Misleading or Deceptive Conduct in Trade or Commerce, Exams of Business

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Misleading  or  Deceptive  Conduct   S  18   “A  person  must  not,  in  trade  or  commerce,  engage  in  conduct  that  is  misleading  or  deceptive,  or  is  likely  to  mislead   or  deceive”     Just  for  ‘consumers’?   • S  18  may  be  used  by  consumers,  trader,  corporations  or  other  parties  in  the  event  that  those  parties  have   experienced  M/D  conduct  (Custom  Build  Furniture)     “A  person”   • Includes  a  corporation  (Houghton  v  Arms)   • S  131  applies  the  ACL  to  the  conduct  of  corporations     Conduct  “in  trade  or  commerce”   • “Trade  or  commerce”  means:  T/C  within  or  outside  Australia,  and  includes  any  business  or  professional  activity   (s  2)   • These  words  have  been  narrowly  interpreted  and  so  it  has  restrictive  operation  (Concrete  Constructions)    the   phrase  “can  be  construed  as  referring  only  to  conduct  which  is  itself  an  aspect  or  element  of  activities  or   transactions  which,  of  their  nature,  bear  a  trading  or  commercial  character”     • Such  conduct  includes:  promotional  activities  in  relation  to,  or  the  purposes  of,  the  supply  of  goods  and  services   to  actual  or  potential  consumers,  be  they  identified  persons  or  merely  an  unidentifiable  section  of  the  public   (Village  Building)     • Examples  of  conduct  in  T/C:   o Promoting  own  products  in  advertising  campaigns  (Gillette  Australia)   o Misleading  reps  made  in  connection  w/  the  sale  of  a  property  or  business  (Nescor)     • More  controversial  forms  of  conduct:   o Private  sales  by  individuals  (generally  not  in  T/C  Smolonogov)     o Statements  made  in  an  employment  context  (two  different  lines  of  authority:  negotiations  b/w   employer  and  future  or  existing  employee  is  not  conduct  in  T/C  Martin  v  Tasmania;  such  negotiations   are  in  T/C  because  a  business  cannot  conduct  any  form  of  trade  or  commerce  w/out  employees   Stoelwinder)      However,  in  Roberts  v  UNE  the  court  said  only  in  the  course  of  negotiating  a  new  employment   contact  w/  potential  employee  will  conduct  be  in  T/C  because  this  is  intrinsically  commercial.   Negotiations  with  an  existing  employee  are  not  T/C   o Statements  made  in  the  course  of  public  debate  (General  education  or  information  campaigns  may  not   be  in  T/C  if  not  designed  to  advance  or  protect  commercial  interests  Fasold  v  Roberts)  –  need  a  close   relationship  between  the  allegedly  misleading  conduct  and  the  advancement,  maintenance  or   protection  of  the  corporation’s  commercial  interests   o Conduct  intended  to  influence  the  trade  and  commerce  of  another  (statements  made  by  persons  who   are  not  themselves  engaged  in  T/D  may  nevertheless  held  to  have  been  made  in  T/C  Houghton  v  Arms)       “Misleading  or  deceptive”   • Both  “lead  into  error”  (Custom  Built  Furniture)   • Determine  whether  or  not  the  relevant  conduct  amounted  to  a  representation  which  has  or  would  be  likely  to   lead  to  a  misconception  arising  in  the  minds  of  that  section  of  the  public  to  whom  the  conduct  has  been  directed   (AstraZeneca)   • Taco  Bell  methodology   o Identify  the  relevant  section(s)  of  the  public  by  reference  to  whom  the  question  of  whether  conduct  is   or  is  likely  to  be  misleading  or  deceptive  falls  to  be  tested,     o Once  established,  consider  the  matter  by  reference  to  all  who  come  within  it,  including  astute  or   gullible,  intelligent  and  not,  educated  and  not,  and  men/women  of  all  ages  (objective  test    would  an   ordinary  and  reasonable  person  from  that  class  be  likely  to  have  been  misled  or  deceived?)     o Evidence  that  some  person  has  actually  formed  an  erroneous  conclusion  is  admissible  and  may  be   persuasive.  But  such  evidence  is  not  conclusive   o Merely  causing  someone  to  wonder  or  leading  ton  confusion  is  NOT  sufficient  to  show  M/D  conduct.   Conduct  may  be  M/D  is  it  leads  into  error     o Enquire  why  any  proven  misconception  has  arisen   • Need  a  representation?   o For  conduct  to  be  M/D  it  is  not  necessary  that  it  conveys  express  or  implied  representations.  It  suffices   that  it  leads  or  is  likely  to  lead  into  error  (Miler  v  Associates)       Identifying  the  ‘class  of  consumers’   • The  class  of  consumer  likely  to  be  affected  by  the  conduct  (Custom  Built  Furniture)   • Must  show  sufficient  nexus  between  conduct  (or  apprehended  conduct)  and  the  misleading  or   deception/likely  misleading  or  deception  of  prospective  purchasers   • “Reasonable  member”  (Campomar)   o Where  the  persons  in  question  are  not  indentified  individuals  but  members  of  a  class  to  which  conduct   was  directed  in  a  general  sense,  it  is  necessary  to  isolate  by  some  criterion  (characteristic  or  quality)  a   representative  member  of  that  class     o Once  that  is  done,  an  inquiry  thus  is  to  be  made  w/  respect  to  this  hypothetical  individual  why  the   misconception  complained  has  arisen  or  is  likely  to  arise   o Identify  conduct  alleges,  examine  whether  the  misled  state  of  mind  of  the  actual  consumer  was  caused   BY  the  conduct  in  question  or  some  other  cause  (Backoffice)       Proving  a  significant  portion  of  class  misled?   misleading/deceptive     c. Exclusion  clauses   i. You  cannot  exclude  the  operation  of  the  ACL  or  CCA  (Henjo)       4. Representations  about  the  future   a. Court  in  James  v  ANZ  Banking  considered   i. There  mere  fact  reps  as  to  future  conduct  or  events  do  not  come  to  pass  does  NOT  make   them  misleading/deceptive   ii. Nevertheless,  a  statement  re  the  future  may  contain  an  implied  statement  as  to  present  or   past  fact.  It  may  represent  impliedly  that  the  promisor  has  a  present  intention  to  make   good  the  promise  and  it  may  represent  impliedly  that  he  has  the  means  to  do  so   iii. A  statement  involving  the  state  of  mind  of  the  maker  of  the  statement,  eg  promises,   predictions  and  opinions,  ordinarily  conveys  the  meaning  that  the  maker  of  the  statement   had  a  particular  state  of  mind  when  the  statement  was  made  and  that  there  was  basis  for   that  state  of  mind.  IF  the  meaning  contained  in  or  conveyed  by  the  statement  is  false  in   that  or  in  any  other  respect,  it  will  have  been  a  contravention  of  s  52   b. Therefore  if  party  A  to  a  contract  is  attempting  to  establish  that  future  rep  made  by  party  B  is   misleading/deceptive,  A  must  establish  that  the  future  rep:   i. Contained  an  implied  statement  of  present/past  fact  about  the  maker’s  state  of  mind  or   intention;  and     ii. That  the  maker  of  the  future  rep  did  not  have  reasonable  grounds  for  holding  that  state  of   mind,  intention  or  for  making  that  future  representation     5. Opinions  and  predictions     6. Silence,  of  failure  to  warn,  advise  or  correct   a. Note  case  of  man  selling  his  business  without  disclosing  that  in  8  weeks  time  the  business  (selling   flashing  signs)  was  going  to  be  banned  by  the  government  because  of  the  distraction  it  posed  to   drivers.  Does  ‘conduct’  imply  a  positive  act?     b. The  failure  to  do  something  IS  conduct,  under  the  ACL  section  2(2).  The  courts  are  just  divided  in   their  approach  to  finding  that  certain  conduct  (i.e.  silence)  is  misleading/deceptive   c. HCA  in  Miller  v  BMW  2010  stated  that  ‘conduct’  defined  in  TPA  s  4  /  ACL  s  2(2)  is  wide  enough  to   capture  ‘silence’  and  refusing  to  do  an  act   i. But  note  s  2(2)(c)  seems  to  suggest  that  a  reference  to  refusing  to  do  an  act  includes  a   reference  to  “refraining  (otherwise  than  inadvertently)  from  doing  an  act”   d. Full  Court  decision  in  Demagogue  v  Ramensky  1992  is  starting  point  for  principles  in  evaluating…….   i. Early  case  law  required  a  plaintiff  to  establish  that  the  defendant  owed  a  positive  duty  of   disclosure  before  the  failure  to  disclose  could  be  considered  misleading  or  deceptive  in   terms  of  the  TPA  (Rhone-­‐Poulence  v  UIM)   ii. That  has  been  rejected.  Courts  have  rejected  the  need  to  establish  a  ‘duty  to  disclose’  in   favour  of  evaluating  the  conduct  as  a  whole,  within  the  entirety  of  the  circumstances  of   the  case  (CBA  v  Mehta)     iii. Therefore  the  crucial  question  is  whether  the  context  of  the  facts  gave  rise  to  a   ‘reasonable  expectation  of  disclosure’  that  if  a  particular  matter  existed,  it  would  be   disclosed.     iv. If  the  answer  to  that  question  is  ‘yes’  then  it  may  be  that,  in  the  circumstances,  that  failure   to  disclose  the  particular  fact  amounted  to  conduct  that  was  misleading  or  deceptive,  or   likely  to  mislead/deceive,  in  breach  of  s  18