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4.4 Section 18 – Common areas of use

Due to its wide scope, s. 18 is frequently relied upon in a range of circumstances. However, two broad categories of application can be identified. The first involves instances where s. 18 is being relied upon in relation to conduct that has misled or deceived, or may mislead or deceive, a section of the public or other identifiable group. This category can loosely be described as relating to “consumer protection”. The second broad category consists of instances where s. 18 is being relied upon by one party arguing to have been specifically misled or deceived by another party, for example, in contractual negotiations. This category can loosely be described as relating to the protection of a private party’s own interests. These two categories are discussed below.


4.4.1 Section 18 as consumer protection

Where s. 18 is used to protect consumers, actions would commonly be brought either by individual consumers or by the Australian Competition & Consumer Commission (ACCC), or both at the same time. Such actions seem to be the most common type of action taken by reference s. 18.


It is also worth noting the role ACL s. 18 may play in turning certain unenforceable undertakings into enforceable rights. Imagine. for example. that a company falsely asserts that it complies with a specific industry code of conduct issued by a trade organisation. The relevant code of conduct may or may not include mechanisms to deal with such false claims. For example, some such codes may cater for the company in question to be excluded from the trade organisation that issued the code of conduct. But even in such cases, the false claim, in itself, would rarely provide any enforceable rights to consumers that may have relied upon the claim.


In a scenario such as this, s. 18 may create an enforceable right in that the conduct of the company may be seen to be misleading and/or deceptive. With a potential increase in the use of codes of conduct and similar ‘soft’ instruments, this may become an increasing important role for ACL s. 18.


Further, there are instances where one corporation will bring an action against another competing corporation for violating s. 18. Such an approach is commonly taken as an alternative to, or in conjunction with, actions for passing off (discussed in Chapter 5). While the corporation bringing the action most likely does so to protect its own interests, the issue is still whether consumers are misled, or likely to be misled.

4.4.2 An alternative to passing off

There are several cases in which s. 18 has been relied upon as an alternative cause of action in disputes relating to passing off (see Chapter 5). In Sydney Markets Limited v Sydney Flower Market Pty Limited,[1] the Court held that, in light of the fact that the two businesses had co-existed for four years with adjacent entries in the telephone book with very little evidence of confusion and bearing in mind that the businesses were of different nature and size, and were not closely located, neither party had established contravention by the other. However, to counter any confusion caused by the similarity of the domain names used by the two parties, the Court also ordered both parties to place a disclaimer on their respective websites, directing visitors to the other business. Justice Hely stated that: “Whilst disclaimers (particularly on labels for products) are often regarded as insufficient to avoid the public being misled, the same considerations are not applicable in the case of the website”.[2]


4.4.3 Section 18 as protection of a private party’s interests

In a situation where one party alleges that it has been misled or deceived by another party, the Taco test, outlined above, can be significantly simplified. In such a situation, there is obviously no need to seek to establish what section of the public was the targeted group. Similarly, there is obviously no need to seek to identify the relevant “reasonable person” within any section of the public. Instead, the courts look at what effect the defendant’s conduct had on the plaintiff. In .au Domain Administration Ltd v Domain Names Australia Pty Ltd, Finkelstein J noted that:

In this type of case the plaintiff has the burden of proving that the impugned conduct was misleading and that he altered his position (that is, was induced) as a result. In most cases it will not be difficult to determine whether the defendant’s conduct amounts to misleading conduct. Nor will it be difficult to determine whether the conduct induced the plaintiff to act to his detriment.[3]


This can be contrasted to situations where the defendant’s conduct was directed at a group:

There can be no doubt that when the impeached conduct is directed towards an indeterminate group or to a group defined by general or collective criteria the case should be treated as one involving a representation to the public at large or to a section or class of consumer. It seems that the same approach should be followed when the case involves a representation to an identifiable group and the plaintiff is alleging not that he was misled but that members of the group (whether great or small in number) were misled by the conduct.[4]


As was also noted by Finkelstein J in .au Domain Administration Ltd v Domain Names Australia Pty Ltd, the difference in approach between this type of actions and actions falling under the wide heading of “consumer protection” raises problems:

I appreciate that on one view the approach might be criticised for applying too fine a distinction. There will be cases where a person other than the representee brings the action and the group to whom the allegedly misleading representation was made is so small that it cannot sensibly be described as a class or a section of the public. In that circumstance it may be neither possible nor necessary to identify a hypothetical member of the group for the purpose of deciding the likely effect of the impugned conduct. If no hypothetical individual is identified the court must determine the likely effect of the conduct on the actual members of the group. There will also be cases on the margin where it will not be clear whether they should be treated as ‘representation to the public’ cases. But the difficult cases are likely to be few and far between.

I also appreciate that the approach I am required to adopt has the potential of producing anomalous results, at least at the theoretical level. Let it be assumed that the proprietor of a business brings an action against a competitor complaining that one of the competitor’s advertisements, sent only to a handful of customers, contained allegedly false statements about the origin of the competitor’s products. In order to succeed the plaintiff would have to establish that a hypothetical member of the group of customers would have been misled by the advertisement. On the other hand, if a member of the group were to bring an action complaining that he personally had been misled by the advertisement, he would need to prove that only he had been misled. The anomaly is that by virtue of the different tests it is possible that the individual complainant might lose his action but the proprietor of the business may succeed, or vice versa. This would be a very strange result.[5]


The complications highlighted by Finkelstein J show that, despite the extensive reliance on s. 18 in litigation, aspects of the application of s. 18 are still to be settled.


4.4.4 In the context of promises and predictions

Section 18 of the ACL is commonly relied upon in actions relating to promises and predictions that are not met. Toohey J outlined in James v ANZ Banking Group Ltd[6] that a representation as to future conduct is not misleading or deceptive just because the event or action does not come to pass. However, the statement may imply that a promisor has a present intention to make good the promise later on. A prediction can also be misleading or deceptive if the person making it knows that it is false or makes it with a reckless disregard for its truth.[7]

In this context, attention must also be given to ACL s. 4, which deals more specifically with promises and predictions:

Australian Consumer Law, s. 4

(1) If:

(a) a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act); and

(b) the person does not have reasonable grounds for making the representation;

the representation is taken, for the purposes of this Schedule, to be misleading.

(2) For the purposes of applying subsection (1) in relation to a proceeding concerning a representation made with respect to a future matter by:

(a) a party to the proceeding; or

(b) any other person;

the party or other person is taken not to have had reasonable grounds for making the representation, unless evidence is adduced to the contrary.

(3) To avoid doubt, subsection (2) does not:

(a) have the effect that, merely because such evidence to the contrary is adduced, the person who made the representation is taken to have had reasonable grounds for making the representation; or

(b) have the effect of placing on any person an onus of proving that the person who made the representation had reasonable grounds for making the representation.

(4) Subsection (1) does not limit by implication the meaning of a reference in this Schedule to:

(a) a misleading representation; or

(b) a representation that is misleading in a material particular; or

(c) conduct that is misleading or is likely or liable to mislead;

and, in particular, does not imply that a representation that a person makes with respect to any future matter is not misleading merely because the person has reasonable grounds for making the representation.

The significance of this provision was illustrated in Ting v Blanche,[8] where Hill J stated that the comparable TPA s. 51A served primarily “to cast the burden of proof upon the respondent corporation who has made a representation about a future matter to show that in making that representation it had reasonable grounds for doing so”.[9]


The ACL has made amendments in furtherance of the position advanced by Ting v Blanche by clarifying the burden of proof thereunder. Previous Court decisions, such as the case of Australian Competition & Consumer Commission v IMB Group Pty Ltd[10] interpreted TPA s. 51A as requiring a respondent to prove that it had reasonable grounds for making the representation. Section 4(2) now provides that a respondent is only required to adduce evidence of reasonable grounds. Thus, clarifying that the burden of proof placed on the respondent is evidentiary in nature, and does not place a legal burden on the respondent to prove that their representations were not misleading.[11]


It can be noted that s. 4 has also made clear that the section can operate against accessories to contraventions as well as primary contraveners (s. 4(2)(a) and (b)).  Further, that satisfying the burden of proof under this section does not constitute a defence for a breach of any other section of the ACL, changes which are contrary to the occasional interpretation of TPA s. 51A.[12]


4.4.5 In the context of contractual negotiations

The courts have allowed parties to receive remedies for conduct made during the course of negotiations which amounted to a misrepresentation that was misleading or deceptive. In Bevanere Pty Ltd v Lubidineuse,[13] TPA s. 52 was held to have been breached when the purchaser of a beauty clinic was told during negotiations that its head employee would continue on after the sale, when the vendor knew that this was not true and that, in fact, the employee had plans to open her own clinic nearby.


Similarly, in Chiarabagli v Westpac Banking Corp,[14] an action was brought under s. 52 by a married couple, who held interest in property and a nightclub in Brisbane, against their bank. Mr Chiarabagli had been seeking a loan and was told by the bank that they should borrow the money offshore in foreign currency, and that there was “no significant risk” of doing this. However, Mr Chiarabagli became more indebted to the bank after the Australian dollar fell, and it was held that there was no reasonable basis for the bank officer’s statement regarding the issue of risk. Also, Mr Chiarabagli had trusted statements made regarding the Australian dollar’s recovery, which led him to not pay off the loan at an earlier date. The bank was held liable for damages.


4.4.6 As an alternative to defamations actions

As has already been seen, s. 18 is an extraordinarily versatile statutory provision with application in a multitude of areas. In Global Sportsman Pty Ltd v Mirror Newspapers Ltd,[15] the Court noted the following as to TPA s. 52’s application in the context of defamatory publications:

There is no definable boundary between conduct which is misleading or deceptive or likely to mislead or deceive and material which is defamatory. Material which is defamatory does not fall outside the operation of subsec. 52(1) of the Act merely for that reason any more than it is brought within the operation of subsec. 52(1) by reason only that it is defamatory.


Consequently, there is an overlap between s. 18 and the tort of defamation.


4.4.7 Remedies in relation to s. 18

Where a party has acted in breach of ACL s. 18, several remedies may come into question. A court may order damages, grant injunctions, or give so-called ancillary orders. These remedies are all discussed below (4.4).

  1. [2002] FCA 124.
  2.  [2002] FCA 124, at 152.
  3. [2004] FCA 424, at 13.
  4. Sydney Markets Limited v Sydney Flower Market Pty Limited [2002] FCA 124, at 18.
  5. [2004] FCA 424, at 19 – 20.
  6. (1985) 64 ALR 347, at 372.
  7. Thompson v Mastertouch TV Service Pty Ltd (No 3) (1977) 29 FLR 270.
  8. (1993) 118 ALR 543.
  9. Ting v Blanche (1993) 118 ALR 543, at 522.
  10. [1999] FCA 819.
  11. Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth) Explanatory Memorandum at 2.22.
  12. Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth) Explanatory Memorandum at 2.24 – 2.25.
  13. (1985) 7 FCR 325.
  14. (1989) ATPR 40-971.
  15. (1984) ATPR 40-463, at 45-343.


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