Case: Sykes v Reserve Bank of Australia (1998) 88 FCR 511
Outcome: cited
Section 51A does not provide an independent cause of action separate from s 52 or other sections in Part V of the Act ( Phoenix Court Pty Ltd v Melbourne Central Pty Ltd (1997) ATPR 46-179 at 54,432, cf Sykes v Reserve Bank of Australia (1998) 88 FCR 511 at 513-514). Rather, s 51A provides, in summary, that where a corporation makes a representation with respect to any future matter and it does not have reasonable grounds for making the representation, the representation shall be taken to be misleading (s 51A(1)). Section 51A in that respect is a "subset of section 52": Phoenix Court Pty Ltd (1997) ATPR 46-179 , Sykes 88 FCR 511 at 514, Quinlivan v Australian Competition &amp; Consumer Commission [2004] FCAFC 175 at [5] ). I shall consider s 51A in further detail later in this judgment in the context of the future representations alleged by the applicants. 277 It has been suggested that, because the deeming within the meaning of s 51A(2) takes effect unless the corporation adduces some evidence to the contrary, this does not mean that the onus of proof (which otherwise lies with the applicant) is reversed, but merely requires the corporation to go into evidence ( ACCC v Universal Sports Challenge Ltd [2002] FCA 1276 at [46] ). The weight of authority however is that the person making the representation can only avoid the deeming in s 51A(2) by establishing on the usual balance of probabilities that there were reasonable grounds for making the representation: Lewarne v Momentum Productions Pty Ltd [2007] FCA 1136 at [82] , Ting [1993] FCA 524 ; 118 ALR 543 at 552, Bowler v Hilda Pty Ltd (1998) 153 ALR 95 at 108 and 117, Sykes 88 FCR 511 at 513-514, Adelaide Petroleum NL &amp; Ors v Poseidon Limited &amp; Ors (1988) 10 ATPR 40-901 at 49,700, Phoenix Court Pty Ltd (1997) ATPR 46-179 (and cf other cases in support of this proposition listed at Miller , 29th ed para 1.51A.37). 413 Considering later events which did occur is of some relevance although clearly not conclusive as to whether the respondents had reasonable grounds to make the future representations. Nonetheless while examining evidence of later events may throw light upon the overall probabilities it remains vital to guard against hindsight illusion (cf Mason P in City of Botany Council v Jazabas Pty Limited [2001] NSWCA 94 at [83] ). There is no necessary connection between the reasonable grounds and the subsequent circumstances which resulted in the predicted state of affairs not occurring ( Sykes 88 FCR 511 at 513 per Heerey J). 415 There is no doubt that historical performance can be a factor relevant to the reasonableness of a forecast of future performance (see, for example, ACCC v Top Snack Foods Pty Ltd [1999] FCA 752 , ACCC v Telstra Corporation Ltd [2007] 244 ALR 470). However in determining whether a person had reasonable grounds for expressing an opinion or making a prediction as to a future matter, is necessary to judge the matter as at the date of the representation (see Lyndel Nominees Pty Ltd v Mobil Oil Australia Ltd (1997) 37 IPR 599 at 625, Sykes 88 FCR 511 at 513, City of Botany Council [2001] NSWCA 94 at [83] ). Historical performance is one factor, although it is an important factor. In paras 19(e) and (f) the applicants claim that the respondents had in their possession Packing Shed data computer records which disclosed the matters referred to in paras 19(a), (b) and (c). I have already considered the claims in paras 19(a), (b) and (c) and found that the respondents had reason to distrust the information in the Packing Shed records to which the applicants refer. Further, I do not consider that the applicants have substantiated the "true position" with respect to, inter alia , the Packing Shed records as claimed by the applicants in paras 19(d)-(g). I shall return to this issue later in my judgment. 418 To paraphrase Heerey J in Sykes v Reserve Bank of Australia (1998) 88 FCR 511 at 513, the task of the first respondent is therefore to show: &#9679; Some facts or circumstances &#9679; Existing at the time of the representation &#9679; On which the first respondent in fact relied &#9679; Which are objectively reasonable and &#9679; Which support the representation made. 419 In considering the facts and circumstances on which the first respondent relied in making the representations as to future economic performance of the orchards, it is in my view critical to consider the process in which the first respondent engaged in compiling the 2005 Sunstate Budget. 420 First, Mr Strahley gave evidence that the budget model upon which the 2005 Sunstate Budget was based was developed in 2001 in conjunction with Dr Matt Shaffer, a specialist with skills in financial modelling who was employed by the US parent company of the first respondent. The budget also provided for revenue and cost on a per tree basis. The first respondent had utilised the template since 2001 in preparation of the yearly budgets (Strahley affidavit sworn 12 July 2006 at [10], [225]). 461 As I noted earlier in this judgment, the packout rate realised by the first respondent for lemons in the 2005 Crop Year (81.2%) exceeded the forecast packout rate. I note this fact as contributing to the overall probability that the first respondent made its representation as to the performance of the orchards in 2005 on reasonable grounds (cf Sykes 88 FCR 511 , City of Botany Bay Council [2001] NSWCA 94).