Commercial Slides from my time lecturing in 2013

1. Commercial Law
Definition of “In Trade or Commerce”

2. 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.

3. “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.

4. 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.

5. 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.

6. 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.

7. Plimerv 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.’’

8. Plimerv 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.

9. Plimerv 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.

10. Plimerv 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’’.

11. Plimerv 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

12. Plimerv 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.

13. O’Brien vSmologov
• 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.

14. O’Brien vSmologov
• 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.

15. O’Brien vSmologov
• The Full Court (Fox, Sheppard and Beaumont
JJ) pointed out that on the facts of O'Brien
vSmologovthe 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 vWhitfords Beach Pty
Ltd (1982) 39 ALR 521.
• The land was not used for any business
activity.

16. O’Brien vSmologov
• 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.

17. O’Brien vSmologov
• 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.

18. 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".

19. 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.

20. 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.

21. Parkdale Custom Build Furniture
vPuxu(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.

22. Parkdale Custom Build Furniture vPuxu
• 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.

23. Parkdale Custom Build Furniture vPuxu
• 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.

24. 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.

25. 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.”

26. 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.

27. 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.

28. 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 vPuxu(1982).
• Consider the nature of the two businesses,
and the nature of the likelihood of a
reasonable consumer being mislead.

29. 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.

30. 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.

31. Demagogue Pty Ltd vRamensky
• Federal Court, reported in (1992) 110 ALR 608
• Facts: Mrs Ramenskypurchased 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.

32. 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.

33. 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
Dimmockv Hallett (1866))

34. Campbell vBackoffice
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.
• Backofficesued for misleading or deceptive
conduct inter alia under s 42 Fair Trading Act.
• Sued for damages under s 72 (new s 236)

35. 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.

36. 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.

37. 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

38. 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.

39. Pappas vSoulac(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.

40. Campbell vBackoffice 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.

41. 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.

42. 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.

43. 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.

45. 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.