Australia: Consumer laws do apply to state authorities: Is the Crown in business?

As governments increasingly involve themselves in commercial enterprises, it is important to be aware of the requirements of Australian consumer laws and how they apply to public and private sector entities. Section 18 of the Australian Consumer Law (ACL), contained in Schedule 2 to the Competition and Consumer Act 2010 (Cth) (CCA), prohibits misleading or deceptive conduct in trade or commerce.

The Commonwealth and the states and territories have legislated to bind the Crown in its various manifestations to the ACL so far as the Crown "carries on a business", either directly or by an authority of the jurisdiction concerned.

The Victorian Supreme Court decision in Murphy v State of Victoria and Linking Melbourne Authority provides guidance as to when governments and their agencies can be said to be carrying on a business. It also sheds light about when government's activities are taken to be in "trade or commerce".

Background

The defendants were planning for the construction of a road in Melbourne as part of the East West Link project. The plaintiff alleged that the defendants made erroneous representations about the proposed road relating to its benefit to Victoria and the amount of traffic which would use it, and that those representations contravened the prohibition against misleading and deceptive conduct contained in s 18 of the ACL.

The decision centred on the following questions:

  • Were the defendants carrying on a business?
  • Were the representations made in trade or commerce?

Carrying on a business

The court summarised the leading cases relating to the phrase "carries on a business" and identified the following important principles in determining its meaning:

  • the impugned conduct must be undertaken in the course of carrying on the business—it is not sufficient to establish that a Crown entity is carrying on a business, and that the conduct complained about is in some way connected with that business and therefore subject to the ACL
  • it is not sufficient that the impugned conduct may be said to be connected in some way with a business to be conducted by the Crown at some time in the future, and
  • the activity in the course of which the impugned conduct occurs must properly be characterised as "carrying on a business".

The Court accepted the following propositions submitted on behalf of the State concerning the meaning of "carrying on a business":

  • the activities must be undertaken in a commercial enterprise or as a going concern and must constitute trade, or commercial transactions or engagements
  • a business activity is an activity that takes place in a business context and which, of itself, bears a business character
  • while the expression "carry on a business" signifies a course of conduct involving the performance of a succession of acts with system and regularity, not the effecting of a solitary transaction, mere repetitiveness is insufficient
  • functions of government that are purely governmental or regulatory, carried out in the interests of the community, such as the performance of statutory functions, does not constitute the carrying on of a business, and
  • there must be some element of commerce or trade, such as a private citizen or trader might undertake.

Applying these principles, the Court found that the defendants' conduct complained about was not conduct engaged in the course of carrying on a business.

Trade or commerce

This question was purely academic, because of the finding that the conduct did not occur in the course of the defendants' carrying on a business. Nevertheless, the Court considered the question of whether the defendants were acting in trade or commerce and affirmed three key principles:

  • a narrow construction applies to the meaning of "in trade or commerce" in s 18 of the ACL, similar to the meaning described in Concrete Constructions (NSW) Pty Ltd v Nelson in relation to s 52 of the Trade Practices Act as "referring only to conduct which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character"
  • there is a temporal element, which requires that the impugned conduct coincide with the conduct of trade or commerce, and
  • while it is not to be automatically excluded, political conduct may often lack the necessary commercial character to constitute trade or commerce.

Accordingly, although not determinative, the Court found that the conduct of the defendants was not conduct in trade or commerce.

Update: matter remitted to the Supreme Court

Please note that the Supreme Court decision has now been successfully appealed to the Court of Appeal, and remitted to the Supreme Court for a new trial based on findings by the Court of Appeal that the primary judge erred in the procedure adopted for the first trial (Murphy v Victoria and Another (2014) 313 ALR 546).

The Court of Appeal did not express an opinion as to the correctness of the conclusions of the primary judge regarding whether the defendants were "carrying on a business" or acting "in trade or commerce", given that the matter has been remitted for a rehearing. The Court of Appeal examined the principles applied by the primary judge to these issues, and did not disagree with those principles. However, the Court of Appeal added the following observations:

  • it is necessary to bear in mind that the word "business" is an "etymological chameleon" that takes its meaning from the context in which it appears and from the purpose of the statute in which it is found—in the context of the CCA it is a word of wide and general word (at [47] and [48])
  • considerable care should be taken when drawing a line between activities preparatory to the establishment of a business and acts that may be done early in the carrying on of the business (at [50])
  • it is important to keep in mind that, in some cases, the functions of a government that are purely governmental or regulatory may co-exist with the functions of a government which may entail the carrying on of a business (at [58]), and
  • section 18 of the ACL remains subject to the limitations identified in Concrete Constructions (NSW) Pty Ltd v Nelson (as found by the primary judge) (at [77]).

We would like to acknowledge the contribution of Alice Bain to this article.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions