Misleading or deceptive conduct
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Misleading or deceptive conduct (often referred to as just misleading conduct) is a doctrine of Australian law (contained primarily within the Trade Practices Act 1974) which prohibits conduct, carried out in the course of trade or commerce, which is misleading or deceptive, or is likely to mislead or deceive. It is similar to the contract law doctrine of misrepresentation, although in some circumstances, failing to disclose information, or failing to perform a contractual obligation, will also constitute misleading conduct.
The doctrine aims primarily to provide consumer protection by preventing businesses from misleading their customers. However, the doctrine is not specifically limited to this objective, and extends to all situations in the course of trade or commerce. Persons who have been the victims of misleading conduct are entitled to compensation in the form of damages. Victims can also apply to the courts for compensation in the form of other orders, such as an order rescinding a contract, although these remedies are discretionary.
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[edit] Application of the doctrine
Section 52 is limited by its own terms 'a corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive'. The Trade Practices Act (TPA) is an act of the Parliament of Australia, so section 51 of the Australian Constitution (which sets out the division of powers between the federal and state parliaments) restricts the application. Section 52 is based on the corporations power ( s51(xx) of the Constitution). The requirement 'in trade or commerce' creates a significant threshold issue.
Individuals may be ancillary liable for breaches of s52 if they are "knowingly concerned" in the breach (s75B).
Each of the States and territories of Australia have implemented fair trading legislation, which contain provisions substantially identical to the TPA including replicating the 'misleading and deceptive conduct' provision. However, the requirement that the conduct be 'in trade or commerce' remains.
[edit] Conduct which is misleading
The prohibition on misleading conduct is set out in section 52(1) of the Trade Practices Act:
- "A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive."
Section 4(2)(a) of the TPA defines conduct as:
- "...doing or refusing to do any act, including the making of, or the giving effect to a provision of, a contract or arrangement, the arriving at, or the giving effect to a provision of, and understanding or the requiring of the giving of, or the giving of, a covenant;"
The most common form of misleading conduct is a false statement of fact (otherwise known as a misrepresentation).
Generally speaking, conduct is misleading or deceptive if it in fact misleads or deceives someone, not just when the person doing the conduct intends to mislead or deceive, or is negligent or reckless as to whether they mislead or deceive. In this way, misleading conduct is a form of strict liability. However, in some circumstances it may be necessary to show that the person doing the conduct did intend to mislead or deceive, for example when the person is merely passing on information.
In some circumstances, failing to disclose certain facts may also be misleading conduct. When there is a duty between parties at common law to disclose facts, then a failure to do so may be misleading conduct. Furthermore, even if there is no common law duty to disclose, a person's silence, when considered in light of all the circumstances (other statements they have made, or other actions they have taken) may be misleading conduct. Generally, 'mere silence' is not misleading conduct unless there is a reasonable expectation that the person should disclose facts.
When the relevant conduct is a representation about the future (as opposed to a representation about present facts), then according to section 51A of the TPA, that conduct will be misleading if the person making it does not have reasonable grounds for doing so. In these situations, representations about the future are presumed to be misleading, and the burden of proof is on the person making the representation to produce evidence to show that they had reasonable grounds.
[edit] Remedies
If a person has suffered loss or damage as a result of another person's misleading or deceptive conduct, then they can bring an action against that other person to recover the amount of the loss or damage under section 82, apply for other orders (such as orders to rescind or modify a contract) under section 87, or in relevant circumstances apply for an injunction under section 80.
According to section 75B, victims can bring actions not only against the direct perpetrators of the conduct, but also any person who aided or abetted the conduct, has conspired to effect the conduct, or has been in any way knowingly involved with the conduct. For example, when a corporation has engaged in misleading or deceptive conduct, a victim is often also able to bring actions against the directors of that corporation. Unlike in normal circumstances, a person needs to be knowingly or intentionally involved with the conduct in order to fall within the definition in section 75B.
The Australian Competition and Consumer Commission (ACCC) is empowered to intercede on behalf of victims of misleading and deceptive conduct, and can apply for orders under section 87 or injunctions under section 80. The ACCC will often seek orders which compel people or companies who have engaged in misleading or deceptive conduct to publish public apologies for their actions.
[edit] Damages
A victim of misleading or deceptive conduct is only entitled to damages if they have suffered loss or damage as a result of the conduct. The measure of loss or damage here is generally the same as it is in contract law or tort law. According to section 82(1B), which was introduced in 2004, if a victim contributed to the loss or damage that they suffered, then the court can reduce the amount of damages that they are awarded, in a similar fashion to the reduction of damages in a negligence claim if the plaintiff is guilty of contributory negligence. However, if the person engaging in the conduct intended to mislead or deceive, or was fradulent in their conduct, then the courts cannot reduce the damages.
There is a limitation period of six years on actions for damages, according to section 82(2).
[edit] Section 87 orders
A victim can apply for orders under section 87 if they have suffered, or are likely to suffer, loss or damage as a result of misleading or deceptive conduct. A victim is not entitled to section 87 orders in the same way that they are entitled to damages, or in the same way that they would be entitled to equivalent orders under applicable common law doctrines, such as misrepresentation. Granting such orders is at the discretion of the court, and can only be granted if the court thinks that the order will compensate the victim for their loss or damage or prevent any (further) loss or damage. For example, a court may refuse to grant an order rescinding a contract if restitutio in integrum (restoration to original condition) is not possible.
The measure of loss or damage here may be different than the measure for damages under section 82. Some cases have suggested that since section 87 is not just about recovering monetary loss, then the measure should be broader. However, other cases consider that the same measure of loss or damage should be used.
There is also a limitation period of six years on actions for section 87 orders, according to section 87(1CA).
