E.3 Consideration of the defendants' arguments
102 The defendants' first argument, that the relevant conduct (providing the Client Protection Policy to clients in conjunction with a statement of advice) involved a separate and individual communication with each client, can be accepted as far as it goes. However, it does not follow that the communication of the Client Protection Policy was not to a "class of persons", nor that the method of analysis described in Campomar is inapplicable to the present case. Further, and in any event, the statutory prohibition of misleading or deceptive conduct does not draw any distinction between communications made to individuals and those made to groups such that, in the former case but not the latter, the plaintiff must show that the individuals were misled or deceived.
103 The defendants' second and third arguments about the purported difference in approach in cases involving communications to a group of persons and communications to individuals is based on a misunderstanding of what was decided in Campomar and related cases. Three points can be made. First, it can be observed that the statutory prohibitions against misleading or deceptive conduct are framed in simple terms and draw no distinction between communications to a group of persons and communications to individuals. The statutory provisions do not contemplate that a different legal test or standard should be applied depending on whether conduct involves a communication to a group of persons or to individuals, such that the latter case requires proof that the individual concerned was misled. Second, and as referred to above, the central issue raised by the statutory prohibitions is whether the impugned conduct, viewed as a whole, has a sufficient tendency to lead a person exposed to the conduct into error. Conduct is misleading or deceptive or likely to mislead or deceive if it has that tendency; it is not necessary to show that the conduct has had that effect (that is, that a person has in fact been misled). Third, Campomar explains that proof of that tendency will often differ depending on whether the conduct involves a communication to a group of persons or a communication to individuals. The High Court referred with approval (at [100]) to the observations of Deane and Fitzgerald JJ in Taco Bell (at 202) that, in cases involving express untrue representations made to identified individuals, the process of deciding whether the conduct was misleading or deceptive may be direct or uncomplicated. It was not suggested, however, that it was necessary to show that the individual concerned was actually misled. The High Court contrasted such cases with cases in which a representation is made to a wider group of persons, including the public or a section of it. The Court observed (at [101]) that in such cases, the sufficiency of the nexus between the conduct and the likelihood of misconception and error must be approached at a level of abstraction. The contrast drawn by the Court was not to the effect that, in the former case, it was necessary to prove that individuals were misled whereas, in the latter case, that was unnecessary. In both cases, it was only necessary to prove the sufficiency of the tendency of the conduct to lead people into error. However, proof of that tendency in the case of communications to a group is necessarily undertaken at a level of abstraction that is not present in the case of communications to an individual.
104 In support of their arguments, the defendants placed reliance on the statements of French CJ in Campbell at [26]-[28]. It is important to note that Campbell was an action for the recovery of loss and damage. Ultimately, the issues in dispute concerned causation of loss and damage and, in that case, whether the plaintiff was misled and suffered loss as a result. Understood in that context, nothing said by French CJ (at [26]-[28]) supports the defendants' arguments. At [26], his Honour discusses the practical distinction between the approach to characterising conduct as misleading or deceptive when the public is involved and where the conduct involves dealings between individuals. In the latter case, the state of knowledge of the individual may be relevant to the assessment of whether conduct is to be characterised as misleading or deceptive. That is because conduct may take on a different complexion depending on the course of dealings between individuals and mutual understanding about matters. His Honour does not suggest that a different legal test is applicable in the case of a communication to an individual such that, in order to prove that conduct is misleading or deceptive, it is necessary to prove that the individual was misled. His Honour's discussion at [27] and [28] concerns the proof of loss and damage by reason of the misleading conduct, which will often involve proof that the individual concerned was misled and suffered loss by acting in reliance on the misleading conduct. Those paragraphs provide no assistance to the defendants in this case.
105 The defendants' argument that there is no evidence that any individual client clicked on the electronic link to the Client Protection Policy or read the policy should be rejected for two reasons. First, for the reasons explained at [79] above, I infer that it is likely that a number of clients downloaded an electronic copy of the Client Protection Policy or received a paper copy and read the document or at least the Introductory Clause which would have assured them that the terms gave them the maximum protection available at law. Second, and in any event, I do not consider that it is necessary for ASIC to prove that one or more of the individual recipients of the Client Protection Policy read the policy. The misleading or deceptive conduct was complete, and the false or misleading representation was made, when Dover, through its authorised representatives, communicated the Client Protection Policy to clients in a manner that would be expected to bring the document to their attention: cf Thompson v Riley McKay Pty Ltd (No 2) (1980) 29 ALR 267 at 273 per Franki J and 276 per Deane J. In that case, which concerned a criminal prosecution for a contravention of s 53(a) of the Trade Practices Act 1974 (Cth) (the predecessor of s 29(1)(a) of the Australian Consumer Law and s 12DA(1) of the ASIC Act), Deane J observed (at 276):
It is implicit in the ordinary use of the word "represent" that there be an intended representee, to whom the relevant representation is directed. That intended representee may be an identified person, as in the case of a representation made to a particular person in a letter, or unidentified, as is commonly the case with a representation made in an advertisement to be disseminated by the mass media. There is not, however, implicit in the word "represent" any requirement that the representation actually reach, or be understood by, the intended representee. The act of representing is complete once the subject matter is irrevocably set forth or disseminated upon the course which is intended to lead to the intended representee or representees.
106 The defendants' fourth argument is that there is no evidence concerning the contents of the statements of advice that were provided to individual clients together with the Client Protection Policy. Therefore, the Court is unable to assess the Client Protection Policy in the context of the entire communication with the client. The defendants argue that the present circumstances are analogous to those considered by Barker J in Breast Check. Specifically, the defendants rely on his Honour's finding (at [101]) that, where each customer of Breast Check received a separate communication, at a separate point in time, following the provision of a breast imaging service to that particular customer that included a breast health report tailored to their particular circumstances, there was no single piece of conduct or representation made to all members of a class of persons.
107 In my view, the facts of this case are not analogous to those considered by Barker J in Breast Check. First, the relevant conduct in the present case involved the communication of a standard form document to a large number of people who were clients of Dover or its authorised representatives. Dover required its authorised representatives to send the Client Protection Policy to clients with each statement of advice. It can be accepted that each statement of advice was personal and individual to each client, but the applicable terms and conditions governing the contract between the adviser and the client were specified in the Client Protection Policy, which was in a standard form. Dover required its authorised representatives to include within each statement of advice a standardised provision (the Contract Conditions Clause) that had the effect of incorporating the Client Protection Policy as part of the contract between the adviser and the client. Dover instructed its authorised representatives to use a standardised Acceptance Clause when communicating a statement of advice to clients which required clients to confirm that they had accepted the additional conditions in Dover's Client Protection Policy. Second, and contrary to the defendants' argument, there is evidence before the Court concerning the format of the statements of advice that were provided to clients. Mr McMaster's emails of 25 and 29 September 2015 each attached a sample statement of advice, the latter being based on an actual statement of advice that had been given to a client but the personal details had been altered. There is nothing in those sample statements of advice that in any way qualifies or modifies the Client Protection Policy. Further, there is no reason to infer that a statement of advice would attempt to qualify or modify the Client Protection Policy or would be likely to do so. The evidence establishes that the Client Protection Policy was a standard form document required to be sent to clients together with each statement of advice. The Client Protection Policy served a different purpose and function to the statements of advice; it set out the terms and conditions of the contract between the adviser and the client. Having regard to the form and content of the Client Protection Policy, and the standard clauses by which it was required to be incorporated into the statement of advice, I do not accept the defendants' submission that the statement of advice may have qualified or overridden the Client Protection Policy. Given the evidence adduced by ASIC, the evidentiary onus shifted to the defendants to prove that, in individual circumstances, a statement of advice may have overridden or qualified the Client Protection Policy. No such evidence was adduced by the defendants.
108 The mode of analysis described by the High Court in Campomar is an appropriate method by which to assess whether Dover's conduct was misleading or deceptive. The relevant communication was in a standard form. The persons to whom the Client Protection Policy was sent were large in number. They share the common characteristic of being retail clients of Dover and its authorised representatives, although they are likely to vary in age, gender, wealth and education. It is both necessary and appropriate, in assessing Dover's conduct by reference to the statutory prohibitions, to consider the effect of the conduct on an ordinary or reasonable member of that class of persons. As observed by Finkelstein J in .au Domain Administration Ltd v Domain Names Australia Pty Ltd (2004) 207 ALR 521 (appeal dismissed in Domain Names Australia Pty Ltd v .au Domain Administration Ltd (2004) 139 FCR 215) at [18]:
There can be no doubt that when the impeached conduct is directed towards an indeterminate group or to a group defined by general or collective criteria the case should be treated as one involving a representation to the public at large or to a section or class of consumer. It seems that the same approach should be followed when the case involves a representation to an identifiable group and the plaintiff is alleging not that he was misled but that members of the group (whether great or small in number) were misled by the conduct. In Elders Trustee and Executor Co Ltd v E G Reeves Pty Ltd (1987) 78 ALR 193, 241 Gummow J indicated that he would treat this type of claim as a "representation to the public" case. This approach, which is the approach I propose to adopt, invites attention to the nature of the claim and not the identity of the person to whom the representation is directed.
109 The defendants' fifth argument that there was no evidence as to the characteristics of the clients who received the Client Protection Policy, and that as a consequence the Court is unable to undertake the task required of it as described in Campomar, should also be rejected. The evidence adduced by ASIC establishes the general context in which the policy was provided to clients. First, Dover held an Australian financial services licence that authorised it to provide financial product advice for a range of standard financial products described in the licence and to deal in a financial product on behalf of another person, again in respect of a range of standard financial products. Second, the defendants admitted that the Client Protection Policy was sent to some 19,402 clients together with a statement of advice in the relevant period. I infer from that fact that the clients of Dover and its authorised representatives were likely to be individuals rather than businesses. Third, the fact that the Client Protection Policy was sent with statements of advice indicates that the recipients were retail clients for the purposes of the Corporations Act. A person is not a retail client if the client is a sophisticated investor in the sense of having previous experience in using financial services and investing in financial products. Accordingly, I infer that the recipients of the Client Protection Policy were not sophisticated investors but ordinary members of the public who needed and sought financial advice. In my view, the foregoing facts are sufficient to assess whether the provision of the Client Protection Policy involved misleading or deceptive conduct.
110 Finally, I reject the defendants' sixth argument that the Introductory Clause in the Client Protection Policy was a statement of opinion, not a statement of fact, and that ASIC had to show that that opinion was not honestly and reasonably held. In the context of the law prohibiting misleading and deceptive conduct, characterising a statement as one of fact or opinion is part of the task of determining whether the statement is likely to mislead or deceive. Whether a statement should be characterised as one of fact or opinion depends upon the words used and what is likely to be understood by the recipients of the communication: Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1 at 26-27 per Foster J and 46-47 per Hill J. In that case, Hill J observed:
No case will forward a guide to any other case, since it must essentially be a question of fact whether a particular formulation of words expresses merely an opinion or a statement of fact. However, two observations may be made. First, the subjective purpose or motivation of the maker of the statement will not be of much significance. It is the reader's perception of the maker's intention which will ordinarily be the significant matter. The question will generally be resolved by looking to the persons to whom the statement was directed and asking whether any members of that class of persons would reasonably understand the statement to be one of fact or of opinion.
Where, as here, the statement is directed to the public at large, it must be borne in mind that the class of persons will include the intelligent and the less intelligent, the informed and the less informed. The fact that some members of the class may perceive the statement as one of opinion will not avail a respondent if a not insignificant class of persons could reasonably be expected to perceive it as a statement of fact.
Secondly, a statement will most usually be seen as a statement of fact if it is one which can be measured against an objective criterion. Thus, generally, where no objective criterion exists, so that of necessity what is said must depend upon judgment or opinion, the statement will be seen not as a statement of fact but as one of opinion.
111 The same approach was taken by the plurality in Forrest v ASIC (2012) 247 CLR 486 (at [31] and [33]):
…it is ultimately unprofitable to attempt to classify the statement according to some taxonomy, no matter whether that taxonomy adopts as its relevant classes fact and opinion, fact and law, or some mixture of these classes. It is necessary instead to examine more closely and identify more precisely what it is that the impugned statements conveyed to their audience.
112 If a statement is likely to be understood by recipients as one of opinion, it follows that the recipients would understand that the statement only reflects the speaker's belief in the statement, not that the matter stated is necessarily true. In some circumstances, a statement of opinion might also convey an implied representation that the speaker had reasonable grounds for making the statement, but that will not always be the case: Global Sportsman at 88.
113 In an abstract sense, a wide range of statements might be characterised as opinions, not facts. This includes statements about scientific matters, where a statement may reflect a widely accepted view about a matter but, strictly speaking, the statement is one of opinion. It is equally true that, at a certain level of abstraction, every statement about the law or legal rights can be characterised as an opinion. Ultimately, though, the relevant question for the purposes of the prohibition against misleading and deceptive conduct is: what would be understood by the recipient of the communication? In my view, clients receiving the Client Protection Policy would be likely to understand the Introductory Clause as a statement of fact for the following reasons:
(a) the statement is made in emphatic terms, and is not qualified by express words of opinion or belief;
(b) the statement is contained in a contractual or quasi-contractual document, not in an advisory document;
(c) the statement is made by a commercial supplier of financial services, not by a lawyer; and
(d) the statement is received by a retail client seeking financial advice.
114 In those circumstances, I consider that a reasonable recipient of the Client Protection Policy would understand the statement, that the policy sets out a number of important consumer protections designed to ensure every Dover client gets the maximum protection available under the law, to be a statement of fact and not merely a statement as to Dover's belief.