Federal Court On Blog Articles And The Australian Consumer Law

by Greg Carter, Commercial Litigation Lawyer in Perth

In Nextra Australia Pty Limited v Fletcher [2014] FCA 399 Collier J examined whether an online blog article was misleading and deceptive contrary to s 18 of the Australian Consumer Law (ACL).  The decision is novel as it appears to be the first time that a Court has examined the application of the ACL to a blog article.

Background

The applicant Nextra is the franchisor of a newsagency franchise system operating throughout Australia.  The respondent Mr Fletcher is a director and 50% shareholder of NewsXpress, a competitor newsagency franchise system also operating throughout Australia.

Mr Fletcher operates an internet blog called the “Australian Newsagency Blog” at www.newsagencyblog.com.au (the Blog).

On 27 April 2011 Mr Fletcher posted an article on the Blog entitled “Nasty campaign from Nextra misleads newsagents” (the Article), referring to a flyer previously distributed by Nextra.

Nextra claimed, and Mr Fletcher admitted, that the Blog is read widely by newsagents and other persons associated with the newsagency industry throughout Australia, including actual and potential franchisees of Nextra.

Nextra sought injunctions:

  • requiring Mr Fletcher to remove the Article from the Blog as well as any responses he may have received;
  • restraining Mr Fletcher from publishing the Article in any other form;
  • requiring Mr Fletcher to publish on the Blog a retraction of the Article and an apology to Nextra.

The Court found that Mr Fletcher had engaged in conduct which was misleading and deceptive within the meaning of s 18 of the ACL, but was not persuaded to grant injunctive relief in the broad terms sought.

The decision

An important threshold question was whether Mr Fletcher’s posting of the Article was conduct “in trade or commerce” within the meaning of s 18 of the ACL.  As Collier J said (at [31]-[32]):

“Where a person works in a particular industry, it would not always be conduct “in trade or commerce” for such a person to engage in an activity relating to that industry. So, for example it is possible that a person who worked in a particular industry, and who wrote an informative article dealing with an aspect of that industry where that article was subsequently published in a trade or industry magazine, would not be engaging in conduct in trade or commerce. As Yates J observed in Toben v Jones (2012) 298 ALR 203; [2012] FCA 1193 at [42], without more the simple act of publication of a monthly magazine and a free email news and commentary service does not constitute conduct in trade or commerce within the meaning of s 18 of the ACL. …        

Similarly, self-publication by a person of articles or thought pieces relevant to a particular industry – on, for example, a blog – do not necessarily constitute conduct in trade or commerce where, for example, it is clear that the particular blog permits ventilation of personal opinions by the publisher on topics in which he or she is interested, and is provided for the interest of readers.”

However the Court found that Mr Fletcher’s motives for posting material on his Blog were mixed.  Whilst the Court was satisfied that Mr Fletcher had a genuine interest and aim in promoting discussion in the newsagency community on relevant topics of interest, it was also satisfied that Mr Fletcher had not hesitated to use the Blog to promote his own commercial interests (at [34]-[35]).

The Court found that the posting of the Article by Mr Fletcher was not conduct divorced from his relevant actual or potential trading or commercial relationships (see Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594).

While Mr Fletcher did not purport to post the Blog on behalf of NewsXpress or the NewsXpress franchise, he did so to defend NewsXpress from what Mr Fletcher regarded as potential poaching of business by Nextra.  Accordingly the posting of the Article on the Blog was conduct in trade or commerce within the meaning of s 18 of the ACL.

The remainder of the decision is a conventional application of settled principles relating to misleading and deceptive conduct, including that:

  • Conduct is misleading or deceptive, or likely to mislead or deceive, if it has a tendency to lead into error. There must be a sufficient causal link between the conduct and error on the part of persons exposed to it. The prohibitions in s 18 of the ACL were not enacted for the benefit of people who failed to take reasonable care of their own interests [fn 1];
  • The relevant test is the reactions or likely reactions of the “ordinary” or “reasonable” members of the class likely to be affected by the conduct [fn 2];
  • Intent is not relevant. The court must decide objectively whether the conduct is misleading or deceptive or likely to mislead or deceive. Evidence that members of the public have actually been misled is not conclusive [fn 3];
  • Whether “puffery” is misleading or deceptive for the purposes of s 18 of the ACL will depend on the facts and circumstances [fn 4].

The result

The Court was satisfied that Mr Fletcher had engaged in misleading and deceptive conduct in contravention of s 18 ACL, in particular that readers of the Article, including potential members of the Nextra group, would be misled by the Article (or any revised or subsequently published version) into forming negative and erroneous views about Nextra (at [103]).

The Court made orders pursuant to s 232 ACL requiring Mr Fletcher to remove the Article from the Blog and restraining him from publishing the Article in any other form (at [103], [109]).

While the Article was published some time ago, the Court observed (at [103]) that:

“it was likely that any reader of the Blog searching for postings about Nextra could find the Article, particularly as Mr Fletcher admitted that the Blog is “searchable” … It is in the public interest for material which is misleading or deceptive about a major Australian newsagent franchise to be removed from a blog which is not only targeted at the newsagent community but available to be read by members of the general public.”

However the Court was not satisfied that Mr Fletcher should publish an apology or corrective advertising because:

  • as a general proposition, a court-ordered apology serves little purpose and is an inappropriate remedy to be granted by the Court [fn 5];
  • corrective advertising would merely draw attention to the Article and would be counterproductive;
  • there was no evidence before the Court that anyone was affected by the Article other than the parties to the litigation; and
  • corrective advertising was likely to simply cause confusion.

Comment

Online blogs are increasingly used by businesses to influence potential customers and purchasing decisions.  There are reportedly over 150 million blogs in existence, and a new blog is created every half a second [fn 6].

With consumers increasingly looking online for reliable information about products and services, online blogs and blog articles that are created wholly or partly for commercial purposes must be cognisant of relevant laws including the Australian Consumer Law.

Footnotes

1. Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 304 ALR 186; [2013] HCA 54 at [39].

2. Parkdale Custom Built Furniture at 199; Campomar Sociedad, Limitada at 86.

3. Parkdale Custom Built Furniture.

4. Contrast Prosperity Group International Pty Ltd v Queensland Communication Company Pty Ltd (No 3) [2011] FCA 1122 (misleading and deceptive) and Petty v Penfold Wines Pty Ltd [1993] ATPR 41-263 (puffery)).

5. Cf Jones on behalf of the Executive Council of Australian Jewry v The Bible Believers’ Church [2007] FCA 55; Forest v Queensland Health [2007] FCA 1236; Jones v Toben [2002] FCA 1150; Jones v Scully [2001] FCA 879; (2001) 113 FCR 343; King Furniture Australia v Dare Gallery [2007] FCA 1845.

6. http://www.wpvirtuoso.com/how-many-blogs-are-on-the-internet/

 

Greg Carter is a freelance litigation lawyer based in Perth, specialising in fixed-fee commercial dispute resolution.

Greg offers a FREE consultation and a ‘no obligation’ quotation.

For more information please call Greg on 0422 406 929 or email gc@gregcarter.com.au.

Or see his website www.gregcarter.com.au.



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