A person can bring proceedings under section 232(2) of the ACL, even though they have no special interest in the outcome, which increases the litigation risk for businesses and other organisations.
Litigation over alleged misleading and deceptive representations in trade and commerce has been a staple of the legal landscape for over 40 years, and the law has been fairly well settled. A case in the Victorian Supreme Court however is pushing its boundaries and, if successful, could lead to more cases against businesses and organisations (Taylor v McLachlan  VSC 298).
Mr Taylor takes the AFL to court
Melbourne solicitor Jackson Taylor commenced proceedings against the Australian Football League (AFL) and two of its executives, alleging misleading and deceptive conduct under section 18 of the Australian Consumer Law (ACL).
What is unusual is that he does not allege that he suffered any loss or damage as a result of the conduct, nor that he has any special interest in the matters in dispute.
The conduct complained of comprises statements made by AFL executives in media interviews, including comments to the effect that the AFL:
- had not asked the Australian Sports Anti-Doping Authority to remove material unfavourable to the AFL from its interim report into the Essendon Football Club supplements program; and
- had not attempted to achieve certain outcomes from the Authority's and the AFL's joint investigation.
Mr Taylor alleges that the statements were made in trade or commerce because they were made to protect the AFL's commercial interests, including its broadcasting revenue, ticket sales and memberships. He seeks a mandatory injunction under section 232(2) of the ACL, requiring the AFL to correct the statements by media advertising.
Section 232(2): "any other person"
Generally, a party needs to show a special interest in the outcome of a proceeding in order to have legal standing to bring and maintain it. There are exceptions, usually where cases are seen to serve a broader public purpose. Mr Taylor's case might be viewed in that light.
As noted above, Mr Taylor has brought his case under section 232(2) of the ACL. This section enables the "regulator" or "any other person" to seek injunctive relief in respect of contraventions of the ACL. An injunction may be prohibitory (to prevent a person from doing something) or mandatory (to compel a person to do something). Mr Taylor seeks the latter, ie. a mandatory injunction to compel the AFL to undertake corrective advertising.
Mr Taylor does so on the basis that:
- he comes within the "any other person" limb of section 232(2); and
- importantly, the section extends to corrective advertising.
Those propositions are supported by High Court authority despite the fact that:
- section 232 makes no mention of corrective advertising;
- the ACL deals separately with corrective advertising in section 247, and confers the power to seek corrective advertising on the regulator alone; and
- to construe "any other person" in section 232(2) in the expansive manner relied on by Mr Taylor creates an overlap with section 247, conferring on an individual the very powers which section 247 gives to the regulator alone.
The sleeping giant of the Australian Consumer Law
Most of the reported cases brought under section 232(2) have been initiated by the regulator or a trade competitor with a tangible interest in the outcome. Few would question the application of section 232(2) in those circumstances. This case would seem to push the boundaries of section 232(2).
Irrespective of the merits, the AFL will be put to considerable effort and expense to defend this case.
The discovery process (which will be extensive) will force the AFL to disclose documents spanning several years about its business operations and the supplements program generally, given Mr Taylor's allegation about the AFL's underlying commercial motivations in making the statements. There are certain protections available in respect of documents produced on discovery, such as confidentiality orders and the implied Harman undertaking to ensure documents cannot be used for a collateral or ulterior purpose unrelated to the proceedings. Despite this, there will likely be sensitive AFL material which enters the public domain in this case. The AFL will also likely need to lead oral evidence in respect of that material.
By contrast, Mr Taylor will face no such burden in respect of discovery or evidence as he would have no documents relevant to the issues in dispute in the proceeding. This is because he had no involvement in the making of the statements and claims no relief beyond corrective advertising.
While extensive discovery is often a natural consequence of litigation, it is noteworthy that this can be triggered by a stranger with no interest in the litigation. Of course, this may well be justified if properly brought to advance a broader public interest. But there is also a risk of abuse of the section by, say, an unscrupulous consumer or disgruntled employee; perhaps even a dissatisfied reader of a news article. By merely pointing to statements which are alleged to be misleading or deceptive, a person could launch proceedings and cause substantial disruption and costs to an organisation over a representation that might not otherwise be actionable (for example, a defamatory statement about a dead person).
Perhaps the time has come to consider whether some limits ought be placed on the operation of section 232(2), by requiring a stranger to first demonstrate a bona fide public benefit in running the case. In the meantime, businesses and organisations will need to factor this in as another element in their overall litigation risk.