HYPOTHETICAL PROBLEMS SOLVING ASSIGNMENT

7159AFE – HYPOTHETICAL PROBLEMS SOLVING ASSIGNMENT  (Trimester 1, 2019)

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Question 1

Issue: The issue that needs to be decided this question is related to the liability of Angelwings Airlines for the breach of Australian Consumer Law. At the same time, it also needs to be seen what remedies, if any are available to Greta and Fabio. In the advertisements of the airline, it was stated that a number of amenities are available to the economy class travellers. However, the reality was that these amenities were not available to economy class travellers, but they were only first class passengers.

Law: The Australian Consumer Law mentioned in Sch 2, Competition and Consumer Act, (CCA) includes all the legal requirements as well as the remedies relevant for individuals and businesses who are dealing in terms of trade or commerce. The meaning of this the requirement that the provisions of the Act basically include everyone, for example, a consumer who buys products or services or the person who runs a business selling goods or services for individuals or to other businesses. Under these conditions, it is beneficial to be aware of the provisions of ACL and also the right items that have been imposed by it. In order to deal with the presentation, the provisions of the ACL related to misleading and deceptive conduct has to be explored and also the remedies that are available to the consumers in case of such conduct.

In this context, it has been provided by section 18, ACL that in the setting of trade or commerce, an individual is prohibited from involving in deceiving conduct or the conduct that may result in cheating the other party. In this way, this provision of the ACL is related to the conduct occurring in a large variety of business undertakings. Therefore contractual arrangements, advertisements and other commercial negotiations are covered by it. The meaning of the term, 'engaging in conduct' can also be described as doing or declining to do any particular action. Similarly, making a representation of something can also be described as conduct under these provisions.

The next issue that has to be decided in this context is to see if the behaviour is misrepresentative? Determining the matter if particular behaviour can be described as misleading is an issue of fact. Therefore, it needs to be determined by considering the conditions of the incident. As the term 'likely to have' is used in s18, the meaning is that the plaintiff is not required to prove that the behaviour has really caused deception to an individual. It is sufficient if the conduct can be merely described as misleading or deceptive. At the same time, the conduct in question is also going to fall under the provision of section 18 in such conduct leads an individual into error. This is going to result in a 'causal connection' that present between the conduct and the error that has been made by such individual by depending on the misleading/deceptive conduct. If any loss is caused to such individual due to the fact of depending on such behaviour, the individual may also be allowed by the law to recover costs.

Application: When the law mentioned above is applied to the facts of this question, it needs to be seen if Fabio and Greta Canada where the protection provided to consumers by the ACL. Both of them are elderly, a migrant couple from Italy. They had recently sold the farm and decided to visit their relatives in Italy. However, they have very limited experience with the airlines. In fact, this was their first overseas trip. Therefore, they did a lot of research regarding the most suitable and comfortable airlines. They referred to newspaper and television advertisements and also visited the websites of different airlines. They particularly liked the facilities provided by  Angelwings Airlines. However, during their trip, they found the reality to be something else and discovered that certain misrepresentations have been made by Angelwings Airlines in its advertisements. Therefore the legal provisions have to be applied today with the present situation.

In this regard, it is not necessary that the conduct should be intentional (although this fact may help in evaluating if the conduct has resulted in the other person into error). This issue arose before the court in Google Inc v ACCC (2013). In this case, it was claimed by the ACCC that the conduct of Google can be described as misleading or deceptive when it displayed paid advertisements on its search engine that can be considered as misleading.

Different types of conduct: apart from the representations or statements made by the other party is also significant to reflect additional types of conduct.

The statements regarding the future: the declarations that have been made regarding the future may be treated as misleading, under certain circumstances. However, it is not a violation of the provisions of the Act if a prediction is made or opinion is expressed about the things that are going to take place in future if the state has been made regarding present facts. On the other hand, and that may be considered as misleading if the facts are not true and if the person making a representation regarding future lacked the rational basis to hold that mental state or to make such depiction concerning future.

Passing information: when misleading information is passed by a person from a primary source can be considered as liable for the breach of s18 but only if they have 'created adopted or endorsed' the material. Considering the type of collection as a whole is going to impact the evaluation, comprising the particular information, the parties and the fact if any disclaimer has been made.

Conduct in the form of Silence: there are certain conditions where the silence of an individual can also be considered as false behaviour. However, the crucial point in deciding if silence can be treated as misleading is to see if there is a reasonable expectation according to which a particular effect or method is going to be disclosed. However, it is hard to bank on silence for seeking respite under the provision that has been imposed on misleading or deceptive conduct in case of commercial transactions because doing so may need the party to disclose information that can be helpful for the other party. It also needs to recognize that our bargaining is a reality of the commercial world. If the terms of the contract have been entered into voluntarily, it is provided by the common doctrines of contract law that the agreement between the parties can be enforced legally.

Liability: An individual or an individual can be sued by a person. It also is to be considered if the conduct of the other party was undertaken personally or if it was undertaken on behalf of another entity or if there was a third party tangled in the breach of the provisions of ACL. If it is found that an employee has been performing in the course of trade of the business of the employer and has made a distorted representation or else the conduct of that can be described as misleading, then such employee is also going to be held accountable(Houghton v Arms, 2006) and also for the breach of the provisions of ACL (Alpen v Richards, 2013).

In the present case, the claims that were made by Angelwing Airlines in its advertisements turned out to be false and misleading. Fabio and Greta relied on these claims and decided to travel by airline. However, they discovered that the facilities that were mentioned in the advertisements were only available to the first-class passengers. By advertisement is admitted that these facilities are also available to the economy class passengers. Under the circumstances, the remedies that have been provided by the ACL for the violation of its provisions are available to Greta and Fabio. These remedies include:

Damages: it has been provided by section 236 of the ACL that any person who has undergone damages due to the violation of these provisions is allowed by the law to recover such loss. In this regard, action needs to be initiated by a great person within 6 years of suffering the loss or damage.

Injunction: ending the engine can be described as an order of the court under which it is required that a person should do or refrain from doing something.

Compensation: A power has been granted by section 237 to the court to grant an order against the person in violation of compensating the party who has initiated the action, whether such individual has undergone damage or maybe going to suffer it.

In the present case, it needs to be noted that Fabio and Greta were an elderly migrant couple. They had sold their form and made a decision to go to Italy for meeting their relatives. However, their airline experience was great to certain interstate trips and this was going to be their first overseas trip. While looking for suitable Airlines, they were impressed by the advertisements issued by Angelwings Airlines. In the television advertisements of the company first showed that delicious meals were served to the passengers. Greta, particularly liked the spacious leather seats and cushioned headrests as she had a back injury. Although the fare for the economy class was a bit higher than other airlines, the elderly couple assumed that the extra amount was being charged for the seeking facilities and the fact that the passengers were going to be delivered to the faster Airport by limousine.

However, Greta and Fabio discovered that they had to go to the airport by taxi. Similarly, the seats were not the spacious leather seats, as shown in the advertisements. In fact, they were packed like sardines and could not even move. The quality of the meals was also not equal to the quality shown in the advertisements.

Conclusion: Under these circumstances, it can be said that Angelwing Airlines is involved in misleading behaviour and the remedies provided by the ACL for such conduct are available to Fabio and Greta.

Question 2

Issue: The matter in this question is if Alex can be considered liable to Denise for making negligent misstatement and as a result, if Denise can claim damages from Alex for the economic loss suffered by him.

Law: Section 9(2)(a)(b)(c) of the Civil Liability Act (Qld) can be abbreviated as – s 9(2)(a)(b)(c) CLA.

Application: In this regard, a negligent misstatement is advice or information that was delivered scrupulously but it is discovered to be false or incorrect. The claim that can be initiated in case of negligent mistreatment is a relatively fresh advancement of the common law. It was provided in Derry v Peak (1889) that negligent misstatement cannot be considered as a beacon for supporting action and deceit. The reason given by the court was that a known deceitful misrepresentation, without any contract or fiduciary duty, may not be treated as a beacon for establishing the duty of care. But the verdict given in Derry v Peek was reviewed in the notable verdict of Hedley Byrne v Heller (1964). Here, it was stated that Derry v Peek at or deciding anything related cause of action for negligent mistreatment and the verdict given in that case was confined to the claims in deceit.

Consequently in Hedley v Heller, it was provided by the court that there can be liability under the law of tort for making negligent mistreatment in cases where advice was passed from the person having certain distinctive ability or judgment and where the individual knows the factor should be aware that the person who is looking for such advisers going to depend on it. The case of Hedley v Heller was approved in Australia in the High Court verdict in Mutual Life v Evatt. Therefore hereBarwick CJ had specified that the present whenever a person gives advice to the other person, if the material has been asked keenly or if it was simply acknowledged by the other party concerning a grave issue and the association that is presenting the case is of the type that on the one hand, it is realized or should have been realized that the person giving advice is being depended upon for providing the best recommendation on account of the foundation of action taken by the other individual and under the circumstances it is rational for the other individual to ask and admit and either to take action on the guidance. However, it is worth mentioning that Barwick CJ had departed from the English notion of the principle by deciding the 'special relationship that existed between the parties did not require the speaker to have the actual possession of skill or judgment or they profess to have such skill and judgment regarding the matter. Although this decision was rejected by the Privy Council on appeal and the decision was reversed. However, in later cases, the views expressed by Barwick CJ in Mutual Life achieved support. Any doubt that was left concerning this matter was later on fixed by the verdict given in San Sebastian v Minister (1988). The court mentioned in this case that it is not essential that the speaker ought to possess or state to have a specific skill or knowledge.

Elements of the cause of action:

There are 3 elements related to the cause of action based on negligence.

·         A legal duty needs to recognize and the conditions which require a particular standard of conduct in order to protect in case of a predictable risk.

·         There ought to be a violation of such duty on account of the failure to fulfil the obligatory standard of care present in the case; and

·         A material injury should have been caused to the plaintiff as a consequence of such violation.

Pure Economic Loss: in this context, it can be labelled as the financial harm that has been forced on account of the negligent action of the other party that is not supplemented by any physical harm caused to the individual or goods. Several attempts have been made to define pure economic loss, but it can still disregard that this loss is the result of negligence. As mentioned above, the classic authority related to negligent misstatements and the degree of economic loss remains Hedley Byrne v Heller. It is suggested by the use of the term 'pure' that the laws should be untainted and self-representative. Therefore it should stand apart from the other losses like a physical injury. This is the type of harm that has been undergone by the claimant, and it is not the result of any physical damage suffered by the person or property. Some of the general categories of pure economic loss include loss of profit, profitability or some type of financial gain and expenditure. Therefore it becomes significant to decide if the claim is consequential or it is purely economic. The reason is that the letter is generally not recoverable under the law as damages. In case of a claim that has been initiated for personal injury on account of the negligence of the defendant is a symbol at the claimant may not be able to resume work after suffering the loss of earning that his general head of damage. Therefore it is clearly the creation of personal injury which represents consequential loss and not pure financial loss.

It has been provided by the Civil Liability Act that this legislation can be used for evaluating the negligence of the individuals and also the liability faced by them on account of their negligent acts. When a person sues the other person in negligence, the first person is looking for financial compensation for damage suffered by it. In such cases, the first person wants to be put in the same place where it could have been if there was already in some part of the other person. Therefore the general rule, that is applicable in Australia is that the damages caused by economic loss. That is not concentrated on the damage to personal property cannot be recovered in negligence even if the loss can be termed as foreseeable. Therefore economic loss can be recovered only in cases where it can be established by the plaintiff that there was a supposition of accountability by the respondent and the defendant knew or ought to know that the printed this going to rely on it or regarding the vulnerability of the plaintiff regarding the inability of the printer for taking the steps that are necessary to protect the printed from the risk of loss. However, there are many cases in which it has been provided by the High Court that economic loss can be recovered. Therefore in Hill v Van Erp(1997), the accountability of a solicitor was established when the testator's gift of the deceased was ineffective on account of the negligence of the solicitor.

In the present case, Denise is the owner of a business wants to minimize their tax liability. She comes in contact with Alex, who has been described as text and trusts specialist and also has 15 years’ experience as a certified practising accountant. Alex gives advice to Denise that in order to minimize their tax liability; she should set up a trust for operating the business and splitting her income equally with her husband Barry. Although Denise is about the fact if the trust structure is legal, citizen assurance to Denise that she should not worry in this regard. Under these circumstances, Denise relies on the advice given by Alex and asked him to prepare the trust. However, later on, the Australian Taxation Office finds the trust created by Denise is in breach of the text avoidance rules. The ATO makes an order that Denise should pay back the tax avoided by her along with a penalty of 50%. Under these circumstances, Denise wants to know if she's entitled to claim damages from Alex for the financial loss suffered by her.

Conclusion: In view of the legal position and relevant case law discussed above, it can be stated that in the present case Denise can recover the financial loss suffered by her from Alex.

Sources

Alpen v Richards [2013] FCA 1387

Australian Competition & Consumer Commission v Cadbury Schweppes Pty Ltd - [2004] FCA 516

Derry v Peak (1889) 12 App Cas 337

Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435

Hedley Byrne & Co v Heller & Partners [1964] AC 465

Hill v Van Erp [1997] HCA 9

Houghton v Arms [2006] HCA 5

Mutual Life & Citizens’ Assurance Co Ltd v Evatt (1968) 122 CLR 556

, San Sebastian Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (NSW) (1988) 162 CLR 340