Australian Competition and Consumer Commission v Fox Symes & Associates Pty Ltd

the case ORIGINALLY PLEADED against the respondents 8 The original Statement of Claim filed by the ACCC claimed that the respondents had made numerous misrepresentations which amounted to either breaches of ss 51, 52 or 53 of the Act. 9 In that Statement of Claim, it was alleged that Fox Symes, through various forms of advertising, represented to members of the public that they were able to provide debt managements services, including preparation and lodging of debt agreement proposals under Part IX of the Bankruptcy Act. 10 The Statement of Claim pleaded that DRS administered Part IX agreements lodged by Fox Symes on behalf of customers. DRS was the 'specified person' of proposals prepared by Fox Symes for the purpose of s 185C (2) (c) of the Bankruptcy Act. 11 The ACCC alleged that DRS received periodic payments from customers, presumably pursuant to s 185Z, and was authorised by customers to deduct administration fees from the assets the subject of the agreement. 12 Essentially, the ACCC's case was that the respondents had made three sets of representations on radio, television and in newspapers and brochures, which contravened the Act. 13 The three sets of representations were referred to as: the advertising misrepresentations; the call centre misrepresentations; and the consultant misrepresentations.

The Advertising Representations 14 The ACCC claimed that from January 2000, Fox Symes extensively advertised their debt relief services in New South Wales, Victoria, Queensland, South Australia and Western Australia. 15 The media advertisements and brochures utilised by Fox Symes were said by the ACCC to have contained representations that: Fox Symes services are 'not bankruptcy'; Fox Symes services are 'debt relief'; Fox Symes services 'release you from your debts'. 16 The advertisements and brochures were said to be misleading or deceptive, or likely to mislead or deceive in that, contrary to the representations, the submission of a Part IX agreement amounts to an act of bankruptcy and that the preparation of a debt agreement does not relieve a debtor of his or her debts.

The Call Centre Representations 17 The advertisements and brochures referred to in the preceding paragraphs also invited potential customers to contact a Fox Symes call centre. 18 Fox Symes employees at the call centre were given instructions as to what enquiries ought to be made of potential customers who phoned in. 19 In particular, the ACCC claimed that the call centre employees were directed to enquire whether the potential customer was someone who Fox Symes and DRS may provide Part IX services. 20 Employees were also required to try and ascertain whether the caller satisfied Part IX criteria and was therefore a person for whom a proposal could be made to the Official Receiver. 21 Representations were also allegedly made by call centre personnel to the effect that Fox Symes consultants were professional debt management experts; offered a range of debt management solutions; that there was no literature on Part IX proposals that could be sent to potential customers; that whether or not the credit rating of a particular customer would diminish was dependent on individual creditors etc. 22 These representations were said by the ACCC to infringe s 52 of the Act.

The Consultant Representations 23 In addition to the above representations, the ACCC alleged that Fox Symes consultants made representations to customers in relation to the charging procedures adopted by Fox Symes and the general operation of Part IX agreements. 24 A Frequently Asked Questions document (the FAQ) was also provided to customers at consultations. The FAQ was alleged to contain further representations relating to the effect of a Part IX agreement in 'freezing' unsecured debts. 25 Furthermore, the ACCC pleaded that Fox Symes consultants made oral representations during the course of consultations which suggested that a customer's credit rating would not be effected by entry into a Part IX agreement; that creditors were paid in full; that the likelihood of a proposal being accepted was over 90%; that upon signing a Part IX agreement, a customer should not, or was not required, to make any further payments to creditors. 26 Again, these representations were said to be misleading or deceptive or likely to mislead or deceive.

the noticeS of motion of 6 july 2004 and 18 AND 21 October 2004 27 On 6 July 2004, the respondents filed a Notice of Motion seeking the following orders: '1. The Applicant deliver further and better particulars of paragraphs 4.2, 6.6, 22, 23, 24, 25, 27, 29, 30, 32, 36.2, 36.8, 38.7, 39, 41, 64, 70, 71, 72.1, 73, 74 and 75 of the Statement of Claim in response to the Request delivered 30 April 2004 and the Respondents' solicitors' correspondence dated 30 June 2004. 2. The Applicant pay the Respondents [sic] costs. 3. Such further orders as the Court deems fit.' 28 That Motion was set down for hearing on 9 September 2004. 29 When the Motion was called on, I made orders giving leave to the ACCC to amend certain paragraphs of the Statement of Claim and requiring the ACCC to give particulars of some of the paragraphs of the Statement of Claim identified in the Notice of Motion. 30 I also directed the respondents to bring any application to strike out the Statement of Claim or any aspects of it, 14 days after receipt of the ACCC's particulars. 31 On 18 October 2004, the ACCC filed a Notice of Motion seeking leave to file and serve an Amended Application and Statement of Claim. The ACCC also sought to have my orders of 9 September 2004 set aside. 32 The respondents subsequently filed a further Notice of Motion on 21 October 2004 seeking orders: '1. That these proceedings be dismissed: (a) For want of prosecution; and (b) For non-compliance by the Applicant with the court's directions of 9 September 2004. 2. Further or alternatively, that the Applicant be: (a) Held in contempt for its failure to comply with the court's directions of 9 September 2004; and (b) Punished for such contempt as the court thinks fit. 3. Further or in the further alternative, that: (a) The Statement of Claim filed on 13 April 2004 be struck out; (b) The Applicant provide an Amended Statement of Claim within 14 days of order, containing full and complete particulars in accordance with the directions given by the court on 9 September 2004; and (c) In default of the provision by the Applicant of an Amended Statement of Claim within 14 days, the proceedings be dismissed for want of prosecution. 4. That the Applicant pay the Respondents' costs of and incidental to the proceedings, to date, on a "solicitor and client" or "indemnity" basis.' 33 Both the ACCC's Notice of Motion of 18 October 2004 and the respondents' Notice of Motion of 21 October 2004 came before me on 28 October 2004. 34 On that day, I dismissed the proceedings against DRS and struck out the ACCC's Statement of Claim, giving the ACCC until 15 November 2004 to file and serve an Amended Application and Statement of Claim. 35 I made the following orders: '1. That the proceedings be dismissed against the second respondent. 2. That pursuant to O 11 r 16, the applicant's statement of claim be struck out. 3. That unless the applicants file and serve an amended application and a further statement of claim by Monday, 15 November 2004, these proceedings stand dismissed against the first, third and fourth respondents.

4. The applicant pay the second respondent's costs on a party and party basis. 5. The applicant pay the first, third and fourth respondents' costs on a party and party basis from the date of the commencement by the applicant of the proceedings, until and including today.

6. The first, third and fourth respondents shall be entitled to have a bill of costs taxed forthwith, notwithstanding the principal proceedings have not concluded.'

The notice of motion of 15 december 2004 36 On 15 November 2004, the ACCC filed its AA and ASC. The case pleaded against the remaining respondents did not differ much from the original Statement of Claim. 37 On 15 December 2004, the respondents filed a Notice of Motion seeking the following orders: '1. That paragraphs 1-6, 15-19 and 22 of the Amended Application filed on 15 November 2004 be struck out. 2. That paragraphs 15-20, 22, 23, 25-32, 89-94, 126-131, 162-167, 203-205 and 213-216 of the Statement of Claim filed on 15 November 2004 be struck out. 3. That the Applicant's claim against the Second and Third Respondents be dismissed, with costs to be taxed on a "solicitor and client" or indemnity basis. 4. That, within seven days of order, the references to these proceedings on the Applicant's website (www.accc.gov.au) identified and referred to in the Respondents' solicitors' correspondence dated 23 November 2004 to the Applicant's solicitors be either removed or (in the Applicant's discretion) amended to fairly and accurately reflect the court of events in this proceeding. 5. That the Applicant pay the Respondents' costs of and incidental to this Notice of Motion, to be taxed on a "solicitor and client" or indemnity basis. 6. Further or other orders, directions or relief.' 38 The Notice of Motion does not refer to the Federal Court Rules under which the application to strike out is made. However, I was advised at the hearing that the respondents relied upon O 11 r 16 for the orders sought in paragraphs 1 and 2 of the Notice of Motion except for its application to strike out paragraphs 215 to 216 of the ASC for which they relied upon O 20 r 2. The respondents relied upon the inherent jurisdiction for the orders sought in paragraph 4 of the Notice of Motion.

OVERVIEW OF THE ASC 39 In the AA, the ACCC seeks declarations that by making representations that the services offered by Fox Symes were 'not bankruptcy'; that entry into a Part IX agreement would possibly have an affect on a debtor's credit rating; and that the fees payable in respect of a debt agreement were fixed at a specified sum, Fox Symes had engaged in misleading or deceptive conduct. 40 The ACCC seeks relief against the Mr Maher and Ms Southon for being knowingly concerned in these contraventions, and sought corrective advertising and probation orders. 41 It is alleged in the ASC that the first respondent, at all relevant times, carried on the business in trade or commerce of supplying services to persons involving the entry into debt agreements with unsecured creditors under Part IX of the Bankruptcy Act. 42 As previously pleaded, it is asserted that the second and third respondents were respectively general manager and operations manager of the first respondent. 43 The ASC divides the proceedings against the respondents into sections. I will with only those sections which are material to the present application. 44 The representations which are said to found the applicant's causes of actions are differently labelled in the ASC. 45 It is alleged that the first respondent made a number of representations in advertisements published by it between April 2001 and June 2002. 46 The representations, which are pleaded in paragraphs 15 to 20 of the ASC, are described as 'The advertising and website "not bankruptcy" representations'. The respondents seek to strike out those paragraphs. 47 Next, it is pleaded that between April 2001 and June 2002 the first respondent published and disseminated to its customers and potential customers two versions of a document which was headed 'Frequently Asked Questions Debt Agreement' (FAQA). 48 It is asserted in the ASC that that document contained questions and answers: paragraphs 22 and 23. 49 The respondents seek to strike out paragraphs 22 and 23 of the Amended Statement of Claim. 50 It is pleaded that the questions and answers referred to in paragraphs 22.1 and 23.2 of the Statement of Claim amounted to a representation that was described in the ASC as 'The credit rating representations' (paragraphs 25 to 29). It is pleaded that the questions and answers referred to in paragraphs 22.2 and 23.1 amounted to representations that are described in the ASC as 'The not bankruptcy representations' (paragraphs 30 to 32). 51 The respondents seek to strike out those representations. 52 In paragraph 24 it is pleaded that the first respondent attached a disclaimer clause to the FAQA. The respondents do not apply to strike out paragraph 24 of the ASC. 53 In paragraphs 33-35 the applicant pleads that the clause amounted to a representation which contravened s 53g of the Act. The respondents do not seek to strike out those paragraphs. 54 The ASC then addresses what it describes as 'The individual agreements'. Paragraphs 36-58 deal with an agreement to which Mr Williams was a party. It is pleaded that he submitted debt agreement proposals to the Official Receiver as a result of representations made to him by Mr Slattery, a consultant and agent of the first respondent. The debt agreement proposal, it is pleaded, was accepted by the Official Receiver but rejected by Mr Williams' creditors as a result of which Mr Williams' credit rating was adversely affected. It is pleaded that the representations contravened the Act: paragraphs 59-68. The respondents do not seek to strike out those paragraphs. 55 In paragraphs 70-72 it is pleaded that Mr McCrohan, a consultant and agent of the first respondent, met with Ms Tadic-Whitehouse and Mr Whitehouse and made representations to them. The two relevant representations were: '72.1 entering into a debt agreement was not bankruptcy; 72.2 giving a debt agreement proposal to the Official Trustee, and entering a debt agreement, would not worsen either of their credit ratings.' 56 It is pleaded that, as a consequence, Ms Tadic-Whitehouse and Mr Whitehouse submitted a debt agreement proposal to the Official Receiver which was rejected by their creditors. It pleaded that their credit rating was thereby adversely affected: paragraph 88. 57 In paragraph 89 of the ASC it is asserted that the statement referred to in paragraph 72.1 amounted to 'the not bankruptcy representations' of the kind pleaded in paragraph 18 of the ASC. 58 It is pleaded that the representations pleaded in paragraph 89 were misleading or deceptive or likely to mislead or deceive and that, in those circumstances, because those representations were made in trade or commerce, they amounted to a contravention of s 52 of the Act: paragraph 90. 59 The respondents seek to strike out paragraphs 89 to 91 which deal with the 'The not bankruptcy representations' said to have been made to Ms Tadic-Whitehouse and Mr Whitehouse. 60 In paragraph 92 of the ASC it is pleaded that the statement pleaded in paragraph 72.2 amounted to representations that giving a debt agreement proposal and entering into a debt agreement would not have an adverse affect on Ms Tadic-Whitehouse's and Mr Whitehouse's credit rating. 61 It is pleaded that those representations were misleading or deceptive or likely to mislead and deceive. The applicant repeats paragraphs 27 and 28 of the ASC ('The credit rating representations'): paragraph 93. The applicant asserts that the first respondent thus contravened s 52 of the Act. The respondents seek to strike out paragraphs 92-94. 62 In paragraphs 95-107 it is pleaded that other representations made to Ms Tadic-Whitehouse and Mr Whitehouse gave rise to other contraventions of the Act. The respondents do not attack those pleadings. 63 In paragraphs 108 to 125 the applicant asserts that representations were made by a person named Billman, who was a consultant and agent of the first respondent, to Ms Gillett. Similar allegations are made in respect of this transaction as that involving Ms Tadic-Whitehouse and Mr Whitehouse. 64 The following relevant statements were said to have been made to Ms Gillett: '110.1.entering into a debt agreement was not bankruptcy; 110.2. entering into a debt agreement would not affect her credit rating.' 65 In paragraphs 126 to 128 of the ASC the applicant pleads that the statements in paragraph 110.1 amounted to 'the not bankruptcy representations'. The respondents seek to strike out paragraphs 89-91. 66 In paragraphs 129 to 131 the applicant pleads that the representation in paragraph 110.2 amounted to 'the credit rating representations' which again were contraventions of s 52. They seek to strike out those representations for the same reasons they seek to strike out paragraphs 92-94. 67 The applicant pleads in paragraphs 132-144 the other representations which it identified were made in paragraph 110 also gave rise to other contraventions of the Act. The respondent does not seek to strike out those paragraphs. 68 Next, the applicant asserts a person named Glencross made statements to Karen and Bruce Boswell: paragraph 145. As a consequence, they submitted a debt agreement to the Official Trustee which was accepted by the Official Trustee but rejected by their creditors: paragraphs 156 and 158. It is pleaded that their credit rating was thereby affected: paragraph 159. Later, on their own petition, they became bankrupt: paragraph 161. 69 Relevantly, it is pleaded in paragraphs 147.1 and 147.2 that the following two statements were made by Glencross: '147.1.entering into a debt agreement was not bankruptcy; 147.2 giving a debt agreement proposal to the Official Trustee would not affect their credit rating.' 70 It is pleaded in paragraphs 162-164 that the statement in paragraph 147.1 amounted to 'The not bankruptcy representations' and thus contravened the Act. 71 It is pleaded in paragraphs 165-167 that the statement in paragraph 147.2 amounted to 'The credit rating representation' and again contravened the Act. 72 The respondents for the same reasons as 'apply to the representations made to Ms Tadic-Whitehouse and Mr Whitehouse and Ms Gillett' seek to strike out paragraphs 162-157. 73 Again, it is alleged that other statements were made to Karen and Bruce Boswell which amounted to representations that contravened the Act: paragraphs 168-180. Those paragraphs are not sought to be struck out. 74 Lastly, in this series of individual agreements, the applicant pleads that statements were made by a person named Johns, a consultant and agent of the first respondent to Susan Bugeja: paragraph 182. The relevant statement made by Johns was: '184.1.entering into a debt agreement was not bankruptcy.' 75 It is pleaded that as a consequence Susan Bugeja gave a debt agreement proposal to the Official Trustee which was accepted by the Official Trustee for processing but rejected by Ms Bugeja's creditors: paragraphs 192, 193 and 196.1. She submitted a second debt agreement proposal to the Official Trustee which she subsequently withdrew: paragraph 200. She petitioned for her own bankruptcy and was made bankrupt: paragraph 202. 76 It is pleaded that the statement in paragraph 184.1 amounted to 'The not bankruptcy representations' (paragraph 203) and that the first respondent had thereby contravened the Act: paragraphs 204 and 205. The respondent seeks to strike out paragraphs 203 to 205. 77 There are other representations made to Ms Bugeja said to give rise to contraventions of the Act in paragraphs 206-212 which are not sought to be struck out by the respondents. 78 It should be observed that even if the respondents succeed on this aspect of their Motion, the applicant's claim in relation to all individual agreements will still go forward because, in each case, there are allegations that other statements made by consultants and agents of the first respondent amounted to representations which contravened the Act. In each of those cases the respondents do not assert that those pleadings do not disclose a cause of action. Each of those causes of action arise out of the same facts and circumstances as the impugned pleadings. 79 In paragraph 213 the applicant pleads the loss or damage suffered by each of the parties to the individual agreements in respect of the contraventions. The loss and damage totals $3,670. The respondents seek to strike out paragraphs 213 and 214. 80 Lastly, in paragraphs 215 and 216, the applicants plead the 'ancillary' liability of the second and third respondents. Those paragraphs are sought to be struck out. 81 The other representations pleaded in the Statement of Claim which are not the subject of this Motion need not be further identified. 82 Essentially, the respondents' motion to strike out is in four parts. 83 First, it seeks to strike out from the ASC those paragraphs which claim that 'not bankruptcy representations' were made and the further paragraphs that asserts that those representations amounted to a contravention of s 52. Secondly, it seeks to strike out from the ASC those representations which the ASC describes as 'The Frequently Asked Questions representations' and those assertions which claim that those representations are a contravention of s 52 of the Act. Thirdly, it seeks to strike out the pleas in relation to damage. Fourthly, it seeks to strike out that much of the ASC which claims accessorial liability of the second and third respondents. 84 The respondents read: 1. The Application filed 13 April 2004; 2. The Statement of Claim filed 13 April 2004; 3. The ACCC's Outline of Submissions filed 8 September 2004; 4. The Respondents' Outline of Submissions filed 8 September 2004; 5. The ACCC's Outline of Submissions filed 27 October 2004; 6. The Respondents' Outline of Submissions filed 27 October 2004; 7. The Respondents' Supplementary Submissions filed 27 October 2004; 8. The Amended Application filed 15 November 2004; 9. The Amended Statement of Claim filed 15 November 2004; 10. The Notice of Motion filed 10 December 2004; 11. The Affidavits of Brett St Clair Bolton sworn on 10 December 2004 and 18 January 2005. 85 Additionally, the respondents read two affidavits sworn by the ACCC's instructing solicitor, Sarah Jennifer Court on 1 February 2005. Those affidavits exhibited letters from persons involved in credit risk management. 86 Initially they were put forward, I think, to establish that there is no such thing as a credit rating. That is a factual issue. 87 On an application to strike out a pleading, the Court would usually have regard only to the challenged pleading. Extraneous material, including affidavits and correspondence between the parties, will not ordinarily bear upon whether a pleading should be struck out. It would not be appropriate to decide factual issues on an application which claims a pleading does not disclose a cause of action. 88 The respondents' counsel, Mr Morris QC, submitted as an alternative that the materials read on his clients' application were relevant to two matters which would follow upon a successful strike out application. Mr Morris said that the materials read were relevant to costs insofar as they demonstrated persistent attempts by the respondents to understand the nature of the case sought to be made against them, and were relevant to whether or not the ACCC should be permitted to replead. 89 Mr Slattery QC, who appeared for the ACCC, submitted that it would not be appropriate to file affidavit evidence on the strike out application. He appeared to accept that additional evidence could be read on the summary dismissal application, but he declined to do so. 90 In my opinion, the evidence read by the respondents may be relevant to the issues raised by Mr Morris and I will have regard to that material for those purposes, but only those purposes.

Order 11 rule 16 91 Order 11 rule 16 of the Federal Court Rules provides: 'Where a pleading: (a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading; (b) has a tendency to cause prejudice, embarrassment or delay in the proceeding; or (c) is otherwise an abuse of the process of the Court; the Court may at any stage of the proceeding order that the whole or any part of the pleading be struck out.' 92 The respondents assert that the Amended Statement of Claim discloses no reasonable cause of action. 93 The onus is therefore upon the respondents to establish that the pleading, on the face of it, does not disclose a reasonable cause of action. 94 A Statement of Claim will not be struck out on the ground that it discloses no reasonable cause of action unless that ground is clearly made out: Salemi v Mackellar (1976) 137 CLR 388. 95 The discretionary power conferred on the Court by O 11 r 16 is to be exercised to ensure that a party complies with the rules of pleading: Chapman v Australian Broadcasting Corporation (2000) 77 SASR 181 at 186; State of Queensland v Pioneer Concrete (Qld) Pty Ltd [1999] FCA 499 at [18]. The power to strike out pleadings is distinct from the power to enter summary judgment or otherwise summarily dismiss an application. When pleadings are struck out, the proceedings remain extant. A party should ordinarily be given an opportunity to replead in accordance with the rules: Turner v The Bulletin Newspaper Co Pty Ltd (1974) 131 CLR 69. 96 For a Statement of Claim to comply with the Rules of Court, the applicants should plead a statement in a summary form of the material or facts upon which the applicants rely but not the evidence by which those facts are to be proved: O 11 r 2. 97 In doing so, the pleadings should be as brief as the nature of the case admits: O 11 r 3. 98 A pleading, or part of it, will be liable to be struck out where it fails to comply with the functions of pleadings and with the rules as to substance and form. However, as von Doussa J said in Beach Petroleum NL v Johnson (1991) 105 ALR 456 at 466 '[t]echnical objections raised to pleadings on the ground of alleged want of form will be received with less enthusiasm today than in times past.' 99 It is to be remembered that the pleadings are the formal structure upon which the proceedings are erected. They serve to identify the matters in dispute between the parties and the issues for the Court to resolve. 100 They also form the structure upon which the interlocutory processes are governed. For example, the matters raised in the pleadings determine the extent to which discovery must be made by the parties. 101 At trial, they indicate the issues which must be resolved and, in doing so, they determine the relevancy of the evidence which may be presented by the parties. 102 For all of those reasons, a Statement of Claim, like any other pleading, must give fair notice to the respondents of the case which the respondents have to meet. 103 The Statement of Claim, and the pleadings generally, also have other functions. They are the record of the matters which the Court has resolved and become relevant if in any subsequent proceedings any of the parties claim issue estoppel or res judicata. 104 In Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564 at 585-586 French J (with whom Beaumont and Finkelstein JJ agreed) said: '[t]he content of the requirement that a statement of claim disclose a reasonable cause of action is derived from a consideration of the rules of court. … A pleading will disclose no reasonable cause of action if it is "so clearly untenable that it cannot succeed"…The determination whether a statement of claim discloses a reasonable cause of action will be made on the assumption that the facts alleged are true… The Court exercises a degree of restraint in responding to the contention that the pleading is so fatally flawed that it should not see the light of day at a trial of the action. It is not enough that the pleaded case is weak or has a low prospect of success.' 105 For all of those reasons, the respondents have the onus of clearly establishing that the Statement of Claim, on the face of it, does not disclose a reasonable cause of action. It is not to be determined by reference to the evidence available to the respondent in answer to the allegations made in the Statement of Claim. It can never be so because the Statement of Claim does not include the evidence by which the material facts asserted in the Statement of Claim will be established. It is therefore not appropriate for a respondent to bring forward evidence in answer to a document which contains only material facts and no evidence. 106 Therefore, the respondents in prosecuting an application of this kind must accept, for the purpose of the application itself, that the material facts asserted in the Statement of Claim will be made out. The respondents must in those circumstances show that upon that assumption there is clearly no reasonable cause of action raised in the Statement of Claim. 107 If a Statement of Claim is shown to disclose no reasonable cause of action, then it will be appropriate, rather than to strike out individual paragraphs of the Statement of Claim, to strike out the whole of the Statement of Claim. That follows, of course, because striking out individual paragraphs could never make a Statement of Claim which discloses no reasonable cause of action, conform with the rules and disclose a reasonable cause of action. 108 Unless the respondent on an application of this kind can also establish that however a Statement of Claim is framed no reasonable cause of action can be made out, then it would ordinarily be appropriate to allow the applicant a further opportunity to seek leave to file a further Statement of Claim to cure the deficiencies in the Statement of Claim which has been struck out. 109 There comes a time, however, where after a number of efforts to file a Statement of Claim which does disclose a reasonable cause of action that it must be inferred that the applicants cannot construct a document which does disclose a reasonable cause of action.

Order 20 rule 2 110 Order 20 r 2 confers a broader power than O 11 r 16. The power vested in the Court by O 20 r 2 is a power to dismiss a proceeding, generally or in a particular respect, where to pursue the proceeding would be frivolous or abusive, or where no reasonable cause of action is disclosed on the face of the pleadings. 111 Order 20 r 2 provides: '(1) Where in any proceeding it appears to the Court that in relation to the proceeding generally or in relation to any claim for relief in the proceeding: (a) no reasonable cause of action is disclosed; (b) the proceeding is frivolous or vexatious; or (c) the proceeding is an abuse of the process of the Court; the Court may order that the proceeding be stayed or dismissed generally or in relation to any claim for relief in the proceeding. (2) The Court may receive evidence on the hearing of an application for an order under subrule (1). 112 An order staying or dismissing a proceeding under this Rule has the effect of bringing the applicant's proceeding to an end. Thus, the procedure provided for in O 20 r 2 is to be utilised sparingly. In General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129 ('General Steel'), Barwick CJ said, when considering the jurisdiction to strike out an action seeking to, inter alia, stay patent summarily: 'It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; "so obviously untenable that it cannot possibly succeed"; "manifestly groundless"; "so manifestly faulty that it does not admit of argument"; "discloses a case which the Court is satisfied cannot succeed; "under no possibility can there be a good cause of action"; "be manifest that to allow them" (the pleadings) "to stand would involve useless expense". At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or "so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument"; "so to speak apparent at a glance".' 113 Barwick CJ referred to Dey v Victorian Railways Commissioners (1949) 78 CLR 62, where Dixon J said a case must be very clear to justify summary intervention by the Court which disentitles a plaintiff to a trial, and continued at 130: 'Although I can agree with Latham C.J. in the same case when he said that the defendant should be saved from the vexation of the continuance of useless and futile proceedings, in my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff's claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed.' (Footnotes omitted.) 114 Although the jurisdiction to dismiss where no reasonable cause of action is disclosed should be exercised sparingly, it is not necessary, as Barwick CJ pointed out in General Steel, that the case impugned be so apparently hopeless that no legal analysis is necessary. 115 In British American Tobacco Australia Ltd v Western Australia [2003] HCA 47, Kirby J said at [103]: 'The amenability to summary judgment of BAT's action was ultimately the only legal issue in contest. That contest was to be resolved by the application of the principles of law that govern the provision of summary judgment. Such relief is not restricted to a case that is simple or self evident. Establishing that a party has no reasonably arguable cause of action may sometimes require extended legal analysis.'

Misleading and Deceptive Conduct 116 Section 52 directs attention to the effect of particular conduct, or the potential effect of particular conduct. It will be a contravention of s 52 if it can be demonstrated that a respondent engaged in conduct that objectively analysed, misled or deceived, or was likely to mislead or deceive, a particular target group. 117 In a case such as this, the applicant would need to establish that the statements made by those on the first respondent's behalf amounted to misrepresentations which misled or deceived the persons referred to in the ASC or were likely to mislead or deceive them. 118 Where misleading and deceptive conduct is alleged to have been engaged in as a consequence of statements, the external context in which those statements are made is particularly relevant. The statements must not be considered in a vacuum. Regard should be given to the persons to whom the statements were made and the circumstances in which the statements were made. 119 Before addressing the respondents' claims it is necessary to have an overall understanding of relevant sections of the Bankruptcy Act insofar as it deals with debt agreements.

part ix of the bankruptcy act 120 Part IX of the Bankruptcy Act was introduced to provide an alternative to bankruptcy. It makes provision for persons in financial difficulties to enter into an agreement, scrutinised by the Insolvency and Trustee Service Australia (ITSA), to satisfy debts owing to unsecured creditors. 121 The provisions were incorporated by the Bankruptcy Legislation Amendment Act 1996 (Cth). The Explanatory Memorandum to the Bankruptcy Legislation Amendment Bill 1995 (Cth) said at [45]: 'Over a number of years, there have been calls for a form of insolvency administration outside bankruptcy and Part X that can be availed of by persons with low levels of debt, few assets and low incomes who are not able to afford to enter Part Xs and who do not wish to become bankrupt. The Bill proposes a new Part IX into the Act which sets up a simple form of insolvency administration to be known as debt agreements.' 122 In order to enter into a debt agreement, a debtor must submit a proposal for a binding agreement between the debtor and his or her creditors to the Official Receiver: s 185C(1). A debtor who gives the Official Receiver a debt agreement proposal must also give the Official Receiver a statement of the debtor's affairs with the proposal: s 185D. The proposal must identify the property to be dealt with under the agreement, how that property is to be dealt with and must authorise a specified person to deal with the identified property: s 185C(2). 123 The specified person referred to in s 185C(2) can be the Official Trustee, a registered trustee or another person: s 185C(2)(c). If the person specified is not the Official Trustee, the proposal may also provide for the remuneration of that person: s 185C(3). 124 Not all debtors can give the Official Receiver a debt agreement. Section 185C(4) provides: '185C(4) A debtor cannot give the Official Receiver a debt agreement proposal at a particular time (the proposal time) if: (a) at any time in the 10 years immediately before the proposal time the debtor: (i) has been a bankrupt; or (ii) has been a party (as debtor) to a debt agreement; or (iii) has given an authority under section 188; or (b) at the proposal time the debtor's unsecured debts total more than: (i) the threshold amount; or (ii) if the regulations prescribe a greater amount for this purpose - the amount prescribed; or (c) at the proposal time, the value of the debtor's property that would be divisible among creditors if the debtor were bankrupt is more than the threshold amount; or (d) the debtor's after tax income (see subsection (5)) in the year beginning at the proposal time is likely to exceed three-quarters of the threshold amount.' 125 Upon receiving an application, the Official Receiver must call a meeting of affected creditors to allow for consideration of the proposal or otherwise write to those creditors asking the individual creditors whether the proposal should be accepted: s 185A. 126 A proposal is accepted by special resolution, or otherwise by the acceptance in writing of the proposal by at least 75% of the affected creditors: s 185B. 127 If a debt agreement is accepted by the creditors and the Official Receiver, it is recorded on the National Personal Insolvency Index and a creditor may not enforce a remedy against the debtor's person or property in respect of a debt the subject of the agreement: s 185F. 128 Part XIII of the Bankruptcy Regulations 1996 (the Regulations) establishes an electronic index to be known as the 'National Personal Insolvency Index' into which must be entered, inter alia: 'Regulation 13.03(1)Subject to this Regulation, the following information is to be entered on the Index: (a) in respect of each creditor's petition bankruptcy, debt agreement under Part IX of the Act, personal insolvency agreement, administration under Part XI of the Act or order under s 253E of the Act, occurring or made on or after the commencement date - information of the kind specified in Schedule 8 to the extent applicable;' 129 Regulation 13.06 of the Regulations permits any person, after paying the prescribed fee, to inspect the National Personal Insolvency Index and obtain an extract of information from it. 130 When a debt proposal is accepted, a debt agreement is made in the same terms: s 185H. The parties to that debt agreement are the debtor and the creditors to whom the debtor owed debts immediately before the debt agreement was made: s 185I. 131 Section 185K provides that where a debt agreement is in force and details of it are entered on the National Personal Insolvency Index, a creditor cannot present a creditor's petition against a debtor or proceed further with a creditor's petition that was presented against the debtor before details of the debt agreement were entered in the Index or enforce a remedy against a debtor's personal property or start or take a fresh step in legal proceedings in respect of a debt that would have been provable had the debtor become bankrupt when details of the debt agreement were entered in the Index. 132 If the property which is subject to the debt agreement is not sufficient to pay in full all of the debtor's provable debts and the debt agreement does not specify how the property is to be distributed amongst the debtor's creditors, the property must be distributed among the creditors in proportion to the provable debts. 133 A debt agreement can be varied in accordance with s 185M. 134 A debt agreement can be ended. It is ended when all of the obligations it created have been discharged unless the agreement has been terminated earlier under s 185P, s 185Q or s 185R: s 185N(1). 135 The debtor or a creditor who is bound by the debt agreement may give the Official Receiver a written proposal to terminate the agreement which the Official Receiver must process. If the proposal is accepted, the debt agreement is terminated: s 185P. 136 Section 185Q(4) provides: '185Q(4) The Court may make an order terminating a debt agreement if it is satisfied: (a) that the debtor (or the debtor's personal representative if the debtor has died) has failed to carry out a term of the agreement and that it is in the creditors' interests to terminate the agreement; or (b) that carrying out the agreement would cause injustice or undue delay to the creditors or the debtor (or the debtor's estate if the debtor has died); or (c) that for any other reason the agreement should be terminated and that it is in the creditors' interest to do so.' 137 If the Court makes an order terminating a debt agreement the Court may also make a sequestration order if a creditor applied for such an order: s 185Q(5). 138 If the debtor becomes bankrupt, any debt agreement to which the debtor is a party is terminated: s 185R. 139 When details of the debt agreement are entered in the National Personal Solvency Index the debtor is released from provable debts from which he or she would have been released following discharge from bankruptcy: s 185J. 140 Importantly, a debt agreement can be terminated on application by the debtor, the Official Receiver or a creditor. A creditor applying for termination may simultaneously apply for a sequestration order: s 185Q. 141 Part IX fulfils an important function. It provides a cheap and expeditious procedure, whereby a debtor can reach a compromise with the debtor's creditors. It thereby enables a debtor to avoid the consequences which flow from bankruptcy whilst it ensures creditors are able to participate in a distribution of the assets of the debtor in proportion to the debtor's provable debts. 142 Under s 40 of the Bankruptcy Act, submission of a debt agreement proposal to the Official Receiver (s 40(1)(ha)), an acceptance of the proposal by creditors (s 40(1)(hb)), a breach of a debt agreement (s 40(1)(hc)) and termination of the debt agreement under ss 185P, 185Q or 185QA (s 40(1)(hd)) are all acts of bankruptcy.

THE APPLICANT'S PLEA IN RELATION TO PART IX AGREEMENTS 143 In paragraph 12 of the ASC the applicant pleads the effect of s 185C(1), s 185D, s 185C(4), s 185C(2), s 185C(3), s 185A and s 185F. 144 In paragraph 13 of the ASC the applicant pleads that debt agreements which are accepted by the Official Trustee for processing are entered by the Official Trustee on the National Personal Insolvency Index. 145 In paragraph 14 of the ASC it is pleaded that the National Personal Insolvency Index is a public record and any person can gain access to the information maintained on the Index. 146 Those pleas are in accord with the Bankruptcy Act and the Regulations. 147 It is in those circumstances that the applicant then addresses advertisements which it said were published by the first respondent between about April 2001 and June 2002.

the 'not bankruptcy' representations - paragraphs 15-20; 30-32; 89-91; 126-128; 162-164; 203-205 148 The applicant's case against the respondents as pleaded relies upon a number of representations which are said to arise out of the first respondent's advertisements (paragraphs 15-17). In paragraphs 15 to 20 it is pleaded that the first respondent advertised its services in the media and included representations in relation to its business of the kind, 'Debt relief … for … individuals' and 'It's not bankruptcy'. 149 The impugned paragraphs relating to the 'not bankruptcy' representations in newspapers and on the internet take the following form: '15. Between about April 2001 and June 2002 Fox Symes advertised its services to individuals throughout many places in Australia by way of newspaper advertisements, television advertisements and promotional brochures. Particulars The newspaper advertisements included advertisements which were published in: - The Sunday Mail in South Australia on 3 June 2001 at page 103, 28 August 2001 at page 42, 7 October 2001 at page 50, 2 December 2001 at page 26 of the TV Plus supplement, 3 February 2002 at page 10 of the TV Plus supplement and 7 April 2002 at page 97; - The Courier Mail in Queensland on 4 April 2001 at page 37, 2 June 2001 at page 2, 1 August 2001 at page 30, 3 October 2001 at page 2, 1 December 2001 at page 75, 1 February 2002 at page 38 and 1 April 2002 at page 25; - The Herald Sun in Victoria on 2 April 2001 at page 88, 1 June 2001 at page 100, 1 August 2001 at page 63, 1 October 2001 at page 70, 3 December 2001 at page 117, 1 February 2002 at page 93 and 1 April 2002 at page 85; and - The Daily Telegraph in New South Wales on 21 April 2001 at page 66, 13 June 2001, 21 August 2001 at page 51, 17 November 2001 at page 14, 2 January 2001 at page 13, 18 March 2002 at page 18 and 21 April 2002 at page 21. The television advertisements were broadcast from at least August 2001 until June 2002 in New South Wales, Victoria, Queensland, South Australia and Western Australia. Further particulars to be provided after discovery. The promotional brochure was disseminated by Fox Symes to persons identified from published Court lists between April 2001 and June 2002. Further particulars to be provided after discovery. A copy of the newspaper advertisements, television advertisements and promotional brochure is available from the Applicant for inspection. 16. The Fox Symes advertising referred to in paragraph 15 contained the statements "Debt relief…for…individuals" and "It's not bankruptcy" and included Fox Symes' name and telephone number. Particulars In the newspaper advertising the statement "Debt relief … for … individuals" was the heading and the statement "It's not bankruptcy" appeared below in the text of the advertising. In the television advertising the statement "Debt relief … for … individuals" was the heading on the screen and the statement "It's not bankruptcy" appeared below on the screen. In the promotional brochures the statement "Debt relief … for … individuals" was the heading and the statement "It's not bankruptcy" appeared below in the text of the brochures. 17. On or about 6 June 2002, and for a period presently unknown to the Applicant, Fox Symes advertised its services on its website http://www.foxsymes.com.au which contained the statements "Debt relief…for…individuals" and "It's not bankruptcy" and included Fox Symes' name and telephone number. Particulars On the website the statement "Debt relief … for … individuals" was the heading and the statement "It's not bankruptcy" appeared below in the text.' 150 It is to be noted that the newspaper advertisements, television advertisements and promotional brochures referred to in paragraph 15 of the ASC are not themselves contained in the ASC. In my opinion, the applicant should have pleaded the advertisements in their terms because, as paragraph 18 will show, the applicant alleges that certain imputations arise out of those advertisements. 151 Paragraphs 16 and 17 apparently identify the words relied on by the applicant for the pleas that follow. 152 If it is asserted that the imputations arise out of only the words referred to in paragraphs 16 and 17 and no others, that should have been stated in the ASC. 153 On the other hand, if the applicant intends to rely upon the context in which the words in paragraphs 16 and 17 are found, then the whole of the relevant advertisement should have been pleaded so that the context could be examined. 154 I would strike out paragraphs 16 and 17 because, in my opinion, they lack particularity for the reasons given. 155 On the other hand, I would allow the applicant to replead those two paragraphs so as to identify either the whole of the advertisement written or electronic or the promotional brochure and the particular words complained of in their context or, alternatively, to make it clear that no other part or parts of any advertisement is relied upon for the plea which follows in paragraph 18, except the words in paragraphs 16 and 17. 156 It is pleaded in paragraph 18: '18. By making the statements referred to…[above]…Fox Symes represented to members of the Australian public that the services it offered to individuals: 18.1 were an alternative to, and mutually exclusive of, bankruptcy; 18.2 avoided bankruptcy; 18.3 could not result in bankruptcy; 18.4 did not have any of the consequences of bankruptcy, in particular an adverse effect on an individual's ability to obtain credit; and, or in the alternative, 18.5 did not have a risk, or an increased risk of bankruptcy. Particulars Each of the representations is partly express and partly implied. To the extent that each of the representations is express the Applicant relies on the statement "It's not bankruptcy". To the extent that each of the representations is implied the Applicant relies on the natural inferences to be drawn from the statement "It's not bankruptcy" and the context in which the statement appears in the advertising.' 157 In paragraph 19 of the ASC the applicant pleads that representations referred to in the previous paragraph were misleading or deceptive or likely to mislead or deceive. 158 The respondents contend that paragraphs 15 to 18 should be struck out because 'the allegation that they conveyed such meanings is simply unsustainable. It is both literally and substantively correct to say that a debt agreement is "not bankruptcy"'. 159 More particularly, the respondents contend that the words pleaded in paragraphs 16 and 17 of the ASC 'are not capable of conveying the meanings ascribed to them'. 160 For the reasons already given, I would strike out paragraphs 16 and 17 because they do not disclose the whole of the advertisements and brochures, and the context in which the words were used or, alternatively, make it clear that no other words nor the context are relied upon for the imputations in paragraph 18 of the ASC. 161 It might be said, therefore, that it would be inappropriate for the Court to address the question whether the imputations can arise until such time as the pleading is in order. 162 However, because the same imputations are raised in connection with other statements in the ASC which do not rely upon advertisements and where the whole of the words are pleaded, it would be appropriate to consider whether these imputations could arise if the only words relied upon for the imputations are those presently pleaded in paragraphs 16 and 17. It would also be appropriate to consider whether these imputations could arise if no other words in the advertisements or brochures or on the services on the first respondent's website are relied upon to give colour to the words by reason of the context in which the words are found. 163 The question is can the words 'It's not bankruptcy' published under the heading 'Debt Relief for Individuals' give rise to all or any of the imputations pleaded in paragraph 18? 164 The words 'It's not bankruptcy' must mean that the services result in something other than bankruptcy. The words do not say what the result is. They do not say anything except that the services are not bankruptcy services. 165 It might be said that if debt relief for individuals is not bankruptcy then it is an alternative to bankruptcy. That may be so but it is not necessarily so. Whether the services are alternative to bankruptcy cannot be gleaned from those bare words. 166 The words 'It's not bankruptcy' under the heading 'Debt Relief for Individuals' do not mean that the services offered by the first respondent are mutually exclusive of bankruptcy, whatever might be meant by the words 'mutually exclusive'. 167 By themselves, the words mean simply that if the party enters into a debt agreement of the kind provided for in Part IX of the Bankruptcy Act that party will not become a bankrupt. 168 In my opinion, the words by themselves are not sufficient to give rise to the imputation as presently pleaded in paragraph 18.1. 169 For those reasons, in my opinion, the words by themselves cannot give rise to any of the other imputations pleaded. 170 The words do not mean that the party has avoided bankruptcy. That may or may not be the case. That is to put a gloss on those words. To say, if it be the case, that if a party enters into a debt agreement the party has avoided bankruptcy is to assume that one or the other had to have occurred. That might be so but, again, is not necessarily so. 171 It does not mean that the party could not result in being bankrupt. Again, that is to put a gloss on the words. Again, it is to assume that there are only two circumstances that could occur; a Part IX debt agreement or bankruptcy. That is not so. Neither might occur. Some other arrangement may be entered into. The words do not give rise to the imputation that the first respondent offered services to individuals that could not result in bankruptcy. 172 The words, by themselves, certainly do not give rise to the imputation pleaded in paragraph 18.4. 173 In my opinion, a debt agreement of the kind in Part IX is an arrangement which will allow the debtor when entering into the debt agreement to avoid the consequences of bankruptcy in respect of the debts then owing to those creditors, provided that the debtor complies in every respect with the provisions of Part IX and any other provisions that relate to the debtor. 174 To say that the debt agreement is not bankruptcy does not carry with it any further imputation than that. 175 It does not carry with it the imputation of the kind pleaded in paragraphs 18.4. Nor do the words mean that the services offered by the first respondent do not have a risk or an increased risk of bankruptcy. The words do not give rise to any imputation which addresses risk or levels of risk. 176 It follows, therefore, that if the words relied on by the applicant for the imputations pleaded in paragraph 18 are only those presently pleaded in paragraphs 16 and 17, then the imputations in paragraph 18 do not arise and paragraph 18 must be struck out. 177 Paragraph 18 must be struck out in any event, because paragraphs 16 and 17 are to be struck out. 178 Paragraph 19 provides: '19. Each of the representations referred to in paragraph 18 was misleading or deceptive, or likely to mislead or deceive, in that: 19.1 the services offered by Fox Symes to debtors in the period April 2001 to June 2002 were in relation to the entry of debt agreements and included the preparation by Fox Symes of debt agreement proposals to be given to the Official Trustee by Fox Symes on behalf of the debtors; 19.2 giving a debt agreement proposal to the Official Trustee is an act of bankruptcy by the debtor for the purposes of the Bankruptcy Act; 19.3 the acceptance by creditors of a debt agreement proposal is an act of bankruptcy by the debtor for the purposes of the Bankruptcy Act; 19.4 breaching a debt agreement is an act of bankruptcy by the debtor for the purposes of the Bankruptcy Act; 19.5 a consequence of a debtor committing an act of bankruptcy is, among other things, that a creditor can at any time apply to a court to make the debtor bankrupt; 19.6 a consequence of a debtor giving the Official Trustee a debt agreement proposal, is that the debtor's credit rating is adversely affected by reason that: 19.6.1 information in relation to the debt agreement proposal is entered by the Official Trustee on the National Personal Insolvency Index; and 19.6.2 the National Personal Insolvency Index is a public record regularly accessed by commercial credit rating agencies by subscription. 19.7 a consequence of a debtor entering into a debt agreement with creditors is that the debtor's credit rating is adversely affected by reason that: 19.7.1 information in relation to the debt agreement is entered by the Official Trustee on the National Personal Insolvency Index; and 19.7.2 the National Personal Insolvency Index is a public record regularly accessed by commercial credit rating agencies by subscription, and accordingly 19.8 giving a debt agreement proposal to the Official Trustee and, or alternatively, entering into a debt agreement with creditors, both being acts of bankruptcy: 19.8.1 are not necessarily an alternative to, and mutually exclusive of, bankruptcy; 19.8.2 do not necessarily avoid bankruptcy; 19.8.3 can result in bankruptcy; 19.8.4 have a consequence of bankruptcy, namely an adverse effect on a debtor's ability to obtain credit, and 19.8.5 have a risk, or an increased risk, of bankruptcy. 20. By reason of the matters set out in paragraphs 15 to 19 above Fox Symes, in trade or commerce, engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act.' 179 Paragraph 19 addresses the imputations which are pleaded in paragraph 18. 180 If paragraph 18 is struck out, and in my opinion it must, then, of course, the plea in paragraph 19 and the consequential plea in paragraph 20 must also be struck out. 181 It seems to me the better course of action, having regard to the conclusions at which I have arrived, is to strike out paragraphs 16 to 20 because, on the face of it, those paragraphs do not give rise to a cause of action. 182 Notwithstanding the many attempts the applicant has had to frame a statement of claim which properly discloses a cause of action, I would give the applicant one further chance to replead the matters in those paragraphs if the applicant intends to rely upon words other than those presently pleaded in paragraphs 16 and 17 to support the imputations which it says arise from the advertisements and brochures referred to in paragraphs 15, 16 and 17. 183 I will not give the applicant leave to file a further statement of claim in that respect. I will allow the applicant 14 days in which it might apply for leave to replead paragraphs 15 to 20. 184 The second series of representations are described in the ASC as 'The Frequently Asked Questions representations'. In paragraph 21 of the ASC it is asserted that between April 2001 and June 2002 the first respondent published a document entitled 'Frequently Asked Questions Debt Agreement' (FAQ) to its customers and its potential customers. 185 In paragraphs 22 and 23 the applicant has pleaded two versions of the FAQ. 186 Those paragraphs are in the following form: '22. Version 1 of the FAQ contained the following question and answer statements: 22.1 "Will a Debt Agreement affect my credit rating? A debt agreement is registered on the National Personal Insolvency Index. It is up to each creditor to report to the CRAA. 22.2 "Is a Debt Agreement the same as going Bankrupt? No, a debt agreement is also known as a Part IX arrangement. It is an alternative to bankruptcy. It does not carry with it the same restrictions as bankruptcy." 23. Version 2 of the FAQ contained the following question and answer statements: 23.1 "Is a Debt Agreement the same as going Bankrupt? No, a debt agreement is also known as a Part IX arrangement. It is an alternative to bankruptcy." 23.2 "Will a Debt Agreement affect my credit rating? Both the debt agreement proposal and the debt agreement are registered on the National Personal Insolvency Index. It is up to the discretion of each creditor as to whether they register a default with Credit Advantage"; or alternatively "Will a Debt Agreement affect my credit rating? Both the debt agreement proposal and the debt agreement are registered on the National Personal Insolvency Index. It is up to the discretion of each creditor as to whether they register a default with Baycorp Advantage". 24. Version 1 and version 2 of the FAQ contained the following statement: "Fox Symes & Associates Pty Ltd ('FSA') takes no responsibility for information contained herein whether prepared by FSA or otherwise, and FSA accepts no responsibility for loss or damage arising out of the document howsoever caused, including, negligence, gross negligence and/or misleading or deceptive conduct".' 187 The pleas in paragraphs 22.1 and 23.2 are said to give rise to the representations in paragraphs 25 and 26. Those pleas are: '25. By making the statements referred to in paragraphs 22.1 and 23.2 Fox Symes represented to its customers and potential customers that there was a possibility that a debtor's credit rating may be affected by entering into a debt agreement with his or her creditors. Particulars … 26. By making the statement referred to in paragraph 23.2 Fox Symes represented to its customers and potential customers that there was a possibility that a debtor's credit rating may be affected by giving a debt agreement proposal to the Official Trustee for processing. Particulars …' 188 I think it is arguable that the imputations pleaded in paragraphs 25 and 26 (which are not materially different) do arise from the statements in paragraphs 22.1 and 23.2. The imputation is that there was a possibility that a debtor's credit rating may be affected. The imputation may arise because of the form of the answers to the questions. The questions directly enquire whether credit ratings will be affected. The answers are equivocal and, in those circumstances, the plea of a possibility could arise. 189 It is pleaded in paragraphs 27 and 28 that the statements in paragraphs 22.1 and 23.2, which give rise to the representations in paragraphs 25 and 26 respectively, are misleading and deceptive. 190 It is pleaded in paragraphs 27 and 28: '27. The representation referred to in paragraph 25 was misleading or deceptive, or likely to mislead or deceive, in that a consequence of a debtor entering into a debt agreement with his or her creditors is that the debtor's credit rating will be adversely affected by reason that: 27.1 information in relation to the debt agreement is entered by the Official Trustee on the National Personal Insolvency Index; and 27.2 the National Personal Insolvency Index is a public record regularly accessed by commercial credit rating agencies by subscription. 28. The representation referred to in paragraph 26 was misleading or deceptive, or likely to mislead or deceive, in that a consequence of a debtor giving the Official Trustee a debt agreement proposal and the Official Trustee accepting the debt agreement proposal for processing, is that the debtor's credit rating will be adversely affected by reason that: 28.1 information in relation to the debt agreement proposal is entered by the Official Trustee on the National Personal Insolvency Index; and 28.2 the National Personal Insolvency Index is a public record regularly accessed by commercial credit rating agencies by subscription.' 191 In my opinion, it would be a matter for evidence at the trial as to whether the applicant can make out the pleas in paragraphs 27 and 28 which amount to a claim that whenever a debtor enters into a debt agreement the debtor's credit rating will be adversely affected. It is not appropriate, on an application under O 20 r 2, to resolve questions of evidence which are matters for the trial. I decline to strike out paragraphs 22, 23, and 25 to 29. 192 Paragraph 30 is again headed 'The "not bankruptcy" representations'. 193 The pleas which follow refer to paragraphs 22.2 and 23.1. 194 The applicant has pleaded in paragraphs 30, 31 and 32: '30. By making the statements referred to in paragraphs 22.2 and 23.1 Fox Symes represented to its customers and potential customers that entering into a debt agreement: 30.1 was an alternative to, and mutually exclusive of, bankruptcy; 30.2 avoided bankruptcy; 30.3 could not result in bankruptcy; 30.4 did not have any of the consequences of bankruptcy, in particular an adverse effect on a debtor's ability to obtain credit; and, or in the alternative 30.5 did not have a risk, or an increased risk, of bankruptcy. Particulars Each of the representations is partly express and partly implied. To the extent that each of the representations is express the Applicant relies on the question and answer statements referred to at paragraphs 22.1 and 23.1. To the extent that each of the representations is implied the Applicant relies on the natural inferences to be drawn from the answers in the context of the questions and the absence of a direct and unequivocal statement to the effect that a debt agreement is not mutually exclusive of bankruptcy, can lead to bankruptcy, involves some of the consequences of bankruptcy, in particular an adverse effect on a debtor's ability to obtain credit and/or involves a risk, or an increased risk, of bankruptcy.' 31. Each of the representations referred to in paragraph 30 was misleading or deceptive, or likely to mislead or deceive. Particulars The Applicant repeats and relies upon sub-paragraphs 19.2 to 19.8 above. 32. By reason of the matters set out in paragraphs 21 to 23 and 30 to 31 above Fox Symes, in trade or commerce, engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 52 of the Act.' 195 The respondents seek to strike out paragraphs 30 to 32. 196 There is a difficulty in the way in which the applicant has pleaded its case in this respect. The statements made in paragraphs 22.2 and 23.1 are not identical. The statement in paragraph 22.2 carries with it the further words 'it does not carry with it the same restrictions as bankruptcy'. 197 Paragraph 30 repeats the same imputations which were pleaded in paragraph 18. The words which are said to have given rise to the imputation in paragraph 18 were the words 'it's not bankruptcy'. 198 On the pleading, as it presently stands, those words by themselves are said to give rise to all of the imputations contained in paragraph 18. For the reasons already given, I do not agree. However, the words which are said to give rise to the imputations in paragraph 30 are, as I have already said, not the same as those contained in paragraph 18. In the case of paragraph 22.2 it is pleaded: 'No, a debt agreement is also known as a Part IX arrangement. It is an alternative to bankruptcy. It does not carry with it the same restrictions as bankruptcy'. In the case of paragraph 23.1, the statement does not include the last sentence. 199 The pleas in paragraphs 22 and 23 is that these are two different versions of the one document. It is unlikely that each customer would have been given both. 200 That points up the difficulty in the way that the applicant has pleaded its case. 201 It would seem to me unlikely that different words in different document could give rise to the same imputations in all cases. 202 In any event, it is asserted in paragraph 30 that the same imputations which were pleaded in paragraph 18 arise out of the statements made in paragraphs 22.2 and 23.1. That also is unlikely. The words which are said to support the imputations in paragraph 18 are different from the words supporting the same imputations in paragraph 30. 203 In this case, there are no other words relied upon apart from those in paragraphs 22.2 and 23.1. Therefore, the question must be whether the words pleaded in paragraph 22.2 and 23.1 could give rise to the imputations in paragraphs 30.1 to 30.5. The words pleaded in paragraphs 22.2 and 23.1 must be understood in the context of the questions to which they both answer. 204 The question in both subparagraphs is 'Is a debt agreement the same as going bankrupt?' 205 The answer is 'no' in both paragraphs. In both cases the answer continues 'a debt agreement is also known as a Part IX agreement. It is an alternative to bankruptcy'. 206 In my opinion, those words do give rise to the imputation pleaded in paragraph 30.1. The first part of paragraph 30.1 'was an alternative to bankruptcy' clearly arises. That is no more than the answer itself. The direct answer to the question (no) must mean that a debt agreement is something other than bankruptcy. I think the words pleaded 'mutually exclusive' are somewhat cumbersome but I think it is an imputation which could arise. 207 For those reasons, I think the imputation in paragraph 30.1 could arise. 208 I am less sure, but I am not able to say it is not arguable, that the imputation pleaded in paragraph 30.2 does arise. 209 The imputation could arise because of the use of the word 'alternative' in paragraphs 22.2 and 23.1 which might allow it to be said that a debt agreement is a way of avoiding bankruptcy. 210 I will not strike out paragraphs 30.1 or 30.2. 211 However, in my opinion, none of the imputations in paragraphs 30.3, 30.4 or 30.5 could arise out of the words used in paragraph 23.1. To say that the services are not bankruptcy but an alternative to bankruptcy simply do not address the matters sought to be raised in paragraphs 30.3, 30.4 and 30.5. 212 The further words in paragraph 22.2, 'It does not carry with it the same restrictions as bankruptcy' might allow part of the imputation in paragraph 30.4 to arise if it were pleaded that the imputation was 'did not have the consequences of bankruptcy'. 213 However, the additional words in paragraph 22.2 do not support a finding of the the imputation which is presently pleaded in paragraph 30.4. Nor do they support a finding of another of the imputations in paragraphs 30.3 or 30.5. 214 I would strike out paragraphs 30.3, 30.4 and 30.5. 215 Paragraph 31 asserts that each of the remaining imputations in paragraphs 30.1 and 30.2 are misleading or deceptive for the reasons given in paragraphs 19.2 to 19.8. 216 For reasons I have already given, I think paragraph 19 should be struck out. 217 However, the plea in paragraph 31 ought to be understood upon the basis that the particulars in paragraph 31 include the pleas in paragraphs 19.2 to 19.8. 218 In my opinion, the pleas in paragraphs 19.2 to 19.8 could not, even if established, prove that the imputation in paragraph 30.1 was false. 219 There are, in fact, two imputations in paragraph 30.1. First, that the Part IX procedure is an alternative to bankruptcy. Secondly, that the Part IX procedure is mutually exclusive of bankruptcy. 220 It is clear beyond doubt that Part IX is an alternative to bankruptcy. That was why Part IX was introduced. 221 The consequences of submitting a debt agreement proposal or of entering into a debt agreement cannot change the fact that Part IX is an alternative to bankruptcy. 222 In those circumstances, none of the particulars in paragraph 19.2 to 19.8 could support the first limb of the imputations pleaded in paragraph 30.1. 223 Nor can any of the particulars support the second limb of paragraph 30.1. A debt agreement procedure in Part IX is not bankruptcy. 224 It may be that, as the particulars claim, various acts by the debtor before giving the debt agreement proposal to the Official Trustee and before entering into the debt agreement and after entering into the debt agreement may amount to an act of bankruptcy. But, even if they do, that is not bankruptcy. 225 An act of bankruptcy is not the same as bankruptcy. 226 In my opinion, none of the particulars, assuming they were established, could make out the second limb of paragraph 30.1. 227 I am also of the opinion that none of the particulars in paragraphs 19.2 to 19.8 could make out the imputation pleaded in paragraph 30.2. If a debtor enters into a debt agreement under Part IX of the Bankruptcy Act the debtor will avoid a sequestration order being made against his or her estate and will avoid becoming a bankrupt. 228 It may be, as I have previously said, that the debtor may, in giving the debt agreement proposal to the Official Trustee or in entering into that debt agreement or after entering into the debt agreement, commit an act of bankruptcy but that does not mean, in my opinion, that a debtor who enters into a debt agreement has not avoided bankruptcy. 229 In my opinion, none of the particulars in paragraphs 19.2 to 19.8 can support the imputations in paragraphs 30.1 and 30.2 which are the only imputations which, in my opinion, could arguably arise out of the statements in paragraphs 22.2 and 23.1. 230 In those circumstances, those remaining imputations should be struck out. 231 In all those circumstances, it would be appropriate to strike out paragraphs 30 to 32. 232 In paragraphs 69 to 88 the applicant pleads the facts and circumstances relating to advice given to Ms Tadic-Whitehouse and Mr Whitehouse in August 2001. It is pleaded in paragraph 81 that a debt agreement prepared at that time was subsequently not accepted by the Official Trustee and a second a debt agreement proposal was entered into which was also rejected. 233 In paragraph 84 it is pleaded that a third debt agreement proposal was entered into by Ms Tadic-Whitehouse and Mr Whitehouse which was subsequently accepted by the Official Trustee for processing. It is pleaded that the provision by the first respondent to the Official Trustee of the third debt agreement meant that Ms Tadic-Whitehouse and Mr Whitehouse's credit rating was adversely affected. 234 The respondents next seek to strike out paragraphs 89 to 94 of the ASC. 235 It is pleaded in paragraph 89: '89. By making the statement referred to in paragraph 72.1 Fox Symes represented to Ms Tadic-Whitehouse and Mr Whitehouse that entering into a debt agreement: 89.1. was an alternative to, and mutually exclusive of, bankruptcy; 89.2. avoided bankruptcy; 89.3. could not result in bankruptcy; 89.4. did not have any of the consequences of bankruptcy, in particular an adverse effect on a debtor's ability to obtain credit; and, or in the alternative, 89.5 did not have a risk, or an increased risk, of bankruptcy. Particulars Each of the representations is partly express and partly implied. To the extent that each of the representations is express the Applicant relies on the statement referred to in paragraph 72.1. To the extent that each of the representations is implied the Applicant relies on the natural inferences to be drawn from the statement and the context that Ms Tadic-Whitehouse and Mr Whitehouse had stated to McCrohan that they did not any action they took to worsen their credit rating.' 236 It is pleaded that those representations are false (paragraph 90) and a contravention of s 52 (paragraph 91). 237 As I have already said, the same pleas which are made in relation to representations by Fox Symes' consultants in the course of consultations with Ms Tadic-Whitehouse and Mr Whitehouse (paragraphs 89-91) are made in relation to other persons who consulted the first respondent; Ms Gillett (paragraphs 126-128); Mr Boswell and Mrs Boswell (paragraphs 162-164) and Ms Bugeja (paragraphs 203-205) (the customers). The statements made are identical and the pleas the same. Those paragraphs which are sought to be struck out by the respondents can be conveniently considered together. 238 The applicant claims that the representation to each of the customers was that entering into a debt agreement was not bankruptcy. I have previously set out the representations relied upon. 239 These representations are said to be misleading or deceptive for the reasons set out in paragraphs 19.2 to 19.8 of the ASC: paragraph 90. 240 For the reasons I have already given, in my opinion, the statement that a debt agreement is not bankruptcy cannot give rise to the imputations pleaded in paragraphs 89.3, 89.4 and 89.5. 241 I accept, for the reasons already given, that the imputations pleaded in paragraphs 89.1 and 89.2 could arguably arise. 242 However, for the reasons I have already given, the particulars in paragraphs 19.2 to 19.8 could never make out the imputations pleaded in paragraphs 89.1 and 89.2. 243 In those circumstances, paragraphs 89 to 91 must be struck out. 244 So it follows must paragraphs 126 to 128, 162 to 164 and 203 to 205. 245 The respondents also seek to strike out paragraphs 92 to 94 which relate to statements said to have been made to Ms Tadic-Whitehouse and Mr Whitehouse at the meeting with Mr McCrohan which is pleaded in paragraph 72 of the ASC and, in particular, a statement said to be made by Mr McCrohan to customers in paragraph 72.2 that giving a debt agreement proposal to the Official Trustee and entering a debt agreement would not worsen either of their credit ratings. 246 Similar pleas are made in relation to the same statement made to Ms Gillett on a separate occasion (paragraphs 129-131) and a statement made to Mr and Mrs Boswell on another occasion (paragraphs 165-167). 247 These pleas can be conveniently dealt with together. If the pleas in paragraphs 92 to 94 cannot be sustained, nor can the pleas in paragraphs 129 to 131 and paragraphs 165 to 167. 248 I have already set out the representations made to the three customers. 249 It is pleaded in paragraph 92: '92. By making the statement referred to in paragraph 72.2 Fox Symes represented to Ms Tadic-Whitehouse and Mr Whitehouse that: 92.1 giving a debt agreement proposal to the Official Trustee would not have an adverse effect on Ms Tadic-Whitehouse and Mr Whitehouse's credit rating; Particulars The representation is partly express and partly implied. To the extent that the representation is express the Applicant relies on the statement referred to at paragraph 72.2. To the extent that the representation is implied the Applicant relies on the natural inferences to be drawn from the statement and the absence of a direct and unequivocal statement by McCrohan that giving a debt agreement proposal to the Official Trustee, which is accepted by the Official Trustee for processing, will adversely affect the credit rating of Ms Tadic-Whitehouse and Mr Whitehouse. [A]nd further, or in the alternative that, 92.2 entering into a debt agreement would not affect Ms Tadic-Whitehouse and Mr Whitehouse's credit rating. Particulars The representation is express. The Applicant relies on the statement referred to in paragraph 72.2. 93. Each of the representations referred to in paragraph 92 was misleading or deceptive, or likely to mislead or deceive, in that giving a debt agreement proposal to the Official Trustee and the Official Trustee accepting the debt agreement proposal for processing, and entering a debt agreement, would have an adverse effect on Ms Tadic-Whitehouse and Mr Whitehouse's credit rating and the Applicant repeats and relies upon subparagraphs 27.1, 27.2, 28.1 and 28.2 above. 94. By reason of the matters set out in paragraphs 72.2, 92 and 93 above Fox Symes, in trade or commerce, engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act.' 250 The representations are said to be misleading or deceptive because a consequence of proposing a debt agreement to the Official Trustee which is accepted or entering into a debt agreement will be an adverse affect on a customer's credit rating. The applicant's case is that that consequence is the inevitable result of information in relation to the debt agreement or proposal being entered onto the National Personal Insolvency Index, a public record accessed by commercial credit rating agencies by subscription, by the Official Trustee. 251 The respondents submitted that these pleadings must be struck out because the applicant has not pleaded, nor could the Court ever find, that in all cases, entry into a Debt Agreement will have an affect or adverse affect on a person's credit rating. Again, the respondents' submission was that these representations were literally true and therefore could not be considered misleading or deceptive. 252 The pleading is also said to be deficient because in none of the examples pleaded in the ASC is the credit rating of a customer pre entry into an agreement set out. Nor is a post agreement rating pleaded. 253 The respondents' arguments, like those advanced in relation to paragraphs 27 and 28, raise factual questions which cannot be addressed on an application of this kind. 254 The applicant will have to prove at trial the falsity of the representations. It will do so if it can establish that merely by giving a debt agreement proposal a party's credit rating would be thereby necessarily adversely affected. It might sound a difficult proposition to prove but the applicant is entitled to the opportunity. 255 I therefore refuse to strike out paragraphs 92-94, 129-131 and 165-167.

Loss and Damage 256 The third aspect of the ASC attacked by the respondents on the motion was the failure by the applicant to plead a causal connection between loss and damage alleged to have been suffered by the five customers of Fox Symes and the conduct complained of. 257 For example, in respect of Mr Williams, the ACCC plead that, during the course of a consultation, a Fox Symes agent made the following statements to him: '38.1 his debts would be fixed in the amount they were that night and no interest would grow on them ['frozen debt' representation]; 38.2 he should stop paying his unsecured creditors immediately; 38.3 the total amount he would pay in respect of a debt agreement was $925; and 38.4 he should withdraw the $900 payment he had recently made to NRMA to fix the amount of his debts and consolidate them.' 258 At paragraph 40, the ACCC plead: '40. During the meeting referred to in paragraph 36, and in reliance on the statements referred to in paragraph 38, Mr Williams agreed to enter into an agreement with Fox Symes in respect of a debt agreement proposal.' 259 The contraventions arising out of the representations pleaded in paragraph 38 are then set out: '57. On or about 13 December 2001 Mr Williams' creditors rejected the third debt agreement proposal referred to at paragraph 54.1. 58. A consequence of the debt agreement proposals being given by Fox Symes to the Official Trustee as referred to in paragraphs 46.1, 51.1 and 55.1, and being accepted by the Official Trustee for processing was that Mr Williams' credit rating was adversely affected by reason that information in relation to Mr Williams was registered on the National Personal Insolvency Index from time to time including information to the effect that: 58.1 he had given a debt agreement proposal for consideration by his creditors which had yet to be accepted or rejected by his creditors; 58.2 he had given a debt agreement proposal for consideration by his creditors and his creditors did not vote to accept the proposal; and 58.3 he had given a debt agreement proposal for consideration by his creditors which had been rejected by his creditors, which information was recorded by commercial credit rating agencies. 59. By making the statement referred to in paragraph 38.3 [fees payable representation] Fox Symes represented to Mr Williams that $925 was the total amount of any fees payable by him in respect of debt agreement proposals given by Fox Symes to the Official Trustee on his behalf, and in respect of a debt agreement resulting from the acceptance of any such debt agreement proposal… 60. The representation referred to in paragraph 59 was misleading or deceptive, or likely to mislead or deceive, in that $925 was not the total amount of any fees payable by Mr Williams in respect of debt agreement proposals given by Fox Symes to the Official Trustee on his behalf, and in respect of a debt agreement resulting from the acceptance of any such debt agreement proposal Particulars Paragraph 2 of the debt agreement proposal referred to in paragraph 41.5 provided for an administration fee to be payable to DRS after acceptance of the debt agreement proposal by Mr Williams' creditors. 61. By reason of the matters set out in paragraphs 38.3, 59 and 60 above, Fox Symes, in trade or commerce, engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act. The 'frozen debt' representation 62. By making the statement referred to in paragraph 38.1 Fox Symes represented to Mr Williams that his debts would be frozen immediately upon him entering into the agreement with Fox Symes referred to at paragraph 41.1… 63. The representation referred to in paragraph 62 was misleading or deceptive, or likely to mislead or deceive, in that pursuant to the Bankruptcy Act debts which are the subject of a debt agreement proposal are frozen upon the acceptance by the Official Trustee of the proposal for processing, and not at any earlier time. 64. By reason of the matters set out in paragraphs 38.1, 62 and 63 above Fox Symes, in trade or commerce, engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act.' 260 The applicant later pleads that, by reason of this conduct, Mr Williams suffered loss or damage in the amount of $925. Paragraph 213 provides: '213. By reason of the contraventions of the Act by Fox Symes referred to in: 213.1 paragraphs 61, 64 and 68, Mr Williams suffered loss or damage; Particulars The loss or damage suffered by Mr Williams was the payment of an application fee in the amount of $925.' 261 It is ordinarily unnecessary to make out a case of misleading or deceptive conduct based on representations, to prove that a person to whom the representation was directed relied on the representation. Misleading and deceptive conduct is actionable per se. 262 However, where compensation for loss is sought under s 82 as a consequence of a contravention, it is incumbent on the party seeking compensation to prove that the loss was caused by the respondent's conduct. Section 82 provides: '(1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV, IVA, IVB or V or section 51AC may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.' 263 Section 87 of the Act gives the Court power to make an order compensating an aggrieved person for loss or damage incurred. 264 The use of the words 'by conduct of another person' in s 82 have been noted as being curious: Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 525. It is settled law however that the section imports common law notions of causation. 265 In a case of a misleading representations where compensation is sought, a party must show that they relied on the representation and that, as a matter of common sense, suffered loss as a consequence. 266 The respondents say that the pleading is defective in that there is no plea by the ACCC that Mr Williams actually relied on the 'fees payable' representations and that doing so caused his loss. I think that is right. The plea of loss or damage refers to, for example, paragraph 61 which refers to the making of the 'fees payable' representation in paragraph 38.3 and the misleading and deceptive consequence of that representation. No reference is made to paragraph 40 or to any other plea of reliance. 267 Mr Slattery QC argued that paragraph 40 answers the respondents' allegations of deficient pleas of reliance. He submitted that paragraph 40 is a general plea of reliance on the 'fees payable' and 'frozen debt' representations. 268 I think the plea is unclear enough to be said that it is embarrassing. 269 The clarity of the pleading could be enhanced by a direct reference in paragraph 213 to the plea of reliance in paragraph 40. 270 The same can be said of the pleadings with respect to Ms Tadic-Whitehouse and Mr Whitehouse; Ms Gillett; Mr and Mrs Boswell; Ms Bugeja, all of whom are said to have suffered loss by virtue of the respondents' conduct. I will strike out paragraphs 213-214 but give the applicant a further opportunity to remedy this defect. In my opinion, the omission to incorporate a plea of reliance can be easily cured.

accessorial liability 271 The final attack on the statement of claim was made against paragraphs 215 and 216. Those paragraphs, the respondents submitted, disclosed that the proceedings against the second and third respondents ought to be struck out pursuant to O 20 r 2. 272 The ACCC's case against those two respondents is that they were knowingly concerned in the contraventions by Fox Symes arising out of the FAQ document: '215. Maher: 215.1 was the author of version 1 and version 2 of the FAQ referred to in paragraph 21 above; 215.2 caused version 1 and version 2 of the FAQ to be published and disseminated to customers and potential customers as referred to in paragraph 21 above; 215.3 knew that version 1 and version 2 of the FAQ contained: 215.3.1the credit rating representations referred to in paragraphs 25 and 26; and 215.3.2the not bankruptcy representations referred to in paragraph 30; 215.4 knew the matters referred to in subparagraphs 27.1, 27.2, 28.1 and 28.2; and 215.5 knew the matters referred to in subparagraphs 19.2 to 19.8, and thereby 215.6 was directly or indirectly, knowingly concerned in, or party to, the contraventions of the Act by Fox Symes which are referred to in paragraphs 29 and 32 above. 216. Southon: 216.1 contributed to, or alternatively commented upon, the content of version 1 and version 2 of the FAQ referred to at paragraph 21 above; and 216.2 knew that it was published and disseminated to customers and potential customers as referred to in paragraph 21 above; 216.3 knew that version 1 and version 2 of the FAQ contained: 216.3.1the credit rating representations referred to in paragraphs 25 and 26; and 216.3.2the not bankruptcy representations referred to in paragraph 30; 216.4 knew the matters referred to in subparagraphs 27.1, 27.2, 28.1 and 28.2; and 216.5 knew the matters referred to in subparagraphs 19.2 to 19.8, and thereby 216.6 was directly or indirectly, knowingly concerned in, or party to, the contraventions of the Act by Fox Symes which are referred to in paragraphs 29 and 32 above.' 273 Section 75B of the Act provides: '(1) A reference in this Part to a person involved in a contravention of a provision of Part IV, IVA, IVB, V or VC, or of section 75AU or 75AYA, shall be read as a reference to a person who: … (c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention…' 274 The respondents submitted that before a person can be found to have contravened the Act for misleading or deceptive representations by virtue of complicity under s 75B, it is necessary to prove that the person had actual knowledge of the essential facts which constitute the contravention. 275 In Yorke v Lucas (1985) 158 CLR 661 at 667-668, Mason ACJ, Wilson, Deane and Dawson JJ said: 'A contravention of s. 52 involves conduct which is misleading or deceptive or likely to mislead or deceive and the conduct relied upon in this case consisted of the making of false representations. Whilst Lucas was aware of the representations - indeed they were made by him - he had no knowledge of their falsity and could not for that reason by said to have intentionally participated in the contravention.' 276 Their Honours later observe at 670: 'There can be no question that a person cannot be knowingly concerned in a contravention unless he has knowledge of the essential facts constituting the contravention…In the context of the paragraph, a person could only properly be said to be "party to" a "contravention" if his participation was in the context of knowledge of the essential facts constituting the particular contravention in question.' 277 The Full Court of the Federal Court recently reaffirmed the necessary pre-conditions to a case of accessorial liability under s 75B in Quinlivan v Australian Competition and Consumer Commission [2004] FCAFC 175 at [10]: 'Where the contravening conduct involves misrepresentation, whether as to a future matter or not, this principle requires actual knowledge by the accessorial respondent of the falsity of the representation. This is an essential matter which must be alleged and proved: Su v Direct Flights International Pty Ltd [1999] FCA 78 at [38], Fernandez v Glev Pty Ltd [2000] FCA 1859 at [18].' 278 In this case, the respondents say that the applicant does not plead that Mr Maher and Ms Southon were aware that the FAQ was being disseminated and had authored or contributed to the documents contents, but also that they knew the 'not bankruptcy' and 'credit rating' representations were false. 279 The applicant accepted that the respondents' proposition was correct. It also acknowledged that it would be necessary to plead that Mr Maher and Ms Southon knew that the statements referred to in paragraphs 22 and 23 carried the imputations pleaded in paragraphs 18 and 30. 280 In those circumstances, the ACCC accepted that it would need to re-address paragraphs 215 and 216. 281 It would be appropriate therefore to strike out paragraphs 215 and 216. 282 For the reasons I have already given, I would strike out paragraphs 16, 17, 18, 19, 20, 30-32, 89-91, 126-128, 162-164, 203-205, 213-214 and 215-216. 283 For the reasons I have already given in considering the respondents' application, it would be appropriate to allow the applicant one further opportunity to cure the defects in the pleadings if they can be cured. 284 As I have already indicated, some of the defects can be easily cured. In respect of paragraphs 16 and 17, it would be necessary to identify any further words in the advertisements or brochures which are relied upon for the purpose of the plea in paragraph 18. 285 If there are no further words relied upon then, necessarily, that plea must be omitted. 286 The applicant may elect not to further plead the matters in paragraphs 30-32 and the like paragraphs in paragraphs 89-91, 126-128, 162-164 and 203-205. That is a matter for the applicant. 287 The question of causation needs to be addressed in paragraphs 213-214. 288 The question of accessorial liability needs to be addressed generally in paragraphs 215-216. 289 There is a further reason why the applicant should be entitled to one further opportunity to amend these pleadings. 290 As I have already noted, even with the paragraphs to which I have referred struck out, there are other causes of action relating to each of the individual parties which survive. 291 Subject to an appropriate plea in damages and for relief, there is no reason why those causes of action cannot go forward. 292 In those circumstances, because the impugned causes of action arise out of the same facts and circumstances, the respondent would not be prejudiced except by way of costs, which I shall address, by allowing the applicant a further opportunity to replead these causes of action. 293 I will not give the applicant leave to file a further amended statement of claim at this stage. I will merely direct that if the applicant intends to seek leave to file a further statement of claim, such an application together with the proposed amended statement of claim, should be filed and served within 14 days. 294 The respondents have been largely successful on their application. The applicant must pay the respondents' costs. 295 I make the following orders: 1. Paragraphs 16, 17, 18, 19, 20, 30-32, 89-91, 126-128, 162-164, 203-205, 213-214 and 215-216 of the amended statement of claim filed on 15 November 2004 are struck out. 2. I direct the applicant, if the applicant be so advised to seek leave to file any further amended statement of claim, to file and serve a notice of motion together with the proposed amended statement of claim within 14 days. 3. The applicant to pay the respondents' costs.

I certify that the preceding two hundred and ninety five (295) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander.

Counsel for the Applicant: Mr P V Slattery QC

Solicitor for the Applicant: Australian Government Solicitor

Counsel for the First, Second and Third Respondents: Mr A J H Morris QC with Mr D L K Atkinson

Solicitor for the First, Second and Third Respondents: Johnson Winter and Slattery

Date of Hearing: 2 February 2005

Date of Judgment: 5 August 2005