Complete Commercial Law (2nd Half)

Canon Australia v Patton Pattons owned company, gave personal guarantees to Canon for Canon's supply of parts. Canon's failures to supply parts led to damage to company cash flow, which led to Canon calling up the guarantees. Canon seems to have caused the harm to the primary debtor. Unconscionable?

ASIC Unconscionability 1. ASIC Act s12CC cases can be used to interpret s51AC TPA, and vice versa. 2. Here, there was no unconscionable dealing, because there was a commercial possibility that it might not be paid, so there was a justifiable reason for failing to supply parts on credit. The conduct was not of such a high level of moral impropriety that it could properly be described as unconscionable.

ASIC v National Exchange National Exchange sends off-market offers to buy shares from members of demutualised companies such as AMP, AXA, and NRMA, who, owing to share-market lack of education, feel as if they have been given free shares. Offer disclosed that a fair estimate of value was $0.90 to $1.29 each; but offer was for $0.35 each. David Tweed ran the offer because particular class of offerees would be more likely to sell regardless of the price offered. He did not claim the offer fair; it was merely an offer to buy at a price. 257 shareholders accepted.

ASIC Unconscionability 1. Cases decided on ASIC Act s12CC, prohibiting unconscionable dealing, are of continuing relevance to B2B unconscionable dealing today. 2. Statutory provisions on unconscionability are not limited by the general law of unconscionability. 3. Statutory remedy for unconscionability offers a greater reward than the historical equitable remedy, because it was derived from a statutory prohibition on conduct. Statutory provisions are conduct-deterrent, rather than outcome-remedial. 4. Here, carefully formulated and systematic targeting of a vulnerable and underinformed class of the public was held to constitute unconscionable conduct.

Ira Berk Case

Anti-Competitive Agreements 1. 'Arrangement' describes something less than a binding contract or agreement, something in the nature of an understanding - a plan arranged between them which may not be enforceable at law. 2. Arrangement bears the meaning an ordinary educated man would ascribe to it, meaning a meeting of minds, involving mutuality in that each party would regard himself as being in some degree under a duty, whether moral or legal, to conduct himself in a particular way...

Outboard Marine Australia v Hecar Investments (No 6)

Anti-Competitive Agreements 1. Checklist for gauging effect of conduct on competition: a) any effect on the capacity of consumers to influence the market b) any effect on the capacity of dealers to continue or enter in market c) any effect on capacity or willingness of dealers to meet requirements of consumers, or to respond to variations in those requirements d) any effect on cost or profit structures in the market or its efficiency otherwise e) any effect upon the product range available in the market f) any effect on the number or identity of the retailers in the market 2. Here, no exclusive dealing despite termination of dealership for not refusing to sell competitor's products, because only minimal effect on competition in the relevant market.

TPC v Nicholas Enterprises (No 2)

Anti-Competitive Agreements 1. Meeting of minds requires that a) each party communicates with the other b) each raises an expectation in the mind of the other, and c) each accepts an obligation with respect to the other.

TPC v Email Two manufacturers of kilowatt/hour electricity meters with very similar prices. Evidence that Email sent its price lists to the other automatically when sending them to distributors, but no other evidence of an agreement.

Anti-Competitive Agreements 1. No agreement existed, because although the conduct of one allowed the other to follow prices if it chose to do so, there was no obligation that it should do so. (Parallel conduct).

Morphett Arms Hotel v TPC

Anti-Competitive Agreements 1. One could have an understanding which is restricted to the conduct one of them will pursue without any element of mutual obligation, so far as the other party or parties are concerned.

Radio 2UE Sydney v Stereo FM

Anti-Competitive Agreements 1. One needs to know something of the business carried on in the relevant market and the nature and extent of the market before one can say that any particular lessening of competition is substantial.

Tradestock v TNT (Management)

Anti-Competitive Agreements 1. The law does not prohibit even the most irrational decision not to do business. What is prohibited is a decision which the maker has undertaken with others to make. 2. s45 requires more than one party.

Nightingdale v Tildsley Bailee failed to turn over the motor of vehicle, but did not regularly turn over his own vehicles.

Bailment 1. Bailee is (sometimes?) not obliged to take any greater care of a bailor's goods than that with which he would treat his own.

Jackson v Cochrane Misdelivered a caravan to fraudsters. Fraudsters presented proper document and claimed to be acting on authority; reasonable efforts were made to communicate with the true owner.

Bailment 1. Fundamental duty of bailee is proper return of the object. 2. A bailee will be held liable for misdelivery even if not demonstrably negligent.

Tottenham Investments v Carburettor Services Theives stole bailment car by sneaking in through skylight.

Bailment 1. Leaving keys in the ignition of cars, being a common practice, is not sufficient to prove a breach of bailment duties. 2. Fixing defects in security after the fact is highly prejudicial to a bailee's argument against their negligence. Securing the skylight and installing alarms indicated the initial breach of duty.

Brambles Security Services v Bi-Lo Bi-Lo hires HSS to carry cheques and cash to deposit in bank. HSS subcontracts carriage to Brambles. Brambles mixes cheques and cash with other clients, causing loss.

Bailment 1. Money is typically not considered subject of a bailment, because cash is transferrable: one does not intend to receive the same notes back. 2. Money may be subject to a bailment where the exact notes are significant; particularly, when bundled with clearly bailmentable cheques. 3. In absence of contract for evident bailment of goods, residual law of bailment determines obligations and liability.

Port Swettenham Authority v TW Wu & Co Pharmaceutical goods missing from port authority. Evidence adduced of general security system, but no evidence about the sufficient care of goods.

Bailment 1. Onus of proof regarding damage to goods in a bailment is the balance of probabilities, and lies on the person defending, not alleging, a claim of negligence. 2. Evidence of a general security system was held insufficient to disprove negligence in absence of evidence about the care of the specific goods; bailee must prove actual care of goods at time of breach, not just in general.

Pitt Son & Badgery v Proulefco SA Goods retained after sale; burnt down by drifter in woolshed due to lax fencing.

Bailment 1. Retention of possession after sale of goods converts seller into bailee. 2. No breach of duty to prevent wool being stolen, because the bails were heavy and it was not foreseeable that someone could take them. 3. Low expense of security precautions not taken to avoid reasonably foreseeable event results in a breach of bailment duty.

Cowper v JG Goldner Carrier allowed mare in foal to die of travel sickness.

Bailment 1. Standard of care for bailment is the care an ordinary reasonable person would take in all the circumstances. 2. Ordinary reasonable persons would have checked the sickness of the horse.

Ultzyen v Nichols Waiter takes plaintiff's coat in restaurant to hang up; later, it was gone.

Bailment vs Licence 1. As the waiter initiated the taking of the coat, and selected where it should be hung, and the goods could not be retrieved except through access to the waiter, there was a bailment.

Greenwood v Municipal Council of Waverley Lockers at Bondi. Fee paid, but goods stolen.

Bailment vs Licence 1. Council-operated beach lockers do not involve the council taking possession of clothes - council was a mere licensor for reward.

Ashby v Tolhurst Car left in bare block of land. No attendant, no exchange of keys, no security. Bailment or licence?

Bailment vs Licence 1. Even for payment, merely using land to park as opposed to transferring possession of one's car is not a bailment, but rather a licence.

Auto-Mart (London) v Chiltern MTA price-fixed for specific car models, and black listed offending members - couldn't obtain supplies from dealers and some manufacturers. Plaintiff sought injunction restraining publication of name on list.

Common Law Competition 1. Strongly anti-competitive allowed by the common law position: black-listing was bona fide and in the interests of the majority of the members of the association.

Phillips v Brooks Impersonation to jeweller and resale to pawnbroker. Can jeweller get the goods back from the pawnbroker?

Common Law Misrepresentation 1. Fraudulent misrepresentation renders the contract voidable, not void. 2. Mistake as to identity of transacting party is a matter of fraudulent misrepresentation, not mistake. 3. Third parties acquiring for consideration without notice gain good title over goods subject to voidable title.

Redgrave v Hurd Solicitor sells house and business under untrue representations about returns. Not found to be a term of the contract. Innocent misrepresentation.

Common Law Misrepresentation 1. Innocent misrepresentation can give rise to a right of rescission (contract is voidable), but this is rare. 2. Innocent misrepresentation is an incorrect statement of fact made without intention to mislead or deceive, or made without realisation of its untruth.

Vimig v Contract Tooling

Common Law Misrepresentation 1. Mere execution of a sale of a business renders restitution no longer possible for the purposes of rescinding a contract made under an innocent misrepresentation in common law.

Svanosio v McNamara

Common Law Misrepresentation 1. Mere execution of a sale of land renders restitution no longer possible for the purposes of rescinding a contract made under an innocent misrepresentation in common law.

Clough v London and North Western Railway

Common Law Misrepresentation 1. Misrepresentation will not provide a remedy in common law where the deceived party has ratified the agreement. 2. Ratification requires full knowledge of the facts.

Alati v Kruger

Common Law Misrepresentation 1. Rescission is not available where, by reason of the changes that have occurred, it is no longer possible to restore the parties to their former position.

Tanwar Enterprises v Cauchi Loss of an equity of redemption caused by failure to give notice in accordance with terms of contract. Loss. Unconscionable?

Common Law Unconscionable Dealing 1. The courts are reluctant to extend the doctrine of unconscionable dealing to novel cases.

Commercial Bank of Australia v Amadio Elderly Italian couple. Unsophisticated clients, limited English. Mortgaged their shops for son's building companies. Became liable for total present and future indebtedness of the company. Elders misled as to son's prosperity. Son never read agreement, told them their liability was limited. Bank manager did not explain or offer great discussion; after obtaining signature, left without leaving a copy of the agreement.

Common Law Unconscionable Dealing 1. Unconscionable dealing requires a special disadvantage or vulnerability on the part of the victim, and unfair or unconscientious advantage being taken of the opportunity thereby created.

Blomley v Ryan Trader brings wine to a deal. Other party signs while inebriated.

Common Law Unconscionable Dealing 1. Unconscionable dealing requires that the aggressor know of the special disadvantage or vulnerability of the victim. 2. Special disadvantage is defies conclusive statement. The common factor is simply that one party is placed at serious disadvantage vis-a-vis the other.

LGIA v Eather Stuff (jewelry) stolen from bag covered by towel and left in locked car. Claim rejected, as insured had not taken all reasonable precautions to minimise injury or loss of damage. Court rejected argument based on plain (rather than literal) reading of 'all reasonable precautions'.

Contra Proferentum 1. 'All reasonable precautions' must be read sensibly (read down), to give commercial efficacy to the contract.

Johnson v AHAC Insurance covered permanent total loss of one limb; camping injury. Considered amputation, but eventually recovered to point where brief walking was possible with pain and insert in shoe. Claim rejected.

Contra Proferentum 1. Clear, plain and unambiguous literal meanings of words used in insurance contracts cannot be defied for greater justice.

Suncorp Metway Insurance v Landridge Insurer argued that their contract, which covered breaches of professional duty, extended only to the insured agent's liability to a landlord, and not to any liability owed to the tenant. (But, if there was no liability owed to tenants, the agent has very few duties).

Contra Proferentum 1. Interpretation (definition) of a policy is carried out in the context of circumstances in which it is formed, to give effect to the intention of parties (of which business efficacy is assumed). 2. Limitations in clauses neither expressly nor implicitly found in the contract will not be read into them; contracts are construed contra proferentum.

MMI v Stargift Damage to confectioner caused by evaporated water from storm puddles under easter eggs. Policy for stock in trade covered damage caused by storm, but not caused by flood. Insurer argued that should be contextualised as 'directly caused'.

Contra Proferentum 1. Terms are construed contra proferentum in order to counteract the inequality of drafting power. Where an insurer wishes to rely on a particular, strained interpretation, they should draft it into the policy.

News Ltd v Australian Rugby Football League ARL required 20 Rugby League clubs in its competition to sign loyalty agreements preventing them playing in any other competition for five years. Murdoch's News Ltd Superleague claimed misuse of market power (s46) and exclusionary dealing (s45(b)(l)/4D).

Definitions 1. (At first instance:) Where the market involves other substitutable products (not just rugby, but several competitive winter team sports), there is no breach of s46 misuse of market power. 2. (On appeal:) There was a breach of the exclusionary provisions because at the time the agreements were made there was a real competition for competition organisers and the acquisition of leading players. 3. The subjective purpose of the parties is the main criterion in assessing whether a term is an exclusionary provision.

Re QCMA Authoritative definition-giving case.

Definitions 1. Defines competition: a situation where no one seller or group of sellers acting in concert has the power to choose its level of profit by giving less and charging more; rivalrous market behaviour. 2. The test for the bounds of a market is substitutability - substitution between one product and another, and between one source of supply and another, in response to changing prices. 3. In determining the outer boundaries of the market we ask: If the firm were to 'give less and charge more' would there be much of a reaction? Is there a relatively high demand or supply response to price change (cross-elasticity of supply/demand)?

Mark Lyons v Bursill Sportsgear

Definitions 1. There may be cases where a particular product is so distinctive that no other product or brand is seen by consumers as a possible substitute - the market would be constituted solely by the trade in that product. 2. In other cases, other products or brands present realistic alternatives, in which case they also will be within the relevant market.

Applications of Tooth & Co and Tooheys

Definitions 1.Competition is a matter of degree. At the extremities of the market, there is such a break in substitution possibilities that firms within its boundaries would collectively possess substantial market power (they could raise prices or offer a poorer deal without being substantially undermined by the incursions of rivals).

Queensland Wire Industries v BHP BHP has 97% steel market. Would only sell Ybars in bulk to QWI at an uncompetitive price.

Definitions Abuse of Market Power 1. Defining a market by substitution involves both including products which compete and excluding those which because of differentiating characteristics do not compete. 2. Uncompetitive pricing, given market control, is an effective refusal to supply (the behaviour would be legitimate, but for having 97% control of the market). 3. Competition by its very nature is deliberate and ruthless. Competitors jockey for sales, the more effective competitors injuring the less effective by taking sales away. This competition has never been a tort... and these injuries are an inevitable consequence of the competition s46 is designed to foster. Thus, there is a fine line between legitimate competitive behaviour and illegitimate anti-competitive behaviour. 4. The question for s46 is simply whether a firm with a substantial degree of market power has used that power for a purpose proscribed in the section, thereby undermining competition. (Highly purposive!).

Albion Insurance v Government Insurance Office of NSW

Double Insurance 1. There is no double insurance unless each insurer is liable under their policies to indemnify the insured in whole or part against the happening which has given rise to the insured's loss. 2. Since insured parties may only recover once, double insured parties get a right of election, and insurer's get an action in contribution.

TNT (Melbourne) v May & Baker Interstate courier. Bailment contract contains exclusion clause for damage or misdelivery 'in transit or storage, for any reason whatsoever'. Courier a day late, depot closed. Left truck in garage without fire extinguisher or side door; fire. Excluded?

Excluding Bailment 1. A departure from the contract can be of such a nature as to prevent a bailee relying on an exclusion clause. 2. Application of Sydney City Council v West (the four corners rule).

Thornton v Shoe Lane Parking Automatic Car park with conditions on back of ticket referencing terms on a sign near the machine.

Excluding Bailment 1. Any exclusion clause, to be effective, must be brought to the adequate notice of the bailor; terms on the back of a ticket referring to lengthy terms near a the machine are insufficient.

Causer v Browne Dry-cleaning damaged. Docket contained exclusions.

Excluding Bailment 1. Exclusion clauses cannot be disguised onto the back of documents which would be contextually taken to be a receipt or voucher by a reasonable person.

Spurling v Bradshaw Storage of orange juice uncovered and in open. Ruined. Wide exclusion clause.

Excluding Bailment 1. Exclusion clauses that purport to be too wide, going to the very heart of the bailment contract, cannot be held effective. Where a clause would tend to contract out of any obligations at all, the exclusion clause is too wide.

Sydney City Council v West Car park attendant gives car to the wrong person. Exclusion clause raised.

Excluding Bailment 1. Where a bailee deviates from the terms of the contract and the damage occurs as a result of that deviation, then they cannot rely on an exclusion clause (the four corners rule) 2. Giving a car to a wrong person is such a deviation from the four corners of the contract that exclusion clauses cannot be relied upon. 3. Transfer of possession occurs for bailment purposes where control of a vehicle is transferred - particularly where some card or ticket must be presented to regain the vehicle.

Clayton v MCGI Husband and wife own car and house. Husband commits suicide by ignition of petrol fumes in car. Exclusion clauses excluded liability for loss or damage caused by deliberate and intentional acts, and unlawful acts. Only the second exclusion clause held.

Excluding Liability 1. 'Deliberate and intentional acts' is read strictly as to the purpose of the insured in committing the act. 2. Exclusion clauses specifically against unlawful acts, and not just deliberate and intentional acts, are advisable.

Bashtannyk v NIA Exclusion clause limits liability where vehicle is driven in unsafe state. Tires were worn down. Court ruled that car was unsafe in wet conditions, but the accident occurred in dry conditions, where the car was safe. Could not avoid liability.

Excluding Liability 1. Exclusion clauses are read specifically, technically, and with regard to the circumstances in which a claimable event occurred.

Beresford v Royal Insurance

Excluding Liability 1. It is presumed as a matter of construction of the policy that the insurer has not agreed to cover an intended loss.

Daniel v AIMH Reckless speeding driver hits another vehicle. Exclusion clause avoids loss, damage or liability caused by or arising from wilful or deliberate acts of the insured. Liable?

Excluding Liability 1. To come within an exclusion clause avoiding harms caused by willed or deliberate acts, the act which caused damage must be willed or deliberate (directly). There must have been an intention to drive into another vehicle.

O'Brien Glass Industries v Cool & Sons O'Brien required retailers who wanted to obtain the highest discount for glass to acquire all, or substantially all, of their windscreens from the company.

Exclusive Dealing 1. Policy coerced retailers into dealing with it and not its competitors. Lessened competition, since it reduced the capacity of retailers to choose between sources of supply, weakened trading position of competitors, and inhibited entry of other competitors. 2. Supply on condition of total supply amounts to supply on condition of not acquiring goods from a competitor - amounts to exclusive dealing.

To v AAMI 15 year old damaged car by driving without consent; Mother thought she needed to lie about the claim, and said it was stolen and then damaged. Insurer refused for fraud.

Fraudulent Claims 1. Demonstrates s56 - insurer cannot avoid policy for fraudulent claim. However, claim can be denied. 2. In these circumstances, there were no grounds under s56(2) to order relief in harsh or unfair situations. 3. Where a person knowingly makes false statements believing that they have an invalid claim otherwise, it makes no difference whether in fact the claim is valid or invalid. The claim is made dishonestly, and therefore fraudulently.

Gugliotii v CUA Australia Deliberately answered questions falsely in claim form regarding consumption of alcohol by the driver of an insured vehicle. Claim was made fraudulently.

Fraudulent Claims 1. Insurer is entitled to refuse claim under s56(1) where claim is made fraudulently. 2. Court could not exercise s56(2) in these circumstances to order the payment of part of a fraudulently made claim; the fraud tainted the whole claim.

Yorkville Nominees v Lissenden

Historical 1. Illustrates historical use of 'basis of contract' clauses, which allowed avoidance of liability irregardless of materiality of misstatements on the basis of the clause declaring that answers given to questions were in every respect true and correct, and that the declaration would form the basis of the contract.

Marene Knitting Mills v GPGI

Interim Contracts 1. Cover notes are contracts of insurance, and thus subject to all the ordinary incidents and requirements of contracts of insurance (such as duty of disclosure, duty of utmost good faith).

CIC Insurance v Midaz

Interim Contracts 1. The duty of disclosure applies to cover notes in the same way as the if the contract was final, rather than interim; in particular, the insured party can only be expected to disclose information that they actually knew.

Mayne Nickless v Pegler

Interim Contracts Illustrates historical use of 'subject to a satisfactory proposal' clauses in interim contracts to avoid all liability on the discovery of a single untrue statement.

Caldwell v JA Neilson Investments Agent sets up new contract, but with new exclusion clause. Event occurs which is not covered. (Cow jumped in front of car - no public liability cover).

Intermediaries 1. An insurance agent does not owe the same duty of care owed by an insurance broker to a client (to advise clients, or to obtain the best cover at the best price).

Eagle Star Insurance v NWFA Broker to insure stallion. Horse died, but insurer avoided liability due broker's failure to exercise reasonable care and skill in filling out the proposal form. Broker held liable for whole amount of insurance.

Intermediaries 1. An insurance broker owes a duty to the insured to exercise reasonable care and skill.

Gokora v Montgomery Jordan and Stevenson Broking company represented that insurance cover had been arranged for its client when such proved not to be the case. Held to be a contravention of s52 TPA (misleading and deceptive conduct).

Intermediaries 1. Illustrates application of ACL to insurance brokers.

MMI v John H Boardman

Intermediaries 1. Illustrates historical position: payment of agent to set up contract was not acceptance of insurer's offer to contract.

Gates v CMLAS 'Total disability cover' advertised by agent as covering injuries which result in incapability of carrying on occupation as self-employed builder; in actuality, only covered total removal from any profession, occupation or employment.

Intermediaries 1. Insurers are responsible for misleading and deceptive descriptions made to insured parties by their agents. 2. Damages for conduct breaching misleading and deceptive provisions is the measure applicable in tort - that is, restoration to position had tortious behaviour not occurred.

Hemms Cassell & Associates v Nasr Motor vehicle policy acquired through broker. Failed disclosure of poor driving record due to broker's advice. Insurer rejected claim; in action against broker, only nominal damages awarded, since there was no evidence that the insurer would have accepted the risk in the event of proper disclosure.

Intermediaries 1. There will be no recovery as against insurance brokers unless the insured establishes damage as a result of the broker's breach of duty (eg that but for the conduct of the broker, the insured would have been entitled to payment from the insurer, or would have had opportunity to shop elsewhere if the insurer would have declined to contract).

Unity Insurance Brokers v Rocco Pezzano Fire damage. Insurer refuses to indemnify insured due to non-disclosure. Insured settles its claim against the insurer, then sues broker for difference between settlement and policy on basis of breach of duty to exercise reasonable care and skill.

Intermediaries 1. Where insured and insurer reach compromise in case of broker breach of duty to exercise reasonable care and skill, broker is liable to the insured for the difference between sum settled and sum recoverable but for breach of duty.

Gilmore v AMP General Insurance Co Partners in a law firm. One partner engages in dishonest acts or omissions, unbeknownst to the others. Policy's exclusion clause for dishonesty applied to the 'Assured' - 'the practitioner, the firm, and each partner thereof.' But, each partner got separate certificates.

Joint vs Composite Insurance Policy 1. At common law, under a composite policy, fraud by one is not fraud by the other. 2. Contra proferentum construction applied - for an exclusion clause to exclude cover for all under a composite policy in the event of fraud by one, it ought say so explicitly.

VL Credits v Switzerland General Insurance Lessee and mortgagee insured compositely; alternatively, the lessee by itself and as trustee for the mortgagee. Benefit of policy assigned to the lessee and the plaintiff with consent of insurer, and plaintiff noted as insured (transfer of mortgage?). Fire. Insurer alleged that lessee's agents lit the fire, so refused to indemnify the plaintiff.

Joint vs Composite Insurance Policy 1. s48(3) does not provide an insurer with a defence against an innocent co-insured under a composite policy of insurance in the event of actions (arson) by the other co-insured.

MMI GI v Baktoo Husband and wife Indian restaurant and home. Husband arson.

Joint vs Composite Insurance policy 1. Where the co-insureds are under a joint policy of insurance, fraudulent conduct on the part of one of the co-insureds will generally prevent the innocent co-insured from recovering under the insurance policy. 2. In a joint policy, interests of the joint insured are treated as one.

Hedley Byrne v Heller Comfort letter (this client is reliable and has good credit) is wrong, with exclusion clause (should not be relied upon for the advancement of credit). Deemed negligent misstatement.

Negligent Misstatement 1. A negligent misstatement may give rise to an action for damages despite the absence of a contractual or fiduciary relationship, since the law implies a duty of care when a party seeking information from a party possessed of a special skill trusts them to exercise due care when they know that they are being relied upon. 2. Elements of negligent misstatement: reliance, reasonable in circumstances, causes loss.

San Sebastian v Minister Administering Environmental Planning Act Scheme encourages private developers to purchase and develop; plan abandoned due to unfeasability. Plaintiffs had purchased land on faith of scheme/plan. Action failed for lack of allegation that plan would prove feasible.

Negligent Misstatement 1. Information or advice need not be requested to show reliance for negligent misstatement. Volunteering information or advice with the intent to induce action can create liability.

Shaddock v Parramatta City Council Purchaser was told by Council that there were no road-widening proposals.

Negligent Misstatement 1. Plaintiffs were entitled to rely on a written Council response to an inquiry (although not a telephone inquiry), creating a duty of care for negligent misstatement. 2. Failure to mention road-widening proposal treated as a statement that none existed.

Hornsby Building Information Centre v Sydney Building Information Centre SBI runs an info centre for many years. HBI starts up a similar business in Hornsby. SBI applies for injunction restraining them. HC refuses.

Passing Off 1. Descriptive trade names are equally applicable to any business of like kind, and do not distinctively identify. The possibility of blunders by members of the public will always be present for descriptive names. 2. Small differences in a competitor's trade name will render the latter immune from action in passing off. 3. The risk of confusing descriptive names must be accepted, to do otherwise is to give to one who appropriates to himself descriptive words an unfair monopoly in those words, and might deter pursuit of the occupation those words describe. 4. Misleading and deceptive conduct provisions cannot be allowed to grant a monopoly in descriptive names.

Wingate Marketing v Levi Strauss W markets environmental jeans and denim products as Revise. Product was sold next to or within same pile as Levis.

Passing Off 1. Illustrates conduct clearly constituting the tort of passing off, and a breach of misleading and deceptive conduct provisions. Damages and injunctions awarded.

ConAgra v McCain Foods 'Healthy Choice' foods marketed in US. 'Healthy Choice' foods later marketed in Australia with same form of packaging. First claims passing off against the second.

Passing Off 1. Passing off is essentially about the appropriation or damage of another party's goodwill. 2. It is necessary for passing off for there to be a reputation for the products or services of the imitatee in the area of practice of the imitator. Even clearly identical products cannot give an action in passing off if there is no general knowledge of the imitated product.

Moltoni Corporation v QBE Insurance Workplace injury case with notification of claims requirement. Notice with claim given some months after the injury. Insurer claimed s54 prejudice - loss of opportunity to investigate, to arrange rehab to reduce claim.

Postcontractual Acts 1. Deprivation of opportunity to investigate is prejudicial, but a short period of prejudice is not sufficient to reduce liability to zero. 2. To rely on s54, it was necessary to show in dollar terms the cost of the prejudice claimed. Failure to do so results in no reduction. 3. Insurer may only reduce liability under s54(1) if it had a right that it would have exercised, but did not, causing measurable prejudice. If insurer wouldn't have exercised right, insurer has suffered no prejudice.

Antico v Heath Fielding Australia Claims made and notified policy. Policy for company directors stipulated detailed procedure for obtaining consent of insurer before incurring legal expenses or settling. Some exchange of information while insured sought consent, but insurer had not consented before insured settled action.

Postcontractual Acts 1. Failure to provide information required by (what amounted to) a claims made and notified provision is an omission under s54(6), and allows refusal of claim under s54 if sufficiently prejudicial.

Ferrcom v CUA Australia Unregistered crane later registered without notice. Evidence is that policy would have been cancelled and replaced with another at a higher premium, but with an exclusion for overturning (which is what happened).

Postcontractual Acts 1. Insurer's liability can be reduced to nil under s54 if insured's conduct is suffficiently prejudicial to the insurer's interests. 2. Deprivation of an opportunity to cancel a contract (and provide another, more suited to the changed risks) is a prejudicial act under s54. Liability reduced to nil.

FAI GI v Australian Hospital Care Claims made and notified policy. Required notice to be given if occurrence 'might give rise to a claim' occurred; if notice was given, covered, even if eventual claim was outside contract period. Insured received demand from solicitors for a doctor claimant, but didn't notify insurers until after the period.

Postcontractual Acts 1. Notice provided for a claims made and notified provision outside of the allotted time period (where the corresponding claim was made inside the time period) is construed as a s54(6) omission. 2. An omission resulting in 4 months delay is not sufficient to prejudice an insurer under s54(1) - no reduction.

East End Real Estate v Heath CGI Insured party under claims made and notified provision informed insurer 6 weeks after cover expired, when they lost the case.

Postcontractual Acts 1. s54(1) applies to omissions to give notice under a claims made and notified provision. s54 should be given a liberal interpretation, applying to all purported cases of refusal to pay a claim for postcontractual act.

Gibbs Holdings v MMI (Australia) Changed from cosmetics to plastics manufacture without notice. Fire.

Postcontractual Acts 1. s54(2) example of refusal to pay claim for postcontractual action which caused or contributed to loss.

Petersen v Union des Assurances de Paris Aird

Proximate Cause 1. Only where the risk insured against was the 'proximate' cause of the loss will the insurer be liable to indemnify the insured. The onus is on the insured to establish that loss is covered by the terms of the policy. 2. Where an exclusion clause or exception clause is raised, the onus is on the insurer to establish that the loss in question fell within one of the exceptions. 3. If there are two or more proximate causes of the loss, one of which arises from an insured peril and other arises from an excepted peril, the insured is not entitled to recover.

Wayne Tank and Pump Co v Employer's Liability Assurance Corporation Contract covered damage to property; exclusion clause excluded liability for damage caused by the nature or condition of any goods supplied by the insured. Inappropriate electric equipment installed, and left on by employee negligence. Covered?

Proximate Cause 1. Where there are two competing causes of an insured incident, the dominant or effective cause is taken to be the proximate cause, even though it may be more remote in time. 2. Where there are two causes of a loss, one within the terms and the other excluded, the insurers are entitled to rely on the exclusion.

TPC v Parker Pyramid scheme example. 'The general idea appears to have been to induce eight people to pay $125 each to join an imaginary train. The money would then pass up the pyramid to a person at the apex, called the train engineer, who would collect $1000. The original pyramid would then split, and each participant would move up a level... and hope to receive $1000.'

Pyramid Schemes 1. Example of a pyramid scheme. 2. Pincus J: 'The scheme is in a way gambling, I suppose, because each person who goes in gambles on the scheme lasting long enough to win some money. He may rise to be engineer and get some money out of it and that sense it has chance attached to it.'

MAMI v Kelly

Quantum 1. An insured party is not entitled to make a profit out of (indemnity) insurance. 2. Where an insurer is in breach of its contractual obligations, the insured may recover damages for the emotional stress caused by substantial inconvenience resulting from the insurer's conduct.

Zurich Australian Insurance v Contour Mobel Cover note for furniture freight done by C. Asked if C had any additional information and if any person with an interest had ever been convicted of fraud or theft offences. C had, 7 times. But, he (innocently) misrepresented no.

Remedies for Misrepresentation 1. (Innocent misrepresentation) Example of s28(3) reduction to nil liability since could demonstrate (through insurance guidelines) that the policy would not have been granted if the innocently misrepresented state of affairs was known truly.

Orb Holdings v Lombard Insurance Building described as brick/iron, but burned like it was awful woody. Innocent misrepresentation.

Remedies for Misrepresentation 1. Although the misrepresentation was innocent on the facts, there was sufficient to allow for zero liability on the insurance. s28(3) example.

Von Braun v AAMI Insurer attempted to avoid liability under a comprehensive car insurance policy where the insured had fraudulently misrepresented the price paid for a second-hand vehicle. But, AAMI would have insured, but for a lower amount.

Remedies for Misrepresentation 1. Example of s31 applied by court. Court disregarded avoidance of contract in these circumstances - too harsh and unfair. 2. s28(2) is an all-or-nothing provision, blind to the proportion of harm caused by a misrepresentation to the contract as a whole. Courts will exercise s31 where avoiding the contract is disproportionate to the severity of the misrepresentation (particularly where one can show that insurer would have insured anyway).

Plasteel Windows v Heath Underwriting Agencies Brokers signed proposal form on behalf of clients, as per their practice. They were asked whether it was their practice to sign on behalf of clients, and answered no. Fraudulent misrepresentation? Relevant to risk, so yes. Avoidance under s28(2), and no grounds to disregard the avoidance under s31.

Remedies for Misrepresentation 1. s28(2) example for avoidance of contract in case of fraudulent misrepresentation. 2. Onus for demonstrating s26(1) lies on insured; onus for s26(2) lies on insurer. (Business as broker sufficient to prove that fraudster knew that misrepresented information was relevant). 3. s31 not exercised: respondent had been prejudiced by the fraudulent misrepresentation and non-disclosure.

AMPS v Lose Asked if they had ever had an epilepsy or fits of any kind. Answered no, despite single hospital visit with a fit months earlier. Claim refused for misrepresentation. (Notably, had been refused by previous insurer when fits had been disclosed - knew relevance under s26(2)).

Remedies for Misrepresentation 1. s29(3) example for avoidance of life insurance contract in cases of misrepresentation. 2. Questions asked are technical and specific, not general. Answering 'no' to 'have you had fits' when you've had one incident is a misrepresentation.

Burns v MMI-CMI Insurance Deliberate failure to disclose previous insurance claims and unusually high number of burglaries which had not been claimed.

Remedies for Non-Disclosure 1. Definition of fraudulence: Deliberate withholding of information required to be disclosed under s21(1) constitutes fraudulent non-disclosure.

Lindsay v CIC Insurance Innocent non-disclosure, but insurer wouldn't have entered into contract at all if they'd been informed - part of insured premises was being used as a brothel. Fire.

Remedies for Non-Disclosure 1. Even in the event of an innocent breach of disclosure obligations, if an insurer can show that they wouldn't have entered into the contract at all, their liability may be reduced to nil under s28(3). 2. The intention of s28(3) is to put the insurer in the position it would have been in if the relevant disclosure had, in truth, been made.

Summerton v SGIC Life Learned of illness in between submitting proposal and its acceptance. Did not pass on.

Remedies for Non-Disclosure 1. Example of application of s29(2) - life insurance policy may be avoided in cases of fraudulent non-disclosure. 2. Not passing on novel relevant information prior to the acceptance of insurance proposal is fraudulent.

Twenty-first Maylux v MMI (Australia) Husband and wife gift shop. Criminal record not disclosed. Questions not asked, but husband had answered such questions on earlier policies. Record was relevant, and husband knew so.

Remedies for Non-Disclosure 1. Example of s28(2) insurer avoidance of contract for deliberate, fraudulent non-disclosure of material facts. 2. Answering similar questions on earlier policies is enough for the purposes of the s21 'items known by the applicant to be relevant to the insured's decision'. 3. Where insured knows a matter is relevant and does not disclose it, such non-disclosure is fraudulent. It does not matter that the insured was not specifically asked about the relevant matter.

AIA v Matthews Husband and wife applied for insurance. Question form asked whether they'd had a claim rejected, and 'are there any other facts relating to the risks'? Answered No. However, husband was former partner in a business which had had an earlier claim reject, which was litigated and settled 50/50. House was burgled; but policy was voided by non-disclosure.

Remedies for Non-Disclosure 1. In a joint policy, the duty of disclosure applies to each of the co-insureds. Failure to disclose by one will void the policy for all.

Boral Resources v Pyke Exhausted, intoxicated employee driver fell asleep and had an accident. Insurer paid up and then subrogated to sue the employee. At first instance, employee escaped liability under s66.

Subrogation 1. Provides example of s66 employee 'serious or wilful misconduct'. Right of subrogation not quashed by s66.

Barroora v Provincial Insurance Australia Property insured against fire, and subject to a charge to Capital Finance. Policy excluded arson by insured or their agent. Property burnt down, evidence of arson by insured's agent, Can Capital claim?

Third Party Claims 1. Applied Trident to conclude that Insurer's liability is several, because the interests of the insured and the third party were several. Prejudice to one font of liability (an exclusion clause) was not prejudice to another. 2. Provided Capital Finance was not implicated in the arson, it could be indemnified. 3. Note p181 distinguishes dicta of McHugh J in Trident. 4. Distinct from CBA v Baltic and Heath CGI v Grey in that it concerned a postcontractual act.

Heath CGI v Grey Company was insured, but directors were third party beneficiaries.

Third Party Claims 1. Confirms CBA v Baltic. 2. s48 does not impose pre-contractual disclosure duties on third party claimants. 3. s48(3) means that if an insured breaches their pre-contractual obligations, the insurer can refuse the claims of third parties.

GMAC Australia v RACQ Insurance GMAC financed purchase of vehicle; their interest was noted in the policy. The insured deliberately destroyed the vehicle. Can GMAC claim?

Third Party Claims 1. Counters Barroora in Queensland. 2. Held that neither the insured nor any third party had a right to recover for non-accidental loss and damage. Insured objects must be used in their prescribed manner. 3. Case of a postcontractual act falling under s48(3).

Trident GI v McNiece Bros Public liability policy for building site insured company contractors. Person injured by contractor who was not a company contractor at the time the insurance contract was made. Recovered against contractor, contractor claims on policy.

Third Party Claims 1. Held that Privity of contract should no longer apply to insurance policies, particularly policies for classes of persons.

CBA v Baltic Policy extended to bank mortgagee of property, but insured did not disclose something material. Fire. Claim of bank refused due to insured's nondisclosure.

Third Party Claims 1. Insurer can rely on non-disclosure or misrepresentation by insured as a defence against otherwise valid third-party claims.

Smart v Westpac Banking Corporation

Third Party Claims 1. Suggests that s13 duty of utmost good faith applies only to parties to a contract, and not to third parties. (Possible residual common law duty through Trident?).

Moss v Sun Alliance Australia Failure to make a prompt admission and pay the claim. Held to be contrary to duty of utmost good faith.

Uberrima fides 1. The insurer's duty of utmost good faith requires them to make a prompt admission of liability and prompt payment of sound claims. 2. Damages are an appropriate remedy for breach of utmost good faith.

CGU Insurance v AMP Financial Planning AMP subject to deluge of claims. Sets up a complaints resolution scheme to settle the claims as the best option. Kept writing to CGU if this was okay - CGU had usual clauses indicating that if insured settled or admitted liability, policy would be voided. CGU response to questions was 'cagey' - said that AMP had to do whatever it could to reduce potential liability, but not actually okaying settlement. CGU tries to rely on voiding provisions.

Uberrima fides 1. Wider view of the duty of utmost good faith accepted in preference to the view that absence of good faith is limited to dishonesty. 2. The duty of utmost good faith requires individuals to act with due regard to the legitimate interests of other parties. 3. Classic example of duty of good faith by insured: full disclosure to insurer. 4. Insecurity! Insurance Contracts Act does not empower a court to make a finding of liability against an insurer as a punitive sanction for not acting in good faith. It is unclear what to do with a failure of s13, since damages would amount to specific performance.

AAMI v Ellis Failed to mention mag wheels added to the car after the contract was formed. Empirically significant contribution to risk and cost of claims. Would have added under 25 year driver exclusion. Crash occurred, not caused by wheels, but with 23 year old driver.

Uberrima fides Postcontractual Acts 1. Failure to disclose factually significant changes in circumstances can amount to a breach of the duty of utmost good faith. 2. It is sufficient for circumstances to be significant for the purposes of disclosure obligations when there is a demonstrable actuarial basis for their significance. 3. ss21-31 apply to precontractual disclosure. For postcontractual actions, s54 is applicable, and allows reduction to zero only if s22(1) obligations are complied with.

Poulet Frais v Silver Fox Co Purchase of Leonards Poultry franchise. Franchisee failed to make franchise payments and was terminated. Argued that they had been misled about turnover. Unconscionability?

Unconscionability - Franchise 1. Merely terminating a franchise, without something more, is insufficient to constitute unconscionability. 2. Here, a misleading and deceptive conduct claim failed, and so there was no basis to claim that an otherwise legitimate franchise termination was unconscionable.

Automasters Aust v Bruness Ongoing disputes with franchise. Automasters terminates, cutting off income stream for franchisee.

Unconscionability - Franchise 1. Unconscionability found from unfair exercise of a contractual right of termination. Basis of termination was 'ambiguous', and in terminating had acted 'capriciously and unreasonably and failed to recognize and have due regard to the legitimate business interests of the franchisee.'

ACCC v Simply No-Knead SNK withheld supplies from franchisees to force compliance with other demands. Operated in competition with franchisees, refused disclosure, refused negotiation, operated promotions without mentioning franchisees. ACCC took action.

Unconscionability - Francise 1. Case provides 'an overwhelming case of unreasonable, unfair bullying and thuggish behaviour that amounts to unconscionable conduct.' 2. Describes s51AC as a shopping list. 3. Applied the shopping list: Refusal to deliver goods amounted to unfair tactics; failure to disclose amounted to a breach of industry code; refusal to negotiate amounted to a breach of good faith; distribution of discriminatory promotional materials amounted to conduct not necessary to protect legitimate interests.

AUX v EGM Solders Ordered solder spheres, some defective. Accidentally returned several finished products with defective products. The lot was scrapped.

Unconscious Bailment 1. Unconscious bailees nonetheless are under a duty to check whether all of the boxes were its own. Failure to ensure that it was dealing with its own property resulted in liability as involuntary bailee.

Argy v Blunts & Lane

s18 ACL 1. A solicitor acting for a vendor of property is acting in the course of trade or commerce.

Collins Marrackville v Henjo Investments NY Deli in Sydney advertised license for 128 drinkers, when only licensed for 80. Contract excluded liability for licensing problems of this nature.

s18 ACL 1. ACL provisions cannot be contracted out of. 2. Silence may constitute misleading or deceptive conduct where some qualification to a statement is necessary to avoid a party being actively misled.

Pilmer v Roberts Roberts claimed to validate Noah's Ark. Sold books and tapes, and lectured. Challenged by skeptics.

s18 ACL 1. An example of conduct not engaged in trade or commerce. 2. The object of the lectures was not to sell anything, but to promote a point of view; and if it was, the consumers got exactly what they paid for.

Taco Company of Australia v Taco Bell Taco Bell Bondi opens 1976; Taco Bell America moves in 1981. Bondi brings an injunction.

s18 ACL 1. An injunction against the use of a business name was granted because the earlier company had acquired a reputation throughout the area (Sydney) under that name. 2. Process for determining misleading or deceptive cases: a) Identify the relevant section of the public; b) Consider the probable effect of the conduct on that section of the public; c) It is not necessary to prove actual deception; d) Determine whether the conduct caused the misconception. 3. Whether a statement is likely to mislead or deceive a section of the public is judged objectively, for the court to decide.

World Series Cricket v Parish

s18 ACL 1. Before a statement can be said to be misleading or deceptive, it must convey a meaning inconsistent with the truth. 2. A literally true statement may nevertheless convey another meaning which is untrue.

Parkdale Custom Built Furniture v Puxu Puxu produced lounge suites in a distinctive Contour range. Parkdale starts manufacturing lounge suites in a Rawhide range, which very closely resembled the Contour range. Labels clearly stated true producers, but were tucked away and hidden. Some consumers had bought Rawhide expecting Contour. Puxu won at first instance, but lost on appeal.

s18 ACL 1. Conduct merely causing consumers to wonder about products similarities is not misleading and deceptive, especially where goods are properly labelled. 2. Gibbs CJ: 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. 3. Standard for misleading or deceptive conduct is that 'an ordinary and reasonable member of the class to which the conduct was directed was or is likely to be misled or deceived'.

Lego Australia v Pauls Irrigation equipment manufacturer described it as fitting together like Lego blocks.

s18 ACL 1. Descriptions mentioning the products of another in a descriptive sense could only be confused by erroneous assumptions by a consumer, rather than the conduct of the representing party.

Hardy v Your Tabs Sold a Pizza Haven. Gave many reasons for why they were selling, except for the operative one: a Pizza Hut was opening down the road.

s18 ACL 1. Giving a list of reasons to sell, but remaining silent about the operative one, constitutes misleading and deceptive conduct. 2. Silence is sufficient for M&D where the induced party is unable to conduct their own searches, for example, due to insider industry knowledge.

Miller & Associates v BMW BMW took an insurance policy thinking it cancellable and transferable, and therefore useful for it's purposes as security. It wasn't. Alleged that the broker's silence on this point (silence in isolation) was misleading.

s18 ACL 1. Holding things back for profit in commerce is 'superior smartness in dealing' - legally permissible. 2. But bargaining power is not a licence to deceive. 3. Misleading and deceptive conduct provisions do not, as a general proposition, require parties to volunteer information which will be of assistance to the decision-making of the other party. 4. False representations in documents, and true statements without important qualifying facts, are misleading. But silence alone was not, in this case, misleading. 5. Factors for M&D: meaning representation would have conveyed to its audience, induced party's commercial sophistication, features of the representation inconsistent with the alleged misrepresented state of affairs, failure by induced party to inquire or indicate the existence of a misconception.

Astrazeneca v Glaxosmithkline Australia G makes seretide for asthma. Study reveals seretide produces total control in 41% of patients and good control in 71%. Product name changed to Seretide Total Control, and published brochures saying 'total control is achievable'.

s18 ACL 1. It is not necessary to prove actual deception, only likelihood to deceive. (In this case, not likely to deceive the target audience).

Rhone-Poulenc v UIM Chemical Services Plaintiff alleged that respondent was selling a product without disclosing that it had been banned in some states.

s18 ACL 1. Mere carelessness or ignorance is not enough to constitute misleading or deceptive conduct. It cannot be inadvertent, and must be intentional or deliberate. 2. For omissions to be 'engaging in conduct' requires a positive refusal to do or a deliberate refraining from doing an act.'

McDonald's System of Australia v MacWilliams Wines Describes wine bottles as Big Mac in ads. Maccas has a fit.

s18 ACL 1. Misunderstandings induced by the erroneous assumptions of observers, rather than by any conduct of a party, does not constitute misleading and deceptive conduct.

Global Sportsman v Mirror Newspapers Cricketer brought misleading and deceptive conduct action as well as a defamation claim against a newspaper.

s18 ACL 1. Publication of statements in newspapers can constitute misleading or deceptive conduct. There is no definable boundary between misleading or deceptive and defamatory conduct. Beware s19! 2. Publication of the inaccurate statement of another is essentially different to the meaning of the original publisher.

Demagogue v Ramensky Sale of land failed to mention awkwardness about access - needed a license, only accessible from public land. Vendor silence - misleading and deceptive?

s18 ACL 1. Silence is a circumstance as any other; to speak of 'mere silence' is misleading. 2. The true question for s18 is whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive or that is likely to mislead or deceive. 3. There is no general duty of disclosure with respect to misleading and deceptive conduct. 4. The circumstances and context of a case may or may not include facts giving rise to a reasonable expectation that if particular matters exist, they will be disclosed.

CSL v Nike International CSL produces 'Nike Sports Fragrance'. Marketed in pharmacies alongside 'Adidas Sports Fragrance', which was actually produced by Adidas. Nike sues.

s18 ACL 1. The issue for s18 is: What is the likely reaction to the representations by ordinary or reasonable members of the class to whom the representation is directed? 2. Contrast McWilliams Wines case - here, conduct of the alleged misrepresentor was causally responsible for a confusion or erroneous assumption among the class of persons who would most likely be looking at the relevant marketing. 3. There are two ways to look at misleading and deceptive conduct - conduct directed at particular individuals, and conduct directed at a class of the public.

Concrete Constructions v Nelson Told employee that grates were secured; they weren't. Serious injury. Claimed misrepresentation in trade or commerce.

s18 ACL 1. To be in trade or commerce, a statement must bear a 'trading' character. 2. Statements incidental to the commercial work of a premises (upkeep, maintenance, administration) are not made in trade or commerce.

Butcher v Lachlan Elder Realty Marketed waterfront property with inaccurate survey diagram, but a disclaimer about materials from other sources. Agent claimed it was merely passing it on. Misleading or deceptive? Held: no in the circumstances. Purchasers were experienced, agent was simple suburbanite. Property was very expensive. Purchasers were using a solicitor, designer, building consultant and builder as advisers.

s18 ACL 1. Where conduct is targeted at particular individuals, one must consider the nature of the parties, the transaction, and the contents of any representations. 2. Sophistication of client, significance of transaction, and client's degree of independent advice, particularly in presence of an exclusion clause, would tend to blunt any misleading or deceptive conduct claims.

Noor Alhouda Islamic College v Bankstown Airport School wanted to lease land near airport, warned that it may not be suitable, but no reference to contamination. Lease specifically provided for no warranty of suitability. Years later, declared a contaminated site; school closed, massive losses. s18?

s18 ACL 1. Where something has not been disclosed during pre contractual negotiations the party who has not made the disclosure will have engaged in misleading and deceptive conduct if the circumstances give rise to a reasonable expectation that the disclosure would be made. 2. Misleading or deceptive conduct does not have to be deliberate or intentional. 3. Disclosure of many of the disadvantages of the site, and vendor awareness of purchaser sensitivity were important in creating a reasonable expectation that any risks of contamination would be disclosed.

AG NSW v World Best Holdings Note - not about aforementioned unconscionability provisions. Retail Shop Leases Act s62B prohibits landlords engaging in unconscionable conduct against tenants. Can non-judicial tribunal appointments adjudicate on such cases? Tribunal decision: behaviour of WBH was 'quite unacceptable having regard to normal industry standards and practices'.

s21 ACL 1. (Spiegelman CJ) Unconscionability is a concept which requires a high level of moral obloquy. 2. Unacceptability of behaviour with regard to market standards is a strong factor, but sets a far lower standard than unconscionability. 3. There is a distinction between what is unconscionable and what is merely unfair or unjust. 4. (Spiegelman CJ) Unconscionability is a doctrine of occasional application, where circumstances are highly unethical; it should not be used as the first and easiest port of call for disputes.

Garry Rogers v Subaru Subaru introduced a program of service enhancement. GR refused, so Subaru filed a notice of termination of dealership. GR changed mind, but Subaru persisted. Held not unconscionable.

s21 ACL 1. Although their actions amounted to a breach, they did not constitute the serious misconduct required for unconscionability. 2. The circumstances disclosed such a breakdown in relations that termination, even irregular termination, was not unconscionable.

Body Bronze International v Fehcorp

s21 ACL 1. Intentional breach of contract is not necessarily unconscionable - further moral obloquy must be shown. (Posner's 'economic breach.')

Cameron v Qantas Requested non-smoking seat, but no contractual obligation to provide. Thought they had one, boarded, wrong. Promised for return. Wrong. Claimed for unconscionability and misleading and deceptive conduct. Held misleading, but not unconscionable.

s21 ACL 1. It is not enough that behaviour is harsh or even unreasonable. There must be some element of moral fault, a high level of moral obloquy. 2. It is possible for circumstances to amount to misleading and deceptive conduct, but not unconscionability.

Pacific National v Queensland Rail PN occupies Acacia Ridge freight terminal under expired lease, on a month to month term. 'Establishment Agreement' nationalisation of rail network project picked PN as vehicle for Commonwealth, to give PN 30 year lease on Ridge facility. As EA decayed, lease offer withdrawn by Qld. Served a notice to quit. PN argues loss as a result.

s21 ACL 1. Merely serving a notice to quit, in accordance with contractual rights, is not unconscionable conduct. 2. Commencing lawful litigation is not unconscionable conduct. Something more is required.

CIT Credit v Keable Bailment agreement with motorcycle stock guaranteed by director who did not read document, following false representations from fellow director that he would only be liable while a director of the company. Company was wound up, and financier went after the ex-director guarantor. Held misleading, but not unconscionable.

s21 ACL 1. Misleading and deceptive conduct is yet a long way from a conclusion of unconscionability. 2. 'Behaviour is only unconscionable where there is some real and substantial ground based on conscience for preventing a person from relying on what are, in terms of the general law, that person's legal rights' 3. Here, not unconscionable, because no pressure to sign the document without first reading.

Coggin v Telstar Finance Security granted over boat valued at $200k for a $50k loan. Interest rate was high, some fees and charges were hidden from the borrower, and the applicant was sick at the time he signed.

s21 ACL 1. Successful claims in unconscionability, although rare, are possible. High interest, hidden terms, and competency issues gave rise to unconscionability.

Hurley v McDonalds Collected burger tokens, claimed a prize from a previous year. Maccas refuses, citing clause granting sweeping power to refuse claim. Held not unconscionable.

s21 ACL 1. The s22 (equivalent (s51AC)) list requires 'serious misconduct, or something clearly unfair or unreasonable.'

Boral Formwork and Scaffolding v Action Makers Action supplied scaffolds - time was of the essence. Protocol adopted for resolving allegations of defects - Boral would repair, deduct from purchase price, and enter dispute resolution. Defective shipment arrives. Meanwhile Action goes into receivership. The Receivers ignored the contract, and simply called up the letter of credit securing payment of the entire contract price, relying on the principle of autonomy from contract native to letters of credit. Held: Unconscionable behaviour. Injunction awarded.

s21 ACL 1. Unconscionability exists to override the unfair consequences of legal rights and obligations of parties, even in highly clear, stable areas of law (such as the autonomy of banks' letters of credit). 2. Exercising the bare right of the letter of credit flew in the face of the extensive contract procedure which was set up to cover the dispute resolution in these circumstances of essentiality of time - the fact that the respondent knew that the urgent circumstances were the basis for the terms of the agreement acted as an estoppel against exercising the rights of the letter of credit. 3. Note - controversial decision. Criticized by Dr Alan Davidson.

Permanent Trustee Australia v FAI GI PT asked for an extension on insurance cover (so that they could shop around for a better deal). During the extension period, a claim arose, and PT did not subsequently renew. FAI claimed that if they had known they were not going to get ongoing work, they would not have granted the exception.

s21 Disclosure 1. Limits the extent of 'material facts' - facts are only relevant if they pertain to the risk involved which is the subject of the insurance contract. Facts which are only commercially relevant need not be disclosed. 2. 'Know' is a strong term. It requires more than even strong suspicion. 3. Not a case of moral hazard, non-disclosure, or misrepresentation.

Naomi Marble and Granite v FAI GI Insured failed to disclose previous criminal or dishonest conduct even though no conviction recorded.

s21 Disclosure 1. The disclosure obligation does extend to moral hazard, such as that posed by a dishonest insured. Obliged to reveal previous criminal conduct, regardless of conviction being recorded.

Alexander Stenhouse v Austcan Investments Insurance contract renewed without disclosing that the use of premises had changed from sale of waterbeds to include manufacture. Fire.

s21 Disclosure 1. The insured is under a duty to disclose a change in circumstances prior t each renewal of insurance contract.

Midaz v Peters McCarthy Insurance Brokers Unbeknownst to owner, tenant stores inflammable materials. Fire. Insurer argues that presence of inflammable materials should have been disclosed.

s21 Disclosure 1. s21 duty of disclosure only extends to that which is actually known. 2. The s21 duty does not create a positive duty of inquiry, except to the extent that a reasonable person should have known.

Lumley GI v Delphin Insurer could not prove that they had sent a proper notice of renewal of a policy which informed the insured of the duty of disclosure. She renewed and didn't mention a conviction for growing dope.

s22 Notice 1. Demonstrates application of s22: failure to notify insured of disclosure obligations waives the ability to avoid a contract for non-disclosure (even on a renewal).

Suncorp GI v Cheihk s22 notice of effect of disclosure provisions contained in a document without attention being appropriately drawn to it.

s22 Notice 1. Notice of the general nature and effect of disclosure provisions must be clear and specific.