The Issues of Misleading and Deceptive Conduct - Case Study Example

Student’s Name Instructor Course Date Business Law Assessment This is a discussion of fraudulent misrepresentation as well as misleading and deceptive conduct. The Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010 (Australian Consumer Law) sets out various provisions regards what constitutes misleading and deceptive conduct as well as the available remedies and defenses available to parties in an action for breach of the provisions set therein.1 In addition, there are a number of case laws that have addressed the issue of misleading and deceptive conduct that will be applicable in this case. Specifically, in consideration of various case laws and the provisions stipulated in the Australian Consumer Law, the essay contends that there is sufficient and permissible evidence in support of the fact that Sandra engaged in misleading and deceptive conduct. Based on this determination, the essay concludes that Julian and Anna can bring an action against Sandra and Bliss Island for breach of the provisions against misleading and deceptive conduct as set out in the Australian Consumer Law. Deceptive and Misleading Conduct According to Section 18 (1) of the Australian Consumer Law, no person should be involved in conduct that is in any way misleading or deceptive while carrying on trade or commerce.2 There are three main elements that must be proved in order for a person to successfully bring an action in breach of this provision. First, the defendant must be involved in trade or commerce. Secondly, the defendant must have been engaged in a particular act. And finally, that act must be misleading or deceptive. Elements of Deceptive and Misleading Conduct The first element that constitutes a misleading and deceptive conduct is involvement in trade or commerce. The definition of what constitutes trade or commerce has been left for interpretation by the courts with Dean J stating that their definition is a matter of common knowledge3 . In this case, Bliss Island is an exclusive tropical island that offers tourist services thus the first condition has been met. Secondly, there should be some form of conduct in which a person engages in. Section 2 (2) (a) of the Australian Consumer Law stipulates that ‘engaging in conduct’ refers to either actions or refusing to act. A consideration of Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) reveals that an act can either be in form of a written statement or an oral representation.4 In Costa Vraca Pty Ltd v Berrigan Weed & Pest Control Pty Ltd (1998), Finkelstein notes that silence can qualify as an engagement in conduct and may include the refusal to perform a given act.5 This position was also held by Samuels JA who stated in Commonwealth Bank of Australia v Mehta (1991) that silence is regarded as misleading conduct where there is a duty to disclose information under common law or equity.6 In this particular case, Sandra failed to disclose information that Bliss Island had changed chefs with the current one’s forte being in preparation of Indian cuisine and not the cakes that Anna and Julian were interested in. Moreover, Sandra also asserts to Julian that the diving at Bliss Island was always brilliant with exceptional food being served. This is regardless of the possibility that she was aware of the fact that accessible sections of the reef had been damaged as well as infested with algae that had hampered visibility thereby undermining the diving experience. As such, the second element of misleading and deceptive conduct has been met. The third element is that a particular conduct must be ‘misleading or deceptive.’ The meaning of the terms misleading or deceptive is a matter for the courts to decide. However, Fox J in Brown v Jam Factory Pty Ltd (1981) notes that a particular conduct cannot be purported to have misled or deceived where the victim was in a state of conscious recognition of the true facts of the issue under consideration.7 Moreover, McLelland CJ in Eq in Watson v Foxman (1995) notes that where one asserts that oral representations are what constitutes misleading or deceptive conduct rather than written statements, that person must clearly identify what specific words the defendant spoke and in what context.8 This is in an effort to ensure that the court is accorded a reasonable opportunity to determine whether the alleged words were actually misleading and deceptive as alleged given their contextual use or not. 9 As such, the third element has also been met since Sandra’s response to Julian’s question on the diving experience at Bliss Island is that ‘it was always brilliant’ which was not the case as Julian did not find it at all satisfactory. This is as a result of the presence of algae that had impaired visibility coupled with the damaged reefs. Hence, Sandra’s assertions were misleading and deceptive in light of these circumstances. Moreover, Sandra’s asseverated that Bliss Island resort only served exceptional food that would be loved by all customers were also misleading since she was aware that their chef who was revered for his exceptional skills in preparing cakes had left and replaced by a Pakistani Chef. The Latter’s forte was in preparation of Indian delicacies whereas Julian and Anna were specifically interested in enjoying cakes. All these show that there was misleading conduct and deception on the part of Sandra hence Julian and Anna can successfully bring an action for breach of Section 18 (1). Misleading and deceptive conduct can be said to have occurred where there is a deceptive impression as to the quality of goods and or services.10 Such misleading impression can be found in statements carried in advertisement materials, promotional materials, business quotations or representations made by employees of a business or an individual business person in the case of a partnership or sole traders.11 As such, Julian and Anna can rely on a comparison of the pictures of cakes found in Bliss Island’s promotional material and the food that they were served as evidence of misleading and deceptive conduct by Bliss Island and seek judicial redress in a court of law. The case of the exclusion clause for Bliss Island’s Liability Regards Loss of Items Another important consideration in this case is that of exclusion clauses. It is a common practice for businesses to include an exclusion clause regards the limit on their liability for any losses suffered.12 However, some exclusion clauses normally fail as a defense in a court of law where the party relying on them failed to provide adequate notice to the plaintiff. Anna and Julian need to understand that if Sandra is able to proof that they were aware of the exclusion clause regards Bliss Island’s liability for loss of property, then an action for award of damages in relation to the stolen property will most probably fail. This is in light of the fact that there was a large sign placed on the back of the door to their room. One can argue that the notice of the exclusion clause was not placed in an accessible place nor was brought to their attention in good time. Consequently, Bliss Island may be liable for the loss of Julian and Anna’s property. Remedies That May Be available to Anna and Julian There are various remedies which are available in actions for breach of Section 18 (1) as set out in Chapter 5 of Australia Consumer Law.13 These remedies include issuance of court injunctions, award of damages as well as issuance of ancillary and compensatory orders. Of these remedies, damages stand out as the principal remedy for actions and conduct in contravention of Section 18 (1). Section 236 (1) of the Australia Consumer Law stipulates that any person who suffers loss as a result of the actions or conduct of another person which are in breach of Section 18 (1) may bring an action for misleading and deceptive conduct and seek an award of damages. However, Section 236 (2) stipulates that an action for breach of Section 18 (1) must be commenced not later than six years since the day the alleged conduct took place. Any action brought after six years will not be admissible in a court of law. In Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd (No 2) (2009), Martin CJ stated that in order to determine the amount of damages that can be awarded in actions for breach of Section 18 (1), the courts usually consider a measure that is applicable in actions for tortious acts in addition to other measures such as in equitable remedies as well as those available in breach of contract.14 Consequently, Anna and Julian can only be awarded an amount of damages in consideration of the financial losses suffered as a result of Sandra’s misleading and deceptive conduct. Another remedy that may be available to Anna and Julian is that of issuance of ancillary court orders. The most substantive ancillary orders are outlined in section 243 (1) the applicable one in this case being section 243 (1) (d) that requires the court to issue ancillary orders for the defendant to refund money to the plaintiff. Accordingly, Julian and Anna may benefit from pleading with the court to order for the refund of their money since their purchase decision was arrived at in reliance to Sandra’s statements that were misleading and deceptive regards the quality of services and food available at Bliss Island. However, it is important for Anna and Julian to be cognizant that issuance of ancillary orders is at the discretion of the courts as set out in Warwick Entertainment Centre Pty Ltd v Alpine Holdings Pty Ltd (2005).15 An injunction as a remedy for misleading and deceptive conduct is set in section 232 of the ACL. An injunction may be sought either by any person or the regulator. As such Julian and Anna may also seek for a court injunction in relation to the promotional pictures for food being used by Bliss Island since the available food does not conform to that which is contained in the promotional materials. This essay has made notable establishments regards the issues of misleading and deceptive conduct and the liability exclusion notice. Notably, there is sufficient and admissible evidence that Sandra in her position as the proprietor of Bliss Island provided misleading information that she knew would be relied upon by Julian and Ann in their decision whether to visit Bliss Island or not. All elements for proof of misleading and deceptive conduct have been met and thus Sandra engaged in misleading and deceptive conduct. As such she can seek various remedies such as damages, an injunction or ancillary court orders. Regards the liability exclusion notice, it is possible that Bliss Island may not rely on the liability exclusion notice as a defense in an action for the loss of Julian’s and Anna’s items. Bibliography Articles/ Books/ Reports Adams, Michael, and Marina Nehme "Consumer Law: No New Specific Legislation Required to Deal with' Greenwashing'" Keeping good companies 63 7 (2011) Latimer, Paul S, Australian business law 2012 (North Ryde, N S W: CCH Australia, 2010) Williams, P G, et al "'Natural'claims on foods: a review of regulations and a pilot study of the views of Australian consumers" Faculty of Health & Behavioural Sciences-Papers (2009) Cases Brown v Jam Factory Pty Ltd (1981) 53 FLR 340 Commonwealth Bank of Australia v. Mehta, 23 N.S.W.L.R. 84 (1991) Costa Vraca Pty Ltd v Berrigan Weed & Pest Control Pty Ltd (1998) 155 ALR 714 Henjo Investments Pty Ltd v. Collins Marrickville Pty Ltd, 79 A.L.R. 83, 39 F.C.R. 546 (1988) In Re Ku-ring-gai Co-operative Building Society (No 12) Ltd, 36 F.L.R. 134 (1978) Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd (No 2) (2009) 261 ALR 179 Taco Company of Australia Inc v Taco Bell Pty Ltd, 1982 A.T.P.R. 40 (1982) Warwick Entertainment Centre Pty Ltd v Alpine Holdings Pty Ltd (2005) 224 ALR 134 Watson v Foxman NSWLR 315 49 (1995) Legislation Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010 Read More