Case: Gluckstein v Barnes [1900] AC 240
Outcome: discussed
course here, I must consider the impression that the words of the brochure made upon each of the applicants, in light of the context, including the fact that there would be a contract sent to them or their solicitor. And, in the ordinary course it could be expected that a solicitor would act, although in Ms Tan-Bounkeua's case that did not eventuate. But a solicitor is not a commercial advisor. Having set out to assure people that the guaranteed return would be earned, it ill lies in the mouth of Austcorp to say that they should not have believed that when they entered into the contract because their solicitors should have disabused them of those impressions. I reject that submission. It is reminiscent of Lord Macnaghten's characterisation of a similar argument in Gluckstein v Barnes [1900] AC 240 at 251-252 where he said: "But then," says Mr. Gluckstein, "there is something in the prospectus about 'interim investments,' and if you had only distrusted us properly and read the prospectus with the caution with which all prospectuses ought to be read, and sifted the matter to the bottom, you might have found a clue to our meaning. You might have discovered that what we call 'interim investments' was really the abatement in price effected by purchasing charges on the property at a discount." My Lords, I decline altogether to take any notice of such an argument. I think the statement in the prospectus as to the price of the property was deliberately intended to mislead the shareholders and to conceal the truth from them." The norm of conduct provided by s 52 is intended to require corporations to adhere to an appropriate level of behaviour in trade or commerce. Austcorp was prohibited from engaging in conduct which was misleading or deceptive or likely to mislead in this trade or commerce, namely the sale of apartments in the resort. The brochure was not a mere puff. The statements about the resort, the quality of the investment and the prospective earnings to be achieved from it were advanced as serious business propositions. Moreover, it is difficult to see how the brochure could have been read in any other way. If, on examination, the nature of the project or the returns promised in the brochure were overstated or not supported, the investor would not proceed. He or she would then mistrust the promoters. I have had regard to Austcorp's arguments in assessing each applicant's evidence. Of course, each transaction was important to the individual applicants. But Austcorp was asserting that other people (solicitors) or other factors (the full contractual documentation and, where relevant, the disclosure statement when read and properly understood) would undo completely the very state of mind its marketing activities had induced by conveying the representations complained of so as to induce the applicants to proceed. It is not an attractive argument. Marketing messages are simple and powerful. While legal fine print may be contractually decisive, it is usually far less interesting to a lay person. The six lucid pages of the brochure (and the equally lucid other promotional material) had no fine print or qualifications. Austcorp was using the same forensic tactic as Mr Gluckstein did a century ago it was asking the applicants to read, in court in 2008, with distrust and cynicism what it wanted them to read, believe and act on in late 1999 and 2000. Lord Macnaghten's rejection of that approach remains entirely apposite: Gluckstein [1900] AC at 251-252. In effect, Austcorp in its defence asserted that it should not have been taken at its word in the representations it made to sell the apartments to the applicants, including Ms Tan-Bounkeua. Austcorp's argument is no sounder than the unsuccessful promoter's in Gluckstein [1900] AC at 251-252. The argument must fail. A person in Ms Tan-Bounkeua's position was entitled to assume, as I find she was, that those who put forward the promotional material she received knew what they were saying in it and were telling her that an investment in an apartment in the resort was a sound one with the characteristics in the representations complained of. Of course, she would realise that the contract, when she received it, was a complex legal document. But there was nothing to alert her that the contract propounded a relationship with the significant differences between the representations complained of and her legal rights if she signed. Ordinarily a solicitor would explain the effect of the contract to his or her client. This might have led to Ms Tan-Bounkeua being informed of the true position before she entered into the contract and lease, although, on the evidence before me, some solicitors did not highlight or inform their clients of the existence or effect of cl 20.9. The question remains why that true position was not in any of the promotional material.