Misleading Silence

Elise Bant, Jeannie Marie Paterson, Elise Bant, Jeannie Paterson, Jeannie Marie Paterson, Elise Bant, Jeannie Paterson

• Publisher: Hart Publishing
• Year: 2020
• Print ISBN: 9781509942312
• eBook ISBN: 9781509929269
• Edition: 1
• Topic: Law
• Subtopic: Law Theory & Practice
• Index: Law

This collection brings together a team of outstanding scholars from across the common law world to explore the treatment of misleading silence in private law doctrine and theory. Whereas previous studies have been contractual in focus, here the topic is explored from across the full spectrum of private law. Its approach encompasses equitable and common law principles, as well as taking an integrated approach to key statutory regimes. The highly original contributions draw on rich theoretical, historical, comparative, cross-disciplinary and doctrinal perspectives. This is truly a landmark publication in private law, with no counterpart in the common law world. Contributors: Professor Elise Bant, Professor Jeannie Paterson, Professor Rick Bigwood; Professor Michael Bryan; Professor John Cartwright; Professor Mindy Chen-Wishart; Professor Simone Degeling; Professor Pamela Hanrahan; Professor Luke Harding; Professor Matthew Harding; Professor Catharine MacMillan; Professor Hector MacQueen; Professor Donna Nagy; Justice Andrew Phang; Professor Pauline Ridge; Professor Andrew Robertson; Ms Anna Williams.

PART I

Theory and Methodology

1

Silence and the Regulation of Misleading Conduct: A Taxonomy

ELISE BANT AND JEANNIE MARIE PATERSON

I.Developing a Rational Law of Misleading Conduct

Conduct that misrepresents factors relevant to a transaction, whether they relate to fact, law, opinion or intention, are problematic from the perspectives of both the market and personal autonomy. Conduct that misleads undermines market efficiency by giving the advantage to those who do not play straight. It also undermines the central philosophical premise of contract law of giving effect to the freely made and well-informed choices of contracting parties. Consistently, the common law contains a number of doctrines that operate to deter and remediate conduct that misleads. The common law torts of deceit, negligent misstatement, passing off, defamation and injurious falsehood, the reliance-based common law and equitable doctrines of estoppel, fraudulent and innocent misrepresentation, fiduciary obligations and remedies such as rescission, variously operate to forbid, prevent and remedy the consequences of misleading conduct.¹ In Australia, this abhorrence of conduct that misleads is embodied in a far-reaching statutory prohibition on conduct in ‘trade or commerce’ that is ‘misleading or deceptive or likely to mislead or deceive’, contained in section 18 of the Australian Consumer Law (ACL)² and repeated in slightly different form and with varying coverage in a host of other legislative instruments at the state, territory and Commonwealth level.³ In other Commonwealth jurisdictions, such as England and Singapore, legislative responses to misleading conduct include Misrepresentation Acts⁴ and consumer protection legislation.⁵

Unfortunately, in the Australian context (and likely in other jurisdictions), the resultant interaction of statute and general law has become almost unmanageably complex.⁶ At the heart of this unwieldy mix of statutory and general law principles concerning misleading conduct is the ongoing failure by parliaments, courts and commentators to treat those principles as contributing to parts of a holistic system of regulation of a social wrong (misleading conduct). This, in turn, undermines the opportunities for the development of a coherent law of misleading conduct and a blueprint for rational and effective law reform. The Australian High Court has in recent years emphasised the principle of coherence⁷ as an overriding aim and requirement both of general law (that is, rules and doctrines developed judicially pursuant to common law and equitable jurisdictions) and statutory development. Here, coherence requires consideration of the ‘fit’ between a wide range of overlapping statutory and general law principles all concerned to forbid, deter and remedy misleading conduct. It also requires consideration of how to promote coherence between our overlapping statutory frameworks. Only from this perspective can we hope to arrive at any clarity in our understanding of the existing law and identify the gaps and overlaps worthy of law reform.

The Australian Research Council Discovery Project that gives rise to this collection (and the colloquium at which the draft chapters were presented and discussed) aims to resolve the current ‘morass’ by undertaking a systematic analysis of the patchwork of legislative and general law rules with the view to presenting a roadmap for developing a rational law of misleading conduct that will operate across the field of regulated transactions.⁸ This is not with the aim of producing some ‘uber-tort’ of misleading conduct. Rather, under this rationalised scheme, categories of misleading conduct will be subject to consistent and justified legal treatment pursuant to nuanced rules that take account of and reflect important normative and doctrinal distinctions, as well as commonalities, which underpin discrete forms of regulation, themselves developed in light of relevant broader legal and statutory principles. The analysis will enable the law to develop and respond appropriately to conduct that misleads in all its manifestations and varied contexts, retaining justified distinctions in treatment, while eradicating inconsistencies that undermine the law’s effectiveness and validity. The hope is that this integrated, analytical framework will enable misleading conduct to be understood, effectively deterred and remedied, for the benefit of victims, the fair treatment of those engaging in corporate and commercial conduct, and our broader legal, social and commercial communities. The ‘map’ will not only allow parties and courts alike to navigate the current labyrinth of rules concerning misleading conduct; the analysis will support more principled and sure-footed law reform, to cut through unnecessary litigation and statutory duplication, so as to achieving a more just, effective and coherent law of misleading conduct. This, in turn, must necessarily promote a more efficient and confident market economy for the benefit of all Australians. Further, given the central place of the norm in other jurisdictions and, accordingly, the ubiquity of the issues raised in the collection, we may also expect the findings to be of interest and, we hope, assistance to other jurisdictions.

The chapter commences by identifying the critical themes and issues for the broader regulation of misleading conduct that emerge from the collection’s examination of the concept of misleading silence. The chapter then turns to focus on the essays in the collection, in so doing locating each analysis within its broader thematic context. The chapter concludes by offering a novel taxonomy of the civil regulation of misleading conduct, seen in light of the broader legal, equitable and statutory contexts in which that regulation occurs. This framework provides the foundations for future development of a more consistent and principled law of misleading conduct across common law jurisdictions.

II.Regulating Misleading Silence

It might seem strange, in light of the broad and complex aims of this research project, to focus on what might appear to be an outlying area: the nature of misleading silence and the appropriate legal responses to such silence. It is valid to question whether such a category can bear any valid intellectual weight. Can silence of itself mislead? Or are we actually talking about conduct misrepresenting a state of affairs or doctrines responding to other juristic bases for relief, such as unilateral mistake? In this light, perhaps a safer strategy might have been to start with core cases of active misconduct and work outwards to the periphery.

However, in this task of mapping and rationalising the regulation of misleading conduct, the collection demonstrates that the question of how (if ever) silence may be held to have misled provides a sharp analytical focus. Indeed, it arguably occupies the centre of any attempt to map and identify the key ‘lines in the sand’ that must be drawn by any legal system seeking to provide a comprehensive regulatory scheme (across common law, equity and statute) to respond to this form of misconduct, in all its varieties and settings. As the chapters that follow demonstrate, the task of thinking about when silence might be misleading requires us to grapple with foundational questions such as the normative salience of failing to act, the nature of decision causation, and the role of legal norms and community expectations in assessing the effect of utterances, conduct and silence. Thus, the inquiry into misleading silence both highlights the highly formal(istic) boundaries that underpin the traditional approaches to regulating misleading conduct and invites more nuanced and substantive development of the more broadly familiar principles that operate in the clear spaces of active misconduct.

As will be seen, through this engagement, a number of key themes emerge. The first is the critical importance of adopting an integrated analysis that looks across common law, equitable and statutory divides to develop a more holistic understanding of the regulation of misleading conduct, in all of its manifestations and contexts.⁹ The second is that any such technical but also comprehensive doctrinal analysis will be most successful when informed by broader historical, ethical and theoretical insights, including for our purposes law-and-economics, legal, philosophical and linguistic theories concerning misleading silence (and thus misleading conduct).¹⁰ The last has, in particular, been a revelation for us, providing a taxonomical framework for understanding the communicative salience of silence that can then be utilised to help identify and refine the necessary, and unnecessary, distinctions and elements for its effective regulation. The third theme is the pivotal role of context in determining the legal salience of silence.¹¹ These contexts include, for example, linguistic conventions as examined by Harding and Harding, which inform the way in which silence may reasonably be understood.¹² These conventions may be quite localised to particular legal or non-legal communities (for example, commercial actors involved in the group litigation industry, or financial service providers),¹³ or may be more generalised, incorporating all members of the class or jurisdiction at which the regulation is aimed. Context also captures the legal frameworks that operate to shape those conventions. These can operate to good or ill effect. For example, a powerful statutory scheme may generate false expectations on the part of those regulated by it that conduct compliant with its requirements fulfils the law’s requirements for disclosure, or cannot give rise to misleading conduct.¹⁴ This may itself be misleading, as the statute will often sit within a complex web of further statutory, common law and equitable principles that have the consequence that compliant conduct may still breach the norm against misleading conduct. The law will often also seek to shape the context in which silence may become relevant, through such measures as the parole evidence rule or through more indirect, but still powerful, means, such as by seeking to change commercial and consumer behaviours in a way that affects the significance of silence, an idea to which we return below. Closely related to context is a fourth factor of culture.¹⁵ Again, cultural norms can be jurisdiction-specific or more localised. An example discussed at the colloquium was that many Asian cultures expect disclosure of unusual circumstances of death of persons associated with residential properties, omission of which would be regarded as misleading.¹⁶ A more localised example might be norms adopted by communities following particular sporting codes, which might regard disclosure of past injuries to be a matter of personal choice or, conversely, required.

A further theme concerns what might be considered the recurrent factors that arise when adopting these combined doctrinal and theoretical/historical perspectives. One of the most significant from the perspective of the aims of this Discovery Project is the reaffirmation of Paul Finn’s original insight of an ideal of neighbourhood – ‘a moral idea of positive and not merely negative requisition’ present in private law.¹⁷ This ideal of responsibility for others and not merely oneself is expressed through overlapping but independent standards of conduct,¹⁸ premised on unconscionability,¹⁹ good faith and fair dealing,²⁰ and fiduciary duties.²¹ To these might be added a norm against unjust enrichment, a central concern of which is to unwind the effect of transactions brought about by mistake.²² Another might be preserving or protecting reasonable...

Table of contents

• Cover
• Title Page
• Foreword
• Preface
• Table of Contents
• List of Contributors
• List of Cases
• Table of Statutes
• PART I: THEORY AND METHODOLOGY
• PART II: NORMATIVE FRAMEWORKS
• PART III: DOCTRINE
• PART IV: REGULATORY CHALLENGES
• Index
• Copyright Page