Case: Taco Co of Australia Inc v Taco Bell Pty Ltd [1982] FCA 136 ; (1982) 42 ALR 177
Outcome: applied
Full Court of this Court revisited the decision in Yorke [1985] HCA 65 ; (1985) 158 CLR 661 and reviewed the previous decision of this Court as to the extent of the knowledge required to make a person " knowingly concerned " in a contravention: Medical Benefits Fund of Australia Ltd v Cassidy [2003] FCAFC 289 , 135 FCR 1. There in issue was s 12GD(1)(e) of the then Australian Securities and Investments Commission Act 1989 (Cth), a provision comparable to s 75B(1)(c) of the Trade Practices Act . The Court there heard two appeals, one in which the Medical Benefits Fund was the appellant; the other in which an advertising agency, Bevins, was the appellant. The primary judge accepted that Bevins did not subjectively appreciate that the advertisements involved were false, misleading or deceptive but found Bevins liable pursuant to s 12GD(1). This conclusion was reversed on appeal. Moore J reviewed the authorities on the analogous provision here in issue, s 75B , and concluded: [14] ... It follows, on his Honour's findings, that Bevins (through its officers and employees) was not aware of the second of the matters, as I earlier described them, constituting the contravening conduct of MBF. That is, while Bevins was aware of what the advertisements contained (necessarily so given that it created them) it was not aware that the advertisements might lead members of the public to believe that certain benefits would be enjoyed or rights conferred by taking out insurance with MBF. Accordingly, in my opinion, his Honour erred in concluding that Bevins was liable as an accessory under s 12GD(1). [15] I should add that, in my opinion, liability as an accessory (in circumstances where the contravening conduct of the principal was making false or misleading representations) does not depend on an affirmative answer to the question whether the alleged accessory knew the representations were false or misleading. All that would be necessary would be for the accessory to know of the matters that enabled the representations to be characterised in that way. ... Mansfield J agreed with Moore J. In a separate judgment, Stone J similarly concluded: [80] It is well established that neither knowledge nor intention is necessary for there to be a contravention of s 52 of the TPA or of s 12GA of the ASIC Act. It is sufficient (and necessary) that the conduct in question can be accurately described as "misleading or deceptive" or "likely to mislead or deceive". This misleading or deceptive character is a question of fact that must be decided in the context of all the surrounding circumstances; Taco Co of Australia Inc v Taco Bell Pty Ltd [1982] FCA 136 ; (1982) 42 ALR 177 at 202. That "fact" is an essential element of the contravention. It follows that to be liable as an accessory one must have knowledge of the misleading and deceptive character of the relevant conduct. ... [82] This is not to say that to be liable as an accessory to a strict liability breach of s 52 it is necessary to know that the conduct of the principal is unlawful, or indeed to have any knowledge of the provisions of the TPA or the ASIC Act. But it is necessary to know the essential elements of the contravention, by which I understand that one must know that which makes the conduct a contravention; in this case, its misleading and deceptive character. Only then can one form the intention to participate in conduct of that character. Liability of Directors and Joint Tortfeasors In this respect, it may be that there is a further distinction between passing off and s 52. For the purposes of passing off, it may be that deception must continue to the " point of sale ". Whether or not there is such a requirement in respect to the tort, s 52 does not impose any such constraint: Taco Co of Australia Inc v Taco Bell Pty Ltd [1982] FCA 136 ; (1982) 42 ALR 177. Deane and Fitzgerald JJ there observed: It is, in the circumstances, unnecessary that we form or express any concluded view on the question whether it is a principle of the law of passing-off that deception must continue, or be likely to continue, to the "point of sale". As a matter of principle and of logic, it is difficult to see why it should be. For the purposes of the present appeal, it suffices to say that, even if such a limitation should be recognized in the law of passing-off, we see no ground for importing it into the provisions of s 52 of the Act. In our view, it is sufficient to enliven s 52 that the conduct, in the circumstances, answers the statutory description, that is to say, that it is misleading or deceptive or is likely to mislead or deceive. It is unnecessary to go further and establish that any actual or potential consumer has taken or is likely to take any positive step in consequence of the misleading or deception. That is not to say that evidence of actual misleading or deception at the point of sale and of steps taken in consequence thereof is not likely to be both relevant and important on the question whether the relevant conduct in fact answers the statutory description and as to the relief, if any, which should be granted. In the circumstances of the present proceeding, it is considered that such disclaimers as were used are not sufficient to negate a conclusion that the conduct engaged in by the Bade Medical Institute which has been found to contravene s 52 remained " misleading or deceptive ". Even if, in limited instances, the " true position " may have emerged such that in a limited number of cases consumers may have realised that the Bade Medical Institute was " not associated with AMI Advanced Medical Institute ", its conduct remained misleading and deceptive and such as to occasion loss or damage to the Applicants. Although the evidence of Dr Beaini was that he was " insisting " upon a disclaimer being used, there is in any event considerable uncertainty as to when any disclaimer first appeared and how uniformly it was being used. Such further evidence as Dr Beaini did give in cross-examination only reinforced the conclusion that consumers were being misled. One exchange was as follows, when Dr Beaini was being asked questions as to his involvement in the preparation of a " business plan ": Did you prepare any business plan for Bade Medical Institute?---No. Never participated in the formulation of any business plan whatsoever?---No. You sure about that answer?---What do [sic] mean? Can you clarify what you mean by business plan? Well, did you prepare, or did you participate in the preparation of it, or were you consulted about ... MR AZZI: Objection, your Honour, that's irrelevant. HIS HONOUR: Will you wait until the question is put first? MR AZZI: Well, it says prepared, participated or consulted. MR GREEN: Well, any of those possibilities, Dr Beaini, in relation to the development and marketing of the Bade Medical Institute?---My involvement was basically getting the medical information out. There was an occasional issue where they would ask me my opinion. For example, they were getting some calls, people asking them if they were AMI and I said we should have it on our website that we're not. Because a lot of people wanted refunds and they were dissatisfied with AMI products. That was a joint agreement to have, "We are not AMI" on our website, so we wouldn't have to deal with that. My - and basically my role was to work with other products and expanding our product range, because we wanted to do something called Bade Online Pharmacy, which was going to sell different vitamins and insomnia products and lasers and Botox treatments and things like that. So they were the sort of business dealings that we had. But when any disclaimer was used and in what form of advertising remained unclear. It is concluded that the contraventions of ss 52 and 53 (d) of the Trade Practices Act have occasioned the Applicants " loss or damage ". The Applicants have suffered " loss or damage by conduct " that has contravened those provisions. In relation to passing off, the Applicants seek either damages or an account of profits. While it is a matter for an applicant to elect between these remedies, in the present proceeding it matters not which remedy is sought as the quantum to which the Applicants are entitled is the same.