Houghton & Anor v Arms

[2006] HCATrans 544

[2006] HCATrans 544

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M107 of 2006

B e t w e e n -

JAMES HOUGHTON AND JAMES STUDENT

Appellants

and

SIMON ARMS

Respondent

GLEESON CJ
GUMMOW J
HAYNE J
HEYDON J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 5 OCTOBER 2006, AT 10.04 AM

Copyright in the High Court of Australia

MR D.J. O’CALLAGHAN, SC:   If the Court pleases, I appear with my learned friend, MR M.D. RUSH, for the appellants.  (instructed by Deacons)

MR P.J. RIORDAN, SC:   If the Court pleases, I appear with my learned friend, MR D.W. BENNETT, for the respondent.  (instructed by Middletons)

MR D.R. WILLIAMS, QC:   May it please the Court, I appear with my learned friend, MR S. BHOJANI, for the Director of Consumer Affairs of Victoria seeking to intervene.  (instructed by Department of Justice)

GLEESON CJ:   Mr Williams, we have read your written submissions and we notice that you are supporting the respondent.  We thought that the course we would take is to hear argument from the appellant and the respondent and then we will deal with your application at that stage.  Yes, Mr O’Callaghan.

MR O’CALLAGHAN: If the Court pleases, the issue in this appeal is the important question of statutory construction, namely, whether on its proper construction section 9(1) of the Fair Trading Act (Vic) and its equivalents in other States and the Territories renders employees, officers or directors of corporations liable, because of the fact of their employment relationship or directorship, without more, for conduct engaged by them as and on behalf of the company.

The Full Court below held, relying on some authorities, that a director or employee of a corporation who acts on its behalf in the course of trade or commerce also acts himself or herself in trade or commerce and if the corporation is liable under a State Fair Trading Act or the Trade Practices Act it will necessarily follow for their conduct the director or employee attracts what the Full Court said was primary liability under the Fair Trading Act.

HAYNE J:   Why is any question to be expressed conditionally?  Why is it to be expressed if the company is liable, what then?  Why are there not simply two separate questions?

MR O’CALLAGHAN:   Two separate questions whether ‑ ‑ ‑

HAYNE J:   Namely, one, is the corporation liable under the TPA? Two, is this individual liable under the Fair Trading Act?  Why is there some condition?

MR O’CALLAGHAN:   We would not put it on the basis that it is condition, your Honour, but that the conduct of an employee – and if I could use the word “employee” without adding officer and director needlessly – if the conduct of the employee is on the facts of the case, as was the case here, only the conduct of the corporation, only the corporation can be the relevant person.  So it is a question, we would say, your Honour, of attribution of conduct.  Your Honour is right.  It is a two‑stage question.  It is not a conditional proposition.  If the first question is answered yes, the company is the person, then, in our submission, the question of primary liability is established and the next ‑ ‑ ‑

GUMMOW J:   We cannot look at it this way. It has been said often enough about section 52 that it prescribes a norm but you have to go somewhere else, namely, you have to go from Part V to Part VI to find out what the sanction is.

MR O’CALLAGHAN:   Yes, your Honour.

GUMMOW J:   Now, what was the sanction sought here in respect of breach of section 9?  It was, what, an action under section 159, was it?

MR O’CALLAGHAN:   Yes, your Honour.

GUMMOW J:   You then have to read 9 plus 159, do you not?

MR O’CALLAGHAN:   Yes, your Honour.

GUMMOW J:   That is the action.

MR O’CALLAGHAN:   Yes, it is, your Honour.

GUMMOW J:   We are not talking about liability in the sky.  We are talking about liability tied to some proceeding seeking a particular remedy which the statute gives.

MR O’CALLAGHAN:   Yes, your Honour, and it is a remedy that is tied to the identification in the first instance of the relevant person in section 9.

GUMMOW J:   The remedy is tied to any person involved in the contravention actually.  That is what 159 says.

MR O’CALLAGHAN:   The remedial provision ‑ ‑ ‑

GUMMOW J:   Is there any further explanation of this term “involved in the contravention”?

MR O’CALLAGHAN:   No, your Honour, I do not believe so, but, in our submission, one only gets to that point if and when one has identified the proper person under section 9 and when the facts of the case are such that the person has only ever acted as the company ‑ ‑ ‑

GUMMOW J: That brings me to another question which I do not fully understand at the moment. What is the relation between section 9 and Part V of the Trade Practices Act?  In other words, this proceeding was brought against the company for damages, was it, under section 82?

MR O’CALLAGHAN:   It was.

GUMMOW J:   Why were not the individuals for whom you act involved in that contravention under section 82 of the Trade Practices Act?

MR O’CALLAGHAN:   It is the same answer, your Honour.  They only ever acted as the company.  Their actions were not attributable to them personally.  They were attributable to the company and only to the company and if they were to be liable personally ‑ ‑ ‑

GUMMOW J:   Why then does the Trade Practices Act not cover the field?  Now, is there some section in the Trade Practices Act you rely on to ‑ ‑ ‑

MR O’CALLAGHAN:   It does not cover the natural person, your Honour, people like Mr Houghton and Mr Student obviously.

GUMMOW J:   They may be involved in the contravention.  That section is valid.  Why does not the totality cover the field?

MR O’CALLAGHAN:   For the reason I have given, your Honour, that one only gets to 159 or to any damages provision ‑ ‑ ‑

GUMMOW J:   I am not talking about 159.  I am talking about the federal law.  Why does it not cover the field?  You have to rely on CML, do you?  These matters have to be thought about otherwise - we do not know what politicians call the road map - we are never going to get to a destination.

MR O’CALLAGHAN:   The Full Court in Victoria, in a passage that is referred to in Mr Williams’ submission, does refer to it ‑ ‑ ‑

GUMMOW J:   Have you ever looked at section 75 of the Trade Practices Act?

MR O’CALLAGHAN:   Yes, your Honour. In our submission, it is to that section that one would go to look at the question of secondary liability. The way we put the case, your Honour, is that once the question of primary liability is resolved as we say it should be by saying that the liability of the individuals or the acts of the individuals are the acts of the company, the only other question that can necessarily arise is are these people liable in some secondary way? Are they liable as accessories? Does any question of vicarious liability arise? Of course, in this case, the plea of accessorial liability that was initially made was abandoned and there was, obviously enough, no plea of vicarious liability and the plaintiff was left with, and only with, the case under section 9. In our submission, in a case of this sort, if the accessorial liability plea is never made, let alone ‑ ‑ ‑

GUMMOW J:   How would this dispute about the State Fair Trading Act get into the Federal Court?

MR O’CALLAGHAN:   Well, dependent jurisdiction I imagine, your Honour.

GUMMOW J:   All the one matter apparently.

MR O’CALLAGHAN: Yes, your Honour. As I have perhaps said already, it is our submission that the proposition of law upon which the Full Court’s decision is founded, that is to say that an employee and his or her employer can both be coextensively liable under section 9 for conduct that is only ever engaged in qua the company, is incorrect.

GUMMOW J:   Why were there not two contraveners as Justice Hayne put to you?  Or to put it more narrowly, why were the individuals not contraveners and then some doctrine of law attributes that also to their corporate master?

MR O’CALLAGHAN:   It is not so much attributing to the corporate master, your Honour, as actions which are carried out only as the company.  For example, in O’Brien v Dawson (1942) 66 CLR 18, which is one of the cases on our list – your Honour is familiar with the case no doubt and the passage, but at page 32 at about point 4 of the page Mr Justice Starke said:

So there was evidence that the company was guilty of an unlawful act in breaking its contracts of July and August 1939 and that Dawson also broke his agreement of service with the plaintiff.  But was there any evidence that the defendants were all engaged in common wrongful acts in concert or as joint tortfeasors?

GUMMOW J:   This is a question of whether the directors were conspiring with their company, was it not?

MR O’CALLAGHAN:   Yes, your Honour, but the statement of principle:

A company “cannot act in its own person for it has no person” (Ferguson v. Wilson).  So it must of necessity act by directors, managers, or other agents.  The company, if it were guilty of a breach of its contracts in this case, acted through its director the respondent Doyle, but it is neither “law nor sense” (Lagunas Nitrate Co. v. Lagunas Syndicate) to say that Doyle in the exercise of his functions as a director of the company combined with it to do any unlawful act or become a joint tortfeasor.  Again, it is equally fallacious to assert that Doyle knowingly procured the company to break its contract.  The acts of Doyle were the acts of the company and not his personal acts which involved him in any liability to the plaintiff.

HAYNE J: Albeit so, hence section 84(2).

GUMMOW J:   Exactly.  It is against that background that 84(2) was put into the federal Act in 1974.

MR O’CALLAGHAN: In our submission, section 84(2) does not have that effect. The purpose of 84(2) is to attribute liability to a corporation, not to individuals. This case is not on our list but I know your Honours are familiar with it, Fencott v Muller (1983) 152 CLR 570.

GUMMOW J:   There is a discussion by Chief Justice Gibbs at page 583.

MR O’CALLAGHAN:   There is, your Honour.  The particular passage that I was going to refer to was from Mr Justice Dawson at page 618, your Honour.  At about point 6 of the page his Honour says:

However, the fact that a law is concerned with the conduct of natural persons or individuals does not mean that it may not be a law with respect to corporations. Corporations, being artificial entities, act through the agency of individuals. The misleading or deceptive conduct by a corporation which is proscribed by s. 52, will of necessity also be the conduct of an individual or individuals. Section 84 is concerned with the connexion which will make the conduct of an individual that of a corporation.

GLEESON CJ:   Actually “also” that of a corporation, it says.

MR O’CALLAGHAN: It does say “also”, your Honour, yes, and that is the word I think that my learned friends fasten on in their submissions, but in our submission the word “also” cannot do all that work. It cannot be read as a matter of statutory construction to turn section 84(2) around as if it were to say that the liability of a corporation is also that of the individual, when what 84 says is the other way around. But your Honour is quite right, the word “also” appears. His Honour goes on to say:

Although it has always been obvious that a corporation can only act through the agency of individuals, the law has not always identified precisely the limits to corporate liability, particularly criminal liability, for wrongs committed by individuals who are also servants or agents of the corporation.

His Honour says it is clearly within power.

GUMMOW J:   What do you say about Chief Justice Gibbs at 583, the beginning of line 5, “It was said”?  Do you see that?

MR O’CALLAGHAN:   I do, your Honour, yes.

GUMMOW J:   To the end of that paragraph.

MR O’CALLAGHAN:   Would your Honour bear with me for a minute?

GUMMOW J:   Yes.

MR O’CALLAGHAN:   Yes, your Honour.

GUMMOW J:   With reference to what the Chief Justice just put to you about 10 lines from the bottom:

This analysis is correct in some cases but not in all.

Do you see that?

MR O’CALLAGHAN:   I do, your Honour, yes:

a person may be involved n the misleading conduct of another, and the conduct may be that of the corporation not by reason of s. 84(2) but because it has been done by an agent -

That is a factual inquiry that may or may not be made in any given case, but in this case the learned trial judge made findings that Mr Houghton and Mr Student had no independent trading or commercial interest and that they had not acted other than as WSA.  The respondent accepts that that was a factual finding and he accepts that it was a correct factual finding.  They do that in their written submissions.  In the face of those factual findings, those sorts of questions that the learned Chief Justice was mentioning in that passage, your Honour, do not arise.

In our submission, there are two fundamental propositions of statutory construction that underpin the submission that I have been adumbrating. In our submission, it is not a question of whether one reads section 9 widely or narrowly, although the learning with respect to section 9 that one does read the words “in trade or commerce” narrowly is something we would invoke, but the most important question is this question of attribution, because we submit that when a corporate employee or an officer or a director acting as the corporation engages in misleading or deceptive conduct and does nothing to exhibit a separate or independent interest, it is the employer who is the person engaging in the relevant conduct, and that is precisely because the employee is operating in the course of his or her authority for and on behalf of the corporation. That is a fundamental principle that goes to separate identity of corporations, we would say. So that is what we would submit is the first fundamental approach to statutory construction.

HAYNE J:   Upon what words or to what words is that proposition directed in section 9? What is the verbal peg on which you are hanging the submission?

MR O’CALLAGHAN:   

A person must not, in trade or commerce, engage ‑ ‑ ‑

HAYNE J:   That is to say, are you not reading “in trade or commerce” relevantly as in his or her own trade or commerce and is not that the proposition that is the proposition you are advancing because the next question is obvious, why would you read it that way?

MR O’CALLAGHAN:   Your Honour, one has to answer the question from the beginning of the tunnel if I could use that expression.  The beginning of the tunnel is the identification of the relevant person.  If the person is the corporation it by definition must be the trade or commerce of the corporation.  One does not get to answer the question “Is it the trade or commerce of the employee?” because of the identification of the relevant person.  That is how we would peg it to the words, your Honour.  Did I answer your Honour’s question?

HAYNE J:   Yes. 

MR O’CALLAGHAN:   The second proposition of statutory construction that we advance is that when employees act as and only on behalf of the company what they do, and this perhaps does go to the second part of your Honour’s question, is that what they do in any event is to work in accordance with the terms of their contract of employment.  If one does get to the question of whose trade or commerce is it, in our submission, there is no separate or distinct concept of trade or commerce apart from the corporation’s trade or commerce.  All the employee does is their job, we would say.

In this case, as we hope we have set out in our written submissions, Mr Arms chose to contract with WSA to provide services, which WSA did.  Mr Houghton and Mr Student were employed by WSA, they only ever acted as WSA, and as the learned trial judge found, their liability can only be the liability – I should not say that, the learned trial judge did not find that.  In our submission, their acts can only be the company’s acts. 

It is important, in our submission, to recognise the type of case that this is.  In other words, if one used the expression “in cases of this kind” it is a shorthand, or would be a shorthand for a case where there is no allegation that the employee, officer or director has knowingly engaged in a contravention.  In this case, that allegation was expressly disavowed.

In our submission, in such a case, where the facts show that the employee only ever acted as the company, the principal contravener is necessarily that company. It is the company who is the actor, it is the company that is liable under section 9. Once that question is resolved, in our submission, section 9 does not invite the question which the Full Court must have been taken to assume was involved, whether the company’s actor was himself or herself co‑extensively and primary liable because what the statutory scheme does is to invite you to make an allegation of accessorial liability, secondary liability for the same conduct. That was never done here.

In our submission, if one were to take the approach favoured by the Full Court, that approach, rather than asking the question, “Is another legal person secondarily liable?” and instead proceed to treat the company and its actors as if they were the same person, that would render section 75B redundant. Why would you ever need to resort to the strictures of knowingness if one had a co‑extensive primary liability without more? It would render the dichotomy between primary and secondary liability irrelevant.

In our respectful submission, that cannot be what the legislature intended. The role of section 75B, of course, in the scheme, was considered by this Court in Yorke v Lucas (1985) 158 CLR 661, and at page 667, the Court, from the bottom of the previous page:

Turning first to par. (a), the appellants immediately encounter difficulty that the words used, “aided, abetted, counselled or procured”, are taken from the criminal law where they are used to designate participation in a crime as a principal in the second degree or as an accessory before the fact.  Both in the case of felonies where the principal offender and the secondary participant commit separate offences, and in the case of misdemeanours where no distinction is drawn between the two, a person will be guilty of the offences of aiding and abetting or counselling and procuring the commission of an offence only if he intentionally participates in it.  To form the requisite intent he must have knowledge of the essential matters which go to make up the offence whether or not he knows that those matters amount to a crime.

The Court then refers to Giorgianni v The Queen and the offence of culpable driving.  At the end of that paragraph, the new paragraph commencing:

If par. (a) of s. 75B imports the requirements of the criminal law –

which the Court said it did –

it is clear in the light of Giorgianni v. The Queen that Lucas could only be brought within that paragraph if he intentionally aided, abetted, counselled or procured a contravention by the Lucas company of s. 52 of the Trade Practices Act.  Upon the findings of the trial judge, however, Lucas lacked the knowledge necessary to form the required intent.

HAYNE J:   Again, be it so, assume the federal Act is as there described, what does that tell us about the State Act?

MR O’CALLAGHAN:   It tells us, your Honour, that that case was like this case.  It fell ‑ ‑ ‑

HAYNE J:   No, it does not, because there are two separate norms engaged:  one federal, one State.  What does the construction of the federal Act in Yorke v Lucas tell us about the construction of section 9 of the State Act?

MR O’CALLAGHAN:   Well, your Honour, there is, of course, a State equivalent of ‑ ‑ ‑

HAYNE J:   No doubt.

MR O’CALLAGHAN:   That is neither here nor there for our purposes, but what it tells ‑ ‑ ‑

GUMMOW J:   What is that State section?

MR O’CALLAGHAN:   The State section is now – I am sorry, your Honour, I get the numbers mixed up.  In the new Act it is section 145.

HEYDON J:   Was anything like that in force at the time of the conduct complained of in this case?

MR O’CALLAGHAN:  No, your Honour.  There was a gap between 1990 and 2000 where the State Acts did not have a provision for accessorial liability.

GUMMOW J: Did they have an equivalent of section 84(2)?

MR O’CALLAGHAN:   Yes, your Honour.

GUMMOW J:   Where do we find that?

MR O’CALLAGHAN:   The damages provision ‑ ‑ ‑

GUMMOW J:   No, 84(2), not 82.

MR O’CALLAGHAN:   I am sorry, attribution, your Honour.  Attribution is 144(2).

GUMMOW J:   Thank you.

HEYDON J:   One of your arguments depended upon the proposition that if your opponents were right, section 145 would have no work to do, but if section 145 did not exist at the relevant time, it may be that the Act meant one thing at that time and means something else at another time.  It seems to undercut that particular argument.

MR O’CALLAGHAN: In our submission, the absence of section – or the equivalent of section 145 in the year 2000 when these events occurred is beside the point because the allegations were made against WSA in the first instance and if Mr Houghton and Mr Student were to be liable as accessories, it would have to have been through section 75B. As we have said, that was the allegation made and abandoned.

HEYDON J: Could not the company have been sued under section 9 of the State Act?

MR O’CALLAGHAN:   It could, yes.

HEYDON J:   Obviously you would not know why it is so, but the applicant chose to do it that way, but it would not make any difference, would it, whether they had gone totally under the State Act or against the company under the federal Act or against the individuals under the State Act?

MR O’CALLAGHAN:   Probably not, your Honour.  No one can explain why there was this hiatus or gap.  It seems the best explanation is that it was a mistake.  I believe that is what one Victorian Supreme Court judge has said, that it was a mistake.  There is nothing in the secondary materials that assists.  It was popped back in in 2003.  One assumes that the more rational explanation for popping it back in was that it had been accidentally omitted, there being no statement otherwise.  I suspect I have not answered Justice Hayne’s question at the same time.  Could your Honour repeat it?

HAYNE J:   What does the construction of the federal Act tell us, in your submission, about the application of section 9?

MR O’CALLAGHAN:   What it tells us, your Honour, is that in a case where the facts involve a case of this general type where an employee on behalf of the corporation has on behalf of the corporation engaged in conduct, the scheme of the legislation is that those persons ‑ ‑ ‑

HAYNE J:   The scheme of which legislation?  Is that not the difficulty?  Are you not attributing a single overarching scheme which unites the Victorian Act and the federal Act as some grand legislative scheme?  Why?

MR O’CALLAGHAN:   It is often thought of in that way, perhaps loosely, your Honour, and the Victorian Court of Appeal has referred to it as a scheme.

HAYNE J:   Maybe, but why?  Why would you?

MR O’CALLAGHAN: There is little, one readily concedes, your Honour, if any – I think one would say one finds no support in the secondary materials for the proposition that it is a grand legislative scheme, but it may be a not so grand legislative scheme. It is obviously not a scheme of the type dealing with companies but, leaving the question of the characterisation of the scheme or otherwise to one side, in our respectful submission, once the question of primary liability has been determined and absent questions of fraud and the like, the necessary and only question in a case of this sort can be, is somebody secondarily liable? Where does one look to for answering the question is an individual secondarily liable for the acts of the company? Well, one looks to section 75B, and that is what Hamilton v Whitehead shows.

Hamilton v Whitehead (1988) 166 CLR 121 at 128 Chief Justice Mason and Justices Wilson and Toohey, having referred to section 38(1) of the Interpretation Code, which was the applicable 75B in that case, say, at the top of the page:

Since the respondent was the actor in the conduct constituting the offences and had knowledge of all the material circumstances, it must follow, according to the applicant, that the respondent was “knowingly concerned” in the commission of the offences committed by the company.

In our opinion, the submission is plainly right.

Then their Honours refer to what Sir Owen Dixon said in Mallan v Lee and say:

But, as we have sought to explain, the inversion of which his Honour spoke has no application here.  The company is not vicariously liable for the actions of the respondent.  The company is the principal offender and the respondent is charged as an accessory.  Franklyn J. thought that it was “wrong and oppressive” to prosecute the respondent for the identical acts and decisions as were relied on as the acts of the company.  There is nothing conceptually wrong in such a course since “it is a logical consequence of the decision in Salomon’s Case that one person may function in dual capacities” . . . 

In Reg. v. Goodall Bray C.J. discussed what his Honour described as:  “some sort of metaphysical bifurcation or duplication of one act by one man so that it is in law both the act of the company and the separate act of himself as an individual” and expressed his conclusion as follows:  “my view is that the logical consequence of Salomon’s Case . . . is that the company, being a legal entity apart from its members, is also a legal person apart from the legal personality of the individual controller of the company, and that he in his personal capacity can aid and abet what the company speaking through his mouth or acting through his hand may have done.”  We agree with this view.

Then at the bottom of page 129, their Honours having gone on to mention the passage at the end of Yorke v Lucas, say:

It would seem to us, with respect, that this reservation –

made in Yorke v Lucas –

made no doubt out of an abundance of caution, was unnecessary.  The provisions of the Trade Practices Act, like the Code in the present case but unlike s. 230 of the Income Tax Assessment Act, were such that the alleged accessory was indeed a true accessory since the offence committed by the company was not the consequence of a vicarious liability for the actions of its servants carried out on its behalf.  It was the consequence of actions undertaken directly by it, that is to say by a person who was the embodiment of the company.

We would say that this case is the same sort of case, that if Mr Houghton and Mr Student were to be liable in the same way that the individual was in Hamilton v Whitehead the necessary cause of action was one under section 75B.

GUMMOW J:   Could you say that again?

MR O’CALLAGHAN: I said the necessary cause of action in this case was under section 75B.

GUMMOW J:   That would require proof of mental elements which are not required under the State Act?

MR O’CALLAGHAN: Yes, your Honour, which are not required under section 9 of the State Act.

GUMMOW J:   Yes, I am sorry.

MR O’CALLAGHAN: Yes, just as they are not required under section 52 of the Trade Practices Act, of course, obviously.

GUMMOW J:   Assume your clients had made these representations by fax or on the telephone, they would then be engaged by section 6 of the Trade Practices Act, would they not?

MR O’CALLAGHAN:   Probably, yes, your Honour. 

GUMMOW J:   How would that then interact with section 52 so far as they were concerned?

MR O’CALLAGHAN:   It would provide a different basis of liability not present in this case. 

GUMMOW J:   I think on your theory you would still say 52 did not apply, would you, because it was the company, not these individuals?  I do now know where you are going really.

MR O’CALLAGHAN:   Maybe I need to give that precise question a little additional thought, your Honour, but I know the respondent relies on the telephone cases but they are not this case.  The case has nothing to do with telephonic or fax communications.  It was never put that way.

GUMMOW J:   I realise that, but we are trying to construe the Act. 

MR O’CALLAGHAN:  Yes, I understand, your Honour.

GUMMOW J:   You want us to construe the State Act by reference to the federal Act, so we have to look, I suppose, at the federal Act. 

MR O’CALLAGHAN:   Yes, your Honour. 

HEYDON J:   You have two arguments.  One is that your clients were not in trade or commerce.  A second argument is your clients were not engaging in conduct; the company was engaging in conduct, they were merely its tools.

MR O’CALLAGHAN:   Yes, your Honour. 

HEYDON J:   So either argument will do.

MR O’CALLAGHAN:   Yes.

HEYDON J:   You set aside tort cases, do you, for those reasons?  I mean, if a truck driver negligently injures someone, the injured person can sue the truck driver or the company who employs that negligent driver or both.

MR O’CALLAGHAN:   Indeed.

HEYDON J:   In the case of deceit, again, often two actions will lie.  You say that the Act narrowed down that type of reasoning or that type of outcome because of the specific language it used.

MR O’CALLAGHAN:   We would not put it on the basis that the Act narrowed down the common law.

HEYDON J:   It does not narrow down the common law but it adopts a narrower approach to liability than that which underlies common law reasoning.

MR O’CALLAGHAN:   In our respectful submission, your Honour, the common law position is exactly the same as the position that represents our construction of this Act.  We say that because there are two propositions – I know the common law in this area of directors’ liability for companies’ acts and so on is in many respects, as we have said in our submissions, uncertain in many jurisdictions.  Two propositions cannot be doubted.  That is, first, where a tort is committed by the company the employee does not make himself liable merely because of the fact of the employment relationship.  Justice Finkelstein said as much in Root Quality Pty Ltd v Root Control Technologies (2000) 177 ALR 231 at [146] where the learned judge said:

If the Mentmore line of cases were adopted it would not always be easy to identify the circumstances under which a director could “make the tort his own”.  All that can be said confidently is that if a director decides that his company should carry out an act that results in an infringement of the rights of a third party, the director does not, without more, render himself personally liable at the suit of the third party.

GLEESON CJ:   I thought Justice Hayne was putting to you the case of a servant of the company, a truck driver, for example.

MR O’CALLAGHAN:   Justice Heydon, your Honour?

GLEESON CJ:   I am sorry, Justice Heydon was putting the case of a truck driver, was he not - a servant, not a director?

MR O’CALLAGHAN:   Yes, your Honour, but I think – I withdraw that.  The truck driver, the servant, is to be distinguished from a person who is in a position to control or guide the mind of the company.  The truck driver is not.  The janitor is not.  But employees like Mr Houghton and Mr Student – marketers, project managers – were in a position to, and did, bind their corporate employer, and that is why they are in a different category.

HEYDON J:   Cases only pleaded that they were employees and servants and/or agents of the company - paragraphs 3 and 4 of the second amended statement of claim.  Are you saying that is a sort of fallacious characterisation?

MR O’CALLAGHAN:   They were certainly employees but, to be clearer, it would probably say employees who were the guiding mind of the company or in a position to bind the company, authorised to do so.

HEYDON J:   If the Director of BHP Billiton negligently runs someone over, he is personally liable – or she.

MR O’CALLAGHAN:   He is.  But then it is the nature of the Act rather than his capacity that determines the answer to that question.

HEYDON J:   But if the allegations are correct, though, the second and third respondents were very closely involved in the conduct.  They said the misleading things.

MR O’CALLAGHAN:   Most certainly, but, in our submission, they said them, not as Mr Houghton and Mr Student, but as, and only as, WSA.  That is what the learned trial judge found - they had no independent trading or commercial interest.

GUMMOW J:   What do you mean by “as WSA”?

MR O’CALLAGHAN:   That their actions were the actions of WSA.  They were not personal actions.  They were clothed in WSA, as all the documents make clear, your Honour, in the appeal book.

GUMMOW J:   This is the sort of theory, is it, that goes back to what Lord Haldane said about directors and the organic theory of company law, is it not, that is referred to in Hamilton v Whitehead?

MR O’CALLAGHAN:   Yes, your Honour.

GUMMOW J:   And in Nattrass at page 127:

He is not acting as a servant, representative, agent or delegate.  He is an embodiment of the company.

MR O’CALLAGHAN:   Yes, your Honour, that is precisely how he put it.

GLEESON CJ:   If a common law action for fraudulent misrepresentation had been brought by people who suffered harm as a result of what was said by Mr Houghton or Mr Student, would an action lie against them personally?

MR O’CALLAGHAN:   For fraudulent misrepresentation?

GLEESON CJ:   Yes.

MR O’CALLAGHAN:   Probably, your Honour, yes, depending on the facts, obviously, because ‑ ‑ ‑

HAYNE J:   I thought your answer would be no for want of knowledge, and is that not why accessorial liability did not run against them?

MR O’CALLAGHAN:   It certainly is, but I thought the learned Chief Justice was putting to me a hypothetical question not founded on the facts of this case where there was ‑ ‑ ‑

GLEESON CJ:   No, suppose there had been fraud.

MR O’CALLAGHAN:   Suppose there had been fraud, yes, which in answer to Justice Hayne’s point, there was not.  Not only no fraud, there was - the allegation of knowing involvement in a contravention was expressly disavowed, so it is a long way from this case, but if fraud had been involved, then fraud is always different and there is that delightful, if I can use that expression, passage in Lord Hoffmann’s speech in Standard Chartered Bank where he says that no person can escape liability for fraud by saying, “I wish to make it clear that I am committing this fraud on behalf of someone else and I am not to be personally liable”.

HEYDON J:   Can someone say, “I am not personally responsible for this misleading and deceptive conduct because I am doing it for someone else”?

MR O’CALLAGHAN:   Yes, your Honour, because you, Mr Arms in this case, choose to contract with my company of limited liability, you know that, and there were certain risks inevitably involved in doing so.  One can insure against those risks or take such other precautions as one might, but if one chooses to contract with a company and someone only ever acts as the company, we would say that is the end of it. 

HEYDON J:   You take the risk of misleading and deceptive conduct?

MR O’CALLAGHAN:   As Mr Arms ‑ ‑ ‑

HEYDON J:   As the person dealing with the company.

MR O’CALLAGHAN:  Yes, but the risk one takes, as in any commercial dealing, has to identify from where the risk emanates. In this case, if there was a risk, as it turned out to be there was, it was a risk that they had to assess in relation to WSA, not in relation to Mr Houghton and Mr Student as individuals. Justice Heydon had asked me a question about the relevance of the common law or whether the common law had been narrowed by section 9 and I had started to say that that was not the case, that ‑ ‑ ‑

HEYDON J:   I am not saying the common law has been narrowed. All I am trying to identify or point out is that you seem to, by your construction of section 9, attribute to it a much narrower type of reasoning or a much narrower approach to liability than that which underlies the common law. The Trade Practices Act and the fair trading legislation is generally thought to have been broader than the common law.  It was enacted in part to meet what some people thought were deficiencies in the common law or difficulties in the common law.  If your construction is correct, it would run against the stream, as it were, of the legislation.

MR O’CALLAGHAN:   In our respectful submission, it would not, your Honour, because although your Honour is quite right, there are statements all over the place about giving the Act a beneficial interpretation and so forth, but, at the end of it, it is still necessary to construe the words of the statute.  In our submission, our construction of the statute does not swim against that tide at all because it is consistent with the common law position.  It is consistent with the proposition that Justice Finkelstein put as one that could not be doubted in the Root Quality Case.

GUMMOW J:   Where is that particular passage in Justice Finkelstein again?

MR O’CALLAGHAN:   It was at paragraph [146], your Honour, which is page 268, towards the end.  This was part of his Honour’s treatment of the four lines of authority that have vexed judges.  As part of that discussion, he confidently says that that proposition is so and, in our submission, that is entirely consistent with our construction of the Act.

HEYDON J:   He says “without more” and then he goes on to give various examples of what would be more.  Some of those examples turn on people who are personally involved in the commission of the unlawful act.

MR O’CALLAGHAN:   Yes, your Honour, and it may be ‑ ‑ ‑

HEYDON J:   That is true of the second and third respondents.

MR O’CALLAGHAN:   One can posit any number of different factual situations where a person would render themselves personally liable.  The Fairline Case where, I think in that case, the individual sent an invoice, there is a clear indication that a fact among others no doubt that led the court in that case to conclude at common law that someone had assumed personal responsibility.  But this case is a case where there is no more.  This is the “without more” case because that is what the trial judge found.  There are not facts that one can look to and say he sent the invoice, he made personal representations.

HEYDON J:   Did not in mid-December 1999 Arms meet with Julie McDowell and Mr Student and at that meeting Arms provided an outline of what he wanted to do with the business and explain various things and so on?  Is that not direct involvement in the conduct proscribed by the Act and of which the applicant complains?

MR O’CALLAGHAN:   In our submission, it is not, your Honour.  All evidence of that sort does is prove that Mr Arms acted as WSA.  WSA has to act, obviously, by somebody.  In that instance it was Mr Arms, but Mr Houghton and Mr Student had to do something more.  What the more is, as we have said, could be any number of different things, but there was not any more here.  A person could, I suppose, say, “I have been in this business for 50 years and I incorporated last week and you can trust me because of the wealth of my experience”, and one can posit any number of fact situations where personal liability could be attributed where, on its proper construction, the person is the individual because he or she has adopted the acts as his or her own or whatever other expressions are invoked.  But nothing could be clearer than the trial judge’s findings and nothing could be clearer, for that matter, than the concession that the respondents make in paragraph 43 of their written submissions that:

[The learned trial judge] considered that the position might be different if there was some independent trading or commercial interest of employees, which he held, as a matter of fact (correctly), the employees in this case did not have.

So even the respondent in this appeal is not saying that that was wrong.

HEYDON J:   When a representative of BHP goes out and buys or sells something, is that representative acting in trade or commerce?

MR O’CALLAGHAN:   That representative buys or sells something on behalf of BHP – yes, your Honour, if that representative signs the contract as BHP ‑ ‑ ‑

HEYDON J:   Makes a representation.

MR O’CALLAGHAN:   Yes.

HEYDON J:   What is the difference here? Again, is this the difference between common law liability and section 9 liability?

MR O’CALLAGHAN:   There is no difference in scope between the two.  In the example your Honour gives of a director of a major company ‑ ‑ ‑

HEYDON J:   Just a vendor on behalf of BHP or a person who goes out to buy machinery for BHP.

MR O’CALLAGHAN:   Yes, and if there is nothing more to it than a sale with relevant representations orally or in writing made by Mr Smith as BHP, then there is no more and the only person engaged in trade or commerce is BHP.  Mr Smith would have to do something more to excite personal liability.  It may be that if he is knowingly involved in a contravention, he can be liable under 75B or if ‑ ‑ ‑

HEYDON J:   If someone said to him at a party, “What do you do?  What trade are you in?”, and he said, “I am a buyer of scrap metal for BHP”, that would be a truthful answer, would it not?  That is what he does.  He is in the trade of buying scrap metal.

MR O’CALLAGHAN:   No, your Honour, BHP is in the trade of buying scrap metal and he, the person at the party, is the human manifestation of BHP when it buys scrap metal.  In a colloquial sense what your Honour says is true, but in the legal sense it is not.

HEYDON J:   Does not your argument perhaps depend on an extrapolation of the theory underlying the Concrete Constructions Case from things that are internal to a corporation to its dealings with the outside world?  That case decided that what an employee is told by an employer is not in trade or commerce.  Is not your argument an extension of that reasoning to cases where an employee deals with outsiders?

MR O’CALLAGHAN:   It is an extension insofar as it deals with a different fact situation, your Honour, because one is dealing with an outsider to be sure, but that is necessarily so because of the facts that are thrown up from the case.  Of course, concepts of reliance might be involved too which are different to the unfortunate workmen in that case, external reliance by a third party on, we would say, the corporation, not the individual in the position of the foreman in Concrete Constructions.  It is different, but that is, as we say, because that is a different fact situation.

GLEESON CJ:   This is a question of statutory construction, is it not?

MR O’CALLAGHAN:   Most assuredly, your Honour, yes.

GLEESON CJ:   Your proposition is not that this is an impossible conclusion conceptually; it is that this is not what the Act means.

MR O’CALLAGHAN:   If it is not an impossible position conceptually, your Honour, it is not far from it impossible to say that once the actions of a person, human being, characterised properly has only been the actions of someone else, ie, the company, it can only be the company to which the words “A person” is referring.

GLEESON CJ:   The reason I asked you the question was this.  If it is a question of legislative intention, a case of what once might have been called a $2 insolvent company would provide an excellent example of a situation in which the legislation to be effective in practice would need to fasten on to the conduct of individuals acting on behalf of the company, would it not?

MR O’CALLAGHAN:   It may, your Honour, that is a not inconceivable consideration that a legislature may bring to bear on legislation, but there is no suggestion of it here.  If one were looking for that sort of legislative intent, it would have to be somewhere.  It is not something that could flow from the broad conceptual notions of beneficial construction because such a beneficial construction does run headlong into concepts of limited liability of the corporation.  That is what they are there for.  That is Salomon’s Case.  If the purpose of the legislation is to revisit Salomon’s Case, which on your Honour’s hypothesis it would, one would need to find clear legislative intent of that, in our submission.

GLEESON CJ:   I was not really suggesting that it was a case of lifting the corporate veil; I was just suggesting that it is a question of the reach of the norm of behaviour, whether it is intended to govern the conduct of people in the position of your client, bearing in mind the practical possibility that in many cases the company would not be worth powder and shot.

MR O’CALLAGHAN:   In our submission, your Honour, that approach would nonetheless run into Salomon’s Case and if that is what the legislature intended, that someone can have a coextensive remedy ‑ ‑ ‑

GUMMOW J:   That is this case, is it not?

MR O’CALLAGHAN:   Yes, and, in our submission, that is ‑ ‑ ‑

GUMMOW J:   The first respondent is under administration, is it not?

MR O’CALLAGHAN:   Yes, indeed.  It is hard to imagine a situation, practically speaking, why ‑ ‑ ‑

GUMMOW J:   So on one way of looking at it this is the sort of case that the circumstances the Chief Justice was putting to you are very present.

MR O’CALLAGHAN:   But, in our submission, your Honour has to find some support for that either in the text of the section or in the legislative history or somewhere and there is no suggestion, with great respect, that the sort of thinking that the Chief Justice has been referring to played any part in the forming of this legislation because, as the cases make clear ‑ ‑ ‑

GUMMOW J:   I would just read section 9(1) and without slipping in words it seems to be you are in trouble, your clients are in trouble. You say that it was not their conduct or something or other. You have to get very metaphysical to get your clients out of section 9(1), it seems to me, not the other way around.

MR O’CALLAGHAN:   I missed what your Honour has said. I apologise.

GUMMOW J:   You have to get very metaphysical to get your clients out of the plain words of 9(1).  It is not the other way around.  It is not the opponents who get metaphysical.  You are the one who has to get metaphysical.

MR O’CALLAGHAN:   Well, it is a little bit metaphysical because it involves the attribution of conduct by employees to a corporation.

HAYNE J: Let me put the metaphysical proposition that seems to me to underlie your whole case. It seems to have three elements. One, you allege that because the appellants were not liable under the federal Act as knowingly concerned in the contravention of that Act by the corporation, a contravention committed because the conduct of the appellants was deemed by section 84(2) to be the corporation’s conduct, that, either, proposition 2, the appellants did not engage in conduct, or, proposition 3, their conduct was not in trade or commerce. Now, that seems to me to be the essence of your argument. It seems to be an argument that has some tensions within it, shall I say, Mr O’Callaghan.

MR O’CALLAGHAN:  Your Honour, if the tensions arise because, as Justice Gummow says, we are attempting to read words in that are not there, we, of course, say that that is not what we are doing. We are seeking to construe section 9 in the same way that this Court construed section 52 in Concrete Constructions and in Parkdale Custom Built Furniture.  In other words, there is ‑ ‑ ‑

GUMMOW J:   This is proposition 3 that Justice Hayne was putting to you, is it?  This is the “in commerce” limb of your argument, is it?

MR O’CALLAGHAN:   Yes, your Honour, that, unlike the other words which are construed broadly and beneficially and so on, those words are said to have a restrictive operation in section 52 and we would say they have a restrictive operation here.

GUMMOW J:   You had better look at Concrete Constructions, I think.

MR O’CALLAGHAN:   Yes, your Honour.

GUMMOW J:   It is a decision I have never been all that happy with actually.

MR O’CALLAGHAN:   That is reported at 169 CLR 594.

GUMMOW J:   It seems to hinge on the notion that the section did not say “with respect to” but said “in” and therefore it was some narrowing in intensification involved.  That seems to be the proposition on which the case turned, is it not?

MR O’CALLAGHAN:   Yes, at the bottom of page 601 the Court says:

As a matter of language, s. 52 prohibits a corporation from engaging in misleading or deceptive conduct “in trade or commerce” regardless of whether the conduct is misleading to, or deceptive of, a person in the capacity of a consumer.

GUMMOW J:   In doing so, for example, in referring to the Bank of New South Wales they seem to be picking up notions derived from the construction of section 92 which says trade and commerce there is narrower otherwise 51(i) under the old theory would have had no work to do and to have translated that into 52 of the Trade Practices Act, which I always thought curious.

MR O’CALLAGHAN:   The expression “with respect to” is wider than “in” therefore “in” has a narrower meaning.

GUMMOW J: Yes, otherwise you cannot read 51(i) and 92 together harmoniously under the then theory of section 92. Well, that may be so, or may once have been so, could no longer be so and then that is translated somehow to the language of section 52 of this remedial statute of the Trade Practices Act.

MR O’CALLAGHAN: Over the page at 603, your Honour, there is an additional explanation other than that one that is linked to section 92 of the Constitution. This is in the middle of the page:

As a matter of mere language, the arguments favouring and militating against these alternative constructions –

the narrow and the broad –

of s. 52 are fairly evenly balanced. The scope of the prohibition imposed by s. 52 is, however, governed not only by “the terms in which it is created” but by “the context ‑ ‑ ‑

GUMMOW J:   Then they are back to the Banking Case, you see?

MR O’CALLAGHAN:   Yes, your Honour, and their Honours say:

In that regard, it is of particular significance that the words “trade” and “commerce” have “about them a chameleon‑like hue, readily adapting themselves to their surroundings” . . . Section 52(2) precludes limiting the scope . . . Nonetheless, when the section is read in the context provided by other features of the Act, which is “An Act relating to certain Trade Practices”, the narrower (i.e. the second) of the alternative constructions of the requirement “in trade or commerce” is the preferable one . . . it is plain that s. 52 was not intended to extend to all conduct, regardless of its nature, in which a corporation might engage in the course of, or for the purposes of, its overall trading or commercial business. Put differently, the section was not intended to impose, by a side‑wind, an overlay of Commonwealth law upon every field of legislative control into which a corporation might stray ‑ ‑ ‑

GUMMOW J:   There is a suppressed premise in that too which is a nervousness about the scope of the corporations power.

MR O’CALLAGHAN:   There may have been at that time, your Honour, yes.

GUMMOW J:   Yes, I think so.

MR O’CALLAGHAN:   But there is also the sort of nervousness, if that is the right word, your Honour, that Justice Toohey expressed at the end of his judgment at page 615.

GUMMOW J:   Could you just go back to – what then is the critical passage?  Is it at the bottom of 603, beginning with the sentence, “Nonetheless”, about line 10 from the bottom of page 603?

MR O’CALLAGHAN:   Yes, your Honour.

GUMMOW J:   What are the other features of the Act?

MR O’CALLAGHAN:   Well, they do not say, your Honour.

GUMMOW J:   What does the phrase “overall trading or commercial business” mean?

MR O’CALLAGHAN:   It is a passage that has some difficulties in understanding, with the greatest of respect to the Court.

GUMMOW J:   Then the next sentence is a pre‑Engineers type anxiety, is it not?

MR O’CALLAGHAN:   No, your Honour, it was 1990, after all.  The anxiety ‑ ‑ ‑

GUMMOW J:   Yes, it is a year after the Incorporation Case.

MR O’CALLAGHAN:   But the anxiety is a different one, and it is the sort of anxiety that Justice Toohey also expressed at page 615 that:

Unless s. 52(1) is confined in the manner suggested in these reasons, it becomes an overriding norm of conduct, a departure from which in any circumstance may give rise to a cause of action.

It is not the identical, but it is a similar concern that we would urge in this case, the side‑wind analysis of page 604, that unless restrictions of the type properly characterised as restrictions – we will live with that – but unless restrictions of the type are imposed, there would be limitless ‑ ‑ ‑

HEYDON J:   It is not for judges to impose limits on parliamentary language.  Judges have to obey what parliaments do and enforce the regimes that parliaments have enacted, not say, “It’s rather too broad and I think it should be narrowed down a bit”.

MR O’CALLAGHAN:   Of course, your Honour, and we are not suggesting for a moment that that is an appropriate approach to statutory construction, not for a second.

HAYNE J:   Well, are you not, because section 9 is “A person must not”, et cetera. You have none of the overlay of worry about how big the corporations power is, et cetera. You have “A person must not”, a perfectly general statement of norm. Now, if once you take the step which has been taken in relation to section 52 that there is no intent, no element of knowledge bound up in this, the norm is pervasive, is it not?

MR O’CALLAGHAN:   No, your Honour, it is not pervasive because the very first question that one has to ask that is not asked in cases like Concrete Constructions is, “Who is the person?”  That is where this case differs from those.  It involves a different question of statutory construction.

HAYNE J:   That is where your reliance on the federal Act, I would have thought, presents you with a difficulty. The three propositions I put to you were related, as I understood the argument to be couched in that way, but do you make some separate proposition that regardless of the way in which the federal Act is engaged, section 9 should be read, absent 145, as was the case relevantly, as incorporating some sort of organic theory of corporate behaviour and if someone does something in the capacity of servant that person does not act, the corporation acts?

MR O’CALLAGHAN:   That is the submission, your Honour, yes.  If I have not made that clear, I apologise.

HAYNE J:   That is not dependent upon the federal Act. 

MR O’CALLAGHAN:   That proposition is not, no.

HAYNE J:   No.

MR O’CALLAGHAN:  No, it is not, your Honour. I did not assent to that proposition that our construction is in some sense fragile because if you remove 75B from it, it falls in a heap – far from it. Its strength lies in the very point about attribution of conduct. The point is that the person has to be, on the facts of this case, WSA; it cannot be both. The fact that it cannot be both is not dependent upon the presence of section 75B or 145(1) in the new Fair Trading Act.  As we have endeavoured to submit, those propositions, far from being narrower than the common law, are entirely consistent with it.  As we say, it is not a matter of adopting a narrower or broader interpretation of the words at all. 

If it was convenient for the Court, I was going to turn next to the decision of the Full Court. We have set out in some detail why we submit, with the greatest of respect, that the Full Court was wrong in its decision and its process of reasoning and I shall endeavour not to repeat what we have said in writing. The learned trial judge dealt with the allegations under section 9 against Mr Houghton and Mr Student at pages 163 to 167 of the appeal book. It is worth just spending a little time on some of those passages.

GUMMOW J:   Can you just explain to me was there any effort at trial to attach section 75B to your clients?

MR O’CALLAGHAN:   No, it was abandoned before the hearing started.

HAYNE J:   There was an earlier pleading summons which gave rise to reasons of Justice Ryan delivered on 8 August 2003 in [2003] FCA 835 which dealt with the then state of pleadings, including accessorial liability. I think I am right in understanding them as recognising that the plea of accessorial liability was at that point abandoned.

MR O’CALLAGHAN:   Yes, your Honour. It is not possible to be more precise than that, I do not think, on the record. What was always the case put by the appellants in this Court was that they were not engaged in trade or commerce. We readily concede that the precise arguments in aid of that submission were not sufficiently dealt with before the Full Court but, in our submission, it is really not to the point because it had always been Mr Houghton and Mr Student’s contention that they were not engaged in trade or commerce as section 9 required.

There is a reference in the top of page 163 to the second reading speech, but it does not get one very far.  Then at paragraph 97 the learned trial judge said that counsel for Houghton and Student:

drew a parallel between s 145 of the Fair Trading Act and s 75B(1) –

That submission is not important for these purposes, but the final sentence of that paragraph is a finding by the judge that:

No such distinct conduct has been imputed to Student or Houghton neither of whom could, in any sense, be said to have been engaged in trade or commerce on his own account as distinct from being an employee of WSA.

Counsel for Arms contended that Student and Houghton’s personal conduct occurred “in trade and commerce” in the sense in which that expression is used in the TPA and in the sense, not relevantly different, in which it is used in the Fair Trading Act.  That characterisation was said to follow from the fact that the individual second and third respondents were engaged in offering and supplying services to Arms “in the course of business”.  However –

and again this is what the trial judge is finding –

the “business” was that of WSA, not of Student or Houghton personally.

The trial judge, Justice Ryan, in considering Tobacco Institute refers to Concrete Constructions and then at paragraph 102 says:

It was also argued on behalf of Arms that the fact that a person has not engaged in impugned conduct in his or her “own right” does not preclude that person from acting in trade or commerce.  However, that analysis begs the question which is not whether the person was acting “in trade or commerce’ but whether he or she was so acting on his or her own behalf or solely as the employee or agent of another.

We would say that is right.  A passage from Concrete Constructions is referred to for no, with respect, apparent reason and then Meadow Gem and that line of authorities is discussed and set out and the learned trial judge says, correctly, in our submission, that they do not bear on the matter because they were all cases in which – this is the last sentence in 104:

The statements were therefore made on their behalf and in connection with their own “business” or in discharge of what they perceived to be their personal duty as Ministers of the Crown.

At 107 to 109 on the next page, these are the paragraphs that the Full Court focused on.  The passage that they particularly fastened on and the basis upon which they allowed the appeal was 107 where Justice Ryan said:

It is significant that although s 9 of the Fair Trading Act and its counterparts in the legislation in other States have been in force for about two decades, the researches of Counsel have not revealed a single authority where an employee has been held personally liable for statements made in the course of her or her employment by an employer who, or which, was concededly engaged in trade or commerce.

His Honour accepts from that observation of 75B that no ‑ ‑ ‑

HEYDON J:   But to assess the force of that argument you would have to examine whether there were any authorities where anyone had attempted to hold an employee personally liable.  Employees are normally people without assets.  Their employers often do have assets.

MR O’CALLAGHAN:   That is true, your Honour.

HEYDON J:   If there have been many cases all one way that sentence would have force, but as it stands does it have much force?

MR O’CALLAGHAN:   It does not, and we do not say that it does, your Honour.  It was, in our submission, little more than a remark in passing.  That might be putting it a little bit low but it certainly was not fundamental to the learned trial judge’s reasoning, his comment about researches of counsel.

GLEESON CJ:   The problem is that in its possible application to the position of employees of corporations, section 9 deals indifferently with the position of a casual salesperson behind the tie counter at David Jones and the sole employee of a one‑person company who happens to be that person as well.

MR O’CALLAGHAN:   It does deal with them differently, your Honour, yes.  In common law different approaches are taken as to whether a one‑man company makes a difference or not.  Cases like Mentmore and the Trevor Ivory Case say that it does not.  A corporation is a corporation.  But this passage in 107 of Justice Ryan’s reasoning, we say ought not to have played the significant role that it did play in the Full Court’s reasoning.

GUMMOW J:   Does his Honour deal with your point about “in trade or commerce”?

MR O’CALLAGHAN:   No, your Honour.

GUMMOW J: Are there cases which say that an activity is not in trade or commerce for the purpose of section 52 if the actor engages in the conduct which is apt to induce others to themselves embark on trade and commerce with a third party?

MR O’CALLAGHAN:   I am not aware of them, your Honour, if they exist.

GUMMOW J:   Look at paragraph 105 on page 166, the summary by Justice Sackville in the Noah’s Ark Case at paragraph (iv).

MR O’CALLAGHAN:   I see, your Honour, I beg your pardon, yes.

GUMMOW J:   I thought that would be a classic case.

MR O’CALLAGHAN:   I am sorry, I misunderstood and I apologise.

GUMMOW J:   But trade and commerce does not have to be the trade and commerce of a relevant actor.  It could be designed to stimulate engagement in trade and commerce by others with others.

MR O’CALLAGHAN:   That is true, because that is what the passage says and Justice Sackville has approved it, but that is not this case, and that is what Justice Ryan was very concerned to say.

GUMMOW J:   Why not?  Why is not this case?

MR O’CALLAGHAN:   Because in all of these cases, as he explains at 106, your Honour, having set out the passage from Justice Sackville’s judgment:

It is to be borne in mind that all of the public presentations and statements in respect of which those principles were postulated were made at least arguably in the pursuit of a business or the purported exercise of powers or functions attaching to a public office.

Justice Sackville said in proposition (iv), extracted above:

Public statements by a person not engaged in trade and commerce himself or herself, may be made in trade and commerce -

His Honour is not to have been taken to have endorsed a proposition that any statement made by an employee – any statement which is made in trade or commerce would be taken to have been made by the employee on his or her own behalf.

HAYNE J:   Well, what is the difference between in Meadow Gem the treasurer who says, “Deal with Pyramid Building Society.  They’re safe”, and the position of Mr Houghton and Mr Student saying, “Deal with WSA on this basis”?  What is the difference?

MR O’CALLAGHAN:   But Mr Houghton and Mr Student never said to Mr Arms, “Deal with WSA on that basis”.  Houghton and Student only ever spoke to Arms as WSA, your Honour.  It is an important distinction, we would say, because to cloud it means that one clouds the division between corporate liability and personal liability.  People need to be able to make it clear that they are acting as, and only as, a company for their own personal reasons, apart from any other things – insurance reasons, and presumably because their employer wishes them to, wishes them to act for them and only for them.

That is why statements like the one that Mr Jolly and Mr McCutcheon made about the Pyramid Building Society are different because they were statements on the pleadings at least that were said to be made by those Ministers on their own behalf in connection with their own business, or discharge of their duties as Ministers, and that is different to this case.  For the same reason so too is paragraph (iv) in Justice Sackville’s decision which had escaped me, your Honour.  In paragraph 109 of Justice Ryan’s decision or reasons, he says:

The consideration just indicated –

and it is not clear whether his Honour is talking about 108 or 107 –

together with my own analysis in the light of the authorities of the common basis on which liability for deceptive or misleading conduct “in trade or commerce” is erected by both the TPA and the Fair Trading Act has led me to conclude that it does not extend to the conduct of Student or Houghton in the present case.  That is not to say that a director or sole shareholder of a company may not attract liability for statements made in the course of the company’s business if their making can be characterised as tending to promote the director’s or shareholders own trading or commercial interests.

He refers to Arktos.  This is another finding of fact:

However, no independent trading or commercial interest can be imputed to Student or Houghton in the present case.

The reference there in the middle of 109 to “a director or sole shareholder” and the reference to “employee” in 107 is probably a result of the submission put before the Full Court, I must concede this, that employees were in some sense different.

HEYDON J:   You mean to Justice Ryan?  This is Justice Ryan’s judgment.

MR O’CALLAGHAN:   I am sorry, I was confused and I apologise.  It is ultimately the source of confusion in the Full Court and it finds some traction in these passages, because it was not the submission of Justice Ryan, as I understand it, that the omission of the word “employee” in the middle of that paragraph is, we think, thought by the Full Court to have some significance.  That is Justice Ryan’s treatment of Mr Houghton and Mr Student and we would say it is a correct treatment.

The reasons for judgment of the Full Court commence at 178 of the appeal book.  At pages 178 to 180 the background facts are set out.  The reasoning of the primary judge is set out at 181 to 183.  That does little more than repeat what Justice Ryan said.  At the bottom of 183 the Full Court refers to what it says are the relevant provisions of the fair trading legislation.  It quotes at 184 the second reading speech, sections 1 and 9 on 184.  Other provisions are set out at page 185 including the definition of “person”, and 84(2).  But for all that is said there, as we have explained in our written submissions, the court having set out the provisions does not consider them when it comes to its reasoning.  They hang there and do not form part of the reasoning.

Now, with great respect to the Full Court, the seeds of their error are probably sewn at paragraph 29 where, having referred to the nature of the appeal that Mr Arms brought, the Full Court says:

The error of law contended for by the appellant is that his Honour erred in principle when he found that an employee would not be held personally liable for statements in the course of his or her employment -

“Would not” is a curious choice of words.  It may be that the court meant could not be held personally liable but “would not” leaves the nature of the issue for them to decide rather curious. What is equally curious is that final sentence in that paragraph where the court says:

This submission is advanced on the basis that if this Court finds that the correct view is otherwise in law, the relevant finding of his Honour should be reversed by this Court.

Whether that means the appeal should be allowed or not, one does not know because one could have corrected the apparent mistake of Justice Ryan in paragraph 107.  The Full Court if it wanted to have could have done that and then ought to have gone on to consider the next question of whether the facts in this case gave rise to liability but it never did that.  I am sorry, your Honour, I ‑ ‑ ‑

GLEESON CJ:   I was only going to say that paragraph 30 does seem to indicate that they were just at that stage concerned with the question of what the outcome of the appeal, or what the proper order would be for them to make if they accepted the view that there was this error in principle.  Should they send it back to the primary judge or would they just go ahead and decide the case themselves.

MR O’CALLAGHAN:   It seems to be that that is the sort of consideration they had in mind.  What they mean by “there is no residue of law on the issue in this appeal” when the issue itself is not crystallised is unclear.

GLEESON CJ:   We do not have to concern ourselves with that, do we?

MR O’CALLAGHAN:   We do not believe so, your Honour, no.  The case law is something we have dealt with in the written submissions.  At paragraph 38, having examined those cases of Arktos and others, the court concludes:

The position at law therefore is that authorities both in the Full Court of this Court and in the Court of Appeal of New South Wales assert that, in the appropriate circumstances, a[n] employee can be found to have engaged in misleading or deceptive conduct for actions taken within the scope of his actual authority; that is, not independently of such authority.

That passage would suggest that the Full Court recognised that one had to address the question of what those appropriate circumstances were but it did not.  The reasoning of the Full Court occupies the next two pages and the Court says that:

From a careful examination of his Honour’s reasons, particularly [107]-[109], we consider that the correct understanding of them is that he dismissed the claim against the present respondents because he did not consider it was open to him at law to find that an employee acting within the scope of his or her actual authority could also be liable -

The Court says that was “a finding of fact” but that, with great respect, is mistaken because Justice Ryan dismissed the claims against Mr Houghton and Mr Student because he found there was no independent trading or commercial interest and no distinct conduct could be imputed to them.

So the error of law that is identified in paragraph 40, if that is what it was, is, in our respectful submission, beside the point.  Even if it were to a point, it did not entitle the court to, as they put it in paragraph 47 under the heading “CONCLUSION”, consequently allow the appeal.  It simply does not follow as matter of a law, or, with respect, logic, that the error, if that is what it was, of the learned trial judge in making that observation about researches of counsel was something that if wrong entitled the court without more to allow the appeal and ask Mr Houghton and Mr Student to pay Mr Arms $53,000.  Nothing in paragraphs 41 to 46 advances the question further.  They are attempts of one sort or another to deal with some points that were made before, but the gist of the reasoning is Justice Ryan in 107 was wrong, he will therefore allow the appeal.  In our submission, it was never open to the court to do that and they erred in doing so.

GLEESON CJ:   In paragraph 38, as you point out, they refer to “appropriate circumstances” and in paragraph 42 they refer to “possible employee liability”.  Is there anywhere where they discriminate between circumstances that will give rise to employee liability and circumstances that will not give rise to employee liability?

MR O’CALLAGHAN:   No, your Honour.  It is only in these two pages that you will find any reasoning and it is not there.  That passage, that line at the top of page 191 about “possible employee liability”, that we think picks up the submission that was put before them that employees are in some way different.  It may be that that is what they had in mind.

GLEESON CJ:   I wondered whether they had in mind some kind of difference between a casual employee behind the tie counter at a large department store and people like your clients.

MR O’CALLAGHAN:   If they had that notion in mind, your Honour, it is not something that appears in their reasons and one would be guessing to think what they did have in mind.  Our guess is that they were responding to that submission put to them that employees were different and what they were saying in 42 is, “We have looked at Arktos, we have looked at these others cases and we can see cases where employees have been made liable and we do not think there is anything particularly wrong with that and if employees are to be treated differently, it is up to the High Court to say so”. 

As I say, that was really a product of that submission that was put below and obviously not put here.  But that is just our guess, your Honour, and, as Justice Hayne said in Waterways Authority v Fitzgibbon, one must not guess about these things.  That is what we wanted to say about the reasons, your Honour.  Unless there was anything else ‑ ‑ ‑

GLEESON CJ:   Thank you.  Does that cover what you want to say then?

MR O’CALLAGHAN:   It does, your Honour, yes.

GLEESON CJ:   Thank you, Mr O’Callaghan.  Yes, Mr Riordan.

MR RIORDAN:  Thank you, your Honours.  The factual position has been set out by my learned friend and essentially, as has been put, Mr Houghton and Mr Student were employees of WSA at the relevant time.  Justice Heydon referred to the fact that there was an allegation of employment and being servants of WSA and they were made and, in fact, they were admitted at appeal book 722.  So there was no question about that in the course of the trial or in the appeal.  Also, there is no question that, leaving aside metaphysical questions, all of the conduct which constituted misleading and deceptive conduct was the conduct of the appellants in this case.

GUMMOW J:   But is the result, as you see it, that not only was there open an action under section 159 for damages for breach of section 9 available against both the individuals for whom the appellants here today appear and the company itself?

MR RIORDAN:  Yes, the claim could have been brought against the company under section 9 and section 159 together as well.

GUMMOW J:   And against the individual actors?

MR RIORDAN:  And against the individual actors. So we certainly contend there was no magic in the fact that the action against the corporation picked up section 52 and section 82 of the Trade Practices Act.  It was developmental in the sense the action was originally brought, as has been said, under the Trade Practices Act with an allegation of involvement under section 75B against Mr Houghton and Mr Student. Subsequently that claim was abandoned, as has been said, and substituted a direct claim, if one likes, under section 9 against the appellants.

The position of the respondent is that having brought the claim under section 159 of the Fair Trading Act on the basis that the appellants had contravened section 9(1) it was incumbent upon the respondent, Mr Arms, to prove the four elements of that section, that the appellants were persons – and there was never any contest about that – within the meaning of the Act, that they engaged in conduct, the conduct was misleading and the conduct was in trade or commerce. The finding of the court was that the conduct was in trade or commerce, which really left the two remaining questions which have been developed before this Court.

GUMMOW J:   What is put against you is that there were acts and words and that somehow section 9 does not involve this…..the word – the attribution of that to some other party other than the human actors or vice versa, I think, probably.

MR RIORDAN:   Yes, it is a displacement.  We say that the nub of our case is extraordinarily simple, that we say that, except in the metaphysical sense, there is no question about who engaged in the conduct – they did – and that we say that the conduct was misleading, it was found to be, and that the conduct was in trade or commerce.  We say all of those elements are satisfied on a plain meaning but there is a gloss that the appellants put on this case because they say they did not really engage in conduct – that is their principal argument – because their conduct was displaced by the fact that they were acting, they say, as the corporation, therefore, when acting as the corporation you do not act at all in this legal sense, it is the corporation’s acts.  There is only one actor.  As my learned friend said, there is only one.  It is the corporation.  It is not the individuals. 

It is that principally that we take issue with.  We say, with respect, two things about it.  We say that on a reading of the section and the way the section should be read, it is not open.  Also, we say, with respect, that it is misconceived in terms of being a common law principle that that would occur.  But, rather, the proper principle, even if it was common law principles were being superimposed on this interpretation, would be it would not be the result in any event. 

We do agree with the approach of the appellants that we consider that section 52 and the analysis of section 52 and the authorities that relate to section 52 are of assistance in considering section 9. Whether or not one can properly say that – I think the interveners in their submissions referred to the comments of the Victorian Court of Appeal in Zeus v Nicolaou (2003) 6 VR 606.

HAYNE J:   Just before you come to that and going back to this singularity of action point, 144(2) was in the Act at the relevant time, was it not?

MR RIORDAN:   No.

HAYNE J:   Section 144(2), the attribution provision?

MR RIORDAN:   Was not.

HAYNE J:   Was not.

MR RIORDAN:   It got left out between 1999 and 2003.

HAYNE J:   I thought the accessorial liability, 145, was not in the Act but that 144(2) was.  Maybe I am wrong.

MR RIORDAN:   My learned friends say that you are right and I wish your Honour was – it would make it just a little simpler – but what was in the Act ‑ ‑ ‑

GUMMOW J:   The present 144 was only substituted in 2003.

MR RIORDAN:   Correct.  What was in the Act, if one likes, is a similar provision but it was limited.  At 145 under the Act which was in existence at the time, the original 1999 Act, if I can call that ‑ ‑ ‑

GUMMOW J:   We had better have that text.  We do not have it at the moment, I do not think.

MR RIORDAN:   Do you not?

GLEESON CJ:   What is the print that we should be working from?

MR RIORDAN:   The print that you should be working from is as enacted.

GUMMOW J:   I have Reprint No 2 at the moment.

MR RIORDAN:   Well, Reprint No 2 incorporates the 2003 amendments.

GUMMOW J:   I know.

GLEESON CJ:   So we should be working from the original Act?

MR RIORDAN:   Correct.

HAYNE J: Section 145(1) of the original Act is the relevant attribution provision, is it?

MR RIORDAN:   It is, but it is limited for “prosecution for an offence against this Act”. 

HAYNE J:   Yes, I see.

MR RIORDAN:  That is what was corrected in 2003. So providing we have made ourselves clear to the Court about the position because it is confusing, but in essence neither the section 75B equivalent was present, nor the 84(2) equivalent was present in their forms.

HAYNE J:   In particular, there was not present reference to “also liable”.

MR RIORDAN:   Not in respect to civil liability.  Your Honour will see then there is 145 which was restricted to prosecution also is there.  In fact, it is the subject of some discussion because Justice Bell in the Astvilla Case was considering the same proposition and formed the view that he did get some assistance by the fact that the legislature had in 145 said that the company is also liable because that impacted on the provisions that were criminal offences, section 10, section 11, et cetera, and he said it could hardly be that “engage in conduct” had a different meaning in 9 as opposed to 10 and 11.  He also said that he inferred that the failure to insert both those provisions appeared to be an oversight, no more than some speculation I think.

The position of both parties before this Court is despite that confusion and the proposition that Justice Heydon postulated to my learned friend that really it would be wrong, with respect, to decide that the legislature intended section 9 to change meanings as it went from 1999 to – 1992 to 2003 and then back in the form that it is now in in 2003, because of course, your Honour, under the 1985 Act the 75B and the 84(2) were both present. So those provisions were present from 1985 to 1999, they then disappeared from the Act for four years from 1999 to 2003, and now both reappear. Victoria is unique in this respect.

GLEESON CJ:   Well, the Director of Consumer Affairs will probably be able to explain to us why that happened.

MR RIORDAN:   I am pleased he is here to do that, your Honour.

GLEESON CJ:   Mr Riordan, do you support the reasoning of the Full Court?

MR RIORDAN:   Yes, we do, your Honour.

GLEESON CJ:   Then in paragraph 38 it is said that in “appropriate circumstances, an employee can be found to have engaged in misleading or deceptive conduct”.  What kind of circumstances would be inappropriate?

MR RIORDAN: Inappropriate where the other elements of section 9 are not made out. We say that the Full Court was not putting any additional gloss on it. Plainly enough, it is still necessary to show that the employee has engaged in conduct because at the Full Court stage the argument that was being put was Justice Hayne’s third limb: not in trade or commerce.

GLEESON CJ:   Just remind me which is the section that provides the liability for damages.

MR RIORDAN:   Section 159.

GLEESON CJ:   Thank you.  That is a liability for damages for, amongst other things, innocent misrepresentation?

MR RIORDAN:   Correct.

GLEESON CJ:   Suppose that a person deals with an employee of a bank and makes an inquiry about some financial issue and the employee of the bank, not being negligent but relying reasonably on information that that employee has obtained from somebody else either inside or outside the bank, gives a response which is misleading or deceptive.  Is the employee personally liable for the damage?

MR RIORDAN:   The answer would be in appropriate circumstances, your Honour the Chief Justice.  Can I elaborate on that and say what I mean by that?  In fact, Mr Michael Pearce in his article talks about such matters.  The fact is that it may well be that the employee would not have been misleading and deceptive.  If, in fact, an employee says, “Look, here is the product.  It is Kentucky Fried Chicken.  It has 11 different herbs and spices” ‑ ‑ ‑

GLEESON CJ:   We know if the employee says “To the best of my information and belief this is what I have been told” but ‑ ‑ ‑

MR RIORDAN:   Even if he does not say that, we say, your Honour, that ‑ ‑ ‑

GLEESON CJ:   ‑ ‑ ‑ an action for damages for innocent misrepresentation will lie against an employee.

MR RIORDAN:   It is for misleading and deceptive conduct, with respect.  I will draw that distinction.  The fact is that the courts have already recognised that in many circumstances a person who simply is and should be seen to be passing on the information in those circumstances provided by the employer that they are the interest rates on the board, that person is not engaging in misleading and deceptive conduct unless that person puts his or her own imprint on it. 

We say that is the safety valve that anybody wanting to bring a claim against an employee is going to have to navigate, because in many circumstances an employee could only be properly seen as communicating to the customer what he has been told, even if he or she does not say, “This is what I am being told by my employer”.  The person is standing there as a representative of the employee, we would contend, in many circumstances could only properly be seen as a conduit of the employer communicating the interest rates which are on the board.  It is only if he or she was to then put their own misleading and deceptive gloss on it can it be said they are misleading and deceptive.

GLEESON CJ:   I can understand a case in which there is no misleading and deceptive conduct because of considerations of the kind that you mention, but you seem to be suggesting there is a case in which there might be misleading and deceptive conduct of the employer but not of the employee.

MR RIORDAN:   Yes.

GLEESON CJ:   Even though there is nobody except the employee who has done any relevant act.

MR RIORDAN:   Well, of course, the relevant act will be the communication by the employer to the employee of that information.  That is the misleading and deceptive conduct which has then led to the employee or the agent passing it on.  We contend this is not new territory.  The misleading and deceptive conduct is the employer putting it out that the interests rates are 11 per cent and the fact that that might be communicated through the conduit of the employee can easily mean that the employer is liable, but not the employee is liable, because the employee himself has not engaged in misleading and deceptive conduct. 

So that is the way we say that the Full Court was, with respect, quite properly leaving open the fact there are other considerations before one comes to the conclusion that anybody has engaged in misleading or deceptive conduct. But the only issue before the Full Court – and that is made plain in the final reasons – the only issue that was put before them as to why these appellants should be found not liable under section 9 was because it was said they were not in trade or commerce because employees do not act in trade or commerce unless they have some independent interest other than being an employee, but those solely employees, as it was put, cannot act in trade or commerce. That is why the Full Court said at paragraph 47:

It is common ground that in the event of the error of law being made out, there is no reason for this Court to remit the matter to the primary judge.

Because the issue was so narrowed.

GUMMOW J:   That answer you gave to the Chief Justice about the position of the employee, does that require any qualification now that there is a section 75B in the Victorian Act? If you are looking at the Act today, would you answer in the same way?

MR RIORDAN:  Yes, I would, even more so, because Yorke v Lucas principles require not only the engaging in the conduct but – or at least the involvement in the conduct must be with knowledge of the falsity.

GUMMOW J:   Exactly.

MR RIORDAN:  So plainly the employee, merely a conduit, would not have that knowledge and therefore would not have the liability.  If the employee ‑ ‑ ‑

GUMMOW J:   But assume the employee who is more than a conduit.

MR RIORDAN:   An employee who is more than a conduit would be liable directly under section 9 ‑ ‑ ‑

GUMMOW J:   But who cannot be caught under the equivalent of 75B because there is no sufficient mental element.

MR RIORDAN:  Yes, and, likewise, cannot be caught under the involvement provision in the Fair Trading Act for the same reason, the same principles apply, therefore, a liability employee would be direct under section 9 is our contention, your Honour.

GLEESON CJ:   If a corporation in trade or commerce incurs a liability for damages under this legislation, is the amount of the damages tax deductible?

MR RIORDAN:   I do not know.

GLEESON CJ:   I was just wondering what would be the position of an employee not in trade or commerce himself or herself who incurred such a liability.

MR RIORDAN:   Yes, I am really unable to assist, I am afraid, your Honour the Chief Justice, on that question.  One might think that there might be some anomaly there, but I do not know.  In terms of the general approach to the interpretation – I was not proposing to elaborate what is on the written submissions about the approach this Court has taken.  Recently, in 2004, Justice McHugh in Butcher v Lachlan Elder Realty again emphasised the broad constructions and the fact that they should not be qualified and the like. 

I was wanting, if I could, to move on to the principal proposition put for the appellants for disturbing the Full Court decision, which is their contention that the person is not engaged in conduct if his or her conduct is entirely in the course of employment, because we contend that is not sustainable.  That is the second proposition, I think, Justice Hayne identified.  The engaging in conduct is, in fact, defined by section 3 of the Fair Trading Act and it defines a range of activities, including:

(a)      the doing of any act by the person;

(b)      the refusal –

et cetera.  We say that it is plain, with respect, it as plain as can be that the legislation is considering that if a person does any act that that is engaging in conduct and we can only say that the legislature has assiduously avoided imposing any limitation under this definition section so that a person acting in the course of employment would be excluded from engaging in conduct and so we say that the appellants get no comfort from the definition.

We suggest one would expect to find, if there was a legislative intent to save employees, agents or other persons, that that is where it would be found. We rely upon the fact that it was a prerequisite in this case for the employer company to be liable under section 84(2) of the Trade Practices Act, as it was, that the conduct had to be engaged in “by a director, servant or agent of the body corporate within the scope of the person’s actual or apparent authority”. So we say that under section 84 the company cannot be liable unless the employee, in this case, engages in the conduct, the very proposition that the appellants say does not occur. Section 84 can only work if there is engaging in conduct by, in this case, the employee.

We say that seriously contraindicates the interpretation put by our learned friends that, in fact, it was not intended that an employee acting in the course of employment is engaging in conduct.  The mechanism will not work in those circumstances.  The fact that the Act contemplated that each party would be engaged in conduct is demonstrated by the use of the word “also”.  There has been reference to that in the Full Court decision, not to mention decisions of Arktos and the like. The fact that under section 84(2) the word “also” is used, and now in 145, it is submitted could only be a demonstration by the legislature of an intention that the conduct of an employee is not subsumed or displaced by the fact that the conduct is deemed to be the conduct of the corporation.

Were it not for the use of the word “also”, our learned friends could mount an argument that there was an intention that the deeming of the conduct of the employee to the corporation did constitute a displacement of the employee’s conduct, but with the use of the word “also” we say that that argument is completely denied. Section 144(2), of course, adopts substantially the same wording as section 84(2). It was relied upon, as I say, in Arktos, it was relied upon in this Full Court, it was relied upon by Justice Bell in his recent decision in Astvilla, all have focused on the use of that word.  We contend that the appellant’s position requires this Court to read a restriction that excludes conduct engaged by persons in the course of employment from being engaged in conduct ‑ ‑ ‑

GUMMOW J:   What is that decision of Justice Bell?

GLEESON CJ:   What is the reference?

MR RIORDAN:   Astvilla (2004) ATPR 42‑005, your Honour.

GUMMOW J:   Is it on the list?

MR RIORDAN:   Not on the list of cases to be read.

GUMMOW J:   That is Justice Kevin Bell, is it not?

MR RIORDAN:   Yes, it is, your Honour.  It is not on the list of cases that are proposed to be read.  It is referred to in the outline of submissions.

HEYDON J:   That is Astvilla?

MR RIORDAN:   I have given the incorrect citation, I am sorry.  I have given the citation of Arktos. The decision of Justice Kevin Bell is unreported. It is [2006] VSC 289.

HAYNE J:   Which paragraph?

MR RIORDAN:   The paragraph where his Honour deals with this is 150.

HAYNE J:   Paragraph 144 and following.

MR RIORDAN:   Yes, and in particular 150 there is a reference to the also.  Whilst I am on this case, could I suggest, with respect, that there is a useful analysis of the amendments to the Fair Trading Act from about page 132, his Honour went through to all the way up to 150, 151 and 153 which ‑ ‑ ‑

GUMMOW J:   His Honour was dealing with the Act in which temporal condition?

MR RIORDAN:   The same Act as what this Court is dealing with, yes, the interim Act.

GUMMOW J:   In that gap period?

MR RIORDAN: Yes. His Honour does, with respect, a very helpful summary of the changing and how that impacts on the reasoning and whether it should and ultimately decides that he does not change his view of how section 9 should be interpreted in line with section 52.

Your Honours, we refer to Concrete Constructions in this sense, that we say that there was a similar proposition put in Concrete Constructions about the limitation, that it was suggested that in fact they should limit section 52 to just misleading or deceptive conduct to consumers and whilst in one sense – and we will come to that – they took a more restricted view, they rejected the proposition at page 601 and 602 that in fact they should restrict the plain meaning of the words in section 52 by inserting the words “misleading or deceptive conduct to consumers” by saying, although in that case they had something that the appellants in this case do not have, they had a heading saying “Consumer Protection”.

GUMMOW J:   This goes back to the Hornsby Building Case, does it not?

MR RIORDAN:   Yes, it does, your Honour.  They said:

As a matter of language, s. 52 prohibits a corporation from engaging in misleading or deceptive conduct “in trade or commerce” regardless of whether the conduct is misleading to, or deceptive of, a person in the capacity of a consumer. In these circumstances, it is not permissible to give to the heading of Pt V the effect of confining the general words of s. 52 to cases involving the protection of consumers alone.

So we simply use it as saying that the Court there was not prepared to be diverted from the plain meaning of the words despite the fact that they had at least something to hang their hat on.

That is what we say with respect to the proposition that is put about engaging in conduct.  The third proposition identified by Justice Hayne, which was the argument that it was not in trade or commerce, it is plainly necessary for our clients to succeed that they establish the conduct was in trade or commerce.  Your Honours, we submit that Concrete Constructions, whilst it decided at pages 602 and 603 that there were two possible interpretations, one was, as they described “the myriad of activities” that were incidental to the carrying on in trade or commerce, such that comments between employees or between employee and employer would be captured.  They decided on the more restricted meaning.

We say that there is no question that the conduct in this case by the appellants to Mr Arms, who in fact was a consumer of services, fell squarely within what was the restricted meaning in Concrete Constructions.  It was conduct within the central conception of trade or commerce as the majority described it at 603.  It was conduct towards a person who was a consumer and we say it was a conduct that bore a trading and commercial character. 

All of this relevant conduct was the conduct of the appellants being the making of the representations. So we say there is just no question of the side wind analysis which has been put by our learned friends. However, in that context, it is said, and it is conceded, that the business of WSA – my learned friend pointed this out was – was not the business of the appellants and so the question arises, is it a requirement that a person may only be liable under section 9 or section 52 if acting as a principal carrying on business?

We say that Concrete Constructions dealt with that proposition.  In the first instance can I take the Court to page 613 where Justice Toohey, at about point 3 on the page, says:

The present appeal proceeded on the assumption, tacit if not express, that the conduct said to have been misleading or deceptive must have been conduct in the trade or commerce of the appellant.  No doubt, in most cases the focus will be on the nature of the defendant’s business but the section is not so limited.  It does not, in terms, refer to the trade or commerce of the particular corporation.

We adopt that and say that this Court should not take a different view.  We say even more compellingly, or at least certainly more adjacent to the present facts, are the comments made by the majority at 604, point 2, because – it comes just after a section that was read by my learned friend.  It starts with the words on the sixth line:

What the section is concerned with is the conduct of a corporation towards persons, be they consumers or not, with whom it (or those whose interests it represents or is seeking to promote) has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character.

Your Honours, the court’s comments related to section 52 and therefore were limited to corporations. However, applying those comments to section 9 of the Fair Trading Act, the quotation contemplates that “in trade or commerce” requirement can relate to the commercial character of the conduct of the person or the entity that the person represents.  So we say that reading it in that context and leaving out some less important words, the quote would read, “What the section is concerned with is the conduct of a person towards others with whom the person, or those whose interests the person represents, has dealings which bear a trading or commercial character”.  We say that directly contradicts the position put by our learned friends that being in a representative capacity means that you are not in trade or commerce simply because your principal is.

This has been the start of what has been now longstanding and well established, we contend, in intermediate appeal courts and also at trials at first instance of judges who have read that passage and have concluded that in fact it is not necessary under section 52 certainly that the relevant person or the relevant corporation be acting in its own business or have ‑ ‑ ‑

GLEESON CJ:   Do the purposes explained in section 1 of the Act throw any light on this question?

MR RIORDAN:   Of the Fair Trading Act?

GLEESON CJ:   Yes, I have in mind paragraphs (a) and (aa).

MR RIORDAN:   Yes, it does, your Honour.  We say that the purposes, and the interveners have done some written submissions which we adopt on this point, we say that they certainly do provide assistance.  This was a remedial Act, it was intended.  Paragraph (aa), again, of course, came in in 2003, your Honour.  So it was not in at the time but we say nonetheless the purpose of this Act has not changed.

GLEESON CJ:   Let us just concentrate on paragraph (a), which seems to be the relevant one.

MR RIORDAN:   Yes.

GLEESON CJ:   If the purpose of the Act is “to promote and encourage fair trading practices”, does that having any bearing on this question of whether in trade or commerce means in the trade or commerce of the person whose conduct gives rise to the contravention?

MR RIORDAN:   We say there will be no warrant for taking that as a limited basis, your Honour.  The trade and commerce is actually conducted through natural persons.  Real persons are the persons who actually carry on trade or commerce.  We say it would be artificial to say this will only restrict or only impact on the owners of businesses. 

GLEESON CJ:   I do not have any difficulty in relating that purpose of the Act to the conduct of people in the position of the present appellants.  What prompts my question is the casual worker behind the tie counter. 

MR RIORDAN:   It is interesting to note, I think, Mr Pearce’s article - he talks about the person who types the misleading letter, plainly enough, has a role in it also but it could never be interpreted that his or her conduct was misleading or deceptive in doing so.  One needs to look at the circumstances of each case but even ‑ ‑ ‑

GLEESON CJ:   When you are looking at the circumstances of each case, what are you looking for?  Just whether there was misleading or deceptive conduct?

MR RIORDAN:   Whether or not – but that does require a reasonable person being capable of being misled by the conduct.  As one goes down the level, it may well be that in many circumstances one would not say that even statements that might prove to be incorrect were misleading and deceptive in the sense that the rubbish collection man telling you about BHP, whether or not that could ever be said to be in any relevant sense misleading and deceptive such as that it is capable of communicating misinformation.  That is why I say it depends on the facts, your Honour.  It is interesting that there has been no case such as that that has come before the courts that, certainly, our researches have found.  We are talking about low level employees now.  That has been the reality to date.

GUMMOW J: It may involve looking at section 82 as well. You would have to show that the loss was by reason of what the lowly placed person did.

MR RIORDAN:   With respect, that is precisely so, and questions of reasonable ‑ ‑ ‑

GUMMOW J:   Rather than by what the corporation behind the lowly officer was doing.

MR RIORDAN:   Yes, there would be serious questions of causation, one can imagine, in some instances.

HAYNE J:   Just to test the proposition a little further, let it be assumed that the tie counter salesperson turning the tie over sees “Finest Quality Rayon” in very large letters all over the label of the tie and then proffers it to the customer saying “100 per cent silk”, why not caught?  Misleading or deceptive conduct.

MR RIORDAN:   It may be, your Honour, but there must be in the ‑ ‑ ‑

GUMMOW J:   As distinct from handing the tie over in the package which says “100 per cent silk” whereas in fact it is rayon.

HAYNE J:   Just so.

MR RIORDAN:   With respect, as I stand here, I am inclined to accept what Justice Hayne says that if there it says “Rayon” and he says, “Look, this is silk”, then there is no reason why he should not be liable for that.  He is putting his or her gloss on it in such a way that he is not promoting fair trading practices.

GLEESON CJ:   What if he goes to the manager of the department and says, “What is this tie made out of?”, and the manager says silk, so he goes back to the customer and says that is a silk tie?  That would be misleading or deceptive conduct, would it not?

MR RIORDAN:   We would say there would be a very powerful argument that an employee in that situation was simply communicating and would only be seen as communicating that which his employer was passing to him and that that would be readily inferred that counter staff communicate what they are told to communicate and unless an employee decides to say it is silk and not rayon, then readily I think the court should say, well, the misleading and deceptive conduct here is by the corporation or by the employer or whoever it was.  It might be the manufacturer.  This person has not been misleading or deceptive.  He has done nothing more than passed on information.

GLEESON CJ:   That may well be the answer to the problem.  I suspect that is the problem that was worrying Justice Ryan.

MR RIORDAN:   I am sure it was.  In terms of the objects of the Act, can I just say that Justice Bell deals with those matters at paragraph 148 in Astvilla by saying:

It has been said of s. 52 of the Trade Practices Act 1974 (Cth), and it may equally be said of ss. 7(1) and 9(1) of the Fair Trading Act 1999 (Vic), that “the nature of the prohibition imposed . . . is . . . governed by the terms in which it is created and the context in which it is found.” There is nothing in the terms of ss. 7(1) or 9(1) or in the context of the Fair Trading Act to warrant a narrow construction. To confine the operation of the provisions to non‑employees, I would have to read down the word “person” to exclude employees and read in a requirement that the trade or commerce be that of the person themselves. Such a construction, quite apart from being contrary to high authority, as I will later show, would not promote the objects of the Act, the main ones of which I have already mentioned. A construction that gives effect to the generality of the language in ss. 7(1) and 9(1) does promote these objects and is to be preferred . . . “must be afforded full weight –

et cetera.  That is in response to the earlier question.

Your Honour, I think just to deal with what your Honour the Chief Justice raised, in a context where you are selling for somebody else, how could it be misleading and deceptive – even though it be innocent misrepresentation in the sense can be caught – to simply pass on company statements, certainly at low level employees?

Your Honours, that interpretation in Concrete Constructions on what the majority said at 604 was what was picked up by Justice Hedigan – in fact, first by Justice Beach in Lauren v Jolly and then by Justice Hedigan in Meadow Gem v ANZ and that has formed the basis for what has become a series of cases in which the courts of Australia, and New Zealand for that matter, have held that it is not a requirement that the person making the representation, or the actor, have an interest in or be engaged in their own business, have some independent interest.

GUMMOW J:   Now, are there any references to the New Zealand cases in the materials we have been given?

MR RIORDAN:  Yes, there is, your Honour, in our outline of submissions.  Paragraph 48.

GUMMOW J:   Thank you.

MR RIORDAN:  I think the last case, the decision of Cox & Coxon v Leipst is the New Zealand decision that we were able to find.  That is a case under the New Zealand Fair Trading Act and they, in similar fashion, found that natural person agents, being employees, directors or otherwise, not independently engaged in business may be directly liable under the fair trading legislation in New Zealand and that has been the position in nine other cases that are quoted in Australia and that is not exhausted, but we say that they are only one way.

To that list should be added the decision that is referred to in the submissions of the interveners of Genocanna Nominees v Thirsty Point Pty Ltd, [2006] FCA 1268, the relevant passages being between paragraphs [265] and [306]. Justice Lander as recently, I think, as last month, came to the same decision. That gives a total of the ones referred to in the outline plus that case of some 11 cases.

Then, of course, there are the additional cases that Justice Gummow raised and they are the extended - section 6 extension cases. There have been, effectively, six cases decided and they are cited in paragraph 49, page 18 of the respondent’s submissions, together with one at footnote 78, because that was under the ASIC Act in identical terms. To these cases should be added the case of ACCC v Henry Kaye and National Investment Institute [2004] FCA 1363, in particular paragraph 193. That was plainly a prosecution of Mr Henry Kaye and they were, apart from anything else, under the extension of section 6 of the Trade Practices Act.

We would respectfully submit in response to Justice Gummow’s question to my learned friend that they must suffer the same fate as the Fair Trading Act analysis. If employees do not act in trade or commerce under section 9, we would say that there would be no reason why under section 52 as extended by section 6 that they would otherwise then act in the same manner.

The respondent also relies upon the views expressed in legal texts which, we contend, accord with the respondent’s position; they are set out in footnote 79 on page 18 of the respondent’s submissions.  That is the contention as to statutory interpretation.  Then the question becomes common law principles.  It is the respondent’s contention that these common law principles and corporations principles are neither necessary nor appropriate in this case given the clarity of the language used by the legislature in the weight of the authority when in Australia and New Zealand when interpreting that section. 

The appellants contend to the contrary that reference should be had to the common law.  We say that if the court was to have reference to the common law, it provides no assistance to the appellants whatsoever.   The appellants contend that they derive assistance from the application of common law principles because they acted as the company.  Therefore, they cannot be persons who engage in conduct because it was the company engaged in conduct and there is not room for two of them.  There is only one.

With respect, that contention, we say, has a number of defects. The first is we say it is essential for the appellants to make good that argument that they were acting as the company as opposed to for or on behalf of the company as an employee or servant normally would. We say merely acting for or on behalf of the company, the company’s liability outside of section 84(2) would be vicarious and we say it is not even suggested that the vicarious liability of a company could displace the liability of the employee for the acts ‑ ‑ ‑

GUMMOW J:   That is what I wanted to ask you.  In the absence of a section like 84(2), where does one get the liability of the company?

MR RIORDAN:   You would get it from vicarious liability.

GUMMOW J:   That assumes the principles of vicarious liability apply to this Act, is that right?

MR RIORDAN:   Yes.  In fact, there have been decisions that have said that companies can be made liable in that way.  I think I am right in saying Trade Practices Commission v Tubemakers (1983) ATPR, a decision of Justice Toohey ‑ ‑ ‑

GUMMOW J:   It is always been assumed but this actually explains it, does it?

MR RIORDAN:   Yes.  Also, there is a decision of ‑ ‑ ‑

HAYNE J:   What is the reference to Tubemakers?

MR RIORDAN:   I am sorry.  Tubemakers (1983) ATPR 40-358. Also, a decision of Walplan v Wallace (1985) 8 FCR 27, a decision of Justice Lockhart or a decision, in fact, of the Full Court – judgment written by Justice Lockhart. So we say that vicarious liability could stand alongside section 84.

HEYDON J:   But 84(2) is wider.

MR RIORDAN: Section 84(2) is wider and we say that vicarious liability can provide no assistance because we say that there is just no principle that vicarious liability displaces the liability of the negligent employee or the employee engaged in the wrongful conduct. I think Justice Heydon referred to the truck driver. Plainly a negligent truck driver injures somebody; the negligent truck driver remains liable.

GUMMOW J:   But you have to construe these words, “a person engages in conduct”.

MR RIORDAN:   Yes.

GUMMOW J:   Somehow you have to read that, the theory is, is it, the principles of vicarious liability, in the absence of a section like 84(2), and we are in that period here.

MR RIORDAN:   Yes, that is right.  It would have to be that the individuals engage in the conduct and the company then becomes vicariously liable for the individual.

HAYNE J:   That is a step that would be necessary if it were thought necessary to establish the liability of the corporation under both TPA and FTA, whereas if by contrast the primary focus of the Fair Trading Act absent the attribution provisions is to be understood as falling upon the conduct of individuals, the liability of corporations may, ordinarily would be, sufficiently met by application of the TPA, would it not?

MR RIORDAN: The application of the TPA would normally – yes, it would because of section ‑ ‑ ‑

HAYNE J:   Thus the asserted gap presented by the absence of attribution provisions is to be seen as a gap if the Fair Trading Act is intended to what, wholly duplicate but go further than the Trade Practices Act?

MR RIORDAN:   Yes, I think that is so, because sometimes employers may not be corporations and therefore ‑ ‑ ‑

HAYNE J:   Yes.

GUMMOW J:   Somehow doing all this consistently with section 109 of the Constitution, just because of these emollient words in section 75.

HAYNE J:   An excitement the parties do not wish to visit upon us.

MR RIORDAN:   If I am looking.

GUMMOW J:   But what Justice Hayne has put to you would avoid that problem, it seems to me. It would all fit together without any section 109 problem. Section 9 is focusing on the individual.

MR RIORDAN: Section 9 focuses on the individual, that is so, and we say deliberately so.

HAYNE J:   Which reminds me, somewhere in Justice Bell’s decision in Astvilla there was a reference, I think, to seeing the fair trading legislation and the trade practices legislation as forming part of a scheme.

MR RIORDAN:   Yes, he does say that.

HAYNE J:   Is that simply an ex post facto rationalisation of the legislation?  There is no inter‑government agreement, is there, that is relevant?

MR RIORDAN:   No.  One might say it is imprecise language but I think it is nothing more than ‑ ‑ ‑

HAYNE J:   I am not concerned to debate the accuracy of the language.  I am just concerned to make sure that yet another realm of my ignorance is not revealed.

GUMMOW J:   These inter‑government agreements tend not to be public documents.

HAYNE J:   Yes, kept very close.

MR RIORDAN:   My learned junior has pointed out to me that in the Minister’s second reading speech, which is relevantly noted at page 184 of the Full Court’s decision, and it is the last paragraph that is probably relevant in paragraph 19:

In pursuit of uniform fair trading legislation across Australia, drafting of provisions in the Fair Trading Bill has been modelled where possible on the relevant provisions of the Trade Practices Act.’

GUMMOW J:   Which paragraph is this?

MR RIORDAN:   I am sorry.  It is paragraph 19 at 184.

GUMMOW J:   Thank you.

MR RIORDAN:   There there is a quotation from the Minister’s second reading speech which says that:

‘The reason for the introduction of the existing Fair Trading Act 1985 in Victoria was pursuant ‑ ‑ ‑

HEYDON J:   What about the first sentence:

‘The reason for the introduction of the existing Fair Trading Act 1985 in Victoria was pursuant to an agreement between all states to extend the coverage of laws ‑ ‑ ‑

MR RIORDAN:   So it probably does give some grounds for what Justice Bell had to say.

GUMMOW J:   Where do we find that agreement?

MR RIORDAN:   Could your Honour ask the Director?

GUMMOW J:   Yes.

GLEESON CJ:   Yes.

MR RIORDAN:   The point which I think our submission got to was to say that if, in fact, these were just employees as was alleged and admitted, the liability would be vicarious.  That provides no joy, applying these common law principles ‑ ‑ ‑

GUMMOW J: Just going back to where we were, if one looks at paragraph 19 and that statement there, that suggests that one would not read section 9 with notions of vicarious liability to attach the corporation, because what the Minister is saying is, if you want the corporation, you go to the Commonwealth system.

MR RIORDAN:   Yes, it does not ‑ ‑ ‑

GUMMOW J: You want to catch these traders, you go to the section 9.

MR RIORDAN:   It does not deal specifically with it, that is so, your Honour.

HEYDON J:   That seems to be how the pleading was approached in this case.  The corporation was pursued under the federal Act, the second and third respondents under the Victorian Act.

MR RIORDAN:   Yes, that is so.

GLEESON CJ:   On the other hand, if you had an employer who was an individual or a partnership, you might need to rely on notions of vicarious liability, might you?

MR RIORDAN:   You would have at the particular point in time because, of course, there was no 84(2) equivalent or 144(2) deeming provision between 1999 and 2003.  But as at now, either side of that, you would not need to rely on vicarious liability because the conduct of the employee would be deemed to be the conduct of the employer.

In terms of that question, vicarious liability, I think in fairness the appellants do not contend to the contrary, they do not contend that vicarious liability displaces the liability of that person primarily liable.  How they attempt to get around it is to talk in terms – and the submissions do and our learned friends have both in their oral submissions as well – contend that they were acting as the company, that is, that as opposed to employees acting for and on behalf of the company, it is contended that these employees act as the corporation.  They say in paragraph 39 of their written submissions:

because an employee operating in the course of his authority acts on behalf of, and for the benefit of, the employer.

We say those notions are inconsistent.  Somebody acting for and on behalf of the corporation is not acting as the corporation.  We say that on the facts of this case, it could not be contended that the liability of WSA for the appellants’ conduct could be anything but vicarious.  The relevant conduct was that WSA employed the appellants for work, in the course of which work the wrongful conduct occurred.  We say that is classic conduct which will give rise to vicarious liability.  It does not, we say, recall the principles of Tesco v Nattrass which have been raised.  To have the concept which they wish to rely upon, they would have it that just because you are an employee, you act as the company.

GUMMOW J:   Well, Tesco certainly means that Tesco was liable.  They are not saying, are they, that an employee could not also be liable?

MR RIORDAN:   Yes, they contend ‑ ‑ ‑

GUMMOW J:   The House of Lords is not saying – there was no question about prosecution of the individual.  It was not being shut out, but obviously the prosecutors wanted to get Tesco.

MR RIORDAN:   Yes, and we say that this Court has considered the question, I think, in Northside Developments v Registrar‑General where they talk in terms of saying this organic theory has been used to impose liability upon companies beyond that which could be imposed upon the application of principles of agency alone.  It is an approach which has been particularly useful in criminal cases where the liability of the company has depended upon mental element.  We say that is the principal purpose for which Tesco has been established when you are actually trying to get liability to say, “Did the company have the necessary intent or wilful act?”  That is what it is used for.  It is not, as Ms Helen Anderson says in “The theory of the corporation”, the purpose of this organic theory is not to exculpate directors from liability for their behaviour.  We say that is, with respect, the misconception that the appellants have put in this case.

We do rely on the fact that – and the facts deny it but it was plainly never pleaded, proven or submitted at anywhere but this Court that in fact the applicants were the directing mind and will of the company, the language of Tesco, or for some other reason that they were the embodiment of the company in the Tesco sense.  They are not propositions.  They certainly were not the managing director of the company, the sorts of persons that you would see as being the company.

There was a case that I was proposing to take the Court to, the House of Lords in Standard Chartered Bank v Pakistan National Shipping Corporation, which we say really puts to bed a lot of these propositions.

Your Honours, this was a case in deceit and we say that if the common law principles as put forward by our learned friends applied, they would apply to a case in deceit.  It was where the deceitful conduct was constituted by a letter.  It was written by the managing director.  I am wondering, could I take the Court to the judgment of Lord Rodger of Earlsferry, which the Court will find at page 969.  At paragraph 31 his Lordship states:

Among the facts that Cresswell J –

the trial judge –

found are the following.  In about the middle of October 1993 Mr Mehra and two other defendants agreed on a plan –

That led to a letter being sent which is quoted at the bottom of the page which included some backdated documents.  The letter was signed by Mr Mehra, the managing director.  Now, as a result, at 971, about halfway down his Lordship refers to what Justice Cresswell found at trial and says in the quotation marks:

“Mr Mehra contends by way of defence that he is not liable for the acts of Oakprime.

Oakprime was the company.  It was on the company’s letterhead, it was the company that, in that sense, made the misrepresentation.  The relevant principles are referred to in Clerk & Lindsell, et cetera:

In the present case Mr Mehra authorised, directed and procured the acts complained of with full knowledge that the acts complained of were tortious.  He is accordingly personally liable.”

The trial judge undertook the task which in this common law matter our learned friends would have this Court say was appropriate under section 9. His Lordship continues:

33       Even on first reading, this was a strangely complex way to formulate Mr Mehra’s liability.  As the judge had spelled out, in what Evans LJ rightly called “devastating detail”, Mr Mehra did not authorise, direct or procure other people to present the bills of lading and other documents:  it was Mr Mehra himself who presented them to Standard Chartered, knowing full well that the bills of lading had been antedated and intending that Standard Chartered should suffer loss by paying Oakprime in reliance on the documents.  It was these acts of his that were to be regarded as the acts of Oakprime. 

34 Standard Chartered’s amended points of claim did not include a case to the effect that Mr Mehra should be held liable for authorising, directing and procuring the various deceitful acts. The pleader had rightfully preferred the simpler – not to say, more accurate – allegation that Mr Mehra had done the various acts himself and should be held liable accordingly. Before the Court of Appeal counsel for Mr Mehra seized on this point. The amended statement of claim had not alleged that Mr Mehra was liable as a joint tortfeasor for procuring and inducing Oakprime to make the false representations. Cresswell J had, therefore, been wrong to find Mr Mehra liable on that basis. Counsel for Standard Chartered applied to amend to include such a case, but the Court of Appeal refused leave. It was in these circumstances that they went on to allow Mr Mehra’s appeal against Cresswell J’s decision [2000] 1 Lloyd’s Rep 218. The Court of Appeal’s thinking can be seen in this passage from the judgment of Aldous LJ –

It then sets out that the documents were the documents of Oakprime.

Mr Mehra’s name appears as the person signing the documents as managing director of or on behalf of Oakprime.  In my view the representations were made by Oakprime and all the evidence points to the conclusion that SCB [Standard Chartered Bank] relied upon them as being representations by Oakprime.

“15.     Since Salomon v A Salomon & Co Ltd [1897] AC 22, companies have been recognised as separate legal entities to their shareholders, their directors and employees. Leaving aside certain cases, not applicable in this case . . .

“16.     First, if a director or an employee himself commits the tort he will be liable.  An example is the lorry driver who is involved in an accident in the course of his employment.  Although Mr Mehra was the person who was responsible for making the misrepresentations, he did not commit the deceit himself.  For reasons I have already stated the representations were made by Oakprime and not by him.  Further, SCB relied upon them as representations by Oakprime and not as representations by Mr Mehra.”

His Lordship continues, we would suggest almost incredulously, saying:

35       The result of the Court of Appeal’s reasoning really comes to this:  a director can himself orchestrate and execute a scheme of deceit, can himself submit false documents to a bank with the intention that they should pay and suffer loss but, provided that he can be said to have carried out all these fraudulent acts “on behalf of” or “as” the company of which he is a director, he is not to be held personally liable for the resulting loss.  Only the company – which in this particular case does not seem to have been worth powder and shot – is liable.  The director himself can be held liable, it is said, only on “the converse of vicarious liability”, by being held liable for the company’s tort if “he ordered or procured the acts of other persons which render the company liable”:  see p 230, per Evans LJ.  So, in this case, Mr Mehra does the fraudulent acts as a director of Oakprime, Oakprime are accordingly liable for those acts but Mr Mehra cannot be held personally liable for his own acts because they did not involve ordering or procuring others to perform the fraudulent acts which make the company liable.  Understandably, Evans LJ showed some signs of unease at the conclusion to which his reasoning had led him.

GLEESON CJ:   Perhaps we can come back to this case when we resume.  We will adjourn now and we will resume at 2.00 pm.

AT 12.49 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.04 PM:

GLEESON CJ:   Yes, Mr Riordon, I think you were at paragraph 36.

MR RIORDAN:   Thank you, your Honour.  If it is convenient, I will continue on.  I was not proposing to read paragraphs 36 and 37.  Lord Rodger goes on and talks about the importance of maintenance of the separate nature of the company entity, but then at the end of paragraph 37 he says, as we would have it, that what is involved in his case has got nothing to do with the lifting or the piercing of the corporate veil.  In the last line he says:

For this reason –

being why we need to respect corporate identity –

only in exceptional circumstances does the law allow a creditor of the company to pierce the veil of incorporation and fix the shareholders with personal liability:  Salomon v A Salomon & Co Ltd [1897] AC 22.

38       Although Aldous LJ referred to lifting the corporate veil, the question of the limited liability of shareholders is irrelevant to the present issue since Standard Chartered do not seek to make Mr Mehra liable as a shareholder in Oakprime.  Nor do Standard Chartered seek to make Mr Mehra liable, by virtue of his position as a director, for the deceitful acts of Oakprime or its employees or other agents.  Rather, they seek to do no more than hold him liable for the deceitful acts that he himself performed.  So no question arises as to whether he directed or procured the doing of tortious acts by others and the C Evans & Sons Ltd v Spritebrand Ltd [1985] 1 WLR 317 line of cases is not in point.

We say those comments, with respect, are apposite to this case.  In paragraph 39 his Lordship deals with the proposition of this displacing of liability by reason of the liability of the corporation because, his Lordship continues:

39       At the heart of the Court of Appeal’s decision is the view that, because Mr Mehra was a director of Oakprime and acted as such when cheating Standard Chartered, his acts must be regarded solely as the acts of Oakprime and he should have no personal civil liability for them.  As Mr Cherryman acknowledged, no man can escape the clutches of criminal law by the simple device of showing he had carried out his frauds in his capacity as a director of a company and in circumstances where his acts were to be attributed to the company . . . In R v ICR Haulage Ltd [1944] KB 551, 559, for example, both the managing director and, through him, the haulage company were convicted of conspiracy to defraud. His acts “were the acts of the company and the fraud of that person was the fraud of the company”. In the world of tort, however, all was said to be more happily arranged for the fraudster. He could use the device of acting as a director to escape any liability to his victims: they were to be regarded not as his victims but just as the victims of the company’s fraud. His fraud might be the fraud of the company but, somehow or other, it was not his own fraud.

40       My Lords, the maxim culpa tenet suos auctores may not be the end, but it is the beginning of wisdom in these matters.  Where someone commits a tortious act, he at least will be liable for the consequences; whether others are liable also depends on the circumstances.  Here, as the facts make plain and as Cresswell J specifically found, “all the ingredients of the tort of deceit are made out against Mr Mehra (and Oakprime)”.  In other words Standard Chartered have proved all that is required to make Mr Mehra – and through him Oakprime – liable in deceit.  That being so, there is no conceivable basis upon which Mr Mehra should not indeed be held liable for the loss that Standard Chartered suffered as a result of his deceit.

Then his Lordship continues, which is apposite of this case:

If he had been a mere employee of Oakprime and had done the same things and written the same letters on behalf of the company in that capacity, it could never have been suggested that Mr Mehra was not personally liable for his fraudulent acts.  His status as a director when he executed the fraud cannot invest him with immunity.

They then go on and deal with the question of contributory negligence.  I might say for the benefit of the Court, those reasons were specifically agreed with by Lord Hobhouse of Woodborough, Lord Mustill and Lord Slynn of Hadley agreed with Lord Hoffmann and Lord Hoffmann in briefer terms, we would contend, makes similar statements in paragraphs 20 and 21.  I was not proposing to take the Court to those provisions. 

We say, with respect, that that firmly deals with the proposition that the Tesco principle of acting as the company displaces the liability of the individual if, in fact, the individual has done all of the elements of whatever the wrongful conduct is, as in this case.  It also, we say, makes plain that even the argument is not available to employees and never has been and, of course, in this case we are dealing with employees.

The only other case that I was wanting to take the Court to was the case of Hamilton v Whitehead, and the Court was taken by our learned friends.  We say that this Court offers no support for their central proposition and, in fact, is strong authority for the contrary proposition.  In Hamilton v Whitehead, the company was charged under section 119 of the Companies Code with offering a prescribed interest in breach.  Whitehead, being the manager, was charged under 169 of the Code and 38 of the Companies and Securities (Interpretation and Miscellaneous Provisions) Code which is an aiding and abetting code.  That is recorded at 125 and ultimately holds that a person who aids and abets a party in “the commission of an offence against any relevant Code shall be deemed to have committed that offence and is punishable accordingly”. 

The argument that was brought before the Court was that it was contended that the very person, being Mr Whitehead, was the person who led to the company being liable.  Thereby it was said if he is the alter ego of the company, if he is acting as the company, and he makes the company liable, then he cannot have any liability because his conduct is the conduct of the company.  It resonates with the same submission made by the appellants in this case.  That was rejected by the Court, in particular, the Chief Justice and Justices Wilson and Toohey.  It was rejected at page 128 where my learned friend took the Court to.  At the first complete paragraph, they talk about Mallan v Lee which, in fact, was the reverse position.  I will come back to discuss Mallan v Lee because they said that there you could not be found to be the secondary liability, be an accessory.  They say:

In our opinion, the submission is plainly right.  Counsel for the respondent sought to gain some comfort from the words of Dixon J. in Mallan v. Lee.  But, as we have sought to explain, the inversion of which his Honour spoke has no application here.

Can I just quickly say what we contend is the inversion.  In Mallan v Lee it was the reverse ‑ ‑ ‑

HEYDON J:   It is about 129, point 8, the quotation from Mr Justice Dixon.  Do you see that, about “It would be an inversion”?

MR RIORDAN:   Yes, that is so.  Justice Dixon in Mallan v Lee we say was dealing with the different proposition.  There a person, in Mallon v Lee, as was shown on page 126 – it was a breach of section 230 of the Income Tax Assessment Act and there the offence was the offence of the person.  So any person who, or any company on whose behalf the public officer knowingly understated income tax committed an offence.  In those circumstances what the Court said you could not do is say under section 230 the individual, the company officer, was primarily liable.  So the company was secondarily liable, therefore it was inappropriate to say that the person whose was primarily liable was accessorily liable to the company.  It was the reverse in the case. 

The significance, we say, in Hamilton v Whitehead is that the Court said there is nothing conceptually wrong with having the individual accessorily liable with the company even though it is the accessory’s acts that led to the liability of the company because he does it in dual capacities.  He says:

“it is a logical consequence of the decision in Salomon’s Case that one person may function in dual capacities”.

That is the:

metaphysical bifurcation or duplication of one act by one man so that it is in law both the act of the company and the separate act of himself as an individual” –

We ask rhetorically, how could that support the proposition?  It very much suggests that when the person acts, they can act as the company and continue to act as themselves, which is why the Court found that although it was the act that made the company liable, that same act can make the individual liable as an accessory.  In fact the sort of argument that has been put by our learned friends was in the last paragraph at page 128:

Counsel for the respondent argued that s. 38 of the Interpretation Code should be read down so as to apply only to servants or officers of the company acting on behalf of the company, thereby excluding those whose actions were themselves the actions of the company –

in the Tesco sense.  But the Court goes on and says:

However, the words of the section are crystal clear and there is no warrant for reading them down.  Indeed, the fundamental purpose of the companies and securities legislation – to ensure the protection of the public –

et cetera.  We make the same submission.  We say again the Court should say that the words of the section are crystal clear and the proposition that the actions of one should only be the actions of the company and not of the individual are not supportable.

In this concept of piercing the corporate veil – Root Quality Case, Justice Finkelstein - the Court was taken to [146] of RootQuality and what Justice Finkelstein had to say. With respect, we say that what he says at [146], he is not apposite to this case. We would ask the Court to go to [116] which we respectfully submit more accurately states the position which is applicable to this case because there his Honour deals with this prospect of the protection provided by the corporate entity by saying:

I can begin by stating some basic principles which, I trust, will not be regarded as controversial.  A corporation is a legal entity separate and distinct from its officers, directors and shareholders.  This separate status has produced the general rule that officers, directors and shareholders are not liable of the obligations of the corporation.  On the other hand, if in the course of carrying out his duties an officer or a director of a corporation commits a tortious act, such as negligence or trespass, he will be personally liable for the wrongdoing.  The corporation may also be vicariously liable for the act of its officer or director.

Your Honours, in our submission, what his Honour was dealing with at [146] was the much more complex question that may well be worthy of the attention of this Court in the appropriate case.  Root Quality was a case where the applicant was suing a company for infringement of a patent and they had thrown in claims against the director, the major shareholder and the inventor for authorising and inducing the infringement.

The sorts of principles that were talked about in the Standard Chartered v Pakistan Shipping Case and in Root Quality Cases are the difficult principles of how, when a corporation is engaged in wrongful conduct, whether those persons who have some role in directing the corporation, when does it become that they will be liable by themselves and that is why at [146] his Honour says, “Well, just being involved in the decision making does not mean the director is liable for what the corporation does” and we say that is not this case.

In this case, as in the case of Standard Chartered Bank, it is common ground that all of the relevant conduct which constituted the wrongdoing was done by the appellants.  Therefore, we say that the principles discussed at [146] and all of these principles about directors making the tort their own have nothing to do with this case.

Your Honours, in the written reply by the appellants, the appellants rely upon a judgment of Justice La Forest in London Drugs Ltd v Kuehne & Nagel International Ltd (1992) 97 DLR (4^th) 261 at 289. It is in support of the proposition that they make that persons voluntarily dealing with companies – quote from the reply submission:

voluntarily assumed the risk of the company being unable to satisfy a judgment in contract or for vicarious liability.

That is in paragraph 9 of the reply submission.  Your Honours, London Drugs was a case where the plaintiff delivers goods to a corporate defendant, a warehouse, for storage.  Employees of the corporate defendant damage the goods when lifting them, the plaintiff sues the corporate defendant and also the employees but the employees, relevantly, have a duty of care when lifting the plaintiff’s goods.

Justice La Forest on the basis explained in the reply submissions found there was no duty of care because the plaintiff had voluntarily dealt with the corporate employer.  This was the proposition that has been made in the appellant’s submissions in writing, but also orally augmented.  Our point about that is that each of the other six judges of the Supreme Court of Canada disagreed with Justice La Forest about that with Justice McLachlin stating at page 320:

I have also had the advantage of reading my colleague Justice La Forest’s reasons.  While I confess to great admiration for the scholarship and good sense they display, my concerns about the magnitude of the change they would introduce to the Canadian law of tort and the difficult questions they raise prevent me from agreeing with them.  Later in these reasons, I will briefly address some of these concerns.

In an article at footnote 39 at page 16 of the appellant’s submissions, it is an article called “Personal Liability of Company Directors in Tort” (2003) 33 HKLJ 51, Francis Reynolds notes that judgment and says that:

LaForest J, in a long and powerful judgment, held that the employee of a warehouse company owed no duty at all to the company’s customers.  The customers looked to the company on the warehousing contract only.

This is of course a heterodox view, and was not agreed with by the rest of the court.  McLachlin J thought that such a decision would upset the current known balance of liabilities. 

That quote is at pages 60 to 61.  The ultimate decision in London Drugs Case was determined by the employee’s entitlement to rely upon exemption clauses between the contracting parties.  As to the duty of care, we say Justice La Forest’s position was not in accord with that of the other six judges of the court.

Your Honours, there was another matter in terms of economic loss because in paragraph 11of their reply submissions, the appellants referred to a statement of Lord Steyn in Williams v Natural Life Health Foods [1998] 1 WLR 830.

GUMMOW J:   That was dealt with by Lord Rodger in the passages you have read to us, I think.

MR RIORDAN:   It was the passages immediately after I read ‑ ‑ ‑

GUMMOW J:   In Standard Chartered.

MR RIORDAN:   Yes, it does read with that, that is so, your Honour.  We adopt what was said by Lord Rodger with respect to that position.  We say it provides no assistance in this particular case.

Your Honours, the final point then we wish to make was the question of the section 75B being rendered unnecessary. We say, with respect, that is not so. Section 75B is an aiding and abetting, it is an accessory liability provision. It will have a role for accessories. Its natural role is not for persons such as the appellants in this case who carry out all of the elements of the wrongful conduct themselves. The case of Williams may well be a case in point where a managing director prepares misleading projections, but never has any contact, never is engaged himself in the conduct which misleads the person, the end user. 

In those circumstances, it may well be argued.  Instances are many.  A recent case in which persons were using misleading conduct to sell properties and a claim was brought against a client who had allowed that person to use the display apartment where the unlawful conduct was being carried out could not be said such a person had engaged in misleading and deceptive conduct.  It certainly would be arguable such a person was relevantly involved in 75B if the necessary knowledge could be established, et cetera.

We simply make those submissions to say that it, with respect, is not correct and that the 75B provisions in the Trade Practices Act and the State equivalents will have no role to play on the interpretation that is put on behalf of my client.

In conclusion, the appellants, in fact, adopt the submissions of the Director of Consumer Affairs, in particular paragraphs 18 and 19 in that the Fair Trading Act was intended to provide a new code of business conduct governing all dealings in Victoria by outlawing deceptive and misleading business conduct.  We respectfully submit it has established a statutory norm, a standard of conduct in trade or commerce.  It is submitted that ensuring an employee’s conduct in trade or commerce complies with that norm is entirely appropriate as is submitted by the Director in the written submissions.

It is well demonstrated, we would contend, by the two recent cases, being Mr Cellante in Astvilla’s Case and Mr Henry Kaye in the National Investment Institute Case, why it is necessary that the words should be given their plain and ordinary meaning.  If the Court pleases.

GLEESON CJ:   Thank you, Mr Riordan.  Mr Williams, I understand there is some opposition from Mr O’Callaghan to your application.

MR O’CALLAGHAN:   The opposition is in our written document, your Honour, and there is nothing we would add to that. 

GLEESON CJ:   All right.  We have read the application and we have read the written opposition to it.  We thought the convenient course to take, Mr Williams, would be to hear what you wanted to say as amicus, unless you want to be at risk as to costs.

MR WILLIAMS:   We are content to say what we propose to say very briefly as amicus.  We rely on our written submissions and I do not intend to take the Court to them.  To the extent our submissions do not deal with arguments relevant to the case, we adopt the submissions of the respondent. 

There are only a few small points that I wanted to make. In the affidavit of Mr Hiland, the Director of Compliance and Enforcement Operations and Consumer Affairs, Victoria, he in fact makes express reference to the situation that your Honour the Chief Justice and, I think, Justice Heydon, raised in relation to the use of two dollar companies. It is a matter of concern and it would be consistent with proper construction of section 9 if the policy of the Act was seen as being directed towards dealing with that situation.

It was not until Mr Riordan’s oral address that we heard or saw reference to the definition of “engaging in conduct”. I would simply add to that a reference to section 39 of the legislation, Interpretation of Legislation Act 1984, which deals with the use of different forms of the same grammatical definition.

In our written submissions, paragraph 21, reference is made to the existence of differing judicial opinions about the knowledge an accessory must be shown to have to render him or her liable under such a provision.  An example is given of the differences of view in Medical Benefits Fund of Australia Ltd v Cassidy 135 FCR 1.

In paragraph 8 and following of Justice Moore’s judgment we see one sort of view and in paragraph 82 of Justice Stone’s judgment in the same case we see a different view.  My learned friend, Mr Riordan, suggested that there was a matter appropriate for the attention of the Court.  We would respectfully suggest that the proper construction of the accessorial directions provided in Yorke v Lucas are also deserving of attention.  Even as amicus, the Director of Consumer Affairs is unable to offer any reason for the omission of the accessory provision between 1999 and 2003.  It is not altogether clear.

In the Astvilla judgment Justice Bell deals with the gap in paragraphs 150 to 154.  He suggests that it is a mistake.  I am not quite sure exactly what he thought the mistake was, but one possible view is that it was simply a mistake in dealing only with criminal liability and not dealing with - criminal accessory liability and not civil accessory liability.

GUMMOW J:   Mr Williams, on that subject of the 1999 Bill, does your client have any information for us as to the agreement between the States that produced this fair trading legislation that is referred to in the second reading speech?

MR WILLIAMS:   I am sure it can be made available but, as, I think, your Honour indicated, the ‑ ‑ ‑

GUMMOW J:   That would be helpful.

MR WILLIAMS:    ‑ ‑ ‑ agreements made at ministerial councils are not always open to the public.  In fact I have some experience of them and they are not always committed to one piece paper.  They are sometimes rather difficult to deal with.

GUMMOW J:   But this may have been more fully referred to by another Minister on another occasion in the Parliament, for all one knows.

MR WILLIAMS:   Well, I can only say we will make inquiries and if there is anything available we will make it available to the Court and to the party ‑ ‑ ‑

GUMMOW J:   The chronology of the State Acts certainly suggests that there was a concerted movement.

MR WILLIAMS:   What suggests that it was not totally concerted is that in fact there are differences between the Acts of the different States.  I do not know that that is relevant in this particular case but it certainly is noticeable.

GUMMOW J:   The differences may not be relevant but what is said at page 184 of the appeal book is relevant, perhaps, in explaining how the two statutory regimes, federal and State, were designed, at least on the State part, to fit together, namely, the concentration by the States upon non‑corporate traders, individuals and partnerships as explaining what section 9 is doing when it talks about “person”.

MR WILLIAMS:   Well, that was a matter of public notoriety at the time, I think, but what else it was seeking to do under the agreement, at the moment I cannot tell you.  I think the only other matter I wanted to refer to

is the judgment referred to in our written submissions of a recent judgment of Justice Lander of the Federal Court in Genocanna Nominees Pty Ltd v Thirsty Point Pty Ltd [2006] FCA 1268 and the only point I wanted to mention there is interestingly in this case one of the respondents, the third respondent, was a director of a corporation and he was found guilty of what appears to be the same conduct of both accessorial liability in respect of the company and primary liability for his own conduct.

GLEESON CJ:   Thank you, Mr Williams.  Yes, Mr O’Callaghan.

MR O’CALLAGHAN:   If the Court pleases.  The reason that the third respondent in Genocanna was found liable, both under section 75B and section 10 of the Fair Trading Act, which is the same as section 9, was that he had done a variety of different things. What he did is apparent from paragraphs [303] and [304] of the lengthy judgment of Justice Lander. I understand the Court does not have a copy of this decision.

He was found liable.  He was the sole director.  He was a party to the decision that the third respondent sell its business and lease its premises.  He assisted in preparation of a brochure which he knew the first and second respondents intended to publish to potential vendors.  He knew the potential vendors would rely on the matters.  He created a disclaimer.  He assisted to create a brochure for the purpose of creating in the mind of the reader that the brochure had been prepared by a CPA, which he knew to be false.  More importantly, he created the précis and the brochure profit and loss statement.  He took the brochure profit and loss statement from information provided by the fifth respondent.  The brochure profit and loss statement omits material fact in the 1999 profit and loss statement, namely, the stock in hand.  In any event, Mr Bahr created the document which represented the first respondent had made a gross profit.

The judge concludes that he must have known that the representations contained in the profit and loss statement were untrue and therefore to publish the document would be to engage in misleading and deceptive conduct.  So, a case so far removed from ours that it is unimaginable.

With great respect, one of the difficulties is that the facts of our case which are in a sense narrow have been swamped by considerations of general – I should not say swamped, perhaps obscured, by considerations of general policy, because of course people like the third respondent in Genocanna can be liable under section 10, and the reason that they are liable is that by nature of the conduct that they have engaged in, conduct is attributable to them.

Our case is different because, as I have said before and shall not repeat, no conduct was found to be attributable to Mr Houghton and Mr Student. Mr Williams mentioned two dollar companies being used for fraud. We trust it is self-evident from what we have said that it is no part of our case that section 9 permits them to do so.

My learned friend, Mr Riordan, spent considerable time reading from Standard Chartered Bank.  The speech of Lord Hoffman in that case, however, makes it clear that that was a case about fraud and it is decisions like Williams v Natural LifeHealth Foods that are apposite to cases of negligent misrepresentation.  Considerations are different in cases of negligent misrepresentation.

If I could briefly go to Williams v Natural Life [1998] 1 WLR 830, which is referred with apparent approval by Lord Hoffmann in Standard Chartered Bank, perhaps without laboriously reading from pages 835, the speech of Lord Steyn, the passage that I am directing the Court’s attention to commences just under line F:

The touchstone of liability is not the state of mind of the defendant . . . The inquiry must be whether the director, or anybody on his behalf, conveyed directly or indirectly to the prospective franchisees that the director assumed personal responsibility towards the prospective franchisees.

It is this sort of analysis that we say is analogous to the sort of analysis that is involved in cases of this sort.  He goes on to cite Fairline Shipping Corporation, which is a case I referred to obliquely earlier where the director had been held personally liable and that conclusion was possible because the director wrote to the customer and rendered an invoice creating the clear impression that he was personally answerable.  Then his Lordship goes on to consider the other side of the line, being Trevor Ivory v Anderson and I will rely on but not read the rest of that paragraph.  Then his Lordship goes on to refer to what Justice La Forest said in the London Drugs Case emphasising the point that:

in the context of an issue of personal liability of a company’s employee the distinction between “mere reliance in fact and reasonable reliance on the employee’s pocket‑book.”

He refers to the other decision of Justice La Forest in Edgeworth Construction, the pocket‑book point again at the bottom of the page, and says at 837:

This reasoning is instructive.  The test is not simply reliance in fact. The test is whether the plaintiff could reasonably rely on an assumption of personal responsibility by the individual who performed the services on behalf of the company.  To that extent I regard what La Forest J. said in Edgeworth’s case as consistent with English law.

We would say that if any analogy is to be drawn from the common law in these principles, it is that sort of analysis, not the analysis of fraud in Standard Chartered Bank. 

The only other case to which we wish to make reference is the decision of Justice Mandie in Pico Holdings Inc v Peter David Voss, an unreported decision, [2004] VSC 263. It is the Hamilton v Whitehead point and I raise it by way of reply to what my learned friend said about Hamilton v Whitehead. I need not detain the Court with the particulars of the case, but at paragraph 154 Justice Mandie says:

It was submitted on behalf of Mr Voss that the conduct (ie, making the false representation that the Dominion Wines shares were unencumbered) was conduct of Dominion Capital and not of Mr Voss.  It was submitted that Mr Voss was acting on behalf of Dominion Capital and not in his personal capacity.  He could be liable (if established) as an accessory, but he could not be the primary contravener, citing Hamilton v Whitehead.

Justice Mandie goes on to consider or to precis the decision in Hamilton v Whitehead and in paragraph 156 in the third sentence says:

The Court said that the respondent, in placing an advertisement and in dealing with those who replied to it, was the company.  The company was therefore liable as a principal.  The respondent, as the actor in the conduct constituting the offences, had knowledge of all the material circumstances and hence was knowingly concerned in the commission of the offence.  The Court approved of judicial statements that it was a logical consequence of the decision in Salomon’s case that one person might function in dual capacities.  This decision was relied upon to support the proposition that Mr Voss could not be liable as a principal but only as an accessory, when what in fact the case decided was that a person could still be liable as an accessory even if his conduct was the very conduct for which the company was liable as a principal.

The present case is different but I think that Mr Voss is not liable as a principal for other reasons.  This is not a case where the precise conduct of an alter ego of the company constitutes conduct both of the company and of the individual.  In this case, the representation is expressly made in writing in the Promissory Note by Dominion Capital and not by Mr Voss (“Maker hereby represents to Payee…”).  Mr Voss did not make and did not purport to make that representation.  The conduct of Mr Voss was participatory and was constituted by signing (on behalf of Dominion Capital) and sending (on behalf of Dominion Capital) the Promissory Note.  It was the representation and conduct of the company and not of Mr Voss that was false and misleading.  Unlike the case of Hamilton v Whitehead, the representation was not made by an individual in dual capacities; it was made by the company.

In our respectful submission, so too was the conduct engaged in by Mr Houghton and Mr Student.  It was conduct engaged in by them as the company.

The next point I wish to make by way of reply was in relation to the construction of section 84 of the Trade Practices Act. My learned friend, Mr Riordan, I think put section 84 on the basis that it is capable of being read to deem the conduct of the corporation to be the conduct of an individual. That, it is said, happens by operation of the word “also”. In our submission, it is clear from section 84(1) that what section 84 is about is the circumstances in which the state of mind of a body corporate can be established. That is what it says.

HEYDON J:   That is true of subsection (1), but subsection (2) deals with something else.

MR O’CALLAGHAN:   It says, your Honour, that:

Any conduct engaged in on behalf of a body corporate –

and then it lists various types of conduct in (a) and (b) –

shall be deemed, for the purposes of this Act, to have been engaged in also by the body corporate.

HEYDON J: That shows a legislative assumption that a director, servant or agent was engaging in conduct so that transposing it over to section 52 or section 9, he puts it as invalidating or vitiating your theory that when the natural person acts, that natural person is acting only as the company – no separate capacity.

MR O’CALLAGHAN:   That is how it is put, your Honour.  In our submission, the word “also” cannot, with respect, do all that work.  That is our point.

HEYDON J:   What does it do?

MR O’CALLAGHAN:   What it is designed to do ‑ ‑ ‑

HEYDON J:   If “also” did not exist, 84(2) would be a strong provision in your favour.

MR O’CALLAGHAN:   It is certainly a vexing word, but for it to do all that work, to turn it on itself and to conclude that what it is actually talking about is establishing the state of mind of an individual, we say is straining it as a matter of statutory construction.  My learned friend, Mr Riordan, agreed in his opening submissions that – and he will correct me if I am mistaken in this regard – in order for people like Mr Houghton and Mr Student to be liable, it is necessary for them, as he put it, to put their own imprint on the conduct – and he used the example of interest rates on a board – or another expression he used was to put their own misleading and deceptive gloss on the conduct. 

Now, those expressions do not find any support in the cases, but if what the respondent is saying is that an employee must have adopted the conduct as his or her own, then we would agree and say that is precisely what did not happen in this case, because the trial judge made it clear that they had no independent interest.  It is those factual findings to which we must return in order for the narrowness in a sense of our facts not to be obscured.

In our submission, the factual findings of the learned trial judge could not be clearer.  However the test is to be posited as to how a person can make conduct their own and whatever facts may arise, they did not exist in this case.  If the respondent were right, taking the Chief Justice’s example of the tie salesperson at David Jones, the tie salesperson perhaps some months before has seen that the ties are cotton ties and months pass and someone asks him in the shop whether the ties are silk ties, or, “What sort of tie is this?”, he says, “Yes, it is a silk tie”.  He is simply mistaken in that regard.  He has forgotten that he once knew that they were cotton. 

On that sort of factual scenario, there is no reason why on the respondent’s case the tie salesperson would not be liable.  In our submission, he or she ought not be liable for the same reason that in this case, Mr Student, for example, should not be liable for the only sin of having, as Justice Ryan put it at page 158, being “unaware, or [having] forgotten, what was required to complete an application to become an ANZ e-Gate merchant”.  That is what the learned trial judge found:

The last two passages suggest that Student was unaware, or had forgotten, what was required to complete an application to become an ANZ e‑Gate merchant –

In our submission, that is not sufficient to found personal liability as a matter of statutory construction.  In our submission, it is inappropriate to contemplate the creation of a hierarchy of potential liability based upon whether someone is a tie salesperson or a project manager or whatever description one gives to their position.  If the legislature had intended a dichotomy of that sort, it would have, in our submission, said so.  After all, the representation, “All you have to do is fill out the form”, is something that could equally have been made by a low level employee.

My learned friend also referred to lots of cases where employees have been found liable but, for the reasons that we give in footnote 6 of our principal written submissions, those cases are either irrelevant or on their facts concern cases where the relevant directors did indeed adopt the representations as their own, and we cite passages in the footnotes as to why that is so.  It is like Genocanna, the facts could not be further removed from our facts.

My learned friend, Mr Riordan, also agreed with Justice Gummow that section 9 focuses on the individual, but as a matter of statutory construction it focuses equally on companies because a person is defined to mean a company. In our submission, there is no textual basis for the conclusion that section 9 focuses on an individual. My learned friend also said something about vicarious liability, but there was never any suggestion in this case that vicarious liability had anything to do with it.

The final point in reply is that, in our respectful submission, the mere inadvertent omission of provisions about accessorial liability and attributing conduct between the years 1999 and 2003 cannot on its own be a basis for giving the words of section 9 a meaning that they otherwise would not have. Unless there is anything further, those are our submissions in reply.

GLEESON CJ:   Thank you, Mr O’Callaghan.  We will reserve our decision in this matter and we will adjourn until 10.15 on Tuesday, 24 October in Perth.

AT 2.52 PM THE MATTER WAS ADJOURNED