The Australian consumer law [Third edition.] 9780455237442, 0455237441
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Citation preview
The Australian Consumer Law
Thomson Reuters (Professional) Australia Limited 19 Harris Street Pyrmont NSW 2009 Tel: (02) 8587 7000 Fax: (02) 8587 7100 [email protected] legal.thomsonreuters.com.au For all customer inquiries please ring 1300 304 195 (for calls within Australia only)
INTERNATIONAL AGENTS & DISTRIBUTORS
NORTH AMERICA Thomson Reuters Eagan United States of America
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EUROPE Thomson Reuters London United Kingdom
The Australian Consumer Law
S G CORONES B Com LLB (Qld), LLM (UCL), PhD (Qld)
Professor of Law, Queensland University of Technology
THIRD EDITION
LAWBOOK CO. 2016
Published in Sydney by Lawbook Co. 19 Harris Street, Pyrmont, NSW
First edition ....................................................................... Second impression with revision .................................. Second edition ................................................................... Third edition .....................................................................
March 2011 August 2011 2013 2016
National Library of Australia Cataloguing-in-Publication entry Corones, S G (Stephen G.). The Australian consumer law/S G Corones. 3rd ed. Includes index. ISBN 978 0 455 23744 2 (pbk). Consumer protection—Law and legislation—Australia. 343.94071 © 2016 ThomsonReuters (Professional) Australia Limited ABN 64 058 914 668. This publication is copyright. Other than for the purposes of and subject to the conditions prescribed under the Copyright Act, no part of it may in any form or by any means (electronic, mechanical, microcopying, photocopying, recording or otherwise) be reproduced, stored in a retrieval system or transmitted without prior written permission. Inquiries should be addressed to the publishers. All legislative material herein is reproduced by permission but does not purport to be the official or authorised version. It is subject to Commonwealth of Australia copyright. The Copyright Act 1968 permits certain reproduction and publication of Commonwealth legislation. In particular, s 182A of the Act enables a complete copy to be made by or on behalf of a particular person. For reproduction or publication beyond that permitted by the Act, permission should be sought in writing. Requests should be addressed to the Manager, Copyright Services, Info Access, Department of Communications, Information Technology and the Arts, GPO Box 1920, Canberra City ACT 2601, or e-mailed to [email protected] Editor: Lara Weeks Product Developer: Vickie Ma Publisher: Robert Wilson Printed by Ligare Pty Ltd, Riverwood, NSW This book has been printed on paper certified by the Programme for the Endorsement of Forest Certification (PEFC). PEFC is committed to sustainable forest management through third party forest certification of responsibly managed forests. For more info: http://www.pefc.org
Preface The Australian Consumer Law (ACL) commenced on 1 January 2011. By enacting the ACL, Commonwealth, State and Territory Parliaments sought to resolve the overly complex nature of consumer law in Australia, which had developed in a piecemeal way over many years. As a result of the ACL there is now one uniform consumer protection law that applies in all jurisdictions throughout Australia and across all sectors of the economy, thereby significantly reducing business compliance costs. It has been a far-reaching national reform. The drafters of the ACL sought to clarify the law by removing inconsistencies and discrepancies and using plain English to improve levels of awareness of the rights, obligations and remedies of consumers and traders. At the time of writing the ACL is undergoing its first review by Consumer Affairs Australia and New Zealand (CAANZ) to assess the effectiveness of its provisions, especially in relation to the challenges of e-commerce, digital products, and peer-to-peer transactions. The Final CAANZ Report is expected to be provided by March 2017. The purpose of this edition remains the same as that of previous editions, namely, to explain the substantive rights and remedies of consumers and the obligations of traders under the ACL. This edition includes discussion about new legislation, including the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Act 2015 (Cth) which will extend the general protection against unfair terms to contracts with small businesses that are entered into or renewed after 12 November 2016. This edition also considers important appellate decisions including those of the High Court of Australia in Google v ACCC, Forrest v ASIC, ACCC v TPG, Kakavas v Crown Melbourne, and Commonwealth v Director, Fair Work Building Industry Inspectorate, and the Full Federal Court in ACCC v Lux Distributors, and Paciocco v Australia and New Zealand Banking Group. There have been a number of new Federal Court decisions that shed light on important aspects of the ACL, including Director of Consumer Affairs Victoria v The Good Guys Discount Warehouses (promotion of extended warranties); ACCC v Chrisco Hampers (unfair terms and lay-by agreements); ACCC v Lyoness (pyramid selling); ACCC v Woolworths (mandatory reporting of injuries); and ACCC v Valve Corporation (No 3) (digital products as goods, and the enforceability of jurisdiction clauses). In addition to the considerable amount of new material, the remaining text has been substantially re-written and updated. I gratefully acknowledge the assistance provided by my Production Editor, Lara Weeks, in the preparation of this new edition. The law is stated on the basis of the materials available to me as at 24 March 2016. S G CORONES Brisbane, April 2016
Table of Contents Preface ................................................................ ................................................................ v Table of Cases ........................................................... ........................................................... ix Table of Statutes ....................................................... ....................................................... xxxv Glossary of Terms ....................................................... ....................................................... liii PART I: INTRODUCTION Chapter 1: Consumer Protection Policy and Overview of the ACL .................. .................. 1 Chapter 2: Definitions and Key Concepts ............................................................. ............................................................ 47 PART II: GENERAL CONSUMER PROTECTIONS Chapter 3: Misleading or Deceptive Conduct ....................................................... ..................................................... 77 Chapter 4: Unconscionable Conduct ...................................................................... .................................................................. 157 Chapter 5: Unfair Contract Terms ......................................................................... ..................................................................... 209 PART III: SPECIFIC CONSUMER PROTECTIONS Chapter 6: Specific False or Misleading Representations ......................................... Chapter 7: Specific Unfair Sales Techniques ........................................................ ..................................................... Chapter 8: Consumer Guarantees for Goods ....................................................... .................................................... Chapter 9: Consumer Guarantees for Services .................................................... ................................................. Chapter 10: Consumer Agreements ....................................................................... ....................................................................
249 315 357 435 455
PART IV: PRODUCT LIABLITY AND SAFETY REGULATION Chapter 11: Product Recall, Safety Standards, Safety Bans and Notices ......... ......
477
Chapter 12: Liability of Manufacturers for Goods with Safety Defects ........... ........
509
PART V: ENFORCEMENT AND REMEDIES Chapter 13: Public Enforcement ............................................................................ ......................................................................... Chapter 14: Private Remedies ................................................................................ ............................................................................. Chapter 15: Remedies Relating to Guarantees ..................................................... .................................................
537 615 671
............................................................................................................................
715
Index
Table of Cases A ACCC v 4WD Systems Pty Ltd (2003) 200 ALR 491 .................................. 4.85, 4.125, 4.130, 4.165 ACCC v A Whistle & Co (1979) Pty Ltd [2015] FCA 1447 .......................................................... 6.80 ACCC v ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Ltd) [2015] FCA 368 .............................................. 4.100, 4.120, 5.95, 5.120 ACCC v AGL Sales Pty Ltd [2013] FCA 1030; (2013) ATPR ¶42-449 .......................................................................................................................... 10.45, 13.185 ACCC v AGL South Australia Pty Ltd [2015] FCA 399 ........ 6.145, 13.175, 13.185, 13.190, 13.200, 13.395 ACCC v Advanced Medical Institute Pty Ltd (No 3) (2007) ATPR ¶42-269 .............................................................................................................................. 6.85 ACCC v AirAsia Berhad Company [2012] FCA 1413 .................................................................. 7.170 ACCC v Allans Music Group Pty Ltd [2002] FCA 1552 .................................................. 6.125, 6.155 ACCC v Allergy Pathway Pty Ltd [2009] FCA 960 ......................................... 13.145, 13.290, 13.335 ACCC v Allergy Pathway Pty Ltd (No 2) [2011] FCA 74; (2011) 192 FCR 34 .............................................................................................. 3.45, 3.195, 13.335 ACCC v Allphones Retail Pty Ltd (No 2) (2009) ATPR ¶42-274 .................................................. 4.50 ACCC v Alvaton Holdings Pty Ltd [2010] FCA 760 .................................................................. 13.145 ACCC v Anglo Estates Pty Ltd (2005) ATPR ¶42-044 ............................................................... 13.240 ACCC v Apple Pty Ltd (2012) ATPR ¶42-404 ................................................................... 1.100, 6.275 ACCC v Ascot Four Pty Ltd (2008) ATPR ¶42-251; 250 ALR 467 .......................................................................................................................... 3.90, 6.155, 13.45 ACCC v Audi Australia Pty Ltd (2007) ATPR ¶ 42-211 .......................................... 6.45, 6.125, 6.275 ACCC v Australian Communications Network Pty Ltd [2006] HCA Trans 265 ........................................................................................................................... 7.130 ACCC v Australian Medical Association (WA) (2003) 199 ALR 423 ....................................................................................................................................... 2.55, 2.70 ACCC v Australian Power and Gas Company Ltd [2013] FCA 1358 ...................................................................................................................... 4.110, 10.45, 10.90 ACCC v Australian Safeway Stores Pty Ltd (1997) 75 FCR 238; 145 ALR 36 ............................................................................................ 13.60, 13.65, 13.70, 13.195 ACCC v BAJV Pty Ltd [2014] FCAFC 52 .................................................................... 13.170, 13.190 ACCC v Bio Enviro Plan Pty Ltd (2003) ATPR ¶41-963 ...................................... 6.180, 6.290, 7.195 ACCC v Black on White Pty Ltd (2001) 110 FCR 1 .................................................................. 13.230 ACCC v Breast Check Pty Ltd (2014) ATPR ¶42-479 ...................................................... 3.155, 6.100 ACCC v Breast Check Pty Ltd (No 2) [2014] FCA 1068 ........................................................... 13.215 ACCC v CAN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Ltd) [2015] FCA 368 ............................................................................ 13.395 ACCC v CC (NSW) Pty Ltd (No 9) (2000) ATPR ¶41-756 ....................................................... 13.200 ACCC v CG Berbatis (No 2) (1999) 96 FCR 491 .......................................................................... 4.60 ACCC v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51 ............................................. 4.25, 4.100 ACCC v CG Berbatis Holdings Pty Ltd (No 2) (1999) 96 FCR 491 ....................................................................................................................................... 4.15, 4.25 ACCC v CLA Trading Pty Ltd [2016] FCA 377 ........................................................................... 5.225 ACCC v Cadbury Schweppes Pty Ltd (2004) ATPR ¶42-001 ............................................. 6.45, 6.275
x
Table of Cases
ACCC v Capalaba Pty Ltd (2004) ATPR ¶41-976 ......................................................................... 7.210 ACCC v Carrerabenz Diamond Industries Pty Ltd (2008) ATPR ¶42-248 ..................................................................................................... 13.20, 13.35, 13.55, 13.60 ACCC v Channel Seven Brisbane Pty Ltd (2009) 239 CLR 305 ................. 1.65, 3.235, 3.245, 6.300 ACCC v Chen (2003) 132 FCR 309; ATPR ¶41-948 ............................................... 1.100, 6.90, 6.115 ACCC v Chopra [2015] FCA 539 .............................................................................. 1.100, 2.40, 6.180 ACCC v Chrisco Hampers Australia Ltd [2015] FCA 1204 ........... 5.110, 5.120, 5.145, 5.150, 6.185, 10.105, 10.110 ACCC v Chubb Security Australia Pty Ltd (2004) ATPR ¶42-041 ................................................................................... 7.50, 7.55, 13.55, 13.60, 13.65, 13.70 ACCC v Clinica Internationale Pty Ltd (No 2) [2016] FCA 62 .................................... 13.395, 13.400 ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405 ............................................................... 1.30, 4.90, 4.100, 4.110, 4.125, 4.150, 4.165, 13.185 ACCC v Coles Supermarkets Australia Pty Ltd (No 2) [2014] FCA 1022 .................................................................................................................................. 13.185 ACCC v Coles Supermarkets Pty Ltd [2014] FCA 634 ......................................................... 3.90, 6.50 ACCC v Commercial & General Publications Pty Ltd (2002) ATPR (Digest) ¶46-222 ..................................................................................................... 7.50, 7.100 ACCC v Commonwealth Bank of Australia (2003) 133 FCR 149 ............................................................................................................................................... 3.170 ACCC v Danoz Direct Pty Ltd (2003) ATPR (Digest) ¶46-241 ................................................. 13.290 ACCC v Dataline.Net.Au Pty Ltd (2007) 161 FCR 513; 236 ALR 665 .................................................................................. 4.110, 4.125, 13.175, 14.230, 14.240 ACCC v Davis [2003] FCA 1227 ................................................................................................... 7.210 ACCC v Dell Computers Pty Ltd (2002) ATPR ¶41-878 .............................................................. 7.165 ACCC v Dell Computers Pty Ltd (2003) ATPR ¶ 41-910 ................................................. 6.125, 7.165 ACCC v Dimmeys Stores Pty Ltd (2001) ATPR ¶41-811 ............................................................. 13.55 ACCC v Dimmeys Stores Pty Ltd [2011] FCA 372 .................................................................... 13.145 ACCC v Dukemaster Pty Ltd [2009] FCA 682; (2009) ATPR ¶42-290 ........................................................................................................... 3.10, 4.50, 5.95, 6.290 ACCC v EDirect Pty Ltd [2008] FCA 65 ........................................................................................ 7.50 ACCC v Econovite Pty Ltd (2003) ATPR ¶41-959 ..................................................................... 13.295 ACCC v Energy Australia Pty Ltd [2015] FCA 274 ..................................................................... 6.185 ACCC v Esanda Finance Corporation Ltd [2003] FCA 1225 ....................................................... 7.210 ACCC v Excite Mobile Pty Ltd [2013] FCA 350; (2013) ATPR ¶42-437 ............................................................................................ 4.85, 6.90, 6.180, 7.215, 13.325 ACCC v Excite Mobile Pty Ltd (No 2) (2013) ATPR ¶42-454 .................................................. 13.325 ACCC v Fisher & Paykel Customer Services Pty Ltd [2014] FCA 1393 .................................................................................................. 3.250, 3.285, 3.290, 6.245 ACCC v Frozen Foods Pty Ltd (1996) ATPR ¶41-515 ............................................................... 13.290 ACCC v GM Holden Ltd [2008] FCA 1428 .......................................................................... 6.90, 6.95 ACCC v Gary Peer & Associates Pty Ltd (2005) 142 FCR 506 .................................................. 6.250 ACCC v Giraffe World Australia Pty Ltd (1999) 95 FCR 302; ATPR ¶41-718 ...................................................................................................... 6.90, 7.195, 14.180 ACCC v Glendale Chemical Products Pty Ltd (1998) 40 IPR 619; ATPR ¶41,632 ................................................................... 6.105, 12.45, 12.85, 12.145, 12.170 ACCC v Global One Mobile Entertainment [2011] FCA 393 ..................................................... 13.175 ACCC v Goldy Motors Pty Ltd (2001) ATPR ¶41-801 ................................................................. 6.180 ACCC v Google Inc (2012) 201 FCR 503 ....................................................................................... 3.45 ACCC v Gourmet Goody’s Family Restaurant Pty Ltd [2010] FCA 1216 ...................................................................................................................... 7.165, 13.385 ACCC v Grant [2000] FCA 1564 ................................................................................................... 6.290
Table of Cases xi
ACCC v Grove and Edgar Pty Ltd (2008) ATPR 42-269 ........................................................... 13.145 ACCC v Halkalia Pty Ltd (No 2) (2012) ATPR ¶42-399 .................................................. 3.140, 6.290 ACCC v Harbin Pty Ltd [2008] FCA 1792 ................................................................................. 13.290 ACCC v Harvey Norman Holdings Ltd [2011] FCA 1407; (2011) ATPR ¶42-384 .................................................... 6.90, 6.180, 6.185, 13.145, 13.170, 13.190 ACCC v Hillside (Australia New Media) Pty Ltd (t/as Bet365) [2015] FCA 1007 ................................................................................................... 3.85, 3.190, 6.135 ACCC v Homeopathy Plus! Australia Pty Ltd [2014] FCA 1412 ................................................. 3.155 ACCC v Homeopathy Plus! Australia Pty Ltd (No 2) [2015] FCA 1090 .................................................................................................................................. 13.215 ACCC v Hughes (2002) ATPR ¶41-863 ......................................................................................... 1.100 ACCC v IMB Group Ltd [2003] FCAFC 17 .................................................................... 3.195, 14.190 ACCC v J McPhee & Son (Australia) Pty Ltd (1997) ATPR ¶41-570 ..................................................................................................................................... 13.220 ACCC v J McPhee & Son (Australia) Pty Ltd (No 3) (1998) ATPR (Digest) ¶46-183 ............................................................................................................ 13.220 ACCC v J McPhee & Son (Australia) Pty Ltd (2000) 172 ALR 532 ............................................................................................................................................. 13.220 ACCC v Jetstar Airways Pty Ltd [2015] FCA 1263 .......................................................... 3.185, 6.140 ACCC v Jewellery Group Pty Ltd (2012) ATPR ¶42-411 ................................................... 3.90, 6.155 ACCC v Jewellery Group Pty Ltd (No 2) (2013) ATPR ¶42-440 ................................................ 6.155 ACCC v Jones (No 5) [2011] FCA 49 ........................................................................................... 1.100 ACCC v Jutsen (No 3) (2011) 206 FCR 264 ...................................... 1.100, 2.40, 7.115, 7.120, 7.130 ACCC v Kokos International Pty Ltd (No 2) (2008) ATPR ¶42-212 ..................................................................................................................................... 13.145 ACCC v Korean Air Lines Co Ltd (2011) ATPR ¶42-382 .......................................................... 13.205 ACCC v Leahy Petroleum Pty Ltd (2007) 160 FCR 321 ........................................................... 15.225 ACCC v Link Solutions Pty Ltd (No 3) [2012] FCA 348 .......................................................... 13.145 ACCC v Lux Distributors Pty Ltd [2013] FCAFC 90 ..................................... 4.90, 4.95, 4.120, 4.195 ACCC v Lux Distributors Pty Ltd (No 2) [2015] FCA 903 ....................................................... 13.190 ACCC v Lyoness Pty Ltd [2015] FCA 1129 ...................................................................... 7.120, 7.195 ACCC v MSY Technology Pty Ltd [2012] FCAFC 56 ............................................................... 13.145 ACCC v MSY Technology Pty Ltd (No 2) [2011] FCA 382; (2011) 279 ALR 609 ...................................................................................... 13.175, 13.180, 13.195 ACCC v Maritime Union of Australia at (2001) 114 FCR 472 .................................................... 7.210 ACCC v Marksun Australia Pty Ltd (2011) ATPR ¶42-363 ................................................ 1.35, 6.165 ACCC v McCaskey (2000) 104 FCR 8; 183 ALR 159 ..................................................... 7.210, 7.215 ACCC v Metricon Homes Qld Pty Ltd [2012] FCA 797 ............................................... 13.180, 13.205 ACCC v Midland Brick Company Pty Ltd (2004) 207 ALR 329 .............................................. 13.145 ACCC v Murray (2002) 21 FCR 428 .................................................................. 6.290, 13.110, 13.115 ACCC v Nationwide News Pty Ltd (1996) ATPR ¶41-519 ...................................... 6.180, 7.10, 13.55 ACCC v Neighbourhood Energy Pty Ltd [2012] FCA 1357 ............................................. 10.45, 10.90 ACCC v Neighbourhood Energy Pty Ltd (2013) ATPR ¶42-449 .................................................. 10.90 ACCC v Nissan Motor Co (Aust) Pty Ltd (1998) ATPR ¶41-660 .................................................. 6.45 ACCC v Oceana Commercial Pty Ltd (2003) ATPR (Digest) ¶46-244 ....................................................................................................................................... 3.140 ACCC v Oceana Commercial Pty Ltd (2004) ATPR (Digest) ¶46-255 ....................................................................................................................................... 13.20 ACCC v On Clinic Australia Pty Ltd (1996) ATPR ¶41-517 ...................................................... 13.310 ACCC v Optell Pty Ltd (1998) ATPR ¶41-640 ................................................. 6.55, 6.90, 7.80, 7.100 ACCC v Origin Energy Electricity Ltd [2015] FCA 278 ..... 4.110, 4.120, 7.215, 10.45, 10.50, 10.90, 13.170
xii Table of Cases
ACCC v Origin Energy Ltd [2015] FCA 55 ....................................................... 6.145, 13.195, 13.200 ACCC v Original Mama’s Pizza & Ribs Pty Ltd [2008] FCA 370; (2008) ATPR ¶42-236 ...................................................................... 3.250, 3.285, 3.290, 6.180 ACCC v Panasonic Australia Pty Ltd (2010) 269 ALR 622 ......................................................... 3.190 ACCC v Pepe’s Ducks Ltd (2013) ATPR ¶42-441 ............................................... 6.50, 13.170, 13.190 ACCC v Pirovic Enterprises Pty Ltd (No 2) (2014) ATPR ¶42-483 .............................................................................................................................. 6.50, 6.275 ACCC v Prouds Jewellers Pty Ltd (2008) ATPR ¶42-217 ....................................... 3.85, 6.125, 6.155 ACCC v Prouds Jewellers Pty Ltd (2008) ATPR ¶42-268 ................................................. 6.125, 6.155 ACCC v Purple Harmony Plates Pty Ltd [2001] FCA 1062 ......................................................... 1.100 ACCC v RL Adams Pty Ltd (t/as Darling Downs Fresh Eggs) [2015] FCA 1016 .............................................................................................................. 6.50, 6.275 ACCC v Radio Rentals Ltd (2005) 146 FCR 292 .................................................................. 4.30, 4.60 ACCC v Real Estate Institute of Western Australia Inc (1999) 95 FCR 114 .............................................................................................................................. 13.280 ACCC v Reebok Australia Pty Ltd [2015] FCA 83; (2015) ATPR ¶42-501 .................................................... 1.35, 6.90, 6.275, 13.175, 13.190, 13.195, 13.395 ACCC v Safe Breast Imaging Pty Ltd (2014) ATPR ¶42-464 ........................................... 3.155, 6.100 ACCC v Safe Breast Imaging Pty Ltd (No 2) (2014) ATPR ¶42-481 ........................................................................................................... 13.195, 13.215, 13.325 ACCC v Safety Compliance Pty Ltd (in liq) (No 2) [2015] FCA 1469 ............................................................................................................................... 6.175, 13.325 ACCC v Sampson [2011] FCA 1165; (2011) ATPR ¶42-374 .......................................... 2.105, 13.145 ACCC v Samton Holdings Pty Ltd (2002) 117 FCR 301 ........................................... 4.15, 4.35, 4.100 ACCC v Santo Pennisi and Dojoo Pty Ltd (2007) ATPR ¶42-209 ....................................................................................................................................... 13.35 ACCC v Seal-A-Fridge Pty Ltd (No 2) [2010] FCA 681; (2010) 268 ALR 321 ................................................................................................................. 4.130, 13.300 ACCC v Sensaslim Australia Pty Ltd (in liq) (No 1) (2011) 196 FCR 566 ...................................................................................................................................... 1.100 ACCC v Seven Network Ltd (2007) 244 ALR 343 ....................................................................... 3.245 ACCC v Signature Security Group Pty Ltd (2003) ¶ATPR 41-908 ............................................................................................................................ 3.190, 13.310 ACCC v Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCR 253; ATPR ¶41-790 ......................................... 4.60, 4.105, 4.125, 4.145, 4.165, 4.175, 4.185 ACCC v Singtel Optus Pty Ltd [2010] FCA 1177 ........................ 3.185,3.190, 3.200, , 6.275, 13.160 ACCC v Singtel Optus Pty Ltd (No 3) [2010] FCA 1272; (2010) 276 ALR 102 ....................................................................................................... 3.70, 13.290 ACCC v Singtel Optus Pty Ltd (No 4) [2011] FCA 761; (2011) 282 ALR 246 ...................................................................................... 3.200, 13.160, 13.190, 13.195 ACCC v Skins Compression Garments Pty Ltd [2009] FCA 710 .............................................. 13.145 ACCC v Skippy Australia Proprietary Ltd [2006] FCA 1343 .......................................... 11.165, 13.20 ACCC v Sontax Australia (1988) Pty Ltd [2011] FCA 1202 ...................................................... 13.145 ACCC v South East Melbourne Cleaning Pty Ltd (in liq) (formerly known as Coverall Cleaning Concepts South East Melbourne Pty Ltd) [2015] FCA 25; (2015) ATPR ¶42-503 ................. 2.120, 3.135, 3.140, 6.290 ACCC v Spreets Pty Ltd [2015] FCA 382 ..................................................................................... 6.140 ACCC v StoresOnline International, Inc [2007] FCA 1597 ........................................................ 13.335 ACCC v TPG Internet Pty Ltd (2011) ATPR ¶42-383 ......................................................... 3.90, 3.190 ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640 ............... 3.60, 3.70, 3.185, 3.190, 6.25, 13.160 ACCC v Target Australia Pty Ltd (2001) ATPR ¶41-840 ...................... 13.145, 3.170, 13.205, 13.310 ACCC v Telstra Corporation Ltd (2004) 208 ALR 459 .. 3.60, 3.90, 3.170, 3.185, 3.190, 6.130, 7.10
Table of Cases xiii
ACCC v Telstra Corporation Ltd (2007) ATPR ¶42-203 .............................................. 3.10, 3.85, 6.25 ACCC v The Construction, Forestry, Mining and Energy Union (2007) ATPR ¶42-141 ............................................................................................................... 13.145 ACCC v Ticketek Pty Ltd [2011] FCA 1489 ............................................................................... 13.145 ACCC v Trading Post Australia Pty Ltd (2011) 197 FCR 498 ....................................................... 3.45 ACCC v Turi Foods Pty Ltd (No 2) [2012] FCA 12 ........................................ 13.145, 13.205, 13.210 ACCC v Turi Foods Pty Ltd (No 4) (2013) ATPR ¶42-448 ................................................ 6.50, 6.275 ACCC v Universal Music Australia Pty Ltd (No 2) (2002) 201 ALR 618 ........................................................................................................................ 13.65, 13.200 ACCC v Valve Corporation (No 3) [2016] FCA 196 ....................... 1.95, 6.180, 8.125, 8.140, 15.275 ACCC v Virgin Mobile Australia Pty Ltd (No 2) (2003) ATPR (Digest) ¶46-230 .......................................................................................................... 13.295, 13.310 ACCC v Wizard Mortgage Corp Ltd (2002) ATPR ¶41-903 ............................................... 6.90, 6.125 ACCC v Woolworths (South Australia) Pty Ltd (t/as Mac’s Liquor) (2003) 198 ALR 417 ................................................................................................... 13.205 ACCC v Woolworths Ltd [2016] FCA 44 ......................................................................... 6.105, 11.215 ACCC v Wordplay Services Pty Ltd (2004) 210 ALR 562 ......................... 7.115, 7.120, 7.125, 7.135 ACCC v Yellow Page Marketing BV (No 2) (2011) 195 FCR 1 ................................................ 13.395 ACCC v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 ................................................. 13.265, 13.290 ACCC v Zanok Technologies Pty Ltd [2009] FCA 1124 .............................................................. 6.265 ACI Australia Ltd v Glamour Glaze Pty Ltd (1988) ATPR ¶40-868 ........................................................................................................................................ 6.115 ALDI Stores v EFTPOS Payments Australia Ltd (2011) ATPR ¶42-371 ....................................................................................................................................... 3.135 ASIC v Accounts Control Management Services Pty Ltd [2012] FCA 1164 .................................................................................................................................... 7.225 ASIC v Australian Property Custodian Holdings Ltd (R & Mgs apptd) (in liq) (Controllers apptd) [2014] FCA 1308 ............................................................. 13.325 ASIC v Fortescue Metals Group Ltd (2011) 190 FCR 364 ........................................................... 3.150 ASIC v Fortescue Metals Group Ltd [No 5] (2009) 264 ALR 201 ............................................................................................................................................... 3.150 ASIC v National Exchange Pty Ltd (2005) 148 FCR 132 .............................. 4.50, 4.65, 4.110, 4.195 ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1991) 27 FCR 460 .................................................................................................................... 8.125 Abigroup Contractors Pty Ltd v Peninsula Balmain Pty Ltd (2001) ATPR (Digest) 46-213 .................................................................................................... 3.115 Abigroup Contractors Pty Ltd v Peninsula Balmain Pty Ltd [2002] NSWCA 211 ................................................................................................................... 3.115 Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 ........................................................................... 1.05, 3.05, 3.145 Ackers v Austcorp International Ltd [2009] FCA 432 ................................................................... 2.115 Acquired Holdings Ltd v Turvey (2008) 8 NZBLC 102 ...................................................... 8.55, 15.80 Actors and Announcers Equity Association of Australia v Fontana Films Pty Ltd (1982) 150 CLR 169 .............................................................................. 2.55 Adams v ETA Foods Ltd (1987) ATPR ¶40-831 ............................................... 13.115, 13.120, 13.130 Adams v J & D’s Used Cars Ltd (1983) 26 Sask R 40 ................................................................ 15.70 Advanced Switching Services Pty Ltd v State Bank of New South Wales [2007] FCA 954 .................................................................................................... 3.125 Aevum Ltd v National Exchange Pty Ltd (2004) 142 FCR 316 ..................................................... 4.50 Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 ............................................... 13.145 Akai Pty Ltd v People’s Insurance Co Ltd (1996) 188 CLR 418 ............................................... 15.275
xiv Table of Cases
Alex Pordage t/as Pattisserie Fe Fi Fo v Chrystal & Co Pty Ltd t/as Caterlink [2014] NSWCATCD 72 ...................................................................................... 15.70 Aliotta v Broadmeadows Bus Service Pty Ltd (1988) ATPR ¶40-873 ............................................................................................................................ 2.120, 3.125 Alley v Quayside [2011] NSWCTTT 228 ...................................................................................... 8.340 Allphones Retail Pty Ltd v Hoy Mobile Pty Ltd (2009) ATPR ¶42-294 ............................................................................................................................ 4.175, 4.185 Amadio Pty Ltd v Henderson (1998) 81 FCR 149 ........................................................................ 3.150 Andrews v Australian and New Zealand Banking Group Ltd (2011) 288 ALR 611 .................................................................................................................... 5.30 Annand and Thompson Pty Ltd v TPC (1979) ATPR ¶40-116 ....................................................... 6.60 Anthony v Vaclav [2009] VSC 357 .................................................................................................. 5.95 Apand Pty Ltd v The Kettle Chip Company Pty Ltd (1994) 52 FCR 474 ...................................................................................................................................... 3.225 Apco Service Stations Pty Ltd v ACCC (2005) ATPR ¶42-078 ................................................. 15.225 Apple Computer Inc v Computer Edge Pty Ltd (1984) 1 FCR 549 ................................................................................................................................... 6.115, 6.120 Arcardi v Colonial Mutual Life Assurance Society Ltd (1984) ATPR ¶40-473 .......................................................................................................................... 14.120 Argy v Blunts and Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112 ...................................................................................................... 2.75, 2.100, 2.105, 2.120 Arturi v Zupps Motors Pty Ltd (1980) ATPR ¶40-189 .................................................................... 8.10 Ascot Four Pty Ltd v ACCC (2009) 176 FCR 106 .............................................................. 3.90, 6.155 Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441 .................................................. 8.385 Astrazeneca Pty Ltd v GlaxoSmithKline Australia Pty Ltd (2006) ATPR ¶42-106 ........................................................................... 3.10, 3.85, 3.90, 3.175, 6.25 Atkinson v Hastings Deering (Queensland) Pty Ltd (1985) 71 ALR 93 ....................................................................................................................................... 8.210 Attorney-General of NSW v World Best Holdings Ltd (2005) 63 NSWLR 557 ............................................................................................................. 4.50, 4.85, 4.195 Au.Domain Administration Ltd v Domain Names Australia (2004) 207 ALR 521 ........................................................................................................... 7.80, 7.85 Auckland Property Restoration Ltd v Blackford (Unreported ....................................................... 15.70 Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 ................................................................................................................................. 4.50 Australia and New Zealand Banking Group Ltd v Dzienciol [2001] WASC 305 ........................................................................................................................ 4.25 Australian Beauty Trade Suppliers Ltd v Conference & Exhibition Organisers Pty Ltd (1991) ATPR ¶41-107 ................................................................ 2.20 Australian Communications Network Pty Ltd v ACCC (2005) 146 FCR 413 ................................................................................................................... 7.115, 7.130 Australian Home Loans Ltd (t/as Aussie Home Loans) v Phillips (1998) ATPR ¶41-626 ................................................................................................................. 6.115 Australian Industrial Relations Commission, Re; Ex parte Australian Transport Officers Federation (1990) 171 CLR 216 ................................................................................................................................................. 2.55 Australian Ocean Line Pty Ltd v West Australian Newspapers Ltd (1983) 66 FLR 453; 47 ALR 497 ........................................................................... 3.235, 6.300 Australian Ocean Line Pty Ltd v West Australian Newspapers Ltd (1985) 58 ALR 549 ............................................................................................................. 3.235 Australian Softwood Forests Pty Ltd v Attorney General(NSW); Ex rel Corporate Affairs Commission (1981) 148 CLR 121 .................................................... 7.120
Table of Cases xv
Australian Woollen Mills Ltd v F S Walton & Co Ltd (1937) 58 CLR 641 ..................................................................................................................................... 3.225 Automasters Australia Pty Ltd v Bruness Pty Ltd [2002] WASC 286; (2003) ATPR (Digest) ¶46-229 ........................................................ 4.105, 4.145, 4.175, 4.185
B BBB Constructions Pty Ltd v Aldi Foods Pty Ltd [2010] NSWSC 1352 ............................................................................................................................. 3.125 BHP Coal Pty Ltd v O and K Orenstein and Koppel AG [2008] QSC 141 ................................................................................................................................... 14.130 BHPB Freight Pty Ltd v Cosco Oceania Chartering Pty Ltd (No 2) [2008] FCA 1656 .................................................................................................... 14.145, 14.165 BHPB Freight Pty Ltd v Cosco Oceania Chartering Pty Ltd (No 3) [2009] FCA 1087 ................................................................................................................. 14.135 BMI Ltd v Federated Clerks Union of Australia (1983) 51 ALR 401 ............................................................................................................................................. 13.145 BMW Australia Ltd v ACCC (2004) 207 ALR 452 .................................................................... 13.265 Baltic Shipping Company v Dillon (1993) 176 CLR 344 .................................................. 5.190, 14.30 Baratta v TPA Pty Ltd [2012] VCAT 679 ...................................................................................... 8.305 Barbaro v The Queen (2014) 253 CLR 58 ................................................................................... 13.205 Barratta v TPA Pty Ltd [2012] VCAT 679 ..................................................................................... 8.250 Bartlett v Sydney Marcus Ltd [1965] 1 WLR 1013 ...................................................................... 8.210 Barton v Croner Trading Pty Ltd (1984) ATPR¶40-470 .................................................................. 6.45 Barton v Westpac Banking Corp (1983) 150 ALR 397 ................................................................... 7.50 Bateman v Slayter (1987) 71 ALR 553 .......................................................... 3.35, 3.140, 3.150, 3.155 Bauer v Power Pacific International Media Pty Ltd [2007] FCA 349 ................................................................................................................................................. 7.80 Begbie v State Bank of New South Wales (1994) ATPR ¶41-288 ................................................ 4.205 Benlist Pty Ltd v Olivetti Australia Pty Ltd (1990) ATPR ¶41-043 ............................................................................................................................ 3.160, 6.250 Bennett v Elysium Noosa Pty Ltd (in liq) (2012) 202 FCR 72 ........ 2.115, 2.125, 3.35, 3.135, 3.140, 6.250, 14.95, 14.165 BestCare Foods Ltd v Origin Energy LPG Ltd (formerly Boral Gas (NSW) Pty Ltd) [2013] NSWSC 1287 ............................................................................ 14.105 Bevanere Pty Ltd v Lubidineuse (1984) 7 FCR 325 ..................................................................... 2.105 Bialous v Budget Vehicles Pty Ltd [2013] NSWCTTT 130 .......................................................... 8.305 Biba Ltd v Stratford Investments Ltd [1973] Ch 281 .................................................................. 13.335 Blomley v Ryan (1956) 99 CLR 362 ............................................................................. 4.20, 4.25, 5.95 Bodum v DKSH Australia Pty Ltd [2011] FCAFC 98 .................................................................. 3.220 Body Bronze International Pty Ltd v Fehcorp Pty Ltd [2011] VSCA 196; (2011) 34 VR 536; 282 ALR 571 ........................................... 3.145, 4.15, 4.50, 4.180 Bond v Barry (2007) 73 IPR 490 ................................................................................................... 3.235 Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 215; 71 ALR 615 ................................................................................... 2.105, 8.125, 14.60 Bonomo v Tile Trends [2012] NSWCTTT 363 .............................................................................. 8.290 Bostik (Australia) Pty Ltd v Gorgevski (No 1) (1992) 36 FCR 20 ............................................................................................................................................... 14.100 Botany Bay City Council v Jazabas Pty Ltd [2001] NSWCA 94 ................................................. 3.135 Bowler v Hilda Pty Ltd (1998) 80 FCR 191; ATPR ¶41-625 ................................ 3.140, 3.160, 6.250 Bowler v Hilda Pty Ltd [2000] FCA 899 ..................................................................................... 14.180
xvi Table of Cases
Brandt v Flower Power and Stone Masonry Pty Ltd [2012] NSWCTTT 261 ............................................................................................................... 8.290, 15.05 Bray v Hoffman-La Roche Ltd (2002) 118 FCR 1 .......................................................................... 1.95 Bridge Stockbrokers Ltd v Bridges (1985) 57 ALR 401 ................................................................. 3.95 Bridgewater v Leahy (1998) 194 CLR 457 ...................................................................................... 4.25 Briginshaw v Briginshaw (1938) 60 CLR 336 ............................................................................. 12.120 Bristol-Meyers Squibb Australia Pty Ltd v Astra Pharmaceuticals Pty Ltd (1999) 45 IPR 144 ............................................................................... 3.20 British Airways Board v Taylor (1976) 1 WLR 13 ....................................................................... 6.180 Brockway v Pando (2000) 22 WAR 771 ........................................................................................ 2.120 Broken Hill South v Commissioner of Taxation (NSW) (1937) 56 CLR 337 ................................................................................................................................ 1.130 Brown v Riverstone Meat Company Pty Ltd (1985) 60 ALR 595 ............................................. 13.110 Brown v The Jam Factory Pty Ltd (1981) 53 FLR 340 .................................................................. 3.05 Bunnings Group Ltd v Laminex Group Ltd (2006) ATPR ¶42-115 ........................................................................................................................................ 8.100 Burdon v Outback Generators Pty Ltd [2013] NSWCTTT 270 .................................................... 8.305 Burg Design Pty Ltd v Wolki (1999) ATPR ¶41-689; 162 ALR 639 ................................................................................................................................... 3.120, 3.160 Burger King Corporation v Hungry Jack’s Pty Ltd [2001] NWSCA 187 .................................................................................................................... 4.145, 4.175 Burswood Management Ltd v Attorney-General (Cth) (1990) 23 FCR 144 ........................................................................................................................................ 6.30 Burton v Chad One Pty Ltd [2013] NSWDC 301 .............................................................. 8.270, 8.300 Business and Professional Leasing Pty Ltd v Dannawi [2008] NSWSC 902 .................................................................................................................... 8.80, 15.225 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 ....... 3.10, 3.20, 3.40, 3.55, 3.60, 3.70, 3.75, 3.80, 3.85, 6.25, 14.130 Byers v Dorotea Pty Ltd (1987) ATPR ¶40-760 ............................................................................ 3.140
C C v FP Ltd & LVM Ltd [2009] NZDispT 34 ................................................................................ 6.205 CCP Australian Airships Ltd v Primus Telecommunications Pty Ltd [2004] VSCA 232 .................................................................................................................. 7.50 CH Real Estate Pty Ltd v Jainran Pty Ltd [2010] NSWCA 37 .................................................... 3.160 CIT Credit Pty Ltd v Keable [2006] NSWCA 130 .......................................................................... 4.85 CPA Australia Ltd v Dunn (2007) ATPR ¶42-205 ........................................................................... 6.90 CPI Group Ltd v Stora Enso Australia Pty Ltd (2007) ATPR ¶42-193 ............................................................................................................................ 3.125, 14.70 Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397 .................................................................................................. 3.20, 3.210 Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 8) [2008] FCA 470 ......................................................................................................... 3.95 Caffwy v Leatt-Hayter (No 3) [2013] WASC 348 ......................................................................... 3.125 Cairnsmore Holdings Pty Ltd v Bearsden Holdings Pty Ltd [2007] FCA 1822 ........................................................................................................................ 1.100 Caltex Australia Petroleum Pty Ltd v Charbden Haulage Pty Ltd [2005] FCAFC 271 ..................................................................................................................... 14.60 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 ............................................................ 3.10, 3.20, 3.60, 3.75, 3.145, 3.160, 3.165, 14.75, 14.80 Campbell v Metway Leasing Ltd (1998) ATPR ¶41-630 .............................................................. 7.210
Table of Cases xvii
Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 ............................. 3.05, 3.10, 3.65, 3.70, 3.85, 3.90, 3.95, 3.165, 3.210, 6.25, 14.230 Canon Australia Pty Ltd v Patton (2007) ATPR ¶42-183; [2007] NSWCA 246 ...................................................................................................................... 4.85, 4.125 Cantarella Bros Pty Ltd v Valcorp Fine foods Pty Ltd (2002) ATPR ¶41-856 .............................................................................................................................. 3.65 Carey-Hazell v Getz Bros & Co (Aust) Pty Ltd (2004) ATPR ¶42-014 ................................................................................................... 8.360, 12.45, 12.85, 12.120 Carpet Call Pty Ltd v Chan [1987] ASC 55-553; (1987) ATPR (Digest) ¶46-025 .................................................................................................... 8.75, 8.100, 8.355 Carroll v Pollock Wholesale Pty Ltd [2014] ACAT 14 ................................................................. 8.335 Cary Boyd v Agrison Pty Ltd [2014] VMC 23 ................................ 8.250, 8.280, 8.380, 8.385, 15.35 Cassidy v Medical Benefits Fund of Australia Ltd (2002) ATPR ¶41-892 .......................................................................................................................... 3.170, 13.310 Cassidy v NRMA Health Pty Ltd (2002) ATPR ¶41-891 ............................................................ 14.175 Castlemaine Tooheys Ltd v Williams & Hodgson Transport Pty Ltd (1986) 162 CLR 395 ........................................................................................................... 8.130 Cehave NV v Bremer Handelsgesellschaft mbH [1976] QB 44 ................................................... 8.260 Channel Seven Brisbane Pty Ltd v ACCC (2008) 173 FCR 91 ................................................... 3.245 Charben Haulage Pty Ltd v Environmental & Earth Sciences Pty Ltd (2004) ATPR (Digest) ¶46-252 .................................................................................. 6.30, 6.250 Cheryl Foster v Mahamudur Rahman t/as Smarty Web Solutions [2014] NSWCATCD 17 ............................................................................................................... 9.80 Chilcott v Homesec Finance Express Pty Ltd [2011] FCA 729 ...................................................... 4.75 Choice Constructions Pty Ltd v Janceski (No 3) [2011] WASC 358 ................................................................................................................................................. 4.25 Cicchini v Brabazon [2014] QCAT 671 ......................................................................................... 8.305 Cinema Centre Services Pty Ltd v Eastaway Air Conditioning Pty Ltd (1999) ASAL 55-034 .................................................................................................... 8.100 Claremont Petroleum NL v Cummings (1992) 110 ALR 239 ......................................................... 6.30 Clifford v Vegas Enterprises [2011] FCAFC 135 ........................................................................... 3.105 Coggin v Telstar Finance Company (Q) Pty Ltd (2006) ATPR ¶42-107 ....................................................................................................................................... 4.100 Colgate-Palmolive Pty Ltd v Rexona Pty Ltd (1981) ATPR ¶40-242 ..................................................................................................................... 1.35, 3.170, 6.45 Collins Marrickville Pty Ltd v Henjo Investments Pty Ltd (1987) 72 ALR 601 ...................................................................................................................... 3.20 Comalco Aluminium Ltd v Mogal Freight Services Pty Ltd (1993) ATPR (Digest) ¶46-106 .................................................................................................... 9.30 Commerce Commission v Adair (1995) 5 NZBLC 99-361 ........................................................... 6.130 Commerce Commission v New Zealand Milk Corporation Ltd [1994] 2 NZLR 730 ................................................................................................................. 13.205 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 ......................................................................................................... 4.15, 4.20, 4.25, 4.30, 4.110 Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 ....................................................................................... 13.160, 13.205 Commonwealth v Verwayen (1990) 170 CLR 394 .......................................................................... 4.15 Commonwealth of Australia v Tasmania (1983) 46 ALR 625 ........................................................ 2.20 Con Agra Inc v McCain Foods (Aust Pty Ltd (1992) 33 FCR 302 ............................................................................................................................................... 3.210 Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 ..................................................................... 2.75, 2.95, 2.105, 3.05, 3.210, 6.265, 13.290
xviii Table of Cases
Consumer Protection, Commissioner for v Armstrong [2012] WASC 206 ................................................................................................................................ 13.335 Contact Energy Ltd v Jones [2009] 2 NZLR 830 ...... 8.55, 8.205, 8.240, 8.260, 8.265, 15.70, 15.105 Cooper v Ashley & Johnson Motors Ltd [1997] DCR 170; NZ DCR Lexis 19 ...................................................................................................... 8.255, 15.35, 15.60 Cooper v Cadwalader (1904) 5 TC 101 ........................................................................................... 1.95 Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184 ............................................................................................................................... 4.145 Corrections Corporation of Australia Pty Ltd v Commonwealth (2000) 104 FCR 448 .................................................................................................................... 2.55 Costa Vraca Pty Ltd v Berrigan Weed & Pest Control Pty Ltd (1998) 155 ALR 714 ........................................................................................................... 3.25, 3.30 Council of the Shire of Noosa v Farr [2001] QSC 060 ................................................................... 9.65 Country Road Clothing Pty Ltd v Najee Nominees Pty Ltd (1991) 20 IPR 419 ........................................................................................................................ 3.20 Crawford v Mayne Nickless Ltd (1992) ATPR (Digest) ¶46-091 ................................................... 8.75 Crocodile Marketing Ltd v Griffith Vintners Pty Ltd (1989) 28 NSWLR 539 .................................................................................................................... 6.45, 14.190 Crossan v Commons (1985) ATPR ¶40-542 ................................................................................... 6.290
D DPN Solutions Pty Ltd v Tridant Pty Ltd [2014] VSC 511 ............................................................ 4.85 Dai v Telstra (2000) 171 ALR 348 ................................................................................................... 4.60 Dalton v Lawson Hill Estate Pty Ltd (2005) ATPR ¶42-079 ................................................. 3.40, 3.55 Darwin Bakery Pty Ltd v Sully (1981) ATPR ¶40-230 ................................................................... 6.25 Dataflow Computer Services Pty Ltd v Goodman (1999) 168 ALR 169 ....................................................................................................................................... 2.80 David Jones Ltd v Willis (1934) 52 CLR 110 ............................................................................... 8.215 Davidson v Watson (1953) 28 ALJ 63 ............................................................................................. 6.20 Dawson v LNG Holdings [2008] NSWSC 137 ............................................................................. 3.125 Dawson v Motor Tyre Service Pty Ltd (1981) ATPR ¶40-223 ..................................................... 6.175 Dawson v World Travel Headquarters Pty Ltd (1981) 53 FLR 455 ................................................................................................................................................. 7.50 De Bortoli Wines Pty Ltd v HIH Insurance Ltd (in liq) (2011) 200 FCR 253 ................................................................................................................... 14.45, 14.50 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 ....................................................... 3.100, 14.215 Dib Group Pty Ltd v Ventouris Enterprises Pty Ltd (2011) 284 ALR 601; [2011] NSWCA 300 ................................................................................................. 3.140 Digi-Tech (Australia) Ltd v Brand (2004) ATPR (Digest) ¶46-248; [2004] NSWCA 58 ............................................................................... 3.145, 14.45, 14.60 Dillon v Baltic Shipping Co (1989) 21 NSWLR 614 ...................................................................... 9.05 Dillon v Chin; Dillon Kingly Commodities (Qld) Pty Ltd (1988) ATPR ¶40-899 .............................................................................................................................. 6.90 Director, Fair Work Building Industry Inspectorate v CFMEU (2015) 229 FCR 331 ................................................................................................................ 13.205 Director of Consumer Affairs v Dimmeys Stores Pty Ltd (2013) 213 FCR 559 .............................................................................................................................. 1.150 Director of Consumer Affairs Victoria v AAPT Ltd [2006] VCAT 1493 ................................................................................................................................. 5.125 Director of Consumer Affairs Victoria v Craig Langley Pty Ltd (No 1 and No 2) [2008] VCAT 482 and [2008] VCAT 1332 .................................................. 5.125
Table of Cases xix
Director of Consumer Affairs Victoria v Scully (No 3) (2013) 303 ALR 168 ................................................................................................................................ 4.85 Director of Consumer Affairs Victoria v The Good Guys Discount Warehouses (Australia) Pty Ltd [2016] FCA 22 ............................................ 6.205, 6.210 Director of Consumer Affairs Victoria v Trainstation Health Clubs Pty Ltd [2008] VCAT 2092 ................................................................................. 5.125, 5.150 Director of Public Prosecutions (Cth) v Said Khodor El Karhani (1990) 21 NSWLR 370 .............................................................................................................. 13.60 Donoghue v Stevenson [1932] AC 562 ............................................................................. 11.20, 12.170 Doolan v Waltons Ltd (1981) ATPR ¶40-257 .............................................................................. 13.115 Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199 .............................. 3.50, 3.75, 3.140 Dr Martens Australia Pty Ltd v Rivers (1999) 95 FCR 136 ......................................................... 3.220 Drew v Makita (Australia) Pty Ltd [2009] 2 Qd R 219 .............................................................. 12.170 Ducret v Chaudhary’s Oriental Carpet Palace Pty Ltd (1987) 76 ALR 182 ..................................................................................................................................... 13.45 Ducret v Nissan Motor Co (Australia) Pty Ltd (1979) ATPR ¶40-111 ........................................................................................................................................ 13.55 Duracell Australia Pty Ltd v Union Carbide Australia Ltd (1988) ATPR ¶40-918 ............................................................................................................................ 3.205
E “E” v Australian Red Cross Society (1991) 27 FCR 310 ........................................... 2.20, 2.105, 8.10 EK Nominees Pty Ltd v Woolworths Ltd [2006] NSWSC 1172 ....................................... 3.110, 3.125 Easts Van Villages v Minister Administering the National Parks and Wildlife Act (2001) ATPR (Digest) ¶46-211 ........................................................................ 2.70 Effem Foods Ltd v Nicholls [2004] NSWCA 332 ............................................................ 8.305, 12.120 Elders Trustee and Executor Company Ltd v EG Reeves Pty Ltd (1987) ATPR (Digest) ¶46,030 .................................................................................................. 6.250 Energizer Australia Pty Ltd v Remington Products Australia Pty Ltd (2008) ATPR ¶42-219 ....................................................................................... 3.85, 6.25, 6.150 Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd (2008) 19 VR 358 .................................................................................................................... 14.120 Eva v Southern Motors Box Hill Pty Ltd (1977) ATPR ¶40-026 .......................................... 6.15, 6.45 Eveready Australia Pty Ltd v Gillette Australia Pty Ltd (2000) ATPR ¶41-751 ............................................................................................................................ 3.180
F F v SC Ltd NZDispt 94 ................................................................................................................... 6.205 Fabcot Pty Ltd v Port Macquarie-Hastings Council [2010] NSWSC 726 ............................................................................................................................... 14.55 Fabcot Pty Ltd v Port Macquarie-Hastings Council [2011] NSWCA 167 .................................................................................................................... 3.100, 3.105 Fadu Pty Ltd v ACN 008 112 196 Pty Ltd as Trustee of the “International Linen Service Unit Trust” (2007) ATPR ¶41-206 ....................................................................................................................................... 14.20 Fair Trading, Director-General of v First National Bank plc [2002] 1 AC 481 ......................................................................................................................... 5.120 Far Horizons Pty Ltd v McDonald’s Australia Ltd [2000] VSC 310 ............................................................................................................................................... 4.145 Fencott v Muller (1983) 152 CLR 570 ............................................................................................. 2.20
xx Table of Cases
Ferme v Kimberley Discovery Cruises Pty Ltd [2015] FCCA 2384 ........................................................................................ 5.50, 5.95, 5.130, 5.135, 5.190, 14.30 Finding v Commonwealth Bank of Australia [2001] 1 Qd R 168 ................................................ 3.125 Finucane v NSW Egg Corp (1988) 80 ALR 486 .................................................................. 3.20, 3.120 Firewatch Australia Pty Ltd v Country Fire Authority (1999) ATPR (Digest) ¶46-198 ................................................................................................................ 2.80 Forrest v ASIC (2012) 247 CLR 486 ............................................................... 3.85, 3.90, 3.150, 3.155 Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 .......................................................... 13.145 Foster v ACCC (2006) 149 FCR 135 .............................................................................. 13.250, 13.275 Four Square Stores (Queensland) Ltd v ABE Copiers Pty Ltd (1981) ATPR ¶40-232 ................................................................................................................. 8.100 Franich v Swannell (1993) 10 WAR 459 .............................................................................. 2.75, 2.100 Frank v Grosvenor Motor Auctions Pty Ltd [1960] VR 607 ........................................................ 8.365 Fraser v NRMA Holdings Ltd (1994) 52 FCR 1 ........................................................................... 6.130 Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 ....................................................................... 6.130 Free v Jetstar Airways Pty Ltd [2007] VCAT 1405 ....................................................................... 5.155 Freestone Auto Sales Pty Ltd v Musulin [2015] NSWCA 160 ..................................................... 8.305
G GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1 ........................................................................................................... 2.55 GPG (Australia Trading) Pty Ltd v GIO Australia Holdings Ltd (2001) 117 FCR 23 ..................................................................................................................... 3.285 Gammasonics Institute of Medical Research Pty Ltd v Comrad Medical Systems Pty Ltd [2010] NSWSC 267 ......................................................................... 8.135 Garcia v National Australia Bank Ltd (1998) 194 CLR 395 ............................................... 4.15, 4.110 Gardam v George Wills & Co Ltd (No 1) (1988) ATPR ¶40-884; 82 ALR 415 ............................................................................ 3.40, 6.15, 6.25, 6.35, 6.45, Gardam v George Willis & Co (No 2) (1988) ATPR ¶40-884 .................................................... 13.130 Gardiner v Suttons Motor (Homebush) Pty Ltd (1983) 48 ALR 142 ............................................................................................................................................... 3.140 Gardner Corporation Pty Ltd v Zed Bears Pty Ltd [2003] WASC 13 ................................................................................................................................... 14.65, 14.130 Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 .............................................................................................................................. 14.85, 14.90 General Newspapers Pty Ltd v Telstra Corp (1993) 45 FCR 164 .............................. 3.25, 3.80, 3.105 Genocanna Nominees Pty Ltd v Thirsty Point Pty Ltd [2006] FCA 1268 .................................................................................................................... 14.175, 14.180 George Weston Foods Ltd v Goodman Fielder Ltd (2000) 49 IPR 553 ....................................................................................................................................... 3.190 Gharibian v Propix Pty Ltd t/as Jamberoo Recreational Park [2007] NSWCA 151 ..................................................................................................................... 9.65 Gillette Aust Pty Ltd v Energizer Australia Pty Ltd (2002) 56 IPR 13; 193 ALR 629 ........................................................................................... 3.20, 3.205, 6.150 Giorgianni v The Queen (1985) 156 CLR 473 ............................................................................ 14.175 Given v CV Holland (Holdings) Pty Ltd (1977) 29 FLR 212 ...................................... 6.15, 6.25, 6.45 Given v Snuffa Pty Ltd and Quinn (1978) ATPR ¶40-083 .............................................................. 6.45 Glendale Chemical Products Pty Ltd v ACCC (1999) ATPR ¶41-672; (1998) 90 FCR 40 ........................................................... 6.90, 6.105, 12.05, 12.10, 12.45 Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82; 55 ALR 25 ............................................................ 3.35, 3.145, 3.150, 3.155, 3.235, 6.300
Table of Cases xxi
Goldiwood Pty Ltd t/as Margaret Franklin & Associates v ADL (Aust) Pty Ltd t/as Adviser Logic [2014] QCAT 238 ........................................ 8.135, 15.30, 15.35 Goldsbro v Walker [1993] 1 NZLR 394 ............................................................................. 3.40, 15.105 Goodridge v Macquarie Bank Ltd [2010] FCA 67 ........................................................................ 4.205 Google Inc v ACCC (2013) 249 CLR 435 ........... 3.05, 3.10, 3.15, 3.20, 3.45, 3.60, 3.70, 3.85, 3.95, 13.125, 13.330, 14.245 Gould v Vaggelas (1983-1985) 157 CLR 215 .................................................................... 3.165, 14.85 Graham Barclay Oysters Pty Ltd v Ryan (2000) 177 ALR 18; ATPR (Digest) ¶46-207 .......................................................................... 8.360, 12.20, 12.35, 12.130 Grain Sorghum Marketing Board v Supastok Pty Ltd [1964] Qd R 98 ............................................................................................................................................. 13.20 Granitgard Pty Ltd v Termicide Pest Control Pty Ltd (No 5) [2010] FCA 313 ............................................................................................................................ 3.50 Granitigard Pty Ltd v Termicide Pest Control Pty Ltd (2011) 281 ALR 1 .................................................................................................................................... 3.50 Grant v Australian Knitting Mills Ltd (1935) 54 CLR 49; [1936] AC 85 ................................................................................................................. 8.365, 11.20, 12.170 Greaves & Co (Contractors) Ltd v Baynham Meikle & Partners [1975] 1 WLR 1095 ..................................................................................................................... 9.65 Green v The Queen (2011) 244 CLR 462 .................................................................................... 13.200 Gregg v Tasmanian Trustees Ltd (1997) 73 FCR 91 ..................................................................... 3.120 Gregory v Philip Morris Ltd (1988) 80 ALR 455 ....................................................................... 14.100 Griffiths v Conway Ltd [1939] 1 All ER 685 ..................................................................... 8.355, 8.365 Guglielman v Trescowthick [2004] FCA 326 ................................................................................. 3.255 Gurr v Hunter Volkswagen [2011] NSWCTTT 146 ....................................................................... 8.340
H HIH Insurance Ltd (in liq) v Adler [2007] NSWSC 633 ............................................... 14.180, 14.185 HTW Valuers (Central Queensland) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 ............................................................................ 14.90, 14.95, 14.110, 14.120 Hadgelias Holdings Pty Ltd v Seirlis [2014] QCA 177 ............................................................... 14.155 Hamilton v Whitehead (1989) ATPR ¶42-932 ................................................................................ 2.115 Hamond v State of New South Wales (2001) FCA 157 .................................................................. 2.70 Hampic Pty Ltd v Adams (2000) ATPR ¶41-737 ........................................................................... 6.105 Hanave Pty Ltd v LFOT Pty Ltd (1999) ATPR ¶41-687 ................................................... 14.50, 14.55 Hancock v East Coast Timber Products Pty Ltd [2011] NSWCA 11 ................................................................................................................................................... 6.75 Hardwick Game Farm v Suffolk Agricultural Poultry Producers Association [1969] 2 AC 31 ...................................................................................................... 8.355 Hardy v Your Tabs Pty Ltd [2000] NSWCA 150 .......................................................................... 3.125 Haros v Linfox Australia Pty Ltd [2011] FCA 699 ....................................................................... 6.265 Haros v Linfox Australia Pty Ltd [2012] FCAFC 42 .................................................................... 14.55 Haros v Linfox Australia Pty Ltd [2012] FCAFC 699 .................................................................. 6.265 Hartnell v Sharp (1975) ATPR ¶40-003 ........................................................................................... 6.45 Harwood, Howard v Rich and Mor Diamonds Pty Ltd [2013] NSWCTTT 502 .......................................................................................................................... 8.230 Hatfield v Health Insurance Commission (1987) 15 FCR 487 ........................................................ 6.30 Havyn Pty Ltd v Webster (2005) 220 ALR 211 .......................................... 3.55, 3.140, 14.85, 14.105 Henderson v Bowden Ford Pty Ltd (1979) ATPR ¶40-129 ............................................................. 6.60 Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546; 79 ALR 83 ......................................... 3.25, 3.35, 3.125, 3.160, 14.70, 14.220
xxii Table of Cases
Henry Kendall & Sons v William Lillico & Sons Ltd [1969] 2 AC 31 .......................................................................................................................................... 8.365 Henville v Walker (2001) 206 CLR 459 ... 14.35, 14.40, 14.55, 14.65, 14.85, 14.120, 14.130, 14.185 Heydon v NRMA Ltd (2000) 51 NSWLR 1 ........................................................................................... Hollis v ABE Copiers Pty Ltd (1979) 41 FLR 141; ATPR ¶40-115 .............................................................................................................................. 6.60, 6.180 Hollis v Clarke (1981) ATPR ¶40-245 ........................................................................................... 13.80 Holman v Johnson (1775) 1 Cowp 341; 98 ER 1120 .................................................................... 14.15 Hoover (Australia) Pty Ltd v Email Ltd (1991) ATPR ¶41-149; 104 ALR 369 ....................................................................................................................... 3.203.205 Hope v Bathurst City Council (1980) 144 CLR 1 .................................................................. 1.95, 5.75 Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 ....... 3.05, 3.70, 3.130, 3.165, 3.210, 3.215 Hosking v The Warehouse Ltd (Unreported ................................................................................... 15.70 Hospital Contribution Fund of Australia Ltd v Switzerland Australia Health Fund Pty Ltd (1987) 78 ALR 483 ............................................................... 13.280 Houghton v Arms (2006) 225 CLR 553 ............................................................................... 2.45, 2.100 Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd [2009] HCA Trans 325 .................................................................................................................................... 4.185 Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) (2008) ATPR ¶42-240 ............................................................................... 4.100, 4.135, 4.145, 4.175, 4.185 Hughes v Western Australian Cricket Association (Inc) (1986) 19 FCR 10 .................................................................................................................................... 2.20 Hungier v Grace (1972) 127 CLR 210 ............................................................................................. 2.55 Hurley v McDonald’s Australia Ltd (2000) ATPR ¶41-741 ................................................. 4.50, 4.105
I I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 ................................................................................ 14.35, 14.40, 14.50, 14.65 ICI Australia Operations Pty Ltd v TPC (1982) 38 FCR 248 ............ 13.250, 13.270, 13.275, 14.230, 14.240 IDP Education Ltd v Lejburg Pty Ltd [2015] VSC 650 .................................. 3.10, 3.150, 3.170, 6.80 IOOF Australia Trustees (NSW) Ltd v Tantipech (1998) 156 ALR 470 ..................................................................................................................................... 3.160 Ibrahim v Phan [2007] NSWCA 215 .............................................................................................. 3.125 Immigration & Multicultural Affairs, Minister for v Mohammad (2000) 101 FCR 434 .................................................................................................................... 6.30 Ingot Capital Investment & Ors v Macquarie Equity Capital Markets & Ors [No 6] [2007] NSWSC 125 ............................................................................. 14.70 Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2008] NSWCA 206; (2008) 73 NSWLR 653 ......................................... 14.45, 14.95 Inland Revenue, Commissioners of v Lysaght [1928] AC 234 ....................................................... 1.95
J J McPhee & Son (Aust) Pty Ltd v ACCC (2000) 172 ALR 532 ................................................ 13.175 JS McMillan Pty Ltd v Commonwealth (1997) 77 FCR 337 ................................................ 2.55, 5.75 Jacazlow Pty Ltd v Amberley Autos Pty Ltd (1992) ATPR ¶41-177 ......................................................................................................................................... 7.95 Jackson v McClintock (1997) 8 TCLR 161 ..................................................................................... 9.40 Jacques v Cut Price Deli Pty Ltd (1993) ATPR (Digest) ¶46-102 .................................................. 3.20
Table of Cases xxiii
Jainran Pty Ltd v Boyana [2008] NSWSC 468 ................................................................ 14.80, 14.130 James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 347 .............................................................................................. 3.35, 3.150, 3.155, 14.120 James Spittles v Michael’s Appliance Services Pty Ltd [2008] NSWCA 76 ...................................................................................................................... 12.10, 12.20 Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526; ATPR ¶41-186 ................................................................................................................... 1.35, 14.45 Janssen Pharmaceutical Pty Ltd v Pfizer Pty Ltd (1986) ATPR ¶40-654 ........................................................................................................................ 13.280, 13.310 Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd (2008) 167 FCR 372 .................................................................................................................... 8.80 Jekos Holdings Pty Ltd v Australian Horticultural Finance Pty Ltd (1994) 2 Qd R 515 ............................................................................................................ 14.120 Jelin Pty Ltd v Murdoch Pty Ltd (1985) ATPR ¶40-562 ............................................................... 3.140 Jetstar Airways Pty Ltd v Free [2008] VSC 539 ................................................................ 5.120, 5.155 Jewellery Group Pty Ltd v ACCC [2013] FCAFC 144 ....................................................... 3.90, 6.155 Jillawarra Grazing Company v John Shearer Ltd (1984) ATPR ¶40-441 ....................................................................................................................................... 8.100 John Bevins Pty Ltd v Cassidy (2003) 135 FCR 1 ..................................................................... 14.180 John G Glass Real Estate Pty Ltd v Karawi Constructions Pty Ltd (1993) ATPR ¶41-249 .............................................................................. 3.20, 3.40, 3.55, 3.140 Johnson Tiles Pty Ltd v Esso Australia Ltd (2001) ATPR ¶41-794 ....................................................................................................................................... 3.165 Johnson Tiles Pty Ltd & Ors v Esso Australia Ltd (1999) ATPR ¶41-696 ..................................................................................................................... 3.25, 3.30, 3.120 Jones v ACCC [2010] FCA 481 ..................................................................................................... 1.100 Jones v Glen Houn Holdings Pty Ltd (1985) ATPR ¶40-604 ....................................................... 6.290 Jones v West Star Motors Pty Ltd (1995) ATPR ¶41-447 .................................................... 8.75, 8.210 Juniper Property Holdings No 15 Pty Ltd v Caltabiano [2016] QSC 5 ......................................................................................................................................... 14.50
K Kabwand v National Australia Bank (1989) ATPR ¶40-950 ......................................................... 3.125 Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 ................................................................. 4.35 Karawi Constructions Pty Ltd v Bonefind Pty Ltd (1993) ATPR ¶41-265 ....................................................................................................................................... 14.70 Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35 ........................................................ 14.120 Keays v J P Morgan Administrative Services Australia Ltd [2011] FCA 358 ............................................................................................................... 6.265, 14.75 Keen Mar Corporation Pty Ltd v Labrador Park Shopping Centre Pty Ltd (1988) ATPR ¶40-853 .......................................................................... 6.250, 14.120 Keen Mar Corporation Pty Ltd v Labrador Park Shopping Centre Pty Ltd (1989) ATPR (Digest) ¶46-048 ......................................................................... 14.75 Keller v LED Technologies Pty Ltd (2010) 185 FCR 449 ................................. 3.195, 14.180, 14.190 Kennan v Monahan [1991] Qd R 401 ............................................................................................ 7.100 Kenny & Good Pty Ltd v MGICA (1992) Ltd (1997) ATPR ¶41-576 ....................................................................................................................................... 14.85 Ketchell v Master Of Education Services Pty Ltd (2007) 226 FLR 169 ...................................................................................................................................... 14.15 Kettle Chip Co Pty Ltd, The v Apand Pty Ltd (1993) 46 FCR 152 ............................................................................................................................................... 3.225
xxiv Table of Cases
Khoury v Sidhu [2011] FCAFC 71 ............................................................................................... 14.135 Khoury v Sidhu (No 2) [2010] FCA 1320 ................................................................................... 14.135 Kiley v Lysfar Pty Ltd (1985) ATPR ¶40-614 ................................................................................. 6.55 Kiley v MCI Technologies Pty Ltd [2006] VCAT 2543 .............................................................. 15.275 Kimberley NZI Finance Ltd v Torero Pty Ltd (1989) ATPR (Digest) ¶46-054 ........................................................................................................................... 3.25 Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281 ................................... 14.65, 14.85, 14.90 Knight v R (1992) 175 CLR 495 .................................................................................................... 13.45 Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd (2000) 100 FCR 257 ..................................................................................... 3.220 Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd [2011] FCAFC 119 ......................................................................................................... 3.80 Kovacevic v Holland Park Holdings Pty Ltd [2010] QDC 279 ...................................................... 9.65 Kowalczuk v Accom Finance Pty Ltd (2008) 229 FLR 4 ............................................................. 5.130 Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 .................................. 3.20, 3.110, 13.220 Ku-ring-gai Co-operative Building Society (No 12) Ltd, Re (1978) 36 FLR 134 .................................................................................................. 2.25, 2.75, 2.105 Kucharski v Air Pacific Ltd [2011] NSWCTTT 555 ..................................................................... 5.155
L LG Thorne & Co Pty Ltd v Thomas Borthwick & Sons (Australasia) Ltd (1956) 56 SR (NSW) 81 ............................................................................... 8.390 Lam v Ausintel Investments Australia Pty Ltd (1990) ATPR ¶40-990 .............................................................................................................................. 3.80, 3.105 Laminex (Aust) Pty Ltd v Coe Manufacturing Co [1999] NSWCA 370; (1998) ATPR ¶41-610 ....................................................................................... 15.275 Larmer v Power Machinery Pty Ltd (1977) ATPR ¶40-021 ............................................................ 6.90 Latrobe Capital & Mortgage Corporation Ltd v Hay Property Consultants Ltd (2011) 273 ALR 774 ..................................................................................... 14.110 Law v MCI Technologies Pty Ltd [2006] VCAT 415 .................................................................. 15.275 Laws v GWS Machinery Pty Ltd [2007] NSWSC 316; (2007) 209 FLR 53 ........................................................................................................ 8.110, 12.60, 12.170 Leading Edge Events Australia Pty Ltd v Te Kanawa [2007] NSWSC 228 ................................................................................................................................. 4.50 Leda Holdings Pty Ltd v Oraka Pty Ltd (1998) ATPR ¶41-601 ..................... 3.20, 3.80, 3.105, 14.75 Leeks v FXC Corporation [2002] FCA 72 ..................................................................................... 12.10 Legione v Hateley (1983) 152 CLR 406 .......................................................................................... 4.15 Lego Australia Pty Ltd v Paul’s (Merchants) Pty Ltd (1982) 42 ALR 344 ..................................................................................................................................... 3.215 Levene v Commissioners of Inland Revenue [1928] AC 217 ......................................................... 1.95 Leveraged Equities Ltd v Goodridge [2011] FCAFC 3; (2011) 274 ALR 655 ..................................................................................................................... 4.205, 5.60 Lewarne v Momentum Productions Pty Ltd [2007] FCA 1136 ..................................................... 1.100 Lezam Pty Ltd v Seabridge Australia Pty Ltd (1992) 35 FCR 535 ....................................................................................................................................... 3.20, 3.55 Lisciandro v Official Trustee in Bankruptcy (1995) ATPR ¶41-436 ........................................................................................................................................ 2.115 Louth v Diprose (1992) 175 CLR 621 ........................................................................... 4.15, 4.20, 4.25 Lovick & Son Developments Pty Ltd v Doppstadt Australia Pty Ltd [2012] NSWSC 529 ........................................................................................................... 14.160 Luxton v Vines (1952) 85 CLR 352 ............................................................................................... 13.45
Table of Cases xxv
Lymquartz v 2 Elizabeth Bay Road [2007] NSWSC 457 .............................................................. 3.180 Lyons v Kern Konstructions (Townsville) Pty Ltd (1983) 47 ALR 114 ..................................................................................................................................... 3.140
M MK Hutchence (Trading as “INXS”) v South Sea Bubble Co (1986) ATPR ¶40-667 ................................................................................................................. 3.175 MacCormick v Nowland (1988) ATPR ¶40-852 ............................................................................ 2.130 Mackman v Stengold Pty Ltd (1991) ATPR ¶41-105 ..................................................... 14.180, 14.185 Macquarie Bank Ltd v Seagle [2008] FCA 1417 ........................................................................... 1.100 Madden v Seafolly Pty Ltd [2012] FCA 1346 ............................................................................... 1.100 Makita (Aust) Pty Ltd v Black & Decker (A’asia) Pty Ltd (1990) 18 IPR 270 ........................................................................................................................ 3.20 Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305 .......................................................... 6.75 Malam v Graysonline, Rumbles Removals and Storage (General) [2012] NSWCTTT 197 .............................................................................................. 8.170 March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506 ........................................... 14.40, 14.130 Mark Bain Constructions Pty Ltd v Avis [2012] QCA 100 ........................................................... 14.95 Mark Foys Pty Ltd v TVSN (Pacific) Ltd (2001) ATPR ¶41-795 ....................................... 6.90, 6.115 Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494; 158 ALR 333 ............................................................................................... 14.45, 14.85, 14.105, 14.220 Martin v Tasmania Development and Resources (1999) ATPR (Digest) ¶46-193 ......................................................................................................................... 6.265 Marwood v Agrison Pty Ltd [2013] VCAT 1549 ............................................................... 8.245, 15.40 Masterclass Enterprises Pty Ltd v Bedshed Franchisors (WA) Pty Ltd [2008] WASC 67 ........................................................................................................... 4.175 Maxwell v Murphy (1957) 96 CLR 261 .......................................................................................... 8.60 Mayes v Australian Cedar Pty Ltd (2006) ATPR ¶42-119 ............................................... 12.10, 12.145 Mayne Nickless v Crawford (1992) 59 SASR 490l [1992] ASC 56-188 .................................................................................................................................. 9.05, 9.85 McCarthy v Australian Rough Riders Association Inc (1988) ATPR ¶40-836 .............................................................................................................................. 2.20 McCarty v Mc Intyre [1999] FCA 784 ........................................................................................... 14.40 McDonald’s System of Australia Pty Ltd v McWilliam’s Wines Pty Ltd (1979) ATPR ¶40-140 ................................................................................................... 6.115 McGrath v Australian Naturalcare Products Pty Ltd (2008) 165 FCR 230 ...................................................................................................................................... 3.135 McQuillan v Thomas [2012] NSWCTTT 107 ................................................................................ 8.335 McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd (1980) 49 FLR 455 .............................................................................................. 3.95, 3.165 Medibank Private Ltd v Cassidy (2002) 124 FCR 40 ................................................................. 13.395 Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1 ........................ 3.170, 3.185, 3.190, 3.195, 13.145, 13.290, 13.310, 14.180, 14.185, 14.190 Medtel Pty Ltd v Courtney (2003) 126 FCR 219 .......................................................................... 8.215 Medtel Pty Ltd v Courtney [2003] FCAFC 151; (2003) 130 FCR 182 .................................................................................................. 8.215, 8.250, 8.305, 12.170 Mehta v Commonwealth Bank of Australia (1990) ATPR ¶41-026 ..................................................................................................................................... 14.120 Merck Sharpe & Dohme (Aust) Pty Ltd v Peterson (2011) 196 FCR 145; [2011] FCAFC 128 ............................................................................. 8.305, 8.360, 14.40
xxvi Table of Cases
Mercland Investment Group Pty Ltd v Duncalm Pty Ltd [2012] FCA 183 ...................................................................................................................................... 3.125 Metal Corp Recyclers Pty Ltd v Metal Manufacturers Ltd (2004) ATPR (Digest) ¶46-243 ....................................................................................... 3.115, 3.120 Microbeads AG v Vinhurst Road Markings Ltd [1975] 1 WLR 218 ............................................................................................................................................... 8.190 Mill v The Queen (1988) 166 CLR 59 ............................................................................. 13.70, 13.195 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31 ......... 3.05, 3.35, 3.65, 3.100, 3.105, 3.110, 3.130 Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825 .................................... 4.145, 4.185 Mister Figgins Pty Ltd v Centepoint Freeholds Pty Ltd (1981) 36 ALR 23 ................................................................................................................................ 14.215 Monroe Topple v The Institute of Chartered Accountants (2002) 122 FCR 110; (2001) ATPR (Digest) ¶46-212 .................................................................. 5.65, 6.30 Mould v Commissioner of State Revenue [2015] VSCA 285 ......................................................... 5.75 Mullens v Miller (1882) 22 Ch D 194 ........................................................................................... 2.120 Munchies Management Pty Ltd v Belperio (1988) 58 FCR 274; (1989) ATPR ¶40-926 ........................................................................................ 14.35, 14.65, 14.220 Murphy v Overton Investments Pty Ltd (2004) 21 CLR 388 ............................... 3.20, 14.110, 14.120
N NMFM Property Pty Ltd v Citibank Ltd (2000) 107 FCR 270 .................................................... 2.115 NT Power Generation Pty Ltd v Power and Water Authority (2002) 122 FCR 399 .................................................................................................................... 2.55 NT Power Generation Pty Ltd v Power and Water Authority (2004) 219 CLR 90 ............................................................................................................. 2.55, 2.60 NW Frozen Foods Pty Ltd v ACCC (1996) 71 FCR 285 ..................... 13.65, 13.175, 13.200, 13.205 National Australia Bank Ltd v Meeke (2007) ATPR (Digest) ¶46-272 ....................................................................................................................................... 4.100 National Exchange Pty Ltd v ASIC (2004) ATPR ¶42-000 ................. 3.10, 3.90, 3.130, 3.190, 3.285 Nationwide News Pty Ltd v ACCC (1996) 71 FCR 215 ....................................................... 7.10, 7.15 Nella v Kingia Pty Ltd (1989) ATPR (Digest) ¶46-046 ................................................................ 14.65 Nesbit v Porter [2000] 2 NZLR 465 ................................................................................... 8.260, 15.60 Nescor Industries Group Pty Ltd v Miba Pty Ltd (1998) ATPR ¶41-609 ....................................................................................................................................... 3.140 Netcomm (Australia) Pty Ltd v Dataplex Pty Ltd (1988) ATPR ¶40-883 ....................................................................................................................................... 6.165 New South Wales v McCloy Hutcherson Pty Ltd (1993) 116 ALR 363 ................................................................................................................................... 14.120 New South Wales v RT & YE Falls Investments Pty Ltd (2003) ATPR (Digest) ¶46-233 ................................................................................................................ 2.55 Niblett v Confectioners’ Materials Co Ltd [1921] 3 KB 387 ........................................................ 8.185 Nike International Ltd v Campomar Sociedad Limitada (1996) ATPR ¶41-518 .............................................................................................................................. 3.70 Nixon v Slater & Gordon (2000) ATPR ¶41-765 ........................................................................... 8.125 Noor Al Houda Islamic College Pty Ltd v Bankstown Airport Ltd (2005) 215 ALR 625 ......................................................................................... 3.25, 3.35, 3.115 Norcast SarL v Bradken Ltd (No 2) (2013) 219 FCR 14 .................................................... 1.95, 3.115 North East Equity Pty Ltd v Proud Nominees Pty Ltd (2010) 269 ALR 262 ................................................................................................................... 14.40, 14.95
Table of Cases xxvii
North East Solution Pty Ltd v Masters Home Improvement Australia Pty Ltd [2016] VSC 1 .............................................................................................. 14.105 Norton v Hervey Motors Ltd [1996] DCR 427; 5 NZBLC 99-387 ......................................................................................................................................... 8.255
O O’Bryen v Coles Myer Ltd (1993) ATPR ¶41-209 .......................................................................... 6.45 O’Neill v Medical Benefits Fund of Australia Ltd (2002) 122 FCR 455 ............................................................................................................. 3.135, 6.265, 14.100 Ocean Dynamics Charter Pty Ltd v Hamilton Island Enterprises Ltd [2015] FCA 460 ................................................................................................................. 14.235 Office Cleaning Services Ltd v Westminster Window and General Cleaners Ltd (1946) 63 RPC 39 .................................................................................. 3.215 Office of Fair Trading v Abbey National plc [2009] UKSC 6; [2010] 1 AC 696 ........................................................................................................................... 5.35 Ogden, Contech Technical Services Pty Ltd v Unmanned Systems Asia Pacific (General) [2013] NSWCTTT 378 ............................................................ 8.80 Orix Australia Corporation Ltd v Moody Kidell & Partners Pty Ltd [2006] NSWCA 257 .............................................................................................................. 3.45 Osgaig Pty Ltd v Ajisen (Melbourne)Pty Ltd (2004) ATPR ¶42-036 ......................................................................................................................................... 6.90 Our Town FM Pty Ltd v Australian Broadcasting Tribunal (1987) 16 FCR 465 ...................................................................................................................... 6.30 Overlook Management BV v Foxtel Management Pty Ltd (2002) ATPR (Digest) ¶46-219 .................................................................................................. 4.185 Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd (2011) 248 FLR 193 ..................................................................................... 3.25, 3.30, 3.100, 3.110, 3.165 Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd [2011] WASCA 76 ................................................................................................................................. 14.40
P PSAL Ltd v Kellas-Sharpe [2012] QSC 31 .......................................... 4.75, 4.195, 4.210, 5.30, 5.130 PT Ltd v Spuds Surf Chatswood Pty Ltd [2013] NSWCA 446 ...................................................... 4.90 Pacific National (ACT) Ltd v Queensland Rail (2006) ATPR (Digest) ¶46-268 ......................................................................................................................... 4.165 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 .................... 4.45, 4.65, 4.80, 4.90, 4.95, 4.100, 4.185, 4.190, 4.195, 4.210, 5.10, 5.15 Paciocco v Australia and New Zealand Banking Group [2015] HCATrans 229 ............................................................................................................................ 4.195 Paramedical Services Pty Ltd v Ambulance Service of NSW [1999] FCA 548 .................................................................................................................. 2.65, 2.70 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 ...................................... 1.40, 3.05, 3.20, 3.60, 3.65, 3.70, 3.95, 3.165, 3.210, 3.220 Parkview (Keppell) Pty Ltd v Mytarc Pty Ltd (1984) 3 FCR 186 ................................................. 3.65 Paul Madsen v Agrison Pty Ltd [2014] NSWCATCD 79 .................................................. 8.230, 8.245 Pavich Pty Ltd v Bobra Nominees (1988) ATPR (Digest) ¶46-039 ....................................................................................................................................... 14.65 Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd [2002] NSWCA 211 ..................................................................................................................... 3.30 Pereira v Director of Public Prosecutions (1988) 82 ALR 217 ........................................ 3.195, 14.190
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Table of Cases
Permanent Mortgages Pty Ltd v Vandenbergh (2010) 41 WAR 353 ................................................................................................................................................. 4.25 Perpetual Trustee Company Ltd v Milanex Pty Ltd (in liq) [2011] NSWCA 367 ........................................................................................... 1.50, 14.130, 14.140 Peterson v Merck Sharpe & Dohme (Aust) Pty Ltd (2010) 184 FCR 1 ................................................................................................................. 3.120, 8.360, 12.170 Phillip & Anton Homes Pty Ltd v Commonwealth (1988) ATPR ¶40-838 ....................................................................................................................................... 6.250 Playcorp Group of Companies Pty Ltd v Peter Bodum A/S [2010] FCA 23 ............................................................................................................................ 3.220 Plimer v Roberts (1997) 80 FCR 303 ................................................................................... 2.95, 2.105 Pojzak v Congeo Nominees Pty Ltd [2013] VCAT 2175 .............................................................. 15.75 Pont Data Australia Pty Ltd v ASX Operations Pty Ltd (1990) 21 FCR 385 ....................................................................................................................... 8.125, 9.10 Poseidon Ltd v Adelaide Petroleum NL (1991) 105 ALR 25 .............................................. 3.80, 3.105 Potts v Miller (1940) 64 CLR 282 ...................................................................................... 14.85, 14.90 Poulet Frais Pty Ltd v The Silver Fox Co Pty Ltd (2005) 220 ALR 211 ............................................................................................................................ 3.20, 14.75 Prestia v Aknar (1996) 40 NSWLR 65 ................................................................................. 2.85, 2.105 Pretorius v Venture Stores (Retailers) Pty Ltd (1992) ATPR ¶41-166 ..................................................................................................................................... 13.130
Q Quickenden v O’Connor, Commissioner of Australian Industrial Relations Commission (2001) 109 FCR 243 .............................................................................. 2.20 Quinlivanc v ACCC (2004) 160 FCR 1 ....................................................................................... 14.180
R R v Federal Court of Australia; Ex parte WA National Football League (1979) 143 CLR 190 ....................................................................................................... 2.20 R v Judges of Federal Court of Australia; Ex parte Pilkington ACI (Operations) Pty Ltd (1978) 142 CLR 113 ..................................................................... 14.230 R v Kirby (1956) 94 CLR 254 ..................................................................................................... 13.375 R v McInerney (1986) 42 SASR 111 ........................................................................................... 13.185 R & C Products Pty Ltd v SC Johnson & Sons Pty Ltd (1993) FCR 188 ........................................................................................................................................ 3.20 RAIA Insurance Brokers Ltd v FAI General Insurance Co Ltd (1993) 41 FCR 164 .................................................................................................................. 13.145 RT & YE Falls Investments Pty Ltd v New South Wales [2001] NSWSC 1027 ...................................................................................................................... 1.95, 5.75 Rafferty v Time 2000 West Pty Ltd (No 4) [2010] FCA 725 ..................................................... 14.185 Raffety v Madgwicks (2012) 203 FCR 1 ........................................................................ 14.185, 14.190 Rasell v Cavalier Marketing (Australia) Pty Ltd [1991] 2 Qd R 323 ................................................................................................................................... 8.210, 8.360 Razdan v Westpac Banking Corporation [2014] NSWCA 126 ..................................................... 14.50 Read v Nerey Nominees Pty Ltd [1979] VR 47 .............................................................................. 9.65 Reardon v Morley Ford Pty Ltd (1980) 49 FLR 401 ...................................................................... 7.35 Reardon v Nolan (1983) ATPR ¶40-405 ......................................................................................... 13.80 Red Bull Australia Pty Ltd v Sydneywide Distributors Pty Ltd (2001) 53 IPR 481 ...................................................................................................................... 3.225
Table of Cases xxix
Regent’s Pty Ltd v Subaru (Aust) Pty Ltd (1996) ATPR ¶41-463 .............................................. 14.235 Reinhold v Ford Motor Company [2014] QCAT 671 .................................................................... 8.340 Reinhold v New South Wales Lotteries Corporation (No 2) [2008] NSWSC 187 ................................................................................................................. 14.160 Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477 ........................................................................................... 3.25, 3.30, 3.100 Rich v ASIC (2004) 220 CLR 129 ............................................................................................... 13.325 Rizzo v Fitzgerald (1988) 19 FCR 175 ................................................................................. 7.80, 7.100 Robin Pty Ltd v Canberra International Airport Pty Ltd (1999) ATPR ¶41-710 ............................................................................................................................ 2.105 Rogers v Whitaker (1992) 175 CLR 479 ......................................................................................... 9.65 Roses Only & Lush Pty Ltd v Mark Lyons Pty Ltd (1999) ATPR ¶41-706 ............................................................................................................................ 3.215 Rural Press Ltd v ACCC (2003) 216 CLR 53 ................................................................ 13.145, 14.180 Ryan v Great Lakes Council [1999] FCA 177; (1999) ATPR (Digest) ¶46-191 ............................................................................................................ 12.20, 12.130 Ryan v The Queen [2001] HCA 21; (2001) 206 CLR 267 ......................................................... 13.185 Ryan Connor v Teela Enterprises Pty Ltd and Robyn May Stevenson t/as Sureflo Exhaust [2014] NSWCATCD 93 ......................................................... 8.130
S S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 88 FCR 354 ........................................................................................................... 3.70, 3.215 SPAR Licensing Pty Ltd v MIS QLD Pty Ltd [2014] FCAFC 50 ............................................... 3.135 SST Consulting Services Pty Ltd v Rieson (2006) 225 CLR 516 ................................................ 14.20 SWB Family Credit Union Ltd v Parramatta Tourist Services Pty Ltd (1980) ATPR ¶40-180 ................................................................................................... 8.125 Sabre Corporation Pty Ltd v Laboratories Pharm-a-Care (1995) ATPR ¶41-396 .......................................................................................................................... 14.235 St Albans City and District Council v International Computers Ltd [1996] 4 All ER 481 ............................................................................................................ 8.135 St George Bank Ltd v Wright [2009] QSC 337 ........................................................ 1.105, 3.250, 9.20 Saints Gallery Pty Ltd, The v Plummer (1988) 80 ALR 525 .......................................................... 3.55 Samsung Electronics Australia Pty Ltd v LG Electronics Pty Ltd [2015] FCA 227 .......................................................................................................................... 3.205 Samsung Electronics Australia Pty Ltd v LG Electronics Australia Pty Ltd (No 2) [2015] FCA 477 ..................................................... 14.25, 14.230, 14.240 Samsung Electronics Company Ltd v Apple Inc (2011) 217 FCR 238 ............................................................................................................................................. 14.235 Samuels v Davis (1943) 1 KB 526 ................................................................................................. 9.100 Schneider Electric (Australia) Pty Ltd v ACCC (2003) 127 FCR 170 ................................................................................................................................. 13.65, 13.200 Seafolly Pty Ltd v Madden [2012] FCA 1346; (2012) ATPR ¶42-424 ......................................................................................................................................... 2.40 Selig v Wealthsure Pty Ltd (2015) 89 ALJR 572 ........................................................................ 14.150 Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 ............................ 3.20, 14.40, 14.105, 14.110 Serini v Surf Toyota [2013] NSWCTTT 531 ................................................................................. 8.305 Serrata Investments Pty Ltd v Rajane Pty Ltd (1991) 6 WAR 419 ............................................................................................................................................... 2.120 Seven Network Ltd v News Ltd [2007] FCA 1062 ....................................................................... 3.125 Sgargetta v National Australia Bank Ltd [2014] VSCA 159 ........................................................... 4.85
xxx Table of Cases
Shahid v Australian College of Dermatologists (2008) 168 FCR 46 ....................................................................................................... 2.20, 2.75, 2.85, 6.275, 14.110 Shoshana Pty Ltd v 10th Cantanae Pty Ltd (1988) 18 FCR 285; ATPR ¶40-833 ................................................................................................................. 6.115, 6.120 Siddons Pty Ltd v Stanley Works Pty Ltd (1990) ATPR ¶41-044 .................................................. 6.45 Sigma Constructions (Vic) Pty Ltd v Maryvell Investments Pty Ltd (2005) ATPR ¶42-048 .......................................................................................................... 2.105 Singtel Optus Pty Ltd v ACCC [2012] FCAFC 20; (2012) 287 ALR 249 .............................................. 1.35, 3.200, 6.275, 13.160, 13.175, 13.185, 13.190, 13.210 Singtel Optus Pty Ltd v Telstra Corp Ltd [2004] FCA 859 .......................................................... 3.170 Sirway Asia Pacific Pty Ltd v Commonwealth (2002) ATPR (Digest) ¶46-226 ........................................................................................................................... 2.55 Skerbic v McCormack [2007] ACTSC 93 ............................................................. 11.220, 12.45, 12.90 Smith v Anderson (1880) 15 Ch D 247 ........................................................................................... 5.75 Smith v Capewell (1979) 142 CLR 509 ................................................................................. 2.55, 5.75 Smith v Chadwick (1884) 9 App Cas 187 ..................................................................................... 14.50 Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd [1997] AC 254 ............................................................................................. 14.95 Smolonogov v O’Brien (1982) ATPR ¶40-312 ................................................................................ 1.90 Smolonogov v O’Brien (1983) ATPR ¶40-418 ................................................................................ 1.90 Smythe v Thomas (2007) 71 NSWLR 537 .................................................................................... 8.170 Specsavers Pty Ltd v The Optical Superstore Pty Ltd (No 2) [2010] FCA 566 .......................................................................................................................... 3.205 Spriggs v Federal Commissioner of Taxation (2009) 239 CLR 1 ................................................... 5.75 Stack v Coast Securities No 9 Pty Ltd (1983) 46 ALR 451 ......................................................... 3.140 State Government Insurance Corporation v Government Insurance Office of NSW (1991) ATPR ¶41-110 ........................................................................ 2.20 Stegenga v J Corp Pty Ltd (1999) ATPR ¶41-695 ....................................................................... 12.100 Steiner v Magic Carpet Tours Pty Ltd (1984) ATPR ¶40-490 ..................................................... 14.110 Stephens v Chevron Motor Court Ltd [1996] DCR 1; NZ DCR Lexis 29 ................................................................................................................ 8.255, 15.25, 15.30 Stern v Mc Arthur (1988) 165 CLR 489 .......................................................................................... 4.15 Sternberg v The Queen (1953) 8 CLR 646 ...................................................................................... 6.20 Stuart Alexander & Co (Interstate) Pty Ltd v Blenders Pty Ltd (1981) 53 FLR 307; 37 ALR 161 ......................................................................... 3.20, 3.180, 3.205 Sun Earth Homes Pty Ltd v Australian Broadcasting Commission (1991) ATPR ¶41-067 ............................................................................................. 2.20 Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 2) (2012) 266 FLR 243 .................................................................................... 1.95, 1.100, 2.75 Sutton v A J Thompson Pty Ltd (in liq) (1987) ATPR ¶40-789 ......................... 3.165, 14.180, 14.185 Swan v Downes (1978) 34 FLR 36 .................................................................................................. 7.50 Sydney Harbour Casino Properties Pty imited v Coluzzi (2003) ATPR (Digest) ¶46-238 .............................................................................................................. 3.145 Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354 ............................................................................................................ 3.20, 3.225 Sykes v Reserve Bank of Australia (1998) 88 FCR 511 ......................................... 2.105, 3.135, 3.145
T TCN Channel Nine Pty Ltd v Ilvariy Pty Ltd (2008) 71 NSWLR 323; [2008] NSWCA 9 ...................................................................................... 2.45, 3.235
Table of Cases xxxi
TLK Transport Pty Ltd v Thornthwaite Pty Ltd t/as Yass Valley Mobile Mechanic [2014] NSWCATCD 147 ......................................................... 9.90, 9.105, 9.115 TPC v Allied Mills Industries Pty Ltd (No 5) (1981) 60 FLR 38 .............................................. 13.205 TPC v Axive Pty Ltd (1994) ATPR ¶41-368 ............................................................................... 13.205 TPC v Bata Shoe Co Pty Ltd (1980) ATPR ¶40-161 .................................................................. 13.210 TPC v CC (New South Wales) Pty Ltd (1994) ATPR ¶41-363 ................................................... 13.205 TPC v CSR Ltd (1991) ATPR ¶41-076 ........................................................................................ 13.175 TPC v Calderton Corporation Pty Ltd (1994) ATPR ¶ 41-306 ....................................................... 7.10 TPC v Cue Design Pty Ltd (1996) ATPR ¶41-475 ............................................................. 6.125, 6.155 TPC v Farrow (1990) ATPR ¶41-018 ............................................................................................. 6.290 TPC v Golden Australia Paper Manufacturers Pty Ltd (1995) ATPR ¶41-370 ................................................................................................................... 6.45, 6.275 TPC v Hymix Industries Pty Ltd (1995) ATPR ¶41-369 ............................................................. 13.205 TPC v J & R Enterprises Pty Ltd (1991) 99 ALR 325 ................................................................. 6.275 TPC v Legion Cabs (Trading) Co-op Society Ltd (1978) ATPR ¶40-092 ......................................................................................................................................... 2.20 TPC v Mobil Oil Australia Ltd (1984) 3 FCR 168 ......................................................................... 7.35 TPC v Optus Communications Pty Ltd (1996) 64 FCR 326 ......................................................... 6.130 TPC v Pacific Dunlop Ltd (1994 ATPR ¶41-307 ............................................................................. 6.45 TPC v Parkfield Operations Pty Ltd (1985) 7 FCR 534 ............................................................. 13.220 TPC v QDSV Holdings Pty Ltd (trading as Bush Friends Australia) (1995) ATPR ¶41-371 ............................................................................................... 6.165 TPC v Queensland Aggregates Pty Ltd (1982) 61 FLR 52 ................................................ 2.115, 8.125 TPC v Santos Ltd (1993) ATPR 41-221 ....................................................................................... 13.145 TPC v Simpson Pope Ltd (1980) 30 ALR 544 ............................................................................ 13.210 TPC v TNT Australia Pty Ltd (1995) ATPR ¶41-375 .................................................................. 13.205 TPC v Tubemakers of Australia Ltd (1983) 76 FLR 455 ..................................... 2.115, 2.120, 13.220 TPC v Vales Wines Co Pty Ltd (1996) ATPR ¶41-480 ................................................................... 6.45 TPG Internet Pty Ltd v ACCC (2012) 210 FCR 277 .................................................................... 3.190 TPS Developments Pty Ltd v Chef’s Hat Australia Pty Ltd [2013] VCAT 731 ....................................................................................................................... 15.85 Tabet v Gett (2010) 240 CLR 537 .................................................................................................. 14.40 Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 ................................................................................................................... 3.05, 3.90, 3.95, 3.165 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 .................................................. 4.15, 5.05 Taylor v Crossman (No 2) [2012] FCAFC 11 ............................................................................... 14.40 Taylor v Johnson (1983) 151 CLR 422 ............................................................................................ 4.15 Tec & Thomas (Australia) Pty Ltd v Matsumiya Computers Co Pty Ltd (1984) 1 FCR 28 ......................................................................................................... 13.290 Telstra Corp Ltd v Cable & Wireless Optus Ltd [2001] FCA 1478 ............................................................................................................................................... 3.65 Telstra Corporation Ltd v Optus Communications Pty Ltd (1996) 36 IPR 515 .......................................................................................................... 3.20, 13.290 Telstra Corporation Ltd v Singtel Optus Pty Ltd (2007) ATPR ¶42-159 ....................................................................................................................................... 6.150 Telstra Corporation Ltd v Singtel Optus Pty Ltd [2014] VSC 35 ................................................. 3.205 Tenji v Henneberry & Associates Pty Ltd (2000) ATPR (Digest) ¶46-204 ........................................................................................................................ 14.200, 14.220 Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd [2012] VSCA 103 ......................................................................................................................... 4.15 Tesco Supermarkets Ltd v Nattrass [1972] AC 153 ....................................................................... 2.110
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Thompson v Ice Creameries of Australia Pty Ltd (1998) ATPR ¶41-611 ................................................................................................................... 3.20, 3.150, 3.155 Thompson v Mastertouch TV Services Pty Ltd (No 2) (1977) 29 FLR 270 ...................................................................................................................................... 3.140 Thompson v Mastertouch TV Services (1977) ATPR ¶40-027 ..................................................... 6.180 Thomson Australia Holdings Pty Ltd v TPC (1981) 148 CLR 151 ............................................................................................................................................. 13.250 Thorpe v CA Imports Pty Ltd (1990) ATPR ¶40-996 .................................................................... 6.165 Ting v Blanche (1993) 118 ALR 543 ............................................................................................. 3.145 Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1 ........................................................................... 2.80 Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89 ........................................................ 13.145 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 ............................................................................................................................................... 6.265 Tomasetti v Brailey [2012] NSWCA 399 ..................................................................................... 14.170 Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 ................................................................................................................................................. 4.50 Townsend v Roussety & Co (WA) Pty Ltd (2007) 33 WAR 321 ................................................. 3.125 Traderight (NSW) Pty Ltd v Bank of Queensland Ltd [2015] NSWCA 94 ................................................................................................. 3.75, 3.100, 3.105, 3.125 Transmarket Trading Pty Ltd v Sydney Futures Exchange Ltd (2010) 188 FCR 1 ...................................................................................... 1.105, 3.250, 4.195, 9.20 Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591 ................................................................ 13.250 Twentieth Century Fox Film Corporation v The South Australian Brewery Co Ltd (1996) 66 FCR 451 ........................................................................................ 3.225 Tycoon Holdings Ltd v Trencor Jetco Inc (1992) 34 FCR 31 ........................................................ 5.75 Tytel Pty Ltd v Telecom (1986) 67 ALR 433 .............................................................................. 14.235
U UK Housing Alliance (North West) Ltd v Francis [2010] EWCA Civ 117 .......................................................................................................................................... 5.95 Ueda v Ecruising Pty Ltd and Southern Cross Safaris Australia Pty Ltd [2014] NSWCATCD 30 ................................................................................................ 9.105 Unilan Holdings Pty Ltd v Kerrin (1992) ATPR ¶41-169 ............................................................. 2.105 Union Steamship Company of Australia Pty Ltd v King (1988) 166 CLR 1 .................................................................................................................................. 1.130 Universal Telecasters (Qld) Ltd v Ainsworth Consolidated Industries Ltd (1983) ATPR ¶40-384 ......................................................................................... 3.235 Universal Telecasters (Qld) Ltd v Guthrie (1978) 32 FLR 360 .................................................... 3.235
V Ventouris Enterprises Pty Ltd v Dib Group Pty Ltd [2010] NSWSC 963 ............................................................................................................................... 3.140 Vero Lenders v Taylor Byrne Pty Ltd [2006] FCA 1430 ............................................................ 14.135 Village Building Company Ltd v Canberra International Airport Pty Ltd (2004) 139 FCR 330 ....................................................................................................... 2.95 Voli v Inglewood Shire Council (1963) 110 CLR 74 ...................................................................... 9.65
Table of Cases xxxiii
Volunteer Eco Students Abroad Pty Ltd v Reach Out Volunteers Pty Ltd [2013] FCA 731 .............................................................................................................. 6.80
W Walker, Commissioner for Fair Trading v Rugs a Million Pty Ltd [2006] WASC 127 .................................................................................................... 6.125, 6.155 Wallace v Brodribb (1985) 5 FCR 315 ............................................................................................ 7.35 Wallace v Walplan Pty Ltd (1985) 8 FCR 14 .................................................................................. 7.35 Wallis v Downard-Pickford (1994) 179 CLR 388 ........................................................................... 9.30 Walplan v Wallace (1985) 8 FCR 27 .............................................................................................. 2.115 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 ....................................................... 4.15 Wardley Australia Ltd v Western Australia (1991) ATPR ¶41-131 ..................................................................................................................................... 14.120 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 ............. 14.35, 14.40, 14.50, 14.120 Warner v Elders Rural Finance Ltd (1993) 41 FCR 399; 113 ALR 517 ............................................................................................................................ 3.25, 3.125 Warnock v Australian and New Zealand Banking Group Ltd (1989) ATPR ¶40-928 ................................................................................................................... 9.95 Warwick Entertainment Centre Pty Ltd v Alpine Holdings Pty Ltd (2005) ALR 134 ................................................................................................................... 3.160 Waterside Workers’ Federation of Australia v JW Alexander Ltd (1915) 20 CLR 54 .................................................................................................................... 13.375 Weininger v The Queen (2003) 212 CLR 629 ............................................................................. 13.185 Weitmann v Katies Ltd (1977) 29 FLR 336; ATPR ¶40-041 ............................................... 3.65, 6.115 Wells v John R Lewis (International) Pty Ltd (1975) 25 FLR 194 ..................................................................................................................................... 1.100, 7.80 Westpac Banking Corporation v Northern Meals Pty Ltd (1989) ATPR ¶40-953 ............................................................................................................................ 6.275 Wheeler Grace & Pierucci Pty Ltd v Wright (1989) 16 IPR 189; ATPR ¶40-940 ...................................................... 2.115, 3.35, 3.140, 3.150, 3.155, 14.180, 14.185 Whitaker v Paxad Pty Ltd [2009] WASC 47 ................................................................................. 3.110 Wilde v Menville Pty Ltd (1981) ATPR ¶40-195 .................................................... 6.265, 6.290, 13.80 Wildsmith v Dainford Ltd (1983) 51 ALR 24 ............................................................................... 3.120 Williams v Pisano [2015] NSWCA 177; (2015) 299 FLR 172 ...... 2.75, 2.100, 2.135, 14.90, 14.145, 14.150, 14.155 Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq) [2012] FCA 1028 .................................................................................... 3.255, 3.285, 3.290 Winterton Constructions Pty Ltd v Hambros Australia Ltd (1993) ATPR ¶41-205 ................................................................................................................. 3.125 Wordplay Services Pty Ltd v ACCC (2005) 143 FCR 345 ................................................ 7.115, 7.135 World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 ........................................................ 14.230 Wright v Wheeler Grace & Pierucci Pty Ltd (1988) ATPR ¶40-865 ................................................................................................................... 3.35, 3.150, 3.155 Wyong Shire Council v Shirt (1980) 146 CLR 40 ........................................................... 11.20, 12.170
Y Yates v Whitlam (1999) ATPR ¶41-722 ......................................................................................... 8.125 Yorke v Lucas (1985) 158 CLR 661 ...................................................................... 3.40, 14.175, 14.195
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Z Zalai v Col Crawford (Retail) Pty Ltd (1980) ATPR ¶40-177 ........................................................ 8.10 Zhang v United Auctions [2013] NSWCTTT 6 .................................................................. 8.130, 8.235 Zhu v Treasurer (NSW) (2004) 218 CLR 530 ................................................................................. 1.90 Zipside Pty Ltd v Anscor Pty Ltd [2000] QCA 395 ......................................................... 14.85, 14.105
Table of Statutes Commonwealth A New Tax System (Goods and Services Tax) Act 1999: 9.125 Acts Interpretation Act 1901: 1.30, 5.65 s s s s
2C(1): 8.70 4: 1.55 15AA: 1.40 15AC: 14.35
Administrative Decisions (Judicial Review) Act 1977: 11.60 Agricultural and Veterinary Chemicals Act 1994: 11.250 Australian Securities and Investments Commission Act 1989 s 12DG: 7.45 s 12DK(5): 7.145 s 12DK(6): 7.145
Australian Securities and Investments Commission Act 2001: 1.55, 3.250, 9.20 s 12BF: 5.205, 5.215, 5.245 s 12BF(1): 5.195 s 12BF(2): 5.195 s 12BF(3): 5.200 ss 12BF to 12BM: 5.45 s 12BG: 5.225 s 12BG(1): 5.220, 5.230 s 12BG(2): 5.220, 5.230 s 12BG(2)(b): 5.235 s 12BG(2)(c): 5.240 s 12BG(3): 5.220, 5.235 s 12BG(4): 5.225 s 12BH(1): 5.220, 5.245 s 12BH(2): 5.245 s 12BI: 1.110, 5.215 s 12BI(2): 5.215 s 12BI(3): 5.215 s 12BL: 5.210 s 12CA: 4.05, 4.195 s 12CB: 4.05, 4.85, 4.90, 4.95, 4.100, 4.185, 4.190, 4.195, 4.205, 4.210 s 12CB(4)(b): 4.65 s 12CC: 4.05, 4.50, 4.90, 4.95, 4.195, 4.210 s 12CC(1): 4.195, 4.200, 4.205, 4.210, 4.215 s 12CC(1)(l): 4.185 s 12CC(2): 4.195 s 12CC(2)(a): 4.200 s 12CC(2)(b): 4.205 s 12CC(2)(e): 4.210
s 12CC(2)(l): 4.185, 4.215 s 12CD(4): 4.05 s 12DA: 1.110, 3.260, 3.285, 6.245 s 12DA(1A): 3.285 s 12DA(1): 3.10, 3.285, 7.225 s 12DB: 3.285, 6.220, 6.225 s 12DB(1): 3.260 s 12DB(1)(g): 3.285 s 12DB(1)(h): 6.245 s 12DB(1)(i): 6.230, 6.245 s 12DB(1)(j): 6.230 s 12DC: 3.260, 6.260 s 12DD: 3.260 s 12DE: 3.260, 7.30 s 12DF: 3.260, 6.285 s 12DG: 3.260, 7.45 s 12DH: 3.260, 7.205 s 12DI: 3.260, 7.60 s 12DJ: 3.260, 7.225 s 12DJ(1): 7.225 s 12DK: 3.260, 7.145 s 12DL: 3.260, 7.75 s 12DM: 3.260, 7.85 s 12DN: 6.305 s 12ED: 1.60, 1.105, 3.250, 9.20, 15.225 s 12ED(3): 1.110 s 12BAA: 3.265 s 12BAA(1): 3.270, 3.285 s 12BAA(4): 3.270 s 12BAA(5): 3.285 s 12BAA(7): 3.270 s 12BAA(7)(d): 9.35 s 12BAA(7)(k): 3.270, 3.285, 8.95 s 12BAA(8): 3.270 s 12BAB: 3.265, 8.95 s 12BAB(1): 3.265 s 12BAB(5): 3.275 s 12BAB(6): 3.275 s 12BAB(7): 3.280 s 12BAB(8): 3.280 s 12DMA: 7.95 s 12DMB: 7.110 s 12DMB(1): 7.100 s 12DMB(2): 7.100 s 12GXA: 6.225, 7.30 s 102(2)(e): 3.290 Pt II, Div 2: 3.250
xxxvi
Table of Statutes
Australian Securities and Investments Commission Regulations 2001 reg 2B: 3.270, 3.285 reg 2B(3): 8.95 reg 2B(3)(b)(iv): 3.285
Carriage of Goods by Sea Act 1991 s 7(1): 5.45
Commonwealth of Australia Constitution Act 1901 Ch III: 13.375 s 51(xxxix): 1.90 s 51(i): 1.90 s 51(xx): 1.90, 2.05, 2.10, 2.25 s 61: 1.90 s 75: 1.150 s 122: 1.90, 1.120
Competition Policy Reform Act 1995: 1.40 Competition and Consumer Act 2010: 1.10, 1.55 s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s
2A(1: 2.05 2: 1.40, 11.45 2A: 2.50, 5.75 2A(1): 2.50 2A(2): 2.50 2C: 2.60, 2.70 2C(1)(b): 2.60 2C(1)(c): 2.60 2C(1)(d): 2.60 2C(3): 2.60 4: 8.120 4(1): 1.100, 2.10, 2.25, 2.30, 2.110 4A(5): 2.35 4F(1)(b): 5.65 4L: 14.20 5: 1.100, 2.40, 2.50 5(1): 1.95, 1.130 5(1)(g): 1.95 6: 1.50, 1.90, 1.100, 2.40, 2.50, 14.150 6(2): 1.90 6(2)(a): 1.100 6(2)(a)(i): 1.95 6(3): 1.95, 1.100, 2.40, 5.175 6(3)(a): 1.100, 2.40 6(3)(b): 1.100 6(3A): 1.100, 2.40 6AA: 13.20 48: 13.210 51AE: 4.140 51ACA: 4.155 51ACA(1): 4.140, 4.155 51ACA(2): 4.155 54(3): 12.35 75B: 14.180 76: 13.155 76(3): 13.210 79A: 13.80 79B: 13.85 82: 14.35, 14.40
s 84(2): 2.110, 2.120, 2.125 s 84(4): 2.100 ss 86A(1) to (3): 1.160 ss 86A(4) to (6): 1.160 s 86C: 13.300 s 86C(2)(a): 13.295 s 87: 14.165 s 87B: 6.140, 6.170, 13.160, 13.335 s 87B(4): 13.335 s 87D: 15.70 s 87E: 12.170 s 87E(1): 14.250, 15.70, 15.135 s 87M: 14.255 s 87S: 14.265 s 87T: 14.270 s 87U: 14.260 s 87W: 14.280 s 87X: 14.280 s 87CB: 14.150 s 87CB(1): 14.145, 14.150, 14.165 s 87CB(2): 14.145 s 87CB(3): 14.145, 14.155 s 87CB(5): 14.155 s 87CC(1): 14.145 s 87CD(1)(a): 14.160 s 87CE: 14.145 s 87CG: 14.145 s 87CI: 14.145, 14.155 s 87ZB: 14.275 s 87ZC: 14.285 s 96(3): 7.35 s 96(4): 7.35 s 130: 1.90, 2.10 s 131: 1.120, 2.40, 2.50, 5.175, 6.230, 9.20 s 131(1): 1.50, 1.90, 1.100, 2.05, 2.50, 4.05, 5.50 s 131(2): 1.50, 1.90 s 131A: 1.110, 3.250, 5.45, 6.230, 6.245, 9.20, 9.35 s 131A(1): 1.105, 8.95, 15.220 s 131C(3): 1.135 s 131C(4): 1.115, 8.15 s 132(1): 11.200 s 132A: 11.210 s 132A(1): 11.60 s 132J: 11.60, 11.200 s 134(1): 13.375 s 134(2)(a): 13.375 s 134(2)(b): 13.375 s 134(2)(c): 13.375 s 134A: 10.125, 11.205, 13.375 s 134A(2): 13.375 s 134C: 13.380 s 134D(3): 13.380 s 134E: 13.380 s 137: 14.125 s 137A: 14.290
Table of Statutes xxxvii Competition and Consumer Act 2010 — cont s 137B: 1.50, 14.55, 14.70, 14.125, 14.130, 14.135, 14.140, 14.165 s 137C: 6.105, 14.250 s 137C(1): 14.125 s 137C(2): 14.125 s 137D: 14.200, 14.205, 14.225 s 137E: 14.250 s 137E(1): 14.210 s 137F: 13.285 s 137G: 13.80 s 137H: 14.10 s 137H(2): 13.390, 14.200 s 138: 1.150 s 138A: 1.150 s 138B: 1.150, 1.155 s 138C(1): 1.160 s 138C(2): 1.160 s 138D: 1.160 s 139A: 1.50, 5.40, 15.280, 15.285 s 139A(1): 15.285 s 139A(2): 15.285 s 139A(4): 15.285 s 139A(5): 15.285 s 139B: 2.110, 2.120, 13.220 s 139B(1): 3.25 s 139B(2): 2.110, 2.115, 2.120, 2.130, 2.135, 14.145 s 139B(2)(a): 2.120, 2.125 s 139B(2)(b): 2.125 s 139C(2): 2.130, 2.135 s 139D: 13.80 s 139D(1)(a): 13.80 s 139D(1)(b): 13.80 s 139D(3): 13.80 s 139D(4): 13.80 s 139D(5): 13.80 s 139D(6): 13.80 s 139G: 1.50, 1.55, 1.140 s 139G(4)(a): 1.140 s 139G(4)(b): 1.140 s 139G(4)(c): 1.140 s 140: 1.50 s 140B: 1.50 s 140C: 1.150 s 140H: 1.125 s 140J(1): 1.135 s 140J(2): 1.135 s 155: 13.345 s 155(1)(a): 13.345 s 163(2): 13.40 s 163(4)(a): 13.20 s 290A: 5.10 Pt IV: 1.120 Pt IV, Div 1: 15.225 Pt IV, Div 2: 15.225 Pt VI: 6.05 Pt VIA: 1.50, 14.125, 14.145, 14.155, 14.165
Pt VIB: 12.170, 14.250, 15.70, 15.135 Pt VIB, Div 2: 14.125, 14.210, 14.250 Pt VIB, Div 7: 14.125, 14.250 Pt VIII, s 96(3): 13.210 Pt XI: 1.50, 1.90, 1.95, 1.100, 1.140, 1.160, 2.40 Pt XI, Div 5: 13.375 Pt XI, Div V: 13.375 Pt XIAA: 1.50, 1.120 Sch 1: 1.120 Sch 2, Australian Consumer Law: 1.051.10, 1.50, 1.55, 1.60, 1.65, 1.75, 1.85, 1.90, 1.120, 1.140, 2.05, 2.40, 2.50, 3.250, 4.05, 10.05, 10.15, 10.55, 10.80, 10.90, 10.95, 11.10, 11.35, 13.335, 14.175 Sch 2, s 2: 1.145, 2.55, 2.75, 2.85, 2.90, 3.100, 3.265, 4.155, 5.75, 6.40, 6.125, 6.250, 7.35, 7.175, 8.75, 8.85, 8.110, 8.120, 8.125, 8.135, 8.140, 8.145, 8.150, 8.165, 8.170, 8.400, 9.15, 9.40, 9.45, 11.25, 11.30, 11.40, 11.45, 11.215, 12.125, 12.140, 13.395, 13.405, 14.175, 14.180, 14.195, 14.205, 14.225, 15.220, 15.235 Sch 2, s 2(1): 1.100, 7.80, 8.70, 8.130, 8.135, 8.160, 12.20, 15.15, 15.30, 15.115 Sch 2, s 2(2): 3.15, 3.20, 3.25, 3.35 Sch 2, s 2(2)(a): 3.145 Sch 2, s 2(2)(b): 3.145 Sch 2, s 2(2)(b)(i): 9.40 Sch 2, s 2(2)(c): 3.25 Sch 2, s 3: 1.65, 5.65, 6.205, 6.250, 6.265, 6.275, 6.290, 7.05, 7.10, 7.35, 7.50, 7.65, 7.80, 7.135, 7.155, 7.195, 8.15, 8.70, 8.75, 8.80, 8.115, 8.160, 10.20, 10.105, 11.25, 15.15, 15.115 Sch 2, s 3(1): 8.70 Sch 2, s 3(1)(a): 8.75 Sch 2, s 3(1)(c): 8.105 Sch 2, s 3(2): 8.70, 8.110, 9.10 Sch 2, s 3(4): 8.70, 8.75 Sch 2, ss 3(4) to (9): 8.75 Sch 2, s 3(5): 8.75, 8.85, 8.110, 8.145, 8.165 Sch 2, s 3(6): 8.90 Sch 2, s 3(7): 8.90 Sch 2, s 3(8): 8.90 Sch 2, s 3(9): 8.95 Sch 2, s 3(10): 8.100, 8.115 Sch 2, s 3(11): 8.85 Sch 2, s 4: 1.65, 3.15, 3.135, 3.145, 4.05, 6.290 Sch 2, s 4(1): 3.60, 3.135, 6.290 Sch 2, s 4(2): 3.135, 3.145, 3.150, 3.155, 6.290 Sch 2, s 5: 1.65, 1.90, 8.160, 12.20 Sch 2, s 6: 1.90, 2.35 Sch 2, s 6(3A): 1.65 Sch 2, s 7: 1.65, 8.395, 12.10 Sch 2, s 7(1)(a): 12.10 Sch 2, s 7(1)(c): 12.10 Sch 2, s 7(1)(e): 12.10
xxxviii
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Competition and Consumer Act 2010 — cont Sch 2, s 8: 8.145, 8.165, 9.40 Sch 2, s 9: 8.245, 12.35, 12.170 Sch 2, s 9(1): 8.245, 12.35 Sch 2, s 9(2): 8.245, 12.35, 12.60 Sch 2, s 9(2)(a): 12.40 Sch 2, ss 9(2)(b) to (d): 12.45 Sch 2, s 9(2)(e): 12.50 Sch 2, s 9(2)(f): 12.55 Sch 2, s 9(3): 12.35, 12.65 Sch 2, s 9(4): 12.35, 12.70 Sch 2, s 10: 7.85, 7.100 Sch 2, s 12BG(2)(a): 5.220 Sch 2, s 12BG(2)(b): 5.220 Sch 2, s 12ED: 15.245 Sch 2, s 12BAA(7)(k): 5.200 Sch 2, s 13: 9.70 Sch 2, s 15: 5.170, 12.170, 14.225, 15.250 Sch 2, s 15(a): 5.175 Sch 2, s 16: 14.20 Sch 2, s 16A(2): 13.60 Sch 2, s 18: 1.05, 1.30, 1.50, 1.100, 2.40, 2.55, 2.75, 2.100, 2.135, 3.05, 3.10, 3.15, 3.25, 3.35, 3.65, 3.70, 3.75, 3.80, 3.95, 3.100, 3.135, 3.140, 3.145, 3.155, 3.160, 3.170, 3.180, 3.185, 3.195, 3.205, 3.210, 3.215, 3.220, 3.225, 3.260, 3.285, 6.05, 6.15, 6.25, 6.50, 6.80, 6.90, 6.105, 6.110, 6.140, 6.145, 6.165, 6.170, 6.180, 6.210, 6.250, 6.265, 6.275, 6.290, 7.05, 7.15, 7.225, 8.15, 9.45, 9.105, 12.170, 13.165, 13.185, 13.280, 13.330, 13.345, 13.350, 13.375, 13.405, 13.410, 13.415, 13.420, 13.425, 13.430, 14.125, 14.130, 14.135, 14.145, 14.150, 14.155, 14.165, 14.240, 14.245, 15.250 Sch 2, s 18(1): 3.05, 3.20, 3.60, 3.95, 6.10, 6.25, 6.180, 6.265, 13.185 Sch 2, s 19: 1.65, 3.235 Sch 2, s 19(1): 3.10, 3.230, 3.235, 3.245, 14.245 Sch 2, s 19(2): 3.240 Sch 2, s 19(2)(3): 3.235, 14.245 Sch 2, s 19(2)(4): 3.235, 14.245 Sch 2, s 19(3): 1.65, 3.245 Sch 2, s 19(4): 1.65, 3.245 Sch 2, s 19(5): 3.235, 13.105 Sch 2, s 19(6): 3.235, 13.105 Sch 2, s 20: 4.05, 4.10 Sch 2, s 20(2): 4.10 Sch 2, s 21: 1.05, 1.30, 1.65, 3.100, 4.05, 4.10, 4.45, 4.65, 4.75, 4.85, 4.90, 4.95, 4.100, 4.105, 4.110, 4.120, 4.125, 4.155, 4.170, 4.175, 4.180, 4.185, 4.190, 4.195, 5.95, 10.90, 13.185 Sch 2, s 21(1): 4.40, 4.45, 4.60, 4.120 Sch 2, s 21(1)(f): 4.175 Sch 2, s 21(4): 1.05, 4.05, 4.45, 4.55 Sch 2, s 22: 4.05, 4.90, 4.95, 4.175, 13.185 Sch 2, s 22(1): 4.60, 4.95, 4.100
Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch
2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2,
Sch Sch Sch Sch Sch Sch Sch Sch Sch
2, 2, 2, 2, 2, 2, 2, 2, 2,
Sch Sch Sch Sch Sch Sch Sch Sch
2, 2, 2, 2, 2, 2, 2, 2,
s 22(1)(a): 4.100, 5.95 s 22(1)(b): 4.105, 5.130 s 22(1)(c): 4.110 s 22(1)(d): 4.115 s 22(1)(e): 4.130 s 22(1)(f): 4.135 s 22(1)(g): 4.140 s 22(1)(h): 4.155 s 22(1)(i)(i): 4.160 s 22(1)(i)(ii): 4.160 s 22(1)(j)(i): 4.165, 5.95 s 22(1)(j)(ii): 4.170 s 22(1)(j)(iv): 4.180 s 22(1)(j)(iii): 4.175 s 22(1)(l): 4.185 s 22(2): 4.45, 4.95 s 22(2)(a): 4.100 s 22(2)(b): 4.95, 4.105, 5.130 s 22(2)(c): 4.110 s 22(2)(d): 4.95, 4.115 s 22(2)(e): 4.130 s 22(2)(f): 4.95, 4.135 s 22(2)(g): 4.140 s 22(2)(h): 4.155 s 22(2)(i): 4.95 s 22(2)(i)(i): 4.160 s 22(2)(i)(ii): 4.160 s 22(2)(j): 1.65 s 22(2)(j)(i): 4.100, 4.165 s 22(2)(j)(ii): 4.170 s 22(2)(j)(iv): 4.180 s 22(2)(j)(iii): 4.175 s 22(2)(l): 4.175, 4.185 s 22(3): 4.45 s 22(3)(j): 1.65 s 22A: 4.05 s 23: 5.20, 5.60, 5.70, 5.75, 5.170 s 23(1): 5.25, 5.35, 5.50, 5.75, 5.90, 5.130, 5.175, 14.30, 14.225 s 23(1)(b): 5.95 s 23(2): 5.50, 14.30 s 23(3): 5.60, 5.65 s 23(4): 5.70 s 23(4)(b): 5.75, 5.80 s 23(5): 5.80 ss 23 to 28: 1.65 s 24: 5.110, 5.135, 5.160 s 24(1): 1.05, 5.105, 5.110, 5.120, 5.130, 5.135, 5.140 s 24(1)(a): 5.120 s 24(2): 5.105, 5.120, 5.140 s 24(2)(a): 5.105, 5.145 s 24(2)(b): 5.105, 5.155 s 24(3): 5.145 s 24(4): 5.130 s 25: 5.35, 5.105, 5.160 s 25(1)(f): 5.35
Table of Statutes xxxix Competition and Consumer Act 2010 — cont Sch 2, s 25(2): 5.165 Sch 2, s 25(l): 5.65 Sch 2, s 26: 5.20, 14.30 Sch 2, s 26(1): 5.25, 5.90 Sch 2, s 26(1)(b): 5.35 Sch 2, s 26(2): 5.85 Sch 2, s 27(1): 5.100 Sch 2, s 27(2): 5.90, 5.95 Sch 2, s 27(2)(a): 5.95 Sch 2, s 27(2)(b): 5.95 Sch 2, s 27(2)(c): 5.95 Sch 2, s 27(2)(e): 5.95 Sch 2, s 28: 5.45 Sch 2, s 28(2): 5.45 Sch 2, s 28(3): 5.45 Sch 2, s 29: 1.65, 2.75, 3.15, 6.20, 6.30, 6.40, 6.215, 6.220, 6.250, 6.265, 6.300, 10.90, 13.185, 13.280, 13.345, 13.410, 13.415, 13.420, 13.425, 13.430, 14.135 Sch 2, s 29(1): 6.10, 6.20, 6.25, 14.130 Sch 2, s 29(1)(a): 1.100, 3.155, 6.35, 6.45, 6.50, 6.105, 6.165, 6.275, 13.405 Sch 2, s 29(1)(b): 3.205, 6.35, 6.55 Sch 2, s 29(1)(c): 6.60 Sch 2, s 29(1)(d): 6.65 Sch 2, s 29(1)(e): 6.10, 6.70, 6.80 Sch 2, s 29(1)(f): 6.10, 6.70, 6.80 Sch 2, s 29(1)(g): 3.155, 3.205, 6.90, 6.95, 6.100, 6.105, 6.110, 6.145, 6.275, 8.15, 12.170, 13.195 Sch 2, s 29(1)(h): 6.115 Sch 2, s 29(1)(i): 3.185, 6.125, 6.130, 6.140, 6.145, 13.195 Sch 2, s 29(1)(j): 6.160 Sch 2, s 29(1)(k): 6.165, 6.170, 13.405 Sch 2, s 29(1)(l): 6.175, 6.210 Sch 2, s 29(1)(m): 1.100, 2.40, 6.180, 6.185, 6.210, 7.10, 8.15, 9.105, 12.165 Sch 2, s 29(1)(n): 6.190, 6.205, 8.15 Sch 2, s 29(2): 6.70, 6.80 Sch 2, s 29(m): 7.15, 15.250 Sch 2, s 29(n): 15.250 Sch 2, s 30: 1.65, 2.75, 3.15, 6.25, 6.40, 6.250, 6.255, 6.260, 6.300, 14.155 Sch 2, s 30(1): 6.250, 9.45, 14.130 Sch 2, s 30(1)(c): 6.250 Sch 2, s 30(1)(e): 6.250 Sch 2, s 30(1)(f): 6.250 Sch 2, s 30(1)(g): 6.250 Sch 2, s 30(2): 6.250 Sch 2, s 31: 1.65, 3.15, 6.25, 6.40, 6.265, 6.270, 6.290, 14.130 Sch 2, s 32: 1.65, 6.125, 7.05, 7.10, 7.25, 7.30 Sch 2, s 32(1): 7.10, 7.15 Sch 2, s 32(1)(c): 6.250 Sch 2, s 32(1)(d): 6.250 Sch 2, s 32(2): 7.10
Sch 2, s 32(3): 1.65, 7.20 Sch 2, s 32(4): 7.20 Sch 2, s 33: 1.100, 3.15, 6.25, 6.40, 6.50, 6.90, 6.105, 6.275, 6.280, 6.285, 6.300, 13.185, 14.130 Sch 2, s 34: 3.15, 6.25, 6.40, 6.275, 6.280, 6.300, 9.105 Sch 2, s 35: 6.125, 7.05, 7.35, 7.40, 7.45 Sch 2, s 35(1): 7.35 Sch 2, s 35(2): 7.35 Sch 2, s 36: 1.65, 7.05, 7.50, 7.55, 7.60 Sch 2, s 36(1): 7.50 Sch 2, s 36(2): 7.50 Sch 2, s 36(3): 7.50 Sch 2, s 36(4): 1.65, 2.40, 7.50 Sch 2, s 36(4)(b): 7.50 Sch 2, s 36(7): 7.50 Sch 2, s 37: 3.15, 6.25, 6.40, 6.290, 6.295, 6.300, 14.130 Sch 2, s 37(1): 6.290 Sch 2, s 37(2): 6.290 Sch 2, s 38: 1.65, 6.300 Sch 2, s 38(2): 6.300 Sch 2, s 38(3): 1.65, 6.300 Sch 2, s 38(4): 1.65, 6.300 Sch 2, s 39: 7.05, 7.65, 7.70, 7.75 Sch 2, s 39(5): 7.65 Sch 2, s 39(6): 7.65 Sch 2, s 40: 1.65, 7.05, 7.80, 7.85, 7.90, 7.95 Sch 2, s 40(3): 7.85 Sch 2, s 41: 7.05, 7.95 Sch 2, s 42: 1.65, 7.95 Sch 2, s 43: 1.65, 7.100, 7.105, 7.110 Sch 2, s 43(1): 7.100 Sch 2, s 43(2): 7.85, 7.100 Sch 2, s 43(3): 7.100 Sch 2, s 43(3)(a): 7.100 Sch 2, s 43(3)(d): 7.100 Sch 2, s 43(6): 7.100 Sch 2, s 44: 7.05, 7.115, 7.120, 7.135, 7.145 Sch 2, s 44(1): 7.115, 7.140 Sch 2, s 44(2): 7.115, 7.140 Sch 2, s 45: 7.115, 7.120, 7.130, 7.135, 7.145, 7.195 Sch 2, s 45(1)(a): 7.120 Sch 2, s 45(1)(b): 7.120, 7.130 Sch 2, s 46: 1.65, 7.115, 7.130, 7.135 Sch 2, s 46(1)(a): 7.130 Sch 2, s 46(1)(b): 7.130 Sch 2, s 47: 1.65, 6.125, 7.150, 7.155 Sch 2, s 47(1): 7.150, 7.155, 7.160 Sch 2, s 47(2): 7.150 Sch 2, s 47(4): 7.150 Sch 2, s 47(5): 7.155 Sch 2, s 48: 6.125, 6.140, 7.165, 7.170, 7.190 Sch 2, s 48(1): 7.165, 7.175, 7.180, 7.185 Sch 2, s 48(2): 7.165
xl
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Competition and Consumer Act 2010 — cont Sch 2, s 48(3): 7.165 Sch 2, s 48(4): 7.165 Sch 2, s 48(5): 7.185 Sch 2, s 48(7): 7.165 Sch 2, s 48(7)(a): 7.180 Sch 2, s 49: 7.195, 7.200, 7.205 Sch 2, s 50: 1.65, 7.210, 7.220, 7.225 Sch 2, s 50(1): 7.215 Sch 2, s 51: 8.155, 8.170, 8.180, 8.185, 15.10, 15.260 Sch 2, s 51(2): 8.185 Sch 2, s 51(3): 8.185 Sch 2, ss 51 to 59: 1.65, 2.75 Sch 2, s 52: 8.155, 8.170, 8.180, 15.10, 15.260 Sch 2, s 52(1): 3.05, 8.190 Sch 2, s 52(2): 8.190 Sch 2, s 52(3): 8.190 Sch 2, s 52(4): 8.190 Sch 2, s 53: 1.65, 8.155, 8.170, 8.180, 15.10, 15.260 Sch 2, s 53(1): 8.195 Sch 2, s 53(2): 8.195 Sch 2, s 53(3): 8.195 Sch 2, s 53(4): 8.195 Sch 2, s 53(a): 13.115 Sch 2, s 53(e): 13.45 Sch 2, s 53(g): 7.10 Sch 2, s 53C: 7.165 Sch 2, s 54: 3.285, 6.180, 8.05, 8.155, 8.160, 8.180, 8.205, 8.230, 8.245, 8.250, 8.305, 8.350, 8.385, 8.390, 12.170, 15.10, 15.30, 15.40, 15.70, 15.140 Sch 2, s 54(1): 8.205, 8.220 Sch 2, s 54(1)(b): 8.170 Sch 2, s 54(2): 8.205, 8.220, 8.225, 8.255, 8.270 Sch 2, s 54(2)(a): 8.230 Sch 2, s 54(2)(b): 8.235 Sch 2, s 54(2)(c): 8.240, 8.335 Sch 2, s 54(2)(d): 8.245, 8.335, 15.40 Sch 2, s 54(2)(e): 8.250, 8.335 Sch 2, s 54(3): 8.205, 8.220, 8.225, 8.235, 8.245, 8.250, 8.255, 8.270, 8.300, 15.30 Sch 2, s 54(3)(a): 8.275 Sch 2, s 54(3)(b): 8.160, 8.280 Sch 2, s 54(3)(c): 8.55, 8.240, 8.285 Sch 2, s 54(3)(d): 8.55, 8.290 Sch 2, s 54(3)(e): 8.300 Sch 2, s 54(4): 8.55, 8.310, 8.320 Sch 2, s 54(4)(5): 8.55 Sch 2, s 54(4)(6): 8.55 Sch 2, s 54(4)(7): 8.55 Sch 2, s 54(5): 8.55, 8.310, 8.325 Sch 2, s 54(6): 8.55, 8.310, 8.330 Sch 2, s 54(7): 8.55, 8.310, 8.335 Sch 2, s 55: 8.155, 8.180, 8.350, 8.355, 8.365, 12.170, 15.10, 15.35, 15.70, 15.110, 15.140 Sch 2, s 55(1): 8.370, 8.375, 8.380, 12.170
Sch 2, s 55(1)(b): 8.170 Sch 2, s 55(2)(a): 8.380 Sch 2, s 56: 8.155, 8.180, 8.385, 15.10, 15.120, 15.140 Sch 2, s 56(1): 8.385 Sch 2, s 56(1)(b): 8.170 Sch 2, s 56(2): 8.385 Sch 2, s 57: 8.155, 8.180, 8.390, 15.10, 15.35 Sch 2, s 57(1)(b): 8.170 Sch 2, s 57(1)(e): 8.390 Sch 2, s 58: 8.155, 8.180, 8.395 Sch 2, s 58(1): 8.395 Sch 2, s 58(1)(b): 8.170 Sch 2, s 58(2): 8.395 Sch 2, s 59: 6.290, 8.50, 8.155, 8.400, 8.405 Sch 2, s 59(1): 8.180, 8.400 Sch 2, s 59(1)(b): 8.170 Sch 2, s 59(2): 8.180, 8.400, 13.115, 15.10 Sch 2, s 60: 1.65, 7.225, 8.10, 8.155, 9.05, 9.25, 9.40, 9.60, 9.70, 9.75, 9.110, 15.145, 15.185, 15.190, 15.195 Sch 2, ss 60 to 63: 1.65 Sch 2, s 61: 8.155, 9.40, 9.45, 9.95, 9.110, 15.190 Sch 2, s 61(1): 9.05, 9.60, 9.95, 9.105, 15.145 Sch 2, s 61(2): 9.05, 9.60, 9.95, 9.110, 15.145 Sch 2, s 61(3): 9.95 Sch 2, s 61(4): 1.65, 9.25, 9.95 Sch 2, s 62: 8.155, 9.25, 9.40, 9.60, 9.115, 15.145, 15.190 Sch 2, s 63: 1.110, 9.05, 9.30, 9.35 Sch 2, s 64: 6.180, 8.380, 8.405, 15.255, 15.260, 15.265, 15.280 Sch 2, s 64(1): 15.255 Sch 2, s 64A: 15.260, 15.265, 15.270 Sch 2, s 64A(3): 15.260 Sch 2, s 64A(4): 15.260 Sch 2, s 65: 1.65, 9.50 Sch 2, s 65A: 6.300 Sch 2, s 65A(1)(b): 3.240 Sch 2, s 66: 1.65, 9.120 Sch 2, s 66(2): 13.165 Sch 2, s 67: 15.275 Sch 2, s 67(1): 15.275 Sch 2, s 67(a): 15.275 Sch 2, s 67(b): 15.275 Sch 2, s 68: 8.175 Sch 2, ss 69 to 95: 1.65 Sch 2, s 69(1): 10.10 Sch 2, s 69(1)(b): 10.10 Sch 2, s 69(1)(c): 10.10 Sch 2, s 69(1)(d): 10.10 Sch 2, s 69(1A): 10.10 Sch 2, s 69(2): 10.10 Sch 2, s 69(4): 10.15 Sch 2, s 70: 10.10 Sch 2, s 71: 10.10 Sch 2, s 72: 10.10
Table of Statutes xli Competition and Consumer Act 2010 — cont Sch 2, s 73: 10.45, 10.85 Sch 2, s 74: 10.05, 10.45, 10.90 Sch 2, s 74(2): 9.100 Sch 2, s 74(a): 10.45, 10.90, 13.185 Sch 2, s 74(b): 10.45, 10.90, 13.185 Sch 2, s 74(c): 10.45, 10.90 Sch 2, s 75: 10.05 Sch 2, s 75(1): 10.45, 10.90 Sch 2, s 75(1)(a): 13.185 Sch 2, s 75(2): 10.45, 10.90 Sch 2, s 76: 10.50, 10.90 Sch 2, s 77: 10.45, 10.90 Sch 2, s 78(1): 10.50 Sch 2, s 78(2): 10.50 Sch 2, s 79: 10.50, 13.45 Sch 2, s 79(b)(ii): 10.50 Sch 2, s 79(b)(iii): 10.50 Sch 2, s 79(c)(ii): 10.50 Sch 2, s 80: 10.50 Sch 2, s 81: 10.50 Sch 2, s 82: 10.65, 10.70 Sch 2, s 82(1): 10.60 Sch 2, s 82(3)(a): 10.60 Sch 2, s 82(3)(b): 10.60 Sch 2, s 82(3)(c): 10.65 Sch 2, s 82(3)(d): 10.65 Sch 2, s 83: 10.70 Sch 2, s 83(1): 10.70 Sch 2, s 83(2): 10.70 Sch 2, s 84: 10.90 Sch 2, s 85(2): 10.75 Sch 2, s 86: 10.50, 10.85 Sch 2, s 86(1): 10.80 Sch 2, s 86C: 13.300 Sch 2, s 87: 10.75, 10.80 Sch 2, s 87CB: 14.150 Sch 2, s 88: 10.80 Sch 2, s 89: 10.95 Sch 2, s 89(1): 10.80 Sch 2, s 89(2): 10.80 Sch 2, s 94: 10.85 Sch 2, s 94(b): 10.85 Sch 2, s 96(1): 10.105 Sch 2, s 96(2): 10.105 Sch 2, s 96(3): 10.105 Sch 2, ss 96 to 99: 1.65, 10.125 Sch 2, s 97(1): 6.185, 10.110 Sch 2, s 97(2): 10.110 Sch 2, s 97(3): 10.110 Sch 2, s 98: 10.115 Sch 2, s 99(1): 10.120 Sch 2, s 100: 1.65 Sch 2, s 100(1): 9.125, 9.130 Sch 2, s 100(3): 9.130 Sch 2, s 100(4): 9.125 Sch 2, s 101: 1.65, 9.135 Sch 2, s 101(1): 9.135
Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch
2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2,
s 101(2): 9.135 s 101(3): 9.135 s 101(4): 9.135 s 102: 1.65, 8.405 s 102(1): 8.405 s 102(2): 8.405 s 102(3): 8.405 s 103: 1.65 s 104(1): 11.150 s 104(2): 11.150, 11.155 s 104(3): 11.155 s 104(3): 11.150 ss 104 to 137: 1.65 s 106(1): 11.165 s 106(3): 11.165 s 108: 11.160, 11.165 s 109: 11.190 s 109(1): 11.190 s 109(2): 11.190 s 111(1): 11.190 s 111(2): 11.190 s 111(4): 11.190 s 114: 11.185 s 114(1): 11.195 s 114(2): 11.195 s 115: 11.195 s 116: 11.195 s 117: 11.195 s 118: 11.205 s 118(1): 11.205 s 118(2): 11.205 s 119: 11.205 s 119(1): 11.205 s 119(2): 11.205 s 122: 11.50 s 122(1): 11.50 s 122(1)(b): 11.50, 11.55 s 122(1)(c): 11.55, 11.50 s 123(1): 11.75 s 123(1)(b): 11.75 s 123(1)(c): 11.75 s 123(4): 11.75 s 124: 11.75 s 125(1): 11.80 s 125(4): 11.80 s 126: 11.70 s 127(2): 11.85 s 128: 11.90, 11.95 s 128(2): 11.90, 11.100, 11.115, 11.135 s 128(3): 11.105 s 128(4): 11.90, 11.125 s 128(6): 11.125, 11.135 s 128(7): 11.90, 11.105 s 129(1): 11.210 s 129(2): 11.210 s 130(1): 11.210
xlii Table of Statutes Competition and Consumer Act 2010 — cont Sch 2, s 131: 6.105, 11.215, 11.225, 11.230, 11.250, 11.255, 13.165 Sch 2, s 131(1): 11.235 Sch 2, s 131(2)(c): 11.250 Sch 2, s 131(4): 11.230 Sch 2, s 131(5): 11.215, 11.240 Sch 2, s 131(6): 11.240 Sch 2, s 131G(2): 13.110 Sch 2, s 132: 11.210, 11.220, 11.225, 11.230, 11.250, 11.255 Sch 2, s 132(1): 11.235 Sch 2, s 132(2)(c): 11.250 Sch 2, s 132(2)(d): 11.245 Sch 2, s 132(2)(e): 11.245 Sch 2, s 132(5): 11.240 Sch 2, s 132A(1): 11.245 Sch 2, s 132A(2): 11.245 Sch 2, s 132A(2)(b): 11.245 Sch 2, s 134(1): 11.170 Sch 2, s 134(2): 11.175 Sch 2, s 134A: 9.130 Sch 2, s 135: 11.175 Sch 2, s 136: 11.180 Sch 2, s 136: 11.175 Sch 2, s 136(1): 11.175 Sch 2, s 136(2): 11.175 Sch 2, s 136(3): 11.175 Sch 2, s 137: 11.175, 11.180 Sch 2, s 137A: 12.145 Sch 2, s 137B: 14.130, 14.135 Sch 2, s 137E(2): 14.210 Sch 2, s 138: 12.05, 12.10, 12.45, 12.75 Sch 2, ss 138 to 141: 12.170 Sch 2, ss 138 to 150: 1.65 Sch 2, s 139: 12.05, 12.95 Sch 2, s 139(1): 12.95 Sch 2, s 139(1)(d): 14.35 Sch 2, s 139(2): 12.95 Sch 2, s 140: 12.05, 12.105 Sch 2, s 140(1): 12.105 Sch 2, s 141: 12.05 Sch 2, s 141(1): 12.110 Sch 2, s 142: 12.85, 12.115 Sch 2, s 142(a): 12.120 Sch 2, s 142(b): 12.125 Sch 2, s 142(c): 12.15, 12.130, 12.170 Sch 2, s 142(d): 12.140 Sch 2, s 142C: 12.170 Sch 2, s 143: 12.15 Sch 2, s 144: 12.150, 12.155 Sch 2, s 147: 12.15 Sch 2, s 147(1): 12.15 Sch 2, s 148: 12.125 Sch 2, s 148(1): 12.125 Sch 2, s 148(2): 12.125 Sch 2, s 148(3): 12.125 Sch 2, s 149: 12.160
Sch 2, s 150: 12.165 Sch 2, s 151: 6.215, 6.300, 13.105, 13.410, 13.415, 13.420, 13.425, 13.430 Sch 2, s 151(1)(a): 6.165, 13.405 Sch 2, s 151(1)(k): 6.165, 13.405 Sch 2, s 151(1)(n): 6.190, 6.205 Sch 2, s 151(m): 12.165 Sch 2, s 152: 6.255, 6.300, 13.105 Sch 2, s 153: 6.270 Sch 2, s 154: 7.25 Sch 2, s 155: 1.100, 6.280, 6.300, 13.105 Sch 2, s 156: 6.280, 6.300, 13.105 Sch 2, s 157: 7.40 Sch 2, s 158: 7.55 Sch 2, s 159: 6.295, 6.300, 13.105 Sch 2, s 160: 6.300 Sch 2, s 160(1): 13.105 Sch 2, s 160(2): 13.105 Sch 2, s 160(3): 13.105 Sch 2, s 160(4): 13.105 Sch 2, s 161: 7.70 Sch 2, s 162: 7.90, 7.100 Sch 2, s 163: 7.105 Sch 2, s 164: 7.140 Sch 2, s 165: 7.160 Sch 2, s 166: 7.190 Sch 2, s 167: 7.200 Sch 2, s 168: 7.220 Sch 2, s 169: 9.120 Sch 2, s 170: 10.95 Sch 2, s 172: 10.95 Sch 2, s 174: 10.95 Sch 2, s 175: 10.95 Sch 2, s 176: 10.95 Sch 2, s 177: 10.95 Sch 2, s 178: 10.95 Sch 2, s 179: 10.95 Sch 2, s 180: 10.95 Sch 2, s 181: 10.95 Sch 2, s 182: 10.95 Sch 2, s 183: 10.95 Sch 2, s 184: 10.95 Sch 2, s 188: 10.130 Sch 2, s 189: 10.130 Sch 2, s 190: 10.130 Sch 2, s 191: 10.130 Sch 2, s 192(1): 8.405 Sch 2, s 194: 11.165, 13.130 Sch 2, s 195: 13.130 Sch 2, s 195(1): 11.165 Sch 2, s 196(1): 11.165 Sch 2, s 197(1): 11.205 Sch 2, s 197(5): 11.205 Sch 2, s 197(6): 11.205 Sch 2, s 198(1): 11.205 Sch 2, s 199(1): 11.85 Sch 2, s 199(2): 11.85
Table of Statutes xliii Competition and Consumer Act 2010 — cont Sch 2, s 200(1): 11.85 Sch 2, s 201(1): 11.135 Sch 2, s 201(2): 11.135 Sch 2, s 202: 11.255 Sch 2, s 203: 11.180, 13.130 Sch 2, s 204: 11.180, 13.130 Sch 2, s 205: 13.365 Sch 2, s 206: 13.365 Sch 2, s 207: 13.110, 13.115 Sch 2, s 208: 13.110, 13.120 Sch 2, s 209: 13.110, 13.125 Sch 2, s 210: 13.110, 13.130 Sch 2, s 212: 13.50 Sch 2, s 213: 13.85 Sch 2, s 214: 13.90 Sch 2, s 215: 13.95 Sch 2, s 216: 13.135 Sch 2, s 218: 9.130, 10.125, 13.15, 13.335, 13.360 Sch 2, s 218(1): 13.335 Sch 2, s 218(4): 13.335 Sch 2, s 219: 9.130, 10.125, 11.205, 13.350 Sch 2, s 219(2)(a): 13.350 Sch 2, s 219(2)(c): 13.350 Sch 2, s 219(4): 13.355 Sch 2, s 221: 13.165 Sch 2, s 222: 13.165 Sch 2, s 222(1): 13.365 Sch 2, s 223: 9.130, 10.125, 11.205, 13.370 Sch 2, s 224: 1.35, 10.90, 10.125, 13.155, 13.165, 13.170, 13.205, 13.220, 13.235, 13.240, 13.360, 13.375 Sch 2, s 224(1)(a)(viii): 11.85, 11.135, 11.165, 11.205 Sch 2, s 224(1)(a)(ix): 11.180 Sch 2, s 224(1)(a): 11.255, 13.155, 13.220, 13.240 Sch 2, s 224(1)(b): 13.215, 13.240 Sch 2, s 224(1)(c): 13.215 Sch 2, s 224(1)(d): 13.215 Sch 2, s 224(1)(e): 13.215, 13.220 Sch 2, s 224(1)(f): 13.215 Sch 2, s 224(2): 13.170, 13.190 Sch 2, s 224(4): 13.210 Sch 2, s 224(b): 13.220 Sch 2, s 224(d): 13.220 Sch 2, ss 224 to 231: 1.65 Sch 2, s 225(1): 13.235 Sch 2, s 225(2): 13.235 Sch 2, s 226: 13.165, 13.240 Sch 2, s 227: 13.400 Sch 2, s 228: 14.10 Sch 2, s 228(1): 13.165 Sch 2, s 228(2): 13.165 Sch 2, s 229: 13.165, 13.245 Sch 2, s 230: 13.245 Sch 2, s 232: 1.155, 3.85, 5.185, 5.190, 9.130, 10.125, 13.135, 13.250, 13.315, 14.10, 14.200, 14.230
Sch Sch Sch Sch Sch Sch Sch Sch
2, 2, 2, 2, 2, 2, 2, 2,
Sch 2, Sch 2, Sch 2,
Sch 2, Sch Sch Sch Sch Sch Sch Sch
2, 2, 2, 2, 2, 2, 2,
Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch
2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2,
Sch Sch Sch Sch Sch
2, 2, 2, 2, 2,
Sch Sch Sch Sch Sch Sch Sch Sch
2, 2, 2, 2, 2, 2, 2, 2,
s 232(1): 13.280 s 232(2): 1.150 s 232(3): 13.150, 14.30 s 232(4): 13.260, 14.240 ss 232 to 235: 1.65 s 233: 13.255 s 234: 14.235 s 236: 1.50, 1.65, 3.160, 3.165, 5.175, 5.190, 6.105, 8.05, 9.130, 10.125, 12.170, 14.05, 14.30, 14.35, 14.40, 14.85, 14.90, 14.105, 14.115, 14.125, 14.130, 14.135, 14.140, 14.145, 14.165, 14.175, 14.185, 14.200, 14.215, 14.225, 14.250, 15.70, 15.250 s 236(1): 14.10, 14.120 s 236(2): 14.120 s 237: 1.65, 5.185, 5.190, 9.130, 10.125, 13.400, 14.20, 14.30, 14.115, 14.135, 14.150, 14.165, 14.175, 14.200, 14.210, 14.215, 14.225, 14.250, 15.70, 15.250 s 237(1): 13.150, 13.390, 14.10, 14.200, 14.205, 14.210, 14.220, 14.225 s 237(1)(a)(ii): 5.175, 5.190, 14.225 s 237(1)(b): 13.150, 13.390 s 237(2): 13.395 s 237(3): 5.190, 14.200, 14.225, 14.250 s 238: 1.65, 13.400, 14.200, 14.205, 14.250 s 238(1): 14.200, 14.205, 14.210, 14.220 s 239: 5.185, 9.130, 13.175, 13.390, 13.395, 13.400 s 239(1): 5.185, 13.150, 13.395, 14.10 s 239(2(a): 14.205 s 239(4): 13.395 s 239L: 10.125 s 240(1): 13.395 s 240(2): 13.395 s 240(3): 13.395 s 241: 13.395 s 242: 13.150 s 242(1): 13.150, 13.395, 14.200 s 242(2): 13.150, 13.390 s 243: 5.185, 13.390, 13.395, 14.30, 14.200, 14.205, 14.215, 14.220 s 243(a): 14.15, 14.220, 14.225 s 243(d): 13.395, 14.30, 14.225 s 243(e): 13.390, 13.395 s 244: 14.200 s 246: 9.130, 10.125, 13.135, 13.280, 13.290, 13.295, 13.315, 14.10, 14.200 s 246(2)(a): 13.295 s 246(2)(b): 13.300 s 246(2)(b)(i): 13.290 s 246(2)(b)(ii): 13.290 s 246(2)(b)(iii): 13.290 s 246(2)(c): 13.305, 13.315 s 246(2)(d): 13.310, 13.315 s 246(a): 11.215
xliv Table of Statutes Competition and Consumer Act 2010 — cont Sch 2, s 246(c): 11.215 Sch 2, s 247: 9.130, 10.125, 13.135, 13.315, 14.10, 14.200 Sch 2, s 247(2)(a): 13.315 Sch 2, s 247(2)(b): 13.315 Sch 2, s 248: 9.130, 10.125, 13.135, 13.215, 13.320, 13.325, 14.10, 14.200 Sch 2, s 248(1)(a): 13.325 Sch 2, s 249: 1.65, 13.325 Sch 2, s 250: 5.175, 5.185, 5.190, 13.150, 14.30, 14.200, 14.205, 14.225 Sch 2, s 250(1): 5.185 Sch 2, s 251: 3.45, 3.235, 3.240, 6.300, 13.125, 13.330, 14.245 Sch 2, ss 254 to 258: 1.65 Sch 2, s 255: 6.165, 13.405, 13.410, 13.415, 13.420, 13.425, 13.430 Sch 2, s 255(3): 13.410 Sch 2, s 255(7): 13.430 Sch 2, s 255(8): 13.430 Sch 2, s 255(9): 13.430 Sch 2, s 256: 13.410, 13.420 Sch 2, s 258: 13.405 Sch 2, s 259: 3.285, 15.10, 15.15 Sch 2, s 259(2): 15.25, 15.30, 15.80, 15.100 Sch 2, s 259(2)(a): 8.05, 15.80 Sch 2, s 259(2)(b): 8.05 Sch 2, s 259(2)(b)(i): 15.80 Sch 2, s 259(3): 6.180, 15.25, 15.30, 15.45, 15.50, 15.55, 15.100 Sch 2, s 259(3)(a): 8.05, 8.250 Sch 2, s 259(3)(b): 8.05, 15.65 Sch 2, s 259(4): 15.70, 15.75, 15.100, 15.105, 15.140, 15.265 Sch 2, s 259(5): 15.70 Sch 2, s 259(6): 8.05, 15.100 Sch 2, ss 259 to 266: 1.65 Sch 2, s 260: 15.20, 15.30, 15.35, 15.40 Sch 2, s 260(a): 15.20, 15.30 Sch 2, s 261: 15.85, 15.100 Sch 2, s 261(c): 15.90 Sch 2, s 262(1): 15.55 Sch 2, s 262(2): 15.60 Sch 2, s 263: 15.50 Sch 2, s 263(2): 15.50 Sch 2, s 263(4): 6.180, 15.50 Sch 2, s 263(5): 15.50 Sch 2, s 263(6): 15.50 Sch 2, s 264: 15.50, 15.90 Sch 2, s 266: 8.160, 15.15, 15.115 Sch 2, s 267: 15.145, 15.285 Sch 2, s 267(1): 15.200 Sch 2, s 267(1)(c): 15.190, 15.195 Sch 2, s 267(1)(c)(i): 15.200 Sch 2, s 267(2): 15.180 Sch 2, s 267(3): 15.185 Sch 2, s 267(4): 15.70, 15.210, 15.265, 15.285
Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch
2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2,
Sch 2, Sch 2,
Sch Sch Sch Sch
2, 2, 2, 2,
ss 267 to 270: 1.65 s 268: 15.150 s 268(a): 15.155 s 268(b): 15.160 s 268(c): 15.165 s 268(d): 15.170 s 268(e): 15.175 s 269(2)(a): 15.180 s 269(2)(b): 15.180 s 271: 15.110, 15.115, 15.135, 15.140 s 271(1): 8.05, 12.170, 15.110, 15.270 s 271(2): 8.05, 15.120 s 271(3): 15.110 s 271(4): 15.120 s 271(5): 8.400, 8.405, 15.110 s 271(6): 8.05, 8.405, 15.05, 15.125 ss 271 to 273: 1.65 s 272: 15.135 s 272(1): 8.405 s 272(1)(a): 8.05, 12.170, 15.125 s 272(1)(b): 8.05, 15.130, 15.270 s 274: 1.65, 8.55, 15.140, 15.270 s 274(1): 15.140 s 274(2): 15.140 s 274(3): 8.05 s 275: 15.290 s 276: 15.270 s 276A(1): 15.270 s 276A(2): 15.270 s 277: 15.295 s 277(2): 15.295 s 278: 15.235, 15.245 s 278(1): 15.220, 15.225 s 278(2): 15.220 ss 278 to 287: 1.65 s 279: 15.230 s 280: 15.235 s 280(1): 15.235 s 280(2): 15.235 s 280(3): 15.235 s 280(4): 15.235 s 281: 15.240 s 284: 15.240 s 285: 15.245 Ch 2: 1.05, 2.75, 3.15, 8.05, 13.05, 13.150, 13.250, 13.270, 13.390, 14.05, 14.10, 14.15, 14.30, 14.35, 14.85, 14.120, 14.200, 14.230, 14.235, 15.250 Ch 2, Pt 2-3: 1.65 Ch 3: 1.05, 2.75, 3.15, 6.05, 8.05, 13.05, 13.20, 13.250, 13.270, 13.315, 13.390, 14.05, 14.10, 14.15, 14.30, 14.35, 14.85, 14.120, 14.200, 14.230, 14.235 Ch 3, Pt 3-1: 1.65 Ch 3, Pt 3-2: 1.60, 10.95 Ch 3, Pt 3-2, Div 1: 1.65, 8.05 Ch 3, Pt 3-2, Div 3: 1.65
Table of Statutes xlv Competition and Consumer Act 2010 — cont Sch 2, Ch 3, Pt 3-3: 1.65, 11.15 Sch 2, Ch 3, Pt 3-4: 1.65 Sch 2, Ch 4: 1.160, 6.05, 7.05, 13.05, 13.20, 13.25, 13.35, 13.80, 13.110, 13.135, 13.170, 13.250, 13.315, 13.375, 13.380, 13.390, 14.05, 14.10, 14.15, 14.200, 14.230, 14.235 Sch 2, Ch 5, Pt 5-3: 6.165, 13.405 Sch 2, Pt 2: 2.40, 3.250 Sch 2, Pt 2-1: 1.100, 6.250, 14.125, 14.250 Sch 2, Pt 2-2: 1.100, 13.165, 13.315, 14.200, 14.205 Sch 2, Pt 2-3: 1.100, 5.05, 5.20 Sch 2, Pt 3-1: 1.100, 6.05, 6.250, 13.165, 14.125, 14.250 Sch 2, Pt 3-1, Div 3: 1.160, 10.100 Sch 2, Pt 3-2: 6.180, 8.05, 8.75, 10.90, 13.165, 15.280 Sch 2, Pt 3-2, Div 1: 3.285, 6.10, 6.180, 6.190, 6.205, 6.230, 8.10, 8.105, 8.120, 8.255, 9.50, 15.20, 15.25, 15.235 Sch 2, Pt 3-2, Div 1, subdiv A: 8.180, 8.350, 9.60 Sch 2, Pt 3-2, Div 1, subdiv B: 9.05, 9.60 Sch 2, Pt 3-2, Div 2: 10.05 Sch 2, Pt 3-3: 1.25, 1.100, 11.05, 11.10, 13.165 Sch 2, Pt 3-3 Div 1: 11.05, 11.145 Sch 2, Pt 3-3 Div 2: 11.05, 11.15, 11.145 Sch 2, Pt 3-3 Div 4: 11.05 Sch 2, Pt 3-3, Div 4: 11.210 Sch 2, Pt 3-3 Div 5: 11.05 Sch 2, Pt 3-4: 1.25, 1.100, 11.10, 13.165 Sch 2, Pt 3-5: 1.25, 1.160, 12.05, 12.165, 12.170 Sch 2, Pt 3-5, Div 1: 6.105, 8.245, 12.05 Sch 2, Pt 3-5, Div 2: 12.170, 14.290 Sch 2, Pt 4-1: 1.100, 13.55 Sch 2, Pt 4-3: 1.100 Sch 2, Pt 4-4: 1.100 Sch 2, Pt 4-5: 13.365 Sch 2, Pt 4-6: 6.215, 6.255, 6.270, 6.280, 6.295, 7.25, 7.40, 7.55, 7.70, 7.90, 7.105, 7.140, 7.160, 7.190, 7.200, 7.220, 10.95, 10.135, 13.110 Sch 2, Pt 5-2: 11.175, 13.380, 14.05 Sch 2, Pt 5-2, Div 4: 14.20 Sch 2, Pt 5-3: 1.95, 1.100, 6.165 Sch 2, Pt 5-4: 14.05, 15.30 Sch 2, Pt 5-4, Div, subdiv A: 15.10 Sch 2, Pt 5-4, Div 2: 15.70, 15.135 Sch 2, Pt 5-5: 9.20, 15.215, 15.220 Sch 2, Pt 5G: 5.180 Sch 2, Pt 305: 12.05, 12.10 Sch 2, Pt V-2: 13.375 Sch 2, Pt V, Div 2: 15.275 Sch2 , Pt II, Div 2, subdiv C: 4.195
Competition and Consumer (Industry Codes – Food and Grocery) Regulation 2015: 4.150
Competition and Consumer (Industry Codes – Franchising) Regulation 2014: 4.145 cl 6: 4.145 cl 6(3): 4.145 cl 6(4): 4.145 cl 6(5): 4.145 cl 6(6): 4.145 Sch 1: 4.145
Competition and Consumer Legislation Amendment Act 2011: 1.65, 4.05, 4.195 Competition and Consumer Legislation Amendment Bill 2010: 4.65 Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004: 14.145 Sch 3: 14.130
Corporations Act 2001: 1.105, 2.120, 3.250, 3.255, 6.240, 9.20, 13.325 s 9: 5.45 ss 12 to 129: 2.120 s 206C: 13.325 s 206E: 13.325 s 763A: 6.240 s 763C: 6.240 s 763E: 6.235, 6.240 s 763E(1): 6.235 s 764A(1)(d): 6.240 s 766A: 3.265 s 1041H: 1.105, 3.130, 14.150 s 1041L: 14.150 s 1466: 14.130 Pt 2D.6: 13.320
Corporations Law s 995(2): 3.285
Crimes Act 1914 s s s s s
5: 14.175 15A: 13.80 16A(2): 13.55 16A(2)(j): 13.60 19B: 13.55
Criminal Code Act 1995: 6.05, 13.20 s 9.2: 13.110 ss 11.2(1) to (6): 13.30 s 11.5(1): 13.35 ss 11.5(2) to (7A): 13.35 s 12.2: 13.20 s 12.3(1): 13.20 s 12.3(2): 13.20 s 12.3(2)(b): 13.20 Ch 2: 13.20
Customs Act 1901 s 234(d): 6.20
Do Not Call Register Act 2006: 10.45 Evidence Act 1995 s 140: 13.155 s 144(1): 2.40
xlvi Table of Statutes Evidence Act 1995 — cont s 191: 13.145
Fair Work Act 2009 s 384: 5.80 s 384(2): 5.80
Federal Court of Australia Act 1976 s s s s
21: 22: 23: 43:
13.145, 14.25 13.250 13.250, 13.335 13.100
Financial Sector Reform (Consequential Amendments) Act 1998 Pt II, Div 2: 3.250
Income Tax Assessment Act 1997: 4.05 Insurance Contracts Act 1984: 5.45, 5.210 s s s s
13: 1.110 14: 1.110 15: 1.110, 5.45 15(1): 1.110
Intergovernmental Agreement for the Australian Consumer Law: 1.140 cl cl cl cl cl
8: 1.140 12: 1.140 19: 1.140 20: 1.145 21: 1.145
Mutual Recognition Act 1992: 1.45 National Consumer Credit Protection Code: 1.105, 3.250 National Credit Code s 135: 1.65
National Health Security Act 2007: 11.250 Passenger Movement Charge Act 1978: 7.170 Therapeutic Goods Act 1989: 11.250 Trade Practices Act 1974: 11.15, 12.05 s 2A: 2.55 s 2B: 2.55 s 4(2): 3.15, 3.30 s 4B: 1.65, 8.70, 8.75, 8.80 s 4F(b)(ii): 5.65 s 5(1): 5.75 s 6(2): 13.115 s 6(3): 1.65, 1.100 s 12: 7.55 s 18: 3.165 ss 29(1)(a) to (h): 6.10 s 35: 7.35 s 45: 13.220 s 47(1): 14.20 s 47B(1)(d): 8.360 s 47B(1)(e): 8.360 s 48: 4.125 s 51A: 1.65, 3.135, 3.140 s 51A(1): 3.135 s 51A(2): 3.135 s 51AA: 4.05, 4.10, 4.15, 4.30, 4.35
s 51AB: 1.65, 4.05, 4.30, 4.45, 4.50, 4.85, 4.120, 4.190 s 51AC: 1.65, 4.05, 4.45, 4.50, 4.85, 4.100, 4.110, 4.125, 4.145, 4.175, 4.180, 4.185, 4.190, 4.210, 6.30, 8.80 s 51AC(3): 4.95 s 51AC(3)(d): 4.125 s 51AC(9): 8.80 s 51AD: 14.185 s 52: 1.05, 1.35, 1.100, 2.45, 2.55, 2.80, 2.120, 2.130, 3.05, 3.10, 3.20, 3.25, 3.30, 3.40, 3.45, 3.65, 3.70, 3.90, 3.95, 3.110, 3.115, 3.140, 3.150, 3.165, 3.175, 3.185, 3.200, 3.210, 3.215, 3.220, 3.225, 3.235, 3.245, 3.255, 3.285, 6.45, 6.50, 6.60, 6.70, 6.85, 6.95, 6.105, 6.120, 6.165, 6.275, 6.290, 13.275, 14.45, 14.50, 14.85, 14.180 s 52(1): 3.05, 3.10, 6.265, 14.105 s 53: 1.65, 2.45, 6.10, 6.20, 14.180 s 53(a): 1.100, 3.185, 6.20, 6.35, 6.45, 6.50, 6.70 s 53(b): 6.20, 6.45, 6.60, 6.65 s 53(c): 1.100, 3.155, 3.225, 6.45, 6.70, 6.90, 6.95, 6.100, 6.105, 6.115, 6.120 s 53(d): 3.225, 6.115, 6.120 s 53(e): 1.100, 6.125, 6.155, 7.10 s 53(f): 6.175 s 53(g): 3.185, 6.180, 6.185, 7.10 s 53A: 1.65, 6.250 s 53A(1): 6.30 s 53A(1)(b): 2.120, 6.250 s 53A(1)(c): 6.250 s 53A(2): 1.65 s 53B: 1.65, 6.265 s 53C: 7.165, 13.385 s 53(aa): 6.55 s 53(ea): 6.20, 6.160 s 53(eb): 6.165 s 54: 1.65, 7.10 s 54(3): 8.10 s 55: 6.45, 6.50, 6.120, 6.275 s 55A: 6.275 s 56: 7.35 s 56(2): 7.35 s 57: 7.195 s 58: 1.65, 7.50 s 58(a): 7.50 s 58(b): 7.50, 7.55 s 59: 6.180, 6.290 s 59(2): 6.290 s 60: 1.65, 7.210, 7.215, 13.325 s 63A: 7.65 s 64: 1.65, 7.80, 7.100 s 64(3): 7.100 s 64(4): 7.100 s 64(5): 7.80 s 64(5)(e): 7.85 s 64(7): 7.80
Table of Statutes xlvii Trade Practices Act 1974 — cont s 65: 7.95 s 65(2): 7.95 s 65A: 1.65, 3.235, 3.240, 3.245, 6.300 s 65A(1): 3.235 s 65A(1)(a): 3.245, 6.300 s 65A(1)(a)(vi): 3.245 s 65A(1)(b): 6.300 s 65B: 1.65, 11.15 s 65C: 1.65, 6.35, 11.15, 11.165, 11.185 s 65C(1)(c): 11.205 s 65D: 1.65, 11.15 s 65E: 1.65, 11.15 s 65F: 1.65, 11.15, 11.50 s 65G: 1.65, 11.15 s 65H: 1.65, 11.15 s 65R: 1.65, 11.15, 11.90 s 65T: 1.65, 11.15 s 65AAC: 7.115 s 65AAC(1): 7.115, 7.135 s 65AAC(2): 7.115 s 65AAD: 7.115, 7.120 s 65AAE: 1.65, 7.115 s 66(2): 8.205, 8.210, 8.215, 8.230 s 66AAD: 7.120, 7.125 s 68: 15.255 s 68A: 8.75, 15.260 s 68B(1): 15.280 s 68B(2): 15.280 s 69(1)(a): 8.185 s 69(1)(b): 8.190 s 70: 8.385 s 71(1): 8.50, 8.75, 8.205, 8.210, 8.215 s 71(2): 8.75, 8.355, 8.360 s 72: 8.390 s 73: 1.65, 15.215 s 74: 1.65, 8.75, 9.05, 9.30, 9.65, 9.85, 15.280 s 74(1): 8.10, 9.05, 9.65, 9.75, 9.85 s 74(2): 9.95, 9.100 s 74(3)(a): 9.30 s 74A: 1.65, 12.10, 12.60 s 74A(1): 1.65 s 74A(2)(a): 8.100 s 74A(3): 1.65 s 74B: 8.10, 8.360, 14.40 s 74B(1): 8.355 s 74B(1)(a): 8.360 s 74B(1)(b): 8.360 s 74B(1)(c): 8.360 s 74B(2): 8.355 s 74B(2)(b): 8.360 s 74D: 8.10, 8.250, 8.305, 8.360, 14.40 s 74D(3): 8.210, 8.215, 12.35 s 74F: 8.395 s 74H: 1.65 s 74AD: 12.10 s 75A: 8.30, 15.10
s 75B: 2.45, 7.135, 13.165, 13.215, 14.175, 14.180, 14.205 s 75B(1): 14.185 s 75B(1)(a): 14.175, 14.185 s 75B(1)(c): 14.185 s 75AA: 12.10 s 75AB: 12.10 s 75AC: 12.35, 12.45, 12.145, 12.170 s 75AC(2): 8.10, 12.35 s 75AC(3): 12.35 s 75AC(4): 12.35 s 75AD: 12.10, 12.60, 12.100, 12.120, 12.130, 12.170 s 75AE: 12.95, 12.100 s 75AF: 12.105 s 75AJ: 12.15 s 75AK(1)(c): 12.130, 12.170 s 75AN: 12.145 s 75AZC: 6.215 s 75AZC(1)(g): 13.20, 13.45 s 75AZD: 6.255 s 75AZE: 6.270 s 75AZG: 7.25 s 75AZH: 6.280 s 75AZI: 6.280 s 75AZJ: 7.40 s 75AZK: 7.200 s 75AZL: 7.55, 13.60 s 75AZL(3): 7.55, 13.60 s 75AZM: 6.295 s 75AZN: 7.220 s 75AZO: 7.140 s 75AZP: 7.70 s 75AZQ: 7.90, 7.105 s 75AZS: 11.165 s 75AZS(1): 11.165, 13.20 s 76: 13.170 s 76(1): 13.220 s 76(1)(b): 13.220 s 76E: 1.65, 13.170 s 79: 6.05, 6.55, 13.35 s 80: 1.65, 13.250, 13.310, 13.320, 14.230 s 82: 1.35, 1.65, 2.45, 6.105, 8.355, 14.35, 14.40, 14.45, 14.50, 14.85, 14.95, 14.110, 14.115, 14.120, 14.130, 14.175, 14.180 s 82(1): 14.35, 14.120 s 82(1B): 1.50, 14.130 s 82(1AAA): 14.250 s 82(1AAB): 14.250 s 82(2): 14.120 s 83: 14.10 s 84(2): 2.115, 13.220 s 84(4): 2.130 s 85: 13.110 s 85(1): 13.115 s 85(1)(a): 13.110, 13.115 s 85(1)(b): 13.115
xlviii
Table of Statutes
Trade Practices Act 1974 — cont s 85(1)(c): 13.110, 13.120 s 85(3): 3.240, 13.110, 13.125, 13.330, 14.245 s 85(4): 13.110, 13.130 s 85(6): 13.240 s 86C: 13.290 s 86D: 13.315 s 86E: 13.325 s 87: 1.65, 4.175, 13.395, 14.85, 14.115, 14.135, 14.200, 14.220 s 87(1): 14.215 s 87(2): 14.215 s 87A: 13.285 s 87ZE: 13.375 s 87AAA: 13.395 s 163: 6.55 ss 251 to 253: 1.65 s 1041H: 3.150 Pt V: 1.40, 1.75, 6.05, 14.120 Pt V, Div 1: 1.90, 3.235, 6.05 Pt V, Div 1A: 11.155, 13.130 Pt V, Div 1AA: 6.165 Pt V, Div 2: 1.65, 1.75, 8.05, 8.10, 8.20, 8.30, 8.50, 8.60, 8.75, 8.210, 8.355, 9.05, 15.10, 15.275 Pt V, Div 2A: 1.65, 8.05, 8.10, 8.30, 8.50, 8.60, 8.210, 8.355, 12.05 Pt V Div 2A: 12.05 Pt VA: 8.10, 11.220, 12.05, 12.10, 12.20, 12.100, 12.145 Pt VC: 6.05, 13.35 Pt VC, Div 2: 6.05 Pt XI: 1.65 Sch 3: 14.130 Trade Practices Amendment Act 1992: 12.05
Trade Practices Amendment (Australian Consumer Law) Act (No 1) 2010: 1.05, 1.55, 5.60
Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010: 1.05, 1.55, 15.25 Pt VIC: 13.375
Trade Practices (Australian Consumer Law) Amendment Regulations 2010 (No 1): 1.05, 1.55, 9.50, 10.15, 10.20 reg reg reg reg reg reg reg reg reg reg reg reg
77: 7.85 78: 7.85 79: 7.100 80: 7.100 81: 10.15, 10.20, 10.25 81(1): 10.20 81(2): 10.20, 10.25, 10.30, 10.35, 10.40 82: 10.45 83: 10.50 84: 10.50 85: 10.50 86: 10.50
reg 87: 10.50 reg 88: 10.85 reg 89: 10.85 reg 90: 8.405 reg 90(1): 8.405 reg 90(2): 8.405 reg 92: 11.250 Sch 1: 1.55 Sch 2: 1.55 Sch 3: 1.55
Trade Practices (Consumer Product Safety Standard) (Baby Walkers) Regulations 2002: 11.165
Trade Practices (Industry Codes – Franchising) Regulations 1998: 4.145 s 4(1): 4.100 cl 22: 4.145
Trademarks Act 1995 Pt XI: 6.115
Trans-Tasman Mutual Recognition Act 1997: 1.45
Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Act 2015: 5.10, 5.70 Uniform Consumer Credit Code: 1.105, 3.250
Australian Capital Territory Administrative Decision (Judicial Review) Act 1989: 11.65 Civil Law (Wrongs) Act 2002 s 107B: 1.50, 14.170
Coroners Act 1997: 11.250 Door-to-Door Trading Act 1991: 10.05 Fair Trading Act 1992 s s s s
14: 15: 16: 18:
2.65 2.65 2.65 2.65
Fair Trading (Australian Consumer Law) Act 1992: 1.50, 1.55, 1.60, 1.120, 1.135, 1.150, 1.155, 2.05, 2.40, 2.65, 2.135, 3.05, 3.35, 3.255, 5.50, 5.60, 5.175, 14.140 s s s s s
6: 1.50, 1.120 7: 1.50, 1.120 11: 1.130 20: 1.135 236: 1.50, 14.130, 14.140
Fair Trading (Consumer Affairs) Act 1973 s 37(1): 11.100
Law Reform (Miscellaneous Provisions) Act 1955 s 15: 1.50, 14.130, 14.140
Lay-by Sales Agreement Act 1953: 10.100 Public Health Act 1997: 11.250
Table of Statutes xlix
Road Transport (Safety and Traffic Management) Act 1999: 11.250 Sale of Goods Act 1954: 8.10 Sale of Goods (Vienna Convention) Act 1987: 8.175
Supreme Court Act 1933: 11.65
New South Wales Australian Consumer Law s 18: 14.150 s 54: 15.05
Civil Liability Act 2002 s 34(1)(b): 1.50, 14.170 s 34(2): 14.150, 14.170 s 35(1): 14.150, 14.170 Pt 4: 14.170
Civil and Administrative Tribunal Act 2013 s 38(2): 8.340 s 38(4): 8.340
Contracts Review Act 1980: 5.130 Coroners Act 2009: 11.250 Fair Trading Act 1987: 1.50, 1.55, 1.60, 1.120, 1.135, 1.150, 1.155, 2.05, 2.40, 2.55, 2.65, 2.85, 2.135, 3.05, 3.35, 3.255, 5.50, 5.60, 5.175, 5.180, 14.140 s 3: 1.120 s 4(1): 11.20 s 24: 14.140 s 27: 1.50, 1.120 s 28: 1.50, 1.120 s 28(1): 1.120 s 29: 1.140 s 32: 1.130 s 35: 2.65 s 36: 2.65 s 36D(1): 11.100 s 37: 2.65 s 39: 2.65 s 40: 1.65, 7.150 s 41: 1.135 s 42: 3.285, 14.140, 14.170 s 42(1): 11.20, 14.55 s 58: 1.65 s 65(2): 1.65 s 68: 13.20 s 68(1): 14.55 s 236: 1.50, 14.130, 14.140 Pt 4, Div 3: 10.05 Pt 5B: 10.100
Fair Trading Amendment (Unfair Contract Terms) Act 2010: 1.55, 5.180 s 60AD: 5.155 s 60ZE(3): 5.155
Fair Trading (Australian Consumer Law) Amendment Act 2010: 1.120
s 28: 1.140
Interpretation Act 1987 s 21: 1.120, 2.45
Law Reform (Miscellaneous Provisions) Act 1965 s 8: 1.50, 14.130, 14.140 s 9: 1.50, 14.130, 14.140
Motor Dealers Act 1974: 8.300 Public Health Act 1991: 11.250 Retail Leases Act 1994: 4.50 Road Transport (Safety and Traffic Management) Act 1999: 11.250 Sale of Goods Act 1923: 8.10, 8.135, 15.05 s 17(1): 8.185 s 17(2): 8.190 s 19(2): 8.205 s 20: 8.390 s 21: 8.185 ss 21 to 25: 8.185 s 22(1): 8.185 s 38(1): 15.55
Sale of Goods (Vienna Convention) Act 1986: 8.175
Supreme Court Act 1970: 11.65
Northern Territory Consumer Affairs and Fair Trading Act: 1.50, 1.55, 1.60, 1.120, 1.135, 1.150, 1.155, 2.05, 2.40, 2.65, 2.135, 3.05, 3.35, 3.255, 5.50, 5.60, 5.175, 8.10, 14.140 s 26: 1.50, 1.120 s 27: 1.50, 1.120 s 31: 1.130 s 34: 2.65 s 35: 2.65 s 36: 2.65 s 36(2): 11.100 s 38: 2.65 s 40: 1.135 s 236: 1.50, 14.130, 14.140 Pt III: 10.05 Coroners Act: 11.250
Fair Trading (Australian Consumer Law) Act Interpretation Act s 17: 1.120, 2.45
Law Reform (Miscellaneous Provisions) Act s 16(1): 1.50, 14.130, 14.140
Notifiable Diseases Act: 11.250 Power and Water Authority Act s 17(1): 2.55
Proportionate Liability Act s 4(2)(b): 1.50, 14.170
Sale of Goods Act: 8.10 Sale of Goods (Vienna Convention) Act: 8.175
l
Table of Statutes
Supreme Court Act: 11.65 Traffic Act: 11.250
Queensland Acts Interpretation Act 1954 s 32D: 1.120, 2.45
Australian Consumer Law Ch 4: 13.20
Civil Liability Act 2003 s 28(1)(b): 1.50, 14.170
Coroners Act 2003: 11.250 Criminal Code of Queensland: 13.20 s 23(2): 13.20
Fair Trading Act 1989: 1.50, 1.55, 1.60, 1.120, 1.135, 1.150, 1.155, 2.05, 2.40, 2.65, 2.135, 3.05, 3.35, 3.255, 5.50, 5.60, 5.175, 14.140 s 3: 1.40 s 5A: 3.35 s 15: 1.50, 1.120 s 16: 1.50, 1.120 s 17: 1.140 s 20: 1.130 s 23: 2.65 s 24: 2.65 s 25: 2.65 s 27: 2.65 s 29: 1.135 s 38: 1.120 s 50: 1.155 s 51: 1.155, 14.225 s 53: 13.20 s 59: 13.85 s 95: 2.135 s 99: 1.120 s 107: 1.50 s 236: 1.50, 14.130, 14.140 Pt 3, Div 4: 10.05 Pt 3, Div 5: 1.65 Judicial Review Act 1991: 11.65
Law Reform Act 1995 s 10: 1.50, 14.130, 14.140
Motor Accident Insurance Act 1994: 11.250 Public Health Act 2005: 11.250 Sale of Goods Act 1896: 8.10 Sale of Goods (Vienna Convention) Act 1986: 8.175
Supreme Court of Queensland Act 1991: 11.65 Transport Operations (Road Use Management – Road Rules) Regulation 2009: 11.250
South Australia Civil Liability Act 1936 s 50: 1.50, 14.130, 14.140
Consumer Transactions Act 1972-1983: 8.10 Coroners Act 2003: 11.250 Criminal Law (Sentencing) Act 1988 s 54(3)(e): 8.300 s 57: 8.390
Fair Trading Act 1987: 1.50, 1.55, 1.60, 1.120, 1.135, 1.150, 1.155, 2.05, 2.40, 2.65, 2.135, 3.05, 3.35, 3.255, 5.50, 5.60, 5.175, 14.140 s 13: 1.50, 1.120 s 14: 1.50, 1.120 s 15: 1.140 s 18: 1.130 s 21: 2.65 s 22: 2.65 s 23: 2.65 s 25: 2.65 s 27: 1.135 s 236: 1.50, 14.130, 14.140 Pt III: 10.05
Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 s 8: 1.50, 14.170
Public and Environmental Health Act 1987: 11.250
Road Traffic Act 1961: 11.250 Sale of Goods Act 1895: 8.10 Sale of Goods (Vienna Convention) Act 1986: 8.175
Supreme Court Act 1935: 11.65 Trade Standards Act 1979 s 27C: 11.100
Tasmania Australian Consumer Law (Tasmania) Act 2010: 1.50, 1.55, 1.60, 1.120, 1.135, 1.150, 1.155, 2.05, 2.40, 2.65, 2.135, 3.05, 3.35, 3.255, 5.50, 5.60, 5.175, 14.140 s s s s s s s s s s
5: 1.50, 1.120 6: 1.50, 1.120 8: 1.140 10: 1.130 13: 2.65 14: 2.65 15: 2.65 17: 2.65 19: 1.135 236: 1.50, 14.130, 14.140
Civil Liability Act 2002 s 43A: 1.50, 14.170
Coroners Act 1995: 11.250 Fair Trading Act 1990: 10.05 Judicial Review Act 2000: 11.65 Public Health Act 1997: 11.250 Sale of Goods Act 1896: 8.10
Table of Statutes li
Sale of Goods (Vienna Convention) Act 1987: 8.175
Supreme Court Act 1856: 11.65 Tortfeasors and Contributory Negligence Act 1954 s 4(1): 1.50, 14.130, 14.140
Traffic Act 1925: 11.250
Victoria Australian Consumer Law and Fair Trading Act 2012: 1.50, 1.55, 1.60, 1.120, 1.135, 1.150, 1.155, 2.05, 2.40, 2.65, 2.135, 3.05, 3.35, 3.255, 5.50, 5.60, 5.175, 14.140 s 6: 2.65 s 7: 1.50, 1.120 s 8: 1.50, 1.120 s 8(1): 1.120, 1.155 s 9: 1.120, 1.140 s 12: 1.130 s 15: 2.65 s 16: 2.65 s 17: 2.65 s 18: 2.65 s 18(1): 2.70 s 18(1)(b): 2.70 s 18(1)(c): 2.70 s 18(1)(d): 2.70 s 18(3): 2.70 s 19: 2.65 s 19(1): 2.65 s 19(2): 2.65 s 20: 2.65 s 22: 1.135, 15.290 s 22(1): 1.50 s 22(4): 15.285 s 64: 1.50 s 196: 2.135 s 217: 14.35 s 233: 5.15 s 236: 1.50, 14.130, 14.140 Ch 7: 1.155 Ch 8: 1.155 Pt 8.5: 1.155 Coroners Act 2008: 11.250
Electricity Industry Act 2000 s 35: 9.50 s 36: 9.50 s 39: 9.50
Fair Trading Act 1999: 4.85, 5.15 s s s s s s
9: 2.45 12: 2.45 14: 1.65, 6.10 16: 1.65 16(6): 1.65 19: 1.65, 7.50
s 26: 1.65 s 32W: 5.15, 5.120, 5.125, 5.150, 5.155 s 32X: 5.15, 5.120, 5.155 s 32Y: 5.15 s 49(1): 11.100 s 159(1): 14.35 s 161A: 1.65, 9.125 Pt 2B: 5.05, 5.15 Pt 4, Div 2: 10.05 Pt 5: 10.100
Fair Trading Amendment (Unfair Contract Terms) Act 2010: 1.55, 5.15, 5.180 Gas Industry Act 2001 s 42: 9.50 s 43: 9.50 s 46: 9.50
Goods Act 1958: 8.10 Pt IV: 8.10
Goods (Sales and Leases) Act 1981: 8.10 Interpretation of Legislation Act 1984 s 38: 1.120, 2.45
Public Health and Wellbeing Act 2008: 11.250 Road Safety Act 1986: 11.250 Sale of Goods (Vienna Convention) Act 1987: 8.175
Supreme Court Act 1986: 11.65 Wrongs Act 1958 s 24AF(1)(b): 1.50, 14.170 s 26(1): 1.50, 14.130, 14.140
Western Australia Australian Consumer Law s 218: 13.335 s 218(4): 13.335
Civil Liability Act 2002 s 5AI(1)(b): 1.50, 14.170
Consumer Affairs Act 1971 s 54(10): 11.100
Coroners Act 1996: 11.250 Door to Door Trading Act 1987: 10.05 Fair Trading Act 1987: 8.10 s 10: 2.85
Fair Trading Act 2010: 1.50, 1.55, 1.60, 1.120, 1.135, 1.150, 1.155, 2.05, 2.40, 2.65, 2.135, 3.05, 3.35, 3.255, 5.50, 5.60, 5.175, 14.140 s s s s s s s s s
3: 1.40 7: 1.140 11: 1.130 18: 1.50, 1.120 19: 1.50, 1.120 19(1): 1.120 19(2): 1.120 20: 1.120 27: 2.65
lii
Table of Statutes
Fair Trading Act 2010 — cont s 28: 2.65 s 29: 2.65 s 30: 2.65 s 31: 1.135 s 236: 1.50, 14.130, 14.140 Food Regulations 2009: 11.250 Health Act 1911: 11.250
Hospitals and Health Services Act 1927: 2.55 Interpretation Act 1984 s 5: 1.120, 2.45
Law Reform (Contributory Negligence and Tortfeasors Contribution) Act 1947 s 4(1): 1.50, 14.130, 14.140 Road Traffic Act 1974: 11.250 Sale of Goods Act 1895: 8.10
Sale of Goods (Vienna Convention) Act 1986: 8.175
s 13(g): 6.130
United Kingdom Consumer Rights Act 2015 s 34: 8.140 s 35: 8.140 s 36: 8.140 Ch 3: 8.140
Sale of Goods Act 1893: 8.355, 8.365 Sale of Goods Act 1896 s 17(1): 8.355
Sale of Goods Act 1979: 8.190 Supply of Goods (Implied Terms) Act 1973: 8.100, 8.210 Supply of Goods and Services Act 1982 s 13: 9.70
Supreme Court Act 1935: 11.65
New Zealand Consumer Guarantees Act 1993: 1.65, 8.10, 8.45, 8.50, 8.150, 8.170, 8.255, 15.20, 15.25, 15.60 s s s s s s s s s s s s s s s s
Fair Trading Act 1986: 15.105
2: 9.40 7(1): 8.205, 8.220, 8.240, 8.260 7(2): 8.320 7(3): 8.325 7(4): 8.330 18(2): 15.80 18(3): 15.25 18(4): 15.70, 15.80, 15.105 19: 15.25 20: 15.60 20(2): 15.60 21: 15.20, 15.25 23(1): 15.50 26: 15.120 28: 9.70 33(b): 15.205
Unfair Term in Consumer Contracts Regulations 1994: 5.115 reg 5(1): 5.115
Unfair Terms in Consumer Contracts Regulations 1999 reg 6(2): 5.35 reg 6(2)(b): 5.35
United States Federal Trade Commission Act s 5(a): 6.110
Treaties and Conventions Australian Treaty Series: 8.175 Intergovernmental Agreement for the Australian Consumer Law cl 39 to 42: 11.50, 11.65
United Nations Convention on Contracts for the International Sale of Goods 1980: 8.175
GLOSSARY OF TERMS ACCC — Australian Competition and Consumer Commission ACL — Australian Consumer Law ACMA — Australian Communication and Media Authority ASIC — Australian Securities and Investments Commission ASIC Act — Australian Securities and Investments Commission Act 2001 CAANZ — Consumer Affairs Australia and New Zealand CCA — Competition and Consumer Act 2010 CCAAC — Commonwealth Consumer Affairs Advisory Council COAG — Council of Australian Governments First Commonwealth Act — Trade Practices Amendment (Australian Consumer Law) Act (No 1) 2010 (Cth) First Explanatory Memorandum — Explanatory Memorandum accompanying the Trade Practices Amendment (Australian Consumer Law) Bill 2009 IGA — Intergovernmental Agreement for the Australian Consumer Law MCCA — Ministerial Council on Consumer Affairs MINCO — Ministerial Council for Corporations NEIAT — National Education and Information Advisory Taskforce NPA — COAG National Partnership Agreement to Deliver a Seamless National Economy NZ CGA — Consumer Guarantees Act 1993 (NZ) PC — Productivity Commission SCOCA — Standing Committee of Officials of Consumer Affairs Second Commonwealth Act — Trade Practices Amendment Act (Australian Consumer Law) Act (No 2) 2010 (Cth) Second Explanatory Memorandum — Explanatory Memorandum accompanying the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 TPA — Trade Practices Act 1974
1
Consumer Protection Policy and Overview of the ACL [1.05] SCOPE OF THE WORK ......................................................................................................... 2 [1.10] PART I – CONSUMER PROTECTION POLICY ................................................................ 3
[1.15] Market failure and consumer detriment ............................................................ 6 [1.20] Behavioural economics and consumer detriment ............................................. 7 [1.25] Sale of unsafe products and consumer detriment ............................................ 9 [1.30] Protection against business detriment ................................................................ 9 [1.35] Misleading conduct and business detriment ................................................... 10 [1.40] Policy objects included in the IGA .................................................................... 12 [1.45] Managing consumer policy and reform ........................................................... 13 [1.50] Overview of the ACL ........................................................................................... 14 [1.55] Commencement dates .......................................................................................... 16 [1.60] Transitional measures ........................................................................................... 18 [1.65] Substantive changes introduced by the ACL .................................................. 19 [1.70] PART II: HISTORY OF THE ACL ....................................................................................... 25
[1.75] Comparison of generic consumer protection legislation ............................... 26 [1.90] PART III: ACL AS A LAW OF THE COMMONWEALTH ............................................ 28
[1.95] Extended application of ACL (Cth) to conduct outside Australia .............. 29 [1.100] Application of ACL (Cth) to conduct of natural persons ........................... 31 [1.105] Financial services ................................................................................................ 34 [1.110] Insurance ............................................................................................................... 35 [1.115] ACL (Cth) not intended to cover the field ..................................................... 36 [1.120] PART IV: THE ACL AS STATE OR TERRITORY LAW ................................................ 36
[1.125] ACL (Application Acts) not intended to cover the field ............................. 39 [1.130] Extraterritorial application of ACL (Application Acts) ................................ 39 [1.135] No doubling-up of liabilities ............................................................................ 40 [1.140] Future modifications to the ACL ..................................................................... 41 [1.145] PART V: ENFORCEMENT ................................................................................................. 42
[1.145] ACL regulators .................................................................................................... 42 [1.150] Jurisdiction of the Federal Court ..................................................................... 43 [1.155] Jurisdiction of the courts of the States and Territories ................................ 44 [1.160] Transfer of proceedings ..................................................................................... 45
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SCOPE OF THE WORK [1.05] On 24 June 2010, the last sitting day of Parliament before the winter recess, both Houses of the Australian Parliament passed the second stage of the Australian Consumer Law (ACL) reforms, the Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth). The first stage of the ACL reforms, the Trade Practices Amendment (Australian Consumer Law) Act (No 1) 2010 (Cth), had been passed on 17 March 2010. The third stage of the ACL reforms, the Trade Practices (Australian Consumer Law) Amendment Regulations 2010 (No 1), were made on 16 November 2010.1 These three pieces of primary and subordinate legislation comprise the Australian Consumer Law at the Commonwealth level. The passage of the ACL implements one of the Commonwealth’s major commitments in COAG’s National Partnership Agreement to Deliver a Seamless National Economy (NPA). The ACL is a single, national law concerning consumer protection and fair trading, which applies in the same way nationally and in each State and Territory. For the first time, consumers have the same protections and expectations about business conduct wherever they live in Australia. Similarly, businesses have the same obligations and responsibilities wherever they operate in Australia. Excluding the introductory section, this work is concerned with four main topics, each of which is the subject of a separate Part. The first topic is the general consumer protections in Ch 2 of the ACL, which are considered in Part II of the book. The second topic is the specific consumer protections, including unfair practices, consumer guarantees, unsolicited consumer agreements, lay-by agreements, contained in Ch 3 of the ACL which are considered in Part III of the book. The third topic is the product liability and safety regulation provisions of the ACL which are considered in Part IV of the book. The fourth topic covers the public enforcement and private remedies available under the ACL which are considered in Part V of the book. There are a number of possible legislative approaches to the regulation of consumer protection. One approach is to prohibit specific types of conduct which are defined (rule-based regulation). This approach has the advantage of clarity and certainty, but it also allows unscrupulous traders to take advantage of consumers by devising trading practices that fall outside the definition of the banned practice. Another approach is to adopt a general prohibition expressed in terms of a standard of behaviour that is prohibited, such as “misleading conduct”, “unconscionable conduct”, or “unfair terms”, sometimes referred to as safety-net regulation.2 Some jurisdictions adopt both general and specific approaches. The approach adopted in the ACL is to provide for three general protections which are supplemented by specific prohibitions in relation to trading practices that are highly unfair, such as pyramid selling, or aggressive selling techniques such as door-to-door or unsolicited sales, and undue harassment or coercion. 1 Explanatory Statement, Select Legislative Instrument 2010, No 280. 2 See Paterson and Brody, “Safety Net Consumer Protection: Using Prohibitions on Unfair and Unconscionable Conduct to Respond to Predatory Business Models” (2015) 38 Journal of Consumer Policy 331 at 332-3.
[1.10]
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A significant feature of the three general protections is that they adopt a principles-based approach to drafting.3 They set out general principles to allow for their flexible application, rather than attempting to define all forms of conduct prohibited with a great deal of specificity. The open-ended nature of the general protections leaves it to the courts to set a legal standard and to decide whether the particular conduct at issue is deserving of intervention. In effect, the court must consider the conduct at issue in the light of its own circumstances and surrounding facts and make a public policy judgment as to whether that conduct is “misleading” or “unconscionable,” or whether a particular term of a standard form contract is “unfair” in the light of all the surrounding circumstances. Such an approach places great faith in the judiciary. It also means that it takes time to develop sufficient case law to enable businesses to be able to predict with certainty what conduct is prohibited. Uncertainty increases risk. It also increases compliance costs, including the costs arising from delay. The first general protection, the prohibition of misleading conduct in s 18 of the ACL, is a broad provision. It does not define “misleading conduct”. It is based on s 52 of the Trade Practices Act 1974 (Cth) (TPA) which imposed a “norm of conduct”,4 and the role of the courts has been to apply it to a wide range of circumstances involving not just business-toconsumer conduct, but business-to-business conduct as well. The second general protection, s 21 of the ACL (statutory unconscionable conduct), is also a broad provision. Section 21 does not define “unconscionable conduct”, although since 1 January 2012 it now contains three interpretative principles in s 21(4) which give some indication as to Parliament’s intention regarding its scope. While these interpretative principles provide useful guidance, they are unlikely to deter judicial creativity or eliminate judicial discretion. The third general protection relates to unfair terms in standard form consumer contracts. In order to satisfy the definition of “unfair term” in s 24(1) of the ACL it is necessary to prove that the term at issue would cause “a significant imbalance” in the parties’ rights and obligations arising under the contract and that “it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term”. This leaves considerable scope for judicial discretion in deciding what constitutes a “significant” imbalance; what constitutes a “legitimate interest”; and whether the term at issue is “reasonably” necessary to protect the respondent’s “legitimate” interest. Before examining the scope of these general and specific protections it is necessary to have some understanding of the economic foundation for consumer protection laws.
PART I – CONSUMER PROTECTION POLICY [1.10] Consumer detriment refers to the loss in economic welfare consumers incur “if they are misled into making purchases of goods and services which they would not otherwise have made or if they pay more for purchases than they would 3 See, eg, Second Explanatory Memorandum at [9.5], where, in relation to the lay-by sales provisions it is stated: “The ACL provisions draw on the ACT, NSW and Victorian approaches, but are expressed in principles-based form, in keeping with the remainder of the ACL”. 4 Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 at 505.
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if they had been better informed.”5 Consumer detriment may be subdivided into structural detriment and personal detriment.6 Structural detriment is the principal concern of competition policy. It focuses on the supply side. It includes market failure arising from sub-optimal market structures, such as monopoly and oligopoly, which limit choice and create inefficiencies resulting in increased prices above those that would prevail under competitive conditions. Personal detriment is the principal concern of consumer policy. It focuses on the demand side. It includes market failures arising from transaction costs or an inequality of information, bargaining power or litigious power as between suppliers and consumers. It focuses on the individual experiences of consumers when goods or services do not meet their expectations and includes loss of money, time and stress arising from: (i) scams and fraud; (ii) misleading advertising; (iii) unfair marketing practices; (iv) unfair contract terms; (v) sales of unsafe products; and (vi) inadequate redress in response to complaints.7 In Australia, both policy objects (limiting consumer detriment arising from structural detriment and limiting consumer detriment arising from personal detriment), are pursued in the same Act. The Competition and Consumer Act 2010 (Cth) (CCA), and related State and Territory legislation, gives effect to the Competition Code in Sch 1 and the ACL in Sch 2 of the CCA as laws of their respective jurisdictions. The Productivity Commission (PC) in its Report considered at some length the role of consumers in promoting effective competition:8 The role of consumers in facilitating competition, and promoting well-functioning markets, has long been recognised. In seeking the “best” value (the good or service and price/quality combination most appropriate for them) consumers not only advance their own self-interest, but also provide signals to suppliers on the product characteristics they require. Competition between suppliers, who respond to these signals, can variously lead to lower costs, improved product quality, greater innovation and higher productivity. However, poorly informed consumers send weak and confused signals to the market, limiting the benefits they receive from transactions and reducing gains from competition more generally. As pointed out by Vickers, informed choice has two dimensions – knowing the alternatives on offer and having the ability to judge their price and quality differences. 5 OECD, Consumer Policy Toolkit (OECD, Paris, 2010), p 52. 6 Europe Economics, An Analysis of the Issue of Consumer Detriment and the Most Appropriate Methodologies to Estimate It (Final Report for DG SANCO, Europe Economics, London, July 2007), available at http://www.ec.europa.eu/consumers/strategy/docs/study_consumer_detriment.pdf. 7 OECD, Consumer Policy Toolkit (OECD, Paris, 2010), p 53. 8 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, Canberra, 2008), vol 2, ch 3.
[1.10]
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In addition to having access to relevant information, consumers need to be sufficiently confident to act on it. Confident consumers have the skills needed to deal effectively with suppliers, and obtain what they expect from a transaction, or, if not, to access effective redress mechanisms. Of course, it is not necessary for all consumers to be well informed and confident to encourage effective competition between firms. Competition will still be robust if there is a sufficient proportion of informed, “marginal” consumers who are willing to switch suppliers to secure a better deal. That said, as a general rule, competition works best when the bulk of consumers are reasonably well-informed and willing to act on that information. To this end, a key goal of consumer policy is to overcome significant information failures that can hinder effective competition. However, it is important to emphasise that competition is a means to achieving an improvement in consumer wellbeing rather than an end in itself. In addition, it is only one means. Where competition is limited (or absent), consumer policy can still achieve improvements in consumer wellbeing through other policy responses such as business or product regulation, improved access to redress mechanisms, and support measures (such as legal aid and financial counselling).9
As regards the policy object of the ACL, the PC also recommended that Australian governments should adopt the common overarching object and six operational objects that have since been incorporated into the Intergovernmental Agreement for the Australian Consumer Law (IGA).10 The principal focus of the ACL is to deliver better outcomes for consumers and to minimise consumer detriment. The aims are to minimise costs and unintended side-effects of interventions, and to have special regard for the needs of vulnerable and disadvantaged consumers. The importance of integrating supply and demand polices is widely accepted.11 The position is summarised by the OECD: Competition involves the interaction of supply and demand. Competition policy is concerned mainly with the supply-side structure of markets, ensuring that there are no unnecessary barriers to entry, that market concentration does not lead to economic loss or unreasonable transfers from consumers to producers, and that there are effective legal sanctions against fraud, misleading conduct, and collusion among suppliers. Various policy instruments in member countries are used to achieve structural soundness in markets. 9 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, Canberra, 2008), vol 2, p 28. 10 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, Canberra, 2008), vol 2, pp 41-2, recommendation 3.1. 11 See OECD, Consumer Policy Toolkit (OECD, Paris, 2010), Ch 2 which sets out an overview of the way in which consumer protection complements competition policy, at http://www.oecd.org/sti/ consumer-policy/toolkit. See also OECD, Roundtable on Demand-side Economics for Consumer Policy, Summary Report (OECD, Paris, 20 April 2006), available at http://www.oecd.org. For commentary on this issue in an Australian context, see Consumer Policy in Australia: A Companion to the OECD, Consumer Policy Toolkit (Commonwealth of Australia, March 2011); Sylvan, “Activating Competition: The Consumer–Competition Interface” (2004) 12 Competition & Consumer Law Journal 191; Griggs, “Intervention or Empowerment – Choosing the Consumer Law Weapon!” (2007) 15 Competition & Consumer Law Journal 111; Hally-Burton, Shirodkar, Winckler and Writer, “Harnessing the Demand Side: Australian Consumer Policy” (2008) 4 Economic Roundup 91; King and Smith, “The Shaky Economic Foundations of Consumer Protection Policy and Law” (2010) 18 Competition & Consumer Law Journal 71.
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Even when markets are structurally sound on the supply-side, however, there can still be adverse consequences for consumers and therefore a misallocation of resources. Problems in gaining access to information and certain patterns of consumer behaviour can result in some potentially beneficial transactions not occurring (“deadweight loss”), an excessive burden of transaction costs (the costs of searching for and switching to alternative suppliers), and some stickiness in prices, all to the detriment of consumers. In short, the potential benefits of competition are not fully realised. It is the behaviour of consumers that activates competition, and that behaviour can be shaped in part by public policy. Public policy, therefore, is concerned with the demand-side as well as the supply-side of markets, to ensure as a basic condition that consumers are well-informed. Provision of information however, while being necessary to activate competition, may not be in itself sufficient. Even well-informed consumers exhibit consistent patterns of behaviour that can lead them away from making decisions that satisfy their preferences. The Committee examined the core question of the extent to which these distortions should be addressed by public policy.12
Market failure and consumer detriment [1.15] A principal source of consumer detriment on the demand side is market failure arising from transactions costs and information asymmetry. Transaction costs are costs of searching for and switching to alternative suppliers. If search costs are high, decisions will be based on incomplete information. Consumers’ “bounded rationality” refers to purchasing decisions being based on less than perfect information; consumers will only undertake a limited or “bounded” range of research prior to purchase. The theory of “bounded rationality” suggests that decision makers truncate their search at the point when the costs of searching start to outweigh the benefits resulting from that search. The OECD explains the situation of “bounded rationality” as one where “the rational decision-maker weighs up the sum of search and switching costs against the expected benefits of continuing to search for a lower priced or more satisfactory product”.13 In some markets consumers are well-informed because it is in the interests of suppliers to provide information about the quality of their products so that prospective purchasers can make comparisons about the price and quality of the goods or services on offer. In many cases prospective purchasers can inspect the goods before purchase and there are many repeat purchases. But in some markets information is not optimised; it is suppressed.14 Transactions involving asymmetric information, where one party to the transaction knows more than the other party, can also produce significant inefficiencies.15 In relation to most consumer goods or services, the ACL does not provide for 12 OECD, Roundtable on Demand-side Economics for Consumer Policy, Summary Report (OECD, Paris, 20 April 2006), at [8]. 13 OECD, Roundtable on Demand-side Economics for Consumer Policy, Summary Report (OECD, Paris, 20 April 2006), at [10]. 14 Akerlof, “The Market for “Lemons”: Quality, Uncertainty and the Market Mechanism” (1970) 84(3) Quarterly Journal of Economics 488. 15 Hadfield, Howse, and Trebilcock, “Information-Based Principles for Rethinking Consumer Protection Policy” (1998) 21 Journal of Consumer Policy 131 at 150.
[1.20]
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mandatory disclosure.16 It is assumed that market forces will put pressure on suppliers to make sufficient information available to consumers to allow them to make an informed decision as to which goods or services will maximise their utility. Provided this information is accurate, and provided consumers are able to evaluate it properly, consumers can use this information to select products and services which meet their requirements. In some situations there is a greater likelihood that the decision-making process will be constrained and that this will result in poor consumer choices. According to the Secondary Explanatory Memorandum: Information standards are an example of regulatory intervention to address the market failure associated with information asymmetry. Lack of information on which to base purchasing decisions can lead consumers to make decisions which are not in their best interests. This can apply to services as well as goods. The service sector accounts for a significant share of economic activity in Australia and covers a wide variety of categories including financial services, property and business services, telecommunications, health services, travel and tourism, cultural and recreational services and personal services. Some services are subject to industry-specific regulation whereas others are subject only to the general fair trading laws. The misleading and deceptive conduct laws in Australia set a minimum acceptable standard of commercial behaviour. They are reactive, providing for sanctions (for example prosecution and injunctions) and remedies (for example compensation orders) to protect the public when misled or deceived. Information standards, on the other hand, are proactive, requiring a positive standard of information disclosure that the market, on its own, has not provided.17
For example, selling products in complex bundles may make it difficult for consumers to calculate the price of each item in the bundle and make comparisons with the prices of competitors. This is a feature of pricing in the telecommunications sector where, for example, fixed line, mobile and internet services are advertised as a bundle of telecommunication services at a single price.
Behavioural economics and consumer detriment [1.20] “Classical” economic theory rests on assumptions of rational consumer behaviour. It is assumed that consumers are well-informed and that they will act in ways that fulfil their preferences.18 Preferences are determined on the basis of self-interest. The rationale behind the classical model is to aggregate consumer decision-making so that analysis and predictions can be made at the market level rather than at the level of an individual or group of consumers. “Behavioural economics” is an empirical discipline that: 16 Safety warning notices are required in relation to some hazardous products where there is a risk of physical injury. Mandatory information standards are required in relation to matters such as fibre content labelling of textile products, care labelling for clothing and textile products, and ingredient labelling for cosmetics and toiletries. 17 Second Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, at [23.180]-[23.181]. 18 For a description see King and Smith, “The Shaky Economic Foundations of Consumer Protection Policy and Law” (2010) 18 Competition & Consumer Law Journal 71 at 74.
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extends the knowledge base of economics with insights from empirical studies of consumer behaviour. Relying largely on psychological studies, in laboratory simulations and actual markets, behavioural economics delves into the ways in which people make decisions. These patterns of behaviour, or biases, indicate ways in which consumers make decisions that are inconsistent with their welfare. This extension of knowledge can provide an important contribution to policy, both by identifying market failures missed by traditional theory and by contributing to the effectiveness and efficiency of remedies.19
On 8 and 9 August 2007, the PC convened a roundtable on the topic “Behavioural Economics and Public Policy” in Melbourne. Behavioural economics applies insights from psychology to economic issues and analysis. Participants at the Roundtable discussed the contribution that behavioural economics can make to a broader understanding of people’s motivation and behaviour in markets and the implications for policy and regulatory approaches. The PC acknowledged that behavioural economics has particular relevance to consumer policy, and that the insights gained through the Roundtable made a useful contribution to the Commission’s inquiry on Australia’s consumer policy framework.20 Several important insights for consumer protection emerge from behavioural economics. One is that consumers do not always behave rationally and are in need of assistance in making purchasing decisions. Some consumers behave emotionally and are vulnerable to exploitation, for example, through the acquisition of weight loss products that do not entail diet or exercise, or get rich quick schemes that do not entail risk.21 Mulholland observes that cooling off regulations in unsolicited consumer agreements provide another example of laws that incorporate behavioural economics insights: In particular, these rules are premised on the view that consumers at times make purchases in emotionally or biologically “hot” states that, in a cooler or more rational state, they would not make. Mandating a cooling-off period allows consumers to reframe their choices and to give them an opportunity for rational re-consideration to overcome the influence of impulsive choice.22
Some high pressure sales techniques play on human weaknesses and the tendency of consumers to behave irrationally. For example, “limited time” sales put pressure on consumers to make up their minds quickly in the belief that the goods or 19 OECD, Roundtable on Demand-side Economics for Consumer Policy, Summary Report (OECD, Paris, 20 April 2006), at [13]. For seminal works on behavioural economics, see Sunstein, Behavioural Law and Economics (Cambridge University Press, 2000) and Korobkin and Ulen, “Law and Behavioural Science: Removing the Rationality Assumption from Law and Economics” (2000) 88(4) California Law Review 1051. 20 See especially the papers by Mulholland, “Behavioural Economics and the Federal Trade Commission”; Shafir, “A Behavioural Background for Economic Policy”, and Field, “Having One’s Cake and Eating it too – an Analysis of Behavioural Economics from a Consumer Policy Perspective”. The conference proceedings can be found at http://www.pc.gov.au/research/ supporting/behavioural-economics. 21 Mulholland, “Behavioural Economics and the Federal Trade Commission”, p 12. 22 Mulholland, “Behavioural Economics and the Federal Trade Commission”, pp 17-8.
[1.30]
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services are scarce. They can result in consumer detriment because the decision to purchase is made under time pressure without the benefit of shopping around and making comparisons. “Reference pricing” or “two-price” advertising provides another example of a sales technique that may be used to exploit consumer irrationality. It refers to the practice of advertising the seller’s current price for goods or services by reference to its previous price. The “was” price acts as a reference or anchor to what the goods or services are “worth” and can result in consumer detriment if goods or services were not, in fact, previously sold at that price: see [6.155]. Finally, sellers may try to make the purchases less “painful” by allowing consumers to spread the payment into the future through lay-by schemes and thereby avoid the emotionally unpleasant experience of having to pay in full at the time of purchase. Consumers may suffer detriment if they are thereby induced to acquire goods or services they cannot afford. Suppliers can seek to exploit natural human weakness through unfair sales techniques including: • misleading conduct generally, or specific misleading representations or lack of disclosure of material information in relation to the supply of goods or services; • unfair marketing practices including harassment and coercion by sales people; • unconscionable conduct in relation to vulnerable consumer groups, including the elderly, consumers with poor understanding of English and the disadvantaged; and • using strong bargaining power to insert unfair terms in standard form consumer contracts. In order to eradicate these high-pressure sales techniques, an effective consumer regulatory regime requires that consumers have access to remedies should problems occur. Traders must have a clear understanding of their obligations and the enforcement powers of the regulator and the penalties imposed for failure to comply must act as a real deterrent for failure to comply.
Sale of unsafe products and consumer detriment [1.25] A further source of personal consumer detriment arises from the sale of defective or unsafe products. The detriment will be easy to detect where the products result in physical injury or, for example, illness (that is, from ingesting tainted food). The ACL contains a number of product liability regimes. It seeks to limit consumer detriment arising from the sale of defective or unsafe products in Pt 3-3 (“Safety of consumer goods and product relate services”), Pt 3-4 (“Information standards”) and Pt 3-5 (“Liability of manufacturers for goods with safety defects”). Protection against business detriment [1.30] Despite its title, some general and specific protections in the ACL are available to businesses as well as consumers. Section 18, the general prohibition of misleading conduct, is not confined to consumer transactions, and much litigation has arisen as a result of businesses seeking to protect their commercial interests
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[1.35]
rather than as a result of consumers seeking remedies from businesses. Section 21, the general prohibition of unconscionable conduct, in trade or commerce, in relation to: the supply or possible supply of goods or services to a person (other than a listed public company), or the acquisition or possible acquisition of goods or services from a person (other than a listed public company). Thus, in the context of a business’s dealings with other businesses, s 21 is intended to protect “business consumers” and “business suppliers” as well as individual consumers. A more restrictive approach was initially taken in relation to the general protection for unfair terms. Until 2015, the unfair terms law only applied where the supply of goods or services or the sale of an interest in land was to an individual. The term “individual” is defined in the Acts Interpretation Act 1901 (Cth) to mean a natural person. In 2015, the general protection in relation to unfair terms was extended to small businesses, although the more egregious unfair terms in business-to-business transactions may be caught by the prohibition of unconscionable conduct in s 21 of the ACL.23
Misleading conduct and business detriment [1.35] It had long been recognised that the “consumer protection” provisions of the TPA were, before their repeal, concerned with the supply side as well as the demand side of markets and with market efficiency considerations. This is because misleading advertising increases demand for an inferior product at the expense of a superior product. It harms competition and is a cause of business detriment on the supply side. For example, Lockhart J in Colgate-Palmolive Pty Ltd v Rexona Pty Ltd,24 granted an interlocutory injunction to prevent misleading claims by Rexona concerning the effectiveness of Aim toothpaste for the following reasons: It is the plain purpose of the Act to require truthful conduct in the market place and that competition be free and fair. In this case, claims are made by Rexona which consumers themselves cannot verify. They rely on the technical expertise of Rexona to assure the validity of the claims. As I have found that a prima facie case has been established, the public interest is a matter to be taken into account, weighing heavily in favour of the granting of interlocutory injunctions …. There is evidence that Rexona’s advertising campaign may erode the market share enjoyed by the smaller manufacturers of toothpastes. Indeed, Mr Johns, the General Sales Manager of Rexona, said in cross-examination that the introduction of Aim toothpaste would, in his view, cause the small brands to suffer substantially, …
Rexona contended that these matters are irrelevant as the small manufacturers are neither parties to the proceedings nor consumers. In my opinion the possible detriment to the small manufacturers is a relevant consideration. The Act is concerned with the maintenance of free and healthy competition. If a corporation is engaging in misleading or deceptive advertising which assists it in gaining a
23 ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405 (Gordon J). See Corones, “Regulating Supermarket Misconduct as Customer/Acquirer of Goods and Services” (2015) 43(6) Australian Business Law Review 400 at 406-10. 24 Colgate-Palmolive Pty Ltd v Rexona Pty Ltd (1981) ATPR ¶40-242.
[1.35]
1 Consumer Protection Policy and Overview of the ACL
11
substantial share of a market at the expense of small manufacturers, the interests of those manufacturers must be a relevant consideration when considering the balance of convenience.25 The same principle has been recognised in other cases. In Janssen-Cilag Pty Ltd v Pfizer Pty Ltd,26 Pfizer argued that only a person who relied on the misleading representation which constituted the contravention of s 52 could recover damages under s 82 of the TPA. Lockhart J rejected this argument and refused to give s 82 a restrictive interpretation. His Honour held that the wording of s 82 did not impose some general requirement that damage can be recovered only where the applicant relies upon the conduct of the respondent constituting the contravention, and that s 82 can be relied upon by a rival trader who suffers a business detriment as a result of the contravening conduct.27 Misleading conduct in relation to premium (or credence) claims can also harm competition on the supply side.28 Where products are genuinely superior, premium claims assist consumers to make informed decisions and enhance consumer welfare. Where premium claims are false they are a source not only of consumer detriment, but also result in lost sales to the suppliers of genuine products. On the supply side, premium claims are the result of innovation and can promote competitive rivalry. False premium claims can deter suppliers from engaging in innovation, because consumers will be cynical in future about the accuracy of such claims. In assessing the level of pecuniary penalties to be imposed under s 224 of the ACL, the court is required to take into account the amount of the loss or damage caused by the conduct to consumers on the demand side and competitors on the supply side. For example, in ACCC v Reebok Australia Pty Ltd, McKerracher J took into account the loss or damage suffered by competitors: The damage to fair and open competition in the footwear market in Australia cannot be quantified, but it is likely that the conduct had a significant effect because some consumers were misled into purchasing the EasyTone shoes on the basis of credence attributes which they could not readily verify, and where they would not otherwise have made such a purchase had they known the shoes did not have such attributes.29
Drip pricing can be a source of consumer detriment on the demand side and business detriment on the supply side. It is a feature of online selling. Drip pricing refers to the practice of using a headline price to attract potential buyers which is misleading because it is not the final total price. This is only ascertained after working through several pages on the site which disclosure fees and surcharges incrementally. The buyer may decide to purchase because of the investment of time and effort involved in searching for the final price even though they would not have purchased if they had been advised of the total price at the outset. Consumer detriment arises because drip pricing leads consumers into making purchases of 25 Colgate-Palmolive Pty Ltd v Rexona Pty Ltd (1981) ATPR ¶40-242 at 43,194-5. See also Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) ATPR ¶41-186 (Lockhart J). 26 Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526. 27 Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526 at [16]. 28 ACCC v Marksun Australia Pty Ltd (2011) ATPR ¶42-363 at [107]. 29 ACCC v Reebok Australia Pty Ltd (2015) ATPR ¶42-501 at [143] citing the Full Federal Court in Singtel Optus Pty Ltd v ACCC (2012) 287 ALR 249 at [69].
12
The Australian Consumer Law
[1.40]
goods and services which they would not otherwise have made, or paying more for goods and services than they would have paid if they had been better informed. Competition is harmed on the supply side because of the erosion of market share by suppliers with less expensive products whose goods and services would have been purchased but for the drip pricing. Because of this demand and supply side interaction it was thought appropriate to include the ACL in the CCA.
Policy objects included in the IGA [1.40] The modern approach or “purposive” approach to statutory interpretation favours a construction of legislation which gives effect to its legislative purpose. Section 15AA of the Acts Interpretation Act 1901 (Cth) requires the courts when interpreting a statute to adopt a meaning that would “promote the purpose or object underlying the Act” rather than one that would not do so. Objects provisions can play a significant role as an aid to judicial interpretation and can influence judicial outcomes. The overarching national consumer policy objective favoured by the PC,30 agreed to by MCCA on 15 August 2008, and included in the IGA signed by COAG on 2 July 2009, is: To improve consumer well-being through consumer empowerment and protection fostering effective competition and enabling confident participation of consumers in markets in which both consumers and suppliers trade fairly.31
Some of the States and Territories have amended their Application Acts to include this objective.32 This overarching objective is supported by six operational objectives: (a) to ensure that consumers are sufficiently well-informed to benefit from and stimulate effective competition; (b) to ensure that goods and services are safe and fit for the purposes for which they were sold; (c) to prevent practices that are unfair; (d) to meet the needs of those consumers who are most vulnerable or are at the greatest disadvantage; (e) to provide accessible and timely redress where consumer detriment has occurred; and (f) to promote proportionate, risk-based enforcement.33 Other objectives of the ACL can be gleaned from the extrinsic materials, especially the Productivity Commission Report, the CCAAC Report and the MCCA. They are: (a) to clarify the law relating to consumer protection in Australia (clarity); 30 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, Canberra, 2008)), recommendation 3.1, vol 2, pp 41-2. 31 Intergovernmental Agreement for the Australian Consumer Law (signed by COAG on 2 July 2009), Recital C. 32 See Fair Trading Act 1989 (Qld), s 3; Fair Trading Act 2010 (WA), s 3. 33 Intergovernmental Agreement for the Australian Consumer Law (signed by COAG on 2 July 2009), Recital D.
[1.45]
1 Consumer Protection Policy and Overview of the ACL
13
(b) to make the law relating to consumer protection in Australia consistent across all jurisdictions and sectors of the economy (consistency); (c) to make the law relating to consumer protection in Australia more readily enforceable from the consumer’s point of view (accessibility); (d) to raise awareness of consumers and suppliers of their rights and responsibilities under the law relating to consumer protection in Australia (awareness); and (e) to promote compliance by business with the law relating to consumer protection in Australia (compliance). The Competition Policy Reform Act 1995 (Cth) inserted a new objects provision into the CCA. It provides: The object of this Act is to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection.
Well before s 2 was inserted, the consumer protection provisions of Pt V of the TPA were consistently recognised as having important public policy objectives. For example, in Parkdale Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd,34 Mason J (as his Honour then was) observed that the two policy objectives of promoting competition and protecting consumers could be reconciled: The object of Pt V is to protect the consumer by eliminating unfair trade practices, just as the object of Pt IV is to promote competition by eliminating restrictive trade practices. Knowledge of the history of the legislative proposals, of the legislation and of the controversy which has surrounded it might suggest that the dominant object of the Act is the promotion of freedom of competition. But examination and analysis of its provisions yields no acceptable foundation for this conclusion. The two Parts are independent and there is no direction that one Part is to be read subject to the other. Although they have to be read together as parts of the same statute, they might in other circumstances have been enacted as separate statutes with not very much difference in legal effect.35
Managing consumer policy and reform [1.45] In 2011, COAG reformed its organisation and processes. The former Ministerial Council on Consumer Affairs (MCCA) was replaced by the COAG Legislative and Governance Forum of Consumer Affairs (CAF) which consists of the Australian and New Zealand Ministers responsible for consumer affairs. CAF’s role and objectives are set out in the Charter 2013-2015 (dated 1 July 2013).36 CAF is responsible for the administration of the ACL and other issues under the Inter-Governmental Agreements.37 Consumer Affairs Australia and New Zealand (CAANZ) comprises: the Australian Treasury (the Commonwealth Department responsible for administering the CCA) and Federal agencies (ACCC and ASIC); the New Zealand Ministry of Business, Innovation and Employment and the NZ 34 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191. 35 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 202-5. 36 COAG Legislative and Governance Forum of Consumer Affairs and Consumer Affairs Australia and New Zealand, Charter 2013-2015 (1 July 2013), at http://consumerlaw.gov.au/files/2015/09/CAF_ charter_20130515.pdf 37 Intergovernmental Agreement for the Australian Consumer Law (signed by COAG on 2 July 2009), the Trans-Tasman Mutual Recognition Act 1997, the Mutual Recognition Act 1992, the “Travel Agents Participation Agreement” and other matters delegated by COAG.
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The Australian Consumer Law
[1.50]
Commerce Commission; and the eight State and Territory regulators set out at [1.145]. CAANZ provides primary support to CAF in achieving its strategic objectives. CAANZ has established a number of advisory and consultative committees for each of its four main functions: • education and information (Education &Information Committee); • compliance and dispute resolution (Compliance & Dispute Resolution Advisory Committee); • product safety (Product Safety Consultative Committee); and • policy and research (Policy & Research Advisory Committee). The Australian Consumer Law Review Issues Paper was released in March 2016 and is available at the consumerlaw.gov.au website. It will be overseen by CAANZ and will formally commence in 2016, incorporating an extensive public consultation process and with a final report to Ministers in early 2017.
Overview of the ACL [1.50] Part XI of the CCA provides for the application of the Australian Consumer Law as a law of the Commonwealth. The text of the ACL consists of: • Schedule 2 of the CCA; • the remaining provisions of the that relate to Sch 2 of the CCA; and • regulations under the CCA that relate to the ACL. The ACL applies as a law of the Commonwealth under the CCA. Part XIAA of the CCA regulates the application of the Australian Consumer Law as a law of a State or Territory. The “applied Australian Consumer Law” is defined in s 140 of the CCA to mean the text described in s 140B. Section 140B of the CCA states: The applied Australian Consumer Law consists of: (g) Schedule 2; and (h) The regulations made under section 139G of this Act.
The ACL applies as a law of each State and Territory by separate State and Territory application legislation referred to collectively in this work as the ACL (Application Acts). They are considered in Part IV of this chapter. When the States and Territories implemented the ACL (Application Acts) they adopted the “Australian Consumer Law text”.38 The Australian Consumer Law text consists of: (f) Schedule 2 to the Competition and Consumer Act 2010 of the Commonwealth, and (g) the regulations made under s 139G of that Act.
Thus, there are nine ACLs in force in Australia. The ACL (Cth), applies principally to corporations. In addition, there are six State and two Territory ACLs that apply 38 The Principal State and Territory Application Acts are: Fair Trading Act 1987 (NSW) (FTA 1987 (NSW)), ss 27 and 28; Australian Consumer Law and Fair Trading Act 2012 (Vic) (ACLFTA 2012 (Vic)), ss 7 and 8; Fair Trading Act 1989 (Qld) (FTA 1989 (Qld)), ss 15 and 16; Fair Trading Act 2010 (WA) (FTA 2010 (WA)), ss 18 and 19; Fair Trading Act 1987 (SA) (FTA 1987 (SA)), ss 13 and 14; Australian Consumer Law (Tasmania) Act 2010 (Tas) (ACLA 2010 (Tas)), ss 5 and 6; Consumer Affairs and Fair Trading Act (NT) (CAFTA (NT)), ss 26 and 27; and Fair Trading (Australian Consumer Law) Act 1992 (ACT) (FT(ACL)A 1992 (ACT)), ss 6 and 7.
[1.50]
1 Consumer Protection Policy and Overview of the ACL
15
to persons generally. However, while the States and Territories adopted the text as defined which includes the regulations made under s 139G of the CCA, they did not adopt the other provisions in the CCA. This means that the nine ACLs are not entirely uniform, because there are a number of important provisions in the CCA that are not in the ACL (Cth) itself, and have not been enacted in the ACL (Application Acts) or other State and Territory legislation. Some important differences that should be noted are: • Section 131(1) of the CCA provides that the ACL (Cth) applies to the conduct of corporations, and only to a limited extent to the conduct of individuals, although ss 6 and 131(2) of the CCA extend the operation of the ACL (Cth) to natural persons in certain circumstances where the Commonwealth has constitutional power to do so. The ACL (Application Acts) apply to the conduct of persons (corporations and individuals). • A contributory fault defence is provided by s 137B of the CCA in relation to claims for damages under s 236 of the ACL (Cth) which re-enacts s 82(1B) of the TPA.39 State legislation40 allows a court to reduce an award of damages for contributory negligence only for claims arising out of the tort of negligence and contributory negligence is available at common law; or the claim is for loss arising from a breach of contractual duty that is concurrent with a duty of care in tort. The legislative provisions have not been amended to extend contributory negligence to a statutory claim for damages under s 236 of the ACL (Application Acts). This presents a procedural advantage for claimants seeking damages under the ACL (Application Acts), who will be able to avoid a reduction of their damages award for contributory fault. • Section 139A of the CCA expressly allows for a term that limits or excludes liability for a failure to comply with the consumer guarantees by suppliers of recreational services under the ACL (Cth). Some States and Territories adopt similar provisions.41 • Part VIA of the CCA (Proportionate liability) only applies to a claim for damages made under s 236 of the ACL (Cth) for economic loss or damage to property caused by conduct that was done in contravention of s 18 of the ACL (Cth).
39 In relation to New South Wales, see the decision of the New South Wales Court of Appeal in Perpetual Trustee Company Ltd v Milanex Pty Ltd (In liq) [2011] NSWCA 367. Seddon and Fridman, “Misleading Conduct and Contributory Fault: Inconsistency under the Uniform Australian Consumer Law” (2012) 20 Australian Journal of Competition and Consumer Law 87. 40 See Law Reform (Miscellaneous Provisions) Act 1965 (NSW), ss 8 and 9; Law Reform Act 1995 (Qld), s 10; Civil Liability Act 1936 (SA), s 50; Tortfeasors and Contributory Negligence Act 1954 (Tas), s 4(1); Wrongs Act 1958 (Vic), s 26(1); Law Reform (Contributory Negligence and Tortfeasors Contribution) Act 1947 (WA), s 4(1); Law Reform (Miscellaneous Provisions) Act 1955 (ACT), s 15; Law Reform (Miscellaneous Provisions) Act (NT), s 16(1). 41 For example, s 22(1) of the ACLFTA 2012 (Vic) provides that a term of a contract which operates to limit liability in relation to the supply of recreational services in the ways described is not void by virtue of s 64 of the ACLFTA 2012 (Vic). On the other hand, s 107 of the FTA 1989 (Qld) prohibits all forms of contracting out of the ACL (Qld).
16
The Australian Consumer Law
[1.55]
Similar provisions have been introduced into State and Territory legislation and apply in relation to claims for negligence and misleading conduct.42 Before commencing proceedings prospective litigants will need to consider which ACL applies. There may be procedural advantages in framing the cause of action as one based on the ACL (Application Acts) rather than the ACL (Cth).
Commencement dates [1.55] The ACL (Cth), Sch 2 was implemented in two stages. The first stage of the reforms contained in the Trade Practices Amendment (Australian Consumer Law) Act (No 1) 2010 (Cth) (First Commonwealth Act) was passed by the Parliament on 17 March 2010. The First Commonwealth Act comprised: (a) national unfair contract terms provisions, and (b) new civil pecuniary penalties, enforcement powers and consumer redress options for breaches of the TPA or the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act). These provisions came into operation on 1 July 2010. The second stage of the reforms contained in the Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth) (Second Commonwealth Act) was passed on 24 June 2010. The Second Commonwealth Act comprised: (i) changes drawing on best practice in the States and Territories,43 (ii) the consumer guarantees reforms, and (iii) a new standard consumer product safety law for consumer goods and product related services. This Act introduced the ACL and provided that the new law would commence on 1 January 2011. Section 139G of the CCA provides that the Governor-General may make regulations prescribing matters required or permitted by the ACL to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the ACL. Item 12 of Sch 7 to the Second Commonwealth Act provides that the GovernorGeneral may make regulations prescribing matters of a transitional, application or saving nature in relation to the amendments and repeals made by the Schedules to the Second Commonwealth Act. 42 Civil Liability Act 2002 (NSW), s 34(1)(b); Civil Liability Act 2003 (Qld), s 28(1)(b) (but note the exclusion for claims by consumers); Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA), s 8; Civil Liability Act 2002 (Tas), s 43A; Wrongs Act 1958 (Vic), s 24AF(1)(b); Civil Liability Act 2002 (WA), s 5AI(1)(b); Civil Law (Wrongs) Act 2002 (ACT), s 107B; Proportionate Liability Act (NT), s 4(2)(b). 43 The Ministerial Council on Consumer Affairs (MCCA) held in Perth on 4 December 2009, considered and agreed on 14 specific proposals to enhance the effectiveness of the Australian Consumer Law. These include unsolicited sales practices, and other forms of direct selling which do not take place in a retail context, lay-by sales transactions, demanding payment for unsolicited advertising, and clarifications to the provisions on pyramid selling.
[1.55]
1 Consumer Protection Policy and Overview of the ACL
17
On 16 November 2010, the Trade Practices (Australian Consumer Law) Amendment Regulations 2010 (No 1)44 (ACL Amendment Regulations) were published. Since the Second Commonwealth Act was scheduled to commence on 1 January 2011, these regulations were made pursuant to s 4 of the Acts Interpretation Act 1901 (Cth) which provides that the regulation-making powers in the ACL (Cth) can be exercised as if the Act had come into force. The ACL Amendment Regulations provide for three transition periods for the implementation of the ACL, to allay the fears expressed by the business community that they would be unable to comply with the 1 January 2011 commencement date. Schedule 1 to the ACL Amendment Regulations relates to the following provisions in the ACL: (a) prescribed requirements for asserting a right to payment, (b) agreements that are not unsolicited consumer agreements and (c) reporting requirements for goods or product-related services associated with death, serious injury or serious illness. These provisions commenced on 1 January 2011. Schedule 2 to the ACL Amendment Regulations relates to repair notices provisions of the ACL, which commenced on 1 July 2011. Schedule 3 to the ACL Amendment Regulations relates to warranties against defects provisions of the ACL, which commenced on 1 January 2012. The TPA was amended and partially renumbered with effect from 1 January 2011 by the Second Commonwealth Act. At the same time, the TPA was renamed by item 2 of Sch 5 to the Second Commonwealth Act to become the Competition and Consumer Act 2010 (Cth). By reason of item 7(1) of Sch 7 to the Second Commonwealth Act the TPA as in force immediately before 1 January 2011 continues to apply to acts or omissions that occurred before that date. This means that in relation to conduct that occurred before 1 January 2011, and continued after that date, it will be necessary to seek relief under the relevant provisions of the TPA and the CCA. At the State and Territory level the ACL was also implemented in stages. Two States implemented the unfair terms provisions of the ACL as a law of their States by incorporating them into their Fair Trading Acts. The Fair Trading Amendment (Unfair Contract Terms) Act 2010 (Vic) was passed by the Parliament of Victoria on 1 June 2010 and came into operation as a law of the State of Victoria on 1 July 2010.45 The Fair Trading Amendment (Unfair Contract Terms) Act 2010 (NSW) was passed by the Parliament of New South Wales on 23 June 2010 and came into operation as a law of the State of New South Wales on 1 July 2010.46 From 1 January 44 Registered on the Federal Register of Legislative Instruments, at http://www.comlaw.gov.au. 45 Available at http://www.parliament.vic.gov.au/static/www.legislation.vic.gov.au-bills.html. See Government Gazette (24 June 2010) http://www.gazette.vic.gov.au/gazette/Gazettes2010/ GG2010G025.pdf. 46 See Government Gazette (1 July 2010) http://www.legislation.nsw.gov.au/sessionalview/sessional/ sr/2010-321.pdf.
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The Australian Consumer Law
[1.60]
2011, the FTA unfair terms provisions in these States were repealed and the unfair terms provisions of the CCA, Sch 2 now apply. The ACL (Application Acts) which enacted the ACL as a law of their respective jurisdictions commenced on 1 January 2011.
Transitional measures [1.60] Transitional measures are contained in Sch 7 of the Second Commonwealth Act. Items 2–5 make the following provisions in relation to existing product declaration, bans and standards: 2 Declarations of goods to be unsafe goods A notice under subsection 65C(5) of the Trade Practices Act 1974 that was in force immediately before the commencement of this item continues in force after that commencement as if: (a) it were an interim ban imposed under section 109 of the Australian Consumer Law by the Commonwealth Minister; and (b) it starts on the day of that commencement. 3 Permanent bans A notice under subsection 65C(7) of the Trade Practices Act 1974 that was in force immediately before the commencement of this item continues in force after that commencement as if it were a permanent ban imposed under section 114 of the Australian Consumer Law. 4 Prescribed consumer product safety standards A prescribed consumer product safety standard under section 65C of the Trade Practices Act 1974 that was in force immediately before the commencement of this item continues in force after that commencement as if it were a safety standard made under section 104 of the Australian Consumer Law. 5 Prescribed consumer product information standards A prescribed consumer product information standard under section 65D of the Trade Practices Act 1974 that was in force immediately before the commencement of this item continues in force after that commencement as if it were an information standard made under section 134 of the Australian Consumer Law.
Implementation of the new consumer guarantees regime is dealt with in item 6 of Sch 7 of the Second Commonwealth Act. It provides that Ch 3, Pt 3-2 (Consumer transactions) applies to all relevant conduct occurring in trade or commerce on or after 1 January 2011. Conduct occurring prior to 1 January 2011 will remain subject to the repealed (and saved, for those purposes) provisions of the TPA or the relevant FTA of a State or Territory .47 Goods and services acquired before 1 January 2011 will be covered by TPA and FTA regimes . Eligible goods and services acquired on or after 1 January 2011 will be
47 Second Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, at [7.144].
[1.65]
1 Consumer Protection Policy and Overview of the ACL
19
subject to the guarantees. Warranties for financial services provided by the ASIC Act48 will continue to apply and be administered by ASIC. Item 7 of Sch 7 of the Second Commonwealth Act provides that the TOA, as in force immediately before the commencement of the CCA, Sch 2, continues to apply to or in relation to any proceedings which were commenced, but not concluded, before the commencement of the ACL.
Substantive changes introduced by the ACL [1.65] The principal substantive changes introduced by the ACL are the national law on unfair contract terms (Ch 2, Pt 2-3) and the national consumer guarantees law, which replaces the statutory implied conditions and warranties (Ch 3, Pt 3-2, Div 1). However, many of the ACL provisions are not substantively different from their equivalent former TPA provisions. According to the Second Explanatory Memorandum accompanying the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, when transferring the provisions of the TPA into the ACL, the opportunity was taken to express the law in a clearer style. It stated: much of the TPA has been in place for over 30 years, so a number of ACL provisions have been redrafted to comply with plain English drafting.49
The drafting changes are not intended to alter the legal effect of those TPA provisions. Thus, the extensive jurisprudence that developed around those TPA provisions will apply equally to the new ACL provisions that re-enact them. The Australian Treasury, the Commonwealth Department responsible for the administration of the CCA, has published two guides to explain the context of the ACL reforms: • The Australian Consumer Law: An Introduction;50 and • The Australian Consumer Law: A Guide to Provisions.51 In The Australian Consumer Law: An Introduction, Treasury identifies the following changes as the principal ones being implemented by the ACL: • a single set of definitions and interpretive provisions, some of which differ from those currently used in the (Ch 1); • a new, national law on unfair contract terms (Ch 2, Pt 2-3); • a single set of provisions about unfair practices and fair trading, including amendments and additions which reflect existing provisions in State and Territory consumer laws (Ch 3, Pt 3-1); • new national consumer guarantees provisions, which will replace statutory implied conditions and warranties (Ch 3, Pt 3-2, Div 1); • a new national regime for unsolicited consumer agreements, which will replace existing State and Territory laws on door-to-door sales and other direct marketing (Ch 3, Pt 3-2, Div 2); 48 ASIC Act, s 12ED. 49 Second Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, at [6.8]. 50 The Australian Consumer Law: An Introduction (July 2010). 51 The Australian Consumer Law: A Guide to Provisions (July 2010).
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The Australian Consumer Law
[1.65]
• simple national rules for lay-by agreements (Ch 3, Pt 3-2, Div 3); • a new, national product safety legislative regime (Ch 3, Pt 3-3); and • new national provisions on information standards which apply to services as well as goods (Ch 3, Pt 3-4).52 The following table, originally prepared by the Australian Treasury, summarises the principal differences between the ACL and the TPA consumer protection provisions.53 It was prepared before the Second ACL Bill was amended in the Senate. It has been amended to reflect those and other changes that have occurred since 1 January 2011. Table 1.1 Australian Consumer Law – Table of provisions that have substantially changed compared to the TPA Description Chapter 1 Meaning of consumer
ACL
TPA or other source
Comments
s3
TPA, s 4B
$40,000 threshold retained contrary to the version of the Bill first introduced into Parliament. Amended to clarify that burden of proof is evidentiary only in nature; no legal burden on defendant; and not a defence to otherwise misleading or deceptive conduct. Proposed changes agreed by MCCA on 4 December 2009. New provision – based on NZ Consumer Guarantees Act 1993 (CG Act). Only applies to contracts for or relating to the use of postal, telegraphic or telephonic services; or contracts for or relating to radio or television broadcasts. Draws on the definition of “manufactured” in s 74A(1) and deemed “manufacturer” in s 74A(3) of the of the TPA.
Misleading representa- s 4 tions with respect to future matters
TPA, s 51A
When donations are treated as supplies
s5
-
Postal, telegraphic or telephonic services or contracts for or in relation to a radio or television broadcast Meaning of manufacturer
s 6(3A)
TPA, s 6(3)
s7
TPA, s 74A
Part 2-1: Misleading or deceptive conduct Application of this s 19 TPA, s 65A Part to information providers
Subsections 19(3) and 19(4) reflect the High Court’s interpretation of 65A of the in ACCC v Channel Seven Brisbane Pty Ltd (2009) 239 CLR 305.
Part 2-2: Unconscionable conduct
52 The Australian Consumer Law: An Introduction, p 3. 53 The Table in its original form appears as an Appendix to the submission by the Treasury to the Senate Economics Legislation Committee. It is reproduced with the kind permission of Office of the Senior Clerk of Committees Department of the Senate.
[1.65] Description Unconscionable conduct in consumer and business transactions
1 Consumer Protection Policy and Overview of the ACL ACL s 21
TPA or other source TPA, ss 51AB and 51AC
21
Comments Amended to give effect to Government response to the 2009 Senate Economics Committee report on unconscionable conduct. Section 22(2)(j) and 22(3)(j) inserted to allow the court to have regard to the progress of a contract in considering unconscionability. Amended by the Competition and Consumer Legislation Amendment Act 2011 (Cth) which implemented the Expert Panel’s recommendations to include a list of interpretive principles and unify the consumer and business related provisions prohibiting unconscionable conduct.
Part 2-3 Unfair Terms Unfair terms in ss 23 – 28 Adds prohibition of unfair terms in standard form standard form consumer contracts consumer contracts Part 3-1 Unfair practices, Division 1: False or misleading representations etc. False or misleading s 29 TPA, s 53 Section 53 of the TPA expanded to: representations about • clarify that discharging an goods or services evidentiary burden does not amount to a defence; • prohibit both false or misleading representations (whereas s 53 prohibited only false representations in some instances); and • include additional prohibitions relating to: – representations that are testimonials and representations about testimonials (based on s 14 FTA 1999); and
– representations concerning consumer guarantees.
False or misleading representations about sale etc of land
ss 30 & 31
TPA, s 53A & 53B
These changes were agreed by MCCA on 4 December 2009. Prohibition on offering gifts and prizes in connection with the sale of land moved to s 32 of the ACL.
22
The Australian Consumer Law
[1.65]
Description Offering rebates, gifts, prizes etc
ACL s 32
TPA or other source TPA, s 54; FTA (Vic), s 16(6)
Comments Combines s 54 of TPA and s 16 of FTA 1999. Defence: s 32(3) added to no providing rebate, gift prize or other free item within time specified (or reasonable time) if: • act or omission of another person or cause beyond person’s control; and • took reasonable precautions to ensure rebate, gift, prize or other free item would be provided within time specified (or reasonable time).
Wrongly accepting payment
s 36
TPA, s 58
Provision now includes requirement to provide goods or services for which payment has been accepted within a specified time, or if no time is specified, within a reasonable time (s 36(4)). Based on s 19 of FTA 1999. Defence: s 36(4) added to accepting payment for goods or services without supply within specified period if: • failure due to act or omission of another person or cause beyond person’s control; and • person took reasonable precautions and exercised due diligence to avoid failure.
Applications of provision of this Division to information providers
s 38
TPA, s 65A
Subsections 38(3) and 38(4) reflect the High Court’s interpretation of s 65A of the in ACCC v Channel Seven Brisbane Pty Ltd (2009) 239 CLR 305.
Part 3-1, Division 2: Unsolicited supplies Assertion of right to s 40 TPA, s 64 payment for unsolicited goods or services
Adds requirement for a warning statement to be set out in the regulations. Based on s 58 FTA 1987. Agreed by Ministerial Council on Consumer Affairs on 4 December 2009. Based on s 26 of the FTA 1999.
Liability of recipient s 42 – for unsolicited services s 43 TPA, s 64 Adds prohibition on asserting a Assertion of right to right to payment for unauthorised payment for unauthoradvertisements. Expansion to ised entries or advertisements advertisements Part 3-1, Divisions 3 to 5: Pyramid schemes, multiple pricing and other unfair practices Marketing schemes as s 46 TPA, s 65AAE Amended such that a court “must” pyramid schemes have regard to certain matters, instead of “may”. Ministerial Council on Consumer Affairs agreed to clarification of pyramid selling provisions on 4 December 2009.
[1.65]
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Description Multiple pricing
ACL s 47
TPA or other source –
Harassment and coercion
s 50
TPA, ss 60 & 53A(2)
Part 3-2, Division 1: Consumer guarantees Guarantees relating to ss 51 – 59 NZ CGA the supply of goods Guarantees relating to the supply of services
ss 60 – 63
s 65 Application of Division to supplies of gas, electricity and telecommunications Display notices Sch 2, s 66
NZ CGA
–
–
Part 3-2, Division 2: Unsolicited consumer agreements All provisions ss 69 – 95 – Part 3-2, Division 3: Lay-by agreements All provisions ss 96 – 99 –
Part 3-2, Division 4 : Miscellaneous Supplier must provide s 100 proof of transaction
Similar to s 161A, FTA 1999.
Customer may request itemised bill
s 101
Similar to s 161A, FTA 1999 (Vic).
Prescribed requirements for warranties against defects
s 102
Similar to FTA 1989 (Qld), Pt 3, Div 5
23
Comments Similar to s 40 of the FTA 1987. The inclusion of this provision in the ACL was agreed by Ministerial Council on Consumer Affairs on 4 December 2009. Combines harassment and coercion in connection with supply of goods and services (s 60) with the same in relation to interests in land (s 53A(2)). Guarantees correspond to implied conditions and warranties in Pt V, Div 2 of the TPA. Guarantees correspond to existing conditions and warranties in Pt V, Div 2 of the TPA. A new guarantee, based on a NZ provision, relates to supply of services within a reasonable time. An exemption for architects and engineers in s 74 of the TPA has been carried over in s 61(4) of the ACL. New provision – regulation-making power to allow for exclusion of guarantees for these supplies. New provision based on Commonwealth Consumer Affairs Advisory Council recommendation. The inclusion of this provision in the ACL was agreed by the Ministerial Council on Consumer Affairs on 4 December 2009. New law – based on existing arrangements in all States and Territories. New law – high level principles, as agreed at Ministerial Council on Consumer Affairs on 4 December 2009. The inclusion of this provision in the ACL was agreed by the Ministerial Council on Consumer Affairs on 4 December 2009. The inclusion of this provision in the ACL was agreed by the Ministerial Council on Consumer Affairs on 4 December 2009. Allows regulation to be made to prescribe requirements contact details, etc to be provided when warranty provided by supplier.
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Description ACL Repairers must comply s 103 with prescribed requirements
[1.65] TPA or other source –
Parts 3-3 and 3-4, Product Safety and Information Standards Safety standards ss 104 – 137 TPA, ss 65B, 65C, 65D, 65E, 65F, 65G, 65H, 65R, 65T
Part 3-5, Manufacturer’s liability for safety defects Manufacturer’s s 138 – 150 TPA, Pt V, Div 2A liability Chapter 4, Offences Offences replicate Chapter 3 provisions Parts 5-1 and 5-2: Enforcement and Remedies Pecuniary penalties ss 224 – 231 TPA, s 76E Injunctions
ss 232 – 235 TPA, s 80
Actions for damages
s 236
TPA, s 82
Compensation orders for injured persons
ss 237, 238
TPA, s 87
Privilege against s 249 exposure to a penalty Defences for certain ss 251 – 253 civil prosecutions Part 5-3, Country of origin representations Country or origin ss 254 – 258 representations
Comments New provision – allows regulations to be made requiring repairers of goods to provide information to consumers about, for example, the potential for data to be erased from electronic storage media when goods are repaired, as agreed at the Ministerial Council on Consumer Affairs on 4 December 2009. The Ministerial Council on Consumer Affairs agreed to a new approach to product safety at its meeting on 23 May 2008. On 4 December 2009 the MCCA agreed to the detailed operation of this approach. It is based on existing arrangements for safety standards, interim bans, permanent bans, mutual recognition, compulsory recalls, voluntary recalls, safety warning notices and information standards under the TPA and recommendations by the Productivity Commission. A new reporting requirement for incidents occasioning death or serious injury has been included in the ACL. The Productivity Commission recommended a mandatory reporting requirement along these lines. No policy change between TPA and ACL.
Penalties apply to new provisions in Chapter 3 based on best practice from States and Territories. Addition of an injunction restraining a person from carrying on a business. Based on s 65(2) of the FTA 1987. Provisions dealing with damages for personal injury moved to Pt XI of the TPA, to apply only as Commonwealth law. Provisions dealing with damages for personal injury moved to Pt XI of the TPA, to apply only as Commonwealth law. New law New law
New defence to misleading or deceptive conduct for goods “grown in” a particular country.
[1.70]
1 Consumer Protection Policy and Overview of the ACL
Description ACL TPA or other source Part 5-4, Remedies relating to consumer guarantees Actions against ss 259 – 266 Based on NZ CGA suppliers of goods Actions against ss 267 – 270 Based on NZ CGA suppliers of services Actions for damages ss 271 – 273 Based on NZ CGA against manufacturers of goods Indemnification of s 274 TPA, s 74H suppliers by manufacturers
Part 5-5, Liability of linked credit providers Linked credit contracts ss 278 – 287 TPA, s 73
25
Comments
Indemnity expanded to cover not only situations where a manufacturer would be required to pay damages, but to circumstances in which a supplier incurs costs because goods are not of acceptable quality, fit for purpose or fail to match their description. Based on s 73 of the TPA and s 135 of the National Credit Code, to ensure that amounts can be recovered in State and Territory tribunals in respect of linked credit contracts. The NCC is otherwise only enforceable in courts (but not tribunals).
The remainder of this chapter is divided into four parts.
• Part II – explains the history of the ACL; • Part III – considers the adoption and scope of the ACL (Cth); • Part IV – considers the adoption and scope of the ACL (Application Acts); and, • Part V – considers the implementation and enforcement of the ACL by the ACL regulators. PART II: HISTORY OF THE ACL [1.70] The catalyst for the ACL reforms was the two studies completed by the Productivity Commission (PC): the 2006 report, Review of the Australian Consumer Product Safety System,54 and the 2008 report, Review of Australia’s Consumer Policy Framework.55 As part of its terms of reference for the 2008 report the PC was to consider “ways to improve the consumer policy framework so as to assist and empower consumers to meet current and future challenges”. The PC was also required to report on “any barriers to, and ways to improve, the harmonisation and coordination of consumer 54 Productivity Commission, Review of the Australian Consumer Product Safety System: Research Report (7 February 2006), at http://www.pc.gov.au/inquiries/completed/product-safety/report. 55 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, Canberra, 2008). The PC’s report is available at http://www.pc.gov.au/inquiries/completed/consumer-policy/ report.
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[1.75]
policy and its development and administration across jurisdictions in Australia, including ways to institutionalise arrangements and to avoid duplications of effort”.56
Comparison of generic consumer protection legislation [1.75] As part of its 2008 Inquiry, the PC commissioned a report to ascertain the nature and extent of any differences between the existing Commonwealth, State and Territory legislation governing consumer protection (Consultancy Report).57 The Consultancy Report considered first the Commonwealth consumer protection regime contained in Pt V of the former TPA and other Commonwealth legislation, principally the ASIC Act. Having considered the material differences between the Commonwealth legislation, the Report compared the TPA (the template legislation) with the equivalent provisions of the State and Territory Fair Trading legislation (eight separate pieces of State and Territory legislation), including the enforcement powers of the State and Territory regulators. The Report also considered the material differences between the statutory implied terms regime in Pt V Div 2 of the TPA, and the State and Territory Sale of Goods Acts (another eight separate pieces of legislation). Finally, the Report considered other State legislation dealing with unfair or unjust terms (a further two separate pieces of legislation). The overall conclusion of the Report was that a myriad of Commonwealth, State and Territory consumer laws had developed over time with many small variations, even in regard to the definition of “consumer”, and that rather than moving towards uniformity and simplicity, they were moving towards greater complexity and disharmony. The national consumer protection laws contained in the TPA, overlapped with separate but discontinuous State and Territory fair trading provisions, leading to uncertainty and unjustified compliance costs for businesses, and confusion for consumers as to their rights and remedies. The PC recommended that a single national generic consumer law (to be called “The Australian Consumer Law”) be implemented and that the existing consumer protection provisions of the TPA should form the basis for the new law. The Australian Consumer Law would constitute a single, national law for fair trading and consumer protection, which would apply equally in all Australian jurisdictions. Commonwealth Consumer Affairs Advisory Council Report
[1.80] The PC, in its review of Australia’s Consumer Policy Framework, noted that it had not “undertaken the detailed analysis necessary to reach a judgment on the adequacy or otherwise of the existing regulation in this area, or the merits of alternative models such as those adopted in countries such as New Zealand”.58 56 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, Canberra, 2008), vol 1, p vii. 57 Professors Corones and Christensen, Comparison of Generic Consumer Protection Legislation (Consultancy Report prepared for Productivity Commission, Faculty of Law, Queensland University of Technology, September, 2007), available at http://www.pc.gov.au/inquiries/completed/ consumer-policy/consumerprotectionlegislation. 58 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, Canberra, 2008), p 176.
[1.85]
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Accordingly, it recommended that: “The adequacy of existing legislation related to implied warranties and conditions should be examined as part of the development of the new national generic consumer law”.59 On 12 March 2009, the Australian government announced that a review of the Australian law of implied terms would be undertaken by the Commonwealth Consumer Affairs Advisory Council (CCAAC).60 On 26 July 2009, the Minister for Competition Policy and Consumer Affairs, the Hon Dr Craig Emerson MP released an Issues Paper on behalf of CCAAC. The Issues Paper examined the adequacy of the existing laws on implied terms and the need, if any, for amendments.61 A parallel consultation process was conducted with the States and Territory consumer agencies. Based on the 33 written submissions received by CCAAC in response to the Issues Paper, there were interviews in Canberra and Melbourne with interested parties and additional teleconferences in September 2009. CCAAC also had discussions with the New Zealand Ministry of Consumer Affairs, ASIC and the ACCC on the adequacy and effectiveness of the existing implied terms regime. On 30 October 2009, CCAAC presented its report, Consumer Rights: Reforming Statutory Implied Conditions and Warranties to Minister Emerson.62 NEIAT Report
[1.85] While CCAAC was conducting its review, the National Education and Information Advisory Taskforce (NEIAT)63 commissioned Latitude Research, together with On Track Research, to conduct a baseline study to generate robust data from consumers and traders in relation to statutory warranties and refunds in three markets, whitegoods, electronic goods and mobile phones (the target goods).64 The baseline research was conducted during July and August 2009.
59 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, Canberra, 2008), recommendation 8.1. 60 The function of CCAAC is to “consider reports and papers referred to CCAAC by the Minister and report to the Minister on their likely consumer impacts; identify emerging issues impacting on consumers and draw those to the attention of the Minister; and investigate and report to the Minister on consumer issues referred to CCAAC by the Minister”. 61 The reports are available on the Australian Government, the Treasury’s website, CCAAC Review of Statutory Implied Conditions and Warranties (2009) at http://www.ccaac.gov.au. The Report was compiled by a sub-group of CCAAC led by Professor Stephen Corones and assisted by Ms Deborah Healey, Mr Ray Steinwall and Ms Carolyn Bond. 62 The report is available on the Australian Government, Treasury’s website, Consumer Rights – CCAAC Report on Statutory Implied Conditions and Warranties (2009) at http://www.ccaac.gov.au. 63 NEIAT was established in 2007 by the Standing Committee of Officials of Consumer Affairs (SCOCA), composed of the senior officers of consumer policy and enforcement bodies in Australia and New Zealand, to help identify, develop and implement strategies to empower consumers to make informed and timely market place decisions. 64 NEIAT, National Baseline Study for Statutory Warranties and Refunds, Research Paper No 2 October 2009 (NEIAT Baseline Study), http://www.archive.treasury.gov.au/documents/1666/PDF/ National_Baseline_Study_Warranties_and_Refunds.pdf.
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[1.90]
On 4 December 2009, the Ministerial Council on Consumer Affairs (MCCA) met in Perth.65 In relation to consumer guarantees, the MCCA noted: the comprehensive studies of the law on consumer rights and the effectiveness of existing laws undertaken by the Commonwealth Consumer Affairs Advisory Council (CCAAC) in its Report Consumer rights: Reforming statutory implied conditions and warranties and the SCOCA’s National Education and Information Taskforce (NEIAT) in its Baseline Study for Statutory Warranties and Refunds. Ministers thanked CCAAC and NEIAT for their impressive contributions to the understanding of these laws and the needs of consumers and businesses, and further noted the publication of these reports. Ministers noted the findings of the NEIAT study to the effect that many consumers and businesses have little, if any, awareness of consumer rights and that a significant contributor to this is the current legal framework. Informed by the NEIAT study, CCAAC has recommended that the existing system of statutory implied conditions and warranties in consumer contracts be replaced with a system of statutory consumer guarantees. Ministers share CCAAC’s view that such a system will be a significant enhancement of the law and will be more readily understood by consumers and businesses. MCCA agreed, as part of the development of the Australian Consumer Law, to improve the legal framework for consumer rights that apply to the acquisition of goods and services. This will be a single national law guaranteeing consumer rights in relation to their acquisition of goods and services. They will be based on existing implied conditions and warranties, which will be simplified and streamlined. This new system of consumer guarantees, supported by effective redress, will foster a greater ability to inform and educate all Australian consumers and businesses about their rights and obligations, and will reduce the compliance burden for businesses, particularly those that operate in more than one state or territory.66
On 15 August 2008, the MCCA adopted the recommendation of the PC that there should be a new ACL based on the consumer protection provisions of the former TPA, together with amendments reflecting best practice in the State and Territory consumer protection legislation. While the Joint Communiqué recognised that the Australian Consumer Law would be “a significant enhancement of the law”, the consumer guarantees regime would be “based on existing implied conditions and warranties, which will be simplified and streamlined”.
PART III: ACL AS A LAW OF THE COMMONWEALTH [1.90] In the case of the Commonwealth, the application law is contained in Pt XI of the CCA. Section 130 of the defines the term “Australian Consumer Law” to mean Sch 2 as applied under Pt XI of the CCA. As an application law, the ACL in Sch 2 of the CCA is drafted to reflect that it will be a law of the Commonwealth and of each State and Territory. Consequently, all of the provisions are drafted to apply to the conduct of “persons” rather than “corporations”, as was the case in the consumer protection provisions of the former TPA. 65 MCCA comprises Commonwealth, State, Territory and New Zealand Ministers responsible for fair trading, consumer protection laws, trade measurement and credit laws. More information can be obtained from its official site at: Consumer.gov.au “Official Site of the Ministerial Council on Consumer Affairs” at http://www.consumer.gov.au/. 66 The MCCA Joint Communique (2009), at http://www.consumerlaw.gov.au/files/2015/09/Meeting_ 22_4_Dec_09.pdf.
[1.95]
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Section 131(1) of the CCA provides: Schedule 2 applies as a law of the Commonwealth to the conduct of corporations, and in relation to contraventions of Chapter 2, 3 or 4 of Schedule 2 by corporations.
Because of constitutional limitations on the legislative power of the Commonwealth Parliament, the does not apply universally to all transactions or activities. The Commonwealth does not have constitutional power to make consumer protection laws generally but may make laws with respect to the conduct of corporations under the corporations power in s 51(xx) of the Constitution. Sections 6 and 131(2) of the CCA extend the operation of the CCA, Sch 2 to natural persons where the Commonwealth has constitutional power to do so. By virtue of s 6(2) of the CCA, reliance is placed on other heads of constitutional power, namely: (a) the overseas trade and commerce power;67 (b) the interstate trade and commerce power;68 (c) the Territories power;69 (d) the executive power of the Commonwealth;70 and (e) the incidental power.71 These powers were used to ensure that the CCA applies directly to the greatest extent possible under the Commonwealth Parliament’s legislative power.72 A number of the phrases used in the Constitution, such as “trading or financial corporations” and “trade and commerce among the States” are also incorporated into the CCA. In the early years of the TPA’s operation, the extension provisions in ss 5 and 6 were very important because, in relation to conduct occurring in the States, they provided the only means of subjecting natural persons to liability under the TPA. In Smolonogov v O’Brien,73 for example, it was the respondent’s use of the telephone to make the representations complained of that brought this conduct within the purview of the Act. However, the enactment during the 1980s of the Fair Trading Acts in each State and Territory which mirrored most of the provisions in Pt V, Div 1 of the TPA meant that reliance on ss 5 and 6 of the was no longer necessary.
Extended application of ACL (Cth) to conduct outside Australia [1.95] The operation of the ACL (Cth) is extended to conduct occurring outside Australia by ss 5(1), 6(2)(a)(i) and 6(3) of the CCA. Section 6(2)(a)(i) extends the territorial operation of the ACL (Cth) to conduct between Australia and places 67 Australian Constitution, s 51(i). 68 Australian Constitution, s 51(i). 69 Australian Constitution, s 122. 70 Australian Constitution, s 61. 71 Australian Constitution, s 51(xxxix). 72 Zhu v Treasurer (NSW) (2004) 218 CLR 530 at [96] (Gleeson CJ, Gummow, Kirby, Callinan and Heydon JJ). 73 Smolonogov v O’Brien (1982) ATPR ¶40-312. On appeal Smolonogov v O’Brien (1983) ATPR ¶40-418.
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[1.95]
outside Australia. Section 6(3) of the CCA extends to representations using the telegraphic or telephonic services. Sections 6(2)(a)(i) and 6(3) are considered at [1.100]. Section 5(1) of the CCA applies Pt XI of the CCA and the ACL, other than Pt 5-3, to: the engaging in conduct outside Australia by: (g) bodies corporate incorporated or carrying on business within Australia; or (h) Australian citizens; or (i) persons ordinarily resident within Australia …
Section 5(1) focuses on the body corporate or person engaging in the conduct. In the case of a body corporate, the necessary connection with Australia exists if it is incorporated or carries on business within Australia. The first test, incorporation, requires no explanation. The second test, “carrying on business”, will be established by trading in Australia. In Hope v Bathurst City Council,74 Mason J (with whom by Gibbs, Stephen and Aickin JJ concurred) said that the word “business” denotes “activities undertaken as a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive basis”.75 This definition was adopted by Merkel J for the purposes of s 5(1) in Bray v Hoffman-La Roche Ltd.76 Merkel J also stated: I see no reason, however, for importing the additional requirement that to carry on business in the jurisdiction the foreign company must also have a place of business in the jurisdiction. A place of business is not a requirement of comity.77
This approach has been adopted in subsequent cases.78 In the case of natural persons, the necessary connection with Australia is citizenship or ordinary residence within Australia. The first test, citizenship, requires no explanation.79 The second test, ordinary residence, is a question of fact and degree. In each case it will be necessary to isolate the factors that give rise to some connection with Australia, such as the frequency, duration and purpose of visits to Australia; family or business ties; and the ownership and use of property in Australia. The fact that a person is a resident of another country does not preclude a finding of ordinary residence within Australia.80 Section 5(1)(g) of the CCA applies Pt XI of the CCA and the ACL, other than Pt 5-3, to the “engaging in conduct outside Australia by … bodies corporate incorporated 74 Hope v Bathurst City Council (1980) 144 CLR 1. 75 Hope v Bathurst City Council (1980) 144 CLR 1 at 8-9. 76 Bray v Hoffman-La Roche Ltd (2002) 118 FCR 1 at [63]. See also Norcast SarL v Bradken Ltd (No 2) (2013) 219 FCR 14 at [255] (Gordon J). 77 Bray v Hoffman-La Roche Ltd (2002) 118 FCR 1 at [63]. 78 Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 2) (2012) 266 FLR 243 at 437-9 [380]-[384] (Croft J) and RT & YE Falls Investments Pty Ltd v New South Wales [2001] NSWSC 1027 at [78] (Palmer J). 79 Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 2) (2012) 266 FLR 243 at 445 [401] (Croft J). 80 Levene v Commissioners of Inland Revenue [1928] AC 217; Commissioners of Inland Revenue v Lysaght [1928] AC 234; Cooper v Cadwalader (1904) 5 TC 101.
[1.100]
1 Consumer Protection Policy and Overview of the ACL
31
or carrying on business within Australia”. There is no definition of the phrase “carrying on business within Australia”.81 In ACCC v Valve Corporation (No 3),82 Valve Corporation did not have a physical presence or place of business in Australia. It supplied computer games to Australian consumers via the internet and granted licences of its computer games to Australian consumers. Even if Valve did not engage in conduct in Australia, Edelman J held that Valve Corporation was carrying on business in Australia, because: • it had many customers in Australia and earned significant revenue from them; • it had content servers in Australia to ensure that consumers could download content as soon as possible; • it had significant personal property and servers located in Australia and paid invoices to Australian companies for equipment involving servers; • it paid for rack space and power to its servers in Australia; • it relied on relationships with third party content delivery providers in Australia; and • it entered into contracts with third party service providers outside Australia who provided content around the world, including Australia.83
Application of ACL (Cth) to conduct of natural persons [1.100]
Section 6(2)(a) of the CCA extends the application of the ACL (other than ss 33 or 155 of the ACL) to natural persons who are engaged in trade or commerce between Australia and places outside Australia, or within Australia but among the States or Territories of Australia. Section 4(1) of the CCA and s 2(1) of the ACL (Cth) both define “trade or commerce” to mean “trade or commerce within Australia or between Australia and places outside Australia”.
Misleading conduct engaged in by Australian firms in an overseas location in respect of their purely overseas transactions will not be actionable under s 18 of the ACL as that conduct was not “in trade or commerce” as so defined. On the other hand, if the conduct in question occurred in the course of trade to or from Australia, the protection given by the Act will extend to overseas consumers and not just those in Australia. For example, in Wells v John R Lewis (International) Pty Ltd,84 liability arose in respect of prohibited conduct originating in Australia but directed towards consumers resident overseas. By virtue of s 6(3)(a) of the CCA, Pts 2-1 (misleading or deceptive conduct), 2-2 (unconscionable conduct), 3-1 (unfair practices other than Div 3, pyramid schemes), 3-3, 3-4, 4-1 (other than Div 3), 4-3, 4-4 and 5-3, apply to natural persons where the conduct in question involved the use of postal, telegraphic or telephonic services, or took place in a radio or television broadcast. The process of achieving this outcome is as follows: the relevant provisions of the ACL refer to “persons”; the effect of s 131(1) of the CCA is that as a law of the Commonwealth these provisions 81 See Bray v Hoffman-La Roche Ltd (2002) 118 FCR 1 at [59]-[60]. 82 ACCC v Valve Corporation (No 3) [2016] FCA 196. 83 ACCC v Valve Corporation (No 3) [2016] FCA 196 at [199]-[205]. 84 Wells v John R Lewis (International) Pty Ltd (1975) 25 FLR 194. See Clarke, “The Extraterritorial Reach of the CCA – A Primer” (2012) 27(10) Competition and Consumer Law News 308.
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[1.100]
are restricted “to the conduct of corporations”. Section 6(3)(b) then reverses this by providing that a reference in the provisions of Pt XI to a corporation include a reference to a person not being a corporation where the conduct involves the use of postal, telegraphic or telephonic services, or takes place in a radio or television broadcast. Section 6(3)(a) of the CCA is of particular significance in the context of the internet, email and e-commerce. In ACCC v Jutsen (No 3),85 Nicholas J held that the expression “telegraphic … services” in s 6(3) of the CCA extends to conduct involving the use of the internet. The statutory provisions of the ACL relating to pyramid selling schemes were held to be applicable to natural persons by reason of the internet-based nature of the scheme. In ACCC v Chopra,86 the court ordered a natural person, the sole operator of an online electronics store based in Australia, Electronic Bazaar (EB), to pay penalties of $100,000 for contraventions of ss 18 and 29(1)(m) of the ACL. Mr Chopra represented that consumers who purchased goods through the EB website were not entitled to a refund, replacement or repair in relation to those goods. Where a natural person engages in infringing conduct by means of a website located outside Australia, it may be necessary to have recourse to both s 5 and s 6(3) of the CCA to bring the conduct within the ACL (Cth). In ACCC v Hughes,87 Mr Hughes, a natural person living within Australia, contravened the TPA, ss 52, 53(e), misleading representation with respect to price, and 53(c), misleading representation with respect of performance characteristics, uses or benefits, by making false or misleading representations through an internet-based website with a United States domain name. The goods offered for sale were prescription pharmaceutical products, namely a range of oral contraceptives. The court made a number of declarations and restrained Hughes from continuing to supply pharmaceutical products unlawfully. Hughes was later imprisoned for contempt for disregarding those orders. Allsop J concluded: Thus, Mr Hughes places on a computer site overseas misleading or deceptive material with the intention that consumers in Australia, the United States and elsewhere will use telephonic services to access that information and rely upon it. Thus, relief is available under the TPA by reason of s 5 and s 6 of the Act, notwithstanding the lack of a presence of a corporation.88
85 ACCC v Jutsen (No 3) (2011) 206 FCR 264 at [100]. See also ACCC v Sensaslim Australia Pty Ltd (in liq) (No 1) (2011) 196 FCR 566 at [17], [25] and [38] (Yates J); ACCC v Jones (No 5) [2011] FCA 49 at [5] and [10] (Logan J); Jones v ACCC [2010] FCA 481 at [30] (Collier J); Macquarie Bank Ltd v Seagle [2008] FCA 1417 at [17] and [19] (Jagot J); Cairnsmore Holdings Pty Ltd v Bearsden Holdings Pty Ltd [2007] FCA 1822 at [130]-[131] (Jacobson J); Lewarne v Momentum Productions Pty Ltd [2007] FCA 1136 (Stone J) at [164]; ACCC v Chen (2003) 132 FCR 309 at [20] and [32]; ACCC v Hughes (2002) ATPR ¶41-863 at [77]-[79] (Allsop J). 86 ACCC v Chopra [2015] FCA 539 at [6] (Middleton J). 87 ACCC v Hughes (2002) ATPR ¶41-863 at [77]. See also ACCC v Purple Harmony Plates Pty Ltd [2001] FCA 1062 at [35] (Goldberg J); and ACCC v Chen (2003) 132 FCR 309 at [32] (Sackville J). 88 ACCC v Hughes (2002) ATPR ¶41-863 at [78]-[79].
[1.100]
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It is unclear whether the references to ss 5 and 6 mean that it is necessary to have recourse to both sections to apply s 18 of the ACL (Cth) to the conduct of natural persons where the website is based outside Australia, rather than s 5 of the CCA alone.89 These provisions are important to ensure that the ACL protections are available in cases of internet shopping where goods are acquired for personal use directly from overseas suppliers online. In addition, online services such as eBay allow people not only to acquire a wide variety of products from around the world, but also to become sellers in an online global marketplace. By searching more effectively online, consumers are presented with a wider range of choice and a greater opportunity to make savings. However, e-commerce is inherently different from traditional methods of acquiring goods and services. It provides additional risks for the exploitation of consumers, and can make it more difficult for consumers to obtain redress. Online consumers should be able to access rights under the ACL that are as extensive as those provided to consumers participating in face-to-face consumer transactions. As Bromberg J observed in ACCC v Apple Pty Ltd: Multi-national corporations who (through their subsidiaries or otherwise) operate in and profit from the Australian market, must respect that market and the laws which serve to regulate it and protect its participants. Those who design global campaigns, and those in Australia who adopt them, need to be attuned to the understandings and perceptions of Australian consumers and ensure that representations made by such campaigns will not serve to mislead. The penalty imposed in this case [$2.25 million], needs to make that message clear.90
In Dataflow Computer Services Pty Ltd v Goodman, s 6(3) of the TPA was held to apply to messages communicated by email. Similarly, in Madden v Seafolly Pty Ltd,91 the appellant, Ms Madden, whose label was “White Sands”, and the respondent were competitors in the ladies swimwear fashion industry. The appellant asserted on her personal Facebook page, her business Facebook page (“White Sands”) and in emails to media outlets that the respondent had copied eight of her swimwear designs. The primary judge found that the assertions were false and misleading contrary to ss 52 and 53(a) of the TPA, now ACL, ss 18 and 29(1)(a) respectively. The TPA applied to Madden (an individual) because each of the publications made use of the internet. An appeal to the Full Federal Court was dismissed. Section 6(3A) of the CCA extends Pt 2-3, the general protection for unfair terms in consumer contracts for, or relating to the use of postal, telegraphic or telephonic services; or contracts for or relating to radio or television broadcasts. Section 6(3A) states: the provisions of Part 2-3 of the Australian Consumer Law have, by force of this subsection, the effect they would have if: (a) those provisions were, by express provision, confined in their operation to contracts for or relating to: (i) the use of the postal, telegraphic or telephonic services or 89 See Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 2) (2012) 266 FLR 243 at 445 [401] (Croft J). 90 ACCC v Apple Pty Ltd (2012) ATPR ¶42-404 at [32]. 91 Madden v Seafolly Pty Ltd [2012] FCA 1346.
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[1.105]
(ii) radio or television broadcasts; and (b) a reference in those provisions of Part XI to a corporation included a reference to a person not being a corporation.
It should be noted that s 6(3A) of the CCA differs from s 6(3) of the CCA. Section 6(3) of the CCA extends the misleading conduct and unconscionable conduct provisions to catch conduct involving “the use of postal, telegraphic or telephonic services or which occurs in a radio or television broadcast”. However, s 6(3A) of the CCA is narrower in its ambit: it only applies to unfair terms in consumer contracts for or relating to the use of postal, telegraphic or telephonic services; or consumer contracts for or relating to radio or television broadcasts. For example, it would apply to unfair terms imposed by the supplier of mobile telephony services in relation to the terms of a mobile phone contract.
Financial services [1.105]
The Commonwealth may also make consumer protection laws in respect of financial services, through a referral of legislative competence from the States set out in the Corporations Agreement 2002. In 2009, the States also referred their specific powers concerning consumer credit. The Intergovernmental Agreement for the Australian Consumer Law (IGA), signed by COAG on 2 July 2009 required the Commonwealth to enact changes to the investor protection provisions of the ASIC Act, and to the extent necessary, the Corporations Act 2001 (Cth), to ensure that they were consistent with the ACL (Cth).92 Relevant amendments to the ASIC Act are included in Sch 3 of the Second Commonwealth Act. The IGA reflects that financial services will be carved out of the scope of the ACL (Cth), and separate legislative arrangements would be made for the regulation of financial services under the Corporations Agreement 2002. Section 131A(1) of the CCA provides: Despite section 131, this Division does not apply (other than in relation to the application of Part 5-5 of Schedule 2 as a law of the Commonwealth) to the supply, or possible supply, of services that are financial services, or of financial products.
This carve-out for financial services means that the ACL (Cth) does not apply to financial services, which are regulated at the Commonwealth level by the Corporations Act 2001 (Cth) and the ASIC Act. The ASIC Act continues to apply, separately, to financial services, with the Australian Securities and Investments Commission (ASIC) as the national regulator. This reflects the current subject matter referral by the States and Territories set out in the Corporations Agreement 2002 and administered by the Ministerial Council for Corporations (MINCO). Clause 301(1) of the Corporations Agreement 2002 states that “the Commission [ASIC] will have sole responsibility for the general administration of the national law [which includes the Corporations Act 2001 (Cth) and the Australian Investments and Securities Commission Act 2001]”. The consumer protection provisions of the ASIC Act have been amended to maintain consistency with the ACL. However, the consumer guarantees regime in 92 Intergovernmental Agreement for the Australian Consumer Law (signed by COAG on 2 July 2009), subclause 3.1.3.
[1.110]
1 Consumer Protection Policy and Overview of the ACL
35
the ACL does not apply to financial services (with the exception of linked credit services).93 This position is at odds with the policy objectives of consistency and uniformity which the ACL was intended to achieve. Section 12ED of the ASIC Act only implies warranties of due care and skill and fitness for purpose into contracts for the supply of financial services to a consumer in the course of a business.94 Consumer credit regulation was referred to the Commonwealth by the States and Territories in 2009. The Uniform Consumer Credit Code was replaced by the National Consumer Credit Protection Code (the National Credit Code) from 1 July 2010. The National Credit Code applies to credit that is provided to individual debtors or strata corporations wholly or predominantly (a) for personal, domestic or household purposes; or (b) to purchase, renovate or improve residential property for investment purposes or to refinance such credit. In relation to misleading conduct or unconscionable conduct involving the supply financial services, great care will need to be taken in framing the cause of action. The conduct may fall within s 1041H of the Corporations Act 2001 (Cth), or the ASIC Act, but not the ACL (Cth).
Insurance [1.110]
While the PC in its Review of Australia’s Consumer Policy Framework, recommended that a new generic national consumer law should apply to all sectors of the economy,95 insurance has been excluded from the ACL regime and the ASIC Act regime. The reason for that is to be found ss 13, 14 and 15 of the Insurance Contracts Act 1984 (Cth) (IC Act). Section 13 of the IC Act provides: A contract of insurance is a contract based on the utmost good faith and there is implied in such a contract a provision requiring each party to it to act towards the other party, in respect of any matter arising under or in relation to it, with the utmost good faith.
Section 14 of the IC Act provides that parties are not to rely on provisions in a contract of insurance except in the utmost good faith. Insurance is a financial product and the supply of insurance is the supply of a financial service. The supply of financial services is regulated by the ASIC Act. For example, misleading statements about flood cover during pre-contractual negotiations for the supply of home and contents insurance would be subject to s 12DA of the ASIC Act. However, it seems that the unfair terms provisions of the ASIC Act do not cover insurance contracts. This is because s 15(1) of the IC Act provides: A contract of insurance is not capable of being made the subject of relief under: • Any other [Commonwealth] Act; • A State Act; or 93 See [9.20]. 94 There have been few cases which have sought to rely on a breach of these implied warranties. See, eg, St George Bank Ltd v Wright [2009] QSC 337 at [54]-[59] (McMurdo J); and Transmarket Trading Pty Ltd v Sydney Futures Exchange Ltd (2010) 188 FCR 1 at [113]-[116] (Perram J). 95 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, Canberra, 2008), recommendation 4.2. The PC’s report is available at http://www.pc.gov.au/inquiries/ completed/consumer-policy/report.
36
The Australian Consumer Law
[1.115]
• An Act or Ordinance of a Territory.
While conduct leading up to the making of an insurance contract is covered by the provisions of the ASIC Act, the terms themselves are regulated by the ICA.96 Even if insurance contracts are covered by the unfair terms provisions of the ASIC Act, those core terms that govern matters such as the risk covered and the premium payable will be excluded by s 12BI of the ASIC Act. The relevant provisions excluding consumer protection applying to insurance are: • s 131A of the CCA excludes financial services from the ACL (Cth); • s 63 of the ACL excludes insurance services (that are not included in the definition of financial services) from Subdiv B of Pt 3-2 (guarantees relating to the supply of services); • s 12ED(3) of the ASIC Act excludes the implied warranties in relation to a contract of insurance; • s 15 of the IC Act operates to prevent some or all of the unfair terms provisions of the ASIC Act in respect of financial services applying to terms in insurance contracts.
ACL (Cth) not intended to cover the field [1.115]
Section 131C(4) of the CCA states:
Except as expressly provided by this Part or the Australian Consumer Law, nothing in this Part or the Australian Consumer Law is taken to limit, restrict or otherwise affect any right or remedy a person would have had if this Part and the Australian Consumer Law had not been enacted.
The purpose of this provision is to ensure that it is not held that the ACL (Cth) is intended to “cover the field” of consumer protection regulation, so as to render invalid State or Territory legislation dealing with that topic. Consequently, the ACL (Cth) will exist side-by-side with other legislation regulating transactions with consumers.
PART IV: THE ACL AS STATE OR TERRITORY LAW [1.120]
In the case of the ACL (Application Acts), the States and Territories have separately legislated to make the ACL a law of their respective jurisdictions, although the approach adopted has not been entirely uniform. Part XIAA of the CCA facilitates the application of the ACL by the States and Territories. The States have a general power to make laws in respect of consumer protection matters, as do the Territories within the scope of the territories power in s 122 of the Australian Constitution. The ACL as State or Territory law applies to the conduct of anyone who is a “person”. The word “person” is not defined in the Application Acts. However, interpretation legislation in most jurisdictions provides that a “person” includes a body politic or corporate as well as a natural person.97
96 See Corporations and Financial Services Division, Unfair Terms in Insurance Contracts – Options Paper (The Treasury, Langton Crescent, Parkes, ACT, 2600). 97 See Interpretation Act 1987 (NSW), s 21; Interpretation of Legislation Act 1984 (Vic), s 38; Acts Interpretation Act 1954 (Qld), s 32D; Interpretation Act 1984 (WA), s 5; Interpretation Act (NT), s 17.
[1.120]
1 Consumer Protection Policy and Overview of the ACL
37
Consequently, as used in the ACL as a law of each State or Territory, the word “person” is likely to be given its ordinary meaning and to cover natural and artificial persons and the Crown. The ACL gives effect to COAG’s National Partnership Agreement to Deliver a Seamless National Economy (NPA).98 It adopts the application model used previously in relation to competition provisions in Pt IV of the CCA and the Competition Code set out in Sch 1 of the CCA, with the Australian Government as the lead legislator. The Principal State and Territory Acts are: • New South Wales: Fair Trading Act 1987 (FTA 1987 (NSW)), ss 27 and 28 • Victoria: Australian Consumer Law and Fair Trading Act 2012 (ACLFTA 2012 (Vic)), ss 7 and 8 • Queensland: Fair Trading Act 1989 (FTA 1989 (Qld)), ss 15 and 16 • Western Australia: Fair Trading Act 2010 (FTA 2010 (WA)), ss 18 and 19 • South Australia: Fair Trading Act 1987 (FTA 1987 (SA)), ss 13 and 14 • Tasmania: Australian Consumer Law (Tasmania) Act 2010 (ACLA 2010 (Tas)), ss 5 and 6 • Northern Territory: Consumer Affairs and Fair Trading Act (CAFTA (NT)), ss 26 and 27 • Australian Capital Territory: Fair Trading (Australian Consumer Law) Act 1992 (FT(ACL)A 1992 (ACT)), ss 6 and 7. By way of example, the Fair Trading (Australian Consumer Law) Amendment Act 2010 (NSW) added “The Australian Consumer Law” as Pt 3 of the FTA 1987 (NSW). Section 27 of the FTA 1987 (NSW) defines the Australian Consumer Law text as: (a) Schedule 2 to the Competition and Consumer Act 2010 of the Commonwealth; and (b) the regulations under s 139G of that Act.
Section 28(1) of the FTA 1987 (NSW) states that: [t]he Australian Consumer Law text, as in force from time to time – (a) applies as a law of New South Wales; and (b) as so applying may be referred to as the Australian Consumer Law (NSW); and (c) as so applying is a part of the Fair Trading Act 1987.
In a similar way, s 7 of the ACLFTA 2012 (Vic) defines the Australian Consumer Law text as: (c) Schedule 2 to the Competition and Consumer Act 2010 of the Commonwealth; and (d) the regulations under s 139G of that Act.
Section 8(1) of the ACLFTA 2012 (Vic) states that: The Australian Consumer Law text, as in force from time to time: (a) applies as a law of this jurisdiction; and (b) as so applying may be referred to as the Australian Consumer Law (Victoria); and 98 The NPA provides for the States and Territories to receive partnership payments from the Commonwealth, consisting of facilitation payments to compensate for set-up costs, and reward payments if they achieve key milestones.
38
The Australian Consumer Law
[1.120]
(c) as so applying is a part of this Act.
In Western Australia a slightly different approach was adopted. Section 19(1) of the FTA 2010 (WA) states: For the purposes of this section, the Australian Consumer Law text consists of – 1. Schedule 2 to the Competition and Consumer Act 2010 (Commonwealth), as in force on the commencement of this section… 2. The regulations made under section 139G of that Act, as those regulations are in force from time to time.
Section 19(2) of the FTA 2010 (WA) states: The Australian Consumer Law text – a) applies as a law of this jurisdiction; and b) as so applying, may be referred to as the Australian Consumer Law (WA); c) in so far as it constitutes Schedule 2 to the Competition and Consumer Act 2010 (Commonwealth), is part of this Act; and d) in so far as it constitutes regulations made under section 139G of the Competition and Consumer Act 2010 (Commonwealth), is subsidiary legislation for the purposes of this Act.
Section 19(1) of the FTA 2010 (WA) makes clear that it is only the text of the ACL as in force on 1 January 2011 that applies as a law of Western Australia. The omission of the words “as in force from time to time” from s 19(2) of the FTA 2010 (WA) means that any future amendment to the text of the ACL in Sch 2 of the CCA will not automatically apply in Western Australia. Section 20 of the FTA 2010 (WA) provides: “the Australian Consumer Law (WA) (as described in s 19(1)(a)) may be amended by bill”. Thus, future changes to the ACL (WA) will be enacted by the Western Australian Parliament, and will not automatically apply as in other States and Territories. As regards the position in Queensland, a significant amendment has been the removal of the limitation placed upon the cause of action for damages for contravening s 38 of the FTA 1989 (Qld), the general prohibition of misleading conduct. The cause of action in damages for misleading conduct in s 99 of the FTA 1989 (Qld) was previously confined to consumers. Since the adoption of the ACL, this limitation has been removed. The alternative model for the adoption of the ACL considered by the PC was a referral of powers by the States and Territories to the Commonwealth, making the ACCC solely responsible for enforcing the ACL (the one regulator model).99 This was rejected for the following reasons: But while the States and Territories remain responsible for enforcing a large body of specific consumer regulation, the loss of regulatory synergies and the costs of creating a parallel regional office network are powerful arguments against implementation of the one regulator model. More pragmatically, in the face of considerable jurisdictional opposition to the one regulator model, packaging it with the implementation of a new 99 The one regulator model applies in relation to the enforcement of the competition provisions of the CCA. The ACCC is the only regulator with the power to bring proceedings for contraventions of Pt IV of the CCA. The Australian Energy Regulator (AER) has responsible for compliance with the Australian Electricity Law and the Australian Gas Law. See Corones, Competition Law in Australia (6th ed, Lawbook Co, Sydney, 2014) ch 3.
[1.130]
1 Consumer Protection Policy and Overview of the ACL
39
national generic law, could put the latter at risk. As indicated above, implementation of this new law is a critical first step in creating a more nationally coherent consumer policy framework that could deliver more efficient and effective outcomes for consumers and the wider community. The Commission has therefore concluded that, for the time being – and with the important exception of the product safety provisions – the new national generic law should be jointly enforced by the Australian Government and the States and Territories.100
Table 1.2 Adoption of the ACL CCA (Cth)
FTA 1987 FTA 1989 ACLFTA (NSW) (Qld) 2012 (Vic)
FTA 1987 FTA 2010 ACLA (SA) (WA) 2010 (Tas)
s 131
ss 27, 28
ss 13, 14
ss 15, 16
ss 8, 9
ss 18, 19
ss 5, 6
FT(ACL)A 1992 (ACT) ss 6, 7
CAFTA (NT) ss 26, 27
ACL (Application Acts) not intended to cover the field [1.125]
Section 140H of the CCA expressly provides that the application of the ACL as a law of a State or Territory is not intended to exclude or limit the concurrent operation of any law, whether written or unwritten, of a State or a Territory. Consequently, the ACL of a State or Territory will exist side by side with other legislation regulating transactions with consumers.
Extraterritorial application of ACL (Application Acts) [1.130]
The State and Territory application laws make it clear that the ACL as a law of their respective jurisdictions is not to be construed as merely applying in the territorial area of that State or Territory, and that the extraterritorial power of the State or Territory Legislature is being used. The power of a State legislature to make laws of extraterritorial application was considered by the High Court in Broken Hill South v Commissioner of Taxation (NSW),101 and Union Steamship Company of Australia Pty Ltd v King.102 The High Court held that there must be some connection with the jurisdiction which may consist in “presence within the territory, residence, domicile, carrying on business there, or even remoter connections”.103 Section 12 of the ACLFTA 2012 (Vic) mirrors s 5(1) of the CCA. It provides: (1) The Australian Consumer Law (Victoria) applies to and in relation to– (a) persons carrying on business within this jurisdiction; or (b) bodies corporate incorporated or registered under the law of this jurisdiction; or (c) persons ordinarily resident in this jurisdiction; or (d) persons otherwise connected with this jurisdiction. (2) Subject to subsection (1), the Australian Consumer Law (Victoria) extends to conduct, and other acts, matters and things, occurring or existing outside or partly outside this jurisdiction (whether within or outside Australia). 100 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, Canberra, 2008) vol 1, p 22. 101 Broken Hill South v Commissioner of Taxation (NSW) (1937) 56 CLR 337. 102 Union Steamship Company of Australia Pty Ltd v King (1988) 166 CLR 1. 103 Union Steamship Company of Australia Pty Ltd v King (1988) 166 CLR 1 at 13.
40
The Australian Consumer Law
[1.135]
There are similar provisions in the State and Territory Acts that apply the ACL as a law of their jurisdiction. Table 1.3 Extraterritorial application of ACL (Application Acts) FTA 1987 (NSW)
FTA 1989 (Qld)
ACLFTA 2012 (Vic)
FTA 1987 (SA)
FTA 2010 (WA)
ACLA 2010 (Tas)
s 32
s 20
s 12
s 18
s 11
s 10
FT(ACL)A 1992 (ACT) s 11
CAFTA (NT) s 31
The definition of “carrying on a business” for the purposes of the ACL (Application Acts) is the same as the definition of “carrying on a business” in the CCA, considered at [2.55] and [2.70].
No doubling-up of liabilities [1.135] Because the same conduct may be actionable under the and also under the ACL (Application Acts), and because the same conduct may be the subject of a pecuniary penalty for a consumer protection breach as well as criminal action, the CCA contains a number of provisions designed to prevent the doubling-up of liabilities. As regards the application of the ACL (Cth), s 131C(3) of the CCA provides if an act or omission is an offence under that Act and also under the application law of a State or Territory and the offender has been punished for the offence under the Commonwealth law, the offender is not liable to punishment for the offence under the State or Territory laws. As regards the application of the ACL (Application Acts), s 140J(1) of the CCA provides that if an act or omission is an offence under the CCA and also under the application law of a State or Territory and the offender has been punished for the offence under the latter, the offender is not liable to punishment for the offence under the CCA. In respect of pecuniary penalties, s 140J(2) of the CCA likewise provides that there is to be no double imposition. The ACL (Application Acts) contain similar protections against double The Explanatory Memorandum to the Queensland Fair Trading (Australian Law) Amendment Bill 2010 provides an example of how the Queensland may be bound by the action of another jurisdiction where an offender punished for the same offence in that jurisdiction:
jeopardy. Consumer regulator has been
if a false representation (the act or omission is made by a business in a newspaper that is published in New South Wales, and the newspaper is read in both Queensland and New South Wales, it would be an offence in both States. If the business in New South Wales is prosecuted and punished in that State, then Queensland cannot seek to punish the business and vice versa. If the punishment is sought and obtained in New South Wales, then the Queensland regulator will not be able to pursue another form of punishment even if it believes the punishment in New South Wales was too lenient, not appropriate or more importantly did not adequately provide redress or compensation for Queensland residents affected by the false representation.104
These provisions recognise the importance of uniformity and that consistency is necessary under a single national law, however this may come at the expense of the 104 Explanatory Memorandum, Fair Trading (Australian Consumer Law) Amendment Bill 2010, p 16.
[1.140]
1 Consumer Protection Policy and Overview of the ACL
41
right of the regulators to act unilaterally. Table 1.4 Protection against doubling-up of liabilities CCA
FTA 1987 FTA 1989 ACLFTA (NSW) (Qld) 2012 (Vic)
ss 131C(3), s 41 140J(1) and (2)
s 29
s 22
FTA 1987 FTA 2010 ACLA (SA) (WA) 2010 (Tas) s 27
s 31
s 19
FT(ACL)A 1992 (ACT) s 20
CAFTA (NT) s 40
Future modifications to the ACL [1.140]
The Intergovernmental Agreement for the Australian Consumer Law (IGA) signed by COAG on 2 July 2009, regulates the way in which future amendments can be made to the template ACL to avoid slipping back into disharmony. By signing the IGA, participating jurisdictions have agreed to abide by the processes for co-operative negotiation of amendments to the ACL. Any party may submit to the Commonwealth a valid proposal to amend the ACL.105 After a period of consultation provided for in cl 12 of the IGA, the Commonwealth Minister will call a vote on the proposed amendment. Clause 19 of the IGA provides that the Commonwealth will not amend the ACL unless the proposed amendment is supported by the Commonwealth plus four jurisdictions, three of which must be States. Part XI of the CCA provides for a system to deal with future modifications of the ACL text by Commonwealth legislation. Section 139G of the CCA provides that the Governor-General may make regulations prescribing matters required or permitted by Sch 2 to be prescribed or necessary or convenient to be prescribed for carrying out or giving effect of the Schedule.
Section 139G provides that a regulation may exempt from Sch 2: • conduct engaged in by a specified organisation or body that performs functions in relation to the marketing of primary products;106 • a specified contract pursuant to or for the purposes of a specified agreement arrangement or understanding between the Government of Australia and the Government of a foreign country;107 • a specified contract or prescribed conduct engaged in, in the course of a business carried on by the Commonwealth or by a prescribed authority of the Commonwealth.108 The States and Territories have reserved the right to exclude any future modification to the ACL as at 1 January 2011 for the ACL in their respective jurisdictions. For example, s 9 of the ACLFTA 2012 (Vic) provides: (1) A modification made by a Commonwealth law to the Australian Consumer Law text after the commencement of this section does not apply under s 8, if the modification is 105 Intergovernmental Agreement for the Australian Consumer Law, cl 8. 106 CCA, s 139G(4)(a). 107 CCA, s 139G(4)(b). 108 CCA, s 139G(4)(c).
42
The Australian Consumer Law
[1.145]
declared by Order of the Governor in Council published in the Government Gazette to be excluded from the operation of the section. (2) An Order under subsection (1) has effect only if published before the end of 2 months after the date of the modification. (3) Subsection (1) ceases to apply to the modification if a further Order so provides. (4) For the purposes of this section, the date of the modification is the date on which the Commonwealth Act effecting the modification receives Royal Assent or the regulation effecting the modification is registered under the Legislative Instruments Act 2003 of the Commonwealth.
Table 1.5 Future modifications to the ACL FTA 1987 (NSW)
FTA 1989 (Qld)
ACLFTA 2012(Vic)
FTA 1987 (SA)
FTA 2010 (WA)
ACLA 2010 (Tas)
s 29
s 17
s9
s 15
n/a
s7
FT(ACL)A 1992 (ACT) s8
CAFTA (NT) s 28
PART V: ENFORCEMENT ACL regulators [1.145]
Enforcement and administration of the ACL will be shared between the ACCC, ASIC and State and Territory administrative agencies pursuant to agreed Memoranda of Understanding.109 Commonwealth, State and Territory consumer agencies will jointly administer and enforce the ACL. The relevant ACL regulators are: • Australian Competition and Consumer Commission;110
• Australian Securities and Investments Commission;111 • ACT Office of Regulatory Services;112 • NSW Fair Trading;113 • Northern Territory Consumer Affairs;114 • Queensland Office of Fair Trading;115 • South Australia Office of Consumer & Business Affairs;116 • Tasmania Consumer Affairs and Fair Trading;117 • Consumer Affairs Victoria;118 109 Intergovernmental Agreement for the Australian Consumer Law, cll 20 and 21. 110 Available at http://www.accc.gov.au. 111 Available at http://www.asic.gov.au. 112 Available at http://www.accesscanberra.act.gov.au. 113 Available at http://www.fairtrading.nsw.gov.au. 114 Available at http://www.consumeraffairs.nt.gov.au. 115 Available at http://www.qld.gov.au/law/fair-trading/. 116 Available at http://www.cbs.sa.gov.au. 117 Available at http://www.consumer.tas.gov.au. 118 Available at http://www.consumer.vic.gov.au.
[1.150]
1 Consumer Protection Policy and Overview of the ACL
43
• Western Australia Department of Commerce.119 The term “regulator” is used to refer to the relevant regulator responsible for enforcing the ACL in the particular jurisdiction concerned. The term “regulator” is defined in s 2 of the ACL as follows: (a) for the purposes of the application of this Schedule as a law of the Commonwealth – means the Commission; or (b) for the purposes of the application of this Schedule as a law of a State or a Territory – has the meaning given by the application law of the State or Territory.
Jurisdiction of the Federal Court [1.150]
Section 138 of the CCA confers jurisdiction over any civil matter in relation to the ACL (Cth) on the Federal Court. The jurisdiction is exclusive, except that jurisdiction is also conferred by s 138A on the Federal Circuit Court in relation to civil matters where the loss or damage does not exceed $750,000 or an amount specified in the regulations, on the courts of the States and Territories under s 138B, and the High Court of Australia, under s 75 of the Constitution. Section 138 provides: (1) Jurisdiction is conferred on the Federal Court in relation to any matter arising under this Part or the Australian Consumer Law in respect of which a civil proceeding has been instituted under this Part or the Australian Consumer Law. (2) The jurisdiction conferred by subsection (1) on the Federal Court is exclusive of the jurisdiction of any other court other than: (a) the jurisdiction of the Federal Magistrates Court under section 138A; and (b) the jurisdiction of the several courts of the States and Territories under section 138B; and (c) the jurisdiction of the High Court under section 75 of the Constitution.
The State and Territory courts have concurrent jurisdiction with the Federal Court over civil matters arising under the ACL (Cth). Section 138B of the CCA provides: (1) Jurisdiction is conferred on the several courts of the States and Territories in relation to any matter arising under this Part or the Australian Consumer Law in respect of which a civil proceeding is instituted by a person other than the Commonwealth Minister or the Commission. (2) However, subsection (1) does not apply in relation to a matter arising under: (a) Division 3 of Part 3-1 of the Australian Consumer Law; or (b) Part 3-5 of the Australian Consumer Law. (3) The jurisdiction conferred by subsection (1) on the several courts of the States is conferred within the limits of their several jurisdictions, whether those limits are as to locality, subject matter or otherwise. (4) The jurisdiction conferred by subsection (1) on the several courts of the Territories is conferred to the extent that the Constitution permits. (5) This section is not to be taken to enable an inferior court of a State or a Territory to grant a remedy other than a remedy of a kind that the court is able to grant under the law of that State or Territory. 119 Available at http://www.commerce.wa.gov.au.
44
The Australian Consumer Law
[1.155]
Section 140C of the provides that the Federal Court may exercise jurisdiction (whether original or appellate) conferred on that Court by an application law of a Territory with respect to matters arising under the ACL (Application Acts). In Director of Consumer Affairs v Dimmeys Stores Pty Ltd,120 the applicant sought injunctive relief against the defendants for alleged breaches of both the ACL (Vic) and its equivalent provisions in the ACL (Cth). The respondents raised a preliminary question as to whether the applicant, being a public official representing a State, had the authority to issue a proceeding in Federal Court relying on Commonwealth legislation. Section 232(2) of the ACL provided relevantly that the court could grant an injunction on application by the regulator or “any other person”. Marshall J observed that the IGA was designed to effect a national approach to consumer protection laws. The IGA also provided for shared enforcement functions between federal, State and Territory regulators. His Honour held “[i]t is consistent with such a shared scheme for the Director to be considered to be ‘another person’ for the purposes of the ACL”.121 Accordingly, the court rejected the respondents’ submission.
Jurisdiction of the courts of the States and Territories [1.155]
The CCA and a State or Territory’s Application Act specifies that the ACL is a law of the relevant jurisdiction.122 The CCA vests Federal jurisdiction on the courts of the States and Territories in civil proceedings instituted under the ACL (Cth) other than proceedings by the ACCC or the Commonwealth Minister, except in relation to manufacturers’ liability and pyramid schemes.123 The CCA and the State and Territory Application Acts : • govern the way in which consumers can access national, State and Territory courts and tribunals; and • make provision for enforcement, administrative and judicial review procedures in respect of the actions of regulators under the ACL.124 The State and Territory Application Acts provide that proceedings under their respective ACLs must be referred to a court of competent jurisdiction. For example, under the ACL (Qld), jurisdiction to hear and determine proceedings under that law is conferred on: (a) (b) (c) (d)
the Supreme Court; the District Court; the Magistrates Court; and the Queensland Civil and Administrative Tribunal (QCAT).125
120 Director of Consumer Affairs v Dimmeys Stores Pty Ltd (2013) 213 FCR 559. 121 Director of Consumer Affairs v Dimmeys Stores Pty Ltd (2013) 213 FCR 559 at [14]. 122 In relation to the Australian Consumer Law (Vic) see s 8(1) of the ACLFTA 2012 (Vic). 123 CCA, s 138B. 124 See ACLFTA 2012 (Vic), Chs 7 and 8. 125 FTA 1989 (Qld), ss 50 and 51.
[1.160]
1 Consumer Protection Policy and Overview of the ACL
45
The tribunal or court having jurisdiction for the proceeding, must have regard to: 1 for the tribunal – whether the subject of the proceeding would be a minor civil dispute within the meaning of the QCAT Act; or 2 for a court – any civil jurisdictional limit, including any monetary limit, applying to the court. In relation to the grant of an injunction under s 232 of the ACL, s 51 of the FTA 1989 (Qld) provides that if the injunction is sought in connection with, or in the course of another proceeding under the ACL (Qld), whether for an offence or otherwise, the matter is to be heard before the District Court, and the District Court has jurisdiction, otherwise the Supreme Court has jurisdiction. Other States and Territories make similar provision for the conferral of jurisdiction on their tribunals and courts to hear and determine matters arising under their respective ACLs.126
Transfer of proceedings [1.160]
The Federal Court may transfer civil proceedings, other than proceedings instituted by the ACCC or the Minister, to State and Territory courts.127 Section 138C(2) provides that, in deciding whether to transfer proceedings, the Federal Court must take into account whether the other court has the power to grant the remedies sought before the Federal Court, whether the matter “arises out of or is related to” the proceeding pending in the other court, and whether it is in the interests of justice that the matter be determined by the other court.128 Section 138D of the CCA provides that a State or Territory court (other than the Supreme Court) hearing a matter under Pt XI of the CCA or the ACL other than under Div 3 of Pt 3-1 of the ACL; or Pt 3-5 of the ACL; or Ch 4 of the ACL must transfer the matter to the Federal Court, if the Federal Court directs it to do so.129
126 See ACLFTA 2012 (Vic), Pt 8.5 – Enforcement of Australian Consumer Law (Victoria). 127 CCA, s 138C(1). 128 These provisions reflect CCA, s 86A(1) – (3). 129 These provisions reflect CCA, s 86A(4) – (6).
2
Definitions and Key Concepts [2.05] INTRODUCTION .................................................................................................................. 48 [2.10] PART I: LIABILITY OF CORPORATIONS ....................................................................... 48
[2.10] Introduction ........................................................................................................... 48 [2.15] Foreign corporation .............................................................................................. 49 [2.20] Trading corporation .............................................................................................. 49 [2.25] Financial corporation ............................................................................................ 50 [2.30] Corporation incorporated in a Territory ........................................................... 51 [2.35] Related bodies corporate ..................................................................................... 51 [2.40] PART II: LIABILITY OF NATURAL PERSONS ............................................................... 51
[2.40] Direct liability under the ACL (Cth) ................................................................. 51 [2.45] Direct liability ACL (Application Acts) ............................................................. 53 [2.50] PART III: LIABILITY OF THE CROWN ........................................................................... 54
[2.50] Commonwealth Crown ........................................................................................ 54 [2.55] Commonwealth Crown carrying on a business .............................................. 54 [2.60] Exceptions to Commonwealth Crown carrying on a business .................... 57 [2.65] State and Territory Crowns ................................................................................. 59 [2.70] State or Territory Crown: exceptions to carrying on a business .................. 61 [2.75] PART IV: “IN TRADE OR COMMERCE” REQUIREMENT ......................................... 63
[2.75] Introduction ........................................................................................................... 63 [2.80] Examples ................................................................................................................ 65 [2.85] Extended definition: any professional activity ................................................ 66 [2.90] Non-profit activities .............................................................................................. 67 [2.95] “In” trade or commerce ....................................................................................... 67 [2.100] Trade or commerce of another ......................................................................... 68 [2.105] Summary .............................................................................................................. 69 [2.110] PART V: LIABILITY OF CORPORATE AND NON-CORPORATE PRINCIPALS ... 69
[2.110] Introduction .......................................................................................................... 69 [2.115] On behalf of ......................................................................................................... 70 [2.120] “Actual or apparent authority” ........................................................................ 72 [2.125] “At the direction of” or “with the consent of” ............................................. 74 [2.130] Direct liability of non-corporate principals for conduct of employees or agents .................................................................................................................... 74 [2.135] Direct liability: summary ................................................................................... 75
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[2.05]
INTRODUCTION [2.05] This chapter considers a number of definitions and key concepts that are common to the general and specific protections contained in the ACL. As explained in Chapter 1Australian Consumer Law (ACL) has been designed to operate uniformly across Australia. There are nine ACLs – the ACL (Cth), and eight ACL (Application Acts) – all of which apply Sch 2 of the Competition and Consumer Act 2010 (Cth) as a law of their respective jurisdictions. However, the ACL does not apply to all types of transactions; it is restricted in a number of ways. First, although the ACL is drafted so as to apply to the conduct of a “person” the effect of s 131(1) of the CCA is to apply the ACL “as a law of the Commonwealth to the conduct of corporations…”. The ACL also applies to natural persons in circumstances where the Commonwealth Parliament has been able to rely on a head of power in the Constitution other than the corporations power created by s 51(xx) of the Australian Constitution. Where an applicant seeks relief from an individual, the applicant will have to frame the cause of action as a breach of a State or Territory ACL (primary liability), or rely on the accessorial liability provisions of the ACL. Secondly, the ACL (Cth) applies to the Crown in right of the Commonwealth,1 and the ACL (Application Acts) apply to the Crown in right of the States and Territories, but only in so far as the Crown carries on a business. Thirdly, many of the key provisions in the CCA, the ACL (Cth) and the ACL (Application Acts), apply only to conduct that occurs “in trade or commerce”. Finally, many of the provisions of the ACL are restricted by reference to some concept of a consumer. This chapter will focus on the key concepts which limit the scope of the ACL and is divided into five parts.
• Part I – considers the meaning of “corporation” for the purposes of the ACL. • Part II – examines the liability of natural persons under the ACL and the ACL (Application Acts). • Part III – examines the liability of the Crown under the ACL and the ACL (Application Acts). • Part IV – analyses the “in trade or commerce” requirement under the ACL and the ACL (Application Acts). • Part V – discusses the liability of corporate and non-corporate principals for conduct of directors, employees or agents. PART I: LIABILITY OF CORPORATIONS Introduction [2.10] Section 130 of the CCA provides that the word “corporation” for the purposes of the ACL (Cth), Sch 2 has the same meaning as in s 4(1) of the CCA. 1 CCA, s 2A(1).
[2.20]
2 Definitions and Key Concepts
49
Section 4(1) of the CCA provides: “corporation” means a body corporate that – a) is a foreign corporation; b) is a trading corporation formed within the limits of Australia or is a financial corporation so formed; c) is incorporated in a Territory; or d) is the holding company of a body corporate of a kind referred to in paragraph (a), (b) or (c).
“Foreign”, “trading” and “financial” corporations are also defined in s 4(1) by reference to the meaning to be given to them by s 51(xx) of the Constitution. These definitions, which are not mutually exclusive, have, generally speaking, been interpreted broadly by the courts with the result that few corporations fall outside the ambit of the Act.
Foreign corporation [2.15] A “foreign corporation” is one incorporated outside continental Australia; that is, in another country or in an external territory.
Trading corporation [2.20] A “trading corporation” is one which engages in trading (which in this context means the activity of acquiring, or supplying, goods or services in a commercial or business context) as a substantial and not merely a peripheral activity. The “substantial current activities test” was summarised in Hughes v Western Australian Cricket Association by Toohey J: Views as to the necessary extent of trading activity have varied. It must be a substantial corporate activity (Barwick CJ in Adamson [R v Federal Court of Australia; Ex parte WA National Football League] (1979) 143 CLR 190 at 208]; the trading activities must form a sufficiently significant proportion of the corporation’s overall activities (Mason J in Adamson at 233, with Jacobs J concurring at 237); the trading activities should not be insubstantial (Adamson at 239); the corporation must carry on trading activities on a significant scale (Mason, Murphy and Deane JJ in State Superannuation Board (57 ALJR at 96); Deane J in Commonwealth v Tasmania (1983) 46 ALR 625 at 833)).2
The following corporations have been held to be “trading corporations” on the basis of this “substantial current activities” test: • a football club and a football league;3 • a rodeo organiser;4 • the Royal Prince Alfred Hospital;5 • the Australian Red Cross Society;6 2 Hughes v Western Australian Cricket Association (Inc) (1986) 19 FCR 10 at 20. 3 R v Federal Court of Australia; Ex parte WA National Football League (1979) 143 CLR 190. 4 McCarthy v Australian Rough Riders Association Inc (1988) ATPR ¶40-836. 5 “E″ v Australian Red Cross Society (1991) 27 FCR 310. 6 “E″ v Australian Red Cross Society (1991) 27 FCR 310.
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[2.25]
• a co-operative society;7 • the Hydro-Electric Commission of Tasmania;8 • the organiser of an annual trade exhibition for members of the corporation;9 • the Australian Broadcasting Commission;10 • the Australian College of Dermatologists;11 • the University of Western Australia;12 and • the New South Wales Government Insurance Office.13 While the substantial current activities test focuses on what the corporation actually does, the purpose for which it was formed, as indicated by its constitution, is not irrelevant. As Toohey J held in Hughes case, a corporation’s constitution will be especially important where the corporation has not yet started to trade. Thus, for example, as Fencott v Muller14 shows, a shelf company which has remained dormant since its incorporation can still be a trading corporation for the purposes of the CCA if its constitution authorises it to engage in trading activity.
Financial corporation [2.25] “Financial corporation” is defined in s 4(1) of the CCA to mean: a financial corporation within the meaning of paragraph 51(xx) of the Constitution and includes a body corporate that carries on its sole or principal business the business of banking (other than State banking not extending beyond the limits of the State concerned) or insurance (other than State insurance not extending beyond the limits of the State concerned).
It was held in Re Ku-ring-gai Co-operative Building Society (No 12) Ltd,15 that the essence of a financial corporation is that it deals in finance to an appreciable degree – that is – in transactions whose subject matter is finance, such as lending or borrowing money, as distinct from transactions which merely involve the use of money. The test of whether a corporation is a “financial corporation,” is the same as that used in respect of trading corporations, namely the substantial current activities test. Consequently, it is not essential for a corporation’s financial activities to be its principal activities so long as they form a significant part of its operations. 7 TPC v Legion Cabs (Trading) Co-op Society Ltd (1978) ATPR ¶40-092. 8 Commonwealth of Australia v Tasmania (1983) 46 ALR 625. 9 Australian Beauty Trade Suppliers Ltd v Conference & Exhibition Organisers Pty Ltd (1991) ATPR ¶41-107. 10 Sun Earth Homes Pty Ltd v Australian Broadcasting Commission (1991) ATPR ¶41-067. 11 Shahid v Australian College of Dermatologists (2008) 168 FCR 46. 12 Quickenden v O’Connor, Commissioner of Australian Industrial Relations Commission (2001) 109 FCR 243. The University engaged in trading activities such as selling publications, parking services, student accommodation services and making investments. 13 State Government Insurance Corporation v Government Insurance Office of NSW (1991) ATPR ¶41-110. 14 Fencott v Muller (1983) 152 CLR 570. 15 Re Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 36 FLR 134.
[2.40]
2 Definitions and Key Concepts
51
Corporation incorporated in a Territory [2.30] A “corporation incorporated in a Territory” is one formed in an internal Australian Territory. As the definition of “corporation” in s 4(1) extends to all corporations of this nature, the ACL has a somewhat wider operation in the Australian Capital Territory and Northern Territory than it does in the States where it applies only to those corporations described at [2.15]-[2.25]. Related bodies corporate [2.35] The Second Explanatory Memorandum states: It is recognised that, for the purposes of the ACL, there are many potential applications of the Law that could be: • avoided or frustrated unless the activities of all corporations forming part of a corporate group are treated in the same way and taken together; or • may apply inconsistently or inappropriately if the activities of a corporate group are not recognised and treated accordingly.16
Section 6 of the ACL provides that a body corporate is taken to be related to another body corporate if the bodies corporate would, under s 4A(5) of the CCA, be deemed to be related to each other. Section 4A(5) of the deems a body corporate to be related to another body corporate if the first-mentioned body corporate is: • the holding company of another body corporate; • a subsidiary of another body corporate; or • a subsidiary of the holding company of another body corporate.
PART II: LIABILITY OF NATURAL PERSONS Direct liability under the ACL (Cth) [2.40] Sections 5 and 6 of the CCA extend the operation of, inter alia, Pt 2 of the ACL to natural persons in a miscellaneous set of situations in which the Commonwealth Parliament has the legislative power to bind them. The prohibitions in Sch 2 of the CCA are directed at “a person”. As a result of s 131 of the CCA, the provisions of the ACL apply as a law of the Commonwealth only to “the conduct of corporations”. However, extension provisions are included in s 6 of the CCA which apply the ACL to natural persons in a number of situations in which the Commonwealth Parliament has the legislative power to do so. The most significant of these are s 6(3) and 6(3A) of the CCA. Section 6(3) and (3A) provide: (3) In addition to the effect that this Act, other than Parts IIIA, VIIA and X, has as provided by another subsection of this section, the provisions of Parts 2-1, 2-2, 3-1 (other than Division 3), 3-3, 3-4, 4-1 (other than Division 3), 4-3, 4-4 and 5-3 of the Australian Consumer Law have, by force of this subsection, the effect they would have if: (a) those provisions (other than sections 33 and 155 of the Australian Consumer Law) were, by express provision, confined in their operation to engaging in conduct to 16 Second Explanatory Memorandum, [2.30].
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[2.40]
the extent to which the conduct involves the use of postal, telegraphic or telephonic services or takes place in a radio or television broadcast; and (b) a reference in the provisions of Part XI to a corporation included a reference to a person not being a corporation. (3A) In addition to the effect that this Act, other than Parts IIIA, VIIA and X, has as provided by subsection (2), the provisions of Part 2-3 of the Australian Consumer Law have, by force of this subsection, the effect they would have if: (a) those provisions were, by express provision, confined in their operation to contracts for or relating to: (i) the use of postal, telegraphic or telephonic services; or (ii) radio or television broadcasts; and (b) a reference in the provisions of Part XI to a corporation included a reference to a person not being a corporation.
The relevant provisions of the ACL in Sch 2 of the CCA refer to “persons”. The effect of s 131 of the CCA is that the ACL as a law of the Commonwealth is restricted “to the conduct of corporations”. Section 6(3) then reverses this, in the instances listed, by providing that the references to “a corporation” in Pt XI of the Act (which contains s 131) should be read as including natural persons. The extensive use that is being made of the internet, access to which involves the use of telephonic services, allows the private parties and the regulators to have recourse to the ACL as a law of the Commonwealth to catch the conduct of natural persons. For example, in Seafolly Pty Ltd v Madden,17 it was held that the TPA applied to an individual (Madden) because each of the publications of which the applicant complained (Facebook postings and sending an email) made use of the internet. In ACCC v Jutsen (No 3),18 Nicholas J held that the expression “telegraphic …services” in s 6(3) of the CCA extends to conduct involving the use of the internet. His Honour stated that “the internet is a ‘telegraphic’ apparatus or system used to transmit and receive electronic communications”.19 Similarly, in ACCC v Chopra,20 Middleton J held that the promotion of and sale of electronic goods to consumers by Mr Chopra through the website, www.elcetronicbazaar.com.au, contravened ss 18, 29(1)(m) and 36(4) of the ACL by the operation of s 6(3)(a) of the CCA.21 Section 6(3A) applies a similar approach to s 6(3) but is narrower in its ambit. It extends the reach of the ACL as a law of the Commonwealth to the conduct of natural persons in relation to unfair terms in consumer contracts for, or relating to, the use of postal, telegraphic, or telephonic services, or radio or television broadcasts. Where a natural person engages in conduct in contravention of one of the provisions of the ACL, applicants in all States and Territories are able to take proceedings by invoking their respective ACL (Application Acts). 17 Seafolly Pty Ltd v Madden [2012] FCA 1346; (2012) ATPR ¶42-424. 18 ACCC v Jutsen (No 3) (2011) 206 FCR 264. 19 ACCC v Jutsen (No 3) (2011) 206 FCR 264 at [100] citing s 144(1) of the Evidence Act 1995 (Cth). 20 ACCC v Chopra [2015] FCA 539. 21 ACCC v Chopra [2015] FCA 539 at [6].
[2.45]
2 Definitions and Key Concepts
53
In summary, the forms of conduct on the part of a natural person which may come within the scope of the ACL (Cth) because of the operation of these sections can be summarised as follows: • conduct occurring overseas where the person involved was an Australian citizen or resident; • conduct occurring in overseas, or interstate trade or commerce; • conduct occurring in trade or commerce within a Territory, between a State and a Territory, or between two Territories; • conduct occurring in the course of supplying goods or services to the Commonwealth; • conduct involving the use of postal, telegraphic or telephonic services; and • contracts for or in relation to the use of postal, telegraphic or telephonic services or contracts for or in relation to a radio or television broadcast.
Direct liability ACL (Application Acts) [2.45] As noted in Chapter 1, each State and Territory has applied the ACL as a law of its jurisdiction. In doing so, they have retained the generality of the ACL’s proscriptions with the result that, subject to certain constitutional limitations, they apply to anyone who is a “person”. Whilst these acts do not define “person”, in most jurisdictions interpretation legislation provides that a “person” includes a body politic or corporate as well as an individual.22 Consequently, as used in the ACL as a law of each State or Territory, the word is likely to be given its ordinary meaning and will cover natural and artificial persons and the Crown. Furthermore, “a person” has not been restricted to someone acting as a principal. Consequently, an individual who acts on behalf of a corporation in a transaction occurring in trade or commerce can be held personally liable, independent of the corporation, if the conduct they undertook on its behalf contravenes a provision of one of those Acts. In Houghton v Arms,23 Mr Arms entered into a contract with WSA Online Ltd to advise on website design, construction and administration. An employee of WSA Online Ltd, Mr Student, who was described as “WSA online project manager”, and a fellow employee, Mr Houghton, who was described as the “guru of interactive web design and development” gave incorrect information to Mr Arms. Mr Arms sued WSA under s 82 for a contravention of ss 52 and 53 of the TPA. Houghton and Student were also sued under s 75B as accessories and for contraventions of ss 9 and 12 of the FTA 1999 (Vic). Ryan J found that WSA was liable, but WSA was in liquidation. Ryan J dismissed the claims against Houghton and Student based on the FTA since it only applied to persons who were acting “in trade or commerce in their own right and not on behalf of another”. The Court held that the employees were directly liable for giving incorrect advice or information in the course of their employment, even though they were not acting for themselves in trade or commerce. The High Court 22 See Interpretation Act 1987 (NSW), s 21; Interpretation of Legislation Act 1984 (Vic), s 38; Acts Interpretation Act 1954 (Qld), s 32D; Interpretation Act 1984 (WA), s 5; Interpretation Act (NT), s 17. 23 Houghton v Arms (2006) 225 CLR 553 (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ).
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[2.50]
held that s 52 did not refer to the trade or commerce of any particular person, and that a representation can be made in trade or commerce even though it is not the trade or commerce of the person making the representation.24 Thus, an employee will be directly liable for misleading conduct under a State or Territory ACL if the employer is engaged in trade or commerce and the conduct occurred in the course of the employer’s trade or commerce, or the trade or commerce of the person to whom that representation is made. It is not the trade or commerce of the employee, but the trade or commerce of the employer in which the conduct takes place.25 Houghton v Arms indicates the superiority of proceeding against a natural person directly under a State or Territory ACL, rather than indirectly as an accessory to a contravention by a corporation under the ACL (Cth). It avoids the problems of proof associated with the requirement of actual knowledge established by the High Court in Yorke v Lucas.
PART III: LIABILITY OF THE CROWN Commonwealth Crown [2.50] Section 2A(1) of the CCA provides: “this Act binds the Crown in right of the Commonwealth in so far as the Crown in right of the Commonwealth carries on a business, either directly or by an authority of the Commonwealth”. Section 131(1) of the CCA provides that Sch 2 applies as a law of the Commonwealth to the conduct of corporations and refers to conduct of corporations as extended by ss 5 and 6 of the CCA, but there is no reference to s 2A or the fact the ACL binds the Crown. However, because s 2A refers to the “Act” and an Act includes any Schedules, this includes the ACL despite the fact that in the application provision (s 131) there is no mention of the application of the ACL to the Crown in right of the Commonwealth. Section 2A(2) of the CCA provides that for this purpose the Crown, in right of the Commonwealth and its authorities, are to be treated as if they were corporations. Thus, if the Crown in right of the Commonwealth engages in conduct proscribed by the ACL (Cth) whilst carrying on a business its conduct will be actionable.
Commonwealth Crown carrying on a business [2.55] The definition of the word “business” in s 2 of the ACL includes a not-for-profit business, but does not elaborate any further. It is necessary to ask: does the activity constitute carrying on a business in the ordinary sense? The word “business” is a “wide and general” word.26 It takes its meaning from its context.27 It 24 Houghton v Arms (2006) 225 CLR 553 at [32]-[35]. See also TCN Channel Nine Pty Ltd v Ilvariy Pty Ltd [2008] NSWCA 9 (Spigelman CJ, Beazley and Hodgson JJA). 25 Houghton v Arms (2006) 225 CLR 553 at [35]. 26 Actors and Announcers Equity Association of Australia v Fontana Films Pty Ltd (1982) 150 CLR 169 at 184 (Gibbs CJ). 27 Re Australian Industrial Relations Commission; Ex parte Australian Transport Officers Federation (1990) 171 CLR 216 at 226 (Mason CJ, Gaudron and McHugh JJ).
[2.55]
2 Definitions and Key Concepts
55
was held in J S McMillan Pty Ltd v Commonwealth,28 that the phrase “carries on a business” has a different meaning to that of engaging in “trade or commerce” as used in 18 of the ACL, but the terms are not mutually exclusive. In particular, it “signifies that the Commonwealth is to be bound only where the conduct complained of is engaged in, in the course of carrying on a business”.29 In that case the Australian Government Publishing Service (AGPS) was a unit within the Department of Administrative Services. It was not a separate authority of the Commonwealth. The AGPS was systematically and regularly providing general printing services, dispatch and distribution services, graphic design services and editorial services to other Commonwealth departments. Emmett J expressed the view that in providing these services the Commonwealth was carrying on a business with the meaning of s 2A of the TPA.30 However, the fact that the AGPS carried on a business by providing these services did not mean that the Commonwealth, in conducting a sale of the AGPS, was carrying on that business. The Commonwealth was not in the business of selling capital assets.31 Emmett J drew a distinction between carrying on the day-to-day operations of the AGPS which was carrying on a business, and issuing a Request for Tender for the sale of the assets of the business which was not conduct in the carrying on of a business.32 His Honour adopted the view of Gibbs J in Smith v Capewell33 that: “The expression ‘carries on a business’ in its ordinary meaning, signifies a course of conduct involving the performance of a succession of acts and not simply the effecting of one solitary transaction.” Emmett J elaborated:34 However, mere repetitiveness is not sufficient to constitute carrying on of a business. System and regularity are involved in the carrying on of the business but it does not necessarily follow that one who has transactions of the same kind systematically or regularly is carrying on a business in those transactions. The example of regular deposits to a bank account is sufficient to explain that proposition. Absence of a system and regularity might deny that a business is being carried on but the presence does not necessarily establish that it is.
Thus, the Commonwealth was able to escape liability for its misleading conduct when it invited tenders for aspects of the AGPS’s business. Its conduct in so doing did not amount to carrying on that business. One factor that the courts consider is whether the activities being undertaken are in the nature of government activities, in the sense of public or regulatory, as opposed to private or commercial. An examination of the entity’s governing statute will be a 28 J S McMillan Pty Ltd v Commonwealth (1997) 77 FCR 337. 29 J S McMillan Pty Ltd v Commonwealth (1997) 77 FCR 337 at 356. 30 J S McMillan Pty Ltd v Commonwealth (1997) 77 FCR 337 at 355. 31 J S McMillan Pty Ltd v Commonwealth (1997) 77 FCR 337 at 356-357. 32 J S McMillan Pty Ltd v Commonwealth (1997) 77 FCR 337 at 356. 33 Smith v Capewell (1979) 142 CLR 509 at 517. 34 J S McMillan Pty Ltd v Commonwealth (1997) 77 FCR 337 at 354 citing Barwick CJ in Hungier v Grace (1972) 127 CLR 210 at 217.
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[2.55]
useful reference point.35 In NT Power Generation Pty Ltd v Power and Water Authority,36 s 17(1) of the Power and Water Authority Act (NT) stated that PAWA’s duty was to “act in a commercial manner”. In ACCC v Australian Medical Association (WA),37 the Hospitals and Health Services Act 1927 (WA) did not suggest that the Minister for Health, when providing medical services in public hospitals, was carrying on a business and Carr J concluded that the activities of the state in this regard were properly characterised as fulfilling a governmental or welfare function. They did not have the requisite “commercial flavour” to amount to carrying on a business.38 Another useful reference point is the language used in the entity’s annual reports and other internal records. This self-description was crucial in the NT Power case where PAWA’s documents indicated that its officers perceived it to be carrying on a business for the purposes of the equivalent “carries on a business” requirement in s 2B of the TPA.39 The High Court referred to PAWA’s Report to the Legislative Assembly in which it stated that it was undergoing “commercialisation” and that: “Like all business, [PAWA] needs to generate a return in the very significant amount of capital invested.” The High Court referred to these admissions being made pursuant to statutory duties as being matters of the “utmost solemnity”.40 Another factor that the courts consider is whether the activities are undertaken with repetition, system and regularity. If so, this tends to indicate that the entity is carrying on a business. An isolated transaction will tend to indicate that the entity is not carrying on a business. The High Court in NT Power approved the result in McMillan since “the officers engaged in the sale had nothing to do with the day-to-day operations of enterprise; the Commonwealth did not conduct any business of selling assets”.41 Another matter of some importance that emerges from the court’s decision in McMillan is that if the government is engaged in the procurement of goods or services for its own use in the conduct of governmental activities it is not carrying on a business. In McMillan, Emmett J held that the AGPS was carrying on a business as a provider of services but that the other government departments that were users of these services were not carrying on a business; rather, they were engaged in purely governmental activities. His Honour stated:42 Insofar as the Commonwealth, in the guise of the Department of the Senate, the Department of the House of Representatives and other departments, utilises the services provided or procured by AGPS, it does so in the carrying out of governmental functions. 35 NT Power Generation Pty Ltd v Power and Water Authority (2002) 122 FCR 399 at [129] (Finkelstein J); and ACCC v Australian Medical Association (WA) (2003) 199 ALR 423 at [390] (Carr J). 36 NT Power Generation Pty Ltd v Power and Water Authority (2002) 122 FCR 399. 37 ACCC v Australian Medical Association (WA) (2003) 199 ALR 423. 38 ACCC v Australian Medical Association (WA) (2003) 199 ALR 423 at [393]. 39 NT Power Generation Pty Ltd v Power and Water Authority (2004) 219 CLR 90 at 110-111 [52]-[54] (McHugh A-CJ, Gummow, Callinan and Heydon JJ). 40 NT Power Generation Pty Ltd v Power and Water Authority (2004) 219 CLR 90 at 110-111 [53]-[55]. 41 NT Power Generation Pty Ltd v Power and Water Authority (2004) 219 CLR 90 at 119 [74]. 42 J S McMillan Pty Ltd v Commonwealth (1997) 77 FCR 337 at 355.
[2.60]
2 Definitions and Key Concepts
57
It could not be said that the Commonwealth in those guises is carrying on a business. It is acquiring the services systematically and regularly, but only for the purposes of governing.
This interpretation has been followed in other cases43 but has been the subject of judicial criticism. Finn J in GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd44 observed: Government contracting (in procurement and otherwise) is of major significance in the economic life of this country, as it is in most countries … It is somewhat surprising, that when the State enters the market place to acquire goods or services, it should exempt itself from those norms of conduct considered appropriate to the conduct of trade and commerce that it has imposed upon the private sector as of course – the more so given the “business-like” manner in which the Executive government commonly professes it conducts its affairs both internally and in its dealings with the community.
In State of New South Wales v RT & YE Falls Investments Pty Ltd,45 representations made by the NSW Department of Agriculture in connection with a disease eradication program it was administering were found by the New South Wales Court of Appeal not to fall within the ambit of the Fair Trading Act 1987 (NSW) which provided that the Crown was bound only to the extent that it carried on a business. Although compensation was paid to the owners of cattle destroyed and although the Department received payments from the abattoirs, its activities were best characterised as “purely governmental in the interests of the community, rather than constituting the carrying on of a business”.46
Exceptions to Commonwealth Crown carrying on a business [2.60] If a Commonwealth entity represents the Crown and the challenged conduct occurs in the course of carrying on a business it is necessary to consider whether a s 2C exception applies. Section 2C of the CCA identifies certain activities that do not amount to carrying on a business. It provides: (1) For the purposes of sections 2A, 2B and 2BA, the following do not amount to carrying on a business: 43 See Corrections Corporation of Australia Pty Ltd v Commonwealth (2000) 104 FCR 448 where the Department of Immigration and Multicultural Affairs (“DIMA”) maintained a number of centres for the detention of “non-citizens” entering Australia unlawfully. In 1997, the government decided to privatise the provision of these centres. It requested a number of organisations, including the applicant, to tender for this work. The requests for tender set out certain criteria and other requirements with which tenders had to comply. The applicant submitted a tender but was unsuccessful. It alleged that DIMA had engaged in misleading conduct contrary to s 52 by representing that it would evaluate the tenders it received in accordance with the terms of the request. Finkelstein J held that the process of selecting a person to provide services to the Commonwealth was quite distinct from any business and struck out the applicant’s s 52 claim. In Sirway Asia Pacific Pty Ltd v Commonwealth (2002) ATPR (Digest) ¶46-226, the Department of Defence was held not to be carrying on a business when it purchased chinaware in “industrial quantities”. Sundberg J held that in doing so it was fulfilling its government related responsibilities, not engaging in a commercial exercise. 44 GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1 at [1375]. 45 State of New South Wales v RT & YE Falls Investments Pty Ltd (2003) ATPR (Digest) ¶46-233. 46 State of New South Wales v RT & YE Falls Investments Pty Ltd (2003) ATPR (Digest) ¶46-233 at 53,719 (Hodgson JA).
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[2.60]
(a) imposing or collecting: (i) taxes; or (ii) levies; or (iii) fees for licences; (b) granting, refusing to grant, revoking, suspending or varying licences (whether or not they are subject to conditions); (c) a transaction involving: (i) only persons who are all acting for the Crown in the same right (and none of whom is an authority of the Commonwealth or an authority of a State or Territory); or (ii) only persons who are all acting for the same authority of the Commonwealth; or (iii) only persons who are all acting for the same authority of a State or Territory; or (iv) only the Crown in right of the Commonwealth and one or more noncommercial authorities of the Commonwealth; or (v) only the Crown in right of a State or Territory and one or more non-commercial authorities of that State or Territory; or (vi) only non-commercial authorities of the Commonwealth; or (vii) only non-commercial authorities of the same State or Territory; or (viii) only persons who are all acting for the same local government body (within the meaning of section 2BA) or for the same incorporated company in which such a body has a controlling interest; (d) the acquisition of primary products by a government body under legislation, unless the acquisition occurs because: (i) the body chooses to acquire the products; or (ii) the body has not exercised a discretion that it has under the legislation that would allow it not to acquire the products. (2) Subsection (1) does not limit the things that do not amount to carrying on a business for the purposes of sections 2A, 2B and 2BA.
In the NT Power case,47 the High Court stated that the “licence” referred to in s 2C(1)(b) is of the kind that prevents what would otherwise be an illegality or wrong against the Crown. According to the High Court:48 [The illegality] is found in conduct without a licence, contrary to an enactment–carrying on some profession (like medicine or law), or some trade or business (like selling liquor or drugs, or erecting buildings, or dealing in second-hand goods), or some pastime (like shooting, fishing, owning a pet or, in former times, watching television), or some common activity (like driving).
Thus, the granting of taxi licences to operators who meet certain minimum criteria in return for an appropriate licence fee would be covered by the exemption. So too would the grant of licences to operate private hospitals that meet specified standards, or the grant of a licence to an approved service operator. Section 2C(1)(b) would not exempt the grant or sale of permits to acquire goods or services; it only exempts licences that allow the licensee to supply goods or services. Similarly, a licence in the nature of a right to occupy land or premises owned by the Crown, or 47 NT Power Generation Pty Ltd v Power and Water Authority (2004) 219 CLR 90 at 128 [101]. 48 NT Power Generation Pty Ltd v Power and Water Authority (2004) 219 CLR 90 at 128 [101].
[2.65]
2 Definitions and Key Concepts
59
a licence to use certain material owned by the Crown would not constitute a licence for the purposes of s 2C(3) since it does not allow the licensee to supply “goods or services”. Section 2C(1)(c) provides that carrying on a business is not constituted by merely carrying out an intra-governmental transaction. It is important to note the limited nature of this exemption. An intra-governmental transaction will only be exempt if it involves persons, all of whom are acting for the Crown in the same right, and none of whom is an authority of the Commonwealth or an authority of a State or Territory. Section 2C(1)(d) provides that carrying on a business is not constituted by the compulsory acquisition of primary products by a Crown body. If a State marketing authority does not represent the Crown, the exemption will not apply and it will carry on a business.
State and Territory Crowns [2.65] The ACL (Cth) does not apply to the State and Territory Crowns. However, the State and Territory application legislation of each jurisdiction provides that the ACL of their jurisdiction will bind the Crown in right of each of the States, and of the Northern Territory and the Australian Capital Territory, to the full extent of its constitutional capacity to do so. This expressly rebuts the common law presumption that the Crown is not bound by legislation. For example, the relevant Part of the Australian Consumer Law and Fair Trading Act 2012 (Vic) (ACLFTA 2012 (Vic)) is Pt 2.4, “Application of the Australian Consumer Law to the Crown”. It contains the following definitions that are relevant to the issue of Crown liability: • The term “jurisdiction” is defined in s 6 of the ACLFTA 2012 (Vic) to mean “a State or the Commonwealth”. • The term “this jurisdiction” is defined in s 6 of the ACLFTA 2012 (Vic) to mean “Victoria”. • The term “participating jurisdiction” is defined in s 6 of the ACLFTA 2012 (Vic) to mean “a jurisdiction that is a party to the Intergovernmental Agreement and applies the Australian Consumer Law as a law of the jurisdiction, either with or without modifications”. • The term “State” is defined in s 6 of the ACLFTA 2012 (Vic) to include a Territory. • Section 15 of the ACLFTA 2012 (Vic) qualifies s 4 and provides: “In this Part, participating jurisdiction or other jurisdiction does not include the Commonwealth”. Section 16 of the ACLFTA 2012 (Vic) provides: The application law of this jurisdiction binds (so far as the legislative power of Parliament permits) the Crown in right of this jurisdiction and of each other jurisdiction, so far as the Crown carries on a business, either directly or by an authority of the jurisdiction concerned.
Section 17 of the ACLFTA 2012 (Vic) provides: (1) The application law of each participating jurisdiction other than this jurisdiction binds the Crown in right of this jurisdiction, so far the Crown carries on a business, either directly or by an authority of this jurisdiction.
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[2.65]
(2) If because of this Chapter, a provision of the law of another participating jurisdiction binds the Crown in right of this jurisdiction, the Crown in that right is subject to that provision despite any prerogative right or privilege. However, s 19 of the ACLFTA 2012 (Vic) provides: (1) Nothing in the application law of this jurisdiction makes the Crown in any capacity liable to a pecuniary penalty or to be prosecuted for an offence. (2) Without limiting subsection (1), nothing in the application law of a participating jurisdiction makes the Crown in right of this jurisdiction liable to a pecuniary penalty or to be prosecuted for an offence. (3) The protection in subsection (1) or (2) does not apply to an authority of any jurisdiction. In summary, the complementary coverage of the ACL (Application Acts) means that each State and Territory Crown is bound by its own ACL, and by each the ACLs of the other States and Territories. However, each application law provides that a State or Territory Crown is only bound by the ACL to the extent that it carries on a business, either directly or by an authority of its jurisdiction. Each State and Territory application law excludes the Commonwealth Crown from its coverage. Thus, the Commonwealth Crown is bound by the ACL (Cth). State and Territory Crowns that contravene the ACL are not liable to a pecuniary penalty or prosecution for an offence. Consider a situation where the Crown in right of New South Wales carried on a business of providing first aid training for reward49 and made a false representation in a newspaper published in both New South Wales and Victoria. Section 16 of the ACLFTA 2012 (Vic) provides that the ACL (Vic) binds the Crown in right of the State of New South Wales so far as it carries on a business. Section 36 of the FTA 1987 (NSW) provides that the ACL (NSW) binds the Crown in right of New South Wales. Thus, the conduct of the Crown in right of New South Wales could be challenged under either the ACL (Vic) or the ACL (NSW), but the Crown in right of New South Wales would not be liable for a pecuniary penalty or prosecution for an offence under either the ACL (Vic) or the ACL (NSW). Table 2.1 Application of State and Territory ACLs to the Crown
Crown bound by application laws of its own jurisdiction
FTA 1987 FTA 1989 ACLFTA (NSW) (Qld) 2012 (Vic) s 36 s 24 s 16
FTA 1987 FTA 2010 ACLA (SA) (WA) 2010 (Tas) s 22 s 28 s 14
49 Paramedical Services Pty Ltd v Ambulance Service of NSW [1999] FCA 548.
FTA 1992 CAFTA (ACT) (NT) s 15
s 35
[2.70]
2 Definitions and Key Concepts FTA 1987 FTA 1989 ACLFTA (NSW) (Qld) 2012 (Vic) s 37 s 25 s 18
Crown bound by application law of other jurisdictions Crown s 39 not liable for pecuniary penalty or prosecution Applica- s 35 tion of the ACL to the Crown does not include the Commonwealth
FTA 1987 FTA 2010 ACLA (SA) (WA) 2010 (Tas) s 23 s 29 s 15
s 16
s 36
61
FTA 1992 CAFTA (ACT) (NT)
s 27
s 20
s 25
s 30
s 17
s 18
s 38
s 23
s 16
s 21
s 27
s 13
s 14
s 34
State or Territory Crown: exceptions to carrying on a business [2.70] If a State or Territory authority represents the Crown and the challenged conduct occurs in the course of carrying on a business, it is necessary to consider whether an exception applies. For example, s 18(1) of the ACLFTA 2012 (Vic) provides: For the purposes of sections 16 and 17, the following do not amount to carrying on a business– (a) imposing or collecting– (i) taxes; or (ii) levies; or (iii) fees for authorisations; (b) granting, refusing to grant, revoking, suspending or varying authorisations (whether or not they are subject to conditions); (c) a transaction involving– (i) only persons who are all acting for the Crown in the same right (and none of whom is an authority of a State); or (ii) only persons who are all acting for the same authority of a State; or (iii) only the Crown in right of a State and one or more non-commercial authorities of that State; or (iv) only non-commercial authorities of the same State; (d) the acquisition of primary products by a government body under legislation, unless the acquisition occurs because– (i) the body chooses to acquire the products; or (ii) the body has not exercised a discretion that it has under the legislation that would allow it not to acquire the products.
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[2.70]
(e) Subjection (1) does not limit the things that do not amount to carrying on a business for the purposes of sections 16 and 17.
These exceptions raise the same issues as those discussed at [2.60] in relation to s 2C of the CCA. Section 18(1)(a) provides that carrying on a business is not constituted by Crown bodies which merely impose or collect fees, taxes and levies. This is self-explanatory. Section 18(1)(b) of the ACLFTA 2012 (Vic) provides that carrying on a business is not constituted by Crown bodies which merely grant, refuse, revoke, suspend or vary authorisations in relation to the supply of goods or services. The definition of “authorisation” in s 18(3) requires that it “allows the holder of the authorisation to supply goods or services”. Thus, the granting of authorisations to taxi operators who meet certain minimum criteria in return for an appropriate fee would be covered by the exemption. So too would the grant of authorisations to operate private hospitals that meet specified standards, or the grant of a licence to an approved service operator. Section 18(1)(b) would not exempt the grant or sale of permits to acquire goods or services; it only exempts licences that allow the licensee to supply goods or services. Section 18(1)(c) of the ACLFTA 2012 (Vic) provides that carrying on a business is not constituted by merely carrying out an intra-governmental transaction. It is important to note the limited nature of this exemption. An intra-governmental transaction will only be exempt if it involves persons, all of whom are acting for the Crown in the same right, and none of whom is an authority of the Commonwealth or an authority of another State or Territory. For example, an intra-governmental transaction between a State Department of Health and a State Department of Administrative Services, both of which are part of the same legal entity (the Crown in right of the State) would be exempt. On the other hand, where a Departmental “business unit” supplies goods or services to a commercial authority of that State, the transaction will not be exempt. Section 18(1)(d) of the ACLFTA 2012 (Vic) provides that carrying on a business is not constituted by the compulsory acquisition of primary products by a Crown body. If a State marketing authority does not represent the Crown, the exemption will not apply and it will carry on a business. Other participating jurisdictions contain similar provisions. In determining whether the ACL of a State or Territory applies to a particular authority, the starting point is to determine its status, and whether it is a manifestation of the Crown. If is not the Crown, the State or Territory ACL will apply and it is unnecessary to enquire further. If the authority is the Crown in right of the particular State or Territory, it is then necessary to consider whether it “carries on a business”. If it is not carrying on a business, it is unnecessary to enquire further. If the authority is carrying on a business, it is necessary to enquire whether the particular business being carried on falls within one of the exceptions. The following State activities have been held to constitute the carrying on of a business:
[2.75]
2 Definitions and Key Concepts
63
• providing ambulance services at sporting events and first aid training for reward.50 The following State activities have been held not to constitute the carrying on of a business: • managing a national park;51 • operating a public hospital through an outsourced contractor and providing hospital services to public patients; and,52 • providing police and corrective services.53
PART IV: “IN TRADE OR COMMERCE” REQUIREMENT Introduction [2.75] The general protections against misleading conduct and unconscionable conduct in Ch 2 of the ACL, and some of the specific protections in Ch 3 of the ACL only apply if the conduct at issue occurs “in trade or commerce.” For example, s 29 provides that a person must not, in trade or commerce, in connection with the supply of goods or services make false or misleading representations concerning various matters, and s 30 provides that a person must not, in trade or commerce, in connection with the sale of an interest in land make false or misleading representations concerning various matters. These provisions were not intended to apply to all conduct regardless of its nature. In particular, they are not intended to apply to conduct of a purely private or personal nature. For example, a person who sells their home would not be engaged in trade or commerce, and this would be so even if they had renovated the home with a view to making a profit on the sale, engaged an agent to assist them with the sale, and prepared brochures and other advertisements.54 The sale by the vendor of his or her home is not an act done as part of a trading or commercial business. In Williams v Pisano,55 the joint vendors of a property retained a real estate agent to market the property on their behalf. The vendors had renovated the property with a view to resale at a profit. They lived in the property from before 2005 until 2010 as their home and the renovations were carried out over a two year period. As soon as the renovations were completed they sold the property. The advertising brochure prepared by the agent made false representations about the standard of the renovations that had been made to the property. The case was decided on the basis that the sale did not occur in trade or commerce because it was a private residence, so there was no contravention of ss 18 or 30 of the ACL.56 Emmett JA observed: 50 Paramedical Services Pty Ltd v Ambulance Service of NSW [1999] FCA 548. 51 Easts Van Villages v Minister Administering the National Parks and Wildlife Act (2001) ATPR (Digest) ¶46-211. 52 ACCC v Australian Medical Association (WA) (2003) 199 ALR 423. 53 Hamond v State of New South Wales (2001) FCA 157. 54 Argy v Blunts and Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112 at 129-130. 55 Williams v Pisano (2015) 299 FLR 172. 56 Williams v Pisano (2015) 299 FLR 172.
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[2.75]
the element of acting in trade or commerce will not be attributed to owners selling their home merely by reason of their engagement of an estate agent to find a buyer … The business character of the acts done by an agent cannot be imputed to the acts of the principals.57
The consumer guarantees provided for in ACL, Ch 3, Pt 3-2, Div 1, subdiv A, ss 51 – 59 only apply if the supply occurs “in trade or commerce”. In relation to the supply of goods the guarantees would not apply to a private sale of a motor vehicle, or a “garage sale” of personal effects. These are not activities of a trading or commercial nature. In each case it is necessary to consider the character of the conduct at issue from the perspective of the person engaging in the conduct. The term “trade or commerce” is defined in s 2 of the ACL to mean: (a) trade or commerce within Australia; or (b) trade or commerce between Australia and places outside Australia; and includes any business or professional activity (whether or not carried on for profit). The ACL applies to conduct engaged in outside Australia, provided that at least some aspect of the trading relationship between two or more parties has taken place in Australia. In Concrete Constructions (NSW) Pty Ltd v Nelson, the majority described the terms “trade or commerce” as “terms of common knowledge of the widest import”.58 In Re Ku-ring-gai Co-operative Building Society (No 12) Ltd,59 Deane J said: the terms “trade” and “commerce” are not terms of art. … [They] are clearly of the widest import … [and] 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, while being commercial in character, are marked by a degree of altruism which is not compatible with a dominant objective of profit-making.
In order to satisfy the definition of the term “trade or commerce” in s 2 of the ACL it is also necessary to establish that it constitutes trading or commercial activity within Australia or between Australia and places outside Australia. In Sunland v Prudentia Investments,60 it was argued that misleading conduct which took place in Dubai in relation to the acquisition of a block of land in Dubai, occurred in trade or commerce between Australia and places outside Australia on the basis that one of the parties to the negotiations for the acquisition of the block of land, Sunland
57 Williams v Pisano (2015) 299 FLR 172 at [40] citing Franich v Swannell (1993) 10 WAR 459 at 481-483. 58 Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 602-604 (majority judgment of Mason CJ, Deane, Dawson and Gaudron JJ). 59 Re Ku-ring-gai Co-operative Building Society (No 2) Ltd (1978) 36 FLR 134 at 167, cited with approval by Branson and Stone JJ in Shahid v Australian College of Dermatologists (2008) 168 FCR 46 at [25]. 60 Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 2) (2012) 266 FLR 243.
[2.80]
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65
Group Ltd, was incorporated in Queensland. Croft J, in the Supreme Court of Victoria, held that the conduct at issue was not conduct in trade or commerce between Australia and Dubai.61
Examples [2.80] In Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc,62 an advertisement published by the Tobacco Institute suggested that there was little evidence proving that cigarette smoke caused disease in non-smokers. The Federation of Consumer Organisations sought an injunction restraining the Institute from publishing these advertisements. It succeeded at first instance and the Institute appealed to the Full Court. The Full Court held that the Institute was formed to promote the interests of a particular industry whose activities were “in trade or commerce”. When conveying representations about that industry’s product and down-playing the risks of passive smoking this was likely to promote sales of tobacco-based products. Accordingly, the Institute was acting in trade or commerce.63 On the other hand, in Dataflow Computer Services Pty Ltd v Goodman,64 Goodman, a former employee of Dataflow, sent an email to Harvey Norman, one of its important customers, suggesting that Dataflow was going to alter its distribution arrangements to the detriment of the Harvey Norman chain of stores. This was not correct. Dataflow took these proceedings against Goodman on the ground that his action in sending the email contravened s 52 of the TPA. Dataflow submitted that the e-mail had a “trading or commercial character” as it was intended to influence the recipients not to deal with Dataflow any longer because of the falsely suggested misbehaviour by Dataflow. Hely J did not agree with this characterisation of the conduct at issue and concluded: Trade or commerce does not exist in the abstract. For present purposes the trade or commerce with which one is concerned can probably be described as the business or commercial dealings between Dataflow and Harvey Norman and other retailers of Dataflow products. In my view the sending of the e-mail was not conduct on the part of the respondent which was engaged in as part of those business or commercial dealings, as opposed to being in connection with or in relation to those dealings.65
Goodman’s conduct was more appropriately characterised as that of a bystander commenting on the trade or commerce in which others were engaged.66
61 Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 2) (2012) 266 FLR 243 at 447 [406] and [407]. 62 Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1. 63 Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1 at 16 (Sheppard J), at 25 (Foster J) and 44 (Hill J). 64 Dataflow Computer Services Pty Ltd v Goodman (1999) 168 ALR 169 (Hely J). 65 Dataflow Computer Services Pty Ltd v Goodman (1999) 168 ALR 169 at [22]. 66 Dataflow Computer Services Pty Ltd v Goodman (1999) 168 ALR 169 at [23].
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[2.85]
It is difficult to reconcile Dataflow with the decision of in Firewatch Australia Pty Ltd v Country Fire Authority.67 Goldberg J held that an internal Fire Authority bulletin which strongly recommended that brigades not become involved in the distribution or recommendation of the applicant’s “Firewatch extinguisher” had a trading or commercial character. His Honour stated: Although an internal CFA communication will ordinarily not have a trading or commercial character there was added to the bulletin a recommendation to brigades that as part of their trading or commercial activity they not be involved in the distribution or recommendation of the Firewatch extinguisher. In that context the primary distribution of the bulletin was conduct “in trade or commerce”. More particularly was this so where the bulletin was distributed further to persons outside the CFA organisation and reached consumers and potential consumers.
Although the bulletin was an internal document it had “a trading or commercial character” in the sense that it was intended to influence servicing brigades not to be involved in the distribution or recommendation of the Firewatch extinguisher. Putting the matter another way, the bulletin had more than “an internal character”; it was intended to have a consequence or impact on trading and commercial activities. It was intended that in dealings or potential dealings with consumers’ fire equipment maintenance servicing brigades would be influenced not to become involved in the distribution or recommendation of the product.68 Goldberg J’s focus on the purpose or intention of those responsible for the bulletin suggests a subjective inquiry rather than an objective inquiry as to whether the conduct at issue is an aspect or element of a trading or commercial nature.69
Extended definition: any professional activity [2.85] The phrase “trade or commerce” is expressly defined in s 2 of the ACL to include “any business or professional activity”. The effect of this inclusion is to expose accountants, lawyers, medical practitioners and the members of other professions to liability under the ACL should they mislead their clients in the course of carrying out professional work for them. It also exposes them to liability under the consumer guarantees law if they fail to comply with the standards imposed by those provisions that have an “in trade or commerce” requirement.70 In Shahid v Australian College of Dermatologists,71 Branson and Stone JJ held that the extended definition of “trade or commerce” in s 10 of the FTA 1987 (WA), which included “any business or professional activity,” was not confined to professional activities that have a trading or commercial character. Included within the concept “professional activity” were the activities and transactions done by the College for the purposes of a training program. This included representations in the College’s 67 Firewatch Australia Pty Ltd v Country Fire Authority (1999) ATPR (Digest) ¶46-198. 68 Firewatch Australia Pty Ltd v Country Fire Authority (1999) ATPR (Digest) ¶46-198 at [63]-[64]. 69 See McCabe, “Section 52 and the Regulation of Non-commercial Speech” (2010) 18 Trade Practices Law Journal 21 at 24-5. 70 See Chapter 9. 71 Shahid v Australian College of Dermatologists (2008) 168 FCR 46.
[2.95]
2 Definitions and Key Concepts
67
Handbook which contained information relating to the selection process, the adequacy of the College’s record keeping and an appeals process for unsuccessful applicants. Branson and Stone JJ held that the College published its Handbooks “in trade or commerce”, and that the College had a commercial relationship with practitioners who applied for a position as a trainee registrar. It charged them significant examination fees and gained further revenue from conducting training and seminars that trainee registrars were required to attend.72 In so finding, their Honours rejected the analysis of Santow J in Prestia v Aknar,73 who adopted a narrow interpretation of “any professional activity” confining it to professional activities that have a trading or commercial character.
Non-profit activities [2.90] The definition of “trade or commerce” in s 2 of the ACL expressly includes non-profit activities. This part of the definition differs from that found in the TPA. For example, it would apply to advice given by a lawyer to a client on a pro bono basis, and, it seems it would also apply to the activities of charities such as supplying goods or services free of charge. This may have implications for charities under the consumer guarantees law of the ACL.74 “In” trade or commerce [2.95] Conduct must occur “in” trade or commerce. The High Court, in Concrete Constructions (NSW) Ply Ltd v Nelson,75 held that the conduct at issue must itself be trading or commercial in nature, and that it is not sufficient for it to be merely connected with, or incidental, to trade or commerce. In other words, the trade or commerce requirement is not satisfied merely because the conduct occurred as part of some overall commercial or trading activity. The majority concluded that the conduct at issue, which consisted of an internal communication by one employee (the foreman) to another (Mr Nelson) in the course of their activities constructing a building, was not “in trade or commerce”.76 The question whether representations made by a business or professional firm to its employees about the terms of their employment are “in” trade or commerce remains unresolved. The position was summarised in the following extract from the Full Federal Court in Village Building Company Ltd v Canberra International Airport Pty Ltd:77 72 Shahid v Australian College of Dermatologists (2008) 168 FCR 46 at [26]. 73 Prestia v Aknar (1996) 40 NSWLR 165. Prestia was concerned with the FTA 1987 (NSW) which was the first of the Fair Trading Acts to contain an extension of the definition of “trade or commerce” to include “professional activity”. 74 See Chapters 8 and 9. 75 Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 603-4; Plimer v Roberts (1997) 80 FCR 303 at 326-9 (Lindgren J). 76 Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 604-5. 77 Village Building Company Ltd v Canberra International Airport Pty Ltd (2004) 139 FCR 330 at [46]-[52].
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[2.100]
The difficulty that can arise in applying the principles in Concrete Constructions is illustrated by the different views expressed in this Court as to whether representations made by a corporation to an employee in connection with the employee’s terms of employment constitute conduct in trade or commerce. In Barto v GPR Management, in the context of a strike out application, Wilcox J held negotiations with a prospective or present employee in respect of that person’s employment contact is conduct capable of falling within s 52 of the TPA. In Martin v Tasmania Development and Resources, Heerey J disagreed, holding that a communication to an employee asserting that termination of his employment was required on operational grounds was not a dealing of a trading or commercial nature. In Stoelwinder v Southern Health Care Network, Finkelstein J preferred Barto to Martin. In Hearn v O’Rourke, a case involving a different fact situation, Kiefel J at first instance expressed a preference for the reasoning in Martin. The Full Court allowed an appeal (Finn and Jacobson JJ; Dowsett J dissenting), but did not find it necessary to resolve the conflict. (citations omitted)
Trade or commerce of another [2.100]
Where vendors of private property have retained an agent in connection with the sale of the property, and the conduct of the agent is conduct in trade or commerce, the “trade or commerce” of the agent is not to be attributed to the principal, where the principal was not engaged in trade or commerce.78 Section 84(4) of the CCA provides that conduct engaged in on behalf of a person (the principal) by an agent within the scope of the actual or apparent authority of the agent is deemed to have been engaged in by the principal. However, s 84(4) does not impute to the principal the trade or commerce of the agent.79 However, an employee who engages in misleading conduct in the course of his or her employment engages in that conduct in trade or commerce if the employer is engaged in trade or commerce. The conduct takes place in the trade or commerce of the employer. In Houghton v Arms,80 the High Court held that while in most cases the focus would be on the nature of the business of the person making the representations, statements made by employees, who are not themselves engaged in trade or commerce, may be held to be in “trade or commerce” where they are made for the purposes of the employer’s business. In such circumstances, the employee will be personally liable if their conduct constitutes a contravention of s 18 of the ACL. In Williams v Pisano,81 Emmett JA observed: it does not follow from the propositions just formulated that an employer (or principal) is deemed to engage in conduct in trade or commerce merely because the employee, or agent, engages in his own trade or commerce in the course of that employment or agency. Such a result would in effect work backwards the principle stated in Houghton v Arms.82 78 Argy v Blunts and Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112 at 127-9. See also Williams v Pisano (2015) 299 FLR 172 at [39] (Emmett JA). 79 Franich v Swannell (1993) 10 WAR 459 at 481-3. 80 Houghton v Arms (2006) 225 CLR 553 at 565 [32]-[35] (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ). 81 Williams v Pisano (2015) 299 FLR 172 (Bathurst CJ, McColl and Emmett JJA). 82 Williams v Pisano (2015) 299 FLR 172 at [43].
[2.110]
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69
Summary [2.105] Davies J in Plimer v Roberts, observed: “the precise limits of what is or is not trade or commerce, or what act is in or is not in trade or commerce cannot be definitely stated…”.83 In summary, the following conduct will occur in trade of commerce: • external transactions or communications by businesses to further their commercial interests;84 and • external transactions or communications by professionals in the course of a retainer for which they are remunerated.85 The following conduct will not occur in trade of commerce: • internal communications by one employee to another in the course of their ordinary activities;86 • government announcements and policy statements;87 and • making representations in the course of lectures on a subject of historical, religious and/or scientific interest for which the lecturer is not remunerated.88
PART V: LIABILITY OF CORPORATE AND NON-CORPORATE PRINCIPALS Introduction [2.110]
The liability of corporate principals for the conduct of others who contravene the consumer protection provisions of the ACL (Cth) does not arise as a result of the common law of vicarious liability. The right of a claimant to sue a corporate principal for the infringing conduct of others, including directors, servants or agents, relies on proof of the matters in s 139B of the CCA. A distinction is made in the relevant authorities between direct liability (as it applies to corporations) and the principle of vicarious liability.
83 Plimer v Roberts (1997) 80 FCR 303 at 305. 84 See, eg, Re Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 36 FLR 134; Bevanere Pty Ltd v Lubidineuse (1984) 7 FCR 325; “E” v Australian Red Cross Society (1991) 27 FCR 310; Sykes v Reserve Bank of Australia (1998) 88 FCR 511; and Sigma Constructions (Vic) Pty Ltd v Maryvell Investments Pty Ltd (2005) ATPR ¶42-048. 85 See, eg, Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 71 ALR 615; Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112 at 127 where it was conceded that a firm of solicitors acting for the vendor of a residential property was engaged in trade or commerce. In ACCC v Sampson (2011) ATPR ¶42-374 Tracey J declared that Ms Sampson, a lawyer, carried on business as a partner and principal of the law firm, Goddard Elliott. Her actions on behalf of her clients in sending debt collection letters and notices seeking to recover debts which contained misleading information were held to have occurred in trade or commerce. Cf Prestia v Aknar (1996) 40 NSWLR 65 where remarks made during the course of settlement negotiations by a solicitor were held not to be in trade or commerce because he was not retained or remunerated by the parties to the settlement. 86 Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594. 87 Unilan Holdings Pty Ltd v Kerrin (1992) ATPR ¶41-169 at 40,324-40,344 (Hill J); Robin Pty Ltd v Canberra International Airport Pty Ltd (1999) ATPR ¶41-710 at 43,117-43,122 (Gyles J). 88 Plimer v Roberts (1997) 80 FCR 303 at [325]-[329] (Lindgren J).
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[2.115]
Under the common law of vicarious liability, a principal is not deemed to have engaged in the conduct at issue; rather, the principal is made legally liable for the conduct of the director, servant or agent who engages in the conduct. Under s 139B of the CCA, on the other hand, the principal is deemed to have engaged in the conduct at issue. A corporation will be directly liable for the acts of its directors, managers and other officers who are the governing mind and body of the corporation, as if their acts were the acts of the corporation in accordance with the principle accepted by the House of Lords in Tesco Supermarkets Ltd v Nattrass.89 In those circumstances no question of vicarious liability under s 139B of the CCA will arise. Whether the corporate principal will be liable for a contravention of the relevant substantive prohibition then depends on whether the other elements of that prohibition can be satisfied, in particular, • whether the principal is a corporation of the type defined in s 4(1) of the CCA; and • whether the principal was engaged “in trade or commerce” at the time the conduct occurred. Section 139B(2) of the CCA provides: Any conduct engaged in on behalf of a body corporate: (a) by a director, employee or agent of the body corporate within the scope of the actual or apparent authority of the director, employee or agent; or (b) by any other person: (i) at the direction of a director, employee or agent of the body corporate; or (ii) with the consent or agreement (whether express or implied) of such a director, employee or agent; if the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, employee or agent; is taken, for the purposes of this Part or the Australian Consumer Law, to have been engaged in also by the body corporate. This mirrors s 84(2) of the CCA. Bodies corporate cannot act except through the conduct of their directors, employees and agents. Section 139B(2) sets out the circumstances in which a body corporate will be held liable for the conduct of its directors, employees and agents. It is first necessary to establish that the person engaging in the conduct was acting “on behalf of” the body corporate. It is then necessary to establish that the person engaging in the conduct fell into one of the two categories specified: first, they were a director, employee or agent; or secondly, they were a person acting at the direction of a director, employee or agent, or with the consent or agreement of a director, employee or agent.
On behalf of [2.115]
Section 139B(2) of the CCA provides that any conduct engaged in “on behalf of” a body corporate by a director, employee or agent within the scope of the
89 Tesco Supermarkets Ltd v Nattrass [1972] AC 153.
[2.115]
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person’s actual or apparent authority shall be deemed to have been engaged in by the body corporate. The words “on behalf of” do not require that the conduct must have been authorised by the body corporate. It was held in Walplan v Wallace90 that the phrase “on behalf of” does not have a strict legal meaning, but there is a limit as to how loose the connection can be. Something must be done “for” the company in the sense of “in the course of the body corporate’s affairs or activities”.91 In Wheeler Grace & Pierucci Pty Ltd v Wright92 the Full Court of the Federal Court considered the effect of s 84(2) of the TPA in light of the High Court decision in Hamilton v Whitehead.93 The appellant, Wheeler Grace & Pierucci Pty Ltd (WGP), carried on business as an investment adviser. Collins made misleading statements to the respondents regarding investments in a gold mining venture, Carbon Gold. Collins was the appointee of WGP to the board of Carbon Gold. The Full Court held that WGP was directly liable for Collins’ misleading statements. Lee J held: Furthermore, in s 84(2) of the Act, it has been expressly provided that any conduct engaged in on behalf of a body corporate by a director, servant or agent within the scope of the person’s actual or apparent authority or by any other person at the direction or with consent or agreement, express or implied, of a director, servant or agent, such direction, consent or agreement being within the scope of the actual or apparent authority of the director, servant or agent, is deemed for the purposes of the Act to have been engaged in also by the body corporate. Whether s 84(2) extends the common law is immaterial. What it does do is make clear that such activities by directors or agents of the company will attract direct liability to the company under provisions such as s 52 of the Act and no question of vicarious liability will arise in that circumstance.94
On the other hand, in Lisciandro v Official Trustee in Bankruptcy,95 Kiefel J held that a company was not responsible for the misleading or deceptive conduct of its “Service Agent”. The company, Alminco, appointed Radford as its service agent for North Queensland. This did not entitle Radford to represent the company or receive moneys on its behalf; rather, it was simply a licence permitting Radford to use Alminco’s parts in his business. Radford misleadingly induced the applicant to sign a guarantee in favour of Alminco. It was held that Radford had not been acting as an agent of Alminco in procuring the guarantee; rather, as a potential purchaser on credit, Radford had obtained the guarantee on his own account in order to raise finance. 90 Walplan v Wallace (1985) 8 FCR 27 at 37, Sweeney J agreeing at 28 and Neaves J at 39. In NMFM Property Pty Ltd v Citibank Ltd (2000) 107 FCR 270 at [1243] Lindgren J referred with approval to the views of Lockhart J in Walplan v Wallace. 91 See TPC v Queensland Aggregates (1982) 61 FLR 52 at 66. 92 Wheeler Grace & Pierucci Pty Ltd v Wright (1989) ATPR ¶40-940. 93 Hamilton v Whitehead (1989) ATPR ¶42-932. 94 Wheeler Grace & Pierucci Pty Ltd v Wright (1989) ATPR ¶40-940 at 50,256, citing TPC v Tubemakers of Australia Ltd (1983) 76 FLR 455 (Toohey J) at 474-6. 95 Lisciandro v Official Trustee in Bankruptcy (1995) ATPR ¶41-436 at 40-903-4.
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Lindgren J, in NMFM Property Pty Ltd v Citibank Ltd,96 said: It seems to me that an act is done “on behalf of” a corporation for the purpose of s 84(2) if either one of two conditions is satisfied: that the actor engaged in the conduct intending to do so “as the representative of” or “for” the corporation, or that the actor engaged in the conduct in the course of the corporation’s business, affairs or activities.97
In Ackers v Austcorp International Ltd,98 a group of companies in a property joint venture were held to be liable for the misleading conduct of an agent engaged by one of the joint venturers. Rares J held that the particular development was part of the ordinary business, affairs and activities of Austcorp and that representations made by the officers, subsidiaries, and agents was the conduct engaged in “on behalf of” Austcorp.99 In Bennett v Elysium Noosa Pty Ltd,100 Reeves J, after reviewing the authorities about the operation of s 84(2) of the TPA, summarised them in the following propositions: Among other things, they show that the level of involvement of the actor concerned may not be significant, provided it comprises “some” involvement. In context, I consider this means some real or genuine involvement. They also show that the actor’s subjective intention is one criterion for assessing whether he or she is acting on behalf of the company concerned. Alternatively, they show that an objective assessment of the actor’s conduct may lead to the conclusion that he or she was acting on behalf of that company. Finally, they show that the assessment as to whether the actor was acting on behalf of a company is ultimately dictated by the circumstances of each particular case. Thus it may conceivably involve a combination of the subjective and objective assessments (above) in a particular case.101
“Actual or apparent authority” [2.120]
Having established that the person engaging in the conduct was acting “on behalf of” the corporation, it is then necessary to establish that the person engaging in the conduct fell into one of the two categories specified. The first category specified in s 139B(2)(a) of the CCA is that the person engaging in the conduct was a director, employee or agent of the body corporate acting within the scope of their actual or apparent authority. In ACCC v South East Melbourne Cleaning Pty Ltd (in liq),102 Coverall was the franchisor of a professional cleaning services franchise system operating in Victoria. Mr Jones was the sole director of Coverall and effectively its owner. It was a small company and he was central to its operations. He was directly responsible within Coverall for franchisee recruitment, new business customer contract development and meeting weekly with Coverall’s Sales Manager, Ms Haley, to discuss the number of cleaning proposals delivered to potential customers and the number of accounts and the dollar value of the
96 NMFM Property Pty Ltd v Citibank Ltd (2000) 107 FCR 270. 97 NMFM Property Pty Ltd v Citibank Ltd (2000) 107 FCR 270 at [1244]. 98 Ackers v Austcorp International Ltd [2009] FCA 432. 99 Ackers v Austcorp International Ltd [2009] FCA 432 at [217]. 100 Bennett v Elysium Noosa Pty Ltd (2012) 202 FCR 72. 101 Bennett v Elysium Noosa Pty Ltd (2012) 202 FCR 72 at [207]. 102 ACCC v South East Melbourne Cleaning Pty Ltd (in liq) (formerly known as Coverall Cleaning Concepts South East Melbourne Pty Ltd) (2015) ATPR ¶42-503.
[2.120]
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proposals won by Coverall. Ms Haley represented to a potential franchisee that if he purchased a franchise at a cost of $28,150 Coverall could provide him with work that would generate a minimum of $4,000 in revenue per month. Murphy J held that the making of the representation was within the scope of Ms Haley’s actual or apparent authority as an employee of Coverall and was deemed to be the conduct of Coverall pursuant to ss 84(2) and 139B of the CCA.103 The Corporations Act 2001 (Cth) sets out certain rules under which director or agents will be taken to have acted within the scope of their actual or apparent authority.104 The actual or apparent authority of the agent is to be determined according to common law principles. For example, in the case of a real estate agent, the agent’s apparent authority is limited to describing the property, representing its situation and representing any matter concerning its value.105 If a real estate agent represents that finance is available in order to induce the purchaser to buy the property, the agent will be acting outside the agent’s apparent authority and the vendor will not be liable for the agent’s misleading statement. Where an agent makes a statement which is within the agent’s apparent authority, but which the principal has expressly prohibited the agent from making, the question is more difficult. The wording of s 139B(2)(a) of the CCA would appear to be wide enough to make the principal liable for such a statement unless some limitation on the agent’s authority was known to the other party. Despite suggestions that an agent who makes a statement expressly prohibited by the principal is not acting “on behalf of” the principal,106 the words “on behalf of” in s 139B(2) of the CCA will extend to cases where the director or agent is acting within apparent authority in some way that is prohibited by the corporation including fraud.107 However, where the director or agent acts on their own behalf and not as a representative of the corporation, s 139B(2) will not apply. In Aliotta v Broadmeadows Bus Service Pty Ltd,108 the respondent wished to sell its property and engaged an estate agent to act on its behalf. The agent advised that it would be easier to sell the property as an investment property if it could be leased before sale. The applicant entered into an agreement for the purchase of the property conditional upon the property being leased. A lease was executed, but the use was found to be prohibited without a permit. A permit was refused and the lease was surrendered. The applicant sought return of the deposit alleging misleading conduct and false or misleading representations as to the use to which the land might lawfully be put, in breach of ss 52 and 53A(1)(b) of the TPA. He claimed that the vendor and the selling agent had both represented that the use described in the lease was permissible and the lease secure. 103 ACCC v South East Melbourne Cleaning Pty Ltd (in liq) (formerly known as Coverall Cleaning Concepts South East Melbourne Pty Ltd) (2015) ATPR ¶42-503 at [91]. 104 See Corporations Act 2001 (Cth), ss 126 – 129. 105 See Mullens v Miller (1882) 22 Ch D 194. 106 See TPC v Tubemakers of Australia Ltd (1983) 76 FLR 455 at 475 (Toohey J). 107 Serrata Investments Pty Ltd v Rajane Pty Ltd (1991) 6 WAR 419; Brockway v Pando (2000) 22 WAR 771. 108 Aliotta v Broadmeadows Bus Service Pty Ltd (1988) ATPR ¶40-873.
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Gray J held that, as a matter of common law, a vendor’s agent has authority to bind the vendor by any representation made as to the nature or quality of the property, even if it is false, unless some limitation on the agent’s authority is known to the intending purchaser. In addition, a company carrying on business as an estate agent is also liable for the acts of its servant within the scope of his actual or ostensible authority. His Honour held that the first respondent, the vendor of the property, was liable for the conduct of the vendor’s agent, which in turn was liable for the conduct of its employee. In Aliotta v Broadmeadows Bus Service the transaction involved the sale of commercial property so that both the respondent vendor and the agent were engaged in trade or commerce. It is clear from Argy v Blunts109 that where the vendor principal is not engaged in trade or commerce and is selling residential property, the vendor will not be liable for any misleading statements of the agent.
“At the direction of” or “with the consent of” [2.125]
Where the person engaging in the misleading conduct is not a director, employee or agent of the respondent corporation, it will be necessary to establish that they fall within the second category specified in s 139B(2)(b) of the CCA; namely, that the person was acting at the direction of, or with the consent of a director, employee or agent of the respondent corporation.
In Bennett v Elysium Noosa Pty Ltd,110 the real estate agents who engaged in the misleading conduct were not parties to the proceedings. Reeves J found that since the development was central to the business affairs of the developer and the marketing of the lots was an activity that was essential to their business, on an objective assessment, the real estate agents were acting “on behalf of” the developer when they engaged in the misleading conduct. The real estate agents were not employed by the developer. They were employed by an independent agency which was appointed by the developer to be the exclusive marketing consultant for the development. Accordingly, they could not fall within the first category in s 84(2) (now CCA, s 139B(2)(a)). Reeves J held that they fell within the second category (now CCA, s 139B(2)(b)) since the real estate agents had been briefed with sales material by a director who was the public relations and marketing manager of the developer. His Honour also found that the real estate agents had acted “at the direction of” a director of the developer.
Direct liability of non-corporate principals for conduct of employees or agents [2.130]
Section 139C(2) of the CCA provides:
Any conduct engaged in on behalf of a person (the principal) other than a body corporate: (a) by an employee or agent of the principal within the scope of the actual or apparent authority of the employee or agent; or 109 Argy v Blunts (1990) 26 FLR 112. 110 Bennett v Elysium Noosa Pty Ltd (2012) 202 FCR 72.
[2.135]
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(b) by any other person: (i) at the direction of an employee or agent of the principal; or (ii) with the consent or agreement (whether express or implied) of such an employee or agent; if the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the employee or agent; is taken, for the purposes of this Part or the Australian Consumer Law, to have been engaged in also by the principal.
This re-enacts s 84(4) of the TPA. Subsection 139C(2) of the CCA has the same effect as s 139B(2) where conduct is engaged in on behalf of non-corporate principals. Section 139C(2) deems the conduct of an employee or agent to be the conduct of a natural person. If regard is had to the reasoning in Wright’s case, it cannot be concluded that the effect of s 139C(2) is to impose liability upon the principal. Rather, it is necessary to consider whether the other elements of the relevant substantive prohibition are satisfied and, in particular, whether the natural person was engaged in trade or commerce at the time the conduct occurred. This will not be the case, for example, where the sale related to the vendor’s private residence. There is very little authority on the liability of a natural person for the misleading conduct of a corporate agent. In MacCormick v Nowland111 the facts presented an opportunity for the question to be considered, but as liability was found in negligent misrepresentation the court did not consider whether the vendor had contravened s 52 of the TPA.
Direct liability: summary [2.135]
Sections 139B(2) and 139C(2) of the CCA operate to impose direct liability rather than vicarious liability on a principal. The sections deem the conduct of the agent to be the conduct of the principal. The sections do not deem the business of the agent to be the business of the principal. Thus, where for example, a vendor principal is not engaged in trade or commerce and is selling a private residence, the vendor will not be liable for a breach of a provision such as s 18 of the ACL for any misleading statements by the agent.112
The ACL (Application Acts) have equivalent provisions to ss 139B(2) and 139C(2) of the CCA.113
111 MacCormick v Nowland (1988) ATPR ¶40-852. 112 Williams v Pisano (2015) 299 FLR 172 at [39]. 113 See, eg, ACLFTA 2012 (Vic), s 196; FTA 1989 (Qld), s 95.
3
Misleading or Deceptive Conduct [3.05] INTRODUCTION .................................................................................................................. 78 [3.15] PART I: IDENTIFYING THE CONDUCT AT ISSUE ...................................................... 82
[3.15] Introduction ........................................................................................................... 82 [3.20] Doing any act ........................................................................................................ 83 [3.25] Refusing to do any act ......................................................................................... 84 [3.30] Silence in isolation ................................................................................................ 86 [3.35] Silence and other conduct ................................................................................... 86 [3.40] Relaying incorrect information supplied by another ..................................... 88 [3.50] Adopting or endorsing information supplied by another ............................ 92 [3.55] Contemporaneous disclaimers ........................................................................... 93 [3.60] PART II: ASSESSING WHETHER THE CONDUCT WAS MISLEADING, OR LIKELY TO MISLEAD ......................................................................................................................... 94
[3.60] Context all important ........................................................................................... 94 [3.65] Misleading conduct: objective test ..................................................................... 95 [3.70] Role of intention .................................................................................................... 96 [3.75] Conduct directed at identified persons ............................................................ 97 [3.80] Commercial negotiations involving identified persons ................................. 99 [3.85] Conduct directed at the public ........................................................................... 99 [3.90] Knowledge base of a reasonable member of the class ................................ 100 [3.95] Confusion or uncertainty .................................................................................. 102 [3.100] Silence as misleading conduct: general principles ..................................... 104 [3.105] Silence as misleading conduct: commercial negotiations .......................... 107 [3.110] Silence: making known specific transactional requirements ..................... 109 [3.115] Silence: unusual or unexpected matters ....................................................... 110 [3.120] Silence: subsequent change in circumstances .............................................. 112 [3.125] Silence: case examples ...................................................................................... 113 [3.130] Literal truth ........................................................................................................ 115 [3.135] Representations with respect to future matters ........................................... 115 [3.140] Case examples: representations about future matters ................................ 118 [3.145] Contractual promises ........................................................................................ 119 [3.150] Expressions of opinion, law and legal rights .............................................. 120
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[3.155] Information asymmetry ................................................................................... 123 [3.160] Exclusion clauses .............................................................................................. 124 [3.165] PART III: DID THE RESPONDENT’S CONDUCT CAUSE THE ALLEGED ERROR OR MISCONCEPTION? ................................................................................................... 125 [3.170] PART IV: ADVERTISING: GENERAL PRINCIPLES ................................................... 126
[3.170] [3.175] [3.180] [3.185] [3.190] [3.195] [3.200] [3.205]
Introduction ....................................................................................................... Knowledge base of the target audience ........................................................ Puffery or exaggeration in advertising ......................................................... Medium used to convey the advertisement ................................................ Qualifying statements and small print disclaimers .................................... Advertising on social media sites .................................................................. Assessing the advertisement ........................................................................... Comparative advertising .................................................................................
126 128 130 130 133 135 136 137
[3.210] PART V: MISLEADING CONDUCT AND PASSING-OFF ........................................ 139
[3.210] Introduction ....................................................................................................... 139 [3.215] Choice of name .................................................................................................. 139 [3.220] Design features or shape ................................................................................. 141 [3.225] Choice of get up ................................................................................................ 142 [3.230] PART VI: EXEMPTION FOR INFORMATION PROVIDERS .................................... 143
[3.235] Scope of the exemption for information providers .................................... 144 [3.240] Publication of an advertisement .................................................................... 145 [3.245] Exceptions to the exemption ........................................................................... 145 [3.250] PART VII: MISLEADING OR DECEPTIVE CONDUCT UNDER THE ASIC ACT . 147
[3.250] [3.255] [3.260] [3.285] [3.290]
Introduction ....................................................................................................... Background to the reform ............................................................................... Misleading or deceptive conduct under the ASIC Act .............................. Misleading or deceptive conduct ................................................................... Overlap between the ACL and ASIC Act .....................................................
147 148 149 153 156
INTRODUCTION [3.05] The legislative approach to the regulation of consumer protection adopted in Australia is to provide for three general protections and to supplement these with more prescriptive protections in relation to specific conduct. The first general protection is contained in s 18(1) of the ACL which provides that: A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead of deceive.
This prohibition does not substantively change compared to s 52(1) of the Trade Practices Act 1974 (Cth) (TPA), and the State and Territory equivalents in their Fair Trading Acts. The only difference is that s 18 is directed at the conduct of persons generally rather than corporations. If the conduct concerns that of a corporation, reliance will generally be placed on the ACL (Cth). If the conduct concerns that of
[3.05]
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natural persons, reliance will generally be placed on the ACL (Application Acts). Before considering the elements of a contravention of s 18 of the ACL, it is necessary to have some understanding of its policy objects and the policy objects of its predecessor, s 52 of the TPA. In Brown v The Jam Factory Pty Ltd,1 s 52(1) of the TPA was described by Fox J as: 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.2
In relation to s 52 of the TPA, Lockhart and Gummow JJ in Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd3 observed: the evident purpose and policy underlying Pt V, which includes s 52, recommends a broad construction of its constituent provisions, the legislation being of a remedial character so that it should be construed so as to give the fullest relief which the fair meaning of its language will allow.4
Their Honours also observed that s 52 imposes a “norm of conduct”,5 and the role of the courts was to apply it to a wide range of circumstances involving businesses as well as consumers. The policy object of s 52 of the TPA was to operate as a catch-all provision that could apply to objectionable conduct that might otherwise escape liability, on technical grounds, under the more specific provisions of the Act. According to Senator Murphy, who as Attorney-General was responsible for introducing the TPA, its role was to ensure that the law was not “continually one step behind businessmen who resort to smart practices”.6 By 1993, former Chief Justice of the High Court, Sir Anthony Mason commented on how the statutory remedies had eclipsed the traditional common law remedies: Section 52 of the Trade Practices Act 1974 (Cth), which provides a statutory cause of action sounding in damages in respect of misleading or deceptive conduct, has reduced the importance of actions for breach of warranty, fraudulent misrepresentation and negligence in those cases to which the statute applies.7
Similarly, French CJ and Kiefel J commented in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd:8 The 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 1 Brown v The Jam Factory Pty Ltd (1981) 53 FLR 340. 2 Brown v The Jam Factory Pty Ltd (1981) 53 FLR 340 at 348. 3 Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470. 4 Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 at 503. 5 Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 at 505. 6 See Parliamentary Debates, Hansard, 1974, Vol S 60, p 547. 7 Sir Anthony Mason, “Changing the Law in a Changing Society” (1993) 67 Australian Law Journal 568. 8 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31 at [5]. See also Mason, “Changing the Law in a Changing Society” (1993) 67 Australian Law Journal 568 at 568.
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staple of civil litigation in Australian courts at all levels. Its frequent invocation, in cases to which it is applicable, reflects its simplicity relative to the torts of negligence, deceit and passing off.
However, there were limits imposed on the general protection against misleading conduct in s 52 of the TPA. The policy object of the law was not to protect the unusually stupid or obtuse, or those who did not take reasonable steps to protect their own interests. In Campomar Sociedad Limitada v Nike International Ltd,9 the High Court stated: It is in these cases of representations to the public … that there enter the “ordinary” or “reasonable” members of the class of prospective purchasers. Although a class of consumers may be expected to include a wide range of persons, in isolating the “ordinary” or “reasonable” members of that class, there is an objective attribution of certain characteristics. … Where the persons in question are not identified individuals to whom a particular misrepresentation has been made or from whom a relevant fact, circumstance or proposal was withheld, but are members of a class to which the conduct in question was directed in a general sense, it is necessary to isolate by some criterion a representative member of that class. The inquiry thus is to be made with respect to this hypothetical individual why the misconception complained has arisen or is likely to arise if no injunctive relief be granted.10
In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd,11 it was held that a reasonable member of the target audience (members of the public who were in the market for an expensive make of furniture) would not be misled into buying a similarly designed “look-alike” product, because they would check the label to confirm that they were purchasing their desired brand. In Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd,12 the High Court held that intention was not a requirement for a person to have engaged in misleading conduct. The question whether conduct was misleading within the meaning of s 52(1) of the TPA was to be determined by the court itself, and the test was objective. Evidence that members of the target audience may in fact have been misled was admissible though not conclusive.13 Section 52(1) was interpreted expansively and this allowed it to be invoked in a wide variety of situations not traditionally associated with consumer protection.14 As a result, it had an impact on Australian law that was not anticipated when it 9 Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45. 10 Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 at 85 per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ. See also Google Inc v ACCC (2013) 249 CLR 435 at 443 (French CJ, Crennan and Kiefel JJ). 11 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191. 12 Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 228 (Stephen J). 13 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 198-9 (Gibbs CJ); Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202. 14 Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 223-6 (Stephen J); Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 197-8 (Gibbs CJ) and 202-5 (Mason J); Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 601-2 (Mason CJ, Deane, Dawson and Gaudron JJ); 606-607 (Brennan J).
[3.10]
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was introduced as part of the TPA in 1974. Its location in the consumer protection parts of the TPA reflected an expectation that its role would be to protect consumers by improving the conduct of businesses in trade or commerce – their advertising, selling practices and promotional activities generally – and by prohibiting businesses from engaging in sharp practices when dealing with individual consumers.
[3.10] However, whilst s 52(1) was used to promote the interests of consumers in these ways, by far its most frequent use was in connection with disputes of a commercial nature between businesses. In effect, competitors held each other to account in complying with the raised standards of business conduct imposed by s 52(1). As a result it became one of Australia’s most litigated statutory provisions and, in conjunction with its Fair Trading Act equivalents, largely usurped important areas of common law including contract, tort and restitution.15 The same policy objects that informed the construction of s 52 of the TPA are likely to inform the construction of s 18 of the ACL. The principles for determining whether misleading conduct has occurred were considered by McHugh J in Butcher v Lachlan Elder Realty Pty Ltd: 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 52 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 corporation’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 52 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 corporation 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.16
The analysis of whether conduct is misleading or likely to mislead in this chapter will focus on the following three matters: • first, identifying or characterising the conduct at issue;17 • secondly, considering the approach taken by the courts in assessing whether the conduct at issue is misleading or likely to mislead; and 15 See Clarke, “Misleading or Deceptive Conduct Cases in the Supreme Court of Victoria” (2015) 89 Australian Law Journal 397. 16 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at 625 [109] (citations omitted), approved in Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at 341-2 [102] (Gummow, Hayne, Heydon and Kiefel JJ). See also Google Inc v ACCC (2013) 249 CLR 435 at 443-4 [6]-[9] (French CJ, Crennan and Kiefel JJ) and ACCC v Dukemaster Pty Ltd (2009) ATPR ¶42-290 at [10] (Gordon J). 17 Campomar Sociedad, Limitada v Nike International (2000) 202 CLR 45 at [105]; National Exchange Pty Ltd v ASIC (2004) ATPR ¶42-000 at [18] (Dowsett J, with whom Jacobson and Bennett JJ agreed); Astrazeneca Pty Ltd v GlaxoSmithKline Australia Pty Ltd (2006) ATPR ¶42-106 at [37] (Wilcox, Bennett and Graham JJ); ACCC v Telstra Corporation Ltd (2007) ATPR ¶42-203 at [14]-[20] (Gordon J); IDP Education Ltd v Lejburg Pty Ltd [2015] VSC 650 (24 November 2015) at 54] (Judd J).
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• thirdly, the need to consider whether the respondent’s conduct caused the applicant’s error or misconception.18 The chapter then considers how the general protection in relation to misleading conduct has been applied in the context of advertising conduct, and in relation to passing-off. These two areas have generated a significant number of cases because of their importance in market economies which depend on consumers being provided with actuate information, and businesses competing fairly. Next, the statutory exemption for information providers in s 19(1) of the ACL is discussed. Finally, the prohibition of misleading conduct in relation to financial products and financial services in s 12DA(1) of the ASIC Act is considered.
PART I: IDENTIFYING THE CONDUCT AT ISSUE Introduction [3.15] The importance of identifying or characterising the relevant conduct alleged to be misleading has been stressed in a number of cases. For example, in Google Inc v ACCC, Hayne J stated: The generality with which s 52 was expressed should not obscure one fundamental point. The section prohibited engaging in conduct that is misleading or deceptive or is likely to mislead or deceive. It is, therefore, always necessary to begin consideration of the application of the section by identifying the conduct that is said to meet the statutory description “misleading or deceptive or … likely to mislead or deceive”. The first question for consideration is always: “What did the alleged contravener do (or not do)?” It is only after identifying the conduct that is impugned that one can go on to consider separately whether that conduct is misleading or deceptive or likely to be so.19
The concept of “engaging in conduct” is defined expansively in s 2(2) of the ACL. Section 2(2) of the ACL provides: (2) In this Schedule: (a) a reference to engaging in conduct is 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; or (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; and (b) a reference to conduct, when that expression is used as a noun otherwise than as mentioned in paragraph (a), is a reference to the doing of or the refusing to do any act, including: (i) the making of, or the giving effect to a provision of, a contract or arrangement; or (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; and (c) a reference to refusing to do an act includes a reference to: (i) refraining (otherwise than inadvertently) from doing that act; or 18 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at [24] (French CJ). 19 Google Inc v ACCC (2013) 249 CLR 435 at 464-5 [89].
[3.20]
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(ii) making it known that that act will not be done; and (d) a reference to a person offering to do an act, or to do an act on a particular condition, includes a reference to the person making it known that the person will accept applications, offers or proposals for the person to do that act or to do that act on that condition, as the case may be.
This mirrors s 4(2) of the TPA. The concept of “engaging in conduct” as defined in s 2(2) of the ACL is not confined to a false or misleading representation. Section 18 is contained in Ch 2 of the ACL which is headed “General Protections”. Chapter 3 of the ACL is headed “Specific Protections” and prohibits a number of unfair practices that are confined to “false or misleading representations”.20 Other prohibitions in Ch 3 of the ACL are directed at “misleading conduct”.21 The same distinction between a “representation” and “conduct” is made in s 4 of the ACL, the evidentiary provision concerning representations with respect to future matters.22
Doing any act [3.20] The concept of “engaging in conduct” in s 2(2) of the ACL divides conduct into two broad categories: “doing any act” and “refusing to do any act”. The statutory language used does not require the making of some representation. As Hayne J observed in Google Inc v ACCC, the focus must be on the statutory text which focuses on “conduct” rather than “representations”: It will often be possible to identify the relevant conduct as the making of one or more representations, but it is necessary to bear in mind that s 52 was not confined to the prohibition of misrepresentations. It follows that a claim of contravention of s 52 need not be pleaded or argued by reference to the making of some representation. “It suffices that [the conduct] leads or is likely to lead into error”. Melding the two issues of conduct and characterisation is apt to distract and confuse. Especially is that so if the melding is achieved by using the language of misrepresentation to give a single composite description of both the conduct and its character. Describing the alleged misleading or deceptive conduct as “making a misrepresentation” is distracting and confusing….23
The proposition that the expression “conduct” extends beyond representations was also described as “sound” by a majority of the High Court in Butcher v Lachlan Elder Realty Pty Ltd.24 Where the relevant conduct consists of doing an act, the “act” will generally involve the making of some express or implied representation and there is a vast body of case law in which pre and post-contractual representations have been held to be misleading in contravention of s 52 of the TPA, and its State and Territory equivalents. Contractual representations in a commercial context, such as 20 ACL, ss 29, 30, and 37. 21 ACL, ss 31, 33 and 34. 22 See [3.135]. 23 Google Inc v ACCC (2013) 249 CLR 435 at 465-6 [92]-[96] (citations omitted). 24 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at [32] (Gleeson CJ, Hayne and Heydon JJ), [102]-[110] (McHugh J) and [179] (Kirby J).
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[3.25]
advertising,25 franchising,26 leasing transactions,27 sales of businesses,28 and passing-off,29 have generated as many, if not more, cases than representations involving a consumer as the victim of misleading conduct. For the doing of an act to constitute a contravention of s 18(1) of the ACL it is only necessary to prove that the representation leads into error or is likely to lead into error.30 It does not require proof of fault on the part of the respondent. The determination of whether the representation was made is a question of fact. Where the evidence that the representation was made is contested, findings of fact will be required to be made on each point. The ultimate issue is whether the representation leads or is likely to lead into error.31
Refusing to do any act [3.25] The concept of “conduct” is defined expansively in s 2(2) of the ACL and includes doing or refusing to do any act. Section 2(2)(c), in turn, provides: A reference to refusing to do an act includes a reference to: (i) refraining (otherwise that inadvertently) from doing that act; or (ii) making it known that the act will not be done.
The words “otherwise than inadvertently” have been held to mean that an unintentional non-disclosure is not regarded as “conduct” for the purposes of s 2(2)(c).32 There is a substantial body of case law and commentary on the circumstances in which silence and non-disclosure gave rise to a contravention of 25 See eg, Gillette Aust Pty Ltd v Energizer Australia Pty Ltd (2002) 56 IPR 13; Hoover (Aust) Pty Ltd v Email Ltd (1991) ATPR ¶41-149; Country Road Clothing Pty Ltd v Najee Nominees Pty Ltd (1991) 20 IPR 419; Makita (Aust) Pty Ltd v Black & Decker (A’asia) Pty Ltd (1990) 18 IPR 270; Stuart Alexander & Co (Interstate) Pty Ltd v Blenders Pty Ltd (1981) 53 FLR 307; Telstra Corp Ltd v Optus Communications Pty Ltd (1996) 36 IPR 515; Bristol-Meyers Squibb Australia Pty Ltd v Astra Pharmaceuticals Pty Ltd (1999) 45 IPR 144; and R & C Products Pty Ltd v SC Johnson & Sons Pty Ltd (1993) FCR 188. 26 See eg, Jacques v Cut Price Deli Pty Ltd (1993) ATPR (Digest) ¶46-102; Thomson v Ice Creameries of Australia Pty Ltd (998) ATPR ¶41-611; and Poulet Frais Pty Ltd v The Silver Fox Co Pty Ltd (2005) 220 ALR 211. 27 See, eg, Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563; Murphy v Overton Investments Pty Ltd (2004) 21 CLR 388; Leda Holdings Pty Ltd v Oraka Pty Ltd (1998) ATPR ¶41-601; Lezam Pty Ltd v Seabridge Australia Pty Ltd (1992) 35 FCR 535; John G Glass Real Estate Pty Ltd v Karawi Constructions Pty Ltd (1993) ATPR ¶41-249. 28 See eg, Sellars v Adelaide Petroleum NL (1994) 179 CLR 332; Finucane v NSW Egg Corp (1988) 80 ALR 486; and Collins Marrickville Pty Ltd v Henjo Investments Pty Ltd (1987) 72 ALR 601. 29 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191; Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354; and Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397. 30 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 198. 31 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 198 (Gibbs CJ); and Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at [25] (French CJ). 32 Costa Vraca Pty Ltd v Berrigan Weed & Pest Control Pty Ltd (1998) 155 ALR 714 at 722 (Finkelstein J); Johnson Tiles Pty Ltd v Esso Australia Ltd (1999) ATPR ¶41-696 at 42,888-9 (Merkel J).
[3.25]
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s 52 of the TPA and this jurisprudence will be equally applicable to s 18.33 Where silence is alleged to constitute misleading or deceptive conduct, it is first necessary to consider whether the respondent’s silence amounts to “conduct” as defined in s 2(2) of the ACL. This is a broad definition which includes, inter alia, “refraining” from doing an act.34 However, whilst this definition is sufficiently broad to embrace silence, it goes on to exclude from its ambit refraining from doing an act “inadvertently”. In Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd,35 Bowen CJ interpreted this to mean that the respondent’s failure to disclose information must be deliberate, so that should it be attributable to carelessness, or, perhaps, ignorance of the significance of the information involved, s 52 would not be contravened. Where the applicant complains not about some positive conduct on the respondent’s part, but about its failure to disclose information, the respondent can be found to have “engaged in conduct” only if this failure was deliberate. In the words of Finkelstein J in Costa Vraca Pty Ltd v Berrigan Weed & Pest Control Pty Ltd: It is clear that a failure to provide information can be conduct which is misleading or deceptive. For the purposes of s 52(1) “engaging in conduct” is defined in s 4(2)(a) as a reference to doing or refusing to do any act and by s 4(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 s 52(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.36
According to his Honour, this followed “from the use of the words ‘refuse’ and ‘refrain’ in s 4(2) of the TPA and was reinforced by the fact that in s 4(2)(c) conduct is said to include refraining from doing an act provided it is ‘otherwise than inadvertently’.” In Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd,37 McLure P drew attention to the requirement that the defendant must be aware of the undisclosed fact and that the silence must be intentional or deliberate: To refrain otherwise than inadvertently requires a deliberate decision to withhold information: Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd [2002] NSWCA 211 at [58]; Rhone-Poulenc at 489-490; Costa Vraca at 723. 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.38 33 See Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477 and Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83; Kimberley NZI Finance Ltd v Torero Pty Ltd (1989) ATPR (Digest) ¶46-054 (French J); Warner v Elders Rural Finance Ltd (1993) 41 FCR 399; and General Newspapers Pty Ltd v Telstra Corp (1993) 45 FCR 164. For commentary on these cases see Gillies, “Non-disclosure Trade Practices Act, s 52” (2004) 78 Australian Law Journal 653. 34 ACL, s 2(2)(c). 35 Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477 at 489. 36 Costa Vraca Pty Ltd v Berrigan Weed & Pest Control Pty Ltd (1999) ATPR ¶41-694 at 42,879. See also Noor Al Houda Islamic College Pty Ltd v Bankstown Airport Ltd (2005) 215 ALR 625 at 657 (Hoeben J). 37 Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd (2011) 248 FLR 193. 38 Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd (2011) 248 FLR 193 at [59].
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[3.30]
Where a corporation engages in conduct that involves silence, and it is necessary to establish that the corporation deliberately failed to disclose within the definition of conduct in s 2(2)(c) of the ACL, s 139B(1) of the CCA must be considered. Section 139B(1) provides that if in a proceeding under the ACL (Cth) in respect of conduct engaged in by a body corporate, it is necessary to establish the state of mind of the body corporate, it is sufficient to show (a) “that a director, employee or agent of that body corporate engaged in that conduct within the scope of the actual or apparent authority of the director, employee or agent”; and (b) “that the director, employee or agent had that state of mind”.
Silence in isolation [3.30] Where silence occurs in isolation it is not always misleading. In Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd,39 Rhone-Poulenc alleged that UIM contravened s 52 of the TPA by selling an agricultural chemical product without disclosing that the sale and use of that product was prohibited in certain States. The applicant was a trade rival of UIM and also alleged that the latter had infringed one of its patents in producing and selling the product. In relation to the definition of “conduct” in s 4(2) of the TPA, Bowen CJ held: The appellants submit that UIM’s failure to warn customers of the risks of seizure and forfeiture constituted “engaging in conduct” within the special definition in s 4(2). I do not agree. Although s 4(2) recognises that an omission to do an act may constitute “engaging in conduct”, that will only be so where there has been a refusal to do, or a deliberate refraining from doing, an act. The words “refuse” and “refrain” clearly connote that the omission to do an act must be deliberate. I agree with the trial judge that s 4(2) does not materially assist the appellants.40
Unless there is a deliberate decision to withhold information, the silence will not be actionable. If the respondent’s silence is attributable to carelessness, or, perhaps, ignorance of the significance of the information involved, it will not be actionable.41
Silence and other conduct [3.35] In many situations the respondent’s silence will not occur in isolation. Rather, it will be accompanied by other acts or omissions so that when viewed as a whole, the respondent’s conduct may be misleading or deceptive in a positive manner. In Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd, French CJ and Kiefel J drew attention to the distinction between “silence in isolation” cases and “silence including other acts or omissions” cases:
39 Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477. 40 Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477 at 489-90. 41 See Costa Vraca Pty Ltd v Berrigan Weed & Pest Control Pty Ltd (1998) 155 ALR 714 at 723 (Finkelstein J); Johnson Tiles Pty Ltd & Ors v Esso Australia Ltd (1999) ATPR ¶41-696 at 42,888-9 (Merkel J); Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd [2002] NSWCA 211 at [58]; and Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd (2011) 248 FLR 193 at [59] (McLure P).
[3.35]
3 Misleading or Deceptive Conduct
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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.42
In cases where the silence is accompanied by other acts or omissions, the applicant will not need to establish that the respondent’s silence alone amounted to “conduct” within s 2(2) of the ACL. The presence of the additional acts or omissions, when combined with the respondent’s failure to disclose, may render the respondent’s conduct, viewed in its entirety, misleading or deceptive for the purpose of s 18 of the ACL. The definition of conduct in s 2(2) of the ACL has been adopted in the ACL (Application Acts).43 For this reason, when silence is alleged to constitute the basis of misleading or deceptive conduct, it will be desirable for the applicant to consider the whole of the conduct and whether there was something more involved than silence in isolation. As Reeves J observed in Bennett v Elysium Noosa Pty Ltd (in liq): Where a person is pleading an implied representation arising out of a failure to disclose, or silence, which has its foundation in the circumstances surrounding that silence, or separately some duty to disclose in the particular circumstances, it is absolutely critical that the circumstances relevant to either situation are pleaded clearly and precisely.44
Implied representations can arise in cases involving silence. The approach for determining whether an implied representation was made “is to determine whether what was actually said or done, in all the relevant circumstances, conveyed something more, such that it led the applicant into error”.45 For example, it may be implied that there was nothing material that needed to be disclosed to the other party. In Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (Henjo),46 it was held to be misleading to inform a prospective purchaser that a restaurant had a certain number of tables without also disclosing that a significant number of them were not allowed under the applicable liquor licensing laws. Similarly, in Noor Al Houda Islamic College Pty Ltd v Bankstown Airport Ltd,47 it was held to be misleading to point out the limitations of a site the respondent was proposing to lease without also mentioning the risks of contamination it presented. In cases involving the expression of an opinion, there may be an implied representation that the opinion is honestly held, or an implied representation that there is a reasonable basis for the opinion.48 These cases illustrate that in cases involving silence, the question is whether what was actually said, in all the relevant 42 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at [5]. 43 See, eg, FTA 1989 (Qld), s 5A. 44 Bennett v Elysium Noosa Pty Ltd (in liq) (2012) 202 FCR 72 at [78]. 45 Bennett v Elysium Noosa Pty Ltd (in liq) (2012) 202 FCR 72 at [40] (Reeves J). 46 Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546. 47 Noor Al Houda Islamic College Pty Ltd v Bankstown Airport Ltd (2005) 215 ALR 625. 48 Global Sportsman v Mirror Newspapers (1984) 2 FCR 82 at 88; James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 347 at 372 (Toohey J); Wright v Wheeler Grace & Pierucci Pty Ltd (1988) ATPR ¶40-865 at 49,375-6 (French J); affirmed in Wheeler Grace & Pierucci Pty Ltd v Wright (1989) 16 IPR 189; Bateman v Slayter (1987) 71 ALR 553 at 559 (Burchett J). See [3.150].
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[3.40]
circumstances, would convey something more to a reasonable person in the position of the applicant, such that it was likely to lead into error.
Relaying incorrect information supplied by another [3.40] The conduct at issue may consist of merely relaying information supplied by another. In Yorke v Lucas,49 Mason A-CJ, Wilson, Deane and Dawson JJ considered a situation where a corporation purported to do no more than pass on information supplied by another in circumstances where it was apparent that the corporation was not the source of the information, and expressed the view that it was doubtful that the corporation could itself be engaging in conduct: That does not, however, mean that a corporation which 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 corporation 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 corporation can properly be said to be itself engaging in conduct that is misleading or deceptive.50
This has subsequently been dubbed “the conduit defence”,51 where the intermediary acts as a mere “postman” and does not do anything to adopt the information.52 It arises in the context of principal–agency relationships, where the agent relays information imparted by the principal and seeks to immunise himself or herself by means of a contemporaneous disclaimer. It also arises in situations where an information provider, such as a newspaper or magazine, publishes an advertisement on behalf of a supplier of goods or services that may contain misleading representations, and the newspaper does not express its own views as to the truth or falsity of those representations. For example, in Dalton v Lawson Hill Estate Pty Ltd,53 the purchaser of a vineyard was unsuccessful in attempting to make an agent liable for representations about the area of the vines planted and the output of a bore on the property. The court noted that there were disclaimers in the promotional material that made it clear that the agent was not accepting any responsibility for the information provided by another person. The Full Federal Court held that the agent was not liable and stated: In considering the liability of an agent for sale for contravention of s 52 of the Trade Practices Act or s 42 of the Fair Trading Act, it is necessary to consider the character of the particular conduct of the particular agent in relation to the particular purchaser, 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, of which each may be taken to have 49 Yorke v Lucas (1985) 158 CLR 661. 50 Yorke v Lucas (1985) 158 CLR 661 at 666. 51 See Gillies, “Misleading and Deceptive Conduct: Immunising the Intermediary – the Conduit Defence” (2006) 14 Trade Practices Law Journal 209; and McCabe, “In the Wake of Butcher: Decisions Affecting the Liability of Agents and Third Parties in Proceedings for Misleading or Deceptive Conduct” (2006) 14 Trade Practices Law Journal 46. 52 The term “postman” was used by French J in Gardam v George Willis & Co (1988) 82 ALR 415 at 427. 53 Dalton v Lawson Hill Estate Pty Ltd (2005) ATPR ¶42-079 (Lindgren, Finn and Emmett JJ).
[3.40]
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known. The mere fact that a person had engaged in the conduct of supplying a document containing information which is in fact misleading does not necessarily mean that that person had engaged in misleading conduct. It is crucial to examine the role of the person in question.54
The Full Court distinguished John G Glass Real Estate Pty Ltd v Karawi Constructions Pty Ltd55 on the basis that in that case the agent held itself out as “Consultants to institutional investors and to developers of major properties”, and the representation concerned what the net lettable area of a building would be when it was constructed, a matter which the purchaser could not independently verify for itself.56 The liability of an intermediary or conduit was considered by the High Court in Butcher.57 In that case, Butcher purchased at auction an expensive waterfront property in Sydney. Prior to the auction, Butcher was shown the property by an estate agent, Lachlan, who provided a brochure describing the property. The brochure reproduced part of a survey done by a surveyor in 1980. The survey was inaccurate in certain details. The brochure contained the following statement: All information contained herein is gathered from sources we believe to be reliable. However, we cannot guarantee its accuracy and interested persons should rely on their own inquiries.
Before settlement, Butcher discovered that the boundary was not located as shown on the survey diagram. Butcher declined to proceed with the transaction and commenced proceedings against the vendor and against the agent, Lachlan, alleging that it had been guilty of misleading conduct contrary to s 52 of the TPA. In a joint majority judgment, Gleeson CJ, Hayne and Heydon JJ held that the intermediary, the agent Lachlan, was not in breach of s 52. The agent’s conduct and the disclaimer were part of the surrounding circumstances and had to be viewed as a whole.58 Their Honours cited with approval59 the decision of the New Zealand Court of Appeal Goldsbro v Walker,60 and concluded: The agent did not engage in conduct towards the purchasers which was misleading or deceiving. Whatever representation the vendor made to the purchasers by authorising the agent to issue the brochure, it was not made by the agent to the purchasers. The agent did no more than communicate what the vendor was representing, without adopting or endorsing it. The conclusion flows from the nature of the parties, the character of the transaction contemplated, and the contents of the brochure itself.61 (emphasis added) 54 Dalton v Lawson Hill Estate Pty Ltd (2005) ATPR ¶42-079 at 43,252 [82]. 55 John G Glass Real Estate Pty Ltd v Karawi Constructions Pty Ltd (1993) ATPR ¶41-249. 56 Dalton v Lawson Hill Estate Pty Ltd (2005) ATPR ¶42-079 at 43,252 [96]-[97]. 57 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592. 58 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at 605 [39]; McHugh J expressed similar views at 625 [109].See also Campbell v Backoffice Investments at [29] (French CJ). 59 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at 602, fn 38. 60 Goldsbro v Walker [1993] 1 NZLR 394. 61 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at 605.
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[3.45]
[3.45] As regards the nature of the parties, it was significant that the relevant class of persons to whom the property was marketed (purchasers prepared to pay above $1 million in 1997) could be expected to have legal advice and the purchasers were “intelligent, shrewd and self-reliant”. The fact that the agent did not adopt or endorse the communication was a factor that supported the finding that the agent had done no more than pass on information from the vendor. Likewise, the disclaimers in the brochure were merely part of the circumstances relevant to the inquiry whether it would have been plain to a reasonable purchaser that the agent was not the source of the misleading information.62 In Orix Australia Corporation Ltd v Moody Kidell & Partners Pty Ltd,63 Orix, an international finance house involved in financing the acquisition of heavy industrial machinery, sought damages from a broker, Moody Kidell. Orix provided finance to QCE, an equipment hire business to acquire six cranes from Nelson Equipment. Orix acted in reliance upon information provided by Moody Kidell. The information provided contained a disclaimer to the effect that it had been provided to Moody Kidell by the proposed borrower/lessee and that Moody Kidell could not accept responsibility for its accuracy. The trial judge (White J) held that Moody Kidell did not adopt or endorse the misleading information, and that Moody Kidell did no more than communicate to Orix what QCE was representing, and was not liable under s 52 of the TPA. The New South Wales Court of Appeal dismissed the appeal. After an extensive analysis of what was said by the majority in Butcher, Ipp JA concluded: From the passages that I have quoted it appears that the ratio of the majority’s decision that the agent had not engaged in misleading conduct was that the agent did no more than communicate what the vendor was representing. Their Honours held that an innocent agent, who acts merely as a conduit and makes it clear, expressly or impliedly, that he or she is doing no more than passing on information obtained from others, does not attract liability under s 52.
The High Court considered the issue again in Google Inc v ACCC.64 The conduct at issue concerned Google’s well-known search engine, “Google search”. A search of the google.com search engine produced two types of result, “organic” search results and “sponsored links”. Organic search results consisted of information displayed free of charge. Sponsored links were advertisements which appeared at the top or right-hand side of the results page, and included a link to the web address displayed beneath the headline. The primary judge, Nicholas J held that in four instances advertisers had engaged in misleading conduct by falsely representing that there was a commercial association or affiliation with its competitor and that information regarding the competitor could be found by clicking on the advertiser’s web address. For example, advertisements for Harvey World Travel (HWT) appeared as sponsored links amid organic search results. STA Travel was a major competitor of HWT. The court held that the representation that there was a 62 Orix Australia Corporation Ltd v Moody Kidell & Partners Pty Ltd [2006] NSWCA 257 at [45]-[46]. 63 Orix Australia Corporation Ltd v Moody Kidell & Partners Pty Ltd [2006] NSWCA 257 (Ipp JA, with whom Spigelman CJ and Basten JA agreed). 64 Google Inc v ACCC (2013) 249 CLR 435.
[3.45]
3 Misleading or Deceptive Conduct
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commercial association or affiliation between STA and HWT were made by STA, not by Google, and that Google did not adopt or endorse the representation.65 On appeal, the Full Federal Court held that Google engaged in misleading conduct because Google took an active role in the preparation, dissemination and publication of the advertisements, and endorsed the information supplied by the advertisers such as STA.66 Google’s appeal to the High Court was successful. Before the High Court there was no challenge to the findings of the primary judge that the advertisements were misleading.67 The question was whether Google had engaged in the conduct. The majority, French CJ, Crennan and Kiefel JJ, in their joint reasons held that the advertisers were the authors of the sponsored links. Google had no control over an advertiser’s choice of search terms, or an advertiser’s choice of keywords. Their Honours stated: It is critical to appreciate that, even with the facility of keyword insertion, the advertiser is the author of the sponsored link. As Google correctly submitted, each relevant aspect of a sponsored link is determined by the advertiser. The automated response which the Google search engine makes to a user’s search request by displaying a sponsored link is wholly determined by the keywords and other content of the sponsored link which the advertiser has chosen. Google does not create, in any authorial sense, the sponsored links that it publishes or displays.68
Their Honours held that Google was a mere conduit passing on the advertisements, without adopting or endorsing them: Google is not relevantly different from other intermediaries, such as newspaper publishers (whether in print or online) or broadcasters (whether radio, television or online), who publish, display or broadcast the advertisements of others. The fact that the provision of information via the internet will – because of the nature of the internet – necessarily involve a response to a request made by an internet user does not, without more, disturb the analogy between Google and other intermediaries. To the extent that it displays sponsored links, the Google search engine is only a means of communication between advertisers and consumers.69
Hayne and Heydon JJ wrote separate opinions but agreed that Google’s appeal should be upheld. The High Court’s decision in Google Inc provides comfort for intermediaries who disseminate, publish or broadcast information provided by others. So long as they can demonstrate that they have not been involved in the preparation of the material by, for example, drafting the wording of the advertisement, they will not be liable for the content they publish or distribute. Publishers of advertisements are provided additional protection by s 251 of the ACL. However, once intermediaries 65 ACCC v Trading Post Australia Pty Ltd (2011) 197 FCR 498. 66 ACCC v Google Inc (2012) 201 FCR 503 at [93]. 67 Google Inc v ACCC (2013) 249 CLR 435 at 455 [54] (French CJ, Crennan and Kiefel JJ). 68 Google Inc v ACCC (2013) 249 CLR 435 at 459 [68]. 69 Google Inc v ACCC (2013) 249 CLR 435 at 459 [69].
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[3.50]
become aware that the information supplied by another is misleading, they must act promptly to remove it, otherwise they risk becoming involved in the contravention as an accessory.70
Adopting or endorsing information supplied by another [3.50] Where, however, an intermediary adopts or endorses the representations supplied by another, the intermediary will be equally culpable if the representations are false or misleading. In Downey v Carlson Hotels Asia Pacific Pty Ltd,71 the appellant, Carlson Hotels, previously known as Raddison Hotels, was in the business of running hotels and apartments of high quality. It lent its name to a development known as “Raddison Suites”, which was being developed by Valco Developments Pty Ltd. A brochure was prepared to promote the development. The name “Raddison” appeared on the brochure 31 times. Raddison approved of the brochure and knew that it would be provided to potential purchasers to promote the sale of units in the Raddison Suites development. The suites were to be managed for letting purposes and the brochure contained an “Investment Analysis” which guaranteed a net 7% per annum for five years. On the last page of the investment analysis was the following disclaimer: Whilst the information inside this publication is believed to be true and correct, the figures and advice supplied are given as a guide only and no responsibility will be taken for any errors and omissions.
Mr and Mrs Downey were investors who purchased units in the development, but the investment return did not materialise. Although Carlton Hotels were not selling the units, it was alleged to have adopted or endorsed the representations of the developer, Valco. Keane JA (with whom Williams JA and Atkinson J agreed) concluded that after considering the material in its entirety, including the disclaimer, that the appellant’s conduct was misleading. His Honour acknowledged72 that disclaimers could be effective if they made it clear that they were only communicating the information prepared by Valco, but the disclaimer in the case before him did not have this effect. On the contrary, his Honour concluded73 that a reasonable purchaser in the position of the Downeys would have formed the view that the brochure contained a representation by the appellant that it was endorsing the information prepared by Valco, and was not merely passing it on for what it was worth. It was making two representations: first, a representation that the units would be a good investment; and secondly, a representation that potential investors could rely on its opinion as to the quality of the investment. The Full Federal Court considered this issue in Granitigard Pty Ltd v Termicide Pest Control Pty Ltd.74 In that case, the trial judge held that Termicide had not adopted a 70 ACCC v Allergy Pathway Pty Ltd (No 2) (2011) 192 FCR 34 at [33] (Finkelstein J) and see [3.195]. 71 Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199. 72 Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199 at [83]. 73 Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199 at [85]-[117]. 74 Granitigard Pty Ltd v Termicide Pest Control Pty Ltd (2011) 281 ALR 1.
[3.55]
3 Misleading or Deceptive Conduct
93
Commonwealth Scientific and Industrial Research Organisation (CSIRO) appraisal document under which experts employed by the CSIRO were engaged in assessing new building products to determine whether they complied with the relevant Australian Standard.75 On appeal, Reeves J (with whom Kenny and Lander JJ agreed) considered that Termicide had adopted the CSIRO appraisal document as its own. It had not merely provided a means by which the CSIRO appraisal document could be read, without using any words or otherwise doing anything to adopt or endorse it. Instead, it took additional steps that amounted to an adoption of it. These steps were removing the CSIRO logo and reproducing parts of the appraisal document on its own website under the Termicide logo.
Contemporaneous disclaimers [3.55] Agents and intermediaries sometimes seek to protect themselves from liability by alerting those who may rely on the information being disseminated that the agent or intermediary is not the source of the information by means of contemporaneous disclaimers. A contemporaneous disclaimer refers to a notice of the kind at issue in Butcher v Lachlan Elder Realty Pty Ltd.76 There, the disclaimer was made available during pre-contractual negotiations. It stated that the information contained in the brochure had been obtained from other sources and that the agent could not guarantee its accuracy. Where, however, the evidence shows that the agent or intermediary is the source of the information; or is responsible for its preparation; or has subsequently endorsed it, the agent or intermediary will not be a mere conduit and will share liability with the principal if it is misleading.77 In Havyn Pty Ltd v Webster,78 the court distinguished the information sought to be disclaimed from that at issue in Butcher’s case. In Butcher, the information concerned the boundaries of the property which surveyors normally certify, while in Havyn the information concerned the floor area of flats in a building which could easily be measured by a person without expertise and fell within the competence of a real estate agent.79 In summary, in deciding whether a disclaimer is effective to protect an agent or intermediary, the courts have regard to the following factors: • The nature of the parties to the transaction: whether the agent or intermediary held itself out as an expert in transactions of that kind and would be expected to know the accuracy of the information being imparted; whether the circumstances made it clear that the other party was acting in reliance on the agent, or intended to make its own inquiries. 75 Granitgard Pty Ltd v Termicide Pest Control Pty Ltd (No 5) [2010] FCA 313 (Logan J). 76 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592. See also The Saints Gallery Pty Ltd v Plummer (1988) 80 ALR 525 at 530-531 and Lezam Pty Ltd v Seabridge Australia Pty Ltd (1992) 35 FCR 535 at 552-3, 556-8. 77 John G Glass Real Estate Pty Ltd v Karawi Constructions Pty Ltd (1993) ATPR ¶41-249; and Havyn Pty Ltd v Webster (2005) 220 ALR 211 (Santow JA, with whom Tobias JA and Brownie AJA agreed). 78 Havyn Pty Ltd v Webster (2005) 220 ALR 211. 79 Havyn Pty Ltd v Webster (2005) 220 ALR 211 at [88]-[91].
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[3.60]
• The nature of the information: whether it is was the kind of information the agent would be expected to possess; whether it concerned a “hard physical fact”80 admitting of only one answer and which should be within the knowledge of the agent, or alternatively, some matter that the agent was clearly not in a position to express a view about its veracity; and whether it was possible for the other party to independently verify it. • The character of the transaction: the more valuable the transaction the more likely the purchaser will make independent inquiries, engage other professionals to advise, and not rely on the information provided by the agent. • The contents of the disclaimer itself: the size, clarity, prominence and specificity of the disclaimer, and whether it was brought to the attention of the purchaser prior to entry into the transaction.
PART II: ASSESSING WHETHER THE CONDUCT WAS MISLEADING, OR LIKELY TO MISLEAD Context all important [3.60] The central concept in s 18(1), that of “misleading or deceptive” conduct, is not defined in the ACL. There are no specific categories of misleading or deceptive conduct although some guidance is provided in relation to representations about future matters by s 4(1) of the ACL.81 In Google Inc, Hayne J stated: Analysis of the decided cases is not to be glossed over and obscured by attempting to identify particular species of misleading or deceptive conduct, attaching some general description to each (such as a “misrepresentation” case, an “advertisement” case or a “mere conduit” case) and then applying s 52 by fitting the case into one of those constructed categories. Analogical reasoning is important but analogies can be drawn only after understanding the full factual context in which it was held that s 52 did or did not apply.82
In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd,83 Gibbs CJ held: The words of s 52 require the Court to consider the nature of the conduct of the corporation against which proceedings are brought and to decide whether that conduct was, within the meaning of that section, misleading or deceptive or likely to mislead or deceive. Those words are on any view tautologous. One meaning which the words “mislead” and “deceive” share in common is “to lead into error”. If the word “deceptive” in s 52 stood alone, it would be a question whether it was used in a bad sense, with a connotation of craft or overreaching, but “misleading” carries no such flavour, and the use of that word appears to render “deceptive” redundant. The words “likely to mislead or deceive”, which were inserted by amendment in 1977, add little to the section; at most they make it clear that it is unnecessary to prove that the conduct in question actually deceived or misled anyone.84 80 Dalton v Lawson Hill Estate Pty Ltd (2005) ATPR ¶42-079 at 43,253 [87]. 81 See [3.135]. 82 Google Inc v ACCC (2013) 249 CLR 435 at 467-8 [102]. 83 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191. 84 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 198.
[3.65]
3 Misleading or Deceptive Conduct
95
The conduct is of the prohibited kind for the purposes of s 18(1) of the ACL if “the conduct viewed as a whole has a tendency to lead a person into error”.85 In deciding whether conduct is misleading or deceptive, regard must be had to the context in which that conduct took place. Conduct that is misleading in one context may not be so in another.86 In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd, Gibbs CJ stated: The conduct of a defendant must be viewed as a whole. It would be wrong to select some words or act, which, alone, would be likely to mislead if those words or acts, when viewed in their context, were not capable of misleading. 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 acts.87
Accordingly, the courts will undertake a very detailed analysis of the evidence, and each case turns on its own specific facts and context. This is a “quintessential question of fact”.88 It is for this reason that Hayne J in Google Inc v ACCC warned about the dangers of extrapolating from decided cases: Because it is the statutory text which controls, there is no little danger in attempting to extrapolate from the decided cases to a rule of general application. No such rule can stand in the place of the statutory text. This is not to say that the decided cases are unimportant or that they do not contribute to the proper understanding of how the Act operates. But each case must be understood by reference to the statutory text and the particular facts that were identified as relevant to the application of that text. When considering what was said in the reasons for decision in a s 52 case, the description of the relevant conduct is as important as are the facts and circumstances identified as bearing upon whether that conduct was misleading or deceptive.89
Misleading conduct: objective test [3.65] In determining whether conduct is misleading or deceptive under s 18 of the ACL, an important consideration will be the nature of the audience at whom it was directed. Early in the history of s 52 of the TPA it was held that conduct will be regarded as misleading or deceptive only if it misled or deceived (or is likely to mislead or deceive) members of that audience.90
85 ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640 at [39] (French CJ, Crennan, Bell and Keane JJ); Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at [25] (French CJ). 86 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at 625 [109] (McHugh J). 87 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 199. 88 ACCC v Telstra (2004) 208 ALR 459 at [49]. For commentary on the tendency of the courts to undertake a very detailed analysis of the evidence and the purported representations see Rickett, “Some Reflections on Open-Textured Commercial Contracting” [2001] AMPLA Yearbook 374 at 378-379 and Stewart and McClurg, “Playing Your Cards Rights: Obligations of Disclosure in Commercial Negotiations” [2007] AMPLA Yearbook 36 at 51. 89 Google Inc v ACCC (2013) 249 CLR 435 at 467 [100]-[101]. 90 Weitmann v Katies Ltd (1977) 29 FLR 336 (Franki J).
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The Australian Consumer Law
[3.70]
If conduct was not misleading in relation to the target audience, it did not contravene s 52 merely because it misled, or was capable of misleading, some other person to whom it may have been communicated, at least where this could not reasonably have been anticipated.91 In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd, Gibbs CJ stated: 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 [sic] 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.92
These principles were confirmed by the High Court in Campomar Sociedad Limitada v Nike International Ltd: It is in these cases of representations to the public … that there enter the “ordinary” or “reasonable” members of the class of prospective purchasers. Although a class of consumers may be expected to include a wide range of persons, in isolating the “ordinary” or “reasonable” members of that class, there is an objective attribution of certain characteristics.93
In Telstra Corp Ltd v Cable & Wireless Optus Ltd,94 Goldberg J thought that the “[t]he extremely stupid, and perhaps the gullible may well be excluded from the class”.95 The class does not include those who fail to take reasonable care of their own interests.96 Reasonable members of the class would take reasonable steps to look after their own interests.
Role of intention [3.70] Intention was not a necessary element of the contravention of s 52 of the TPA. The section involved no questions of intent upon the part of the person whose conduct was in question. Thus, in Google Inc v ACCC, French CJ and Crennan and Kiefel JJ noted that: Section 52 is not confined to conduct which is intended to mislead or deceive. A corporation could contravene s 52 even though it acted reasonably and honestly.97
In Butcher v Lachlan Elder Realty Pty Ltd, McHugh J stated: 91 Parkview (Keppell) Pty Ltd v Mytarc Pty Ltd (1984) 3 FCR 186 at 190-191 (McGregor J). 92 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 199. See also Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at 371 [22] (French CJ and Kiefel J). 93 Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at 85 [102] (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ) (citations omitted). 94 Telstra Corp Ltd v Cable & Wireless Optus Ltd [2001] FCA 1478. 95 Telstra Corp Ltd v Cable & Wireless Optus Ltd [2001] FCA 1478 at [23]. 96 See Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at 85 [105]; Cantarella Bros Pty Ltd v Valcorp Fine foods Pty Ltd (2002) ATPR ¶41-856 at [35]-[36] (Lindgren J). 97 Google Inc v ACCC (2013) 249 CLR 435 at 443. See also Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 228 (Stephen J) and Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 197 (Gibbs CJ).
[3.75]
3 Misleading or Deceptive Conduct
97
Section 52 looks at the conduct of a corporation and is concerned only with whether that conduct misled or was likely to mislead a consumer. It is not concerned with the mental state of the corporation.98
However, intention is not entirely irrelevant. In Campomar v Nike the primary judge, Sheppard J, found that Campomar deliberately marketed the Nike Sports Fragrance products in order to take advantage of the goodwill and reputation of Nike International.99 The High Court held, where there is a finding of intention to deceive, the court may more readily infer that the intention has been or in all probability will be, effective.100 The same approach applies in relation to s 18 of the ACL. Conduct may be found to contravene s 18 of the ACL even though the respondent acted honestly and did not intend to mislead or deceive. On the other hand, where the respondent did intend to mislead or deceive, a court may more readily find that the conduct was misleading or likely to mislead.101 In ACCC v TPG Internet Pty Ltd, the High Court majority stated: [W]here a representation is made in terms apt to create a particular mental impression in the representee, and is intended to do so, it may properly be inferred that it has that effect. Such an inference may be drawn more readily where the business of the representor is to make such representations and where the representor’s business benefits from creating such an impression.102
Two other areas where intention has a role to play are where the misleading conduct at issue consists of refraining from doing an act,103 and where an applicant seeks to establish accessorial liability for misleading conduct.104
Conduct directed at identified persons [3.75] The courts draw a distinction between conduct directed at particular individuals in a one-on-one situation and conduct directed at the public or a segment of the public. Where conduct is directed at identified persons, rather than the public at large, French CJ in Campbell v Backoffice Investments Pty Ltd, stated: In the case of an individual it is not necessary that he or she be reconstructed into a hypothetical, ’ordinary person’. Characterisation may proceed by reference to the circumstances and context of the questioned conduct. The state of knowledge of the 98 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at 634 [139]. 99 Nike International Ltd v Campomar Sociedad Limitada (1996) ATPR ¶41-518 at 42,478, 42,480. 100 Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at [33] (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ). This principle has been applied in subsequent cases. See, eg, ACCC v Singtel Optus Pty Ltd (No 3) (2010) 276 ALR 102 where Perram J inferred that Optus intended its misleading advertising campaign to have a substantial impact in the broadband market, based on the amount of money which Optus spent on the campaign, and concluded that the effect of the campaign was substantial (at [16]-[17]). 101 S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 88 FCR 354 at 361-363 (Hill, RD Nicholson and Emmett JJ). 102 ACCC v TPG Internet Pty Ltd (2013) 304 ALR 189 at 198 [55] (French CJ, Crennan, Bell and Keane JJ) (Citations omitted). 103 See [3.25]. 104 See [14.175]–[14.195].
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The Australian Consumer Law
[3.75]
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.105
Where the conduct at issue consists of misleading pre-contractual representations such as those at issue in Butcher v Lachlan Elder Realty Pty Ltd,106 directed at identified persons, then whether the conduct is misleading is to be assessed in relation to the individual applicants alone. According to the majority in Butcher’s case: So here, it 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. Indeed, counsel for the purchasers conceded that the mere fact that a person had engaged in the conduct of supplying a document containing misleading information did not mean that that person had engaged in misleading conduct: it was crucial to examine the role of the person in question.107
Thus, assessing whether conduct which consists of a representation made to a particular person is misleading or likely to mislead will be ascertained by reference to the context in which the parties are situated, and may involve a combination of subjective and objective assessments. The assessment of whether the conduct is likely to mislead proceeds by reference to what “a reasonable person in the position of the [representees], taking into account what they knew, would make of the [representor]’s behaviour”.108 Thus, if the applicant claims to have been misled, the conduct will not contravene s 18 if a hypothetical reasonable person who possessed the applicant’s knowledge of the surrounding circumstances would not have been misled by the conduct at issue. In Traderight (NSW) Pty Ltd v Bank of Queensland Ltd,109 Barrett JA (with whom Bathurst CJ and Beazley P agreed) stated: It is the quality of the conduct in terms of capacity or tendency, objectively ascertained, that must be judged, not its actual impact on a particular person. Where… the conduct consists of a representation actively made to a particular person in a one-on-one situation, the quality of the conduct is to be ascertained by reference to the context in which the parties are situated, including such matters as their respective states of prior knowledge and understanding. It is within the whole of that context that the court must address the question whether the representation consists of a representation actively made to a particular person in a one-on-one situation, the quality of the conduct is to be ascertained by reference to the representee. The question whether the representee relied or acted upon the representation is irrelevant to that inquiry.110
105 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at [26]. See R V Miller, Australian Competition and Consumer Law Annotated (37th ed, Lawbook Co, Sydney, 2015), [1.S2.18.50]. 106 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592. 107 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at [37]. 108 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at [50]. Applied in Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199 at [69]. 109 Traderight (NSW) Pty Ltd v Bank of Queensland Ltd [2015] NSWCA 94 (14 April 2015). 110 Traderight (NSW) Pty Ltd v Bank of Queensland Ltd [2015] NSWCA 94 at [161].
[3.85]
3 Misleading or Deceptive Conduct
99
Commercial negotiations involving identified persons [3.80] Section 18 of the ACL applies to statements made in the course of private negotiations between commercial entities and is not limited consumer transactions.111 The cases indicate that the courts place particular emphasis upon the whole context of the pre-contractual negotiations between the parties. In considering their effect of the conduct at issue on a reasonable person in the applicant’s position the courts may take into account the following matters: • the character of the particular conduct by the respondent towards the aggrieved party;112 • the nature of the dealings between the parties and what matters of fact each knew about the other as a result of their dealings; in particular, what discussions took place, at what times, and what documents were exchanged;113 • the relative commercial experience of the aggrieved party; • the length of time over which the negotiations took place; and • any professional advice (valuation, survey, legal, or accounting) that the aggrieved party may have sought or received in coming to a decision whether to enter into the transaction.
Conduct directed at the public [3.85] However, where misleading representations are not directed at identified individuals, but to the public generally and the relief sought is an injunction under ACL, s 232, it is necessary to determine who could fairly be regarded as its target. This may have been a segment of the public, or the public as a whole, and it is necessary to isolate some criterion or criteria of a representative member.114 In Campomar Sociedad Limitada v Nike International Ltd, the majority, in a joint judgment stated: Where the persons in question are not identified individuals to whom a particular misrepresentation has been made or from whom a relevant fact, circumstance or proposal was withheld, but are members of a class to which the conduct in question was directed in a general sense, it is necessary to isolate by some criterion a representative member of that class. The inquiry thus is to be made with respect to this hypothetical individual why the misconception complained has arisen or is likely to arise if no injunctive relief be granted. In formulating this inquiry, the courts have had regard to what appears to be the outer limits of the purpose and scope of the statutory norm of conduct fixed by s 52.115 (citations omitted) 111 See eg, Lam v Ausintel Investments Australia Pty Ltd (1990) ATPR ¶40-990 at 50,880 (Gleeson CJ, Samuels AP and Meagher JA concurring). The same view was taken in Poseidon Ltd v Adelaide Petroleum NL (1991) 105 ALR 25 at 26 (Burchett J); General Newspapers Pty Ltd v Telstra Corp (1993) 45 FCR 164 especially at 177-179 (Davies and Einfeld JJ); Leda Holdings Pty Ltd v Oraka Pty Ltd (1998) ATPR ¶41-601 at 40,513 (Branson and Emmett JJ), and Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd [2011] FCAFC 119 at [111]-[115] (Gilmour, Jagot and Nicholas JJ). 112 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at [37]. 113 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at [37]. 114 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at [36]. 115 Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at 85 [103] (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ). See also Google Inc v ACCC (2013) 249 CLR 435 at [6]-[9] (French CJ, Crennan and Kiefel JJ); Astrazeneca Pty Ltd v GlaxoSmithKline Australia
100
The Australian Consumer Law
[3.90]
Thus, where conduct is directed at the public, the class is first identified. Having identified the class, the effect of the conduct is assessed having regard to the reactions of the “hypothetical individual” – the ordinary, reasonable member of the class, not those of persons whose reactions are “extreme or fanciful”.116 The test is an objective one. As Beach J observed in ACCC v Hillside (Australia New Media) Pty Ltd (t/as Bet365), “[t]his hypothetical construct avoids using the very gullible or the highly astute to assess effect or likely effect”.117
Knowledge base of a reasonable member of the class [3.90] The ordinary or reasonable consumer does not exist in the abstract, but depends on the specific context in which the public statement was made. The level of knowledge to be imputed to a reasonable member of the pleaded target audience will be crucial for the obvious reason that the more sophisticated and knowledgeable the audience, the more difficult it will be to prove that a reasonable member of that audience would be likely to be misled or deceived by the statement at issue. In ACCC v TPG Internet Pty Ltd Murphy J stated that “[t]he degree of knowledge to be imputed to the class, and thus to the ordinary or reasonable consumer, is a matter of inference from the evidence”.118 In misleading or deceptive conduct cases involving a statement directed towards a specific individual, the court may be assisted by receiving evidence pertaining to this issue from that person. Similarly, where the statement was directed towards a target audience of prospective purchasers, evidence of this nature may be given by members of that audience. For example, in National Exchange Pty Ltd v ASIC,119 the Australian Securities and Investment Commission (ASIC) led evidence concerning the reactions of shareholders to the two dollar offers, two of whom were confused or misled at least temporarily.120 As regards this evidence, Dowsett J stated: There is evidence that both Mr Locke and Ms Normoyle were at least temporarily misled by the offer. It is not clear whether this was as a result of the impact upon them of the format of the offer or as a result of their not giving sufficient attention to the payment provision. It would be wrong to place great weight on their having been misled. Further, there is no evidence of any substantial number of people having been mislead [sic].121 Pty Ltd (2006) ATPR ¶42-106 at [37] (Wilcox, Bennett and Graham JJ); ACCC v Telstra Corporation Ltd (2007) ATPR ¶42-203 at [14]-[15] (Gordon J); Energizer Australia Pty Ltd v Remington Products Australia Pty Ltd (2008) ATPR ¶42-219 at [16] (Moore J); and ACCC v Prouds Jewellers Pty Ltd (2008) ATPR ¶42-217 at [16]-[19] (Moore J). 116 Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at 86-7 [105]. See also Forrest v ASIC (2012) 247 CLR 486 at [49]-[50] (French CJ, Gummow, Hayne and Kiefel JJ). 117 ACCC v Hillside (Australia New Media) Pty Ltd (t/as Bet365) [2015] FCA 1007 at [70]. 118 ACCC v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,686 [25]. 119 National Exchange Pty Ltd v ASIC (2004) ATPR ¶42-000. 120 ASIC led evidence that a third shareholder had also been confused or misled: National Exchange Pty Ltd v ASIC (2004) ATPR ¶42-000 at 48,712 [7] (Dowsett J). However, Dowsett J considered that it would be unfair to give that evidence any weight due to its ambiguity (at 48,716 [29]). 121 National Exchange Pty Ltd v Australian Securities and Investments Commission (2004) ATPR ¶42-000 at 48,719 [41].
[3.90]
3 Misleading or Deceptive Conduct
101
If evidence is led that members of the target audience have actually been misled by the public statement, the task of the court is to ascertain whether they were “reasonable” members of the target audience, or whether they were misled because they made assumptions that were extreme or fanciful.122 In ACCC v Coles Supermarkets Pty Ltd Allsop CJ stated: Evidence that someone was actually misled or deceived may be given weight. The presence or absence of such evidence is relevant to an evaluation of all the circumstances relating to the impugned conduct. Where the conduct and representations are to the public generally and concern a body of simple direct advertising, the absence of individuals saying they were misled may not be of great significance. There was no such evidence here. The ACCC was criticised for that. That criticism is unfounded. The objective assessment of advertising using ordinary English words in an attempt to persuade can be undertaken without the lengthening of a trial by the bringing of witnesses of indeterminate numbers. Language, especially advertising, seeking to raise intuitive senses and associations, can have its ambiguities and subtleties. The task of evaluating the objective character and meaning of the language in the minds of reasonable members of the public is not necessarily one that will be assisted in any cost-effective manner by calling members of the public. The question is one for the Court.123
Identifying the attributes of the target audience is a crucial step in applying the test. Higher standards of accuracy are expected where members of the intended audience are naive, unsophisticated or impressionable. On the other hand, where members of the intended audience are sufficiently “tough, shrewd and sceptical”124 they can, to a greater extent, be expected to look after their own interests and make their own judgments. Individual judges vary in their assessments of the ability of members of the target audience to assess the purport of the words used in the context the conduct as a whole. It is clearly an area where there is room for legitimate differences of opinion.125 The target audience may be found to consist of sub-classes. One sub-class may have a greater awareness or knowledge of the way a particular industry operates than the other. If so, the conduct at issue is be tested by reference to its likely impact on a reasonable member of the unaware sub-class. In ACCC v Jewellery Group Pty Ltd,126 the ACCC alleged that the respondent breached s 52 of the TPA by distributing catalogues with higher prices that were struck through with a line and next to that price was another lower price indicated as the sale price. Lander J accepted that the relevant class would have consisted of both persons who were aware of the discount culture in the jewellery market, and persons who were 122 AstraZeneca v GSK (2006) ATPR ¶42-106 at 44 891 [37] (Wilcox, Bennett and Graham JJ), citing Campomar (2000) 202 CLR 45 at 85-6 [104]–[105] (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ). 123 ACCC v Coles Supermarkets Pty Ltd [2014] FCA 634 at [45] citing Taco Co of Australia v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202. 124 Forrest v ASIC (2012) 247 CLR 486 at [105] (Heydon J). 125 ACCC v Telstra Corporation Ltd (2004) 208 ALR 459 at 475-6. (Gyles J). See Corones, “Misleading Conduct Arising from Public Statements: Establishing the Knowledge Base of the Target Audience” (2014) 38 (1) Melbourne University Law Review 281. 126 ACCC v Jewellery Group Pty Ltd (2012) ATPR ¶42-411.
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The Australian Consumer Law
[3.95]
unaware of the discount culture.127 His Honour focussed on the effect of the “strike through pricing” on the unaware members of the class, who would have thought that the strike through price was the actual price at which the jewellery item had been sold, rather than a negotiable price. The savings representation was false because the items had been sold at a price less than the strike through price because of the respondent’s price negotiation policy.128
Confusion or uncertainty [3.95] It is necessary to draw a distinction between conduct that is misleading or likely to mislead, and conduct that causes confusion or uncertainty. Conduct that has a tendency to cause confusion or uncertainty does not suffice to establish that it was misleading or deceptive within s 18(1) of the ACL. In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd,129 Gibbs CJ held: that to prove a breach of s 52 it is not enough to establish that the conduct complained of was confusing or caused people to wonder whether two products may have come from the same source.130
In McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd,131 advertisements prepared for McWilliams, flagons of its wine were described by a journalist as “the Big Mac”. McDonald’s sought an injunction to restrain this use of the words “Big Mac” on the ground that they contravened TPA, s 52 by falsely implying that there was a business connection between McDonald’s and McWilliam’s, or that they were engaged in a joint promotion. It succeeded at first instance. However, an appeal by McWilliam’s was successful because the Full Court found that although readers of the advertisement may have been confused about the existence of a possible connection between the two firms, it would not actually mislead them into thinking that there was such a connection. In Taco Co (Aust) Inc v Taco Bell Pty Ltd, Deane and Fitzgerald JJ said: Conduct which produces or contributes to confusion or uncertainty may or may not be misleading or deceptive for the purposes of s 52. In some circumstances, conduct could conceivably be properly categorized as misleading or deceptive for the very reason that it represents that confusion or uncertainty exists where, in truth, there is no proper room for either. Ordinarily, however, a tendency to cause confusion or uncertainty will not suffice to establish that conduct is of the type described in s 52. The question whether particular conduct causes confusion or wonderment cannot be substituted for the question whether the conduct answers the statutory description contained in s 52.132 127 ACCC v Jewellery Group Pty Ltd (2012) ATPR ¶42-411 at [36] adopting the reasoning of Mansfield J in ACCC v Ascot Four Pty Ltd (2008) 250 ALR 467 which was approved by the Full Federal Court in Ascot Four Pty Ltd v ACCC (2009) 176 FCR 106. 128 ACCC v Jewellery Group Pty Ltd (2012) ATPR ¶42-411 at [38] and [152] applying Ascot Four Pty Ltd v ACCC (2009) 176 FCR 106 at [43]-[49]. The decision was upheld by the Full Federal Court in Jewellery Group Pty Ltd v ACCC [2013] FCAFC 144. 129 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191. 130 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 198-199. 131 McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd (1980) 49 FLR 455. 132 Taco Co (Aust) Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 201.
[3.95]
3 Misleading or Deceptive Conduct
103
This was endorsed by the High Court in Campomar Sociedad Limitada v Nike International Ltd.133 The distinction drawn in these cases is between misleading conduct and conduct which merely causes uncertainty or confusion. In practice, however, there will often be no sharp dividing line between the two. Thus, for example, in Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 8),134 Darrell Lea made significant use of purple in relation to packaging and point of sale displays. An expert witness for Cadbury, Dr Gibbs, gave evidence that in his opinion Darrell Lea’s use of purple was likely to cause informationprocessing errors to occur among consumers of chocolate confectionery, including misidentification when consumers seeking to buy Cadbury chocolate mistakenly identify a Darrell Lea product as a Cadbury product, and therefore buy the Darrell Lea product by mistake. Heerey J concluded that these “information processing errors” did not amount to misleading conduct. His Honour held: Much of Dr Gibbs’ opinions as to misinference and misassociation would seem to be examples of the “caused to wonder” reaction by consumers (and others such as employees and competitors). Insofar as they are, they would seem to raise matters outside the purview of the Trade Practices Act or the tort of passing off, even if they are matters of commercial concern to Cadbury.135
In Bridge Stockbrokers Ltd v Bridges,136 Lockhart J drew attention to the legislative policy behind s 52, namely to prevent the public being misled in a practical sense by the conduct of corporations and provided the following illustration where confusion may cross the dividing line and constitute misleading conduct: The corporation may deliberately produce and market the new brand of soap with a similar get-up, style and name to the already established soap for the purpose of increasing market share by confusing the public so that they are uncertain whether the two products come from the same source. The corporation would know that a not insignificant number of people would buy its product in those circumstances. It is not straining credulity too much, or indeed at all, to conceive of such a corporation, with ready access to competent marketing advice, planning its marketing strategy so that it could not be said that the public would think that the two products in fact came from the same source. But the corporation would know that, by stopping short of such conduct at the point where the public is merely confused or uncertain, it will nevertheless increase its sales and market share at the expense of the established product. In my view, the corporation is guilty of misleading or deceptive conduct within s 52. It is cheating.137
In relation to s 18 of the ACL, the court must decide objectively whether the representations made are misleading or deceptive or likely to mislead or deceive. 133 Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 at 87 [106]. See also Google Inc v ACCC (2013) 249 CLR 435 at 443 [8] (French CJ, Crennan and Kiefel JJ). 134 Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 8) [2008] FCA 470 (11 April 2008). 135 Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 8) [2008] FCA 470 (11 April 2008) at [88]. 136 Bridge Stockbrokers Ltd v Bridges (1985) 57 ALR 401. 137 Bridge Stockbrokers Ltd v Bridges (1985) 57 ALR 401 at 415.
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[3.100]
Evidence of the kind led in Cadbury Schweppes Pty Ltd v Darrell Lea from expert witnesses that members of the public are likely to be confused of caused to wonder will not suffice.
Silence as misleading conduct: general principles [3.100]
Whether silence amounts to “conduct” for the purposes of s 18 of the ACL is considered at [3.25]-[3.35].
Assuming that the definition of “conduct” in s 2 of the ACL can be satisfied, it is then necessary to consider whether the omission or withholding of information in a particular case was misleading.138 In Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd, different approaches were taken for determining whether the conduct at issue was misleading.139 One approach was to analyse whether the conduct viewed as a whole, conveyed a representation which was misleading. Another approach was to analyse whether the circumstances gave rise to a “reasonable expectation” that if some relevant fact existed, it would be disclosed to the person who claimed to have been misled.140 French CJ and Kiefel J observed: Reasonable expectation analysis is unnecessary in the case of a false representation where the undisclosed fact is the falsity of the representation. A party to precontractual negotiations who provides to another party a document containing a false representation which is not disclaimed will, in all probability, have engaged in misleading or deceptive conduct. When a document contains a statement that is true, non-disclosure of an important qualifying fact will be misleading or deceptive if the recipient would be misled, absent such disclosure, into believing that the statement was complete.141
The facts of the case were that Consolidated Timber Holdings, a borrower, engaged insurance broker, Miller & Associates (Miller), to assist it in applying for an insurance premium funding loan with a lender, BMW. Miller supplied BMW with documentation which included a memorandum and certificate of insurance with HIH. BMW lent Consolidated a sum of money which Consolidated did not fully repay. The insurance policy was not a cancellable policy. A cancellable property policy provides a form of security for a lender because in the event of a default by the borrower, the lender can cancel the policy and recover the unused premium. BMW claimed that Miller engaged in misleading conduct on two different bases: first, that the HIH certificate falsely represented that the underlying policy was cancellable and good security for the loan, when it was not; and secondly, that Miller failed to disclose to BMW an unattractive feature of the policy (that it was non-cancellable) a feature that BMW was not aware of. 138 See R V Miller, Australian Competition and Consumer Law Annotated (37th ed, Lawbook Co, Sydney, 2015), [1.S2.18.85]. 139 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at [19]. See McCabe, “When Silence Misleads, and When it Doesn’t?” (2011) 19 Australian Journal of Competition and Consumer Law 47 at 49-51. 140 The genesis of the “reasonable expectation” approach is to be found in the judgment of Gummow J in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 41. 141 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at [23].
[3.100]
3 Misleading or Deceptive Conduct
105
As regards, BMW’s first case, the majority (Heydon, Crennan and Bell JJ), concluded that the HIH certificate did not convey a representation that it was a cancellable policy.142 As regards BMW’s second case, the majority noted that BMW was known by Miller to be an “experienced premium lender”143 and the parties were “commercially sophisticated”.144 The majority held that Miller had not engaged in misleading conduct: Miller had supplied BMW with a copy of the policy. BMW was an experienced premium lender. The policy was not a lengthy document. It was apparent that it did not insure the holders against loss or damage to property. It did not contain a cancellation clause. Miller’s failure to draw to BMW’s attention a circumstance that the document itself disclosed was not misleading or deceptive.145
French CJ and Kiefel J agreed with the majority that, the HIH certificate did not contain a false representation that it was a cancellable policy.146 As regards BMW’s second case, on a close analysis of all the circumstances of the transaction, their Honours held that BMW could not have had a reasonable expectation that Miller would disclose that the policy was not cancellable. A copy of the policy was provided to BMW and they simply failed to read it.147 Their Honours observed: s 52 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.148
Commenting more broadly on the “reasonable expectation” test, their Honours observed: The language of reasonable expectation is not statutory. It indicates an approach which can be taken to the characterisation, for the purposes of s 52, 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. An example in the former category is non-disclosure of material facts in a prospectus.149
The “reasonable expectation” test is predicated on the assumption that one party is aware of an undisclosed fact and the circumstances and context of the case give rise to an objectively reasonable expectation on the part of the other party that the fact should be disclosed because it would be relevant or material in its decision-making. The reasonableness of the alleged expectation is to be assessed objectively, and not 142 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 383 at [87]. 143 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 383 at [85]. 144 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 384 at [91]. 145 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 386 at [96]. 146 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 383 at [24]. 147 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 383 at [26]. 148 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Lyd (2010) 241 CLR 357 at [22]. See also Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd (2011) 248 FLR 193 at [91]. 149 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at [19]-[20].
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[3.100]
be reference to the subjective expectation of the other party to the transaction.150 All of the members of the High Court in Miller & Associates v BMW were of the opinion that the lender could not have had a reasonable expectation that the broker would disclose that the policy was not cancellable.151 In Rhone-Poulenc,152 and a number of subsequent cases, it was suggested that silence will amount to misleading conduct where there was a “duty” to disclose the information withheld. Subsequently, this situation was incorporated into a general proposition that silence will amount to misleading conduct where the surrounding circumstances give rise to a “reasonable expectation” on the part of the respondent that information would be disclosed. In Demagogue Pty Ltd v Ramensky,153 Black CJ observed: 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 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.154
A reasonable expectation of disclosure may arise if the supplier inserts a term into a contract that is highly unusual or harsh from the consumer’s perspective. A reasonable expectation of disclosure is less likely to arise in the case of agreements between two commercial parties of roughly equal bargaining strength, experience and commercial sophistication. It is important to note that silence or a failure to disclose highly unusual or harsh term may also demonstrate a lack of good faith, and be a relevant consideration for determining whether a supply or acquisition of goods or services fell within the prohibition of statutory unconscionability in s 21 of the ACL.
150 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at [20]. 151 For a summary of the relevant principles, see Fabcot Pty Ltd v Port Macquarie-Hastings Council [2011] NSWCA 167 at [209] (Sackville AJA) cited with approval by Barrett JA in Traderight (NSW) Pty Ltd v Bank of Queensland Ltd [2015] NSWCA 94 at [192]. 152 Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477. 153 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31. 154 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 32. See Gillies, “Non-disclosure: Trade Practices Act, s 52” (2004) 78 Australian Law Journal 653; O’Shea, “Undisclosed Unusual and Unexpected Matters – Liability Issues under s 52 of the Trade Practices Act” (2006) 14(1) Competition & Consumer Law Journal 1; McCabe, “When Silence Misleads, and When it Doesn’t?” (2011) 19 Australian Journal of Competition and Consumer Law 47 at 50.
[3.105]
3 Misleading or Deceptive Conduct
107
Silence as misleading conduct: commercial negotiations [3.105]
In the context of commercial negotiations the courts have been reluctant to impose additional obligations of disclosure to those already imposed by the common law, such as where a fiduciary duty is owed to the other party, or where there is a sufficient relationship of proximity.155 In Lam v Ausintel Investments Australia Pty Ltd, Gleeson CJ observed: Where parties are dealing at arm’s length in a commercial situation in which they have conflicting interests it will often be the case that one party will be aware of information which, if known to the other, would or might cause that other party to take a different negotiating stance. This does not of itself impose any obligation on the first party to bring that information to the attention of the other party, and failure to do so would not, without more, ordinarily be regarded as dishonest or even sharp practice.156 (emphasis added)
There is no need to impose additional burdens where the parties are of roughly equal bargaining strength and each party is capable of ascertaining the relevant information. The “more” to which his Honour refers applies to other circumstances which may give rise to a “reasonable expectation of disclosure”. In Miller v BMW Australia, French CJ and Kiefel J observed: 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 52.157
For example, in Traderight (NSW) Pty Ltd v Bank of Queensland Ltd,158 the New South Wales Court of Appeal held that there was no reasonable expectation by prospective franchisees that the BOQ would disclose information regarding business volumes achieved by existing franchisees. The Bank operated through corporate branches and agencies which from 2001 to 2003 were converted to franchises and became known as Owner Manager Branches (OMBs). Eleven OMB principals who operated OMBs in NSW sued BOQ for losses they claimed to suffer from entering into their respective franchise agreements. Barrett JA (with whom Bathurst CJ and Beazley P agreed) stated that the crucial question was whether the 155 See Gillies, “Non-disclosure: Trade Practices Act, s 52” (2004) 78 Australian Law Journal 653 at 657-60; and Stewart and McClurg, “Playing your Cards Right: Obligations of Disclosure in Commercial Negotiations” (2007) Australian Mining and Petroleum Laws Association Handbook 36 at 36-8. 156 Lam v Ausintel Investments Australia Pty Ltd (1990) ATPR ¶40-990 at 50,880 (Gleeson CJ, Samuels AP and Meagher JA concurring). The same view was taken in Poseidon Ltd v Adelaide Petroleum NL (1991) 105 ALR 25 at 26 (Burchett J); General Newspapers Pty Ltd v Telstra Corp (1993) 45 FCR 164 especially at 177-9 and Leda Holdings Pty Ltd v Oraka Pty Ltd (1997) ATPR ¶41-601 at 40,513. 157 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at [20]. 158 Traderight (NSW) Pty Ltd v Bank of Queensland Ltd [2015] NSWCA 94.
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“course of dealing” by BOQ with each prospective franchisee was such as to give rise to an objectively reasonable expectation of disclosure.159 His Honour found that no objectively reasonable expectation of disclosure arose that BOQ should volunteer the information that BOQ possessed about the actual financial performance of existing OMBs in NSW because “all OMB principals were persons of some commercial sophistication, all had business experience and most had specifically banking experience”,160 and the OMB principals were told by BOQ that it was for them to investigate the feasibility and viability of their business proposal.161 By way of contrast, in Fabcot Pty Ltd v Port Macquarie-Hastings Council162 the Macquarie-Hastings Council was seeking to develop a parcel of land into a supermarket. The Council issued as an Expression of Interest (EOI) and conditionally accepted an offer from Woolworths, although the Council did not expressly state in the EOI process that it was negotiating with Woolworths exclusively. On 19 May 2009 the Council decided to negotiate with Coles for the sale of the land. The New South Wales Court of Appeal held that the EOI process gave rise to a reasonable expectation by Woolworths that it would receive notification before the Council commenced negotiations with a third party. The following factors were held to be relevant in the “course of dealing” between the successful tenderer (Woolworths) and the Council as part of the Expression of Interest (EOI) process: • the nature of the EOI process and the fact that a single bidder was selected; • the Council’s communication that it had conditionally accepted Woolworths’ offer; and • the nature of the project and the fact the proposal accepted by the Council would require a substantial level of collaboration by the negotiating parties.163 However, the EOI process did not give rise to an expectation that Woolworths would be entitled to notification for an indefinite period.164 Once it became clear that there were “substantial impediments to the finalisation of an agreement,”165 there was no longer any reasonable expectation that Woolworths was entitled to a period of exclusivity by reason of the EOI process. By 1 April 2009, serious issues remained unresolved. Sackville AJA stated:
159 Traderight (NSW) Pty Ltd v Bank of Queensland Ltd [2015] NSWCA 94 at [203]. 160 Traderight (NSW) Pty Ltd v Bank of Queensland Ltd [2015] NSWCA 94 at [204]. 161 Traderight (NSW) Pty Ltd v Bank of Queensland Ltd [2015] NSWCA 94 at [207]; Clifford v Vegas Enterprises [2011] FCAFC 135 at 144 and 226. 162 Fabcot Pty Ltd v Port Macquarie-Hastings Council [2011] NSWCA 167 (Sackville AJA with whom Beazley JA and Campbell JA agreed). 163 Fabcot Pty Ltd v Port Macquarie-Hastings Council [2011] NSWCA 167 at [223]. 164 Fabcot Pty Ltd v Port Macquarie-Hastings Council [2011] NSWCA 167 at [225]. 165 Fabcot Pty Ltd v Port Macquarie-Hastings Council [2011] NSWCA 167 at [227].
[3.110]
3 Misleading or Deceptive Conduct
109
A reasonable observer would have concluded at that point that in view of the urgency of completing a sale of the Land, the Council might well seek another negotiating partner and that Woolworths could no longer have an expectation that it would receive prior notice of the Council’s intention to do so.166
Thus, the Council had not engaged in misleading conduct on the 19 May 2009 when it decided to negotiate with Coles for the sale of the Land.
Silence: making known specific transactional requirements [3.110]
The circumstances or contextual factors that may be relevant in giving rise to a reasonable expectation of disclosure will now be considered. A reasonable expectation of disclosure is more likely to arise where one party, during pre-contractual negotiations, explicitly makes known a particular purpose or objective which that party is seeking to achieve, or specific transactional requirements by entering into the transaction.167 In Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd, Heydon, Crennan and Bell JJ held: There was nothing in the conduct of the parties … to convey that cancellability was important to the determination of this later application. The request for guarantees suggested that it was not. There was no foundation for the conclusion that the known importance of cancellability gave rise to a reasonable expectation, in the circumstances of this transaction, that Miller would not supply the HIH certificate in response to BMW’s request without disclosing at that time or later that the policy was not cancellable.168
This factor has been held to be relevant in other cases. For example, in Whitaker v Paxad Pty Ltd,169 a real estate agent acting in the sale of his mother’s home and who had grown up in the home, had a thorough knowledge of its defects which included water drainage problems in the garage. The purchasers informed the agent that they wished to use the garage as a home office. The agent disclosed to the purchasers that the back shed contained asbestos, but made no mention of the drainage problems in the garage. Blaxel J held that in the circumstances, it was reasonable for the purchasers to expect that if the garage was not suitable for their disclosed intended use, the agent would have told them so.170 Similarly, in EK Nominees Pty Ltd v Woolworths Ltd,171 a property developer, EK Nominees, and the owner of a chain of supermarkets, Woolworths, commenced negotiations for a lease that provided for construction of a supermarket on EK Nominees’ land (the Auburn Road site). EK Nominees expended significant amounts obtaining development approval and preparing the land for development in anticipation of obtaining a formal lease with Woolworths. Subsequently, a third 166 Fabcot Pty Ltd v Port Macquarie-Hastings Council [2011] NSWCA 167 at [229]. 167 For example, in Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 at 583 and 587-588 (Brennan, Deane, Gaudron and McHugh JJ), where the appellants made clear to the respondent’s agent that their express purpose was to acquire a tenanted property that would generate a 10% return on their investment. The seller was found to have breached s 52 of the TPA for failing to disclose a collateral agreement with the tenant for a rent-free period that would prevent the 10% return being realised. 168 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at [95]. 169 Whitaker v Paxad Pty Ltd [2009] WASC 47. 170 Whitaker v Paxad Pty Ltd [2009] WASC 47 at 98. 171 EK Nominees Pty Ltd v Woolworths Ltd [2006] NSWSC 1172.
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[3.115]
party developer (Markham Corporation) approached Woolworths with a superior development opportunity and Woolworths withdrew from the negotiations with EK Nominees. EK Nominees pleaded that Woolworths made two representations which were misleading. White J considered that Woolworths made an implied representation that it intended to enter into a lease on the terms and conditions contained in its approval letter of 18 July 2011, and that it was a continuing representation.172 White J held: The relevant conduct is the advertent failure to disclose Woolworths’ alleged change in intentions. It was Mr Hunt who deliberately made no disclosure of the approach of Markham Corporation or the implications that might have for the Auburn Road site. … If circumstances changed after the Property Committee’s approval was given, so that a decision had to be made as to whether Woolworths should go ahead, that decision would be made by representatives of the Property Committee, which did not include Mr Hunt. Mr Hunt was not the person authorised to decide whether or not Woolworths should enter into an agreement for lease.173
However, White J found: Woolworths’ failure to disclose its changed position, whilst continuing to encourage E K Nominees to carry out work on the project, and continuing to negotiate terms of the agreement for lease, was conduct, in trade or commerce, which was misleading or deceptive, or likely to mislead or deceive.174
By way of contrast, in Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd,175 Mr Anderson had been shown premises in which he planned to store his collection of antiques and art works. During a pre-lease inspection of the building Mr Anderson observed sprinkler heads and formed the erroneous impression that the premises had an operational sprinkler system. Mr Anderson stated that the building had to be “air-conditioned, waterproof and secure”, but said nothing about the need for fire protection. The trial judge found that Clambake had engaged in misleading conduct by failing to disclose that despite the visible sprinkler system, the premises did not have an operational fire protection system. On appeal, McLure P took into account that at no time during the inspection did Mr Anderson seek any information concerning the type of fire protection system in the building, and that Mr Anderson’s erroneous impression had never been expressly or impliedly communicated to Clambake.176 The appeal was upheld.
Silence: unusual or unexpected matters [3.115]
The existence of something unusual or unexpected may give rise to a reasonable expectation of disclosure in the circumstances of a particular case. If the other party is unable to find out the true position by conducting searches of public records or making other inquiries, a reasonable expectation of disclosure is more
172 EK Nominees Pty Ltd v Woolworths Ltd [2006] NSWSC 1172 at [139]. 173 EK Nominees Pty Ltd v Woolworths Ltd [2006] NSWSC 1172 at [147]-[149]. 174 EK Nominees Pty Ltd v Woolworths Ltd [2006] NSWSC 1172 at [156]. 175 Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd (2011) 248 FLR 193. 176 Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd (2011) 248 FLR 193 at [91].
[3.115]
3 Misleading or Deceptive Conduct
111
likely to arise. Deliberately concealing the existence of the unusual or unexpected matter may amount to misleading conduct. For example, in negotiating the sale of a quantity of scrap metal copper a reasonable expectation of disclosure arose where the purchaser became aware that it may have been stolen, but did not disclose this suspicion to the vendor.177 In negotiating the terms for a lease of premises for conducting a flying school, a reasonable expectation of disclosure arose where the lessor’s agent knew that there had been a risk of contamination on the site.178 In Abigroup Contractors Pty Ltd v Peninsula Balmain Pty Ltd,179 Barrett J, the primary judge, found that a developer (Peninsula) had breached s 52 of the TPA by failing to disclose to a building contractor (Abigroup) the existence of an agency agreement pursuant to which a third company (the superintendent) was Peninsula’s agent in all matters relating to the design and construction of the project. However, on appeal,180 the New South Wales Court of Appeal held that the primary judge erred in his finding of misleading or deceptive conduct. Hodgson JA stated: In my opinion, for conduct to be misleading or deceptive, it must be such as is apt to mislead or deceive in some non-trivial respect; so that to make out a case under s 52, Abigroup needed to show that the non-disclosure of the project management agreement was apt to do just that.181
There is nothing unusual or unexpected about undisclosed agency agreements. Generally, neither the principal nor the agent would engage in misleading conduct if the agent entered into a contract with a third party and failed to disclose the existence of the agency agreement. However, silence as regards the existence of a bid rigging arrangement may give rise to misleading or deceptive conduct. In Norcast SarL v Bradken Ltd (No 2),182 a request for bids was made in the United States by Norcast S ar L (Norcast) in relation to its subsidiary, a Canadian company, Norcast Wear Solutions Inc (NWS). There was an arrangement between Castle Harlan Inc (a private equity investment firm) and Bradken that Castle Harlan Inc would bid for NWS and Bradken would not bid (the bidding provision). It was at least possible that Castle Harlan Inc and Bradken would have competed with each other to acquire the shares in NWS but for the bid rigging arrangement. Norcast alleged that Castle Harlan and Bradken engaged in misleading or deceptive conduct during the course of the NWS sales process. Norcast relied upon Bradken’s silence about the bidding provision, the back-to-back sale arrangement with Castle Harlan and the fact that it and Castle Harlan were co-operating for the purpose of acquiring NWS. Gordon J found that Bradken took deliberate and deceptive steps: 177 Metal Corp Recyclers Pty Ltd v Metal Manufacturers Ltd (2004) ATPR (Digest) ¶46-243 at 54,203-54,204 (Handley JA). 178 Noor Al Houda Islamic College Pty Ltd v Bankstown Airport Ltd (2005) 215 ALR 625 (Hoeben J). 179 Abigroup Contractors Pty Ltd v Peninsula Balmain Pty Ltd (2001) ATPR (Digest) 46-213. 180 Abigroup Contractors Pty Ltd v Peninsula Balmain Pty Ltd [2002] NSWCA 211 (Hodgson JA, with whom Mason P and Stein JA agreed). 181 Abigroup Contractors Pty Ltd v Peninsula Balmain Pty Ltd [2002] NSWCA 211 at [54]. 182 Norcast SarL v Bradken Ltd (No 2) (2013) 219 FCR 14.
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The Australian Consumer Law
[3.120]
to prevent disclosure of its direct involvement in Castle Harlan’s acquisition of NWS. In doing so, by its silence, Bradken represented that it was not involved in Castle Harlan’s acquisition of NWS. That conduct was misleading and deceptive… Even in the absence of the Bid Rigging Arrangement, in all the circumstances, Bradken and Castle Harlan’s silence constituted misleading or deceptive conduct in contravention of the ACL. Bradken further submitted that Bradken’s silence was not misleading or deceptive in circumstances where Norcast knew that it was not uncommon for a private equity business to resell a company it had acquired. Norcast’s general awareness of the likelihood that Castle Harlan might, at some time in the future, sell NWS cannot and does not cure Bradken’s misleading or deceptive conduct by silence.183
Bradken appealed against the decision, but the parties subsequently reached a settlement so that no appeal was required. The Full Court made orders setting aside the orders of the primary judge, but left intact the reasoning and legal and factual conclusions.
Silence: subsequent change in circumstances [3.120]
A failure to qualify a statement made earlier in negotiations which is no longer accurate because of a subsequent change in circumstances, or varying agreed terms, may give rise to a reasonable expectation of disclosure. In Gregg v Tasmanian Trustees Ltd,184 it was held to be misleading for the respondent to ask the applicant to sign mortgage documents relating to her property without first informing her that the terms differed significantly from what they had agreed earlier. According to Merkel J: The fact that the mortgage departed in significant respects from the transaction agreed to by the respondent, gave rise to a reasonable expectation that the changes and their effect would be brought to the attention of the applicant. A failure to do so and remaining silent in the circumstances, in itself, can constitute conduct in contravention of s 52 …185
It may be misleading or deceptive conduct not to correct a representation which was true when it was originally made but which later becomes false, or qualified in some way due to a subsequent change in circumstances. The common law rule that representations, once made, are treated as continuing beyond the time they are made, was applied in relation to the TPA. For example, in Wildsmith v Dainford Ltd,186 the applicants purchased a unit off-the-plan on the basis of a representation that the balconies would have certain features substantially in accordance with the sketch in the contract. When constructed the balconies departed in significant respects from the sketch. Similarly, in Burg Design Pty Ltd v Wolki,187 the applicant purchased a business (selling barbecued chicken) on the basis of representations by 183 Norcast SarL v Bradken Ltd (No 2) (2013) 219 FCR 14 at [317]-[318]. 184 Gregg v Tasmanian Trustees Ltd (1997) 73 FCR 91. 185 Gregg v Tasmanian Trustees Ltd (1997) 73 FCR 91 at 108. See also Finucane v NSW Egg Corp (1988) 80 ALR 486 (Lockhart J); Johnson Tiles Pty Ltd & Ors v Esso Australia Ltd & Anor (1999) ATPR ¶41-696 at 42,888-9 (Merkel J); and Metalcorp Recyclers Pty Ltd v Metal Manufacturers Ltd (2004) ATPR (Digest) ¶46-243 at 54,203 [14] (Handley JA). 186 Wildsmith v Dainford Ltd (1983) 51 ALR 24 at 31-34 (Smithers J). 187 Burg Design Pty Ltd v Wolki (1999) ATPR ¶41-689 at 42,810 (Burchett J).
[3.125]
3 Misleading or Deceptive Conduct
113
the respondent that it made “$130,000 a year by way of net profit”. Burchett J held that it was misleading to fail to correct the previous statements and accounts. The issue of failure to disclose subsequent changes also arose in Peterson v Merck Sharpe & Dohme (Aust) Pty Ltd.188 It was held to be misleading for MSDA not to qualify its pharmaceutical Product Information brochure for Vioxx once it was aware of the results of the subsequent VIGOR trial which demonstrated that the use of Vioxx increased the risk of heart attack. Jessup J did not hold that the initial Product Information was misleading. Rather, his Honour held that the misleading conduct was constituted by the failure to draw the attention of doctors and other health care professionals to the increased cardiovascular risk that emerged from the VIGOR study. Jessup J held: …MSDA’s failure to provide any qualification to what was then contained in the Product Information did … amount to misleading information.189
Silence: case examples [3.125]
Cases where a reasonable expectation of disclosure has arisen include:
• on the part of a purchaser, where the trading figures disclosed were accurate, but they misrepresented the true trading position;190 • on the part of a purchaser, where the vendor knew that its major client, which represented almost two-thirds of its annual sales, had just had its Government funding reduced by 40% and future orders would be reduced in consequence;191 • on the part of a purchaser negotiating the sale of a restaurant, where the vendor knew that the actual seating capacity differed from the licensed seating capacity;192 • on the part of a purchaser, where the vendor’s agent informed the purchaser that there was a proposal to lease the property in a certain manner when the agent knew that it could not be used in this manner without a local government permit which had not been obtained;193 • on the part of a shopping centre developer negotiating terms for a lease, where the prospective anchor tenant failed to disclose that it had already decided not to take up a lease in the shopping centre;194 188 Peterson v Merck Sharpe & Dohme (Aust) Pty Ltd (2010) 184 FCR 1 (Jessup J). 189 Peterson v Merck Sharpe & Dohme (Aust) Pty Ltd (2010) 184 FCR 1 at 338 [904]. This finding was not challenged on the appeal. 190 See CPI Group Ltd v Stora Enso Australia Pty Ltd (2007) ATPR ¶42-193 (Branson, Stone and Edmonds JJ). See also Townsend v Roussety & Co (WA) Pty Ltd (2007) 33 WAR 321 at [92] (Buss JA, with whom Wheeler JA and McClure JA agreed). 191 Caffwy v Leatt-Hayter (No 3) [2013] WASC 348 (Beech J). 192 Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546 (Lockhart J, Burchett and Foster JJ concurring). 193 Aliotta v Broadmeadows Bus Service Pty Ltd (1988) ATPR ¶40-873 (Gray J). 194 E K Nominees Pty Ltd v Woolworths Ltd [2006] NSWSC 1172 (16 November 2006).
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• on the part of potential investors in a joint venture corporation, where one of the directors was an undischarged bankrupt;195 and, • on the part of a prospective purchaser of a Pizza Haven restaurant, where the vendor failed to disclose that a Pizza Hut restaurant was opening nearby.196 Cases in which no objectively reasonable expectation of disclosure has arisen include: • on the part of a purchaser, that a bank would disclose that the vendor’s business was unprofitable because the bank was under a pre-existing duty of confidence to the vendor;197 • on the part of a commercial borrower, that a lender will explain the intricacies of the financial system and the risk of loss;198 • on the part of a building contractor, that a mortgagee would disclose that a property developer was facing insolvency and would not be able to pay for the work done;199 • on the part of a lessor, that a prospective tenant had changed its intention to take up the lease where the correspondence made clear that either party was free to withdraw at any time prior to execution;200 • on the part of a purchaser, that the vendor of a Service Centre for trucks and cars would disclose the past history or causes of fracturing in pavement bitumen which was unsuitable for heavy vehicles in the absence of specific questions raised by the purchaser;201 • on the part of new franchisees, that the franchisor would share with them information that the franchisor possessed about the financial performance and business levels achieved by existing franchisees, when it had been made clear, both orally and in writing, that it was for the prospective franchisees to investigate the feasibility and viability of their own business proposal;202 and, 195 Dawson v LNG Holdings [2008] NSWSC 137 (White J). 196 Hardy v Your Tabs Pty Ltd [2000] NSWCA 150 (22 June 2000) (Heydon JA, with whom Meagher JA and Foster AJA agreed). 197 Kabwand v National Australia Bank (1989) ATPR ¶40-950 (Lockhart, Hartigan and Hill JJ) and Finding v Commonwealth Bank of Australia [2001] 1 Qd R 168. The Banks were found not to have breached s 52 for failing to disclose information concerning the business or financial affairs of another client. In the absence of a fiduciary relationship to disclose matters regarding other clients there could be no reasonable expectation of disclosure in such circumstances because of the duty of confidentiality owed by a bank to a client. See also Advanced Switching Services Pty Ltd v State Bank of New South Wales [2007] FCA 954 (Rares J) and Ibrahim v Phan [2007] NSWCA 215, where the NSW Court of Appeal held that in the circumstances of that case there was no reasonable expectation of disclosure by a solicitor. 198 Warner v Elders Rural Finance Ltd (1993) 113 ALR 517 at 522-523 (Hill J). 199 Winterton Constructions Pty Ltd v Hambros Australia Ltd (1993) ATPR ¶41-205 (Hill J). A borrower is entitled to expect that his financier will keep confidential matters concerning the borrower’s financial affairs. 200 BBB Constructions Pty Ltd v Aldi Foods Pty Ltd [2010] NSWSC 1352 at [254]-[256] (McDougall J). 201 Mercland Investment Group Pty Ltd v Duncalm Pty Ltd [2012] FCA 183 at [117] (Edmonds J). 202 Traderight (NSW) Pty Ltd v Bank of Queensland Ltd [2015] NSWCA 94 at [203]-[213] (Barrett JA, with whom Bathurst CJ and Beazley P agreed).
[3.135]
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• on the part of a sports program supplier, that a customer was engaged in discussions with an alternative program supplier.203
Literal truth [3.130]
While a statement may be literally true or factually accurate, it may, depending on its context, create a misleading impression. In Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd, Stephen J held: [W]hat the Hornsby Centre has done is, in a sense, no more than to use its own corporate name in association with its activities. No doubt the meaning of the statutory prohibition which s 52(1) enunciates must be gained from the terms of the subsection itself; but nothing in those terms suggests that a statement made which is literally true, ie, that the centre at Hornsby is conducted by Hornsby Building Information Centre Pty Ltd may not at the same time be misleading and deceptive. It clearly may be. To announce an opera as one in which a named and famous prima donna will appear and then to produce an unknown young lady bearing by chance that name will clearly be to mislead and deceive. The announcement would be literally true but none the less deceptive, and this because it conveyed to others something more than the literal meaning which the words spelled out.204
Similarly, in National Exchange Pty Ltd v ASIC,205 it was held to be misleading or deceptive in contravention of s 1041H of the Corporations Act 2001 (Cth) for the appellant to compare the price it was offering to pay shareholders for their shares with the current market price without drawing attention to the fact that the purchase price it was offering would be paid by instalments over 15 years. Although there were no false statements in the offer document, it created the false impression that was likely to mislead members of the target audience. In Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd, French CJ and Kiefel J observed: When a document contains a statement that is true, non-disclosure of an important qualifying fact will be misleading or deceptive if the recipient would be misled, absent such disclosure, into believing that the statement was complete. In some cases it might not be necessary to invoke non-disclosure at all where a statement which is literally true, but incomplete in some material respect, conveys a false representation that it is complete.206
Representations with respect to future matters [3.135]
Section 4 of the ACL contains an important evidentiary provision which may assist an applicant in a claim based on s 18 of the ACL. Where the conduct at issue contains a representation as to a future matter, the person making the representation must adduce evidence that there were reasonable grounds for making the representation or it will be deemed be misleading.
203 Seven Network Ltd v News Ltd [2007] FCA 1062 (27 July 2007) (Sackville J). This finding was not challenged on the appeal. 204 Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 227-8. 205 National Exchange Pty Ltd v ASIC (2004) ATPR ¶42-000. 206 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at [23].
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Section 4 of the ACL provides: (1) 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. (2) For the purposes of applying subsection (1) in relation to a proceeding concerning a representation made with respect to a future matter by: (a) a party to the proceeding; or (b) any other person; the party or other person is taken not to have had reasonable grounds for making the representation, unless evidence is adduced to the contrary. (3) 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. (4) Subsection (1) does not limit by implication the meaning of a reference in this Schedule to: (a) a misleading representation; or (b) a representation that is misleading in a material particular; or (c) conduct that is misleading or is likely or liable to mislead; and, in particular, does not imply that a representation that a person makes with respect to any future matter is not misleading merely because the person has reasonable grounds for making the representation.
Section 4 of the ACL is based on s 51A of the TPA.207 According to the Second Explanatory Memorandum: Section 4 of the ACL includes a provision that replaces section 51A of the TPA. It places an evidentiary burden on a defendant who is alleged to have made a representation as to a future matter that is misleading. When compared to section 51A, the new provision seeks to clarify that • the burden of proof under this section is evidentiary in nature and does not place a legal burden on defendants to prove that representations were not misleading; • satisfying the burden of proof under this section does not constitute a substantive defence for breach of any other section of the ACL; and • the section can operate in proceedings against accessories to contraventions as well as primary contraveners.208
If the respondent adduces no evidence as to the existence of reasonable grounds for making the representations, ss 4(1) and (2) of the ACL operate to deem the representations to be misleading and contrary to s 18 of the ACL.209 Adducing 207 Duke, “Representations as to the Future under the Proposed Australian Consumer Law” (2009) 33 Melbourne University Law Review 454. 208 Second Explanatory Memorandum, [2.22]-[2.26]. 209 ACCC v South East Melbourne Cleaning Pty Ltd (in liq) (formerly known as Coverall Cleaning Concepts South East Melbourne Pty Ltd) [2015] FCA 25 at [94] and [102].
[3.135]
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some evidence that tends to establish reasonable grounds for making the representation discharges the onus on the respondent/representor and eliminates the operation of the deeming provision in s 4(2) of the ACL. There will be no automatic deeming as there would be if the respondent adduced no evidence at all. When the respondent adduces evidence, it will then be a matter for the court to determine whether that evidence establishes reasonable grounds.210 For example, in Bennett v Elysium Noosa Pty Ltd (in liq),211 the applicant purchaser alleged that real estate agents had no reasonable grounds for making oral representations that a Community Centre would be completed in Stage 1 of a development. Reeves J found that the respondent (property developer) had adduced quite extensive evidence to avoid the deeming provision in TPA, s 51A(2) (now ACL, s 4(2)).212 It was then a matter for Reeves J to assess under TPA, s 51A(1) (now ACL, s 4(1)), on all the evidence, whether he was satisfied on the balance of probabilities, that the property developer had reasonable grounds to make the representations it did. If it had reasonable grounds the representations would not be taken to be misleading. If it did not have reasonable grounds, the representations would be taken to be misleading. If the court was not persuaded either way, the applicant would fail because the onus of proof still rested on the applicant.213 His Honour concluded that there were no reasonable grounds and the representations were misleading: This review of the evidence relating to the Community Centre building as at early 2005, when the Burkes made the representations about it, shows that it was a component of the Elysium Noosa development for which there was no development approval, no final plans or design drawings, no construction program, no reliable costings and no genuine commitment to it by the joint venture partners.214
Section 4 of the ACL highlights the importance of preserving contemporaneous evidence that substantiates any representations made during pre-contractual negotiations or in advertising material. In relation to s 51A (now s 4, ACL) Heerey J stated in Sykes v Reserve Bank of Australia:215 If there was a representation as to a future matter, s 51A requires the representor to show: • some facts or circumstances • existing at the time of the representation • on which the representor in fact relied • which are objectively reasonable and • which support the representation made.216 210 See McGrath v Australian Naturalcare Products Pty Ltd (2008) 165 FCR 230 at [191]-[192] (Allsop J) and ALDI Stores v EFTPOS Payments Australia Ltd (2011) ATPR ¶42-371 at 44,319 (Jacobson J). 211 Bennett v Elysium Noosa Pty Ltd (in liq) (2012) 202 FCR 72 at [78]. 212 Bennett v Elysium Noosa Pty Ltd (in liq) (2012) 202 FCR 72 at [120]. 213 Bennett v Elysium Noosa Pty Ltd (in liq) (2012) 202 FCR 72 at [120]. 214 Bennett v Elysium Noosa Pty Ltd (in liq) (2012) 202 FCR 72 at [161]. 215 Sykes v Reserve Bank of Australia (1998) 88 FCR 511. 216 Sykes v Reserve Bank of Australia (1998) 88 FCR 511 at 513. Sundberg J agreed.
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The third proposition – a requirement that that the representor show that the grounds said to be reasonable were in fact relied upon by the representor at the time of making the representation – was not contained within the wording of s 51A. It was said to be “implicit” in the provision.217 Whether the Sykes requirement is thought to be implicit in the language of s 4 of the ACL remains to be seen.218 If a person intends to rely on s 4 of the ACL they ought to plead to that effect so that the person alleged to have made the representation as to a future matter has notice that they are required to adduce evidence to avoid the deeming effect of s 4(1) of the ACL. In SPAR Licensing Pty Ltd v MIS QLD Pty Ltd,219 Foster J stated: In my view, a party who wishes to rely upon s 51A (or its equivalent in the Australian Consumer Law) should specifically plead its intention to do so in the first pleading where it is appropriate to do so. Although not bearing any ultimate onus of proof on the issue of reasonable grounds, the counter-party ought then be required to plead that it had reasonable grounds for making the relevant statement and to specify with particularity the nature of those grounds and, by way of particulars, the substance of the evidence it intends to adduce to establish those grounds.220
Case examples: representations about future matters In Ventouris Enterprises Pty Ltd v Dib Group Pty Ltd221 the Dib Group was a franchisor of services stations. The Chief Executive Officer was Mr George Dib. The plaintiff was a small lending business. It lent $100,000 to E-Style Marketing which operated three service stations as a franchisee and lessee from the Dib Group. E-Style was placed into receivership and the loan was not repaid. The plaintiff claimed that it was induced to make the loan on the basis of representations made by the Dib Group and Mr George Dib that were misleading. The plaintiff’s case was based on positive representations that were alleged to be misleading: Mr Dib recommended E-Style as a suitable borrower. He represented that its owners were running a good business and would be suitable borrowers. Mr Dib also stated:
[3.140]
Short-term lending normally brings 20%. You will be helping us and we will be helping you… Nothing will go wrong, I assure you. It will be OK trust me. The Dib Group won’t let anything go wrong.
Slattery J found that Mr Dib did encourage the plaintiff to invest in service stations sites franchised from the Dib Group by lending money to Dib Group franchisees and that such a conversation did occur.222 His Honour held: 217 Botany Bay City Council v Jazabas Pty Ltd [2001] NSWCA 94 at [85] (Mason P). 218 See Eastwood, “Future Representations and the Grounds that May Be Relied on to Establish Reasonableness” (2015) 89 Australia Law Journal 270. 219 SPAR Licensing Pty Ltd v MIS QLD Pty Ltd [2014] FCAFC 50. 220 SPAR Licensing Pty Ltd v MIS QLD Pty Ltd [2014] FCAFC 50 at [77] and O’Neill v Medical Benefits Fund of Australia Ltd (2002) 122 FCR 455 at 461-3 [15]–[21]). See McCabe, “Important Lessons on the Approach to Claims of Misleading or Deceptive Conduct that Involve Representations as to Future Matter” (2014) 22 Australian Journal of Competition and Consumer Law 215. 221 Ventouris Enterprises Pty Ltd v Dib Group Pty Ltd [2010] NSWSC 963 (13 September 2010). 222 Ventouris Enterprises Pty Ltd v Dib Group Pty Ltd [2010] NSWSC 963 at [23].
[3.145]
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The repeated emphasis at the time of these assurances on the role of the Dib Group and the role of Mr George Dib as the speaker and CEO of the Dib Group also support the inference that the defendants were representing that they would ensure that the proposed $100,000 loan would be repaid with interest.223
These representations related to future matters and the case relied upon s 51A of the TPA. His Honour concluded: The defendants have not established that they did have reasonable grounds for making representations as to the future matters about which Mr George Dib assured Ms Ventouris. The absence of evidence of reasonable grounds and evidence in this case compels the inference that the defendants engaged in misleading and deceptive conduct.224
The New South Wales Court of Appeal confirmed that Mr Dib did not have reasonable grounds for making the relevant representations.225 Section 18 of the ACL, and its predecessor s 52 of the TPA, have been used extensively in the context of representations made to potential investors about the future profitability of a business or investment.226 Section 18 of the ACL, and its predecessor s 52 of the TPA, have also been used extensively in the context of representations made to potential purchasers about the facilities, uses and amenities that will be available when a property development is completed.227
Contractual promises [3.145]
Section 2(2)(a) and (b) of the ACL defines engaging in conduct to include “the making of, or giving effect to a provision of, a contract”. As a result, “making” a contract, as well as “refusing” to perform its terms, can amount to engaging in conduct for the purposes of s 18. A contractual promise about an existing matter of fact will contravene s 18 where the facts are not as promised and this misleads someone whom the promisor knew may rely on that promise. In such a case, the promise will convey a misrepresentation to that person and liability will arise for that reason. A promise may also contain an implied representation of existing fact, namely that the promisor has a present intention to make good the promise, or that the promisor has the means to do so.228
223 Ventouris Enterprises Pty Ltd v Dib Group Pty Ltd [2010] NSWSC 963 at [88]. 224 Ventouris Enterprises Pty Ltd v Dib Group Pty Ltd [2010] NSWSC 963 at [94]. 225 Dib Group Pty Ltd v Ventouris Enterprises Pty Ltd (2011) 284 ALR 601; [2011] NSWCA 300 at [41]-[45] (Allsop P, with whom Macfarlan and Handley JJA agreed). 226 ACCC v South East Melbourne Cleaning Pty Ltd (in liq) [2015] FCA 25; ACCC v Halkalia Pty Ltd (No 2) (2012) ATPR ¶42-399; Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199; ACCC v Oceana Commercial Pty Ltd (2004) ATPR (Digest) ¶46-244; Nescor Industries Group Pty Ltd v Miba Pty Ltd (1998) ATPR ¶41-609; Wheeler Grace & Pierucci Pty Ltd v Wright (1989) ATPR ¶50-239; Bateman v Slater (1987) 71 ALR 553; Jelin Pty Ltd v Murdoch Pty Ltd (1985) ATPR ¶40-562; Gardiner v Suttons Motor (Homebush) Pty Ltd (1983) 48 ALR 142; Lyons v Kern Konstructions (Townsville) Pty Ltd (1983) 47 ALR 114; Thompson v Mastertouch TV Services Pty Ltd (No 2) (1977) 29 FLR 270. 227 Bennett v Elysium Noosa Pty Ltd (in liq) (2012) 202 FCR 72; John G Glass Real Estate Pty Ltd v Karawi Constructions Pty Ltd (1993) ATPR ¶41-249; Havyn Pty Ltd v Webster (2005) 220 ALR 211; Bowler v Hilda (1998) 80 FCR 191; Byers v Dorotea Pty Ltd (1987) ATPR ¶40-760; and Stack v Coast Securities No 9 Pty Ltd (1983) 46 ALR 451. 228 Body Bronze International Pty Ltd v Fehcorp Pty Ltd (2011) 34 VR 536 at [49].
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[3.150]
In Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd, Lockhart and Gummow JJ observed: the making of a statement as to a presently existing state of affairs, if false, may be the engaging in misleading or deceptive conduct, where the statement is embodied as a provision of a contract.229
This observation was endorsed by French CJ in Campbell v Backoffice Investments Pty Ltd, who stated: There is no reason in principle why the fact that a false statement is contained in a contractual document thereby takes the use of that statement in the document out of the scope of “misleading or deceptive conduct”.230
Where the promise is about some future matter, assistance may be derived from s 4 of the ACL which is discussed at [3.135]. Where a contractual promise is about some future matter, the mere failure of the promisor to perform the promise will not constitute misleading or deceptive conduct. According to the Full Court in Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd this is because: [T]he non-fulfilment of a promise when the time comes for performance arrives does not of itself establish that the promisor did not intend to perform it when it was made or that the promisor’s intention lacked any, or any adequate, foundation.231
However, the promisor must adduce some evidence that tends to establish reasonable grounds for making the contractual promise to discharge the onus on the promisor and eliminate the operation of the deeming provision in s 4(2) of the ACL. In Digi-Tech (Australia) Ltd v Brand,232 the New South Wales Court of Appeal held that a representation expressed as a belief that projected sales would be achieved or a belief concerning the potential profitability of products did not preclude it from having the character of a representation as to a future matter.233
Expressions of opinion, law and legal rights [3.150]
The early case law on s 52 of the TPA drew a distinction between expressions of fact and expressions of opinion. Having identified the impugned statement as an opinion, the court then inquired into the mental state of the maker of the statement to determine whether the opinion was honestly held, and also whether it was reasonable for the maker of the statement to hold that opinion. In Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd, the Full Court held that:
229 Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 at 505. 230 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at 322 [35]. 231 Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 88. See R V Miller, Australian Competition and Consumer Law Annotated (37 ed, Lawbook Co, Sydney, 2015), [1.S2.18.90]. 232 Digi-Tech (Australia) Ltd v Brand (2004) ATPR (Digest) ¶46-248 (Sheller JA, Ipp JA and McColl JA). 233 Digi-Tech (Australia) Ltd v Brand (2004) ATPR (Digest) ¶46-248 at 54,241 [114]. See also Sydney Harbour Casino Properties Pty Ltd v Coluzzi (2003) ATPR (Digest) ¶46-238 at [24] (Mason P); Ting v Blanche (1993) 118 ALR 543 at 553 (Hill J); Sykes v Reserve Bank of Australia (1998) 88 FCR 511 at 514 (Heerey J) and 520-521 (Sundberg J).
[3.150]
3 Misleading or Deceptive Conduct
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An expression of opinion which is identifiable as such conveys no more than that the opinion expressed is held and perhaps that there is a basis for the opinion. At least if those conditions are met, an expression of opinion, however erroneous, misrepresents nothing.234
Something must have been misleading at the time the statement was made. An expression of opinion may be misleading if it implies a representation of an existing fact which is false. For example, the expression of an opinion may be accompanied by an implied representation that the speaker holds that opinion. In such cases liability for misleading conduct may well arise should that implied representation be false.235 Thus, a reasonable reader of an expression of opinion would expect the person expressing the opinion to have a genuine and reasonable basis for making the statements,236 or that it is based upon appropriate research. For example, in Bateman v Slatyer,237 the respondents’ representations concerning the cash flow of the business being sold to the applicants and their ability to afford it were found to contravene s 52 because no serious attempt had been made to establish a basis for the cash flow projection and the respondents could not have believed that the figures it used were soundly based. Similarly, in Thompson v Ice Creameries of Australia Pty Ltd,238 a representation as to the suitability of a site for the establishment of an ice cream franchise was found to be misleading because there were no reasonable grounds for this opinion. As the speaker held himself out to be a leader in the industry, the representation conveyed not merely that he believed that the site was suitable but that, based on information available to him there were reasonable grounds for that belief. As there were no such grounds, s 52 was contravened. An incorrect statement of law or a statement about legal rights can constitute misleading conduct, but one needs to be cautious about reaching a conclusion that such a representation has been made. In ASIC v Fortescue Metals Group Ltd [No 5],239 the issue was whether Fortescue Metals Group Ltd (“FMG”) and its Chief Executive Officer, Mr Forrest, had contravened s 1041H of the Corporations Act, which prohibits misleading conduct by a person in relation to a financial product or a financial service, by announcing to investors and potential investors in FMG shares in emphatic, unequivocal and unqualified terms that FMG had entered into “binding contracts” with Chinese state-owned entities, when, in fact, the contracts were not legally binding.240 At first instance, Forrest and FMG were successful in 234 Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 88. 235 Amadio Pty Ltd v Henderson (1998) 81 FCR 149 at 239 (Macaulay AJA, with whom Harper JA and Hansen JA agreed). 236 Global Sportsman v Mirror Newspapers (1984) 2 FCR 82 at 88; James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 347 at 372 (Toohey J); Wright v Wheeler Grace & Pierucci Pty Ltd (1988) ATPR ¶40-865 at 49,375-6 (French J); affirmed in Wheeler Grace & Pierucci Pty Ltd v Wright (1989) 16 IPR 189; Bateman v Slayter (1987) 71 ALR 553 at 559 (Burchett J). 237 Bateman v Slatyer (1987) 71 ALR 553. 238 Thompson v Ice Creameries of Australia Pty Ltd (1998) ATPR ¶41-611 at 40,693 (Lehane J). 239 ASIC v Fortescue Metals Group Ltd [No 5] (2009) 264 ALR 201, 341 [684] (Gilmour J). 240 Forrest v ASIC (2012) 247 CLR 486. See Humphrey and Corones,“Forrest v ASIC: A Perfect Storm” (2014) 88(1) Australian Law Journal 26.
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[3.150]
the Federal Court,241 but then they lost an appeal by ASIC to the Full Federal Court, which unanimously upheld the appeal.242 On a further appeal, the High Court unanimously found that FMG and Forrest had not engaged in misleading or deceptive conduct.243 French CJ, Gummow, Hayne and Kiefel JJ, in their joint reasons, did not think that the representations conveyed some message about legal enforceability: it is ultimately unprofitable to attempt to classify the statement according to some taxonomy, no matter whether that taxonomy adopts as its relevant classes fact and opinion, fact and law, or some mixture of these classes. It is necessary instead to examine more closely and identify more precisely what it is that the impugned statements conveyed to their audience.244
Heydon J reached the same conclusion as the majority that FMG’s statements were not misleading, but his approach differed from that of the majority. His Honour adopted the fact/opinion distinction. Heydon J considered that the existence of reasonable grounds to support an opinion had come to be expected in the pre-existing case law. Heydon J observed: It is also often said that to state an opinion which one does hold implies that one has reasonable grounds for holding it. In some circumstances that may be so, but why should it be so in all? Assume that two people are asked: “In your opinion, is that document a contract?”, one answers “Yes”, and the other answers “Yes, and I have reasonable grounds for that view”. The two answers are different. The first answer does not imply the second, unless there are special circumstances indicating that it should.245
Heydon J cast doubt on the existence of a requirement that there be any grounds or reasonable grounds for an opinion: As noted above, the case which originated the fact/opinion distinction in this field offered no support for the requirement that there be grounds, let alone reasonable grounds, for an opinion if it were not to be misleading. … The matter calls for examination on some future occasion.246
In some cases the conduct at issue may involve a combination of representations as to present fact, future matters and opinion. Where a business makes false or misleading claims about the past performance characteristics of its product, and predicted rates of future success in a comparative advertising campaign, it will be required to adduce evidence of reasonable grounds if the operation of s 4(2) of the ACL is to be avoided.247
241 ASIC v Fortescue Metals Group Ltd [No 5] (2009) 264 ALR 201. 242 ASIC v Fortescue Metals Group Ltd (2011) 190 FCR 364 at 504 [32]. 243 Forrest v ASIC (2012) 247 CLR 486. 244 Forrest v ASIC (2012) 247 CLR 486 at 505 [33]. 245 Forrest v ASIC (2012) 247 CLR 486 at 525 [102] (citations omitted). 246 Forrest v ASIC (2012) 247 CLR 486 at 525 [103], citing Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 88 (Bowen CJ, Lockhart and Fitzgerald JJ). 247 IDP Education Ltd v Lejburg Pty Ltd [2015] VSC 650 at [67] (Judd J).
[3.155]
3 Misleading or Deceptive Conduct
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Information asymmetry [3.155]
In cases involving information asymmetry, or where representors hold themselves out as having specialist knowledge or expertise, the court may find that a reasonable member of the target audience may conclude that the representation conveyed not merely that the maker believed the claim, but also that there were reasonable grounds for that belief, or, in the case of scientific or medical claims, that there was an adequate scientific or medical basis for the claim. If there is no adequate basis to substantiate the claim it will be found to be misleading.
In ACCC v Safe Breast Imaging Pty Ltd,248 the respondent conducted a breast imaging business using a device known as a multi-frequency electrical impedance mammograph (MEM device). The respondent made a number of representations, including a representation that the MEM device could be used for assessing whether a customer was at risk from breast cancer and the level of that risk (the risk of cancer representation), and that imaging with the MEM device was a substitute for a breast cancer screening mammogram, such as ultrasound and magnetic resonance imaging (the substitute for mammography representation). Barker J found that the risk of cancer representation in the promotional materials “conveyed the representation that the MEM device could provide an adequate scientific basis for assessing whether a customer was at risk from breast cancer and if so, the level of such risk”.249 Similarly, in ACCC v Breast Check Pty Ltd,250 Breast Check published promotional pamphlets stating that its thermography devices for conducting breast imaging could be used for assessing whether a customer was at risk from breast cancer and the level of that risk. The ACCC also alleged that Breast Check’s claim contained representation that there was an adequate scientific basis for using the thermography devices as a substitute for mammography. It was held that Breast Check had contravened s 53(c) of the TPA and s 29(1)(g) of the ACL. Barker J found: In the context of a representation of a medical nature …it would be entirely reasonable for a consumer to conclude that, where a service of a medical nature is being provided, there would be scientific medical evidence of a sufficient quality to support the use of the equipment used to provide such a service and that the use of breast imaging devices would not be promoted in a way as to be contrary to the state of scientific medical knowledge.251
What constitutes an “adequate” basis was considered by Barker J stated: As to the question of the representation conveying that there is an adequate scientific or medical basis, I accept the submission made on behalf of ACCC that the word “adequate” should be taken in the sense by which it is generally understood. In the medical context that is that the service is provided according to evidence based medical knowledge and that there is sufficient support in medical science for the use of the devices for the 248 ACCC v Safe Breast Imaging Pty Ltd (2014) ATPR ¶42-464 (Barker J). 249 ACCC v Safe Breast Imaging Pty Ltd (2014) ATPR ¶42-464 at [68]. 250 ACCC v Breast Check Pty Ltd (2014) ATPR 42-479. 251 ACCC v Breast Check Pty Ltd (2014) ATPR ¶42-479 at [141].
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[3.160]
purposes represented. This is particularly so in the context of assessing whether or not a person may have or be at risk of breast cancer, which is clearly a question of medical science.252
Finally, in ACCC v Homeopathy Plus! Australia Pty Ltd,253 the respondent made representations on its website to the effect that there was a reasonable basis, in the sense of an adequate foundation, to enable it to state that its homeopathic treatments were a safe and effective alternative treatment to the whooping cough vaccine. It was found to have contravened s 18 and s 29(1)(a) of the ACL by representing that its homeopathic treatments were of a particular standard or quality, and s 29(1)(g) of the ACL by representing that its homeopathic treatments had a use or benefit. The court found that there was no reasonable basis, in the sense of an adequate foundation, in medical science to make such a representation. Perry J stated: In line with the lack of published evidence supporting the asserted effectiveness of homeopathic treatments for whooping cough, the consensus based on medical science is that homeopathic treatments are not an effective alternative to the whooping cough vaccine for the prevention of whooping cough.254
In summary, the “real question” in a misleading conduct case is not the “mental state” of the maker of the statement, but the effect of a statement upon its audience – whether the statement is apt to mislead those to whom it is published. This in turn will depend on the knowledge base attributed to a reasonable member of the target audience. However, if the opinion concerns a future matter, the speaker must adduce some evidence that tends to establish reasonable grounds for holding it, in order to eliminate the operation of the deeming provision in s 4(2) of the ACL.
Exclusion clauses [3.160]
An exclusion clause refers to a provision of a contract which purports to exclude or exempt one party from liability for misleading conduct that has already occurred. Such a clause will not normally break the nexus between pre-contractual misleading conduct and the loss or damage suffered as a result of entering into the contract. For many years the courts have consistently recognised that as a matter of public policy, an exclusion clause should not be allowed to defeat the operation of s 18 of the ACL.255
252 ACCC v Breast Check Pty Ltd (2014) ATPR 42-479 at [139]. There is a line of authority that supports this approach. See Global Sportsman v Mirror Newspapers (1984) 2 FCR 82 at 88 (Bowen CJ, Lockhart and Fitzgerald JJ); James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 347 at 372 (Toohey J); Wright v Wheeler Grace & Pierucci Pty Ltd (1988) ATPR ¶40-865 at 49,375-6 (French J); affirmed in Wheeler Grace & Pierucci Pty Ltd v Wright (1989) 16 IPR 189; Bateman v Slayter (1987) 71 ALR 553 at 559 (Burchett J); and Thompson v Ice Creameries of Australia Pty Ltd (1998) ATPR ¶41-611 at 40,693 (Lehane J). Cf Forrest v ASIC (2012) 247 CLR 486 at 525 [103] (Heydon J). 253 ACCC v Homeopathy Plus! Australia Pty Ltd [2014] FCA 1412. 254 ACCC v Homeopathy Plus! Australia Pty Ltd [2014] FCA 1412 at [264]. 255 See Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546 at 561 (Lockhart J); Benlist Pty Ltd v Olivetti Australia Pty Ltd (1990) ATPR ¶41-043 at 51,590 (Burchett J); Burg Design Pty Ltd v Wolki (1999) 162 ALR 639; Bowler v Hilda Pty Ltd (1998) 80 FCR 191 (Heerey J); Warwick Entertainment Centre Pty Ltd v Alpine Holdings Pty Ltd (2005) ALR 134 at 147-8 (Steytler P, with
[3.165]
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However, it may be possible to avoid liability of misleading conduct by means of a declaration of non-reliance. Where one party expressly acknowledges in writing that it has not relied on a representation that was misleading in deciding to enter into a transaction, the courts will take this into account in deciding the question of causation in relation to the cause of action for damages under s 236 of the ACL.256 The issue is considered at [14.75].
PART III: DID THE RESPONDENT’S CONDUCT CAUSE THE ALLEGED ERROR OR MISCONCEPTION? [3.165]
There must be a causal connection between the respondent’s conduct and the applicant’s alleged error or misconception.257 In Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd258 Stephen J held that in order to determine whether there had been a contravention of s 52 of the TPA it was necessary to inquire whether there is a sufficient nexus between the conduct at issue, which may include refraining from doing an act, and the error that was alleged to have arisen. This was approved by a unanimous High Court in Campomar Sociedad Limitada v Nike International Ltd.259 The respondent’s conduct must cause or materially contribute to the applicant’s misapprehension applying, inter alia, the “but for” test of factual causation.260 The issue of whether the conduct caused or contributed to error suffered by the applicant is separate and anterior to the issue of whether the misleading conduct caused the claimed loss or damage said to flow from the misleading conduct as required by s 236 of the ACL. According to the French J (as his Honour then was), in Johnson Tiles Pty Ltd v Esso Australia Ltd: There must be a logical causal connection between the conduct and some hypothesised error. But not every case involving a logical connection between conduct and alleged error will result in the conduct being regarded as misleading or deceptive for the purposes of s 52. There is an evaluative judgment involved. As the Full Court said in SAP Australia Pty Ltd v Sapient Australia Pty Ltd (1999) 169 ALR 1 at 14: The characterisation of conduct as “misleading or deceptive or likely to mislead or deceive” involves a judgment of a notional cause and effect relationship between the conduct and the putative consumer’s state of mind. Implicit in that judgment is a selection process which can reject some causal connections, which, although theoretically open, are too tenuous or impose responsibility otherwise than in accordance with the policy of the legislation. By way of example, it might be said that, strictly speaking, a causal connection exists between conduct and error where the error is based upon erroneous assumption derived whom McLure and Pullin JJA agreed); CH Real Estate Pty Ltd v Jainran Pty Ltd [2010] NSWCA 37 (1 April 2010) (Beazley, Basten and Young JJA). See R V Miller, Australian Competition and Consumer Law Annotated (37th ed, Lawbook Co, Sydney, 2015), [1.S2.18.95]. 256 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at 321 [31] (French CJ). See also IOOF Australia Trustees (NSW) Ltd v Tantipech (1998) 156 ALR 470 at 480. 257 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at [26] (French CJ). 258 Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 228 (Stephen J). 259 Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at 83-4 [98]. 260 Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd (2011) 248 FLR 193 at 209 [67] (McLure P).
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from but not logically justified by the conduct. The conduct will not ordinarily be treated on that account, as misleading or deceptive in such a case.261
In Sutton v A J Thompson Pty Ltd (in liq),262 the Full Federal Court referred to the principles of law relating to the common law action of deceit as expressed by Wilson J in Gould v Vaggelas.263 These, the court held, were equally applicable to breaches of s 52 of the TPA.264 According to the first of these principles, if a representation is false and fraudulent, and the representee does not rely upon it, the representee has no case. The Full Federal Court stated in relation to s 52 of the TPA: Similarly, if a person is so determined to enter into a contract that he is not in truth influenced by some false representation made to him, he clearly has no case.265
The need for a causal connection of this nature means that where the evidence reveals that a statement or representation was made by the respondent it will not contravene s 18 where the applicant’s error or misconception was attributable to: • an erroneous assumption on the part of the applicant;266 or • the applicant relying on representations or conduct of a third party; or • the applicant relying on his or her own assessment of the situation, rather than on the representations or conduct of the respondent.
PART IV: ADVERTISING: GENERAL PRINCIPLES Introduction [3.170]
Misleading advertising can be a major source of consumer detriment. The OECD, in its Consumer Policy Toolkit, defines consumer detriment broadly to include financial detriment and non-financial detriment.267 It may take the form of structural detriment or personal detriment. Structural detriment arises where misleading advertising increases demand for one product over a rival’s product even though it may be inferior to the rival’s product.268 Personal detriment focuses on consumers’ experiences once a product has been purchased, and includes stress and disappointment: The disappointment and the monetary and time losses that a consumer experience after purchasing and using a weight loss product that fails to deliver on its advertised promise 261 Johnson Tiles Pty Ltd v Esso Australia Ltd (2001) ATPR ¶41-794 at [42,547]. 262 Sutton v A J Thompson Pty Ltd (in liq) (1987) ATPR ¶40-789 at 46,607 (Forster, Woodward and Wilcox JJ). 263 Gould v Vaggelas (1984) 56 ALR 31 at 46. 264 Sutton v A J Thompson Pty Ltd (in liq) (1987) ATPR ¶40-789 at 46,606. 265 Sutton v A J Thompson Pty Ltd (in liq) (1987) ATPR ¶40-789 at 46,607. 266 McWilliams Wines Pty Ltd v McDonald’s System of Australia Pty Ltd (1980) 49 FLR 455 at 464 (Smithers, with whom Northrop J generally agreed). See also Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 203-4 (Mason J) and Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 200 (Deane and Fitzgerald JJ). 267 See OECD, Consumer Policy Toolkit, (OECD, Paris, 2010), pp 12 and 52. 268 See Colgate-Palmolive Pty Ltd v Rexona Pty Ltd (1981) ATPR ¶40-242 at 43,185-6.
[3.170]
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are examples of such detriment. In addition to money and time costs, personal detriment includes negative psychological impacts such as stress.269
Advertising has been the subject of action by individual consumers, the ACCC (on behalf of consumers generally) and rivals of the firm advertising to ensure that it was accurate and did not mislead consumers.270 The ACCC has stated that truth in advertising is a current priority enforcement area, “particularly where misleading claims are made by large businesses with the potential to result in significant consumer detriment, or where conduct is likely to become widespread if the ACCC does not intervene”.271 The ACCC has been particularly active in relation credence claims made in food labelling. However, most actions have been initiated by rival firms which face a loss of revenue and market share arising from misleading advertising. The general principles for determining when an advertisement is misleading or deceptive in contravention of s 18 of the ACL are set out at [3.60]-[3.165]. Of particular importance is the principle that each case needs to be determined on its own particular facts and context, so that decisions reached in similar cases in the past can only ever provide guidance and cannot determine the outcome of a new case.272 In relation to advertisements the courts pay particular attention to the following matters: • the attributes of the target audience; • the need to consider the entirety of the advertisement rather than considering some words in isolation; • the nature of the product being promoted; • the medium used to convey the advertisement; and • any qualifying statements or disclaimers. The general principles to be applied in the context of advertising are usefully summarised by Judd J in IDP Education Ltd v Lejburg Pty Ltd: Conduct is misleading or deceptive if it has a tendency to lead into error, although there must be a sufficient causal link between the conduct and the error on the part of the relevant class exposed to the conduct. Consideration of conduct under inquiry should not involve a dissection, or line by line analysis. The conduct should be considered as a whole, in its proper context. Context will include the market to which the conduct is directed, the nature of the product being promoted and the characteristics of those in the particular market to whom the promotion is directed. Regard must also be had to qualifying statements, disclaimers or explanations. 269 OECD, Consumer Policy Toolkit, (OECD, Paris, 2010), p 53. 270 See R V Miller, Australian Competition and Consumer Law Annotated (37th ed, Lawbook Co, Sydney, 2015), [1.S2.18.155]-[1.S2.18.205]. 271 See ACCC Compliance and Enforcement Policy (February 2015), p 4. 272 See, eg, ACCC v Telstra Corporation Ltd (2004) 208 ALR 459 (Gyles J); Singtel Optus Pty Ltd v Telstra Corp Ltd [2004] FCA 859; ACCC v Commonwealth Bank of Australia (2003) 133 FCR 149; Cassidy v Medical Benefits Fund of Australia Ltd (2002) ATPR ¶41-892 (Hill J); on appeal, Medical Benefits Fund of Australia Ltd v Cassidy (2003) 205 ALR 402 (Stone J with whom Moore and Mansfield JJ agreed); and ACCC v Target Australia Pty Ltd (2001) ATPR ¶41-840 (Lee J).
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[3.175]
A contravention of ss 18 or 29 of the Australian Consumer Law does not depend upon the intention or belief concerning the accuracy of the facts stated, but upon whether the statement conveys a meaning that is false or misleading. When the impugned conduct involves statements made in a public forum, such as the internet, regard must be had to the effect of the statements or representations on ordinary or reasonable members of the class of prospective purchasers. The dominant message of promotional or advertising material will be of crucial importance. The advertising or promotional material must be considered as a whole, rather than straining at the meaning of critical words and phrases. The first impression conveyed by promotional material is often that which creates the greatest impact on the member of the class to which it is directed.273
Because most advertising is directed at the public at large or a particular segment or group of the public, the test of what is misleading or likely to mislead is an objective one for the court, the outcome will depend first, on the characteristics or attributes of the target audience at whom the advertisement was directed; and secondly, on the views of the particular judge as to how an ordinary, reasonable member of the class is likely to respond to the advertisement. As a result, an advertisement which may be misleading or deceptive when directed towards one audience may not be so were it directed towards another. This can give rise to legitimate differences of opinion, as Gyles J observed in ACCC v Telstra Corporation Ltd: Reading the numerous cases in this field makes it perfectly apparent that individual judges vary considerably in their assessments of the effect of advertising. Some take a robust view and credit consumers with a fair amount of cynicism about advertisements and a fair amount of ability to make their own judgments. Others are convinced of the power of advertisements and are protective of the consumer. Neither side is right or wrong – it is a matter of opinion.274
Knowledge base of the target audience [3.175]
Advertisements are directed at the public generally or a segment of the public that acquires the particular goods or services being advertised. As a first step, it will be necessary to determine the knowledge base of the class of consumers at whom it is directed. This will involve considering such matters as their age, geographical location, sophistication, unusual predilections (if any) and familiarity with the subject. Generally speaking, higher standards of accuracy are expected in connection with advertisements directed towards unsophisticated or impressionable audiences such as children or teenagers.
For example, in M K Hutchence (Trading as INXS) v South Sea Bubble Co,275 applicants were members of a pop group known as INXS. As well as performing, they also merchandised goods, including T-shirts, using their name. The respondents manufactured and sold T-shirts which were copied from those authorised by the applicants. A small sign at the stalls selling these products indicated that they were 273 IDP Education Ltd v Lejburg Pty Ltd [2015] VSC 650 at [56]-[59] (citations omitted). 274 ACCC v Telstra Corporation Ltd (2004) 208 ALR 459 at 475-6. 275 M K Hutchence (Trading as “INXS”) v South Sea Bubble Co (1986) ATPR ¶40-667.
[3.175]
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not authorised. The applicants sought orders restraining the respondents from dealing with these T-shirts on the ground, inter alia, that their conduct contravened s 52 of the TPA. In identifying the target audience, Wilcox J held: In the present case the section of the public likely to be affected by the sale of T-shirts bearing the names of, or symbols relating to, INXS is the body of people who enjoy the music of that group: the people who attend their concerts, purchase their records and/or listen to their music on the radio or on television. Bearing in mind the notorious fact that the proportion of persons in any given age group who are rock enthusiasts tends to diminish with increasing age, it is reasonable to assume that a major proportion of INXS followers are teenagers or persons in their twenties. There is no reason to assume otherwise than that, in intelligence and educational attainments, INXS followers will represent a fair cross-section of the community.276
Advertising directed at a smaller, professional target audience arose for consideration in Astrazeneca Pty Ltd v GlaxoSmithKline Australia Pty Ltd.277 The advertisements and flyers were placed in Australian Doctor, a professional publication directed at general medical practitioners by Glaxo to promote the prescription by general practitioners of Glaxo’s drug, “Seretide”. Glaxo claimed that virtually all or a majority of asthma patients would achieve total control of their symptoms if Seretide was prescribed. The flyers and the advertisements were headed, “Seretide TOTAL CONTROL*”. The asterisk, referred to the findings of “The Gaining Optimal Asthma Control Study” (GOAL study), according to which, only 41% of patients achieved total control and 71% achieved substantial relief from using Seretide. The appellant, another pharmaceutical company, took exception to the representations made in the advertisements. The primary judge dismissed the appellant’s application. The appellant argued that the references to the GOAL study were deficient in that they failed to point out that the GOAL study did not include patients with significant concomitant diseases, smokers and patients below 12 years of age. The Full Court held that the representations contained in the advertisements and flyers were not made to identified individuals, nor were they made to the public at large.278 The section of the community towards whom the conduct had been directed was the community of general practitioners throughout Australia: The task of the Court is to determine whether any misconceptions or deceptions alleged to arise or to be likely to arise from the conduct complained of are properly to be attributed to the ordinary or reasonable members of the section of the community towards whom the conduct has been directed. The Court may disregard assumptions drawn by persons to whom the conduct is directed, where those assumptions or their reactions are extreme or fanciful …279
“Seretide TOTAL CONTROL” was nothing more than an alternative brand name and the elucidator was effective to clarify the extent of the control that was 276 M K Hutchence (Trading as “INXS”) v South Sea Bubble Co (1986) ATPR ¶40-667 at 47,376-7. 277 Astrazeneca Pty Ltd v GlaxoSmithKline Australia Pty Ltd (2006) ATPR ¶42-106. 278 Astrazeneca Pty Ltd v GlaxoSmithKline Australia Pty Ltd (2006) ATPR ¶42-106 at [35] (Wilcox, Bennett and Graham JJ). 279 Astrazeneca Pty Ltd v GlaxoSmithKline Australia Pty Ltd (2006) ATPR ¶42-106 at [37].
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achievable using Seretide. After carefully considering each of advertisements and flyers in their entirety, the Full Court agreed with the primary judge that they were not misleading. None of the advertisements or flyers represented that the GOAL study patients were representative of the community at large; the footnotes clearly indicated that the study was based on the observations of “3,416 patients with uncontrolled asthma” and no more.280
Puffery or exaggeration in advertising [3.180]
“Puffery” refers to exaggeration in the course of advertising with a view to attracting customers. Section 18 of the ACL does not prohibit the expression of exaggerated opinions, or the making of grandiose claims in advertising, where the audience to whom they are addressed could not reasonably be misled by them. Thus, in Stuart Alexander & Co (Interstate) Pty Ltd v Blenders Pty Ltd, Lockhart J said: a robust approach is called for when determining whether television commercials of this kind are false, misleading or deceptive. The public is accustomed to the puffing of products in advertising.281
However, the courts will carefully scrutinise claims based on “puffery”. If the representation is one of specific fact that is false, it will not be dismissed as puffery. In Eveready Australia Pty Ltd v Gillette Australia Pty Ltd, Lindgren J found: the words “lasts up to four times longer” hold out to the viewer that Duracell batteries do offer a meaningful advantage over competing brands. The specificity of those words is inconsistent with the nature of advertising puff. To my mind it is misleading and deceptive to appear to a reasonable television viewer to be saying something meaningful on which the viewer is invited to rely as a basis for action….282
Medium used to convey the advertisement [3.185]
Corporations advertise their goods and services on the radio and television, in newspapers and in brochures distributed to clients and prospective clients and more recently, on social media sites. Questions sometimes arise as to whether any significance should be placed on the choice of medium. In ACCC v TPG Internet Pty Ltd,283 the High Court emphasised the importance of the context in which the advertisements were broadcast and contrasted it with the context in which the alleged misleading conduct arose in Parkdale v Puxu. The High Court majority stated: TPG’s target audience did not consist of potential purchasers focused on the subject matter of their purchase in the calm of the showroom to which they had come with a substantial purchase in mind. Here, the advertisements were an unbidden intrusion on the consciousness of the target audience. … [W]hile the attention of the audience might have been arrested, it cannot have been expected to pay close attention to the advertisement …284 280 Astrazeneca Pty Ltd v GlaxoSmithKline Australia Pty Ltd (2006) ATPR ¶42-106 at [48]. 281 Stuart Alexander & Co (Interstate) Pty Ltd v Blenders Pty Ltd (1981) 53 FLR 307 at 311. See also Lymquartz v 2 Elizabeth Bay Road [2007] NSWSC 457 at [183] (Biscoe AJ). 282 Eveready Australia Pty Ltd v Gillette Australia Pty Ltd (2000) ATPR ¶41-751 at 40,694. 283 ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640. 284 ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640 at 654 [47] (French CJ, Crennan, Bell and Keane JJ).
[3.185]
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A distinction is drawn between radio, television and cinema advertisements which are fleeting or ephemeral forms of advertising, and newspapers, magazines and brochures which are static forms of advertising and allow for a more considered approach to understanding the representations contained in the advertisements. A distinction is also made between static forms of advertising and internet advertising. In ACCC v Jetstar Airways Pty Ltd,285 Foster J found that the impugned conduct was not the same as advertising in print and radio and television broadcasts, and that the relevant target audience was not the public at large as the ACCC contended, but a narrower class consisting of members of the public who had internet access and possessed some level of knowledge and experience in navigating the internet and using online booking services, including an understanding of the use of hyperlinks to navigate particular websites.286 This finding was crucial to his Honour’s ultimate finding that, while in the case of Jetstar the website representations in May 2013 were misleading and contrary to ACL, ss 18 and 29(1)(i),287 the disclosures made in 2014 were adequate and not false or misleading.288 Prior to the High Court’s decision in ACCC v TPG, the significance of the medium used to convey the advertisement was considered by the Full Federal Court in Medical Benefits Fund of Australia Ltd v Cassidy.289 MBF commissioned an advertising agency to produce a series of television, print and railway billboard advertisements for its private health insurance products. The advertisements presented the image of a pregnant woman and contained a representation that MBF would waive private health insurance waiting periods. In the television advertisements the following statement appeared at the bottom of the screen for less than five seconds: “12 month waiting periods such as pre-existing conditions and obstetrics still apply”. The Full Federal Court held: Even an astute and observant viewer may not have had sufficient time to peruse the fine print with sufficient care to notice the qualification and it is not unlikely that even a reasonably careful viewer might have been misled … the disproportion in both the television and billboard advertisements between the dominant representations and the qualification of those representations was such that the qualification was insufficient to draw the attention of prospective customers to the fact that a waiting period applied for obstetrics claims. It is the entire effect, particularly the first impression, that makes the advertisements misleading.290
However, it was held that the print advertisements were not misleading as the qualifying statement could more readily be viewed in that context. In ACCC v Telstra Corporation Ltd,291 Telstra placed various advertisements using the expression “$0*” and “$0 upfront” to promote the sale of handsets and mobile 285 ACCC v Jetstar Airways Pty Ltd [2015] FCA 1263. 286 ACCC v Jetstar Airways Pty Ltd [2015] FCA 1263 at [168]. 287 ACCC v Jetstar Airways Pty Ltd [2015] FCA 1263 at [181]. 288 ACCC v Jetstar Airways Pty Ltd [2015] FCA 1263 at [186]. 289 Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1 at 17 [36]-[37]. 290 Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1 at 18 [40]-[41]. 291 ACCC v Telstra Corporation Ltd (2004) 208 ALR 459.
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telephone services in newspapers and brochures. Particular handsets that a subscriber might acquire under the Phone Option were promoted in the brochure with the expression “$0*” displayed prominently alongside a picture of each. The asterisk (*) symbol referred to additional information displayed in fine print in a footnote at the bottom of each relevant page. The ACCC alleged that these expressions contravened ss 52 and 53(a) and (g) of the TPA with respect to the price of the relevant handset, because it amounted to a representation that the handset could be obtained at no extra cost. Gyles J concluded that the expression “$0*” was misleading because the telephone service could be obtained without the mobile phone for significantly less than the ultimate cost of the bundled price, so an amount must have been attributed to the handset.292 On the other hand, the expression “$0 upfront” was not misleading as the plan did not require an initial payment.293 As regards the significance of the medium used to advertise the handset and telephony services, his Honour observed: The newspaper advertisement and the brochure are different media and, to an extent, would be read differently. The newspaper advertisement would have a wider and more random circulation and would tend to be more ephemeral. It would tend to catch the eye and raise interest rather than lead to a decision as to purchase. The brochure would be more likely to be picked up and read by those with a closer interest in acquiring a phone and closer to the time of making a decision. It is more likely to be taken away and read with some care.294
The significance of the medium used to display the advertisement was also considered by Perram J in ACCC v Singtel Optus Pty Ltd (No 1).295 In that case, the advertising campaign was conducted using five different media: television, online, metropolitan and local newspapers, billboards, and direct marketing with flyers. Perram J observed: Each form of medium, of course, presents its own subtleties in terms of gauging whether an advertisement is misleading or not. Less attention is generally paid by the public to a billboard commercial than to a television commercial and that kind of commercial, in turn, generally receives less attention from consumers than do some online commercials. These general observations have some truth, however, only because people do not stare at computer screens in quite the same way in which they stare at television screens and also because most people do not stare at billboards at all. Generalisations in this field are, however, difficult to justify because the nature of any particular advertisement is such a significant variable in the calculus of deception. Some television commercials are quite transfixing and, by the same token, many online advertisements are tedious and are readily ended with a simple click. The central principle is that each advertisement must be considered in the context of the medium in which it is expressed taking full cognisance of the different consumer experiences arising with different media. Much beyond that it is difficult to go.296 292 ACCC v Telstra Corporation Ltd (2004) 208 ALR 459 at [54]. 293 ACCC v Telstra Corporation Ltd (2004) 208 ALR 459 at [54]. 294 ACCC v Telstra Corporation Ltd (2004) 208 ALR 459 at [52]. 295 ACCC v Singtel Optus Pty Ltd (No 1) [2010] FCA 1177 (29 October 2010). 296 ACCC v Singtel Optus Pty Ltd (No 1) [2010] FCA 1177 at [5].
[3.190]
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Qualifying statements and small print disclaimers [3.190]
Where an advertisement consists of a dominant message in a bold headline statement with a small print footnote that attempts to disclaim, limit, or qualify the dominant message the courts adopt a two-stage approach in assessing whether there is a real rather than a remote chance that a reasonable member of the target audience will be led into error.297 The first stage is to identify what representations are made by the advertisement in its dominant message to the intended audience. The second stage is to determine whether the corrective information was sufficiently prominent to dispel the false dominant message. Accurate information in a footnote may not remedy a false headline statement because a reasonable consumer may glance only at the headline. The issue in ACCC v TPG298 was the effectiveness of small print elucidators to clarify a bold headline statement in a television advertisement. This will depend on the all the surrounding circumstances but especially the medium used to convey the advertisement, and whether it allows a reasonable member of the target audience the opportunity to carefully consider the advertisement in its entirety. The ACCC was successful in the Federal Court at first instance, with the primary judge finding that an ordinary or reasonable member of the target audience would not have assumed that ADSL2+ services were bundled when this was not immediately apparent, and that the “dominant message” of the advertisements was that the entire cost of the service was only $29.99 per month.299 The ACCC lost an appeal by TPG Internet Pty Ltd (“TPG”) to the Full Federal Court. The Full Federal Court held that a reasonable consumer would have read the advertisement in its entirety, not just the dominant message, and that the bundling condition could not have been missed except on a “perfunctory” viewing or listening.300 The High Court majority upheld the ACCC’s appeal and agreed with the primary judge that TPG’s advertising stratagems were misleading.301 The Full Court (Jacobson, Bennett and Gilmour JJ) rejected the primary judge’s two-stage approach of first identifying the dominant message and then examining whether the corrective information was effective to dispel the misleading dominant 297 See ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640 at [20], [40] and [45] (French CJ, Crennan, Bell and Keane JJ); ACCC v Signature Security Group Pty Ltd (2003) ATPR ¶41-908 at 46 538-9 [26]-[27] (Stone J); Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1 at 17-18 [35]-[39] (Stone J), with whom Mansfield J agreed: at 11 [17]. Both of these cases are authority for the principle that the qualifying material must be sufficiently prominent or conspicuous to prevent the headline statement from being misleading. See also ACCC v Telstra (2004) 208 ALR 459, 475-8 [49]-[62] (Gyles J); ACCC v Singtel Optus Pty Ltd [2010] FCA 1177 (29 October 2010) at [28][29] (Perram J); National Exchange v ASIC (2004) ATPR ¶42-000 at 48 724–5 [48]-[59] (Jacobson and Bennett JJ); ACCC v Panasonic Australia Pty Ltd (2010) 269 ALR 622, 631-4 [43]-[58], where Mansfield J held that it was misleading to publish promotional material informing the purchasers of television sets that they would receive a “Bonus Wii”, but failed to convey the fact that matters outside the control of the purchaser (such as the delivery time for televisions paid for at a retail store) could disqualify the purchaser from receiving the Bonus Wii. 298 ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640. 299 ACCC v TPG Internet Pty Ltd (2011) ATPR ¶42-383. 300 TPG Internet Pty Ltd v ACCC (2012) 210 FCR 277. 301 ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640.
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[3.190]
message. In their joint reasons, their Honours stated that there was only one question, and that was “whether … the ordinary or reasonable consumer would be led into error by the advertisements, read or viewed as a whole, in their full context”.302 The High Court majority (French CJ, Crennan, Bell and Keane JJ) held that the Full Court erred in two respects: first, the Full Court erred in holding that the primary judge was wrong to place importance on the dominant message of the advertisements; and secondly, the Full Court erred in considering that the tendency of TPG’s advertisements to mislead was neutralised by the Full Court’s attribution of a higher level of knowledge to members of the target audience that TPG’s ADSL2+ services were being offered as part of a bundle.303 The High Court majority concluded that even with this higher attributed level of knowledge of the bundling method of sale, TPG’s advertisements still had a tendency to mislead because the target audience was “left only with the general thrust or dominant message”.304 The High Court majority accepted that viewers cannot realistically be expected to absorb and digest the small print in cases involving bold headline statements of attractive prices, especially in television advertisements where the opportunity to do so is fleeting. The High Court majority observed: As the primary judge said, the vice of TPG’s advertisements was that they required “consumers to find their way through to the truth past advertising stratagems which have the effect of misleading or being likely to mislead them”.305
The High Court held that TPG intended to emphasise the most attractive component of its offer and to downplay the less attractive components, rather than give equal prominence to each component of the package. In such circumstances it may properly be inferred that the advertisement had the effect of leaving the target audience with the general thrust or dominant message.306 In the case of fleeting or ephemeral advertisements as opposed to static advertisements, it is necessary to consider the dominant message in the context of the advertisement as a whole. Unless the advertiser gives equal prominence to the less attractive features of the advertised product, a court is likely to infer that the advertisement had the effect of leaving a reasonable member of the target audience with the general thrust or dominant message. In ACCC v Hillside (Australia New Media) Pty Ltd (t/as Bet365),307 Beach J found that Bet365’s Australian and United Kingdom companies, Hillside (Australia New Media) and Hillside (Shared Services) engaged in misleading conduct concerning promotions relating to “Free Bets” for new customers as part of an internet advertising campaign. The dominant message contained in the promotional offer on its homepage (http:// 302 TPG Internet Pty Ltd v ACCC (2012) 210 FCR 277 at 289 [100]; see also at 289 [103]. 303 ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640 [45]. 304 ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640 [53]. 305 ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640 at [54], quoting ACCC v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44 697 [116] (Murphy J). 306 ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640 at [55] and [57] (citations omitted). 307 ACCC v Hillside (Australia New Media) Pty Ltd (t/as Bet365) [2015] FCA 1007.
[3.195]
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www.bet365.com.au) stated “$200 FREE BETS FOR NEW CUSTOMERS”. However, there were important conditions that qualified the dominant message, including that the customer had to pay a deposit and risk that deposit before being entitled to make a “free” bet and that the customer had to risk the value of their deposit and the amount of the “free” bet three times prior to making a withdrawal. These conditions were not displayed on the webpage containing the promotional offer. Beach J found that the digital pathway to the terms and conditions was “complicated and problematic”.308 The use of a small print qualifier in a static advertisement was at issue in George Weston Foods Ltd v Goodman Fielder Ltd.309 Bread packaging declared in large typeface: “Now Twice the Fibre*”. As regards the target audience, Moore J concluded: The broadest description of the class is consumers of bread. However, in my opinion, the relevant class can more appropriately be described as consumers of bread who have some interest in the fibre content of bread.310
Moore J held that an asterisk can be sufficient to draw the attention of a consumer to a qualification of a representation. Moore J observed that the asterisk was prominent and would have been taken to signify some qualification or explanation of the words used. One could expect a consumer interested in fibre content to seek out the qualification or explanation. Not only was the explanation within 2 cm of the words on the package (albeit in much smaller type) but it was repeated elsewhere on the packaging.311
Advertising on social media sites [3.195]
Corporations may also provide information about their goods and services by means of posts on their website, Facebook and Twitter pages. The provisions relating to misleading or deceptive conduct impose strict liability. An aspect of strict liability is that a corporation that fails to remove misleading comments from its website, Facebook, or Twitter page will be liable for a contravention of s 18 of the ACL.
In ACCC v Allergy Pathway Pty Ltd (No 2),312 Finkelstein J held that Allergy Pathway was responsible for Facebook and Twitter comments by fans on its account in breach of an undertaking not to make misleading claims about its allergy treatments. His Honour concluded: While it cannot be said that Allergy Pathway was responsible for the initial publication of the testimonials (the original publisher was the third party who posted the testimonials on Allergy Pathway’s Twitter and Facebook pages) it is appropriate to conclude that Allergy Pathway accepted responsibility for the publications when it knew of the publications and decided not to remove them. Hence it became the publisher of the testimonials. In any event it is clear that it caused them to continue to be published from 308 ACCC v Hillside (Australia New Media) Pty Ltd (t/as Bet365) [2015] FCA 1007 at [101]. 309 George Weston Foods Ltd v Goodman Fielder Ltd (2000) 49 IPR 553. 310 George Weston Foods Ltd v Goodman Fielder Ltd (2000) 49 IPR 553 568 [37]. 311 George Weston Foods Ltd v Goodman Fielder Ltd (2000) 49 IPR 553 at 571-2 [46]. 312 ACCC v Allergy Pathway Pty Ltd (No 2) (2011) 192 FCR 34.
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the time when it became aware of their existence, which is enough to put Allergy Pathway in breach of the second limb of its undertaking.313 (emphasis added)
The test adopted by Finkelstein J has two elements. Suppliers of goods and services that have Facebook and Twitter pages will incur primary or accessorial liability when they have actual knowledge of the publications on their Facebook and Twitter pages and they decide not to remove them. This does not mean that they can avoid liability by keeping themselves in a state of ignorance. Where a person wilfully turns a blind eye, or deliberately abstains from asking questions or making enquiries, they may be held to have actual knowledge sufficient to attract accessorial liability.314 Actual knowledge may be inferred from a combination of suspicious circumstances and a failure to make inquiry.315 Accordingly, corporations should pre-monitor comments left by third party users of their Facebook and Twitter pages to ensure that they comply with the ACL before they are posted.
Assessing the advertisement [3.200]
Having identified the target audience, the effect of the advertisement must be assessed having regard to the reactions of an ordinary, reasonable member of the target audience, not those of persons whose reactions are extreme or fanciful.
For example, in ACCC v Singtel Optus Pty Ltd (No 1),316 Optus advertised its internet broadband plans and represented that for a monthly payment, a consumer would receive an overall cap or quota data allowance of broadband which was then split into two allowances: a peak allowance (midday to midnight) and an off-peak allowance (midnight to midday). The “headline” claim was accompanied by a disclaimer in smaller or less prominent print noting “Speed limited once peak data exceeded”. The ACCC alleged that Optus had not sufficiently disclosed that the service would be speed limited once consumers exceeded their peak data allowance. The target audience was held to be the general public with a need or desire for broadband internet access. The trial judge, Perram J, held that in 2010 consumers must be taken to have a certain degree of background knowledge of internet usage; to understand that broadband plans have usage limits and that when those limits are exceeded considerable inconvenience is likely to result.317 In assessing the likely impact of the advertisement on a reasonable member of the target audience, Perram J found that Optus had contravened s 52 of the TPA: I accept that a careful reading of the small print disclaimer at the bottom of the page, “Speed limited once peak data exceeded”, and some meditation upon the full import of that statement would lead sophisticated persons to deduce that the 150GB was not the total of two distinct usage allowances but in fact a theoretical maximum which could be 313 ACCC v Allergy Pathway Pty Ltd (No 2) (2011) 192 FCR 34 at [33]. 314 See the discussion of this issue in the judgment of Stone J in Medical Benefits Fund of Australia Ltd v Cassidy; John Bevins Pty Ltd v Cassidy (2003) 135 FCR 1 at 84-93.See also ACCC v IMB Group Ltd [2003] FCAFC 17 at [135] (Cooper, Kiefel, and Emmett JJ) and Keller v LED Technologies Pty Ltd (2010) 185 FCR 449 at [335]-[336] (Besanko J). 315 Pereira v Director of Public Prosecutions (1988) 82 ALR 217 at 219-220 (Mason CJ, Deane, Dawson, Toohey and Gaudron JJ). 316 ACCC v Singtel Optus Pty Ltd (No 1) [2010] FCA 117 (29 October 2010). 317 ACCC v Singtel Optus Pty Ltd (No. 1) [2010] FCA 117 at [28].
[3.205]
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obtained only by using the 75GB off-peak allowance in full before exhausting the 75GB peak allowance. But that is not what an ordinary person reading it would have understood.318 (emphasis added)
A pecuniary penalty of $5.26 million was imposed,319 which was reduced on appeal by the Full Federal Court to $3.61 million.320
Comparative advertising [3.205]
Comparative advertising is a form of advertising whereby a firm seeks to promote sales of its products by comparing them favourably with a rival products, or by denigrating a rival products in some way. In Gillette Australia Pty Ltd v Energizer Australia Pty Ltd, Heerey J observed: The characterisation of advertising as comparative does not of itself have legal significance, or create any kind of presumption in favour of a party alleging a breach of Pt V of the TPA. There is no basis in the TPA for regarding comparative advertising as an inherently disreputable form of commercial conduct, to be viewed with suspicion by the courts. On the contrary, to the extent that comparative advertising provides consumers with accurate hard facts about competing products, it assists in the making of better informed consumer choices and thereby results in more effective competition.321
Nevertheless, advertisers using this form of advertising would be well advised to take special care to ensure that the representations they make are accurate and that there is no real chance they are likely to mislead ordinary consumers.322 As with other forms of advertising, it is necessary to consider the scope of the representations that are being made, the audience to whom they are being conveyed, and the likely effect the representations will have on an ordinary, reasonable member of the target audience. For example, in Telstra Corporation Ltd v Singtel Optus Pty Ltd,323 Optus conducted a comparative advertising campaign in relation to its 3G and 4G mobile networks in which it represented that: “When it comes to the percentage of Australians the Optus mobile network reaches, there isn’t much difference between us and Telstra. In fact, it’s less than 1%.” Optus contended that a hypothetical ordinary or reasonable member of the target audience would know that the representations made concerning 98.5% and 99.3% coverage could not possibly relate to geographic coverage. Elliott J of the Supreme Court of Victoria found that Optus’ advertising campaign contravened ACL, s 18 and 29(1)(b) and (g). It misled consumers on the 318 ACCC v Singtel Optus Pty Ltd (No. 1) [2010] FCA 117 at [25]. 319 ACCC v Singtel Optus Pty Ltd (No 4) (2011) 282 ALR 246. 320 Singtel Optus Pty Ltd v ACCC (2012) 287 ALR 249. 321 Gillette Australia Pty Ltd v Energizer Australia Pty Ltd (2002) 193 ALR 629 at [20]. See also Specsavers Pty Ltd v The Optical Superstore Pty Ltd (No 2) [2010] FCA 566 at [1], where Katzmann J stated: “provided it is accurate and does not involve half-truths, it promotes competition and helps consumers make informed choices”. 322 See, for example, Hoover (Australia) Pty Ltd v Email Ltd (1991) 104 ALR 369 at 375.4 (Gummow J), referring with approval to Duracell Australia Pty Ltd v Union Carbide Australia Ltd (1988) ATPR ¶40-918 at 49,861.8 col 1 (Burchett J); see also Stuart Alexander & Co (Interstate) Pty Ltd v Blenders Pty Ltd (1981) 37 ALR 161 at 163.9 (Lockhart J). 323 Telstra Corporation Ltd v Singtel Optus Pty Ltd [2014] VSC 35.
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extent of its network coverage on the basis that it misrepresented the geographical coverage of Optus’ mobile network and the comparative coverage of the two networks. In reaching that conclusion, Elliott J held that an ordinary or reasonable person in the target audience would be likely to “accept the Representations at face value”,324 and gave weight to the fact that the advertisement was “part of a deliberate advertising strategy that was calculated to benefit Optus’ business”.325 Finally, the fact that the advertisement was a television commercial, a medium that did not allow a reasonable member of the target audience the opportunity to carefully consider the advertisement, meant that it was likely to mislead.326 Elliott J held: it is irrefutable that a key component of the Advertisement is the focus upon the Geographic Coverage of the Optus mobile network and the comparison with the Telstra mobile network. This aspect of the Advertisement provides the platform upon which Optus seeks to make it attractive to “switch” and enter into the deals that are being offered.327
On the other hand, in Samsung Electronics Australia Pty Ltd v LG Electronics Pty Ltd,328 Samsung used a form of 3D technology known as “active shutter” technology. In April 2011, LG produced 3D televisions which operated using a different form of technology known as “passive technology”. Samsung alleged that LG produced a television commercial which represented that the shuttering effect of active shutter technology caused discomfort and interfered with the viewing experience, and in doing so was misleading or deceptive, in contravention of s 18 of the ACL. The television commercial featured a man in a “lab coat” dressed up as a scientist or technician conducting a “3D TV test” which was “in the nature of a comical and exaggerated comparison of different types of 3D television technology”.329 Nicholas J found that although the material conveyed technical information that would normally be taken seriously by viewers, the humorous style was a contextual matter that had to be borne in mind when determining whether reasonable viewers would make significant allowance for what was readily discernible as exaggeration and parody.330 However, his Honour found certain representations made by LG relating to specific technical features contravened the ACL.
324 Telstra Corporation Ltd v Singtel Optus Pty Ltd [2014] VSC 35 at [72]. 325 Telstra Corporation Ltd v Singtel Optus Pty Ltd [2014] VSC 35 at [53]. See the role of intention at [3.70]. 326 Telstra Corporation Ltd v Singtel Optus Pty Ltd [2014] VSC 35 at [73]. See the medium used to convey the advertisement at [3.185]. 327 Telstra Corporation Ltd v Singtel Optus Pty Ltd [2014] VSC 35 at [93]. 328 Samsung Electronics Australia Pty Ltd v LG Electronics Pty Ltd [2015] FCA 227. 329 Samsung Electronics Australia Pty Ltd v LG Electronics Pty Ltd [2015] FCA 227 at [88]. 330 Samsung Electronics Australia Pty Ltd v LG Electronics Pty Ltd [2015] FCA 227 at [94].
[3.215]
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PART V: MISLEADING CONDUCT AND PASSING-OFF Introduction Section 52 of the TPA was intended to protect consumers,331 however, early in the life of s 52 of the TPA it was held that businesses could also take advantage of the general protection provided by it.332 Businesses have made considerable use of s 52 of the TPA and s 18 of the ACL in order to protect their business goodwill, and incidentally to protect consumers from being misled as to the source or origin of goods and services. The common law action of passing off is intended to protect business goodwill, while s 18 of the ACL is designed primarily to protect consumers.333 The two causes of action are separate and require separate analysis, however, they will frequently be pleaded together. In order to succeed in each cause of action the applicant must establish an adequate reputation in its name or logo or the design features of its product.334
[3.210]
Choice of name [3.215]
Sometimes businesses use, as a part, or all, of their name, words that describe the nature of the business, or adopt a get-up that is confusingly similar to that of another existing business. In such cases, the central issue is whether the words used, while descriptive of the business, have also acquired a meaning that identifies the existing business in the eyes of consumers so as to make it misleading for another firm to adopt them. In Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd,335 the Sydney Building Information Centre (Sydney) conducted an information centre in Sydney. At this Centre, building products and techniques were displayed, without charge, to members of the public. Sydney derived its revenue from the exhibitors who displayed their products. It was the only business of this kind. In 1975 the Hornsby Building Information Centre commenced a similar business in the Sydney suburb of Hornsby. Sydney then brought proceedings in the Australian Industrial Court (the court then having jurisdiction over trade practices matters) seeking an injunction restraining Hornsby from conducting its business under its corporate name. It argued that this conduct contravened s 52 because it would
331 Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at [108] (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ). 332 Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 223-6 (Stephen J); Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 197-8 (Gibbs CJ) and 202-5 (Mason J); Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 601-2 (Mason CJ, Deane, Dawson and Gaudron JJ); 606-7 (Brennan J). 333 Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at [108] and [109] (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ); Con Agra Inc v McCain Foods (Aust Pty Ltd (1992) 33 FCR 302 at 355-6 (Gummow J); Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397 at [97]-[98]. 334 See R V Miller, Australian Competition and Consumer Law Annotated (37th ed, Lawbook Co, Sydney, 2015), [1.S2.18.495]-[1.S2.18.575]. 335 Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216.
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[3.215]
mislead or deceive others into believing that Hornsby was associated in some way with Sydney. An interim injunction was issued against Hornsby from which it appealed to the High Court. The High Court held: There is a price to be paid for the advantages flowing from the possession of an eloquently descriptive trade name. Because it is descriptive it is equally applicable to any business of a like kind, its very descriptiveness ensures that it is not distinctive of any particular business and hence its application to other like businesses will not ordinarily mislead the public. In cases of passing off, where it is the wrongful appropriation of the reputation of another or that of his goods that is in question, a plaintiff which uses descriptive words in its trade name will find that quite small differences in a competitor’s trade name will render the latter more immune from action.336
Sometimes generic or descriptive words can acquire a secondary meaning, or product features can acquire a secondary meaning with a sufficient number of consumers, such that if the words are copied or the features are copied by a competitor they may give rise to an action for passing off and/or an action based on a contravention of ACL, s 18. For example, in S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd,337 the appellant, S&I Publishing Pty Ltd (S&I) commenced publishing Triathlon & Multi Sport Magazine. The respondent, who published Triathlon Sports, sought to restrain S&I from selling or distributing the new magazine in its current format on the ground that, inter alia, doing so contravened s 52 of the TPA. The respondent succeeded at first instance and S&I appealed to the Full Court. The Full Court held: It is difficult to see how the name of a sport on its own could ever become distinctive of particular products of a person. No such suggestion is directly made in the present case. But no doubt the name of a sport, like the name of an article such as an opal, may be used as part of a get-up including a name such that it could become distinctive of a particular person’s business or product. However, it will not be the name of the sport that creates the necessary distinctiveness to enable the circumstances to fall within s 52. Rather it will be a combination of names or the get-up adopted which will bring about this result. We do not doubt that the name Triathlon Sports used over a period of time in connection with a magazine could become and indeed (as his Honour found) did become distinctive of the magazine of Life Saver. No doubt anyone using the same name would engaged in conduct within the meaning of s 52 of the Act. We do not think that the mere use of the name Triathlon & Multi Sport Magazine on its own is sufficiently similar to the name Triathlon Sports to itself constitute conduct which is misleading and deceptive. Indeed it would seem that the trial judge took the same view for his Honour did not concentrate on the name itself but on the prominence which the word “triathlon” had in the masthead or, in other words, upon the get-up which S & I had adopted. So much is clear from the orders made by his Honour as well as the reasons to which we have already referred.338 336 Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 228 (Stephen J) citing Office Cleaning Services Ltd v Westminster Window and General Cleaners Ltd (1946) 63 RPC 39 at 42 (Lord Simonds). 337 S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 88 FCR 354. 338 S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 88 FCR 354 at 363-4.
[3.220]
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The Court concluded that the S&I masthead was sufficiently differentiated from the Life Saver masthead and allowed the appeal. In Roses Only & Lush Pty Ltd v Mark Lyons Pty Ltd,339 there was a dispute between two companies each carrying on a business taking telephone orders for the delivery of packages containing roses to retail customers. The applicant has conducted its business since 1995 under the name “Roses Only”, while the respondent commenced its business in early March 1999 under the name “Roses Plus”. The interlocutory claim was based solely on an alleged breach of s 52 of the TPA. Sackville J made an interlocutory order restraining the respondent from advertising, in certain formats, its business as “Roses Plus” on the basis that there was a serious question of fact as to whether the name “Roses Only” has acquired a reputation or secondary meaning distinctive of the applicant’s business.340 The adoption of the same name as that of an existing manufacturer, as occurred in Campomar v Nike, will not always be misleading. The conduct of the respondent – the acts or words or silence – must be viewed in their context. For example, in Lego Australia Pty Ltd v Paul’s (Merchants) Pty Ltd,341 “Lego” is a well-known brand applicable to the applicant’s Lego toys. The respondent imported irrigation equipment that bore the name “Lego”. Deane and Fitzgerald JJ considered that an ordinary or reasonable purchaser of irrigation equipment would not be misled into thinking that there was a connection with the toy manufacturer. Their Honours concluded: “The fact that companies may and sometimes do expand the range of products they produce cannot of itself warrant a conclusion that a particular company has done so”.342
Design features or shape [3.220]
Section 18 and passing off claims can be relied upon to protect product designs. Such claims do not replace proprietary intellectual property rights such as design registrations. In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd,343 Parkdale (the rival) sold furniture that was virtually identical in appearance to those sold by Puxu; however, sewn into the front of each of Parkdale’s chairs was a label, “Parkdale Custom Built Furniture”. The Puxu furniture had acquired an established reputation, but the claims based on s 52 and passing off were not established because “potential purchasers of a suite of furniture costing about $1,500, would, if acting reasonably, look for a label, brand or mark if they were concerned to buy a suite of particular manufacture”.344 In Playcorp Group of Companies Pty Ltd v Peter Bodum A/S,345 Bodum alleged that it had a reputation or secondary meaning in the Chambord Coffee Plunger and the 339 Roses Only & Lush Pty Ltd v Mark Lyons Pty Ltd (1999) ATPR ¶41-706. 340 Roses Only & Lush Pty Ltd v Mark Lyons Pty Ltd (1999) ATPR ¶41-706 at 43,051 [23]. 341 Lego Australia Pty Ltd v Paul’s (Merchants) Pty Ltd (1982) 42 ALR 344. 342 Lego Australia Pty Ltd v Paul’s (Merchants) Pty Ltd (1982) 42 ALR 344 at 352. 343 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191. 344 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 199. 345 Playcorp Group of Companies Pty Ltd v Peter Bodum A/S [2010] FCA 23 (Middleton J).
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[3.225]
Assam Teapot, based on the products’ features, and that the promotion of similar articles by Playcorp constituted a breach of s 52 and passing off. Middleton J held that Playcorp had not engaged in passing off or in conduct in breach of s 52 of the TPA. On appeal,346 a majority (Greenwood J, with whom Tracey J agreed) examined the “vast amount of advertising”347 engaged in by Bodum and concluded that Bodum had a reputation or secondary meaning in the features of the Bodum plunger. Although much of the advertising featured some reference to the Bodum name or trade mark, Greenwood J was satisfied that the evidence established “a very significant secondary reputation in the features of the Bodum Chambord Coffee Plunger associated in the minds of consumers with Bodum as the manufacturer of the product…”.348 In reaching this conclusion his Honour considered “all of the contextual circumstances.”349 DKSH had not done enough to distinguish its coffee plunger. Unlike the Puxu case, the rival had not affixed a trade mark on the product itself as opposed to on the packaging.350
Choice of get up [3.225]
However, in cases where a new trader deliberately sets out to “cash in” on the reputation of an existing trader, the courts are likely to find a breach of s 18 and to find that a claim based on passing of is made out.351
For example, in The Kettle Chip Co Pty Ltd v Apand Pty Ltd,352 the respondent was the largest manufacturer of potato chips in Australia and marketed its products under the name “Smith’s”. The applicant entered the market in 1989 with a chip called a “kettle chip”, which was cooked in batches rather than mass-produced in a continuous fryer. The chips had a distinctive flavour and texture and were sold at a premium price under the registered business name “The Kettle Chip”. The Kettle chips were very successful and in 1992 the respondent brought onto the market a new line of potato chips called “Country Kettle”. In addition to the use of the word “Kettle”, the respondent’s packet bore a picture of a stylised cauldron and utilised a similar colour scheme to that of the applicant. Later in 1992 the respondent modified the packets by removing the cauldron and replacing it with a pastoral scene.
346 Bodum v DKSH Australia Pty Ltd [2011] FCAFC 98. 347 Bodum v DKSH Australia Pty Ltd [2011] FCAFC 98 at [51]. 348 Bodum v DKSH Australia Pty Ltd [2011] FCAFC 98 at [197]. 349 Bodum v DKSH Australia Pty Ltd [2011] FCAFC 98 at [255] and [261]. 350 Bodum v DKSH Australia Pty Ltd [2011] FCAFC 98 at [256] and [257]-[258] citing Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd (2000) 100 FCR 257 and Dr Martens Australia Pty Ltd v Rivers (1999) 95 FCR 136. 351 Twentieth Century Fox Film Corporation v The South Australian Brewery Co Ltd (1996) 66 FCR 451 at 467 (Tamberlin J). In that case it was found that the intention of the brewery was to persuade consumers that there was a strong association between its product and “The Simpsons” animated television series (466-7). 352 The Kettle Chip Co Pty Ltd v Apand Pty Ltd (1993) 46 FCR 152.
[3.230]
3 Misleading or Deceptive Conduct
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The applicant brought proceedings against the respondent, alleging that the use by the respondent of the word “Kettle” and similar features on its packaging contravened ss 52, 53(c) and (d) of the TPA. Burchett J held: In my opinion, this evidence makes it clear that potato chips sold in the new packets will continue to benefit from the goodwill of the applicant misappropriated by the original promotion and packaging of “Country Kettle”. The image of “Country Kettle” which the respondent desired to create, and did in part create by its passing off and its misrepresentation, will continue to sustain the sale of the new packets, and will be recalled to the minds of consumers by compelling visual and other links.353
His Honour’s finding in relation to s 52 was confirmed by the Full Federal Court.354 In Red Bull Australia Pty Ltd v Sydneywide Distributors Pty Ltd, the trial judge, Conti J, found that Sydneywide had adopted a get up for its LiveWire energy drink that was calculated to deceive potential purchasers into thinking that it was the Red Bull energy drink, or believing that the LiveWire energy drink was made by, or with the licence or approval of Red Bull.355 On appeal, in Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd,356 Weinberg and Dowsett JJ (with whom Branson J agreed) upheld the findings of the primary judge. Their Honours confirmed that while there is no requirement that there be an actual, subjective intention to mislead, as an element that has to be demonstrated in a passing off action, “that does not detract from the evidentiary value of deliberate borrowing”.357 Similarly, in relation to a contravention of s 18 of the ACL, while there is no requirement that there be an actual, subjective intention to mislead as an element that has to be demonstrated, the courts are more likely to conclude that where a trader deliberately sets out to mislead to consumers, the conduct is likely to do so. See [3.70].
PART VI: EXEMPTION FOR INFORMATION PROVIDERS [3.230]
The provisions relating to misleading or deceptive conduct impose strict liability. An aspect of strict liability is that any newspaper which publishes, or television or radio station which broadcasts, misleading or deceptive news, information, opinion or commentary has engaged in misleading or deceptive conduct. It may, however, be possible for information providers to rely on the statutory exemption in ACL, s 19(1), which states that the provisions relating to misleading or deceptive conduct do not apply to an information provider if the information provider made a publication in the course of carrying on a business of providing information, unless the publication is related directly to its business activities.
353 The Kettle Chip Co Pty Ltd v Apand Pty Ltd (1993) 46 FCR 152 at 174. 354 Apand Pty Ltd v The Kettle Chip Company Pty Ltd (1994) 52 FCR 474. 355 Red Bull Australia Pty Ltd v Sydneywide Distributors Pty Ltd (2001) 53 IPR 481 at [69]-[70]. 356 Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354. 357 Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354 at [62] citing the reasons of Dixon and McTiernan JJ in Australian Woollen Mills Ltd v F S Walton & Co Ltd (1937) 58 CLR 641 at 657.
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[3.235]
Scope of the exemption for information providers [3.235]
Section 19 provides:
(1) This Part does not apply to a publication of matter by an information provider if: (a) in any case – the information provider made the publication in the course of carrying on a business of providing information; or (b) if the information provider is the Australian Broadcasting Corporation, the Special Broadcasting Service Corporation or the holder of a licence granted under the Broadcasting Services Act 1992 – the publication was by way of a radio or television broadcast by the information provider.
However, the scope of s 19(1) is circumscribed by ss 19(2)(3) and (4). This exemption does not apply to: • advertisements; • a publication in connection with the supply (or promotion of the supply) of goods or services by the information provider; or • a publication in connection with the sale or grant (or promotion of the sale or grant) of an interest in land by the information provider. In relation to publishers of advertisements there is a special defence created by s 251 of the ACL considered at [13.330]. Section 19 of the ACL replaces and clarifies s 65A of the TPA. The Second Explanatory Memorandum states: Section 19 of the ACL operates in the same way as the repealed subsections 65A(1) and (2) of the TP Act, and the jurisprudence on the understanding, interpretation and application of those provisions is relevant to section 19.358
Section 65A was enacted because decisions of the Federal Court had suggested that a newspaper publisher may be taken to have engaged in conduct for the purposes of s 52 of the TPA if the newspaper contained inaccurate information.359 Section 65A operated to exempt the media and other persons engaged in the business of providing information from the operation of Pt V, Div 1 of the TPA, so as not to inhibit the provision of news and other information. The term “information provider” is defined in s 19(5) to mean “a person who carries on a business of providing information”. Section 19(6) provides that it includes media organisations such as radio and television stations (including the Australian Broadcasting Corporation and the Special Broadcasting Service Corporation), as well as publishers of newspapers and magazines. The rationale for such an approach is that the information provider is merely a conduit and it is apparent from the circumstances that the information provider is 358 Second Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, at [3.19]-[3.20]. 359 Universal Telecasters (Qld) Ltd v Guthrie (1978) 32 FLR 360; Universal Telecasters (Qld) Ltd v Ainsworth Consolidated Industries Ltd (1983) ATPR ¶40-384 and Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82. See also Australian Ocean Line Pty Ltd v West Australian Newspapers Ltd (1983) 66 FLR 453, and Australian Ocean Line Pty Ltd v West Australian Newspapers Ltd (1985) 58 ALR 549.
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not the source of the information and is passing it on for what it is worth.360 In ACCC v Channel Seven Brisbane Pty Ltd, French CJ and Kiefel J held that the rationale of s 65A(1) of the was to maintain a free and vigorous press “by releasing newspapers and electronic media proprietors, inter alia, from undesirable inhibitions on the provision, by them, of news, information, opinion and comment.”361 However, the exemption did not extend to the provision of information where information provider had a commercial interest in the content of the information, such as “advertorial content”, where a newspaper has agreed to publish a “news” item about a product in exchange for the product supplier taking out paid advertising in that publication. Such advertorial content fell outside the exemption.362 The Second Explanatory Memorandum states: The prohibition in section 18 of the ACL does not apply to publications by an information provider, where the information provider made the publication in the course of carrying on a business of providing information or, in the case of a radio or television broadcaster, the publication was by radio or television broadcast by the information provider.
Publication of an advertisement [3.240]
Section 19(2) provides that the exemption does not apply to the publication of an advertisement. This mirrors s 65A(1)(b) of the which provided that “publication of matter in connection with … an advertisement” was not protected under s 65A of the TPA. In order to protect the publishers of misleading advertisements a special defence is created by s 251 of the ACL (previously s 85(3) of the TPA). This defence is considered at [13.330].
Exceptions to the exemption [3.245]
There are a number of exceptions to the exemption in ACL, s 19(1). Section 19(3) of the ACL deprives the information provider of immunity in the following circumstances: (3) Subsection (1) does not apply to a publication of matter in connection with the supply or possible supply of, or the promotion by any means of the supply or use of, goods or services (the publicised goods or services), if: (a) the publicised goods or services were goods or services of a kind supplied by the information provider or, if the information provider is a body corporate, by a body corporate that is related to the information provider; or (b) the publication was made on behalf of, or pursuant to a contract, arrangement or understanding with, a person who supplies goods or services of the same kind as the publicised goods or services; or (c) the publication was made on behalf of, or pursuant to a contract, arrangement or understanding with, a body corporate that is related to a body corporate that supplies goods or services of the same kind as the publicised goods or services.
Section 19(4) of the ACL makes similar provision in relation to the publication of matter in connection with the grant of an interest in land. 360 See Gillies, “Avoiding Infringement of Section 52: Reconciling the Information Provider’s Defence and the Conduit Defence” (2009) 17 Trade Practices Law Journal 186. 361 ACCC v Channel Seven Brisbane Pty Ltd (2009) 239 CLR 305 at [42]. 362 See Bond v Barry (2007) 73 IPR 490 (French J); TCN Channel Nine Pty Ltd v Ilvariy Pty Ltd (2008) 71 NSWLR 323 at [52]-[53] (Spigelman CJ, Beasley and Hodgson JJA).
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Sections 19(3) and (4) have been drafted in such a way as to maintain the High Court’s interpretation of s 65A of the TPA in ACCC v Channel Seven Brisbane Pty Ltd.363 In ACCC v Channel Seven Brisbane Pty Ltd,364 the question for determination whether Channel Seven had contravened the TPA in the course of broadcasting two episodes of the current affairs television program “Today Tonight” which reported on a “mentoring program” for women, the Wildly Wealthy Women Millionaire Mentoring Program. The ACCC alleged that in the course of broadcasting the episodes the Seven Licensees (Channel Seven Brisbane Pty Ltd, Channel Seven Sydney Pty Ltd, Channel Seven Melbourne Pty Ltd and Channel Seven Perth Pty Ltd) contravened s 52 of the TPA by making or adopting as their own, misleading representations concerning the mentoring program. The Channel Seven Licensees submitted that even if misleading representations were made, s 65A provided a complete defence. The ACCC argued that the Channel Seven Licensees’ conduct fell within the statutory exception, s 65A(1)(a), to the general exemption, namely a publication in connection with the supply of services of the information provider. The trial judge, Bennett J, found in favour of the ACCC.365 The Full Federal Court upheld Bennett J’s findings that Seven had made the representations in the program.366 However, the Full Court concluded that the services being promoted were the Wildly Wealthy Women’s financial services, and these were not services of a kind being supplied by the Channel Seven licensees, so the exemption applied to the media proprietors. Before the High Court, the ACCC succeeded in establishing that the exemption in s 65A did not apply because the exception in s 65A(1)(a)(vi) applied. Their Honours observed: Where, however, the information provider publishes matter in connection with goods or services which it itself provides, or publishes an advertisement for its own or someone else’s goods or services, the rationale of maintaining a free and vigorous press does not require its exemption from the prohibition of misleading or deceptive conduct. The same is true where the information provider promotes the goods or services of a third party pursuant to a contract, arrangement or understanding with that party. It would be true also of publications critical of goods or services provided by competitors of the information provider or of a third party with whom the information provider has a contract, arrangement or understanding.367
Seven had entered into an agreement to produce a number of episodes of “Today Tonight” with the Wildly Wealthy Women and misleading representations were made in connection with the promotion of the Wildly Wealthy Women’s financial services. Accordingly, the exception in s 65A(1)(a)(vi) applied. The publication was 363 Second Explanatory Memorandum, at [3.21]; ACCC v Channel Seven Brisbane Pty Ltd (2009) 239 CLR 305. 364 ACCC v Channel Seven Brisbane Pty Ltd (2009) 239 CLR 305 (French CJ, Gummow, Hayne and Kiefel JJ, Heydon J dissenting). 365 ACCC v Seven Network Ltd (2007) 244 ALR 343. 366 Channel Seven Brisbane Pty Ltd v ACCC (2008) 173 FCR 91 at 103-104 [47]-[57] (Sundberg, Jacobson and Lander JJ). 367 ACCC v Channel Seven Brisbane Pty Ltd (2009) 239 CLR 305 at [42].
[3.250]
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made on behalf of or pursuant to a contract, arrangement or understanding with a person who supplies goods or services of that kind, and Seven did not have the benefit of the s 65A protection. Their Honours held: Sub-paragraph (vi) is concerned with contracts, arrangements or understandings between information providers and the suppliers of goods or services. The information provider that publishes matter in connection with the supply of goods or services, and engages in misleading or deceptive conduct in so doing by the adoption or making of misrepresentations, is the party affected by this exception. This case was well within the purposes of the exception. Other cases may require consideration of the range of arrangements or understandings that fall within it.368
PART VII: MISLEADING OR DECEPTIVE CONDUCT UNDER THE ASIC ACT Introduction [3.250] The Financial Sector Reform (Consequential Amendments) Act 1998 (Cth) inserted Pt II Div 2, commonly known as the consumer protection provisions, into the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act). The provisions are general and specific protections against misleading and other unfair practices, such as unconscionable conduct in relation to financial services. On 1 July 1998, the Australian Securities and Investments Commission (ASIC) took over the ACCC’s powers and functions in relation to the enforcement of these provisions. From 2006 to 2010, Australia underwent a fundamental revision and reform of its generic consumer protection laws, resulting in the Australian Consumer Law (ACL). The government decided to exclude financial services and financial products from many of those reforms. Subclause 3.1.3 of the Intergovernmental Agreement for the Australian Consumer Law (IGA), signed by the Council of Australian Governments on 2 July 2009, required the Commonwealth to enact changes to the consumer investor protection provisions of the ASIC Act, and, to the extent necessary, the Corporations Act 2001 (Cth), to ensure that they are consistent with the ACL. Part 2 of the ACL regulates misleading conduct, unconscionable conduct, and unfair terms; however, it does not extend to financial products and contracts in relation to the supply of financial services (other than linked credit providers). Section 131A of the CCA provides: (1) Despite section 131, this Division does not apply (other than in relation to the application of Part 5-5 of Schedule 2 as a law of the Commonwealth) to the supply, or possible supply, of services that are financial services, or of financial products.
This reflects the current referral of power by the States and Territories set out in the Corporations Agreement 2002 and administered by the Ministerial Council for Corporations (MINCO). The consumer protection provisions of the ASIC Act have been amended to maintain consistency with the ACL. However, the consumer guarantees law in the ACL does not apply to financial services, with the exception of linked credit provider services. Section 12ED of the ASIC Act only implies 368 ACCC v Channel Seven Brisbane Pty Ltd (2009) 239 CLR 305 at [48]-[50].
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[3.255]
warranties of due care and skill and fitness for purpose into contracts for the supply financial services to a consumer in the course of a business. There have been very few cases in which consumers have sought to rely on a breach of these implied warranties.369 Proceedings for breaches of the consumer protections of the ASIC Act are brought by the ACCC pursuant to a delegation from ASIC.370 Consumer credit regulation was referred to the Commonwealth by the States and Territories in 2009. The Uniform Consumer Credit Code was replaced by the National Consumer Credit Protection Code from 1 July 2010. This Part is primarily concerned with the consumer protection provisions of the ASIC Act in relation to financial services and the powers of enforcement and remedies available to ASIC for breaches or potential breaches of Pt II Div 2 of the ASIC Act.
Background to the reform [3.255] The provisions of the ASIC Act and the Corporations Act 2001 operate in a complementary way to the misleading conduct provisions of the ACL (Cth) and the ACL (Application Acts) in different areas of commercial activity, but without overlapping. In Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq),371 Rares J trenchantly criticised the government for replacing the “elegantly simple” s 52 of the TPA with “a labyrinth of statutes”.372 His Honour observed: Of course, each Act has a myriad of complex definitions of what is a financial product or a financial service or are financial services. Each Act gives a person, who suffers loss or damage by conduct of another in contravention of the prohibition, the right to compensation (eg, s 1041I(1), s 12GF) coupled with substantively identical related exceptions and qualifications concerning proportionate liability. Since the end result of this legislative morass seems to be the same, it is difficult to discern why the public, their lawyers (if they can afford them) and the Courts must waste their time turning up and construing which of these statutes applies to the particular circumstance.373
The rationale for this “tangled legislative weave”374 is ASIC’s role as a specialist consumer protection regulator for financial services which resulted from recommendations of the Wallis Committee. In March 1997 the Wallis Committee in its Financial System Inquiry Final Report (FSI) recommended to the Government that: in relation to the regulatory framework for market integrity and consumer protection in the financial system it would be desirable to ensure that: • the regulatory structure is flexible and responsive to the forces for change operating on the system; 369 See eg, St George Bank Ltd v Wright [2009] QSC 337 at [54]-[59] (McMurdo J) and Transmarket Trading Pty Ltd v Sydney Future Exchange Ltd (2010) 188 FCR 1 at [113]-[116] (Perram J). 370 See ACCC v Original Mama’s Pizza & Ribs [2008] FCA 370 (18 March 2008) and ACCC v Fisher & Paykel Customer Services Pty Ltd [2014] FCA 1393 (19 December 2014). 371 Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq) [2012] FCA 1028 (21 September 2012). 372 Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq) [2012] FCA 1028 at [947]. 373 Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq) [2012] FCA 1028 at [948]. 374 Guglielman v Trescowthick [2004] FCA 326 at [35] (Mansfield J).
[3.265]
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• there is consistency in regulation of similar financial products to promote competition by improving comparability; • financial markets are more contestable, efficient and fair; • regulation of financial conglomerates is effective which will facilitate competition and efficiency; and • international competitiveness of the Australian financial system is facilitated.
The Wallis Committee also recommended that there should be a self-contained regulatory regime in relation to fundraising and other dealings in securities that required the issue of a prospectus. The rationale for the different regimes was explained by Wallis in the following terms: The provisions of the Corporations Law require positive disclosure and provided tailored defences. The balance between disclosure, liability and defences has been carefully struck, and is consistent with provisions governing securities issues and takeovers in the United Kingdom, the United States, Canada and New Zealand … The provisions of the Trade Practices Act apply generally and were not constructed in the context of provisions which require positive disclosure. Unlike the consumption of products and services in general, many investments provide a return to investors based on their bearing a share of the risks which are intrinsic to financial activity. This distinguishes the act of investment from the act of consumption. Among the risks that investors may be rewarded for bearing are those deriving from imperfect information. It is vital to economic efficiency that regulation not unduly interfere with this risk allocation function of the financial system.375
The factors that led to the adoption of industry-specific regulation in relation to financial services and a specialist regulator (ASIC) in this area include: • the complex nature of financial products generally; • the compulsory nature of superannuation, the attendant risks of poor decisionmaking by consumers and the serious consequences that would flow from this; • ASIC’s specialist knowledge of financial markets and its ability to co-ordinate consumer protection enforcement with its other compliance work.
Misleading or deceptive conduct under the ASIC Act [3.260]
Part II, Div 2, Subdiv D of the ASIC Act mirrors the ACL (Cth). It contains a broad general protection (s 12DA) against misleading or deceptive conduct in relation to financial services or financial products, the equivalent of s 18 of the ACL, and then contains two sets of more specific protections – first, the making of specific false or misleading representations in relation to financial services;376 and, second, unfair sales techniques.377
Financial products, financial services
[3.265]
“Financial product” is defined in s 2 of the ACL to have the same meaning as s 12BAA of the ASIC Act. See [3.270]. “Financial service” is defined in
375 Wallis Committee, Financial System Inquiry Final Report (March 1997), p 251. 376 ASIC Act, s 12DB(1). 377 ASIC Act, ss 12DC, 12DD, 12DE, 12DF, 12DG, 12DH, 12DI, 12DJ, 12DK, 12DL and 12DM.
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s 2 of the ACL to have the same meaning as s 12BAB of the ASIC Act. The ASIC Act contains a very broad definition of “financial service” which is linked with the definition of “financial product”. Section 12BAB(1) of the ASIC Act provides: a person provides a financial service if they: (a) provide financial product advice (see subsection (5)); or (b) deal in a financial product (see subsection (7)); or (c) make a market for a financial product (see subsection (11)); or (d) operate a registered scheme; or (e) provide a custodial or depository service (see subsection (12)); or (f) operate a financial market (see subsection (15)) or clearing and settlement facility (see subsection (17)); or (g) provide a service that is otherwise supplied in relation to a financial product; or (h) engage in conduct of a kind prescribed in regulations made for the purposes of this paragraph.
Financial services are similarly defined in s 766A of the Corporations Act 2001 (Cth) except that the clauses (f) and (g) are not included. Financial product
[3.270]
A “financial product” is defined in s 12BAA(1) of the ASIC Act.
a financial product is a facility through which, or through the acquisition of which, a person does one or more of the following: (a) makes a financial investment (see subsection (4)); (b) manages financial risk (see subsection (5)); (c) makes non cash payments (see subsection (6)). Section 12BAA(4) of the ASIC Act provides that a person makes a financial investment if the investor gives money or money’s worth (the contribution) to another person and the other person uses the contribution to generate a financial return or other benefit for the investor, or the investor intends the other person to use the contribution to generate a financial return, and the investor does not have day-to-day control over the use of the contribution to generate the return or benefit. This definition would include an investor paying money to receive an issue of shares in a company. This general definition of “financial product” is then followed by a number of specific products that are included within the general concept (set out in subs (7)), and a number of specific products that are excluded from the general concept (set out in subs (8)). Section 12BAA(7) of the ASIC Act provides that the following transactions are financial products: (a) a security; (b) any of the following in relation to a managed investment scheme: (i) an interest in the scheme; (ii) a legal or equitable right or interest in an interest covered by subparagraph (i);
[3.270]
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(iii) an option to acquire, by way of issue, an interest or right covered by subparagraph (i) or (ii); (c) a derivative; (d) a contract of insurance (see subsection (9)) (except health insurance provided as part of a health insurance business as defined by Division 121 of the Private Health Insurance Act 2007); (e) a life policy, or a sinking fund policy, within the meaning of the Life Insurance Act 1995, that is not a contract of insurance (see subsection (9)); (f) a beneficial interest in a superannuation fund (as defined by section 10 of the Superannuation Industry (Supervision) Act 1993); (g) an RSA (retirement savings account) within the meaning of the Retirement Savings Accounts Act 1997; (h) any deposit-taking facility made available by an ADI (within the meaning of the Banking Act 1959) in the course of its banking business (within the meaning of that Act), other than an RSA (RSAs are covered by paragraph (g)); (i) a debenture, stock or bond issued or proposed to be issued by a government; (j) a foreign exchange contract; (k) a credit facility (within the meaning of the regulations); (l) anything declared by the regulations to be a financial product for the purposes of this subsection.
A credit facility for the purposes of s 12BAA(7)(k) of the ASIC Act is defined in reg 2B of the Australian Securities and Investments Commission Regulations 2001 (Cth). Regulation 2B lists nine separate transactions and deems each to be a credit facility: (1) For paragraph 12BAA (7) (k) of the Act, each of the following is a credit facility: (a) the provision of credit: (i) for any period; and (ii) with or without prior agreement between the credit provider and the debtor; and (iii) whether or not both credit and debit facilities are available; (b) a facility: (i) known as a bill facility; and (ii) under which a credit provider provides credit by accepting, drawing, discounting or indorsing a bill of exchange or promissory note; (c) the provision of credit by a pawnbroker in the ordinary course of a pawnbroker’s business (being a business which is being lawfully conducted by the pawnbroker); (d) the provision of credit by the trustee of the estate of a deceased person by way of an advance to a beneficiary or prospective beneficiary of the estate; (e) the provision of credit by an employer, or a related body corporate of an employer, to an employee or former employee (whether or not it is provided to the employee or former employee with another person); (f) the provision of a mortgage that secures obligations under a credit contract (other than a lien or charge arising by operation of any law or by custom); (g) a guarantee related to a mortgage mentioned in paragraph (f); (h) a guarantee of obligations under a credit contract; (i) a facility for making non-cash payments (within the meaning of section 763D of the Corporations Act) if payments made using the facility will all be debited to a facility mentioned in paragraphs (a) to (h).
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[3.275]
(2) The provision of consumer credit insurance that includes a contract of general insurance for the Insurance Contracts Act 1984 is not a credit facility. (3) In this regulation: credit means a contract, arrangement or understanding: (a) under which: (i) payment of a debt owed by one person (a debtor) to another person (a credit provider) is deferred; or (ii) one person (a debtor) incurs a deferred debt to another person (a credit provider); and (b) including any of the following: (i) any form of financial accommodation; (ii) a hire purchase agreement; (iii) credit provided for the purchase of goods or services; (iv) a contract, arrangement or understanding for the hire, lease or rental of goods or services, other than a contract, arrangement or understanding under which: (A) full payment is made before or when the goods or services are provided; and (B) for the hire, lease or rental of goods – an amount at least equal to the value of the goods is paid as a deposit in relation to the return of the goods; (v) an article known as a credit card or charge card; (vi) an article, other than a credit card or a charge card, intended to be used to obtain cash, goods or services; (vii) an article, other than a credit card or a charge card, commonly issued to customers or prospective customers by persons who carry on business for the purpose of obtaining goods or services from those persons by way of a loan; (viii) a liability in respect of redeemable preference shares; (ix) a financial benefit arising from or as a result of a loan; (x) assistance in obtaining a financial benefit arising from or as a result of a loan; (xi) issuing, indorsing or otherwise dealing in a promissory note; (xii) drawing, accepting, indorsing or otherwise dealing in a negotiable instrument (including a bill of exchange); (xiii) granting or taking a lease over real or personal property; (xiv) a letter of credit.
In essence, a person provides a financial service if they provide financial product advice or deal in financial products. Providing financial product advice
[3.275]
Financial product advice is defined in s 12BAB(5) of the ASIC Act to mean a recommendation or a statement of opinion, or a report of either of those things, that: (a) is intended to influence a person or person in making a decision in relation to a particular financial product; or (b) could reasonably be regarded as being intended to have such an influence.
[3.285]
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Section 12BAB(6) of the ASIC Act provides that advice given by a lawyer in his or her professional capacity about matters of law or legal interpretation or the application of the law to any facts, is not financial product advice. However, the ASIC Act provision could, nevertheless, apply to lawyers who act as financial brokers or arrange loans for clients. Dealing in financial products
[3.280]
Section 12BAB(7) of the ASIC Act provides that the following conduct constitutes dealing in a financial product: (a) applying for or acquiring a financial product; (b) issuing a financial product; (c) in relation to securities or managed investment schemes – underwriting the securities or interests; (d) varying a financial product; (e) disposing of a financial product.
Section 12BAB(8) provides that “arranging for a person to engage in conduct referred to in s 12BAB(7) is also dealing in a financial product, unless the actions concerned amount to providing financial advice”.
Misleading or deceptive conduct [3.285]
Section 12DA provides:
(1) A person must not, in trade or commerce, engage in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive. (1A) Conduct: (a) that contravenes: (i) section 670A of the Corporations Act (misleading or deceptive takeover document); or (ii) section 728 of the Corporations Act (misleading or deceptive fundraising document); or (b) in relation to a disclosure document or statement within the meaning of section 953A of the Corporations Act; or (c) in relation to a disclosure document or statement within the meaning of section 1022A of the Corporations Act; does not contravene subsection (1).
In ACCC v Original Mama’s Pizza & Ribs,378 the misleading conduct consisted of representations that the “purchasers” of the pizza ovens financed their acquisition by leases from third party financiers, could try them for six months, and if they were not satisfied, they could be returned to the financiers, and the “purchasers” would have no further financial obligations in relation to the lease. In fact, there was no six month trial period, and no entitlement to be released from the obligations after six months. A credit facility for the purposes of s 12BAA(7)(k) of the ASIC Act is defined in reg 2B of the Australian Securities and Investments 378 ACCC v Original Mama’s Pizza & Ribs (2008) ATPR ¶42-236.
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[3.285]
Commission Regulations 2001 (Cth).379 Madgwick J held that the representations contravened s 12DA(1) and s 12DB(1)(g) of the ASIC Act – making a false or misleading representation concerning the existence or effect of a right. The test for deciding whether conduct is misleading under s 18 of the and s 12DA of the ASIC Act is the same, namely whether the conduct is likely to mislead a reasonable member of the class at whom the conduct is directed.380 For example, in GPG (Australia Trading) Pty Ltd v GIO Australia Holdings Ltd,381 GPG commenced actions against GIO for contraventions of s 52 of the TPA, s 42 of the FTA 1987, s 995(2) of the Corporations Law and s 12DA of the ASIC Act. GPG alleged misrepresentations in the announcement of 24 September 1999 to the ASX concerning the extent of its exposure. Gyles J stated that in his opinion there was no relevant difference between the various statutory provisions and that s 12DA of the ASIC Act was the pertinent provision.382 His Honour held the 24 September 1999 announcement made by GIO to the ASX was misleading. The reasonable reader would assume that there was no relevant change for the worse in what was to be expected in relation to reinsurance claims from events known to GIO compared with the announcements in August 1999. Put another way, the reasonable reader would assume that no further doubt had been cast upon the adequacy of the current provisions on that account.383 In Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq),384 Grange Securities Ltd (Grange), which had been acquired by Lehman Brothers Australia Ltd in March 2007, was engaged by three local councils to acquire complex financial products (synthetic collateralised debt obligations – SCDOs). Before dealing with Grange, the councils had invested conservatively. The councils were concerned to ensure that ratepayers’ funds were not invested in products that had a substantive risk of loss. Nevertheless, the councils wanted to ensure their funds earned best returns available, consistent with their conservative investment policies. Grange put itself forward as a financial adviser that understood the investment requirements of local governments, including the relevant legislative and policy constraints. Grange represented to the councils that the SCDO investments were suitable for a conservative investment strategy. After the Global Financial Crisis began to develop in mid-2007, many of the councils’ SCDOs suffered “credit events” causing the money invested in them to be lost. The councils suffered significant losses. The councils alleged that Grange had engaged in misleading or deceptive conduct in breach of s 12DA of the ASIC Act. 379 See Australian Securities and Investments Corporations 2001, reg 2B(3)(b)(iv) which includes hire, lease or rental of goods other than one under which full payment is made. 380 National Exchange Pty Ltd v ASIC (2004) ATPR ¶42-000. 381 GPG (Australia Trading) Pty Ltd v GIO Australia Holdings Ltd (2001) 117 FCR 23. 382 GPG (Australia Trading) Pty Ltd v GIO Australia Holdings Ltd (2001) 117 FCR 23 at [100]. 383 GPG (Australia Trading) Pty Ltd v GIO Australia Holdings Ltd (2001) 117 FCR 23 at [101]. 384 Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq) [2012] FCA 1028.
[3.285]
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Rares J held that Grange engaged in misleading conduct when it promoted SCDOs to councils as suitable for investors with a conservative investment strategy. This was not the case; investment in SCDOs was not consistent with a conservative investment strategy. Grange had failed to look at the individual managed portfolio agreement entered into by Wingecarribee and Grange in January 2007 which contained a prohibition on the acquisition of any product that did not have an active secondary market.385 In ACCC v Fisher & Paykel Customer Services Pty Ltd,386 the ACCC alleged false or misleading representations regarding consumer guarantees in the context of businesses offering extended warranties. The proceedings were brought by the ACCC under the ASIC Act pursuant to a delegation from the ASIC, as the extended warranty in this case was a financial product under the ASIC Act. Between January 2011 and December 2012, Fisher & Paykel and Domestic & General sent letters to consumers who had purchased a Fisher & Paykel appliance inviting them to purchase an extended warranty. The letters contained a number of statements, including: Your Fisher & Paykel [appliance] is now a year old, which means that you have 12 months remaining – after that your appliance won’t be protected against repair costs.
Wigney J held that the extended warranty offered by Domestic & General, as agent for Fisher & Paykel Customer Services, was a financial product as defined in subss 12BAA(1) and (5) of the ASIC Act because it was a facility through which a person (the consumer) managed financial risk by managing the financial consequences to them of the appliance breaking down.387 In sending the extended warranty letters to consumers, F & P Customer Services and Domestic & General contravened s 12DA of the ASIC Act because the letters represented that the consumer would not be protected against repair costs for the appliance after a period of two years from the date of purchase of the appliance unless the consumer purchased the extended warranty. Under the consumer guarantees regime in Pt 3-2, Div 1 of the ACL, a consumer may have had a right to have the appliance replaced or repaired beyond a period of two years depending on the nature of the failure to comply with the guarantee, without the purchase of an extended warranty. Under the guarantee of acceptable quality in s 54 of the ACL, an appliance used for residential purposes could be expected to last for up to five years or more. Section 259 of the ACL creates a right of action against a supplier in respect of, amongst other things, non-compliance with a guarantee of acceptable quality under s 54 of the ACL. The right of action under s 259 of the ACL contains no time limit. A consumer can take action under s 259 at any time so long as the terms of s 259 are satisfied. The right of action does not cease two years after purchase, or upon the expiry of any warranty provided by the manufacturer or supplier. The Court found that Fisher & Paykel did not make the relevant consumer guarantees clear to consumers. 385 Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq) [2012] FCA 1028 at [753], [957] and [962]. 386 ACCC v Fisher & Paykel Customer Services Pty Ltd [2014] FCA 1393. 387 ACCC v Fisher & Paykel Customer Services Pty Ltd [2014] FCA 1393 at [24].
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[3.290]
The effect of s 12DA(1A) is that the section does not apply to dealings in securities involving: • • • •
a a a a
misleading takeover document; or misleading fundraising document; or financial services guide; or product disclosure statement.
Section 12DB of the (concerning false or misleading representations) also contains a subsection equivalent to s 12DA(1A). Why are dealings in securities involving disclosure documents excluded? In order to answer this question it is necessary to understand the different policy rationales for consumer protection and investor protection. Broadly speaking, consumer protection relates to goods and services used by consumers to meet their daily needs. The test for misleading conduct under s 18 of the ACL is an objective one: what is the likely effect of the conduct on a reasonable member of the target audience? Investor protection recognises that the value of the choses in action being acquired (eg, shares, debentures etc) will depend on the underlying value of the business. It accepts that there will always be an element of risk involved, but the investor is entitled to make an informed decision and the information made available to investors through disclosure document (eg, prospectus) must be reliable. However, so long as those responsible for preparing the disclosure document have made all reasonable inquiries, and any statements or predictions are based on reasonable grounds, there should be no further liability, if something is omitted or the predictions do not come to pass. Thus, there is some justification for due diligence defences in relation to dealings in securities.
Overlap between the ACL and ASIC Act [3.290]
Where goods are supplied in combination with financial products or services, such as goods supplied in conjunction with a credit facility,388 or goods supplied in conjunction with an extended warranty that is a financial product,389 it can cause difficulties in determining which legislative scheme applies as Rares J observed in Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq).390 It may be necessary to plead under both legislative schemes. In the case of public enforcement, the proceedings are generally brought by the ACCC under the ASIC Act pursuant to a delegation from ASIC under s 102(2)(e) of the ASIC Act. Enforcement of the ACL and the related ASIC Act provisions is regulated at an operational level by a Memorandum of Understanding (MOU) between the ACCC, ASIC and State and Territory consumer agencies.391
388 ACCC v Original Mama’s Pizza & Ribs (2008) ATPR ¶42-236. 389 ACCC v Fisher & Paykel Customer Services Pty Ltd [2014] FCA 1393. 390 Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq) [2012] FCA 1028 at [948]. 391 Australian Consumer Law, Memorandum of Understanding, 6 July 2010. Available at: http:// www.consumerlaw.gov.au/files/2015/06/acl_mou.pdf.
4
Unconscionable Conduct [4.05] INTRODUCTION ................................................................................................................ 157 [4.10] PART I: UNCONSCIONABLE CONDUCT: THE UNWRITTEN LAW ..................... 159
[4.15] Meaning of the unwritten law from time to time ........................................ 160 [4.20] Unconscientious exploitation of special disadvantage ................................ 162 [4.40] PART II: STATUTORY UNCONSCIONABLE CONDUCT .......................................... 166
[4.40] Introduction ......................................................................................................... 166 [4.45] Supply and acquisition arrangements covered ............................................. 166 [4.50] Statutory unconscionable conduct under ss 51AB and 51AC of the TPA . 166 [4.55] Interpretative principles – s 21(4) .................................................................... 168 [4.75] Procedural unconscionable conduct ................................................................ 170 [4.80] Substantive unconscionable conduct ............................................................... 172 [4.85] Different interpretations ..................................................................................... 172 [4.95] Statutory factors .................................................................................................. 176 [4.195] PART III: UNCONSCIONABLE CONDUCT UNDER THE ASIC ACT .................. 200
[4.200] Imbalance of bargaining power ..................................................................... 204 [4.205] Unreasonable conditions ................................................................................. 204 [4.210] Exploitative pricing .......................................................................................... 205 [4.215] Lack of good faith ............................................................................................. 206
INTRODUCTION [4.05] The second general protection in the Australian Consumer Law (ACL) prohibits persons from engaging in unconscionable conduct towards consumers and businesses, but does not define the concept of “unconscionable conduct” for the purposes of the ACL. Statutory unconscionable conduct is to be determined in the light of the values and norms expressed by Parliament in s 22 of the ACL. When the ACL took effect on 1 January 2011, the unconscionable conduct provisions fell into three categories: • s 20 – unconscionable conduct within the meaning of the unwritten law of the States and Territories; • s 21 – unconscionable conduct in the context of a business’s dealings with consumers; and • s 22 – unconscionable conduct in the context of a business’s dealings with other businesses, either as a customer or as a supplier.
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Section 20 was based on s 51AA of the TPA which prohibited a corporation from engaging in unconscionable conduct “within the meaning of the unwritten law from time to time”. Section 21 of the ACL was based on s 51AB of the TPA which prohibited a corporation, in trade or commerce, from engaging in conduct that was unconscionable in connection with the supply or possible supply of goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption. What could be regarded as “unconscionable conduct” was not restricted to the kinds of conduct that were so characterised under the unwritten law. Section 22 of the ACL was ACL based on s 51AC of the TPA which was introduced in 1998. It prohibited a corporation, in trade or commerce, from engaging in unconscionable conduct in relation to businesses as suppliers and acquirers in relation to any type of goods or services provided that they were being acquired for the purpose of trade or commerce. This was also unrestricted by the unwritten law. On 27 November 2009, the then Minister for Competition Policy and Consumer Affairs, the Hon Dr Craig Emerson MP, established an expert panel to advise him whether the unconscionability provisions in s 51AC of the TPA should be amended to include a list of examples that constitute unconscionable, or include a statement of principles concerning unconscionable conduct.1 Minister Emerson released the expert panel’s report, Strengthening Statutory Unconscionable Conduct and the Franchising Code of Conduct, on 3 March 2010.2 The principal findings of the Expert Panel regarding s 51AC were that a list of examples should not be included for the reason that it was impossible to identify examples that would be unconscionable in all circumstances. As the Panel noted, a finding of unconscionable conduct is “fact-dependent” requiring a consideration of all the circumstances, and conduct that is unconscionable in one set of circumstances may not be unconscionable in another.3 Instead, the Panel recommended that a statement of interpretative principles should be included in statutory unconscionability provisions. The Competition and Consumer Legislation Amendment Act 2011 (Cth) implemented the Expert Panel’s recommendations on unconscionable conduct. It amended the ACL and the ASIC Act to include a list of interpretative principles and unified the consumer and business related provisions prohibiting unconscionable conduct.4 In the Second Reading Speech, that accompanied the Competition and Consumer Legislation Amendment Bill 2011, the Minister stated: The Bill will also remove the distinction in the existing provisions between unconscionable conduct that affects businesses and that which affects consumers. 1 The expert panel consisted of Professor Bryan Horrigan, Mr David Lieberman and Mr Ray Steinwall. 2 Available at: http://www.treasury.gov.au/contentitem.asp?NavId=014&ContentID=1744. 3 Strengthening Statutory Unconscionable Conduct and the Franchising Code of Conduct, p 24. 4 The Government previously introduced the Competition and Consumer Legislation Amendment Bill 2010, into Parliament on 27 May 2010. The Bill was referred to the Senate Economics Committee, which recommended that the Bill be passed. However, the Bill lapsed with prorogation of the Parliament for the 2010 Federal Election.
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It combines existing sections 21 and 22 of the Australian Consumer Law and sections 12CB and 12CC of the ASIC Act, respectively, into one section and rationalises their drafting to apply a single set of specific factors which the court could consider. This amendment will eliminate the potential that the concept of unconscionable in the two existing provisions could diverge, through a false assumption that the existence of the two provisions signals a distinction in policy. Any divergence has the potential to lead to confusion, and the distinction should be removed before any such notion develops.5
The 2011 amendments came into operation on 1 January 2012. First, ACL, s 20 remains a general prohibition of unconscionable conduct within the meaning of the unwritten law (ASIC Act, s 12CA). Secondly, ACL, ss 21 and 22 (ASIC Act, ss 12CB and 12CC) were repealed and replaced by the new ss 21 and 22 (ASIC Act, new ss 12CB and 12CC). Thirdly, the new s 21 unified the old ss 21 and 22 to create a single, general, prohibition of unconscionable conduct in connection with the supply or acquisition of goods or services (or possible supply or acquisition) other than to or from, respectively, a listed public company within the meaning found in the Income Tax Assessment Act 1997 (Cth). It is designed to confer the same level of protection on consumers and businesses, except where the business is conducted through a listed public company. Fourthly, a new s 21(4) (ASIC Act, s 12CD(4)) includes a list of interpretive principles designed to make sure that the prohibition is interpreted expansively. Fifthly, the new s 22 sets out a non-exhaustive list of factors that may be taken into account by a court in deciding whether s 21 has been contravened. This list replicates the list of 12 matters that previously applied under the old s 22 to transactions involving business consumers. Finally, a new s 22A applies s 4 of the ACL (which deals with misleading representations about the future) to ss 21 and 22. The prohibitions in ss 20 and 21 are directed to “a person”. However, as a law of the Commonwealth they apply only to corporations.6 Non-corporate persons are instead made subject to the ACL via the State or Territory law making the ACL part of the law of the jurisdiction in which the conduct occurred. Chapter 4 is divided into three parts.
• Part I – examines the scope of unconscionable conduct under the “unwritten law”. • Part II – considers the scope of statutory unconscionable conduct under the ACL. • Part III – considers the scope of statutory unconscionable conduct under the ASIC Act. PART I: UNCONSCIONABLE CONDUCT: THE UNWRITTEN LAW [4.10] Section 20 of the ACL provides: (1) A person must not, in trade or commerce, engage in conduct that is unconscionable, within the meaning of the unwritten law from time to time. 5 The Hon David Bradbury MP, Second Reading Speech to the Competition and Consumer Legislation Amendment Bill 2011, 15 June 2011, p 5. 6 CCA, s 131(1).
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(2) This section does not apply to conduct that is prohibited by section 21. Section 20 of the ACL re-enacts s 51AA of the TPA which prohibited a corporation, in trade or commerce, from engaging in conduct that was unconscionable according to the “unwritten law” of the States and Territories.7 Section 20 of the ACL is a general prohibition of unconscionable conduct; that is, one that has the potential to apply to all types of transactions and in favour of all types of victims unless – because of the exception created by s 20(2) – the conduct in question is prohibited by s 21. However, it does not alter what is to be recognised as unconscionable conduct. This remains governed by “the unwritten law from time to time”. Two further points should be noted about the scope of s 20 of the ACL. First, the prohibition in s 20 is on unconscionable conduct generally, provided it occurs in trade or commerce. It is not restricted, as is s 21, to conduct arising in connection with the “supply or possible supply” of “goods or services”. Thus, unlike s 21, it can apply to unconscionable conduct engaged in by, as well as towards, a consumer and to transactions not involving goods or services. Secondly, reliance on s 21 is open to both businesses and consumers. However, s 20(2) provides that the section does not apply to conduct covered by s 21. This requires a person to determine that the defendant’s conduct is not covered by s 21 before being able to invoke s 20, or to plead a contravention of s 20 or s 21, in the alternative.
Meaning of the unwritten law from time to time [4.15] According to the Explanatory Memorandum to the Competition and Consumer Legislation Amendment Bill 2011, “the unwritten law from time to time” refers to: the array of common law and equitable principles that have developed in the Australian courts over many years as they apply and relate to the concept of unconscionable conduct. Previous jurisprudence developed in the courts of England and Wales prior to the independence of the Australian judicial system, which occurred with the reception of the laws and statutes of England and Wales and the establishment of the colonial Supreme Courts in the nineteenth century, is also relevant, as are the decisions of the Privy Council exercising its now ended appellate jurisdiction over State courts.8
Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ in Tanwar Enterprises Pty Ltd v Cauchi observed: The terms “unconscientious” and “unconscionable” are, as was emphasised in ACCC v C G Berbatis Holdings Pty Ltd, used across a broad range of the equity jurisdiction. They describe in their various applications the formation and instruction of conscience by reference to well developed principles.9
In ACCC v CG Berbatis Holdings Pty Ltd (No 2),10 French J (as his Honour then was) indicated that the concept of unconscionability under the unwritten law has two different meanings. At the generic level it is the fundamental principle according to 7 See R V Miller, Australian Competition and Consumer Law Annotated (37th ed, Lawbook Co, Sydney, 2015), [1.S2.20.10]-[1.S2.20.115]. 8 Explanatory Memorandum, Competition and Consumer Legislation Amendment Bill 2011, at [2.14]. 9 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at [20]. 10 ACCC v CG Berbatis Holdings Pty Ltd (No 2) (1999) 96 FCR 491.
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which equity acts and embraces not just unconscientious exploitation by one person of a serious disadvantage of another but also equitable estoppel; relief from forfeiture and penalties. At the specific level it is a distinct ground of equitable relief most often associated with the unconscientious exploitation of a special disadvantage as in Commercial Bank of Australia v Amadio.11 In ACCC v Samton Holdings Pty Ltd,12 the Full Federal Court recognised five categories of case under which equity will provide relief against the consequences of unconscionable conduct thus falling within the “unwritten law” for the purposes of s 51AA of the TPA: • knowing exploitation of special disadvantage which may be constitutional (age, illness, poverty, inexperience or lack of education), or situational (deriving from the relationship of the actors such as emotional dependence);13 • setting aside as against third parties a transaction entered into as the result of defective comprehension by a party to the transaction;14 • preventing a party exercising a legal right based on equitable estoppel;15 • relief against forfeiture and penalty;16 and • rescinding contracts entered into under the influence of unilateral mistake.17 It is outside the scope of this work to deal in any depth with these specific equitable doctrines; however, they may come to the aid of consumers, especially unconscientious exploitation of serious disadvantage which will be discussed briefly.18 The object of s 51AA of the TPA was to make available the extensive and flexible remedies under the TPA for unconscionable conduct in equity. This objective has been carried over into the ACL. According to the Second Explanatory Memorandum, “[t]he principal purpose and function of s 20 of the ACL, is to allow the penalties and remedies available under Ch 5 of the ACL to be imposed with respect to conduct that is found to be considered to be unconscionable within the meaning of the unwritten law.”19 11 Commercial Bank of Australia v Amadio (1983) 151 CLR 447. 12 ACCC v Samton Holdings Pty Ltd (2002) 117 FCR 301 at [48] (Gray, French and Stone JJ). Followed in Body Bronze International Pty Ltd v Fehcorp Pty Ltd (2011) 282 ALR 571 at [87] (Macaulay AJA, with whom Harper and Hansen JJA agreed) and Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd [2012] VSCA 103 at [115] (Nettle and Neave JJA, with whom Bell AJA agreed). 13 Commercial Bank of Australia v Amadio (1983) 151 CLR 447; Louth v Diprose (1992) 175 CLR 621. 14 Garcia v National Australia Bank Ltd (1998) 194 CLR 395. 15 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; Commonwealth v Verwayen (1990) 170 CLR 394. 16 Legione v Hateley (1983) 152 CLR 406; Stern v Mc Arthur (1988) 165 CLR 489. 17 Taylor v Johnson (1983) 151 CLR 422. 18 See Dal Pont, “The Varying Shades of ‘Unconscionable Conduct’ – Same Term, Different Meaning” (2000) 19 Australian Bar Review 135. 19 Second Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, at [4.22].
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[4.20]
Unconscientious exploitation of special disadvantage [4.20] Unconscientious exploitation of special disadvantage is a recognised equitable doctrine that falls within the “unwritten law”. It is first necessary to indentify a particular person at whom the conduct is directed. Having identified that person it is then necessary to satisfy three elements: • the person identified must be suffering from a special disadvantage vis-à-vis the stronger party; • the stronger party must have knowledge of that special disadvantage or it must be sufficiently evident; and • there must be a taking advantage by the stronger party of the other person’s special disadvantage in a way that offends good conscience.20 Special disadvantage
[4.25] In relation to the first element, the class of circumstances which might amount to “special disadvantage” has tended to focus on: • a constitutional disadvantage arising from some inherent weakness, such as illiteracy, drunkenness, poverty, need, sickness, advanced age, infirmity of body or mind; • lack of education and lack of assistance or explanation when assistance or explanation is necessary;21 • lack of, or limited comprehension of, the English language;22 and • emotional dependence such as that which arose in Louth v Diprose23 where the appellant manufactured an atmosphere of crisis about her accommodation in order to influence the respondent to provide her with money to purchase a house. The respondent’s concern for the appellant’s welfare seriously affected his ability to make a judgment as to his own best interests. Proof of a constitutional disadvantage is not, of itself, sufficient to invoke the equitable doctrine; it must lead to an inability to make a rational judgment. For example, poverty alone does not prove that a person is not capable of making a rational decision; however, if it can be demonstrated that a person lacked the means to obtain a proper education and was accordingly unable to understand the nature or terms and conditions of the transaction in question, this will constitute a special disadvantage. In Permanent Mortgages Pty Ltd v Vandenbergh, Murphy JA held that advanced age does not of itself constitute a “special disadvantage”, but may in combination with other factors such as limited or lack of education, 20 See Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 462 (Mason J) and 474-480 (Deane J). See also Blomley v Ryan (1956) 99 CLR 362 at 405 (Fullagar J); and Louth v Diprose (1992) 175 CLR 621 at 626 (Brennan J). 21 Blomley v Ryan (1956) 99 CLR 362 at 405, 415. 22 Commercial Bank of Australia v Amadio (1983) 151 CLR 447. 23 Louth v Diprose (1992) 175 CLR 621.
[4.30]
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contribute to the condition of being under a special disadvantage.24 Illiteracy, lack of education or unfamiliarity with the language often indicate “special disadvantage”.25 Lack of business knowledge can constitute “special disadvantage” especially where the transaction in question is not a commonplace one.26 While absence of independent legal advice does not constitute a “special disadvantage” on its own it may be of factual importance in determining whether a special disadvantage exists.27 At first instance in ACCC v CG Berbatis Holdings Pty Ltd (No 2),28 French J stated that the categories of special disadvantage are open and may extend to situational disadvantage as well as constitutional disadvantage. However, it is clear that a mere imbalance of bargaining power will not constitute special disadvantage for the purposes of the equitable doctrine. As Gleeson CJ stated in ACCC v CG Berbatis Holdings Pty Ltd: A person is not in a position of relevant disadvantage, constitutional, situational or otherwise, simply because of inequality of bargaining power. Many, perhaps even most, contracts are made between parties of unequal bargaining power, and good conscience does not require parties to contractual negotiations to forfeit their advantages, or neglect their own interests.29
The essential point is that the “special disadvantage” must be “one which seriously affects the ability of the innocent party to make a judgment as to [their] own best interests”.30 Actual knowledge of special disadvantage
[4.30] The second element is actual knowledge of the special disadvantage or something less than actual knowledge. In Commercial Bank of Australia Ltd v Amadio Mason J stated: If A having actual knowledge that B occupies a situation of special disadvantage in relation to an intended transaction, so that B cannot make a judgment as to what is in his own interests, takes unfair advantage of his (A’s) superior bargaining power or position by entering into that transaction, his conduct in so doing is unconscionable. And if, instead of having actual knowledge of that situation, A is aware of the possibility that that situation may exist or is aware of facts that would raise that possibility in the mind of any reasonable person, the result will be the same.31 24 Permanent Mortgages Pty Ltd v Vandenbergh (2010) 41 WAR 353 at [235]-[236], citing Australia and New Zealand Banking Group Ltd v Dzienciol [2001] WASC 305 at [289]-[290]. Applied in Choice Constructions Pty Ltd v Janceski (No 3) [2011] WASC 358 at [136] (Simmonds J). 25 Permanent Mortgages Pty Ltd v Vandenbergh (2010) 41 WAR 353 at [231]; Choice Constructions Pty Ltd v Janceski (No 3) [2011] WASC 358 at [148]. 26 Choice Constructions Pty Ltd v Janceski (No 3) [2011] WASC 358 at [183]. 27 Bridgewater v Leahy (1998) 194 CLR 457 at [41]; Permanent Mortgages Pty Ltd v Vandenbergh (2010) 41 WAR 353 at [232]. 28 ACCC v CG Berbatis Holdings Pty Ltd (No 2) (2000) 96 FCR 491. 29 ACCC v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at 64 [11] and [14]. See also Gummow and Hayne JJ at 77-79 and Callinan J at 115-116. 30 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 462 (Mason J). 31 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 467.
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[4.35]
Deane J expressed this element in the following terms: [Was the] disability … sufficiently evident to the stronger party to make it prima facie unfair or “unconscientious” that he procure, or accept, the weaker party’s assent to the impugned transaction in the circumstances in which he procured or accepted it.32
In ACCC v Radio Rentals Ltd,33 Finn J cited the above passages from Amadio’s case, and concluded that Radio Rentals had not contravened ss 51AA and 51AB of the in circumstances where a pensioner who, as a result an intellectual disability and schizophrenia, entered into 39 agreements relating to electrical appliances which consumed 30-40% of his income. The pensioner could not read or understand the terms of these agreements; however, his disability was not sufficiently evident to the Radio Rentals staff to make their conduct unconscionable. Unconscientious exploitation of special disadvantage
[4.35] As regards the third element, unconscientious exploitation of special disadvantage, the focus is on procedural, rather than substantive unconscionable conduct. Procedural unconscionable conduct refers to bargaining misconduct. Substantive unconscionable conduct refers to the terms of the contract and the conduct of a party in carrying it out. Factors going to the process of the bargain include the conduct of the negotiations in adverse circumstances, absence of meaningful choice, and the use of an influential third party or lack of information.34 The question is whether the antecedent conduct was such that the party suffering from the special disadvantage was unable to reach a rational decision as to what was in their best interests. The focus is on the effect of the conduct on a particular person. Cases of unconscientious exploitation of special disadvantage are most likely to be successful in business to consumer transactions where there is some dependency on the business party by the consumer claiming unconscionability. Such dependency may also exist in business-to-business transactions; however, the courts will carefully scrutinise whether the dependency results in one business party being incapable of making a rational decision as to what was in their best interests. For example, in ACCC v CG Berbatis, Mr and Mrs Roberts were in a difficult position because they had no option to renew their lease. The prospects of selling their business depended on the co-operation of the lessor in agreeing to grant them an extension. However, in giving up their claims against the lessor in return for an extension they made a rational decision as to what was in their best interests.35 Similarly, in ACCC v Samton Holdings,36 the Full Federal Court held: The disadvantage under which the Rinaldis and Executive Bloodstock laboured had arisen from a combination of considered commercial judgment (the decision to borrow 32 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 474. 33 ACCC v Radio Rentals Ltd (2005) 146 FCR 292. 34 G E Dal Pont and D R C Chalmers, Equity and Trusts in Australia (4th ed, Lawbook Co, 2011), at [9.10]. 35 ACCC v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at 64-5 [15] (Gleeson CJ); 77 [56] (Gummow and Hayne JJ); 115-6 [185] (Callinan J). 36 ACCC v Samton Holdings Pty Ltd (2002) 117 FCR 301.
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heavily in order to purchase the business), and Mr Rinaldi’s oversight in neglecting to exercise the option in good time. These factors did not impair the Rinaldis’ ability to make a decision about the best course of action in the circumstances. At least in the case of an experienced business person there must, in our opinion, be something more than commercial vulnerability (however extreme) to elevate disadvantage into special disadvantage.37
In Kakavas v Crown Melbourne Ltd,38 the High Court denied a remedy to a person who voluntarily engaged in gambling, an inherently risky activity. For many years Mr Kakavas was not permitted to gamble at Crown Casino because the management were concerned that he may have been addicted to gambling. Towards the end of 2004, Mr Kakavas was permitted to gamble after Crown Casino received a psychologist’s report stating that he was not addicted to gambling. By August 2005, Mr Kakavas had sustained losses of $20.5 million, and in 2007 he commenced proceedings against Crown claiming that it had engaged in unconscionable conduct contrary to s 51AA of the TPA. Mr Kakavas argued that Crown exploited his inability to make decisions that were in his best interests because of his pathological urge to gamble. In a unanimous judgment the High Court held: equitable intervention does not relieve a plaintiff from the consequences of improvident transactions conducted in the ordinary and undistinguished course of a lawful business. A plaintiff who voluntarily engages in risky business has never been able to call upon equitable principles to be redeemed from the coming home of risks inherent in the business. The plaintiff must be able to point to conduct on the part of the defendant, beyond the ordinary conduct of the business, which makes it just to require the defendant to restore the plaintiff to his or her previous position. … The appellant seeks to distinguish his dealings with Crown from the ordinary course of its business, but it is difficult to see the special factual foundation required to shift responsibility for his own conduct onto the party whose conduct did not go beyond accommodating the appellant’s wish to engage in risky business.39
The court elaborated on what is required to invoke equitable intervention: Equitable intervention to deprive a party of the benefit of its bargain on the basis that it was procured by unfair exploitation of the weakness of the other party requires proof of a predatory state of mind. Heedlessness of, or indifference to, the best interests of the other party is not sufficient for this purpose. The principle is not engaged by mere inadvertence, or even indifference, to the circumstances of the other party to an arm’s length commercial transaction. Inadvertence, or indifference, falls short or the victimisation or exploitation with which the principle is concerned.40
Thus, those persons who are capable of making a judgment as to their own best interests, and who carelessly fail to look after their own interests are not in a situation of special disadvantage for the purposes of the specific equitable concept. 37 ACCC v Samton Holdings Pty Ltd (2002) 117 FCR 301 at 323 [64]. 38 Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392. 39 Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at [20]-[21] 40 Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at [161].
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[4.40]
PART II: STATUTORY UNCONSCIONABLE CONDUCT Introduction [4.40] Section 21(1) of the ACL provides: A person must not, in trade or commerce, in connection with: (a) the supply or possible supply of goods or services to a person (other than a listed public company); or (b) the acquisition or possible acquisition of goods or services from a person (other than a listed public company); engage in conduct that is, in all the circumstances, unconscionable.
Supply and acquisition arrangements covered [4.45] Section 21(1) of the ACL applies to: • conduct by a person (the “supplier”) in connection with the supply or possible supply of goods or services to another person, other than a listed public company (the “customer”);41 and • conduct by a person (the “acquirer”) in connection with the acquisition or possible acquisition of goods or services from another person, other than a listed public company (the “supplier”).42 Section 21(1) is designed to protect persons generally, including “business consumers” and “business suppliers” from unconscionable conduct by persons occupying more powerful positions. There are no limits on the kind of businesses that might seek to rely on s 21(1); the only limitations are that the goods or services supplied or acquired must be supplied or acquired for the purpose of trade or commerce and the conduct must not be directed towards a publicly listed company.43 The protection extends to cover not just the exercise of the terms of the contract (substantive unconscionable conduct), but also to the conduct surrounding the bargaining process (procedural unconscionable conduct) since s 21 of the ACL expressly refers to the possible supply of goods or services.44 Section 21 does not define “unconscionable conduct”, although it does contain three interpretative principles in s 21(4), which give some indication as to Parliament’s intention regarding its scope. Before considering these interpretative principles, it is necessary to consider what was the scope of statutory unconscionable conduct under the repealed ss 51AB and 51AC of the TPA.
Statutory unconscionable conduct under ss 51AB and 51AC of the TPA [4.50] In ACCC v Allphones Retail Pty Ltd (No 2)45 Foster J summarised the meaning of statutory unconscionable conduct in TPA, s 51AC in three propositions: 41 ACL, s 22(2). 42 ACL, s 22(3). 43 See R V Miller, Australian Competition and Consumer Law Annotated (37th ed, Lawbook Co, Sydney, 2015), [1.S2.21.10]-[1.S2.21.60]. 44 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [294] (Allsop CJ). 45 ACCC v Allphones Retail Pty Ltd (No 2) (2009) ATPR ¶42-274 at [113].
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(a) The scope of s 51AC is wider than that of s 51AA. The meaning of unconscionable for the purposes of s 51AC is not limited to the meaning of the word according to established principles of common law and equity; (b) The ordinary or dictionary meaning of unconscionable, which involves notions of serious misconduct or something which is clearly unfair or unreasonable, is picked up by the use of the word in s 51AC. When used in that section, the expression requires that the actions of the alleged contravenor show no regard for conscience, and be irreconcilable with what is right or reasonable. Inevitably the expression imports a pejorative moral judgment; and (c) Normally, some moral fault or moral responsibility would be involved. This would not ordinarily be present if the critical actions are merely negligent. There would ordinarily need to be a deliberate (in the sense of intentional) act or at least a reckless act.46 [citations omitted]
Two decisions of the Full Court of the Federal Court of Australia, Hurley v McDonald’s Australia Ltd,47 and ASIC v National Exchange Pty Ltd,48 provided guidance as to what the term “unconscionable” meant for the purposes of ss 51AB and 51AC of the TPA. In Hurley v McDonald’s Australia Ltd, the Full Court held: For conduct to be regarded as unconscionable, serious misconduct or something clearly unfair or unreasonable, must be demonstrated – Cameron v Qantas Airways Ltd … (1994) 55 FCR 147 at 179. Whatever “unconscionable” means in ss 51AB and 51AC, the term carries the meaning given by the Shorter Oxford English Dictionary, namely, actions showing no regard for conscience, or that are irreconcilable with what is right or reasonable – Qantas Airways Ltd v Cameron … (1996) 66 FCR 246 at 262. The various synonyms used in relation to the term “unconscionable” import a pejorative moral judgment – Qantas Airways Ltd v Cameron … at 283-4 and 298.49 (emphasis in the original)
In the spectrum of commercial conduct, there is a clear demarcation between conduct which is merely shrewd or opportunistic, and that which can properly be characterised as “unconscionable” in the sense described by the Full Federal Court in Australian Securities Investment Commission v National Exchange Pty Ltd.50 Spigelman CJ, in a case involving another statutory unconscionable conduct provision in the Retail Leases Act 1994 (NSW) which mirrors s 51AC of the TPA, drew attention to the dangers of setting the bar too low: Over recent decades legislatures have authorised courts to rearrange the legal rights of persons on the basis of vague general standards which are clearly capable of misuse unless their application is carefully confined. Unconscionability is such a standard. … restraint in decision-making [is] appropriate. Unconscionability is a concept which requires a high level of moral obloquy. If it were to be applied as if it were equivalent to what was 46 These propositions were cited with approval by Gordon J in ACCC v Dukemaster Pty Ltd (2009) ATPR ¶42-290 at [127] and by Macaulay AJA (with whom Harper and Hansen JJA agreed) in Body Bronze International Pty Ltd v Fehcorp Pty Ltd (2011) 282 ALR 571 at [89]. 47 Hurley v McDonald’s Australia Ltd (2000) ATPR ¶41-741 at 40,585. 48 Australian Securities and Investments Commission v National Exchange Pty Ltd (2005) 148 FCR 132 (National Exchange case). The decision at first instance is reported as Aevum Ltd v National Exchange Pty Ltd (2004) 142 FCR 316. 49 Hurley v McDonald’s Australia Ltd (2000) ATPR ¶41-741 at 40,585 (Heerey, Drummond, Emmett JJ). 50 ASIC v National Exchange Pty Ltd (2005) 148 FCR 132.
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“fair” or “just”, it could transform commercial relationships … The principle of “unconscionability” would not be a doctrine of occasional application, when the circumstances are highly unethical, it would be transformed into the first and easiest port of call when any dispute about a retail lease arises.51 (emphasis added)
In ASIC v National Exchange Pty Ltd, the Full Federal Court noted that the legislative purpose of s 12CC of the ASIC Act, which mirrors s 51AC of the TPA, was “… to build on and not be constrained by the unwritten law”.52 According to the Court, on its ordinary and natural interpretation, unconscionable conduct means “doing what should not be done in good conscience”,53 which the Court interpreted as requiring a “high level of moral obloquy”.54 The New South Wales Court of Appeal held in Tonto Home Loans Australia Pty Ltd v Tavares,55 that: It is neither possible nor desirable to provide a comprehensive definition. The range of conduct is wide and can include bullying and thuggish behaviour, undue pressure and unfair tactics, taking advantage of vulnerability or lack of understanding, trickery or misleading conduct. A finding requires an examination of all of the circumstances.56
Interpretative principles – s 21(4) [4.55] Section 21(4) of the ACL sets out three interpretative principles that provide some indication as to Parliament’s intention regarding its scope. According to the Explanatory Memorandum, the interpretative principles have been drawn from existing case law, and they are intended to clarify rather than alter the meaning of statutory unconscionalbility.57 Section 21(4) provides: (4) It is the intention of the Parliament that: (a) this section is not limited by the unwritten law relating to unconscionable conduct; and (b) this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and (c) in considering whether conduct to which a contract relates is unconscionable, a court’s consideration of the contract may include consideration of: (i) the terms of the contract; and (ii) the manner in which and the extent to which the contract is carried out; and is not limited to consideration of the circumstances relating to formation of the contract. 51 Attorney General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557 at [119], [121]. See also Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 at 585-586 (Kirby P) and Leading Edge Events Australia Pty Ltd v Te Kanawa [2007] NSWSC 228 at [231] (Bergin J). 52 ASIC v National Exchange Pty Ltd (2005) 148 FCR 132 at 140 [30]-[31]. 53 ASIC v National Exchange Pty Ltd (2005) 148 FCR 132 at 140 [33]. 54 ASIC v National Exchange Pty Ltd (2005) 148 FCR 132 at 140 [43], referring to Spigelman CJ’s judgment in Attorney-General of NSW v World Best Holdings Ltd (2005) 63 NSWLR 557. 55 Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389. 56 Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 at [291]. 57 Explanatory Memorandum, Competition and Consumer Legislation Amendment Bill 2010, at [2.19].
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First interpretative principle
[4.60] In the Second Reading Speech introducing the Competition and Consumer Legislation Amendment Bill 2011, the Minister stated: The first principle will deal with concerns that the practical application of the equitable concept of unconscionable conduct is too narrow when applied to business and consumer relationships. Courts have tended to stick closely to the traditional equitable concept when applying the statutory prohibitions that were sections 51AB and 51AC of the former Trade Practices Act (now sections 21 and 22 of the Australian Consumer Law) and sections 12CB and 12CC of the ASIC Act.58
Statutory unconscionable conduct in s 21(1) of the ACL is not limited to unconscionable conduct under the unwritten law. Also, a number of the factors listed in s 22(1) (considered at [4.95]–[4.190]) that may be taken into account in deciding whether the conduct at issue is unconscionable goes beyond those that have been considered under unconscientious exploitation of serious disadvantage.59 Second interpretative principle
[4.65] The Expert Panel recommended the inclusion of an interpretative principle which recognises that statutory unconscionable conduct focuses on the conduct itself and it is not necessary to identify a specific or particular person who is the victim of the conduct.60 It is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as the victim of that conduct or behaviour. According to the Explanatory Memorandum, The unconscionable conduct provisions of the ACL are not limited to individual transactions. Rather, the focus of the provisions is on conduct that may be said to offend against good conscience; it is not specifically on the characteristics of any possible “victim” of the conduct (though these may be relevant to the assessment of the conduct).61
The same point was made in the Second Reading Speech, introducing the Competition and Consumer Legislation Amendment Bill 2011. The Minister stated: Unconscionable conduct is not limited to individual transactions or events. A pattern of systemic conduct or patterns of behaviour occurring over a period of time – which might include an accumulation of minor incidents – can also amount to unconscionable conduct.62
Under the Amadio species of unconscionability the focus is on a particular individual under a special disadvantage and whether, because of that special 58 The Hon David Bradbury MP, Second Reading Speech, to the Competition and Consumer Legislation Amendment Bill 2010,, 15 June 2011, p 5. 59 See ACCC v CG Berbatis (No 2) (1999) 96 FCR 491; Dai v Telstra (2000) 171 ALR 348; ACCC v Simply No-Knead (Franchising) Pty Ltd (2000) ATPR ¶41-790 and ACCC v Radio Rentals Ltd (2005) 146 FCR 292. 60 Strengthening Statutory Unconscionable Conduct and the Franchising Code of Conduct, p 34. 61 Competition and Consumer Legislation Amendment Bill 2010, Explanatory Memorandum, at [2.21]. 62 The Hon David Bradbury MP, Second Reading Speech, to the Competition and Consumer Legislation Amendment Bill 2011, 15 June 2011, p 5. This reflects the views of the Expert Panel who stated: “a system of conduct or pattern of behaviour may be unconscionable, and that statutory unconscionable conduct is not limited to an examination of particular transactions”. See Strengthening Statutory Unconscionable Conduct and the Franchising Code of Conduct, p 33.
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disadvantage, they are able to decide what is in their best interests. Statutory unconscionability for the purposes of s 21 of the ACL focuses on the conduct of the dominant party and whether that conduct, looked at as a whole, can be said to offend good conscience. In relation to the equivalent interpretative principle in s 12CB(4)(b) of the ASIC Act, Allsop CJ stated in Paciocco v Australia and New Zealand Banking Group: Section 12CB(4)(b) emphasises that, even if there are factors militating against a conclusion that there was any unconscionable conduct by ANZ in its dealing with Mr Paciocco and SDG, that does not mean the “system of conduct or pattern of behaviour” of ANZ cannot exhibit unconscionable conduct.63
The Full Federal Court had already held in ASIC v National Exchange Pty Ltd,64 that statutory unconscionable conduct is capable of applying to a system or pattern of conduct.65 Third interpretative principle
[4.70] The third interpretative principle recognises that statutory unconscionable conduct is not limited to conduct relating to the formation of the contract. Consideration may be given to the terms of the contract and the manner and extent to which a contract is carried out. Statutory unconscionable conduct under the ACL is concerned with both procedural unconscionable conduct (the bargaining process leading to the making of the contract) and substantive unconscionable conduct (the terms of the contract and the conduct of the parties in carrying it out).66 According to the Explanatory Memorandum, The prohibition of unconscionable conduct is not restricted to situations where there is a contract between two or more parties. However, where there is a contract, this provision clarifies that unconscionable conduct can extend beyond the formation of the contract to both its terms and the way in which it is carried out.67
Unconscionable conduct can also manifest itself in the way in which the stronger party enforces its strict contractual rights. According to the third interpretative principle, statutory unconscionability may consist of procedural unconscionable conduct or substantive unconscionable conduct, or both.
Procedural unconscionable conduct [4.75] Procedural unconscionable conduct has been said to arise during the process of contract formation, and the rationale for rendering a contract provision procedurally unconscionable is that an inequality of bargaining power can give rise to a situation where there is no genuine negotiation and an absence of meaningful choice. 63 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [309]. 64 ASIC v National Exchange Pty Ltd (2005) 148 FCR 132. 65 ASIC v National Exchange Pty Ltd (2005) 148 FCR 132 at [33]. 66 Strengthening Statutory Unconscionable Conduct and the Franchising Code of Conduct, pp 32-33. 67 Explanatory Memorandum, Competition and Consumer Legislation Amendment Bill 2010, at [2.25].
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However, in relation to the application of s 21 of the ACL, the existence of one of the factors, such as lack of bargaining power, will not be enough on its own to constitute unconscionable conduct. Mere knowledge of the existence of inequality of bargaining power does not give rise to statutory unconscionable conduct. There must be some direct evidence of some deliberate misuse of the bargaining positions between the parties in a way that offends good conscience. For example, in PSAL Ltd v Kellas-Sharpe,68 PSAL agreed to lend Ms Kellas-Sharpe the sum of $1,139,368 on a short-term, 2 month loan. The Loan Agreement defined the interest rate as being 7.5% per month, but while the borrower was not in default the lender would accept interest at the concessional rate of 4%. Clause 4.3 of the loan agreement provided: If any payment of interest required to be paid under this agreement or any part of it is not paid on the due date, the interest in arrears may, at the election of the Lender … be capitalised and be immediately added to the Debt and shall bear interest accordingly from the day when the interest is capitalised.
Ms Kellas-Sharpe failed to repay the loan after two months, and by December 2010 the amount outstanding had increased to $2,040,420.The defendants relied on the statutory unconscionability provisions of the ASIC Act, and in the alternative statutory unconscionability under the TPA. In deciding whether there was procedural unconscionable conduct in the formation of the loan contract, Applegarth J considered the relative strengths of the bargaining positions of the supplier and the service recipient, and the fact that PSAL was unwilling to change the terms upon which it was prepared to enter into the contract. His Honour found that there was no procedural unconscionability and that PSAL did not exploit Ms Kellas-Sharpe’s vulnerability in negotiation the loan.69 She was under pressure to secure the purchase of a property and PSAL knew this, but the pressure to secure finance was largely of her own making. She did not make the purchase of the property subject to finance, and took the risk of not being able to obtain finance. She was experienced in business and was able to understand the terms of the loan negotiated.70 With the settlement of the property contract only a few days away PSAL became her “lender of last resort”. Applegarth J adopted the following observations of Marshall J in Chilcott v Homesec Finance Express Pty Ltd: It did no more than carry on its usual business as a lender of last resort at transparently high interest rates to people who had a choice not to go ahead with the transaction at the risk of losing their deposit … The [borrowers] were not placed at a serious disadvantage simply because of the high rates charged … There was no unconscientious exploitation by [the lender] of [the borrowers’] inability to conserve their own interests. The [borrowers] had a choice. They were able to walk away from the … transaction and not enter a short term loan.71 68 PSAL Ltd v Kellas-Sharpe [2012] QSC 31. 69 PSAL Ltd v Kellas-Sharpe [2012] QSC 31 at [97]. 70 PSAL Ltd v Kellas-Sharpe [2012] QSC 31 at [95]-[96]. 71 Chilcott v Homesec Finance Express Pty Ltd [2011] FCA 729 at [40].
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Substantive unconscionable conduct [4.80] According to the third interpretative principle discussed at [4.70], statutory unconscionability can be found without bargaining misconduct. Substantive unconscionable conduct deals with the content of the contract, and whether there are any unreasonable terms that overwhelmingly favour one party, and that are enforced in a way that offends goods conscience. The rationale for rendering a contract provision substantively unconscionable is that the alleged contravenor, in asserting their rights under the contract, is knowingly exploiting a vulnerable target. However, in Paciocco v Australia and New Zealand Banking Group,72 the Full Federal Court would not characterise a term of a contact imposing an exorbitant fee as unconscionable conduct in isolation. It held that the term had to be considered in the light of the conduct that led to the formation of the contract.73 Different interpretations [4.85] Two lines of authority have developed around the interpretation of statutory unconscionable conduct for the purposes of ss 51AB and 51AC of the TPA, s 12CB of the ASIC Act, and s 21 of the ACL. According to the first line of authority, statutory unconscionable conduct is targeted at commercial conduct involving a “high level of moral obloquy”,74 or at least some moral tainting. This judicially imposed requirement of a “high level of moral obloquy” or moral tainting has been applied in a number of cases of statutory unconscionable conduct. For example, in Canon Australia Pty Ltd v Patton,75 the New South Wales Court of Appeal overturned the finding of the trial judge, that the conduct of the appellant was unconscionable under s 51AC of the TPA. The Pattons incorporated a business, James Aston Pty Ltd, as a vehicle for selling parts for Canon and Hewlett-Packard printers. The conduct at issue consisted of a failure by Canon to supply spare parts; a failure to supply for cash in advance; and refusal to accept the return of stock. James Aston was experiencing cash flow problems. Campbell JA (with whom Harrison J agreed) concluded that Canon had not engaged in unconscionable conduct under s 51AC of the TPA for refusing to supply spare parts to a customer who was $160,000 in arrears and experiencing cash flow problems. It was also held that Canon’s refusal to take back unsaleable stock, when it was not part of the terms of trade and there was no evidence of the age or condition of the stock, was 72 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50. 73 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [341]. 74 See Attorney-General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557 at 583 [121] (Spigelman CJ); CIT Credit Pty Ltd v Keable [2006] NSWCA 130 (Spigelman CJ, with whom Giles JA and Gzell J agreed); Canon Australia Pty Ltd v Patton (2007) ATPR ¶42-183; [2007] NSWCA 246 at [55]; ACCC v Excite Mobile Pty Ltd [2013] FCA 350 at [178] (Mansfield J); Director of Consumer Affairs Victoria v Scully (No 3) (2013) 303 ALR 168 at [58]. See also DPN Solutions Pty Ltd v Tridant Pty Ltd [2014] VSC 511 (Hargrave J) and Sgargetta v National Australia Bank Ltd [2014] VSCA 159 (Whelan and Santamaria JJA). See Paterson and Brody, “Safety Net Consumer Protection: Using Prohibitions on Unfair and Unconscionable Conduct to Respond to Predatory Business Models” (2015) 38 Journal of Consumer Policy 331 at 342-3; and McLeod, “Statutory Unconscionable Conduct under the ACL: The Case against a Requirement of “Moral Obloquy”” (2015) 23(2) Competition & Consumer Law Journal 123. 75 Canon Australia Pty Ltd v Patton (2007) 244 ALR 759.
[4.85]
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not unconscionable under s 51AC of the TPA. The commercial possibility that it would not be paid, prevented Canon’s conduct being of “… such a high level of moral impropriety that it could properly be described as ‘unconscionable’.”76 However, Basten JA disagreed with this approach: to treat the word “unconscionable” as having some larger meaning, derived from ordinary language, and then to seek to confine it by such concepts as high moral obloquy is to risk substituting for the statutory term language of no greater precision in an attempt to impose limits without which the Court may wander from well-trodden paths without clear criteria or guidance. That approach should not be adopted unless the statute clearly so requires.77
In CIT Credit Pty Ltd v Keable,78 the New South Wales Court of Appeal overturned the trial judge’s decision that the actions of CIT Credit were unconscionable under s 51AC of the TPA, although they were misleading or deceptive. The respondent had signed a guarantee, without reading it, based on a false representation that it would be operative only whilst the respondent was a director of the company. The court held that “to say that a misrepresentation has been made and, therefore, that there was false or misleading conduct in trade or commerce, is a long way from a conclusion of unconscionability, or of unjustness”.79 The appellant was not responsible for the respondent’s failure to read the guarantee before executing it. The decision not to read it was that of the appellant alone. He had access to legal and accounting advice if he had thought it appropriate to seek it. None of the terms of the guarantee was unreasonable or unjust. In ACCC v Excite Mobile Pty Ltd,80 Mansfield J held the sales method adopted by Excite Mobile for the promotion of its day cap plan for mobile services was unconscionable conduct contrary to s 51AB of the TPA.81 The telemarketing sales strategy set out to sign up every day users to a plan that was unsuitable for them and likely to expose them to very significant additional monthly charges. Mansfield J held: It was unfair to such a degree as to attract a strong adverse moral judgment … the Excite Mobile plan was destined to expose its consumers to quite substantial monthly charges but was presented in such a way that it effectively concealed that reality … and it did so when Excite Mobile knew that its plan was not suited to the requirements of the everyday user. … in my view, its marketing approach judged objectively was cynically indifferent to the interests of its potential customers, and was unconscionable for the reasons given.82
The requirement of a high moral obloquy in relation to statutory unconscionable conduct has been recognised in other State courts. In Director of Consumer Affairs 76 Canon Australia Pty Ltd v Patton (2007) 244 ALR 759 at [55]. 77 Canon Australia Pty Ltd v Patton (2007) 244 ALR 759 at [4]. 78 CIT Credit Pty Ltd v Keable [2006] NSWCA 130 (Spigelman CJ, with whom Giles JA and Gzell J agreed). 79 CIT Credit Pty Ltd v Keable [2006] NSWCA 130 at [70], citing ACCC v 4WD Systems Pty Ltd (2003) 200 ALR 491 at [184]-[185]. 80 ACCC v Excite Mobile Pty Ltd [2013] FCA 350. 81 ACCC v Excite Mobile Pty Ltd [2013] FCA 350 at [175]. 82 ACCC v Excite Mobile Pty Ltd [2013] FCA 350 at [178].
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Victoria v Scully (No 3),83 the Victorian Court of Appeal had to consider the scope of the equivalent statutory unconscionable conduct provision of the Fair Trading Act 1999 (Vic). The Director of Consumer Affairs in Victoria argued that moral obloquy was not required to prove statutory unconscionable conduct. In dismissing the appeal, the Court of Appeal held that, “the trial judge understood statutory unconscionability as involving moral taint, and that absent such taint, conduct which might be thought otherwise to be unfair or unreasonable should not be held to be ‘unconscionable’.”84
[4.90] According to another line of authority, the statutory language needs to be given its ordinary and natural interpretation and the normative inquiry involved is not limited to finding “moral obloquy”. In ACCC v Lux Distributors Pty Ltd, the Full Federal Court held that conduct is “unconscionable” for the purposes of s 21 of the ACL if it is “not done in good conscience”.85 Statutory unconscionable conduct is an evaluative standard to be understood by taking into account the values and norms that Parliament considered relevant when it identified the non-exhaustive list of factors in s 22 of the ACL, and s 12CC of the ASIC Act.86 It is to be applied according to the particular context of the case by asking: what is the current moral or ethical standard in relation to the conduct at issue? According to the Full Federal Court in Lux Distributors: The task of the Court is the evaluation of the facts by reference to a normative standard of conscience. That normative standard is permeated with accepted and acceptable community values. In some contexts, such values are contestable. Here, however, they can be seen to be honesty and fairness in the dealing with consumers. The content of those values is not solely governed by the legislature, but the legislature may illuminate, elaborate and develop those norms and values by the act of legislating, and thus standard setting. The existence of State legislation directed to elements of fairness is a fact to be taken into account… These laws of the States and the operative provisions of the ACL reinforce the recognised societal values and expectations that consumers will be dealt with honestly, fairly and without deception or unfair pressure.87
In relation to the prohibition of statutory unconscionable conduct in s 12CB of the ASIC Act, in Paciocco v Australia and New Zealand Banking Group, Allsop CJ said: 83 Director of Consumer Affairs Victoria v Scully (No 3) (2013) 303 ALR 168 (Neave, Osborn and Santamaria JJA). 84 Director of Consumer Affairs Victoria v Scully (No 3) (2013) 303 ALR 168 at [58]. See also DPN Solutions Pty Ltd v Tridant Pty Ltd [2014] VSC 511 (Hargrave J) and Sgargetta v National Australia Bank Ltd [2014] VSCA 159 (Whelan and Santamaria JJA). 85 See ACCC v Lux Distributors Pty Ltd [2013] FCAFC 90 at [41] (Allsop CJ, Jacobson and Gordon JJ). Leave to appeal to the High Court was refused. See [2014] HCASL 55. See also Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [262] (Allsop CJ) in relation to “unconscionability” in s 12CB of the ASIC Act. See JM Paterson and G Brody, ““Safety Net” Consumer Protection: Using Prohibitions on Unfair and Unconscionable Conduct to Respond to Predatory Business Models” (2015) 38 Journal of Consumer Policy 331 at 341-6. 86 ACCC v Lux Distributors Pty Ltd [2013] FCAFC 90 at [23]); and Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [262] (Allsop CJ) in relation to statutory unconscionable conduct in s 12CB of the ASIC Act. 87 ACCC v Lux Distributors Pty Ltd [2013] FCAFC 90 at [23].
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More specific guidance to the meaning and operation of s 12CB as a consumer provision is given by the matters set out in s 12CC … to which a court may have regard for the purposes of considering the question of unconscionable conduct. These matters assist in setting a framework for the values that lie behind the notion of the relevant conscience of the parties in trade or commerce identified in s 12CB. Those values and conceptions can be seen as: fairness and equality: see paras (a), (b), (d) – (k); a lack of understanding or ignorance of a party: para (c); the risk and worth of the bargain: paras (e) and (i); and good faith and fair dealing: para (l).88
Allsop CJ stated that in applying s 12CB of the ASIC Act, what is required is: an evaluation of business behaviour (conduct in trade or commerce) as to whether it warrants the characterisation of unconscionable, in the light of the values and norms recognised by the statute. The task is not limited to finding “moral obloquy”; such may only divert the normative inquiry from that required by the statute, to another, not tied to the words of the statute.89
A system or pattern of conduct was again at issue in ACCC v Coles Supermarkets Australia Pty Ltd.90 The Federal Court, by consent, made declarations that Coles had engaged in unconscionable conduct in contravention of then s 22 of the ACL (now s 21 of the ACL) by forcing its Tier 3 suppliers to make payments in relation to a new streamlined logistics system without providing them sufficient information to assess the benefits of the system. Tier 3 suppliers comprised “smaller” suppliers for whom Coles believed it represented about 30% of the supplier’s business. Gordon J made no mention of the need to establish moral obloquy or moral tainting in order to establish statutory unconscionable conduct. Her Honour described Coles’ conduct as being “deliberate, orchestrated and relentless”.91 Her Honour stated: Coles’ misconduct was serious, deliberate and repeated. Coles misused its substantial bargaining power. Its conduct was “not done in good conscience”. Coles accepted that in its dealings with the five suppliers it treated them in a manner inconsistent with acceptable business practice, was not respectful of the suppliers’ needs for full and timely transparency, and nor did it properly respect the responsibility attached to Coles’ bargaining power.92
This approach has been followed by some State courts. In PT Ltd v Spuds Surf Chatswood Pty Ltd,93 Sackville AJA, (Leeming and McColl JJA concurring) suggested that a requirement of “high moral obloquy” in relation to statutory unconscionability was “too stringent” and adopted the approach of the Full Federal Court in Lux Distributors, since it had “the advantage of adhering closely to the statutory language”.94 88 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [285]. 89 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [304]-[305]. 90 ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405. 91 ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405 at [96]. 92 ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405 at [104]-[106]. 93 PT Ltd v Spuds Surf Chatswood Pty Ltd [2013] NSWCA 446 (Sackville AJA, Leeming and McColl JJA). 94 PT Ltd v Spuds Surf Chatswood Pty Ltd [2013] NSWCA 446 at [105].
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Statutory factors [4.95] Statutory unconscionable conduct is an evaluative standard to be understood by taking into account the values and norms that Parliament considered relevant when it identified the non-exhaustive list of factors in s 22 of the ACL, and s 12CC of the ASIC Act.95 Section 22(1) of the ACL provides: (1) Without limiting the matters to which the court may have regard for the purpose of determining whether a person (the supplier) has contravened section 21 in connection with the supply or possible supply of goods or services to a person (the customer), the court may have regard to: (a) the relative strengths of the bargaining positions of the supplier and the customer; and (b) whether, as a result of conduct engaged in by the supplier, the customer was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier; and (c) whether the customer was able to understand any documents relating to the supply or possible supply of the goods or services; and (d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the customer or a person acting on behalf of the customer by the supplier or a person acting on behalf of the supplier in relation to the supply or possible supply of the goods or services; and (e) the amount for which, and the circumstances under which, the customer could have acquired identical or equivalent goods or services from a person other than the supplier; and (f) the extent to which the supplier’s conduct towards the customer was consistent with the supplier’s conduct in similar transactions between the supplier and other like customers; and (g) the requirements of any applicable industry code; and (h) the requirements of any other industry code, if the customer acted on the reasonable belief that the supplier would comply with that code; and (i) the extent to which the supplier unreasonably failed to disclose to the customer: (i) any intended conduct of the supplier that might affect the interests of the customer; and (ii) any risks to the customer arising from the supplier’s intended conduct (being risks that the supplier should have foreseen would not be apparent to the customer); and (j) if there is a contract between the supplier and the customer for the supply of the goods or services: (i) the extent to which the supplier was willing to negotiate the terms and conditions of the contract with the customer; and (ii) the terms and conditions of the contract; and 95 ACCC v Lux Distributors Pty Ltd [2013] FCAFC 90 at [23] (Allsop CJ); and Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [262] (Allsop CJ) in relation to statutory unconscionable conduct in s 12CB of the ASIC Act.
[4.95]
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(iii) the conduct of the supplier and the customer in complying with the terms and conditions of the contract; and (iv) any conduct that the supplier or the customer engaged in, in connection with their commercial relationship, after they entered into the contract; and (k) without limiting paragraph (j), whether the supplier has a contractual right to vary unilaterally a term or condition of a contract between the supplier and the customer for the supply of the goods or services; and (l) the extent to which the supplier and the customer acted in good faith. Section 22(2) provides: (2) Without limiting the matters to which the court may have regard for the purpose of determining whether a person (the acquirer) has contravened section 21 in connection with the acquisition or possible acquisition of goods or services from a person (the supplier), the court may have regard to: (a) the relative strengths of the bargaining positions of the acquirer and the supplier; and (b) whether, as a result of conduct engaged in by the acquirer, the supplier was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the acquirer; and (c) whether the supplier was able to understand any documents relating to the acquisition or possible acquisition of the goods or services; and (d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the supplier or a person acting on behalf of the supplier by the acquirer or a person acting on behalf of the acquirer in relation to the acquisition or possible acquisition of the goods or services; and (e) the amount for which, and the circumstances in which, the supplier could have supplied identical or equivalent goods or services to a person other than the acquirer; and (f) the extent to which the acquirer’s conduct towards the supplier was consistent with the acquirer’s conduct in similar transactions between the acquirer and other like suppliers; and (g) the requirements of any applicable industry code; and (h) the requirements of any other industry code, if the supplier acted on the reasonable belief that the acquirer would comply with that code; and (i) the extent to which the acquirer unreasonably failed to disclose to the supplier: (i) any intended conduct of the acquirer that might affect the interests of the supplier; and (ii) any risks to the supplier arising from the acquirer’s intended conduct (being risks that the acquirer should have foreseen would not be apparent to the supplier); and (j) if there is a contract between the acquirer and the supplier for the acquisition of the goods or services: (i) the extent to which the acquirer was willing to negotiate the terms and conditions of the contract with the supplier; and
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(ii) the terms and conditions of the contract; and (iii) the conduct of the acquirer and the supplier in complying with the terms and conditions of the contract; and (iv) any conduct that the acquirer or the supplier engaged in, in connection with their commercial relationship, after they entered into the contract; and (k) without limiting paragraph (j), whether the acquirer has a contractual right to vary unilaterally a term or condition of a contract between the acquirer and the supplier for the acquisition of the goods or services; and (l) the extent to which the acquirer and the supplier acted in good faith. The statutory factors in s 22(1) and (2) of the ACL are largely based on those in the repealed s 51AC(3) of the TPA and s 12CC of the ASIC Act. In the National Exchange case, the Full Federal Court stated: The starting point in making this determination as to unconscionability is the list of factors to which the Court’s attention is drawn by s 12CC(2) [which mirrors s 22(1) and (2) of the ACL]. These factors should be considered and weighed as a whole. Some may weigh in favour of a characterisation of the conduct as unconscionable and others may not. It is not appropriate to approach this list as exhaustive. This list is indicative of some of “the relevant circumstances”.
The s 22 factors direct a court towards considering the conduct at issue within the commercial context in which the contract was negotiated and performed.96 They direct attention to both procedural and substantive unconscionability, and involve a combination of subjective and objective inquiries. For example, s 22(1) and (2)(f) require an inquiry into the extent to which the stronger party’s conduct towards the weaker party was consistent with its conduct in similar transactions. Section 22(1) and (2)(d) require an inquiry into whether the stronger party exercised any undue pressure or unfair tactics. These factors suggest a subjective inquiry. Others will involve an objective inquiry. For example, s 22(1) and (2)(b) require an investigation as to whether the conditions imposed were reasonably necessary for the protection of the legitimate interests of the stronger party. Section 22(1) and (2)(i) require an inquiry into whether the stronger party unreasonably failed to disclose information to the weaker party. However, identifying the presence of one or more statutory factors will not be sufficient to establish a contravention of s 21 of the ACL; the conduct as a whole must offend good conscience. Imbalance of bargaining power
[4.100]
Section 22(1)(a) and (2)(a) provide that the court may consider the relative strengths of the bargaining positions of the parties. In ACCC v Coles Supermarkets Australia Pty Ltd,97 the court held that Coles relied on its superior bargaining position as a substantial buyer to require payments from vulnerable suppliers to recoup the cost of a new supply logistics portal installed by Coles. Coles represented 30% of the small suppliers’ total business, and to this extent they
96 See R V Miller, Australian Competition and Consumer Law Annotated (37th ed, Lawbook Co, Sydney, 2015), [1.S2.22.10]-[1.S2.22.45]. 97 ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405.
[4.100]
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were “vulnerable” suppliers and this was the reason they were targeted by Coles.98 In ACCC v ACN 117 372 915 Pty Ltd (in liq),99 it was held the patients who were subjected to high pressure selling techniques suffered from a significant imbalance of bargaining power. The fact that standard terms may be imposed with no opportunity to negotiate does not alone render conduct unconscionable. In Paciocco v Australia and New Zealand Banking Group,100 the Full Federal Court confirmed the decision of the primary judge, Gordon J, that ANZ’s late payment fees were not unconscionable within the meaning of s 12CB or the ASIC Act. Allsop CJ observed: It is true that the fees were charged under contracts of adhesion, reflecting a strength of bargaining power to impose terms. But these terms could only be imposed whilesoever the person remained a customer. The accounts could be closed at will. The fees were not charged if the customer kept within the original terms of the account. The terms were openly disclosed.101
As an example of the circumstances in which this factor may be relevant consider a franchisee–franchisor relationship. There will be some imbalance of bargaining power, given the position of power enjoyed by the franchisor. The definition of “franchise agreement” in cl 4(1)(b) of the Franchising Code of Conduct in fact requires some level of control being exercised by the franchisor over the way the franchisee conducts the business. It provides: A franchise agreement is an agreement … in which a person (the franchisor) grants to another person (the franchisee) the right to carry on the business of offering, supplying or distributing goods or services in Australia under a system or marketing plan substantially determined, controlled or suggested by the franchisor … (emphasis added)102
This imbalance will be greater in the case of an existing franchisee, as they will have already committed a significant investment of time and resources into their franchise, which may not be fully recoverable if they terminate the contract. A prospective franchisee without these sunk costs may be able to demand a better deal from the franchisor, or walk away if the deal offered is unsatisfactory. An existing franchisee may, for example, feel compelled to renew their franchise agreement on less satisfactory terms than their initial agreement, to avoid losing their investment in the franchise. The fact that a franchisee is legally represented and can air their grievances with the franchisor in a robust fashion does not preclude an imbalance of bargaining power. This argument was raised by the franchisor in Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) (the Allphones case), in which it argued that there was no
98 ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405 at [35], [44], [50],[56],[62], [68] and [102]-[105]. 99 ACCC v ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Ltd) [2015] FCA 368 at [947]. 100 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50. 101 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [346]-[347]. 102 Trade Practices (Industry Codes – Franchising) Regulations 1998, s 4(1).
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evidence that its oppressive and bullying conduct had any effect on the franchisee, which was “more than up to the task of batting back to Allphones anything that was thrown at them and did so.”103 Rares J dismissed the argument: While [the franchisee] could talk or send letters, it received an insouciant reception from Allphones. Whatever they “batted back” was not scoring runs … [the franchisee] could complain as much as it liked, but Allphones had the substantive power in the relationship and used it.104
This statutory factor will also overlap, to some extent, with another statutory factor of whether the supplier (franchisor) was willing to negotiate on terms.105 While inequality of bargaining power alone is not sufficient to constitute a special disadvantage for the purposes of the equitable doctrine of unconscionability106 it may be sufficient for the purposes of s 21 of the ACL. Where contract terms confer a discretion on the stronger party (for example, renewal, assignment or termination clauses) the stronger party will need to exercise considerable care taking into account any situational advantage which the weaker party may be suffering. For example, if a franchisee’s personal circumstances make that party particularly vulnerable, the franchisor must not try to take advantage of that weakness in order to extract some concession or benefit that might not otherwise be obtainable. A franchisee attempting to sell a business will almost always be at a situational disadvantage because if the lease is not renewed there is a risk of losing the goodwill. Although this type of “situational disadvantage” may be insufficient to attract the Amadio species of unconscionability,107 it may be sufficient for the conduct of the stronger party to contravene s 21 of the ACL. For example, in Coggin v Telstar Finance Company (Q) Pty Ltd,108 the respondent was found to have engaged in unconscionable conduct. Here, the applicant provided a fishing boat valued at over $200,000 as security for a loan of $65,000 made to him by the respondent at “a truly extortionate rate of interest of 10% per month”.109 This money was raised to finance the acquisition of a franchise business that was essentially for the benefit of a person acting for the respondents and his associates, rather than the applicant. These factors, together with taking advantage of the applicant’s ill health and his desire to assist his daughter, led to the transaction being overwhelmingly against his interests and in favour of the respondent’s interests. This combined with the receipt of secret profits, led Heerey J to conclude that something more than unfairness had been established and s 51AC contravened. 103 Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) (2008) ATPR ¶42-240 at [408]. 104 Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) (2008) ATPR ¶42-240 at [409]. 105 ACL, s 22(1) and (2)(j)(i). 106 ACCC v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at 64 [11] and [14] (Gleeson CJ). 107 See, eg, ACCC v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51; ACCC v Samton Holdings Pty Ltd (2002) 117 FCR 301. 108 Coggin v Telstar Finance Company (Q) Pty Ltd (2006) ATPR ¶42-107. 109 Coggin v Telstar Finance Company (Q) Pty Ltd (2006) ATPR ¶42-107 at 44,905.
[4.110]
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The importance of the respondent’s conduct offending good conscience, as distinct from the respondent merely occupying a significantly superior bargaining position, is illustrated by National Australia Bank Ltd v Meeke.110 Here, the bank sought to enforce a mortgage given to it by the Meekes to secure advances it had made to a company with which they were associated. The Meekes sought to resist this claim by relying on s 51AC, arguing that the bank was in a much stronger bargaining position than they were when the transaction was entered into. Although the weakness of their position was accepted, this was held to be insufficient on its own to render the bank’s conduct unconscionable. To be so characterised it was necessary that the bank had “unlawfully, unfairly or unreasonably taken advantage of its stronger bargaining position” and this had not been established.111 Unreasonable conditions
[4.105]
Section 22(1)(b) and (2)(b) provide that the court may have regard to whether, as a result of conduct engaged in by the supplier or acquirer, the other party was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier or acquirer. This factor requires an objective inquiry. First, it is necessary to consider what the legitimate interests of the supplier or acquirer are; and, secondly, whether any conditions imposed on the other party are reasonably necessary to protect those interests.
The mere reliance on the terms of a contract cannot, without something more, constitute unconscionable conduct.112 For example, it may be reasonably necessary to protect the legitimate interests of a franchisor to require a franchisee to disclose to the franchisor the names and addresses of all the franchisee’s customers. Mere disclosure of the names and addresses of all the franchisee’s customers is unlikely to be unconscionable; however, it would be unconscionable conduct under s 21 for the franchisor to use that information to poach the franchisee’s clients or to otherwise compete with the franchisee.113 Similarly, where a contract contains onerous provisions allowing for termination on the slightest default, the inclusion of those provisions may not be unconscionable, but relying on them where there is reasonable doubt about whether the franchisee has, in fact, breached the term,114 or where the breach is of a minor or technical nature, may be unconscionable. Understanding of documents
[4.110]
Section 22(1)(c) and (2)(c) provide that the court may have regard to whether the other party “was able to understand any documents relating to the
110 National Australia Bank Ltd v Meeke (2007) ATPR (Digest) ¶46-272. 111 National Australia Bank Ltd v Meeke (2007) ATPR (Digest) ¶46-272 at 54,549. 112 Hurley v McDonald’s Australia Ltd (2000) ATPR ¶41-741 at 40,586. 113 See, eg, ACCC v Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCR 253. 114 See, eg, Automasters Australia Pty Ltd v Bruness Pty Ltd [2002] WASC 286.
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supply or possible supply of the goods or services”. The inability to understand documents can arise from lack of, or limited ability to understand the English language, or lack of education, or lack of understanding of specialist legal or business concepts. In ACCC v Australian Power and Gas Company Ltd,115 the Federal Court imposed a penalty of $200,000 for a contravention of s 21 of the ACL in the context of door-to-door sales conduct that breached the ACL, when its sales representatives dealt with a non-English speaking customer. Similarly, in ACCC v Origin Energy Electricity Ltd,116 the Federal Court imposed a total penalty of $600,000 on Origin Energy Electricity Ltd (Origin) for a contravention of s 21 of the ACL in the context of unlawful door-to-door selling when its sales representatives dealt with a non-English speaking customer. Lack of understanding of specialist legal or business concepts has arisen in a number of cases. In ASIC v National Exchange,117 the Full Federal Court held that there was some doubt as to whether the recipients who accepted the offer were able to understand the offer document: since, on its face, it is difficult to see why or how a recipient would be persuaded to part with shares, without bargaining, where the price offered was admitted by the offeror to be substantially less than half the offeror’s estimate of the value of the shares, and less that one quarter of the initial market price of the shares.118
In ACCC v Coles Supermarkets Australia Pty Ltd,119 the court held that Coles had failed to supply sufficient details to enable the suppliers to understand how Coles had calculated savings to each supplier’s business.120 Furthermore, Coles’ claim that the data sharing and the ordering system would lead to value to the Supplier of at least a specified percentage of the price Coles paid for the supplier’s grocery products was based on assumptions. Coles had not sought to establish whether the assumptions reflected the actual value of the ordering system to the Tier 3 supplier. In other words, Coles unreasonably failed to disclose information about the value of the ARC system to the small suppliers before obliging them to make a decision about whether to pay the 1% rebate and whether it represented value for money. There are a number of steps which a supplier or acquirer can take to mitigate the risk of documents not being understood, including: • drafting the relevant documents in “plain English”; • providing a genuine opportunity for the other party to obtain independent legal advice;
115 ACCC v Australian Power and Gas Company Ltd [2013] FCA 1358 (Logan J). 116 ACCC v Origin Energy Electricity Ltd [2015] FCA 278 (Katzmann J). 117 ASIC v National Exchange (2005) 148 FCR 132. 118 ASIC v National Exchange (2005) 148 FCR 132 at 142 [40]. 119 ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405. 120 ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405 at [35], [44], [50], [56], [62] and [68].
[4.120]
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• requiring the other party to obtain a certificate from their legal advisors, confirming that those advisors have explained the nature and effect of the agreement (and any other relevant documents) to them;121 and, • taking extra care where the language in which the documents are written is not the first language of the other party. The supplier or acquirer should not, under any circumstances, prevent or dissuade the other party from obtaining independent legal advice, or engage in conduct which could be construed as doing so. This type of conduct was held to contravene s 51AC of the TPA in the Dataline case.122 Undue influence or pressure, unfair tactics
[4.115]
Section 22(1)(d) and (2)(d) provide that the court may have regard to whether any undue influence or pressure was exerted on, or any unfair tactics were used by the supplier or acquirer against the other party in relation to the supply or possible supply of the goods or services.
Business-to-consumer context
[4.120]
This factor was relied upon in a business-to-consumer context by the Full Federal Court in ACCC v Lux Distributors Pty Ltd.123 In 2010 and 2011 sales representatives of the respondent made door-to-door sales of vacuum cleaners to three elderly women. The respondent required its representatives to contact potential customers by telephone, offering to conduct a “free maintenance check” of their existing vacuum cleaner. This offer was a ruse to gain entry to their home. Once there, having conducted a maintenance check, the representative would persuade them that their existing machine needed to be replaced by a new one, which they would then sell to the occupant. On the three occasions in question the sales representative contravened Commonwealth or State legislation governing “direct selling” (door-to-door selling). At issue in these proceedings was whether their conduct was also unconscionable under s 51AB of the TPA (for two sales occurring in 2010), or the original s 21 of the ACL (for a sale occurring in 2011). The application failed at first instance; the ACCC appealed to the Full Court which held that Lux had contravened the statutory unconscionable conduct provisions. The ACL proscribes various highly unfair and exploitative trading practices including certain door-to-door selling practices, bait advertising, pyramid selling, and asserting a right to payment for unsolicited goods. The prior existence of these laws
121 Obtaining Certificates of Independent Advice are now a standard practice in relation to the giving of Third Party Guarantees following cases such as Commercial Bank of Australia v Amadio (1983) 151 CLR 447 and Garcia v National Australia Bank (1998) 194 CLR 395. 122 ACCC v Dataline.net.au Pty Ltd (2006) 236 ALR 665 at 684, 695. The relevant contracts in this case involved default clauses which allowed the supplier to seize the business and client-base of its resellers if the reseller defaulted in the slightest way. The court inferred that the supplier prevented or dissuaded the resellers from obtaining independent legal advice so they would not be informed of the effect of the default terms, and the undesirability of entry into a contract which contained them. 123 ACCC v Lux Distributors Pty Ltd (2013) FCAFC 90.
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[4.120]
in relation to door-to-door selling was of considerable assistance to the Full Federal Court in finding that the conduct at issue in Lux Distributors was unconscionable.124 In ACCC v ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Ltd),125 Advanced Medical Institute Pty Ltd (AMI) conducted a business promoting and supplying medication and services for the treatment of male sexual dysfunction. AMI was placed into voluntary administration on 22 December 2010, the day after the ACCC instituted proceedings against it. AMI continued to trade during its voluntary administration but in June 2011 sold the AMI business to NRM. Shortly afterwards, AMI was placed into voluntary liquidation. NRM conducted the AMI business following its acquisition in June 2011. The ACCC alleged that AMI engaged in unconscionable conduct in breach of the TPA and NRM engaged in unconscionable conduct in breach of the CCA. The court found: The technique of frightening men by telling them of the dire adverse consequences of not agreeing to treatment and assuring them that the treatment was effective was part of the business system of AMI and NRM. It was formulated by management and imparted in an organised fashion through scripts and training sessions … Training salespeople to trap vulnerable men into agreeing to treatment programs by the use of high-pressure selling was dishonest conduct. It resulted in undue pressure on the consumer, which is a marker of possible unconscionable conduct referred to in s 51AB(2)(d) of the TPA, s 21(2)(d) of the ACL operating between 1 January 2011 and 1 January 2012, and s 22(1)(d) of the ACL in operation after 1 January 2012.126
The salespeople employed by AMI and NRM were paid by commission which meant that they had an interest in selling the higher priced programs. If they disclosed that they were paid on commission, the patients may have been alerted to the interest of the salespeople in selling the higher priced programs and that the patients were not consulting a traditional medical practice. The court concluded: The failure to disclose the basis of the remuneration of salespeople was dishonest and exploitative, it was sharp practice and deceptive, particularly in the circumstances when men believed they were consulting a medical practice which characteristically make patient welfare a primary concern. It was an unfair tactic, which is a possible marker of unconscionable conduct …127
In ACCC v Origin Energy Electricity Ltd,128 Origin Energy Electricity Ltd (Origin) and Origin’s marketing company, SalesForce Australia Pty Ltd (SalesForce) admitted that they engaged in two contraventions of s 21(1) of the ACL. In one instance, a sales representative spent about 30 to 45 minutes with a consumer, Witness C, under the false pretext that he was from Witness C’s existing electricity 124 ACCC v Lux Distributors Pty Ltd [2013] FCAFC 90 at [23] and [71]. 125 ACCC v ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Ltd) [2015] FCA 368. 126 ACCC v ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Ltd) [2015] FCA 368 at [897]-[899]. 127 ACCC v ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Ltd) [2015] FCA 368 at [905]. 128 ACCC v Origin Energy Electricity Ltd [2015] FCA 278 (Katzmann J).
[4.125]
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supplier. The sales representative continued to negotiate with Witness C, who was a native Tamil speaker, after being advised by Witness C that he had difficulty understanding English. The sales representative then telephoned SalesForce and prompted Witness C to say “yes” to questions to confirm and electricity contract with Origin. Katzmann J observed: In conducting himself as he did, the sales representative exerted undue influence or pressure over Witness C and deployed unfair tactics. The sales representative knew or ought to have known from both his observations of, and conversations with, Witness C that Witness C had difficulty understanding, reading and speaking English, that he might require assistance to read and understand the documents, that he was vulnerable and that he was susceptible to undue influence and pressure and unfair tactics. Yet he did not provide Witness C with a reasonable opportunity to obtain assistance to read and understand the documents and took advantage of, or obtained an advantage from, his vulnerable position.129
In a second instance, the sales representative continued to negotiate with a consumer, Witness E, after she informed him that she was not the authorised account holder, and repeatedly advised that she was not interested in changing her electricity supplier. During a telephone call with SalesForce to confirm a contract with Origin, the sales representative instructed Witness E to state that her husband, who was the authorised account holder, had signed the agreement when this was not the case.130 This conduct was held to contravene s 21 of the ACL.131 Business-to-business context
[4.125]
This factor was relied upon in a business-to-business context by Gordon J in ACCC v Coles Supermarkets Australia Pty Ltd.132 The court held that Coles exerted undue influence and pressure and used unfair tactics against vulnerable suppliers to obtain payments from them in relation to a new supply logistics portal installed by Coles. It required the suppliers to agree to ongoing payments without providing them with enough time to assess the value of the benefits of the portal. This required a subjective enquiry into whether Coles exercised any undue pressure or unfair practices. Coles provided the category managers with training and scripts. The scripts included threats to delete the supplier’s product from its shelves if it did not pay the rebate and the supplier would be denied the opportunity to participate in promotions. Prizes were awarded to category managers who collected payments.133 This factor has been considered in a number of cases involving franchises. The nature of the franchisor–franchisee relationship gives the franchisor a degree of power and control over the franchisee. Where the franchisee is dependent upon the 129 ACCC v Origin Energy Electricity Ltd [2015] FCA 278 at [41]. 130 ACCC v Origin Energy Electricity Ltd [2015] FCA 278 at [52]. 131 ACCC v Origin Energy Electricity Ltd [2015] FCA 278 at [57]. 132 ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405. 133 ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405 at [35], [44], [50], [56], [62] and [68].
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[4.125]
franchisor for goods or services which are essential to the operation of its business, withholding supply can place considerable pressure on the franchisee to comply with the franchisor’s demands. In the Simply No-Knead case,134 the franchisor had made a number of unreasonable demands on franchisees, including that they pay for and distribute unwanted advertising brochures which contained only the contact details for the franchisor’s own retail outlet, pay for unrequested deliveries, and supply the franchisor with details of the franchisee’s customers in circumstances where the franchisor had no right to that information, and the franchisees had reason to believe that the franchisor would use that information to poach their clients.135 On several occasions, the franchisor refused to supply the franchisees with essential products unless they complied with the franchisor’s unreasonable demands. The court characterised these refusals to supply as done “in order to put pressure on the franchisees to do what [the franchisor] wanted done, but had no entitlement to have done.”136 The court held it to be the exertion of pressure on, and the unfair use of tactics against the franchisees within the meaning of s 51AC(3)(d),137 and the franchisor was held to have contravened s 51AC for its conduct including this refusal to supply. In the Dataline case, Dataline was a supplier of internet services in the nature of a wholesaler. It contracted with a number of other companies (Virtual Internet Service Providers, or “VISPs”) who resold those services. It was alleged that Dataline threatened the VISPs with disconnection of the resold internet services (which would have put those VISPs immediately out of business) unless the VISPs complied with Dataline’s demands, including: • entering into a new and different contract with Dataline; • carrying on its business with its customers in the manner and at a level of performance required by Dataline; • entering the VISPs’ client’s credit card information into a database operated by Dataline; • paying to Dataline debts which were owing to Dataline by an unrelated VISP, the business of which had been purchased by the VISP; and • reselling the services at a price specified by Dataline.138 The court held that the threats of disconnection, regarding the first two of the above demands, contravened s 51AC.139 In another incident, Dataline wrongfully ceased to supply services to one of its clients (HTE), putting HTE’s business in jeopardy. Dataline then offered to acquire 134 ACCC v Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCR 253. 135 ACCC v Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCR 253 at 258-60. 136 ACCC v Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCR 253 at 268. 137 ACCC v Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCR 253 at 267-368. 138 ACCC v Dataline.net.au Pty Ltd (2006) 236 ALR 665 at 671-2. Dataline’s demands with respect to setting the price at which the services could be resold constituted resale price maintenance which is prohibited by s 48 of the TPA. 139 ACCC v Dataline.net.au Pty Ltd (2006) 236 ALR 665 at 695.
[4.130]
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HTE’s contracts with its clients, in return for a commission on sales. HTE refused to deal with Dataline on this basis. Dataline subsequently sabotaged computer equipment belonging to HTE (but in the possession of Dataline) which was used to supply services to HTE’s clients, by changing the passwords used to access that equipment.140 The court held that by wrongly ceasing to supply HTE, and then offering to acquire HTE’s contracts with its customers, Dataline had contravened s 51AC.141 It can be seen from these cases that refusal to supply essential inputs is likely to contravene s 21 of the if it is done for an improper purpose or to extract concessions from the weaker party which the stronger supplier is not entitled to. On the other hand, it will not be unconscionable to refuse supply because of genuine credit management concerns.142 It will not be unconscionable conduct if the failure to supply is due to management and financial problems on the part of the stronger party, rather than a deliberate decision made to withhold supply to exploit the vulnerable position of the weaker party.143 Exploitative pricing
[4.130]
Section 22(1)(e) and (2)(e) of the ACL provide that the court may have regard to the amount for which, and the circumstances under which, the other party could have acquired identical or equivalent goods or services from a person other than the supplier; see also [4.210].
In ACCC v 4WD Systems Pty Ltd, Selway J indicated that this factor may be relevant if the franchisee is compelled to purchase all of its supplies of goods or services from the franchisor.144 In ACCC v Seal-A-Fridge,145 Logan J found that a franchisor Seal-A-Fridge Pty Ltd had engaged in unconscionable conduct towards its franchisees. Seal-A-Fridge was the franchisor of a mobile refrigeration seal replacement business run by franchisees around Australia. The court declared that in 2001 and 2004 Seal-AFridge engaged in unconscionable conduct towards certain franchisees by demanding, and ultimately obtaining, payment of increases of up to 50% in the ongoing weekly fees for access to the national telephone number. In 2001 Seal-A-Fridge disconnected these franchisees from the phone number for failing to pay the full amount of the fee increase. In 2004 Seal-A-Fridge required the franchisees to agree to vary their franchise agreements to provide for the fee increase. The national phone number was used by the franchisees to receive customer inquiries and work and was essential to their business. The court found that Seal-A-Fridge had no contractual basis for the fee increases. Logan J concluded: 140 ACCC v Dataline.net.au Pty Ltd (2006) 236 ALR 665 at 672. 141 ACCC v Dataline.net.au Pty Ltd (2006) 236 ALR 665 at 684, 696. 142 Canon Australia Pty Ltd v Patton (2007) ATPR ¶42-183; [2007] NSWCA 246. 143 See eg, ACCC v 4WD Systems Pty Ltd (2003) 200 ALR 491 at 545. 144 ACCC v 4WD Systems Pty Ltd (2003) 200 ALR 491 at 545. 145 ACCC v Seal-A-Fridge (2010) 268 ALR 321.
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[4.135]
In the context of the present case, and having regard to the central role played by the 13 number in the promotion by various advertising means of the generic “Seal-A-Fridge” business name, there can be no doubt that continued access to calls directed to a franchisee following a call to that 13 number was essential to the continued conduct of that franchisee’s business. Essentiality of access to the 13 number by franchisees gave Seal-A-Fridge a position of strength in relation to them in the event of non-payment. Yet that essentiality does not per se make the highlighting of the withdrawal of access to that service in the event of non-payment unconscionable. So much was, as I understood it, accepted by the ACCC. Rather, so the ACCC submitted, it was the abuse of that position of strength that was relevant to the characterisation of the conduct of Seal-A-Fridge as unconscionable, in all of the circumstances. I agree. What emerges is that the 2001 weekly fee increase was demanded and obtained by Seal-A-Fridge, without contractual authority but supported by falsehood and abuse of a position of strength for the purpose of gaining additional profit.146
Inconsistent treatment
[4.135]
Section 22(1)(f) and (2)(f) of the ACL provide that the court may have regard to the extent to which the supplier’s conduct towards the other party was consistent with the supplier’s conduct in similar transactions with other like customers. For example, this factor may be enlivened if a franchisor discriminates against a particular franchisee. It will be highly relevant if the franchisor decides to take punitive action against a franchisee with the intention of intimidating other franchisees.147 This was the case in Allphones, where a senior manager of the franchisor told the franchisee that he “intended to make an example of” the franchisee “to show other franchisees what would happen to them if they opposed Allphones”.148 Allphones’ conduct was characterised as “vindictive”, the court finding that “[n]o justification existed, at that time, to treat [the franchisee] in accordance with ‘the Admiral Byng principle’”.149 Applicable industry codes
[4.140]
Codes of conduct are used to set standards of good business behaviour in particular industry sectors. Well-established codes of conduct reflect good business practice and can be used to identify statutory unconscionable conduct. Section 22(1)(g) and (2)(g) provide that the court may have regard to the requirements of any “applicable industry code”. Section 51ACA(1) of the CCA defines an “applicable industry code” to mean the prescribed provisions of any mandatory industry code relating to the industry and the prescribed provisions of any voluntary industry code that binds a corporation. A “mandatory industry code” is defined to mean an industry code that is declared by regulations under s 51AE of the CCA to be mandatory. In other words, an industry code is only mandatory if it is prescribed by regulation. Four codes have been declared to be mandatory:
146 ACCC v Seal-A-Fridge (2010) 268 ALR 321 at [145]-[146]. 147 See, eg, Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) (2008) ATPR ¶42-240 at [139]. 148 Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) (2008) ATPR ¶42-240 at [139]. 149 Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) (2008) ATPR ¶42-240 at [409].
[4.145]
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• the Franchising Code of Conduct; • the Oilcode (Cth); • the Horticulture Code; and • the Unit Pricing Code. To date only the Franchising Code of Conduct has been used by the courts in assessing whether conduct is unconscionable. Franchising Code of Conduct
[4.145]
The Franchising Code of Conduct set out in Sch 1 of the Competition and Consumer (Industry Codes – Franchising) Regulation 2014 (Cth) (the New Code) took effect on 1 January 2015. The New Code replaces the Franchising Code of Conduct set out in the Sch to the Trade Practices (Industry Codes – Franchising) Regulations 1998 as in force immediately before 1 January 2015 (the Old Code). Non-compliance with the provisions of the Old Code by franchisors has been taken into account in s 51AC cases, especially where the non-compliance was of a serious nature, such as a failure to provide disclosure documents or a failure to abide by the dispute resolution provisions.150
In relation to the Old Code, the courts sometimes implied an obligation of good faith as a matter of law into the franchise contract.151 Clause 6 of the New Code provides for an express obligation to act in good faith forms part of the New Code. According to the Explanatory Statement accompanying the Competition and Consumer (Industry Codes – Franchising) Regulation 2014 (Cth): The most significant change from the 1998 Code is the introduction of an obligation on the parties to a franchise agreement to act in good faith (clause 6). This obligation applies both to franchisors and franchisees in respect of any matter arising under or in relation to the franchise agreement or the Franchising Code. The meaning of good faith under the Franchising Code is the same as at common law. While the obligation is not defined the Franchising Code contains a non-exhaustive list of matters that the courts may have regard to when determining whether a breach of the obligation has occurred. The purpose of this list is also to provide some guidance to assist franchise participants to understand the nature of their obligation to act in good faith.
The scope of the obligation of good faith at common law is becoming clearer. In Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd, the New South Wales Court of Appeal stated: The content of the obligation has commonly been held to embrace three related matters: 1. An obligation on the parties to co-operate to achieve the contractual objectives. 2. Compliance with honest standards of conduct. 150 See, eg, ACCC v Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCR 253; Automasters Australia Pty Ltd v Bruness Pty Ltd [2002] WASC 286; Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) (2008) ATPR ¶42-240. 151 Burger King Corporation v Hungry Jack’s Pty Ltd [2001] NWSCA 187 at [164]; ACCC v Simply No-Knead (Franchising) Pty Ltd (2000) ATPR ¶41-790; and Automasters Australia Pty Ltd v Bruness Pty Ltd [2002] WASC 286.
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[4.145]
3. Compliance with standards of conduct that are reasonable having regard to the interests of the parties.152
A franchisor is not required to act in a contractually altruistic manner or in a manner akin to a fiduciary. Nor is a franchisor required to subordinate the franchisor’s own immediate or longer-term business or other interests to those of the franchisee. However, the courts recognise the relational nature of franchise contracts, and that the franchisor’s interests arise in the context of an interdependent, mutual relationship where the franchisee reasonably expects that regard will be paid to the franchisee’s interests. For example, where a franchisor has a discretion to give or withhold consent to a transfer of a franchise, the right must not be exercised “capriciously or for some extraneous purpose”.153 For avoidance of doubt, cl 6(3), (5) and (6) of the New Code set out a number of matters to which the court may have regard in considering the scope of the obligation of good faith: • whether the party acted honestly (a subjective standard is adopted); • whether the party acted arbitrarily or capriciously for some irrelevant purpose; • whether the party co-operated for the purposes of the agreement; and • whether the party acted to protect a legitimate commercial interest. These matters are also taken into account under the common law obligation of good faith. One advance over the common law position is cl 6(4) of the New Code. In so far as the implied obligation of good faith at common law is an implication made as a matter of fact rather than law, an express term excluding good faith would be upheld by courts. However, cl 6(4) of the New Code provides: A franchise agreement must not contain a clause that limits or excludes the obligation to act in good faith, and if it does, the clause is of no effect.
However, it seems that the supplier or acquirer is not required to deny its legitimate interests. In Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd,154 Finkelstein J held that it was not unconscionable under s 51AC for Subaru to give a notice of termination of a motor vehicle dealership after the dealer refused to adopt the 6-star program. Subaru had not given notice of its reasons for termination, as required by cl 22 of the Old Code, but the dealer was well aware of the reasons for termination. The dealer sought to have the notice of termination withdrawn after it indicated its willingness to abide by the 6-star program. Subaru refused to withdraw the notice. Finkelstein J observed: In my view, a term of a contract that requires a party to act in good faith and fairly, imposes an obligation upon that party not to act capriciously. It would not operate so as to restrict actions designed to promote the legitimate interests of that party.155 152 Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184 at [145]. See also Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [287]-[294] (Allsop CJ) and Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825 at [003]-[019] (Edelman J). 153 Far Horizons Pty Ltd v McDonald’s Australia Ltd [2000] VSC 310 at [120]. 154 Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd (1999) ATPR ¶41-703. 155 Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd (1999) ATPR ¶41-703 at 43,014.
[4.150]
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His Honour held: its failure to adopt the program and its criticism of certain aspects of the program, could reasonably be regarded by the first respondent as an indication that the applicant was not willing to act in the best interests of the first respondent … No doubt this led to a loss of confidence in the applicant. That loss of confidence would not necessarily be overcome by a change of attitude on the part of the applicant. Many relationships can only operate satisfactorily if there is mutual confidence and trust. Once that confidence and trust has broken down the position is not easily restored. It is not unconscionable to terminate a relationship where that trust and confidence has been undermined.156
Food and Grocery Code of Conduct
[4.150]
The relationship between supermarkets and their suppliers is regulated by the Food and Grocery Industry Code of Conduct contained in Competition and Consumer (Industry Codes – Food and Grocery) Regulation 2015.157 The Food and Grocery Industry Code of Conduct was declared to be a legally enforceable, voluntary prescribed code under the CCA on 26 February 2015. Retailers have to choose to opt-in to the Code. The Code is then binding on that retailer.158
As a Code “prescribed under the CCA” it will be enforceable by the ACCC or by a private right of action. The ACCC is provided with an audit, compliance and enforcement role to oversee the operation of and compliance with the Code. When a retailer agrees to be bound by the Code, the retailer must deal with its suppliers in accordance with the Code. This includes offering suppliers a grocery supply agreement in writing that complies with the Code.159 In relation to the conduct at issue in ACCC v Coles Supermarkets Australia Pty Ltd,160 the Code restricts the circumstances under which a retailer is allowed to make unilateral and retrospective variations to Grocery Supply Agreements. Subclause 9(1) provides that retailers must not unilaterally vary the grocery supply agreement without the consent of the supplier concerned. However, subclause 9(2) affords that if the original grocery agreement provides expressly for the retailer to vary the agreement, and sets out clearly the changed circumstances in which a variation may be made, then a variation may be made in accordance with its terms if the supplier concerned is given reasonable notice of the variation. A variation which involves an adjustment in the quantity of goods to be supplied must specify the basis or methodology to determine the amount of the variation. Subclause 10(1) provides that a retailer must not vary a grocery supply agreement with retrospective effect. However, subclause 10(2) allows for a retrospective variation if the original grocery supply agreement clearly sets out the change in circumstances that allow for the variation and this change is beyond the retailer’s 156 Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd (1999) ATPR ¶41-703 at 43,016. 157 The Food and Grocery Industry Code of Conduct is available at http://www.comlaw.gov.au/ Details/F2015L00242. 158 Food and Grocery Industry Code, Cl 4(1). 159 Food and Grocery Industry Code, Cl 7 and Pt 2. 160 ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405.
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[4.155]
control. A variation which involves an adjustment in the quantity of goods to be supplied must specify the basis or methodology to determine the amount of the variation. There is a difference between unilateral and retrospective variation. For unilateral variation the original agreement must provide for such a variation and clearly set out the circumstances in which it will be permissible. For retrospective variation the change in circumstances must be set out in the agreement, but there is an additional requirement: the change in circumstances must be beyond the control of the retailer. This will limit the uncertainty and risk for the supplier associated with such a change. It also recognises that unilateral variations may be a necessary business practice in the light of unforeseen changes in business circumstances. The Code contains loopholes that will allow supermarkets to engage in the challenged conduct. Clause 9 does not ban variations altogether. Clause 9(1) provides that a variation to a Grocery Supply Agreement may be made with the consent of the supplier. This leaves it open to the supermarkets to coerce their suppliers into consenting to a variation and effectively contracting out of the Code provisions. The supermarkets maintain that such contracting out provides the flexibility that both sides need to run their businesses. The Code represents an improvement in terms of transparency and certainty for suppliers, including the requirement for written agreements and the prohibition of retrospective changes to those agreements except in very limited circumstances. It is likely to stop the more egregious conduct such as retrospective payments for supermarket promotions. On 24 September 2015, the ACCC issued a media release in which it expressed its concern over the manner in which Woolworths and Aldi were presenting new Grocery Supply Agreements, leaving the supplier with the impression that they were non-negotiable. The Code was developed to establish good faith negotiations between retailers and suppliers and to ensure that suppliers were not subject to random requests for payments.161 Other industry codes
[4.155]
There are a large number of voluntary codes that, as the name suggests, are not binding on industry participants that have not adopted the code.162 However, the fact that they are not binding does not mean that they are legally irrelevant. These voluntary industry codes are intended to promote fair trading practices. In deciding whether a corporation has engaged in unconscionable conduct for the purposes of s 21 of the ACL. Section 22(1)(h) and (2)(h) provide that the court may have regard to the requirements of any “other industry code”, if the customer acted on the reasonable belief that the supplier would comply with that code. What constitutes a “reasonable belief” requires an objective inquiry. Section 2 of the ACL provides that the term “industry code” has the meaning given by s 51ACA of the CCA. Section 51ACA(1) defines “industry code” in very broad 161 ACCC, Media release MR 185/15 (24 September 2015). 162 Section 51ACA(2) of the CCA.
[4.165]
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terms to mean “a code regulating the conduct of participants in an industry towards other participants in the industry or towards consumers in the industry”. Failure to disclose intended conduct or risk
[4.160]
Section 22(1)(i)(i) and (2)(i)(i) provide that the court may have regard to the extent to which the supplier or acquirer unreasonably failed to disclose to the other party any intended conduct that might affect the interest of the other party. Section 22(1)(i)(ii) and (2)(i)(ii) provide that the court may have regard to the extent to which the supplier or acquirer unreasonably failed to disclose to the other party any risks arising from the supplier’s intended conduct, being risks that the supplier should have foreseen would not be apparent to other party. For example, a tenant’s lease of premises in a shopping centre may be about to expire. The landlord may have decided not to renew the lease, or may have decided to offer to renew the lease, but with a much higher rent and other onerous conditions. If the tenant embarks upon a new, expensive fit-out of the premises and the landlord fails to disclose its intended conduct or the risks arising from the intended conduct, this would be relevant to an assessment as to whether the landlord was guilty of any unconscionable conduct. The very weak bargaining power of sitting captive tenants due to their lack of a real choice, if they do not want to relinquish the benefit of the past years of trading, makes them “vulnerable targets ripe for exploitation” by landlords in a way that is contrary to good conscience. The landlord will be in possession of much commercial information that will have a bearing on the viability and profitability of a shopping centre complex. This information will be of interest to lessees who are about to sign up for new leases, or to exercise options to renew. In deciding whether to disclose that information, the landlord should act reasonably and should disclose any information that can have a bearing on the risks that tenants are about to assume.
Refusal to negotiate
[4.165]
Section 22(1)(j)(i) and (2)(j)(i) provide that the court may have regard to the extent to which the supplier or acquirer was willing to negotiate the terms and conditions of the contract with the other party. For example, in ACCC v Coles Supermarkets Australia Pty Ltd,163 the court found that Coles had not conducted any informed negotiation with suppliers about the value to the suppliers of data sharing or the ordering system.164 This factor does not impose an obligation on the supplier or acquirer to negotiate in all cases. As Selway J said in the 4WD Systems case: It is in the nature of a franchise system that the agreements with each franchisee are likely to be reasonably standard. And there is nothing surprising or inappropriate in the use of standard term contracts. Of course it may be different where a party has expended considerable funds in advance of entering the written contract and is presented with an unreasonable and unexpected standard document. In such a case the party may 163 ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405. 164 ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405 at [35], [44], [50], [56], [62] and [68].
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[4.170]
effectively be a “captive”. If the franchisor, knowing of this, refuses to negotiate then this might be viewed as “unconscionable” or as an aspect of it. … Effectively they would have had no choice because of the commitment they had already made in entering into the franchise. (citations omitted)165
The mere adoption of “unmeritorious negotiating positions” will not amount to unconscionable conduct. It would be necessary to demonstrate that the conduct at issue was unreasonable in the sense stated in the Simply No-Knead case.166 Unreasonable refusal to negotiate in order to resolve genuine grievances with franchisees, or unreasonable refusal to negotiate collectively with franchisees, may constitute unconscionable conduct.167 Terms and conditions of the contract
[4.170]
Sections 22(1)(j)(ii) and (2)(j)(ii) provide that the court may have regard to the terms and conditions of the contract. This factor recognises that statutory unconscionability under s 21 of the ACL includes substantive unconscionability, not just procedural unconscionability.
Conduct in complying with terms and conditions
[4.175]
Section 22(1)(j)(iii) and (2)(j)(iii) provide that the court may have regard to the conduct of the supplier or acquirer in complying with the terms and conditions of the contract. There may be a degree of overlap between this statutory factor and s 21(1)(f) and (2)(l) which relate to the extent to which the acquirer and the supplier acted in good faith. The court will be required to examine the exercise of discretionary power by the supplier, especially the power to terminate, against the circumstances that provoked it, considering what protection may be appropriate for the other party. It seems that to succeed in a claim of this type under s 21 of the ACL, the other party will need to produce compelling evidence of motive and that an argument based on inference alone is likely to fail. The mere fact that the other party may suffer financially as a result of the supplier enforcing its strict contractual rights is unlikely, in itself, to be sufficient to constitute a breach of s 21 of the ACL. It would seem that something more than reliance upon strict legal rights is required to render the post-formation conduct unconscionable within the meaning of s 21 of the ACL. For example, an unjustifiable refusal to consent to an assignment by a franchisor/ landlord may be relevant in deciding whether there has been a breach of s 21 of the ACL. A franchisee or shopping centre lessee may incur considerable set-up costs by a combination of a requirement to pay a franchise fee, fit-out, the acquisition of specialised equipment and inventory. These costs may be “sunk” costs if the franchisee or lessee is prevented from transferring the business to a third party.
165 ACCC v 4WD Systems Pty Ltd (2003) 200 ALR 491 at 545. 166 See, eg, Pacific National (ACT) Ltd v Queensland Rail (2006) ATPR (Digest) ¶46-268 at [933]. 167 ACCC v Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCR 253 at 268-9.
[4.175]
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The New Franchising Code of Conduct imposes a number of requirements relating to transfers of franchises, including that requests for consent to transfer must be made in writing,168 the franchisor must not unreasonably withhold its consent,169 and that the franchisor is deemed to have consented if the franchisor does not within 42 days give written notice that its consent is withheld and giving reasons for that decision.170 In Masterclass Enterprises Pty Ltd v Bedshed Franchisors (WA) Pty Ltd,171 Bedshed was a franchisor of retail stores. Masterclass was a franchisee of the Claremont store. Bedshed’s franchisee selection criteria provided that the most successful franchise structure was an “owner-operated” model because the owner invested capital in the franchise, the owner was more likely to be motivated to increase sales. Clause 12.2 of the franchise agreement provided that Masterclass was not entitled to transfer the franchise without the prior written approval of Bedshed. Masterclass wanted to transfer the franchise. The prospective purchaser did not intend to operate the business. Instead, it intended to put a manager in the store. Bedshed refused because business would not be “owner-operated” in accordance the franchisee selection criteria. Newnes J of the Supreme Court of Western Australia held it was not unreasonable for Bedshed to refuse consent to transfer and to require that a franchise business be supervised by someone with a substantial investment in the Franchisee.172 It was reasonable for Bedshed to take the view that a manager without an investment in the business would lack the level of motivation and commitment to the business that Bedshed considered necessary.173 It would seem to follow from the Allphones case174 , that in considering whether the exercise of a right to terminate a contract constitutes unconscionable for the purposes of s 51AC, the court is required to focus solely on what caused the decision to terminate, and to ignore other conduct and circumstances which have no causal nexus with the decision to terminate. In that case the primary judge, Rares J, considered the conduct of Allphones as a whole and decided that it was unconscionable under s 51AC. Accordingly, Allphones was not entitled to exercise its strict legal right to terminate.175 Rares J granted an injunction under s 87 preventing the termination of the franchise because of Allphones’ unconscionable conduct. On appeal, a majority of the Full Federal Court held that the decision to terminate needed to be assessed independently of the other conduct and surrounding circumstances and that one could only consider matters that had a causal nexus 168 New Franchising Code, subcl 20(1). 169 New Franchising Code, subcl 20(2). 170 New Franchising Code, subcl 20(4). 171 Masterclass Enterprises Pty Ltd v Bedshed Franchisors (WA) Pty Ltd [2008] WASC 67 (13 May 2008). 172 Masterclass Enterprises Pty Ltd v Bedshed Franchisors (WA) Pty Ltd [2008] WASC 67 at [114]. 173 Masterclass Enterprises Pty Ltd v Bedshed Franchisors (WA) Pty Ltd [2008] WASC 67 at [120]. 174 Allphones Retail Pty Ltd v Hoy Mobile Pty Ltd (2009) ATPR ¶42-294 at [5]. 175 Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) (2008) ATPR ¶42-240 at [427].
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[4.175]
with the decision to terminate.176 Since the sole motivating factor to terminate had been Hoy Mobile’s fraudulent conduct, the exercise of Allphones’ contractual right to terminate could not constitute unconscionable conduct under s 51AC. Most franchise agreements spell out the circumstances under which the parties may terminate their agreement. The discretion allocated to the franchisor to terminate will vary from system to system. Differences in termination rights may reflect differences in bargaining power, the marketing strategy of the franchisor and the competitive conditions in the market. Termination can be an essential means of replacing inefficient and non-performing franchisees whose deficiencies can undermine the value of the system. The franchisor will generally be guided by enlightened self-interest and will generally have no economic incentive to terminate arbitrarily franchisees who contribute value to a franchise system. The franchisor should only terminate for “good cause”. The New Franchising Code of Conduct provides that before terminating the franchise agreement, the franchisor must give reasonable written notice of the proposed termination, and reasons for it, to the franchisee.177 In Automasters Australia Pty Ltd v Bruness Pty Ltd, Hasluck J held that the plaintiff’s conduct amounted to an infringement of s 51AC: I have already observed, in the course of dealing with the good faith issue, that the plaintiff acted capriciously and unreasonably in circumstances where there was not a sufficient basis to terminate the contract. I have found that there was an element of oppression in the plaintiff’s conduct, and this was referable to a conscious determination to bring the Franchise Agreement to an end, notwithstanding an awareness that there was a degree of ambiguity surrounding the allegations of default to be relied upon.178
Apart from these provisions of the New Code and s 22 of the ACL, the courts may imply an obligation of good faith as a matter of law into a franchise contract.179 The mere fact that a franchisee may suffer financially as a result of a franchisor’s refusal to consent to a transfer, is not in itself, sufficient to constitute a breach of the implied obligation of good faith. It would be necessary to establish that the refusal to consent was exercised capriciously, or that there was no rational basis for the refusal. Where the denial of consent is calculated to deny the franchisee the ability to obtain the full value of the established goodwill or to enable the franchisor to exercise a right of first refusal and to buy back the franchise at an under value, it is likely that it would held to be contrary to an implied obligation of good faith. The courts will require compelling evidence of motive and are unlikely to accept an argument by the franchisee based on inference alone.
176 Allphones Retail Pty Ltd v Hoy Mobile Pty Ltd (2009) ATPR ¶42-294 at [5]. 177 New Franchising Code, Subcl 22(3). 178 Automasters Australia Pty Ltd v Bruness Pty Ltd [2002] WASC 286 at [388]-[399]. 179 See Burger King Corporation v Hungry Jack’s Pty Ltd [2001] NWSCA 187 at [164]; ACCC v Simply No-Knead (Franchising) Pty Ltd (2000) ATPR ¶41-790; and Automasters Australia Pty Ltd v Bruness Pty Ltd [2002] WASC 286. See Dixon, “What is the Content of the Common Law Obligation of Goods Faith in Commercial Franchises?” (2005) 33(3) Australian Business Law Review 207.
[4.185]
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Conduct in connection with the commercial relationship
[4.180]
Section 22(1)(j)(iv) and (2)(j)(iv) provide that the court may have regard to any conduct that the supplier or acquirer engaged in, in connection with their commercial relationship, after they entered into the contract. This factor recognises that statutory unconscionability under s 21 of the ACL includes substantive unconscionability, not just procedural unconscionability. This is confirmed by the third interpretative principle considered at [4.70].
There have been a number of cases in which one party decides to break a contract with the other party to the contract. There may be nothing that offends good conscience in taking such a decision especially where the burden of performance may be more onerous than the liability to be incurred from the breach. Such a breach arises from rational commercial considerations rather than unconscionable conduct. For example, in Body Bronze International Pty Ltd v Fehcorp Pty Ltd,180 Macaulay AJA (with whom Harper and Hansen JJA agreed) said: it should be recognised that not every breach of contract, even a deliberate breach, necessarily involves the moral obloquy that the authorities suggest needs be present for unconscionable conduct in breach of s 51AC to be made out.181
Macaulay AJA, after considering all the circumstances surrounding Body Bronze enforcing its strict contractual rights, concluded that it had not engaged in substantive unconscionability with s 51AC of the TPA. In particular, in deciding to enforce its strict contractual rights Body Bronze was entitled to consider: [its] own tight financial position, its concern about the workability of its relationship with Fehcorp, and that it foreshadowed its action to Fehcorp whom it knew had access to legal advice and a demonstrated capacity to employ such advice effectively.182
Lack of good faith
[4.185]
Section 22(1)(l) and (2)(l) of the ACL provides that the court may have regard to the extent to which the acquirer and the supplier acted in good faith. In Paciocco v Australia and New Zealand Banking Group, Allsop CJ had to consider the meaning to be given to “good faith” in the equivalent provisions of the ASIC Act, s 12CC(1)(l) and (2)(l). His Honour observed that good faith had been recognised as a feature of Australian contract law and summarised the developing jurisprudence: The usual content of the obligation of good faith that can be extracted from cases such as Renard Constructions, Hughes Bros Pty Ltd v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (1993) 31 NSWLR 91, Burger King Corporation v Hungry Jack’s Pty Ltd [2001] NSWCA 187; 69 NSWLR 558, Alcatel Australia Ltd v Scarcella [1998] NSWSC 483; 44 NSWLR 349, and United Group Rail Services Ltd is an obligation to act honestly and with a fidelity to the bargain; an obligation not to act dishonestly and not to act to undermine the bargain entered or the substance of the contractual benefit bargained for; and an
180 Body Bronze International Pty Ltd v Fehcorp Pty Ltd [2011] VSCA 196. 181 Body Bronze International Pty Ltd v Fehcorp Pty Ltd [2011] VSCA 196 at [91]. 182 Body Bronze International Pty Ltd v Fehcorp Pty Ltd [2011] VSCA 196 at [97].
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[4.185]
obligation to act reasonably and with fair dealing having regard to the interests of the parties (which will, inevitably, at times conflict) and to the provisions, aims and purposes of the contract, objectively ascertained.183
In relation to statutory unconscionable conduct, Allsop CJ stated this obligation to act reasonably must not only be observed in relation to the exercise of the terms of the contract, but also in relation to the conduct surrounding the bargaining process since s 12CB of the ASIC Act (and s 21 of the ACL) expressly refer to the possible supply of goods and services.184 This does not require the stronger party to act selflessly, but they must not take actions which would prevent the performance of the contract or withhold the benefits of the contract from the weaker party. In discussing an obligation of good faith in Overlook v Foxtel, Barrett J observed: It must be accepted that the party subject to the obligation is not required to subordinate the party’s own interests, so long as pursuit of those interests does not entail unreasonable interference with the enjoyment of a benefit conferred by the express contractual terms so that the enjoyment becomes (or could become) … “nugatory, worthless or, perhaps, seriously undermined” … the implied obligation of good faith underwrites the spirit of the contract and supports the integrity of its character. A party is precluded from cynical resort to the black letter. But no party is fixed with the duty to subordinate self-interest entirely which is the lot of the fiduciary … The duty is not a duty to prefer the interests of the other contracting party. It is, rather, a duty to recognise and to have due regard to the legitimate interests of both the parties in the enjoyment of the fruits of the contract as delineated by its terms.185
Examples of such conduct in a franchising context include: • purporting to terminate a franchise when there was serious doubt as to whether the franchisee was in breach, the franchisor had likely contributed to any breaches, and an independent report had recommended against termination;186 • competing with franchisees, including advertising within their territories, selling franchised products to independent retail outlets within those territories, and misusing information supplied by franchisees to “poach” their clients;187 and • making life difficult for franchisees with the intent to cause them to terminate or not renew their franchise agreements.188 This factor looks not only at the extent to which the supplier acted in good faith, but the extent to which the business consumer acted in good faith. This appears to contemplate that the actions of a business consumer in bad faith could, in effect, cancel out the actions of a supplier that were in bad faith; however, this will not necessarily be the case. 183 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [288]. See also Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825 at [1010] (Edelman J). 184 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [294]. 185 Overlook Management BV v Foxtel Management Pty Ltd (2002) ATPR (Digest) ¶46-219 at [65]-[67], cited in Auto Masters Australia Pty Ltd v Bruness Pty Ltd (2003) ATPR (Digest) ¶46-229 at [357]. 186 Auto Masters Australia Pty Ltd v Bruness Pty Ltd (2003) ATPR (Digest) ¶46-229. 187 ACCC v Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCR 253. 188 ACCC v Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCR 253.
[4.185]
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In the Allphones case, both franchisor and franchisee were each systematically defrauding the other – the franchisor by charging fees to which it was not entitled and withholding commissions due to all its franchisees, and the relevant franchisee, Hoy Mobile, by “unlocking” and selling mobile phones held on consignment from the franchisor for a price higher than that reported to the franchisor. Although Rares J acknowledged that the “propriety of the conduct of both parties may be relevant”, and both parties were engaged in “equally dishonest conduct”, this did not prevent a finding that the franchisor had acted unconscionably in contravention of s 51AC of the TPA.189 With respect to the unlocking issue, Rares J concluded that Hoy Mobile had been guilty of fraud. However, his Honour held that the franchisor’s express power to terminate because of that fraud could not be exercised because of the franchisor’s earlier repudiation in making deductions from the amounts that should have been paid to Hoy Mobile. Accordingly, Allphones had engaged in unconscionable conduct within the meaning of s 51AC in respect of the purported termination. Rather than examine the contractual right to terminate separately, Rares J considered the franchisor’s conduct as a whole and held that it acted unconscionably for the purposes of s 51AC of the TPA. According to Rares J, s 51AC authorises the Court to look more broadly at the whole of the relationship and to assess the corporation’s conduct in that broader context. That context includes the breaches of the franchise agreement which I have found Allphones to have committed as the basis of my finding that it was not entitled to terminate the franchise agreement because it was itself in breach of an essential term or evincing an intention not to be bound. In addition, Allphones engaged in other conduct which is relevant under s 51AC(1) and (2).190
On appeal,191 the Full Federal Court (Goldberg, Jacobson and Perram JJ) took a different approach. It examined the contractual entitlement to terminate separately from the alleged unconscionable conduct. As regards the exercise of the contractual right to terminate by Allphones, the Full Court unanimously held that the primary judge erred in finding and declaring that the franchisor did not have a contractual entitlement to terminate. It was not necessary to decide whether a party who had repudiated a contract could take advantage of a breach by the other party of an essential term and terminate the agreement. This was because the contract itself contained an express power of termination even where the party seeking to do so had repudiated the agreement.192 In denying leave to appeal to the High Court French CJ stated: The power of Allphones to terminate its contract with Hoy Mobile was conferred by the terms of the written agreement between them. The conclusion reached by the Full Court 189 Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) (2008) ATPR ¶42-240 at [423], [427]. 190 Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) (2008) ATPR ¶42-240 at [419]. 191 Allphones Retail Pty Ltd v Hoy Mobile Pty Ltd (2009) ATPR ¶42-294. 192 Allphones Retail Pty Ltd v Hoy Mobile Pty Ltd (2009) ATPR ¶42-294 at [55].
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that the power was not qualified by anterior repudiation of the contract by the terminating party is not, in our opinion, attended with sufficient doubt to warrant the grant of special leave. The Full Court also decided, by majority, that the exercise by Allphones of its contractual right to terminate could not constitute conduct which was unconscionable for the purposes of s 51AC of the Trade Practices Act. Without endorsing all that was said by the Full Court in the circumstances which gave rise to Allphones’ contractual power to terminate, an appeal against this decision has insufficient prospects of success to warrant the grant of special leave.193
Summary
[4.190]
There are two different interpretations of statutory unconscionable conduct for the purposes of ss 51AB and 51AC of the TPA, s 12CB of the ASIC Act, and s 21 of the ACL. According to the first line of authority, statutory unconscionable conduct is targeted at commercial conduct involving a “high level of moral obloquy”, or at least some moral tainting. According to the second, the statutory language needs to be given its ordinary and natural interpretation and the normative inquiry involved is not limited to finding “moral obloquy”. In Paciocco v Australia and New Zealand Banking Group, Allsop CJ provided a useful summary of the values and norms recognised by the statute that are relevant in evaluating business behaviour to determine whether it warrants the characterisation of being unconscionable: The working through of what a modern Australian commercial, business or trade conscience contains and requires, in both consumer and business contexts, will take its inspiration and formative direction from the nation’s legal heritage in Equity and the common law, and from modern social and commercial legal values identified by Australian Parliaments and courts. … It is an evaluation which must be reasoned and enunciated by reference to the values and norms recognised by the text, structure and context of the legislation, and made against an assessment of all connected circumstances. The evaluation includes a recognition of the deep and abiding requirement of honesty in behaviour; a rejection of trickery or sharp practice; fairness when dealing with consumers; the central importance of the faithful performance of bargains and promises freely made; the protection of those whose vulnerability as to the protection of their own interests places them in a position that calls for a just legal system to respond for their protection, especially from those who would victimise, predate or take advantage; a recognition that inequality of bargaining power can (but not always) be used in a way that is contrary to fair dealing or conscience; the importance of a reasonable degree of certainty in commercial transactions; the reversibility of enrichments unjustly received; the importance of behaviour in a business and consumer context that exhibits good faith and fair dealing; and the conduct of an equitable and certain judicial system that is not a harbour for idiosyncratic or personal moral judgment and exercise of power and discretion based thereon.194
PART III: UNCONSCIONABLE CONDUCT UNDER THE ASIC ACT [4.195]
The Competition and Consumer Legislation Amendment Act 2011 (Cth), combined the existing ss 12CB and 12CC of the ASIC Act into one section and
193 Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd [2009] HCA Trans 325. 194 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [296].
[4.195]
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rationalised their drafting to apply a single set of specific factors which the court may consider. The former s 12CC of the ASIC Act was the subject of some negative judicial comment. Perram J, in Transmarket Trading Pty Ltd v Sydney Futures Exchange Ltd, observed: The wisdom of giving statutory force to such ill-defined moral precepts which of their nature are likely to vary between different people and judges may seriously be questioned. Further, common experience with litigation shows that the prescription of such vague and contestable standards is apt to multiply disputation and prolong litigation whilst parties debate the application of a rule whose content is not only obscure but elusive. Worse, because most parties in litigation regard themselves as being in the right, the insertion of a standard resting on a moral precept such as conscience is likely to mean that each side sees such a provision as assisting it. A less wholesome incentive to the reduction of litigation is difficult to imagine.195
Part II Div 2 Subdiv C of the now contains only two substantive prohibitions. Section 12CA provides: (1) A person must not, in trade or commerce, engage in conduct in relation to financial services if the conduct is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories. (2) This section does not apply to conduct that is prohibited by section 12CB
Section 12CB provides: (1) A person must not, in trade or commerce, in connection with: (a) the supply or possible supply of financial services to a person (other than a listed public company); or (b) the acquisition or possible acquisition of financial services from a person (other than a listed public company); engage in conduct that is, in all the circumstances, unconscionable. (2) This section does not apply to conduct that is engaged in only because the person engaging in the conduct: (a) institutes legal proceedings in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition; or (b) refers to arbitration a dispute or claim in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition. (3) For the purpose of determining whether a person has contravened subsection (1): (a) the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and (b) the court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section. (4) It is the intention of the Parliament that: (a) this section is not limited by the unwritten law of the States and Territories relating to unconscionable conduct; and (b) this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and (c) in considering whether conduct to which a contract relates is unconscionable, a court’s consideration of the contract may include consideration of: 195 Transmarket Trading Pty Ltd v Sydney Futures Exchange Ltd (2010) 188 FCR 1 at [127].
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(i) the terms of the contract; and (ii) the manner in which and the extent to which the contract is carried out; and is not limited to consideration of the circumstances relating to formation of the contract.
The meaning of “unconscionable” in s 12CB of the ASIC Act is the same as that in s 21 of the ACL. The Full Federal Court in ASIC v National Exchange Pty Ltd,196 noted that the legislative purpose of s 12CC of the ASIC Act was “to build on and not be constrained by the unwritten law”.197 According to the Court, on its ordinary and natural interpretation, unconscionable conduct means “doing what should not be done in good conscience”,198 which the Court interpreted as requiring a “high level of moral obloquy.”199 In Paciocco v Australia and New Zealand Banking Group the Full Federal Court held that conduct is “unconscionable” for the purposes of s 12CB of the ASIC Act if it is “against conscience”.200 It is to be tested according to current norms and standards of what is regarded as acceptable business behaviour, and this may, but does not necessarily, involve a moral judgment.201 The Full Federal Court confirmed the decision of the primary judge, Gordon J, that ANZ’s late payment fees were not unconscionable within the meaning of s 12CB or the ASIC Act.202 One basis for the statutory unconscionable conduct claim was that ANZ’s late fees were too high. Allsop CJ observed that “s 12CB does not transform the Court in to a price regulator”.203 The court will not intervene on the basis that a price may be said to be too high in the absence of other indicators that demonstrate “exorbitant exercises of bargaining power that bespeak predation and taking advantage that contravene fair dealing and that may be unconscionable”.204 There was evidence that other banks charged similar fees. In addition, the fact that standard terms were imposed with no opportunity to negotiate did render the fees unconscionable. Allsop CJ observed: In all the circumstances, in particular, the lack of any proven predation on the weak or poor, the lack of real vulnerability requiring protection, the lack of financial or personal compulsion or pressure to enter or maintain accounts, the clarity of disclosure, the lack of secrecy, trickery or dishonesty, and the ability of people to avoid the fees or terminate the 196 ASIC v National Exchange Pty Ltd (2005) 148 FCR 132. 197 ASIC v National Exchange Pty Ltd (2005) 148 FCR 132 at 140 [30]-[31]; PSAL Ltd v Kellas-Sharpe [2012] QSC 31 at [85] (Applegarth J). 198 ASIC v National Exchange Pty Ltd (2005) 148 FCR 132 at 140 [33]. 199 ASIC v National Exchange Pty Ltd (2005) 148 FCR 132 at 140 [43], referring to Spigelman CJ’s judgment in Attorney-General of NSW v World Best Holdings Ltd (2005) 63 NSWLR 557. See McGill, “Asset Lending, Unconscionable Conduct and Intermediaries” (2014) 42 Australian Business Law Review 146. 200 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [262]. 201 ACCC v Lux Distributors Pty Ltd [2013] FCAFC 90 at [23] in relation to s 21 of the ACL; and Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [298] in relation to statutory unconscionable conduct in s 12CB of the ASIC Act. 202 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50. 203 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [335]. 204 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [335].
[4.195]
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accounts, I do not consider the conduct of ANZ to have been unconscionable. To do so would require the court to be a price regulator in banking business in connection with otherwise honestly carried on business in which high fees were extracted from customers.205
The High Court has granted special leave to hear an appeal from the decision of the Full Federal Court in Paciocco v Australia and New Zealand Banking Group.206 Section 12CC sets out the matters the court may have regard to for the purposes of s 12CB. Section 12CC(1) sets out the matters the court may have regard to in determining whether a supplier of financial services has engaged in unconscionable conduct. It provides: (1) Without limiting the matters to which the court may have regard for the purpose of determining whether a person (the supplier) has contravened section 12CB in connection with the supply or possible supply of financial services to a person (the service recipient), the court may have regard to: (a) the relative strengths of the bargaining positions of the supplier and the service recipient; and (b) whether, as a result of conduct engaged in by the supplier, the service recipient was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier; and (c) whether the service recipient was able to understand any documents relating to the supply or possible supply of the financial services; and (d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the service recipient or a person acting on behalf of the service recipient by the supplier or a person acting on behalf of the supplier in relation to the supply or possible supply of the financial services; and (e) the amount for which, and the circumstances under which, the service recipient could have acquired identical or equivalent financial services from a person other than the supplier; and (f) the extent to which the supplier’s conduct towards the service recipient was consistent with the supplier’s conduct in similar transactions between the supplier and other like service recipients; and (g) if the supplier is a corporation–the requirements of any applicable industry code (see subsection (3)); and (h) the requirements of any other industry code (see subsection (3)), if the service recipient acted on the reasonable belief that the supplier would comply with that code; and (i) the extent to which the supplier unreasonably failed to disclose to the service recipient: (i) any intended conduct of the supplier that might affect the interests of the service recipient; and (ii) any risks to the service recipient arising from the supplier’s intended conduct (being risks that the supplier should have foreseen would not be apparent to the service recipient); and (j) if there is a contract between the supplier and the service recipient for the supply of the financial services: (i) the extent to which the supplier was willing to negotiate the terms and conditions of the contract with the service recipient; and 205 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [346]-[347]. 206 Paciocco v Australia and New Zealand Banking Group [2015] HCATrans 229.
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[4.200]
(ii) the terms and conditions of the contract; and (iii) the conduct of the supplier and the service recipient in complying with the terms and conditions of the contract; and (iv) any conduct that the supplier or the service recipient engaged in, in connection with their commercial relationship, after they entered into the contract; and (k) without limiting paragraph (j), whether the supplier has a contractual right to vary unilaterally a term or condition of a contract between the supplier and the service recipient for the supply of the financial services; and (l) the extent to which the supplier and the service recipient acted in good faith.
Section 12CC(2) sets out the same matters the court may have regard to in determining whether an acquirer of financial services has engaged in unconscionable conduct.
Imbalance of bargaining power [4.200]
In relation to s 12CC(1) and (2)(a) of the ASIC Act, which refer to inequality of bargaining power, Allsop CJ in Paciocco v Australia and New Zealand Banking Group stated: The inclusion in para (a) in sub-ss (1) and (2) of inequality of bargaining power can be seen to be a recognition that in commerce there may arise circumstances of asymmetry of power; such asymmetries are sometimes ruthlessly exploited in a manner that may offend the commercial conscience: see for example ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405 at [102]-[105] (Gordon J). The reality of that to business people is no more difficult to understand than is the difference between sharp practice and good faith, even when the latter is accompanied by hard bargaining. (That does not mean, however, that using one’s bargaining position is necessarily unconscionable, or even unfair.)207
Unreasonable conditions [4.205]
In relation to s 12CC(1) and (2)(b) of the ASIC Act which refers to unreasonable conditions not reasonably necessary to protect the legitimate interests of the supplier, in Goodridge v Macquarie Bank Ltd,208 Mr Goodridge entered into a Margin Lending Loan and Security Agreement (LSA) with Macquarie Bank. Clause 5 of the LSA provided that if at any time the total loan balance exceeded or was likely to exceed the market value of the equities acquired, the Bank could at its discretion require the Borrower to pay a further sum (“the margin call”), and that such sum was to be paid by 2.00 pm on the business day following the margin call. Clause 21 of the LSA provided that Macquarie Bank could assign, transfer or novate the Agreement to any person without the consent of the borrower. Subsequently, Macquarie Bank sold is margin loan book to Leveraged Equities.
207 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [286]. 208 Goodridge v Macquarie Bank Ltd [2010] FCA 67 (12 February 2010) at [201].
[4.210]
4 Unconscionable Conduct
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Rares J found that in acquiring the margin loan from Macquarie Bank to buy shares to provide an income stream for retirement it was for a “long term personal objective”,209 and accordingly the LSA was a consumer contract for the purposes of s 12CB of the ASIC Act. Rares J also held that the acquirer of a margin loan, Leveraged Equities, required the applicant to comply with conditions that were not reasonably necessary to protect its legitimate interests: namely, first, it required him to pay money in accordance with a timetable and series of demands that were not valid and, secondly, it threatened, and then proceeded, to sell his property without a legitimate interest (on my findings above) that it was then entitled to protect. Leveraged Equities thus misused its power of sale unconscientiously without any right to do so.210
On appeal,211 the Full Federal Court took a different view. In allowing the appeal, Jacobson J (with whom Finkelstein and Stone JJ agreed) held: First, s 12CB applies only to financial services of a kind ordinarily acquired for personal, domestic or household use: see s 12CB(5). Mr Goodridge acknowledged when he entered into the LSA that the funds would be applied wholly or predominantly for business or investment purposes. His evidence that the funds were invested for the purpose of providing for his retirement was not relevant to the question of whether s 12CB was engaged. Second, absent some conduct on the part of Leveraged Equities or Macquarie which could be characterised as taking improper advantage of Mr Goodridge (which there was not), there is nothing unconscionable in a margin lender enforcing its legal rights to protect itself against a fall in the value of its security: Bacnet Pty Ltd v Capital Partners Pty Ltd [2010] FCAFC 36; (2010) 183 FCR 384 at [118]-[120].212
The Full Federal Court held that the novation was effected by the contract documents and that there was nothing improper about one party authorising the other party to novate the contract without any further involvement by the first party.
Exploitative pricing [4.210]
Section 12CC(1) and (2)(e) refer to the amount for which the recipient could have acquired identical financial services from another supplier. In PSAL Ltd v Kellas-Sharpe,213 Applegarth J was required to decide whether the capitalisation of interest over an 18 month period on a loan with a term of 2 months contravened s 12CC of the ASIC Act and s 51AC of the TPA. It was argued by the defendants that the provisions of the contract went beyond what was reasonably necessary to protect PSAL’s legitimate interests, because PSAL had been provided with substantial security for the loan. 209 Goodridge v Macquarie Bank Ltd [2010] FCA 67 (12 February 2010) at [210]-[211], citing Begbie v State Bank of New South Wales (1994) ATPR ¶41-288 at 41,498 (Drummond J). 210 Goodridge v Macquarie Bank Ltd [2010] FCA 67 at [207]. 211 Leveraged Equities Ltd v Goodridge (2011) 274 ALR 655. 212 Leveraged Equities Ltd v Goodridge (2011) 274 ALR 655 at [416]-[417]. 213 PSAL Ltd v Kellas-Sharpe [2012] QSC 31.
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[4.215]
Applegarth J was not persuaded that the 7.5% standard rate that applied when the loan went into default was an exorbitant rate, having regard to PSAL’s potential loss on a defaulting loan. An interest rate of 7.5% was consistent with commercial rates at the time and was not shown to be unreasonable considering the costs and losses that result from default.214 However, the election by the lender to capitalise the interest on a monthly basis was irreconcilable with what was right and reasonable.215 In Paciocco v Australia and New Zealand Banking Group,216 Allsop CJ stated that whether a fee is extravagant or exorbitant relative to the cost of the fee event: does not necessarily lead to a conclusion of statutory unconscionability … Their characterisation as the product of unconscionable conduct would depend upon the broader considerations of the statute. The question might be seen to be whether…the conduct was the imposition of an oppressive burden on a weaker party by the unconscientious use of power by a stronger party.217
The Full Federal Court confirmed the decision of the primary judge, Gordon J, that ANZ’s late payment fees were not unconscionable within the meaning of s 12CB of the ASIC Act. The court would not intervene solely on the basis that ANZ’s late payment fees were said to be too high unless there were other indicators that demonstrated “…exorbitant exercises of bargaining power that bespeak predation and taking advantage that contravene fair dealing and that may be unconscionable”.218 There was evidence that other banks charged similar fees and equivalent financial services were available from other financial institutions (banks and non-banks).219 There was choice available to ANZ’s customers to move to other financial institutions, the fees could not be seen as “a form of predation on the weak or poor”.220 It seems that a term of a contact imposing an exorbitant price of fee will not be characterised as statutory unconscionable conduct in isolation. The term will have to be considered in the light of the conduct that led to the formation of the contract, and whether the price or fee imposes an oppressive obligation on the other party.
Lack of good faith [4.215]
In relation to s 12CC(1) and (2)(l) of the ASIC Act, which refers to good faith, Allsop CJ in Paciocco v Australia and New Zealand Banking Group stated that the principle of good faith is: an obligation to act reasonably and with fair dealing having regard to the interests of the parties (which will, inevitably, at times conflict) and to the provisions, aims and purposes of the contract, objectively ascertained.221
214 PSAL Ltd v Kellas-Sharpe [2012] QSC 31 at [103]. 215 PSAL Ltd v Kellas-Sharpe [2012] QSC 31 at [115]. 216 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50. 217 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [341]-[342]. 218 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [335]. 219 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [343]. 220 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [345]. 221 Paciocco v Australia and New Zealand Banking Group[2015] FCAFC 50 at [288]-[289].
[4.215]
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The Full Federal Court held that ANZ’s late payment terms were not unjust. The court held: the terms were clear, intelligible, and openly disclosed. The practical effect of the terms was disclosed clearly: leaflets etc., as well as explanations by letter and telephone. There was no unfair pressure, undue influence or unfair tactics. The measures to bring the terms to the attention of customers was not said to be inadequate. There was no evidence of hardship on the part of these applicants. It was not proved that the ANZ inflicted hardship on others by the fees.222
222 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [360].
5
Unfair Contract Terms [5.05] INTRODUCTION ................................................................................................................ 210
[5.15] Unfair terms: Victorian legislation ................................................................... 213 [5.20] CONTRACTS AND TERMS EXEMPT FROM REVIEW .............................................. 214
[5.25] Term defining the main subject matter ........................................................... 214 [5.30] Term setting the upfront price ......................................................................... 215 [5.40] Terms expressly permitted as a matter of law .............................................. 217 [5.45] Contracts excluded ............................................................................................. 218 [5.50] OPERATIVE PROVISIONS RELATING TO UNFAIR TERMS ................................... 218 [5.55] FIRST REQUIREMENT: CONSUMER CONTRACT OR SMALL BUSINESS CONTRACT ......................................................................................................................... 219
[5.60] Consumer contract .............................................................................................. 219 [5.70] Small business contract ...................................................................................... 221 [5.90] SECOND REQUIREMENT: STANDARD FORM CONTRACT .................................. 223
[5.100] Rebuttable presumption .................................................................................. 225 [5.105] THIRD REQUIREMENT: UNFAIR TERM .................................................................... 225
[5.105] Meaning of unfair: four part test ................................................................... 225 [5.110] First part: the term itself .................................................................................. 226 [5.140] Second part: contextual considerations ........................................................ 234 [5.145] Third part: transparency .................................................................................. 234 [5.155] Fourth part: contract as a whole .................................................................... 237 [5.160] Grey list: examples of terms that may be unfair ........................................ 238 [5.165] TERMS PRESCRIBED BY REGULATION .................................................................... 239 [5.170] EFFECT OF A TERM BEING DECLARED TO BE UNFAIR ..................................... 240 [5.175] ACL – COMMONWEALTH ............................................................................................ 240 [5.180] ACL – STATES AND TERRITORIES .............................................................................. 241 [5.185] PUBLIC ENFORCEMENT ............................................................................................... 241 [5.190] PRIVATE REMEDIES ........................................................................................................ 242 [5.195] UNFAIR TERMS UNDER THE ASIC ACT .................................................................. 242
[5.200] Consumer contracts covered ........................................................................... 243 [5.205] Small business contracts covered ................................................................... 243 [5.210] Contracts excluded ........................................................................................... 243 [5.215] Terms excluded ................................................................................................. 243 [5.220] MEANING OF UNFAIR TERM ...................................................................................... 244
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[5.05]
[5.225] First part: the term itself .................................................................................. 245 [5.230] Second part: contextual considerations ........................................................ 246 [5.235] Third part: transparency .................................................................................. 246 [5.240] Fourth part: contract as a whole .................................................................... 246 [5.245] Grey list: examples of terms that may be unfair ........................................ 246
INTRODUCTION [5.05] The third general protection relates to unfair terms in standard form consumer contracts and small business contracts. These are regulated by Part 2-3 of the ACL. In contract theory, agreements are negotiated, and the terms settled by a process of bargaining between the parties. While this may occur in some instances, it is not a feature of many consumer transactions. Consumers either do not read the terms upon which they are supplied goods or services prior to contracting, or if they do read them, they will lack the power to bargain with the supplier about those terms. Generally, consumers are presented with standard form contracts on a “take-it-or-leave-it” basis. They are faced with the alternatives of either contracting on the supplier’s terms and conditions, or not contracting at all. The common law courts have traditionally not recognised unfairness in the terms of a contract as a basis for intervention, the underlying premise being that a party is free to enter into a binding contract on terms of his or her choice.1 Parties who freely conclude contracts are legally bound by their terms. This presumption of freedom of contract, and the voluntary entry into binding contracts overlooks the fact that many standard form contracts relate to essential goods or services, such as utilities, and that the consumer may have no bargaining power and little choice as regards the terms and conditions on offer.2 Typically, inequality of bargaining power will exist whenever there is only one or a small number of possible suppliers,3 or because consumers are unable to obtain the necessary information about alternative suppliers at a reasonable cost.4 Standard form consumer contracts are common place in the following areas: 1 See, eg, Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at 325 where Gleeson CJ McHugh, Gummow, Hayne and Heydon JJ stated: “to speak of ‘unconscionable conduct’ may, wrongly, suggest that sufficient foundation for the existence of the necessary ‘equity’ to interfere in relationships established by, for example, the law of contract, is supplied by an element of hardship or unfairness in the terms of the transaction in question, or in the manner of its performance”. 2 See, Robertson, “The Limits of Voluntariness in Contract” (2005) 29 Melbourne University Law Review 179 at 180-181; Paterson, “The Australian Unfair Contract Terms Law: the Rise of Substantive Unfairness as a Ground for Review of Standard Form Contracts” (2009) 33 Melbourne University Law Review 934 at 937-9; and Paterson, Unfair Contract Terms in Australia (Thomson Reuters, Sydney, 2012), Ch 1. 3 See Kornhauser, “Unconscionability in Standard Forms” (1976) 64 California Law Review 1151 for a consideration of how imperfect markets can lead to unfair contract terms. 4 See Leff, “Unconscionability and the Crowd – Consumers and the Common Law Tradition” (1970) 31 University of Pittsburgh Law Review 349 at 351 and Schwartz and Wilde, “Intervening in Markets on the Basis of Imperfect Information: A Legal and Economic Analysis” (1979) 127 University of Pennsylvania Law Review 630 at 682.
[5.10]
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• telephony services, internet access services, and computer softwares licences;5 • banking and finance services, including agreements for the supply of credit; • domestic building contracts; • gymnasium memberships; • motor vehicle contracts; • travel (airline tickets, car hire); and • utility service contracts (gas, electricity and water).6 Although specific terms of a contract may be disclosed, unsophisticated or uneducated consumers may not be capable of comprehending the meaning or effect of those terms. Consequently, mandatory disclosure may not result in consumers avoiding unfair terms or preventing suppliers relying on them. It is now generally accepted that there is a need for government intervention which prohibits certain types of unfair contract terms, while at the same time seeking to maximise individual freedom of contract. Unfair terms in contracts were previously regulated by Pt 2B of the Fair Trading Act 1999 (Vic) (FTA 1999 (Vic)) which took effect in 2003. Attempts by the Ministerial Council on Consumer Affairs (MCCA) to devise national legislation along the lines of the Victorian model stalled when the Regulatory Impact Statement (RIS) did not meet the required standard providing only anecdotal evidence of detriment from the use of unfair terms.7
[5.10] In 2008 the Productivity Commission (PC) recommended that unfair terms should be regulated by the ACL.8 The PC acknowledged that the regulation of unfair terms by the unconscionability provisions of the ACL was “costly, slow and uncertain”.9 Two principal rationales were advanced by the PC for such a scheme – one ethical and the other economic. The PC was of the view that such a scheme could be justified as an extension of ethical principles about fairness in contracts, the aim of the proposed law being to cover terms that appear to be manifestly
5 See Trackman, “The Boundaries of Contract Law in Cyberspace” (2009) International Business Law Journal 161; Clapperton and Corones, “Unfair Terms in “clickwrap” and Other Electronic Contracts” (2007) 35 Australian Business Law Review 152; and Paterson and Gadir, “Look at the Fine Print: Standard Form Contracts for Telecommunications Products and Consumer Protection Law in Australia” (2013) 37(1) University of Western Australia Law Review 45. 6 ACCC, A Guide to the Unfair Contract Terms Law (Canberra, 2010), p 4, [1.3]. 7 See Standing Committee of Officials of Consumer Affairs, “Unfair Contract Terms: A Discussion Paper” (2004); Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, 2008 Canberra), vol 2, p 149. 8 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, 2008 Canberra), vol 2, pp 168-9, Recommendation 7.1. 9 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, 2008 Canberra), vol 2, p 154.
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[5.10]
unfair.10 The scheme could also be justified on economic grounds, in that markets do not operate efficiently on the basis of sub-optimal risk assessments by consumers.11 The PC in its Review of Australia’s Consumer Policy Framework expressed the view that the aim of the proposed law regulating unfair terms was only to cover terms that are manifestly unfair.12 The Productivity Commission was cognisant of the fact that “[w]hatever their immediate benefits, barring unfair contract terms is likely to have some adverse knock-on impacts for consumers through higher prices (or lower quality goods and services),”13 and that regulatory action should only take place where net benefits are likely.14 According to the Minister who introduced the Bill into the House, the Hon Dr Craig Emerson MP: The law is not about the government telling business what to put into contracts. And it is not about undoing bad bargains and letting consumers walk away from poor choices. This reform is about making contracts clear in business-to-consumer transactions so that consumers can make an accurate assessment of the risks of signing a contract. And it is about ensuring that a business assesses its risk properly and does not use its stronger bargaining position to simply push all the risk away from itself.15
In 2015, the general protection against unfair terms was extended to small businesses by the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Act 2015 (Cth). The new law received Royal Assent on 12 November 2015 and takes effect 12 months after that date in order to allow businesses time to implement system changes and contract amendments to ensure compliance. The unfair terms prohibitions will only apply to small business contracts entered into or renewed, or terms of existing contracts that are varied, after 12 November 2016.16 It will not apply to small business contracts entered into before this date. The object of the extension of unfair contract term protections to small businesses is set out in the Decision Regulation Impact Statement: to promote fairness in contractual dealings with small businesses with regard to standard form contracts. This will reduce small business detriment and have positive impacts on the broader economy by increasing small business certainty and confidence, and providing for a more efficient allocation of risk. Small businesses, in dealing with other 10 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, 2008 Canberra), vol 2, pp 151 and 413-4. 11 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, 2008 Canberra), vol 2, pp 151 and 414-23. 12 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, 2008 Canberra), vol 2, pp 151 and 413-4. 13 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, 2008 Canberra), vol 2, p 155. 14 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, 2008 Canberra), vol 2, p 157. 15 The Hon Dr Craig Emerson MP, Second Reading Speech, House of Representatives, Hansard, 24 June 2009, p 6981 at 6983. 16 CCA, s 290A.
[5.15]
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businesses through standard form contracts, should have confidence that the contract they are offered is fair and reasonable and that the risks are allocated efficiently.17
It appears that the standard for establishing “unfairness” is a lower one than that for establishing “unconscionability”, although the approach to be adopted in relation to each has much in common. In Paciocco v Australia and New Zealand Banking Group, Allsop CJ observed: Although it can be accepted that unjustness and unfairness are of a lower moral or ethical standard than unconscionability … The characterisation of unjustness or unfairness is, of course, evaluative and a task to be carried out with a close attendance to the statutory provisions.18
Unfair terms: Victorian legislation [5.15] Unfair terms in contracts were first regulated in Australia by the inclusion of Pt 2B in the FTA 1999 (Vic) in 2003. Section 32Y of the FTA 1999 (Vic) provided that any unfair term in a consumer contract or any prescribed unfair term in a standard form contract was void. Section 32W of the FTA 1999 (Vic) provided: A term in a consumer contract is to be regarded as unfair if, contrary to the requirements of good faith and in all the circumstances, it causes a significant imbalance in the parties’ rights and obligations arising under the contract to the detriment of the consumer.
Section 32X of the FTA 1999 (Vic) provided considerations relevant to the conception of unfairness: Without limiting section 32W, in determining whether a term of a consumer contract is unfair, a court or the Tribunal may take into account, among other matters, whether the term was individually negotiated, whether the term is a prescribed unfair term and whether the term has the object or effect of– (a) permitting the supplier but not the consumer to avoid or limit performance of the contract; (b) permitting the supplier but not the consumer to terminate the contract; (c) penalising the consumer but not the supplier for a breach or termination of the contract; (d) permitting the supplier but not the consumer to vary the terms of the contract; (e) permitting the supplier but not the consumer to renew or not renew the contract; (f) permitting the supplier to determine the price without the right of the consumer to terminate the contract; (g) permitting the supplier unilaterally to vary the characteristics of the goods or services to be supplied under the contract; (h) permitting the supplier unilaterally to determine whether the contract had been breached or to interpret its meaning; (i) limiting the supplier’s vicarious liability for its agents; (j) permitting the supplier to assign the contract to the consumer’s detriment without the consumer’ consent; 17 Consumer Affairs Australia and New Zealand, Decision Regulation Impact Statement, Extending Unfair Contract Term Protections to Small Businesses (2015), p 11. 18 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [363]-[364].
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(k) limiting the consumer’s right to sue the supplier; (l) limiting the evidence the consumer can lead in proceedings on the contract; (m) imposing the evidential burden on the consumer in proceedings on the contract.
The statutory conception of unfairness was an evaluative standard to be understood by taking into account the relevant circumstances that Parliament identified in s 32X of the FTA 1999 (Vic) to assist in making the evaluative assessment.19 In Paciocco v Australia and New Zealand Banking Group, the Full Federal Court held that ANZ’s late payment terms were not unfair pursuant to ss 32W and 32X of the FTA 1999 (Vic). Allsop CJ stated: Considering the terms of s 32W of the FT Act, at the time of entry into the arrangements, did the provisions in question cause an imbalance in the parties’ rights and obligations to the detriment of the consumer? It is difficult to see why this would be so by reference to the matters in s 32X or otherwise. The provisions were clearly disclosed. In most instances, the fees could be avoided. No trickery took place. Although set by the bank in contracts of adhesion, the contracts were terminable at the will of the customer; and the fee could be avoided by the conduct of the customer that was not unreasonable – keeping to her or his contractual limits.20
Part 2B of the FTA 1999 (Vic) was repealed by the Fair Trading Amendment (Unfair Contract Terms) Act 2010 (Vic) which gave effect to the unfair terms provisions of the ACL as a law of Victoria. The FTA 1999 (Vic) was repealed by s 233 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) (ACLFTA 2012 (Vic)).
CONTRACTS AND TERMS EXEMPT FROM REVIEW [5.20] Unfair contract terms in standard form consumer contracts and small business contracts are regulated by Pt 2-3 of the ACL. Before analysing s 23 of the ACL and the other operative provisions relating to unfair terms, the contracts and terms exempt from review will be considered. Section 26 provides: (1) Section 23 does not apply to a term of a consumer contract to the extent, but only to the extent, that the term: (a) defines the main subject matter of the contract; or (b) sets the upfront price payable under the contract; or (c) is a term required, or expressly permitted, by a law of the Commonwealth, a State or a Territory. (2) The upfront price payable under a consumer contract is the consideration that: (a) is provided, or is to be provided, for the supply, sale or grant under the contract; and (b) is disclosed at or before the time the contract is entered into; but does not include any other consideration that is contingent on the occurrence or non-occurrence of a particular event.
Term defining the main subject matter [5.25] As regards the meaning of the term “the main subject matter of the contract”, the Second Explanatory Memorandum accompanying the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, states: 19 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [355], and [363]-[364]. 20 Paciocco v Australia and New Zealand Banking Group [2015] FCAFC 50 at [358].
[5.30]
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The exclusion of terms that define the main subject matter of a consumer contract ensures that a party cannot challenge a term concerning the basis for the existence of the contract. Where a party has decided to purchase the goods, services, land, financial services or financial products that are the subject of the contract, that party cannot then challenge the fairness of a term relating to the main subject matter of the contract at a later stage, given that the party had a choice of whether or not to make the purchase on the basis of what was offered. The main subject matter of the contract may include the decision to purchase a particular type of good, service, financial service or financial product, or a particular piece of land. It may also encompass a term that is necessary to give effect to the supply or grant, or without which, the supply or grant could not occur.21
Section 26(1)(a) implies that a distinction can be drawn between terms that define the main subject matter of the contract and incidental or ancillary terms. If a term relates to the main subject matter it is excluded from consideration under s 23(1) of the ACL. If a term relates to incidental subject matter it may be assessed under s 23(1) of the ACL.
Term setting the upfront price [5.30] The Productivity Commission in its Review of Australia’s Consumer Policy Framework gave the following reasons for excluding terms setting the upfront price from the unfair terms law: The argument for exclusion rests on the fact that prices are clearly visible to consumers and, unlike many other terms, cannot legitimately be seen as surprises veiled by a complex contract. Unless there are major barriers to effective competition, consumers can elect to avoid contracts with unfair prices. And where there are such barriers, competition policy is the more appropriate vehicle for achieving efficient prices rather than the discretionary use of unfair contracts law to impose de facto price controls.22
As regards the meaning of the term “the upfront price”, the Second Explanatory Memorandum accompanying the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, states: The upfront price payable under a consumer contract is consideration that is: • provided, or is to be provided, for the supply, sale or grant under the contract; and • is disclosed at or before the time the contract is entered into, but does not include any other consideration that is contingent on the occurrence or non-occurrence of a particular event. Consideration includes any amount or thing provided as consideration for the supply of a good, service, financial service, financial product or a grant of land. It would also include any interest payable under a consumer contract. The exclusion of upfront price means that a term concerning the upfront price cannot be challenged on the basis that it is unfair. Having agreed to provide a particular amount of consideration when the contract was made, which was disclosed at or before the time the 21 Second Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, at [5.59]-[5.61]. 22 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, 2008 Canberra), vol 2, pp 161-2.
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contract was entered into, a person cannot then argue that that consideration is unfair at a later time. The upfront price is a matter about which the person has a choice and, in many cases, may negotiate. The upfront price covers the cash price payable for a good, service, financial service, financial product or land at the time the contract is made. It also covers a future payment or a series of future payments. The definition also requires that the upfront price must be disclosed at or before the time the contract was entered into by the parties. In the case of most transactions this is reasonably straightforward, as a key pre-condition of the transaction occurring is an understanding of the price to be paid. A key consideration for a court in considering whether a future payment, or a series of future payments, forms the upfront price may be the transparency of the disclosure of such a payment, or the basis on which such payments may be determined, at or before the time the contract is made. In the context of non-financial services contracts, another relevant consideration is compliance with section 53C of the TPA (which commenced on 25 May 2009), which imposes specific obligations in relation to the disclosure of a single price in many cases. Other consideration (that is, further forms of consideration which are not part of the upfront price) under the consumer contract that is contingent on the occurrence or non-occurrence of a particular event, is excluded from the determination of the upfront price. Terms that require further payments levied as a consequence of something happening or not happening at some point in the duration of the contract are covered by the unfair contract terms provisions. Such payments are additional to the upfront price, and are not necessary for the provision of the basic supply, sale or grant under the contract.23
The exclusion of “any other consideration that is contingent on the occurrence or non-occurrence of a particular event” from the term “upfront price” would mean that the following provisions will be subject to scrutiny under the unfair terms provision of the ACL: • a term providing that additional amounts are payable in the event of default or untimely payment;24 • a term providing for early termination fees;25 • a term providing for capitalisation of interest;26 and • a term providing for a unilateral power to vary the upfront price payable under the contract.27
[5.35] A price escalation clause may be assessed for unfairness. It is one of the examples included in s 25 of the ACL, the non-exhaustive grey list of terms that may be unfair depending on the particular circumstances (see [5.160]).28 Such a 23 Second Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, at [5.62]-[5.70]. 24 Andrews v Australian and New Zealand Banking Group Ltd (2011) 288 ALR 611. 25 See ASIC, “Early Termination Fees for Residential Loans: Unconscionable Fees and Unfair Contract Terms, Regulatory Guide 220” (2010). 26 PSAL Ltd v Kellas-Sharpe [2012] QSC 31. 27 Paterson, Unfair Contract Terms in Australia (Lawbook Co, Sydney, 2012), pp 47-8 [4.130]-[4.170]. 28 ACL, s 25(1)(f).
[5.40]
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clause may be unfair because it allows the price to increase without giving the consumer or small business the right to terminate the contract. Whether it is unfair in the circumstances will depend on the size of the increase. It may be that a small increase is not unfair. Regulation 6(2) of the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR) states: (2) In so far as it is in plain intelligible language, the assessment of fairness of a term shall not relate – (a) to the definition of the main subject matter of the contract, or (b) to the adequacy of the price or remuneration, as against the goods and services supplied in exchange.
In Office of Fair Trading v Abbey National plc,29 the issue was whether charges for unauthorised overdrafts (when a customer withdrew money without prior arrangement with the bank) fell within the reg 6(2) exemption or whether they were reviewable for unfairness. The Supreme Court refused to interpret the two limbs together so the price or remuneration in reg 6(2)(b) was limited to sums reflecting the “essential” price or remuneration.30 The Supreme Court also held that determining what constituted the price or remuneration was a “matter of objective interpretation by the court”.31 Thus, whether a term is the price is a matter for the court and how a hypothetical reasonable person would view the term, not how actual consumers understood the term. The Supreme Court concluded that the relevant charges were part of the price and did fall within the exclusion. The overdraft charges were an important part of the banks’ revenue stream.32 Accordingly, they were not reviewable for fairness. The difference in wording between reg 6(2)(b) of the UTCCR, and s 26(1)(b) of the ACL suggests that the latter exclusion is confined to the essential “upfront” price. Any other price or remuneration payable under the contract is reviewable for unfairness under s 23(1) of the ACL.
Terms expressly permitted as a matter of law [5.40] As regards the meaning of “terms expressly permitted as a matter of law”, the Second Explanatory Memorandum accompanying the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, states: The exclusion of terms “required, or expressly permitted, by a law of the Commonwealth or a State or Territory” ensures that a court is not required to determine the fairness of terms that are required to be included, or expressly permitted to be included, in consumer contracts as a matter of public policy. There are many examples of mandated consumer contracts or terms that are required to be used or are expressly permitted to be used in 29 Office of Fair Trading v Abbey National plc [2009] UKSC 6; [2010] 1 AC 696. 30 Office of Fair Trading v Abbey National plc [2009] UKSC 6, [2010] 1 AC 696 at [31] (Lord Walker, with whom Lord Phillips, Baroness Hale and Lord Neuberger agreed). 31 Office of Fair Trading v Abbey National plc [2009] UKSC 6, [2010] 1 AC 696 at [113]. 32 Office of Fair Trading v Abbey National plc [2009] UKSC 6, [2010] 1 AC 696 at [47] (Lord Walker) and [88] (Lord Phillips).
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order to ensure the validity of specific transactions, which apply in the laws of the Commonwealth, the States or the Territories.33
For example, s 139A of the CCA expressly allows for a term that limits or excludes liability for a failure to comply with the consumer guarantees by suppliers of recreational services under the ACL. There are equivalent provisions in some, but not all, of the State and Territory jurisdictions. See [15.280] -[15.290].
Contracts excluded [5.45] The following contracts are expressly excluded by s 28 of the ACL: • • • •
a contract of marine salvage or towage; or a charter party of a ship; or a contract for the carriage of goods by ship;34 or constitutions of a corporation, managed investment scheme or other kind of body.35
The ACL does not apply to unfair terms in contracts for financial services. “Financial services” are excluded from the ACL by s 131A of the CCA. Contracts for financial services are separately regulated by ss 12BF – 12BM of the ASIC Act.36 Insurance contracts regulated by the Insurance Contracts Act 1984 (Cth) are also exempt from the unfair terms provisions of the ACL. Section 15 of the Insurance Contracts Act 1984 (Cth) provides that a contact of insurance is not capable of being made the subject of relief under any other Commonwealth or State Act. Relief is defined to include relief in the form of judicial review of a contract on the ground that it is “harsh, oppressive, unconscionable, unjust, unfair or inequitable”.
OPERATIVE PROVISIONS RELATING TO UNFAIR TERMS [5.50] The principal operative provisions relating to unfair terms are s 23(1) and (2) of the ACL which provide: (1) A term of a consumer contract or small business contract is void if: (a) the term is unfair; and (b) the contract is a standard form contract. (2) The contract continues to bind the parties if it is capable of operating without the unfair term.
The supply is not required to be from a person “in trade or commerce”. Under the ACL (Cth) the supply must be by a corporation.37 Under the ACL (Application 33 Second Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, at [5.71]. 34 Section 28(2) of the ACL provides that the reference to a contract for the carriage of goods by ship includes a reference to any contract covered by a sea carriage document within the meaning of the amended Hague Rules referred to in the Carriage of Goods by Sea Act 1991 (Cth), s 7(1). 35 Section 28(3) of the ACL states that “constitution” refers to a constitution within the meaning of Corporations Act 2001 (Cth), s 9. 36 See [5.195]-[5.245]. 37 CCA, s 131(1).
[5.60]
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Acts) the supply may be by a corporation or a natural person, partnership or other entity and there is no requirement that the supply be “in trade or commerce”. The three requirements that need to be satisfied are: • the contract must be a consumer contract or a small business contract; • the contract must be a standard form contract; and, • the contract must contain a term that is unfair.38 It seems that the time at which unfairness is to be assessed is the time at which the contract is formed.39 Each requirement will be considered in turn.
FIRST REQUIREMENT: CONSUMER CONTRACT OR SMALL BUSINESS CONTRACT [5.55] The first requirement that must be satisfied is that the contract at issue must be a “consumer contract” or a “small business contract”. Consumer contract [5.60] Section 23 was originally introduced as part of the ACL by the Trade Practices Amendment (Australian Consumer Law) Act (No 1) 2009 (Cth) and took effect on 1 July 2010. The unfair terms provisions of the ACL apply to contracts in which the supplier is a corporation from that date. The unfair terms provisions of the ACL (Application Acts) apply to contracts between suppliers (persons or corporations) within the jurisdiction or connected to the jurisdiction, and took effect on 1 January 2011. Section 23(3) provides: A consumer contract is a contract for: (a) a supply of goods or services; or (b) a sale or grant of an interest in land;
to an individual whose acquisition of the goods, services or interests is wholly or predominantly for personal, domestic or household use or consumption. Section 23(3) adopts a subjective approach and defines consumer contracts by reference to the purposes for which the goods or services in question were acquired. The definition in s 23(3) does not limit the goods or services that may be the subject of consumer contracts to things of a personal, domestic or household nature. The focus is on the purpose or reason of the individual who acquired the goods or services. Potentially, any goods or services or interests in land may be the subject of consumer contracts provided the subjective purpose of the acquirer is wholly or predominantly for personal, domestic or household use, and not for business purposes. If land is acquired as a personal investment it may be held to be acquired 38 See R V Miller, Australian Competition and Consumer Law Annotated (37th ed, Lawbook Co, Sydney, 2015), at [1.S2.23.20]-[1.S2.23.90]. 39 Ferme v Kimberley Discovery Cruises Pty Ltd [2015] FCCA 2384 (2 September 2015) at [58] (Judge Jarrett).
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[5.65]
for a business purpose.40 A standard form contract for a sale of land, house or unit, lease, or easement will be a “consumer contract” subject to the unfair terms provisions of the ACL provided that the subjective purpose of the acquirer is wholly or predominantly for personal, domestic or household use. A mortgage in relation to a domestic dwelling will also be a “consumer contract”; however, as a financial service it would be subject to the unfair terms provisions of the ASIC Act, rather than the ACL. The definition of “consumer contract” in s 23(3) may create uncertainty in some situations. First, the purpose of the consumer may not be known to a business supplier and so may make it difficult for the supplier to know which contracts are “consumer contracts”. For example, a contract for the supply of car hire services will be a “consumer contract” if they are acquired by the hirer for the purpose of personal holiday travel; but it will not be a “consumer contract” if the car hire services are acquired for the purpose of attending a business meeting.
[5.65] Another area of potential uncertainty is where the contract is to acquire goods or services for dual purposes. For example, furniture may be acquired by a sole trader for a home office, but the furniture may be used concurrently by the trader’s family for personal purposes. Section 4F(1)(b) of the CCA may be of assistance in this regard. Section 4F(1)(b) of the CCA provides that a person shall be deemed to have engaged in conduct for a particular purpose or a particular reason, if the person engaged or engages in the conduct for purposes that included or include that purpose or for reasons that included or include that reason and that purpose or reason was a substantial purpose or reason. This necessitates an enquiry into the subjective purpose or purposes of the individual who acquired the goods or services. It is clear from s 4F(1)(b) that even if the acquirer has a consumer purpose and a commercial purpose, it will still be a “consumer contract” if the consumer purpose was operative on the acquirer’s mind and was substantial among the operative ones. As regards the meaning of “substantial” in s 4F(b)(ii) of the TPA, Heerey J expressed the view in Monroe Topple & Associates v Institute of Chartered Accountants that it is used in the sense of considerable or large: Did the proscribed purpose, if it existed, loom large among the objects the corporation sought to achieve?41
Finally, it seems that the time for ascertaining purpose is the time when the contract was entered into, and that if the acquirer’s purpose in using the goods or services subsequently changes from a commercial purpose to a consumer one, the unfair terms regime will not apply. For example, a trader may purchase a mobile phone for business use, but subsequently give it to a member of the family for personal purposes. It will not be a consumer contract.
40 Leveraged Equities Ltd v Goodridge [2011] FCAFC 3 at [416]-[417] (Jacobson J with whom Finkelstein and Stone JJ agreed). 41 Monroe Topple & Associates v Institute of Chartered Accountants (2002) 122 FCR 110 at [97].
[5.75]
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The definition of “consumer” in s 3 of the ACL differs from the definition of a “consumer contract” in s 23(3) for the purposes of the unfair terms provisions. The definition in s 3 adopts an objective test that focuses on the uses to which the goods or services are ordinarily put.42 Attempts to circumvent the application of the unfair terms provisions of the ACL by requiring an individual to sign a declaration that the goods or services are being acquired for a business or investment purpose, when this is inconsistent with the individual acquirer’s true purpose should be carefully scrutinised. They may, themselves, be held to constitute unfair terms. Section 25(l) gives, as an example of a term that may be unfair, a term that limits, or has the effect of limiting, the evidence one party can adduce in proceedings relating to the contract. The supply of goods or services or the sale of an interest in land must be to an individual. The term “individual” is defined in the Acts Interpretation Act 1901 (Cth) to mean a natural person. Thus, unlike the general protections for misleading conduct and unconscionable conduct considered in Chapters 3 and 4 respectively, bodies corporate are precluded from relying on the general protection for unfair terms. However, the more egregious unfair terms in contracts between bodies corporate may be challenged under the unconscionable conduct provisions of the ACL. See [4.80] and [4.105].
Small business contract [5.70] Section 23 was extended to small business contracts by the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Act 2015 (Cth). The provisions apply to small business contracts entered into or amended or renewed after 12 November 2016. In the case of application to small businesses, one party to the contract must be a business within the definition contained in s 23(4) which provides: (4) A contract is a small business contract if: (a) the contract is for a supply of goods or services, or a sale or grant of an interest in land; and (b) at the time the contract is entered into, at least one party to the contract is a business that employs fewer than 20 persons; and (c) either of the following applies: (i) the upfront price payable under the contract does not exceed $300,000; (ii) the contract has a duration of more than 12 months and the upfront price payable under the contract does not exceed $1,000,000. (5) In counting the persons employed by a business for the purposes of paragraph (4)(b), a casual employee is not to be counted unless he or she is employed by the business on a regular and systematic basis.
A business
[5.75] The small business can be the supplier or the acquirer under the contract. No particular business entity is specified so that the business may be conducted by natural persons, a body corporate, a partnership, trust or joint venture. The 42 See [8.70]-[8.115].
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[5.80]
definition of the word “business” in s 2 of the ACL includes a not-for- profit business, but does not elaborate any further. It is necessary to consider whether the particular activity constitutes a business in the ordinary sense. It would include activities such as supplying goods or services for remuneration or buying and reselling goods. There must always be present some element of commerciality, in the sense of income production, but as to what is a sufficient degree of commerciality is a question of fact in each case.43 In Spriggs v Federal Commissioner of Taxation, the High Court stated: The existence of a business is a matter of fact and degree. It will depend on a number of indicia, which must be considered in combination and as a whole. No one factor is necessarily determinative. Relevant factors include, but are not limited to, the existence of a profit-making purpose, the scale of activities, the commercial character of the transactions, and whether the activities are systematic and organised, often described as whether the activities are carried out in a business-like manner.44 (citations omitted)
The word “business” is used in s 2A of the CCA to bind the Crown in right of the Commonwealth to the CCA (including the ACL) in so far as the Crown in right of the Commonwealth “carries on a business” (see [2.55]). The jurisprudence in construing the word “business” in that context may be applicable in construing the word “business” in the context of s 23 of the ACL. It has been held that the concept of “carrying on a business” involves an element of repetition and continuity, so that an isolated or “one-off” transaction will not amount to carrying on a business.45 In Hope v Bathurst City Council, Mason J stated: It is the words “carrying on” which imply the repetition of acts and activities which possess something of a permanent character.46
Section 23 of the ACL does not require that the business be “carried on”, so that the repetition of acts and activities does not become necessary in order to invoke the protection of s 23(1). Section 23(4)(b) requires that, at the time the contract is entered into, the small business protected must employ fewer than 20 persons. Many small businesses involve activities with an element of repetition and continuity, but it is possible to envisage a small business being established to perform an isolated or one-off transaction, for example, the sale of an investment property by the trustee of a family trust, or the renting of properties by a trust.47 That employs fewer than 20 persons
[5.80] In calculating persons employed, each full-time, part-time and casual employee constitutes one person. Section 23(5) of the ACL provides that only 43 Hope v Bathurst City Council (1980) 144 CLR 1 at 8 (Mason J, with whom Gibbs and Stephen JJ agreed). 44 Spriggs v Federal Commissioner of Taxation (2009) 239 CLR 1 at [59] (French CJ, Gummow, Heydon, Crennan, Kiefel and Bell JJ). 45 See, eg, JS McMillan Pty Ltd v Commonwealth (1997) 77 FCR 337 at 356 (Emmett J) applying Smith v Capewell (1979) 142 CLR 509 at 517; State of New South Wales v RT & YE Falls Investments Pty Ltd [2001] NSWSC 1027 at [78] (Palmer J); and Tycoon Holdings Ltd v Trencor Jetco Inc (1992) 34 FCR 31 at 38 (Wilcox J) in relation to s 5(1) of the TPA which extended to conduct by bodies corporate “carrying on business within Australia”. 46 Hope v Bathurst City Council (1980) 144 CLR 1 at 8 citing Smith v Anderson (1880) 15 Ch D 247 at 277-8. 47 Mould v Commissioner of State Revenue [2015] VSCA 285.
[5.90]
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casual employees who are employed on a regular and systematic basis are to be counted for the purposes of s 23(4)(b) of the ACL. Section 384(2) of the Fair Work Act 2009 (Cth) provides that a period of employment can include a period of casual employment if the employment was on a regular and systematic basis and during the period of service as a casual employee, the employee had a reasonable expectation of continuing employment by the employer on a regular and systematic basis.48 Employees who are engaged on a seasonal roster will not be included. Upfront price
[5.85] The contract entered into by the small business is limited by the upfront price of the contract. “Upfront price” is defined in s 26(2) of the ACL (see [5.20] and [5.30]). It includes all consideration provided under a contract at any time during the contract term so long as the consideration, or the basis on which it is to be determined, are disclosed before the contract is entered into. It does not include other consideration if it is “contingent”. For example, the upfront price in a contract for the sale of land would include the purchase price and any adjustments to the price for outgoings, but not any contingent payments which are additional to the upfront price. SECOND REQUIREMENT: STANDARD FORM CONTRACT [5.90] Section 23(1) only applies if the consumer contract or the small business contract at issue is a “standard form contract”. The Productivity Commission in its Review of Australia’s Consumer Policy Framework gave the following reasons for excluding negotiated contracts from the unfair terms law: Negotiated contracts, by their nature, require parties to explicitly consider and tailor the terms and conditions. Parties can seek to eliminate any terms seen as unfair in such contracts. Indeed, even apparent “standard-form” contracts can be negotiated contracts if parties routinely strike out or alter existing terms that they do not believe to be appropriate. Negotiation also typically occurs for more costly products and often will involve intermediaries because they have professional competence in interpreting the terms and conditions. In that context, parties to negotiated contracts, or their agents, are usually sufficiently sophisticated to ensure acceptable contract outcomes and can reasonably be expected to have their “eyes wide open”. The application of an unfair contracts law in this situation would undermine parties’ diligence in considering the full terms of the contract. Accordingly, it would only be appropriate for a court or tribunal to void negotiated terms in highly special circumstances.49
The term “standard form contract” is not exhaustively defined s 27(2) of the ACL. It merely provides that in deciding whether a contract is a standard form contract, a court may consider any matter that it thinks relevant, but must consider: (a) whether one of the parties has all or most of the bargaining power relating to the transaction; 48 Fair Work Act 2009 (Cth), s 384. 49 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, 2008 Canberra), vol 2, p 161.
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(b) whether the contract was prepared by one party before any discussion relating to the transaction occurred between the parties; (c) whether another party was, in effect, required either to accept or reject the terms of the contract (other than the terms referred to in s 26(1)) in the form in which they were presented; (d) whether another party was given an effective opportunity to negotiate the terms of the contract that were not the terms referred to in s 26(1); (e) whether the terms of the contract (other than the terms referred to in s 26(1)) take into account the specific characteristics of another party or the particular transaction; (f) any other matter prescribed by the regulations.
[5.95] Imbalance of bargaining power is also a factor that a court may consider in relation to statutory unconscionability under s 21 of the ACL.50 Apart from obvious cases where one party is suffering from a special disadvantage (such as where the buyer is elderly,51 or there is a lack of education and lack of assistance or explanation when assistance or explanation is necessary,52 or a lack of or limited comprehension of the English language53), s 27(2)(a) (imbalance of bargaining power) is likely to apply in circumstances where there is only one or a small number of suppliers, or because the transaction costs associated with searching for alternative suppliers are prohibitive. In ACCC v ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Ltd),54 it was held the patients who were subjected to high pressure selling techniques suffered from a significant imbalance of bargaining power. The ACCC published A Guide to the Unfair Contract Terms Law, which set out its views on the meaning of the law and the way that it will enforce compliance with the law.55 According to the Guide, whether a contract is, in fact, a standard form “is properly assessed on an individual contract-by-contract basis based on how each of the factors applies to the facts of the case”.56 This suggests that evidence of whether a particular consumer contract is frequently negotiated with consumers is not relevant to whether the specific contract at issue is a standard form contract. This may mean substantially similar contracts are sometimes caught by the unfair terms regime and sometimes not. In relation to s 27(2)(b), it would seem that the contract does not have to be physically prepared before discussion occurs. According to the ACCC Guide, standard form contracts may be made orally. 50 ACL, s 22(1)(a). See [4.100]. 51 Anthony v Vaclav [2009] VSC 357. 52 Blomley v Ryan (1956) 99 CLR 362 at 405, 415 (Kitto J). 53 ACCC v Dukemaster Pty Ltd (2009) ATPR ¶42-290. 54 ACCC v ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Ltd) [2015] FCA 368 at [947]. 55 ACCC, A Guide to the Unfair Contract Terms Law (Canberra, 2010). 56 ACCC, A Guide to the Unfair Contract Terms Law (Canberra, 2010), p 5 [1.4].
[5.105]
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In relation to s 27(2)(c), non-negotiable terms are also a factor that a court may consider in relation to statutory unconscionability under s 21 of the ACL.57 Section 27(2)(d) is likely to be construed to mean that the consumer must be given an effective opportunity to influence the substance of a term.58 It will not suffice to give the consumer the potential to ask the respondent to negotiate or vary a term of the contract, or the opportunity to seek legal advice in relation to a concluded agreement.59 In relation to s 27(2)(e), it is unclear to what extent the terms must take into account the specific characteristics of another party or the transaction. It may be possible to insert special conditions requested by another party into an otherwise standard form contract, and avoid falling within the category of “standard form contract” for the purposes of s 23(1)(b).
Rebuttable presumption [5.100]
Section 27(1) of the ACL provides that if a party to a proceeding alleges that a contract is a standard form contract, it is presumed to be a standard form contract, unless another party to the proceeding proves otherwise. The rationale for this presumption is that the claimant/consumer or small business has evidence of only one contract (their own), whereas the respondent/supplier is best placed to provide evidence regarding the nature of the contract it issues, and the way in which it deals with other consumers or small businesses, including whether negotiations are normally conducted.60
THIRD REQUIREMENT: UNFAIR TERM Meaning of unfair: four part test [5.105]
If the term at issue is not excluded as a core term, the next question to consider is whether it falls within the definition of “unfair”. The test of what is “unfair” is the same for consumers and small businesses. The test falls into four parts. The first part of the test requires the court to consider the term at issue itself.61 The second part of the test requires the court to consider contextual matters surrounding the formation of the contract containing the term.62 The third part of the test requires the court to consider whether the term was transparent.63 The fourth part of the test requires the court to consider the term at issue in the context 57 ACL, s 22(1)(j)(i). See [4.165]. 58 Ferme v Kimberley Discovery Cruises Pty Ltd [2015] FCCA 2384 (2 September 2015) at [46] (Judge Jarrett). 59 UK Housing Alliance (North West) Ltd v Francis [2010] EWCA Civ 117 (24 February 2010). 60 Second Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, at [5.73]. 61 ACL, s 24(1). 62 ACL, s 24(2). 63 ACL, s 24(2)(a).
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of the contract as a whole.64 In determining whether each of the elements of unfairness is satisfied the court obtains guidance from the indicative “grey” list in s 25 of the ACL.
First part: the term itself [5.110]
Section 24(1) of the ACL provides that a term of a consumer contract or small business contract will be “unfair” if: (a) it would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and (b) it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and (c) it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.
Each element of unfairness focuses on the term itself and appears to preclude consideration of any additional matters such as, the circumstances surrounding its exercise, or the conduct of the parties during pre-contractual negotiations. In ACCC v Chrisco Hampers Australia Ltd65 (Chrisco case), the Federal Court had to consider whether the HeadStart term inserted by Chrisco Hampers Australia Ltd into its lay-by contracts with consumers was unfair within the meaning of s 24 of the ACL. The HeadStart term allowed Chrisco to continue to take payments by direct debit from the consumer’s bank account even after the consumer had made full payment for the lay-by order. The term would apply unless the consumer opted out of it. The money withdrawn from the consumer’s bank account would then be used for any future order made by the consumer. If the consumer did not place an order and requested a refund of the money paid, the money would be refunded without interest. Edelman J said: The legislative concept of “unfairness” in s 24, with elaboration through the three elements of unfairness, might be described as a guided form of open-ended legislation.66
First element: significant imbalance in parties’ rights and obligations
[5.115]
Under the first element, the onus is placed on the claimant to prove that on the balance of probabilities the term at issue would cause a significant imbalance in the parties’ rights and obligations arising under the contract.67 The Second Explanatory Memorandum accompanying the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, provides little in the way of guidance as to the meaning of “significant”. It merely states that: “This will involve a factual determination of whether any such significant imbalance would exist”.68 It also
64 ACL, s 24(2)(b). 65 ACCC v Chrisco Hampers Australia Ltd [2015] FCA 1204. 66 ACCC v Chrisco Hampers Australia Ltd [2015] FCA 1204 at [40]. 67 Second Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, at [5.24]. 68 Second Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, at [5.23].
[5.115]
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states: “A lack of transparency in the terms of a consumer contract may be a strong indication of the existence of a significant imbalance in the rights and obligations of the parties under the contract”.69 According to its ordinary dictionary definition, “significant” as an adjective means “important” or “of consequence”.70 The Productivity Commission in its Review of Australia’s Consumer Policy Framework expressed the view that the aim of the proposed law regulating unfair terms was only to cover terms that are manifestly unfair.71 The Productivity Commission was cognisant of the fact that “[w]hatever their immediate benefits, barring unfair contract terms is likely to have some adverse knock-on impacts for consumers through higher prices (or lower quality goods and services)”,72 and that regulatory action should only take place where net benefits are likely.73 The Productivity Commission concluded: The application of any law regarding unfair contract terms should be designed so that the benefits for unfairly treated consumers are not offset by any incidental costs to consumers generally. In effect, this is nothing more than the requirement to consider the overall public interest in applying the law… Among other matters, a regulator (and any court) might be expected to take into account: • the extent of consumer detriment (realised or likely); • the degree to which the contract term reduced transactions costs in its current (and proposed) forms; • any effects (adverse or favourable) on risk allocation and prices; and • whether voiding (or changing) terms for groups of affected consumers could encourage inappropriate behaviour by some consumers to the ultimate detriment of consumers as a whole. In other words, the regulator would need to take account of “all the circumstances of the contract” and evidence of detriment.74
As regards the fourth bullet point, the Productivity Commission identifies the following inappropriate behaviour of some consumers: they may not be careful in using their purchases, conceal damage they have done to a rented asset, or seek to extract themselves from contracts that require businesses to commit significant upfront resources … Crucially, unlike businesses, consumers do not generally have a brand name or reputation to lose from such conduct. It is hard for suppliers to foresee all the forms that such conduct might take, hence the need for disclaimers that deal with unspecified contingencies. As a result, what appears to be 69 Second Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, at [5.38]. 70 Macquarie Dictionary (4th ed 2005), p 1314. See also The Oxford English Dictionary (2nd ed Clarendon Press, Oxford, 1989), Vol XV, p 458. 71 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, 2008 Canberra), vol 2, pp 151 and 413-514. 72 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, 2008 Canberra), vol 2, p 155. 73 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, 2008 Canberra), vol 2, p 157. 74 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, 2008 Canberra), vol 2, pp 159-60.
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one-sided contracts may sometimes better protect the bulk of customers from the behaviour of the few, than balanced contracts.75
The requirement of a “significant imbalance” is also contained in the Unfair Term in Consumer Contracts Regulations 1994 (UK). Regulation 5(1) provides that a contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.
In Director-General of Fair Trading v First National Bank plc,76 Bingham LJ stated that the requirement of a significant imbalance is met if “a term is so weighted in favour of the supplier as to tilt the parties’ rights and obligations under the contract significantly in his favour. This may be the granting to the supplier of a beneficial option or discretion or power, or by imposing on the consumer of a disadvantageous burden or risk or duty”.77 In the Chrisco case, Edelman J proceeded on the basis that Lord Bingham’s definition was an appropriate meaning to be given the notion of “significant imbalance”.78 In relation to the unfair terms regime under the repealed ss 32W and 32X of the FTA 1999 (Vic), in Jetstar Airways Pty Ltd v Free,79 Cavanough J stated that the lack of individual negotiation of the contract between the supplier and the consumer was not relevant to whether the impugned term causes a significant imbalance in the parties’ rights and obligations under the contract.80
[5.120]
In the Chrisco case, Edelman J accepted that the lack of negotiation of the contracts between Chrisco and its customers was not relevant in considering whether the HeadStart term caused a significant imbalance in the parties’ rights and obligations.81 In relation to the first element, in the Chrisco case, Edelman J concluded: Ultimately, it suffices to say that the sums of money lost by Chrisco’s withdrawals from the consumer’saccount, without any obligation upon Chrisco to pay interest and with no discount for the consumer who subsequently chose to place an order, involved a significant detriment to the consumer. That detriment was not balanced by any substantial corresponding right that the consumer obtained against Chrisco. By itself, it is not necessarily determinative that there is no substantial right to a consumer, or duty upon Chrisco, that corresponds with the consumer’s obligations under the HeadStart
75 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, 2008 Canberra), vol 2, p 151. See Bebchuck and Posner, “One-Sided Contracts in Competitive Consumer Markets” (2006) 104 Michigan Law Review 827. 76 Director-General of Fair Trading v First National Bank plc [2002] 1 AC 481. 77 Director-General of Fair Trading v First National Bank plc [2002] 1 AC 481 at 481 [17]. 78 ACCC v Chrisco Hampers Australia Ltd [2015] FCA 1204 at [49]. See also ACCC v ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Ltd) [2015] FCA 368 at [950] (North J). 79 Jetstar Airways Pty Ltd v Free [2008] VSC 539. 80 Jetstar Airways Pty Ltd v Free [2008] VSC 539 at [112]. 81 ACCC v Chrisco Hampers Australia Ltd [2015] FCA 1204 at [50].
[5.120]
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term. The evaluative exercise involves consideration of the contract as a whole to determine whether there is a significant imbalance in the parties’ rights and obligations arising under the contract.82
In ACCC v ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Ltd),83 Advanced Medical Institute Pty Ltd (AMI) conducted a business promoting and supplying medication and services for the treatment of male sexual dysfunction. AMI was placed into voluntary administration on 22 December 2010, the day after the ACCC instituted proceedings against it. AMI continued to trade during its voluntary administration but in June 2011, sold the AMI business to NRM. Shortly afterwards, AMI was placed into voluntary liquidation. NRM conducted the AMI business following its acquisition in June 2011. The ACCC alleged that NRM’s contracts for the treatment of male sexual dysfunction contained an unfair term in relation to the termination of a contract. NRM patients were required to provide 30 days’ written notice to NRM to terminate the contract and were required to pay a number of fees including a fixed administrative fee of 15% of the original contract price. The ACCC alleged that each of the fees had the effect of penalising a consumer who gave notice of termination and therefore causing a significant imbalance in the parties’ rights under the contract. The court concluded: The NRM refund term required the patient to pay a 15% administration fee, a pro-rata fee for the expired portion of the treatment, a pro-rata fee for the 30-day notice period, and the cost of medication supplied or prepared for the patient. The term operated whether the reason for the termination was a change of mind very soon after the phone consultation, a severe adverse side effect, or where the medication proved ineffective. The term thus caused detriment to the patient, if relied upon, within the meaning of s 24(1)(c). It also caused a significant imbalance in the parties’ rights and obligations because it had the effect of binding patients to continue treatment in disadvantageous circumstances, or alternatively suffer a financial penalty.84
In summary, it appears that “significant” in s 24(1)(a) of the ACL means an imbalance of bargaining power that is “meaningful” or “of consequence” and “more than trivial”, such that it is deserving of the intervention of the court to avoid the realised or likely consumer detriment. Whether a particular term creates a “significant imbalance” will entail a factual inquiry taking into account a number of contextual factors including those identified by the Productivity Commission set out in [5.115]. As the Productivity Commission observes, while some contract terms, such as those imposing disproportionate penalties for a technical breach, are intrinsically unfair in all contexts, others will only be unfair in the case of inappropriate use.85 Section 24(2) of the ACL provides that in determining whether a term is unfair under s 24(1), the court may take into account such matters as it thinks relevant. The court is required to examine the term in the light of the other 82 ACCC v Chrisco Hampers Australia Ltd [2015] FCA 1204 at [69]-[70]. 83 ACCC v ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Ltd) [2015] FCA 368 (North J). 84 ACCC v ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Ltd) [2015] FCA 368 at [951]. 85 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, 2008 Canberra), vol 2, p 152.
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provisions of the contract (“the contract as a whole”), and to consider whether the detriment to the consumer arising from the term at issue is balanced by other terms in the contract which provide a “substantial corresponding right” in favour of the consumer or small business.86 Examples of terms creating a “significant imbalance”
[5.125]
The requirement of a “significant imbalance” was also contained in the Victorian definition of “unfair term” in s 32W of the FTA 1999 (Vic). In Director of Consumer Affairs Victoria v AAPT Ltd,87 Morris J found that the following terms in AAPT’s contract were one-sided and created a significant imbalance in the parties’ rights and obligations: Variations: We may vary any term of this Agreement at any time in writing. To the extent required by any applicable laws or determinations made by the Australian Communications Authority (ACA), we will notify you of any such variation.
Morris J found this term to be unfair because it permitted AAPT, but not the customer, to change the contract unilaterally. The term had the effect of permitting AAPT, but not the consumer, to avoid or limit the performance of the contract. Suspension: We reserve the right to suspend provision of Services to you, where charges owing to us or any amount owing under this clause remain outstanding after 60 days, unless we have received written notice from you disputing those charges in good faith. If we suspend or terminate the Services for unpaid charges or any other reason, subsequent reconnection may incur a reconnection fee. Morris J found that the second sentence of the term was unfair because went too far in providing that AAPT may charge a reconnection fee for “any other reason”. This could embrace a reason which did not involve any breach by the customer of its obligations under the contract. Liability to pay: Notwithstanding any suspension of the Services under this clause you shall remain liable for all charges due hereunder throughout the period of suspension (including without limitation all monthly access fees, and regardless of whether or not any SIM card has been disconnected from the Network) unless we in our sole discretion determine otherwise. Morris J found that Clause 9.2 was unfair because circumstances could arise where the service was suspended for a technical failure, and AAPT had a discretion as to whether or not to charge its customer during the period of suspension. Immediate termination: We may terminate this Agreement immediately by notice to you if: (a) you have breached this Agreement; (b) …; or (c) you change your address or billing contact details without notifying us in accordance with clause 7.4. 86 ACCC v Chrisco Hampers Australia Ltd [2015] FCA 1204 at [53] and [69]-[70]. 87 Director of Consumer Affairs Victoria v AAPT Ltd [2006] VCAT 1493. See also Director of Consumer Affairs Victoria v Craig Langley Pty Ltd (No 1 and No 2) [2008] VCAT 482 and [2008] VCAT 1332; and Director of Consumer Affairs Victoria v Trainstation Health Clubs Pty Ltd [2008] VCAT 2092.
[5.130]
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10.4 You remain liable for all charges payable under the Agreement in respect of Services up to the time of termination. Morris J found that these provisions potentially had broad application. A customer may have breached the Agreement in a manner that was inconsequential, but nevertheless faced the prospect of having the service terminated. Further, if the customer changed his or her address, this would also provide a ground for termination. Because these provisions were so broadly drawn, and one sided in their operation, they were unfair terms within the meaning of the FTA 1999 (Vic). Variations: To the extent permitted by law, AAPT may change a Supplier or its products, or vary our charges from time to time without notice to you. Otherwise, AAPT may vary these terms on 30 days written notice to you. Morris J found that this term was unfair because it caused a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer. For example, it would enable AAPT to reduce the number of calls that a person could make pursuant to a prepaid mobile phone service which the person had entered into in good faith.88 Second element: not reasonably necessary to protect legitimate interests
[5.130]
There are two aspects to the second element of the definition of “unfair” in s 24(1) of the ACL. First, it is necessary to establish that the respondent has a “legitimate interest”. Secondly, it is necessary to establish that the term in question was “reasonably necessary” to protect that interest. Section 24(4) provides that there is a rebuttable presumption that a term of a consumer contract is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term. The party who inserted the term and would be advantaged by it must prove that it is reasonably necessary to protect its legitimate interests. The reason for this is that the pertinent evidence is likely to be difficult for a consumer to obtain and relatively easier for the party who would advantaged by the term. Failure to adduce evidence that a term is reasonably necessary will result in the term being found to be not reasonably necessary. According to Second Explanatory Memorandum accompanying the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010: Where a claimant in proceedings has alleged that a term is unfair, it is for the respondent to establish that a term is reasonably necessary to protect its legitimate interests on the balance of probabilities. The respondent may introduce any evidence relevant to this element of the test. While it is ultimately a matter for the Court to determine whether a term is reasonably necessary to protect the legitimate interests of the respondent, the provision would require the respondent to establish, at the very least, that its legitimate interest is sufficiently compelling on the balance of probabilities to overcome any detriment caused to the consumer, or a class of consumers, and that therefore the term was “reasonably necessary”.89
88 Director of Consumer Affairs Victoria v AAPT Ltd [2006] VCAT 1493 at [49]-[54]. 89 Second Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, at [5.27]-[5.28].
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[5.130]
The ACCC, in its Guide to the Unfair Contract Terms Law states: This limb requires that the party advantaged by the term provide evidence to the court to demonstrate why it is necessary for the contact to include the term. Such evidence might include material relating to the business’ costs and business structure, the need for the mitigation of risks or particular industry practices to the extent that such material is relevant.90
This element of the of the definition of “unfair” in s 24(1) of the ACL is similar to the statutory factors for determining unconscionability in s 22(1)(b) and (2)(b) of the ACL which provide that the court may have regard to whether, as a result of conduct engaged in by one party, the other party was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier.91 Whether a particular term is reasonably necessary to protect the legitimate interests of the supplier will entail a factual inquiry taking into account a number of contextual factors including the following: • the risk inherent in the transaction from the supplier’s point of view and whether the term in question provides a degree of protection to the supplier that is disproportionate to that risk; and • industry norms and whether they are necessary to protect the supplier’s interest having regard to the particular consumer’s risk profile.92 In Ferme v Kimberley Discovery Cruises Pty Ltd,93 Kimberley Discovery Cruises Pty Ltd (KDC) offered cruises from Wyndham to Derby in Western Australia. As part of the contract with some of the applicants KDC agreed to transfer them from Darwin to Wyndham at the commencement of the cruise, and from Derby to Broome at the conclusion of the cruise, so that there was a dispute between the parties as to whether the contract was for a “cruise”, or a “holiday tour and a cruise”. The terms and conditions contained a “cancellation clause” which provided that if there were an “unexpected event” such as a tropical cyclone, KDC was entitled to cancel the cruise and the passenger accepted that they (the passenger) would not be entitled to any compensation or a refund of the fare paid. KDC cancelled the cruise because of a tropical cyclone, and the applicants’s insurer exercised its right of subrogation to recover from KDC the amounts paid by the applicants for their cruise on the basis that the cancellation clause was void under s 23(1) of the ACL. KDC argued that it had a legitimate interest, namely, reputation in the market (its business goodwill) and the preservation of the financial position of KDC.94 The fares that KDC retained by reason of the cancellation clause provided the funds necessary to meet the costs associated with the preparations undertaken for the cruise. There was evidence in the form of receipts and invoices for food, crew wages and fuel, but no breakdown of costs incurred leading up to the commencement of the cruise. The Federal Circuit Court held that the respondent 90 ACCC, A Guide to the Unfair Contract Terms Law (Canberra, 2010), p 11. 91 See [4.105]. 92 See PSAL Ltd v Kellas-Sharpe [2012] QSC 31. In Kowalczuk v Accom Finance Pty Ltd (2008) 229 FLR 4, a term providing for an interest rate of 75% was not reasonably necessary to protect the legitimate interest of the mortgagee and unjust under the Contracts Review Act 1980 (NSW). 93 Ferme v Kimberley Discovery Cruises Pty Ltd [2015] FCCA 2384 at [72]. 94 Ferme v Kimberley Discovery Cruises Pty Ltd [2015] FCCA 2384 at [73].
[5.135]
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had not proved that the cancellation clause was reasonably necessary in order to protect the legitimate interests of KDC. Judge Jarrett observed: If there was evidence of that nature and if the forfeiture term provided for a “sliding scale” of the amount that would be retained by the respondent in the event that the respondent cancelled a cruise, it might be the case that such a term would be reasonably necessary.95
His Honour also observed that: retaining the entire fare is perhaps just as likely to cause a loss of goodwill and lack of repeat business. The respondent’s strong suggestion in the Terms & Conditions that all passengers obtain their own travel insurance, highlights, in my view, the unfairness of the clause.96
Third element: detriment if applied or relied on
[5.135]
Under the third element of the definition of “unfair” in s 24(1) of the ACL, it is necessary to satisfy the court that the term would cause detriment to a party if it were to be applied or relied on. The Productivity Commission in its Review of Australia’s Consumer Policy Framework considered two possible models for the introduction of an unfair terms law: an ex ante model and an ex post model.97 The ex ante model would give the regulator the capacity to take pre-emptive action against unfair terms that would cause future detriment, even where the evidence of detriment was unclear. The ex post model would only permit the regulator to initiate action after the consumer had suffered a detriment from an unfair term. The Productivity Commission was inclined to the view that the ex post model was the preferable option and that intervention should only be permitted if there was evidence of material detriment to consumers, individually or as a class.98 The Productivity Commission was concerned about the risk of regulatory overreach and concluded that the ex post model was “a prudent approach given the uncertainty about the severity of the problem”.99 Contrary to the Commission’s recommendation, the Bill adopted the ex ante model and provided that there would need to be a “substantial likelihood” of detriment for a term to be unfair; however, these words were removed from s 24 which, in its final form, only requires that the term “would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on”. There must be evidence of actual detriment; however, it is not necessary to prove that actual detriment has been caused. In relation to this element of s 24(1), the Second Explanatory Memorandum accompanying the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, states: 95 Ferme v Kimberley Discovery Cruises Pty Ltd [2015] FCCA 2384 at [80]. 96 Ferme v Kimberley Discovery Cruises Pty Ltd [2015] FCCA 2384 at [85]. 97 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, 2008 Canberra), vol 2, pp 165-8. 98 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, 2008 Canberra), vol 2, pp 167-168. 99 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, 2008 Canberra), vol 2, p 167.
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[5.140]
In this regard, a term does not need to be enforced in order to be unfair, although the possibility of such enforcement may impact on the decisions made by the party that would be disadvantaged by the term’s practical effect, to that party’s detriment. Detriment is not limited to financial detriment. This is designed to allow the Court to consider situations where there may be other forms of detriment that have affected or may affect the party disadvantaged by the practical effect of the term. Where it is found that a term is unfair and there is only future detriment would arise from the application of or reliance on that term, then the remedies available would likely be limited to a declaration that the term is an unfair term and an injunction preventing the party advantaged by it applying or relying on it, or purporting to do so. Any form of compensatory remedy would likely be limited to those situations where there is material or actual detriment proven.100
Financial detriment is a reference to financial loss or expenditure; non-financial detriment may include mental distress, delay or inconvenience. In Ferme v Kimberley Discovery Cruises Pty Ltd, the court found that the cancellation clause would cause detriment, in particular financial detriment, if it were to be relied on.101
Second part: contextual considerations [5.140]
While s 24(1) appears to require that the assessment as to whether a particular term is unfair is to be made without consideration of the surrounding circumstances, s 24(2) provides that in determining whether a term of a consumer contract or small business contract is unfair under s 24(1), a court may take into account “such matters as it thinks relevant”. This allows a court to consider the context in which the term was inserted or exercised, and may convert a term that is unobjectionable on its face into an unfair term. The Productivity Commission drew attention to the importance of considering procedural aspects in seeking to regulate unfair terms in its Report on the Consumer Policy Framework: the rationale for action principally rests on the unreasonable use of unfair terms, not their existence. This is because, perceptions of their inherent unfairness aside, dormant unfair terms often do not cause detriment to consumers.102
Relevant matters might include: • whether the consumer or small business had a choice and alternative suppliers were available; and • whether the term at issue was in common use in the industry concerned.
Third part: transparency [5.145]
The third part of the test of unfairness contained in s 24(2)(a) requires the court to consider the extent to which the term is transparent. Section 24(3) provides:
100 Second Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, at [5.32]-[5.34]. 101 Ferme v Kimberley Discovery Cruises Pty Ltd [2015] FCCA 2384 at [89]. 102 Productivity Commission, Review of Australia’s Consumer Policy Framework (Final Report, 2008 Canberra), vol 2, p 152.
[5.145]
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A term is transparent if the term is: (a) expressed in reasonably plain language; and (b) legible; and (c) presented clearly; and (d) readily available to any party affected by the term.
Transparency is a procedural aspect of unfairness rather than a substantive aspect. It requires that an assessment be made as to whether a term has been sufficiently brought to the attention of the consumer. According to the Second Explanatory Memorandum accompanying the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010: Transparency, on its own account, cannot overcome underlying unfairness in a contract term. Furthermore, the extent to which a term is not transparent is not, of itself, determinative of the unfairness of a term in a consumer contract and the nature and effect of the term will continue to be relevant.103
It appears that the principal focus in determining whether a term is unfair will be on its substantive content and whether it creates a significant imbalance in the parties’ rights and obligations. If so it is likely to be held to be unfair even if it has been brought to the attention of the consumer. Others argue that procedural fairness should be the determinative consideration, since consumers are unlikely to read standard form contracts.104 Transparency requires that consumers must be given reasonable notice of unusual terms. The issue of lack of transparency arose for consideration in ACCC v Chrisco Hampers Australia Ltd. The HeadStart term had several characteristics that reduced transparency. Edelman J stated: The considerations relevant to assess the extent of transparency of the HeadStart term involve whether it is expressed in reasonably plain language; legible; presented clearly; and readily available to the consumer.105
The HeadStart term lacked transparency in the following respects. First, its meaning was not plain. It was not possible for consumers to determine the amount that would be automatically deducted from the consumer’s account if the consumer failed to opt out, and it was unclear as to how the consumer could cancel the automatic payments under the HeadStart plan. Secondly, the presentation of the HeadStart term was unclear. The font size of the HeadStart term was very small. Other terms were emphasised by the use of bright colours and larger font sizes. Thirdly, there was no cross-referencing as between the HeadStart term and the opt-out provision. Edelman J observed: Another difficulty with the legibility, clarity and availability of the HeadStart term is that although the HeadStart term and the opt-out provision were opposite each other in the four pages of the catalogue there was no reference in either to the other. The opt-out box 103 Second Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, at [5.39]. 104 See Pearson, “The Australian Unfair Contract Terms Law: the Rise of Substantive Unfairness as a Ground for Review of Standard Form Consumer Contracts” (2009) 33 Melbourne University Law Review 934 at 955. 105 ACCC v Chrisco Hampers Australia Ltd [2015] FCA 1204 at [75].
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to be ticked did not refer to the HeadStart term on the previous page nor did it explain what was involved in the HeadStart Plan. And the HeadStart term on the previous page did not refer to the possibility of opting out.106
Fourthly, the provision that the HeadStart plan was fully refundable was not contained in the terms and conditions at all; rather, it was contained in the opt-out box on the form that would be sent to Chrisco.107 Edelman J held: Overall, for the reasons I have expressed, and as an evaluative assessment of all the circumstances relevant to the HeadStart term including its transparency and the contract as a whole, the HeadStart term caused a significant imbalance in the parties’ rights and obligations arising under the contract.108
The Chrisco case demonstrates first, that lack of transparency can arise where terms are not expressed in “reasonably plain language”109 and the term and its effect cannot be understood in the context of the contract as a whole. If the impugned term raises questions, the answers to those questions must be “readily available” to the consumer elsewhere in the contract, or in another “contemporaneous document” or website.110 Secondly, the case demonstrates that a lack of transparency can arise from the order in which the terms appear in the contract and the visual lay-out of the document, including the font size of the term relative to other terms in the contract, and the use of colour, graphics, formatting and cross-referencing. Suppliers who include terms that are unusual and work to the disadvantage of the consumer in some way may need to actively assist consumers to understand their consequences if they are not to be held to lack transparency.
[5.150]
The issue or transparency arose under s 32W of the FTA 1999 (Vic) in Director of Consumer Affairs Victoria v Trainstation Health Clubs Pty Ltd.111 Clause 11 of a gym membership contract provided: Change of location of a club within 12 kilometres, or change of the name of a club, or change of the name of the operator, or change of ownership of the operator, or change of ownership of a club, does not absolve the customer, in any way at all, from honouring the terms of this contract.
In assessing whether Clause 11 was unfair for the purposes of s 32W of the FTA 1999 (Vic), Harbison J held: It is a term which in my view would surprise consumers. It is one which they would not expect. However, I can envisage that such a term might be perfectly fair if it was brought to a consumer’s attention prior to signing of a contract. It is true that the evidence of Hodges is that he did notice the clause at the time he signed a contract. However, I am deciding this question not in relation to any rights Hodges may have under his individual contract, but on the wording of the term within the context of the contract as a whole. I am entitled to take into account the position of the term in the contract. In particular, I can take into account the fact that it is given no prominence. It is 106 ACCC v Chrisco Hampers Australia Ltd [2015] FCA 1204 at [91]. 107 ACCC v Chrisco Hampers Australia Ltd [2015] FCA 1204 at [92]. 108 ACCC v Chrisco Hampers Australia Ltd [2015] FCA 1204 at [97]. 109 ACCC v Chrisco Hampers Australia Ltd [2015] FCA 1204 at [75]. 110 ACCC v Chrisco Hampers Australia Ltd [2015] FCA 1204 at [83]. 111 Director of Consumer Affairs Victoria v Trainstation Health Clubs Pty Ltd [2008] VCAT 2092.
[5.155]
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in the same typeface as all other terms. There is no evidence that the Respondent has employed any procedure to bring this requirement to the attention of the consumer. …in my view the concept of information imbalance can be applied to a situation where a term of significance, known to be potentially significant to a supplier, is not given due prominence in a contract so as to bring it to the consumer’s attention.112
However, procedural considerations such as drawing the consumer’s attention to a term in an open and transparent way prior to making the contract will not be sufficient to protect the other contracting party from a charge of unfairness. Substantive considerations must also be taken into account. A term may be substantively unfair if it is not balanced, and the supplier “uses it stronger bargaining position to simply push all the risk away from itself” on to the consumer. Edelman J in the Chrisco case left open the question “whether a lack of transparency could itself create an imbalance which does not otherwise exist”.113
Fourth part: contract as a whole [5.155]
The fourth part of the test of unfairness contained in s 24(2)(b) requires the court to consider the term in the context of the contract as a whole. Some contractual terms that appear to be unfair when viewed in isolation, might be considered to be fair in the context of the agreement as a whole: a harsh term may be necessary to ensure that the consumer obtains the goods or services at a lower price. The lower price is the trade-off for the harsh term.
The requirement to view the impugned term in the context of the contract as a whole was also a feature of the unfair terms regime under ss 32W and 32X of the FTA 1999 (Vic). In Free v Jetstar Airways Pty Ltd,114 the applicant purchased two Jetstar “Jet Saver” return tickets from Melbourne to Honolulu in May 2007 for a total cost of $874.98. One was booked in her name and the other in the name of her sister. In March, Mrs Free’s sister told her she was unable to travel as planned and Mrs Free then wished to take her niece instead. When Mrs Free called to request a name change she was informed that Jetstar only allowed a name change if the passenger paid a “change fee” of $75 per person (each way) plus the difference between the fare applicable on the date of purchase and the current fare. Mrs Free agreed to pay the additional sum of nearly $800 (including $150 “change fee” for flights to and from Honolulu and $600 as the difference between the cost of the Jet Saver ticket purchased for her sister and the cost of the same type of ticket in March when the name change was made) and subsequently brought an action claiming the “change fee” was unfair. Senior Member Vassie held: 112 Director of Consumer Affairs Victoria v Trainstation Health Clubs Pty Ltd [2008] VCAT 2092 at [145]-[148]. 113 ACCC v Chrisco Hampers Australia Ltd [2015] FCA 1204 at [74]. See Harder, “Problems in Interpreting the Unfair Contract Terms Provisions of the Australian Consumer Law” (2011) Australian Bar Review 306 at 317. 114 Free v Jetstar Airways Pty Ltd [2007] VCAT 1405.
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Accordingly, in my opinion, the terms in question, to the extent that they require payment of a fare difference when a name change is requested, cause a significant imbalance, to the detriment of purchasers from Jetstar, in the rights and obligations of the parties under the contract of sale, are “unfair” within the meaning of that word in Part 2B of the Act, and so are void by virtue of section 32Y(1). On the other hand I see nothing unfair in Jetstar requiring payment of a “change fee” to compensate it for the administrative work involved in effecting a change in the booking, whether it be a change of flight date, change of flight time or change of passenger name. There was no evidence of how the “change fee” of $75.00 per flight segment was arrived at but there does not seem to be anything obviously unreasonable about the figure. By virtue of section 32Y(3) the contract will otherwise be binding if it is capable of existing without an unfair term.115
This finding was overturned on appeal.116 Cavanough J held that when the contract was looked at as a whole, the term was not unfair. The consumer had purchased two less expensive and less flexible tickets: the trade-off for the cheap fare was that the flight and passenger details could not be changed without a fee being paid. However, the mere fact that the contract contains other terms that are favourable to the acquirer of the goods or services does not preclude a finding a no refund provision is unfair.117 It • • •
is submitted that the following matters will be relevant in applying s 24(2)(b): the purpose of the term which is alleged to be unfair; the consequences of failing to enforce it; and whether the term is necessarily related to the consumer achieving some other benefit under the contract.
Grey list: examples of terms that may be unfair [5.160]
Section 25 provides non-exhaustive examples of the kinds of terms that may, depending on the particular circumstances, be unfair (the grey list). The opening words of s 25 are “without limiting s 24”. Thus, whether the terms in the grey list are unfair will need to be tested by reference to the three limbs of s 24 and the surrounding circumstances of the particular case. The purpose of the grey list is to provide statutory guidance as to the terms that may be of concern; it does not create a presumption that those terms are unfair.118 The following examples are provided: (a) a term that permits, or has the effect of permitting, one party (but not another party) to avoid or limit performance of the contract;
115 Free v Jetstar Airways Pty Ltd [2007] VCAT 1405 [36]-[41]. 116 Jetstar Airways Pty Ltd v Free [2008] VSC 539. 117 See Kucharski v Air Pacific Ltd [2011] NSWCTTT 555 (28 November 2011). The applicant was forced to cancel “Saver fare” airline tickets purchased online one day after purchase because he was unable to obtain travel insurance. The online terms, which provided that the tickets were non-refundable and non-transferable, were not prominently displayed and were not included in the printed terms and conditions. Accordingly, they were not transparent within the meaning of s 60ZE(3) of the Fair Trading Amendment (Unfair Contract Terms) Act 2010 (NSW). The term was held to be void in accordance with s 60AD, and the applicant was entitled to a full refund. 118 Second Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, at [5.44].
[5.165]
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(b) a term that permits, or has the effect of permitting, one party (but not another party) to terminate the contract; (c) a term that penalises, or has the effect of penalising, one party (but not another party) for a breach or termination of the contract; (d) a term that permits, or has the effect of permitting, one party (but not another party) to vary the terms of the contract; (e) a term that permits, or has the effect of permitting, one party (but not another party) to renew or not renew the contract; (f) a term that permits, or has the effect of permitting, one party to vary the upfront price payable under the contract without the right of another party to terminate the contract; (g) a term that permits, or has the effect of permitting, one party unilaterally to vary the characteristics of the goods or services to be supplied, or the interest in land to be sold or granted, under the contract; (h) a term that permits, or has the effect of permitting, one party unilaterally to determine whether the contract has been breached or to interpret its meaning; (i) a term that limits, or has the effect of limiting, one party’s vicarious liability for its agents; (j) a term that permits, or has the effect of permitting, one party to assign the contract to the detriment of another party without that other party’s consent; (k) a term that limits, or has the effect of limiting, one party’s right to sue another party; (l) a term that limits, or has the effect of limiting, the evidence one party can adduce in proceedings relating to the contract; (m) a term that imposes, or has the effect of imposing, the evidential burden on one party in proceedings relating to the contract; (n) a term of a kind, or a term that has an effect of a kind, prescribed by the regulations.
What the terms have in common is that they give unilateral rights to one party and no rights to the other party in relation to matters such as varying, terminating and assigning the contract. The circumstances in which each of these examples may be unfair within the meaning of s 24 of the ACL are considered by the ACCC in its Guide to the Unfair Contract Terms Law.119
TERMS PRESCRIBED BY REGULATION [5.165]
The ACL provides that certain terms that are, in all the circumstances unfair, may be prescribed by regulation. The regulation-making power rests with the Australian Government Minister, who would prescribe terms in accordance with the national consumer law amendment process set out in the Intergovernmental Agreement.120
Section 25(2) provides: Before the Governor-General makes a regulation for the purposes of subsection (1)(n) prescribing a kind of term, or a kind of effect that a term has, the Minister must take into consideration: (a) the detriment that a term of that kind would cause to consumers; and (b) the impact on business generally of prescribing that kind of term or effect; and 119 ACCC, A Guide to the Unfair Contract Terms Law (Canberra, 2010), pp 15-22. 120 See [1.140].
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[5.170]
(c) the public interest.
EFFECT OF A TERM BEING DECLARED TO BE UNFAIR [5.170]
Only a court can determine whether a term in a standard form contract is unfair. Proceedings can be commenced in the Federal Court of Australia in relation to the ACL at a Commonwealth level after 1 July 2010. Proceedings can be commenced in Victoria and New South Wales after 1 July 2010, and in the remaining State and Territory courts under the State or Territory legislation giving effect to the ACL as a law of the enacting State of Territory after 1 January 2011. The mere fact that a term is void under s 23 is not a contravention of the ACL.121
ACL – COMMONWEALTH [5.175]
Section 131 of the CCA provides that the ACL only applies to the conduct of corporations, or in relation to contraventions of Chs 2, 3 and 4 by corporations.
The ACL will apply to the conduct of a corporation, a supplier of goods or services, or granting an interest in land, where the conduct constitutes applying or relying on, or purporting to apply or rely on, a term of a consumer contract that has been declared under s 250 of the ACL to be an unfair term. This follows from a consideration of s 15(a) of the ACL which provides that “conduct” consisting merely of the voiding of an unfair term under s 23(1) will not constitute a contravention of the ACL. The effect of this provision, in relation to unfair terms is that the inclusion of an unfair term in a standard form consumer contract, is not a contravention of the ACL. Furthermore, the declaration of a term to be unfair pursuant to s 250 is not a contravention of the ACL. There is no “conduct” and no “contravention” for the purposes of bringing an action for damages under s 236 of the ACL. It is only if a person applies or relies on an unfair term after it is declared to be unfair under s 250, that the injured person may seek a compensation order under s 237(1)(a)(ii) which provides: (1) A court may: (a) on application of a person (the injured person) who has suffered, or is likely to suffer, loss or damage because of the conduct of another person that: … (ii) constitutes applying or relying on, or purporting to apply or rely on, a term of a consumer contract that has been declared under section 250 to be an unfair term (b) on the application of the regulator made on behalf of one or more such injured persons; make such order or orders as the court thinks appropriate against the person who engaged in the conduct, or a person involved in the conduct.
In terms of the overlap between the ACL and the ACL (Application Acts), an unfair term can be challenged under the ACL if it has been inserted by a corporation, as supplier, into a standard for contract with an individual, or an individual, as supplier, if s 6(3) of the CCA applies, and the contract was for, or relates to, postal, telegraphic or telephonic services, or radio or television broadcasts. 121 ACL, s 15.
[5.185]
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ACL – STATES AND TERRITORIES [5.180]
An unfair term can be challenged under the ACL of the States and Territories where it has been inserted by a person (body corporate or individual) into a standard form contract with an individual. The Fair Trading Amendment (Unfair Contract Terms) Act 2010 (Vic) was passed by the Parliament of Victoria on 27 May 2010. It aligned the provisions of the with the Commonwealth unfair terms provisions. It came into operation as a law of the State of Victoria on 1 July 2010. The Fair Trading Amendment (Unfair Contract Terms) Act 2010 (Vic) contains transitional provisions similar to those in the ACL relating to contracts containing unfair terms. The Fair Trading Amendment (Unfair Contract Terms) Act 2010 (NSW) was passed by the Parliament of New South Wales on 23 June 2010. It inserted into the Fair Trading Act 1987 (NSW) a new Pt 5G which aligned its provisions with the Commonwealth unfair terms provisions. It came into operation as a law of the State of New South Wales on 1 July 2010. From 1 January 2011, the regulator for each State or Territory will be able to apply to the relevant court or tribunal for a declaration that a term in a consumer contract is unfair, for an injunction against the relevant trader that incorporates the term in a consumer contract and for a compensation order for any loss or damage suffered.
PUBLIC ENFORCEMENT [5.185]
Section 250(1) of the ACL provides that a regulator may apply to the court to declare that a term of a standard form contract is an unfair term. At the Commonwealth level proceedings may be brought in the Federal Court by the ACCC seeking:
• a declaration that a term is unfair;122 • an injunction;123 • a compensation claim on behalf of a party suffering loss;124 and • an order to redress loss or damage to a non-party consumer.125 A term in a contract that is declared to be unfair is void. As regards the severance of unfair terms see [14.30]. No penalties apply at the time a term is declared to be unfair. The types of orders that can be made under ss 237 and 239 are set out in s 243 of the ACL. The regulators in the States and Territories can apply to the appropriate State and Territory tribunals and courts for the same remedial orders. If a term of a consumer contract is declared to be unfair and the supplier subsequently relies upon or applies a term declared to be unfair, and the declared term causes a class of persons who are not parties to the consumer contract to suffer 122 ACL, s 250. 123 ACL, s 232. 124 ACL, s 237. 125 ACL, s 239.
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loss or damage, the regulator may apply for such order or orders (other than an award of damages) as the court thinks appropriate.126 Conduct constituted by applying or relying on, or purporting to apply or rely on, a term of a consumer contract that has been declared under s 250 to be an unfair term does not give rise to criminal liability.
PRIVATE REMEDIES [5.190]
The following remedial options are available to a private litigant:
• a declaration that the term is unfair;127 • an injunction preventing the use of the term;128 and • a compensation order for any loss suffered.129 Damages under s 236 of the ACL are not available for the reasons considered in relation to compensation orders at [14.225]. There may, however, be other conduct, such as misleading conduct in relation to the insertion or exercise of the unfair term that gives rise to an action for damages under s 236 of the ACL. It is only if a person applies or relies on an unfair term after it is declared to be unfair under s 250 of the ACL, that the injured person may seek a compensation order under s 237(1)(a)(ii) of the ACL. A consumer may be able to obtain a refund if there has been a total failure of consideration. There will be no total failure if a consumer has received a substantial part of the benefit expected under the contract.130 The time limit for applying for a compensation order under s 237 is within six years of the declaration.131
UNFAIR TERMS UNDER THE ASIC ACT [5.195]
The principal operative provisions are s 12BF(1) and (2) of the ASIC Act which provide: (1) A term of a consumer contract or small business contract is void if: (a) the term is unfair; and (b) the contract is a standard form contract; and (c) the contract is: (i) a financial product; or (ii) a contract for the supply, or possible supply, of services that are financial services.
126 ACL, s 239(1). 127 ACL, s 250. 128 ACL, s 232. 129 ACL, s 237. 130 Baltic Shipping Company v Dillon (1993) 176 CLR 344 at 350 (Mason CJ) applied in Ferme v Kimberley Discovery Cruises Pty Ltd [2015] FCCA 2384 at [112] (Judge Jarrett). 131 ACL, s 237(3).
[5.215]
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(2) The contract continues to bind the parties if it is capable of operating without the unfair term.
Consumer contracts covered [5.200]
Section 12BF(3) of the ASIC Act provides that a “consumer contract” is a contract where at least one of the parties is an individual whose acquisition of what is supplied is wholly or predominantly an acquisition for personal, domestic or household use or consumption. Some examples include contracts for banking services, loans or credit card contracts. The terms “financial product” and “financial services” are considered at [3.265][3.280]. Section 12BAA(7)(k) expressly provides that a credit facility (within the meaning of the regulations) is a financial product. The law commenced on 1 July 2010. Thus, it will apply to: • new contracts made on or after 1 July 2010; • contracts made before 1 July 2010 that are renewed; • the terms of contracts made before 1 July 2010, that are varied after 1 July 2010.
Small business contracts covered [5.205]
A “small business contract” is defined in s 12BF of the ASIC Act:
(4) A contract is a small business contract if: (a) at the time the contract is entered into, at least one party to the contract is a business that employs fewer than 20 persons; and (b) either of the following applies: (i) the upfront price payable under the contract does not exceed $300,000; (ii) the contract has a duration of more than 12 months and the upfront price payable under the contract does not exceed $1,000,000. (5) In counting the persons employed by a business for the purposes of paragraph (4)(a), a casual employee is not to be counted unless he or she is employed by the business on a regular and systematic basis. (6) For the purposes of subsection (4) and despite subsection 12BI(3), in working out the upfront price payable under a contract under which credit is or is to be provided, disregard any interest payable under the contract.
Contracts excluded [5.210]
Section 12BL of the ASIC Act provides that the unfair terms provisions do not apply to a consumer contract that is the constitution of a company, managed investment scheme or other kind of body. The unfair contract terms provisions do not cover insurance contracts regulated under the Insurance Contracts Act 1984 (Cth).
Terms excluded [5.215]
The provisions do not apply to all of the terms of the contracts covered. Section 12BI of the ASIC Act provides that s 12BF does not apply to: • terms that define the main subject matter of the contract; or
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• set the upfront price payable under the contract; or • are required or expressly permitted by a law of the Commonwealth, State or Territory. Section 12BI(2) of the ASIC Act provides that the “upfront price” is the consideration that is provided for the supply under the contract, and is disclosed at or before the time the contract was entered into, and does not include any other consideration that is contingent on the occurrence or non-occurrence of a particular event, such as default on a loan.132 ASIC provides the following example: the up-front price of a mortgage includes the amount borrowed and the interest payable and any fees disclosed at the time the contract is entered into, but does not include contingent fees, such as default fees. As a result, principal and interest cannot be challenged under the unfair contract terms provisions.133
Section 12BI(3) of the ASIC Act provides that the consideration for the provision of credit includes the total amount of principal owed under the contract which is included in the “upfront price”. The interest payable and fees charged will also be included in the “upfront price” if they are disclosed at the time of entry into the contract. Thus, lenders will have an incentive to disclose interest and fees to borrowers prior to entry into the contract since it means that they cannot be challenged as unfair contract terms provisions. However, contingent fees payable in the event of default will be able to be challenged.
MEANING OF UNFAIR TERM [5.220]
The same four part test of “unfair” considered at [5.105]-[5.155] in relation to the ACL applies in relation to the ASIC Act. The first part of the test requires the court to consider the term at issue itself.134 The second part of the test requires the court to consider contextual matters including the formation of the contract containing the term.135 The third part of the test requires the court to consider whether the term was transparent.136 The fourth part of the test requires the court to consider the term at issue in the context of the contract as a whole.137 In determining whether each of the elements of unfairness is satisfied the court may obtain guidance from the indicative “grey” list in s 12BH(1) of the ASIC Act. Section 12BG(1) of the provides that a term will be unfair if: (a) it would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and (b) it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and 132 See the discussion at [5.30]. 133 See ASIC, Australian Consumer Law – Unfair terms, available at http://www.asic.gov.au/asic/ asic.nsf/byheadline/Unfair-contract-terms-law?openDocument. 134 ASIC Act, s 12BG(1). 135 ASIC Act, s 12BG(2). 136 ACL, s 12BG(2)(a). 137 ACL, s 12BG(2)(b).
[5.225]
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(c) it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.
Thus, for example, in relation to the provision of a credit facility, lenders have a legitimate interest in seeking to recover their reasonable costs of borrowing and having the loan re-paid; however, they are not entitled to push all the risks on to the borrower. Section 12BG(2) provides in determining whether a consumer contract is unfair under s 12BG(1) a court may consider any relevant matter, but a court must consider: (a) (b) the extent to which the term is transparent; (b) (c) the contract as a whole.
Section 12BG(3) provides: A term is transparent if the term is: (a) expressed in reasonably plain language; and (b) legible; and (c) presented clearly; and (d) readily available to any party affected by the term.
First part: the term itself [5.225]
The first part of the definition of “unfair” in s 12BG contains three
elements. The first element is that the term would cause a “significant imbalance” in the parties’ contractual rights and obligations. The claimant is required to prove the existence of such an imbalance on the balance of probabilities. In ACCC v CLA Trading Pty Ltd,138 Gilmour J stated that in order to determine whether there is a “significant imbalance” it was “... useful to access the impact of an impuned term on the parties’ rights and obligations by comparing the effect of the contract involving that term and the effect it would have without it”. The second element is that the term is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term. Section 12BG(4) of the ASIC Act contains a reversal of the onus of proof. It provides that a term of a consumer contract is presumed not to be reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term. For example, in relation to the provision of a credit facility the onus is on the lender to prove that the use of the term is reasonably necessary to protect its legitimate interests on the balance of probabilities. The third element requires the claimant to prove that detriment would be caused if the term were to be applied or relied upon. It is not necessary to prove that actual damage has been caused. Detriment is not limited to financial detriment. Other forms of detriment include delay or distress suffered by the consumer if the term is relied upon. 138 ACCC v CLA Trading Pty Ltd [2016] FCA 377 at [66].
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Second part: contextual considerations [5.230]
While s 12BG(1) appears to require that the assessment as to whether a particular term is unfair is to be made without consideration of the surrounding circumstances, s 12BG(2) provides that in determining whether a term of a consumer contract is unfair under s 12BG(1), a court may take into account “such matters that it thinks relevant”. This allows a court to consider the context in which the term was exercised, and may convert a term that is unobjectionable on its face into an unfair term.
Third part: transparency [5.235]
The third part of the test of unfairness contained in s 12BG(2)(b) requires the court to consider the extent to which the term is transparent. Section 12BG(3) provides: A term is transparent if the term is: (a) (b) (c) (d)
expressed in reasonably plain language; and legible; and presented clearly; and readily available to any party affected by the term.
Fourth part: contract as a whole [5.240]
The fourth part of the test of unfairness contained in s 12BG(2)(c) requires the court to consider the term in the context of the contract as a whole. Some contractual terms that appear to be unfair when viewed in isolation, might be considered to be fair in the context of the agreement as a whole: a harsh term may be necessary to ensure that the consumer obtains the goods or services at a lower price. The lower price is the trade-off for the harsh term.
Grey list: examples of terms that may be unfair [5.245]
Section 12BH(1) of the provides a non-exhaustive examples of the kinds of terms that may, depending on the circumstances, be unfair: (a) a term that permits, or has the effect of permitting, one party (but not another party) to avoid or limit performance of the contract; (b) a term that permits, or has the effect of permitting, one party (but not another party) to terminate the contract; (c) a term that penalises, or has the effect of penalising, one party (but not another party) for a breach or termination of the contract; (d) a term that permits, or has the effect of permitting, one party (but not another party) to vary the terms of the contract; (e) a term that permits, or has the effect of permitting, one party (but not another party) to renew or not renew the contract; (f) a term that permits, or has the effect of permitting, one party to vary the upfront price payable under the contract without the right of another party to terminate the contract; (g) a term that permits, or has the effect of permitting, one party unilaterally to vary financial services to be supplied under the contract; (h) a term that permits, or has the effect of permitting, one party unilaterally to determine whether the contract has been breached or to interpret its meaning;
[5.245]
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(i) a term that limits, or has the effect of limiting, one party’s vicarious liability for its agents; (j) a term that permits, or has the effect of permitting, one party to assign the contract to the detriment of another party without that other party’s consent; (k) a term that limits, or has the effect of limiting, one party’s right to sue another party; (l) a term that limits, or has the effect of limiting, the evidence one party can adduce in proceedings relating to the contract; (m) a term that imposes, or has the effect of imposing, the evidential burden on one party in proceedings relating to the contract; (n) a term of a kind, or a term that has an effect of a kind, prescribed by the regulations.
The ASIC Act provides for the prescription of certain terms by regulation that are, in all the circumstances unfair. Section 12BH(2) provides: Before the Governor General makes a regulation for the purposes of paragraph (1)(n) prescribing a kind of term, or a kind of effect that a term has, the Minister must take into consideration: (a) the detriment that a term of that kind would cause to consumers; and (b) the impact on business generally of prescribing that kind of term or effect; and (c) the public interest.
Section 12BF provides that an unfair term is void, but the contract continues to bind the parties if it is capable of operating without the unfair term.
6
Specific False or Misleading Representations [6.05] INTRODUCTION ................................................................................................................ 251 [6.10] FALSE OR MISLEADING REPRESENTATIONS ........................................................... 252
[6.10] [6.15] [6.20] [6.25] [6.30] [6.35] [6.40]
Civil liability ........................................................................................................ Making a representation .................................................................................... False ....................................................................................................................... Misleading ............................................................................................................ In connection with .............................................................................................. Particular .............................................................................................................. In trade or commerce .........................................................................................
252 253 254 255 256 257 258
[6.45] STANDARD, QUALITY, VALUE, GRADE, COMPOSITION – GOODS .................. 258
[6.50] Premium claims ................................................................................................... 260 [6.55] STANDARD, QUALITY, VALUE OR GRADE – SERVICES ....................................... 262 [6.60] REPRESENTING THAT GOODS ARE NEW ................................................................. 263 [6.65] REPRESENTING THAT A PARTICULAR PERSON HAS AGREED TO ACQUIRE GOODS OR SERVICES ....................................................................................................... 264 [6.70] TESTIMONIALS – GOODS OR SERVICES .................................................................... 264
[6.75] Expert testimonials ............................................................................................. 265 [6.80] Consumer testimonials ...................................................................................... 265 [6.85] Celebrity testimonials ......................................................................................... 266 [6.90] SPONSORSHIP, APPROVAL, PERFORMANCE CHARACTERISTICS – GOODS AND SERVICES ................................................................................................................... 267
[6.95] Performance characteristics: environmental claims ...................................... 268 [6.100] Performance characteristics: health benefits ................................................ 269 [6.105] Performance characteristics: product safety ................................................. 270 [6.110] Performance characteristics: consumer privacy and data security .......... 272 [6.115] SPONSORSHIP, APPROVAL, OR AFFILIATION – PERSONS ................................. 272 [6.125] PRICE – GOODS OR SERVICES .................................................................................... 275
[6.130] Use of the word “free” in relation to price .................................................. 276 [6.140] Advertised price not the total price: “drip pricing” .................................. 278 [6.145] Discount or rebate ............................................................................................ 280 [6.150] Comparative price advertising ....................................................................... 280 [6.155] Reference pricing or two-price advertising .................................................. 281
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[6.160] REPAIRS AND SPARE PARTS – GOODS ..................................................................... 283 [6.165] PLACE OF ORIGIN .......................................................................................................... 284
[6.165] Goods .................................................................................................................. 284 [6.170] Food labelling .................................................................................................... 286 [6.175] NEED – GOODS OR SERVICES ..................................................................................... 287 [6.180] EXISTENCE, EXCLUSION OR EFFECT OF ANY CONDITION, WARRANTY, GUARANTEE, RIGHT OR REMEDY ............................................................................ 288
[6.185] Misrepresenting the existence of rights or benefits .................................... 290 [6.190] REQUIREMENT TO PAY FOR A CONTRACTUAL RIGHT: EXTENDED WARRANTIES ................................................................................................................... 291
[6.195] What is an extended warranty? ..................................................................... 292 [6.200] Concerns raised by extended warranties ..................................................... 292 [6.205] Extended warranties: guarantee of acceptable quality .............................. 292 [6.210] Information at the point-of-sale ..................................................................... 294 [6.215] Criminal liability ............................................................................................... 296 [6.220] ASIC ACT: FALSE OR MISLEADING REPRESENTATIONS ................................... 297
[6.230] Extended warranties: financial services ........................................................ 299 [6.235] Extended warranties: incidental products .................................................... 299 [6.240] Extended warranties: insurance products .................................................... 300 [6.245] Extended warranties: contravention .............................................................. 300 [6.250] FALSE OR MISLEADING REPRESENTATIONS – SALE OF LAND ...................... 301
[6.250] Civil liability ...................................................................................................... 301 [6.255] Criminal liability ............................................................................................... 302 [6.260] ASIC ACT: FALSE OR MISLEADING REPRESENTATIONS – SALE OF LAND . 303 [6.265] MISLEADING CONDUCT – PERSONS SEEKING EMPLOYMENT ...................... 304
[6.265] Civil liability ...................................................................................................... 304 [6.270] Criminal liability ............................................................................................... 306 [6.275] MISLEADING CONDUCT CONCERNING THE NATURE OF GOODS AND SERVICES ............................................................................................................................ 307
[6.275] Civil liability ...................................................................................................... 307 [6.280] Criminal liability ............................................................................................... 309 [6.285] ASIC ACT: MISLEADING CONDUCT CONCERNING THE NATURE OF FINANCIAL SERVICES ................................................................................................... 309 [6.290] MISLEADING REPRESENTATIONS ABOUT CERTAIN BUSINESS ACTIVITIES . 309
[6.290] Civil liability ...................................................................................................... 309 [6.295] Criminal liability ............................................................................................... 312 [6.300] EXEMPTION FOR INFORMATION PROVIDERS ...................................................... 312
[6.305] ASIC Act ............................................................................................................. 313
[6.05]
6 Specific False or Misleading Representations
251
INTRODUCTION [6.05] The ACL provides two levels of protection. The general protections against misleading conduct, unconscionable conduct and the imposition of unfair terms in standard form consumer contracts are intended to create general standards or norms of conduct that must be complied with in trade or commerce. These general standards are strengthened by more specific protections directed at particular conduct that is likely to give rise to consumer detriment. Section 18 of the ACL is a general provision dealing with misleading conduct and only gives rise to civil liability. Part 3-1 of the ACL prohibits various kinds of specific false or misleading conduct and unfair business practices, all of which give rise to criminal as well as civil liability. In relation to civil liability, proceedings under one or more of the remedy provisions in Pt VI of the CCA are brought by a private litigant and the civil standard of proof applies. In relation to criminal liability, Div 2 of Pt VC was inserted into the TPA. It established a separate consumer protection regime which replicated the provisions in Pt V, Div 1 of the TPA but gave effect to the Criminal Code Act 1995 (Cth). Thus, there were separate civil and criminal regimes contained in Pt V and Pt VC of the TPA respectively. In accordance with the requirements of the Criminal Code, Pt VC sought to maintain the statutory and judicial interpretation of Pt V Div 1, but redrafted the provisions to clearly identify any fault elements applicable to each offence, and prescribed a maximum penalty for contravention of each offence. Proceedings under s 79 of the Act were brought on behalf of the ACCC by an informant and the criminal standard of proof applied. This dichotomy has been retained under the ACL with civil liability the subject of Ch 3 of the ACL and criminal liability the subject of Ch 4 of the ACL. However, under the ACL, the ACCC and the State and Territory regulators (the ACL regulators) now have the power to bring civil proceedings for the imposition of civil pecuniary penalties and have a number of new administrative powers.1 This chapter considers the civil and criminal liability arising from specific false or misleading representations. This liability is not limited to dealings with consumers but applies also to dealings with other businesses. Table 6.1 Civil and criminal provision relating to false, misleading and unfair trading practices Provision
False or misleading representations about goods or services False or misleading representations about sale etc of land False or misleading conduct relating to employment Misleading conduct as to the nature etc of goods Misleading conduct as to the nature etc of services
1 These enforcement powers are the subject of Chapter 13.
Civil liability (Ch 3) 29 30 31 33 34
Criminal liability (Ch 4) 151 152 153 155 156
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Provision
False or misleading representations about certain businesses Offering rebates, gifts, prizes etc Bait advertising Wrongly accepting payment Unsolicited cards etc Assertion of right to payment for unsolicited goods or services Assertion of right to payment for unauthorised entries or advertisements Participation in pyramid schemes Multiple pricing Single price to be specified in certain circumstances Referral selling Harassment and coercion
[6.10]
Civil liability (Ch 3) 37 32 35 36 39 40
Criminal liability (Ch 4) 159 154 157 158 161 162
43
163
44 47 48 49 50
164 165 166 167 168
FALSE OR MISLEADING REPRESENTATIONS Civil liability [6.10] Section 18(1) of the ACL is a general prohibition directed at “conduct”. As explained at [3.20], while in the majority of cases the “conduct” at issue will give rise to a representation of some kind, it has been recognised that the word “conduct” extends beyond representations. Section 29(1), on the other hand, is specifically confined to the making of false or misleading representations.2 Section 29(1) provides: A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services: (a) make a false or misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use; or (b) make a false or misleading representation that services are of a particular standard, quality, value or grade; or (c) make a false or misleading representation that goods are new; or (d) make a false or misleading representation that a particular person has agreed to acquire goods or services; or (e) make a false or misleading representation that purports to be a testimonial by any person relating to goods or services; or (f) make a false or misleading representation concerning: (i) a testimonial by any person; or (ii) a representation that purports to be such a testimonial; relating to goods or services; or 2 See R V Miller, Australian Competition and Consumer Law Annotated (37th ed, Lawbook Co, Sydney, 2015), at [1.S2.29.10]-[1.S2.29.135].
[6.15]
6 Specific False or Misleading Representations
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(g) make a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits; or (h) make a false or misleading representation that the person making the representation has a sponsorship, approval or affiliation; or (i) make a false or misleading representation with respect to the price of goods or services; or (j) make a false or misleading representation concerning the availability of facilities for the repair of goods or of spare parts for goods; or (k) make a false or misleading representation concerning the place of origin of goods; or (l) make a false or misleading representation concerning the need for any goods or services; or (m) make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3-2); or (n) make a false or misleading representation concerning a requirement to pay for a contractual right that: (i) is wholly or partly equivalent to any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3-2); and (ii) a person has under a law of the Commonwealth, a State or a Territory (other than an unwritten law).
This prohibition does not substantively change compared to s 53 of the TPA and the State and Territory equivalents in their Fair Trading Acts (FTA); however, it is expanded to: • prohibit both false or misleading representations;3 • include additional prohibitions in s 29(1)(e) and (f) relating to representations that are testimonials and representations about testimonials;4 and • include an additional prohibition in s 29(1)(e) relating to representations concerning a requirement to pay for a contractual right that is wholly or partly equivalent to any condition, warranty, right, or remedy including a guarantee under Div 1 of Pt 3-2.
Making a representation [6.15] As for s 18 of the ACL, a representation can be made to identified individuals, or to members of a class or section of the public.5 It may be made expressly, such as a statement contained in an advertisement, or impliedly, for example, by putting goods on display. In Given v C V Holland (Holdings) Pty Ltd,6 there was a representation as to quality even though there was no verbal representation. Placing the car on display was sufficient to establish the requisite representation. 3 In relation to s 29(1)(a) – (h), s 53 of the TPA only prohibited false representations. 4 These are based on s 14 of the FTA 1999 prior to its amendment by the ACLFTA 2010 (Vic). 5 See [3.75]–[3.90]. 6 Given v C V Holland (Holdings) Pty Ltd (1977) 29 FLR 212 at 216; Eva v Southern Motors Box Hill Pty Ltd (1977) ATPR ¶40-029 at 17,385-17,386 (Franki J).
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[6.20]
Also, in common with s 18 of the ACL, innocently passing on of information supplied by another will not be regarded as making a representation, so long as it is not adopted or endorsed.7 In Gardam v George Wills & Co Ltd (No 1),8 French J stated: The innocent carriage of a false representation from one person to another in circumstances where the carrier is and is seen to be a mere conduit, does not involve him in making that representation. Nobody would expect that the postman who bears a misleading message in a postal article has any concern about its content or is any sense adopting it. The same is true of the messenger boy or the courier service. When, however, a representation is conveyed in circumstances in which the carrier would be regarded by the relevant section of the public as adopting it, then he makes that representation.9
In common with s 18 of the ACL, promises, predictions and opinions may amount to representations.10 In some circumstances, silence can give rise to an implied representation that there was nothing material that needed to be disclosed to the representee.11
False [6.20] Section 53 of the TPA proscribed specific representations in relation to goods and services, some for being false,12 some for being false or misleading,13 and others being about qualities the goods or services did not have. Section 29 of the ACL has been drafted to remove this distinction and applies to false or misleading representations.14 However, in relation to supply of goods and services, s 29(1) imposes liability for false representations on the supplier who is in the best position to know the characteristics of those goods and services. There is no disclosure obligation placed on the supplier but if the supplier discloses information in relation to a particular transaction for the supply of goods or services it must be accurate. The term “false” in relation to s 53 of the TPA was construed to mean “contrary to fact”, and did not depend on the knowledge of the person making the representation. In Given v Holland (Holdings) Pty Ltd, the representation consisted of an odometer reading of a motor vehicle displayed for sale in the defendant’s second-hand car yard. The odometer showed a mileage of 23,700 when, in fact, the vehicle had travelled approximately 69,012 miles. Franki J held in relation to TPAs 53(a): I am satisfied that, if a representation is in fact not correct, it comes within the words of the section, even if it is not false to the knowledge of the person making the 7 See [3.40]–[3.50]. 8 Gardam v George Wills & Co Ltd (No 1) (1988) ATPR ¶40-884. 9 Gardam v George Wills & Co Ltd (No 1) (1988) ATPR ¶40-884 at 49,581. 10 See [3.135]–[3.150]. 11 See [3.100]–[3.125]. 12 TPA, s 53(b). 13 TPA, s 53(ea). 14 Second Explanatory Memorandum, at [6.13].
[6.25]
6 Specific False or Misleading Representations
255
representation, and even if the person making the representation is a servant of the company of insufficient significance in the company for his knowledge, according to the ordinary principles of the Common Law, to be deemed to be the knowledge of the company.15
His Honour concluded that the display of the incorrect odometer reading constituted a false representation that the vehicle was of a particular quality.16
Misleading [6.25] The test for determining whether representations in relation to goods or services are “misleading” for the purposes of s 29(1)ACL is the same as that adopted for determining whether conduct is misleading for the purposes of s 18(1) of the ACL.17 Whether a representation directed at identified persons is misleading will be dictated by the circumstances of each particular case, including the state of knowledge of the person to whom the representation is directed. The test is: would a reasonable person in the position of the representee, taking into account what they knew, have been misled by the representation.18 Where a representation is directed at a segment of the public, the relevant test for determining whether the representation is misleading is whether “ordinary” or “reasonable” persons of the segment of the public to whom the conduct is directed are likely to be misled or deceived.19 When deciding whether an advertisement is misleading for the purposes of s 29(1) the first step should always be to isolate some criterion or criteria of a representative member of the target audience to whom it is directed. This will involve considering such matters as their age, geographical location, sophistication, unusual predilections (if any) and familiarity with the subject. Generally speaking, higher standards of accuracy are expected in connection with advertisements directed towards unsophisticated or impressionable audiences. As a result, an advertisement which may be misleading when directed towards one audience may not be so were it directed towards another. Whether an advertisement is misleading is determined by reference to its effect on “reasonable” members of the audience, rather than on those whose assumptions or reactions are “extreme or fanciful”. As a result, it will not contravene s 29(1) if a 15 Given v C V Holland (Holdings) Pty Ltd (1977) ATPR ¶40-029 at 17,386. Franki J placed reliance on the High Court’s interpretation of “false” as meaning “contrary to fact” in s 234(d) of the Customs Act 1901 (Cth) in Sternberg v The Queen (1953) 8 CLR 646 and Davidson v Watson (1953) 28 ALJ 63 at 64. 16 Given v C V Holland (Holdings) Pty Ltd (1977) ATPR ¶40-029 at 17,387. 17 See the discussion at [3.60]–[3.165]. 18 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at [50]. See [3.75]. 19 Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at 85 [103] (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ); Astrazeneca Pty Ltd v GlaxoSmithKline Australia Pty Ltd (2006) ATPR ¶42-106 at [37] (Wilcox, Bennett and Graham JJ); ACCC v Telstra Corporation Ltd (2007) ATPR ¶42-203 at [14]-[15] (Gordon J); and Energizer Australia Pty Ltd v Remingtom Products Australia Pty Ltd (2008) ATPR ¶42-219 at [16] (Moore J).
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[6.30]
reasonable member of the audience would not be misled, even though it did mislead a person whose reactions are extreme. As with s 18 of the ACL, for contraventions of s 29(1) there is no requirement for intent or a “guilty mind”.20 However, “intention” has a role to play in the drawing of inferences as regards the effect, or likely effect, of the conduct on a reasonable member of the target audience. The High Court has held where there is a finding of intention to deceive, the court may more readily infer that the intention has been or in all probability will be, effective.21 Section 18(1) also overlaps with the following provisions of the ACL: • s 30 – false or misleading representations about the sale of land or grant of an interest in land; • s 31 – misleading conduct in relation to persons seeking employment as to matters relating to employment; • s 33 – misleading conduct in relation to the nature of goods; • s 34 – misleading conduct in relation to the nature of services; and • s 37 – misleading representations about certain business activities.
In connection with [6.30] Conduct relating to s 29 of the ACL must occur “in connection with” the supply of goods or services or the promotion of the supply of goods or services. There is no indication as to how close the connection needs to be. In Monroe Topple v The Institute of Chartered Accountants in Australia,22 Lindgren J, observed in relation to the same expression which was used in the former TPA, s 51AC of the while potentially broad, “bear[s] a meaning dictated by legislative context, purpose or object”.23 His Honour concluded that the expression “in connection with” in s 51AC required that the conduct “accompany”, “go with” or “be involved in” the supply of goods or services.24 The purpose and policy underlying s 29 would suggest a broad construction so that any connection; however, it seems that there must be a direct link, rather than an indirect link, to satisfy this requirement. 20 See Given v Holland (Holdings) Pty Ltd (1977) ATPR ¶40-029 at 17,386 (Franki J); Darwin Bakery Pty Ltd v Sully (1981) ATPR ¶40-230 at 43,102 (Full Court); Gardam v George Wills & Co Ltd (No 1) (1988) ATPR ¶40-884 at 49,580 (French J). 21 Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at [33] (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ); and ACCC v TPG Internet Pty Ltd (2013) 304 ALR 189 at 198 [55] (French CJ, Crennan, Bell and Keane JJ) (citations omitted). See the discussion at [3.70]. 22 Monroe Topple v The Institute of Chartered Accountants in Australia (2001) ATPR (Digest) ¶46-212. 23 Monroe Topple v The Institute of Chartered Accountants in Australia (2001) ATPR (Digest) ¶46-212 at [252] referring to Hatfield v Health Insurance Commission (1987) 15 FCR 487 at 491 (Davies J); Our Town FM Pty Ltd v Australian Broadcasting Tribunal (1987) 16 FCR 465 at 479-80 (Wilcox J); Burswood Management Ltd v Attorney-General (Cth) (1990) 23 FCR 144 at 146 (Lockhart, Wilcox and Hill JJ); Claremont Petroleum NL v Cummings (1992) 110 ALR 239 at 280 (Wilcox J); Minister for Immigration & Multicultural Affairs v Mohammad (2000) 101 FCR 434 at 443-4 (Burchett J). 24 Monroe Topple v The Institute of Chartered Accountants in Australia (2001) ATPR (Digest) ¶46-212 at [260].
[6.35]
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In Charben Haulage Pty Ltd v Environmental & Earth Sciences Pty Ltd,25 the respondent environmental consultants were engaged by Caltex to estimate the contamination of two plots of land on which a petrol station had been operated. The plots were being prepared for sale by Caltex. The consultants’ reports contained a number of deficiencies. The reports were communicated to prospective purchasers, including the applicant. The applicant brought an action against the consultants for a breach of s 53A(1) of the TPA for misleading representations in the report. Wilcox J held that even though the consultants knew that the allotments were being prepared for sale by its client, the consultants were not themselves “involved in” the sale, and accordingly, the report was not made “in connection with the sale or grant of land”.26
Particular [6.35] The term “particular” is used in ACL, s 29(1)(a) and (b) which are concerned with false or misleading representations that goods or services are of a “particular” standard, quality, value etc. This has been give