• Any

TRADE PRACTICES - misleading and deceptive conduct - television,newspaper and billboard advertisements for private health insurance - where aninsurerrepresented it would waive waiting periods - where fine print qualifiedprimary representations - purpose of corrective advertising- whetherappropriate to order a party to undertake corrective advertising for thepurpose of the general education of the public- injunctive relief, includingcorrective advertising, must bear a sufficient nexus to the contraveningconduct - accessorial liability- whether the advertising agency that developedthe infringing advertisements was liable as an accessory - `knowingly concernedin,or party to, the contravention' - whether intent a necessary component foraccessorial liability

PRACTICE AND PROCEDURE - whether the Full Court should interfere with anexercise of discretion by the primary judge

Australian Securities and Investments Commission Act 1989(Cth)ss 12DA, 12DB, 12DF, 12GE, 12GD(1)

Australian Securities and Investments Commission Act 2001(Cth)ss 12DA,12DB,12DF,12GLA,12GLB,268

Crimes Act 1900(NSW)ss 52A,351

Trade Practices Act 1974(Cth),Pt V,ss 45(2),52,53(c),53(g),55A, 75B,80, 80A, 86C, 86D

Adler v Australian Securities and Investments Commission[2003] NSWCA 131;(2003) 46 ACSR504 discussed

Australian Competition and Consumer Commission v Giraffe World Australia PtyLtd (No 2)[1999] FCA 1161;(1999) 95 FCR 302 referred to

Australian Competition and Consumer Commission v Hungry Jack's Pty Ltd[1996] FCA 955 referred to

Australian Competition and Consumer Commission v IMB Group Pty Ltd[2003] FCAFC 17 referred to

Australian Competition and Consumer Commission v Nissan Motor Company(Australia) Pty Ltd and Anor(1998) ATPR 41-660 discussed

Australian Competition and Consumer Commission v On Clinic Australia Pty Ltd(1996) 35 IPR 635 referred to

Australian Competition and Consumer Commission v Purple Harmony Plates PtyLtd[2001] FCA 1062 referred to

Australian Competition and Consumer Commission v Real Estate Institute ofWestern Australia Inc[1999] FCA 1387;(1999) 95 FCR 114 discussed

Australian Competition and Consumer Commission v Signature Security GroupPty Limited[2003] FCA 3;(2003) ATPR 41-908 referred to

Australian Competition and Consumer Commission v Target Australia Pty Ltd[2001] FCA 1326;(2001) ATPR 41-840 referred to

Australian Competition and Consumer Commission v Virgin Mobile Australia PtyLtd (No 2)[2002] FCA 1548 discussed

Australian Competition and Consumer Commission v Wizard Mortgage CorporationLimited[2002] FCA 1317;(2002) ATPR 41-903 referred to

Australian Competition and Consumer Commission v Woolworths Limited (No 2)(2002) ATPR 41-890 referred to

Brown v Jam Factory Pty Ltd[1981] FCA 35;(1981) 53 FLR 340 referred to

Butt v Tingey(unreported, Davies, Neaves, Beazley JJ, 5 August 1993)referred to

Campomar Sociedad, Limitada v Nike International Limited[2000] HCA 12;(2000) 202 CLR45 referred to

Cassidy v NRMA Health Pty Ltd[2002] FCA 1228 referred to

Chan Cuong Su t/a Ausviet Travel v Direct Flights International (No 2)(1999) ATPR 41-677 referred to

Chan Cuong Su v Direct Flights International Pty Ltd[1999] ATPR 41-677referred to

Crocodile Marketing v Griffith Vintners(1989) 28 NSWLR 539 referredto

Dimension Data Australia Pty Ltd v Kepper[1999] FCA 1446 discussed

Equity Access Pty Ltd v Westpac Banking Corporation[1989] FCA 506;(1989) 16 IPR 431referred to

Fernandez v Glev PtyLtd[2000] FCA 1859 discussed

George Weston Foods Ltd v Goodman Fielder Ltd[2000] FCA 1632;(2001) 49 IPR 553discussed

Georgianni v The Queen[1985] HCA 29;(1985) 156 CLR 473 discussed

Heydon v NRMA Ltd[2000] NSWCA 374;(2000) 51 NSWLR 1 discussed

Hospital Contribution Fund Australia Ltd v Switzerland Australia Health FundPty Ltd (1988) ATPR 40-846 referred to

House v The King[1936] HCA 40;(1936) 55 CLR 499 referred to

Idoport Pty Ltd v National Australia Bank Ltd[2000] NSWSC 599 referredto

Janssen Pharmaceutical Pty Ltd v Pfizer Pty Ltd(1986) ATPR 40-654referred to

King v GIO Australia Holdings Ltd[2001] FCA 308;(2001) 184 ALR 98 referred to

Makita (Australia) Pty Ltd v Black & Decker (Australasia) Pty Ltd[1990] FCA 166;(1990) ATPR 41-030 referred to

Minister for Health and Aged Care v Harrington Associates Ltd[2000] FCA 1723 referred to

Paper Products Pty Ltd v Tomlinsons (Rochdale) Pty Ltd[1994] FCA 940;[1994] ATPR41-315 referred to

Parkdale Custom Built Furniture Proprietary Limited v Puxu ProprietaryLimited[1982] HCA 44;(1982) 149 CLR 191 referred to

Richardson & Wrench (Holdings) Pty Ltd v Ligon No. 174 Pty Ltd[1994] FCA 1222;(1994) 123 ALR 681 referred to

Ridgway v Consolidated Energy Corporation Pty Ltd(1987) ATPR 40-754discussed

Rural Press Ltd v Australian Competition and Consumer Commission[2002]FCAFC 213 discussed

St Luke's Health Insurance v Medical Benefits Fund of Australia Limited[1995] FCA 1314;(1995) ATPR 41-428 referred to

Taco Company of Australia Inc v Taco Bell Pty Ltd[1982] FCA 136;(1982) 42 ALR 177referred to

Telstra Corporation v Optus Communications Pty Limited(1997) ATPR41-541 referred to

Trade Practices Commissionv Optus Communications Pty Ltd(1996)34 IPR 176 referred to

Truth About Motorways Pty Ltd v Macquarie Infrastructure InvestmentManagement Pty Ltd[2000] FCA 918;(2000) 34 ACSR 673 referred to

Wheeler Grace & Pierucci Pty Ltd v Wright[1989] FCA 127;(1989) 16 IPR 189 discussed

Yorke v Lucas[1985] HCA 65;(1985) 158 CLR 661 discussed

MEDICAL BENEFITS FUND OF AUSTRALIA PTY LIMITED (ACN 000 057 590) v BRIANCASSIDY, CHIEF EXECUTIVE OFFICER OF AUSTRALIAN COMPETITIONAND CONSUMERCOMMISSION AND AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

N 1090 OF 2002

JOHN BEVINS PTY LIMITED (ACN 002 003 572) vBRIAN CASSIDY, CHIEFEXECUTIVE OFFICER OF AUSTRALIAN COMPETITION AND CONSUMER COMMISSION ANDAUSTRALIAN SECURITIES AND INVESTMENTSCOMMISSION

N 1117 OF 2002

MOORE, MANSFIELD AND STONE JJ

16 DECEMBER 2003

SYDNEY

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

THE COURT ORDERS THAT:

1.Subject to order 2 the appeal be dismissed.

2.Order 4 of the orders made by the primary judge on 2 October 2002 and order1 made by the primary judge on 15 October 2002 beset aside.

3.The parties provide to the Associate of Stone J by 22 December 2003 anagreed minute of the orders to be made as to costs andif agreement has notbeen reached by then the minutes of orders for which they respectively contendand brief outlines of submissionsin support of the orders.

Note:Settlement and entry of orders is dealt with in Order 36 of the FederalCourt Rules.

THE COURT ORDERS THAT:

1.The appeal be allowed.

2.The orders and declarations made by the primary judge on 2 October 2002 beset aside in so far as they relate to the Appellant.

3.The application of the First and Second Respondents be dismissed in so faras it relates to the Appellant.

4.The First and Second Respondents pay the Appellant's costs of this appealand of the proceedings before the primary judge.

Note:Settlement and entry of orders is dealt with in Order 36 of the FederalCourt Rules.

MOORE J

1I have read the reasons for judgment of Stone J in a draft form. Igratefully adopt her Honour's account of the facts, the relevantlegislationand the issues that have arisen in these appeals. I agree with her Honour'sconclusions but, on one issue, I approachthe matter a little differently. Theissue concerns whether John Bevins Pty Ltd ("Bevins") could be liable undersubs 12GD(1) oftheAustralian Securities and Investments CommissionAct 1989(Cth) ("the ASIC Act") in the face of findings that no officer oremployee of Bevins (who gave evidence) formed the view the advertisementsweremisleading and that none intended to mislead or deceive. The subsectionprovides:

12GD.Injunctions

(1)If, on the application of the Minister, the Commission or any otherperson, the Court is satisfied that a person has engaged,or is proposing toengage, in conduct that constitutes or would constitute:

(a)a contravention of a provision of this Division; or

...

(e)being in any way, directly or indirectly, knowingly concerned in, ora party to, the contravention by a person of such a provision;...

...

the Court may grant an injunction in such terms as the Court determines to beappropriate.

2There is no material difference between the terms of par 12GD(1)(e)and the terms of par 75B(c) of theTrade Practices Act 1974(Cth)and many of the relevant authorities have considered that latter provision.There is fairly clearly a division of judicial opinionabout whether anaccessory, to be liable under such a provision, must be aware that theproscribed conduct of the principal was eithermisleading or deceptive conductor conduct likely to mislead or deceive.

3InKing v GIO Australia Holdings Ltd[2001] FCA 308;(2001) 184 ALR 98 at[15] andfollowing I briefly surveyed some, though not all, of the authorities whichreflect that division of opinion. A starting pointis the observations of HelyJ in Fernandez v Glev PtyLtd[2000] FCA 1859whichsuggest it is necessary, when establishing accessorial liability of a personconcerning a false representation made by a principal,to demonstrate that theperson knew of the falsity of the representation. His Honour said at [18] inrelation to the way accessorialliability should be pleaded:

The facts necessary to sustain a conclusion that the individualswere involved in the contravention ofs 52 should be pleaded. Thatincludes whatever involvement in, or knowledge of, the making of therepresentations is relied upon andknowledge of the falsity of therepresentations in question.

4To similar effect are the following observations of Lehane J inChan Cuong Su t/as Ausviet Travel v Direct Flights International PtyLimited[1999] ATPR 41-677 at 42,666:

InYorke v Lucas[1985] HCA 65;(1985) ATPR 40-622;(1985)158 CLR 661, Mason ACJ and Wilson, Deane and Dawson JJ said at 669:

Notwithstanding that s. 75B operates as an adjunct to the imposition ofcivil liability, its derivation is to be found in the criminallaw and there isnothing to support the view that the concepts which it introduces should begiven a new or special meaning.

As to those concepts, their Honours said at ATPR 47,055; CLR 667:

Both in the case of felonies where the principal offender and the secondaryparticipant commit separate offences, and in the caseof misdemeanours where nodistinction is drawn between the two, a person will be guilty of the offencesof aiding and abetting orcounselling and procuring the commission of anoffence only if he intentionally participates in it. To form the requisiteintenthe must have knowledge of the essential matters which go to make up theoffence whether or not he knows that those matters amountto a crime.

Thus, in the case of a contravention ofs 52, the mere making ofrepresentations on behalf of a corporation, without knowledge of their falsity,could not constitute "involvement"in misleading or deceptive conductcontravenings 52.

The last part of this passage was quoted with approval by Einstein J inIdoport Pty Ltd v National Australia Bank Ltd[2000] NSWSC 599. Thisapproach is also reflected in the following judgments:Crocodile Marketing vGriffith Vintners(1989) 28 NSWLR 539;Richardson & Wrench(Holdings) Pty Ltd v Ligon No. 174 Pty Ltd[1994] FCA 1222;(1994) 123 ALR 681;Butt vTingey (unreported, Davies, Neaves, Beazley JJ, 5 August 1993);Australian Competition and Consumer Commission v Giraffe World Australia PtyLtd (No.2)[1999] FCA 1161;(1999) 95 FCR 302;Chan Cuong Su v Direct FlightsInternational Pty Ltd[1999] ATPR 41-677;Cassidy v NRMA Health PtyLtd[2002] FCA 1228,[2002] ATPR 41-891;Fernandez v Glev Pty Ltd[2000] FCA 1859.

5A not dissimilar issue arose inDimension Data Australia Pty Ltd vKepper[1999] FCA 1446. In that matter there was an issue about whetherconduct of directors of a corporation caught by s 75B would be conductinvolvinga lack of good faith for the purposes of s 241 of theCorporationsLaw. In the matter I said at [7] - [8]:

The nature of the conduct which attracts s 75B wasdiscussed by French J inPaper Products Pty Ltd v Tomlinsons(Rochdale) Ltd[1994] FCA 940;(1994) ATPR 41-315. His Honour said at42,204:

`The application of that section [s 84(2) of the TPA] and the common lawto the relationship between the conduct of the officersof a corporation andthat conduct which is attributed to the corporation was discussed by the FullCourt in Wheeler Grace and PierucciPty Ltd v Wright[1989] FCA 127;(1989) ATPR 40-940 at50,255-50,257[16 IPR 189 at 208-209] (per Lee J with whom Neaves andBurchett JJ agreed). And as is apparent from that decision, the officersofa corporation whose conduct is attributed to the corporation and in respectof which the corporation is in contravention ofs. 52 may, by thatconduct, be themselves "involved in the contravention" within the meaning ofs. 75B. Such an involvement does requireknowledge of the essentialelements of the contravention - Yorke v. Lucas(1984) ATPR 40-622 at47,056-47,057 and 47,060-47,061;[1985] HCA 65;(1984) 158 CLR 661 at 670 and 677. Thatknowledge does not require knowledge or awareness that the conduct has thecapacity to mislead nor knowledgethat it may be a contravention ofs. 52.What must be shown to be possessed is knowledge of the elements of acontravention: Wheeler Grace and Pierucci Pty Ltd v Wright(supra)at p. 50,257.'

In Wheeler Grace & Pierucci Pty Ltd v Wright[1989] FCA 127;(1989) 16 IPR 189, the [Full]Court considered the accessorial liability of an employee of a company whichwas a financial consultant and investmentadvisor. That company had held ameeting of potential investors, conducted by the employee, at which statementshad been made abouta trust which was to operate a gold mine. As to theaccessorial liability of the employee, Lee J said at 209:

According to his Honour's findings, the acts which constituted thecontravention ofs 52 were the appellant's [the company's] statement topotential investors in the course of inviting such persons to invest in thespecialunits of the trust that such investors would receive a return of thepremiums paid on their investment within a few months withoutinforming thosepotential investors of any qualifications on the prospect of repayment of thepremiums. Obviously Collins [the employee]was fully aware of those elementsbeing the person conducting the meeting on behalf of the appellant and theperson who made thestatement for the appellant without qualification.

His Honour found that Collins was aware, prior to the meeting, that such astatement would require qualification because Collinshad participated in aresolution of the board of directors of Carbon Gold on 26 April 1985 that thespeculative nature of the investmentshould be continually stressed toprospective unit holders. It followed from that finding that Collins possessedknowledge of thecircumstances that gave the conduct of the appellant amisleading character. It is immaterial whether Collins understood the importof those circumstances or held a positive belief as to the truth of theassertion he had made for the appellant. [Emphasis added]

See also Richardson & Wrench (Holdings) Pty Ltd v Ligon No. 174 Pty Ltd[1994] FCA 1222;(1994) 123 ALR 681 and Westbay Seafoods (Aust) Pty Ltd v TranspacificStandardbred Agency Pty Ltd [1996] FCA 630.

[Emphasis in original]

6Similarly, observations of McPherson AJAin Heydon v NRMA Ltd[2000] NSWCA 374;(2000) 51 NSWLR 1 would suggest that a person can be liable by operation ofs 75B, even if they did not know or believe that the published statementswere misleading. The issue arose in that matter in the following context. Aprospectus was issued during the course of the proposedrestructuring of agroup of companies including NRMA Ltd ("NRMA"). The prospectus containedstatements which, as found in proceedingsin this Court, resulted in it beingmisleading. Legal advice had been given about the contents of the prospectus.Several issuesarose about the role of the legal advisers in advising about theprospectus. One was whether, in publishing the prospectus, NRMAengaged inmisleading and deceptive conduct and, if so, whether the legal advisers hadbeen involved in the conduct and were liableby reference to provisions such ass 75B. Each member of the Court of Appeal concluded that the publicationof the prospectus wasnot misleading and deceptive conduct. Nonetheless, thequestion of the accessorial liability of the legal advisers was addressedbythe Court. McPherson AJA said at [436]:

If that conclusion is wrong[that the publication of theprospectus was not misleading conduct], then I find it difficult to see howthe[legal advisers] could avoid being "involved" in a contravention oftheTrade Practices Act1974 (Cth). To state the matter in a morepositive and direct form, it seems to me that, knowing as they would then havedone that thoseexpressions were used in a prospectus which would, and did infact, issue to a vast number of people some of whom were not well educatedorversed in the ways of business, they would be found to have intentionallycounselled a contravention ofs 52; or, alternatively, being aware of theessential facts which on this assumption made it misleading, to have beenknowingly concernedin or party to that contravention...It istrue that they did not intend to mislead, andthat they did notbelieve that the prospectus or those expressions in it would misleadanyone; but if they knew what was in the prospectus and that it was goingto be published, they satisfied the provisions of s 75B.

[Emphasis added]

Ormiston AJA agreed with McPherson AJA on this issue: see also theobservations of Lindgren J inAustralian Competition and Consumer Commissionv Giraffe World Australia Pty Ltd[1999] FCA 1161;(1999) 95 FCR 302 at 346. A very recentjudgment of the Court of Appeal of New South Wales to similar effect isAdler v Australian Securities and Investments Commission[2003] NSWCA 131;(2003) 46 ACSR504. Giles JA gave the leading judgment (Mason P and Beazley JA agreeing) andsaid (at [333-342] after briefly discussing the facts andlegal issues arisingin Yorke v Lucas[1985] HCA 65;(1985) 158 CLR 661):

Attention is thus directed to the essential facts constitutingthe contravention.Section 52 proscribed engaging in misleading or deceptiveconduct, and inYorke v Lucas making the representations as to theaverage weekly turnover of the business was misleading or deceptive conductbecause the turnoverinformation was incorrect. The relevant fact was that theturnover information was incorrect.It was not necessary that Lucas knewthat the making of false representations as to the average weekly turnover ofthe business wasengaging in misleading or deceptive conduct as referred to ins 52, and if Lucas had known that the turnover information was incorrect afinding of involvement would have followed.

Many cases have considered theYorke v Lucas requirement of knowledgein the context of misleading or deceptive conduct, applying the principle thatthere must be knowledge ofthe essential facts making out the contravention butthere need not be knowledge that the facts amounted to misleading ordeceptive conduct and constituted a contravention.

[Emphasis added]

7His Honour then referred to Wheeler Grace & Pierucci Pty Ltd vWright[1989] FCA 127;(1989) 16 IPR 189 andPaper Products Pty Ltd vTomlinsons (Rochdale) Pty Ltd[1994] FCA 940;[1994] ATPR 41-315 in which it was said (at42,204) that knowledge of the essential elements of the contravention "does notrequire knowledge or awarenessthat the conduct has the capacity to mislead norknowledge that it may be a contravention ofs 52". His Honour also referred toRural Press Ltd v Australian Competition and Consumer Commission[2002] FCAFC 213;(2002)118 FCR 236 which he viewed as applying that principle in a different context.

8These approaches are all based on the judgment of the High Court inYorkev Lucas. The reasons of four of the members of the Court, Mason ACJ andWilson, Deane, and Dawson JJ (for convenience only I will referto them as themajority) can be read in a number of ways. The case concerned the liability ofMr Lucas. He had been the managingdirector of a company (which was a licensedland agent) which had acted as agent for the vendor of a business. Thepurchaser hadbeen told by Lucas that the weekly turnover of the businessduring a period preceding the sale was $3500 whereas, in fact, it wasnot thisamount. Lucas had obtained this information from the vendor. The trial judgehad found that Lucas was not aware and hadno reason to suspect that theinformation concerning the turnover was incorrect. Ultimately the trial judgehad found that Lucaswas not, by operation of s 75B, to be treated ashaving engaged in conduct in contravention ofs 52. These findings weremade in the context of the trial judge having found that Lucas' company and thevendor company had both engagedin conduct in contravention ofs 52.

9The approaches in the cases referred to, concerning what the majority viewedas necessary to establish liability under s 75B areprimarily based on thefollowing passages from the joint judgment. At 667 their Honours noted thatthe language used in par 75B(a)was taken from the criminal law. In thecriminal law a person aids and abets or counsels and procures only if he or sheintentionallyparticipates in the commission of an offence. Their Honours thensaid:

To form the requisite intent he must have knowledge of theessential matters which go to make up the offence whether or not he knowsthatthose matters amount to a crime. So much was affirmed recently inGiorgianni v The Queen (15) where the relevant authorities wereexamined. That was a case in which the appellant had been convicted ofculpable drivingunders 52A of theCrimes Act1900 (NSW) inreliance upons 351 of that Act. The latter section provides that aperson who aids, abets, counsels or procures the commission of any misdemeanourmay be proceeded against as a principal offender and was held to be declaratoryof the position at common law. The offence of culpabledriving unders 52A is an offence of strict liability which, putting the defence ofhonest and reasonable mistake to one side, requiresno proof by the prosecutorof any mental state on the part of the accused.Nevertheless it was heldthat to have aided and abetted or counselled and procured the offence ofculpable driving the appellant musthave intentionally participated in thatoffence and to have done so must have had knowledge of the essential matterswhich went tomake up the offence on the occasion in question. Thosematters included the defective condition of the brakes upon the vehicle beingdriven, because the culpable driving allegedconsisted of the driving of thatvehicle with defective brakes. Proof of such knowledge on the part of theprincipal offender was,however, not part of the prosecution case because theprincipal offence was one of strict liability.

[Emphasis added]

Of significance is that immediately after their Honours spoke of therequired "knowledge of the essential matters" they added thequalification"whether or not he knows that those matters amount to a crime". This wouldsuggest that, in the context of conductproscribed by s 52, a person mightaid and abet or counsel and procure even if the person did not know that theconduct was proscribedby s 52, that is it was unlawful or could becharacterised in a way that rendered it unlawful.

10Their Honours went on to say:

If par. (a) of s 75B imports the requirements of thecriminal law, it is clear in the light ofGiorgianni v The QueenthatLucas could only be brought within that paragraph if he intentionally aided,abetted, counselled or procured a contraventionby the Lucas company ofs 52 of theTrade Practices Act. Upon the findings of the trialjudge, however, Lucas lacked the knowledge necessary to form the requiredintent. A contraventionofs 52 involves conduct which is misleading ordeceptive or likely to mislead or deceive and the conduct relied upon in thiscase consistedof the making of false representations. Whilst Lucas was awareof the representations - indeed they were made by him -he had no knowledgeof their falsity and could not for that reason be said to have intentionallyparticipated din the contravention.

[Emphasis added]

It might be concluded from this passage that the majority were saying thatknowledge of the falsity of the representations is a preconditionto liabilityas an accessory. However, it must be borne in mind that these remarks weremade against the factual background whereLucas did not know one essentialmatter of fact, namely the actual turnover and therefore could not have knownthat the representationswere false or misleading.

11A little later in their judgment, the majority explained that the basis onwhich a person was liable as a person knowingly concernedin or party to acontravention was, as a matter of construction, the same as for an accessory.Paragraph (c) of s 75B is the directanalogue of the provision underconsideration in this appeal, subs 12GD(1). Of par (c) their Honourssaid (at 669-670):

So far we have dealt only with par. (a) of s 75B whichrefers to involvement of persons who are accessories. The appellants alsorelyupon par. (c) of the same section which extends the definition of a personinvolved to a person who has been in any way, directlyor indirectly, knowinglyconcerned in, or party to, the contravention. There can be no question that aperson cannot be knowinglyconcerned in a contravention unless he has knowledgeof the essential facts constituting the contravention. It cannot, therefore,be suggested that Lucas falls within the first limb of par. (c). It might bethought possible to construe the express requirementof knowledge as extendingnot only to being "concerned in" but also to being "party to" a contravention.However, there are two reasons,in our view, why it is inappropriate to doso.

...

In our view, the proper construction of par. (c) requires a party to acontravention to be an intentional participant, the necessaryintent beingbased upon knowledge of the essential elements of thecontravention.

12The majority used two expressions in these passages. One is "essentialmatters" making up the offence and the other is "essentialelements" of thecontravention. It is relatively clear from the example used in the firstpassage, that the expression "essentialmatters" comprehends matters of factwhich must be known to the alleged accessory before liability arises. Theexample given (fromthe facts in Giorgianni v The Queen[1985] HCA 29;(1985) 156 CLR473) was knowledge of the condition of the brakes. On any view of what washeld by the High Court, accessorial liability only arisesin the present matterif it is at least demonstrated that the alleged accessory knew of the factswhich constituted the conduct ofMBF which contravened the ASIC Act.

13In relation to the television advertisements, the conduct of MBF was(firstly) the publication of the advertisements in the contextwhere (secondly)the content of the advertisements (being the visual images, the sound and theway they were formatted and sequenced)might lead members of the public tobelieve that certain benefits would be enjoyed or rights conferred by takingout insurance withMBF where (thirdly), in fact, they would not be. In myopinion, these three matters constitute, as a minimum, "essential matters"forthe purposes of applying the principle established inYorke v Lucas. Ihave included the contents of the advertisements and what they might convey asa second essential element because it is the probableimpact of their contentwhich transforms what otherwise would be unexceptionable commercial conductinto unlawful conduct.

14Plainly Bevins knew the advertisements were being prepared for publicationand were published. His Honour (at [74] and [75])appears to have found thatBevins knew (through its officers and employees) that waiting periods did applyin the case of pregnancyand thus the contentious rights and benefits would notaccrue. No express finding was made by the primary judge about whether Bevinsunderstood that members of the public might be led to believe, having regard tothe content of the advertisements, that certain benefitswould be enjoyed orrights conferred by taking out insurance with MBF. However, it appears tofollow from one passage in his reasonsthat his Honour found that Bevins didnot understand that this was a consequence of the contents and format of theadvertisements. The primary judge said at [73]:

The question is not whether the agency, or those employed by itsubjectively appreciated that the advertisements were false or misleading. Ifit were, I would find that they had no liability. I accept the evidence ledthat none of those who gave evidence formed theview that the advertisementswere misleading. None intended to mislead or deceive thepublic.

This observation was followed by the passage (at pars [74] and [75]) inwhich his Honour appears to have found that Bevins (throughits officers andemployees) knew that the waiting periods did apply in the case of pregnancy.It seems to follow that his Honouraccepted that Bevins (through its officersand employees), knowing that waiting periods did apply, did not appreciate thatthe advertisementsmight be understood as indicating the waiting periods didnot apply. It follows, on his Honour's findings, that Bevins (throughitsofficers and employees) was not aware of the second of the matters, as Iearlier described them, constituting the contraveningconduct of MBF. That is,while Bevins was aware of what the advertisements contained (necessarily sogiven that it created them)it was not aware that the advertisements might leadmembers of the public to believe that certain benefits would be enjoyed orrightsconferred by taking out insurance with MBF. Accordingly, in my opinion,his Honour erred in concluding that the Bevins was liableas an accessory undersubs 12GD(1).

15I should add that, in my opinion, liability as an accessory (incircumstances where the contravening conduct of the principalwas making falseor misleading representations) does not depend on an affirmative answer to thequestion whether the alleged accessoryknew the representations were false ormisleading. All that would be necessary would be for the accessory to know ofthe mattersthat enabled the representations to be characterised in that way.In a comparatively simple situation, such as the situation consideredinYorke v Lucas, where particular representations were being made toindividuals or groups of individuals, knowledge of those matters would almostinevitably result in the alleged accessory also knowing the representationswere false or misleading. Had Lucas known of the realturnover figures, thenit is difficult to imagine that he would not have appreciated, additionally,that what he was saying aboutthe business was false and misleading.

16However in a situation where representations are made to the public andwhether they are misleading or deceptive is to be approachedat a level ofabstraction (to use the language of the High Court inCampomar Sociedad,Limitata v Nike International Ltd[2000] HCA 12;(2000) 202 CLR 45 (at [101]) it seemsinapt to explore the question of whether the alleged accessory knew therepresentations were false or misleadingin some subjective sense. Asillustrated by the preceding consideration of the facts of this case, it isprobably appropriate toconsider, and only consider, the question of whetherthe alleged accessory knew that the conduct of the principal might lead membersof the public to assume a state of affairs which was not the true state ofaffairs. If this analysis is correct, then the divisionof judicial opinionreferred to at the beginning of those reasons may, at least in many instances,be illusory rather than real. It is not a large step to say knowledge that arepresentation may convey a meaning contrary to the facts is also knowledgethatthe representation is false and the making of the representation ismisleading and deceptive conduct.

Associate:

Dated:16 December 2003

MANSFIELD J

17I have had the benefit of reading in draft the reasons for decision of MooreJ and of Stone J. I too agree with the reasonsfor decision of Stone Jconcerning the appeal by Medical Benefits Fund of Australia Ltd and the orderswhich she proposes. In respectof the appeal by John Bevins Pty Ltd, I alsoagree with the reasons for decision of Stone J, save for the matter which MooreJ hasseparately addressed. I agree with the reasons of Moore J on that oneissue. It follows that I agree with the orders which StoneJ proposes for thedisposition of that appeal.

Associate:

Dated:16 December 2003

STONE J

18On 9 September 2002 a judge of this Court held that Medical BenefitsFund of Australia Limited (ACN 000 057 590) (`MBF'), bycertain television andbillboard advertisements, had engaged in conduct that was,inter alia,misleading and deceptive or likely to mislead or deceive in contravention ofs 12DA(1) of theAustralian Securities and Investments Commission Act1989 (Cth). His Honour rejected a similar allegation in respect of MBF'snewspaper advertisements.

19At the same time his Honour held that John Bevins Pty Limited (ACN 002003 572) (`Bevins'), by creating the television and billboardadvertisementsand arranging for them to be published, was knowingly concerned with MBF'scontraventions. MBF and Bevins have bothfiled appeals from the primarydecision in respect of the television and billboard advertisements (proceedingsnumbers N 1090 of2002 and N 1117 of 2002 respectively) and thoseappeals have been heard together.

BACKGROUND TO THE APPEALS

20The advertisements that are the subject of these appeals were prompted bythe Federal Government `Lifetime Health Cover' initiative,which was announcedon 11 May 1999 and scheduled to commence on 1 July 2000. As the primaryjudge stated, at pars [1] to [2]:

`By this initiative the Federal Government sought to reduce thestrain on the public health system by encouraging Australians to takeoutprivate hospital cover. In effect the initiative meant that Australians agedbetween 31 and 65 who took out private hospitalcover on or before 30 June2000 were not required to pay a graduated system of premiums which increasedwith age. Those who joinedafter that date and were over the age of 30 becamesubject to the graduated system of premiums.

The 30 June deadline received widespread publicity. Members of the publicwere encouraged to purchase private health cover beforethat date. The privatehealth funds including the first respondent ...[MBF], not surprisinglyembarked on aggressive advertising campaigns to encourage prospective customersto purchase their particular healthinsurance products. To this end MBFemployed ... Bevins ... to design television and print advertisements.'

21The applicants below alleged that by television commercials screenedbetween May 2000 and July 2000, MBF made misleading or deceptiverepresentations that it would waive all waiting periods applying in respect ofpregnancy and obstetrics for customers who purchasedhealth insurance beforethe deadline of 30 June 2000 (`the waiver representation') and that consumerswho purchased health insurancecould claim expenses related to pregnancy theday after joining (`the claim tomorrow representation'). Further, it wasalleged thatby printed advertisements, displayed in newspapers and onbillboards at railway stations between August 2000 and September 2000,MBF madethe misleading and or deceptive representation that if a pregnant womantransferred to MBF from another health fund shewould forthwith be covered forexpenses related to the pregnancy (`the transfer representation'). Bevins wassaid to have been knowinglyconcerned in, or a party to, the allegedlymisleading and deceptive conduct of MBF through its involvement in the creationof theadvertisements.

22The advertisements focussed on the lives of three characters whose storieswere told in chronologically progressive chapters. Each character was said tobe an existing member of MBF. Relevantly, one of the characters, `Steve', wasan expectant father whosewife, `Judy', had fallen pregnant in late 1999.Steve and Judy's story contained four chapters. The first two chapters showedthecouple shopping for, and viewing ultrasound images of, their unborn child;Steve, at work as a police officer, expressing concernover the pregnancy; andSteve and Judy attending an antenatal class. Text appearing on the screen inthe second chapter said thatSteve's MBF health cover helped to pay forantenatal classes. The final two chapters of Steve and Judy's story were saidto containthe waiver representation and the claim tomorrow representation.

23The primary judge dealt with the representations at pars [10] to [14] of hisreasons for judgment:

`The Waiver Representation

[10]The third chapter in Steve and Judy's story depicted the day on whichtheir baby was born. It began with the text on the screenstating "Steve andJudy's big day didn't go as planned." Judy, in a hospital bed is shown lookinganxious and in pain, explainsthat "the artificial induction hasn't worked ...and so we're off to have a caesarean". This was followed by images of StevehuggingJudy, an anaesthetist putting a needle into Judy for an epidural andJudy being wheeled into surgery with Steve following. The text"Fortunately,they had MBF FamilyFirst with their doctor of choice" appears on screen. Thiswas followed by Steve coming into thewaiting room and announcing that "It's agirl". He is then shown holding his newborn baby in a carry box with a closeup of thebaby. Judy is then shown in a hospital bed waving and smiling - sheannounces happily "I'm a mum". The final scenes are of Steveand Judy sayingthat their daughter was "just beautiful" and kissing. The text"Congratulations Steve and Judy and Georgia Madison"appears on the screen withthe voice over "Join any MBF hospital cover before 30 June and they'llwaivethe two and six month waiting periods [phone number given]" (emphasisadded). The final screen shows the MBF logo with a phone number displayed andthe words "or visita Member Centre" in small text underneath. Below that, atthe bottom of the screen, text approximately half the size appears, forunder 5seconds. The text reads "12 month waiting periods such as pre existingconditions and obstetrics will apply."

The Join Today, Claim Tomorrow Representation

[11]The finale of Steve and Judy's story depicted them getting used totaking care of their baby at home. It began with the text"Congratulations toMBF Members Steve and Judy (and Georgia)" while Judy talks about the questionsthey have to ask themselves abouttheir baby to take care of her such as "Isshe hungry or is she wet?". The images shown are of the couple bathing theirbaby andholding her outside their home. These were followed by a time-lapsesequence of Steve and Judy decorating the nursery. The text"Your big day isJuly 1" then appears on the screen with a "Lifetime Health Cover" umbrellalogo. A montage of images of Steve andJudy from the other commercials andincluding an underwater image of Judy swimming whilst pregnant is then shownwhile the voiceover states:

"Steve and Judy's MBF Family First is a unique type of health cover, becauseit's the only cover for families that gives them extrabenefits for havingsimple health checks. They can also claim on things like sports gear andnatural therapies, and of course, qualityhospital cover with their doctor ofchoice. And if you join by July 1, MBF will waive the 2 and 6 month waitingperiods."

Following an image of the newborn baby clasping an adult finger, and during thevoice over, the text "Join today. Claim tomorrow" (emphasis added)appeared on the screen with the words "12 month waiting periods such as preexisting conditions and obstetricsstill apply" appearing at the bottom of thescreen, approximately half the size of the emphasised text above. This screenappearsfor under 5 seconds. The commercial concluded with an image of Steveand Judy holding their baby in front of their home "rocking"the baby andlaughing. This fades to the MBF logo with a phone number and the text "orvisit a Member Centre".

...

The Billboard Advertising in New South Wales and Queensland

[14]It was not in issue that in September 2000 MBF displayed on outdoorrailway billboard advertisements that had been preparedby the John Bevinsagency. These also depicted a heavily pregnant semi naked woman and had thewords "Are you sure your health coveris going to deliver?" printed adjacent tothe image. In significantly smaller print at the bottom of the poster appearedthe words"Does your health insurance cover you for things like pregnancy, aknee replacement or major heart surgery? If not you'll find thatswitching toMBF pays - once you've served your waiting period you're covered*." In printapproximately one half the size directlybelow appeared the words "*Conditionsapply, including a 12 month waiting period." There was no evidence as to theexact size ofthe railway billboards. Suffice to say that each billboard waslarge enough that if a person of average eyesight stopped to examineone, whereit was displayed with good lighting, the text would have been large enough toread without difficulty.'

LEGISLATIVE BACKGROUND

24The first instance application, filed on 5 February 2001, was brought undertheAustralian Securities and Investments Commission Act 1989(Cth)(`ASIC Act 1989'). That legislation was superseded by theAustralianSecurities and Investments Commission Act 2001 (Cth) (`ASIC Act')which commenced on 15 July 2001.Section 268 of theASICActprovides that:

`(1) This section applies to a proceeding in relation to whichthe following paragraphs are satisfied:

(a)the proceeding was started in a court before the commencement; and

(b)the proceeding was a federal ASIC proceeding that related to amatter to which a provision of the old ASIC legislation of the Commonwealth...applied; and

(c)the proceeding had not been concluded or terminated before thecommencement.

(2) In this section:

(a)the proceeding to which this section applies is called the"continued proceeding"; and

(b)the provision of the old ASIC legislation referred to in paragraph(1)(b) is called the "relevant old provision".

(3) Subject to subsection (4):

(a)the continued proceeding continues after the commencement in thesame court as if it were, and always had been, a proceeding in relationto amatter to which the provision of the new ASIC legislation that corresponds tothe relevant old provision applies; and

(b)to the extent that the proceeding, before the commencement, relatedto pre-commencement rights or liabilities, the proceeding, ascontinued,relates, and is taken always to have related, to the substituted rights andliabilities in relation to those pre-commencementrights and liabilities.

(4)Subject to any order to the contrary made by the court, the court must dealwith the continued proceeding as if:

(a)the steps that had been taken for the purposes of the proceeding before thecommencement had been taken for the purpose of theproceeding as continued bythis section; and

(b)any orders made in relation to the proceeding before the commencement hadbeen made in relation to the proceeding as continuedby this section.'(original emphasis)

25The present proceeding satisfies the criteria atss 268(1)(a), (b)and (c) and is therefore, since 15 July 2001, a `continuedproceeding'. As such, pursuant tos 268(3)(a), the continued proceedingcontinues `as if it were, and always had been' a proceeding to which theprovisions of theASIC Actapply.

26The relevant provisions are of theASIC Actare:

`12DA (1)[Prohibition]A person must not, intrade or commerce, engage in conduct in relation to financial services that ismisleading or deceptive or islikely to mislead or deceive.

...

12DB (1)[Prohibition]A person must not, in trade orcommerce, in connection with the supply or possible supply of financialservices, or in connectionwith the promotion by any means of the supply or useof financial services:

...

(c)represent that services have sponsorship, approval, performancecharacteristics, uses or benefits they do not have;

...

(g)make a false or misleading representation concerning the existence,exclusion or effect of any condition, warranty, guarantee,right or remedy.

...

12DF (1)[Offence] A person must not, in trade or commerce, engage inconduct that is liable to mislead the public as to the nature, thecharacteristics,the suitability for their purpose or the quantity of anyfinancial services.'

27Sections 12DA,12DB and12DF of theASIC Actare analogous toss 52,53(c),53(g) and 55A of theTrade Practices Act 1974(Cth)(`TPA'). There is no relevant material difference between theseprovisions of theASIC Act and theTPAand it was not incontention that the principles (and case law) applicable to contraventions ofPart V of theTPA are also applicable to determining whether there hasbeen a contravention of the above provisions of theASIC Act.

MBF APPEAL (N 1090 OF 2002)

28MBF submits that the primary judge erred in law in finding that itstelevision and billboard advertisements breached theASIC Actand that,even if his Honour's finding was correct, the relief ordered was notappropriate. Those orders include that MBF publishcorrective advertising in aform approved by the Court. That order was stayed pending the determination ofMBF's appeal.

29The central thrust of the MBF appeal is that the advertisements it publishedwere not misleading and deceptive or likely to misleador deceive.Section 52 `is a comprehensive provision of wide impact';Brown v JamFactory Pty Ltd[1981] FCA 35;(1981) 53 FLR 340 at 348. Whether conduct is misleading ordeceptive or likely to mislead or deceive is a question of fact which the courtmust determinefor itself.

30MBF's submissions, both written and oral, referred variously to what a`reasonable member of the public' or an `ordinary normalperson actingreasonably' might do or think. InParkdale Custom Built FurnitureProprietary Limited v Puxu Proprietary Limited[1982] HCA 44;(1982) 149 CLR 191 at 199,Gibbs CJ commented that:

`Although it is true, as has often been said, that ordinarily aclass of consumers may include the inexperienced as well as the experienced,and the gullible as well as the astute, the section must in my opinion by[sic] regarded as contemplating the effect of the conduct on reasonablemembers of the class. The heavy burdens which the section createscannot havebeen intended to be imposed for the benefit of persons who fail to takereasonable care of their own interests.'

The Chief Justice added that what is reasonable will depend on all thecircumstances.

31The proposition that in assessing whether a representation contraveness 52 of theTPA(and its analogues) the court should examine theeffect of that conduct on a reasonable person in the class of persons to whomtherepresentation was made is supported by the High Court's decision inCampomar Sociedad, Limitada v Nike International Limited[2000] HCA 12;(2000) 202 CLR45 at 85 where the High Court (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby,Hayne and Callinan JJ) stated:

`Where the persons in question are not identified individuals towhom a particular misrepresentation has been made or from whom arelevant fact,circumstance or proposal was withheld, but are members of a class to which theconduct in question was directed ina general sense, it is necessary to isolateby some criterion a representative member of that class. The inquiry thus isto be madewith respect to this hypothetical individual why the misconceptioncomplained has arisen or is likely to arise if no injunctive reliefbe granted.In formulating this inquiry, the courts have had regard to what appears to bethe outer limits of the purpose and scopeof the statutory norm of conductfixed bys 52. Thus, inPuxu, Gibbs CJ observed that conduct notintended to mislead or deceive and which was engaged in "honestly andreasonably" might neverthelesscontravenes 52. Having regard to these"heavy burdens" which the statute created, his Honour concluded that, where theeffect of conduct on a classof persons, such as consumers, was in issue, thesection must be "regarded as contemplating the effect of the conduct onreasonablemembers of the class." '

32The class of persons to whom the advertisements for health insurance wereaddressed was extremely large, particularly because theFederal Government wasvigorously encouraging the Australian public to purchase health insurance. MBFsubmitted that any reasonableperson whose decision-making processes wereinitiated by the advertisements would have checked that their assumptions inrelationto the waiver of waiting periods were correct. However, theextraordinary width of the class in question suggests that it wouldhaveincluded many people whose decision making processes lacked the level ofsophistication that MBF suggests a `reasonable' personwould have exercised.

The alleged errors in the primary judge's reasoning

33MBF submits that the primary judge was in error in finding that thetelevision commercials conveyed a representation that MBFwas waiving theapplicable waiting periods for pregnancy related expenses and that a personcould claim on their insurance the dayafter they joined. MBF makes thefollowing points:

(i) each television commercial contained a disclaimer, albeit in fine print,stating that the 12 month waiting period for obstetricscontinued to apply;

(ii) no statement was explicitly made that the 12 month waiting period wouldbe waived;

(iii) the persons depicted in the advertisements were said to be existing MBFmembers rather than people who had just joined andtherefore a viewer wouldassume they were enjoying the benefits of obstetrics cover because theirwaiting period had already expired;and

(iv) even if the primary judge's findings regarding the impression conveyed bythe television commercials are correct (which MBFdenies), his Honour failed toconsider the nature of the relevant services, the circumstances in which thoseservices are acquiredand the disclosures which are inevitably made to personsseeking to acquire MBF's insurance services.

34In respect of the billboard advertisements, the primary judge accepted thatpeople who viewed them would most likely be toldof the waiting periods by MBFstaff or read about them in MBF literature. His Honour held, however, thatthis later disclosure wasnot effective to change the misleading character ofthe advertisements. MBF submits that in reaching this conclusion his Honourfailed to assess the practical effect of the impugned conduct. MBF says thatin determining whether conduct contravenes the relevantlegislation, `the courtmust have regard to any conduct which might render any error on the part of aconsumer temporary and commerciallyirrelevant' and that the subsequent conductof both the representee and MBF will have a bearing on both relief andliability.

35MBF submits that irrespective of the impression conveyed by the main part ofthe advertisements the written disclaimers weresufficiently prominent to bringthe obstetrics waiting period to the attention of a person viewing theadvertisements.

36In support of its submissions MBF points to the decision of Moore J inGeorge Weston Foods Ltd v Goodman Fielder Ltd[2000] FCA 1632;(2000) 49 IPR 553(`Wonder White Case'). In that case Moore J held that an asterisk canbe sufficient to draw the attention of a consumer to a qualification of arepresentation. That case concerned,inter alia, the packaging of breadwhich declared in large typeface `Now Twice the Fibre*'. Moore J observed, at572, that:

`the asterisk is prominent and would be taken to signify somequalification or explanation of the words used. One could expect aconsumerinterested in the fibre content to seek out the qualification or explanation.Not only is the explanation within 2 cm ofthe words used on the package(albeit in much smaller type) but it is repeated elsewhere on thepackaging.'

37While theWonder White Case is authority that an asterisk leadingto a qualification of a representation may be effective to neutralise anotherwise misleadingor deceptive advertisement, whether this is so is a matterfor determination in the specific circumstances of any particular case. Thequalifying material must be sufficiently prominent to prevent the primarystatement being misleading and deceptive or likelyto mislead or deceive;Australian Competition and Consumer Commission v Signature Security GroupPty Limited[2003] FCA 3 at[26] - [27];[2003] FCA 3;(2003) ATPR 41-908.

38Signature Security involved,inter alia, the advertising ofsecurity systems for a price exclusive of any goods and services tax component.In that case, at [27], I commented:

`The degree of prominence required may well vary with thepotential of the primary statement to be misleading and deceptive. It seemstome that a representation that the price of goods is $295 is seriouslymisleading if the truth is that they are never availableat that price. Evenan astute observer noticing the asterisk and realising that it directs thereader to additional informationmight be led to believe that the goods wereavailable for $295 at least in some circumstances. It is unlikely that such anobserverwould immediately conclude that they were never available at thatprice. In those circumstances it would take an extremely prominentreferenceto the additional information to prevent such a representation from beingmisleading.'

39This reasoning is pertinent to the MBF advertisements in question, whichpresented the striking image of a pregnant woman withthe waiver and claimtomorrow representations (primary statements). The disclaimer qualified theserepresentations. The impactof the fine print qualification is, however,disproportionate to the impact of the pregnancy image and the primarystatements. Thepotential for the overall effect to be misleading anddeceptive is immense.

40In the billboard advertisements the disclaimer was flagged by an asterisk.In the television advertisements it was not. Ratherthe text, `12 monthwaiting periods such as pre-existing conditions and obstetrics still apply',appeared at the bottom of the screen,in small font, for less than fiveseconds. Even an astute and observant viewer may not have had sufficient timeto peruse the fineprint with sufficient care to notice the qualification andit is not unlikely that even a reasonably careful viewer might have beenmisled.

41Asterisk or not, the disproportion in both the television and billboardadvertisements between the dominant representations andthe qualification ofthose representations was such that the qualification was insufficient to drawthe attention of prospectivecustomers to the fact that a waiting periodapplied for obstetrics claims. It is the entire effect, particularly the firstimpression,that makes the advertisements misleading. Moreover, the fact thatthe advertisements were part of a campaign to attract new memberspursuant tothe `Lifetime Health Cover' initiative was relevant for, as the primary judgeobserved, at [47]:

`The fact that consumers were forced to make a decision onwhether to purchase private health insurance in what was a quite shortperiodof time leading up to the 30 June deadline explains why this first impressionwas so significant.'

The subsequent disclosures

42MBF submits that, even if a prospective customer was misled by thetelevision or billboard advertisements, later disclosuresmade to theprospective customer would dispel any misapprehension as to the cover offeredby MBF, including relevant waiting periods. When prospective customers madefurther enquiries, or contacted MBF to obtain insurance, appropriatedisclosures would have beenmade in booklets titled `Your Choice!' or`Quickjoin'; on the internet where prospective customers could followhyperlinks to theterms and conditions; or in many cases, orally by MBF staff.In any event, MBF submits, new members were provided with a `WelcomePack'which disclosed the fact that certain waiting periods apply. MBF alsosubmitted that any reasonable person would take stepsto ensure that theirassumptions arising from the advertisements (correct or otherwise) wereaccurate.

43It is not to the point that the ACCC only identified two instances of peoplewho had actually been misled. Although evidenceof the public being misled ordeceived may be persuasive, it is not necessary for there to be any suchevidence;Taco Company of Australia Inc v Taco Bell Pty Ltd[1982] FCA 136;(1982) 42ALR 177. The submission that there is room under theTPAor itsanalogues for publication of misleading or deceptive advertising so long as itis corrected by later material is not sustainable.Section 12DA(1) of theASIC Actprohibits conduct that is `misleading or deceptive or is likelyto mislead or deceive' and neither intent nor effect is determinativeofwhether conduct is in breach of this provision;Yorke v Lucas[1985] HCA 65;(1985) 61ALR 307 (`Yorke v Lucas') at 666 andEquity Access Pty Ltd v WestpacBanking Corporation[1989] FCA 506;(1989) 16 IPR 431 at 441. Nor is it to the point thatthe misleading or deceptive impression may or will be corrected before or afterany contractis made. Whether a representation is misleading or deceptive (orlikely to be so) depends on the circumstances in which it is madeand not onwhat might happen in the future;St Luke's Health Insurance v MedicalBenefits Fund of Australia Limited[1995] FCA 1314;(1995) ATPR 41-428;Minister forHealth and Aged Care v Harrington Associates Ltd[2000] FCA 1723;(2000) 107 FCR 212.

44In my view the primary judge's conclusion that the television and billboardadvertisements were misleading was correct for thereasons his Honour gave.Consequently the declarations made by his Honour on 2 October 2002 inrelation to contraventions ofss 12DA,12DB and12DF were correct.

Relief

45In their amended application filed on 25 June 2001, therespondents to the MBF appeal sought,inter alia, orders underss 12GD and 12GE of theASIC Act 1989 directing MBF to publishcorrective advertising on television and in newspapers. Section 12GE, whichspecifically provided for theCourt to make such orders, was repealed effectivefrom 11 July 2001 when theASIC Actcame into force. It wasreplaced by ss 12GLA and 12GLB, dealing with non-punitive and punitiveorders respectively. This amendmentmirrors the repeal of s 80A of theTPA and its replacement by ss 86C and 86D. The circumstances inwhich s 12GLB of theASIC Actand s 86D of theTPAallow the Court to make punitive orders do not apply here. Section 12GLA oftheASIC Actis relevant and provides:

`Non-Punitive Orders

12GLA (1)[Court may make orders in subs (2)]The Court may, onapplication by ASIC, make one or more of the orders mentioned in subsection (2)in relation to a person who hasengaged in contravening conduct.

12GLA (2)[Court orders]The orders that the Court may make in relationto the person are:

(a)a community service order; and

(b)a probation order for a period of no longer than 3 years; and

(c)an order requiring the person to disclose, in the way and to thepersons specified in the order, such information as is so specified,beinginformation that the person has possession of or access to; and

(d)an order requiring the person to publish, at the person's expenseand in the way specified in the order, an advertisement in the termsspecifiedin, or determined in accordance with, the order.

12GLA (3)[Court's powers not limited]This section does not limit theCourt's powers under any other provision of this Act.'

Subsection (4) includes a definition of `contravening conduct' that includesconduct that contravenes s 12DA.

46The primary judge, having found that MBF's conduct in relation to thetelevision and billboard advertising was misleading anddeceptive (and therebycontravened s 12DA of theASIC Act) ordered MBF to publishcorrective advertising by television and in various newspapers, however thisorder was stayed pending thehearing of this appeal. In making those ordershis Honour referred to s 12GE of theASIC Act 1989, noting that ithad been repealed. Although the primary judge did not refer to s 12GLA,it would seem (for reasons outlined in [25]above) that this was the relevantsection at the time of those orders and therefore his Honour had jurisdiction,in the exerciseof his discretion, to order corrective advertising. Unlikess 86C and 86D of theTPA,ss 12GLA and 12GLB are notrestricted to conduct that occurred after their commencement. Consequently,Lindgren J's concern as tothe availability of power to make orders forcorrective advertising after the date on which s 80A was replaced bys 86C, in relationto conduct that occurred before that date, is notrelevant in this case;Australian Competition and Consumer Commission vWoolworths Limited (No 2)[2002] FCA 1046 at[23];(2002) ATPR 41-890.

47The primary judge expressed the opinion that there would be few, if any,people now labouring under any misconception as a resultof the MBFadvertisements. Nevertheless, his Honour held that an order for correctiveadvertising was appropriate as it would drawthe attention of anyone who mayhave been misled to the availability of a remedy as well as generally raisingpublic awareness ofwaiting periods for health insurance cover and the need toanalyse advertisements published by the insurance industry carefully.

48The principles guiding the exercise of discretion in relation to correctiveadvertising have developed in the context of orderssought under s 80 ands 80A of theTPA.Those principles have emphasised that the poweris to be used protectively and not punitively. The addition of s 86D ands 12GLBto theTPA and theASIC Actrespectively haveexpanded the Court's power by expressly providing for punitive orders; seeExplanatory Memorandum,Trade Practices Amendment Bill (No 1) 2000Item24 and Revised Explanatory Memorandum,Financial Services Reform(Consequential Provisions) Bill 2001 3.16-3.18. As s 12GLB does notapply here (see [45] above) there is no question of there being a punitiveorder under that section. Accordingly the principles developed under s 80and s 80A of theTPAare applicable.

49There are numerous authorities for the proposition that the purpose ofordering corrective advertising under s 80 and/or s 80Aof theTPA is to protect the public interest and that punitive considerationsshould not be entertained. InAustralian Competition and ConsumerCommission v On Clinic Australia Pty Ltd(1996) 35 IPR 635,Tamberlin J observed, at 640:

`The purpose of corrective advertising is to protect the publicinterest. ... Corrective advertising is intended to dispel incorrector falseimpressions which may have been created as a result of deceptive or misleadingconduct. It is not intended to be punitive. In any matter concerningcorrective advertising the timing of such corrective advertising is of courseimportant, ... There isno principle that any particular period is appropriateas a point beyond which corrective advertising is not warranted. In thecontextof advertising it is necessary to examine the nature, extent andintensity of the advertising and the media in which it has beenreleased with aview to deciding whether there could reasonably be any current misapprehensionas a result of the advertisements.'

See alsoJanssen Pharmaceutical Pty Ltd v Pfizer Pty Ltd(1986) ATPR40-654,Makita (Australia) Pty Ltd v Black & Decker (Australasia) PtyLtd[1990] FCA 166;(1990) ATPR 41-030 at 51,477;Hospital Contribution Fund AustraliaLtd v Switzerland Australia Health Fund Pty Ltd (1988) ATPR 40-846 at49,117;Australian Competition and Consumer Commission v Hungry Jack's PtyLtd[1996] FCA 955;Australian Competition and Consumer Commission vPurple Harmony Plates Pty Ltd[2001] FCA 1062 at[33]; andTruth AboutMotorways Pty Ltd v Macquarie Infrastructure Investment Management Pty Ltd[2000] FCA 918;(2000) 34 ACSR 673 at 677. This approach is peculiarly apt in relation toorders made under s 12GLA of theASIC Actand s 86C of theTPA now that there is specific provision for `punitive orders' ins 12GLB of theASIC Actand s 86D of theTPA.

50Advertising that is directed to dispelling incorrect or false impressionscreated as a result of deceptive or misleading conductwill generally have, asan ancillary benefit, some public educational effect in relation to theoperation of the relevant legislativeprovisions. InAustralian Competitionand Consumer Commission v Target Australia Pty Ltd[2001] FCA 1326;(2001) ATPR 41-840(`ACCC v Target') Lee J commented, at 43,382, that:

`The purpose sought to be achieved by corrective advertising isto raise public awareness - for both consumers and competitors - asto the typeof conduct that may contravene the Act, and as to the outcome of the particularlitigation.'

51This benefit had often been recognised including inAustralianCompetition and Consumer Commission v Real Estate Institute of WesternAustralia Inc[1999] FCA 1387;(1999) 95 FCR 114 (`ACCC v REIWA'). Although French Jwas there dealing with breaches of Part IV of theTPA,his commentsare equally applicable to the conduct under consideration here. French Jaccepted that under s 80 of theTPAthere was power to make ordersto bring the outcome of those proceedings to the attention of the members ofthe Real Estate Instituteof Western Australia and to the public as consumers.Nevertheless his Honour observed that it is important that correctiveadvertisementsdo more than merely announce a `win' for the ACCC. In relationto the contraventions of Part IV of theTPAFrench J held, at 133,that s 80 authorised advertisements `directed to informing the relevantmarkets of the outcome of the litigationso that those in the market have atleast a broad understanding of the ways in which the contravenors have had tochange their conduct.'Such advertisements `aid in the enforcement of theprimary orders and the prevention of the repetition of the contraveningconduct.'

52His Honour expressed similar views inAustralian Competition and ConsumerCommission v Virgin Mobile Australia Pty Ltd (No 2)[2002] FCA 1548(`Virgin Mobile') where he was prepared to make consent orders forcorrective advertising because the proposed advertisement was `consistent withthe objectives of consumer protection for which such advertisements should beordered in respect of contraventions of Pt V'. HisHonour noted, at [22], thatthe advertising would `assist in drawing [the contravention] to the attentionof consumers generallywho may have acquired Virgin Mobile packages or may becontemplating doing so' and would serve `the positive function of alertingconsumers to the obligation imposed on Virgin Mobile to disclose those things',namely the cash price and minimum cost of the phonepackage.

53In discussing the question of corrective advertising the primary judgestated that he saw `utility' in ordering MBF to publishcorrective advertisingin newspapers and on television because it would not only remind the publicthat MBF had engaged in misleadingconduct but would educate both the insuranceindustry and its customers about the consequences of misleading advertising.His Honourcontinued, at [91]:

`Such advertising will, also, make consumers aware, if theythemselves were induced to purchase insurance on reliance of theadvertisements,that they might have some remedy. Further, the generalcomplexity of the health insurance products and particularly waiting periodsmeans that even if consumers had forgotten the actual advertisement, acorrective advertisement will assist them to understand theimportance ofwaiting periods in the future and increase the awareness of consumersaccordingly.'

54It was submitted for MBF that there must be a nexus between anycorrective advertising and the conduct that constituted the statutorybreach.In the absence of such nexus it was submitted that the Court has no power tomake an order directed to the general educationof the public about itsstatutory rights and their enforcement; see the comments of French J inACCCv REIWAat 113. As Mr Sackar QC, senior counsel for MBF put it, MBF couldnot `legitimately be ordered to pay for educating consumers generallynoreducating the insurance community generally'. I agree with that propositionbut do not agree that this was the effect of theprimary judge's orders. Whilehis Honour expressed the view that most consumers had not been misled heclearly accepted that therehad been some persons who were misled intopurchasing MBF products by the advertisements in question. He stated, at [86]:

`If corrective advertisements are placed with televisionstations the nature of the misleading conduct will be drawn ... to theattentionof the public and if they were misled they will be able to take suchadvice as they may receive in the circumstances of their case.'

In my view there was a sufficient nexus between MBF's conduct and thecorrective advertising ordered by the primary judge for it tobe within hispower, and a matter for his discretion, to make the orders.

55The primary judge ordered that his orders for corrective advertising bestayed `pending the prosecution of an appeal'. In doingso he noted theundertaking given by MBF that it would file and serve any notice of appealwithin 14 days of his Honour's orders,would prosecute any appeal with `dueexpedition' and would not, on the appeal:

`make any submission that the rights of the First Applicant areaffected by any time elapsing between today and the ultimate dispositionof theappeal.'

MBF has abided by that undertaking and has confined its submissionsconcerning the passage of time to the period between the advertisingcampaignand his Honour's orders.

56As mentioned above, the orders for corrective advertising were made in theexercise of the primary judge's discretion. InHouse v TheKing[1936] HCA 40;(1936) 55 CLR 499, which involved an appeal against sentence, Dixon,Evatt and McTiernan JJ, at 504-5, outlined the principles governing an appealagainst an exercise of discretion:

`It is not enough that the judges composing the appellate courtconsider that, if they had been in the position of the primary judge,theywould have taken a different course. It must appear that some error has beenmade in exercising the discretion. If the judgeacts upon a wrong principle,if he allows extraneous or irrelevant matters to guide or affect him, if hemistakes the facts, if hedoes not take into account some materialconsideration, then his determination should be reviewed and the appellatecourt may exerciseits own discretion in substitution for his if it has thematerials for doing so. It may not appear how the primary judge has reachedthe result embodied in his order, but, if upon the facts it is unreasonable orplainly unjust, the appellate court may infer thatin some way there has been afailure properly to exercise the discretion which the law reposes in the courtof first instance. Insuch a case, although the nature of the error may not bediscoverable the exercise of the discretion is reviewed on the ground thatasubstantial wrong has in fact occurred.'

57MBF submits that the orders for corrective advertising made by theprimary judge were so unreasonable as to indicate error on thepart of hisHonour. It points to the long period that elapsed between the advertisingcampaign and the orders and to his Honour'sfindings that it is likely thatmost customers were not misled. In addition MBF submits that since theadvertising campaign wasdirected to a specific offer that applied during aperiod that has long since expired, there is no currently operativemisrepresentationto dispel. Given these factors, MBF submits, correctiveadvertising may create confusion where none presently exists.

58The effluxion of time generally must have a bearing on the utility of ordersfor corrective advertising; seeTrade Practices Commissionv OptusCommunications Pty Ltd(1996) 34 IPR 176 (`TPC v Optus') at 196 andAustralian Competition and Consumer Commission v Wizard Mortgage CorporationLimited[2002] FCA 1317;(2002) ATPR 41-903. MBF's advertising program ran between January2000 and September 2000. It is now three years since the program ended.Irrespectiveof the undertaking by MBF referred to in [55] above, this Court isentitled to take this period into account in considering whetherthe orders forcorrective advertising are, in the present circumstances, so unreasonable orunjust that they should be set aside.

59I accept MBF's submission that there is no continuing opportunity for theadvertisements to mislead the public and thereforeit is unnecessary to correctany ongoing misapprehension. I am mindful of the primary judge's view thatthere will have been somepersons who were misled into purchasing MBF'sproducts by the misleading advertisements as well as his qualification that,`it islikely that most consumers were not, if only because they will not haverelied upon the advertisements, but rather upon other informationandliterature given to them by MBF'. I accept that the passage of time (includingthe time between his Honour's orders and thepresent) is such that there is alegitimate concern as to whether corrective advertisements would be likely tocause confusion andbe of little utility. I also accept that, in principle,there is utility in informing those people who were misled (be the grouplargeor small) of the true position and thus putting them in the position to assessany rights they may have as a result.

60There is particular cause for concern about whether, in these circumstances,television is an appropriate medium for correctiveadvertising. In consideringthe impugned advertisements, the primary judge referred to the views of MerkelJ inTelstra Corporation v Optus Communications Pty Limited(1997) ATPR41-541 where his Honour, reviewing certain comparative televisionadvertisements of Optus, said, at 43,514:

`[The advertisements]will be seen by the casual but notoverly attentive viewer viewing a free-to-air program with only marginalinterest in the advertisementsshown between the segments of the program. Inthat context it will be the first impressions conveyed to that viewer, ratherthanan analysis of the cleverly crafted constituent parts of the commercial,which will be determinative. The observations I have referredto above are ofparticular relevance to television advertising where the message is basicallyone of the impression conveyed.'

61This evanescent quality of television advertising is as relevant to theimpact of corrective advertisements as it is to those ofthe original campaign.Reminding viewers of the MBF campaign and correcting any misrepresentation thatarose from it would not besimple. In my view it is highly likely that suchadvertisements would not achieve their purpose and in the circumstances itwouldbe unjust to require MBF to publish them. I would set aside the primaryjudge's orders as to corrective television advertising.

62The primary judge also ordered that MBF publish corrective advertising incertain newspapers. In my view advertising in thisform is inherently betteradapted to convey a complex message than is television advertising. Theprimary judge recognised thisin finding that MBF's newspaper advertisementsdid not suffer from the same defects as the television and billboardadvertising andthus were not misleading. His Honour commented that `Printadvertisements give the reader more time to study the content. Theyhave notthe character of transience which television commercials have.'

63As previously noted (see [56] above) an order made in the exercise of theprimary judge's discretion should not be set asideon appeal merely because theCourt hearing the appeal may have come to a different conclusion. In thecircumstances, irrespectiveof whether I would or would not have made ordersfor newspaper advertising correcting the potentially misleading television andbillboardadvertising, I do not believe that it would be appropriate tointerfere with the orders for corrective advertising in newspapersmade by theprimary judge. I would therefore set aside the orders made by the primaryjudge in so far as they require correctivetelevision advertising. I wouldotherwise dismiss the appeal by MBF.

THE BEVINS APPEAL (N 1117 OF 2002)

64Section 12GD(1) of theASIC Act (echoing s 75B of theTPA) provides:

`If, on the application of the Minister, ASIC or any otherperson, the Court is satisfied that a person has engaged, or is proposingtoengage, in conduct that constitutes or would constitute:

(a) a contravention of a provision of this Division; or

(b) attempting to contravene such a provision; or

(c) aiding, abetting, counselling, or procuring a person to contravene such aprovision; or

(d) inducing, or attempting to induce, whether by threats, promises orotherwise, a person to contravene such a provision; or

(e) being in any way, directly or indirectly, knowingly concerned in, or partyto, the contravention by a person of such a provision;or

(f) conspiring with others to contravene such a provision;

the Court may grant an injunction in such terms as the Court determines to beappropriate.'

65On 2 October 2002 the primary judge declared that Bevins, `inmaking the advertisements ... and by arranging for them to be publishedwasdirectly, or indirectly, knowingly concerned in, or party to ... contraventionsof the ASIC Act'. It is from this finding ofaccessorial liability that Bevinsappeals.

66InCassidy v NRMA Health Pty Ltd[2002] FCA 1228 (`Cassidy vNRMA'), at [71] - [73], Jacobson J provided a succinct summary of thestatutory scheme for accessorial liability in theASIC Actand theTPA:

`It seems to me that the[ASIC]Act and the TPAcontain a statutory scheme which, in subdivisions D and G of the Act, and,in particular ss 12DA, 12DB, 12GB, 12GD, 12GF and 12GM,distinguish betweenprincipal liability and accessorial liability. The same scheme is to be foundin Part V and Part VI of the TPAand, in particular, ss 52, 53, 75B, 79,80, 82 and 87 of the TPA.

As part of this statutory scheme, s 12DA of the[ASIC]Act and s52 of the TPA, if contravened, may result in remedies irrespective of theprincipal's state of mind. By contrast, accessorialliability under s 12GD ofthe[ASIC]Act and under ss 75B and 80 of the TPAis imposedonly upon those who are knowingly concerned in the contravention of theAct.

It has been well established since the decision of the High Court inYorke v Lucas[1985] HCA 65;(1985) 158 CLR 661 at 667-669 that accessorial liabilityunder s 75B requires knowledge of the falsity of a representation andintentional participationin a contravention of the provisions of s 52 of theTPA.'

67The similarity between the provisions concerning accessorial liability intheTPAand theASIC Act (together the `accessory liabilityprovisions')is such that authorities dealing with the former areclearly applicable to the latter.

68The accessory liability provisions draw on criminal law notions ofculpability. InYorke v Lucas[1985] HCA 65;(1985) 158 CLR 661 (`Yorke vLucas'),the High Court was much influenced in its interpretation ofs 75B by this provenance. The Court referred at length to its earlieranalysis of accessory liability in the criminal sphere inGeorgianni v TheQueen[1985] HCA 29;(1985) 156 CLR 473 (`Georgianni'). The appellant inGeorgiannihad been convicted of a strict liability motor vehicleoffence unders 52A of theCrimes Act 1900 (NSW) in reliance ons 351 of that Act, which provided that a person who aids, abets, counselsor procures the commission of any misdemeanour could be proceededagainst as aprincipal offender. At 479 Gibbs CJ said:

`Section 52A prescribes an objective standard and, speakinggenerally, the reference to a motor vehicle being driven "at speed orin amanner dangerous to the public" refers to the actual behaviour of the driverand does not require any given state of mind asan essential element of theoffence:[reference omitted].That does not mean that a person can aid,abet, counsel or procure the commission of an offence of strict liabilitywithout havingan intention to do so formed in the light of knowledge of thefacts. The very words used in s 351, and the synonyms which expresstheirmeanings - e.g. help, encourage, advise, persuade, induce, bring about byeffort - indicate that a particular state of mindis essential before a personcan become liable as a secondary party for the commission of an offence, evenif the offence is oneof strict liability.'

69In relation to s 75B(1)(a) of theTPA, Mason ACJ, Wilson,Deane and Dawson JJ observed inYorke v Lucas, at 667:

`the words used, "aided, abetted, counselled or procured", aretaken from the criminal law where they are used to designate participationin acrime as a principal in the second degree or as an accessory before the fact.Both in the case of felonies where the principaloffender and the secondaryparticipant commit separate offences, and in the case of misdemeanour where nodistinction is drawn betweenthe two,a person will be guilty of theoffences ... only if he intentionally participates in it.To form therequisite intent he must have knowledge of theessential matterswhich go to make up the offence whether or not he knows that those mattersamount to a crime.'(emphasis added)

At 669 their Honours continued:

`Notwithstanding that s 75B operates as an adjunct to theimposition of civil liability, its derivation is to be found in the criminallaw and there is nothing to support the view that the concepts which itintroduces should be given a new or special meaning.'

70InGiorgiannitheHigh Court considered what must beestablished to impose accessory liability under the criminal law. Wilson,Deane and Dawson JJsaid, at 504 -505:

`Intent is an ingredient of the offence of aiding and abettingor counselling and procuring and knowledge of the essential facts oftheprincipal offence is necessary before there can be intent ....

Aiding, abetting, counselling or procuring the commission of an offencerequires the intentional assistance or encouragement of thedoing of thosethings which go to make up the offence. The necessary intent is absent if theperson alleged to be a secondary participantlacks knowledge that the principaloffender is doing something or is about to do something which amounts to anoffence.'

Their Honours continued, at 506-507:

`For the purposes of many offences it may be true to say that ifan act is done with foresight of its probable consequences, thereis sufficientintent in law even if such intent may more properly be described as a form ofrecklessness. There are, however, offencesin which it is not possible tospeak of recklessness as constituting a sufficient intent. Attempt is one andconspiracy is another. And we think the offences of aiding and abetting andcounselling and procuring are others. Those offences require intentionalparticipationin a crime by lending assistance or encouragement. They do not,of course, require knowledge of the law and it is necessary to distinguishbetween knowledge of or belief in the existence of facts which constitute acriminal offence and knowledge or belief that those factsare made a criminaloffence under law. The necessary intent is absent if the person alleged to bea secondary participant does notknow or believe that what he is assisting orencouraging is something which goes to make up the facts which constitute thecommissionof the relevant criminal offence. He need not recognize thecriminal offence as such, but his participation must be intentionallyaimed atthe commission of the acts which constitute it. It is not sufficient if hisknowledge or belief extends only to the possibilityor even probability thatthe acts which he is assisting or encouraging are such, whether he realizes itor not, as to constitutethe factual ingredients of a crime. If that weresufficient, a person might be guilty of aiding, abetting, counselling orprocuringan offence which formed no part of his design. Intent is requiredand it is an intent which must be based upon knowledge or beliefof thenecessary facts.'

71There is, however, at least one qualification (also found in the criminallaw) to the principle that a person cannot be found guiltyas an accessoryunless he had actual knowledge of all the matters that together are necessaryand sufficient for the conduct in questionto constitute an offence. It wasaccepted by the High Court inGiorgianni, per Gibbs CJ at 482:

`One qualification that must be accepted is that wilfulblindness, the deliberate shutting of one's eyes to what is going on, isequivalentto knowledge.'

Wilful blindness will not easily be imputed and must be something greaterthan mere negligence or recklessness. Gibbs CJ went onat 487:

`My view of the law may be summed up very shortly. No one maybe convicted of aiding, abetting, counselling or procuring the commissionof anoffence unless, knowing all the essential facts which made what was done acrime, he intentionally aided, abetted, counselledor procured the acts of theprincipal offender. Wilful blindness, in the sense that I have described, istreated as equivalent toknowledge but neither negligence nor recklessness issufficient.'

72Section 75B(1)(c) extends the liability to someone `knowingly concerned'in contravening conduct. However, it is clear fromYorke v Lucasthatthe reasoning applied to s 75B(a) also applies to s 75B(c). Thejoint judgment concluded at 670:

`In our view, the proper construction of par (c) requires aparty to a contravention to be anintentional participant, the necessaryintent beingbased upon knowledge of the essential elements of thecontravention.'(emphasis added)

73In a separate judgment Brennan J, at 677, expressed a similar viewstating that theTPA:

`does not extend liability for a s 52 contravention to aperson who procures the corporation to engage in contravening conduct ifthatperson is honestly ignorant of the circumstances that give that conduct acontravening character.'

At 673 his Honour said:

`Civil liability is ... imposed only on those who engage in conduct prescribedby s 75B with the state of mind which the criminallaw calls mens rea ....A person whose act or omission brings him within the literal terms of theprovision is not held liable, however,unless he engaged in the conduct thereinspecified (aiding, abetting, etc.) with a state of mind that amounts to mensrea.'

This approach has consistently been followed in this Court: see for exampleAustralian Competition and Consumer Commission v IMB Group Pty Ltd[2003] FCAFC 17 (`IMB Group') at [134];Fernandez v Glev[2002] FCA 1859 (`Fernandez v Glev') at [18];Cassidy v NRMAat [73];andChan Cuong Su t/a Ausviet Travel v Direct Flights International (No 2)(1999) ATPR 41-677 at 42,666.

74InRural Press Ltd v Australian Competition and Consumer Commission[2002] FCAFC 213;(2002) 118 FCR 236 (`Rural Press') the Full Court considered whetherfindings of accessory liability, by way of being knowingly concerned incontraventions of ss45(2)(a)(ii) and 45(2)(b)(ii) of theTPA,should be set aside. The Court, at [155], noted that the primary judge hadspecifically held that each of the appellants intendedto procure a resultwhereby competition in the area would `come to an end'. Counsel for theappellants submitted that, in orderto be guilty as an accessory it wasnecessary to show that a person actually knew that what they were participatingin amounted toa contravention of theTPA. That submission is clearlyincorrect in light ofYorke v Lucas; in particular at 667 per Mason ACJ,Wilson, Deane and Dawson JJ. The Full Court undertook a thorough analysis ofthe relevant authoritiesin this area, in particularYorke v LucasandGeorgianni and also referred to the decision of Lindgren J, inAustralian Competition and Consumer Commission v Giraffe World Australia PtyLtd (No 2)[1999] FCA 1161;(1999) 95 FCR 302 (`Giraffe World') at 346, in which hisHonour said: `It is not required that the accessory should have objectivelyappreciated that the conduct wasunlawful.' The Full Court inRural Presssaid, at [160]:

`In our opinion, Lindgren J's formulation inGiraffeWorld, which the primary Judge applied in the present case, accords with theprinciples relating to accessory liability stated by the HighCourt ....'

75I do not quibble with this analysis, which is clearly correct. It isvery well established that knowledge that conduct is unlawfulis not requiredto establish accessorial liability. However, it was not in contention that theappellants inRural Pressintended to bring about a lessening ofcompetition in the area (contrary to theTPA). The Full Court said, at[162], that the appellants `intended that the incipient competition in areashould be brought to an end.' The issue before the Full Court inRuralPress was a different one to the issue before this Court, which goesdirectly to what Lindgren J, inGiraffe World at 346, described as,

`the critical issue raised by the authorities of the state ofmind of the supposed accessory in relation to the particular pleadedcontraventions.'

76In this case, the primary judge accepted that Bevins did not subjectivelyappreciate that the advertisements were false misleadingor deceptive. At [73]his Honour stated:

`The question, therefore is whether the applicant has shown thatthe John Bevins Agency knew of the essential elements of the conductthatconstituted the relevant offence.The question is not whether the agency,or those employed by it subjectively appreciated that the advertisements werefalse or misleading. If it were I would find that they had no liability.I accept the evidence led that none of those who gave evidence formed the viewthat the advertisements were misleading. None intendedto mislead or deceivethe public.'(emphasis added)

77His Honour concluded, at [75]:

`It is clear that the Agency had knowledge of the essentialfacts which constituted the contraventions, even although they were notconsciously aware that those facts would give rise to a contravention. Itcould hardly be said that they were ignorant of the circumstancesthat gave theadvertisements their contravening character. They had created theadvertisements, they were aware that the advertisementswere to be publishedand in fact placed these advertisements with the media. The fact that theymade a mistake in assuming thatthe advertisements did not contravene the lawis no defence.'

78With great respect, I have difficulty in reconciling his Honour's viewwith the High Court's approach inYorke v Lucas which adopted theapproach to accessory liability explained inGiorgianni, where theWilson, Deane and Dawson JJ said, at 506:

`The necessary intent is absent if the person alleged to be asecondary participant does not know or believe that what he is assistingorencouraging is something which goes to make up the facts which constitute thecommission of the relevant ... offence.'

The learned primary judge held that neither Bevins nor its employeesbelieved the advertisements to be misleading or deceptive, orlikely to be so.His Honour also held that they did not intend `to mislead or deceive thepublic'. These findings dictate the outcomeof this appeal.

79Yorke v Lucas shows that knowledge of the actual conduct is notsufficient for accessorial liability. It concerned a sale of business in thecourseof which the vendors provided misleading information concerning turnoverand profit. Mr Lucas was the managing director of the vendor'sland agent.The vendor gave the information to Mr Lucas who passed it on to the purchasers.Mr Lucas was aware of the figures givenby the vendor but was not aware, andhad no reason to suspect, that they were incorrect. In holding that Mr Lucaswas not liableas an accessory, the majority of the High Court said, at667-8:

`Upon the findings of the trial judge ... Lucas lacked theknowledge necessaryto form the required intent. A contravention ofs 52 involves conduct which is misleading or deceptive or likely tomislead or deceive and the conduct reliedupon in this case consisted of themaking of false representations. Whilst Lucas was aware of the representations... he had noknowledge of their falsity and could not for that reason be saidto have intentionally participated in the contravention.'(emphasisadded)

80It is well established that neither knowledge nor intention is necessaryfor there to be a contravention of s 52 of theTPA or ofs 12GA of theASIC Act.It is sufficient (and necessary) that theconduct in question can be accurately described as `misleading or deceptive' or`likelyto mislead or deceive'. This misleading or deceptive character is aquestion of fact that must be decided in the context of allthe surroundingcircumstances;Taco Company 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 knowledgeof themisleading and deceptive character of the relevant conduct.

81InYorke v Lucas Mr Lucas was not liable as an accessory because hedid not know that the information he was giving to the prospective purchaserwasfalse. He lacked knowledge of an essential element of the contravention,such knowledge being `necessary to form the required intent';667 per MasonACJ, Wilson, Deane and Dawson JJ. In the words of Brennan J, he was `honestlyignorant of the circumstances that [gave]that conduct a contraveningcharacter'; see [71] above. As such and given that, per Gibbs CJ inGeorgianni, `a person cannot aid, abet, counsel or procure an offence ofstrict liability without having an intention to do so formed in lightof theknowledge of the facts', Mr Lucas could be not be liable as an accessory.

82This is not to say that to be liable as an accessory to a strict liabilitybreach of s 52 it is necessary to know that the conductof the principalis unlawful, or indeed to have any knowledge of the provisions of theTPA or theASIC Act. But it is necessary to know the essentialelements of the contravention, by which I understand that one must know thatwhich makesthe conduct a contravention; in this case, its misleading anddeceptive character. Only then can one form the intention to participateinconduct of that character.

83In some cases dealing with s 75B there are suggestions that liabilityunder s 75B does not require the accessory to know thatthe conduct of theprincipal has a misleading or deceptive character; see for instancePaperProducts Pty Ltd v Tomlinsons (Rockdale) Pty Ltd(1994) AIPR 41-315 at42,204;Heydon v NRMA(2001) Aust Torts Reports 81-588at66,390 per McPherson AJA; andAdler v Australian Securities and InvestmentsCommission[2003] NSWCA 131;(2003) 46 ASCR 504 at[331]-[342]. A similar view was expressedinWheeler Grace & Pierucci v Wright[1989] FCA 127;(1989) 16 IPR 189(`Pierucci') at 209 where Lee J, after referring to the majorityjudgment inYorke v Lucas, said:

`The knowledge required is not knowledge or awareness that theconduct has the capacity to mislead nor knowledge that it may be acontravention of s 52 of the Act. What must be shown to be possessed isknowledge of the elements of a contravention.'

His Honour further commented (at 210) that it was `immaterial whetherCollins understood the import of those circumstances or helda positive beliefas to the truth of the assertion he had made for the [company]'. The other twomembers of the Full Court, Neavesand Burchett JJ did not address this issue.

84InPierucci, Mr Collins, a company employee chairing a meeting ofinvestors made an unqualified prediction as to the return that could beexpectedon an investment when he was fully aware that the investment wasspeculative and that the statement required qualification. In fact,prior tothe meeting, Mr Collins participated in a resolution of the board of directors`that the speculative nature of the investmentshould be continually stressedto prospective unit holders'; at 209 per Lee J. It followed that Mr Collinswas aware that the statementrequired qualification and that this knowledge wasinconsistent with a claim that he did not intend to participate in thecontraveningconduct of the company.

85With respect, Lee J's proposition that an accessory does not need to knowthat `the conduct has the capacity to mislead' is inconsistentwith theYorke v Lucas. The High Court interpreted the accessory liabilityprovisions not as requiring that the accessory know the essential elements ofthe contraveningconduct but that he or she know the essential elementsof thecontravention.As stated earlier this involves knowing, inaddition to what happened, the fact that the relevant conduct is misleading ordeceptiveor likely to mislead or deceive. Moreover the proposition, that anaccessory does not need to know that the principal's conducthas the capacityto mislead, is not necessary to explain the decision inPierucci. Thefact that Mr Collins made an unqualified statement at the meeting, when he wasaware that the statement required qualification,was inconsistent with a claimthat he did not know the statement was misleading. In such circumstances Iaccept that it is not necessaryto show that the accessory subjectivelyintended that someone would actually be misled or deceived. It is sufficientthat the accessoryintentionally participated in conduct that he or she knewhad the capacity to mislead or deceive. It is, however, difficult to conceiveof circumstances in which a person intentionally participates in conduct thathe or she knows has a misleading or deceptive characterwithout intending tomislead or deceive, or at least wilfully blinding themself to this possibility.

86InRidgway v Consolidated Energy Corporation Pty Ltd(1987) ATPR 40-754 (`Ridgway') the first respondent made false and misleadingrepresentations to the effect that it had the exclusive licence to market anddistributean energy saving computer system and therefore had `title' to enterinto licence agreements with the applicants for the use of thesystem. It wasclaimed that, under s 75B of theTPA, the second respondent wasliable as an accessory in respect of those representations. Referring toYorke v LucasFox J stated,

`to be liable under sec 75B there must be knowledgeactual orconstructive on the part of those concerned of the essential facts ormatters constituting the contravention, although knowledge that they amounttoa contravention is not necessary.'(emphasis added)

In the circumstances before him, his Honour said that it was necessary toshow that the second respondent had actual or constructiveknowledge of thefirst respondent's lack of `title' to grant a licence to the applicants. Fox Jheld that there was no direct evidenceof the second respondent having actualknowledge and said `I do not think any can be inferred'. Accordingly the caseagainst thesecond respondent failed.

87The reference to `actual or constructive knowledge' is consistent withYorke v Lucas,where the court quoted the primary judge's findingthat Mr Lucas had not acted recklessly nor deliberately abstained from askingquestionsor making enquiries; quoted at 665-6. In that regard the comments ofthe Full Federal Court inIMB Group Pty Ltd at [135] are pertinent:

`before any accessorial liability will arise, it is necessary toestablish the subjective element of knowledge of each of the essentialelementsof the contravention. That knowledge may be constructive in the sense that itmay be possible to show wilful blindnessin relation to the elements of acontravention. However, absent a finding of wilful blindness, it is necessaryto establish actualknowledge on the part of a person to whom it is sought tosheet home accessorial liability in respect of a contravention of Pt V.'

88A similar approach was taken in Fernandez v Glevwhere Hely J,commenting on the adequacy of pleadings before him, said at [18]:

`The facts necessary to sustain a conclusion that theindividuals were involved in the contravention of s 52 should be pleaded.Thatincludes whatever involvement in, or knowledge of, the making of therepresentations is relied upon and knowledge of the falsityof therepresentations in question'.

89The primary judge is this case referred to the decision of von Doussa Jin Australian Competition and Consumer Commission v Nissan Motor Company(Australia) Pty Ltd and Anor(1998) ATPR 41-660 (`Nissan'). MrWrightman, an advertising agent had been charged by the ACCC as an accessory tomisleading representations made by the NissanMotor Company. Themisrepresentations arose from newspaper advertisements for a particular modelof car at a specific price. Thecar illustrated in the advertisements was notthat which was for sale at the advertised price but a different, more expensivemodel. The error was discovered shortly before the advertisement appeared anda disclaimer was added, `in small print running verticallyup the right handside of the advertisement' stating `pic for illustration purposes only'. Thedisclaimer was added at the suggestionof Mr Wrightman, who was aware that sucha disclaimer had been approved by the ACCC in connection with illustrations ofused cars. His Honour found that Mr Wrightman, genuinely but incorrectly,believed that the disclaimer would have the effect that there wouldbe nobreach of the law if used in connection with the illustration of a new car.

90It is important to note that Mr Wrightman pleaded guilty to the charge ofaccessorial liability. Consequently von Doussa J wasconcerned only withwhether a conviction should be recorded and the amount of any fine. In thiscontext his Honour commented onthe seriousness of the offence and itspotential to harm consumers and said, at 41,354:

`I accept Mr Wrightman's evidence that he was under the beliefat the time that the disclaimer would have the consequence that nobreach ofthe law occurred. However, that belief was the result of a want of adequatethought or consideration of the circumstanceson his part.In theadvertising industry, advertising agents are the "gatekeepers" who have aresponsibility to consider whether advertising materialprepared by them fortheir clients, complies with consumer protection legislation. I do notthink that the basis for Mr Wrightman's belief, that such a disclaimer could beused in the case of a new vehicle, justifiedhis belief. Had he reflected onthe situation he should have realised that the disclaimer he inserted in theadvertisement wouldnot draw attention to the misleading or deceptive featuresof the representation of the vehicle. '(emphasis added)

In these circumstances von Doussa J decided to record a conviction andimposed a fine of $10,000.

91In referring to the decision inNissan the primary judge approved andquoted the comment about advertising agents being `gatekeepers' shown above inbold. He continued,at [77]:

`I should add that advertising agents cannot rely uponcompliance with CAD guidelines or scrutiny of advertisements by the legaladvisorsof their clients as a defence to accessorial liability when they areinvolved in the creating and publication of advertising directedat the public.They are the gatekeepers. No doubt the fact that they relied upon others mayoperate to mitigate penalty, but it isno defence to a conclusion that theywere knowingly concerned in a contravention of the Act.'

92With respect, there is a significant difference between the position ofan advertising agent who actually knows, as did Mr WrightmaninNissan,that an advertisement is misleading and has to consider what steps should betaken to correct the problem and that of Bevins andits employees who, hisHonour found, did not subjectively appreciate that the advertisements werefalse or misleading. Imposingthe role of `gatekeeper' on an advertising agentwho knows that an advertisement is misleading and is careless or reckless inensuringthat the problem is corrected before publication is quite differentfrom imposing on advertising agents an obligation to act as gatekeeperinrespect of advertisements that they do not believe are misleading or deceptiveor likely to be so. In my view, it would be wrongto treat the mattersidentified by von Doussa J as relevant to determining an appropriate penaltyfor a person whose intentionalparticipation has been found or conceded as atest for determining liability where the requisite intention is in contention.

93In this case it was agreed on both sides that Bevins and its employees knewthe specific content of the advertisements. However,in formulating the testand reaching the conclusions quoted at [76]-[77] above, the primary judge fellinto error as he did not considerit relevant to determine if Bevins or itsemployees knew whether the conduct was misleading or deceptive or likely tomislead ordeceive. This conclusion is supported by the following obitercomment of the Full Court inIMB Group Pty Ltdat [133] to [134]:

`For a person to be involved in a contravention within themeaning of s 75B(1)(c) of the Act, a person must be an intentionalparticipantin the contravention, the necessary intent being based uponknowledge of the essential elements of the contravention: seeYorke vLucas[1985] HCA 65;(1985) 158 CLR 661 at 670. Thus, while it is not necessary toestablish that the individual Respondents had knowledge that there was acontraventionof a provision of Pt V of the Act, it is necessary to demonstratethat each individual Respondent had knowledge of each of the essentialelementsof the contravention.

In order to establish whether any of the individual Respondents was involved ina contravention, it is necessary to examine thestate of mind of each of themseparately in relation to each alleged contravention.'

94I do not dispute that it was open to the learned primary judge, at par[75], to find that that neither Bevins nor its employeesappreciated that theadvertisements were misleading or deceptive or likely to mislead or deceive.However in my view that finding,in the absence of any finding of wilfulblindness, should have led to a conclusion opposite to that reached by hisHonour.

95I would therefore allow the Bevins appeal.

Associate:

Dated:16 December 2003