Misleading and deceptive conduct in Queensland and Australian wide is governed by section 18 of the Australian Consumer Law (ACL), or previously referred to as section 52 of the Trades Practices Act 1974.
This extract of law states that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive, or likely to mislead or deceive.
This is generally focused upon the conduct of an individual, rather than representations made by them.
A person within this section includes both an individual and a legal person (companies) which may be held liable for providing false or misleading conduct in the course of dealings.
Conduct may be found to be in breach of this section regardless of whether their misleading or deceptive conduct was intentional.
It is important to note this provision will only apply in trade or commerce. This means that the scope of the provision does not include private dealings and sales.
Situations where conduct may be considered misleading may include misleading advertisements, deceptive selling practices, and precontractual statements made during negotiations.
What is Misleading and Deceptive Conduct?
The law in Australia defines conduct as doing or refusing to do an act.
An individual may be found to have engaged in misleading or deceptive conduct if they have made an express or implied misrepresentation.
Whether or not the individual or legal person was intentionally misleading is mostly irrelevant, only that the conducts tends to mislead.
Prediction of the Future
Making a statement concerning a future prediction may amount to misleading and deceptive conduct if the individual or legal person making the statement had no reasonable grounds to make such statement.
For example, if a real estate agent selling a property told a potential buyer that the value of the property would double in 5 years, while have no reasonable grounds to make such prediction, this would be considered misleading and deceptive conduct.
Silence
Silence may constitute misleading or deceptive conduct under the ACL if there was a reasonable expectation for the individual/legal person to disclose such information. This is where they fail to state information which impacts the accuracy of what they have said.
A good example of this is the case of Henjo Investments v Collins Marrickville (1988) 79 ALR 83.
It involved the business sale of a restaurant to Collins Marrickville. When asked about the seating capacity of the restaurant, Henjo said it seats 128 people.
This was physically true; however, it was not licensed to serve that many people. It was held to be a literally true statement but gave a misleading impression.
Henjo Investments had duty to reveal the true position, as an impression had been communicated that the limitation on capacity was less restrictive than it really was.
Does the audience effect what is considered misleading and deceptive conduct?
In determining whether conduct is misleading or deceptive, or likely to mislead or deceive, it is necessary to consider the recipient audience of the conduct as it may vary what is considered misleading and deceptive.
For example, if a false statement is made about a specific topic by a person to an expert of that topic, the threshold for what may be considered misleading and deceptive conduct may be higher.
Whether the misrepresentation is made to a specific individual, or a class will alter the test used in determining whether the conduct is deemed as misleading or deceptive.
If a misrepresentation is made to one specific person, the case of Downey & Anor v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199 determined “in such circumstance the proper approach has been held to involve an inquiry into what a reasonable person in the position of the [representees], taking into account what they knew, would make of the [representor]’s behaviour.”
Whereas, if a misrepresentation is made to a class of people, such as a target audience in an advertising campaign, the test is different.
The case of Campomar Sociedad Limited v Nike International Limited [2000] HCA 12 considered the reactions of ordinary and reasonable members of the class of prospective purchasers, while disregarding those whose reactions were extreme or fanciful to determine whether the misrepresentation was considered misleading and deceptive conduct.
What is not considered misleading and deceptive conduct?
If an individual or legal person makes a statement of opinion, a promise, or a prediction, this will generally not amount to misleading or deceptive conduct.
However, if the statement of opinion, promise or prediction is made without reasonable grounds or they had no intention to uphold their end, the conduct will most likely amount to misleading.
The onus is on the individual/legal person who made the misrepresentation to prove they had a reasonable ground for their statement.
Another type of statement which will generally not be considered misleading and deceptive conduct is puffery.
An example of this is a café claiming to have ‘the world’s best coffee’. Claims which are self-evidentially untrue, however the more outrageous the claims are, the less likely it will amount to misleading or deceptive conduct.
Remedies for Misleading and Deceptive Conduct
If you are found to be a victim of misleading and deceptive conduct, within trade or commerce, the ACL has a number or remedies.
Injunction
Section 232 of the Act enables the court the ability to set in place an injunction.
This may restrain the contracting party from acting in any manner which contravenes the Act.
This will restrict the defendant from continuing its misleading and deceptive conduct, minimising potential future victims.
Damages
Section 236 of the Act states damages may be available if a loss or damage has been suffered because of the contravening conduct and this causal connection must be shown.
Tort measures generally apply when awarding damages due to misleading and deceptive conduct, this aims to place the plaintiff in the position they would have been in if the contravening conduct had not occurred.
This remedy has a limitation date of 6 years, meaning action must be taken within 6 years from when the loss/damage from the date the conduct occurred.
Recission
Sections 237 and 243 of the Act enable the court to deem part or the whole of the contract void.
This remedy, like the one above, has a limitation date of 6 years.
When should I seek legal advice?
It is important to have an experienced litigation/contract lawyer if you are either defending a misleading and deceptive conduct allegation, or you are looking to bring an action against another party.
This may have occurred during precontractual negotiations, leading you to sign a contract, or has caused you a loss.
Use our search engine today to find a suitable lawyer on the Sunshine Coast in defending or bringing an action in misleading and deceptive conduct.
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