ACCC loses appeal in LG faulty television case
Competition & Consumer Protection June 27, 2018 2:01 pm By Cat Fredenburgh | Melbourne

The Full Federal Court has upheld most of a ruling that found LG did not engage in misleading or deceptive conduct by failing to inform purchasers of faulty televisions of the remedies available to them under the Australian Consumer Law.

The case deals with consumers who bought LG televisions that broke down after the product warranty expired. The ACCC alleged LG violated the law by misleading consumers into believing the warranty was their only recourse, without expressly mentioning their rights under the ACL.

The Full Court on Wednesday agreed with the primary judge that the context in which LG’s behaviour took place was a negotiation which didn’t call for a discussion of consumers’ right under the ACL’s consumer guarantee.

“The ACCC would have it that the primary judge’s characterisation of the context is wrong, but we disagree…The consumers (or those communicating on their behalf) wanted to know what LG would do for them. LG told the consumers what it was willing to do. Some consumers pressed harder than others and got more out of LG as a result…the context of the dealings simply did not call up for consideration the possibility that consumers might have rights under the ACL consumer guarantee,” the Full Court said.

Chief Justice James Allsop, Justice Jayne Jagot and Justice Michael Lee sat for the Full Court.

However, LG did violate the ACL on two occasions when its representatives falsely represented that the ACL consumer guarantee on faulty products did not exist or did not apply to the LG televisions, the Full Court found.

The Full Court also shot down the ACCC’s bid to alter its grounds for appeal so that it could argue LG violated the ACL through its policy and practice of communicating with purchasers of faulty products as if their rights under the ACL did not exist, saying the ACCC had failed to run its case on this basis before the primary judge.

It also noted that proving the existence of a policy did not amount to proving a violation of the ACL.

The ACCC cast the ruling as a win, despite the fact that the Full Court upheld the primary judge’s ruling for 17 of the 19 representations made by LG that were targeted by the ACCC.

“The ACCC welcomes the Court’s decision, which should serve as a warning to businesses they run a risk if they choose not to mention the ACL consumer guarantees to customers,” Commissioner Sarah Court said.

A representative for LG said it was reviewing the court’s findings.

“LG Australia is committed to honouring our obligations under Australian Consumer Law and will be carefully reviewing the findings of the Court,” the representative said.

Representatives for the ACCC did not immediately respond to requests seeking comment.

In a September 1 judgment, Justice John Middleton sided with LG, ruling that the company was not obligated to inform consumers of remedies available to them under the ACL.

The judge said there was “no direct evidence that any of the consumers asked to be advised of their rights generally.”

In announcing the appeal, ACCC Deputy Chair Delia Rickard said more clarity was needed on the obligations of companies to notify customers of defective products of their rights under the law.

“The ACCC has appealed this decision in order to seek clarity from the Full Federal Court. In particular, this appeal is about the extent to which manufacturers should inform people seeking a remedy for a faulty product about their consumer guarantee rights,” Rickard said.

“Products and services come with consumer guarantees which may provide remedies over and above those in any manufacturer’s warranty. The ACCC will take appropriate action to ensure that consumers are not misled about their consumer guarantee rights,” Rickard said.

The ACCC was represented in the appeal by Nicholas Hopkins QC with List A Barristers and solicitors with Norton Rose Fulbright. LG was represented by Norman O’Bryan SC with Dawson Chambers, Marcus Hoyne with Owen Dixon Chambers, and solicitors with Mills Oakley.

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Cat Fredenburgh

Cat Fredenburgh has been covering legal news for 12 years. She was previously Editor-in-Chief at US legal news publication Law360. She is the Co-Founder of Lawyerly.