Midland Metals Overseas v Australian Cablemakers Association

[2018] NSWSC 938

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Midland Metals Overseas v Australian Cablemakers Association [2018] NSWSC 938
Hearing dates:	12/06/2018, 13/06/2018
Date of orders:	21 June 2018
Decision date:	21 June 2018
Jurisdiction:	Equity - Commercial List
Before:	McDougall J
Decision:	Proceedings dismissed with costs; liberty to apply for some further or varied costs orders.
Catchwords:	COMMERCE – misleading or deceptive conduct – where the Australian Cablemakers Association sent letters to government Ministers informing them of safety concerns with Midland’s cable – common ground that the letter contained incorrect representations – whether the letters had tendency to lead the recipient Ministers into error – enquiry to be conducted by reference to the objectively known characteristics of the recipient – each recipient had available considerable expert resources which they would inevitably consider before forming a conclusion on the letter – no likelihood that the letter by itself would lead any Minister into error – this conclusion is supported by reference to what actually took place – no misleading or deceptive conduct – proceedings dismissed.
Legislation Cited:	Australian Consumer Law, Schedule 2 to the Competition and Consumer Act 2010 (Cth)
Cases Cited:	Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 Butcher v Lachlan Elder Reality Pty Ltd (2004) 218 CLR 592 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd 1982) 149 CLR 191
Category:	Principal judgment
Parties:	Midland Metals Overseas Pte Limited (Plaintiff) Australian Cablemakers Association Limited (First Defendant) Frederick Persson (Second Defendant)
Representation:	Counsel: BA Coles QC / PB Walsh (Plaintiff) MA Izzo / J Granger (Defendants)   Solicitors: Church & Grace Solicitors (Plaintiff) Johnson Winter & Slattery (Defendants)
File Number(s):	2016/340194

Judgment

1. HIS HONOUR:   On 28 April 2016, the first defendant (ACA) sent a letter in identical terms to a number of Ministers of the Crown for the States of this country. The letter was signed by the second defendant (Mr Persson), who was then ACA’s Chairman. The letter asserted that a particular kind of electrical cable supplied in Australia by the plaintiff (Midland) failed to meet an applicable Australian and New Zealand Standard (the Standard), and was unsafe. The letter gave details of the testing that was said to establish those matters. It urged further investigation.

2. It is common ground that some of the representations made in the letter were incorrect.

3. Midland says that in sending the letter to the various Ministers, ACA and Mr Persson engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, and that they did so in trade or commerce. That conduct, Midland says, breached s 18 of the Australian Consumer Law [1] . Midland seeks declaratory relief establishing the alleged contravention, and an injunction to prevent recurrence. There is no claim for damages.

   1. Schedule 2 to the Competition and Consumer Act 2010 (Cth).

4. For the reasons that follow, Midland’s claim fails because the conduct, considered in context, was not misleading or deceptive. Nor was it likely to mislead or deceive.

The issues

5. The parties agreed on the real issues that arose on the “pleadings”. I set them out:

(a)   Whether the defendants made each of the representations as alleged by the plaintiff.

(b)   Whether in making the representations as alleged the defendants engaged in conduct in trade or commerce.

(c) Whether in making each of the representations as alleged the defendants engaged in conduct that is misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the ACL.

(d)   The appropriate relief.

(e) Whether Mr Persson is personally liable for any contravention of s 18 that has occurred.

6. As I have indicated, Midland fails on the first aspect of the third issue. It is unnecessary to resolve the balance of that issue, or the other issues. To the extent that their resolution would require findings of fact, the primary facts are not in dispute and the arguments were directed to the ultimate findings, or proper inferences, to be drawn from those primary facts.

Background

7. Midland is a Singaporean company. It manufactures products that include electrical cable of the kind described in the letter: LOBAC 95mm² aerial bundled cable. I shall refer to this simply as “Midland’s cable”. Midland sells its cable to electricity distributors in Australia, who use it for their “poles and wires” networks.

8. ACA is a company limited by guarantee. Its members are Australian cablemakers. ACA’s objects are set out in cl 3.1 of its constitution as follows:

3.1   Objects

The objects of the Company are all or any of the following:

3.1.1   To represent Australian cable manufacturers in interactions between the manufactures and third parties, including customer and supplier associations, governments and government bodies.

3.1.2   To provide a mechanism and forum for permitted discussions between Australian cable manufacturers on industry wide issues.

3.1.3   To lift safety standards for cables in Australia.

3.1.4   The Approved Cables Initiative:

3.1.4.1   To set up and operate an approved cables initiative, being a communications and education program whose prime objectives are safety and the enforcement and upholding of specifications and standards.

3.1.4.2   To undertake and/or arrange independent testing of Australian and/or foreign manufactured cables being sold in Australia on an ad hoc or on-going basis against Australian standards.

3.1.4.3    To set up its own testing facilities and/or laboratory for testing of Australian and/or foreign manufactured cables being sold in Australia on an ad hoc or on-going basis against Australian standards.

3.1.5   To represent and act on behalf of Australian cable manufacturers in respect of Australian and International standards, including up-specing of standards.

3.1.6   To represent and act on behalf of Australian cable manufactures in respect of cable imports and cable importers.

3.1.7   To represent and act on behalf of Australian cable manufactures in respect of government legislation and regulations, including changes to government legislation and regulations.

3.1.8   To undertake such other activities on behalf of Australian cable manufacturers as the Members and/or the Board may decide.

3.1.9   To act in the best interests of Australian cable manufacturers.

9. The approved cables initiative referred to in cl 3.1.4.1 was set up. At a meeting of the directors of ACA held on 14 May 2015, something called the “ACI Rules” was approved. Those rules set out, among other things, rules for testing cables of non-members and members of ACA, and what was to be done if cables failed testing. It is not necessary to go to the detail.

10. The members of ACA include two companies referred to in the evidence as Olex (Olex Australia Pty Ltd) and Prysmian (Prysmian Power Cables & Systems Australia Pty Ltd). The tests that gave rise to the letter of 28 April 2016 were conducted by Prysmian.

11. The directors of ACA are nominated by its members. The office of chairman of the board rotates annually. When the letter was sent, Mr Persson (from Prysmian) was the chairman. At present, Mr Stack (from Olex) is the chairman. The secretary of ACA, from 1 August 2016 to the present, is Mr Mennie (formerly an employee of and now a consultant to Prysmian).

12. It is not necessary to go to the precise detail or wording of the Standard (which is more formally known as AS/NZS 3560.1.2000). A sufficient understanding comes from an expert witness report prepared by Mr Orton, of Orton Consulting Engineers International Limited, for ACA. That report was tendered (in the event, without objection), and Mr Orton was not required for cross-examination. In annexure “C” to that report, Mr Orton said, among other things:

The purpose of the Standard is to specify the construction, dimensions and tests for 0.6/1 kV rated cross-linked polyethylene insulated bundled cables (ABC) of 2, 3 or 4 cores having aluminium conductors with cross-sectional areas of 16 mm² to 150 mm². See Scope, Page 4, of the Standard. [1]

The only test related to bushfires was the optional Type test or the “heat radiation test”. However, in the Standard it is referred to as an “intense heat radiation” test, not specifically related as a test for bushfires. The word “bushfire” is not used. Refer to Appendix F, Section F1 Scope and F2 Application to Heat Damage, Page 25.

The heat radiation test is an attempt to assess the damage that may occur to a cable during an intense heat event. The test is not designed to assess if the cable will accelerate a bushfire situation or even survive a bushfire. The word “bushfire” is not used. Refer to Appendix F, Section F1 Scope and F2 Application to Heat Damage, Page 25.

13. Mr Orton said, further, that the heat radiation test was a test method to measure the time to electrical failure of a cable under intense heat radiation, and that a bushfire, although not mentioned in the Standard, was an event of intense heat radiation. The results of the test, he said, could be used to assess potential heat damage to a cable caused by such an event.

14. It was common ground that compliance with the heat radiation test was not mandatory. Mr Orton explained why, in his understanding, that was so:

Compliance with the Standard for all cables to which the Standard applies was not required for the following reasons. All cable supplied is not installed in a high risk bushfire area and no matter how thorough the heat radiation test is performed and how long the cable will last during the test, in an intense real life heat situation the cable will eventually fail or at a minimum require replacement due to heat damage thus making the heat radiation test redundant. These comments are based upon personal experience with clients in Australia and New Zealand.

15. Jumping ahead for a moment: it is clear that a number of regulatory authorities took the view that the heat radiation test should not have been included in the Standard. It would appear, from some of Mr Orton’s comments in his report, that he may have been sympathetic to that view.

16. According to Mr Mennie, Prysmian carried out its tests on Midland’s cable in late 2014, and reported the results to ACA “[i]n around October 2014”. ACA appears to have done very little for a year thereafter.

17. On 23 October 2015, ACA sent the test report and other material to Mr Costantini of SAS Consulting Group Pty Ltd (SAS Consulting). SAS Consulting provided lobbying, marketing and media services to ACA. ACA asked Mr Costantini to review the material (which included a video of one of the tests showing a failure of the cable) “and advise the ACA on the best course of action with respect to it”. The test report sent to SAS Consulting included the following findings:

Findings:

We tested our own cable and that of a Competitor selling into the same market (Western Power in WA) and found that while the Prysmian cable comfortably and consistently achieves a time to failure of circa 100+ seconds, the equivalent cable from Midland Metals falls 50% of the time. The results of this testing work are provided in Attachment 1 below.

The impact of this failure is difficult to assess but during the test of the Midland Metals cable it was observed that not only did it fail prematurely but it dripped molten polymer from the cable profusely which would then add significantly to the burning fuel in a bushfire situation; exacerbating the danger rather than helping to contain the danger as is the intent of the Standard.

18. SAS Consulting replied on 3 December 2015. It made comments on that report, including that:

1. the fact that testing was carried out by Prysmian using “non-certified test equipment” might be a source of criticism; and

2. nonetheless, with modifications, the report, more accurately the failure referred to in it, should be “raise[d]” (without specifying how).

19. SAS Consulting asked a number of questions, and suggested some rewording of the test report. It is entirely unclear what technical expertise (in the fields of electrical cabling or heat radiation testing) SAS Consulting possessed that might have qualified it to do this.

20. Mr Mennie replied to SAS Consulting. He answered the questions and suggested some revisions to the wording of the report as redrafted by SAS Consulting. Thereafter, after some further interaction, SAS Consulting wrote to ACA on 4 April 2016 recommending that the information contained in the report not be released to the media for three reasons:

-    the date of testing (October 2014) may prompt questions about the time ACA took to release the information and undermine messages about ACA’s safety concerns

-   testing was undertaken by an ACA member rather than an independent laboratory

-   testing was not conducted on NATA approved apparatus.

21. However, SAS Consulting did recommend that ACA send a letter (a draft of which it provided) “to the regulators”: the Ministers of the States and Territories where the cable was used. The recommendation included that the report (as redrafted) and relevant extracts from the Standard be included as attachments to those letters.

22. The draft letter provided by SAS Consulting to ACA to be sent to the Ministers was discussed within ACA. The evidence is silent as to the full extent of that discussion. Someone suggested, as a topic for consideration, whether ACA should “say it [Midland’s cable] is unsafe?”. Apparently, that was agreed, because the words “and is unsafe” were added to the draft (they now appear at the end of the first paragraph of the letter that was in fact sent).

23. After further discussion within ACA, the letter was sent.

The letter and its attachments

24. It is necessary to set out the whole text of the letter (omitting formal parts). I do so:

I write to advise that Australian Cablemakers Association (ACA) member testing has identified another example of electrical cable currently used in Australia that has failed to meet Australian and NZ Standards and is unsafe.

Specifically, the ACA’s concerns relate to the heat radiation resistance properties of Midlands LOBAC 95mm² brand of aerial bundled cable used to supply low voltage electricity to customers in Western Australia, South Australia, New South Wales and Victoria.

As you would be aware, a range of aerial cables with insulated conductors were designed and incorporated within Australian and NZ Standards (AS/NZS 3560.1) following concerns that bush fires, most notably the 1983 Ash Wednesday fires, were started by arcing as a result of open wire lines clashing together and trees falling across open conductors causing arcing that ignited fires. A further enhancement of the Standard was subsequently incorporated to access a cable’s survivability during a fast-paced fire front.

An ACA member tested the heat radiation performance of a sample of Midlands LOBAC 95mm² cable against AS/NZs 3560.1 (as per the detailed test method and apparatus described in Appendix F of the Standard included as Attachment 2). The Midland Cable LOBAC 95mm² demonstrated a failure to achieve the Standard. During the test, the cable was not only found to fall but also dripped molten polymer from the cable potentially adding to the burning fuel in a bushfire situation.

This testing was conducted on equipment designed and built by the ACA member as no suitable testing apparatus existed to test Heat Radiation Resistance. While we have full confidence in the veracity of the apparatus and subsequent test results, the apparatus was not covered by the Member’s NATA registration. The results of the Midland Cable Heat Radiation Test are included in Attachment 1.

ACA is committed to ensuring safety of all electrical cable used in Australia. It was through laboratory testing undertaken by ACA members that identified faulty cable and prompted two recent major recalls – infinity cables in 2013 and ECABLES in 2014. We urge, as a matter of priority, further investigation to ensure the compliance to AS/NZS 3560.1 of Midland Cable LOBAC 95mm².

We would be pleased to provide more information about the methodology and apparatus used in the test and welcome the opportunity to discuss this with you [contact details omitted].

We look forward to your prompt attention on this important safety issue.

25. The attached report said (omitting the tables):

Aerial Bundled Cable – Heat Radiation Performance

Background:

The subject cable is commonly utilised by electricity utilities for the distribution of Low Voltage (LV, 0.6/1.0 kV) power within their distribution networks. The cables are required to comply with AS/NZS 3560.1 which defines a number of parameters relating to materials selection, constructional details, safety and compliance testing.

This type of cable came about after concerns were raised as a result of the ‘Ash Wednesday’ fires in Victoria and South Australia in February 1983. It was thought that a number of fires were started from arcing as a result of open wire lines clashing together in high winds and also from trees falling across open conductors causing more arcing that ignited fires.

As a result, a range of aerial cables having insulated conductors were designed and incorporated within Australian and NZ Standards to avoid the arcing issues identified.

A further enhancement of the Standard was incorporated subsequently to asses [sic] a cable’s ‘survivability’ during a fast-paced fire front. This test is called the Heat Radiation Test and is optionally specified in Appendix F of the aforementioned Standard (extract included in Attachment 2 for ready reference).

This additional requirement mandates that a cable must be able to survive, without shorting between conductors, for a minimum of 75 seconds under intense amblent conditions. This is to simulate the type of conditions an aerial cable would experience as a fire front passes below it. The Standard requires that the cable be tested 6 times with each time registering a minimum time to failure of 75 seconds to be considered complaint.

Heat Radiation Resistance Assessment:

Appendix F of AS/NZS 3560.1 contains a detailed test method and test apparatus for the Heat Radiation Test. An ACA member designed and built a suitable apparatus that conforms in every way with the design criteria specified in Appendix F of AS/NZS 3560.1 Whilst the apparatus is not covered by the member’s NATA registration at this point of time, ACA is confident of the veracity of the test methodology and apparatus.

Findings:

The test was conducted on Midland Cable LOBAC 95mm². This cable is used in the Australian energy distribution market. The standard requires cable to confirm to a minimum time to failure of 75 seconds.

The test of the Midland Cable LOBAC 95mm² demonstrated a failure to achieve the standard 50 per cent of the time. The results of this testing work are provided below.

The impact of this failure is potentially significant. During the test of the Midland Metals cable it was observed that not only did it fail prematurely but it dripped molten polymer from the cable profusely which would then add significantly to the burning fuel in a bushfire situation, exacerbating the danger rather than helping to contain the danger as is the intent of the Standard.

26. The letter also attached the heat radiation test as taken from Appendix F to the Standard. It is not necessary to set out the detail of that test.

27. It is common ground that:

1. a letter in the terms set out above was sent to the Minister of each Australian State “responsible for electrical safety regulation”; and

2. each letter was signed by Mr Persson in his capacity as Chairman of ACA, and attached a copy of the test report.

The evidence of Mr De Vries

28. Mr De Vries is the managing director of Midland. He gave evidence of a number of matters, including the structure of the electricity industry, and the regulation of electrical safety, in Australia at the relevant time. That evidence was read without objection. Mr De Vries was not required for cross-examination.

28. The salient points of his evidence are that, at the relevant times (i.e., 2014, 2015 and 2016):

1. the generation and transmission of high voltage electricity and the distribution of electricity had been separated, so that those activities were conducted by different entities in each state;

2. the electrical utilities in each state were regulated by an electrical safety regulator for that state;

3. there is an Electrical Regulatory Authorities Council (ERAC) made up of representatives of each of those regulatory authorities in Australia and New Zealand; and

4. electrical cabling, including Midland’s cable and equivalent products, is purchased by the distribution utilities for use in their networks.

30. It is clear (and common ground on the pleadings) that each Minister to whom the letter and its attachments were sent had ministerial responsibility for the electrical safety regulator in his or her state. There is no evidence that any of those Ministers had any responsibility, ministerial or otherwise, for purchasing decisions made by electricity distribution utilities.

No misleading or deceptive conduct

The approach to characterisation

31. Counsel pressed upon me many authorities dealing with the statutory concept of “misleading or deceptive conduct” (and dealing with many other topics as well). It is unnecessary to say a great deal about those authorities.

32. The first point to be noted is that for conduct to be characterised as misleading or deceptive (or likely to mislead or deceive), it must have a tendency to lead into error. There must be some sufficient causal link between that conduct and the likelihood of error on the part of the person to whom it is directed. That point is made clearly in the majority reasons of French CJ, Crennan, Bell and Keane JJ in Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2] at [39]:

Whether speaking of representations to the public at large or in negotiations between parties of equal bargaining power and competence, the quoted observations in Puxu and Miller go to the characterisation of conduct as misleading or deceptive. Conduct is misleading or deceptive, or likely to mislead or deceive, if it has a tendency to lead into error. That is to say there must be a sufficient causal link between the conduct and error on the part of persons exposed to it. It is in that sense that it can be said that the prohibitions in ss 52 and 18 were not enacted for the benefit of people who failed to take reasonable care of their own interests.

2. (2013) 250 CLR 640.

33. Their Honours’ observations echo what French CJ had said in Campbell v Backoffice Investments Pty Ltd [3] at [25]. If I may say so with respect, the point was not novel when his Honour made that observation (see Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [4] , to which his Honour referred). As French CJ said in Campbell at [25] (omitting citations):

Characterisation is a task that generally requires consideration of whether the impugned conduct viewed as a whole has a tendency to lead a person into error. It may be undertaken by reference to the public or a relevant section of the public. In cases of misleading or deceptive conduct analogous to passing off and involving reputational issues, the relevant section of the public may be defined, according to the nature of the conduct, by geographical distribution, age or some other common attribute or interest. On the other hand, characterisation may be undertaken in the context of commercial negotiations between individuals. In either case it involves consideration of a notional cause and effect relationship between the conduct and the state of mind of the relevant person or class of persons. The test is necessarily objective.

3. (2009) 238 CLR 304.

4. (1982) 149 CLR 191.

34. The next point is that there is a practical distinction between the approach taken to characterisation of conduct that it is, on the one hand, directed to the public and, on the other, directed to an individual, or “dealings between individuals”[5] . Where the conduct is directed at a particular individual (and equally, I add, where it is directed to specific individuals identifiable by reference to the positions or offices that they hold), it is not necessary to reconstruct them into “a hypothetical, “ordinary”, person”[6] . On the contrary, and continuing with what French CJ said in Campbell at [26]:

Characterisations [of conduct directed to an individual] may proceed by reference to the circumstances and context of the questioned conduct. The state of knowledge of the person to whom the conduct is directed may be relevant, at least in so far as it relates to the content and circumstances of the conduct.

5. See French CJ in Campbell at [26].

6. Ibid.

35. That is consistent with the majority approach in Butcherv Lachlan Elder Reality Pty Ltd [7] at [37] (Gleeson CJ, Hayne and Heydon JJ).

    7. (2004) 218 CLR 592.

36. The final point, for present purposes, is that whether conduct is to be characterised as misleading or deceptive (or likely to mislead or deceive) is a question of fact. Its analysis involves the examination of the conduct as a whole “by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances… [and]… is an objective question that the court must determine for itself”[8] .

    8. See McHugh J in Butcher at [109], cited with approval in the joint judgment of Gummow, Hayne, Heydon and Kiefel JJ in Campbell at [102].

The pleaded case

37. The pleaded case analysed the letter and its attachments closely, and extracted from it some thirteen representations that were said to have been made. ACA and Mr Persson accepted that some of those representations had been made, but said that others had not. I do not propose to resolve that dispute. The view that I have reached is based on reading the letter in whole and in context, and then characterising the conduct in sending it in the manner that, as I understand it, is required by the authorities.

38. Nonetheless, it may be of help to give some indication of the way in which, ultimately, Midland put its case. It sought a declaration as follows:

… that by letters dated 28 April 2016 (“the letters”) from the Australian Cablemakers Association (“ACA”) and signed by Frederick Persson (“Persson”), the ACA and Persson each engaged in conduct which was misleading or deceptive, or likely to mislead or deceive, in contravention of s.18 of the Australian Consumer Law, by representing that LOBAC 95 mm2 cable sold by Midland Metals Overseas Pte Limited, the subject to the letters:

(a) failed to comply with the heat radiation test in Appendix F of Australia/New

Zealand Standard 3560.1:2000 (“Standard”);

(b) was unsafe;

(c) should not be used without further investigation to ensure compliance with the Standard; and

(d) contributed to the risk of a bushfire.

39. Midland sought, in addition, injunctive relief preventing an occurrence of behaviour of the kind stipulated in the declaration.

40. I add that there was a pleaded case seeking damages for injurious falsehood. That claim was abandoned at the commencement of the hearing.

The parties’ submissions

41. There is no need to outline in any detail the competing submissions. Mr Coles of Queens Counsel, who appeared with Mr Walsh of Counsel for Midlands, submitted that the representations were misleading or deceptive, because (as the evidence of Mr Orton made clear), they could not be sustained. As Mr Coles submitted:

1. the tests had not been carried out in accordance with the Standard;

2. the report failed to mention that a number of the results fell outside the range of values relevant to the Standard; and

3. specifically, it was self-evidently absurd that in a bushfire of sufficient intensity to melt the polymer coating of the cables, the additional fuel load created by molten polymer dropping to the ground would intensify the fire (or risk of fire) in any significant way.

42. Mr Coles’ submissions at one stage appeared to conflate the relevant Ministers with the distribution authorities, to the extent that he sought to suggest that the Ministers were responsible for, or might have had some influence upon, purchasing decisions. It is convenient to note at this point that the evidence does not sustain that submission.

43. Mr Izzo of Counsel, who appeared with Ms Granger of Counsel for ACA and Mr Persson, submitted that it was necessary to construe the representations (to the extent that they are found to have been made) in context. That context included not only the letter itself, but also the annexed test results.

44. Mr Izzo submitted that the test results, read with even moderate care, did not support in full the representations made in the letter. Mr Izzo submitted, more importantly, that the context included the way in which it was, at the time the letters were sent, foreseeable that the recipient Ministers would deal with them. That prospective view, Mr Izzo submitted, was supported by evidence of what in fact happened.

Decision

45. I start with the proposition that the representations, both as pleaded and as articulated in the declaration sought, were representations of opinion. Mr Mennie, who had appropriate technical expertise, said in his affidavit that at the time the letters were sent, he believed the representations made in them to be true. Mr Coles did not challenge that evidence, and I accept it. I add that Mr Mennie said, further, that he still believed those representations to be true. As Mr Coles submitted, it is a little difficult how Mr Mennie could continue to think that in good faith, given the weight and tendency of the evidence (including the unchallenged expert evidence of Mr Orton and the reports of the regulatory authorities) that has accumulated since April 2016. However, nothing turns on that in the present context.

46. So far as the evidence goes, Mr Stack does not possess relevant technical qualifications. He is a marketing person. To the extent that his state of mind is relevant, it was not suggested that he did not believe, at the time the letters were sent, that the representations of opinion contained in them were untrue, or lacked any rational foundation.

47. Mr Persson was, as I have said, the signatory of the letters. He was not required for cross-examination. Thus, it was not put to him that when he signed the letters, he had any doubt as to the truth of the representations of opinion made in them, or that he had no basis for thinking that those representations were justifiable having regard to the test results.

48. Specifically, no relevant witness was challenged by reference to the problem to which I refer at [50] below.

49. Thus, assessment of the representations must be conducted upon the basis that, to the extent that they are representations of opinions, those opinions were genuinely held by the representors, ACA and (perhaps) Mr Persson. That method of analysis poses an immediate obstacle to acceptance of this part of Midland’s case.

50. The next matter to take into consideration is that, as I have mentioned, when one reads the letters in conjunction with the attached test report, and does so with at least moderately careful attention, it is clear that the representations overstated the case. To put the matter another way, a moderately careful reader of the letters and the attached test results would have understood that the opinions in the letter were not fully supported by the test results. It was no part of Midland’s case that the Ministers and their advisors would read the material carelessly.

51. As I have said, the authorities require the characterisation of the conduct to include a consideration of that conduct in the context of all relevant surrounding facts and circumstances. They require analysis of the capacity of the conduct, so considered, to lead the person at whom it is directed into error. Those matters are to be assessed objectively. The assessment is to be made, notionally, at the time the conduct takes place. However, in my view, that assessment may be informed by evidence of what happened subsequently, to the extent that such evidence is capable of bearing rationally upon the probabilities as they existed at the time the conduct occurred.

52. Looking at the matter objectively and at the time each letter was sent, it was likely to the point of certainty that each Minister, upon receiving his or her copy of the letter, would have referred it to his or her department for comment. It is unlikely to the point of inconceivability that any Minister would have acted upon the letter without first taking advice. That projection of the probabilities is confirmed by what in fact happened. In each case, the relevant Minister sought advice. However, even in the absence of evidence of what actually happened, I would have reached the same conclusions.

53. It was equally likely, prospectively, that when the Minister referred the letter for advice, the departmental official charged with the reference would consult the electrical safety regulator for that state. Again, that projection is consistent with what happened in each case. Again, the conclusion is one I would have reached even in the absence of such evidence.

54. Thus, even if the letter had made all the representations that Midland says it did, and even if they were all misleading or deceptive, it is unlikely in the extreme that the letter by itself could have led a Minister into error. The overwhelming probability is that, as happened, the Minister would seek advice upon the letter.

55. If the advice confirmed the content of the letter then, by hypothesis, the representations could hardly be said to have been misleading or deceptive. And if (as in fact happened) the advice given to the Minister was that there was no safety concern, and no need for further action, then the overwhelming probability must have been that the Minister would proceed in accordance with the advice given to him or her, in preference to the assertions in the letter. That is what happened in each case.

56. This is not a case where the letters were directed to individuals who were without resources, or who were likely to act upon it without receiving impartial and expert advice. The recipients (as everyone must have known at the time) had ample resources available to them to give advice as to the substance of the concerns raised in the letters. It was, as I have suggested, highly likely (looking forward) that each recipient would avail himself or herself of those resources. And it was equally highly likely (looking forward) that the recipient would be given impartial and expert advice.

57. In short, even if the letters were to be characterised as having made misleading or deceptive representations in each of the thirteen ways alleged by Midland in its Further Amended Commercial List Statement, that was never likely by itself to lead any recipient Minister into error. Nor was the whole of the conduct constituted by sending the letters likely to do so. No recipient Minister was ever likely to act upon the letter without seeking the advice to which I have now more than once referred.

Conclusion and orders

58. Midland fails. The proceedings should be dismissed with costs. Since ACA and Mr Persson flagged an intention to seek a special order as to costs, I shall give directions for that to be done.

59. I make the following orders:

1. order that the proceedings be dismissed.

2. Subject to orders (3) to (5), order the plaintiff to pay the defendants’ costs.

3. Grant leave to any party to seek some further or other order as to costs; any such application to be made by written submissions sent to the other parties and forwarded to my Associate, together with any evidence relied upon, by 5 July 2018;

4. Any submissions and evidence in response to be served and sent to my Associate by 12 July 2018.

5. Direct that the question of costs be dealt with on the papers.

6. Direct that the exhibits be returned.

**********

Endnotes

Amendments

28 June 2018 - Paragraph [4].

Decision last updated: 28 June 2018