Case: HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54 ; (2004) 217 CLR 640
Outcome: followed
relies upon two representations. The first is that Pan would so conduct its manufacturing processes as to comply with the Code called the Quality Assurance representation. This representation is alleged to have been made by the 2002 Manufacturing Agreement in the light of previous dealings between the parties. Contractual promises can be the foundation of misleading and deceptive conduct for the purposes of s 52 in some circumstances ( HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54 ; (2004) 217 CLR 640 at [13] ). Whether these are such circumstances is best judged in a wider context. It is also alleged 'further or in the alternative' that Pan represented to Naturalcare that Pan would continue to supply all, or most of, Naturalcare's requirements as to therapeutic goods or, alternatively, Naturalcare's requirements as to soft gel goods and all or most of Naturalcare's requirements as to other therapeutic goods called the Supply representation. That alleged representation is based upon particular statements in various discussions between Schadel and Selim including that Pan was the largest manufacturer of health care products in Australia and was compliant with the requirements of the TGA and, accordingly, that the risk associated with Naturalcare's reliance and dependence on Pan continuing to supply Naturalcare with those goods customarily purchased by it from Pan at the quantities customarily acquired was negligible or immaterial; and that Pan was ready, willing and able to continue to supply Naturalcare with all goods it customarily acquired from Pan at those quantities it customarily obtained from Pan. It is submitted on behalf of Naturalcare that each of the Quality Assurance representation and the Supply representation was with respect to a future matter: in the one case, future conduct of the manufacturing process; and the other, the future ability to supply therapeutic goods, each broadly concerned with the continuing supply of therapeutic goods. It is contended that Pan has not established reasonable grounds for making either representation, with the result that the making of each of them was misleading and deceptive, or likely to mislead and deceive. It is further contended that Naturalcare relied upon the misleading conduct by continuing to conduct business on the basis that the bulk of the products it was to sell would be acquired from Pan and did not reorganise its business. This left it vulnerable to the sudden cessation of supply which occurred upon suspension of Pan's licence, leading to losses due to the disruption to its business. The question is whether entering into the Manufacturing Agreement in 2002 in the light of the previous dealings amounted to a representation or representations as pleaded and not whether a contractual promise was made. Reference has already been made to the judgment of Gleeson CJ, McHugh, Gummow, Kirby and Heydon JJ in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd , dealing with the capacity of contractual promises to found representations for the purposes of s 52, which in turn refers to the judgment of Lockhart and Gummow JJ in Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 at 503 506 (see also Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217 at 233 241). A practical example of the interplay between contractual promises and misleading or deceptive conduct is seen in the decision of Finn J in Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151. Nonetheless, some caution needs to be exercised in too readily equating the two ( Effem Foods Pty Ltd (t/as Uncle Ben's of Australia) v Lake Cumbeline Pty Ltd [1999] HCA 15 ; (1999) 161 ALR 599 per Gleeson CJ, Gaudron, Kirby and Hayne JJ at [12] and Callinan J at [60]; Wright v TNT Management Pty Ltd (1988) 15 NSWLR 679; and McWilliam's Wines Pty Ltd v LS Booth Wine Transport Pty Ltd (1992) 25 NSWLR 723).