“The law made me do it” – when misleading labels are not misleading conduct

Articles Written by Sar Katdare (Partner)
fuel gauge showing no fuel

19 December 2023

Last week, the High Court held that a party is unlikely to have engaged in misleading or deceptive conduct if it has made a misrepresentation that is otherwise compliant with a different, more specific, statutory requirement with the similar purpose of consumer protection. 

Despite this decision, manufacturers and suppliers that are required to comply with statutory labelling requirements should seek to ensure that all of their “conduct” separate to any potential misleading label is true and accurate.

The Begovic case[1]

Facts

In 2017, Mr Begovic commenced a claim in the Victorian Civil and Administrative Tribunal (VCAT) against Mitsubishi and the dealer who sold him his vehicle (collectively, Mitsubishi) alleging that the fuel consumption of the vehicle exceeded the fuel consumption values on the label applied to the windscreen. Mr Begovic claimed that such conduct was misleading or deceptive in breach of the Australian Consumer Law (ACL).

Relevantly, in compliance with the Motor Vehicle Standards Act 1989 (Cth) and the Vehicle Standard (Australian Design Rule 81/02 – Fuel Consumption Labelling for Light Vehicles) 2008 (Cth), Mitsubishi was required to apply a sticker to the windscreen of the vehicle which described the fuel consumption in “urban”, “extra-urban” and “combined” scenarios.

Decisions of the lower courts

VCAT found that Mitsubishi had engaged in misleading or deceptive conduct because the fuel consumption of Mr Begovic’s vehicle was significantly greater than the label.

Mitsubishi appealed to the Supreme Court of Victoria, and then the Court of Appeal, arguing that a manufacturer that was required by law to apply a fuel consumption label to a vehicle, “the form and content [of] which are prescribed by law”, could not be found to have engaged in misleading or deceptive conduct in breach of the ACL.

Both courts dismissed the appeals finding that a label which was applied in compliance with other laws could nevertheless be misleading or deceptive in breach of the ACL.

The High Court decision

The High Court unanimously held in favour of Mitsubishi.

First, the High Court applied its earlier decision of R v Credit Tribunal; Ex parte General Motors Acceptance Corporation[2] (GMAC). That decision was said to be an outworking of the principle that in the event of inconsistency of statutory requirements relating to the same subject matter (in this case, consumer protection), the general provision may need to be subordinated to the specific provision in order to alleviate the apparent conflict. The High Court also noted that “consideration of the detail of the statutory provisions in the specific factual context will be required to decide the proper focus of the inquiry in each case.”

Secondly, the High Court noted that circumstances may have been different if Mitsubishi had falsely represented that the actual vehicle sold conformed with the relevant type or class of vehicle. That would likely depend on what was done or said at the time of sale. There was no evidence in this case that Mitsubishi had done anything other than apply the relevant label.

Thirdly, the High Court found that where the conduct in trade or commerce said to be allegedly misleading or deceptive is the same conduct required by another consumer protection law, the latter law cannot be avoided by characterising the decision to engage in trade or commerce as voluntary.

What should you do now?

  • Ensure that if you have statutory obligations to make representations or apply labels that you fully comply with those statutory obligations.
  • For reasons of efficiency, there is a temptation where work has been done to comply with a statutory obligation, for manufacturers to repeat the relevant representation elsewhere. Manufacturers should only do so where they are certain that the representation is accurate as such conduct is likely to fall outside the protection identified by this case and in GMAC.
  • If a manufacturer elects to repeat a misrepresentation outside of the legal requirements to do so, it should accompany that representation with an appropriate and sufficiently prominent disclaimer. For example, if a manufacturer makes a representation as to the nature of a product as a result of statutory testing, it might describe the specific testing which has been done to obtain that representation or qualify that it is only representing that the results will be obtained when tested in that way.
  • Finally, it should be remembered that whether conduct has been misleading or deceptive will depend on the relevant facts (even in this case, as stated by the High Court).

This article was written with the assistance of Caitlin Littler, Seasonal Clerk.

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).

Related insights Read more insight

Digital Bytes – cyber, privacy & data update

2024 is off to brisk start in the cyber, privacy and data space – regulatory developments in cyber security and artificial intelligence (AI) continue at pace.

More
Payment times reports due 31 March 2024

An increase in enforcement action by the Regulator under the Payment Times Reporting Act 2020 (Cth) (PTR Act) has been happening over the last 12 months. Companies covered as reporting entities...

More
Consultation on merger control reform in Australia begins

Treasury has released a detailed consultation paper seeking views on whether Australia’s current merger control regime is effective and the available options for reform, drawing extensively on...

More