He referred to an experimental study in support of this proposition. Dr Freire went on to say that because of this trait many hens would refrain from moving towards the pop holes in sheds with large flock sizes. Dr Freire referred to four studies which he said supported that proposition. Dr Freire referred to his own research on hens tagged with electronic identification transponders in large flocks and found that some hens restrict their movement around a large shed as a means of avoiding interaction with the other hens. Dr Freire also referred to other studies which he said supported that proposition. Among those studies was a study undertaken by Gilani AM, Knowles TG and Nichol CJ, “Factors affecting ranging behaviour in young and adult laying hens”, 55 British Poultry Science, Issue 2, 2014, 127-135 (Gilani study), which was a large study of free range flocks in the United Kingdom, which reported that the percentage of hens on a range was significantly affected by flock size and was found to decrease with an increasing flock size. Dr Freire also referred to a German study which said that in commercial conditions as few as approximately 4% of hens had been reported on a range in a flock of 16,000 hens.

318    Dr Freire said that the size of the shed and the arrangement of the interior content of the shed that increased the distance that the hens would have to travel to the pop holes, and so increase the number of unfamiliar hens that the hens would have to pass, would also adversely affect the number of hens that would get to the pop holes. In support of this opinion, Dr Freire referred to the experimental study referred to above, and his own research on hens tagged with electronic identification transponders which showed that in large sheds some hens restricted their movement to small sub-areas of the shed. Dr Freire also referred to a recent study on commercial free range farms which showed that reduced distance and ease of manoeuvre to access the pop holes helped increase access of the hens to the open range.

319    Dr Freire said that the number of hens per metre of pop hole was one of the most significant factors affecting the ability and propensity of hens to exit the shed. In support of this proposition, Dr Freire referred to the Gilani study showing that in 33 flocks on commercial farms the percentage of birds on the range decreased with decreasing pop hole availability. In that study, a statistical model was developed to estimate the percentage of flocks on the range. Dr Freire said that that model predicted that the percentage of hens on the range would decline when pop hole availability exceeded 200 birds per metre of pop hole. Dr Freire also said that pop hole availability was important for another reason and that was that hens found pop holes attractive and may perch on the pop holes for extended periods of time, so deterring other hens from moving through the pop holes.

320    Dr Freire also said that the attractiveness of the outdoor ranges, and the amount of space that each hen had on the outdoor ranges would affect the propensity of the hens to exit the shed and to use the outdoor ranges to engage in natural behaviour.

321    Dr Freire also said that stock density per se was not a factor which would inhibit hens from exiting the open ranges. Dr Freire referred to his visit to Paddock Eggs Farm in Holbrook which used small portable sheds on a free range farm. The portable sheds housed 500 hens and, therefore, had a high stocking density. However, said Dr Freire, he had observed that nearly all of the hens were out on the outside range. Dr Freire believed that the ability and propensity of hens to exit the sheds are more accurately affected by factors correlated with stocking density such as the size of the sheds and the size of the flocks, but not stocking density per se.

322    Dr Freire then dealt specifically in his report with the farming conditions at sheds 5, 6 and 7 and 8 at Carabooda and shed 1 at Swan Valley which he had been asked to assume. Dr Freire addressed, by reference to those farming conditions, the extent to which each of stocking density, flock sizes, size and internal contents of the sheds, the number, size and distribution of pop holes, the size and physical appearance of the outdoor ranges, the physical obstacles in accessing the open ranges, and the manner in which laying hens were trained, affected the ability and propensity of laying hens to exit the sheds and move around freely on an open range.

323    Dr Freire was then asked the following question:

Question 28: If any two or more of the Farming Factors in combination would have affected the ability of hens to exit the barn and move freely on an open range on an ordinary day, what would have been the likely combined effect of those factors in each barn.

324    Dr Freire set out the factual assumptions he relied on in answering that question in the following chart: