Misleading and Deceptive Conduct Flashcards
What is the key provision for the Statute?
Competition and Consumer Act, Schedule 2 (Refer to as Australian Consumer Law ACL) s18(1) which provides: a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive.
The P does not have to be a consumer under ACL, but D must be acting in trade or in commerce.
What are the requirements/issues to think about?
- What does in trade or commerce mean?
- What does misleading or deceptive mean?
- How are damages assessed?
Concrete Constructions NSW v Nelson - What does trade or commerce mean?
P working on a building site. P fell down an air conditioning shaft and was injured. At entry to shaft, something was removed and as a result P fell down.
P fell down because foreman told them it was safe to remove the bolts on the gates. Obviously not the case.
P sought to argue to come within TPA. Reason for this is because there were restrictions on claiming for workplace accident.
The misleading/deceptive conduct was the statement by the foreman that it was safe to remove the bolts from to open the gate.
Held: The statements were not made within trade or commerce. It was in the course of their ordinary activities. It courts allowed this, then there would be many more of the sorts of claims.
O’Brien v Smolonogov - What does trade or commerce mean?
D advertised certain portions of land in the newspaper.
One of the P’s spoke to D by telephone.
Alleged D made some statements that were false and misleading.
Held: On the facts, they were not because the land was not being used for any business activity, it was domestic land.
But P argued the negotiations were ‘trade or in commerce’. HC rejected this.
It doesn’t necessarily mean if the activities were carried out in a way that could also be used for commercial parties, that doesn’t turn a non trade or commerce activity into one of trade of commerce.
Houghton v Arms - What does trade or commerce mean?
Employee as well as employer could be acting in trade or commerce in their own right and had to be liable.
Two parties of a website design company who had mislead P.
They told P that they could set up an online purchasing system for his wine. This was not possible. P had to restructure business and lose money.
The owner of the wine business sued the employees.
Held: Employees are liable.
Bevanere v Lubidineuse - What does trade or commerce mean?
D sold a beauty clinic to P.
It was one of the capital assets of D.
They sold it wanting to retire. As part of the sale, D represented that a key employee would stay with the beauty clinic. D knew that the employee was going to set up their own business.
D argued that they had gone out of trade or commerce by selling the beauty clinic.
Held: It was stated that the sale, even if any remaining capital asset is within trade and asset, you have to look at their activities as a whole. The fact that it was a sale of a capital asset, did not deprive it of the character of the trade in commerce.
TC Channel Nine v Ilvarity - What does trade or commerce mean?
Involving television investigation of an allegedly jubious building firm.
Channel 9 wanted access to building’s premises so they pretended that they were interested in the builder.
They wanted access to managing director.
Managing director sued channel 9 who were pretending that they wanted building work done.
The misrep was the statement that they wanted building work done.
Held: Channel 9 were acting in trade or commerce. They emphasise the conduct that occured in relation to the trade and commerce of the builders.
This case is authority for the party to whom the statement is made is also relevant in considering whether D was making the statement in trade or commerce.
Bond Corporation v Thiess Contractors - What does trade or commerce mean?
This case: held that professional advice was within trade or commerce.
This has been clarified under s2(b) of the ACL which “includes any business or professional activity”.
What is the second element?
Whether the conduct is misleading and/or deceptive.
How do determine whether conduct is misleading or deceptive?
Courts look first at the likely audience to who the conduct is directed to.
It is simple if the conduct is directed at an individual, but becomes much more complicated if the conduct is directed at the public at large
Campomar Sociedad v Nike International
D began selling a marketed fragrant and labelled it “nike sports fragrance”. There was issues about copyright. Nike argued conduct of Compomar was misleading and deceptive because they were deceiving the public into thinking Nike had produced this so called sport fragrance.
Held: Conduct was directed at the public and “an ordinary and reasonable member of the public would believe that Nike had either made the product themselves, or they consented to the marketing of it”.
The test is, if the conduct is directed at the public, would a reasonable member of the public believe?
How to know if it’s misleading or deceptive to an individual?
The question then becomes: is the conduct misleading or deceptive or likely to be deceptive to the individual concerned? You look at the specific individual: Butcher v Lachlan Realty.
Butcher v Lachlan Realty
P was a purchaser of waterfront property in Sydney.
D was a real estate agent.
D had included a diagram in the brochure and that anyone intending to purchase the property only rely on the info from inquiries.
D, when they were putting the brochure together, were simply communicating what htey’d been told to include by the owner.
Held: HC Majority said D was merely a msall firm of real estate agents. Purchasers were wealthy and intelligent. They were legally advised and actually employed solicitors.
D did not hold themselves out as legally qualified or able to verify boundaries.
They included the disclaimer and all they had done was pass info on.
HC held that P was not misled or deceived.
What’s the difference between misleading and deceptive?
From Henjo Investments:
- Deceptive - there has to be an element of moral turpitude in the statement/conduct. E.g. Trickery, crafting or guile.
- Mislead - is much wider. Doesn’t involve necessarily intent. One can mislead without intending to mislead.
From Parkdale Custom Built v Puxu:
1. You can be liable under legislation even if you’ve acted reasonably and honestly. In other words, innocent misrep which at common law gave right to rescission but not damages, gives rise to liability under ACL. And under ACL, you can get damages.
What about future matters?
s4 of the ACL deals with future matters.
Main point to note is that:
1. Where a representation is about a future matter, the question of whether there is liability for making such a representation is whether the person has REASONABLE GROUNDS FOR MAKING THE REPRESENTATION. If they do not have reasonable grounds, then it’s misleading or deceptive conduct.
