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ONLINE ASSIGNMENT MISLEADING OR DECEPTIVE CONDUCT ISSUE Did Sally engage in misleading or deceptive conduct? RULE Misleading or deceptive conduct by a person prohibited if it takes place in trade or commerce; s181. Identifying the conduct engaged in is characterised by a person doing an act involving the formation of a direct or indirect misrepresentation pre-and post-creation of a contract; s2(2)2. Representations proven to be false in relation to future matters are deemed to be misleading in which the respondent is unable to cite any evidence of reasonable grounds in relation to the representation made; s4(1) and (2)3. Evidence that establishes some reasonable grounds in relation to the representation made releases the responsibility of the respondent and removes the deeming provision procedure; s4(1) and (2)4. Representations that lead to error, or are likely to lead to error, will be held to be misleading, this can include honest and reasonable actions from the respondent; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd5. The circumstances and content of the conduct may be characterised by the level of knowledge of the person in which the conduct is aimed; Campbell v Backoffice Investments

1 Competition and Consumer Act 2001 (Cth) s 18 (‘CCA’). 2 Ibid s 2(2). 3 Ibid s4(1)-(2). 4 Ibid. 5 Jeannie M Paterson, Corones' Australian Consumer Law, (Thomson Reuters (Professional) Australia Pty Limited, 4th ed, 2019) 85 [3.80] (‘Corones’).

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Pty Ltd6. Conduct may also be characterised by the information acquired between the agent and the purchaser, through discussions and the type of transaction; Butcher v Lachlan Elder Realty Pty Ltd7. When entering into a transaction any intention or purpose, expressed or implied, in relation to transactional requirements or results, communicated by the purchaser, will lead to a reasonable expectation of disclosure; Whitaker v Paxad Pty Ltd8 & Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd9. If the agent makes oral representations with reasonable grounds, the representations will not be considered to be misleading; Bennett v Elysium Noosa Pty Ltd10. However, if the agent doesn’t not have reasonable grounds the representations they will be considered to be misleading; Bennett v Elysium Noosa Pty Ltd11. Representations made in relation to future matters expect the respondent to provide circumstances and facts, that existed at the time the representation was made, in which the respondent relied upon, which are factually reasonable and confirm the representations that were made; Sykes v Reserve Bank of Australia12. Communication of an honest opinion that is proven to be false is not misleading; Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd13. Communication of an opinion must be genuine, made under reasonable grounds or established by applicable research; Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd14. An opinion made by an expert with specialist knowledge is more likely to be deemed under reasonable grounds with adequate

6 Ibid 96 [3.200]. 7 Ibid 97 [3.200]. 8 Ibid 109 [3.290]. 9 Ibid 110 [3.290]. 10 Ibid 117 [3.340]. 11 Ibid. 12 Ibid 118 [3.340]. 13 Ibid 120 [3.360]. 14 Ibid.

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research to support the representation made; ACCC v Safe Breast Imagining Pty Ltd15. However, communication of an opinion may be deemed misleading in circumstances in which a representation is implied from a fact which is proven to be false; Amadio Pty Ltd v Henderson16. APPLICATION Sally is considered to be doing an act when she was discussing and formulating the contract to purchase for Lazlo and Bright. Lazlo and Bright expressly advised Sally during the formation of the contract that they required a safe suburb with good schools in an area that would increase in value. Lazlo and Bright had a certain expectation for Sally to provide them a reasonable level of disclosure prior to signing the Contract. Sally did not disclose that Hallow Heights is a poor area with a high crime rate and has poorly ranked schools. These representations were relied upon by Lazlo and Bright whose property is now deceasing in value. Sally made representations in relation to future matters by verbally stating that the Hallow Estates was an up and coming suburb likely to increase to value. Sally would need to provide evidence to support this information. It could be argued that as a real estate agent Sally and provided her honest opinion and knowledge of the current real estate market in which she has the expert ability to provide such information to consumers. However, Sally would be need to provide some research of recent sales data to support these claims. Without this evidence the representations made by Sally were likely to lead to an error. CONCLUSION Sally engaged in misleading and deceptive conduct under s1817 during the formation of Lazlo and Bright’s contract to purchase. 15 Ibid 123 [3.370]. 16 Ibid 121 [3.360]. 17 See above n 1

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Remedies from Lazlo and Bright include damages being awarded; s23618, s23719 and s23820. UNCONSCIONABLE CONDUCT ISSUE Did the Bank engage in unconscionable conduct? RULE In general, unconscionable conduct is prohibited if it takes place in trade or commerce; s2021. Relief to consumers is either applied under ACL or via equitable doctrines. Unconscionable conduct applies to matters in which unconscionable conduct is involved by either engagement or towards consumers; s2022. Unconscionable conduct may be limited to apply to matters that involve the supply or the possible supply of goods or services; s21(1)23. Within trade and commerce, a contract to lend money is known as a service; s224 Unconscionable conduct applies to conduct involving the process of bargaining that results in the formation of a contract along with the process or forming or enforcing the terms of the contract; s21(4)(c)25. Identification of statutory factors along with conduct that transgresses good conscience principles ascertains unconscionable conduct; s22(1) and (2)26. These factors include inequality of bargaining powers (s22(1)(a) and (2)(a))27; understanding of documents (s22(1)

18 CCA s 236. 19 Ibid s 237. 20 Ibid s 238. 21 Ibid s 20. 22 Ibid. 23 Ibid s 21(1). 24 Ibid s 2. 25 Ibid s 21(4)(c). 26 Ibid s 22(1)- (2). 27 Ibid s 22(1)(a)-2)(a).

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(c) and 2(c))28; undue influence or pressure and unfair tactics (s22(1)(d) and 2(d))29; terms and conditions of the contract (s22(1)(j)(ii) and 2(j)(ii))30; and lack of good faith (s22(1)(l) and 2(l))31. Unconscionable conduct in equity extends to an advantage that has been taken or exploitation of a person with a special disadvantage in which the conduct is aimed towards; Commercial Bank of Australia v Amadio32. A special disadvantage is one that gravely affects a naïve party’s ability to make decisions in relation to their own best interests; Commercial Bank of Australia v Amadio33. Factors such as illiteracy; limited of lack of education, aid or clarification; and unfamiliarity or lack of understanding of the English language frequently suggest a special disadvantage; Permanent Mortgages Pty Ltd v Vandenbergh34. Unconscionable conduct occurs when the said conduct involves the following three elements: 

One party is suffering from a special disadvantage;



The other party has knowledge or it is evident, that the other party is suffering from a special disadvantage; and



The advantage taken by the other party was taken in a way that is inconsistent with good conscience; Commercial Bank of Australia v Amadio35.

A lack of comprehension of legal, financial or business models; the English language; and education can result in a failure to understand documents; ACCC v Australian Power and Gas Company Ltd36. Taking additional care and using plain English when drafting documents,

28 Ibid s 22(1)(c)-2(c). 29 Ibid s 22(1)(d)-2(d) 30 Ibid s 22(1)(j)(ii). 31 Ibid s 22(1)(l) and 2(l). 32 Corones 153 [4.60] 33 Ibid. 34 Ibid 154 [4.70]. 35 Ibid 153 [4.60]. 36 Ibid 170 [4.250].

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allowing the other party to attain independent legal advice from a legal consultant to explain the character and consequences of the documentation or agreement, and a requirement to provide a certificate that independent legal advice has been obtained by the other party are actions that can be considered to alleviate the risk of a failure to understand documents; ASIC v National Exchange37. Actions by a lender are considered unconscionable conduct when they lack moral responsibility and joined by moral fault and are deliberate; Violet Home Loans Pty v Schmidt38. Sales representative are seen to use undue influence or pressure and unfair tactics to take advantage of vulnerable consumers with either knowledge or they ought to have known; that the consumer had a lack of understanding and comprehension of the English language, and may need aid in understanding the documentation; ACCC v Origin Electricity Ltd39. Contractual terms to recover specific costs, expenses and interest are not considered unconscionable or a penalty unless the conduct that led to establishment of the term and the circumstances in which payment is required are considered unconscionable; PSAL Ltd v Kellas-Sharpe40. A duty of good faith requires fair, reasonable and honesty dealings taking into consideration the parties interests, intention, aim and terms of the contract; Paciocco v ANZ41. One party recouping benefits that were not initially authorised, resulting from a change in circumstances, is considered opportunistic and inconsistent conduct, contravening a duty of good faith and is considered unconscionable conduct; Ipstar Australia Pty Ltd v APS Satellite Pty Ltd42. 37 Ibid. 38 Ibid 162 [4.130]. 39 Ibid 181 [4.280]. 40 Ibid 184 [4.300]. 41 Ibid 192 [4.410]. 42 Ibid 193 [4.410].

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APPLICATION The mortgage obtained by Lazlo and Bright is a good or service in trade or commerce and falls within the definition of the ALC. Lazlo and Bright’s unfamiliarity and lack of understanding of the English language is a special disadvantage and resulted in result in a failure to understand documents provided by the Bank. The Bank did not take care or use plain English language when drafting the Bank Contract. The actions of the Bank were contrary to good faith, taking advantage of Lazlo and Bright’s special disadvantage to increase their bargaining power and enter an opportunistic clause relating to payment of full interest on the loan in the circumstances of the mortgaging being discharge earlier. The Bank Manager was aware that Lazlo and Bright suffered from a special disadvantage, deliberately used complicated language and did not offer, assistance or an opportunity for Lazlo and Bright to seek independent legal advice to ensure they understood the terms prior to signing the Bank Contract. CONCLUSION The inequality of bargaining powers between the Bank and Lazlo and Bright; lack of understanding of documents signed by Lazlo and Bright; undue influence or pressure and unfair tactics used by the Bank and the Bank Manager; unfair terms and conditions of the Bank Contract; and lack of good faith by the Bank and Bank Manager would result in the Bank being found to have engaged in unconscionable conduct under s2043, 2144 and 2245.

43 CCA s 20. 44 Ibid s 21. 45 Ibid s 22.

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Lazlo and Bright can seek remedies such as an order to; void or vary whole or part of the Bank Contract, instructing monies to be refunded, for an amount of damages, or to create an instrument to transfer an interest in land; s23746. FALSE OR MISLEADING REPRESENTATION S ISSUE Did Hallow Estate make false or misleading representations? RULE There are unspecified provisions that deal with misleading conduct; s18. Along with numerous prohibitions that prevent specific kinds of false or misleading conduct in accordance with trade or commerce; s2947. Trade or commerce includes activities that are considered to be related to business or are professional being conducted within Australia or between Australia and places outside Australia; s2(1). 48 Services includes any rights or interests in real property; s249. As discussed earlier conduct relates to a misrepresentation; s2(2). 50Identification of individuals or a class of persons or a segment of the public can be created by a representation; s2(2)51. False or misleading conduct must transpire in connection with the supply or promotion of goods and services; s2952 or the sale or grant, or possible sale or grant of an interest in land; s3053. 46 Ibid s 237. 47 Ibid s 29. 48 Ibid s 2(1). 49 Ibid s 2 50 Ibid s2(2). 51 Ibid s2(2). 52 Ibid s 29 53 Ibid s 30

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False or misleading representations are prohibited in relation to goods or services that are of a particular standard; s29(1)(a) and (b54). In this context, the word particular is defined using its ordinary meaning of indicated or certain goods or services that are of a particular quality, value or standard; s29(1)(a) and (b)55. False or misleading representations are prohibited related to or concerned with testimonials of goods and services by a person; s29(1)(e)56. False or misleading representations are also prohibited in relation to authentic testimonials involving goods or services; s29(1)(f)57. A testimonial will be considered misleading in circumstances in which there is a failure to provide evidence of the representation made; s29(2)58. Evidence presented must be adequate and surround the validity of the testimonial; s29(2)59. Within this context false is defined as contrary to the fact which is not dependant on the information of the party making the said representation; TPA v Values Wine Co Pty Ltd60. Conduct must be directly linked in connect with, accompany, go with or be involved in the supply of goods or services; Monroe Tepple v Institute of Chartered Accounts in Australia61. The test to determine misleading conduct is whether a reasonable person to be misled by the representation taking into consideration the information they have required; Butcher v Lachlan Elder Realty Pty Ltd62.

54 Ibid s29(1)(a) and (b). 55 Ibid s29(1)(a) and (b). 56 Ibid s29(1)(e). 57 Ibid s29(1)(f). 58 Ibid s29(2). 59 Ibid s29(2). 60 Corones 251 [6.60] 61 Ibid 252 [6.70] 62 Ibid 251 [6.60]

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Inference by providing positive representations or negative content that are an untruthful of a particular standard of a good or service is considered a false representation; Eva v Southern Motors Box Hill Pty Ltd63. Wholly or partly fictitious testimonials that are characterised narratives told by consumers who state that they have made use of the goods or services will be deemed to be false, misleading or deceptive; IDP Education Ltd v Lejburg Pty Ltd64. Testimonials provided on a website or Facebook, by consumers, who assert to have used the goods or services, must make a representation of the experience and standard that further consumers anticipate attaining; Volunteer Eco Students Abroad Pty Ltd v Reach Out Volunteers Pty Ltd65. The consumer providing the testimonial must be able to provide evidence to validate the experience or of plainly disclose the incomplete relevance of the representations made; Volunteer Eco Students Abroad Pty Ltd v Reach Out Volunteers Pty Ltd66. Publishing, posting or inducing others to publish or post, fictitious testimonials on the internet that claim to be authentic testimonials from consumers in relation to the standard and quality or goods or services will be deemed false, misleading or deceptive; ACCC v A Whistle & Co67. APPLICATION To determine whether Hallow Estates have engaged in misleading conduct we would need to consider if a reasonable personal would be misled by the representations made in the testimonial videos.

63 Ibid 255 [6.110] 64 Ibid 261 [6.180] 65 Ibid 261 [6.180]. 66 Ibid. 67 Ibid.

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Hallow Estate is conducting business within Australia that falls within the definition of trade or commerce. Hallow Estate is providing services in relation to interests of real property which falls within the definition of services. Hallow Estates conduct is in connection with the supply and promotion of services along with the sale or possible sale of an interest in land. The testimonials provided on Hallow Estates website is making representations to individuals, a class of persons interested in the estate and the general public that the services provided are of a certain standard. The testimonial videos seen by Lazlo and Bright made representations that Hallow Estate is a pleasant area which lead to them expecting a certain experience and standard. In order to confirm the validity of the testimonials provided Lazlo and Bright will need to request evidence from Hallow Estates to support the claims made in the videos. If Lazlo and Bright have adequate evidence to support the rumour that the testimonials provided on Hallow Estates website are narratives told by paid actors the testimonials would be false and misleading due to their fictitious nature. CONCLUSION The testimonial videos published on Hallow Estates website make misleading representations in relation to the particular standard of services which is prohibited by s29(1)(b)68. For Hallow Estates to be found liable of making misleading representations under s29(1)(e) and (f)69 there would need to be evidence to that the testimonials are wholly or partly fictitious and contrary to the facts. Remedies available to Lazlo and Bright would be damages or compensation orders; s23623770. 68 CCA s29(1)(b). 69 Ibid s29(1)(e) and (f) 70 Ibid s236-237.

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BIBLIOGRAPHY

A

ARTICLES/BOOKS REPORTS

Paterson Jeannie M, Corones' Australian Consumer Law, (Thomson Reuters (Professional) Australia Pty Limited, 4th ed, 2019)

B C

CASES LEGISLATION

Competition and Consumer Act 2001 (Cth)

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