Belle Gibson: Summary of Director of Consumer Affairs Victoria v Gibson [2017] FCA 240

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Belle Gibson stated she suffered from brain cancer, that she had undergone radiotherapy and chemotherapy, and had instead turned to alternative therapy and nutrition to heal her. She represented that sales made by her company, through her app, and book would go to charitable institutions and families in need. This was done to secure financial and personal benefits for herself and her company. However, what is malingering (feigning illness to gain a personal benefit) and what could be a genuine illness is difficult to determine. Should a court be able to make this determination and penalise a malingerer?

Facts

Belle Gibson made $280,000 over a 2-year period from her Apple smart phone app, $28,000 over a 3-year period from her Android smart phone app, and received $132,000 as an advance for her book. The average price for a “social media influencer” to promote an item is $300, a top earner will charge $800 (http://www.adweek.com/digital/what-is-the-real-cost-of-instagram-influence-infographics/), and, other celebrities can earn more then $75,000 dollars for a single post on Instagram (http://www.economist.com/blogs/graphicdetail/2016/10/daily-chart-9). The law, as shown below, does regulate these social media claims. Additionally, Belle Gibson did not defend the proceeding, nor participate in it. As such, it was a trial of Belle Gibson: the Brand, as opposed to Belle Gibson: the Person. A large amount of the evidence submitted to the court came from media sources as opposed to direct testimony from Bella Gibson. Media reports which by their nature are second-hand, and are not as reliable. Justice Mortimer attempted to sort reliable evidence from this second-hand, less reliable evidence. However, to come to a decision, Justice Mortimer had to work with the evidence at hand. This lessens the precedential value of the case.

Charges

Belle Gibson and her company (Belle Gibson Pty Ltd.) were found to have contravened ss 18, and 21 of the Australian Consumer Law Fair Trading Act (Vic) (ACL (Vic)) and the Australian Consumer Law (ACL). Her conduct being so intertwined with her company meant that both Belle Gibson and her company had accessorial liability for the conduct contravening s 18, within the terms of s 216(4) of the ACL and ss 224(1)(c)-(e) and 246(1)(b) of the ACL (Vic). However, Justice Mortimer felt she could not make a finding regarding s 29 of the ACL and ACL (Vic).

It is important to note that s 8 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) adopts the ACLwhich is contained in Schedule 2 of the Competition and Consumer Act 2010 (Cth), as a law of the Victorian jurisdiction.

The claims made by the Director of Consumer Affairs Victoria (Director) can be separated into two broad categories. Representations made by Belle Gibson regarding her health, and representations of the charitable donations made by Belle Gibson or her company.

For the former, the Director alleged that Belle Gibson represented that:

(1) She had brain cancer; and/or

(2) She had a reasonable basis to believe that she had brain cancer; and/or

(3) She had conventional medical treatment for her brain cancer.

For the second category, the Director alleged that Belle Gibson or her company represented that:

(1) A portion of sales revenue from the sale of her app would be donated to charities

(2) A large part of company earnings is donated to charities and organisations

(3) Proceeds from the sale of tickets for the event launching her app would be donated to charities

(4) For a specific week, all proceeds from app sales would be donated to the Schwarz family

(5) All proceeds from app sales between 11 May 2014 and 18 May 2014 would be donated to charities in connection with a Mother’s Day fundraising event.

Findings: s 18

Justice Mortimer found a breach of ACL and ACL (Vic) s 18 for each of the three contentions made by the Director regarding Belle Gibson’s health. The claims made by Belle Gibson and her company through social media regarding their charitable donations were also found to be representations, under ACL and ACL (Vic) s 4, that constituted misleading or deceptive conduct for the purposes of s 18, as the charitable donations of sales from the Whole Pantry app and from company earnings were never made or made later and at a fraction of what was represented. Further representations regarding donations through the purchase of “virtual tickets” to the Whole Pantry app launch, donations of app sales for a week to the Schwarz family, and for a Mother’s day fundraiser, which were never made, were also found to be in breach of s 18.

Since the conduct engaged in by Belle Gibson was within the scope of her actual or apparent authority as director of her company, her conduct is taken to have been the conduct of her company under s 196(2) of the Australian Consumer Law and Fair Trading Act 2012 (Vic), and s 139B(2) of the Competition and Consumer Act 2010 (Cth). In addition to this, Belle Gibson’s conduct was ‘so intertwined’ with her company, that both were found to have accessorial liability for each other’s contravention of s 18, within s 216(4) of the Australian Consumer Law and Fair Trading Act 2012 (Vic), and s 224(1)(c)-(e) and 246(1)(b) of the ACL (Vic).

The question of whether Belle Gibson genuinely believed she had brain cancer was considered by Justice Mortimer as it may be relevant in how the Court determines the appropriate penalty. Interestingly, Justice Mortimer was not convinced that Belle Gibson had no genuine belief she had brain cancer. This was distinguished from the finding that Belle Gibson possessed no rational or reasonable basis for representing she had brain cancer. Justice Mortimer states that a lack of genuine belief would indicate that ‘Ms. Gibson concocted a ruse form the start, in order to deceive consumers into purchasing her products, knowing that she was doing so on an entirely falsified basis.’ Justice Mortimer raised the possibility that Belle Gibson could be suffering from a series of delusions regarding her health, and a court would need substantial and persuasive evidence to find that a person had no genuine belief regarding possibly false representations. The ability of a court to do so and the question of whether a court should do so are serious questions that cannot be addressed here.

Findings: s 29

The Director raised three issues under s 29 of the ACL and ACL (Vic) which prohibits false or misleading representations about goods or services. First, Belle Gibson made a false or misleading representation that purports to be a testimonial by a person (Ms. Gibson) relating to goods (s 29(1)(e)). Second, a false or misleading representation was made concerning a testimonial by any person (Ms. Gibson) relating to goods (s 29(1)(f)). Third, a false or misleading representation was made that goods have performance characteristics, uses or benefits (i.e. the information concerning wellness successfully used by Ms. Gibson, as a person diagnosed with terminal brain cancer who had rejection conventional treatment to prolong and improve her quality of life) (s 29(1)(g)).

Justice Mortimer understood the definition of “testimonial” with reference to the Macquarie Dictionary, and a number of cases (e.g. Australian Competition and Consumer Commission v P & N Pty Ltd [2014] FCA 6). The definition was understood to mean ‘a writing certifying to a person’s character, conduct or qualifications, or to a thing’s value, excellence, etc.’ Looking at Belle Gibson’s app, and her books, Justice Mortimer did not find ss 29(1)(e) and 29(1)(f) were contravened as Belle Gibson’s representations did not constitute testimonials. Furthermore, Justice Mortimer also found no contravention of s 29(1)(g) on the basis that (1) there is a high bar for showing that that specific claims that diet, health, exercise and wellness helped to cure or stabilize cancer were false or misleading and, (2) the court was not the best body to analyse the validity of such claims. This would be better left to scientific and medical bodies.

Finding: s 21

The Director also alleged that Belle Gibson breached the statutory prohibition against unconscionable conduct under ACL and ACL (Vic) s 21, since she took no steps to withdraw her claims or stop sales when she was alerted to the fact that she did not possess cancer, and even assured her publisher that she did in fact have cancer. The evidence relied on were communications to her publisher and statements made in media training with her publisher. However, as discussed above, Justice Mortimer found that the evidence was insufficient to show that Belle Gibson had no genuine belief after her testing that she had cancer. Her honour stated that there was a possibility that Belle Gibson was under some kind of delusion that she had cancer or had other psychiatric or psychological issues, and thus there was insufficient evidence to show that she was acting unconscionably. Hence demonstrating that there is an extremely high bar for showing unconscionable conduct under s 21 to the exclusion of other possibilities for conduct of the kind engaged by Belle Gibson.

Nevertheless, Justice Mortimer found that the representations made regarding her company’s charitable donations did constitute unconscionable conduct and hence contravened s 21. Her Honour noted that these representations were unconscionable as they were deliberately made to market Belle Gibson and her company’s image by playing on the empathy and generosity of the community.

Take Home Message

What can we take away from this case? Firstly, Belle Gibson’s lack of participation devalues both the court’s result and the entire process. It is likely the result would have been the same had she participated. However, as she did not, the precedential value of the conclusions made are not as strong as they could be. Secondly, it is clear that the court can and will police social media statements which contain dishonest or misleading representations. This is particularly so when the statements make false, misleading or unconscionable claims which can be quantified, measured or evaluated through an examination of an individual’s conduct, such as the claim that the company made charitable donations which was easily disproved by showing evidence to the contrary. However, the court will not look at the efficacy of claims, nor will they consider whether claims relating to issues outside its purview are unconscionable or misleading or deceptive (e.g. claims that relate to scientific or medical issues). Thirdly, the definition of “testimonial” in s ACL and ACL (Vic) s 29 sets a high bar. Hence, an applicant may struggle to show that the actions of a “social media influencer” constitute a testimonial. Lastly, the court is reluctant to decide issues which involves consideration of psychiatric or psychological matters without the presence of solid evidence.

What is and what should be the role of the court in determining whether an individual is a malingerer or someone suffering a genuine illness? In addressing this issue, Justice Mortimer came to the conclusion that a court with access to medical advice can and should determine whether an individual is a malingerer or, an individual who suffers a genuine illness. A malingerer who makes false and unconscionable representations to the public should then be penalized. Her Honour left the question regarding “reasonable beliefs” possessed by an individual for a court with access to psychiatric and psychological expertise.

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