Australian consumer law [First edition.] 9780409339031, 0409339032

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Australian Consumer Law

Adrian Coorey BEc, LLB (Hons I) (Macq), LLM (Hons II) (Cantab), BCom (Macq)

LexisNexis Butterworths Australia 2015

LexisNexis AUSTRALIA LexisNexis Butterworths 475–495 Victoria Avenue, Chatswood NSW 2067 On the internet at: www.lexisnexis.com.au ARGENTINA LexisNexis Argentina, BUENOS AIRES AUSTRIA LexisNexis Verlag ARD Orac GmbH & Co KG, VIENNA BRAZIL LexisNexis Latin America, SAO PAULO CANADA LexisNexis Canada, Markham, ONTARIO CHILE LexisNexis Chile, SANTIAGO CHINA LexisNexis China, BEIJING, SHANGHAI CZECH REPUBLIC Nakladatelství Orac sro, PRAGUE FRANCE LexisNexis SA, PARIS GERMANY LexisNexis Germany, FRANKFURT HONG KONG LexisNexis Hong Kong, HONG KONG HUNGARY HVG-Orac, BUDAPEST INDIA LexisNexis, NEW DELHI ITALY Dott A Giuffrè Editore SpA, MILAN JAPAN LexisNexis Japan KK, TOKYO KOREA LexisNexis, SEOUL MALAYSIA LexisNexis Malaysia Sdn Bhd, PETALING JAYA, SELANGOR NEW ZEALAND LexisNexis, WELLINGTON POLAND Wydawnictwo Prawnicze LexisNexis, WARSAW SINGAPORE LexisNexis, SINGAPORE SOUTH AFRICA LexisNexis Butterworths, DURBAN

SWITZERLAND Staempfli Verlag AG, BERNE TAIWAN LexisNexis, TAIWAN UNITED KINGDOM LexisNexis UK, LONDON, EDINBURGH USA LexisNexis Group, New York, NEW YORK LexisNexis, Miamisburg, OHIO National Library of Australia Cataloguing-in-Publication entry Author:

Coorey, Adrian.

Title:

Australian Consumer Law.

Edition:

First edition.

ISBN:

9780409339031 (pbk). 9780409339048 (ebk).

Notes:

Includes index.

Subjects:

Consumer protection — Law and legislation — Australia.

Dewey Number:

343.94071

© 2015 Reed International Books Australia Pty Limited trading as LexisNexis. This book is copyright. Except as permitted under the Copyright Act 1968 (Cth), no part of this publication may be reproduced by any process, electronic or otherwise, without the specific written permission of the copyright owner. Neither may information be stored electronically in any form whatsoever without such permission. Inquiries should be addressed to the publishers. Typeset in Myriad Pro, Minion Pro. Printed in China.

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Foreword The year 2011 marked a major reform in consumer policy framework in Australia with the consolidation and replacement of 17 existing national, state and territory laws in one single national consumer law: the Australian Consumer Law (ACL). This piece of law created a uniform set of rights and obligations for all across states and territories and has become the cornerstone of consumer protection in Australia. This book offers a timely and comprehensive account of the ACL. It provides a clear outline of its legislative background and history, in-depth analysis of the provisions with references to well-selected case law and detailed analysis of the relevant enforcement powers and remedies. Perhaps the most widely-known consumer protection provisions are those dealing with misleading or deceptive conduct or misrepresentations made by persons. It is therefore fitting that the author has devoted four chapters to these specific provisions. Impressively, the author has examined these provisions in a wider context and provided an interesting comparison between the ACL provision on misleading or deceptive conduct with similar causes of actions in other areas of law, such as torts and contract. This offers an interesting and rare perspective on this key consumer protection provision to students of law and is of significant practical relevance to practitioners. I congratulate the author and the publisher on the publication of this important work on a subject that is of increasing significance in Australia. I have no doubt it will be an invaluable source of knowledge and assistance to all that study or practise in this area of law. Professor Allan Fels AO Former Chairman, Australian Competition and Consumer Commission 26 November 2014

Preface There is no doubt that the most significant change to consumer protection law in Australia since the enactment of the former Pt V of the Trade Practices Act 1974 (Cth) was the introduction of the Australian Consumer Law (ACL). The ACL commenced on 1 January 2011 and replaced 17 different laws on consumer protection. The ACL is a single, national consumer protection law that applies consistently in all Australian jurisdictions. The administrative provisions of the ACL are contained in Pts XI and XIAA of the Competition and Consumer Act 2010 (Cth) (CCA) and the substantive provisions are contained in Sch 2 of the CCA. The substantive provisions of the ACL are voluminous. Schedule 2 of the CCA contains 287 sections and is divided into five chapters, 20 Parts, 45 Divisions and 25 Sub-Divisions, and consists of over 67,000 words. The purpose of this book is to provide a clear, concise and comprehensive explanation of all key areas of the ACL, including the enforcement powers of the ACL regulators and the availability of private and public remedies. The book has been designed primarily to accommodate both undergraduate and postgraduate university students who study the ACL, and to aid legal researchers, staff of ACL regulators, lawyers and barristers who practise in this area. Readers should note that the book contains some attempts at humour and reference to famous musicians and movie characters, particularly in the hypothetical problem sections at the end of each chapter. I do not intend to offend anyone with what has been described to me as a ‘lawyer’s typical bad attempt to make a joke’. I sincerely apologise if anyone is offended by my light humour, offered in the hope that through the problems and exercises, readers will gain a better understanding of the ACL.

All of the drafting and editing work of this book was done after working hours and on weekends. The book was written over a lengthy period of time and I am forever indebted to all who contributed to it. In particular, I am most grateful for the enormous amount of editing work that was done by Peter Renehan, Felicity Lee, Chris Xie, Jack Ducommun and the LexisNexis Butterworths editorial team. I thank you all for your dedication and hard work. However, the greatest sacrifices that were made while writing this book came from my two greatest loves of all time — my wonderful, darling wife, Dr Pornsakol Coorey, and my extra-super-special daughter, Catherine Coorey (Little C). I love you both always and forever. This book is dedicated to you both, as well as to my family, and especially to my mother and my late father, who worked tirelessly all of their lives to provide me with the best education they could afford. My father passed away while I was in the midst of writing this book. The passing of my father has been the greatest loss to our family and we will never forget him for being the best dad in the world. Adrian Coorey Sydney 29 November 2014

Publisher’s Note The scenarios described in the Hypothetical Problem Questions at the end of each chapter are entirely fictitious, and so are the characters in them. Any similarities between the characters’ names and those of famous people are purely for lighthearted amusement.

Table of Cases References are to paragraphs 10th Cantanae Pty Ltd v Shoshana Pty Ltd (Sue Smith case) (1987) 79 ALR 299 …. 8.127, 8.128, 8.132

A Abundant Earth Pty Ltd v R & C Products Pty Ltd (1985) 59 ALR 211 …. 4.73 ACCC v 1Cellnet LLC [2005] FCA 856 …. 14.207 — v 4WD Systems Pty Ltd (2003) 200 ALR 491 …. 13.42, 13.47, 14.194 — v ABB Power Transmission [2004] FCA 819 …. 14.110 — v ABB Transmission and Distribution Ltd (No 2) (2002) 190 ALR 169 …. 14.22, 14.55, 14.60, 14.67, 14.100, 14.425, 14.426, 14.428 — v ACN 135 183 372 (in liq) (formerly known as Energy Watch Pty Ltd) [2012] FCA 749 …. 14.25, 14.82, 14.123 — v Adepto Publications Pty Ltd [2013] FCA 247 …. 8.92, 13.52, 13.75, 14.123 — v Advance Medical Institute Pty Ltd (admin apptd) [2011] FCA 103 …. 7.149 — v AGL Sales Pty Ltd [2013] FCA 1030 …. 14.87, 14.114 — v AI Constructions (ACT) Pty Ltd [2010] FCA 1377 …. 14.123 — v AirAsia Berhad Co [2012] FCA 1413 …. 9.192, 14.25, 14.123, 14.222, 14.232, 14.234, 14.235 — v Albert (2005) 223 ALR 467 …. 13.45, 13.50 — v Allergy Pathway Pty Ltd [2009] FCA 960 …. 3.11, 8.77, 13.375 — v — (No 2) [2011] FCA 74 …. 12.60, 12.61 — v Allphones Retail Pty Ltd (No 2) (2009) 253 ALR 324 …. 6.126, 13.81

— v Anglo Estates Pty Ltd (ACN 008 700 696) [2005] FCA 20 …. 14.136, 14.137, 14.194 — v Apollo Optical (Aust) Pty Ltd [2001] FCA 1456 …. 14.424, 14.428 — v Apple Pty Ltd [2012] FCA 646 …. 8.263, 14.123 — v Arnott’s Biscuits Ltd [2008] FCA 590 …. 4.64 — v Artorios Ink Co Pty Ltd (No 2) [2013] FCA 1292 …. 8.92, 9.66, 13.7, 13.19, 13.20, 13.24, 13.49, 14.25, 14.114, 14.123, 14.330 — v ATS All Trades and Services Pty Ltd [2009] FCA 647 …. 14.428 — v Australian Abalone Pty Ltd [2007] FCA 1834 …. 14.57 — v Australian Dreamtime Creations Pty Ltd [2009] FCA 1545 …. 3.11 — v Australian Power and Gas Company Ltd [2013] FCA 1358 …. 14.193 — v Australian Safeway Stores Pty Ltd (1997) 145 ALR 36 …. 14.6, 14.63, 14.76, 14.79, 14.93, 14.100 — v — (No 4) [2006] FCA 21 …. 14.85–14.87 — v Avitalb Pty Ltd [2014] FCA 222 …. 14.114 — v BAJV Pty Ltd [2014] FCAFC 52 …. 14.123 — v Baxter Healthcare Pty Ltd (2007) 237 ALR 512 …. 1.35–1.37 — v Bill Express Ltd (ACN 090 059 564) (in liq) (2009) 259 ALR 483 …. 8.185, 14.427 — v Billbusters Pty Ltd [2003] FCA 423 …. 8.117, 8.118 — v Bio Enviro Plan Pty Ltd [2003] FCA 232 …. 8.180, 8.278, 9.200 — v Bytecard Pty Ltd (Federal Court, 24 July 2013, VID301/2013) …. 7.148 — v Boost Tel Pty Ltd [2010] FCA 701 …. 4.46, 14.185 — v Bruhn [2012] FCA 959 …. 14.123, 14.206 — v Cabcharge Australia Ltd [2010] FCA 1261 …. 14.6, 14.33, 14.34, 14.105, 14.106 — v Cadbury Schweppes Pty Ltd (2004) 61 IPR 270 …. 8.64 — v — [2004] FCA 516 …. 13.371, 13.372

— v Cargolux Airlines International SA [2009] FCA 342 …. 14.33 — v Cathay Pacific Airways Ltd (No 3) [2012] FCA 1392 …. 2.220 — v CG Berbatis Holdings Pty Ltd (2000) 169 ALR 324 …. 6.39, 6.48, 6.50, 6.132 — v — [2000] FCA 1893 …. 14.207 — v — (2003) 197 ALR 153 …. 6.35, 6.38, 6.40, 6.48, 6.54, 6.72, 6.97 — v Channel Seven Brisbane Pty Ltd (Wildly Wealthy Women case) (2009) 255 ALR 1 …. 3.235–3.237 — v Chaste Corp (No 1) [2003] FCA 180 …. 14.406 — v Chaste Corporation Pty Ltd [2011] FCA 1431 …. 14.406 — v Chen (2003) 201 ALR 40 …. 13.341, 13.355–13.358 — v Chubb Security Australia Pty Ltd [2004] FCA 1750 …. 9.35 — v CI and Co Pty Ltd [2010] FCA 1511 …. 14.25 — v Citigroup Global Markets Australia Pty Limited (ANC 113114831) (No 4) [2007] FCA 963 …. 14.326 — Clarion Marketing Australia Pty Ltd [2009] FCA 666 …. 13.82 — v Coles Group Ltd [2014] FCA 363 …. 12.58 — v Coles Supermarkets Australia Pty Ltd [2014] FCA 634 …. 3.91, 3.94, 4.14, 8.24 — v Commercial & General Publications Pty Ltd [2002] FCA 900 …. 9.35 — v Commonwealth Bank of Australia [2003] FCA 1129 …. 3.99, 8.175, 14.217, 14.218 — v Construction, Forestry, Mining and Energy Union (CFMEU) [2006] FCA 1730 …. 13.353, 13.356, 14.190, 14.202 — v — [2007] FCA 1546 …. 13.57–13.59 — v Contact Plus Group Pty Ltd (in liq) [2006] FCA 396 …. 14.427 — v — (No 2) (2006) 232 ALR 364 …. 14.427 — v Cotton On Kids Pty Ltd [2012] FCA 1428 …. 14.123, 14.194, 14.198

— v Danoz Direct Pty Ltd [2003] FCA 881 …. 13.374, 14.175, 14.191, 14.206, 14.210–14.212, 14.214, 14.215 — v Dataline.Net.Au Pty Ltd (2006) 236 ALR 665 …. 14.194, 14.196, 14.227–14.229, 14.422, 14.426, 14.428 — v — (2007) 244 ALR 300 …. 13.33, 13.39, 14.9, 14.30, 14.75, 14.77, 14.78, 14.80, 14.83 — v Davis [2003] FCA 1227 …. 9.212, 9.213 — v Dell Computers Pty Ltd (2002) 126 FCR 170 …. 8.139, 8.140 — v — [2002] FCA 847 …. 14.207 — v Dimmeys Stores Pty Ltd [2001] FCA 299 …. 13.47 — v — [2011] FCA 372 …. 13.343, 13.345, 13.355, 13.356, 13.361, 13.372, 13.376, 14.123 — v DM Faulkner Pty Ltd [2004] FCA 1666 …. 14.6 — v Dukemaster Pty Ltd [2009] FCA 682 …. 3.11, 6.133, 8.5, 8.9, 8.24 — v Econovite Pty Ltd [2003] FCA 964 …. 14.183, 14.184, 14.194 — v EDirect Pty Ltd [2008] FCA 65 …. 9.46 — v — (in liq) (2012) 296 ALR 769 …. 8.120, 9.46, 14.83, 14.123 — v — [2012] FCA 976 …. 14.25 — v Emerald Ocean Distributors Pty Ltd [2004] FCA 303 …. 14.421 — v — [2006] FCA 244 …. 14.427 — v Emirates [2012] FCA 1108 …. 2.220 — v Energy Australia Pty Ltd [2014] FCA 336 …. 14.46, 14.114, 14.118–14.121, 14.198 — v Energy Watch Pty Ltd [2012] FCA 425 …. 3.11, 8.120 — v — (ACN 135 183 372) (in liq) [2012] FCA 749 …. 14.25, 14.82, 14.123 — v Eternal Beauty Products Pty Ltd [2012] FCA 1124 …. 14.84 — v Excite Mobile Pty Ltd (No 2) [2013] FCA 1267 …. 14.123, 14.330, 14.427 — v Fila Sport Oceania Pty Ltd [2004] FCA 376 …. 14.88

— v Flight Centre Limited (No 3) [2014] FCA 292 …. 14.78 — v Francis [2004] FCA 487 …. 13.76, 14.194 — v Gary Peer & Associates Pty Ltd (2005) 65 IPR 1 …. 8.140, 8.228, 8.237 — v — [2005] FCA 404 …. 3.171 — v George Weston Foods Ltd [2000] FCA 690 …. 14.53 — v GIA Pty Ltd [2002] FCA 1298 …. 12.284, 12.293, 14.82 — v Giraffe World Australia Pty Ltd (No 2) (1999) 166 ALR 74 …. 9.199, 9.201–9.203 — v — [1999] FCA 1476 …. 14.406 — v Global Green Plan Ltd [2010] FCA 1057 …. 12.62 — v Global One Mobile Entertainment Ltd [2011] FCA 393 …. 4.8, 4.59, 14.73, 14.123 — v — (No 2) [2011] FCA 670 …. 14.198 — v GM Holden Ltd [2008] FCA 1428 …. 3.11 — v Goldy Motors Pty Ltd [2000] FCA 1885 …. 8.145, 8.175, 13.352, 13.353 — v Google Inc [2012] FCAFC 49 …. 3.11 — v Gordon Superstore Pty Ltd [2014] FCA 452 …. 14.123, 14.198 — v Gourmet Goody’s Family Restaurant Pty Ltd [2010] FCA 1216 …. 9.191, 14.123 — v Grove and Edgar Pty Ltd [2008] FCA 1956 …. 14.202 — v Halkalia Pty Ltd [2012] FCA 534 …. 13.56 — v — (No 2) [2012] FCA 535 …. 4.16, 4.17, 4.19, 8.279, 13.56, 14.33, 14.123, 14.262, 14.330, 14.427 — v Harris Scarfe Australia [2009] FCA 54 …. 14.194 — v Hartwich [2002] FCA 273 …. 14.427 — v Harvey Fresh (1994) Ltd (2009) 82 IPR 6 …. 8.158 — v Harvey Norman Holdings Ltd [2011] FCA 1407 …. 8.182, 13.343, 14.52, 14.123

— v Health Partners Inc (1997) 151 ALR 662 …. 14.427 — v Henry Kaye and National Investment Institute Pty Ltd [2004] FCA 1363 …. 4.29 — v Hewlett-Packard Australia Pty Ltd [2013] FCA 653 …. 8.169, 8.211, 13.343, 14.115, 14.123, 14.198, 14.237 — v High Adventure Pty Ltd [2005] FCAFC 247 …. 14.81 — v Hobie Cat Australasia Pty Ltd (ACN 095 150 413) [2008] FCA 402 …. 14.194, 14.203 — v HP Superstore Pty Ltd [2013] FCA 1317 …. 13.41, 14.114, 14.198 — v Hughes [2001] FCA 38 …. 13.60–13.63, 13.65–13.67, 13.70 — v — [2002] FCA 270 …. 8.120 — v Humax Pty Ltd [2005] FCA 706 …. 14.84 — v Hungry Jack’s Pty Ltd [1996] FCA 955 …. 14.207 — v Imagine Essential Services Ltd (No 2) [2008] FCA 446 …. 8.278 — v IMB Group Ltd [1999] FCA 819 …. 3.166 — v — [1999] FCA 313 …. 13.362 — v — [2003] FCAFC 17 …. 2.155 — v IPM Operation & Maintenance Loy Yang Pty Ltd [2006] FCA 1777 …. 13.55 — v — (No 2) [2007] FCA 11 …. 14.22 — v — (No 3) [2007] FCA 144 …. 14.66 — v Ithaca Ice Works Pty Ltd [2001] FCA 1716 …. 14.92, 14.109 — v J McPhee & Son (Australia) Pty Ltd (No 3) (1998) ATPR (Digest) 46-183 …. 2.164 — v — (No 5) (1998) ATPR 41-628 …. 14.91 — v Jewellery Group Pty Ltd (2012) 293 ALR 335 …. 4.125 — v — (No 2) [2013] FCA 14 …. 14.123, 14.198, 14.206 — v Jones (No 5) [2011] FCA 49 …. 14.202

— v Jurlique International Pty Ltd [2007] FCA 79 …. 14.416, 14.427 — v Jutsen (unreported decision on 14 May 2010) …. 14.406 — v — (No 3) (2011) 285 ALR 110 …. 1.89, 9.129, 9.130, 9.148 — v — (No 3) [2012] FCA 597 …. 14.406 — v — (No 4) [2012] FCA 503 …. 13.56, 14.123, 14.428 — v Kaye [2004] FCA 1363 …. 14.206, 14.207, 14.210 — v Keshow [2005] FCA 558 …. 6.135 — v Kingsland Meatworks and Cellars Pty Ltd [2012] FCA 859 …. 8.158 — v — [2013] FCA 48 …. 14.123, 14.194, 14.206 — v Kokos International Pty Ltd (No 2) [2008] FCA 5 …. 2.220 — v — (No 4) [2008] FCA 549 …. 2.220 — v Korean Air Lines Co Ltd [2011] FCA 1360 …. 14.45, 14.93 — v Koyo Australia Pty Ltd [2013] FCA 1051 …. 14.114, 14.198 — v Le Sands Restaurant and Le Sands Café Pty Ltd t/as Signature Brasserie [2011] FCA 105 …. 14.123 — v Leahy Petroleum Pty Ltd (No 2) (2005) 215 ALR 281 …. 14.100 — v — (No 3) (2005) 215 ALR 301 …. 14.424, 14.426, 14.428 — v LG Electronics Australia Pty Ltd [2006] FCA 1118 …. 8.178, 13.354, 13.355, 13.360, 14.194 — v Liquorland (Australia) Pty Ltd [2005] FCA 683 …. 14.27 — v Luv-a-Duck Pty Ltd [2013] FCA 1136 …. 8.55, 14.123, 14.190, 14.198, 14.206 — v Lux Distributors Pty Ltd [2013] FCAFC 90 …. 6.122, 6.124, 6.125, 6.136 — v McCaskey (2000) 183 ALR 159 …. 8.184, 9.218, 9.220, 13.373 — v McMahon Services Pty Ltd [2004] FCA 1171 …. 14.55 — v — [2004] FCA 1425 …. 14.9 — v Mailpost Australia Ltd [2010] FCA 369 …. 8.182, 8.280, 14.422, 14.427 — v Mandurvit Pty Ltd [2014] FCA 464 …. 14.121

— v Maritime Union of Australia (2001) 187 ALR 487 …. 9.216, 9.218, 9.221, 9.222, 9.224, 9.225 — v Marksun Australia Pty Ltd [2011] FCA 695 …. 8.158, 13.16, 14.25, 14.123 — v Mayo International Pty Ltd (1998) 85 FCR 327 …. 2.164 — v Metricon Homes Qld Pty Ltd [2012] FCA 797 …. 8.145, 8.180, 14.33, 14.123 — v Michigan Group Pty Ltd [2002] FCA 1439 …. 14.431 — v Midland Brick Co Pty Ltd (2004) 207 ALR 329 …. 13.356, 13.360 — v Monza Imports Pty Ltd [2001] FCA 1455 …. 14.418, 14.422, 14.424, 14.428 — v Moonah Superstore Pty Ltd [2013] FCA 1314 …. 14.198 — v MSY Technologies Pty Ltd [2012] FCAFC 56 …. 8.178, 13.364, 13.365, 13.367 — v — (No 2) (2011) 279 ALR 609 …. 13.75, 14.30, 14.33, 14.46, 14.73, 14.123, 14.198 — v Murray (2002) 121 FCR 428 …. 8.278 — v Narnia Investments Pty Ltd [2009] FCA 395 …. 12.294 — v Nationwide News Pty Ltd (1996) 36 IPR 75 …. 9.19 — v Neighbourhood Energy Pty Ltd [2012] FCA 1357 …. 14.25, 14.123, 14.198 — v Neville [2007] FCA 1583 …. 12.294 — v Nonchalant Pty Ltd (in liq) [2013] FCA 605 …. 14.123 — v Nudie Foods Aust Pty Ltd [2008] FCA 943 …. 3.11, 8.63 — v Nuera Health Pty Ltd (in liq) [2007] FCA 695 …. 8.165, 12.70 — v NW Frozen Foods Pty Ltd (1996) ATPR 41-515 …. 14.30, 14.32 — v Office Link (Aust) Pty Ltd (1997) ATPR 41-598 …. 14.194 — v On Clinic Aust Pty Ltd, Men Only Medical Clinic Pty Ltd & Potent-C Clinics (1996) 35 IPR 635 …. 4.14, 14.205–14.209

— v Optell Pty Ltd, Beckett & Andela (1998) 41 IPR 49 …. 8.165 — v Original Mama’s Pizza & Rib Pty Ltd [2008] FCA 370 …. 3.11, 14.202, 14.416, 14.419, 14.428 — v Ozdirect Online Brands Pty Ltd [2009] FCA 1604 …. 14.427 — v P and N Pty Ltd [2014] FCA 6 …. 8.101, 14.25, 14.114, 14.123 — v Pacific Dunlop Ltd [2001] FCA 740 …. 13.348 — v Panasonic Australia Pty Ltd (2010) 269 ALR 622 …. 14.194 — v Panasonic Pty Ltd [2010] FCA 856 …. 3.11 — v Pepe’s Ducks Ltd [2013] FCA 570 …. 13.56, 14.25, 14.123, 14.198 — v Pest Free Australia Pty Ltd [2004] FCA 527 …. 8.115, 8.116 — v Pirovic Enterprises Pty Ltd (No 2) [2014] FCA 1028 …. 14.123, 14.198 — v Powerballwincomau Pty Ltd [2010] FCA 378 …. 14.427 — v Prouds Jewellers Pty Ltd [2008] FCAFC 199 …. 4.125 — v Purple Harmony Plates Pty Ltd [2001] FCA 1062 …. 14.205–14.207 — v Radio Rentals Ltd (2005) 146 FCR 292 …. 6.85, 6.88, 6.89 — v Rana [2008] FCA 374 …. 12.294 — v Real Estate Institute of Western Australia Inc (1999) 161 ALR 79 …. 13.39, 13.51, 13.377, 14.213 — v — [1999] FCA 1387 …. 13.352, 14.192, 14.206 — v Roche Vitamins Australia Pty Ltd [2001] FCA 150 …. 14.33, 14.72 — v Rural Press Ltd (2000) 169 ALR 573 …. 12.256 — v — [2001] FCA 116 …. 2.170 — v — [2001] FCA 1065 …. 14.22, 14.194 — v Safe Breast Imaging Pty Ltd (No 2) [2014] FCA 998 …. 14.123, 14.206, 14.330, 14.427 — v Salecomp Pty Ltd [2013] FCA 1316 …. 8.180, 14.198 — v Sampson [2011] FCA 1165 …. 14.427 — v Samton Holdings Pty Ltd (2002) 189 ALR 76 …. 6.37, 6.38, 6.41, 6.42,

6.44, 6.49, 6.77 — v Scoopon Pty Ltd [2014] FCA 820 …. 14.25, 14.123, 14.198 — v Seal-A-Fridge Pty Ltd (2010) 268 ALR 321 …. 6.120, 6.134 — v Sensaslim Australia Pty Ltd (in liq) (No 1) (2011) 283 ALR 235 …. 1.80 — v Singapore Airlines Cargo Pty Ltd [2012] FCA 1395 …. 2.220 — v Signature Security Group Pty Ltd [2003] FCA 3 …. 4.49, 4.50, 12.56, 12.57 — v — [2003] FCA 375 …. 13.56 — v Singtel Optus Pty Ltd (No 1) [2010] FCA 1177 …. 4.53, 4.54, 8.271 — v — (No 3) (2010) 276 ALR 102 …. 3.106, 3.107, 14.172, 14.203, 14.206, 14.219, 14.220 — v — (No 4) (2011) 282 ALR 246 …. 1.14, 14.33, 14.51, 14.73, 14.74, 14.199 — v SIP Australia Pty Ltd [2002] FCA 824 …. 2.220 — v — [2003] FCA 336 …. 14.66, 14.82, 14.83, 14.93 — v Skins Compression Garments Pty Ltd [2009] FCA 710 …. 13.372 — v Smash Enterprises Pty Ltd [2011] FCA 375 …. 14.123 — v — (No 2) [2011] FCA 376 …. 14.198 — v SMS Global Pty Ltd [2011] FCA 855 …. 3.62, 13.49, 14.123, 14.194, 14.205–14.207, 14.427 — v Societe Air France [2009] FCA 341 …. 14.38, 14.44 — v Sontax Australia (1988) Pty Ltd [2011] FCA 1202 …. 14.123 — v Star Promotions Club Pty Ltd [2010] FCA 139 …. 13.36 — v Startel Communication Co Pty Ltd [2014] FCA 352 …. 14.25, 14.123, 14.181, 14.198 — v StoresOnline International Inc [2007] FCA 1597 …. 12.55 — v Stott [2013] FCA 88 …. 14.262, 14.330 — v Target Australia Pty Ltd [2001] FCA 1326 …. 4.40, 13.347, 13.373, 14.45, 14.49, 14.206

— v Tasmanian Salmonid Growers Association Ltd [2003] FCA 788 …. 14.427 — v Taxsmart Group Pty Ltd [2014] FCA 487 …. 14.427 — v Telstra Corporation Ltd [2004] FCA 987 …. 4.7 — v — (2007) 244 ALR 470 …. 4.57 — v — [2007] FCA 2058 …. 14.207 — v — [2010] FCA 790 …. 14.22, 14.60–14.63 — v Thorn Australia Pty Ltd [2004] FCA 157 …. 4.40 — v Titan Marketing Pty Ltd [2014] FCA 913 …. 14.123, 14.182 — v TPG Internet Pty Ltd [2011] FCA 1254 …. 4.52, 4.55, 4.56, 8.145 — v — (No 2) [2012] FCA 629 …. 14.236 — v — (2013) 304 ALR 186 …. 3.180, 4.10, 4.11, 4.13, 14.6, 14.9, 14.123 — v Trading Post Aust Pty Ltd [2011] FCA 1086 …. 3.11 — v Trevor Davis Investments Pty Ltd [2001] FCA 952 …. 2.220 — v Turi Foods Pty Ltd (No 2) [2012] FCA 19 …. 14.123 — v — (No 4) [2013] FCA 665 …. 8.261, 8.262 — v — (No 5) [2013] FCA 1109 …. 14.427 — v Universal Sports Challenge [2002] FCA 1275 …. 3.166 — v UNJ Millenium Pty Ltd [2012] FCA 1123 …. 14.123 — v Vales Wine Co Pty Ltd (1996) ATPR 41-528 …. 14.82 — v Vanderfield Pty Ltd [2009] FCA 1535 …. 13.45 — v Virgin Mobile Australia Pty Ltd (No 2) [2002] FCA 1548 …. 13.373, 14.181, 14.190, 14.203, 14.206, 14.213 — v Visy Paper Pty Ltd [2000] FCA 1640 …. 2.209, 2.211 — v — (2001) 186 ALR 731 …. 2.188, 2.189, 2.194, 2.220 — v Visy Industries Holdings Pty Limited (No 3) [2007] FCA 1617 …. 14.163 — v Westminster Retail Pty Ltd [2005] FCA 1299 …. 14.37, 14.40–14.42 — v Willesee Healthcare Pty Ltd (No 2) [2011] FCA 752 …. 14.123, 14.198

— v Wilson Parking 1992 Pty Ltd (ACN 052 475 911) [2009] FCA 1580 …. 8.20, 13.39, 13.46, 13.51 — v Wizard Mortgage Corp Ltd [2002] FCA 1317 …. 8.145, 13.56, 14.207 — v Woolworths Ltd [2014] FCA 364 …. 12.58 — v — (No 2) [2002] FCA 1046 …. 14.207 — v Woolworths (South Australia) Pty Ltd (2003) 198 ALR 417 …. 8.31, 12.50, 12.63 — v World Netsafe Pty Ltd [2000] FCA 33 …. 14.406 — v Worldplay Services Pty Ltd (2004) 210 ALR 562 …. 1.79, 9.115, 9.125–9.129, 9.135, 9.138, 9.142, 9.143 — v Yellow Page Marketing BV (No 2) [2011] FCA 352 …. 14.25, 14.123, 14.427 — v Z-Tek Computers Pty Ltd (1997) 148 ALR 339 …. 13.51, 14.190, 14.194 — v Zanok Technologies Pty Ltd [2009] FCA 1124 …. 3.11, 8.248 ACS v Anderson [1975] 1 NSWLR 212 …. 13.366 Actors & Announcers Equity Association of Australia v Fontana Films Pty Ltd (1982) 40 ALR 609 …. 1.52, 1.54 Adams v Thrift [1915] 1 Ch 557 …. 5.186 Adamson v New South Wales Rugby League Ltd (NSW Rugby League Draft case) (1991) 103 ALR 319 …. 2.271, 2.272, 2.274 — v West Perth Football Club (1979) 27 ALR 475 …. 2.272 Adoko v Freeserve.Com.Plc [2002] EWCA Civ 869 …. 7.16 Ainsworth v Criminal Justice Commission (1992) 106 ALR 11 …. 13.325, 13.347, 13.348 Akron Securities Ltd v Iliffe (1997) 143 ALR 457 …. 1.10, 13.93, 13.169, 13.231, 13.236, 13.259, 13.265, 13.276 Alexander v Cambridge Credit Corp Ltd (1987) 9 NSWLR 310 …. 13.106, 13.108 Alievski v Cross Country Realty Victoria Pty Ltd [2010] VSC 316 …. 6.30,

6.31 Allphones Retail Pty Ltd (ACN 008 169 090) v ACCC (2009) 259 ALR 354 …. 12.345 Aluminium Industries Vasen BV v Romalpa Aluminium Pty Ltd [1976] 2 All ER 522 …. 10.41 Amaral v Algar [2003] VSC 246 …. 14.373 American Cyanamid Co v Ethicon Ltd [1975] AC 396 …. 13.14 Andrews Bros Ltd v Singer Cars [1934] 1 KB 17 …. 8.84 Angelatos v National Australia Bank (1994) 51 FCR 574 …. 13.300 Anheuser-Busch Inc v Budejovicky Budvar (2002) 56 IPR 182 …. 5.47 Annand & Thompson Pty Ltd v TPC (1979) 25 ALR 91 …. 8.85–8.88 Antonovic v Volker (1986) 7 NSWLR 151 …. 6.48 Apand Pty Ltd v Kettle Chip Co Pty Ltd (Kettle Chips case) (1994) 30 IPR 337 …. 4.112 Applied Business Technology v Grandmaster Computers Pty Ltd (1999) 161 ALR 31 …. 5.30, 5.75, 5.108 Archer v Brown [1984] 2 All ER 267 …. 5.105, 5.106, 13.134, 13.135 Architects (Aust) Pty Ltd t/as Architects Australia v Witty Consultants Pty Ltd [2002] QSC 139 …. 5.54 Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 94 ALR 719 …. 2.115 Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (in liq) [2007] FCAFC 40 …. 5.67 Arkwright v Newbold (1881) 17 Ch D 301 …. 5.148 Ascot Four Pty Ltd v ACCC [2009] FCAFC 61 …. 4.125 Ashington Piggeries Ltd v Christopher Hill Ltd [1971] 1 All ER 847 …. 10.132, 10.142 ASIC v Accounts Control Management Services Pty Ltd [2012] FCA 1164 …. 9.214, 9.217, 9.219, 9.222 — v Adler [2001] NSWSC 451 …. 14.412

— v — [2002] NSWSC 483 …. 14.58, 14.262, 14.265, 14.276, 14.279, 14.281, 14.282, 14.284, 14.286, 14.289 — v Banovec (No 2) [2007] NSWSC 961 …. 14.413 — v Beekink (2007) 238 ALR 595 …. 14.278, 14.281, 14.287, 14.288 — v Burke [2000] NSWSC 694 …. 14.413 — v Burnard [2006] NSWSC 611 …. 14.413 — v Carey (No 3) (2006) 232 ALR 577 …. 14.410 — v Citigroup Global Markets Australia Pty Limited (ANC 113114831) (No 4) [2007] FCA 963 …. 14.326 — v Citrofresh International Ltd (2007) 245 ALR 47 …. 5.198, 5.199, 5.222 — v — (No 3) (2010) 268 ALR 303 …. 14.270, 14.275, 14.285 — v Cycclone Magnetic Engines Inc [2009] QSC 58 …. 5.200 — v Edwards (No 3) [2006] NSWSC 376 …. 14.270 — v Elm Financial Service [2005] NSWSC 1020 …. 14.270 — v — [2005] NSWSC 1065 …. 14.289 — v Forem-Freeway Enterprises Pty Ltd [1999] FCA 179 …. 14.275, 14.285 — v Fortescue Metals Group Ltd (No 5) (2009) 264 ALR 201 …. 5.201, 5.202 — v Healey (No 2) (2011) 284 ALR 734 …. 14.280 — v — [2011] FCA 1003 …. 14.66, 14.68, 14.270, 14.275 — v Hellicar (2012) 286 ALR 501 …. 14.344 — v Hutchings [2001] NSWSC 522 …. 14.283 — v Ingleby [2013] VSCA 49 …. 14.11, 14.93, 14.112–14.115, 14.122 — v Krecichwost [2007] NSWSC 948 …. 14.411, 14.412 — v Lindberg [2012] VSC 332 …. 14.61, 14.275, 14.287 — v Loiterton [2004] NSWSC 897 …. 14.265, 14.289 — v National Exchange Pty Ltd [2005] FCAFC 226 …. 6.115, 6.122 — v Macdonald (No 11) (2009) 256 ALR 199 …. 14.306 — v — (No 12) (2009) 259 ALR 116 …. 14.56, 14.66, 14.275

— v Mathews (1999) 32 ACSR 404 …. 13.68 — v Michalik (2004) 211 ALR 285 …. 14.413 — v Mining Projects Group Ltd [2007] FCA 1620 …. 14.351 — v Papotto [2002] NSWSC 310 …. 14.271 — v Parkes [2001] NSWSC 377 …. 14.270, 14.283 — v Pegasus Leveraged Options Group Pty Ltd [2002] NSWSC 310 …. 14.270 — v PJCB International Pty Ltd [2009] NSWSC 34 …. 14.413 — v Plymin (No 2) [2003] VSC 230 …. 14.275, 14.289 — v Rajnoch [2003] QSC 46 …. 14.413 — v Rangwala and Go Markets Pty Ltd [2014] NSWSC 96 …. 14.413 — v Reid [2005] FCA 1275 …. 14.294, 14.295 — v Roussi [1999] FCA 618 …. 14.271 — v Singapore Liason Pty Ltd [2000] FCA 226 …. 14.407 — v Somerville [2009] NSWSC 1149 …. 14.299, 14.315, 14.326 — v Soust (No 2) [2010] FCA 388 …. 14.270, 14.275, 14.285 — v Vines [2005] NSWSC 738 …. 14.325 — v — [2006] NSWSC 760 …. 14.56, 14.269, 14.280, 14.325 — v Vizard (2005) 219 ALR 714 …. 14.268, 14.269 — v White [2006] VSC 239 …. 14.277, 14.279 — v Whitlam (No 2) [2002] NSWSC 718 …. 14.266 Associated Newspapers Ltd v Bancks (1951) 83 CLR 322 …. 15.39, 15.10 Associated Newspapers Plc v Insert Media Ltd (1989) 18 IPR 345 …. 13.14 ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) 97 ALR 513 …. 2.258 Atkinson v Hastings Deering (Qld) Pty Ltd (1985) 6 FCR 331 …. 2.56 Attorney-General; Ex rel Elisha v Holy Apostolic & Catholic Church (1989) 98 ALR 327 …. 5.72, 5.75 Attorney-General (NSW) v World Best Holdings Ltd (2005) 223 ALR 346 ….

6.51, 6.52, 6.122 .au Domain Administration Ltd v Domain Names Australia Pty Ltd (2004) 207 ALR 521 …. 3.78, 9.73 Australian Beauty Trade Suppliers v Conference & Exhibition Organisers Pty Ltd (1991) 99 ALR 474 …. 2.83 Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 …. 13.14 Australian Building Construction Employees’ and Builders Labourers’ Federation v Commonwealth of Australia (1986) 161 CLR 88 …. 13.64 Australian Communications Network Pty Ltd v ACCC (2005) 224 ALR 344 …. 9.140–9.142, 9.145 Australian Home Loans Ltd t/as Aussie Home Loans v Phillips & Technocrat Computing Pty Ltd (1998) 40 IPR 392 …. 8.135 Australian Knitting Mills Ltd v Grant (Underpants/Woollen Underwear case) (1933) 50 CLR 387 …. 10.142 Australian Mortgage & Finance Co Pty Ltd as Trustee of Melnikoff Family Trust v Rome Euro Windows Pty Ltd as Trustee of Rome Euro Windows Unit Trust [2014] NSWSC 996 …. 14.369 Australian Ocean Line Pty Ltd v West Australian Newspapers Ltd (1983) 47 ALR 497 …. 3.221 Australian Posters Pty Ltd v City of Perth (1985) 58 LGRA 57 …. 13.325 Australian Petroleum Pty Ltd v ACCC (1997) 143 ALR 381 …. 12.46 Australian Safeway Stores Pty Ltd (1997) 145 ALR 36 …. 14.47, 14.49 Australian Securities Commission v Bell (1991) 104 ALR 125 …. 12.261 Australian Society of Accountants v Federation of Australian Accountants Incorporated (1987) 9 IPR 282 …. 5.18 Australian Softwood Forests Pty Ltd v Attorney-General (NSW); Ex Rel Corporate Affairs Commission (1981) 36 ALR 257 …. 9.129 Australian Woollen Mills Ltd v F S Walton & Co Ltd (1937) 58 CLR 641 …. 4.68

Avis v Mark Bain Constructions Pty Ltd (2011) 82 ACSR 655 …. 8.233 Avoca Consultants Pty Ltd v Millennium 3 Financial Services Pty Ltd [2009] FCA 883 …. 5.223 Avon Insurance plc v Swire Fraser Ltd [2000] 1 All ER (Comm) 573 …. 5.145 Awad v Twin Creeks Properties Pty Ltd [2012] NSWCA 200 …. 3.155, 3.156, 3.158, 3.159, 13.260

B Babanaft International Co SA v Bassatne [1989] 1 All ER 433 …. 14.378 Balfour and Clarke v Hollandia Ravensthorpe NL (1978) 18 SAS 240 …. 5.90 Ballabil Holdings Pty Ltd v Hospital Products Ltd (1985) 1 NSWLR 155 …. 14.378 Ballarat Products Ltd v Farmers Smallgoods Co Pty Ltd [1957] VR 104 …. 5.39 Bank of New South Wales v Commonwealth (Bank Nationalisation case) (1948) 76 CLR 1 …. 2.90 Bannerman v Mildura Fruit Juices Pty Ltd (1984) 55 ALR 367 …. 12.215, 12.216 Barbaro v R; Zirilli v R (2014) 305 ALR 323 …. 14.116, 14.117, 14.120, 14.122 Barclay-Johnson v Yuill [1980] 3 All ER 190 …. 14.369 Barry v Lake Jindabyne Reservation Centre Pty Ltd (1985) 8 FCR 279 …. 3.41 Barto v GPR Management Services Pty Ltd (1991) 105 ALR 339 …. 2.135 Batchelder v Holden Ltd [2009] VSC 29 …. 11.32, 11.56, 11.61 Bateman’s Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 155 ALR 684 …. 13.351 Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012] FCA 1200 …. 5.196, 5.197 Bayer Australia Ltd v Kemcon Pty Ltd (1991) 6 ANZ Ins Cas 61–026 …. 2.305 BBB Constructions v Aldi Foods [2010] NSWSC 1352 …. 3.111

Beach Petroleum NL v Johnson (1992) 9 ACSR 404 …. 14.409 Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 …. 13.14 Begbie v State Bank of New South Wales Ltd (1994) ATPR 41-288 …. 2.56 Benlist Pty Ltd v Olivetti Australia Pty Ltd (1990) ATPR 41-043 …. 3.204 Bennett v Elysium Noosa Pty Ltd (2012) 202 FCR 72 …. 3.123 — v Minister of Community Welfare (1992) 107 ALR 617 …. 13.108 Betta Foods Australia Pty Ltd v Betta Fruit Bars Pty Ltd (1998) 41 IPR 347 …. 4.108, 5.49 Bettini v Gye (1876) 1 QBD 183 …. 15.10 Bevanere Pty Ltd v Lubidineuse (1985) 59 ALR 334 …. 2.118, 3.71 Biba Ltd v Stratford Investments Ltd [1972] 3 All ER 1041 …. 12.60 Bill Acceptance Corp Ltd v GWA Ltd (1983) 50 ALR 242 …. 3.151, 3.152, 3.154 Bissett v Wilkinson (1926) All ER 343 …. 5.143 Blomley v Ryan (1956) 99 CLR 362 …. 6.13, 6.47, 6.64–6.66, 6.68, 6.72, 6.74–6.76 BM Auto Sales Pty Ltd v Budget Rent A Car Systems Pty Ltd (1976) 12 ALR 363 …. 4.117 BMI Ltd v Federated Clerks Union of Australia (NSW) Branch (1983) 51 ALR 401 …. 13.348 BMW Australia Ltd v ACCC (2004) 207 ALR 452 …. 13.32, 13.35, 14.194 Bodum v DKSH Aust Pty Ltd [2011] FCAFC 98 …. 3.11 Bonan v Hadgkiss (2006) 236 ALR 745 …. 12.256 Bond v Barry (2007) 73 IPR 490 …. 3.225 Bosaid v Andrey [1963] VR 465 …. 13.283 Boyce v Paddington Borough Council [1903] 1 Ch 109 …. 13.351 Bradford Third Equitable Benefit Building Society v Borders (1941) 2 All ER

205 …. 5.83, 5.85, 5.88, 5.92, 13.102 Bradken Consolidated Ltd v Broken Hill Pty Co Ltd (1979) 24 ALR 9 …. 1.27–1.29, 1.31, 1.36, 1.37 Brambles Holdings Ltd v TPC (No 2) (1980) 32 ALR 328 …. 12.277 Bray v F Hoffman-La Roche Ltd (2002) 190 ALR 1 …. 1.72, 1.76–1.78, 1.81, 1.82 — v — (2003) 200 ALR 607 …. 13.317 Break Fast Investments Ltd v Gravity Ventures Pty Ltd [2013] VSC 89 …. 14.369 Bridge Stockbrokers Ltd v Bridges (1984) 4 FCR 460 …. 3.42 Bridgewater v Leahy (1998) 158 ALR 66 …. 6.44, 6.73, 6.96 British Westinghouse Electric Co Ltd v Underground Electric Railways Co Ltd [1912] AC 673 …. 13.123 Bropho v State of Western Australia (1990) 93 ALR 207 …. 1.30, 1.36 Brown v Jam Factory Pty Ltd (1981) 35 ALR 79 …. 3.7 Bunnings Group Ltd v Laminex Group Ltd (2006) 230 ALR 269 …. 2.38–2.40, 2.47–2.51, 2.53, 2.55 Bunnings Pty Ltd v McMillin [2005] VSC 131 …. 14.373 Burns v MAN Automotive (1986) 161 CLR 653 …. 10.109 — v — (1986) 69 ALR 11 …. 13.125, 13.127 Business and Professional Leasing Pty Ltd v Dannawi; Bpl (NNW) Pty Ltd v Blue Robe Petroleum Pty Ltd; Bpl (NSW) Pty Ltd v Macarounas [2008] NSWSC 902 …. 2.24, 2.26 Butcher v Lachlan Elder Realty Pty Ltd (2004) 212 ALR 357 …. 3.186, 3.199–3.203

C Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 239 ALR 662 …. 5.40, 5.70, 5.73, 5.74

— v — (No 8) (2008) 75 IPR 557 …. 5.45 — v Pub Squash Co Pty Ltd (1980) 32 ALR 387 …. 5.31 Cadura Investments Ltd v Rototek Pty Ltd [2003] WASC 255 …. 14.369, 14.372, 14.379, 14.381, 14.386, 14.393 Caltex Oil (Aust) Pty Ltd v Dredge Willemstad (1976) 11 ALR 227 …. 5.122 Caltex Refineries (Qld) Pty Ltd v Stavar (2009) 259 ALR 616 …. 5.127, 5.128, 5.130, 5.131 Cameron v Qantas Airways Ltd (1995) 55 FCR 147 …. 6.122 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 …. 3.79 — v Metway Leasing Ltd (1998) ATPR 41-630 …. 9.215 Campomar Sociedad, Limitada v Nike International Ltd (2000) 169 ALR 677 …. 3.39, 3.48, 3.49, 5.15, 5.52, 5.58 — v — [2000] HCA 12 …. 3.81, 3.82, 3.105 Car & Universal Finance Co Ltd v Caldwell [1965] 1 QB 525 …. 10.46 Cardile v LED Builders Pty Ltd (1999) 162 ALR 294 …. 13.8, 14.359, 14.360, 14.369, 14.373, 14.386–14.388, 14.390–14.392 Carey-Hazell v Getz Bros and Co (Aust) Pty Ltd [2004] FCA 853 …. 10.132, 11.8, 11.24, 11.34, 11.37, 11.56, 11.61, 11.70 Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 …. 4.35 Carlos Federspiel and Co SA v Charles Twigg and Co Ltd [1957] 1 Lloyd’s Rep 240 …. 10.40 Carpet Call Pty Ltd v Chan (1987) ATPR (Digest) 46-025 …. 2.54 Carter v Delgrove Holdings Pty Ltd [2013] FCCA 783 …. 3.170 Cartledge v E Jopling & Sons Ltd [1963] 1 All ER 341 …. 13.190 Cassidy v Medical Benefits Fund of Australia (No 2) [2002] FCA 1097 …. 3.84, 8.182 — v Saatchi & Saatchi Australia Pty Ltd [2004] FCAFC 34 …. 3.23 Castlemaine Tooheys Ltd v South Australia (1986) 67 ALR 553 …. 13.14

— v Williams & Hodgson Transport Pty Ltd (1985) 64 ALR 536 …. 2.284 — v — (1986) 68 ALR 376 …. 2.288 Cavalier Marketing (Australia) Pty Ltd v Rasell (1990) 96 ALR 375 …. 10.150 CBS Records Australia Ltd v Telmak Teleproducts (Aust) Pty Ltd (1987) 72 ALR 270 …. 5.70, 5.72, 5.74 CCP Australian Airships Ltd v Primus Telecommunications Pty Ltd (2005) ATPR 42-042 …. 9.35 Central Equity Limited v Central Corporation Pty Ltd (1995) 32 IPR 481 …. 8.220–8.222 Century Metals and Mining NL v Yeomans (1989) 85 ALR 54 …. 13.14 Chapman v Hearse (1961) 106 CLR 112 …. 13.107 — v Luminis Pty Ltd (No 4) (Hindmarsh Island Bridge case) [2001] FCA 1106 …. 2.142, 13.149, 13.203 Cheong by her tutor The Protective Commissioner of New South Wales v Wong [2001] NSWSC 881 …. 2.305, 11.25, 11.26, 11.51 Childrens Television Workshop Inc v Woolworths (NSW) Ltd (Muppet/Sesame Street case) (1980) 1B IPR 609 …. 5.58 Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 7) [2008] FCA 1364 …. 3.109 City Equitable Fire Insurance Co Ltd, Re [1925] Ch 407 …. 14.149 Civil Service Co-Operative Society of Vic Ltd v Blyth (1914) 20 ALR 161 …. 5.142 Clark Equipment Australia Ltd v Covcat Pty Ltd (1987) 71 ALR 367 …. 3.195 Clay, Re; Clay v Booth [1919] 1 Ch 66 …. 13.348 Club Cape Schanck Resort Co Ltd v Cape Country Club Pty Ltd (2001) 3 VR 526 …. 13.283 Coca-Cola Co v All-Fect Distributors Ltd t/as Millers Distributing Co (1998) 43 IPR 47 …. 4.104 Collier Constructions Pty Ltd v Foskett Pty Ltd (1990) 97 ALR 460 …. 4.28

Colorado Group Ltd v Strandbags Group Pty Ltd (2007) 243 ALR 127 …. 5.36 Commercial Bank of Australia Ltd v Amadio (1983) 46 ALR 402 …. 6.44, 6.56, 6.57, 6.59, 6.61, 6.63, 6.69, 6.81, 6.82–6.84, 6.86, 6.87, 6.91 — v — (1983) 151 CLR 447 …. 6.13 Commercial Banking Co of Sydney Ltd v RH Brown & Co [1972–73] ALR 393 …. 5.98 Commissioner for Corporate Affairs (Vic) v Bracht [1989] VR 821 …. 14.307, 14.318, 14.326 Commissioner for Corporate Affairs (WA) v Ekamper (1987) 12 ACLR 519 …. 14.271, 14.287 Commissioner of Fair Trading v Kent Publishing Pty Ltd [2007] NSWSC 590 …. 9.102 Commodore Business Machines Pty Ltd v TPC (1990) 92 ALR 563 …. 13.40 Commonwealth v Amann Aviation Pty Ltd (1991) 104 ALR 1 …. 13.172, 13.173 — v Leahy Petroleum – Retail Pty Ltd [2005] FCA 1422 …. 14.82 — v Verwayen (1990) 95 ALR 321 …. 6.44, 6.50, 6.51, 6.99, 6.100 Commonwealth Bank of Australia v Mehta (Swiss Franc cases) (1991) 23 NSWLR 84 …. 3.133, 3.134 ConAgra Inc v McCain Foods (Aust) Pty Ltd (McCain Pizza/McCain’s Healthy Choice case) (1992) 106 ALR 465 …. 5.5, 5.6, 5.8, 5.20, 5.21, 5.23, 5.24, 5.28–5.30, 5.50, 5.56, 5.57 Concrete Constructions Pty Ltd v Plumbers and Gasfitters Employees Union (No 2) (1987) 15 FCR 64 …. 13.61 Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 92 ALR 193 …. 2.97, 2.100–2.102, 2.104, 2.137 Constantine v TPC (1994) ALR 341 …. 12.256, 12.258–12.261, 12.263 Construction, Forestry, Mining and Energy Union (CFMEU) v Cahill (2010) 269 ALR 1 …. 14.22

Cook v Pasminco Ltd (2000) 99 FCR 548 …. 2.287 — v — [2000] FCA 677 …. 11.34 Cool and Sons Pty Ltd v O’Brien Glass Industries Ltd (1981) 35 ALR 445 …. 2.289, 2.290 Cooper v Ashley & Johnson Motors Ltd [1997] DCR 170 …. 10.79 Copyright Agency Ltd v Haines (1982) 40 ALR 264 …. 13.14 Coshott (Ronald) v ASIC [2014] AATA 677 …. 14.277 Costa Vraca Pty Ltd v Berrigan Weed & Pest Control Pty Ltd & Kocks (1998) 155 ALR 714 …. 3.147 Crago v Multiquip Pty Ltd & Dunogan Farm Tech Pty Ltd (1998) ATPR 41620 …. 2.41, 2.52 Crawford v Mayne Nickless Ltd t/as MSS Alarm Service (Reg’d) (1992) ATPR (Digest) 46-091 …. 2.55 Credit Suisse Fides Trust SA v Cuoghi [1997] 3 All ER 724 …. 14.378 Crocodile Marketing Ltd v Griffith Vintners Pty Ltd (1989) 91 ALR 273 …. 2.155 Crowther v Shannon Motor Co Ltd [1975] 1 WLR 30 …. 10.124 Cummings v Rundle (1993) 113 ALR 285 …. 3.160 Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337 …. 13.14 Curtis v Chemical & Dying Co [1951] 1 KB 805 …. 5.92 — v NID Pty Ltd [2010] FCA 1072 …. 14.382, 14.383

D Daniels Corp International Pty Ltd v ACCC (2002) 192 ALR 561 …. 12.135, 12.185, 12.188, 12.198, 12.297 Danlay Pty Ltd v Medlane Ltd [1999] VSC 264 …. 14.373 Dataflow Computer Services Pty Ltd v Goodman (1999) 168 ALR 169 …. 2.141 Davenport v TPC (1983) 47 ALR 505 …. 12.175, 12.191, 12.197, 12.198,

12.201, 12.204, 12.207, 12.210, 12.214, 12.234 David Jones Ltd v Willis (1934) 52 CLR 110 …. 10.86 De Gruchy v R (2002) 190 ALR 441 …. 2.200 Deatons Pty Ltd v Flew (1949) 79 CLR 370 …. 2.234 Deckers Outdoor Corp Inc v Farley (No 5) (2009) 262 ALR 53 …. 5.52 Demagogue Pty Ltd v Ramensky (1992) 110 ALR 608 …. 3.121–3.123, 3.130, 13.92, 13.271–13.273, 13.287 Dennant v Skinner [1948] 2 KB 164 …. 10.40 Dependable Motors Pty Ltd v Ashford Shire Council (1959) 101 CLR 265 …. 10.132 Derry v Peek (1889) 14 App Cas 337 …. 5.85, 5.93, 5.96, 5.159, 5.160, 13.102 DG of Fair Trading v First National Bank plc [2002] 1 All ER 97 …. 5.57 — v — [2002] 1 AC 481 …. 7.16 Dillon v Baltic Shipping Co (1989) 21 NSWLR 614 …. 10.173 Dimension Data Aust Pty Ltd v Kepper [2000] FCA 218 …. 2.170 Dimmock v Hallett (1866) LR2 ChApp 21 …. 5.143 Director of Consumer Affairs Victoria v AAPT Ltd [2006] VCAT 1493 …. 7.16, 7.54, 7.59, 7.65, 7.96, 7.101 — v Australian Tourism Centre Pty Ltd (in liq) [2010] VSC 571 …. 14.236 — v Backloads.com Pty Ltd [2009] VCAT 754 …. 7.16, 7.104 — v Craig Langley Pty Ltd [2008] VCAT 482 …. 2.55, 7.38 — v Dimmeys Stores Pty Ltd (2013) 308 ALR 296 …. 14.46, 14.236, 14.330 — v Midas Trading (Aust) Pty Ltd (2009) 25 VR 1 …. 14.236 — v Parking Patrols Vic Pty Ltd [2012] VSC 137 …. 14.236 — v Trainstation Health Clubs Pty Ltd [2008] VCAT 2092 …. 7.16, 7.98 Director of Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2013] FCA 1014 …. 14.114 Director General of Fair Trading v First National Bank plc [2002] 1 All ER 97

…. 5.57 — v — [2002] 1 AC 481 …. 7.16 Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 …. 4.115 Doney v Palmview Sawmill Pty Ltd [2005] QSC 062 …. 2.154, 2.157 Donoghue v Stevenson [1932] AC 562 …. 11.4, 11.6, 11.7 Drambo Pty Ltd v Westpac Banking Corporation Ltd (1992) 37 FCR 263 …. 13.205 Drummond v Van Ingen (1887) 12 App Cas 284 …. 10.147, 10.148 Ducret v Chaudhary’s Oriental Carpet Palace Pty Ltd (1987) 76 ALR 183 …. 8.47, 8.50, 8.54 Duncan v Lipscombe Child Care Services Inc [2006] FCA 458 …. 2.136 Dunlop Olympic Ltd v TPC (1982) 40 ALR 367 …. 12.254, 12.287 Durant v Greiner (1990) 21 NSWLR 119 …. 2.128

E E v Australian Red Cross Society (1991) 99 ALR 601 …. 2.82 Eastland Technology Australia Pty Ltd v Whisson (2005) 223 ALR 123 …. 14.153 Edgington v Fitzmaurice (1885) 29 Ch D 459 …. 5.85, 5.91, 5.143, 13.102 Effem Foods Ltd v Nicholls [2004] NSWCA 332 …. 11.63, 11.64, 11.69, 11.70 Elder Smith Goldsbrough Mort Ltd v McBride & Palmer [1976] 2 NSWLR 631 …. 10.142 Elders Trustee & Executor Co Ltd v EG Reeves Pty Ltd (1987) 78 ALR 193 …. 3.85 Elliott v ASIC (2004) 205 ALR 594 …. 14.262, 14.265 Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (No 2) (1987) 75 ALR 271 …. 13.92 Elwood Clothing Pty Ltd v Cotton On Clothing Pty Ltd (2009) 81 IPR 378 ….

5.68 Enterprise Finance Solutions Pty Ltd v Austec Pty Ltd [2013] FCA 491 …. 5.220 Environment Protection Authority v Caltex Refining Co Pty Ltd (1993) 118 ALR 392 …. 12.297, 14.331 Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 57 ALR 167 …. 2.148 Equity Access Pty Ltd v Westpac Banking Corporation (1989) 16 IPR 431 …. 5.76 Equuscorp Pty Ltd v Kamisha Corp Ltd [1999] FCA 681 …. 3.217 Erven BV v J Townsend & Sons (Hull) Ltd (Advocaat case) [1979] 2 All ER 927 …. 5.10, 5.11, 5.13 Erwin v Iveco Trucks Australia Ltd (2010) 267 ALR 752 …. 11.34 European Asian of Australia Ltd v Kurland (1985) NSWLR 192 …. 6.65 Eva v Southern Motors Box Hill Pty Ltd (1977) 30 FLR 213 …. 8.71

F FAI General Insurance Co Ltd v RAIA Insurance Brokers Ltd (1992) 108 ALR 479 …. 3.76, 13.328 Farquhar v Bottom [1980] 2 NSWLR 380 …. 4.9 Fasold v Roberts (Evolution v Creation case / Noah’s Ark case) (1997) 145 ALR 548 …. 1.55 Finn v Carelli [2007] NSWSC 261 …. 14.382 Finucane v New South Wales Egg Corp (1988) 80 ALR 486 …. 13.215 Firewatch Australia Pty Ltd v Country Fire Authority [1999] FCA 761 …. 2.138 First Netcom Pty Ltd v Telstra Corp Ltd (2000) 179 ALR 725 …. 13.11 Forge v ASIC (2004) 213 ALR 574 …. 14.265, 14.325 Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 …. 13.345, 13.350, 13.363

Foster v ACCC (2006) 226 ALR 27 …. 13.52 Four Square Stores (Qld) Ltd v A B E Copiers Pty Ltd (1981) ATPR 40-232 …. 2.56 Fourie v Le Roux [2007] 1 All ER 1087 …. 14.369 Fox v Wood (1981) 35 ALR 607 …. 13.127 Fraser v NRMA Holdings Ltd (1995) 127 ALR 543 …. 3.97, 3.98 Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 …. 2.246, 2.255

G Gallagher v Durack (1983) 45 ALR 53 …. 13.69 Gamer’s Motor Centre (Newcastle) Pty Ltd v Natwest Wholesale Australia Pty Ltd (1987) 163 CLR 236 …. 10.46 Gammasonics Institute for Medical Research Pty Ltd v Comrad Medical Systems Pty Ltd (2010) 77 NSWLR 479 …. 2.266 Garcia v National Australia Bank Ltd (1998) 155 ALR 614 …. 6.44 Gardam v George Wills & Co Ltd (No 1) (1988) 82 ALR 415 …. 3.183–3.185, 8.20, 8.39, 8.43, 8.44, 8.46–8.48 — v Splendid Enterprises Pty Ltd (1987) ATPR 40-779 …. 8.49 Gardner v Dairy Industry Authority of NSW (1977) 18 ALR 55 …. 13.348 Gates v City Mutual Life Assurance Society Ltd (1986) 63 ALR 600 …. 13.174 GAY, Re (2014) 99 ACSR 199 …. 14.269 GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50 …. 1.57–1.61 General Newspapers Pty Ltd v Telstra Corp (1993) 117 ALR 629 …. 3.140, 4.31 George v ASIC [2014] AATA 167 …. 14.270 George Weston Foods Ltd v Goodman Fielders Ltd (Wonder White case) (2000) 49 IPR 553 …. 4.43, 4.48

Gerakiteys v R (1984) 51 ALR 417 …. 2.177, 2.182, 2.183 Gibson v Barton (1875) LR 10 QB 329 …. 14.326 Gillette Australia Pty Ltd v Energizer Australia Pty Ltd (2002) 193 ALR 629 …. 4.84–4.86, 4.90–4.92, 4.94–4.96, 4.99 — v — [2005] FCA 1647 …. 4.36, 4.90 Gillfillan v ASIC [2012] NSWCA 370 …. 14.59, 14.66, 14.99, 14.262, 14.265, 14.266, 14.270, 14.278, 14.288 Gilmour v Bannister Nominees Pty Ltd (1982) ATPR 40-325 …. 8.51 Gipps v Gipps [1978] 1 NSWLR 454 …. 5.99 Given v CV Holland (Holdings) Pty Ltd (1977) 15 ALR 439 …. 8.15, 8.16, 8.41, 8.52, 8.53 — v Pryor (1979) 24 ALR 442 …. 8.235 Glavonjic v Foster [1979] VR 536 …. 10.108, 13.124 Glendale Chemical Products Pty Ltd v ACCC (1998) 90 FCR 40 …. 2.300, 2.303, 2.305, 11.24, 11.31 Global One Mobile Entertainment Pty Ltd v ACCC [2012] FCAFC 134 …. 3.178, 4.18, 14.33, 14.46, 14.87 Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 55 ALR 25 …. 3.65, 3.153, 3.220 Glorie v WA Chip & Pulp Co Pty Ltd (1981) 39 ALR 67 …. 2.124–2.126 GM Holden Ltd v Paine (2011) 281 ALR 406 …. 5.68 Godley v Perry (Burton & Sons (Bermondsey) Ltd [1960] 1 All ER 36 …. 10.147 Goldstraw v Goldstraw [2002] VSC 491 …. 14.373 Gollel Holdings Pty Ltd v Kenneth Maurer Funerals Pty Ltd (1987) 9 IPR 109 …. 3.60 Google Inc v ACCC (2013) 294 ALR 404 …. 3.187, 14.135 Gould v Vaggelas (1984) 56 ALR 31 …. 5.151, 5.152 GPG (Australia Trading) Pty Ltd v GIO Australia (Holdings) Ltd (2001) 191

ALR 342 …. 5.218 Graham Barclay Oysters Pty Ltd v Ryan (Wallis Lake Oyster Case) (2000) 177 ALR 18 …. 11.77, 11.80 — v — (2002) 194 ALR 337 …. 11.81 Grant v Australian Knitting Mills Ltd (Woollen Underwear case) [1936] AC 85 …. 10.132, 10.143 Green v R; Quinn v R (2011) 283 ALR 1 …. 14.56 Griggs v Australian Securities Commission (1999) 75 SASR 307 …. 14.307, 14.312, 14.315, 14.320, 14.321, 14.326

H Haber v Walker [1963] VE 339 …. 13.109 Habib Bank Ltd v Habib Bank AG Zurich [1981] 2 All ER 650 …. 5.37 Hadley v Baxendale (1854) 9 Exch 341 …. 13.164, 15.41 Harlingdon & Leinster Enterprises Ltd v Christopher Hull Fine Art Ltd [1990] 1 All ER 737 …. 10.133, 10.142 Harrington v Lowe (1996) 136 ALR 42 …. 3.215 Harris v Cmr of Taxation (2002) 125 FCR 46 …. 9.144 — v Western Australian Exim Corp (1994) 129 ALR 387 …. 13.187–13.189, 13.194 Harvey Norman Holdings Ltd v Fels [2001] FCA 888 …. 12.256 Hasell v Bagot Shakes & Lewis Ltd (1911) 13 CLR 374 …. 13.123 He Kaw Teh v R (1985) 60 ALR 449 …. 2.156 Healing (Sales) Pty Ltd v Inglis Electrix Pty Ltd [1969] ALR 533 …. 10.53 Hearn v O’Rouke [2003] FCAFC 78 …. 2.103 Heating Centre Pty Ltd, The v Trade Practices Commission (1986) 9 FCR 153 …. 2.165 — v — (1986) 65 ALR 429 …. 14.146

Hedley Byrne & Co Ltd v Heller & Partners Ltd [1963] 2 All ER 575 …. 5.110–5.112, 5.117, 5.119, 5.120, 5.129 Hely–Hutchinson v Brayhead Ltd [1968] 1 QB 549 …. 2.253, 10.46 Henderson v Pioneer Homes Pty Ltd (1980) 29 ALR 597 …. 8.174, 8.175 — v Radio Corp Pty Ltd (Ballroom Dancers case) (1960) 1A IPR 620 …. 5.61 Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (New York Deli case) (1988) 79 ALR 83 …. 3.58, 3.116, 3.121, 3.173, 13.118, 13.151, 13.275 — v — (No 2) (1989) 89 ALR 539 …. 13.167 Henville v Walker (2001) 182 ALR 37 …. 13.107, 13.112–13.117, 13.163, 13.172, 13.173 Heritage Clothing Pty Ltd v Mens Suit Warehouse Direct Pty Ltd [2008] FCA 1775 …. 3.11 Hill v Van Erp (1997) 142 ALR 687 …. 5.123 Hodgson v Amcor [2012] VSC 94 …. 14.325 Hogan v Koala Dundee Pty Ltd (1988) 83 ALR 187 …. 4.107 Hollis v ABE Copiers Pty Ltd (1979) 41 FLR 141 …. 8.80, 8.82–8.84 — v PH & D Stephens Investments Pty Ltd (1985) 8 FCR 576 …. 8.69, 8.72 — v Vabu Pty Ltd (2001) 181 ALR 263 …. 2.234 Holloway v Gilport Pty Ltd (1995) ATPR 41-408 …. 8.243, 8.245 Hongkong Fir Shipping Co v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 …. 15.11 Hoover (Australia) Pty Ltd v Email Ltd (1991) 104 ALR 369 …. 4.91 Hope v Bathurst City Council (1980) 29 ALR 577 …. 1.51 Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 18 ALR 639 …. 3.8, 3.11, 3.25, 3.100, 3.102, 3.113, 4.109–4.111, 5.71 Hospitals Contribution Fund of Australia Ltd v Switzerland Australia Health Fund Pty Ltd (1988) 11 IPR 549 …. 14.205, 14.207

Houghton v Arms (2006) 231 ALR 534 …. 2.139 House v R [1936] HCA 40 …. 14.98 Howarth and ASIC, Re [2008] AATA 278 …. 14.270 HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 211 ALR 79 …. 13.164, 13.207 — v — [2004] HCA 54 …. 3.11 Hubbards Pty Ltd v Simpson Ltd (1982) 41 ALR 509 …. 14.429 Hughes v Lord Advocate [1963] 1 All ER 705 …. 13.121 — v Western Australian Cricket Association Inc (1986) 69 ALR 660 …. 2.81 Hume v Munro (No 2) (1943) 67 CLR 461 …. 13.348 Hurley v McDonald’s Australia Ltd [1999] FCA 1728 …. 6.55, 6.122 Hutchence v South Sea Bubble Co Pty Ltd (INXS case) (1986) 64 ALR 330 …. 5.18 Huynh v Phan [2004] VSC 151 …. 14.373, 14.384

I I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 192 ALR 1 …. 13.151, 13.214, 13.225, 13.262 ICI Australia Operations Pty Ltd v TPC (1992) 110 ALR 47 …. 13.25, 13.31, 13.38, 13.40, 13.42, 13.43, 13.48, 13.53, 13.54, 13.63, 13.170, 14.46 Idylic Solutions Pty Ltd, Re; ASIC v Hobbs [2013] NSWSC 106 …. 14.57, 14.60 IMF (Australia) Ltd v Sons Of Gwalia Ltd (admin apptd) (2004) 211 ALR 231 …. 13.363–13.368 Inn Leisure Industries Pty Ltd v DF McCloy Pty Ltd (No 1) (1991) 100 ALR 447 …. 3.210 Interlego AG v Croner Trading Pty Ltd (1992) 111 ALR 577 …. 4.118 Iraqi Ministry of Defence v Arcepey Shipping Co SA [1980] 1 All ER 480 …. 14.369

IRC v Muller & Co’s Margarine Ltd [1901] AC 217 …. 5.21 Irving v Emu & Prospect Gravel & Metal Co Ltd (1909) 26 WN (NSW) 137 …. 13.11, 13.14 Islamic Co-Ordinating Council of Victoria v Chawk [2001] VSC 414 …. 14.378

J J McPhee & Son (Australia) Pty Ltd v Others v ACCC (2000) 172 ALR 532 …. 2.220, 14.33, 14.96, 14.100 J S McMillan Pty Ltd v Commonwealth (1997) 147 ALR 419 …. 1.63 Jackson v Sterling Industries Ltd (1987) 71 ALR 457 …. 14.361–14.363, 14.369 James v The Commonwealth (1936) 62 CLR 339 …. 10.40 Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 109 ALR 638 …. 13.118 Janssen Pharmaceutical Pty Ltd v Pfizer Pty Ltd (1985) 6 IPR 227 …. 14.206 Jetset Tours Pty Ltd v Leibler [1999] VSC 265 …. 14.373 Jetstar Airways Pty Ltd v Free [2008] VSC 539 …. 7.16, 7.55 Jillawarra Grazing Co v John Shearer Ltd (1984) ATPR 40-441 …. 2.45, 2.46, 10.153 Jobbins v Capel Court Corp Ltd (1989) 91 ALR 314 …. 13.193 Joel v Morison [1834] 172 ER 1338 …. 2.243 Johnson v Perez (1988) 82 ALR 587 …. 13.130 Johnston v NEI International Combustion Ltd; Rothwell v Chemical & Insulating Co Ltd; Topping v Benchtown Ltd (Pleural Plaques Litigation) [2007] 4 All ER 1047 …. 13.131 Jones v Sterling [1982] 63 FLR 216 …. 14.420 Joseph Travers and Sons Ltd v Longel Ltd (1947) 64 TLR 150 …. 10.142 JS Robertson (Aust) Pty Ltd v Martin (1956) 94 CLR 30 …. 10.147 Juice Station Franchising Pty Ltd (In Liq) v Konidaris [2006] NSWSC 1024

…. 13.302

K Kakavas v Crown Melbourne Ltd (2013) 298 ALR 35 …. 6.71, 6.78–6.80, 6.90, 6.91 Kalgoorlie Consolidated Gold Mines Pty Ltd & Ors v F L Smidth Inc & Ors [2003] WASC 52 …. 13.200 Kannegieter v Hair Testing Laboratory Pty Ltd [2004] FCA 639 …. 3.119 Karadimas v H & P Solopitias Pty Ltd [2000] VSC 392 …. 14.373 Karedis Enterprises Pty Ltd & Greenfriars Pty Ltd v Antoniou (1995) 137 ALR 544 …. 13.185 Karlshamns Oljefabriker v Eastport Navigation Corp [1982] 1 All ER 208 …. 10.40 Karmot Auto Spares Pty Ltd v Dominelli Ford (Hurstville) Pty Ltd (1992) 35 FCR 560 …. 13.291 Keehn v Medical Benefits Fund of Australia Ltd (1977) 14 ALR 77 …. 8.165 Keen Mar Corp Pty Ltd v Labrador Park Shopping Centre Pty Ltd (1985) 61 ALR 504 …. 2.173 — v — (1988) ATPR 40-853 …. 13.203 Keller v LED Technologies Pty Ltd (2010) 268 ALR 613 …. 2.154 Kenny v South Australia (1987) 46 SASR 268 …. 12.26 Kettles and Gas Appliances Ltd v Anthony Hordern & Sons Ltd (1934) 35 SR (NSW) 108 …. 13.14 Kingsway Hall Hotel Ltd v Red Sky IT (Hounslow) Ltd [2010] EWHC 965 …. 7.16 Kismet International Pty Ltd v Guano Fertilizer Sales Pty Ltd [2013] FCA 375 …. 5.65 Klein v Botsman [2003] TASSC 106 …. 14.385 Knott Investments Pty Ltd v Winnebago Industries Inc (2013) 299 ALR 74

…. 5.32 Korczynski v Wes Lofts (Aust) Pty Ltd (1985) 62 ALR 225 …. 8.72 Korean Airlines Co Ltd v ACCC (No 3) (2008) 247 ALR 781 …. 12.184, 12.186, 12.277–12.279 Kosciuszko Thredbo Pty Ltd v ThredboNet Marketing Pty Ltd [2013] FCA 563 …. 4.113, 4.116 Kotan Holdings Pty Ltd v TPC (1991) 102 ALR 51 …. 12.186, 12.221, 12.222, 12.224, 12.277 Krakowski v Eurolynx Properties Ltd (1995) 130 ALR 1 …. 5.100 Ku-ring-gai Co-operative Building Society (No 12) Ltd, Re (1978) 22 ALR 621 …. 2.86–2.88, 2.90, 2.104, 2.105

L L Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) (Shaddock’s case) (1981) 36 ALR 385 …. 5.161, 5.163 Lam v Ausintel Investments Aust Pty Ltd (1989) 97 FLR 458 …. 3.139 Langridge v Levy (1837) 2 M & W 519 …. 5.95 Lanza v Codemo [2001] NSWSC 72 …. 11.99, 11.101 Laws v GWS Machinery Pty Ltd [2007] NSWSC 316 …. 2.72 LED Technologies Pty Ltd v Elecspess Pty Ltd (2008) 80 IPR 85 …. 8.51 Leeks v FXC Corporation (2002) 189 ALR 288 …. 2.298 Legione v Hateley (1983) 46 ALR 1 …. 6.44 Lego Australia Pty Ltd v Paul’s (Merchants) Pty Ltd (1982) 42 ALR 344 …. 3.45 Leonie’s Travel Pty Ltd v International Air Transport Association [2009] FCA 280 …. 3.11 Levi Strauss & Co v Wingate Marketing Pty Ltd (1993) 116 ALR 298 …. 4.74 Lexcray Pty Ltd v Northern Territory of Australia [1999] NTSC 107 …. 12.26 Lexmead (Basingstoke) Ltd v Lewis; sub nom Lambert v Lewis [1981] 1 All

ER 1185 …. 10.124 LG Thorne & Co Pty Ltd v Thomas Borthwick & Sons (Australasia) Ltd (1956) SR (NSW) 81 …. 10.147 Lim Poh Choo v Camden & Islington Area Health Authority [1980] AC 174 …. 13.131 Liquorland (Aust) Pty Ltd v Anghie [2001] VSC 362 …. 14.373 Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 …. 13.129 London & Northern Bank Ltd, In re (Haddock’s case Hoyles’s case) [1902] 2 Ch 73 …. 12.258, 12.261, 12.263 Louth v Diprose (1992) 110 ALR 1 …. 6.44, 6.70 Lowe v R (1984) 54 ALR 193 …. 14.57 Lubidineuse v Bevanere Pty Ltd (1984) 55 ALR 273 …. 2.117 Luckins v Highway Motel (Carnarvon) Pty Ltd (1975) 7 ALR 413 …. 1.56, 1.75 Luxottica Retail Australia Pty Ltd v Specsavers Pty Ltd (2010) 267 ALR 721 …. 4.60

M McCarthy v Australian Rough Riders Association Inc (1988) ATPR 40-836 …. 2.82 McDonald’s System (Aust) Pty Ltd v McWilliam’s Wines Pty Ltd (No 2) (1979) 28 ALR 236 …. 8.126, 8.129, 8.131 McRae v Commonwealth Disposals Commission [1951] ALR 771 …. 13.173 McWilliam’s Wine Pty Ltd v Liaweena (NSW) Pty Ltd (1988) ASC 55-695 …. 10.119 — v McDonald’s System of Australia Pty Ltd (1980) 33 ALR 394 …. 3.33, 3.34, 3.37, 3.40, 3.45 Magill v Magill (2006) 231 ALR 277 …. 5.78, 5.80–5.82, 5.84–5.87 Magna Alloys & Research Pty Ltd, Re (1975) 1 ACLR 203 …. 14.270

Makita (Aust) Pty Ltd v Black & Decker (A/Asia) Pty Ltd (1990) 18 IPR 270 …. 4.100, 14.207 Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 1 ALR 169 …. 13.283 March v E & M H Stramare Pty Ltd (1991) 99 ALR 423 …. 5.116, 13.103–13.105, 13107, 13.111, 13.114, 13.119 Mareva Compania Naviera SA v International Bulkcarriers SA [1980] 1 All ER 213 …. 14.358, 14.361 Mark Foys Pty Ltd v TVSN (Pacific) Ltd (2000) 181 ALR 90 …. 4.77, 4.82, 5.38, 8.133–8.135 Markarian v R (2005) 215 ALR 213 …. 14.26, 14.27 Marks v GIO Australia Holdings Ltd (1998) 158 ALR 333 …. 13.94, 13.118, 13.145, 13.148, 13.150, 13.168, 13.170, 13.171, 13.175, 13.181, 13.218, 13.263, 13.284 Mars Australia Pty Ltd v Sweet Rewards Pty Ltd (2009) 81 IPR 354 …. 5.74 Martin v Tasmania Development & Resources (1999) 163 ALR 79 …. 2.135, 8.242 Martine Batchelder and Gary Batcherlder v Holden Ltd [2009] VSC 29 …. 11.32, 11.56, 11.61 Masiano v Car and Hoe Finance Pty Ltd [2005] VCAT 1755 …. 6.25 Matthews v Doctrieve Corp Pty Ltd (2003) 59 IPR 155 …. 5.38 Mayes v Australian Cedar Pty Ltd [2006] NSWSC 597 …. 2.305 Mayne Nickless v Crawford (1992) 59 SASR 490 …. 10.173 — v Multigroup Distribution Services Pty Ltd [2001] FCA 1620 …. 13.213, 13.216 Medical Benefits Fund of Australia Ltd v Cassidy; John Bevins Pty Ltd v Cassidy (2003) 205 ALR 402 …. 4.44–4.47, 14.205–14.207, 14.231 — v — [2003] FCAFC 289 …. 4.58 Medtel Pty Ltd v Courtney (2003) 198 ALR 630 …. 10.74, 10.90 Melbourne Home of Ford Pty Ltd v TPC & Bannerman (1979) ATPR 40-107

…. 12.183, 12.199, 12.201, 12.243, 12.251, 12.252, 12.296 — v TPC (1979) 27 ALR 275 …. 12.193, 12.218, 12.219, 12.228, 12.290 — v — (No 3) (1980) 31 ALR 519 …. 12.181, 12.214, 12.232, 12.234 Melbourne Steamship Co Ltd v Moorehead (1912) 18 ALR 533 …. 12.27 Menhaden Pty Ltd v Citibank NA (1984) 55 ALR 709 …. 3.211 Mercantile Credits Ltd v F C Upton and Sons Pty Ltd (1974) 48 ALJR 301 …. 10.46 Merck Sharp & Dohme (Australia) Pty Ltd v Peterson (2011) 284 ALR 1 …. 10.132 MGICA (1992) Ltd (formerly MGICA Ltd) v Kenny & Good Pty Ltd and Kenny (1996) 140 ALR 313 …. 13.185, 13.193, 13.198, 13.199 MGM Bailey Enterprises v Austin Aust Pty Ltd [2002] NSWSC 259 …. 3.11 Microsoft Corp v CX Computer Pty Ltd (2002) 187 ALR 362 …. 14.351 Mildura Fruit Juices Pty Ltd v Bannerman (1983) 1 IPR 56 …. 8.256 Milford Astor Pty Ltd v Machinery Developments Ltd [2003] NSWSC 301 …. 3.194 Mill v R (1988) 83 ALR 1 …. 14.64 Miller v Fiona’s Clothes Horse of Centrepoint Pty Ltd (1989) ATPR 40-963 …. 8.185 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 270 ALR 204 …. 3.127, 3.131, 3.138 Minchillo v Ford Motor Co of Australia [1995] 2 VR 594 …. 2.43, 2.44, 2.56 Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 …. 14.108, 14.109, 14.111–14.114, 14.116, 14.117, 14.121, 14.122 Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd (1981) 36 ALR 23 …. 13.169 Monroe Topple & Associates Pty Ltd v Institute of Chartered Accountants in

Australia [2001] FCA 1056 …. 8.28, 8.30, 12.49 Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890 …. 10.45 Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 56 ALR 193 …. 5.16 Morgan & Banks Pty Ltd v Select Personnel Pty Ltd (1991) 20 IPR 289 …. 5.13 Morley v ASIC (2010) 274 ALR 205 …. 14.307, 14.318 Morris v Alcon Laboratories (Australia) Pty Ltd [2003] FCA 151 …. 11.29 Mostert v Durban Roodepoort Deep Ltd [2004] WASCA 309 …. 14.369 Motor Trades Association of Australia Superannuation Fund Pty Ltd v Rickus (No 3) [2008] FCA 1986 …. 14.163 Motorcycling Events Group Australia Pty Ltd v Kelly (2013) 303 ALR 583 …. 10.205 — v — [2013] NSWCA 361 …. 10.177 Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd & Ansett Transport Industries (Operations) Pty Ltd (1996) ATPR 41-522 …. 13.147 Murphy v Farmer (1988) 79 ALR 1 …. 8.18 — v Overton Investments Pty Ltd (2001) 182 ALR 138 …. 13.185 — v — (2004) 204 ALR 26 …. 13.94, 13.166, 13.195, 13.196, 13.201, 13.206 Musca v Astle Cork Pty Ltd (1988) 80 ALR 251 …. 5.106, 13.135 Myer Stores Pty Ltd v Conforto [2000] VSC 382 …. 14.373

N Nader v Urban Transit Authority (NSW) (1985) 2 NSWLR 501 …. 13.122 National Australia Bank Ltd v Bond Brewing Holdings Ltd (1990) 92 ALR 49 …. 14.389 — v Dessau [1988] VR 521 …. 14.369, 14.378 National Coal Board v Gamble [1959] 1 QB 11 …. 10.40

National Companies & Securities Commission v Bankers Trust Australia Ltd (1989) 91 ALR 321 …. 12.258, 12.261, 12.263 National Crime Authority v A, B & D (1988) 78 ALR 707 …. 12.261 National Exchange Pty Ltd v ASIC (2004) 61 IPR 420 …. 5.190, 5.191 National Mutual Property Services (Aust) Pty Ltd v Citibank Savings Ltd (No 1) (1995) 132 ALR 514 …. 13.149 Nella v Kingia Pty Ltd (1986) 7 IPR 55 …. 2.150 Nesbit v Porter [2000] 2 NZLR 465 …. 2.42, 15.79, 15.80 Netcomm (Aust) Pty Ltd v Dataplex Pty Ltd (1988) 81 ALR 101 …. 8.152, 8.159 New South Wales v Lepore (2003) 195 ALR 412 …. 2.234 — v McCloy Hutcherson Pty Ltd (1993) 116 ALR 363 …. 13.192, 13.203 Newmarket Corp Pty Ltd v Kee-vee Properties Pty Ltd [2003] WASC 157 …. 10.109, 13.126 News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 215 CLR 563 …. 2.198, 2.199 Nicholls v Taylor [1939] VLR 119 …. 5.104, 13.133 Nick Scali Ltd v Super A-Mart Pty Ltd [2011] FCA 751 …. 8.55 Ninemia Maritime Corp v Trave GmbH & Co KG (The Niedersachsen) [1984] 1 All ER 398 …. 14.372 Nippon Yusen Kaisha v Karageorgis [1975] 3 All ER 282 …. 14.357, 14.358, 14.361 Nirta v R (1983) 51 ALR 53 …. 2.175, 2.176, 2.179, 2.180, 2.185 NMFM Property Pty Ltd v Citibank Ltd (No 10) (2000) 186 ALR 442 …. 2.238 North East Equity Pty Ltd v Proud Nominees Pty Ltd [2010] FCAFC 60 …. 3.11 NRMA Ltd v Yates [1999] NSWSC 859 …. 2.137 NSW v Lepore (2003) 195 ALR 412 …. 2.234

— v McCloy Hutcherson Pty Ltd (1993) 116 ALR 363 …. 13.192, 13.203 NT Power Generation Pty Ltd v Power and Water Authority [2002] FCAFC 302 …. 1.46 — v — (2004) 210 ALR 312 …. 1.34, 1.38, 1.64 Nutrientwater Pty Ltd v Baco Pty Ltd (2010) 265 ALR 140 …. 5.46 NW Frozen Foods Pty Ltd v ACCC (1996) 141 ALR 640 …. 14.7–14.10, 14.28, 14.45, 14.79, 14.90, 14.95, 14.100, 14.107–14.109, 14.111–14.114, 14.116, 14.117, 14.120–14.122

O Obeid v ACCC [2014] FCA 839 …. 2.267, 2.273–2.275, 2.277, 2.278, 12.194, 12.197, 12.201, 12.205, 12.211, 12.213, 12.216, 12.240 O’Brien v Smolonogov (1983) 53 ALR 107 …. 2.114 O’Connor v Stevenson (1989) ATPR 40-944 …. 8.92 Office Cleaning Services Ltd v Westminister Office Cleaning Association [1946] 1 All ER 320 …. 4.69 Office of Fair Trading (OFT) v Abbey National plc [2009] UKSC 6 …. 7.16 O’Grady v Northern Queensland Co Ltd (1990) 92 ALR 213 …. 9.144 One.Tel Ltd (in liq), Re; ASIC v Rich [2003] NSWSC 186 …. 14.266, 14.267, 14.270, 14.280 Orion Pet Products Pty Ltd v Royal Society for the Prevention of Cruelty to Animals (Vic) [2002] FCA 860 …. 2.83, 2.122 Oropesa, The [1943] P 32 …. 13.109 Orr v Ford (1989) 167 CLR 316 …. 13.14 Our Town FM Pty Ltd v Australian Broadcasting Tribunal (No 1) (1987) 77 ALR 577 …. 8.32 Overseas Tankship (UK) Ltd v Miller Steamship Co Pty Ltd (Wagon Mound (No 2) case) [1966] 2 All ER 709 …. 13.120, 13.161 — v — [1967] 1 AC 617 …. 5.116, 15.41, 15.114

— v Morts Dock & Engineering Co Ltd (Wagon Mound (No 1) case) [1961] AC 388 …. 5.116, 15.41, 15.114 — v — [1961] 1 All ER 404 …. 13.120, 13.161 OZ-US Film Productions Pty Ltd (in liq) v Heath [2000] NSWSC 967 …. 14.378

P Pacific Dunlop Ltd v Hogan (1989) 87 ALR 14 …. 4.79, 4.106, 4.107, 5.18 Panasonic Australia Pty Ltd v Burstner (1993) ATPR 41-224 …. 10.153 Panelboard Pty Ltd v TPC (1981) 59 FLR 395 …. 12.217 Paracidal Pty Ltd v Herctum Pty Ltd (1983) 4 IPR 201 …. 5.22 Paramedical Services Pty Ltd v Ambulance Service (NSW) (1999) 217 ALR 502 …. 2.142 Park v Allied Mortgage Corp Ltd (1993) ATPR (Digest) 46-105 …. 13.149 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 …. 3.9, 3.26–3.32, 3.35, 3.36, 3.50, 3.59, 3.60, 3.63, 3.68, 3.69, 3.86, 3.87, 3.89, 3.90, 3.101, 4.5, 4.71, 4.72 Parker v R [1963] ALR 524 …. 2.203 Parkview (Keppell) Pty Ltd v Mytarc Pty Ltd (1984) 3 FCR 186 …. 3.76 Parramatta Tourist Services Pty Ltd v SWB Family Credit Union Ltd (1979) 24 ALR 273 …. 2.90 Pasley v Freeman (1789) 3 Term Rep 51 …. 5.77 Patrick v Steel Mains Pty Ltd (1987) 77 ALR 133 …. 2.135, 8.242 Patrick Stevedores Operations (No 2) Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 …. 13.11 — v — (No 3) (1998) 153 ALR 643 …. 13.82, 14.363, 14.369 Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 …. 14.372, 14.381 PCW (Underwriting Agencies) Ltd v Dixon [1983] 2 All ER 158 …. 14.369

Pearce v R (1998) 156 ALR 684 …. 14.65 Pearson & Son Ltd v Dublin Corporation [1907] AC 351 …. 5.102 Pegasus Leveraged Options Group Pty Ltd [2002] NSWSC 310 …. 14.283 Pelechowski v Registrar, Court of Appeal (1999) 162 ALR 336 …. 14.369 Pereira v DPP (1988) 82 ALR 217 …. 2.157 Perre v Apand Pty Ltd (1999) 164 ALR 606 …. 5.124 Peter Bodum A/S v DKSH Australia Pty Ltd (2011) 92 IPR 222 …. 4.114, 4.119 — v — (2011) 280 ALR 639 …. 5.40, 5.74 Peterson v Merck Sharpe & Dohme (Aust) Pty Ltd (2010) 266 ALR 1 …. 11.75 Petty v Penfold Wines Pty Ltd (1994) 49 FCR 282 …. 4.30 Philips Electronics NV v Remington Products Australia Pty Ltd (1997) 39 IPR 283 …. 5.44 Phillips and Inspector-General in Bankruptcy, Re [2012] AATA 788 …. 14.295, 14.299, 14.315 Pihiga Pty Ltd v Roche (2011) 278 ALR 209 …. 3.212 Pioneer Concrete (Vic) Pty Ltd v TPC (1982) 43 ALR 449 …. 12.174, 12.182, 12.277, 12.282 Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257 …. 5.66 Plimer v Roberts (Noah’s Ark case) (1997) 150 ALR 235 …. 2.112, 2.120 Polemis & Furness, Withy & Company Limited, Re [1921] All ER Rep 40 …. 13.121, 13.161 Polgardy v Australian Guarantee Corp Ltd (1981) 34 ALR 391 …. 13.321 Polly Peck International Plc v Nadir (No 2) [1992] 4 All ER 769 …. 14.376 Pont Data Australia Pty Ltd v ASX Operations Pty Ltd (1990) 93 ALR 523 …. 13.285 Pool v Smith’s Car Sales (Balham) Ltd [1962] 1 WLR 744 …. 10.40

Port Kennedy Golf Country Club Pty Ltd & Ors v Port Kennedy Resorts Pty Ltd & Ors [1999] WASC 253 …. 13.292 Poseidon Ltd v Adelaide Petroleum NL (1991) 105 ALR 25 …. 3.137 Postiglione v R (1997) 145 ALR 408 …. 14.56 Powell v Birmingham Vinegar Brewery Co Ltd (1897) 14 RPC 720 …. 5.34 Preist v Last [1903] 2 KB 148 …. 10.132 Price v Price [2000] VSC 389 …. 14.373 Prince Manufacturing Inc v ABAC Corp Australia Pty Ltd (1984) 57 ALR 159 …. 5.64 Province of Bombay v Municipal Corporation of the City of Bombay [1947] AC 58 …. 1.29 PT Garuda Indonesia Ltd v ACCC (2012) 290 ALR 681 …. 2.79 Pye Industries Sales Pty Ltd v TPC (1979) ATPR 40-124 …. 14.97 Pyneboard Pty Ltd (aka Pyneboard Pty Ltd) v TPC & Bannerman (1982) 39 ALR 565 …. 12.191, 12.215–12.217, 12.220, 12.223, 12.225–12.227, 12.232, 12.233, 12.235–12.238 — v — (1983) 45 ALR 609 …. 12.295, 14.331

Q Qantas Airways Ltd v Cameron (1996) 145 ALR 294 …. 6.122 QDSV Holdings Pty Ltd v TPC (1995) 131 ALR 493 …. 13.85 Quad Consulting Pty Ltd v David R Bleakley & Associates Pty Ltd (1990) 98 ALR 659 …. 3.214 Quickenden v O’Connor (2001) 184 ALR 260 …. 2.83 Quinlivan v ACCC [2004] FCAFC 175 …. 3.166

R R v Australian Industrial Court; Ex parte CLM Holdings Pty Ltd (CLM Holdings case) (1977) 13 ALR 273 …. 8.66

— v Campbell (1984) 78 Cr App R 95 …. 14.325 — v Judges of Federal Court of Australia; Ex parte Western Australian National Football League (1979) 23 ALR 439 …. 2.80, 2.82 — v Kempley (1944) 44 SR (NSW) 416 …. 2.181 — v Moloney [1985] AC 905 …. 2.202 — v Tait (1979) 24 ALR 473 …. 14.94, 14.95, 14.97 — v Tannous (1988) 81 ALR 403 …. 2.167 — v Tiddy (1969) SASR 575 …. 14.55 Ransley v Spare Parts & Reconditioning Co Pty Ltd (1975) ATPR 40-055 …. 8.68 Rasell v Cavalier Marketing (Aust) Pty Ltd & Garden City Vinyl & Carpet Centre (1990) 96 ALR 375 …. 10.74, 10.76, 10.81, 10.132, 10.150 Reckitt & Colman Products Ltd v Borden Inc (Jif Lemon case) (1990) 17 IPR 1 …. 4.65 — v — [1990] 1 All ER 873 …. 5.12, 5.14, 5.33 Red Bull Australia Pty Ltd v Sydneywide Distributors Pty Ltd [2001] FCA 1228 …. 4.62, 4.63, 4.66 Redgrave v Hurd (1881) 20 Ch D 1 …. 5.85, 13.102 Reiffel v ACN 075 839 226 Ltd [2003] FCA 194 …. 3.11 Revesby Credit Union Co-operative Ltd v FCT (1965) 112 CLR 564 …. 2.277 Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 68 ALR 77 …. 3.136, 3.143 Rich v ASIC (2004) 209 ALR 271 …. 14.255, 14.263, 14.264, 14.275, 14.331–14.334, 14.337–14.342 Riley McKay Pty Ltd v Bannerman (1977) 15 ALR 561 …. 8.15, 12.184, 12.186, 12.190, 12.228, 12.229, 12.231, 12.248–12.250 — v McKay [1982] 1 NSWLR 264 …. 14.364 Robertson Street Properties Pty Ltd v RPM Promotions Pty Ltd [2005] QSC 95 …. 3.197

Robin Pty Ltd v Canberra International Airport Pty Ltd (1999) 179 ALR 449 …. 2.126, 2.131 Rosebanner Pty Ltd v Energy Australia (2009) 223 FLR 460 …. 3.213 Roumanus v Orchard Holdings (NSW) Pty Ltd (in liq) [2012] FCA 775 …. 13.191, 13.204 Royal v El Ali; In the Matter of the Bankrupt Estate of El Ali [2014] FCA 834 …. 14.369 Ruaro v Ferrari [2007] FCA 2022 …. 10.206 Ruffino v Grace Bros Pty Ltd [1980] 1 NSWLR 732 …. 13.110 Rural Press Ltd v ACCC (2002) 193 ALR 399 …. 14.41, 14.194 — v — (2003) 203 ALR 217 …. 2.169, 13.43, 13.368 Ryan v Great Lakes Council [1999] FCA 177 …. 2.306

S S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 168 ALR 396 …. 5.45 S W F Hoists and Industrial Equipment Pty Ltd v State Government Insurance Commission (1990) ATPR 41-045 …. 3.208, 3.209 SA Brewing Holdings Ltd v Baxt (1989) 89 ALR 105 …. 12.175, 12.184, 12.209–12.211, 12.213, 12.215, 12.231, 12.232, 12.234, 12.240, 12.241 Sabre Corporation Pty Ltd v Laboratories Pharm-A-Care Pty Ltd (1995) 31 IPR 445 …. 4.33 SAP Australia Pty Ltd v Sapient Australia Pty Ltd (1999) 169 ALR 1 …. 3.179 SC Johnson & Son Pty Ltd v Reckitt Benckiser (Aust) Pty Ltd (2012) 298 ALR 215 …. 3.83 Schneider Electric (Australia) Pty Ltd v ACCC (2003) 196 ALR 611 …. 14.66, 14.85–14.87 Seafolly Pty Ltd v Madden (2012) 297 ALR 337 …. 1.88 Seeley International Pty Ltd v Newtronics Pty Ltd [2001] FCA 1862 …. 2.15

Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL (1994) 120 ALR 16 …. 13.109, 13.174 Seven Network Ltd v ACCC (2004) 212 ALR 31 …. 12.175, 12.176, 12.180, 12.181, 12.184–12.187, 12.191, 12.192, 12.194, 12.197, 12.198, 12.201, 12.202, 12.205, 12.206, 12.208, 12.210–12.213, 12.215–12.217, 12.232, 12.239, 12.240, 12.244–12.248 Shafron v ASIC (2012) 286 ALR 612 …. 14.307, 14.308, 14.315, 14.325 Shahid v Australasian College of Dermatologists (2007) 72 IPR 555 …. 2.82 — v — [2008] FCAFC 72 …. 3.11 Shannahan v TPC (1991) ATPR 41-115 …. 12.195 Sharp v Cossack Pearls Pty Ltd [2011] FCA 1477 …. 3.61 Sherman (as liquidator of Giraffe World Australia Pty Ltd) (in liq) v ACCC [2003] NSWSC 996 …. 9.198 Simmons v Swift (1826) 5 B & C 857 …. 10.40 Simonius Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322 …. 13.128 Sinclair v Preston [1970] WAR 186 …. 5.101 Singapore Airlines Ltd v ACCC (2009) 260 ALR 244 …. 12.202, 12.213, 12.216 Singtel Optus Pty Ltd v ACCC (2012) 287 ALR 249 …. 14.9, 14.21, 14.24, 14.94, 14.95, 14.97, 14.123 Skerbic v McCormack [2007] ACTSC 93 …. 11.117 Sorby v Commonwealth (1983) 46 ALR 237 …. 14.351 South Australia v Johnson (1982) 42 ALR 161 …. 5.103 Specsavers Pty Ltd v The Optical Superstore Pty Ltd (No 2) [2010] FCA 566 …. 3.60 Speedway Safety Products Pty Ltd v Hazell & Moore Industries Pty Ltd [1982] 1 NSWLR 255 …. 10.142 Spittles v Michael’s Appliance Services Pty Ltd (2008) 248 ALR 386 …. 11.42, 11.43

SST Consulting Services Pty Limited v Rieson (2006) 228 ALR 417 …. 13.283 — v — [2006] HCA 31 …. 2.281 Star Micronics Pty Ltd v Five Star Computers Pty Ltd (1991) 22 IPR 473 …. 5.62 State Government Insurance Commission v JM Insurance Pty Ltd (1984) ATPR 40-465 …. 4.87 State Government Insurance Corp v Government Insurance Office (NSW) (1991) 101 ALR 259 …. 2.82 State Superannuation Board v TPC (1982) 41 ALR 279 …. 2.85, 2.89, 2.90 Stegenga v J Corp Pty Ltd (1999) ATPR 41-695 …. 11.48, 11.50 Stephens v Chevron Motor Court Ltd [1996] DCR 1 …. 10.78 Stern v McArthur (1988) 81 ALR 463 …. 6.44, 6.53 Stoelwinder v Southern Health Care Network (2000) 177 ALR 501 …. 2.135, 8.242 Strikers Management Pty Ltd, Re; Australian Securities Commission v Dimitri (1997) BC9702133 …. 14.270 Stringfellow v McCain Foods (GB) Ltd (Stringfellows Nightclub case) (1983) 2 IPR 279 …. 5.60 Stuart Alexander & Co (Interstate) Pty Ltd v Blenders Pty Ltd (1981) 37 ALR 161 …. 4.12, 4.32, 4.88 Sun Earth Homes Pty Ltd v Australian Broadcasting Corp (1990) 98 ALR 101 …. 2.83 Surge Licensing Inc v Pearson (Teenage Mutant Ninja Turtles case) (1991) 21 IPR 228 …. 4.105 Sutton v A J Thompson Pty Ltd (in liq) (1987) 73 ALR 233 …. 3.197 Sycotex Pty Ltd v Baseler (1994) 13 ACSR 766 …. 14.326 Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354 …. 5.50, 5.51 Sykes v Reserve Bank of Australia (1998) 158 ALR 710 …. 2.144

T Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 …. 3.38, 3.40, 3.44–3.47, 3.66, 3.72, 3.73, 5.43, 5.72 Tagget v Sexton (2009) 255 ALR 522 …. 14.369 Talacko v Talacko [2009] VSC 349 …. 14.355, 14.356, 14.364, 14.369, 14.372, 14.373, 14.375, 14.379, 14.388 Taleb v GM Holden Ltd (2011) 286 ALR 309 …. 5.69 Tanwar Enterprises Pty Ltd v Cauci (2003) 201 ALR 359 …. 6.43, 6.101 Targetts Pty Ltd v Target Australia Pty Ltd (1993) 26 IPR 51 …. 5.27 Tarrant v ASIC [2013] AATA 926 …. 14.270 Tasmanian Spastics Association, Re; Australian Securities Commission v Nandan (1997) 23 ACSR 743 …. 14.270 Taxation, Commissioner of State (WA) v Mechold Pty Ltd (1995) 95 ATC 4053 …. 14.378 Taylor v Johnson (1983) 45 ALR 265 …. 6.44 TCN Channel Nine Pty Ltd v Ilvariy Pty Ltd [2008] NSWCA 9 …. 2.139 TEC & Tomas (Aust) Pty Ltd v Matsumiya Computer Co Pty Ltd (1984) 53 ALR 167 …. 4.117 Tegra (NSW) Pty Ltd v Gundagai Shire Council [2007] NSWLEC 806 …. 14.369 Telstra Corp Ltd v Cable & Wireless Optus Ltd [2001] FCA 1478 …. 3.80, 4.20 — v Optus Communications Pty Ltd (1996) 36 IPR 515 …. 13.82 — v Royal & Sun Alliance Insurance Australia Ltd (2003) 57 IPR 453 …. 5.18, 5.48, 8.130, 8.135 Tesco Supermarkets Ltd v Nattrass [1972] AC 153 …. 2.226, 2.229, 2.230 Theo Holdings Pty Ltd v Hockey (2000) 175 ALR 89 …. 2.38 Third Chandris Shipping Corpn v Unimarine SA [1979] 2 All ER 972 ….

14.369, 14.382 Thomas v R [1960] ALR 233 …. 2.203 — v Southcorp Australia Pty Ltd [2003] VSC 34 …. 11.61 Thompson v Australian Capital Television Pty Ltd (1996) 141 ALR 1 …. 13.110 — v Riley McKay Pty Ltd (No2) (1980) 29 ALR 267 …. 8.120 Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2008] NSWSC 657 …. 14.309 TNT Australia Pty Ltd v Fels (1992) ATPR 41-190 …. 12.196 Tobacco Institute (Aust) Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1 …. 4.15 — v — (1992) 111 ALR 61 …. 2.123 — v — (No 2) (1993) 113 ALR 257 …. 13.341, 13.343, 13.344, 13.348 Toby Constructions Products Pty Ltd v Computer Bar Sales Pty Ltd [1983] 2 NSWLR 48 …. 2.266 Tonto Home Loans Australia Pty Ltd v Tavares; Firstmac Ltd v Di Benedetto; Firstmac Ltd v O’Donnell [2011] NSWCA 389 …. 2.55, 6.122, 6.123 Tooth & Co Ltd, Re (1978) 19 ALR 191 …. 13.316, 13.318, 13.349 Town Investments Ltd v Department of Environment [1977] 1 All ER 813 …. 1.53 TPC v Abbco Ice Works Pty Ltd (1994) 123 ALR 503 …. 14.331 — v Allied Mills Industries Pty Ltd (1981) 37 ALR 256 …. 14.104 — v Ampol Petroleum (Victoria) Pty Ltd (1994) 126 ALR 111 …. 12.259 — v — (1994) ATPR 41-305 …. 12.267, 12.268, 12.277 — v Bata Shoe Co of Australia Pty Ltd (No 2) (1980) 44 FLR 149 …. 14.22 — v Calderton Corp Pty Ltd (1994) ATPR 41-306 …. 9.18 — v CC (New South Wales) Pty Ltd & Woollard (1994) 125 ALR 94 …. 12.260 — v CSR Ltd (1991) ATPR 41-076 …. 14.30, 14.31, 14.90

— v ICI Australia Operations Pty Ltd (1991) 105 ALR 115 …. 14.72 — v J & R Enterprises Pty Ltd (1991) 99 ALR 325 …. 8.258–8.260, 8.270 — v Milreis Pty Ltd (1977) 14 ALR 623 …. 13.268, 13.269 — v Mobile Oil Australia Ltd (1984) 55 ALR 527 …. 2.166 — v — (1984) 4 FCR 296 …. 13.37 — v Optus Communications Pty Ltd & Optus Mobile Pty Ltd (1996) 34 IPR 176 …. 14.207 — v Parkfield Operations Pty Ltd (1985) 62 ALR 267 …. 2.214–2.217, 2.220 — v Pioneer Concrete (Vic) Pty Ltd (1981) 36 ALR 151 …. 12.184, 12.277 — v QDSV Holdings Pty Ltd (t/as Bush Friends Australia) (1995) ATPR 41371 …. 4.42 — v — (1995) 128 ALR 551 …. 8.159 — v Radio World Pty Ltd (1989) 16 IPR 407 …. 8.185, 10.204 — v Service Station Association Ltd (1992) 109 ALR 465 …. 2.220 — v Simpson Pope Ltd (1980) 30 ALR 544 …. 14.22 — v Stihl Chain Saws (Aust) Pty Ltd (1978) 2 ATPR 40-091 …. 14.6, 14.91, 14.100 — v Sun Alliance Australia Ltd (1994) ATPR 41-286 …. 2.231 — v Telstra Corp Ltd (1993) ATPR 41-256 …. 4.89 — v TNT Australia Pty Ltd (1995) ATPR 41-375 …. 14.28, 14.100 — v Tubemakers of Australia Ltd (1983) 47 ALR 719 …. 2.187, 2.190, 2.191, 2.195, 2.196, 2.205, 2.208, 2.213, 2.220 TPG Internet Pty Ltd v ACCC [2012] FCAFC 190 …. 14.19, 14.26, 14.27, 14.30, 14.32, 14.33, 14.54, 14.60, 14.100, 14.236 Tramways Advertising Pty Ltd v Luna Park (NSW) (1938) 38 SR (NSW) 632 …. 8.173, 15.9 Transglobal Capital Pty Ltd v Yolarno Pty Ltd [2005] NSWCA 68 …. 3.11 Traveland Pty Ltd & Associated Travel Pty Ltd v Doherty (1982) 41 ALR 563

…. 8.111 Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 169 ALR 616 …. 13.314, 13.315 — v — [2000] FCA 918 …. 14.207, 14.209 Turner v Green [1895] 2 Ch 205 …. 5.146 Twentieth Century Fox Film Corporation v South Australian Brewing Co Ltd (Duff Beer case) (1996) 66 FCR 451 …. 5.41, 5.72

U Ultramares Corp v Touche (1931) 174 NE 441 …. 5.113 Underwood Ltd v Burgh Castle Brick and Cement Syndicate [1922] 1 KB 343 …. 10.40 Unilan Holdings Pty Ltd v Kerin (1992) 107 ALR 709 …. 2.129, 2.143 Unilever Australia Ltd v Goodman Fielder Consumer Foods Pty Ltd [2009] FCA 1305 …. 8.37, 8.51 Universal Music Australia Pty Ltd v ACCC (2003) 201 ALR 636 …. 14.33 Universal Telecasters (Qld) Ltd v Ainsworth Consolidated Industries Ltd (1983) 1 IPR 260 …. 3.220 — v Guthrie (1978) 18 ALR 531 …. 3.220 University of New South Wales v Moorhouse & Angus & Robertson (Publishers) Pty Ltd (1975) 6 ALR 193 …. 13.348

V Van Win Pty Ltd v Eleventh Mirontron Pty Ltd [1986] VR 484 …. 13.191 Varley v Whipp [1900] 1 QB 513 …. 10.142 Victoria University of Technology v Wilson [2003] VSC 299 …. 14.373 Victorian Egg Marketing Board v Parkwood Eggs Pty Ltd (1978) 20 ALR 129 …. 13.44 Videon v Beneficial Finance Corporation (1981) ATPR 40-246 …. 8.231

Vieright Pty Ltd v Myer Stores Ltd (1995) 31 IPR 361 …. 5.33 Village Building Co Ltd v Canberra International Airport Pty Ltd (2004) 210 ALR 114 …. 2.133 — v — (No 2) (2004) 208 ALR 98 …. 2.102, 2.132 Vines v ASIC [2007] NSWCA 126 …. 14.66 Vink v Schering Pty Ltd (No1) (1991) ATPR 41-064 …. 13.203 Violet Home Loans Pty Ltd v Schmidt (2013) 300 ALR 770 …. 2.55 Visy Paper Pty Ltd v ACCC (2005) 224 ALR 390 …. 14.33 Volunteer Eco Students Abroad Pty Ltd v Reach Out Volunteers Pty Ltd (2013) 102 IPR 161 …. 8.106

W WA Pines Pty Ltd v Bannerman (1980) 30 ALR 559 …. 12.136, 12.176, 12.187, 12.192, 12.202, 12.203, 12.205–12.208 Wallace v Safeway Caravan Mart Pty Ltd (1975) 3 QL 224 …. 10.40 — v Walplan Pty Ltd (1985) 59 ALR 771 …. 9.31 Walplan Pty Ltd v Wallace (1985) 63 ALR 453 …. 2.224, 2.225, 2.230, 2.237, 2.239 Waltons Store (Interstate) Ltd v Maher (1988) 76 ALR 513 …. 6.44 Wardar’s (Import and Export) Co Ltd v W Norwood and Sons Ltd [1968] 2 QB 663 …. 10.40 Wardley Australia Ltd v State of Western Australia (1992) 109 ALR 247 …. 13.95, 13.137, 13.150, 13.162, 13.177, 13.183, 13.184, 3.196–13.198 Warramunda Village Inc v Pryde [2001] FCA 61 …. 13.308, 13.369, 13.370 Watson v Foxman (1995) 49 NSWLR 315 …. 3.108–3.110 Webb Distributors (Aust) Pty Ltd v State of Victoria (1993) 117 ALR 321 …. 13.170, 13.270 Weitmann v Katies Ltd (1977) 29 FLR 336 …. 3.57 Wells v John R Lewis (International) Pty Ltd (1975) 25 FLR 194 …. 1.80

West v AGC (Advances) Ltd (1986) 5 NSWLR 610 …. 6.22 Western Australia v Wardley Australia Ltd (1991) 102 ALR 213 …. 13.146, 13.188, 13.189, 13.191, 13.204, 13.214 Westminster Properties Pty Ltd v Comco Constructions Pty Ltd (1991) 5 WAR 191 …. 2.56 Westpac Banking Corp v ASIC (2009) 181 FCR 379 …. 9.59 — v Hilliard [2001] VSC 187 …. 14.373 — v Northern Metals Pty Ltd (Swiss Franc case) (1989) 14 IPR 499 …. 8.257 Wheeler Grace & Pierucci Pty Ltd v Wright (1989) 16 IPR 189 …. 2.232 White v Eurocycle Pty Ltd (1994) ATPR 41-330 …. 2.297 Whitlam v National Roads and Motorists’ Association Ltd [2006] NSWSC 766 …. 14.153, 14.163 Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq) (2012) 301 ALR 1 …. 5.174 Winteron Constructions Pty Ltd v Hambrose Aust Ltd (1992) 111 ALR 649 …. 3.142 With v O’Flanagan [1936] 1 All ER 727 …. 5.147 Witham v Holloway (1995) 131 ALR 401 …. 12.61, 13.63 — v — (1995) 183 CLR 525 …. 13.68 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 205 ALR 522 …. 5.124–5.126 World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 …. 3.114, 3.115 Wright v TNT Australia Pty Ltd (1988) 15 NSWLR 662 …. 8.244 — v TNT Management Pty Ltd (1989) 85 ALR 442 …. 8.247 Wynyard Investments Pty Ltd v Commissioner for Railways (NSW) [1956] ALR 49 …. 1.26, 1.33

Y Yandil Holdings Pty Ltd v Insurance Co of North America (1986) 7 NSWLR

571 …. 14.378 Yong Jun Qin v Minister for Immigration and Multicultural Affairs (1997) 144 ALR 695 …. 12.27 Yorke v Lucas (1983) 49 ALR 672 …. 2.153, 2.162, 2.163, 2.172, 2.174, 2.178 — v — (1985) 61 ALR 307 …. 2.151, 2.158–2.161, 2.168, 2.172, 3.103, 3.104, 3.182

Z Zhen v Mo [2008] VSC 300 …. 14.373

Table of Statutes References are to paragraphs

Commonwealth Acts Interpretations Act 1901 s 2B …. 7.26 s 2C …. 2.10, 3.14 s 33(3) …. 12.253 Administrative Decisions (Judicial Review) Act 1977 …. 12.46, 12.346 ss 6–7 …. 12.347 Australian Consumer Law …. 1.11 Ch 1 …. 1.11 Ch 2 …. 1.11, 2.186, 7.161, 12.105, 13.18, 13.86, 13.87, 13.137, 13.138, 13.140, 13.148, 13.183, 13.211, 13.228, 13.234, 13.238, 13.332, 14.173, 14.400, 14.415 Ch 2 Pt 2-1 …. 1.11, 2.6, 3.4, 8.217, 14.400 Ch 2 Pt 2-2 …. 1.11, 2.6, 6.15, 6.18–6.20, 14.223 Ch 2 Pt 2-3 …. 1.11, 2.6, 7.4, 7.90, 13.138 Ch 3 …. 1.11, 2.186, 12.105, 13.18, 13.86, 13.87, 13.137, 13.138, 13.140, 13.148, 13.183, 13.211, 13.228, 13.234, 13.332, 14.173, 14.223, 14.400, 14.415 Ch 3 Pt 3-1 …. 1.11, 8.217, 13.238 Ch 3 Pt 3-1 Div 1 …. 1.11, 2.6 Ch 3 Pt 3-1 Div 2 …. 1.11, 2.6 Ch 3 Pt 3-1 Div 3 …. 1.11, 1.99, 2.6 Ch 3 Pt 3-1 Div 4 …. 1.11, 2.6 Ch 3 Pt 3-1 Div 5 …. 1.11, 2.6

Ch 3 Pt 3-2 …. 1.11, 2.291, 7.137, 15.4, 15.21 Ch 3 Pt 3-2 Div 1 …. 1.11, 2.6, 8.201, 10.5, 10.6, 10.200, 10.213 Ch 3 Pt 3-2 Div 1 Sub-Div A …. 1.11, 10.33, 15.179 Ch 3 Pt 3-2 Div 1 Sub-Div B …. 1.11, 10.169, 15.188 Ch 3 Pt 3-2 Div 2 …. 1.11, 2.6, 13.238, 13.323 Ch 3 Pt 3-2 Div 3 …. 1.11, 2.6, 13.238 Ch 3 Pt 3-2 Div 4 …. 1.11, 2.6, 13.238 Ch 3 Pt 3-3 …. 1.11, 11.10 Ch 3 Pt 3-3 Div 1 …. 1.11, 2.6 Ch 3 Pt 3-3 Div 2 …. 1.11, 2.6 Ch 3 Pt 3-3 Div 3 …. 1.11, 2.6 Ch 3 Pt 3-3 Div 4 …. 1.11, 2.6 Ch 3 Pt 3-3 Div 5 …. 1.11, 2.6 Ch 3 Pt 3-4 …. 1.11 Ch 3 Pt 3-5 …. 1.11, 1.96, 1.99, 2.291, 11.4, 11.9–11.12, 11.15, 11.114–11.116, 11.119 Ch 4 …. 1.11, 1.99, 1.103, 4.131, 12.105, 12.130, 13.18, 13.211, 13.228, 13.234, 13.238, 14.173, 14.223, 14.400, 14.415 Ch 4 Pt 4-1 …. 1.11 Ch 4 Pt 4-2 …. 1.11 Ch 4 Pt 4-3 …. 1.11 Ch 4 Pt 4-4 …. 1.11 Ch 4 Pt 4-5 …. 1.11 Ch 4 Pt 4-6 …. 1.11, 12.94 Ch 4 Pt 4-7 …. 1.11 Ch 5 …. 1.11 Ch 5 Pt 5-1 …. 1.11 Ch 5 Pt 5-2 …. 1.11, 12.130

Ch 5 Pt 5-2 Div 2 …. 13.4–13.6, 13.84 Ch 5 Pt 5-3 …. 1.11, 1.71, 1.73, 2.291, 8.153, 8.157, 12.322 Ch 5 Pt 5-4 …. 1.11, 2.291, 10.6, 13.323, 15.4, 15.15 Ch 5 Pt 5-5 …. 1.11 Ch 5 Pt 5-5 Div 1 …. 1.11, 2.6 ss 1–17 …. 1.11 s 2 …. 1.47, 1.48, 1.50, 2.4, 2.5, 2.21–2.23, 2.68, 2.106, 2.107, 2.109, 2.145–2.149, 2.157, 2.171, 2.258, 2.261, 2.266–2.272, 2.282–2.285, 6.105, 8.139, 8.219, 8.243, 9.58, 9.72, 10.161, 10.162, 10.214, 10.242, 10.249, 11.13, 11.72, 11.106, 12.31, 13.18, 13.240, 14.144, 15.199 s 2(a) …. 2.158, 2.161 s 2(1)(a) …. 10.162 s 2(1)(b) …. 10.163 s 2(1)(c) …. 10.164 s 2(2) …. 3.148 s 2(2)(a) …. 3.17 s 2(2)(c) …. 3.18, 3.19, 3.144–3.146 s 3 …. 2.4, 2.5, 2.7–2.11, 2.42, 2.65, 2.69, 6.32, 8.168, 8.187, 8.215, 8.241, 8.252, 8.267, 8.275, 9.25, 9.38, 9.53, 9.65, 9.80, 9.93, 9.103, 9.123, 9.171, 10.32 s 3(1) …. 2.12, 2.67 s 3(1)(a) …. 2.16, 2.17, 2.19 s 3(1)(b) …. 2.35, 2.36 s 3(1)(c) …. 2.57, 2.58, 2.62, 2.66 s 3(2) …. 2.18, 2.67 s 3(3) …. 2.13 s 3(3)(a) …. 2.16, 2.17, 2.19 s 3(3)(b) …. 2.35, 2.36

s 3(4)–(9) …. 2.19 s 3(4) …. 2.20 s 3(5) …. 2.20, 2.27 s 3(5)(a) …. 2.27 s 3(5)(b)(i) …. 2.27 s 3(5)(b)(ii) …. 2.27 s 3(5)(c) …. 2.27 s 3(6) …. 2.29, 2.30 s 3(7) …. 2.29–2.31 s 3(8) …. 2.29, 2.30, 2.32 s 3(9) …. 2.33, 2.34 s 3(10) …. 2.14 s 3(11) …. 2.28 s 4 …. 3.162–3.171, 5.217 s 4(2) …. 3.167, 3.169 s 4(3)(a) …. 3.168 s 4(3)(b) …. 3.169 s 6 …. 2.91, 2.93–2.95 s 7 …. 2.291–2.294, 2.304 s 7(1)(a) …. 2.295, 2.298 s 7(1)(b) …. 2.295, 2.298 s 7(1)(c) …. 2.295, 2.298, 2.299 s 7(1)(d) …. 2.295, 2.298 s 7(1)(e) …. 2.295, 2.298 s 7(2)(a) …. 2.299 s 7(2)(b) …. 2.301 s 7(2)(e) …. 2.302 s 7(3) …. 2.302

s 8 …. 2.262 s 9 …. 10.85, 11.22, 11.32 s 9(1) …. 11.23–11.25, 11.30 s 9(2) …. 11.27–11.29 s 9(3) …. 11.33 s 9(4) …. 11.33 s 10 …. 9.69, 9.106 s 10(1)(e) …. 9.70 s 11 …. 2.286 s 13 …. 13.175 s 13(a) …. 13.176 s 13(b) …. 13.176 s 15 …. 7.152 s 15(a) …. 7.152 s 16 …. 2.279 ss 18–19 …. 1.11 s 18 …. 2.98, 3.4–3.13, 3.15, 3.21, 3.27, 3.29, 3.30, 3.33, 3.62–3.65, 3.68–3.72, 3.80, 3.81, 3.85, 3.88, 3.93, 3.95, 3.96, 3.98–3.101, 3.105, 3.112, 3.114, 3.116, 3.121, 3.122, 3.124, 3.129, 3.132, 3.133, 3.137, 3.138, 3.149–3.152, 3.154, 3.155, 3.172, 3.174, 3.177, 3.181, 3.188–3.190, 3.193–3.208, 3.211, 3.212, 3.218, 3.227, 3.229, 3.232, 3.233, 3.238, 3.239, 4.4–4.20, 4.26, 4.27, 4.29, 4.61, 4.62, 4.70, 4.76, 4.83, 4.84, 4.93, 4.98, 4.100, 4.103, 4.108, 4.112, 4.117–4.120, 4.126, 4.130, 4.131, 5.43, 5.45, 5.46, 5.70–5.76, 5.107–5.109, 5.133–5.135, 5.168–5.170, 5.174, 5.190, 5.192, 5.193, 5.212, 5.218, 8.4–8.9, 8.12, 8.144, 8.169, 8.223, 8.241, 8.257, 8.262, 9.17, 10.201, 12.138, 13.151, 13.152, 13.178, 14.14, 14.34, 14.224, 14.258, 14.330 s 18(1) …. 3.12 s 19 …. 3.218–3.237, 8.281

s 19(1) …. 3.227 s 19(2) …. 3.228–3.230 s 19(3) …. 3.228, 3.233 s 19(4) …. 3.228 s 19(5) …. 3.226, 12.82 s 19(6) …. 3.226, 12.82 ss 20–22A …. 1.11 ss 20–22 …. 6.20, 14.257 ss 20–21 …. 12.137 s 20 …. 2.98, 6.15, 6.18, 6.27–6.35, 6.41, 6.46, 6.61, 6.62, 6.98, 6.107, 6.118, 6.119, 6.137, 6.139, 12.144, 14.13, 14.18 s 20(1) …. 6.29, 6.32–6.34 s 20(2) …. 6.29 ss 21–22 …. 6.16 s 21 …. 2.98, 6.15–6.18, 6.29, 6.30, 6.32–6.34, 6.102–6.128, 6.130–6.132, 6.136–6.139, 12.144, 14.13, 14.18 s 21(1) …. 6.103–6.108 s 21(2)(a) …. 6.108 s 21(2)(b) …. 6.108 s 21(3)(a) …. 6.109 s 21(3)(b) …. 6.110 s 21(4) …. 6.107, 6.111 s 21(4)(a) …. 6.112 s 21(4)(b) …. 6.113, 6.114 s 21(4)(c) …. 6.117, 6.118 s 22 …. 6.15–6.18, 6.23, 6.26, 6.107, 6.115, 6.120, 6.121, 6.127–6.132 s 22(1) …. 6.130 s 22(2) …. 6.131

ss 23–28 …. 1.11, 7.6, 7.11, 12.138, 14.14, 14.258 s 23 …. 13.335, 14.224 s 23(1) …. 7.20, 7.21, 7.23, 7.24, 7.34, 7.46 s 23(2) …. 7.20, 7.22, 7.34, 7.46 s 23(3) …. 2.4, 2.5, 7.25–7.33 s 24 …. 7.46, 7.58, 7.148, 14.330 s 24(1) …. 7.46–7.50, 7.60, 7.66, 7.92 s 24(2) …. 7.48, 7.49, 7.72–7.87 s 24(2)(a) …. 7.79 s 24(2)(b) …. 7.84 s 24(3) …. 7.48, 7.49, 7.72–7.87 s 24(4) …. 7.46–7.49, 7.61, 7.62 s 25 …. 7.88–7.94 s 25(1) …. 7.89, 7.94 s 25(1)(a) …. 7.95 s 25(1)(b) …. 7.96 s 25(1)(c) …. 7.97 s 25(1)(d) …. 7.98 s 25(1)(e) …. 7.99 s 25(1)(f) …. 7.100 s 25(1)(g) …. 7.101 s 25(1)(h) …. 7.102 s 25(1)(i) …. 7.103 s 25(1)(j) …. 7.104 s 25(1)(k) …. 7.105 s 25(1)(l) …. 7.106 s 25(1)(m) …. 7.107 s 25(1)(n) …. 7.108

s 26 …. 7.112–7.137 s 26(1) …. 7.112, 7.113 s 27 …. 7.34–7.45 s 27(1) …. 7.42, 7.43 s 27(2) …. 7.45 s 28 …. 7.138–7.147 s 28(1) …. 7.138 s 28(3) …. 7.139 ss 29–50 …. 12.137, 12.144, 14.257 ss 29–38 …. 1.11 ss 29–37 …. 14.13, 14.18 s 29 …. 2.98, 8.4–8.33, 8.98, 8.111, 8.144, 8.216, 8.241, 8.281, 9.17, 14.330 s 29(1)(a)–(n) …. 8.11 s 29(1)(a) …. 8.34–8.72, 8.262, 10.82 s 29(1)(b) …. 8.73–8.77 s 29(1)(c) …. 8.78–8.88 s 29(1)(d) …. 8.89–8.92 s 29(1)(e) …. 8.93–8.101, 8.106 s 29(1)(f) …. 8.98, 8.102–8.106 s 29(1)(g) …. 8.107–8.120, 8.124, 14.25 s 29(1)(h) …. 8.113, 8.114, 8.121–8.135 s 29(1)(i) …. 8.136–8.145 s 29(1)(j) …. 8.146–8.148 s 29(1)(k) …. 8.149–8.159 s 29(1)(l) …. 8.160–8.165 s 29(1)(m) …. 8.166–8.185, 10.201, 11.114 s 29(1)(n) …. 8.186–8.211

s 29(2) …. 8.98, 8.100, 8.105 s 29(3) …. 8.105 s 29(3)(a) …. 8.99 s 29(3)(b) …. 8.100 s 30 …. 1.90, 2.98, 8.212–8.237, 8.281, 8.282, 8.284 s 30(1) …. 8.216, 8.218, 8.220, 8.222, 8.223 s 30(2) …. 8.217 s 31 …. 2.136, 8.238–8.248, 8.282, 8.284 s 32 …. 2.98, 9.4–9.22, 9.226, 9.228, 12.137 s 32(1) …. 9.10, 12.137, 12.144 s 32(2) …. 9.11, 9.12 s 32(3) …. 9.14 s 32(4) …. 9.15 s 33 …. 1.87, 1.90, 8.249–8.263, 8.268, 8.269, 8.281, 8.282, 8.284 s 34 …. 2.98, 8.257, 8.264–8.271, 8.281, 8.282, 8.284, 14.25 s 35 …. 1.47, 2.98, 9.23–9.33, 9.226, 9.228, 12.137 s 35(1) …. 9.26, 9.28, 12.137, 12.144 s 35(2) …. 9.27, 9.28 s 36 …. 2.98, 9.36–9.46, 9.226, 9.228, 12.137 s 36(1) …. 9.40, 9.43, 9.45, 12.137, 12.144 s 36(2) …. 9.40, 9.43, 9.45, 12.137, 12.144 s 36(3) …. 9.40, 9.43, 9.45, 9.46, 12.137, 12.144 s 36(3)(a)(ii) …. 9.44 s 36(4) …. 9.41, 9.43 s 36(4)(b) …. 9.44 s 36(5) …. 9.42 s 36(6) …. 9.42 s 36(7) …. 9.45

s 37 …. 1.47, 2.98, 8.272–8.282, 8.284 s 37(1) …. 8.276, 8.278 s 37(2) …. 8.277, 8.278, 14.330 s 38 …. 8.281 ss 39 v 43 …. 1.11 ss 39–40 …. 14.13, 14.18 s 39 …. 9.51–9.60, 9.226, 9.228 s 39(1) …. 9.54, 9.55 s 39(1)(b) …. 9.59 s 39(2) …. 9.55 s 39(3) …. 9.55 s 39(4) …. 9.55 s 39(5) …. 9.56 s 39(6) …. 9.57 s 40 …. 9.63–9.74, 9.77, 9.91, 9.226, 9.228, 12.137, 12.144, 14.330 s 40(1) …. 9.67 s 40(2) …. 9.67 s 40(3) …. 9.68, 9.69 s 40(3)(b) …. 9.70 s 40(4) …. 9.71 s 41 …. 2.98, 9.76–9.86 s 41(1) …. 9.81 s 41(2) …. 9.84, 9.85 s 41(3) …. 9.85 s 41(4) …. 9.82 s 41(5) …. 9.82, 9.83 s 42 …. 2.98, 9.91–9.95

ss 43–44 …. 14.13 s 43 …. 1.47, 9.98–9.114, 9.226, 9.228, 12.137, 12.144, 14.18 s 43(1) …. 9.104, 9.107 s 43(2) …. 9.105–9.107 s 43(3) …. 9.107 s 43(3)(a) …. 9.107, 9.108, 9.110 s 43(3)(b) …. 9.107, 9.109, 9.110 s 43(3)(c) …. 9.107, 9.110 s 43(3)(d) …. 9.107, 9.110 s 43(4) …. 9.111 s 43(5) …. 9.112 s 43(6) …. 9.113 ss 44–46 …. 1.11 s 44 …. 9.121–9.128, 9.226, 9.228, 14.18, 14.330 s 44(1) …. 9.124 s 44(2) …. 9.124 s 44(3) …. 9.125 s 45 …. 9.122, 9.123, 9.131–9.145 s 45(1) …. 9.132, 9.139 s 45(3)–(5) …. 9.133 s 46 …. 9.122, 9.123, 9.146–9.148 s 46(1) …. 9.147 s 46(2) …. 9.147 ss 47–50 …. 14.13 ss 47–48 …. 1.11 s 47 …. 2.98, 9.150–9.162, 9.226, 9.228, 14.18 s 47(1) …. 9.156, 12.144 s 47(2) …. 9.160

s 47(3) …. 9.161 s 47(4) …. 9.162 s 47(5) …. 9.158 ss 48–50 …. 14.18 s 48 …. 2.98, 8.144, 9.169–9.192, 9.226, 9.228 s 48(1) …. 9.172, 9.173, 9.178, 9.179 s 48(2) …. 9.175 s 48(3) …. 9.176, 9.177 s 48(4) …. 9.178 s 48(5) …. 9.179, 9.180 s 48(6) …. 9.180, 9.181 s 48(7) …. 9.182, 9.184, 9.185, 9.190 s 48(7)(a) …. 9.185, 9.186 s 48(7)(b) …. 9.187 s 48(7)(c) …. 9.189 ss 49–50 …. 1.11 s 49 …. 2.98, 9.194–9.203, 9.226, 9.228 s 50 …. 9.204, 9.205, 9.209–9.226, 9.228 ss 51–63 …. 12.138, 14.14, 14.258 ss 51–59 …. 1.11 ss 51–57 …. 15.27, 15.36, 15.38, 15.48, 15.49, 15.72, 15.73 ss 51–53 …. 10.34 s 51 …. 10.33, 10.35–10.49, 10.208, 15.25 s 51(1) …. 10.36–10.38, 10.42, 10.47, 10.48 s 51(2) …. 10.47 s 51(3) …. 10.48 s 52 …. 10.33, 10.50–10.59, 10.208, 15.25

s 52(1) …. 10.51, 10.52, 10.54, 10.55, 10.57, 10.58 s 52(2) …. 10.54, 10.58 s 52(3) …. 10.55, 10.58 s 52(4) …. 10.56 s 53 …. 10.33, 10.60–10.69, 10.208, 15.25 s 53(1) …. 10.61–10.63, 10.66 s 53(2) …. 10.63, 10.66 s 53(3) …. 10.67 s 53(4) …. 10.68 ss 54–59 …. 10.34 s 54 …. 2.98, 8.204, 8.205, 10.33, 10.70–10.119, 10.123, 15.25, 15.149, 15.152–15.154, 15.156, 15.181 s 54(1) …. 10.71–10.73, 10.116 s 54(1)(b) …. 10.32 s 54(2) …. 10.77–10.79, 10.81, 10.87, 15.69 s 54(2)(e) …. 8.206 s 54(3) …. 8.207, 8.208, 10.78, 10.87, 10.94 s 54(3)(b) …. 15.159 s 54(4) …. 10.72, 10.95–10.98 s 54(5) …. 10.72, 10.99 s 54(6) …. 10.72, 10.101, 10.111 s 54(7) …. 10.72, 10.112, 10.115, 10.117 s 55 …. 2.98, 10.33, 10.34, 10.120–10.133, 15.25, 15.181 s 55(1) …. 10.121–10.123, 10.128 s 55(2) …. 10.125–10.127 s 55(3) …. 10.130 s 56 …. 2.98, 10.33, 10.134–10.143, 10.146, 15.25, 15.149, 15.161–15.163 s 56(1) …. 10.135, 10.136

s 56(2) …. 10.137, 10.138 s 56(3) …. 10.139, 10.140 s 57 …. 2.98, 10.33, 10.34, 10.139, 10.140, 10.144–10.150, 15.25 s 57(1) …. 10.145 s 57(2) …. 10.146 s 58 …. 2.98, 10.33, 10.151–10.157, 15.26, 15.149, 15.164 s 58(1) …. 10.152, 10.153, 10.155 s 58(2) …. 10.155 s 59 …. 2.98, 10.33, 10.158–10.168, 15.26, 15.149, 15.164 s 59(1) …. 10.159 s 59(2) …. 10.160 ss 60–63 …. 1.11 ss 60–62 …. 15.105, 15.111, 15.113, 15.116, 15.117 s 60 …. 2.98, 7.137, 10.169, 10.171–10.178, 15.103 s 61 …. 2.98, 7.137, 10.179–10.191, 15.103, 15.104 s 61(1) …. 10.169, 10.180, 10.189–10.191 s 61(2) …. 10.169, 10.183, 10.184, 10.187, 10.189–10.191 s 61(3) …. 10.189 s 61(4) …. 10.190 s 62 …. 2.98, 10.169, 10.192–10.195, 15.103, 15.104 s 63 …. 10.196–10.198 s 63(a) …. 10.197 s 63(b) …. 10.197 ss 64–64A …. 1.11 s 64 …. 10.199–10.205, 10.207, 10.209 s 64(1) …. 10.200, 10.202 s 64A …. 10.206–10.211 s 64A(1) …. 10.207, 10.208

s 64A(2) …. 10.209 s 64A(3) …. 10.210 s 64A(4) …. 10.211 ss 65–68 …. 1.11 s 65 …. 10.212–10.215 s 65(1) …. 10.213 s 65(2) …. 10.214 s 66 …. 10.216–10.220 s 66(1) …. 10.217 s 66(2) …. 10.218, 12.137, 12.144, 14.13, 14.18 s 66(3) …. 10.219 s 67 …. 10.221–10.223 s 66 …. 10.224–10.231 ss 69–95 …. 12.137, 12.144, 14.257 ss 69–72 …. 1.11 ss 73–84 …. 14.13, 14.18 ss 73–77 …. 1.11 s 74 …. 14.25 s 75 …. 14.25 ss 78–81 …. 1.11 ss 82–88 …. 1.11 s 85 …. 12.137, 12.144, 14.257 ss 86–90 …. 14.13, 14.18 ss 89–95 …. 1.11 ss 96–99 …. 1.11, 12.137, 12.144, 14.13, 14.18 s 96(2) …. 12.137, 12.144, 14.13, 14.18 ss 100–103 …. 1.11

s 100 …. 10.235–10.242 s 100(1) …. 10.237, 12.137, 12.144, 14.13, 14.18 s 100(2) …. 10.239, 10.240 s 100(3) …. 10.240, 12.137, 12.144, 14.13, 14.18 s 100(4) …. 10.241 s 100(5) …. 10.242 s 101 …. 10.235, 10.243–10.249 s 101(1) …. 10.244 s 101(2) …. 10.246 s 101(3) …. 10.247, 12.137, 12.144, 14.13, 14.18 s 101(4) …. 10.248, 12.137, 12.144, 14.13, 14.18 s 101(5) …. 10.249 s 102 …. 10.250–10.256 s 102(1) …. 10.252 s 102(2) …. 10.254, 12.137, 12.144, 14.13, 14.18 s 102(3) …. 10.166, 10.255 s 103 …. 10.257–10.262 s 103(1) …. 10.259 s 103(2) …. 10.261, 12.137, 12.144, 14.13, 14.18 ss 104–108 …. 1.11 s 106(1) …. 12.137, 12.144, 14.13, 14.18, 14.257 s 106(2) …. 12.137, 12.144, 14.13, 14.18, 14.257 s 106(3) …. 12.137, 12.144, 14.13, 14.18, 14.257 s 106(5) …. 12.137, 12.144, 14.13, 14.18, 14.257 s 107(1) …. 12.137, 12.144, 14.13, 14.18, 14.257 s 107(2) …. 12.137, 12.144, 14.13, 14.18, 14.257 ss 109–113 …. 1.11 ss 114–117 …. 1.11

ss 118–119 …. 1.11 s 118(1) …. 12.137, 12.144, 14.13, 14.18, 14.257 s 118(2) …. 12.137, 12.144, 14.13, 14.18, 14.257 s 118(3) …. 12.137, 12.144, 14.13, 14.18, 14.257 s 118(5) …. 12.137, 12.144, 14.13, 14.18, 14.257 s 119(1) …. 12.137, 12.144, 14.13, 14.18, 14.257 s 119(2) …. 12.137, 12.144, 14.13, 14.18, 14.257 ss 120–121 …. 1.11 ss 122–127 …. 1.11 s 125(4) …. 12.137, 12.144, 14.13, 14.18, 14.257 s 127(1) …. 12.137, 12.144, 14.13, 14.18, 14.257 s 127(2) …. 12.137, 12.144, 14.13, 14.18, 14.257 s 128 …. 1.11 s 128(2) …. 12.137, 12.144, 14.13, 14.18, 14.257 s 128(6) …. 12.137, 12.144, 14.13, 14.18, 14.257 ss 129–130 …. 1.11 ss 131–132A …. 1.11 s 131(1) …. 12.137, 12.144, 14.13, 14.18, 14.257 s 132(1) …. 12.137, 12.144, 14.13, 14.18, 14.257 s 133 …. 1.11 ss 134–137 …. 1.11 s 134C …. 12.88 s 136(1) …. 12.137, 12.144, 14.13, 14.18, 14.257 s 136(2) …. 12.137, 12.144, 14.13, 14.18, 14.257 s 136(3) …. 12.137, 12.144, 14.13, 14.18, 14.257 s 137(1) …. 12.137, 12.144, 14.13, 14.18, 14.257 s 137(2) …. 12.137, 12.144, 14.13, 14.18, 14.257

ss 138–142 …. 1.11 ss 138–141 …. 11.14, 11.22 s 138 …. 11.35–11.43 s 138(1) …. 11.36, 11.37 s 138(2) …. 11.38 s 138(3) …. 11.14, 11.39 s 139 …. 11.44–11.51 s 139(1) …. 11.46, 11.47 s 139(1)(e) …. 11.47, 11.48 s 139(2) …. 11.49 s 140 …. 11.52–11.56 s 140(1) …. 11.54 s 140(2) …. 11.55 s 141 …. 11.57–11.61 s 141(1) …. 11.59 s 141(2) …. 11.60 ss 142–149 …. 11.13 s 142 …. 11.32, 11.56, 11.61, 11.62–11.85 s 142(a)(i) …. 11.68 s 142(a)(ii) …. 11.66, 11.67 s 142(b) …. 11.71, 11.74 s 142(c) …. 11.21, 11.76, 11.79 s 142(d) …. 11.82, 11.85 ss 143–149 …. 1.11 s 143 …. 11.86–11.90 s 143(1) …. 11.87 s 143(2) …. 11.89 s 144 …. 11.91–11.93

s 145 …. 11.14, 11.94, 11.95 s 146 …. 11.96–11.101 s 147 …. 11.16, 11.17 s 147(1) …. 11.18 s 148 …. 11.74, 11.102–11.104 s 149 …. 11.105–11.110 s 149(1) …. 11.108 s 149(2) …. 11.109 s 150 …. 1.11, 11.111–11.114 s 150(1) …. 11.112 s 150(2) …. 11.113 ss 151–217 …. 14.257 ss 151–160 …. 1.11 s 151 …. 3.234, 8.7 s 151(1)(m) …. 11.114 s 152 …. 1.90, 3.234, 8.284 s 153 …. 8.284 s 154 …. 9.228 s 155 …. 1.87, 1.90, 3.234, 8.284 s 155(1)(a)–(c) …. 14.349 s 156 …. 3.234, 8.284 s 157 …. 9.228 s 158 …. 9.228 s 159 …. 3.234, 8.284 s 160 …. 3.234 ss 161–163 …. 1.11 s 161 …. 9.228

s 162 …. 9.110, 9.228 s 163 …. 9.228 s 164 …. 1.11, 1.90, 9.228 ss 165–166 …. 1.11 s 165 …. 9.228 s 166 …. 9.228 ss 167–168 …. 1.11 s 167 …. 9.228 s 168 …. 9.228 s 169 …. 1.11 ss 170–173 …. 1.11 ss 174–177 …. 1.11 ss 178–181 …. 1.11 ss 182–187 …. 1.11 ss 188–191 …. 1.11 ss 192–193 …. 1.11 s 192 …. 10.256 s 193 …. 10.262 ss 194–196 …. 1.11 ss 197–198 …. 1.11 ss 199–201 …. 1.11 s 202 …. 1.11 ss 203–204 …. 1.11 ss 205–206 …. 1.11 s 205 …. 12.94 s 206 …. 12.94 ss 207–211 …. 1.11 s 207 …. 1.103

ss 212–217 …. 1.11 s 213 …. 2.186 s 217 …. 2.186 s 218 …. 1.11, 3.238, 4.130, 6.138, 8.282, 9.226, 12.47–12.63 s 218(1) …. 12.48 s 218(2) …. 12.51 s 218(3) …. 12.54 s 218(4) …. 12.54 ss 219–222 …. 1.11 s 219 …. 3.238, 6.138, 8.282, 9.226, 12.72–12.82 s 219(1) …. 12.73 s 219(2) …. 12.74 s 219(3) …. 12.78 s 219(4) …. 12.79 s 219(5) …. 12.80 s 219(6) …. 12.81, 12.82 s 220 …. 12.75, 12.79, 12.83–12.85, 12.89 s 220(1) …. 12.84 s 220(2) …. 12.85 s 221 …. 12.79, 12.86–12.90 s 221(1) …. 12.87, 12.137, 12.144, 14.13, 14.18 s 221(2) …. 12.89 s 221(3) …. 12.90 s 222 …. 12.91–12.94 s 222(1) …. 12.92, 12.93, 12.137, 12.144, 14.13 s 222(2) …. 12.93 s 223 …. 1.11, 3.238, 4.130, 6.138, 8.282, 9.226, 12.102–12.117

s 223(1) …. 12.105 s 223(2) …. 12.110 ss 224–230 …. 1.11 s 224 …. 2.186, 2.210, 3.239, 4.131, 6.137, 7.166, 8.282, 9.226, 12.128, 14.6, 14.10, 14.12–14.25, 14.27, 14.54, 14.134, 14.148, 14.158 s 224(1) …. 14.13 s 224(1)(a) …. 14.20 s 224(1)(b) …. 2.220, 14.15 s 224(1)(c) …. 14.15 s 224(1)(d) …. 14.15 s 224(1)(e) …. 14.15 s 224(1)(f) …. 14.15 s 224(2) …. 14.16, 14.29, 14.31 s 224(3) …. 12.88, 14.18 s 224(4) …. 14.20, 14.22, 14.25 s 224(4)(b) …. 14.25 s 225 …. 14.124–14.132 s 225(1) …. 14.126 s 225(2) …. 14.127, 14.128 s 225(3) …. 14.129 s 225(4) …. 14.130, 14.131 s 226 …. 14.133–14.137 s 227 …. 14.138–14.141 s 228 …. 14.142–14.146, 14.415 s 229 …. 14.148, 14.149, 14.156–14.163, 14.165 s 229(1) …. 14.158, 14.159, 14.162 s 229(2) …. 14.162 s 230 …. 14.156, 14.164–14.167

s 230(1) …. 14.165 s 230(2) …. 14.166, 14.167 s 231 …. 14.156, 14.168, 14.169 ss 232–235 …. 1.11, 13.7, 13.12 s 232 …. 2.186, 3.238, 4.130, 6.138, 7.160, 7.161, 7.164, 7.169, 8.282, 9.226, 13.4, 13.9, 13.10, 13.15–13.34, 13.42, 13.43, 13.46–13.48, 13.72, 13.78, 13.304, 13.333, 14.400, 14.415 s 232(1) …. 13.18, 13.20, 13.21, 13.23, 13.26–13.30, 13.72, 13.79 s 232(2) …. 13.21 s 232(3) …. 7.160, 13.22 s 232(4) …. 13.20, 13.23–13.25, 13.32 s 232(5) …. 13.26, 13.27 s 232(6) …. 13.28, 13.29 s 232(7) …. 13.30, 13.31, 13.32 s 233 …. 13.4, 13.9, 13.10, 13.71–13.76, 13.304 s 234 …. 13.4, 13.9, 13.10, 13.77–13.82, 13.304 s 234(1) …. 13.78, 13.81 s 234(2) …. 13.79, 13.80 s 235 …. 13.5, 13.10, 13.83–13.85 s 236 …. 1.11, 1.83, 1.96, 2.146, 2.148, 3.67, 3.238, 4.130, 5.107, 5.133, 5.170, 5.170, 5.170, 5.170, 5.170, 6.138, 7.159, 7.170, 8.282, 9.226, 13.86–13.91, 13.93, 13.94, 13.96, 13.136–13.144, 13.146, 13.147, 13.150–13.152, 13.165, 13.166, 13.168–13.175, 13.178, 13.208–13.219, 13.225, 13.227, 13.231, 13.233, 13.236, 13.295, 13.304, 13.331, 13.332, 14.400 s 236(1) …. 13.137–13.140, 13.149, 13.177, 13.182, 13.183, 13.195–13.199, 14.415 s 236(2) …. 5.109, 5.133, 5.170, 13.182, 13.186, 13.187–13.189, 13.191, 13.192, 13.201–13.204

ss 237–239 …. 7.162 ss 237–238 …. 1.11, 7.160, 13.225, 13.306 s 237 …. 1.84, 3.238, 4.130, 6.138, 7.164, 7.169, 8.282, 9.226, 13.208–13.218, 13.220, 13.225–13.231, 13.264, 13.304, 13.333 s 237(1) …. 7.165, 13.222, 13.228, 13.230, 13.258, 14.400, 14.415 s 237(1)(a)(ii) …. 7.160, 13.222 s 237(1)(b) …. 13.217, 13.256 s 237(2) …. 13.229 s 237(3) …. 13.230 s 238 …. 1.84, 13.208–13.218, 13.223–13.225, 13.232–13.236, 13.264, 13.304 s 238(1) …. 13.234, 13.258 s 238(1)(b) …. 7.160 s 238(2) …. 2.35 ss 239–241 …. 1.11, 13.306 s 239 …. 3.238, 4.130, 6.138, 7.149, 7.160, 7.164, 8.282, 9.226, 13.237–13.243, 13.264, 13.304, 13.333 s 239(1) …. 7.165, 13.238, 13.239, 13.243, 13.245, 13.246, 13.248, 13.250, 13.251, 13.258, 14.400, 14.415 s 239(1)(a)(ii) …. 7.160 s 239(1)(b) …. 7.160 s 239(2) …. 13.241 s 239(3) …. 13.242 s 239(4) …. 13.243 s 240 …. 13.244–13.248 s 240(1) …. 13.245, 13.247 s 240(2) …. 13.246, 13.247 s 240(3) …. 13.248

s 241 …. 13.249–13.252 s 241(1) …. 13.250 s 241(2) …. 13.251 s 241(3) …. 13.252 ss 242–245 …. 1.11 s 242 …. 13.239, 13.240, 13.253–13.256 s 242(1) …. 13.222, 13.254 s 242(2) …. 13.217, 13.256 s 243 …. 2.146, 7.165, 13.210, 13.228, 13.234, 13.239, 13.257–13.265 s 243(a) …. 13.264, 13.266–13.276, 13.279, 13.280, 13.294, 13.311, 13.312 s 243(b) …. 13.264, 13.277–13.285 s 243(c) …. 13.264, 13.286–13.288, 13.290 s 243(d) …. 13.264, 13.289–13.292 s 243(e) …. 13.264, 13.293–13.295 s 243(f) …. 13.264, 13.296, 13.297 s 243(g) …. 13.264, 13.298–13.300 s 243(h) …. 13.264, 13.301, 13.302 s 244 …. 13.303, 13.304 s 245 …. 13.305, 13.306 ss 246–250 …. 1.11 s 246 …. 3.238, 4.130, 6.138, 8.282, 9.226, 13.304, 14.170–14.220, 14.226, 14.231, 14.232, 14.241, 14.242, 14.415 s 246(1) …. 14.173, 14.174 s 246(2) …. 14.174, 14.176, 14.180 s 246(2)(a) …. 14.174, 14.177, 14.181 s 246(2)(b) …. 14.174, 14.186, 14.190, 14.194, 14.195, 14.232 s 246(2)(b)(i)–(iii) …. 14.197 s 246(2)(c) …. 14.174, 14.200, 14.220

s 246(2)(d) …. 14.174, 14.203, 14.204, 14.206, 14.207, 14.219, 14.220, 14.232 s 246(3) …. 14.175, 14.226 s 247 …. 4.130, 6.138, 8.282, 9.226, 13.304, 14.175, 14.205, 14.221–14.240, 14.415 s 247(1) …. 14.223, 14.224 s 247(2) …. 14.225 s 247(2)(b) …. 14.232 s 247(3) …. 14.226 s 248 …. 2.186, 3.238, 4.130, 6.138, 8.282, 9.226, 13.304, 14.255–14.330, 14.346, 14.348, 14.415 s 248(1) …. 14.257, 14.261 s 248(2) …. 14.259 s 248(3) …. 14.260 s 248(4) …. 14.261 s 249 …. 14.255, 14.261, 14.331–14.351 s 249(1) …. 14.346, 14.349 s 249(2) …. 14.347 s 249(3) …. 14.348, 14.349 s 250 …. 7.149, 7.153, 7.163, 7.164, 7.168, 7.169, 13.22, 13.228, 13.234, 13.238, 13.311, 13.329–13.339 s 250(1) …. 13.330, 13.335, 13.336 s 250(2) …. 13.335 s 250(3) …. 13.336 ss 251–253 …. 1.11 ss 254–258 …. 1.11, 8.153 ss 259–266 …. 1.11 s 259 …. 15.24–15.47, 15.76

s 259(1) …. 15.25, 15.26 s 259(1)(b) …. 15.76 s 259(2) …. 15.27, 15.46 s 259(2)(a) …. 15.31, 15.35, 15.72 s 259(2)(b)(i) …. 15.31, 15.35, 15.74 s 259(2)(b)(ii) …. 15.31, 15.75, 15.81 s 259(3) …. 15.36, 15.37, 15.46 s 259(3)(a) …. 15.37, 15.74–15.76, 15.81 s 259(3)(b) …. 15.37 s 259(4) …. 15.38, 15.41, 15.46, 15.180 s 259(5) …. 15.43 s 259(6) …. 15.46 s 259(7) …. 15.47 s 260 …. 15.48–15.71 s 260(a) …. 15.49, 15.51 s 260(b) …. 15.49, 15.54 s 260(c) …. 15.49, 15.58 s 260(d) …. 15.49, 15.65, 15.67 s 260(e) …. 15.49, 15.69 s 261 …. 15.31, 15.72, 15.73 s 261(c) …. 15.92 s 262 …. 15.32, 15.37, 15.74–15.80 s 262(1) …. 15.75 s 262(2) …. 15.76, 15.79 s 263 …. 15.32, 15.37, 15.81–15.90 s 263(2) …. 15.82 s 263(3) …. 15.83, 15.146 s 263(4)(a) …. 15.85

s 263(4)(b) …. 15.87, 15.92 s 263(5) …. 15.88 s 263(6) …. 15.89 s 264 …. 15.91–15.93 s 265 …. 15.94–15.99 s 265(1) …. 15.95 s 265(2) …. 15.96 s 265(3) …. 15.98 s 266 …. 15.100, 15.101 ss 267–270 …. 1.11 s 267 …. 15.102–15.115 s 267(1) …. 15.103, 15.104 s 267(2) …. 15.105, 15.115 s 267(2)(a) …. 15.109 s 267(2)(b)(i) …. 15.110 s 267(2)(b)(ii) …. 15.110, 15.137, 15.145 s 267(3) …. 15.111, 15.112 s 267(3)(a) …. 15.112, 15.137, 15.145 s 267(3)(b) …. 15.112 s 267(4) …. 15.113–15.115 s 267(5) …. 15.112, 15.115 s 268 …. 15.111, 15.116–15.135 s 268(a) …. 15.117, 15.119 s 268(b) …. 15.117, 15.122 s 268(c) …. 15.117, 15.127, 15.129 s 268(d) …. 15.117, 15.131 s 268(e) …. 15.117, 15.133

s 269 …. 15.136–15.143 s 269(1) …. 15.137 s 269(2) …. 15.138 s 269(3)(a) …. 15.141 s 269(3)(b) …. 15.141 s 270 …. 15.144–15.146 s 270(1) …. 15.145 s 270(1)(e)(i) …. 15.145 s 270(2) …. 15.146 ss 271–273 …. 1.11 s 271 …. 15.150–15.166, 15.180 s 271(1) …. 15.152, 15.153, 15.165 s 271(1)(a) …. 15.165 s 271(2) …. 15.153 s 271(2)(a) …. 15.153–15.155 s 271(2)(b) …. 15.153, 15.156, 15.157 s 271(2)(c) …. 15.153, 15.158, 15.159 s 271(3) …. 15.160, 15.161 s 271(4) …. 15.161 s 271(4)(a) …. 15.161, 15.162 s 271(4)(b) …. 15.161, 15.163 s 271(5) …. 15.164 s 271(6) …. 15.165 s 271(7) …. 15.166 s 272 …. 15.167–15.174 s 272(1)(a) …. 15.168, 15.169, 15.174 s 272(1)(b) …. 15.171, 15.174 s 272(2) …. 15.173

s 272(3) …. 15.165, 15.174 s 272(5) …. 15.165 s 273 …. 15.175–15.177 ss 274–277 …. 1.11 s 274 …. 15.178–15.184, 15.194 s 274(1) …. 15.180 s 274(2) …. 15.181 s 274(3) …. 15.183 s 274(4) …. 15.184 s 275 …. 15.185–15.188 s 276 …. 15.189–15.192 s 276(1) …. 15.190 s 276(2) …. 15.191 s 276(3) …. 15.192 s 276A …. 15.193–15.197 s 276A(1) …. 15.194, 15.195 s 276A(2) …. 15.195 s 276A(3) …. 15.196 s 276A(4) …. 15.192, 15.197 s 277 …. 15.198–15.201 s 277(1) …. 15.199 s 277(2) …. 15.20 ss 278–286 …. 1.11 s 287 …. 1.11 Australian Securities and Investments Commission Act 2001 …. 6.19 Pt 2 …. 1.9, 5.246 Pt 2 Div 2 Sub-Div BA …. 7.147

Pt 2 Div 2 Sub-Div C …. 6.20 Pt 3 …. 5.246 s 12BAA(1) …. 5.224 s 12BAA(4) …. 5.225 s 12BAA(5) …. 5.225 s 12BAA(6) …. 5.225 s 12BAA(7) …. 5.226 s 12BAA(7)(d) …. 10.198 s 12BAA(8) …. 5.227 s 12BAB(1) …. 5.228 s 12BAB(5) …. 5.229 s 12BAB(7) …. 5.229 s 12BAB(11) …. 5.229 s 12BAB(12) …. 5.229 s 12BB …. 5.217 s 12BI(3) …. 7.133 s 12CA …. 6.20 s 12CB …. 6.17, 6.20 s 12CC …. 6.17, 6.20, 6.115 s 12DA …. 5.217–5.242 s 12DA(1) …. 5.174, 5.232, 5.235 s 12DA(1A) …. 5.232 s 12DB …. 5.219 s 12DF …. 5.219 s 12DJ(1) …. 9.217 s 12DL …. 9.59, 9.60 s 12DL(2)(a) …. 9.60 s 12DL(2)(b) …. 9.60

s 12DL(2)(b)(i) …. 9.60 s 12DL(2)(b)(ii) …. 9.60 s 12DM …. 9.74 s 12DMA …. 9.86, 9.95 s 12DMB …. 9.114 s 12GBA …. 5.231 s 12GBD …. 14.156 s 12GBD(1) …. 14.157 s 12GBD(2) …. 14.157 s 12GBD(3) …. 14.164 s 12GBD(4) …. 14.164 s 12GD …. 5.230 s 12GF …. 5.174, 5.230 s 12GLA …. 5.230 s 12GLB …. 14.221 s 12GLC …. 5.241, 12.103 s 12GLD …. 5.231, 14.256 s 12GM …. 5.230 s 12GN …. 14.407–14.413 s 12GY …. 12.72 s 102 …. 5.244 s 102(2B) …. 5.245 Australian Securities and Investments Commission Regulations 2001 …. 5.226 reg 2B …. 5.226 Bankruptcy Act 1966 s 30 …. 14.405 Broadcasting Services Act 1992 …. 3.225

Companies Code s 237 …. 14.152, 14.153 Competition and Consumer Act 2010 Pt IV …. 1.43, 1.47, 1.65, 1.70, 1.92, 2.199, 2.210 Pt IVB …. 12.19 Pt VI …. 13.180 Pt VIA …. 13.152, 13.154, 13.160 Pt VIB …. 13.141, 13.179 Pt XI …. 1.5, 1.6, 1.11, 1.94, 1.99, 1.100, 1.102, 1.103, 15.188 Pt XI Div 5 …. 12.126–12.131 Pt XI Div 8 …. 1.93 Pt XIAA …. 1.6, 1.11 Pt XIB …. 1.65, 12.309 Pt XIC …. 12.309 s 2 …. 12.6 s 2A …. 1.2, 1.38, 1.44, 1.47, 1.49, 1.64 s 2A(1) …. 1.39, 1.69 s 2A(2) …. 1.40 s 2A(3) …. 1.41 s 2A(3A) …. 1.42 s 2A(4) …. 1.43 s 2B …. 1.2, 1.47, 1.49, 1.64, 1.66 s 2B(1) …. 1.65, 1.69 s 2B(2) …. 1.67 s 2B(3) …. 1.68 s 2BA …. 1.2, 1.47, 1.49, 1.70 s 2C …. 1.62

s 4 …. 1.44, 2.109, 14.144 s 4(1) …. 2.74, 2.75, 2.77, 2.78, 2.80, 2.84 s 4(2)(a) …. 3.17 s 4A …. 2.77, 2.96 s 4A(5) …. 2.91, 2.92 s 4B …. 2.8, 2.38 s 4B(4) …. 2.60 s 4C …. 2.286 s 4K …. 13.175 s 4L …. 2.279, 2.281 s 5 …. 1.2, 1.71, 1.78, 1.79 s 5(1) …. 1.73, 1.84 s 5(3) …. 1.83 s 5(4) …. 1.84 s 6(2) …. 1.86 s 6(3) …. 1.86, 1.87, 1.89 s 6(3A) …. 1.87 s 6(4) …. 1.90–1.92 s 6A …. 1.7, 12.5 s 6AA …. 1.102 s 8A(4) …. 12.256 s 25 …. 12.256 s 46 …. 14.34 s 75B …. 2.149, 3.104 s 76 …. 1.41, 1.42, 1.67, 1.68, 14.12, 14.27 s 76(3) …. 14.22 s 76B …. 14.124 s 77 …. 14.142, 14.144

s 77A …. 14.155, 14.157, 14.163 s 77B …. 14.155, 14.164 s 77C …. 14.155, 14.168, 14.169 s 79B …. 14.138 s 80 …. 13.6, 13.7, 13.15–13.17, 13.34 s 80(1AA) …. 13.71, 13.75 s 80(2) …. 13.77, 13.186 s 80(3) …. 13.83 s 80(4) …. 13.25 s 80(5) …. 13.25, 13.31 s 82 …. 13.88, 13.89, 13.136, 13.144 s 83 …. 14.414, 14.418, 14.427–14.429 s 84 …. 2.222, 2.223 s 84(2) …. 2.238 s 84(4) …. 2.257 s 85 …. 14.133 s 86C(4) …. 8.31 s 86D …. 14.221 s 86E …. 14.255, 14.324 s 86F …. 14.255, 14.345 s 87 …. 13.180, 13.257 s 87(2)(a) …. 13.266 s 87(2)(b) …. 13.277 s 87B …. 8.31, 12.38, 12.41, 12.47 s 87CA …. 13.326 s 87CB(1) …. 13.152 s 87CB(2) …. 13.153

s 87CB(3) …. 13.154 s 87CC(1) …. 13.154 s 87CD(1) …. 13.155 s 87CD(4) …. 13.155 s 87CE(1) …. 13.156 s 87CF …. 13.157 s 87CG …. 13.158 s 87CH(1) …. 13.159 s 87CH(2) …. 13.159 s 87CI …. 13.160 s 87E(1) …. 13.179 ss 87F–87ZC …. 13.180 s 95S(3) …. 12.269 s 95ZK(1) …. 12.269 s 95ZK(2) …. 12.269 s 130 …. 1.6, 2.74 s 131(1) …. 1.6 s 131A …. 1.8, 5.174, 5.193, 6.19, 7.147 s 131C …. 1.12 s 131C(3) …. 1.104 s 134 …. 12.127–12.131 s 134(1) …. 12.128 s 134(2)(a) …. 12.129 s 134(2)(b) …. 12.130 s 134(2)(c) …. 12.131 s 134A …. 3.239, 4.131, 6.138, 8.282, 9.226, 12.132–12.140 s 134A(1) …. 12.133 s 134A(2) …. 12.118, 12.137

s 134A(3) …. 12.139 s 134A(4) …. 12.140 s 134B …. 12.141, 12.142 s 134C …. 12.143, 12.144 s 134D …. 12.145–12.147 s 134D(1) …. 12.147 s 134D(2) …. 12.147 s 134D(3) …. 12.147 s 134E …. 12.148–12.151 s 134F …. 12.152–12.159 s 134F(1) …. 12.153 s 134F(2) …. 12.155 s 134F(3) …. 12.157 s 134F(4) …. 12.157 s 134F(5) …. 12.158 s 134F(6) …. 12.159 s 134G …. 12.130, 12.160–12.171 s 134G(1) …. 12.161 s 134G(2) …. 12.163 s 134G(3) …. 12.165 s 134G(4) …. 12.168 s 134G(5) …. 12.169 s 134G(6) …. 12.170 s 134G(7) …. 12.171 s 137(1) …. 13.178 s 137(4) …. 13.178 s 137(5) …. 13.178

s 137A …. 11.118 s 137B …. 13.165 s 137C …. 13.141 s 137F …. 3.238, 4.130, 6.138, 8.282, 9.226, 14.366, 14.398–14.407 s 137F(1) …. 14.400 s 137F(2) …. 14.400 s 137F(3) …. 14.401 s 137F(4) …. 14.402, 14.403 s 137F(5) …. 14.404, 14.405 s 137H …. 14.414–14.432 s 138(1) …. 1.94 s 138A …. 1.95 s 138A(2) …. 1.96 s 138B …. 1.95 s 138C …. 1.97 s 138C(1)(a) …. 1.97 s 138C(2) …. 1.98 s 138D …. 1.99 s 139A …. 7.137, 15.187 s 139B …. 2.221–2.223 s 139B(1) …. 2.224, 2.225, 2.227, 2.228 s 139B(2) …. 2.224, 2.229, 2.235, 2.236, 2.240, 2.257 s 139C …. 2.256, 2.257 s 139C(2) …. 2.257 s 139G …. 1.106, 1.107 s 139G(4)(c) …. 1.107 s 140 …. 1.6 s 140A …. 1.6

s 140B …. 1.6 s 140J …. 1.105 s 155 …. 3.238, 4.130, 6.138, 8.282, 9.226, 12.71, 12.134–12.136, 12.172–12.314, 12.316, 12.318, 12.321, 12.345, 14.39, 14.40 s 155(1) …. 12.172–12.176, 12.179–12.186, 12.188, 12.189, 12.195–12.204, 12.208, 12.209, 12.212–12.215, 12.217–12.222, 12.225–12.227, 12.229, 12.231, 12.232, 12.233, 12.238–12.240, 12.243–12.246, 12.248, 12.249, 12.251, 12.254, 12.269, 12.272–12.282, 12.294 s 155(1)(a) …. 12.71, 12.179, 12.245, 12.298, 12.299 s 155(1)(b) …. 12.71, 12.179, 12.299 s 155(1)(c) …. 12.255–12.260, 12.263, 12.264, 12.266, 12.268, 12.270, 12.271, 12.294, 12.298, 12.299 s 155(2A) …. 12.269 s 155(3) …. 12.270 s 155(4) …. 12.272, 12.276, 12.277, 12.281 s 155(4)(a) …. 12.273, 12.274 s 155(4)(b) …. 12.275 s 155(5) …. 12.283, 12.284, 12.291–12.294, 12.298, 14.40 s 155(5)(a) …. 12.285–12.290, 12.294 s 155(5)(b) …. 12.294 s 155(5A) …. 12.285 s 155(6A) …. 12.284, 12.291, 12.292, 12.298, 14.40 s 155(7) …. 12.71, 12.295, 12.296, 12.298 s 155(7A) …. 12.300–12.302 s 155(7B) …. 12.303–12.306, 12.314 s 155(8) …. 12.308 s 155(9) …. 12.309, 12.310

s 155(9A) …. 12.311–12.313 s 155(10) …. 12.314 s 155A …. 12.308 s 155AAA …. 12.315–12.348 s 155AAA(1) …. 12.319 s 155AAA(2) …. 12.323 s 155AAA(3) …. 12.324, 12.327 s 155AAA(4) …. 12.325–12.327, 12.329 s 155AAA(5) …. 12.327 s 155AAA(6) …. 12.328, 12.331 s 155AAA(7) …. 12.325, 12.329–12.331 s 155AAA(8) …. 12.331 s 155AAA(9) …. 12.332 s 155AAA(10) …. 12.332, 12.333 s 155AAA(11) …. 12.333 s 155AAA(12) …. 12.334, 12.336 s 155AAA(13) …. 12.336, 12.337 s 155AAA(14) …. 12.337 s 155AAA(15) …. 12.338 s 155AAA(16) …. 12.339 s 155AAA(17) …. 12.340 s 155AAA(18) …. 12.341–12.344 s 155AAA(19) …. 12.343 s 155AAA(20) …. 12.344 s 155AAA(21) …. 12.320–12.322, 12.325, 12.329, 12.335 s 163A …. 13.311, 13.313–13.328, 13.336 s 163A(1)(a) …. 13.322, 13.326, 13.327 s 163A(1)(aa) …. 13.324

s 163A(1)(aaa) …. 13.323, 13.327 s 163A(1)(b) …. 13.325 s 163A(3) …. 13.326 Sch 2 see Australian Consumer Law Competition and Consumer Legislation Amendment Act 2010 Sch 2 …. 6.16 Competition and Consumer Regulations 2010 …. 10.217, 10.252 Pt 6 …. 1.108 reg 77 …. 9.70 reg 78 …. 1.108, 9.70, 9.109 reg 79 …. 9.108 reg 80 …. 9.110 reg 90 …. 10.253, 10.256 reg 91 …. 10.260, 10.262 reg 91(2) …. 15.36 Competition Policy Reform Act 1995 …. 12.4 Contracts Review Act 1980 s 4 …. 6.22 s 7 …. 6.21 s 7(1) …. 6.22 s 8 …. 6.22 s 9(2) …. 6.23 Sch 1 …. 6.22 Constitution …. 8.256 Ch III …. 13.315, 13.318 s 51(i) …. 1.86, 2.100 s 51(v) …. 1.88

s 51(xx) …. 1.86, 2.75, 2.88 s 51(xxxix) …. 1.86 s 61 …. 1.86 s 75 …. 1.95 s 122 …. 1.86 Corporations Act 2001 …. 2.95, 8.198, 14.254 Ch 6D …. 5.175 Pt 2D.6 …. 14.251, 14.255, 14.301 s 9 …. 5.179, 5.194, 5.209, 7.139, 14.160, 14.306 s 92(3) …. 5.178 ss 126–129 …. 2.241 s 199A …. 14.153, 14.155, 14.157, 14.163 s 199B …. 14.153, 14.155 s 199C …. 14.153, 14.155, 14.164 s 206A(1) …. 14.292–14.298, 14.300, 14.302, 14.306, 14.310, 14.311, 14.324, 14.327 s 206A(1)(a) …. 14.310, 14.311 s 206A(1)(b) …. 14.310, 14.311 s 206A(1)(c) …. 14.305, 14.310, 14.311 s 206C …. 5.212, 14.256, 14.264, 14.335 s 206E …. 14.264 s 206EA(b) …. 14.255, 14.301 s 230 …. 14.244 s 670A …. 5.171, 5.213, 5.214, 5.232, 5.233 s 708 …. 5.216, 5.235 s 728 …. 5.171, 5.172, 5.175–5.186, 5.213–5.216, 5.232–5.235 s 728(1) …. 5.177, 5.181, 5.182, 5.186 s 728(2) …. 5.180

s 728(3) …. 5.181, 5.186 s 729 …. 5.176, 5.186 s 729(1) …. 5.182, 5.185 s 729(2) …. 5.184 s 729(3) …. 5.185 s 730(1) …. 5.183 s 731(1) …. 5.186 s 731(2) …. 5.186 s 733(1) …. 5.186 s 733(2) …. 5.186 s 733(3) …. 5.186 s 763A(1) …. 5.203 s 763B …. 5.204 s 763C …. 5.204 s 763D …. 5.204 s 764A(1) …. 5.205, 5.206, 10.198 s 765A …. 5.238 s 766A …. 5.239 s 766A(1) …. 5.207 s 766B …. 5.208 s 766C …. 5.208 s 766D …. 5.208 s 766E …. 5.208 s 1041E …. 5.171 s 1041F …. 5.171 s 1041G …. 5.171 s 1041H …. 5.171, 5.173, 5.187–5.216, 5.221, 5.236–5.242 s 1041H(1) …. 5.174, 5.189, 5.190, 5.192

s 1041H(2) …. 5.210 s 1041H(3) …. 5.213 s 1041I …. 5.211 s 1041I(1) …. 5.174 s 1317E …. 5.212 s 1317G …. 5.212 s 1323 …. 14.407–14.413 s 1324 …. 5.211 s 1325 …. 5.211 s 1349 …. 14.344, 14.345 Corporations Amendment (Insolvency) Act 2007 …. 14.344 Corporations Law s 241 …. 14.153 s 995(2) …. 5.188 s 1323 …. 14.409, 14.412 s 1324 …. 14.412 Corporations Regulations 2001 …. 5.205 reg 7.1.06 …. 5.206 Crimes Act 1914 s 4AA …. 12.144 s 4AA(1) …. 12.88 s 4AB …. 1.100, 1.101 s 4C …. 14.125 Criminal Code Ch 2 …. 1.102 Pt 2.5 …. 1.103 Pt 11.4 …. 14.169

s 5.2 …. 2.201 s 9.2 …. 1.103 s 11.5(3) …. 2.184 s 137.1 …. 12.298 s 137.2 …. 12.298 s 149.1 …. 12.298 Criminal Code Act 1995 s 13.3(3) …. 12.304 Sch see Criminal Code Customs Act 1901 s 229 …. 8.19 Evidence Act 1995 Pt 3.10 Div 1 …. 12.314 s 118 …. 12.314 s 119 …. 12.314 ss 121–126 …. 12.314 s 140 …. 14.10 s 144(1) …. 1.89 s 191(2) …. 13.373 Factors (Mercantile Agents) Act 1923 …. 10.45 Federal Court Act 1976 s 21 …. 13.311, 13.318–13.320, 13.328, 13.338–13.374 s 21(1) …. 13.340, 13.341 s 21(2) …. 13.342 s 23 …. 14.363, 14.406, 14.411 Federal Court Rules 2011 rr 7.31–7.38 …. 14.365 r 7.33(1) …. 14.395

r 7.33(2) …. 14.396 r 7.34 …. 14.397 r 7.35(4) …. 14.380 Foreign States Immunities Act 1985 Pt II …. 2.79 s 11(1) …. 2.79 Freedom of Information Act 1982 …. 12.334 High Court Rules O 26, r 19 …. 13.318 Insurance Contracts Act 1984 …. 7.141 s 9 …. 7.145 s 9(1) …. 7.146 s 15 …. 7.142, 10.198 Judiciary Act 1903 s 79 …. 13.205 Legislative Instruments Act 2003 s 5 …. 12.104, 12.334, 12.337, 12.343 National Broadband Network Companies Act 2011 …. 12.309 National Credit Code s 76(1) …. 6.24 s 76(2) …. 6.26 s 77 …. 6.25 s 204 …. 6.25 National Consumer Credit Protection Act 2009 Sch 1 see National Credit Code Passenger Movement Charge Act 1978 …. 9.169, 9.190, 9.192 Personal Property Securities Act 2009 …. 10.45

Radiocommunications Act 1992 Pt 2.2 Div 4A …. 12.309 Pt 2.2 Div 4B2 …. 12.309 Sex Discrimination Act 1984 …. 9.220 s 28(3) …. 9.218 Statute Law (Miscellaneous Provisions) Act (No 2) 1984 …. 3.235 Telecommunications Act 1997 …. 12.309 Telecommunications (Consumer Protection and Service Standards) Act 1999 …. 12.309 Trade Practices Act 1974 Pt IV …. 2.79, 13.25, 13.95, 14.136, 14.254 Pt IVA …. 6.12, 6.126 Pt IVB …. 6.126 Pt V …. 1.14, 1.80, 2.100, 3.8, 3.69, 4.85, 5.220, 6.126, 10.204, 13.25, 13.95, 14.146, 14.240 Pt V, Div 1 …. 2.118, 3.8, 3.223 Pt V, Div 1AAA …. 9.122 Pt V, Div 2 …. 1.14, 3.8, 10.8, 10.11, 10.25, 10.26, 15.6, 15.14 Pt V, Div 2A …. 15.14 Pt VA …. 2.300, 11.8, 11.9 Pt VI …. 13.206, 13.317 s 2A …. 1.63 s 4 …. 2.79, 2.82, 2.89, 2.272, 2.284 s 4(1) …. 2.273, 8.152 s 4(2) …. 3.147 s 4(3) …. 3.8 s 4B …. 2.24, 2.72 s 4D(1) …. 2.209, 2.210

s 4L …. 2.281 s 5 …. 1.72, 1.77 s 6(2) …. 2.100 s 6(3) …. 1.88 s 45(2) …. 2.196, 2.208, 2.209, 13.268, 13.269 s 45(3) …. 2.272 s 45D …. 9.19 s 47(1) …. 2.281 s 47(6) …. 2.281 s 49(4)(a) …. 2.163 s 51(1) …. 1.36 s 51A …. 3.165, 3.166, 3.170 s 51AA …. 6.12, 6.15, 6.31, 6.37, 6.40, 6.54, 6.55, 6.77, 6.78, 6.89, 6.97, 6.126 s 51AA(1) …. 6.31 s 51AB …. 6.12, 6.15, 6.17, 6.31, 6.55, 6.89, 6.136 s 51AB(1) …. 6.31 s 51AB(2) …. 6.31 s 51AC …. 6.14, 6.15, 6.17, 6.31, 6.55, 6.115, 6.126, 6.133, 6.134, 8.30 s 51AC(1) …. 6.31 s 51AC(3) …. 6.31 s 51AF …. 5.220 s 51C …. 2.26 s 52 …. 1.63, 2.100, 2.101, 2.115, 2.117, 2.122, 2.123, 2.129, 2.131, 2.132, 2.138, 2.141, 2.144, 2.151, 2.232, 3.5–3.8, 3.11–3.13, 3.25, 3.28, 3.32, 3.35–3.39, 3.57–3.59, 3.66, 3.84, 3.86, 3.87, 3.98, 3.102, 3.103, 3.109, 3.110, 3.119, 3.123, 3.131, 3.136, 3.137, 3.139, 3.140, 3.143, 3.147, 3.171, 3.173, 3.179, 3.180, 3.187, 3.194, 3.195, 3.209, 3.210, 3.213,

3.214, 3.217, 3.220, 3.221, 3.223, 3.225, 3.237, 4.8, 4.20, 4.28, 4.36, 4.49, 4.60, 4.64, 4.66, 4.72, 4.74, 4.79, 4.82, 4.91, 4.94, 4.95, 4.100, 4.105, 4.106, 4.111, 4.125, 4.129, 5.24, 5.41, 5.52, 5.71, 5.76, 5.174, 5.191, 5.219, 6.133, 8.5, 8.6, 8.24, 8.64, 8.77, 8.132, 8.159, 8.248, 8.262, 8.279, 9.46, 9.73, 9.153, 9.200, 10.204, 13.95, 13.181, 13.206, 13.207, 13.373, 14.330 s 52A …. 6.5–6.10, 6.12 s 53 …. 2.138, 3.119, 3.209, 3.214, 4.64, 4.66, 4.82, 4.105, 4.125, 5.76, 8.5, 8.6, 8.10, 8.23, 8.127, 8.132, 9.46, 90153 s 53(a) …. 2.114, 2.122, 4.94, 8.16, 8.22, 8.35, 8.43, 8.46, 8.50, 8.51, 8.55, 8.62, 8.64, 8.70, 8.72, 8.262 s 53(aa) …. 8.74 s 53(b) …. 8.23, 8.79, 8.86–8.88 s 53(bb) …. 8.90, 8.92 s 53(c) …. 3.37, 4.82, 4.129, 5.24, 5.219, 8.77, 8.108, 8.126, 9.200 s 53(d) …. 3.37, 4.82, 8.122, 8.129, 8.130, 8.135 s 53(e) …. 4.125, 6.133, 8.24, 8.137, 13.370 s 53(ea) …. 8.23, 8.147 s 53(eb) …. 8.150, 8.152, 8.158, 8.159 s 53(f) …. 8.163, 8.165 s 53(g) …. 5.219, 8.120, 8.167, 8.174, 8.175, 8.178, 8.180, 8.182, 8.185, 9.200, 10.204, 13.370 s 53(i) …. 8.145 s 53A …. 8.213, 8.214, 8.221, 8.228, 8.237 s 53A(2) …. 9.209, 9.210 s 53B …. 8.239, 8.240, 8.242, 8.244, 8.245, 8.248 s 53C …. 9.169, 9.170, 9.191 s 54 …. 9.6–9.8, 9.18, 9.19 s 55 …. 4.64, 4.105, 4.129, 8.64, 8.250, 8.251, 8.253, 8.256, 8.262, 14.25

s 55A …. 8.77, 8.265, 8.266, 8.270, 8.271 s 56 …. 9.23, 9.24, 9.31 s 56(1) …. 9.31 s 56(2) …. 9.31 s 57 …. 2.163, 9.196–9.203 s 58 …. 9.36, 9.37, 9.46 s 58(a) …. 9.46 s 58(b) …. 9.46 s 59 …. 8.273, 8.274, 8.280 s 59(2) …. 8.279, 8.280, 9.200, 14.330 s 60 …. 9.209, 9.210, 9.218, 9.220, 9.225 s 61 …. 9.200 s 63A …. 9.51, 9.52 s 64 …. 9.63, 9.64, 9.73, 9.79, 9.98, 9.99 s 64(3) …. 9.100 s 64(5)(e) …. 9.73 s 65 …. 9.78, 9.79 s 65A …. 3.218–3.220, 3.223–3.225, 3.235–3.237 s 65AAC …. 9.121, 9.122, 9.148 s 65AAC(1) …. 9.145, 14.330 s 65AAB …. 9.121, 9.122, 9.128 s 65AAD …. 9.131, 9.145, 9.148 s 65AAD(1)(b) …. 9.145 s 65AAE …. 9.145, 9.146 s 66 …. 10.70, 10.134 s 66(2) …. 10.73–10.76, 10.81 s 67 …. 10.17 s 68 …. 10.17, 10.203

s 68(1) …. 10.205 s 68A …. 10.17 s 68B …. 10.17 s 69 …. 10.17 s 69(1)(a) …. 10.35 s 69(1)(b) …. 10.50 s 69(1)(c) …. 10.60 s 70 …. 10.17, 10.134 s 71 …. 10.17, 10.70, 10.74 s 71(1) …. 2.72 s 71(2) …. 2.54, 2.72, 10.120, 10.132 s 72 …. 10.17, 10.144 s 74 …. 10.17, 10.171, 10.173 s 74(2) …. 10.179 s 74A …. 2.292, 2.293, 2.305, 2.306 s 74A(2)(a) …. 2.40, 2.46, 2.52 s 74A(3) …. 2.298, 2.300 s 74A(4) …. 2.298 s 74B …. 10.17, 10.70, 10.120, 10.132, 11.80 s 74C …. 10.17 s 74D …. 10.17, 10.70, 10.74, 10.75, 11.69, 11.75, 11.80 s 74D(1) …. 10.75 s 74D(2)(a)(i) …. 11.69 s 74D(3) …. 10.75 s 74E …. 10.17 s 74F …. 10.17, 10.151 s 74G …. 10.17

s 74G(1) …. 10.158 s 74H …. 10.17 s 74J …. 10.17, 11.86 s 74K …. 10.17, 11.111 s 74L …. 10.17 s 75A …. 10.26, 15.6 s 75AA …. 11.75 s 75AB …. 2.300 s 75AC …. 11.22, 11.31, 11.75 s 75AC(1) …. 11.29, 11.34 s 75AC(2) …. 11.29, 11.31 s 75AD …. 11.26, 11.35, 11.37, 11.75, 11.80, 11.101 s 75AE …. 11.44, 11.50, 11.51 s 75AF …. 11.52, 11.61 s 75AG …. 11.57, 11.61 s 75AH …. 11.95 s 75AI …. 11.97, 11.99 s 75AJ …. 11.17 s 75AK …. 11.65, 11.69, 11.80 s 75AK(1)(a) …. 11.69, 11.70 s 75AK(1)(b) …. 11.75 s 75AK(1)(c) …. 11.80, 11.81 s 75AL …. 11.104 s 75AM …. 11.92 s 75AO …. 11.86 s 75AP …. 11.111 s 75AQ …. 11.105 s 75AZC(1)(g) …. 4.125

s 75B …. 2.150, 2.151, 2.157, 2.163, 2.174, 2.178, 3.225 s 75B(c) …. 2.174 s 75B(d) …. 2.178 s 76 …. 2.211, 14.109, 14.137, 14.146, 14.238 s 76(1)(b)–(f) …. 14.136 s 76(1)(b) …. 2.220 s 76F …. 14.124, 14.125 s 77 …. 14.142, 14.144, 14.146 s 77A …. 14.154–14.156, 14.163 s 77B …. 14.154–14.156 s 77C …. 14.154, 14.155 s 78 …. 14.146 s 79 …. 14.146, 14.238 s 80 …. 3.102, 13.6, 13.8, 13.34, 13.35, 13.315 s 80(1) …. 13.32 s 80(2) …. 13.186 s 80(4) …. 13.25, 13.32 s 80(5) …. 13.25, 13.31, 13.32 s 80A …. 14.239, 14.240 s 82 …. 2.151, 2.174, 8.132, 13.88, 13.95, 13.144, 13.145, 13.181, 13.205, 13.206, 13.215, 13.225, 13.260, 13.262, 13.273, 15.8 s 82(1) …. 13.95, 13.162 s 82(1AAA) …. 13.141 s 82(1AAB) …. 13.141 s 82(1B) …. 13.165 s 83 …. 14.418, 14.421, 14.422, 14.426, 14.427–14.429 s 84(2) …. 2.230–2.232, 2.239 s 85 …. 14.137

s 85(1) …. 2.239 s 85(6) …. 14.133, 14.136, 14.137 s 86(1) …. 13.317 s 86C …. 14.171, 14.196, 14.198, 14.232 s 86C(3) …. 14.226 s 86C(4) …. 12.50 s 86D …. 14.222, 14.231–14.233, 14.238 s 86DA …. 12.102 s 86E …. 14.251, 14.252 s 87 …. 1.10, 2.281, 13.181, 13.215, 13.225, 13.259, 13.260, 13.262, 13.275, 13.276, 13.300 s 87(1) …. 13.273 s 87(1A) …. 13.206 s 87(1CA)(b) …. 13.206 s 87(2)(a) …. 13.268–13.270 s 87(2)(b) …. 13.285 s 87(2)(ba) …. 13.286, 13.287 s 87(2)(c) …. 13.289, 13.291 s 87(2)(d) …. 13.293 s 87(2)(e) …. 13.296 s 87(2)(f) …. 13.298 s 87(2)(g) …. 13.300–13.302 s 87A …. 2.281, 14.398, 14.399, 14.406 s 87B …. 12.50, 12.55, 12.62 s 87B(4) …. 12.55, 12.63 s 96 …. 2.164 s 96(3)(b) …. 2.163 s 155 …. 12.136, 12.172–12.314

s 155(1) …. 12.136, 12.176, 12.177, 12.193, 12.199, 12.203, 12.208, 12.214, 12.217, 12.222, 12.233 s 155(1)(a) …. 12.193, 12.245 s 163A …. 13.315, 13.317, 13.318, 13.321 s 163A(1) …. 13.317 s 163A(3A) …. 13.317 Trade Practices Amendment Act 1992 …. 11.8 Trade Practices Amendment (Australian Consumer Law) Act (No 1) 2010 …. 7.10 Sch 2 Pt 1 …. 14.124 Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 …. 7.11 Sch 5, item 51 …. 14.124 Sch 7, item 6 …. 10.11 Sch 7, item 7(2) …. 13.17 Trade Practices Amendment (Cartel Conduct and Other Measures) Act 2009 Sch 1, items 55–58 …. 14.252 Trade Practices Amendment (Fair Trading) Act 1998 Sch 2 …. 6.14 Trade Practices (Industry Code — Unit Pricing) Regulations 2009 …. 9.162 Trade Practices Legislation Amendment Act 1992 …. 6.13 Trade Practices Legislation Amendment Act (No 1) 2006 …. 14.154 Sch 9 Pt 2 …. 14.250, 14.251 Trade Practices Regulations reg 12(3) …. 12.252 Trade Practices Revision Act 1986 …. 6.8 s 52A(5) …. 6.8 Water Act 2007

Pt 4 …. 12.311, 12.313 Pt 4A …. 12.311, 12.313

Australian Capital Territory Fair Trading Legislation Amendment Act 2001 s 27 …. 10.31 Sale of Goods Act 1954 s 17 …. 10.17, 10.29 s 18 …. 10.17, 10.29 s 19 …. 10.17, 10.29 s 20 …. 10.17, 10.29 s 58 …. 10.31 Sale of Goods (Vienna Convention) Act 1987 s 5 …. 10.226 New South Wales Administration of Justice Act 1924 s 10 …. 13.344 Civil Liability Act 2002 …. 5.132 s 5D …. 5.116 s 5E …. 5.116 s 5O …. 5.116, 10.177 s 5P …. 5.116 Criminal Appeal Act 1912 s 6(3) …. 14.99 Environmental Planning and Assessment Act 1979 s 149(1) …. 8.231 Fair Trading Act 1987 …. 9.154, 13.337

s 3 …. 1.66 s 40 …. 9.151–9.153, 9.155 s 40M …. 10.17 s 40M(3) …. 10.17 s 40O …. 10.17 s 40P …. 10.17 s 40Q …. 10.17 s 40R …. 10.17 s 40S …. 10.17 s 40U …. 10.17 s 40V …. 10.17 s 40W …. 10.17 s 40X …. 10.17 s 40Y …. 10.17 s 40Z …. 10.17 s 40ZA …. 10.17 s 40ZB …. 10.17 s 40ZC …. 10.17 s 42 …. 2.120, 2.128, 3.110 s 46 …. 8.245 s 55 …. 9.218 s 71(1) …. 13.337 s 71(2) …. 13.337 s 86 …. 13.337 Industrial Arbitration Act 1940 s 88F …. 6.5 Law Reform (Miscellaneous Provisions) Act 1965 ss 8–9 …. 13.111

Limitation Act 1969 s 14(1)(a) …. 5.170, 5.171 s 14(1)(b) …. 5.109, 5.135 Property, Stock and Business Agents Act 2002 s 66 …. 1.12 Sale of Goods Act 1923 …. 10.28, 10.44 s 5 …. 10.39 s 17 …. 10.29, 10.53 s 17(1) …. 10.35, 10.53 s 17(2) …. 10.50, 10.53, 10.60 s 18 …. 10.29, 10.134, 10.142 s 19 …. 3.194, 10.29 s 19(1) …. 2.72, 10.86, 10.120, 10.132 s 19(2) …. 2.72, 10.70, 10.75, 10.119 s 20 …. 10.29, 10.144 ss 21–25 …. 10.38 s 21 …. 10.39 s 22(1) …. 10.39 s 22(2) …. 10.39 s 23 …. 10.40 s 24 …. 10.41 s 25 …. 10.41 ss 26–28 …. 10.43 s 26 …. 10.45 s 26(1) …. 10.45 s 26(2)(a) …. 10.45 s 26(2)(b) …. 10.45

s 27 …. 10.46 s 28(1) …. 10.46 s 28(2) …. 10.46 s 57 …. 10.30 s 64 …. 10.30 s 64(5) …. 10.32 Sale of Goods (Vienna Convention) Act 1986 s 5 …. 10.226 Supreme Court Act 1970 s 23 …. 14.364 Uniform Civil Procedure Rules 2005 rr 25.10–25.17 …. 14.363 r 30.3 …. 13.132 Workers Compensation Act 1987 s 151E …. 11.101 Northern Territory Consumer Affairs and Fair Trading Act s 62 …. 10.17 s 63 …. 10.17 s 64 …. 10.17 s 65 …. 10.17 s 66 …. 10.17 s 68 …. 10.17 s 68A …. 10.17 s 69 …. 10.17 s 73 …. 10.17 s 74 …. 10.17

s 75 …. 10.17 s 76 …. 10.17 s 77 …. 10.17 s 78 …. 10.17 s 79 …. 10.17 s 80 …. 10.17 s 81 …. 10.17 s 82 …. 10.17 Sale of Goods Act 1972 s 17 …. 10.29 s 18 …. 10.29 s 19 …. 10.29 s 20 …. 10.29 s 57 …. 10.30 Sale of Goods (Vienna Convention) Act 1987 s 5 …. 10.226 Queensland Sale of Goods Act 1896 s 15 …. 10.17, 10.29 s 16 …. 10.17, 10.29 s 17 …. 10.17, 10.29 s 18 …. 10.17, 10.29 s 56 …. 10.30 Sale of Goods (Vienna Convention) Act 1986 s 5 …. 10.226 South Australia Consumer Transactions Act 1972

s 3 …. 10.17 s 6 …. 10.17 s 6(3) …. 10.17 s 6(4) …. 10.17 s 6(4)(b) …. 10.17 s 7 …. 10.17 s 8 …. 10.17 Sale of Goods Act 1895 s 12 …. 10.29 s 13 …. 10.29 s 14 …. 10.29, 10.143 s 15 …. 10.29 s 54 …. 10.30 Sale of Goods (Vienna Convention) Act 1986 s 4 …. 10.226 Tasmania Sale of Goods Act 1896 s 17 …. 10.17, 10.29 s 18 …. 10.17, 10.29 s 19 …. 10.17, 10.29 s 20 …. 10.17, 10.29 s 59 …. 10.30 Sale of Goods (Vienna Convention) Act 1987 s 5 …. 10.226 Victoria Australian Consumer Law and Fair Trading Act 2012 …. 10.232 Fair Trading Act 1999 …. 7.59, 7.96, 7.104

Pt 2B …. 7.5, 7.15, 7.18, 7.54, 7.55 s 32G …. 10.17 s 32GA …. 10.17 s 32H …. 10.17 s 32HA …. 10.17 s 32I …. 10.17 s 32IA …. 10.17 s 32J …. 10.17 s 32JA …. 10.17 s 32L …. 10.17 s 32MA …. 10.17 s 32N …. 10.17 s 32W …. 7.55 s 160A …. 10.232 Goods Act 1958 s 17 …. 10.29 s 18 …. 10.29 s 19 …. 10.29 s 20 …. 10.29 s 51 …. 10.30 s 86 …. 10.226 Manufacturers’ Warranties Act 1974 …. 10.17 Western Australia Fair Trading Act 1987 s 4(3) …. 10.17 s 34 …. 10.17 s 35 …. 10.17

s 36 …. 10.17 s 37 …. 10.17 s 38 …. 10.17 s 39 …. 10.17 s 40 …. 10.17 Sale of Goods Act 1895 s 12 …. 10.17, 10.29 s 13 …. 10.17, 10.29 s 14 …. 10.17, 10.29 s 15 …. 10.17, 10.29 s 54 …. 10.30 Sale of Goods (Vienna Convention) Act 1986 s 5 …. 10.226

International Paris Convention for the Protection of Industrial Property Art 10bis …. 8.254–8.256 Art 10bis(3)(iii) …. 8.253, 8.256 UN Convention on Contracts for the International Sale of Goods (Vienna Sales Convention) …. 10.225–10.231 Art 1 …. 10.228 Art 2 …. 10.229 Art 3 …. 10.230 Art 4 …. 10.231 New Zealand Consumer Guarantees Act 1993 …. 10.7, 10.23 s 7 …. 10.78 s 20 …. 15.80

s 20(2) …. 15.79 United Kingdom Chancery Procedure Act 1852 s 50 …. 13.344 Sale of Goods Act 1893 …. 10.27, 10.148 Sale of Goods Act 1979 s 13(1) …. 10.133 s 13(1)(a) …. 10.133 Trade Descriptions Act 1968 s 11(2) …. 2.226 Unfair Terms in Consumer Contracts Regulations 1994 …. 7.5, 7.15, 7.18, 7.109 reg 5 …. 7.57 reg 5(1) …. 7.56 United States of America Lanham Act 1946 s 43(a) …. 8.152

Table of Contents Foreword Detailed Table of Contents Preface Publisher’s Note Table of Cases Table of Statutes

Chapter 1

Introduction

Chapter 2

Definitions and Key Concepts

Chapter 3

Misleading or Deceptive Conduct (General Principles)

Chapter 4

Misleading or Deceptive Conduct and Advertising

Chapter 5

Misleading or Deceptive Conduct and Other Areas of Law

Chapter 6

Unconscionable Conduct

Chapter 7

Unfair Contract Terms

Chapter 8

Specific False or Misleading Representations

Chapter 9

Specific Unfair Practices

Chapter 10 Consumer Guarantees Chapter 11 Manufacturers’ Liability Chapter 12 Enforcement Powers Chapter 13 Remedies (Private)

Chapter 14 Remedies (Public) Chapter 15 Consumer Guarantees Remedies Index

Detailed Table of Contents Foreword Table of Contents Preface Publisher’s Note Table of Cases Table of Statutes

Chapter 1: Introduction Introduction Overview Overview of the ACL What is the ACL? What does the ACL cover? What are the key changes that are made by the ACL? What are the objectives of the ACL? Why was the ACL introduced? The Crown, Crown immunity, derivative Crown immunity and liability of the Crown The Crown Crown immunity Derivative Crown immunity Section 2A of the CCA Section 2B of the CCA Section 2BA of the CCA Extraterritorial application of the ACL Section 5 of the CCA

Extended application of the ACL Jurisdiction of the court Conferred jurisdiction Transfer of proceedings Application of the Criminal Code No ‘double dipping’ of liabilities Regulations Short theory questions Theory questions Further reading

Chapter 2: Definitions and Key Concepts Introduction Overview Definition of consumer Section 3 of the ACL Acquiring goods or services as a consumer Exceptions to acquiring goods as a consumer Definitions of corporation, subsidy, holding and related bodies corporate Definition of a corporation Definition of a foreign corporation Definition of a trading corporation Definition of a financial corporation Definition of a subsidiary, holding and related body corporate The meaning of ‘in trade or commerce’ What provisions does ‘in trade or commerce’ apply to? What is ‘in trade or commerce’? Private sale of land or business Public statements, debates and general education Political statements and lobbying

Employment contracts Internal communications Conduct to influence others The activities of the government Accessorial liability ‘Involved’ ‘Aided, abetted, counselled or procured’ the contravention ‘Induced’ the contravention ‘Knowingly concerned in’, or ‘a party to’, the contravention ‘Conspired with others’ to effect the contravention Attempt to contravene The elements of attempt to contravene Liability of corporate and non-corporate principals Section 139B of the CCA ‘On behalf of’ Not on a ‘frolic of their own’ Section 139C of the CCA Various other key definitions and concepts ‘Goods’ ‘Services’ ‘Severability’ ‘Supply’ ‘Manufacturer’ Short theory and problem questions Theory questions Hypothetical problem questions Further reading

Chapter 3: Misleading or Deceptive Conduct (General Principles) Introduction

Overview Section 18 of the ACL Overview Who is a person? Legal and natural person What is ‘in trade or commerce’? What is ‘engaging in conduct’? To do or refuse to do any act What is ‘misleading or deceptive conduct’? The overall impression is what matters Induces or is capable of inducing error Mere confusion or wonderment Doctrine of erroneous assumption Is there any difference between ‘misleading’ and ‘deceptive’? What is ‘likely to mislead or deceive’? No need to prove that a person was actually misled Who must be misled? Section 18 is not limited to consumers The relevant members of the public must be identified Lack of reasonable care General principles of misleading or deceptive conduct Conduct must be viewed as a whole Multiple meanings Intent (and honesty) Spoken words Literal truths Half-truths Silence Future conduct (predictions, forecasts or opinions) Failure to make proper inquiries Failure to accommodate subsequent changes and the transitory effect

Passing on information Disclaimers and exclusion clauses Misleading conduct in relation to professional advice Misleading conduct in without prejudice negotiations Misleading conduct and legal professional privilege Exemptions for information providers Section 19 of the ACL Remedies and enforcement powers Summary of available remedies and enforcement powers Short theory and problem questions Theory questions Hypothetical problem question Further reading

Chapter 4: Misleading or Deceptive Conduct and Advertising Introduction Overview General principles of misleading conduct in advertising Misleading advertisements are captured under s 18 of the ACL Puffery What is puffery? Can puffery be misleading? Advertising and small print The requirement of sufficient prominence Advertising and asterisk The requirement of sufficient prominence Advertising and different communication mediums Different mediums make a difference Advertising and packaging Packaging can be misleading in many ways

Advertising and labelling A lack of proper labelling may be misleading Character advertising Creating the wrong impression Comparative advertising A comparison in advertising must be accurate Disparaging advertising Inaccurate disparaging advertising may be misleading Parody advertising Inaccurate parody advertising may be misleading Trading names and business names No monopoly rights on trading or business names First to enter the market A second person to enter the market does not necessarily mislead Two Price Advertising Was/now pricing Environmental claims Environmental claims must be accurate Remedies and enforcement powers Summary of available remedies and enforcement powers Short theory and problem questions Theory questions Hypothetical problem question Further reading

Chapter 5: Misleading or Deceptive Conduct and Other Areas of Law Introduction Overview The tort of passing off What is the tort of passing off?

The elements of passing off Passing off v s 18 of the ACL Tort of deceit What is the tort of deceit? The elements of the tort of deceit Remedies available for the tort of deceit Tort of deceit v s 18 of the ACL Negligent misstatements under tort law An actionable misrepresentation under tort law Remedies available for negligent misstatements under tort law Negligent misstatements under tort law v s 18 of the ACL Misrepresentations under contract law An actionable misrepresentation under contract law The elements of misrepresentations in contract law Types of misrepresentations under contract law Remedies available for misrepresentations under contract law Misrepresentations under contract law v s 18 of the ACL Corporations Act 2001 (Cth) Overview Section 728 of the CA Section 1041H of the CA Remedies under the CA Some differences between s 1041H and s 728 of the CA Australian Securities and Investments Commission Act 2001 (Cth) Section 12DA of the ASIC Act Remedies under the ASIC Act Some differences between s 12DA of the ASIC Act and s 728 of the CA Some differences between s 12DA of the ASIC Act and s 1041H of the CA Delegation Short theory and problem questions

Theory questions Hypothetical problem question Further reading

Chapter 6: Unconscionable Conduct Introduction Overview Background to legislative unconscionable conduct Background to former TPA provisions Background to ACL ASIC Act Contracts Review Act 1980 (NSW) National Credit Code Unconscionable conduct within the meaning of the unwritten law Section 20 of the ACL What is the meaning of ‘the unwritten law from time to time’? Definition of unconscionable conduct in the unwritten law Elements of unconscionable conduct in the unwritten law Is there a difference between ‘unconscientious’ and ‘unconscionable’ conduct? Unconscionable conduct in connection with goods or services Section 21 of the ACL Unconscionable conduct under s 21 of the ACL Matters that court may have regard to for the purposes of s 21 Section 22 of the ACL Some examples of unconscionable conduct Unconscionable conduct with businesses Unconscionable conduct with consumers Remedies and enforcement powers Remedies (and enforcement powers) available for contraventions of s 20 or s 21 of the ACL

Short theory and problem questions Theory questions Hypothetical problem question Further reading

Chapter 7: Unfair Contract Terms Introduction Overview Background to UCT Overview of national regime History of the national regime Why introduce a national regime? How useful are the Victorian and United Kingdom decisions? The operative UCT provision Section 23(1) and (2) of the ACL What is a ‘consumer contract’? Section 23(3) of the ACL What is a ‘standard form contract’? Section 27 of the ACL What is an ‘unfair term’? Section 24(1) and (4) of the ACL Three additional considerations regarding ‘unfair’ terms Section 24(2) and (3) of the ACL Examples of terms that may be unfair Section 25 of the ACL United Kingdom examples of terms that may be unfair Contractual terms that are exempted Section 26 of the ACL Terms that define the main subject matter Terms that set the up-front price

What is the up-front price? Terms expressly permitted as a matter of law Contracts that are exempted Section 28 of the ACL Some examples of UCT cases under the ACL Remedies Availability of remedies Public remedies Private remedies Short theory and problem questions Theory questions Hypothetical problem question Further reading

Chapter 8: Specific False or Misleading Representations Introduction Overview Differences between ss 18 and 29 of the ACL Section 18 v s 29 False or misleading representations about goods or services Section 29 of the ACL Key terms of false or misleading representations Particular standard, quality, value, grade, composition, style, model, history, or use of goods (s 29(1)(a)) ‘Particular standard, quality, value, grade’ of services (s 29(1)(b)) ‘New’ goods (s 29(1)(c)) ‘Particular person has agreed to acquire goods or services’ (s 29(1)(d)) ‘Purported testimonials’ (s 29(1)(e)) ‘Concerning testimonials or purported testimonials’ (s 29(1)(f)) ‘Sponsorship, approval, performance characteristics, etc’ (s 29(1)(g)) ‘Sponsorship, approval or affiliation of persons’ (s 29(1)(h))

‘Price’ of goods or services (s 29(1)(i)) ‘Repairs and spare parts’ of goods (s 29(1)(j)) ‘Place of origin’ (s 29(1)(k)) ‘Need’ for any goods or services (s 29(1)(l)) ‘Exclusion’ of any consumer guarantee, etc (s 29(1)(m)) Extended warranties (s 29(1)(n)) False or misleading representations about sale etc of land Section 30 of the ACL Misleading conduct relating to employment Section 31 of the ACL Misleading conduct as to the nature etc of goods Section 33 of the ACL Misleading conduct as to the nature etc of services Section 34 of the ACL Misleading representations about certain business activities (and activities conducted from home) Section 37 of the ACL Exemption for information providers Section 38 of the ACL Remedies and enforcement powers Summary of available remedies and enforcement powers Criminal Remedies Short theory and problem questions Theory questions Hypothetical problem question Further reading

Chapter 9: Specific Unfair Practices Introduction Overview Offering rebates, gifts, prizes, etc

Section 32 of the ACL An example of a contravention An example of a non-contravention Bait advertising What is bait advertising? Section 35 of the ACL Court Enforceable Undertaking from Harvey Norman Holdings Limited dated 9 August 2004 (D04/38052) Wrongly accepting payments What is wrongly accepting payment? Section 36 of the ACL Unsolicited credit and debit cards What are unsolicited credit and debit cards? Section 39 of the ACL Unsolicited goods or services What are unsolicited goods or services? Section 40 of the ACL Liability of recipient (and ownership rights) for unsolicited goods Section 41 of the ACL Liability of recipient for unsolicited services Section 42 of the ACL Unauthorised entries or advertisements What are unauthorised entries or advertisements? Section 43 of the ACL Pyramid selling What is pyramid selling? Section 44 of the ACL Meaning of ‘scheme’ Section 45 of the ACL Meaning of ‘substantially induced’ Meaning of ‘in relation to’

Section 46 of the ACL Multiple pricing What is multiple pricing? Section 47 of the ACL Component pricing What is component pricing? Section 48 of the ACL Referral selling What is referral selling? Section 49 of the ACL Harassment and coercion What is harassment and coercion? Section 50 of the ACL The leading decision on undue harassment and coercion Remedies and enforcement powers Summary of available remedies and enforcement powers Criminal remedies Short Theory and Problem Questions Theory questions Hypothetical problem questions Further reading

Chapter 10: Consumer Guarantees Introduction Overview Consumer guarantees Background to consumer guarantees Why were the implied conditions and warranties in the former TPA (and fair trading legislation) replaced? Some key differences between implied conditions and warranties in former Pt V Div 2 of the TPA and consumer guarantees

Implied conditions and warranties in sale of goods legislation Some key differences between implied conditions and warranties in sale of goods legislations and consumer guarantees Consumer guarantees in relation to goods Introduction Section 51 of the ACL Section 52 of the ACL Section 53 of the ACL Section 54 of the ACL Section 55 of the ACL Section 56 of the ACL Section 57 of the ACL Section 58 of the ACL Section 59 of the ACL Consumer guarantees in relation to supply of services Overview Section 60 of the ACL Section 61 of the ACL Section 62 of the ACL Section 63 of the ACL Guarantees not to be excluded, etc by contract Section 64 of the ACL Section 64A of the ACL Miscellaneous Section 65 of the ACL Section 66 of the ACL Section 67 of the ACL Section 68 of the ACL Proof of transactions and itemised bill Section 100 of the ACL Section 101 of the ACL

Section 102 of the ACL Section 103 of the ACL Short theory and problem questions Theory questions Hypothetical problem question Further reading

Chapter 11: Manufacturers’ Liability Introduction Overview Background to manufacturers’ liability From Donoghue v Stevenson to Ch 3 Pt 3-5 of the ACL Manufacturers’ liability v consumer safety? Relevant definitions and key concepts Outline ‘Defective goods action’ Unidentified manufacturer Safety defect Some examples of non-defective goods Liability for loss or damage suffered by an injured individual Section 138 of the ACL Liability for loss or damage suffered by a person other than an injured individual Section 139 of the ACL Liability for loss or damage suffered by a person if other goods are destroyed or damaged Section 140 of the ACL Liability for loss or damage suffered by a person if land, buildings or fixtures are destroyed or damaged Section 141 of the ACL Defences to defective goods actions

Section 142 of the ACL No safety defect exists at time of supply Compliance with a mandatory standard State of scientific or technical knowledge Good was comprised in another good Time for commencing defective goods actions Section 143 of the ACL Liability joint and several Section 144 of the ACL Survival of actions Section 145 of the ACL No defective goods action where workers’ compensation law etc applies Section 146 of the ACL Commonwealth liability for goods that are defective only because of compliance with Commonwealth mandatory standard Section 148 of the ACL Representative actions by the regulator Section 149 of the ACL No ‘contracting out’ Section 150 of the ACL Available remedies Compensation Contributory negligence Offence Short theory and problem questions Theory questions Hypothetical problem question Further reading

Chapter 12: Enforcement Powers Introduction

Overview The ACCC and other ACL regulators ACCC’s role and objectives ACCC’s approach to enforcement ACCC’s enforcement priorities ACCC’s compliance ‘pyramid’ ACCC’s obligations to act as a model litigant ‘One law, multiple regulators’ model Guiding principles of the ACL regulators Enforceable undertakings Background Section 218 of the ACL Substantiation notices Background Some differences between SNs and notices issued under s 155 of the CCA Section 219 of the ACL Section 220 of the ACL Section 221 of the ACL Section 222 of the ACL Public warning notices Background Section 223 of the ACL Infringement notices Background Section 134 of the CCA Section 134A of the CCA Section 134B of the CCA Section 134C of the CCA Section 134D of the CCA Section 134E of the CCA

Section 134F of the CCA Section 134G of the CCA Section 155 notices Background Section 155 of the CCA Section 155AAA of the CCA Short theory and problem questions Theory questions Hypothetical problem question Further reading

Chapter 13: Remedies (Private) Introduction Overview Injunctions Background Private parties v regulators Equity law principles Section 232 of the ACL Statutory principles Section 233 of the ACL Section 234 of the ACL Section 235 of the ACL Damages Background Common law principles Section 236 of the ACL Statutory principles Limitation period Damages v compensation orders

Compensation orders Section 237 of the ACL Section 238 of the ACL Orders for non-party consumers Section 239 of the ACL Section 240 of the ACL Section 241 of the ACL Miscellaneous Section 242 of the ACL Section 243 of the ACL Section 244 of the ACL Section 245 of the ACL Declarations Background Section 163A of the CCA Section 250 of the ACL Section 21 of the FCA Short theory and problem questions Theory questions Hypothetical problem question Further reading

Chapter 14: Remedies (Public) Introduction Overview Pecuniary penalties Background Section 224 of the ACL Assessment of pecuniary penalty Some examples of pecuniary penalties

Section 225 of the ACL Section 226 of the ACL Section 227 of the ACL Section 228 of the ACL Indemnification of officers Background Section 229 of the ACL Section 230 of the ACL Where is s 231 of the ACL? Non-punitive orders Section 246 of the ACL Adverse publicity orders Section 247 of the ACL Disqualification orders Background Section 248 of the ACL General principles Period of time disqualified The meaning of ‘managing corporations’ Summary of cases on disqualification orders under the ACL Why was s 249 inserted into the ACL? Section 249 of the ACL Mareva orders Background Common law principles Section 137F of the CCA Section 12GN of the ASIC Act and s 1323 of the CA Findings in proceedings to be evidence Section 137H of the CCA Short theory and problem questions Theory questions

Hypothetical problem question Further reading

Chapter 15: Consumer Guarantees Remedies Introduction Overview Background to remedies relating to consumer guarantees Action against the supplier of goods Section 259 of the ACL Section 260 of the ACL Section 261 of the ACL Section 262 of the ACL Section 263 of the ACL Section 264 of the ACL Section 265 of the ACL Section 266 of the ACL Remedies for supply of services Section 267 of the ACL Section 268 of the ACL Section 269 of the ACL Section 270 of the ACL Action for damages against manufacturers of goods Introduction Section 271 of the ACL Section 272 of the ACL Section 273 of the ACL Miscellaneous Section 274 of the ACL Section 275 of the ACL Section 276 of the ACL

Section 276A of the ACL Section 277 of the ACL Short theory and problem questions Theory questions Hypothetical problem question Further reading Index

[page 1]

Chapter 1 Introduction ‘Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self-evident that it would be absurd to attempt to prove it.’1

Introduction Overview 1.1 This Chapter considers the Australian Consumer Law (ACL), its background and policy objectives. It also considers what the ACL covers as well as some key topics of the ACL. 1.2

The topics covered in this Chapter are: Overview of the ACL; – What is the ACL?; –

What does the ACL cover?;

–

What are the key changes that are made by the ACL?;

–

What are the objectives of the ACL?;

–

Why was the ACL introduced?;

The Crown, Crown immunity, derivative Crown immunity and

liability of the Crown; – The Crown; –

Crown immunity;

–

Derivative Crown immunity;

–

Section 2A of the Competition and Consumer Act 2010 (Cth) (CCA) ♦

‘Authority’;

♦

‘Business’;

♦

‘Carrying on a business’;

–

Section 2B of the CCA;

–

Section 2BA of the CCA; [page 2]

Extraterritorial application of the ACL; – Section 5 of the CCA; ♦

‘Carrying on a business in Australia’;

Extended application of the ACL; Jurisdiction of the court; – Conferred jurisdiction; –

Transfer of proceedings;

Application of the Criminal Code; No ‘double dipping’ of liabilities; and Regulations. 1.3

Each topic above will be discussed individually below.

Overview of the ACL What is the ACL? 1.4 The ACL is a national law for the promotion of fair trading and for the provision of consumer protection. The ACL commenced on 1 January 2011 and replaced 17 different laws on consumer protection.2 1.5 The ACL is contained in Pts XI and XIAA of the CCA and in Sch 2 of the CCA. The ACL applies in the same way nationally as it does in each state and territory. 1.6 The ACL operates both as a law of the Commonwealth3 and as an ‘applied law’ of the states and territories.4 The provisions in the ACL are drafted to reflect this and apply to ‘persons’ instead of ‘corporations.’ 1.7 The ACL is administered and enforced by the Australian Competition and Consumer Commission (ACCC)5 and by each of the following state and territory Fair Trading Commissions: Fair Trading (New South Wales); Consumer Affairs (Victoria); Office of Regulatory Services (Australian Capital Territory); Office of Fair Trading (Queensland); Consumer Affairs (Northern Territory); Office of Consumer and Business Affairs (South Australia); Consumer Affairs and Fair Trading (Tasmania); and Department of Commerce (Western Australia). [page 3]

1.8 However, consumer protection in relation to financial services and financial products is administered and enforced by the Australian Securities and Investments Commission (ASIC).6 1.9 The Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) contains a number of key consumer protection provisions in relation to financial services which are reflective of those under the ACL.7

What does the ACL cover? 1.10 The ACL covers a large range of dishonourable and dangerous conduct that may affect a consumer. It also provides a ‘smorgasbord’ of civil and criminal remedies8 and ‘hard-hitting’ enforcement powers for the ACCC. 1.11 The ACL in Sch 2 of the CCA contains 287 sections and is divided into five Chapters.9 Most of the Chapters in Sch 2 are divided further into Parts, Divisions and Sub-Divisions, set out as follows: Chapter 1 – Introduction (ss 1–17); Chapter 2 – General protections; Part 2-1 – Misleading or deceptive conduct (ss 18–19); – Part 2-2 – Unconscionable conduct (ss 20–22A); –

Part 2-3 – Unfair contract terms (ss 23–28);

Chapter 3 – Specific protections; – Part 3-1 – Unfair Practices; ♦

Division 1 – False or misleading representations, and other sharp practices (ss 29–38);

♦

Division 2 – Unsolicited supplies (ss 39–43);

♦

Division 3 – Pyramid schemes (ss 44–46);

♦

Division 4 – Pricing (ss 47–48);

♦

Division 5 – Other unfair practices (ss 49–50);

–

Part 3-2 – Consumer transactions; ♦

Division 1 – Consumer Guarantees; Subdivision A – Guarantees in relation to the supply of goods (ss 51–59); Subdivision B – Guarantees in relation to the supply of services (ss 60–63); Subdivision C – Guarantees not to be excluded (ss 64–64A); Subdivision D – Miscellaneous (ss 65–68); [page 4]

♦

Division 2 – Unsolicited consumer agreements; Subdivision A – Introduction (ss 69–72); Subdivision B – Negotiating unsolicited consumer agreements (ss 73–77); Subdivision C – Requirements for unsolicited consumer agreements, etc (ss 78–81); Subdivision D – Terminating unsolicited consumer agreements (ss 82–88); Subdivision E – Miscellaneous (ss 89–95);

–

♦

Division 3 – Lay-by agreements (ss 96–99);

♦

Division 4 – Miscellaneous (ss 100–103);

Part 3-3 – Safety of consumer goods and product related services; ♦

Division 1 – Safety standards (ss 104–108);

♦

Division 2 – Bans on consumer goods and product related services;

Subdivision A – Interim bans (ss 109–113); Subdivision B – Permanent bans (ss 114–117); Subdivision C – Compliance with interim bans and permanent bans (ss 118–119); Subdivision D – Temporary exemption from mutual recognition principles (ss 120–121); ♦

Division 3 – Recall of consumer goods; Subdivision A – Compulsory recall of consumer goods (ss 122–127); Subdivision B – Voluntary recall of consumer goods (s 128);

♦

Division 4 – Safety warning notices (ss 129–130);

♦

Division 5 – Consumer goods, or product related services, associated with death or serious injury or illness (ss 131– 132A);

♦

Division 6 – Miscellaneous (s 133);

–

Part 3-4 – Information standards (ss 134–137);

–

Part 3-5 – Liability of manufacturers for goods with safety defects; ♦

Division 1 – Actions against manufacturers for goods with safety defects (ss 138–142);

♦

Division 2 – Defective goods action (ss 143–149);

♦

Division 3 – Miscellaneous (s 150);

Chapter 4 – Offences; – Part 4-1 – Offences relating to unfair practices; ♦

Division 1 – False or misleading representations etc. (ss 151–160);

♦

Division 2 – Unsolicited supplies (ss 161–163);

♦

Division 3 – Pyramid scheme (s 164);

–

♦

Division 4 – Pricing (ss 165–166);

♦

Division 5 – Other unfair practices (ss 167–168);

Part 4-2 – Offences relating to consumer transactions; ♦

Division 1 – Consumer guarantees (s 169);

♦

Division 2 – Unsolicited consumer agreements; Subdivision A – Negotiating unsolicited consumer agreements (ss 170–173); [page 5] Subdivision B – Requirements for unsolicited consumer agreements etc (ss 174–177); Subdivision C – Terminating unsolicited consumer agreements (ss 178–181); Subdivision D – Miscellaneous (ss 182–187);

–

♦

Division 3 – Lay-by agreements (ss 188–191);

♦

Division 4 – Miscellaneous (ss 192–193);

Part 4-3 – Offences relating to safety of consumer goods and product related services; ♦

Division 1 – Safety standards (ss 194–196);

♦

Division 2 – Bans on consumer goods and product related services (ss 197–198);

♦

Division 3 – Recall on consumer goods (ss 199–201);

♦

Division 4 – Consumer goods, or product related services, associated with death or serious injury or illness (s 202);

–

Part 4-4 – Offences relating to information standards (ss 203– 204);

–

Part 4-5 – Offences relating to substantiation notices (ss 205–

206); –

Part 4-6 – Defence (ss 207–211);

–

Part 4-7 – Miscellaneous (ss 212–217);

Chapter 5 – Enforcement and remedies; – Part 5-1 – Enforcement;

–

♦

Division 1 – Undertakings (s 218);

♦

Division 2 – Substantiation notices (ss 219–222);

♦

Division 3 – Public warning notices (s 223);

Part 5-2 – Remedies; ♦

Division 1 – Pecuniary penalties (ss 224–230);

♦

Division 2 – Injunctions (ss 232–235);

♦

Division 3 – Damages (s 236);

♦

Division 4 – Compensation orders etc for injured persons and orders for non-party consumers; Subdivision A – Compensation orders etc for injured persons (ss 237–238); Subdivision B – Orders for non-party consumers (ss 239–241); Subdivision C – Miscellaneous (ss 242–245);

♦

Division 5 – Other remedies (ss 246–250);

♦

Division 6 – Defences (ss 251–253);

–

Part 5-3 – Country of origin representations (ss 254–258);

–

Part 5-4 – Remedies relating to guarantees; ♦

Division 1 – Action against suppliers; Subdivision A – Action against suppliers of goods (ss 259–266); Subdivision B – Action against suppliers of services (ss 267–270);

–

♦

Division 2 – Action for damages against manufacturers of goods (ss 271–273);

♦

Division 3 – Miscellaneous (ss 274–277);

Part 5-5 – Liability of suppliers and credit providers; [page 6] ♦

Division 1 – Linked credit contracts (ss 278–286);

♦

Division 2 - Non-linked credit contracts (s 287);

1.12 It should be noted that the ACL is not intended to cover all areas of consumer protection law,10 nor is it intended to infringe on the state or territory laws. This is made clear in s 131C of the CCA, which states: Saving of other laws and remedies (1) This Part is not intended to exclude or limit the concurrent operation of any law, whether written or unwritten, of a State or a Territory. (2) Section 73 of the Australian Consumer Law does not operate in a State or a Territory to the extent necessary to ensure that no inconsistency arises between: (a) that section; and (b) a provision of a law of the State or Territory that would, but for this subsection, be inconsistent with that section. (3) Despite subsection (1): (a) if an act or omission of a person is both: (i)

an offence against this Part or the Australian Consumer Law; and

(ii) an offence against a law of a State or a Territory; and (b) the person is convicted of either of those offences; he or she is not liable to be convicted of the other of those offences. (4) 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.

1.13

Accordingly, the ACL will operate concurrently with state and

territory legislation as well as with the common law and equity law, while the rights and remedies provided by those laws are not limited by the ACL.

What are the key changes that are made by the ACL? 1.14 The ACL introduced the following key changes to consumer protection law in Australia, including the repeal of former Pt V of the TPA and the renaming of the Trade Practices Act 1974 (Cth) (TPA) to the CCA:11 definitions and key concepts (including some new or modified definitions and key concepts) that are universally applicable to all jurisdictions in Australia; a new national unfair contract term regime; amendments and additions to a number of the general and specific consumer protection provisions (eg amendments to the unconscionable conduct provisions); [page 7] a new national consumer guarantees regime, which replaced the former statutory conditions and warranties in consumer transactions in Pt V Div 2 of the TPA (repealed); a new national unsolicited consumer agreements regime, which replaced the state and territory laws on door-to-door sales; a new national product safety regime; additional national information standards provisions for both goods and services; and additional enforcement powers for the ACCC (eg substantiation notices and public warning notices etc) and public remedies (eg pecuniary penalties and disqualification orders etc).

What are the objectives of the ACL? 1.15 In its Review of Australia’s Consumer Policy Framework,12 the Productivity Commission (PC) recommended that Australian governments should adopt the following overarching objective for the ACL: To improve consumer wellbeing by fostering effective competition and enabling the confident participation of consumers in markets in which both consumers and suppliers trade fairly and in good faith.

1.16 The PC also recommended that in order to provide more specific guidance to the implementation of the ACL, the overarching objective should be supported by the following six operational objectives:13 The consumer policy framework should efficiently and effectively aim to: ensure that consumers are sufficiently well-informed to benefit from, and stimulate effective competition; ensure that goods and services are safe and fit for the purposes for which they were sold; prevent practices that are unfair or contrary to good faith; meet the needs of those who, as consumers, are most vulnerable, or at greatest disadvantage; provide accessible and timely redress where consumer detriment has occurred; and promote proportionate, risk-based enforcement.

1.17 The recommendations by the PC were subsequently agreed to by the Ministerial Council on Consumer Affairs (MCCA) (as it was then named)14 and accepted by the Council of Australian Governments (COAG).15 [page 8]

Why was the ACL introduced? 1.18

The reasons why the ACL was introduced and its history span as far

back as the PC’s inquiry into the framework of the consumer protection regime which commenced in December 2006. 1.19 On 8 May 2008, the PC released the Review of Australia’s Consumer Policy Framework, which made a substantial number of comprehensive recommendations, including of course, the introduction of the ACL.16 1.20 The ACL was introduced primarily to provide Australians with a single harmonised framework for the promotion of fair trading and better consumer protection. 1.21 In its Review of Australia’s Consumer Policy Framework,17 the PC estimated that the ACL reform could benefit Australians by reducing red tape, litigation and other costs in the range of $1.5 billion to $4.5 billion a year. 1.22 Under the ACL, consumers across Australia for the first time would have the same protection and expectations about the obligations of businesses no matter which jurisdiction the issue occurred.

The Crown, Crown immunity, derivative Crown immunity and liability of the Crown 1.23 The federal, state and local governments all engage in conduct, including, carrying on business and entering into commercial transactions and dealings, with the Australian public. 1.24 The question arises as to whether the federal, state and local governments are bound by the provisions of the ACL, and if so, in what circumstances are the governments bound. 1.25

In order to understand the answer to this question, it is first necessary

to know what the Crown is and what are the common law doctrines of Crown immunity and derivative Crown immunity.

The Crown 1.26 The expression ‘the Crown’ refers to the executive arm of the governments of the Commonwealth, state and territories and includes government departments that discharge functions of Ministers.18 [page 9] 1.27 The Crown in right of the Commonwealth is a phrase that is commonly used to refer to the Commonwealth Crown, which includes the servants and agents of the Commonwealth.19 1.28 The Crown in right of the states or the Crown in the right of territories are phrases that are commonly used to refer to the state Crowns and territory Crowns.20

Crown immunity 1.29 Crown immunity states that ‘no statute binds the Crown unless the Crown is expressly named therein or unless there is a necessary implication that it was intended to be bound’.21 1.30 In circumstances where there is a necessary implication that the statute is intended to bind the Crown, that implication is found from the words of the statute, including its purpose and subject matter.22 1.31

Crown immunity applies not only to the Crown, but also to servants

and agents of the Crown where the interests of the Crown would be prejudiced if such servants or agents were bound by the statute.23

Derivative Crown immunity 1.32 Derivative Crown immunity states that where a party deals with the Crown, it will enjoy the same immunity as the Crown if the application of the statute interferes with the interests of the Crown. 1.33 In Wynyard Investments Pty Ltd v Commissioner for Railways (NSW),24 Kitto J identified the following classes of cases where the application of the statute may interfere with the interests of the Crown: There is first the class of cases where a provision, if applied to a particular individual or corporation, would adversely affect the exercise of an authority which he or it possesses as a servant or agent of the Crown to perform some function so that in law it is performed by the Crown itself: see eg Cooper v Hawkins (1904) 2 KB 164; R v McCann (1868) LR 3 QB 677; Public Works Commissioners v Pontypridd Masonic Hall Co (1920) 2 KB 233. Next there is the class of cases in which a provision, if applied to a particular individual or corporation, would adversely affect some proprietary right or interest of the Crown, legal equitable or statutory: see Wirral Estates Ltd v Shaw (1932) 2 KB 247. And finally there is an anomalous class of cases where a provision creating a liability by

[page 10] reference to the ownership or occupation of property would, in its application in respect of certain kinds of property, impose a burden upon the performance of functions which, though not performed by servants or agents of the Crown, are looked upon by the law as performed for the Crown.

1.34 The interests of the Crown that must be interfered with are the ‘property rights, legal rights, legal interests or legal prerogatives’, but this does not include the financial interests of the Crown.25 1.35

The protection of derivative Crown immunity does not extend to pre-

contractual negotiations with the Crown where those negotiations included anti-competitive conduct in contravention of the CCA.26 1.36 In ACCC v Baxter Healthcare Pty Ltd,27 Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ stated that the reasons given in Bradken Consolidated Ltd v Broken Hill Pty Co Ltd in light of Bropho v State of Western Australia were too widely expressed. Their Honours also stated:28 Underlying this argument is the idea that the Act operated so as not to enact any law that would circumscribe the freedom of the Crown in right of a state or territory to make any kind of contract it wished, and, furthermore, that the Act preserved the Crown’s freedom in that respect, by providing that corporations dealing or negotiating with the Crown should be free to propose and make any kind of contract, unfettered by any constraint under the Act. These ideas cannot be supported by reference to any established principle of statutory construction, and they are impossible to reconcile with the purpose and subject-matter of the Act. It is one thing to read the Act so as not to divest the Crown of legal rights. It is another thing altogether to read the Act as giving an executive government (as distinct from a parliament acting under s 51(1)), including all its servants and agents, a freedom not enjoyed when the government itself is carrying on business, from any impact of laws enacted for the promotion of competition and fair trading in the public interest. And it is even more unlikely that that freedom extends to all persons dealing with that executive government.

1.37 In the same case, the majority of the High Court also stated that the former TPA had changed materially since Bradken Consolidated Ltd v Broken Hill Pty Co Ltd, as had the law governing the relevant principles of statutory construction.29 [page 11]

Section 2A of the CCA 1.38 The purpose of s 2A of the CCA is to ensure that the Commonwealth Government should, in its commercial activities, be subject to the same regime as corporations.30 Section 2A states: Application of Act to Commonwealth and Commonwealth authorities

(1) Subject to this section and sections 44AC, 44E and 95D, 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. (2) Subject to the succeeding provisions of this section, this Act applies as if: (a) the Commonwealth, in so far as it carries on a business otherwise than by an authority of the Commonwealth; and (b) each authority of the Commonwealth (whether or not acting as an agent of the Crown in right of the Commonwealth) in so far as it carries on a business; were a corporation. (3) Nothing in this Act makes the Crown in right of the Commonwealth liable to a pecuniary penalty or to be prosecuted for an offence. (3A) The protection in subsection (3) does not apply to an authority of the Commonwealth. (4) Part IV does not apply in relation to the business carried on by the Commonwealth in developing, and disposing of interests in, land in the Australian Capital Territory.

1.39 Section 2A(1) of the CCA provides that the Commonwealth Crown and its authorities are subject to the provisions of the CCA and ACL in so far as they carry on business. 1.40 Section 2A(2) of the CCA provides that the Commonwealth Crown and its authorities in so far as they carry on a business are deemed to be corporations for the purposes of the CCA. 1.41 Section 2A(3) of the CCA provides that the Commonwealth Crown is not liable to pecuniary penalties under s 76 of the CCA or to be prosecuted for an offence. 1.42 Section 2A(3A) of the CCA provides, however, that the authorities of the Commonwealth Crown can be subjected to pecuniary penalties under s 76 and may be prosecuted for an offence. 1.43 Section 2A(4) of the CCA provides an exemption from Pt IV for the Commonwealth Crown in relation to the business of developing, and disposing of interests in, land in the Australian Capital Territory.

[page 12]

‘Authority’ 1.44 Section 2A of the CCA refers to an ‘authority of the Commonwealth’. Section 4 defines ‘authority of the Commonwealth’ to mean: (a) a body corporate established for a purpose of the Commonwealth by or under a law of the Commonwealth or a law of a Territory; or (b) an incorporated company in which the Commonwealth, or a body corporate referred to in paragraph (a), has a controlling interest.

1.45 The CCA does not define the term ‘controlling interest’. A ‘controlling interest’ is likely to be given its ordinary meaning as having control of the board of directors or owning more than 50 per cent of the voting shares. 1.46 In NT Power Generation Pty Ltd v Power and Water Authority,31 Finkelstein J made the following comments about the approach to determine whether the Crown is able to control the authority: In one of the first articles published on this subject (‘Liability for Acts of Public Servants’ (1907) 23 LQR 12) Sir Harrison Moore wrote (at 20): In determining whether any given body is a part of the general government of the country and in this sense “the hands of the Crown”, it is material to consider the nature of the function or office — whether its essential character is governmental, ie implies the exercise of authority, or whether it is the mere substitute for private enterprise (either in the way of profit or of philanthropy); whether it belongs to the general welfare of the country or to the special interest of some part of it; the history of the function or the organ in the particular community; and the control or direction under which it is exercised. (Emphasis added) (Footnotes omitted) An examination of the leading cases including Grain Elevators Board (Vict) v Dunmunkle Corp (1946) 73 CLR 70, Inglis v Commonwealth Trading Bank of Australia (1969) 119 CLR 334, Superannuation Fund Investment Trust v Commissioners of Stamps (SA) (1979) 145 CLR 330 and Townsville Hospitals Board v Townsville City Council (1982) 149 CLR 282 suggests that the so called functions test (that is whether the activities and functions of the corporation are governmental in character) is not of much relevance, though there are cases such as

Superannuation Fund Investment Trust (at 349) which still treat this issue as a relevant factor. The better approach is to examine the relationship between the corporation and the Crown. If the Crown is able to control the activities of the corporation (whether directly, by instruction or direction, or indirectly, pursuant to a power to remove those in control of its operations otherwise than for misconduct or incapacity,) the corporation will usually be the alter ego of the Crown. So in every case where the question arises it is necessary to examine the nature and degree of control that the Crown exercises over the corporation. If the corporation is subject to the same control as a governmental department it is likely to be the alter ego of the Crown. If the corporation is largely free of ministerial control

[page 13] then it is unlikely to be the Crown’s alter ego. See generally Hogg and Monahan, Liability of the Crown 3rd ed (2000) at 334–337.

‘Business’ 1.47 The word ‘business’ is relevant to the phrase ‘carrying on a business’ and is used in a number of key definitions32 and provisions33 in the CCA and the ACL. 1.48 Section 2 of the ACL defines ‘business’ inclusively. The definition of business in s 2 is an extension of the ordinary meaning of ‘business’. Section 2 defines a business to include: … a business not carried on for profit.

1.49 An example of the relevance of the above definition is in relation to the words ‘carries on a business’ of a Commonwealth, state or local government body as outlined in ss 2A, s 2B and 2BA of the CCA. 1.50 The definition of business in s 2 makes it clear that Commonwealth, state and local government bodies can be carrying on business even though they engage in commerce not with a view to making profit.

1.51 The ordinary meaning of the word ‘business’ is a commercial enterprise in the nature of a going concern where the activities are carried out for profit on a continuous and repetitive basis.34 1.52 The ordinary meaning of the word ‘business’ is usually ‘wide and general’, but it is not identical to the meaning of ‘trade’, nor are those words necessarily mutually exclusive in meaning.35 1.53 In Town Investments Ltd v Department of Environment,36 Lord Diplock made the following comments about the dictionary meaning of the word ‘business’: The word ‘business’ is an etymological chameleon; it suits its meaning to the context in which it is found. It is not a term of legal art and its dictionary meanings as Lindley LJ pointed out in Rolls v Miller ((1884) 27 Ch D 71 at 88, [1881–5] All ER Rep 915 at 920) embrace ‘almost anything which is an occupation, as distinguished from a pleasure — anything which is an occupation or a duty which requires attention is a business …’

[page 14] 1.54 The word ‘business’ will take its particular meaning from the context in which it appears, and it must clearly be given a meaning that is not inconsistent with its context.37 1.55 In Fasold v Roberts,38 Sackville J made the following useful comments about the meaning of the word ‘business’ and how that meaning may change in different statutory contexts: It is generally accepted that the word ‘business’, to use Mason J’s phrase, has a ‘chameleonlike hue’ but must take its meaning from the particular statutory context: FCT v Whitfords Beach Pty Ltd (1982) 150 CLR 355 at 378–9; 39 ALR 521; State Superannuation Board (NSW) v FCT (1988) 82 ALR 63 (Fed C of A, Sheppard J), at 72; O’Brien v Smolonogov (1983) 53 ALR 107 (Fed C of A, FC), at 113–14. In Hope v Bathurst City Council (1980) 144 CLR 1 at 8–9; 29 ALR 577, Mason J considered that the word ‘business’ ordinarily denotes activities undertaken as a commercial enterprise in the nature of a going concern — ie ‘activities engaged in for the purpose of profit on a continuous and repetitive basis’. His Honour observed, however, that the word took its

flavour in that case from the statutory expression ‘carrying on business’. In Hungier v Grace (1972) 127 CLR 210 at 216–17, Barwick CJ cited the observations of McCardie J in Edgelow v MacElwee [1918] 1 KB 205 at 206 that, in order for a person to be one ‘whose business … is that of money-lending’, there must be more than occasional and disconnected loans: ‘the word ‘business’ imports the notion of system, repetition and continuity’. Barwick CJ accepted (at 217) that ‘system and regularity are involved in the carrying on of a business’, although he did not think it followed that one who conducts transactions systematically and regularly is necessarily carrying on a business in those transactions. In State Superannuation Board v FCT, Sheppard J had to consider whether the administration of a superannuation scheme for government employees constituted the carrying on of an activity in the nature of a business. His Honour expressed the view (at 72) that the dictionary definition of ‘business’ as ‘trade, commercial transactions or engagements’ was helpful in ascertaining its meaning. In Durant v Greiner, Rolfe J considered that the dictionary definition shed light on the meaning of ‘business’, as used in the FTA (NSW). In that case, his Honour held (at 128) that the provision of State schools, at which attendance is compulsory and free of charge, could not be characterised as a ‘business’. I agree with Rolfe J that, generally speaking, the word ‘business’ as used in the Fair Trading Acts, bears the dictionary meaning of ‘trade, commercial transactions or engagement’. However, that will not always carry matters very far. I think that in addition, ordinarily at least, the concept of ‘business’ imports, as Barwick CJ suggested in Hungier v Grace, a notion of system, repetition and continuity. I appreciate and accept that due regard should be paid to the ‘wide and flexible meaning’ attributed to the word ‘business’ in common usage: Grieve v Commissioner of Inland Revenue [1984] 1 NZLR 101 at 111, per Richardson J. I also recognise that each case must depend on its particular circumstances. Nonetheless, in general, for an undertaking to constitute a business it will have to be conducted with some degree of system and regularity.

[page 15]

‘Carrying on a business’ 1.56 The expression ‘carrying on a business’ may have different meanings in different contexts.39 Whether or not the Commonwealth Crown is carrying on a business is a question of fact.40 1.57

In the context of the CCA, the expression ‘carrying on a business’ is

intended to refer to activities undertaken in a commercial enterprise or as a going concern.41 1.58 Although ‘repetition, system and regularity are indicia of carrying on a business, they are not on their own sufficient to compel a conclusion that such is the case’.42 1.59 There must be ‘present some element of commerce or trade such as a private citizen or trader might undertake. What is a sufficient degree of commerciality is a question of fact’.43 1.60 The performance of an act on a ‘single occasion or only as an ad hoc response to an infrequent occurrence or circumstance’ will not normally indicate that the company is ‘carrying on a business’.44 1.61 The scope of the activities considered to be ‘carrying on a business’ must be examined to determine whether the impugned conduct was a part of, or in the course of, the carrying on of that business.45 1.62 Section 2C of the CCA provides the following list of activities that do not amount to carrying on a business for the purposes of the Commonwealth, state and territory Crowns: (1) For the purposes of sections 2A, 2B and 2BA, the following do not amount to carrying on a business: (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

[page 16]

(d)

(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 noncommercial 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;

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. (3) In this section: ‘acquisition of primary products by a government body under legislation’ includes vesting of ownership of primary products in a government body by legislation. ‘government body’ means the Commonwealth, a State, a Territory, an authority of the Commonwealth or an authority of a State or Territory. ‘licence’ means a licence that allows the licensee to supply goods or services. ‘primary products’ means: (a) agricultural or horticultural produce; or (b) crops, whether on or attached to the land or not; or (c) animals (whether dead or alive); or (d) the bodily produce (including natural increase) of animals. (4) For the purposes of this section, an authority of the Commonwealth or an authority of a State or Territory is non-commercial if: (a) it is constituted by only one person; and (b) it is neither a trading corporation nor a financial corporation.

1.63 The following case of J S McMillan Pty Ltd v Commonwealth,46 is an example of where the activities of the Commonwealth Crown did not amount to ‘carrying on a business’.

J S McMillan Pty Ltd v Commonwealth (1997) 147 ALR 419 In this case, the Australian Government Publishing Service (AGPS) was the primary publisher, printer and distributor of Commonwealth parliamentary and government information. [page 17] AGPS was a business unit within the Department of Administrative Services (DAS). By request of tender, DAS invited tenders for the purchase of five separate packages comprising aspects of the activities of the AGPS. J S McMillan Pty Ltd (McMillan) submitted a tender to DAS, but was not successful. McMillan was informed that it had not been short listed for the packages for which it tendered. McMillan alleged that the DAS on behalf of the Commonwealth engaged in misleading or deceptive conduct in contravention of former s 52 of the TPA. In particular, McMillan alleged that DAS misled it by representing to McMillan before the tender process closed that it would be short listed. McMillan also alleged that DAS misled it by creating a reasonable expectation, which was never fulfilled, that McMillan would be informed that if it failed to accept certain conditions contained in the request for tender it would not be short listed. Accordingly, McMillan lost the opportunity of being short listed.

One of the main issues before the court was whether in the providing of the publishing, printing and distribution services, the Commonwealth Crown was carrying on a business within the meaning of former s 2A of the TPA. Emmett J held that the Commonwealth was not carrying on a business. Emmett J provided the following reasons (at 438) for this conclusion: The conduct of the Commonwealth in issuing the request for tender and in dealing with prospective tenderers was not activity engaged in in carrying on the business which has hitherto been carried on by the Commonwealth, in the guise of the DAS, under the name AGPS. The conduct complained of is that of officers of the Commonwealth who have had nothing to do with the day to day operations of the AGPS. It is conduct quite divorced from the carrying on of that business. While some entities might be thought to engage in the business of selling capital assets, it was not contended by McMillan that the Commonwealth is engaged in a business of selling assets. A once off decision to cease engaging in the activities of AGPS, to dispose of the plant and equipment relevant to those activities, to undertake not to engage in those activities in the future and, in the capacity of client, to invite private enterprise to take on those activities, is not conduct in the carrying on of a business: nor is the conduct of offering plant and equipment for sale and offering the opportunity to perform package 3 activities for government departments the carrying on of a business. I conclude, therefore, that s 2A does not have the effect of making the Trade Practices Act applicable to the conduct about which complaint is made by McMillan in these proceedings.

Section 2B of the CCA 1.64 Section s 2B of the CCA applies to state and territory Crowns to the same extent that s 2A of the CCA applies to the Commonwealth Crown.47 Section 2B of the CCA states: [page 18] Application of Act to States and Territories

(1) The following provisions of this Act bind the Crown in right of each of the States, of the Northern Territory and of the Australian Capital Territory, so far as the Crown carries on a business, either directly or by an authority of the State or Territory: (a) Part IV; (b) Part XIB; (c) the other provisions of this Act so far as they relate to the above provisions. (2) Nothing in this Act renders the Crown in right of a State or Territory liable to a pecuniary penalty or to be prosecuted for an offence. (3) The protection in subsection (2) does not apply to an authority of a State or Territory.

1.65 Section 2B(1) of the CCA provides that the state and territory Crowns and their authorities are subject to Pt IV and Pt XIB of the CCA in so far as they carry on a business. 1.66 While s 2B of the CCA does not subject the state and territory Crowns and their authorities to the ACL, provisions have been inserted into each of the state and territory Fair Trading Acts, which expressly apply the ACL to the state and territory Crowns and their authorities.48 1.67 Section 2B(2) of the CCA provides that the state and territory Crowns are not liable to pecuniary penalties under s 76 of the CCA or to be prosecuted for an offence. 1.68 Section 2B(3) of the CCA provides, however, that the authorities of the state or territory Crowns can be subjected to pecuniary penalties under s 76 of the CCA and may be prosecuted for an offence. 1.69 As s 2B(1) of the CCA is couched in similar wording to s 2A(1), the jurisprudence in relation to key concepts in s 2A(1) should also apply to s 2B(1) in so far as they are similarly worded.49

Section 2BA of the CCA 1.70

Section 2BA of the CCA was inserted into the CCA so that Pt IV

would apply to a local government body to the extent that it carries on a business. Section 2BA states: Application of Part IV to local government bodies (1) Part IV applies in relation to a local government body only to the extent that it carries on a business, either directly or by an incorporated company in which it has a controlling interest. (2) In this section: ‘local government body’ means a body established by or under a law of a State or Territory for the purposes of local government, other than a body established solely or primarily for the purposes of providing a particular service, such as the supply of electricity or water.

[page 19]

Extraterritorial application of the ACL Section 5 of the CCA 1.71 Section 5 of the CCA extends the operation of the ACL (except Pt 5-3 of the ACL) (and the CCA) to conduct outside Australia in certain circumstances. Section 5 states: Extended application of this Act to conduct outside Australia (1) Each of the following provisions: (a) Part IV; (b) Part XI; (c) the Australian Consumer Law (other than Part 5-3); (f)

the remaining provisions of this Act (to the extent to which they relate to any of the provisions covered by paragraph (a), (b) or (c));

extends 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.

… (3) Where a claim under section 82, or under section 236 of the Australian Consumer Law, is

made in a proceeding, a person is not entitled to rely at a hearing in respect of that proceeding on conduct to which a provision of this Act extends by virtue of subsection (1) or (2) of this section except with the consent in writing of the Minister. (4) A person other than the Minister, the Commission or the Director of Public Prosecutions is not entitled to make an application to the Court for an order under subsection 87(1) or (1A), or under subsection 237(1) or 238(1) of the Australian Consumer Law, in a proceeding in respect of conduct to which a provision of this Act extends by virtue of subsection (1) or (2) of this section except with the consent in writing of the Minister. (5) The Minister shall give a consent under subsection (3) or (4) in respect of a proceeding unless, in the opinion of the Minister: (a) the law of the country in which the conduct concerned was engaged in required or specifically authorised the engaging in of the conduct; and (b) it is not in the national interest that the consent be given.

1.72 In Bray v F Hoffman-La Roche Ltd,50 Merkel J provided the following comments that former s 5 of the TPA is the only provision in the TPA related to the extraterritorial operation of the TPA: Whether a statutory provision has extraterritorial operation is a question of construction of the Act as a whole. With the TPA, as in Meyer Heine, it is not necessary to rely on any canon of construction in respect of s 5 as s 5(1) has provided for extraterritorial operation of the provisions of Pts IV, IVA, V (other than Div 1AA), VB subject to certain conditions. As with s 9(b) of the Australian Industries Preservation Act 1906–50 (Cth), s 5 of the TPA is to be accounted for only on the basis that the Act as a whole, including s 5 itself, has been framed on the assumption that when conduct is made a contravention of the Act it is only conduct in Australia that is meant unless the conditions set out in s 5 apply.

[page 20] The view that s 5(1) is the repository of the extraterritorial operation of the Act is also supported by s 5(1A), (2), (3), (4) and (5) which is concerned with, or lays down, particular requirements in relation to the extraterritorial operation of Pts IV, IVA, V and VB. It is clear from those subsections that, unless expressly provided otherwise, the legislature intended that the Act is only to apply to extraterritorial conduct in the circumstances and subject to the conditions laid down in s 5. Further, there is nothing in the provisions of the TPA not mentioned in s 5(1) that implies that they are to operate extraterritorially, or that those parts mentioned in s 5(1) operate extraterritorially other than as provided in s 5. This construction, that the extraterritorial

operation of the TPA is only as provided for in s 5, accords with cl 87 of the explanatory memorandum of the Trade Practices Bill 1974 which stated “[t]he extent to which the legislation will operate extra-territorially is indicated in clause 5”. The construction also accords with the case law on s 5(1): see Australian Iron and Steel (1990) at FCR 319–20 per Lockhart J and Trade Practices Commission v Australia Meat Holdings Pty Ltd (1988) 83 ALR 299 (Australia Meat Holdings) at 353–6 per Wilcox J.

1.73 Section 5(1) of the CCA provides that the ACL (except Pt 5-3) extends to conduct outside Australia by: a body corporate that is incorporated in Australia; a body corporate carrying on business in Australia; an Australian citizen; or a resident within Australia. 1.74 While it is usually clear whether or not a body corporate is incorporated, or whether a person is an Australian citizen or resident, the phrase ‘carrying on business in Australia’, is not straightforward.

‘Carrying on business in Australia’ 1.75 The phrase ‘carrying on business’ is discussed above.51 As stated above, the phrase ‘carrying on a business’ may have different meanings in different contexts.52 1.76 Whether a body corporate is carrying on business within Australia is ‘very much a question of fact’ and will usually involve ‘a series or repetition of acts’.53 1.77 In Bray v F Hoffman-La Roche Ltd,54 Merkel J made the following comments on the nexus requirement of ‘carrying on business in Australia’ in the context of former s 5 of the TPA: The present context is s 5(1), which gives effect to the legislature’s view that comity, for the purposes of the TPA, requires that a particular nexus with Australia exist (that is, citizenship or residence by a person or incorporation or the carrying on of business in the case of a body

corporate) if certain Parts of the TPA are to apply to conduct engaged in outside of Australia by those persons or bodies corporate.

[page 21] 1.78 The nexus required in s 5 of the CCA does not import the additional requirement that to carry on business in the jurisdiction the foreign company must have a place of business in the jurisdiction.55 1.79 The provisions of the ACL should not be read down so as to apply only to the protection of Australian consumers.56 Pursuant to s 5 of the CCA, the ACL can apply to overseas consumers. 1.80 In Wells v John R Lewis (International) Pty Ltd,57 Spicer CJ, Dunphy and Smithers JJ made the following comments that the protection of former Pt V of the TPA could apply to overseas consumers: Part V does not contain any express provision limiting the proscription of standards of conduct therein to conduct which may have an effect only in the market in Australia or which may affect only Australian consumers. Any such limitation must be found by implication from the other provisions of the Act. Some provisions relating to particular trade practices are expressly limited to practices having effect only upon the Australian market. See for example s 46 relating to monopolization; s 49, price discrimination; and s 50, mergers. Provisions prohibiting or regulating various other trade practices are expressly made referable to conduct ‘in trade or commerce’. By definition that means trade or commerce within Australia or between Australia and places outside Australia.

1.81 An important question arose in Bray v F Hoffman-La Roche Ltd,58 as to whether a foreign corporation that operates through a subsidiary in Australia is considered to be ‘carrying on business in Australia’. 1.82

Merkel J provided the following useful guidance on the issue:59

In determining whether the Australian subsidiaries or the overseas parent companies are

carrying on business in Australia the question might be asked: ‘is the person [or corporation] in question doing his business or doing the absent corporation’s business? Conversely are they doing business through him or by him’: see Vogel v R & A Kohnstamm Ltd [1973] QB 133 at 143; [1971] 2 All ER 1428 (Vogel) per Ashworth J. In determining the answer to that question a court would be required to investigate the functions which the subsidiary has been performing and all aspects of the relationship between it and the overseas corporation: see Adams v Cape at Ch 530. Byrne J observed in Commonwealth Bank of Australia v White [1999] 2 VR 681 at 691 that the authorities establish that in resolving the question of whether the subsidiary is in truth carrying on the parent’s business the court must examine ‘the totality of the relationship between the principal and the agent in the light of the nature of the company’s business and that of the agent’. In Wilson v Servier

[page 22] Canada Inc (2000) 50 OR (3d) 219 at 228 Cumming J stated that a ‘stringent test must be satisfied before one may pierce the corporate veil of a subsidiary corporation and impose liability upon a parent corporation on the basis of an asserted agency relationship’. In Adams v Cape at Ch 530–1 a number of questions were considered to be likely to be relevant. They include: (a) whether the fixed place of business from which the subsidiary operates was originally acquired for the overseas corporation; (b) what other contributions, if any, the overseas corporation makes to the financing of the subsidiary; (c) what degree of control the overseas corporation is entitled to exercise and does exercise over the running of the business conducted by the subsidiary; (d) whether the subsidiary reserves part of its premises or staff for the work of the overseas corporation; (e) whether the subsidiary displays the overseas corporation’s name at its premises or on its stationery in such a way as to indicate it represents the overseas corporation; (f)

what business the subsidiary transacts exclusively on its own behalf;

(g) whether the subsidiary makes contracts with customers or other parties in the names of the overseas corporation or otherwise in such manner as to bind it; (h) if so, whether the representative requires specified authority in advance before binding the overseas corporation to contractual obligations.

1.83

Section 5(3) of the CCA provides that if a claim for damages is made

pursuant to s 236 of the ACL, a person is prevented from relying on s 5(1), unless they first obtained written consent from the Minister. 1.84 Section 5(4) of the CCA provides that a person is prevented from making an application for an order under s 237 or s 238 of the ACL, if the person is relying on s 5(1), without the consent of the Minister.

Extended application of the ACL 1.85 Due to constitutional limitations on the legislative powers of the Commonwealth Parliament, the operation of the CCA as applied as a law of the Commonwealth is generally limited to the conduct of corporations. 1.86 While the CCA generally relies upon the Corporations power in s 51(xx) of the Australian Constitution, s 6(2) and (3) of the CCA extend the reach of the CCA and the ACL by utilising other heads of constitutional power.60 1.87 Section 6(3) and (3A) of the CCA extend the operation of certain provisions of the ACL61 to natural persons where the conduct involves the use of postal, telegraphic or telephonic services or takes place in a radio or television broadcast. [page 23] 1.88 The word ‘telephonic services’ has been interpreted to include conduct over the internet. This was made clear in Seafolly Pty Ltd v Madden,62 where Tracey J made the following comments about ‘telephonic services’: The term ‘telephonic services’ is not defined in the TP Act. It is, no doubt, intended to bear the

same meaning as attaches to it in s 51(v) of the Constitution. In Australian Competition and [Consumer] Commission v Hughes [2002] FCA 270 Allsop J dealt with representations which appeared on an internet website. His Honour held that relief was available under the TP Act, in part because of the provisions of s 6(3) as access to the internet involved the use of telephonic services: see at [77]; Dataflow Computer Services Pty Ltd v Goodman (1999) 168 ALR 169; 46 IPR 393; [1999] FCA 1625 at [7] and compare CPA Australia Ltd v Dunn (2007) 74 IPR 495; [2007] FCA 1966; Australian Competition and Consumer Commission v Chen (2003) 132 FCR 309; 201 ALR 40; [2003] FCA 897. Each of the impugned publications was promulgated using the internet. Access to that facility involved the use of telephonic services. As a result I accept that Ms Madden is liable for contraventions of ss 52 and 53(a) because of the extended operation of those provisions as prescribed by s 6(3) of the TP Act.

1.89 In ACCC v Jutsen (No 3),63 Nicholas J formed the following view that the word ‘telegraphic’ given its ordinary meaning was also wide enough to include conduct via the internet: The expression ‘postal, telegraphic or telephonic services’ as used in s 6(3) of the Act extends to conduct involving the use of the internet. I think this must be so having regard to the very broad way in which the word ‘telegraphic’ is defined in most of the well known dictionaries. For example, the Macquarie Dictionary, 3rd ed, Macquarie Library, 1997, p 2176 defines telegraph as: an apparatus, system or process for transmitting messages or signals to a distance, especially by means of an electrical device consisting essentially of a transmitting or sending instrument and a distant receiving instrument connected by a conducting wire, or other communications channel, the making and breaking of the circuit at the sending end causing a corresponding effect, as on a sounder, at the receiving end. The word ‘telegraphic’ ought to be given a correspondingly broad meaning. It is open to the court to take judicial notice of the fact that the internet is a ‘telegraphic’ apparatus or system used to transmit and receive electronic communications: see s 144(1) of the Evidence Act 1995 (Cth).

1.90 Section 6(4) of the CCA extends the operation of certain provisions in the ACL to conduct in trade or commerce to the promotional activities of a professional person.64

[page 24] 1.91 The effect of s 6(4) of the CCA is that it means that the activities of professional persons, such as doctors, lawyers and accountants can be liable for conduct in the course of their promotional activities. 1.92 It is unclear how useful s 6(4) of CCA is, given that proceedings may now be commenced against individuals for contraventions of the ACL under state and territory Fair Trading Acts.65

Jurisdiction of the court Conferred jurisdiction 1.93 The jurisdictional matters related to the ACL are set out in Pt XI Div 8 of the CCA. Pt XI Div 8 sets out which courts have jurisdiction conferred on them to hear ACL matters and the transfer of matters from one court to another. 1.94 In particular, s 138(1) of the CCA confers jurisdiction on the Federal Court over ‘any matter’ arising under the ACL in respect of civil proceedings that have been instituted either under Pt XI or the ACL. 1.95 The jurisdiction conferred on the Federal Court is exclusive jurisdiction of any other court except the jurisdictions of the Federal Circuit Court,66 certain state and territories courts,67 and the High Court.68 1.96 However, in proceedings under Pt 3-5 or s 236 of the ACL, the Federal Circuit Court does not have jurisdiction to award an amount for loss or damages that exceeds $750,000.69

Transfer of proceedings 1.97 The Federal Court may transfer civil proceedings to certain state or territory courts.70 However, the Federal Court cannot transfer proceedings that have been instituted by the ACCC or the Minister.71 1.98 The Federal Court must not transfer a matter to another court unless:72 the other court has power to grant the remedies sought before the Federal Court; the matters have arisen out of, or are related to, a proceedings that is pending in the other court; and it appears that it is in the interests of justice to do so. [page 25] 1.99 The Federal Court may direct a state or territory court (other than the Supreme Court) to transfer to the Federal Court a Pt XI or ACL matter other than a matter under Pt 3-1 Div 3, Pt 3-5 or Ch 4 under the ACL.73

Application of the Criminal Code 1.100 A number of provisions of the Crimes Act 1914 (Cth) (Crim Act) and Criminal Code do not apply to the ACL. In particular, s 4AB of the Crim Act does not apply to any provision in Pt XI of the CCA or the ACL. 1.101

Section 4AB of the Crim Act states:

Conversion of pecuniary penalties expressed in dollar amounts to penalty units (1) A reference in a law of the Commonwealth or in a Territory Ordinance to a pecuniary

penalty of D dollars, where D is a number, is taken to be a reference to a pecuniary penalty of P penalty units, where P is: (a) if D / 100 is a whole number — that whole number; or (b) if D / 100 is not a whole number — the next highest whole number. (2) Subsection (1) does not apply to a reference to the maximum amount of a penalty that is not imposed by a court, or by a service tribunal under the Defence Force Discipline Act 1982. (3) Subsection (1) does not apply to: (a) section 76 of the Competition and Consumer Act 2010; or (c) a provision of a law of the Commonwealth prescribed for the purposes of this subsection. (4) In this section: ‘penalty’ includes a fine. ‘Territory Ordinance’ has the same meaning as in section 4AA.

1.102 Pursuant to s 6AA of the CCA, Ch 2 of the Criminal Code applies to all offences against the CCA, including Pt XI of the CCA and the ACL. 1.103 However, Pt 2.5 of the Criminal Code74 does not apply to an offence against Pt XI of the CCA or the ACL, neither does s 9.2 of the Criminal Code75 apply to an offence against Ch 4 of the ACL.76

No ‘double dipping’ of liabilities 1.104 To avoid ‘double dipping’ of liability for the same offence under both the ACL as a law of the Commonwealth and the ACL as an applied law of the states or territories, s 131C(3) of the CCA provides: [page 26] (3) Despite subsection (1): (a) if an act or omission of a person is both: (i)

an offence against this Part or the Australian Consumer Law; and

(ii) an offence against a law of a State or a Territory; and (b) the person is convicted of either of those offences; he or she is not liable to be convicted of the other of those offences.

1.105 Similarly, in relation to pecuniary penalties and the possibility of ‘double dipping’ under the ACL as a law of the Commonwealth and the ACL as an applied law of the states or territories, s 140J of the CCA provides: No doubling-up of liabilities (1) If: (a) an act or omission is an offence against this Act and is also an offence against an application law; and (b) the offender has been punished for the offence under the application law; the offender is not liable to be punished for the offence against this Act. (2) If a person has been ordered to pay a pecuniary penalty under an application law, the person is not liable to a pecuniary penalty under this Act in respect of the same conduct.

Regulations 1.106 Section 139G of the CCA was inserted to permit the GovernorGeneral to make Regulations prescribing matters in the ACL, as required or necessary or convenient for the carrying out of, or giving effect to, the ACL. 1.107 For instance, s 139G of the CCA states that the prescribed conduct engaged in in the course of a business carried on by the Commonwealth or by one of its prescribed authorities may be exempted from the ACL.77 1.108 Part 6 of the Competition and Consumer Regulations 2010 (Cth) (CCR) contains a number of prescribed matters, including the prescribed requirements for warning statements.78

Short theory questions

Theory questions 1.

Do you think the ACL has achieved its overarching objective? Has the ACL achieved all of its six supporting objectives? Why or why not?

2.

Do you think the ACL contains the right amount of consumer protection provisions, or are there too many or not enough? [page 27]

3.

Do you think the ACL is drafted so an ordinary business person or consumer would understand it? What is the role of ACCC Guidelines?

4.

Do you think the ACCC should be given more or less enforcement powers under the CCA and ACL?

5.

Do you think the introduction of pecuniary penalties and/or disqualification orders for contraventions of certain provisions in the ACL is justified?

6.

What is the difference between Crown immunity and derivative Crown immunity?

7.

Is repetition of commercial conduct sufficient to make a conclusion that the person is ‘carrying on a business’?

8.

In J S McMillan Pty Ltd v Commonwealth (1997) 147 ALR 419, why was the conduct of the Commonwealth Crown not considered to amount to ‘carrying on a business’?

9.

Does the expression ‘use of postal, telegraphic or telephonic services or takes place in a radio or television broadcast’ include reference to the internet?

Further reading A Bruce, Consumer Protection Law in Australia, 2nd ed, LexisNexis Butterworths, Sydney, 2014, pp 1–27. S Corones, The Australian Consumer Law, 2nd ed, Thomson Reuters, Sydney, 2013, pp 1–54. Halsbury’s Laws of Australia, Commentary, Consumer Protection title, LexisNexis, Sydney, 2011, [75,500]–[75,500.30]. Justice J D Heydon, Trade Practices Law Competition & Consumer Law (Looseleaf Services), Thomson Reuters, Australia, 2012, [150.10]–[150.30]. R Miller, Australian Competition and Consumer Law Annotated, 36th ed, Thomson Reuters, Sydney, 2014, pp 1397–410. R Steinwall, Annotated Competition and Consumer Legislation, LexisNexis, Sydney 2014, pp 97–109. The ACCC website at or the ACL website at and download the following publications: – The Australian Consumer Law: An Introduction, 2010; –

The Australian Consumer Law: A Guide to Provisions, 2010;

–

The Australian Consumer Law Guide, 2011.

1.

Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Book IV, Chapter VIII) W Strahan and T Cadell, London 1776 at [8.49].

2.

For a list of the legislation that the ACL replaced, please see the Australian Consumer Law website at .

3.

CCA Pt XI (Application of the ACL as a law of the Commonwealth), ss 130 and 131(1).

4.

CCA Pt XIAA (Application of the ACL as a law of a State or Territory), ss 140, 140A, 140B.

5.

The ACCC is established pursuant to CCA s 6A.

6.

CCA s 131A.

7.

ASIC Act Pt 2.

8.

The phrase ‘remedial smorgasbord’ was first used in relation to the remedies provided under the

former s 87 of the TPA: Akron Securities Ltd v Iliffes (1997) 143 ALR 457 per Mason P at 466. 9.

Not including the ACL references in Pts XI and XIAA of the CCA, the ACL in Schedule 2 of the CCA contains 5 Chapters, 20 Parts, 45 Divisions, 25 Sub-Divisions, 287 sections and consists of over 67,000 words.

10. For example, in New South Wales the prevention of dummy bidding at auctions is regulated under the Property, Stock and Business Agents Act 2002 (NSW) s 66, but is notably absent from the ACL. 11. In ACCC v Singtel Optus Pty Ltd (No 4) (2011) 282 ALR 246, Perram J described the legislation as being ‘pointlessly renamed’ at [4]. 12. Productivity Commission, Review of Australia’s Consumer Policy Framework, Final Report, Canberra, 2008, p 63. 13. Productivity Commission, Review of Australia’s Consumer Policy Framework, Final Report, Canberra, 2008, p 63. 14. MCCA is now known as the Legislative and Governance Forum on Consumer Affairs (CAF): CAF Charter for 2013–15 as An Integrated and Harmonised Approach to Consumer Protection (1 July 2013), p 6. 15. D Recital, Intergovernmental Agreement for the Australian Consumer Law (signed by COAG on 2 July 2009). 16. Productivity Commission, Review of Australia’s Consumer Policy Framework, Final Report, Canberra 2008, pp XV–XXVI. 17. Productivity Commission, Review of Australia’s Consumer Policy Framework, Final Report, Canberra 2008, p 323. 18. Wynyard Investments Pty Ltd v Commissioner for Railways (NSW) [1956] ALR 49 per Kitto J at 55–56. 19. Bradken Consolidated Ltd v Broken Hill Pty Co Ltd (1979) 24 ALR 9 per Gibbs ACJ at 16–17. 20. Bradken Consolidated Ltd v Broken Hill Pty Co Ltd (1979) 24 ALR 9 per Gibbs ACJ at 16–17. 21. Bradken Consolidated Ltd v Broken Hill Pty Co Ltd (1979) 24 ALR 9 per Gibbs ACJ at 16. See also Province of Bombay v Municipal Corporation of the City of Bombay [1947] AC 58. 22. Bropho v State of Western Australia (1990) 93 ALR 207 per Mason CJ, Deane, Dawson, Toohey, Gaudron and McHugh JJ at 217. 23. Bradken Consolidated Ltd v Broken Hill Pty Co Ltd (1979) 24 ALR 9 per Gibbs ACJ at 15–19. 24. Wynyard Investments Pty Ltd v Commissioner for Railways (NSW) [1956] ALR 49 per Kitto J at 56. 25. NT Power Generation Pty Ltd v Power and Water Authority (2004) 210 ALR 312 per McHugh ACJ, Gummow, Callinan and Heydon JJ at [173]–[174]. 26. ACCC v Baxter Healthcare Pty Ltd (2007) 237 ALR 512 per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ at [68]–[78]. 27. ACCC v Baxter Healthcare Pty Ltd (2007) 237 ALR 512 per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ at [52]. 28. ACCC v Baxter Healthcare Pty Ltd (2007) 237 ALR 512 per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ at [68]. 29. ACCC v Baxter Healthcare Pty Ltd (2007) 237 ALR 512 per Gleeson CJ, Gummow, Hayne, Heydon

and Crennan JJ at [75]. 30. NT Power Generation Pty Ltd v Power and Water Authority (2004) 210 ALR 312 per McHugh ACJ, Gummow, Callinan and Heydon JJ at [66]. 31. NT Power Generation Pty Ltd v Power and Water Authority [2002] FCAFC 302 per Finkelstein J at [125]–[126]. 32. For example, see ACL s 2 (definitions of ‘credit provider’, ‘linked credit provider’, ‘loan contract’, ‘in trade or commerce’, etc). 33. For example, see ACL ss 35 (bait advertising), 37 (misleading representations about certain business activities), 43 (asserting a right to payment for unauthorised entries or advertisements), etc. Also see CCA ss 2A (application of Act to Commonwealth and Commonwealth authorities), 2B (application of Act to States and Territories), 2BA (application of Pt IV to local government bodies). 34. Hope v Bathurst City Council (1980) 29 ALR 577 per Mason J at 582. 35. Actors & Announcers Equity Association of Australia v Fontana Films Pty Ltd (1982) 40 ALR 609 per Gibbs CJ at 618. 36. Town Investments Ltd v Department of Environment [1977] 1 All ER 813 per Lord Diplock at 819. 37. Actors & Announcers Equity Association of Australia v Fontana Films Pty Ltd (1982) 40 ALR 609 per Stephen J at 627. 38. Fasold v Roberts (Evolution v Creation case / Noah’s Ark case) (1997) 145 ALR 548 per Sackville J at 587–8. 39. Luckins v Highway Motel (Carnarvon) Pty Ltd (1975) 7 ALR 413 per Gibbs J at 422. 40. Luckins v Highway Motel (Carnarvon) Pty Ltd (1975) 7 ALR 413 per Stephen J at 429. 41. GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50 per Finn J at [1371]. 42. GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50 per Finn J at [1372]. 43. GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50 per Finn J at [1372]. 44. GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50 per Finn J at [1373]. 45. GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50 per Finn J at [1374]. 46. J S McMillan Pty Ltd v Commonwealth (1997) 147 ALR 419. 47. NT Power Generation Pty Ltd v Power and Water Authority (2004) 210 ALR 312 per McHugh ACJ, Gummow, Callinan and Heydon JJ at [21], [66]. 48. For example, see Fair Trading Act 1987 (NSW) s 3. 49. For discussion on the meaning of ‘authority’ and ‘carrying on a business’, see 1.44, 1.56 respectively. 50. Bray v F Hoffman-La Roche Ltd (2002) 190 ALR 1 per Merkel J at [50]–[52].

51. See 1.56. 52. Luckins v Highway Motel (Carnarvon) Pty Ltd (1975) 7 ALR 413 per Gibbs J at 422. 53. Bray v F Hoffman-La Roche Ltd (2002) 190 ALR 1 per Merkel J at [62]. 54. Bray v F Hoffman-La Roche Ltd (2002) 190 ALR 1 per Merkel J at [60]. 55. Bray v F Hoffman-La Roche Ltd (2002) 190 ALR 1 per Merkel J at [63]. 56. Australian Competition & Consumer Commission v Worldplay Services Pty Ltd (2004) 210 ALR 562 per Finn J at [82]. 57. Wells v John R Lewis (International) Pty Ltd (1975) 25 FLR 194 per Spicer CJ, Dunphy and Smithers JJ at 208. See also ACCC v Sensaslim Australia Pty Ltd (in liq) (No 1) (2011) 283 ALR 235 per Yates J at [20]. 58. Bray v F Hoffman-La Roche Ltd (2002) 190 ALR 1 per Merkel J at [64]. 59. Bray v F Hoffman-La Roche Ltd (2002) 190 ALR 1 per Merkel J at [70]–[71]. 60. See, The Australian Constitution ss 51(i) (Interstate and overseas trade and commerce powers), 51(xxxix) (Incidental powers), 61 (Executive powers) and 122 (Territory powers). 61. However, CCA s 6(3) does not apply to ACL ss 33 and 155. 62. Seafolly Pty Ltd v Madden (2012) 297 ALR 337 per Tracey J at [78]–[79]. 63. ACCC v Jutsen (No 3) (2011) 285 ALR 110 per Nicholas J at [100]. 64. However, CCA s 6(4) does not apply to ACL ss 30, 33, 152, 155 and 164. 65. Similarly, proceedings may be commenced under the Competition Code against individuals for contraventions of the CCA Pt IV. 66. CCA s 138A. 67. CCA s 138B. 68. The Australian Constitution s 75. 69. CCA s 138A(2). 70. CCA s 138C. 71. CCA s 138C(1)(a). 72. CCA s 138C(2). 73. CCA s 138D. 74. Criminal Code Pt 2.5 (Corporate criminal responsibility). 75. Criminal Code s 9.2 (Mistake of fact defence). 76. It is noted that ACL s 207 provides a mistake of fact defence for offences under ACL Ch 4. 77. CCA s 139G(4)(c). 78. CCR reg 78.

[page 29]

Chapter 2 Definitions and Key Concepts ‘Mate, I know all about the Australian Customer Law [sic] or whatever you call it. You are not a consumer and you have no rights. I sold to you this totally awesome car for only $80,000, and now you tell me that you are using it to transport goods on public roads.’

Introduction Overview 2.1 This Chapter considers definitions and key concepts that are commonly referred to in a number of provisions of the Australian Consumer Law (ACL). 2.2

The topics covered in this Chapter are: Definition of consumer; – Section 3 of the ACL; –

Acquiring goods or services as a consumer; ♦

Goods that cost $40,000 or less;

♦

Goods of a kind ordinarily acquired for personal, domestic or household use or consumption;

♦

Vehicles and trailers acquired to transport goods on

public roads; –

Exceptions to acquiring goods as a consumer; ♦

‘Re-supply’;

♦

‘Using them up or transforming them’;

Definitions of corporation, subsidy, holding and related bodies corporate; – Definition of a corporation; –

Definition of a foreign corporation;

–

Definition of a trading corporation;

–

Definition of a financial corporation;

–

Definition of a subsidiary, holding and related body corporate;

The meaning of ‘in trade or commerce’; – What provisions does ‘in trade or commerce’ apply to?; –

What is ‘in trade or commerce’?;

–

Private sale of land or business; [page 30]

–

Public statements, debates and general education;

–

Political statements and lobbying;

–

Employment contracts;

–

Internal communications;

–

Conduct to influence others;

–

The activities of the government; Accessorial liability; – ‘Involved’; –

‘Aided, abetted, counselled or procured’ the contravention;

–

‘Induced’ the contravention;

–

‘Knowingly concerned in’, or ‘a party to’, the contravention;

–

‘Conspired with others’ to effect the contravention;

Attempt to contravene; – The elements of attempt to contravene; ♦

Mental element;

♦

Physical element;

♦

Some examples contravene’

of

what

constitutes

‘attempt

to

Liability of corporate and non-corporate principals; – Section 139B of the Competition and Consumer Act 2010 (Cth) (CCA); –

‘on behalf of’;

–

Not on a ‘frolic of their own’;

–

♦

Actual authority;

♦

Actual express authority;

♦

Actual implied authority;

♦

Apparent (or ostensible) authority;

Section 139C of the CCA;

Various other key definitions and concepts; – ‘Goods’;

2.3

–

‘Services’;

–

‘Severability’;

–

‘Supply’; and

–

‘Manufacturer’.

Each topic will be discussed individually below.

Definition of consumer Section 3 of the ACL 2.4 The word ‘consumer’ is defined in s 3 of the ACL. It is not be confused with the words ‘consumer goods’ as defined in s 2,1 or the words ‘consumer contracts’ as defined in s 23(3).2 [page 31] 2.5 While the definitions of ‘consumer goods’ in s 2 of the ACL and ‘consumer contracts’ in s 23(3) are couched in similar terms to the definition of ‘consumer’ in s 3, they are not subject to that definition.3 2.6 The following table sets out the provisions in the ACL to which the definitions of ‘consumer’, ‘consumer goods’ and ‘consumer contracts’ apply, and the provisions where none of these definitions apply.

Table 2.1 Definition

Area of Law

‘Consumer’

Consumer guarantees (Ch 3 Pt 3-2 Div 1) Unsolicited consumer agreements (Ch 3 Pt 3-2 Div 2) Lay-by sales agreements (Ch 3 Pt 3-2 Div 3) Itemised bills (Ch 3 Pt 3-2 Div 4) Linked credit contracts (Ch 5 Pt 5-5 Div 1)

‘Consumer goods’

Safety standards (Ch 3 Pt 3-3 Div 1) Bans on consumer goods and product-related services (Ch 3 Pt 3-3 Div 2) Recall of consumer goods (Ch 3 Pt 3-3 Div 3) Safety warning notices (Ch 3 Pt 3-3 Div 4) Consumer goods, or product related services, associated with death or serious injury or illness (Ch 3 Pt 3-3 Div 5)

‘Consumer contracts’

Unfair contract terms (Ch 2 Pt 2-3)

No definition

2.7

Misleading or deceptive conduct (Ch 2 Pt 2-1) Unconscionable conduct (Ch 2 Pt 2-2) Specific unfair practices (Ch 3 Pt 3-1 Div 1) Unsolicited supplies (Ch, Pt 3-1 Div 2) Pyramid schemes (Ch 3 Pt 3-1 Div 3) Pricing (Ch 3 Pt 3-1 Div 4) Other unfair practices (Ch 3 Pt 3-1 Div 5)

Section 3 of the ACL states:

Meaning of consumer Acquiring goods as a consumer (1) A person is taken to have acquired particular goods as a consumer if, and only if: (a) the amount paid or payable for the goods, as worked out under subsections (4) to (9), did not exceed: (i)

$40,000; or

(ii) if a greater amount is prescribed for the purposes of this paragraph — that greater amount; or (b) the goods were of a kind ordinarily acquired for personal, domestic or household use or consumption; or (c) the goods consisted of a vehicle or trailer acquired for use principally in the transport of goods on public roads.

[page 32] [Exceptions to acquiring goods as a consumer] (2) However, subsection (1) does not apply if the person acquired the goods, or held himself or herself out as acquiring the goods: (a) for the purpose of re-supply; or (b) for the purpose of using them up or transforming them, in trade or commerce: (i)

in the course of a process of production or manufacture; or

(ii) in the course of repairing or treating other goods or fixtures on land. Acquiring services as a consumer (3) A person is taken to have acquired particular services as a consumer if, and only if:

(a) the amount paid or payable for the services, as worked out under subsections (4) to (9), did not exceed: (i)

$40,000; or

(ii) if a greater amount is prescribed for the purposes of subsection (1)(a) — that greater amount; or (b) the services were of a kind ordinarily acquired for personal, domestic or household use or consumption. Amounts paid or payable for purchases (4) For the purposes of subsection (1) or (3), the amount paid or payable for goods or services purchased by a person is taken to be the price paid or payable by the person for the goods or services, unless subsection (5) applies. (5) For the purposes of subsection (1) or (3), if a person purchased goods or services by a mixed supply and a specified price was not allocated to the goods or services in the contract under which they were purchased, the amount paid or payable for goods or services is taken to be: (a) if, at the time of the acquisition, the person could have purchased from the supplier the goods or services other than by a mixed supply — the price at which they could have been purchased from the supplier; or (b) if: (i)

paragraph (a) does not apply; but

(ii) at the time of the acquisition, goods or services of the kind acquired could have been purchased from another supplier other than by a mixed supply; the lowest price at which the person could, at that time, reasonably have purchased goods or services of that kind from another supplier; or (c) if, at the time of the acquisition, goods or services of the kind acquired could not have been purchased from any supplier except by a mixed supply — the value of the goods or services at that time. Amounts paid or payable for other acquisitions (6) For the purposes of subsection (1) or (3), the amount paid or payable for goods or services acquired by a person other than by way of purchase is taken to be the price at which, at the time of the acquisition, the person could have purchased the goods or services from the supplier, unless subsection (7) or (8) applies. (7) For the purposes of subsection (1) or (3), if: (a) goods or services acquired by a person other than by way of purchase could not, at the time of the acquisition, have been purchased from the supplier, or could have been purchased only by a mixed supply; but

[page 33] (b) at that time, goods or services of the kind acquired could have been purchased from another supplier other than by a mixed supply; the amount paid or payable for the goods or services is taken to be the lowest price at which the person could, at that time, reasonably have purchased goods or services of that kind from another supplier. (8) For the purposes of subsection (1) or (3), if goods or services acquired by a person other than by way of purchase could not, at the time of the acquisition, have been purchased from any supplier other than by a mixed supply, the amount paid or payable for the goods or services is taken to be the value of the goods or services at that time. Amounts paid or payable for obtaining credit (9) If: (a) a person obtains credit in connection with the acquisition of goods or services by him or her; and (b) the amount paid or payable by him or her for the goods or services is increased because he or she so obtains credit; obtaining the credit is taken for the purposes of subsection (3) to be the acquisition of a service, and the amount paid or payable by him or her for the service of being provided with the credit is taken to include the amount of the increase. Presumption that persons are consumers (10) If it is alleged in any proceeding under this Schedule, or in any other proceeding in respect of a matter arising under this Schedule, that a person was a consumer in relation to particular goods or services, it is presumed, unless the contrary is established, that the person was a consumer in relation to those goods or services. Mixed supplies (11) A purchase or other acquisition of goods or services is made by a mixed supply if the goods or services are purchased or acquired together with other property or services, or together with both other property and other services. Supplies to consumers (12) In this Schedule, a reference to a supply of goods or services to a consumer is a reference to a supply of goods or services to a person who is taken to have acquired them as a consumer.

2.8

The words in the definition of ‘consumer’ in s 3 of the ACL are

interpreted in the same way to the extent that those words appear in the similar definition of ‘consumer’ in s 4B of the CCA.4 2.9 The definition of ‘consumer’ in s 3 of the ACL is not straightforward. It is split into twelve subsections and contains a number of different threshold tests, exceptions and concepts with expanded meanings. [page 34] 2.10 One example of a concept with an expanded meaning is the use of the word ‘person’ in s 3 of the ACL. A person is not defined in the ACL, but includes an individual as well as a ‘body politic or corporate’.5 2.11 This means that the definition of a ‘consumer’ in s 3 of the ACL applies not only to a natural person, but also to a company, a trust, a charity, an agency, partnership or any other form of corporate entity.

Acquiring goods or services as a consumer 2.12 Section 3(1) of the ACL states that a person is taken to have acquired particular goods as a consumer if, and only if, the goods: paid for were $40,000 or less; were of a kind ordinarily acquired for personal, domestic or household use or consumption; or were a vehicle or trailer for use principally to transport goods on public roads. 2.13 Similarly, s 3(3) of the ACL states that a person is taken to have acquired particular services as a consumer, if and only, if the services:

paid for were $40,000 or less; or were of a kind ordinarily acquired for personal, domestic or household use or consumption. 2.14 Section 3(10) of the ACL creates a presumption that a person was a consumer in relation to particular goods or services, unless the contrary is established. 2.15 This means that the onus of proof is reversed and it is not the person who acquired the goods or services that has to prove that he or she is a consumer, but rather it is the supplier that bears the onus of proof.6

Goods that cost $40,000 or less 2.16 Section 3(1)(a) and (3)(a) of the ACL provide the first avenue by which a person who has acquired goods or services may be taken to be a consumer. 2.17 Under s 3(1)(a) and (3)(a) of the ACL, a person is a consumer if he or she acquires a good or service for which the amount paid or payable is $40,000 or less, regardless of the nature of the good or service. 2.18 For example, a business that purchases a photocopying machine for $35,000 is considered a consumer, provided that none of the exceptions in s 3(2) of the ACL apply. 2.19 Section 3(1)(a) and (3)(a) of the ACL states that the amount paid or payable for the goods or services is to be worked out under s 3(4)–(9). [page 35] 2.20

Section 3(4) of the ACL provides that the amount paid or payable for

goods or services purchased by a person is taken to be the price paid or payable by the person for the goods or services, unless s 3(5) applies. 2.21

Section 2 of the ACL defines price to mean: (a) the amount paid or payable (including any charge of any description) for their acquisition; or (b) if such an amount is not specified because the acquisition is part only of a transaction for which a total amount is paid or payable: (i)

the lowest amount (including any charge of any description) for which the goods or services could reasonably have been acquired from the supplier at the time of the transaction or, if not from the supplier, from another supplier; or

(ii) if they could not reasonably have been acquired separately from another supplier — their value at the time of the transaction.

2.22 The definition of price in s 2 of the ACL refers to ‘any charge of any description’, which presumably includes costs associated with purchase, such as delivery fees or postage and handling. 2.23 However, s 2 of the ACL is silent as to how to determine the price in circumstances where there is two or more goods or services purchased under the one contract. 2.24 In Business and Professional Leasing Pty Ltd v Dannawi,7 the question arose as to whether former s 4B of the TPA refers to the price of each item of goods or the aggregate price of both goods. 2.25 In that case, the question arose in relation to two pizza ovens that were acquired for $42,900. The amount $42,900 appeared on the one document and the ovens were to be used in different premises. 2.26 Young CJ in Eq held that the single deal of acquiring two pizza ovens should be considered as two separate transactions, instead of aggregating the price of both ovens. Young CJ in Eq said:8 In the 3rd edition of Taperell, Vermeesch & Harland, Trade Practices and Consumer Protection

(Butterworths, 1983) at [1329], the learned authors say that whilst it is easy to split a contract where a purchaser buys a truck valued at $14,000 and other machinery worth $16,000, there is more difficulty in splitting a contract to buy two trucks for $28,000. However, they remark that it is odd that a person ceases to be a consumer just because he or she buys two identical products at the one time.

[page 36] More recently, in the context of s 51C of the Act, the Full Federal Court ruled that courts must take into account all the facts and circumstances before deciding whether aggregation is justified or not: Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd (2008) 167 FCR 372. … when one looks at the whole of the material, two ovens were being purchased for two different sites. There was no discount for quantity. The deal should be considered as two separate transactions. It really makes nonsense [sic] in the present type of case to hold that a company making two purchases for different businesses loses its protection under a consumer sale because the paperwork puts the two in the one document.

2.27 Section 3(5) of the ACL provides that if a person purchased goods or services by a mixed supply and a specified price was not allocated to the goods or services in the contract, the amount paid or payable is taken to be: the price at which the goods or services could have been purchased individually (s 3(5)(a)); if the above price is not possible, the lowest reasonable price at which the goods or services of the kind (ie substitutes) acquired could be purchased from other suppliers at that time (s 3(5)(b)(i) and (ii)); or if both of the above are not possible, then the value of the goods or services at that time: s 3(5)(c). 2.28 Section 3(11) of the ACL provides a definition of mixed supply in circumstances where goods or services are acquired together with other property or services, or together with both other property and other services.

2.29 Section 3(6), (7) and (8) of the ACL provide guidance on the price of the goods or services in circumstances where the goods or services are acquired other than by way of purchase (ie lease or hire). 2.30 Section 3(6) of the ACL provides that the amount paid or is payable for goods or services by lease or hire is taken to be the price at the time of the acquisition, unless s 3(7) or s 3(8) applies. 2.31

Section 3(7) of the ACL provides that if: goods acquired by lease or hire could not, at the time of acquisition, have been purchased by the supplier, or could have been purchased only by a mixed supply; but at that time, substitute goods could have been acquired individually from another supplier;

the amount paid or payable for the goods is the lowest reasonable price at which the substitute goods could have been purchased from other suppliers. 2.32 Section 3(8) of the ACL provides that if goods acquired by lease or hire could not, at the time of acquisition, have been purchased other than by a mixed supply, the amount paid or payable is the value of the goods. [page 37] 2.33 Section 3(9) of the ACL deals with circumstances where a person has acquired goods on credit and deemed the credit as a separate service in addition to the good. 2.34 Section 3(9) of the ACL also provides that any amount of credit that is charged to the purchaser of the goods is excluded from the determination of the amount paid or payable in relation to the $40,000 threshold limit.

Goods of a kind ordinarily acquired for personal, domestic or household use or consumption 2.35 Section 3(1)(b) and (3)(b) of the ACL provides the second avenue by which a person who has acquired goods or services may be taken to be a consumer. 2.36 Under s 3(1)(b) and (3)(b) of the ACL, a person is a consumer if he or she acquires a good or service that was of a kind ordinarily acquired for personal, domestic or household use or consumption. 2.37 The question of whether goods were of a kind ordinarily acquired for personal, domestic or household use or consumption is determined objectively based on the nature and usual purpose of the good.9 2.38 The words ‘goods of a kind ordinarily acquired for personal, domestic or household use or consumption’ as they appeared in s 4B of the CCA are likely to have the same meaning wherever used in the ACL.10 2.39 The words ‘goods of a kind ordinarily acquired for personal, domestic or household use or consumption’, should be given a broad meaning, notwithstanding where they appear in the CCA or the ACL.11 2.40 The word ‘ordinarily’ means ‘commonly’ or ‘regularly’, not ‘principally’, ‘exclusively’ or ‘predominately’.12 In Bunnings Group Ltd v Laminex Group Ltd,13 Young J said: Counsel for the respondent invited me to depart from these authorities, and to hold that the word ‘ordinarily’ as used in s 74A(2)(a) means ‘predominately’. In view of the authorities to which I was referred, I doubt that I am free to adopt such a construction. In any event, I am not persuaded that the word ‘ordinarily’ in s 74A(2)(a) means ‘predominately’ rather than ‘commonly’ or ‘regularly’. On the contrary, I consider that the meaning which best accords with the policy and the purposes of the TPA is that of ‘commonly’ or ‘regularly’. I am conscious that the Full Court of the Victorian Supreme Court in ICI Australia Operations Pty Ltd v DCT (Vic) (1987) 87 ATC 5110 said at 5112 that the concept of ‘ordinarily used for’ equals ‘whose primary but not necessarily exclusive purpose and customary use is’. However, I do not agree that the

[page 38] word ‘ordinarily’ should be given such a connotation in s 74A(2)(a) or elsewhere in the TPA.

2.41 Hence, goods may be of a kind ordinarily acquired for personal, domestic or household use or consumption even if those goods are in many cases, or even in a majority of cases, acquired for business use.14 2.42 This view is consistent with the following New Zealand case of Nesbit v Porter,15 where the definition of ‘consumer’ in the Consumer Guarantees Act 1993 (NZ) mirrors the definition in s 3 of the ACL.

Nesbit v Porter [2000] 2 NZLR 465 In this case, Mr and Mrs Nesbit (Nesbits) purchased a second hand Nissan Navara 720 four-wheel drive from a car dealer, of which Mr Porter was a director. Around five months after purchase, the Nesbits were advised of certain defects in the vehicle, which included extensive rust and problems with the steering box. The Nesbits sued Mr Porter alleging that the vehicle was not fit for purpose at the time of the sale. The evidence given in court was that around 80 per cent of buyers of this particular type of vehicle purchased it for commercial purposes. Only 20 per cent of buyers purchase this vehicle exclusively for personal use. Blanchard J (with whom Thomas and Keith JJ agreed) held that the vehicle was goods of a kind ‘ordinarily acquired for personal, domestic or household use or consumption’. His Honour noted that goods may have several uses, namely: private, commercial or both. Where a good acquired has uses both private and commercial, the question of whether a person is

a consumer is not simply a matter of determining a majority or dominant ordinary purpose of the acquisition of the particular kind of goods. The word ‘ordinarily’, according to his Honour (at [29]), is to be construed as a ‘matter of regular practice or occurrence’ or ‘in the ordinary or usual course of events or state of things.’ The 20 per cent of users was sufficient for the vehicle to be ‘ordinarily’ acquired for personal, domestic or household use — in the sense that it was not ‘out of the ordinary’. According to Blanchard J (at [27]): If more purchases are for a commercial use it does not follow that the goods in question cannot be said to be ordinarily acquired for private use by the minority of buyers. Take the example of ball point pens. They are frequently acquired for private use but it seems probable that much greater numbers are bought by businesses.

[page 39] 2.43 The word ‘personal’ in the phrase ‘acquired for personal …’ does not mean ‘individual’. It covers a wide field and is to be contrasted with commercial or business use rather than with public use.16 2.44 Furthermore, while the words ‘domestic or household’ have a similar connotation to ‘personal’ use, those words are intended to cover a narrower field to the intended wide scope of the words ‘personal’ use.17 2.45 The word ‘domestic’ carries its usual significance of pertaining to a home. It does not mean ‘civilised or domesticated or something appertaining to man’, but means using or occupying a home.18 2.46

This was made clear in the following case of Jillawarra Grazing Co v

John Shearer Ltd,19 where it was held that a farm machine was not a kind of good acquired for personal, domestic or household use.

Jillawarra Grazing Co v John Shearer Ltd (1984) ATPR 40-441 In this case, Toohey J held that an agricultural airseeder, purchased by Jillawarra Grazing Co (Jillawarra) from John Shearer Ltd (Shearer) for use in its farming business, fell outside former s 74A(2)(a) of the TPA. Shearer argued that the airseeder bought by Jillawarra could not fall within the description of goods acquired for personal, domestic or household use or consumption. In response, Jillawarra argued (at 45,090) that: In the present instance it is appropriate to consider farmers as a class. What is used for a farmer’s personal, domestic or household use would appear to encompass everything which is used on or in connection with his farm, there being no exterior business or commerce which he conducts.

Toohey J rejected Jillawarra’s argument that airseeder was a good of a kind ordinarily acquired for personal, domestic or household use or consumption, because ‘everything on the farm is domestic to a farmer’. In particular Toohey J said (at 45,090–1): In no sense is an airseeder within goods of a kind ordinarily acquired for use or consumption in connection with the home. The fact that a farmer’s residence is ordinarily on the land where he conducts his business does not mean that the distinction ceases to exist.

[page 40] 2.47

The question of whether goods of a kind ordinarily acquired for

personal, domestic or household use or consumption should be approached as a ‘single, composite’ question.20 2.48 This is opposed to a two-stage inquiry as to, first, the genus of goods in question, and second, whether that kind of goods is ordinarily acquired for personal, domestic or household use or consumption.21 2.49 In determining whether goods were of a kind ordinarily acquired for personal, domestic or household use or consumption, it is necessary to inquire as to the essential character of the goods in question.22 2.50 However, the inquiry does not end there. It is necessary to conduct a broader inquiry into the evidence concerning the design, marketing, pricing and potential uses of the type of goods in question.23 2.51 In Bunnings Group Ltd v Laminex Group Ltd,24 Young J provided the following reasons as to why a further broader inquiry beyond the ‘essential character’ is required: In Diethelm, French J thought that the answer to the statutory inquiry depended critically on the essential character of the goods. Adopting what had been said by Gummow J in Hygienic Lily at FCR 399; ALR 444, Hill J said that the question whether goods are of a particular kind was to be determined objectively, by reference to the nature, quality and adaptation of the goods in the class or genus in question. However, Hill J also expressed reservations about the essential character test, saying that the inquiry may be useful in some cases but in other cases it may suffer from a lack of precision: at 470. In Chubb, Burchett J doubted the usefulness of the essential character test: at 559. Hill J in Chubb looked beyond the essential character of the goods and took into account evidence that explained the attributes, the intended use and the cost of the goods. Tamberlin J adopted much the same approach as Hill J. In Clean Investments, Lindgren J said that the essential character test lacked sufficient precision to assist in answering the question whether the coin-operated washing machines under consideration in that case constituted goods of a kind ordinarily used for household purposes: at [96]. Lindgren J added that there is a danger that the essential character test may serve simply to give an undeserved legitimacy to first impressions.

2.52

The following case of Crago v Multiquip Pty Ltd & Dunogan Farm

Tech Pty Ltd,25 is an example where a judge adopted the essential character test and a broader inquiry into the nature of the goods in question. [page 41]

Crago v Multiquip Pty Ltd & Dunogan Farm Tech Pty Ltd (1998) ATPR 41-620 In this case, Lehane J considered whether an ostrich egg incubator and hatcher were goods falling within former s 74A(2)(a) of the TPA. Lehane J held that the ostrich egg incubator and hatcher were not goods of a kind acquired for personal, domestic or household use. In reaching this conclusion, Lehane J said that it was appropriate to ask whether the nature of particular goods is such that they are, or are not, of a kind ordinarily acquired for personal, domestic or household use or consumption, even in the absence of evidence of actual use: at [40]. Lehane J also placed weight on evidence that the goods were used in the ostrich egg ‘industry’ and that ostriches and their eggs were traded at high prices, and on the lack of evidence that the incubators were in fact acquired for personal, domestic or household use. Lehane J drew a distinction between products which might be regarded as of a kind acquired for personal, domestic or household use ‘as a matter of common sense’ (such as a carpet, a washing machine or a television set) and an ostrich egg incubator. In particular, his Honour said (at [40]–[41]): However, if one or two people are so eccentric as to incubate crocodile eggs in the bedroom, it does not follow that machines adapted to the incubation of ostrich eggs are goods ordinarily acquired for personal, domestic or household use. … It is doubtful that it says anything about the use for which any incubators are (in fact)

ordinarily acquired; certainly it says nothing about the nature of the use for which ostrich egg incubators are ordinarily acquired. The evidence spoke of an ostrich ‘industry’. It established that, at the relevant time, ostriches and their eggs were traded at high prices. All those, about whose use of incubators evidence was given, used them in the course of a business. Certainly it cannot be regarded as a matter of common knowledge that an ostrich egg incubator is, like a carpet, a washing machine or a television set, ordinarily acquired for personal, household or domestic use. There was no evidence that anyone in fact acquired such incubators for such use.

2.53 Ultimately, the question of whether goods were of a kind ordinarily acquired for personal, domestic or household use or consumption is one of fact and degree.26 2.54 This is highlighted in the following case of Carpet Call Pty Ltd v Chan,27 where the good in question was capable of having different uses, including personal and/or business. [page 42]

Carpet Call Pty Ltd v Chan (1987) ATPR (Digest) 46-025 In this case, Mr Chan owned a nightclub and acquired plain grey heavy duty domestic carpet from Carpet Call Pty Ltd (Carpet Call). Mr Chan agreed to pay $69,000 for the supply and laying of the carpet in the nightclub. Mr Chan paid $48,800, but refused to pay the remaining amount due to stains, cigarette burns and chewing gum stuck to the carpet. Carpet Call sued Mr Chan for the balance owing and Mr Chan argued

in defence that the carpet was not fit for its purpose in contravention of former s 71(2) of the TPA. Thomas J held that although the carpet was commercially rated for use in a nightclub and may have lasted longer than other carpet normally supplied for use in a domestic setting, the ‘heavy duty’ carpet was still regarded as a good of a kind ordinarily acquired for personal, domestic or household use or consumption. In particular, Thomas J said (at 57,187): In my view, ‘carpet’ is a commodity, or goods, ordinarily acquired for domestic consumption, and it does not lose that description by reason of a commercial rating, or some quality which makes it last longer than other carpet normally supplied for use in a domestic setting. In fact the carpet supplied (as to which the warranty is alleged to apply) was of a domestic rating. The point may deserve discussion at greater length, but for the purpose of noting the submissions and expressing a provisional view, it is not necessary to engage in such discussion here.

2.55 Some examples of cases where the goods [or services] in question were of a kind ordinarily acquired for personal, domestic or household use or consumption are as follows: the ‘installation of an alarm service’ in a shop;28 the supply of ‘fitness services’;29 the supply of a ‘line of credit’, even though the credit provided was to be applied wholly or predominantly for business or investment purposes’;30 the supply of ‘loans to small business persons used for the personal use of investment savings’;31 and ‘reflective foil insulation’ goods.32 [page 43]

2.56 Some examples of cases where the goods [or services] in question were not of a kind ordinarily acquired for personal, domestic or household use or consumption are as follows: a ‘reduction photocopier’;33 a ‘large tractor’;34 a ‘prime mover’;35 a ‘$250,000 business loan’;36 and building services to ‘erect an office block’.37

Vehicles and trailers acquired to transport goods on public roads 2.57 Section 3(1)(c) of the ACL provides the third avenue by which a person who has acquired goods may be taken to be a consumer. This avenue is applicable only to the acquisition of goods and not services. 2.58 Under s 3(1)(c) of the ACL, a person is a consumer if he or she acquires a vehicle or trailer for use principally in the transport of goods on public roads, irrespective of price. 2.59 The question of whether a person acquired a ‘vehicle’ or ‘trailer’ as a consumer is determined subjectively by reference to the actual purpose for which the vehicle or trailer was acquired.38 2.60 There is no definition of vehicle or trailer in the ACL. Section 4B(4) of the CCA defines ‘commercial road vehicle’ as a vehicle or trailer acquired for use principally to transport goods on public roads. 2.61 If the definition of commercial road vehicle is applicable to the definition of vehicle or trailer, this may imply that the vehicle or trailer must be acquired for ‘commercial purposes’.

2.62 Accordingly, the focus of the test in s 3(1)(c) of the ACL is not the nature of the vehicle or trailer, or objectively what the particular vehicle or trailer is typically used for. 2.63 Hence, if a person acquires a ‘scooter’ for the purposes of delivering pizzas, the person is considered as a consumer, even though a scooter may sometimes be used for non-commercial purposes. [page 44] 2.64 Similarly, if a person acquires a ‘dump truck’ for recreational purposes, the person would not be considered as a consumer, even though a dump truck is normally used for transporting goods. 2.65 Some obvious examples where a person acquires a vehicle or trailer and is considered as a consumer for the purposes of s 3 of the ACL are as follows: a van acquired for the purposes of moving furniture for payment; a motorbike acquired for the purposes of delivering newspapers to houses; a trailer to transport horses; a $500,000 road-train acquired for the purposes of transporting cattle; and a refrigerator truck transporting seafood. 2.66 Section 3(1)(c) of the ACL also requires that the vehicle or trailer must be used for the transport of goods principally on public roads as opposed to private roads, such as those on farms or private property.

Exceptions to acquiring goods as a consumer

2.67 Section 3(2) of the ACL contains exceptions to s 3(1). Section 3(2) states that s 3(1) does not apply if the person acquired the goods, or held themselves out as acquiring the goods: for the purpose of re-supply; or for the purpose of using them up or transforming them in trade or commerce, in the course of: – production or manufacture; or –

repairing or treating other goods or fixtures on land.

‘Re-supply’ 2.68 In relation to the purpose of ‘re-supply’ of goods, s 2 of the ACL defines the word ‘supply’, when used as a verb, to include re-supply by way of sale, exchange, lease, hire or hire-purchase. 2.69 Some examples of re-supply of goods and hence where the person (resupplier) is not considered as a ‘consumer’ for the purposes of s 3 of the ACL, are as follows: stock in trade, where the stock was acquired by another business which had already purchased the stock for sale; installing a radio in a manufactured car to be sold, where the radio was acquired from another company; leasing a computer from a retailer, where the retailer purchased the computer from another retailer; hiring (or renting) of a boat; and hire-purchase of a car. [page 45]

‘Using them up or transforming them’ 2.70 The purpose of ‘using them up or transforming them’ must be in the course of production or manufacture or repairing or treating other goods or fixtures on land. 2.71 Hence, to ‘use up a good’ or ‘transform it’ in isolation, and separate from the production or manufacture or repairing or treating other goods or fixtures on land, is insufficient for the exception to apply. 2.72 This was made clear in the following case of Laws v GWS Machinery Pty Ltd,39 where the respondent unsuccessfully argued that the plaintiff was not a consumer as defined in former s 4B of the TPA.

Laws v GWS Machinery Pty Ltd [2007] NSWSC 316 In this case, Thomas Laws (Laws) purchased from GWS Machinery Pty Ltd (GWS) a tractor tyre for $530. When Laws was fitting the tyre to the tyre rim of a Massey Ferguson 35 Tractor, the tyre and tube exploded, forcing the rim outwards. The explosion caused injury to Laws and his son, including continuing disabilities. Laws and his son sued GWS and others for negligence, and in contract for breaches of conditions implied into the contract by s 19(1) and (2) of the Sale of Goods Act 1923 (NSW), and by former s 71(1) and (2) of the TPA. Relevant to former s 71(1) and (2) of the TPA is the definition of ‘consumer’ in former s 4B of the TPA. GWS argued that Laws was not a ‘consumer’ for the purposes of s 4B of the TPA. In particular, GWS argued that the words in s 4B ‘acquired them for the purpose of using them up’ included ‘consumed the whole of

or exhaust’. It followed that because the tyre was perishable or depreciable, and/or may blow out and be damaged beyond repair, it was consumed in whole or exhausted. Rothman J rejected GWS’s argument and said (at [141]–[143]): GWS does not submit that the tyre was used as part of the process of production or manufacture. Nor does it submit that the tyre was transformed in the process. Assuming that the tyre was not used as part of a ‘process of production or manufacture’ and that the tyre was not transformed, we can omit certain words to make s 4B(1) of the Trade Practices Act more easily understood. Given that the price of the goods is less than the prescribed amount what otherwise must be required is that the person did not acquire the goods (we can ignore for present purposes the holding out provisions) ‘for the purpose of using them up in the course of repairing or treating other goods’. The fallacy in the submission of GWS is that it omits the words ‘in the course of’ and reads the section as if the word ‘of’ did not appear before the words ‘repairing or

[page 46] treating’. The use there of the word ‘of’, after the word ‘or’, means that the reading of the subsection requires that the alternative (‘of repairing or treating other goods’) is an alternative to one of: the purpose of re-supply; or the purpose of using them up; or the process of production or manufacture. The last mentioned reading is the only logical result. In that way the person remains a consumer even though goods are required for the purpose of using them up unless the goods are used up, relevantly, ‘in the course of repairing or treating other goods’ or ‘in the course of the process of repairing or treating other goods’. On that construction, a manufacturer who purchases biscuits for its staff is a consumer, even if the staff eats the biscuits while manufacturing, repairing etc. Also, a manufacturer or owner of other goods is still a consumer if it acquires goods for the purpose of using them up but the consumption of them is not in the course of a process of production or manufacture or in the course of repair or treating other goods. A tyre on a car, truck or tractor is a perfect example of the acquisition of goods which may be used in repairing or treating other goods (and sometimes in the course of a process of production or manufacture) and would be acquired for the purpose of using it up, but it would not be used up in the course of that repair or treatment. It would be used up by the use of the tyre (or goods on which it was fitted) once repaired or treated.

2.73 Some examples of ‘using up goods or transforming them’ for the purpose of production or manufacture; or repairing or treating other goods or fixtures on land are as follows: a manufacturer that acquires aluminium and converts it into guttering for houses; a builder that acquires mortar to make bricks; a wood maker that carves wood into wooden doors; and a fruit juice company that acquires oranges for the purposes of making orange juice.

Definitions of corporation, subsidy, holding and related bodies corporate Definition of a corporation 2.74 The word ‘corporation’ as used in the ACL has the same meaning as the word corporation as defined in s 4(1) of the CCA.40 Section 4(1) of the CCA defines a ‘corporation’ as: … a body corporate that: (a) is a foreign corporation;

[page 47] (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 paragraphs (a), (b) or (c).

2.75 Section 4(1) of the ACL also provides separate definitions of a ‘foreign corporation’, ‘trading corporation’ and ‘financial corporation’, which are defined within the meaning of s 51(xx) of the Constitution. 2.76 The definitions of a foreign corporation, trading corporation and financial corporation are not mutually exclusive, so it is possible that a body corporate can be more than one type of corporation. 2.77 Each type of corporation as defined in s 4(1) of the CCA is discussed below, followed by a discussion on the meaning of subsidiary, holding and related bodies corporate as defined in s 4A.

Definition of a foreign corporation 2.78 A foreign corporation is defined as a body corporate that is incorporated outside Australia. Section 4(1) of the CCA defines a foreign corporation to mean: … a foreign corporation within the meaning of paragraph 51(xx) of the Constitution and includes a body corporate that is incorporated in an external Territory.

2.79 In the following case of PT Garuda Indonesia Ltd v ACCC,41 the respondent admitted to being a foreign corporation, but unsuccessfully argued immunity from former Pt IV of the TPA.

PT Garuda Indonesia Ltd v ACCC (2012) 290 ALR 681 In this case, PT Garuda Indonesia Ltd (Garuda) was an international airline that provided air freight services to and from Australia. Garuda was a body corporate incorporated pursuant to the laws of the Republic of Indonesia. Approximately 95 per cent of shares in Garuda were owned

directly by the Republic of Indonesia and the remaining shares were held by government-controlled corporations associated with Indonesian airports. At the relevant times, four of the five members of Garuda’s Board of Commissioners were senior officials of the Indonesian government. Garuda argued that, while it recognised that it was a ‘foreign corporation’ within the meaning of former s 4 of the TPA, it was immune from the exercise of the jurisdiction of the Federal Court of Australia in a proceeding for contravention [page 48] of certain provisions in former Pt IV of the TPA. Garuda’s immunity argument relied on the application of Pt II of the Foreign States Immunities Act 1985 (Cth) (Immunity Act). A judge of the Federal Court dismissed a motion by Garuda that the proceeding be stayed or dismissed. The Full Court of the Federal Court dismissed an appeal by Garuda. Garuda appealed to the High Court of Australia. French CJ, Gummow, Hayne and Crennan JJ (Heydon J agreeing), dismissed the appeal. Their Honours held that Garuda could not claim immunity because the proceedings against it concerned a commercial transaction within the meaning of s 11(1) of the Immunity Act. The definition of ‘commercial transaction’ did not require that the activity be contractual in nature. The conduct alleged by the ACCC against Garuda comprised dealings of a commercial trading and business character. The Federal Court proceeding ‘concerned’ a commercial transaction, within the meaning of s 11(1), in an immediate sense: at [42], [73]. In particular, their Honours stated (at [32]): The precise issue, as identified correctly by counsel for the ACCC in this court, looks first to the application to foreign corporations of the substantive norms of conduct required by

Pt IV of the TPA, secondly to the provisions conferring jurisdiction on the Federal Court to entertain the proceeding by the ACCC for contravention of those norms by a foreign corporation, and then asks to what extent the exercise of this jurisdiction is qualified with respect to that foreign corporation by engagement of the immunity provisions of the Act.

Definition of a trading corporation 2.80 A trading corporation is a body corporate whose trading activity is a substantial activity of the corporation.42 Section 4(1) of the CCA defines a ‘trading corporation’ to mean: … a trading corporation within the meaning of paragraph 51(xx) of the Constitution.

2.81 In Hughes v Western Australian Cricket Association Inc,43 Toohey J provided the following summary of the ‘substantial current activities’ test to determine whether a corporation is a trading corporation: (1) The mere fact that a corporation trades does not mean that it is a trading corporation: R v Trade Practices Tribunal; Ex parte St George County Council (1974) 2 ALR 371; 130 CLR 533 at 543, 562 (St George County Council); R v Federal Court of Australia; Ex parte WA National Football League (1979) 23 ALR 439; 143 CLR 190 at 219, 234 (Adamson).

[page 49] (2) The purpose of incorporation, propounded in St George County Council, is no longer a valid test. The test is one of the current activities of the corporation: Adamson and State Superannuation Board v Trade Practices Commission (1982) 44 ALR 1; 57 ALJR 89 at 96 (State Superannuation Board). (3) But the current activities test is not the sole criterion for determining whether a corporation is a trading corporation. Thus where a corporation has not begun to trade, its character may be found in its constitution. Even when there are current activities, the corporation’s constitution is not completely irrelevant: Fencott v Muller (1983) 46 ALR 41; 152 CLR 570 at 602. (4) Views as to the necessary extent of trading activity have varied. It must be a substantial corporate activity (Barwick CJ in Adamson (143 CLR at p 208); the trading activities must

form a sufficiently significant proportion of the corporations overall activities (Mason J in Adamson at p 233, with Jacobs J concurring at p 237); the trading activities should not be insubstantial (Murphy J in Adamson at p 239); the corporation must carry on trading activities on a significant scale (Mason, Murphy and Deane JJ in State Superannuation Board (57 ALJR at p 96; Deane J in Commonwealth v Tasmania (1983) 46 ALR 625 at 833). (5) An incorporated sporting body can be a trading corporation if its activities meet the required test (Adamson). (6) In particular, incorporation under a statute such as the Associations Incorporation Act does not prevent a corporate body from being a trading corporation if its activities warrant that description (Adamson at p 232). (7) Trading denotes the activity of providing, for reward, goods or services: Re Ku-ringgai Cooperative Building Society (No 12) Ltd (1978) 22 ALR 621 at 624–5; St George County Council (130 CLR at 569–70); Bevanere Pty Ltd v Lubidineuse (1985) 59 ALR 334; 7 FCR 325 at 330–1. (8) The Trade Practices Act itself draws a distinction between trading corporations and financial corporations; nevertheless the two classes are not mutually exclusive: State Superannuation Board (57 ALJR) at p 96.

2.82 The above principles have consistently been applied by the courts.44 The following two cases are examples of how the ‘substantial current activities’ test has been applied in different circumstances.

Shahid v Australasian College of Dermatologists (2007) 72 IPR 555 In this case, the Australasian College of Dermatologists (College) was a professional body representing dermatologists with responsibilities for the selection and training of new dermatologists. The College did not receive payment for the selection and training of new dermatologists. However, the principal trading activity of the College was [page 50]

the organisation of an annual scientific meeting which incorporated a trade exhibition. This was the largest income for the College, but the College also earned income from its training functions, which related to continuing education of fellow dermatologists. Nicholas J held that the College was a trading corporation within the meaning of former s 4 of the TPA. His Honour noted that the income the College received from its principal trading activity and the income earned from training functions was not insubstantial. The fact that these activities were incidental to other activities of the College did not prevent it from being considered as a trading corporation. In particular, his Honour noted (at [567]–[568]): The test for determining whether or not a corporation is a trading corporation for the purposes of the TPA requires consideration of the ‘current activities’ of the corporation rather than enquiring into the ‘essential character’ of or ‘purpose of its incorporation’: Adamson and State Superannuation Board (Vic) v Trade Practices Commission (1982) 150 CLR 282 at 303–4; 44 ALR 1 at 15–16 per Mason, Murphy and Deane JJ. The test requires an assessment to be made whether ‘trading is a substantial corporate activity’ (Adamson at CLR 208; ALR 452 per Barwick CJ) or whether ‘trading activities form a sufficiently significant proportion of its overall activities’ (Adamson at CLR 233; ALR 472 per Mason J with whom Jacobs J agreed) or determining that ‘trading is not insubstantial, [the fact that trading is incidental to other activities does not prevent it being a trading corporation]’: Adamson at CLR 239; ALR 477 per Murphy J. It should also be noted that ‘Trade for constitutional purposes cannot be confined to dealing in goods or commodities. Its full parameters may be difficult of definition. But the commercial nature of an activity is an element in deciding whether the action is in trade or trading’: Adamson at CLR 209; ALR 452 per Barwick CJ. In State Superannuation Board at CLR 304; ALR 15, Mason, Murphy and Deane JJ also said: The point is that the corporation engages in trading activities and these activities do not cease to be trading activities because they are entered into in the course of, or for the purpose of carrying on a primary or dominant undertaking not described by reference to trade. It has been recognised that a trading corporation may be a sporting, religious or governmental body: see Adamson at CLR 239; ALR 477 per Murphy J. The fact that a corporation was incorporated by statute, publicly owned and established to undertake important public functions at public expense does not prevent it being characterised as a

trading corporation — as was the case with the Tasmanian Hydro-Electric Commission in the Commonwealth v Tasmania (Dam Case) (1983) 158 CLR 1; 46 ALR 625.

[page 51]

E v Australian Red Cross Society (1991) 99 ALR 601 In this case, the Australian Red Cross Society (Red Cross) was responsible for, and supervised, the blood collection activities of the New South Wales Division of the Red Cross (NSW Division). The NSW Division was engaged in the collection and fractionation of blood and its distribution to the Royal Prince Alfred Hospital (Hospital). Approximately 80 per cent of the Red Cross’ activities related to blood transfusion services, which it made no profit from. The Red Cross did receive income from governments, but the funding formula prevented that income to exceed its costs. However, in the relevant year, various divisions of the Red Cross (including the NSW Division) did raise more than $2 million from trading activities at kiosks, shops, street stalls or by direct sale of merchandise to the public. The Hospital’s predominant activity was the provision of medical and surgical care to patients. The Hospital did receive, in the relevant year, around $14.5 million in patients’ fees. It also received around $3.7 million from ‘business activities’. Wilcox J held (at 634) that the Red Cross and the NSW Division were each a ‘trading corporation’ within the meaning of former s 4 of the TPA. The fact that the trading activities of the Red Cross and the NSW Division

were not motivated by the hope of private gain, but purely to earn revenue for charitable activities, did not matter. Wilcox J also held (at 635) that the Hospital was also a trading corporation within the meaning of former s 4 of the TPA. The critical question concerning whether the Hospital was a trading corporation was the nature of the hospital’s activities at the relevant time. The scale of the Hospital’s trading activities in the relevant period was such that it should be regarded as then being a trading corporation. It was not necessary that trading activities be profitable, or even intended to be profitable, to constitute the trader as a trading corporation.

2.83 In addition to the above two cases, some further examples of corporations that have been considered to be trading corporations under the ‘substantial current activities’ test are listed as follows: The RSPCA;45 The Western Australian National Football League and the West Perth Football Club;46 A trade association that organised annual trade exhibitions;47 [page 52] The University of Western Australia;48 and The Australian Broadcasting Corporation.49

Definition of a financial corporation 2.84

A financial corporation is a body corporate that performs the

function or engages in the activity of dealing in finance. Section 4(1) of the CCA defines a ‘financial corporation’ to mean: … a financial corporation within the meaning of paragraph 51(xx) of the Constitution and includes a body corporate that carries on as 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).

2.85 To determine whether a corporation is a financial corporation, the courts will apply the ‘substantial current activities’ test, which is the same test used in respect of ‘trading corporations’.50 2.86 In Ku-ring-gai Co-operative Building Society (No 12) Ltd, Re51 Bowen CJ made the following comments about what his Honour considered to be the principal or characteristic activity of a financial corporation: In my opinion a financial corporation is one which borrows and lends or otherwise deals in finance as its principal or characteristic activity or, depending on which approach one takes, it is a corporation formed for the purpose of borrowing and lending or otherwise dealing in finance. If it does so in the way of trade it may also be a trading corporation, but that is not a necessary feature of a financial corporation.

2.87 In the same case, Brennan J made the following similar comments to that of Bowen CJ about the principal or predominant activity of a financial corporation:52 In the present case the relevant inquiry is whether either of the applicant corporations is a financial corporation. Unless some feature of its constitution, or purpose of incorporation, or management, would place it in a category which is exclusive of the category of financial corporation, its predominant activity must be regarded in order to ascertain whether it answers the relevant description. Its predominant activity is the activity which it was formed to undertake — the borrowing of moneys to lend to its members, the lending of those moneys, the receipt of repayments and the ultimate repayment of the moneys to the source from which they came. These are money dealings. The activities of borrowing in order to lend and lending at interest are financial activities which give to each corporation the character, and place it within the category of financial corporation. It is no doubt right to describe the applicant societies as

[page 53]

co-operative societies or, more fully, as co-operative terminating building societies, but that description neither places them in, nor removes them from, the category of financial corporations. Nor do the features of each society — its constitution, organization and management, the source and nature of its borrowings, its subjection to governmental controls — identify it as falling within some category of corporation which excludes financial corporations.

2.88 In the same case, Deane J also made the following useful comments about a financial corporation:53 The phrases ‘trading corporation’ and ‘financial corporation’ in the context of both s 51(xx) of the Constitution and the definition of ‘corporation’ in the Act are composite ones. Each phrase refers to a corporation which can appropriately be categorized by reference to activity whether actual or intended. The fact that a corporation was formed for purposes or with objectives that might legitimately be advanced through trading, or that it in fact trades, will not necessarily mean that it can be appropriately categorized as a trading corporation. Nor will the fact that a corporation was formed for purposes or with objectives that might legitimately be advanced by involvement in financial transactions or that it occasionally has dealings in finance necessarily mean that it can appropriately be categorized as a financial corporation. Trading activity or dealing in finance (whether actual or intended) will be decisive of categorization only where the overall circumstances are such that the corporation can appropriately be categorized by reference to such activity. … [T]he phrase ‘financial corporation’ is a composite one. It does not refer to solvency. An obvious reference point is to the activity of commercial dealing in finance. Another possible reference point is the provision of management or advisory services in relation to financial matters. I use the words ‘dealing in finance’, for want of a better expression, to refer to transactions in which the subject of the transaction is finance (such as borrowing or lending money) as distinct from transactions (such as the purchase or sale of particular goods for a monetary consideration) in which finance, although involved in the payment of the price, cannot properly be seen as constituting the subject of the transaction. A common but not invariable characteristic of the relevant type of transaction is that the obligation on each side is to pay money.

2.89 In State Superannuation Board v Trade Practices Commission,54 Northrop J made the following comments about the essential feature of a financial corporation in relation to former s 4 of the TPA: In my opinion, the essential feature which denotes a corporation being a financial corporation is that it performs the function or engages in the activities of dealing in finance in the sense expressed by Deane J in Ku-ring-gai. It is not necessary that a corporation acquires capital for

the purpose of lending money nor is it necessary that the corporation borrows money for the purpose of lending.

[page 54] 2.90 Financial corporations would therefore generally include finance companies,55 credit unions,56 building societies57 and, of course, banks and insurance companies.58

Definition of a subsidiary, holding and related body corporate 2.91 The term ‘body corporate’ is not defined in the CCA or in the ACL. However, s 6 of the ACL imports the meaning of ‘related bodies corporate’ from s 4A(5) of the CCA. Section 6 of the ACL states: Related bodies corporate (1) A body corporate is taken to be related to another body corporate if the bodies corporate would, under section 4A(5) of the Competition and Consumer Act, be deemed to be related to each other. (2) In proceedings under this Schedule, it is presumed, unless the contrary is established, that bodies corporate are not, or were not at a particular time, related to each other.

2.92 Section 4A(5) of the CCA deems a body corporate to be related to another body corporate where 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. 2.93 The Explanatory Memorandum provides the following reasons why s 6 was inserted in the ACL:59

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.

2.94 Section 6 of the ACL is relevant to circumstances where a body corporate is either subject to an obligation or liability under the ACL, as bodies corporate are presumed not to be related to each other.60 2.95 The jurisprudence relating to the meaning of ‘related bodies corporate’ in s 4A of the CCA is relevant to s 6 of the ACL, as well as the related jurisprudence from the Corporations Act 2001 (Cth) (CA).61 [page 55] 2.96

Section 4A of the CCA states:

Subsidiary, holding and related bodies corporate (1) For the purposes of this Act, a body corporate shall, subject to subsection (3), be deemed to be a subsidiary of another body corporate if: (a) that other body corporate: (i)

controls the composition of the board of directors of the first-mentioned body corporate;

(ii) is in a position to cast, or control the casting of, more than one-half of the maximum number of votes that might be cast at a general meeting of the firstmentioned body corporate; or (iii) holds more than one-half of the allotted share capital of the first-mentioned body corporate (excluding any part of that allotted share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital); or (b) the first-mentioned body corporate is a subsidiary of any body corporate that is that other body corporate’s subsidiary (including any body corporate that is that other body corporate’s subsidiary by another application or other applications of this paragraph).

(2) For the purposes of subsection (1), the composition of a body corporate’s board of directors shall be deemed to be controlled by another body corporate if that other body corporate, by the exercise of some power exercisable by it without the consent or concurrence of any other person, can appoint or remove all or a majority of the directors, and for the purposes of this provision that other body corporate shall be deemed to have power to make such an appointment if: (a) a person cannot be appointed as a director without the exercise in his or her favour by that other body corporate of such a power; or (b) a person’s appointment as a director follows necessarily from his or her being a director or other officer of that other body corporate. (3) In determining whether a body corporate is a subsidiary of another body corporate: (a) any shares held or power exercisable by that other body corporate in a fiduciary capacity shall be treated as not held or exercisable by it; (b) subject to paragraphs (c) and (d), any shares held or power exercisable: (i)

by any person as a nominee for that other body corporate (except where that other body corporate is concerned only in a fiduciary capacity); or

(ii) by, or by a nominee for, a subsidiary of that other body corporate, not being a subsidiary that is concerned only in a fiduciary capacity; shall be treated as held or exercisable by that other body corporate; (c) any shares held or power exercisable by any person by virtue of the provisions of any debentures of the first-mentioned body corporate, or of a trust deed for securing any allotment of such debentures, shall be disregarded; and (d) any shares held or power exercisable by, or by a nominee for, that other body corporate or its subsidiary (not being held or exercisable as mentioned in paragraph (c)) shall be treated as not held or exercisable by that other body corporate if the ordinary business of that other body corporate or its subsidiary, as the case may be, includes the lending of money and the shares are held or the power is exercisable by way of security only for the purposes of a transaction entered into in the ordinary course of that business.

[page 56] (4) A reference in this Act to the holding company of a body corporate shall be read as a reference to a body corporate of which that other body corporate is a subsidiary. (5) Where a body corporate: (a) is the holding company of another body corporate; (b) is a subsidiary of another body corporate; or (c) is a subsidiary of the holding company of another body corporate;

that first-mentioned body corporate and that other body corporate shall, for the purposes of this Act, be deemed to be related to each other. (5A) For the purposes of Parts IV, VI and VII: (a) a body corporate that is a party to a dual listed company arrangement is taken to be related to the other body corporate that is a party to the arrangement; and (b) a body corporate that is related to one of the parties to the arrangement is taken to be related to the other party to the arrangement; and (c) a body corporate that is related to one of the parties to the arrangement is taken to be related to each body corporate that is related to the other party to the arrangement. (6) In proceedings under this Act, whether in the Court or before the Tribunal or the Commission, it shall be presumed, unless the contrary is established, that bodies corporate are not, or were not at a particular time, related to each other.

The meaning of ‘in trade or commerce’ What provisions does ‘in trade or commerce’ apply to? 2.97 The phrase ‘in trade or commerce’ is inserted into a number of provisions in the ACL and CCA to limit the scope of those provisions to conduct that bear a ‘trading or commercial character’.62 2.98 These provisions only apply if the conduct engaged in is in trade or commerce. Some key provisions in the ACL which contain the in trade or commerce requirement include: s 18 (misleading or deceptive conduct); ss 20 and 21 (unconscionable conduct); ss 29 (false or misleading representations), 30 (false or misleading representation about land), 32 (offering rebates, gifts, prizes etc), and 34 (misleading conduct as to the nature etc of services); s 35 (bait advertising); ss 36 (wrongly accepting payment), 37 (misleading representations about certain business activities), 41 (liability etc of recipient for

unsolicited goods) and 42 (liability of recipient for unsolicited services); ss 47 (multiple pricing), 48 (single price to be specified in certain circumstances), and 49 (referral selling); ss 54 (guarantee as to acceptable quality), 55 (guarantee as to fitness for any disclosed purpose etc), 56 (guarantee relating to the supply of goods by [page 57] description), 57 (guarantees relating to the supply of goods by sample or demonstration model), 58 (guarantee as to repairs and spare parts) and 59 (guarantee as to express warranties); ss 60 (guarantee as to due care and skill), 61 (guarantees as to fitness for a particular purpose etc) and 62 (guarantee as to reasonable time for supply).

What is ‘in trade or commerce’? 2.99 The conduct in question must be conduct ‘in trade or commerce’ and not ‘in respect of trade or commence’, or not ‘merely connected with,’ or ‘incidental to trade or commerce’. 2.100 The majority judgment of the High Court in the following case of Concrete Constructions (NSW) Pty Ltd v Nelson,63 is the leading authority on the meaning of in trade or commerce.

Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 92 ALR 193

In this case, Concrete Constructions (NSW) Pty Ltd (Concrete) was constructing a building in Grosvenor Square, Sydney. Mr Nelson (Nelson) was an employee of Concrete. In the course of performing his work, Nelson sustained serious injuries when he fell to the bottom of an air-conditioning shaft while attempting to remove a grate positioned at the entry point of the shaft. Nelson alleged that his injuries were caused by the conduct of the Concrete’s foreman who informed him that the grates at the entry points of the air-conditioning shafts were fixed by three bolts on each side. Nelson alleged that he was wrongly informed that it was safe to remove the three bolts in the manner explained by the foreman. In fact, the bolts were not fixed in the manner explained by the foreman. The majority of the High Court (Mason CJ, Deane, Dawson and Gaudron JJ) held (at 198) that the alleged misleading or deceptive conduct of the Concrete’s foreman consisted of an internal communication by one employee to another employee in the course of their ordinary activities in and about the construction of a building. As such, the internal communication by the foreman to Nelson was merely ‘in respect of trade or commerce’ and not conduct ‘in trade or commence’. Consequently, there was no contravention of former s 52 of the TPA. In particular, the majority of the High Court stated (at 196–7) that: It is well established that the words ‘trade’ and ‘commerce’, when used in the context of s 51(i) of the Constitution, are not terms of art but are terms of common knowledge of the widest import. The same may be said of those words as used

[page 58] in s 52(1) of the Act. Indeed, in the light of the provisions of s 6(2) of the Act which give an extended operation to s 52 and which clearly use the words ‘trade’ and ‘commerce’ in the sense which the words bear in s 51(i) of the Constitution, it would be difficult to maintain that those words were used in s 52 with some different meaning. The real problem involved in the construction of s 52 of the Act does not, however, spring from the use of

the words ‘trade or commerce’. It arises from the requirement that the conduct to which the section refers be ‘in’ trade or commerce. Plainly enough, what is encompassed in the plenary grant of legislative power ‘with respect to … Trade and commerce’ in s 51(i) of the Constitution is not of assistance on the question of the effect of the word ‘in’ as part of the requirement that the conduct proscribed by s 52(1) of the Act be ‘in trade or commerce’. The phrase ‘in trade or commerce’ in s 52 has a restrictive operation. It qualifies the prohibition against engaging in conduct of the specified kind. As a matter of language, a prohibition against engaging in conduct ‘in trade or commerce’ can be construed as encompassing conduct in the course of the myriad of activities which are not, of their nature, of a trading or commercial character but which are undertaken in the course of, or as incidental to, the carrying on of an overall trading or commercial business. If the words in trade or commerce in s 52 are construed in that sense, the provisions of the section would extend, for example, to a case where the misleading or deceptive conduct was a failure by a driver to give the correct handsignal when driving a truck in the course of a corporation’s haulage business. It would also extend to a case, such as the present, where the alleged misleading or deceptive conduct consisted of the giving of inaccurate information by one employee to another in the course of carrying on the building activities of a commercial builder. Alternatively, the reference to conduct ‘in trade or commerce’ in s 52 can be construed as referring only to conduct which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character. So construed, to borrow and adapt words used by Dixon J in a different context in Bank of NSW v Commonwealth (1948) 76 CLR 1 at 381, the words ‘in trade or commerce’ refer to ‘the central conception’ of trade or commerce and not to the ‘immense field of activities’ in which corporations may engage in the course of, or for the purposes of, carrying on some overall trading or commercial business. … the narrower (ie the second) of the alternative constructions of the requirement ‘in trade or commerce’ is the preferable one. Indeed, in the context of Pt V of the Act with its heading ‘Consumer Protection’, it is plain that s 52 was not intended to extend to all conduct, regardless of its nature, in which a corporation might engage in the course of, or for the purposes of, its overall trading or commercial business. Put differently, the section was not intended to impose, by a side-wind, an overlay of Commonwealth law upon every field of legislative control into which a corporation might stray for the purposes of, or in connection with, carrying on its trading or commercial activities. What the section is concerned with is the conduct of a corporation towards persons, be they consumers or not, with whom it (or those whose interests it represents or is seeking to promote) has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character.

[page 59] 2.101 In Concrete Constructions,64 the majority of the High Court also provided the following useful example to illustrate conduct in trade or commerce and conduct which is not: The driving of a truck for the delivery of goods to a consumer and the construction of a building for another pursuant to a building contract are, no doubt, trade or commerce in so far as the relationship between supplier and actual or potential customer or between builder and building owner is concerned. That being so, to drive a truck with a competitor’s name upon it in order to mislead the customer or to conceal a defect in a building for the purpose of deceiving the building owner may well constitute misleading or deceptive conduct ‘in trade or commerce’ for the purposes of s 52. On the other hand, the mere driving of a truck or construction of a building is not, without more, trade or commerce and to engage in conduct in the course of those activities which is divorced from any relevant actual or potential trading or commercial relationship or dealing will not, of itself, constitute conduct ‘in trade or commerce’ for the purposes of that section. That being so, the giving of a misleading handsignal by the driver of one of its trucks is not, in the relevant sense, conduct by a corporation ‘in trade or commerce’.

2.102 Whether conduct engaged in is considered to be in trade or commerce is a question of fact to be determined on a case-by-case basis according to the above principles in Concrete Construction (NSW) Pty Ltd v Nelson.65 2.103 In Hearn v O’Rourke,66 Dowsett J provided the following useful guidance on the method to determine whether or not the conduct engaged in was in trade or commerce: The dividing line between conduct which is in trade or commerce and conduct which is not may be unclear, in which case it may be necessary to identify the features which import a trading or commercial character to an activity which would not, without more, have that character. … [T]he focus must be upon the conduct in question and not upon the range of activities in which a relevant corporation may be engaged. In other words, one does not simply identify the conduct in question, note that the relevant corporation is engaged in commercial activity of some kind, then look for a connection between the two. Because corporations are usually formed to engage in commercial activities, it will rarely be difficult to find such a connection.

The correct approach is to determine whether or not the relevant conduct can, according to ordinary usage, be described as having occurred in the course of dealings ‘… which, of their nature, bear a trading or commercial character’. The commercial undertakings of the corporation in question may be relevant to the exercise. However, the more important question will be whether the conduct is of a kind which is usually of a commercial nature.

[page 60] 2.104 In Re Ku-ring-gai Co-op Building Society (No 12) Ltd,67 a decision prior to Concrete Constructions, Bowen CJ provided the following comments on the wide meaning of trade or commerce: The terms ‘trade or commerce’ are ordinary terms which describe all the mutual communings, the negotiations verbal and by correspondence, the bargain, the transport and the delivery which comprise commercial arrangements… The commercial character of trade was mentioned more recently by Lord Reid in Ramson v Higgs [1974] 3 All ER 949 at 955. His Lordship there said: As an ordinary word in the English language ‘trade’ has or has had a variety of meanings or shades of meaning. Leaving aside obsolete or rare usage it is sometimes used to denote any mercantile operation but is commonly used to denote operations of a commercial character by which the trader provides to customers for reward some kind of goods or services. Moreover, the word covers intangibles, such as banking transactions, as well as the movement of goods and person for historically its use has been founded upon elements of use, regularity and course of conduct.

2.105 In the same case, Deane J provided the following comments on the meaning of trade or commerce and confirmed that the terms are not terms of art and should be construed widely:68 The terms of ‘trade’ and ‘commerce’ are not terms of art. They are expressions of fact and terms of common knowledge. While the particular instances that may fall within them will depend upon varying phases of development of trade, commerce and commercial communication, the terms are clearly of the widest import … They are not restricted to dealings or communications which can properly be described as being at arms’ length in the sense that they are within open markets or between strangers or have a dominant objective of profit making. They are apt to include commercial or business dealings in finance between a company and its members which are not within the mainstream of ordinary commercial activities and which, while being

commercial in character, are marked by a degree of altruism which is not compatible with a dominant objective of profit making.

2.106 The phrase trade or commerce is defined in s 2 of the ACL and it codifies and extends the common law interpretation of trade or commerce 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). 2.107 Two points should be noted about the definition of trade or commerce in s 2 of the ACL. First, the definition is expanded to trade or commerce between Australia and overseas. [page 61] 2.108 This means that the ACL applies to conduct engaged in outside Australia, ‘provided at least some aspect of the trading relationship between two or more parties has taken place in Australia’.69 2.109 Secondly, the definition in s 2 of the ACL is different to that in s 4 of the CCA in that it includes reference to ‘any business or professional activity (whether or not carried on for profit)’. 2.110 The effect of this inclusion means that professionals, such as lawyers and accountants, are liable under the ACL, as well as non-profit organisations, such as charities and institutions that do pro bono work. 2.111 Whilst the test to determine whether conduct engaged in is in trade or commerce is clear, in practice the application to the following areas, amongst others, have proved to be somewhat difficult:

private sale of land and business; public statements, debates and general education; political statements and lobbying; employment contracts; internal communications; conduct to influence others; and the activities of the government. 2.112 Each of the discrete areas listed above are discussed individually below. From the outset of the discussion, the following comments by Davies J in Plimer v Roberts,70 should be borne in mind: Although the terms of the statutory provisions express a clear idea and are readily understood, the concept [in trade or commerce] is a complex one and the precise limits of what is or is not trade and commerce or what act is in or is not in trade or commerce cannot be definitively stated, either in general terms or for the purposes of any particular statutory provision in which the words appear. In marginal cases, the circumstances of the case must be considered and many factors must be taken into account.

Private sale of land or business 2.113 The ‘one-off’ private sale of land by an individual vendor who is not a real estate agent or a person who commonly sells properties is generally not considered as conduct in trade or commerce. 2.114 In the following case of O’Brien v Smolonogov,71 the Full Federal Court held that private sale of property was not conduct in trade or commerce, unless it was done in the course of a business activity. [page 62]

O’Brien v Smolonogov (1983) 53 ALR 107 In this case, Mr Raymond O’Brien and Mrs Barbara O’Brien (O’Briens) advertised in the Sunday Telegraph the sale of two portions of land near Jindabyne. Mr Paul Smolonogov (Smolonogov) read the advertisement and he and a friend, Adrian Lapardin (Lapardin), acquired the two portions of land. Prior to purchase, the O’Briens made the following representations to Lapardin during a telephone call: the subject land was 13 miles from Jindabyne, was practically on the main road and only one or two gates from it; there was no problem to get onto the land; that it is very good land; that he had a building permit to build on the land and that there was no problem to build a house on it and to bring in materials; that there was a permanent creek running through the property, (collectively, the representations). The issue before the court was whether the representations were false or misleading in contravention of former s 53(a) of the TPA. At first instance, Ellicott J held (at 361) that the representations were made ‘in trade or commerce’ and were false or misleading in contravention of former s 53(a) of the TPA. The O’Briens appealed. On appeal, Fox, Sheppard and Beaumont JJ allowed the appeal and reversed the decision of the trial judge. Accordingly, their Honours held that the representations made by the O’Briens over the telephone were not ‘in trade or commerce’. In particular, their Honours provided the following reasons (at 113–14) why they formed this view:

In the present case, it cannot be suggested that the lands acquired by the appellants became trading stock (see FC of T v St Hubert’s Island Pty Ltd (in liq) (1978) 19 ALR 1; 138 CLR 211). Nor is it a case where the taxpayer’s activities amounted to more than the mere realization of a capital asset and constituted the carrying on of land development (see FC of T v Whitfords Beach Pty Ltd (1982) 39 ALR 521). The land itself was not used for any business activity: it was not used for farming or grazing. It follows, in our opinion, that the only possible feature of the case which could conceivably be relied upon to suggest that the impugned conduct occurred in trade or commerce was the resort by the appellants to a newspaper as a medium of public advertisement of the land and the use made by the parties of the telephone for the purpose of conducting negotiations. It is true, as the learned judge observed, that the use of such facilities is common practice in the conduct of trade or commerce. It is also true, as Mason J observed in Whitfords Beach, supra (at 537) that there is ambiguity in the adjectives ‘business’, ‘commercial’ and ‘trading’ which ‘have about them a chameleon-like hue, readily adapting themselves to their surroundings’. As his Honour said, in some contexts, phrases such as ‘business deal’ and ‘operation of business’ may signify a transaction entered into by a person in the course of carrying on a business; in other contexts they ‘denote a transaction which is business or commercial in character’ (at

[page 63] 537). The same may be said of ‘commercial’ or ‘trading’. But, in our view, the mere use, by a person not acting in the course of carrying on a business, of facilities commonly employed in commercial transactions, cannot transform a dealing which lacks any business character into something done in trade or commerce. Of course, the facilities mentioned have applications which are not commercial in any sense: advertisements in newspapers and the telephone are used by persons for purposes which are not commercial at all. With all respect to the learned judge, we are not persuaded that resort to them can create the business context required by the reference to ‘trade or commerce’ in s 53(a). The conduct complained of was not something done by the appellants in the course of carrying on a business and it lacked trading or commercial character as a transaction. It thus fell outside the scope of s 53(a).

2.115 In the following case of Argy v Blunts & Lane Cove Real Estate Pty Ltd,72 the conduct of the vendor of a property was not considered to be in trade or commerce, while that of the lawyer and real estate agent was.

Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 94 ALR 719 In this case, Mr Raymond Crooks (Crooks) was the vendor of the resident property at 54 Arabella St Longueville (property). Crooks appointed Blunts & Lane Cove Real Estate Pty Ltd (Blunts) and Gadens Lawyers (Gadens) to assist with the sale of the property. Philip Argy (Argy) and his wife saw from an advertisement in a newspaper that the property was for sale. Argy inspected the property and was handed by an employee of Blunts a brochure (prepared solely by Blunts), which contained particulars of the property. The brochure claimed, amongst other things, that the property was an ‘underdeveloped waterfront in a prime location with unlimited potential’ and it was in a ‘Residential 2A’ zoning. Argy read the brochure. The certificate issued under s 149 of the Environmental Planning and Assessment Act 1979 (NSW) (s 149 certificate) stated accurately that the property was zoned ‘Residential 2A’ and that part of the land was affected by a ‘development control plan’, which placed restrictions on the development of the property. Blunt obtained a copy of the s 149 certificate and faxed it to Gadens. However, the page that referred to the ‘development control plan’ was omitted from the faxed document. Argy was given the incomplete copy of the s 149 certificate along with the draft contract of sale. The property went to auction, but failed to reach its reserve price. Subsequent to the auction, Argy negotiated with Crooks an agreed price. A few days after the auction, Argy received the contract for sale which attached a completed copy of the certificate. [page 64]

Argy sued Crooks, Blunt and Gadens for misleading or deceptive conduct in contravention of former s 52 of the TPA. One of the main issues before the court was whether the conduct of Crooks, Blunt and/or Gadens was in trade or commerce. Hill J held that: the conduct of Crooks as an individual vendor selling his private residence was not conduct in trade or commerce (at 737); and the conduct of Blunt and Gadens was misleading or deceptive and was in trade or commerce (at 739). In particular Hill J said (at 735) that: I am unable to accept that the present facts are relevantly distinguishable from those in O’Brien. The question to be determined is whether the owner of a house by selling it does so in trade or commerce. It could scarcely be said that a person who sells his home, whether by private treaty or by auction and whether he conducts the negotiations personally or through a real estate agent, is undertaking what he does in the course of a trade or business or in a business context. The conclusion in O’Brien v Smolonogov was reached because the land there had never been used at all for the purposes of any business. It was not a case where land held as a capital asset was thereafter subdivided and sold as in Whitfords Beach so that the circumstances of sale arose in a business context. The present is purely a case of a person selling his house and, accepting that O’Brien v Smolonogov is correct, it necessarily follows that whether or not an estate agent is used, and whether or not that agent advertises the property by preparing brochures or other advertisements and whether or not the agent sells by auction or merely negotiates a private treaty, the sale still remains a sale by the vendor of his house and not an act done in a business context.

2.116 The ‘one-off’ private sale of a business and its goodwill by an individual vendor, unlike that of a vendor selling a private residence, is generally considered as conduct ‘in trade or commerce’. 2.117

In the following case of Lubidineuse v Bevanere Pty Ltd,73 the sale of

a business that was intended to be used for commercial gain by the purchaser was considered as conduct ‘in trade or commerce’.

Lubidineuse v Bevanere Pty Ltd (1984) 55 ALR 273 In this case, Bevanere Pty Ltd (Bevanere) sold its business of a cosmetic clinic to Mrs Lubidineuse (Lubidineuse). During the negotiations for the sale of the [page 65] business, Lubidineuse claimed that Bevanere represented that a particular employee, Mrs Dragica Kostic (Kostic) would remain as an employee after the sale to assist Lubidineuse in running the cosmetic clinic. Lubidineuse claimed that Bevanere knew that Kostic was intending to resign from her position almost immediately. In fact, Kostic did resign three days after Lubidineuse acquired the business. Lubidineuse alleged that Bevanere engaged in misleading or deceptive conduct in contravention of former s 52 of the TPA. Wilcox J held that the sale of the business was conduct ‘in trade or commerce’. The transaction in this case, unlike that of the sale of a private residence by a vendor, involved the sale of a business used for commercial gain and intended to be so used. In particular Wilxox J stated (at 285): I apply the distinction made in O’Brien v Smolonogov gladly, because the opposite conclusion appears to lead to undesirable results in at least three respects. First, it would introduce into this area of the law some of the difficulties already found in taxation law in determining whether a sale is by way of disposal of a capital asset as distinct from the carrying on of a business: cf FC of T v Whitfords Beach Pty Ltd (1982) 39 ALR 521; 56 ALJR 240. The distinction is not merely difficult in practice but anomalous in a day when many small traders commence or purchase a business in the expectation of making money more

by an eventual sale for a capital profit than by profitable trading in the meantime. Secondly, on the respondent’s concession — properly made I think — there would be conduct ‘in trade or commerce’ if this conduct was part of the regular business of the corporation, even if it was associated with the disposal of a capital asset. So a real estate agent may be guilty of misleading conduct ‘in trade or commerce’, leading to the possibility of vicarious liability being visited upon a principal for actions which, if done by itself, it could not be made liable. Finally, if recurrent behaviour will attract the label ‘in trade or commerce’, the result is that given conduct by a corporation in its second or later experience of disposing of a major capital asset will be actionable by a damaged purchaser, yet that same conduct would not be actionable in the first ever disposal, and this whether or not an individual associated with the corporation has had prior experience of such disposals or has been concerned in such conduct.

2.118 On appeal, in Bevanere Pty Ltd v Lubidineuse,74 the Full Federal Court (Morling, Neaves and Spender JJ) affirmed the decision of the trial judge Wilcox J. In particular, their Honours stated that: It was next argued on behalf of the appellant that even if the appellant’s conduct was misleading or deceptive it was not conduct in trade or commerce. It was argued that the sale by a corporation of its only capital asset, in a case where the corporation is not engaged in the business of buying or selling such capital assets, does not constitute conduct in trade or commerce for the purposes of Pt V, Div 1, of the Trade Practices Act. This submission needs to be considered in the context of the facts surrounding the sale of the clinic. The business of the appellant was conducting the clinic. The contract provided

[page 66] not only for the sale of the goodwill of the business, but also of stock to the value of about $8000. When the appellant decided to sell the business it retained the services of an agent to find a purchaser. The business was sold as a going concern and, in order to protect the goodwill, a covenant was given by Mrs Prussak that she would not, directly or indirectly, carry on the business of a cosmetic clinic within a radius of 5 km from the Strand Arcade for a period of three years from the date of completion of the contract. The sale of the clinic should not be viewed in isolation from the totality of the appellant’s commercial activities. The sale was part of those in other commercial activities, if it so chose. The agreement for sale entailed continuing obligations on Mrs Prussak not to engage in

competitive commercial conduct. In retaining an agent to find a buyer for the business the appellant adopted a procedure commonly used in trade or commerce for finding a buyer for a business which is available for purchase. The mere fact that it was the sale of a capital asset did not deprive it of its character as a transaction in trade or commerce. In our opinion the activities of the appellant in and about conducting and selling the clinic fall well within the confines of ‘trade’ or ‘commerce’.

Public statements, debates and general education 2.119 Statements made during the course of free education at schools, universities and other educational institutions are generally not considered to be ‘in trade or commerce’. 2.120 In the following case of Plimer v Roberts,75 statements made during a lecture given by an ordained Christian minister without payment was considered not to be conduct ‘in trade or commerce’.

Plimer v Roberts (Noah’s Ark case) (1997) 150 ALR 235 Professor Plimer was a Professor of Geology and the Head of the School of Earth Science at the University of Melbourne. Dr Roberts was an ordained Christian minister whose career included a period as the principal of a Bible college in Sydney. Dr Roberts also had academic qualifications in education and described himself as a historical researcher in archaeology. In 1992, Dr Roberts gave a number of public lectures throughout Australia. During at least one of his lectures, Dr Roberts claimed that a boat shaped geological formation at a place in Eastern Turkey is or could contain the remnants of ‘Noah’s Ark’. Dr Roberts also claimed that this provided physical proof of the account of the ‘great flood’ in Genesis, 6:13-8:19.

Professor Plimer attended one of Dr Roberts’ lectures and alleged that Dr Roberts’ statements made about ‘Noah’s Ark’ were misleading or deceptive in contravention of former s 42 of the Fair Trading Act 1987 (NSW) (FTA). [page 67] Importantly, Dr Roberts did not have a commercial interest in providing the lectures (and authorising the video and audio recordings). He worked closely with two associations called ‘NARF’ and ‘Ark Search’, which obtained the profits from the presentations and recordings, but he did not receive any payment for giving the lectures. At first instance, Sackville J held that Dr Roberts made misleading or deceptive representations during his lectures in that he had personally carried out various archaeological and scientific investigations relating to the area where he claims the remnants of Noah’s Ark remain. However, Sackville J also held that s 42 of the FTA was not contravened as the giving of the lectures was not ‘in trade or commerce’. Professor Plimer appealed. On appeal, the Full Federal Court (Davies, Branson and Lindgren JJ in separate judgments) held that there was no trading or commercial dealing or commercial relationship between Dr Roberts and the members of his audience or the purchasers of the tapes or videos of his lectures, and as such the conduct was not ‘in trade or commerce’ for the purposes of s 42 of the FTA. In forming the view that the conduct in question did not occur ‘in trade or commerce’, Davies J considered, amongst others, the following relevant factors (at 238): (a) Dr Roberts was not a member of NARF or Ark Search and was not paid for giving lectures;

(b) The lectures given by Dr Roberts were not concerned with commerce, but rather with the promotion of a creationist view of history and the investigation of a matter of great historical interest; and (c) The misleading representations made by Dr Roberts related not to the sale of the video and audio recordings, but to the content of the lectures. In particular, Lindgren J (with whom Branson J agreed) stated (at 258) that: The delivery of the lectures was not inherently a trading or commercial activity. The misrepresentations, made in the course of the giving of them, were not in the nature of a promotion of NARF’s selling of door tickets or videotapes or audio cassettes. The misrepresentations were no different, in the present respect, from misrepresentations made in the course of the giving of lectures or addresses in many familiar factual settings. A professor delivers a lecture to university students; an academic or other person presents a paper at a conference or seminar held for the practitioners of a profession; a public figure addresses a crowd in a hall. Assume that in each case the speaker is not paid but understands that the institution or organisation which has arranged the event is making an admission charge or will sell various recorded forms of the lecture or address, or both. In such cases, what is said in the course of the delivery of the lecture or address will not ordinarily be ‘in’ trade or commerce, even if the charging and selling by the institution or organisation is. Dr Roberts’ misrepresentations were not placed ‘in trade or commerce’ by the fact that, to his knowledge, an admission charge was being imposed and audio and video recordings were being made and were to be sold.

[page 68] … Indeed, it will be recalled that the trial judge found that there was no commercial or trading relationship between Dr Roberts and NARF; that he was not paid to deliver the lectures or to contribute to NARF’s newsletter or brochure; that he had no expectation of remuneration from his activities; that in giving his lectures and contributing to the publications, he was not primarily motivated by the desire to promote any business activities of NARF; and that his objectives were to propound his own views and to assist NARF to raise funds for NARF’s objectives.

2.121 Public statements in advertisements and debates are generally not considered to be ‘in trade or commerce’, unless they are to protect or enhance the commercial interests of the statement maker. 2.122 In the following case of Orion Pet Products Pty Ltd v Royal Society for the Prevention of Cruelty to Animals (Vic),76 public statements for educational purposes were not considered to be ‘in trade or commerce’.

Orion Pet Products Pty Ltd v Royal Society for the Prevention of Cruelty to Animals (Vic) (No BarkWoof case) [2002] FCA 860 In this case, Orion Pet Products Pty Ltd (Orion) and Innotek Australia Pty Ltd (Innotek) manufactured and supplied electronic dog collars for the purpose of training dogs. The products bore the brand names ‘NoBark Collar’, ‘Smart Dog Containment System’, ‘Home Free Containment System’ and ‘Smart Dog Remote Trainer’. The Royal Society for the Prevention of Cruelty to Animals (Victoria) Inc (RSPCA) was an association that promoted the welfare of animals and to prevent cruelty to them. It operated on a non-profit basis, but conducted training courses for animals and sold various animal products. RSPCA campaigned strongly against the use of electronic dog collars. Orion and Innotek alleged that a series of representations made by the RSPCA, including that: (a) the electronic dog collars were cruel and were instruments of torture;

(b) anyone using the collars in Victoria would be prosecuted; and (c) the collars were ineffective and inappropriate as devices for training dogs, (collectively, the Representations) were misleading or deceptive in contravention of former ss 52 and 53(a) of the TPA. Weinberg J held (at [192]–[193]) that the Representations were not made ‘in trade or commerce’, as they were part of an educational and political campaign to ban electronic dog collars in Victoria. [page 69] In particular, Weinberg J acknowledged (at [189]–[190]) that: It seems clear that statements made in public presentations, such as films or advertisements, may constitute conduct in trade or commerce if designed to advance or protect the commercial interests of the exhibitor or publisher: Fasold v Roberts (supra) at 490. [Emphasis added]

2.123 In the following case of Tobacco Institute (Aust) Ltd v Australian Federation of Consumer Organisations Inc,77 an advertisement to protect commercial interests was considered to be ‘in trade or commerce.’

Tobacco Institute (Aust) Ltd v Australian Federation of Consumer Organisations Inc (1992) 111 ALR 61 In this case, Tobacco Institute (Aust) Ltd (Tobacco) published an advertisement in a number of newspapers in Australia (Advertisement).

In the Advertisement, the following representation (Representation) was made: [T]here is little evidence and none which proves scientifically that cigarette smoke causes disease in non-smokers.

The Australian Federation of Consumer Organisations Inc (AFCO) alleged that the Representation was misleading in contravention of former s 52 of the TPA. At first instance, Morling J held that the Representation in the Advertisement was ‘in trade or commerce’ and misleading in contravention of former s 52 of the TPA. Tobacco appealed. On appeal, the Full Federal Court (Sheppard, Foster and Hill JJ, in separate judgments, and for different reasons) held that the Representation in the Advertisement was ‘in trade or commerce’. In particular, Sheppard J stated (at 76) that: It seems most unlikely that the advertisement was inserted by some organisation or association of smokers in an endeavour to persuade non-smokers that their health was not in danger. Furthermore, it seems quite unlikely that any such association or organisation would call itself the Tobacco Institute. All these considerations taken together have led me to conclude that the most likely reason for the publication of the advertisement was to promote or maintain sales of cigarettes for commercial reasons, ie gain. In my opinion this inference, if not the only one open, is the most compelling and the most likely. I am satisfied that it should be drawn principally because of the absence of evidence on the point from the appellant.

[page 70] 2.124 In Glorie v WA Chip & Pulp Co Pty Ltd (Glorie),78 Morling J held that the exhibition of a documentary film which contained misleading statements about forests was considered to be ‘in trade or commerce’.

2.125 In Glorie,79 Morling J provided the following reasons as to why he considered the misleading statements in the film about forests were made ‘in trade or commerce’: … He [counsel for the respondents] contended that the film was not exhibited in trade or commerce. He described the film as being in the nature of a political exercise. He argued that viewers of the film were addressed as members of the electorate with the object of educating them in matters of forest management so that they would become sympathetic to the industry. However, this submission does not take sufficient account of all the circumstances in which the film came to be made. The film was produced as part of the activities of the trade association of which the first respondent was a member. The impetus for its production came, in part, from the desire to answer criticism of the industry. It was prudent, if not necessary, that such criticism be answered in order that the commercial interests of members of the association might be protected. The evidence clearly shows that the production of the film was seen as a public relations exercise, which plainly it was. The involvement of the Forests Department in the production of the film did not make it any the less a trade or commercial activity of the association. The first respondent carries on substantial wood-chipping operations in Western Australia. The viability of those operations is almost totally dependent upon the supply of timber from the South West Forest. Public antipathy to the use of the forest as a source of supply of that timber could impose a serious threat to the company’s future activities if it were to find expression in political or other pressure upon the government to change existing forestry management practices. Having regard to these considerations I am of the opinion that the film has been, and is intended to be exhibited in trade or commerce. … In the present case, a real reason for exhibiting the film was to protect indirectly the commercial interests of the members of the association, including the first respondent. In these circumstances, I think it is correct to characterize the exhibition of the film as being in trade or commerce.

2.126 However, in Robin Pty Ltd v Canberra International Airport Pty Ltd,80 Gyles J thought that Glorie was incorrectly decided, although he acknowledged that no other judgment has criticised the decision: In these circumstances, I am not relieved of the responsibility of deciding whether Glorie is consistent with Nelson. In my opinion, the better view is that it is not. A public relations exercise of the kind explained by Morling J cannot be categorised as the promotion of the sale of timber or as otherwise within the central conception of trade or commerce as explained by the High Court. It is not an aspect or element of transactions which of their nature bear a trading or commercial character. I cannot find the kind of indirect promotion of timber products in that

case that was found about cigarettes in AFCO. That is certainly not the manner in which Morling J analysed the matter, as the passage cited above reveals.

[page 71]

Political statements and lobbying 2.127 Statements made by politicians, ministers or other representatives of the government in relation to government policy are generally not considered as conduct ‘in trade or commerce’. 2.128 In the following case of Durant v Greiner,81 incorrect statements about a government decision made by a politician during an election campaign were not considered to be ‘in trade or commerce’.

Durant v Greiner (1990) 21 NSWLR 119 In this case, the Minister for Education and Youth Affairs, Dr Metherell (Minister) considered a structured programme for the rationalisation of schools in New South Wales (NSW) over a period of 4 to 5 years. One of the schools listed for closure was Milsons Point Public School. Mr Greiner attended a meeting of the Parents and Citizens Organisation at Neutral Bay on 21 September 1988 (Parents meeting) and said words to the effect that the government had no intention of closing down Naremburn or Milsons Point Public Schools. Mr Durant and other plaintiffs sued the respondents, alleging that they engaged in misleading or deceptive conduct in contravention of former s 42 of the Fair Trading Act 1987 (NSW). Rolfe J held (at 129) that the statements made by Mr Greiner at the

Parents meeting were not a statement made ‘in trade or commerce’. In particular Rolfe J stated (at 127–8) that: For s 42(1) to be applicable in the present case, the conduct complained of, as being misleading or deceptive or likely to mislead or deceive, must be ‘in trade or commerce’. The words ‘trade or commerce’ are defined as including ‘any business or professional activity’. Thus the conduct must be misleading or deceptive or likely to mislead or deceive in ‘any business or professional activity’. Business or professional activity: It is then necessary to determine what constitutes the business or professional activity, which is ‘trade or commerce’ in the present case. As to the business activity, it was submitted on behalf of the plaintiffs that it was the administration of the State public school system. In my opinion, it is more appropriate to consider the provision by the Government of State schools to members of the public, at which school attendance is made compulsory by legislation, save for certain specified exceptions, and the provision of instruction which is free of charge, both historically and traditionally as a service to the community provided by the Government, rather than an activity which, as between the Government and the community, can be

[page 72] characterised as a business, even within the wide definition of business contained in the Act. It may be argued that certain activities conducted by the Government in carrying on schools, for example, the purchase of equipment or the provision of services amounts to the carrying on of a business as between the Crown and the entity with which or with whom it is dealing. But that is not the present case.

2.129 In the following decision of Unilan Holdings Pty Ltd v Kerin,82 statements made by a Minister about a government scheme at a conference were not considered to be ‘in trade or commerce’.

Unilan Holdings Pty Ltd v Kerin

(1992) 107 ALR 709 In this case, Unilan Holdings Pty Ltd and others were international traders of Australian wool (Wool Traders). The Minister for Primary Industries and Energy (Minister) made a speech to the Wool Traders at an international conference (Conference). During the speech, the Minister stated that the government would not reduce the reserve price of wool under a reserve price scheme. In particular, the Minister stated in his speech that: I have given a cast-iron guarantee, which I repeat here, that the Australian government will not contemplate, under any circumstances, any further downward movement in the floor price.

Approximately eight months after the speech was given, the government suspended the reserve price scheme. As a result of the suspension of the scheme, the price of wool slumped. The Wool Traders commenced proceedings against the Minister for an alleged contravention of former s 52 of the TPA. Hill J held (at 714) that the speech given by the Minister at the Conference was not ‘in trade or commerce’. In particular Hill J said (at 713–14): Whether conduct is conduct in trade or commerce will often be a difficult question. … The giving of a speech to an international wool conference by a Minister of State is not an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character. A fortiori, if the Minister attends that conference in his personal capacity. It does not form part of the central conception of trade or commerce of which the majority of the High Court [in

[page 73] Concrete Constructions] speaks, and is not made so merely because the speech concerns

matters of trade or commerce. The giving of the speech is a matter that can be said to be in relation to trade or commerce, but is not conduct which is actually in trade or commerce.

2.130 The lobbying of a political party in the local, state or federal government, or to a minister or government department, is unlikely to be considered as conduct ‘in trade or commerce’. 2.131 In the following case of Robin Pty Ltd v Canberra International Airport Pty Ltd,83 the lobbying for a political purpose by an operator of an airport was not considered to be ‘in trade or commerce’.

Robin Pty Ltd v Canberra International Airport Pty Ltd (1999) 179 ALR 449 In this case, Robin Pty Ltd (Robin) owned land approximately eight kilometres to the south of the Canberra Airport. Canberra International Airport Pty Ltd (CIA) was the operator of Canberra Airport. The land owned by Robin was grazing land, but it sought to have the land rezoned as residential. CIA opposed the rezoning of the land. CIA was concerned that there would be complaints made in the future about the noise levels from the airport. In response, CIA embarked on a publicity campaign through various newspapers, articles and letterbox drops. Robin commenced proceedings against CIA and alleged that CIA contravened former s 52 of the TPA by engaging in misleading or deceptive conduct in the course of making public statements concerning the effect of aircraft noise upon residents of land near the airport. Gyles J held that the lobbying by CIA was not conduct ‘in trade or

commerce’. In particular his Honour said (at [49]–[50]): I cannot discern any relevant existing trade or commerce of the applicant. The applicant no doubt intends to dispose of its property to best commercial advantage … However, in the absence of a rezoning, it cannot be said that there is any relevant trade or commerce in the land, either in globo or in subdivided lots. It may be that some of the persons who read the first respondent’s material are potential purchasers of the land — either in globo or in subdivision — if it comes onto the market. It may also be that some of them may retain a memory of these advertisements at that time. However, I do not regard that nexus as causing the conduct to be in any existing trade or commerce of the applicant. In some cases, there may be a nice question as to when trade or commerce begins, but potential

[page 74] trade or commerce is not sufficient. The objective of the relevant conduct of the respondents is to prevent rezoning. It is only upon rezoning that the potential for trade or commerce may be realised. I therefore do not need to decide the issues which would have arisen had there been a transaction or transactions in the land. That would have involved considering cases such as O’Brien v Smolonogov (1983) 53 ALR 107, Bevanere Pty Ltd v Lubidineuse (1985) 7 FCR 325; 59 ALR 334, Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112; 94 ALR 719, and Eighth SRJ Pty Ltd v Merity (1997) 7 BPR 15,189, the first three of which predated Nelson. Even if I be wrong in this, the publications were plainly made in order to influence the readers, as members of the community, for political purposes. Any effect upon them as potential purchasers would be a side wind. They were not made in relation to, or for the purposes of, the supply of goods or services to actual or potential customers as required by Nelson.

2.132 In the following case of Village Building Co Ltd v Canberra International Airport Pty Ltd (No 2),84 an attempt to influence public and political opinions was not considered to be ‘in trade or commerce’.

Village Building Co Ltd v Canberra International

Airport Pty Ltd (No 2) (2004) 208 ALR 98 In this case, Village Building Co Ltd (Village) was a property developer that owned land near Canberra Airport. Canberra International Airport Pty Ltd (CIA) was the operator of Canberra Airport. The land owned by Village was zoned for rural and environmental uses. Village applied to have the land rezoned as residential. CIA opposed the application for the rezoning of the land. CIA prepared a master plan, as required by law, which included specific forecasts of noise exposure levels in areas surrounding the Canberra Airport. CIA was contemplating obtaining approval for a new landing flight path that would have the effect of decreasing the noise levels in one area, but increasing the levels in the area where Village owned the land. By its master plan, CIA had sought positively to influence public opinion and political and governmental decisionmaking, including the relevant Minister at the time. Village alleged that CIA engaged in misleading or deceptive conduct in contravention of former s 52 of the TPA by inflating its estimates of future noise levels with a view to affecting the deliberations of planning authorities in the area. In particular, Village argued that the conduct engaged in by CIA was not to merely participate in public debate about the rezoning. Rather, CIA’s conduct was [page 75] designed to protect and maintain its business. It was conduct aimed at

protecting ‘the ongoing operational integrity of the airport’ and ‘the longterm sustainability of the airport’. Finn J held (at [64]) that the conduct of CIA was not ‘in trade or commerce’. In particular, Hill J stated (at [62]–[63]) that: It is notable that the impugned representations were not made in circumstances in which it could properly be said that CIA was promoting, directly or indirectly, the services provided by the airport. It was, nonetheless, acting to protect its business. As I earlier indicated, action so taken is not for that reason alone in trade or commerce. It would be surprising if the legislature had intended the contrary to be the case in the Trade Practices Act. Corporations engage directly and indirectly in public and political debate on a myriad of matters that do or might impact actually or prospectively on their own interests. While all such debate will not be beyond the reach of s 52 of the Trade Practices Act: see eg Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1; 111 ALR 61; much will be as it will not be directed at consumers (actual or potential), or will not be an incident of an activity which bears a trading or commercial character. What Village is seeking to do in this proceeding is to have imposed on CIA ‘by a sidewind’: cf Concrete Constructions; a form of legislative control in circumstances in which s 52 has no role to play. One may desire conduct in public and political debate to be not misleading or deceptive. Section 52 is not designed to secure that state of affairs. In saying this I express no view on whether or not CIA’s conduct was misleading or deceptive.

2.133 On appeal, in Village Building Co Ltd v Canberra International Airport Pty Ltd,85 French, Sackville and Conti JJ dismissed the appeal and affirmed the decision of Finn J. Their Honours stated: The fact that conduct has the purpose or effect (or both) of maintaining or protecting a business is not, of itself, enough to ensure that the conduct is in trade or commerce. Similarly, acts necessary to obtain a licence or authority to conduct the corporation’s business may be in trade or commerce, although we think this would be unusual. The question is whether the conduct falls within the central conception of trade or commerce as explained in Concrete Constructions. In the present case the conduct alleged against CIA did not.

Employment contracts

2.134 The negotiations between employers and employees and potential employees may be considered to be ‘in trade or commerce’, but this will depend on the particular facts of the case. [page 76] 2.135 The law in this area appears to be somewhat in a state of uncertainty.86 However, the uncertainty is now of little practical importance when determining the ‘in trade or commerce’ issue. 2.136 Section 31 of the ACL does not include the ‘in trade or commerce’ requirement for the prohibition of conduct that is liable to mislead a person in seeking employment and hence bypasses the issue.87

Internal communications 2.137 The internal communication between an employer and employee is generally not considered to be ‘in trade or commerce’,88 but it may be where the communication bears a trading or commercial character.89 2.138 The following case of Firewatch Australia Pty Ltd v Country Fire Authority,90 is an example where the internal communication bore a trading or commercial character and was found to be ‘in trade or commerce’.

Firewatch Australia Pty Ltd v Country Fire Authority [1999] FCA 761 In this case, Firewatch Australia Pty Ltd (Firewatch) manufactured foam spray fire extinguishers and supplied them to Country Fire Authority

(CFA). CFA circulated a bulletin throughout various offices and brigades (Bulletin). The Bulletin contained misleading statements that the Firewatch foam spray fire extinguishers did not comply with certain Australian standards. Firewatch alleged that the circulation of the Bulletin by CFA to purchasers and prospective purchasers of its fire extinguishers constituted contraventions of former ss 52 and 53 of the TPA. Goldberg J held (at [67]) that the circulation of the Bulletin was ‘in trade or commerce’ as it bore a trading and commercial character in the sense that Bulletin was intended to influence servicing brigades not to acquire Firewatch’s fire extinguishers. In particular Goldberg J stated (at [62]–[64]) that: An internal communication within an organisation which is intended to be read only by addressees within the organisation ordinarily is not a dissemination

[page 77] which has a trading or commercial character as explained by the High Court in Concrete Constructions (NSW) Pty Ltd v Nelson (supra): see also Unilan Holdings Pty Ltd v Kerin (1992) 35 FCR 272, 276–277; Plimer v Roberts (1997) 150 ALR 235. Were it otherwise the whole of a corporation’s or organisation’s internal communications could be opened up to scrutiny under Pt V of the Trade Practices Act. In the ordinary course this is not an issue as such internal documents are not seen by consumers external to the organisation. However each case of an internal communication must be considered by reference to the reason why it comes into existence and the purpose it is intended to achieve. More specifically I would not expect an internal communication between the CFA administration or one of its fulltime departments and its other divisions and brigades to be an aspect of conduct in trade or commerce for the purposes of s 52 of the Act. It would not be conduct, to paraphrase the majority in Concrete Constructions (supra) at 604: towards persons … with whom it has or may have dealings in the course of those activities … which of their nature bear a trading or commercial character. The present case falls into that area identified by the majority in Concrete Constructions

(supra) where the dividing line between what is and what is not conduct ‘in trade or commerce’ is less clear. 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.

Conduct to influence others 2.139 If a person not engaged in trade or commerce acted to influence another person to engage in commercial conduct with a third person, this can be considered to be conduct ‘in trade or commerce’.91 [page 78] 2.140 However, this may not be the case where the person not engaged in trade or commerce has no commercial or trading relationship with the second or third person or no interest to promote their interests. 2.141 The following case of Dataflow Computer Services Pty Ltd v Goodman,92 is an example of this, where an ex-employee of one company sent an email containing misleading statements to another company.

Dataflow Computer Services Pty Ltd v Goodman (1999) 168 ALR 169 In this case, Dataflow Computer Services Pty Ltd (Dataflow) supplied computer software programs to franchisees of Harvey Norman stores. Mr Goodman was an ex-employee of Dataflow and sent an email to a number of Harvey Norman stores suggesting that Dataflow was intending to cease supply of its computer software programs to the Harvey Norman stores, as it was intending to supply the programs directly to consumers. This was not true. Dataflow commenced proceedings against Mr Goodman alleging misleading or deceptive conduct in contravention of former s 52 of the TPA. Hely J held (at [10]) that by sending the email, Mr Goodman did engage in misleading conduct. However, Hely J also held (at [24]) that Mr Goodman’s conduct was not in trade or commerce. In particular, Hely J provided the following reasons (at [12], [22]–[23]): The respondent did not have a commercial or trading relationship with any of those to whom the email was directed, nor did he have any subsisting relationship with Dataflow. The respondent was in the position of an officious or mischievous bystander making a false statement to those in an industry (and the press) about the plans of a participant in the industry and about the financial impact which implementation of those plans would have on other participants. … 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 email 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. Goodman’s conduct is more appropriately characterised as that of a bystander

commenting on the trade or commerce in which others are engaged, rather than something done in that, or any other, trade or commerce.

[page 79]

The activities of the government 2.142 The activities of the government, whether federal, state or local, can be in trade or commerce,93 but will generally not be if the activities are merely the carrying out of a non-commercial statutory duty.94 2.143 In Unilan Holdings Pty Ltd v Kerin,95 Hill J made the following comments which confirm that the activities of the government can be considered in trade or commerce: It is obvious that a statutory body could engage in trade or commerce. The Treasury might mint coins to be marketed for collection; its sale of those coins would be conduct in trade or commerce. If the Treasurer, acting on behalf of his department, were to make a misleading statement in the course of promoting the sale of the coins, he could be representing the Treasury in its dealing with potential consumers. But such a case is remote from the present. The conduct complained of here is a speech of the Minister dealing with governmental policy which impinges directly upon the international trade in wool. It is not conduct which itself has a trading or commercial character, as the exhibiting of the film in Glorie clearly was.

2.144 In the following case of Sykes v Reserve Bank of Australia,96 the activities of issuing and printing notes for profit, and the provision and promotion of polymer notes was considered as conduct in trade or commerce.

Sykes v Reserve Bank of Australia (1998) 158 ALR 710

In this case, Mr Peter Sykes (Sykes) manufactured and developed a product (Product) designed to handle plastic or polymer bank notes when folded and a device (Device) to handle plastic or polymer bank notes when flat. The Product and Device together with paper bands were designed to hold bank notes in groups of 10 or 100 along with dispensers to hold and dispense the paper bands. The Reserve Bank of Australia (RBA) engaged in the activities of issuing and printing of bank notes in Australia and overseas for profit. The RBA appointed Sykes as a consultant and advanced funds to him for the development of the Product and Device. On several occasions, the RBA represented to Sykes that the $5 polymer bank note would be released shortly after Easter 1991 and that thereafter new [page 80] polymer banknotes for the remaining bank notes in the series would be released sequentially at approximately six monthly intervals (Representations). Sykes alleged that the Representations were misleading or deceptive in contravention of former s 52 of the TPA as the polymer $5 bank notes were not released until November 1992 and the new polymer bank notes for the remaining bank notes in the series were not released at approximately six monthly intervals after Easter 1991. At first instance, Tamberlin J held that the RBA’s Representations were misleading or deceptive in contravention of former s 52 of the TPA. In particular, his Honour found that the Representations were made ‘in trade or commerce’, as the activities of the RBA (ie note printing and issuing notes for profit, as well as the provision and promotion of the new polymer notes) were ‘in trade or commerce’.

The RBA appealed. On appeal, the RBA did not argue that in manufacturing and issuing Australian currency (as distinct from currency manufactured for and sold to foreign countries) the bank was not engaged in trade or commerce. Rather the RBA argued that the Representations made by the RBA did not bear a trading or commercial character, as there was no ‘relationship’ between the bank and Sykes arising out of the issue of the notes. On appeal, Heerey J (with whom Sundberg J agreed (at 720)) rejected the RBA’s argument and held (at 714) that the Representations made by the RBA were ‘in trade or commerce’, as the RBA had a clear commercial interest in the announcement of the release date to Mr Sykes so that he could assist in the marketing process of the new notes Emmett J found it unnecessary to decide on the issue of ‘in trade or commerce’, as he concluded that Sykes failed to establish that any conduct on the part of the RBA was misleading or deceptive.

Accessorial liability ‘Involved’ 2.145 A person will be found liable as an accessorial liable under the ACL when he or she is ‘involved in the contravention’. Section 2 of the ACL defines the word ‘involved’ as: … a person is involved in a contravention of a provision of this Schedule or in conduct that constitutes such a contravention, if the person: (a) has aided, abetted, counselled or procured the contravention; or (b) has induced, whether by threats or promises or otherwise, the contravention; or (c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or (d) has conspired with others to effect the contravention.

2.146 The definition of ‘involved’ in s 2 of the ACL is a procedural definition for the purposes of certain remedy provisions (eg ss 236 and 243). The definition does not create ancillary liability. [page 81] 2.147 The definition of involved in s 2 of the ACL merely lists the ways in which a person can be ‘involved in a contravention’ for the purposes of making a damages or compensation order against them. 2.148 For example, when s 236 of the ACL is read together with the definition of ‘involved’ in s 2, the court is empowered to make an award of damages against a person ‘involved’ in the contravention.97 2.149 Section 2 of the ACL is similarly worded to s 75B of the CCA and in so far as the provisions are the same, the jurisprudence that applies to s 75B of the CCA also applies to s 2 of the ACL. 2.150 In Nella v Kingia Pty Ltd,98 Toohey J made the following comments about former s 75B of the TPA, including its sole function being to define who is involved in a contravention: The only function of s 75B is to define who is a person involved in a contravention of Pt IV or V. It is misleading to speak of s 75B as a source of liability and (although it is commonly done) to claim damages under that section. A claim which needs to rely upon s 75B is nevertheless a claim under s 82 and should be so pleaded. The statement of claim should also plead facts to make it clear on what basis the person is said to have been involved in the contravention.

2.151 The following case of Yorke v Lucas,99 is the leading authority on the interpretation of the word ‘involved’. In this case, the High Court considered the meaning of key concepts in former s 75B of the TPA.

Yorke v Lucas (1985) 61 ALR 307 In this case, Ross Lucas (Lucas) was the managing director of Ross Lucas Pty Ltd (Lucas company). Lucas company was a licensed land and business agent. Lucas had acted as agent for Treasureways Stores Pty Ltd (Treasureway) for the sale of Treasureway’s business to Mr Miles Yorke (Yorke). During the negotiations for the sale of Treasureway’s business, it was represented to Yorke that the average weekly turnover of the business during the period preceding the sale was $3500. This was not the case. Yorke alleged that the director of Treasureway, Lucas Company and Lucas engaged in misleading or deceptive conduct in contravention of former s 52 of the TPA. In particular, it was alleged that Lucas was ‘involved in the contravention’ of former s 52 by Treasureway (as interpreted in s 75B) and therefore subject to order for damages pursuant to former s 82 of the TPA. [page 82] At trial, the learned judge found that Treasureway had contravened former s 52 of the TPA. However, the trial judge dismissed the s 75B claim against Lucas for aiding and abetting the contravention. The Full Federal Court also dismissed the appeal. Yorke appealed to the High Court. The High Court dismissed the appeal. The majority (Mason ACJ, Wilson, Deane and Dawson JJ) held that Lucas did not possess the requisite knowledge required for the purposes of former s 75B of the TPA. Lucas was therefore not ‘involved in the contravention’ of former s 52 and he was not liable in damages under former s 82 of the TPA.

In particular, the majority stated that intent is not a requisite element for the purposes of former s 52 of the TPA (at [309]): It is, of course, established that contravention of that section [s 52] does not require an intent to mislead or deceive and, even though a corporation acts honestly and reasonably, it may nonetheless engage in conduct that is misleading or deceptive or likely to mislead or deceive.

However, the majority also noted that intent is a requisite element for the purposes of s 75B (at [310], [312]): To form the requisite intent he must have knowledge of the essential matters which go to make up the offence whether or not be knows that those matters amount to a crime. … There can be no question that a person cannot be knowingly concerned in a contravention unless he has knowledge of the essential facts constituting the contravention.

2.152 A person will only be liable on an ancillary basis if he or she intentionally participates in the contravention in the sense that they have actual knowledge of essential facts that make up the contravention. 2.153 Some knowledge of the essential facts that make up the contravention is insufficient to establish ancillary liability.100 An individual must have actual knowledge of all of the essential facts of the contravention. 2.154 Constructive knowledge of the essential facts of the contravention or reckless indifference to the truth is insufficient to establish ancillary liability.101 In Doney v Palmview Sawmill Pty Ltd,102 McMurdo J said: From Yorke, and its extensive reference to and reliance upon Giorgianni, there are two principles which are important for the outcome of the present case. The first is that a

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mere reckless indifference to the truth should not be equated with knowledge of the essential facts of the contravention. … In my view, Yorke is against the plaintiffs’ case that the defendants are liable if they ought to have been aware of the facts or that they were simply recklessly indifferent to them.

2.155 However, the failure to inquire where there are suspicious circumstances may allow the inference to be drawn that the person had the requisite actual knowledge.103 2.156 This is known as ‘wilful blindness’. It is where a person wilfully ‘turns a blind eye’, or deliberately abstains from making inquiries or asking questions in suspicious circumstances.104 2.157 The actual knowledge required for the purposes of s 2 of the ACL may be inferred from the evidence of wilful blindness.105 In Doney v Palmview Sawmill Pty Ltd,106 McMurdo J said: … a wilful blindness to the facts could be relevant for the operation of s 75B only where it is evidence from which actual knowledge could be inferred or (perhaps) where it involves some connivance in that the person has deliberately avoided any enquiry for fear of learning the truth.

‘Aided, abetted, counselled or procured’ the contravention 2.158 The words ‘aided, abetted, counselled or procured’ in s 2(a) of the ACL are taken from the criminal law where they are used to ‘designate participation in a crime as a principal in the second degree or as an accessory’.107 2.159 In criminal law, a person will be guilty of the offences of ‘aided, abetted, counselled or procured’ only if he or she intentionally participates in it.108

2.160 To form the requisite intent, he or she must have actual knowledge of the essential matters which go to make up the offence, whether or not he or she knows that those matters amount to a crime.109 2.161 For the purposes of s 2(a) of the ACL, the meaning of the words ‘aided, abetted, counselled or procured’ are construed in the same way as they are interpreted in criminal law.110 [page 84]

‘Induced’ the contravention 2.162 Inducing a contravention connotes some act of compulsion by force or threat, or some act of persuasion or stimulation aimed at ensuring that an act is committed which constitutes a contravention.111 2.163 In Yorke v Lucas,112 Bowen CJ, Lockhart and Beaumont JJ provided the following comments on the meaning of inducing a contravention in the context of former s 75B of the TPA as: The word ‘incite’ is akin to ‘induce’, though ‘induce’ probably covers a wider field. ‘Incite’ is a word familiar to the criminal law and involves some deliberate act of rousing, stimulating, urging or spurring on: Young v Cassels (1914) 33 NZLR 852, per Stout CJ (at 854). Thus, something more than innocent participation by the defendant is involved in the notion of inducing a person to commit a contravention. The word ‘induce’ appears in other sections of the Act: for example, ss 49(4)(a), 57 and 96(3)(b). The use of that word in those provisions is not inconsistent with the meaning which we have attached to it in the context of s 75B.

2.164 In ACCC v Mayo,113 Kiefel J made the following comments in relation to the meaning of inducement in the context of former s 96 of the TPA (the resale price maintenance provision): In the case of an inducement, the statutory provision will be satisfied where the necessary causal connexion is shown between the supplier’s words or actions and the maintenance of price. …

Inducing to my mind conveys both the means employed and the result. It refers to actions which are effective, although they may not have comprised actual coercion or pressure, or the offer of an advantage.

2.165 In other words, inducement refers to conduct which successfully procures a contravention and is not limited to conduct such as a promise or a threat.114 2.166 To establish an ‘inducement’, it is not necessary to prove a mental element or intention to induce. Rather, all that is required is proof of the conduct proscribed.115

‘Knowingly concerned in’, or ‘a party to’, the contravention 2.167 The words ‘knowingly concerned in’ the contravention requires that the following two elements are satisfied: (i) knowledge and (ii) some act or conduct by the person.116 [page 85] 2.168 In relation to the knowledge requirement, a person must have actual knowledge of the essential facts that constitute the contravention.117 2.169 However, in order to know the essential facts that constitute the contravention, it is not necessary for the person to know that those facts amount to a contravention of the ACL.118 2.170 In other words, it is not necessary that the person who is alleged to be knowingly concerned should have actual knowledge of the contravention or appreciate that the conduct was unlawful.119

2.171 It is important to note that the words ‘knowingly concerned in’ in s 2 are expanded to include a person who has been ‘in any way, directly or indirectly, knowingly concerned in the contravention.’ 2.172 The words ‘a party to’ the contravention require that the person participates in, or assents to, the contravention and has actual knowledge of the essential facts constituting the contravention.120 2.173 It is insufficient to prove that the person was a principal on whose behalf acts were done by others.121 To be ‘a party to’ the contravention the person must be involved in the contravention. 2.174 In Yorke v Lucas,122 Bowen CJ, Lockhart and Beaumont JJ provided the following comments that the word ‘knowingly’ should not qualify the words ‘a party to’ the contravention: We do not think that the word ‘knowingly’ should literally be read as qualifying both the phrases ‘concerned in’ and ‘party to’ in s 75B(c). Two considerations lead us to this view. First, it would be unnecessary to precede the phrase ‘party to’ with the word ‘knowingly’, as the requisite element of knowledge is inherent in the concept of being a ‘party to’ a contravention. Secondly, the placement of the commas in s 75B(c) is indicative of the draftsman’s intentions. In Fencott v Muller, supra, Gibbs CJ said at 48: ‘By the combined provisions of ss 75B and 82, the Parliament has made natural persons liable in damages for a contravention by the corporation only if they have been involved in the manner described by s 75B, which, in my opinion, refers to a close rather than a remote involvement in the contravention. In the most general words of s 75B, those of para(c), the word ‘knowingly’ significantly confines the operation of the provision.’

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‘Conspired with others’ to effect the contravention 2.175 In the criminal context, a conspiracy is defined as an agreement between two or more people to carry out future unlawful acts or lawful acts by unlawful means.123

2.176 In Nirta v R,124 Gallop J made the following comments about what is required to establish conspiracy and what he considers to be the gist of the crime of conspiracy: So long as such a desire rests in intention only, it is not indictable. When two agree to carry it into effect, the very plot is an act in itself and the act of each of the parties, promise against promise, actus contra actum, capable of being enforced if lawful, is punishable if for a criminal object or for the use of criminal means (Mulcahy v R (1868) LR 3 HL 306, per Willes J at 317; R v Meyrick, supra and DPP v Nock [1978] 2 All ER 654). The gist of the crime of conspiracy is the agreement of two or more persons to effect an improper purpose. The crime is committed whenever two or more persons agree to do something which they know to be unlawful or immoral, whether as an end in itself or as a means of securing some object lawful or unlawful (Independent Oil Industries Ltd v Shell Co of Australia Ltd (1937) 37 SR (NSW) 394).

2.177 Hence, the gist of the crime of conspiracy lies in the making of the relevant agreement. It is the subject matter and purpose of the agreement which determines whether it is criminally unlawful.125 2.178 In Yorke v Lucas,126 Bowen CJ, Lockhart and Beaumont JJ made the following comments about conspiracy in the context of former s 75B of the TPA, drawing upon its meaning in the criminal context: The act of conspiring with others to effect a contravention (s 75B(d)) necessarily involves an element of intention, requiring an agreement between two or more people to effect a proscribed act.

2.179 In the criminal context, when a conspiracy is sought to be proved by inference, great care must be taken in pointing out the steps, and the possibility of innocent hypotheses.127 2.180 To prove conspiracy, it is not necessary to show that at some definite time there was an arrangement made between the conspirators, nor is it necessary to prove that every conspirator took part in every act.128 [page 87]

2.181 The conspiracy ‘lies in the agreement between the conspirators’.129 The acts done by the conspirators to give effect to it are merely evidence of its existence.130 2.182 Obviously, there must be at least two parties to a conspiracy. However, the number and identity of the co-conspirators may be ‘inessential to the identification or proof’ of the conspiracy.131 2.183 Indeed, as a matter of common law principle in the criminal context, an accused may be convicted of conspiring ‘with a person or persons unknown’ to commit an unlawful act.132 2.184 In the criminal context, it is irrelevant whether or not the conspiracy agreement was in fact ever carried out, or that it was impossible for the offence to be committed.133 2.185 In the criminal decision of Nirta v R,134 Jenkinson J provided the following useful summary of certain key elements of conspiracy in the criminal context: (a) Conspiracy is an agreement to do an unlawful act. (b) There must be at least a conscious agreed understanding of a common design. (c) The agreement necessary may come into being through a tacit mutual understanding, not expressed in words, and the wilful intentional and knowing adoption by two or more persons of the unlawful common design. (d) The necessary criminal state of mind is the agreement to execute the illegal elements in the conduct contemplated by the agreement in the knowledge of those facts which render the conduct illegal. It is not necessary that a conspirator should actually know that the contemplated agreement amounts to a crime. (e) Conspiracy may be proved or inferred from proven or inferred knowledge of the criminal purpose and by proven or inferred general co-operation in advancing its object. (f)

An accused cannot be found guilty, although active to the same end being pursued by others, unless you are satisfied that he was acting to achieve that end in pursuance of the same design.

(g) You may find five of the accused not guilty but be satisfied that the sixth conspired with a person or persons unknown.

(h) If one of the accused or another conspirator intended to possess cannabis for the purpose of supply to another and an accused knowingly agreed directly or indirectly with him to advance that plan by any means, then that accused is to be considered as having conspired to possess cannabis for the purpose of supply to another or others.

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Attempt to contravene The elements of attempt to contravene 2.186 In order to establish that a person attempted to contravene a provision in the ACL for the purposes of various provisions in the ACL,135 it is necessary to satisfy the following two elements.136 2.187 First, there must be an intention to achieve an understanding which contains a proscribed provision.137 Secondly, there must be an accompanying act to evince that intention.138 2.188 An attempt to contravene therefore requires proof that at least one person intended to bring about a particular result and acted in a particular way to do so.139 2.189 In other words, an attempt to contravene requires proof of both a mental and physical element.140 It also requires proof that some sort of connection exists between each element. 2.190 To say that a person attempted to do something means that he or she has acted with the purpose of bringing about that which he or she is said to have attempted.141 2.191 In TPC v Tubemakers of Australia Ltd,142 Toohey J described his view of an attempt to contravene as:

I have no difficulty with the proposition that a statement relied upon to found an allegation of attempt must carry within its terms the potential for an arrangement or an understanding. A statement made quite unilaterally of intention to do something or to refrain from doing something, with no suggestion express or implied that others might act in the same way, is hard to visualize as an attempt to make an arrangement or arrive at an understanding …

2.192 The above description by Toohey J is a useful starting point to understand the meaning of attempt to contravene. However, the description, by itself, does not provide a great deal of practical guidance on the various ways to establish an attempt to contravene. [page 89] 2.193 To provide further guidance, a brief examination of the mental and physical elements of an attempt to contravene follows, as well as a short list of examples of what constitutes an attempt to contravene.

Mental element 2.194 The mental element of intention is the first requirement to establish an attempt to contravene a provision for the purposes of the relevant provisions of the ACL.143 2.195 However, the expectation of a person is irrelevant. The introduction of expectation as a required aspect of intention has been rejected by Toohey J in TPC v Tubemakers of Australia Ltd.144 2.196 Toohey J also ruled out the possibility that expectation could be considered as an additional element to establish an attempt to contravene. His Honour stated:145 But it is, I think, introducing an unnecessary and unwarranted element into the notion of attempt to suggest that there must be an expectation, as in the present case, that an arrangement or understanding will result. It may be that counsel was not submitting that expectation was an

element additional to that of intention, rather that expectation was an aspect of intention. But in either case its introduction is both unnecessary and confusing. If intention is an essential ingredient of attempt under the Trade Practices Act and the necessary intention has been demonstrated, why should there be an expectation that an arrangement or understanding will result? As Professor Howard points out in Australian Criminal Law 2nd ed, at 300: ‘Conviction of attempt is not precluded by reason only of the fact that what D is attempting is under the circumstances impossible, but the meaning of ‘impossible’ in this context is far from clear’. If a person may be convicted of attempting to commit an offence though achievement of the offence is in the circumstances not possible, I see no reason why there must be an expectation in the mind of the person charged that he will achieve his object as well as having the intention to achieve it. If, on the other hand, no intention is necessary for an attempt to contravene s 45(2) of the Trade Practices Act, there can be no justification for demanding an expectation that the conduct prescribed will result.

2.197 For similar reasons above, it is likely that the motive(s) of a person should also be considered irrelevant for the purposes of establishing an attempt to contravene. 2.198 Motive is an emotion or driving force which is part of a person’s state of mind which prompts that person to act. The motive for conduct is therefore the reason for seeking an end.146 2.199 Motive should not be confused with intention which is the bringing about of a particular result or seeking an end. This view is consistent with the interpretation of purpose in certain Pt IV provisions of the CCA147 and also in the criminal context. [page 90] 2.200 In the criminal context, motive is usually irrelevant to criminal liability even though it is a vital part of a person’s state of mind.148 Intent is most frequently associated with act and consequence elements in the actus reus, and not motive.

2.201 In cl 5.2 in the Sch to the Criminal Code Act 1995 (Cth), intention is described as: (1) A person has intention with respect to conduct if he or she means to engage in that conduct. (2) A person has intention with respect to a circumstance if he or she believes that it exists or will exist. (3) A person has intention with respect to a result if he or she means to bring it about or is aware that it will occur in the ordinary course of events.

2.202 In the criminal context, intention is an everyday term that does not require a technical definition.149 Intention simply requires proof that a person intended to bring about a particular result. 2.203 Premeditation is not relevant to establishing intention in the criminal context. Nor is there a presumption that a person intends the natural or probable consequences of his or her act(s).150 Intention, in both criminal and civil context, may be inferred from the circumstances.151 2.204 In the criminal context, mens rea may include an objective as well as a subjective test. However, in the context of the relevant provisions of the ACL, it is not entirely clear as to whether intention requires an objective, or subjective test, or a combination of both. 2.205 The answer may lie in obiter dicta in TPC v Tubemakers.152 In this case, it appeared that Toohey J accepted that objective circumstances must be weighed against the subjective intention of the person. His Honour stated:153 They [the respondents] agreed that objective circumstances from which inferences might be drawn could properly be taken into account, but said this must be weighed against the subjective intention of the persons whose conduct was the subject of inquiry. With much of this submission there can be no argument.

2.206 Toohey J’s above statement has never been referred to by other judges, and its applicability to other attempt to contravene cases is not entirely clear, nor has it been cited in cases concerning contraventions.

[page 91] 2.207 Whether a subjective or objective test or a combination of both (or no test at all) is required to establish a contravention will ultimately depend on the section contravened in the ACL (or CCA). 2.208 For example, in TPC v Tubemakers,154 Toohey J observed that the prohibitions in former s 45(2) of the TPA are absolute and not dependent on establishing mens rea (or the subjective view) on the part of the alleged offender. 2.209 However, in ACCC v Visy,155 Sackville J qualified Toohey J’s observation. His Honour stated that Toohey J’s observation ‘may, perhaps, require modification to the extent that former s 45(2), read with s 4D(1), incorporates a subjective purpose’.156 2.210 From this, it is possible that the mental requirement for intention under s 224 of the ACL differs (in term of which test, objective, subjective or both, is applicable) to the mental requirement of purpose under s 4D(1) and other purpose provisions in Pt IV of the CCA. 2.211 Regardless, it is clear that intention for the purpose of establishing an attempt to contravene under former s 76 of the TPA requires, at least, an examination of the subjective intention of the relevant person.157

Physical element 2.212 The second element required to establish an attempt to contravene is the accompanying physical act to evince the illegal intention of a person. 2.213

It captures conduct which falls short of a contravention and in some

cases, conduct which is far short of a contravention. It also captures conduct which may not be possible to achieve a contravention.158 2.214 An attempt to contravene does not require that an arrangement is in place or readily able to be effected.159 Nor is it necessary that the attempt to contravene must have reached an advanced stage before it comes within one of the relevant provisions of the ACL.160 2.215 An attempt to contravene must involve the taking of a step towards the commission of the illegal act.161 However, it is not sufficient if it is merely remotely connected or preparatory to the commission of the act.162 [page 92] 2.216 For example, in TPC v Parkfield,163 the effect of conversations between two petrol retailers, in the course of which one sought to ascertain the other’s attitude to raising petrol prices, was held to be sufficient to constitute an ‘attempt to contravene’. 2.217 This was despite the fact that the price fixing proposal had not reached an advanced stage, and other retailers were not identified, either by name or by any reasonably precise reference to the areas in which they traded.164 2.218 From the above description of the physical element of attempt to contravene, it appears that satisfying this threshold can be quite low. This is also evident from some of the examples given in the short list below of what constitutes an attempt to contravene. 2.219 The following examples may provide some further practical guidance on the topic. However, the list is merely useful as a general guide only, as each case will be determined on its own facts.

Some examples of what constitutes ‘attempt to contravene’ 2.220 The following is a list of examples of what is considered to constitute an ‘attempt to contravene’ for the purposes of former s 76(1)(b) of the TPA (similar to s 224(1)(b)). A competitor who had proffered six separate draft agreements to another competitor, and on each occasion, the draft contained a nocompetition clause drafted on behalf of the first competitor, was held as an ‘attempt to contravene.’ In these circumstances, it was irrelevant that neither party was prepared to execute any of the draft agreements without the approval of their respective lawyers.165 The delivery of a memorandum to a competitor, which emphasised that profitability had fallen away because of competition, and statements made to that competitor (and other competitors) in a number of meetings to the effect that the company was prepared to allow discounts, and that an agreement should be reached on discounts because it was impossible to compete, was collectively held as an ‘attempt to contravene’.166 Over a period of two months, a competitor contacted another competitor by telephone on a number of occasions. During those telephone calls, the first competitor asked the second competitor whether he would raise his price of petrol to a certain level, if everyone else in the area would do the same. The second competitor refused to do so. The actions of the first competitor were held as an ‘attempt to contravene’.167 A meeting being arranged by one competitor with another, with the first competitor asking the second competitor to provide a ‘cover quote’ (instead of a competitive quote) to a particular customer was held as an ‘attempt to

[page 93] contravene’. In these circumstances, the details of the proposed arrangement was specific and almost complete in that it only required the second competitor to agree to provide the ‘cover quote’.168 An email sent from one competitor to another competitor, which contained a provision to the effect that the first competitor would refrain from engaging in the practice of offering or agreeing to accept a discounted tuition fee, and urging the second competitor to do the same, was held as an ‘attempt to contravene’.169 The preparation of draft agreements which contained a proposed list of customers and an exclusionary provision to the effect that the customers were to be shared between two competitors was held as an ‘attempt to contravene’. This was despite the fact that no concluded agreement was reached on the content of the draft agreements and those agreements were never finalised, signed or accepted by both competitors.170 A competitor spoke to another competitor in the airline industry in an attempt to persuade the second competitor to increase its price to a certain level for the transport of meat if the first competitor did the same. Later that day, a senior member of the first competitor sent an email to a subordinate detailing this. For an unknown reason, the understanding was never arrived at, but the conduct was held as an ‘attempt to contravene’.171 A competitor emailed another competitor in the airline industry in an attempt to persuade the second competitor to keep its tariff rate in line with the first competitor. The conduct was held as an ‘attempt to contravene’. A second email from the first competitor to a third competitor with similar intention was also held an as ‘attempt to contravene’. In both instances, the first competitor was

unsuccessful in arriving at an understanding with the other competitor.172 A competitor spoke to another competitor in the airline industry in a series of meetings over a ten-day period in an attempt to persuade the second competitor to fix the price of fuel surcharges for a specific route from Hong Kong to Australia. The conduct was held as an ‘attempt to contravene’, as there were discussions and a number of arranged meetings, in which the two competitors failed to reach an understanding.173 Other generic examples of what may be considered as an ‘attempt to contravene’ include: – an anti-competitive arrangement which was negotiated, but not put into practice;174 [page 94] –

an anti-competitive arrangement which was agreed in principle, but never completed;175 and

–

the collective nature of threatening (or persuasive) conduct and repeated requests from one competitor to form an anticompetitive arrangement.176

Liability of corporate and non-corporate principals Section 139B of the CCA 2.221

Section 139B of the CCA is a deeming provision which provides

guidance on how to determine the state of mind of a body corporate through the conduct of its directors, employees or agents. 2.222 Section 139B of the CCA helps to ensure that a body corporate or person cannot use employees as a shield from liability under the ACL. Section 139B (which relevantly mirrors s 84 of the CCA) states: Conduct of directors, employees or agents of bodies corporate (1) If, in a proceeding under this Part or the Australian Consumer Law in respect of conduct that is engaged in by a body corporate and to which this Part or the Australian Consumer Law applies, 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 the 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. (2) 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.

2.223 As most of the concepts in s 139B of the CCA are similar to those used in s 84, the jurisprudence that applies to s 84 also applies to s 139B to the extent that it is similarly worded. [page 95] 2.224

Section 139B(1) of the CCA concerns intention of the person,

whereas s 139B(2) concerns conduct which is deemed to be that of the corporation.177 2.225 Under s 139B(1) of the CCA it is not necessary for the intent to be that of a person who possesses the directing mind and will of the corporation. It is sufficient if the person having the relevant intent is a servant or agent.178 2.226 This is a significant extension to the ‘organic theory’ of corporate personality enunciated in the following case of Tesco Supermarkets Ltd v Nattrass,179 and to what is known as the ‘due diligence’ defence.

Tesco Supermarkets Ltd v Nattrass [1972] AC 153 In this case, Tesco Supermarkets Ltd (Tesco) owned a large number of supermarkets in which they sold a wide variety of goods. In September 1969, Tesco was offering a discount on Radiant washing powder. The discount was advertised on posters displayed in their shops. Once all of the washing powder was sold at the lower price, Tesco would replace it with the normal priced stock. In one particular shop, the Radiant washing powder ran out, but the manager failed to remove the poster which displayed the discount price. A customer, Mr Coane, who purchased a pack of the Radiant washing powder was charged the normal price. Tesco was charged under the s 11(2) of the Trade Descriptions Act 1968 (UK) for falsely advertising the price of washing powder. Tesco argued in defence that it had taken all reasonable precautions and all due diligence to ensure that pricing errors would not occur. As such, the conduct of the manager in this particular store could not attach liability to Tesco. The House of Lords held that Tesco was not liable for the actions of the store manager in this particular circumstance. Tesco had not delegated its

responsibilities to take all reasonable precautions and exercise all due diligence to the manager (ie the ‘due diligence’ defence). The discharge of those responsibilities required the directing mind and will of the company. As such, the conduct of the manager was not a directing mind of Tesco and therefore his conduct was not attributable to Tesco.

2.227 Section 139B(1) of the CCA makes it easier to prove corporate intent, as it does not require proof that the person engaging in the conduct was the ‘directing mind and will’ of the corporation. [page 96] 2.228 Section 139B(1) of the CCA merely requires a director, servant or agent of the corporation to be engaging in the conduct within that person’s actual or apparent authority and he or she had the requisite intent to do so. 2.229 Section 139B(2) of the CCA is an enlarging provision of general application under the CCA. Section 139B(2) has the effect of widening the common law principles of vicarious liability, agency and the Tesco principles.180 2.230 In Walplan Pty Ltd v Wallace,181 Lockhart J made the following comments about the wide application of former s 84(2) of the TPA and its extension beyond principles enunciated in Tesco: Section 84(2) is obviously a provision of wide application. It is, in my opinion, an extension of the principles enunciated in Tesco. Where proceedings are brought against a corporation for contravention of a provision of the Act the corporation’s liability may be determined either by applying the principles of Tesco or by s 84(2). Sub-section (2) is not concerned with intention and I agree with what Toohey J said about this in Tubemakers (ATPR at p 44,326; 47 ALR at pp 739–40). I cannot accept the submission of counsel for the appellant that s 84(2) only applies where a

person had the corporation’s actual (be it express or implied) authority to engage in the conduct in question. If sub-s (2) had so limited an operation it would, I think, fail to achieve any useful purpose. It would be largely a restatement of the general law. It is a statutory provision designed to facilitate proof of the responsibility of a corporation for the acts of its directors, servants, agents and others. It is designed to attribute to a corporation conduct of others for which the corporation would not necessarily be otherwise responsible.

2.231 In TPC v Sun Alliance Australia Ltd,182 Einfeld J made the following comments in relation to former s 84(2) of the TPA and its reach beyond the common law principles of agency: It [the former s 84(2) of the TPA] extends to proceedings, both civil and criminal, and is designed to eliminate the necessity to apply the various and at times divergent tests of the common law relating to a corporation’s responsibility for the acts of its servants or agents. It extends those common law principles in order to facilitate proof of a corporation’s responsibility. I respectfully adopt the views of Justice Sheppard in Burgundy Royale in relation to the correct way of approaching the construction of s 84(2) and the statement of Justice Lockhart in Walplan defining its scope. The most appropriate course is to take the words of the subsection as they are and endeavour to give effect to them, approaching the task upon the basis that it was the legislature’s intention to widen the common law principles relating to agency.

[page 97] 2.232 Similarly, in Wheeler Grace & Pierucci Pty Ltd v Wright,183 Lee J made it clear that former s 84(2) of the TPA is not limited to the common law principles of vicarious liability: … 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.

2.233 Vicarious liability is defined as liability imposed on one person for the wrongful act of another person on the basis of the legal relationship between them.184 2.234 For example, an employer is liable to a third person for the tortious acts of an employee in the course of his or her employment, which the employer actually or impliedly authorises.185 2.235 The liability of a corporation for the conduct of its directors, servants and agents under s 139B(2) of the CCA is determined not by the principles of vicarious liability, but by proof of the relevant matters in s 139B(2).

‘On behalf of’ 2.236 The first of the relevant matters in s 139B(2) of the CCA is to establish that the director, servant or agent who was engaging in the conduct was acting ‘on behalf of’ the corporation. 2.237 The phrase ‘on behalf of’ is not one with a strict legal meaning and is used in a wide range of relationships.186 The phrase is not used in any definitive sense capable of general application to all circumstances. 2.238 For the purposes of s 84(2) of the CCA, a person has acted on behalf of a corporation if either one of the following two conditions is satisfied:187 [page 98] the person engaged in the conduct intending to do so ‘as the representative of’ or ‘for’ the corporation; or the person engaged in the conduct in the course of the corporation’s

business, affairs or activities. 2.239 In Walplan Pty Ltd v Wallace,188 Lockhart J made the following comments about the meaning of the phrase ‘on behalf of’ in the context of former s 84(2) of the TPA: In the context of s 84(2) the phrase suggests some involvement by the person concerned with the activities of the company. The words convey a meaning similar to the phrase ‘in the course of the body corporate’s affairs or activities’. The words ‘on behalf of’ also encompass acts done by a corporation’s servants in the course of their employment; but those words are not confined to the notion of the master/servant relationship. Section 84(2) refers to conduct by directors and agents of a body corporate as well as its servants. Also, the second limb of the sub-section extends the corporation’s responsibility to the conduct of other persons who act at the behest of a director, agent or servant of the corporation. Hence the phrase ‘on behalf of’ casts a much wider net than conduct by servants in the course of their employment, although it includes it. The second limb of the sub-section reinforces my view that the words ‘on behalf of’ govern both limbs of the sub-section. It may be possible to read the second limb as if it was not qualified by the words ‘on behalf of’ and relate back only to the opening words of the sub-section ‘any conduct engaged in’; but the more ordinary and natural meaning of the sub-section when read as a whole is that the conduct by the various persons to whom it refers must be engaged in ‘on behalf of’ the corporation to attract the benefit of the deemed responsibility of the corporation. If this were not so, a corporation could be liable by the application of the sub-section yet be unable to avail itself of defences under s 85(1) in circumstances where the only nexus between the corporation and the conduct complained of is the fact that a director, servant or agent (whether he be in a position of authority in the corporation or at the bottom of the corporation’s ladder) directed that the conduct be engaged in.

Not on a ‘frolic of their own’ 2.240 The second relevant matter in s 139B(2) of the CCA is that the corporation will only be bound when the director, employee or agent has acted within their actual or apparent authority. 2.241 Sections 126–129 of the CA provide statutory rules for when a director, employee or agent will be taken to have acted within the scope of their actual or apparent authority.

2.242 However, whether a director, employee or agent has acted beyond their actual or apparent authority will be determined by the common law principles of agency. [page 99] 2.243 Accordingly, a corporation will not be bound by the conduct of the director, employee or agent who has acted beyond their actual or apparent authority or who has gone out on a ‘frolic of their own’.189

Actual authority 2.244 The actual authority of an agent is defined as the authority given to a person (usually a company officer) by a company, to engage in particular conduct on behalf of the company.190 2.245 Actual authority includes the authority to do whatever is necessarily incidental to the acts authorised and, if the appointment is to a standard position, the things usually done by a person in that position. 2.246 In Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd,191 Diplock LJ provides the following comments on the nature and effect of the actual authority of an agent: An actual authority is a legal relationship between principal and agent created by a consensual agreement to which they alone are parties. Its scope is to be ascertained by applying ordinary principles of construction of contracts.

2.247 Accordingly, whether actual authority of an agent exists is a question of fact to be determined by the common law principles of construction of contract. 2.248

The common law has divided actual authority into two categories,

namely actual expressed authority and actual implied authority.

Actual express authority 2.249 The actual express authority of an agent is the authority the principal corporation has expressly given to the agent in either words or in writing that he or she may act on behalf of the corporation. 2.250 For example, a corporation gives an employee specific instructions in writing to enter into a contract for the sale of land and purchase that land at a stipulated price or price range.

Actual implied authority 2.251 The actual implied authority of an agent is the authority an agent has by virtue of being reasonably necessary to carry out his or her express authority. This is inferred by virtue of the position held by an agent. [page 100] 2.252 For example, a corporation gives an employee specific instructions to organise a conference for its staff. That employee would presumably have the implied authority to also book flights, hotel rooms, taxis, etc.

Apparent (or ostensible) authority 2.253 Apparent authority (sometimes referred to as ostensible authority) is defined as the authority of an agent as it appears to others, regardless of any limit agreed between the principal and agent.192 2.254

In other words, apparent authority exists where the conduct of a

principal has led a person to believe that the agent was authorised to contract on its behalf, even if no actual authorisation was given to the agent. 2.255 For example, an acting managing director of a building company (although never formally appointed) who hired architects on behalf of the company, was considered to be acting within his apparent authority.193

Section 139C of the CCA 2.256 Section 139C of the CCA is a deeming provision which provides guidance on how to determine the state of mind of a non-body corporate through the conduct of its directors, employees or agents. 2.257 Section 139C(2) of the CCA has the same effect as s 139B(2), but refers to a non-body corporate, which includes sole traders and natural persons. Section 139C (s 139C(2) reflects s 84(4)) states: Conduct of employees or agents of persons other than bodies corporate (1) If, in a proceeding under this Part or the Australian Consumer Law in respect of conduct that is engaged in by a person (the principal) other than a body corporate and to which this Part or the Australian Consumer Law applies, it is necessary to establish the state of mind of the principal, it is sufficient to show: (a) that an employee or agent of the principal engaged in that conduct within the scope of the actual or apparent authority of the employee or agent; and (b) the employee or agent had that state of mind. (2) 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 (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;

[page 101]

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. (3) If: (a) a person other than a body corporate is convicted of an offence; and (b) subsection (1) or (2) applied in relation to the conviction on the basis that the person was the principal mentioned in that subsection; and (c) the person would not have been convicted of the offence if that subsection had not been enacted; the person is not liable to be punished by imprisonment for that offence.

Various other key definitions and concepts ‘Goods’ 2.258 Section 2 of the ACL provides an inclusive definition of ‘goods’. The definition of goods in s 2 is an extension of the ordinary meaning of goods.194 Section 2 defines ‘goods’ as follows: ‘goods’ includes: (a) ships, aircraft and other vehicles; and (b) animals, including fish; and (c) minerals, trees and crops, whether on, under or attached to land or not; and (d) gas and electricity; and (e) computer software; and (f)

second-hand goods; and

(g) any component part of, or accessory to, goods.

2.259 In terms of the ordinary meaning of goods, the LexisNexis Concise Australian Legal Dictionary195 defines goods as: Moveable personal property, especially merchandise used in trade or commerce and requiring carriage from one place to another. The word ‘good’ is general and indefinite import.

2.260 The ordinary definition of goods is wide and includes most items on shelves in retail and department stores, including: kitchenware, furniture, clothing, electrical appliances, bedding etc. 2.261 The expanded definition of goods in s 2 of the ACL specifically includes minerals, trees and crops, regardless of whether or not they are attached to land. 2.262 Section 8 of the ACL provides that, for the purposes of the ACL, goods are taken to be supplied to a consumer even if they are affixed to land or premises at the time of the supply. [page 102] 2.263 This means that where items are supplied in relation to another transaction (such as building a house) and are fixed to the land, those items are considered to be goods for the purposes of the ACL.196 2.264 For example, the supply of a built-in kitchen or bathroom fittings as part of a building contract are goods, regardless of whether they would otherwise become fixtures at the time of their installation. 2.265 The definition of goods in s 2 of the ACL also includes ‘any component part of, or accessory to, goods’. This would include bundled items such as a battery recharger or headset, which may come with a mobile phone. 2.266 Section 2 of the ACL also specifically includes computer software as goods. This inclusion was made to overcome some uncertainty as to the status of computer software under the common law.197

‘Services’

2.267 Section 2 of the ACL provides an inclusive definition of ‘services’. The definition of services in s 2 is an extension of the ordinary meaning of services.198 Section 2 defines ‘services’ as: ‘services’ includes: (a) any rights (including rights in relation to, and interests in, real or personal property), benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce; and (b) without limiting paragraph (a), the rights, benefits, privileges or facilities that are, or are to be, provided, granted or conferred under: (i)

a contract for or in relation to the performance of work (including work of a professional nature), whether with or without the supply of goods; or

(ii) a contract for or in relation to the provision of, or the use or enjoyment of facilities for, amusement, entertainment, recreation or instruction; or (iii) a contract for or in relation to the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction; or (iv) a contract of insurance; or (v) a contract between a banker and a customer of the banker entered into in the course of the carrying on by the banker of the business of banking; or (vi) any contract for or in relation to the lending of money; but does not include rights or benefits being the supply of goods or the performance of work under a contract of service.

[page 103] 2.268 The definition of ‘services’ is widely expressed in s 2 of the ACL to include any rights, benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce’. 2.269 Although the inclusion of ‘in trade or commerce’ somewhat narrows the scope of the expanded definition in s 2 of the ACL, in most cases it would not be considered as an issue, as services are usually commercial in nature. 2.270

Section 2 of the ACL expressly excludes from the expanded

definition of services any rights or benefits being the supply of goods or the performance of work under a contract of service. 2.271 The exclusion in s 2 of the ACL applies only to a contract of service, and not to a contract for service.199 The former is in relation to employer/employee contracts, whereas the latter is in relation to independent contractors. 2.272 In Adamson v West Perth Football Club,200 Northrop J provided the following comments in relation to services as defined in former s 4 of the TPA (similarly worded to s 2 of the ACL): The word ‘services’ has no clear and stated meaning and the Act does not provide a definitive meaning but it is clear from the inclusive provisions of the definition that services includes the rights or benefits granted or conferred under a contract for the performance of work. In the present case, the question is whether a club, as a result of entering into a contract with a professional footballer under the terms of which the footballer is to play football for that club, acquires services: see s 45(3) of the Act. By substituting parts of the extended meaning for the word ‘services’ the question is whether, in those circumstances, the club ‘acquires’, which by definition includes ‘accepts’, rights or benefits granted or conferred under a contract for the performance of work. Without attempting to place any final meaning on the word ‘services’ the answer to that question must be in the affirmative. But the exclusive provisions of the definition expressly exclude from the meaning of services, rights or benefits being the performance of work under a contract of service. It follows therefore that a club does not come within s 45(3) of the Act when it acquires rights or benefits granted or conferred under a contract for the performance of work. In an attempt to overcome this conclusion, counsel for the applicant contrasted the right or privilege to enter into a contract of service with the right or benefit being the performance of work under a contract of service and contended that the right or privilege to enter into a contract of service did not come within the exclusive provisions of the definition. I reject that contention. The right or privilege of the club, if it can be so called, to enter into a contract of service with a footballer is not the acquisition of services by a club under s 45(3) of the Act.

[page 104] 2.273

The legislative history of the definition of ‘services’ in former s 4(1)

of the TPA is neatly and usefully set out by Farrell J in Obeid v ACCC.201 2.274 In terms of the ordinary meaning of ‘services’, Farrell J in Obeid v ACCC,202 applied the same dictionary meaning given to ‘services’ as Wilcox J did in Adamson v New South Wales Rugby League Ltd:203 As a reference to any standard dictionary will show, although the word ‘services’ has a wide application, it imports always the notion of some assistance or accommodation being made available by one person to another.

2.275 In Obeid v ACCC,204 Farrell J observed that the Macquarie Dictionary provided 33 definitions of ‘services’, but noted that the legislative context is determinative of what can be encompassed by ‘services’. 2.276 Farrell J described the purpose of the trade practices legislation as one that was originally designed to regulate restrictive trade practices and later to afford consumer protection. 2.277 Farrell J thought that this context might mandate a more expansive view of ‘services’,205 perhaps along the following lines suggested by McTiernan J in Revesby Credit Union Co-operative Ltd v FCT:206 The Shorter Oxford Dictionary defines ‘service’ as ‘the act of helping or benefiting’, and in the plural, ‘friendly or professional services’. This is a broad definition. It would include all the things contemplated by the word ‘services’ in the common phrase ‘goods and services’. It would include any consideration given in the performance of any ordinary commercial contract, as well as all those activities more specifically called services, which do not actually involve the production or processing of goods, for instance, banking and financing, transportation, and insurance. In the case of Employers’ Mutual Indemnity Association Ltd v Federal Commissioner of Taxation (1943) 68 CLR 165 the Full Court had to consider whether a mutual insurance company in issuing policies and in investigating and either resisting or paying on claims was engaged in ‘the rendering of services’ to its policy holders. The Court with Rich J and myself dissenting held that neither the issuing of insurance policies nor the investigation, resisting and paying of claims was ‘the rendering of services’ to the policy holders. In the opinion of Latham CJ ‘the rendering of services’ must involve the doing of work of some kind. The mere making of a contract, such as the issuing of an insurance policy cannot be put into this category, even though work may be done in pursuance of the contract. Furthermore, the Chief Justice did not regard ordinary commercial dealing on terms acceptable to each party as the rendering of

services. But he did not further define the phrase. I would have thought that the performance of work for the benefit of another if in pursuance

[page 105] of a contract would fall within the Chief Justice’s general definition but this has been specifically excluded if it merely amounts to a performance of consideration already promised. Starke J held that ‘the rendering of services’ necessarily involved the ‘doing of a positive act’ and his example was the shearing of sheep. The third majority opinion, that of Williams J, decided that the services which are to be rendered must be of the kind that could result from a contract of services and accordingly must involve a personal and confidential relationship so as to make them unenforceable specifically in Equity. The minority opinions of Rich J and myself agreed that the word ‘services’ refers to services of the same nature as those rendered by a business enterprise in satisfying the business needs of persons having recourse to it. It is immediately apparent that the majority judgments do not reveal a common opinion as to the nature of ‘the rendering of service’. However in the light of the decision the broad meaning of the phrase cannot be adopted. But what restriction is to be placed on it? I consider that ‘the rendering of services’ should consist of the doing of an act for the benefit of another, which is more than the mere making of a contract and which goes beyond the performance of an obligation undertaken in the course of an ordinary commercial contract.

2.278 In line with the expansive view of ‘services’ in the CCA, Farrell J in Obeid v ACCC,207 also noted that under the CCA, there is no reason to give the ordinary meaning of ‘services’ a restrictive application: [T]he CC Act is directed to regulating restrictive practices and protecting consumers from unfair practices: there is no reason to give the ordinary meaning of ‘services’ restrictive application. Although the Full Court of the Federal Court in Queensland Aggregates Pty Ltd v Trade Practices Commission (1981) 38 ALR 217 indicated at 221 that ‘services’ should not be interpreted in an expansive way, the limitation discussed in that case was that ‘services’ should not include the payment of money or the supply of goods. In a context where the supply of goods is also (and often similarly) addressed in the legislation, that is not a substantial limitation. In my view, the Full Court’s reasoning would not preclude a finding that Ministerial Consent and the right to apply for an exploration licence which by force of s 22 of the Mining Act requires the Minister to consider the application before deciding whether to grant or refuse to grant a licence are ‘services’ having regard to the purpose of regulating restrictive and unfair practices for which the CC Act and its predecessors were enacted.

‘Severability’ 2.279

Section 16 of the ACL (similarly worded to s 4L of the CCA) states:

Severability (1) If the making of a contract after the commencement of this section contravenes this Schedule because the contract includes a particular provision, nothing in this Schedule affects the validity or enforceability of the contract otherwise than in relation to that provision, so far as that provision is severable. (2) This section has effect subject to any order made under Division 4 of Part 5-2.

[page 106] 2.280 Severability is not defined in the ACL or CCA. The LexisNexis, Concise Australian Legal Dictionary defines severability as:208 A principle of interpretation which relates to the independence of part of a statute or contract, allowing it to be removed from the main instrument without undermining the integrity of the instrument as a whole.

2.281 The leading decision on the interpretation of severability under former s 4L of the TPA (now s 4L of the CCA) is the following High Court decision of SST Consulting Services Pty Limited v Rieson.209

SST Consulting Services Pty Limited v Rieson [2006] HCA 31 In this case, SST Consulting Services Pty Ltd (SST) lent money to AFS Freight Management (USA) Inc (AFS). A personal guarantee for repayment of that loan was given by two directors of AFS, Mr Charles Rieson and Mr Scott Bell. The loan contract obliged AFS to direct all work of packing and unpacking shipping containers at certain ports ‘to the corporations that the lender shall direct’. Failure to satisfy this

obligation would constitute a default and SST would be entitled to recover the loan principal. At a later stage, AFS defaulted on the loan agreement. The default was not due to the failure to direct packing and unpacking work to the specified corporations. Rather the default was due to arrears in payment. SST sought to enforce the personal guarantee and recover the loan principal. The outstanding amount of the $1,000,000 loan was $571,472.51 plus interest. SST brought proceedings against Mr Rieson and Mr Bell in accordance with the personal guarantee executed by them. At trial, both parties agreed that the obligation to direct packing and unpacking work to the specific corporations was an exclusive dealing in contravention of former s 47(1) of the TPA. Such an obligation constituted a third line forcing as defined under former s 47(6) of the TPA. SST argued that despite the third line forcing provision being invalid and unenforceable, the remainder of the loan contract was valid and enforceable as the illegal provision could be severed pursuant to former s 4L of the TPA. The majority of the High Court (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ in a joint judgment, Kirby J dissenting) allowed the appeal and held in favour of SST. [page 107] In arriving at their decision, the majority rejected the decision of the Full Federal Court to rely on the common law rules of severance and instead constructed s 4L from its statutory context. According to their Honours: Section 4L takes its place in a statutory framework: a framework of legislation that makes elaborate provision not only for the creation of norms of conduct but also for the consequences that are to follow from the contravention of those norms. It is not readily to be supposed that the consequences of contravention are to be determined by resort to

principles hinging upon inferences about legislative intention or the imputed intentions of contracting parties.

In construing s 4L within its statutory framework, the majority made the following three observations relating to its text. First, s 4L is engaged only if there is a contract as distinct from an arrangement or understanding. Second, s 4L is engaged only if the making of that contract contravenes the Act and third s 4L is engaged only if the making of the contract contravenes the Act by reason of the inclusion of a particular provision in the contract. It follows that s 4L cannot be engaged in respect of any other contravention of the Act. The majority held that the central proposition of s 4L is in the words ‘nothing in this Act affects the validity or enforceability of the contract.’ This proposition, according to the majority, is qualified in two respects. First, it is subject to ‘any order made under section 87 or 87A’. Second, different consequences follow in relation to the offending provision ‘in so far as that provision is severable’. Notably, the central proposition is contrary to the ordinary rule that a contract whose making is illegal will not be enforced. On its proper construction, the majority held that s 4L requires rather than permits the severance of the offending provision. The phrase ‘in so far as’ marks the limit of the severance that must be undertaking. This, according to the majority, will in many cases be achieved by the ‘blue pencil’ test. However, in cases when the blue pencil test is not appropriate, the phrase marks the limit of the invalidity and unenforceability of the offending provision. The limits of each case will depend upon the particular contractual provisions that are to be considered.

‘Supply’

2.282 Section 2 of the ACL defines ‘supply’ inclusively. The definition of supply in s 2 is an extension of the ordinary meaning of supply. Section 2 defines ‘supply’ as: ‘supply’, when used as a verb, includes: (a) in relation to goods—supply (including re-supply) by way of sale, exchange, lease, hire or hire-purchase; and (b) in relation to services—provide, grant or confer; and, when used as a noun, has a corresponding meaning, and supplied and supplier have corresponding meanings.

[page 108] 2.283 In relation to goods, the definition of supply is widely defined in s 2 of the ACL to extend the ordinary meaning of services to include sale, exchange, lease, hire or hire-purchase of goods and re-supply of goods. 2.284 In Castlemaine Tooheys Ltd v Williams & Hodgson Transport Pty Ltd,210 Lockhart J made the following comments in relation to supply in former s 4 of the TPA (similarly worded to s 2 of the ACL): The supply of goods will usually be made pursuant to a contract for sale, lease, hire-purchase or some other form of agreement; but it is the act of supply to which the statutory prohibition is directed and this includes the process of furnishing, providing or delivering goods. ‘Supply’ is a word of wide import. The subject matter of the Act and its evident purposes do not call for any reading down of its ordinary meaning. Neither s 4c nor the definition of ‘supply’ in s 4 call for any restrictive interpretation. The prohibited supply is essentially the supply of goods or services pursuant to business transactions: see Commonwealth v Sterling Nicholas Duty Free Pty Ltd (1972) 46 ALJR 241.

2.285 In relation to services, the definition of supply is widely defined in s 2 of the ACL to extend the ordinary meaning of services to include the providing, granting or conferring of a service. 2.286

Section 11 of the ACL (similarly worded to s 4C of the CCA)

provides a further reference to the meaning of acquisition, supply and resupply for the purposes of the ACL. Section 11 states: References to acquisition, supply and re-supply In this Schedule: (a) a reference to the acquisition of goods includes a reference to the acquisition of property in, or rights in relation to, goods pursuant to a supply of the goods; and (b) a reference to the supply or acquisition of goods or services includes a reference to agreeing to supply or acquire goods or services; and (c) a reference to the supply or acquisition of goods includes a reference to the supply or acquisition of goods together with other property or services, or both; and (d) a reference to the supply or acquisition of services includes a reference to the supply or acquisition of services together with property or other services, or both; and (e) a reference to the re-supply of goods acquired from a person includes a reference to: (i)

a supply of the goods to another person in an altered form or condition; and

(ii) a supply to another person of goods in which the first-mentioned goods have been incorporated; and (f)

a reference to the re-supply of services (the original services) acquired from a person (the original supplier) includes a reference to: (i)

a supply of the original services to another person in an altered form or condition; and

(ii) a supply to another person of other services that are substantially similar to the original services, and could not have been supplied if the original services had not been acquired by the person who acquired them from the original supplier.

[page 109] 2.287 The definition of ‘supply’ and ‘acquire’ are symmetrical. A supply of goods must occur as part of a ‘bilateral transaction or dealing under which the other party acquires them’.211 2.288 The supply of goods may include the provision of services in a single transaction. Where this occurs, and the transaction is characterised as a supply of goods, it cannot be also a supply of services.212 2.289

Hence, a contract for the ‘supply and fitting of a windscreen to a

motor vehicle’ has been held to fall within a market in which persons supply goods rather than services.213 2.290 The characterisation of a supply of good or a supply of service may not always be an easy task. A court will identify from the facts of the case the ‘precise legal obligation’ undertaken by the supplier.214

‘Manufacturer’ 2.291 Section 7 of the ACL defines ‘manufacturer’ inclusively. The meaning of manufacturer in s 7 is relevant to three areas in the ACL, namely: consumer guarantees and remedies relating to consumer guarantees (Ch 3 Pt 3-2 and Ch 5 Pt 5-4); liability of manufacturers for defective goods (Ch 3 Pt 3-5); and country of origin representations: Ch 5 Pt 5-3. 2.292 The definition of manufacturer in s 7 of the ACL is an extension of the ordinary meaning of manufacturer. Section 7 (similar to former s 74A of the TPA) defines ‘manufacturer’ as follows: Meaning of manufacturer (1) A manufacturer includes the following: (a) a person who grows, extracts, produces, processes or assembles goods; (b) a person who holds himself or herself out to the public as the manufacturer of goods; (c) a person who causes or permits the name of the person, a name by which the person carries on business or a brand or mark of the person to be applied to goods supplied by the person; (d) a person (the first person) who causes or permits another person, in connection with: (i)

the supply or possible supply of goods by that other person; or

(ii) the promotion by that other person by any means of the supply or use of goods; to hold out the first person to the public as the manufacturer of the goods;

[page 110] (e) a person who imports goods into Australia if: (i)

the person is not the manufacturer of the goods; and

(ii) at the time of the importation, the manufacturer of the goods does not have a place of business in Australia. (2) For the purposes of subsection (1)(c): (a) a name, brand or mark is taken to be applied to goods if: (i)

it is woven in, impressed on, worked into or annexed or affixed to the goods; or

(ii) it is applied to a covering, label, reel or thing in or with which the goods are supplied; and (b) if the name of a person, a name by which a person carries on business or a brand or mark of a person is applied to goods, it is presumed, unless the contrary is established, that the person caused or permitted the name, brand or mark to be applied to the goods. (3) If goods are imported into Australia on behalf of a person, the person is taken, for the purposes of paragraph (1)(e), to have imported the goods into Australia.

2.293 As s 7 of the ACL is drafted similarly to former s 74A of the TPA, the jurisprudence relating to former s 74A is applicable to s 7 insofar as those provisions are similar.215 2.294 The meaning of manufacturer in s 7 of the ACL is broad. It represents the first point in the distribution chain of a good into an Australian market and covers a wide range of activities.216 2.295 For the purposes of the ACL, the Explanatory Memorandum provides the following inclusive list of the types of activities which will fall under each category of a manufacturer: the growing, extracting, producing, processing or assembling of the goods: s 7(1)(a). These activities encompass a very wide range of ‘agricultural, mining, forestry, fishing and aquacultural, manufacturing, product assembly, trade, craft and artisanal activities’;217

a person who holds themselves out to the public as the manufacturer of the goods: s 7(1)(b). This activity covers, amongst other things, a range of things importers and agents of the manufacturer may do to give the impression that they are the manufacturer of the goods;218 a person who causes or permits the name of the person, brand or mark to be applied to goods supplied by the person: s 7(1)(c). This activity covers, amongst other things, a range of things importers and agents of the manufacturer may do when acting as the local representative of manufacturers;219 [page 111] a person who permits another person to promote the goods as those of the first person: s 7(1)(d). This activity covers, amongst other things, a range of activities that relate to the activities of ‘importers and agents acting as the local representative of manufacturers’;220 and an importer of the goods into Australia, where the importer is not the manufacturer of the goods and there is no place of business in Australia for the manufacturer: s 7(1)(e).221 2.296 The above categories of activities of a manufacturer are not mutually exclusive. This means that more than one person may be considered as a manufacturer of a particular good at any given time. 2.297 A person may therefore commence in the same legal proceedings an action against a deemed manufacturer as well as the actual manufacturer, and liability may be apportioned between them.222 2.298

This was made clear in the decision of Leeks v FXC Corporation,223

where Finn J made the following comments in relation to former s 74A(3) and (4) of the TPA (now s 7(1)(a)–(e) of the ACL): It has since been judicially accepted that, notwithstanding the deeming provisions, an actual foreign manufacturer can properly be a party as well to proceedings brought by a consumer against local deemed manufacturers. … If the objection be that to allow proceedings as well against the actual manufacturer results in the curiosity of there being two ‘manufacturers’ for the purposes of proceedings under the Division, that possibility is inherent within the deeming provisions themselves. An actual foreign manufacturer may satisfy the requirements of s 74A(3) — the ‘holding out’ provision — and be a deemed manufacturer for its purposes, while an importer from that manufacturer may as well be a deemed manufacturer by virtue of s 74A(4): see also Heydon, paras 16.1180– 16.1190. There is, in my view, no reason why the various provisions of s 74A(3) and s 74A(4) should be treated as mutually exclusive so that only one of the deemed manufacturers could be sued. To adopt the words of von Doussa J on an analogous statutory provision in Electricity Trust (SA) v Krone (Aust) Technique Pty Ltd (1994) 51 FCR 540; 123 ALR 202; ATPR 41–337at 42,426: … the Act gives no indication which of them would be the party liable. That would be an odd result, and one which would be avoided if … the definition[s] were not read as being mutually exclusive.

[page 112] 2.299 For the purposes of s 7(1)(c) of the ACL, a person is taken to have associated their name, brand or mark with a good if their name, brand or mark is: woven, impressed, worked into or annexed, or affixed to the goods; or it is applied to a covering, label, reel or thing in or with which the goods are supplied: s 7(2)(a). 2.300

In Glendale Chemical Products Pty Ltd v ACCC,224 Wilcox,

Tamberlin and Sackville JJ made the following comments about a corporation that causes or permits the name of the corporation or a brand or mark to be applied to the good: However, the effect of s 74A(3) and s 75AB of the Act is that if a corporation causes or permits the name of the corporation or a brand or mark of the corporation to be applied to goods supplied by the corporation, the corporation is to be deemed for the purposes of Pt VA to have manufactured the goods. It is not disputed that Glendale’s name was applied to the Product. Nevertheless, it was contended that s 75AB and s 74A(3) cannot have effect in circumstances where there is a clear statement to the effect that Glendale did not manufacture the Product but that the Product was merely packed by it. It was said that if the Commission’s contention as to the effect of those provisions were correct, a label on a product supplied by a corporation stating expressly that the product was not manufactured by the corporation would have no effect. Of course in the present case Glendale did not go as far as that. Nevertheless, I consider that that is just what the section is intended to do. A corporation which is not the manufacturer is deemed to be the manufacturer for the purposes of Pt VA even if it is clearly not. One can understand the policy reasons for the Parliament imposing such an obligation. That is to say if a corporation is prepared to lend its name to a product by having its name or its logo affixed to the product, an individual injured by defect in that product need look no further than that corporation. The effect may well be to impose onerous obligations on any corporation which supplies a product with its name or logo applied to the product. Be that as it may, that appears to me to be the clear meaning and intent of the provision. Accordingly, I conclude that the Product is deemed to have been manufactured by Glendale.

2.301 Unless the contrary is established, it is presumed that if a person’s name, brand or mark is applied to goods, then that person caused their name, brand or mark to be so applied: s 7(2)(b). 2.302 For the purposes of s 7(2)(e) of the ACL, if goods are imported into Australia on behalf of a person, that person is taken to have imported the goods: s 7(3). 2.303 A person who inserts a label on goods which expressly states that the goods were not manufactured by that person may still be considered a manufacturer for the purposes of s 7 of the ACL.225 2.304

Hence, a person who is not the manufacturer can be deemed to be

the manufacturer for the purposes of s 7 of the ACL, even if that person is clearly not the manufacturer. [page 113] 2.305 Some examples of a person being considered to be an actual manufacturer or a deemed manufacturer under former s 74A of the TPA are: a person who merely re-packages goods was deemed to be a manufacturer because their name was on the label of the good, and not the name of the actual manufacturer;226 a person who retreads a previously used car tyre was considered to be a manufacturer;227 a ‘contract manufacturer’, who carried out manufacturing activities, such as preparing and packing chemical products, on behalf of another entity, was also held to be a manufacturer;228 and a person who imported treated pine timber decking from overseas, was deemed to be a manufacturer.229 2.306 An example of a person not being considered to be an actual manufacturer or a deemed manufacturer under former s 74A of the TPA is: a person who merely distributes oysters was not considered as a manufacturer, even within the expanded definition of that term, or deemed a manufacturer.230

Short theory and problem questions Theory questions 1.

Does the definition of a ‘consumer’ apply to a consumer contract in

the unfair contract term provision (s 23 of the ACL)? 2.

Can a corporation be defined under the definition of consumer in s 3 of the ACL?

3.

Is the test to determine whether goods are of a kind ordinarily acquired for personal, domestic or household use or consumption, a subjective, objective test or a combination of both?

4.

Does the mere fact that a corporation trades mean that it is a trading corporation?

5.

What is the difference between actual authority and ostensible authority?

6.

What is required to satisfy ‘being knowingly concerned in, or a party to’ a contravention?

7.

What is the difference between conduct that is ‘in trade or commerce’ and conduct that is ‘in respect of trade or commerce’? [page 114]

8.

In Plimer v Roberts (1997) 80 FCR 303, why did Professor Plimer fail in his action against Dr Roberts for alleged misleading or deceptive conduct in contravention of former s 52 of the TPA? Would it have made a difference if Dr Roberts was paid for giving the lecture?

9.

For the purposes of the consumer guarantee provisions, can an importer of goods into Australia be considered as a manufacturer, even though the importer did not manufacture the goods?

Hypothetical problem questions 1.

John, Paul, George and Bingo were musicians in a band called the Beagles. One day Paul decided to sell his favourite second hand TBird car. After speaking to John, George and Bingo, Paul was

convinced that in order to get the best price for the car, he would sell it via an online auction. Paul set the reserve price of the car at $25,000 and posted the following details on the auction website: ‘Fun. Fun, Fun, until your daddy takes your T-Bird away.’ Are you looking to buy a second-hand T-Bird with a number plate ‘Baby you can drive my car’.? Well now is your chance. At 8am, this Saturday the auction begins. Car is only one year old and in excellent condition. It is perfect for the Long and Winding Road. Owner says sell!

Dennis, who was a collector of T-Birds and Little Deuce Coupes, saw the online post. Dennis was eager to purchase the car and use it for his Magical Mystery touring business. At 8.02am on Saturday, Dennis placed an opening bid of $35,000. Paul immediately accepted the bid and payment and transfer of possession of the car took place on the following Saturday. Dennis thought the car was perfect to drag up and down Abbey Road. Two weeks after Dennis had taken possession of the car, the engine burnt out on his way to a Surfin’ Safari on the island in the Florida Keys called Kokomo. Is Dennis a consumer within the meaning of s 3 of the ACL? Advise Dennis whether he is likely to be protected by s 54 of the ACL? 2.

John, Paul, George and Bingo were musicians in a band called the Beagles. Bingo owned two drum kits, namely a Thomas the Tank drum kit and a Giggles drum kit. One day, Bingo contacted his agent Bars Furich and ask him to sell the Thomas the Tank drum kit for ‘no less than $50,000’. Bars found a purchaser, named Tummy Lee, but sold the Giggles drum kit to him for $25,000. Later, when Bingo found out, he was furious, as the Giggles drum kit was a rare and more expensive drum kit that was once owned by the drummer of the famous band the, Clockroaches. Advise Bingo whether he is bound by the contract with Tummy Lee.

[page 115]

Further reading A Bruce, Consumer Protection Law in Australia, 2nd ed, LexisNexis Butterworths, Sydney, 2014, pp 27–58. S Corones, The Australian Consumer Law, 2nd ed, Thomson Reuters, Sydney, 2013, pp 55–112. Halsbury’s Laws of Australia, Commentary, Consumer Protection title, LexisNexis, Sydney, 2011, [100-257]–[100-270]. Justice J D Heydon, Trade Practices Law Competition & Consumer Law (Looseleaf Services), Thomson Reuters, Australia, 2012, [150.40]–[150.390]. R Miller, Australian Competition and Consumer Law Annotated, 36th ed, Thomson Reuters, Sydney, 2014, pp 1410–26 (definitions) and 1448–51 (in trade or commerce). R Steinwall, Annotated Competition and Consumer Legislation, LexisNexis, Sydney, 2014, pp 109–43. The ACCC website at or the ACL website at and download the following publications: – What is the Australian Consumer Law; and –

The Australian Consumer Law Guide.

1.

For further commentary on the definition of ‘consumer goods’ see 2.6.

2.

For further commentary on the definition of ‘consumer contracts’ see 2.6, 7.25.

3.

Explanatory Memorandum to Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth) (Explanatory Memorandum) at [2.14].

4.

Explanatory Memorandum at [2.20].

5.

Acts Interpretations Act 1901 (Cth) s 2C.

6.

Seeley International Pty Ltd v Newtronics Pty Ltd [2001] FCA 1862 per O’Loughlin J at [168].

7.

Business and Professional Leasing Pty Ltd v Dannawi; Bpl (NNW) Pty Ltd v Blue Robe Petroleum Pty Ltd; Bpl (NSW) Pty Ltd v Macarounas [2008] NSWSC 902.

8.

Business and Professional Leasing Pty Ltd v Dannawi; Bpl (NSW) Pty Ltd v Blue Robe Petroleum Pty Ltd; Bpl (NSW) Pty Ltd v Macarounas [2008] NSWSC 902 per Young CJ in Eq at [145]–[150].

9.

Explanatory Memorandum at [2.17].

10. Bunnings Group Ltd v Laminex Group Ltd (2006) 230 ALR 269 per Young J at [72]; Theo Holdings Pty Ltd v Hockey (2000) 175 ALR 89 per Dowsett J at [21]. 11. Bunnings Group Ltd v Laminex Group Ltd (2006) 230 ALR 269 per Young J at [76]. 12. Bunnings Group Ltd v Laminex Group Ltd (2006) 230 ALR 269 per Young J at [81]. 13. Bunnings Group Ltd v Laminex Group Ltd (2006) 230 ALR 269 per Young J at [81]. 14. Crago v Multiquip Pty Ltd & Dunogan Farm Tech Pty Ltd (1998) ATPR 41-62 per Lehane J at [40]. 15. Nesbit v Porter [2000] 2 NZLR 465. 16. Minchillo v Ford Motor Co of Australia [1995] 2 VR 594 per Ormiston J (with whom Fullagher J agreed) at 616. 17. Minchillo v Ford Motor Co of Australia [1995] 2 VR 594 per Ormiston J (with whom Fullagher J agreed) at 616. 18. Jillawarra Grazing Co v John Shearer Ltd (1984) ATPR 40-441 per Toohey J at 45,090–1. 19. Jillawarra Grazing Co v John Shearer Ltd (1984) ATPR 40-441. 20. Bunnings Group Ltd v Laminex Group Ltd (2006) 230 ALR 269 per Young J at [82]. 21. Bunnings Group Ltd v Laminex Group Ltd (2006) 230 ALR 269 per Young J at [82]. 22. Bunnings Group Ltd v Laminex Group Ltd (2006) 230 ALR 269 per Young J at [83]. 23. Bunnings Group Ltd v Laminex Group Ltd (2006) 230 ALR 269 per Young J at [86]. 24. Bunnings Group Ltd v Laminex Group Ltd (2006) 230 ALR 269 per Young J at [83]–[85]. 25. Crago v Multiquip Pty Ltd & Dunogan Farm Tech Pty Ltd (1998) ATPR 41-620. 26. Bunnings Group Ltd v Laminex Group Ltd (2006) 230 ALR 269 per Young J at [87]. 27. Carpet Call Pty Ltd v Chan (1987) ATPR (Digest) 46-025. 28. Crawford v Mayne Nickless Ltd t/as MSS Alarm Service (Reg’d) (1992) ATPR (Digest) 46-091 per Bollen J. 29. Director of Consumer Affairs Victoria v Craig Langley Pty Ltd [2008] VCAT 482 per Harbison J at [23]. 30. Violet Home Loans Pty Ltd v Schmidt (2013) 300 ALR 770 per Warren CJ, Cavanough and Ferguson AJJA at [75]. 31. Tonto Home Loans Australia Pty Ltd v Tavares; Firstmac Ltd v Di Benedetto; Firstmac Ltd v O’Donnell [2011] NSWCA 389 per Allsop P (with whom Bathurst CJ and Campbell JA agreed) at [297]–[298]. 32. Bunnings Group Ltd v Laminex Group Ltd (2006) 230 ALR 269 per Young J at [113]. 33. Four Square Stores (Qld) Ltd v ABE Copiers Pty Ltd (1981) ATPR 40-232 per Campbell J at 43,115.

34. Atkinson v Hastings Deering (Qld) Pty Ltd (1985) 6 FCR 331 per Pincus J at 346. 35. Minchillo v Ford Motor Co of Australia [1995] 2 VR 594 per Ormiston J (with whom Fullagher J agreed) at 616–17. 36. Begbie v State Bank of New South Wales Ltd (1994) ATPR 41-288 per Drummond J. 37. Westminster Properties Pty Ltd v Comco Constructions Pty Ltd (1991) 5 WAR 191 per Malcolm CJ, Kennedy and Pidgeon JJ. 38. Explanatory Memorandum at [2.17]. 39. Laws v GWS Machinery Pty Ltd [2007] NSWSC 316. 40. CCA s 130 (definition of ‘corporation’). 41. PT Garuda Indonesia Ltd v ACCC (2012) 290 ALR 681. 42. R v Judges of Federal Court of Australia; Ex parte Western Australian National Football League (1979) 23 ALR 439 per Murphy J at [477]. 43. Hughes v Western Australian Cricket Association Inc (1986) 69 ALR 660 per Toohey J at [671]– [672]. 44. For example, see McCarthy v Australian Rough Riders Association Inc (1988) ATPR 40-836; State Government Insurance Corp v Government Insurance Office (NSW) (1991) 101 ALR 259. 45. Orion Pet Products Pty Ltd v Royal Society for the Prevention of Cruelty to Animals (Vic) [2002] FCA 860 per Weinberg J at [171]. 46. R v Judges of FCA & Adamson; Ex parte WA National Football League (Inc) (Adamson’s /Western Australia Football case) (1979) 23 ALR 439. 47. Australian Beauty Trade Suppliers v Conference & Exhibition Organisers Pty Ltd (1991) 99 ALR 474 per Morling, Wilcox and Hill JJ at 478. 48. Quickenden v O’Connor (2001) 184 ALR 260 per Black CJ, French J (with whom Carr J agreed) at [59], [109]. 49. Sun Earth Homes Pty Ltd v Australian Broadcasting Corp (1990) 98 ALR 101 per Burchett J at 111. 50. State Superannuation Board v TPC (1982) 41 ALR 279 per Northrop J at 284, Ellicott J at 297. 51. Ku-ring-gai Co-operative Building Society (No 12) Ltd, Re (1978) 22 ALR 621 per Bowen CJ at 624. 52. Ku-ring-gai Co-operative Building Society (No 12) Ltd, Re (1978) 22 ALR 621 per Brennan J at 634. 53. Re Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 22 ALR 621 per Deane J at 641–2. 54. State Superannuation Board v TPC (1982) 41 ALR 279 per Northrop J at 287. 55. State Superannuation Board v TPC (1982) 44 ALR 1 per Mason, Murphy and Deane JJ at 14–17. 56. Parramatta Tourist Services Pty Ltd v SWB Family Credit Union Ltd (1979) 24 ALR 273. 57. Re Ku-ring-gai Co-op Building Society (No 12) Ltd (1978) 22 ALR 621. 58. Bank of New South Wales v Commonwealth (Bank Nationalisation case) (1948) 76 CLR 1 per Latham CJ at 204. 59. Explanatory Memorandum at [2.30]. 60. Explanatory Memorandum at [2.32]–[2.33]. 61. Explanatory Memorandum at [2.34].

62. Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 92 ALR 193 per Mason CJ, Deane, Dawson and Gaudron JJ at 197. 63. Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 92 ALR 193 (Concrete Constructions case). 64. Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 92 ALR 193 per Mason CJ, Deane, Dawson and Gaudron JJ at 197–8. 65. For example, see Village Building Co Ltd v Canberra International Airport Pty Ltd (No 2) (2004) 208 ALR 98 per Finn J at [43], [59]. 66. Hearn v O’Rourke [2003] FCAFC 78 per Dowsett J at [28]–[29]. 67. Re Ku-ring-gai Co-op Building Society (No 12) Ltd (1978) 22 ALR 621 per Bowen CJ at 624–5. 68. Re Ku-ring-gai Co-op Building Society (No 12) Ltd (1978) 22 ALR 621 per Deane J at 648–9. 69. Explanatory Memorandum at [3.12]. 70. Plimer v Roberts (1997) 150 ALR 235 per Davies J at 238. 71. O’Brien v Smolonogov (1983) 53 ALR 107. 72. Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 94 ALR 719. 73. Lubidineuse v Bevanere Pty Ltd (1984) 55 ALR 273. 74. Bevanere Pty Ltd v Lubidineuse (1985) 59 ALR 334 per Morling, Neaves and Spender JJ at 338–9. 75. Plimer v Roberts (Noah’s Ark case) (1997) 150 ALR 235. 76. Orion Pet Products Pty Ltd v Royal Society for the Prevention of Cruelty to Animals (Vic) [2002] FCA 860. 77. Tobacco Institute (Aust) Ltd v Australian Federation of Consumer Organisations Inc (1992) 111 ALR 61. 78. Glorie v WA Chip & Pulp Co Pty Ltd (1981) 39 ALR 67 per Morling J at 93. 79. Glorie v WA Chip & Pulp Co Pty Ltd (1981) 39 ALR 67 per Morling J at 75–6. 80. Robin Pty Ltd v Canberra International Airport Pty Ltd (1999) 179 ALR 449 per Gyles J at [43]. 81. Durant v Greiner (1990) 21 NSWLR 119. 82. Unilan Holdings Pty Ltd v Kerin (1992) 107 ALR 709. 83. Robin Pty Ltd v Canberra International Airport Pty Ltd (1999) 179 ALR 449. 84. Village Building Co Ltd v Canberra International Airport Pty Ltd (No 2) (2004) 208 ALR 98. 85. Village Building Co Ltd v Canberra International Airport Pty Ltd (2004) 210 ALR 114 per French, Sackville and Conti JJ at [59]. 86. For example, compare Patrick v Steel Mains Pty Ltd (1987) 77 ALR 133; Barto v GPR Management Services Pty Ltd (1991) 105 ALR 339 disapproved in Martin v Tasmania Development & Resources (1999) 163 ALR 79; Stoelwinder v Southern Health Care Network (2000) 177 ALR 501; Duncan v Lipscombe Child Care Services Inc [2006] FCA 458. 87. For further discussion on s 31 of the ACL see 8.238–8.248. 88. Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 92 ALR 193 per Mason CJ, Deane, Dawson and Gaudron JJ at 196–7. 89. For example, see NRMA Ltd v Yates [1999] NSWSC 859. 90. Firewatch Australia Pty Ltd v Country Fire Authority [1999] FCA 761.

91. For example, see Houghton v Arms (2006) 231 ALR 534; TCN Channel Nine Pty Ltd v Ilvariy Pty Ltd [2008] NSWCA 9. 92. Dataflow Computer Services Pty Ltd v Goodman (1999) 168 ALR 169. 93. For an example of government activity considered to be in trade or commerce, see Paramedical Services Pty Ltd v Ambulance Service (NSW) (1999) 217 ALR 502. 94. For an example of government activity not considered to be in trade or commerce, see Chapman v Luminis Pty Ltd (No 4) (Hindmarsh Island Bridge case) [2001] FCA 1106. 95. Unilan Holdings Pty Ltd v Kerin (1992) 107 ALR 709 per Hill at 715. 96. Sykes v Reserve Bank of Australia (1998) 158 ALR 710. 97. Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 57 ALR 167 per Sheppard, Morling and Wilcox JJ at 178. 98. Nella v Kingia Pty Ltd (1986) 7 IPR 55 per Toohey J at 57. 99. Yorke v Lucas (1985) 61 ALR 307. 100. Yorke v Lucas (1983) 49 ALR 672 per Bowen CJ, Lockhart and Beaumont JJ at 682. 101. Keller v LED Technologies Pty Ltd (2010) 268 ALR 613 per Besanko J at [329]. 102. Doney v Palmview Sawmill Pty Ltd [2005] QSC 062 per McMurdo J at [42]. 103. Crocodile Marketing Ltd v Griffith Vintners Pty Ltd (1989) 91 ALR 273 per Cole J at 281. Also see ACCC v IMB Group Ltd [2003] FCAFC 17 per Cooper, Kiefel and Emmett JJ at [135]. 104. He Kaw Teh v R (1985) 60 ALR 449 per Gibbs CJ at 457–8. 105. Pereira v DPP (1988) 82 ALR 217 per Mason CJ, Deane, Dawson, Toohey and Gaudron JJ at 220. 106. Doney v Palmview Sawmill Pty Ltd [2005] QSC 062 per McMurdo J at [42]. 107. Yorke v Lucas (1985) 61 ALR 307 per Mason ACJ, Wilson, Deane and Dawson JJ at 310. 108. Yorke v Lucas (1985) 61 ALR 307 per Mason ACJ, Wilson, Deane and Dawson JJ at 310. 109. Yorke v Lucas (1985) 61 ALR 307 per Mason ACJ, Wilson, Deane and Dawson JJ at 310. 110. Yorke v Lucas (1985) 61 ALR 307 per Mason ACJ, Wilson, Deane and Dawson JJ at 311. 111. Yorke v Lucas (1983) 49 ALR 672 per Bowen CJ, Lockhart and Beaumont JJ at 681–2. 112. Yorke v Lucas (1983) 49 ALR 672 per Bowen CJ, Lockhart and Beaumont JJ at 681–2. 113. ACCC v Mayo International Pty Ltd (1998) 85 FCR 327 per Kiefel J at 43. Also see ACCC v J McPhee & Son (Australia) Pty Ltd (No 3) (1998) ATPR (Digest) 46-183 per Heerey J at 32. 114. The Heating Centre Pty Ltd v TPC (1986) 9 FCR 153 per Pincus J at 163. 115. TPC v Mobile Oil Australia Ltd (1984) 55 ALR 527 per Toohey J at 542. 116. R v Tannous (1988) 81 ALR 403 per Lee (with whom Street and Finlay JJ agreed) at 407. 117. Yorke v Lucas (1985) 61 ALR 307 per Mason ACJ, Wilson, Deane and Dawson JJ at 312. 118. Rural Press Ltd v ACCC (2003) 203 ALR 217 per Gummow, Hayne and Heydon JJ at [48]. 119. Dimension Data Aust Pty Ltd v Kepper [2000] FCA 218 per Hill, Heerey and Hely JJ at [1]; ACCC v Rural Press Ltd [2001] FCA 116 per Mansfield J at [136]. 120. Yorke v Lucas (1983) 49 ALR 672 per Bowen CJ, Lockhart and Beaumont JJ at 682; Yorke v Lucas (1985) 61 ALR 307 per Mason ACJ, Wilson, Deane and Dawson JJ at 312.

121. Keen Mar Corp Pty Ltd v Labrador Park Shopping Centre Pty Ltd (1985) 61 ALR 504 per Pincus J at 508. 122. Yorke v Lucas (1983) 49 ALR 672 per Bowen CJ, Lockhart and Beaumont JJ at 682. 123. Nirta v R (1983) 51 ALR 53 per Gallop J at 61. 124. Nirta v R (1983) 51 ALR 53 per Gallop J at 61. 125. Gerakiteys v R (1984) 51 ALR 417 per Deane J at 431. 126. Yorke v Lucas (1983) 49 ALR 672 per Bowen CJ, Lockhart and Beaumont JJ at 682. 127. Nirta v R (1983) 51 ALR 53 per Fox J at 54. 128. Nirta v R (1983) 51 ALR 53 per Gallop J at 61. 129. R v Kempley (1944) 44 SR (NSW) 416 per Jordan CJ at 426. 130. R v Kempley (1944) 44 SR (NSW) 416 per Jordan CJ at 426. 131. Gerakiteys v R (1984) 51 ALR 417 per Deane J at 431. 132. Gerakiteys v R (1984) 51 ALR 417 per Deane J at 431. 133. Criminal Code (Cth) s 11.5(3). 134. Nirta v R (1983) 51 ALR 53 per Jenkinson J at 71. 135. For example, the expression ‘an attempt to contravene’ is relevant to ss 213 (preference must be given to compensation for victims), 217 (criminal proceedings not to be brought for contraventions of Ch 2 or 3), 224 (pecuniary penalties), 232 (injunctions), and 248 (order disqualifying a person from managing corporations). 136. The analysis in this section on the ‘meaning of attempt to contravene’ is largely reflective of the analysis in Adrian Coorey, ‘Some Guidance on the Meaning of “Attempt to Contravene” under the Competition and Consumer Act 2010’ (2014) 30(5) Competition and Consumer Law News 60. 137. TPC v Tubemakers of Australia Ltd (1983) 47 ALR 719 per Toohey J at 736–7. 138. TPC v Tubemakers of Australia Ltd (1983) 47 ALR 719 per Toohey J at 736–7. 139. ACCC v Visy Paper Pty Ltd (2001) 186 ALR 731 per Sackville J at [152]. 140. ACCC v Visy Paper Pty Ltd (2001) 186 ALR 731 per Sackville J at [146]–[163]. 141. TPC v Tubemakers of Australia Ltd (1983) 47 ALR 719 per Toohey J at 737. 142. TPC v Tubemakers of Australia Ltd (1983) 47 ALR 719 per Toohey J at 736. 143. ACCC v Visy Paper Pty Ltd (2001) 186 ALR 731 per Sackville J at [152]. 144. TPC v Tubemakers of Australia Ltd (1983) 47 ALR 719 per Toohey J at 736. 145. TPC v Tubemakers of Australia Ltd (1983) 47 ALR 719 per Toohey J at 736. 146. News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 215 CLR 563 per Gleeson CJ at [18]. 147. News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 215 CLR 563 per Gleeson CJ at [18]. 148. De Gruchy v R (2002) 190 ALR 441 per Kirby J at [50]–[53]. 149. R v Moloney [1985] AC 905 per Lord Bridge of Harwich (with whom Lord Hailsham of St Marylebone LC, Lord Fraser of Tullybelton, Lord Edmund-Davies, Lord Keith of Kinkel agreed) at 1032.

150. Parker v R [1963] ALR 524 per Windeyer J. 151. Thomas v R [1960] ALR 233 per Kitto J. 152. TPC v Tubemakers of Australia Ltd (1983) 47 ALR 719 per Toohey J at 743. 153. TPC v Tubemakers of Australia Ltd (1983) 47 ALR 719 per Toohey J at 743. 154. TPC v Tubemakers of Australia Ltd (1983) 47 ALR 719 per Toohey J at 737. 155. ACCC v Visy [2000] FCA 1640 per Sackville J at [151]. 156. ACCC v Visy [2000] FCA 1640 per Sackville J at [151]. 157. For example, see ACCC v Visy [2000] FCA 1640 per Sackville J at [142]. 158. TPC v Tubemakers of Australia Ltd (1983) 47 ALR 719 per Toohey J at 736. 159. TPC v Parkfield Operations Pty Ltd (1985) 62 ALR 267 per Bowen CJ, Smithers and Morling JJ at 272. 160. TPC v Parkfield Operations Pty Ltd (1985) 62 ALR 267 per Bowen CJ, Smithers and Morling JJ at 272. 161. TPC v Parkfield Operations Pty Ltd (1985) 62 ALR 267 per Bowen CJ, Smithers and Morling JJ at 272. 162. TPC v Parkfield Operations Pty Ltd (1985) 62 ALR 267 per Bowen CJ, Smithers and Morling JJ at 272. 163. TPC v Parkfield Operations Pty Ltd (1985) 62 ALR 267 per Bowen CJ, Smithers and Morling JJ at 272. 164. TPC v Parkfield Operations Pty Ltd (1985) 62 ALR 267 per Bowen CJ, Smithers and Morling JJ at 271. 165. ACCC v Visy Paper Pty Ltd (2001) 186 ALR 731 per Sackville J at [90] and [161]. 166. TPC v Tubemakers of Australia Ltd (1983) 47 ALR 719 per Toohey J at 743–4. 167. TPC v Parkfield Operations Pty Ltd (1985) 62 ALR 267 per Bowen CJ, Smithers and Morling JJ at 271–2. 168. TPC v Service Station Association Ltd (1992) 109 ALR 465 per Heerey J at [31]. 169. ACCC v Kokos International Pty Ltd (No 4) [2008] FCA 549 per French J at [21]; ACCC v Kokos International Pty Ltd (No 2) [2008] FCA 5 per French J at [41]–[43], [47]. 170. ACCC v SIP Australia Pty Ltd [2002] FCA 824 per Goldberg J at [114]–[116]. 171. ACCC v Singapore Airlines Cargo Pty Ltd [2012] FCA 1395 per Katzmann J at [8], [16]–[19]. 172. ACCC v Emirates [2012] FCA 1108 per Katzmann J at [22]–[27], [44]–[45], [57]. 173. ACCC v Cathay Pacific Airways Ltd (No 3) [2012] FCA 1392 per Katzmann J at [18]–[25], [28]– [29]. 174. Justice Heydon, Trade Practices Law Competition and Consumer Law, Thomson Reuters, Australia, 2012, p [18–4552]. 175. Justice Heydon, Trade Practices Law Competition and Consumer Law, Thomson Reuters, Australia, 2012, p [18–4552]. 176. Also see, ACCC v Trevor Davis Investments Pty Ltd [2001] FCA 952 per Sundberg J at [4]–[5], [7]– [8], and [11]; J McPhee & Son (Australia) Pty Ltd v Others v ACCC (2000) 172 ALR 532 per Black

CJ, Lee and Goldberg JJ at [166]–[167], [172]. 177. Walplan Pty Ltd v Wallace (1985) 63 ALR 453 per Lockhart J (with whom Sweeney and Neaves JJ agreed) at 461. 178. Walplan Pty Ltd v Wallace (1985) 63 ALR 453 per Lockhart J (with whom Sweeney and Neaves JJ agreed) at 462. 179. Tesco Supermarkets Ltd v Nattrass [1972] AC 153. 180. TPC v Sun Alliance Australia Ltd (1994) ATPR 41-286 per Einfeld J. 181. Walplan Pty Ltd v Wallace (1985) 63 ALR 453 per Lockhart J (with whom Sweeney and Neaves JJ agreed) at 462. 182. TPC v Sun Alliance Australia Ltd (1994) ATPR 41-286 per Einfeld J. 183. Wheeler Grace & Pierucci Pty Ltd v Wright (1989) 16 IPR 189 per Lee J at 208. 184. P Butt and D Hamer, LexisNexis Concise Australian Legal Dictionary, 4th ed, LexisNexis Butterworths, Sydney, 2010, p 607. 185. For example, see Hollis v Vabu Pty Ltd (2001) 181 ALR 263; Deatons Pty Ltd v Flew (1949) 79 CLR 370; NSW v Lepore (2003) 195 ALR 412. 186. Walplan Pty Ltd v Wallace (1985) 63 ALR 453 per Lockhart J (with whom Sweeney and Neaves JJ agreed) at 462. 187. NMFM Property Pty Ltd v Citibank Ltd (No 10) (2000) 186 ALR 442 per Lindgren J at [1244]. 188. Walplan Pty Ltd v Wallace (1985) 63 ALR 453 per Lockhart J (with whom Sweeney and Neaves JJ agreed) at 462–3. 189. Joel v Morison [1834] 172 ER 1338 per Parke B at [5]. 190. P Butt and D Hamer, LexisNexis Concise Australian Legal Dictionary, 4th ed, LexisNexis Butterworths, Sydney, 2010, p 13. 191. Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480. 192. P Butt and D Hamer, LexisNexis Concise Australian Legal Dictionary, 4th ed, LexisNexis Butterworths, Sydney, 2010, p 31; Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549 per Lord Denning at [583]. 193. Freeman v Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480. 194. ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) 97 ALR 513 per Lockhart, Gummow and von Doussa JJ at [520]. 195. P Butt and D Hamer, LexisNexis Concise Australian Legal Dictionary, 4th ed, LexisNexis Butterworths, Sydney, 2010, p 263. 196. Explanatory Memorandum at [2.42]. 197. For example, compare Toby Constructions Products Pty Ltd v Computer Bar Sales Pty Ltd [1983] 2 NSWLR 48 with Gammasonics Institute for Medical Research Pty Ltd v Comrad Medical Systems Pty Ltd (2010) 77 NSWLR 479. 198. Obeid v ACCC [2014] FCA 839 per Farrell J at [54]. 199. Adamson v New South Wales Rugby League Ltd (NSW Rugby League Draft case) (1991) 103 ALR 319 per Wilcox J at 335–6.

200. Adamson v West Perth Football Club (1979) 27 ALR 475 per Northrop J at 505. See also Adamson v New South Wales Rugby League Ltd (1991) 100 ALR 479 per Hill J at 491–2. 201. Obeid v ACCC [2014] FCA 839 per Farrell J at [57]–[74]. 202. Obeid v ACCC [2014] FCA 839 per Farrell J at [75]–[76]. 203. Adamson v New South Wales Rugby League Ltd (NSW Rugby League Draft case) (1991) 103 ALR 319 per Wilcox J at 337. 204. Obeid v ACCC [2014] FCA 839 per Farrell J at [76]. 205. Obeid v ACCC [2014] FCA 839 per Farrell J at [77]. 206. Revesby Credit Union Co-operative Ltd v FCT (1965) 112 CLR 564 per McTiernan J at 577–8. 207. Obeid v ACCC [2014] FCA 839 per Farrell J at [90]. 208. P Butt and D Hamer, LexisNexis Concise Australian Legal Dictionary, 4th ed, LexisNexis Butterworths, Sydney, 2010, p 533. 209. SST Consulting Services Pty Limited v Rieson [2006] HCA 31. Also see Adrian Coorey, ‘SST Consulting Services Pty Limited v Rieson and s 4L of the Trade Practices Act 1974: Seven Short Statements on Severability’ 28(6) Competition and Consumer Law News 90. 210. Castlemaine Tooheys Ltd v Williams & Hodgson Transport Pty Ltd (1985) 64 ALR 536 per Lockhart J at 554. 211. Cook v Pasminco Ltd (2000) 99 FCR 548 per Lindgren J at [26]. 212. Castlemaine Tooheys Ltd v Williams & Hodgson Transport Pty Ltd (1986) 68 ALR 376 per Wilson J at 381. 213. Cool and Sons Pty Ltd v O’Brien Glass Industries Ltd (1981) 35 ALR 445 per Keely J at 460. 214. Cool and Sons Pty Ltd v O’Brien Glass Industries Ltd (1981) 35 ALR 445 per Keely J at 460. 215. Explanatory Memorandum at [2.36]. 216. Explanatory Memorandum at [2.37]. 217. Explanatory Memorandum at [2.38]. 218. Explanatory Memorandum at [2.38]. 219. Explanatory Memorandum at [2.38]. 220. Explanatory Memorandum at [2.38]. 221. Explanatory Memorandum at [2.38]. 222. White v Eurocycle Pty Ltd (1994) ATPR 41-330 per Boehm AJ at 26. 223. Leeks v FXC Corporation (2002) 189 ALR 288 per Finn J at [13]–[16]. 224. Glendale Chemical Products Pty Ltd v ACCC (1998) 90 FCR 40. 225. Glendale Chemical Products Pty Ltd v ACCC (1998) 90 FCR 40. 226. Glendale Chemical Products Pty Ltd v ACCC (1998) 90 FCR 40. 227. Cheong by her tutor The Protective Commissioner of New South Wales v Wong [2001] NSWSC 881 per Grove J at [64]. 228. Bayer Australia Ltd v Kemcon Pty Ltd (1991) 6 ANZ Ins Cas 61–026 per Giles J at [1], [15]. 229. Mayes v Australian Cedar Pty Ltd [2006] NSWSC 597 per Grove J at [8].

230. Ryan v Great Lakes Council [1999] FCA 177 per Wilcox J at [369].

[page 117]

Chapter 3 Misleading or Deceptive Conduct (General Principles) ‘Look … me and the McDonald’s people got this little misunderstanding. See, they’re McDonald’s … I’m McDowell’s. They got the Golden Arches, mine is the Golden Arcs. They got the Big Mac, I got the Big Mick. We both got two all-beef patties, special sauce, lettuce, cheese, pickles and onions, but their buns have sesame seeds. My buns have no seeds.’1

Introduction Overview 3.1 This Chapter considers the general principles of misleading or deceptive conduct as prohibited under s 18 of the Australian Consumer Law (ACL). 3.2

The topics covered in this Chapter are: Section 18 of the ACL; – Overview Who is a ‘person’?;

–

Legal and natural person;

What is ‘in trade or commerce’?; What is ‘engaging in conduct’?; – To do or refuse to do any act; What is ‘misleading or deceptive conduct’?; – The overall impression is what matters; –

Induces or is capable of inducing error;

–

Mere confusion or wonderment;

–

Doctrine of erroneous assumption;

–

Is there any difference between ‘misleading’ and ‘deceptive’?; [page 118]

What is ‘likely to mislead or deceive’?; – No need to prove that a person was actually misled; Who must be ‘misled’? – Section 18 is not limited to consumers; –

–

The relevant members of the public must be identified; ♦

First step of identification process;

♦

Second step of identification process;

Lack of reasonable care;

General principles of misleading or deceptive conduct; – Conduct must be viewed as a whole; –

Multiple meanings;

–

Intent (and honesty);

–

Spoken words;

–

Literal truths;

–

Half-truths;

–

–

Silence; ♦

Silence where there is an obligation to reveal;

♦

Silence in isolation;

Future conduct (predictions, forecasts or opinions); ♦

Section 4 of the ACL: an interpretative and deeming provision;

–

Failure to make proper inquiries;

–

Failure to accommodate subsequent changes and the transitory effect;

–

Passing on information;

–

Disclaimers and exclusion clauses; ♦

The effect, if any, of an exclusion clause on s 18 of the ACL;

♦

The effect, if any, of a disclaimer on s 18 of the ACL;

–

Misleading conduct in relation to professional advice;

–

Misleading conduct in without prejudice negotiations;

–

Misleading conduct and legal professional privilege;

Exemptions for information providers; and – Section 19 of the ACL. 3.3 Each topic will be discussed individually below. This will be followed by a summary of the remedies (and enforcement powers) available for a contravention of s 18 of the ACL.

Section 18 of the ACL Overview 3.4

Chapter 2 Pt 2-1 of the ACL contains the general protection provisions

for misleading or deceptive conduct. Section 18 is the liability provision of Pt 2-1. Section 18 states: 18 Misleading or deceptive conduct (1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. (2) Nothing in Part 3-1 (which is about unfair practices) limits by implication subsection (1). Note: For rules relating to representations as to the country of origin of goods, see Part 5-3.

[page 119] 3.5 Section 18 of the ACL contains almost identical wording to that of former s 52 of the Trade Practices Act 1974 (Cth) (TPA). The jurisprudence which applied to former s 52 applies to s 18. 3.6 The only substantive difference between the two sections is that former s 52 of the TPA referred to the conduct of a ‘corporation’, whereas s 18 of the ACL now refers to the conduct of a ‘person’. 3.7 Section 18 of the ACL (and former s 52 of the TPA) is one of the most heavily litigated statutory provisions in Australian law. Section 18 is a ‘comprehensive provision of wide impact’.2 3.8 In Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd,3 Stephen J made the following comments about the broad scope of former s 52 of the TPA: To subject the clear and quite general words of s 52 to some limitation derived from the heading to Pt V is, I think, especially inappropriate in the case of this particular legislation. The Act is intricately drafted, some of its provisions being expressed in terms of broad generalities, as is s 52, others in elaborate detail. Each may be seen to take the precise form it does because of the particular work intended for it. That s 52(1) is intended to be a provision having a broad reach is made clear by the express provision in s 52(2) preserving its “generality” from any limitation which might be thought to arise from the more specific provisions of succeeding sections. It is also significant that the quasi-definitions of “consumer” in s 4(3) appear to have little

application to most of the provisions of Div 1 of Pt V; it is on Div 2 that they principally operate. To interpret the provisions of Div 1 in the light of the quasi-definitions, applied, through this heading, to the entire Part, will be to distort in numerous respects the otherwise clearly apparent legislative pattern manifest in Pt V.

3.9 Section 18 of the ACL can be used not only to protect the ‘weak’ from the ‘strong’, but it may also be used by a large and powerful company to restrain the activities of a smaller competitor.4 3.10 Given the broad scope of s 18 of the ACL, it is not unusual for a plaintiff to commence an action under both s 18 and under another area of law, such as contracts, intellectual property law, tort, etc. 3.11 Section 18 of the ACL (and former s 52 of the TPA) has been applied in thousands of cases in Australia and those cases have spanned across many professions and industries, including: legal;5 accountants;6 banking and finance;7 [page 120] valuers;8 arts;9 automobiles;10 aviation;11 building and construction;12 business names;13 clothing;14 electrical products;15 employment;16

education;17 electricity and gas;18 food and beverages;19 franchises;20 household appliances;21 health and beauty products;22 media and advertising;23 property;24 and telecommunications.25 3.12 The 23 word sentence in s 18(1) of the ACL (and former s 52 of the TPA) is so important that one devoted scholar has even gone so far as writing an entire textbook on the topic.26

Who is a person? Legal and natural person 3.13 As stated above, s 18 of the ACL is directed at the conduct of a person, rather than the narrower definition of a corporation as under former s 52 of the TPA. [page 121] 3.14 A person is not defined in the ACL or the Competition and Consumer Act 2010 (Cth) (CCA). It is simply given its legislative meaning under s 2C of the Acts Interpretations Act 1901 (Cth) to include a body politic or corporation as well as an individual. 3.15

Hence, for the purposes of s 18 of the ACL, a person would include: a

natural person, a company, a trust, an association, a charity, an agency, a partnership, an organisation, or any other form of corporate entity.

What is ‘in trade or commerce’? 3.16 For a discussion of the meaning of ‘in trade or commerce’, see Chapter 2.27

What is ‘engaging in conduct’? To do or refuse to do any act 3.17 Pursuant to s 2(2)(a) of the ACL (similar to s 4(2)(a) of the CCA), a reference to engaging in conduct is read as a reference to doing or refusing to do any act, including: (i)

the making of, or the giving effect to a provision of, a contract or arrangement;

(ii) the arriving at, or the giving effect to a provision of, an understanding; or (iii) the requiring of the giving of, or the giving of, a covenant.

3.18 Pursuant to s 2(2)(c) of the ACL, a reference to refusing to do an act includes a reference to: (i)

refraining (otherwise than inadvertently) from doing that act; or

(ii) making it known that that act will not be done.

3.19 In s 2(2)(c) of the ACL, the words ‘otherwise than inadvertently’ means that an unintentional refraining from acting would not be regarded as ‘conduct’ for the purposes of s 2(2)(c). 3.20 Engaging in conduct includes acts and refraining from acting (except unintentionally), such as:

advice; advertisements; promotions; quotations; statements; predictions; provisions in a deed, contract, or covenant; provisions in an arrangement or understanding; and representations (express and implied). [page 122] 3.21 Accordingly, engaging in conduct is wider than making a representation, although the vast majority of cases under s 18 of the ACL will give rise to a representation of some kind. 3.22 The words ‘engage in conduct’ become particularly important in situations where there is more than one person who has engaged in the misleading or deceptive conduct. 3.23 Of course, the level of involvement of each person must be assessed individually.28 It will depend on the facts whether each person has engaged in conduct that is misleading or deceptive.

What is ‘misleading or deceptive conduct’? The overall impression is what matters 3.24

The words ‘misleading’ or ‘deceptive’ are not defined in the ACL, or

in the CCA. The courts have been reluctant to provide a precise meaning of the words misleading or deceptive conduct. 3.25 However, the courts have stated that the words of former s 52 of the TPA are both clear and unambiguous, and the title, or headings must give way to the full effect of the enactment of the provision.29 3.26 Despite these judicial views, the words ‘misleading’ or ‘deceptive’ have also been considered as ‘productive of considerable difficulty’ when applied to the facts of particular cases.30 3.27 Like most general precepts framed in abstract terms, s 18 of the ACL affords little practical guidance to those who seek to arrange their activities so that they will not contravene the provision.31 3.28 In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd,32 Gibbs J provided the following useful guidance in relation to the interpretation of former s 52 of the TPA: I do not suggest that the words of s 52 should be given ‘some unnaturally confined meaning’ (to use the words of Stephen J in Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (ALR at 644; CLR at 225)), or that they should be construed to conform with the common law (see World Cricket v Parish (1977) 16 ALR 181 at 198–9), but simply that they should be given their plain and natural meaning, and should not be understood in some loose or expanded sense.

[page 123] 3.29 For the purposes of s 18 of the ACL, it is the overall impression created by the alleged conduct which determines whether it is likely to be considered as misleading or deceptive.33

Induces or is capable of inducing error

3.30 The threshold test for determining whether conduct is misleading or deceptive for the purposes of s 18 of the ACL is if the overall impression of the conduct induces or is capable of inducing error.34 3.31 Whether the overall impression of the conduct induces or is capable of inducing error is a question of fact to be determined in the context of the alleged conduct and relevant surrounding circumstances.35 3.32 The following case of Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd36 is an example of an unsuccessful attempt to prove misleading or deceptive conduct in contravention of former s 52 of the TPA.

Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 Puxu Pty Ltd (Puxu) manufactured and sold furniture which included lounge suites and chairs. The lounge suites and chairs were subject of fairly extensive advertising and had acquired an established reputation. At a later date, Parkdale Custom Built Furniture Pty Ltd (Parkdale) manufactured and sold chairs and lounge suites similar to those of Puxu. However, these chairs and lounge suites had sewn into the front of each chair and lounge, in a size of about 6.35 cm, the words ‘Parkdale Custom Built Furniture’. That label could be tucked under the upholstery of the chair or lounge and would not be visible and it might easily enough be removed by cutting it off from the chair. Puxu argued that Parkdale manufactured and sold chairs and lounges whose appearance were copied from those of Puxu and which closely resembled their furniture, although they were labelled as ‘Parkdale Custom Built Furniture’. The majority of the High Court (Gibbs CJ, Mason and Brennan JJ)

(Murphy J dissenting, and Aickin J died before judgment was delivered) held that Parkdale did not contravene former s 52 of the TPA. In particular, the majority stated that the sale by one manufacturer of goods which closely resemble those of another manufacturer is not a contravention of former s 52, if the goods are [page 124] properly labelled. Although there was evidence of instances of persons who had been misled, an ordinary person who read the labels on the furniture could not possibly be deceived or misled. Accordingly, the court must decide objectively whether conduct is misleading or deceptive or likely to mislead or deceive, and evidence that members of the public have actually been misled is not conclusive. The basis for the majority view was that an ordinary person who read the labels on the chair could not possibly be ‘led into error’ into believing that Parkdale’s chair was that of Puxu. However, without the label, the evidence showed that the resemblance between the Puxu chairs and the Parkdale chairs was so close that a person looking at the Parkdale chairs, without looking for and finding the label on them, would be likely to be misled into thinking that they were the Puxu chairs.

Mere confusion or wonderment 3.33 The state of mere confusion or wonderment caused by the alleged conduct is generally insufficient to constitute misleading or deceptive conduct for the purposes of s 18 of the ACL.37 3.34

Mere confusion or wonderment is a different state of mind to that of

being induced or capable of being induced into error, and it is something of a lesser state of mind than being led into error.38 3.35 In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd,39 Gibbs CJ stated: In McWilliam’s v McDonald’s (1980) 33 ALR 394 it was rightly held by Smithers J and by Fisher J 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…

3.36 In the same case, Mason J provided the following similar comments that ‘conduct which merely causes some uncertainty in the minds of the relevant consumers does not breach s 52’.40 3.37 A classic example of the alleged conduct merely causing confusion or wonderment to the members of the public is the following case of McWilliam’s Wine Pty Ltd v McDonald’s System of Australia Pty Ltd.41 [page 125]

McWilliam’s Wine Pty Ltd v McDonald’s System of Australia Pty Ltd (1980) 33 ALR 394 In this case, McWilliam’s Wine Pty Ltd (McWilliam’s) published a series of advertisements in a number of newspapers which contained comments by persons described as ‘top wine writers’. The comments were in relation to a particular brand of wine supplied by McWilliam’s, namely, the Rosedale Dry Red wine. One of the comments about this brand of wine was from a Mr Peter Wilson, who said that: ‘I call it the Big Mac’. The

advertisements also included in letters about 3.5 centimetres in height reference to the words ‘McWilliam’s BIG MAC’. As widely known in the general public, McDonald’s System of Australia Pty Ltd (McDonald’s) used the expression ‘Big Mac’ to describe a particular type of hamburger it sells. McDonalds alleged that the use of the words ‘BIG MAC’ by McWilliam’s in the advertisements constituted conduct that was misleading or deceptive in contravention of former s 52 (and s 53(c), (d)) of the TPA. The trial judge, Franki J, found that the use of the words ‘McWilliam’s BIG MAC’ by McWilliams might have caused some confusion to potential consumers of either or both businesses as to whether or not there was a connection between the two businesses. On appeal to the Full Federal Court, Smithers, Northrop and Fisher JJ, in separate judgments, held that there was no contravention of former s 52, as the relevant members of the public were merely confused and not led into error. Their Honours noted that to be in a state of confusion is to be in a different and lesser state than being misled. According to their Honours, even where there is evidence of the relevant members of the public that have been misled, that evidence is not conclusive of the question of determination, but merely of peripheral value. The court must itself determine whether there is a likelihood that the relevant persons will be misled. In particular, Smithers J made the following comments about the evidence (at 403): … and the one thing about which the bulk of witnesses in this case were in no doubt was that the product the subject of the advertisement was a wine product of McWilliam’s and not of McDonald’s.

In particular, Fisher J made the following comments (at 412–13) about the meaning of ‘confusion’ for the purposes of former s 52 of the TPA: The trial judge found that the appellant’s conduct in using the words ‘BIG MAC’ had, in

the circumstances, confused the public into believing that there was such a connection and, based on such confusion, he held that he was entitled to conclude that the conduct was ‘likely to mislead or deceive’. In other words, an essential feature of his reasoning, as I understand it, was that, as a matter of law, conduct which

[page 126] ‘confused’ was conduct which was likely to mislead or deceive. Such reasoning was based on the trial judge’s understanding of trade mark cases. In my opinion, the trial judge was incorrect in concluding that conduct which is confusing (in the sense in which he used the word) to members of the public falls within the section. It is, however, necessary to determine exactly what is meant by the word ‘confusion’, for I see it as having at least two different meanings. A person may be in a state of confusion when he is unable to differentiate between product A and product B. Product A and product B are ‘confused’, ie mixed up, in his mind, and this can have been the end result or consequence of misleading or deceptive conduct. This meaning is illustrated by a sentence in Halsbury’s Laws of England 3rd ed, vol 38, p 597, where the author is dealing with the essentials of an action to prevent use of a trade name. He says in para 998: ‘The plaintiff must further prove that the defendant’s use of name or mark was likely or calculated to deceive and thus cause confusion and injury, actual or probable …’ (emphasis added). However, the sense in which the trial judge made use of the word ‘confusion’ was more referable to a state of mind at an earlier stage, namely the state of mind of a person whose preconceived ideas have been disturbed and who is in a state of wonderment in consequence of this disturbance. In my view this state of uncertainty or bewilderment precedes the state of confusion referred to in the previous paragraph of these reasons, and the trial judge when he spoke of the confusion engendered by the advertisement was referring to this state of wonder or uncertainty. I cannot accept that conduct which only produces this state of mind is conduct which misleads or deceives or is likely to mislead or deceive. Stephen J, in Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216; 18 ALR 639 admittedly prior to the insertion of the words ‘likely to mislead or deceive’ in s 52, was quite firm that there was a clear distinction between conduct which confused and conduct which was misleading or deceptive. I refer to CLR at 229; ALR at 648, where Stephen J said ‘the risk of confusion must be accepted’, and to CLR at 230; ALR at 648: ‘Evidence of confusion in the minds of members of the public is not evidence that the use of the Hornsby Centre’s name is itself misleading or deceptive but rather that its intrusion into the field originally occupied exclusively by the Sydney Centre has, naturally enough,

caused a degree of confusion in the public mind. This is not, however, anything at which s 52(1) is directed.’

3.38 In Taco Co of Australia Inc v Taco Bell Pty Ltd,42 Deane and Fitzgerald JJ made the following comments which state that in some circumstances confusion or wonderment can be misleading or deceptive: 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 categorised as misleading or deceptive for the very reason that it represents that confusion or uncertainty exists where, in truth, there is no proper

[page 127] 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.

3.39 In Campomar Sociedad, Limitada v Nike International Ltd,43 the High Court made the following comments about confusion or wonderment in relation to former s 52 of the TPA: … whether particular conduct causes confusion or wonderment cannot be substituted for the question of whether the conduct answers the statutory description contained in s 52.

3.40 However, in Taco Co of Australia Inc v Taco Bell Pty Ltd,44 Deane and Fitzgerald JJ said that McWilliam’s Wine Pty Ltd v McDonald’s System of Australia Pty Ltd,45 did not establish: [A] necessary dichotomy between ‘confusion’ on the one hand and ‘misleading or deception’ on the other.

3.41

Some courts have noted that the drawing of a clear distinction

between mere confusion or wonderment and misleading or deceptive conduct is not always appropriate or practical.46 3.42 The reason why a distinction cannot always be drawn between the two states is that the boundaries between confusion and leading one into error are occasionally very fine and/or interwoven.47 3.43 Although occasionally there is a blurred distinction between confusion and to lead one into error, and sometimes overlap between the two states exist, each state is not necessarily co-extensive.

Doctrine of erroneous assumption 3.44 The doctrine of erroneous assumption states that no conduct can be misleading or deceptive unless the person to whom the conduct is directed labours under some error.48 3.45 The doctrine derives from the decisions of McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd,49 Taco Co of Australia Inc v Taco Bell Pty Ltd50 and Lego Australia Pty Ltd v Paul’s (Merchants) Pty Ltd.51 [page 128] 3.46 In Taco Co of Australia Inc v Taco Bell Pty Ltd,52 Deane and Fitzgerald JJ made the following useful comments about the nature of the doctrine of erroneous assumption:53 In truth, of course, no conduct can mislead or deceive unless the representee labours under some erroneous assumption. Such an assumption can range from the obvious, such as a simple assumption that an express representation is worthy of credence, through the predictable, such as the common assumption in a passing-off case that goods marketed under a trade name which corresponds to the well-known trade name of goods of the same type have their origins in the

manufacturer of the well-known goods, to the fanciful, such as an assumption that the mere fact that a person sells goods means that he is the manufacturer of them. The nature of the erroneous assumption which must be made before conduct can mislead or deceive will be a relevant, and sometimes decisive, factor in determining the factual question whether conduct should properly be categorized as misleading or deceptive or as likely to mislead or deceive. Beyond that, generalizations are themselves liable to be misleading or deceptive. Thus, one might generalize that the need for a simple assumption that an express representation is literally true could never be a factor militating against a finding that conduct which has misled or deceived is of its nature misleading or deceptive. Such a generalization would, however, ignore the part that irony can legitimately play in human communications. On the other hand, conduct which could only mislead or deceive if the representee were to make a fanciful assumption and which ordinarily would be innocent, may be misleading or deceptive if it appears that the person engaging in the conduct knew that the person to whom the relevant conduct was directed was convinced of the validity of that assumption.

3.47 There is no general proposition of law that an erroneous assumption will result in conduct not being regarded as misleading or deceptive or likely to mislead or deceive.54 3.48 The question for determining whether an erroneous assumption will result from alleged conduct will depend on the response from ordinary and reasonable members of the public.55 3.49 However, erroneous assumptions by persons whose reactions are extreme or fanciful are not considered as attributed to the ‘ordinary’ or ‘reasonable’ members of the public and should be disregarded.56 3.50 In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd,57 Brennan J provided the following explanation of how the doctrine of erroneous assumption applies in practice: [page 129] Therefore, a manufacturer who exercises his freedom to manufacture goods according to a design which is not protected by valid registration does not engage in conduct which is

misleading or deceptive or which is likely to mislead or deceive. If consumers or potential consumers believe that all goods of a particular design are manufactured by him who first establishes a market reputation as a manufacturer of those goods, that belief is or may be erroneous. The error may be attributed to a preconceived belief that the manufacturer who first establishes a market reputation has a monopoly in the manufacture and sale of goods of that kind but, unless the manufacturer has acquired a statutory monopoly, that belief is also erroneous and the error flows from a misconception of law. A later manufacturer who does no more than exercise his freedom to manufacture and sell goods made in accordance with the design in the public domain does not mislead or deceive and if a consumer has an erroneous preconceived belief that the first manufacturer has a monopoly, a false assumption by the consumer as to the source of the later manufacturer’s goods is self-induced.

Is there any difference between ‘misleading’ and ‘deceptive’? 3.51 The word ‘mislead’ is defined in the Oxford English Dictionary58 in its transitive sense as ‘to lead astray in action or conduct; to lead into error; to cause to err’. 3.52 The word ‘deceive’ is defined in the Oxford English Dictionary59 as ‘to ensnare; to take unawares by craft or guile; to get the better of by trickery; to beguile or betray into mischief or sins; to mislead’. 3.53 It is clear that the Oxford English Dictionary provides different definitions for the words ‘mislead’ and ‘deceive’. In particular, the definition of ‘deceive’ includes reference to ‘mislead’. 3.54 This suggests that the Oxford English Dictionary definition of ‘deceive’ is narrower in scope than the definition of ‘mislead’ although there is clearly a great deal of overlap between what is considered as ‘misleading’ and ‘deceptive’. 3.55 Furthermore, the Oxford English Dictionary definition of ‘deceive’ gives a darker connotation of craft, trickery, betrayal and mischief, which does not appear in the definition of ‘mislead’.

3.56 This suggests that the Oxford English Dictionary requires something more negative in conduct to satisfy what is considered as ‘deceptive’ to what is considered as ‘misleading’. 3.57 The differences in the definition of ‘mislead’ and ‘deceive’ as defined in the Oxford English Dictionary were adopted by Franki J in Weitmann v Katies Ltd60 in relation to former s 52 of the TPA. [page 130] 3.58 In Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd,61 Lockhart J supported the view that the words ‘misleading’ and ‘deceptive’ are plainly not synonymous. His Honour said: That is not to say that each word may not catch some of the same conduct and that there may not be some degree of overlap. ‘Mislead’ does not necessarily involve an element of intent and it is a word of wider reach than ‘deceive’. However, it is difficult, in my opinion, to read the word ‘deceive’ in s 52 other than as involving some degree of moral turpitude as it does in ordinary English usage. Trickery, craft and guile, though not essential elements of liability, are typically at the heart of this second element of the statutory provision directed to the protection of the public from unfair trading practices.

3.59 However, in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd,62 Gibbs CJ made the following observations which support the view that the words ‘misleading’ or ‘deceptive’ in the context of former s 52 of the TPA, are tautologous: 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.

3.60

The view of Gibbs CJ in Parkdale Custom Built Furniture Pty Ltd v

Puxu Pty Ltd,63 appears to be supported in a number of decisions, which have held that the words can be used interchangeably.64 3.61 It appears that the law on whether or not the words ‘misleading’ or ‘deceptive’ can be used interchangeably is not settled. It is likely that the better view is that the words can be used interchangeably.65 3.62 Whatever the final view may be, it is clear that drawing a distinction between the two words serves little to no real benefit for the purposes of s 18 of the ACL, as intention is not a requisite element.66

What is ‘likely to mislead or deceive’? No need to prove that a person was actually misled 3.63 The words ‘likely to mislead or deceive’ in s 18 of the ACL make it clear that it is unnecessary to prove that the conduct in question actually misled or deceived anyone.67 [page 131] 3.64 Although the use of evidence that a person(s) has been in fact led into error by the alleged conduct may be persuasive to establish a contravention of s 18 of the ACL, such evidence is not essential. 3.65 For the purposes of s 18 of the ACL, conduct is ‘likely to mislead or deceive’ if there is a real or not remote chance or possibility to mislead or deceive, regardless of whether it is less or more than 50 per cent.68 3.66

The following case of Taco Co of Australia Inc v Taco Bell Pty Ltd69 is

a classic example of a successful action under former s 52 of the TPA without the need to adduce evidence of someone being misled.

Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 In this case, Taco Bell Pty Ltd (Taco Bell Private) was a restaurant that opened in 1970 in Bondi, Sydney. Taco Company of Australia (Taco Company) was a franchise company incorporated in the United States under the name ‘Taco Bell’. The franchise chain usually sold food associated with a Mexican theme. In 1981, Taco Company opened two restaurants in Sydney. Taco Bell Private commenced proceedings against Taco Company alleging contravention of former s 52 of the TPA, as well as passing off. The trial judge, Ellicott J, granted an injunction to Taco Bell Private. Taco Company appealed. The Full Federal Court (Deane and Fitzgerald JJ in joint judgment and Franki J in separate judgment) held that former 52 of the TPA does not require proof of deception or likelihood thereof which continues to the point of sale. The conduct of Taco Company was in contravention of former s 52 of the TPA as it was the cause of any actual or likely misconception as to a connection between the Bondi restaurant and the Taco Company franchise chain. This was by reason of its use of that name in connection with a chain of Mexican food restaurants in circumstances in which Taco Company had no prior reputation in respect of the local use of that name and in which that name was, in respect of local operations, clearly associated with an established Mexican food restaurant operated by Taco Bell Private in Bondi. In particular, Deane and Fitzgerald JJ said (at 199): In our view, it is sufficient to enliven s 52 that the conduct, in the circumstances, answers

the statutory description, that is to say, that it is misleading or deceptive

[page 132] or is likely to mislead or deceive. It is unnecessary to go further and establish that any actual or potential consumer has taken or is likely to take any positive step in consequence of the misleading or deception. That is not to say that evidence of actual misleading or deception at the point of sale and of steps taken in consequence thereof is not likely to be both relevant and important on the question whether the relevant conduct in fact answers the statutory description and as to the relief, if any, which should be granted.

3.67 Of course, if a plaintiff seeks damages pursuant to s 236 of the ACL, he or she is required to establish that they have suffered loss or damage caused by the misleading or deceptive conduct.

Who must be misled? Section 18 is not limited to consumers 3.68 Section 18 of the ACL is to be construed widely and should not be ‘read down’ to apply only to reasonable consumers or even to consumers who would be misled or deceived.70 3.69 Despite the words ‘consumer protection’ in the title under former Pt V of the TPA, s 18 of the ACL can apply to conduct that is directed towards non-consumers, corporate entities and even competitors.71 3.70 The identification of the target audience or relevant section of the public to which the alleged conduct is directed is important to determine whether conduct is misleading or deceptive.

3.71 While conduct under s 18 of the ACL is frequently directed to members of the public, it is however not essential for s 18 to be confined to statements directed to the public or some identified section of it.72

The relevant members of the public must be identified 3.72 To determine who must be misled for the purposes of s 18 of the ACL, the following four step process was set out in Taco Co of Australia Inc v Taco Bell Pty Ltd,73 by Deane and Fitzgerald JJ: First, it is necessary to identify the relevant section(s) of the public by reference to whom the question of whether conduct is, or is likely to be, misleading or deceptive falls to be tested. [page 133] Secondly, once the relevant section of the public is established, the matter is to be considered by reference to all who come within it, which includes: [T]he astute and the gullible, the intelligent and the not so intelligent, the well educated as well as the poorly educated, men and women of various ages pursuing a variety of vocations.

Thirdly, evidence that some person has in fact formed an erroneous conclusion is admissible and may be persuasive but is not essential. Such evidence does not itself conclusively establish that conduct is misleading or deceptive or likely to mislead or deceive. The court must determine that question for itself. The test is objective; and Fourthly, it is necessary to inquire why proven misconception has arisen. It is only by this investigation that the evidence of those who are shown to have been led into error can be evaluated and it can be

determined whether they are confused because of misleading or deceptive conduct on the part of the respondent. 3.73 The first two steps of the above process as set out in Taco Co of Australia Inc v Taco Bell Pty Ltd74 by Deane and Fitzgerald JJ are examined individually below.

First step of identification process 3.74 In relation to the first step, the relevant section of the public who may be misled by the alleged conduct can include the entire public, a large or small segment of the public, or even just one person. 3.75 The relevant section of the public may be identified in a number of ways, which will ultimately depend on who the alleged conduct is directed towards and the circumstances of each case. 3.76 For example, the relevant section of the public may be limited to a particular geographic location or to classes of person that contain a special knowledge,75 such as sophisticated shareholders or doctors. 3.77 A particular time period or periods may be another way to identify the relevant section of the public, as well as other characterisations such as age, gender, religion, demographic background, status, wealth, etc. 3.78 In other words, to determine whether the alleged conduct is made to identifiable individuals or is directed to the general public or a section of it is a matter of characterisation.76 3.79 In Campbell v Backoffice Investments Pty Ltd,77 French CJ made the following comments about characterisation of the relevant members of the public:

[page 134] Characterisation is a task that generally requires consideration of whether the impugned conduct viewed as a whole has a tendency to lead a person into error. It may be undertaken by reference to the public or a relevant section of the public. In cases of misleading or deceptive conduct analogous to passing off and involving reputational issues, the relevant section of the public may be defined, according to the nature of the conduct, by geographical distribution, age or some other common attribute or interest. On the other hand, characterisation may be undertaken in the context of commercial negotiations between individuals. In either case it involves consideration of a notional cause and effect relationship between the conduct and the state of mind of the relevant person or class of persons. The test is necessarily objective. This court has drawn a practical distinction between the approach to characterisation of conduct as misleading or deceptive when the public is involved, on the one hand, and where the conduct occurs in dealings between individuals on the other. In the former case, the sufficiency of the connection between the conduct and the misleading or deception of prospective purchasers: is to be approached at a level of abstraction not present where the case is one involving an express untrue representation allegedly made only to identified individuals. Where the conduct is directed to members of a class in a general sense, then the characterisation enquiry is to be made with respect to a hypothetical individual ‘isolate[d] by some criterion’ as a ‘representative member of that class’. 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 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.

Second step of identification process 3.80 In relation to the second step, although the range of persons included in the relevant class is wide, s 18 of the ACL is unlikely to protect the extremely stupid or extremely gullible.78 3.81 Similarly, s 18 of the ACL does not protect persons who make fanciful assumptions or react in an extreme way to the alleged conduct. These persons should be disregarded from the relevant class.79 3.82

The effect of the conduct must be tested against ordinary or

reasonable members of the class identified.80 The reasonable person test is used to determine whether that class is likely to be misled.81 3.83 To determine the class of consumers affected by the alleged conduct, the court must consider whether a reasonably significant number of potential consumers would be likely to be misled.82 [page 135] 3.84 In Cassidy v Medical Benefits Fund of Australia (No 2),83 Hill J identified the following relevant members of the public for the purposes of former s 52 of the TPA: The breadth of persons exposed to the advertisements in this case means the statutory question is to be tested by considering whether a ‘reasonable’ person (concerned about their health cover) who saw the advertisements and who was ‘not particularly intelligent or well informed, but of somewhat less than average intelligence and background’ although not ‘unusually stupid’ … was (or was likely to be) misled or deceived by the advertisements. I would not restrict the class to persons interested in private health cover generally or specific cover for pregnancy. However the class of persons to whom representations were made included such persons.

Lack of reasonable care 3.85 Section 18 of the ACL does not protect people who fail to take reasonable care of their own interests.84 Reasonable members of the class would take reasonable steps to look after their own interests. 3.86 For example, in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd,85 Gibbs CJ observed: Section 52 does not expressly state what persons or class of persons should be considered as the possible victims for the purpose of deciding whether conduct is misleading or deceptive or likely to mislead or deceive. It seems clear enough that consideration must be given to the class of consumers likely to be affected by the conduct. Although it is true, as has often been said, that ordinarily a class of consumers may include the inexperienced as well as the experienced, and

the gullible as well as the astute, the section must, in my opinion, be regarded as contemplating the effect of the conduct on reasonable members of the class. The heavy burdens which the section creates cannot have been intended to be imposed for the benefit of persons who fail to take reasonable care of their own interests. What is reasonable will of course depend on all the circumstances. The persons likely to be affected in the present case, the potential purchasers of a suite of furniture costing about $1500, would, if acting reasonably, look for a label, brand or mark if they were concerned to buy a suite of particular manufacture.

3.87 In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd,86 Mason J made similar comments: … taking into account the importance both financially and aesthetically of the relevant furniture, my conclusion is that a purchaser who considered it important to acquire Post & Rail ‘Contour’ furniture could reasonably be expected to look for and find the label or to take comparable steps, such as inquiring of a salesman, to ensure that furniture from the ‘Contour’ range was being purchased. Indeed the evidence of Mrs Hogg referred to above supports the view that a prospective purchaser could reasonably be expected to attempt to ascertain the brand name of this type of furniture. Therefore I conclude that the appellant’s

[page 136] practice of labelling its ‘Rawhide’ furniture ensured that the similarity of the two suites, even if it might otherwise have been ‘misleading or deceptive’, did not contravene s 52.

General principles of misleading or deceptive conduct Conduct must be viewed as a whole 3.88 To determine whether conduct is misleading or deceptive in contravention of s 18 of the ACL, it is essential that the alleged conduct is viewed as a whole and not considered in isolation. 3.89

Indeed, it is incorrect to select some words or conduct which, alone,

would be likely to mislead or deceive if those words or conduct, when viewed in their context, were not capable of misleading or deceiving.87 3.90 In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd,88 Gibbs CJ made the following comments about viewing the conduct as a whole in relation to words and facts: It is obvious that where the conduct complained of consists of words, it would not be right to select some words only and to ignore others which provided the context which gave meaning to the particular words. The same is true of facts.

3.91 In ACCC v Coles Supermarkets Australia Pty Ltd,89 Allsop CJ made the following similar comments about the need to view the conduct as a whole and in its proper context: It is necessary to view the conduct as a whole and in its proper context. This will or may include consideration of the type of market, the manner in which such goods are sold, and the habits and characteristics of purchasers in such a market: see generally ACCC v TPG at [52]; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; 149 CLR 191 at 199; and Reckitt & Coleman Products Ltd v Borden Inc [1990] 1 WLR 491; 17 IPR 1 at 16–17 [a passing off case]. The context will also include relevant disclaimers or explanations: Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; 218 CLR 592 at 608 [49] (where the disclaimer, in small print, but in a short document, was ‘there to be read’).

Multiple meanings 3.92 It is possible for statements, representations or any form of alleged conduct to contain more than one meaning, particularly if the statement is vague, elusive, or suffers from latent ambiguity. 3.93 If a statement has multiple meanings and one of those meanings conveys a misleading impression, then the statement is likely to be misleading or deceptive for the purposes of s 18 of the ACL. [page 137]

3.94

In ACCC v Coles Supermarkets Australia Pty Ltd,90 Allsop CJ said:

Where, as in the present case, the advertisement is capable of more than one meaning, the question of whether the conduct of placing the advertisement in a newspaper is misleading or deceptive conduct must be tested against each meaning which is reasonably open. This is perhaps but another way of saying that the advertisement will be misleading or likely to mislead or deceive if any reasonable interpretation of it would lead a member of the class, who can be expected to read it, into error: Keehn v Medical Benefits Fund of Australia Ltd (1977) 14 ALR 77 at 81 per Northrop J and cf the approach taken by Mason J in Parkdale. … Where advertising material uses simple phrases and words evoking attractive notions, but without necessarily precise meaning, ambiguity or reasonably available different meanings may well arise. Context and the ‘dominant message’ will be important. If one or more of the reasonably available different meanings is misleading, the conduct may well be misleading or deceptive, or false and misleading.

3.95 If a statement is repeated numerous times, and if the repeated statement individually or collectively creates a misleading impression, then the statement is likely to be misleading for the purposes of s 18 of the ACL. 3.96 If a statement is made in different contexts, and if those statements individually or collectively create a misleading impression, then the statement(s) is likely to be misleading for the purposes of s 18 of the ACL. 3.97 For example, in the following case of Fraser v NRMA,91 Black CJ, Von Doussa and Cooper JJ stressed that the word ‘free’ can convey a number of different meanings in different contexts. 3.98 Accordingly the word ‘free’ can be misleading or deceptive for the purposes of s 18 of the ACL, even where it is capable of being understood as a true statement.

Fraser v NRMA Holdings Ltd (1995) 127 ALR 543

In this case, NRMA Holdings Ltd (NRMA Holdings) was incorporated as a public company limited by shares and registered under the former Corporations Law. NRMA Ltd (NRMA) and NRMA Insurance Pty Ltd (NRMA Insurance) intended that NRMA Holdings acquire ownership and control of NRMA and NRMA Insurance from the members of each company. The acquisition was allegedly for ‘free shares’ in NRMA Holdings. NRMA Holdings issued a ‘prospectus’ which included information about the intended acquisition. [page 138] Two directors and members of NRMA and NRMA Insurance opposed the proposed acquisition and commenced proceedings for alleged misleading or deceptive conduct under former s 52 of the TPA. At trial, Gummow J held that the reference to ‘Free Shares’ in the prospectus was misleading or deceptive in contravention of former s 52 of the TPA. According to Gummow J, the persistent repetition of the words ‘Free Shares’ in the context engendered or was likely to engender the notion that the shares might be acquired without significant loss or outgoing. NRMA and NRMA Insurance appealed. On appeal, Black CJ, Von Doussa and Cooper JJ upheld the trial judge’s finding and noted that the words ‘Free Shares’ and ‘Free Share’ together appeared 100 times in the first 31 pages of the prospectus and appeared 117 times in the whole of the prospectus. The words also appeared 13 times on the proxy form and in the ‘Important Information Inside’ leaflet. In particular, Black CJ, Von Doussa and Cooper JJ noted (at 570): Although it is no doubt true that in some contexts, such as in the expression ‘buy one, get

one free’, the word ‘free’ may be understood as meaning ‘without additional or marginal outlay over what is obviously being paid’, this is not invariably so. ‘Free’ can easily be misleading or deceptive, depending on the context: Federal Trade Commission v Standard Education Society (1937) 302 US 112 at 116–17; Book of the Month Club v Federal Trade Commission 202 F 2d 486 at 488; (2nd Cir 1953). We agree with the trial judge that in the present context of a document that strongly argued in favour of voting for the proposed changes, the persistent use of the expression ‘Free Shares’ was in fact likely to engender the notion that the shares might be acquired without significant loss or outgoing and it was in this respect misleading or deceptive, or likely to mislead or deceive, to use that phrase.

3.99 Similarly, in ACCC v Commonwealth Bank of Australia,92 Conti J found that the words ‘no establishment fee’ in different contexts can also be misleading or deceptive for the purposes of s 18 of the ACL.

Intent (and honesty) 3.100 The intention of the person engaging in the alleged conduct is not a relevant factor under s 18 of the ACL. All that is relevant under s 18 is whether the conduct was likely to mislead or deceive.93 3.101 Accordingly, a person who has engaged in conduct that is likely to mislead will be liable under s 18 of the ACL, even if that person honestly believed that what they were doing or representing was truthful.94 [page 139] 3.102 In Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd,95 Stephen J rejected the argument that intention to mislead is necessary for the purposes of former s 52 of the TPA: Again, in s 52(1) nothing turns, I think, upon the intent of the Hornsby Centre. In the tort of passing off, the defendant’s absence of intention to deceive will not provide him with a defence: Baume & Co Ltd v A H Moore Ltd [1958] Ch 907 at 916; ‘trading must not only be honest but

must not even unintentionally be unfair’: Parker-Knoll Ltd v Knoll International Ltd (at 278) per Lord Morris and see Ewing (trading as the Buttercup Dairy Co v Buttercup Margarine Co Ltd [1917] 2 Ch 1). As I read s 52(1) the same may be said of it, it is concerned with consequences as giving to particular conduct a particular colour. If the consequence is deception, that suffices to make the conduct deceptive. Section 52(1) creates no offence, it only prescribes a course of conduct deviation from which may result in an order of the court, made under s 80 of the Act, forbidding further deviation in the future. The section should be understood as meaning precisely what it says and as involving no questions of intent upon the part of the corporation whose conduct is in question.

3.103 The decision of Yorke v Lucas96 is an example of where honest and reasonable belief was no defence to misleading or deceptive conduct for the purposes of former s 52 of the TPA. 3.104 However, in the same case, the majority of the High Court also held that intent and knowledge of the essential facts are relevant for the purposes of ancillary liability as interpreted under s 75B of the CCA.97 3.105 While intention is not relevant for the purposes of s 18 of the ACL, where a person did intend to mislead, a court may more readily find that the conduct was misleading or likely to mislead.98 3.106 For example, in ACCC v Singtel Optus Pty Ltd (No 3),99 Perram J inferred that Optus intended its misleading advertising campaign to have a substantial impact in the broadband market. 3.107 Perram J based his inference on the ‘very substantial’ amount of money which Optus spent on the advertising campaign, and concluded that the effect of the campaign was ‘substantial’.100 [page 140]

Spoken words

3.108 If the alleged conduct is in the form of spoken words, it is essential that the words spoken be proved with a degree of precision sufficient for the court to be reasonably satisfied that they are likely to mislead.101 3.109 In Watson v Foxman,102 McClelland CJ in Eq made the following comments about spoken words in relation to former s 52 of the TPA, and what is expected from ‘human memory’: Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the Court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions of self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.

3.110 In Watson v Foxman,103 McClelland CJ in Eq also held that a person who relies on spoken words would have serious difficulties of proof of misleading conduct in the absence of a reliable record: Each element of the cause of action must be proved to the reasonable satisfaction of the Court, which means that the Court ‘must feel an actual persuasion of its occurrence or existence … Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of a cause of action based on s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), in the absence of some reliable contemporaneous record or other satisfactory corroboration. That is the position in the present case. There is no contemporaneous document in evidence which supports the making of any such promise or representation as is relied on and no other satisfactory corroboration.

3.111 The need for the court to obtain some sense of ‘actual persuasion’ of the existence of each element of the cause of action does not mean that proof is to be achieved other than on the balance of probabilities.104

[page 141]

Literal truths 3.112 Literal truths may be misleading or deceptive for the purposes of s 18 of the ACL. A statement which is literally true and accurate may nevertheless carry with it a misleading impression.105 3.113 In Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd,106 Stephen J provided the following example of how a literally true statement can be considered misleading: 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.

3.114 Before a statement or representation can be said to be misleading or deceptive for the purposes of s 18 of the ACL, it must convey a meaning inconsistent with the truth.107 3.115 A statement which conveys no meaning but the truth cannot mislead or deceive or falsely represent; although a statement which is literally true may nevertheless convey another meaning which is untrue.108

Half-truths 3.116 Half-truths may be misleading or deceptive for the purposes of s 18 of the ACL.109 A half-truth comes in several forms and often includes a misleading statement that has some element of truth. 3.117

For example, the misleading statement might be partly true because

of an omission of a relevant fact to make it true. Similarly the misleading statement might be partly true because of a mixture of truth and lies. 3.118 A misleading statement might also be partly true because it may be totally true in isolation or out of context, but only part of the whole truth. Similarly, the misleading statement might be partly true because it uses double meaning. 3.119 The following case of Kannegieter v Hair Testing Laboratory Pty Ltd110 is a classic example of a half-truth statement that was misleading for the purposes of former s 52 of the TPA. [page 142]

Kannegieter v Hair Testing Laboratory Pty Ltd [2004] FCA 639 In this case, Dr Nicholas Kannegieter (Dr K) was a highly qualified equine veterinary surgeon. Dr K was a registered specialist in equine surgery in New South Wales, the Australian Capital Territory and Queensland Dr K also participated on a weekly 30 minute radio segment on Sydney radio station 2KY. During these segments, Dr K would normally provide basic information to members of the horse racing industry and the public about how to care for, and manage horses. Hair Testing Laboratory Pty Ltd (Hair Testing) placed advertisements in two magazines, namely the Turf Monthly and The Australian Standardbred. Both advertisements were aimed at promoting the test of samples of horse hair. It was promoted that the test of horse hair samples

were for the purposes of diagnosing illness and nutritional defects in horses and the use of feed supplements in connection with those tests. The two advertisements quoted selected comments made by Dr K on a number of different radio segments. The quotes were selected and arranged to imply that Dr K approved and endorsed Hair Testing’s services. In fact, the quotations, which were taken out of context, were obtained from radio segments where Dr K had disapproved hair testing. Dr K alleged that the advertisements were misleading or deceptive in contravention of former ss 52 and 53 of the TPA. Whitlam J held (at [24]–[25]) that the advertisements were misleading or deceptive in contravention of former ss 52 and 53 of the TPA because they contained a selective extraction of a few of Dr K’s words which caused the advertisements to give an entirely false impression of what Dr K actually said on his radio segment.

Silence 3.120 There are many meanings of what is considered as silence. The following extract from the movie A Man for All Seasons illustrates the point.

Cromwell: ‘Now, Sir Thomas, you stand on your silence.’ Sir Thomas More: ‘I do.’ Cromwell: But, gentlemen of the jury, there are many kinds of silence. Consider first the silence of a man who is dead. Let us suppose we go into the room where he is laid out, and we listen: what do we hear? Silence. What does it betoken, this silence? Nothing; this is silence pure and simple. But let us take another case. Suppose I were to take a dagger from my sleeve and make to kill the prisoner with it; and my lordships there,

instead of crying out for me to stop, maintained their silence. That would betoken! It would betoken a willingness that I should [page 143] do it, and under the law, they will be guilty with me. So silence can, according to the circumstances, speak! Let us consider now the circumstances of the prisoner’s silence. The oath was put to loyal subjects up and down the country, and they all declared His Grace’s title to be just and good. But when it came to the prisoner, he refused! He calls this silence. Yet is there a man in this court — is there a man in this country! — who does not know Sir Thomas More’s opinion of this title? Crowd in court gallery: No! Cromwell: Yet how can this be? Because this silence betokened, nay, this silence was, not silence at all, but most eloquent denial! Sir Thomas More: Not so. Not so, Master Secretary. The maxim is ‘Qui tacet consentire’: the maxim of the law is ‘Silence gives consent’. If therefore you wish to construe what my silence betokened, you must construe that I consented, not that I denied. Cromwell: Is that in fact what the world construes from it? Do you pretend that is what you wish the world to construe from it? Sir Thomas More: The world must construe according to its wits; this court must construe according to the law.111

3.121 Silence may be found to constitute (or partly constitute) misleading or deceptive conduct for the purposes of s 18 of the ACL.112 Silence is not to be given a special category. It is to be assessed like any other general circumstance under s 18.113

3.122 The essential question for the purposes of s 18 of the ACL is whether, having regard to all the relevant circumstances, including the silence itself, there has been conduct that is likely to mislead or deceive.114 3.123 In Demagogue Pty Ltd v Ramensky,115 Gummow J made the following comments in relation to how to determine whether silence is likely to mislead in contravention of former s 52 of the TPA: But, consistently with regard to the natural meaning of the terms of s 52, the question is whether in the light of all relevant circumstances constituted by acts, omissions, statements or silence, there has been conduct which is or is likely to be misleading or deceptive. Conduct answering that description may not always involve misrepresentation.

3.124 Silence is likely to mislead in contravention of s 18 of the ACL in two ways. First, where there is an obligation to reveal relevant facts and, secondly, where the silence is, in isolation of itself, misleading. 3.125 Before discussing each of these ways individually below, it is important to note that it is necessary to identify clearly and precisely which type of silence is alleged. [page 144] 3.126

In Bennett v Elysium Noosa Pty Ltd,116 Reeves J observed:

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.

3.127 Similarly, in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd,117 French CJ and Kiefel J made the distinction between the categories as: 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.

Silence where there is an obligation to reveal 3.128 The first way in which silence is likely to mislead or deceive is where there is an obligation to reveal relevant facts and the failure to reveal those facts is likely to lead into error. 3.129 In these circumstances, silence may be misleading in contravention of s 18 of the ACL on the basis that the withholding of relevant information substantially affects the correctness of what is said. 3.130 Accordingly, a defendant will be liable for silence if the circumstances are such as to ‘give rise to the reasonable expectation’ on the part of the plaintiff, that if some relevant fact exists it would be disclosed.118 3.131 In Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd,119 French CJ and Kiefel J stated: 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 nondisclosure of material facts in a prospectus. 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.

[page 145]

3.132 An example of silence that is likely to mislead in this sense is as follows: John wants to buy a second-hand car from Lennon in Bankstown. John tells Lennon that he has a particular purpose to buy the car (to ‘race it on the Bathurst Motor Racing Circuit’ and of course to ‘race it up the back streets of Bankstown’). Lennon knows that the car is not suitable for those purposes, but remains silent.

In this example, Lennon’s silence would likely be misleading in contravention of s 18 of the ACL. 3.133 This type of duty to disclose is not to be confused with a general duty to disclose information at law. Section 18 of the ACL does not create a general duty to disclose information at common law or in equity.120 3.134 Silence is not necessarily misleading only where there is a duty to disclose at law. It may simply be the element in all the circumstances of a case which renders the conduct misleading.121 3.135 However, in circumstances where a common law or equitable duty to disclose does exist; for example, where there is a fiduciary duty, silence is likely to be the main element which renders the conduct misleading. 3.136 In Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd,122 Bowen CJ described the relationship between the common law and equitable duty to disclose and silence under former s 52 of the TPA: Where silence is relied on in order to show a breach of s 52 it will depend upon the circumstances whether the silence constitutes conduct which is misleading or deceptive. As in the case of other sections of the Trade Practices Act 1974 the court may gain assistance from consideration of cases at common law and in equity dealing with related types of situations. However, the court is not confined by such cases because it is concerned with the interpretation and application of the words of the particular statute. … Under the general law it is important to consider whether there is a legal obligation to divulge. There are particular relationships which have been held to raise an obligation of disclosure.

Contracts uberrimae fidei come to mind as examples of this type of relationship. Indeed, there are many particular relationships which raise duties of disclosure. These include trustee and beneficiary, solicitor and client, principal and agent and guardian and ward. Where an obligation to disclose arises an omission to inform the person to whom the obligation is owed may, perhaps on the basis that that person is entitled to assume some fact or circumstance which does not exist, constitute or be an ingredient in misleading conduct. The notion of relationships giving rise to an obligation to make disclosure is one which may well prove useful in determining some of the cases which may arise under s 52 of the Trade Practices Act. However, the court will not be restricted to cases where such a relationship has already been held to exist at common law or in equity. The court is likely to be faced with situations under s 52 between particular parties, where it will feel bound to hold that such an obligation to disclose arises from the circumstances.

[page 146] 3.137 Section 18 of the ACL does not impose a general obligation in commercial negotiations to reveal every detail of information. In Poseidon Ltd v Adelaide Petroleum NL,123 Burchett J said: I do not think it has ever been suggested that s 52 strikes at the traditional secretiveness and obliquity of the bargaining process. Traditional bargaining may be hard, without being in the statutory sense misleading or deceptive. No-one expects all the cards to be on the table. But the bargaining process is not therefore to be seen as a licence to deceive. If, for example, the bargainer has no intention of contracting on the terms discussed — perhaps because his real aim is to tie up the market, or to achieve some other ulterior purpose — may not (at least, in some circumstances) his conduct in seeming to bargain be accurately stigmatised as misleading? It certainly may do enormous harm to a competitor.

3.138 Under s 18 of the ACL, there is no general obligation in commercial negotiations to volunteer information to assist the other party, or to reveal every detail of information.124 3.139 For example, in Lam v Ausintel Investments Aust Pty Ltd,125 Gleeson CJ made the following comments in relation to commercial negotiations and the requirement of disclosure under former s 52 of the TPA: … a question arises as to how these matters should now be regarded where parties are dealing at

arms’ length in a commercial situation in which they have conflicting interests [sic] 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 in itself impose any obligation on the first party to bring the information to the attention of the other party, and failure to do so would not, without more, ordinarily be regarded as dishonesty or even sharp practice. It would normally only be if there were an obligation of full disclosure that a different result would follow. That could occur, for example, by reason of some feature of the relationship between the parties, or because previous communications between them gave rise to a duty to add to or correct earlier information.

3.140 The following case of General Newspapers Pty Ltd v Telstra Corp,126 is an example of a situation where the facts did not give rise to any reasonable expectation to disclose in an arm’s-length negotiation.

General Newspapers Pty Ltd v Telstra Corp (1993) 117 ALR 629 In this case, General Newspapers Pty Ltd (General News) and others carried on business as printers and publishers under the name ‘Hannanprint’. The Australian Telecommunications Corporation (Telecom) for many years had published the telephone directories, named the White Pages and the Yellow [page 147] Pages. The telephone directories were printed by two companies, whose contracts were about to expire. Hannanprint contacted Telecom and expressed its interest in tendering for the printing of their telephone directories. However, Hannanprint was not informed either that the printing contracts would not be put out for tender or that that possibility was being considered. Hannanprint’s premises were inspected and officers of Hannanprint were interviewed by

an officer of Telecom with a view to ascertaining Hannanprint’s suitability to undertake the work. Its name was placed on a list of potential tenderers and Hannanprint was advised that ‘You are on the tender list’. However, Telecom entered into new contracts with its existing contractors without calling for tenders or informing Hannanprint. The initial term of the ‘new’ contracts was for 10 years. General News commenced proceedings against Telecom alleging misleading or deceptive conduct in contravention of former s 52 of the TPA. At trial, Wilcox J held that Telecom had contravened former s 52 of the TPA, because it had failed to correct Hannaprint’s assumption (which it created) that the tender process and no other process would be used for the selection of contractors. On appeal, the Full Court (Davies and Einfeld JJ in joint judgment, and Gummow J in separate judgment) set aside the orders of Wilcox J and held that the conduct of Telecom in the circumstances was not in contravention of former s 52 of the TPA. The facts were not such as to give rise to any reasonable expectation on the part of General News that Telecom would disclose to them the procedures it proposed to implement in connection with the new printing contracts, including whether there was to be a call for tenders for those contracts. In particular, Davies and Einfeld JJ stated (at 641–642): More recently, in Demagogue Pty Ltd v Ramensky (1993) 39 FCR 31; 110 ALR 608, Black CJ, Gummow and Cooper JJ emphasised that s 52 provides its own test, meaning that if conduct is not misleading and deceptive or likely to mislead or deceive in the circumstances in which it occurs, it will not breach s 52. That section does not require arm’s length negotiations to be completely open or require full disclosure at all times. The particular facts of the case must be considered in the light of the ordinary incidents and character of commercial behaviour.

Silence in isolation

3.141 The second way in which silence is likely to mislead is where the silence occurs in isolation and is itself considered as the misleading conduct. In practice, these circumstances are not common. 3.142 Indeed, courts have noted the difficulty in seeing how mere silence could, of itself, be considered as misleading. In Winterton Constructions Pty Ltd v Hambros Aust Ltd,127 Hill J noted: Obviously, it is difficult to see how mere silence could, of itself, constitute conduct which is misleading or deceptive or likely to mislead or deceive. However, if the circumstances

[page 148] are such that a person is entitled to believe that a relevant matter affecting him or her adversely would, if it existed, be communicated, then the failure to so communicate it may constitute conduct which is misleading or deceptive because the person who ultimately may act to his or her detriment is entitled to infer from the silence that no danger of detriment existed. Thus, where a duty to speak is imposed, silence may constitute misleading and deceptive conduct.

3.143 Similarly, in Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd,128 Lockhart J made the following comments about mere silence and former s 52 of the TPA: It is difficult to conceive how mere silence by an alleged contravener could be sufficient to attract the operation of s 52, but when all the relevant circumstances of a case are analysed, silence of the alleged contravener may be the critical matter upon which reliance is placed to establish misleading or deceptive conduct.

3.144 Another reason why silence in isolation is not common in practice is that it is limited by the definition of ‘conduct’ as stated in s 2(2)(c) of the ACL to deliberate decisions to withhold information. 3.145

Section 2(c) of the ACL states in part:

(c) reference to refusing to do an act includes a reference to: (i)

refraining (otherwise than inadvertently) from doing that act; or

(ii) making it known that that act will not be done …

3.146 Accordingly, s 2(2)(c) of the ACL includes a reference to ‘refraining from doing an act’, but does not include inadvertent omissions in a reference to refusing to do an act. 3.147 This means that silence in isolation can only be considered as ‘conduct’ if it is engaged in deliberately. In Costa Vraca Pty Ltd v Berrigan Weed & Pest Control Pty Ltd & Kocks,129 Finkelstein J stated: 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. Bowen CJ in Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 77; 68 ALR 77 at 84 said this followed from the use of the words ‘refuse’ and ‘refrain’ in s 4(2). This conclusion is reinforced by the fact that by s 4(2)(c) conduct includes the refraining from doing an act provided it is ‘otherwise than inadvertently’: see also Edgar v Farrow Mortgage Services Pty Ltd (in liq) (1992) ATPR 46–096 at 53,375; Zaknic Pty Ltd v Svelte Corp Pty Ltd (1996) ATPR 46–159 at

[page 149] 53,362; Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 42; 110 ALR 608; Diversified Mineral Resources NL v CRA Exploration Pty Ltd (1995) ATPR 41–381 at 40,284.

3.148 In cases where the silence is accompanied by other acts or omissions, the plaintiff will not need to establish that the respondent’s silence alone amounted to ‘conduct’ within s 2(2) of the ACL. 3.149 In these cases, the presence of the additional material, when combined with the respondent’s failure to disclose, may render the conduct, viewed in its entirety, misleading for the purposes of s 18 of the ACL.

Future conduct (predictions, forecasts or opinions) 3.150 Predictions, forecasts, opinions or any other representations as to future conduct may be misleading or deceptive or likely to mislead or deceive for the purposes of s 18 of the ACL. 3.151 In circumstances where the state of mind of the representor is in question, s 18 requires that the representor either knew that the future representations were false or made them with reckless disregard.130 3.152 The mere fact that representations as to future conduct or events do not come to pass does not make them misleading in contravention of s 18 of the ACL, even though they may have been relied on by another person.131 3.153 In Global Sportsman Pty Ltd v Mirror Newspapers Ltd,132 Bowen CJ, Lockhart and Fitzgerald JJ made the following comments about the nonfulfilment of a promise, prediction and opinion: The non-fulfilment of a promise when the time 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. Similarly, that a prediction proves inaccurate does not of itself establish that the maker of the prediction did not believe that it would eventuate or that the belief lacked any, or any adequate, foundation. Likewise, the incorrectness of an opinion (assuming that can be established) does not of itself establish that the opinion was not held by the person who expressed it or that it lacked any, or any adequate, foundation.

3.154 Although reference may be made to later events, whether a representation as to future conduct is misleading for the purposes of s 18 of the ACL, must be determined as at the time it was made.133 3.155 At the time the representation as to future conduct was made, the representor must have reasonable grounds for making that representation, otherwise it is misleading for the purposes of s 18 of the ACL.134 [page 150]

3.156 The broader and more expansive the representation as to future conduct is made, the wider the responsibility for proof of the representor to show that he or she had reasonable grounds.135 3.157 Whether or not a person has reasonable grounds for making a representation in relation to future conduct is a question of fact to be determined from the particular circumstances of each case. 3.158 Reasonable grounds involve that there be on the part of the representor first, an intention to perform the representation, and secondly, an ability to perform it.136 3.159 The best of intentions do not provide reasonable grounds if there is no ability to perform. Similarly, ability to perform does not establish reasonable grounds in the absence of an intention to perform.137 3.160 The fact that a person may honestly believe in a particular state of affairs does not necessarily mean that the person has reasonable grounds to believe that the statement he or she makes is correct.138 3.161 As a rule of thumb for determining reasonable grounds, future conduct should be based on balanced information, reliable and/or updated data, relevant time periods, and realistic calculations.

Section 4 of the ACL: an interpretative and deeming provision 3.162 Section 4 of the ACL is an interpretative provision which places an evidentiary burden on a defendant who is alleged to have made a representation as to a future matter that is misleading. 3.163 In effect, s 4 of the ACL deems a representation misleading unless the person who made the representation adduces evidence that there were reasonable grounds for making it.

3.164

Section 4 of the ACL provides:

4 Misleading representations with respect to future matters (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

[page 151] (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.

3.165 Section 4 of the ACL was based on former s 51A of the TPA. However, the two provisions contain notable differences between them. 3.166

The Explanatory Memorandum to the Trade Practices Amendment

(Australian Consumer Law) Bill (No 2) 2010139 provides the following explanation about s 4 of the ACL and former s 51A of the TPA: Section 4 of the ACL includes a provision that replaces section 51A of the TP Act. 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. The clarification of the burden as requiring only evidence of reasonable grounds to be adduced is to reverse the effect of some past court decisions, such as Australian Competition & Consumer Commission v IMB Group Pty Ltd [1999] FCA 819, that have interpreted section 51A of the TP Act as requiring a respondent to prove that he, she or it had reasonable grounds. In certain cases, section 51A of the TP Act was interpreted in such a way to, by implication, provide that proving reasonable grounds is a substantive defence to an allegation of misleading conduct.140 To reverse the effect of such decisions, section 4 of the ACL states explicitly that it does not imply that a representation as to a future matter is not misleading merely because the person had reasonable grounds for making the representation.

[page 152] Section 51A of the TP Act has been interpreted to not allow the provision to apply to alleged accessories to a contravention because it was worded as to require the ‘corporation’ to adduce evidence.141 Section 4 of the ACL reverses the effect of such decisions to allow its application to accessories. The drafting of section 4 of the ACL clarifies the operation of this provision and ensures that it has the effect of facilitating the presentation of evidence to the court when a representation of a future matter is alleged to be misleading.

3.167 Section 4(2) of the ACL is the evidentiary burden provision which provides that the person who made the representation is taken not to have reasonable grounds unless evidence is adduced to the contrary.

3.168 Section 4(3)(a) of the ACL states that merely because such evidence to the contrary is adduced, the person who made the representation is not taken to have had reasonable grounds for making the representation. 3.169 Section 4(3)(b) of the ACL provides that s 4(2) does not 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. 3.170 In Carter v Delgrove Holdings Pty Ltd,142 Lindsay J made the following comments about the application of s 4 of the ACL: Before discussing the respondents’ conduct in making the bid I should indicate that in applying s 4 of the ACL I do so upon the basis of the explication of that section by Allsop J in McGrath v Australian Natural Care Products Pty Ltd [2008] FCAFC 2 (His Honour was in the majority as to the outcome of that appeal but the dissentient, Emmett J, agreed with him in relation to his discussion of s 51A). Firstly, the evidentiary onus in subs (2) is to adduce evidence ‘to the contrary’. It is not enough for the defendant to simply put some evidence forward to discharge his obligation pursuant to subs (2). Any evidence is insufficient. It must be evidence to the contrary. Secondly, if such evidence to the contrary is adduced the onus cast upon the defendant by subs (2) will have been satisfied. However, this is not the expression of a view that the legal or persuasive onus had been changed by the introduction of subs (2). As his Honour expressed it at [192] of this judgment: For instance, if evidence ‘to the contrary’ is adduced by the representor, and if the representee itself adduces evidence, tending to the lack of reasonable grounds, the matter might be equally poised. In such a case, there has been evidence ‘to the contrary’ adduced by the representee, thereby eliminating the operation of the deeming provision and, on the totality of the evidence, the proof of reasonableness (or lack thereof) of the grounds is evenly balanced. Section 51A (2) does not, in my view, mean that in those circumstances, the representor has not met an onus. The section does not cast a legal or persuasive onus, in such a case, on the representor.

[page 153] 3.171

The following case of ACCC v Gary Peer & Associates Pty Ltd,143 is

an example of a respondent having insufficient evidence to support reasonable grounds for making a future representation.

ACCC v Gary Peer & Associates Pty Ltd [2005] FCA 404 In this case, in August 2003 Gary Peer & Associates Pty Ltd (Gary Peer) advertised a property in various newspapers with the following statement: ‘PRICE GUIDE $600,000 Plus Buyers Should Inspect’. Gary Peer published similar advertisements in various newspapers a month later with the following statement: ‘PRICE GUIDE $650,000 Plus Buyers Should Inspect.’ The ACCC alleged that such statements represented that the vendors would sell the property for a price that was approximately or was not substantially more than $600,000 or $650,000. Sundberg J held that each statement was misleading as the vendors instructed Gary Peer not to sell the property for less than $780,000 on 6 August 2003 and not less than $800,000 on 27 August 2003. The reason why the representations were misleading was the ‘PRICE GUIDE’ was a dominant part of the phrases which has a natural meaning of the price at which the property is likely to be sold. As the representations were with respect to future matters, the evidential burden was on the agent to adduce evidence. The evidence provided by Gary Peer (at [31]–[52]) (although discharging the evidential burden) failed to show ‘reasonable grounds’ for making such statements (at [80]–[83]). The evidence presented by Gary Peer did not discharge the legal onus as to why it had reasonable grounds for making the statements. As a result, Gary Peer was found to have engaged in misleading conduct in contravention of former s 52 of the TPA.

Failure to make proper inquiries 3.172 A person who engages in misleading conduct is not absolved from liability under s 18 of the ACL because the person who is subject of that conduct or their representative could have made proper inquiries. 3.173 The following case of Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1),144 is an example of a failure to make proper inquiries not acting as a defence to a claim under former s 52 of the TPA. [page 154]

Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 79 ALR 83 Henjo Investments Pty Ltd (Henjo) was the owner of a restaurant. The restaurant only had approval from the Woollahra Municipal Council (Council) to seat 84 people, and the seating at the bar area was restricted. Subsequent to the restaurant opening, the number of seats was increased by in excess of one-third, without authority from the Council. The bar area was also used as a service area with stools. Collins Marrickville Pty Ltd (Collins) purchased the restaurant from Henjo. During the course of negotiations Collins was not informed of the local council or bar licensing laws. Collins instructed their lawyer to confirm compliance with council by-laws. The lawyer made no inquiries which would have disclosed the limits of the approved user. The purchase was completed before Collins became aware of the true position. Relevantly, the agreement contained exclusion clauses. Lockhart J (with whom Burchett and Foster JJ agreed) held that silence

may be relied on to show a contravention of former 52 of the TPA when the circumstances give rise to an obligation to disclose relevant facts. The duty to disclose is not confined to cases where there are particular relationships. Whether the duty is disclosed will depend on the facts of each case and in this case such duty existed. The existence of a duty is not negated because inquiries could be made which would disclose the true position. The exclusion clause of which those in the agreement were examples cannot operate to defeat a claim under former s 52. As such, Henjo was in contravention of former s 52 of the TPA. In particular Lockhart J made the following comments about failure to make proper inquiries and former s 52 of the TPA (at 97): Doubtless Collins Marrickville could have ascertained the true position about the restaurant’s licences if it had inquired about them; but it did not do so. Even if Mr Tadd or Mr Jones, as advisers to the plaintiff, were on inquiry as to the matter in issue, this should not itself be taken to exclude recovery under s 52. It is true that at common law, the principal has imputed knowledge of that which is, or ought to be, known by his agent. There is authority that a client who employs a solicitor in a conveyancing transaction has imputed to him knowledge of anything which is known to his solicitor or would have been known to his solicitor on the proper inquiries: Kadner v Brune Holdings Pty Ltd [1973] 1 NSWLR 498, per Mahoney JA at 501; Sargent v ASL Developments Ltd (1974) 131 CLR 634 per Stephen J at 649; per Mason J at 658–9; 4 ALR 257 at 268–9 and 276. In an action under s 52, however, the issue is whether the misleading and deceptive conduct alleged continues to be operative in fact, whatever the knowledge which might have been obtained had the applicant’s advisers conducted their investigations in a proper manner, and whatever the matters of which those advisers might have constructive notice: Obacelo Pty Ltd v Taveraft Pty Ltd (1986) ATPR 40-703, per Wilcox J at

[page 155] 47,688. This reasoning is the stronger where a party who would otherwise be liable on account of conduct found to be misleading or deceptive seeks to rely upon knowledge notionally attributed to the innocent party so as to avoid liability. In my opinion the trial judge correctly rejected the argument that Collins Marrickville had constructive notice of these matters.

Failure to accommodate subsequent changes and the transitory effect 3.174 A failure to correct a true representation that at some stage later became untrue may be misleading or deceptive for the purposes of s 18 of the ACL. 3.175 This is especially so for continuing representations that are made to members of the public over a considerable period of time, and some event or circumstance alters the representation to make it misleading. 3.176 In these circumstances, there is an obligation on behalf of the person making the continual representation to correct or qualify the misleading representation, so it becomes truthful. 3.177 Whether a representation is misleading is considered at the time it is made, and a later correction does not absolve the person making the corrected representation from liability under s 18 of the ACL. 3.178 This is known as conduct that has a transitory effect,145 and it is misleading even though a person who is affected by the conduct learns the truth about the conduct before a transaction is concluded. 3.179 In SAP Australia Pty Ltd v Sapient Australia Pty Ltd,146 French, Heerey and Lindgren JJ made the following comments about the transitory effect and former s 52 of the TPA: … it was rightly observed that misleading or deceptive conduct in trade or commerce is not limited to conduct which induces or is likely to induce entry into a transaction. So to propose would be to limit s 52 of the TP Act in a way not justified by its terms. Conduct which misleads a customer so that, under some mistaken impression of a trader’s connection or affiliation, he or

she opens negotiations or invites approaches may be misleading or deceptive even if the true position emerges before the transaction is concluded.

3.180 Similarly, in ACCC v TPG Internet Pty Ltd,147 French CJ, Crennan, Bell, and Keane JJ made the following comments about the transitory effect and former s 52 of the TPA: [page 156] It has long been recognised that a contravention of s 52 of the TPA may occur, not only when a contract has been concluded under the influence of a misleading advertisement, but also at the point where members of the target audience have been enticed into ‘the marketing web’ by an erroneous belief engendered by an advertiser, even if the consumer may come to appreciate the true position before a transaction is concluded.

Passing on information 3.181 A person who passes on information from another person may be engaging in misleading conduct in contravention of s 18 of the ACL, unless it is clear that they are not the source of the information. 3.182 In Yorke v Lucas,148 Mason ACJ, Wilson, Deane and Dawson JJ said that where it is apparent that a person passing on the information was not the source, it is doubtful that the person is engaging in misleading or deceptive 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.

3.183

Hence, the innocent carriage of a misleading representation from

one person to another where the carrier is, and is seen to be, a mere conduit, does not involve that person in making the representation.149 3.184 In Gardam v George Wills & Co Ltd (No 1),150 French J explained this by reference to a postman. His Honour also noted that if the carrier adopts the representation, then they will be considered as making it: Nobody would expect that the postman who bears a misleading message in a postal article has any concern about its content or is in any sense adopting it. The same is true of the messenger boy or 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.

3.185 Whether or not a person has merely passed on information from another person and is seen as a mere conduit without adopting or endorsing that representation, is a question of fact.151 3.186 The following case of Butcher v Lachlan Elder Realty Pty Ltd,152 is a classic example of what has been labelled as the ‘mere conduit’ defence or mere passing on information without liability. [page 157]

Butcher v Lachlan Elder Realty Pty Ltd (2004) 212 ALR 357 In this case, Mr Butcher agreed to purchase a waterfront property (property) from Mr Harkins. Mr Harkins hired Lachlan Elder Realty Pty Ltd (Lachlan) as real estate agents for the sale of the property. Mr Butcher inspected the property and during the inspection a representative of Lachlan provided Mr Butcher with a brochure

describing the property. The brochure contained photographs of the house on the property and relevantly the following information: Lachlan Elder Realty Pty Ltd ACN 002 332 247. All information contained herein is gathered from sources we believe to be reliable. However we cannot guarantee it’s [sic] accuracy and interested persons should rely on their own enquiries.

The brochure also contained a survey diagram which showed, amongst other things, a line marked ‘MHWM’ [mean high water mark] and a ‘reclaimed area’. At the bottom of the back page of the brochure, the following words appeared: All information contained herein is gathered from sources we deem to be reliable. However we cannot guarantee it’s [sic] accuracy and interested persons should rely on their own enquiries …

Mr Butcher purchased the property at auction. After purchase, Mr Butcher discovered that the MHWM was not located where it was shown on the survey diagram in the brochure. In fact, the MHWM traversed the swimming pool. Mr Butcher commenced proceedings against Mr Harkins and Lachlan. At trial, Austin J found that if Mr Butcher had known that the MHWM traversed the swimming pool, he never would have purchased the property at auction. His Honour held that while Mr Harkins engaged in misleading conduct. Lachlan did not, as it was merely passing on information. Mr Butcher appealed. The Court of Appeal (Handley JA with whom Beazley and Hodgson JJA agreed) upheld Austin’s J decision and dismissed the appeal. Mr Butcher appealed to the High Court. The majority of the High Court, Gleeson CJ, Hayne and Heydon JJ (McHugh and Kirby JJ in dissent) held (at [39]–[40]) that the conduct of Lachlan must be ‘viewed as a whole’. It was Mr Harkins who provided the

information to Lachlan about the MHWM and Lachlan merely included that information in the brochure without adopting or endorsing it. When reading the brochure as a whole, which included two disclaimers, a reasonable purchaser would realise the Lachlan was not the source of the MHWM information.

[page 158] 3.187 The issue of the ‘conduit defence’ was considered by the High Court in Google Inc v ACCC.153 In this case, the ACCC failed to establish that Google Inc was liable under former s 52 of the TPA.

Google Inc v ACCC (2013) 294 ALR 404 In this case, Google Inc (Google) operated the internet search engine named ‘Google’ (Google Search). During the relevant period, Google used a program named AdWords, which permitted sponsored links to be created for advertisements of certain businesses. A number of businesses (including STA Travel, Carsales and Trading Post) used the Adword program to create sponsored links in Google. Advertisers used the Adwords program to specify which keywords are entered in Google Search by the user. The user’s keywords will trigger a link to a sponsor’s website. Google had no control over an advertiser’s choice of the search terms that would trigger the sponsored links. STA Travel, Carsales and Trading Post, among other businesses, used the Adwords program to create the sponsored links to their websites, by using keywords of the names of competitors. The effect of this was that

when a person typed in Google Search the words, for example, ‘Harvey World Travel’, the person was directed to the STA Travel website. The ACCC commenced proceedings alleging that Google engaged in misleading or deceptive conduct under former s 52 of the TPA. At trial, Nicholas J, found that the sponsored links did convey misleading or deceptive representations, but dismissed the ACCC’s claim against Google on the basis that Google had not made those representations: see ACCC v Trading Post Australia Pty Ltd (2011) 283 ALR 310. The ACCC appealed. On appeal, the Full Federal Court (Keane CJ, Jacobson and Lander JJ in a joint judgment) allowed the appeal: see ACCC v Google Inc (2012) 291 ALR 16. Google appealed to the High Court of Australia. The High Court (French CJ, Crennan and Kiefel JJ in joint judgment, Hayne and Heydon JJ in separate judgments) allowed the appeal and held that Google did not contravene former s 52 of the TPA. In particular, French CJ, Crennan and Kiefel JJ noted (at [68]–[70]) that: … 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.

[page 159] That the display of sponsored links (together with organic search results) can be described as Google’s response to a user’s request for information does not render Google the maker, author, creator or originator of the information in a sponsored link. The technology which lies behind the display of a sponsored link merely assembles information provided by others for the purpose of displaying advertisements directed to users of the Google search engine in their capacity as consumers of products and services. In this sense, 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. The primary judge’s findings about the way in which ordinary and reasonable users of the Google search engine would understand the sponsored links were not disturbed in the Full Court. These findings — that ordinary and reasonable users would have understood the sponsored links to be statements made by advertisers which Google had not endorsed, and was merely passing on for what they were worth — were plainly correct. They also support the conclusion reached above. On its face, each sponsored link indicates that its source is not Google, but an advertiser.

Disclaimers and exclusion clauses 3.188 There is an important distinction between exclusion clauses and disclaimers for the purposes of s 18 of the ACL, as the effect of each concept is somewhat different in terms of liability. 3.189 An exclusion clause is a term in a contract designed to exclude a person from liability for misleading conduct. In other words, an exclusion clause is an attempt to ‘contract out’ of s 18 of the ACL. 3.190

An example of an exclusion clause is as follows:

George acknowledges that Harrison will not be liable under s 18 of the Australian Consumer Law for any statements or representations made during the course of the negotiations of this agreement, including those made about the condition, performance or quality of the Starship Enterprise that he is selling to Harrison.

3.191 On the other hand, a disclaimer is a statement usually included in precontractual negotiations or in advertisements designed to limit the liability of a person or negate the effect of misleading conduct.

3.192

An example of a disclaimer is as follows:

Bingo is not the source of the information in this advertisement concerning the Star Trek movie and does not vouch for it. Please ensure that you make your own inquiries as to the correctness of the information.

[page 160]

The effect, if any, of an exclusion clause on s 18 of the ACL 3.193 A person is likely to be liable for misleading conduct in contravention of s 18 of the ACL, despite the existence of an exclusion clause in a contract which purports to oust the jurisdiction of s 18. 3.194 Exclusion clauses which attempt to oust the jurisdiction of s 18 of the ACL have routinely been read down by courts. For example, in Milford Astor Pty Ltd v Machinery Developments Ltd154 Matthews JA said: The exemption clause in question was in the following terms: 8. CONSEQUENTIAL LOSS AND DAMAGE Save as expressly provided for in the limited warranty in para 8, the Company shall not be liable for any loss or damage or injury, direct or consequential, whether in contract, tort, by statute or otherwise, and whether at law or in equity, and whether caused or arising out of or through the negligence, breach, acts or omissions for the Company, its servants or agents or otherwise and of whatsoever nature and to whomsoever or whatsoever caused arising out of the manufacturing and supply or supply only of any goods to the Customer or out of or through the use of any such goods by the Customer. This clause is in very broad terms. It would almost certainly operate to exclude liability for breach of an implied condition under s 19 of the Sale of Goods Act. But it cannot exclude liability under s 52 of the Trade Practices Act. For there is clear authority that a vendor of goods cannot rely on an exemption clause in answer to a cause of action under s 52, as the conduct in making the representation preceded the contract in which the exemption clause was contained.

3.195

The following case of Clark Equipment Australia Ltd v Covcat Pty

Ltd,155 is a classic example of the court reading down exclusion clauses that has the effect to oust the jurisdiction of former s 52 of the TPA.

Clark Equipment Australia Ltd v Covcat Pty Ltd (1987) 71 ALR 367 In this case, Clark Equipment Australia Ltd (Clark) leased to Covcat Pty Ltd (Covcat) a tracked machine named Clark 1080 Feller Buncher (Buncher). The Buncher was designed to cut down trees and place them in ‘bunches’. A brochure about the Buncher read that it would cut ironbark in a natural forest at a rate of between 800 to 1200 trees per day. Clarke also made a similar representation to Covcat. Covcat signed a lease agreement with Clark. The lease agreement contained an exclusion clause to the effect that Covcat had inspected the Buncher and relied on its own skill and judgment that it was reasonably fit for its purpose. [page 161] At trial, Wilcox J held that Clark contravened former s 52 of the TPA. Clark appealed. The Full Federal Court (Fox, Sheppard and Jackson JJ in separate judgments) dismissed the appeal. In particular, Sheppard J (with whom Jackson J agreed) held that a remedy conferred by former s 52 of the TPA will not be lost whatever the parties may provide in their agreement (at [371]): Parties may agree that statements and representations made antecedently to their entering into a contract are not to form the basis of any remedy in the event of there being a subsequent disagreement. Except in cases of fraud, the common law will give effect to their

contract. But the remedy conferred by s 52 of the Trade Practices Act will not be lost, whatever the parties may provide in their agreement. If a vendor of goods has engaged in misleading or deceptive conduct, the law makes him accountable for loss and damage suffered as a result of his unlawful conduct. That conduct will usually have been committed, as in this case, prior to the signing of any contract. If, as a result of the conduct, a person is induced to enter into a contract and suffers loss, an action to recover it lies. The terms of the contract are irrelevant. As Wilcox J said in Petera Pty Ltd v EAJ Pty Ltd (1985) 7 FCR 375 at 378: Whatever may be the effect of cl 19 [the exemption clause in that case] in relation to an action brought in contract, in which reliance is placed upon an alleged warranty or condition not included in the contract of sale, that clause should not be allowed to defeat a claim based upon s 52. To permit such a clause to defeat such a claim would be to accept the possibility that a vendor might exacerbate his deception, as by actively misleading a purchaser as to the existence or nature of such an exclusion, and thereby ensure that he would escape liability.’ I refer also to Byers v Dorotea Pty Ltd (1986) 69 ALR 715; [1987] ATPR 40-760, per Pincus J at 48230.

3.196 Whether or not an exclusion clause in a contract has the effect of excluding or limiting the consequence of the misleading representation is a question of fact. 3.197 The question is whether the exclusion clause has broken the nexus between the misleading conduct and the loss suffered.156 In Sutton v A J Thompson Pty Ltd (in liq),157 Forster, Woodward and Wilcox JJ said: … 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.

The effect, if any, of a disclaimer on s 18 of the ACL 3.198 A person may be liable for misleading or deceptive conduct in contravention of s 18 of the ACL, despite disclaiming the representation in pre-contractual negotiations or in an advertisement. [page 162]

3.199 A disclaimer as to the truth or otherwise of a particular representation, of itself, does not necessarily absolve a person who made the representation from liability under s 18 of the ACL.158 3.200 This is because the intention and honesty of a person is not relevant for the purposes of s 18 of the ACL and a disclaimer can be a mere expression of intention.159 3.201 However, a disclaimer will not be ignored altogether for the purposes of s 18 of the ACL.160 Whether a disclaimer limits or negates the effect of a misleading representation is a question of fact. 3.202 The court will examine the disclaimer in light of all the circumstances and consider whether the conduct in question, including any representations and the disclaimer, is likely to mislead or deceive.161 3.203 If a disclaimer has the effect of erasing whatever is misleading in the conduct, the disclaimer will be effective, not by any independent force of its own, but by actually modifying the conduct.162 3.204 However, a formal disclaimer would have this effect only in rare cases. This was noted by Burchett J in Benlist Pty Ltd v Olivetti Australia Pty Ltd.163 3.205 This is not to be confused with the situation of a person merely passing on information, who made it clear by way of disclaimer that they are not the source of the information or adopting the information 3.206 As stated above, a person who merely passes on information is considered as a mere conduit and is unlikely to be liable under s 18 of the ACL, if they provide an adequate disclaimer to this effect.

Misleading conduct in relation to professional advice

3.207 Professional advice, including that of accountants, financial advisers, valuers, lawyers and experts, if incorrect, may be misleading or deceptive for the purposes of s 18 of the ACL. 3.208 Section 18 of the ACL captures both errors of fact and errors of law.164 The generality of s 18 does not support any implied limitation that would exclude from its operation conduct inducing error of law.165 [page 163] 3.209 This was made clear by Von Doussa J in the following decision of S W F Hoists and Industrial Equipment Pty Ltd v State Government Insurance Commission.166

S W F Hoists and Industrial Equipment Pty Ltd v State Government Insurance Commission (1990) ATPR 41-045 In this case, the State Government Insurance Commission (Commission) had provided to S W F Hoists and Industrial Equipment Pty Ltd (SFW) advice that its workers’ compensation insurance cover would extend to employees injured during interstate work. The advice was incorrect. SFW commenced proceedings against the Commission for misleading or deceptive conduct in contravention of former ss 52 and 53 of the TPA. Von Doussa J considered, among other things, a submission that the Commission’s advice had been on a question of law and, as such, would not amount to an actionable misrepresentation if it were wrong. Von Doussa J held that the representations made were on matters of fact about the content of insurance, but even if they were matters of law, former s 52 would still apply. In particular, Von Doussa J also said:

As the respondent held itself out as an expert in matters of insurance, and actually gave advice in relation to the position in Queensland, in my opinion the oral and written statements of the respondent would amount to conduct that was misleading or deceptive or likely to mislead and deceive within the meaning of s 52 even if the statements are correctly to be characterised as statements of law.

3.210 In relation to misrepresentations about the law under former s 52 of the TPA, French J noted the following in Inn Leisure Industries Pty Ltd v DF McCloy Pty Ltd (No 1):167 A representation of law may be made in different ways which send different messages to the recipient. It may do no more than convey what is, on the face of it, the untutored opinion of the representor. As such it would be unlikely, if wrong, to constitute misleading or deceptive conduct. If the represented opinion were not in fact held by the representor, then that would be a misrepresentation of fact and able to be characterised as misleading or deceptive conduct. It is on that basis also that a fraudulent misstatement of law may be actionable. Expert advice as to the law may convey the representation that it is based upon an underlying body of knowledge, experience or expertise possessed by the person proffering it or to which that person has access. The situations in which advice, expert or otherwise, as to the law may be misleading or deceptive for the purposes of s 52 will depend upon the context and circumstances in which it is proffered and the representations implied or expressed that accompany it.

[page 164] 3.211 The fact that a person has provided to another person misleading or deceptive information without charging the person, is no defence to a contravention of s 18 of the ACL.168

Misleading conduct in without prejudice negotiations 3.212 The fact that negotiations were conducted on a ‘without prejudice’ basis is no defence under s 18 of the ACL, if in the course of the negotiation, a misleading representation was made and relied on.169

3.213 In Rosebanner Pty Ltd v Energy Australia,170 Ward J made the following comment about misleading conduct under former s 52 of the TPA in the context of without prejudice negotiations: It surely cannot be the case that a discussion with a view to resolving a dispute at the least possible cost to a corporation and with what must have been a view to the continued and efficient conduct of the business, a corporation would be free to engage in misleading and deceptive conduct without recourse by a party suffering loss in reliance thereon.

3.214 The following decision of Quad Consulting Pty Ltd v David R Bleakley & Associates Pty Ltd,171 is an example of without prejudice negotiations not being a bar to liability for misleading statements.

Quad Consulting Pty Ltd v David R Bleakley & Associates Pty Ltd (1990) 98 ALR 659 In this case, Quad Consulting Pty Ltd (Quad) attended a ‘without prejudice’ meeting (Meeting) with David R Bleakley & Associates Pty Ltd (David) and MLC Life Ltd (MLC). At the Meeting, hand written notes were taken. Quad commenced proceedings against David and MLC for contraventions of former ss 52 and 53 of the TPA. Specifically, Quad alleged that during the Meeting misleading representations were made on behalf of David, which resulted in loss for Quad. A subpoena was issued to MLC by Quad. David sought to have the court set aside the subpoena, in so far as it concerned the hand written notes that were taken during the Meeting. David argued that the notes were taken on a ‘without prejudice’ basis and therefore should not be disclosed. Hill J rejected David’s argument and ordered that MLC produce the

hand written notes. His Honour held that the ‘without prejudice’ rule was subject to [page 165] limitations and could not protect a party ‘if the matter in dispute in proceedings, unrelated to the matter the subject of the negotiation, was whether particular words were uttered by one of the parties to the negotiation’. In particular, Hill J said (at 666): It seems to me that if, in the course of ‘without prejudice’ negotiations, a party to those negotiations engages in conduct which is misleading or deceptive or likely to mislead or deceive contrary to s 52 of the Trade Practices Act and as a result the other party to the negotiations relying, for example, upon the misleading or deceptive conduct suffers loss, proof of the negotiations should not be rendered impossible by the ‘without prejudice’ rule. There is, in such a case, no longer the same subject matter in dispute between the parties as was in dispute at the time of the negotiations. A fortiori where the party suffering damage was not at all a party to the negotiation. The public policy to be found in Part V of the Trade Practices Act is not to be rendered nugatory by permitting a party to hide behind the fact that his or her conduct, which is misleading or deceptive conduct, occurred during the course of ‘without prejudice’ negotiations. A party cannot, with impunity, engage in misleading or deceptive conduct resulting in loss to another under the cover of ‘without prejudice’ negotiations.

3.215 In Harrington v Lowe,172 Brennan CJ, Dawson, Toohey, Gaudron, McHugh and Gummow JJ made the following comments about a without prejudice communication and misleading conduct: That privilege is concerned with the admissibility of evidence at trial after the failure of negotiations and even then does not provide a legal norm which is absolute in nature. Thus, in a proceeding in which the ordinary rules of evidence apply, ‘without prejudice’ material will be admissible if the issue is whether or not the negotiations resulted in an agreed settlement. So also where what is in issue is the entry into the impugned agreement as a consequence of engagement in misleading and deceptive conduct by another party.

Misleading conduct and legal professional privilege 3.216 Communications that are protected by legal professional privilege even if relevant to a misleading conduct case, may be excluded from evidence at an interlocutory stage of proceeding, or at a final hearing. 3.217 In Equuscorp Pty Ltd v Kamisha Corp Ltd,173 Heerey J made the following comments, on an interlocutory application, about legal professional privilege and former s 52 of the TPA: A privileged communication may be subsequently referred to in a way that makes its continued protection unfair. But at the moment I have to consider the issue at an

[page 166] interlocutory stage. It is true that legal advice could be relevant in determining whether a plaintiff in fact relied on the misrepresentations complained of. But the whole point of legal professional privilege is that, for public policy reasons, material is excluded which might be relevant, indeed highly relevant. No balancing exercise is involved. If legal professional privilege applies, privilege trumps relevance.

Exemptions for information providers Section 19 of the ACL 3.218 Section 19 of the ACL (which replaces former s 65A of the TPA) exempts the media in certain circumstances from contraventions of s 18. Section 19 states: 19 Application of this Part to information providers (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. (2) Subsection (1) does not apply to a publication of an advertisement. (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. (4) Subsection (1) does not apply to a publication of matter in connection with the sale or grant, or possible sale or grant, of, or the promotion by any means of the sale or grant of, interests in land (the publicised interests in land), if: (a) the publicised interests in land were interests of a kind sold or granted 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 sells or grants interests of the same kind as the publicised interests in land; 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 sells or grants interests of the same kind as the publicised interests in land. (5) An information provider is a person who carries on a business of providing information.

[page 167] (6) Without limiting subsection (5), each of the following is an information provider: (a) the holder of a licence granted under the Broadcasting Services Act 1992; (b) a person who is the provider of a broadcasting service under a class licence under that Act; (c) the holder of a licence continued in force by section 5(1) of the Broadcasting Services (Transitional Provisions and Consequential Amendments) Act 1992;

(d) the Australian Broadcasting Corporation; (e) the Special Broadcasting Service Corporation.

3.219 Section 19 of the ACL operates in the same way as former s 65A of the TPA. The jurisprudence on the interpretation of former s 65A is relevant to s 19.174 3.220 It is worth noting that former s 65A of the TPA was inserted in response to concerns that news media could be liable for incorrect news reports under former s 52.175 3.221 In Australian Ocean Line Pty Ltd v West Australian Newspapers Ltd,176 Toohey J refused to dismiss proceedings against the newspaper for misleading conduct in contravention of former s 52 of the TPA. 3.222 In particular, Toohey J made an order for an award of damages against the newspaper in relation to a story it carried about services and conditions aboard a cruise ship, The Dalamacija. 3.223 In the Second Reading Speech for the Statute Law (Miscellaneous Provisions) Bill (No 2) 1984, which introduced former s 65A into the TPA, the then Attorney-General said: A new section 65A is to be inserted in the Trade Practices Act 1974 to clarify the application of certain of the consumer protection provisions of that Act to the Media and the other persons who carry on business of providing information. Recent decisions of the Federal Court have suggested that a newspaper publisher may be taken to have engaged in conduct that is misleading or deceptive for the purposes of section 52 of the Trade Practices Act if the newspaper contains inaccurate information. … New s 65A will operate to exempt the media and (other persons who engage in businesses of providing information) from the operation of those provisions of Division 1 of Part V of the Trade Practices Act which could inhibit activities relating to the provision of news and other information.

3.224 It was further noted by the then Attorney-General that the proposed exemption in former 65A of the TPA did not extend to the provision of information that is regarded to contain a commercial interest: [page 168] In such cases, information providers must take the same responsibility for the accuracy of information as any other person who publishes information in trade or commerce. This can occur, for example, 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.

3.225 In Bond v Barry,177 French J stated that former s 65A of the TPA does not provide an exemption where the information provider has a commercial interest in the content of the information.

Bond v Barry (2007) 73 IPR 490 In this case, a freelance journalist named Paul Barry wrote an article about the relationship between Alan Bond and a diamond mining company, Lesotho Diamond Corporation Plc (Diamond) that operated in South Africa. The article appeared in The Sunday Telegraph newspaper in New South Wales and in The Sunday Times newspaper in Western Australia. Mr Bond and Diamond commenced proceedings against Mr Barry, and others, for misleading or deceptive conduct in contravention of former s 52 of the TPA. Mr Barry argued in defence that regardless of the merits of the complaints about his article, the proceedings could not succeed on the basis that they are exempted from the TPA by former s 65A. French J dismissed the proceedings and held that a freelance journalist,

like Mr Barry, was clearly within the class of persons described in former s 65A as a ‘prescribed information provider’. Accordingly, Mr Barry was exempted from the liability of former s 52 of the TPA. However, his Honour noted, that former s 65A of the TPA provides not protection against accessorial liability for misleading or deceptive conduct. In relation to former s 65A of the TPA, French J said (at [32]–[35]) that: Section 65A provides an exemption from the application of s 52. That is to say, conduct which would otherwise contravene s 52 does not do so if it is conduct to which s 65A applies. The section provides no exemption for a media organisation which is an accessory to a contravention which is not covered by s 65A. So, if a news organisation aids, abets or induces somebody who is not covered by s 65A to make statements in trade or commerce which are misleading or deceptive and contravene s 52 or one of the State Fair Trading Acts, then the news organisation may be ‘involved in’ that contravention within the meaning of s 75B of the TPA or its equivalent under the relevant Fair Trading Act. That is not to say that a newspaper or other media outlet would be held liable simply for reporting the fact of a statement by a third party which is of itself misleading or deceptive. It is not

[page 169] necessary to consider the conditions of accessorial liability in such a case because that is not the case now before the court. The proposition remains that there is no protection in s 65A or its Fair Trading Act equivalents against accessorial liability for misleading or deceptive conduct: Advanced Hair Studio Pty Ltd v TVW Enterprises Ltd (1987) 18 FCR 1; 77 ALR 615; 10 IPR 97. Section 65A exempts from the application of s 52 ‘a prescribed publication of matter by a prescribed information provider’. The party claiming the exemption must be a prescribed information provider. This means a person ‘who carries on a business of providing information’. The term includes but is not limited to licence holders under the Broadcasting Services Act 1992 (Cth) or who provide broadcasting services under a class licence under that Act. The word ‘information’ is not defined. Its ordinary meaning relevantly includes ‘knowledge or facts communicated about a particular subject, event etc; intelligence, news’. It also extends to ‘an item of news’: Shorter Oxford English Dictionary, 5th ed, Oxford University Press, Oxford, 2002. …

The term ‘freelance journalist’ … may be taken to include a person who writes articles for publication in media outlets on the basis that he or she will be paid for articles so published by the relevant media organisation. A freelance journalist is necessarily a person working on his or her own account and not as an employee of a particular media organisation. A person who carries on business as a freelance journalist is plainly within the class of persons described in s 65A as a ‘prescribed information provider’: see Carlovers Carwash Ltd v Sahathevan [2000] NSWSC 947 at [36] (Levine J).

3.226 An ‘information provider’ is defined in s 19(5) of the ACL (and elaborated on in s 19(6)). An information provider includes: television, radio, newspapers, magazines and the internet. 3.227 Section 19(1) of the ACL provides that information providers are exempted from liability under s 18, where they made a publication in the course of carrying on a business. 3.228

The exemption does not apply to: a publication of an advertisement (s 19(2)); a publication in connection with the supply, or promotion of the supply of goods or services by the information provider (s 19(3)); and 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 (s 19(4)).

3.229 In relation to s 19(2) of the ACL and the exemption for the publication of advertisements, an information provider will not be caught by s 18 when carrying on their business of providing information. [page 170]

3.230

An example of how s 19(2) of the ACL operates is as follows:

Paul places an advertisement in a major magazine, which contains misleading statements about the ‘totally awesome and fully sick performance’ of the red WRX second-hand cars that he supplies. In these circumstances, Paul will be liable for misleading conduct, but the magazine company is not.

3.231 The magazine company will be exempted via s 19 of the ACL where it is apparent that the company is not the source of the advertisement and was merely passing on the information without endorsing or approving it. 3.232 However, the magazine company will be liable for the misleading advertisement pursuant to s 18 of the ACL if it also made the relevant misleading statements or engaged in the misleading conduct itself. 3.233 Similarly, if the magazine company also has an interest in Paul’s business and is also supplying the cars, the magazine company will be liable pursuant to s 18 for the misleading advertisement: s 19(3). 3.234 Section 160 of the ACL states that information providers are also exempt from the related criminal offence provisions in ss 151, 152, 155, 156 and 159 of the ACL. 3.235 In ACCC v Channel Seven Brisbane Pty Ltd,178 French CJ and Kiefel J made the following comment about the purpose of former s 65A of the TPA: In order to understand the purpose of the provision it is useful to refer to a passage from the second reading speech for the Bill which became the Statute Law (Miscellaneous Provisions) Act (No 2) 1984 (Cth) by which s 65A was introduced into the TPA. In the second reading speech it was said, inter alia: The Government recognises the need to maintain a vigorous free press, as well as an effective and enforceable Trade Practices Act. In doing so, the Government recognises that, whilst the problem may have been highlighted by a defamation action, similar considerations apply in respect of action for negligent misstatement and actions for injurious falsehood. The Government also recognises that the difficulties in this area are experienced not only by the main newspaper, magazine

and television publishers, but also by a wide range of other people who provide information. New section 65A will operate to exempt the media (and other persons who engage in businesses of providing information) from the operation of those provisions of Division 1 of Part V of the Trade Practices Act which could inhibit activities relating to the provision of news and other information. The exemption was limited and the relevant limit was: The exemption is not available, however, in respect of a publication of information relating to goods, services or land of a kind supplied by the information provider, or relating to goods, services or land where the publication is made pursuant to a contract, arrangement or understanding with a body corporate related to a body corporate that supplies such goods, services or land. These provisions

[page 171] ensure that information providers are not exempt from the consumer protection provisions of the Trade Practices Act in respect of the provision of information where they have what might be regarded as a commercial interest in the content of the information. In such cases, information providers must take the same responsibility for the accuracy of information as any other person who publishes information in trade or commerce. This can occur, for example, 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.

3.236 In ACCC v Channel Seven Brisbane Pty Ltd,179 Gummow J made the following comment about the construction of former s 65A of the TPA: Section 65A of the Trade Practices Act 1974 (Cth) is so drawn as to compress within a fairly short text numerous interactions between various integers or elements specified in the section. That interaction produces various combinations in which those integers operate conjunctively and disjunctively. When any particular set of facts is said to engage the section it becomes necessary first to identify which one or more of those combinations is relied upon to attract the section. If this step is taken with the present appeal, much of the uncertainty said to attend the application of s 65A in this case does not appear.

3.237

The following case of ACCC v Channel Seven Brisbane Pty Ltd,180 is

an example of an exception to the exemption provided to information providers under former s 65A of the TPA.

ACCC v Channel Seven Brisbane Pty Ltd (Wildly Wealthy Women case) (2009) 255 ALR 1 In this case, the two respondents were licensed broadcasters and members of the Channel Seven network. In October 2003 and January 2004, the respondents broadcast two episodes of the Today Tonight program, which included a segment entitled ‘Wildly Wealthy Women Millionaire Mentoring Program’ (Program). The broadcasts of the Program were about a business offering training for women in the arts of property investment. It was promoted and conducted by Dymphna Boholt and Sandra Forster. According to the Program, Ms Boholt and Ms Forster were offering to teach women how to become wealthy through investments in real estate for a fee of approximately $3000 per person for a nine month program. The ACCC commenced proceedings against the respondents alleging contraventions of former s 52 of the TPA. The ACCC claimed that, by broadcasting the Program on Today Tonight, the respondents had made representations about the benefits of the services offered by Ms Boholt and Ms Forster and that those representations were misleading or deceptive. The trial judge, Bennett J, held that former s 65A of the TPA did not provide a defence for the respondents. The respondents’ conduct fell within an exception [page 172]

to the exemption from liability provided by s 65A. This was on the basis that the broadcasts had been made pursuant to an arrangement between the respondents and the two women and related to services provided by the women. The respondents appealed. The Full Court (Sundberg, Jacobson and Lander JJ) allowed the appeal on the basis that the exception to the exemption provided by former s 65A did not apply to the conduct of the respondents. The respondents’ conduct therefore fell within the exemption provided by former s 65A. The ACCC appealed to the High Court. The majority of the High Court held that the appeal should be allowed. The exemption conferred by former s 65A of the TPA does not apply to situations in which a media outlet, pursuant to a contract, agreement or understanding with a supplier of goods or services, publishes and, by adoption or otherwise, makes representations of a misleading character in relation to goods or services of that kind. Furthermore, a publication can be made ‘pursuant to’ a contract, agreement or understanding that relates to the publication notwithstanding that the particular publication is not specified in that contract, agreement or understanding (at [49], [73]).

Remedies and enforcement powers Summary of available remedies and enforcement powers 3.238 A person contravening s 18 of the ACL may be subjected to any of the following remedies and enforcement powers: declarations (s 21 of the Federal Court of Australia Act 1976 (Cth)); undertakings (s 218 of the ACL);

substantiation notices (s 219 of the ACL); public warning notices (s 223 of the ACL); injunctions (s 232 of the ACL); damages (s 236 of the ACL); compensatory orders (s 237 of the ACL); compensation orders arising out of other proceedings (s 238 of the ACL); orders for non-party consumers (s 239 of the ACL); non-punitive orders (s 246 of the ACL); orders for the preservation of property (s 137F of the CCA); and power to obtain information, documents and evidence (s 155 of the CCA). 3.239 However, the following remedies and enforcement powers are not available for contraventions of s 18 of the ACL: infringement notices (s 134A of the CCA); pecuniary penalties (s 224 of the ACL); adverse publicity orders (s 247 of the ACL); orders disqualifying a person from managing corporations (s 248 of the ACL); and criminal liabilities provisions. [page 173]

Short theory and problem questions Theory questions 1.

Can puffery constitute misleading or deceptive conduct under s 18

of the ACL? 2.

Can silence constitute misleading or deceptive conduct under s 18 of the ACL?

3.

Can half-truths constitute misleading or deceptive conduct under s 18 of the ACL?

4.

Can honest mistakes constitute misleading or deceptive conduct under s 18 of the ACL?

5.

Can merely passing on information that is incorrect constitute misleading or deceptive conduct under s 18 of the ACL?

6.

Can predictions, forecasts and opinions constitute misleading or deceptive conduct under s 18 of the ACL?

7.

Is confusion or mere wonderment by itself misleading or deceptive conduct under s 18 of the ACL?

8.

Can a person ‘contract out’ of liability for contraventions of s 18 of the ACL?

9.

Is a radio station exempted from liability under s 18 of the ACL, if it promotes its own radio merchandise in a misleading way?

Hypothetical problem question John, Paul, George and Bingo were musicians in a band called The Beagles. Each band member also studied law at the University of Australia (UOA). In order to pay for their studies, the Beagles play ‘gigs’ on weekends at the local campus in Mosman. During the Autumn semester, John neglected his studies. He started drinking heavily and played lots of rock music (including a weird song called ‘Revolution 999’, which everyone hated). He also often asked Paul, George or Bingo to sign his name on the roll for one of his classes, ACL. He also made fun of his ACL lecturer, Nairda, behind his back. As a result of his attitude and neglect of his studies, John failed his first

assignment in ACL. John became rather sad and thought that he may not pass the course. In order to ‘drown his sorrows’, John attended an on campus ‘after ACL assignment drinking party’, where he met Koko, who was another student studying Arts at UOA. John and Koko immediately fell in love and started writing music together, including a song called ‘Imagine, I pass ACL’. One day, John and Koko were walking past the UOA Library and saw an advertisement, which read: Are you tired of failing Australian Consumer Law? Brian Wilsun is coming to save the day. Enrol now in his lectures at Endless Summer University and buy his text book How to Listen to 70s Beach Music while Studying Australian Consumer Law. Brian claims that his book is a BEST SELLER and will make you a ‘legal/music

[page 174] genius.’ We guarantee that after studying Brian’s course, you will have 100% chance of passing Australian Consumer Law at UOA.*

John enrolled in the course as it provided a 100 per cent chance of passing ACL at UOA. He also decided to buy Brian’s book, as it was a ‘best seller’ and, of course, he also wanted to become a ‘legal/music genius’. At the first lecture at Endless Summer University, John was disappointed to discover that Brian was not going to teach the course. Instead, the lecture was given by a third year law student at Endless Summer University, named Axel Guns. Axel was not paid for teaching at Endless Summer University. In fact, Axel had never studied Australian Consumer Law and it was clear that he knew nothing about 70s music, or how to dress appropriately in class. Axel was also caught on a number of occasions smoking reefers. In his first lecture, Axel made many mistakes, including telling the students that all lawyers who pass Australian Consumer Law at Endless Summer University are expected to earn over $1 million for their first

year as a graduate. Axel also thought that the group called the Bee Zees was going to be a ‘big flop’. John took great offence to this, as he was best friends with the lead singer Garry Bibbs. John was also disappointed with the textbook. The book had little information about the Australian Consumer Law or music. Instead, it was filled mostly with pictures of Brian relaxing on the beach in Hawii. John soon discovered that Brian’s book was not a ‘best seller’. John was annoyed and wanted his money back for the book that Brian sold to him and a refund for the course at Endless Summer University. John also wanted Axel to stop spreading lies about the Bee Zees. John asked Endless Summer University to repay him for the course but the University refused to do so. Brian also refused to refund John for the book, telling him that he should ‘surf it off’. However, John was most angry at Axel who told him that he would never stop ‘slagging off other bands’ (including Frontlane Boys, Take This, and Lads II Men). Axel also told John that his song ‘Imagine, I pass ACL’ really ‘sux’. Advise John whether he has any causes of action against Endless Summer University and/or Brian Wilsun and/or Axel Guns under s 18 of the ACL. *

Advertisement authorised and approved by Endless Summer University.

Further reading A Bruce, Consumer Protection Law in Australia, 2nd ed, LexisNexis Butterworths, Sydney, 2014, pp 59–128. S Corones, The Australian Consumer Law, 2nd ed, Thomson Reuters, Sydney, 2013, pp 113–76. C Lockhart, The Law of Misleading or Deceptive Conduct, 3rd ed, LexisNexis Butterworths, Sydney, 2011.

[page 175] Halsbury’s Laws of Australia, Commentary, Consumer Protection title, LexisNexis, Sydney, 2011, [10.14]–[10.18] and [75,590.250]– [75,590.330]. Justice J D Heydon, Trade Practices Law Competition & Consumer Law (Looseleaf Services), Thomson Reuters, Australia, 2012, [160.100]–[160.1900]. R Miller, Australian Competition and Consumer Law Annotated, 36th ed, Thomson Reuters, Sydney, 2014, pp 1445–557. R Steinwall, Annotated Competition and Consumer Legislation, LexisNexis Butterworths, Sydney, 2014, pp 1305–40. The ACCC website at or the ACL website at and download the following publications: – The Australian Consumer Law — A Guide to the Provisions, 2011; –

The Australian Consumer Law — A Framework Overview, 2013;

–

Avoiding Unfair Business Practices — A Guide for Businesses and Legal Practitioners, 2010;

–

Guide for Business — Advertising and Selling, 2014 and 2007; and

–

Green Marketing and the Australian Consumer Law, 2011.

1.

Memorable quote taken from Coming to America (1998).

2.

Brown v Jam Factory Pty Ltd (1981) 35 ALR 79 per Fox J at 86.

3.

Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 18 ALR 639 per Stephen J at 645.

4.

Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Gibbs J at 5.

5.

For example, see MGM Bailey Enterprises v Austin Aust Pty Ltd [2002] NSWSC 259.

6.

For example, see Transglobal Capital Pty Ltd v Yolarno Pty Ltd [2005] NSWCA 68.

7.

For example, see Reiffel v ACN 075 839 226 Ltd [2003] FCA 194.

8.

For example, see HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54.

9.

For example, see ACCC v Australian Dreamtime Creations Pty Ltd [2009] FCA 1545.

10. For example, see ACCC v GM Holden Ltd [2008] FCA 1428. 11. For example, see Leonie’s Travel Pty Ltd v International Air Transport Association [2009] FCA 280. 12. For example, see North East Equity Pty Ltd v Proud Nominees Pty Ltd [2010] FCAFC 60. 13. For example, see Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 18 ALR 639. 14. For example, see Heritage Clothing Pty Ltd v Mens Suit Warehouse Direct Pty Ltd [2008] FCA 1775. 15. For example, see ACCC v Panasonic Pty Ltd [2010] FCA 856. 16. For example, see ACCC v Zanok Technologies Pty Ltd [2009] FCA 1124. 17. For example, see Shahid v Australasian College of Dermatologists [2008] FCAFC 72. 18. For example, see ACCC v Energy Watch Pty Ltd [2012] FCA 425. 19. For example, see ACCC v Nudie Foods Aust Pty Ltd [2008] FCA 943. 20. For example, see ACCC v Original Mama’s Pizza & Rib Pty Ltd [2008] FCA 370. 21. For example, see Bodum v DKSH Aust Pty Ltd [2011] FCAFC 98. 22. For example, see ACCC v Allergy Pathway Pty Ltd [2009] FCA 960. 23. For example, see ACCC v Trading Post Aust Pty Ltd [2011] FCA 1086. 24. For example, see ACCC v Dukemaster Pty Ltd [2009] FCA 682. 25. For example, see ACCC v Google Inc [2012] FCAFC 49. 26. Colin Lockhart, The Law of Misleading or Deceptive Conduct, 4th ed, LexisNexis Butterworths, Sydney, 2014. 27. See 2.97 for the meaning of ‘in trade or commerce’. 28. Cassidy v Saatchi & Saatchi Australia Pty Ltd [2004] FCAFC 34 per Moore and Mansfield JJ at [31]. 29. Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 18 ALR 639 per Stephen J at 645. 30. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Gibbs J at 5. 31. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Gibbs J at 5. 32. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Gibbs J at 5. 33. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Gibbs J at 5. 34. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Gibbs J at 5. 35. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Gibbs J at 7. 36. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Gibbs J at 5. 37. McWilliam’s Wine Pty Ltd v McDonald’s System of Australia Pty Ltd (1980) 33 ALR 394 per Smithers and Fisher JJ at 398, 413; ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 634

per Allsop CJ at [39]. 38. McWilliam’s Wine Pty Ltd v McDonald’s System of Australia Pty Ltd (1980) 33 ALR 394 per Fisher J at 413. 39. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Gibbs CJ at 6. 40. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Mason J at 15. 41. McWilliam’s Wine Pty Ltd v McDonald’s System of Australia Pty Ltd (1980) 33 ALR 394. 42. Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 per Deane and Fitzgerald JJ at 201. 43. Campomar Sociedad, Limitada v Nike International Ltd (2000) 169 ALR 677 per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ at 706. 44. Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 per Deane and Fitzgerald JJ at 201. 45. McWilliam’s Wine Pty Ltd v McDonald’s System of Australia Pty Ltd (1980) 33 ALR 394. 46. For example, see Barry v Lake Jindabyne Reservation Centre Pty Ltd (1985) 8 FCR 279 per Toohey J at 285. 47. For example, see Bridge Stockbrokers Ltd v Bridges (1984) 4 FCR 460 per Lockhart J at 473. 48. Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 per Deane and Fitzgerald JJ at 200. 49. McWilliam’s Wine Pty Ltd v McDonald’s System of Australia Pty Ltd (1980) 33 ALR 394. 50. Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 367. 51. Lego Australia Pty Ltd v Paul’s (Merchants) Pty Ltd (1982) 42 ALR 344. 52. Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177. 53. Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 per Deane and Fitzgerald JJ at 200. 54. Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 per Deane and Fitzgerald JJ at 200. 55. Campomar Sociedad, Limitada v Nike International Ltd (2000) 169 ALR 677 per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ at 705. 56. Campomar Sociedad, Limitada v Nike International Ltd (2000) 169 ALR 677 per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ at 705. 57. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Brennan J at 27. 58. Oxford English Dictionary, Compact Edition, 1987. 59. Oxford English Dictionary, Compact Edition, 1987. 60. Weitmann v Katies Ltd (1977) 29 FLR 336 per Franki J at 343. 61. Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (New York Deli case) (1988) 79 ALR 83 per Lockhart J at 92. 62. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Gibbs CJ at 6. 63. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Gibbs CJ at 6. 64. For example, see Gollel Holdings Pty Ltd v Kenneth Maurer Funerals Pty Ltd (1987) 9 IPR 109; Specsavers Pty Ltd v The Optical Superstore Pty Ltd (No 2) [2010] FCA 566. 65. For example, see Sharp v Cossack Pearls Pty Ltd [2011] FCA 1477 per Tracey J at [60]. 66. For example, see ACCC v SMS Global Pty Ltd [2011] FCA 855 per Murphy J at [30]–[32]. 67. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Gibbs CJ at 6.

68. Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 55 ALR 25 per Bowen CJ, Lockhart and Fitzgerald JJ at 30. 69. Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177. 70. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Gibbs CJ at 6, 9. 71. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Gibbs CJ at 9. 72. Bevanere Pty Ltd v Lubidineuse (1985) 59 ALR 334 per Morling, Neaves and Spender JJ at 341. 73. Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 per Deane and Fitzgerald JJ at 202– 203. 74. Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 per Deane and Fitzgerald JJ at 202– 203. 75. Parkview (Keppell) Pty Ltd v Mytarc Pty Ltd (1984) 3 FCR 186; also see FAI General Insurance Co Ltd v RAIA Insurance Brokers Ltd (1992) 108 ALR 479. 76. au Domain Administration Ltd v Domain Names Australia Pty Ltd (2004) 207 ALR 521 per Finkelstein J at [17]. 77. Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 per French CJ at [25]–[26]. 78. Telstra Corp Ltd v Cable & Wireless Optus Ltd [2001] FCA 1478 per Goldberg J at [23]. 79. Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12. 80. Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12. 81. Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12. 82. SC Johnson & Son Pty Ltd v Reckitt Benckiser (Aust) Pty Ltd (2012) 298 ALR 215 per Yates at [110]. 83. Cassidy v Medical Benefits Fund of Australia (No 2) [2002] FCA 1097 per Hill J at [44]. 84. Elders Trustee & Executor Co Ltd v EG Reeves Pty Ltd (1987) 78 ALR 193 per Gummow J at 241. 85. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Gibbs CJ at 6. 86. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Mason J at 16. 87. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Gibbs CJ at 7. 88. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Gibbs CJ at 7. 89. ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 634 per Allsop CJ at [47]. 90. ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 634 per Allsop CJ at [46]–[47]. 91. Fraser v NRMA Holdings Ltd (1995) 127 ALR 543. 92. ACCC v Commonwealth Bank of Australia [2003] FCA 1129 per Conti J at [72]–[77]. 93. Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 18 ALR 639 per Stephen J at 647. 94. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Gibbs CJ at 5. 95. Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 18 ALR 639 per Stephen J at 647. 96. Yorke v Lucas (1985) 61 ALR 307. 97. Yorke v Lucas (1985) 61 ALR 307 per Mason ACJ, Wilson, Deane and Dawson JJ at 310, 312. 98. Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12 per Gleeson CJ, Gaudron,

McHugh, Gummow, Kirby, Hayne and Callinan JJ at [33]. 99. ACCC v Singtel Optus Pty Ltd (No 3) (2010) 276 ALR 102 per Perram J at [16]–[17]. 100. ACCC v Singtel Optus Pty Ltd (No 3) (2010) 276 ALR 102 per Perram J at [16]–[17]. 101. Watson v Foxman (1995) 49 NSWLR 315 per McClelland CJ in Eq at 318–19. 102. Watson v Foxman (1995) 49 NSWLR 315 per McClelland CJ in Eq at 318–19. Also see Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 7) [2008] FCA 1364 per Collier J at [179]. 103. Watson v Foxman (1995) 49 NSWLR 315 per McClelland CJ in Eq at 318–19. 104. BBB Constructions v Aldi Foods [2010] NSWSC 1352 per McDougall J at [9]. 105. Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 18 ALR 639 per Stephen J at 646. 106. Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 18 ALR 639 per Stephen J at 646. 107. World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 per Brennan J at 200–201. 108. World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 per Brennan J at 201. 109. Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 79 ALR 83 per Lockhart at 95. 110. Kannegieter v Hair Testing Laboratory Pty Ltd [2004] FCA 639. 111. Memorable quote taken from Robert Bolt, A Man for All Seasons (1966). 112. Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 79 ALR 83 per Lockhart J at 93. 113. Demagogue Pty Ltd v Ramensky (1992) 110 ALR 608 per Black CJ at 609. 114. Demagogue Pty Ltd v Ramensky (1992) 110 ALR 608 per Black CJ at 609. 115. Demagogue Pty Ltd v Ramensky (1992) 110 ALR 608 per Gummow J at 618. 116. Bennett v Elysium Noosa Pty Ltd (2012) 202 FCR 72 per Reeves J at 78. 117. Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 270 ALR 204 per French CJ and Kiefel J at [5]. 118. Demagogue Pty Ltd v Ramensky (1992) 110 ALR 608 per Black CJ at 610, Gummow J at 619. 119. Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 270 ALR 204 per French CJ and Kiefel J at [19]. 120. Commonwealth Bank of Australia v Mehta (Swiss Franc cases) (1991) 23 NSWLR 84 per Samuels JA at 87. 121. Commonwealth Bank of Australia v Mehta (Swiss Franc cases) (1991) 23 NSWLR 84 per Samuels JA at 88. 122. Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 68 ALR 77 per Bowen CJ at 84–85. 123. Poseidon Ltd v Adelaide Petroleum NL (1991) 105 ALR 25 per Burchett J (with whom Sheppard and Lee JJ agreed) at 26. 124. Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 270 ALR 204 per French CJ and Kiefel J at [22].

125. Lam v Ausintel Investments Aust Pty Ltd (1989) 97 FLR 458 per Gleeson CJ (with whom Samuels AP and Meagher JA agreed) at [23]. 126. General Newspapers Pty Ltd v Telstra Corp (1993) 117 ALR 629. 127. Winterton Constructions Pty Ltd v Hambros Aust Ltd (1992) 111 ALR 649 per Hill J at 666. 128. Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 68 ALR 77 per Lockhart J at 99. 129. Costa Vraca Pty Ltd v Berrigan Weed & Pest Control Pty Ltd & Kocks (1998) 155 ALR 714 per Finkelstein J at 722. 130. Bill Acceptance Corp Ltd v GWA Ltd (1983) 50 ALR 242 per Lockhart J at 250. 131. Bill Acceptance Corp Ltd v GWA Ltd (1983) 50 ALR 242 per Lockhart J at 250. 132. Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 55 ALR 25 Bowen CJ, Lockhart and Fitzgerald JJ at 31. 133. Bill Acceptance Corp Ltd v GWA Ltd (1983) 50 ALR 242 per Lockhart J at 250. 134. Awad v Twin Creeks Properties Pty Ltd [2012] NSWCA 200 per Allsop P (with whom Macfarlan JA and Sackville AJA agreed) at [36]. 135. Awad v Twin Creeks Properties Pty Ltd [2012] NSWCA 200 per Allsop P (with whom Macfarlan JA and Sackville AJA agreed) at [36]. 136. Awad v Twin Creeks Properties Pty Ltd [2012] NSWCA 200 per Allsop P (with whom Macfarlan JA and Sackville AJA agreed) at [10]. 137. Awad v Twin Creeks Properties Pty Ltd [2012] NSWCA 200 per Allsop P (with whom Macfarlan JA and Sackville AJA agreed) at [10]. 138. Cummings v Rundle (1993) 113 ALR 285 per Sheppard and Neaves JJ at 291. 139. Explanatory Memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Explanatory Memorandum) at [2.22]–[2.26]. 140. Quinlivan v ACCC [2004] FCAFC 175 per Heerey, Sundberg and Dowsett JJ at [14]. 141. See ACCC v Universal Sports Challenge [2002] FCA 1275 at [44]. 142. Carter v Delgrove Holdings Pty Ltd [2013] FCCA 783 per Lindsay J at [69]–[71]. 143. ACCC v Gary Peer & Associates Pty Ltd [2005] FCA 404. 144. Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 79 ALR 83. 145. Global One Mobile Entertainment Pty Ltd v ACCC [2012] FCAFC 134 per Greenwood, Logan and Yates JJ at [58], [84] and [157]. 146. SAP Australia Pty Ltd v Sapient Australia Pty Ltd (1999) 169 ALR 1 per French, Heerey and Lindgren JJ at 14. 147. ACCC v TPG Internet Pty Ltd (2013) 304 ALR 186 per French CJ, Crennan, Bell, and Keane JJ at [50]. 148. Yorke v Lucas (1985) 61 ALR 307 per Mason ACJ, Wilson, Deane and Dawson JJ at 309. 149. Gardam v George Wills & Co Ltd (No 1) (1988) 82 ALR 415 per French J at 427. 150. Gardam v George Wills & Co Ltd (No 1) (1988) 82 ALR 415 per French J at 427. 151. Gardam v George Wills & Co Ltd (No 1) (1988) 82 ALR 415 per French J at 427.

152. Butcher v Lachlan Elder Realty Pty Ltd (2004) 212 ALR 357. 153. Google Inc v ACCC (2013) 294 ALR 404. 154. Milford Astor Pty Ltd v Machinery Developments Ltd [2003] NSWSC 301 per Matthews JA at [63]– [64]. 155. Clark Equipment Australia Ltd v Covcat Pty Ltd (1987) 71 ALR 367. 156. Robertson Street Properties Pty Ltd v RPM Promotions Pty Ltd [2005] QSC 95 per Atkinson J at [50]. 157. Sutton v A J Thompson Pty Ltd (in liq) (1987) 73 ALR 233 per Forster, Woodward and Wilcox JJ at 240. 158. Butcher v Lachlan Elder Realty Pty Ltd (2004) 212 ALR 357 per McHugh J at 394. 159. Butcher v Lachlan Elder Realty Pty Ltd (2004) 212 ALR 357 per McHugh J at 394. 160. Butcher v Lachlan Elder Realty Pty Ltd (2004) 212 ALR 357 per McHugh J at 395. 161. Butcher v Lachlan Elder Realty Pty Ltd (2004) 212 ALR 357 per McHugh J at 395. 162. Butcher v Lachlan Elder Realty Pty Ltd (2004) 212 ALR 357 per McHugh J at 395. 163. Benlist Pty Ltd v Olivetti Australia Pty Ltd (1990) ATPR 41-043 per Burchett J at 51-590. 164. S W F Hoists and Industrial Equipment Pty Ltd v State Government Insurance Commission (1990) ATPR 41-045 per Von Doussa J at 51-607. 165. Inn Leisure Industries Pty Ltd v DF McCloy Pty Ltd (No 1) (1991) 100 ALR 447 per French J at 462. 166. S W F Hoists and Industrial Equipment Pty Ltd v State Government Insurance Commission (1990) ATPR 41-045. 167. Inn Leisure Industries Pty Ltd v DF McCloy Pty Ltd (No 1) (1991) 100 ALR 447 per French J at 462– 3. 168. Menhaden Pty Ltd v Citibank NA (1984) 55 ALR 709 per Toohey J at 712. 169. Pihiga Pty Ltd v Roche (2011) 278 ALR 209 per Lander J at [102]–[108]. 170. Rosebanner Pty Ltd v Energy Australia (2009) 223 FLR 460 per Ward J at [412]. 171. Quad Consulting Pty Ltd v David R Bleakley & Associates Pty Ltd (1990) 98 ALR 659. 172. Harrington v Lowe (1996) 136 ALR 42 per Brennan CJ, Dawson, Toohey, Gaudron, McHugh and Gummow JJ at 50. 173. Equuscorp Pty Ltd v Kamisha Corp Ltd [1999] FCA 681 per Heerey J at [13]. 174. Explanatory Memorandum at [3.19]–[3.20]. 175. This followed the decisions of the Full Federal Court in Universal Telecasters (Qld) Ltd v Guthrie (1978) 18 ALR 531; Universal Telecasters (Qld) Ltd v Ainsworth Consolidated Industries Ltd (1983) 1 IPR 260; and Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 55 ALR 25. 176. Australian Ocean Line Pty Ltd v West Australian Newspapers Ltd (1983) 47 ALR 497. 177. Bond v Barry (2007) 73 IPR 490. 178. ACCC v Channel Seven Brisbane Pty Ltd (2009) 255 ALR 1 per French CJ and Kiefel J at [31]–[32]. 179. ACCC v Channel Seven Brisbane Pty Ltd (Wildly Wealthy Women case) (2009) 255 ALR 1 per Gummow J at [54]. 180. ACCC v Channel Seven Brisbane Pty Ltd (Wildly Wealthy Women case) (2009) 255 ALR 1.

[page 177]

Chapter 4 Misleading or Deceptive Conduct and Advertising ‘Our advertisement is not misleading. You can clearly see the qualification to the promotion in small print on page 44 of our brochure which makes it abundantly clear that “unlimited” means “limited”.’

Introduction Overview 4.1 This Chapter considers misleading or deceptive conduct in relation to advertising as prohibited under s 18 of the Australian Consumer Law (ACL). 4.2

The topics covered in this Chapter are: General principles of misleading conduct in advertising; – Misleading advertisements are captured under s 18 of the ACL; Puffery; – What is puffery? –

Can puffery be misleading?

Advertising and small print;

–

The requirement of sufficient prominence;

Advertising and asterisk; – The requirement of sufficient prominence; Advertising and different communication mediums; – Different mediums make a difference; Advertising and packaging; – Packaging can be misleading in many ways; Advertising and labelling; – A lack of proper labelling may be misleading; Character advertising; – Creating the wrong impression; Comparative advertising; – A comparison in advertising must be accurate; [page 178] Disparaging advertising; – Inaccurate disparaging advertising may be misleading; Parody advertising; – Inaccurate parody advertising may be misleading; Trading names and business names; – No monopoly rights on trading or business names; First to enter the market; – A second person to enter the market does not necessarily mislead; Two price advertising; – Was/now pricing; Environmental claims; and – Environmental claims must be accurate.

4.3 Each topic will be discussed individually below. This will be followed by a summary of the remedies (and enforcement powers) available for contraventions of s 18 of the ACL.

General principles of misleading conduct in advertising Misleading advertisements are captured under s 18 of the ACL 4.4 The publication of an advertisement in trade or commerce that is misleading or deceptive or likely to mislead or deceive members of the public is prohibited under s 18 of the ACL. 4.5 The threshold for determining whether an advertisement is misleading or deceptive is the same as for other conduct, namely that it induces or is capable of inducing error.1 4.6 However, it appears that courts have been somewhat variable in determining whether representations made in advertisements are misleading or deceptive in contravention of s 18 of the ACL. 4.7 For example, in Australian Competition and Consumer Commission (ACCC) v Telstra Corp Ltd,2 Gyles J said: 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.

4.8

In ACCC v Global One Mobile Entertainment Ltd,3 Bennett J said:

In Telstra Corporation Ltd v Optus Communications Pty Ltd (1996) 36 IPR 515 at 523, in

determining whether a television advertisement was in contravention of s 52, Merkel J adopted the approach that had been taken by Lockhart J in Stuart Alexander & Co

[page 179] (Interstate) Pty Ltd v Blenders Pty Ltd (1981) 37 ALR 161. Justice Lockhart had observed at 163 that considerable weight must be placed on the importance of the first impressions conveyed by the advertisement, as these impressions would most closely approximate the impact of the advertisement on the viewer. Justice Lockhart also observed at 164–5, however, that it is necessary to take into account that the public is accustomed to the kind of exaggeration that may take place in advertising. In addition, Merkel J referred to Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1, in which Sheppard J said at 4 that it is not appropriate to take part of an advertisement and endeavour to isolate or consider in isolation the meaning of each of the critical words or phrases which is used. The veracity of the message relied upon must be read in context. Justice Sheppard observed that it may also be necessary to take account of ‘the fact that many readers would not make a close study of the advertisement but would read it fleetingly and absorb its general thrust’.

4.9 In Farquhar v Bottom,4 Hunt J listed the following principles in relation to the publication of defamatory material. This list may also be applied to the present context to determine whether advertisements are misleading or deceptive: In deciding whether the matter complained of is capable of conveying to the ordinary reasonable reader the imputations relied upon by the plaintiff, the test applied is one of reasonableness. A court should reject strained or forced, or utterly unreasonable interpretations and must proceed upon the basis that the ordinary reasonable reader is a person of fair, average intelligence who is neither perverse, nor morbid or suspicious of mind, nor avid for scandal. The ordinary reasonable reader does not live in an ivory tower. He or she can and does read between the lines in light of his or her general knowledge and experience. The ordinary reasonable reader is a layman, not a lawyer, and that

his or her capacity for implication is much greater than that of the lawyer. In ‘newspaper’ cases (and presuming advertising cases more generally), further questions may arise as to the care with which the ordinary reasonable reader would have read a sensational article, and as to the degree of analytical attention he or she would apply to it; and as to the degree of accuracy he or she might have expected of that article. The ordinary reasonable reader of such an article is understandably prone to engage in a certain amount of loose thinking. The mode or manner of publication is a material fact in determining what imputation is conveyed. One assumes that the reader of a book would read it with more care than he or she would a newspaper. In both the ‘newspaper’ and in other cases, there is also a wide degree of latitude given to the capacity of the matter complained of to convey particular imputations where the words published are imprecise, ambiguous, loose, fanciful or unusual. [page 180] It is not enough to say that, by some person or another, the matter complained of might be understood in the sense contended for by the plaintiff. What must be considered is the sense in which the ordinary reasonable reader would understand it. 4.10 An advertisement that contains an untrue representation is misleading or deceptive as soon as it is published or shown to the world. It is not necessary that the misrepresentation occur at time of sale.5 4.11

This is true even in circumstances where members of the public learn

the truth about the misrepresentation in the advertisement before the sale has concluded.6 4.12 In determining whether advertisements are misleading or deceptive, it is inappropriate to make distinctions that are too fine or precise, as the general public is accustomed to puffery.7 4.13 An advertisement should be read in its entire context.8 It is not appropriate to take part of an advertisement and attempt to ascertain in isolation the meaning of each of the critical words or phrases. 4.14 If an advertisement is capable of more than one meaning, the question of whether the advertisement is misleading or deceptive must be tested against each meaning which is reasonably open.9 4.15 In other words, the advertisement will be misleading or likely to mislead or deceive if any reasonable interpretation of it would lead members of the public, who can be expected to read it, into error.10 4.16 A contravention of s 18 of the ACL may be established without evidence that members of the public who read an advertisement were in fact misled or deceived by it.11 4.17 However, if such evidence is called and accepted by the court, it may be treated as strongly supportive of establishing a contravention of s 18 of the ACL.12 4.18 Each advertisement can be examined individually (and collectively) to determine whether the advertisement(s) are capable of inducing error, and each case must be determined according to its own facts.13 [page 181]

4.19 Where an advertisement has wide public circulation, assessment of the effect of the advertisement must be tested by reference to its impact on ordinary or reasonable members of the general public.14 4.20 In Telstra Corp Ltd v Cable & Wireless Optus Ltd,15 Goldberg J provided the following convenient summary of the relevant principles in relation to advertising and former s 52 of the Trade Practices Act 1974 (Cth) (TPA): When considering an advertisement through the eyes of a reasonable consumer, the court must take into account that an advertisement published to the world at large is designed and calculated to be seen and read by a wide range of persons. The range of persons will include the shrewd and the ingenuous, the educated and the uneducated, the experienced and inexperienced in commercial transactions. It will include the astute, the informed, those who are sceptical and read the small print, those who are intelligent and those who are well informed. It will also cover many who do not possess those characteristics, those who are less informed and those with average intelligence. The question of whether an advertisement is misleading or deceptive is to be tested by the effect on the class of persons who are likely to consider the advertisement. The court is not entitled to assume that the reader will be able to supply for himself or herself omitted facts or to resolve ambiguities. An advertisement may be misleading even though it fails to deceive more wary readers.

Puffery What is puffery?

4.21 Puffery or a mere puff is an exaggerated statement that no reasonable person would believe to be true. Puffery may otherwise be known as ‘sales talk’, which serves to ‘puff up’ an exaggerated advertisement. 4.22 Puffery or a mere puff may be formally defined as a non-promissory statement that may be made as part of advertisements for a good or service, or negotiations to induce another to enter into a contract. 4.23 A simple example of puffery would be a representation made in an advertisement which states that: ‘If you buy this bed and sleep on it, you will feel like you are sleeping on a cloud’. 4.24 Of course, the feeling of the bed may be good or not so good, but it is unlikely that any reasonable person would believe that you will actually feel like sleeping on a cloud. [page 182] 4.25

Classic examples of puffery include: Red Bull: ‘Red Bull gives you wings’; Accutron Bulova: ‘The most accurate watch in the world’; Starbucks: ‘The best coffee’; Papa John’s: ‘Best ingredients. Best pizza’; Overland Roadster (1926): ‘The greatest value on the face of the earth — Overland Cars at $635’; and Mars bar: ‘A Mars a day helps you work, rest and play’.

Can puffery be misleading? 4.26

Puffery may be misleading or deceptive for the purposes of s 18 of the

ACL. While the common law of contracts makes a distinction between representations and puffery, s 18 of the ACL makes no distinction. 4.27 Accordingly, what may be considered as puffery under the common law of contracts, and hence not actionable as a misrepresentation, does not necessarily mean that the same representation is not misleading or deceptive for the purposes of s 18 of the ACL. 4.28 In Collier Constructions Pty Ltd v Foskett Pty Ltd,16 Gummow J made the following comments about puffery, the common law and former s 52 of the TPA: Reference was made to various authorities in which certain types of commendation were classified quite differently from statements of fact or promissory statements and treated as ‘mere puffs’: see Greig and Davis, The Law of Contract, 1987, pp 488–9. In my view it would not be correct to translate the learning in those authorities immediately into the construction of s 52 of the Trade Practices Act, so as to decide that if a statement was first classified as a ‘mere puff’ at general law, it necessarily did not have the character of conduct that was misleading or deceptive, or likely to mislead or deceive. The circumstances of each case must be assessed and measured against the terms of the legislation itself. Thus, in particular circumstances, a representation that new home units are to be ‘bigger and better’ than in any existing building may be likely to mislead or deceive within the meaning of s 52.

4.29 Whether puffery is considered as misleading for the purposes of s 18 of the ACL will depend on the particular facts considered in the light of the ordinary incidents and character of commercial behaviour.17 4.30 Courts will examine puffery in advertisements or in negotiations objectively to determine whether a reasonable person would rely on it or consider that it had a ‘contractual or promissory flavour’.18 4.31 In General Newspapers Pty Ltd v Telstra Corp,19 Davies and Einfeld JJ made the following comments in relation to puffery, which suggest that some level of puffery is to be expected in commercial dealings: Thus, in the ordinary course of commercial dealings, a certain degree of ‘puffing’ or exaggeration is to be expected. Indeed, puffery is part of the ordinary stuff of commerce.

[page 183] 4.32 A similar point was made by Lockhart J in Stuart Alexander & Co (Interstate) Pty Ltd v Blenders Pty Ltd,20 but in relation to puffery in television advertisements: I think 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.

4.33 Of their nature, statements which are puffing must be statements of opinion and not statements of fact.21 Statements which are puffs or which are exaggerated are generally not misleading or deceptive. 4.34 However, there is often a fine line between what is puffing, what might merely cause uncertainty, and what is misleading. These are matters of evaluation in respect of which responses, including the responses of judges, may differ. 4.35 The following case of Carlill v Carbolic Smoke Ball Co22 is a famous case in the common law of contract. It provides an example of what is not considered as puffery.

Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 In this case, Carbolic Smoke Ball Co (Carbolic) published an advertisement in the Pall Mall Gazette and other newspapers to promote its product called the ‘smoke ball’. The smoke ball was a rubber ball with a tube attached. It was filled with carbolic acid. The tube would be inserted into a user’s nose and squeezed

at the bottom to release the vapours. The idea was that a user’s nose would run, ostensibly flushing out viral infections. In the advertisement, Carbolic offered to pay £100 to any person who contracted influenza after using it according to the instructions provided. Mrs Carlill purchased the smoke ball and used it in the correct manner as prescribed. Mrs Carlill caught influenza and sued Carbolic for the £100. It was argued by Carbolic that the statement in the advertisement to repay the £100 to any person who contracted influenza after using it as prescribed was merely a puff and not a genuine offer. The Court of Appeal rejected the argument by Carbolic and held that the statement to repay £100 was not puffery. In particular, Lord Lindley based his finding upon the fact that £1000 had been placed by Carbolic in a bank account, which was stated by Carbolic in the advertisement as ‘shewing our sincerity in the matter’. This implied that Carbolic was prepared to be bound by the £100 offer in its advertisement.

[page 184] 4.36 The following case of Gillette Australia Pty Ltd v Energizer Australia Pty Ltd,23 is a classic example of a statement in an advertisement which was not considered as puffery.

Gillette Australia Pty Ltd v Energizer Australia Pty Ltd [2005] FCA 1647 In this case, Gillette Australia Pty Ltd (Gillette) sold batteries under the

name Duracell and Energizer Australia Pty Ltd (Energizer) sold batteries under the names Energizer and Eveready. Both Gillette and Energizer have been engaging in comparative advertising in television commercials. In the last round of advertisements, Gillette published a television advertisement known as the ‘Race Bunny’ advertisement. In the Race Bunny advertisement, Gillette claimed that the Duracell alkaline battery provided ‘up to three times more power’ than the Eveready super heavy duty battery. The present round of advertisements concerned a television advertisement referred to by the parties as ‘the Chariot advertisement’, in which Energizer claims that the Energizer lithium battery performs ‘up to seven times longer’ in high powered devices (such as digital cameras) than Duracell’s standard alkaline battery and that they are the ‘world’s longest lasting battery in high powered devices’. Energizer argued that this statement was mere puffery and not misleading or deceptive for the purposes of former s 52 of the TPA. Merkel J held that Energizer’s television advertisement, which claimed that one of their batteries is the ‘world’s longest lasting battery in high powered devices’ was puffery. In particular, Merkel J noted the following at [25]–[26]: In the context of the Chariot advertisement’s proclamation of the significantly superior power of Energizer’s lithium batteries over that of Duracell’s alkaline batteries, the representation that the Energizer batteries are also the world’s longest lasting batteries in high powered devices is a significant and unambiguous representation of fact, which would not be perceived by the public to be mere exaggeration. The representation in the Chariot advertisement may be contrasted with the representation made by Energizer on the packaging of Energizer’s lithium e2 AA and AAA batteries, which state the batteries to be ‘The world’s longest lasting AA [or AAA] battery in high-powered devices’. It is also relevant that one of the purposes identified by Energizer in its creative brief for the Chariot advertisement was to ‘communicate the superior nature, from a pure performance perspective, of Energizer lithium versus all other ordinary battery products when used in digital cameras’. The brief also stated the ‘Proposition’ being put forward was that: Energizer Lithium is the world’s longest lasting battery in high powered

devices … [page 185] The representations to that effect that were made in the Chariot advertisement were made with the intention that consumers would accept and make their purchasing decisions on the basis that the representations made in the advertisement were true and accurate. While the representations may have been accurate if they only related to AA and AAA batteries, I do not accept that the representations were, or would be, perceived by ordinary or reasonable viewers to be so confined. In summary, the ‘world’s longest lasting battery’ representations travel well beyond what might be ascribed to be mere puffery or exaggeration.

Advertising and small print The requirement of sufficient prominence 4.37 Small or fine print in advertisements is usually used to qualify statements made in the main section of the advertisement, to state terms and conditions, and/or to inform consumers of other limitations. 4.38 Courts will generally examine whether the small print is of sufficient prominence to ensure that the overall impression of the advertisement is not likely to mislead or deceive. 4.39 The level of prominence required to qualify what otherwise would be a misleading or deceptive statement in an advertisement is determined on a case-by-case basis. 4.40 Important factors that a court may consider in determining whether the small print is sufficiently prominent to qualify what would otherwise be a misleading statement include:

the size of the small print. The larger the print, the more likely to capture the attention of the reader, and vice versa; the type of font of the small print. Some fonts are clearer and easier to read, and stand out more than others; whether the small print is in bold, italics or underlined. Small print that is in bold, italics or underlined will draw a reader to the small print as something which is important; the location of the small print. If the small print is hidden in a lengthy document, or not on the same page as the unqualified statement, then it is more likely to be not of sufficient prominence; the background of the small print. If the small print is unclear due to a similar colour background or an image behind the small print, then it is more likely to be not of sufficient prominence; if the small print is subjected to a temporary basis in that it is only visible for a short period of time.24 For example, if the small print is used for a few seconds [page 186] in a lengthy television commercial, it is more likely to be insufficient for the viewer to have a reasonable opportunity to read the small print; the repetition of the small print and/or the use of some other means of qualifying an unqualified statement. For example, if the small print is repeated in an advertisement to emphasise the qualification to what would be otherwise a misleading statement, or if the small print was aided with the use of a voice over which also assists to qualify what would be otherwise a misleading statement; and the small print in comparison to the overall impression of the advertisement and/or the unqualified statement. If the overall

impression of the advertisement and/or the unqualified statement is strong, it may be that the small print is insufficiently prominent to qualify what would otherwise be a misleading statement. 4.41 Some judges have even gone as far as stating that the size of the small print which qualifies what would otherwise be a misleading statement should be of the same size as the misleading statement itself. 4.42 For example, in Trade Practices Commission v QDSV Holdings Pty Ltd (t/as Bush Friends Australia),25 Davies J said: Size is important. The larger the print the more it catches the eye … As a matter of strict theory, if words … are misleading and deceptive, qualifying words which are added to render the message accurate should be in the same sized print, for the qualification is just as important as the description itself.

Advertising and asterisk The requirement of sufficient prominence 4.43 An asterisk can be used to assist the reader in drawing his or her attention to a qualification of what otherwise may be a misleading statement in an advertisement.26 4.44 If the asterisk is used to draw the attention of the reader to a footnote or small print in order to qualify what otherwise may be a misleading statement, the asterisk and qualifier must be sufficiently prominent.27 4.45 In Medical Benefits Fund of Australia Ltd v Cassidy,28 Stone J made the following observations in relation to the use of disclaimers in advertisements: MBF submits that irrespective of the impression conveyed by the main part of the advertisements the written disclaimers were sufficiently prominent to bring the obstetrics waiting period to the attention of a person viewing the advertisements.

[page 187] In support of its submissions MBF points to the decision of Moore J in George Weston Foods Ltd v Goodman Fielder Ltd (2000) 49 IPR 553 (Wonder White Case). In that case Moore J held that an asterisk can be sufficient to draw the attention of a consumer to a qualification of a representation. That case concerned, inter alia, the packaging of bread which declared in large typeface ‘Now Twice the Fibre*’. Moore J observed (at 572) that: … the asterisk is prominent and would be taken to signify some qualification or explanation of the words used. One could expect a consumer interested in the fibre content to seek out the qualification or explanation. Not only is the explanation within 2 cm of the words used on the package (albeit in much smaller type) but it is repeated elsewhere on the packaging. While the Wonder White Case is authority that an asterisk leading to a qualification of a representation may be effective to neutralise an otherwise misleading or deceptive advertisement, whether this is so is a matter for determination in the specific circumstances of any particular case. The qualifying material must be sufficiently prominent to prevent the primary statement being misleading and deceptive or likely to mislead or deceive: Australian Competition and Consumer Commission v Signature Security Group Pty Ltd (2003) ATPR 41-908 at [26]–[27]. Signature Security involved, inter alia, the advertising of security systems for a price exclusive of any goods and services tax component. In that case (at [27]) I commented: The degree of prominence required may well vary with the potential of the primary statement to be misleading and deceptive. It seems to me that a representation that the price of goods is $295 is seriously misleading if the truth is that they are never available at that price. Even an astute observer noticing the asterisk and realising that it directs the reader to additional information might be led to believe that the goods were available for $295 at least in some circumstances. It is unlikely that such an observer would immediately conclude that they were never available at that price. In those circumstances it would take an extremely prominent reference to the additional information to prevent such a representation from being misleading. This reasoning is pertinent to the MBF advertisements in question, which presented the striking image of a pregnant woman with the waiver and claim tomorrow representations (primary statements). The disclaimer qualified these representations. The impact of the fine print qualification is, however, disproportionate to the impact of the pregnancy image and the primary statements. The potential for the overall effect to be misleading and deceptive is immense.

… Asterisk or not, 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. Moreover, the fact that the advertisements were part of a campaign to attract new members pursuant to the ‘Lifetime Health Cover’ initiative was relevant for, as the primary judge observed (at [47]): The fact that consumers were forced to make a decision on whether to purchase private health insurance in what was a quite short period of time leading up to the 30 June deadline explains why this first impression was so significant.

[page 188] 4.46 In ACCC v Boost Tel Pty Ltd,29 Siopis J applied the facts of this case to the above observations made by Stone J in Medical Benefits Fund of Australia Ltd v Cassidy:30 In my view, the observations of Stone J are equally applicable to the circumstances of this case. As mentioned, the ‘½c’ and ‘2½c’ notations reflecting the time charge rate dominate the surface area of all the publications. The prominence given to these notations would, in my view, create in the mind of a reasonable consumer of the phone card services, the impression that all calls made in the course of the normal usage of the card, would be charged at that rate, regardless of the number or duration of those calls. That impression, however, is fundamentally false. The truth is that that rate could only be achievable in the most exceptional and unlikely of circumstances, namely, if the card was used for a continuous call in excess of 30 hours which exhausted all of the available minutes on the card; or if a series of calls were made of exactly one minute or five minutes duration. The extent of the disparity between the content of the message conveyed by the headline representation, and the content of the message conveyed by the fine print, is too great for it to be adequately and fairly reflected by the style of the presentation used in this advertisement. This is not a case of the asterisked information fairly qualifying the primary representation. This is a case of the fine print seriously undermining the substance and integrity of the primary message. By portraying the highly exceptional as the norm, as Boost has done in the dominant representation in these advertisements, Boost has engaged in highly misleading conduct. To adapt the language of Stone J in MBF, referred to at [78] above, to this case: asterisk or not, the disproportion between the prominence given to the dominant representation and the

qualification was insufficient to draw the attention of a consumer to the disparity between the rate that would be charged by the use of the card in highly unlikely circumstances, and the rate which would be charged in the course of the normal usage of the card. It is the entire effect, particularly, the first impression that makes the advertisement misleading.

4.47 Whether an asterisk leading to a qualification of a statement in an advertisement is effective to neutralise an otherwise misleading statement is a matter to be determined on a case-by-case basis.31 4.48 In George Weston Foods Ltd v Goodman Fielder Ltd,32 Moore J made the following comments with respect to an asterisk used in relation to a qualification of the words ‘Now Twice the Fibre’: [T]he asterisk is prominent and would be taken to signify some qualification or explanation of the words used. One could expect a consumer interested in the fibre content to seek out the qualification or explanation. Not only is the explanation within 2 cm of the words used on the package (albeit in much smaller type) but it is repeated

[page 189] elsewhere on the packaging. It is an explanation which, in my opinion, would come to the attention of a consumer who might otherwise, by superficial initial impression or reaction, have viewed the product bearing the contentious words as containing twice the fibre of earlier versions of the same product.

4.49 The following case of ACCC v Signature Security Group Pty Ltd33 is a classic example of the use of small print and asterisk in advertising.

ACCC v Signature Security Group Pty Ltd [2003] FCA 3 In this case, Signature Security Group Pty Ltd (Signature) sold security systems suitable for domestic and small business users. In various advertisements in different mediums, Signature quoted a price of $295 for

the provision and installation of its basic system, excluding the cost of GST which was passed on to consumers. The ACCC identified the following four categories of representation by Signature which was alleged to be in contravention of former s 52 of the TPA: an oral representation as to price of goods or services with no reference to GST (ie $295); a representation in a brochure that the cost of installation of the system was ‘from just $295*’. The reference to the asterisk was on the second page in a significantly smaller print which stated ‘plus GST where applicable’; representations in the Yellow Pages and on radio that the cost of installation of the system was ‘$295 plus GST’; and a sales representative of Signature who represented to a customer that Signature had a special arrangement in place whereby it did not have to quote GST inclusive prices and could quote to customers GST exclusive prices. It was conceded by Signature that the advertising of the price of the basic security system as $295 without reference to the additional $29.50 GST was misleading or deceptive (ie categories (i) and (iv) above). Stone J held with respect to category (iii) that the representation ‘$295 plus GST’ was not misleading or deceptive for the purposes of former s 52, despite the breadth of the audience to which the advertisements were directed, which included people with minimum level of numeracy skills. His Honour held that the words ‘GST’ would be understood by the audience as ‘goods and services tax’ and there was no need to actually specify the tax amount of $29.50, as the audience would know that they would have to pay something more than $295. Stone J held with respect to category (ii) above that the relevant

question here was whether the GST component of the price had been sufficiently drawn to the attention of the persons to whom such advertisements were addressed by the [page 190] asterisk and the statement in fine print. A representation that the price of goods was $295 was seriously misleading if the truth was that they were never available at that price. Even an astute observer noticing the asterisk and realising that it directed the reader to additional information might be led to believe that the goods were available for $295 at least in some circumstances. It was unlikely that such an observer would immediately conclude that they were never available at that price. In those circumstances it would take an extremely prominent reference to the additional information to prevent such a representation from being misleading. In saying this, the reference to the GST in the category (ii) advertisements could hardly be described as prominent. The asterisk referred the reader of the advertisement to a different page where the fine print, and it was very fine print, stated ‘plus GST where applicable.’ Furthermore, this information appeared after other information and would be missed. As such, the representation in category (ii) was misleading for the purposes of former s 52 of the TPA.

4.50 Whether or not something misleads an audience relies on the overall impression created. As shown in ACCC v Signature Security Group Pty Ltd,34 the consumer is not required to exhaustively search for qualifying facts.

Advertising and different communication

mediums Different mediums make a difference 4.51 A person may advertise their goods or services on various mediums, including: television; radio; newspapers; brochures; magazines; posters and billboards; and internet. 4.52 Advertisements in different media will impact on consumers differently.35 The overall impression of a newspaper article will likely have a different effect on the public than a radio advertisement. 4.53 Each advertisement must be considered in the context of the particular medium in which it appears, taking account of the different consumer viewing experiences with each form of advertisement.36 [page 191] 4.54 In ACCC v Singtel Optus Pty Ltd (No 1),37 Perram J made the following comments in relation to the different mediums used by the respondent in the case: Both of these campaigns were conducted in several different kinds of media but not every advertisement has been the subject of complaint by the Commission. In the case of the Supersonic Broadband promotions only the on-line advertisements have been targeted. In the case of the Think Bigger advertisements, however, the Commission takes aim not only at a series

of television commercials but also at certain print advertisements, flyers, on-line advertisements and a billboard promotion. 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 on-line 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 on-line 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.

4.55 Where there is an advertising campaign, and there is repetition of the same advertisement in different mediums, each advertisement should be examined individually and collectively.38 4.56 In an advertising campaign, courts may infer that the impression conveyed by an advertisement is likely to have a continuing effect on a consumer who views another version of the advertisement.39 4.57 In ACCC v Telstra Corporation Ltd,40 Gordon J made the following comments about the continuing effect of repeated viewing of the same advertisement: As noted, under the two-step analysis that has been described, the court cannot consider each event in isolation. Each event must be considered within the context of the advertising campaign of which it formed part: see Telstra Corporation Ltd v Optus Communications Pty Ltd (1996) 36 IPR 515 at 523–4 (Telstra Corporation); Trade Practices Commission v Optus Communications Pty Ltd (1996) 64 FCR 326 at 338; 34 IPR 176 at 188 (Optus Communications); Astrazeneca at [24]; Johnson & Johnson Pacific Pty Ltd v Unilever Australia Ltd (No 2) (2006) 70 IPR 574; [2007] ATPR 42-136; [2006] FCA 1646 at [16]. In a national advertising campaign it would ordinarily be expected that there would be a dominant message and, in such a case, particular attention should be paid to that dominant message. In Telstra Corporation (at 524), that principle was stated as follows:

[page 192] In television and print advertising where a false dominant impression is conveyed, its message will not be ameliorated by the accuracy of the detailed message which is derived from a careful analysis of all the constituent parts of the advertisement. Part of this contextual approach requires consideration of any ‘hangover effect’ caused by earlier advertising. That is, it is necessary to consider whether an impression obtained from an earlier but related advertisement may need to be taken into account in determining whether a later advertisement is misleading: see Duracell Australia Pty Ltd v Union Carbide Australia Ltd (1988) 14 IPR 293 at 299, cited in Singtel Optus Pty Ltd v Telstra Corp Ltd [2004] FCA 859 at [43]; Optus Communications at FCR 338; IPR 188.

4.58 The following case of Medical Benefits Fund of Australia Ltd v Cassidy,41 is an example of how different mediums of advertising have different impacts on members of the public.

Medical Benefits Fund of Australia Ltd v Cassidy (2003) 205 ALR 402 In this case, Medical Benefits Fund of Australia Ltd (MBF) advertised on television that it would waive all waiting periods applying in respect of pregnancy and obstetrics for customers who purchased health insurance before a deadline. MBF also advertised that consumers who purchase health insurance could claim expenses related to pregnancy the day after joining MBF. MBF advertised in newspapers and on billboards at railway stations that if a pregnant woman transferred to MBF from another health fund she would be covered for expenses related to pregnancy. The television advertisements focussed on the lives of three characters whose stories were told in chronologically progressive segments. Each character was said to be an existing member of MBF. The advertisements also contained disclaimers. The billboards depicted a heavily pregnant semi-naked woman and

had the words ‘Are you sure your health cover is going to deliver?’ printed adjacent to the image. In significantly smaller print at the bottom of the poster appeared the words ‘Does you (sic) health insurance cover you for things like pregnancy, a knee replacement or major heart surgery? If not you’ll find that switching to MBF pays — once you’ve served your waiting period you’re covered*’. In print approximately one half the size directly below appeared the words ‘*Conditions apply, including a 12 month waiting period’. There was no evidence to the actual size of the billboard, but it was large enough to read the wording without difficulty. Television The Full Federal Court (Moore, Mansfield and Stone JJ in separate judgments) held that the disclaimers in the television advertisements did qualify the representations made. However the impact of the fine print qualification was disproportionate [page 193] to the impact of the pregnancy image and the primary statement made. The disclaimer was only shown for less than 5 seconds and appeared only at the bottom of the screen. As such, the advertisement was considered to be misleading. Billboards Unlike billboards that face the street, this billboard faced the railway stations and can only be scrutinised by train passengers waiting for their trains or merely noticed by passengers in a passing train, unless the train stopped at the station. However, as in the television commercials, the disclaimer was disproportionate to the dominant representation. As such, the advertisements on the billboards were misleading or deceptive.

Newspapers There was no appeal of the Primary Judge’s findings in relation to the newspaper advertisements. Hill J held that print advertisements give the reader more time to study the content. Newspapers do not have the character and transience which television commercials have. As such, there was no misleading or deceptive conduct, as the asterisk was prominent enough for a reader to qualify the statement.

4.59 Considerable weight must be placed on the first impressions conveyed by a television advertisement as these would most closely approximate the impact of the advertisement on a viewer.42 4.60 In the following case of Luxottica Retail Australia Pty Ltd v Specsavers Pty Ltd,43 Perram J held that the use of a voice over on a television commercial was relevant to the impression of the advertisement.

Luxottica Retail Australia Pty Ltd v Specsavers Pty Ltd (2010) 267 ALR 721 In this case, Luxottica Retail Australia Pty Ltd, trading under the name OPSM, supplied optometry services and optical products to the public. Specsavers Pty Ltd (Specsavers) was a competitor of OPSM. Specsavers placed two 30 second advertisements on the internet and on television, which compared its optical products with those of OPSM. During the commercials, a voice over said: On average OPSM customers paid over $480 for their prescription glasses. We believe that’s too much. That’s why at Specsavers our customers paid on average $114 less for their prescription glasses than OPSM customers.

[page 194] OPSM commenced proceedings against Specsavers alleging misleading or deceptive conduct in contravention of former s 52 of the TPA. Perram J held (at [36]–[37], [40]) that the comparative advertising was misleading or deceptive in a contravention of former s 52 of the TPA. The reason why was that the advertisement compared the average price that customers of OPSM and Specsavers paid over a 6 month period, whereas the impression left from the advertisement was that the price comparison was for a single pair of glasses, which was misleading.

Advertising and packaging Packaging can be misleading in many ways 4.61 The packaging of a good may be misleading or deceptive for the purposes of s 18 of the ACL in many ways. The following are some examples of ways in which packaging can be misleading: misrepresenting the characteristics or attributes of a particular good; misrepresenting another good on the packaging of the good; misrepresenting that the good is the same or better in quality than another good; misrepresenting the price or value of the good; misrepresenting the country of origin of the good; misrepresenting whether the good is environmentally friendly; misrepresenting that the good is approved by some standard; and misrepresenting that the good has some sponsorship, endorsement,

or affiliation with another person. 4.62 The actual appearance of packaging to the prospective customers is ultimately the determining factor as to whether the packaging is misleading or deceptive for the purpose of s 18 of the ACL.44 4.63 Whether or not the packaging of a good is misleading is essentially a question of fact for the court to determine, with the assistance of any available expert evidence of value.45 4.64 The following case of ACCC v Arnott’s Biscuits Ltd,46 is a classic example of misleading packaging in relation to the characteristics and attributes of a good. [page 195]

ACCC v Arnott’s Biscuits Ltd [2008] FCA 590 In this case, Gyles J held that Arnott’s Biscuits Ltd (Arnott’s) engaged in conduct that was likely to mislead or deceive in relation to the packaging and labelling of the following Arnott’s Snack Right products: Snack Right Apple and Blackberry Fruit Pillow; Snack Right Wild Berry Fruit Pillow; Snack Right Apricot Fruit Slice; Snack Right Apricot and Yogurt Fruit Slice; and Snack Right Mixed Berry Fruit Slice (Snack Products). Gyles J held that Arnott’s contravened former ss 52, 53 and 55 of the

TPA by conveying to consumers in the packaging and labelling of the Snack Products an overall impression that the filling in the biscuits consisted predominantly of the particular fruits depicted on the packaging; and there was a not insubstantial proportion of the depicted fruits in the biscuit filling, when instead the fruit filling of the Snack Products consisted predominantly of fruits not depicted on the packaging. An example of the misleading packaging is the Arnott’s Snack Right Apple and Blackberry Fruit Pillow in packaging which had the following characteristics: use of the name ‘Apple and Blackberry Fruit Pillow’; the words ‘Apple and Blackberry’ appeared in a large and prominent font on the top and front of the package; no other fruit was referred to in the name of the biscuit; underneath the name of the biscuit on the top and front of the package the following words appeared: ‘a delicious golden baked biscuit, crammed with apples, blackberries and sultanas’; prominent pictorial representations of apples and blackberries appeared on the front and sides of the package; no pictorial representations of any other fruit appeared on the package; and a prominent pictorial representation of a pillow shaped biscuit, open at one end revealing the filling, appeared on the top and front of the package adjacent to the pictorial representations of apples and blackberries. The above characteristics represented to consumers that the filling in the Apple and Blackberry Fruit Pillow biscuit consisted predominantly of apple and blackberry; and included a not insubstantial proportion of

blackberry. These representations were false, misleading or deceptive by reason of the fact that: the approximate proportion of sultana in the filling in the Apple and Blackberry Fruit Pillow biscuit was 38.8%; the approximate proportion of apple concentrate in the filling in the Apple and Blackberry Fruit Pillow biscuit was 12.9%; [page 196] the approximate proportion of dried apple concentrate in the filling in the Apple and Blackberry Fruit Pillow biscuit was 8.6%; and the approximate proportion of blackberry concentrate in the filling in the Apple and Blackberry Fruit Pillow biscuit was 1.7%. Arnott’s undertook to the court that it will change the labelling and packaging of the products concerned and will refrain from similar conduct in the future.

4.65 The packaging of a good from one company which is similar to the packaging of a good of another company can be misleading, even though the packaging correctly identifies who the supplier is.47 4.66 The following case of Red Bull Australia Pty Ltd v Sydneywide Distributors Pty Ltd,48 is an example of misleading conduct in relation to a good that was similarly packaged to that of another competitor’s good.

Red Bull Australia Pty Ltd v Sydneywide Distributors Pty Ltd [2001] FCA 1228 In this case, there were at least 20 different energy drinks available for sale in Australia sold in 250 ml cylinder cans. Red Bull Australia Pty Ltd (Red) imported into Australia a carbonated energy drink named Red Bull. Red engaged in an extensive marketing campaign and was successful in promoting Red Bull in Australia. Sydneywide Distributors Pty Ltd (Sydneywide) was a substantial distributor of Red Bull in Australia. It was also a substantial distributor of other energy drinks and soft drinks in Australia. Sydneywide planned to import its own energy drink into Australia, named LiveWire. Red commenced proceedings against Sydneywide for passing off and misleading or deceptive conduct in contravention of former ss 52 and 53 of the TPA. Conti J held that notwithstanding the obvious difference in the trademarks of the two products Red Bull and LiveWire, the packaging get-up of LiveWire was so deceptively similar as to have enabled Sydneywide to appropriate part of the goodwill and custom of Red into the marketplace for energy drinks. In reaching this conclusion, Conti J drew an inference that Sydneywide intentionally designed a packaging label which ‘sailed too close to the wind’ in its endeavours to gain, at virtually no cost to Sydneywide, the benefit of Red’s massive [page 197]

advertising and marketing campaign conducted over the preceding two or three years. In particular, Conti J noted (at [63]) that: The evidence which I have reviewed in detail leads to the conclusion that Sydneywide intentionally, if not also carefully and skilfully, set about the adaption of the most prominent features and characteristics of Red Bull’s packaging get-up in the ways and to the extent postulated by Dr Beaton, though not of course the trade mark or brand name of Red Bull and the associated portrayal of the two charging bulls. As stated in the joint judgment of Wilcox and Einfeld JJ in Telmak Teleproducts (Australia) Pty Ltd v Coles Myer Ltd (1989) 89 ALR 48 at 69, the evidentiary value of the existence of circumstances of getup adoption on the part of Sydneywide, which I have inferred (see [47] above), are highly significant to the drawing or otherwise of an inference of adoption and consequently of deception, since the courts have long recognised that traders best know their trade.

4.67 The following two cases are passing off cases. However, the legal principles in relation to the ‘get up’ of goods in passing off is also applicable to misleading or deceptive conduct cases under the ACL. 4.68 In Australian Woollen Mills Ltd v F S Walton & Co Ltd,49 the following passage appears from the joint judgment of Dixon and McTiernan JJ in relation to get-up of goods: The rule that if a mark or get-up for goods is adopted for the purpose of appropriating part of the trade or reputation of a rival, it should be presumed to be fitted for the purpose and therefore likely to deceive or confuse, no doubt, is as just in principle as it is wholesome in tendency. In a question how possible or prospective buyers will be impressed by a given picture, word or appearance, the instinct and judgment of traders is not to be lightly rejected, and when a dishonest trader fashions an implement or weapon for the purpose of misleading potential customers he at least provides a reliable and expert opinion on the question whether what he has done is in fact likely to deceive. In the present case it has caused a prolonged and expensive inquiry into the states of mind, motives and intentions of three people whose combined judgment decided that the company should adopt the trade brand and description complained of. This in turn necessitated an investigation of the steps by which the picture was obtained, considered and adopted and what was said and done by a number of persons in relation to the subject …

4.69 Subsequently in Office Cleaning Services Ltd v Westminster Office Cleaning Association,50 Lord Simonds provided the following similar comments in relation to intention to deceive in terms of get-up of goods: Confusion innocently caused will yet be restrained. But if the intention to deceive is found, it will be readily inferred that deception will result. Who knows better than the trader the mysteries of his trade?

[page 198]

Advertising and labelling A lack of proper labelling may be misleading 4.70 The incorrect, inadequate or lack of labelling of a good are important considerations as to whether the good, being similar to another good, is misleading for the purposes of s 18 of the ACL. 4.71 For example, in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd,51 Gibb CJ said: The fact that the appellant sold its products to retailers, and labelled them before delivery, and the absence of any evidence of any improper agreement between the appellant and any retailer, support the conclusion that the appellant had no intent to mislead or deceive.

4.72

Furthermore, Gibbs CJ added:52

Speaking generally, the sale by one manufacturer of goods which closely resemble those of another manufacturer is not a breach of s 52 if the goods are properly labelled. There are hundreds of ordinary articles of consumption which, although made by different manufacturers and of different quality, closely resemble one another. In some cases this is because the design of a particular article has traditionally, or over a considerable period of time, been accepted as the most suitable for the purpose which the article serves. In some cases, indeed, no other design would be practicable. In other cases, although the article in question is the product of the invention of a person who is currently trading, the suitability of the design or appearance of the article is such that a market has become established which other manufacturers endeavour to satisfy, as they are entitled to do if no property exists in the design or appearance of the article.

In all of these cases, the normal and reasonable way to distinguish one product from another is by marks, brands or labels. If an article is properly labelled so as to show the name of the manufacturer or the source of the article its close resemblance to another article will not mislead an ordinary reasonable member of the public. If the label is removed by some person for whose acts the defendant is not responsible, and in consequence the purchaser is misled, the misleading effect will have been produced, not by the conduct of the defendant, but by the conduct of the person who removed the label.

4.73 However, there have been a number of cases where the labelling of a good sold by one company has not sufficiently distinguished that good from a similar good of a competitor.53 4.74 The following case of Levi Strauss & Co v Wingate Marketing Pty Ltd,54 is an example of where revising the label of a good multiple times did not assist the respondents in defending a misleading claim. [page 199]

Levi Strauss & Co v Wingate Marketing Pty Ltd (1993) 116 ALR 298 In this case, Levi Strauss (Levi) manufactured and sold Levi’s clothing. Wingate Marketing Pty Ltd (Wingate) imported second-hand Levi’s jeans from the United States. The jeans were imported without a licence and Wingate would supply the jeans to retailers with the Levi’s and REVISE mark on them. During the relevant period, various labels had been adopted by Wingate for its jeans. The introduction of the first label was evocative and certainly brought to mind ‘Levi’s’. Following initial complaints from Levi about the first REVISE label of Wingate, a second printing of the label was undertaken. Further complaints were made by Levi in relation to the second label,

in response to which a third label was printed. The third label differed from the second label only in that the words ‘Imported to Australia by Wingate Marketing Pty Ltd’ were added at the foot of the label in small print and it also made provision for insertion of a grade. The third label was overprinted to include the words ‘second hand’ between the words ‘recycled’ and ‘environmentally friendly clothing’. Levi further requested a variation of the label and a fourth label was produced. This was identical to the third label save for the addition of the words ‘second hand’ and Wingate’s ACN number. A fifth version of the label was printed and it was the same as the fourth label except that it introduced the words ‘and modified’. Lockhart J noted that the following matters were relevant in relation to the alleged contravention of former s 52 of the TPA: both products were sold in shops which sold new goods (some did sell both new and second-hand goods); but Wingate’s products were not sold in second-hand shops; both Revise jeans and Levi’s jeans were sold alongside each other (and it was only new Levi’s that were sold by Levi Strauss); the prices of the two sets of goods were broadly comparable, though prices for Revise jeans were generally less than for Levi’s jeans; but not always; both goods were sold to the same range of consumers; and the label ‘Revise’ appeared on each of the pairs of jeans which has a number of the trade marks of Levi Strauss appearing on them, so that the minds and eyes of the consumers and members of staff of retail stores were inevitably drawn at the same time to the marks of Levi Strauss and the label Revise. Lockhart J held that the important element was that Wingate had in

this case put into the hands of the retailers a product which did have inherent potential to mislead the public. This was an important element in passing off or misleading or deceptive conduct under former s 52. [page 200] Lockhart J was of the view that a substantial section of the public was misled into believing that second-hand Levi’s jeans sold under the Revise label were being sold by Levi or by some enterprise with its authority or under its aegis. His Honour stated (at 327): Wingate can if it wishes remove the Levi Strauss emblems and marks from its garments. It is not in my view an accident that Wingate seeks to market its product with prominence being given to the various Levi Strauss trade marks. Plainly the whole marketing strategy of Wingate is to sell second-hand Levi’s jeans (they being the particularly relevant products), making it very clear to the public that they are Levi’s jeans with all the goodwill and background of Levi Strauss that attaches to them, the benefit of which will rub off onto Wingate, although the Revise label makes it reasonably clear that they are second-hand goods.

4.75 The importance of correct labelling should not be understated, particularly where health and safety issues arise. The ACCC, Advertising and Selling55 publication provides the following example: A manufacturer of a fruit ice confection product labelled its product with the claim ‘No Added Sugar’ and indicated in the nutritional information panel that the sugar content was zero. The product actually contained a significant amount of naturally occurring sugar from its high fruit content.

Character advertising Creating the wrong impression

4.76 An advertisement that creates an impression or claims that a good or service has affiliation, association, endorsement, or some other form of approval or use, by a character or celebrity when there is none, is likely to be misleading for the purposes of s 18 of the ACL. 4.77 The exact impression created by the association between the good or service and the character referred to in the advertisement does not have to be identifiable with precision. Indeed, in many cases it will be difficult to pinpoint the exact nature of the impression conveyed.56 4.78 Sometimes the association arises in the form of a generalised favourable impression evoked by the personality or entity with which a good or service is sought to be associated. 4.79 In the following case of Pacific Dunlop Ltd v Hogan (Crocodile Dundee case),57 Burchett J considered a television advertisement for shoes which re-enacted the ‘knife scene’ in the movie Crocodile Dundee. [page 201]

Pacific Dunlop Ltd v Hogan (Crocodile Dundee case) (1989) 87 ALR 14 In this case, Pacific Dunlop Ltd (Pacific) produced a television advertisement for Grosby Leatherz shoes. The advertisement was similar to the well known ‘knife scene’ in the famous Australian movie ‘Crocodile Dundee’. Paul Hogan was the main character of this movie, along with Linda Kozlowski, who played Sue Charlton, as co-star. The television advertisement involved a scene where a couple were set

upon by a mugger. The advertisement depicted a scene at night in a dingy street with a couple advancing arm in arm, in a light-hearted mood. The female had fair hair, as did the Sue Charlton character in the film. The clothing of the male character was identical to that of Mr Hogan in the knife scene, except with respect to wearing jeans and Grosby Leatherz shoes. The male character’s name was Mick, similar to the character in Crocodile Dundee. The majority of the Full Federal Court held that the advertisement was misleading and deceptive for the purposes of former s 52 of the TPA and did constitute passing off. In particularly, Burchett J said (at 45–6): Character merchandising through television advertisements should not be seen as setting off a logical train of thought in the minds of television viewers. Its appeal is nothing like the insistence of a logical argument on behalf of a product, which may persuade, but also may repel. An association of some desirable character with the product proceeds more subtly to foster favourable inclination towards it, a good feeling about it, an emotional attachment to it. No logic tells the consumer that boots are better because Crocodile Dundee wears them for a few seconds on the screen; but the boots are better in his eyes, worn by his idol … To ask whether the consumer reasons that Mr Hogan authorised the advertisement is therefore to ask a question which is a mere side issue, and far from the full impact of the advertisement. The consumer is moved by a desire to wear something belonging in some sense to Crocodile Dundee (who is perceived as a persona, almost an avatar, of Mr Hogan). The arousal of that feeling by Mr Hogan himself could not be regarded as misleading, for then the value he promises the product will have is not in its leather, but in its association with himself. When, however, an advertisement he did not authorise makes the same suggestion, it is misleading; for the product sold by that advertisement really lacks the one feature the advertisement attributes to it. The whole importance of character merchandising is the creation of an association of the product with the character; not the making of precise representations. Precision would only weaken an impression which is unrelated to logic, and would in general be logically indefensible. Yet the impression must be powerful to be effective. The only medium likely to convey the vague message of character merchandising, while giving it the force and immediacy of an exciting visual impact, is television. That is why the technique has grown in importance with the rise of the television industry. Its implications have hardly yet been explored in the courts. Their exploration involves the application of established principles in an unfamiliar setting, where a pervasive feature is not so much the making of statements

that may mislead the mind directly, as suggestions that may inveigle the emotions into false responses.

[page 202] 4.80 There may be circumstances where the reputation or goodwill of a well-known character or celebrity no longer exists, as that person is no longer in the eyes of the public. 4.81 If a well-known character is associated with a particular company, it is not necessary that the goodwill or reputation of that character continues to exist with that particular company, in order to protect the association between the company and the well-known character. 4.82 In the following case of Mark Foys Pty Ltd v TVSN (Pacific) Ltd,58 the Full Federal Court declined to accept a general proposition that in order to show sufficient connection between the respondent’s conduct and the alleged deception, it is necessary for the purposes of former s 52 of the TPA to prove that there is continuing goodwill or reputation attached to the particular entity or person.

Mark Foys Pty Ltd v TVSN (Pacific) Ltd (2000) 181 ALR 90 In this case, Mark Foys Pty Ltd (Mark) was a famous retail business in a department store in Sydney. In 1993, Mark was placed in the hands of receivers, and Mark purchased its name from the receivers, but not its assets. In 1994, Mark registered the name ‘Mark Foys Pty Ltd’, but never traded under that name.

TVSN (Pacific) Ltd (TVSN) was a retail business that promoted its products under the name ‘Mark Foys’. Mark commenced proceedings against TVSN for misleading or deceptive conduct in contravention of former ss 52 and 53(c) and (d) of the TPA. At trial, Whitlam J held that the conduct of TVSN was not in contravention of former ss 52 and 53 of the TPA. Mark appealed. On appeal, the Full Federal Court (Beaumont, Tamberlin and Emmett JJ in a joint judgment) partly varied Whitlam J’s decision, and held that there was a contravention of former s 52 of the TPA, as there was some form of association conveyed between TVSN and the quality and tradition of services previously provided by Mark, when in fact there is no such association whatsoever. As such, a potential purchaser would be likely to form the false opinion that there was an association of some kind between TVSN and Mark. In particular, Beaumont, Tamberlin and Emmett JJ stated (at [48]) that: These authorities [cases relied upon by TVSN] cannot be taken to establish any general proposition that in order to show sufficient connection between the conduct and the deception, so as to amount to a contravention of the Act, it is necessary to prove that there is a continuing goodwill which attaches to the business of any particular person or entity. The task of the court is simply to give effect to the language of ss 52 and 53 without any such preconceived limitation.

[page 203]

Comparative advertising A comparison in advertising must be accurate 4.83

An advertisement by one company which compares its goods to the

goods of another company must be accurate, otherwise it may be misleading conduct in contravention of s 18 of the ACL. 4.84 The characterisation of advertising as comparative does not of itself have legal significance, or create any kind of presumption in favour of a plaintiff alleging a contravention of s 18 of the ACL.59 4.85 In Gillette Australia Pty Ltd v Energizer Australia Pty Ltd,60 Heerey J made the following comments about the characterisation of comparative advertising under former 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. Of course, the more actual comparisons that are used, the more potential there is for error (and half-truth). So advertisers have to be careful. Understood in context, that is all that the passages referred to by his Honour are saying. Assertions of factual inaccuracy have to be carefully considered by courts in comparative advertising cases, no differently from any other cases.

4.86 In the same case,61 Merkel J made the following reference to a similar view adopted in the United States, where the Federal Trade Commission defined comparative advertising and made some supportive comments on when it is used truthfully and in a non-deceptive way: For purposes of this Policy Statement, comparative advertising is defined as advertising that compares alternative brands on objectively measurable attributes or price, and identifies the alternative brand by name, illustration or other distinctive information. [Federal Trade Commission Commercial Practices Rule, 16 CFR §14.15 n 1 (2002)] The Commission has supported the use of brand comparisons where the bases of comparison are clearly identified. Comparative advertising, when truthful and non-deceptive, is a source of important information to consumers and assists them in making rational purchase decisions. Comparative advertising encourages product improvement and innovation, and can lead to lower prices in the marketplace. For these reasons, the Commission will continue to scrutinize carefully restraints upon its use.

4.87

However, comparative advertising has been treated by some courts as

requiring special care. In terms of comparative advertising, there is a heavy responsibility of the [page 204] representor to ensure that the comparisons are accurate. In State Government Insurance Commission v JM Insurance Pty Ltd,62 Fisher J said: There is in my opinion a heavy responsibility on it [the representor] to ensure that its comparisons are accurate, for inaccurate comparisons are inherently likely to mislead the public.

4.88 Essentially, the test for comparative advertising is the same as for general advertising, but the court will expect the representor to take particular care to ensure that the statements are accurate.63 4.89 In this sense, comparative advertising does not carry a higher burden on the advertiser to show the accuracy of the comparison, but errors in comparative advertising may have a greater potential to mislead consumers than statements made in ordinary advertisements.64 4.90 As with all forms of advertising, a comparative advertiser is only responsible for the representations, whether passive or active, made in the course of the advertisement.65 Thus, a consumer may make assumptions, not on the basis of those representations, but on the basis of the consumer’s selfinduced and incorrect assumptions, which ought not to be attributed to the conduct of the advertiser.66 4.91 When comparing two competing goods, there is no obligation to compare all relevant factors that might influence consumers.67 However, comparative advertisements may be misleading if the advertisement omits information that is necessary for the viewer to make a fair comparison of the two competing goods. The following decision of Hoover (Australia) Pty Ltd v Email Ltd,68 is an example of this.

Hoover (Australia) Pty Ltd v Email Ltd (1991) 104 ALR 369 In this case, Email Ltd (Email) and Hoover (Australia) Pty Ltd (Hoover) were two major Australian manufacturers of domestic washing machines. Email marketed its washing machines under the name ‘Simpson’. Hoover had what was known as the ‘Elite 1200’ series of washing machines. It was customary for the competitors each to test the products of the other. [page 205] Email prepared a promotional video which was directed not to the general public, but to wholesalers and retailers of Simpson washing machines. The promotional video made a comparison between the Simpson (Aquarius) washing machine and a Hoover Elite 1200 series washing machine. In particular, the video unfairly compared the two washing machines, by inserting into the Hoover machine an unbalanced load of lead shot. However, in the video, it was represented that the weight of items in each washing machine would ‘equate to a couple of towels, a few shirts and pillow cases’. The video then showed the two machines turned on, but the Hoover Elite machine was excessively vibrating and walking. The expression ‘walking’ in relation to washing machines is understood by manufacturers to described an undesirable movement by machines during the drying or spin cycle. The machines ‘walk’ in the sense of moving across the floor in a counter-clockwise direction. They will not move in this fashion if attached to the floor or wall. Hoover accepted that its Elite 1200 machines are more likely to vibrate

and ‘walk’ than the Simpson Aquarius washing machines, as that series contained a top suspension system, which helped to keep it more stable in the drying or spin cycle. However, Hoover alleged that the video was misleading because it did not disclose the unfair comparison of lead shot in its machine, compared to the Simpson Aquarius machine, which contained no lead shot. Gummow J held that the video was misleading and deceptive in contravention of former s 52 of the TPA. The video misrepresented that the two kilogram weight used in the video equated to a couple of towels, a few shirts and pillow cases and that the Hoover Elite 1200 series washing machine was likely to behave in the manner depicted in the video if it contained an out-of-balance load of washing during the spin cycle. In particular Gummow J stated (at 375) that: In the circumstances of the particular case, a ‘half truth’ may be misleading or deceptive: Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83 at 95. A comparison between goods or services may be rendered misleading by the omission of material that would be necessary to render the comparison fair: Collier Constructions Pty Ltd v Foskett Pty Ltd (1990) 97 ALR 460 at 479, affirmed (1991) ATPR (Digest) 46-071. In Duracell Australia Pty Ltd v Union Carbide Australia Ltd (1988) ATPR 40-918 at 49,861, Burchett J said that an inaccurate statement or an ambiguously qualified statement may often be found to be misleading. His Honour continued: In the area of comparison advertising, it has repeatedly been said that particular care is required. An unfair comparison may, quite simply, because it is unfair, be misleading. It may mislead a consumer into thinking there is a basis for a choice where, in truth, there is not; or that a choice may be made on grounds which are not truly valid …

[page 206] 4.92

Generally, comparative advertising should be between actual

competitors and competing products and the comparisons between competitors should also be ‘appropriate’ comparisons.69 4.93 A comparative advertisement which fails to compare ‘like with like’ goods may be engaging in conduct which is misleading for the purposes of s 18 of the ACL. 4.94 However, not all comparative advertisements which fail to compare like with like goods are misleading. The following case of Gillette Australia Pty Ltd v Energizer Australia Pty Ltd,70 is an example of this, where the comparison of a carbon zinc battery with that of an alkaline battery was not considered as misleading, because the comparison did not make any representations as to price or value.

Gillette Australia Pty Ltd v Energizer Australia Pty Ltd (2002) 193 ALR 629 In this case, Gillette Australia Pty Ltd (Gillette) manufactured and distributed batteries under the brand name ‘Duracell’. Energizer Australia Pty Ltd (Energizer) manufactured and distributed batteries under the brand names ‘Energizer’ and ‘Eveready’. Duracell batteries were supplied as alkaline batteries only. The Energizer and Eveready batteries were supplied as both alkaline and carbon zinc batteries. The cost of carbon zinc batteries was cheaper than those of alkaline batteries of the same size. However, carbon zinc batteries did not last as long as alkaline batteries. Gillette placed an advertisement on the television which showed four ‘bunny’ rabbits running in a straight line in a race. The rabbit that won the race was one that was powered by a Duracell battery. A voice over

said that the Eveready Super Heavy Duty battery (which was a carbon zinc battery): ‘[J]ust can’t keep up’ and ‘with up to three times more power Duracell always wins’.

Energizer commenced proceedings against Gillette alleging misleading or deceptive conduct in contravention of former ss 52 and 53(a) of the TPA. In particular, Energizer alleged that the advertisement was misleading because: the Eveready Super Heavy Duty battery was only the fifth most powerful battery in Energizer’s product range; the advertisement did not reveal that there was a substantial price differential between Duracell and Eveready Super Heavy Duty batteries and thus consumers would be misled in comparing the value of the two; and [page 207] the advertisement did not adequately identify the type of battery to which Duracell batteries were being compared. At trial, Lindgren J held that the advertisement was misleading or deceptive in contravention of former s 52 of the TPA as alleged by Energizer. Gillette appealed. On appeal, the Full Federal Court (Heerey, Lindgren and Merkel JJ, in separate judgments) allowed the appeal. In particular, Heerey J held (at [27]–[28]) that: Is the advertisement misleading in failing to disclose that Energizer has a comparable alkaline battery to that of Duracell?

There is no doubt on the evidence that the Eveready Super Heavy Duty battery, the highest selling carbon zinc battery in Australia, competes head to head with Duracell’s alkaline battery. Duracell is entitled, in my opinion, to point out truthfully to consumers a feature of its product which is superior to that of a rival product. If viewers think that Energizer has no other batteries which are more powerful than the Eveready Super Heavy Duty, then that belief would spring from their own mistaken assumptions and not from anything Duracell has told them in the advertisement. The appropriate remedy is for Eveready to correct such mistaken assumptions, if they exist, by its own advertising. There is no legal or ethical obligation on a trader to publicise the full range of a competitor’s products, and reasonable viewers would not think otherwise.

Merkel J agreed with Heerey J and stated (at [85]) that: … I agree, for the reasons given by Heerey J and Lindgren J, that the impression that is likely to be created upon the viewer is that the modified advertisement compares the power of the Duracell alkaline battery and the Eveready Super Heavy Duty battery and not their price or value. Accordingly, I do not accept that the advertisement makes any representation as to price or value. Rather, the potential purchaser is left to make his or her own choice on those matters at the point of sale.

4.95 To import the notions of unfairness into comparative advertising has been considered as putting an unwarranted gloss on the plain words of former s 52 of the TPA.71 4.96 Provided the factual assertions are not untrue, or misleading halftruths, an advertiser can lawfully compare a particular aspect of its product or service favourably with the same aspect of a competitor’s product or service. The following example by Heerey J in Gillette Australia Pty Ltd v Energizer Australia Pty Ltd,72 supports this view: To take an example that was discussed in argument, airline X might advertise that its economy class seats provide 20 cm more leg room than those of airline Y. If that is in fact

[page 208]

true, I do not see that the TPA obliges airline X to provide in its advertisement detailed information as to the myriad other factors which might influence consumers choosing between airlines. And if airline Y wants to advertise that its fares are cheaper, its aircraft more modern, and its flights more frequent than those of X then again, providing no untruths or misleading half-truths are stated, that is legitimate.

Disparaging advertising Inaccurate disparaging advertising may be misleading 4.97 Disparaging advertising is a form of comparative advertising where the method of advertising is a mockery of a good. Disparaging advertising can also be in the form of something that derogates or casts in an unfavourable light on a competitor’s good compared to that of its own. 4.98 Disparaging advertising that honestly and accurately informs the public of the advantages of one good over another is unlikely to contravene s 18 of the ACL. 4.99 In Gillette Australia Pty Ltd v Energizer Australia Pty Ltd,73 Merkel J appeared to endorse the view of the United States Fair Trading Commission on disparaging advertising, where his Honour stated: In relation to disparaging advertising the Commission stated that it: … know[s] of no rule of law which prevents a seller from honestly informing the public of the advantages of its product as opposed to those of competing products … [16 CFR §14.15]

4.100 However, disparaging advertising that omits relevant information, is inaccurate and/or untrue may be conduct that is misleading or deceptive for the purposes of s 18 of the ACL. The following case of Makita (Aust) Pty Ltd v Black & Decker (A/Asia) Pty Ltd,74 while perhaps more appropriately

characterised as a comparative advertising case, is also considered as an example of disparaging advertising.

Makita (Aust) Pty Ltd v Black & Decker (A/Asia) Pty Ltd (1990) 18 IPR 270 In this case, Makita (Australia) Pty Ltd (Makita) and Black & Decker (Australasia) Pty Ltd (Black & Decker), each distributed a range of power tools, including electric drills. Black & Decker hired a film company to film a 30 second television commercial based on what was referred to as the ‘torture test’. The torture test consisted of comparing the power of a Black & Decker 1160 drill to that of a blue drill (the [page 209] Makita 6010BVR drill) by facing both drills to each other chunk to chunk and by fixing them to a single 10 millimetre shaft. The advertisement did not identify the blue drill depicted in competition with the Black & Decker drill. This omission was deliberate. Prior to the filming, steps had been taken to paint over the name ‘Makita’ on the drill. There were five ‘takes’ of the duel between the two drills, one of which was aborted because the drills had been put into reverse rather than forward. New drills were used for each take. The four completed takes showed a similar sequence of events. In each case the Makita drill was turned on first, followed a few seconds later by the Black & Decker drill which almost instantaneously reversed the Makita drill’s shaft rotation. In

each case, at an interval of time varying from 5.84–9.57 seconds, visible smoke emanated from the Makita drill, followed 8–12 seconds later by intense smoke. During the filming of each of the takes a growling noise emanated from each of the drills due to the strain under which they were labouring. The film company hired by Black & Decker selected the first take for use in the commercial which it then prepared. The total footage filmed for this commercial exceeded the desired 30 seconds. Consequently, the film was edited by omitting some of the footage of the period between the Black & Decker drill reversing the Makita drill and the Makita drill commencing to smoke. On the edited film, the period which elapsed between the time when the Black & Decker drill was turned on and the first emission of smoke from the Makita drill was reduced to 2.7 seconds. Additionally, while smoke obscured a good deal of what was happening during the takes, it is apparent that in two takes at least, the Black & Decker drill eventually stalled, and that on one take a brief puff of smoke was emitted by the Black & Decker drill at the very end of the demonstration. None of this footage appeared in the final commercial. The commercial was completed with the voice over narration, to accommodate the growling noise of the Black & Decker drill, in which a male voice said the following words: Here is an amazing demonstration. Two 10 mm industrial drills are linked by a common shaft. The blue drill is turned on first. Then, the new Black & Decker industrial. With superior power, it’s actually reversing the spin of the other drill. Now you can see the better choice, Black & Decker industrial — in the right hands we’re unbeatable.

This commercial was found to be misleading and deceptive for a number of reasons, including that it did not disclose that Black & Decker’s 450 watt drill was being compared with Makita’s 305 watt drill and that a variable transformer was used to power the Black & Decker drill — relevantly boosting the voltage delivered to that drill. Wilcox J held that the commercial was misleading in contravention of

former s 52 of the TPA, because: it did not compare ‘like with like’. Makita at that time sold a full range of drills some of which were more powerful than the Black & Decker 450 watt drill; [page 210] it dubbed the comparison and therefore failed to bring to the consumers’ attention the following facts: –

the film was edited so that smoke came from the Makita drill far earlier than was in fact the case;

–

the smoke coming from the Makita drill was enhanced by special effects; and

–

a loud growling noise which would emanate from the Black & Decker drill during the test had been edited out, along with some smoke.

Parody advertising Inaccurate parody advertising may be misleading 4.101 A parody advertisement is a fictional advertisement for a nonexistent good. A parody advertisement is used as a way of drawing negative attention or ridiculing a competitor’s real advertisement. 4.102 A parody advertisement may ridicule a real advertisement by use of a comedy skit or sketch. A parody advertisement may not indicate that it is one and can use satire to conceal the nature of the advertisement.

4.103 Parody advertising that omits relevant information, is inaccurate and/or untrue (or if not clearly a parody) may be conduct that is misleading or deceptive for the purposes of s 18 of the ACL. 4.104 In Coca-Cola Co v All-Fect Distributors Ltd t/as Millers Distributing Co,75 Merkel J made the following comments about parody and misleading conduct: An analogous commercial use, which has also been held to fall short of representing a trade or commercial connection, can arise when an imitation product is created as a parody. In Nike Inc v ‘Just Did It’ Enterprises 6 F 3d 1225, 1227–8 (7th Cir 1993) the United States Court of Appeals for the Seventh Circuit said: Parodies date back as far as Greek antiquity … “Parody or satire, as we understand it, is when one artist, for comic effect or social commentary, closely imitates the style of another artist and in so doing creates a new art work that makes ridiculous the style and expression of the original” … But parodies have a legal hurdle to overcome. Federal law prohibits copies or imitations that confuse consumers … This protects trademarks as a form of intellectual property … and guards against confusion, deception or mistake by the consuming public … Whether a customer is confused is the ultimate question. If the defendant employs a successful parody, the customer would not be confused, but amused … Thus, we agree with the district court that parody is not an affirmative defence but an additional factor in the analysis. “[T]he keystone of parody is imitation. It is hard to imagine, for example, a successful parody of Time magazine that did not reproduce Time’s trademarked red border. A parody must convey two simultaneous — and

[page 211] contradictory — messages: that it is the original, but also that is not the original and is instead a parody. To the extent that it does only the former but not the latter, it is not only a poor parody, but also vulnerable under trade mark law, since the customer will be confused” … Thus the parody has to be a take-off, not a ripoff.

4.105 In the following case of Surge Licensing Inc v Pearson (Teenage Mutant Ninja Turtles case),76 the respondents failed in their argument that tshirts produced and marketed by them were a parody of the cartoon

characters Teenage Mutant Ninja Turtles and therefore not misleading for the purposes of former s 52 of the TPA.

Surge Licensing Inc v Pearson (Teenage Mutant Ninja Turtles case – ‘Heroes in a half shell’) (1991) 21 IPR 228 In this case, Surge Licensing Inc and JVH Pty Ltd (Surge) claimed exclusive rights to promote and market the cartoon characters known as the Teenage Mutant Ninja Turtles (Turtles). Daphne and Desmond Pearson, directors of South Sea Bubble Co Pty Ltd, and the company itself (Sea) produced and marketed t-shirts and similar apparel bearing the image or name of the Turtles. One set of the garments in question depicts the Turtles smoking marijuana. The other is of the Turtles in typically aggressive battle armoury. Surge alleged that the marketing of the t-shirts and other goods by Sea was misleading or deceptive conduct in contravention of former ss 52, 53, and 55 of the TPA, as well as passing off, as the public would be misled into believing that the Sea products were authorised by Surge as licensees of the Turtles in Australia. As part of their defence, Sea argued that there was no resemblance between the images on Surge’s products and those of the Turtles. Sea argued that the public would not be misled or deceived, because their images were a ‘parody’ of the cartoon figures. Sea pointed to the fact that sales were at Paddy’s Markets and the adult sizes of some of the products as further reducing the possibility of such deception. Einfeld J rejected Sea’s argument on the basis of Burchett J’s judgment in Pacific Dunlop Ltd v Hogan and Others (1989) 87 ALR 14 (at 45–7) and held that Sea contravened former ss 52, 53 and 55 of the TPA. His

Honour noted that this was not a parody case, but rather a clear case of conduct which misleads or deceives or is likely to do so.

4.106 In Pacific Dunlop Ltd v Hogan (Crocodile Dundee case),77 Burchett J rejected the appellant’s argument that their advertisement of Grosby Shoes was merely a parody [page 212] of the famous knife scene in Crocodile Dundee and therefore not misleading for the purposes of former s 52 of the TPA. His Honour stated: I reject the appellant’s attempt to avoid, by miscalling its advertisement a parody, the consequences of representing Crocodile Dundee (actually addressed in the advertisement by his name Mick) as endorsing its shoes. The essence of Mr Hogan’s performance is parody, which can hardly itself be parodied, at least by what would be more accurately described as a parasitic copy — parasitic because its vitality is drawn entirely from the audience’s memory of the original. As well might an attempt to imitate ‘HMS Pinafore’ be called a parody of Gilbert and Sullivan!

4.107 In the same case,78 Beaumont J also rejected the parody argument, and made the following reference to the decision of Hogan v Koala Dundee Pty Ltd,79 and the following comments by Pincus J: Here, Mr Chesterman QC argued that the koala image was akin to a parody of the image of Paul Hogan in the film and he relied upon certain United States parody cases: Warner Bros Inc v American Broadcasting Companies Inc (1983) 720 F 2d 231; Universal City Studios Inc v Casey & Casey Inc (1985) 622 F Supp 201 and Universal City Studios Inc v T-Shirt Gallery Ltd (1986) 634 F Supp 1468. He contended that people would be likely to think that, if the respondents were using ‘Crocodile Dundee’ images in the shop by licence, Paul Hogan’s face would not have been replaced by that of a koala, nor would all mention of Paul Hogan’s name have been omitted. I agree. In my opinion, however, there is nevertheless a clear representation of association with the film’s images. Mr Chesterman pointed out that each of the elements complained of is by itself common enough. For example, koalas are, as are bush hats and, perhaps less so, hats with teeth in the band and so forth, but the combination of images is something else again.

Trading names and business names No monopoly rights on trading or business names 4.108 Section 18 of the ACL does not create a monopoly for the use of a trading name or business name.80 Accordingly, two companies may use similar names without necessarily contravening the ACL. 4.109 Where similar descriptive words are used in the trading or business name of two businesses, it is possible that some members of the public will be confused whatever the differentiating words may be.81 4.110 In such circumstances, any confusion which might arise is not because the name itself is misleading, but because there has been an intrusion into the descriptive area occupied by another company.82 [page 213] 4.111 The following case of Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd,83 is a classic example where two businesses used trading names of similar description.

Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 18 ALR 639 In this case, Sydney Building Information Centre (Sydney Centre) was a long established information centre. Sydney alleged that the ‘newly’ established Hornsby Information Centre, under the corporate name of Hornsby Building Information Centre Pty Ltd (Hornsby Centre) would

mislead the public into thinking that the Hornsby Centre was in some way affiliated with the Sydney Centre. The High Court held unanimously that the names under which both parties operate were no more than merely descriptive of the nature of the businesses respectively carried on by them. The use by Hornsby Building Information Centre of its name was not misleading or deceptive for the purposes of former s 52 of the TPA. In particular, Stephen J noted that (at 648): 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 immune from action.

4.112 However, if the trading or business name of a company has acquired a secondary meaning that is distinctive, the use of a similar name by another company may contravene s 18 of the ACL.84 4.113 Generally, a secondary meaning (or independent reputation) of a trading or business name of a company can be acquired in a word(s) which have a generic or descriptive meaning.85 4.114 In Peter Bodum A/S v DKSH Australia Pty Ltd,86 Greenwood J made the following comments in relation to secondary meaning in reference to the shape of a Coca-Cola bottle: Whether a secondary meaning or independent reputation exists in the features or shape of a particular product or its get-up is, it is said, a question of fact to be determined having regard to all the relevant contextual circumstances.

[page 214] 4.115 Descriptive trading or business names can be distinctive if the use by another is calculated to mislead or deceive persons into believing that the two businesses are connected, when they are not.87 4.116 A generalised descriptive name ensures that it is not distinctive of any particular business.88 The more descriptive a business is, the greater the difficulty a plaintiff has in demonstrating distinction.89 4.117 In terms of business names, the mere fact that a business has registered its name under the relevant Business Names legislation does not protect that name from an action under s 18 of the ACL.90

First to enter the market A second person to enter the market does not necessarily mislead 4.118 A person who enters an existing market and advertises a similar good to that of a competitor does not necessarily engage in misleading conduct for the purposes of s 18 of the ACL.91 4.119 Section 18 is only likely to be contravened where a person enters an existing market and leads or is likely to lead members of the public into error by making express or implied representations that its goods are those of another competitor.92

Two Price Advertising

Was/now pricing 4.120 Two price advertising in the form of ‘was/now’ pricing is likely to be misleading or deceptive for the purposes of s 18 of the ACL in circumstances where the saving is illusory. 4.121 Accordingly, statements such as Was $200/Now $50 is likely to be misleading if the goods have not been sold (or at least genuinely offered for sale) at the specified ‘was’ price in a reasonable period immediately before the sale. 4.122 Such statements are also likely to be misleading if only a limited proportion of the goods were sold (or offered for sale) at the ‘was’ price in the period immediately before the sale. [page 215] 4.123 Accuracy in two price comparisons is essential. The savings implied from the comparison should be genuine and real. An advertiser cannot merely rely on an educated guess. 4.124 The ACCC, Advertising and Selling publication93 provides the following useful comments about two price advertising: A business can compare its current prices with its own previous or normal prices, so long as the previous ones were genuine and applied to a sufficient and reasonable number of items, for a reasonable period. How long this ‘reasonable period’ is may depend upon factors such as the type of product or market involved and the usual frequency of price changes. Comparisons between an advertised price and what the product is worth are also potentially troublesome. Any such statement of worth or value would need to be supported by objective evidence. An advertiser cannot merely rely on its intuition or an educated guess. This is because the consumer is likely to believe that there is some reliable substance behind the statement of worth and will be misled if the statement is not actually supported by facts.

Another type of deceptive two price advertising involves comparisons with the recommended retail price (RRP). If, as is sometimes the case, this price is not actually charged by the company or its competitors, it would be misleading to advertise goods and compare the price to the RRP. For example, if the product’s RRP was $150 but it regularly sold for $140, a ‘$10 off RRP’ offer of $140 would probably be misleading. In that situation the consumer is led to believe that the RRP is the same as the market price or the advertiser’s own previous price, whereas it may be quite different.

4.125 The following three cases are examples of two price advertising and each case highlights the complexity of this area of law.

ACCC v Prouds Jewellers Pty Ltd [2008] FCAFC 199 In this case, Prouds Jewellers Pty Ltd (Prouds) published two catalogues promoting the sale of a range of jewellery items. Each catalogue offered items for sale at a price described as a ‘was/now’ price near a picture of the good. The ‘was’ price was higher, and often much higher, than the ‘now’ price. The ACCC alleged that this method of promotion contravened former ss 52 and 53 of the TPA for the reason that the ‘was’ price would be viewed as a previous selling price, in circumstances where the price at which, historically, each item was actually sold was often less. In other words, the ‘was’ price did not reflect the previous actual sale price. In response, Prouds argued that because the word ‘was’ was in juxtaposition to the word ‘now’, the former referred not to the previous actual sale price, but rather to the offered price. The trial judge, Moore J, ruled in favour of Prouds on this point, but importantly, held that Prouds did contravene former s 52 by reason that several [page 216]

items of jewellery in one catalogue bore a ‘was’ price in circumstances when those items had never been offered for sale at those prices. Moore J held that the message conveyed by the ‘was’ price in the context given, was that the item, immediately before the sale commenced, would have been offered for sale for a reasonable period of time and could have been bought at the ‘was’ price. Both parties appealed. On appeal, the ACCC submitted that Moore J had erred with respect to the ‘level of saving representation’ by focusing on the amount the individual consumer would have paid rather than what the relevant classes of consumers would have understood the catalogue as conveying: at [20]–[23]. In this matter, Black CJ, Ryan and Gordon JJ in a joint judgment dismissed both the appeal and the cross-appeal. The Full Federal Court held that it did not matter whether the product was actually sold at the ‘was’ price as long as it was offered at the ‘was’ price. However, this meant that no matter how overpriced a certain product was, as long as it was offered at that price and a consumer would have paid the ‘was’ price had it purchased the goods outside of the sales period, it was permissible to use the ‘was’ price in was/now discount advertising. The Full Court held that it was open to Moore J to find that the relevant consumer would focus on the benefits available to him or her during the sale period: at [31]. The Full Court also dismissed the ACCC’s appeal with respect to the ‘previous selling price representation’ holding (at [42]) that: … it was open to the learned primary Judge to infer that the relevant hypothetical consumer would not have regarded the ‘Was’ price as saying anything about the price at which actual sales of a particular item had been achieved before the introduction of the ‘Now’ price.

Ascot Four Pty Ltd v ACCC [2009] FCAFC 61 In this case, Ascot Four Pty Ltd (Ascot Four) supplied jewellery to the public. Ascot Four published a Christmas sale catalogue (catalogue) which advertised a large number of items of jewellery for sale. Eleven items of jewellery advertised in the catalogue were referenced by a sale price in large print coloured red and a strike through price in smaller print coloured black. The strike through price was always higher than the sale price. The ACCC alleged the Ascot Four made false or misleading representations in contravention of former s 75AZC(1)(g) of the TPA (criminal provision). At trial, Mansfield J held that the reference to the ‘strike through’ pricing of the 11 items of jewellery in the catalogue was false or misleading in contravention of former s 75AZC of the TPA. In particular, Mansfield J found that it was misleading for Ascot Four to create the false impression that a customer purchasing one of 11 jewellery items during the sale period would make a saving of the difference [page 217] between the strike through price and the sale price. Since Ascot Four did not sell any of the 11 jewellery items at the strike through price in the four months prior to the sale period, it was misleading to create the impression that a customer who purchased one of the 11 items of jewellery was making a saving. Ascot Four appealed. On appeal, the Full Federal Court (Black CJ, Ryan and Jagot JJ in a

joint judgment) dismissed the appeal and held that the catalogue was misleading as it created the false impression that a potential purchaser would be making a saving in the saving period based on the strike through pricing. In particular, Black CJ, Ryan and Jagot JJ stated (at [30]): The different result from that in Prouds Jewellers is explained by the different allegations and evidence before the court in the present case. As noted, the ACCC failed on the relevant aspect of the claim in Prouds Jewellers because it pleaded that the representation was the saving between the sale price and the amount actually paid by consumers before the sale period. The present case is different. The ACCC’s allegation in the present case depended on the strike through price representing the price that would have been paid before the sale period. This allegation does not depend on purchasers being imputed with knowledge of actual sales prices. The primary judge’s characterisation of the representation was consistent with Moore J’s approach to that issue. This is because the latter half of the representation as found by Moore J at [37] (and thus the price at which they would then have been bought), on the facts of the present case, was false. In other words, it was open to Moore J in Prouds Jewellers to find that on the facts, the possibility could not be excluded that the consumer unaware of the potential for obtaining a discount would in fact have paid the ticketed price. In this case, however, where for whatever reason there were no recorded sales at or near the strike through price, it is simply implausible that any customer, no matter how ill-informed about bargaining opportunities, would have paid that price.

ACCC v Jewellery Group Pty Ltd (2012) 293 ALR 335 In this case, the Jewellery Group Pty Ltd (Jewellery Group) operated the jewellery chain of stores named Zamel’s. The Jewellery Group advertised in a number of catalogues 44 items of jewellery by using ‘strike through’ and ‘was/now’ pricing. The ACCC commenced proceedings against the Jewellery Group, alleging misleading or deceptive conduct in contravention of former ss 52 and 53(e) of the TPA. In particular, the ACCC argued that only a few of

the items of jewellery were sold at the higher strike through or was/now prices. Lander J held (at [145], [151]–[153]) that the Jewellery Group contravened former ss 52 and 53(e) of the TPA, as the Jewellery Group commonly discounted their jewellery items and as such the savings represented were false. An appeal to the Full Federal Court by the Jewellery Group was dismissed: Jewellery Group Pty Ltd v ACCC [2013] FCAFC 144.

[page 218]

Environmental claims Environmental claims must be accurate 4.126 Environmental claims in advertisements that are not accurate or substantiated may be misleading or deceptive for the purposes of s 18 of the ACL. 4.127 Given that terms such as ‘environmentally safe’, ‘green’ and ‘fully recycled’ may have more than one meaning, it is important that care be taken in advertisements not to mislead members of the public. 4.128 The ACCC in its Green marketing and the Australian Consumer Law publication,94 provides the following principles and examples in relation to environmental claims: Environmental claims must be accurate. For example, A manufacturer of washing machines claims that their new model reduces water usage by 75 per cent. In fact it only reduces water usage by 25 per cent in most normal households. This claim is almost certain to be misleading.

Environmental claims must be able to be substantiated. For example, A dishwasher manufacturer claims that their new model is 60 per cent more water efficient. Without scientific or test data to back this up, the manufacturer may not have a good faith basis for making this claim. This may risk misleading consumers and breaching the provisions of the ACL.

Environmental claims should be specific, and not unqualified and/or general statements. For example, The statement ‘safe for the environment’ could have many meanings depending on the audience — some may believe this means your product is biodegradable; others may infer that it contains no toxic components or ingredients. Without further explanation consumers may not know what you mean and you risk misleading at least some portion of the audience.

Environmental claims should be in plain language. For example, A product labelled ‘10%—CROSS-LINKED ELASTIN CLR SOL N’ was held to be misleading to consumers. It was determined that consumers were likely to believe the critical ingredient ‘elastin’ was present in the cosmetic in 10 per cent concentration, whereas in fact the ingredient was present in only a 0.05 per cent.

Environmental claims should only be made for a real benefit. For example, A claim which may be relevant at one time can become less relevant and ultimately meaningless over time and therefore potentially misleading. One example is claims such as ‘CFC free’, as no other competing products now contain CFCs because authorities prohibit their use in almost all aerosols.

Environmental claims must not overstate the real benefit. For example, A claim of ‘now 50 per cent more recycled content’ is of no real benefit if a product was previously only 1 per cent recycled content in the first place. It

[page 219] is likely to convey the false impression that you have significantly increased the use of

recycled material and is likely to mislead consumers.

Environmental claims that use pictures must be made with care and/or qualified where necessary. For example, A picture of a dolphin on a tuna product may be taken by consumers as a symbol to mean the tuna has been fished in a manner that does not harm dolphins. If this is not the case then the use of the picture risks misleading consumers.

Environmental claims should be considered over the whole product lifecycle. For example, A car is manufactured to be extremely fuel efficient and advertised as ‘green’ or ‘ecofriendly’. This does not take into account the harm to the environment of the production process or the disposal of the car at the end of its life cycle, which may have a large environmental impact. Advertising the car as being ‘fuel efficient’ rather than ‘green’ could help avoid misleading consumers.

Environmental claims using endorsement or certification should be used with caution. For example, A logo depicting a red panda is used on paper and stationery products. Consumers unfamiliar with the logo may believe that the production of the products do not harm the natural habitat of red pandas. In actual fact the red panda logo represents a scheme that plants trees to offset those logged in the production of the paper products. Without some kind of qualification or further information given, the use of this logo on the paper products risks misleading consumers.

4.129 The following enforceable undertaking to the ACCC by Daikin is an example of how important it is to be accurate about environmental claims in advertising.

Daikin Australia Pty Ltd (Enforceable Undertaking dated 12 October 2004) From January 2001 to August 2003, Daikin Australia Pty Ltd (Daikin) imported and distributed air-conditioning units to Australia. In

brochures distributed to its sale agents and on its website, Daikin made the following representations, amongst others: the hydrofluorocarbon (HFC) refrigerants HFC–407C and HFC–134a are environmentally friendly; certain Daikin air-conditioning units using the HFC refrigerants HFC–407C and HFC–134a are environmentally friendly; the use by consumers of certain Daikin air-conditioning units which use HFC–407C and HFC–134a will be beneficial to the environment or at worst be benign so far as its environmental impact is concerned; and [page 220] the use by consumers of certain Daikin air-conditioning units which use HFC–407C and HFC–134a will prevent or at least not contribute to global warming (together the Representations). Based on expert scientific advice, the ACCC considered that the above representations were misleading in contravention of former ss 52, 53(c) and 55 of the TPA in that the refrigerants HFC–407C and HFC–134a are potent greenhouse gases and therefore will not benefit the environment and will contribute to global warming. Daikin undertook that it would restrain from making the representations for five years, and place corrective advertisements on its website.

Remedies and enforcement powers Summary of available remedies and enforcement powers 4.130 A person contravening s 18 of the ACL is liable for any of the following remedies and enforcement powers against them: declarations (s 21 of the Federal Court of Australia Act 1974 (Cth)); undertakings (s 218 of the ACL); substantiation notices (s 219 of the ACL); public warning notices (s 223 of the ACL); injunctions (s 232 of the ACL); damages (s 236 of the ACL); compensatory orders (s 237 of the ACL); compensation orders arising out of other proceedings (s 238 of the ACL); orders for non-party consumers (s 239 of the ACL); non-punitive orders (s 246 of the ACL); orders for the preservation of property (s 137F of the Competition and Consumer Act 2010 (CCA)); and power to obtain information, documents and evidence: s 155 of the CCA. 4.131 However, the following remedies and enforcement powers are not available for contraventions of s 18 of the ACL: infringement notices (s 134A of the CCA); pecuniary penalties (s 224 of the ACL); and adverse publicity orders (s 247 of the ACL); orders disqualifying a person from managing corporations (s 248 of

the ACL); criminal liabilities provisions: Ch 4 of the ACL.

Short theory and problem questions Theory questions 1.

In circumstances where the consumer learns the truth about the misrepresentation before purchasing a good, can an advertisement that [page 221] contains an incorrect statement be misleading or deceptive in contravention of s 18 of the ACL?

2.

Is there a different threshold for determining whether an advertisement is misleading or deceptive for the purposes of s 18 of the ACL to that of a non-advertisement?

3.

Does labelling of a good always assist the respondent in a defence to a misleading or deceptive conduct claim in contravention of s 18 of the ACL?

4.

Does the exact impression created in character advertising have to be identified with precision in order to prove misleading or deceptive conduct in contravention of s 18 of the ACL?

5.

Is the threshold test for misleading or deceptive conduct under s 18 of the ACL in relation to comparative advertising different to general advertising?

6.

Is there a requirement in comparative advertising under s 18 of the ACL to always compare ‘like goods with like’?

7.

What is parody advertising?

8. 9.

For the purposes of s 18 of the ACL, is it necessary that no businesses can have the same or similar trading or business names? Does the registration of a business name under the State Business Names Registration provide a defence or protection of that name from an action under s 18 of the ACL?

Hypothetical problem question John, Paul, George and Bingo were musicians in a band called the Beagles. The Beagles were a famous band in Australia. The band was so famous that the locals called the intense fan frenzy, Beaglemania. In particular, John was a personal favourite of the fans. Wilsun Guitars was a music store in Australia, which supplied musical instruments. Brian, who was the owner of Wilsun Guitars, received a new shipment of Super-V guitars. Brian wanted to advertise these new SuperV guitars on television, as he was the only musical store to supply them to the public. Brian hired Bill Spector to produce a television commercial to advertise the new Super-V guitars. When Bill asked Brian what type of commercial he wanted, Brian said: God only knows what type of commercial I want, but make sure you include a scene in Hawaii with some California girls in it. This should send out the message of surfer girls, surfin’ and good vibrations. Hey wouldn’t that be nice if you can design a commercial like that?

Bill Spector was an artist and he often stressed the word ‘artist’. He did not like Brian’s idea, so decided to produce the commercial his way. Bill decided to set the scene of the commercial as similar to that of what the Beagles did when they played on the roof top concert in London. The commercial involved a scene with four musicians, who looked and dressed very similar to that of the Beagles. They all played musical instruments similar to those of the Beagles, with

[page 222] the character who looked like John playing a Super-V guitar. The focus of the commercial was on the look-alike character of John and the Super-V guitar. John’s look-alike character was singing one of the Beagles hits, Get Back, but the words in the commercial were changed to ‘Get Back to Wilsun Guitars’. The commercial finished with lightning striking the Super-V guitar and John being elevated into the sky. At this point, there was a voice over in the commercial which said: Super-V sold only at Wilsun Guitars. Super-V guitars mean more to popular musicians than does religion.

Upon seeing the commercial, Brian loved it and decided to place the commercial on every major television channel in Australia. John and the rest of the Beagles saw the commercial and were outraged. Advise the Beagles as to whether the Wilsun Guitars’ commercial is misleading or deceptive for the purposes of s 18 of the ACL?

Further reading A Bruce, Consumer Protection Law in Australia, 2nd ed, LexisNexis Butterworths, Sydney, 2014, pp 59–128. S Corones, The Australian Consumer Law, 2nd ed, Thomson Reuters, Sydney, 2013, pp 113–76. Halsbury’s Laws of Australia, Commentary, Consumer Protection title, LexisNexis, Sydney, 2011, [10.14]–[10.18] and [75,590.250]– [75,590.330]. Justice J D Heydon, Trade Practices Law Competition & Consumer Law (Looseleaf Services), Thomson Reuters, Australia, 2012, [160.1740]– [160.1900].

C Lockhart, The Law of Misleading or Deceptive Conduct, 4th ed, LexisNexis, Sydney, 2014. R Miller, Australian Competition and Consumer Law Annotated, 36th ed, Thomson Reuters, Sydney, 2014, pp 1445–557. R Steinwall, Annotated Competition and Consumer Legislation, LexisNexis, Sydney, 2014, pp 1305–40. The ACCC website at or the ACL website at and download the following publications: – The Guide for Business — Advertising and Selling, 2014 and 2007; –

The Australian Consumer Law: A framework overview, 2013;

–

Avoiding unfair business practices: A guide for businesses and legal practitioners, 2010; and

–

Green marketing and the Australian Consumer Law, 2011.

1.

Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Gibbs CJ at 6.

2.

ACCC v Telstra Corp Ltd [2004] FCA 987 per Gyles J at [50].

3.

ACCC v Global One Mobile Entertainment Ltd [2011] FCA 393 per Bennett J at [51].

4.

Farquhar v Bottom [1980] 2 NSWLR 380 per Hunt J at 385–6.

5.

ACCC v TPG Internet Pty Ltd (2013) 304 ALR 186 per French CJ, Crennan, Bell and Keane JJ at [50].

6.

ACCC v TPG Internet Pty Ltd (2013) 304 ALR 186 per French CJ, Crennan, Bell and Keane JJ at [50].

7.

Stuart Alexander & Co (Interstate) Pty Ltd v Blenders Pty Ltd (1981) 37 ALR 161 per Lockhart J at 311.

8.

ACCC v TPG Internet Pty Ltd (2013) 304 ALR 186 per French CJ, Crennan, Bell and Keane JJ at [35].

9.

ACCC v On Clinic Aust Pty Ltd, Men Only Medical Clinic Pty Ltd & Potent-C Clinics (1996) 35 IPR 635 per Tamberlin Jat [7]; ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 634 per Allsop CJ at [46].

10. Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations (1992) 38 FCR 1 per Hill at 50. 11. ACCC v Halkalia Pty Ltd (No 2) [2012] FCA 535 per Tracey J at [68]. 12. ACCC v Halkalia Pty Ltd (No 2) [2012] FCA 535 per Tracey J at [68]. 13. Global One Mobile Entertainment Pty Ltd v ACCC [2012] FCAFC 134 per Greenwood, Logan and Yates JJ at [53].

14. ACCC v Halkalia Pty Ltd (No 2) [2012] FCA 535 per Tracey J at [68]. 15. Telstra Corp Ltd v Cable & Wireless Optus Ltd [2001] FCA 1478 per Goldberg J at [21]–[25]. 16. Collier Constructions Pty Ltd v Foskett Pty Ltd (1990) 97 ALR 460 per Gummow J at 470. 17. ACCC v Henry Kaye and National Investment Institute Pty Ltd [2004] FCA 1363 per Kenny J at [122]. 18. For example, see Petty v Penfold Wines Pty Ltd (1994) 49 FCR 282 at [17]. 19. General Newspapers Pty Ltd v Telstra Corp (1993) 117 ALR 629 per Davies and Einfeld JJ at 642. 20. Stuart Alexander & Co (Interstate) Pty Ltd v Blenders Pty Ltd (Moccona case) (1981) 37 ALR 161 per Lockhart J at 164–5. 21. Sabre Corporation Pty Ltd v Laboratories Pharm-A-Care Pty Ltd (1995) 31 IPR 445 per Beazley J at 453. 22. Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256. 23. Gillette Australia Pty Ltd v Energizer Australia Pty Ltd [2005] FCA 1647. 24. For example, see ACCC v Target Australia Pty Ltd [2001] FCA 1326 per Lee J at [6]; ACCC v Thorn Australia Pty Ltd [2004] FCA 157 per French CJ at [13]. 25. Trade Practices Commission v QDSV Holdings Pty Ltd (t/as Bush Friends Australia) (1995) ATPR 41-371 per Davies J at 40-115. 26. George Weston Foods Ltd v Goodman Fielder Ltd (Wonder White case) (2000) 49 IPR 553. 27. Medical Benefits Fund of Australia Ltd v Cassidy (2003) 205 ALR 402 per Stone J (Moore and Mansfield JJ agreeing) at [36]–[37]. 28. Medical Benefits Fund of Australia Ltd v Cassidy (2003) 205 ALR 402 per Stone J (Moore and Mansfield JJ agreeing) at [35]–[39], [41]. 29. ACCC v Boost Tel Pty Ltd [2010] FCA 701 per Siopis J at [79]–[81]. 30. Medical Benefits Fund of Australia Ltd v Cassidy (2003) 205 ALR 402 per Stone J (Moore and Mansfield JJ agreeing) at [35]–[39], [41]. 31. Medical Benefits Fund of Australia Ltd v Cassidy and Another (2003) 205 ALR 402 per Stone J (with whom Moore and Mansfield JJ agreed) at [37]. 32. George Weston Foods Ltd v Goodman Fielder Ltd (Wonder White case) (2000) 49 IPR 553 per Moore J at 571–2. 33. ACCC v Signature Security Group Pty Ltd [2003] FCA 3. 34. ACCC v Signature Security Group Pty Ltd [2003] FCA 3. 35. ACCC v TPG Internet Pty Ltd [2011] FCA 1254 per Murphy J at [37]. 36. ACCC v Singtel Optus Pty Ltd (No 1) [2010] FCA 1177 per Perram J at [5]. 37. ACCC v Singtel Optus Pty Ltd (No 1) [2010] FCA 1177 per Perram J at [5]. 38. ACCC v TPG Internet Pty Ltd [2011] FCA 1254 per Murphy J at [36]. 39. ACCC v TPG Internet Pty Ltd [2011] FCA 1254 per Murphy J at [36]. 40. ACCC v Telstra Corporation Ltd (2007) 244 ALR 470 per Gordon J at [19]–[20]. 41. Medical Benefits Fund of Australia Ltd v Cassidy (2003) 205 ALR 402. 42. ACCC v Global One Mobile Entertainment Ltd [2011] FCA 393 per Bennett J at [51].

43. Luxottica Retail Australia Pty Ltd v Specsavers Pty Ltd (2010) 267 ALR 721. 44. Red Bull Australia Pty Ltd v Sydneywide Distributors Pty Ltd [2001] FCA 1228 per Conti J at [64]. 45. Red Bull Australia Pty Ltd v Sydneywide Distributors Pty Ltd [2001] FCA 1228 per Conti J at [64]. 46. ACCC v Arnott’s Biscuits Ltd [2008] FCA 590. 47. Reckitt & Colman Products Ltd v Borden Inc (Jif Lemon case) (1990) 17 IPR 1 per Lord Jauncey of Tullichettle at 22. 48. Red Bull Australia Pty Ltd v Sydneywide Distributors Pty Ltd [2001] FCA 1228. 49. Australian Woollen Mills Ltd v F S Walton & Co Ltd (1937) 58 CLR 641 per Dixon and McTiernan JJ at 657. 50. Office Cleaning Services Ltd v Westminster Office Cleaning Association [1946] 1 All ER 320 per Lord Simonds at [42]. 51. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Gibbs CJ at 4. 52. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 per Gibbs CJ at 7. 53. For example, see Abundant Earth Pty Ltd v R & C Products Pty Ltd (1985) 59 ALR 211. 54. Levi Strauss & Co v Wingate Marketing Pty Ltd (1993) 116 ALR 298. 55. ACCC, Advertising and Selling, 2007, p 58. 56. Mark Foys Pty Ltd v TVSN (Pacific) Ltd (2000) 181 ALR 90 per Beaumont, Tamberlin and Emmett JJ at [51]. 57. Pacific Dunlop Ltd v Hogan (1989) 87 ALR 14. 58. Mark Foys Pty Ltd v TVSN (Pacific) Ltd (2000) 181 ALR 90. 59. Gillette Australia Pty Ltd v Energizer Australia Pty Ltd (2002) 193 ALR 629 per Heerey J at [20]. 60. Gillette Australia Pty Ltd v Energizer Australia Pty Ltd (2002) 193 ALR 629 per Heerey J at [20]. 61. Gillette Australia Pty Ltd v Energizer Australia Pty Ltd (2002) 193 ALR 629 per Merkel J at [91]. 62. State Government Insurance Commission v JM Insurance Pty Ltd (1984) ATPR 40-465 per Fisher J at 45-362. 63. Stuart Alexander & Co (Interstate) Pty Ltd v Blenders Pty Ltd (1981) 53 FLR 307 per Lockhart J at 310. 64. TPC v Telstra Corp Ltd (1993) ATPR 41-256. 65. Gillette Australia Pty Ltd v Energizer Australia Pty Limited [2005] FCA 1647 per Merkel J at [15]. 66. Gillette Australia Pty Ltd v Energizer Australia Pty Ltd (2002) 193 ALR 629 per Heerey J at [28] and per Lindgren J at [53]. 67. Gillette Australia Pty Ltd v Energizer Australia Pty Ltd (2002) 193 ALR 629 per Heerey J at [22]– [24], per Lindgren J at [53] and per Merkel J at [85]. 68. Hoover (Australia) Pty Ltd v Email Ltd (1991) 104 ALR 369. 69. Gillette Australia Pty Ltd v Energizer Australia Pty Ltd (2002) 193 ALR 629 per Heerey J at [22]– [24], per Lindgren J at [53] and per Merkel J at [90], [94]. 70. Gillette Australia Pty Ltd v Energizer Australia Pty Ltd (2002) 193 ALR 629. 71. Gillette Australia Pty Ltd v Energizer Australia Pty Ltd (2002) 193 ALR 629 per Heerey J at [21]–

[23]. 72. Gillette Australia Pty Ltd v Energizer Australia Pty Ltd (2002) 193 ALR 629 per Heerey J at [23]. 73. Gillette Australia Pty Ltd v Energizer Australia Pty Ltd (2002) 193 ALR 629 per Merkel J at [92]. 74. Makita (Aust) Pty Ltd v Black & Decker (A/Asia) Pty Ltd (1990) 18 IPR 270. 75. Coca-Cola Co v All-Fect Distributors Ltd t/as Millers Distributing Co (1998) 43 IPR 47 per Merkel J at 63. 76. Surge Licensing Inc v Pearson (Teenage Mutant Ninja Turtles case) (1991) 21 IPR 228. 77. Pacific Dunlop Ltd v Hogan (1989) 87 ALR 14 per Burchett J at 16. 78. Pacific Dunlop Ltd v Hogan (1989) 87 ALR 14 per Beaumont J at 42–3. 79. Hogan v Koala Dundee Pty Ltd (1988) 83 ALR 187 per Pincus J at 200. 80. Betta Foods Australia Pty Ltd v Betta Fruit Bars Pty Ltd (1998) 41 IPR 347 per Goldberg J at [15]. 81. Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 18 ALR 639 per Stephen J at 647. 82. Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 18 ALR 639 per Stephen J at 648. 83. Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 18 ALR 639. 84. Apand Pty Ltd v Kettle Chip Co Pty Ltd (Kettle Chips case) (1994) 30 IPR 337 per Lockhart, Gummow and Lee JJ at 344. 85. Kosciuszko Thredbo Pty Ltd v ThredboNet Marketing Pty Ltd [2013] FCA 563 per Cowdroy J at [72]. 86. Peter Bodum A/S v DKSH Australia Pty Ltd (2011) 92 IPR 222 per Greenwood J at [9]. 87. Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 per Gummow, French and Hill JJ at 269. 88. Kosciuszko Thredbo Pty Ltd v ThredboNet Marketing Pty Ltd [2013] FCA 563 per Cowdroy J at [74]. 89. Kosciuszko Thredbo Pty Ltd v ThredboNet Marketing Pty Ltd [2013] FCA 563 per Cowdroy J at [73]. 90. BM Auto Sales Pty Ltd v Budget Rent A Car Systems Pty Ltd (1976) 12 ALR 363 per Gibbs J at 369 (with whom Barwick CJ and Murphy J agreed). Also see TEC & Tomas (Aust) Pty Ltd v Matsumiya Computer Co Pty Ltd (1984) 53 ALR 167 per Beaumont J at 176. 91. Interlego AG v Croner Trading Pty Ltd (1992) 111 ALR 577 per Gummow JJ at 627 (with whom Black CJ and Lockhart J agreed). 92. Peter Bodum A/S v DKSH Australia Pty Ltd (2011) 280 ALR 639 per Greenwood J at [201]–[202] (with whom Tracey J agreed). 93. ACCC, Advertising and Selling, 2007, p 27. 94. ACCC, Green marketing and the Australian Consumer Law, 2011, pp 8–15.

[page 223]

Chapter 5 Misleading or Deceptive Conduct and Other Areas of Law ‘How can it be passing off? My album Sgt Pepper’s Happy Hearts Club Band sounds nothing like Sgt Pepper’s Lonely Hearts Club Band. We even used different people on the front cover of the album. Besides, nobody in the United States has heard of this British band.’

Introduction Overview 5.1 This Chapter considers the tort of passing off, misleading or deceptive conduct in relation to other legislation and other areas of the common law of torts and contract. 5.2

The topics covered in this Chapter are: Tort of passing off; – What is passing off? –

The elements of passing off; ♦

First element of passing off: goodwill or reputation;

♦

Second element of passing off: misrepresentation;

♦ –

Third element of passing off: damage;

Passing off v s 18 of the ACL;

Tort of deceit; – What is the tort of deceit?; –

The elements of the tort of deceit; ♦

False representation;

♦

Knowledge or reckless or careless disregard;’

♦

Intention;

♦

Reliance;

♦

Damage; [page 224]

–

Remedies available for the tort of deceit;

–

Tort of deceit v s 18 of the ACL;

Negligent misstatements under tort law; – An actionable misrepresentation under tort law; –

Remedies available for negligent misstatements under tort law;

–

Negligent misstatement under tort law v s 18 of the ACL;

Misrepresentations under contract law; – An actionable misrepresentation under contract law; –

–

The elements of misrepresentation in contract law; ♦

Representation of fact;

♦

Representation must be false;

♦

Representation must be made by a party to the contract to another party to the contract;

♦

Inducement;

Types of misrepresentations under contract law;

♦

Fraudulent misrepresentation;

♦

Negligent misrepresentation;

♦

Innocent misrepresentation;

–

Remedies available for misrepresentation under contract law;

–

Misrepresentations under contract law v s 18 of the ACL;

Corporations Act 2001 (Cth) (CA); – Overview –

Section 728 of the CA;

–

Section 1041H of the CA; ♦

‘in this jurisdiction’;

♦

‘in relation to’;

♦

‘a financial product’;

♦

‘a financial service’;

♦

‘engage in conduct’;

–

Remedies under the CA;

–

Some differences between s 1041H and s 728 of the CA;

Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act); – Section 12DA of the ASIC Act; ♦

‘in relation to’;

♦

‘a financial product’;

♦

‘a financial service’;

–

Remedies under the ASIC Act;

–

Some differences between s 12DA and the ASIC Act and s 728 of the CA;

–

Some differences between s 12DA of the ASIC Act and s 1041H of the CA; and

–

Delegation.

5.3 The Chapter provides a general summary of each of these topics. Further suggested reading on each area of law is provided at the end of this Chapter. Each topic is discussed individually below. [page 225]

The tort of passing off What is the tort of passing off? 5.4 There is no precise definition of the tort of passing off. Part of the reason why it is difficult to establish a precise definition is that actions in passing off often turn on their own facts. 5.5 It has been observed that passing off contains sufficient ‘nooks and crannies’ that make it difficult to formulate any satisfactory definition in short form.1 It is a tort which is better described than defined. 5.6 The tort of passing off is concerned with the protection of reputation and goodwill of a business. The tort arose principally to protect traders and prevent commercial dishonesty.2 5.7 Traditionally, the tort was concerned with fraudulent passing off of goods. However, the tort expanded over time to include any false representation of a connection between one business and another. 5.8 In essence, the tort of passing off protects the business of the plaintiff with its many facets: its assets, goodwill and reputation.3 The basis of the cause of action of passing off lies squarely in misrepresentation.4 5.9

Accordingly, the tort of passing off prevents persons from gaining a

commercial advantage through wrongfully taking the attributes of another’s business if it causes damage to the other business. 5.10 A passage from the speech of Lord Diplock in Erven BV v J Townsend & Sons (Hull) Ltd (Advocaat case),5 is regarded as the authoritative statement of the necessary characteristics of passing off. 5.11 The following five characteristics as set out by Lord Diplock in the Advocaat case must be present in order to create a valid cause of action for passing off:6 a misrepresentation; made by a trader in the course of trade; to prospective customers or his ultimate consumers of goods or services supplied by him; which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence); and [page 226] which causes actual damage to a business or goodwill of a trader by whom the action is brought. 5.12 However, it has also been accepted that ‘the classical trinity’ serves to emphasise the three core elements of passing off. The ‘classical trinity’ is described as follows:7 the plaintiff(s) has an established reputation or goodwill in the relevant indicia; there is or there is likely to be a misrepresentation by the defendant that its goods or services, or business, are those of the plaintiff(s),

whereby confusion or deception is likely to be created for the relevant public; and there is actual damage, or inevitable actual damage, to the plaintiffs’ goodwill or reputation as a result of the defendant’s misrepresentation. 5.13 It has been observed that there is little difference in substance between the ‘five characteristics’ of passing off as described in the Advocaat case and the three elements of ‘the classical trinity’.8 5.14 In Reckitt & Colman Products Ltd v Borden Inc,9 Lord Oliver of Aylmerton made the following comments which provide a short general proposition and summary of the elements of passing off: The law of passing off can be summarised in one short general proposition — no man may pass off his goods as those of another. More specifically, it may be expressed in terms of the elements which the plaintiff in such an action has to prove in order to succeed. These are three in number. First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying getup (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff’s goods or services. Secondly, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff. Whether the public is aware of the plaintiff’s identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff. For example, if the public is accustomed to rely upon a particular brand name in purchasing goods of a particular description, it matters not at all that there is little or no public awareness of the identity of the proprietor of the brand name. Thirdly, he must demonstrate that he suffers or, in a quia timet action, that he is likely to suffer damage by reason of the erroneous belief engendered by the defendant’s misrepresentation that the source of the defendant’s goods or services is the same as the source of those offered by the plaintiff.

[page 227]

5.15 Over time, there has been development both in the nature of the ‘goodwill’ involved in passing off actions and in the range of conduct which will be restrained.10 5.16 In Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2),11 Deane J stated that: … the adaptation of the traditional doctrine of passing-off to meet new circumstances involving the deceptive or confusing use of names, descriptive terms or other indicia to persuade purchasers or customers to believe that goods or services have an association, quality or endorsement which belongs or would belong to goods or services of, or associated with, another or others: see, for example, Warnink v J Townend & Sons (Hull) Ltd; Henderson v Radio Corp Pty Ltd.

5.17 It appears that the element of goodwill in passing off has now developed to the stage that it can capture almost any conduct or form of misrepresentation between the plaintiff and the defendant. 5.18 In addition to the main category of cases where the misrepresentation is in relation to the mistaken identity of the good of the plaintiff, the following categories have also been accepted in passing off cases: The goods or services provided by the defendant are misrepresented as sharing an exclusive quality with that of the plaintiff.12 The goods or services provided by the defendant misrepresent a character or person associated with the plaintiff.13 The goods or services provided by the defendant are misrepresented as being sponsored or approved by the plaintiff.14 The business of the defendant is misrepresented as being connected in some way to that of the plaintiff’s business.15

The elements of passing off First element of passing off: goodwill or reputation

5.19 The first requisite element of the tort of passing off is that the plaintiff has goodwill or reputation. In the past, there have been attempts to distinguish between goodwill and reputation. 5.20 However, to draw a distinction between goodwill and reputation appears to only complicate matters. In terms of passing off, goodwill has the same meaning as reputation.16 [page 228] 5.21 In ConAgra Inc v McCain Foods (Aust) Pty Ltd,17 Lockhart J endorsed the often cited description of goodwill as stated by Lord Macnaghten in IRC v Muller & Co’s Margarine Ltd:18 It [goodwill] is a thing very easy to describe, very difficult to define. It is the benefit and advantage of the good name, reputation and connection of a business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old-established business from a new business at its first start. The goodwill of a business must emanate from a particular centre or source. However widely extended or diffused its influence may be, goodwill is worth nothing unless it has power of attraction sufficient to bring customers home to the source from which it emanates. Goodwill is composed of a variety of elements. It differs in its composition in different trades and in different businesses in the same trade. One element may preponderate here and another element there. To analyse goodwill and split it up into its component parts, to pare it down as the commissioners desire to do until nothing is left but a dry residuum ingrained in the actual place where the business is carried on while everything else is in the air, seems to me to be as useful for practical purposes as it would be to resolve the human body into the various substances of which it is said to be composed. The goodwill of a business is one whole, and in a case like this it must be dealt with as such. For my part, I think that if there is one attribute common to all cases of goodwill it is the attribute of locality. For goodwill has no independent existence. It cannot subsist by itself. It must be attached to a business. Destroy the business, and the goodwill perishes with it, though elements remain which may perhaps be gathered up and be revived again. No doubt, where the reputation of a business is very widely spread or where it is the article produced rather than the producer of the article that has won popular favour, it may be difficult to localise goodwill.

5.22

In terms of goodwill, it is not necessary that a plaintiff has a place of

business or a business presence in the relevant jurisdiction, nor is it necessary that the plaintiff’s goods are sold in the jurisdiction.19 5.23 Moreover, it is not necessary that a plaintiff ever had a place of business or a business presence in the relevant jurisdiction, nor is it necessary that the plaintiff’s goods were ever sold in the jurisdiction.20 5.24 This was made clear in the following decision of ConAgra Inc v McCain Foods (Aust) Pty Ltd,21 which is considered as the leading authority on this particular issue of passing off. [page 229]

ConAgra Inc v McCain Foods (Aust) Pty Ltd (McCain Pizza/McCain’s Healthy Choice case) (1992) 106 ALR 465 In this case, ConAgra Inc (ConAgra) manufactured and marketed in the United States frozen foods under a number of brand names including the name ‘Healthy Choice’. The Healthy Choice food products were sold in the United States, but not in Australia. In the United States, sales of the Healthy Choice products in a period of two years and three months totalled $US458,210,000. At the time of the hearing, the brand had 7.6 per cent of the overall frozen food, dinner and entrée market in the United States. McCain Foods (Aust) Pty Ltd (McCain) commenced selling in Australia a similar range of food products under the name ‘Healthy Choice’. The packaging of the McCain ‘Healthy Choice’ food products was similar to that of ConAgra.

ConAgra commenced proceedings against McCain for misleading conduct (and false or misleading representations) under former ss 52 and 53(c) of the TPA and passing off. At trial, Hill J found in favour of ConAgra on its claim under former ss 52 and 53(c) of the TPA, but denied the passing off claim on the basis that passing off required the conduct of a business to be within the relevant jurisdiction to the claim. ConAgra appealed. The Full Court (Lockhart, Gummow and French J in separate judgments) dismissed the appeal. Their Honours held: ConAgra failed to prove that there were a substantial proportion of persons in Australia who were aware of their Healthy Choice food product. As such, ConAgra claim for passing off failed; ConAgra’s failed to prove that a sufficiently substantial number of people in Australia were aware of the ConAgra’s product and to establish a relevant reputation in Australia. Hence, there was no contravention of former s 52 of the TPA or passing off; and In order to maintain a passing off action, it is not necessary that a plaintiff has a place of business or a business presence within the jurisdiction. Furthermore, is it not necessary that the plaintiff’s goods are sold within that jurisdiction. All that is required is that the plaintiff’s goods have a sufficient degree of reputation in the jurisdiction to establish that there is a likelihood of deception among consumers and potential consumers and of damage to the plaintiff’s reputation: at 505.

5.25

Hence, a plaintiff’s goodwill or reputation may extend well beyond

the geographic area(s) of where the plaintiff’s place of business is, its business presence or where the plaintiff’s goods are sold. [page 230] 5.26 Goodwill and reputation can easily extend beyond the relevant geographic area(s) of a business and its trade. Advertising, ‘word of mouth’ and other forms of communication, facilitate this expansion. 5.27 For the purposes of passing off, all that is required is that the plaintiff’s reputation or goodwill must be present in the area where the defendant is making the representation to the class of persons.22 5.28 The level of reputation or goodwill that is required to be present in the relevant area is determined by whether there is a ‘sufficiently substantial’ number of persons aware of the business or goods.23 5.29 In ConAgra Inc v McCain Foods (Aust) Pty Ltd,24 French J provided the following guidance as to how one determines whether the number of person concerned is sufficiently substantial: If the similarity complained of is commercially irrelevant having regard to the number of people who know of it, then it can be concluded that the use of the name and/or get-up complained of is not misleading or deceptive.

5.30 The above test by French J in ConAgra v McCain Foods (Aust) Pty Ltd has been described as a test of ‘commercial relevance’.25 What is commercial relevance will depend on the facts of the case and in particular the nature of the business. 5.31 Whether a plaintiff has developed reputation or goodwill is a question of fact.26 For example, in Cadbury-Schweppes Pty Ltd v Pub Squash Co Pty Ltd,27 Lord Scarman framed the question of fact as follows:

As always in a ‘passing off’ action the ultimately critical question was one of fact. The critical question in this case proved to be: were customers, or potential customers, led by the similarities in the get-up and advertising of the two products into believing that Pub Squash was the Cadbury Schweppes product? Or, if no deception be proved, was there a real probability of deception?

5.32 The relevant date that the reputation or goodwill of the plaintiff is to be determined by the court is the date of the defendant’s conduct, and not the date of the commencement of the proceedings.28 [page 231] 5.33 At the time of the defendant’s conduct, it is irrelevant that the public does not know the identity or name of the plaintiff.29 It is sufficient that the public associate the goodwill or reputation with the plaintiff’s good or indicia.30 5.34 For example, in Powell v Birmingham Vinegar Brewery Co Ltd,31 Lord Halsbury provided the following explanation as to why it is not necessary for the public to know the actual identity of the plaintiff: It may be true that the customer does not know or care who the manufacturer is, but it is a particular manufacture that he desires. He want ‘Yorkshire Relish’ to which he has been accustomed, and which, it is not denied, has been made exclusively by the plaintiff for a great number of years. This thing which is put into the hands of the intended customer is not ‘Yorkshire Relish’ in that sense. It is not the original manufacture. It is not made by the person who invented it. Under the circumstances, it is a fraud upon the person who purchases to give him the one thing in place of the other.

5.35 The reputation or goodwill of the plaintiff does not have to be exclusive to the plaintiff. A plaintiff can be one of a number of persons who share the reputation or goodwill in a business or good. 5.36

In circumstances where the plaintiff shares the reputation or goodwill

with others, each person may independently take action to protect their interests, but generally cannot sue each other.32 5.37 In Habib Bank Ltd v Habib Bank AG Zurich,33 Oliver LJ stated that in a passing off case when two persons have a reputation or goodwill in the same or similar names that are concurrently being used: … neither of them can be said to be guilty of any misrepresentation. Each represents nothing but the truth, that a particular name or mark is associated with his goods or business.

5.38 A plaintiff’s reputation or goodwill may still remain even after the plaintiff’s business or trade ceases.34 However, it is important that the plaintiff demonstrates that it intends for the reputation to remain.35 5.39 A mere intention not to abandon the reputation or goodwill is likely to be insufficient.36 A plaintiff who cannot show an intention for the reputation to remain will not be able to show probable damage.37 [page 232] 5.40 A plaintiff’s reputation or goodwill is generally established in court by evidence of sales or advertising.38 Expert and/or consumer survey evidence are also useful in establishing reputation or goodwill.39 5.41 The following case of Twentieth Century Fox Film Corporation v South Australian Brewing Co Ltd,40 is an example where evidence used in the defence was not persuasive enough to convince the court that no harm to reputation or goodwill will occur.

Twentieth Century Fox Film Corporation v South Australian Brewing Co Ltd (Duff Beer case)

(1996) 66 FCR 451 In this case, South Australian Brewing Co Ltd (SA Brewing) introduced a new range of beer named ‘Duff Beer’. Twentieth Century Fox Film Corporation (Twentieth Century) alleged that SA Brewing was in contravention of former 52 of the TPA and passing off their product by attempting to exploit the reputation in relation to ‘The Simpsons’ television series through its adopted product ‘Duff Beer’. Submitted evidence on behalf of SA Brewing showed that there were 134 episodes of ‘The Simpsons’ shown to date of the hearing and that each of those episodes lasted for 22 minutes. Two of those episodes, namely, ‘Selma’s Choice’ and ‘Duffless’ contain repeated references to ‘Duff Beer’. Of the remaining 132 episodes which constituted a total of 2904 minutes, only 6 minutes and 40 seconds contained references to ‘Duff Beer’. Furthermore, the words ‘The Simpsons’ were not referred to on the yellow can, and the design, colour and get-up of the can was said to be quite different from that featured in The Simpsons. Nor did the image of any Simpsons character appear on the can. Tamberlin J held that SA Brewing contravened former s 52 of the TPA and passing off. Tamberlin J believed that there was significant merchandise sold in Australia in relation to The Simpsons and the fact that there were repeated episodes of the series for over five years, was sufficient to create an association between the SA Brewing product and The Simpsons. With respect to passing off, Tamberlin J said that the goodwill of The Simpsons could be damaged as the merchandising rights and licensing could be adversely affected, particularly in light of the policy in relation to alcohol promotion: at 49.

Second element of passing off: misrepresentation

5.42 The second requisite element of the tort of passing off is that the defendant misrepresented to the public that its business or product was associated with the plaintiff. [page 233] 5.43 The misrepresentation element in passing off is largely co-extensive with misleading or deceptive conduct under s 18 of the ACL. As such, the principles in each area are often applied interchangeably.41 5.44 In Philips Electronics NV v Remington Products Australia Pty Ltd,42 Lehane J made the following comments about the overlap between a misrepresentation in passing off and misleading or deceptive conduct: In any case, it is of the essence of passing off that there be a misrepresentation as to the trade origin of the defendant’s goods or as to an association between the defendant and the plaintiff: ConAgra Inc at FCR 308, 340, 356, 378. That being so, it is not easy to imagine circumstances in which, if there is no misleading or deceptive conduct on the part of a defendant, the defendant will nevertheless be found to have made a relevant misrepresentation for the purpose of a claim in passing off.

5.45 The threshold test of misleading or deceptive conduct in s 18 of the ACL, of leading a person into error, or is likely to do so, is applicable in the context of a misrepresentation in passing off.43 5.46 Hence, as similar to s 18 of the ACL, conduct which merely creates confusion or mere wonderment by itself is generally insufficient to constitute a misrepresentation for the purposes of passing off.44 5.47 Whether the conduct of a defendant constitutes a misrepresentation for the purposes of passing off is a question of fact, which must take into consideration all of the relevant circumstances.45 5.48

A misrepresentation is not determined by examining the individual

aspects of the defendant’s conduct in isolation. A misrepresentation is determined by the overall impression of all relevant circumstances.46 5.49 The plaintiff being led into error, or is likely to do so, must be caused by the misrepresentation of the defendant and not by other intervening circumstances or conduct by third parties.47 5.50 A misrepresentation in passing off does not require proof of fraud by the defendant,48 but it must be ‘calculated to deceive’, or ‘calculated to be likely to deceive’.49 [page 234] 5.51 This does not mean that there is a requirement that there be an actual, subjective intention to mislead or deceive.50 All that is required is that the conduct is likely to have that outcome.51 5.52 However, evidence of an intention to mislead or deceive may persuade a judge more readily to infer or conclude that a defendant has engaged in a misrepresentation in passing off.52

Campomar Sociedad, Limitada v Nike International Ltd (2000) 169 ALR 677 In this case, Campomar Sociedad, Limitada (Campomar) manufactured and marketed cosmetics and toiletries in overseas countries, not including Australia. Campomar applied for and obtained two separate trade mark registrations for the word ‘Nike’. The first registration was to

be used for cosmetic products and the second registration was to be used for bathroom and laundry products. Nike International Ltd (Nike Ltd) and others were subsidiaries of a United States company which manufactured and marketed sporting footwear and clothing outside Australia. A predecessor to Nike Ltd applied for and obtained registration for the word ‘Nike’ for athletic shoes and athletic uniforms. Campomar commenced selling their products in Australia using the word ‘Nike’. One of the products had a get-up featuring the expression ‘Nike Sport Fragrance’. The ‘Nike Sport Fragrance’ product was placed in the same area of pharmacies with other sports fragrances. This was at a time when Nike Ltd and others had a strong reputation in Australia for sporting clothing and athletic footwear. Nike Ltd and others commenced proceedings against Campomar seeking to expunge the registrations and alleging contraventions of former s 52 of the TPA and passing off. At trial, Sheppard J held that Campomar contravened former s 52 of the TPA and engaged in passing off. Campomar appealed. The majority of the Full Federal Court dismissed the appeal. Campomar appealed to the High Court. The High Court (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ in an unanimous judgment) allowed the appeal in part and held that the tort of passing off (at [110]) was established and contravention of former s 52 of the TPA. In relation to former s 52 of the TPA contravention, their Honours said (at [107]) that: … looking at the matter objectively, there was nothing capricious or unreasonable or unpredictable in Sheppard J’s conclusion that the placing of the ‘Nike Sport Fragrance’ product in the same area of pharmacies with other sports fragrances was likely to mislead or deceive members of the public into thinking that the ‘Nike Sport Fragrance’ product was in some way promoted or distributed by Nike International itself or with its consent and approval.

[page 235]

Third element of passing off: damage 5.53 The third requisite element of the tort of passing off is that the defendant’s misrepresentation causes actual damage to the business or goodwill of the plaintiff. 5.54 The damage to the business or goodwill of the plaintiff is commonly in the form of loss of customers or potential customers, because those lost customers are now buying the goods of the defendant.53 5.55 However, claims for damages in passing off are not limited to direct loss of customers or loss of potential customers switching from the plaintiff to the defendant due to a misrepresentation made. 5.56 Claims in damages also extend to loss of potential customers by dilution in goodwill because the misrepresentation has created an injurious association with the goods of the defendant.54 5.57 In ConAgra Inc v McCain Foods (Aust) Pty Ltd,55 Gummow J provides the following examples and explanation of the dilution of goodwill due to injurious association between the plaintiff and defendant: Three examples will suffice. Harrods Ltd v R Harrod Ltd (1923) 41 RPC 74 concerned a complaint by the London department store that its name was being used for a moneylending business; Totalizator Agency Board v Turf News Pty Ltd [1967] VR 605 concerned a complaint as to a false connection between a government established betting service and a tipster’s newspaper. In Annabel’s (Berkeley Square) Ltd v G Schock [1972] RPC 838, the famous London nightclub complained of the use of its name for what the defendant, perhaps euphemistically, described as an ‘escort service’. An earlier example is provided by Eastman Photographic Materials Co Ltd v John Griffiths Cycle Corp Ltd (1898) 15 RPC 105 where Romer J held it would injure the plaintiff, which had used

‘Kodak’ for its cameras, if the defendant were not restrained from using ‘Kodak’ to identify their bicycles. This case has been used in the United States as a foundation for the trade mark ‘dilution’ doctrine; see Hogan v Pacific Dunlop Ltd (1988) 83 ALR 403 at 428–9; 12 IPR 225. Indeed, the ‘franchising’ cases display characteristics in common with those of the above authorities; see Shanahan, ‘Image Filching in Australia: The Legal Provenance and Aftermath of the “Crocodile Dundee” Decisions’ (1991) 81 TMR 351 at 355–7. It was of cases such as those I have described that in Yale Electric Corp v Robertson 26 F 2d 972 (1928), Learned Hand J said, at 974: ‘If another uses [the plaintiff’s mark], he borrows the owner’s reputation, whose quality no longer lies within his own control. This is an injury, even though the borrower does not tarnish it, or divert any sales by its use; for a reputation, like a face, is the symbol of its possessor and creator, and another can use it only as a mask. And so it has come to be recognised that, unless the borrower’s use is so foreign to the owner’s as to insure against any identification of the two, it is unlawful.’

[page 236] 5.58 The injuries against which the goodwill is protected in a passing off action are not limited to diversion of sales by any representations that the goods or services of the defendant are those of the plaintiff’s.56

Children’s Television Workshop Inc v Woolworths (NSW) Ltd (Muppet/Sesame Street case) (1980) 1B IPR 609 In this case, Children’s Television Workshop Inc (CTW) had an exclusive licence from Muppets Inc to use the Muppet characters in the program ‘Sesame Street’. Sesame Street was a well-known television series which had been running twice daily and for five days a week on ABC television continuously for at least ten years. CTW also had the exclusive right in New South Wales to grant licences for the manufacturing, distribution, advertising and sale of any goods utilising the Muppet characters.

Woolworths New South Wales Ltd (Woolworths) was selling three dolls made in Korea, which represented the Muppet characters ‘Big Bird’, ‘Oscar the Grouch’ and ‘The Cookie Monster’. Woolworths sold these dolls in New South Wales without the authorisation or licence from CTW. CTW sought an injunction. Helsham CJ in Eq (at 618) granted an injunction to restrain Woolworths from continuing to sell the three dolls in New South Wales. According to his Honour, it is the threat, and not the proof, of damage which is the basis of the tort of passing off. Therefore, the tort is established when the legitimate business interests of the plaintiffs are jeopardised by the actions of the defendants, without proof of special damage or of an adverse effect on reputation, and consequent damage to business reputation, resulting from inferior goods being on the market. In particular, Helsham CJ said (at 617): … it has been established here, that there is a relevant business nexus between the activities of the plaintiffs and those of the defendants, such that the public will, by the very sale of the goods in question, wrongly believe that this activity is connected with the business of the plaintiffs, then I think it must follow that the legitimate business interests of the plaintiffs are jeopardised. Actual damage need not be proved; in fact in many passing off cases actual damage is never proved. It is the threat of damage to the complainant’s business by reason of the public confusion or deception that is the basis of the tort. The plaintiffs here make their money (in this area) from a business which is based upon sales of character merchandise to the public; that is what a licence to make and sell these character representations is all about; it is clear that the merchandise covered by licence has included and will include plush toys. If toys, mistaken for the ones that form the end of the plaintiffs’ business chain, are being sold as and for those that have the imprimatur of the plaintiffs, as they are, then the plaintiffs’ business must suffer in some way. I do not believe that the law requires the plaintiffs to point to a particular loss, to quantify a

[page 237] diminution in licence royalties, to demonstrate that they cannot negotiate a licence on such favourable terms as they otherwise might. They have lost the benefit of having Woolworths’ goods sold under licence to them, and there must be some benefit to be

derived from sales under licence. I do not think that evidence need be called to prove an adverse effect upon reputation, and consequent damage to business, resulting from goods of inferior quality being on the market, or from ‘lousy imitations’. The presence of these goods in the same marketplace as those emanating from the plaintiffs’ business, and the deception as to their authenticity, leads to a proper inference that the business of the plaintiffs is bound to be adversely affected in some way. It is true that neither of the first two plaintiffs can point to a local goodwill in the same way as a local licensee could probably do. But the first plaintiff, at least, has a business reputation, and the activities of the defendants are calculated to appropriate that business reputation by deception for their own pecuniary benefit.

5.59 A plaintiff may also seek damages for the loss of opportunity to exploit the existing goodwill. This type of damage is usually involved in cases where there is character merchandising of a famous person. 5.60 One example of this type of damage is the loss of opportunity for the plaintiff to charge for sponsorship, affiliation, association, endorsement or approval of the defendant’s good.57 5.61 Another example of this type of damage is the loss of opportunity for the plaintiff to grow its business in the location or ‘field of activity’ of that of the defendant.58 5.62 The assessment of damages in passing off cases is generally based on compensating the plaintiff for the loss that has flown directly from the conduct of the defendant.59 5.63 In determining that loss, it is necessary for the court to avoid ‘doubling up’, where there are several grounds of claim and all of which contributed to the overall loss of reputation or goodwill.60 5.64 General damages for loss of profits can be claimed, even though the amount is not capable of precise proof and calculation, but which could be expected to result in the normal course of things.61

5.65 However, where the claim for general damages is for loss of profits, the quantum of loss should be proved with as much certainty as is reasonable having regard to all the circumstances.62 [page 238] 5.66 In Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd,63 Hayne J provided the following comments on what is required in terms of certainty in the calculation of loss: Placer undoubtedly bore the burden of proving not only that it had suffered damage as a result of Thiess Contractors’ breach of contract, but also the amount of the loss it had sustained. It goes without saying that it had to prove these matters on the balance of probabilities and with as much precision as the subject matter reasonably permitted. (The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 80 and 83–84 per Mason CJ and Dawson J, 138 per Toohey J, 153 per Gaudron J, 161 per McHugh J; Ratcliffe v Evans [1892] 2 QB 524). It may be that, in at least some cases, it is necessary or desirable to distinguish between a case where a plaintiff cannot adduce precise evidence of what has been lost and a case where, although apparently able to do so, the plaintiff has not adduced such evidence. In the former kind of case it may be that estimation, if not guesswork, may be necessary in assessing the damages to be allowed. (Fink v Fink (1946) 74 CLR 127; McRae v Commonwealth Disposals Commission (1951) 84 CLR 377; Jones v Schiffmann (1971) 124 CLR 303; Pennant Hills Restaurants Pty Ltd v Barrell Insurances Pty Ltd (1981) 145 CLR 625; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 83 per Mason CJ and Dawson J, 138 per Toohey J). References to mere difficulty in estimating damages not relieving a court from the responsibility of estimating them as best it can (Fink v Fink (1946) 74 CLR 127 at 143 per Dixon and McTiernan JJ; McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 at 411–412 per Dixon and Fullagar JJ; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 83 per Mason CJ and Dawson J) may find their most apt application in cases of the former rather than the latter kind.

5.67 It is clear that in assessing damages the court must do its best to quantify the loss suffered by the plaintiff by the defendant’s conduct, even if some degree of speculation and guesswork is involved.64 5.68

While not universally applicable in assessing all claims for damages in

passing off actions, the following six step methodology by Gordon J in GM Holden Ltd v Paine,65 may be a useful guide: 1.

Examine the number of sales made by the respondent.

2.

Assume the respondent was trying to capture sales from the plaintiff.

3.

Assume that the number of sales made by the respondent is equal to the number of sales lost by the plaintiff.

4.

Discount to reflect the fact that not all sales made by the respondent can be considered sales lost by the plaintiff.

5.

Apply any further discount necessary in the circumstances of the case.

6.

Multiply the resulting quantity by the plaintiff’s net profit. [page 239]

5.69 Where a defendant has a ‘conscious and contumelious’ disregard for the rights of the plaintiff, the court may award exemplary damages in passing off cases to deter repeated conduct.66

Passing off v s 18 of the ACL 5.70 There is an overlap between causes of action arising under s 18 of the ACL and the tort of passing off.67 A number of requisite elements of a claim in passing off cases are similar in s 18 cases.68 5.71 In Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd,69 Stephen J made the following comments about the relationship between passing off and former s 52 of the TPA: In determining the meaning of ‘misleading or deceptive’ in s 52(1) and in applying it to

particular circumstances the law which has developed around the tort of passing off, founded as that tort is upon the protection of the plaintiff’s intangible property rights, may not always provide any safe guide. However, the long experience of the courts in that field should not be disregarded, some principles which have been developed appear equally applicable to s 52(1).

5.72 However, there are areas of operation where the two laws do not coincide.70 Accordingly, there are cases where a contravention has been established: under both s 18 of the ACL and under the tort of passing off;71 under s 18 of the ACL, but not under the tort of passing off;72 and not under s 18 of the ACL, but under the tort of passing off (although this category is not common).73 5.73 The causes of action under s 18 of the ACL and under the tort law of passing off have distinct origins and the purposes and interests that both bodies of law primarily protect are contrasting.74 [page 240] 5.74 The following is a summary of some of the advantages of pursuing a claim for misleading or deceptive conduct under s 18 of the ACL, instead of under the tort of passing off: passing off merely protects a right of property in business or goodwill, whereas s 18 of the ACL is concerned with consumer protection and public interest;75 passing off is narrower in the scope of protection, whereas s 18 provides wider protection;76 passing off is restricted by common law principles and remedies, whereas s 18 is not;77 passing off requires that there is the existence of a business or

goodwill, whereas s 18 does not generally require an establishment of a business or goodwill;78 whether or not there is a requirement for some exclusive reputation as an element in passing off, there is generally no such requirement in relation to s 18.79 However, the presence or absence of reputation can also play an important role in determining whether consumers are likely to be misled or deceived for the purposes of s 18;80 and passing off requires that there is likelihood of injury to the plaintiff’s business, whereas s 18 does not require any proof of loss or damage. 5.75 The following is a summary of some of the disadvantages of pursuing a claim for misleading or deceptive conduct under s 18 of the ACL, instead of under the tort of passing off: passing off, if established, allows for the remedy of account of profits, whereas no such remedy is available under the ACL for a contravention of s 18;81 and passing off does not require conduct to be engaged in trade or commerce, whereas s 18 does.82 5.76 In Equity Access Pty Ltd v Westpac Banking Corporation,83 Hill J made the following comments in relation to the broader scope of former s 52 of the TPA in comparison with the tort of passing off: Nevertheless, it is necessary to keep in mind that the proceedings under the Act are in aid of the protection of the public and that the ambit of the proceedings under the Act will

[page 241] not be confined to reference to the prior learning on the tort of passing off, concerned, as that tort is, with the protection of the proprietary rights of traders. Proceedings based upon a contravention of s 52 or s 53 of the Act are only confined by reference to the very words of the

sections themselves. This is not, however, to say that the principles applicable in a case such as the present to the tort of passing off are irrelevant. The scope for the operation of s 52 will thus be broader than that involved in the tort of passing off so that in a case such as the present where the claim is for the protection of the reputation in a name against the use of the name by another, failure to succeed under s 52 or s 53 will invariably mean that proceedings for passing off would likewise fail: Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 206; Telmak Teleproducts (Aust) Pty Ltd v Coles Myer Ltd (1989) 15 IPR 362 at 381; 89 ALR 48 at 67.

Tort of deceit What is the tort of deceit? 5.77 The tort of deceit, also known as fraudulent misrepresentation, is an intentional tort. The modern origins of the tort dates from Pasley v Freeman,84 where it was recognised as an independent action in law. 5.78 Deceit is where a person knowingly or recklessly makes a false representation of fact, with the intention that another person will rely on it to his or her detriment and suffers loss.85 5.79 The modern origins and application of the tort of deceit and its influential relationship with the contract law of false warranties have been described by Professor J Fleming as follows:86 Deceit, as an independent and general cause of action in tort, is of relatively novel origin, although traces of it are encountered as early as the 13th century when a writ of that name became available against misuse of legal procedure for the purpose of swindling others. Later this remedy expanded and played a modest part in developing the incipient law of contract, principally in connection with false warranties. Its scope, however, remained confined to direct transactions between the parties until in 1789, in Pasley, it was freed from this link with contractual relations and held to lie whenever one person, by a knowingly false statement, intentionally induced another to act upon it to his detriment. There, the plaintiff had made an inquiry from the defendant concerning the financial standing of a merchant with whom he was negotiating for the sale of 16 bags of cochineal and received the assurance that he could safely extend credit, although the defendant well knew the party to be insolvent. Despite the want of any contractual bargain with the plaintiff, the defendant was held to answer for the loss in an

action for deceit. At about the same time, the remedy for breach of warranty was absorbed by the action of assumpsit and henceforth regarded as purely contractual. Thereafter, the two theories of misrepresentation began to diverge and are now quite distinct. The tort

[page 242] action for deceit requires proof of fraudulent intent, while breach of contractual warranty became independent of any intention to mislead or other fault.

5.80 In the late 19th century, significant developments of the tort of deceit arose from the increased use of companies as suitable vehicles for the conduct of commercial activity.87 5.81 The tort of deceit commonly applies to business and commercial transactions. However, it may, in limited circumstances, operate in a domestic context,88 or in relation to personal injuries or harm to property.89 5.82 The following case of Magill v Magill,90 is an example of a failed attempt to apply the tort of deceit to a domestic relationship, as not all of the elements of the tort were established.

Magill v Magill (2006) 231 ALR 277 In this case, Mr Magill and Mrs Magill were separated after four years of marriage and divorced after ten years of marriage. They had three children, who stayed mostly with Mrs Magill. After the separation Mr Magill made payments in accordance with the Child Support (Assessment) Act 1989 (Cth) (Child Support Act) in respect of all three children for around seven years. DNA testing established that Mr Magill was not the biological father of

the second and the third child. Pursuant to the Child Support Act, Mr Magill became entitled to an adjustment of child support payments to allow for past overpayments and an extinguishment of arrears. Mr Magill commenced proceedings against Mrs Magill based on the tort of deceit. He claimed damages for personal injury in the form of anxiety and depression as a result of the wife’s fraudulent misrepresentations. He also claimed financial loss, including loss of earning capacity by reason of his mental or psychological problems, and loss related to the time he had spent with, and money he had spent on, the children under the mistaken belief that he was their father. He also claimed exemplary damages. The trial judge found that Mrs Magill’s presentation of the birth registration forms soon after the birth of the second and the third child to Mr Magill constituted the representation that he was the father. Mrs Magill appealed. The Victorian Court of Appeal reversed the decision on the ground that Mr Magill had failed to establish all of the the essential elements of the tort of deceit. [page 243] Mr Magill appealed seeking the restoration of the original award of damages. Mrs Magill argued that the action was misconceived and that all elements of the tort of deceit had not been made out. Mrs Magill also argued that the tort of deceit did not extend to claims for damages arising from misrepresentations as to the paternity of children born during the course of a marriage. The High Court (Gleeson CJ and Heydon J in separate judgments, Gummow, Kirby and Crennan JJ in joint judgment) dismissed the appeal. The High Court held that all of the elements of the tort of deceit were not established. This was because unless it can be said that there was a legal or

equitable duty to disclose the truth, Mrs Magill’s silence did not amount to a representation. There was currently no recognised legal or equitable obligation, or duty of care, on a spouse to disclose an extra-marital sexual relationship to the other spouse during the course of a marriage. Furthermore, Gummow, Kirby, Crennan JJ noted (at [87]–[88]) that false representations concerning an extra-marital sexual relationship were not actionable in deceit. The relevant legislation facilitated accurate determination of paternity and permitted the recovery of amounts wrongly paid for child support.

The elements of the tort of deceit 5.83 The requisite elements of the tort of deceit were stated by Viscount Maugham in Bradford Third Equitable Benefit Building Society v Borders,91 as follows: First, there must be a representation of fact made by words, or, it may be, by conduct. The phrase will include a case where the defendant has manifestly approved and adopted a representation made by some third person. On the other hand, mere silence, however morally wrong, will not support an action of deceit. Secondly, the representation must be made with a knowledge that it is false. It must be wilfully false, or at least made in the absence of any genuine belief that it is true. Thirdly, it must be made with the intention that it should be acted upon by the plaintiff, or by a class of persons which will include the plaintiff, in the manner which resulted in damage to him. If, however, fraud be established, it is immaterial that there was no intention to cheat or injure the person to whom the false statement was made. Fourthly, it must be proved that the plaintiff has acted upon the false statement and has sustained damage by so doing.

5.84 The reference to ‘mere silence’ in Viscount Maugham’s above statement contemplates, by way of contrast, the possibility of a case where there is a legal or equitable duty to disclose the true facts.92 5.85 In Magill v Magill,93 Gummow, Kirby and Crennan JJ characterised the five requisite elements of the tort of deceit as the following:

1.

The defendant made a false representation.94 [page 244]

2.

The defendant made the representation with the knowledge that it was false, or that the defendant was reckless or careless as to whether the representation was false or not.95

3.

The defendant made the representation with the intention that it be relied upon by the plaintiff.96

4.

The plaintiff acted in reliance on the false representation.97

5.

The plaintiff suffered damage which was caused by reliance on the false representation.98

5.86 Generally, the elements of the tort have been found to exist in cases which concern pecuniary loss flowing from a false inducement and the need to satisfy each element has always been strictly enforced.99 5.87 A brief discussion of each of the five requisite elements of the tort of deceit as described by Gummow, Kirby and Crennan JJ in Magill v Magill,100 follows below.

False representation 5.88 A false representation made by a defendant must be a representation of fact. The courts will apply an objective test to determine whether there has been a false representation of fact.101 5.89 A prediction, forecast or future representation does not amount to a false representation of fact, nor generally does a representation about the state of law or puffery constitute an action for deceit.

5.90 Similarly, a statement of opinion or a statement of intention generally does not amount to a representation of fact.102 However, in limited situations, a statement of opinion or intention may constitute deceit. 5.91 For example, a statement of intention may constitute a false representation of fact, if there was no intention to do (or refrain from doing) what was represented to do (or refrain from doing).103 5.92 Mere silence or failure to disclose the truth generally does not amount to a false representation of fact.104 However, half truths are more likely to amount to a false representation of fact.105 [page 245]

Knowledge or reckless or careless disregard 5.93 The false representation must be made by the defendant knowing that it was false, or reckless in the sense of not caring as to whether it was true or false.106 5.94 The relevant knowledge is the defendant’s actual knowledge, but in limited circumstances may include constructive knowledge in cases of wilful blindness. 5.95 A court will apply a subjective test to determine whether the defendant had knowledge of the false representation. The court will disregard any motive of the defendant.107 5.96 The defendant must have known that what he or she represented was not true. If the defendant honestly believed the representation was truthful, he or she will not have knowledge of the falsity.108

Intention 5.97 The false representation must be made by the defendant with the intention that it be relied upon by the plaintiff. It is not necessary for the false representation to be made directly to the plaintiff. 5.98 In Commercial Banking Co of Sydney Ltd v RH Brown & Co,109 Menzies J stated that it is not necessary for the false representation to be made directly to a particular person, but can be made to a group: A person who makes a false and fraudulent misrepresentation is only liable to the persons to whom it is made, ie to the persons whom it is intended should act upon it: Peek v Gurney (1873) LR 6 HL 377. It is not necessary for liability that the misrepresentation should be made directly, it can be made to one, to be passed on to another; it is not necessary that it should be made to a particular person; it can be made to a group to which the plaintiff belongs so that the plaintiff is one of those intended to be deceived. The representation must, however, in one way or another, be made to the plaintiff to induce him to act upon it.

Reliance 5.99 The plaintiff must have acted in reliance on the false representation made by the defendant. The question of whether a plaintiff has relied on a false representation made to him or her is a question of fact.110 5.100 A court will determine whether the plaintiff first understood the false representation and if so, whether he or she was induced to act in reliance on the false representation.111 [page 246] 5.101 The understanding of the false representation and the lack of knowledge of the plaintiff may, in certain circumstances, but will not necessarily, defeat a claim in an action of deceit.112

5.102 It is not a defence to argue that the plaintiff had an opportunity or means to take reasonable steps to check the accuracy of the representation before relying on it.113

Damage 5.103 The plaintiff must have suffered damage which was caused by reliance on the false representation made by the defendant. The damage must be a direct consequence of the false representation.114 5.104 The amount of damages are measured by the actual loss suffered by the plaintiff as a result of the false representation. This includes compensatory damages for consequential loss.115 5.105 Damages will also include losses in carrying on businesses flowing directly from the defendant’s fraudulent representation and any expenses incurred as a result of the deceit.116

Remedies available for the tort of deceit 5.106 The main remedy for an action in deceit is compensatory damages.117 However, aggravated118 and exemplary damages119 may also be available for an action in deceit.

Tort of deceit v s 18 of the ACL 5.107 The following is a summary of some of the advantages of pursuing a claim for misleading or deceptive conduct under s 18 of the ACL, instead of under tort of deceit: Section 18 applies to unintentional or honest conduct, whereas the

tort law of deceit applies only to intentional (or reckless disregard) conduct. Section 18 applies to a wide variety of conduct, including future representation, opinion, puffery, statements of law, whereas the tort of deceit does not generally apply to this conduct, but merely to representations of fact. Section 18 can be contravened without evidence that someone has actually been misled, whereas under the tort of deceit misstatements, inducement and reliance on the false representation are essential elements for an actionable case. [page 247] The use of exclusion clauses that attempt to contract out of liability are not effective under s 18, whereas these clauses are considered somewhat favourably under the tort of deceit. There are far more remedies available under the ACL, than there are available under the tort of deceit. In a claim for damages pursuant to s 236 of the ACL, the court is not bound to follow the principles as applied in the tort of deceit for awarding damages, although such principles may be useful for analogy purposes, and are often followed by the courts. 5.108 The following are the main disadvantages of pursuing a claim for misleading conduct under s 18 of the ACL, instead of under tort of deceit: tort of deceit, if established, allows for the remedy of account of profits, whereas no such remedy is available under the ACL for a contravention of s 18;120 and there is no need for the conduct to be in trade or commerce under

tort law of deceit, whereas this is a requirement under s 18 of the ACL. 5.109 The limitation period for an action under tort of deceit in New South Wales121 is the same as under s 236(2) of the ACL.

Negligent misstatements under tort law An actionable misrepresentation under tort law 5.110 In tort law, a person may owe a duty to take reasonable care not to provide to another person misleading information or advice that causes pure economic loss.122 5.111 Prior to the landmark decision of Hedley Byrne & Co Ltd v Heller & Partners Ltd,123 claims based on negligent misstatements for the recovery of pure economic loss were not available. 5.112 One of the main reasons for this was because negligent misstatements that caused pure economic loss had the potential to create colossal liability, if decided under the general principles of negligence.124 5.113 This was recognised by Cardozo CJ in the United States case of Ultramares Corp v Touche,125 where his Honour made the following often cited comment about negligent misstatements and indeterminate liability: If liability for negligence exists, a thoughtless slip or blunder, the failure to detect a theft or forgery beneath the cover of deceptive entries, may expose accountants to a liability in an indeterminate amount for an indeterminate time to an indeterminate class.

[page 248]

5.114 It is for this reason that negligent misstatements which cause pure economic loss are placed in a ‘special’ or ‘novel’ category separate from negligent acts or misstatements that cause physical injury. 5.115 Negligent misstatements that cause pure economic loss are governed by different principles in relation to establishing a duty of care to that of negligent acts or misstatements that cause physical loss. 5.116 However, the remaining requisite elements of breach of duty, causation126 and remoteness of damage127 for negligent misstatements are governed by the general statutory provisions and common law. 5.117 In Hedley Byrne & Co Ltd v Heller & Partners Ltd,128 the House of Lords did not provide a single test to determine whether a person has a duty to take reasonable care when making negligent misstatements. 5.118 Instead, the House of Lords identified a number of factors that may be relevant in determining whether or not a duty of care exists in this ‘special category’ of cases. 5.119 The House of Lords also made it clear that when determining whether or not a duty of care exists in this ‘special category’ of cases, different factors would have different weight in each case.

Hedley Byrne & Co Ltd v Heller & Partners Ltd [1963] 2 All ER 575 In this case, Hedley Byrne & Co Ltd (Hedley) was a firm of advertising agents. One of Hedley’s customers, Easipower Ltd (Easipower) placed a large advertising order with Hedley. The arrangement between Hedley and Easipower was that Hedley paid for the advertisements upfront, and at a later stage Easipower would reimburse Hedley for the cost.

Hedley checked the financial position of Easipower through their bank National Provincial Bank (Bank). Hedley asked the Bank to get a report from Easipower’s bank, Heller & Partners Ltd (Heller). Heller replied to the request by stating in a letter that Easipower was ‘considered good for its ordinary business engagements’. However, the letter was headed, ‘without responsibility on the part of this bank’. Hedley relied on this letter and placed and paid for the advertisements on behalf of Easipower. Easipower went into liquidation and failed to reimburse Hedley. Hedley lost £17,000 on advertising contracts. [page 249] Hedley sued Heller for negligence, claiming that the information was given negligently and was misleading. Heller argued there was no duty of care owed regarding the statements, and in any case liability was excluded. The House of Lords held that Heller was not liable in negligence, as their statement about Easipower’s financial ability was ‘without responsibility’. Despite this, the House of Lords found that the relationship between the parties was ‘sufficiently proximate’ as to create a duty of care. It was reasonable for Heller to have known that the information that they had given would likely have been relied upon for entering into a contract of some sort. This gave rise to a ‘special relationship’ in which Heller would have to take sufficient care in giving advice to avoid negligence liability. However, on the facts, the disclaimer was found to be sufficient enough to discharge any duty created by Heller’s actions. In particular, Lord Morris of Borth-Y-Gest said (at 502): I consider that it follows and that it should now be regarded as settled that if someone possessing special skill undertakes, quite irrespective of contract, to apply that skill for the

assistance of another person who relies upon such skill, a duty of care will arise. The fact that the service is to be given by means of or by the instrumentality of words can make no difference. Furthermore, if in a sphere in which a person is so placed that others could reasonably rely upon his judgment or his skill or upon his ability to make careful inquiry, a person takes it upon himself to give information or advice to, or allows his information or advice to be passed on to, another person who, as he knows or should know, will place reliance upon it, then a duty of care will arise.

5.120 Since Hedley Byrne & Co Ltd v Heller & Partners Ltd,129 the courts have attempted to develop an appropriate test to determine whether a person has a duty to take care when making negligent misstatements. 5.121 From the beginning, the courts realised that the test of reasonable foreseeability of pure economic loss was insufficient to determine whether a duty of care exists when making negligent misstatements. 5.122 Initially, the courts combined the test of reasonable foreseeability and the principle of proximity to determine the relationship between the defendant giving the information and plaintiff relying on it.130 5.123 For example, in Hill v Van Erp,131 Dawson J made the following comments in relation to the need for the principle of proximity to be combined with reasonable foreseeability in ‘special’ negligence cases: Thus the difference between the approach based on proximity and that suggested by Brennan J is, in my view, far less than the protracted debate on the subject would

[page 250] suggest, and is, perhaps, more a difference of labelling than one of substance. Reasonable foreseeability of harm does not, of itself, always give rise to a duty to take care. Something more is required according to the category of the case in question, and that something more is called proximity.

5.124 However, in Perre v Apand132 and Woolcock Street Investments Pty Ltd v CDG Pty Ltd,133 the proximity principle was considered no longer to be the appropriate test for ‘special’ negligence cases. 5.125 In Woolcock Street Investments Pty Ltd v CDG Pty Ltd,134 the High Court said that there was a need to use the vulnerability doctrine or some other control mechanism was required for ‘special’ negligence cases. 5.126 In Woolcock Street Investments Pty Ltd v CDG Pty Ltd,135 Gleeson CJ, Gummow, Hayne and Heydon JJ made the following comments about the vulnerability doctrine: Since Caltex Oil, and most notably in Perre v Apand Pty Ltd, the vulnerability of the plaintiff has emerged as an important requirement in cases where a duty of care to avoid economic loss has been held to have been owed. ‘Vulnerability’, in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather, ‘vulnerability’ is to be understood as a reference to the plaintiff’s inability to protect itself from the consequences of a defendant’s want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant. So, in Perre, the plaintiffs could do nothing to protect themselves from the economic consequences to them of the defendant’s negligence in sowing a crop which caused the quarantining of the plaintiffs’ land. In Hill v Van Erp, the intended beneficiary depended entirely upon the solicitor performing the client’s retainer properly and the beneficiary could do nothing to ensure that this was done. But in Esanda Finance Corp Ltd v Peat Marwick Hungerfords, the financier could itself have made inquiries about the financial position of the company to which it was to lend money, rather than depend upon the auditor’s certification of the accounts of the company. In other cases of pure economic loss (Bryan v Maloney is an example) reference has been made to notions of assumption of responsibility and known reliance. The negligent misstatement cases like Mutual Life & Citizens’ Assurance Co Ltd v Evatt and Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) can be seen as cases in which a central plank in the plaintiff’s allegation that the defendant owed it a duty of care is the contention that the defendant knew that the plaintiff would rely on the accuracy of the information the defendant provided. And it may be, as Professor Stapleton has suggested, that these cases, too, can be explained by reference to notions of vulnerability. (The reference in Caltex Oil to economic loss being ‘inherently likely’ can also be seen as consistent with the importance of notions of vulnerability.) It is not necessary in this

[page 251]

case, however, to attempt to identify or articulate the breadth of any general proposition about the importance of vulnerability. This case can be decided without doing so.

5.127 In Caltex Refineries (Qld) Pty Ltd v Stavar,136 Allsop P made the following comments about other tests, such as the two and three stage approaches, which have been rejected in other cases: … the required multi-factorial approach in assessing whether a duty of care arose in a novel circumstance or category. This approach recognises what has been said to be the use of foreseeability at a higher level of generality and the involvement of normative considerations of judgment and policy. This approach requires not only an assessment of foreseeability, but also attention to such considerations as control, vulnerability, assumption of responsibility and nearness or proximity. The High Court has rejected its previously enunciated general determinant of proximity, the two stage approach in Anns v Merton London Borough Council [1978] AC 728; [1977] 2 All ER 492 based on reasonable foreseeability, the expanded three stage approach in Caparo Industries Plc v Dickman [1990] 2 AC 605; (1990) 1 ACSR 636; [1990] 1 All ER 568 and any reformulation of the latter two, such as in Canada in Cooper v Hobart (2001) 206 DLR (4th) 193: see by way of example: Perre at [9]–[10] per Gleeson CJ, at [77]–[82], [83], [93] per McHugh J, at [330]–[333] per Hayne J; Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254; 176 ALR 411; [2000] HCA 61 at [101] (Modbury Triangle) per Hayne J; Crimmins at [272] per Hayne J; Brodie at [316] per Hayne J; Sullivan at [43]–[53] per Gleeson CJ, Gaudron, McHugh, Hayne and Callinan JJ; Tame at [250] per Hayne J; Vairy at [66] per Gummow J; Imbree at [40]–[41] per Gummow, Hayne and Kiefel JJ.

5.128 Despite the High Court’s preference for the vulnerability doctrine in ‘special’ cases of negligence, Allsop P in Caltex Refineries (Qld) Pty Ltd v Stavar,137 adopted the following approach to determine duty of care: This rejection of any particular formula or methodology or test the application of which will yield an answer to the question whether there exists in any given circumstance a duty of care, and if so, its scope or content, has been accompanied by the identification of an approach to be used to assist in drawing the conclusion whether in novel circumstances the law imputes a duty and, if so, in identifying its scope or content. If the circumstances fall within an accepted category of duty, little or no difficulty arises. If, however, the posited duty is a novel one, the proper approach is to undertake a close analysis of the facts bearing on the relationship between the plaintiff and the putative tortfeasor by references to the ‘salient features’ or factors affecting the appropriateness of imputing a legal duty to take reasonable care to avoid harm or injury.

5.129

Since Hedley Byrne & Co Ltd v Heller & Partners Ltd,138 the courts

have expanded on the possible ‘salient features’ or factors to determine whether a duty of care exists in this ‘special category’ of cases. [page 252] 5.130 In Caltex Refineries (Qld) Pty Ltd v Stavar,139 Allsop P provided the following useful summary of the ‘salient features’ or factors to determine liability ‘special’ cases of negligence: the foreseeability of harm; the nature of the harm alleged; the degree and nature of control able to be exercised by the defendant to avoid harm; the degree of vulnerability of the plaintiff to harm from the defendant’s conduct, including the capacity and reasonable expectation of a plaintiff to take steps to protect itself; the degree of reliance by the plaintiff upon the defendant; any assumption of responsibility by the defendant; the proximity or nearness in a physical, temporal or relational sense of the plaintiff to the defendant; the existence or otherwise of a category of relationship between the defendant and the plaintiff or a person closely connected with the plaintiff; the nature of the activity undertaken by the defendant; the nature or the degree of the hazard or danger liable to be caused by the defendant’s conduct or the activity or substance controlled by the defendant; knowledge (either actual or constructive) by the defendant that the conduct will cause harm to the plaintiff; any potential indeterminacy of liability;

the nature and consequences of any action that can be taken to avoid the harm to the plaintiff; the extent of imposition on the autonomy or freedom of individuals, including the right to pursue one’s own interests; the existence of conflicting duties arising from other principles of law or statute; consistency with the terms, scope and purpose of any statute relevant to the existence of a duty; and the desirability of, and in some circumstances, need for conformance and coherence in the structure and fabric of the common law. 5.131 The above list of ‘salient features’ is not an exhaustive or compulsory list of factors to be applied in every ‘special’ negligence case. Rather, it provides the court with:140 [A] non-exhaustive universe of considerations of the kind relevant to the evaluative task of imputation of the duty and the identification of its scope and content.

Remedies available for negligent misstatements under tort law 5.132 The main remedy for an action in negligent misstatements that cause pure economic loss is compensatory damages.141 However, aggravated and exemplary damages are also available in certain circumstances. [page 253]

Negligent misstatements under tort law v s 18 of the ACL

5.133 The following is a summary of some of the advantages of pursuing a claim for misleading conduct under s 18 of the ACL, instead of under tort law of negligent misstatements: Section 18 applies to a wide variety of conduct, whereas the tort law of negligent misstatements only applies where there is a duty of care. Exclusion clauses that attempt to ‘contract out’ of liability are not effective under s 18, whereas these clauses are considered favourably under the tort law of negligent misstatements. Section 18 can be contravened without evidence that someone has actually been misled, whereas under the tort law of negligent misstatements, inducement and reliance on the misrepresentation is an essential element for an actionable case. There are far more remedies available under the ACL than there are available under the tort law of negligent misstatements. Damages under s 236 are not limited (or capped), whereas damages under the tort law state legislation for economic loss are capped. In a damages claim pursuant to s 236, the court is not bound to follow tort law principles, although such principles may be useful for analogy purposes, and are often cited by the courts. 5.134 The main disadvantage of pursuing a claim for misleading conduct under s 18 of the ACL, instead of under tort law of negligent misstatements is that there is no need for the conduct to be in trade or commerce under tort law of negligent misstatements, whereas this is a requirement under s 18 of the ACL. 5.135 The limitation period for an action under tort law of negligent misstatements in New South Wales142 is the same as under s 236(2) of the ACL, namely six years running from the date on which the cause of action first accrues.

Misrepresentations under contract law An actionable misrepresentation under contract law 5.136 In contract law, a contract that contains all the requisite elements may not be legally enforceable due to the presence of some vitiating factor, such as a misrepresentation. 5.137 In contractual negotiations, statements will usually be made between the negotiating parties. Some of those statements will become terms of the contract and others may not. 5.138 Statements that are made during negotiations that are not terms of the contract (or a collateral contract) are representations. Representations are usually made to induce a party to enter into a contract. [page 254] 5.139 If a representation is false, the resulting contract remains extant, but it does provide the innocent party a right to rescind the contract if the requisite elements of misrepresentation are established.

The elements of misrepresentations in contract law 5.140 The four requisite elements of establishing a misrepresentation in contract law are: 1.

the representation must be of a fact;

2.

the representation must be false;

3.

the representation must be made by a party of the contract to another party of the contract, unless an ‘exception’ to the doctrine

of privity applies; and 4.

the plaintiff must have been induced to enter into the contract as a result of the misrepresentation by the defendant.

5.141 A brief discussion of each of the requisite elements of misrepresentation in contract law follows below.

Representation of fact 5.142 The representation must relate to a past or present fact. Any form of future statements, such as promises, predictions, and forecasts are generally not actionable as a contract law misrepresentation.143 5.143 Similarly, any form of puffery,144 statements of intention,145 statements in relation to law, and statements of opinion146 are generally not actionable as a contract law misrepresentation. 5.144 However, it is difficult to distinguish between a statement of fact and a statement of law. It is doubtful whether such a distinction is still relevant, especially in cases of fraud.

Representation must be false 5.145 The representation must be false. Any representation that is true or ‘substantially correct’ at the time the representation was made is not actionable as a contract law misrepresentation.147 5.146 Similarly, silence is generally not actionable as a contract law misrepresentation,148 unless there is a fiduciary relationship between the parties or the contract between them is uberrimae fidei. [page 255]

5.147 Silence is also actionable as a contract law misrepresentation where there is a duty on a party to inform the other of a change in circumstance where a statement which was once true when made, later becomes false.149 5.148 A ‘half truth’ may be considered to be a representation that is false if material facts have been withheld which creates a false impression in the mind of the plaintiff.150

Representation must be made by a party to the contract to another party to the contract 5.149 The representation must be made by a party to the contract to another party to the contract, unless an ‘exception’ to the doctrine of privity applies (such principal/agent, estoppel, trusts, etc). The so-called ‘exceptions’ to the doctrine of privity are not actually exceptions, but rather other areas of law which get around the doctrine of privity. 5.150 Unless an ‘exception’ to the doctrine of privity applies, there is no remedy for a non-party in misrepresentation under contract law, but there could be a remedy in torts of negligent misstatement or deceit.

Inducement 5.151 The false representation made by the defendant must induce the plaintiff to enter into the contract. The false representation need not be the sole inducement for the plaintiff to enter into the contract.151 5.152 It is sufficient so long as the misrepresentation by the defendant plays some part, even if only a minor part, in contributing to the formation of the contract.152

Types of misrepresentations under contract law

5.153 Under the common law of contracts, there are three types of misrepresentation that are actionable in law, namely: fraudulent misrepresentation; negligent misrepresentation; and innocent misrepresentation. 5.154 The common law distinction between the three types of misrepresentations is important as the remedies available vary according to which type of misrepresentation has been alleged. 5.155 A brief discussion of each type of misrepresentation under contract law is provided below, followed by a summary of remedies available for each type of misrepresentation. [page 256]

Fraudulent misrepresentation 5.156 Fraudulent misrepresentation requires the plaintiff to prove that the defendant made a false statement knowing that it was false or was reckless in not caring whether it was true. 5.157 The knowledge of the defendant is actual knowledge, but in limited circumstances may include constructive knowledge in cases of wilful blindness. 5.158 The court will apply a subjective test to determine whether the statement was false and inquire into the defendant’s state of mind at the time the statement was made. 5.159

Accordingly, a defendant who holds an honest belief in the truth of

the statement will not be liable for fraudulent misrepresentation, even though such belief is based on unreasonable grounds.153 5.160 The following case of Derry v Peek,154 is the leading authority on the meaning of the word ‘fraud’ in the context of fraudulent misrepresentations in contract law.

Derry v Peek (1889) 14 App Cas 337 In this case, Sir Henry Peek (Peek) purchased shares in the Plymouth, Devonport and District Tramways company (Company). In purchasing the shares in the Company, Peek had relied on a prospectus that was issued by the board of directors of the Company. The prospectus contained a statement which said that the Company was entitled to use steam trams rather than horse powered ones. In fact, the Company was not entitled to use steam trams because the right to use steam trams was subject to the consent of the Board of Trade (BOT). The BOT refused consent for the Company to use steam trams, unless certain conditions applied. The Company was wound up. Shareholders, represented by Peek, commenced an action in deceit against the Company. An action in deceit required that the misrepresentations made by the directors of the Company were made fraudulently. The directors argued that they honestly believed that the BOT would consent to the Company using steam trams, although such a belief was erroneous. Lord Herschell (with whom Lords Halsbury, Watson, Bramwell, Fitzgerald agreed) held that the directors of the Company were not liable for fraudulent misrepresentation in an action of deceit. In particular Lord Herschell stated (at 374) the elements for establishing fraud as follows:

I think the authorities establish the following propositions: First, in order to sustain an action of deceit, there must be proof of fraud, and nothing short of that will suffice. Secondly, fraud is proved when it is shewn that a false representation

[page 257] has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false. Although I have treated the second and third as distinct cases, I think the third is but an instance of the second, for one who makes a statement under such circumstances can have no real belief in the truth of what he states. To prevent a false statement being fraudulent, there must, I think, always be an honest belief in its truth. And this probably covers the whole ground, for one who knowingly alleges that which is false, has obviously no such honest belief. Thirdly, if fraud be proved, the motive of the person guilty of it is immaterial. It matters not that there was no intention to cheat or injure the person to whom the statement was made.

Negligent misrepresentation 5.161 Negligent misrepresentation in contract law requires the plaintiff to prove that the defendant made the incorrect statement without taking reasonable care or based the statement on unreasonable grounds.155 5.162 The standard in contract law is akin to that of tort law.156 The plaintiff will need to prove that the defendant owed a duty to take reasonable care that the statement made by the defendant was true and reliable. 5.163 The following case of L Shaddock & Associates Pty Ltd v Parramatta City Council (No 1),157 is one of the leading authorities on negligent misstatements in tort law (and applicable to contract law).

L Shaddock & Associates Pty Ltd v Parramatta City

Council (No 1) (Shaddock’s case) (1981) 36 ALR 385 In this case, L Shaddock & Associates Pty Ltd (Shaddock) purchased a property on the corner of an intersection in Parramatta, New South Wales (Property). The Property was bought for the purpose of redevelopment. Shaddock would not have purchased the Property if it had known that the land would be substantially affected by road widening proposals which had been approved in principle by the Council of the City of Parramatta (Council). The solicitors for Shaddock made inquiries from the Council as to the existence of any road widening proposals affecting the land adjacent to the Property. The Council responded that there was no proposal to widen the road adjacent to the Property. In fact, at the time there was a proposal to widen the road adjacent to the Property in a plan in the Council records, and indeed the Property was affected by a road widening scheme, which caused the companies to suffer loss. [page 258] Shaddock commenced proceedings against the Council for negligent misrepresentation. The trial judge found that the Council had been careless but that it owed no relevant duty of care to the companies. This decision was affirmed by the Court of Appeal. The High Court (Gibbs CJ, Stephen, Mason, Murphy and Aickin JJ in separate judgments) allowed the appeal and held that a person can have a duty of care in giving information or advice and that duty of care is not confined to those who carry on, or profess to carry on a profession,

business or occupation involving the possession of skill and competence. In particular, Gibbs CJ said (at 391–2) that: I find it difficult to see why, in principle, the duty should be limited to persons whose business or profession includes giving the sort of advice or information sought and to persons claiming to have the same skill and competence as those carrying on such a business or profession, and why it should not extend to persons who, on a serious occasion, give considered advice or information concerning a business or professional transaction.

Innocent misrepresentation 5.164 Innocent misrepresentation requires the plaintiff to prove the defendant made an incorrect statement without the need to prove the intention to mislead or deceive or the knowledge of its falsity. 5.165 Accordingly, innocent misrepresentation occurs where the misrepresentation made by the defendant which induces the plaintiff to enter into the contract is neither fraudulent nor negligent.

Remedies available for misrepresentations under contract law 5.166 Damages are available for fraudulent and negligent misrepresentations in contract law,158 but not available for innocent misrepresentation. 5.167 Rescission of contract is available for all types of misrepresentations in contract law. If an order for recession is made by the court, the contract is considered to be voidable.

Misrepresentations under contract law v s 18 of the

ACL 5.168 The following is a summary of some of the advantages of pursuing a claim for misleading or deceptive conduct under s 18 of the ACL, instead of as a contract law misrepresentation: Section 18 applies to a wide variety of conduct, not limited to representations, whereas in contract law misrepresentations the relevant conduct is confined to representations and must be in relation to a contract. [page 259] Section 18 applies to past, present and future statements, whereas in misrepresentations under contract law only past and present statements are actionable. Section 18 applies to statements of fact as well as statements of law, whereas in misrepresentations under contract law there still may be cases where statements of law are not actionable. Section 18 applies to statements of opinion, whereas in misrepresentations under contract law statements of opinion are generally not actionable. Section 18 applies to advertising puffs, whereas puffery is generally not actionable in relation to misrepresentations under contract law. Section 18 applies to silence in certain circumstances, whereas silence is generally not actionable in relation to misrepresentations under contract law silence. Section 18 does not require knowledge or a dishonest intent, whereas knowledge or a dishonest intent is necessary for an action in relation to fraudulent misrepresentations under contract law.

Section 18 captures conduct from all parties engaging in misleading conduct or those who are knowingly concerned or a party to the conduct, whereas in relation to misrepresentations under contract law, the doctrine of privity generally applies, and only parties to the contract can sue and be sued. The use of exclusion clauses or disclaimers that attempt to ‘contract out’ of liability are not effective under s 18, whereas these clauses and disclaimers are likely to be considered more favourably in relation to misrepresentations under contract law. Section 18 can be contravened without evidence that someone has actually been misled, whereas in relation to misrepresentations under contract law, inducement and reliance on the misrepresentation is an essential element for an actionable case. There are far more remedies available under the ACL than there are available in relation to misrepresentation under contract law. For example, damages may be awarded pursuant to s 236 of the ACL even for honest (or innocent) misrepresentations. In a claim for damages pursuant to s 236 of the ACL, the court is not bound to follow the contract common law principles for awarding damages, although such principles may be useful for analogy purposes. 5.169 The main disadvantage of pursuing a claim for misleading conduct under s 18 of the ACL, instead of under the contract common law of misrepresentation is that there is no need for the conduct to be in trade or commerce under the contract common law, whereas this is a requirement under s 18 of the ACL. 5.170 The limitation period for an action in contract common law in New South Wales159 is the same as under s 236(2) of the ACL, namely six years running from the date on which the cause of action first accrues.

[page 260]

Corporations Act 2001 (Cth) Overview 5.171 There are a number of provisions in the CA that prohibit certain types of conduct that are misleading or deceptive.160 The focus of the following discussion is on two of those provisions, namely: s 728 of the CA; and s 1041H of the CA. 5.172 Section 728 of the CA is a narrow liability provision which deals only with misleading or deceptive statements, omissions and new matters in relation to lodged disclosure documents used for fundraising. 5.173 Section 1041H of the CA is a general liability provision which deals with misleading or deceptive conduct in relation to financial services and financial products. 5.174 Before examining these provisions below, it is worth noting the following comments by Rares J in Wingecarribee Shire Council v Lehman Brothers Australia Ltd,161 about the complexity of these areas of law: The councils relied on the various statutory provisions prohibiting corporations from engaging in misleading or deceptive conduct. For many years all one had to know was that the elegantly simple s 52(1) of the Trade Practices Act 1974 (Cth) prohibited a corporation from engaging in conduct, in trade or commerce, that was misleading or deceptive or likely to mislead or deceive. For some purpose that is not evident the parliament decided to remove elegant simplicity in its statutory drafting some years ago. Now the community and the courts must grapple with a labyrinth of statutes, all prohibiting such conduct, in relatively general fields (such as s 18 of Sch 2 of the Competition and Consumer Act 2010 (Cth) and see s 131A of that Act itself) and also in particular fields, such as s 1041H(1) of the Corporations Act and s 12DA(1) of the ASIC Act. The latter two provisions state:

1041H(1) A person must not, in this jurisdiction, engage in conduct, in relation to a financial product or a financial service, that is misleading or deceptive or is likely to mislead or deceive. 12DA(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. [Emphasis added.] 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 (for example, ss 1041I(1) and 12GF) coupled with substantively identical related exceptions and qualifications concerning proportionate liability. Since the end

[page 261] 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. Here, should it make any difference whether Grange was alleged to have engaged in conduct in relation to ‘financial services’ (s 12DA(1)) or ‘a financial product or a financial service’ (s 1041H(1))? Why is there a difference? Why does a court have to waste its time wading through this legislative porridge to work out which one or ones of these provisions apply even though it is likely that the end result will be the same? As Edmund Davies LJ lamented in The Putbus [1969] P 136 at 152; [1969] 2 All ER 676 at 680: Were bewilderment the legitimate aim of statutes, the Merchant Shipping (Liability of Shipowners and Others) Act, 1958, would clearly be entitled to a high award. Indeed, the deep gloom which its tortuousities induced in me has been lifted only by the happy discovery that my attempt to construe them has led me to the same conclusion as my brethren.

Section 728 of the CA 5.175 Section 728 of the CA is the main civil and criminal liability provision for Ch 6D, which deals exclusively with fundraising. Section 728 states: Misstatement in, or omission from, disclosure document

Misleading or deceptive statements, omissions and new matters (1) A person must not offer securities under a disclosure document if there is: (a) a misleading or deceptive statement in: (i)

the disclosure document; or

(ii) any application form that accompanies the disclosure document; or (iii) any document that contains the offer if the offer is not in the disclosure document or the application form; or (b) an omission from the disclosure document of material required by section 710, 711, 712, 713, 714 or 715; or (c) a new circumstance that: (i)

has arisen since the disclosure document was lodged; and

(ii) would have been required by section 710, 711, 712, 713, 714 or 715 to be included in the disclosure document if it had arisen before the disclosure document was lodged. Note 1: The person may make further offers after making up the deficiency in the current disclosure document by lodging a supplementary or replacement document. Note 2: See sections 731, 732 and 733 for defences. Note 3: Section 1041H imposes liabilities in respect of other conduct related to the offering of the securities. Forecasts and other forward-looking statements (2) A person is taken to make a misleading statement about a future matter (including the doing of, or refusing to do, an act) if they do not have reasonable grounds for making the statement. This subsection does not limit the meaning of a reference to a misleading statement or a statement that is misleading in a material particular.

[page 262] Offence if statement, omission or new matter materially adverse (3) A person commits an offence if they contravene subsection (1) and: (a) the misleading or deceptive statement; or (b) the omission or new circumstance; is materially adverse from the point of view of an investor.

5.176

The Explanatory Memorandum to the Corporate Law Economic

Reform Program Bill 1999 (Cth)162 stated that the purpose of s 728 (and s 729, see below) was as follows: [T]o ensure that issuers continue to provide full disclosure in the associated prospectus, issuers will be liable to investors in relation to the prospectus.

5.177 Section 728(1) of the CA provides that a person must not offer securities under a disclosure document if it contains: a misleading or deceptive statement; an omission of required information; or an omission of a new circumstance that is required to be included in the disclosure document. 5.178

Section 92(3) of the CA defines ‘securities’ to mean:

(a) shares in a body; or (b) debentures of a body; or (c) interests in a registered managed investment scheme; or (d) legal or equitable rights or interests in: (i)

shares; or

(ii) debentures; or (iii) interests in a registered managed investment scheme; (e) options to acquire (whether by way of issue or transfer) a security covered by paragraph (a), (b), (c) or (d). 5.179 Section 9 of the CA defines ‘disclosure document’ for an offer of securities to mean: (a) a prospectus for the offer; or (b) a profile statement for the offer; or (c) an offer information statement for the offer.

5.180 Section 728(2) of the ACL deems a person to have made a misleading statement about a future matter if they do not have reasonable grounds for making the statement. 5.181 Section 728(3) of the ACL is a criminal provision which states that a person commits an offence if they contravene s 728(1) and the misleading statement is materially adverse for the investor. [page 263] 5.182 A person who suffers loss or damage because of an offer of securities under a disclosure document that contravenes s 728(1) may recover the amount of the loss or damage from a person in accordance with Table 5.1 below:163

Table 5.1 People liable on disclosure document

[operative]

These people …

are liable for loss or damage caused by …

1

the person making the offer

any contravention of s 728(1) in relation to the disclosure document

2

each director of the body making the offer if the offer is made by a body

any contravention of s 728(1) in relation to the disclosure document

3

a person named in the disclosure any contravention of s 728(1) in relation to the document with their consent as a proposed disclosure document director of the body whose securities are being offered

4

an underwriter (but not a sub-underwriter) any contravention of s 728(1) in relation to the to the issue or sale named in the disclosure disclosure document document with their consent

5

a person named in the disclosure document with their consent as having made a statement: (a) that is included in the disclosure document; or

the inclusion of the statement in the disclosure document

(b) on which a statement made in the disclosure document is based 6

a person who contravenes, or is involved in that contravention the contravention of, s 728(1)

5.183 A person named in Table 5.1 must, as soon as practicable, notify the offeror in writing if they become aware of a misleading statement, omission or new circumstance that is material in either case.164 5.184 A person who acquires securities as a result of an offer that was accompanied by a profile statement is taken to have acquired the securities in reliance on both the prospectus and profile statement.165 5.185 An action under s 729(1) of the CA to recover loss or damages may begin any time within six years after the day on which the cause of action arose.166 5.186 The following defences are applicable to criminal and civil liability under ss 728 and 729 of the CA: [page 264] A person does not commit an offence against s 728(3), and is not liable under s 729 for a contravention of s 728(1), because of a misleading or deceptive statement (or an omission) in a prospectus if the person proves that they:167 – made all inquiries (if any) that were reasonable in the circumstances; and –

after doing so, believed on reasonable grounds168 that the statement was not misleading or deceptive (or that there was no omission from the prospectus in relation to the matter);

A person does not commit an offence against s 728(3), and is not

liable under s 729 for a contravention of s 728(1), because of a misleading or deceptive statement (or an omission) in an offer information statement or profile statement if the person proves that they did not know that the statement was misleading or deceptive (or that there was no omission from the prospectus in relation to the matter);169 A person does not commit an offence against s 728(3), and is not liable under s 729 for a contravention against s 728(1), because of a misleading or deceptive statement in, or an omission from, a disclosure document if the person proves that they placed reasonable reliance on information given to them by:170 – if the person is a body — someone other than a director, employee or agent of the body; or –

if the person is an individual — someone other than an employee or agent of the individual;

A person who is named in a disclosure document as:171 – being a proposed director or underwriter; or –

making a statement included in the document; or

–

making a statement on the basis of which a statement is included in the document;

does not commit an offence against s 728(3), and is not liable under s 729 for a contravention against s 728(1), because of a misleading or deceptive statement in, or an omission from, a disclosure document if the person proves that they publicly withdrew their consent to being named in the document in that way; and A person does not commit an offence against s 728(3), and is not liable under s 729 for a contravention of s 728(1), because of a new circumstance that has arisen since the disclosure document was lodged if the person proves that they were not aware of the matter.172

[page 265]

Section 1041H of the CA 5.187 Section 1041H of the CA prohibits misleading or deceptive conduct in relation to financial services and financial products and is a gateway provision to civil liability under s 1041I. 5.188 Section 1041H of the CA (similar to former s 995(2) of the Corporations Law (CL)) states: Misleading or deceptive conduct (civil liability only) (1) A person must not, in this jurisdiction, engage in conduct, in relation to a financial product or a financial service, that is misleading or deceptive or is likely to mislead or deceive. Note 1: Failure to comply with this subsection is not an offence. Note 2: Failure to comply with this subsection may lead to civil liability under section 1041I. For limits on, and relief from, liability under that section, see Division 4. (2) The reference in subsection (1) to engaging in conduct in relation to a financial product includes (but is not limited to) any of the following: (a) dealing in a financial product; (b) without limiting paragraph (a): (i)

issuing a financial product;

(ii)

publishing a notice in relation to a financial product;

(iii)

making, or making an evaluation of, an offer under a takeover bid or a recommendation relating to such an offer;

(iv)

applying to become a standard employer-sponsor (within the meaning of the Superannuation Industry (Supervision) Act 1993) of a superannuation entity (within the meaning of that Act);

(v)

permitting a person to become a standard employer-sponsor (within the meaning of the Superannuation Industry (Supervision) Act 1993) of a superannuation entity (within the meaning of that Act);

(vi)

a trustee of a superannuation entity (within the meaning of the Superannuation Industry (Supervision) Act 1993) dealing with a beneficiary of that entity as such a beneficiary;

(vii)

a trustee of a superannuation entity (within the meaning of the Superannuation Industry (Supervision) Act 1993) dealing with an employersponsor (within the meaning of that Act), or an associate(within the meaning

of that Act) of an employer-sponsor, of that entity as such an employersponsor or associate; (viii)

applying, on behalf of an employee (within the meaning of the Retirement Savings Accounts Act 1997), for the employee to become the holder of an RSA product;

(ix)

an RSA provider (within the meaning of the Retirement Savings Accounts Act 1997) dealing with an employer (within the meaning of that Act), or an associate (within the meaning of that Act) of an employer, who makes an application, on behalf of an employee (within the meaning of that Act) of the employer, for the employee to become the holder of an RSA product, as such an employer;

(x)

carrying on negotiations, or making arrangements, or doing any other act, preparatory to, or in any way related to, an activity covered by any of subparagraphs (i) to (ix).

[page 266] (3) Conduct: (a) that contravenes: (i)

section 670A (misleading or deceptive takeover document); or

(ii) section 728 (misleading or deceptive fundraising document); or (iii) section 1021NA, 1021NB or 1021NC; or (b) in relation to a disclosure document or statement within the meaning of section 953A; or (c) in relation to a disclosure document or statement within the meaning of section 1022A; does not contravene subsection (1). For this purpose, conduct contravenes the provision even if the conduct does not constitute an offence, or does not lead to any liability, because of the availability of a defence.

5.189 Section 1041H(1) of the CA prohibits a person from engaging in conduct in relation to a financial product or a financial service, that is misleading or deceptive or is likely to mislead or deceive. 5.190 Section 1041H(1) of the CA contains similar wording to s 18 of the ACL173 and, to the extent that the words are the same in each provision, they should be interpreted in the same way.174

5.191 The following case of National Exchange Pty Ltd v ASIC,175 is a leading authority for applying cases under former s 52 of the TPA to s 1041H of the CA.

National Exchange Pty Ltd v ASIC (2004) 61 IPR 420 In this case, five thousand shareholders of Onesteel Ltd (Onesteel) received written offers from National Exchange Pty Ltd (National) to purchase their shareholdings in Onesteel. The offers stated that National would purchase the shares from the shareholder for $2. The offers also noted the closing market price for the shares of $1.93. However, when the provision was taken into account, the actual value offered was substantially less than $2 per share. ASIC commenced proceedings against National. ASIC alleged that by making the $2 offers, National wrongly represented that the financial value of the price offered for each Onesteel share pursuant to the offers was $2 per share, whereas in fact the financial value at the time was less than $2 per share. Dowsett J (with whom Jacobson and Bennett JJ agreed) held (at [42]) that National contravened s 1041H of the CA. In particular, Dowsett J said (at [37], [42]) that: [page 267] The offers clearly invited a comparison between the offer of $2 per share and the current market price of $1.93. That invitation carried an implicit representation that there was some point in such comparison, in other words that the comparison was between ‘likes’. The invitation clearly implied that the offeree would be better off if he or she accepted,

rather than rejected, the offer. The extent of that benefit may not have been clear. A person selling shares on the stock market might have to pay brokerage and perhaps other expenses of the sale. Further, in any transaction there is the possibility of delay in payment of the purchase price. Where no time for payment is stipulated, the law frequently implies an obligation to pay within a reasonable time. No doubt the stock exchange rules deal with this matter. Such considerations might mean that a reasonable offeree would understand that the comparison between $2 and $1.93 required some qualification. Nonetheless, I am inclined to the view that the heading ‘OFFER TO BUY YOUR SHARES IN ONESTEEL LTD (‘SHARES’) FOR $2.00 EACH’, and the subsequent information appearing under the heading ‘Offer’, represented to offerees that the comparison between the market price and the offer gave a reasonable indication of the value of the offer. The subsequent provision for deferred payment significantly undermined the validity of such a comparison. … The format of the offer, particularly the heading and the information which appears under the subheading ‘Offer’ would suggest to any reasonable person that the benefit to be derived from the offer was about $2 as compared to the market price of $1.93. No doubt, a sceptical shareholder would look for the ‘catch’ but in my view, many reasonable shareholders would have been inclined to accept the offer at face value, assuming that conditions as to payment would be subsidiary and not such as significantly to reduce the value of the offer or the favorable comparison of it with the market price. It may be that many reasonable shareholders would, before finally accepting, have read the documents more closely and more critically. However I am satisfied that not every reasonable shareholder in the class would have done so. I conclude that the two dollar offers were likely to mislead or deceive reasonable offerees. The appeal should be dismissed.

Dowsett J also noted (at [18]) that the effect of former s 52 of the TPA is the same as s 1041H of the CA.

5.192 Unlike s 18 of the ACL, s 1041H(1) of the CA does not require that conduct be ‘in trade or commerce’, and in this respect s 1041H of the CA is wider in scope than s 18 of the ACL. 5.193 Furthermore, unlike s 18 of the ACL, s 1041H of the CA does require conduct to be engaging in in this jurisdiction and in relation to financial services and financial products.176

[page 268]

‘In this jurisdiction’ 5.194 Section 1041H of the CA requires that the impugned conduct must be engaged in ‘in this jurisdiction’. Section 9 of the CA defines ‘this jurisdiction’ to mean: [T]he geographical area that consists of: (a) each referring State (including its coastal sea); and (b) the Capital Territory (including the coastal sea of the Jervis Bay Territory); and (c) the Northern Territory (including its coastal sea); and (d) also, for the purposes of the application of a provision of Chapter 7 or an associated provision (as defined in section 5) — any external Territory in which the provision applies because of subsection 5(9) (but only to the extent provided for in that subsection).

5.195 Hence, for the purposes of s 1041H of the CA, the words ‘in this jurisdiction’ simply mean that the impugned conduct must be engaged in in the geographic jurisdiction of Australia. 5.196 The words ‘in this jurisdiction’ do not require that all of the impugned conduct must occur in Australia.177 It is sufficient that only a fraction of the conduct occurs in Australia and the rest occurs overseas. 5.197 For example, in Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5),178 Jagot J rejected the respondent’s argument that all of the impugned conduct occurred outside Australia and said: The ultimate basis for S&P’s submission is that ‘all of the impugned conduct of S&P occurred outside Australia’ and the ‘conduct of S&P relied upon as being misleading or deceptive does not extend to anything that occurred in Australia’. Further, that there is no suggestion that ABN Amro or LGFS acted as S&P’s agent in Australia when they disseminated S&P’s rating to the councils. The submission is confounded by the facts. S&P was engaged by ABN Amro to rate the

Rembrandt CPDOs, a product to be issued only in Australia. The relevant fact is not the location of S&P’s servers or the location of Mr Chandler or the S&P committees which assigned the ratings. It is the communication by S&P of the fact of the assigning of the rating and authorisation of its dissemination to ABN Amro in Australia. The ratings letters S&P issued for the Rembrandt CPDOs 2006–2 and 2006–3 were both issued to Mr Lewis of ABN Amro in Australia (to be precise, the ratings letters were addressed to Mr Lewis at ABN Amro Tower, 88 Phillip Street, Sydney). It is these communications which assigned and authorised, unconditionally, the dissemination of the rating. It is not to the point that the councils did not see the ratings letter for Rembrandt 2006–3. The critical fact is that S&P communicated and intended to communicate the act of

[page 269] the assigning and authorising the dissemination of the rating in Australia. The fact of communication by S&P thus occurred in Australia and was conduct in this jurisdiction.

‘In relation to’ 5.198 The words ‘in relation to’ in s 1041H of the CA requires that the conduct must, on its face, have a connection or relationship with the financial product or financial service.179 5.199 In ASIC v Citrofresh International Ltd,180 Goldberg J made the following comments on the words ‘in relation to’ for the purposes of s 1041H of the CA: The expression ‘in relation to’ has been the subject of judicial consideration in a number of different contexts. A consistent theme running through the case is that the expression ‘in relation to’ gathers its meaning from the context in which it appears and the purpose for which it appears: see, for example, Oceanic Life Ltd v Chief Cmr of Stamp Duties (1999) 168 ALR 211 at 225; [1999] NSWCA 416 per Fitzgerald JA. The words ‘in relation to’ have a very wide meaning, but like the expression ‘in respect of’, they do not extend to ‘any relationship however tenuous’: Technical Products Pty Ltd v State Government Insurance Office (Qld) (1989) 167 CLR 45 at 51; 85 ALR 173 at 177–8; 8 MVR 385 at 390; Workers’ Compensation Board (Qld) v Technical Products Pty Ltd (1988) 165 CLR 642 at 653–64; 81 ALR 260 at 267–8. See generally, D C Pearce and R S Geddes, Statutory Interpretation in Australia, 6th ed, LexisNexis Butterworths, Sydney, 2006 at pp 359–67 and the cases there cited.

Each case which has considered the interpretation and scope of the expression ‘in relation to’ is limited in its precedential value by the context in the relevant statute in which it appears. Nevertheless the approaches taken in some of those cases provide useful analogues for the context presently under consideration.

5.200 In ASIC v Cycclone Magnetic Engines Inc,181 Martin J considered whether publications, including a television news film made on Cycclone’s website, was in relation to a financial product. Martin J said: The website was, no doubt, intended to fulfil a number of functions. One would have been to publicise CME in a general way. Another was to allow interested persons to contact CME — the web site contained a feedback page. Another was, as the home page made clear, ‘to obtain … direct investment and to complete the development program’. The conduct of CME in placing the film on the web site and then describing it as showing the engine working is relevantly indistinguishable from writing an ASX release to the same effect, especially in the context of the introductory words on the home page about ‘obtaining direct investment’, that is, shares in CME. That conduct, therefore, comes within s 1041H.

[page 270] 5.201 In ASIC v Fortescue Metals Group Ltd (No 5),182 Gilmore J held that statements made at a press conference and in an interview was conduct ‘in relation to’ a financial product. His Honour said: It is to be expected that the seven media representatives present at the press conference would republish those statements in some form in the broad financial press and thereby report on the statements made to the market which would include actual or potential investors in FMG securities. The Business Sunday Interview is a televised business program which is watched, I infer, by at least potential investors in FMG securities.

5.202 However, in the same case, Gilmore J also held that statements in a brochure at a professional mining conference was not conduct ‘in relation to’ a financial product.183

‘A financial product’

5.203 A financial product, for the purposes of the CA, is defined generally as a facility through which a person makes a financial investment, manages financial risk or makes non-cash payments.184 5.204 The CA provides further statutory guidance on when a person makes a financial investment,185 manages financial risk,186 or makes non-cash payments.187 5.205 Specifically, a financial product for the purposes of the CA includes, amongst other things, any of the following:188 securities; interests, rights and options in registered schemes; derivatives; contracts of insurance (not life policies or sink fund policies); superannuation interests; retirement savings accounts; certain deposit taking facilities; government debentures, stock or bonds; foreign exchange contracts; carbon units; Australian carbon credit units; eligible international emissions units; margin lending facilities; and anything declared by the Corporations Regulations 2001 (Cth) (CR) to be a financial product. [page 271] 5.206

Specifically, a financial product for the purposes of the CA does not

include, amongst other things, any of the following:189 excluded securities; health insurance; government insurance; reinsurance; credit facilities;190 non-cash payment facilities; clearance and settlement facilities; and funeral benefits.

‘A financial service’ 5.207 A person provides a financial service, for the purposes of the CA, if that person:191 provides financial product advice; deals in a financial product; makes a market for a financial product; operates a registered scheme; provides a custodial or depository service; or engages in conduct prescribed by the CR. 5.208 The CA provides further statutory guidance on the meaning of financial product advice,192 dealings,193 makes a market for a financial product,194 and provide a custodial or depository service.195

‘Engage in conduct’ 5.209 Section 9 of the CA defines ‘engage in conduct’ to mean ‘do an act; or omit to perform an act’.

5.210 Section 1041H(2) of the CA provides a non-exhaustive list of types of conduct that is considered to be engaged in in relation to financial products, which includes: dealing in a financial product; issuing a financial product; publishing a notice in relation to a financial product; evaluating an offer under a takeover bid; applying to become (or permitting a person to become) a standard employer sponsor of a superannuation entity; [page 272] a trustee of a superannuation entity dealing with a beneficiary or dealing with an employer-sponsor; and applying on behalf of an employee, for the employee to become the holder of a Retirement Savings Account (RSA), and being an RSA provider.

Remedies under the CA 5.211 There are a number of remedies available for a contravention of s 1041H of the CA. Some of the main remedies that are potentially available are: compensation for damages or loss (s 1041I); injunctions (s 1324); and other orders: s 1325. 5.212

Similarly to s 18 of the ACL, a contravention of s 1041H of the CA

does not give rise to civil pecuniary penalties (see ss 1317E and 1317G of the CA) or a disqualification order (see s 206C of CA).

Some differences between s 1041H and s 728 of the CA 5.213 Section 1041H(3) of the CA makes it clear that conduct which contravenes ss 728 (fundraising documents) and 670A (takeover documents) does not contravene s 1041H of the CA. 5.214 However, s 1041H of the CA does capture residual misleading or deceptive conduct in relation to fundraising (and takeovers) which is not caught by the narrower s 728 (or s 670A) of the CA. 5.215 For example, s 728 of the CA is limited to statements in or omissions from a disclosure document that is lodged with ASIC. It does not capture other types of misleading conduct in relation to fundraising. 5.216 Section 1041H, on the other hand, captures misleading or deceptive conduct in relation to fundraising advertising material or disclosure documents which are exempt from lodgement with ASIC.196

Australian Securities and Investments Commission Act 2001 (Cth) Section 12DA of the ASIC Act 5.217 Section 12DA of the ASIC Act prohibits misleading or deceptive conduct, in trade or commerce, in relation to financial services and financial products.197 Section 12DA states:

[page 273] Misleading or deceptive conduct (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). For this purpose, conduct contravenes the provision even if the conduct does not constitute an offence, or does not lead to any liability, because of the availability of a defence. (2) Nothing in sections 12DB to 12DN limits by implication the generality of subsection (1).

5.218 Section 12DA of the ASIC Act contains similar wording to s 18 of the ACL198 and to the extent that the wording is the same in each provision, they should be interpreted in the same way.199 5.219 In Medical Benefits Fund of Australia Ltd v Cassidy,200 Stone J made the following comments in relation to s 12DA in the ASIC Act and former s 52 of the TPA and to other corresponding provisions: Sections 12DA, 12DB and 12DF of the ASIC Act are analogous to ss 52, 53(c) and 53(g) of the Trade Practices Act 1974 (Cth) (‘TPA’). There is no relevant material difference between these provisions of the ASIC Act and the TPA.

5.220 Conduct which relates to both financial services and non-financial services may be actionable under both the ASIC Act and ACL. In Enterprise Finance Solutions Pty Ltd v Austec Pty Ltd,201 Nicholas J said: In my view, s 51AF operates to exclude the operation of Pt V of the TP Act in cases involving

contraventions of any of its provisions only in so far as such conduct relates to financial services. To the extent that such conduct also relates to something other than financial services then Pt V of the TP Act is not excluded. Thus, conduct which, as in this case, relates not only to the financial services (the provision of finance under a rental contract) but also to a characteristic of goods (the price of the goods) may in fact be actionable under both the TP Act and the ASIC Act.

[page 274]

‘In relation to’ 5.221 The words ‘in relation to’ in s 12DA of the ASIC Act is likely to be interpreted in the same way as those words have been interpreted in s 1041H of the CA.202 5.222 Hence, the words ‘in relation to’ in s 12DA of the ASIC Act requires that the conduct must, on its face, have a connection or relationship with the financial product or financial service.203 5.223 However, conduct that is ‘anterior to and separate from the provision of financial product advice’ is considered not ‘in relation to’ a financial service.204

‘A financial product’ 5.224 A financial product, for the purposes of the ASIC Act, is defined generally as a facility through which a person makes a financial investment, manages financial risk or makes non-cash payments.205 5.225 The ASIC Act provides further statutory guidance on when a person makes a financial investment,206 manages financial risk,207 or makes non-cash payments.208 5.226

Specifically, a financial product for the purposes of the ASIC Act

includes, amongst other things, any of the following:209 securities; interests, rights and options in relation to managed investment schemes; derivatives; contracts of insurance (not health insurance business or health related business); superannuation interests; retirement savings accounts; certain deposit taking facilities; government debentures, stock or bonds; foreign exchange contracts; credit facilities;210 carbon units; Australian carbon credit units; eligible international emissions units; margin lending facilities; and anything declared by the Australian Securities and Investments Commission Regulations 2001 (Cth) (ASIC Regulations) to be a financial product. [page 275] 5.227 Specifically, a financial product for the purposes of the ASIC Act does not include, amongst other things, any of the following:211 excluded securities; health insurance business or health related business; non-cash payment facilities;

clearance and settlement facilities; and funeral benefits.

‘A financial service’ 5.228 A person provides a financial service, for the purposes of the ASIC Act, if that person:212 provides financial product advice; deals in a financial product; makes a market for a financial product; operates a registered scheme; provides a custodial or depository service; provides a service (not being the operation of a derivative trade depository) that is otherwise supplied in relation to a financial product (other than a carbon unit, an Australian carbon credit unit or an eligible international emissions unit); or engages in conduct prescribed by the ASIC Regulations. 5.229 The CA provides further statutory guidance on the meaning of financial product advice,213 dealings,214 makes a market for a financial product,215 and provide a custodial or depository service.216

Remedies under the ASIC Act 5.230 There are a number of remedies available for a contravention of s 12DA of the ASIC Act. Some of the main remedies that are potentially available under the ASIC Act are: compensation for damages or loss (ss 12GF); injunctions (s 12GD); non-punitive orders (s 12GLA); and

other orders: s 12GM. [page 276] 5.231 Similarly to s 18 of the ACL, a contravention of s 12DA of the ASIC Act does not give rise to civil pecuniary penalties (see s 12GBA of the ASIC Act) or a disqualification order: s 12GLD of ASIC Act.

Some differences between s 12DA of the ASIC Act and s 728 of the CA 5.232 Section 12DA(1A) of the ASIC Act makes it clear that conduct which contravenes ss 728 (fundraising documents) and 670A (takeover documents) of the CA does not contravene s 12DA(1) of the ASIC Act. 5.233 However, s 12DA(1) of the ASIC Act does capture residual misleading or deceptive conduct in relation to fundraising (and takeovers) which is not caught by the narrower s 728 (or s 670A) of the CA. 5.234 For example, s 728 of the CA is limited to statements in, or omissions from, a disclosure document that is lodged with ASIC. It does not capture other types of misleading conduct in relation to fundraising. 5.235 Section 12DA(1) of the ASIC Act, on the other hand, captures misleading or deceptive conduct in relation to fundraising advertising material or disclosure documents which are exempt from lodgement with ASIC.217

Some differences between s 12DA of the ASIC Act and s 1041H of the CA

5.236 Both s 12DA of the ASIC Act and s 1041H of the CA give rise to civil liability and largely overlap with each other. However, there are a number of differences between the provisions. 5.237 First, s 12DA of the ASIC Act has the requirement of ‘in trade or commerce’, whereas s 1041H of the CA does not. In this sense, s 1041H is wider in scope than s 12DA. 5.238 Secondly, the list of specific things that are not financial products in s 765A of the CA is broader than the list of specific things that are not financial products under s 12BAA of the ASIC Act. 5.239 Thirdly, the list of things for when a person provides a financial service in s 12BAB of the ASIC Act is broader than the list of things for when a person provides a financial service under s 766A of the CA. 5.240 Fourthly, there are differences in the remedies and enforcement powers offered under the ASIC Act for a contravention of s 12DA to that of the CA for a contravention of s 1041H. 5.241 For example, under the ASIC Act, ASIC can issue a public warning notice pursuant to s 12GLC, whereas ASIC does not have this power under the CA. 5.242 In practical terms, these differences between s 12DA of the ASIC Act and s 1041H of the CA are minor, and as such, the provisions will overlap in a majority of circumstances. [page 277]

Delegation

5.243 The investigation and enforcement of misleading or deceptive conduct (and certain other areas of the ACL) in relation to financial services and financial products is the responsibility of ASIC. 5.244 However, pursuant to s 102 of the ASIC Act, ASIC may by writing, delegate to a person, including the ACCC, all or any of its functions and powers under the ASIC Act (and the CA). 5.245 ASIC must not delegate a function or power to a staff member of the ACCC unless the Chairman of the ACCC agrees in writing to the delegation.218 5.246 The delegation of powers from ASIC to the ACCC may include, amongst other investigation and enforcement powers and remedies under the CA, all or any of the: investigation and information powers under Pt 3 of the ASIC Act; and/or enforcement powers and remedies under Pt 2 of the ASIC Act. 5.247 Delegation will also allow the ACCC to commence any proceedings under the ASIC Act.

Short theory and problem questions Theory questions 1.

For the purposes of the ASIC Act, which of the following are financial products and which are not: credit provided by an employer to an employee for the purchase of a vehicle; an equitable interest in a managed investment scheme;

an option taken out which covers costs for a funeral. 2.

Is it necessary for the plaintiff to have a place of business or trade in the same jurisdiction as that of a defendant which is passing off its goods as those of the plaintiff? If not, why?

3.

Is there any circumstance where there may be an actionable tort of passing off and not an actionable case pursuant to s 18 of the ACL?

4.

List three reasons why a plaintiff would sue under s 18 of the ACL, instead of suing under the tort of negligent misstatements.

5.

What are the requisite elements for an actionable misrepresentation under contract law?

6.

What are the categories of misrepresentation in contract law and what remedies are available for each category?

7.

Are any of the following statements considered actionable misrepresentations under contract law? [page 278] ‘Powerful energy drink. Drink it and you will explode’; ‘Large land for sale 2000 m2. Great opportunity.’ The land is only 1000 m2; ‘Franchise for sale! Expected profit $200,000 per annum’. John knows that the particular franchise only earns $50,000 per annum, but still buys the franchise.

8.

In passing off actions, are damages limited to direct loss of customers?

9.

What are the elements of the ‘classical trinity’?

Hypothetical problem question

John, Paul, George and Bingo were musicians in a band called the Beagles. The Beagles released in England a smash hit album called ‘Sgt. Salt and Pepper’s Lonely Hearts Club Band’. The cover of the album was distinctive in design and layout. In particular, it was in the colours of red and yellow and contained pictures of famous people, including the Queen, the Spice Girls and James Bond (Roger Moore, of course). Due to the success of the album in England, the Beagles spent $5,000,000 on promotion and advertising of the album around the world. However, just before the Beagles were about to release the album in the United States, a band called the Sand and Surf Boys released a similar named album called ‘Sgt. Salt and Pepper’s Happy Hearts Club Band’. The cover of this album was strikingly similar in design and layout to that of the Beagles’ album. However, the colours were slightly different, in that the red and yellow colours were darker than the colours of the Beagles’ album. Also of difference were the pictures of the famous people, which included: Emperor Palpatine, Ex-President George Bush, and Chuck Norris (performing a classic round-house kick). Advise whether the Beagles are likely to succeed in a tort action against the Sand and Surf Boys for passing off of their album ‘Sgt. Salt and Pepper’s Lonely Hearts Club Band’?

Further reading M Davison, K Johnson, P Kennedy, Shanahan’s Australian Law of Trade Marks & Passing Off, 3rd ed, Lawbook Co, 2003, pp 491–629. M Davies, I Malkin, Focus Torts, 5th ed, LexisNexis Butterworths, Australia, 2008, pp 339–60. E Finnane, Corporations Legislation 2013, Lawbook Co, Sydney 2013, pp 1326–31.

Halsbury’s Laws of Australia, Commentary, Consumer Protection title, LexisNexis, Sydney, 2011, in relation to misleading conduct in relation to fundraising, see [120-16575]–[120-16587]. In relation misleading conduct in relation to financial products and financial services, see [120-18100]–[120-18110]. [page 279] Justice J D Heydon, Trade Practices Law Competition & Consumer Law (Looseleaf Services), Thomson Reuters, Australia, 2012, [160.1950]–[160.2230]. R Miller, Australian Competition and Consumer Law Annotated, 36th ed, Thomson Reuters, Sydney, 2014, in relation to the tort of passing off, see pp 1546–57. J Paterson, A Robertson, A Duke, Principles of Contract Law, 4th ed, Lawbook Co, 2012, pp 613–30. P Redmond, Corporations and Financial Markets Law, Lawbook Co, Sydney, 2013, pp 850–63. See the ASIC website at for the following publications: Regulatory Guides –

RG 25: Takeovers: false and misleading statements;

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RG 38: The hawking provisions;

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RG 53: The use of past performance in promotional material;

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RG 56: Prospectuses;

–

RG 60: Scheme of arrangements;

–

RG107: Electronic prospectuses;

–

RG 156: Advertising of debentures and notes to retail

investors; –

RG 158: Advertising and publicity for offers of securities;

–

RG 168: Disclosure: Product Disclosure Statements (and other disclosure obligations);

–

RG 170: Prospective financial information;

–

RG 173: Disclosure for on-sale of securities and other financial products;

–

RG 228: Effective disclosure for retail investors; and

–

RG 234: Advertising financial products and services (including credit): Good practice guidance.

Consultation Papers –

CP 167: Advertising financial products and advice services: Good practice guidance;

–

CP 178: Advertising credit products and credit services: Additional good practice guidance; and

–

CP 183: Giving information, general advice and scaled advice.

Reports –

REP: Australian Consumers: at a glance; and

–

REP: Financial literacy and behavioural change.

Information Sheets

1.

–

INFO 99: Disclosure of credit ratings in Australia;

–

INFO 151: ASIC’s approach to enforcement; and

–

INFO 152: Public comment.

ConAgra Inc v McCain Foods (Aust) Pty Ltd (McCain Pizza/McCain’s Healthy Choice case) (1992) 106 ALR 465 per Gummow J at 518.

2.

ConAgra Inc v McCain Foods (Aust) Pty Ltd (McCain Pizza/McCain’s Healthy Choice case) (1992) 106 ALR 465 per Lockhart J at 471.

3.

ConAgra Inc v McCain Foods (Aust) Pty Ltd (McCain Pizza/McCain’s Healthy Choice case) (1992) 106 ALR 465 per Lockhart J at 502.

4.

ConAgra Inc v McCain Foods (Aust) Pty Ltd (McCain Pizza/McCain’s Healthy Choice case) (1992) 106 ALR 465 per Lockhart J at 502.

5.

Erven BV v J Townsend & Sons (Hull) Ltd (Advocaat case) [1979] 2 All ER 927 per Lord Diplock at 932–3.

6.

Erven BV v J Townsend & Sons (Hull) Ltd (Advocaat case) [1979] 2 All ER 927 per Lord Diplock at 932–3.

7.

Reckitt & Colman Products Ltd v Borden Inc [1990] 1 All ER 873 per Lord Oliver of Aylmerton at [7].

8.

Morgan & Banks Pty Ltd v Select Personnel Pty Ltd (1991) 20 IPR 289 per Clarke JA (with whom Priestley JA and Hope AJA agreed) at 293.

9.

Reckitt & Colman Products Ltd v Borden Inc [1990] 1 All ER 873 per Lord Oliver of Aylmerton at [17].

10. Campomar Sociedad Limitada v Nike Int’l Ltd (2000) 169 ALR 677 per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ at [109]. 11. Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 56 ALR 193 per Deane J at 214. 12. For example, see Australian Society of Accountants v Federation of Australian Accountants Incorporated (1987) 9 IPR 282 per Woodward J at 288. 13. For example, see Hutchence v South Sea Bubble Co Pty Ltd (INXS case) (1986) 64 ALR 330 per Wilcox J at 340. 14. For example, see Pacific Dunlop Ltd v Hogan (1989) 87 ALR 14 per Sheppard J (in dissent) at 29. 15. For example, see Telstra Corp Ltd v Royal & Sun Alliance Insurance Australia Ltd (2003) 57 IPR 453 per Merkel J at [79]. 16. ConAgra Inc v McCain Foods (Aust) Pty Ltd (McCain Pizza/McCain’s Healthy Choice case) (1992) 106 ALR 465 per Lockhart J at 502. 17. ConAgra Inc v McCain Foods (Aust) Pty Ltd (McCain Pizza/McCain’s Healthy Choice case) (1992) 106 ALR 465 per Lockhart J at 475. 18. IRC v Muller & Co’s Margarine Ltd [1901] AC 217 per Lord Macnaghten at 223–4. 19. Paracidal Pty Ltd v Herctum Pty Ltd (1983) 4 IPR 201 per McPherson J at 206. 20. ConAgra Inc v McCain Foods (Aust) Pty Ltd (McCain Pizza/McCain’s Healthy Choice case) (1992) 106 ALR 465 per Lockhart J at 475. 21. ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 106 ALR 465. 22. Targetts Pty Ltd v Target Australia Pty Ltd (1993) 26 IPR 51 per Heerey J at 57–60. 23. ConAgra Inc v McCain Foods (Aust) Pty Ltd (McCain Pizza/McCain’s Healthy Choice case) (1992) 106 ALR 465 per Lockhart J at 512. 24. ConAgra Inc v McCain Foods (Aust) Pty Ltd (McCain Pizza/McCain’s Healthy Choice case) (1992)

106 ALR 465 per French J at 543. 25. Applied Business Technology v Grandmaster Computers Pty Ltd (1999) 161 ALR 31 per Katz J at [91]. 26. Cadbury-Schweppes Pty Ltd v Pub Squash Co Pty Ltd (1980) 32 ALR 387 per Lord Scarman (with whom Lord Wilberforce, Lord Edmund-Davies, Lord Fraser of Tullybelton and Lord Roskill agreed) at 394. 27. Cadbury-Schweppes Pty Ltd v Pub Squash Co Pty Ltd (1980) 32 ALR 387 per Lord Scarman (with whom Lord Wilberforce, Lord Edmund-Davies, Lord Fraser of Tullybelton and Lord Roskill agreed) at 394. 28. Knott Investments Pty Ltd v Winnebago Industries Inc (2013) 299 ALR 74 per Allsop CJ at [7]–[10] (with whom Cowdroy J agreed) at [141]. 29. Reckitt & Colman Products Ltd v Borden Inc [1990] 1 All ER 873 per Lord Oliver of Aylmerton at [7]. 30. Vieright Pty Ltd v Myer Stores Ltd (1995) 31 IPR 361 per Beaumont, Branson and Lindgren JJ at 369. 31. Powell v Birmingham Vinegar Brewery Co Ltd (1897) 14 RPC 720 per Lord Halsbury at 729. 32. Colorado Group Ltd v Strandbags Group Pty Ltd (2007) 243 ALR 127 per Allsop J at [221]. 33. Habib Bank Ltd v Habib Bank AG Zurich [1981] 2 All ER 650 per Oliver LJ at 657. 34. Mark Foys Pty Ltd v TVSN (Pacific) Ltd (2000) 181 ALR 90 per Beaumont, Tamberlin and Emmett JJ at [42]–[45]. 35. Matthews v Doctrieve Corp Pty Ltd (2003) 59 IPR 155 per Finkelstein J at [25]. 36. Ballarat Products Ltd v Farmers Smallgoods Co Pty Ltd [1957] VR 104 per Hudson J at 107–8. 37. Ballarat Products Ltd v Farmers Smallgoods Co Pty Ltd [1957] VR 104 per Hudson J at 108. 38. For example, see Peter Bodum A/S v DKSH Australia Pty Ltd (2011) 280 ALR 639 per Greenwood at [27]–[33]. 39. For example, see Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 239 ALR 662 per Black CJ, Emmett and Middleton JJ at [22]–[26]. 40. Twentieth Century Fox Film Corporation v South Australian Brewing Co Ltd (Duff Beer case) (1996) 66 FCR 451. 41. Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 per Franki J at 197. 42. Philips Electronics NV v Remington Products Australia Pty Ltd (1997) 39 IPR 283 per Lehane J at 296. 43. Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 8) (2008) 75 IPR 557 per Heerey J at [56]; S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 168 ALR 396 per Hill, Nicholson and Emmett JJ at 399. 44. Nutrientwater Pty Ltd v Baco Pty Ltd (2010) 265 ALR 140 per Kenny J at [117]; Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 8) (2008) 75 IPR 557 per Heerey J at [88]. 45. Anheuser-Busch Inc v Budejovicky Budvar (2002) 56 IPR 182 per Allsop J at [239], [245]–[246]. 46. Telstra Corp Ltd v Royal & Sun Alliance Insurance Australia Ltd (2003) 57 IPR 453 per Merkel J at

[82]. 47. Betta Foods Australia Pty Ltd v Betta Fruit Bars Pty Ltd (1998) 41 IPR 347 per Goldberg J at 357. 48. ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 106 ALR 465 per Lockhart J at 495. 49. Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354 per Weinberg and Dowsett JJ at [57]. 50. Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354 per Weinberg and Dowsett JJ at [62]. 51. Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354 per Weinberg and Dowsett JJ at [62]. 52. Deckers Outdoor Corp Inc v Farley (No 5) (2009) 262 ALR 53 per Tracey J at 53–4. 53. For example, see Architects (Aust) Pty Ltd t/as Architects Australia v Witty Consultants Pty Ltd [2002] QSC 139 per Chesterman J at [33], [38]. 54. ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 106 ALR 465 per Gummow J at 530–1. 55. ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 106 ALR 465 per Gummow J at 530–1. 56. Campomar Sociedad Limitada v Nike Int’l Ltd (2000) 169 ALR 677 per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ at [109]. 57. Stringfellow v McCain Foods (GB) Ltd (Stringfellows Nightclub case) (1983) 2 IPR 279 per Whitford J at 298. 58. Henderson v Radio Corp Pty Ltd (Ballroom Dancers case) (1960) 1A IPR 620 per Sugerman J at 626–7. 59. Star Micronics Pty Ltd v Five Star Computers Pty Ltd (1991) 22 IPR 473 per Davis J at 483. 60. Star Micronics Pty Ltd v Five Star Computers Pty Ltd (1991) 22 IPR 473 per Davis J at 483. 61. Prince Manufacturing Inc v ABAC Corp Australia Pty Ltd (1984) 57 ALR 159 per Beaumont J at 163. 62. Kismet International Pty Ltd v Guano Fertilizer Sales Pty Ltd [2013] FCA 375 per Murphy J at [20]. 63. Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257 per Hayne J (with whom Gleeson CJ, McHugh and Kirby JJ agreed) at [37]–[38]. 64. Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (in liq) [2007] FCAFC 40 per Black CJ and Jacobson J at [35]. 65. GM Holden Ltd v Paine (2011) 281 ALR 406 per Gordon J at [77], [84]. See also, Elwood Clothing Pty Ltd v Cotton On Clothing Pty Ltd (2009) 81 IPR 378 per Gordon J at [11]. 66. Taleb v GM Holden Ltd (2011) 286 ALR 309 per Finn and Bennett JJ at [41]. 67. Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 239 ALR 662 per Black CJ, Emmett and Middleton JJ at [98]. 68. CBS Records Australia Ltd v Telmak Teleproducts (Aust) Pty Ltd (1987) 72 ALR 270 per Bowen CJ at 279. 69. Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 18 ALR 639 per Stephen J at 646. 70. Taco Co (Aust) Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 per Deane and Fitzgerald JJ at 197.

71. For example, see Twentieth Century Fox Film Corporation v South Australian Brewing Co Ltd (Duff Beer case) (1996) 66 FCR 451. 72. For example, see CBS Records Australia Ltd v Telmak Teleproducts (Aust) Pty Ltd (1987) 72 ALR 270 per Bowen CJ at 280. 73. For example, see Attorney-General; Ex rel Elisha v Holy Apostolic & Catholic Church (1989) 98 ALR 327 per Young J at 351. 74. Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 239 ALR 662 per Black CJ, Emmett and Middleton JJ at [98]. 75. Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 239 ALR 662 per Black CJ, Emmett and Middleton JJ at [98]. 76. Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 239 ALR 662 per Black CJ, Emmett and Middleton JJ at [98]; Peter Bodum A/S v DKSH Australia Pty Ltd (2011) 280 ALR 639 per Greenwood J at [200]. 77. Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 239 ALR 662 per Black CJ, Emmett and Middleton JJ at [98]. 78. CBS Records Australia Ltd v Telmak Teleproducts (Aust) Pty Ltd (1987) 72 ALR 270 per Bowen CJ at 279. 79. Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 239 ALR 662 per Black CJ, Emmett and Middleton JJ at [99]. 80. Mars Australia Pty Ltd v Sweet Rewards Pty Ltd (2009) 81 IPR 354 per Perram J at [22]. 81. Applied Business Technology Pty Ltd v Grandmaster Computers Pty Ltd (1999) 161 ALR 31 per Katz J at [7]. 82. Attorney-General; Ex rel Elisha v Holy Apostolic & Catholic Church (1989) 98 ALR 327. 83. Equity Access Pty Ltd v Westpac Banking Corporation (1989) 16 IPR 431 per Hill J at 440. 84. Pasley v Freeman (1789) 3 Term Rep 51. 85. Magill v Magill (2006) 231 ALR 277 per Gummow, Kirby and Crennan JJ at [59]. 86. Professor J Fleming, The Law of Torts, 9th ed, LBC Information Services, Sydney, 1998, pp 694–5. 87. Magill v Magill (2006) 231 ALR 277 per Gummow, Kirby and Crennan JJ at [111]. 88. Magill v Magill (2006) 231 ALR 277 per Gummow, Kirby and Crennan JJ at [115]. 89. Professor J Fleming, The Law of Torts, 9th ed, LBC Information Services, Sydney, 1998, p 695. 90. Magill v Magill (2006) 231 ALR 277. 91. Bradford Third Equitable Benefit Building Society v Borders (1941) 2 All ER 205 per Viscount Maugham at 211. 92. Magill v Magill (2006) 231 ALR 277 per Gleeson CJ at [38]. 93. Magill v Magill (2006) 231 ALR 277 per Gummow, Kirby and Crennan JJ at [114]. 94. Edgington v Fitzmaurice (1885) 29 Ch D 459 per Bowen LJ at 483. 95. Derry v Peek (1889) 14 App Cas 337 per Lord Herschell (with whom Lords Halsbury, Watson, Bramwell, Fitzgerald agreed) at 374. 96. Bradford Third Equitable Benefit Building Society v Borders (1941) 2 All ER 205 per Viscount

Maugham at 211. 97. Redgrave v Hurd (1881) 20 Ch D 1 per Jessel MR at 21. 98. Bradford Third Equitable Benefit Building Society v Borders (1941) 2 All ER 205 per Viscount Maugham at 211. 99. Magill v Magill (2006) 231 ALR 277 per Gummow, Kirby and Crennan JJ at [114]. 100. Magill v Magill (2006) 231 ALR 277 per Gummow, Kirby and Crennan JJ at [114]. 101. Bradford Third Equitable Benefit Building Society v Borders (1941) 2 All ER 205 per Viscount Maugham at 211. 102. Balfour and Clarke v Hollandia Ravensthorpe NL (1978) 18 SAS 240. 103. Edgington v Fitzmaurice (1885) 29 Ch D 459. 104. Bradford Third Equitable Benefit Building Society v Borders (1941) 2 All ER 205 per Viscount Maugham at 211. 105. Curtis v Chemical & Dying Co [1951] 1 KB 805. 106. Derry v Peek (1889) 14 App Cas 337. 107. Langridge v Levy (1837) 2 M & W 519. 108. Derry v Peek (1889) 14 App Cas 337. 109. Commercial Banking Co of Sydney Ltd v RH Brown & Co [1972–73] ALR 393 per Menzies J at [343]. 110. Gipps v Gipps [1978] 1 NSWLR 454 per Hutley JA at 460. 111. Krakowski v Eurolynx Properties Ltd (1995) 130 ALR 1. 112. Sinclair v Preston [1970] WAR 186. 113. Pearson & Son Ltd v Dublin Corporation [1907] AC 351. 114. South Australia v Johnson (1982) 42 ALR 161 per Gibbs CJ, Mason, Murphy, Wilson and Brennan JJ at 169–70. 115. Nicholls v Taylor [1939] VLR 119. 116. Archer v Brown [1984] 2 All ER 267. 117. See 13.57. 118. Archer v Brown [1984] 2 All ER 267. 119. Musca v Astle Cork Pty Ltd (1988) 80 ALR 251. 120. Applied Business Technology Pty Ltd v Grandmaster Computers Pty Ltd (1999) 161 ALR 31 per Katz J at [7]. 121. Limitation Act 1969 (NSW) s 14(1)(b). 122. Hedley Byrne & Co Ltd v Heller & Partners Ltd [1963] 2 All ER 575 per Lord Morris at 594 and Lord Hodson at 601. 123. Hedley Byrne & Co Ltd v Heller & Partners Ltd [1963] 2 All ER 575. 124. Hedley Byrne & Co Ltd v Heller & Partners Ltd [1963] 2 All ER 575 per Lord Pearce at 616. 125. Ultramares Corp v Touche (1931) 174 NE 441 per Cardozo CJ at 444. 126. For example, see Civil Liability Act 2002 (NSW) s 5D and 5E (and ss 5O and 5P in relation to

professional negligence) and March v E & M H Stramare Pty Ltd (1991) 99 ALR 423. 127. For example, see Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd (Wagon Mound (No 1) case) [1961] AC 388 and Overseas Tankship (UK) Ltd v Miller Steamship Co Pty Ltd (Wagon Mound (No 2) case) [1967] 1 AC 617. 128. Hedley Byrne & Co Ltd v Heller & Partners Ltd [1963] 2 All ER 575. 129. Hedley Byrne & Co Ltd v Heller & Partners Ltd [1963] 2 All ER 575. 130. For example, see Caltex Oil (Aust) Pty Ltd v Dredge Willemstad (1976) 11 ALR 227 per Stephen J at 261–2, although this was a case concerning negligent acts that cause pure economic loss. 131. Hill v Van Erp (1997) 142 ALR 687 per Dawson J at 700. However, see McHugh J at 725–6 (in dissent, criticism of the proximity principle). 132. Perre v Apand Pty Ltd (1999) 164 ALR 606 per McHugh J at [70]–[119]. 133. Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 205 ALR 522 per Gleeson CJ, Gummow, Hayne and Heydon JJ at [18], Kirby J at [148]. 134. Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 205 ALR 522 per Gleeson CJ, Gummow, Hayne and Heydon JJ at [21], [23]–[24]; McHugh J at [80]–[86]; Kirby J at [168]–[169]; Callinan J at [225]–[227]. 135. Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 205 ALR 522 per Gleeson CJ, Gummow, Hayne and Heydon JJ at [23]–[24]. 136. Caltex Refineries (Qld) Pty Ltd v Stavar (2009) 259 ALR 616 per Allsop J at [100]–[101]. 137. Caltex Refineries (Qld) Pty Ltd v Stavar (2009) 259 ALR 616 per Allsop J at [102]. 138. Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465. 139. Caltex Refineries (Qld) Pty Ltd v Stavar (2009) 259 ALR 616 per Allsop J at [103]. 140. Caltex Refineries (Qld) Pty Ltd v Stavar (2009) 259 ALR 616 per Allsop J at [104]. 141. Also see the damages provisions in the Civil Liability Act 2002 (NSW) for claims that fall under this legislation. 142. Limitation Act 1969 (NSW) s 14(1)(b). 143. Civil Service Co-Operative Society of Vic Ltd v Blyth (1914) 20 ALR 161 per Barton J at 169. 144. Dimmock v Hallett (1866) LR 2 Ch App 21. 145. Edgington v Fitzmaurice (1885) 29 Ch D 459. 146. Bissett v Wilkinson (1926) All ER 343 per Lord Merrivale at 346. 147. Avon Insurance plc v Swire Fraser Ltd [2000] 1 All ER (Comm) 573 per Rix J at 597. 148. Turner v Green [1895] 2 Ch 205. 149. With v O’Flanagan [1936] 1 All ER 727. 150. Arkwright v Newbold (1881) 17 Ch D 301 per James lJ at 317–18. 151. Gould v Vaggelas (1984) 56 ALR 31 per Wilson at 46. 152. Gould v Vaggelas (1984) 56 ALR 31 per Wilson at 46. 153. Derry v Peek (1889) 14 App Cas 337 per Lord Herschell (with whom Lords Halsbury, Watson, Bramwell, Fitzgerald agreed) at 374. 154. Derry v Peek (1889) 14 App Cas 337.

155. L Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) (Shaddock’s case) (1981) 36 ALR 385. 156. See 5.110. 157. L Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) (Shaddock’s case) (1981) 36 ALR 385. 158. For a discussion on damages in relation to contract law, see W Covell, K Lupton, J Forder, Covell & Lupton Principles of Remedies, 5th ed, LexisNexis Butterworths, Australia, 2012, pp 90–126. 159. Limitation Act 1969 (NSW) s 14(1)(a). 160. For example, see CA ss 670A (misstatements in, or omissions from, takeover and compulsory acquisition and buy-out documents), 1041E (false or misleading statements), 1041F (inducing persons to deal), and 1041G (dishonest conduct). 161. Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq) (2012) 301 ALR 1 per Rares J at 47–8. 162. Explanatory Memorandum to the Corporate Law Economic Reform Program Bill 1999 (Cth) at [8.1]. 163. CA s 729(1). 164. CA s 730(1). 165. CA s 729(2). 166. CA s 729(3). 167. CA ss 731(1) and (2). 168. A person must be aware of the statement in order to have reasonable grounds for believing that a statement is not misleading: Adams v Thrift [1915] 1 Ch 557 per Eve J at 563. 169. CA ss 732(1) and (2). 170. CA s 733(1). 171. CA s 733(3). 172. CA s 733(3). 173. For further commentary on the meaning of the words ‘misleading or deceptive’ or ‘likely to mislead or deceive’, see 3.24. 174. National Exchange Pty Ltd v ASIC (2004) 61 IPR 420 per Dowsett J at [18]. 175. National Exchange Pty Ltd v ASIC (2004) 61 IPR 420. 176. ACL s 18 does not capture conduct in relation to financial services or financial products: CCA s 131A. 177. Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012] FCA 1200 per Jagot J at [2899]. 178. Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012] FCA 1200 per Jagot J at [2891]–[2892]. 179. ASIC v Citrofresh International Ltd (2007) 245 ALR 47 per Goldberg J at [64]. 180. ASIC v Citrofresh International Ltd (2007) 245 ALR 47 per Goldberg J at [66]–[67]. 181. ASIC v Cycclone Magnetic Engines Inc [2009] QSC 58 per Martin J at [146]–[147].

182. ASIC v Fortescue Metals Group Ltd (No 5) (2009) 264 ALR 201 per Gilmore J at [657]. 183. ASIC v Fortescue Metals Group Ltd (No 5) (2009) 264 ALR 201 per Gilmore J at [658]–[659]. 184. CA s 763A(1). 185. CA s 763B. 186. CA s 763C. 187. CA s 763D. 188. CA s 764A(1). 189. CA s 765A(1). 190. See also Corporations Regulations 2001 (Cth) (CR) reg 7.1.06. 191. CA s 766A(1). 192. CA s 766B. 193. CA s 766C. 194. CA s 766D. 195. CA s 766E. 196. See CA s 708 for documents that are not required to be lodged with ASIC. 197. See ASIC Act s 12BB for misleading or deceptive conduct in relation to future matters (similar to ACL s 4). 198. For further commentary on the meaning of the words ‘misleading or deceptive’ or ‘likely to mislead or deceive’, see 3.24. 199. GPG (Australia Trading) Pty Ltd v GIO Australia (Holdings) Ltd (2001) 191 ALR 342 per Giles J at [100]. 200. Medical Benefits Fund of Australia Ltd v Cassidy [2003] FCAFC 289 per Stone J at [27]. 201. Enterprise Finance Solutions Pty Ltd v Austec Pty Ltd [2013] FCA 491 per Nicholas J at [74]. 202. See 5.188. 203. ASIC v Citrofresh International Ltd (2007) 245 ALR 47 per Goldberg J at 64. 204. Avoca Consultants Pty Ltd v Millennium3 Financial Services Pty Ltd [2009] FCA 883 per Barker J at [232]. 205. ASIC Act s 12BAA(1). 206. ASIC Act s 12BAA(4). 207. ASIC Act s 12BAA(5). 208. ASIC Act s 12BAA(6). 209. ASIC Act s 12BAA(7). 210. See also ASIC Regulations reg 2B for a list of things that are considered as a credit facility. 211. ASIC Act s 12BAA(8). 212. ASIC Act s 12BAB(1). 213. ASIC Act s 12BAB(5). 214. ASIC Act s 12BAB(7). 215. ASIC Act s 12BAB(11).

216. ASIC Act s 12BAB(12). 217. See CA s 708 for documents that are not required to be lodged with ASIC. 218. ASIC Act s 102(2B).

[page 281]

Chapter 6 Unconscionable Conduct ‘Look, I know that English is not your first language. But, you don’t need a lawyer to check this document. Just sign it.’

Introduction Overview 6.1 This Chapter considers the provisions in relation to unconscionable conduct that are contained in Ch 2 Pt 2-2 of the Australian Consumer Law (ACL). 6.2

The topics covered in this Chapter are: Background to legislative unconscionable conduct – Background to former Trade Practices Act 1974 (Cth) (TPA) provisions; –

Background to ACL;

–

Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act);

–

Contracts Review Act 1980 (NSW);

–

National Credit Code;

Unconscionable conduct within the meaning of the unwritten law;

–

Section 20 of the ACL;

–

What is the meaning of ‘the unwritten law from time to time’?;

–

Definition of unconscionable conduct in the unwritten law;

–

Elements of unconscionable conduct in the unwritten law;

–

♦

What constitutes a ‘special disability’?;

♦

‘Knowledge’ of the special disability;

♦

‘Taking advantage’ of the special disability;

Is there a difference between ‘unconscionable’ conduct?;

‘unconscientious’

and

Unconscionable conduct in connection with goods or services; – Section 21 of the ACL; –

Unconscionable conduct under s 21 of the ACL;

Matters the court may have regard to for the purposes of s 21; – Section 22 of the ACL; Some examples of unconscionable conduct; – Unconscionable conduct with businesses; and –

Unconscionable conduct with consumers. [page 282]

6.3 Each topic will be discussed individually below. This will be followed by a summary of the remedies (and enforcement powers) available for contravention of the unconscionable conduct provisions.

Background to legislative unconscionable conduct Background to former TPA provisions

6.4 The idea of legislating a prohibition upon unconscionable conduct was first raised in 1976 by the Swanson Committee in its Report of the Trade Practices Act Review Committee to the Minister for Business and Consumer Affairs.1 6.5

In particular, the Report states:2

However, we do see advantages in prohibiting, but as a civil matter only, unconscionable conduct or practices in trade or commerce. The Committee so recommends, principally to give the Act a greater ability to deal with the problem outlined in the first paragraph of this chapter — the general disparity of bargaining power between sellers and buyers. Unconscionability is a standard quite apart from, and usually not encompassed by, the standards of misleading or deceptive conduct. It is a standard which historically developed under the equitable jurisdiction of the courts, which has also been adopted by specific legislation in Australia (eg section 88F of the N.S.W. Industrial Arbitration Act; various State and Territory money lenders and hire-purchase Acts) and, accordingly, is a familiar concept to Australian law.

6.6 No further discussion on legislating unconscionable conduct occurred until 1984 when a Green Paper containing a draft provision dealing with unconscionable conduct was published.3 6.7 The proposed new provision in the Green Paper set out factors which the court could consider in making a finding of unconscionable conduct. However, the proposed provision did not become law. 6.8 In 1986, former s 52A was introduced into the TPA.4 Former s 52A was limited to ‘goods or services’ of a kind ordinarily acquired for ‘personal, domestic or household use or consumption’.5 6.9 In 1990, the Report of the House of Representatives Standing Committee on Industry recommended the extension of former s 52A of the TPA to also cover small business transactions.6 [page 283]

6.10 In 1991, the Report of the Senate Standing Committee on Legal and Constitutional Affairs recommended against the extension of former s 52A of the TPA to cover small business transactions.7 6.11 In 1991, the Report of the Trade Practices Commission to the AttorneyGeneral and Minister for Small Business and Customs recommended that unconscionable commercial transactions be regulated under the TPA to allow access to legislative remedies.8 6.12 In 1992, former ss 51AA and 51AB were introduced under Pt IVA of the TPA.9 Section 51AB was former s 52A. Section 51AA was a new provision. The Explanatory Memorandum described former s 51AA as a provision which:10 … will not extend the existing equitable principles of unconscionability, but will make available remedies under the Trade Practices Act and make possible the involvement of the Trade Practices Commission.

6.13 The Explanatory Memorandum to the Trade Practices Legislation Amendment Bill 1992 also described former s 51AA as embodying:11 … the equitable concept of unconscionable conduct as recognised by the High Court in Blomley v Ryan (1956) 99 CLR 362 and Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447.

6.14 In 1998, former s 51AC was introduced in the TPA to regulate unconscionable conduct in business transactions, and to protect the ‘business consumer’ from unconscionable conduct by a corporation.12

Background to ACL 6.15 On 1 January 2011, the unconscionable conduct provisions were introduced under Ch 2 Pt 2-2 of the ACL. Initially, the original provisions in Ch 2 Pt 2-2 were as follows: Section 20 was based on former s 51AA of the TPA (unconscionable

conduct within the meaning of the unwritten law of the states and territories). Section 21 was based on former s 51AB of the TPA (unconscionable conduct in the context of a business’s dealing with consumers). Section 22 was based on former s 51AC of the TPA (unconscionable conduct in the context of business dealings with other ‘business consumers’). [page 284] 6.16 However, the original ss 21 and 22 of the ACL were unified into the one provision (now s 21) and a new provision to aid the courts in the interpretation of s 21 was introduced in what is now s 22.13 6.17 The Explanatory Memorandum to the Competition and Consumer Legislation Amendment Bill 2010 (Cth) states the following reasons as to why these changes were made:14 The Bill amends the unconscionable conduct provisions of the ACL and the ASIC Act to include a list of interpretative principles and to unify the consumer and business-related provisions prohibiting unconscionable conduct. The inclusion of a statement of interpretative principles in the unconscionable conduct provisions of the ACL and the ASIC Act will assist the courts in applying the prohibition of statutory unconscionable conduct, as well as improve stakeholder understanding of the meaning and scope of the provisions. The Bill also unifies what were sections 51AB and 51AC of the TP Act and sections 12CB and 12CC of the ASIC Act. Sections 51AB and 51AC of the TP Act were drafted in almost identical terms, as were sections 12CB and 12CC of the ASIC Act, and the meaning of unconscionable conduct under each provision was intended to be the same. The new provisions are sections 21 and 22 of the ACL and sections 12CB and 12CC of the ASIC Act. The unification will avoid the risk that courts will accord different meanings to the two sets of provisions.

6.18 In summary, the current unconscionable conduct provisions under Ch 2 Pt 2-2 of the ACL are as follows:

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 unconscionable conduct in the context of business dealings with other ‘business consumers’); and s 22 (interpretative provision to aid the court in the interpretation of s 21).

ASIC Act 6.19 Pursuant to s 131A of the Competition and Consumer Act 2010 (Cth) (CCA), Ch 2 Pt 2-2 of the ACL does not apply ‘to the supply, or possible supply, of services that are financial services, or of financial products’. Financial services and financial products are regulated under the ASIC Act. 6.20 The current unconscionable conduct provisions in Ch 2 Pt 2-2 ss 20– 22 of the ACL are mirrored respectively in Pt 2 Div 2 Sub-Div C ss 12CA, 12CB and 12CC of the ASIC Act. [page 285]

Contracts Review Act 1980 (NSW) 6.21 The Contracts Review Act 1980 (NSW) (CRA) allows a plaintiff to seek an order from the court in relation to a contract or a provision of a contract found to have been unjust in the circumstances.15 6.22 The word unjust is defined in s 4 of the CRA to include ‘unconscionable, harsh or oppressive’ conduct.16 Section 7(1) of the CRA provides a range of remedies if the court finds that a contract or a provision in a contract was unjust in the circumstances.17

6.23 Similar to s 22 of the ACL, s 9(2) of the CRA provides a nonexhaustive list of factors that a court may take into consideration in determining whether the contract was unjust at the time it was made.

National Credit Code 6.24 The National Credit Code (NCC) is set out in Sch 1 of the National Consumer Credit Protection Act 2009 (Cth). Under s 76(1) of the NCC, a court may reopen a transaction where it is satisfied that in the circumstances, the credit contract, mortgage or guarantee was unjust. 6.25 The word unjust is defined in s 204 of the NCC to include ‘unconscionable, harsh or oppressive’ conduct.18 Section 77 of the NCC provides the court with wide powers to adjust the rights and obligations of the parties, where an unjust transaction is reopened. 6.26 Similar to s 22 of the ACL, s 76(2) of the NCC provides a nonexhaustive list of factors that a court may take into consideration in determining whether the contract was unjust at the time it was made.

Unconscionable conduct within the meaning of the unwritten law Section 20 of the ACL 6.27

Section 20 of the ACL states:

20 Unconscionable conduct within the meaning of the unwritten law (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. Note: A pecuniary penalty may be imposed for a contravention of this subsection. (2) This section does not apply to conduct that is prohibited by section 21.

[page 286] 6.28 The principal purpose and function of s 20 of the ACL is to extend the remedies available under the ACL to conduct regarded by the courts as unconscionable in accordance with common law and equitable principles. 6.29 The scope of s 20(1) of the ACL is limited by the application of the more specific provision of s 21 (see s 20(2)). In other words, s 20(1) does not apply to unconscionable conduct in the context of a business’s dealing with consumers, and unconscionable conduct in the context of business dealings with other ‘business consumers’. 6.30 The usual course is that a court will examine first whether the alleged unconscionable conduct falls within s 21 of the ACL. If it does not fall under s 21, the court will then consider the matter under s 20.19 6.31 In Alievski v Cross Country Realty Victoria Pty Ltd,20 Bell J made the following comments in relation to the former unconscionable conduct provisions in the TPA, where his Honour said: I think it would have been an error of law for the magistrate to apply s 51AA(1) instead of s 51AB(1). Section 51AA(1) does not apply to conduct which is prohibited by s 51AB (or s 51AC). Thus it is logically necessary to consider s 51AB (and s 51AC) first. If s 51AB (or s 51AC) is found to apply, s 51AA does not. Further, as Hargrave J held in First East Auction Holdings Pty Ltd v Ange (as regards s 51AB and s 51AC), and Sundberg J held in Australian Competition and Consumer Commission v Simply No-Knead (Franchising) Pty Ltd (as regards s 51AC), ‘unconscionable’ in those provisions is not limited to cases of equitable or ‘unwritten law’ unconscionability, as it is in s 51AA. The concept of ‘unconscionable’ in s 51AB and s 51AC has an enlarged (somewhat more protective) content which takes its scope from the ordinary meaning of the word. The provisions of s 51AB(2) and s 51AC(3) assist in applying that enlarged concept. Those provisions also underscore that the concept in s 51AB(1) and s 51AC(1) is statutory and not limited to the unwritten law form. So interpreted, ‘unconscionable’ in s 51AB(1) and s 51AC(1) means unconscionable according to the accepted standards of human behaviour in the context of trade and commerce, reflecting the dictionary meaning of the word as understood in that context. Consequently, decisions on the scope of unconscionability under the unwritten law in s 51AA(1), such as Australian Competition and

Consumer Commission v Berbatis Holdings Pty Ltd, do not actually govern the operation of ss 51AB and 51AC, however much they might otherwise be generally helpful.

6.32 Section 20(1) (and s 21) of the ACL is not linked to the definition of consumer in s 3.21 Accordingly, a person who the unconscionable conduct is directed towards does not have to be a consumer. 6.33 Section 20(1) (and s 21) of the ACL will apply only if the unconscionable conduct occurs in ‘trade or commerce’. [page 287] 6.34 Unlike s 20, s 21 of the ACL includes an additional limitation that the unconscionable conduct is in connection with the supply or possible supply of goods or services. In this sense, s 20(1) is wider in scope than s 21, as s 20(1) does not require transactions to involve the supply, or possible supply, of goods or services.

What is the meaning of ‘the unwritten law from time to time’? 6.35 Section 20 of the ACL refers to conduct that is unconscionable within the meaning of the ‘unwritten law’. The unwritten law referred to in s 20 is the common law and equity.22 6.36 The Explanatory Memorandum to the Competition and Consumer Legislation Amendment Bill 2011 described the meaning of ‘the unwritten law from time to time’ as follows:23 The ‘unwritten law, from time to time’ is 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.

6.37 In Australian Competition and Consumer Commission (ACCC) v Samton Holdings Pty Ltd,24 Gray, French and Stone JJ made the following comments in relation to the words ‘the unwritten law from time to time’ in former s 51AA of the TPA: The words ‘unwritten law from time to time of the States and Territories’ identify one body of unwritten law. The courts of the states and territories are a primary source of that unwritten law, but any differences between them are subject to resolution by the High Court. It is beyond controversy that the unwritten law of the states and territories is one body of law for the whole of Australia: Lange v Australian Broadcasting Corp (1997) 189 CLR 520 at 563; 145 ALR 96; Lipohar v R (1999) 200 CLR 485 at 505; 168 ALR 8. Section 51AA, in referring to the unwritten law from time to time of the states and territories, refers to the common law of Australia.

6.38 In ACCC v CG Berbatis Holdings Pty Ltd,25 Gummow and Hayne JJ made similar comments:26 The parties, correctly, accept that the term ‘unconscionable’ is not used in s 51AA in any sense which is at large or reflects an ordinary or natural meaning in general usage. That is plain from the identification in s 51AA of ‘the meaning’ given by ‘the unwritten law, from time to time’. The identification thus made is the principles of law and equity

[page 288] expounded from time to time in decisions respecting the common law of Australia. It is now settled that there is but one Australian common law and the reference in the section to ‘the unwritten law … of the States and Territories’ must be read in that way. French J held that the phrase in question ‘can only be taken as a reference to the common law of Australia, a single body of judge-made law’, and the contrary has not been suggested in submissions to this court.

6.39 In ACCC v CG Berbatis Holdings Pty Ltd,27 French J identified the following two separate levels of unconscionable conduct in the unwritten law, namely:28

a generic level — which informs the fundamental principle of unconscionable conduct according to which equity acts; and a specific level — which restricts the usage of unconscionable conduct to particular categories of case. 6.40 French J considered that it is the specific level, and not the generic level, to which former s 51AA of the TPA applies. In ACCC v CG Berbatis Holdings Pty Ltd,29 Gummow and Hayne JJ accepted that the proper construction of former s 51AA of the TPA is restricted to legal categories of unconscionable conduct. In particular, their Honours said: The reference by his Honour to the use in s 51AA of the term ‘conduct that is unconscionable within the meaning of the unwritten law’ as identifying particular categories of case should be accepted as indicating the proper construction of s 51AA. The argument on the present appeal of all parties appeared to proceed on that footing. However, there then arises the question as to which particular manifestations of equity’s concern with unconscientious or unconscionable conduct are reached by s 51AA. The issue is an important one because s 51AA does more than re-enact for application in trade and commerce the general law principles concerned. Contravention of s 51AA attracts particular remedies under the Act which may not otherwise be available and provides, as this case illustrates, for litigation to be instituted and conducted by a public body, the ACCC.

6.41 As s 20 of the ACL recognises, the unwritten law may change from time to time. However, the change is effected through a process of judicial decision making.30 Section 20 does not operate to extend the application of the principles of unconscionable conduct.31 6.42 Equity is directed to the prevention of unconscionable behaviour.32 The fundamental principle upon which equitable relief is granted is that a party having a [page 289] legal right may not exercise it in such a way that the exercise amounts to

unconscionable conduct.33 6.43 In Tanwar Enterprises Pty Ltd v Cauci,34 Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ stated: The terms ‘unconscientious’ and ‘unconscionable’ are, as was emphasised in Australian Competition and Consumer Commission v CG 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. Thus, it may be said that breaches of trust and abuses of fiduciary position manifest unconscientious conduct; but whether a particular case amounts to a breach of trust or abuse of fiduciary duty is determined by reference to well-developed principles, both specific and flexible in character. It is to those principles that the court has first regard rather than entering into the case at that higher level of abstraction involved in notions of unconscientious conduct in some loose sense where all principles are at large.

6.44 In ACCC v Samton Holdings Pty Ltd,35 Gray, French and Stone JJ identified the following five categories where equity will provide relief in relation to unconscionable conduct: set aside a contract resulting from the knowing exploitation by one party of the special disadvantage of another. In this category: – the special disadvantage may be constitutional, deriving from age, illness, poverty, inexperience or lack of education;36 or –

the special disadvantage may be situational, deriving from particular features of a relationship between actors in the transaction such as the emotional dependence of one on the other;37

set aside a transaction against third parties entered into as the result of the defective comprehension by a party to the transaction, the influence of another, and the want of any independent explanation to the complaining party;38 prevent a party from exercising a legal right in a way that involves unconscionable departure from a representation relied upon by another to his or her detriment (equitable estoppel);39

relieve against forfeiture and penalty;40 and rescind contracts entered into under the influence of unilateral mistake.41 [page 290] 6.45 Each of the five categories involves the identification of unconscionable conduct, albeit its content and degree will vary according to the category. 6.46 The focus of the following discussion is on the first category of unconscientious exploitation of special disadvantage. It is this category which is most relevant for the purposes of s 20 of the ACL.

Definition of unconscionable conduct in the unwritten law 6.47 Unconscionable conduct is not defined in the ACL, nor is it capable of any precise definition. It is a concept that is described in terms of ‘very wide general expressions’.42 6.48 Unconscionable conduct is a concept that is ‘better described than defined’.43 It offers a standard determined by judicial decision-making rather than a ‘hard and fast’ rule.44 6.49 In ACCC v Samton Holdings Pty Ltd,45 Gray, French and Stone JJ made the following comments in relation to unconscionable conduct: The word ‘unconscionable’ is not a term of art. Its ordinary meaning given in the Shorter Oxford English Dictionary is ‘showing no regard for conscience; irreconcilable with what is right or reasonable’. That meaning is not affected by equitable doctrines. They define the cases in which unconscionable conduct will attract equitable relief. But the words of the section and the extrinsic material indicate that it was not intended to extend the categories of unconscionable

conduct in respect of which relief could be granted. Its object is to attract, to cases of unconscionable conduct to which it applies, the remedies available under the Trade Practices Act and to allow for those remedies to be pursued by the commission. That having been said, the reference in the explanatory memorandum to the equitable concept of unconscionable conduct as recognised by the High Court in Blomley v Ryan and Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; 46 ALR 402 does not require that the concept be read down to the classes of fact situation with which those cases were concerned. The section is not to be read as though it imported the words of the explanatory memorandum or the second reading speech. It speaks of the unwritten law ‘from time to time’.

6.50 Unconscionable conduct has no settled technical meaning.46 It is a concept that has been developed, and is still being developed, by courts over time on a case-by-case basis.47 [page 291] 6.51 However, unconscionable conduct is generally accepted to mean conduct that defies ‘good conscience’.48 It is more than harsh or unfair conduct. It requires a high level of moral obloquy.49 6.52 Accordingly, not every transaction or unfair practice will be considered as unconscionable conduct. In Attorney-General (NSW) v World Best Holdings Ltd,50 Spigelman CJ noted that: If it [unconscionable conduct] were to be applied as if it were equivalent to what was ‘fair’ or ‘just’, it could transform commercial relationships in a manner which the minister expressly stated was not the intention of the legislation. 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.

6.53 For example, driving a ‘hard commercial bargain’ or simply getting someone involved in a ‘bad deal’ are by themselves unlikely to be considered as unconscionable conduct.51 6.54

In ACCC v CG Berbatis Holdings Pty Ltd,52 Gleeson CJ stated the

following in relation to merely taking advantage of superior bargaining position and unconscionable conduct: Unconscientious exploitation of another’s inability, or diminished ability, to conserve his or her own interests is not to be confused with taking advantage of a superior bargaining position. There may be cases where both elements are involved, but, in such cases, it is the first, not the second, element that is of legal consequence. It is neither the purpose nor the effect of s 51AA to treat people generally, when they deal with others in a stronger position, as though they were all expectant heirs in the nineteenth century, dealing with a usurer.

6.55 In Hurley v McDonald’s Australia Ltd,53 Heerey, Drummond and Emmett JJ stated the following in relation to the words ‘unfair’, ‘unreasonable’, ‘immoral’ or ‘wrong’ and unconscionable conduct: 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 s 51AB and s 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

[page 292] to the term ‘unconscionable’ import a pejorative moral judgment — Qantas Airways Ltd v Cameron (1996) 66 FCR 246 at 283–284 and 298. … Before s 51AA, s 51AB or s 51AC will be applicable, there must be some circumstance other than the mere terms of the contract itself that would render reliance on the terms of the contract ‘unfair’ or ‘unreasonable’ or ‘immoral’ or ‘wrong’.

6.56 In Commercial Bank of Australia Ltd v Amadio,54 Mason J provided the following comments in relation to unconscionable conduct: Relief on the ground of unconscionable conduct will be granted when unconscientious advantage is taken of an innocent party whose will is overborne so that it is not independent and voluntary, just as it will be granted when such advantage is taken of an innocent party who,

though not deprived of an independent and voluntary will, is unable to make a worthwhile judgment as to what is in his best interest.

6.57 Another way of describing what is considered as unconscionable conduct is that it is ‘the exploitation by one party of another’s position of disadvantage in such a manner that the former could not in good conscience retain the benefit of the bargain’.55

Elements of unconscionable conduct in the unwritten law 6.58 Although there is no precise definition of unconscionable conduct, the courts have generally required three elements in order to establish unconscionable conduct. 6.59 In Commercial Bank of Australia Ltd v Amadio,56 Deane J provided the following basis for unconscionable conduct to apply and in doing so, identified three requisite elements of unconscionable conduct: The jurisdiction is now established as extending generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them and (ii) that disability was 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. Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable.

6.60 From Deane J’s above statement, it is clear that the three requisite elements of unconscionable conduct are: 1.

one party must have a ‘special disability’;

2.

the other party must have knowledge of the special disability; and

3.

the other party took advantage of the first party’s special disability in a way that was ‘unconscientious’.

[page 293] 6.61 Before examining individually each of the three requisite elements of unconscionable conduct in the unwritten law (and hence s 20 of the ACL), it is useful to consider the leading case on unconscionable conduct, namely Commercial Bank of Australia Ltd v Amadio.57 In the extract below, it is shown how the three requisite elements of unconscionable conduct have been applied in this decision.

Commercial Bank of Australia Ltd v Amadio (1983) 46 ALR 402 In this case, Mr and Mrs Amadio were an elderly couple of an Italian background. Vincenzo Amadio (Vince), who was Mr and Mrs Amadio’s son, owned a building business (Business). The Business was not doing well. Vince asked his parents to mortgage their house to the bank for six months as security for a $50,000 loan from the Commercial Bank of Australia Ltd (CBA). The CBA was aware that the Business was in financial difficulty, but Mr and Mrs Amadio incorrectly believed that it was financially sound. On that basis, Mr and Mrs Amadio signed a guarantee and mortgage document (Document) for their house in the presence of the bank manager from CBA. When signing the Document, Mr and Mrs Amadio did not read it, nor did they receive legal advice. In fact, the Document included a guarantee by Mr and Mrs Amadio to secure all indebtedness of Vince’s business. Furthermore, the Document was not limited to $50,000, but was unlimited in amount and time. After the Document was signed, the business went into liquidation. At that time, the overdraft of the Business stood at approximately $130,000. In addition to that liability, the Business had contingent liabilities to the

bank involving a total amount of $20,000 in respect of guarantees given by it. The CBA made demand on Mr and Mrs Amadio. Mr and Mrs Amadio commenced proceedings to set aside the mortgage on the ground of unconscionable conduct. At trial, the CBA was successful. Mr and Mrs Amadio appealed. On appeal, the Full Court of the Supreme Court of South Australia set the mortgage aside. The CBA appealed. The majority of the High Court, Mason, Deane and Wilson JJ, (Gibbs CJ and Dawson J in dissent) ruled in favour of Mr and Mrs Amadio and held that the guarantee and mortgage should be set aside on the grounds of unconscionable conduct. Deane J, in his judgment, set out the three requisite elements of unconscionable conduct as follows. [page 294] The first issue was whether Mr and Mrs Amadio suffered under a disability’ that seriously affected their ability to make a judgement as to their best interests. Deane J found that Mr and Mrs Amadio were acting under a ‘special disability, because of a combination of: (i)

their age;

(ii) their limited grasp of written English; (iii) the circumstances in which the bank presented the documents to them for signing; (iv) their lack of knowledge and understanding of the contents of the document; and (v) their lack of assistance and advice. The second issue was whether the CBA had knowledge that Mr and Mrs

Amadio’s had a special disability. Deane J found that the special disability of Mr and Mrs Amadio was evident to the CBA. In particular, the CBA manager was aware that the Business could not pay its debts and he knew the potential consequences to Mr and Mrs Amadio, who had clearly shown signs of special disability (as described in (i) to (v) above). The third issue was whether it was unfair or ‘unconscientious’ of the CBA to have Mr and Mrs Amadio sign the Document in the circumstances. Deane J found that the CBA took unconscientious advantage of the situation that Mr and Mrs Amadio were in.

What constitutes a ‘special disability’? 6.62 The first element of unconscionable conduct in the unwritten law (and hence the first element of s 20) is ‘special disability’. What constitutes special disability (sometimes referred to as ‘special disadvantage’) is not comprehensively defined or exhaustively stated. 6.63 A special disadvantage is described in general terms as ‘one which seriously affects the ability of the innocent party to make a decision as to his own best interests’.58 6.64 In Blomley v Ryan,59 Fullagar J listed some of the circumstances that may place a person under a special disability. His Honour said: The circumstances adversely affecting a party, which may induce a court of equity to refuse its aid or to set a transaction aside, are of great variety and can hardly be satisfactorily classified. Among them are poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy, or lack of education, lack of assistance or explanation where assistance or explanation is necessary. The common characteristic seems to be that they have the effect of placing one party at a serious disadvantage vis-a-vis the other.

[page 295]

6.65 The list provided by Fullagar J in Blomley v Ryan,60 is not exhaustive, nor fixed. For example, the reference to ‘sex’ and the mere fact that a female could be under a special disability for simply being married has been rejected as anachronistic in later decisions.61 6.66 Furthermore, each category in the list identified by Fullagar J in Blomley v Ryan,62 does not, by itself, constitute a special disability. What is required is that the category must seriously affect a person’s ability to make decisions in their own best interest. 6.67 For example, the fact that someone is elderly does not automatically place them in a category of special disability. Elderly people can still make rational decisions in their own best interest. However, if the age of a person affects the ability of that person to make a rational decision, then this may be considered as a special disability. 6.68 Furthermore, the categories in the list identified by Fullagar J in Blomley v Ryan,63 are not mutually exclusive, and as such, a combination of two or more of these categories may provide a strong basis for a person to be considered as having a special disability.64 6.69 The importance of the disadvantage being ‘special’ was stressed by Mason J in Commercial Bank of Australia Ltd v Amadio,65 as follows: I qualify the word ‘disadvantage’ by the adjective ‘special’ in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party.

6.70 Equity will not intervene merely to relieve the plaintiff from his or her own foolishness. The following decision of Louth v Diprose,66 makes it clear that equity will intervene to set aside a transaction in circumstances of unconscionable victimisation.

Louth v Diprose (1992) 110 ALR 1 In this case, Mr Louis Diprose (Diprose), a practising solicitor, was infatuated with Ms Carol Louth (Louth). Louth was aware of Diprose’s infatuation with her and as a result, it gave her strong influence over him. Louth often received gifts from Diprose and on one occasion he even proposed to her (which she refused). [page 296] Louth was renting her sister’s house, which was about to be sold. Louth approached Diprose and informed him that she was depressed and had thought of committing suicide as she would be left without a home. Diprose was aware that there was no immediate threat of Louth becoming homeless, but he responded to what was described as an ‘atmosphere of crisis’. As a result, Diprose agreed to buy the house for Louth and paid $59,206.55. The relationship between Diprose and Louth deteriorated and Diprose commenced proceedings in the Supreme Court of South Australia claiming beneficial title to the house. At trial, King CJ found that Diprose made the gift because he was emotionally dependent on Louth and this gave her a position of great influence on his actions and decisions. Furthermore, King CJ found that Louth manipulated Diprose’s infatuation by manufacturing an ‘atmosphere of crisis’, so that he would provide money for the purchase of the house. King CJ held that it would be unconscionable for Louth to retain title in the house paid for by Diprose. Louth appealed. On appeal, the majority

of the Full Court (Jacobs ACJ and Legoe J, with Matheson J dissenting) upheld the findings of King CJ. Louth appealed to the High Court On appeal, the majority of the High Court (Mason CJ, Brennan, Deane, Dawson, Gaudron and McHugh JJ (Toohey J dissenting)), ruled in favour of Diprose and dismissed the appeal. The majority held that the gift to buy the house should be set aside because it was unconscionable in the circumstances for the appellant to retain the benefit of the gift. In particular, Deane J stated the following as to the ‘special disability’ of the respondent (at 14): [T]he relationship between the respondent and the appellant at the time of the impugned gift was plainly such that the respondent was under a special disability in dealing with the appellant. That special disability arose not merely from the respondent’s infatuation. It extended to the extraordinary vulnerability of the respondent in the false ‘atmosphere of crisis’ in which he believed that the woman with whom he was ‘completely in love’ and upon whom he was emotionally dependent was facing eviction from her home and suicide unless he provided the money for the purchase of the house. The appellant was aware of that special disability. Indeed, to a significant extent, she had deliberately created it. She manipulated it to her advantage to influence the respondent to make the gift of the money to purchase the house. When asked for restitution she refused. From the respondent’s point of view, the whole transaction was plainly a most improvident one. In these circumstances, the learned trial judge’s conclusion that the appellant had been guilty of unconscionable conduct in procuring and retaining the gift of $59,206.55 was not only open to him. In the context of his Honour’s findings of fact, it was inevitable and plainly correct. On those findings, the case was not simply one in which the respondent had, under the influence of his love for, or infatuation with, the appellant, made an imprudent gift in her favour. The case was one in which the

[page 297] appellant deliberately used that love or infatuation and her own deceit to create a situation in which she could unconscientiously manipulate the respondent to part with a large proportion of his property. The intervention of equity is not merely to relieve the plaintiff from the consequences of his own foolishness. It is to prevent his victimisation.

6.71 In Kakavas v Crown Melbourne Ltd,67 the High Court re-emphasised that equity is focused on preventing victimisation or exploitation and not with a person being indifferent or inadvertent in making decisions in his or her own best interest. The High Court said: 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 of the victimisation or exploitation with which the principle is concerned.

6.72 As stated above, a person is not under a special disability simply because of inequality of bargaining power. Many contracts are made between parties of unequal bargaining power.68 It is not essential that loss by the bargain is suffered by the disadvantaged person.69 6.73 However, in Bridgewater v Leahy,70 it appears that the majority of the High Court adopted an expansive application of what is ‘special disability’. In this case, the majority appears to have focused on the fact that the transaction between the two parties was improvident, and was neither fair nor just and reasonable. Interestingly, the trial judge, the majority judges in the Court of Appeal and the dissenting judges in the High Court case all held that there was no ‘special disability’.71

Bridgewater v Leahy (1998) 158 ALR 66 In this case, Bill York (Bill) passed away, but was survived by his wife and his four daughters, all married women. In his Will, Bill left his farming property (Property) to his daughters. However, that provision was subject to an option for his nephew, Neil York (Neil) to purchase the Property.

[page 298] Neil had worked on the Property for substantially the whole of his working life and formed a close relationship with Bill. Prior to his death, Bill had entered into a transaction with Neil, which in fact meant that Neil would only pay a fraction of the market price of the Property upon Bill’s death. Bill’s daughters sought to have the transaction between Bill and Neil set aside on the basis that it was unconscionable for Neil to retain the Property in the circumstances given. The majority of the High Court (Gaudron, Gummow and Kirby JJ (Gleeson CJ and Callinan J dissenting)) held, amongst other things, that it was unconscionable for Neil to retain the benefit of the transaction between him and Bill. Bill had a ‘special disability’, and Neil was aware of it and took advantage of it through a grossly improvident transaction on the part of Bill. In particular, the majority provided the following reasons as to why they formed the view that Bill was under a ‘special disability’. The majority said (at [121]–[122]): Bill had the goal of retaining the properties as an integrated farming enterprise under reliable and experienced management. His Honour found that this goal was important to him. The transfers and the deed, as a means to attain that goal, involved an improvident transaction which was neither fair nor just and reasonable. The effect of the transfers and the deed was to dispose of a significant portion of Bill’s assets not for their value of $696,811 but for $150,000. This transaction put it out of Bill’s power to change his testamentary arrangements with respect to that portion of its assets. Further, for all his deep concerns that all his properties be kept together under the one manager, even at the expense of the interests of his children, the form of the transaction was such as to provide no certainty that this necessarily would follow for the remainder of Bill’s life or after his death. Nor is it any sufficient response that, were Bill to retain the $150,000 or assets representing such sum, this would augment the $200,000 which would fall into the residue under cl 4 of the Will upon exercise of the option after his death. Bill’s goal to preserve his rural interests intact and his perception that Neil was the candidate to provide reliable and experienced management thereof were significant elements in his emotional attachment to and dependency upon Neil. The initiative to

utilise the circumstance of the sale of the Injune land (to the retention of which Bill had been opposed) for the irreversible implementation of Bill’s wishes during his lifetime came from Neil. It is not an answer that there was no finding that Neil had pursued the initiative to its implementation in July and November 1988 with the motive or purpose of forestalling any change in Bill’s testamentary intentions. The equity to set aside the deed may be enlivened not only by the active pursuit of the benefit it conferred but by the passive acceptance of that benefit.

6.74 A plaintiff is not under a special disability simply because the defendant has provided inadequate consideration in a contract. The inadequacy of consideration, on its own, is insufficient to show that a plaintiff suffers from a special disability.72 [page 299] 6.75 However, the inadequacy of consideration from the defendant may be relevant in supporting an inference that a ‘special disability’ existed. This was made clear in Blomley v Ryan,73 where Fullagar J stated: … inadequacy of consideration, while never of itself a ground for resisting enforcement, will often be a specially important element in cases of this type. It may be important in either or both of two ways — firstly as supporting the inference that a position of disadvantage existed, and secondly as tending to show that an unfair use was made of the occasion. Where, as here, intoxication is the main element relied upon as creating the position of disadvantage, the question of adequacy or inadequacy of consideration is, I think, likely to be a matter of major, and perhaps decisive, importance. It will almost always, I think, be ‘… an important ingredient in considering whether a person did exercise any degree of judgment in making a contract, or whether there is a degree of unfairness in accepting the contract’ (per Page Wood VC in Wiltshire v Marshall (1866) 14 LT 396, at 397).

6.76 The following case of Blomley v Ryan,74 is an example of a successful claim of unconscionable conduct. The case re-emphasises the point that knowingly taking advantage of a person’s special disability beyond a hard bargain can be considered as unconscionable conduct.

Blomley v Ryan (1956) 99 CLR 362 In this case, Mr Ryan, the respondent, sold a grazing property to Mr Blomley, the appellant, for the price of £25,000. The property was a settlement lease of 3,696 acres at Boggabilla, a town in New South Wales. At the time of sale, the market value of the property as grazing land was £33,444 or ‘slightly over’ £9 per acre. The deposit payable by Mr Blomley, as purchaser, was £5. Mr Ryan did not dispute that he signed a contract for sale of the property. However, he did argue that at the time of signing the contract, he was incapacitated by his old age (about 78 years old) and was extremely intoxicated. Furthermore, Mr Ryan argued that at the time of execution of the contract, Mr Rogers, a lawyer who acted for the vendor and purchaser, failed to give him proper advice and protection. Mr Rogers was hired by the purchaser of the property, and Mr Ryan argued that the plaintiff ‘acted with undue haste’ to have the contract for sale signed in Mr Rogers’ office. Accordingly, Mr Ryan argued that the contract was not signed on equal terms and he was taken advantage of by the purchaser because he was elderly and extremely intoxicated. [page 300] Mr Blomley sought specific performance of the contract, while in cross-claim Mr Ryan sought to have the contract set aside on the basis that it was unconscionable conduct. The majority of the High Court (McTiernan and Fullagar JJ in separate

judgments (Kitto J dissenting)) held that the transaction was unconscionable and that the contract for sale of the property be set aside. In particular, the majority noted that because of Mr Ryan’s intoxicated state, he was suffering from a special disability to the extent that his judgment was seriously affected. The fact that Mr Ryan was intoxicated was known by the purchaser and the purchaser exploited or took advantage of Mr Ryan’s special disability. The majority based Mr Ryan’s special disability on a number of factors, including the low deposit paid, and the inadequacy of consideration (ie, the difference between the contract price of the property and the market value). It was emphasised by Fullagar J that it was the fact that the purchaser took advantage of Mr Ryan’s special disability at the time of signing the contract that was relevant to the finding of unconscionable conduct, and not simply because Mr Ryan was intoxicated at that time. In particular, Fullagar J stated (at 405): Where the court is satisfied that a contract disadvantageous to the party affected has been obtained by ‘drawing him to drink’, or that there has been real unfairness in taking advantage of his condition, the contract may be set aside.

6.77 The following case of ACCC v Samton Holdings,75 is an example of the ACCC failing to establish unconscionable conduct. The ACCC failed in this case because the Full Federal Court concluded that the requisite element of special disadvantage was not established.

ACCC v Samton Holdings Pty Ltd (2002) 189 ALR 76 In this case, Executive Bloodstock Pty Ltd (Bloodstock) acquired a lunch bar business. The owners of Bloodstock, Mr and Mrs Ranaldi, borrowed

heavily to purchase the business. The business was located in premises leased from the landlords, Samton Holdings Pty Ltd (Landlords). The lease of the premises was due to expire and contained an option to renew. Bloodstock failed to exercise the option to renew and, as a consequence, it was left with the prospect of substantial loss. The Landlords initially refused to extend the time for the exercise of the option. However, after negotiations, the Landlords agreed that they would extend the option for a sum of $70,000. The payment was made by Bloodstock. [page 301] The ACCC commenced proceedings against the Landlords alleging unconscionable conduct in contravention of former s 51AA of the TPA. At trial, Carr J held in favour of the Landlords, as his Honour believed that the conduct of the Landlords was not unconscionable. The ACCC appealed. On appeal, the Full Federal Court (Gray, French and Stone JJ, in a joint judgment) dismissed the appeal and held that the conduct of the Landlords was not unconscionable, as Bloodstock (ie, its owner, the Ranaldis) was not at a special disadvantage within the meaning of unconscionable conduct for the following reasons: 1.

in the relevant period, Bloodstock received legal advice about the option to renew;

2.

the failure to exercise the option to renew the lease was the fault of Bloodstock and not the Landlord; and

3.

once the lease expired, there was no legal obligation for the Landlords to renew the lease.

Accordingly, their Honours found that the conduct of the Landlord was not unconscionable, as the mere inequality of bargaining power, by itself, in these circumstances was insufficient of establishing unconscionable conduct. In particular, Gray, French and Stone JJ stated (at [64]–[66]) that: At the time they were negotiating for the grant of the second lease, the Ranaldis and Executive Bloodstock were at a serious disadvantage. They had very little bargaining power. As a practical matter, they were not in a position to make any decision other than to pay the price demanded by the respondents. It may be accepted that the categories of special disadvantage are open and may extend to what French J, at first instance in Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (ACN 008 799 040) [2000] FCA 1893; BC200008185, called ‘situational disadvantage’ as well as the constitutional disadvantages engendered by such disabilities as illiteracy or lack of education, illness or infirmity. It is not necessary for present purposes to explore the limits of those categories. On the findings of fact made by his Honour it is difficult to see how it would be correct to characterise the case as one of ‘special disadvantage’ in the relevant sense. The disadvantage under which … Bloodstock laboured had arisen from a combination of considered commercial judgment (the decision to borrow heavily in order to purchase the business) and Mr Ranaldi’s oversight in neglecting to exercise the option in good time. These factors did not impair the Ranaldis’ 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. Characterisation of disadvantage as ‘special’ involves the recognition that it would be unconscionable knowingly to deal with the person so affected without regard to his or her disability, be it constitutional, in the sense of inherent, or situational, in the sense of arising from a particular set of circumstances. In effect this may

[page 302] require some special conduct or care which is not necessary in the absence of such disadvantage. If, for example, the disability relates to language, illiteracy or lack of education, conscientious dealing may ensure the bargaining deficit is compensated for by the provision of special assistance such as independent advice which will either enable a proper understanding of the transaction or overcome the disadvantage arising from want of a proper understanding.

In this case it is difficult to see how the respondents might have catered for the disadvantage suffered by the Ranaldis and … Bloodstock other than by granting them a new lease on the same terms as would have applied had the option been exercised in accordance with the first lease. Yet it was accepted on all sides that the respondents were not obliged to offer the lessee a further term. The Ranaldis’ situation could not be characterised as one of special disadvantage only because the respondents failed to make an offer that they had no obligation to make. It cannot be the case that any tenant whose careless failure to exercise an option to renew a lease results in economic disadvantage would be entitled to a renewal of the term. A fortiori it cannot be the case that a tenant in that situation and absent other circumstances, is in a situation of special disadvantage. Support for this position can be found in the judgment of the Full Court in C G Berbatis Holdings Pty Ltd v Australian Competition and Consumer Commission (2001) 185 ALR 555 at [82]: It is inappropriate to characterise the detriment that a tenant has by reason of the imminent expiration of a lease as a special disadvantage.

6.78 The following case of Kakavas v Crown Melbourne Ltd,76 is an important High Court case and a further example of failing to establish unconscionable conduct due to the requisite element of special disadvantage not being established.

Kakavas v Crown Melbourne Ltd (2013) 298 ALR 35 In this case, between June 2005 and August 2006, Mr Kakavas, a ‘high roller’, lost over $20 million playing baccarat at the Melbourne casino operated by Crown Melbourne Ltd (Crown). Crown knew that Mr Kakavas was a gambler, but it provided a number of incentives for Mr Kakavas to continue to gamble at the casino, including rebates on losses and access to Crown’s corporate jet. Mr Kakavas considered himself as a pathological gambler. Given the large sums of money gambled, Mr Kakavas was subject to an interstate exclusion order (IEO) made by the Commissioner of Police in New South

Wales. The IEO had the consequence that any winnings payable to Mr Kakavas by Crown were forfeited to the State of Victoria. [page 303] Mr Kakavas commenced proceedings against Crown in the Supreme Court of Victoria, claiming unconscionable conduct on behalf of Crown in contravention of former s 51AA of the TPA. The trial judge (Harper J) found in favour of Crown and held that there was no unconscionable conduct by Crown against Mr Kakavas. Mr Kakavas appealed. The Court of Appeal of the Supreme Court of Victoria (Mandie and Bongiorno JJA and Almond AJA) upheld the decision of Harper J and dismissed the appeal. Mr Kakavas appealed to the High Court. In a unanimous decision, the High Court (French CJ, Hayne, Crennan, Kiefel, Bell, Gageler and Keane JJ) ruled in favour of Crown and dismissed the appeal. The High Court held (at [126]–[135]) that Mr Kakavas was not under a special disadvantage because he was a pathological gambler. Mr Kakavas was able to make rational decisions on his own accord. Furthermore, even if Mr Kakavas had a special disability, Crown did not exploit it. In particular, the High Court noted the following in relation to the approach for considering the issue of special disability of Mr Kakavas (at [124]): It does not accord with that approach to consider the appellant’s ‘special disadvantage’ separately, in isolation from the other circumstances of the impugned transactions which bear upon the principle invoked by the appellant. The issue as to special disadvantage must be considered as part of the broader question, which is whether the impugned transactions were procured by Crown’s taking advantage of an inability on the appellant’s part to make worthwhile decisions in his own interests, which inability was sufficiently evident to Crown’s employees to render their conduct exploitative.

6.79 In Kakavas v Crown Melbourne Ltd,77 the High Court made it clear that it is not the role of equity to intervene in circumstances where a plaintiff voluntarily engages in risky business. The High Court said: It is telling that none of the authorities cited by the parties affords an example of a successful claim by a party who has voluntarily chosen to indulge his or her ‘special disadvantage’ by a decision made when not in the grip of that disadvantage. … [E]quitable 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.

[page 304] 6.80 Furthermore, it is evident from the High Court’s judgment in Kakavas v Crown Melbourne Ltd,78 that when examining whether a plaintiff suffers from a special disability, the courts may look beyond the plaintiff’s ability in the given transaction(s) or particular encounter(s) with the defendant, but will also look towards the plaintiff’s general ability to function within society. The High Court stated: Importantly, his Honour [primary judge] found that the appellant’s ‘level of functioning in each of the personal, familial, financial, vocational and legal levels was … unremarkable’. Further, his Honour found that the appellant’s ‘finances were, at least to outward appearances and perhaps in fact, in sound, perhaps excellent, shape’. These findings are quite inconsistent with a view of the appellant as a person unable to make a responsible decision as to whether he could afford to indulge himself as a high roller, and should or should not do so, much less that Crown knew, or should have known, that he could not.

‘Knowledge’ of the special disability 6.81 The second requisite element of unconscionable conduct is ‘knowledge’ of the special disability. For the purposes of unconscionable conduct, the required level of knowledge is ‘actual knowledge’ or ‘something less than actual knowledge’.79 6.82 The ‘something less than actual knowledge’ has been interpreted to include wilful ignorance.80 Hence, the defendant wilfully ‘shutting his or her eyes’ to the vulnerability of the plaintiff, is considered as sufficient knowledge for the purposes of unconscionable conduct. 6.83 In other words, wilful ignorance (sometimes referred to as wilful blindness) is evident if a defendant abstains from inquiring in suspicious circumstances, because he or she sees that the result of the inquiry will probably show the special disability of the plaintiff.81 6.84 In Commercial Bank of Australia Ltd v Amadio,82 Mason J stated that ‘knowledge’ required that the defendant ‘knows or ought to know’ of the existence of the plaintiff’s ‘special disability’, which affects the plaintiff’s ability to make decisions in his or her best interest. 6.85 The reference to ‘ought to know’ must logically be equivalent to the reference to ‘something less than actual knowledge.’ The ‘ought to know’ reference has been interpreted as something that should not stray too far from the standard of actual knowledge.83 [page 305] 6.86 In Commercial Bank of Australia Ltd v Amadio,84 Mason J provided the following example on the knowledge requirement in the following terms,

which supports the notion that actual knowledge or something less than actual knowledge is required for unconscionable conduct: … 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.

6.87 In Commercial Bank of Australia Ltd v Amadio,85 Deane J described the knowledge requirement as follows: [Was the] disability … sufficiently evident to the stronger party to make it prima facie unfair or unconscientious …

6.88 In ACCC v Radio Rentals,86 Finn J made it clear that the ‘something less than actual knowledge’ or ‘ought to know’ or ‘sufficiently evident’ is not constructive notice. His Honour states: While the courts subsequently have resorted to various formulae to encapsulate the knowledge falling short of actual knowledge which will nonetheless be sufficient, sight must not be lost of what is the subject of the required knowledge (be it actual or something less). It is knowledge of a particular state of affairs which itself embodies a judgment as to the disabled party’s ability to conserve his or her own affairs in the parties’ dealing. It is that state of affairs which is to be ‘sufficiently evident’ to the stronger party. If that person does not actually know of that state of affairs and is not ‘wilfully ignorant’ of it (in the sense that he or she is intent on not knowing it despite what is evident to him or her: cf Owen and Gutch v Homan [1853] Eng R 883; (1853) 4 HLC 997 at 1035), that person must at least be aware of circumstances that would cause him or her or a reasonable person in his or her position to suspect from what is evident that that state of affairs may exist. I have avoided resort in the above to formulaic descriptions — ‘constructive knowledge (or notice)’ or ‘duty to inquire’, etc. These tend to have their own provenances which can deflect attention from the inquiry required to be made — hence Kirby J’s comment in Garcia v National Australia Bank Ltd [1998] HCA 48; (1998) 194 CLR 395 at 430 that ‘[c]onstructive notice should not be sufficient for unconscientious dealing’.

6.89 In ACCC v Radio Rentals,87 one of the critical issues raised by the ACCC related to what Radio Rentals knew or had reason to know through its

employees about the capacities and personal circumstances of a customer as a result of its dealings with him [page 306] and from its records. The ACCC was not successful in this case, as the judge thought the evidence was not sufficient to establish the requisite element of knowledge for unconscionable conduct.

ACCC v Radio Rentals Ltd (2005) 146 FCR 292 In this case, the ACCC instituted proceedings against Radio Rentals Limited and Walker Stores (which operates through Radio Rentals stores) alleging that they engaged in unconscionable conduct in their dealings with an intellectually disabled man, named Mr Groth. Mr Groth had both an intellectual disability and a schizophrenic illness. He was in receipt of a disability pension which was his sole source of income. The ACCC alleged that the companies engaged in unconscionable conduct between 1996 and 2002 in their dealings with Mr Groth which resulted in: him entering into 15 rental agreements, two loan agreements and 17 service agreements with Radio Rentals; and three rental agreements with Walker Stores. The agreements were in respect of various electrical goods including fridges, televisions, washing machines, microwave ovens, video recorders, a clothes dryer, heater, vacuum cleaner, DVD player and a digital camera. The ACCC alleged Mr Groth paid Radio Rentals and Walker Stores

more than $20,000 pursuant to the agreements. Finn J held that Radio Rentals and Walker Stores had not acted unconscionably in contravention of former s 51AA (and s 51AB) of the TPA in their dealings with the intellectually disabled man. Finn J noted that notwithstanding the significant disability and incapacities from which Mr Groth suffered, these were not so made evident to Radio Rentals as to justify the conclusion that Radio Rentals and Walker Stores engaged in unconscionable conduct for the purposes of the former s 51AA and s 51AB of the TPA. In particular, Finn J said (at [156]–[160]): My own views are as follows. I am satisfied that Mr Groth suffers both from schizophrenia and intellectual retardation which is at least borderline. I similarly am satisfied that his reading, spelling and mathematical abilities are quite limited and that while he has some capacity to operate ordinary machines and appliances, it is nonetheless fairly limited. … Turning to Mr Groth’s dealings with Radio Rentals personnel, it is significant that none of the salespersons who were called and who had a memory of him knew or suspected he was intellectually disabled. The evidence of what transpired as each agreement was made — to the extent that there is evidence at all — is not particularly reliable and often somewhat contradictory. Memories are unreliable and what may in fact have been reconstructed can assume the character of reality. Having said this I accept the evidence of the salespersons’ perceptions of Mr Groth.

[page 307] What they said is consistent with the view I arrived at after close observation of him. I should add, because of the attention paid to this matter by the ACCC in its crossexamination of the salespersons, that the types of encounters they had with Mr Groth on the sales floor were not such as would necessarily or at all invite suspicion about his intellectual capacity. If on occasion protracted because of the time involved in obtaining credit approvals, the various encounters appear to have been routine and perfunctory in a setting which would not naturally invite critical appraisal of a person such as Mr Groth.

6.90 In Kakavas v Crown Melbourne Ltd,88 the High Court confirmed that constructive knowledge of the plaintiff’s special disability is insufficient for the purposes of unconscionable conduct. In particular, the High Court noted the following:89 Of the concept of constructive notice, in Manchester Trust v Furness, Lindley LJ said: [A]s regards the extension of the equitable doctrines of constructive notice to commercial transactions, the Courts have always set their faces resolutely against it. The equitable doctrines of constructive notice are common enough in dealing with land and estates, with which the Court is familiar; but there have been repeated protests against the introduction into commercial transactions of anything like an extension of those doctrines. Consistently with that approach, in Oxley v James, Jordan CJ observed that ‘in commercial transactions … means of knowledge are not actual knowledge’. More recently, in Garcia, Gaudron, McHugh, Gummow and Hayne JJ did not welcome the use of constructive notice to establish that a transaction is impeachable for equitable fraud. Their Honours said: Such an analysis may be required in ordering the priority of competing interests in property but in the present context it may well distract attention from the underlying principle: that the enforcement of the legal rights of the creditor would, in all the circumstances, be unconscionable.

6.91 In Kakavas v Crown Melbourne Ltd,90 the High Court confirmed that the example provided by Mason J in Commercial Bank of Australia Ltd v Amadio,91 was an example of wilful ignorance and not constructive notice. In particular, the High Court said: In our respectful opinion, Mason J cannot be taken to have supported the importation of the concept of constructive notice into the operation of the principle he enunciated in

[page 308] Amadio. In this regard, the passage from the reasons of Mason J on which the appellant relies followed, and was evidently intended to paraphrase, the statement of Lord Cranworth LC in Owen and Gutch v Homan. There his Lordship said:

… it may safely be stated that if the dealings are such as fairly to lead a reasonable man to believe that fraud must have been used in order to obtain [the advantage], he is bound to make inquiry, and cannot shelter himself under the plea that he was not called on to ask, and did not ask, any questions on the subject. In some cases wilful ignorance is not to be distinguished in its equitable consequences from knowledge. It is apparent from what Mason J said in relation to the transaction under consideration in Amadio that his Honour was speaking of wilful ignorance, which, for the purposes of relieving against equitable fraud, is not different from actual knowledge. In this regard, Mason J observed that it must have been obvious to the appellant bank’s officer that the transaction was an improvident one from the respondents’ point of view. On that basis, it was ‘inconceivable’ that the possibility did not occur to him that the respondents’ entry into the transaction was due to their misplaced reliance on their son and that the respondents’ lack of understanding of the extent of their exposure was manifest from their questions of the bank’s officer.

‘Taking advantage’ of the special disability 6.92 The third requisite element of unconscionable conduct is the defendant ‘taking advantage’ of the special disability of the plaintiff in a way that was ‘unconscientious’. 6.93 To satisfy the third element, the relevant question is whether the behaviour of the defendant was such that the plaintiff with the special disability could not make decisions in his or her own best interest. 6.94 In determining whether the third element is satisfied, the courts will normally focus their inquiry, not on the terms of the contract or transaction, but rather on the process of the bargain. 6.95 An important consideration in determining whether the third element is satisfied is whether there was denial of opportunity for the plaintiff to seek independent legal, financial or other professional advice. 6.96

In Bridgewater v Leahy,92 Gaudron, Gummow and Kirby JJ said:

As Manning J put it in Re Levey; Ex parte Official Assignee, ‘the court does not allow any person to take advantage of any known weakness of the vendor’ and the court asks whether that party

had ‘the opportunity’ of professional advice as to ‘the effect of what he [was] doing’. This denial of the opportunity to have ‘the assistance of a disinterested legal adviser’, rather than speculation as to what might have followed had it been pursued, is an element in the unconscientious conduct in respect of which equity intervenes to deny the entitlement of the disponee to retain the property in question, unless the disponee shows the disposition to have been ‘fair, just and reasonable’.

[page 309] 6.97 The following case of ACCC v CG Berbatis Holdings Pty Ltd,93 highlights the importance of whether the party with the special disability had the opportunity to seek legal advice. In this case, it was found that not only did the relevant party have the benefit of legal advice, but also that they were business people, who had the ability to make rational decisions in their own interest. The defendants, in this case, simply drove a ‘hard bargain’.

ACCC v CG Berbatis Holdings Pty Ltd (2003) 197 ALR 153 In this case, Mr and Mrs Roberts (Roberts) leased a fish and chips shop from the owners of a shopping centre, named CG Berbatis Holdings Pty Ltd (Berbatis). The lease on the shop operated by the Roberts was about to expire and the lease contained no right of renewal. The Roberts wanted to sell the fish and chips business and were having difficulty trying to sell it without a right of renewal. Berbatis agreed to assign the lease to a purchaser of the Roberts’ business, but only on the condition that the Roberts withdraw from separate litigation against Berbatis, which concerned various levies charged to the tenants of the shopping centre. The Roberts agreed to withdraw from the separate proceedings against Berbatis. The ACCC commenced proceedings against Berbatis for alleged

unconscionable conduct in contravention of former s 51AA of the TPA. At trial, French J held that the conduct of Berbatis was unconscionable and contravened former s 51AA of the TPA. Berbatis appealed. On appeal, the Full Federal Court, (Hill, Tamberlin and Emmett JJ in a joint judgment) held in favour of Berbatis. The ACCC appealed to the High Court. On appeal, the majority of the High Court (Gleeson CJ, Gummow, Hayne and Callinan JJ (Kirby J dissenting) dismissed the appeal and held that Berbatis did not engage in unconscionable conduct in contravention of former s 51AA of the TPA. The Roberts did not have a special disadvantage which affected their ability to make decisions in their own best interests. In particular Gummow J said (at [11], [14] and [15]): 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 … In the present case, there was neither a special disadvantage on the part of the lessees (Roberts), nor unconscientious conduct on the part of the lessors (respondents). All the people involved in the transaction were business people, concerned to advance or protect their own financial interests. The critical disadvantage from which the

[page 310] lessees suffered was that they had no legal entitlement to a renewal or extension of their lease; and they depended upon the lessors’ willingness to grant such an extension or renewal for their capacity to sell the goodwill of their business for a substantial price. They were thus compelled to approach the lessors, seeking their agreement to such an extension or renewal, against a background of current claims and litigation in which they were involved. They were at a distinct disadvantage, but there was nothing ‘special’ about it. They had two forms of financial interest at stake: their claims, and the sale of their

business. The second was large; as things turned out, the first was shown to be relatively small. They had the benefit of legal advice. They made a rational decision, and took the course of preferring the second interest. They suffered from no lack of ability to judge or protect their financial interests. What they lacked was the commercial ability to pursue them both at the same time.

Is there a difference between ‘unconscientious’ and ‘unconscionable’ conduct? 6.98 The words ‘unconscientious’ and ‘unconscionable’ conduct have been used generally in case law without distinction. At a practical level, it is most likely that there is no real difference between the use of either word for the purposes of s 20 of the ACL. 6.99 It was, however, pointed out by Deane J in Commonwealth v Verwayen,94 that he preferred the use of the word ‘unconscientious’ to that of ‘unconscionable’ in areas where equity has traditionally intervened to vindicate the requirements of good conscience. 6.100 Deane J preferred to use the word ‘unconscientious’ as he believed that it was a more accurate term to be used than ‘unconscionable’.95 Deane J noted, however, that he used the words interchangeably in his judgment in line with the generally accepted usage of both words.96 6.101 In Tanwar Enterprises Pty Ltd v Cauci,97 Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ noted Deane J’s preference for the use of the word ‘unconscientious’ instead of ‘unconscionable’ as follows: The term ‘unconscionable conduct’ is used in authorities such as Legione and Stern. There is nothing new in this. The terms ‘unconscionable’ and ‘against conscience’ were, for example, used without distinction by Farwell J in Mussen v Van Diemen’s Land Co in 1937. However, as Deane J explained in Commonwealth v Verwayen, with reference to the discussion by Story of the lien of the unpaid vendor, the term ‘unconscionable’ is used to refer to that which ‘ought not, in conscience’, be allowed as between the parties; the

[page 311] purchaser, having taken a conveyance of the estate of the vendor, should not be allowed to keep it without payment of the full purchase price. Hence, as Deane J also pointed out, ‘unconscientious’ is the more accurate term.

Unconscionable conduct in connection with goods or services Section 21 of the ACL 6.102

Section 21 of the ACL states:

21 Unconscionable conduct in connection with goods or services (1) A person must not, in trade or commerce, in connection with: (a) the supply orpossible 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. (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 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.

6.103 Section 21(1) of the ACL provides that a person must not, in trade or commerce, in connection with the supply or acquisition of goods or services, engage in unconscionable conduct. 6.104 Section 21(1) is broad in scope. It is designed to protect both natural and legal persons, which includes ‘business suppliers’ and ‘business consumers’. [page 312] 6.105 However, s 21(1) does not apply to listed public companies.98 Listed public companies are exempted from s 21(1) because they are considered as companies that do not require legislative protection.99 6.106 Section 21(1) does not define ‘unconscionable conduct’. However, it does not limit the concept as understood in the ‘unwritten law from time to time’.100 6.107 In other words, the concept of unconscionable conduct in s 21(1) of the ACL has a broader meaning than that under s 20. There are a number of reasons as to why this is so, which include: the words used in s 21 differ to those used in s 20, and there is a policy need to keep the provisions separate;

the practical application of s 20 is too narrow when applied to business and consumer relationships;101 the interpretative factors listed in s 22 are broader than the factors considered in s 20; and s 21(4) expressly confirms that unconscionable conduct in s 21 is not limited to the unwritten law in s 20. 6.108 Section 21(2)(a) and (b) of the ACL provide that s 21(1) does not apply to conduct that is engaged in only because the person engaging in the conduct institutes legal proceedings or refers the dispute to arbitration in relation to the supply or acquisition. This ensures that it is not possible to assert that the action of instituting formal dispute resolution processes amounts to unconscionable conduct. 6.109 Section 21(3)(a) of the ACL states that the court is not to have regard to any circumstances not reasonably foreseeable at the time of the alleged unconscionable conduct. This ensures that persons engaging in conduct are not held to an absolute liability standard if circumstances that they could not have reasonably foreseen occur. 6.110 Section 21(3)(b) of the ACL states that the court may have regard to conduct or circumstances prior to entry into the contract. This means that s 21 takes into account conduct that occurred prior to 1 January 2011. 6.111 Section 21(4) of the ACL sets out the intention of Parliament in relation to the interpretation of s 21. Each of the three interpretation principles have been based on existing common law.102 It is intended that the principles clarify, rather than modify the effect of s 21.103 [page 313]

6.112 Section 21(4)(a) of the ACL provides that s 21 is not limited by the unwritten law of the states and territories relating to unconscionable conduct, as preserved in s 20. It is clear that s 21(4)(a) is intended to allow unconscionable conduct under s 21 to develop, where appropriate, independent from the equitable and common law doctrines. 6.113 Section 21(4)(b) of the ACL provides that s 21 is not limited to individual transactions, but is capable of applying to a system of conduct or a pattern of behaviour. The system of conduct or pattern of behaviour includes an accumulation of minor incidents.104 6.114 Section 21(4)(b) of the ACL focuses the provision on the conduct itself, rather than on identifying a particular person who has been wronged by the conduct. In other words, s 21(4)(b) provides that conduct may be considered unconscionable even where there is no ‘victim’ identified. 6.115 The above view was reflected in ASIC v National Exchange Pty Ltd,105 where Tamberlin, Finn and Conti JJ, in referring to s 12CC of the ASIC Act (which mirrors s 22 of the ACL), stated: There is no foundation in the language or purpose of s 12CC to impose limitations from the unwritten law, such as the necessity to identify a specific or particular person. Authority on s 51AC supports the proposition that the prohibition in s 12CC is not to be read down by limiting its operation only to circumstances where the common law would grant relief in respect of unconscionable conduct.

6.116 Accordingly, it follows from the above principle that it is not a requisite element of s 21 of the ACL to identify a person with a special disability in order to establish unconscionable conduct under the provision. 6.117 Section 21(4)(c) of the ACL provides that in considering whether conduct is unconscionable, the court may consider the terms of the contract, the manner in which the contract is carried out and the extent to which the contract is carried out. The court is not limited to considering the circumstances in which the contract was formed.

6.118 Section 21(4)(c) of the ACL extends the scope of s 21 beyond s 20 in the sense that s 21 includes consideration of both wrongdoing in the bargaining process, as well as wrongdoing in the terms of the bargain itself. It appears that s 20 focuses more on the former, rather than the latter.

Unconscionable conduct under s 21 of the ACL 6.119 It is clear that unconscionable conduct under s 21 of the ACL is wider than the meaning given under s 20. The relevant question is how much wider the meaning is given by courts to unconscionable conduct under s 21. [page 314] 6.120 It is difficult to provide a direct answer to this question, as unconscionable conduct under s 21 of the ACL has been described as an ‘open-ended concept’.106 This is also evident from the way s 22 is cast in that the considerations listed within that section are neither intended to be exhaustive nor to limit the meaning of unconscionable conduct. 6.121 It appears that Parliament intended that the scope of the meaning of unconscionable conduct for the purposes of s 21 of the ACL to be expansive, and presumably the concept will continue to expand or change, as new cases arise and different circumstances and considerations in s 22 are examined and weighed by the courts. 6.122 However, in the past, the courts have provided the following guidance on what unconscionable conduct means in the statutory context: It is neither possible, nor desirable to provide a precise and comprehensive statutory definition of unconscionable conduct.107 Unconscionable conduct is given its ordinary and natural meaning

as ‘doing what should not be done in good conscience’.108 Unconscionable conduct must demonstrate a ‘high level of moral obloquy’ on the part of the person said to have acted unconscionably.109 Unconscionable conduct must be irreconcilable with what is right or reasonable.110 Unconscionable conduct requires serious misconduct or some clearly unfair or unreasonable conduct to be demonstrated.111 The range of conduct that can be considered as unconscionable is wide. For example, it can include: victimisation, manipulation, exploitation and unscrupulous taking advantage of misadventure;112 bullying and thuggish behaviour; undue pressure and unfair tactics; taking advantage of vulnerability or lack of understanding; and trickery or misleading conduct.113 A finding of unconscionable conduct requires an examination of all the circumstances,114 and involves a pejorative moral judgment by the court.115 [page 315] 6.123 For the purposes of s 21 of the ACL, unconscionable conduct focuses on the conduct of the person said to have acted unconscionably.116 6.124 The task of the court in determining unconscionable conduct in s 21 of the ACL is the evaluation of the facts by reference to a normative standard of conscience.117 That normative standard is permeated with accepted and acceptable community values. In some contexts, such values are contestable. 6.125 Values, norms and community expectations can develop and change over time. Customary morality develops ‘silently and unconsciously from one age to another’, shaping law and legal values.118 The expectation that

consumers are dealt with honestly, fairly and without deception or unfair pressure is central to the evaluation of the facts by reference to the operative norm of conscionable conduct.119 6.126 In ACCC v Allphones Retail Pty Ltd (No 2),120 Foster J provided the following useful summary of the meaning of statutory unconscionable conduct: There is a body of authority in this court which establishes the following propositions: (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: per French J in Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (No 2) (2000) 96 FCR 491; 169 ALR 324; [2000] FCA 2 at [24] and [25], per Sundberg J in Australian Competition and Consumer Commissioner v Simply No-Knead Franchising Pty Ltd (2000) 104 FCR 253; 178 ALR 304; [2000] FCA 1365 at [31], per Selway J in Australian Competition and Consumer Commission v 4WD Systems Pty Ltd (2003) 200 ALR 491; 59 IPR 435; [2003] FCA 850 at [183] and per Jacobson J 253 ALR 324 at 347 in Pacific National (ACT) Ltd v Queensland Rail (2006) 28 ATPR (Digest) 46-268; [2006] FCA 91 at [918] and [931]. (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: per Heerey, Drummond and Emmett JJ in Hurley v McDonald’s Australia Ltd (2000) ATPR 41741; [1999] FCA 1728 at [22] and 29. This helpful articulation of the meaning of the word when used in s 51AC was followed by Selway J in Australian Competition & Consumer Commission v 4WD Systems Pty Ltd (2003) 200 ALR 491; 59 IPR 435; [2003] FCA 850 at [183]–[185] (4WD Systems) and by Sundberg J in Australian Competition and Consumer Commission v Simply No-Knead Franchising Pty Ltd (2000) 104 FCR 253; 178 ALR 304; [2000] FCA 1365 at [30]; and

[page 316] (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: per Selway J in 4WD Systems at [185].

The above statements of principle provide useful guidance as to the content of the concept of unconscionability or unconscionable when used in s 51AC of the TPA. Of necessity, the authorities to which I have referred do not prescribe a precise definition which would be able to be applied to every set of circumstances presented to the court for consideration. The application of the meaning accorded to the concept will always be a matter of judgment in every case and will depend upon a careful consideration of the circumstances of each case. It must also be remembered that, as is the case with other sections of the TPA contained in Pts IVA, IVB and V, s 51AC establishes a norm of conduct. Failure to observe that norm has consequences provided elsewhere in the Act: see the judgment of the High Court in Master Education Services Pty Ltd v Ketchell (2008) 249 ALR 44; 82 ALJR 1322; [2008] HCA 38 at [28]– [32] and the cases cited in those paragraphs.

Matters that court may have regard to for the purposes of s 21 Section 22 of the ACL 6.127 Section 22 of the ACL provides a non-exhaustive list of indicia to which the court may have regard in determining whether there is unconscionable conduct for the purposes of s 21. 6.128 The list of indicia in s 22 of the ACL is intended to assist the court in its consideration of unconscionable conduct in s 21 of all of the circumstances surrounding the relevant parties’ conduct towards each other. 6.129

Section 22 of the ACL states:

22 Matters the court may have regard to for the purposes of section 21 (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

[page 317] 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 (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.

(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

[page 318] (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

(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.

6.130 Section 22(1) of the ACL provides a list of factors that a court may take into consideration when determining whether conduct by a supplier to a customer is unconscionable pursuant to s 21. 6.131 Section 22(2) of the ACL provides a similar list of factors that a court may take into consideration when determining whether conduct by an acquirer to a supplier is unconscionable pursuant to s 21. 6.132 The fact that one or more indicia in s 22 of the ACL is present in a particular circumstance, does not necessarily mean that there is a contravention of s 21. For example, it has been made clear in numerous cases that the relative strengths of the bargaining positions between the parties is, by itself, insufficient to give rise to unconscionable conduct.121

Some examples of unconscionable conduct Unconscionable conduct with businesses 6.133 The following case of ACCC v Dukemaster Pty Ltd,122 is an example of unconscionable conduct from business to small business. [page 319]

ACCC v Dukemaster Pty Ltd [2009] FCA 682 In this case, Dukemaster Pty Ltd (Dukemaster) is the owner of a shopping centre, named the Paramount Centre in Melbourne. In relation to a particular tenant, Dukemaster sought unreasonable rent for the renewal of the shop lease (which it represented as below market value) and required a very short time frame for the tenant to respond to the proposed rental offer. Dukemaster also threatened to evict or send letters of demand to the tenant, who had only operated the shop for nine months. Dukemaster was aware that the tenant was an individual who had little to no ability to speak or read English. The ACCC alleged contraventions of former s 51AC (and ss 52 and 53(e)) of the TPA. Specifically, ACCC contended that Dukemaster engaged in unconscionable conduct in fixing or seeking to fix increases in rent payable by the tenant on the extension of the terms of the lease in the food court in circumstances where the rental increases sought by Dukemaster were excessive and significantly greater than the market rental. Gordon J held (at [128], [131] and [136]) that Dukemaster’s conduct was unconscionable because its actions were deliberate (or at least reckless), showed no regard for conscience and were irreconcilable with what was right or reasonable. In particular, Gordon J found that the conduct of Dukemaster was unconscionable because: 1.

Dukemaster was aware that the tenant had little or no ability to speak or read English;

2.

There was no basis for Dukemaster to secure a renewal of the lease at the high rental amount sought; and

3.

Dukemaster unnecessarily required a response from the tenant within a period of seven days, at a time when independent advice was not readily available and when there was no explanation provided by Dukemaster to justify the limited time in which the tenant could respond.

Dukemaster and its General Manager were ordered to pay compensation to the tenants in excess of $275,000 for their loss and damage suffered as a result of the contravening conduct.

6.134 The following case of ACCC v Seal-A-Fridge Pty Ltd,123 is an example of unconscionable conduct from franchisor to franchisees in relation to an abuse of position of strength and ‘profit gouging’. [page 320]

ACCC v Seal-A-Fridge Pty Ltd (2010) 268 ALR 321 In this case, Seal-A-Fridge Pty Ltd (Seal-A-Fridge) carried on business in Australia as a franchisor of businesses concerned with the on-site replacement of seals on refrigerators. Seal-A-Fridge demanded and obtained from certain franchisees payment of increased weekly franchise fees. The fee increases demanded and obtained by Seal-A-Fridge were not within the terms of the franchise agreements. Seal-A-Fridge also required existing franchisees to vary their franchise agreements to include the fee increase, and in one circumstance refused to give its consent to the assignment of a franchisee’s interest. The ACCC alleged that the conduct engaged in by Seal-A-Fridge was

unconscionable in contravention of former s 51AC of the TPA. Logan J held (at [146]–[147]) that the weekly fee increases were demanded and obtained by Seal-A-Fridge without contractual authority and was unconscionable conduct in contravention of former s 51AC of the TPA.

Unconscionable conduct with consumers 6.135 The following case of ACCC v Keshow,124 is an example of unconscionable conduct towards indigenous consumers.

ACCC v Keshow [2005] FCA 558 In this case, Mr Keshow sold children’s educational materials to the residents of indigenous communities in the Northern Territory. In a substantial number of instances, the educational materials were not needed or useful, having regard to the age of the child or children of the consumer. The products that Mr Keshow contracted to provide were commonly not supplied, or not supplied in full. Mansfield J found that Mr Keshow took advantage of the lack of education and commercial experience of those in the communities. In particular, Mansfield J stated (at [3]) that: The overall picture which the evidence presents is that the respondent is what is sometimes called a ‘humbugger’ [meaning a hoax or something intended to deceive].

Mansfield J held that the conduct engaged in by Mr Kenshow was unconscionable.

6.136 The following case of ACCC v Lux Distributors,125 is an example of unconscionable conduct towards elderly people in their homes. [page 321]

ACCC v Lux Distributors Pty Ltd [2013] FCAFC 90 In this case, sales representatives of Lux Distributors Pty Ltd (Lux) sold vacuum cleaners to three elderly women who lived alone at their homes. Initially, a sales representative of Lux would ‘cold-call’ a household and offer a free maintenance check on the householder’s vacuum cleaner. If the offer was accepted, then a sales representative of Lux would visit the home and attempt to sell to the householder a more expensive vacuum cleaner. A sales representative could have been in a home for up to two hours in order to make the sale. Relevantly, the purchase agreements for the vacuum cleaners included a 10-day cooling off period. The ACCC alleged that Lux engaged in unconscionable conduct in contravention of former s 51AB of the TPA and s 21 of the ACL. At trial, Jessop J held that Lux had not engaged in unconscionable conduct. In particular, his Honour found that the sales representatives of Lux did not engage in unfair sales tactics merely by staying in the home for up to two hours, and the sales techniques applied by the representatives of Lux were conventional and traditional and the customers could be expected to be aware of them. Jessop J also thought that the 10-day cooling off period that applied in each case was an important consideration in his determination. The ACCC appealed. Allsop CJ, Jacobson and Gordon JJ held that Jessop J made a number

of errors in his judgment, which included (at [63]–[68]): First, the whole conduct of Lux was seen not to be unconscionable largely because of a focus on individual acts and interactions in the human dialogue between the representative and each of the women. No direct lies were told by the visiting representatives. They did their jobs as salesmen with women, though of advanced years, who, to a degree, were able to look after themselves. That way of looking at the matter gave little weight to the fact that the opportunity to practise skilled selling techniques on elderly people in their homes was gained only by deception. The norms and standards of today require businesses who wish to gain access to the homes of people for extended selling opportunities to exhibit honesty and openness in what they are doing, not to apply deceptive ruses to gain entry. Secondly, the process of selling, building from the ‘free maintenance check’ to the comparison test, and the creation of a sense of need for a new machine, takes time. That is not a disadvantage to the representative. Rather, the passage of time and the apparent effort in solicitous assistance by the representative creates the subtle pressure upon the householder which, it can be inferred from the findings, each woman felt. Mrs Baird was perhaps the best exemplification of this. The subtle inequality of bargaining power is gained by the representative through the householder being unwilling to ask the person to leave, especially as he is being so ‘helpful’. The process reaches the point where, like Mrs Baird, the householder feels pressured or obligated to buy. In some circumstances, this may not be unconscionable. Here, these representatives gained entry by deception. Two of

[page 322] them compounded that by contravening provisions requiring them to either state their purpose or state that they could not stay for longer than one hour. Thirdly, the primary judge’s conclusion that it could not be said that the Lux representatives had no genuine intention of carrying out a maintenance check can be accepted. That, however, does not absolve Lux from its deception as the primary judge seems to have done. Of course the representatives intended to carry out the maintenance check. It was the first stage in the process of selling by advancing the creation of the need to buy. That in some, even a majority of, cases the test is carried out and the householder wants no more contact, or the vacuum cleaner is sufficiently new or efficient as to be an unlikely candidate for the subsequent comparison test, is neither here nor there. The primary purpose of each representative was to sell a vacuum cleaner, not to carry out a free maintenance check. The initial deception, the ruse, was critical to the creation of the opportunity to sell and was the launching pad for all that followed. This deception tainted all the conduct thereafter.

Fourthly, the primary judge failed to give weight to the effect of the deception that unfairly deprived each of the women of a meaningful opportunity to decline to have the representative enter her home. Fifthly, the primary judge wrongly assessed the relative bargaining strengths of the parties. The opportunity to enter and remain in someone’s home creates a real position of strength for the seller. The reactions of the women, especially Mrs Baird, exemplify the psychology of the selling process. That bargaining advantage was obtained by deception, one that was compounded, in the case of Mrs Baird and Mrs May, by contraventions of Commonwealth and State law. Sixthly, the primary judge failed to give weight to the contravention of legislative provisions intended to ensure fairness in the process of selling. The contraventions were different in respect of each woman. There was a contravention by Mr Walton in accepting money from Mrs Oxley before the expiry of the cooling-off period: see [59] above. That revealed a failure to attend to Mrs Oxley’s rights.

Remedies and enforcement powers Remedies (and enforcement powers) available for contraventions of s 20 or s 21 of the ACL 6.137 A person contravening s 20 or s 21 of the ACL may be liable to pay a civil pecuniary penalty of up to: $1.1 million for a body corporate; $222,000 for other persons (s 224). 6.138 The following additional enforcement powers and remedies apply in relation to a contravention of s 21 of the ACL: declarations (s 21 of the Federal Court of Australia Act 1976 (Cth); undertakings (s 218 of the ACL);

[page 323] substantiation notices (s 219 of the ACL); public warning notices (s 223 of the ACL); infringement notices (s 134A of the CCA); injunctions (s 232 of the ACL); damages (s 236 of the ACL); compensatory orders (s 237 of the ACL); compensatory orders arising out of other proceedings (s 238 of the ACL); orders for non-party consumers (s 239 of the ACL); non-punitive orders (s 246 of the ACL); adverse publicity orders (s 247 of the ACL); orders disqualifying a person from managing corporations (s 248 of the ACL); orders for the preservation of property (s 137F of the CCA); power to obtain information, documents and evidence (s 155 of the CCA). 6.139 A contravention of s 20 or s 21 of the ACL does not give rise to criminal liability.

Short theory and problem questions Theory questions 1.

What is the meaning of the ‘unwritten law from time to time’?

2.

What is the difference between the generic level and special level of unconscionable conduct in the ‘unwritten law’, and which level applies to s 20 of the ACL?

3.

Is unconscionable conduct a term of art? Is it defined in the ACL?

4.

For the purposes of s 20 of the ACL, what are the three requisite elements of unconscionable conduct?

5.

Why did Mr Kakavas not succeed in his unconscionable conduct claim in Kakavas v Crown Melbourne Ltd (2013) 298 ALR 35?

6.

For the purposes of s 20 of the ACL, is constructive knowledge sufficient to satisfy the third requisite element of unconscionable conduct?

7.

Why did the ACCC not succeed in alleging unconscionable conduct in ACCC v CG Berbatis Holdings Pty Ltd (2003) 197 ALR 153?

8.

For the purposes of s 21 of the ACL, is it necessary to identify a ‘special disability’ of a person in order to establish a contravention?

9.

Are the matters listed in s 22 of the ACL an exhaustive list of indicative factors of unconscionable conduct? Do some, or all, of the factors in the list in s 22 require an objective or subjective inquiry, or a combination of both?

Hypothetical problem question John, Paul, George and Bingo were musicians in a band called the Beagles. One day, the Beagles decided to purchase a business, named Wilsun Guitars. The Beagles purchased Wilsun Guitars for a very large price and in order to pay [page 324] for the business, John, Paul, George and Bingo all borrowed heavily from the local bank, named ‘Piggies Bank’. Piggies granted each member of the Beagles a mortgage over their homes, and a charge over all of their band equipment. Wilsun Guitars was located in the middle of Bankstown, and the

Beagles leased the shop from the previous owner of the business, Murray Wilsun. At the time of signing the lease, the Beagles had a lawyer present, named Spector Phil. When signing the contract, Spector did not explain the terms of the lease to any of the members of the Beagles. The lease was drafted by Spector, but Spector relied mostly on a template version of a lease contract, and as a result, it was rather lengthy. Murray, who was in a hurry to leave, said to the members of the Beagles: Look at the size of that bloody thing. It is over 100 pages long and written in gibberish. You have to be a walrus to understand it. Lads, you are not lawyers, you are musicians, just sign it so we can all leave.

Each member of the Beagles signed the lease without reading any part of it. Unknown to the Beagles, the lease contained a clause which provided an option to renew the lease. That clause also stated that if the Beagles failed to renew the lease, Murray Wilsun could retake possession of the premises and operate Wilsun Guitars. The lease was due to expire within three months. The Beagles were unaware of this, and opened the shop for trading. After 11 weeks and five days of trading, Murray sent a letter to the Beagles informing them of the expiry of the lease within 48 hours and the need to renew the lease if they wanted to continue to use the premises. The Beagles ignored the letter and continued trading for two weeks, until John purported to exercise the option to renew the lease. Murray told the Beagles that the lease had already expired and that he had the right to retake possession of the premises. The Beagles were furious and requested a meeting with their lawyer Spector and Murray to discuss the lease. At the meeting, Murray agreed to renew the lease with the Beagles, on condition that they pay him an extra $100,000. The Beagles, who had already borrowed heavily and invested a great deal of money into the business which they had only operated for three and half months, agreed to this deal. However, within six months, Wilsun Guitars closed after suffering

from some heavy losses due to the global financial crisis. Piggies Bank sold up the homes of each member of the Beagles and exercised their right over the charges for their band equipment. Advise the Beagles as to whether it will be successful in instituting proceedings against Murray Wilsun for unconscionable conduct in contravention of s 20 of the ACL?

[page 325]

Further reading A Bruce, Consumer Protection Law in Australia, 2nd ed, LexisNexis Butterworths, Sydney, 2014, pp 147–60. S Corones, The Australian Consumer Law, 2nd ed, Thomson Reuters, Sydney, 2013, pp 177–220. Halsbury’s Laws of Australia, Commentary, Consumer Protection title, LexisNexis, Sydney, 2011, [100-257]–[100-270]. Justice J D Heydon, Trade Practices Law Competition & Consumer Law (Looseleaf Services), Thomson Reuters, Australia, 2012, [160.170.80]–[160.170.290]. R Miller, Australian Competition and Consumer Law Annotated, 36th ed, Thomson Reuters, Sydney, 2014, pp 1562–86. R Steinwall, Annotated Competition and Consumer Legislation, LexisNexis, Sydney, 2014, pp 1364–85. The ACCC website at or the ACL website at and download the following publications: – Unconscionable Conduct — Guide to Consumers; –

Unconscionable Conduct — Guide to Businesses; and

–

Unconscionable Conduct — Business Snapshot.

1.

Report of the Trade Practices Act Review Committee to the Minister for Business and Consumer Affairs, 1976, AGPS, Canberra, at [9.59].

2.

Report of the Trade Practices Act Review Committee to the Minister for Business and Consumer Affairs, 1976, AGPS, Canberra at [9.59]–[9.60].

3.

Commonwealth Government: The Trade Practices Act: Proposals for Change, 1984, AGPS, Canberra.

4.

Trade Practices Revision Act 1986 (Cth) (repealed).

5.

Trade Practices Revision Act 1986 (Cth) (repealed) s 52A(5).

6.

The Report of the House of Representatives Standing Committee on Industry, Science and Technology, Small Business in Australia: Challenges, Problems and Opportunities, January 1990, AGPS, Canberra.

7.

Report of the Senate Standing Committee on Legal and Constitutional Affairs, Mergers, Monopolies and Acquisitions: Adequacy of Existing Legislative Controls, December 1991, AGPS, Canberra.

8.

Report of the Trade Practices Commission to the Attorney-General and Minister for Small Business and Customs, Unconscionable Conduct and the Trade Practices Act: Possible Extension to Cover Commercial Transactions, July 1991, AGPS, Canberra.

9.

Trade Practices Legislation Amendment Act 1992 (Cth).

10. Explanatory Memorandum to the Trade Practices Legislation Amendment Bill 1992 at [40]. 11. Explanatory Memorandum to the Trade Practices Legislation Amendment Bill 1992 at [41]. 12. Trade Practices Amendment (Fair Trading) Act 1998 (Cth) Sch 2. 13. Competition and Consumer Legislation Amendment Act 2010 (Cth) Sch 2, [2]–[4]. 14. Explanatory Memorandum to the Competition and Consumer Legislation Amendment Bill 2010 (Cth) at [2.8]–[2.10]. 15. Contracts Review Act 1980 (NSW) s 7. 16. West v AGC (Advances) Ltd (1986) 5 NSWLR 610. 17. Also see Contracts Review Act 1980 (NSW) s 8. 18. Masiano v Car and Hoe Finance Pty Ltd [2005] VCAT 1755. 19. Alievski v Cross Country Realty Victoria Pty Ltd [2010] VSC 316 per Bell J at [11]. 20. Alievski v Cross Country Realty Victoria Pty Ltd [2010] VSC 316 per Bell J at [11]. 21. Explanatory Memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Explanatory Memorandum) at [2.13]. 22. ACCC v CG Berbatis Holdings Pty Ltd (2003) 197 ALR 153 per Gummow and Hayne JJ at [38]. 23. Explanatory Memorandum to the Competition and Consumer Legislation Amendment Bill 2011 at [2.14]. 24. ACCC v Samton Holdings Pty Ltd (2002) 189 ALR 76 per Gray, French and Stone JJ at [45]. 25. ACCC v CG Berbatis Holdings Pty Ltd (2003) 197 ALR 153 per Gummow and Hayne JJ at [38].

26. ACCC v Samton Holdings Pty Ltd (2002) 189 ALR 76 per Gray, French and Stone JJ at [45]. 27. ACCC v CG Berbatis Holdings Pty Ltd (2000) 169 ALR 324. 28. ACCC v CG Berbatis Holdings Pty Ltd (2000) 169 ALR 324 per French J at [23]. 29. ACCC v CG Berbatis Holdings Pty Ltd (2003) 197 ALR 153 per Gummow and Hayne JJ at [30]. 30. ACCC v Samton Holdings Pty Ltd (2002) 189 ALR 76 per Gray, French and Stone JJ at [43]. 31. ACCC v Samton Holdings Pty Ltd (2002) 189 ALR 76 per Gray, French and Stone JJ at [43]. 32. ACCC v Samton Holdings Pty Ltd (2002) 189 ALR 76 per Gray, French and Stone JJ at [46]. 33. ACCC v Samton Holdings Pty Ltd (2002) 189 ALR 76 per Gray, French and Stone JJ at [46]. 34. Tanwar Enterprises Pty Ltd v Cauci (2003) 201 ALR 359 per Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ at [20]. 35. ACCC v Samton Holdings Pty Ltd (2002) 189 ALR 76 per Gray, French and Stone JJ at [48]. 36. Commercial Bank of Australia v Amadio (1983) 46 ALR 402. 37. Louth v Diprose (1992) 110 ALR 1; Bridgewater v Leahy (1998) 158 ALR 66. 38. Garcia v National Australia Bank Ltd (1998) 155 ALR 614. 39. Waltons Store (Interstate) Ltd v Maher (1988) 76 ALR 513; Commonwealth v Verwayen (1990) 95 ALR 321. 40. Legione v Hateley (1983) 46 ALR 1; Stern v McArthur (1988) 81 ALR 463. 41. Taylor v Johnson (1983) 45 ALR 265. 42. Blomley v Ryan (1956) 99 CLR 362 per Fullagar J at 402. 43. Antonovic v Volker (1986) 7 NSWLR 151 per Mahoney JA at 165; ACCC v CG Berbatis Holdings Pty Ltd (2003) 197 ALR 153 per Gummow and Hayne JJ at [44]. 44. ACCC v CG Berbatis Holdings Pty Ltd (2000) 169 ALR 324 per French J at [21]. 45. ACCC v Samton Holdings Pty Ltd (2002) 189 ALR 76 per Gray, French and Stone JJ at [44]. 46. ACCC v CG Berbatis Holdings Pty Ltd (2000) 169 ALR 324 per French J at [21]. 47. Commonwealth v Verwayen (1990) 95 ALR 321 per Deane J at 353. 48. Commonwealth v Verwayen (1990) 95 ALR 321 per Deane J at 353. 49. Attorney-General (NSW) v World Best Holdings Ltd (2005) 223 ALR 346 per Spigelman CJ at [121]. 50. Attorney-General (NSW) v World Best Holdings Ltd (2005) 223 ALR 346 per Spigelman CJ at [121]. 51. Stern v McArthur (1988) 81 ALR 463 per Deane and Dawson JJ at 488. 52. ACCC v CG Berbatis Holdings Pty Ltd (2003) 197 ALR 153 per Gleeson CJ at [14]. 53. Hurley v McDonald’s Australia Ltd [1999] FCA 1728 per Heerey, Drummond and Emmett JJ at [22], [31]. 54. Commercial Bank of Australia Ltd v Amadio (1983) 46 ALR 402 per Mason J at 412. 55. Commercial Bank of Australia Ltd v Amadio (1983) 46 ALR 402 per Dawson J at 489. 56. Commercial Bank of Australia Ltd v Amadio (1983) 46 ALR 402 per Deane J at 422. 57. Commercial Bank of Australia Ltd v Amadio (1983) 46 ALR 402. 58. Commercial Bank of Australia Ltd v Amadio (1983) 46 ALR 402 per Mason J at 413. 59. Blomley v Ryan (1956) 99 CLR 362 per Fullagar J at 405.

60. Blomley v Ryan (1956) 99 CLR 362 per Fullagar J at 405. 61. See, for example, European Asian of Australia Ltd v Kurland (1985) NSWLR 192 per Rogers J at 200. 62. Blomley v Ryan (1956) 99 CLR 362 per Fullagar J at 405. 63. Blomley v Ryan (1956) 99 CLR 362 per Fullagar J at 405. 64. For example, see Permanent Mortgages Pty Ltd v Vandenbergh (2010) 41 WAR 353 per Murphy J at [235]–[236]. 65. Commercial Bank of Australia Ltd v Amadio (1983) 46 ALR 402 per Mason J at 413. 66. Louth v Diprose (1992) 110 ALR 1. 67. Kakavas v Crown Melbourne Ltd (2013) 298 ALR 35 per French CJ, Hayne, Crennan, Kiefel, Bell, Gageler and Keane JJ at [161]. 68. ACCC v CG Berbatis Holdings Pty Ltd (2003) 197 ALR 153 per Gleeson CJ at [11]. 69. Blomley v Ryan (1956) 99 CLR 362 per Fullagar J at 405. 70. Bridgewater v Leahy (1998) 158 ALR 66. 71. Bridgewater v Leahy (1998) 158 ALR 66 per Gleeson CJ and Callinan J at [37]. 72. Blomley v Ryan (1956) 99 CLR 362 per Fullagar J at 405. 73. Blomley v Ryan (1956) 99 CLR 362 per Fullagar J at 405. 74. Blomley v Ryan (1956) 99 CLR 362. 75. ACCC v Samton Holdings Pty Ltd (2002) 189 ALR 76. 76. Kakavas v Crown Melbourne Ltd (2013) 298 ALR 35. 77. Kakavas v Crown Melbourne Ltd (2013) 298 ALR 35 per French CJ, Hayne, Crennan, Kiefel, Bell, Gageler and Keane JJ at [24], [161]. 78. Kakavas v Crown Melbourne Ltd (2013) 298 ALR 35 per French CJ, Hayne, Crennan, Kiefel, Bell, Gageler and Keane JJ at [133]. 79. Commercial Bank of Australia Ltd v Amadio (1983) 46 ALR 402 per Mason J at 417. 80. Commercial Bank of Australia Ltd v Amadio (1983) 46 ALR 402 per Mason J at 417, per Deane J at 426–7. 81. Commercial Bank of Australia Ltd v Amadio (1983) 46 ALR 402 per Dawson J at 432. 82. Commercial Bank of Australia Ltd v Amadio (1983) 46 ALR 402 per Mason J at 413. 83. ACCC v Radio Rentals Ltd (2005) 146 FCR 292 per Finn J at [19]. 84. Commercial Bank of Australia Ltd v Amadio (1983) 46 ALR 402 per Mason J at 417. 85. Commercial Bank of Australia Ltd v Amadio (1983) 46 ALR 402 per Deane J at 422. 86. ACCC v Radio Rentals Ltd (2005) 146 FCR 292 per Finn J at [21]–[22]. 87. ACCC v Radio Rentals Ltd (2005) 146 FCR 292. 88. Kakavas v Crown Melbourne Ltd (2013) 298 ALR 35 per French CJ, Hayne, Crennan, Kiefel, Bell, Gageler and Keane JJ at [162]. 89. Kakavas v Crown Melbourne Ltd (2013) 298 ALR 35 per French CJ, Hayne, Crennan, Kiefel, Bell, Gageler and Keane JJ at [152]–[154].

90. Kakavas v Crown Melbourne Ltd (2013) 298 ALR 35 per French CJ, Hayne, Crennan, Kiefel, Bell, Gageler and Keane JJ at [155]–[159]. 91. Commercial Bank of Australia Ltd v Amadio (1983) 46 ALR 402 per Mason J at 417. 92. Bridgewater v Leahy (1998) 158 ALR 66 per Gaudron, Gummow and Kirby JJ at [100]. 93. ACCC v CG Berbatis Holdings (2003) 197 ALR 153. 94. Commonwealth v Verwayen (1990) 95 ALR 321 per Deane J at 356–7. 95. Commonwealth v Verwayen (1990) 95 ALR 321 per Deane J at 357. 96. Commonwealth v Verwayen (1990) 95 ALR 321 per Deane J at 357. 97. Tanwar Enterprises Pty Ltd v Cauci (2003) 201 ALR 359 per Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ at [21]. 98. A listed public company is defined in s 2 of the ACL. 99. Explanatory Memorandum to the Competition and Consumer Legislation Amendment Bill 2011 (Cth) at [2.15]. 100. Explanatory Memorandum to the Competition and Consumer Legislation Amendment Bill 2011 (Cth) at [2.13]. 101. The Honourable D Bradbury, Second Reading Speech, Competition and Consumer Legislation Amendment Bill 2011 (Cth) at 5. 102. Explanatory Memorandum to the Competition and Consumer Legislation Amendment Bill 2011 (Cth) at [2.19]. 103. Explanatory Memorandum to the Competition and Consumer Legislation Amendment Bill 2011 (Cth) at [2.19]. 104. The Honourable D Bradbury, Second Reading Speech, Competition and Consumer Legislation Amendment Bill 2011 (Cth) at 5. 105. ASIC v National Exchange Pty Ltd [2005] FCAFC 226 per Tamberlin, Finn and Conti JJ at [30]. 106. ACCC v Seal-A-Fridge Pty Ltd (2010) 268 ALR 321 per Logan J at [12]. 107. Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 per Allsop P (with whom Bathurst CJ and Campbell JA agreed) at [291]. 108. ASIC v National Exchange Pty Ltd [2005] FCAFC 226 per Tamberlin, Finn and Conti JJ at [33]; ACCC v Lux Distributors Pty Ltd [2013] FCAFC 90 per Allsop CJ, Jacobson and Gordon JJ at [41]. 109. Attorney-General (NSW) v World Best Holdings Ltd (2005) 223 ALR 346 per Spigelman CJ at [121]; Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 per Allsop P (with whom Bathurst CJ and Campbell JA agreed) at [291]. 110. Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 per Allsop P (with whom Bathurst CJ and Campbell JA agreed) at [291]. 111. Cameron v Qantas Airways Ltd (1995) 55 FCR 147 per Beaumont J at 179; Hurley v McDonald’s Australia Ltd [1999] FCA 1728 per Heerey, Drummond and Emmett JJ at [22]. 112. Qantas Airways Ltd v Cameron (1996) 145 ALR 294 per Lindgren J at 327. 113. Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 per Allsop P (with whom Bathurst CJ and Campbell JA agreed) at [291].

114. Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 per Allsop P (with whom Bathurst CJ and Campbell JA agreed) at [291]. 115. Qantas Airways Ltd v Cameron (1996) 145 ALR 294 per Lindgren J at 329; Hurley v McDonald’s Australia Ltd [1999] FCA 1728 per Heerey, Drummond and Emmett JJ at [22]. 116. Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 per Allsop P (with whom Bathurst CJ and Campbell JA agreed) at [291]. 117. ACCC v Lux Distributors Pty Ltd [2013] FCAFC 90 per Allsop CJ, Jacobson and Gordon JJ at [23]. 118. ACCC v Lux Distributors Pty Ltd [2013] FCAFC 90 per Allsop CJ, Jacobson and Gordon JJ at [23]. 119. ACCC v Lux Distributors Pty Ltd [2013] FCAFC 90 per Allsop CJ, Jacobson and Gordon JJ at [23]. 120. ACCC v Allphones Retail Pty Ltd (No 2) (2009) 253 ALR 324 per Foster J at [113]–[115]. 121. See, for example, ACCC v CG Berbatis Holdings Pty Ltd (2000) 169 ALR 324. 122. ACCC v Dukemaster Pty Ltd [2009] FCA 682. 123. ACCC v Seal-A-Fridge Pty Ltd (2010) 268 ALR 321. 124. ACCC v Keshow [2005] FCA 558. 125. ACCC v Lux Distributors [2013] FCAFC 90.

[page 327]

Chapter 7 Unfair Contract Terms ‘Of course, I can terminate this contract at any time and for any reason without notification to you. This is a standard form contract that is used by everyone in the industry. Don’t complain to me about this term being unfair. It is inserted in this contract to protect my business interests. You can take it or leave it.’

Introduction Overview 7.1 This Chapter considers the unfair contract term (UCT) provisions that are contained in Ch 2 Pt 2-3 of the Australian Consumer Law (ACL). 7.2

The topics covered in this Chapter are: Background to UCT; – Overview of national regime; –

History of the national regime;

–

Why introduce a national regime?;

–

How useful are the Victorian and United Kingdom decisions?;

The operative UCT provisions; – Section 23(1) and (2) of the ACL;

What is a ‘consumer contract’?; – Section 23(3) of the ACL; What is a ‘standard form contract’?; – Section 27 of the ACL; What is an ‘unfair term’?; – Section 24(1) and (4) of the ACL; ♦

What is ‘significant imbalance’?

♦

What is ‘not reasonably necessary’ to protect ‘legitimate interests’?;

♦

What is ‘detriment’?;

Three additional considerations regarding ‘unfair’ terms; – Section 24(2) and (3) of the ACL; ♦

‘Such matters as it thinks relevant’;

♦

‘Transparency’;

♦

The ‘contract as a whole’; [page 328]

Examples of terms that may be unfair; – Section 25 of the ACL; ♦

A term that permits, or has the effect of permitting, one party (but not another party) to avoid or limit performance of the contract (s 25(1)(a));

♦

A term that permits, or has the effect of permitting, one party (but not another party) to terminate the contract (s 25(1)(b));

♦

A term that penalises, or has the effect of penalising, one party (but not another party) for a breach or termination of the contract (s 25(1)(c));

♦

A term that permits, or has the effect of permitting, one party (but not another party) to vary the terms of the contract (s 25(1)(d));

♦

A term that permits, or has the effect of permitting, one party (but not another party) to renew or not renew the contract (s 25(1)(e));

♦

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 (s 25(1)(f));

♦

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 (s 25(1)(g));

♦

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 (s 25(1)(h));

♦

A term that limits, or has the effect of limiting, one party’s vicarious liability for its agents (s 25(1)(i));

♦

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 (s 25(1)(j));

♦

A term that limits, or has the effect of limiting, one party’s right to sue another party (s 25(1)(k));

♦

A term that limits, or has the effect of limiting, the evidence one party can adduce in proceedings relating to the contract (s 25(1)(l));

♦

A term that imposes, or has the effect of imposmg, the evidential burden on one party in proceedings relating to the contract (s 25(1)(m));

♦ –

A term of a kind, or a term that has an effect of a kind, prescribed by the regulations (s 25(1)(n));

United Kingdom examples of terms that may be unfair;

Contractual terms that are exempted; – Section 26 of the ACL; –

Terms that define the main subject matter;

–

Terms that set the up-front price;

–

What is the up-front price?;

–

Terms expressly permitted as a matter of law;

Contracts that are exempted; – Section 28 of the ACL; Some examples of UCT cases under the ACL. [page 329] 7.3 Each topic above will be discussed individually below. This will be followed by a summary of the remedies applicable to the UCT provisions.

Background to UCT Overview of national regime 7.4 Chapter 2 Pt 2-3 of the ACL contains a national regime for the regulation of UCT. Prior to 1 July 2010, UCT was only regulated in Victoria, and not regulated under the former TPA. 7.5 The UCT provisions in the ACL are based on, but not identical to, the Unfair Terms in Consumer Contracts Regulations 1999 (UK) and former Pt 2B of the Fair Trading Act 1999 (Vic).

7.6 The UCT provisions apply only to contracts that were ‘made, renewed or varied’ on or after 1 July 2010. Accordingly, the UCT provisions in ss 23– 28 of the ACL will apply only to: contracts entered into on or after 1 July 2010; contracts entered into prior to 1 July 2010, but were renewed after 1 July 2010; the terms of contracts entered into prior to 1 July 2010, that are varied on or after 1 July 2010.

History of the national regime 7.7 On 30 April 2008, the Productivity Commission (PC) proposed a national UCT regime to address the ‘gaps in the coverage and scope’ of UCT provisions under the Victorian legislation. 7.8 On 15 August 2008, the Ministerial Council on Consumer Affairs (MCCA)1 (as named then) considered and agreed in principle with the PC’s proposal for a national UCT regime. 7.9 On 2 October 2008, the Council of Australian Governments (COAG) agreed to establish a national law addressing UCT, as proposed by the MCCA. 7.10 The UCT provisions in the ACL were introduced by the Trade Practices Amendment (Australian Consumer Law) Act (No 1) 2010 and came into effect on 1 July 2010. 7.11 On 1 January 2011, the UCT provisions in the ACL were renumbered as ss 23–28 of the ACL by the Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth).

[page 330]

Why introduce a national regime? 7.12 The national UCT regime was based on the recommendations of the PC. The PC’s Review of Australia’s Consumer Policy Framework2 Report provided the following reasons why a national UCT regime is desired: There are sound in-principle economic and ethical reasons for proscribing unfair contract terms that cause consumer detriment. And while the unconscionability provisions in the generic consumer law can theoretically be used to address abuse of unfair terms, that route is very costly and slow, and there is a lack of clarity about its precise applicability in this area. … Moreover, without a national approach in this area, there is a risk that some other jurisdictions may implement their own (possibly divergent) measures. A national approach could also remove the need for some industry-specific arrangements dealing with the issue of unfairness, thereby contributing to the development of a more streamlined consumer policy framework.

7.13 In summary, the PC identified in its Report the following reasons for introducing a national UCT regime in Australia. A national UCT regime would ensure:3 that ethical principles about fairness to contracts would be upheld; consistency in regulation (as some states expressed interest in the regulation of UCTs); and a removal of the need for industry specific arrangements dealing with issues of unfairness. 7.14 However, the PC also acknowledged the following reasons against introducing a national UCT regime in Australia, but concluded that these reasons were outweighed by the argument in favour of a national regime:4 Even so, there are some arguments against a specific new regulatory response. There is only limited information on the extent of consumer detriment resulting from the

use by suppliers of notionally unfair contract terms, in part because such data is inherently hard to collect. Inappropriate regulatory interference with apparently one-sided contracts could be costly for consumers. For example, lending institutions will need scope to unilaterally change their interest charges if they are to avoid renegotiation of contracts with every customer each time interest rates change. Also, such terms may provide a means for suppliers to deal with inappropriate behaviour by some purchasers, to the benefit of consumers as a whole.

How useful are the Victorian and United Kingdom decisions? 7.15 There are a number of Victorian and United Kingdom tribunal decisions and cases which concern former Pt 2B of the Fair Trading Act 1999 (Vic) and the Unfair Terms in Consumer Contracts Regulations 1999 (UK). [page 331] 7.16 Examples of Victorian and United Kingdom tribunal decisions and cases include: Kingsway Hall Hotel Ltd v Red Sky IT (Hounslow) Ltd;5 Office of Fair Trading (OFT) v Abbey National plc;6 Director of Consumer Affairs Victoria v Backloads.com Pty Ltd;7 Director of Consumer Affairs Victoria v Trainstation Health Clubs Pty Ltd;8 Jetstar Airways Pty Ltd v Free;9 Director of Consumer Affairs v AAPT Ltd;10 Director General of Fair Trading v First National Bank plc;11 and Adoko v Freeserve.Com.Plc.12 7.17

The Victorian and United Kingdom decisions, while useful in some

respects to the interpretation of the UCT provisions in the ACL, should be approached with extreme caution. 7.18 The wording of former Pt 2B of the Fair Trading Act 1999 (Vic) and the Unfair Terms in Consumer Contracts Regulations 1999 (UK) is fairly different to the wording of the UCT provisions in the ACL. 7.19 When referring to the Victorian and United Kingdom decisions, one must ensure that what they are referring to in a particular judgment is applicable to the UCT provisions in the ACL.

The operative UCT provision Section 23(1) and (2) of the ACL 7.20 The operative UCT provisions in the ACL are s 23(1) and (2) of the ACL. Section 23(1) and (2) states: 23 Unfair terms of consumer contracts (1) A term of a consumer 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.

7.21 Section 23(1) of the ACL provides that if a term in a consumer contract is unfair, then that term is void. A finding by a court that a term is unfair, and therefore void, means that the term is treated as if it never existed. [page 332] 7.22

Section 23(2) of the ACL provides that if the unfair term can be

severed from the remainder of the consumer contract, then the rest of the contract will continue to operate without the unfair term. 7.23 In order to satisfy s 23(1) of the ACL, the following three requirements need to be established: 1.

The contract must be a consumer contract.

2.

The contract must be a standard form contract.

3.

The contract must contain a term that is unfair.

7.24 Each requirement of s 23(1) of the ACL is discussed individually below.

What is a ‘consumer contract’? Section 23(3) of the ACL 7.25 Section 23(3) of the ACL provides a definition of a ‘consumer contract’ for the purposes of the UCT provisions. Section 23(3) states: (3) 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 interest is wholly or predominantly for personal, domestic or household use or consumption.

7.26 The definition of a ‘consumer contract’ in s 23(3) of the ACL is restricted to business-to-consumer transactions as it applies only to contracts where the buyer is an individual.13 7.27 Accordingly, a ‘consumer contract’ as defined in s 23(3) of the ACL does not includes business-to-business transactions, except in respect of a contract between a business and a sole trader.14 7.28

A ‘consumer contract’ as defined in s 23(3) of the ACL applies to

goods, services and interests in land, where the acquisition is wholly or predominantly for ‘personal, domestic or household use or consumption’.15 7.29 Section 23(3) of the ACL adopts a subjective test that focuses on the person who acquired the goods, services or an interest in land, and not on the subjective intention of the supplier or the vendor. 7.30 The Explanatory Memorandum provides the following comments, which supports the interpretation that the focus of s 23(3) of the ACL is on the subjective purpose of the individual making the acquisition:16 [page 333] This definition does not limit the operation of the unfair contract terms provisions to things of a personal, domestic or household nature, and would include the supply of any good, service or interest in land to a consumer provided the acquisition of what is supplied under the contract is wholly or predominantly for personal, domestic or household use or consumption.

7.31 Hence, the relevant question is whether an individual has acquired the good, service or interest in land for the sole or predominant purpose of personal, domestic or household use or consumption. 7.32 The relevant question must be asked at the time the individual has acquired the good, service or interest in land and not at a later time, when perhaps the individual might have changed his or her mind. 7.33 The following three examples assist to explain the application of s 23(3) of the ACL, the relevance of the timing issue and the predominant purposes of personal, domestic or household use or consumption: Example 1 Mike wants to buy a van from Brady’s Used Cars in Bankstown. Mike buys a red van for the purpose of his architecture business, but three months after purchase, he changes his mind and gives the van to his son Greg. Greg only uses the van for drag racing up and down the back

streets of Bankstown and for taking his two brothers and three sisters to school. Sometimes his dog Tiger rides in the van. In this example, the contract between Mike and Brady’s Used Cars is not a consumer contract for the purposes of s 23(3). Example 2 Harry wants to buy a sports car from Potter’s Used Cars in Hogwarts. Harry buys a red sports car for the purposes of driving to his weekly Quidditch match in Hogwarts and for taking his friends Ron and Hermione to school. After three months from the date of purchase, Harry decides that the sportscar is ‘so magically awesome’ that he could even take his clients in it for his new magician business, called The Expecto Patronum. In this example, the contract between Harry and Potter’s Used Cars is a consumer contract for the purposes of s 23(3). Example 3 Godfrey wants to buy a four-wheel drive from Baldwin’s Used Cars on the North Shore. At the time of purchase, Godfrey has the purpose of using the car both for business and for domestic use. However, he is not entirely sure as to how much he wants to use the four-wheel drive for domestic use. Godfrey buys the four-wheel drive and uses it only two days a week for business use, and five days for domestic use. In this example, it is not entirely clear as to what is the dominant purpose Godfrey has at the time of the purchase of the four-wheel drive. However, given that Godfrey had a mixed purpose, the court is likely to attempt to determine by evidence, or by inference, whether the domestic purpose was the dominant purpose at the time of purchase, or whether there was no dominant purpose at all.

[page 334] The court may not place considerable weight on the fact that Godfrey’s use of the four-wheel drive is more for domestic use instead of business use. Godfrey’s purpose for buying the fourwheel drive at the time of signing the contract may, in fact, be different from his subsequent use of the four-wheel drive, as Godfrey may change his mind after purchase as to what he intends to use the four-wheel drive for.

What is a ‘standard form contract’?

Section 27 of the ACL 7.34 The UCT operative provisions in s 23(1) and (2) of the ACL only apply to a consumer contract that is a ‘standard form contract’. A ‘standard form contract’ is not defined in the ACL. 7.35 However, a ‘standard form contract’ is typically a contract that contains the same terms for all transactions of that type and has been prepared by one party and the other party has little or no ability to negotiate. 7.36 In other words, the contract is offered on a ‘take it or leave it’ basis. Standard form contracts are typically used for the supply of goods and services to consumers in many industries, including: telecommunications; motor vehicles; health and fitness services; air travel; car and bus hire; land; building; electronics and computers; homeware; banking and finance; and government and private utilities. 7.37 The PC’s Review of Australia’s Consumer Policy Framework17 Report provided the following reasons for regulating only ‘standard form contracts’ in the UCT provisions: The biggest concerns arise for standard-form contracts — typically used in the supply of a broad range of services including air travel, telecommunications, energy, consumer credit, car hire, holiday packages, home improvements and software sales. Such non-negotiated contracts have

advantages for consumers — in particular, in competitive markets, lower business costs will be passed on to consumers as lower prices. But, by their nature, these contract terms are offered on a ‘take-it-or-leave-it’ basis, are often complex and apparently mostly not read. The concern is that businesses sometimes use unfair terms against consumers and the public interest generally.

[page 335] 7.38 In the Victorian decision of Director of Consumer Affairs Victoria v Craig Langley Pty Ltd,18 Harbison J made the following comments about negotiated contracts and why they should not be protected by law: … it appears to me to reflect the common sense view that terms of a consumer contract which have been the subject of genuine negotiation should not be lightly declared unfair. This legislation is designed to protect consumers from unfair contracts, not to allow a party to a contract who has genuinely reflected on its terms and negotiated them, to be released from a contract term from which he or she later wishes to resile. I can visualise that it might be very difficult to argue that a term was unfair if it had been arrived at after genuine negotiation, and represented a compromise between the positions of both parties.

7.39 Contracts can be wholly in writing, partly in writing and partly oral, or entirely oral. Whether a contract is a ‘standard form contract’ is to be determined on a contract-by-contract basis.19 7.40 Section 27 of the ACL provides some clarity as to what must (and may) be considered as relevant in determining whether or not a contract is a ‘standard form contract’. 7.41

Section 27 of the ACL states:

27 Standard form contracts (1) 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. (2) In determining whether a contract is a standard form contract, a court may take into account such matters as it thinks relevant, but must take into account the following: (a) whether one of the parties has all or most of the bargaining power relating to the

transaction; (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 section 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 section 26(1); (e) whether the terms of the contract (other than the terms referred to in section 26(1)) take into account the specific characteristics of another party or the particular transaction; (f)

any other matter prescribed by the regulations.

7.42 Section 27(1) of the ACL creates a rebuttable presumption that a contract is presumed to be a ‘standard form contract’ unless the drafter of the contract proves otherwise. [page 336] 7.43 The reason for the rebuttable presumption in s 27(1) of the ACL is that it reflects the fact that the drafter of the ‘standard form contract’ is usually in the best position to bring evidence regarding the nature of the contract.20 7.44 A drafter of a ‘standard form contract’ may present evidence in court to show, on the balance of probabilities, that the presumption of a ‘standard form contract’ is not correct in the particular circumstances. 7.45 To determine whether a contract is a ‘standard form contract’, a court may take into account such matters as it thinks relevant, but must take into account the following non-exhaustive factors listed in s 27(2) of the ACL: whether one party had all or most of the bargaining power; whether the contract was prepared by one party before any

discussions; whether one party was required to accept or reject the terms of the contract; whether one party was given an effective opportunity to negotiate; whether the terms of the contract take into account the specific characteristics of another party or particular transaction; and any other matter prescribed by the regulations.

What is an ‘unfair term’? Section 24(1) and (4) of the ACL 7.46 The UCT operative provisions in s 23(1) and (2) of the ACL states that a term in a contract is void if it is unfair. The meaning of unfair is found in s 24. Section 24(1) and (4) of the ACL states: 24 Meaning of unfair (1) A term of a consumer contract is 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. … (4) For the purposes of subsection (1)(b), 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, unless that party proves otherwise.

7.47 In deciding whether a term in a standard form contract is unfair, the court will apply a three-limb test for unfairness. 7.48

Each limb in s 24(1) is discussed individually below. This is followed

by a separate discussion on s 24(2) and (3) of the ACL, which considers additional factors that a court may consider to determine if a term is unfair. [page 337] 7.49 It is important to note that a court will not examine the three limb test in s 24(1) of the ACL in isolation, but will also consider the additional factors in s 24(2) and (3) to determine if a term is unfair.

What is a ‘significant imbalance’? 7.50 The first limb of the test for unfairness in s 24(1) is whether the term would cause a significant imbalance in the parties’ rights and obligations arising under the contract. 7.51 This test involves a factual assessment of the available evidence and would require a common sense approach or value judgement as to whether the term causes a significant imbalance between the parties.21 7.52 The onus of proof is placed on the claimant in proceedings to prove, on the balance of probabilities, that the term itself would cause a significant imbalance in the parties’ rights and obligations.22 7.53 In terms of the previous Victorian and United Kingdom law, there appear to be differing views as to the precise meaning of the word ‘significant’ in the context of the phrase ‘significant imbalance’. 7.54 In terms of Pt 2B of the Fair Trading Act 1999 (Vic), the word ‘significant’ in the phrase ‘significant imbalance’ was interpreted in Director of Consumer Affairs v AAPT Ltd,23 by Morris P as follows: The word ‘significant’ simply means ‘important’ or ‘of consequence’. It does not mean ‘substantial’. It is not a word of fixed connotation and besides being elastic is somewhat

indefinite. However, in its context, it is designed to identify an imbalance, to the detriment of the consumer, which should be regarded as unfair. In this sense the definition is circular. But it is impossible to avoid the notion of fairness in determining whether a term causes a significant imbalance, even though this exercise is designed to ascertain whether a term is unfair.

7.55 However, in Jetstar Airways Pty Ltd v Free,24 a case also decided in the context of Pt 2B of the Fair Trading Act 1999 (Vic), Cavanough J made the following comments about the meaning of ‘significant’: In AAPT, President Morris asserted that the word ‘significant’ in s 32W means ‘important’ or ‘of consequence’, and that it does not mean ‘substantial’. He acknowledged that ‘significant’ is a word of somewhat elastic and indefinite meaning. However he concluded that, in s 32W, the word is intended to bring in the notion of unfairness (despite the circularity involved in that proposition) and thus, in turn, presumably, the notion of contrariety to the requirements of good faith. To the answers I have already

[page 338] given to that line of reasoning, I would add that, in the phrase ‘significant imbalance’, the word ‘significant’ seems to me to carry, or to include, a quantitative sense. The word can certainly carry the meaning ‘substantial’. As Thomas JA said in Emaas v Mobil Oil Australia Ltd, the word ‘significant’ very much takes it meaning from the context in which it is used. His Honour referred with approval to the following comment of an American court (which had previously found favour with Young J in Coombs v Bahama Palm Trading Pty Ltd): While … determination of the meaning of “significant” is a question of law, one must add immediately that to make this determination on the basis of the dictionary would be impossible. Although all words may be “chameleons, which reflect the colour of their environment”, “significant” has that quality more than most. It covers a spectrum ranging from “not trivial” through “appreciable” to “important” and even “momentous”. I recognise the perils of attempting to paraphrase statutory language, but, in my view, the context of the word ‘significant’ in s 32W shows that it means, principally at least, ‘significant in magnitude’, or ‘sufficiently large to be important’, being a meaning not too distant from ‘substantial’. If that be right, the interpretation of s 32W adopted in AAPT is all the more unlikely.

7.56

Regulation 5(1) of the Unfair Terms in Consumer Contracts

Regulations 1999 (UK) (UTCCR) provides a ‘good faith’ requirement in the meaning of ‘significant imbalance’. However, the ‘good faith’ requirement is not required in the UCT provisions in the ACL. Regulation 5(1) states: 5. (1) 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.

7.57 In the United Kingdom decision of DG of Fair Trading v First National Bank plc,25 Bingham LJ made the following comments about the meaning of ‘significant imbalance’ as provided in reg 5 of the UTCCR: … 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.

7.58 Despite the somewhat differing view of the meaning of ‘significant’ in other contexts, in terms of s 24 of the ACL, ‘significant’ is likely to mean something ‘more than trivial’, ‘meaningful’, and ‘weighty’. 7.59 Examples of terms in a standard form contract causing ‘significant imbalance’ between the parties were given in the following Victorian tribunal decision of Director of Consumer Affairs Victoria v AAPT Ltd.26 [page 339]

Director of Consumer Affairs Victoria v AAPT Ltd [2006] VCAT 1493 In this case, AAPT Ltd (AAPT) supplied mobile phone services and prepared phone services to the public. AAPT did not provide the infrastructure for the delivery of service. AAPT on-sold the services that were provided by network operators, such as Telstra, Vodaphone and

Optus. At the time, there were over 16 million mobile phone services in use in Australia and AAPT had a market share of approximately 2 per cent. On AAPT’s website, there was a link to the terms and conditions. The Director of Consumer Affairs Victoria (Director) alleged that some of these terms and conditions on AAPT’s website were unfair for the purposes of the Fair Trading Act 1999 (Vic). The Director commenced proceedings against AAPT, but AAPT had, in fact, commenced to review the terms and conditions of its mobile phone contracts several months earlier. Discussions between the Director and AAPT followed shortly afterwards, which resulted in AAPT drafting a series of new terms and conditions, which were designed to address the UCT concerns raised by the Director. Morris P concluded (at [49]) that many of the terms in the terms and conditions provided by AAPT on their website (prior to their variations) were unfair and were void. In particular, Morris P held that the following terms, amongst others, were one-sided and created a ‘significant imbalance’ in the parties’ rights and obligations: Variations to Agreement 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 P held (at [50]) that this term was unfair as it allowed AAPT to vary the contract unilaterally, but not the customer. Suspension of service 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 P held (at [51]) that the first sentence in this term was not

unfair. However, the second sentence in this term was unfair and void. His Honour thought that the second sentence ‘goes too far’, as it provided that AAPT may charge a reconnection fee for ‘any other reason’. Immediate termination Immediate termination: We may terminate this Agreement immediately by notice to you if: (a) you have breached this Agreement;

[page 340] (b) …; or (c) you change your address or billing contact details without notifying us in accordance with clause 7.4. 10.4 You remain liable for all charges payable under the Agreement in respect of Services up to the time of termination.

Morris J held (at [53]) that these provisions were unfair and void as any inconsequential breach of the agreement has the prospect of having the service terminated. Variations to prepaid mobile service 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 P held (at [54]) that this term was unfair as it caused a significant imbalance between the parties’ contractual rights and obligations.

What is ‘not reasonably necessary’ to protect ‘legitimate interests’? 7.60

The second limb of the test for unfairness in s 24(1) of the ACL is

whether the term is ‘not reasonably necessary’ to protect the ‘legitimate interests’ of the party that would be advantaged by the term. 7.61 Section 24(4) of the ACL creates a rebuttable presumption that a term of a contract is presumed not to be reasonably necessary to protect the legitimate interest of a business, unless the business can prove otherwise. 7.62 Accordingly, s 24(4) of the ACL requires that the party advantaged by the term provide evidence to the court to demonstrate why it is necessary for the contract to include the term so as to protect its legitimate interest. 7.63 The business may introduce any evidence relevant to rebut the presumption and establish, on the balance of probabilities, that the term is reasonably necessary to protect its legitimate interests.27 7.64 The evidence that a business is likely to provide to the court includes: the type of goods or services supplied, the nature and structure of the business and its costs, the risks of litigation, and industry practices.28 7.65 The Victorian decision of Director of Consumer Affairs Victoria v AAPT Ltd,29 provides a classic example of a term that was not reasonably necessary to protect the legitimate interests of a business. [page 341]

Director of Consumer Affairs Victoria v AAPT Ltd [2006] VCAT 1493 See facts above (at 7.59) In this case, Morris P held that the following term, amongst others, was not reasonably necessary to protect the legitimate interests of AAPT:

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, we will notify you of any such variation.

AAPT argued unsuccessfully that this was necessary for their legitimate business interests, as AAPT does not provide the network service, but only resells it. If the network operator was to change or impose terms on AAPT at short notice, then AAPT will need to vary the contract. Morris P rejected AAPT’s argument and held: Under the terms of AAPT’s supplier contracts, terms may be imposed upon AAPT on relatively short notice, which might make it commercially necessary for AAPT to seek changes consequential upon new terms imposed on AAPT. Be this as it may, it provides no justification for a term as broad as clause 1.3, which permits AAPT to vary any term of the agreement, at any time, for any cause.

What is ‘detriment’? 7.66 The third limb of the test for unfairness in s 24(1) of the ACL is whether the term would cause ‘detriment’ (whether financial or nonfinancial) to a party if it were to be applied or relied on. 7.67 This test involves a factual determination of whether the financial or non-financial detriment does exist or would exist if the term was relied on by the business.30 7.68 The reason why detriment is not limited to financial detriment is to allow the court to consider situations where there may be other forms of detriment that effectively disadvantage a consumer.31 7.69 The scope of non-financial detriment is wide. The ACCC’s A Guide to the Unfair Contract Terms Law32 publication provides the following examples of non-financial detriment:

Detriment is not limited to financial detriment. The court will be allowed to consider situations where there may be other forms of detriment such as delay or distress suffered by the consumer as a result of the unfair term.

[page 342] 7.70 The ACCC also states in its Consumers and Unfair Contract Terms33 publication that a person’s mere inconvenience due to an unfair term is also a form of non-financial detriment. 7.71 The ACCC’s News for Business — Unfair Contract Terms34 publication provides the following useful example of a term in a contract that has caused non-financial detriment: Douglas wants to travel home to Dublin to celebrate Christmas with his family. In October, he books a ticket for air travel with Whoosh Airlines via its internet website. Douglas books the ticket in his name and selects a ‘Wondersaver’ ticket — the fare rules for this type of ticket include: Subject to availability and payment of all applicable amounts, changes can be made to your Booking as follows. Changes to the origin and destination are not permitted … Date, time and passenger name change may be required through the telephone booking service and are at the absolute discretion of Whoosh Airlines … In early December, Douglas is admitted to hospital and is told by doctors that he will not be able to fly. As a result he attempts to change the name on his ticket to that of his sister, Deena. Whoosh Airlines declines Douglas’s request but offers to change the ticket to a travel date in March the following year. In this case, the contract has not caused Douglas any financial loss as he has not lost the value of the ticket. However, he has suffered irritation, inconvenience and distress because Deena cannot travel in time for Christmas. This may be sufficient to meet this part of the test for unfairness.

Three additional considerations regarding ‘unfair’ terms

Section 24(2) and (3) of the ACL 7.72 Section 24(2) and (3) of the ACL provide additional considerations in relation to the three limb test in s 24(1) for a court to determine whether a term in a consumer contract is ‘unfair’. 7.73

Section 24(2) and (3) of the ACL states:

24 Meaning of unfair … (2) In determining whether a term of a consumer contract is unfair under subsection (1), a court may take into account such matters as it thinks relevant, but must take into account the following: (a) the extent to which the term is transparent; (b) the contract as a whole.

[page 343] (3) 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. ….

7.74 The additional considerations in determining whether a term in a consumer contract is unfair as set out in s 24(2) of the ACL are: the court may take into account any matter which it thinks is relevant; the court must take into account the extent to which the term is transparent; and the court must take into account the contract as a whole.

7.75

Each consideration is discussed individually below.

‘Such matters as it thinks relevant’ 7.76 The first additional consideration in s 24(2) of the ACL provides that in determining whether a consumer contract is unfair, a court may consider ‘such matters as it thinks relevant’. 7.77 This allows the court wide discretion to consider any matter in the surrounding circumstances of the case that may be relevant to determining whether a consumer contract is unfair. 7.78 Some examples of matters that a court may consider relevant to determine whether a consumer contract is unfair are: the nature of the goods, services or interest in land; whether the consumer has in the past acquired similar goods, services or interests in the land under the same, or similar, terms and conditions of the contract; whether the terms were hidden in a lengthy contract or other document, or whether the terms were brought to the attention of the consumer; whether the consumer had a reasonable opportunity to consider and negotiate the terms of the contract; all other terms of the contract or of another contract on which the contract may depend; and the circumstances in which the contract was made, including the time of the conclusion of the contract and all the circumstances attending to the conclusion of the contract.

‘Transparency’

7.79 The second additional consideration in s 24(2)(a) of the ACL provides that in determining whether a consumer contract is unfair, a court must take into account the extent to which the term is transparent. [page 344] 7.80 The lack of transparency of a term in a consumer contract is not, by itself, determinative to declare that the term is unfair and the nature and effect of the term will continue to be relevant.35 7.81 Section 24(3) of the ACL provides that a term is considered to be transparent if it is: expressed in reasonably plain language; legible; presented clearly; and readily available to any party affected by the term. 7.82 A term in a consumer contract is unlikely to be considered as transparent if it is hidden in fine print, or is obscurely located somewhere in the back pages of a lengthy document. 7.83 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.36

The ‘contract as a whole’ 7.84 The third additional consideration in s 24(2)(b) of the ACL provides that in determining whether a term in a consumer contract is unfair, a court must take into account the ‘contract as a whole’.

7.85 A term in a consumer contract should not be considered in isolation when determining whether or not it is unfair. A term that may be unfair in one context may not be in another. 7.86 A term in a consumer contract should be considered in light of other off-setting terms in the contract, and any other benefits offered outside the contract. 7.87 A term that may appear to be unfair may be necessarily related to the consumer receiving some other benefit under or outside the contract. For example, lower prices in exchange for no variation rights.

Examples of terms that may be unfair Section 25 of the ACL 7.88 Section 25 of the ACL provides a non-exhaustive list of examples of the kind of terms that may, depending on the circumstances, be regarded by a court to be unfair. Section 25 states: 25 Examples of unfair terms (1) Without limiting section 24, the following are examples of the kinds of terms of a consumer contract that may be unfair:

[page 345] (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 up-front 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. (2) 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 (c) the public interest.

7.89 The examples listed in s 25(1) of the ACL are intended to provide statutory guidance only. They do not prohibit the use of the terms, nor do they create a presumption that they are unfair.37 7.90 Industry bodies have also provided other examples of terms that may be unfair. For example, the Telecommunications Consumer Protections Code (C628: 2012) provides the following examples:38 Unfair Terms: A Supplier will not include terms which would be Unfair in its Standard Form Customer Contracts under the law.

[page 346] To enable this outcome, without limiting the effect of the Unfair Contract Terms provisions contained in Part 2-3 of the Australian Consumer Law, or clause 4.5.3 of this Code, when assessing a term for unfairness a Supplier must consider whether the object or effect of the term is to: (a) Suspension of service: permit the Supplier to indefinitely suspend all Telecommunication Services because of the Supplier’s error or failure, or to charge the Customer a reconnection fee for a suspension caused by the Supplier’s error or failure; (b) Penalty for breach: require a Customer to pay a penalty for a breach, where the imposition of the penalty is inconsistent with the Unfair Contract Terms provisions in Part 2-3 of the Australian Consumer Law; (c) Extension of contract period: permit the Supplier to renew or extend a fixed length Standard Form Customer Contract for a further term without obtaining the Customer’s express consent a reasonable time before the renewal or extension, and in circumstances that would be inconsistent with the Unfair Contract Terms provisions in Part 2-3 of the Australian Consumer Law; and (d) Unilateral variation by Supplier: permit the Supplier to unilaterally amend or vary the contract or any matters related to the contract, the characteristics of Telecommunications Products or price, during the term of a contract, in circumstances that would be inconsistent with the Unfair Contract Terms provisions in Part 2-3 of the Australian Consumer Law.

7.91 Prescribed examples of unfair terms may be included in the regulations where the Minister has taken into consideration the public interest, the detriment of the term and the impact on the business. 7.92 Any consideration of the examples listed in s 25 of the ACL will need to be tested by reference to the three limb test in s 24(1) and the surrounding circumstances of the particular case. 7.93 In this context, there may be circumstances in which the use of such a term as listed in s 25 of the ACL is reasonably necessary in order to protect a party’s reasonable business interests or considered as fair.39 7.94

What follows is a brief overview of the ACCC’s discussion of

examples listed in s 25(1) of the ACL of the kind of terms that may, depending on the circumstances, be regarded by a court to be unfair.

A term that permits, or has the effect of permitting, one party (but not another party) to avoid or limit performance of the contract (s 25(1)(a)) 7.95 The ACCC, A Guide to the Unfair Contract Terms Law40 publication provides the following information on the example listed in s 25(1)(a) of the ACL: [page 347] Terms that permit a business to avoid or limit performance of its obligations under the contract, at its discretion and without liability, such as an exclusion clause, have the potential to cause a significant imbalance in the parties’ rights and obligations arising under the contract. Terms may be less likely to be considered unfair if they are qualified in such a way that consumers understand when and how they are likely to be affected or if the terms outline reimbursements available to the consumer when such terms are relied upon by the business. For example, an exclusion clause may not be unfair where a consumer understands the effect of the term or is given reasonable notice of its effect. There are many instances in which limitations of liability are expressly permitted by Commonwealth, state or territory legislation for public policy reasons — for example, terms that allow a business to limit its liability under the Act for recreational services.

A term that permits, or has the effect of permitting, one party (but not another party) to terminate the contract (s 25(1)(b)) 7.96 The ACCC, A Guide to the Unfair Contract Terms Law41 publication provides the following information on the example listed in s 25(1)(b) of the ACL: Terms that allow the business to cancel a contract at will, without it being reasonably necessary

to protect the business’s legitimate interests or, for example, in response to an inconsequential breach of contract by the consumer, may be considered unfair by a court. An example of this arose in the Victorian case of Director of Consumer Affairs Victoria v AAPT Limited,42 where Morris J found that an immediate termination clause in a mobile phone contract for any breach potentially had an application so broad that it was considered unfair: A customer may have breached the agreement in a manner which is inconsequential, yet faces the prospect of having the service terminated. Further, if the customer changes his other address (which will not necessarily be the address for receipt of billing information) this will also provide a ground to AAPT to terminate the Agreement. Because these provisions are so broadly drawn, and are one-sided in their operation, they are unfair terms within the meaning of the FTA. Terms may also be considered unfair if they undermine the consumer’s right to terminate the contract. Terms that state or imply that the consumer cannot cancel the contract under any circumstances or only with the business’s agreement, regardless of the business’s action or omission under the contract, may be considered unfair.

[page 348]

A term that penalises, or has the effect of penalising, one party (but not another party) for a breach or termination of the contract (s 25(1)(c)) 7.97 The ACCC, A Guide to the Unfair Contract Terms Law43 publication provides the following information on the example listed in s 25(1)(c) of the ACL: Terms imposing penalties for trivial breaches of a contract by consumers may be unfair. A term may also be considered unfair if it threatens sanctions over and above those that can be imposed at law. A penalty imposed by a contract should bear a reasonable relationship to the loss likely to be suffered by the business as a result of the breach or early termination, and should not be an arbitrary sum. A term that imposes a penalty on a consumer for terminating a contract because the business has not complied with its obligations under the contract is likely to be considered unfair. An example of this may be where a business is unable to supply a product ordered by a consumer by

the date specified in the contract, but also refuses to refund any money paid by the consumer if they attempt to terminate the contract due to the non-delivery.

A term that permits, or has the effect of permitting, one party (but not another party) to vary the terms of the contract (s 25(1)(d)) 7.98 The ACCC, A Guide to the Unfair Contract Terms Law44 publication provides the following information on the example listed in s 25(1)(d) of the ACL: A contract term that provides a right for one party to alter the terms of the contract after it has been agreed may be unfair. This may operate similarly to a term that permits one party (but not the other party) to avoid or limit performance of the contract. If a term could require a consumer to accept increased costs or penalties, new requirements or reduced benefits, for example, it may be considered unfair. An example of an unfair unilateral variation clause was identified in the Victorian case of Director of Consumer Affairs Victoria v Trainstation Health Clubs Pty Ltd (Civil Claims). The Victorian Civil and Administrative Tribunal found that a clause in a consumer contract allowing the health club operator to unilaterally change the location of the club within a 12kilometre radius of the club’s original location, among other things, was unfair because ‘it is a term to which the consumers’ attention is not specifically drawn, and which may operate in a way in which the consumer may not expect and to his or her disadvantage’. A unilateral variation clause may cause a significant imbalance in the rights of the parties to the contract. This applies to terms giving the business the right to make changes to contracts at its discretion and without liability. While unilateral variation clauses may be justified in some circumstances, such terms must be used in a manner which is reasonably necessary in order to protect the legitimate interests of the party advantaged by the term, will not cause a significant imbalance in the parties’ rights and obligations, and will not cause detriment to one of the parties.

[page 349] A variation clause may be more likely to be acceptable if it permits either party to vary the contract and only for legitimate reasons stated in the contract which are clear and specific enough to ensure the power to vary cannot be used by the business at will to suit its interests, or

in a manner that would be detrimental to consumers. For example, a unilateral variation clause may be acceptable where: –

the circumstances are clearly expressed in the contract

–

it is reasonably necessary to protect the legitimate interests of the party using the term or

–

where the consumer has a right to cancel the contract, without penalty, if the change is detrimental to the consumer (footnotes omitted).

A term that permits, or has the effect of permitting, one party (but not another party) to renew or not renew the contract (s 25(1)(e)) 7.99 The ACCC, A Guide to the Unfair Contract Terms Law45 publication provides the following information on the example listed in s 25(1)(e) of the ACL: If a term of a standard form consumer contract only allows a business, and not the consumer, the right of renewal (or not), the business may be unfairly advantaged. The consumer may suffer detriment, including delay or distress, where a contract is not renewed or is automatically renewed without their consent. For example, where the contract involved is a continuing contract and the business unilaterally decides not to renew the agreement without providing adequate notice to the consumer, the consumer may be caught unawares and suffer detriment because of the sudden absence of the product or service and the need to find a replacement. Likewise, the consumer could suffer detriment with the automatic renewal of a contract without their consent. However, there may be instances where the automatic renewal of a contract is reasonably necessary and does not cause a significant imbalance between the parties. Automatic renewal for a reasonably short period is common practice in some industries and can benefit the consumer. For example, ongoing service contracts, such as some utilities contracts, may benefit consumers with the business having a limited ability to renew a contract and continue supply. Provided that the consumer, prior to the expiration of the contract, is given the right not to have the contract renewed or is not required to pay a fee if they wish to withdraw from the agreement following the automatic renewal, the term may not be considered unfair.

A term that permits, or has the effect of permitting, one party to vary the up-front price payable under the contract without

the right of another party to terminate the contract (s 25(1)(f)) 7.100 The ACCC, A Guide to the Unfair Contract Terms Law46 publication provides the following information on the example listed in s 25(1)(f) of the ACL: [page 350] In the ordinary course of business, a consumer would expect to receive the goods or services they were promised in exchange for providing the agreed price. A term allowing the business to unilaterally increase the price — varying one of the most important terms in the contract — has significant potential for unfairness. In some circumstances, a term that provides a discretionary right for the business to set or vary a price after the consumer has agreed to an amount may be unfair, even if there is a right to cancel. For example, a term allowing the business to charge a price on delivery of goods or services different from the price quoted to the consumer when ordering those goods or services may be unfair. In some cases, a variation clause detailing the up-front price payable under the contract is less likely to be considered unfair if consumers are able to end the contract if they do not agree to the variation. To be genuinely free to end the contract, the consumer should not be worse off for having entered into the contract — for example, by experiencing financial loss such as forfeiture of a prepayment. In most cases, however, the consumer should be entitled to receive the goods or services at the agreed price. As always, a term challenged for allowing one party to vary the up-front price without the right of another party to terminate the contract will be subject to the court’s application of the test for unfairness. In some cases, there may be a legitimate interest for including the term, and this may justify the term so that it is not unfair. An example of this may be a domestic building contract where the business is able to vary the up-front price based on the type of materials or furnishings selected by the consumer.

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 (s 25(1)(g))

7.101 The ACCC, A Guide to the Unfair Contract Terms Law47 publication provides the following information on the example listed in s 25(1)(g) of the ACL: A unilateral variation clause may allow a business to substitute a different product or service than the business originally agreed to supply to the consumer. This may conflict with the consumer’s expectation of receiving a product or service that they agreed to purchase, not merely something similar or equivalent. An example of such a unilateral variation clause arose in the Victorian case of Director of Consumer Affairs Victoria v AAPT Limited,48 where a term in a contract for mobile phone services allowed AAPT to ‘vary a Supplier or its products, or vary [AAPT’s] charges from time to time without notice to you [the consumer]’. Morris J found: This term causes 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

[page 351] pursuant to a prepaid mobile phone service which the person had entered into in good faith. This term was an unfair term. If the intention of a unilateral variation clause is to permit changes that are limited in scope and the consumer understands and agrees to the changes in advance, it may be less likely to be considered unfair. This may involve: –

setting out clearly the variation that might be made and in what circumstances;

–

defining how far the variation can extend; or

–

providing the consumer with the right to terminate the contract without penalty if the business cannot supply the product or service agreed to in the contract.

The ability to unilaterally vary the characteristics of the goods or services to be supplied may be fair where notice of such variation is given and the consumer is offered the option of terminating the contract for a period after the notice is given. For example, in the telecommunications industry, s 5.1.3(d)(ix) of the Telecommunications Consumer Protections Code (C628:2007) notes that a term may be unfair if its effect is to permit a business to unilaterally vary the characteristics of goods or services during a fixed term contract on less than 21 days notice to the consumer without offering the consumer the right to terminate the agreement within 42 days of the date of notice.

In some circumstances, there may be a legitimate interest for including the term. An example of this may be a provisional sum clause in a domestic building contract, where the consumer requests variations to the furnishing or material that is used.

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 (s 25(1)(h)) 7.102 The ACCC, A Guide to the Unfair Contract Terms Law49 publication provides the following information on the example listed in s 25(1)(h) of the ACL: A term that allows a business to reserve the right to determine whether it has performed its contractual obligations properly may be considered unfair. Such a term would allow the business to unfairly refuse to acknowledge that it has breached its obligations, thereby denying redress to the consumer. An example might be a term that limits any testing or inspection of an alleged faulty product to testing or inspection by the business. In this situation, it may be considered fairer for the term to provide for the product or service to be independently assessed. Also, a term of a standard form consumer contract may be unfair where it allows a business to reserve the right to decide the meaning or interpretation of a contractual term. The business is effectively able to manipulate the contract to its best advantage in a way that may disadvantage a consumer. Such a term gives rise to the same objections as a unilateral right to vary terms.

[page 352]

A term that limits, or has the effect of limiting, one party’s vicarious liability for its agents (s 25(1)(i)) 7.103 The ACCC, A Guide to the Unfair Contract Terms Law50 publication provides the following information on the example listed in s 25(1)(i) of the ACL: Consumers often rely on what is said to them by a sales representative, employee or agent of a business before or when they are entering into a contract. A contractual term that seeks to disclaim the business’s responsibility or liability for representations made to prospective consumers by its agents at the point of sale may be unfair.

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 (s 25(1)(j)) 7.104 The ACCC, A Guide to the Unfair Contract Terms Law51 publication provides the following information on the example listed in s 25(1)(j) of the ACL: If a business is sold, its contractual relationships with its customers are often ‘assigned’ to the purchaser of the business. In certain circumstances, this may be considered unfair if the assignment detrimentally affects a consumer’s rights under those contracts. For example, in the Victorian case of Director of Consumer Affairs Victoria v Backloads. com Pty Ltd (Civil Claims), Judge Harbison found that a term in a removalist contract that allowed the removalist company to ‘assign its rights and the rights of any persons on behalf of whom it is acting, to collect all charges and payments from Clients to the Contractor’ was unfair for the purposes of the Fair Trading Act 1999 (Vic). Judge Harbison stated that the term was unfair because it ‘has the object or effect of assigning rights in respect of the contract to an unidentified non-party’ and because it ‘creates uncertainty for the consumer because the “Contractor” is not a party to the removalist services contract’. Alternatively, an assignment clause may be less likely to be considered unfair if it operates in circumstances where a consumer’s rights under the contract will not be detrimentally affected by the assignment. For example, with respect to credit agreements, many lenders have a legitimate interest in assigning contracts under securitisation arrangements.

A term that limits, or has the effect of limiting, one party’s right to sue another party (s 25(1)(k)) 7.105 The ACCC, A Guide to the Unfair Contract Terms Law52 publication provides the following information on the example listed in s 25(1)(k) of the ACL: A term which could be used — even if that is not the intention — to prevent or hinder a consumer from enforcing his or her rights against the business when the business

[page 353]

has breached the contract may place the consumer at a significant disadvantage and consequently may be considered unfair. Excluding or limiting one party’s right to sue another under a contract may have the effect of allowing one party to act unreasonably or negligently towards the other without any legal consequences. This may be unfair. Terms that require a consumer to bring legal proceedings in a foreign court may also be unfair.

A term that limits, or has the effect of limiting, the evidence one party can adduce in proceedings relating to the contract (s 25(1)(l)) 7.106 The ACCC, A Guide to the Unfair Contract Terms Law53 publication provides the following information on the example listed in s 25(1)(l) of the ACL: Including a term in a contract that has the effect, or potential effect, of limiting the evidence that a consumer can present in proceedings against the business may be unfair because it limits the consumer’s legal rights or their perception of their legal rights in court proceedings. An example of such a term may be one that limits presentable evidence to the contract itself and excludes any evidence on pre contractual negotiations. While court rules may allow the presentation of such evidence in certain circumstances, consumers may not be aware of the rules of evidence and may be deterred from taking action against another party, including seeking legal advice, because of the term.

A term that imposes, or has the effect of imposing, the evidential burden on one party in proceedings relating to the contract (s 25(1)(m)) 7.107 The ACCC, A Guide to the Unfair Contract Terms Law54 publication provides the following information on the example listed in s 25(1)(m) of the ACL: The effect of this provision is similar to that of restricting the evidence that a party could rely on in court proceedings — it creates the potential for a party to be deterred from taking action against another party. For example, a term that requires a consumer to prove unreasonable or potentially unprovable elements of a dispute, such as the authority of a staff member of the business to make representations where such information is in the hands of the business not the consumer, may be unfair.

A term of a kind, or a term that has an effect of a kind, prescribed by the regulations (s 25(1)(n)) 7.108 The ACCC, A Guide to the Unfair Contract Terms Law55 publication provides the following information on the example listed in s 25(1)(n) of the ACL: The Governor-General may make regulations setting out types of terms or terms that have a certain effect that may be unfair. Before making such regulations, the Minister must take into consideration: –

the detriment that a term of that kind would cause to consumers;

[page 354] –

the impact on business generally of prescribing that kind of term or effect;

–

the public interest.

The elements to be considered by the minister must ensure that consumer, business and public interests are all considered before a term, or term that has an effect of a kind, is listed as unfair.

United Kingdom examples of terms that may be unfair 7.109 In the context of the Unfair Terms in Consumer Contracts Regulations 1999 (UK), the Competition and Markets Authority (CMA) provides the following examples of terms that may be unfair:56 Disclaimers of liability for death or injury caused by the business. For example, ‘Equipment is used entirely at customers’ own risk’. Disclaimers relating to faulty or misdescribed goods, unsatisfactory services. For example, ‘Goods are sold as seen — we accept no liability for faults discovered after purchase’. ‘Claims will not be entertained for “sale” goods.’

‘No liability is accepted for damage to decor caused during installation’. Disclaimers of liability for delay by the business. For example, ‘The company will make all reasonable endeavours to start and complete the works by the dates given, but will not accept liability for delays’. Disclaimers of liability for failure to do what was agreed. For example, ‘Management reserves the right to suspend services without liability’. ‘Non-delivery of an instalment does not give the customer a right to cancel the contract.’ Disclaimers reducing the amount or availability of redress. For example, ‘Liability accepted up to the value of the goods only’. ‘If goods are returned, customers must pay for carriage and packaging.’ ‘No liability is accepted for consequential loss or indirect loss.’ Terms creating barriers to seeking redress. For example, ‘Complaints cannot be accepted unless notified in writing within three days of delivery’. ‘Notice of cancellation must be sent by recorded delivery.’ Terms excluding the consumer’s right of set-off. For example, ‘Payment may not be withheld because of any alleged defect’. ‘Payment must be received in full before installation can commence.’

[page 355] ‘Benefit of the guarantees is lost if payment in full is not received on due date.’ Terms disclaiming liability by conferring unsatisfactory guarantee rights. For example, ‘We will repair or replace (at our option) any item found faulty within three months’. Non-returnable consumer prepayments terms. For example, ‘In the event of an order being cancelled, no refunds can be given’.

Terms denying liability for statements made by agents or employees. For example, ‘All terms of the contract are contained in this document’. ‘No employee has authority to make statements inconsistent with these terms.’ ‘Any variation to these terms must be in writing and signed by a director.’ Unbalanced assignment clauses. For example, ‘The company may at any time assign the agreement to any third party’. ‘This guarantee is personal to the customer and may not be transferred to anyone else.’ Terms hindering or preventing the consumer from going to court. For example ‘Any dispute that cannot be resolved will be referred to arbitration’. ‘This contract is subject to the exclusive jurisdiction of the courts of the Isle of Man.’ Terms allowing excessive burdens or requirements to be imposed on the consumer. For example, ‘We may at any time require payment of such security deposit as is deemed necessary’. ‘The college will, at its discretion, make an additional charge for cleaning rooms.’ Terms requiring the consumer to bear inappropriate risks. For example, ‘The customer indemnifies the company against all third party claims’. ‘The customer will pay for damage caused to the company’s equipment by adverse weather conditions.’ Terms requiring the consumer to make disadvantageous declarations. For example, ‘I have read and understood the conditions of sale overleaf’. ‘No oral representation was made to me as to the vehicle’s condition or mileage.’ Terms excluding non-contractual rights. For example, ‘This contract is deemed to have been signed on the company’s business premises’. ‘The consumer agrees to allow any personal data to be communicated to third parties.’ Terms stating unreasonable obligations and restrictions. For example, ‘The tenant shall not keep any inflammable materials on the property.’

[page 356] 7.110 The above Checklist provided by the CMA does not cover every kind of term that can be unfair in the United Kingdom and further guidance can be found in the OFT’s publication Unfair Contract Terms Guidance.57 7.111 The above Checklist provided by the CMA, while not binding on the UCT provisions in the ACL, does provide further useful examples of the types of terms that may be considered as unfair under the ACL.

Contractual terms that are exempted Section 26 of the ACL 7.112 Section 26(1) of the ACL provides an exhaustive list of terms that are exempted from the UCT provisions in the ACL. Section 26 states: 26 Terms that define main subject matter of consumer contracts etc are unaffected (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 up-front 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 up-front 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.

7.113 Section 26(1) of the ACL contains the following three types of terms that are exempted from the UCT provisions: terms that define the main subject matter;

terms that set the up-front price; and terms expressly permitted as a matter of law. 7.114 Each type of exempted term from the UCT provisions is discussed individually below.

Terms that define the main subject matter 7.115 Terms that define the main subject matter of a contract are exempted from the UCT provisions to ensure that a party cannot challenge a term concerning the basis for the existence of the contract. [page 357] 7.116 The main subject matter of a contract generally refers to the goods or services (which includes land, financial services or financial products) that a consumer is acquiring under a contract. 7.117 The main subject matter of a contract may also include a term that is necessary to give effect to the supply or grant under the contract, or without which the supply or grant could not occur.58 7.118 The ACCC’s A Guide to the Unfair Contract Terms Law59 publication provides the following example to explain the reason for excluding terms that define the subject matter of a contract: For example, where a consumer agrees to buy a product over the internet and agrees to have that product delivered by post, the consumer cannot later challenge the delivery term as being unfair, because it is necessary to effect the supply of the product that they agreed to buy.

7.119 The main subject matter of a contract may also include the decision to purchase a particular type of good or service (or a particular piece of land or financial service or financial product).60

7.120 This inclusion prevents a consumer from inappropriately alleging that a term is unfair on the basis that the consumer has changed their mind about the good or service they have acquired.61

Terms that set the up-front price 7.121 The up-front price paid for a good or service or interest in land under a contract is exempted from the UCT provisions provided that it was disclosed at or before the time the contract was entered into. 7.122 The exclusion of up-front price from the UCT provisions means that a term concerning the up-front price cannot be challenged by a consumer on the basis that it is unfair. 7.123 A consumer usually has the opportunity to know what the up-front price is for the good or service or interest in land they are acquiring, and in many cases they have the opportunity to negotiate the price. 7.124 The PC’s Review of Australia’s Consumer Policy Framework62 Report provided the following reasons why up-front prices should be exempted from the UCT provisions: [page 358] 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.

7.125

Accordingly, a consumer is prevented from inappropriately alleging

that a term is unfair on the basis that he or she discovers at a later stage that the up-front price of the good or service was unfair.63

What is the up-front price? 7.126 The up-front price payable under a contract is the consideration that is provided for the goods or services or interest in land acquired, and includes any amount or thing provided as consideration for:64 the supply of a good or service; the supply of a financial service or product; the grant of an interest in land; and any interest payable under a consumer contract. 7.127 However, the up-front price does not include other consideration (ie further forms of consideration which are not part of the up-front price) that is contingent on the occurrence of a particular event. 7.128 For example, the up-front price would not include terms that impose fees and charges levied as a consequence of something happening or not happening at some point over the period of the contract. 7.129 Such payments of fees or charges are additional to the up-front price, and are not necessary for the provision of the basic supply, sale or grant under the contract.65 7.130 Hence, terms that impose additional fees and charges (eg for a default of payment or exit fee), which are in addition to the price of the goods or services acquired, are excluded from the up-front price.66 7.131 The up-front price will usually be the cash payment for the good or service in question at the time the contract is made, and will also include any future payment or a series of future payments.67

7.132 The determination of future payments or series of future payments should be transparent to the consumer or the consumer should be made aware of the payments at the time the contract was made.68 [page 359] 7.133 In terms of financial services or financial products, the ACCC’s A Guide to the Unfair Contract Terms Law69 publication provides the following example of up-front price: In the context of a financial product or service — for example, a consumer credit agreement — the up-front price 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 (see s 12BI(3) of the ASIC Act). As a result, principal and interest cannot be challenged under the unfair contract terms provisions.

Terms expressly permitted as a matter of law 7.134 Terms that are required or expressly permitted by the Commonwealth, state or territory law are exempted from the UCT provisions to the extent they are required or permitted by the law. 7.135 This exemption ensures that a court is not required to determine the fairness of terms that are required to be included in consumer contracts as a matter of public policy.70 7.136 There are many examples of the terms that are required by law to be included in consumer contracts which may be necessary to ensure the validity of specific transactions as required by law.71 7.137 The ACCC’s A Guide to the Unfair Contract Terms Law72 publication provides the following example of a term which is expressly permitted as a matter of law:

An example of such a term can be found in s 139A of the Act, which states that a term of a contract for the supply of recreational services will not be void by reason only that the term excludes, restricts or modifies the implied warranties in Sch 2, Part 3-2, ss 60 and 61 of the Act.

Contracts that are exempted Section 28 of the ACL 7.138 Section 28(1) of the ACL provides an exhaustive list of standard form contracts that are exempted from the UCT provisions. Section 28 states: 28 Contracts to which this Part does not apply (1) This Part does not apply to: (a) a contract of marine salvage or towage; or (b) a charterparty of a ship; or (c) a contract for the carriage of goods by ship.

[page 360] (2) Without limiting subsection (1)(c), the reference in that subsection 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 section 7(1) of the Carriage of Goods by Sea Act 1991. (3) This Part does not apply to a contract that is the constitution (within the meaning of section 9 of the Corporations Act 2001) of a company, managed investment scheme or other kind of body.

7.139 Section 28 of the ACL exempts from the UCT provisions the following standard form contracts: a contract of marine salvage or towage; a charterparty of a ship; a contract for the carriage of goods by ship; a contract that is the constitution of a company, a managed

investment scheme or other kind of body.73 7.140 Shipping contracts are exempted from the UCT provisions as they are already subject to a comprehensive legal framework that is provided by national and international maritime law.74 7.141 Insurance contracts that are regulated by the Insurance Contracts Act 1984 (Cth) (ICA) are also exempted from the UCT provisions in the ACL.75 7.142 Section 15 of the ICA provides that an insurance contract is not capable of being made the subject of relief under any other Commonwealth or state law. 7.143 In this context, ‘relief’ means relief in the form of review of a contract on the ground that it is harsh, oppressive, unconscionable, unjust, unfair or inequitable. 7.144 However, not all types of insurance contracts are exempted by the UCT provisions in the ACL. It is only the types of insurance contracts that are regulated by the ICA. 7.145 Section 9 of the ICA provides a list of the type of insurance contracts that are exempted from the regulation of the ICA, and hence these types of insurance contracts are subject to the UCT provisions. 7.146 Examples of the types of insurance contracts that are subject to the UCT provisions include:76 contracts of reinsurance; private health insurance in respect of health insurance business or health insurance related business;

[page 361] insurance contracts of a friendly society; workers’ compensation insurance; and personal injury or death insurance arising out of the use of a motor vehicle. 7.147 Contracts for ‘financial services’ or ‘financial products’ are also exempted from the UCT provisions in the ACL.77 These types of contracts are regulated in Pt 2 Div 2 Sub-Div BA of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).

Some examples of UCT cases under the ACL 7.148 The following case of ACCC v Bytecard Pty Ltd,78 is an important decision, as it is the first case brought by the ACCC solely on the UCT provisions in the ACL.

ACCC v Bytecard Pty Ltd (Federal Court, 24 July 2013, VID301/2013) In this case, ByteCard Pty Ltd (ByteCard) operated an internet service provider called NetSpeed Internet Communications (NetSpeed). Netspeed provided internet access, telephone services and web hosting to the public. ByteCard contained on its website a number of terms and conditions for the use of its NetSpeed services. Three of these terms and conditions were:

ByteCard had the ability to unilaterally vary prices (cl 1.7); ByteCard was to be indemnified by the customer (cl 4); and ByteCard had the right to unilaterally terminate the contract at any time, ‘without cause or reason’ (cl 6). ByteCard admitted that these three terms were unfair as defined in s 24 of the ACL. The Federal Court held that the three terms were unfair and made declaratory orders, by consent, that clauses 1.7, 4 and 6 in ByteCard’s terms and conditions were unfair terms because: Clause 1.7 enabled ByteCard to unilaterally vary the price under an existing contract without providing the customer with a right to terminate the contract; Clause 4 required the customer to indemnify ByteCard in any circumstance, even where the contract has not been breached; and Clause 6 enabled ByteCard to unilaterally terminate the contract at any time with or without cause or reason.

[page 362] 7.149 The following case of ACCC v Advance Medical Institute Pty Ltd (admin apptd),79 is an example of an alleged unfair term included in standard form consumer contracts. The case is still before the courts.

ACCC v Advance Medical Institute Pty Ltd (admin apptd)

[2011] FCA 103 In this case, the ACCC alleged that Advance Medical Institute Pty Ltd (AMI), its director Jack Vaisman and two doctors working for the company, engaged in unconscionable conduct and a term in AMI’s standard form contract was unfair. The case was commenced in 2010 and since then AMI has been placed in liquidation and is now referred to as ACN 117 375 915. Within days of the proceedings being commenced, AMI was placed into voluntary administration, owing about $50 million. The administrators said they believed the business, which still has about 150,000 customers, was viable despite its financial woes. Between 2008 and 2010, AMI supplied medication (including a nasal spray) and medical services for the treatment of male sexual dysfunctions (namely, premature ejaculations and erectile dysfunctions). AMI advertised their products and services in advertisements and on their website. The ACCC alleged that the contracts were prepared by AMI without negotiation with the consumer, apart from the duration of the contract. The ACCC also alleged that the consumer received a written statement of the terms after entering into the contracts and the consumer was not given an effective opportunity to negotiate the contract. The term of the contract in question reads as follows: Termination: Sexual dysfunction is a chronic condition and treatment can take some time. For this reason we stipulate that your contract with us for the period decided in the first consultation with the AMI doctor. You may cancel your treatment program with AMI at any time by giving AMI not less than 30 days notice. Cancelling your treatment program you will be entitled to a refund for the unexpired period of your treatment program less an administration fee of 15% and less the cost of any medication already provided to or prepared for you. No refund will be provided for the expired period of treatment program or the 30 days notice period. All cancellations must be communicated to AMI in writing signed by you. Oral cancellations will not be accepted in any circumstances.

The ACCC alleges that the term was unfair because:

It entitled AMI to charge an “administrative fee” of 15 per cent of the original total price of the contract, without disclosing the method of calculation and was imposed regardless of the: total price;

[page 363] original length of the contract; or portion of the contract which had lapsed or the portion of the contract remaining.

It entitled AMI to charge a pro-rated amount representing the ‘expired’ portion of the treatment program, which was calculated by reference to the portion of the contract which had expired between the date of contracting and the date upon which AMI received notice of cancellation, which was imposed regardless of: the quality of the goods or services during the expired period; or whether the goods or services were effective for the specific purpose. Each fee had the effect of penalising the consumer, who gave notice, therefore causing the significant imbalance in the rights under the contract. The fees were not necessary to protect AMI’s legitimate business interests. The uncertainty and cost of terminating a contract would cause a financial and other detriment to a patient wishing to terminate. The administration fee and the medication fee were not transparent. The ACCC sought orders from the court for: a declaration pursuant to s 250 of the ACL that the above term is unfair; and consumer redress pursuant to s 239.

Remedies Availability of remedies 7.150 There are a limited range of remedies available to private litigants and public enforcement in relation to the UCT provisions in the ACL, and there is also a limit on when those remedies are available. 7.151 To understand which remedies in relation to the UCT provisions in the ACL are available and when, it is necessary to examine other provisions in the ACL and the Explanatory Memorandum 7.152 Section 15(a) of the ACL provides that terms in consumer contracts that have been declared by a court to be void do not constitute a contravention of the ACL. Section 15 states: 15 Contraventions of this Schedule Conduct is not taken, for the purposes of this Schedule, to contravene a provision of this Schedule merely because of the application of: (a) section 23(1); or (b) a provision of Division 1 of Part 3-2 (other than section 66(2)); or (c) a provision of Part 3-5.

7.153 This means that the inclusion of a term which is unfair in a consumer contract is not a contravention of the ACL, nor is it a contravention after a court has declared the term unfair pursuant to s 250 of the ACL. [page 364] 7.154 A deemed contravention of the ACL in relation to UCT provisions occurs when a court has declared a term to be unfair and a person purports to apply or rely (or applies or relies) on that term.

7.155 When read together, [5.86] and [5.89] of the Explanatory Memorandum supports the view of a deeming contravention for the purposes of the court’s power to make certain orders:80 5.86 Where a court has declared a term in a consumer contract to be an unfair term, it is a contravention of the ACL for a person to apply or rely on, or purport to apply or rely on, that term. … 5.89 A reference to a contravention of a provision of the ACL includes a reference to applying or relying on, or purporting to apply or rely on, a declared term of a consumer contract for the purposes of the court’s power to: grant an injunction in such terms as the court determines appropriate; make an order to redress nonparty consumers (other than an award of damages) as the court thinks appropriate; and make any order as the court thinks appropriate, such as specific performance, payment of compensation or exemplary damages.

7.156 When read by itself, [5.86] of the Explanatory Memorandum seems to suggest that a term that is declared unfair and then relied on or applied by a business is a contravention of the ACL. 7.157 However, when [5.86] is read together with [5.89], it is more likely that a term that is declared unfair and then relied on or applied by a business is deemed as a contravention of the ACL. 7.158 The words ‘for the purposes of the court’s power to’ in [5.89] suggests that a declared unfair term that is relied on or applied is not a contravention of the ACL, but a deemed contravention. 7.159 This view is supported by the exclusion of damages pursuant to s 236 of the ACL, which require that the conduct ‘contravened a provision of Chapter 2 …’ of the ACL. 7.160

Furthermore, the following wording in ss 232, 237–238 and 239 of

the ACL suggests that a declared unfair term that is relied on or applied is a deemed contravention for the purposes of the ACL: In terms of injunctions, s 232(3) of the ACL relevantly states: Subsection (1) applies in relation to conduct constituted by applying or relying on, or purporting to rely on, a term of a contract that has been declared under

[page 365] section 250 to be an unfair term as if the conduct were a contravention of a provision of Chapter 2. In terms of compensation orders for an injured person, s 237(1)(a)(ii) of the ACL relevantly states in part: On application of a person who has suffered … damage because of the conduct of another person: (i)

was engaged in a contravention of a provision of Chapter 2, 3, or 4; or

(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 … In terms of compensation orders arising out of proceedings, s 238(1)(b) of the ACL relevantly states in part: If a court finds, in a proceeding … that a person … has suffered … damage because of the conduct of another person that: (a) was engaged in a contravention of a provision of Chapter 2, 3 or 4; or (b) 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 … In terms of non-party redress orders, s 239(1)(a)(ii) and (b) of the ACL relevantly states in part: If: (a) a person: (i)

engaged in conduct … in contravention of a provision of Chapter 2, Part 31 Division 2, 3, or 4 of Part 3-2 or Chapter; or

(ii) is a party to a consumer contract who is advantaged by a term (the declared term) of the contract in relation to which a court has made a declaration under section 250; and (b) the contravening conduct or declared term caused, or is likely to cause, a class of persons to suffer loss or damage …

7.161 The wording in s 232 of the ACL ‘as if the conduct were a contravention’ of Ch 2, suggests that applying or relying on a declared unfair term, whilst not in itself a contravention, is to be treated as if it were a contravention of Ch 2. 7.162 The wording in ss 237–239 of the ACL each distinguish between a ‘contravention’ or ‘contravening conduct’ and a party to a consumer contract who is relying on or applying a declared unfair term.

Public remedies 7.163 Only a court can declare a term to be unfair, and not a regulator. A regulator may seek from the court pursuant to s 250 of the ACL a declaration that a term in a consumer contract is unfair and void. [page 366] 7.164 The following public remedies are available only after a court has declared a term unfair pursuant to s 250 of the ACL, and where a person continues to apply or rely on, or purports to apply or rely on, that term: an injunction (s 232); a compensation order (s 237); and an order for non-party redress: s 239. 7.165

Without limiting ss 237(1) and 239(1) of the ACL, the type of orders

that can be made under those sections are listed in s 243. The orders listed in s 243 are wide, but do not include an account of profits. 7.166 For public policy reasons, pecuniary penalties pursuant to s 224 of the ACL are not available in relation to the UCT provisions in the ACL. 7.167 14.

For further information in relation to public remedies, see Chapter

Private remedies 7.168 A person may seek from the court pursuant to s 250 of the ACL a declaration that a term in a consumer contract is unfair and void. 7.169 The following private remedies are available only after a court has declared a term unfair pursuant to s 250 of the ACL, and where a person continues to apply or rely on, or purports to apply or rely on, that term: an injunction (s 232); and a compensation order: s 237. 7.170 For reasons stated above, damages pursuant to s 236 of the ACL are not available in relation to the UCT provisions in the ACL. 7.171 13.

For further information in relation to private remedies, see Chapter

Short theory and problem questions Theory questions 1.

What is a standard form contract? Provide three examples of standard form contracts.

2.

What is a consumer contract? Provide three examples of consumer contracts.

3.

Is it the subjective purpose, objective purpose or both of the consumer and/or supplier that is relevant for the purposes of determining whether a contract is a consumer contract?

4.

When is a term in a consumer contract considered as unfair?

5.

Do the UCT provisions in the ACL apply to a contract made before 1 July 2010? Do the provisions apply if the contract is varied or renewed after 1 July 2010? [page 367]

6.

Do the unfair contract term provisions in the ACL apply to a term which defines the subject matter of the contract?

7.

Do the unfair contract term provisions in the ACL apply to a term which sets the up-front price?

8.

Is the inclusion of an unfair term in a standard form contract considered as a contravention of the ACL?

9.

If a term is declared unfair by a court, can pecuniary penalties apply? What remedies are available for the UCT provisions?

Hypothetical problem question John, Paul, George and Bingo were musicians in a band called the Beagles. One day, John visited his favourite music store Wilsun Guitars and he saw a new Super-V guitar on display. A sign was hanging above the guitar which read: New Super-V guitar — Purchase Price $10,000 or Rental Fee $1,000 per month. For rental terms and conditions, please see terms and conditions at front counter.

John wanted to buy the guitar, but did not have $10,000. He could pay the $1,000 per month, as he would receive money from doing ‘gigs’ at the local tavern, called Revolver. John went to the front counter where he saw a rental agreement. He flipped through the 64 page agreement and noticed the following terms and conditions hidden in small print in the middle of page 56:

Terms and Conditions 1.

The rental fee for the Super-V guitar is $1,000 per month.

2.

You must sign up to a rental contract for at least 12 months.

3.

If you damage the guitar while it is rented, you must pay all fees for repair or replacement.

4.

You may cancel your rental at any time, provided that you give Wilsun Guitars 30 days’ notice in writing and pay a cancellation fee of $1,500.

5.

Wilsun Guitars can vary any term in this contract at any time without notification, and may cancel the agreement at any time without prior notification.

6.

You must return the Super-V guitar in its original case, as given to you.

After reading the terms and conditions, John spoke to the owner of Wilsun Guitars, Murray Wilsun and said: ‘You must be kidding. I am not the fool on the hill to sign up to these terms.’ Murray responded to John by saying: ‘Listen here Sloop John B. These terms are fair and reasonable. You can take the guitar or leave it’. John reluctantly signs the rental agreement. Advise John as to whether the contract that he signed contains terms which are likely to be considered as unfair, and whether John can seek a declaration pursuant to s 250 of the ACL.

[page 368]

Further reading A Bruce, Consumer Protection Law in Australia, 2nd ed, LexisNexis Butterworths, Sydney, 2014, pp 161–74. S Corones, The Australian Consumer Law, 2nd ed, Thomson Reuters, Sydney, 2013, pp 221–54. Halsbury’s Laws of Australia, Commentary, Consumer Protection title, LexisNexis, Sydney, 2011, [16,160]–[16,165], [410-417]. Justice J D Heydon, Trade Practices Law Competition & Consumer Law (Looseleaf Services), Thomson Reuters, Australia, 2012, [180.10]–[180.500]. Jeannie Paterson, Unfair Contract Terms in Australia, Lawbook Co, Sydney, 2012. R Miller, Australian Competition and Consumer Law Annotated, 36th ed, Thomson Reuters, Sydney, 2014, pp 1586–94. R Steinwall, Annotated Competition and Consumer Legislation, LexisNexis, Sydney, 2014, pp 1385–90. See the ACCC website at or the ACL website at and download the following publications: – A Guide to the Unfair Contract Terms Law, 2010; –

Consumers and Unfair Contract Terms, 2010; and

–

Unfair Contract Terms Industry Review Outcomes, 2013.

1.

MCCA is now named the Legislative and Governance Forum on Consumer Affairs (CAF).

2.

Productivity Commission, Review of Australia’s Consumer Policy Framework, 2008, p 34.

3.

Productivity Commission, Review of Australia’s Consumer Policy Framework, 2008, pp 34–5.

4.

Productivity Commission, Review of Australia’s Consumer Policy Framework, 2008, pp 34–5.

5.

Kingsway Hall Hotel Ltd v Red Sky IT (Hounslow) Ltd [2010] EWHC 965.

6.

Office of Fair Trading (OFT) v Abbey National plc [2009] UKSC 6.

7.

Director of Consumer Affairs Victoria v Backloads.com Pty Ltd [2009] VCAT 754.

8.

Director of Consumer Affairs Victoria v Trainstation Health Clubs Pty Ltd [2008] VCAT 2092.

9.

Jetstar Airways Pty Ltd v Free [2008] VSC 539.

10. Director of Consumer Affairs v AAPT Ltd [2006] VCAT 1493. 11. Director General of Fair Trading v First National Bank plc [2002] 1 AC 481. 12. Adoko v Freeserve.Com.Plc [2002] EWCA Civ 869. 13. An individual is defined in s 2B of the Acts Interpretation Act 1901 (Cth) as a natural person. 14. Explanatory Memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Explanatory Memorandum) at [5.16]. 15. For discussion on ‘personal, domestic or household use or consumption’, see 2.35. 16. Explanatory Memorandum at [5.19]. 17. Productivity Commission, Review of Australia’s Consumer Policy Framework, 2008, p 159. 18. Director of Consumer Affairs Victoria v Craig Langley Pty Ltd [2008] VCAT 482 per Harbison J at [66]–[67]. 19. ACCC, A Guide to the Unfair Contract Terms Law, 2011, p 8. 20. Explanatory Memorandum at [5.73]. 21. Explanatory Memorandum at [5.23]. 22. Explanatory Memorandum at [5.24]. 23. Director of Consumer Affairs v AAPT Ltd [2006] VCAT 1493 per Morris P at [33]. 24. Jetstar Airways Pty Ltd v Free [2008] VSC 539. 25. DG of Fair Trading v First National Bank plc [2002] 1 All ER 97 per Bingham LJ at 109. 26. Director of Consumer Affairs Victoria v AAPT Ltd [2006] VCAT 1493. 27. Explanatory Memorandum at [5.27]. 28. ACCC, A Guide to the Unfair Contract Terms Law, 2010, pp 11–12. 29. Director of Consumer Affairs Victoria v AAPT Ltd [2006] VCAT 1493. 30. Explanatory Memorandum at [5.29]. 31. Explanatory Memorandum at [5.33]. 32. ACCC, A Guide to the Unfair Contract Terms Law, 2010, p 15. 33. ACCC, Consumers and Unfair Contract Terms, 2010, p 2. 34. ACCC, News for Business — Unfair Contract Terms, 2010, p 3. 35. Explanatory Memorandum at [5.39]. 36. Explanatory Memorandum at [5.38]. 37. Explanatory Memorandum at [5.44]. 38. Communications Alliance Ltd, Industry Code — Telecommunications Consumer Protections Code (C628: 2012) at [4.5.3]. 39. Explanatory Memorandum at [5.45].

40. ACCC, A Guide to the Unfair Contract Terms Law, 2010, p 15. 41. ACCC, A Guide to the Unfair Contract Terms Law, 2010, p 15. 42. Director of Consumer Affairs Victoria v AAPT Limited [2006] VCAT 1493 per Morris J at [53]. 43. ACCC, A Guide to the Unfair Contract Terms Law, 2010, p 16. 44. ACCC, A Guide to the Unfair Contract Terms Law, 2010, pp 16–17. 45. ACCC, A Guide to the Unfair Contract Terms Law, 2010, p 17. 46. ACCC, A Guide to the Unfair Contract Terms Law, 2010, p 18. 47. ACCC, A Guide to the Unfair Contract Terms Law, 2010, p 19. 48. Director of Consumer Affairs Victoria v AAPT Limited [2006] VCAT 1493 per Morris J at [54]. 49. ACCC, A Guide to the Unfair Contract Terms Law, 2010, p 20. 50. ACCC, A Guide to the Unfair Contract Terms Law, 2010, p 20. 51. ACCC, A Guide to the Unfair Contract Terms Law, 2010, p 21. 52. ACCC, A Guide to the Unfair Contract Terms Law, 2010, p 21. 53. ACCC, A Guide to the Unfair Contract Terms Law, 2010, p 22. 54. ACCC, A Guide to the Unfair Contract Terms Law, 2010, p 22. 55. ACCC, A Guide to the Unfair Contract Terms Law, 2010, p 22. 56. CMA, Unfair Terms in Consumer Contracts Regulations 1999 Checklist, 2013, pp 1–4. 57. OFT, Unfair Contract Terms Guidance — Guidance for the Unfair Terms in Consumer Contracts Regulations 1999 (UK), 2008. 58. Explanatory Memorandum at [5.61]. 59. ACCC, A Guide to the Unfair Contract Terms Law, 2010, p 9. 60. Explanatory Memorandum at [5.61]. 61. Explanatory Memorandum at [5.60]. 62. Productivity Commission, Review of Australia’s Consumer Policy Framework, 2008, pp 161–2. 63. Explanatory Memorandum at [5.60]. 64. Explanatory Memorandum at [5.63]. 65. Explanatory Memorandum at [5.70]. 66. ACCC, A Guide to the Unfair Contract Terms Law, 2010, p 10. 67. Explanatory Memorandum at [5.65]. 68. Explanatory Memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No 1) 2009 (Cth) at [2.73]. 69. ACCC, A Guide to the Unfair Contract Terms Law, 2010, p 10. 70. Explanatory Memorandum at [5.71]. 71. Explanatory Memorandum at [5.71]. 72. ACCC, A Guide to the Unfair Contract Terms Law, 2010, p 10. 73. Section 28(3) of the ACL states that ‘constitution’ refers to the constitution within the meaning of s 9 of the Corporations Act 2001 (Cth). 74. Explanatory Memorandum at [5.79].

75. Explanatory Memorandum at [5.84]. 76. Section 9(1) of the ICA. 77. Competition and Consumer Act 2010 s 131A. 78. ACCC v Bytecard Pty Ltd (Federal Court, 24 July 2013, VID301/2013). 79. ACCC v Advance Medical Institute Pty Ltd (admin apptd) [2011] FCA 103. 80. Explanatory Memorandum at [5.86] and [5.89].

[page 369]

Chapter 8 Specific False or Misleading Representations ‘Look here mate, we don’t do refunds. You can only get a replacement or store credit if your appliance has been repaired three times.’

Introduction Overview 8.1 This Chapter considers specific false or misleading representations and specific misleading conduct provisions that are contained in Ch 3 Pt 3-1 Div 1 of the Australian Consumer Law (ACL). 8.2

The relevant topics covered in this Chapter are: Differences between ss 18 and 29 of the ACL; – Section 18 v s 29; False or misleading representations about goods or services; – Section 29 of the ACL; –

Key terms of false or misleading representations; ♦

‘Making a representation’;

♦

‘False’;

–

♦

‘Misleading’;

♦

‘False’ v ‘misleading’;

♦

‘In connection with’;

♦

‘In trade or commerce’;

‘Particular standard, quality, value, grade, composition, style, model, history, or use’ of goods (s 29(1)(a)); ♦

Particular;

♦

Standard;

♦

Quality;

♦

Value;

♦

Grade;

♦

Composition;

♦

Style; [page 370]

♦

Model;

♦

History and previous use;

–

‘Particular standard, quality, value, grade’ of services (s 29(1) (b));

–

‘New’ goods (s 29(1)(c));

–

‘Particular person has agreed to acquire goods or services’ (s 29(1)(d));

–

‘Purported testimonials’ (s 29(1)(e));

–

‘Concerning testimonials or purported testimonials’ (s 29(1) (f));

–

‘Sponsorship, approval performance characteristics, etc’ (s 29(1)(g));

–

♦

Sponsorship;

♦

Approval;

♦

Performance characteristics, uses or benefits;

‘Sponsorship, approval or affiliation of persons’ (s 29(1)(h)); ♦

Sponsorship;

♦

Affiliation;

♦

Approval;

♦

Examples of sponsorship, affiliation or approval;

–

‘Price’ of goods or services (s 29(1)(i));

–

‘Repairs and spare parts’ of goods (s 29(1)(j));

–

‘Place of origin’ (s 29(1)(k));

–

‘Need’ of any goods or services (s 29(1)(l));

–

‘Exclusion’ of any consumer guarantee, etc (s 29(1)(m));

–

♦

Condition;

♦

Warranty;

♦

Guarantee;

♦

Right;

♦

Remedy;

Extended warranties (s 29(1)(n)); ♦

What is an extended warranty?;

♦

Extended warranties in relation to consumer guarantees;

False or misleading representations about sale etc of land; – Section 30 of the ACL; Misleading conduct relating to employment; – Section 31 of the ACL; Misleading conduct as to the nature etc of goods; – Section 33 of the ACL; Misleading conduct as to the nature etc of services;

–

Section 34 of the ACL;

Misleading representations about certain business activities; – Section 37 of the ACL; Exemption for information providers; – Section 38 of the ACL. 8.3 Each topic will be discussed individually below. This will be followed by a summary of the civil and criminal remedies (and enforcement powers) available for contraventions of each liability provision. [page 371]

Differences between ss 18 and 29 of the ACL Section 18 v s 29 8.4 Section 29 of the ACL is intended to support the more general prohibition of s 18 by prohibiting an exhaustive list of specific types of false or misleading representations. 8.5 In Australian Competition and Consumer Commission (ACCC) v Dukemaster Pty Ltd,1 Gordon J made the following comments about former ss 52 and 53 of the Trade Practices Act 1974 (Cth) (TPA) (now ss 18 and 29 of the ACL respectively): The purpose of s 53 has been described as being to [support] s 52 by enumerating specific types of conduct which, if engaged in by a corporation in trade or commerce in connection with the promotion or supply of goods or services, [would] give rise to a breach of the Act.

8.6

The Swanson Committee, in their Report to the Minister of Business

and Consumer Affairs made the following comments about former ss 52 and 53 of the TPA:2 … the Committee would like to express the general view that it should not be the function of section 53, which has criminal law sanctions, to prohibit as wide a sweep of false and misleading conduct as possible. Section 53 should deal only with conduct which has demonstrably led to abuses and involves a real potential for harm. Section 52, which has sanctions of a civil nature, provides a more appropriate approach to a general prohibition of undesirable practices.

8.7 The following list is a summary of some of the key differences between ss 18 and 29 of the ACL: s 18 is a general provision, whereas s 29 is specific and the list of prohibitions is exhaustive. Hence s 18 will cover a wider range of circumstances than s 29, although there may be significant overlap between the provisions; s 18 refers to engaging in conduct, whereas s 29 refers only to making representations. Accordingly, s 18 will cover a wider range of circumstances than s 29; s 18 is a civil provision, whereas s 29 is both civil and criminal. Hence, s 18 will only require the standard of proof to be on the balance of probabilities, whereas the offence provision in s 151 requires proof beyond reasonable doubt; s 18 prohibits conduct ‘in trade or commerce’ as does s 29, however s 29 has the additional requirement of ‘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’; and [page 372]

Adverse publicity orders, disqualification orders, pecuniary penalties and infringement notices are not available for contravention of s 18, whereas these remedies are available for contravention of s 29. 8.8 There can be overlap in contraventions of ss 18 and 29 of the ACL. Indeed, misleading representations can fall into both provisions, as both provisions can cover identical factual circumstances. 8.9 Where there is an overlap in contraventions of both ss 18 and 29 of the ACL, it is often that a court’s finding of a contravention of s 29 will be based on the finding of s 18.3

False or misleading representations about goods or services Section 29 of the ACL 8.10 Section 29 of the ACL prohibits 14 different types of specific false or misleading representations, with the majority of the subsections containing multiple attributes. Section 29 (similar to former s 53 of the TPA) states: 29 False or misleading representations about goods or services (1) 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 (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

[page 373] (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). Note 1:

A pecuniary penalty may be imposed for a contravention of this subsection.

Note 2:

For rules relating to representations as to the country of origin of goods, see Part 5-3.

(2) For the purposes of applying subsection (1) in relation to a proceeding concerning a representation of a kind referred to in subsection (1)(e) or (f), the representation is taken to be misleading 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 representation is not misleading; or

(b) have the effect of placing on any person an onus of proving that the representation is not misleading.

Key terms of false or misleading representations 8.11 Before discussing the relevant prohibitions in s 29(1)(a)–(n) of the ACL, it is important to first consider the following key terms that are applicable to each subsection: ‘making a representation’; ‘false’; ‘misleading’; ‘in connection with’; and ‘in trade or commerce’.

‘Making a representation’ 8.12 Section 29 of the ACL requires that a person must not make a false or misleading representation. As stated above, this is narrower than the requirement in s 18 in the following two respects: A representation in s 29 is merely one form of conduct, whereas s 18 covers all forms of conduct; and A representation in s 29 must relate to one of the 14 types of representations listed in s 29, whereas s 18 is not restricted to any types of representations, or indeed to representations at all. [page 374] 8.13

A representation is defined as an oral or written statement made by

one person to another, usually with the intent to persuade the other person to take a particular course of action, such as entry into a contract.4 8.14 A representation may be in the form of an express representation, for example, ‘this watch for sale is an antique’, or it may be an implied representation, for example, placing a watch in an antique shop.

‘False’ 8.15 The word ‘false’ has been interpreted to mean ‘contrary to fact’.5 Accordingly, the word ‘false’ does not require knowledge (or intention) on the part of the person making the representation.6 8.16 In Given v CV Holland (Holdings) Pty Ltd,7 Franki J made the following comments in relation to the word false under former s 53(a) of the TPA: The next matter to consider is whether the words ‘falsely represent’ in s 53(a) of the Act are satisfied if the representation is not correct, or whether it must be known to be false by the person making the representation. It was also argued for the defendant, that, since it was a corporation, the representation must be one false to the knowledge of a person of sufficient seniority in the company to be able to bind the company. 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 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. There is nothing novel in equating ‘false’ with ‘contrary to fact’.

8.17 Hence, a representation is false if it is contrary to fact, or not correct. If the representation is not correct then it is false even if it is not false to the knowledge of the person making the representation. 8.18

An alternative meaning of the word ‘false’ was given by the majority

of the High Court in Murphy v Farmer.8 In that case, Deane, Dawson and Gaudron JJ interpreted ‘false’ as meaning ‘purposely untrue’. 8.19 However, this interpretation was given in the context of other legislation (ie s 229 of the Customs Act 1901 (Cth)) and is not considered as the preferred interpretation for s 29 of the ACL. [page 375] 8.20 The meaning of ‘false’ as equated to ‘contrary to fact’ appears to be the longstanding view for the purposes of s 29 of the ACL and one that has been applied in a substantial number of decisions.9

‘Misleading’ 8.21

The word ‘misleading’ is discussed in Chapter 3.10

‘False’ v ‘misleading’ 8.22 Under former s 53(a) of the TPA, there was a distinction between prohibitions concerning false representations and those concerning false or misleading representations. 8.23 There is no such distinction in s 29 of the ACL. Section 29 prohibits a representation that is false or misleading. The Explanatory Memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 provided the following reason for this:11 Section 53 of the TP Act proscribed specific representations, some of which are prohibited from being false, some from being false or misleading, and others from being about qualities the goods or services do not have. There appears to be no rationale as to why, through various amendments, the different forms of wording were used for different elements of section 53 of the TP Act.

For example, there is little reason to prohibit false or misleading representations concerning the availability of spare parts (section 53(ea) of the TP Act) but only prohibiting false, but not misleading, representations that goods are new (section 53(b) of the TP Act). Section 29 of the ACL replaces section 53 of the TP Act and has been drafted to remove this distinction and apply to false or misleading representations and includes the new forms of prohibited representation.

8.24 For the purposes of s 29 of the ACL there does not appear to be any meaningful difference between the words ‘false’ or ‘misleading’. This was noted by Gordon J in ACCC v Dukemaster Pty Ltd:12 In relation to the first element, s 53(e) requires the representation to be ‘false or misleading’ as opposed to ‘misleading or deceptive’ (in s 52). I was not taken to, and I have not found, any authority which attributes a meaningful difference to this dichotomy for the purposes of the TPA. (For a discussion of the phrase ‘false and misleading’ under a

[page 376] different Act, see Construction, Forestry, Mining and Energy Union v Hadkiss (2007) 160 FCR 151.) Indeed, the vast majority of cases that discuss an alleged breach of s 53(e) couple it with a breach of s 52 and deal with the ‘false or misleading’ and ‘misleading or deceptive’ aspect of the conduct mutatis mutandis: see Foxtel Management Pty Ltd (2005) 214 ALR 554 at [94]; ACCC v Target Australia Pty Ltd (2001) ATPR 41-840; ACCC v Harbin Pty Ltd [2008] FCA 1792; ACCC v Prouds Jewellers Pty Ltd [2008] FCAFC 199 at [42].

8.25 Accordingly, if a contravention is established by virtue of conduct found to be ‘misleading’, it is redundant and unnecessary to further establish that the conduct was ‘false’. 8.26 However, in the criminal context, the same is not true. The word ‘false’ requires the further element of knowledge of the facts that gives rise to the crime.

‘In connection with’ 8.27

Section 29 of the ACL requires that a person must not ‘in connection

with’ the promotion of supply (or supply, or possible supply or use) of goods or services, make a false or misleading representation. 8.28 The words ‘in connection with’ are not defined in the ACL, nor have they been interpreted in terms of s 29. The words ‘in connection with’ must be construed in their legislative context, purpose and objective.13 8.29 For the purposes of satisfying the legislative context, purpose and objective of s 29 of the ACL, it is submitted that a broad interpretation of the words ‘in connection with’ should be adopted. 8.30 In the context of former s 51AC of the TPA, the words ‘in connection with’ have been held to mean ‘accompany’, ‘go with’ or ‘be involved in’ the supply of goods or services.14 8.31 In the context of s 87B of the Competition and Consumer Act 2010 (CCA), the words ‘in connection with’ have been held by Mansfield J in ACCC v Woolworths (South Australia) Pty Ltd,15 to be capable of bearing a wide meaning: The ACCC’s power under s 87B is to accept an undertaking ‘in connection with’ a matter in relation to which it has a power or function. It is arguably a more extensive power. The scope of the power is to be determined as a matter of statutory construction. The expression ‘in connection with’ was given a wide scope of operation by Kitto J in Berry v FCT (1953) 89 CLR 653 at 658–9, as requiring ‘a substantial relation, in a practical business sense’. The test does not necessarily require an immediate causal relationship:

[page 377] per Wilcox J in Our Town FM Pty Ltd v Australian Broadcasting Tribunal (1987) 16 FCR 465 at 479–80; 77 ALR 577 at 591–2. In this matter, there is no legislative indication that the powers of the ACCC under s 87B should be limited to powers akin to those of the court. Indeed, it may be the choice of the words ‘in connection with’ in s 87B, compared for example to the words ‘relates to’ in s 86C(4), is

intended to indicate the powers of the ACCC should be widely interpreted. The words ‘in connection with’ are capable of bearing a wide meaning.

8.32 The words ‘in connection with’ have also been interpreted in other statutory contexts in Our Town FM Pty Ltd v Australian Broadcasting Tribunal (No 1),16 by Wilcox J: The words ‘in connexion with’ have a wide connotation, requiring merely a relation between one thing and another. They do not necessarily require a causal relationship between the two things: see Commissioner for Superannuation v Miller (1985) 63 ALR 237 at 238, 244, 247. They may be used to describe a relationship with a contemplated future event: see Koppen v Commissioner for Community Relations (1986) 67 ALR 215 at 220; Johnson v Johnson [1952] p 47 at 50–1. In the latter case the United Kingdom Court of Appeal applied a decision of the British Columbia Court of Appeal, Re Nanaimo Community Hotel Ltd [1945] 3 DLR 225, in which the question was whether a particular court, which was given ‘jurisdiction to hear and determine all questions that may arise in connection with any assessment made under this Act, had jurisdiction to deal with a matter which preceded the issue of an assessment. The trial judge held that it did, that the phrase ‘in connection with’ covered matters leading up to, or which might lead up to, an assessment. He said, [1944] 4 DLR 639: ‘One of the very generally accepted meanings of ‘connection’ is ‘relation between things one of which is bound up with or involved in another’; or, again ‘having to do with’. The words include matters occurring prior to as well as subsequent to or consequent upon so long as they are related to the principal thing. The phrase ‘having to do with’ perhaps gives as good a suggestion of the meaning as could be had.’ This statement was upheld on appeal.

‘In trade or commerce’ 8.33 The meaning of the words ‘in trade or commerce’ is discussed in Chapter 2.17

Particular standard, quality, value, grade, composition, style, model, history, or use of goods (s 29(1)(a)) 8.34 Section 29(1)(a) of the ACL prohibits a person from making false or misleading representations that goods are of a particular standard, quality,

value, grade, composition, style or model or have had a particular history or particular previous use. 8.35 Section 29(1)(a) of the ACL is similar to former s 53(a) of the TPA, and the jurisprudence relating to the concepts applicable to s 53(a) is relevant to those concepts as they exist in relation to s 29(1)(a). [page 378] 8.36 The Explanatory Memorandum states that s 29(1)(a) could cover a 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, for example:18 representations about the nature of the goods, which could include: – the way in which the goods were manufactured, including specific methods or processes; or –

the materials from which the goods were manufactured; or

–

the correspondence of the actual goods, their contents or the way in which those goods were made with a description of those goods, their contents or the way in which they were made;

representations about the standard, quality or grade of the goods, which could include: – the suitability of the goods for the uses to which they might reasonably be put; or –

the purity, strength, cleanliness, fineness (or otherwise) of the goods, or any other standard, quality or grade by which the goods may be assessed or compared;

representations about the value of the goods, which could include: – the price of the goods; or –

the cost of the contents of the goods; or

–

the cost of the process by which the goods were manufactured or distributed; or

–

the market value of the goods;

representations about the style of the goods, which could include: – the design or the designer of the goods; or –

the accuracy of a reproduction of other goods;

representations about the model of the goods, which could include whether the goods match the characteristics of a particular make or model of the goods; representations about the previous history or use of the goods, including:

–

the origin and age of the goods; or

–

the previous ownership of the goods; or

–

the historical uses or associations of the goods either in a specific context or by specified persons.

8.37 It is not necessary that each attribute (of a particular standard, quality, value, grade etc) be engaged for a contravention of s 29(1)(a) of the ACL.19 It is sufficient if any of the listed attributes is misrepresented. 8.38 A brief explanation of each of the words ‘particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use’ in s 29(1)(a) of the ACL is provided below.

Particular 8.39 The word ‘particular’ in s 29(1)(a) of the ACL is given its ordinary meaning of ‘indicated’ or ‘certain’ standard, and not a ‘precise’ or ‘generally recognised’ standard.20 [page 379] 8.40 The ordinary meaning of the word ‘particular’ as ‘indicated’ or ‘certain’ standard is a wider interpretation to the word particular, than a ‘precise’ or ‘generally recognised’ standard. 8.41 For example, under the broader interpretation, the ordinary meaning of the word ‘particular’ as an indicated or certain standard, Franki J held in Given v C V Holland (Holdings) Pty Ltd,21 that: [t]he number of miles a particular vehicle has travelled describes a particular attribute, or a special feature, of that vehicle, and therefore describes a particular quality of that vehicle.

8.42

Whereas, under the narrower interpretation, ‘precise’ or ‘generally

recognised’ meaning of the word ‘particular’, the attributes or special feature of the vehicle is unlikely to be considered as a ‘particular’ quality. 8.43 In Gardam v George Wills & Co Ltd (No 1),22 French J made the following comments about the word ‘particular’ in relation to former s 53(a) of the TPA: As Franki J used it in Given v C V Holland (Holdings) Pty Ltd, supra and as used in the later cases, the word has borne the meaning for which Donald and Heydon contend, that is to say an ‘indicated’ or ‘certain’ standard. This approach, in my respectful view, is consistent with the ordinary meaning of the word. It is not necessary therefore to import into the collocation ‘particular standard’ the requirement that the standard be, as Taperell Vermeesch & Harland, supra, suggests, ‘generally recognised’. It may be that ‘particular’ has little more function than the indefinite article in qualifying ‘standard’. It may be that it excludes global descriptions embracing a range of standards or qualities such as ‘This item is of a very high standard’: cf MacFarlane v John Martin & Co Ltd (1977) ATPR 40-034. The limits of its operation need not be decided here.

8.44 The word ‘particular’ does not change its meaning in s 29(1)(a) of the ACL according to which of the terms standard, quality, grade, composition, or style it is taken to qualify.23 8.45 Furthermore, the repetition of the word ‘particular’ before ‘history’ and ‘previous use’ might be taken to suggest that it is not intended to qualify the words ‘quality, grade, composition, style or model’. 8.46 However, in Gardam v George Wills & Co Ltd (No 1),24 French J made the following comments which do not support such an interpretation: A possible corollary of that view is that the word [particular] has a special limiting role in its application to standards. That is an interpretation which would lead to the rather awkward reading ‘falsely represent that goods are of a … quality etc’ and would be at

[page 380] odds with the consistent assumption to the contrary in the cases mentioned above. The

repetition of the word in s 53(a) can, in my opinion, be explained simply as a matter of syntax. That is borne out by reference to the paragraph as it stood prior to the 1977 amendment: ‘(a) falsely represent that goods or services are of a particular standard, quality or grade, or that goods are of a particular style or model’.

Standard 8.47 The meaning of the word ‘standard’ in s 29(1)(a) of the ACL has been given the same meaning as defined in the Shorter Oxford English Dictionary namely:25 … a definite level of excellence, attainment, wealth or the like, or a definite degree of any quality, viewed as a prescribed object of endeavour or as the measure of what is adequate for some purpose.

8.48 It is not necessary for the purposes of s 29(1)(a) of the ACL that the represented standard has any statutory significance, nor is it necessary to establish that it is a declared consumer product safety standard.26 8.49 However, consumer product safety standards that are declared under the CCA will fall within the meaning of ‘standard’ for the purposes of s 29(1) (a) of the ACL.27 8.50 The word ‘standard’ as used in s 29(1)(a) of the ACL connotes a narrower concept than the word ‘quality’.28 In Ducret v Chaudhary’s Oriental Carpet Palace Pty Ltd,29 Ryan J said: Notwithstanding the differences in width between ‘quality’ and ‘standard’ as used in s 53(a), I consider that a representation as to each of them in respect of goods is capable of being made by attributing to the goods a value expressed as an amount of money. Whether such an attribution constitutes a representation of that kind is a matter of fact to be determined on the evidence in each case.

8.51 Some examples of false or misleading representations that goods are of a particular standard in contravention of former s 53(a) of the TPA are: a statement made that a concrete pumping machine was ‘to

contractors standard’, when in fact it was not;30 statements made that light emitting diodes or LED lights were approved or compliant with product safety standards known as the Australian Design Rules (ADR), when in fact the LED lights were not approved or compliant with ADR;31 and [page 381] a statement that margarine was: ‘Plant sterol spread — No 1 recommended for dietary change’, when in fact there was no foundation for making such a statement.32

Quality 8.52 The meaning of the word ‘quality’ in s 29(1)(a) of the ACL has been given the same meaning as defined in the Shorter Oxford English Dictionary namely:33 [A]n attribute, property, special feature. The nature, kind or character (of something).

8.53 The words ‘of a particular quality’ in s 29(1)(a) of the ACL have to be read in their context. Its meaning must be ascertained in relation to the goods whose quality is being considered.34 8.54 A broad meaning should be given to the word ‘quality’ in s 29(1)(a) of the ACL. In Ducret v Chaudhary’s Oriental Carpet Palace Pty Ltd,35 Ryan J said that: [A] meaning [of quality] which extends beyond the degree or grade of excellence which a thing can be held upon physical examination to possess in comparison with others of a similar kind, and which includes the virtues, attributes, properties and special features of the thing.

8.55

Some examples of false or misleading representations that goods are

of a particular quality in contravention of former s 53(a) of the TPA are: comparative advertising statements on television commercials that a furniture suite from one company has the same qualities and the same physical attributes as a suite from another company, when they did not;36 and statements made by a supplier of meat products that used the words ‘GROWN AND GRAIN FED IN THE SPACIOUS VICTORIAN WIMMERA WHEATLANDS’ and using a logo with the words ‘RANGE REARED & GRAIN FED’ on packaging for its ‘Retail Range’ of Duck Meat Products; when in fact this was not the case.37

Value 8.56 The meaning of the word ‘value’ in s 29(1)(a) of the ACL is likely to be given the same meaning as defined in the Shorter Oxford English Dictionary namely:38 1.

That amount of a commodity, medium of exchange, etc, considered to be an equivalent for something else; a fair or satisfactory equivalent or return. [page 382]

8.57

2.

The material or monetary worth of a thing; the amount of money goods, etc, for which a thing can be exchanged or traded.

3.

The extent or amount of a specified standard or measure of length, quantity, etc. There is limited case law on false or misleading representations that

goods are of a particular value. However, it is likely that s 29(1)(a) of the ACL would cover the following false or misleading representations: The value of this pizza business is high, when in fact the business is insolvent. The market value of this car is $100,000, when in fact it is only $5,000. This antique clock is worth a fortune, when in fact it is not.

Grade 8.58 The meaning of the word ‘grade’ in s 29(1)(a) of the ACL is likely to be given the same meaning as defined in the Shorter Oxford English Dictionary namely:39 A degree in rank, proficiency, quality, intensity, or value. The position in an ablaut series occupied by a particular form. A class of persons or things of a similar degree of ability, rank, or quality.

8.59 The word ‘grade’ is narrower in scope than the word ‘quality’. Accordingly, it is possible for the same representation to fall within the meaning of both the ‘grade’ and ‘quality’ of goods. 8.60 There is limited case law on false or misleading representations that goods are of a particular grade. However, it would be expected that s 29(1)(a) of the ACL would cover the following false or misleading representations: The grade of this cotton is ‘A-grade’, when in fact it is not. The grade of this wheat is better than the grade of that wheat, when in fact it is not.

Composition 8.61

The meaning of the word ‘composition’ in s 29(1)(a) of the ACL is

likely to be given the same meaning as defined in the Shorter Oxford English Dictionary namely:40 A substance or preparation formed by a combination or mixture of various ingredients; a compound artificial substance serving the purpose of a natural one.

8.62 The word ‘composition’ was inserted in former s 53(a) of the TPA in 1977. The Swanson Committee noted the following reason why it was important to expand on the former language in s 53(a):41 [page 383] In regard to (ii) ‘composition’, we consider that a strong prohibition against deceptive labelling is warranted. Accordingly, we recommend that the present references to ‘quality’ and ‘grade’ be supplemented by the addition of a reference to ‘composition’.

8.63 There is limited case law on false or misleading representations that goods are of a particular composition.42 However, it would be expected that s 29(1)(a) of the ACL would cover the following false or misleading representations: This orange juice consists entirely of oranges, when in fact the portion of oranges is only 50 percent. This apple juice consists entirely of ‘freshly picked’ apples, when in fact the apples were not freshly picked. This cranberry juice is ‘pure’, when in fact it is not composed wholly of cranberries, but includes preservatives and artificial colouring and flavouring. 8.64 The following case of ACCC v Cadbury Schweppes Pty Ltd,43 is an example of goods that contained false or misleading representations on their labels in contravention of former s 53(a) of the TPA.

ACCC v Cadbury Schweppes Pty Ltd (2004) 61 IPR 270 In this case, Cadbury sold two flavoured cordials to supermarkets. The first cordial was called ‘banana mango flavoured cordial’. The background to the label on this product appeared to be a colour photograph, showing parts of at least three bananas and parts of at least six mangoes. At the top of the product, was a red banner with the word ‘new’. This banner slightly overlapped a larger blue banner with the words ‘jug pack’ and it contained a picture of a happy monkey. In one hand, the monkey was grasping a half-peeled banana. Below the monkey’s head and right hand was a blue banner, bordered in orange, with the words ‘go bananas’. On the back of the product there were various other pictures and writing, including the list of ingredients which did not include any element derived from either bananas or mangoes. The second cordial was called ‘apple kiwi flavoured cordial concentrate’. This product was packaged in a 375 millilitre aluminum can. The contents of the can were not visible from the outside. The label covered the surface of the can, with the exception of the top and the bottom. There was a photographic depiction of fruit, used as background to the label. The fruit concerned were apples and kiwi fruit. It was possible to discern parts of at least three apples and seven kiwi fruit. The apples were predominantly red and appeared as whole fruit. The kiwi fruit all appeared as cut, so that green flesh and black seeds were shown. [page 384]

The Cottee’s brand logo appeared in two places, in a form similar to that on the ‘banana mango flavoured’ cordial. Importantly, the words ‘apple kiwi’ were printed in white against the deep blue background on two occasions, in different sizes. In each case, immediately beneath them in light green appeared the words ‘flavoured cordial’ in smaller type. Below them, again in light green, appeared the word ‘concentrate’, in type that appeared to be of the same size as the words ‘apple kiwi’. The label also contained nutritional information, instructions, puffery and manufacturer information. It also contained the list of ingredients which showed that the cordial did contain a significant quantity of an element derived from apples, but did not contain anything derived from kiwi fruit. Gray J held that the representations made on each cordial product were misleading in contravention of former s 53(a) (and ss 52 and 55) of the TPA. In relation to s 53(a), Gray held that Cadbury had misrepresented that the products were of a particular composition, when in fact they were not. In particular, Gray noted (at [27] and [34]): The Commission sought to establish that the use of pictorial representations of fruit on the label of a product that did not contain any product of that fruit was itself a misrepresentation as to the contents of the product. The respondent sought to establish that the use of the description ‘flavoured cordial’ was sufficient to communicate to consumers generally that the product concerned was artificially flavoured, and not flavoured by means of the use of the products of real fruit. In my view, both attempts failed. … (emphasis added) On the basis of the overall impression of the packaging and labelling of each of the two products the subject of this proceeding, I am of the view that each was capable of conveying to a significant body of reasonable consumers a representation that the product concerned contained extracts of the real fruit depicted. In the case of the banana mango flavoured cordial, such a representation was false, in that the cordial contained no extract of banana or of mango. In the case of the apple kiwi flavoured cordial concentrate, the representation was false, in that the cordial contained no kiwi fruit extract. In each case, it is likely that some reasonable consumers would be misled or deceived by the

representation and influenced by it to purchase the product concerned on the basis that it contained the real fruit represented.

Style 8.65 The meaning of the word ‘style’ in s 29(1)(a) of the ACL is likely to be given the same meaning as defined in the Shorter Oxford English Dictionary namely:44 A mode or manner of living or behavior: a person’s bearing or demeanour. A particular or characteristic way, form or technique of making or producing a thing, esp, a work of art; a way of executing a task; a manner of performance.

[page 385] 8.66 There is limited case law on false or misleading representations that goods are of a particular style.45 However, it would be expected that s 29(1)(a) of the ACL would cover the following false or misleading representations: The style of this t-shirt is retro, when in fact it is not. The style of this lounge is unique, when in fact it is not. The style of his hair is gothic, when in fact it is not. The style of the table is Italian, when in fact it is not.

Model 8.67 The meaning of the word ‘model’ in s 29(1)(a) of the ACL is likely to be given the same meaning as defined in the Shorter Oxford English Dictionary namely:46 The design, pattern, or structural type of a material or immaterial thing. A garment by a particular designer of a particular season, etc; a copy of such a garment. A motor vehicle etc of a

particular design or produced in a specified year; each of a series of varying designs of the same type of object.

8.68 There is limited case law on false or misleading representations that goods are of a particular model.47 However, it would be expected that s 29(1) (a) of the ACL would cover the following false or misleading representations: This motor vehicle is the latest model, when in fact it is not. The model of this motor vehicle is two years old, when in fact it is not. The model of this motor vehicle contains features X, Y and Z, when in fact the model does not. This model is the last model that will be made of this motor vehicle, when in fact it is not. This model is one of a kind, when in fact it is not.

History and previous use 8.69 The meaning of the word ‘history’ in s 29(1)(a) of the ACL has been given the same meaning in Hollis v PH & D Stephens Investments Pty Ltd48 as defined in the Shorter Oxford English Dictionary namely: … a relation of incidents.

8.70 The words ‘history or previous use’ were inserted in former s 53(a) of the TPA in 1977. There were doubts expressed by the Swanson Committee that the former language in s 53(a) would apply to:49 [page 386] … situations where mechanical devices measuring usage, eg motor vehicle odometers, are adjusted so as to display lesser usage than is actually the case. The view of the Committee is that such conduct, in connection with the supply of goods or services, should be prohibited by section 53.

8.71 However, courts have held that similar conduct falls under the attribute of ‘particular quality’,50 and since 1977 they have also held that this type of conduct is covered by ‘history or previous use’. 8.72 Some examples of false or misleading representations that goods are of a particular history in contravention of former s 53(a) of the TPA are: A representation that imported rolls of masking tape, which were manufactured in the United States, but repackaged in Australia under the label ‘made in Australia’ had a particular history.51 A representation as to the number of previous owners of the vehicle, the characteristics of any or all of such owners, or the geographical areas where the vehicle had been serviced, would be a representation that the vehicle had a particular history.52

‘Particular standard, quality, value, grade’ of services (s 29(1)(b)) 8.73 Section 29(1)(b) of the ACL prohibits a person from making false or misleading representations that services are of a particular standard, quality, value or grade. 8.74 Section 29(1)(b) of the ACL is similar to former s 53(aa) of the TPA, and the jurisprudence relating to the concepts applicable to s 53(aa) is relevant to those concepts as they exist in relation to s 29(1)(b). 8.75 The Explanatory Memorandum states that s 29(1)(b) could cover a representation that services are of a particular standard, quality, value or grade for example:53 representations about the nature of the services, which could include: – the way in which the services are, have been or might be undertaken, including specific methods or processes; or

–

the persons who will or might undertake the services and whether those persons have undertaken the services previously; or

–

the correspondence of the actual services or the way in which those services are undertaken with a description of those services;

representations about the standard, quality or grade of the goods, which could include: – the suitability of the services for the purposes to which they are to be put or the matter to which they relate; or [page 387] –

the qualifications and previous experience of the persons who will undertake the services; or

–

the amount of work to be undertaken as part of the supply of the services and the relationship of that work with the cost of the services.

8.76 The meaning of the words ‘particular standard, quality value or grade’ in s 29(1) (b) of the ACL are interpreted in the same way as the words appear in s 29(1)(a). See discussion above in relation to s 29(1)(a).54 8.77 The following case of ACCC v Allergy Pathway Pty Ltd,55 is an example of false or misleading representations made in contravention of former s 53(aa) of the TPA in relation to curing allergies.

ACCC v Allergy Pathway Pty Ltd [2009] FCA 960 In this case, Advanced Allergy Elimination Pty Ltd (AAE) operated clinics for the diagnosis and treatment of allergies. AAE diagnosed and treated allergies by using a muscle strength indicator technique and by using a technique based on positive and negative condition. AAE also published information about their services on the internet, radio and in newspapers advertisements. In a number of advertisements, AAE represented that they could cure or eliminate virtually all allergies or allergic reactions. This included the representation that AAE could cure

serious allergic reactions to wheezing and asthma, when in fact, there was no known cure for asthma. There remained a substantial risk of mortality associated with asthma. The ACCC alleged that this representation and many others published on the website and contained in the advertisements were in breach of former s 53(aa) (and ss 52, 53(c) and 55A) of the TPA. Finkelstein J held that the representations in relation to services provided by AAE were in contravention of former 53(aa) of the TPA.

‘New’ goods (s 29(1)(c)) 8.78 Section 29(1)(c) of the ACL prohibits a person from making false or misleading representations that goods are new, when in fact they are not. 8.79 Section 29(1)(c) of the ACL is similar to former s 53(b) of the TPA, and the jurisprudence relating to the concepts applicable to s 53(b) is relevant to those concepts as they exist in relation to s 29(1)(c). [page 388] 8.80 The word ‘new’ in s 29(1)(c) of the ACL does not have a fixed and inflexible meaning. The meaning of the word ‘new’ is a question of fact in each case and the context in which the representation is made.56 8.81 The fact that goods may be new in one or more senses will not necessarily provide protection to a respondent if they are not new in another sense that is relevant to a particular case. 8.82

Depending on the context in which the word ‘new’ appears, it may

mean ‘not second-hand’, ‘not old’, ‘of recent origin’, or ‘not excessively used’.57 8.83 For goods to be ‘new’, they do not have to be in ‘mint condition’.58 The mere fact that goods are damaged, irrespective of the nature or quality of the repairs, does not mean that they have ceased to be new. 8.84 In some cases, a good or an article of commerce may cease to be new even if it is used for a comparatively short period.59 For example, the immediate use of a vehicle after purchase makes it second hand.60 8.85 The meaning of the word ‘new’, particularly when used in relation to motor vehicles, has been considered to have at least five possible meanings, namely, that the goods:61 have not previously been sold by retail, in other words, that they are not second hand; are a current, and not a superseded, model; have not suffered significant deterioration or been used to any significant extent; are of recent origin; and have suffered a measure of damage, but the damage has been effectively repaired and the goods are otherwise new in every respect. 8.86 In Annand & Thomson Pty Ptd v TPC,62 Franki J made the following comments about the word ‘new’ in relation to former s 53(b) of the TPA: It is always difficult to define the simple words of common use; but I think that the primary meaning of ‘new’ is ‘not old’ or ‘of recent origin’, and I think that the onus is upon those who contend that a word like this is used in any secondary sense to show that it was so intended. New and old are relative terms, but it seems to me that there are various ways in which an article of commerce may lose the quality of newness. A thing is no longer ‘new’ when it has been used for a comparatively short period — Andrews Brothers (Bournemouth) Ltd v Singer & Co Ltd [1934] 1 KB 17 — but when things become old

[page 389] they are no longer new, and if the mere lapse of time results in deterioration in quality, or depreciation in value, I think that the thing is no longer new according to the ordinary use of the English language

8.87 In Annand & Thomson Pty Ptd v TPC,63 Northrop J made the following comments about the word ‘new’ in relation to former s 53(b) of the TPA and motor vehicles: A reference to the Shorter Oxford Dictionary illustrates that the word ‘new’ when used as an adjective can have many varying meanings. Some of the many dictionary meanings are set out: not existing before; now made or brought into existence; for the first time; of recent origin or growth; not before used or worn. When used to describe a car or motor vehicle the word ‘new’ is commonly understood to mean not second-hand or not used. This is refined to be understood as meaning that the car or motor vehicle is a current model and has not previously been sold by retail. A demonstration model is understood as meaning a motor vehicle which has not been sold by retail, but has been used by the seller to demonstrate to persons how that type of vehicle performs. This meaning of the word ‘new’ is accepted generally within the motor trade. … In my opinion, the use of the word ‘new’, when used in connection with the sale or purchase of a car or motor vehicle, is to be understood as meaning a car or motor vehicle which is a current model which has not previously been sold by retail. The meaning of the word ‘new’ in this context is to be contrasted with the meaning to be understood by its use in other contexts. It is quite common for a person to describe his car as ‘a new car’ after he has bought it and after he has used it. It is not unusual for a person who has bought a used car to describe it as his new car.

8.88 The following case of Annand & Thomson Pty Ptd v TPC,64 is an example of certain conduct held to contravene former s 53(b) of the TPA and other conduct held not to constitute a contravention.

Annand and Thompson Pty Ltd v TPC (1979) 25 ALR 91 In this case, Annand and Thompson Pty Ltd (Annand), was a car dealer

selling motor vehicles. On two separate occasions, Annand sold two Jeep motor vehicles to two separate purchasers, a Mr Watson and a Mr Andrado. Each of the Jeeps sold to Mr Watson and Mr Andrado was imported into Australia fully assembled in January 1975 and was able to be registered at that time. The Jeeps sold to Mr Watson and Mr Andrado, in January 1977 and August 1977 respectively, had not previously been sold by retail, nor were [page 390] they used as demonstration models. From the date of purchase, the Jeep sold to Mr Andrado was at least two years and nine months old, and the Jeep sold to Mr Watson was at least two years old. Upon purchase of his Jeep, Mr Andrado signed an order form which contained the following words in the description of goods section ‘A New/Demo/Used’ and underneath those words the words ‘Cross out whichever not applicable’. The words ‘Demo’ and ‘Used’ were crossed out. Also under the same heading is the statement ‘I acknowledge you do not warrant the correctness of the year model which is believed to be …’ and in the space at the end of this sentence the word ‘new’ appears in writing. Upon purchase of his Jeep, Mr Waston also signed a similar order form, but was also given a receipt from an insurance company which stated the year of manufacture to be ‘1977’. In relation to the Jeep sold to Mr Andrado, Franki, Northrop and Fisher JJ held that there was no contravention of the former TPA. In relation to the Jeep sold to Mr Watson, Franki, Northrop and Fisher JJ held that this was misleading as the receipt from the insurance company stated that the year of manufacture was 1977, when in fact, it was 1975.

In particular, Franki J said (at [102]) that: In relation to the sale to Mr Andrado I do not consider that misleading or deceptive conduct by the appellant [Annand] has been established on the balance of probabilities. It is necessary to look at the whole of the transaction of sale and purchase and not only at one aspect of it. Different principles may be applicable in the case of an advertisement. No representation was made that the Jeep was of any particular age and the appearance of the word ‘New’ in the order form associated with ‘Demo’ and ‘Used’ points to the word ‘New’ being used in contradistinction to the words ‘Demo’ or ‘Used’. Also the reference to the year model points in the same direction. The test is whether, in an objective sense, the conduct of the appellant was such as to be misleading or deceptive when viewed in the light of the type of person who is likely to be exposed to that conduct. Broadly speaking it is fair to say that the question is to be tested by the effect on a person, not particularly intelligent or well informed, but perhaps of somewhat less than average intelligence and background knowledge, although the test is not the effect on a person who is, for example, quite unusually stupid. The question is not whether the purchaser was deceived but whether the conduct was misleading or deceptive. In the subject case the trade meaning of ‘new’ is not directly relevant. On balance I have come to the opposite conclusion with regard to the sale to Mr Watson. Mr Watson’s oral evidence denied any verbal representation to him that the vehicle was new and also that he mentioned the word ‘new’ when he inquired about the Jeep … The year ‘1977’ appears on the receipt of the insurance company and I consider that this statement is sufficient, in the background against which it was made, to render the appellant’s conduct, in respect of the sale, deceptive.

[page 391]

‘Particular person has agreed to acquire goods or services’ (s 29(1)(d)) 8.89 Section 29(1)(d) of the ACL prohibits a person from making false or misleading representations that a particular person has agreed to acquire goods or services. 8.90

Section 29(1)(d) of the ACL is similar to former s 53(bb) of the TPA,

and the jurisprudence relating to the concepts applicable to s 53(bb) is relevant to those concepts as they exist in relation to s 29(1)(d). 8.91 The Explanatory Memorandum states that s 29(1)(d) could cover a representation that a particular person has agreed to acquire the goods or services, for example:65 that another person has, may or will acquire the goods or services; or that that other person has, may or will acquire the goods or services for a particular price or at a particular time; or that that other person has, may or will acquire a specific form of the goods or services.

8.92 Some examples of false or misleading representations that a particular person has agreed to acquire goods or services in contravention of s 29(1)(d) of the ACL and former s 53(bb) of the TPA are: A business that sold printer ink cartridges made telephone calls to other businesses stating that the business had already placed orders for printer ink cartridges which simply required confirmation, when in fact, no such order was made.66 A business that was involved in a scheme where cold calls by telephone were made by persons who claimed that other employees of the business had made orders, when in fact no such orders were made.67 Representatives of a publication business made telephone calls to small businesses and made statements to the small business that they had agreed to acquire advertising space in publications produced by the publication business.68

‘Purported testimonials’ (s 29(1)(e)) 8.93

Section 29(1)(e) of the ACL prohibits a person from making false or

misleading representations that purport to be a testimonial by any person relating to goods or services. 8.94 Section 29(1)(e) of the ACL has no equivalent provision under the former TPA. 8.95 Testimonials are statements of opinion from customers who have acquired goods or services from a business or person. Testimonials can be on video, on websites or in brochures, etc. [page 392] 8.96 Testimonials are usually about the customer’s experience with the business, what they think of it, and/or how they rate the goods or services of the business. 8.97 Section 29(1)(e) of the ACL prohibits representations of fictitious testimonials.69 It also prohibits genuine testimonials where the testimonial is misrepresented or misquoted.70 8.98 Section 29(2) provides a rebuttable presumption that representations concerning a testimonial are misleading. The Explanatory Memorandum provides the following explanation of s 29(2): Failure to adduce evidence to the contrary when it is alleged that a person has made a false or misleading representation concerning a testimonial will result in the representation being found to be misleading. This onus is evidentiary in nature, the person accused does not have to disprove the alleged breach: he or she must put evidence to the contrary of the allegation before the court. Similarly, adducing such evidence does not provide the accused with a defence to any allegation that the representation is false or misleading: it merely discharges the onus on them. A person can discharge the evidentiary onus and still be found to have made a misleading representation. The evidentiary onus does not apply to any other paragraphs in section 29 other than paragraphs 29(1)(e) and (f).

8.99 Section 29(3)(a) of the ACL makes it clear that even if evidence is adduced to the contrary, a representation is not, purely on that basis, not misleading.71 The evidence must be sufficient to displace the presumption. 8.100 Section 29(3)(b) of the ACL makes it clear that s 29(2) does not have the effect of placing an onus on a person to prove that a representation is not misleading. 8.101 The following case of ACCC v P and N Pty Ltd,72 is an example of non-genuine testimonials that were admitted to be false or misleading in contravention of s 29(1)(e) of the ACL.

ACCC v P and N Pty Ltd [2014] FCA 6 In this case, P and N Pty Ltd (PN), P and N NSW Pty Ltd (PN NSW) and Worldwide Energy and Manufacturing Australia Pty Ltd (WEMA) supplied solar panels to consumers in various states in Australia. [page 393] Between May 2012 and February 2013, PN and PN NSW published videos, on YouTube and on a website, that purported to be testimonials by customers. In fact, the persons in the videos were actors. Between January 2013 and February 2013, WEMA published, on a website, written statements that purported to be testimonials by customers. In fact, the testimonials were not genuine. Each of PN, PN NSW and WEMA admitted (at [30]) that by publishing the testimonials, they had, in trade or commerce in connection with the supply or possible supply of goods, or the promotion

of the supply of goods, made false or misleading representations in contravention of s 29(1)(e) of the ACL. Besanko J held that the testimonials were in contravention of s 29(1)(e) of the ACL and made, amongst other orders, an order, by consent, that the respondents pay pecuniary penalties.

‘Concerning testimonials or purported testimonials’ (s 29(1)(f)) 8.102 Section 29(1)(f) of the ACL prohibits a person from making false or misleading representations that concerns: a person’s testimonial relating to goods or services; or a representation that purports to be such a testimonial, relating to goods or services. 8.103 Section 29(1)(f) of the ACL has no equivalent provision under the former TPA. 8.104 Section 29(1)(f) of the ACL prohibits representations of fictitious testimonials.73 It also prohibits genuine testimonials where the testimonial is misrepresented or misquoted.74 8.105 The rebuttable presumption that representations concerning a testimonial are misleading in s 29(2) of the ACL applies to s 29(1)(f) (see discussion above on s 29(2) and (3)).75 8.106 The following case of Volunteer Eco Students Abroad Pty Ltd v Reach Out Volunteers Pty Ltd,76 is an example of testimonials that were admitted to be false or misleading in contravention of s 29(1)(e) and (f) of the ACL.

[page 394]

Volunteer Eco Students Abroad Pty Ltd v Reach Out Volunteers Pty Ltd (2013) 102 IPR 161 In this case, Volunteer Eco Students Abroad Pty Ltd (VESA) complained about various testimonials relating to Reach Out Volunteers Pty Ltd (ROV) business as the supplier of volunteer eco tourism programs. Between September 2010 and June 2011, ROV published on its website and on its Facebook page the following testimonials: One of the biggest eye opening experiences of my life. The satisfaction of knowing that you have made a difference in the lives of others, is truly remarkable. I still can’t believe that I first had the opportunity to work with some of the happiest kids in the world. But that I also did hands on work with wildlife, still makes me smile. Ps Giraffes are the best: Matt Cork This was the best thing I have ever done. I want to go back tomorrow! I will certainly be back next year!: Sara Bordina I had the most amazing time in South Africa. I really enjoyed the two weeks. It was a lot more hands on than I had expected. I would highly recommend this program to anyone: James Shaw ROV admitted (at [462]) that Mr Matt Cork, Ms Sara Bordina and Mr James Shaw had never participated as a volunteer on an eco tour or volunteer program operated by ROV. Griffiths J held (at [466]) that the publication of each of testimonials was in contravention of s 29(1)(e) and (f) of the ACL.

‘Sponsorship, approval, performance characteristics, etc’ (s 29(1)(g)) 8.107 Section 29(1)(g) of the ACL prohibits a person from making false or misleading representations that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits. 8.108 Section 29(1)(g) of the ACL is similar to former s 53(c) of the TPA, and the jurisprudence relating to the concepts applicable to s 53(c) is relevant to those concepts as they exist in relation to s 29(1)(g). 8.109 The Explanatory Memorandum states s 29(1)(g) could cover the following representations:77 representations that the goods or services are, in some way, sponsored by another person or entity. This could include persons or entities not engaged in trade or commerce, [page 395] such as charities, religious institutions, educational institutions, professional and trades bodies and governments; representations that a person or other entity has approved of the goods or services, including representations that such an approval is a formal or informal endorsement, certification or other indication of approval made by a person or entity. This could include persons or entities not engaged in trade or commerce. representations that the goods or services will or could: – reach specified or nonspecified performance standards or levels in their use or provision; or –

deliver specified or nonspecified benefits or enhancements in

the use of other goods or the undertaking of other services; or –

with respect to goods, last for specified or nonspecified periods of time or a specified or nonspecified number of uses, and with respect to services, be provided or undertaken for a specified or unspecified period of time or a specified or unspecified number of times; or

–

tolerate specified or nonspecified physical circumstances (including, for example, pressures or stresses) in their use or undertaking;

representations that the goods or services come with other accessories, including the provision of additional goods or services either generally or in the event that certain things occur; representations that the goods or services have particular uses either generally or in addition to those for which they are to be or have been supplied; representations that the goods or services will provide the person acquiring them or other persons with benefits. 8.110 As shown from the examples above in the Explanatory Memorandum, s 29(1)(g) of the ACL has wide scope and can capture many forms of false or misleading representations. 8.111 For example, a contravention of s 29(1)(g) of the ACL can be constituted by no less than 96 different combinations of the elements specified in the introductory words of s 29 and in the paragraph.78 8.112 A brief explanation of each of the words ‘sponsorship’, ‘approval’, ‘performance characteristics, accessories, uses or benefits’ in s 29(1)(g) of the ACL is provided below, along with some case examples.

Sponsorship

8.113 The word ‘sponsorship’ in s 29(1)(g) of the ACL is interpreted in the same way as the word appears in s 29(1)(h). See discussion below under s 29(1)(h) of the ACL.79

Approval 8.114 The word ‘approval’ in s 29(1)(g) of the ACL is interpreted in the same way as the word appears in s 29(1)(h). See discussion below under s 29(1)(h).80 [page 396]

Performance characteristics, uses or benefits 8.115 A performance characteristic, use or benefit in relation to goods signifies something that the goods can do or something that can be done with the goods.81 The capability of a good is often represented. 8.116 Alternatively, a performance characteristic, use or benefit in relation to goods might signify some consequence of having or owning the goods.82 8.117 The words ‘uses’ or ‘benefits’ are of more general application than the more specific words ‘performance characteristics’.83 8.118 In ACCC v Billbusters Pty Ltd,84 Kenny J made the following comments about the words ‘use’ or ‘benefit’ in connection with the supply of services: Whether there is a representation of a relevant ‘use’ or ‘benefit’ in connection with services to be provided by a representor will depend on the nature of the services in question, although the benefit, for these purposes, must inhere in the services in question.

8.119

While a contravention can be established for a false or misleading

representation made by reference to any one of the statutory words, it is often the case that a combination of the words, or all three words are read together. 8.120 Some examples of false or misleading representations that the goods or services have a performance characteristic, use or benefit in contravention of the s 53(g) of the TPA are as follows: A website named ‘Crowded Planet’ contained statements that an oral contraceptive had performance characteristics, uses or benefits, such as no side effects, when in fact, there were significant health risks in using oral contraceptives in certain ways.85 An advertisement in the magazine ‘New Idea’, which described a good as being a ‘Golden Replica of 400-Day Clock’, which would cause the reader’s ‘envious guests’ to: gaze with amazement and intrigue when the counter balances turn constantly as they have for countless years to keep perfect time on the original unique masterpieces of craftsmanship …

when in fact the good was a plastic and metal box which did not operate as a clock at all, but ‘no doubt to the heightened amazement and intrigue of the above-mentioned envious guests, played Edelweiss’.86 [page 397] Statements made by telemarketers over the telephone that a mobile telephone service would be available in remote regions where certain customers resided, when in fact the mobile coverage was not available in those remote regions.87 A provider of broking services for the retail purchase of electricity and/or natural gas for residential and business customers made various statements in certain advertisements that customers who

signed up to the company would receive savings in energy costs, when in fact such savings were not available.88

‘Sponsorship, approval or affiliation of persons’ (s 29(1)(h)) 8.121 Section 29(1)(h) of the ACL prohibits a person from making false or misleading representations that the person making the representation has a sponsorship, approval or affiliation. 8.122 Section 29(1)(h) of the ACL is similar to former s 53(d) of the TPA, and the jurisprudence relating to the concepts applicable to s 53(d) is relevant to those concepts as they exist in relation to s 29(1)(h). 8.123 The Explanatory Memorandum states s 29(1)(h) of the ACL could cover the following representations:89 representations that the person is, in some way, sponsored by, approved of or affiliated with another person or entity. This could include persons or entities not engaged in trade or commerce, such as charities, religious institutions, educational institutions, professional and trades bodies and governments; representations that a person or other entity has sponsored, approved of or extend an affiliation to the person, including representations that such an approval is a formal or informal endorsement, certification, qualification or other indication of approval made by a person or entity. This could include persons or entities not engaged in trade or commerce.

8.124 There is overlap with the use of words ‘sponsorship’ and ‘approval’ in s 29(1) (h) and (g) of the ACL. However, s 29(1)(h) is different to s 29(1)(g) in the following two respects: Section 29(1)(h) prohibits false or misleading representations that the person making the representations has ‘sponsorship, approval…’, whereas s 29(1) (g) prohibits false or misleading representations that goods or services have ‘sponsorship, approval…’.

Section 29(1)(g) prohibits false or misleading representations about performance characteristics, uses or benefits of goods or services, whereas [page 398] s 29(1)(h) prohibits false or misleading representations about a person’s affiliation with someone or something else. 8.125 A brief explanation of each of the words ‘sponsorship, affiliation, and approval’ in s 29(1)(h) of the ACL is provided below, along with some examples of cases applicable to each word.

Sponsorship 8.126 In McDonald’s System (Aust) Pty Ltd v McWilliam’s Wines Pty Ltd (No 2),90 Franki J provided the following comments on what he considered to be the meaning of the word ‘sponsorship’: ‘Sponsorship’ is defined in the Oxford Dictionary as ‘the state of being a sponsor; the office of a sponsor’. The most relevant meanings of ‘sponsor’ in that dictionary are, in my opinion: ‘One who enters into an engagement, makes a formal promise or pledge, on behalf of another; a surety.’ … In Weitmann v Katies Ltd (1977) 29 FLR 336 at 344, I had occasion to consider the meaning of the word ‘sponsorship’ in s 53(c) and I said: ‘The word “sponsorship” in connection with trade marks or trade names seems to envisage something more along the lines of a certification mark.’ I see no reason to change this view and I consider that the word ‘sponsorship’ in s 53(c) should be construed in a way appropriate to the construction of such a word in a section creating a criminal offence.

8.127 However, in 10th Cantanae Pty Ltd v Shoshana Pty Ltd (Sue Smith case),91 Gummow J questioned whether Franki J placed too narrow a meaning on the word ‘sponsorship’:

In Weitmann v Katies Ltd (1977) 29 FLR 336 at 344, Franki J treated the term ‘sponsorship’ in s 53 as envisaging, in connection with trade names, ‘something more along the lines of a certification mark’ (Trade Marks Act 1955, Pt XI), that is to say a use of the name to certify quality, accuracy or other characteristic of goods or services. In McDonald’s System of Australia Pty Ltd v McWilliams Wines Pty Ltd (1979) 28 ALR 236 at 248, Franki J gave a similar interpretation of ‘approval’ in s 53. This may be placing too narrow a meaning upon these terms, attached as they are to the verb ‘represent’.

8.128 Perhaps the more practical meaning given to the word ‘sponsorship’ is the following one given by Pincus J in 10th Cantanae Pty Ltd v Shoshana Pty Ltd (Sue Smith case):92 Sponsorship, in a commercial context, conveys that a commercial or other organisation or person stands behind and, perhaps, wholly or partly finances some activity — for example, a sporting event or a television show.

[page 399]

Affiliation 8.129 In McDonald’s System (Aust) Pty Ltd v McWilliam’s Wines Pty Ltd (No 2),93 Franki J provided the following comments on what he considered to be the meaning of the word ‘affiliation’: Affiliation is defined in the Oxford Dictionary as: ‘Adoption; the act of taking a son: Adoption, by a society, of subordinate branches; union of branches to a supreme or central organization.’ … I consider that the type of ‘affiliation’ to which s 53(d) of the Act refers is akin to ‘sponsorship’ or ‘approval’. ‘Affiliation’ seems to require a positive link.

8.130 The word ‘affiliation’ has been used interchangeably with the word ‘association’ in false or misleading cases concerning former s 53(d) of the TPA.94

Approval 8.131 In McDonald’s System (Aust) Pty Ltd v McWilliam’s Wines Pty Ltd (No 2),95 Franki J provided the following comments on what he considered to be the meaning of the word ‘approval’: The Oxford Dictionary defines ‘approval’ as ‘the action of approving; sanctioning, approbation’. The most appropriate meanings of ‘approve’ in the Oxford Dictionary are, in my opinion, ‘to confirm authoritatively; to sanction; to pronounce to be good; commend’.

8.132 However, in 10th Cantanae Pty Ltd v Shoshana Pty Ltd (Sue Smith case),96 Gummow J questioned whether Franki J placed too narrow a meaning on the word ‘approval’. In particular, his Honour said:97 In Weitmann v Katies Ltd (1977) 29 FLR 336 at 344, Franki J treated the term ‘sponsorship’ in s 53 as envisaging, in connection with trade names, ‘something more along the lines of a certification mark’ (Trade Marks Act 1955, Pt XI), that is to say a use of the name to certify quality, accuracy or other characteristic of goods or services. In McDonald’s System of Australia Pty Ltd v McWilliam’s Wines Pty Ltd (1979) 28 ALR 236 at 248, Franki J gave a similar interpretation of ‘approval’ in s 53. This may be placing too narrow a meaning upon these terms, attached as they are to the verb ‘represent’. Nevertheless, claims made pursuant to ss 53 and 82 involve establishing, albeit in civil proceedings, the commission of a series of misdemeanours. I heed the caution of Sheppard J in Apple Computer Inc v Computer Edge Pty Ltd (1984) 53 ALR 225 at 279. In my view, in the circumstances of this case, his Honour was in error in holding that the respondents had made out their claims based on s 53. However,

[page 400] that does not affect the award of damages under s 82, based, as it was primarily and independently on contraventions of s 52.

8.133 In Mark Foys Pty Ltd v TVSN (Pacific) Ltd,98 Beaumont, Tamberlin and Emmett JJ adopted the following dictionary meaning of the words ‘approved’ and ‘approval’: The verb ‘approved’ can convey as a primary meaning the notion of being considered good or worthy or being regarded favourably. ‘Approval’ conveys the notion of permission: see Macquarie Dictionary, 2nd ed, 1991, p 81.

8.134 It is not necessary to spell out the exact nature of the association of the alleged conduct, as long as there is evidence to support, in some way, that there is a form of ‘approval’ by one party to another.99

Examples of sponsorship, affiliation or approval 8.135 Some examples of false or misleading representations that the person making the representation has a sponsorship, approval or affiliation in contravention of s 53(d) of the TPA are as follows: A builder who used the name ‘Aussie Home Builders’ in a logo which was similar to the logo of ‘Aussie Home Loans’ was held to imply a sponsorship or affiliation between the two businesses where no such affiliation existed.100 A television advertisement which featured a Goggomobil, a rare make of a car manufactured in the 1950s, was held to imply an affiliation with a well-known Yellow Pages television advertisement, which also featured that car, in circumstances where not such affiliation existed.101 A company which used the name ‘Mark Foys’ in relation to the sale of goods on television and over the internet, was held to imply an ‘approval’ with the well-known retail business named ‘Mark Foys’, in circumstances where no such approval was given.102

‘Price’ of goods or services (s 29(1)(i)) 8.136 Section 29(1)(i) of the ACL prohibits a person from making false or misleading representations with respect to the price of goods or services. 8.137 Section 29(1)(i) of the ACL is similar to former s 53(e) of the TPA, and the jurisprudence relating to the concepts applicable to s 53(e) is relevant to those concepts as they exist in relation to s 29(1)(i).

[page 401] 8.138 The Explanatory Memorandum states that s 29(1)(i) of the ACL could cover representations such as:103 a representation that the goods or services: – will be supplied for a particular price or at a particular discount; or –

may be paid for in a particular way or at a particular time or times.

8.139 The word ‘price’ is defined in s 2 of the ACL to mean the amount paid or payable, which includes any charge of any description, such as delivery charges.104 Section 2 states: ‘price’, of goods or services, means: (a) the amount paid or payable (including any charge of any description) for their acquisition; or (b) if such an amount is not specified because the acquisition is part only of a transaction for which a total amount is paid or payable: (i)

the lowest amount (including any charge of any description) for which the goods or services could reasonably have been acquired from the supplier at the time of the transaction or, if not from the supplier, from another supplier; or

(ii) if they could not reasonably have been acquired separately from another supplier — their value at the time of the transaction.

8.140 Accordingly, the price is the total amount payable for the goods or services, which includes all fees and charges.105 The price does not have to be a precise figure. It can be a range or an approximation.106 8.141 Section 29(1)(i) of the ACL refers to representations ‘with respect to’ price, and is not limited to representations ‘of’ price. Accordingly, a misleading representation about a method of payment may contravene s 29(1)(i). 8.142

The ACCC’s Advertising and Selling107 publication provides useful

guidance on the use of the word ‘price’ in advertisements in conjunction with, or in relation to, the following words: Free (in relation to price). Even after decades of use, the word ‘free’ remains a marketing marvel. The idea of getting goods or services without charge can excite keen interest in consumers. In their anticipation consumers will usually think of ‘free’ as absolutely free — a justifiable expectation. However, the business making the offer may be thinking about the costs of that offer, its structure and the limitations that will apply. When the costs of a free offer are recouped by means of price rises elsewhere, it is not truly free. An example is a business that makes a ‘buy one, get one free’ offer, but raises the price of the first item to largely cover the cost of the second (free) item.

[page 402] A business cannot make a free offer and at the same time try to finance it from the pockets of consumers. To do so is to mislead consumers, who may not expect (unless they are explicitly told) that ‘free’ does not really mean free. Another example is a manufacturer’s use of the phrase ‘10 per cent free’ — meaning that the price to the consumer is the same but they receive an additional ‘free’ volume of the product. But if the consumer pays more for the product this could be misleading, because the additional volume is not actually free. This often happens because the manufacturer is unable to control the eventual price that retailers charge. Businesses using a phrase like ‘10 per cent free’ must be careful to anticipate and deal with hidden cost recovery or price changes occurring as the product passes from manufacturer to wholesaler to retailer. Simply put, businesses may get into trouble with free offers if they do not reveal the complete truth. The previous discussion on disclaimers and fine print illustrates some of the problems. What is said above about the word ‘free’ applies to all commonly used marketing words and phrases. Free (in relation to content). The word ‘free’ is also popular in the marketing of products when the seller wants to indicate that the product does not contain a particular attribute or ingredient. The most obvious example is food. As discussed above, the word ‘free’ is powerful and absolute. If the product does in fact contain the thing that it claims to be ‘free from’, the seller should consider a different claim that more accurately describes the product. Food labelled as ‘lactose free’ should be 100 per cent free of lactose — even a 0.1 per cent concentration may be perceived as misleading or deceptive.

A full list of powerful words and phrases requiring care would be very long. Its length would be a tribute to the inventiveness of marketers and to the almost infinite variations made on basic formulas. Some words and phrases not mentioned so far are discussed below. Cost price. Cost price reflects only the landed cost of the goods to the retailer — the cost of the goods plus any other costs involved in placing the product in store, eg shipping, packaging and transit insurance. This phrase will mislead consumers if the retailer is actually charging a price higher than this and therefore recovering a profit over and above the landed cost. Cost plus $5.00. This is a variation on the above, and plainly a problem if the price of the good is really cost plus more than $5.00. New. This indicates not used, repaired, reconditioned or used in display, and also not old or already known. Cheapest. All superlatives (such as cheapest, best, most used) are comparisons of one product with all others. As noted in the discussion on comparative advertising, comparisons that do not withstand factual scrutiny are likely to be challenged by competitors and/or the ACCC. Such a challenge may succeed in instances where the ‘cheapest’ claim is said to be supported by specific evidence, such as price surveys, that turn out to be unreliable. A statement such as ‘cheapest car prices in the galaxy’ may qualify as puffery, as no one would reasonably be misled or be deceived by it. If a claim could potentially mislead some member of the target audience, the retailer should either refrain from using such a claim or reword the advertisement to avoid misleading consumers.

[page 403] Sale. Depending on the circumstances in which it is used, the word ‘sale’ may indicate that some goods are now on offer for a certain period and perhaps for certain reasons at less than their normal price. It can also mean that goods are simply available for purchase. Care must be taken in the way the word ‘sale’ is used. Example: A store has a ‘CLOSING DOWN SALE’ sign permanently displayed, despite the fact that the retailer has no intention of closing the business. Consumers may be misled into believing that goods will be discounted as liquidators are trying to sell them quickly. Discount. Is the discount a real one with a truthful basis in fact? If a discount is not completely bona fide, consumers may be misled and the trader may be in breach of the ACL.

8.143

The ACCC’s A Guide for Businesses — Advertising and Selling

Guide108 provides useful information in relation to the following forms of pricing, all of which are also captured in other sections of the ACL: component pricing;109 multiple pricing — price displays;110 two-price comparison advertising;111 unit pricing — a mandatory code of conduct; carbon price claims; and receipts and itemised bills. 8.144 In terms of false or misleading representations relating to price, it is possible for the same conduct to contravene different sections in the ACL, for example, component pricing may be caught by ss 18, 29, and/or 48. 8.145 Some examples of false or misleading representations with respect to the price of goods or services in contravention of former s 53(i) of the TPA are as follows: A representation by a building company as to the price of houses in brochures by depicting houses with features and fittings that were only available at a higher price than the price advertised.112 A statement made in an advertisement that a consumer would be able to purchase a motor vehicle ‘GST free’, when in fact the GST prices of motor vehicles would be included in a period shortly after the statement was made.113 A statement made by a financial institution in an advertisement which offered consumers a mortgage loan, which contained certain features, such as direct salary crediting and changing from monthly payments to fortnightly or weekly and in not paying ongoing monthly fees, when in fact it did not have these features.114 [page 404]

Representations made by a service provider in a national advertising campaign which stated that the customers would receive unlimited broadband at a cost of $29.99 per month, when in fact the cost of the plan was conditional on the customer renting a landline at a further of $30 per month.115

‘Repairs and spare parts’ of goods (s 29(1)(j)) 8.146 Section 29(1)(j) of the ACL prohibits a person from making false or misleading representations which concern the availability of facilities for the repair of goods or of spare parts for goods. 8.147 Section 29(1)(j) of the ACL is similar to former s 53(ea) of the TPA, and the jurisprudence relating to the concepts applicable to s 53(ea) is relevant to those concepts as they exist in relation to s 29(1)(j). 8.148 The Explanatory Memorandum states that s 29(1)(j) of the ACL could cover representations made by a person concerning the availability of facilities for the repair of goods or of spare parts for goods:116 … when no such parts are available or a representation that there are facilities for the repair of the goods which are not, in fact, available.

‘Place of origin’ (s 29(1)(k)) 8.149 Section 29(1)(k) of the ACL prohibits a person from making false or misleading representations which concern the place of origin of goods. 8.150 Section 29(1)(k) of the ACL is similar to former s 53(eb) of the TPA, and the jurisprudence relating to the concepts applicable to s 53(eb) is relevant to those concepts as they exist in relation to s 29(1)(k).

8.151 The Explanatory Memorandum states that s 29(1)(k) of the ACL could cover representations such as:117 a representation that goods were manufactured in a particular place; or a representation that the contents of the goods came from a particular place; or a representation that the goods were ‘made in’, the ‘product of’ or ‘grown in’ a particular place. 8.152 In Netcomm (Aust) Pty Ltd v Dataplex Pty Ltd,118 Gummow J made the following comments about the word ‘origin’ in former s 53(eb) of the TPA and the difficulties with its application to certain goods: Paragraph (eb) has some affinity with s 43(a) of the Lanham Act 1946, 11 USC § 1125(a). This prohibits, inter alia, persons using in connection with any goods or services ‘a false

[page 405] designation of origin’. The latter expression has been judicially interpreted as including designation not only of place of manufacture, but also of the identity of the manufacturer, supplier or franchisor of goods or services. This expansive interpretation has attracted criticism: eg by Professor Germain in the ebulliently titled article ‘Unfair Trade Practices Under Section 43(a) of the Lanham Act: You’ve Come a Long Way, Baby — Too far, Maybe’, (1974) 64 Trade Mark Reporter 193 at 206, 218–21. The terms of the Australian para (eb) perhaps reflect the United States experience by making it plain that ‘origin’ has a purely geographic denotation. … What then is meant by a false or misleading representation concerning the place of origin of goods? ‘Origin’ directs attention, consistently with the Oxford English Dictionary meaning, to the beginnings of existence of the goods with reference to a source or cause of that existence; the concept is that of beginning regarded in connection with its cause. In s 4(1) of the TP Act, ‘goods’ is defined as including such sophisticated items as ships and aircraft as well as primary produce such as minerals and crops. With minerals or crops, it may be quite easy to state what is their place of origin and so to characterise representations concerning that place of origin as being or not being false or misleading. The concept of ‘place of origin’ will present difficulties

where sophisticated articles derive their value and character as articles of commerce by various circumstances involving design and manufacture. There is then more likely to be a complex of integers constituting the origin of those articles.

8.153 It should be noted that Ch 5 Pt 5-3 of the ACL contains a set of rules (not dealt with in this Chapter) that deal separately with statutory defences to certain country of origin representations.119 8.154 The scope of representations in relation to country of origin of goods is narrower than the scope of representations in relation to place of origin of goods. 8.155 The country of origin claims deal only with representations that a good comes from a country(s), whereas place of origin claim are expanded to deal with representations from localised regions or areas. 8.156 For example, a country of origin representation may be ‘Made in Australia’, whereas a place of origin representation may be ‘Made in Bankstown’ or a ‘Product of Queensland’. 8.157 The statutory defences in Ch 5 Pt 5-3 of the ACL are only applicable to representations in relation to country of origin, and do not apply to representations made in relation to place of origin. 8.158 Some examples of false or misleading representations which concern place of origin in contravention of former s 53(eb) of the TPA are as follows: A butcher which used the business name ‘Kingisland Meatworks and Cellars’ gave the impression that the butcher’s meat originated from King Island in [page 406]

Bass Strait, where meat was renowned for its high quality, when in fact the meat did not originate from King Island.120 The advertising of ugg boots on a number of websites that the ugg boots were made in Australia, when in fact the ugg boots were made in China.121 The advertising on the packaging of one kilogram blocks of cheese labelled ‘Matured Cheese’ and ‘Semi-Matured Cheese’ represented that the cheese was produced from Western Australia, when in fact the cheese was produced in Victoria.122 8.159 The following two cases of Netcomm (Aust) Pty Ltd v Dataplex Pty Ltd123 and TPC v QDSV Holdings Pty Ltd (Trading as Bush Friends Australia),124 highlight the complexity of place of origin claims.

Netcomm (Aust) Pty Ltd v Dataplex Pty Ltd (1988) 81 ALR 101 In this case, Dataplex Pty Ltd (Dataplex) advertised a computer modem twice in a trade publication and once in a magazine (advertisements). The advertisements described the modem as ‘Made in Australia’ or ‘Australian Built’. In fact, the code for the software was written by a company in the United States and various components of the circuit board were manufactured in various other countries. Once in Australia, Datalplex mounted the circuit boards into a case and assembled other electrical components. Netcomm Australia Pty Ltd (Netcomm) commenced proceedings against Dataplex alleging misleading or deceptive conduct in contravention of former ss 52 and 53(eb) of the TPA. Dataplex offered an

undertaking not to use the phrase ‘Made in Australia’ in relation to the modem. Gummow J held that the application be dismissed as the offering of the undertaking by Dataplex to the court that it would not use the word ‘Made in Australia’ in advertisements in relation to the modem was sufficient. In particular Gummow J stated (at 107–8) that: To say of goods that they were made in Australia plainly is to make a statement concerning their place of origin. The making of goods involves the steps and procedures which preceded and resulted in the formation or composition of the goods: cf Korczynski v Wes Lofts (Aust) Pty Ltd (1986) ATPR 47-206 at 47,212. When used in relation to equipment, such as the DPX-224 modem, and without a qualifying context to limit it, the expression ‘Made in

[page 407] Australia’ suggests that the steps in the composition or construction of the item, including the design work which makes it the technically proficient equipment it is promoted to be, were taken in Australia. The expression will, depending on the context, amount to a representation, and depending on the facts the representation may be false or misleading. In my judgment, in the circumstances I have described as to the provenance of the DPX224 modem, to state that it was ‘Made in Australia’ and to seek to promote sales thereby would ordinarily be to make a false or at least misleading statement concerning the place origin of those goods. There would also, in my view, ordinarily thereby be an engagement in trade or commerce that was at least likely to mislead or deceive. Accordingly, the undertaking proffered by the applicant not to use this expression in relation to the DPX224 modem was soundly based. On the other hand, statements that the product is ‘Australian Built’ or ‘Built in Australia by Dataplex’ stand in a rather different position. These were the expressions used in one or other of the advertisements of 22 January 1988 and 8 April 1988. Clearly, the building of an object is an integer or element in the ‘origin’ of the goods in the sense I have described. As counsel for the applicant put it, ‘build’ is a sub-set of ‘make’ with a narrower and more precise range of application. Cakes, he said, are made, cars built. One of the primary meanings of the word ‘build’ is ‘to construct by the fitting together of separate parts’. One might add that, as the respondent suggests, the ‘fitting together’ would usually be taken as a

process of some skill and judgment, whereas mere ‘assembly’ more readily might be thought of as a routine procedure with the application of less skill and judgment. The evidence satisfies me that the procedures employed at the Lilydale plant of the respondent in relation to the DPX-224 modem are more than assembly. To say of the DPX-224 that it is Australian built or built in Australia by Dataplex is, in the circumstances of this case, not to make a false or misleading representation concerning the place of origin of the goods; thus to locate the place where these goods are built does not, in my view, carry with it the implication or suggestion that the materials or components used in that process themselves were constructed in Australia, or that the technology employed in design of the goods emanated from Australia. Paragraph (eb) of s 53 of the TP Act is directed to false or misleading representations concerning ‘the place of origin of goods’; the concept of ‘origin’ is not narrow or cramped, but to say of goods that they were built in a particular place is to make a fairly specific and precise statement concerning origin which does not extend to the provenance of the design or manufacture of some of, or the major part of, the components which went into construction. It follows from what I have said that I accept the submission of the respondent on this issue. Nor, in my view, is there in the statements complained of, ‘Built in Australia by Dataplex’ and ‘Australian Built’ (when used in the circumstances disclosed in this case) any half truth which might involve contravention of s 52 of the TP Act, as conduct that was misleading or deceptive, or likely to mislead or deceive.

[page 408]

TPC v QDSV Holdings Pty Ltd (Trading as Bush Friends Australia) (1995) 128 ALR 551 In this case, QDSV Holdings Pty Ltd (QDSV) (trading under the name ‘Bush Friends Australia’), was a wholesaler of animal toys. In early 1994, QDSV commenced to supply a range of toy animals, in respect of which it used what was alleged to be an unregistered mark, ‘Aussie Born’. One of these toys was a koala, which was sold in several sizes.

When the koalas were first marketed, a cardboard label was stapled to the left ear. On the outward side of the tag was a picture of a koala on a green background and in large letters the words ‘AUSSIE BORN’. On the other side, the following description appeared: * The AUSSIE BORN range is made in The Hunter Valley, Australia by BUSH FRIENDS AUSTRALIA (a wholly owned Australian Company) and meets all international child safety standards. The major component of the manufacturing process uses Australian labour and materials. In order to maintain the highest quality and value, some elements (including the casings) have been purchased abroad. BUSH FRIENDS AUSTRALIA — WORLD WIDE GUARANTEE If you are not entirely satisfied with your purchase, you may return it for refund or exchange to BUSH FRIENDS AUSTRALIA, 96 Gloucester Street, Sydney NSW 2000. Phone: (02) 240 6150 AUSTRALIAN MADE *

The parties were in agreement that this label was misleading. The koala was designed by QDSV. The fur fabric was produced in China. The eyes and nose of the koala were produced in Hong Kong or Taiwan. All the materials, except the filling, were materials from overseas. A second label on one side of the koala also contained information including the words ‘MADE IN AUSTRALIA WITH SOME IMPORTED COMPONENTS’. Davies J held (at 560) that the words ‘MADE IN AUSTRALIA’ in the print size in which they appeared on the label were misleading. Only some of the manufacturing process occurred in Australia. A significant part of the manufacturing process occurred in China, and most of the components were imported.

‘Need’ for any goods or services (s 29(1)(l)) 8.160

Section 29(1)(l) of the ACL prohibits a person from making false or

misleading representation which concern the need for any goods or services. [page 409] 8.161 The word ‘need’ captures conduct where a statement is made that a person ‘needs’ a particular good or service, or that a person ‘needs’ to acquire a certain amount of goods or hire a certain amount of labour. 8.162 The word ‘need’ also captures conduct where a statement is made by a professional or expert, and it is commonly known that a reasonable consumer would rely on the advice of the professional or expert. 8.163 Section 29(1)(l) of the ACL is similar to former s 53(f) of the TPA, and the jurisprudence relating to the concepts applicable to s 53(f) is relevant to those concepts as they exist in relation to s 29(1)(l). 8.164 The Explanatory Memorandum states that s 29(1)(l) of the ACL could cover representations such as:125 a representation that the goods or services are necessary in particular circumstances or at all; or a representation that the goods and services are required in the light of a specific event or as a consequence of specific circumstances; or a representation that a failure to provide the goods or services will result in specific things occurring or not occurring.

8.165 Some examples of false or misleading representations which concern the need for any goods or services in contravention of former s 53(f) of the ACL are as follows: The wide distribution of a series of letters, application forms and invoices for a mandatory associated registration fee, gave the impression that these documents originated from a government

department when, in fact, these documents had no association with the government and the registration was not mandatory.126 A letter forwarded by a medical insurance company to contributors being Commonwealth public servants which referred to the ‘need’ to have a surgeon or physician of their choice in a hospital when there was no such need.127 Statements made on a number of websites to the effect that people who have cancer ‘need’ an alternative approach to cancer care which offers ‘hope’ to cancer suffers.128

‘Exclusion’ of any consumer guarantee, etc (s 29(1) (m)) 8.166 Section 29(1)(m) of the ACL prohibits false or misleading representations concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy. [page 410] 8.167 Section 29(1)(m) of the ACL is similar to former s 53(g) of the TPA, and the jurisprudence relating to the concepts applicable to s 53(g) is relevant to those concepts as they exist in relation to s 29(1)(m). 8.168 The Explanatory Memorandum states that s 29(1)(m) of the ACL could cover representations made by a person (generally a trader) to a person (generally a consumer as defined in s 3) that:129 … a condition, warranty, guarantee, right or remedy, including the statutory guarantees provided by the ACL:

does or does not exist with respect to the goods or services, either at

all or in specified circumstances; or may or may not be excluded with respect to the goods or services, either at all or in specified circumstances; or may or may not have a particular effect with respect to the goods or services, either at all or in specified circumstances. 8.169 In ACCC v Hewlett-Packard Australia Pty Ltd,130 the respondent admitted to multiple contraventions of s 29(1)(m) of the ACL, and agreed to pay a pecuniary penalty of $3 million.

ACCC v Hewlett-Packard Australia Pty Ltd [2013] FCA 653 Hewlett Packard Australia Pty Ltd (HPA) supplied computer products in Australia directly to consumers through an online store and through a number of retailers such as JB Hi-Fi and Harvey Norman. HPA operated a number of helpdesks which consumers and retailers were advised to contact in respect of HPA computer products that were faulty. HPA provided staff at their helpdesks with scripts to respond to customer service enquiries and complaints. In following the scripts, HPA staff made misrepresentations to retailers and customers. Buchanan J held that HPA had contravened ss 18 and 29(1)(m) of the ACL by making the following representations to consumers and retailers: consumers’ remedies for HPA computer products were limited to those available from HPA at its discretion; consumers must have HPA computer products repaired three times before they were entitled to a replacement product; after the expiry of the express warranty period, consumers could only have HPA computer products repaired if they paid for the repairs;

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the warranty period for a HPA computer product was limited to a specified express warranty period; and retailers of HPA computer products were not entitled to be indemnified by HPA if they provided consumers with a refund or replacement without prior authorisation from HPA.

HPA also represented on its online store that consumers could not return or exchange HPA computer products purchased on the online store unless otherwise agreed by HPA, at its sole discretion. Buchanan J ordered, by consent, that HPA pay a pecuniary penalty of $3 million for making false or misleading statements to consumers and retailers about their consumer guarantee rights under the ACL.

8.170 A brief explanation of each of the words ‘condition, warranty, guarantee, right or remedy’ in s 29(1)(m) of the ACL is provided below, along with some examples of cases applicable to each word.

Condition 8.171 The word ‘condition’ has acquired many meanings in everyday use. For the purposes of s 29(1)(m) of the ACL, ‘condition’ has its contract law meaning; an essential term of a contract. 8.172 In other words, the word ‘condition’ refers to a fundamental term in a contract, which goes to the ‘heart’ or ‘root’ of the contract. It is a matter of construction as to whether a term is a condition. 8.173 The courts will apply an objective test to determine the intention of the parties at the time the contract was made. The test often used by the court is the following test of essentiality:131 The test of essentiality is whether it appears from the general nature of the contract considered as a while, or from some particular term or terms, that the promise is of such importance to the promise that he [or she] would not have entered into the contract unless he [or she] had been

assured of a strict or substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promisor.

8.174 In Henderson v Pioneer Homes Pty Ltd,132 Smithers J provided the following explanation as to why the word ‘condition’ was inserted into former s 53(g) of the TPA: For the purpose of ascertaining the scope of the expression ‘condition’ in s 53(g) it is useful to refer to what is said by Donald & Heydon in Vol 2 of Trade Practices

[page 412] Law (1978), at p 608, namely: ‘The reference to ‘condition’ and ‘right or remedy’ were inserted in 1977 in order to avoid problems arising from the ambiguity of ‘warranty’ as meaning ‘contractual term sounding only in damages’, or ‘any contractual term’, or ‘any promise (ie, including the normally non-enforceable promises made by manufacturers when retailers sell durables to customers). The ambiguity is now resolved: ‘condition’ will catch warranties as opposed to conditions, and statements about terms which are not classifiable either as conditions or warranties will be statements, directly or indirectly, about a ‘right or remedy’: see Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26; [1962] 1 All ER 474.

8.175 Some examples of false or misleading representations concerning the existence, exclusion or effect of a condition in contravention of former s 53(g) of the TPA are as follows: A term that a vendor would arrange the necessary loans for the purchase of a house and the purchaser would make repayments at no more than $45 per week.133 Terms offered in an advertisement that a consumer would be able to purchase a motor vehicle ‘GST free’ and that ‘no finance application refused’.134 A term in an advertisement on television that a bank home loan did not attract the imposition of an establishment fee.135

Warranty 8.176 A ‘warranty’ for the purposes of s 29(1)(m) of the ACL includes the express warranty given by a supplier or manufacturer, and any statutory warranties that cannot be excluded. 8.177 The false or misleading representation under s 29(1)(m) of the ACL may involve the nature and extent of an express warranty provided by the supplier or manufacturer. 8.178 Some examples of false or misleading representations concerning the existence, exclusion or effect of a warranty in contravention of former s 53(g) of the TPA are as follows: Display notices and price lists in computer stores, which contained disclaimers that purported to exclude the stores’ liability from providing warranties to consumer.136 User manuals which contained statements to the effect that consumers would only have the benefit of the voluntary warranty provided in relation to mobile phones, as it was in lieu of all other warranties including statutory warranties.137 [page 413]

Guarantee 8.179 A ‘guarantee’ for the purposes of s 29(1)(m) of the ACL includes both guarantees given by a supplier or manufacturer, and guarantees provided under the consumer guarantee regime in the ACL. 8.180

Some examples of false or misleading representations concerning

the existence, exclusion or effect of a guarantee in contravention of former s 53(g) of the TPA are as follows: A statement made concerning the existence of a guaranteed return of $9,500 after 36 months of a worm farm scheme, when in fact the contract provided in small print that payment was only made if notice was given within 14 days after the 36 month period.138 Oral statements in relation to computers and other electrical goods that had the effect of excluding the remedies provided to consumers in certain circumstances under the consumer guarantees regime in the ACL.139 Statements made in advertising brochures that a building company would guarantee building time to be between 14 and 24 weeks for houses it offered, when the insufficiently prominent terms and conditions excluded a range of homes.140

Right 8.181 The word ‘right’ as used in s 29(1)(m) of the ACL is given its ordinary meaning. It simply refers to a moral or legal entitlement to have or do something. 8.182 Some examples of false or misleading representations concerning the existence, exclusion or effect of a right in contravention of former s 53(g) of the TPA are as follows: A statement that franchisees did not have rights under the Franchising Code of Conduct (Code), when all franchisees have rights under the Code.141 A statement that a policy holder had the right to claim expenses related to pregnancy from the time of purchase of the policy, when there was a waiting period.142

A statement in a catalogue that did not adequately identify that special offers were only available to some stores, and restricting a consumer’s right to acquire goods.143

Remedy 8.183 A remedy for the purposes of s 29(1)(m) of the ACL includes a remedy provided by the ACL and a remedy provided by other legislation and common law. [page 414] 8.184 Section 29(1)(m) of the ACL is concerned with representations about the existence, exclusion or effect of a remedy available to a consumer against the supplier, rather than remedies available to the supplier against the consumer.144 8.185 Some examples of false or misleading representations concerning the existence, exclusion or effect of a remedy in contravention of former s 53(g) of the TPA are as follows: A ‘no refunds, exchange only’ sign in a retail store restricted consumer remedies to only exchanges, where a consumer in certain circumstances would have access to other statutory remedies, such as repairs or refunds.145 A ‘no refunds’ sign, which was qualified, although not sufficiently, by the words ‘except to the extent that the Trade Practices Act imposes any condition, warranty, guarantee, right or remedy which cannot be modified or excluded’.146 A rental contract which purported to limit a merchant lessee’s remedy, for defects in the rented equipment or any other breach of

the rental contract, to a claim for damages, where a merchant lessee was entitled to other statutory remedies, including recession.147

Extended warranties (s 29(1)(n)) 8.186 Section 29(1)(n) of the ACL prohibits a person from making false or misleading representations as to a requirement to pay for a contractual right that is already covered by a statutory law. 8.187 Section 29(1)(n) of the ACL has no equivalent provision under the former TPA. The Explanatory Memorandum provides the following comments on the operation of the section:148 This could cover representations made by a person (generally a trader) to a person (generally a consumer as defined in section 3 of the ACL) that a condition, warranty, guarantee, right or remedy, including the statutory guarantees provided by the ACL must be paid for, either at all or in specified circumstances.

8.188 Section 29(1)(n) of the ACL was inserted to address the following significant issues that consumers perceived in relation to extended warranties offered by suppliers of goods or services: lack of clarity and knowledge of who offers the warranty cover; limitations of what is covered; and lack of transparency in pricing or commissions. [page 415] 8.189 The National Education and Information Advisory Taskforce (NEIAT), National Baseline Study for Statutory Warranties and Refunds, Research Paper No 2149 elaborated on the above consumer concerns: Consumers are not always well informed about what they are purchasing and who is providing

the extended warranty. The finer details of extended warranties are often not explained to consumers at the time of purchase, so consumers are not necessarily getting what they expect when problems with their products arise. The quantitative research supports these findings, showing 32 per cent of consumers with an extended warranty receive no redress. … Lack of transparency in terms of pricing or commissions on extended warranty sales creates several problems. It appears sales people get incentives to sell extended warranties and this can interfere with market forces. Salespeople may not have the incentive to inform consumers of different manufacturer warranties, if it is in their interest to sell an extended warranty. Also, consumers are not informed of the full product price including extended warranty until final point of purchase. This means they cannot compare the ‘real’ cost, which also interferes with market forces.

8.190 The Commonwealth Consumer Affairs Advisory Council (CCAAC) Consumer Rights — Reforming Statutory Implied Conditions and Warranties Final Report150 found in relation to extended warranties that: Extended warranties are, in part, often marketed to provide ‘peace of mind’ to consumers over and above statutory implied terms and the manufacturer/importer’s voluntary warranty. However, the evidence presented to CCAAC suggests that extended warranties may not be justified in some cases. This is especially the case when retailers and manufacturer/importers are required to remedy faults or replace goods under the existing statutory regime.

What is an extended warranty? 8.191 An extended warranty is an additional warranty that some suppliers sell to consumers to cover costs against certain types of faults in goods for a limited period of time. 8.192 Extended warranties are different to express warranties. An extended warranty is a contractual right to repair or replace a good for a limited period of time beyond the initial period of an express warranty. 8.193 Extended warranties are usually sold by suppliers of high-value consumer goods, such as expensive vehicles, electrical goods, kitchen and household appliances and mobile telephones.

[page 416] 8.194 The CCAAC, Review of Statutory Implied Conditions and Warranties, Issue Paper151 provided the following description of extended warranties and other useful comments about their use: An extended warranty is a contract separate from the contract of sale for the product, which provides for the repair or service of the product. It is generally entered into at the same time, or very soon after, the contract for the sale of the product. A separate price or fee is payable for the extended warranty. Extended warranties are being offered for a wide range of products, including whitegoods, electrical goods and cars. The extended warranty may provide for repair, replacement or refund subject to its implied terms. If the implied terms of the warranty have not been satisfied, the consumer may not be entitled to claim on the warranty. For example, the warranty may only be valid for a certain period after the date of purchase; it may not cover accessories; it may not cover the fair wear and tear of the product; special requirements may first need to be satisfied (for example, regular servicing or maintenance); additional charges may apply (for example, callout fees, labour costs, costs for additional parts and freight charges); there could be a limit on the number of claims that can be made; and there could be other exclusions or restrictions. The extended warranty may or may not be in addition to any manufacturer’s warranty for the product. Neither an extended warranty nor a manufacturer’s warranty can replace, restrict or modify the basic statutory warranties and remedies that are provided to consumers when purchasing goods and services.

8.195 The CCAAC’s Review of Statutory Implied Conditions and Warranties, Issue Paper152 categorised extended warranties into the following three types: extended warranty as incidental product; extended warranty as insurance product; and third party warranty providers. 8.196 Under the first type of extended warranty, the supplier agrees for a fixed term to repair or replace the goods in the event of defects in, or the failure of, the goods during the warranty period.

8.197 Under the second type of extended warranty, the extended warranty is a form of insurance contract sold by the supplier as an agent or intermediary on behalf of the insurer. 8.198 The second type of extended warranty is a ‘financial product’ under the Corporations Act 2001 (Cth) (CA). It is a product through which consumers manage financial risk. 8.199 This type of extended warranty is not merely incidental to the sale but is a separate financial product which will require the consumer to make a separate decision about financial risk. [page 417] 8.200 Under the third type of extended warranty, a third party warranty provider is a person who does not have an interest in the goods sold by the supplier or control over the quality of the good.

Extended warranties in relation to consumer guarantees 8.201 Section 29(1)(n) of the ACL makes specific reference to the consumer guarantees regime in Ch 3 Pt 3-2 Div 1 to ensure the prohibition covers representations about guarantees provided by the ACL. 8.202 In other words, a supplier must not make an offer to a consumer that he or she should acquire an extended warranty, when the time period for that warranty is already covered by consumer guarantees. 8.203 The determination of whether an extended warranty is ‘wholly or partly equivalent’ to a consumer guarantee is a question of fact to be decided on a case-by-case basis.

8.204 It is difficult, if not impossible, to provide a precise period of time within which a range of goods would be considered as being of ‘acceptable quality’ as defined under s 54 of the ACL. 8.205 However, it is possible to determine, on a case-by-case basis, the period of time for which a particular good is expected to be protected by the acceptable quality consumer guarantee in s 54 of the ACL. 8.206 Section 54(2)(e) of the ACL provides that goods are of acceptable quality if they are, amongst other things, durable. What is durable will depend on the features of the good and circumstances of sale. 8.207 Section 54(3) of the ACL provides the following guidance on what a consumer should consider in determining whether or not a good is durable, and hence of acceptable quality: the nature of the good; the price of the good; any statements made about the good on the packaging or labelling; any representations made about the good; and any other relevant circumstances relating to the supply of the good. 8.208 Taking into consideration the factors in s 54(3) of the ACL, the relevant test is what a reasonable consumer would expect to be the period of time that a particular good would last. 8.209 In some circumstances it may be difficult for suppliers to ensure that they are not contravening s 29(1)(n) of the ACL, as there is no prescribed list on how long each good is expected to last. [page 418]

8.210 A supplier should err on the side of caution and adopt a common sense approach when offering extended warranties to consumers, particularly for expensive and reputable goods. 8.211 In ACCC v Hewlett-Packard Australia Pty Ltd,153 the respondent admitted to having made misleading representations that the warranty period for its computer products was limited to a specific express warranty period. Buchanan J found that such conduct contravened s 29(1)(n) of the ACL and made orders, by consent, that the respondent pay a pecuniary penalty of $3 million in respect of this and other, related, conduct.

False or misleading representations about sale etc of land Section 30 of the ACL 8.212 Section 30 of the ACL provides that a person must not, in trade or commerce, make specified types of false or misleading representations in connection with the promotion of, or the sale or grant, or the possible sale or grant, of an interest in land. 8.213

Section 30 of the ACL (similar to former s 53A of the TPA) states:

30 False or misleading representations about sale etc of land (1) A person must not, in trade or commerce, in connection with the sale or grant, or the possible sale or grant, of an interest in land or in connection with the promotion by any means of the sale or grant of an interest in land: (a) make a false or misleading representation that the person making the representation has a sponsorship, approval or affiliation; or (b) make a false or misleading representation concerning the nature of the interest in the land; or (c) make a false or misleading representation concerning the price payable for the land; or (d) make a false or misleading representation concerning the location of the land; or

make a false or misleading representation concerning the characteristics of the land; (e) or (f)

make a false or misleading representation concerning the use to which the land is capable of being put or may lawfully be put; or

(g) make a false or misleading representation concerning the existence or availability of facilities associated with the land. Note: A pecuniary penalty may be imposed for a contravention of this subsection. (2) This section does not affect the application of any other provision of Part 2-1 or this Part in relation to the supply or acquisition, or the possible supply or acquisition, of interests in land.

[page 419] 8.214 As s 30 of the ACL is couched in substantially the same form as former s 53A of the TPA, the jurisprudence relating to the concepts applicable to s 53A is relevant to those concepts as they exist in relation to s 30.154 8.215 The application of s 30 of the ACL is not limited to transactions involving ‘consumers’ as defined in s 3 of the ACL.155 8.216 Section 30(1) of the ACL applies to any land transaction. A land transaction may not be a supply of ‘goods’ or ‘services’ and as such s 30 is inserted to avoid any doubt about the scope of s 29.156 8.217 The wording in s 30(2) of the ACL confirms that other sections in Pt 2-1 or Pt 3-1 can also apply in relation to the supply or acquisition, or the possible supply or acquisition, of interests in land. 8.218 Section 30(1) of the ACL only applies if the representations are made in connection with transactions involving the sale or grant of interests in land. 8.219

An ‘interest in land’ is defined in s 2 of the ACL as:

‘interest’, in relation to land, means: (a) a legal or equitable estate or interest in the land; or (b) a right of occupancy of the land, or of a building or part of a building erected on the land, arising by virtue of the holding of shares, or by virtue of a contract to purchase shares, in an incorporated company that owns the land or building; or (c) a right, power or privilege over, or in connection with, the land.

8.220 However, s 30(1) of the ACL does not apply if the representations are made only in connection with a person’s general business activities, even if those business activities involve the selling of land.157 8.221 In Central Equity Limited v Central Corporation Pty Ltd,158 Drummond J commented as to why former s 53A was inserted into the TPA and why its application is only in relation to land transactions: There is no warrant for giving to the words of the section anything other than their ordinary meaning. Section 53A of the Act was inserted on the recommendation of the Trade Practices Review Committee Report of 20 August 1976 (the Swanson Report): see the minister’s second reading speeches of 8 December 1976 on the lapsed bill and of 3 May 1977 on the bill that resulted in the enactment of that section. Section 53 of the Act imposes criminal sanctions on particular kinds of conduct in connection with the supply of goods or services which were identified as involving common abuses; the Swanson Committee recommendation (paras 9.78 and 9.79) was that a specific provision should be enacted to proscribe, subject to criminal sanctions, common abuses in relation to land

[page 420] transactions. Section 53A of the Act was the result. It is because the section is concerned with prohibiting abuses identified as commonly occurring in connection with land transactions that various of the provisions of the section, including subpara (a), do not require proof that anyone has been or is likely to be misled by the practices in question. For the same reason, conduct infringing the section attracts criminal sanctions (as well as providing a foundation for civil remedies). There is thus no reason to strive to find grounds for restricting the ordinary meaning of the words of the section. Having said this, I consider that the words of the section show that it only applies if the proscribed representation is made in connection with transactions or possible transactions involving the sale or some other disposition of interests in particular parcels of land.

Misrepresentations of affiliation made in relation to a corporation’s general business activities will not be sufficient to infringe the section, even if the corporation’s business concerns the selling of land.

8.222 Section 30(1) of the ACL captures misrepresentations in connection with the promotion of, or the sale or grant, or the possible sale or grant, of an interest in:159 identifiable parcel(s) of land, where the particular parcel may be identified precisely by title, description or address; or unidentifiable parcel(s) of land where the land can be ‘identified’ in a general way. For example, an unidentifiable part of a proposed sub-division of a large area at a particular place. 8.223 Section 30(1) of the ACL is more specific than s 18, even though s 18 covers misleading conduct in relation to the sale of land. Specifically, s 30 only prohibits false or misleading representations in relation to: sponsorship, approval or affiliation; the nature of the interest in the land; the price payable for the land; the location of the land; the characteristics of the land; the use of the land; and the existence or availability of facilities associated with the land. 8.224 The terms ‘sponsorship, approval or affiliation’ could include representations such as an endorsement, certification, qualification, or other indication of approval by a person.160 8.225 The phrase ‘nature of the interest in land’ could include representations that the interest in the land exists when it does not, or that the interest in the land is different to what it actually is.161

8.226 The phrase ‘price payable for the land’ could include representations about taxes, fees or charges, or a person’s ability to pay for the land, or a price for the land that is different to what it is.162 [page 421] 8.227 Furthermore, the words ‘price payable’ covers not only the money a person may have to pay for land in a contractual sense, and includes noncontractual representations ab out price payable for land. 8.228 For example, in ACCC v Gary Peer & Associates Pty Ltd,163 Sundberg J held that the respondent contravened former s 53A of the TPA by misrepresenting the price of a property in an advertisement. 8.229 The phrase ‘location of the land’ could include representations about matters relating to the land, for example, access to the land, or whether it is located near transport or shops.164 8.230 It could also include the more obvious representations about the location of the property, such as that the land is located in an expensive area or suburb, but the land is actually located elsewhere. 8.231 Land can be identified by specific reference to a map or the s 149(1) certificate attached to the sale of land contract, and also by the locality of land, such as whether it is waterfront, or next to the beach.165 8.232 The phrase ‘characteristics of the land’ could include representations about the features of the land, or about the matters relating to the suitability, fertility, scenery or geology of the land.166 8.233

For example, a person who represents, in trade or commerce, that a

house or unit has ocean views, when in fact it does not, would contravene s 30 of the ACL.167 8.234 The phrase ‘use of the land’ could include representations about requirements of administrative approvals, development applications, or licences required to use the land in a particular way.168 8.235 For example, an advertisement that represented that dwellings could be built on a particular area of land, when in fact the zoning prevented the erection of dwellings, would contravene s 30 of the ACL.169 8.236 The term ‘facilities’ could include representations about the nature of the facilities, or the rights or interests in the facilities, or that the land has the facilities, when in fact it does not.170 [page 422] 8.237 The following case of ACCC v Gary Peer & Associates Pty Ltd,171 is an example of the respondent contravening former s 53A of the TPA by misrepresenting the price of a house in an advertisement.

ACCC v Gary Peer & Associates Pty Ltd (2005) 65 IPR 1 In this case, in August 2003, Gary Peer & Associates (Gary) advertised a property with the following statements: ‘PRICE GUIDE $600,000 Plus Buyers Should Inspect’ and a month later ‘PRICE GUIDE $650,000 Plus Buyers Should Inspect.’

The ACCC alleged that such statements represented that the vendors

would sell the property for a price that was approximately or was not substantially more than $600,000 or $650,000. Each statement was misleading as the vendors instructed Gary not to sell the property for less than $780,000 on 6 August 2003 and not less than $800,000 on 27 August 2003. The reason why the representations were misleading was the ‘PRICE GUIDE’ was a dominant part of the phrases which has a natural meaning of the price at which the property is likely to be sold. The latter words ‘Buyers Should Inspect’ do not deflect attention from the predominant words of the selling price and therefore provide no basis for a claim that the advertisements were merely an invitation to inspect. In this respect, the advertisements as a whole would implicitly carry with them an invitation to inspect even without the addition of the words ‘Buyers Should Inspect’. As the representations were with respect to future matters, the onus of proof was on the agent, not the ACCC. Gary failed to discharge that onus, as the evidence was insufficient to show that there were reasonable grounds for making such statements. Sundberg J held that Gary contravened former s 53A of the TPA.

Misleading conduct relating to employment Section 31 of the ACL 8.238 Section 31 of the ACL prohibits a person from engaging in conduct that is liable to mislead persons seeking employment about the availability, nature, terms or conditions of the employment, or any other matter relating to employment.

[page 423] 8.239

Section 31 of the ACL (similar to former s 53B of the TPA) states:

31 Misleading conduct relating to employment A person must not, in relation to employment that is to be, or may be, offered by the person or by another person, engage in conduct that is liable to mislead persons seeking the employment as to: (a) the availability, nature, terms or conditions of the employment; or (b) any other matter relating to the employment. Note:

A pecuniary penalty may be imposed for a contravention of this section.

8.240 As s 31 of the ACL is couched in substantially the same form as former s 53B of the TPA, the jurisprudence relating to the concepts applicable to s 53B is relevant to those concepts as they exist in s 31.172 8.241 The application of s 31 of the ACL is not limited to transactions involving ‘consumers’ as defined in s 3,173 nor does it require conduct to occur ‘in trade or commerce’, unlike ss 18 and 29. 8.242 Former s 53B of the TPA was inserted because misleading conduct in relation to employment may not necessarily be made in ‘trade or commerce’, but rather ‘in respect of trade or commerce’.174 8.243 The definition of ‘service’ in s 2 of the ACL expressly excludes the ‘performance of work under a contract of service’. As such, an employee has no protection under most of the sections of the ACL.175 8.244 In Wright v TNT Australia Pty Ltd,176 Lee J, when referring to former s 53B of the TPA, said that because such a contract of service had been excluded from the definition of ‘service’, s 53B stood as: … a special section dealing merely with the subject matter which it expresses, identified as matters of employment and contracts of employment.

8.245 Accordingly, s 31 of the ACL applies to the performance of work either under a contract of service or under a contract for services. This was made clear in Holloway v Gilport Pty Ltd,177 where Hunt CJ said: I agree that s 46 [of the Fair Trading Act 1987 (NSW), equivalent to the former s 53B of the TPA and s 31 of the ACL] does apply to such contracts of service (or employment), but the argument for which the defendants contend depends upon s 46 being limited to such contracts. I do not accept that the section is so limited. The ordinary meaning of the

[page 424] noun ‘employment’ used in s 46 is the act of employing or the state of being employed. The verb ‘employ’ is to engage or to make use of the services of a person in return for money. It is quite naturally applicable to both a contract for services (the commission agent) and a contract of service (the employee or the servant). I see nothing ambiguous or doubtful in its meaning so as to require an interpretation that it relates only to one or the other, and certainly nothing to require an interpretation that it relates only to a contract of service. In my opinion, s 46 applies to the employment of a person to perform work both under a contract of service (the employee or servant) and under a contract for services (the commission agent).

8.246 Section 31 of the ACL applies to circumstances where employment is offered and to where employment may be offered. 8.247 However, s 31 of the ACL is limited to conduct which occurs before a contract of the employment arises which is usually prior to the commencement of employment.178 8.248 The following case of ACCC v Zanok Technologies Pty Ltd,179 is an example of conduct that is liable to mislead persons seeking employment in contravention of former s 53B of the TPA.

ACCC v Zanok Technologies Pty Ltd

[2009] FCA 1124 In this case, the respondents, Zanok Technology Pty Ltd (Zanok), and its directors, Mr Darley Stephen and Ms Vanitha Darley, were found to have engaged in conduct that was liable to mislead persons seeking employment. The respondents engaged in the misleading conduct through advertisements and representations made during job interviews. The advertisements were directed to persons residing in Australia by reason of a temporary visa issued by the Department of Immigration. Most notably, it applied to persons residing in Australia by reasons of a ‘485 visa’ or skilled graduate visa. Relevantly, a ‘485 visa’ permitted the holder to remain in Australia for up to 18 months after completing higher education required to enable that person to obtain relevant points for a permanent general skilled migrant visa. Points were awarded on factors such as whether the applicant had a job offer in Australia. Specifically, the misleading conduct by the respondents included: During interviews, the prospective employee would be informed that Zanok had an established business in providing IT services and that a period of

[page 425] training was required at a cost to the trainee of up to $4,700 which would prepare the trainee for employment with Zanok that was guaranteed on completion of the training, or earlier if the trainee ‘proved’ themselves to the company — where in fact: the training provided by Zanok was unstructured, disorganised and of no assistance or value to the trainees; and the period set aside for the training was used by Zanok to have a number of the trainees contact prospective customers of Zanok and otherwise assist Zanok to establish its business.

Furthermore, Zanok deceived the trainees into believing they would be offered employment in return for paying a fee for the pre-employment training when in fact Zanok had no available employment opportunities and in lieu of providing the promised training, required the trainees to assist Zanok in setting up its business. Edmunds J held (at [28]) that all three respondents engaged in misleading conduct in contravention of former s 53B (and s 52) of the TPA.

Misleading conduct as to the nature etc of goods Section 33 of the ACL 8.249 Section 33 of the ACL prohibits a person, in trade or commerce, from engaging in conduct that is liable to mislead the public as to the manufacturing process, characteristics, suitability for their purpose or quantity of any goods. 8.250

Section 33 of the ACL (similar to former s 55 of the TPA) states:

33 Misleading conduct as to the nature etc of goods A person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose or the quantity of any goods. Note:

A pecuniary penalty may be imposed for a contravention of this section.

8.251 As s 33 of the ACL is couched in substantially the same form as former s 55 of the TPA, the jurisprudence relating to the concepts applicable to s 55 is relevant to those concepts as they exist in s 33.180

8.252 The application of s 33 of the ACL is not limited to transactions involving ‘consumers’ as defined in s 3.181 [page 426] 8.253 Former s 55 of the TPA was inserted to give effect to Australia’s ratification of Art 10bis(3)(iii) of the Paris Convention for the Protection of Industrial Property (Convention). 8.254

Article 10bis of the Convention states: Article 10bis Unfair Competition

(1) The countries of the Union are bound to assure to nationals of such countries effective protection against unfair competition. (2) Any act of competition contrary to honest practices in industrial or commercial matters constitutes an act of unfair competition. (3) The following in particular shall be prohibited: (i)

all acts of such a nature as to create confusion by any means whatever with the establishment, the goods, or the industrial or commercial activities, of a competitor;

(ii) false allegations in the course of trade of such a nature as to discredit the establishment, the goods, or the industrial or commercial activities, of a competitor; (iii) indications or allegations the use of which in the course of trade is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose, or the quantity, of the goods.

8.255 Article 10bis of the Convention was intended to provide worldwide protection of unfair competition. The operation of s 33 of the ACL is based on Australia’s ratification of the Convention.182 8.256 Section 33 of the ACL relies on the external affairs powers in the Constitution. In Mildura Fruit Juices Pty Ltd v Bannerman,183 Franki J held that former s 55 of the TPA was a valid exercise of those powers: I consider that, as a matter of construction, Art 10bis (3)(iii) should be read without limitation

by any other part of Art 10bis. I consider that the attack on the validity of s 55 fails since, in my opinion, the submissions that it does not give effect to the provisions of the convention have not been made out in this case.

8.257 The words ‘liable to mislead’ the public in s 33 of the ACL is narrower than ‘likely to mislead’ in s 18 and any conduct that is ‘liable to mislead’ must be conduct that is ‘likely to mislead’.184 8.258 In TPC v J & R Enterprises Pty Ltd,185 O’Loughlin J concluded that a court would find that conduct was ‘likely to mislead’ more readily than it would find that conduct was ‘liable to mislead’. [page 427] 8.259 In the same case, O’Loughlin J held that to find that conduct was ‘liable to mislead’, a court would require a greater degree of evidence than to find that conduct was ‘likely to mislead’.186 8.260 O’Loughlin J also held in the same case that the word ‘public’ is not to be taken as meaning the world at large or the whole community. His Honour said that:187 There will be a sufficient approach to the public if first, the approach is general and at random and secondly, the number of people who are approached is sufficiently large.

8.261 The words ‘nature’ and ‘characteristics’ in s 33 of the ACL are not defined. Those words are to be identified by reference to their internal constitution or utility rather than the manner of their creation.188 8.262 In the following case of ACCC v Turi Foods Pty Ltd (No 4),189 the ACCC failed to establish a contravention of former s 55 of the TPA (and s 33 of the ACL), as it did not adduce evidence of the ‘nature’ and ‘characteristics’ of the chickens which were relevantly linked to the representations made by the respondents.

ACCC v Turi Foods Pty Ltd (No 4) [2013] FCA 665 In this case, Turi Foods Pty Ltd (Turi) and three other respondents used the phrase ‘free to roam’ on their packaging and publication of chicken products. Turi settled the proceedings, but the second, third and fourth respondents (suppliers of meat chickens under brand names including ‘Steggles’) denied the ACCC’s allegations. The ACCC alleged that the representations that the chickens, which were raised in sheds operated by the respondents, were ‘free to roam around in large barns’ and ‘free to roam in barns’ constitute representations that the chickens had substantial space available allowing them to roam around freely during the growing cycle. This, it was contended, was contrary to the fact because the chickens were subjected to such stocking densities that they did not, as a practical matter, have substantial space available to roam around freely. The ACCC alleged that each respondent contravened former ss 52, 53(a) and 55 of the TPA in respect of conduct prior to 1 January 2011, and ss 18, 29(1)(a) and 33 of the ACL for conduct after 1 January 2011. In relation to the alleged contraventions of s 55 of the TPA and s 33 of the ACL, the ACCC argued that all respondents had contravened these sections [page 428] as the ‘free to roam’ representation was liable to mislead the public as to the nature and characteristics of Steggles meat chickens. The second, third and fourth respondents contended that s 55 of the TPA had no operation because the ACCC had not adduced any evidence

to demonstrate that the nature or characteristics of Steggles chickens were in any way affected by the stocking densities at which they were raised or their capacity (or lack of it) to roam around the sheds. Tracey J held (at [129]) that no allegation of ss 55 of the TPA (and also s 33 of the ACL) had been made out. Tracey J stated that the ‘free to roam’ representations did not relate to the inherent qualities of the chickens. They related to the circumstances in which the chickens were raised. There was, as the respondents submitted, no evidence to link those circumstances with any inherent quality such as taste or fat content of any processed chickens which were marketed by producers or processors. In relation to the words ‘nature’ and ‘characteristics’ in former s 52 of the TPA (and in s 33 of the ACL), Tracey J said (at [126]–[127]): The ACCC submitted that the word ‘nature’ should be accorded its ordinary and natural meaning as ‘the particular combination of qualities belonging to a thing by constitution; its inherent character’: cf Spunwill Pty Ltd v Bab Pty Ltd (1994) 36 NSWLR 290 at 302. It sought to rely on the Macquarie Dictionary definition of ‘characteristic’ as meaning ‘a distinguishing feature or quality.’ It did not, however, identify with precision the nature or characteristics of the chickens on which the ‘free to roam’ representations were said to impinge. In the context of s 55 the nature and characteristics of goods are to be identified by reference to their internal constitution or utility rather than the manner of their creation. Section 55 will thus be contravened, for example, if it is represented that 35% of liquid in a container is fruit juice when the truth is that juice comprised only 17% of the contents: cf Trade Practices Commission v Glo Juice Company Pty Ltd (1987) 73 ALR 407. Similarly, a contravention will occur if a manufacturer advertises that children’s car seats conform in their structure with a particular Australian standard: cf Temperley v Playground Supplies Pty Ltd (1980) 3 TPR 506. A contravention will also occur if a false representation is made about the operational capacity of goods. Thus, in Australian Competition and Consumer Commission v Apple Pty Ltd [2012] FCA 646, it was conceded that s 33 of the ACL had been contravened when the manufacturer of an iPad advertised that its product could be connected to the 4G network in Australia when the contrary was true.

8.263

In the following case of ACCC v Apple Pty Ltd,190 the respondent

admitted contravening s 33 of the ACL, as its representations were liable to mislead consumers about the characteristics of its product. [page 429]

ACCC v Apple Pty Ltd [2012] FCA 646 In this case, Apple Pty Ltd (Apple) promoted and supplied the latest version of its Ipad on its website, online store and in its retail stores by way of a product designator stating the ‘iPad with WiFi + 4G’ connection in Australia. The term ‘4G’, was a term familiar to Australian consumers. The understanding of Australian consumers of the term ‘4G’ in relation to data mobile networks, was to be distinguished from that relating to other mobile data networks and, in particular, those which had been promoted in Australia as ‘3G’ networks. No Australian carrier used the term ‘4G’ to describe any network which operated on HSPA, HSPA+ or DC-HSDPA networks. Those networks had always been referred to by Australian carriers as ‘3G’ networks. During the relevant period, Apple used the product designator ‘iPad with WiFi + 4G’, in relation to a device which could not directly connect with the only commercially available network understood by Australian consumers to be a ‘4G’ network. Bromberg J ordered by consent that Apple pay $2.25 million in civil pecuniary penalties for misleading advertising in relation to the promotion of its ‘iPad with WiFi + 4G’ (in contravention of s 33 of the ACL). Bromberg’s J reasons for the penalty included the deliberate nature

of Apple’s contravention, its willingness to prioritise the global uniformity of the Apple brand over compliance with Australian Consumer Law, and the extensive and substantial reach of Apple’s conduct.

Misleading conduct as to the nature etc of services Section 34 of the ACL 8.264 Section 34 of the ACL prohibits a person, in trade or commerce, from engaging in conduct that is liable to mislead the public as to the nature, characteristics, suitability for their purpose or quantity of any services. 8.265

Section 34 of the ACL (similar to former s 55A of the TPA) states:

34 Misleading conduct as to the nature etc of services A person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of any services. Note:

A pecuniary penalty may be imposed for a contravention of this section.

[page 430] 8.266 As s 34 of the ACL is couched in substantially the same form as former s 55A of the TPA, the jurisprudence relating to the concepts applicable to s 55A is relevant to those concepts as they exist in s 34.191 8.267 The application of s 34 of the ACL is not limited to transactions involving ‘consumers’ as defined in s 3.192

8.268 Section 34 of the ACL is drafted similarly to s 33, except that s 34 relates to services and s 33 relates to goods, and the reference to manufacturing process that is in s 33 has been removed from s 34. 8.269 Furthermore, the Convention only relates to goods and not services. Despite these differences, ss 33 and 34 of the ACL are largely the same and the commentary above in relation to s 33 is applicable to s 34.193 8.270 The following case of TPC v J & R Enterprises Pty Ltd,194 is an example of a convention under former s 55A of the TPA in relation to services which extends to the sale of advertising in a scheme.

TPC v J & R Enterprises Pty Ltd (1991) 99 ALR 325 In this case, the J & R Enterprises Pty Ltd (J&R) was a franchise holder that supplied the ‘Easyfind Planner’ to a large number of households in Adelaide. The ‘Easyfind Planner’ was a yearly calendar that was delivered, free of charge. J&R and other franchise holders which also supplied the ‘Easyfind Planner’ attended a conference for the launch of a marketing concept that was known as ‘System 2000’. The ‘System 2000’ was a home organiser. A brochure described the ‘System 2000’ as follows: The System 2000 Household Organiser is a new, copyrighted Danish home organising concept, graphically designed by Bruno Hansen, mgk, and all functionally fitted into a patented wall unit designed by the famous award-winning Danish designer, Bjarne Bo Andersen. The marketing and distribution of this new System 2000 Household Organiser is built around the Easyfind Planner/Directory, which is distributed worldwide and was founded by Glen Ion, who today is also the chairman of System 2000. In securing Mr Ion’s participation, System 2000 gained the right to use Easyfind’s copyrighted and highly successful yearly planner format, and

[page 431] in addition, the ability to take advantage of the proven marketing and distribution skills of his worldwide network of franchisees. Although the System 2000 Household Organiser was created to appeal to home owners on an international basis, the system is designed to provide businesses with a means of acquiring more customers and less competition on a local basis. As you will see as you read on, System 2000 fulfills a real consumer need, and in so doing, provides a real and solid opportunity for the local businesses trying to reach them. The TPC alleged that J&R contravened former s 55A of the TPA by supplying the ‘System 2000’ to franchise holders at a time when it knew that there was no reasonable prospect of it being established in Adelaide.

O’Loughlin J held the word ‘services’ in former s 55A of the TPA extended to J&R’s sales of advertising in the System 2000 advertising scheme. J&R had misleadingly stated that the System 2000 advertising scheme was suitable for its intended purposes and its quantity. Consequently, J&R contravened former s 55A of the TPA.

8.271 The following case of ACCC v Singtel Optus Pty Ltd,195 is an example of establishing multiple contraventions of former s 55A of the TPA.

ACCC v Singtel Optus Pty Ltd [2010] FCA 1177 In this case, Singtel Optus Pty Ltd (Optus) was a large telecommunications firm which provides broadband internet services. One of the broadband data service plans provided by Optus was the ‘Think Bigger Plan’. Optus conducted a ‘Think Bigger’ and ‘Supersonic’ advertising campaign for the supply of broadband data services. The campaign was

substantial and was conducted over five different communication mediums, namely newspapers, television, the internet, billboards and flyers. The advertisements in both promotions contained a headline statement about peak and off-peak usage allowances. Each headline was qualified by a disclaimer in small print which stated: ‘Speed limit once peak data exceeded.’

The ACCC argued that in 11 advertisements, some consumers would be likely to be misled by the flyer into thinking that for $59.99 they would receive 150GB of broadband made up of 75GB of peak usage and 75GB of [page 432] off-peak usage. However, that is not the way in which the plan worked. The actual operation of the plan was as follows: (a) If a consumer used all of their 75GB peak usage allowance then the service would be throttled back to 64kbps both for the peak usage and, more importantly, for the offpeak usage. After the peak allowance was depleted the consumer would not get the benefit of any of the remaining off-peak entitlement to 75GB at broadband speeds. (b) By contrast, if the consumer exceeded his 75GB off-peak allowance the speed would not be throttled back (unlike that which occurred when the peak allowance was exceeded). Instead, further use would continue at broadband speeds but would be deducted from the peak usage allowance. Once that allowance was reached, further use would be throttled back to 64kbps.

The ACCC argued that without sufficient attention being drawn to those features the advertisement was apt to suggest to consumers something which was quite wrong, namely, that they would receive 150GB of usage for $59.99. The ACCC also argued (unsuccessfully) that the advertisements: (i)

did not adequately disclose that the speed would be throttled back to 64kbps once the threshold was reached;

(ii) did not indicate anywhere that the speed limitation was to a speed which was not a broadband speed.

Perram J held that the 11 advertisements contravened former s 55A of the TPA. Optus had not sufficiently disclosed that the speed of the broadband data service was reduced once a consumer exceeded their peak data allowance. Optus appealed. On appeal, the Full Federal Court upheld the decision of Perram J, but reduced the pecuniary penalty imposed from $5.26 million to $3.61 million.

Misleading representations about certain business activities (and activities conducted from home) Section 37 of the ACL 8.272 Section 37 of the ACL prohibits a person from making false or misleading representations regarding the profitability, risk or other material aspects of a business activity. 8.273

Section 37 of the ACL (similar to former s 59 of the TPA) states:

37 Misleading representations about certain business activities (1) A person must not, in trade or commerce, make a representation that: (a) is false or misleading in a material particular; and

[page 433] (b) concerns the profitability, risk or any other material aspect of any business activity that the person has represented as one that can be, or can be to a considerable extent,

carried on at or from a person’s place of residence. Note:

A pecuniary penalty may be imposed for a contravention of this subsection.

(2) A person must not, in trade or commerce, make a representation that: (a) is false or misleading in a material particular; and (b) concerns the profitability, risk or any other material aspect of any business activity: (i)

that the person invites (whether by advertisement or otherwise) other persons to engage or participate in, or to offer or apply to engage or participate in; and

(ii) that requires the performance of work by other persons, or the investment of money by other persons and the performance by them of work associated with the investment. Note:

A pecuniary penalty may be imposed for a contravention of this subsection.

8.274 As s 37 of the ACL is drafted in substantially the same form as former s 59 of the TPA, the jurisprudence relating to the concepts applicable to s 59 is relevant to those concepts as they exist in s 37. 8.275 The application of s 37 of the ACL is not limited to transactions involving ‘consumers’ as defined in s 3.196 8.276 Section 37(1) prohibits, in trade or commence, making false or misleading representations about the profitability, risk or other material aspect of a business activity that is carried on from home. 8.277 Section 37(2) prohibits, in trade or commerce, making false or misleading representations about the profitability, risk or other material aspect of a business activity that invites other persons to: participate in work; or invest money that is related to the work. 8.278 Section 37(1) is limited to business activities carried on from a home, where s 37(2) is wider in scope and would capture franchise agreements and other non-home based businesses.197 8.279

The following case of ACCC v Halkalia Pty Ltd (No 2)198 is an

example of misleading representations of profitability of distribution businesses in contravention of former s 59(2) of the TPA. [page 434]

ACCC v Halkalia Pty Ltd (No 2) [2012] FCA 535 In this case, in the period from about 10 January 2007 and 15 May 2010 (relevant period), the first to third respondents advertised in over 850 newspapers the sale of distribution businesses to sell Heartlink branded household cleaning products to independent supermarkets and stores. The Heartlink distribution businesses were advertised in rural, regional and metropolitan newspapers in a number of States including New South Wales, Victoria, Queensland and South Australia (the Newspaper Advertisements). The Newspaper Advertisements were mostly targeted to elderly and retired people, who paid between $10,000 and $30,000 for a Heartlink distribution business. Some of the purchasers borrowed the money, while others had invested their retirement savings or redundancy payments. The Newspaper Advertisements induced these people to purchase a Heartlink distribution business by making false and misleading representations that an owner could earn anywhere from $900 to $2,000 per week for three to four days’ work (Projected Figure). The Newspaper Advertisements in each State contained similar misrepresentations about the potential earnings of the distribution business. A typical advertisement contained the following misrepresentation: ‘Sales distribution business part time, light parcels genuine unique opportunity for

purchase amount of $10,000. Potential earnings for 3-4 days per week approximately $800 to $1,000 for the Mature Aged Group, 1800 267 583.’

A majority of Heartlink distributors, who submitted a complaint to the ACCC, indicated that they earned no income after the purchase of the Heartlink distribution business, and none of the complainants reached earnings equivalent to or reasonably near the Projected Figure. Tracey J made orders against the first to third respondents for contravening former ss 52 and 59(2) of the TPA by engaging in conduct that was false, misleading or deceptive or likely to mislead or deceive. In particular, Tracey J held that the first to third respondents had no reasonable grounds on which to claim the Projected Figure, and his Honour held that the fourth respondent was knowingly concerned in, and a party to the contraventions of the first to third respondents. Tracey J also held that the fourth respondent was primarily liable for contravening former s 59(2) of the TPA, by causing certain letters to be sent to potential purchasers of the distribution business, which contained false and misleading representations about the profitability of the business activity. Tracey J ordered pecuniary penalties on the first and fourth respondent at $450,000 each and 15-year disqualification order on the fourth respondent.

[page 435] 8.280 The following case of ACCC v Mailpost Australia,199 is an example of misleading representations of profitability and risk of a franchise business in contravention of former s 59(2) of the TPA.

ACCC v Mailpost Australia [2010] FCA 369 In this case, Mailpost Australia Ltd (Mailpost) was a master franchisor of a print and distribution business for unaddressed mail. Mailpost appointed various corporations as State Master Agents in respect of its activities in each of the states of New South Wales, Victoria, Queensland, South Australia and Western Australia. State Master Agents were authorised to grant franchises of the Mailpost business to individuals and corporations. These franchisees were classified as Posties, Managing Posties and Regional Agents. Mailpost prepared and provided the following material to State Master Agents and their representatives for the purpose of recruiting franchisees, which material contained representations, amongst others, to the effect: Agents for the Mailpost business would earn or could reasonably be expected to earn ‘$160K OTE’ per year; Franchisees of the Mailpost business would earn or could reasonable be expected to earn ‘$180,000 + pa’; The Mailpost business model was ‘recession proof’; The Mailpost business was ‘growing in recessive times’; and The Mailpost business was ‘probably the fastest growing franchise type operation in the whole world’. These representations were false or misleading as to the profitability or risk of the Mailpost business, for the purposes of former s 59 of the TPA. Foster J held that Mailpost and its CEO, Peter Kritas, made false or misleading representations in contravention of former s 59 of the TPA. Orders were made by consent between the parties.

Exemption for information providers Section 38 of the ACL 8.281 Section 38 of the ACL exempts the media from liability of ss 29, 30, 33, 34 and 37 in certain circumstances. Section 38 mirrors s 19. For commentary on terms used in s 38, please see 3.218. [page 436]

Remedies and enforcement powers Summary of available remedies and enforcement powers 8.282 A person contravening any of ss 29, 30, 31, 33, 34 and 37 of the ACL is potentially liable for any of the following remedies (and enforcement powers) against them: declarations (s 21 of the Federal Court of Australia Act 1976 (Cth)); pecuniary penalties (s 224 of the ACL); undertakings (s 218 of the ACL); substantiation notices (s 219 of the ACL); public warning notices (s 223 of the ACL); injunctions (s 232 of the ACL); damages (s 236 of the ACL); compensatory orders (s 237 of the ACL); compensation orders arising out of other proceedings (s 238 of the ACL); orders for non-party consumers (s 239 of the ACL);

non-punitive orders (s 246 of the ACL); adverse publicity orders (s 247 of the ACL); disqualification orders (s 248 of the ACL); infringement notices (s 134A of the CCA); orders for the preservation of property (s 137F of the CCA); and power to obtain information, documents and evidence (s 155 of the CCA). 8.283

For further information on civil remedies, see Chapters 13–14.

Criminal Remedies 8.284 The corresponding criminal provisions for ss 29, 30, 31, 33, 34 and 37 are ss 151, 152, 153, 155, 156 and 159. The criminal provisions replicate the civil provisions.

Short theory and problem questions Theory questions 1.

Does the term ‘false’ in s 29 of the ACL require a person who makes the misrepresentation to have knowledge of, or intention to mislead?

2.

For the purpose of s 29 of the ACL, is there a material difference between a ‘false’ representation and a ‘misleading’ representation?

3.

For the purpose of s 29(1)(i) of the ACL, does a ‘price’ of goods or services have to be a precise figure that is misleading?

4.

Does a ‘no refund’ sign in a store contravene s 29(1)(m) of the ACL?

5.

Can a supplier charge a consumer for an extended term of an expressed warranty, when the consumer is entitled to a remedy under the consumer guarantees?

[page 437] 6.

Why does the misleading conduct in relation to employment provision in s 31 of the ACL not include the ‘in trade or commerce’ requirement?

7.

Are there criminal offence provisions for contraventions of ss 29, 30, 31, 33, 34 and 37, and if so, what is the maximum penalty for a body corporate or a person?

8.

Is an Information Provider exempted from liability under s 29 of the ACL if the information provider publishes an advertisement that is misleading?

9.

List three reasons why s 33 of the ACL is narrower in scope than s 18 of the ACL.

Hypothetical problem question John, Paul, George and Bingo were musicians in a band called the Beagles. One day, John visited his favourite music store Wilsun Guitars and he saw a Super-V guitar on display. John was excited when he read the following sign above the guitars on display: Brand new Super-V guitars are built wholly from Australian made products. These guitars are made from Norwegian wood and are of the highest quality. See Slash’s comments on Twitter about the performance of the Super-V guitar and what he thinks about other brands of guitars. Slash says ‘the Gunners only use Super-V. All other brands are just crap. Don’t waste your money on them.’

John bought one of the Super-V guitars and took it home to jam on it. After about two hours of straight jamming, the guitar started to rattle, cut out and overheat. John took the guitar to George and he immediately saw that the guitar was of poor quality. George also informed John that the guitar he bought was not a Super-V, but an imitation of a Super-V.

John later discovered that the guitar was not made from Norwegian wood, and that it was not even new. The Super-V guitar that he purchased was refurbished from second-hand material and parts that were sourced 30% from China, 20% from Germany, and the remainder from Australia. John was angry and was angrier when he learned the truth that the Twitter comment on the display in Wilsun Guitars was not written by Slash from Guns and Roses, but written by a local unknown musician named ‘James Hatfield’. James uses Slash as his identity on Twitter, and the name of his band is the ‘The Metallic Gunners’. John confronted Brian, the owner of Wilsun Guitars and demanded his money back. Brian said: Sorry mate, I was only relying on the information provided to me by the manufacturer, a company called Skip Rope. Surely I can’t be at fault. I am merely passing on information. I cannot refund your money. It is store policy. I can try and repair your guitar for you, or if you like I can give you store credit.

Advise Brian as to whether Wilsun Guitars has contravened s 29 of the ACL for false or misleading representations made by the display sign?

[page 438]

Further reading A Bruce, Consumer Protection Law in Australia, 2nd ed, LexisNexis Butterworths, Sydney, 2014, pp 175–96. S Corones, The Australian Consumer Law, 2nd ed, Thomson Reuters, Sydney, 2013, pp 255–312. Halsbury’s Laws of Australia, Commentary, Consumer Protection title, LexisNexis, Sydney, 2011, [100-137]–[100-193]. Justice J D Heydon, Trade Practices Law Competition & Consumer

Law (Looseleaf Services), Thomson Reuters, Australia, 2012, [190.10]–[190.2260]. R Miller, Australian Competition and Consumer Law Annotated, 36th ed, Thomson Reuters, Sydney, 2014, pp 1595–1620, 1625–6, 1733–40, 1742. R Steinwall, Annotated Competition and Consumer Legislation, LexisNexis, Sydney, 2014, pp 1391–420. See the ACCC website at or the ACL website at