MISLEADING OR DECEPTIVE CONDUCT
INTRODUCTION
The prohibition against misleading or deceptive conduct is found in legislation.
Originally, it was enacted in s 52 of the Trade Practices Act 1974 (Cth).1 Today it is
found in s 18 of the Australian Consumer Law (ACL).
The provisions of the ACL are set out in Schedule 2 of the Competition and
Consumer Act 2010 (Cth) (CCA). Section 131A(1) of the CCA stipulates that the
provision of financial services or products is not subject to the ACL. However,
financial services and products are regulated by ss 12DA of the Australian Securities
and Investments Commission Act 2001 (Cth) which largely mirrors the provisions of s
18 of the ACL.
The misleading or deceptive conduct provisions of the ACL relate to the actions of
‘persons’.
Pursuant
to
Australian
constitutional
law,
the
Commonwealth
government’s competence to legislate in relation to misleading or deceptive conduct
is confined to doing so in relation to persons who are corporations. In relation to
persons who are not corporations, such legislative competence rests with the various
States and Territories. Although the provisions of the ACL do effectively cover
misleading or deceptive conduct by any person, s 131(1) of the CCA confines the
application of the ACL as a law of the Commonwealth to the activities of
corporations. In relation to misleading or deceptive conduct by persons who are not
corporations, the provisions of the ACL are enforced as a law of the State or Territory
where such conduct occurred. This stems from the fact that all States and Territories
have passed legislation adopting the provisions of the ACL as part of their law. Thus,
depending upon the nature of the person engaged in misleading or deceptive conduct,
the provisions of the ACL will be enforced either as a law of the Commonwealth or as
a law of the relevant State or Territory.
1
As of the start of 2010 the Trade Practices Act was renamed the Competition and Consumer Act 2010
(Cth) (CCA).
Section 18(1) of the ACL stipulates as follows:
A person must not, in trade or commerce, engage in conduct that is misleading or deceptive
or is likely to mislead or deceive.
A breach of s 18(1) may result in various remedies set out in Chapter 5 of the ACL,
such as injunctions, damages and compensatory orders which can be sought by
anybody and are not confined to persons who are consumers as defined by s 3 of the
ACL: Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 601;
92 ALR 193 at 195. The availability of such remedies has a dramatic effect on areas
of contract law traditionally dealt with by the law on misrepresentation. Although
there is much overlap between what constitutes a misrepresentation under the general
law and what constitutes misleading or deceptive conduct, it must be noted that the
latter is much broader than the former and is not confined to persons standing in a
contractual relationship.
For a breach of s 18(1) to occur the misleading or deceptive conduct must be by a
person engaged in ‘trade or commerce’. Thus, an analysis of s 18(1) involves an
examination of the meaning of ‘in trade and commerce’, ‘engage in conduct’ and
‘misleading or deceptive conduct’.
THE MEANING OF ‘IN TRADE AND COMMERCE’
Section 2 of the ACL states that trade and commerce means ‘(a) trade and commerce
within Australia; or (b) trade and commerce between Australia and places outside
Australia; and includes any business or professional activity (whether or not carried
on for profit)’.
The ACL does not, however, define the words ‘trade’ and ‘commerce’. It has thus
been left to the courts to determine the meaning of these two words. In this respect the
courts have consistently stated that the words are to be interpreted broadly. Thus, in
Re Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 36 FLR 134 at 167;
(1978) 22 ALR 621 at 648-9, Deane J said:
The terms ‘trade’ and ‘commerce’ are not terms of art. They are expressions of fact and
terms of common knowledge. While the particular instances that may fall within them will
depend upon the varying phrases of development of trade, commerce and commercial
communication, the terms are clearly of the widest import. They are not restricted to
dealings or communications which can properly be described as being at arm’s length in the
sense that they are within open markets or between strangers or have a dominant objective
of profit-making. They are apt to include commercial or business dealings in finance
between a company and its members which are not within the mainstream of ordinary
commercial activities and which, while being commercial in character, are marked by a
degree of altruism which is not compatible with a dominant objective of profit-making.
In Larmer v Power Machinery Pty Ltd (1977) 29 FLR 490 at 493; 14 ALR 243 at
245-6, Nimmo J said:
I think the provisions of the Trade Practices Act, including the definition given to the
expression [‘in trade and commerce’ in the legislation] demand that a very wide meaning be
given to it. In my view, the expression is intended to cover the whole field in which the
nation’s trade or commerce is carried on. I reject the view that it is confined to any particular
event which may occur in the conduct of a business which operates within that field.
The misleading or deceptive conduct must occur ‘in’ trade or commerce. This has
been held to mean that the conduct must be trading or commercial in nature and not
merely incidental to trade or commerce. In Concrete Constructions (NSW) Pty Ltd v
Nelson (1990) 169 CLR 594 at 602-3; 92 ALR 193 at 196-7, Mason CJ, Deane
Dawson & Gaudron JJ said:
The phrase ‘in trade or commerce’ in [s 18(1)] has a restrictive operation. It qualifies the
prohibition against engaging in conduct of the specified kind. As a matter of language, a
prohibition against engaging in conduct ‘in trade or commerce’ can be construed as
encompassing conduct in the course of the myriad of activities which are not, of their
nature, of a trading or commercial character but which are undertaken in the course of, or as
incidental to, the carrying on of an overall trading or commercial business. If the words ‘in
trade or commerce’ in [s 18(1)] are construed in that sense, the provisions of the section
would extend, for example, to a case where the misleading or deceptive conduct was a
failure by a driver to give the correct handsignal when driving a truck in the course of a
[person’s] haulage business. It would also extend to a case, such as the present, where the
alleged misleading or deceptive conduct consisted of the giving of inaccurate information
by one employee to another in the course of carrying on the building activities of a
commercial builder. Alternatively, the reference to conduct ‘in trade or commerce’ in [s
18(1)] 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. So
construed, to borrow and adapt words used by Dixon J. in a different context in Bank of
NSW v The Commonwealth [(1948) 76 CLR 1 at 381], the words ‘in trade or commerce’
refer to ‘the central conception’ of trade or commerce and not to the ‘immense field of
activities’ in which [persons] may engage in the course of, or for the purposes of, carrying
on some overall trading or commercial business.
Their Honours, at CLR 603-4; ALR 197, in preferring the second and narrower
interpretation, observed as follows:
[I]t is plain that [s 18(1)] was not intended to extend to all conduct, regardless of its nature,
in which a [person] might engage in the course of, or for the purposes of, its overall trading
or commercial business. Put differently, the section was not intended to impose, by a sidewind, an overlay of Commonwealth law upon every field of legislative control into which a
[person] might stray for the purposes of, or in connection with, carrying on its trading or
commercial activities. What the section is concerned with is the conduct of a [person]
towards persons, be they consumers or not, with whom it (or those whose interests it
represents or is seeking to promote) has or may have dealings in the course of those
activities or transactions which, of their nature, bear a trading or commercial character.
Such conduct includes, of course, promotional activities in relation to, or for the purposes
of, the supply of goods or services to actual or potential consumers, be they identified
persons or merely an unidentifiable section of the public. In some areas, the dividing line
between what is and what is not conduct in ‘trade or commerce’ may be less clear and may
require an identification of what imports a trading or commercial character to an activity
which is not, without more, of that character
A consequence of this interpretation is that a purely personal transaction such as the
sale of a house used as one’s private residence will not be caught by s 18(1) because
such as sale is not ‘in’ trade or commerce: O’Brien v Smolonogov (1983) 53 ALR
107. This is so even if a real estate agent is concerned, although the agent may be
liable for misleading or deceptive conduct: Argy v Blunts & Lane Real Estate Pty Ltd
(1990) 26 FCR 112; 94 ALR 719.
THE MEANING OF ‘ENGAGE IN CONDUCT’
Section 2(2) of the ACL expansively details the meaning of ‘engaging in conduct’.
Section 2(2)(a) states that ‘a reference to engaging in conduct shall be read as a
reference to do or refusing to do any act’. In most cases the ‘act’ will consist of some
oral or written statement or representation: Henjo Investments Pty Ltd v Collins
Marrickville Pty Ltd (1988) 39 FCR 546 at 555; 79 ALR 83 at 93. However, it is also
clear that the words ‘refusing to do any act’ means that silence can amount to
‘engaging in conduct’.
In relation to silence or ‘refusing to do any act’, s 2(2)(c) of the ACL states that it
includes ‘(i) refraining (otherwise than inadvertently) from doing the act; or (ii)
making it known that the act will not be done’.
In Costa Vraca Pty Ltd v Berrigan Weed & Pest Control Pty Ltd (1998) 155 ALR 714
at 722-3, Finkelstein J said:
It is clear that a failure to provide information can be conduct which is misleading or
deceptive. For the purposes of [s 18(1)] ‘engaging in conduct’ is defined in [s2(2)(a)] as a
reference to doing or refusing to do any act and by [s 2(2)(c)] a reference to refusing to do
an act includes a reference to refraining (otherwise than inadvertently) from doing that act.
However, when the complaint is that [s18(1)] has been infringed by conduct that involves
either refusing or refraining from doing an act before that conduct is actionable it must have
been deliberately engaged in … [T]his [follows] from the use of the words ‘refuse’ and
‘refrain’ in [s 2(2)]. This conclusion is reinforced by the fact that by [s 2(2)(c)] conduct
includes the refraining from doing an act provided it is ‘otherwise than inadvertently’ …
Accordingly, to determine whether [one] has contravened [s 18(1)] … two questions arise
for consideration. The first is whether the failure by [one] to inform [the other of the
relevant matter] was misleading or deceptive conduct. The second question is whether that
conduct was deliberate.
Generally, in commercial dealings between parties the law does not impose any obligation
upon one party to inform the other party of matters that might be important for the other
party to know before that party enters into some agreement or embarks upon some
transaction with the first party. Of course there are exceptions. There can be no fraudulent
concealment of facts. Further, some relationships require facts to be disclosed …
Section [18(1)] has brought about an important change to this common law position. In
Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 at 88 Samuels JA said
that now:
… silence is not misleading only where there is a duty to disclose at common
law or in equity. It may simply be the element in all the circumstances of the
case which renders the conduct misleading or deceptive.
One circumstance where the failure to provide information will constitute misleading or
deceptive conduct is where the circumstances of the case give rise to a reasonable
expectation that if a relevant fact exists it will be disclosed. In Demagogue [Pty Ltd v
Ramensky (1992) 39 FCR 31 at 41; 110 ALR 608 at 618] Gummow J put the matter this
way:
But, consistently with regard to the natural meaning of the terms of [s 18], the
question is whether in the light of all relevant circumstances constituted by acts,
omissions, statements or silence, there has been conduct which is or is likely to
be misleading or deceptive.
It is clear that silence will not always lead to a finding that the person was engaging in
conduct that violated s 18(1). In this respect, and in connection with the language of
reasonable expectations referred to in the decision in Costa Vraca, in Miller &
Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited (2010) 241
CLR 357 at 369-70; 270 ALR 204 at 211, French CJ & Kiefel J said:
The language of reasonable expectation is not statutory. It indicates an approach which can
be taken to the characterisation, for the purposes of [s 18], of conduct consisting of, or
including, non-disclosure of information. That approach may differ in its application
according to whether the conduct is said to be misleading or deceptive to members of the
public, or whether it arises between entities in commercial negotiations …
In commercial dealings between individuals or individual entities, characterisation of
conduct will be undertaken by reference to its circumstances and context. Silence may be a
circumstance to be considered. The knowledge of the person to whom the conduct is
directed may be relevant. Also relevant, as in the present case, may be the existence of
common assumptions and practices established between the parties or prevailing in the
particular profession, trade or industry in which they carry on business. The judgment which
looks to a reasonable expectation of disclosure as an aid to characterising non-disclosure as
misleading or deceptive is objective. It is a practical approach to the application of the
prohibition in [s 18].
To invoke the existence of a reasonable expectation that if a fact exists it will be disclosed is
to do no more than direct attention to the effect or likely effect of non-disclosure unmediated
by antecedent erroneous assumptions or beliefs or high moral expectations held by one
person of another which exceed the requirements of the general law and the prohibition
imposed by the statute.
Cases involving silence fall into two categories. The first is where there is mere
silence or as it is sometimes called, silence in isolation. The second is where the
silence is part of a broader set of circumstances where what is said or done may be
true at face value, but is nevertheless misleading or deceptive because of the silence.
This categorisation of silence cases was drawn in Miller & Associates Insurance
Broking Pty Ltd v BMW Australia Finance Limited (2010) 241 CLR 357 at 364; 270
ALR 204 at 206, where French CJ & Kiefel J said:
Where silence or non-disclosure is relied upon, the pleading should identify whether it is
alleged of itself to be, in the circumstances of the case, misleading or deceptive conduct or
whether it is an element of conduct, including other acts or omissions, said to be misleading
or deceptive.
There has been a degree of confusion about the extent to which silence amounts to
engaging in conduct that violates s 18(1). In the light of such confusion, in Owston
Nominees No 2 Pty Ltd v Clambake Pty Ltd [2011] WASCA 76 at [54]-[67], McLure
P said:
Much of the confusion in this area of the law is because the circumstances in which silence
or
non-disclosure
of
information
arises
are
many
and
varied.
Half
truths,
unequivocal/unqualified statements where qualification is required and statements which
are true when made but falsified by subsequent events ordinarily convey a representation
(the latter by the device of relying on the continuation of the representation). Most of the
leading cases on silence involve acts by the defendant in circumstances which gave rise to a
representation which was falsified by the undisclosed facts … In such circumstances, there
is no requirement that the undisclosed facts be known to the defendant. However, if that
was a proposition of general application there would be no scope for a requirement that
silence be intentional or deliberate. Moreover, the reasonable expectation test is predicated
on an assumption that the defendant is aware of the undisclosed fact …
In view of the conflict in the case law and the lack of binding authority on the scope and
effect of [s 2(2)], I propose to fully expose the reasoning and principles that guide my
answers to the questions that arise for determination in this case.
Based on the language of [s 2(2)] as a whole, ‘refusing to do an act’ requires an act or, at a
minimum, refraining otherwise than inadvertently from doing an act. Thus, an omission (a
failure to act) cannot itself constitute conduct for the purposes of [s 18]. In other words, in
order for a person to engage in conduct contrary to [s 18] that person must do an act or at
least refrain, otherwise than inadvertently, from doing an act.
To refrain otherwise than inadvertently requires a deliberate decision to withhold
information. Thus, the defendant must advert to the question and form an intention not to
disclose. That conclusion is consistent with the natural and ordinary meaning of the term
‘refrain’ which means to forebear or to keep oneself back.
The statutory prohibition in [s 18], when read with [s 2(2)], is on conduct of (or ‘by’) the
defendant which is misleading or deceptive (which should be taken to include ‘likely to
mislead or deceive’). When considering whether conduct is both ‘of the defendant’ and
‘misleading or deceptive’, the focus widens to include contextual matters. Contextual
matters can have a material impact in widening the range of conduct properly attributable to
the defendant. That is, the actual conduct (in its natural and ordinary meaning) of the
defendant is examined in its broader context to assess the full scope of what can properly be
characterised, expressly or impliedly, as conduct of the defendant. For example, a
responsive nod of the head or raised thumb implies that the defendant in effect made or
confirmed the correctness of the statement to which it was responding. Contextual conduct
of this nature not only connects back to the defendant but also identifies what the
defendant’s conduct is capable of conveying or communicating to the persons to whom the
conduct is directed. Ordinarily, the term ‘representation’ is used to capture, in words, both
the defendant’s contextual conduct and what it conveys or communicates to others. That is
how the term representation is used in the respondents’ pleading and is its intended meaning
in these reasons. It has a wider than normal meaning because it focuses on the defendant’s
contextual conduct. The making of a representation is the doing of an act for the purposes
of [s 2(2)].
It is not always clear in the cases that the task is to identify a defendant’s contextual
conduct. Often the question posed by the courts is whether the defendant’s actual conduct
(what it did and did not do), in the surrounding circumstances, is misleading or deceptive.
That formulation of the question has two consequences. First, it may be interpreted as
narrowing the scope of the defendant’s conduct which must meet the statutory definition in
[s 2(2)]. The oft-stated proposition that ‘conduct’ is not confined to representations is a
consequence of the narrow focus on what the defendant actually did or did not do, rather
than on the defendant’s contextual conduct. Secondly, it gives the misleading or deceptive
analysis a greater role than it would otherwise have. The identification of the contextual
conduct will dictate the answer to whether it is misleading or deceptive.
Thus, the identification of the defendant’s contextual conduct and what it conveys or
communicates to the persons to whom it is directed must be assessed having regard to all
relevant surrounding circumstances. Not all surrounding circumstances are relevant in the
identification process. In particular, conduct cannot be attributed to the defendant unless it
had actual or constructive knowledge of the circumstances that affect its content. In other
words, contextual circumstances of which the defendant had no actual or constructive
knowledge that alter the scope of what would otherwise be attributed to it, are irrelevant.
This specific proposition is but an aspect of the wider and well-established proposition that
the identification of the defendant’s actual conduct, the relevant surrounding circumstances
and what is capable of being conveyed is to be undertaken by reference to the actual,
objectively determined, circumstances. Reasonable inferences, reasonable assumptions and
reasonable expectations arising from the objectively determined circumstances will be in
the constructive knowledge of the parties. An objective test excludes from consideration
subjective matters (knowledge, intention) not known to the parties. I leave open the
question whether an objective test applies in circumstances where the only relevant conduct
of the defendant is a deliberate failure to disclose.
The requirement that the defendant have actual or constructive knowledge of matters to be
taken into account in determining the conduct properly attributable to it is consistent with
the definition in [s 2(2)] which requires an act or deliberate omission. Moreover, it is not
inconsistent with the well-established principle that an intention to mislead or deceive is not
an element of the statutory claim.
When identifying the defendant’s contextual conduct, regard can and should be had to all
the actual conduct of the defendant which encompasses acts and omissions (including
silence). Ordinarily, the role of silence is negative in the sense that it confirms there is
nothing to prevent a representation arising … If the surrounding circumstances alter what
the actual conduct would otherwise convey, it is the defendant’s contextual conduct that
must satisfy the definition of ‘engage in conduct’ in [s 2(2)]. The making of a representation
is an act.
A defendant’s non-disclosure can, because of common assumptions or established practices
or other relevant surrounding circumstances, give rise to an implied representation by the
defendant that an undisclosed fact did (or did not, as the case may be) exist. The making of
such an implied representation by the defendant is the doing of an act and is thus within [s
2(2)]. The satisfaction of the ‘reasonable expectation’ test can result in the defendant doing
an act.
The need to establish a deliberate omission will only arise if the defendant’s actual conduct
together with all the relevant surrounding circumstances are (objectively) incapable of
giving rise to the misleading or deceptive contextual conduct complained of. In that event,
the circumstances in which deliberate non-disclosure may be misleading or deceptive
conduct will be limited; perhaps where the defendant is aware of another’s misapprehension
in the type of situations where relief is available for unilateral mistake or where the
plaintiff’s misapprehension is caused by, but is not objectively attributable to, the
defendant’s conduct.
There must be a causal connection between the defendant’s conduct and the plaintiff’s
misapprehension. The usual causation principles should apply; the defendant’s conduct
must cause or materially contribute to the plaintiff’s misapprehension applying, inter alia,
the ‘but for’ test of factual causation.
In cases involving commercial transactions where parties are dealing at arm’s length,
the courts are more inclined to find that one party’s silence does not constitute
engaging in conduct amounting to a violation of s 18(1). Thus, Miller & Associates
Insurance Broking Pty Ltd v BMW Australia Finance Limited, in the context of a
commercial borrower and insurance broker, certain non-disclosures by the broker in
relation to an insurance policy were held not to be violations of s 18(1). In the context
of that case, French CJ & Kiefel J, at CLR 371; ALR 212, said:
[A]s a general proposition, [s 18] does not require a party to commercial negotiations to
volunteer information which will be of assistance to the decision-making of the other party.
A fortiori it does not impose on a party an obligation to volunteer information in order to
avoid the consequences of the careless disregard, for its own interests, of another party of
equal bargaining power and competence.
That is not to say that in such commercial transactions, a failure to disclose will never
amount to a violation of s 18. Thus, in Noor Al Houda Islamic College Pty Ltd v
Bankstown Airport Ltd (2004) 215 ALR 625 at 655-7, the failure of the landlord’s
agent to disclose to a prospective tenant that premises to be leased for conducting a
school were at risk of being contaminated was held to be engaging in conduct that
violated the prohibition against misleading or deceptive conduct.
Two cases illustrating pre-contractual silence amounting to a violation of s 18 are
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31; 110 ALR 608 and Henjo
Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546; 79 ALR 83.
In Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31; 110 ALR 608, Ramensky
contracted to purchase Lot 5 in a proposed strata development being undertaken by
Demagogue. The contract set out the proposed strata development and Lot 5 was
detailed in a plan annexed to the contract. The plan also referred to a driveway.
However, what was referred to as the driveway on the plan was a public road.
Demagogue had, for some two years, been negotiating with the Land Administration
Commission in Queensland for the right to use the road as a driveway to the proposed
flats. Demagogue did not tell Ramensky of the issues relating to the driveway. The
Full Court of the Federal Court held that Demagogue’s silence constituted misleading
or deceptive conduct and ordered the contract to be rescinded.
Black CJ held that the basis for the finding of misleading or deceptive conduct lay in
the fact that there was a reasonable expectation that there should have been disclosure
of the unusual circumstances surrounding access to the property. His Honour, at FCR
32; ALR 609, said:
Silence is to be assessed as a circumstance like any other. To say this is certainly not to
impose any general duty of disclosure; the question is simply whether, having regard to all
the relevant circumstances, there has been conduct that is misleading or deceptive or that is
likely to mislead or deceive. To speak of ‘mere silence’ or of a duty of disclosure can divert
attention from that primary question. Although ‘mere silence’ is a convenient way of
describing some fact situations, there is in truth no such thing as “mere silence” because the
significance of silence always falls to be considered in the context in which it occurs. That
context may or may not include facts giving rise to a reasonable expectation, in the
circumstances of the case that if particular matters exist they will be disclosed.
In Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR
546; 79 ALR 83, Henjo operated a restaurant. The restaurant licence had a maximum
seating capacity for 84 persons. In fact the restaurant operated with capacity for 128
patrons. Collins Marrickville contracted to purchase the restaurant, having been
informed that the restaurant had a 128 seating capacity. The solicitor for Collins
Marrickville failed to undertake the standard search of the restaurant’s licence which
would have revealed the true situation. After the sale of the restaurant was completed
Collins Marrickville discovered the true situation. The Full Court of the Federal Court
held that Henjo’s failure to disclose the restaurant’s licence details was misleading or
deceptive conduct and held it liable to Collins Marrickville for damages. Lockhart J,
at FCR 557-8; ALR 95, said:
In the present case the [Henjo] sold a business knowing that it was subject to serious
limitations upon its lawful seating capacity, limitations imposed by both the licensing
authorities and the local council which vitally affected the business, its goodwill, takings and
profitability and knowing that in fact the restaurant was being conducted contrary to law
with a substantial element of overseating. [Henjo’s] agent had given [Collins Marrickville]
to understand that the limitations upon the seating capacity and the limitations arising from
the licensing of the restaurant were less restrictive than was in fact the case, while the
manner in which the business was conducted at the time of sale supported this
understanding. In my opinion these circumstances gave rise to a duty on the part of Henjo
as vendor to reveal the true position to Collins Marrickville, the potential purchaser, before
any contract was signed. It is no answer to say that Collins Marrickville should have made
its own inquiries and that, if it had done so, it would have found out the true position: see
Redgrave v Hurd (1881) 20 Ch D 1 per Jessel MR at 14 and 17; per Baggallay LJ at 23, in
the context of the equitable right to rescind for innocent misrepresentation.
THE MEANING OF ‘MISLEADING OR DECEPTIVE’
The focal point of s 18, that is ‘misleading or deceptive’ conduct, is not defined in the
ACL. What can be said is that s 18 has been broadly interpreted by the courts so much
so that, as was observed by French CJ & Kiefel J in Miller & Associates Insurance
Broking Pty Ltd v BMW Australia Finance Limited at CLR 364; ALR 206, ‘[t]he
cause of action for contravention of statutory prohibitions against conduct in trade or
commerce that is misleading or deceptive or is likely to mislead or deceive has
become a staple of civil litigation in Australian courts at all levels’.
In relation to the issue of whether the conduct is likely to mislead or deceive, this will
occur if there is a real, and not remote, chance or possibility of misleading or
deceiving regardless of whether it is more or less than 50%: Global Sportsman Pty
Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 at 87; 55 ALR 25 at 30.
In Brown v Jam Factory Pty Ltd (1981) 53 FLR 340 at 348-9; 35 ALR 79 at 86, Fox J
said the following in relation to ascertaining the meaning of s 18(1):
Section [18(1)] is a comprehensive provision of wide impact, which does not adopt the
language of any common law cause of action. It does not purport to create liability at all;
rather does it establish a norm of conduct, failure to observe which has consequences
provided for elsewhere in the same statute, or under the general law … In my view effect
should be given to the ordinary meaning of the words used. They should not be qualified or
(if it be possible) expanded, by reference to established common law principles of liability.
At the same time, known concepts, such as those concerning the torts of deceit and passing
off and the analyses made of them over the years, may prove helpful in deciding a case
under [s 18(1)] … One looks to the audience, or the relevant part of it, and, eccentricities
and absurdities aside, asks whether the conduct complained of was to them misleading or
deceptive; but the question is not simply whether they (or he) were (or was) misled.
Whether the conduct was misleading or deceptive is a matter for the court … Conduct will
not mislead or deceive a person having a conscious awareness of the true facts or correct
information.
In Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd at FCR 554-555; ALR
92-3, Lockhart J (speaking for a unanimous Full Court on this point) said:
The Compact Edition of the Oxford English Dictionary 1987 defines the word ‘mislead’ in
its transitive sense as ‘to lead astray in action or conduct; to lead into error; to cause to err’.
‘Deceive’ is defined as ‘to ensnare; to take unawares by craft or guile; to overcome,
overreach, get the better of by trickery; to beguile or betray into mischief or sins; to
mislead’ … The two words, ‘misleading’ and ‘deceptive’, are plainly not synonymous. That
is not to say that each word may not catch some of the same conduct and that there may not
be some degree of overlap. ‘Mislead’ does not necessarily involve an element of intent and
it is a word of wider reach than ‘deceive’. However, it is difficult, in my opinion, to read the
word ‘deceive’ in [s 18] other than as involving some degree of moral turpitude as it does in
ordinary English usage. Trickery, craft and guile, though not essential elements of liability,
are typically at the heart of this second element of the statutory provision directed to the
protection of the public from unfair trading practices.
It has been held that to mislead means to lead or induce a person into error. In
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 198;
42 ALR 1 at 6, Gibbs CJ said:
Section [18] does not expressly state what persons or class of persons should be considered
as the possible victims for the purpose of deciding whether conduct is misleading or
deceptive or likely to mislead or deceive. It seems clear enough that consideration must be
given to the class of consumers likely to be affected by the conduct. Although it is true, as
has often been said, that ordinarily a class of consumers may include the inexperienced as
well as the experienced, and the gullible as well as the astute, the section must in my
opinion by regarded as contemplating the effect of the conduct on reasonable members of
the class. The heavy burdens which the section creates cannot have been intended to be
imposed for the benefit of persons who fail to take reasonable care of their own interests.
What is reasonable will of course depend on all the circumstances.
In cases where it is claimed that spoken words constitute misleading or deceptive
conduct, the applicant must clearly identify the words which the respondent is alleged
to have spoken. In this respect, in Watson v Foxman (1995) 49 NSWLR 315 at 318–9,
McLelland CJ in Eq, said:
Where the conduct [alleged to contravene s 18] is the speaking of words in the course of a
conversation, it is necessary that the words spoken be proved with a degree of precision
sufficient to enable the court to be reasonably satisfied that they were in fact misleading in
the proved circumstances. In many cases (but not all) the question whether spoken words
were misleading may depend upon what, if examined at the time, may have been seen to be
relatively subtle nuances flowing from the use of one word, phrase or grammatical
construction rather than another, or the presence or absence of some qualifying word or
phrase, or condition. Furthermore, human memory of what was said in a conversation is
fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the
passage of time, particularly where disputes or litigation intervene, and the processes of
memory are overlaid, often subconsciously, by perceptions or self-interest as well as
conscious consideration of what should have been said or could have been said. All too
often what is actually remembered is little more than an impression from which plausible
details are then, again often subconsciously, constructed. All this is a matter of ordinary
human experience.
When Conduct is Misleading or Deceptive
For a violation of s 18 to occur the conduct engaged in must be misleading or
deceptive. Whether this is so depends upon the context in which the conduct took
place. Resolution of this issue is ‘a question of fact to be answered in the context of
the evidence as to the alleged conduct and as to relevant surrounding facts and
circumstances’: Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at
199. This initially involves an identification of the target audience at which the
conduct is directed: Weitman v Katies (1977) 29 FLR 336 at 339-41. In identifying
the target audience, a distinction is drawn between conduct directed at specific
individuals and conduct directed at the public generally: Campbell v Backoffice
Investments Pty Ltd (2009) 238 CLR 304 at 319; 257 ALR 610 at 620.
Conduct Directed at Specific Individuals
In cases where there is an allegation that misleading or deceptive conduct induced a
specific individual or individuals to enter into a contract, the court must, in reaching
its determination on the issue, take into account everything that the other party did up
to the time that the contract was entered into: Butcher v Lachlan Elder Realty Pty
Limited (2004) 218 CLR 592 at 605; 212 ALR 357 at 367. In Campbell v Backoffice
Investments Pty Ltd (2009) 238 CLR 304 at 319; 257 ALR 610 at 620-1, French CJ
said:
Characterisation [of the conduct] may proceed by reference to the circumstances and
context of the questioned conduct. The state of knowledge of the person to whom the
conduct is directed may be relevant, at least in so far as it relates to the content and
circumstances of the conduct.
In Butcher v Lachlan Elder Realty Pty Limited (2004) 218 CLR 592 at 604-5; 212
ALR 357 at 366, Gleeson CJ, Hayne and Heydon JJ said:
[I]t is necessary to consider the character of the particular conduct of the particular agent in
relation to the particular purchasers, bearing in mind what matters of fact each knew about
the other as a result of the nature of their dealings and the conversations between them, or
which each may be taken to have known … [T]he mere fact that a person had engaged in
the conduct of supplying a document containing misleading information [does] not mean
that that person [has] engaged in misleading conduct: it [is] crucial to examine the role of
the person in question.
Thus, in Butcher v Lachlan Elder Realty Pty Limited, the plurality judgment gave
detailed consideration to the personal characteristics and experience of the property
purchasers (the alleged representees) on the one hand, and the alleged representor on
the other. Gleeson CJ, Hayne and Heydon JJ, at CLR 606; ALR 367, described the
purchasers as ‘persons who were quite wealthy, and certainly aspired to becoming
wealthier, by means of complex property and financial dealings”, and as “intelligent,
shrewd and self-reliant’. On the other hand, their Honours, at CLR 606; ALR 368,
described the alleged representor as a suburban real estate agent who could not be
assumed to have possessed ‘research skills or means of independently verifying title
deeds about the properties’ that he sought to sell. These, amongst other matters, were
relevant to the court’s conclusion that a reasonable person in the position of the
purchasers would not have understood the agent to be doing more than passing on
information supplied by another or others.
Conduct Directed at the Public Generally
In relation to identifying circumstances where conduct is directed to the public or a
section of the public, in Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR
177 at 202-3, Deane & Fitzgerald JJ said the following:
First, it is necessary to identify the relevant section (or sections) of the public (which may
be the public at large) by reference to whom the question of whether conduct is, or is likely
to be, misleading or deceptive falls to be tested …
Second, once the relevant section of the public is established, the matter is to be considered
by reference to all who come within it, ‘including the astute and the gullible, the intelligent
and the not so intelligent, the well educated as well as the poorly educated, men and women
of various ages pursuing a variety of vocations’: Puxu Pty Ltd v Parkdale Custom Built
Furniture Pty Ltd (1980) 31 ALR 73 at 93.
Thirdly, evidence that some person has in fact formed an erroneous conclusion is
admissible and may be persuasive but is not essential. Such evidence does not itself
conclusively establish that conduct is misleading or deceptive or likely to mislead or
deceive. The court must determine that question for itself. The test is objective.
Finally, it is necessary to inquire why proven misconception has arisen. The fundamental
importance of this principle is that it is only by this investigation that the evidence of those
who are shown to have been led into error can be evaluated and it can be determined
whether they are confused because of misleading or deceptive conduct on the part of the
respondent.
In Campomar Sociedad, Limitada v Nike International Limited (2000) 202 CLR 45 at
84; 169 ALR 677 at 703, the High Court approved the observations of Deane and
Fitzgerald JJ regarding the manner in which a plaintiff should go about establishing
whether or not particular conduct has produced error or misconception. In addition,
the High Court, at CLR 85–6; ALR 703–5, set out two additional rules. First, where
the persons allegedly misled or deceived are not identified individuals but are
members of a class it is necessary to isolate ‘a representative member’ of the class and
determine whether this hypothetical individual is likely to have been misled or
deceived. Second, when considering the likely effect of the conduct on this
hypothetical person he or she should be judged as an ‘ordinary’ or ‘reasonable’
member of the class. The consequence of this rule is that ‘extreme’ or ‘fanciful’
reactions to the conduct are to be disregarded.
However, as was pointed out by Finkelstein J in .Au Domain Administration Ltd v
Domain Names Pty Ltd (2004) 207 ALR 521 at 527, the High Court decision in
Campomar Sociedad, Limitada v Nike International Ltd still left some issues
unresolved. His Honour, at 527, said:
One unresolved issue concerns a matter of characterisation. How is one to distinguish
between a case which involves a representation made to identified individuals and a case
where the representation is made to the public or to a section of the public? I had occasion
briefly to consider this problem in Australian Securities and Investments Commission v
National Exchange Pty Ltd (2003) 202 ALR 24 at 27-8. There the defendant had made false
representations to approximately 5000 shareholders of a major public company. Each
shareholder to whom the representations were made was identifiable by name and address. I
treated the case as one where the representation had been made to identified individuals. If I
were to adopt that approach in the instant case, it would be characterised as a case
concerning representations to identified individuals, although the notices in issue were
despatched to several hundred thousand businesses.
A final point in relation to conduct directed to the public generally arises from the
decision in Weitmann v Katies Ltd (1977) 29 FLR 336 at 343, where Franki J said that
in such cases a court had to ‘consider whether a reasonably significant number of
potential purchasers would be likely to be misled or deceived’. Although this
statement was cited with approval in subsequent cases, in .Au Domain Administration
Ltd v Domain Names Pty Ltd (2004) 207 ALR 521 at 527, Finkelstein doubted its
continuing validity. His Honour, at 529-30 said:
It seems to me that there is simply no warrant for imposing a requirement that in a
‘representation to the public’ case significant members of the public must be misled by the
impugned conduct before there can be a contravention of [s 18]. First, [s 18] does not
prescribe this requirement. Second, there is no reason in principle why the requirement
should exist. Third, it would be strange if a court were to determine that certain conduct had
the capacity to mislead (and did in fact mislead a handful of people) but nevertheless held
that the conduct was not actionable because an insufficient number of people were misled
…
I am of opinion that the dictum [in Weitmann v Katies Ltd] cannot survive the High Court’s
decision in Campomar Sociedad. By laying down the rule that in a ‘representation to the
public’ case the question whether conduct is misleading or deceptive is to be assessed by
reference to the reaction of the hypothetical representative member of the class to whom the
representation is directed, the High Court has left no scope for the operation of the
requirement that it must also be shown that a significant number of members of the class
have been misled. That is, the two requirements cannot sit side by side. I take the position
now to be that the dictum imposed in Weitmann v Katies Ltd has been overtaken.
Objective Test
The issue of establishing whether any particular conduct is misleading or deceptive is
a question of fact that is to be objectively determined. In Campbell v Backoffice
Investments Pty Ltd (2009) 238 CLR 304 at 341-2; 257 ALR 610 at 639, Gummow,
Hayne, Heydon and Kiefel JJ approved the following statements by McHugh J in
Butcher v Lachlan Elder Realty Pty Limited (2004) 218 CLR 592 at 625; 212 ALR
357 at 383-4:
The question whether conduct is misleading or deceptive or is likely to mislead or deceive
is a question of fact. In determining whether a contravention of [s 18] has occurred, the task
of the court is to examine the relevant course of conduct as a whole. It is determined by
reference to the alleged conduct in the light of the relevant surrounding facts and
circumstances. It is an objective question that the court must determine for itself. It invites
error to look at isolated parts of the [person’s] conduct. The effect of any relevant
statements or actions or any silence or inaction occurring in the context of a single course of
conduct must be deduced from the whole course of conduct. Thus, where the alleged
contravention of [s 18] relates primarily to a document, the effect of the document must be
examined in the context of the evidence as a whole. The court is not confined to examining
the document in isolation. It must have regard to all the conduct of the [person] in relation
to the document including the preparation and distribution of the document and any
statement, action, silence or inaction in connection with the document.
Intention
It is now established that intent is not a necessary element in establishing a
contravention of the s 18. In Yorke v Lucas (1985) 158 CLR 661 at 666; 61 ALR 307
at 309, Mason ACJ, Wilson, Deane & Dawson JJ said:
It is, of course, established that contravention of [s 18] does not require an intent to mislead
or deceive and even though a [person] acts honestly and reasonably, it may nonetheless
engage in conduct that is misleading or deceptive or is likely to mislead or deceive. That
does not, however, mean that a [person who] purports to do no more than pass on
information supplied by another must nevertheless be engaging in misleading or deceptive
conduct if the information turns out to be false. If the circumstances are such as to make it
apparent that the [person] is not the source of the information and that it expressly or
impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is
worth, we very much doubt that the [person] can properly be said to be itself engaging in
conduct that is misleading or deceptive.
Thus, a person who acts honestly and reasonably may nonetheless engage in conduct
that is likely to mislead or deceive and be in breach of s 18. However, there are cases
where an intention to mislead or deceive will be essential in order to establish a
contravention of s 18: Bridge Stockbrokers Ltd v Bridges (1985) 57 ALR 401 at 415.
Opinion Statements
Although statements of opinion, and possibly statements of law, cannot give rise to a
misrepresentation under the general law, such statements may amount to misleading
or deceptive conduct: Heydon v NRMA Ltd (2000) 51 NSWLR 1 at 148. In relation to
statements of opinion, in Australian Securities and Investments Commission v
Fortescue Metals Group Ltd (2011) 190 FCR 364 at 405-6; 274 ALR 731 at 767-8,
Keane CJ said:
In the circumstances of any particular case, the effect of a statement upon its audience may
well vary, depending on the nature of the information conveyed and the terms in which it is
couched. A representation may be couched in terms which are apt to be understood by an
ordinary and reasonable audience only as a statement of opinion. On the other hand, a
representation may be couched in terms which may ordinarily and reasonably be understood
only as a statement of fact. In the first case, the existence of a reasonable basis for the
statement means that the representation cannot be characterised as misleading or deceptive
if the opinion is genuinely and reasonably held by the representor. That cannot be said in
relation to the second category. A statement which is ordinarily and reasonably understood
as a statement of opinion is not apt to mislead if the opinion is genuinely and reasonably
held by the maker of the statement. That is because the audience would understand that the
statement was made on the basis that it expresses a view on which a different opinion might
also be entertained, not a matter of fact about which no doubt can be entertained.
Misleading Representations as to Future Matters
During negotiations for a contract many statements will be made. Any such statement
may constitute a term of the contract or a collateral contract or it may become an
actionable misrepresentation. However, it may also be that the statement constitutes
misleading or deceptive conduct. Often such statements relate to future matters. For
example, the statement may relate to the future profitability of a business that is being
sold.
For such statements to constitute misleading or deceptive conduct, it is important to
appreciate that the mere falsity of the statement will not constitute misleading or
deceptive conduct. More is required. In this respect, in Phoenix Court Pty Ltd v
Melbourne Central Pty Ltd [1997] FCA 1101 at [15], Goldberg J said:
Although the mere fact that a representation as to future conduct or the happening of a
future event does not occur does not make the representation misleading or deceptive, such
a representation can ripen into misleading or deceptive conduct for the purposes of [s 18] in
a number of circumstances; namely, if there is an implied statement in the representation as
to a present or past fact; if the representation represents impliedly that the representor has a
present intention to make good the promise or has the means or ability to do so; if the
representation involves a representation that the representor has a present state of mind; or
if a representation is made, which having regard to relevant circumstances at the time,
requires a qualification because of the possibility of its non-fulfilment. In any of these
circumstances it is necessary to plead more than simply the fact of the representation as to
the future matter and the fact that it does not occur. One has to plead material facts in
relation to the implication in the statement of the present or past fact, the present intention
and the means to carry it out, the relevant state of mind and the fact that there was no basis
for it, and the relevant circumstance giving rise to the qualification. Without pleading such
matters all the material facts necessary to complete the cause of action have not been stated
and the respondent does not know what case it has to meet.
Alex Bruce summarises the position in relation to whether a representation as to the
future constitutes misleading or deceptive conduct by noting that, in order for it to be
so, one must establish that the future misrepresentation made by the other:
(i) contained an implied statement of [a] present or past fact about the [other’s] state of
mind or intention; and
(ii) that the maker of the future representation did not have reasonable grounds for holding
that state of mind, intention or for making that future representation. 2
However, in this context, s 4 of the ACL is of great significance. Section 4 is a redrafted version of what used to be s 51A of the Trade Practices Act 1974. Section
4(1) stipulates as follows:
If:
(a) a person makes a representation with respect to any future matter (including the
doing of, or the refusing to do, any act); and
(b) the person does not have reasonable grounds for making the representation;
the representation is taken, for the purposes of this Schedule, to be misleading.
Thus, s 4(1) deems a future representation to be misleading or deceptive unless the
person making it has reasonable grounds for making it. Pursuant to s 4(2), the maker
of the representation with respect to any future matter is to be deemed not to have had
2
A Bruce, Consumer Protection Law in Australia, LexisNexis Butterworths, Australia, 2011, p 100.
reasonable grounds for making the representation unless the maker adduces evidence
to the contrary.
Section 4(3) makes it clear that merely adducing evidence of reasonable grounds does
not constitute a substantive defence to an action for misleading or deceptive conduct.
Section 4(3) did not have its equivalent provision in what was s 51A of the Trade
Practices Act 1974 and was introduced to resolve certain ambiguities that have arisen
in relation to the onus of proof. In this respect, s 4(3) stipulates as follows:
To avoid doubt, subsection (2) does not:
(a) have the effect that, merely because such evidence to the contrary is adduced, the person
who made the representation is taken to have had reasonable grounds for making the
representation; or
(b) have the effect of placing on any person an onus of proving that the person who made
the representation had reasonable grounds for making the representation.
Thus, the maker of the representation must bring evidence to establish reasonable
grounds for making future representation. It is then for the court to determine whether
the future misrepresentation was misleading or deceptive. In this respect, in McGrath
v Australian Naturalcare Products Pty Ltd (2008) 165 FCR 230 at 242; 246 ALR 514
at 525 (2008) 246 ALR 514 at 525, Emmett J said:
However, if evidence is adduced by a representor to the effect that the representor had
reasonable grounds for making the representation, the deeming provision will not operate.
Where the representor adduces such evidence, it is then a matter for the court to determine,
on the balance of probabilities in the ordinary way, whether or not the representor had
reasonable grounds for making the representation.
EXCLUSION CLAUSES AND DISCLAIMERS
The question raised here is whether parties can contract out of the application of s 18
of the ACL. The extent to which this can be done will be determined by the nature of
the relevant contractual provision. It is clear that clauses that exclude, or limit the
extent of, liability for misleading or deceptive conduct are ineffective on the basis that
permitting such clauses would operate to subvert the legislative policy that underpins
the ACL: Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR
546 at 561; 79 ALR 83 at 98-9. The same approach has been taken to clauses that
assert that a person was not induced into a contract on the basis of the other person’s
misleading or deceptive conduct: Clark Equipment Australia Ltd v Covcat Pty Ltd
(1987) 71 ALR 367 at 371.
However, one can escape liability for a violation of s 18 if an effectively worded
disclaimer precludes misleading or deceptive conduct from arising at all. Such clauses
are not exclusion clauses as traditionally understood. Rather, they lead to there being
no misleading or deceptive conduct at all. In this respect, in Italform Pty Ltd v
Sangain Pty Ltd [2009] NSWCA 427 at [30], Macfarlan JA said:
Where a contract is alleged to have been induced by misleading or deceptive conduct,
everything that the party alleged to have engaged in that conduct did up until the time the
contract was entered into must be taken into account. Thus, where it is contended that there
has been a relevant ‘disclaimer’ prior to the contract being entered into, that disclaimer must
be considered for the purpose of determining whether it has had effect ‘by actually
modifying the conduct’. If a disclaimer has effect it is ‘not by any independent force of its
own’ but by ‘erasing whatever is misleading in the conduct’.
Such clauses will be relatively rare because, as was Wilcox J said in Hutchence v
South Sea Bubble Company Pty Ltd (1986) 64 ALR 330 at 338:
[S]uch cases are … confined to situations in which the court is able to reach satisfaction —
the onus resting on the party relying upon the disclaimer — that the disclaimer is likely to
be seen and understood by all those — leaving aside isolated exceptions — who would
otherwise be misled before they act in relation to the relevant transaction.
REMEDIES
As has been seen, the prohibition of misleading and deceptive conduct in s 18 of the
ACL overlaps with, but goes well beyond, the concept of misrepresentation under the
general law. With misrepresentation the prima facie remedy is that of rescission,
which may or may not be available (see Chapter 31). Furthermore, if the
misrepresentation is fraudulent or constitutes negligent misstatement, tortious
damages are available (see Chapter 33).
However, if there is misleading or deceptive conduct, a far more potent array of
remedies is available, including the injunction, damages and various ancillary orders,
all set out in Chapter 5 of the ACL.
Damages
In relation to contracts entered into as the result of misleading or deceptive conduct,
the principal remedy is that of damages. Although an injunction (see ss 232-236 of the
ACL) is more important in relation to relief for violations of s 18 generally, such
relief is of little utility in circumstances where a contract has already been entered into
as the result of misleading or deceptive conduct.
In relation to the action for damages, s 236 of the ACL stipulates as follows:
(1) If:
(a) a person (the claimant) suffers loss or damage because of the conduct of another
person; and
(b) the conduct contravened [s 18 of the ACL]
the claimant may recover the amount of the loss or damage by action against that other
person, or against any person involved in the contravention.
(2) An action under subsection (1) may be commenced at any time within 6 years after the
day on which the cause of action that relates to the conduct accrued.
The amount of the damages for loss suffered as the result of a contravention of s 18 is
determined by asking what measure of damages properly conforms to the remedial
purpose of the statute and does justice and equity in the circumstances of the case:
Henville v Walker (2001) 206 CLR 459 at 470; 182 ALR 37 at 42. In order to recover
damages for such loss one must show that the loss was caused ‘by’ the contravention.
In this respect in Italform Pty Ltd v Sangain Pty Ltd [2009] NSWCA 427 at [42],
Macfarlan JA said:
In many cases, [causation] will be shown by proving that the conduct was relied upon in the
taking of some action, often, as here, by the entry into a contract. In other cases, particularly
when the misleading or deceptive conduct is constituted by a failure to speak or advise, the
notion of ‘reliance’ is less useful as one of the ‘tools of analysis’ to be utilised for the
purpose of determining whether there is ‘a causal connection (denoted by the word “by”)
between [misleading or deceptive] conduct and the loss and damage allegedly suffered’.
In relation to quantifying the damages for the loss suffered, the essential applicable
principles were summarised by Martin CJ in Professional Services of Australia Pty
Ltd v Computer Accounting and Tax Pty Ltd (No 2) (2009) 261 ALR 179 at 200-1, as
follows:
The cases establish that where a party claims to have suffered loss and damage ‘by’ reason
of conduct in contravention of [s 18] the usual measure of damage will be the measure
applicable in tort — namely, the sum required to place that party in the position in which
they would have been but for the contravening conduct. However, the measure is not
confined to the measure in tort, or by analogy to other measures, such as that available in
contract or equitable remedies.
Where the conduct in contravention of [s 18] is found to have been a material cause in the
acquisition of an asset by the innocent party, the ordinary measure of damage will be the
difference between the price paid for the asset, and its true value at the time of acquisition
… When assessing the value of that which has been acquired, subsequent declines in value
can be taken into account if inherent in the asset itself at the time of acquisition, but not if
‘independent’, ‘extrinsic’, ‘supervening’ or ‘accidental’. In addition, losses caused by and
flowing from the acquisition of the asset, such as trading losses incurred in running a
business may also be recovered. Provided the causal connection between the contravening
conduct and the acquisition of the asset is established, it is otherwise unnecessary to
establish a causal connection between the subject matter of the contravention and the cause
of the loss.
Ancillary Orders
Where a contract has been entered into as the result of misleading or deceptive
conduct, a court can make various ancillary orders. In relation to such ancillary
orders, the most significant are those set out in s 243(1). Pursuant to this section a
court can make a variety of orders, including:
(a)
an order declaring the contract void in whole or in part;
(b)
an order varying the contract;
(c)
an order refusing specific performance of the contract;
(d)
an order requiring the defendant to refund money or return property;
(e)
an order requiring the defendant to repair or provide parts for goods;
(f)
an order requiring the defendant to provide services;
(g)
an order requiring the execution of instruments relating to land that varies
or terminates a previously executed instrument relating to the said land.
It has long been accepted that the powers conferred under s 243 are discretionary:
Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd (1981) 36 ALR 23 at 56.
Section 243 has been described by the High Court as conferring a wide discretionary
power on courts to make remedial orders in appropriate cases in order to ensure a fair
result: Kizbeau Pty Limited v WG & V Pty Limited (1995) 184 CLR 281 at 298; 131
ALR 363 at 375. The power to make such orders is broader than that provided for
under the common law or in equity and the scope of the orders available is not to be
constrained because, in particular cases, they may resemble common law or equitable
remedies: Warwick Entertainment Centre Pty Ltd v Alpine Holdings Pty Ltd (2005)
224 ALR 134 at 149.