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Misleading and deceptive conduct

Aughton v Wilkie [2010] NSWSC 1462. 16.12.10. Tamberlin AJ.

18 The case essentially turns on the representations, discussions, correspondence and conduct of Mr and Mrs Wilkie. The plaintiff relies on s 42 of the Fair Trading Act which provides that a person shall not in trade or commerce engage in conduct that is misleading or deceptive or is likely to mislead or deceive. In the present case it is not suggested that the parties were not engaged in trade or commerce.

Under s 68 of the Fair Trading Act an action lies for damages by a person who suffers loss or damage by conduct that is misleading or deceptive or likely to be misleading or deceptive.

Under that provision the plaintiff can recover the amount of loss or damage from any person involved in the contravention.

The loss or damage must however be caused by the misleading and deceptive conduct and if there has been no reliance or causation then the amount of loss or damage cannot be recovered.

19 The expression “conduct” is a term of wide import and is not limited to express oral or written representations but implied representations include a course of conduct manifested by action or failure to act.

The conduct in question must induce or be capable of inducing error: see Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 198.

This is a question of fact to be determined on the particular evidence in the specific case.

It is not sufficient to establish confusion or the possibility of confusion: see Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177.

Intention to deceive or mislead is not a necessary element in the offence, but if it can be shown that the person or corporation intended to mislead a court may be more likely to find that the conduct complained of was misleading: see Campomar Socieadad Limitada v Nike International Ltd (2000) 202 CLR 45.

20 Silence can amount to misleading conduct where it can be shown to be a relevant circumstance.

Although there is no general duty of disclosure in circumstances where a failure to disclose could be misleading then the silence may amount to conduct which is likely to mislead or deceive.

What has been referred to as “mere silence” is not of itself sufficient.

The courts recognise that parties are entitled to negotiate on a fair and reasonable basis and not disclose all aspects of their dealings.

As Hill J observed in Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97:

“… If the circumstances are such that a person is entitled to believe that a relevant matter affecting him or her would, if it existed, be communicated, then the failure to communicate it may constitute conduct which is misleading or deceptive because the person who ultimately may act to his or her detriment is entitled to infer from the silence that no danger or detriment existed.”

21 Depending on the circumstances silence then may be a critical matter on which reliance is or could reasonably be placed to establish misleading and deceptive conduct.

22 In relation to the need for a causal relationship between the deceptive conduct and the loss or damage, it is not necessary to show that the conduct is the sole cause of the applicant’s loss or damage.

It will be sufficient if it plays a part in the plaintiff’s loss or damage even if only a minor part, but the effect of the conduct must not be trivial or insignificant: see I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109; Gould v Vaggelas (1985) 157 CLR 215.

In the latter case, Wilson J observed that if the material representation is significantly likely to induce a representee to enter into a contract and the person actually enters into the contract, a fair inference will arise, subject to rebuttal, that the representation operated as an inducement.

However, if it can be shown that circumstances were fully explained to the plaintiff or that the plaintiff acted on a self-induced or other erroneous assumption not caused by the representation or acts after having formed his or her own independent judgment, the position may well be that there was no reliance or causation in such circumstances and therefore damages are not recoverable.

23 The courts have approached the question of causation as being essentially a question of fact and degree to be determined by reference to commonsense and practical experience and one into which policy considerations and value judgments necessarily enter: see March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506.

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