TRADE PRACTICES PARTS IV IVA, V, VA and VI

COMPETITION AND CONSUMER LAW

COURSE SYNOPSIS

This synopsis does not constitute lecture notes and cannot be relied upon beyond providing an outline of the course.

The CCL Subject Guide provides the full list of relevant cases.

Additional cases may be added, during the semester.

The cases referred to in the synopsis are examples only.

Diagrams on the various sections and certain concepts will be made accessible on the internet.

Competition & Consumer Act 2011

From 1 January 2011, the Trade Practices Act 1974 (“TPA”) was amended & renamed the Competition & Consumer Act 2011 ("CCA").

Included in the CCA is the Australian Consumer Law (“ACL”).

Australian Consumer Law (“ACL”)

The ACL is contained in Schedule 2 of the CCA.

Similar sections that were in the TPA were repealed, including those dealing with:

. Deceptive Trade Practices (“DTP”);

. Product Liability (“PL”);

. Enforcement; &

. Remedies

S131(1) of the CCA, “Application of the ACL in relation to corporations etc.”: “the ACL applies to conduct of “corporations””.

S131A, “Division does not apply to financial services”,.

S131C "Saving of other laws and remedies"): the ACL operates concurrently with applicable State & Territory consumer law (e.g. Fair Trading Acts). 2:

To the extent that any provision of State consumer legislation are inconsistent with the CCA, s109 of the Constitution will apply so as to render the State legislation invalid.

The ACL:  includes a national unfair contract terms law covering standard form consumer and small business contracts;

 includes a national law guaranteeing consumer rights when buying goods and services;

 includes a national product safety law and enforcement system;

 includes a national law for unsolicited consumer agreements covering door- to-door sales and telephone sales;

 includes simple national rules for lay-by agreements; includes penalties, enforcement powers and consumer redress options;  applies nationally and in all States and Territories;  applies to all Australian businesses. For pre 1/1/11 transactions, the previous national, State and Territory consumer laws continue to apply;  is administered by the ACCC & state and territory consumer protection agencies  is enforced by all Australian courts & tribunals, including the courts & tribunals of the States & Territories;  is a cooperative reform of the Australian Government and the States and Territories,;  was the key recommendation of the Productivity Commission’s 2008 Review of Australia’s Consumer Policy Framework ;  the Productivity Commission ‘found that the ACL could deliver between $1.5 and $4.5 billion of benefits to the Australian community. Australian Securities and Investments Commission Act 2001 (ASIC Act), contains ACL type provisions in relation to financial products & services. ACL is comprised of 5 chapters:

Chapter 1 – Introduction: a single set of definitions & interpretive provisions 3:

For the purposes of the ACL, a person is a ‘consumer’ if they acquire goods or services that are priced at:

 less than $40,000;

 more than $40,000 but they are ‘of a kind ordinarily acquired for personal, domestic or household use or consumption’.

A person who acquires a vehicle for use in the transport of goods on public roads, irrespective of price, is also considered to be a consumer for the purposes of the ACL.

Chapter 2 – General protections: which create standards of business conduct in the market, including a general ban on misleading and deceptive conduct in trade or commerce;

S 18 prohibits a person, in trade or commerce, from engaging in misleading or deceptive conduct. Not limited to the supply of goods or services. Creates a broad, economy-wide norm of conduct.

There is a general ban on unconscionable conduct in trade or commerce.

Specific bans on unconscionable conduct in consumer and some business transactions; to be considered unconscionable, conduct must be more than simply unfair. It must be against conscience as judged by society’s norms.

Unfair terms in consumer contracts may be void.

A term is ‘unfair’ when it causes a significant imbalance in the parties’ rights and obligations arising under the contract and it is not reasonably necessary to protect the legitimate interests of the supplier and it would cause financial or non-financial detriment to a party.

Chapter 3 – Specific protections which address identified forms of business conduct, including provisions banning specific unfair practices in trade or commerce. There are prohibitions for certain false/misleading representations, the supply of unsolicited goods or services, participating in pyramid schemes, and practices involving the display of prices, referral selling, harassment or coercion. 4:

Dealing with consumer transactions for goods or services, the ACL provides guaranteed consumer rights for goods or services,

On the liability of manufacturers for goods with a safety defects, the ACL sets out the statutory rules for dealing with liability claims for loss or damage. Includes economic loss, caused by supplying goods containing a safety defect.

Any person, as well as a regulator on behalf of a consenting individual, may commence an action against a manufacturer to recover compensation where the person has suffered loss or injury as a result of defective goods being supplied.

Chapter 4 – Offences. The ACL provides that certain breaches are sufficiently serious such that they may be treated as criminal offences, to which criminal sanctions apply. Chapter 5 – Enforcement and remedies: Not all remedies require a breach to be taken to court e.g., consumers can seek a refund, replacement or repairs if a supplier fails to satisfy its obligations regarding consumer guarantees

Each chapter contain divisions, parts and sections. There are:

 definitions /interpretive provisions;

 A national law on unfair consumer contract term (Part 2-3);

 provisions prohibiting unfair/sharp practices and unfair trading etc., which mirror/replicate provisions in State & Territory Fair Trading legislation;

 National consumer statutory guarantee provisions, (Part 3-2, Division 1);

 other product liability provisions;

 National regime for unsolicited consumer agreements;

 National product safety legislative regime (Part 3-5).

 Enforcement and remedy provisions 5:

Topic A: Background and outline to the CCA.

Issues:

What is the basis (economic, social etc.) for the CCA/ACL?

How does the CCA/ACL affect the commercial activities of businesses, large and small, government authorities, and individuals?

How can/do consumers benefit from the CCA/ACL?

Object of the CCA: s2. – “The object: enhance the welfare of Australians through:

. the promotion of competition & the promotion of fair trading &

. provision for consumer protection.” by:

 prohibiting anti- competitive conduct in the form of restrictive trade practices (“RTP”),

 prohibiting DTP” &

 making actionable inadequate/defective/unsafe products/services and defective goods (product liability).

 providing for:

 enforcement & penalties

 injunctive relief;

 damages;

 other forms of relief/remedies not available under the common law.

Structure of the CCA 6:

Part IV of the CCA:

RTP provisions are contained in Part IV of the CCA. They comprises:

. cartel provisions (Division 1 of Part IV) i.e. anti- competitive agreements (contracts, arrangements and understandings) between competitors ;

. anti-competitive agreements (contracts/arrangements/ understandings) between competitors (s45) which contain:

 an "exclusionary provision" (defined in s4D) or

 “ have the purpose or effect or likely effect of substantially lessen competition” (in defined markets)

. misuse of market power (s46)

. exclusive dealing (s47)

. resale price maintenance (s48, 96 – 100)

. mergers/acquisitions (s50 and 50A)

DTP comprise:

. Unconscionable Conduct (Part 2.2- ACL), including breaches of mandatory & voluntary Industry Codes (Part IVB of CCA)

. Misleading/deceptive conduct, misrepresentations, undue harassment and coercion (Part 2 – 1 of ACL)

. Unfair terms in consumer contract (Part 2 – 3 of ACL)

. Sharp practices (Part 3.1 of ACL).

. PL provisions comprise:

. Consumer guarantees and remedies (Part 3.2 of ACL); 7:

. Actions and remedies against manufacturers of goods that contain safety defects (Part 3.5 of ACL)

Enforcement provisions for breaches of relevant sections – refer to sections in Part VI of CCA & Chapter 5 of ACL.

Remedies where there are breaches of relevant sections –” refer to sections in Parts VI, VIA & B of CCA & Chapter 5 of ACL.

Desired Outcome:

Understand:

 the economic/social justification for the CCA & ACL.

 The statutory objectives of the CCA & ACL

 the general structure of the CCA & ACL and

 the specific provisions. of the CCA & ACL 8:

Topic B: Constitutional Basis for CCA (including ACL)

Issues:

What are the Heads of Power ,under Australian Constitution Act, relied upon to establish the jurisdictional limits of the CCA?

Why is this important?

How have these limits been expanded, including via the ACL?

Structure:

“ Corporations Power". S51 (XX) of Constitution Act provides for the making of laws concerning the “trading” activities of “trading corporations” (s4 CCA).

“ Person”: defined in the Acts Interpretations Act to include a “body a corporate & a body politic”. Particularly relevant to ACL.

CCA is not meant to cover everything.

Fair Trading Acts of the states/territories still operate but in a more limited way due to the ACL.

See also ASIC Act/Corporations Act/ other federal and state legislation for provisions similar to those contained in ACL.

Desired outcome:

Understand:

 the Constitutional basis for the CCA.

 Jurisdiction conferred by states/territories re CCA & ACL

 Limitations of application of CCA/ACL. 9:

Topic C: Government entities covered by the CCA, Extended Jurisdiction & Definitions/ Interpretations of terms.

Issues:

When are government (Federal/State/Territory) and other entities subject to the CCA/ACL and when can they rely on Crown immunity?

Why is this important?

Structure:

ss2A & 2B of CCA deem Commonwealth, State & Territory government bodies to be “corporations”, "in so far as they are carrying on a business”, so may be subject to the provisions of CCA.

Difference between “the carrying on a business” and “governmental activities”, which attraction Crown immunity.

"Governmental" activities: see JS McMillan P/L, RT. & YE Falls Invest, Village Building v Canberra Airport (as it pertains to Air Services Australia), NT Power Generation v Power & Water.

Specific government activities excluded from constituting the carrying on of a business (s2C of CCA) i.e. tax collection, imposition of levies/fees etc.

Definitions

"Business" (s4 (1)) includes :"one not carried on for profit".

“Corporations” (s4):

 “trading”, based on the “activities test”, as per

Hughes v WA Cricket Assoc, R v Fed Ct of Aust ex parte: WA National Football League (Adamson case) or

 “financial” (State Super Board of Vic). 10:

“Activities test” vs. “purpose test”

(see. Adamson case, State Super Board of Victoria, E v Australian Red Cross Society. If there are no activities, see Fencott v Muller).

Financial Corporation" (State Superannuation Board of Vic, SGIC v GIO).

“Acquire" (s4),

“acquisition, supply and resupply" (s4C of CCA & s 2 of ACL),

“Acquisition of shares” (s4 (4)) - relevant to s50

“Goods",

“services”,

"In trade or commerce" vrs “in connection with trade or commerce”

(see Glorie v WA Chip & Pulp, Nelson v Concrete Construction, Pritchard v Racecage, AFCO v Tobacco Institute of Australia, Pears v Balzer, Martin v Tasmanian Development, McCormick v Riverwood International, Walker v Sell) .

Note the policy justification for the distinction.

“Conduct", including by silence,

(see Henjo v Collins Marrickville Demagogue Pty Ltd. v Ramensky, Metalcorp Recyclers v Metal Manufacturers).

Defence of “inadvertence”

(see Costa Vraca v Berrigan Weed)

“Consumer” (s4B of CCA & s 3 of ACL). 11:

“Injury loss or damage including personal injury” (s4K & s4KA)

See also s2 in Ch 1 of the ACL. Desired Outcomes

(i) Understand when a government entity may be the subject to the CCA/ACL via the extended jurisdiction. (ii) (iii) Understand key definitions: and

(ii) Be able to identify/ discuss/ apply key threshold issues (including key definitions) as to the application of CCA & AC to a factual situation. 12:

Topic D: Competition Policy & Markets

Issues:

Why is it desirable/necessary regulate to promote/ procure/ maintain competition in the Australian economy?

What are the benefits of highly competitive markets vs. “monopoly/ duopoly/oligopoly”?

What is the connection between competitive markets and efficient markets?

Who benefits and how?

For the purposes of applying provisions in the CCA, what is a “market” ,?

How is a market to be derived/identified?

How are “markets” relevant to determining market power (s46 CCA) & the “substantially lessening of competition” (ss45, 47 & 50 of CCA)?

Structure:

The economic theory upon which competition policy is based:

i. price theory

ii. perfect competition v monopoly

iii. Industrial Organisation Theory

A perfectly competitive market is a hypothetical market where the level of competition is at its, theoretical, highest.

Neo-classical economists argued that perfect competition would produce the best possible outcomes for the economy, consumers, and society generally. Why?

Implications and connection of economic theories about competition to Part IV of CCA (refer to chapter in Corones on competition policy). 13:

“Market” definition (s4E of CCA):

 a market in Australia &

 when used in relation to any goods or services, includes:

o a market for those goods or services &

o other goods or services that are substitutable for the first-mentioned goods or services, or

o otherwise competitive with, the first-mentioned goods or services”.

What are "close substitutes" within a “field of competition”?

Why are close substitutes important when deriving a market?

Concept of “elasticity of demand and supply” when determining the “field of competition” and in turn “the market”.

Elasticity refers to the degree of responsiveness in supply or demand in relation to changes in price. If a curve is more elastic, then small changes in price will cause large changes in quantity consumed. If a curve is less elastic, then it will take large changes in price to effect a change in quantity consumed. The greater the elasticity the greater the likelihood that other goods & services will be regarded as close substitutes & hence part of “the market”.

Markets can be defined by:

 product /service type (e.g. biscuits, fat cattle),

 function – (e.g. manufacture, wholesale, retail),

 Demographics (e.g. age, sex , circumstances, nationality)

 Genre (e.g. interests, styles et cetera see Universal Music)

 geographical area. (e.g. TPC v Australian Meat Holdings, Cool v O’Brian 14:

 Any combination of the above.

Refer: Qld. Co-op Milling Association, TPC v Ansett Transport Industries, QWI v BHP, Mark Lyons v Bursill, Arnotts, Melway, Universal Music, Boral Besser, Henschke v Rosemount, ACCC v Kingsland. Meatworks & Cellars, ACCC v Flight Centre

What is the difference between a “Sub-market” vs the “market”? (Taprobane v Singapore Airlines)

Defining the “Market” for the purpose of establishing:

. Substantially lessening of competition” (in the defined market). (see Boral Besser where High Court discussed the connection)

. “market power”:

Desired outcomes:

Basic understanding of the importance of competition policy to the provisions contained in CCA/ACL.

Ability to apply principles in identifying the characteristics of a “market”.

Deriving “the market”

Determining:

o the extent of market power (s46); and

o the substantial lessening of competition (ss45, 47 and 50) 15:

Topic E: Contracts, Arrangements or Understandings (“c/ a/ u”,)

C/A/U between competitors, which contain:

- a cartel provision (Part IV Division 1) &/ or

- an "exclusionary provision" (s 45& s4D) or

- that has the purpose or effect or likely effect of substantially lessening competition (s 45)

Issues:

Application to anti-competitive conduct/restrictive trade practices, in the form of collusion between competitors.

Identifying the existence of a c/ a/ u which contain a cartel provision, (as defined in Division 1).

Identifying the existence of a c/ a/ u which:

. contain an “exclusionary provisions” (defined in the s4D of CCA) as referred to in s 45.

. Otherwise, as per s 45, have :

o the purpose or

o effect or

o likely effect

o of “substantially lessening competition”.

How is the “substantially lessening competition” test applied?

Requires the derivation of the relevant market.

Structure: 16:

The provisions involve conduct which can operate/ have an effect both:

o “vertically” and/or

o "horizontally”.

What are the critical:

o concepts,

o terms &

o threshold issues?

“C/ a/ u” (involving the making of or giving effect to c/ a/ u) between 2 or more competitors (one of which must be “a corporation”)

– see Top Performance Motors, TPA v Nicholas, David Jones, Concrete Constructions, Apco v ACCC, ACCC v Leahy (2007).

Types of cartel provisions contained in c/ a/u

S 44ZZRA provides a simplified outline:

A corporation must not make, or give effect to, a c/a/u that contains a cartel provision. A cartel provision is a provision relating to: (a) Price-fixing; or (b) restricting outputs in the production and supply chain; or (c) allocating customers, suppliers or territories; or d) bid-rigging; by parties that are, or would otherwise be, in competition with each other.

S 44ZZRD sets out the forms of cartel conduct in detail. 17:

Cartels are Illegal per se.

Criminal penalties apply for proscribed forms of conduct, including jail.

Civil prohibition operates in relation to the same forms of cartel conduct.

S44ZZRF : “Making a contract etc. containing a cartel provision” Offence (1) A corporation commits an offence if: (a) the corporation makes a contract or arrangement, or arrives at an understanding; and (b) the c/a/u contains a cartel provision. Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility. (2) The fault element for paragraph (1)(b) is knowledge or belief. Penalty (3) An offence against subsection (1) is punishable on conviction by a fine not exceeding the greater of the following: (a) $10,000,000; (b) if the court can determine the total value of the benefits that: (i) have been obtained by one or more persons; and (ii) are reasonably attributable to the commission of the offence; 3 times that total value; (c) if the court cannot determine the total value of those benefits--10% of the corporation's annual turnover during the 12- month period ending at the end of the month in which the corporation committed, or began committing, the offence. Indictable offence (4) An offence against subsection (1) is an indictable offence. 18:

Operation of s45.

S45 contains 2 tests.

CAU containing an Exclusionary Provisions) are illegal per se.

Exclusionary Provisions (s4D):

Exclusionary provisions are also known as primary boycotts. They occur when competitors agree not to supply (or buy) goods or services to a particular person or class of persons, or when competitors agree to prevent or hinder the acquisition of goods or services from a particular person or class of persons. If, for example, a corporation agrees to share information about defaulting trade debtors with several of its competitors and the competitors agree not to supply those debtors, this would be an exclusionary provision. Forms of conduct includes:

 Refusal to deal (black listing),

 Limiting/restricting dealings with a supplier or a particular customer, or class of competitor or customer

(e.g. Top Performance Motors, News Limited v South Sydney Rugby League).

 Exclusion aimed at a definable person or class of person.

(News Ltd v South Sydney Rugby League , Rural Press v ACCC)

If c/a/u does not contain an exclusionary provision apply 2nd test, namely does it involve:

i. the making of; or

ii. giving effect to

agreements between 2 or more competitors which has:

o the purpose or 19:

o effect or

o likely effect of substantially lessening competition?

“Purpose” must be a "substantial purpose" (s4F of CCA)

“Substantial”: large or weighty, big (Dowling v Dalgety)

Requires:

i. defining the market &

ii. evaluating level of competition in that market pre the uncompetitive conduct arising out of the c/a/u

iii. evaluating level of competition in that market post the conduct in question

iv. establish whether any lessening of competition (ii – iii) is substantial (i.e. Weighty/ considerable).

Desired outcomes:

Understanding of:

 what is a c/a/u

 the cartel provisions

 the penalties (civil and criminal) for breaches of the cartel provisions

 s45 threshold issues, including existence of an exclusionary provision (s4D)

 Application of the 2 test approach 20:

 Under the 2nd test assess whether CAU has the effect or likely effect of substantially lessening competition in breach of s45 21:

Topic F: Misuse of market power (s46)

Issues:

When does a corporation have:

. “market power” or

. “a substantial share of the market”?

When does a corporation misuse/take advantage of that market power for a prescribed anti-competitive purpose?

Supplying, at a price that is less than the relevant cost to the corporation, for a prescribed anti-competitive purpose, where the corporation has a substantial share of the market, is also a potential breach.

Establish the causal connection between the corporation’s:

. market power &/or

. substantial share of the market & any identifiable, prescribed anti-competitive conduct.

Structure:

To find market power must:

1. define the” market” in which conduct is alleged to occur; and

2. establish whether the corporation has the requisite power in that market

(e.g. QWI v BHP, Mark Lyons v Bursill, Eastern Express, Boral Besser etc). “Market power”

(Melway Publishing v Hicks , Mark Lyons v Bursill, Munroe Topple, Boral Besser & Universal Music v ACCC, ACCC v Pfizer Australia). 22:

Must be evidence of the “taking advantage of that (market) power” (Melway).

Alternatively there is a 2nd test:

 a corporation;

 with a "significant share of the market";

 which sells below cost (not defined);

 for a prescribed anti-competitive purpose

may also breach the Section.

“Purpose” (s4F):

. may be one of multiple proposes but

. must be a “substantial purpose" - apply subjective test (Pont Data)

Proscribed purposes which constitute “forms of anti-competitive” conduct to:

a. To damage a competitor

b. To prevent entry of a person into a market

c. 2 deter/prevent a person from engaging in competitive conduct in a market.

Typical types of conduct:

predatory pricing (Vic Egg Marketing Board, Boral Besser)

oppressive contracts (Pont Data)

refusal to deal (QWI v BHP, Mark Lyons v Bursill, Melway)

Note: HC cases –

QWI v BHP, Melway Publishing v Hicks, Boral Besser Masonry v ACCC., NT Power Generation v Power & Water 23:

Desired outcomes:

 apply the 2 tests;

 determine the key threshold issues: “corporation”, “market”, “market Power”, “substantial share of the market”;

 identify breach/s;

 confirm causal connection between the “market power” & breach

 also confirm causal connection between “substantial share of the market” & breach 24:

Topic G: Exclusive dealing (s47)

What is exclusive dealing?

What are the types of vertical non-price restrictions, placed on parties in the distribution chain, that constitute exclusive dealing?

Why are the various forms of exclusive dealing prescribed in s47, prohibited?

Why is the third line forcing prohibited, per se?

Structure:

Types of exclusive dealing, which are subject to the "substantially lessening of competition" test:

. Product restrictions:

o solus agreements, including franchise agreements

(Re Tooths, Dandy Power, Outboard Marine v Hecar)

o partial requirements contracts

(O’Brien Glass v Cool & Sons, Universal Music)

o tying arrangements

(Re Cadbury Schweppes)&

o full line forcing

(Nashua).

. Geographical Restrictions (Australian Meat Holdings)

. Customer Restrictions

3rd line forcing: 25:

Requiring a customer to acquire goods or services from another person as a condition of the supply of your goods or services to that customer is prohibited, regardless of the effect on competition. Similarly, refusing to supply because the customer has not accepted the condition to acquire goods or services from another if also prohibited. It is also illegal to set prices according to whether a customer has acquired goods or services from another person. A common example of third-line forcing is a lender requiring that, as a condition of its lending money, the borrower must take out insurance with the lender’s nominated insurer. The forcing condition need not be express, it can be inferred from the circumstances.

3rd line forcing:

 a form of exclusive dealing which is illegal per se

 there must be 2 separate contracts

(Castlemaine Tooheys v Willams & Hodgson)

 one of the contracts must be with a 3rd party

(SWB Family Credit Union v Parramatta Tourist Services , Transport, Paul Dainty v National Tennis Centre, Legion Cabs v TPC)

The "Substantial lessening of competition" test requires:

 defining the relevant market

 establishing competition pre- conduct;

 establishing competition post- conduct;

 Establish whether there is a lessening of competition.

 Establish whether the lessening of competition is substantial.

Consideration of critical concepts, terms and threshold issues. One critical threshold 26: issue is the existence of “a corporation”.

See also ACCC v Health Partners, ACCC v Safeway, Universal Music

Desired outcomes:

To be able to determine:

i. the threshold issues ;

ii. elements when considering whether there has been a breach of s47

iii. apply the section to a given set of facts. 27:

Topic H: Resale price maintenance (“RPM”) (ss48 and s96 to s100)

Why are the practices of establishing minimum resale prices for goods and services (i.e. non-discounting), as a condition of supply of the goods and services by corporations, illegal per se?

What are the 6 forms of RPM?

What are direct v indirect forms of RPM?

What are the circumstances in which disallowance of discounting allowable? Why?

Structure:

The law gives resellers the freedom to sell and to advertise products at any price but prohibits insisting that resellers sell or advertise at minimum prices. RPM involves a supplier setting a minimum price below which resellers must not resell goods. It is permissible to set a maximum resale price. A contract that expressly provides that a product cannot be resold except at or above a minimum price is prohibited. Other less obvious conduct which may constitutes RPM can be:  refusing to supply resellers who will not adopt your pricing policy (or making that threat known);  requiring that the resale price is linked to something else, for example, what a competitor’s resellers are charging;

 using a formula to work out a minimum resale price; or

 prohibiting the advertising of discount prices. A supplier can legally recommend a resale price, but only if the price is, in every sense of the word, recommended only. There must be no obligation of any nature to follow the recommendation and this 28: must be made clear to the reseller to whom the recommendation is made.

RPM is Illegal per se.

Statutory Structure

S48 Resale price maintenance A corporation or other person shall not engage in the practice of resale price maintenance S4 "practice of resale price maintenance” means the practice of resale price maintenance referred to in Part VIII.

PART VIII--RESALE PRICE MAINTENANCE

96. Acts constituting engaging in resale price maintenance

96A. Resale price maintenance in relation to services

97. Recommended prices

98. Withholding the supply of goods

99. Statements as to the minimum price of goods

100. Evidentiary provisions

Threshold issue: must be a “corporation” supplying or acquiring (s 96 (1) & (2))

6 separate acts constituting engaging in RPM (s 96 (3)).

Distinguish between:

. direct RPM (s 96 (3) (a), (b), (e) & (f)) &

. indirect RPM (i.e. by withholding goods or services. (s96 (3) (d) – (e)).

Consideration of critical concepts, terms and threshold issue.

What constitutes “a specified price” – s96 (4).

How specific must the price be? 29:

(TPC v Bata Shoes, Mobil Oil, Heating Centre v TPC, 2UE v Stereo FM, TPC v Penfolds Wines).

What constitutes “making it known”: s96 (3) (a)

(ACCC v Dermalogica) and

“Inducing or attempting to induce”: s96 (3) (b).

(Bata Shoes, Heating Centre)?

“Attempting to induce”: must prove intent.

“Recommended prices” (s97).

Conduct that is deemed to constitute “withholding of supply” (s 98)

The defence of ‘loss leader’ selling (s98 (2) but subject to certain qualifications

(TPC v Orlane).

When can it operate as against being ineffectual?

See also ACCC v Safeway (No 2), Dermalogica and Jolique .

Desired outcomes:

To be able to determine the threshold issues regarding RPM.

Identifying the elements for a breach of s48. 30:

Topic I: Prohibition of acquisitions that would result in a substantial lessening of competition -mergers and takeovers (s50)

The rationale for prohibiting or restricting certain mergers/takeovers.

Prevention of aggregation of market power by means of mergers/takeovers.

Acquisitions (shares and/or assets) which would have the effect of “substantially lessening competition” in a market.

Markets within a region may be effected.

Structure:

S50 Prohibition of acquisitions that would result in a substantial lessening of competition (1) A corporation must not directly or indirectly: (a) acquire shares in the capital of a body corporate; or (b) acquire any assets of a person; if the acquisition would have the effect, or be likely to have the effect, of substantially lessening competition in any market. (2) A person must not directly or indirectly: (a) acquire shares in the capital of a corporation; or (b) acquire any assets of a corporation; if the acquisition would have the effect, or be likely to have the effect, of substantially lessening competition in any market.

Applies to corporations but also to “persons” who acquire, directly or indirectly, the shares or assets of a corporation.

Consideration of critical concepts and terms including:

. “acquisition” (s 4(4) and (TPC v Australian Iron and Steel) 31:

. “directly and indirectly” (Bowral Bricks, Australian Meat Holdings).

Identifying the relevant market.

Must find that there is:

. a ” market” (ss 4D &50 (6))

. in Australia, States or Territories or a region.

Apply “Substantially lessening competition” test: (TPC v Ansett, Arnotts v TPC)

The Court must take into account 9 factors when considering if there is a “substantially lessening competition” (s50 (3)).

These are:

(a) the actual and potential level of import competition in the market; (b) the height of barriers to entry to the market; (c) the level of concentration in the market; (d) the degree of countervailing power in the market; (e) the likelihood that the acquisition would result in the acquirer being able to significantly and sustainably increase prices or profit margins; (f) the extent to which substitutes are available in the market or are likely to be available in the market; (g) the dynamic characteristics of the market, including growth, innovation and product differentiation; (h) the likelihood that the acquisition would result in the removal from the market of a vigorous and effective competitor; (i) the nature and extent of vertical integration in the market.

Note: divestiture powers under s81 of CCA.

Outcome

To be able to determine: 32:

i. the threshold issues including the derivation of the relevant “market”; & ii. The elements for a breach of s50. iii. The application of s50(3) when considering a breach. 33:

Topic J: Unconscionable conduct (Part 2.2 of the ACL)

Issues:

What is unconscionable conduct?

What is unconscionable conduct within the meaning of the unwritten law (s20)?

In what circumstances can s20 be used?

What is unconscionable conduct in connection with goods or services (s21)?

What are the matters the court may have regard to for the purposes of deciding whether there has been a breach of s 21 (s22)?

What are the benefits of relying on Part 2.2?

Structure:

Part 2.2 does not apply to financial services: (s 131A of Part XI of CCA). Use ASIC Act.

Threshold issues:

 “person ",

 “conduct” (s 2 (2),

 "in trade or commerce”.

S20 -Unconscionability within the meaning of” the unwritten law”:

 substantial disability (constitutional and situational) vs.  substantial disadvantage

(Refer to Bromley v Ryan, Commercial Bank v Amardo, Yerky v Jones, Gregg v Tasmanian Trustee Ltd, ACCC v Barbatis). 34:

Advantages of s20: gives access to forms of statutory remedies for unconscionable conduct (ACL: Division 2 – injunction & s243 orders) which are not available in equity.

Important limitations on s20 ( s 20 (2).

S 21: “"unconscionable conduct “in connection with” goods or services" – “to go with” or “be involved in” given a broad meaning (Munroe Topple).

Supply or possible supply of goods or services to another person.

Acquisition or possible acquisition of good or services from another person.

Not available to listed public companies.

Has very broad application. s 21 (4) identifies "Parliamentary intention".

Defence of foreseeability ((s21 (3)(a))

S22: 11 matters the court may have regard for the purposes of 21.

(a) the relative strengths of the bargaining positions of the supplier and the customer(ACCC v Lux); and (b) whether, as a result of conduct engaged in by the supplier, the customer was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier; and (c) whether the customer was able to understand any documents relating to the supply or possible supply of the goods or services; and (d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the customer or a person acting on behalf of the customer by the supplier or a person acting on behalf of the supplier in relation to the supply or possible supply of the goods or services; and (e) the amount for which, and the circumstances under which, the customer could have acquired identical or equivalent goods or services from a person other than the supplier; and 35:

(f) the extent to which the supplier's conduct towards the customer was consistent with the supplier's conduct in similar transactions between the supplier and other like customers; and (g) the requirements of any applicable industry code (Part IVB of CCA mandatory industry codes & voluntary codes): and (h) the requirements of any other industry code, if the customer acted on the reasonable belief that the supplier would comply with that code; and (i) the extent to which the supplier unreasonably failed to disclose to the customer: (i) any intended conduct of the supplier that might affect the interests of the customer; and (ii) any risks to the customer arising from the supplier's intended conduct (being risks that the supplier should have foreseen would not be apparent to the customer); and (j) if there is a contract between the supplier and the customer for the supply of the goods or services: (i) the extent to which the supplier was willing to negotiate the terms & conditions of the contract with the customer; and (ii) the terms and conditions of the contract; and (iii) the conduct of the supplier and the customer in complying with the terms and conditions of the contract; and (iv) any conduct that the supplier or the customer engaged in, in connection with their commercial relationship, after they entered into the contract; and (k) without limiting paragraph (j), whether the supplier has a contractual right to vary unilaterally a term or condition of a contract between the supplier and the customer for the supply of the goods or services; and (l) the extent to which the supplier and the customer acted in good faith (ASIC v National Exchange).

Also refer to Full Federal Court’s decision in ACCC v Lux& NRM Corp v ACCC 36:

Application of Part IVB of CCA- Industry Codes (sS51AD) – mandatory codes:

 Franchising Code of Conduct &

 Horticultural Code.

Consequence of a breach.

Desired outcomes:

Ability to apply ss 20 &, 21 and s22, including identifying the circumstances in which they can be used.

Understand the interrelationship of s21/22 including the application of industry codes as per Part IVB of CCA. 37:

Topic K: Unfair practices (Part 2 – 1 Misleading or deceptive conduct, Part 3 – 1: unfair practices)

Representations as to future matters in the form of promises & predictions (s4 of ACL)

Issues:

What types of practices/conduct are misleading or deceptive?

When can the section be applied if the conduct/representation is in the form of a promise or prediction vs. a representation as to a past or current matter?

When can “silence” constitute conduct?

Must intent need to exist?

Structure:

Non-application to the provision of “financial services” (s 131A of Pt XI CCA); must apply ASIC Act).

4 threshold elements:

 “person”,

 “conduct” (including by silence),

 “in trade or commerce” (ie. must be “in trade or commerce” and not simply incidental to trade or commerce ( CC v Nelson, Walker v Sell))

 Conduct that does or is likely to mislead or deceive

(S4 of ACL): Misrepresentations as to future matters.

Shifts burden of adducing evidence, of having reasonable grounds, onto the defendant.

(Sykes v Reserve Bank)

Misleading & deceptive conduct (s18) - establishes a norm of conduct. 38:

Proof of intent is not necessary:

(see Brown v Jam Factory P.L.).

Not confined to “consumers”:

(see Concrete Construction v Nelson).

Can be relied upon to protect commercial interests

(Parkdale, Hornsby Building Information Centre, Campomar Sociadad v Nike).

Who must be misled?

Distinguish between:

. public representations (as per advertising, signs, public presentations/ announcements, product labelling, use of internet etc.) versus

. private representations (usually made to an individual).

Public representations: apply 4 step analysis as referred to in Taco Bell but qualified by the “reasonable person test"(see, Campomar Sociadad v Nike).

All of the circumstances in which the representation is made needs to be considered (Butcher v Lachlan Elder).

Doctrine of “erroneous assumption”:

(McWilliams Wines v McDonald’s and Taco Bell) vs.

Intention to confuse may be relevant but is not essential:

(see Murray Goulburn Co-op, Telmak).

Use of disclaimers & exclusion clauses which seek to avoid potential liability are problematic and generally fail: (see Henjo v Collins Marrickville & Butcher v Lachlan Elder). 39:

Wrong Information passed on – the conduit effect:

(see Yorke v Lucas, Acohs v Bashford Consulting, Costa Vraca)

Note particular types of conduct such as comparative advertising and use of testimonials.

‘Puffery’: wildly exaggerated, fanciful or vague claims that no reasonable person could possibly treat seriously or find misleading.

For example:

o a café owner claims to make ‘the best coffee in the world’

o ‘all your dreams will come true’ if you use a certain product.

No legal distinction between puffery and misleading or deceptive conduct.

Desired outcomes

Clear identification of the basis for a s18 action, including where conduct is:

. based on a promise or prediction

. in the form of a failure to disclose (“silence”)

. directed towards a group/audience vs. an individual.

Application of s 18 to a given set of facts stop 40:

Topic L: Sharp practices–and improper business practice –Part 3 – 1 of ACL

Unfair contract terms – Part 2 – 3 of ACL

Issues:

What may constitute unfair contract terms?

What circumstances can the various sharp/improper business practices sections be successfully applied?

Structure: s 23 declares unfair terms in certain contracts void, but also states that the contract otherwise continues to bind the parties if it is capable of operation without the unfair term. s 23(1)(b): only terms in standard form consumer or small business contract contracts can be declared void. s23 Unfair terms of consumer & small business contracts – includes definitions s24 Meaning of “unfair” s25 Examples (14) of unfair terms s26 Terms that define main subject matter of consumer contracts or small business contracts etc. are unaffected s27 Standard form contracts: presumption s28 Contracts to which this Part does not apply

Consider specific the types of misrepresentations under: 41:

. S29 applicable to many circumstances.

14 types of misrepresentations:

(a) make a false or misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use [a manufacturer sold socks, which were not pure cotton, labelled as ‘pure cotton’. (TPC v Pacific Dunlop limited (1994) ATPR 41-307), Henschke v Rosemount, ACCC v Cadbury Schweppes] ; or

(b) make a false or misleading representation that services are of a particular standard, quality, value or grade; or (c) make a false or misleading representation that goods are new; or (d) make a false or misleading representation that a particular person has agreed to acquire goods or services; or (e) make a false or misleading representation that purports to be a testimonial by any person relating to goods or services; or (f) make a false or misleading representation concerning: (i) a testimonial by any person; or (ii) a representation that purports to be such a testimonial; relating to goods or services; or (g) make a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits; or (h) make a false or misleading representation that the person making the representation has a sponsorship, approval or affiliation; or (i) make a false or misleading representation with respect to the price of goods or services; or (j) make a false or misleading representation concerning the availability of facilities for the repair of goods or of spare parts for goods; or 42:

(k) make a false or misleading representation concerning the place of origin of goods (Kingisland); or (l) make a false or misleading representation concerning the need for any goods or services; or (m) make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3-2); or (n) make a false or misleading representation concerning a requirement to pay for a contractual right that: (i) is wholly or partly equivalent to any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3-2); and (ii) a person has under a law of the Commonwealth, a State or a Territory (other than an unwritten law).

. s30 applicable to range of land transactions i.e. sale, grant of an interest in land etc.

"interest " , in relation to land, means: (a) a legal or equitable estate or interest in the land; or (b) a right of occupancy of the land, or of a building or part of a building erected on the land, arising by virtue of the holding of shares, or by virtue of a contract to purchase shares, in an incorporated company that owns the land or building; or (c) a right, power or privilege over, or in connection with, the land.

. s31 It is unlawful to make false or misleading representations about:

o the availability, nature or terms and conditions of employment 43:

o the profitability, risk or other material aspect of any business activity that requires work or investment by a person. o Example: A second-hand truck dealer falsely told buyers they could get employment from certain places if they bought the dealer’s trucks. The truck dealer was found guilty of misleading the buyers and fined.

Types of sharp business practices/misleading conduct, include:

. bait advertising (s 35) takes place when an advertisement promotes certain (usually ‘sale’ prices) on products that are not available or available only in very limited quantities. It is not misleading if the business is upfront in a highly visible, clear and specific manner about the particular product ‘on sale’ being in short supply or on sale for a limited time.

. referral selling (s 49) involves a supplier offering benefits (e.g. a rebate or commission) for a consumer to purchase goods and services if the consumer will provide referrals for other prospective consumers.

. accepting payment where there is no intention to supply as initially represented (s 36);

. claiming payment where there is no reasonable cause/basis to do so e.g. “inertia selling”) and

. placement of entry in a directory without proper authority (s 43)

. s48 Single price to be stated in certain circumstances.

Who may contravene sections?

Consider threshold issues:

 "person"

 "conduct" 44:

 "in trade or commerce" etc..

Contravention may be subject to prosecution by ACCC.

Penalties may be applied in addition to damages for injury/loss.

Harassment/coercion/physical force (s50):

Note: Conduct does not require “misleading” or “deceptive” elements. Requirements:

. “Person”

. Physical Force, undue harassment or coercion

. “In connection with”

. “Supply/payment of goods or services”

. Sale/grant or payment for an interest in land.

Businesses may push consumers to agree to a purchase or encounter consumers from whom it is difficult to obtain payment. S50 prohibits coercion, undue harassment or physical force in connection with the supply or possible supply of goods or services, or the payment for them. Harassment means persistent disturbance or torment. Undue harassment is where the frequency, nature or content of unwelcome approaches is such that they are calculated to intimidate or demoralise, tire out or exhaust a person. The provision is broad and may apply to:

 prolonged visit by a sales representative who ignores requests to leave

 unwanted persistent telephone calls

 debt collectors who make repeated and relentless calls to a debtor about a debt 45:

 use of particularly over-the-top methods/strategies/tactics of hard selling. Coercion can occur in the course of aggressive selling. A seller may try to exploit known facts about, circumstances of, or statements made by a consumer, to force them to agree to a purchase. Example: A debt collector makes an excessive number of telephone calls to debtors over the course of several days. The tone of the calls is threatening, abusive & aggressive or otherwise impolite. The collector gives false or misleading (including by silence) information to debtors & others about debt recovery procedures & the consequences of non-payment. This conduct is likely to contravene the harassment provisions of the ACL. A creditor entering a consumer's premises without consent and pinning him to the ground to recover goods, even though the creditor has a contractual right to recover the goods.

See: ACCC v Davis [2003] FCA 1227. A creditor using personal abuse, obscene language, or conveying demands for payment through uninvolved family members (especially if they are children).

See: ACCC v McCaskey (2000) 104 FCR 8. A business is entitled to take reasonable steps to pursue a debt. In such circumstances a debtor is entitled to be treated fairly, with respect and courtesy, and not be unduly harassed or coerced.

Desired Outcome:

To be able to:

. identify and discuss the basis for an action under various sections (ss29, 30, 31, 35, 49, 50 given the existence of potentially offending conduct, under particular circumstances. 46:

. Consider the threshold issues.

. Being apply more than one of the DTP sections to potentially offending conduct, under particular circumstances.

. In the application of various sections, being able to consider all the elements relevant to determining the existence of a breach. 47:

Topic M: Product Liability (Part 3.2, Division 1 & Part 5 – 4of the ACL)

Issues:

What is the scope of these provisions?

What is a “consumer”?

How are “consumers” protected by proscribing certain statutory, non-excludable guarantees (Div 1) into every “consumer” contracts?

How are “consumers” protected by proscribing liability to “manufacturers/ importers” (Part 5 – 4 Division 2 of ACL?

Structure

Definition of a “Consumer”? s3 of ACL.

Goods & services ≤ $40,000

Goods & services › $40,000 (must be ordinarily used for personal, domestic or household use or consumption).

What does the term “ordinarily used for” mean?

Exclude goods for resale or elaborate transformation.

The statutory guarantees in “consumer” contracts for goods and services are non- excludable.

(s 64 of ACL): Guarantees not to be excluded etc. by contract

(1) A term of a contract (including a term that is not set out in the contract but is incorporated in the contract by another term of the contract) is void to the extent that the term purports to exclude, restrict or modify, or has the effect of excluding, restricting or modifying: (a) the application of all or any of the provisions of this Division; or (b) the exercise of a right conferred by such a provision; or (c) any liability of a person for a failure to comply with a guarantee that applies under this Division to a supply of goods or services. 48:

(2) A term of a contract is not taken, for the purposes of this section, to exclude, restrict or modify the application of a provision of this Division unless the term does so expressly or is inconsistent with the provision. Guarantees relating to the supply of goods:

 guarantee of title

 guarantee as to undisturbed possession

 guarantee at an acceptable quality

 guarantee as to fitness for any disclosed purpose

(see Medtel v Courtney & Ryan v Great Lakes Council).

Products must be of acceptable quality, that is:

 safe, lasting, with no faults

 look acceptable

 do all the things someone would normally expect them to do. Acceptable quality takes into account what would normally be expected for the type of product and cost.

A major failure with goods is when:

• a reasonable consumer would not have bought the goods if they had known about the problem. E.g. No reasonable consumer would buy a washing machine if they knew the motor was going to burn out after three months

• the goods are significantly different from the description, sample or demonstration model shown to the consumer. E.g. a consumer orders a red bicycle from a catalogue, but the bicycle delivered is green.

• the goods are substantially unfit for their normal purpose & cannot easily be made fit, within a reasonable time. E.g. A ski jacket is not waterproof because it is made from the wrong material. 49:

• the goods are substantially unfit for a purpose that the consumer told the supplier about, & cannot easily be made fit within a reasonable time. E.g. car is not powerful enough to tow the consumer’s boat because engine is too mall—despite the consumer telling the supplier they needed the car to tow a boat.

• the goods are unsafe. E.g., an electric blanket has faulty wiring

Services must be:

 provided with acceptable care and skill or technical knowledge and taking all necessary steps to avoid loss and damage

 fit for the purpose or give the results that you and the business had agreed to

 delivered within a reasonable time when there is no agreed end date. s63 specifies services to which the subdivision does not apply.

Remedies relating to guarantees (Part 5 – 4 of ACL).

Remedies for failures with goods

If goods fail to meet a consumer guarantee, the supplier who sold the consumer the product may be required to:

• repair or replace the product

• provide a refund

• provide compensation for any consequential loss.

When the problem with the goods is minor, the supplier can choose the remedy— either a repair, replacement or refund.

When there is a major failure, the consumer can choose to:

• reject the goods or services and either choose a refund or a replacement; or

• ask for compensation for any drop in value of the goods or services. 50:

Remedies for major failures with services.

When there is a major failure with a service, a consumer can choose to:

• cancel the service contract with the supplier and get a refund for the parts of the service not already consumed; or

• keep the contract and get compensation for the difference in the service delivered and what they paid for.

EG.A consumer has signed a building contract that sets out the specifications for a new house. When it is completed, the consumer notices a few windows are not in the right place.

Because the builder has not met the standard required by the contract, the consumer may be entitled to compensation.

Remedies for minor failure with services: if the problem with a service can be fixed, the consumer cannot cancel and demand a refund immediately.

The consumer must give the supplier who provided the services an opportunity to fix the problem:

• free of charge; and

• within a reasonable time.

If the supplier refuses to fix the problem or takes too long, the consumer can:

• get someone else to fix the problem (deliver the services) and recover the reasonable costs from the supplier

• cancel the contract and get some or all of their money back, if they have already paid.

A consumer who has not yet paid, or only partly paid, can refuse to pay for the defective services at all, or pay less than the agreed price.

Action against suppliers of goods (Subdivision A). 51:

Action against suppliers of services (Subdivision B)

Rights of gift recipients: people who receive goods and services as gifts have the same rights and responsibilities and are entitled to the same remedies as consumers who buy the goods and services directly.

Actions against manufacturers/importers (Part 5 – 4, division 2 of ACL).

A consumer is entitled to recover damages from a manufacturer/ importer if goods fail to meet the consumer guarantees for:

• acceptable quality

• matching description (where the description was applied by the manufacturer/importer)

• repairs and spare parts

• express warranties.

Manufacturer must honour a consumer’s rights under consumer guarantees, regardless of whether the goods are covered by any other warranty.

Desired Outcome:

To be able to apply the product liability provisions.

Which goods and services are covered?

What can’t a supplier say about consumers’ rights?

When is a consumer entitled to a remedy?

Who can the consumer claim a remedy from?

What is a major failure with goods?

When the consumer chooses a refund?

When is a manufacturer responsible? 52: 53:

Topic N: Liability of manufacturers/importers for goods which contain safety defects (Part 3.5 of ACL)

Issue:

Strict product liability applied to goods supplied by a manufacturer/ importer.

“Supplied”  putting goods into circulation. What does this entail?

What is the scope of liability?

Structure:

Recovery by action against manufacturer of the good/s and right to compensation for the amount of loss or damage suffered.

Strict liability provisions, whereby a person who is injured or suffers property damage as a result of a defective product has a right to compensation against the manufacturer, without having to prove negligence against the manufacturer.

4 basic conditions:

1. Threshold conditions:

 manufacturer. [s 7 of ACL]

 in trade or commerce [s 2 of ACL]

 supplies goods [s 2 of ACL]

 manufactured by it [7 of ACL]

2. “Safety defect” [s 9] in the goods supplied (includes labelling & instructions

(See Glendale Chemicals)

S9(1) ……., goods have a safety defect if their safety is not such as persons generally are entitled to expect. 54:

(2) In determining the extent of the safety of goods, regard is to be given to all relevant circumstances, including: (a) the manner in which, and the purposes for which, they have been marketed; and (b) their packaging; and (c) the use of any mark in relation to them; and (d) any instructions for, or warnings with respect to, doing, or refraining from doing, anything with or in relation to them; & (e) what might reasonably be expected to be done with or in relation to them; and (f) the time when they were supplied by their manufacturer. (3) An inference that goods have a safety defect is not to be made only because of the fact that, after they were supplied by their manufacturer, safer goods of the same kind were supplied. (4) An inference that goods have a safety defect is not to be made only because: (a) there was compliance with a Commonwealth mandatory standard for them; and (b) that standard was not the safest possible standard having regard to the latest state of scientific or technical knowledge when they were supplied by their manufacturer.

3. Loss or damage suffered :

. by a person [s 138 of ACL] &/or

. by a person other the injured person [s 139 of ACL] &/or,

. in relation to other household/domestic goods [s 140 of ACL] &/or,

. in relation to buildings [s 141 of ACL]

4. Causal connection between the defect and the loss. 55:

Importers are deemed to be manufacturers.

Unidentified manufacturers (147 of ACL)

Defences which may erode the “strict liability” approach [s 142 of ACL]

In a defective goods action, it is a defence if it is established that: (a) the safety defect in the goods that is alleged to have caused the loss or damage did not exist: (i) in the case of electricity--at the time at which the electricity was generated, being a time before it was transmitted or distributed; or (ii) in any other case--at the time when the goods were supplied by their actual manufacturer; or (b) the goods had that safety defect only because there was compliance with a mandatory standard for them; or (c) the state of scientific or technical knowledge at the time when the goods were supplied by their manufacturer was not such as to enable that safety defect to be discovered; or (d) if the goods that had that safety defect were comprised in other goods--that safety defect is attributable only to: (i) the design of the other goods; or (ii) the markings on or accompanying the other goods; or (iii) the instructions or warnings given by the manufacturer of the other goods. (see Effem Foods; Barclay Oysters);

Limitation:

Time for commencing defective goods actions: 56:

o 3 years but

o with 10 year repose period. (s 143 of ACL

Application of all the conditions of part 3 – 5 not to be excluded or modified (150 ACL) s

Measure of damages.

Desired outcomes

To identify under Part 3 – 5:

 causes of action

 remedies

 defences. 57:

Topic O: Offences/enforcement/remedies (Pt VI CCA & Ch. 4 & 5 ACL).

Issues:

Circumstances remedial action and prosecution is extended to certain persons?

Who can commence a prosecution?

What are the potential penalties for breaches of Part IV of CCA and & ACL?

What remedies are available?

How remedies may apply to given circumstances.

Structure:

Part VI of CCA applies to breaches of Parts IV of CCA.

Chapters 4 & 5 of ACL apply to riches of Chapters 2 & 3 of ACL, s75B of CCA – interpretation of “a person involved in a contravention” as per ss82 and 87 of CCA and in relation to ACL.

When is a person "involved" in a contravention (Yorke v Lucas)? s84 - conduct of directors/servants/ agents imputed to the corporation. Applies to ss46, 46A and, Pt IVB,

Offences against Pt IV& penalties –

- S76 offences & pecuniary penalties – practice & procedure.

See for example ACCC v Visy FCA (2007) and Jolique (FCA (2007)

- Limitation issues.

Enforcement & penalties for breaches of provisions under the chapters 2 & 3 of ACL (Ch 4 of ACL) -

Defences, including publishers defence (Part 5 – 2, Division 6 of ACL). 58:

Factors Courts have taken into account in imposing penalties:

(TPC v CSR, NW Frozen Foods Pty Ltd v ACCC, George Weston). Remedies:

Injunctions - final and interim (s80 of CCA & Part 5 – 2, Division 2 of ACL).

Interim injunctions:

1. serious question to be tried

2. balance of convenience.

Standing to apply for an injunction, apart from ACCC:”any other person”.

Wide application for “any other person”; public interest test:

 company v company :

Hornsby Building Information Centre

 in the public interest:

Phelps v Western Mining, Glorie v Chip & Pulp, Tobacco Institute v AFCO, World Series Cricket v Parish, Truth About Motorways Pty Limited v Macquarie Infrastructure).

The exercise of Court's discretion:

(ACCC v CG Berbatis).

Interlocutory injunction to preserve assets (s87A of CCA).

Order to disclose information or publish advertisements (Part 5 2, Div 5 ACL)

Divestiture of assets (s81 of CCA)

Damages - (s82 of ACL & Part 5 – 2, Division 3 of ACL).

Right to and limits on damages.

Contributory negligence (s82 (1B of CCA & s137 B of CCA) re economic loss and 59: property damage.

S 137 B : where action is based on s18 of ACL, damages for economic loss & property damage may be reduced to the extent to which the court thinks equitable having regard to the applicant's share of responsibility for the loss or damage.

Limitation period 6 yrs from when cause of action arises.

Where cause of action is contingent upon the occurrence of an event: (Wardley v WA).

Causal connection between conduct & damage i.e. “by” the conduct & reliance on the conduct (see Butcher v Lachlan Elder Real Estate, Campbell v Backoffice)

Basis for measure of damages (torts, contractual, other?): (see Gates v City Mutual Life Assurance, Marks v GIO, Wardley, Kenny & Good Pty Ltd v MGICA, Murphy v Overton.

Other orders (s87 of CCA & s 243 of ACL).

Types of order:

. Rescission: (Henjo v Collins Marrickville).

. Setting aside guarantee: (Nobile v NAB).

. Restraining order against further proceedings to recover outstanding rent where lessees proved that they had been induced to enter the lease by false representations by the leasing agent :(Brown v Jam Factory).

. Declaring void ab initio a contract for the sale of a unit where there had been a misrepresentation by silence: (Demagogue v Ramenesky).

. Agreement void ab initio & order that respondent supply on terms which previously applied: (ASX Operations P/L v Pont Data Australia P/ L).

. Vary agreements: Court obliged to exercise caution so as not alter essential bargain that parties would have reached: (Kizbeau v W G & B Pty Ltd).

Right to and limits on damages.

Statutory limitation issues. 60:

Measure of damages:

o “tort”/contractual” measures

o “other”:

(See:Marks v GIO, Murphy v Overton)

Murphy v Overton: High Court stated – it is wrong to approach the operation of the "loss and damage" provisions of Pt VI of the Act by beginning with an attempt to draw an analogy with any particular claim under the general law.

While the High Court's decision does not provide for any clear-cut formula as to the most appropriate method of assessing damages, it highlights the importance that each case must be considered in light of its own individual facts and circumstances, using a unique measure of loss or damage obtained through a careful consideration of the particular facts at hand.

In each case the relevant loss must be particularised as being caused by conduct in contravention of the Act, & then the nature of such loss must be examined

Guiding principles from the High Court re Murphy v Overton Principles to be applied when assessments of loss or damage are to be made under the Act. Although these principles may be useful they do not establish a logical test or formula for the assessment of loss or damage under the Act. These principles include: 1. "loss or damage" is not to be given a narrow meaning. The loss or damage spoken of in s82 and 87 is not confined to economic loss. 2. Necessary to identify the detriment which is said to be the loss or damage which has occurred (or, when considering the application of s 87, has occurred or is likely to occur). 61:

3. Risk of loss is not itself a category of loss, however, once the risk of loss has crystallised, this will amount to a category of loss for the purpose of the Act. 4. Loss is not necessarily a "one off" event and may require more than one remedy. 5. Remedies other than an award of damages may be made under the Act to compensate for, prevent or reduce those future losses. For example, the terms of contracts could be varied. 6. Whether damages are to be awarded in compensation may depend upon what other forms of relief are to be granted. In particular it will be much affected by what orders to prevent or reduce the loss or damage are made under s 87...

Proof of “state of mind of body corporate (s. 84): (TPC v Sun Alliance Aust Limited: Gregg v Tasmanian Trustees Ltd)

Desired outcomes

To be able to determine against whom a prosecution can be applied for a breach of Part IV.

Apply criterion for imposition of penalties by Court.

Applying the various remedies in relation to a civil action bought for breaches of Parts IV, of CCA & Chapters 3 & 4 of ACL.

Understand “causation” & “measure” of damages

Prepared by J. S. Mendel

November 2017