Fair Trading Act Notes

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Cynthia Hawes

To be liable under the FTA one must be “trade” (Section 2). Gault cites the majority in the Australian case of Concrete Constructions v Nelson that the section is concerned with “activities or transactions which, of their nature, bear a trading or commercial character.” Cashmore v Sands  The matter of being “in trade” depends on all the facts. You need to look at the character of the parties involved, whether the sale was springboard to more business) or whether it was motivated by personal or family reasons.  A one-off transaction is less likely to be in trade. Frankel Consultants v Enviro Waste Services  The definition of “person” includes a local authority (Section 2).  You do not have to be directly in trade with the other party e.g A realtor could be liable to a purchaser of a house under the FTA, even though the purchaser’s contract is with the vendor, not the realtor. Section 9 PC Brixton Autos Ltd v Commerce Commission  A car was sold with a notice stating the odometer reading is 109000km. This was literally true, but in fact it had been wound back to show this figure. This was a false or misleading representation even though it was technically accurate. Commerce Commission v Vero Insurance NZ Ltd  It was said by the insurer that anyone who took out one of these policies would go into a prize draw. The insurer never got around to setting up the prize draw.  Vero had had an honest intention to set up the draw but had failed to perform. It was not a misrepresentation; rather it was simply a promise to do something in the future that had not been realised. Silence will sometimes be misleading and sometimes won’t be. Hieber v Barfoot & Thompson  Is there a reasonable expectation of disclosure?  Advertising relied on the property’s view. The agent knew but did not say that there was a building proposed that would interfere with the view. If the plaintiff had known this they would have been unlikely to continue the sale. To not say anything was misleading. Tuiara v Frost and Sutcliffe  Nephew persuaded aunt to transfer property to company but did not tell her the company was in financial trouble.  This was misleading, because he was in a position where he was required to act in good faith with candour. There was a reasonable expectation of disclosure here. Mills v United Building Society  Auctioneer gave M, an experienced developer, a copy of the lease and told him to get legal advice. M’s solicitor had advised him to consult a valuer but M did not. M bought the property and it turned out the terms of the lease made the property less valuable than M thought it was.  There was no misrepresentation. The doctrine of caveat emptor was not abrogated by the FTA. His misunderstanding arose form his own erroneous assumption, the auctioneer’s “silence” was not misleading. No need to disclose something that the buyer could have found out by examining the lease. Gloken Holdings v CDE  For the six months before the sale a project going on nearby pushed sales up beyond their normal amount. The turnover figures given in the sale were factually true, but they were misleading. The “silence” was the lack of qualification about the figures  People make predictions for the future based on these past figures. If they cannot be relied on as a typical example then it is misleading to not say anything and present them as such. Reasonable expectation that something like this would be disclosed. Puffery - Is it a statement of opinion or fact? Harcourts v Commerce Commission  Property advertised as “not a cent to spend” when in fact quite a bit of money needed to be spent on fixing the property.  The average NZ house buyer would be misled by this. It was not just a statement of opinion but one of fact unlike say, “tastefully decorated.” Confusion Could the public be confused between the brands? Bonz Ltd v Cooke  Bonz made a distinctive range of knitwear products which it sold mainly to tourists. A former employee of Bonz began producing her own knitwear using the same distinctive designs of the Bonz range.  She was not in breach of section 9 because because tourists did not already know about the Bonz range.  The court said “likely” is a lower standard than “more probable than not” but more than a “mere possibility.” A real risk is needed, not a remote one.  The target market could not be confused because the tourists had no pre-existing understanding or awareness of the Bonz range. Trust Bank Auckland Ltd v ASB Bank Ltd  ASB introduced a savings account called a “hit account”. Trust Bank then introduced something with the same name.  The court said it was a question of fact and degree, was it serious enough to warrant intervention? The public here would be likely to be confused. Names of banks are already confused in people’s minds, ASB has established marketing associated with the name and the use of the same name would cause people to associate it with the other bank. How do you determine what is misleading? One person being deceived does not immediately mean something is deceiving, but it is evidence that indicates the conduct may have been deceitful. The Australian case Puxu v Parkdale Custom Built Furniture said you must consider “the astute and the gullible, the intelligent and the not so intelligent, the well-educated as the poorly educated, men and women of various ages pursuing a variety of vocations.” So you cannot just pick a person in the middle and say they would or would not be deceived. Cerebos Greggs v Unilever NZ  Two traders both selling coffee. One sold coffee in bags that had the same marking on them whether they were real or instant. The other party said this was misleading, instant coffee was being passed off as real coffee.  The HC and CA held that a significant portion of the public would be misled. The market is a tough place and people have to be realistic, but this was deceptive. Red Eagle Corp Ltd v Ellis  Would a reasonable person in the claimant’s situation have been misled? You need to tailor what you say to particular customers i.e. for a sophisticated person, an ordinary consumer, someone with intellectual disabilities etc. Commerce Commission v Adair  2 for 1 bicycles case. The court applied the Puxu dictum about the target market and said the relevant section was the average NZ shopper, whose mind would work more by impression than analysis. This would be misleading to a significant group of people within the class. Luxottica Retail New Zealand Ltd v Specsavers New Zealand Ltd  If comparisons are to be made in advertising they have to be very accurate.  The impression was misleading, and that is what a significant portion of consumers operate on. While it may seem that the courts have little belief in the ability of the average New Zealand consumer to critically analyse advertising, the FTA is consumer protection legislation and it makes sense to take a broader approach to what could be misleading. It is a common thread throughout the cases to allow for some “looseness of thought” by the representee, as Tipping J put it in Marcol v Commerce Commission. Section 10 Commerce Commission v Rikstay Industries  Selling petrol as 96 Octane when in fact the seller had deliberately mixed it with another type of petrol was a straightforward breach of section 10. Sound Plus v Commerce Commission Anderson J  Misleading to say goods are duty-free when they were never subject to any duties.  It is plain that the word "liable" in s 10 has a comparative and not an analogous quality in relation to the word "likely". It connotes a potential which is less restricted in scope than likelihood or probability. However the Australian case of Trade Practices Commission v J&R Enterprises found the exact opposite to be true.  Sections 10 and 11 are concerned with conduct that is essentially true but capable of being reasonably construed as something which is not true, whereas s 13(g), (h), (i), and (j) is concerned with representations that are essentially false but which purport to be true.  Sections 10 and 11 mention misleading the public and these are the ones that use the lower threshold word “liable”. Section 11 Commerce Commission v Telecom New Zealand Ltd  There was a 0800 number and another number which cost money. Usually the one that cost money had a message on it telling you how much you had to pay. This message was omitted for 3 months. This was held to be a breach of section 11.  Conduct includes omissions (section 2). Section 13 Foodtown Supermarkets Ltd v Commerce Commission  Supply has a wide meaning and does not just referred to the actual sale. S 13(a) Commerce Commission v Rikstay Industries Ltd  Petrol case. S 13(e) (endorsement/benefits) Commerce Commission v Vero Insurance NZ Ltd  The offer of the draw was not a benefit of the insurance itself. It was extraneous to the insurance S 13(g) (price) Commerce Commission v Adair  Bicycle seller advertising two for the price of one. Commerce Commission v Air New Zealand  Small print said “one way fare excludes taxes and surcharges.” The ads were misleading by putting the $189 figure prominently at the top. They were not aimed at an analytical or studious person. The ordinary person could still be left with the wrong idea. Luxottica Retail New Zealand Ltd v Specsavers New Zealand Ltd  Fine print “up to/as much as” made the overall effect misleading. The advertiser was also not making a genuine apples with apples comparison by putting in their lowest price and the competitor’s highest price. Commerce Commission v Bond n Bond  It is misleading to create a false sense of urgency S 13 (i) (existence or exclusion of any condition, warranty, right, remedy) Telecom v CC  Stipulated that once the phone was opened the recipient was deemed to have accepted the phone which breached the Door to Door Sales Act.  This was a breach of section 13(i) because they did not inform customers of their right to cancel - they said to people that could not cancel once the box was open. Noel Leeming v Com
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