Section 18 of the Australian Consumer Law (previously s. 52 of the TPA) is the most important, and the most widely applicable, of the provisions discussed in this Chapter. Indeed, few other statutory provisions in Australian law can be as widely applied as s. 18. Section 18 reads as follows:

In contrast to many other sections of the ACL, s. 18 does not create a cause of action as such. Rather, the effect of s. 18(1) is to establish a norm of conduct. However, this by no means renders the section a ‘toothless tiger’. Where a corporation acts contrary to the norm of conduct established by s. 18(1), other sections of the ACL (see further 4.4 below) prescribe remedies.

The purpose of s. 18(2) is to make clear that the more specific provisions of the ACL relating to unfair practices do not limit the application of s. 18(1). A practical consequence of this is that a party taking action under one of the more specific sections, such as ACL s. 29, often also relies on s. 18(1) in the alternative. Thus, in some cases the court determines that there have been contraventions of both s. 18 and s. 29. An example of this is found in ACCC v Get Qualified Pty Ltd (in liq) (No 2)^[1] where the respondent was held to have contravened ss 18, 29(1)(m) and 29(1)(b) for making representations that consumers were entitled to receive 100% of their money back (even though they did not refund on the basis of undisclosed criteria and deducted an administration fee); that customers were eligible to receive a qualification without need for study (even though they had no reasonable basis for making that assessment on a future matter); and by employing sales representatives to undertake eligibility assessment even though they had no qualifications to do so and made eligibility representations to customers on the basis of no documents or evidence.

It is worth emphasising that causes of action for misleading and deceptive conduct that arose prior to the introduction of the ACL (i.e., prior to 1 January 2011) were litigated under s. 52 of the TPA. Yet, given the fact that TPA s. 52 used substantially the same wording as the ACL s. 18, many of the cases decided under TPA s. 52 are useful for understanding the operation of ACL s. 18.

The wording of TPA s. 52 differed from that of ACL s. 18 in that it only provided that a corporation must not engage in misleading in deceptive conduct, as distinct from the ACL’s use of the word ‘person’. Thus, the ACL’s approach to misleading and deceptive conduct provides for broader application.

4.1.1 The scope of ACL s. 18

The reader will recognise some of the terms used in ACL s. 18 from the discussions in other parts of this book. The definitions of the terms “person” and “in trade or commerce” have been discussed in the context of implied terms (see Chapter 2), and were defined there. However, s. 18 is significantly different in other regards. First, s. 18 is uncharacteristically short for a provision of the CCA. Second, the language used is rather general in its nature. Perhaps it can be said that the general nature of the language used in s. 18, in part, accounts for its wide applicability.

In terms of its application, it is important to note that, while Schedule 2 to the CCA is titled “Australian Consumer Law”, s. 18 can also be applied outside the strict protection of consumers. The modern position is described in the majority judgment in Concrete Constructions (N.S.W.) Pty Ltd v Nelson^[2] (in discussing s. 52 of the TPA). In making reference to several cases,^[3] Mason CJ, Deane, Dawson, and Gaudron JJ stated that:

It suffices, for present purposes, to say that we regard it as settled by earlier decisions that an action to restrain a contravention of s. 52 [ACL s. 18] can, in appropriate circumstances, be maintained by a person who is not a consumer … and that we consider that, while the cases make plain that consumer protection lies at the heart of the legislative purpose to be discerned in s. 52 [ACL s. 18], the precise boundaries of the territory within which that section operates remain undetermined[.]^[4]

Thus, while the dissenting judges (e.g. McHugh J) argued convincingly for the application of s. 52 of the TPA (s. 18 ACL) to be “confined to conduct which affects or is apt to affect members of the public in their capacity as consumers, using that term in a broad and general sense [unlike how it is defined in s. 3]”,^[5] there is no such limitation and thus s. 18 can be invoked in a very broad range of circumstances.

The reference to “engage in conduct” is explained in ACL s. 2(2):

In older cases, specifically in Taco Company of Australia Inc v Taco Bell Pty Ltd,^[6] courts took the view that: “Irrespective of whether conduct is likely to produce confusion, it cannot be categorised as misleading for the purpose of s. 52 [s. 18 ACL] unless, in all the circumstances, it contains or conveys a misrepresentation”.^[7] The part of this statement expressing the view that only representations can be classed as conduct has since been rejected. The application of ACL s. 18 is not limited to representations in the stricter sense. The scope is significantly broader, and a wide range of types of conduct fall within the scope of s. 18. This was confirmed in the High Court case of Butcher v Lachlan Elder Realty Pty Limited^[8] where the majority noted how ‘conduct” in s. 52 [s. 18 ACL] extends beyond “representations”. A further demonstration of the broad scope of “conduct” is found in Miller and Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited,^[9] where French CJ and Kiefel J state at [15]: ‘For conduct to be misleading or deceptive it is not necessary that it convey express or implied representations, it suffices that it leads or is likely to lead into error.’

One effect of this is that silence may be fitted within what is termed “conduct”. In Commonwealth Bank of Australia v Mehta,^[10] a bank was alleged to have engaged in deceptive and/or misleading conduct as it had failed to advise the plaintiffs of the extent of possible risks inherent in the transaction in question. The bank had also failed to advise the plaintiffs of the need for continued supervision of the borrowing. As noted by Samuels JA in that case: “Silence is not misleading only where there is a duty to disclose at common law or in equity. It may simply be the element in all the circumstances of a case which renders the conduct in question misleading or deceptive”.^[11] The reference to the need to consider all the circumstances of a case cannot be emphasised enough.

A recent case adds further to the discussion of “misleading silence”. ACCC v Australian Institute of Professional Education Pty Ltd (in liq) (No 3)^[12] concerned the respondent’s conduct, through its contracted agents and their recruiters, in promoting and selling its education services to consumers. At [267] of this decision, in relation to one individual’s evidence, the Court found that the respondent had engaged in representations by silence or omission thereby contravening s. 18 because the consumer was not notified when signing documents to enrol in courses that doing so would leave her with a debt to the Commonwealth if she did not cancel by the census date. It was found to be irrelevant that the information was supplied after she was enrolled. This case is also another example where the Court found contravention of both s. 18 and s. 29 (specifically, s 29(1)(i)).

It should be noted that Elise Bant and Jeannie Paterson, the authors of the book Misleading Silence, highlighted a court decision which made a critical distinction between ‘mere silence’ and ‘misleading silence’.^[13] The decision by McLure P in Owsten Nominees No 2 Pty Ltd v Clambake Pty Ltd^[14] demonstrates that if the ‘conduct’ in question is ‘mere silence’ rather than misleading silence (where silence is an element of the doing of the relevant conduct), it is necessary to prove intention because otherwise the defendant will not have engaged in ‘conduct’ as required by s. 18

Once it has been determined that a person has engaged in conduct, as is indicated by the fact that the section covers conduct that is “likely” to mislead or deceive, it is not even necessary that the conduct has had any actual effect on any other party at the time of the complaint.^[15]

4.1.2 Limitations to the scope of s. 18

The exact scope of s. 52 TPA varied over the years it was in force. The following important limitations that applied to TPA s. 52 apply equally to ACL s. 18.

4.1.2.1  Financial services

Misleading or deceptive conduct in relation to financial services falls outside the scope of the CCA. Such conduct is instead regulated by Australian Securities and Investments Commission Act 2001 (Cth) and the Corporations Act 2001 (Cth).

4.1.2.2 Freedom of speech

In Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc,^[16] Hill J stated that: “There is nothing in any of the judgments of their Honours in the recent decisions of Australian Capital Television Pty Ltd v Commonwealth of Australia (No 2)^[17] and Nationwide News Pty Ltd v Wills^[18] which suggests for a moment that a law prohibiting misleading or deceptive conduct could infringe any constitutional protection of free speech”.^[19] However, in recognition of the dangers faced by the media as a consequence of s. 18 and similar provisions, s. 19 was introduced (formerly TPA s. 65A). It excludes “a publication of matter” by “an information provider” from the scope of the s. 18. Similar exclusions apply to ACL ss. 29, 30, 33, 34, 37, 151, 152, 155, 156, 159 and 219.

An information provider “is the Australian Broadcasting Corporation, the Special Broadcasting Service Corporation or the holder of a licence granted under the Broadcasting Services Act 1992 [Cth]”.^[20] This protection is not afforded to the extent that an information provider uses its publication for an advertisement,^[21] in connection with the supply or possible supply of goods or services or interests in land,^[22] or to boost its own business^[23] However, ACL s. 209 provides a defence for publishers of advertisements, where it is shown that the publisher is in the business of publishing or arranging for the publication of advertisements, and that it received the advertisement for publication in the ordinary course of business, and did not know and had no reason to suspect that its publication would amount to a contravention of a provision of Chapter 4 (ss. 151 to 206).

4.1.2.3 Intermediaries

Gardam v George Wills & Co Ltd^[24] related to whether the seller of mislabelled children’s bedtime garments was responsible in relation to the information stated on the labels. Justice French made clear that, where an intermediary simply passes on information, that party is not responsible under s. 52 TPA [s. 18 ACL] for that information, provided that it is made clear that it is not the source of the information, and it disclaims belief in the truth or falsity of the information. However, French J also stated that: “When, however, a representation is conveyed in circumstances in which the carrier would be regarded by the relevant section of the public as adopting it, then he makes that representation”.^[25]

The matter of intermediaries was also the object of dispute in the High Court case of Butcher v Lachlan Elder Realty Pty Limited.^[26] Lachlan (a real estate agent) had produced a brochure that indirectly described the boundaries of a property. The brochure stated that: “all information contained herein is gathered from sources we believe to be reliable. However, we cannot guarantee its accuracy and interested persons should rely on their own inquiries.” A diagram in the brochure was inaccurate and the purchaser alleged misleading and deceptive conduct on part of Lachlan. The majority of the Court held that:

it would have been plain to a reasonable purchaser that the agent was not the source of the information which was said to be misleading. The agent did not purport to do anything more than pass on information supplied by another or others. It both expressly and implicitly disclaimed any belief in the truth or falsity of that information. It did no more than state a belief in the reliability of the sources.^[27]

Justices McHugh and Kirby took a different approach. In his dissenting judgment, McHugh J outlined three types of situations in which an intermediary would not be liable for the information it passed on:

1. where the circumstances make it apparent that the corporation is not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity and is merely passing on the information for what it is worth;
2. where the corporation, while believing the information, expressly or impliedly disclaims personal responsibility for what it conveys, for example, by disclaiming personal knowledge; and
3. where the corporation, while believing the information, ensures that its name is not used in association with the information.^[28] (internal footnotes omitted)

While, as noted, McHugh J was in minority in his judgment, commentators have remarked that, in order to be ‘safe’, an intermediary may wish to use McHugh J’s statement as guidance.^[29]

The High Court in Google Inc v ACCC^[30] provide an in-depth discussion of the principles in Butcher.^[31] Most importantly at [114], Hayne J (who agreed with the majority) stated:

…Both [Yorke v Lucas and Butcher] point to the importance of identifying the relevant “conduct”, having regard to all of the circumstances of the case. … In both, attention was given to whether, in all of the circumstances of the case, it was clear that the defendant expressly or impliedly disclaimed belief in the truth or falsity of the information. And in both, the defendant’s express or implied disclaimer of belief in the truth or falsity of the information communicated was an important element of the facts.

In this case, Google was held not to have contravened s. 18 by publishing misleading advertisements by its AdWords customers. This was held to be the case because the ordinary and reasonable members of the relevant class would not have believed that Google was adopting or endorsing the misleading advertisements (representations).