Case Summaries ACL - just case studies for australian consumer law PDF

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Case Summaries Consumer Protection CASE Valve Corporation v ACCC [p.221]

FACTS Valve is one of the world’s largest online game retailers and operates the Steam game distribution platform. Valve made false/misleading representations in relation to refund policies, including consumers’ rights to obtain a refund for games if they were not of acceptable quality. They claimed they were providing services not goods.

ISSUE(S) s54 applied, supply of goods rather than services

DECISION It was held V misled through representations and conduct, and that ACL applied to V despite its lack of physical presence in Aus. The parties’ contractual relationship didn’t protect them, V was penalised for $3 million.

COMMENT Additional breaches of s18 and s29(1)(m)

Plimer v Roberts [p.223]

R was an ordained Christian minister with academic qualifications in education – believed that a boat shaped formation in Turkey was the remains of Noah’s Ark and gave lectures to this effect. P was a Geology professor and an ‘Australian Sceptic’, he sued R for misleading conduct.

Did R’s conduct breach s18?

The court decided R didn’t make misleading representations in “trade and commerce” because (a) he wasn’t paid to give lectures, (b) subject was non-commercial, (c) misrepresentations related to content not ticketing etc and (d) primary goal was to encourage interest in archaeological site.

The conduct must be in “trade or commerce”.

Google Inc v

G displayed sponsored

Is G accountable for

G wasn’t liable for publishing the

The person

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ACCC [p.223]

search results separately from other results. Sponsored results contained misleading or deceptive representations.

the misleading representations in their sponsored links?

Hyder v McGrath Sales Pty Ltd [p.224]

H bought a large residential property through M (real estate agent), H sued over a year later for misrepresentations involving the parking spaces at the property.

Did M engage in misleading or deceptive conduct in regards to the parking at the property?

misleading/deceptive content of the sponsored results and they weren’t the author of the content. An intermediary would be liable if they adopted/endorsed the conduct, however G hadn’t adopted or endorsed the sponsored search results.  H -> relatively intelligent and with considerable success and experience in property development.  Nature of transaction is an expensive residential property in relation to which a reasonable person would expect care taken by purchaser to verify matters concerning purchase.  Nature of info in q. is expected to not be known by M, but rather passed on by the vendor.  All relevant marketing material contained a disclaimer.

must have “engaged” in conduct.

“Mere conduit” argument. Damages.

Concluded that M was merely passing on info, meaning M didn’t engage in misleading/deceptive conduct. Henjo Investments Pty Ltd v Collins

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H owned a licensed restaurant, during negotiations to sell it to C,

Is the silence by H regarding the seating capacity

Full Court of the Federal Court decided that by remaining silent, H’s vendor had engaged in misleading

Half-truth.

Marrickville [p.225]

its agent led C to believe that the restaurant seated 128 people. It was set up to seat 128, but was only licensed to seat 84. The reduced seating capacity impacted the profitability of the restaurant.

considered engaging in misleading/deceptiv e “conduct”?

conduct.

Demagogue Pty Ltd v Ramensky [p.225]

R contracted to purchase land from D in a proposed unit development. The plan referred to a “driveway” which was a public road. D had been negotiating for the road to be a driveway but had not yet been successful. When R found out, wanted to rescind the contract.

Is the silence by D in relation to the driveway-public road situation engaging in misleading/deceptiv e “conduct”?

The decision was that D’s silence constituted misleading/deceptive conduct because there was a reasonable expectation that there should have been disclosure of the unusual circumstances surrounding access to the property.

ACCC v TPG Internet Pty Ltd [p.227]

TPG ran an advertising campaign for a broadband internet plan using various media, advertising a specific price. In the fine print, it read: consumer was required to bundle the service with a landline rental for additional cost and pay an overall minimum amount that was significantly higher than the advertised price.

Was the conduct “misleading/decepti ve” or “likely to mislead or deceive”?

The High Court decided that first phase of advertisement conveyed a representation that the internet service was available without bundling. The small print didn’t do enough to correct the false impression created by the dominant message of the ad. Although a sophisticated consumer generally has the knowledge that a broadband internet plan is usually bundled, ordinary consumers would not have this starting assumption. - breach of s18 and s48

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s18 in relation to marketing and advertising.

- pecuniary penalty of $2m was imposed ACCC v Turi Foods Pty Ltd [p.228]

Chickens advertised as “free-range” in a large barn, but as the size and number of chickens increased, it was harder for T to keep their word.

ACCC v Reckitt Benckiser [p.228]

RB represented that Nurofen Specific Pain products treated a specific type of pain, although all products were identical in formula.

Telstra Corporation Ltd v Singtel Optus Pty Ltd [p.229]

An Optus Mobile advertisement showed a distinctively orange and blue (like Telstra, but they were also previously commonplace) sinking into the desert, with a tagline

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Was the statement misleading/deceptiv e or likely to be?

Telstra claimed that the advertisements indicate a “significant and permanent change in the relationship between the Telstra

The Federal Court agreed that “freeto-roam” in regard to chickens meant “largely uninhibited ability of the chickens to move around at will in an aimless manner”, and considered this would be understood by a significant no. of consumers who read/saw the labels, ads etc. The court also recognised that customers pay premium prices for free-range, so this representation was a breach of s18, s29(1)(a) [history of the goods] and a penalty of $400,000 was imposed. The Federal Court decided that this representation breached s18: misleading/ deceptive conduct, breached s33: misleading/deceptive conduct about the specific purpose of goods. Penalties of $1.7m were imposed for the s33 breach, ACCC appealed and penalty was increased to $6m.

s18, 33 breach

The court held that the phone box advertisements did not mislead consumers and were instead “humorous”.

Clearly, in the court’s view, comparative advertising is less likely to be found misleading if

“… It would be fanciful to imagine that the humorous image of a

“Empires end. That’s what they do.”

and Optus mobile networks.”

Telstra phone box in a desert landscape would persuade a reasonable person that Telstra’s strong position in the market has been permanently destroyed.”

ACCC v Meriton Property Services Pty Ltd [p.229]

M is a builder and operator of serviced apartments and hotels. M subscribed to TripAdvisor’s “Express Review”, which provides TripAdvisor with guest emails and asks them to review on Facebook etc (reviews ↑ 33%). This could increase the service provider’s ranking if M interfered with results. M instructed its staff to “mask” email addresses with negative reviews linked to them.

Was the “masking” of certain email addresses so the reviews didn’t appear on TripAdvisor “deceptive/misleadi ng”?

The court found that M breached s18, and s34 (misleading conduct as to the nature, characteristics or suitability of any services), imposed penalties to be paid of $3m.

McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd [p.230]

The “Big Mac” is an advertised burger, and McW (well-known wine company) started to prominently display those words in their ads. McD’s sought an injunction claiming that McW’s usage of “Big Mac” constituted conduct that is misleading / deceptive or likely to be.

Was the use of the words “Big Mac” in advertising for their wines by McW engaging in misleading and deceptive conduct?

The court held that even though the ads might cause confusion or wonder in the person’s mind whether or not there was a business connection between McD and McW, such a person was not misled by the ad into believing that there was such a connection and accordingly there was no contravention of what is now s18(1) of ACL.

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humour is incorporated.

Conduct which merely tends to confuse will not ordinarily be sufficient to constitute misleading or deceptive.

Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [p.231]

P manufactured and sold furniture under the name “Post & Rail” in its socalled “Contour” range. Parkdale manufactured very similar furniture in the “Rawhide” range. Products were highly similar, although on close inspection differences could be observed, including manufacturer label.

Does having similar product ranges being likely to mislead based off of the actions of a retailer constitute misleading and deceptive conduct?

The High Court decided that there was no breach of s18. Potential customers were able to inspect the furniture that was on display in the retailer’s showroom. Ordinary customers would act reasonably, pay attention to label, brand or mark of the suite they were looking to buy and would not be misled by similarities in the getup of the rival products.

Apand Pty Ltd v The Kettle Chip Co Pty Ltd [p.231]

The Kettle Chip Co Pty Ltd marketed “The Kettle Chip” because it was made by a particular batchcooking method. In response to losing market share, the appellant (“Smith’s Crisps”) marketed a new line of chips under the name “Country Kettle” but not made by the same method.

Did Apand Pty Ltd engage in passing off?

The Full Federal Court ruled that at the time the appellant’s chips came onto the market, the name “Kettle” had obtained a secondary meaning distinctive of the respondent’s product. The court held that Apand Pty Ltd engaged in passing off and did indeed breach s18.

Byers v Dorotea Pty Ltd [p.232]

Representations were made to B by D as to the proposed features and quality of home units which were not yet built, claiming they

Will the representations during contractual negotiations be classified as breaching s18?

The court decided that the applicants were induced into the contract by misleading statements, which constitutes a breach of s18. The court then ordered a refund of their deposits.

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were “bigger and better”. B agreed to buy the units, and then the representations were proven untrue. Butcher v Lachlan Elder Realty Pty Ltd [p.232]

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B and his wife enquired to a real estate agent about the auction of a property, were given a brochure claiming to contain all relevant information, including a survey showing the swimming pool was above the mean highwater mark. The brochure contained small-font disclaimers: “cannot guarantee accuracy, interested persons should rely on their own enquiries”. B advised the agent he wished to relocate the pool and the builder approved based on the survey. B purchased the property, soon found that the MHWM changed, meaning half the pool was govt land. Govt did not allow B to relocate the pool, he sued the agent for misleading /deceptive conduct from the brochure. The claim was originally

Was Lachlan Elder Realty Pty Ltd able to limit their liability?

The High Court decided to dismiss the appeal because s18 imposed strict liability but the disclaimer put the purchasers on notice not to rely on the representations in the brochure.

dismissed. Brighton Australia Pty Ltd v Multiplex Constructions Pty Ltd [p.233]

B, a subcontractor, made claims against M in relation to constructions in Docklands, Melbourne. B pleaded that it entered into the relevant subcontracts with M in reliance upon representations made by M that breached s18.

Was the attempt by M to exclude liability successful?

The court appointed special referee found that the ACL claim should fail on numerous points, including that the claim wasn’t in accordance with a subcontract clause reading: “requiring notice of any claim, including a claim for breach of the ACL, to be given within seven days of the event occurring.” However, the Supreme Court held that the attempt to rely on time was an indirect method of excluding liability under the ACL, and so was “an unacceptable interference with the public policy underpinning” the ACL.

Unsuccessful in limiting liability.

ACCC v Thermomix in Australia Pty Ltd [p.235]

A number of consumers suffered serious burns caused by the lid lifting and hot food/liquid escaping from the TM31. T was aware there was a potential risk of injury to users of this model, they continued to supply and promote the TM31. They also neglected to disclose this issue to consumers, in doing so, they represented that they weren’t aware of the safety and injury risks that could potentially occur.

Did Thermomix breach s29 (the provision for goods and services)?

The court held that T engaged in conduct that was in breach of s18, s29(1)(a), s29(1)(m) and s33. T was ordered to pay a penalty of $4,608,500 and to establish a Consumer Compliance program for 3 year, publishing the judgement result on their website for 3 months.

s18 – engage in misleading or deceptive conduct.

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s29(1)(a) particular standard/quali ty. s29(1)(m) existence or effect of the rights and remedies available under the ACL

for noncompliance with the consumer guarantees. s33 - nature, characteristics and suitability for purpose of the TM31. Optus Mobile Pty Ltd v Telstra Corporation Limited [p.236]

ACCC v Heinz [p.236]

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T advertised its mobile network plan with the tagline “One word for Australia’s best mobile network – Unlimited”. In fact, their “unlimited” plans provided 40GB at usual speeds and slower speeds in peak, but disclaimers did exist in most cases.

Did T violate s29 in any way in the display of this advertisement?

A product marketed as food for toddlers had “99% fruit and veg” on the front packaging, along with “No artificial colours and flavours,” and “No preservatives.” Although the back of the box

Did Heinz breach s29 through the prominent representations on the front of the box?

The court decided the ads were misleading /deceptive because the mobile network plan was not unlimited. The court held that the disclaimers were not sufficiently prominent to explain the impact of limitations to consumers. The court also found that the ads breached s29(1)(b), s34 in that they falsely conveyed that T provided plans offering unlimited mobile usage when in fact its services, including mobile data, were always subject to limitations and exclusions.

s29(1)(b) services provided under a plan are of a particular quality.

The court found that the packaging’s statements and pictures would convey to the “ordinary” and “reasonable” consumer (parents of toddlers) that the product was beneficial to toddler health. The court said this was misleading as the consumption of a large qty of

S29(1)(g) – goods or services have… uses or benefits.

s34 - liable to mislead as to the nature or the characteristics of services.

showed in the ingredient list that over 2/3 of the product was sugar.

sugar in a snack could not be regarded as “beneficial”. The court found Heinz breached s18 and s29(1)(g) and ordered a $2.25m penalty to be paid.

ACCC v Jetstar Airways Pty Ltd [p.237]

An airline’s website prominently promoted flights for a price excluding the booking fee that applied to most card payments. This fee wasn’t disclosed until the payment page was reached, but there was prior indication a fee might be payable.

Was Jetstar misleading in breach of s18 and/or s29 by failing to disclose the booking fee prior to request of payment?

The court held that the airline had contravened s18 and s29(1)(i). Disclosure on the payment page was insufficient to avoid these contraventions of the Act.

S29(1)(i) – false or misleading representation s with respect to the price of services.

ACCC v Apple Inc [p.237]

An error disabled some iPhones and iPads after downloading the latest iOS update. A represented to at least 275 Aus. consumers affected by “error 53” that they weren’t eligible for a remedy if their device had been repaired by a third party.

Did this representation by Apple Inc breach the ACL?

A admitted it breached s18, s29(1) (m), it was a misrepresentation because the fact that a component of the consumer’s iPhone device had been serviced, replaced, or repaired by someone other than an A-authorised service provider cannot result in the consumer guarantees provided under the ACL ceasing to have any operation. A pecuniary penalty of $9m was imposed for the s29(1)(m) breach. The penalty was ordered by consent, following a settlement between ACCC and Apple Inc.

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The size of a corporation doesn’t itself justify a ↑ penalty than might otherwise be imposed; and

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If a penalty doesn’t impose a ‘sting’, it is less likely

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to achieve its intended deterrent effect. ACCC v LG Electronics Australia Pty Ltd [p.238]

LG made representations about the redress they would provide to consumers in relation to TVs where the manufacturer’s warranty had expired.

Was this representation a breach of s18/s29?

The Full Court held that the statements were in breach of s29(1) (m) because they went beyond a mere statement of what LG was willing to offer, that no rights other than those under LG’s manufacturer’s warranty existed, operated or had potential effect.

ACCC v Marksun Australia Pty Ltd [p.238]

A series of websites operated by M claimed that Ugg boots were Australian made when they were actually made in China. Website also used the “Australian Made” logo without authorisation.

Does this breach s29(1)(k) – in relation to the country of origin of goods?

The Federal Court decided that these claims constituted misleading/deceptive conduct [s18] and falsely representations of the place of origin of the goods [s29(1) (k)].

Given v Pryor [p.239]

TV ad for land offered for sale. Ad contained various pictures of the land showing houses. In reality, the land was subject to a planning scheme under which houses couldn’t be built without authority’s special approval requiring extensive conditions to be met.

Does this advertisement breach s30(1) in relation is false/misleading representations regarding land?

There had been a representation that houses could be built on the land, this is a misleading representation concerning the use to which the land could be lawfully put in contravention of s30.

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Ducret v Colou...