CLAW1001 Chapter Notes - Chapter 18: Vehicle Insurance, Darrell Lea, Makita
CHAPTER 18: MISLEADING OR DECEPTIVE CONDUCT
A COMPREHENSIVE PROVISION OF WIDE IMPACT
• Section 18(1) of ACL: a person must not, in trade or commerce, engage in conduct that is misleading or deceptive
or is likely to mislead or deceive
o Doesn’t apply for financial services and products (s 131A) à ASIC
• General prohibition of misleading or deceptive conduct overlaps specific provisions and was conceived as a
“backstop” to cover any gaps
o Criminal fines and civil pecuniary penalties not available for s18 contraventions à injunctions and
damages are available through ACCC or private action
FACTORS IN THE DEVELOPMENT OF S 18
• Factors:
o Wide scope + application: only two criteria
o Width of concept M/D: generality = strength (catches lots) + weakness (no direction for application)
o Irrelevance of intention, knowledge, motive or fault
o Low threshold: all persons exposed must be considered = “less than average intelligence and background
knowledge” test (Taco) = lower threshold than common law
o Ineffectiveness of exemption clauses: s18 = cannot be excluded à some disclaimers effective to prevent
conduct being categorised as M/D
§ Butcher v Lachlan Elder Realty (2004) à successful exemption clause, stated information
believed to be reliable BUT not responsible for accuracy
o Reverse onus of proof for statements about future: those making statements must prove them
o No defences: information providers exempt for editorial comment + news reporting
• Wide range of remedies: breach doesn’t have criminal consequences or give rise to civil pecuniary penalties
o Injunction (s 232), damages (s 236), other orders (s 243) à declaring contract void, varying contract, return of money etc.
• Wide range of potential plaintiffs: “any person” entitled to seek injunction under s232 à encourages public interest
• Wide range of potential defendants: accessories to a breach also liable under s18
• Enforcement by business community: alternative to passing off, breach of contract, deceit, negligent misstatement
APPLICATION
• Trading must represent a substantial aspect of activities
o Orion Pet Products Pty Ltd v RSPCA (Vic) [2002]
§ Held: RSPCA was a trading corporation à although aim was not profit
1. Engaging in conduct: positive conduct or deliberate inactivity à may affect multiple parties
2. In trade or commerce: normal business dealings, excludes isolated transactions by private individuals not in
relation to business or trading activities
o Concrete Constructions (NSW) Pty Ltd v Nelson [1990]
§ N injured on building site à difference b/w IN trade and commerce and IN RELATION TO trade
and commerce
§ Decision: couldn’t claim damages under s18
MISLEADING OR DECEPTIVE: THE GENERAL PRINCIPLES
• Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982)
o Difficult terms to apply to facts of particular cases
o Labels that would have distinguished defendant’s product from another first produced had been removed
by 3rd party (employee) à would have precluded the conduct from being characterised as M/D
o Defendant didn’t breach s 52
• “Likely to mislead or deceive” à should apply without proof that conduct actually M/D
• “To lead into error”: conduct cannot be categorised as misleading unless it contains or conveys a
misrepresentation (Taco case)
• Literal truth: a statement which is literally true can also be M/D
o E.g. state a certain person will perform, bring out another with the same name
• Confusion: conduct which confuses DOESN’T = M/D
• Ambiguity: can be M/D if any reasonably possible meanings are M/D
• Intention to mislead is not required
• Misleading to whom?: capacity of conduct to M/D is determined by likely effect on target audience, reasonable
members of the class
o Hutchence v South Sea Bubble Co Pty Ltd [1986] = “INXS case”
§ Sold t-shirts with unauthorised INXS designs à INXS sought injunction
§ Small label stating images were unauthorised
§ Decision: M/D conduct = injunction provided
Document Summary
Backstop to cover any gaps: criminal fines and civil pecuniary penalties not available for s18 contraventions injunctions and damages are available through accc or private action. Factors: wide scope + application: only two criteria, width of concept m/d: generality = strength (catches lots) + weakness (no direction for application) Low threshold: all persons exposed must be considered = less than average intelligence and background knowledge test (taco) = lower threshold than common law. Ineffectiveness of exemption clauses: s18 = cannot be excluded some disclaimers effective to prevent conduct being categorised as m/d. Enforcement by business community: alternative to passing off, breach of contract, deceit, negligent misstatement. Trading must represent a substantial aspect of activities: orion pet products pty ltd v rspca (vic) [2002] Held: rspca was a trading corporation although aim was not profit: engaging in conduct: positive conduct or deliberate inactivity may affect multiple parties.
