Introduction
Liability for having induced another to act to their detriment on the basis of a negligent misstatement can arise under the general law through a number of different avenues. The statement may be the subject of a contractual warranty.
Liability may arise extra-contractually pursuant to the common law and equitable doctrines of mistake, estoppel, misrepresentation, and, following the decision in Hedley Byrne & Co Ltd v Heller & Partners Ltd,1 negligent misstatement. All these claims have different elements and yield diverse remedial outcomes. In Australia, the plaintiff's first port of call will usually be statute. Section 18 of the Australian Consumer Law (ACL),2 formerly section 52 of the Trade Practices Act 1974 (Cth) (TPA), contains a broad prohibition on misleading or deceptive conduct occurÂring in trade or commerce. Section 18 and its associated remedial provisions3 have had a marked impact on defendant liability for misstatement in Australia. LiabilÂity under section 18 does not require any element of fault, clearly encompasses omissions and silence as well as positive statements, and opens up a ‘remedial smorgasbord'4 to the victim unparalleled at common law. It is hence rational (and correspondingly common) for plaintiffs to bring their claim arising from a negligent misstatement within the statutory regime, if not instead of, then at least in addition to, any pertinent common law claims.* This work forms part of an Australian Research Council Discovery grant project entitled ‘Remedies under the Australian Consumer Law: Evolution and Revolution'. The authors thank Holly Fairhurst, Eliza Wallace and Stephanie Murphy for their considerable assistance with this research. All errors are the authors.
1 Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 (‘ Hedley Byrne v Heller).
2 The ACL is contained in schedule 2 of the Competition and Consumer Act 2010 (Cth) (CCA).
3 ACL,ss 236,237,238.
4 Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353,364 (Mason P).
The frequent concurrence of claims under the statute with their common law counterparts has given rise to some valuable judicial insights into their comparative elements, remedial consequences and the limiting considerations in those contexts that properly restrict defendants' liability. Courts have stressed that it is the words of the section and the express purposes of the legislation rather than analogy with the common law that should guide the application of the statutory prohibition.[816] This is appropriate given the status of the legislation as commonwealth law and the clearly stated purposes of the legislation as furthering consumer protection, a heady contrast to the law of torts where debates over purpose continue unreÂsolved.[817] Nonetheless, courts have found it useful to draw on the tort of deceit in assessing the proper measure of damages[818] and utilise distinctions from that area to determine the boundaries of actionable loss.[819] The result has been a generous approach taken to key statutory issues of factual causation and defendant scope of liability, which accords with the policy of the statute to promote ‘competition and fair trading and provision for consumer protection'.[820]
Yet despite the broad-ranging features of the prohibition in section 18, courts have considered that liability under the section should be subject to some limitaÂtions. As Gibbs CJ observed in Parkdale Customer Built Furniture Pty Ltd v Puxu Pty Ltd (iPuxu):[821]
It may have been thought that the unequal position of consumers as against the corporaÂtions which supply them with commodities justified a measure that from the point of view of the latter seems draconic, but although s.
52 is intended for the protection of consumers, it is enforceable by a trade competitor who is not a consumer (Reg. v. Federal Court of Australia; Exparte Pilkington A.C.I. (Operations) Pty. Ltd.)[822] and it is not infreÂquently used by one trader against a rival to protect a trade name or to prevent a passing- off. The section may have been designed to protect the weak from the powerful, but it may be used by a large and powerful corporation to restrain the activities of a smaller competitor. I am, with all respect, unable to see any reason why a section so broadly expressed and so drastic in its possible consequences should be beneficially construed... in some loose or expanded sense.Compared to deceit, the other common law causes of action that may function in aid of consumer protection have received relatively little consideration as sources of insight into the nature of cognate statutory liability. In particular, although frequently mentioned as an analogous source of common law liability,[823] the tort of negligent misstatement has received very little sustained analysis as an interpreÂtive source for the operation of section 18 and related remedial provisions. This is a pity. In negligent misstatement, the search for appropriate defining criteria for defendant liability has identified a range of principles and standards that assist courts in the complex, multifactorial inquiry into the respective degrees of fault and responsibility of the parties that serve to delimit defendant liability.[824]
The aim of this chapter is to explore some of the potential lessons to be learned about the proper limits on defendant liability for misleading or deceptive conduct from the law of negligent misstatement. It is clearly inappropriate to interpret a statutory prohibition solely by reference to analogous common law concepts. However, common law concepts developed in the context of the tort of negligent misstatement can enlighten and inform difficult debates about the scope of statutory liability. The enquiry in this chapter reveals that, although there remain some areas where the common law action is not a good ‘fit' with the statutory language and purpose, there exist a number of instances where concepts developed in the context of the tort of negligent misstatement have the potential properly to influence the extent of statutory liability.
II.