It’s official - you can't contract out of s18 of the ACL

This article was co-authored by Clancy Petersen, Law Graduate, Sydney.

Summary

In Viterra Malt Pty Ltd v Cargill Australia [2023] VSCA 157, the Victoria Supreme Court of Appeal confirmed that, as a matter of public policy, a party cannot contract out of liability for misleading or deceptive conduct under Australian Consumer Law (ACL). Whilst other Courts in Australia had previously made determinations to a similar effect, this decision represents the most authoritative position on the matter.

The Court of Appeal ultimately determined that allowing parties to avoid the operation of s236 through a contractual provision would permit private parties to undermine the operation of s18 and other relevant statutory consumer protection provisions.

The proceedings

In 2013, Cargill bought the entire share capital of Joe White Maltings Pty Ltd from Viterra. As part of this process, Cargill entered into a Confidentiality Deed with Viterra. Clause 10.3 of the Deed provided that:

‘Subject to clause 10.4 (‘Representations’) [Cargill] unconditionally and irrevocably release [Viterra] and its Representatives from any liability which may arise, whether directly or indirectly, in relation to, in connection with, or as a result of the provision of the Confidential Information or any reliance placed by any person Confidential Information or the non disclosure of any Information, including any liability resulting from any negligence, default or lack of care on the part of [Viterra] or any of its Representatives or from any misrepresentation or any other cause.’

Cargill subsequently brought successful proceedings in the Victorian Supreme Court against Viterra for misleading or deceptive conduct under s18 of the ACL on account of Joe White Maltings’ alleged business practices.

On appeal to the Victorian Supreme Court of Appeal, Viterra submitted that it was not liable under s18 of the ACL to Cargill for the following reasons:

• no representations were made, and no responsibility was accepted as to the accuracy and completeness of the information provided;
• Cargill agreed not to rely, and/or had not relied, upon any representations, but would rely upon their own investigations; and
• the contract between them purported to exclude, release or limit Viterra’s liability to Cargill.

The Court of Appeal dismissed these arguments. Relevantly, the Court of Appeal determined that s236 confers a remedy where a person has contravened s18 by way of damages payable, and that contracting out of such a provision would undermine the intended operation of s18 of the ACL. This is despite there being no ACL provisions which expressly prohibit ‘contracting out’ of s18 or s236 (regarding damages) of the ACL.

Importantly, the Court of Appeal made a distinction between ‘contracting out’ of liability and the implications of contractual terms on assessing whether liability is made out in the first instance. In this respect, the Court maintained that contractual terms may be argued where an issue arises as to whether the customer’s assertion of reasonable reliance (for maintaining s18 actions) has been proven.

The Court of Appeal also confirmed that settlement agreements can compromise a claim, or potential claim, even if the effect is a compromise on liability for damages for breaches of s18.

Implications

The ramifications of this decision (noting it reflects the highest authority on the issue) are significant and will have grander implications beyond this transaction and specific facts of this case. The principles will apply to all transactions which fall within the jurisdiction of the statutory consumer protection provisions. Nevertheless, the overriding principle remains that parties cannot contract out of such provisions.