Electronic Signature Legitimacy for Business Ethics and Conduct Disclosure Statement in Australia

How to eSign a document: electronic signature legitimacy for Business Ethics and Conduct Disclosure Statement in Australia

Oh [Music] Steve Brown @n lawyers we're going to discuss in this session misleading and deceptive conduct misleading a deceptive conduct is the interesting provision for many of us were quite familiar with the concept but it was a new concept that the law developed in 1974 in fact although this dates me to somewhat when I was studying contract law the lecturer was asked just prior to the exam will this particular section at that time section 52 in the Trade Practices Act have any impact on the Lord and the contracts lectura said no it will have no impact whatsoever it's really a temp to codify the law of misrepresentation so far as the law of contract is concerned well I won't mention who that particular lecturer was that particular lecturer now as a professor and that lecturer obviously got it very wrong because section 52 or now section 18 of the Australian Consumer Law developed a whole raft of new causes of action the words are very simple a person must not in trade in commerce engage in conduct that is misleading or deceptive or likely to mislead or deceive those words are very simplistic and we'll look at a little bit of what conduct is and we'll look at the concept of trade and commerce these particular sections have no common law or equivalent they are creatures of statute and they impose strict liability that can't be contracted out of section 18 dealing with misleading and deceptive conduct is limited to particular conduct engaged in trade in commerce in the non-financial area of Australia manufacturing business contracts consumer arrangements if there is financial-services element to the particular conduct we need to have regard to section 12 D capital D capital A of the Australian investment and Securities Commission Act which the ASIC deals with financial product misleading and deceptive conduct D a Triple C has jurisdiction over all misleading and deceptive conduct that is not of a financial nature the Australian consumer and Competition and Consumer Commission has the powers to investigate potential breaches of the Act which includes misleading and deceptive conduct as I've just mentioned assic has the power to investigate potential breaches of misleading and deceptive conduct in regards to financial products and services we will look at in this session three particular aspects of misleading and deceptive conduct the general principles will then look at some specific false and misleading activities built within section 29 through two About section 37 of the Australian Consumer Law and we will briefly end by having a look at the penalties and remedies that are available when there is a breach of the misleading and deceptive and false misrepresentation provisions the first pass is that of what is misleading a deceptive conduct all about what is this new or relatively new concept of misleading and deceptive conduct the Australian Consumer Law is about protecting people in most cases consumers from unscrupulous marketing and safety practices of manufacturers and retailers ingly corporations in relation to the supply of goods and services are provided with a certain number of basic obligations and amongst them the obligation to not engage in misleading or deceptive conduct unlike other provisions of the Australian Consumer Law section 18 and section 29 are not restricted to consumers therefore business-to-business transactions a business against another business a vendor can be sued by a purchaser these are all aspects that are covered by the misleading and deceptive conduct provisions so although they are embodied within schedule 2 of the Competition and Consumer Act namely the Australian Consumer Law they are not strictly consumer provisions although they are contained in this legislation so we will have a look at section 18 misleading and deceptive conduct false and misleading representations in Section 29 and some other unfair practices the basic concept is that intention is not an issue so far as whether a person has or not has or has not engaged in misleading and deceptive conduct and we will discuss what that is all about so to recap section 18 simply states a person must not in trade and commerce engage in conduct that is misleading or deceptive or is likely to mislead or to see section 18 of the Australian Consumer Law prohibits a person in trade and commerce from engaging in conduct that is defined to be misleading and deceptive the prohibition is not limited to the supply of goods or services and creates a broad economy-wide norm of conduct what we need to first understand and appreciate is to have a look at what the concept of trade and commerce is all about in one of the earlier cases that of O'Brien and small log of 1983 53 Australian law reports 107 the federal court held that a private sale of a parcel of rural land was not a transaction in trade or commerce the federal court applied a number of American decisions which drew a distinction between private or non trade or commerce practices and the sale of land or goods or services within a commercial context another case in Bevin air proprietor limited and lewd and SAE 1985 7fc are three to five the full court there said that the ratio of O'Brien was that a private sale of property by an individual is not conduct in trade or commerce except if done in the course of a business activity or otherwise arising in a business context now what is the business context a case that looks at that is a case called the Commonwealth and Macmillan in that particular case the Commonwealth depart the common government went out to tender to sell the Australian government publishing service they put out a tender and within the tender they said only conforming tenders will be accepted Macmillan taking the government at its word only put in a conforming tender it was later sold on a totally different basis to other parties that's the Australian Government Printing service Macmillan then sued the Commonwealth on the basis that if he would have known that non-conforming tenders were being accepted he would likely have put in an offer which more likely than not would have been accepted consequently he sued the government for misleading a deceptive conduct in having hims expend time money and effort in submitting to a tender which could never ever be accepted justice Emmett held that the form of conduct that the Commonwealth had engaged in was indeed the type of conduct that was misleading and deceptive however no remedy was able to be given to Macmillan in this case because the court held that the conduct that the government had engaged in was not conduct that occurred within trade or commerce the explanation the court gave was that although it had an air of commercial nurse about us the particular government body that engaged in the sale process had no history or course of conduct of engaging in such activities as it was a standalone transaction by this particular government instrumentality it had no systemic nature of business or commerce that encapsulated it ingly it did not fall within the concept of trade in commerce and therefore no remedy was able to be given by the court to Macmillan in this particular instance so it is very important to realize when you're looking at matters whether there is trade in commerce a case that we had some involvement in recently was where a particular representative of a company attended a trade association and the discussion at the trade association centered around whether particular chemicals were effective in preventing rot wood rot and certain statements were made by this particular representative of company a that were demeaning all he would have said truthful about a competitor Company B Company B's representatives were in attendance at this meeting but there were also consumers and other suppliers that use the particular chemicals as a consequence of the statements that were made by the company a representative company b commenced court action on the grounds that the representative made statements that were misleading and deceptive the issue then became were those statements made in trading commerce and the argument that was put was that as these were statements made at a trade association they were not made for the purposes of trade and commerce they were made for scientific and inform information purposes for the dissemination of information between the participants at that particular section so always having the backing in mind when you're giving advice are is the threshold issue that the particular conduct in question was one that involved trade and commerce because if it isn't the particular people will either not have a remedy or may not be answerable to the conduct in question the concepts of misleading and deceptive conduct for the point of view of an analysis can be broken down into the following elements strict liability is actual deception required to be proven the concept of half-truths court and ambiguity the issue of can silence constitute misleading and deceptive conduct what are we the words and product buffering and the concept of promises and predictions all of which need to be considered in the context of to whom the particular representations are made that is the target audience to whom these particular statements are given the first concept that is to be looked at is that of strict liability hence co-investments and Collins marital proprietary limiters illustrates this particular aspect the case of henge co-investments in Collins Marrickville concerned the sale by a mr. Michael Saad of the New York Deli that was in double bay mr. Saad went about advertising the sale of the deli by having a sign placed at the front of the restaurant saying licensed restaurant seats 128 he also placed some advertisements in The Sydney Morning Herald which had worse the effect seats 128 licensed now it transpired that the particular restaurant whilst capable of seating 128 people at any one point in time was in fact merely licensed to serve only 84 patrons at any one point in time therefore although the purchaser was looking at the books of account of a restaurant that was in fact seating and eating and supplying liquor to 128 people contemporaneously in fact the record should only have been reflecting what would have occurred if 84 people would have been in the restaurant at the one time when the purchaser uncovered the fact that they were not able to seat 128 people the purchaser took action for miss leading a deceptive conduct and claimed this behavior against the vendor one of the vendors defenses was what appears in the sliders claw at 7:00 and it's the standard clause of saying that this is an entire contract notwithstanding and without limiting the provisions of any other clause or a specific condition of this agreement the parties here to agree that the agreement constitutes the whole of any promises representations warranties and Undertaker's so it's an entire contract clause the vendor said as the contract embodied the entire agreement between the parties these advertisements the statements within the notice on the front of the restaurant and the statements within the advertisements advertising the restaurant for sale were not representations upon which a court case could be maintained the court was holding that exclusion clauses of this nature are valid said that this was not the only that a contractual misrepresentation case was not the sole cause of action that the purchaser Collins was taking against hinge go this was a case where misleading and deceptive conduct was being alleged by the purchaser against the vendor and the one of the issues was can this be contracted out off this was early in the beginning of when section 52 misleading and separate conduct was first being looked at and the issue had not been resolved the federal court held that section 52 simle now section 18 is a section of strict liability it cannot be contracted out of so whilst a contractual term can be misleading a deceptive conduct can't as such the court held that this particular section within the contract clause seven was not effective to prevent the purchaser in succeeding in a misleading and deceptive claim against the vendor it resulted in the purchaser obtaining damages from the vendor being a reduction in the purchase price having regard to the fact that the restaurant although capable of seating 128 people contemporaneously could only serve liquor and should only have 84 people at any one point in time the next concept to look at is that is whether actual deception is or is not required in determining whether or not there has been misleading or deceptive conduct now when we're looking at these misleading and deceptive conduct I think it's important to distinguish between advertising cases where a competitor or the a Triple C takes on an advertiser for engaging misleading interceptive conduct where no damages are sought and contract or business cases where damages are sought the distinction I think arises in that so far as a misleading and deceptive conduct claim arises you do not have to prove actual deception for example in an advertising case the a Triple C does not have to prove that any particular consumer was actually deceived by the alleged misleading and deceptive conduct provided a court is satisfied that the statements and representations taken as a whole constitute misleading and deceptive conduct that is sufficient however I think where lawyers tend to get confused in some cases is that in a business context actual deception doesn't have to proven for there to be misled in deceptive conduct however unless you can also establish reliance upon the misleading and deceptive statements damages will not flow so the two are often merged together and seen as the one concept but in an analytical sense they are separate and distinct and you need to determine one has there be misleading and deceptive conduct for damages to flow you need to show that there has been misleading and deceptive conduct and that particular conduct was relied upon by the party who sustained the loss and there were sufficient reliance to justify damages being paid and compensated to them in the particular instances now let's have a look at some of these concepts and then we'll have a constable look at the issue of disclaimers as they may appear in the case of veranda cafe Northbridge proprietary limited Morgan 2008 New South Wales Supreme Court 103 to the matter turned upon the representations made in the course of the sale of a cafe business representations were made as to net profit turnover and food costs they were found to be misleading justice to bill summarize the law in relation to Reliance and its application as follows the plaintiffs must establish that it was induced to purchase the business in reliance on the misrepresentations the relevant principles are well settled especially in proceedings brought pursuant to section 18 of the Australian Consumer Law now just as the bill was talking about section 52 but for the sake of consistency we'll look at those as being section 18 his honor that went on into the terms of which are in all material respects the same as those within the fair training act which are no longer relevant a person claiming damages under these provisions must demonstrate that he has been induced to do something or to refrain from doing something which gives rise to damage or has been influenced to do or refrain from doing something which gives rise to damage by conduct that has been contravened he's only then went on and said that the evidence showed that Morgan's representations as to turn over net profit and food costs were not only relied upon by Bohm but were also an important in inducing the purchases in deciding whether to enter into the contract to purchase the business or not his honor then said I have already referred to the calculations made by mrs. Vaughan she made certain assumptions for the purpose of calculating in that profit in each week of the business those assumptions included assumptions as to the turnover which are based on the representations made by Morgan in addition mrs. Baum assumed the cost of food purchases was 21 percent the calculations were made on behalf of the plaintiff had decided to purchase of business and they were reduced to writing they were able to be a proven and therefore the court was able to be satisfied that the purchases were reliant upon those particular statements which were held to be misleading and deceptive another area that needs to be considered are those of disclaimers disclaimers irrelevant provided they are adequately brought to the attention of those to whom the statements of being made and they are not mere weasel words when we look at some examples we'll see an example of a particular misleading and deceptive ad and the effect of an inadequate disclaimer in that particular instance the next concept we'll look at is the concept of half-truths now a half-truth is where something has said or done which without more communicates only part of the whole picture an example would be fairly dimension a qualification to an otherwise absolute statement some of the cases tend to indicate that this is a form of misleading and deceptive conduct by silence although other cases take the view that it is a separate head of or several a separate example of misleading and deceptive conduct in its own right some examples are Frazer in the NRMA Holdings limited in that particular case the NRMA issued a prospectus for the D neutralization of the NRMA based upon members receiving free shares the question then was raised by two of the directors of the NRA dawn Frazer and Richard Tolbert as to whether the shares were indeed free or whether they were there whether there was some form of consideration being given by the members in regards to receiving such as the court held that the concept are free meant absolutely free in this context however in order for the members to receive such as they would have to relinquish their rights of discounted roadside service it was established that membership fees at the time were approximately twenty five thirty five dollars a year but the equivalent costs to those members should this dematerialization proceed would have increased those fees about 185 dollars a year the court therefore was convinced that the issue of the shares could not be described as free ingly the prospectus in this case was misleading and deceptive and the court injuncted the NRMA from holding a members meeting to proceed with any particular dematerialization so as you can see it depends upon the particular facts as to whether a statement is misleading and deceptive and if you do not tell the whole truth of a whole story then such behavior can amount to misleading and deceptive conduct a trite example to illustrate the point a bit further is that if you were to pass a restaurant and it was a well-known high-class restaurant in the city and at saying tonight one night only Elton John performing and so you decide to pay an expensive exorbitant amount of money to sit in a restaurant seat and at 9:30 a gentleman comes out with a guitar and sits down and says hi I'm Elton John I'm here from Mount Druitt and I'm here to play for you some songs now as a concept of the overall appearance of the restaurant the location the target audience I would posit would take the view that it would be Sir Elton John not another Elton John who'd be playing those particular songs ingly the half-truth the fact that it was indeed a person by the name of Elton John isn't sufficient to mean that the behavior was not misleading and deceptive conduct and in causing an action to arise silence at common law what is not said cannot be a cause of action and the concept of how silence can constitute misleading and deceptive conduct is an excellent illustration of how section 18 is indeed a creature of statues mere silence per se is not misleading a deceptive conduct but if the person making the statement knows the truth behind it it could well be take for example the demo GU proprietor limited and REM remnants key case romance key contracted to purchase lot five in a proposed strata development being undertaken by them ago the contract set out the proposed right of development and lot five was detailed in a plan and next to the contract the plan also referred to a driveway however the drive however what was referred to as the driveway on the plan was a public road deme GU had for two years been negotiating with the land administration Commission in Queensland for the right to use the road as a driveway for the proposed flats the developer though did not tell the purchaser of the issues relating to the driveway and in fact that they hadn't yet been approved the full court of the federal court held that Demma goes silence constituting misleading in deceptive conduct and ordered the contract to be rescinded Chief Justice black held that on the basis for the finding of misleading and deceptive conduct lay in the fact that there was a reasonable expectation that there should have been disclosure of the unusual circumstances surrounding access to the property his honor said Silas is to be assessed as a circumstance like any other to say this is certainly not to impose any general duty of disclosure the question is simply whether having regard to all of the relevant circumstances that has been conduct that is misleading or deceptive or that is likely to mislead or to save to speak of mere silence or a duty of disclosure can divert attention from the primary question although mere silence is a convenient way of describing some fact situations there is in truth no such thing as mere silence because the significance of silence always Falls to be considered in the context in which it occurs the context may or may not include facts giving rise to a resurrect a ssin in the circumstances of the case if a particular matters exists they will or should be disclosed so they're the sort of issues you need to consider when dealing in advising clients does your client know something that needs to be disclosed there is though no duty to disclose the courts have been at pains to point out that notwithstanding the provisions of section 18 section 18 whilst creating a cause or remedy for when someone has engaged in misleading and deceptive conduct section 18 does not create a general duty to disclose information so if in circumstances there's hard bargaining and it's something you didn't need to disclose and it wasn't necessary or you didn't make a half-truth then you do not need to actually have to disclose something just because you know the information so it's a very difficult line and it's a one that you need to consider the circumstances of each in every case as to how you go and advise your clients as to what they should or should not do weasel words and product puffery the a triple C defines puffery as any form of wildly exaggerated claims an example could be a restaurant claims the best steaks on earth obviously such statements are not likely to be seen as being misleading or deceptive they are seen to be advertising exaggeration where you need to be careful is the more scientific the more precise the more factual you endeavor to make a claim the more likely it is a court could see that the claim constitutes misleading and deceptive conduct the greater the exaggeration the more extravagant and the use of humor the more likely it is the court will see it as a weasel world or product buffering so it needs to be very careful of how you can consider it Optus Telstra have all had difficulties in use of the words free and therefore they have had a lot of court cases against them where that particular word has been used of court has often said that the word is indeed not used correctly because the particular item which they say is free as it's bundled with other goods and services comes at a cost so again be very careful on how you use these particular words and promises the next concept that we wish to look at in misleading and deceptive conduct is the concept of promises and predictions section four of the Australian Consumer Law imposes a reasonable grounds test for making promises and predictions it reverses the onus of proof such that where a statement of future intent or a prediction is made the onus is on the person who has made that future statement to show if all upon that they had reason and objective grounds in making the statement at the time they made it so for example forecasts of future earnings of the business the subject of a sale or representations of future lessees what as to what shops would be in a shopping complex need to be made on the basis of objective evidence therefore for example a vendor of a business would be required to show that that at the time of making the statement it had reasonable grounds predicting a 50% increase in sales or a 50% decrease in expenditure in any particular financial year if there was not objective evidence to support the making of such prediction then more likely than not a court would conclude that the particular sale or the particular statement representation constituted misleading and deceptive conduct although the a Triple C doesn't look at this ASIC is very concerned when product disclosure statements are put together concerning interest rates if you're selling a management investment scheme and you say the rates of return are historically 4% on average then you need to specify where that average comes from because if you looked at a 20-year average interest returns would not be 4% they'd be much higher if you looked at the last five or six years and 4% may well be realistic so the temporal period over which averages are provided need to be set forward indeed is probably preferable to have a range of interest rates saying if interest rates were these and not make strong or predictable statements for fear of being caught for misleading and deceptive conduct all of the particular principles we've looked at strict liability silence ambiguity where's our words product puffery predictions and promises all need to be taken into consideration with these particular four principles each of the above are parts or parcels of a representation and that representation will be made to a relevant section of the public in a business to business transaction it may be one-on-one in an advertising concept it could be the public at large therefore the broader the range of people involved the more likely it is you need to be careful as to what is being said you then have to consider all the people within the section the intelligence and the not so intelligent the educated and the uneducated so in the case of Frazer on the NRMA as members of the NRA encapsulated anyone with the sufficient mental capacity to be able to obtain a driver's license it covered professors of Finance to someone who have difficulty in adding up one and one is to an enormous Lea broad range and misleading and deceptive conduct is not about what the average person might understand it's about what the target audience overall would get so although the concept of free may have been to a professor of finance clearly discernible that they work for the court was at pains to point out for the greater mass of the target audience who were members of the NRMA freemen exactly that as the shares being offered were not indeed free the statement was misleading and deceptive another example it was case with email and Hoover in this particular case Hoover was distributing to sales staff at white good stores a VHS video about the benefits of the Hoover washing machine over email it was not being disseminated to the general public only to sales staff email took over the court alleging that the video was misleading and deceptive the course of the information that was contained in it the court said if this information had been disseminated to the world at large emails claims were justifiable however have in regard to the fact that the target audience was limited to sales staff of white goods who would have or ought to have certain knowledge and understanding of washing machines and their makeup the information within the particular video was more instructive and informative and could not be classified for that target audience as misleading and deceptive now it's very crucial in ascertaining whether conduct is or is not misleading and deceptive to delineate to whom the target audience is in the particular instance as these cases illustrate evidence that someone was mislead maybe helpful but as indicated proof of actual deception is not essential to establishing a case for misleading and deceptive conduct before when a misconception has arisen it is important to determine why in order to see if it was the business conduct to cause it or some other form of activity and these particular principles have been established and of then followed by the courts since taco company of Australia and the Taco Bell case in 1982 so that this is the general principles I now want to take a bit of time and illustrate how these principles apply to practical applications in the real world misleading and deceptive conduct can occur in any business communication indeed when looking at what conduct constitutes misleading and deceptive conduct you should always look back and have a look at section two subjects and two of the Australian Consumer Law which gives you a list of the types of conduct that can or cannot be engaging that will formulate misleading a deceptive conduct but essentially nearly any form of business conduct can amount to misleading and deceptive conduct in some way shape or form cases of misleading and deceptive conduct concerning an advertising mission is advertising agency were taken to court by the a triple C for advertising and patrol rx turbo-diesel the model in the advertisement was the RX 4.2 liter styled with over fender flares and wider wheels this particular version was not available within Australia the a Triple C submitted that missin had falsely represented the goods were a particular style and model contrary to the trade practices section 53 a which has its equivalent now in Section 29 a of the ACL later on misson used the same picture in another campaign but they added a disclaimer for illustration purposes only missile was fined 130,000 and the agent who aided abetted counseled and procured in the contravention of the particular misleading and deceptive offense was also fined the court held that in the illustration the disclaimer was inadequate as it did not sufficiently draw the attention to the target audience that these particular features didn't exist in the actual cars that could be bought or purchased in Australia another case to have a look at is a situation of packaging the packaging of a product is itself a representation so in this particular instance we have an old-style package of nappies and note the capital n the capital S the placement of red lines and red writing and blue what writing a pot of white background now you then have a competitor and the competitor has red lines capital n capital S the names are different well the names are different the issue is is nappy safe and nappy sand the same an expert from Sydney University argued that may be saying that be safe are very similar and moreover that most people when looking at packaging a label see depictions we don't read every word out loud loud we have a mental image in our minds as to what we're looking for so by seeing the red across the top seeing the capital ends in a hurried and rushed state of shopping within a centre one would readily MIT could mislead or be misled to pick up episode instead of nabu-san in this case Procter & Gamble was the owner of Napa's and and action was taken against that be safe to have them all to their product packaging and the product packaging was changed to this particular form of packaging that is on the screen as we now appear as a consequence possibly as a consequence of this sale my understanding is that Nappi safe did not last long on the Schultz and ceased trading very soon after the package change came to be what we now want to have a look at is the concept of a misleading into 50 VAT and how it can be made now from a practical point of view any personnel engaged in sales or advertising must ensure that all statements are factual correct and any statements are made are true at any particular point in time marketers are liable for any advertisements that breach the act and as indicated previously disclaimers can be useful to prevent a statement in a particular advertisement from being misleading however if a disclaimer is used it must be sufficiently of value or must be sufficiently large enough for people to get the message the small print won't always be sufficient to overcome a problem an example of that is shown in this particular ad that was put on TV a few years ago until Sunday time we drop in to my price of all men's ladies Mayson 25% that's right 25% off every stitch of clothing so see you apartment now as you could have seen at the very last couple of seconds there was excludes socks and underwear that's what was put on but it was there for a very short period of time and the a trip we'll see took target to court on the basis that the advertisement was misleading deceptive because it wasn't 25% off all clothes because there were these sufficient exclusions and for even that was a television ad and there was a disclaimer because it was an ad the a Triple C said that a lot of people during the ads will get up and have nature breaks or make some coffee or do something of some other distraction that would not necessarily mean that they were looking at the screen consequently the main message the target audience would receive was that there's a 25% discount off all clothing where in fact it was not all clothing at all but only a limited range and the disclaimer that was put on the screen was insufficient force and effect to dissuade the overall concept of all as being misleading and deceptive as a consequence of that the court required this to happen that here at tournament we are the 25% of every digit clothing but by using small prints we failed adequately inform consumers that certain items were excluded and we didn't take them on a range X target has agreed that this type of advertising is misleading contrary to the pre Practices Act and that in future will tell you the whole story or clearly so many consumers that were mistake we're sorry so you can see what can happen a one of the forms of penalty that can arise is the court ordered target in this case to place on air at the same time as the ads had been shown over Christmas this particular apology the apology though was only played on one night so you had to be in front of your TV screen on that one night to actually have seen it query how genuine you think the apology was personally I actually saw it on the night that it was aired and I thought it was a skit from some particular comedy show and I didn't actually understand it was genuine til I got a copy from the a trip we'll see again for the purposes of Education now what we can do is have a look at some further misleading and deceptive conduct you know luxury leader in rental market for luxury cars misleading in deceptive product puffery possibly there was a case of Colgate against aim the medium - the advertisement was TV magazines pamphlets and brochures there was a sampling also through retailers and cooperatives and there was a 4.5 million dollar advertising campaign what the ad said was that the particular toothpaste contained Citra did more efficient than Australia's most known toothpaste in slowing down growth of plaque a scientific proven breakthrough so we had aim making these statements and Colgate being disgruntled by these particular claims what the ads didn't say was that the scientific material relied upon bio Rexona were essentially unpublished reports and tests and therefore there was no actual third-party scientific evidence to justify the claims being made until the claims made extolling the virtues of sitri Dhin are scientifically substantiated by published reports they should not have been said to have been scientific the court granted injunctions meaning that Rexona had to abandon the ad campaign and lost the 4.5 million dollars they paid in putting the campaign together as I indicated earlier if you start to make scientific allegations these claims must be objectively substantiated it's dangerous to make a deep scientific claim if you do not have objective independent scientific proof colgate-palmolive a product limited Rexona 1981 australian trade practices report 42 42 exclusion clauses and section 18 numerous cases Clark equipments tray limited and Cove a propriety limited henge Co and Collins marital propriety later exclusion clauses are not outlawed by section 18 a properly drafted exclusion clause is still permissible provided the exclusion clause goes to a contractual matter not a misleading and deceptive matter which cannot be excluded because of its strict liability nature tenders are another area where section 18 has been used a representation that a project will take a stated period of time and it does not or it doesn't start or goes beyond the stated period of its dues commenced can be seen as misleading and deceptive have regard to predictions under Section 4 about making a statement for example this project will take three months if indeed it was going to take six months and you've submitted a tender on doing the work in three and objectively it was always going to take six months you may have a collateral contract for a cause of action for misleading and deceptive conduct a case that you can look at is O'Connor and Sons proprietor limited and then tack clapper Private Limited 1996 Western Australian Supreme Court it's an unreported decision but of the West Australian Supreme Court it dealt with a situation where a subcontractor Watters put a tender to commence some particular work they were asked to tender on the basis of what they could see they said is there any asbestos in the building and the project manager principal contractor said we're not answering that question you make your own decisions and there was a whole box of keys and there were multiple rooms and buildings to go through and the project manager said to the representative of O'Connor & Sons look make your own decision here's all the keys choose what you want so the tenderer put his hand in pulled out a lot of keys and went to a spattering of rooms through sort of a handheld order if you wish the particular rooms that were chosen none had asbestos the tender was put in on the basis that no asbestos needed to be removed in fact 80% of all the buildings had asbestos and the cost of removing the asbestos was astronomically more than what the tender cook told Tom price of the tender was it just so happened that by bad chance the particular rooms that the person went to inspect had no asbestos in them the court held that this was misleading in deceptive conduct and ordered that additional money be paid under the contract for the asbestos to be removed by the Builder in tenders we have a situation where the tender itself can produce a collateral contract an example of that is used and Airservices Australia in this particular case Airservices Australia put out a tender and there are only two people that could provide the services a-and that was used and a company that called Thompson's who was used as competitor previously the only company that had ever provided services to air service of Australia were Thompson and as a consequence of the costs of submitting a tender use chose not to participate the government was concerned that it needed to be seen as having a competitive tendering system but couldn't do so if when it issued a tender there was only one tenderer the government then prevailed upon use to put a tender in if they reissued the tenders you said look we're concerned about putting a tender in because of the time costs and effort in doing so if these tenders aren't addressed on an objective basis we will never get the work and consequently we are wasting our time and shareholders money simply to put a tender in to make you happy the government informed use that an objective criteria would be included in the tender and that that particular objective standard would be used tenders were reissued an objective criteria for determining who the successful tenderer should be was indeed set out in the contract as all good court cases eventuate use was not the successful tenderer use then made a freedom of information application and discovered that the objective criteria although stated as being the criteria that would be used to determine the successful tenderer was not in fact used by air services Australia in coming to its determination ingly use sued air services for misleading intercepted undocked in having used spend time money and effort in putting a tender when the particular objective criteria upon which it tended fall was not in fact the criteria that Air Service Australia used and in conclusion the last part we want to have a look at is that the penalties prior to the Australian Consumer Law there were no penalties for breaches of section 52 injunctions were able to be obtained and compensated damages could be claimed since the introduction of section 18 with the enshrine consumer law penalties now can be imposed by assic sorry and by the a Triple C for breaches of misleading and deceptive conduct so far as the a Triple C a concern a person who is engaged in a contravention can be fined a maximum $220,000 a body corporate 1.1 million there are also infringement notices with fines that can be issued there are banning orders from being engaged within the management of a company and as we have seen with the target disclaimer rectification adds which may have a damaged to a corporation's and business reputation can also be imposed in recapping section 18 a person must not engage in trade in commerce in conduct that is misleading or deceptive or likely to mislead or deceive is a cause of action which is new or relatively new since 1974 to Australian law indeed it is a form of action which exists only in Australia New Zealand and to a lesser degree Canada it is one of strict liability therefore it has enormous breadth and is a very powerful cause of action as it is a powerful cause of action it is a difficult one for advisors to give advice on it's difficult to give advice because as advisors we can clearly ascertain when something is clearly misleading and deceptive we can clearly give advice when something is not this letting a deceptive however when a client chooses to act at the interface between what is and what is not misleading and deceptive it is very difficult to delineate whether they have or have not crossed over the line ingly if clients want certainty they should act in a manner that is far beyond that interface if they wish to take the commercial risk of pushing the boundary they need to be aware that in pushing the boundary they may inadvertently fall over it [Music]