An Analysis and Discussion into Australian Consumer Law s 18 Part 2: The Test of Whether Conduct is Misleading or Deceptive

Ariel GalapoAriel Galapo, barrister, continues his series into s 18 of the Australian Consumer Law. In Part 2, he provides an analysis into the test of whether conduct is misleading or deceptive. For more on s 18, read Part 1, where he provides an analysis into the terminology used in the section.

The misleading or deceptive conduct may be directed at specific identified individuals to whom a particular misrepresentation has been made, or alternatively may be directed towards a class of persons.

Where the issue is the effect of conduct on a class of persons (rather than identified individuals to whom a particular misrepresentation or conduct has been directed towards), the effect of the conduct or representations upon ordinary or reasonable members of that class must be considered (see Flexopack S.A. Plastics Industry v Flexopack Australia Pty Ltd [2016] FCA 235).

The test of whether conduct is misleading or deceptive in the context of a class of persons was set out by the High Court in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44. It involves an objective question of fact to be determined by considering the conduct as a whole including all circumstances of the particular case. The question is whether the conduct is likely to mislead or deceive members of the class of persons to whom the conduct is directed and which is affected by the conduct. It involves a “spectrum where, depending on the facts, the characterisation of kinds of conduct might involve more nuanced considerations than are capable of being conveyed by the limited concepts of knowing, reckless or innocent contraventions.” (Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; (2016) 340 ALR 25 at [129]).

In Aldi Foods Pty Ltd v Moroccanoil Israel Ltd [2018] FCAFC 93, it was held that the correct question to be asked was: what was conveyed to the ordinary reasonable consumer of the relevant class by the use of the word ‘Naturals’ in their context? The potential class of consumers is a broad one and should be presumed to include “the astute and the gullible, the intelligent and the not so intelligent, the well-educated as well as the poorly educated, and men and women of various ages pursuing a variety of vocations”: Puxu Pty Ltd v Parkdale Custom Built Furniture Pty Ltd (1980) 31 ALR 73 at 93 (Lockhart J).

In order to ascertain the class, it is to be determined if the class is the public in general or whether the class consists of an identified group of individuals. See Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60.

In Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2015] FCA 330; Allsop CJ said with regards to the case at [95]: “ … the fact that a debate that the phrases were misleading was objectively open indicate that the impugned phrases should never have been deployed in the way that Coles chose to deploy them… The fact that some people may not be misled is not the point. It is important that sellers in the market recognise that consumers are entitled to reliable, truthful and accurate information. Confidence in such is a matter of importance for the Australian community and economy…”.

The courts will look at the characteristics of the targeted class of consumers to determine if the representation is likely to mislead or deceive not an insignificant number of reasonable members of the class. See Novartis Pharmaceuticals Australia Pty Ltd v Byer Australia Ltd [2015] FCA 35 where the representation was directed to specilaised physicians. On the other hand, in Aldi Foods Pty Ltd v Moroccanoil Israel Ltd [2018] FCAFC 93, the relevant class was someone who shopped, or may have shopped, at one of the appellants’ supermarkets, was aware of the respondent’s brand and its products and was attracted by the prospect of purchasing them at a bargain price.

It must be noted that the group to whom the representation is directed and who are likely to be deceived or mislead “need not itself have any particular characteristics such as being capable of being described as “consumers” (see Mortimer J in Shape Shopfitters Pty Ltd v Shape Australia Pty Ltd (No 3) [2017] FCA 865 at [100]).

Finally, it must also be noted that a representation can be proved to be misleading or deceptive by adducing expert evidence regarding the quality of the product even though the consumers may be quite unaware of defects or inferior quality. See ACCC v HJ Heinz Company Australia Ltd [2018] FCA 360.

Ariel Galapo is a Barrister at Frederick Jordan Chambers specializing in Competition and Consumer Law, Commercial Law and Equity. Ariel brings a wealth of legal knowledge as a legal editor with Thomson Reuters for 10 years. His editorial portfolio was wide and extensive and included leading legal texts such as: Trade Practices Law: Competition and Consumer Law by former Justice Dyson Heydon AC, Miller’s Australian Competition and Consumer Law Annotated, Federal and High Court suite of publications by Justice Flick and Commercial Damages by Sydney Jacobs. You can contact Ariel via email at