Week 2: Misleading or Deceptive Conduct

Tuesday, 7 March 2023

8:07 pm
A. Overview:
a. Section 18 of the ACL
B. In Trade or Commerce:
C. Engaging in Conduct
D. Misleading or Deceptive Conduct:
a. What is Misleading or Deceptive Conduct
b. Elements
c. What is 'likely to mislead or deceive?'
E. Who must be misled?
F. General Principles of Misleading and Deceptive conduct
A. Overview
 Chapter 2 Pt 2-1 of the ACL contains the general protection provisions for misleading
or deceptive conduct. Section 18 is the liability provision of Pt 2-1.
o Section 18 states:
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.
(2) Nothing in Part 3-1 (which is about unfair practices) limits by implication subsection (1).
Note: For rules relating to representations as to the country of origin of goods, see Part 5-3.
o Elements of S 18
 Directed at the conduct of a person
 A Person - Acts Interpretations Act 1901 (Cth)
 
 
B. In Trade or Commerce:
 In Trade or Commerce:
C. What is ‘engaging in conduct’?
a. To do or refuse to do any act
 
 Pursuant to s 2(2)(a) of the ACL (similar to s 4(2)(a) of the CCA), a reference to
engaging in conduct is read as a reference to doing or refusing to do any act,
including:
(i)  the making of, or the giving effect to a provision of, a contract or arrangement;
(ii)  the arriving at, or the giving effect to a provision of, an understanding; or
(iii) the requiring of the giving of,or the giving of, a covenant.
  
D. What is ‘misleading or deceptive conduct’?
 The words ‘misleading’ or ‘deceptive’ are not defined in the ACL, or in the CCA.
o The courts have been reluctant to provide a precise meaning of the words
misleading or deceptive conduct.
 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd
 
Gibbs J provided the following useful guidance in relation to the interpretation of former s
52 of the TPA:
 
I do not suggest that the words of s 52 should be given ‘some unnaturally confined
meaning’ (to use the words of Stephen J in Hornsby Building Information Centre Pty Ltd v
Sydney Building Information Centre Ltd (ALR at 644; CLR at 225)), or that they should be
construed to conform with the common law (see World Cricket v Parish (1977) 16 ALR 181
at 198–9), but simply that they should be given their plain and natural meaning, and
should not be understood in some loose or expanded sense.
 
For the purposes of s 18 of the ACL, it is the overall impression created by the alleged
conduct which determines whether it is likely to be considered as misleading or deceptive
 
Misleading or Deceptive Conduct: Elements
If the overall impression -
a. Induces or is capable of inducing error
o The threshold test for determining whether conduct is misleading or deceptive for
the purposes of s 18 of the ACL is if the overall impression of the conduct induces or
is capable of inducing error.
 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd
b. Mere confusion or wonderment
o The state of mere confusion or wonderment caused by the alleged conduct is
generally insufficient to constitute misleading or deceptive conduct for the purposes
of s 18 of the ACL
o Mere confusion or wonderment is a different state of mind to that of being induced
or capable of being induced into error, and it is something of a lesser state of mind
than being led into error
 McWilliam’s Wine Pty Ltd v McDonald’s System of Australia Pty
 
 What is ‘likely to mislead or deceive’?
o The words ‘likely to mislead or deceive’ in s 18 of the ACL make it clear that it
is unnecessary to prove that the conduct in question actually misled or
deceived anyone
 conduct is ‘likely to mislead or deceive’ if there is a real or not remote
chance or possibility to mislead or deceive, regardless of whether it is
less or more than 50 per cent
 No need to prove that a person was actually misled.
 
E. Who must be misled?
 Section 18 is not limited to consumers
o Section 18 is widely understood to not only apply to reasonable consumers or
even to consumer who would be mislead or deceived
 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd
 Despite the words ‘consumer protection’ in the title under former Pt V of the TPA
o s 18 can apply to conduct that is directed towards non-consumers,
corporate entities and even competitors
 Identifying the target audience or relevant section of the public to
which the alleged conduct is directed towards is fundamental for
 determining whether such conduct was misleading or deceptive
 
o The relevant members of the public must be identified
 Four Step Process: Relevant members of the public must be identified:
 
 
 
 
F. General principles of misleading or deceptive conduct
 To determine whether conduct is misleading or deceptive in contravention of s 18
of the ACL:
o Question of fact
o Conduct must be viewed as a whole
 cannot select some words which taken out of context would be likely
to mislead or deceive
 
a. Conduct must be viewed as a whole
 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd.
o Gibbs CJ made the following comments about viewing conduct as a whole
It is obvious that where the conduct complained of consists of words,
it would not be right to select some words only and to ignore others
which provided the context which gave meaning to the particular words.
The same is true of facts.
 
b. Multiple Meanings
 It is possible for statements, representations or any form of alleged conduct to
contain more than one meaning, particularly if the statement is vague, elusive, or
suffers from latent ambiguity.
o If a statement has multiple meanings and one of those meanings conveys a
misleading impression, then the statement is likely to be misleading or
deceptive for the purposes of s 18 of the ACL.
 Frazer v NRMA Holdings Ltd (1995) 55 FCR 452
 
 
c. Intent (and Honesty)
 Not a relevant factor under s 18 of the ACL.
 Whether the conduct was likely to mislead or deceive is the only thing that matters
o Even if a person honestly believed what they were doing, or stating was
truthful, if their conduct is likely to misled they will be held liable
 Hornsby Building Information Centre Pty Ltd v Sydney Building
Information Centre Ltd
 
 Failure to make proper inquiries
 A person who engages in misleading conduct is not absolved from liability under s
18 of the ACL because the person who is subject of that conduct or their
representative could have made proper inquiries.
 o Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd
 
 Spoken Words
 If the alleged conduct is in the form of spoken words,
o it is essential that the words spoken be proved with a degree of precision
sufficient for the court to be reasonably satisfied that they are likely to
mislead
 Watson v Foxman (1995) 49 NSWLR 315
 
f. Literal Truths
 Literal truths may be misleading or deceptive for the purposes of s 18 of the ACL.
o A statement which is literally true and accurate may nevertheless carry with
it a misleading impression.
o before a statement or representation can be said to be misleading or
deceptive for the purposes of s 18 of the ACL, it must convey a meaning
inconsistent with the truth
 Hornsby Building Information Centre Pty Ltd v Sydney Building
Information Centre Ltd
 
g. Half Truths
 Half-truths may be misleading or deceptive or likely to mislead or deceive in
contravention of Section 18 of the ACL.
 
Types of Half-truths:
A statement…
1. That is partially true and partially false
2. Removed from context
3. Which has more than one meaning
4. Which is unclear, vague, or ambiguous
5. Where 'half of the story is told' or a selective retelling of 'parts of a story'
6. Where there is a mixture of truth and lies
7. Where material matter is omitted
8. That is positive and literally true, but is misleading unless suitably qualified
9. Where there is insufficient information that permits are reasonable open, but
erogenous conclusion to be drawn
10. Where there is a 'series of representations' or 'continual representations', but
circumstances change, and those representations were not corrected
 
Half-truths which are misleading or deceptive are often worse than a blatant lie.
 This is because half-truths indulge the receiver into a false sense of understanding
and belief that they are receiving the whole truth.
o And therefore reacting accordingly, under the impression they have been
told the full story
 When these situations arise, there is an obligation to disclose the
whole truth
 
 Real world implications of Half-Truths.
 o Half-truths in the environment of comparative advertising poses a dangerous
threat to consumers, .
 As Half-truths made in this context, have a conceivably greater
potential to mislead or deceive consumers, as opposed to other
modes of advertising
o Half-truths may also be potentially damaging in general advertising or
character advertising
 
 The case of Kannegieter v Hair Testing Laboratory Pty Ltd [2004] FCA is an example
of the damaging affect, a half truth may have on a specialist equine veterinary
surgeon in the context of misleading or deceptive advertising
 
h. Silence
 Silence or non-disclosure of information may constitute, misleading or deceptive,
conduct, or conduct that is likely to mislead or deceive.
o No special category given or different implications under s 18 ACL
o Assessed as a circumstance like any other
 The significance of silence or nondisclosure will ultimately depend on
the particular facts and circumstances of each case
 
The Essential Question
 The essential question is whether having regard to all of the relevant circumstances
constituted by acts, omissions, statements, or silence, there has been conduct, which
is misleading or deceptive, or likely to mislead or deceive.
o Answer = question of fact
 Silence is one of the circumstances to be considered against the
broader factual matrix
 
Various Circumstances of Silence
 There are a variety of circumstances in which silence can equate to misleading or
deceptive conduct.
 There are two key categories which contravene section 18 ACL.
Reasonable Expectation:
o When there is a reasonable expectation to disclose or act
o Failure to speak up or withholding information that has a substantial affect on the
correctness of what was said
 Ultimately Concealing material facts
o Absent of Express Representation
 
i. Passing on Information
 A person who mainly passes on information from one person to another without
adopting that information = unlikely to be misleading or deceptive
o Person is no more than a mere messenger of the content
 Known as the conduit defence
o Only applies to the primary contravener does not apply to accessories
 The courts have held in three situations a person is considered to be a mere
conduit
Mere Conduit
1. Apparent that the person is not the source of the information and is simply stating it
for what it's worth
2. Where the person, while believing the information, expressly or implicitly, disclaims,
personal responsibility for what it conveys
3. Where a person who believes in the information insures that its name is not used in
association with information
 Butcher v Lachlan Elder Realty [2004] HCA 60