Edelsten v Ward

In *Edelsten v Ward & Ors*, the New South Wales Court of Appeal considered a dispute between the appellant, Edelsten, and the respondents, who were directors of a company. The core of the disagreement concerned allegations of misleading and deceptive conduct in contravention of section 52 of the *Trade Practices Act 1974* (Cth) and the common law tort of deceit. Edelsten claimed he had been induced to enter into certain transactions by representations made by the directors, which he alleged were false and made with knowledge of their falsity or with reckless indifference to their truth.

The Court of Appeal was required to determine whether the representations made by the directors to Edelsten were indeed misleading or deceptive, and if so, whether they were made with the requisite fraudulent intent for the tort of deceit. A key issue was the interpretation of the directors' state of mind at the time the representations were made, specifically whether they knew the statements were untrue or were reckless as to their truth or falsity. The court also had to consider the application of section 52 of the *Trade Practices Act* to the conduct in question, which prohibits corporations engaging in conduct that is misleading or deceptive or is likely to mislead or deceive.

The Court of Appeal found that the representations made by the directors were not established to be misleading or deceptive in a manner that would found a claim under section 52 of the *Trade Practices Act*. Furthermore, the court held that the evidence did not support a finding of fraudulent intent necessary to establish the tort of deceit. The judges analysed the evidence presented regarding the directors' knowledge and intentions, concluding that while the representations may have been inaccurate, they were not made with the specific fraudulent intent required for deceit, nor were they proven to be misleading or deceptive under the *Trade Practices Act*.

The appeal was dismissed.