Case: Yorke v Lucas [1985] HCA 65 ; (1985) 158 CLR 661
Outcome: applied
High Court has noted that s 75B(1)(a) requires that a person said to be involved in a contravention of s 52 is shown to have actual knowledge of the falsity of the representations; see Yorke v Lucas [1985] HCA 65 ; (1985) 158 CLR 661 at 666-69 per Mason ACJ, Wilson, Deane and Dawson JJ. Their Honours went on to say (at 670) that: There can be no question that a person cannot be knowingly concerned in a contravention unless he has knowledge of the essential facts constituting the contravention ... a person could only properly be said to be a "party to" a contravention if his participation was in the context of knowledge of the essential facts constituting the particular contravention in question. Whilst it is not a contradiction in terms to speak of a person being "party to" something of which he is unaware, some indication is needed to convey such a meaning. There is nothing in the paragraph itself which would point to any conclusion other than that the words "party to" are sued to refer to a participant in the nature of an accessory. Moreover, the wider context of the whole section leads to the same conclusion. We have already indicated why para. (a) requires knowledge. Paragraph (b), which speaks of inducing a contravention by threats, promises or otherwise, and par. (d) which speaks of conspiring with others to effect a contravention, both clearly require intent based upon knowledge ... In our view the proper construction of par. (c) requires a party to a contravention to be an intentional participate, the necessary intent being based upon knowledge of the essential elements of the contravention. The Initial Representations were made in documents provided by the second respondent and others to the first applicant. There is no evidence to show the first respondent prepared or authorised these documents. The Initial Representations were also made during meetings which the first respondent did not attend. There is no evidence to suggest that the first respondent directed or knew what was said at these meetings. No liability on the part of the first respondent under s 75B of the Act arises in relation to these aspects of the Initial Representations. The first respondent attended a meeting with the first applicant on 1 February 2004. None of the Initial Representations were made during this meeting. The first respondent also attended a meeting of "EVP managers and partners" on 3 April 2004. Initial Representation (a) was made during the April 2004 meeting. The evidence, in particular that of Trudee Maxine Mashlan, shows that EVP Holdings and EVP Recruitment at that time were in what can best be described as a precarious financial position and at worst were a short step from insolvency. The first respondent was aware of these facts which rendered the representation that the group has a successful business model and history misleading and deceptive. Accordingly, the first respondent is liable under s 75B of the Act with respect to representation (a) of the Initial Representations. Section 82 of the Act requires the first applicant to have suffered loss caused by the first respondent's conduct in order to receive compensation for loss or damage.