MLL217 MISLEADING CONDUCT AND ECONOMIC TORTS
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1 MLL217 MISLEADING CONDUCT AND ECONOMIC TORTS Contents FALSE AND MISLEADING STATEMENTS... 5 Other Common Law Torts Regulating False or Misleading Statements... 5 Deceit... 5 Injurious falsehood... 6 Negligent misrepresentation... Error! Bookmark not defined. Passing off... Error! Bookmark not defined. MISLEADING CONDUCT UNDER THE ACL (s 18)... Error! Bookmark not defined. Key Concepts Underpinning the Australian Consumer Law... Error! Bookmark not defined. ACL s 18(1)... Error! Bookmark not defined. PERSON / CORPORATION... Error! Bookmark not defined. IN TRADE OR COMMERCE... Error! Bookmark not defined. Nature of misleading or deceptive conduct... Error! Bookmark not defined. Coverage of s Error! Bookmark not defined. Locus standi for breach of s Error! Bookmark not defined. The nature of the prohibition in s 18 of the ACL... Error! Bookmark not defined. The target audience... Error! Bookmark not defined. Surrounding circumstances... Error! Bookmark not defined. Causation... Error! Bookmark not defined. Erroneous assumptions... Error! Bookmark not defined. Confusion or uncertainty... Error! Bookmark not defined. Evidence... Error! Bookmark not defined. Exclusion and disclaimer clauses... Error! Bookmark not defined. The hegemony of s Error! Bookmark not defined. CONDUCT WHICH MAY BE MISLEADING OR DECEPTIVE... Error! Bookmark not defined. Contractual misrepresentations... Error! Bookmark not defined. Non-disclosure / silence... Error! Bookmark not defined. Puffery... Error! Bookmark not defined. Literal truth... Error! Bookmark not defined. Relaying third party information... Error! Bookmark not defined. Future statements (s 4 ACL)... Error! Bookmark not defined.
2 Expressions of opinion... Error! Bookmark not defined. Negligent advice... Error! Bookmark not defined. Contractual promises... Error! Bookmark not defined. Defamation... Error! Bookmark not defined. Section 19 of the ACL... Error! Bookmark not defined. ADVERTISING (contravention of s 18)... Error! Bookmark not defined. Factors of advertisements... Error! Bookmark not defined. The Target Audience... Error! Bookmark not defined. The entirety of ad and the context... Error! Bookmark not defined. Test for breach of s Error! Bookmark not defined. Nature of the transaction and the product involved... Error! Bookmark not defined. False claims in advertisements... Error! Bookmark not defined. Literal truth... Error! Bookmark not defined. Similar business names... Error! Bookmark not defined. Cyber-squatting: registration of domain names... Error! Bookmark not defined. Similar product names... Error! Bookmark not defined. Similar designs, get up, ad features... Error! Bookmark not defined. Character merchandising... Error! Bookmark not defined. Comparative advertising... Error! Bookmark not defined. Who is liable for misleading advertisements?... Error! Bookmark not defined. SPECIFICALLY PROHIBITED FALSE OR MISLEADING REPRESENTATIONS (contravention of Part 3-1)... Error! Bookmark not defined. Section 29 Prohibits specific representations or business activities Error! Bookmark not defined. Definitions of Terms... Error! Bookmark not defined. Particular standard... Error! Bookmark not defined. Particular quality... Error! Bookmark not defined. Particular composition... Error! Bookmark not defined. Particular History or Particular Previous Use... Error! Bookmark not defined. was and now pricing... Error! Bookmark not defined. Section 29(1)(k) Place of origin claims... Error! Bookmark not defined. Section 30 Sale or grant of an interest in land... Error! Bookmark not defined. Section 31 Offering employment... Error! Bookmark not defined. Section 32 Offering rebate, gifs, prizes or other free items (new)... Error! Bookmark not defined. Section 33 Mislead the public to any good... Error! Bookmark not defined.
3 Section 34 Mislead the public to any service... Error! Bookmark not defined. Section 47 More than one displayed price (new)... Error! Bookmark not defined. Section 48 Partial pricing... Error! Bookmark not defined. Section 38 Information Provider s Defence... Error! Bookmark not defined. REMEDIES AVAILABLE FOR A CONTRAVENTION OF THE ACL... Error! Bookmark not defined. Remedies available to the ACL regulator... Error! Bookmark not defined. Criminal penalties... Error! Bookmark not defined. Civil Pecuniary Penalties... Error! Bookmark not defined. Injunctions: Section 232 of the ACL... Error! Bookmark not defined. Disclosure/Corrective Advertising and other non-punitive orders.. Error! Bookmark not defined. Punitive orders Adverse publicity orders... Error! Bookmark not defined. Infringement Notices... Error! Bookmark not defined. Remedies available to private litigants... Error! Bookmark not defined. Civil Remedies (s 18/Part 3-1 ACL)... Error! Bookmark not defined. Damages: Section Error! Bookmark not defined. Contributory negligence... Error! Bookmark not defined. Proportionate Liability: Part VIA... Error! Bookmark not defined. Other remedial remedies... Error! Bookmark not defined. Cost awards... Error! Bookmark not defined. Limitation of Actions... Error! Bookmark not defined. Vicarious and accessorial liability... Error! Bookmark not defined. Vicarious liability... Error! Bookmark not defined. Accessorial liability... Error! Bookmark not defined. MANUFACTURER S LIABILITY FOR FAILURE TO COMPLY WITH CONSUMER GUARANTEES... Error! Bookmark not defined. Rationale for ACL product liability provisions... Error! Bookmark not defined. Consumer Guarantees Part 3-2 of the ACL... Error! Bookmark not defined. Deficiencies of the tort of negligence... Error! Bookmark not defined. Limitations of Part 3-2 (preliminary matters)... Error! Bookmark not defined. Causes of Action against Manufacturers... Error! Bookmark not defined. Section 54: Guarantee as to acceptable quality... Error! Bookmark not defined. Section 56: Guarantee that goods match their description... Error! Bookmark not defined. Section 58: Guarantee as to the availability of repairs and spare parts... Error! Bookmark not defined.
4 Section 59: Guarantees as to express warranties... Error! Bookmark not defined. Remedies... Error! Bookmark not defined. Contracting out of consumer guarantees (s 64)... Error! Bookmark not defined. LIABILITY OF MANUFACTURERS FOR GOODS WITH A SAFETY DEFECT... Error! Bookmark not defined. Standing... Error! Bookmark not defined. Causes of action (ss )... Error! Bookmark not defined. Defendant bound by ACL... Error! Bookmark not defined. Manufacturer... Error! Bookmark not defined. Goods... Error! Bookmark not defined. In trade or commerce... Error! Bookmark not defined. Goods must have a defect... Error! Bookmark not defined. Causation... Error! Bookmark not defined. Defences... Error! Bookmark not defined. Limitations... Error! Bookmark not defined. Merck Sharp & Dohme (Australia) Pty Ltd v Peterson [2011] FCAFC Error! Bookmark not defined. OTHER TORTS PROTECTING ECONOMIC INTERESTS... Error! Bookmark not defined. Recovery in negligence for pure economic loss... Error! Bookmark not defined. Economic loss consequential upon damage to property of Defendant or Third Party... Error! Bookmark not defined. Duty of care to prevent economic loss... Error! Bookmark not defined. Liability for defective structures... Error! Bookmark not defined. Private v Commercial premises... Error! Bookmark not defined. Proportionate Liability... Error! Bookmark not defined. Economic Torts... Error! Bookmark not defined. Interference with contractual relations... Error! Bookmark not defined. Intimidation... Error! Bookmark not defined. Conspiracy... Error! Bookmark not defined.
5 FALSE AND MISLEADING STATEMENTS Other Common Law Torts Regulating False or Misleading Statements Deceit Injurious falsehood Negligent misrepresentation Passing off Deceit Elements of the tort: Magill v Magill (2006) D made a false representation to the P; D made the statement fraudulently; D intended P to believe in and rely on the false representation; P was induced to rely on the representation; and P suffered damage. Central requirement of fraud Onus is on P to prove fraud negligence (that is, a failure to take reasonable steps to verify the accuracy of the information) does not suffice P must establish that D knew the statement was false or had no belief in its truth, or was recklessly indifferent to its truth or falsity: Derry v Peek (1889) Where fraud is alleged, clear or cogent or strict proof is necessary o Neat Holdings v Karajan Holdings; Sunland Waterfront (BVI) v Prudential Investments (No 2) Interaction with s 18 of ACL Advantages of s 18: o Liability is strict; unnecessary to prove an intention to deceive or negligence o s 18 will apply in a broader range of circumstances where liability is sought to be imposed for mere silence ; i.e. a failure to disclose information o Broader range of remedies in ACL Disadvantages of s 18: o Only applies where the conduct is in trade or commerce doesn t apply to private transactions (have to use tort of deceit instead) Aggravated and exemplary damages not available: Musta v Astle Corp Contributory negligence reduces damages awarded for a contravention of s 18 (see s 236) but not for the common law tort of deceit: Standard Chartered Bank v Pakistan National Shipping Co (Nos 2 & 4) Often easier to make out under ACL than under tort of deceit, however there are still advantages/disadvantages of both. Interaction with Injurious Falsehood
6 Deceit applies where the plaintiff is the person to whom the false rep was directed and who was induced to rely on the rep Injurious falsehood applies where the false rep is made to a third party who was induced to rely on the rep Injurious falsehood An action on the case available where D has maliciously made to third parties a false representation concerning P s goods, business, profession or property that induces the third parties to act in reliance on the statement, causing loss to the plaintiff Available to all corporations regardless of size (in contrast to defamation), so renewed reliance on injurious falsehood Interaction with defamation Injurious falsehood is often also defamatory/denigratory, but is not necessarily so o See Ratcliffe v Evans o Radio 2UE Sydney v Chesterton Advantages of defamation over injurious falsehood? Elements of injurious falsehood D makes a false statement about P s goods, business, profession or property D publishes the statement to a third party D makes the statement maliciously P suffers actual loss as a result of reliance by TP on the statement. o Ratcliffe v Evans; Palmer Bruyn & Parker v Parsons; Radio 2UE Sydney v Chesterton (a) A false statement about P s goods, business, profession or property Typical examples: A) Statements by competitors designed to induce P s customers to take their business elsewhere: Swimsure (Laboratories) v McDonald B) Statements by disgruntled customer/employee: Kaplan v Go Daddy Group Must injure a person s business, trade or professional reputation: Dye v Commonwealth Securities E.g. Comparative advertising (b) Publication to a third party Eg. an advertisement on TV; online post; statements to customers; statements to distributors/stockists o Swimsure (Laboratories) v MCDonald (c) Malice The statement must be made for a collateral or an improper purpose Knowledge of the falsity of the representation (or recklessness) invariably conclusive proof of malice
7 o As to recklessness, see Seafolly v Madden [2012] FCA 1346 o As to negligence (not sufficient), see Orion Pet products v RSPCA the RSPCA staff believed in what they were saying, that what they were saying was true Contemporary authorities suggest that no material difference between test of malice for IF and for defamation o Beechwood Homes (NSW) v Camenzuli [2010] NSDWSC 521 made in personal spite o Born Brands v Nine Network Australia (No 6) [2013] NSWSC 1651 (d) Loss to P because of reliance by TP Must prove actual damage: Seafolly v Madden [2012] FCA 1346 o though a probability of damage suffices to obtain an interim injunction: Swimsure (Laboratories) v MCDonald Examples of loss: o Loss of custom o Costs of corrective advertising Also, aggravated / exemplary damages are available Interaction with s 18 of the ACL Injurious falsehood also often actionable under s 18 of the ACL, but can be problems with the in trade or commerce requirement o Dataflow Computer Services v Goodman; Orion Pet Products v RSPCA Advantage of s 18 over injurious falsehood?
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