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Freedom of speech and consumer protection

Feature Articles

Cite as: March 2015 89 (3) LIJ, p.50

An individual's right to freedom of expression is limited by a prohibition on misleading and deceptive conduct. 

By Blair Ussher

The prohibition against misleading and deceptive conduct was introduced by s52 of the Trade Practices Act 1974 (Cth). Over the following two decades, the states and territories expanded the reach of the prohibition by enacting an identical provision in each of their Fair Trading Acts.1 The prohibition now appears in s18 of the Australian Consumer Law (ACL).2 This section provides that:

“A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive”.

The prohibition is generally worded so that all conduct which could potentially be detrimental to consumers by virtue of being misleading or deceptive can be targeted.3 Conduct is considered to be misleading or deceptive, or likely to mislead or deceive, if it conveys a meaning that is inconsistent with the truth.4 The prohibition is not confined to conduct which is intended to mislead or deceive.5 The prohibition can apply to “innocent” statements and to the expression of opinions honestly, but erroneously, held.6

This raises the issue of the extent to which the prohibition against misleading and deceptive conduct may justifiably impinge upon the exercise of a natural person’s right to free expression. Freedom of expression, although not enshrined in the Constitution, is fundamental to common law.7 Understandably, courts will exercise considerable care before making orders restraining statements on issues regarded by many people as important to their ideological beliefs.8 It is not an answer to say that the prohibition only applies to false or misleading representations as freedom of expression can, in several contexts, include the freedom to express ill-informed and irrational views.

While freedom of expression has been described as a “primary right”, it has never been considered an absolute right. The courts have made clear that this freedom is but one of a number of competing rights which must be accommodated within a free society.9 Historically, the right has been restricted by the law of sedition, defamation, obscenity, copyright and, more recently, anti-vilification laws. “Commercial expression”, much to the chagrin of free-market fundamentalists, has long been subject to regulation. In Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd10 the Full Federal Court readily concluded that the social justice objectives of consumer protection constituted a justifiable restriction on freedom of expression. The Full Court held that:

“. . . the meaning of s52(1) [TPA] cannot be controlled by the doctrine of freedom of speech, which incorporates the freedom of the press. Although there is no right to speak freely given by the Constitution or by statute, free speech is of fundamental importance. But in this as in other areas, freedom does not mean licence but freedom under law in a civilised society”.11

Even in the US where the right of free expression is cast in absolute terms under the First Amendment to the Constitution, the Supreme Court has interpreted the right as affording considerably less protection to “commercial expression” and has denied any protection at all for commercial speech that is false or misleading.12

In Australia it is unnecessary to categorise speech as “commercial”, “religious” or political” expression for the purpose of balancing the value of the prohibition against the right to free speech. This is because the prohibition against misleading or deceptive conduct does not purport to intrude into areas of general public discourse. While it may be desirable for those involved in public discussion not to engage in misleading or deceptive conduct, the prohibition was not designed to secure that outcome. The prohibition is restricted to a singular context, namely, to conduct “in trade or commerce”. The preposition “in” provides a limitation on the scope of conduct regulated by the prohibition.

In trade or commerce

The expression “in trade or commerce” can cover an extensive range of activities. One view is that it would encompass any conduct that occurs “in connection with” or “in relation to” the carrying on of any trading activity. In Concrete Constructions v Nelson13 the majority of the High Court (Mason CJ, Deane, Dawson and Gaudron JJ) rejected this broad construction. The majority held that the statutory context limited the meaning of “in trade or commerce” so that it only applied to the conduct of a person towards others, whether in their capacity as consumers or otherwise, with whom the person (or those whose interests the person is seeking to promote) has, or may have, dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character.

Such conduct includes promotional activities for the purposes of the supply of goods or services to actual or potential consumers but does not include conduct that is merely incidental to a trading or commercial activity. This is perhaps best illustrated by the case of Unilan Holdings Pty Ltd v Kerin14 where Hill J held that the giving of a speech by a federal minister to an international wool conference was not an aspect or element of an activity which bore a trading or commercial character. The fact that the speech concerned matters of trade and commerce meant that it could be said to be conduct “in relation to trade or commerce”. It was not however, conduct “in trade or commerce”.

Conversely, statements intended to advance a person’s commercial interests, or those of another, rather than to altruistically contribute to public discussion, will be characterised as constituting conduct “in trade or commerce”. This applies whether or not the person engaged in the impugned conduct is directly engaged in trade or commerce.15 These principles are demonstrated by the decision in Tobacco Institute of Australia v Australian Federation of Consumer Organisations Inc.16 This case concerned advertisements published by the Tobacco Institute to the effect that there was little evidence linking passive smoking to the onset of disease. The Full Court of the Federal Court held that, though participation in a debate on a matter of public controversy would not usually constitute conduct “in trade or commerce”, the Tobacco Institute was involved in the debate in order to ensure that cigarette sales were not affected by public or government reaction. For this reason, publishing the advertisements did constitute conduct “in trade or commerce”.

This is not to say that all persons engaged in commerce who contribute to public debate will be regarded as acting in trade or commerce. To be caught by the prohibition they must have a direct commercial interest in the subject of the advocacy. This principle is demonstrated by Orion Pet Products Pty Ltd v RSPCA (Vic)17 where Dr Wirth, president of the RSPCA (Vic), was alleged to have made false public statements concerning the characteristics of certain electrified dog-collars. The Federal Court found that, although the RSPCA had extensive commercial interests, the comments were made for educational and political purposes and, while the RSPCA may have benefited from the radio broadcasts by acquiring a greater public profile for its intellectual property, this commercial benefit was incidental to its trading activities. Accordingly, the statements were not made “in trade or commerce”.

The Charter

The Charter of Human Rights and Responsibilities Act 2008 (Vic) (the Charter) provides an additional framework for the protection of human rights in Victoria. Section 15(1) of the Charter provides that every person has a right to hold an opinion without interference. It is of no consequence that the opinion may be irrational or mistaken. Section 15(2) provides that every person has the right to freedom of expression which includes the right to seek, receive and impart information and ideas of all kinds. The Charter makes clear that these rights only apply to natural persons. As at common law, a corporation may not avail itself of human rights.18

Section 32 of the Charter provides that “so far as it is possible to do so consistently with their purpose, all statutory provisions must be interpreted in a way that is compatible with human rights”.19 The Charter, however, does not affect the validity of an Act or the provision of an Act that is incompatible with a human right.20

Under the Charter the right of free expression is subject to two layers of qualifications – one specific to the right and the other general. The specific limitation found in s15(3) provides that:

“Special duties and responsibilities are attached to the right of freedom of expression and the right may be subject to lawful restrictions as necessary:

  1. to respect the rights and reputation of other persons; or
  2. for the protection of national security, public order, public health or public morality”.

The construction of this provision signifies that the reasonable restrictions listed under sub-paragraphs (a) and (b) are in addition to the special duties and responsibilities attached to the right. Accordingly, in an appropriate context (such as “in trade or commerce”) these special duties could include a duty not to engage in misleading or deceptive expression. In any event, the “rights . . . of other persons” referred to in s15(3)(a) are not limited to fundamental rights. They extend to limitations which further social justice purposes.21 The expression “public order” in s15(3)(b) has a meaning that is considerably broader than the meaning accorded to it under Victorian criminal law. For the purposes of the Charter, the expression encompasses all of those “universally accepted fundamental principles, consistent with respect for human rights, on which a democratic society is based”.22

The general limitation is found in s7. All the rights under Part 2 of the Charter are subject to this limitation. Section 7(2) provides that:

“A human right may be subject under law only to such reasonable limits as can be demonstrably justified in a free and democratic society based on human dignity, equality and freedom, and taking into account all relevant factors including:

  1. the nature of the right; and
  2. the importance of the purpose of the limitation; and
  3. the nature and extent of the limitation; and
  4. the relationship between the limitation and its purpose; and
  5. any less restrictive means reasonably available to achieve the purpose that the limitation seeks to achieve”.

Section 7 precludes any of the human rights set out in Part 2 of the Charter from being absolute by imposing a balancing exercise to determine whether any limitation on a right is justified. The list of factors to be taken into account is not exhaustive. Proportionality is central to the test.23

The general and specific limitations underscore the point that the right of free speech is integrally connected with other values – values that, in turn, are grounded on respect for human dignity.

In the case of Noone (DCAV) v Operation Smile (Aust) Inc. & Ors24 the Victorian Court of Appeal found that the operators of the Hope Clinic had engaged in misleading and deceptive conduct, in trade or commerce, by falsely representing that the clinic’s treatments had scientific credibility and could benefit terminally ill cancer patients. Having reached this finding, the Court of Appeal considered whether the prohibition against misleading and deceptive conduct contained in s9 of the Fair Trading Act 1999 (FTA) was inconsistent with s15 of the Charter.

The Director of Consumer Affairs Victoria (DCAV), supported by the State Attorney-General, contended that there was no inconsistency between the settled meaning of s9 of the FTA and the right to free expression on the basis that:

  1. the right to free expression does not protect commercial expression that is misleading or deceptive; alternatively, if the right did extend to such expression -
  2. the prohibition against misleading or deceptive conduct in trade or commerce was reasonably necessary to protect the rights of others or for the protection of public order or for the protection of public health. The prohibition was, thus, a justifiable limitation, sanctioned by s15(3) of the Charter.

Nettle JA agreed with the DCAV’s submissions. Warren CJ and Cavanough AJA considered that this issue did not require determination in this instance but noted that there was “great force” in Nettle JA’s reasoning.

At first instance, PILCH (as amicus) had contended that the strict liability construction of s9 FTA was incompatible with human rights. All justices of the Court of Appeal rejected this contention, noting that the importation of a mens rea requirement through s32 of the Charter, as contended by PILCH, would defeat the purpose of the prohibition contained in s9 FTA.

Conclusion

Consumer protection and the right to free expression are two important values recognised in Australian society. Freedom of expression has been described as a primary right, against which any limitation must be justified. The courts have held that the limitation on the right to free speech imposed by the prohibition contained in s18 of the ACL is justified both at common law and under the Charter. This is so because the prohibition is limited – being confined to conduct occurring “in trade or commerce” – and because it is reasonably necessary to achieve the social justice objectives of consumer protection, namely, the elimination of deceit and trickery in trade and commerce and the achievement of a fair market for all, particularly for the disadvantaged and vulnerable.

The maintenance of a fair and just balance is as important as any fundamental right. There is no merit in championing one right at the expense of justice.


BLAIR USSHER is general counsel at Consumer Affairs Victoria. He also has an interest in international humanitarian law and has written extensively in this field.

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  1. See Fair Trading Act 1999 (Vic) s9.
  2. The ACL consists of Schedule 2 to the Competition & Consumer Act 2010 (Cth) and the regulations under s139G of the Act.
  3. The Second Reading Speech to the Trade Practices Bill provides that: “It is important that there should be such a provision if the law is not to be continually one step behind businessmen who resort to smart practices”. Hansard, House of Representatives, 16 July 1974, 232.
  4. World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181.
  5. Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre (1978) 140 CLR 216.
  6. Cummings v Lewis (1993) 41 FCR 559; Blackman & Ors v Grant & Anor [2010] VSC 229 at [114] and [131] and see the reverse onus in s4 ACL.
  7. R v Secretary of State for Home Dept. Ex parte Simms & Anor [2002] 2 AC 115.
  8. Fasold v Roberts (1996) 7 FCR 489 at 550.
  9. Samuels v Readers Digest Assoc. Pty Ltd (1969) 120 CLR 1.
  10. (1984) 2 FCR 82.
  11. Note 10 above, at 86.
  12. Central Hudson Gas & Electric 447 US 557 (1980).
  13. (1990) 169 CLR 594.
  14. (1992) 35 FCR 272.
  15. In Houghton v Arms (2006) 225 CLR 553, in which the DCAV appeared as Amicus Curiae, the High Court held that: “. . . statements made by a person not . . . engaged in trade or commerce may answer the statutory expression if, for example, they are designed to encourage others to invest, or continue investments, in a particular trading entity”, [at 563].
  16. (1992) 38 FCR 1; see also ACCC v Hughes (2002) ATPR 41-863 where Mr David Zero Population Growth Hughes was found to have engaged in misleading conduct in relation to the marketing of contraceptives.
  17. (2002) 120 FCR 191.
  18. Charter s6(1) and s3 (definition of “person”).
  19. Section 32 applies to s18 of the ACL (Vic) which is deemed to be part of the Australian Consumer Law & Fair Trading Act 2012 (Vic).
  20. Charter s32(3) and note s36(5).
  21. Nowak, M, UN Covenant on Civil & Political Rights – CCPR Commentary (2nd edn, 2005), 463.
  22. Note 21 above, 465.
  23. R v Momcilovic (2010) 265 ALR 751.
  24. [2012] VSCA 91 (11 May 2012).

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