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Re: GRANT ANTHONY NELSON
And: CONCRETE CONSTRUCTIONS (NSW) PTY LTD
No. G791 of 1988
FED No. 84
Trade Practices
COURT
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES REGISTRY
GENERAL DIVISION
Einfeld J.(1)
CWDS
Trade Practices- Personal Injuries - whether a case of personal injury is
actionable under section 52 Trade Practices Act - whether conduct was
misleading or deceptive - whether the conduct was "in trade or commerce" -
scope of section 52
Trade Practices Act 1974 - ss 52, 82
The Constitution 1901 - s 51(xx) - s 122
HRNG
SYDNEY
#DATE 15:3:1989
Counsel and solicitors for Mr F.M. Douglas
the applicant with Mr D. Conti
instructed by
McClellands Solicitors
Counsel and solicitors for Mr Heydon, QC
respondent company with Mr J. Campbell
instructed by
Westgarth Baldick Solicitors
ORDER
The question to be decided is answered yes.
The respondent company is to pay the applicant's costs.
Note: Settlement and entry of orders are dealt with in accordance with Order
36 of the Federal Court Rules.
JUDGE1
On 14 June 1988 an order was made by consent under Order 29 Rule 2(a) of the
Federal Court Rules that the following question be decided separately from any
other question and before the trial in these proceedings:
"Do the facts pleaded and particularized in the Statement of
Claim give rise to a cause of action under the Trade Practices
Act 1974?"
2. The particular section of the Trade Practices Act (the Act) on which Mr
Nelson relies is section 52. He also claims damages under section 82. The
respondent to the substantive claim is the applicant in this notice of motion.
For convenience, therefore, I shall refer to the applicant and the respondent
in the statement of claim as the worker and the employer.
THE FACTS
3. The facts on which I have been asked to determine the question are these.
The worker, Mr Nelson, was on 28 July 1987 employed by Concrete Constructions
on a building site at Grosvenor Square, Sydney. His duties included the moving
of grates positioned at the entry points to air-conditioning shafts. Before
carrying out this work the applicant was told by Mr Colin Jamieson, the
employer's general foreman, that each of the grates was secured by three bolts
on either side. This was not the case. As a result, while the worker was
removing one of the grates, it gave way and he fell to the bottom of the
air-conditioning shaft. He suffered serious injuries and disabilities and has
been unable to work since the accident.
THE CAUSE OF ACTION
4. Section 52 of the Act provides:
A corporation shall not, in trade or commerce, engage in
conduct that is misleading or deceptive or is likely to
mislead or deceive.
5. The various elements of the section which were pleaded and particularized
in the statement of claim will be considered in turn.
(i) A Corporation
6. The worker submitted that there could be no dispute that the employer is a
corporation within section 4 of the Act. Further, under section 84(2)(a) the
employer is clearly liable for the conduct of the general foreman and its
safety officer. Section 84(2)(a) provides:
Any conduct engaged in on behalf of a body corporate -
(a) by a director, servant or agent of the body corporate
within the scope of the person's actual or apparent
authority . . . .
. . . . . . . . . . . .
shall be deemed for the purposes of this Act, to have been
engaged in also by the body corporate.
These submissions must clearly be upheld.
(ii) Engaged in Conduct
7. It is submitted that the conduct complained of by the worker is an express
and implied misrepresentation alleged to have been made by the employer. The
express misrepresentation is said to be the alleged statement by the general
foreman that each of the grates to the airconditioning shaft was secured by
three bolts on either side. The implied representation is said to arise out of
the conduct of the general foreman and the safety officer in permitting the
worker to carry out the work without any warning as to the possible
instability of all or any of the grates. This is said to have implied that it
would be safe to remove the grates as instructed by the foreman.
8. The worker claims that the fact that a misrepresentation can amount to
"conduct" within the meaning of the section is exemplified by the use of the
section for passing off cases. He referred in particular to Taco Company of
Australia Inc v Taco Bell Pty Limited (1982) 42 ALR 177 at 202 and
Rhone-Poulenc v UIM Chemical Services (1986) 12 FCR 477.
9. Again I am of the opinion that this submission is correct.
(iii) Misleading or Deceptive
10. In his particulars as to misleading or deceptive conduct, the worker says
of these representations that:
In reliance upon the aforesaid representations the worker
was injured when one of the grates gave way by reason of the
fact that it was not affixed by bolts or otherwise in
consequence whereof he fell into the bottom of the
airconditioning shaft and was injured.
11. The worker claims that the facts make clear that the relevant conduct was
misleading or deceptive as the condition of the premises was otherwise than as
stated.
12. Some observations as to what constitutes misleading and deceptive conduct
were made in the recent case of Wright v TNT Management Services Pty Ltd t/a
Comet Overnight Transport unreported 13 February 1989, a decision of the New
South Wales Court of Appeal on appeal from Lee J of the New South Wales
Supreme Court. That case concerned the same issues as arise here and Lee J
held that the Act did not give a right of action in these circumstances. The
worker had been injured during his employment while unloading a semi trailer,
allegedly due to the negligence of a fellow worker. The Court (Mahoney and
Clarke JJA, McHugh JA dissenting) divided on the result, although not so
clearly on the relevant legal principles, with the majority holding that the
Act did not provide the particular worker with a cause of action in damages
for his injuries.
13. On the matter in general, Mahoney JA said at page 3 of the judgment:
It is not to be doubted that, when an employer employs a
worker, the employer may do things which constitute a breach
of these sections. An employer may, for example, promise a
worker, or a class of workers, in terms: "The working
conditions and practices in my establishment involve no risk
of injury to workers". An employer may engage in conduct
which gives a worker, or a group of workers, so to
understand. The plaintiff's case, as pleaded and
particularised was, perhaps, wide enough to allow him to make
out a case based upon circumstances particular to his
employment: cl 9 of the statement of claim and the
particulars given of it would, perhaps, have admitted of the
proof of such a case.
14. However, the case was argued on the basis that the representations in
question were imputed by law, in that it was said to arise out of the contract
of employment. The worker argued that:
(a) when entering the employment contract, the employer represented
and warranted to him that the system of work in operation was
safe and that the employees were competent and careful; and
(b) in the course of his employment, the employer's servants
misrepresented to him that the system of work was safe.
15. These representations, it was argued, were to be implied from conduct
arising from the employment contract.
16. Mahoney JA stated at page 8 of his printed judgment:
Where the warranty arises because, expressly or by
implication, the employer intended it to be given, the
circumstances may warrant the worker taking from the making
of the contract of employment that the employer will do what
he warrants. The warranty, in the circumstances, may give
the worker to understand that that will be so. In such a
case, the conclusion will be open that, from the conduct of
the employer in doing what he did, the worker was to take it
that the employer would act in a particular way. And, if
the employer had, eg, no intention or no provision for doing
so, then the conclusion may be open that that which the
worker took from the contract of employment would mislead.
But in my opinion, this does not follow where the warranty
arises by imputation. If, eg, there be nothing more than
that, absent actual intention, the law imputes or imposes on
the employer the relevant warranty, it by no means follows
that the worker may, in the relevant sense, take from the
making of the contract of employment that the employer will,
or will be able to, do what the warranty requires. As I
have said, what may be taken from the making of the contract
of employment will depend upon the circumstances.
17. Mahoney JA went on to expand this distinction by concluding that a worker
may not take as misleading representations said to arise from the making of
the employment contract alone. Later his Honour said that the allegation of
misleading conduct may not "necessarily" follow from the contract, but that it
may do so, depending on the particular employment contract. In this particular
case, he held that the worker could not allege misleading conduct, but did not
say in what cases a worker might be able to do so.
18. Clarke JA said at page 7 of the printed judgment that the entry into the
contract itself could constitute misleading or deceptive conduct. His Honour
said that nothing the employer did when entering the contract could be
construed as constituting a representation capable of misleading the worker.
Clarke JA thought that a different result may follow if statements were made
at the time of the contract or if a term is implied to give a contract
business efficacy or to give effect to a custom. At page 10, he said:
But in requiring the appellant to undertake his task the
respondent is not, in my opinion, saying or representing
that reasonable care will be exercised at all times or that
co-employees will not ever be careless or, indeed, that no
co-employee will turn out to be incompetent. While it is
bound to pay damages if it does transpire that a co-employee
is incompetent or guilty of casual negligence I fail to see
how it can be said that in requiring the appellant to work
it was representing that, for instance, no employee would be
guilty of casual negligence. It simply says "carry out your
duties" and, in my opinion there is . . . . . no representation
implicit in that instruction.
19. Clarke JA thought that the silence of the employer, at any rate in that
case, could not have misled the worker. Except by means of his custom and
business efficacy tests, his Honour does not really state a conclusive
attitude on the question as to whether the Act could in principle be a
possible avenue of redress for a worker injured in an employment accident.
20. McHugh JA stated at pages 9-10 of the printed judgment:
At common law a representation outside a contract would only
give rise to legal consequences if it was in respect of an
existing or past fact; a contractual promise as to the
future did have legal consequences. But for the purposes of
Part V, s 51A must be taken to have abolished the
distinction between a promise and a representation with
respect to a future event. A promise to do something in the
future is to be regarded as a representation that it will be
performed. It will be deemed misleading, therefore, unless
the corporation proves that it had reasonable grounds for
making the promise. A promise by a corporation to re-pay
$1,000.00 by 1 January, for example, is misleading and in
breach of s 52 of the Trade Practices Act unless it had
reasonable grounds for making the promise.
Accordingly, when the defendant engaged the plaintiff and
promised that it would provide a reasonably safe system of
work and reasonably competent staff, it made a
representation and engaged in conduct which was misleading
and, therefore, a breach of s 52 unless it can prove that it
had reasonable grounds for making the promise. On this part
of the case, the issue is not whether the defendant did have
a reasonably safe system of work and reasonably competent
staff but whether it had reasonable grounds for making the
promise at the time when it did.
21. By contrast with Clarke JA, McHugh JA thought that the silence of the
employer constituted a representation that he was carrying out his obligations
under the employment contract to provide a reasonably safe system of work and
take reasonable care for the safety of the worker.
22. The employer's failure to warn the employee of a danger was also, in his
Honour's view, misleading conduct under the Act. McHugh JA agreed with Clarke
JA that if the injury resulted only from a casual act of negligence by a
fellow employee, and not from any failure of the employer to carry out his
obligations under the employment contract, no misleading conduct has occurred
and the worker would fail.
23. It seems that on this 'misleading/deceptive' point, there is relevant
similarity if not unanimity of view between at least Mahoney JA and McHugh JA.
I agree with their Honours' conclusions.
(iv) In trade or commerce
24. The worker submitted firstly that the reason for inserting the words
"trade and commerce" into section 52 of the Act relates principally to the
question of constitutional power. At the time of the Act's introduction into
Parliament, there was a belief that the High Court's decision in Strickland v
Rocla Concrete Pipes Limited (1971) 124 CLR 468 had clarified the corporations
power, on which section 52 is based, as extending to the control of the
trading and financial activities of trading and financial corporations, while
leaving uncertainty as to whether it went further.
25. It is now apparent that the restriction imposed by the use of these words
is not great. Several decisions indicate the width of the phrase. In Re
Kur-ring-gai Co-operative Building Society (No. 12) Ltd (1978) 36 FLR 134,
Bowen CJ said at 139:
The terms "trade" and "commerce" are ordinary terms which
describe all the mutual communings, the negotiations verbal
and by correspondence, the bargain, the transport and the
delivery which comprise commercial arrangements (W & A
McArthur Ltd v State of Queensland (1920) 28 CLR 530 at
547). The word "trade" is used with its accepted English
meaning: traffic by way of sale of (sic) exchange or
commercial dealing (Commissioners of Taxation v Kirk (1900)
AC 588 at 592 per Lord Davey; W & A McArthur Ltd v State of
Queensland (1920) 28 CLR 530). The commercial character of
trade was mentioned more recently by Lord Reid in Ransom v
Higgs (1974) 1 WLR 1594). His Lordship there said: 'As an
ordinary word in the English language "trade" has or has had
a variety of meanings or shades of meaning. Leaving aside
obsolete or rare usage it is sometimes used to denote any
mercantile operation but is commonly used to denote
operations of a commercial character by which the trader
provides to customers for reward some kind of goods or
services ((1974) 1 WLR at 1600)'. Moreover, the word covers
intangibles, such as banking transactions, as well as the
movement of goods and persons, for historically its use has
been founded upon the elements of use, regularity and course
of conduct (Bank of New South Wales v The Commonwealth
(1948) 76 CLR 1 at 381).
26. In Finucane v New South Wales Egg Corporation (1988) 80 ALR 486 Lockhart
J stated at 504:
There is some authority that a statement by a prospective
employer to a prospective employee in negotiations leading
towards employment is capable of being conduct within trade
or commerce within s. 52 of the Act: Patrick v Steel Mains
Pty Ltd (1987) 77 ALR 133 at 136; ATPR 40-794 at 48,665 per
Wilcox J. His Honour there referred to the cases
establishing that the words "trade or commerce" are of the
widest import, to which I shall also refer shortly.
27. After citing the definitions of Bowen CJ above, his Honour continued at
506-7:
Deane J said in the same case at 167 that the terms "trade"
and "commerce" are not terms of art and are of the widest
import: see also Lubidineuse v Bevanere Pty Ltd (1984) 3
FCR 1 per Wilcox J at 11-14; Hornsby Building Information
Centre Pty Ltd v Sydney Building Information Centre Ltd
(1978) 140 CLR 216 per Murphy J at 234; Handley v Snoid
(1981) ATPR 40-219 per Ellicott J at 42,984-5; Bond
Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 71
ALR 615 per French J at 618-619; O'Brien v Smolonogov
(1983) 53 ALR 107 per Fox, Sheppard and Beaumont JJ at 110-
114. While these cases involve factual situations different
from the present, they establish an approach to the scope of
s. 52 which in my view is consistent with the purpose of the
Act, and is applicable in the present context . . . . . .
28. The worker argued that if negotiations leading to a contract of
employment constitute a part of trade and commerce, then it must be so where
an employee was given instructions whilst the actual activity was being
carried on.
29. The employer described the trade and commerce in which it engages as the
supply of building services for the proprietor of the land on which the
buildings are to be erected. When a construction company gives instructions to
its employees, it is not acting in trade or commerce - at most it is carrying
out a step antecedent to trade or commerce. Trade is something which takes
place between the corporation and the proprietor, not the corporation and its
employees.
30. The appropriate cannons of construction, the employer said, were stated
by Gummow J in Elna Australia Pty Ltd v International Computers (Australia)
Pty Ltd (1987) 75 ALR 271 at 279-80. The particular question there was the
extent common law principles should be taken into account in construing the
Act. His Honour stated:
In defining, construing and applying the common law
principles in this field, particularly in negligence and in
contract, it is to be remembered that what are often classed
as rules are as such only prima facie, and may be displaced
or modified to meet the particular case: Wenham v Ella
(1972) 127 CLR 454 at 466.
Where the selection to which I have referred concerns
statutory rights and obligations it would be an error to
translate automatically to the particular statute what
appeared the closest analogue from the common law "rules" as
to causation. It is rather a question of statutory
construction: Commonwealth v Butler (1958) 102 CLR 465 at
478-9; Commonwealth v Whillock (1983) 48 ALR 433 at 438,
452-6; 70 FLR 292 at 297, 311-15; National and General
Insurance Co Ltd v South British Insurance Co Ltd (1982) 149
CLR 327 at 336; 43 ALR 273 at 279. That process of
statutory construction calls for examination of the terms of
the statute in their context, using "context" to embrace the
other provisions of the statute, the pre-existing state of
the law, other statutes in pari materia, and the mischief
the court can discern as that the statute was intended to
remedy: K and S Lake City Freighters Pty Ltd v Gordon and
Gotch Ltd (1985) 60 ALR 509 at 513-4; 59 ALJR 658 at 660-1;
(1971) AC 850 at 880; Isherwood v Butler Pollnow Pty Ltd
(1986) 6 NSWLR 363 at 374-5, 387-8. The process I have
described is now supplemented by the Acts Interpretation Act
1901 (Cth) ss 15AA, 15AB (see also, as to s 52 of the TP
Act: Yorke v Lucas (1985) 158 CLR 661 at 668; 61 ALR 307 at
311).
There is no alarming novelty in this. In Thom v Sinclair,
supra, Lord Haldane looked to the "governing purpose"
((1917) AC at 136) of the Workmen's Compensation Act 1906
(UK) in construing the phrase "arising out of", and in
selecting those circumstances which were to determine
whether an event had arisen out of an applicant's employment
so as to constitute an injury by accident within the meaning
of the legislation: see also Gorris v Scott (1874) LR 9 Ex
125 at 129-30, cited in Hart and Honore "Causation in the
Law" 2nd ed at 93, and Fleming and Perry "Legal Cause"
(1951) 60 Yale LJ 761 at 789-90. The matter is further
discussed in Hart and Honore, op cit, at 117-21, 141-2, 414;
(1956) 72 LQR 58 at 59-60 and Trindade and Cane "The Law of
Torts in Australia" at 580-2.
Thus, in construing s 82, it is appropriate to bear in mind
such matters as the scope and purpose of the Pts IV and V of
the TP Act as directed significantly to issues of economic
loss or damage, the wide range of subject-matters dealt with
in Pts IV and V, but all linked to s 82, the extension of
liability beyond the immediate actors to persons involved
(within the meaning of s 75B) in the contravention in
question, the exclusion of contraventions of s 52A from the
wide spectrum of contraventions to which s 82 does attach,
the absence of any direct provision to apportion
responsibility for loss or damage between applicant and
respondent or third parties, and the apparent telescoping of
what to the common law would be issues of causation,
remoteness and measure of damages. However, common law
analogies will not necessarily offer sufficient guidance,
particularly where, as is the case with the TP Act, the
statute evinces an intention to supplement the common law
or, further, to travel into new fields.
31. As to construction, the employer referred to the difference between the
expression "in trade and commerce" in section 52 and "with respect to trade
and commerce" in section 92 of the Constitution, which is a wider concept.
There are also other factors claimed by the employer to show that Parliament
did not intend to give the widest possible reach to section 52. One, for
example, was that section 52 is based constitutionally on the corporations
power (S51(xx)) and section 122 of the Constitution which relates inter alia
to laws about corporations incorporated in a territory. Because "corporation"
is defined in section 4(1) of the Act to include financial, trading, foreign
and territorial corporations, section 52 could thus have commanded foreign
corporations not to engage in misleading conduct whether or not it was in
trade or commerce at all. Parliament, however, chose not to do so. Similarly
when section 52 is read, not in isolation, but with section 6(2)(a) of the
Constitution for example, it can be seen that Parliament refrained from
legislating to the full extent of the trade and commerce power conferred by
section 51(i) - it prohibited misleading conduct in trade or commerce, not
misleading conduct with respect to trade or commerce.
32. The employer submits that the reason Parliament did not use its full
powers in section 52 was because it was concerned to protect "consumers" in
the general sense described in Hornsby Building Information Centre Pty Ltd v
Sydney Building Information Centre Ltd (1978) 140 CLR 216 from misleading
conduct. It was not concerned to prohibit such conduct between employer and
employee. Another reason put forward was doubt as to the impact of the Rocla
Concrete Pipes Case (above). The employer said that the remarks of Bowen CJ in
Re Ku-ring-gai Co-operative Building Society make clear that "trade" or
"commerce" centres on the relation between the supplier of a good or service
to a recipient, not on relations internal to the supplier. Thus
misrepresentations by employees to employers are not actionable under the Act.
33. The employer also argued that particular parts of the Act support the
general contentions outlined. For example, it is said that the presence of
section 53B (misleading conduct in relation to employment) suggests that
Parliament did not consider that section 52 caught such statements. Further,
the fact that section 53B is not restricted to trade or commerce must mean
that section 52 is in narrower compass. Indeed, apart from section 53B, all
the sections in Part V Division 1 regulating misrepresentations require that
the conduct be in trade and commerce. The definition of "services" in section
4(1) of the Act specifically excludes the employer/employee relationship. As
"trade and commerce" in the same section is defined as concerning the
communings or traffic or operations by which goods or services are provided,
the Act's definitions do not seem to contemplate that what passes between
employer and employee in the normal case is either a good or a service. That
is a strong indication, the employer submitted, that those parties are not in
a trading or commercial relationship.