Discussion On Australian Consumer Law-Free Essay

Question:

Discuss the ACCC’s possible causes of action (and the likely outcome) and appropriate remedies, if successful. You should support your answer with relevant legislation and case law.

Answer:

Issue:

The issues that have been identified in the given case study are:

  • whether Ohau engaged in misleading and deceptive conduct while advertising for its product ‘ Less is best” and what are the possible claims
  • What the possible Causes of action of ACCC are in this given scenario

Rule:

It can be said in accordance with section 2(1) of the ACL that trade or commerce in the context of Australian Consumer Law can be defined as any professional or business activity or any trade or commerce within the territorial boundaries of Australia as well as trade and commerce between any place outside Australia and Australia.

It has been provided in subsection 2(2) (a) and (b) of the ACL that a company’s act of engaging in a conduct can be referred to:

  • refusing or giving effect to the terms of the contract,
  • giving effect to a provision of understanding
  • Giving of a covenant.

As provided in section 18 of Australian Consumer Law, it can be said that any company or business organization must not engage in misleading and deceptive conduct.

An objective test can be applied by the courts to identify whether the conduct is misleading and deceptive. In the case Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, it had been held that the courts must take into consideration whether fair reading or viewing of the conduct would lead an original or reasonable member of the target audience to be deceived.


It has been provided in section 4(1) of the ACL that any representation made by a person with respect to future matter would be considered to be misleading in nature if the person who made the representation without having reasonable grounds to believe such representation to be true. It has been provided in subsection 4(2) of the ACL that for commencing proceedings in relation to subsection 1 for making any representation about a future matter by either of the parties to the proceeding or any other person, it would be held that such party did not have reasonable grounds to make the representation unless evidence suggests otherwise.

It has been provided in section 29(1) of the ACL that any person who engages in trade or commerce specifically in relation to supply of goods and services must not promote any service or goods by making a misleading and false representation particularly about the standard, quality, value and composition of the product.

Business must not any cost engage in advertising which misleads or deceives the customers even if the business did not intend to deceive the customers and no damage was sustained by the consumers by relying on such misleading and deceptive conduct. Some of the important cases which deal with misleading and deceptive conduct are Google Inc v Australian Competition and Consumer Commission[1], Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2]and Sidhu v Van Dyke[3]. It had been held by Gibbs CJ in the case Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd that the meaning of the words which are likely to mislead or deceive customers is misleading and deceptive is opaque. Firstly it is important to assess what constitutes misleading or deceptive conduct. It can be stated in accordance with the judgment of the case Google Inc[4] that misleading or deceptive conduct can be referred to any act which leads another person to commit an error. The principles of determining whether an act contravenes the provisions of misleading or deceptive conduct had been enumerated in the case Butcher v Lachlan Realty Pty Ltd[5]:


Whether the conduct is deceptive and misleading is question of fact.

For the purpose of assessing whether the conduct is consideration has contravened the provision as provided in section 52 of the former Trade Practices Act which has been replaced by section 18 of the ACL, it is important to evaluate the conduct as a whole in light of the circumstances involved.

The relevant statements or actions or any silence which constituted the misleading and deceptive conduct has to be deduced by the court from the whole conduct.

It can be stated that when the contravention relates to document, such document has to be scrutinized by the court in relation to the evidence which suggested the contravention.

Whether the conduct has contravened the provisions of section 18 of the ACL is a question which has to be determined by the courts.

Further as provided in the decision of case Google Inc, it can be stated that:

  • The words likely to deceive or mislead make it expressly clear that it is not required to demonstrate the actual action to establish the occurrence of the contravention
  • The conduct which targets a class of persons who range from gullible to astute, the courts must assess whether a reasonable person belonging to the class would be misled or be deceived.
  • Any conduct which causes confusion in the minds of the consumers will not be held to be co-extensive with misleading or deceptive conduct.
  • The intention of the defendant to mislead or deceive the customers is in significant in relation to determining the nature of the conduct.

It can be stated that it is important to assess whether the conduct of the business is likely to affect the impression of audience. Any conduct can be held to be misleading if such conduct if the overall impression created by the product is false and inaccurate. As held in the recent case Singtel Optus Pty Ltd v Australian Competition and Consumer Commission[6], a business is required to disclose material facts and provide relevant information so as to avoid engaging in misleading or deceptive conduct. A business is also required to disclose additional information to the customers of the business where it is expected that the conduct of the business is likely to have a misleading impact on the customers.


The courts have the power to order corrective advertising where it is determined by the court that the advertisement given by the company was misleading and deceptive in accordance with section 232(1), (2) of the Australian Consumer Law.

Further in accordance with section 232(4) it can be stated that the courts have the power to pass an injunction order restraining the contravening conduct of the defendant.

The courts will impose a penalty on the corporation or company if it s assessed by the court that plaintiff had sustained some loss or damages by relying on the misleading and deceptive conduct of the defendant. The cases Wardley Australia Ltd v Western Australia[7] and Marks v GIO Australia Holdings Ltd[8] contain the principles which are to be taken into account by the curt while evaluating on what basis the damages are to be awarded.

Application

By the application of section 4(1) of the ACL it can be stated that the company made false claims about future events that the customers would lose weight by consuming their product without any reasonable ground to believe their claims to be true. Therefore the company engaged in making misleading representation. The company made false claims about the benefits of its product without having reasonable grounds to believe such claims to be true. ACCC had inspected and found out there was no clinical proof of what the company had claimed.

Further by the application of section 29(1) of the ACL to the facts of the case it can be stated that the company promoted their product by making false and misleading representation about the provisions mentioned in the section. The company promoted their product by claiming that consumers would lose weight upon consumption of the product.


Thus by discussing the facts of the case it can be stated that the company had engaged in misleading and deceptive conduct. The conduct of the company can be analyzed by the application of the test as established in the Butcher v Lachlan Realty Pty Ltd case. In relation to the findings of this case the courts can assess the following:

  • that the advertisement constituted misleading and deceptive conduct as it is in relation to the facts of the advertisement.
  • There was no reasonable ground to substantiate the claims of the company.
  • The conduct of the company targeted the audience ranging from astute to gullible. However it can be assessed by the court that any reasonable person would have been misled and be deceived by the advertisement as the company had made false claims about the fact that their products were clinically proven to reduce weight.
  • Further it can be stated that the intention to deceive the customers was directly related to the nature of the product.

Further by the application of the decision of the case Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, it can be said that conduct was misleading as any ordinary or reasonable person of the target audience would have been deceived by the conduct.

Thus this conduct can be held to be in contravention of the provisions of section 18 of the Australian Consumer law and therefore it can be concluded that the company indulged in advertising which was misleading and deceptive.

Further in accordance with the decision of the Google Inc v ACCC case it can be stated that the conduct of the company in consideration does not have mislead or deceive the customers in actual. In accordance with the judgment of the Google Inc v ACCC it can be stated that

the words “likely to mislead or deceive” as provided in section 18 applies to the companies even when the conduct of the company was unintentional. Thus in this case it is clearly evident that the company engaged in misleading conduct and in can rely on the defense of intention.

The court in relation to this case can thus order the company to engage in corrective advertisement in accordance with section 232(1) (2) of the ACL. The court can even order an injunction to retrain the company from engaging misleading and deceptive advertisement as per the section 232(4). The court has the power to grant damages to an party who has suffered any detriment by relying on the misleading and deceptive conduct of the defendant, however a test has to be applied by the court to assess the compensation amount as held in the case Wardley Australia Ltd v Western Australia.

Conclusion

Thus to conclude, it can be said that ACCC can start proceedings against the company for engaging in misleading and deceptive conduct.

Reference List:

Australian Competition and Consumer Commission (ACCC)

Trade practices act 1974

Competition and Consumer Act 2010

Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 304 ALR 186

Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435

Sidhu v Van Dyke (2014) 308 ALR 232

Parkdale Custom Built Furniture Pty Ltd v Puxu Pty

Butcher v Lachlan Realty Pty Ltd (2004) 218 CLR 592 at 625 [109]

Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20,

Wardley Australia Ltd v Western Australia [1992] 109 ALR 247, (1992) 175 CLR 514

and Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494

Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 19

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