Can Silence Be Misleading in Australian Law?

Can Silence Be Misleading in Australian Law?

Can Silence Be Misleading?  In commercial dealings, liability for misleading or deceptive conduct is often associated with what is said rather than with what is left unsaid.

However, while Australian law does not impose a general duty to disclose information, silence can, in some circumstances, give rise to liability where, in context, it creates a misleading impression.

This issue arises under s 18 of Schedule 2 of the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law – ACL), which focuses on the overall effect of conduct in trade or commerce.

That conduct is not limited to express representations and may include omissions, non-disclosure, or the continuation of a known misunderstanding.

The key difficulty is identifying when silence becomes misleading. Not every failure to disclose will suffice.

However, when silence coexists with other conduct, such as partial disclosures or known assumptions, it may create a false impression.

For that reason, courts focus not on whether there was a duty to disclose, but on whether, in all the circumstances, the conduct as a whole was misleading or deceptive.

In this article, our commercial litigation lawyers examine how that principle applies to silence and non-disclosure in Australian law.

The diagram below provides a simplified overview of how courts assess when silence or non-disclosure may amount to misleading or deceptive conduct under Australian law.

The Legal Framework For When Silence Is Misleading

The prohibition on misleading or deceptive conduct under Australian law is framed in broad, flexible terms.

Section 18 of The Australian Consumer Law prohibits conduct in trade or commerce that is misleading or deceptive or likely to mislead or deceive.

Critically, the provision is not confined to express representations. It extends to the entirety of a party’s conduct, including omissions, non-disclosure, and the overall impression conveyed in context.

A recurring source of difficulty is the role of silence. As a starting point, Australian law does not impose a general duty of disclosure in commercial dealings.

However, the absence of such a duty does not render silence legally irrelevant.

The correct inquiry is whether, in all the circumstances, the conduct, including any silence, conveys a misleading impression.

This principle is authoritatively stated in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31. The Court emphasised that silence is not to be treated as a separate category, but as part of the overall factual matrix. Black CJ explained at [3]:

Silence is to be assessed as a circumstance like any other. To say this is certainly not to impose any general duty of disclosure; the question is simply whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive or that is likely to mislead or deceive.

His Honour also said that, although “mere silence” is a convenient description, “there is in truth no such thing as ‘mere silence’ because the significance of silence always falls to be considered in the context in which it occurs.”

These passages encapsulate the governing approach. The focus is not on whether there was a duty to disclose, but whether the totality of the conduct viewed in context was misleading or deceptive.

That approach aligns with the High Court’s consistent emphasis on the objective nature of the statutory test.

In Google Inc v ACCC (2013) 249 CLR 435, the High Court reaffirmed that, where conduct is directed to a class of persons, the inquiry is objective: the court asks whether the “ordinary” or “reasonable” members of that class would be misled or deceived (or tort of deceit at common law). In that case, the Court held that ordinary and reasonable users would have understood the sponsored links to be advertisements conveying the advertisers’ representations, not representations adopted or endorsed by Google. The Court stated at [7]:

the court must consider whether “the ‘ordinary’ or ‘reasonable’ members of that class” would be misled or deceived

This objective framework is critical when analysing silence. The question is not what the representor intended, nor whether the representee asked the right questions, but whether the conduct taken as a whole was apt to mislead its audience.

Silence may therefore become misleading in several ways. It may qualify or contradict what has been expressly stated, allow a known misunderstanding to persist, or create a false impression when combined with partial disclosure.

The High Court in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 recognised the analytical complexity of such cases, observing at [5]:

Where silence or non-disclosure is relied upon, the pleading should identify whether it is alleged of itself to be… misleading or deceptive conduct or whether it is an element of conduct… said to be misleading or deceptive.

This highlights an important structural point. Silence is rarely assessed in isolation.

Instead, it operates as part of a broader course of conduct, and its legal significance depends on how it interacts with what has been said or done.

Accordingly, the central inquiry remains constant: whether, in all the circumstances, the conduct comprising both acts and omissions conveys a misleading or deceptive impression to the relevant audience.

When Silence Becomes Misleading

While the general principle is that silence is assessed in context, the case law demonstrates that its significance most often arises where silence interacts with assumptions created by the surrounding circumstances.

One of the clearest examples is when a party fails to correct an assumption it has helped create or maintain.

This issue was considered in Johnson Tiles Pty Ltd v Esso Australia Ltd [1999] FCA 477, where the Court examined whether a claim in misleading or deceptive conduct could be sustained where the alleged conduct depended in part on omissions and assumptions.

French J emphasised the need for precision in identifying how misleading conduct is said to arise. The Court stated at [17]:

Finally, I would add that I have taken a stricter, and possibly more technical, approach to pleadings in the present matter than I might usually take in respect of other matters on my docket. The reason for that is that the magnitude of the present litigation and the nature of the issues arising are such that it is appropriate in the interests of the administration of justice that the causes of action relied upon by the applicants and the defences of the respondents are pleaded with clarity and precision.

Although directed to pleading, the point is substantive. Where silence is relied upon, the misleading effect must be clearly tied to the assumptions said to arise from the conduct.

It is not enough to point to non-disclosure in the abstract; the omission must be shown to contribute to a misleading impression in context.

A related situation arises where silence concerns material risks or legal consequences associated with a transaction.

In Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477, the Court considered whether the failure to disclose that a product was unregistered and therefore exposed purchasers to potential seizure could constitute misleading conduct.

The case illustrates that non-disclosure of legal or regulatory risks may, depending on the context, create a misleading impression, particularly when the transaction proceeds on an implied assumption of compliance.

The significance of such omissions does not lie in the existence of a duty to disclose, but in the effect of the silence on the overall impression conveyed.

Where a party supplies a product or information in circumstances that imply compliance, safety, or reliability, the omission of material qualifying facts may distort that impression.

The High Court’s reasoning in Yorke v Lucas (1985) 158 CLR 661 further illustrates the importance of context in assessing conduct involving omissions. The Court stated at [7]:

If the circumstances are such as to make it apparent that the corporation is not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is worth, we very much doubt that the corporation can properly be said to be itself engaging in conduct that is misleading or deceptive.

This passage underscores that silence is less likely to be misleading where the surrounding circumstances make clear that no representation is being made.

Conversely, when the circumstances suggest endorsement, accuracy, or completeness, silence may create a misleading impression.

Finally, it is important to recognise that the statutory prohibition is not concerned with fault or intention.

As Barwick CJ explained in Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216, the Court stated at [3]:

Section 52 is concerned with conduct which is deceptive of members of the public in their capacity as consumers of goods or services.

Accordingly, silence may be misleading, even when honest or inadvertent.

The focus remains on the effect of the conduct, not the state of mind of the party engaging in it.

The following examples illustrate common commercial situations in which silence or non-disclosure may create a misleading impression in practice.

Common Misconceptions About Silence and Non-Disclosure

Misconceptions about silence and non-disclosure often arise from treating misleading or deceptive conduct as a rule-based doctrine.

In reality, the inquiry is evaluative and fact-specific, focusing on the overall impression the conduct creates in context.

There is no duty to disclose, so silence is safe

It is correct that Australian law does not impose a general duty of disclosure in commercial dealings.

However, that proposition is frequently misunderstood.

The absence of a duty to disclose does not mean silence is legally neutral. Liability arises when silence, in context, creates a misleading overall impression.

The focus is not on whether a party was required to speak, but on whether the conduct viewed as a whole misleads.

The other party should have asked

A common assumption is that responsibility lies with the other party to make appropriate inquiries.

While the opportunity to discover the truth may be relevant, it is not determinative.

The statutory test is objective. It asks whether the conduct is capable of misleading, not whether a particular individual could have avoided being misled.

A party cannot rely on the other’s failure to ask questions where its own conduct has contributed to a misleading impression.

If what was said is true, there is no problem

It is also commonly assumed that liability cannot arise where statements made are literally true. That assumption is incorrect.

Misleading or deceptive conduct is assessed by reference to the overall impression conveyed.

Even accurate statements may mislead when they omit material information or create a false inference when read in context.

This is particularly evident in cases involving half-truths.

Across these misconceptions, a consistent theme emerges: the law does not turn on formal rules such as the existence of a duty to disclose or the literal truth of individual statements.

Instead, the focus is on whether, in all the circumstances, the conduct comprising both what was said and what was not said was apt to mislead.

Silence becomes legally significant not because it breaches a duty to disclose, but because, in context, it contributes to a misleading overall impression.

Consequences of Misleading Silence and Non-Disclosure

Where silence or non-disclosure contributes to misleading or deceptive conduct, the consequences can be significant.

The Australian Consumer Law does not treat such conduct as merely technical.

Once contravening conduct is established, attention shifts to whether loss or damage has been suffered, what causal connection exists between the conduct and that loss, and what remedial response is appropriate.

Compensation for loss caused by the conduct

The primary compensatory remedy is found in s 236 of the ACL, which continues the substance of s 82 of the Trade Practices Act 1974 (Cth) (now repealed).

The central question is whether the claimant suffered loss or damage as a result of the contravening conduct.

In Henville v Walker [2001] HCA 52, Gleeson CJ explained that causation under the statute does not require the contravening conduct to be the sole cause of the loss. His Honour stated at [14]:

For there to be the necessary causal relationship between a contravention of s 52, and loss or damage, so as to satisfy the requirements of s 82(1), it is not essential that the contravention be the sole cause of the loss or damage.

That proposition is important in silence cases. A claimant may have made errors of their own, or the transaction may have involved multiple contributing factors, but that will not necessarily defeat recovery.

If the misleading silence caused the loss, that may be enough.

The same case also makes clear, however, that compensation is not limitless. Courts distinguish between loss flowing from the contravention and loss attributable to later or independent causes.

Misleading conduct does not make the contravening party an insurer against every adverse consequence that follows a transaction.

A claimant’s own negligence is not necessarily fatal

A common practical issue is whether the claimant’s own carelessness defeats recovery.

In this context, the authorities do not adopt a simple all-or-nothing approach.

Again, in Henville v Walker [2001] HCA 52, Gleeson CJ stated at [13]:

Negligence on the part of the victim of a contravention is not a bar to an action under s 82 unless the conduct of the victim is such as to destroy the causal connection between contravention and loss or damage.

That is especially relevant where silence or non-disclosure is said to have induced entry into a transaction.

A claimant may have failed to inquire further, or may have made poor commercial decisions of their own, but that does not necessarily sever causation.

The real question remains whether the misleading conduct materially contributed to the loss claimed.

Relief is compensation, not punishment

Where relief is sought under ss 236 and 237, the court is concerned with compensation, prevention and reduction of loss, not punishment.

That distinction matters because it confines the available remedies to those intended to redress the consequences of the contravention.

In Marks v GIO Australia Holdings Ltd [1998] HCA 69, Gaudron J observed at [9]:

The second is that there is no punitive aspect to these provisions, they being concerned solely to provide for recovery of ‘the amount of the loss or damage [suffered]’ (s 82) or to ‘compensate’ for or ‘prevent or reduce’ loss or damage (s 87).

That statement provides the clearest guide to the function of the statutory remedies.

In practical terms, the court is not punishing the misleading party for silence as such; it is identifying and addressing the loss caused by the misleading conduct.

The court’s additional remedial powers

In addition to damages, the court may grant a wide range of orders under s 237 of the ACL.

Those powers are flexible and can be adapted to the circumstances of the case. Depending on the facts, relief may include:

• rescission or avoidance of a contract
• variation of contractual terms
• refusal to enforce part or all of an agreement
• refund of money
• return of property
• other orders necessary to compensate for, prevent or reduce loss.

Marks v GIO Australia Holdings Ltd [1998] HCA 69 is particularly useful here because it recognises that the statutory task is not to force the case into contractual or tortious categories.

Rather, the court must identify the relevant loss or damage and then fashion appropriate relief under the statute.

This is especially important in cases involving silence or non-disclosure, because the most appropriate remedy will often depend on the stage at which the misleading conduct operated.

If the silence induced entry into the transaction, rescission or variation may be more appropriate.

If the transaction has already run its course and the loss is quantifiable, compensation may be the primary remedy.

Can Silence Be Misleading in Australian Law – Key Takeaways

Silence and non-disclosure occupy a nuanced position within the law of misleading or deceptive conduct.

Australian courts have consistently rejected any rigid rule that silence is either inherently permissible or inherently suspect.

Instead, the analysis is contextual and evaluative, directed to the overall impression created by the conduct as a whole.

The key unifying principle is that liability does not arise from silence in the abstract, but from the misleading effect of silence in context.

Where a party’s conduct viewed holistically creates or sustains an erroneous assumption, the absence of disclosure may be sufficient to contravene section 18 of the ACL.

Several practical themes emerge from the authorities:

• The absence of a general duty to disclose does not provide a safe harbour.
• Literal truth does not preclude liability where the overall impression is misleading.
• A failure by the other party to make inquiries is not determinative.
• Disclaimers and qualifications will only be effective if they genuinely correct the impression conveyed.

These principles reflect the statute’s focus on substance over form. Courts are concerned not with how conduct is characterised, but with how it is understood by its audience in the circumstances in which it occurs.

From a practical perspective, the risk associated with silence most often arises in situations where:

• One party has superior knowledge,
• A representation (express or implied) has already been made, or
• A known misunderstanding is allowed to persist.

In those contexts, non-disclosure is unlikely to be treated as neutral. Instead, it may form part of a course of conduct that is misleading in its overall effect.

Finally, the consequences of contravention reinforce the importance of careful communication.

The statutory regime provides flexible and potentially significant remedies, including compensation for loss, contractual relief, and regulatory intervention.

The focus on causation ensures that liability is not unlimited, but where misleading silence is shown to have contributed to a loss, meaningful relief will ordinarily follow.

In that sense, the law does not require parties to disclose everything.

It does, however, require that what is said and what is left unsaid does not combine to mislead.

Practical Examples of Misleading Silence

The principles discussed above are best understood in their practical application.

The following examples illustrate how silence or non-disclosure can, in context, contribute to a misleading or deceptive overall impression.

Failure to correct a known assumption in a sales process

A business is offered for sale. During negotiations, the buyer assumes that a key customer contract will continue after completion. The seller knows the contract is about to terminate, but says nothing. Even if the seller makes no express statement about the contract, allowing that assumption to persist may create a misleading overall impression.

Partial disclosure in a construction context

A contractor provides a quotation stating that the work can be completed within 12 weeks. The contractor is aware that approvals are unlikely to be obtained within that timeframe, but does not qualify the statement. While the timeframe may be achievable in a vacuum, omitting known approval delays may render the representation misleading in context.

Non-disclosure of regulatory risk in a commercial supply arrangement

A supplier sells a product for use in a regulated industry. The supplier knows the product does not comply with applicable regulatory requirements and may be subject to recall or seizure, but does not disclose this. In circumstances where compliance is ordinarily assumed, the failure to disclose that risk may contribute to a misleading impression about the product’s suitability for use.

What Should You Do?

If you are involved in commercial negotiations or transactions, the following steps will help reduce the risk of misleading or deceptive conduct arising from silence or non-disclosure:

• Do not rely on silence as a safe position
  If a fact is material to the transaction and your conduct creates an assumption about it, consider whether leaving it unsaid could mislead.
• Identify and correct known misunderstandings
  If you are aware that the other party is proceeding on an incorrect assumption, allowing that assumption to continue may expose you to liability.
• Avoid half-truths
  Statements that are technically true but incomplete can be misleading. Ensure that what you say is accurate in substance, not just in form.
• Qualify statements where necessary
  If a representation depends on assumptions, conditions, or uncertainties (such as approvals, timing, or compliance), make those qualifications clear.
• Be careful where you hold superior knowledge
  The greater the information imbalance, the greater the risk that silence may contribute to a misleading impression.
• Ensure disclaimers are clear and effective
  Disclaimers must genuinely correct the impression created. Boilerplate or buried qualifications are unlikely to protect you.
• Document key communications
  Clear written records of what was said — and what was clarified — can be critical in managing risk and defending claims.
• Seek advice early
  If there is any doubt about how your conduct may be perceived, obtaining legal advice before finalising the transaction can avoid significant exposure later.

Can Silence Be Misleading in Australian Law – FAQ

The following frequently asked questions address common issues that arise in practice when considering whether silence or non-disclosure may amount to misleading or deceptive conduct.

Can silence be misleading or deceptive conduct in Australia?

Yes. Silence can be misleading if, in context, it creates or allows a false impression to continue. Australian courts assess conduct as a whole, including what is not said. If a reasonable person would be misled by the omission, it may constitute a breach of section 18 of the ACL.

Is there a legal duty to disclose information in Australia?

Generally, there is no broad duty to disclose in commercial dealings. However, silence can still be unlawful if it results in a misleading overall impression. The key issue is not the duty to speak, but whether the conduct misleads in context.

When does non-disclosure become misleading conduct?

Non-disclosure becomes misleading when it creates or maintains a false assumption. This commonly occurs where one party knows the other is mistaken and fails to correct it, or where partial information is given without important qualifications.

Can a true statement still be misleading in Australian law?

Yes. Even if a statement is factually correct, it can still be misleading if it creates a false overall impression. This often arises in “half-truth” situations where important information is omitted.

Does failing to correct a misunderstanding breach the law?

It can. If you are aware that another party is relying on a mistaken assumption and your conduct contributes to that misunderstanding, failing to correct it may amount to misleading or deceptive conduct.

Are disclaimers enough to avoid misleading conduct claims?

Not always. Disclaimers must be clear and prominent. If the overall impression of the conduct is still misleading, a disclaimer will not fix the issue.

What happens if I breach misleading or deceptive conduct laws?

You may be required to compensate the other party for loss suffered. Courts can also void or vary contracts, order refunds, or impose other remedies. In some cases, regulators like the ACCC may take enforcement action.

Do I need to prove intention to mislead?

No. Intention is not required. The law focuses on the effect of the conduct, not what the person intended. Even honest or accidental silence can be misleading if it creates a false impression.

Does the other party need to prove they relied on the silence?

For a private claim for damages, usually yes in substance: the claimant must prove the misleading conduct caused the loss, and that will often involve showing reliance on the impression created by the conduct. But the real legal question is causation, not the mere use of the word “reliance”, and the position may differ depending on the remedy sought.

Can misleading silence affect contracts?

Yes. A contract entered into due to misleading silence may be set aside, varied, or give rise to damages. The outcome depends on how the silence affected the decision to enter the agreement.