What happened to fallen wellness entrepreneur Belle Gibson? Director of Consumer Affairs v Gibson [2017] FCA 240

Belle Gibson is the fallen wellness entrepreneur who had an app, website, and book. She claimed that she had been diagnosed with brain cancer in 2009, been given four months to live and had taken and then rejected conventional cancer treatments in favour of embarking on a quest to heal herself naturally. She also made representations about proceeds she would pass on to charities. The media began to make and report allegations against Ms Gibson in March 2015 and in June 2015 on the television program 60 Minutes she admitted that she did not have cancer or undergo conventional medical treatments. I wrote a blog post identifying the potential civil and criminal offences Ms Gibson may have committed and concluded it was likely no legal action would be taken against Ms Gibson. Subsequently, the Director of Consumer Affairs in Victoria commenced consumer law proceedings against Belle Gibson. In this blog post I outline the case against Belle Gibson and the decision of the Federal Court in the liability proceedings.

Liability proceedings - Director of Consumer Affairs v Gibson [2017] FCA 240

Background

The Director of Consumer Affairs Victoria (Director) commenced proceedings against Ms Gibson on 24 May 2016 alleging contraventions of s 18 (misleading or deceptive conduct), s 21 (unconscionable conduct in connection with goods and services) and s 29 (false or misleading representations about goods or services) of the Australian Consumer Law (contained in Schedule 2 to the Competition and Consumer Act 2010) and the Victorian Consumer Law equivalent provisions.

Ms Gibson had a book (The Whole Pantry), website, Facebook and Instagram accounts, and an Apple and Android App. On all these platforms as well as in media interviews she made numerous misrepresentations relating to having brain cancer and having conventional treatment before turning to natural methods of healing.

Ms Gibson also made a number of representations about proceeds to be donated to charities. In many instances no donations were made. Other charities did receive donations but only after long periods of time had passed, and after the lack of donation had been reported by the charity.

The contraventions were brought against Ms Gibson as well as her company Inkerman Road Nominees Pty Ltd. Ms Gibson did not defend or participate in proceedings. The liability hearing was held on 13 September 2016 and judgment was delivered on 15 March 2017.  

Outcome of liability proceedings

Justice Mortimer found all of the s 18 misleading and deceptive conduct contraventions were made out and some of the s21 unconscionable conduct contraventions were made out. None of the s29 false or misleading representations about goods or services contraventions were made out. Her Honour analysed the cancer and charity representations separately

Cancer and treatment representations

Justice Mortimer found there was no difficulty characterising Ms Gibson’s statements made across her social media accounts and in media interviews as making a representation that she had brain cancer, or a brain tumour and that members of the community would erroneously be lead to believe she was suffering from terminal brain cancer when this was never the case. The implied representation that Ms Gibson had a reasonable basis for believing she had a brain cancer was also made out, as she often described her chemotherapy and radiotherapy treatment, treatment she would not be receiving had she not been professionally diagnosed. Ms Gibson had offered various conflicting explanations including that her initial diagnosis was made in her home by a man who was not a medically qualified professional and then later that he cancer diagnosis occurred at St John of God Hospital in Perth. Justice Mortimer did not have to make a finding in the liability proceedings as to whether Ms Gibson genuinely believed she had brain cancer despite there being no rational or reasonable basis for her to do so,  but this may have to be determined in the penalty proceedings.

Her Honour was not persuaded Ms Gibson had acted unconscionably in making the cancer representations as there was not sufficient evidence to find on the balance of probabilities that Ms Gibson was acting against conscience in deliberately withholding information that she did not have cancer. Ms Gibson may have a psychological or psychiatric issue causing her to be under a delusion about having cancer which is a possibility her Honour considered reasonably open on the evidence.

The s 29 contraventions were not made out. The Director alleged contraventions were made under s 29(1)(e), s 29(1)(f) and s 29(1)(g). Both s 29(1)(e) and s 29(1)(f) require a testimonial to have been made relating to the goods. Ms Gibson’s representations could not be characterised as a testimonial given the term is understood to refer to customer testimonials. The s 29(1)(g) contravention was not made out as it required the Director to make submissions that the representations that diet, health, exercise and wellness could help cure or stabilise cancer were misleading. The Director led no such evidence.

Charity representations

Five categories of representations were considered by Justice Mortimer:

a. App sales donation

Ms Gibson represented on the Whole Pantry website and the description of the android app that a portion of all sales revenue from sales of the Whole Pantry app was being, or would, within a reasonable time be, donated to charities. The implication being that donations would be made reasonably promptly. A portion of all app sales was not donated to charity. The only donation from sales of the app was $2,790 made to the Bumi Sehat Foundation in July 2015 as part of a larger $5,000 donation made over a year after the event purporting to raise money for Bumi Sehat.

b. Company earnings donation

Ms Gibson stated in the introduction to The Whole Pantry book that a large part of everything the company earned is now donated to charities and organisations which support global health, and wellbeing, protect the environment and provide education to those who otherwise wouldn’t have the opportunity. The representation was false as a large part of what the company earned was not donated on a contemporaneous and continuous basis. The evidence disclosed only two donations referrable to the company’s earnings (the Bumi Sehat donation of $5,000 and a $4,823.53 donation to Vestal Water funding a filtration system for Kinfolk Café). A little under $10,000 was donated from the company’s earnings, on no view a large part of everything the company earned when in the relevant period the company received over $420,000 from sales of the app and boo

c. App launch event donation

In notifications on social media for the virtual launch of the Whole Pantry App Ms Gibson represented that proceeds of the sale of the virtual launch tickets would be donated to four charities (the Birthing Kit Foundation, One Girl, Asylum Seeker Resource Centre (ASRC), and TWP Families including the Schwarz Family). On the evidence before the court the ASRC, Birthing Kit Foundation and the Schwarz Family received no donations from Ms Gibson or her company. One Girl received $1,000 in March 2015, only after media had started to investigate Ms Gibson’s claims. Ms Gibson’s then partner donated $1,000 to the ASRC in April 2014 but there was no evidence linking this donation to the app launch event.

d. Schwarz family app sales donation

In November 2013 Ms Gibson stated on the healing_belle Instagram account that 100% of app sales for a week would be donated to the Schwarz family. The representation was false. There was no evidence before the court the Schwarz family received a cent from Ms Gibson. While Ms Gibson maintains she collected $800 in a jar she gave to the Schwarz family, there was no evidence to support this claim and Her Honour found the $800 donation was not made.

e. Mother’s Day fundraising

In May 2014 Ms Gibson stated in media and on the company’s Facebook page that app purchases between 11 May 2014 and 18 May 2014 go straight to the 2h Project and the Bumi Sehat Foundation. The company would donate an extra $1 for each person who purchased the app that week. No funds went straight to the two organisations. More than a year later Ms Gibson made a one off $5,000 donation to Bumi Sehat but there is no evidence these funds were relatable to the Mother’s Day sales.

Justice Mortimer found all five categories of representations constituted misleading and deceptive conduct. Ms Gibson’s marketing of herself and her company centred on the image of a successful and booming enterprise with a wholesale dedication to charitable giving. There were no reasonable grounds for these representations.

Section 21 unconscionable conduct was established. Her Honour inferred that Ms Gibson well knew the potential drawing power of the statements that a portion of sales made would go to charity. Her chosen pitch used groups, such as young girls, sick children and asylum seekers that would evoke sympathy because of their vulnerabilities. Ms Gibson secured a public profile, and financial and personal benefits by deliberately playing on the Australian community’s desire to help those less fortunate.  

The orders -  Director of Consumer Affairs Victoria v Gibson (No 2) [2017] FCA 366

Orders were determined on the papers at a later date after the Director had an opportunity to submit proposed orders and submissions regarding the orders and costs. The orders included an injunction preventing Ms Gibson from making claims that she had been diagnosed with brain cancer at any time prior to 24 May 2016, that she was given four months to live, and that she had taken and then rejected conventional cancer treatments in favour of embarking on a quest to heal herself naturally. Ms Gibson was ordered to pay $30,000 towards the Director’s costs. The matter was adjourned for consideration of penalties.

Summary and penalty proceedings

Ms Gibson was found to have contravened s 18 and s 21 of the Australian Consumer Law for her misleading and deceptive cancer representations and her misleading and deceptive and unconscionable charitable donation representations. An injunction is in place preventing her from continuing to make such representations. While the contraventions have been established, penalty proceedings are yet to occur. While Ms Gibson has not participated in the Federal Court proceedings to date, she may participate in penalty proceedings to offer mitigating evidence or even appeal the decision. The maximum penalty for false or misleading and unconscionable conduct is $220,000 for individuals and $1.1m for corporations. While each course of conduct will be considered separately, regard will also be had to the totality principle to ensure the total penalty is just and appropriate as a whole. It is difficult to predict what the total penalty will be, given the unique circumstances of Ms Gibson’s case, and uncertainty as to whether she will participate in penalty proceedings to offer mitigating evidence such as medical evidence of any psychological or psychiatric conditions she may have been suffering from at the relevant times.