Home Page | Consumer law

Australian Consumer Law: Misleading conduct

Overview

The statutory prohibition of misleading and deceptive conduct can now be found in s 18 of the Australian Consumer Law (it was previously known as s 52 of the Trade Practices Act). This is one of the most commonly litigated provisions and often accompanies contract-based claims.

Section 18 prohibits a person (including a corporation), acting in trade or commerce, from engaging in conduct that is misleading or deceptive or is likely to mislead or deceive.

 

Misleading and deceptive conduct

The statutory prohibition of misleading and deceptive conduct can now be found in s 18 of the Australian Consumer Law (contained in schedule 2 of the Competition and Consumer Act 2010 (Cth)). Section 18 provides:

18 Misleading or deceptive conduct
(1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

Where a breach of section 18 is established a range of remedies are available including damages and contractual avoidance or variation.

Trade Practices Act

Previously the prohibition was contained in s 52 of the Trade Practices Act 1974. The Act was renamed in 2010 and the content of s 52 was moved to s 18 of the Australian Consumer Law. Case law relating to s 52 remains relevant to s 18.

 

Trade or commerce

Section 18 applies only to conduct occurring in trade or commerce.

The reference to 'trade or commerce' excludes purely private sales but captures most commercial activity.

External link Concrete Constructions v Nelson (1990) 169 CLR 594 (High Court)
Misleading or deceptive conduct - in trade or commerce

External link Williams v Pisano (NSWCA 2015) (special leave refused)
(Misleading conduct - Australian Consumer Law - meaning of 'trade or commerce')

 

Misleading or deceptive or likely to mislead or deceive

Section 18 prohibits conduct that is misleading or deceptive or is likely to mislead or deceive. This is a positive obligation; ignorance about the truthfulness of statements made is not a defence.

Where comments are made to the public at large (such as in mass advertising) whether something is misleading or deceptive is judged by reference to whether the conduct would have misled or deceived a reasonable person. Similarly, where directed to a class of persons then reference will be made to a reasonable member of that class.

Where comments are made to individuals then conduct is usually assessed by reference to the particular individual.

Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 (High Court)
(Misleading or deceptive conduct - passing on information - reasonable potential purchasers)

Silence as misleading or deceptive conduct

Silence can be misleading or deceptive, depending on the circumstances

Australian Consumer Law (s 2(2))
(Silence as misleading conduct)

Demagogue Pty Ltd v Ramensky (Federal Court (Full Court) 1992)
(Silence as misleading conduct)

Miller & Associates Insurance Broking Pty Ltd v BMW Australia (High Court 2010)
(Misleading or deceptive conduct - non-disclosure)

Statements about the future

Statements about the future are not misleading simply because they turn out to be false - an important queston will be whether or not the party had reasonable grounds for making the representation.

Australian Consumer Law (s 4)
(Statements about the future)

 

Key principles

On this issue of whether the policies were void for uncertainty, Justice Gordon in ACCC v Dukemaster Pty Ltd [2009] FCA 682 set out (at para 10) the following key principles [emphasis added]:

1. A contravention of s 52(1) of the TPA is established by "conduct" which is misleading or deceptive or likely to mislead or deceive ... The "conduct", in the circumstances, must lead, or be capable of leading, a person into error ... and the error or misconception must result from "conduct" of the corporation and not from other circumstances for which the corporation is not responsible ... "Conduct" is likely to mislead or deceive if there is a "real or not remote chance or possibility regardless of whether it is less or more than fifty per cent" ...

2. Section 52(1) is concerned with the effect or likely effect of "conduct" upon the minds of that person or those persons in relation to whom the question of whether the "conduct" is or is likely to be misleading or deceptive falls to be tested. The test is objective and the Court must determine the question for itself .... Section 52 is not designed for the benefit of persons who fail, in the circumstances of the case, to take reasonable care of their own interests: ... Moreover, it would be wrong to select particular words or acts which although misleading in isolation do not have that character when viewed in context: ....

3. "Conduct" can, of course, include making a statement which is misleading or deceptive or likely to mislead or deceive: ...

4. By making a statement of past or present fact, a corporation's state of mind is irrelevant unless the statement involved the state of the corporation’s mind: ... Contravention of s 52(1) does not depend upon the corporation's intention or its belief concerning the accuracy of the statement of fact but upon whether the statement conveys a meaning which is false. A false meaning will be conveyed if what is stated concerning the past or present fact is inaccurate but also if, although literally true, the statement conveys a meaning which is false.

5. Precisely the same principles control the operation of s 52(1) to statements involving the state of mind of the maker when the statement was made (e.g. promises, predictions and opinions). A statement which involves the state of mind of the maker ordinarily conveys the meaning (expressly or impliedly) that the maker of the statement had a particular state of mind when the statement was made and, commonly, that there was a basis for that state of mind: ...

6. A statement of opinion will not be misleading or deceptive or likely to mislead or deceive merely because it turns out to be incorrect, misinforms or is likely to do so: ... An incorrect opinion does not of itself establish that the opinion was not held by the person who expressed it or that it lacked any or any adequate foundation: .... An expression of an opinion which is identifiable as an expression of opinion conveys no more than that the opinion is held and perhaps that there is a basis for the opinion. If that is so, an expression of opinion however erroneous misrepresents nothing: ...

7. However, an opinion may convey that there is a basis for it, that it is honestly held and when it is expressed as the opinion of an expert, that it is honestly held upon rational grounds involving an application of the relevant expertise. If the evidence shows that the opinion was not held or that it lacked any or any adequate foundation, particularly if the opinion was expressed as an expert, a statement of opinion may contravene s 52 of the TPA: ...

[although it related to s 52 of the Trade Practices Act 1974, the principles are equally applicable to the equivalent provision in s 18 of the Australian Consumer Law]

 

Case example: Google

In 2013 the ACCC lost a High Court case relating to misleading and deceptive conduct. The ACCC alleged Google had engaged in misleading or deceptive conduct in relation to its display of sponsored links. The High Court held that Google was not responsible for misleading or deceptive representations contained in the links themselves (they were the responsibility of the advertisers themselves). View High Court Decision in Google Inc v ACCC. The High Court released a brief Press Release stating, in part:

The High Court unanimously allowed the appeal. Google did not create the sponsored links that it published or displayed. Ordinary and reasonable users of the Google search engine would have understood that the representations conveyed by the sponsored links were those of the advertisers, and would not have concluded that Google adopted or endorsed the representations. Accordingly, Google did not engage in conduct that was misleading or deceptive.

 

Case examples

There are plenty of cases dealing with misleading conduct [either as it appears in the current s 18 of the Australian Consumer Law or the previous iteration in s 52 of the Trade Practices Act]. Here's a sample:

High Court

 

Other courts

  • Rhone-Poulenc Agrochimie AG v UIM Chemical Services Pty Ltd (1986) 12 FCR 477
    []
  • External link Global Sportsman Pty Ltd [1984] FCA 180 (Full Court)
    [Statements of opinion made in newspapers ('There is no definable boundary between conduct which is misleading or deceptive or likely to mislead or deceive and material which is defamatory. Material which is defamatory does not fall outside the operation of sub-s. 52(1) of the Act merely for that reason any more than it is brought within the operation of sub-s. 52(1) by reason only that it is defamatory.' (para 11))]

The LawCite list for s 52 of the Trade Practices Act contains more than seven thousand references ...


Further reading