Commercial Law

Definition of “In Trade or Commerce”

What is Trade and Commerce?

• First deal with trade and commerce.• Conduct must be in commercial activities.• Does not need to be a consumer only.• Applies to other provisions in the ACL where

“trade or commerce” is referred to.• For example ACL section 54 deals with

terminology of trade and commerce.

“In trade or commerce” – Concrete Constructions v Nelson

• Facts: The conduct must be in trade or commerce and not conduct in respect of trade or commerce.

• Nelson was an employee of Concrete Constructions. He fell down an air-conditioning shaft whilst at work.

• Nelson sued in tort and under s 52 (now s 18). • He contended that his injuries came from his

employer who mislead him by wrongly informing him as to the safety of the shaft.

Nelson (judgment)

• Held: This conduct consisted of an internal communication between a supervisor and an employee.

• The communication was given in the course of the companies daily activities.

• However it was only in respect of trade or commerce, but not actually in trade or commerce.

Nelson (judgment)

• Mason CJ, Deane, Dawson and Gaudron JJ, allowing appeal: Section 52 is concerned with the conduct of a corporation towards persons, be they consumers or not, with whom it has or may have dealings in the course of its trading or commercial activities.

• This means that it applies to consumers and other businesses.

• Does not include representations by an employer to an employee.

Nelson (discussion)

• A misleading statement by one of a building company's own employees to another employee in the course of their ordinary activities is not conduct in trade or commerce.

• Note that the plaintiff pleaded a cause of action in tort and ordinarily workplace and workers compensation laws apply.

• However misleading or deceptive conduct was not designed to deal with this sort of issue.

Plimer v Roberts (1997) 150 ALR 235

• The main issue in this case was whether the respondent (Dr Roberts), when making false representations regarding his personal involvement in archaeological investigations, engaged in misleading or deceptive conduct ``in trade or commerce.’’

Plimer v Roberts (facts)

• Dr Roberts was an ordained Christian minister with academic qualifications in the field of education.

• He described himself as an historical researcher in archaeological work as it relates to a boat-shaped formation near Mt Ararat in Turkey (the site).

• Dr Roberts said he believed that this formation could be the remains of Noah's Ark.

Plimer v Roberts (facts)

• The appellant (Professor Plimer) was a Professor of Geology at the University of Melbourne and a member of the organisation known as Australian Skeptics.

• He brought legal proceedings in respect of a number of representations made by Dr Roberts in the course of the lectures.

• Professor Plimer alleged that Dr Roberts had engaged in misleading or deceptive conduct.

Plimer v Roberts (judgment)

• Held: Dr Roberts did not make the relevant false [misleading or deceptive] representations ``in trade or commerce'’.

• Applying the test in Concrete Constructions, the combined force of a number of factors demonstrated that the misrepresentations did not occur ``in trade or commerce’’.

Plimer v Roberts (reasons)

• Those factors include:• (a) Dr Roberts was not paid to deliver the

lectures and was not a member of NARF;• (b) the subject matter of Dr Roberts’ lectures

was of a non-commercial nature;• (c) the relevant misrepresentations related to

the content of the lectures themselves rather than the sale by NARF of admission tickets or recordings; and

Plimer v Roberts (reasons)

• (d) Dr Roberts’ (and NARF's) primary goal in delivering the lectures was to encourage interest in the site and a creationist view of history rather than to obtain financial gain, therefore not in course of trade or commerce.

O’Brien v Smologov

• The appellants in that case sold vacant land on which they proposed to build and sell off the remaining part.

• They sold a particular portion of the land by private treaty.

• In the course of the sale they made certain representations which were found to have been false or misleading.

O’Brien v Smologov

• Public advertisements were inserted in the newspapers inviting the conduct of negotiations over the telephone.

• These statements were allegedly made during a telephone conversation between the parties.

• This conversation was in connection with a possible sale of lots of land by the appellants to the respondents.

O’Brien v Smologov

• The Full Court (Fox, Sheppard and Beaumont JJ) pointed out that on the facts of O'Brien v Smologov the land had not become trading stock nor was there more than the mere realisation of an asset by land development such as occurred in FCT v Whitfords Beach Pty Ltd (1982) 39 ALR 521.

• The land was not used for any business activity.

O’Brien v Smologov

• Held: (allowing the appeal) The conduct complained of was not something done by the appellants in the course of carrying on a business and it lacked trading or commercial character as a transaction.

• The conduct in question was not conduct in trade or commerce.

O’Brien v Smologov

• The mere use, by a person not acting in the course of carrying on a business of facilities commonly employed in commercial transactions, cannot transform a dealing which lacks any business character into something done in trade or commerce.

Argy v Blunts & Lane Cove Real Estate

• Facts: Mr Argy entered into a contract for the sale of a waterfront property from Mr Crooks.

• When Argy went to inspect the property he was handed a brochure giving particulars of the property by the real estate agent, Blunts.

• The brochure stated that the property had "unlimited potential".

Argy (cont.)

• Argy inspected the property more than once and received a draft contract from Blunts for perusal.

• The draft contract had an incomplete certificate under the Environmental Planning laws.

• However, the property was sold nonetheless.

Argy (cont.)

• Held: It could scarcely be said that a person who sells his home, is undertaking what he does in the course of trade or commerce or in a business context within the meaning of misleading conduct.

• Irrespective of the fact that it is by private treaty or by auction.

• Or whether he conducts the negotiations personally or through a real estate agent.

Parkdale Custom Build Furniture v Puxu (1982)

• The appellant only sold furniture that had been labelled, in the ordinary way, so as to show the name of the manufacturer.

• The conduct of the appellant (Parkdale) did not contravene s 52.

• Speaking generally, the sale by one manufacturer of goods which closely resemble those of another manufacturer is not a breach of s 52.

Parkdale Custom Build Furniture v Puxu

• Parkdale putting a label on their product was also relevant to their case that they had not attempted to mislead or deceive.

• It does not matter whether it was a lack of reasonable care, or intended to mislead.

• All that needs to be done is to look at the conduct of the party. Parkdale established that conduct could be toward a business not just a consumer.

Parkdale Custom Build Furniture v Puxu

• Gibbs CJ: [at 199] The conduct of the appellant must be viewed as a whole…In Parkdale… the conduct was not to manufacture and sell furniture that resembled that of the respondent.

• “… the court must decide objectively whether the conduct is misleading or deceptive or likely to mislead or deceive…”

• Section 52 does not expressly state who or what class of persons could be mislead or deceived.

Puxu (Gibbs CJ cont.)

• It seems clear enough that consideration must be given to the class of consumers likely to be affected by the conduct.

• Although it is true, as has often been said, that ordinarily a class of consumers may include the inexperienced as well as the experienced, and the gullible as well as the astute, the section must be regarded as contemplating the effect of the conduct on reasonable members of the class.

Puxu (Gibbs CJ cont.)

• “The heavy burdens which the section creates cannot have been intended to be imposed for the benefit of persons who fail to take reasonable care of their own interests.

• What is reasonable will of course depend on all the circumstances.”

Taco (Australia) v Taco Bell (1982)

• Facts: Taco Bell had for several years conducted a Mexican food restaurant at Bondi under the name "Taco Bell's Casa".

• Taco Bell (Australia) opened two Mexican restaurants in Sydney in 1981 under the name "Taco Bell”.

• These two restaurants were associated with a large chain of fast food restaurants in the US food called "Taco Bell” which sold Mexican.

Taco (Judgment)

• Per Deane and Fitzgerald JJ: Section 52 of the Trade Practices Act does not require proof of deception or likelihood thereof which continues to the point of sale.

• In order for conduct to be misleading or deceptive, it must constitute a misrepresentation, and it must also take into account all surrounding circumstances.

Taco Bell (discussion)

• If the conduct is likely to mislead a party, then it will meet the threshold for misleading or deceptive conduct: Parkdale Custom Built Furniture v Puxu (1982).

• Consider the nature of the two businesses, and the nature of the likelihood of a reasonable consumer being mislead.

Henjo Investments v Collins Marrickville (1988)

• Facts: Henjo had an approval for 84 seats for the restaurant. Henjo then increased their seating numbers by 33% without approval.

• Collins purchased the restaurant but did not know about the absence of approval.

• Collins’ solicitors were asked to check with the Council but did not actually check.

Henjo Investments v Collins Marrickville (1988)

• Held by Lockhart J: Henjo had mislead them by not disclosing that the restaurant did not meet Council requirements.

• There was a duty to disclose this information by Henjo.

• This was despite Collins not making the proper inquiries, but on the facts the silence was a suppression of facts that constituted misleading conduct.

Demagogue Pty Ltd v Ramensky

• Federal Court, reported in (1992) 110 ALR 608• Facts: Mrs Ramensky purchased a unit ‘off the

plan’. She specifically asked a salesperson about access to the site.

• She was informed that the access was a private road but was not informed that an annual fee was payable to use the road.

• She sued for misleading or deceptive conduct.

Ramensky (judgment)

• Black CJ held that the appropriate test is that of ‘reasonable expectation of disclosure’.

• It was held that, in the circumstances, there should have been disclosure of the existence of the fee, because there was a reasonable expectation that there all the circumstances concerning access to the property should have been revealed.

Ramensky (discussion)

• Non-disclosure or circumstantial silence may amount to misleading or deceptive conduct: [at 110 ALR 618].

• The counter-argument to Henjo and Ramensky is that the purchaser should have made more reasonable inquiries as to the facts, however, this would need to be dealt with by the facts of each case. (see also Dimmock v Hallett (1866))

Campbell v Backoffice Investments (2009) 257 ALR 610

• Campbell gave backoffice some financial data and these were described as estimates.

• Campbell did not exercise reasonable care in putting the documents together.

• Backoffice sued for misleading or deceptive conduct inter alia under s 42 Fair Trading Act.

• Sued for damages under s 72 (new s 236)

Miller & Associates v BMW Australia Finance (2010) 270 ALR 204

• Consolidated Timber engaged an insurance broker, Miller, to apply for an insurance premium funding loan by BMW.

• The premium was not cancellable and could not be refunded.

• BMW contended that Miller had mislead them by not disclosing that the policy was neither assignable nor cancellable.

Miller & Associates v BMW

• The HIH certificate was not ambiguous in the sense that it was capable of being read as conveying a representation that the policy was a cancellable property insurance policy. Accordingly, the provision of further information would not have excluded a misleading construction.

Miller & Associates v BMW

• The alleged failure of Miller to volunteer information about the policy could not be said to have constituted misleading or deceptive conduct.

• In the event, a copy of the policy was put in the hands of BMW, who simply did not read it

Third party passing on misrepresentation

• Butcher v Lachlan Elder Realty (2004)• Real estate agent provided a disclaimer as to

representations about the sale of a house. • The purchaser bought the house because the

representations were false. • High Court held that the real estate agent was

passing on information.

Pappas v Soulac (1983) 50 ALR 231

• Fisher J, many of the initial statements made by the agent were essentially the type of introductory comments, in the nature of puffery, made at the start of negotiations, for the purpose of attracting the interest of a possible purchaser. However, the agent did make statements about the state of tenancy, that the tenants were happy and would not leave their tenancy. These statements were statements of fact which a reasonable person would rely on. It depends on the facts.

Campbell v Backoffice Investments (2009) 257 ALR 610

• Gummow, Hayne, Heydon, Kiefel JJ: A reasonable person in the position of backoffice would have made investigations.

• The question is whether the conduct is misleading or deceptive.

• The question of misleading conduct is a question of fact. • Look at the objective circumstances of the case. • Common law principles of misrepresentation and

reliance are not relevant to determining misleading or deceptive conduct.

McWilliams Wines v McDonalds (1989)

• Confusion on its own is not misleading. • McWilliams Wines created a “Big Mac” wine

but did not hold their products to be linked or related to McDonalds.

• They merely had a product called “Big Mac”.• The Big Mac wine did not have any use of the

material or aspects that were park of McDonalds Big Mac.

McWilliams Wines v McDonalds (1989)

• Smithers, Northrop and Fisher JJ: There were no other aspects such as colour or logos, so at most the Big Mac would cause confusion and not actually result in error.

• Objective test being whether a reasonable person would be mislead into believing the Big Mac wine was a part of McDonalds.

• Full Federal Court held that it was not misleading.

Intent not relevant

• Intent is not relevant to Section 18 (formerly s 52) contravention

• The person representing does not need to have any intention of misleading a party with their representations.

• A misrepresentation must look at the conduct as a whole.

Big Mac or Big Mic?

Hornsby Building Info Centre v Sydney Building Info Centre (1978)

• Look at all of the conduct, and circumstances: In this case.

• In the Hornsby case, the Sydney centre sought an injunction to restrain the Hornsby centre, because the similar name would mislead people as to whether the centres were affiliated.

• The Court held that it was not misleading because looking at the context as a whole must be considered.

Practical Analysis of “Big Mic”