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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.
…

The reference to 'trade or commerce' excludes purely private sales but captures most commercial activity. 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 provision was s 52 of the Trade Practices Act. 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.

 

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

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

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


Further reading

External link Arlen Duke, Representations as to the Future under the Proposed Australian Consumer Law (2009) MULR 17

External link Jason Cornwall-Jones, 'Breach of Contract and Misleading Conduct: A Storm in A Teacup?' [2000] MelbULawRw 10; (2000) 24(2) Melbourne University Law Review 249

C E K Hampson, 'Blocked contractual arteries? try a section 52 by-pass' (1993) 1 Trade Practices Law Journal 22

Philip H Clarke, 'The Hegemony of Misleading or Deceptive Conduct in Contract, Tort and Restitution' (1989) 5 Australian Bar Review 109

External link Justice R E Cooper, 'Unconscionability in Consumer Transactions: Section 52 of the Trade Practices Act' [1989] QUTLawJl 1; (1989) 5 Queensland University of Technology Law Journal 1

Warren Pengilley, 'Section 52 of the Trade Practices Act: A plaintiff's new exocet?' (1987) 15 Australian Business Law Review 247

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