CONSIDERATION
40 The ACCC's pleaded case involved a considerable number of different alleged contraventions in relation to a variety of persons. As such, it is important to establish a coherent structure for my analysis of the facts. I will do so by having regard to the structure adopted by the ACCC in its pleaded case. However, as I have indicated, no one pleaded representation or statement can be viewed in isolation.
41 The ACCC's pleaded case can be viewed as being in two parts. First, the ACCC alleges that LG contravened s 18 and s 29(1)(m) by making various representations when communicating with specific consumers, retailers and repairers. Secondly, the ACCC alleges that LG contravened those provisions by making representations to the world at large via the content displayed on its website. Whilst this second part of the case is relatively confined, the first part of the case involves a consideration of many different representations alleged to have been made by LG to many different consumers, retailers and repairers. Because of this, I intend to organise my consideration of those representations, and will do so by reference to each of the seven LG televisions purchased by the relevant consumers. For each of the seven LG televisions, with the qualification I have mentioned of viewing the conduct in context, I will consider whether the alleged representations of LG in relation to those televisions were misleading pursuant to s 18 or s 29(1)(m).
42 Therefore, I will use the following headings to structure my forthcoming analysis:
(1) Television purchased by SS and CS.
(2) Television purchased by CW.
(3) Television purchased by JF.
(4) Television purchased by MM.
(5) Television purchased by PG and MG.
(6) Television purchased by RH.
(7) Television purchased by DW and SW.
43 I will use the following heading for my analysis of the second part of the ACCC's case regarding representations said to have been made via content displayed on LG's website:
(8) The content displayed on LG's website.
44 Throughout these Reasons I will also make use of the convenient shorthand used by the ACCC to describe the various types of representations made by LG. These were (collectively, the 'ACL Representations'):
Assessment Cost Representation - a representation by LG that when a LG good had any defect after the expiry of the LG warranty, the consumer was only entitled to a remedy if the consumer paid for the costs of assessing the failure.
Limited Warranty Representation - a representation by LG that the remedies available in respect of the failure of LG goods which had any defect were limited to the LG warranty.
Goodwill Representation - a representation by LG that when a LG good had any defect after the expiry of the LG manufacturer's warranty, LG had no further obligations with respect to the LG good, and any step it took in relation to the LG good was an act of goodwill.
Repair Only Representation - a representation by LG that when a LG good had any defect after the expiry of the LG manufacturer's warranty, the consumer was only entitled to have that good repaired, regardless of the nature of the defect.
Labour Cost Representation - a representation by LG that when a LG good had any defect after the expiry of the LG manufacturer's warranty, the consumer was liable for the labour costs of the repair.
45 However, there are risks involved in relying on generic, second-hand characterisations of specific conduct. Therefore, whilst these shorthand labels are convenient, they will not comprise a substitute for analysis of the specific facts in relation to each alleged contravention. Further, as will become apparent, whilst each ACL Representation is alleged separately, in essence the central complaint of the ACCC can be (and should be) dealt with taking all the individual ACL Representations in context. Taking into account the evidence relied upon by the ACCC (which in some respects were the notes of conversations), isolated references to one or two words, or even sentences, should be treated with caution, when the task is to view LG's conduct in context.
46 I observe that the ACCC put the overall context of the representations in closing submissions as follows:
The context for the communications in 2014 was that:
a. a consumer had purchased an LG television (LGTV);
b. the TV had developed a fault shortly after the period of the express LG Manufacturer's Warranty (LG Warranty);
c. in each case, the fault rendered the LGTV effectively unusable and was a 'major failure' as that term is defined under the ACL;
d. the consumer had contacted LG about the defect seeking a solution;
e. the LGTV was assessed by an authorised LG repairer who had determined what component had failed, and in no instance assessed the fault as having been caused by the consumer;
f. the ACL consumer guarantee as to acceptable quality applied to the LGTVs;
g. LG knew the ACL consumer guarantee applied to the TVs and that the consumers had or may have had rights by reason of it;
h. LG approached its communications with the consumer on the basis that unless the consumer raised the ACL, it was not invoked and/or not applicable; and
i. LG consciously communicated with the consumers as if the only relevant matter was the LG warranty itself.
(Original emphasis.)
47 I accept these submissions, with these following important and significant qualifications and observations.
48 In relation to the rights under the ACL pertaining to each relevant customer, all that can be said on the evidence is that the customer may have had the ability to seek damages against LG, or relief against a supplier. It is not possible to conclude, in relation to each relevant customer, whether LG or a supplier were legally liable to any of the relevant customers. In any event, this is not the approach I understood the ACCC to be taking in this proceeding, namely to undertake the task of demonstrating such a liability existed in fact. The ACCC, in different formulations, sought to place responsibility upon LG for falsely representing that the only relevant source of a consumer's rights was the LG warranty. The ACCC in its closing outline of submissions, in discussing the reasonable expectations of consumers, stated as follows:
This reasonable expectation did not arise only where a consumer had demonstrated that the LG good had a major or minor failure to comply with the consumer guarantee, or where a consumer had made a claim for relief under those provisions. It applied in any circumstance where the consumer, or a retailer or repairer, had made enquiries of LG as to a potentially defective good, where the consumer guarantees might potentially have application.
(Original emphasis.)
49 As the ACCC further submitted, the false and misleading conduct alleged against LG could have been prevented if (for instance) LG said: "The Australian Consumer Law applies to these goods and you may have rights to a refund, repair or replacement by reason of its application" (or words to that effect). Alternatively, the ACCC submitted that LG could have made a statement in line with reg 90(2) of the Competition and Consumer Regulations 2010 (Cth) (the 'Regulations'), which provided:
'Our goods come with guarantees that cannot be excluded under the Australian Consumer Law. You are entitled to a replacement or refund for a major failure and compensation for any other reasonably foreseeable loss or damage. You are also entitled to have the goods repaired or replaced if the goods fail to be of acceptable quality and the failure does not amount to a major failure'.
50 I observe that this is a requirement under s 102(2)(a) of the ACL, which (as the parties accepted) does not apply in terms to LG and the instances relating to this proceeding.
51 It can be accepted that LG approached its communications with the consumers on the basis that faults occurring outside the manufacturer's warranty period were probably not manufacturing defects. Whether this is a correct assumption or not, LG was entitled to require a consumer to satisfy LG that a claim was accurate and substantiated. Even if a claim was made under the ACL, LG would have been entitled to accept or reject the claim, taking the consequences for either approach. LG would have been entitled to ask a consumer to substantiate a claim. Undoubtedly the evidence of Catherine Warwood, acting supervisor of LG's Direct Dealer Support Team (the 'DDS team') (which was responsible for dealing with queries from retailers of LG products across Australia), indicated a perhaps uninformed approach to the application of the ACL. It may also be that the offers made by LG had no regard to the LG warranty - however, this is not the subject of allegations against LG. This is not a proceeding about the internal processes of LG in dealing with consumers, or to examine the factors or considerations LG or the DDS team took into account in considering a claim; nor is this a proceeding that investigates whether the communications with the retailers or consumers involved bona fide offers of assistance or ex gratia payments.
52 It was accepted by the ACCC that LG, in response to a claim made to it, could have simply referred consumers to retailers, or if a consumer approached a retailer, LG could have asked the retailer to deal with the consumer. The gist of the ACCC's allegations is that since LG 'entered the fray' (as LG did), LG's conscious decision not to mention the ACL was a half-truth as the implication was that the only relevant source of a consumer's rights was the manufacturer's warranty: by consciously omitting to mention the ACL in the context of the consumer's requests, LG made a representation as to the non-existence of a consumer's rights outside the manufacturer's warranty.
53 It can readily be accepted that a half a truth may be worse than a blatant lie. A half-truth may beguile the receiver of the half-truth into a false sense that he or she is receiving the whole truth and nothing but the truth - and hence is under the understanding, and reasonable and legitimate expectation, that the person giving the information is presenting all the information necessary for the recipient to act accordingly.
54 In the area of prospectus disclosure, where there is a duty of full disclosure, Lord Macnaghten in Gluckstein v Barnes [1900] AC 240 at [250]-[252] ('Gluckstein'), whilst not going so far as I have just indicated, bespoke of the dangers of half a truth in the following terms:
My Lords, it is a trite observation that every document as against its author must be read in the sense which it was intended to convey. And everybody knows that sometimes half a truth is no better than a downright falsehood. Is the statement in the prospectus which I have just read as to the price which the vendors had to pay for the property true or false? In the letter it is true. The vendors had bid 140,000l. for the property, and had formally agreed to pay that sum for it. But for all that, the sum of 140,000l. was not the sum they were going to pay, and they knew that well enough. They had provided themselves with counters, obtained at little cost, which in reckoning the price would be taken, as they knew, at their face value, so that the price of the property to them would be only about 120,000l. Is that what Mr. Gluckstein and his associates meant the public to understand? Surely ordinary persons reading the prospectus, and attracted by the hopes of profit held out by it, would say to themselves, "Here is a scheme which promises well. The gentlemen who are putting the property on the market know something about it, for they were the sole directors and managers of 'Venice in London,' which was a very profitable speculation. They have had the whole property valued by well-known auctioneers, who say that it is worth more than is asked for it. True, they secure a profit of 40,000l. for themselves, but then they disclose it frankly, and it is not all clear profit. There is interest to be paid, and all the expense of forming the company. And they have actually agreed to pay 140,000l. down. That sum, they tell us, is 'payable in cash.'" You will observe those last words, "payable in cash." Their introduction is almost a stroke of genius. That slight touch seems to give an air of reality and bona fides to the story. Would anybody after that suppose that the directors were only going to pay 120,000l. for the property, and pocket the difference without saying anything to the shareholders? "But then," says Mr. Gluckstein, "there is something in the prospectus about 'interim investments,' and if you had only distrusted us properly and read the prospectus with the caution with which all prospectuses ought to be read, and sifted the matter to the bottom, you might have found a clue to our meaning. You might have discovered that what we call 'interim investments' was really the abatement in price effected by purchasing charges on the property at a "discount." My Lords, I decline altogether to take any notice of such an argument. I think the statement in the prospectus as to the price of the property was deliberately intended to mislead the shareholders and to conceal the truth from them.
55 The position in this proceeding as pleaded by the ACCC is far removed from that which confronted Lord Macnaghten, where his Lordship dealt with a clear duty already existing to disclose the price, such that a half-truth going to that very issue (price) needed to be disclosed.
56 In this proceeding it is important to focus on the relevant conduct of LG having regard to the allegations of the ACCC and the reasonable expectation of each consumer (in the context of their communications), so as to determine whether LG should have disclosed the existence of the ACL and the 'potential' remedy available under that statutory provision so as not to mislead or deceive or likely mislead or deceive the consumer. I emphasis 'potential' because this is the real complaint made by the ACCC.
57 I am satisfied that all consumers would have received a LG warranty card at the time of purchase (which occurred at least a year before the faults occurred), which made reference to the ACL in line with reg 90(2) of the Regulations. However, I find that on the evidence most (if not all) of the consumers would have had, at the time of communicating about the faulty TVs, only a very general knowledge about the ACL and its existence. Nevertheless in viewing LG's conduct, it is relevant that all consumers had been informed (as the law required) of the ACL, and LG would have been aware this occurred at least at the time of purchase. Further, LG had no reason to assume that a consumer was not aware of the ACL.
58 I do add by way of some qualification to the above statement, that the communications with some consumers (for example CW, JF, MM, PG, DW and SW) indicate that these consumers had a more immediate or heightened awareness of the effect of the ACL, but not to the somewhat complicated nature of the remedial relief possibly available to them as outlined above in these Reasons by reference to the various statutory provisions. Nevertheless, this state of knowledge by consumers is relevant as part of the content and context of LG's conduct. So too is the knowledge of retailers; a retailer would be expected to have some knowledge (to different degrees) of the ACL and a retailer's obligations thereunder. LG had no reason to assume that a retailer was not aware of the ACL.
59 The conscious approach of LG to its communications with the retailer or consumer was to respond to the enquiry in the context of that specific enquiry. By this I mean that unless the ACL was raised, LG would not mention it or bring it to a consumer's attention. However, there is no evidence that LG knew or was itself aware that consumers were unaware of the existence of the ACL. In some specific instances consumers did know of or mention the ACL in specific terms.
60 Having made these observations, I return to other submissions of the ACCC, where it continued to submit as follows;
Having chosen to engage with those consumers in respect of the faults with their LGTVs, it was required to do so - and there was a reasonable expectation that it would do so - in a way that was not misleading. That meant referring to the ACL.
LG's communications were, deliberately, entirely focused on the expired LG Warranty as if it were the only repository of consumer rights. The communications denied the existence of the consumer guarantees.
…
LG engaged in a consistent course of conduct, making one or more representations which had the effect of:
a. misinforming or misleading consumers about the applicable consumer guarantees and their rights, or remedies that applied in respect of the goods; and
b. frustrating their attempts to obtain remedies that applied in respect of the goods.
61 It is also useful to make some observations on these submissions. Again the content of the actual communications is important in the context of the pleaded allegations. Further, although submitted by the ACCC, the ACCC does not need to show that the "communications denied the existence of the consumer guarantees". The pleaded case is merely that LG only represented half the picture as to consumer rights by not referring to the ACL, and this was misleading as tending to indicate to consumers that their only remedy was by recourse to the manufacturer's warranty (or LG's goodwill).
62 The reference to LG's conduct having the effect of frustrating the relevant consumer's attempt to attain remedies that applied in respect of the TVs was not pleaded, nor is it a necessary component of the allegations made as to the representations and their misleading nature.
63 I will now turn to an analysis using the structure earlier described. However I do not repeat in relation to each separate allegation the findings and observations I have made above. These findings and observations impact upon my characterisation of the conduct of LG in each individual instance as alleged.