BTC1110 Lecture Notes - Lecture 6: Rescission, Breach (Security Exploit), G.992.5
15 Jun 2018
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Misleading or Deceptive Conduct, Specific False or
Misleading Representations
Misleading or deceptive conduct: s18 of ACL
Specific false or misleading representations: mostly s29 of ACL
• These sections overlap however they have different remedies
• Important in Auslaw (most litigated provision)
• S29 can involve prosecutions, s18 is where persons likely to sue each other
Section 18(1) A person must not, in trade or commerce, engage in conduct that is misleading or
deceptive or is likely to mislead or deceive
• Key principles:
o s 8 applies to persos atural persos ad orporatios legal persos
o s 18 only applies to conduct occurrig i trade or oere – it must have a
commercial flavour (eg. not private sales)
o s 8 applies to a ide rage of conduct … roader tha represetatios
o s 18 applies where conduct is misleading or deceptive or is likely to be
o s 18 creates strict liability and cannot be excluded – no need to prove fault or fraud
or breach of good faith. Only question is whether the conduct occurred and it was
relied on, or may be relied on
o Remedies for breach of s 18 are very broad and include damages, injunctions,
corrective advertising and variation or rescission of contracts
• Person: both natural and legal persons are included
• In trade or commerce: s18 concerned with 'the conduct of a corporation towards
persos…ith ho it…has or ay hae dealigs hih ear a trading or commercial
character": Concrete constructions v Nelson (HCA)
• Engage in conduct:
o Google v ACCCC
o 1. Puffs?
o 2. Opinions, statements about the future? – not misleading conduct (because they
are not facts) but s 4(1):
• Where a person makes a representation about a future matter (eg. the future
profitability of a business or the future trends of the ASX) BUT does not have
reasonable grounds for making it, the representation may be misleading.
• Silence - person has no general duty to disclose
o However, the literal truth may be misleading
o Failure to disclose changed circumstances
o Failure to diclose where there is a 'reasonable expectation' that disclosure would be
made:
• Henjo v Collins Marrickville
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• Demagogue v Ramensky
• Misleading or deceptive
The Three Broad Categories of Misleading Conduct
• ACCC takes action against corporations for misleading or deceptive conduct when
advertising or marketing good or services
o ACCC v TPG (p274)
• Facts and issue:
• TPG ran an advertising campaign
• Advertisements involved a number of media to promote TPG's new
29.99 per month unlimited ADSL2+ broadband internet plan
• In much smaller print the ad stated that the customer was required to
bundle the service with a landline rental for an additional 30$ per month
( for a min of 6months) and pay an overall min of $509.89 including a set
up fee and deposit
• found that the targeted audience included first time users of this service
• found that, by virtue of the array of available internet options, the
ordinary or reasonable consumer would not have any starting
assumptions as to whether TPG's offering was of a separate or bundled
service, and would rely on the ad for info as to the service offered
• HC found that the ad conveyed a representation that the internet
service was available without bundling and, at least in the first phase of
the ad campaign, a representation that there would be no set-up fee or
deposit
• Court held there were breaches of s52 and s53 of the Trade Practices
Act 1974 (s18 and s48 of the ACL)
• HC decided that the 'dominant messsage' was important: statement
that SPG would provide 'unlimited ADSL2+ for 29.99 a month'
• The qualifying info in the small print did not do enough to correct false
impression created by the dominant message
• Pecuniary penalty of $2m for breach of s48
• Implications of decision: it is the overall impact of an advertisement and
not just the dominant message which matters when determining if an
ordinary customer would be misled
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• To meet stat requirement to state the total "all inclusive price"
prominently, an advertised single price needs to be very noticeable in
the context of the overall message conveyed and not merely
discoverable in small print
• Further, an advertiser cannot argue that some of its sophisticated
consumers would not be misled if other "ordinary" customers would be
misled
• HC drew a clear distinction between this case and Puxu
• (1) TPG's target audience did not consist of potential purchasers focused
on the subject matter of their purchase in the calm of the showrooms
to which they have come with a substantial purchase in mind. The ad
was an intrusion on the consciousness of the target audience
• (2) the tendency of the advertisers to mislead was to be determined, not
by asking whether they were apt to bring them into negotiation with
TPG rather than with one of its competitors on the basis of an
erroneous belief that engendered by the thrust of TPG
• (3)not a case where the tendency of TPG's ad to lead consumers into
error arouse bc the target audience might be disposed, independently of
TPG's conduct to attend closely to some words of the ad and ignore the
balance
• TPGs ad lead consumers into error arose bc the ad themselves selected
some words for emphasis and relegated the balance to relative
obscurity
• How to judge if conduct misleading or deceptive? - doiat essage to
target audiee
o ACCC v Turi (CACL 13.65)
• Facts and issue:
• Poultry advertising and packaging claimed chickens were 'free to roam
around in large barns'
• True at some stage of the chickens' life but as they grew in size, it was
impossible
• Court insisted the natural meaning of 'free to roam' when applied to
chickens with agreement of ACCC was 'largely inhibited ability of
chickens to move around at will in an aimless manner'
• Decision - Why were the advertisements in both cases misleading or
deceptive?
• Court held: claim constituted misleading and deceptive conduct (s18)
and a false representation about history of goods
• Imposed penalty $$$
NB: Also action under s29(1) (specific false representations re history of
product), s 33 (specific false representations re nature and characteristics) –
hee the fie of $ pealty ot aailale for reah of s8.
How to judge if conduct misleading or deceptive?
• Ask, ho ould a sigifiat uer of hypothetial osuers to
ho adertisig direted reat?
o Example: ACCC v Coles (p276) and ACCC v Reckitt (p277)
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