Case: Fleetman Pty Ltd v Cairns Pty Ltd [2005] FCAFC 80
Outcome: cited
Section 52 of the Act provides that a corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Proceedings before this Court involving s 52 claims are not infrequent and feature widely varying factual scenarios. A number of principles should be kept in mind in considering claims in the context of s 52. These include the following: 1. Section 52 of the Act requires that the relevant corporation engage in conduct that is misleading or deceptive. Section 4(2)(a) of the Act provides that: a reference to engaging in conduct shall be read as a reference to doing or refusing to do any act, including the making of, or the giving effect to a provision of, a contract or arrangement, the arriving at, or the giving effect to a provision of, an understanding or the requiring of the giving of, or the giving of, a covenant. "Conduct" is not co-extensive with "representation" in s 52 (Lockhart and Gummow JJ in Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 at 504, Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60 ; (2004) 218 CLR 592 per Gleeson CJ, Hayne and Heydon JJ at 603, McHugh J at 622) however engaging in conduct does encompass making representations (cf McGrath; in the matter of Pan Pharmaceuticals Ltd (in liq) v Australian Naturalcare Products Pty Ltd [2008] FCAFC 2 at [150] ). 2. Where a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive, it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court the nature of the alleged conduct and the circumstances which rendered the conduct misleading: McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318 (cf for example, Lahoud v Lahoud [2006] NSWCA 169 at [91] , Yang v American International Assurance Co (Australia) Ltd [2008] FCA 39 at [89] ). 3. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances: Watson 49 NSWLR 315 at 318 (cf for example Christofidellis v Zdrilic [1999] FCA 39 , Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 6) (2007) 63 ACLR 1 at 107, Yang FCA 39 at [89]). 4. The essential characteristic of misleading or deceptive conduct is that it contains or conveys a meaning which is false ( Global Sportsman Ltd v Mirror Newspapers Pty Ltd [1984] FCA 180 ; (1984) 2 FCR 82 at 88). 5. There will be no contravention unless error or misconception results from the conduct of the corporation, and not from other circumstances for which the corporation is not responsible ( Equity Access Pty Ltd v Westpac Banking Corporation [1989] FCA 506 ; (1990) ATPR 40-994 at 50,950; Miller's Annotated Trade Practices Act (29th ed) 1.51.5). 6. Whether or not conduct is misleading or deceptive is a question of fact to be decided by considering what is said and done against the background of all surrounding circumstances ( Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202). 7. The words likely to mislead or deceive add little to s 52; at most they make it clear that it is unnecessary to prove that the conduct in question actually deceived or misled anyone (Gibbs CJ in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44 ; (1982) 149 CLR 191 at 198). Conduct will be likely to mislead or deceive if there is a real or not remote chance or possibility of misleading or deceiving, regardless of whether it is more than 50% ( Parkdale Custom Built Furniture Pty Ltd [1982] HCA 44 ; 149 CLR 191 at [6] , [15], Equity Access Pty Ltd ATPR 40-994 at 50,950, Global Sportsman Pty Ltd [1984] FCA 180 ; 2 FCR 82 , McHugh J in Butcher [2004] HCA 60 ; 218 CLR 592 at 626). 8. Silence, or failure to disclose information, can fall within the gamut of misleading or deceptive conduct in the sense that having regard to all the relevant circumstances, it constitutes conduct that has been misleading or deceptive or that is likely to mislead or deceive ( Demagogue Pty Ltd v Ramensky [1992] FCA 557 ; (1992) 39 FCR 31 at 32, 41; Fleetman Pty Ltd v Cairns Pty Ltd [2005] FCAFC 80 at [1] - [2] ). 9. The conduct of a corporation must be viewed as a whole. It would be wrong to select some words or act which, alone, would be likely to mislead if those words or acts, when viewed in their context, were not capable of misleading (Gibbs CJ in Parkdale Custom Built Furniture Pty Ltd [1982] HCA 44 ; 149 CLR 191 at 199). 10. As a general rule intention (or lack of intention) to mislead or deceive is not a necessary element of conduct proscribed by s 52 ( Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 228). The liability imposed by s 52 is unrelated to fault (Gibbs CJ in Parkdale Custom Built Furniture Pty Ltd [1982] HCA 44 ; 149 CLR 191 at 197). 11. The court must decide objectively whether the conduct is misleading or deceptive or likely to mislead or deceive, and that evidence that members of the public have actually been misled is not conclusive, although it can be very persuasive (Gibbs CJ in Parkdale Custom Built Furniture Pty Ltd [1982] HCA 44 ; 149 CLR 191 at 198-199, McWilliam's Wines Pty Ltd v McDonald's System of Australia [1980] FCA 159 ; (1980) 33 ALR 394 per Smithers J at 399 and Fisher J at 414, Equity Access Pty Ltd ATPR 40-994 at 50,950). 234 It may be that the first respondent would anticipate that, if it had disclosed in the Ray White Information Memorandum that management reports existed, then Mr Tracy could ask for those management reports if he so wished. However that is not material. If the failure of the first respondent to produce the farm manager reports constituted conduct which was misleading or deceptive within the meaning of s 52, it is not to the point that Mr Tracy could have asked if such reports existed, and then whether he could have copies of them. (cf Fleetman Pty Ltd FCAFC 80 at [17]). The obligation to produce the reports would have been on the first respondent. 235 However as I have identified, the real issue in relation to these claims concerns the disclosure of information described in paras 17A(b)(i)-(iii) of the Further Amended Statement of Claim. Two initial questions arise, namely whether the first respondent was under an obligation to disclose the information in paras 17A(2)(i)-(iii), and whether it did disclose that information. Did the circumstances give rise to an obligation in the respondents to disclose this information to the applicants? 236 In my view it is clear that, in the circumstances, the first respondent was under an obligation to disclose to the applicants that the Nova and Ellenor fruit crops on the land was significantly affected by the fruit disease EBS and that the Murcott fruit crop on the land was affected by the fruit disease EBS. That these crops were so affected is clear from the evidence of Mr Owen-Turner and Mr Papacek, and not in dispute.