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Supplying information authored by others: can you be found to be misleading or deceptive?

The Federal Court was recently asked to consider in the case of Granitgard Pty Ltd v Termicide Pest Control Pty Ltd [2010] FCA 313, two important questions:

1. whether adopting statements of others by including links in websites, can amount to misleading and deceptive conduct; and 
2. whether a party can be held liable for misrepresentations simply by passing on information which has been supplied by someone else.

Granitgard and Termicide are rival companies in the pest control industry, both providing similar barrier systems which are installed on properties to prevent the subterranean access of termites to buildings.

Granitgard brought proceedings alleging that Termicide had engaged in conduct that was misleading or deceptive, or likely to mislead or deceive the public, contrary to s 52 of the Trade Practices Act 1974 (Cth).

Granitgard alleged that Termicide made (and continued to make) a number of representations, via its website, relating to the installation of the “Termiglass” barrier system.

These representations were that Termiglass:

1. forms “an impenetrable barrier” to termites
2. provides a barrier that is “too hard to chew, too heavy to move and too small to crawl through”
3. will satisfy the requirements of the Australian Standard 3660.14-2000 ‘Termite Management – New building work’ (the “Australian Standard”)
4. provides a suitable physical barrier against subterranean termite entry
5. “termiglass and the termiglass termite barrier system have been tested by the CSIRO and appraised as satisfying the Australian standard 3360.1 – 2000 ‘Termite management – New building work” [sic]
6. has a life expectancy of 50 years.

The Termicide website, along with other products and company information, also provided a link with the CSIRO Appraisal’s logo which opened up a Technical Assessment formulated by the CSIRO in respect of the Termiglass barrier system. In this report, the CSIRO stated that, in their opinion, the Termiglass product would satisfy the requirements of the Australian Standard 3660.1-2000 and that it was a suitable physical barrier against subterranean termite entry.

In order to satisfy the Australian Standard a number of requirements must be met. In this case, Granitgard argued that the Termiglass barrier system did not meet these requirements, and as such the statements made in the CSIRO Appraisal that Termiglass complied with the Australian Standard were false. Granitgard put forward a number of arguments to support this allegation including that Termiglass:

• did not deter concealed entry of termites to buildings
• was not termite resistant
• did not have a sufficient proportion of particles which were of a consistently sound quality and shape and within the required size range for ‘medium’ sized particles of between 1.2mm and 3mm in diameter.

Granitgard also alleged that Termicide was incapable of consistently producing large commercial quantities of Termiglass which complied with the requirements of the Australian Standard, the CSIRO Appraisal or which were consistent with the crushed glass tested by Ecospan Consulting Services.

Termicide contested these allegations stating that it had and continued to have reasonable grounds for making the particular representation regarding Termiglass. It was argued that the representations in contention relayed to the world at large an opinion that the CSIRO chose to give, namely that the Termiglass system will satisfy the 2000 standard and was thus a suitable physical barrier.

Justice Logan found that allegations made by Granitgard that the Termiglass barrier system was not effective in preventing subterranean access of termites to buildings and did not meet the Australian Standand were not substantiated. Therefore the opinions expressed within the CSIRO appraisal were not misleading or deceptive.

Further the Court held:

1. the link to the CSIRO’s webpage made it clear to the reader that the CSIRO appraisal was sought by Termicide, but that the opinions which were expressed in it were those of CSIRO
2. Termicide did not adopt the CSIRO appraisal by including the link on their website, but rather relayed an opinion to the world at large and invited the readers to read the document and form their own opinion as to the worth of the claims that Termicide did not itself state on its website
3. in determining whether a party adopts such statements on websites linked to other documents, an objective assessment should be made. In absence of adoption by Termicide in tis own language, the company was not taken to have adopted the statements made by CSIRO in their appraisal.

The relaying of an opinion via a link on a company website does not, by itself, on the reasoning in this case, adopt the opinions expressed in that linked document and, as such, will not constitute misleading and deceptive conduct.

It is possible, the Court also added, for a person to be regarded as having adopted the opinion of a third party by publishing this opinion to the world at large. Therefore, should the published opinion be misleading or deceptive (or likely to mislead or deceive) and cause a person loss or damage, the person relaying the opinion could be liable for damages under the Trade Practices Act 1974 (Cth).

In passing on information which turns out to be false, where the person is not the source of the information and disclaims any belief in its truth or falsity (expressly or impliedly) and merely seeks to pass it on for what it is worth, then it is unlikely that the person will be said to be engaging in misleading or deceptive conduct.

Misleading and deceptive conduct generally turns on the particular facts of each case and while these general principles can be repeated for general information it is prudent to review the statements and circumstances as a whole and seek advice if there are possible concerns prior to publication.

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The material contained in this publication is no more than general comment. Readers should not act on the basis of the material without taking professional advice relating to their particular circumstances.

© DibbsBarker 2010