Gilmore v POOLE-BLUNDEN & Ors No. Scgrg-98-1731, Scgrg-98-1732 Judgment No. S186

GILMORE v POOLE-BLUNDEN and OTHERS; POOLE-BLUNDEN and OTHERS v GILMORE
[1999] SASC 186

Full Court: Olsson, Bleby, Martin JJ

OLSSON J. I have had the benefit of reading, in draft, the reasons about to be published by Martin J. I agree that the appeal must be dismissed for the reasons expressed by him.
BLEBY J. The relevant facts and the background to this appeal are adequately set out in the reasons for judgment of Martin J which I have had the advantage of reading. I need not repeat those matters.
I agree with his Honour that all the attacks made by the respondents on the validity and alleged duplicity of the information lack substance and should be dismissed. There was no unfairness in the trial. The magistrate was correct in holding that there was a case to answer. I agree that s70(3) of the Fair Trading Act 1987 applies to schemes not involving the provision of goods or services. I also agree that it was not necessary to prove the success of any inducement to enter the scheme contained in the promotion. All the respondents’ contentions should be dismissed. I have nothing to add to the reasons of Martin J for doing so.
I also agree that the defence provided by s88(1)(a) of the Act does not include a mistake of law. As Martin J has demonstrated, the history of the equivalent section in the Trade Practices Act 1974 (Commonwealth) and particularly the 1997 amendment and the reasons for it support that conclusion.
However, I wish to add some additional remarks of my own.
The section was written against the background of the principle of common law that, generally speaking, ignorance of the law is no defence to a criminal charge: ignorantia juris non excusat. The general principle and its effect is referred to by Lord Bridge of Harwich in Grant v Borg [1982] 1 WLR 638 at 646:
“First, the principle that ignorance of the law is no defence in crime is so fundamental that to construe the word ‘knowingly’ in a criminal statute as requiring not merely knowledge of the facts material to the offender’s guilt, but also knowledge of the relevant law, would be revolutionary and, to my mind, wholly unacceptable. I reserve my opinion as to whether the courts might nevertheless be driven to that extremity if a statutory offence embodying a requirement of knowledge in the definition of the offence were of such a nature that it was impossible to envisage circumstances in which the facts necessary to establish the offender’s guilt would not be known to him. But that is certainly not this case.”
It is important to note that the principle is not necessarily formulated by reference to a mistaken view of the law. It will apply to total ignorance of the law. It will apply to a mistaken understanding of the law and to a situation where the defendant has been positively misled as to the effect of the law. A positive but wrong belief as to the state of the law will be no excuse: R v Kennedy [1923] SASR 183. The principle covers a wide variety of circumstances in which ignorance of the law will not afford a defence. Mistake as to the law is only one of them.
It would give rise to a strange anomaly if, by enacting s88(1)(a), Parliament intended to excuse a mistaken belief of the law but not ignorance of the law. If Parliament had intended to abrogate or qualify the general principle that ignorance of the law is not a defence, it is likely to have done so in a much clearer and more comprehensive way. There are cases where this has been held to have occurred. An example is R v P (1986) 41 SASR 360. In the course of his reasons for judgment in that case King CJ said at 368:
“The direct application of the maxim (ignorantia legis haud excusat) in the criminal law is found in the principle that it is not a defence to a criminal charge that the accused person did not know, or did not know the true import of, the law which he is said to have broken. But the maxim also has a permeating influence on the law in other respects, not least of which respects is that of statutory interpretation. Courts tend to interpret statutes, in the absence of indication to the contrary, in a way which gives effect to the principle. Nevertheless the principle cannot be pushed too far. Where there is a question of the honesty or bona fides of a person, that question cannot be resolved artificially by excluding from consideration, if it is otherwise relevant, that person’s understanding of the relevant law. Thus the defence of claim of right to a charge of larceny is available to a person whose claim is genuine but mistaken because it is based upon his mistaken view of the law.”
Thus, in approaching the proper interpretation of the section, it should be done in a manner which gives effect to the principle. I can detect no indication that Parliament intended anything to the contrary.
Martin J has referred to the only decision relating to an equivalent section, that in the New South Wales Act, in Holloway v Gilport Pty Ltd (1995) ATPR 41‑408, where Hunt CJ at CL clearly confined “mistake” in the section to an error as to a factual situation or in a conclusion drawn from a factual situation. I agree with that observation.
Mr Gray QC argued that whatever “mistake” may have meant when s88 and its Commonwealth predecessor was enacted, since the decision of the High Court in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353, the word “mistake” must include mistake of law. I reject that submission. David Securities decided that the rule precluding the recovery of monies paid under a mistake of law does not form part of the law in Australia. In tracing the history of the rule, which had hitherto been applied in Australia, it was pointed out in the joint judgment of Mason CJ, Deane, Toohey, Gaudron and McHugh JJ (at 370) that the defence of payment under a mistake of law seems to have had its origin in Bilbie v Lumley (1802) 2 East 469; 102 ER 448. Prior to the early nineteenth century no distinction had been made between mistake of law and mistake of fact, and restitution had been granted both in law and equity to persons who had paid money under either of such a mistake. The Court noted that in Bilbie v Lumley Lord Ellenborough CJ denied recovery “on the basis of a maxim wholly inapplicable to the case, namely, ignorantia juris non excusat”. That is the very principle with which we are here concerned, and the Court plainly recognised that it was a principle which had no relevance to the matter under consideration in David Securities. Furthermore, the abolition of the distinction between mistake of fact and mistake of law in the context which the High Court was considering was driven by concepts of unjust enrichment. When dealing with a number of criticisms of the law as it then was the Court said (at 375):
“The criticism gains added impetus in Australia by virtue of the recognition by this Court in Pavey & Matthews Pty. Ltd. v. Paul of the ‘unifying legal concept’ of unjust enrichment ((1987) 162 C.L.R. 221, at pp.256-257, per Deane J. (with whom Mason and Wilson JJ. agreed); see also Australia & New Zealand Banking Group Ltd. v. Westpac Banking Corporation (1988), 164 C.L.R. 662, at p.673. As Dickson J. stated in Ontario Hydro ([1982] S.C.R., at p.367; (1982) 132 D.L.R. (3d), at p.209.):
‘Once a doctrine of restitution or unjust enrichment is recognized, the distinction as to mistake of law and mistake of fact becomes simply meaningless.’
If the ground for ordering recovery is that the defendant has been unjustly enriched, there is no justification for drawing distinctions on the basis of how the enrichment was gained, except in so far as the manner of gaining the enrichment bears upon the justice of the case.”
It is plain that that concept has no application to the principle with which we are concerned.
For these reasons I agree that the respondents were unable to rely on s88(1)(a) of the Fair Trading Act. “Mistake” in that context is limited to a mistake of fact.
In my opinion the respondents are also unable to rely on s88(1)(b) of the Act, namely that “the contravention was due to reasonable reliance on information supplied by another person”.
The magistrate found that neither the first respondent nor the third respondent initially believed that the scheme which they promoted was lawful. The first respondent had read a number of newspaper clippings about the legality of the Concorde scheme. He obtained (he did not commission them himself) a number of legal opinions. One (Exhibit D5) concerned the legality in Queensland of a scheme known as “Pentagono” under Queensland legislation similar to s61 of the Trade Practices Act 1974 (Commonwealth) which in turn is similar to s70 of the Fair Trading Act. The second opinion (Exhibit D6) concerned the legality of Pentagono in South Australia. The scheme was apparently similar to the Concorde scheme. The third opinion (Exhibit D7) concerned the legality in South Australia of the Concorde scheme. The fourth (Exhibit D8) came from the firm which provided Exhibit D6 and related to the legality in South Australia of the Concorde scheme. The fifth opinion (Exhibit D10) also concerned the legality of “Concorde” in South Australia.
The first four expressed the opinion that their respective schemes were not unlawful in the States with which their respective opinions were concerned. The last one was more guarded and expressed the view that there was “a reasonable probability” that the promotion of Concorde would not contravene the Fair Trading Act.
The first respondent also read the Fair Trading Act and similar legislation in other States, New Zealand and the UK. He read one of the cases referred to in one of the opinions. He spoke to people about the scheme, including an officer of the department responsible for the administration of the Act, from whom he considered he got inconclusive advice.
The third respondent saw the first three opinions and assisted the first respondent in his researches. The magistrate found (AB1:38):
“I agree the defendants formed their own view of the legality of what they were doing themselves but in doing so they relied on the legal opinions and the statements from the Department of Consumer Affairs in forming that opinion.”
All the opinions related to and depended on the view that the schemes did not include the provision of goods or services, and were therefore outside the definition of “trading scheme” to which, it was said, s70 or its equivalent sections was directed. The result of the respondents’ reliance on the opinions was plainly on an error of law - as to whether a known set of facts in the form of the promotion of the scheme was proscribed by sections 70 and 75 of the Fair Trading Act.
The question is whether the opinions, being opinions on questions of law, constituted “information supplied by another person”.
As in the case of s88(1)(a), this paragraph must be construed against the principle to which I have already referred, that ignorance of the law is no defence to a criminal charge. The words used in s88(1)(b) are insufficient, in my opinion, to intrude on the operation of that principle. I reach that conclusion for much the same reasons as I have expressed in relation to the use of the word “mistake” in s88(1)(a).
Just as “mistake” standing alone can include a mistake of law, but does not in this context, so “information” standing alone can include a legal opinion as to the consequences of carrying on certain conduct. It does not follow, however, that on the proper construction of the Act such an opinion constitutes “information” for the purposes of that paragraph.
In my opinion “information” in that context means factual information which affects the nature and quality of the conduct said to be unlawful, just as “mistake” means mistake of fact. There is no manifest intention to exclude the operation of the principle ignorantia juris non excusat.
I have already pointed out the anomaly that can arise if “mistake” in s88(1)(a) includes a mistake of law. If “information” in s88(1)(b) were to include a legal or other opinion as to the consequences of carrying out certain conduct, even greater anomalies would arise. Consider the following examples if “information” includes advice on the operation of the law.
A person who makes no inquiry and remains ignorant of the law and who commits a breach of s70 of the Act would have no defence under paragraph (b). He does not rely on information. A person who seeks out or happens to obtain by other means legal advice, or even advice from a non‑lawyer, such as a trusted confidante or business adviser, and is given wrong legal advice on which he relies, will have a defence under paragraph (b). But if, instead of obtaining advice he reads the Act and cases which have interpreted the relevant parts of the Act and formed his own (wrong) opinion on the law and then acts on it, will not succeed under paragraph (b) because he has not relied on information from another person.
If our interpretation of s88(1)(a) is correct, in none of these examples would the defendant succeed under that paragraph. The principle of ignorance of the law not being a defence would therefore be qualified by s88(1)(b) in a very narrow and selective way - a way which causes one to question whether that was really intended by the Parliament.
The mischief which the section was designed to prevent was identified by Gummow J in Adams v Eta Foods Ltd (1987) 78 ALR 611 at 618. Martin J has already referred, in the context of s88(1)(a), to Gummow J’s historical analysis of the equivalent section in the Trade Practices Act. In that analysis Gummow J was dealing with the whole section including paragraph (b). He was, not merely referring to paragraph (a). At the conclusion of his analysis he said (at 618):
“I conclude that the mischief to which the recast s85(1) was directed is to be understood as follows. In its original form, the provision was taken to incorporate and to extend the principle that an honest and reasonable mistake of fact will be a ground of exculpation where actual knowledge is not required as an element of an offence. Nevertheless, the perception was that the provision operated unduly harshly and that amelioration in favour of defendants was appropriate. This was sought to be achieved by division of the sub‑section so as to spell out three heads of defence.”
At no stage in his judgment did Gummow J even hint at the suggestion that the section was concerned with exculpation for wrong or mistaken information or belief as to the law. The mischief identified by Gummow J certainly does not suggest that Parliament intended to derogate from or to qualify the operation of the general principle that ignorance of the law is no defence to a criminal charge.
It might be said that the respondents relied on “information” by way of the fact that the opinions had been expressed by a number of apparently reputable lawyers. They may well have relied in part on that fact in deciding to promote the scheme. However, that fact merely adds weight to their reliance on their own opinion and belief as to the meaning of the law. It was that opinion or belief to which, in my view, the conduct was due. Section 88(1)(b) is not expressed in such a manner as to negate or qualify the principle that ignorance of the law is not a defence to a criminal charge.
However, there is a further reason why I consider that s88(1)(b) has no application. The typical situation to which the section is directed is where an agent of a principal unwittingly commits a contravention of the Act by, for example, making a representation which is misleading or deceptive, the information having been supplied to him by the principal in circumstances in which he was entitled to rely on it. It will usually be the use of the information itself which constitutes in whole or in part the contravention of the Act.
Section 88(1)(b) refers to information which, when relied on and used by the defendant, converts what might otherwise have been lawful conduct into unlawful conduct. The “information” in this case did not change, affect or influence the nature of the conduct at all. The conduct remained the same. The information only affected the belief of the respondents as to whether or not it was lawful - a belief that went to the consequences of engaging in the conduct and which did not affect the conduct itself.
A person might be given totally reliable information by another as to the general level of penalty fixed by courts for a particular contravention of the Act. Armed with that information, a person might proceed to engage in the contravention believing that the likely rewards outweigh any penalty likely to be imposed. The person might proceed to engage in the conduct only for that reason. The reliance on the information might be entirely reasonable. But for that information the offence would not have been committed. The contravention in those circumstances can be said to be due to reasonable reliance on the information supplied by another. It could hardly be suggested that in those circumstances the defence would succeed. It would not. That is because the information goes not to the character or particular features of the conduct but to the consequences of engaging in it. The conduct remains the same. It is unlawful.
Similarly, in this case, the information does not affect or change the nature of the conduct. It merely affects the belief of the respondents as to the consequences of engaging in it. Another example might be given. Suppose a similar scheme is set up. It is known by the defendant to be illegal. Everything necessary has been done in preparation for its setting up. All that is required is finance for the defendant to enable him to acquire the necessary computer hardware. He is then given information by his lending institution that the finance will be forthcoming upon the completion of the necessary security documentation. Based on that information he engages in the promotion of the scheme which he says will operate from a certain date. His engagement in the promotion at that time is only “due to” the information he has obtained from his bank which removes the last obstacle to the implementation of the scheme. In my opinion he could not successfully argue that the contravention was due to his reasonable reliance on the information obtained from his financial institution. That is because the information must go to and affect the nature and quality of the conduct and not something peripheral to it, such as its legality or the defendant’s capacity to engage in it.
That is all that the information in this case did. In my opinion the magistrate erred in holding that the defence succeeded under s88(1)(b) of the Act.
If I am wrong in my interpretation of s88(1)(b), and there can be reliance on a legal opinion as to the consequences of engaging in the conduct, I would nevertheless hold that the contravention was not “due to” the reliance.
One hesitates to draw any close analogy with principles of causation applicable to a claim for damages for engaging in conduct which contravenes the Act. In such civil actions based on a breach of Part 10 of the Fair Trading Act or Part V of the Trade Practices Act the phrase used in s85 of the Fair Trading Act the question is whether loss or damage has been suffered “by reason of” a contravention of the Act. The equivalent section in the Trade Practices Act (s82) allows recovery of compensation by a person who suffers loss or damage “by” conduct of another person in contravention of the relevant part of the Act. These are all protean expressions. Of the expression used in s82 of the Trade Practices Act, Mason CJ said in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 525:
“The statutory cause of action arises when the plaintiff suffers loss or damage ‘by’ contravening conduct of another person. ‘By’ is a curious word to use. One might have expected ‘by means of’, ‘by reason of’, ‘in consequence of’ or ‘as a result of’. But the word clearly expresses the notion of causation without defining or elucidating it. In this situation, s.82(1) should be understood as taking up the common law practical or common‑sense concept of causation recently discussed by this Court in March v. Stramare (E. & M. H.) Pty. Ltd. (1991) 171 C.L.R. 506, except in so far as that concept is modified or supplemented expressly or impliedly by the provisions of the Act.”

I see no reason why one should not adopt a similar approach to the expression used in s88(1)(b). Whether a contravention is “due to” reliance on particular information will be essentially a question of fact to be determined by reference to commonsense and experience, and one into which policy considerations and value judgments will necessarily enter.
I accept the magistrate’s finding that at the outset both the first and third respondents believed that the scheme was illegal. I also accept his finding that they relied on the opinions they saw in order to form their own opinions that the scheme was legal. However, their decision to promote and the promotion of the scheme was based on other factors, one of which no doubt was the knowledge that in promoting the scheme they would obtain not inconsiderable financial gain. As I have already pointed out, their decision to engage in the promotion of the scheme could, in other circumstances, have been determined by the fact that their lending institution would finance the company’s hardware acquisitions, without which the conduct could not have been engaged in. In yet other circumstances it may have depended on information received from their Internet provider that that provider had the capacity to service the scheme on the Internet. Without that the conduct probably would not have been engaged in. The supply of the relevant information from either one of those sources might then be said to be the decisive element in the decision to proceed with the conduct. In this case, it may well be that there was reliance on the legal information without which the conduct would not have been engaged in.
Any of these matters to which I have referred may be essential pre‑conditions to the engaging in the conduct, without any one of which the conduct would not have occurred. But the conduct was not “due to” any one of those pre‑conditions. It was due to a conscious decision to engage in the conduct in the light of all that background information and, no doubt, in the hope of making money out of the scheme. In this case, in my opinion, the contraventions were due to the decision by the defendant to engage in the conduct in the light of all pre‑conditions having been satisfied. That is what caused the contravention.
The magistrate found that only the first respondent had a case to answer on Count 1 and that all respondents had a case to answer on Counts 2 to 7. In my opinion, the appeal should be allowed and there should be a conviction against the first respondent on Count 1 and against all the respondents on Counts 2 to 7. I would remit the matter to the magistrate to deal with the question of the appropriate penalty.

MARTIN J. The defendants at trial (“the respondents”) were charged with a number of offences against the Fair Trading Act 1987 (“the Act”) arising out of their conduct in connection with games that are commonly known as pyramid schemes.
The Magistrate found that the prosecution had made out a case to answer against the first respondent but not the second respondent Jones in respect of the first count. There is no appeal with respect to the finding as to Jones. His Honour ultimately acquitted the first respondent on count 1 having found that the first respondent had made out the statutory defence contained in s88(1)(b) of the Act.
As to the remaining six counts, his Honour found that the fourth respondent, Golden Galaxy Pty Ltd, of which the first three respondents were directors, had through those directors also made out the statutory defence provided in s88(1)(b). Having dismissed the information against the fourth respondent, it followed that his Honour found each of the respondent directors not guilty as their liability was dependent upon a conviction of the fourth respondent as a body corporate (s93).
The informant appeals against the dismissals on the basis that none of the respondents had made out the statutory defence. The respondents have filed a notice of cross-contention. The grounds raised in the notice of cross-contention and other matters raised by the respondents for the first time during submissions before this Court, if successful, would mean that the respondents should not have been convicted for reasons other than the availability of the statutory defence. It is, therefore, convenient to deal with the respondents’ submissions on those additional matters before considering the appeal by the informant.
The respondents contend that the Information is not valid because the informant did not comply with the Act.
The Information alleged offences against s70 of the Act. It was laid by Hugh James Gilmore, a person who occupied the position of Commissioner for Consumer Affairs. That office is created by s5. The functions of the Commissioner are set out in s8 and include :
“(h).. to enforce the requirements of this Act and related Acts by the prosecution of offences and other appropriate action;”
The respondents contended before the Magistrate that the informant laid the Information in his official capacity as Commissioner for Consumer Affairs. His Honour appears to have held that the informant was acting, in essence, as a private individual. The appellant has agreed, however, that the informant was acting in his official capacity. The respondents maintain, therefore, that the informant was obliged to comply with the provisions of s76 of the Act. In particular they contend he was required to obtain the written consent of a consumer and of the Minister before laying the Information. It is common ground that such written consent was not obtained.
Section 76 is found in Part 11 of the Act under the heading “Enforcement”. It is in Division 1 which is a division headed “Powers of the Commissioner and Authorised Officers” and is in the following terms:
“(1)   The Commissioner may, on behalf of a consumer and for the purpose of enforcing or protecting the rights of the consumer under this Act, a related Act or some other law, institute, defend or assume the conduct of legal proceedings.
(2)    The Commissioner must not institute, defend or assume the conduct of legal proceedings pursuant to this section unless the Commissioner -
(a).... is satisfied that the case raises questions of law affecting the interests of consumers generally or a particular class of consumers or that it is otherwise in the public interest to do so; and
(b)has first obtained the written consent of the consumer and of the Minister.
(3)    The consent of a consumer is irrevocable except with the agreement of the Commissioner or the Minister.
(4)    The consent of the Minister may be given subject to such conditions as the Minister thinks fit.
(5)    The Commissioner must not institute, defend or assume the conduct of legal proceedings pursuant to this section if the proceedings involve a monetary claim exceeding the prescribed amount.
(6)    In subsection (5) -
“the prescribed amount” means -
(a).... where the consumer is or is to be a party to proceedings in the capacity of purchaser or prospective purchaser of premises - $100 000 or such greater amount as may be prescribed; and
(b)where the consumer is or is to be a party to proceedings in the capacity of mortgagor of premises - $50 000 or such greater amount as may be prescribed; and
(c).... in any other case - $25 000 or such greater amount as may be prescribed.
(7)    The following provisions apply in relation to legal proceedings that the Commissioner institutes or defends or the conduct of which the Commissioner assumes pursuant to this section -
(a).... the Commissioner has the same rights in and control over the proceedings as the consumer would have had in the conduct of those proceedings; and
(b)the Commissioner may, without consulting or seeking the consent of the consumer, conduct the proceedings as the Commissioner thinks appropriate; and
(c).... any money (excluding costs) recovered by the Commissioner must be paid to the consumer without deduction; and
(d)any amount (excluding costs) awarded against the consumer is recoverable from the consumer, except if the consumer had, before that judgment was given, given written notice to the Commissioner of the consumer’s desire to settle the matter, in which case the amount is recoverable from the Commissioner; and
(e).... the costs of the proceedings shall be borne by or paid to the Commissioner; and
(f)an unrelated counter-claim by or against the consumer must, if the Commissioner applies for a separate hearing, be heard separately.”
Section 76 is aptly headed “Conduct of legal proceedings on behalf of consumers”. It is clearly intended to empower the Commissioner to institute, defend or assume the conduct of legal proceedings “... on behalf of a consumer and for the purpose of enforcing or protecting the rights of the consumer ...” under the Act. It is in that context that subs(2) requires the Commissioner to first obtain the written consent of the consumer and of the Minister before instituting, defending or assuming the conduct of legal proceedings for any of those specified purposes.
Section 76 has no application, however, to these proceedings. There is no evidence to suggest that the prosecution followed a complaint by a consumer. The witnesses for the prosecution who had taken part in one of the schemes denied making any complaint to the Commissioner. The prosecution was not instituted on behalf of a particular consumer nor for the purpose of enforcing or protecting the rights of the particular consumer under the Act.
Counsel for the respondents attempted to support his proposition by linking the function of the Commissioner described in s8(h) to the powers in s76 because they are both concerned with “enforcement”. In my view that argument cannot be sustained in view of the obvious purpose and scope of s76, which are inapplicable to this prosecution. As was pointed out during submissions, if the respondents are correct, the Commissioner could not institute any prosecution for an offence against the Act without first obtaining the written consent of both a consumer and the Minister. Parliament clearly did not intend to circumscribe the powers of the Commissioner in that manner.
Ground 1 of the respondents’ notice of cross-contention should be dismissed.
Two schemes were involved. The first count charged the first and second respondents with taking part in the promotion of a scheme called Concorde contrary to s70 of the Act. Counts 2-7 charged all respondents with taking part in the promotion of a scheme called Golden Galaxy contrary to s70. The particulars of counts 1-6 alleged promotion of the scheme to particular individuals while those of count 7 alleged promotion of the scheme by publishing on the Internet system promotional material relating to the scheme, such material inviting persons to participate in it by the payment of money. The variation between the statement of the offence and the particulars in each count is discussed later.
The Magistrate observed that the principal difference between the two schemes was that in Concorde the participant was required to introduce two or more players to the game, whereas the Golden Galaxy game was only to be available on the Internet and persons participating did not have to obtain any other person to participate.
In ruling on the case to answer, his Honour described the schemes in the following terms:
“The rules of the games Concord (sic) and Golden Galaxy are basically the same and are based on a seating plan of a small aircraft. The actual rules were agreed by the prosecution and defence counsel and are set out in paragraph 11 of the statement of agreed facts, exhibit P1. For completeness of these reasons I will set out rules as they appear in paragraph 11. However, I have added words in the hope of making the game a little clearer. There are four levels of players comprising the pilot, two co-pilots, four crew members and eight passengers. Games are played at various values and all persons in the one game pay a similar amount to participate in the game. Payments are made in US dollars and the participants usually pay by direct payment into the Golden Galaxy Trust account. The pilot is entitled to receive the amount of money which equals the amount of money paid by all the eight passengers less a five percent fee which is paid to the company Golden Galaxy Pty Ltd and an administrative charge. He then leaves the game. The game then splits into two games and the original two co-pilots become pilots in each of the games, the four crew members become the two co-pilots in each game and the eight passengers become the four crew members in each of the two new games. When either of the new games have eight people recruited as passengers, paying the same amount of money as the original passengers, the pilot (formerly a co-pilot) is entitled to his payments as above and the game splits again. In other words all pilots receive about eight times the amount they pay to participate in the game, if the game is completed.”
Later in the same reasons, his Honour added :
“You enter the game as a passenger of the Golden Galaxy flight. When all eight passenger seats are filled, the pilot leaves the game with the winnings which are eight times the “entrance value” less the amounts referred to above. The flight splits into two games and everyone left in the game is promoted, “co-pilot to captain, crew to co-pilot, passengers to crew”. Eight further passengers are required to enter each of the two new games and once eight have entered in either game, the pilot in that game receives the winnings as calculated above. Importantly there is no suggestion that Golden Galaxy International or for that matter its agents, “Golden Galaxy Pty Ltd (Australia)” place any money in the game. All monies comes (sic) from passengers who pay a certain amount to join the game. Clearly, although not stated specifically by the witnesses who became passengers in the game, the explanation of the game to which they have referred must have included the explanation as to where the money came from namely the passengers obtained on the internet and how it was dispersed (sic), otherwise I can’t imagine that any of them would have participated in the game. That was the inducement to take part in the game.”
The involvement of the fourth respondent in counts 2-7 occurred through the other respondents who were directors of the company at the relevant time. The fourth respondent was incorporated and registered with the Australian Securities Commission on 12 March 1997 and, on that date, it entered into a contract with Iinet Technologies SA Pty Ltd for the provision of Internet facilities to it. The domain name “GoldenGalaxy.com.au” was created on 14 April 1997. The Golden Galaxy scheme was programmed into the computer leased by the fourth respondent which enabled persons to participate in it on the Internet.
The respondents now take further issue with the validity of the Information on bases that were not raised before the Magistrate. The appellant does not suggest that the respondents should not be permitted to rely upon these matters in this appeal.
First the respondents complain that each count of the Information failed to allege an offence. Each count alleged taking part in the promotion of a scheme contrary to s70 of the Act. The respondents now submit there is no such offence as s70 does not create a specific offence, but rather a series of offences in the various sub-sections. Section 70 is set out in full later in these reasons.
Strictly speaking the offence is created by s75 which specifies that a person who contravenes or is involved in a contravention of a provision of Part 10 of the Act is guilty of a minor indictable offence. The Information should have referred to both s75 and s70. In addition, it would have been preferable if the particular sub-section of s70 had been identified, although this may not have been strictly necessary as the conduct offending against subss(1), (2) and (3) of s70 is, in each sub-section, referred to as a contravention of “this section” meaning s70.
In this context counsel for the appellant submitted that the rules contained in Schedule 3 of the Criminal Law Consolidation Act 1935 apply equally to Informations prosecuted in the Magistrates Court. While it is not necessary to decide the question, in my opinion there must be some doubt about that proposition. When s277 of the Criminal Law Consolidation Act speaks of an Information, it is speaking of an Information as defined in s274 of that Act which is limited to a criminal Information presented to the Supreme Court or a District Criminal Court. Similarly, it might be expected that the rules contained in Schedule 3 of the Act which, by virtue of s283 have the same effect as if enacted in the Criminal Law Consolidation Act, would also be limited to Informations as defined in s274.
The requirements for Informations issued under the Summary Procedure Act 1921 are set out in s22A of that Act. That section is in similar terms to the provisions of the Criminal Law Consolidation Act. Subs(1) provides that it shall be sufficient if the Information contains a statement of the specific offence charged together with such particulars as are necessary for giving reasonable information as to the nature of the charge. In addition, subs(2) requires that the statement of offence shall describe the offence shortly in ordinary language and “...shall contain a reference to the section of the statute creating the offence”. The Information identified the offence of taking part in the promotion of a scheme which fitted the description of the scheme proscribed by s70(3). In my opinion the Information complied with s22A and it cannot be said that the Information failed to charge an offence created by the Act.
This Information is to be contrasted with that considered in Walsh v Tattersall (1996) 188 CLR 77. In a judgement relied upon by the respondents, Gaudron and Gummow JJ decided that the prosecution had failed in its “statement of offence” to charge any offence created by the Workers Rehabilitation and Compensation Act 1986. As their Honours pointed out, the statement of offence charged [“obtaining] by dishonest means payments or benefits under [the Act]” whereas the offence of which the relevant section spoke was a “discreet offence” completed upon receipt of any one payment or benefit. In these circumstances the reasoning of their Honours has no application. This ground of complaint is not made out.
The respondents next complain that each count on the Information is duplicitous on the face of the document. They argue that a number of different schemes are identified as contravening s70(3). In addition, they refer to the face of the Information in respect of each count where the statement of offence alleges that the respondents “... did take part in the promotion of a scheme ...”, whereas the particulars in each allege that the respondents “...promoted the scheme...”. I set out count 1 as a typical example.
“Between the 28th day of January 1997 and the 12th day of February 1997 in the said State, the first and second defendants did take part in the promotion of a scheme, namely, Concorde, under which a payment is to be made by a person who has been invited to participate or who participates in the said scheme for the benefit of another person who participates in the scheme or takes part in the promotion of the scheme, and the inducement for making the payment is the holding out to the person who makes or is to make the payment, the prospect of receiving payments from other persons who may participate in the scheme.
Contrary to Section 70 of the Fair Trading Act 1987.
This is a minor indictable offence.
Particulars
The first and second defendants promoted the scheme to John Krieg and as an inducement to the said Eric John Krieg who paid $2000 on 11 February 1997 to participate in the scheme, held out to him that he would receive payments from other persons participating in the scheme.” (emphasis added)

The Solicitor-General, who appeared for the appellant on the appeal, conceded that each statement of the offence was inconsistent with the particulars provided in support. He argued, however, that there was no duplicity and the essential question to be determined is whether those different statements are so inconsistent or uncertain as to leave the respondents in the unfair position of not knowing what they were charged with.
The rule against duplicitous counts prohibits the prosecution from charging two or more separate offences in the one count on an indictment (Walsh v Tattersall per Dawson and Toohey JJ at 83 and Kirby J at 107.) An example is found in Iannella v French (1968) 119 CLR 84 where it was held that a conviction for an offence charged under s56a(1) of the Housing Improvement Act 1940-1965 (SA) of having “wilfully demanded or wilfully recovered” as rent an irrecoverable sum was bad for duplicity.
The statement of offence in each count alleged that the respondents “... did take part in the promotion of a scheme ...”. There is nothing duplicitous in that allegation. The count is not rendered bad for duplicity merely because the subsequent particulars alleged that the respondents “... promoted the scheme...” rather than that they took part in the promotion of the scheme. Indeed, taking part in the promotion necessarily encompasses promoting the scheme. On that view, there is no inconsistency between the statement of offence and the particulars.
The respondents then argued that in the statement of offence duplicity arises because, in describing the alleged prohibited scheme, alternatives were left open in the following passage:
“...under which a payment is to be made by a person who has been invited to participate or who participates in the said scheme for the benefit of another person who participates in the scheme or takes part in the promotion of the scheme, and the inducement for making the payment is the holding out to the person who makes or is to make the payment, the prospect of receiving payments from other persons who may participate in the scheme.” (emphasis added)
The gravamen of the offence charged was taking part in the promotion of a prohibited scheme. Only one offence was charged in each count. The alternatives left open in the description of the scheme did not result in the charging of two or more separate offences in the one count so as to give rise to duplicity on the face of the document.
Next the respondents contended that, if each count is not duplicitous, the Court should not interfere with the ultimate result of dismissal because the alternatives left open in the statement of offence and the difference previously described between the statement of the offence and the particulars in each instance combined to render the trial unfair. Counsel referred to S v The Queen (1989) 168 CLR 266 and the classic statement of Evatt J in Johnson v Miller (1937) 59 CLR 467 at 497-498. In essence it was argued that each count offended the principle that the respondents were entitled to know the specific offence being alleged against them and the case they had to meet.
No complaint of this nature was made to the Magistrate. A considerable body of the evidence was presented by agreement between the parties. The trial was conducted on the basis that the prosecution was alleging the schemes offended s70(3). Counsel for the respondents was unable to identify any embarrassment caused to the respondents by the deficiencies they now suggest existed in the Information. Similarly, counsel was not able to identify how the content of the evidence or its course or the manner in which the trial was conducted would or might have been different if these deficiencies had not existed.
In Walsh v Tattersall, Kirby J pointed out that authority exists to the effect that in cases of duplicity the issue is one of form, not of evidence or of injustice as such (p102). Those other considerations of evidence and injustice are, however, relevant in considering whether an information should be struck out or a trial was unfair to a defendant because the counts, while not duplicitous, are said for the first time on appeal not to identify with sufficient precision and certainty the case which a defendant is called upon to meet. The conduct of counsel for the respondents at trial is significant in this regard.
Having considered the evidence and manner in which the trial was conducted, I am left in no doubt that the respondents knew precisely the case they were to meet and no relevant unfairness occurred. In my opinion this complaint must fail.
The respondents further contended that the prosecution had failed to establish a case to answer at trial because the schemes proved by the Crown were not a breach of s70(3). The argument before the Magistrate and on this appeal was that the scheme prohibited by s70(3) was a trading scheme as defined in s70(5). The trading scheme defined in s70(5) includes the element of the provision of goods or services or both to participants in the scheme. As Concorde and Golden Galaxy schemes did not involve the provision of goods or services, those schemes were not prohibited for the purposes of s70(3).
The Magistrate rejected that submission. The respondents have challenged his Honour’s finding in their notice of cross-contention. In my view the Magistrate was correct.
It is necessary to set out s70 in its entirety:
“(1)   A person contravenes this section if -
(a).... the person is a promoter of, or (if there are more than one) one of the promoters of, or is a participant in, a trading scheme to which this section applies; and
(b) a person who is a participant in that trading scheme, or has applied or been invited to become a participant in that trading scheme, makes any payment to or for the benefit of the person referred to in paragraph (a), being a payment that the person is induced to make by reason that the prospect is held out to the person of receiving payments or other benefits in respect of the introduction (whether by the person or by another person) of other persons who become participants in that trading scheme.
(2)... A person also contravenes this section if -
(a)the person is a promoter of, or (if there are more than one) one of the promoters of, is a participant in, or is otherwise acting in accordance with, a trading scheme to which this section applies; and
(b).... the person, by holding out to another person the prospect of receiving payments or other benefits in respect of the introduction (whether by that other person or by another person) of other persons who become participants in that trading scheme, attempts to induce that other person -
(i).... if that other person is already a participant in that trading scheme, to make any payment to or for the benefit of the promoter or any of the promoters or to or for the benefit of a participant in that trading scheme; or
(ii)    if that other person is not already a participant in that trading scheme, to become such a participant and to make a payment of a kind mentioned in subparagraph (i).
(3)    A person also contravenes this section is the person promotes, or takes part in the promotion of, a scheme under which -
(a).... a payment is to be made by a person who participates, or who has applied or been invited to participate, in the scheme to or for the benefit of the person or another person who takes part in the promotion of the scheme or to or for the benefit of another person who participates in the scheme; and
(b)the inducement for making the payment is the holding out to the person who makes or is to make the payment the prospect of receiving payments from other persons who may participate in the scheme.
(4)... For the purposes of subsection (1), (2) or (3) -
(a)a prospect of a kind mentioned in that subsection shall be taken to be held out to a person whether it is held out so as to confer on the person a legally enforceable right or not; and
(b).... in determining whether an inducement or attempt to induce is made by holding out a prospect of a kind mentioned in that subsection, it is sufficient if a prospect of that kind constitutes or would constitute a substantial part of the inducement; and
(c)any reference to the making of a payment to or for the benefit of a person shall be construed as including the making of a payment partly to or for the benefit of that person and partly to or for the benefit of one or more other persons.
(5)... For the purposes of this section, a scheme is a trading scheme to which this section applies if the scheme includes the following elements:
(a)goods or services, or both, are to be provided by the person promoting the scheme (in this section referred to as the “promoter”) or, in the case of a scheme promoted by two or more persons acting in concert (in this section referred to as the “promoters”), are to be provided by one or more of those persons; and
(b).... the goods or services so provided are to be supplied to or for other persons under transactions arranged or effected by persons who participate in the scheme (each of whom is in this section referred to as a “participant”), being persons not all of whom are promoters.
(6)For the purposes of subsection (5) -
(a).... a scheme shall be taken to include the element referred to in paragraph (b) of that subsection whether a participant who is not a promoter acts in relation to a transaction referred to in that paragraph in the capacity of a servant or agent of the promoter or of one of the promoters or in any other capacity; and
(b)a scheme includes any arrangements made in connection with the carrying on of a business, whether those arrangements are made or recorded wholly or partly in writing or not; and
(c).... any reference to the provision of goods or services by a person shall be construed as including a reference to the provision of goods or services under arrangements to which that person is a party.”
It is apparent that subss(1) and (2) are directed to participation in a “trading scheme”. Such a scheme is defined for the purposes of s70 in subs(5) as including the provision of goods or services. Sub-section (3), however, is not limited to a “trading scheme”. It provides that a person “also” contravenes the section if the person promotes or takes part in the promotion of “a scheme”. It is clear that Parliament intended to extend the coverage of s70 beyond trading schemes to other schemes which do not involve the provision of goods or services, but which fit the criteria set out in subss(3)(a) and (b).
The intention of Parliament to extend the operation of s70(3) to schemes not involving the provision of goods or services is confirmed by a consideration of the context in which the Act was enacted. It forms part of a co-operative Australasian scheme which was established to ensure uniformity in business laws. See Hansard for the House of Assembly, 26 February 1987 at pp 3236, 3240 and 3451.
The Commonwealth counterpart is the Trade Practices Act 1974. In particular, s61(2A) of that Act is in the same terms as s70(3). Section 61(2A) was inserted into the Trade Practices Act in 1986. The purpose of the amendment is clearly stated in clause 102 of the Explanatory Memorandum accompanying the amending Bill stated:
“102. Currently, the section is limited to schemes under which goods or services are provided. Recently schemes have come to light which are pyramid in nature but only require the transfer of moneys, and not the transfer of goods or services. The section is therefore being amended by inserting a new sub-s.(2A) to cover schemes under which only money is transferred.”
For its part in the uniform co-operative scheme, the South Australian Parliament enacted the Fair Trading Act 1987. It is clear that in doing so, Parliament had the same intention in enacting s70(3) as the Commonwealth legislature possessed in introducing s61(2A) to the Trade Practices Act. In my opinion s70(3) is not limited to trading schemes that include the provision of goods or services.
During the hearing of the appeal, the respondents mounted another attack upon the adequacy of the evidence on a basis that was not put before the Magistrate. It is not mentioned in the notice of cross-contention or the written outline of submissions provided to the Court. In essence, counsel argued that in order to establish each offence it was necessary for the prosecution to prove that the participants were induced to participate in the scheme and part with money by the prospect being held out of receiving payments from other participants. As no such evidence of actual inducement was led, it was said to be a fatal flaw in the prosecution case. In particular, the necessary inference could not be drawn in respect of Rino Michael Devita, the participant referred to in count 4, because he was not called as a witness.
In my opinion the submission misconceives the nature of the offence. The section prohibits promoting or taking part in the promotion of a scheme which possesses certain characteristics. Those characteristics are described in sub-paragraphs (a) and (b) of s70(3) (previously set out). They include the features that:
(i).... a payment is to be made by a person who participates or who has applied or been invited to participate in the particular scheme; and
(ii)the inducement for making the payment is the holding out to the participant the prospect of receiving payments from other persons who may participate in the scheme.
In order to establish the scheme was of a type prohibited by s70(3), it is not necessary to prove that the inducement was successful. There is no substance in this new complaint.
I turn to the appellant’s appeal.
The Magistrate found that, subject to the defences provided by s88 of the Act, the prosecution had made good its case for breaches of s70(3). The respondents relied on the defences of reasonable mistake and reasonable reliance on information supplied by another person pursuant to s88(1)(a) and (b). His Honour rejected the defence based upon reasonable mistake, but found the defendants had satisfied him on the balance of probabilities that the contravention was due to reasonable reliance on information supplied by another person. The appellant appeals against the dismissal of the information on that basis.
Ground 1 of the appeal is as follows:
“The Learned Magistrate erred in the interpretation he afforded Section 88(1)(b) of the Fair Trading Act, 1987 in that:
(a).... he held that the mistake of the person providing the information, upon which reasonable influence is placed by a defendant, may be a mistake of law;
(b)he held that the supply of information by another did not require evidence of an actual supply.
(c).... he held that reliance on information supplied by another did not demand the adoption of the information supplied by that other as the recipient’s own.”
Section 88 provides -
“(1)   Subject to subsection (3), in a prosecution for a contravention of a provision of this Act, it is a defence if the defendant establishes -
(a)     that the contravention was due to reasonable mistake; or
(b).... that the contravention was due to reasonable reliance on information supplied by another person; or
(c)that -
(i).... the contravention was due to the act or default of another person, to an accident or to some other cause beyond the defendant’s control; and
(ii)    the defendant took reasonable precautions and exercised due diligence to avoid the contravention.
(2)    In subsection (1) (b) and (c) -
“another person” does not include a person who was -
(a)     a servant or agent of the defendant; or
(b)... in the case of a defendant that is a body corporate, a director, servant or agent of the defendant,
at the time when the contravention occurred.
(3)    If a defence provided by subsection (1) involves an allegation that a contravention was due to reliance on information supplied by another person or to the act or default of another person, the defendant is not, without leave, entitled to rely on that defence unless the defendant has, not later than seven days before the day on which the hearing of the proceeding commences, served on the person by whom the proceeding was instituted a notice in writing giving such information that would identify or assist in the identification of the other person as was then in the defendant’s possession.
(4)    In a prosecution for a contravention of a provision of this Act committed by the publication of an advertisement, it is a defence to establish that the defendant is a person whose business it is to publish or arrange for the publication of advertisements and that the defendant received the advertisement for publication in the ordinary course of business and did not know and had no reason to suspect that its publication would amount to a contravention of a provision of this Act.”
The first and third respondents gave evidence. In essence, they said that they formed their own view that the schemes were legal. They were aware of contrary views, but after considering a number of legal opinions and carrying out their own research, they arrived at their own independent views as to the legality of the schemes.
The first respondent said he read the Act, went to meetings, read articles and read a number of legal opinions. The opinions were tendered in evidence. It is unnecessary to canvass the details of those opinions. Some related to schemes similar to Concorde and Golden Galaxy. In essence the writers expressed the views that the schemes would not breach any provision of the Act or there was a reasonable possibility that they did not do so because they did not include the provision of goods or services.
The Magistrate found that the first respondent originally thought the Concorde game was illegal and perhaps the Golden Galaxy game. He accepted, however, that after the first respondent considered the legal opinions, read the Act and spoke to a number of persons he formed the view that the games were legal provided they did not involve the provision of goods or services.
The third respondent said that prior to reading any legal opinions he thought the Concorde game was illegal. He read three of the opinions to which the first respondent referred before becoming involved in Golden Galaxy. He preferred those opinions to the apparent view of the Attorney-General as reported in a newspaper article that pyramid schemes were illegal. The third respondent made up his own mind and concluded that the Golden Galaxy game was legal.
There is no challenge to the finding of the Magistrate that the respondents formed their own opinions that the schemes were legal. Although expressing surprise at the content of the legal opinions, counsel for the appellant accepted that, in view of those opinions read by the respondents, it was “not unreasonable” for someone to hold the opinion of the Act that was held by each of the respondents. In essence the appellant concedes that, in the particular circumstances of this matter, it was reasonable for the respondents to hold the view that the Concorde and Golden Galaxy games were legal because they did not involve the provision of goods or services. It was in these circumstances that the respondents relied upon s88(1)(a) and (b).
The equivalent provision in the Trade Practices Act is s85. When first enacted, it was in the following form:
“(1) Subject to sub-section 2, in a prosecution under this Part in relation to a contravention of a provision of Part V it is a defence if the defendant establishes -
(a).... that the contravention in respect of which the proceeding was instituted was due to a mistake, to reliance on information supplied by another person, to the act or the default of another person, to an accident or to some other cause beyond his control; and
(b) that he took reasonable precautions and exercised due diligence to avoid the contravention.”

The amendment to the present provision was effected in 1977 by the Trade Practices Amendment Act 1977. The circumstances in which the amendment occurred were discussed by Gummow J sitting in the Federal Court in Adams v ETA Foods Ltd (1988) 78 ALR 611 and 615-620. His Honour referred to the second reading speech in the Senate in which the role of the Swanson Committee in reviewing the operation of the Act was mentioned. That Committee had recommended as follows:
“9.144 However, the committee does consider that s 85(1) currently operates unduly harshly. For example, some concern was expressed to the committee that the requirements of ‘reliance on information supplied by another person’, and ‘the exercise of due diligence’ were uncertain and could make excessive demands upon operations for preventive measures. The committee considers that the sub-section should be restructured to provide a defence to a criminal prosecution when the defendant establishes that the contravention in respect of which the proceeding was instituted was:
(a) due to an honest and reasonable mistake, or
(b)... due to reasonable reliance on information supplied by another person, or
(c) due to the act or default of another person or to an accident or some other cause beyond his control and in which case he took reasonable precautions and exercised due diligence to avoid the contravention.
“The committee would consider this to be a major change to the law on this matter.”
Ultimately the recommendation of the Committee with respect to subpar(a) was not fully adopted. The word “honest’ was deleted. As Gummow J pointed out, the shorter form of words may be explained on the basis that “Mistakes may be unreasonable, but a dishonest mistake is something of a contradiction in terms” (p618). As to the meaning of the defence of honest and reasonable mistake, his Honour said:
“The reference in the Swanson committee’s report to “the defence known as honest and reasonable mistake” was to a significant doctrine which, as a matter of construction, may operate to qualify what otherwise would be so-called absolute liability in statutory offences. In an appropriate case a statute may be construed as removing from the prosecution the obligation to establish mens rea but none the less so as to permit the accused to raise matters which may give rise to a reasonable doubt that he acted under an honest and reasonable mistake of fact. The doctrine has recently been described as a “half-way house”: Chiou Yaou Fa v Morris (1987) 46 NTR 1 at 18. It had as a most influential proponent Dixon J in Proudman v Dayman (1941) 67 CLR 536 at 540-1.”
The first question to be determined is whether the Magistrate was correct in rejecting the defence based on reasonable mistake pursuant to s88(1)(a). His Honour expressed the view that in arriving at their opinions that the schemes were legal, the respondents made a mistake of law and a mistake of law can never be a defence unless the legislature has made it clear that it intended such a mistake to amount to a defence. He was of the view that there was no such indication in s88.
As a broad proposition removed from any particular statutory context, it is generally true to say that neither ignorance of the law or a mistake of law afford a defence. Similarly, as noted by the High Court in Re Alcan Australia Ltd and OthersEx parte Federation of Industrial, Manufacturing and Engineering Employees (1994) 181 CLR 96, Parliament is generally taken to have intended words that have been judicially construed to bear the meaning already attributed to them (p106). In Holloway v Gilport Pty Ltd (1995) ATPR 41-408 at p40 529, in dealing with a defence of reasonable mistake under s71(1) of the Fair Trading Act 1987 (NSW), Hunt CJ held:
“In my view, a mistake in the sense so variously described means, in the context of s71(1)(a), something more than conduct by which others are unintentionally liable to be misled. There must be shown to have been an error made as to a factual situation, or in a conclusion drawn as to a factual situation - not just a mistake as to the consequence that the conduct is liable to mislead others”.
In Adams v ETA Foods, Gummow J held that the section in its original form “...incorporated and extended the principle that an honest and reasonable mistake of fact will be a ground of exculpation where actual knowledge is not required as an element of the offence”. His Honour did not suggest the 1977 amendments altered that essential quality of that defence.
In my opinion, therefore, s88(1)(a) was not intended to apply to a reasonable mistake of law. It was intended to provide a defence based on a reasonable mistake of fact which has its origins in Proudman v Dayman and is shortly described by Hunt CJ in Holloway v Gilport in the passage quoted.
The respondents arrived at their own opinion that the schemes were legal. That opinion was as to the legal consequences of a known set of facts. They made a mistake of law and were unable to rely upon the defence provided in s88(1)(a).
The next issue is whether the Magistrate was correct in ruling that the legal opinions read by the respondents amounted to “information supplied by another person” for the purposes of a defence under s88(1)(b). In the written outline of submissions, the appellant contended that the legislative history of the equivalent provision in the Trade Practices Act suggests that both pars(a) and (b) are intended to be limited to matters of fact and there is no justification or basis why the general principle that a mistake of law affords no defence should not apply to par(b). In answer, the respondents submit that pars(a) and (b) must have different work to do and there is no indication that Parliament intended the expression “information supplied” should be read down in the manner suggested by the appellant.
In its original form in the Trade Practices Act, s85 required the defendant to prove not only that the contravention was due to a mistake or reliance on information supplied by another person, but also that the defendant took reasonable precautions and exercised due diligence to avoid the contravention. The amendment in 1977 deleted the requirement to prove reasonable precautions and due diligence. The deletion of that requirement was apparently as a consequence of a perception that the provision operated unduly harshly and that amelioration in favour of the defendants was appropriate (Adams v ETA per Gummow J at 618). As a counterbalance to the removal of that requirement, the 1977 amendment added the requirement that the mistake or reliance on information supplied be “reasonable”. In addition, although this change does not appear to be linked to the concept of amelioration, the defences of mistake and reliance on information supplied were separated into discrete paragraphs.
In my opinion the 1977 amendments do not alter the meaning of the words “information supplied”. Parliament’s intention in this regard must be gleaned from a consideration of the Act in both its original and amended forms. There is nothing in Hansard to assist.
The context in which the defences in s85 apply is found in Parts V and VI of the Trade Practices Act. Part V is concerned with consumer protection. The sections in Part V cover a myriad of prohibited unfair practices, including the type of pyramid selling that is the subject of this prosecution. In addition there are provisions dealing with product safety and product information. Part VI of the Trade Practices Act is concerned with enforcement and remedies. Section 79 creates an offence for contravening or, in various ways, being involved in a contravention of a provision of Part V. Section 85 provides defences to contraventions of a provision of Part V.
On the basis that the defence is s85(1)(a) is limited to a reasonable mistake of fact as previously discussed, in my opinion Parliament did not intend, when enacting s85 in its original form or by its 1977 amendment, to limit the defence in s85(1)(b) to information about factual matters as opposed to opinions concerning legal consequences or information about such opinions. The words “information supplied” have not been judicially construed either generally or in a particular statutory context so as to lead to a view that Parliament intended the words in the Trade Practices Act to bear the meaning already attributed to them by previous judicial pronouncements. Bearing in mind the strict liability nature of many offences in Part V and the limitation of the defence in s85(1)(a) to reasonable mistakes of fact, it would not be surprising if Parliament decided to provide a defence which included the basis that the contravention was due to reasonable reliance on a legal opinion. The multiplicity of contraventions possible under Part V supports this interpretation. In addition, in the ordinary sense of the word, the contents of a legal opinion are information or, at the least, amount to information as to the view of the particular person providing that legal opinion. The Shorter Oxford English Dictionary refers to “that of which one is apprised or told; intelligence, news”.
There does not appear to be any authority that has specifically addressed this issue. In David Aubourn Thorp v CA Imports Pty Ltd (1989) 16 IPR 511, Sheppard J considered the defence of reasonable reliance on information in the context of charges alleging breaches of s53(eb) of the Trade Practices Act based on alleged false representation concerning the place of origin of particular goods. The defendant relied upon the defence in s85(1)(b) on the basis that the representation was only made after receiving advice from a number of officials of the Department of Trade. In essence, the Managing Director of the defendant had been told by the Commission that he was entitled to label goods “Australian made” if more than 50 per cent of the total cost of producing the goods was incurred in Australia.
Sheppard J concluded that the statements made to the defendant constituted “information supplied” within the meaning of s85(1)(b) of the Trade Practices Act. The issue of whether the statements relied upon were statements of law or legal conclusions to which the expression “information supplied” did not apply does not appear to have been raised or considered by his Honour.
In my opinion the analysis of the meaning to be attributed to the expression “information supplied” in s85 of the Trade Practices Act is equally applicable to s88 of the Act with which this appeal is concerned. The Act is aimed at preventing unfair or undesirable trade practices and seeks to ensure the protection of consumers. There are numerous circumstances in which contraventions of the Act can occur and many amount to offences of strict liability. Section 88 provides defences for a contravention of any provision of the Act.
In my view the words should be given their ordinary and natural meaning. The legal and other opinions to which the respondents had recourse amounted to “information supplied” for the purposes of s88(1)(b) of the Act.
The appellant conceded during submissions that, in view of the legal opinions, it was not unreasonable for the respondents to hold the opinion of the Act that they held. It necessarily follows that it was reasonable for the respondents to rely upon those opinions in arriving at their view of the Act.
Section 88(1)(b) requires that the information be “supplied by another person”. The circumstances in which the respondents read the opinions and became aware of other views might give rise to some interesting questions as to whether the information was “supplied” by another person. Ground 1(b) was abandoned and this aspect has not been relied upon by the respondent. In the circumstances, therefore, I will assume the respondents satisfied this element of the defence.
The issue of causation remains to be considered because the onus was on the respondents to establish that the contravention was “due to” reasonable reliance on the information supplied.
Not surprisingly, the various authorities examined have tended to focus on whether the defendant proved reliance and that the reliance was reasonable. In Thorp v CA Imports, the nature of the evidence and the approach of the parties led Sheppard J to concentrate on whether the defendant had established reliance on information supplied and that such reliance was reasonable. While in many circumstances proof of causation would necessarily follow from proof of reliance, in this matter the appellant submits that not only did the Magistrate fail to perceive that s88(1)(b) requires a causative connection between the reliance on the information and the contravention, but the evidence cannot support a conclusion that the respondents proved the required causative connection.
The Magistrate was clearly satisfied that the respondents relied upon the opinions in arriving at their views that the games were legal. His Honour does not appear, however, to have specifically addressed the issue of causation. He referred to the “...more difficult question...” as to whether the respondents relied on the opinions and examined that issue in some detail. He specifically found:
“I agree the defendants formed their own view of the legality of what they were doing themselves but in doing so they relied on the legal opinions and the statements from the Department of Consumer Affairs in forming that opinion”.
The respondents also read other material and the first respondent read the Act. It is clear that the legal opinions played a particularly significant role in the first and third respondents arriving at their own views that the schemes were legal.
Although the Magistrate did not specifically refer to the issue of causation, his judgment is clearly based upon the view that if the respondents had not relied upon the erroneous legal opinions, they would not have formed their opinions that the schemes were legal and they would not have entered into the schemes. In my opinion, that is a correct interpretation of the evidence given by the first and third respondents, which evidence was accepted by the Magistrate.
In these circumstances, it is unnecessary to embark upon a detailed examination of the law of causation and the meaning of the expression “due to”. The distinctions between the appellant’s position that the reliance must be the “real, essential, substantial, direct or effective cause” in comparison with the respondent’s submission that it need only be a “material cause of the respondent’s actions” need not be debated. In my opinion, if the Magistrate had addressed his mind to this specific issue, he would have been in no doubt that there was a sufficient causative link between the information supplied and the actions of the respondents in becoming involved in the schemes to satisfy the test in s88(1)(b).
In my opinion, it is inappropriate to adopt a technical or narrow approach to causation in the circumstances of this particular defence. The words “due to” should be given their ordinary and natural meaning and should not be unduly restricted by legal technicalities such as issues of proximity that might arise in a civil context (cf R v Reilly [1982] 3 All E R 27 at 34-35; Kooragang Cement Pty Ltd v Bates (1994) 35 NSW LR 452 at 461-464).
Having considered the evidence, in my opinion there is no doubt that reliance on the erroneous legal opinions was a substantial and effective cause of the contraventions by the respondents. In those circumstances the contraventions were clearly “due to” reliance on that information.
I would dismiss the appeal.

[1999] SASC 186

12 May 1999