In Choo v Zhang [2016] NSWCA 193 the Court of Appeal revered the findings of the District Court in finding that the relevant representation was not misleading, and that if required the Court would have set aside the lower court's findings about the assessment of damages.
The case essentially involved allegations by the Zhangs that Mr Choo (and another) engaged in misleading and conduct based on alleged representations that a certain license agreement gave effect to a handwritten agreement concerning the purchase of an interest in a chicken shop in Lane Cove. The loss was allegedly the license fee paid by Mr Choo and the Zhangs which permitted them to conduct the relevant business.
The Court of Appeal noted the relevant provisions:-
Section 18(1) of the ACL, which is in Ch 2, provides as follows: “A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive.”
Section 236(1) of the ACL states that: “If: (a) a person (the claimant) suffers loss or damage because of the conduct of another person; and (b) the conduct contravened a provision of Chapter 2…; the claimant may recover the amount of the loss or damage by action against that other person…”
The ACL applies as a law of New South Wales by virtue of s 28(1) of the Fair Trading Act 1987 (NSW).
Later, in the judgement, the Court of Appeal stated: -
It is, however, important to appreciate that whether or not a person contravenes s 18(1) of the ACL is not necessarily answered simply by asking whether the person’s conduct in fact misled someone else, although evidence to that effect might be significant. Misleading conduct may take many forms and is not confined to representations. But in a case where the impugned conduct is said to consist of representations, the question of whether the conduct was misleading or deceptive ordinarily must be determined by what a reasonable person in the position of the representee would have made of the representations, taking into account all relevant circumstances.
In applying the principles to the fact the Court found that the representation was not as alleged, and that the Appellant had not misled them. Moreover, whilst not necessary to do so the Court of Appeal also found that the lower court's assessment of damages would have been set aside.
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