Cassidy v Saatchi & Saatchi Australia Pty Ltd - [2004] FCAFC 34 - FCAFC 2004 case summary — Zoe

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Cassidy v Saatchi & Saatchi Australia Pty Ltd

[2004] FCAFC 34

Federal Court of Australia (Full Court)|2004-02-25|Before: Stone JJ, Mansfield JJ

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Court

Federal Court of Australia (Full Court)

Decision date

2004-02-25

Before

Stone JJ, Mansfield JJ

Source

Original judgment source is linked above.

Judgment (30 paragraphs)

[1]

MOORE AND MANSFIELD JJ 1 This appeal deals with the question of whether an advertising agency which creates and prepares an advertisement for a client, using its skill to convey a representation that when made will be misleading, contravenes s 12DA of the Australian Securities & Investments Commission Act 2001 (Cth) (the new ASIC Act) as a principal, when its client has final approval of the form of the advertisement and its client arranges for the publication of the advertisement. 2 The appellants describe the question as giving rise to an issue of principle. In a sense, that is correct. But the stating of the question demonstrates that the issue of principle must be addressed upon the evidence in each particular case. There may be nuances of circumstances which inform the outcome of any particular proceeding. The appellants contend that the appeal requires consideration to be given to the meaning of the words 'engage in conduct … that is misleading or deceptive' in s 12DA of the new ASIC Act. The expression is of course also used in s 52 of the Trade Practices Act 1974 (Cth) (the TP Act). 3 For the reasons given below, in the circumstances of this matter, we have reached the view that the respondent did not contravene s 12DA(1) of the new ASIC Act in the manner alleged, and that the appeal should be dismissed.

[2]

the facts 4 The facts are not now contentious. The following recitation of the facts is taken from the reasons for decision of the learned judge at first instance. 5 The respondent provided advertising services to NRMA Ltd (NRMA) from about 1993. The relationship between the respondent and NRMA was recorded in an agency agreement entered into in September 1998. 6 The practice which was then followed when NRMA wanted the respondent to develop an advertising campaign was to send to the respondent a 'communications brief' which contained essential information about the campaign which NRMA wanted the respondent to develop. The next step was for the respondent to prepare an 'ideas brief' for NRMA, setting out the approach which it proposed to take in creating a suitable advertisement for the campaign. If NRMA approved the ideas brief, the respondent's creative personnel would then prepare and design the advertisements in accordance with the concepts set out in the ideas brief. Its creative team would prepare drafts, which were sent to NRMA for approval. There would commonly be an exchange of comments between the parties before NRMA gave its final approval to the form of the advertisement. Draft advertisements were reviewed by the marketing personnel of NRMA, that is, those who had issued the campaign instructions, and by its in-house legal advisers. 7 Those various steps were followed in the present case. The in-house solicitor for NRMA approved the final draft advertisements submitted to NRMA by the respondent, and the respondent was aware of that. 8 In July and August 2001, NRMA ran a series of newspaper advertisements for a new health insurance product under the caption 'Closing the Gap'. The substance of the advertisements was that pregnant women would be able to have their babies delivered without making any payment for hospitalisation or medical expenses. The advertisements stated that NRMA would make every payment for its fund members irrespective of how advanced the pregnancy was at the time when the mother joined the fund. There were provisos in small print to the advertisements. A pregnant woman was fully covered only after payment of any policy excess or 'co-payment'. Women who were pregnant at the time of joining the fund were required to have completed a 12 month waiting period with NRMA or with their existing fund. 9 The respondent did not place the advertisements in the newspapers for NRMA. A separate company Zenith Media Pty Ltd (Zenith), unrelated to the respondent, was engaged by NRMA to decide in which publications the advertisements were to appear. Then Zenith purchased the necessary space in the publications on behalf of NRMA. Each of the published advertisements had the name 'Saatchi' followed by the respondent's 'key number' in its bottom right hand corner, immediately after the provisos which referred to the policy excess and co-payment. Its name and key number were in even smaller font than the provisos. The key number was a unique identification number to ensure the correct advertisement was published as arranged by Zenith. 10 It is not disputed that the advertisements contained representations which were misleading. NRMA consented to declarations that it had breached s 12DA of the new ASIC Act. The respondent also formally admitted that the advertisements contained representations that were misleading. What the respondent disputed was that the representations were made by it. The respondent says, in the written outline of argument of its senior counsel, that it did no more than prepare the advertisement for NRMA in the knowledge that, if approved, they would be likely to be published as part of an advertising campaign. The respondent did not approve the advertisements or authorise or arrange for their publication. There is no claim that the respondent aided or abetted the contravention by its principal of s 12DA of the new ASIC Act or that it was knowingly concerned in the contravention of s 12DA by its principal.

[3]

THE DECISION AT FIRST INSTANCE 11 Section 12DA(1) of the new ASIC Act provides that a corporation must not in trade or commerce engage in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive. Apart from it applying only to conduct in relation to financial services, s 12DA(1) corresponds with s 52(1) of the TP Act. There is no direct overlap of the operation of those provisions. Section 51AF of the TP Act makes it clear that Part V of the TP Act, including s 52, does not apply to the supply, or possible supply, of financial services or to conduct in relation to financial services. 12 Section 12GD(1) of the new ASIC Act deals with accessorial liability. In relevant respects, it is also to the same effect as s 75B of the TP Act. However, the appellants did not seek to establish that the respondent's conduct engaged s 12GD(1). The case presented by the appellants was that the respondent as principal, by its conduct, contravened s 12DA(1) by making misrepresentations that NRMA would make all payments of hospital and medical expenses for the delivery of babies for pregnant mothers who were members of the NRMA Fund. 13 The learned judge at first instance identified the issue as being whether there were facts which brought home to the relevant section of the public that the respondent made the misrepresentations. His Honour pointed out that in Taco Company of Australia Ltd v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202 Deane and Fitzgerald JJ said that whether or not conduct amounts to a misrepresentation is a question of fact to be decided by considering what is said and what is done against the background of all relevant surrounding circumstances. 14 His Honour then concluded that the advertisements did not convey to the relevant section of the public that the misrepresentations they contained were made by the respondent. They were clearly advertisements of NRMA making (what came to be accepted as) misrepresentations. The size of the printed name of the respondent and its key number, relative to the size of other print on the advertisements, and the impression created by a fair reading of the advertisements, did not convert the advertisements into joint advertisements of NRMA and the respondent, and would not give any such impression to the relevant section of the public. 15 Consideration of cases involving criminal prosecutions for contravention of s 53 of the TP Act, generally relating to the making in trade or commerce of false representations about the quality of goods or services, fortified the learned judge at first instance in those views. The cases referred to were Universal Telecasters (Qld) Ltd v Guthrie (1978) 18 ALR 531 (Bowen CJ, Nimmo and Franki JJ) (Universal Telecasters); Thompson v Riley McKay Pty Ltd (1980) 29 ALR 267 (Deane J); Barton v Croner Trading Pty Ltd (1984) 3 FCR 95 (Bowen CJ, Beaumont and Wilcox JJ) (Barton); Gardam v George Wills & Co Ltd (1988) 82 ALR 415 (French J) (Gardam); and Brown v Jam Factory Pty Ltd (1981) 35 ALR 79 (Fox J). 16 His Honour did not find much assistance from the analogy which senior counsel for the appellants sought to draw from the law of defamation both at trial and on appeal, namely that those who are accessory to the publication of a libel are considered to be principals in the act of publication: see e.g. Webb v Bloch (1928) 41 CLR 331 at 363-366 per Isaacs J. Jacobson J at first instance explained: 'It seems to me that the Act and the TPA contain a statutory scheme which, in subdivisions D and G of the Act, and, in particular ss 12DA, 12DB, 12GB, 12GD, 12GF and 12GM, distinguish between principal liability and accessorial liability. The same scheme is to be found in Part V and Part VI of the TPA and, in particular, ss 52, 53, 75B, 79, 80, 82 and 87 of the TPA. As part of this statutory scheme, s 12DA of the Act and s 52 of the TPA, if contravened, may result in remedies irrespective of the principal's state of mind. By contrast, accessorial liability under s 12GD of the Act and under ss 75B and 80 of the TPA is imposed only upon those who are knowingly concerned in the contravention of the Act. … In my view, it follows from this that the scheme of the legislation under both the Act and the TPA is inconsistent with the basis upon which accessories to a libellous publication may be treated as principals for the purpose of imposing liability under the law of defamation.' 17 Accordingly, the application was dismissed with costs.

[4]

consideration of contentions 18 The appellants first attributed to the learned judge at first instance the reasoning that the respondent was not liable as a principal contravener but was liable as an accessory because there were provisions in both the new ASIC Act and the TP Act which deal with accessorial liability. Then they contend there are errors in so reasoning. 19 It is convenient to deal with that contention immediately. We do not consider the learned judge at first instance did adopt that process of reasoning. His Honour observed that the appellants' claim was that the respondent was liable as a principal contravener of s 12DA(1) of the new ASIC Act, and that there was no claim that it was liable as an accessory by reason of s 12GD(1). His Honour did not conclude that the respondent was, or if the claim was made against it on that basis would have been, liable as an accessory. That claim was not made. It was not addressed by his Honour because he did not need to do so. He did not reason, as asserted, that because s 12GD(1) provided for circumstances in which accessorial liability could arise, the respondent was not liable as a principal contravener of s 12DA(1). 20 In our judgment, the learned judge at first instance correctly addressed the question as being whether the respondent made the representation (which is now acknowledged as having been misleading). 21 The case pleaded by the appellants was that the conduct of the respondent resulted in it making the false representations. Paragraph 38 of the Second Further Amended Statement of Claim included the allegation that the respondent arranged for the misleading advertisements to be published. It was not found to have done so. The alternative pleas in pars 38A, 38B and 38C were that the respondent made the false representations either because it was the natural and probable consequence of its creation and development of the advertisements that they would be published, or because it provided the advertisements to NRMA so that NRMA would publish them. 22 It is then pleaded in par 39: 'By engaging in the conduct referred to in paragraphs 38, 38A, 38B and 38C above, (the respondent) made one or more of the (misrepresentations).' The conclusion in par 48 of the Second Further Amended Statement of Claim is that, by reason of those factual matters, the respondent in trade or commerce in relation to financial services engaged in conduct that was misleading and deceptive in contravention of s 12DA(1) of the new ASIC Act. 23 It was precisely that case which his Honour addressed. He said: 'The case was pleaded and conducted upon the footing that Saatchi engaged in misleading conduct by making misrepresentations that the NRMA companies would make all payments of hospital and medical expenses for the delivery of babies for pregnant mothers who were members of the fund. Thus, as stated above, the only issue is whether Saatchi made that misrepresentation.' 24 He considered whether the respondent made the misrepresentations, by having created the advertisements with the intention or knowledge that they would (subject to the approval of the NRMA in-house legal advisers) later be published by NRMA by placing or causing them to be placed in newspapers. That is the conduct which, the appellants alleged, amounted to a contravention of s 12DA(1). 25 It is then necessary to consider whether the learned judge at first instance erred, as contended, in the way in which he addressed that question. The appellant contended his Honour had erred because: (1) he reasoned by analogy with cases concerning contraventions of s 53 of the TP Act that it was necessary that the respondent had made the misrepresentations, and had considered that only one person or entity (in this instance NRMA) could be the maker of the misrepresentation; (2) he failed to apply the common law test as to when a person or entity has made or published a defamatory statement to determine whether the respondent had made the misrepresentations; (3) in any event, the findings of fact should have lead to the conclusion that the respondent had contravened s 12DA(1) by itself making the misrepresentations. 26 His Honour said: '… the question of who made the misrepresentation must also be a question of fact to be decided by considering the form and content of the advertisement. The role of Saatchi as the advertising agency, which created the advertisement, can only be a relevant surrounding circumstance, in my view, if there were facts, which were brought home to the relevant section of the public that would establish that Saatchi made the alleged misrepresentations. In my view, there is nothing in the advertisement, which could possibly convey to the relevant section of the public that the representation was made by Saatchi. It seems to me to be clear that anyone reading the advertisement would read it as the NRMA companies' advertisement. That is the view, which I take of the advertisement when considering it objectively.' 27 The learned judge at first instance correctly identified the misleading conduct as the making of the representations to the public. He addressed whether the respondent had engaged in that conduct in the circumstances. There were two alternative bases upon which he considered the respondent may have made the misrepresentations in the circumstances. 28 The first was that on an objective reading of the advertisement the respondent presented itself as the (or one of the) makers of the misrepresentations by the use of its name or other identifying material. He concluded as a fact that it had not done so, because the advertisements did not convey to the relevant section of the public that the representations were made by the respondent. In reaching that view, his Honour considered the terms of the advertisements, the respondent's role in their preparation, the significance of the respondent's name and key number appearing on the advertisements, and the evidence of the only consumer who was presented by the appellants. We do not consider his Honour's analysis of the relevant evidence, or the conclusion he reached, is shown to be erroneous. On one view, it may be thought his Honour was suggesting at [32] of his reasons that the mere fact that the relevant section of the public did not understand the representation to have been made by the respondent could be determinative of the question of whether the respondent engaged in the impugned conduct as pleaded. However, we doubt that this is what his Honour meant. His Honour's underlying approach was seemingly to consider how the advertisement was understood as one factor, in the factual matrix established by the evidence, which pointed to the respondent not having contravened s 12DA as alleged in the pleadings. 29 The other alternative was that the respondent made the representations by reason of its preparation of the advertisements and by providing them to NRMA expecting that NRMA would publish them or knowing that it was the natural and probable consequence of their preparation that they would be published. It was in relation to that aspect that the learned trial judge addressed the cases under s 53 of the TP Act. He regarded those cases as supporting his view about who made the misrepresentations. Their relevance, he considered, arose because the appellants claimed that the respondent had made the misrepresentations. 30 In the context of this particular case, we do not consider the learned judge at first instance erred in the use to which he put cases decided under s 53 of the TP Act. His Honour recognised that s 53 concerns the 'making' of misleading statements, whereas s 52 of the TP Act and s 12DA(1) of the new ASIC Act prescribe a norm of conduct the contravention of which does not give rise to criminal liability (cf Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 86-87, and 89-91). Their relevance, as his Honour said, was because the case was pleaded and conducted upon the footing that the respondent made the representations. 31 There can clearly be more than one publisher of misleading information. Hence, until the introduction of s 65A to the TP Act, both the advertiser and the publisher of the newspaper in which the advertisement appeared could contravene s 52 of the TP Act: See e.g. Global Sportsman; Australian Ocean Line Pty Ltd v West Australian Newspapers Ltd (1983) 66 FLR 453. Section 65A now protects media publishers from the application of ss 52 and 53 of the TP Act in certain circumstances, although it does not apply in relation to the publication of an advertisement: s 65A(1)(b). In such cases, s 85(3) may provide protection to the media publisher. The analogue of s 65A in the new ASIC Act is s 12DN. But the learned judge at first instance did not misapprehend those matters. He was called upon to address, and did address, whether the respondent made (or was one of the persons or entities which made) the misrepresentations. 32 Senior counsel for the appellants also contended, as was put at first instance, that the respondent is a publisher of the misleading advertisements by reason of its role in their preparation, intending that they would be published. The analogy was sought to be drawn with those liable for the publication of defamatory material, for instance as explained by Isaacs J in Webb v Bloch at 363-366. 33 We do not consider his Honour was wrong to reject that analogy. His reasons are encapsulated in the passage from his reasons set out in [16] above. 34 That passage illustrates that his Honour's reference to accessorial liability was not for the purpose asserted by the appellants and addressed earlier in these reasons. It was to explain why his Honour did not accept the contention of the appellants that the applicability of s 12DA(1) should be informed by drawing an analogy from the common law as to when a person is liable for having published defamatory material. We respectfully agree with his Honour's reasons. 35 To determine whether the respondent had contravened s 12DA(1) of the new ASIC Act in the way alleged by the appellants, it was necessary for his Honour to have considered the terms of s 12DA(1), the context in which they appear, and other relevant provisions of the new ASIC Act. It was appropriate to address how the analogous provisions in the TP Act have been construed, to assist in addressing the appellant's contentions. It would have been remiss simply to adopt the common law concept of who may be liable for having published defamatory material without addressing the proper construction of s 12DA(1). As his Honour concluded, it is apparent from a consideration of s 12DA(1), its context, and other relevant provisions of the new ASIC Act that the adoption of those concepts into s 12DA(1) of the new ASIC Act would be inappropriate. 36 Senior counsel for the appellants acknowledged also that it was the publication of the advertisements which perfected the contravention of s 12DA(1) on the case that had been pleaded. That is, until the publication of the advertisements, there had been no contravention of s 12DA(1) because, until the publication, no entity had engaged in conduct that was misleading or deceptive. 37 As noted above, it has long been recognised that two entities may each contravene s 52 or other provisions of Pt 5 of the TP Act by simultaneously engaging in conduct which is misleading or deceptive or which otherwise contravenes a provision of Pt 5 of the TP Act. 38 The learned judge at first instance did not overlook that. His consideration of the cases referred to in [15] included consideration of the circumstances in which there may be two or more persons or entities which make a misleading statement. Universal Telecasters required the Full Court to address that very issue, including the scope of the word 'make' in s 53(e) of the TP Act: per Bowen CJ at 532-534; Nimmo J at 538-539; and Franki J at 547. Each concluded that the television station which played a misleading advertisement made the misleading statement in the advertisement, as well as the publisher. As the judge at first instance pointed out, Nimmo J at 539 specifically rejected the suggestion that the mere preparation by an advertising agency of a misleading advertisement constitutes the making of a misleading statement. 39 The judge at first instance drew from that case the proposition that an advertising agent who prepares an advertisement for a client does not make a representation under s 53 of the TP Act unless, in addition, either the advertising agent actually disseminates the advertisement or the advertisement is in terms which identifies the advertising agent as its (or one of its) publishers. He did not treat those propositions as definitive and conclusive. As he later said, whether the respondent in this case made the misleading statements depends upon all the circumstances. It would also depend on the case as pleaded. His Honour's reference to Barton, where the Full Court held a wholesaler had made misleading representations to the public, at the point at which the products which contained misleading label information were displayed for sale by retailer, further demonstrates the need to look to all the relevant circumstances. The wholesaler was described there by Bowen CJ, Beaumont and Wilcox JJ at 107 as having chosen the retailer as the vehicle for communicating the label representations to the public. French J in Gardam reached a similar conclusion in relation to a wholesaler's labelling. His Honour at 427 also said that whether the wholesaler has made the false representation is a question of fact in each case. 40 In our judgment, the learned judge a first instance correctly described the issue of the application, as described by the appellants, as involving a question of fact to be determined in the light of all the relevant circumstances and the pleadings. His Honour, in reaching his conclusion at first instance, has not been shown to have misunderstood the appellants' case, or to have misapplied the law. His Honour's decision of fact is one which was readily open to him, and one with which in the circumstances we respectfully agree. 41 We would therefore dismiss the appeal with costs. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Moore & Mansfield.

[8]

Introduction 42 This is an appeal from a judgment of Jacobson J in Cassidy v Nrma Health Pty Ltd [2002] FCA 1228, delivered on 3 October 2002. His Honour, inter alia, found that Saatchi & Saatchi Australia Pty Ltd ('Saatchi') was not liable as a principal for advertisements which it created and developed for NRMA Health Pty Limited and NRMA Insurance Limited ('NRMA'), notwithstanding that those advertisements contained representations that were misleading or deceptive or likely to mislead or deceive. The advertisements in question were published in newspapers between 11 July and 19 August 2000 and contained representations about insurance cover for pregnant women that were qualified by small print provisos. 43 The first instance application, filed on 5 November 2001, purported to be brought under the Australian Securities and Investments Commission Act 1989 (Cth). That legislation was superseded by the Australian Securities and Investments Commission Act 2001 (Cth) ('ASIC Act') which commenced on 15 July 2001. In any event, the learned primary judge quite rightly dealt with the application in terms of the ASIC Act; see the transitional provisions at s 276. The relevant provision of the ASIC Act is: '12DA (1) A person must not, in trade or commerce, engage in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive.' 44 Section 12DA of the ASIC Act is analogous to s 52 of the Trade Practices Act 1974 (Cth) ('TPA'). The principles (and case law) applicable to contraventions of Part V of the TPA are also applicable to determining whether there has been a contravention of the analogous provisions of the ASIC Act. 45 It is not in dispute that NRMA made the representations in the advertisements and by doing so engaged in conduct that was misleading or deceptive or likely to mislead or deceive. No claim was made that Saatchi aided or abetted the contravention of s 12DA by NRMA and for this reason it is not necessary to consider the concept of accessorial liability under s 12GD(1) of the ASIC Act. The respondent alleges however, that Saatchi's role in the creation and development of the advertisements was such that it engaged in contravening conduct as a principal and is liable as such. 46 Saatchi admits that the advertisements were misleading but denies that the representations in the advertisements were made by it. As the primary judge said at [7] , 'the only issue which arises is whether Saatchi is liable as a principal for making misleading representations in the advertisements.'

[19]

Publication of the advertisements 49 The appellant's argument that Saatchi engaged in conduct which is prohibited by s 12DA of the ASIC Act is primarily predicated on the assertion that Saatchi itself was the publisher of the misleading representations in the advertisements and therefore a party to those representations. 50 In Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 55 ALR 25 at 32-3 ('Global Sportsman'), the Full Court stated, '…it is possible to conclude that the publication of incorrect information may constitute conduct which is misleading or deceptive or likely to mislead or deceive within the meaning of s 52(1) of the [TPA]; but will only do so if the conduct contains or conveys a misrepresentation. Obviously, in the determination of that question, the meaning of the words published will be of considerable importance. It is important to emphasize that the meaning is to be determined by reference to what is published by the corporation, and that the ultimate task is to determine whether its conduct in publishing the words is misleading or deceptive or likely to mislead or deceive.' 51 In their submissions (both written and oral) the appellants have concentrated on the question of publication and have argued that the principles that determine involvement in publication for the law of defamation are determinative of the issue in this appeal. In my view, in doing so they have substituted the question of whether the respondent published the advertisements in question for the true issue in this proceeding. 52 Though the issue of publication may well be relevant, it is important to keep firmly in mind the issue that this Court is asked to decide. It is not whether the advertisements were misleading (that is conceded) or what part Saatchi played in the creation, development and publication of the advertisements (that is not in dispute) or even whether that amounted to publication of the advertisements. The issue is whether the conduct that Saatchi admittedly engaged in (summarised at [47] above) was misleading or deceptive or likely to mislead or deceive. 53 NRMA published the representations complained of and was therefore liable as a principal under s 12DA of the ASIC Act. However, NRMA's liability does not preclude Saatchi also having made the same representations as a co-principal; Global Sportsman; Dow Jones & Co Inc v Gutnick (2002) 210 CLR 575 at 580 ('Dow Jones'). The question is whether it did make these representations. 54 In Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202, Deane and Fitzgerald JJ held that conduct could not be misleading or deceptive unless 'it contains or conveys, in all the circumstances, a misrepresentation'. Their Honours added '... whether or not conduct amounts to a misrepresentation is a question of fact to be decided by considering what is said and done against the background of all surrounding circumstances.'

[23]

(c) on NRMA's instructions forwarded the advertisements to a newspaper publisher that had been independently engaged by NRMA through a media buyer, Zenith Media Pty Ltd ('Zenith'). By these submissions Saatchi also denies that it adopted the representations as its own. This issue is discussed below at [62] - [64]. 56 In support of their submission that Saatchi should be liable as a principal by way of its role as publisher, the appellants point out that at common law more than one party can be liable for 'publishing' a defamatory article; Dow Jones. Those parties may include parties who intentionally lend assistance to the existence of the matter complained of; Webb v Bloch (1929) 41 CLR 331. The appellants submit that the primary judge, at [22] of his reasons, erred in his characterisation of the common law rule treating the issue as one involving accessory liability rather than treating the parties as joint tortfeasors both of whom incur principal liability as explained in Thompson v Australian Capital Television Pty Limited (1996) 186 CLR 574 at 580-1. 57 In my view that submission misinterprets the learned primary judge's comment but, in any event, the invitation to apply directly principles developed in the context of defamation is misconceived. I accept that principles of common law may provide useful guidance in relation to some aspects of the consumer protection provisions of the TPA andthe ASIC Act. For instance, the common law of damages in respect of tort or breach of contract has been accepted as relevant, but not determinative, to the assessment of damages under s 82 of the TPA; Henville v Walker (2001) 206 CLR 459. There are, however, important limitations to this approach. In an oft quoted passage from Brown v Jam Factory Pty Ltd (1991) 35 ALR 79 Fox J said, at 86: 'Section 52(1) is a comprehensive provision of wide impact, which does not adopt the language of any common law cause of action. It does not purport to create liability at all; rather does it establish a norm of conduct, failure to observe which has the consequences provided for elsewhere in the same statute, or under the general law…. In my view effect should be given to the ordinary meaning of the words used. They should not be qualified or (if it be possible) expanded, by reference to established common law principles of liability.' (emphasis added) 58 The learned primary judge recognised these limitations and, in my view, was correct in rejecting the invitation to apply defamation principles to the matter in hand. In a passage at [69] with which I respectfully agree, his Honour said: 'The law of defamation has been moulded and developed as part of the common law over some hundreds of years. Defences have been established which ameliorate the apparently harsh general principle that all who participate in publication of a libel do so as principals … An example of one of the defences is innocent publication. … There are other defences such as 'qualified privilege', the precise variations and bases of which are familiar only to those who practice regularly in that field.' 59 Like his Honour, I also attach importance to the structure of the statutory scheme which distinguishes between principal and accessorial liability, imposes liability irrespective of the principal's state of mind and limits accessorial liability to a person who was 'knowingly concerned' in the contravening conduct of the principal. I accept the submission of senior counsel for Saatchi that, such a scheme: '… simply allows no room for the operation by analogy of a common law rule which treats as prima facie liable as principals "all who are in any degree accessory to the publication" of a defamatory statement … in a context in which the harshness of the rule is ameliorated by the availability to each of a multitude of potential defences (including the defence of "innocent dissemination": …' 60 Having considered the circumstances here, the primary judge held that the misleading representations contained in the advertisements were made by NRMA and not by Saatchi. His Honour relied on the view expressed by Deane J in Thompson v Riley McKay Pty Ltd (1980) 29 ALR 267 at 277: 'Where, as in ordinary conversation, the initial making of the statement of fact itself constitutes the method by which it is destined to reach the intended representee, the making of the statement will itself amount to a representation. Where, however, the initial making of the statement of fact is but a step in a process which is intended to lead up to the ultimate means of communication to the intended representee or representees, the making of the statement will not, in itself, constitute a representation until the statement of fact is set forth or disseminated upon the path of actual communication to the intended representee or representees. Thus, a statement of fact in the oral notes of a speech will not amount to a representation until the speech is actually delivered.' 61 Jacobson J viewed the role of Saatchi as analogous to that of a speech writer and said, at [52] - [53]: 'It was the NRMA companies who took the step, through their agent, Zenith, of disseminating the advertisement upon the path of actual communication to the intended representees. Saatchi prepared the "bullet", but it was the NRMA companies, which took the step of disseminating it. Saatchi did not disseminate the advertisement because it carefully structured its role so that, at each stage, it went back to its client, the NRMA companies, leaving them to make the ultimate decision to go forward with the act of dissemination of the advertisement.

[24]

Even if it is correct to describe Saatchi as the NRMA companies' agent for the purpose of preparation of the advertisement, the agent did not make a representation on behalf of its principals. It was the principals acting through a different agent, Zenith, who distributed or disseminated the advertisement.' 62 The appellants also submitted that the fact that Saatchi's name was mentioned in the advertisements was sufficient to identify Saatchi as a co-publisher of the representations made by NRMA. The primary judge described, at [15] of his reasons, the way in which Saatchi's name appeared in each advertisement: 'Each of the published advertisements had the name "Saatchi" followed by Saatchi's "key number" in the bottom right hand corner of the advertisement immediately after the provisos, which referred to the policy excess and co-payment. The name "Saatchi's" and the key number were in even smaller font than the provisos. Mr Leppard's unchallenged evidence was that the key number was a unique identification number assigned by Saatchi to the job. The purpose of the key number was to identify the advertisement, which was to be published so as to ensure that it found its way to the correct edition of the newspaper. Mr Leppard said that this was important because there were slight variations in the form of the advertisement for publication in different States of Australia.' 63 The learned primary judge did not accept that the appearance of the Saatchi name at the bottom of the advertisement was sufficient to convert the advertisement into a joint representation by NRMA and Saatchi. In their written submissions the appellants criticised the following comment made by the primary judge at [32] of his Honour's reasons: 'In my view, there is nothing in the advertisement, which could possibly convey to the relevant section of the public that the representation was made by Saatchi. It seems to me to be clear that anyone reading the advertisement would read it as the NRMA companies' advertisement. That is the view, which I take of the advertisement when considering it objectively.'

[25]

The appellants used the following example to support their claim that his Honour's comment could not be correct: '[A]ssume A has a contract with B to manufacture Vitamin C tablets packaged in bottles and labelled as if they had been manufactured by B. In fact, because of an innocent mistake in A's factory, the contents of the bottles are not Vitamin C tablets but cyanide tablets. If the Judge's view is correct, because A has disguised, in accordance with the contract, the fact that it had any role in the manufacturing process, it cannot be a principal liable in respect of a breach of s 52; only B can be so liable because the label had "… nothing … which could possibly convey to the relevant section of the public that the representation was made by …" A.' 64 With respect, the example is not analogous in that, by hypothesis, A has control of the process of manufacture and the misleading element (the pills being other than as represented on the label) has stemmed solely from the conduct of A. In the example it is not necessary for A to adopt the misleading representations of B as made on the product label for A's own conduct independently to be misleading. This is not the situation here. In my view his Honour was not making a pronouncement of a generally applicable principle but merely making the point (correct in my view) that, on the evidence, Saatchi's conduct would only be misleading if it adopted the representations made by NRMA through publication of the misleading advertisements. On the facts of this case Saatchi did not publish the advertisements and control of the process which led to publication (see [47] above) did not remain with Saatchi. 65 I agree entirely with his Honour's rejection of the submission that the appearance of the Saatchi name at the bottom of the advertisement was sufficient to convert the advertisement into a joint representation by NRMA and Saatchi. The relative proportions of the message of the advertisement and the reference to Saatchi are such as to negative that implication. In the absence of anything else in the advertisements that might support the claim I do not accept that Saatchi could be seen as having adopted the representations made by NRMA; see Gardam v George Wills & Co Ltd (No 1) (1988) 82 ALR 415 at 427. I would make only one further comment. In the advertisements Saatchi's name was printed in a font significantly smaller than the small print disclaimer which, it was accepted, was ineffective to prevent the advertisements being the misleading and deceptive. In my opinion, the most that might be understood by anyone who noticed the oblique and somewhat enigmatic reference to Saatchi would be that Saatchi had prepared the advertisement for the NRMA. In my view, a person who did not independently recognise the respondent's name as that of an advertising agency, would be unlikely to ascribe any meaning to the reference.

[26]

Was Saatchi's creation and development of the advertisements contravening conduct? 66 Mr Rares SC, counsel for the appellants, submitted that the act of creation of the advertisement was itself misleading and deceptive conduct within the meaning of s 12DA of the ASIC Act. He said: 'The fact that the advertising agency itself does not place the add in the newspaper or does not contract with the newspaper company to do so, we say, doesn't make any difference for the purposes of [s 12DA]. The conduct it engaged in was as a principle in preparing the misleading advertisement for publication doing everything that had to be done to get that message, which was misleading across, and giving it to the client which then published [it].' (emphasis added) 67 The highlighted comment above misstates the position. Saatchi did not do everything that had to be done to get the message across. The arrangements between NRMA and Saatchi were such as to make it clear that NRMA retained control of the process. It approved the advertisements that contained the information provided by NRMA. Without further action by NRMA, through Zenith, the advertisements themselves would not have been published. A finding of principal liability for breach of s 12DA cannot be reached in circumstances where the conduct itself was neither misleading nor likely to mislead or deceive anyone. Saatchi is said to have contravened s 12DA by 'preparing and causing the publication of the advertisements'. However, it is abundantly clear that Saatchi was not involved in the publication of the advertisements to the public but merely with their preparation. It is instructive to note that the amended application at first instance stated that NRMA contravened the ASIC Act by 'causing the publication of an advertisement'. It may be (and I make no finding on this issue) that Saatchi was knowingly involved in, or concerned with, NRMA's misleading and deceptive conduct by way of its involvement in the creation of the advertisement. That is not to the point. 68 The question is whether, in merely preparing the advertisement, Saatchi engaged in conduct that was misleading and deceptive or likely to mislead or deceive. The answer to that question must be no. Quite simply, Saatchi's conduct, absent steps being taken by NRMA, could never, on any analysis, have misled or deceived anyone. Although the advertisements may have been used by NRMA to mislead or deceive people there is nothing in Saatchi's conduct in and of itself which can be categorised as directly misleading or deceptive. The appellants' allegation is really that Saatchi helped NRMA to mislead people. That falls squarely within the category of behaviour to which the accessorial liability provisions in the TPA and ASIC Act are directed. 69 It seems to me that the misleading and deceptive conduct in respect of advertising NRMA's services arose from the publication of the advertisements to the public. There are good reasons why the statutory scheme found in both the TPAand the ASIC Actdistinguishes between principal and accessorial liability. Not the least important is that, on the construction posited by the appellants, Saatchi would have been liable as a principal even if NRMA had given it instructions that were bound to produce a misleading advertisement such as, for example, by misinforming Saatchi in some material way about the services that NRMA offered. 70 It is critical to remember that, although Saatchi produced the advertisements in question, their content was approved by NRMA and that the approval included a 'legal sign off'. It was NRMA who, although utilising Saatchi's expertise in conveying a message, chose what message to convey to the public and, ultimately, whether or not to deliver it. In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty (1981) 149 CLR 191 ('Parkdale v Puxu') the High Court considered a case in which a manufacturer distributed 'Rawhide' chairs which were very similar to a competitor's 'Rail and Post' chairs, but for the fact that the Rawhide chairs were clearly labelled with the manufacturer's name. In circumstances where a retailer had removed the manufacturer's name from the chairs and a customer mistakenly purchased them, believing that they were Post and Rail chairs, the majority of the High Court, per Gibbs CJ, Mason and Brennan JJ, held that the manufacturer's conduct had not contravened s 52 of the TPA. Although Parkdale v Puxu concerned a passing off type claim the comments of Brennan J, at 225, have some relevance to the present appeal: 'Conduct cannot be held to fall within s 52 unless a consumer, not labouring under any mistake or imperfection of understanding of law, would be or would be likely to be misled or deceived by that conduct.'

Cassidy v Saatchi & Saatchi Australia Pty Ltd

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Judgment (30 paragraphs)

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Legislation Cited (4)

Cases Cited (17)

Cited By (7)