Case: Quinlivan v Australian Competition and Consumer Commission [2004] FCAFC 175
Outcome: applied
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. 275 The "future representations" are the subject of paras 12(a) and (b), 13, 14 (b) and (c), 15, 16 and 17 Further Amended Statement of Claim. For the respondents, s 51A is particularly significant because although s 51A does not provide an independent cause of action separate from ss 52 or 53A, and nor does it define a norm of conduct, if the facts demonstrate that the first respondent has made the representations alleged, the effect of s 51A is that the representation shall be taken to be misleading unless the first respondent had reasonable grounds for making the relevant representation . Conversely if the first respondent demonstrates that it had reasonable grounds for making the relevant future representations, it will not only be free from liability under s 51A but also from liability under s 52 of the Act. ( Ting v Blanche [1993] FCA 524 ; (1993) 118 ALR 543 at 552, Quinlivan FCAFC 175 at [6].) 607 The interplay of ss 51A and 75B was also considered by the Full Court in Quinlivan v Australian Competition and Consumer Commission [2004] FCAFC 175 where the Court said: Accordingly, where s 75B or s 80 accessorial liability is in issue in relation to a representation with respect to a future matter, the existence or otherwise of reasonable grounds will be relevant. If reasonable grounds exist, there will have been no contravention and thus no question of accessorial liability will arise. However, as against the accessorial respondent, the onus will be on the applicant to show the respondent had actual knowledge that &#8226; the representation was made and &#8226; it was misleading or &#8226; the corporation had no reasonable grounds for making it. (at [15]) 608 The respondents in this case submitted that para 20B Further Amended Statement of Claim did not adequately plead the essential elements of the cause of action, and did not allege: &#8226; actual knowledge by Mr Strahley of each alleged representation; &#8226; that he knew each representation was misleading; and &#8226; that he knew that the first respondent had no reasonable grounds for making the alleged representations as to future matters. 609 By way of example the respondents pointed to the allegation regarding the Most Likely Scenario, which the applicants in para 16 pleaded was created by Mr Breed, and submitted that the applicants did not plead that Mr Strahley had actual knowledge of such representations, or that they were misleading, or that there were no reasonable grounds for making the forecasts or predictions. 610 The applicants in response submitted as follows: The evidence of accessorial liability for the Second Respondent is as follows:- 1. Strahley caused the 2004 Valuation containing the false crop production figures to be sent to the Applicants; 2. Strahley sent the Applicants the 2005 Budget, Yield Summary.xls, Carton Yield Summary.xls, and Valuation Yield Summary.xls to the Applicants. The evidence of accessorial liability for the Third Respondent is as follows:- 1. Breed made the representations about the Most Likely Scenario and the oral representations made on 5 January 2005. 2. Breed sent the Applicants the Production Pricing Schedule Jan.05.xls 611 In my view the applicants have not properly pleaded the required elements of a s 75B claim against either Mr Strahley or Mr Breed regarding any of the representations in the Further Amended Statement of Claim. Paragraph 20B does not allege actual knowledge by either Mr Strahley or Mr Breed of each alleged representation, that either respondent new each representation was misleading, or that either respondent knew that the first respondent had no reasonable grounds for making the alleged representation as to future matters. The written submissions of the applicants with respect to s 75B constitute an attempt to replead their claims after the hearing has concluded, but in any event continue to fail to address the elements of s 75B as articulated in Yorke v Lucas and Quinlivan . I consider that even if I have erred in my findings that the representations of the first respondent as pleaded in the Further Amended Statement of Claim did not breach ss 51A or 52, the claims of the applicants against Mr Strahley and Mr Breed in respect of accessorial liability failed at the threshold.