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ACL damages · Remedies module 4

The idea

The statutory claim begins with a prohibition rather than a promise or a duty. Section 18 of the Australian Consumer Law forbids misleading or deceptive conduct in trade or commerce. Section 236 then lets a person who suffers loss because of such conduct recover the amount of it. The statute adopts no single common law measure. This is because the High Court reads s 236 as compensating the loss the contravention actually caused, and the court selects whatever measure reflects that loss. Examiners usually concede the misleading statement early. The marks sit in causation and measure, and above all in what happens when the plaintiff contributed to her own loss.

Some rules carry a small icon marking the structure the rule takes. The icon is a reading aid and nothing more. The facts of the cases and the words of the statute do the work.

Attack plan

1. Establish the statutory gateway first. Ask whether the defendant engaged in misleading or deceptive conduct in trade or commerce under s 18 of the Australian Consumer Law. A false statement of present fact made while marketing a business or property is the usual exam version. Settle this before any talk of measure. This is because errors of scope are the classic mistake in this module.
2. Run causation under the words because of. The contravention need only be a cause of the loss rather than the only cause. The plaintiff's own carelessness in relying does not sever the connection. Where the representation concerned a future matter, the representor bears the onus of showing reasonable grounds for making it under s 4. Where the contravention was fraudulent, the onus shifts to the fraudster to prove the loss would have occurred anyway.
3. Choose the measure the statute allows. The usual candidates are the price paid minus the real value, an undisclosed ongoing burden, or wasted expenditure. Pick the one that reflects the loss the contravention actually caused and defend the choice against the value for money objection. Do not import common law remoteness wholesale. The words because of together with the amount of the loss do the limiting, informed by common law analogues but bound by none.
4. Check reductions under s 137B of the Competition and Consumer Act. Damages may be reduced where the claimant failed to take reasonable care. That route is closed where the defendant intended the loss or acted fraudulently, so characterise the defendant's conduct before conceding any discount.
5. Consider the wider orders under ss 237 and 243. The court may declare the contract void, vary it, refuse to enforce it or order money refunded. Raise these orders where unwinding the transaction serves the plaintiff better than damages alone.
6. Conclude with a dollar figure. State the award, the fact that drove it, the minimum the plaintiff recovers even on the losing view, and why the alternative award was rejected.

Cases at a glance

Case	In a line
Henville	An agent misrepresented likely apartment prices and the developer's own faulty costings compounded the error. The developer recovered his loss in full
Berry	A fraudulent contravention made the loss difficult to measure. The onus shifted to the fraudster to prove the loss would have occurred anyway, and the court would not speculate in the fraudster's favour
Marks	Borrowers received a loan on terms that matched the market. The bargain caused no compensable loss, and the statute was held to adopt no single measure
Murphy	An asset was worth the price paid but carried undisclosed future outgoings. Those hidden burdens were real loss and were recoverable

The rules

R31 · What must be established to recover statutory damages for misleading conduct? A person must not in trade or commerce engage in conduct that is misleading or deceptive or likely to mislead or deceive, and a person who suffers loss because of such conduct may recover the amount of it. ss 18 and 236 of the Australian Consumer Law. Trap. Errors of scope. Establish the statutory gateway before analysing the measure of damages.

R32 · Who bears the onus where the representation concerned a future matter? Where a representation concerns a future matter the representor bears the onus of showing reasonable grounds for making it under s 4. s 4 of the Australian Consumer Law. The examiner's signal is a forecast or a prediction rather than a statement of present fact.

R33 · How is causation established under the statute where the plaintiff was also careless? The contravention need only be a cause of the loss and the plaintiff's own carelessness in relying does not sever the connection. Henville. Trap. Importing common law remoteness wholesale. The Act is silent. "Because of" plus the amount of the loss do the limiting, informed by common law analogues (Hay), bound by none.

R34 · What happens to the onus of proof where the contravention was fraudulent? Once loss caused by fraudulent contravention is proved the onus shifts to the fraudster to prove the loss would have occurred anyway and courts do not speculate in favour of the party whose fraud created the uncertainty. Berry. Trap. Overlooking Berry where there is fraud. Examiners' reports on past papers note that students who missed it tended to do badly. Where a deliberate falsehood makes the loss difficult to measure, the onus shifts to the fraudster.

R35 · How is loss or damage measured under s 236? Loss or damage under s 236 is confined to no single common law measure and the court selects the measure reflecting the loss the contravention actually caused. Marks; Murphy. Trap. Marks against Murphy. Reconcile on the loss concept. Marks found no loss because the bargain matched the market. Murphy found real loss in hidden future burdens. The statute's refusal of a single measure is itself the reconciliation.

R36 · When can ACL damages be reduced for the claimant's own carelessness? Damages may be reduced for the claimant's failure to take reasonable care under s 137B Competition and Consumer Act only where the defendant did not intend the loss and was not fraudulent. s 137B of the Competition and Consumer Act. Fraud or an intention to cause the loss closes the route entirely rather than merely reducing the award.

R37 · What orders beyond damages are available under the ACL? The court may make any order it thinks appropriate against the wrongdoer to compensate for, prevent or reduce the loss, including declaring the contract void, varying it, refusing to enforce it, or ordering money refunded, a statutory unwinding more flexible than rescission in equity. ss 237 and 243 of the Australian Consumer Law. Raise these orders where unwinding the transaction would serve the plaintiff better than damages alone.

The flowchart

The ACL damages flowchart runs the attack plan as a single page of decisions, from the s 18 gateway through causation and measure to the reductions and the wider orders. It ships with the Remedies flowcharts page at /remedies/flowcharts. Until that page is live the chart sits in Remedies Flowcharts (the companion document to the schematic).

A worked example, dissected

Nadia inspects a childcare centre offered for sale, and the selling agent tells her it runs at ninety two funded places with a waiting list to match. The agent refuses her request to see the enrolment register. Nadia's own feasibility spreadsheet overstates fee income and she buys the business for $890,000. Forty places were filled at settlement, and a valuer puts the true value at $610,000.

The full problem, with its Pass answer, H1 answer and examiner's comments, is Problem 1 of the ACL damages drill bank on the practice page.

Practise this module

Ten drills in the ACL damages bank cover every rule above, and the exam tier runs the module inside integrated scenarios. Start with the quick drills on the gateway and on causation, then attempt the bank blind.

Practise this module →