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Unfulfilled Promissory Contractual Terms And Section 52 Of The Australian Trade Practices Act

Author: Weeliem Seah LLB (Hons), BComm, GDLP
Murdoch University School of Law
Issue: Volume 7, Number 3 (September 2000)

Contents

Unfulfilled Promissory Contractual Terms And Section 52 Of The Australian Trade Practices Act

    Disobey my own decisions, I deserve all your suspicion
    First itís yes and then itís no, I dilly dally down to duo
    But I got no secrets that I babble in my sleep,
    I wonít make promises to you that I canít keep

    Tim Finn, ĎStuff And Nonsenseí (1979)

    Introduction

  1. Section 52 of the Trade Practices Act 1974[1] is one of the most heavily litigated statutory provisions in Australian law. It provides a general prohibition against misleading or deceptive conduct in commercial activities. Although it is located in a part of the Act titled 'Consumer Protection', it is the interpretation given by Australian courts to the provision as extending beyond consumer protection[2] that makes it an extremely important consideration for contracting parties.[3] Whether breach of contract might also be breach of section 52 is a significant issue. The width of statutory remedies available for breach of section 52, itself a 'comprehensive provision of wide impact'[4] and expressed in 'the widest terms',[5] makes it an issue which can potentially render obsolete large parts of contract law.

  2. This article focuses on whether breaches of express promissory contractual terms can be said to be actionable under section 52 as misleading conduct.[6] Its thesis is that failure to adhere to promissory terms is arguably always breach of section 52. The basis of such an argument is the consideration that contractual promises are obligations which contracting parties have undertaken to fulfill, and to enter into a contractual undertaking and subsequently fail to adhere to it is misleading within the meaning of section 52. This article first outlines the relevant statutory provisions. It then briefly describes the two arguments innocent parties, faced with breach of a promissory contractual term, have made under section 52: (1) that the promise incorporated a misleading statement as to an existing state of affairs; and (2) that the promise constituted a representation with respect to a future matter which lacked reasonable grounds. The main part of this article focuses on whether an unfulfilled contractual promise itself - as opposed to a 'defect' in the promise - constitutes a breach of section 52.[7] It concludes that the argument, that an unfulfilled promissory contractual term is misleading per se, is an arguable one under Australian law.

    Statutory Regime

  3. Section 52(1) 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.
    It is located in Division 1 of Part V of the Act, which are titled 'Unfair Practices' and 'Consumer Protection' respectively. The operation of the section was described by Justice Fox of the Federal Court in Brown v The Jam Factory Pty Ltd:[8]
    Section 52 is a comprehensive provision of wide impact, which does not adopt the language of any common law cause of action. It does not purport to create liability at all; rather, it establishes a norm of conduct, failure to observe which has consequences provided for elsewhere in the same statute.[9]
    Contravention of section 52 is not an offence under the Act.[10] Its breach however, will render any person 'involved in a contravention'[11] liable to various remedies, including injunction,[12] corrective advertising[13] and damages[14] as well as to a variety of additional orders at the court's discretion.[15] Such discretion allows a court to make an order, among other things:

      1. declaring the whole or part of a contract void and if the court thinks fit, void ab initio;[16]
      2. varying a contract or arrangement in such a manner at it thinks fit;[17] and
      3. refusing to enforce any or all of the provisions of a contract;[18]

  4. The width and accessibility of the remedial provisions makes actions under section 52 attractive in contrast with the stricter common law remedies for breach of contract or for misrepresentation. For example: (1) damages may be awarded for conduct that would have constituted innocent misrepresentation at common law and in respect of which damages at common law would not lie; (2) provisions which would be void or unenforceable at common law can be the subject of specific performance;[19] and (3) common law principles such as the parol evidence rule and election are not applicable unless the court in its discretion chooses to apply them.[20] Further, because the remedies in Part VI extend liability to persons 'involved in a contravention',[21] relief can be awarded against third parties outside the contractual relationship, thereby sidestepping privity of contract.[22]

    Meaning of 'conduct'

  5. Section 52 proscribes 'engaging in conduct' that is misleading or deceptive or likely to have that effect. The Act defines 'engaging in conduct' as including:
    doing or refusing to do any act, including the making of, or the giving effect to a provision of, a contract or arrangement.[23]
    The making of a contractual promise will generally be held to be 'conduct' for the purposes of section 52.[24]

    'Misleading or deceptive'

  6. There is no definition in the Act as to the meaning of 'misleading or deceptive'. However, the case law has established that conduct will be misleading if there is a real or not remote chance[25] of it leading into error[26] those persons likely to be affected by the conduct.[27] The test as to whether conduct is misleading or deceptive is an objective one,[28] meaning that conduct can be misleading whether or not there was any dishonesty, negligence, fault or intention to mislead;[29] and since it is the tendency to mislead that is impugned, proof that someone was actually mislead is neither necessary nor conclusive.[30]

    Breach of an Implied Representation and Breach by Reference to Section 51A

  7. Innocent parties have primarily sought to establish a contravention of section 52 upon breach of contractual promises in two ways. The first is to argue that the contractual promise was accompanied by a misleading statement as to a state of affairs. The courts have regarded the making of a promise as at least incorporating a representation about the state of mind of the promisor:
    Many statements, for example, promises, predictions and opinions, do involve the state of mind of the maker of the statement at the time when the statement is made. Precisely the same principles control the operation of s 52(1) with respect to the making of such statements. A statement which involves the state of mind of the maker ordinarily conveys the meaning (expressly or by implication) that the maker of the statement had a particular state of mind when the statement was made and, commonly at least, that there was a basis for that state of mind. If the meaning contained in or conveyed by the statement is false in that or in any other respect, the making of the statement will have contravened s 52(1) of the Act.
    The non-fulfillment of a promise when the time for performance arrives does not of itself establish that the promisor did not intend to perform it when it was made or that the promisor's intention lacked any, or any adequate, foundation.[31]
    Similarly, it was said in James v Australian and New Zealand Banking Group Ltd [32] that:
    A statement relating to the future may contain an implied statement as to present or past fact. It may represent impliedly that the promisor has a present intention to make good the promise and it may represent impliedly that he has the means to do so... [Where] the meaning contained in or conveyed by the statement is false in that or in any other respect, there will have been a contravention of Section 52.[33]

  8. The principle is derived from common law, where a statement of future intention is said to have involved a representation of present fact as to the maker's intention.[34] So if the promisor had no intention, at the time of its making, to perform the promise, or perhaps if there was no adequate foundation supporting it, the conduct in making such a promise will be misleading or deceptive and in breach of section 52. The misleading conduct is the representation of an inaccurate state of affairs. It is to be noted that it is not the unfulfilled contractual promise but the misleading representation as to a state of affairs incorporated into that promise which is the basis of the claim under section 52.

  9. The second way that section 52 has been pleaded upon an unfulfilled contractual promise is by reference to section 51A. Section 51A provides that:

      1. For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.

      2. For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation.

    Under section 51A(1), if there are no reasonable grounds for making a representation as to a future matter, that representation is deemed to be misleading for the purposes Division 1 of Part V, which includes section 52. Pursuant to section 51A(2), the onus is on the maker of the statement to adduce evidence to show that there were reasonable grounds for making the representation. Where evidence as to the existence of such reasonable grounds is not adduced, the representation is deemed to be misleading, not relying, as in the first argument, on a finding that there was a misrepresentation of a past or existing fact.

  10. Whether or not contractual promises constitute representations with respect to future matters,[35] this approach, like actions based on misleading statements as to the promisor's state of mind, focuses on a defect in the promise, or in the representation underlying it, rather than its non-fulfillment, as constituting the misleading conduct.

    Unfulfilled Contractual Promise as Misleading Conduct

  11. The non-fulfillment of a contractual promise has not been definitively established by Australian courts as conduct itself being misleading within the meaning of section 52. It may appear curious that to promise to do something, and thereafter not do it, is not misleading. However, as mentioned, the focus of actions under section 52 on breach of promissory terms has been on the making of the contractual promise as being the relevant 'conduct'. At common law, it was said that:
    A statement that a fact exists now, or that it existed in the past, is either true or false at the time when it is made. But it is not the case with a promise or a prediction about the future. A prediction may come true or it may not. A promise to do something in the future may be kept or it may be broken. But neither the prediction nor the promise can be said to have been true or false at the time when it was made.[36]

  12. On such a basis, the rationale of the courts has been that apart from a lack of reasonable grounds or the existence of an inaccurate representation as to a state of affairs, such as the promisor's state of mind, the making of a promise cannot be said to be misleading at the time that it is made simply because it relates to a future event, in respect of which the promisor has assumed an obligation, and can neither be true nor false at that time.[37] And because the question of whether section 52 has been contravened must be considered at the time the conduct is undertaken, and not by subsequent events, the failure to keep a promise does not make the initial promise misleading or deceptive.[38] Consequently:
    If it be said that [the promisee]... was mislead into entering into the contract, then the breach is irrelevant, for that breach could have played no part in misleading him... the promisor's combined action could not be characterised as misleading or deceptive at the time the promisee was induced to accept the promise because the breach had not occurred at that stage.[39]
    Because the promise is regarded as the relevant 'conduct', its mere non-fulfillment has not been generally regarded as constituting a breach of section 52.

    Promise and breach as 'conduct'

  13. Notwithstanding that, subject to the propositions cited above, a promise cannot itself be misleading at the time at which it was made, it is submitted that there may still be an argument that the promise and its subsequent non-fulfillment is misleading. This approach is based on treating the promise and the breach as together constituting the conduct sought to be impugned under section 52.[40] If a promise and its subsequent breach are viewed together as the relevant conduct, it is arguable that such conduct is misleading. For example, in a contract to sell a car, A promises to sell to B the car if B pays $100, and after such payment A decides instead to refund B's money and sell the car to C for $200. In such a case, it is arguable that the conduct promising to do an act and thereafter not doing that act, in breach of the contractual obligation, is misleading in that it tends to lead the promisee into error, namely in error of the belief that A will sell the car to B on payment of $100. It is submitted that the conduct in promising to do something and thereafter not doing it is per se misleading, irrespective of whether A had the intention of keeping, or a reasonable basis for making, the promise since it is the conduct in making the promise and ultimately not fulfilling it that is said to be misleading, and not the conduct in making the promise alone.

  14. There is academic commentary in support of this view. As stated in The Law of Contract:
    If the respondent makes a contractual promise, the applicant may reasonably believe that it will be performed; when the promise is not performed, the applicant's belief is found to be erroneous, and it may fairly be said that the respondent's original promise, together with a subsequent repudiation thereof, is conduct which had lead the applicant into error. The essential question is the nature of the error into which the applicant has been led.[41]
    Because the approach suggested here treats the promise and the breach as the relevant 'conduct' for section 52, it avoids conflict with the truism that the statement of future conduct which is the subject of a promise cannot be said to be true or false at the time of its making. The relevant time of the conduct would be that from the promise to its subsequent non-fulfillment, and on the basis that the promise is not viewed independently of or in isolation from the breach, it would still be available to the innocent party to argue that reliance was placed on the promise and that the conduct culminating in breach of contract led that party into the error of believing that the promise would be fulfilled.

  15. However, it is because the approach disregards as relevant the promisor's intention, or a reasonable basis for it, that there has been some criticism of the approach. In Futuretronics International Pty Ltd v Gadzhis,[42] Justice Ormiston, speaking of section 51A, said that:
    One can understand that the section should not be treated as qualifying by implication the types of conduct which can be characterised as misleading or deceptive. It is another to say that the section does not show in what way a defendant can establish that a representation as to the future which is "taken to be misleading" does not amount to a contravention of s 52... for sub-s (2), by negative implication, says that, if a person adduces evidence that he had "reasonable grounds for making the representation" as to future conduct, then the representation shall no longer be taken to be misleading. If those who maintain that implied promise plus breach are sufficient to constitute misleading conduct are correct, then the question whether the promisor had reasonable grounds for making the representation would be irrelevant.[43]
    Similarly, Bonutto has stated that the approach would 'render Section 51A otiose, as the issue as to whether the promisor had reasonable grounds for making the promise becomes irrelevant.'[44] The answer to these criticisms is the overriding principle that whether particular conduct is misleading or deceptive is a question that is to be determined objectively:[45]
    The tort is more objective, but it is not precisely correct to apply the concept of the hypothetical reasonable man. One looks to the audience, or the relevant part of it, and... asks whether the conduct complained of was to them misleading or deceptive; but the question is not simply whether they (or he) were (or was) misled. Whether the conduct was misleading or deceptive is a matter for the Court.[46]

  16. Conduct is misleading or deceptive if it has that effect on the recipient of the conduct. The question is not whether the person engaging in the conduct made a false or misleading representation, but whether the effect of the conduct was misleading upon the recipient of it.[47] In the cases where it has been accepted that the promise is the relevant conduct, as has been the predominant view of the courts, it is regarded that any subsequent breach is irrelevant and that the promisee could only have been misled as to the promisor's state of mind or as to the existence of a reasonable basis for it. That is, the promisee could have been operating under a misleading impression only as to the promisor's state of mind or as to the basis for making the promise. Under the present judicial approach, whether the promisor had reasonable grounds for the promise is rightly relevant.[48]

  17. Where however, the promise and breach are taken together as the relevant 'conduct', the subsequent breach is relevant and the promisee can argue that he or she was mislead by a promise to do something which was not ultimately done. In this regard, the fact that the promisor had the intention or had reasonable grounds for the promise is not determinative of the issue of whether the conduct was misleading. Thus to take the point made in Futuretronics, conduct can be misleading even where the promisor had reasonable grounds for the promise if the subsequent breach, when combined with the promise, is sufficient to make it so.[49]

  18. Further, section 51A is not necessarily rendered otiose by the wider approach. Unless the principles relating to predictions are widened to allow a similar approach to be taken, section 51A will still relevantly apply.[50] Predictions can be distinguished from contractual promises. Irrespective of the presence or absence of any representation as to intention or as to reasonable grounds, a promisee may reasonably be lead into thinking that the promisor will carry out the promise, given its character as a contractual term, the ability of the promisor for the most part to determine whether the promise is performed,[51] and to qualify the promise where necessary. In contrast, a mere prediction may not lead the recipient into thinking that the prediction would come true, since the person making the prediction is not assuming a legal obligation and may have little to no control or influence over the matters which were the subject of the prediction.

  19. Section 51A would also remain relevant where, for whatever reasons, breach of contractual promise is not pleaded or where no actual breach of contract has occurred. This would happen, for example, where the promisee pleads a lack of reasonable grounds in an action for anticipatory repudiation; that is, where no actual breach has occurred but it has become clear that the promisor would not be in a position to fulfill the contractual obligations at the time for performance.[52] In any case, it is of course one thing to say that a principle of law might make an evidentiary, statutory provision otiose, and something quite different to suggest that the risk of making such a provision unnecessary should deny the application or recognition of a proper principle of law.

  20. Another apparent difficulty of the 'promise and breach' approach arises from the doubts expressed about a promise incorporating a representation as to its performance. For example, in Futuretronics, Ormiston J said that:
    [i]t is not difficult to see that particular promises may be expressed in terms which can properly be characterised as representations as to future conduct, albeit that the promises form part of the process of making a contract. It is another matter to take obligations arising under a contract and imply from them representations from each side that it will perform the agreed representations.[53]
    The argument would then be that if there was no such representation as to performance, the promisee could not be mislead as to the fulfillment of the promise.[54] Any misapprehension or deception, it might be argued, was caused not by the conduct of the promisor but by the 'erroneous assumption' of the promisee that the promise would be fulfilled. But as stated earlier, the question of whether conduct is misleading or not is not to be determined by reference to a finding that there was an incorrect representation. The prohibition in section 52 is tested objectively and its focus is not upon what representations the promisor might have made as it is on the effect of the conduct upon the person affected.[55] The question is not whether a representation was made from the promisor's point of view to perform the contractual obligation but whether the effect of the conduct was misleading.[56] The promisee would have been lead into error by the promisor if he or she believes that the promisor would fulfill the contractual obligations, which are then subsequently unfulfilled. A promisee would believe that the promisor will perform his or her contractual promises simply on the basis that the promisor had assumed the obligation to perform them. If the obligations are not fulfilled, the promisee is lead into the error that there would be performance. In such a case, the cause of the error, that being the erroneous belief that the promise would be fulfilled, is not the erroneous assumption by the promisee of matters extraneous to the conduct of the promisor but the conduct of the promisor in making the promise alone. It could hardly be appropriate to hold that contracting parties could come within the doctrine of erroneous assumption if they somehow came to the belief that the contracts which they just entered into would be performed. Entry into contracts is predicated on the assumption that both parties would fulfil their contractual obligations.[57]

  21. There is also the antecedent question of whether section 4(2) permits the treatment of a contractual promise and its breach as 'conduct' for the purposes of section 52. This issue is not specifically dealt with in the Act. It is fairly clear that making a contractual promise is 'conduct'. Breach of a contractual promise is also 'conduct' since section 4(2)(a) defines 'conduct' as including the refusal to do an act, which itself includes 'refraining (otherwise than inadvertently) from doing that act'[58] or 'making it known that that act will not be done'.[59] So if the making of a contractual promise is 'conduct', and its breach is also 'conduct', it might be argued that the addition of promise and breach must also be 'conduct'.[60] Logically, the addition of two things of a particular character does not necessarily mean that the result of the addition is also of the same character. However, it is submitted that in this case, the addition of promise and breach is 'conduct' because the approach does no more than to 'aggregate' the two forms of 'conduct' without changing their independent character as such. What is required is that when the promise and breach are viewed together, the course of action can be said to constitute 'conduct'. This approach would not require a characterisation of the promise as somehow being inaccurate, wrong or misleading at the time at which it was made - it does not attempt to alter the truism that the content of a promise cannot be misleading at the time at which it was made, nor does it seek to impose an ex post facto rationalisation of breach as being indicative of prior misleading conduct.[61]

  22. It is not clear whether the words of section 4(2) allow such an 'aggregation'. The section states that a reference to engaging in conduct shall be read as a reference to doing or refusing to do any 'act', not 'acts'. Whether or not 'conduct' can be constituted by more than one act, each constituting 'conduct' if they were to be viewed in isolation, is not immediately clear. The fact that the section refers to 'act' and not 'acts' does not necessarily lead to the conclusion that 'conduct' cannot be constituted by 'acts'. Certainly, it might have been considered unnecessary to specify that a course of action, involving activities which could independently be characterised as 'acts', would also constitute 'conduct', if a single independent 'act' was itself sufficient to do so.

  23. The authors of Chesire and Fifoot's 'Law of Contract' are prepared to regard 'making a promise and then not keeping it' as 'misleading conduct, or at least... a misleading course of conduct',[62] and that to look at the promise in isolation from the breach tends to 'undermine the robust common sense approach which has been adopted by the courts when considering misleading conduct.'[63]

    Conclusion

  24. With contract-related actions based on section 52 of the Trade Practices Act facing less stringent requirements and having more accessible remedies than actions pleading stricter principles at common law, it is not surprising that the section is becoming an increasingly pleaded alternative to the traditional actions in contract and tort. Much of the common law has become obsolete through the prohibition against 'misleading or deceptive' conduct being applied to areas outside 'consumer protection'.

  25. The case history of section 52 shows that there have been two primary arguments raised by innocent parties when faced with an unfulfilled contractual promise - both types of argument regard the promise as being the relevant conduct and view the misleading conduct as being constituted by a 'defective' promise, either because the promise was not consistent with the promisor's intent or because such intent was not supported by a reasonable foundation. Mere breach of contract has not been definitively established as being misleading on that basis alone because where the relevant conduct is the making of the promise, its subsequent non-fulfillment has no relevance to the determination of the character of the promise.

  26. However, this article has argued that an unfulfilled contractual promise might be said to have been misleading if the promise and breach can be taken together as the conduct to be considered since it will be open to a court to decide that the innocent party was lead into error in believing that an obligation would be fulfilled as to its terms. There are unresolved issues such as whether it is permitted under section 4(2) to view the contractual promise and breach together for the purposes of section 52, and whether the promisor should be liable for breaches caused other than by his or her own conduct; but with no sign of an end to section 52 actions, it is only a matter of time before the applicability or otherwise of section 52 to non-fulfillment of promissory contractual terms is authoritatively established.

Notes

[*]I wish to acknowledge the assistance of Tony Buti in the preparation of this article and an anonymous referee for comments on an earlier draft. All errors, of course, remain my own.

[1] Trade Practices Act 1974 (Cth) (the Act'). All section references are to the Act unless otherwise specified.

[2] See for example, Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594, 601-602 (Mason CJ, Deane Dawson and Gaudron JJ); Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216, 225 (Stephen J); Squibb & Sons Pty Ltd v Tully Corporation Pty Ltd (1986) ATPR ¶40-691, 47,594 (Gray J); see also Marshall, B, "Liability for Unconscionable and Misleading Conduct in Commercial Dealings: Balancing Commercial Morality and Individual Responsibility" (1995) 7 Bond LR 42, at 48-50.

[3] See for example, Terry, A, "Consumer Protection for Business Interests: The Application of Section 52 Trade Practices Act to Commercial Negotiations" (1987) 10 UNSWLJ 260, 261: 'the reach of the consumer protection provisions of Part V... [are] so extensive that commercial enterprises contracting at arm's length now look to section 52 rather than the traditional actions in contract and tort'; Pengilley, W, "Unconscionable and Misleading Conduct: How the Trade Practices Act is Used and the Duty to Advise" (1992) 8 QUTLJ 35, 41.

[4] Brown v The Jam Factory Pty Ltd (1981) 53 FLR 340, 348 (Fox J).

[5] Menhaden Pty Ltd v Citibank NA (1984) 55 ALR 709, 712 (Toohey J); see also Terry, A, "Consumer Protection for Business Interests: The Application of Section 52 Trade Practices Act to Commercial Negotiations" (1987) 10 UNSWLJ 260, 260.

[6] The focus of this article is on terms of a promissory nature - a term about something to occur in the future - and not terms which on their face are about existing or past facts. For a detailed analysis of the latter type of contractual term and the implications of their breach under section 52, see Skapinker, D & Carter, JW, "Breach of Contract and Misleading or Deceptive Conduct in Australia" (1997) 113 LQR 294.

[7] For this purpose, it will be assumed that the contracts are valid in all respects and having identifiable and certain terms. It will be further taken that breach of contract is actionable, not being subject to the principles relating to divisible contracts, substantial performance, prevention of performance by the promisee or the principles relating to part performance.

[8] Brown v The Jam Factory Pty Ltd (1981) 53 FLR 340.

[9] Id, 348 (Fox J).

[10] Section 79.

[11] Section 75B.

[12] Section 80.

[13] Section 80A.

[14] Section 82.

[15] Section 87.

[16] Section 87(2)(a).

[17] Section 87(2)(b).

[18] Section 87(2)(ba).

[19] Angelatos v National Australia Bank (1994) ATPR ¶41-333.

[20] Byers v Dorotea Pty Ltd (1986) 69 ALR 715. Note also that exclusion clauses cannot absolve a person from liability under section 52: Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83, 98-99 (Lockhart J); Lezam Pty Ltd v Seabridge Australia Pty Ltd (1992) 35 FCR 535, 557 (Burchett J).

[21] Section 75B.

[22] See for example, Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 114 ALR 355.

[23] Section 4(2)(a). To 'engage in conduct' is interpreted liberally: Austrasin Pty Ltd v Stratlock Ltd (1986) ATPR ¶40-695, 47,626.

[24] See Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 114 ALR 355; see also Bonutto, S, "New Horizons for Section 52? Can Breach of a Contractual Promise amount to Misleading and Deceptive Conduct?" (1993) Queensland Law Society Journal 123, 124-126 and the cases cited therein.

[25] Parkdale Custom Built Furniture v Puxu Pty Ltd (1982) 149 CLR 191, 198; (Gibbs CJ); Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82, 87 (Bowen CJ, Lockhart and Fitzgerald JJ). The words 'likely to mislead or deceive' add nothing to the preceding text: Equity Access Pty Ltd v Westpac Banking Corporation and Another (1990) ATPR ¶40-994.

[26] Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, 198 (Gibbs CJ); Weitmann v Katies [1977] 29 FLR 336, 343 (Franki J).

[27] Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, 199 (Gibbs CJ).

[28] Pacific Dunlop Ltd v Hogan (1989) 23 FCR 553, 581 (Beaumont J); Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, 198 (Gibbs CJ), 216 (Brennan J); Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177, 202 (Deane and Fitzgerald JJ).

[29] Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216, 228 (Stephen J); Parkdale Custom Built Furniture v Puxu Pty Ltd (1982) 149 CLR 191, 197 (Gibbs CJ), 216 (Brennan J); Yorke v Lucas (1985) 158 CLR 661, 666; (Mason ACJ, Wilson, Deane and Dawson JJ); see also Australian Home Loans Ltd v Phillips (1998) ATPR ¶41-626; New South Wales Dairy Corporation v Murray Goulburn Co-operative Co Ltd (1989) 86 ALR 549.

[30] Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177, 202 (Deane and Fitzgerald JJ); Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, 198 (Gibbs CJ). Proof of actual deception is necessary in an action for damages under section 82.

[31] Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82, 88 (Bowen CJ, Lockhart and Fitzgerald JJ); see also Holt v Biroka Pty Ltd (1988) 13 NSWLR 629; Chiarabaglio v Westpac Banking Corp (1989) ATPR ¶40-971.

[32] James v Australian and New Zealand Banking Group Ltd (1986) 64 ALR 347.

[33] Id, 372 (Toohey J); see also Bell v Australasian Recyclers (WA) Pty Ltd (1986) ATPR ¶40-644; Wheeler Grace & Pierucci Pty Ltd v Wright (1989) ATPR ¶40-940, 50,251 (Lee J).

[34] See for example, Edgington v Fitzmaurice (1885) 29 Ch D 459, 479 (Cotton LJ), 483 (Bowen LJ).

[35] There may be an issue as to whether contractual promises are within the meaning of section 51A: Wright v TNT Management Pty Ltd (1989) 85 ALR 442, 451 (McHugh J); Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217, 240-241 (Ormiston J); Skapinker, D & Carter, JW, "Breach of Contract and Misleading or Deceptive Conduct in Australia" (1997) 113 LQR 294, 304-306, 315.

[36] R v Sunair Holidays Ltd [1973] 1 WLR 1105, 1109 (MacKenna J). Similarly, it was stated in Beattie v Lord Ebury (1872) LR 7 Ch App 777, 804 (Mellish J) that '[t]here is a clear difference between a representation of fact and a representation that something will be done in the future. A representation that something will be done in the future cannot either be true or false at the moment it is made; and although you may call it a representation, if it is anything it is a contract or promise.'

[37] Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217, 236 (Ormiston J); see also Skapinker, D, & Carter, JW, "Breach of Contract and Misleading or Deceptive Conduct in Australia" (1997) 113 LQR 294, 304.

[38] Bill Acceptance Corp Ltd v GWA Ltd (1983) 50 ALR 242, 250; (Lockhart J); see also Skapinker, D, & Carter, JW, "Breach of Contract and Misleading or Deceptive Conduct in Australia" (1997) 113 LQR 294, 307.

[39] Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217, 238-2

[39] (Ormiston J)

[40] '[I]n the case of promissory statements, it is arguable that the necessary conduct can consist of both the initial promise and its subsequent breach': Greig, DW, & Davis, JLR, The Law of Contract, 3rd Edition (LBC: Sydney, 1987), 814.

[41] Id, 815.

[42] Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217.

[43] Id, 240 (Ormiston J).

[44] See Bonutto, S, "New Horizons for Section 52? Can Breach of a Contractual Promise amount to Misleading and Deceptive Conduct?" (1993) Queensland Law Society Journal 123, 127.

[45] Above, note 28.

[46] Brown v The Jam Factory Pty Ltd (1981) 53 FLR 340, 348 (Fox J).

[47] Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83, 93 (Lockhart J).

[48] It is the recognition that different considerations apply, when the nature of the conduct is essentially a manifestation of intent, that permits a reconciliation between the view of the courts that it is the absence of an intention to perform a promise or the lack of a reasonable foundation for its making that makes a promise misleading or deceptive, with the general view that whether conduct is misleading or deceptive is to be determined objectively, and the state of mind of the impugned person to be disregarded.

[49] It may not be the case that in all situations where reasonable grounds are adduced to support a representation with respect to a future matter, the representation must necessarily be free from the section 52 prohibition. Section 51A provides that representations with respect to future matters will be deemed misleading if evidence of a reasonable basis for the representation is not adduced by the representor. It does not provide that representations as to future matters can only be taken to be misleading where there are no reasonable grounds, or that representations as to future matters cannot be misleading where there are reasonable grounds, but only that such representations shall be taken to be misleading where evidence of a reasonable basis is not adduced. The section is an evidentiary one, 'designed to facilitate proof': Cummings v Lewis (1993) 113 ALR 285, 294 (Sheppard and Neaves JJ). It is designed to facilitate proof of matters particularly within the knowledge of the representor. The rationale for the section is that matters with respect to the reasonableness or otherwise of representations of that kind are likely to lie with the person making the representation. Therefore, it is not necessarily the case that the existence of reasonable grounds precludes an argument on some other basis that the representation was misleading. The fact that other bases for arguing that the representation was misleading are not contained in section 51A is no support for an argument that such other bases do not exist - and that consequently the existence of reasonable grounds precludes the application of section 52 - since the evidence supporting such bases do not lie particularly within the knowledge of the representor, making it unnecessary to have them as the subject of an evidentiary provision. In this regard, the point made in Futuretronics in relation to the negative implication would appear incorrect if such other bases do exist. Ormiston J clearly regarded that such other bases do not exist, that a representation with respect to a future matter could be misleading only in the absence of reasonable grounds. On the other hand, in Wheeler Grace & Pierucci Pty Ltd v Wright (1989) ATPR ¶40-940, 50,251, Lee J stated that '[i]n respect of unfulfilled promises or predictions, there may be conduct which may be shown to be in contravention of s.52 of the Act without it being established that there was an implied representation by the maker of the prediction or promise that there were reasonable grounds for the belief that the prediction or promise would be fulfilled... The fact that a corporation believed or had reasonable grounds for belief that the prediction would be fulfilled, would not answer the question as to whether the conduct was misleading or deceptive conduct in trade or commerce... the assessment of misleading or deceptive conduct is an objective test not dependent upon the proof of an intent to mislead or deceive on the part of the corporation... and restriction of the application of s.52 in respect of promissory or predictive statements by a corporation to conduct of the corporation which involves a lack of belief on the part of the corporation or absence of grounds upon which the corporation could form such a belief would be inconsistent with the thrust of the section.' It may be noted that section 51A(3) provides that subsection (1) should not be treated so as to 'limit by implication the meaning of a reference... to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead.' In any case, it is argued that a promise and its breach may be misleading even if the promise by itself is not.

[50] Section 51A, being an evidentiary provision and not forming part of the law which provides for the cause of action, is to be the subject of a specific pleading where reliance is placed upon it: Western Australia v Bond Corporation Holdings Ltd (1991) ATPR ¶41-081.

[51] In Holt v Biroka Pty Ltd (1988) 13 NSWLR 629, 636, Kearney J considered that non-fulfillment resulting from circumstances beyond the control of the promisor may not qualify as 'conduct'.

[52] See for example, Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17. As mentioned, there might also be an issue as to whether section 51A necessarily applies to the making of contractual promises: above, note 35.

[53] Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217, 235 (Ormiston J); see also Skapinker, D, & Carter, JW, "Breach of Contract and Misleading or Deceptive Conduct in Australia" (1997) 113 LQR 294, 304, 307-308.

[54] However, it was said by McHugh J in a dissenting judgment in Wright v TNT Management Pty Ltd (1989) 85 ALR 442, 451, that 'a promise to do something in the future is to be regarded as a representation that it will be performed.' See also McWilliam's Wines Pty Ltd v LS Booth Wine Transport Pty Ltd (1992) 25 NSWLR 723; Holt v Biroka Pty Ltd (1988) 13 NSWLR 629, 636 (Kearney J); Hunt Contracting Co Pty Ltd v Roebuck Resources NL (1992) 110 ALR 183, 187-189 (French J), cited in Skapinker, D, & Carter, JW, "Breach of Contract and Misleading or Deceptive Conduct in Australia" (1997) 113 LQR 294, 309.

[55] Above, note 28.

[56] Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83, 93 (Lockhart J).

[57] The fact that specific performance or injunctive relief was available at common law only upon the inadequacy of damages provides no support to the proposition that the parties did not enter into contractual relations in reliance upon the other party's performance. The restrictions placed upon such relief reflect the policy of not forcing parties to continue dealings after the contractual relationship has broken down through breach.

[58] Section 4(2)(c)(i); see also Holt v Biroka Pty Ltd & Others (1988) 13 NSWLR 629. Whilst the non-fulfillment of a contractual promise might also be 'conduct', the non-fulfillment is unlikely to be misleading or deceptive by itself.

[59] Section 4(2)(c)(ii).

[60] Above, note 40.

[61] See Skapinker, D, & Carter, JW, "Breach of Contract and Misleading or Deceptive Conduct in Australia" (1997) 113 LQR 294, 309-310.

[62] Seddon, NC & Ellinghaus, MP, Chesire and Fifoot's Law of Contract, 7th Australian Edition (Butterworths: Sydney, 1997), 449, citing Arbest Pty Ltd v State Bank of NSW Ltd [1996] ATPR ¶41-481.

[63] Seddon, NC & Ellinghaus, MP, Chesire and Fifoot's Law of Contract, 7th Australian Edition (Butterworths: Sydney, 1997), 449.


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