Ground 1: The Dove Pre-Contractual Representations and the requirement that the impugned conduct be conduct in "trade or commerce"
47 Section 18(1) of the ACL provides:
A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
48 The cross-respondents contend that the Dove Pre-Contractual Representations cannot have been conduct in "trade or commerce" and thus that the cause of action based on those representations, under s 18 of the ACL, cannot succeed.
49 I do not accept this contention, for the following reasons.
50 The seminal case concerning the meaning of "trade or commerce" for the purposes of s 18 of the ACL is Concrete Constructions (NSW) Pty Ltd v Nelson [1990] HCA 17; (1990) 169 CLR 594.
51 The relevant reasoning of the plurality (Mason CJ, Deane, Dawson and Gaudron JJ) was conveniently summarised by the Full Court of this Court (French J as his Honour then was; Sackville and Conti JJ) in Village Building Co Ltd v Canberra International Airport Pty Ltd [2004] FCAFC 240; (2004) 139 FCR 330 at 338 to 340 ([44] and [45]):
44. The joint judgment addressed the meaning of the expression "in trade or commerce" in s 52. The following propositions emerge from the judgment (cf the judgment of Dowsett J, dissenting, in Hearn v O'Rourke (2003) 129 FCR 64 at [28]):
(i) The phrase "in trade or commerce" in s 52 has a restrictive operation (at 602);
(ii) Two competing constructions of the phrase are available. The broader view would encompass (at 602-603):
... conduct in the course of the myriad of activities which are not, of their nature, of a trading or commercial character but which are undertaken in the course of, or as incidental to, the carrying on of an overall trading or commercial business.
This would extend, for example, to a case where one employee gives inaccurate information to another in the course of carrying on the building activities of a commercial builder. The narrower view is that the phrase "in trade or commerce" refers only (at 603):
... to conduct which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character. So construed … the words "in trade or commerce" refer to "the central conception" of trade or commerce and not to the "immense field of activities" in which corporations may engage in the course of, or for the purposes of, carrying on some overall trading or commercial business.
The narrower view is the correct construction of s 52;
(iii) Accordingly, what s 52 is concerned with is (at 604):
the conduct of a corporation towards persons, be they consumers or not, with whom it (or those whose interests it represents or is seeking to promote) has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character. Such conduct includes, of course, promotional activities in relation to, or the purposes of, the supply of goods or services to actual or potential consumers, be they identified persons or merely an unidentifiable section of the public.
(iv) In some areas the dividing line between what is and what is not conduct in trade or commerce may be less clear and (at 604):
... may require the identification of what imports a trading or commercial character to an activity which is not, without more, of that character. The point can be illustrated by reference to the examples mentioned above. The driving of a truck for the delivery of goods to a consumer and the construction of a building for another pursuant to a building contract are, no doubt, trade or commerce in so far as the relationship between supplier and actual or potential customer or between builder and building owner is concerned. That being so, to drive a truck with a competitor's name upon it in order to mislead the customer or to conceal a defect in a building for the purpose of deceiving the building owner may well constitute misleading or deceptive conduct "in trade or commerce" for the purposes of s 52. On the other hand, the mere driving of a truck or construction of a building is not, without more, trade or commerce and to engage in conduct in the course of those activities which is divorced from any relevant actual or potential trading or commercial relationship or dealing will not, of itself, constitute conduct "in trade or commerce" for the purposes of that section. That being so, the giving of a misleading handsignal by the driver of one of its trucks is not, in the relevant sense, conduct by a corporation "in trade or commerce". Nor, without more, is a misleading statement by one of a building company's own employees to another employee in the course of their ordinary activities. The position might well be different if the misleading statement was made in the course of, or the purposes of, some trading or commercial dealing between the corporation and the particular employee.
45. Since the alleged misleading or deceptive conduct in Concrete Constructions itself consisted of an internal communication between employees in the course of their ordinary activities in constructing a building, the conduct was not in trade or commerce (at 605). Thus the employer had not contravened s 52 of the TP Act.
(emphasis added)
52 The Full Court in Village Building Co then explained at 340 ([46] to [48]) matters to be borne in mind when applying the principles set down in Concrete Constructions:
46. In applying the principles laid down by the High Court it is helpful to bear in mind the context in which Concrete Constructions was decided. As Wilcox J observed in Barto v GPR Management Services Pty Ltd (1991) 33 FCR 389 at 393:
It is easy to understand the policy reasons underlying Concrete Constructions. A contrary result would have led to s 52 being used as a vehicle for the recovery of personal injury damages in a large number of industrial and motor accident cases; even cases where the respondent was not negligent, but only if it happened to be a "corporation" as defined in s 4 of the Trade Practices Act. And this development would have occurred at the very time that some States were legislating to exclude personal injury damages claims in industrial and/or motor accident cases.
47. The context assists in understanding the import of remarks in the joint judgment, which sometimes appear to be treated as though they are contained in a statute rather than a judgment construing a statute. For example, their Honours observed (at 604) that s 52 was:
… not intended to impose, by a side-wind, an overlay of Commonwealth law upon every field of legislative control into which a corporation might stray for the purposes of, or in connection with, carrying on its trading or commercial activities.
Clearly enough, this observation was directed at the construction worker's attempt to use s 52 of the TP Act to circumvent restrictions imposed by State law on the recovery of damages in personal injury cases. It should not be regarded as an independent principle of construction intended to narrow the scope of s 52 beyond what follows from the construction adopted by the joint judgment.
48. The joint judgment in Concrete Constructions acknowledged that the "dividing line" between conduct that is or is not in trade or commerce, according to the narrower construction of s 52 of the TP Act, may be difficult to draw. However, once the narrower construction of s 52 was adopted, the facts of Concrete Constructions clearly fell outside s 52. Other fact situations will be much closer to the line.
(emphasis added)
53 The Full Court in Village Building Co then referred to the divergence in views in this Court, as at 2004, concerning the application of the principles in Concrete Constructions to conduct involving representations made by an employer to an employee in connection with the employee's terms of employment. At 340 to 341 [49], the Full Court stated:
The difficulty that can arise in applying the principles in Concrete Constructions is illustrated by the different views expressed in this Court as to whether representations made by a corporation to an employee in connection with the employee's terms of employment constitute conduct in trade or commerce. In Barto v GPR Management, in the context of a strike out application, Wilcox J held (at 395) that negotiations with a prospective or present employee in respect of that person's employment contract are capable of falling within s 52 of the TP Act. In Martin v Tasmania Development & Resources (1999) 89 IR 98 (Martin) at [70]-[77] Heerey J disagreed, holding that a communication to an employee asserting that termination of his employment was required on operational grounds was not a dealing of a trading or commercial nature. (This issue was not addressed on appeal: Tasmania Development & Resources v Martin (2000) 97 IR 66.) In Stoelwinder v Southern Health Care Network (2000) 97 IR 76, Finkelstein J preferred Barto to Martin. In Hearn v O'Rourke (2002) 193 ALR 264, a case involving a different fact situation, Kiefel J at first instance expressed a preference for the reasoning in Martin. The Full Court allowed an appeal (Finn and Jacobson JJ; Dowsett J dissenting), but did not find it necessary to resolve the conflict: Hearn and Another v O'Rourke and Another (2003) 129 FCR 64.
54 The controversy does not appear to have been quelled in the interim. Of particular present relevance is that it cannot fairly be said that conduct prior to the creation of an employment relationship cannot be conduct in trade or commerce.
55 This is illustrated by Rakic v Johns Lyng Insurance Building Solutions (Victoria) Pty Ltd (Trustee) [2016] FCA 430; (2016) 259 IR 47 (Bromberg J). In that case, allegations were made that a prospective employer made misrepresentations to a prospective employee during pre-contractual negotiations. The person who became an employee of the representor claimed that such conduct contravened ss 18 and 31 of the ACL. Bromberg J at 65 [62] followed Kenny J in Walker v Salomon Smith Barney Securities Pty Ltd [2003] FCA 1099; (2003) 140 IR 433, noting that her Honour's finding in Walker that representations in pre-employment negotiations could support a s 52 Trade Practices Act 1974 (Cth) (TP Act) action was directly on point and formed part of the ratio decidendi in Walker. Bromberg J ultimately found that the pre-contractual representations made in Rakic were conduct that contravened s 18 of the ACL and that damages were payable (see 52 [6]).
56 In Walker, Mr Walker claimed that misrepresentations had been made to him qua prospective employee by his prospective employer during negotiations which culminated in his entry into a contract of employment. At 472 to 473 ([180] to [185]), Kenny J surveyed various authorities concerning the question of the application of Concrete Constructions to conduct occurring during the negotiation of employment contracts; and whether such conduct can be conduct in trade or commerce. Having done so, her Honour concluded that "misleading and deceptive conduct in the course of negotiations for employment may support a cause of action under s 52 of the TPA". Her Honour held that some of the alleged misrepresentations were made out and that Mr Walker was entitled to relief by way of damages.
57 A further example of a case in which representations made by a prospective employer to a prospective employee were found to have been conduct within trade or commerce is Russell v RCR Tomlinson Ltd (No 2) [2016] WASC 240 (Tottle J). In that case the "First Representation" was described as a representation made by the prospective employer to the prospective employee, in a conversation in which the Chief Executive Officer of the prospective employer told the prospective employee that he would be paid a retirement benefit by the prospective employer if his employment were terminated otherwise than for cause (see [5], [160(a)]). Tottle J reasoned relevantly as follows (at [171] to [175]):
Was the First Representation made in trade or commerce?
171 There are conflicting authorities as to whether representations made in the course of pre-employment negotiations are made in 'trade or commerce'. The authorities from which the conflict emerges were reviewed by Buchanan J in Westpac Banking Corporation v Wittenberg [2016] FCAFC 33 [181] - [196]. At [195] his Honour expressed the view that s 53B of the TP Act 'did all the work that was necessary with respect to pre-employment negotiations and that the more limited view of the reach of s 52 was the correct one'. That view was obiter dicta. McKerracher J relevantly agreed with Buchanan J's view. White J preferred not to consider the issue.
172 More recently in Rakic v Johns Lyng Insurance Building Solutions (Victoria) Pty Ltd (Trustee) [2016] FCA 430 [62], Bromberg J declined to follow the obiter view expressed by Buchanan J in Westpac Banking Corporation v Wittenberg and followed the decision of Kenny J in Walker v Salomon Smith Barney Securities Pty Ltd [2003] FCA 1099; (2003) 140 IR 433 [185], in which her Honour, after reviewing the relevant authorities, held that misleading or deceptive conduct in the course of negotiations for employment may support a cause of action under s 52 of the TP Act.
173 In Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594, 603 the majority (Mason CJ, Deane, Dawson & Gaudron JJ) held that the words 'in trade or commerce' in s 52 of the TP Act refer to the 'central conception' of trade or commerce and not to the immense field of activities in which corporations engage in the course of, or for the purposes of, carrying on some overall trading or commercial business.
174 In my view, the negotiations between Mr Russell and Mr Noordhoek fell within the central conception of trade or commerce because they concerned an agreement that related not only to Mr Russell's prospective employment but also to the protection, by means of the non-competition clause in the Services Agreement, of RCR's business and the business of any 'Related Body Corporate' for up to five years after the termination of Mr Russell's employment. The protection of a business by means of a non-competition clause is a matter undertaken in trade or commerce.
175 Accordingly, I conclude that the First Representation was made in trade or commerce.
(emphasis in original)
58 The existence of differing views as to whether conduct occurring as part of pre-contractual negotiations may be conduct in trade or commerce was also the subject of comment by McKerracher J in Zaghloul v Woodside Energy Limited (No 7) [2019] FCA 818 at [118]:
There are certainly cases since Concrete Constructions, including those on which Dr Zaghloul relies, where specific elements of the pleaded conduct have led courts to conclude that pleadings should not be struck out on a summary basis because of the manner in which conduct fell within the employment relationship sphere. But those cases have invariably involved features taking the conduct outside of the key realm of employment activities or transactions which, of their nature, bear a trading or commercial character. So, for example, differing views, mainly at a summary judgment level, have been expressed in relation to activities which are negotiations with an existing employee about a variation to an employment contract or negotiations with a prospective employee: Barto v GPR Management Services Pty Ltd (1991) 33 FCR 389 per Wilcox J (at 393-394), Stoelwinder v Southern Health Care Network (2000) 177 ALR 501 per Finkelstein J (at [6]), David Walker v Salomon Smith Barney Securities Pty Ltd [2003] FCA 1099 per Kenny J (at [185]-[188]) and McCormick v Riverwood International (Australia) Pty Ltd (1999) 167 ALR 689 per Weinberg J (at [28]-[31]).
(emphasis added)
59 More recently, in Sheehy v Nuix Pty Ltd [2023] FCA 56 at [36] Halley J noted that: "Conduct occurring in the negotiation of employment terms (for example, misleading statements) might be in trade or commerce", citing Walker at 472 to 473 ([180] to [185]).
60 In support of their submission that the Dove Pre-Contractual Representations should be struck out because such representations could not have been conduct in trade or commerce, the cross-respondents placed heavy reliance upon the decision of the Full Court (Buchanan, McKerracher and White JJ) in Westpac Banking Corporation v Wittenberg [2016] FCAFC 33; (2016) 242 FCR 505 and in particular the views expressed by Buchanan J at 540 [195]:
It is not necessary to address the wider question raised in some of the cases to which I have referred, although my own view is that s 53B of the TP Act did all the work that was necessary with respect to pre-employment negotiations and that the more limited view of the reach of s 52 of the TP Act was the correct one. In the present cases, the offers of a retention incentive payment were concerned with the internal affairs and management of SGB.
61 The cross-respondents submitted that the views expressed by Buchanan J at 540 [195], together with the concurrence of McKerracher J at 563 [334], are binding authority for the principle that representations made in pre-employment negotiations cannot be conduct in trade or commerce.
62 There are two aspects to the observations made by Buchanan J. The first is that s 53B of the TP Act operated to the exclusion of s 52 of that Act with respect to pre-employment contract conduct. The second is that the "more limited view" of the reach of s 52 of the TP Act was correct.
63 I do not accept that either of these views compels the striking out of the paragraphs of the FASCC which concern the Dove Pre-Contractual Representations, for the following reasons.
64 First, those views were each obiter.
65 So much is clear from the opening words of [195]. Further, Wittenberg involved alleged representations made during the employment relationship, as is clear from the judgment of Griffiths J at first instance: see Murphy v Westpac Banking Corporation [2014] FCA 1104 at [690] to [706] and [901] to [906] and Rakic at 64 [60]. Griffiths J held that as the representations were made to extant employees, the representations were not conduct in trade or commerce for the purposes of s 52 of the TP Act, or conduct "in relation to employment that is to be, or may be offered by the corporation or by another person" within the meaning of s 53B of the TP Act.
66 The Full Court upheld the approach taken by Griffiths J. Further, and importantly, as the Full Court agreed that the employees had failed to prove loss, the decision of the Full Court did not depend upon any finding as to whether the impugned conduct was conduct in trade or commerce. Thus, the ratio decidendi of the decision of the Full Court in Wittenberg does not extend to any conclusion as to whether conduct occurring prior to the formation of an employment relationship was in trade or commerce.
67 I note also that both Bromberg J in Rakic at 65 [62] and Tottle J in Russell at [171] treated the views of Buchanan J as obiter.
68 Secondly, it is not apparent, as a matter of statutory construction, that s 53B of the TP Act necessarily precluded the operation of s 52 of the TP Act with respect to pre-employment conduct; or in the present context that such a relationship exists between ss 31 and 18 of the ACL (noting also that there are textual differences between the two pairs of provisions). It is open to argument that the Court would be slow to conclude that s 31 of the ACL operates to the exclusion of s 18 of the ACL with respect to pre-employment conduct in circumstances where: (1) there is no textual imperative in either section for the conclusion that s 31 operates to the exclusion of s 18 with respect to pre-employment conduct; (2) the two provisions can operate together, albeit with overlap, with s 31 operating exclusively only where the conduct cannot be said to be conduct in trade or commerce; and (3) the objects of the Competition and Consumer Act include the enhancement of the welfare of Australians through the promotion of fair trading and it might be inferred that Parliament intended each section to operate to its fullest extent.
69 I note also that the cross-respondents have cited no binding authority in support of their submission that s 31 precludes the operation of s 18 in the present case.
70 Thirdly, the "more limited view of the reach of s 52" referred to in [195] of Wittenberg, which appears to be that s 52 of the TP Act did not apply to conduct in an employment context, is difficult to reconcile with the approach taken in the cases discussed at [55] to [59] above. I note also that Bromberg at 64 ([61] to [62]) expressed his agreement with the reservations expressed by White J, the third member of the Full Court in Wittenberg, at [347]:
Buchanan J has reviewed the authorities indicating divergent views on the question in this Court. Given that divergence, I would prefer to reserve to an occasion when it is necessary to do so consideration of the question of whether an employer's statements made to a prospective employee in relation to contemplated employment, or to an existing employee with a view to retaining the services of that employee, may be "conduct which is … an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character" (Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 603). I would not wish presently to preclude the possibility that an employer's statements of those kinds may be characterised differently from statements made by an employer in the context of an existing employment relationship concerning the place, manner or circumstances of an employee's work, which are generally thought not to have a commercial character. It may also be that misleading or deceptive statements to prospective or existing employees about future employment are analogous to misleading or deceptive statements to prospective or existing suppliers or goods or services about future supply arrangements. Conduct of the latter kind is commonly regarded as having a trading or commercial character.
(emphasis added)
71 I respectfully agree with White and Bromberg JJ.
72 In summary, as the above analysis demonstrates, the question whether conduct which is alleged to have occurred - as in the present case - between a prospective employer and a prospective employee can be conduct in trade or commerce is an open question. There are authorities to the effect that a claim under s 18 of the ACL (or its predecessor, s 52 of the TP Act) based upon an allegation concerning pre-contractual conduct by a prospective employer to a prospective employee may be conduct in trade or commerce, and that an allegation to that effect should not be struck out: see e.g. Barto v GPR Management Services Pty Ltd [1991] FCA 659; (1991) 33 FCR 389 (Wilcox J) and Stoelwinder v Southern Health Care Network [2000] FCA 444; (2000) 177 ALR 501 (Finkelstein J). Further, in Walker, Rakic and Russell such conduct was found - on a final basis - to have been conduct in trade or commerce for the purposes of s 52 of the TP Act or s 18 of the ACL.
73 I note that in the cases discussed above the person alleged to have engaged in the contravening conduct was the prospective or extant employer, and that in the present case the person alleged to have engaged in the contravening conduct is the prospective employee. However, I do not regard this as a point of distinction that compels a conclusion that the alleged misrepresentations cannot have been conduct in trade or commerce. No authority has been cited to the Court to the effect that a representation made by a prospective employee to a prospective employer cannot be conduct in trade or commerce. To adopt the expression of Wilcox J in Barto at 395, it cannot be said, without an investigation of the facts, that the proposition that such conduct is conduct in trade or commerce is so clearly untenable as to justify striking out a pleading which relies upon it. Those facts may include the terms of the draft employment contract, including any post-employment restraints upon Mr Dove such as those set out at cll 20.6 to 20.8 of his employment contract (cf Russell at [174]).
74 For all of the above reasons, ground 1 fails.