FEDERAL COURT OF AUSTRALIA

Cassidy v Nrma Health Pty Ltd [2002] FCA 1228

Trade Practices – misleading and deceptive conduct – whether advertising agency could be liable as a principal rather than via accessorial liability.

WORDS & PHRASES – “representation”.

Australian Securities and Investments Commission Act 2001 (Cth), ss 12DA, 12DB, 12GB, 12GD, 12GF, 12GI and 12GM.

Trade Practices Act 1974 (Cth), ss 52(1), 53, 65A, 75B, 79, 80, 82 and 87.

Webb v Bloch (1928) 41 CLR 331 considered

Taco Company of Australia Inc v Taco Bell Pty Limited (1982) 42 ALR 177 applied

Universal Telecasters (Qld) Limited v Guthrie (1978) 18 ALR 531 applied

Thompson v Riley McKay Pty Limited (1980) 29 ALR 267 applied

Barton v Croner Trading Pty Limited (1984) 3 FCR 95 applied

Gardam v George Wills & Co Ltd (1988) 82 ALR 415 considered

Brown v Jam Factory Pty Ltd (1981) 35 ALR 79 referred to

Thompson v Australian Capital Television Pty Limited (1996) 186 CLR 574 referred to

Yorke v Lucas (1985) 158 CLR 661 referred to

Gatley on Libel & Slander, 9^th ed, 1998.

BRIAN CASSIDY, CHIEF EXECUTIVE OFFICER OF AUSTRALIAN COMPETITION AND CONSUMER COMMISSION & AUSTRALIAN SECURITIES

AND INVESTMENTS COMMISSION v NRMA HEALTH PTY LIMITED (ACN 075 799 236) & NRMA INSURANCE LIMITED (ACN 000 016 722) & SAATCHI & SAATCHI AUSTRALIA PTY LTD (ACN 001 720 921)

N 3011 of 2001

JACOBSON J

3 OCTOBER 2002

SYDNEY

THE COURT ORDERS THAT:

1. The application is dismissed.
2. The applicants pay the fifth respondent’s costs of the proceedings.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

Introduction

1                     In July and August 2001, NRMA Health Pty Limited and NRMA Insurance Limited (“the NRMA companies”) ran a series of newspaper advertisements for a new health insurance product under the caption “Closing the Gap”.  The substance of the advertisements was that pregnant women would be able to have their babies delivered without making any payment for hospitalisation or medical expenses.

2                     The advertisements stated that the NRMA companies would make every payment for their fund members irrespective of how advanced the pregnancy was at the time when the mother joined the Fund. 

3                     There were provisos in small print to the advertisements.  A pregnant woman was fully covered only after payment of any policy excess or “co-payment”.  Women who were pregnant at the time of joining the Fund were required to have completed a 12 month waiting period with the NRMA companies or with their existing fund.

4                     The advertisements were created and developed for the NRMA companies by their advertising agent, Saatchi and Saatchi Australia Pty Limited (“Saatchi”) who is the fifth respondent in the proceedings.  The other respondents have reached agreement with the applicants.  Accordingly, the hearing was concerned only with the potential liability of Saatchi.

5                     The applicants claim that Saatchi engaged in misleading and deceptive conduct in contravention of s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (“the Act”).  The applicants seek declaratory and injunctive relief against Saatchi by reason of its alleged contravention of s 12DA.

6                     Significantly, there is no claim against Saatchi that it aided or abetted the contravention by the NRMA companies of s 12DA of the Act or that Saatchi was knowingly concerned in the contravention by the NRMA companies of s 12DA.

7                     Saatchi admits that the advertisements were misleading but denies that the misleading representations contained in the advertisements were made by Saatchi.  Thus, the only issue which arises is whether Saatchi is liable as a principal for making misleading representations in the advertisements.

The Facts

8                     Saatchi commenced providing advertising services to NRMA Limited in about  1993.  The relationship between Saatchi and NRMA Limited was recorded in an agency agreement entered into in September1998. 

9                     The practice, which was followed between the parties, was that when the NRMA companies wanted Saatchi to develop an advertising campaign, they would send Saatchi a “communications brief” which contained essential information about the campaign, which the NRMA companies wanted Saatchi to develop.

10                  The next step was that Saatchi would prepare an “ideas brief” for the NRMA companies setting out the approach, which Saatchi intended to take in creating a suitable advertisement for the campaign.

11                  If the NRMA companies approved the ideas brief, Saatchi’s creative personnel would prepare and design the advertisements in accordance with the concepts set out in the ideas brief.  The creative team would then prepare drafts, which were sent to the NRMA companies for approval.  There would usually be an exchange of comments between the parties before the NRMA companies gave their final approval to the form of the advertisement.

12                  The practice was for the draft advertisements to be reviewed by the NRMA companies’ marketing personnel who had issued the campaign instructions.  It was part of the practice that the drafts were also reviewed by members of the NRMA companies’ in-house legal advisers. 

13                  The various steps in the practice as set out above were followed in the present case.  Legal sign-off for the advertisements was provided by an in-house solicitor employed by the NRMA companies (or NRMA Limited).  Mr Leppard, Saatchi’s Group Accounts Director, responsible for preparation of the advertising campaign, was aware that the NRMA companies had obtained legal sign-off from the solicitor.  The final drafts bore the word “approved” in the handwriting of the solicitor. 

14                  Saatchi did not place the advertisements in the newspapers for the NRMA companies.  A separate company, Zenith Media Pty Limited (“Zenith”), which is unrelated to Saatchi, was engaged by the NRMA companies to decide in which publications the advertisements were to appear.  Zenith then purchased the necessary space in the publications on behalf of the NRMA companies.

15                 Each of the published advertisements had the name “Saatchi” followed by Saatchi’s “key number” in the bottom right hand corner of the advertisement immediately after the provisos, which referred to the policy excess and co-payment.  The name “Saatchi’s” and the key number were in even smaller font than the provisos.  Mr Leppard’s unchallenged evidence was that the key number was a unique identification number assigned by Saatchi to the job.  The purpose of the key number was to identify the advertisement, which was to be published so as to ensure that it found its way to the correct edition of the newspaper.  Mr Leppard said that this was important because there were slight variations in the form of the advertisement for publication in different States of Australia.

Statutory provisions

16                  Section 12DA(1) of the Act provides that a corporation must not in trade or commerce engage in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive.  Clearly enough, this section of the Act corresponds with s 52(1) of the Trade Practices Act 1974 (Cth) (“the TPA”).

17                  Section 12GD(1) of the Act provides:-

“If, on the application of the Minister, ASIC or any other person, the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute:

(a)       a contravention of a provision of this Division; or

(b)       attempting to contravene such a provision; or

(c)        aiding, abetting, counselling or procuring a person to contravene such a provision; or

(d)       inducing, or attempting to induce, whether by threats, promises or otherwise, a person to contravene such a provision; or

(e)        being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or

(f)                conspiring with others to contravene such a provision;

the Court may grant an injunction in such terms as the Court determines to be appropriate.”

18                  Section 12GD of the Act corresponds with the provisions of ss 75B and 80 of the TPA.

Submissions of the Parties

19                  Mr Rares SC and Ms Painter appeared for the applicants.  The essence of their submissions was that Saatchi engaged in misleading conduct in contravention of s 12DA of the Act because Saatchi used its creative skills to prepare the advertisements for the NRMA companies knowing and intending that the advertisements would be published in the newspapers.

20                  They relied upon an admission made by Saatchi in its defence that it was a probable result of Saatchi’s creation of the advertisement that, if it was approved by the NRMA companies, it would be published in that form in the newspapers.

21                  Thus, it was said by the applicants’ counsel that Saatchi created the vehicle in which the misleading representations were contained, knowing full well that the “bullet” which Saatchi had fashioned would be “fired” by its clients.  That, it was said, was sufficient to amount to the making of the misleading representation.

22                  The applicants’ counsel relied heavily upon an analogy, which they sought to draw from the law of defamation.  It will be necessary for me to deal with this in more detail below but it is sufficient for me to say at present that the substance of the submission was that, under the law of defamation, all persons who are accessory to the publication of a libel are considered to be principals in the act of publication; see especially Webb v Bloch (1928) 41 CLR 331 (“Webb v Bloch”) at 363-366 per Isaacs J.

23                  Thus, Mr Rares submitted that Saatchi, as the creator of the misleading advertisements, by analogy with the law of defamation, published the advertisements, in conjunction with the NRMA companies, and thereby made the misleading representations contained in them.

24                  Mr Rares also relied upon the fact that the name “Saatchi’s” appeared on the advertisement to support the proposition that Saatchi made the relevant misrepresentations.

25                  Mr Gageler SC appeared for Saatchi.  He submitted that the advertisement on its face was quite clearly an advertisement of the NRMA companies.  It could not be read as an advertisement for Saatchi and no evidence was called to suggest otherwise.

26                  He relied upon the structure of the Act, which distinguishes between principal and accessory liability.  He also relied upon authorities in this Court, which have dealt with the meaning of “representation” under s 53 of the TPA.  Mr Gageler submitted that the effect of those authorities is that it is necessary to separate and analyse the roles of each of the parties involved in the publication in order to determine who made the representation. 

27                  In the present case, there were three such parties.  The first was the NRMA companies which were the advertisers.  The second was the newspapers in which the advertisements were published and the third was Saatchi, which assisted the NRMA companies by creating the form and content of the advertisements. 

28                  Mr Gageler submitted that the scheme of the legislation is such that the advertisers, ie the NRMA companies, were liable as principals under s 12DA.  So too, the newspapers which published the advertisements would have been liable as principals but are saved by the exception for prescribed information providers contained in s 65A of the TPAand its equivalent in s 12GI of the Act.  The advertising agency which created the advertisement, on Mr Gageler’s submissions, can only be liable as an accessory unless it can be seen on the face of the advertisement to have made the representation or to have adopted it as its own.

29                  Mr Gageler also submitted that the analogy to the law of defamation is misplaced.  This is because the Act and the TPAdistinguish quite clearly between principal and accessory liability whereas, under the common law rules of defamation, all who are accessories are treated as publishers of the defamatory statements.  The harshness of that rule is then ameliorated by the availability to each “principal” of a wide range of defences including innocent dissemination and qualified privilege.

Decision

30                  The case was pleaded and conducted upon the footing that Saatchi engaged in misleading conduct by making misrepresentations that the NRMA companies would make all payments of hospital and medical expenses for the delivery of babies for pregnant mothers who were members of the fund.  Thus, as stated above, the only issue is whether Saatchi made that misrepresentation.

31                  In Taco Company of Australia Inc v Taco Bell Pty Limited (1982) 42 ALR 177 at 202, Deane and Fitzgerald JJ said that whether or not conduct amounts to a misrepresentation is a question of fact which is to be decided by considering what is said and what is done against the background of all relevant surrounding circumstances.  It seems to me to follow from this that the question of who made the misrepresentation must also be a question of fact to be decided by considering the form and content of the advertisement.  The role of Saatchi as the advertising agency, which created the advertisement, can only be a relevant surrounding circumstance, in my view, if there were facts, which were brought home to the relevant section of the public that would establish that Saatchi made the alleged misrepresentations.

32                  In my view, there is nothing in the advertisement, which could possibly convey to the relevant section of the public that the representation was made by Saatchi.  It seems to me to be clear that anyone reading the advertisement would read it as the NRMA companies’ advertisement.  That is the view, which I take of the advertisement when considering it objectively.

33                  In my opinion, this finding is supported by the only affidavit evidence adduced by the applicants in these proceedings.  The evidence was that of Ms Maree Wilmhurst who read a version of the advertisement which was published in South Australia.  The advertisement in the “Sunday Mail” of 8 July 2001 was an advertisement for SGIC Health, which is apparently a related company of the NRMA companies.  Ms Wilmhurst said that she understood the advertisement to be a statement made by SGIC Health.  She said she felt that she had been misled by SGIC Health.  Her affidavit made no mention of Saatchi.

34                  I do not accept the submission of the applicants that the name “Saatchi’s” in the bottom right hand corner of the advertisement converts what would otherwise have been an advertisement of the NRMA companies into a joint advertisement of the NRMA companies and Saatchi.

35                  That is not the way Ms Wilmhurst read the advertisement.  Moreover, the size of the print is so small that it stands in stark contrast to the impression created by a fair reading of the whole of the advertisement that the representations contained within it were those of the NRMA companies.

36                  Even if anyone actually read the name “Saatchi” and the key number which follows it, in my view, no such reader would gain the impression that Saatchi made the statements appearing in the advertisement or that Saatchi had adopted it.  Mr Rares submitted that the relevant section of the public in the present case is the “visible achiever” segment of the public to whom the advertisements were directed.  Even if this is so, the matter must be considered by reference to all who come within that category.  It is difficult to see what those who come within that segment would make of the name “Saatchi’s” and the key number.  It is probably sufficient for me to say that the size of the print and its position in the advertisement could not possibly be taken to be an acknowledgment by Saatchi (whose name does not of course appear in full) that it made the representations.  Indeed, in the absence of the full name of Saatchi it can not be said that there is any reference to the fifth respondent in the advertisements.

37                  It seems to me that, at most, a more astute member of the relevant section of the public might consider the name and number to be some form of document identification along the lines of the explanation given by Mr Leppard.

38                  Moreover, in my opinion, the view that Saatchi did not make the representations is supported by a number of authorities of the Court in which the words “making a statement” and “representation” have been considered.  All of the authorities to which I will refer dealt with the meaning of those words in criminal prosecutions under s 53 of the TPA.  Nonetheless, it does seem to me that the views expressed by the judges in those cases assist in determining the issue as to who made the representation in the present case.  This is because, as I have said, the case was pleaded and conducted upon the footing that Saatchi made the representation.

39                  In Universal Telecasters (Qld) Limited v Guthrie (1978) 18 ALR 531, the Full Court (Bowen CJ, Nimmo & Franki JJ) considered the question of whether the appellant telecaster had made false or misleading statements with respect to the price of goods.  The appellant was convicted on a charge of contravention of s 53(e) of the TPA.  The telecaster had carried an advertisement for a Queensland car dealer, which was promoting the sale of Ford Falcon motor vehicles.  The misleading statements on which the telecaster was convicted at first instance were that cuts in sales tax would cease on a particular date in the future.

40                  One of the submissions made by the television station was that the advertisement was telecast by it either on behalf of the car dealer or its advertising agency and, accordingly, the television station did not make the statement.

41                  Bowen CJ approached this question upon the basis that it is possible to have in any one advertisement, whether shown on television or published in another form of media, one statement made by both the broadcaster (or publisher) and the advertiser.

42                  His Honour said at 532-533:-

“In one sense, when a television station broadcasts an individual saying something, it is the individual who makes the statement; the station broadcasts his statement.  However, the meaning of the word ‘make’ is such that it is wide enough to cover the broadcasting of the statement.  It appears to be used in s.53(e) of the Trade Practices Act 1974 in a sense which extends to that.

But it is argued that where it appears that the statement is put forth by or on behalf of another and not by or on behalf of the television station, the station does not ‘make’ the statement.

…

The fact that a statement is clearly an advertisement for a particular advertiser would not seem to constitute a sufficient basis in the circumstances to justify a holding that the statement was not made by the television station.

While the terms of the advertisement in the present case may fairly raise the inference that the statement in it is the statement of Metro Ford, there is insufficient material in it to raise the inference that it is not also the statement of Universal Telecasters.  Even if it be proper to distinguish statements, on the basis they are expressly or by necessary implication statements of the advertiser and not of the television station, the statement in this case is not seen to be such a statement.”

43                  Nimmo J went further than Bowen CJ in setting out his views as to what he considered to be required for it to be said that a person had made a statement.  His Honour said (at 538-539):-

“The first ground on which it is contended that the order should be set aside is based on the undisputed fact that the advertisement was prepared by an advertising agency, Doyle Dane & Bernback Pty Ltd, on the instructions of the advertiser, Metro Ford Pty Ltd and then sent to the appellant to be telecast.  In those circumstances, it is argued, it was the advertising agency that made the statements and all that the appellant did was provide the means by which they were published.  This argument suggests that the mere preparation by the advertising agency constitutes the making of the statements.  In the context of Pt V of the Act, I consider that the making of statements involves more than that and requires their dissemination by one means or another to potential consumers.  In the present case the text of the advertisement was disseminated to potential consumers by the appellant in its telecast which made no reference to the advertising agency.  In my view the making and publishing of the statements in this case were contemporaneous and mutually inclusive.”  (emphasis added)

44                  Nimmo J dissented in the outcome of the appeal because he disagreed with the majority as to whether the appellant had established a defence under s 85(3) of the TPA.  All of the Justices were of the view that the telecaster had made the representation.

45                  The effect of the passage, which I have set forth in Nimmo J’s judgment, is that an advertising agent who prepares an advertisement for its client does not make a representation under s 53 of the TPAunless one of the two alternative conditions is satisfied.  The first is that the advertising agent actually disseminates the advertisement.  The second is that the advertisement refers to the advertising agency.  It seems to me that what his Honour contemplated by the word “reference” in the passage which I have highlighted was that the terms of the advertisement must be such that it can be inferred that the advertising agent makes the representation.

46                  The passage, which I have quoted from Bowen CJ’s judgment, does not include the first of the two conditions referred to by Nimmo J.  However, the second of Nimmo J’s conditions is entirely consistent with the views of the Chief Justice.  Moreover, in my opinion, Nimmo J’s approach to the question of whether a person who prepares an advertisement actually makes a representation is supported by the remarks of Deane J (as he then was) in Thompson v Riley McKay Pty Limited (1980) 29 ALR 267 (“Riley McKay”).

47                  In Riley McKay, the Full Court (Franki, Deane and Fisher JJ) heard an application by way of case stated on a charge brought against an advertiser as an accessory to a contravention of ss 53(a) and 53(c) of the TPA. 

48                  The advertisements in question had been published by the advertiser in the magazines “TV Times” and “New Idea”.  The primary issue for determination was whether it was an essential ingredient of an offence under ss 53(a) or (c) of the TPAthat the advertisement was actually read by any person.

49                  Deane J answered this question by looking at the ordinary meaning of the word “represent”.  His Honour said at 276:-

“It is implicit in the ordinary use of the word ‘represent’ that there be an intended representee, to whom the relevant representation is directed.  That intended representee may be an identified person, as in the case of a representation made to a particular person in a letter, or unidentified, as is commonly the case with a representation made in an advertisement to be disseminated by the mass media.  There is not, however, implicit in the word ‘represent’ any requirement that the representation actually reach, or be understood by, the intended representee.  The act of representing is complete once the subject matter is irrevocably set forth or disseminated upon the course which is intended to lead to the intended representee or representees.”

50                  Of course, his Honour was not dealing with the question of who made the representation.  However, it seems to me that his Honour’s remarks as to when representation is complete are applicable to a determination of the question of who made the representation. 

51                  This conclusion is further supported by the remarks of Deane J in the following passage of his judgment at 277:-

“Where, as in ordinary conversation, the initial making of the statement of fact itself constitutes the method by which it is destined to reach the intended representee, the making of the statement will itself amount to a representation.  Where, however, the initial making of the statement of fact is but a step in a process which is intended to lead up to the ultimate means of communication to the intended representee or representees, the making of the statement will not, in itself, constitute a representation until the statement of fact is set forth or disseminated upon the path of actual communication to the intended representee or representees.  Thus, a statement of fact in the oral notes of a speech will not amount to a representation until the speech is actually delivered.”

52                  Mr Gageler has submitted that, in the present case, the role of Saatchi is analogous to the speechwriter.  I agree that this is an apt analogy.  It was the NRMA companies who took the step, through their agent, Zenith, of disseminating the advertisement upon the path of actual communication to the intended representees.  Saatchi prepared the “bullet”, but it was the NRMA companies, which took the step of disseminating it.  Saatchi did not disseminate the advertisement because it carefully structured its role so that, at each stage, it went back to its client, the NRMA companies, leaving them to make the ultimate decision to go forward with the act of dissemination of the advertisement.

53                  Even if it is correct to describe Saatchi as the NRMA companies’ agent for the purpose of preparation of the advertisement, the agent did not make a representation on behalf of its principals.  It was the principals acting through a different agent, Zenith, who distributed or disseminated the advertisement.

54                  In Riley McKay, Fisher J (at 284), when considering whether to follow English authority, observed that s 53 of the TPA, unlike the English legislation, provides that a false representation may be made in either of two situations; first, in connection with the supply or possible supply of goods or services or, second, in connection with the promotion by any means of the supply of goods or services.  His Honour then said (at 284):-

“It is my opinion that the specifying in the Australian legislation of the two circumstances in which the false representation may be made is of significance in determining the context in which the word ‘represent’ is to be construed.  A representation may have a different connotation in the context of the supply or possible supply of goods than it has in the context of promoting the supply thereof by any means.  Many and varied are the means used in the commercial world to promote and keep in the public eye the trade name and qualities of the trader’s goods, and advertisements, whether made by word of mouth, in written material or pictorial representation, sponsorship of sporting and other activities, conduct of competitions and outright donations are but a few of the means used.”

55                  Fisher J was of the view that, on the facts of the case, communication of the representation to a specific representee was not an essential element of the breach.

56                  The observations of Fisher J referred to above are not, in my opinion, inconsistent with what Deane J said about the need for there to be dissemination of an advertisement.  Fisher J’s judgment does, of course, emphasise that his remarks were made specifically in the context of a consideration of the provisions of ss 53(a) and (c) of the TPA.  However, for reasons I have already stated, it is my view that the cases, which dealt with those sections, are of assistance in answering the question, which arises in the present proceedings.

57                  Mr Gageler also referred to the decision of the Full Court in Barton v Croner Trading Pty Limited (1984) 3 FCR 95 (“Barton v Croner”).  There, the question which arose was whether the defendant, a wholesaler of goods who had supplied the goods to Woolworths for sale by retail had made representations in contravention of ss 53(a) and 53(c) to prospective purchasers by means of labels affixed to the goods at the time when Woolworths displayed the goods for sale.  Their Honours, Bowen CJ, Beaumont and Wilcox JJ, were of the view that the conduct, when looked at as a whole in light of all the surrounding circumstances, constituted statements made by the wholesaler at the time when the goods were displayed for sale to the public by Woolworths.

58                  Their Honours said at 106-7:-

“It is true, as the defendant submits, that the prospective purchaser never made any direct contact with the defendant.  …  Nonetheless, the surrounding circumstances indicate that the defendant was seeking to implement a scheme for the marketing of the goods, a central feature of which was the display for sale to the public of goods bearing labels intended to be read by the public.  The defendant required a retail outlet to market its product, and Woolworths, by assuming that role in the defendant’s marketing plan, acted as an intermediary between the defendant and the ultimate purchasers.

…

            [T]he position of Woolworths may be seen, not as the agent of the defendant in any strict sense, but rather as a convenient medium through which the defendant chose to pass its message – as a channel for communication between the defendant and consumers, the class of persons primarily intended to be protected by s. 53.  We think that representations made under these circumstances may properly be characterised as a representation of the kind contemplated by s.53(a) and (c) and that such representations should be regarded as having been made whenever they are communicated to consumers.  In the present case, since Woolworths was chosen by the defendant as its vehicle for the purpose of communicating with the public, the representations in question should be regarded as having occurred whenever Woolworths offered the goods to the public for sale.”

59                  Their Honours were of the view that the conclusion reached was not inconsistent with the decision in Riley McKay.  They noted that the question there was whether it was appropriate to draw an inference that a communication of an advertisement in a magazine to at least one person occurred at the time of publication.  Their Honours appreciated the force of the view expressed by Deane J that the representation in Riley McKay was made on the day of publication of the advertisement.  However, as their Honours noted, Barton v Croner was concerned with the sale by retail of individual objects over a period of time (at 107).

60                  In my opinion, the decision in Barton v Croner is of some assistance to Saatchi.  It cannot be said that the NRMA companies were the medium through which Saatchi chose to pass its message.  Rather, insofar as any analogy can be drawn between the position of a retailer and the position of newspapers, it was the newspapers through whom the NRMA companies passed their message on to the public.  Saatchi’s role was not analogous to that of the wholesaler.  The NRMA companies occupied that role.

61                  A similar question arose in Gardam v George Wills & Co Ltd (1988) 82 ALR 415.  There, French J dealt with a prosecution of a clothing wholesaler for alleged breaches of the TPAincluding a breach of s 53(a).  The wholesaler had supplied nightdresses to a retailer.  The nightdresses bore tags stating that the goods were “styled to reduce fire danger”.  This representation was false. 

62                  One of the questions which arose before his Honour was whether a wholesaler can be said to have made a representation in relation to labels on goods which were purchased from a manufacturer who mislabelled the goods and onsold them to the wholesaler who, without knowledge of the labels, sold the goods to a retailer.

63                  His Honour answered that question as follows at 427:-

“The innocent carriage of a false representation from one person to another in circumstances where the carrier is and is seen to be a mere conduit, does not involve him in making that representation.  Nobody would expect that the postman who bears a misleading message in a postal article has any concern about its content or is in any sense adopting it.  The same is true of the messenger boy or courier service.  When, however, a representation is conveyed in circumstances in which the carrier would be regarded by the relevant section of the public as adopting it, then he makes that representation.  It will be a question of fact in each case, but in my opinion the wholesaler who resells goods labelled without attribution of authorship can be taken in ordinary circumstances to adopt the text of those labels.  Whether the position is different where the labels disclose the author of their text does not arise in this case.”

64                  In my view, French J’s remarks provide further support for the proposition that the representation in the present case was made by the NRMA companies and not by Saatchi.  There is nothing here to suggest that the representation was conveyed in circumstances in which Saatchi could be regarded by the relevant section of the public as adopting the representations made in the advertisement. 

65                  In my opinion, there is no place in the scheme of the legislation under the Act or under the TPAfor resort to the common law of defamation to make good the proposition that all who are accessories to the publication must be treated as principals. 

66                  In Brown v Jam Factory Pty Ltd (1981) 35 ALR 79 at 86, Fox J observed that s 52 is a comprehensive provision of wide import.  It does not purport to create liability but establishes a norm of conduct, the contravention of which may give rise to remedies set forth in the TPA.  Importantly, his Honour said (at 86) that the wording of the section should not be narrowed or expanded by reference to established principles of liability under the common law. 

67                  The cases relied upon by the applicants, in particular the judgment of Isaacs J in Webb v Bloch make it abundantly clear that the common law of defamation throws a wide net over that which is to be treated as “publication” of defamatory material. 

68                  The effect of the passages to which Mr Rares referred in the judgment of Isaacs J is that all who assist in publication of a libellous statement are to be treated as having published it.  Those passages appear at 363-364 as follows:-

“The meaning of ‘publication’ is well described in Folkard on Slander and Libel, 5^th ed. (1891), at p.439, in these words:  “The term published is the proper and technical term to be used in the case of libel, without reference to the precise degree in which the defendant has been instrumental to such publication; since, if he has intentionally lent his assistance to its existence for the purpose of being published, his instrumentality is evidence to show a publication by him.”

            …

In Parkes v Prescott (1869) L.R., 4 Ex. 169 at p.173 Giffard QC quotes from the second edition of Starkie:  “All who are in any degree accessory to the publication of a libel, and by any means whatever conduce to the publication, are to be considered as principals in the act of publication: thus if one suggest illegal matter in order that another may write or print it, and that a third may publish it, all are equally amenable for the act of publication when it has been so effected.’  In R v Paine (1696) 5 Mod. 163, at p.167 it is held:  “If one repeat and another write a libel, and a third approve what is wrote, they are all makers of it; for all persons who concur, and show their assent or approbation to do an unlawful act, are guilty: so that murdering a man’s reputation by a scandalous libel may be compared to murdering his person; for if several are assisting and encouraging a man in the act, though the stroke was given by one, yet all are guilty of homicide.”

69                  The law of defamation has been moulded and developed as part of the common law over some hundreds of years.  Defences have been established which ameliorate the apparently harsh general principle that all who participate in publication of a libel do so as principals; see Gatley on Libel & Slander, 9^th ed, 1998, at par 6.2.  An example of one of the defences is innocent publication.  In Thompson v Australian Capital Television Pty Limited (1996) 186 CLR 574 at 587, the High Court referred to the somewhat “muddled origins” of the defence of innocent misrepresentation.  There are other defences such as “qualified privilege”, the precise variations and bases of which are familiar only to those who practice regularly in that field. 

70                  Publication of a libellous statement for the purposes of the law of defamation may, in some circumstances, amount to a contravention of s 52 of the TPAor s 12DA of the Act.  But it does not follow that every person who lends his or her assistance is a fortiori, treated as a person who engaged in misleading or deceptive conduct or one who made a misrepresentation which contravenes s 52 of the TPA.

71                  It seems to me that the Act and the TPAcontain a statutory scheme which, in subdivisions D and G of the Act, and, in particular ss 12DA, 12DB, 12GB, 12GD, 12GF and 12GM, distinguish between principal liability and accessorial liability.  The same scheme is to be found in Part V and Part V1 of the TPAand, in particular, ss 52, 53, 75B, 79, 80, 82 and 87 of the TPA.

72                  As part of this statutory scheme, s 12DA of the Act and s 52 of the TPA, if contravened, may result in remedies irrespective of the principal’s state of mind.  By contrast, accessorial liability under s 12GD of the Act and under ss 75B and 80 of the TPAis imposed only upon those who are knowingly concerned in the contravention of the Act.

73                  It has been well established since the decision of the High Court in Yorke v Lucas (1985) 158 CLR 661 at 667-669 that accessorial liability under s 75B requires knowledge of the falsity of a representation and intentional participation in a contravention of the provisions of s 52 of the TPA. 

74                  In my view, it follows from this that the scheme of the legislation under both the Act and the TPAis inconsistent with the basis upon which accessories to a libellous publication may be treated as principals for the purpose of imposing liability under the law of defamation.

75                  Accordingly, the orders that I propose to make are that the application be dismissed with costs.

Associate:

Date:                3 October 2002