Trade Practices—Consumer protection—Misleading or deceptive conduct by corporation—Liability of persons aiding, abetting, counselling or procuring or party to contravention by corporation—Whether knowledge of material facts necessary—Whether knowledge that facts constitute contravention necessary—Trade Practices Act 1974 (Cth),ss. 52, 75B, 82
Decisions
MASON A.C.J., WILSON, DEANE, DAWSON JJ.: The respondent, Ross Melville Lucas ("Lucas"), was the managing director of a company, Ross Lucas Pty. Ltd. ("the Lucas company") which carried on business in South Australia as a licensed land and business agent. It acted for Treasureway Stores Pty. Ltd. ("Treasureway") in the sale of that company's business to the appellants.
2. Arising out of the sale of the business, the appellants claimed damages in the Federal Court under s.82 of the Trade Practices Act 1974 (Cth) against Treasureway, Kevin Thomas Mahoney who was a director of Treasureway, the Lucas company and Lucas. The basis of the claim was a contravention of s.52 of the Act. That section prohibits a corporation from, in trade or commerce, engaging in conduct that is misleading or deceptive or is likely to mislead or deceive. Section 82 allows a person who suffers loss or damage by conduct of another person that was done in contravention of, amongst other provisions, s.52, to recover the amount of the loss or damage against that other person or against "any person involved in the contravention". Lucas is said by the appellants to be involved in the contravention of s.52 and they rely upon s.75B of the Act, which provides that a reference to a person involved in a contravention shall be read as a reference to a person who -
"(a) has aided, abetted, counselled or procured the contravention;
(b) has induced, whether by threats or promises or otherwise, the contravention;
(c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or
(d) has conspired with others to effect the contravention."
3. At the trial of the action the learned trial judge found that Treasureway had engaged in conduct which was both misleading and deceptive by falsely representing that the average weekly turnover of the business during a period preceding the sale was $3,500. The necessary consequence was, in the view of the trial judge, that a representation that the gross profit of the business was $1,200 per week was also misleading. He found that the first appellant, Miles Richard Yorke, was induced by that conduct to enter into the contract to purchase the business. His Honour held that the Lucas company had also contravened s.52 of the Act by acting as agent for Treasureway, but that its contravention was unwitting. He assessed the loss of the appellants at $73,000 and ordered that there be judgment for the appellants in that sum against Treasureway and the Lucas company. Execution on the judgment against the Lucas company was stayed until…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Yorke v Lucas [1985] HCA 65
Case
[1985] HCA 65
Decision Date
CaseChat Overview and Summary
In *Yorke v Lucas*, the High Court of Australia considered the liability of an individual for contravening section 52 of the *Trade Practices Act 1974* (Cth) (now the *Competition and Consumer Act 2010* (Cth)), which prohibits misleading or deceptive conduct. The dispute arose from representations made by Mr Lucas, an employee of a company, to Mr Yorke concerning the turnover of a business the company was selling. Mr Yorke alleged that these representations were misleading and deceptive, causing him loss. The central question was whether Mr Lucas could be held personally liable for the company's contravention of section 52, and by extension, whether liability under section 75B of the Act required knowledge of the contravention itself.
The High Court was required to determine two primary legal issues. Firstly, whether a person who aids, abets, counsels, or procures a contravention of section 52 by a corporation, or is knowingly concerned in such a contravention, is liable under section 75B of the Act, even if they did not intend to contravene the Act. Secondly, the Court had to consider whether, for liability to attach under section 75B, the alleged aider or abettor must have knowledge that their conduct constituted a contravention of section 52, or whether knowledge of the facts that constitute the contravention is sufficient.
The Court reasoned that section 75B imposes liability on persons who are knowingly concerned in or party to a contravention. It was held that "knowingly concerned" does not require knowledge that the conduct amounts to a contravention of the Act. Instead, it requires knowledge of the facts or circumstances that make the conduct misleading or deceptive. The Court affirmed that liability under section 75B is not dependent on the intention to contravene the Act, but rather on the intention to do the acts which constitute the contravention. Therefore, Mr Lucas, having been knowingly concerned in the making of the misleading representations, was liable for the contravention of section 52 by his employer. The appeal was dismissed with costs.