Limiting Factors Under the ACL

The prohibition on misleading or deceptive conduct in the ACL does not merely adopt and codify tort-based liability for misstatements. Rather, it creates a unique statutory cause of action.

In that context, it is perhaps particularly apt that the High Court of Australia has repeatedly stated that it must be the words of the section that determine its application not analogy with the common law.^[883] Thus, in Murphy v Overton Investments Pty Ltd, the Court said:^[884]

This Court has now said more than once that it is wrong to approach the operation of those provisions of Pt VI of the Act which deal with remedies for contravention of the Act by beginning the inquiry with an attempt to draw some analogy with any particular form of claim under the general law.

At the same time it is difficult to start with an entirely clean slate. There is little direction provided in the legislation about how courts should proceed in making these assessments. The statute does not define key concepts such as the nature of the link between misleading or deceptive conduct and the loss suffered by the claimant or the meaning of ‘ loss or damage' for which damages or compensatory orders may be claimed. Recognising this, courts have also accepted that the common law provides ‘ an accumulation of valuable insight and experience which may well be useful in applying the Act'.^[885]

Particularly where the statutory phrases echo well-known common law concepts, it is inevitable that courts will refer to the operation of those common law principles in interpreting the statute. Additionally, courts have accepted that a defendant's liability under the statute is limited. Given that the statutory norm spans both consumer and commercial dealings this is not at all surprising.^[886] It follows that notwithstanding the unique and express policy purposes of the statute, similar types of considerations relating to responsibility for creating and manag­ing risks that inform the interpretation of common law torts may remain relevant to the statutory prohibition. In particular, factors familiar from the law of torts, relating to the status of the defendant, the relationship between the defendant and the plaintiff, and the plaintiff's response to the conduct in question, natu­rally inform the enquiry into whether there has been a breach of the statutory prohibition. These types of factors again become relevant in assessing the extent to which the plaintiff has suffered loss or damage that should be compensated or remedied.

Courts applying section 18 have most commonly drawn upon cases dealing with deceit. Yet there may be much to be learned from the cases on negligent misstatement in framing questions of liability, both in characterising conduct as misleading and in defining the loss that must be compensated.^[888] As we have seen, the negligent misstatement cases engage with a complex range of considerations relevant in delineating the scope of liability of a defendant in its dealings with the plaintiff. These concepts may usefully be utilised in developing a better under­standing of the nature of the statutory liability, subject of course to the necessary primacy of the words of the section and the policy or purposes underlying the statute. The following sections accordingly consider, in the light of the approach taken in negligent misstatement, the comparative role played by objective fault­based standards in the statutory context as they relate to the conduct of defend­ants, plaintiffs and rules of remoteness, contributory fault and mitigation.

A. The Reasonable Defendant

An immediate point of departure between negligent misstatement and the prohibition on misleading or deceptive conduct is that, subject to four caveats noted below, the fault of the defendant forms no part of the necessary conditions for breach of the statutory prohibition.^[889] The prohibition is concerned, rather, with the objective tendency of the defendant's conduct to mislead or deceive.

Turning to limiting factors, typically, reasonable foreseeability of the plaintiff's reliance has no direct role to play at the point of identifying prohibited conduct under the ACL.^[895] We have seen that the critical question at this point is whether the defendant's conduct was likely to mislead, not whether it did so and certainly not whether it actually caused harm to any identified person. Those latter-order questions generally only come into play at the point of remedies, particularly at the stage of determining the defendant's liability for loss or damage suffered by a plaintiff “by” or “because of” the defendant's contravening behaviour.

The statute is not concerned with the same dangers of indeterminacy that are used to justify the adoption of stringent duty rules in cases of negligent misstatement. The prohibition is against an identified category of conduct and, in theory at least, its contravention is entirely possible notwithstanding that no one has been harmed by its breach. While the ‘common understanding of commercial people' will be taken into account in determining whether particular conduct is misleading,^[896] the statutory prohibition of misleading or deceptive conduct cannot be undermined by conflicting, traditional common law conceptions of what con­stitutes acceptable commercial practices. Courts have recognised that the ACL gives effect to ‘matters of high public policy' ^[897] and is to be ‘construed so as “to give the fullest relief which the fair meaning of its language will allow”'. ^[898] Finally, a point to which we will return below, the statutory prohibition does not require that a plaintiff must have acted reasonably to protect her own interests in order to obtain relief. That is, there is no statutory equivalent of the common law concep­tion of‘vulnerability'.

The conclusion must be that the identified objective, defendant-oriented restrictions on imposing a duty of care recognised in the context of negligent misstatement are not directly analogous to determining the issue of prohibited behaviour under the statute. This does not, however, mean they entirely cease to be of relevance. In assessing whether there has been conduct contravening section 18, courts must consider the entirety of the circumstances and, in particular, the nature of the relationship between plaintiff and defendant (including a hypotheti­cal plaintiff in cases where the claim is made by a regulator). It is only by examining the features of this relationship that courts can make an assessment of the actual or likely impact of the conduct and its effect on the plaintiff or putative plaintiff.

The first caveat relates to the fact that what is prohibited is misleading conduct not the supply of inaccurate information. In order to assess whether conduct is misleading, or likely to mislead, courts have to consider the extent to which the defendant's conduct did or was likely to lead a person into error. This inquiry inevitably leads the court to consider not merely the perspective of the recipient, but also the entirety of the conduct of the defendant, and the reasonableness of the steps it took to qualify its responsibility for any information it has imparted.^[899]

The second caveat is that the defendant's state of mind may be relevant in assess­ing whether statements of opinion or statements as to the future are misleading.^[900] Moreover, as a result of section 4, a representation with respect to a future matter will be taken to be misleading or deceptive unless the representor leads evidence that he or she had reasonable grounds for making the representation.^[901]

The third caveat arises in assessing when silence is misleading.^[902] A defendant who fails to reveal critical information when it would be reasonable for the plaintiff to expect him to do so will have engaged in misleading conduct.^[903] This part of the inquiry would appear to focus on the plaintiff. Yet it is impos­sible to consider whether there is a reasonable expectation of disclosure on the part of the plaintiff without considering its relationship with the defendant. In addition, some courts have interpreted the statute to require the defendant's silence to be deliberate before there can be liability for misleading or deceptive conduct.^[904] This possible limitation has been suggested to arise from the definition of conduct in the ACL.^[905] A requirement of deliberateness as an element of liability for misleading conduct will effectively operate as a requirement for the defendant to have knowledge of the plaintiff's reasonable expectation of disclosure. It is only in the face of this knowledge that the defendant's failure to disclose can be deliber­ate. Here we see something very similar to notions used in assessing common law negligent misstatement, of reasonable reliance and knowledge of reliance.

The fourth caveat relates to the role of defendant intention in determining whether conduct was ‘likely to mislead or deceive'. We have seen that the defend­ant's intention to induce reliance plays an important role in deceit and has a some­what similar role in negligent misstatement.^[906] In essence, the presence of intention allows courts to take a more generous approach to defendant liability. There are some signs that it has been used to cognate effect in relation to the statutory prohibition.^[907] Thus, although it stressed that deception was not required under the ACL, the High Court in ACCC v TPG Internet noted that deliberate stratagems to induce reliance by focusing on some facts and omitting (or underplaying) others are more likely to be found to have induced reliance and hence be found to be misleading or deceptive.^[908] Intention is not a criterion of liability, but it is relevant to establishing breach of the statutory norm. That this distinction contin­ues to have normative force under the ACL is supported by the fact that the new apportionment provisions of section 138B of the Competition and Consumer Act 2010 (Cth) (CCA) (which we consider further below) only apply to reduce a defendant's scope of liability where the defendant did not intentionally or fraudu­lently cause the damage.

In summary then, although the circumstances of the defendant, its state of mind, or its knowledge of the plaintiff's situation are not directly relevant to characterising conduct as misleading under the ACL, these notions or a variation of them do have a role in certain types of case. Here the courts' analysis might be made more transparent by recognising the common law parallels and indeed might benefit from the comparison.

B. The Reasonable Plaintiff

When we turn to consider the position of the plaintiff, the picture changes considerably. An objective analysis of plaintiff behaviour is inherent in the statutory prohibition. This is because the statutory norm prohibits conduct that is ‘misleading or deceptive, or likely to mislead or deceive'. Given the disjunctive phrase, which we have seen indicates that it is unnecessary to show that any person was actually misled or deceived, the statutory test necessarily requires a court to consider the objective impact of the impugned conduct, not its effect on the sub­jective state of mind of a particular plaintiff.^[909] In addressing this question, courts must consider what would be a reasonable response by a (hypothetical) plaintiff to the impugned conduct by the defendant. Where the object of the conduct is an identified individual, courts consider the response of a reasonable person with the characteristics of that individual.^[910] Where the conduct is directed towards a class of persons, or the public at large, courts consider what a ‘representative member' of that class would make of the conduct and whether that representative person or member of a class would tend to act in reliance on the conduct.^[911] In both sce­narios ‘there must be a sufficient causal link between the conduct and error on the part of persons exposed to it'.^[912] In practice, this test functions as a weak require­ment of reasonable reliance, excluding cases of unreasonable consumer reliance from the ambit of what constitutes proscribed conduct. While the protection of the legislation is not limited to the careful or the astute,^[913] even here reasonable care on the part of the recipient is expected.^[914] In the words of Gibbs CJ in Puxu:^[915]

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 in my opinion be regarded as contemplating the effect of the conduct on reasonable members of the class. 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.

The similarity between excluding cases where the plaintiff failed to take reason­able care and the tort concept of reasonable reliance is even more apparent when courts are considering conduct directed at an individual. It is clear that the High Court is alive to the context and that in assessing the standard of reasonable care, and indeed background knowledge, expected of recipients of information, both the forum of the statement and the intended audience are of crucial importance. For example, when that individual is in business, it is quite clear that courts have certain expectations of self-responsibility, so that any reliance on the impugned statement of the defendant must be reasonable. A good example of the relevant mode of judicial reasoning is found in Butcher v Lachlan Elder Realty Pty Ltd.^[916] The case involved a claim by a purchaser of property against a real estate agent. The purchaser argued that the agent had engaged in misleading conduct by including an inaccurate survey diagram in the brochure it produced to market the property. The brochure included the following disclaimer: ‘All information contained herein is gathered from sources we believe to be reliable. However, we cannot guarantee it’s [ sic] accuracy and interested parties should rely on their own enquiries’. In the High Court, the majority (Gleeson CJ, Hayne and Heydon JJ) held that the conduct was not misleading.^[917] In reaching this conclusion the majority held that it was necessary to consider the nature of the parties, the character of the transaction contemplated and what each party knew about the other as a result of the dealings, in order to determine what effect the conduct would have.^[918] The majority charac­terised the purchasers as ‘intelligent, shrewd and self-reliant’ business people who could be assumed to respond to the representation in question in a reasonable manner.^[919] The real estate agent was characterised as a business with a small staff that did not hold itself out as possessing the means of independently verifying title details of property.^[920] Given the nature of the parties, the nature of the transaction and the presence of the disclaimer, the majority concluded that the conduct was not misleading or deceptive—the disclaimer made it clear that the real estate agent was not representing that the diagram in question was accurate.^[921]

This sensitivity to context on the part of the court can produce very different results where the circumstances change only slightly. ACCC v TPG Internet^[922] involved a multimedia advertisement campaign conducted by TPG using TV, radio, newspapers and websites. In its headline offer, it offered ‘Unlimited ADSL2+’, an internet broadband service, to consumers for $29.99 per month. In fact the offer was qualified: ADSL2+ was available only when bundled with TPG’s home phone service for an additional $30 per month (with a minimum six-month commitment) and consumers were required to pay an additional setup fee plus a deposit for telephone charges. These charges were disclosed in fine print under the headline offer.

The Federal Court accepted the submissions of the Australian Competition and Consumer Commission (ACCC) that the advertisements were misleading or deceptive due to the disparity between the prominent headline offer of $29.99 and the actual offer terms. This finding was set aside on appeal in the Full Court of the Federal Court but reinstated in the High Court. The High Court accepted the reasoning of the trial judge to the effect that the advertisements had a dominant message, namely: ‘Unlimited ADSL2+ for $29.99 per month’. This would, for the ordinary consumer, create an impression that the entire cost of the service was $29.99 per month. Qualifications to this cost were not given sufficient prominence to counter the effect of the headline claim.^[923] The failure of consumers to pay attention to the qualifying words could not be equated with a lack of care on their behalf. The High Court explained that:^[924]

[T]he advertisements were an unbidden intrusion on the consciousness of the target audience. The intrusion will not always be welcome. The very function of the advertise­ments was to arrest the attention of the target audience. But while the attention of the audience might have been arrested, it cannot have been expected to pay close attention to the advertisement... That being so, the attention given to the advertisement by an ordinary and reasonable person may well be ‘perfunctory’, without being equated with a failure on the part of the members of the target audience to take reasonable care of their own interests.

It was not sufficient to contend that many consumers may know that ADSL2+ services are often offered as part of a ‘ bundle’. This knowledge would not ‘defuse’ the advertisements’ tendency to mislead in circumstances where the target audi­ence was left with only the ‘dominant message’ at the end of the advertisements.^[925] Rather, consumers were likely to be misled by TPG’s advertisements because the advertisements had selected some words for emphasis and failed to neutralise the effect of this: instead, it ‘relegated the balance to relative obscurity’. ^[926] In this regard, the High Court affirmed the proposition that ‘ where a representation is made in terms apt to create a particular mental impression in the representee, and is intended to do so, it may properly be inferred that it has had that effect’.^[927]

C. Remoteness and Foreseeability of Harm

The limiting role of objective standards of fault has arguably also emerged in assessing the remedy available to plaintiffs who have established misleading conduct and are seeking a response to loss suffered by them. Courts have repea­tedly stressed that the language of the Act does not admit of restrictions on liability arising from carelessness or fault on the part of the plaintiff that is not itself wrongful under the ACL.^[928] Thus, in I & L Securities, Gaudron, Gummow and Hayne JJ stated:^[929]

it would... be anomalous if s 87 were to be read in such a way as would permit the claim­ant’s carelessness ( not in contravention of the Act) to be taken into account to reduce the amount of the loss or damage caused by the contravener’s conduct.

So too it has been said that:^[930]

There is nothing in s 82, in other provisions of the Act or in the policy of the Act to suggest that a plaintiff’s right to relief for loss of which the contravening conduct was a cause depends in any way on him or her having taken reasonable care for his or her own interests.

But such blanket assertions must be qualified to the extent that they would deny the roles we have previously seen played by the concept of reasonable care or its absence, or, more generally, reasonable reliance in determining contravention of section 18. These statements arguably also overstate the case in denying any role under the statute to common law concepts such as remoteness, contributory negligence and mitigation, in which considerations of the reasonableness of the plain­tiff’s behaviour commonly play a leading part. As we will see, in this context there has been a shift from the paradigm of apparently strict liability under the statute to one where lessons drawn from negligent misstatement are increasingly apposite.

The statutory remedies provided under the ACL are available where a person has suffered loss ‘because of’ conduct prohibited by the ACL,^[931] and ‘by’ conduct under the predecessor legislation the TPA.^[932] These words have been understood as expressing a requirement of causation.^[933] It is notable that there is no language of remoteness employed on the face of the relevant provisions. In the light of that omission, and consistently with the protective aims of the statute, it would be entirely rational, albeit harsh, for the statute to take the position that, in order to promote high standards of conduct by repeat traders, and to protect gullible and irrational consumers, the plaintiff should be entitled to be compensated for all loss caused as a matter of fact by the defendant's misleading or deceptive conduct.^[934]

Consistently with that position, courts have recognised that there is nothing in the words of the statutory prohibition and associated remedies to suggest that a defendant's liability is subject to the remoteness considerations that might apply under cognate general law areas.^[935] In Henville v Walker, Gleeson CJ noted that the ‘only express guidance' under the Act with respect to assessment of damages is the concept of causation expressed by the word ‘by' (or now ‘because of').^[936] ‘The task is to select a measure of damages which conforms to the remedial purpose of the statute and to the justice and equity of the case'. ^[937] However, this recognition has not led to wholesale rejection of the applicability of remoteness considerations under the statute. This is because courts have also taken the view that the language of causation employed by the ACL does not relate solely to the purely factual ques­tion of whether the defendant's breach of the statutory norm as a matter of history led to the loss that in fact occurred. It additionally encompasses the quite separate question of whether a defendant should be held responsible for that outcome, a matter that raises normative questions and concerns regarding the appropriate limitations on defendants' scope of liability under the legislation.^[938]

The language of ‘common law practical or common-sense' causation has commonly been deployed by Australian courts to aggregate these enquiries into both the factual and normative conditions for liability.^[939] This can lead to serious confusion about the conditions for and limits on defendant liability.^[940] In particu­lar, in the context of the prohibition on misleading or deceptive conduct, courts have frequently been concerned that to apply the usual ‘a factor'^[941] test of factual causation will leave defendants in the position of insurers of plaintiff losses.^[942] To the extent that the language of ‘ causation' is being used to cover two quite sepa­rate issues (factual causation and normative or policy-based conditions for legal responsibility), there is a danger of losing sight of the fact that factual causation is but one part of a much greater liability enquiry.

One positive outcome of the widespread use of the language of ‘legal' or ‘common-sense' causation in the case law on misleading conduct is that it enables courts to take a similarly broad approach to the language of causation used under the Act.^[943] Insofar as courts recognise that ‘common sense' causation is an inquiry into scope of liability, they have opened the door to consideration of limiting concepts such as remoteness. In the words of Gleeson CJ in I & L Securities:^[944]

The misrepresentation will rarely be the sole cause of the loss. In statements of principle concerning the common law of contract or tort, additional factors which affect loss or damage are often discussed under the rubrics of remoteness, mitigation, or contributory negligence. Here we are concerned, not with common law principles, but with statutory rights and liabilities. However, the same problems arise, and must be dealt with in con­formity with the statute.

The relationship between conduct of a person that is in contravention of the statute, and loss or damage suffered, expressed in the word ‘ by', is one of legal responsibility. Such responsibility is vindicated by an award of damages. When a court assesses an amount of loss or damage for the purpose of making an order under s 82, it is not merely engaged in the factual, or historical, exercise of explaining, and calculating the financial conse­quences of, a sequence of events, of which the contravention forms part. It is attribut­ing legal responsibility; blame. This is not done in a conceptual vacuum. It is done in order to give effect to a statute with a discernible purpose; and that purpose provides a guide as to the requirements of justice and equity in the case. Those requirements are not determined by a visceral response on the part of the judge assessing damages, but by the judge's concept of principle and of the statutory purpose.

What remoteness rules have been identified as applicable under the Act? As Gleeson CJ makes clear, the rules limiting liability under the statute must (as at common law) be informed by the purpose of the law's prohibition.^[945] The statute clearly aims strongly to deter certain forms of commercial conduct and in so doing, promote fair trading and consumer protection.^[946] This combination of aims and the direct prohibition on deceitful conduct makes deceit an apt source of analogical reasoning. We saw previously that in deceit, the law seeks to draw boundaries between ‘direct' and ‘indirect' losses, or losses intrinsic and external to assets acquired in reliance on the defendant's misrepresentation.^[947] It also recognises a mitigation requirement, itself closely linked to the concept of direct and indirect losses. Thus where a business purchased as a result of the defendant's fraud has suffered losses as a result of the gross negligence of the plaintiff in continuing trading after she should have ceased, a line may be drawn under those losses which must be borne by the plaintiff.¹³⁷ Whether viewed as ‘external' losses or a failure to mitigate, the defendant is not held responsible for those losses, not­withstanding they were undoubtedly caused as a matter of historical fact by her breach.

Much the same sorts of limiting factors have been identified as being rele­vant to limiting defendant liability under the statute for misleading or deceptive conduct. In HTW Valuers v Astonlond^13s (ⁱHTW Valuers’) the plaintiff was con­sidering purchasing a small shopping arcade, near which a new shopping centre was being constructed. The plaintiff sought advice from the defendant about retail rental levels in the area. On the basis of that advice the plaintiff entered into a con­tract to purchase the shopping arcade. The net rent collected from the property fell dramatically over the next three-year period. The trial judge found that the defendant had engaged in misleading conduct contrary to the legislation by failing to qualify its advice by reference to the uncertain effect of the imminent opening of the new shopping centre. The High Court affirmed that the correct award of damages should be reached by deducting the ‘true' value of the arcade at the date of acquisition from the purchase price. The losses to the plaintiff brought about by the fact that a rival shopping centre opened after the purchase date were deemed to be losses intrinsic to the asset originally purchased, and therefore recoverable. The Court distinguished this from situations where aspects of the total loss are brought about by events that are ‘ independent, extrinsic, supervening or accidental' ¹³⁹— for example by ‘unexpected competition'.¹⁴⁰ In HTW Valuers, the subsequent events which exacerbated the plaintiff's loss arose from ‘expected competition'¹⁴¹ and ‘“the nature” of the Plaza and its commercial and geographical environment; they were not events which arose from “sources supervening upon or extraneous to the fraudulent inducement”'.¹⁴²

In I & L Securities, Gleeson CJ gave as instances where defendant liability might properly be reduced:¹⁴³

[A] case in which there had been grossly unreasonable conduct on the part of a lender in realising a security; conduct that in a common law context may be regarded as a super­vening cause of part of the ultimate loss... [an] act of a third party, or the influence of [an] external event or circumstance. that contributed to the financial outcome of the loan transaction.

On this analysis, the purpose of the statute supports the view that the objective failure of a plaintiff to take care to protect her own interests may be relevant here, just as it was when characterising conduct as misleading or deceptive.¹⁴⁴

¹³⁷See text at n 56 above.

¹³⁸HTWValuers (n 55).

¹³⁹ ibid 659 [40] (Gleeson CJ, McHugh, Gummow, Kirby and Heydon JJ), quoting Potts v Miller (n 53) 298 (Dixon J).

¹⁴⁰HTW Valuers (n 55) 660 [42].

¹⁴¹ibid.

¹⁴²ibid 660 [43] (Gleeson CJ, McHugh, Gummow, Kirby and Heydon JJ).

¹⁴³I & L Securities (n 56) 119-20 [27] (Gleeson CJ).

¹⁴⁴Henville v Walker (n 12) 474 [36].

However, prior to the introduction of apportionment provisions to the statute, the circumstances in which a reasonableness requirement could operate to dimin­ish defendant liability were restricted. This is because in I & L Securities the High Court held that there was nothing in the Act to permit apportionment of liabil­ity in cases where the damage was an ‘indivisible' consequence of the defendant's breach.^[948] In that case, the plaintiff financier relied on the defendant's misleading valuation of property in making a loan, however failed to take reasonable steps to assess independently the borrower's capacity to repay. The defendant's plea that the plaintiff's concurrent role in bringing about its own loss should operate in diminution of the defendant's total liability failed.^[949] The Court noted that in some comparatively rare instances (such as those suggested by Gleeson CJ)^[950] it would be possible and appropriate to divide up the loss suffered and attribute part to severable acts of the plaintiff or third parties. But a person who contravened the Act was otherwise liable for all of the indivisible loss of another that was attribut­able to the contravention. The Court could not apportion indivisible loss or dam­age suffered by the plaintiff in accordance with the parties' culpability.^[951]

By contrast, a good example of a case where loss was divisible is H ay Property Consultants Pty Ltd v Victorian Securities Corporation Limited.^[952] In that case, as in I & L Securities, the defendant provided a negligent valuation on which a financier relied in making a loan. When the borrower defaulted, the lender suffered a loss. However, in Hay Property, the loss was exacerbated by acts of vandalism to the property by unknown third parties, which severely diminished the value of the property before sale. Neave JA (with whom the other justices agreed) considered that the Act did not aim to make persons in the position of the defendant the insurer of all loss that flowed from breach of the statutory prohibition.^[953] Nor did the purpose and policy of the TPA require that a negligent valuer be held liable for loss caused by the criminal acts of third parties unrelated to the contravening conduct, unrelated in the sense that it did not increase the risk of the sort of loss that in fact occurred.^[954] The criminal acts of the third parties in her Honour's view ‘ [broke] the chain of causation' and gave rise to a distinct and severable amount of loss that should be excluded from the award.^[955] Notably, in coming to this conclu­sion, Neave JA expressly drew on the analogous position taken under the law of negligence.^[956]

In summary, courts have repeatedly recognised that remoteness rules may apply under the Act consistently with its purpose, including considerations based on the reasonable conduct of the defendant. Unfortunately, this reasoning is often obscured by the unhelpful merging of the cause-in-fact enquiry with the separate question of relevant normative and policy considerations that work to restrict liability. Language such as ‘legal' or ‘common-sense' causation, intervening acts that ‘break the chain of causation' and so on tend to suggest that there is some scientific principle at work, determining which fact or matter among others are relevant causes of the loss that has occurred. In truth, however, here, as at common law, the remoteness principles are deeply informed by the reasons for the law's prohibition of the defendant's behaviour. These reasons are primarily founded in the policy of the Act and value judgements about the proper scope of defendant liability in the light of that legislative purpose.^[957] None of it is straightforward and all requires an exercise of active judgement.

Other High Court cases have also emphasised the importance of identifying the purpose of applicable legislation (other than and in addition to the ACL) to place proper limits on defendant liability. A good example is Travel Compensation Fund v Tambree.^[958] The defendants had provided misleading reports of the finan­cial position of a third-party travel agency to the plaintiff, Travel Compensation Fund. In reliance on these reports, the Fund had allowed the third party to con­tinue to participate in the Fund, which was a condition of holding a travel agency licence. At the subsequent request of the agency's director, the Travel Compensa­tion Fund terminated her business's participation in the Fund, with the result that she lost the agency licence and should have ceased trading. However, she unlaw­fully continued in business, amassing further liabilities to customers for which the Fund became liable. The defendants argued that they could not be held liable for those additional losses suffered: the continued unlawful trading of the third-party business constituted, it was claimed, a ‘break' in the chain of causation.

The High Court disagreed, noting that this sort of unlawful activity was the very kind of risk against which the Travel Compensation Fund had sought assurance when it requested and received account and audit advice. Critical in determining that the loss was not too remote was the purpose of the statutory regime pursuant to which the Fund was established. In the words of Gleeson CJ:^[959]

The whole purpose of the scheme is to protect the public against loss resulting from dealing with defaulting agents. Default commonly results from financial failure, and failure to account by an agent may well involve some form of illegality. When the appellant called for audited financial statements, the kind of loss to the public, and the kind of loss to itself, against which it sought protection was loss that would always involve an agent's failure to account.

Gleeson CJ, with whom Gummow and Hayne JJ and Callinan J agreed, concluded that the unlawful conduct of the travel agent did not fall outside the ‘scope of risk' against which the Fund had sought to protect itself.^[960]

In this respect, it is interesting that the reasoning of Gummow and Hayne JJ in that case emphasised that, subsequent to the contravening conduct, the plain­tiff had acted reasonably in terminating the failing business's participation in the scheme, as had the Department of Fair Trading in shutting down the business once the fact of continued unlawful trading surfaced.^[961] Neither of these events, therefore, ‘broke' the chain of causation. However, we have seen that the conclu­sion that some act or event ‘broke' or did not break the chain of causation is a normative or policy-based one, not a conclusion of historical fact.^[962] In all these cases, it is undeniable that, as a matter of historical fact, the defendant's breach was a factual cause of all the loss that occurred. In that context, the conclusion that the chain of causation has or has not been broken rests on normative concepts of reasonableness familiar from the remoteness (and mitigation)^[963] rules relating to deceit and negligent misstatement. These normative concepts are quite independ­ent of the question of factual causation and are not explicit on the face of the statute. Their Honours' emphasis on the reasonableness of the plaintiff's conduct confirms the normative nature of the inquiry.

What other support is there in the authorities for the operation of conceptions of remoteness under the ACL? In Henville v Walker, McHugh J suggested that cau­sation under the Act incorporated the concept of remoteness, excluding respon­sibility for loss or damage that ‘ was not reasonably foreseeable even in a general way by the contravener'. ^[964] The incorporation of a reasonable foreseeability test would constitute a clear departure from the stricter test of ‘direct loss' applicable in cases of deceit and suggests a direct analogy with negligent misstatement.^[965] This might seem to tell against the appropriateness of the criterion in the context of the statute. But it will be recalled that the criterion of reasonable foreseeability was rejected for deceit because the defendants in such cases are by definition unreasonable.^[966] The same cannot be said for all defendants in cases of misleading or deceptive conduct. Nor is fraud a condition of defendant liability under the Act. So it would not seem to be incoherent to limit liability for loss in cases where the defendant contravened the statute innocently or on reasonable grounds and in circumstances where the plaintiff's loss or damage was not reasonably foresee­able. Notably, on this approach, reasonable foreseeability would remain irrelevant to the process of characterising conduct as misleading or deceptive. It would only come into play at the stage of determining the scope of the defendant's liability for loss.

This conclusion depends on it being possible and proper to disaggregate the conditions of contravention of section 18 from the considerations bearing on defendant liability for loss caused by that breach. It is arguable that it is for two main reasons. The first is because the prohibition of misleading or deceptive conduct is actionable without loss. It follows that the informing considerations for determining liability under that provision may differ from those that inform liability for loss. The second and related point is that liability for loss is contingent on proof that the loss was caused ‘by' or ‘because of' the defendant's breach and, as we have seen, this language denotes not merely factual causation, but the nor­mative and policy-based conditions that inform the defendant's scope of liability. Notwithstanding these considerations, the point remains a difficult one, which also arises in respect of the apportionment provisions, to which we now turn.

D. Apportioning Fault and Contributory Negligence

We have seen that, prior to the enactment of apportionment provisions under the TPA and subsequently the CCA, Australian courts had fairly consistently set their face against taking the plaintiff's carelessness in connection or contemporaneously with the defendant's breach into account when determining the defendant's level of liability for loss. The relevance of the plaintiff's care for his or her own interests has been said to be relevant to the scope of liability only in exceptional cases. ^[967] This was said to be because such loss was ‘indivisible' and the TPA made no provision for apportionment.^[968] Less convincingly, it was further said to be ‘anomalous' that the claimant's carelessness (not in contravention of the Act) should be taken into account to reduce the amount of the loss or damage caused by the contravener's conduct,^[969] although we have also seen that the reasonableness of the plaintiff's behaviour has informed that question in other contexts.^[970] Thus in Henville v Walker, a majority would have held that the defendant was liable for all of the losses caused by his contravention of the statute, notwithstanding the plaintiff's own carelessness in preparing a seriously inaccurate feasibility study on which he also relied.^[971] A similar result was reached in I & L Securities where the plaintiff's failure independently to check the creditworthiness of a borrower was not taken into account to reduce the defendant's liability for loss arising from its misleading property valuation.^[972]

This picture has now changed with the introduction of apportionment provi­sions under section 137B of the CCA.^[973] Section 137B (based on its predecessor s 82(1B) of the TPA) relevantly states:

If:

(a) a person (the claimant) makes a claim under subsection 236(1) of the Australian Consumer Law in relation to economic loss, or damage to property, suffered by the claimant because of the conduct of another person; and

(b) the conduct contravened section 18 of the Australian Consumer Law; and

(c) the claimant suffered the loss or damage as a result:

(i) partly of the claimant’s failure to take reasonable care; and

(ii) partly of the conduct of the other person; and

(d) the other person did not intend to cause the loss or damage and did not fraudu­lently cause the loss or damage;

the amount of the loss or damage that the claimant may recover under subsection 236(1) of the Australian Consumer Law is to be reduced to the extent to which a court thinks just and equitable having regard to the claimant’s share in the responsibility for the loss or damage.

As yet, there has been no extended analysis of the operation of this section.^[974] It is similar to the contributory negligence provisions allowing courts to appor­tion liability in cases of negligence, the difference being that the terminology of contributory negligence is not used.^[975] We have noted above that a defendant may contravene the prohibition on misleading or deceptive conduct without neg­ligence. Because of this, courts have suggested that it may be a challenging ques­tion to determine the way damages should be apportioned under the CCA.^[976] The assumption underpinning that sort of observation is the apparent incoherence in attempting to compare the parties' culpability in determining the defendant's scope of liability, given that the defendant's negligence is not a condition of lia­bility in the first place. However, as we have seen, it is arguable that the criteria for establishing breach of the statutory norm can legitimately be uncoupled from the considerations determining the defendant's scope of liability for loss. So it may be that a defendant's failure to take reasonable care may properly inform the application of the particular provision. More important is whether the apportion­ment provisions themselves reveal any guidance as to the informing criteria for the apportionment process in this context.

The section identifies the claimant's failure to take reasonable care and her share in the ‘responsibility' for the loss or damage as the relevant factors. These are fairly broad labels that readily encompass the sorts of objective limiting criteria rele­vant to negligence and concepts of ‘ legal causation' familiar from both negligent misstatement and deceit. This suggests that the enquiry may be directed to mat­ters such as the comparative fault of the parties irrespective of any tortious duty of care, including the risk taking displayed by plaintiff and defendant, judged against an objective standard of reasonable conduct and, conversely, reasonable reliance. The inquiry into the reasonableness of the plaintiff's reliance on the purportedly misleading conduct would therefore occur at three levels: in characterising the conduct as misleading, in considering the causal nexus between the defendant's conduct and the plaintiff's response for the purposes of accessing a remedy and then in considering whether damages should be reduced on grounds of lack of care by the plaintiff. It is, moreover, possible that the provisions are sufficiently broad to encompass the concept of mitigation, which is the final issue to which we now turn.

E. Mitigation

In applying the remedial provisions of the ACL concerned with addressing plaintiff loss or damage, courts have only intermittently acknowledged the valuable analytical role that can be played by concepts of mitigation drawn from the common law. In discussing the role of carelessness on the part of plaintiffs, courts have traditionally tended to focus on the irrelevance of contributory neg­ligence and consigned consideration of ‘gross negligence' on the part of the plain­tiff to the umbrella concept of ‘ legal' or ‘common-sense' causation.^[977] This has generally entailed an all or nothing approach to issues of mitigation, whereby a failure to mitigate may, if unreasonable, be taken to ‘break the chain' of causa­tion between the defendant's wrongdoing and the plaintiff's loss.^[978] Nonetheless, courts have occasionally (and we would say properly) recognised that under the remedial provisions of the consumer law, a plaintiff cannot recover damages for losses that he could reasonably have avoided.^[979]

As we have seen,^[980] a defendant's failure to mitigate his loss is relevant to deter­mining his scope of liability under both deceit and negligent misstatement. Similar considerations should bear upon defendant liability under the statute, even prior to the introduction of the apportionment provisions. The policy considerations of reducing economic waste that inform mitigation requirements under general law apply with equal force to statutory liability. Consistently with this view, we have seen that mitigation considerations have influenced defendants' statutory liability through the adoption of the approach taken in deceit to the usual measure of loss in cases involving acquisition of an asset.^[981] Following the introduction of the apportionment provisions, it is clear that whether a plaintiff took reasonable steps to mitigate her loss following breach of the statutory provision may be a relevant issue in determining the scope of defendant liability under the ACL.

IV.