Citation : MAGRO -v- FREMANTLE FOOTBALL CLUB LTD & ORS [2005] WASC 163

Appeal - Trade Practices Act 1974 (Cth) - Misleading and deceptive conduct - Conduct liable to mislead - Representations as to future matters - Misleading character of unfulfilled promises or predictions aside from operation of s 51A - Accessorial liability - Interaction between s 51A and s 75B - No sufficient basis shown at trial for finding of liability

Fair Trading Act 1987 (WA), s 9, s 10, s 14, s 68, s 79

Trade Practices Act 1974 (Cth), s 51A, s 52, s 53B, s 75B, s 82

1 STEYTLER P: The appellants appeal against the decision of a Supreme Court judge awarding damages against them pursuant to s 82 of the Trade Practices Act 1974 (Cth) ("the Act"). The award followed his finding that each of them had been involved in misleading or deceptive conduct by the Fremantle Football Club ("the Club") in contravention of s 52 and s 53B of the Act. The respondent has cross-appealed in relation to the assessment of damages awarded in his favour. He contends that a larger sum should have been awarded.

2 In 1997 the first appellant ("Mr Hatt") was the chief executive officer of the Club. The second appellant ("Mr McNeill") was the football manager of the Club. The third appellant ("Mr Kelly") was the Club's chairman. The respondent ("Mr Magro") was then an assistant coach at Collingwood Football Club in Victoria. There was a vacancy for the position of an assistant coach at the Club. An accountant, Mr Peter Gepp, contacted Mr McNeill in relation to the possibility of Mr Magro transferring to the Club. There were conversations between Mr Magro and the then senior coach of the Club, Mr Gerard Neesham, and between Mr Magro and Mr McNeill, concerning the possible appointment of Mr Magro. Mr Magro was formally interviewed for the position in Melbourne on 21 September 1997. The interview was conducted by Messrs Hatt, McNeill and Kelly on behalf of the Club.

3 In early October 1997 Mr Magro was told by Mr McNeill that he had been successful in his application for the position of assistant coach. His appointment as such was announced by Mr Kelly at a Club function on 4 October 1997. Mr Magro and his family moved from Melbourne to Perth. He took up the position soon afterwards.

4 In August 1998 the Club appointed a new senior coach, Mr Damian Drum. On 23 September 1998 Mr Magro was told by Mr McNeill and Mr Drum that he was no longer required as part of the Club's coaching staff and that his employment was terminated. He subsequently commenced proceedings for damages for breach of contract against the Club (as first defendant) and for damages against the Club, Mr Hatt, Mr McNeill and Mr Kelly for loss arising out of conduct in contravention of s 52 or s 53B of the Act or the equivalent provisions of the Fair Trading Act 1987 (WA) ("FTA"), being s 10 and s 14. This last claim relied upon a number of representations which were said to have been made to Mr Magro, or to Mr Gepp on his behalf, during September 1997.

5 It is necessary to set out, in some detail, what was pleaded by Mr Magro in his amended statement of claim.

6 The Club, through Mr McNeill, was said to have represented to Mr Gepp, acting on behalf of Mr Magro, that if Mr Magro was appointed to the position of assistant coach his contract "would be for a term of three years irrespective of who was the Senior Coach" and that Mr Magro "would be considered for the Senior Coach position in the future if it became vacant". These representations are said to have been made between 10 September 1997 and 12 September 1997 (par 9 and par 10 of the statement of claim). The statement of claim also alleges that, during the interview on 21 September 1997, Mr Hatt "stated that the Club agreed to a three year contract" (par 13) and (par 14) that each of Mr Kelly and Mr Hatt told Mr Magro that:

"(a) he would be interviewed for the future senior coaching position with the Dockers [the Club's football team] if Neesham was not re-appointed during the term of [Mr Magro's] appointment; and

(b) in relation to [Mr Magro's wife] the Club would obtain similar employment for her if [Mr Magro] relocated to Western Australia to take up the Position; and

(c) the Club would pay [Mr Magro's] relocation expenses to move from Victoria to Western Australia."

7 Then, in par 15 of the statement of claim, each of the appellants is said, by these pleaded statements, to have represented to Mr Magro, on behalf of the Club, that upon being appointed to the position of assistant coach:

(a) the contract for the position "was to be for a duration of three years";

(b) Mr Magro "would be interviewed for the senior coaching position with the Dockers if Neesham was not re-appointed during the term of [Mr Magro's] appointment";

(c) the Club "would obtain employment for [Mr Magro's wife] in or around Perth or Fremantle similar to her then employment in Melbourne as a medical receptionist"; and

(d) the Club would pay the relocation expenses of Mr Magro and his family from Victoria to Western Australia.

8 Each of these representations is pleaded (par 15A) to have been one "with respect to a future matter, namely the terms of the appointment of [Mr Magro] to the Position". Section 51A of the Act and s 9(1) of the FTA are said to apply to them. Section 51A reads as follows:

"(1) For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.

(2) For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation.

(3) Subsection (1) shall be deemed not to limit by implication the meaning of a reference in this Division to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead."

Section 9(1) of the FTA is identical to s 51A(1) of the Act, save for the use of the word "Part" instead of "Division" and the use of the word "person" in lieu of the word "corporation". Section 9(2) places the onus of establishing the existence of reasonable grounds on the person making the representation. Section 9(3) is drafted in terms equivalent to s 51A(3).

9 In par 33 of the statement of claim Mr Magro alleges that the pleaded representations were misleading or deceptive or likely to mislead or deceive him into believing that:

(a) he would be engaged by the Club as assistant coach and that he would "continue in that position for three years";

(b) he would be considered for and interviewed for the position of senior coach if that position became vacant within the three year period; and

(c) the Club "could and would" obtain employment for his wife as a medical receptionist within a reasonable time.

There is no plea that the representation in relation to the relocation expenses was misleading or deceptive.

10 Mr Magro alleges (par 32) that, relying upon and induced by the representations, he terminated his engagement with the Collingwood Football Club, accepted the position of assistant coach with the Club, sold his home in Victoria, relocated with his family to Western Australia, took up the position of assistant coach and prepared for and made himself available for an interview for the position of senior coach.

11 In par 34 Mr Magro pleads that the Club did not continue his engagement for three years or interview him for the position of senior coach and that it did not obtain employment for his wife as a medical receptionist.

12 Then, in par 35.1, Mr Magro alleges that the Club "engaged in conduct that was liable to and did mislead [him] in relation to and in seeking employment with the ... [Club and as regards] the terms and conditions of the employment contrary to s 53B of the [Act] and s 14 of the [FTA]". He alleges that he has suffered loss and damage as a result of the Club's contraventions of s 52 and s 53B of the Act or the FTA equivalents (par 36) and claims damages against each of the appellants pursuant to s 82 of the Act or s 79 of the FTA (par 37(b)).

13 The statement of claim also pleads a claim for breach of contract by the Club. It alleges that the Club "orally contracted to engage" Mr Magro in the position on the terms represented but that it breached those terms, causing him loss and damage.

Settlement by the Club and the bringing of a strike-out application

14 Shortly before the trial was due to commence, Mr Magro and the Club settled their differences. They entered into a deed of release. Mr Magro's action was discontinued against the Club. However, he maintained the action against the three appellants. No point has been raised concerning the effect, if any, of the deed of release on the action against the appellants. It is consequently unnecessary to give it further attention.

15 The appellants applied to strike out the statement of claim upon the ground that it disclosed no cause of action against them. The application was heard on 10 May 2005. In his submissions, counsel for the appellants said that Mr Magro's case against the appellants appeared to be pleaded solely upon the basis of accessorial liability, although the pleadings did not explicitly refer to s 75B of the Act (s 68 of the FTA) which, with s 82 (s 79 of the FTA), provides for liability of that kind. He said that, if it was alleged that the appellants had been knowingly concerned in the Club's contravention of s 52 and s 53B of the Act, the appellants were entitled "to have the details of that alleged involvement ... spelt out". Counsel for the appellants also complained that there was no plea under s 51A(1) of the Act that the Club did not have reasonable grounds for making the representations with respect to the future matters relied upon. He said that Mr Magro could not rely on the deeming provisions in s 51A(2) in order to establish an absence of reasonable grounds on the part of the Club. He relied, in this last respect, upon Quinlivan v Australian Competition and Consumer Commission [2004] FCAFC 175; (2004) ATPR 42-010 which, he said, supported the proposition that s 51A(2) did not apply to persons who were said to be liable solely as accessories under s 75B.

16 In his submissions in response to the application, counsel for Mr Magro, Mr Viner QC, acknowledged that the claim against the appellants relied solely upon accessorial liability. He acknowledged this in the following exchange with the trial Judge (transcript 19):

"BLAXELL J: The nub of [counsel for the appellant's] submission is that throughout [Mr Magro] has pleaded that those representations were made on behalf of the Club, on behalf of the first defendant. Therefore, you are pleading accessorial liability.

MR VINER: Yes. That's plain because of [paragraph] 37(b) [of the statement of claim] which involves section 82 and [paragraph] 34 [which] pleads the falsity of the alleged representations and that is the contraventions of the Act, being that the first defendant did not continue [Mr Magro's] engagement for three years, did not interview him for the position of senior coach and did not obtain employment for his wife ...

... It's pleaded on the face of it and the defendants by their defence, have responded to that."

17 Counsel for Mr Magro said that the pleadings made it plain that Mr Magro asked the court to find that the appellants were "ipso facto knowingly concerned in, or party to, the contravention by those representations" because they were the persons who had made the representations (transcript 21). In relation to s 51A, counsel for Mr Magro contended that Quinlivan applied only when the accessory was not "the prime actor" in the misleading or deceptive conduct. He accepted (transcript 25) that the pleaded case was that, as a matter of law, liability would be established "against all defendants" if Mr Magro proved only that the representations were made.

18 There was no discussion concerning the operation of s 9 of the FTA. The trial Judge specifically asked counsel for Mr Magro whether there was a claim made under the FTA. He replied that there was, but that "they are the identical provisions" (transcript 4). He did not say that Mr Magro also claimed that the appellants were liable as principals under the FTA. He did make some comments during the hearing of the application, in relation to the appellants being the prime actors in the conduct, which, when viewed in isolation, could be read as suggesting a claim under s 10 of the FTA against the appellants as principals, relying on s 9 of the FTA. However, in context, these submissions clearly appeared to be directed to a claim that the appellants were knowingly concerned in, or party to, a contravention by the Club and to the application of Quinlivan. This was the way in which he was understood by the trial Judge and counsel for the appellants.

19 It is necessary for me to refer to some of the comments made by the trial Judge during the course of the hearing of the strike-out application. He said that, as the pleading did not allege that there was a lack of reasonable grounds for the making of the representations by the Club as to future matters, he did not consider it open to Mr Magro to adduce evidence in that regard (transcript 7, 25). He also said that, as the pleadings stood, Mr Magro would "necessarily" have to rely upon the deeming provision in s 51A(2) of the Act and "overcome the hurdle of the decision in Quinlivan" (transcript 7). Towards the end of the hearing (transcript 28 - 29), the following exchange took place between Mr Mendelow, counsel for the appellants, and the trial Judge:

"MENDELOW, MR: I have already referred your Honour to the pleading issues that are required to be pleaded in relation to matters such as this, it's clear what my learned friend is relying on is purely the deeming provisions - - -

BLAXELL J: Exactly.

MENDELOW, MR: - - - under section 51A and his hurdle Quinlivan, so to speak ...

BLAXELL J: It won't be open to the plaintiff to adduce evidence to show that the representations were in fact without reasonable grounds.

MENDELOW, MR: Yes.

BLAXELL J: On the pleadings the plaintiff relies entirely upon the deeming provision.

MENDELOW, MR: That does, with respect, go some way to assisting us in relation to understanding how the matter is to be run. Your Honour, that being the position, it would seem then that principally what is relied upon is the deeming provision and there cannot be any other evidence adduced. That being the position, having clarification on that issue, I really make no further submissions ...

BLAXELL J: As against all defendants, the plaintiff could only succeed if he proves, on the balance of probabilities, that the representations as to future matters were made and, as against the [appellants], the plaintiff must also establish as a matter of law that the deeming provision in subsection (2) of section 51A applies to their accessorial liability.

MENDELOW, MR: Yes. That having been established, and if the plaintiff is not going to be relying upon any other matters, then obviously I can't require the plaintiff to plead any such matters. It was just to be prevented by being taken by surprise - - -

BLAXELL J: Certainly you clarified exactly what the issues are on the pleadings."

20 The matter then proceeded to trial upon this basis. In his judgment, given after the trial, the trial Judge found that Mr Magro had made it plain to Messrs McNeill, Hatt and Kelly that he would accept the position of assistant coach at the Club only if the term of the appointment was to be one of three years (at [112], [122]). He found that, during the interview on 21 September 1997, Mr Hatt told Mr Magro that this would not be a problem and that neither of Mr Kelly and Mr McNeill demurred when this was said (at [122]). He also found (at [122]) that Mr Magro was told that the Club would meet his costs of relocation, that it would use its best endeavours to find employment for his wife and that he would be considered for the position of senior coach if that position became available.

21 At [123], the trial Judge found that each of the appellants was aware that Mr Magro had accepted the appointment as assistant coach subject to these conditions at the time at which Mr Kelly publicly announced the appointment at the Club function on 4 October 1997. He found that, notwithstanding this, Mr Hatt told the Club's Board, on 6 October 1997, that Mr Magro's appointment was for "no fixed period" and that the Club, "within its internal processes", purported to employ Mr Magro on this basis. He also found that Mr Magro believed, at all material times, that he had been appointed for a three year term (at [128]).

22 The trial Judge went on to find that the Club had failed to honour its representations. He said that it did not interview Mr Magro for the vacant position of senior coach when that vacancy arose, that the Club had not paid some of Mr Magro's relocation expenses, that the Club had failed to use its best endeavours to find employment for Mrs Magro and that the Club had had no grounds for the termination of Mr Magro's employment on 23 September 1998.

23 He then turned to consider the liability of the appellants. He made a number of findings in this respect.

24 First, he held (at [130] - [131]) that the Club had contravened s 52 by making representations that were misleading or deceptive or likely to mislead or deceive; and that it had contravened s 53B by engaging in conduct that was liable to mislead Mr Magro in relation to, and in seeking, employment with the Club as to the terms and conditions of that employment. He found (at [131]) that these contraventions "were entirely the result of representations and conduct by each and all" of the appellants. He recognised (at [132]) that the claim against the appellants was one of accessorial liability pursuant to s 82 and s 75B of the Act. He also recognised that the claim was based on "representations made as to future matters, namely the terms of Mr Magro's proposed employment by [the Club]" (at [134]). He said in this respect that in his opinion, on the facts as found, the claim could have been based on a representation as to an existing fact, being a communication by Mr McNeill in early October 1997 which was "implicitly to the effect that Mr Magro had been appointed on the basis ... previously represented". However, he said (also at [134]) that the claim had not been pleaded in that way and it was consequently relevant for him to note the provisions of s 51A of the Act.

25 The trial Judge next considered Quinlivan. He said that that case "conclusively" determined that a plaintiff cannot rely upon the deeming provision in s 51A(2) in respect of a claim for accessorial liability against defendants other than a corporation (at [136]). He also said that the appellants would consequently only be liable if Mr Magro had established that "they each had actual knowledge that the relevant representations were made, and that such representations were misleading or that [the Club] had no reasonable grounds for making the same" (at [137]). His judgment continues (at [138]) - [143]), in passages which it is necessary to quote in full, as follows:

"Clearly, Mr McNeill was aware of the representations that he made on behalf of [the Club], and all of the remaining defendants [the appellants] were aware of the representations similarly made at the meeting with Mr Magro on 21 September 1997. The question whether each was also aware that the representations were misleading or that there were no reasonable grounds for making the same, requires a further consideration of the facts.

In this regard, it is common ground that each of the remaining defendants was authorised by [the Club] to act on its behalf not only in the negotiations with Mr Magro, but also in appointing him as assistant coach. Furthermore, it was the remaining defendants who had the authority to determine the terms on which such an appointment was made.

The self-evident and inevitable conclusion from the facts as found is that the second, third and fourth defendants [the appellants] failed to appoint Mr Magro as assistant coach on the terms as previously represented. Quite the contrary, little more than two weeks later Mr Hatt was able to state to the Board of Directors that Mr Magro had been appointed for "no fixed period". Similarly, [the Club's] subsequent lack of effort in finding employment for Mrs Magro, or in meeting all of Mr Magro's relocation expenses, is indicative of a failure by the remaining defendants to take steps to ensure that those representations would be met.

In these circumstances, the facts that are critical to the question of liability are that the remaining defendants represented to Mr Magro that he would be appointed on a particular basis, but then failed to exercise their authority and power to ensure that this occurred. They appointed Mr Magro without saying more, thus misleading him into believing that his appointment was as previously represented. Of necessity, these were all matters that were within the actual knowledge of the remaining defendants.

Given these circumstances, it is my view that there is simply no scope for s 51A(2) to operate. Put another way, in circumstances where accessorial defendants make representations as to future matters on behalf of a corporation, but then by their own conduct bring about the situation where those representations are not met, they are necessarily a 'party' to the contraventions involved. Accordingly, there is no need to resort to the question of whether there were reasonable grounds for making the representations because the defendants, by their own conduct, ensured that the representations did not come to pass.

Even if I am wrong in this view, it is relevant to note that the deeming provision in s 51A can only operate to the extent that the representations are "taken to be misleading". The deeming provision cannot operate in respect of representations that are 'likely to mislead' (s 52) or 'liable to mislead' (s 53B). In this regard, and on the facts as found, each of the remaining defendants was certainly a "party" to representations which were likely to mislead or liable to mislead."

26 Next, the trial Judge turned to a contention advanced on behalf of the appellants that, if he was to make the findings that he had in fact made, he should also find that Mr Magro "did indeed have a 3-year contract with [the Club], and thus (in that respect) there is no loss that can be claimed". He said (at [144]) that, while this submission was superficially attractive, it failed to "take account of the realities of what occurred". He explained this by saying (also at [144]):

"At all material times the [appellants] have either ignored or denied the existence of any such contract. Furthermore, there is no plea in the defence (either in the alternative or otherwise) that Mr Magro had a three-year term of appointment, and it follows that this submission should be rejected."

He went on (at [145]) to find that the appellants were liable to Mr Magro for the Club's contraventions of s 52 and s 53B of the Act. He added the following comments (at [145] - [146]):

"I make this finding notwithstanding the views that I expressed prior to trial when refusing leave for the [appellants] to bring an application to strike out the statement of claim. That proposed application was based on the contention that the authority of Quinlivan ... made the plaintiff's claim for accessorial liability untenable. At that time the first defendant [the Club] was still a party to the proceedings, and when refusing leave I stated (inter alia):

'As against all defendants, the plaintiff could only succeed if he proves, on the balance of probabilities, that the representations as to future matters were made and, as against the second to the fourth defendants, the plaintiff must also establish as a matter of law that the deeming provisions in subs (2) of s 51A applies to their accessorial liability.'

That statement was based upon my understanding of the case against the [appellants] at that time, but as it turns out, I have found them to be liable on a different basis. I have carefully considered whether this situation results in any unfairness to the [appellants], but in my view it does not. In this regard, my findings as to liability fall squarely within the ambit of the statement of claim as pleaded, and there is no area of potential evidence or argument which could conceivably have brought about a different result."

27 There are four grounds of appeal in respect of the finding of liability on the part of the appellants. These are essentially as follows:

1. The trial Judge "erred in law in finding that the failure on the part of the Appellants to take steps to ensure representations made to the Respondent would be met invoked the operation of section 75B of [the Act] or that each Appellant had the requisite state of mind to invoke the operation of [that] section".
2. The trial Judge "erred in fact and in law in holding that the Appellants misled the Respondent into believing he had a three year contract with [the Club] when upon a proper analysis of the events which occurred the [Respondent] did have a three year contract with the Club (albeit that the contract was not honoured by the Club)".
3. The trial Judge erred in holding that it was unnecessary for him to consider whether Mr Magro had a three year contract "when he should have held that it was necessary for the Respondent to plead and prove, and for him to find that there was no contract before the conduct of any Appellant could possibly be characterised as misleading and deceptive".
4. The trial Judge denied the appellants procedural fairness. The particulars to this ground contend that the trial Judge should not have made findings beyond the pleaded case in circumstances in which he had earlier agreed to confine Mr Magro to his pleading. The particulars also contend that he erred in his conclusion that the appellants suffered no prejudice as a consequence of Mr Magro being permitted to depart from his pleading. They allege that the appellants limited their defence and submissions to the matters pleaded in the light of the trial Judge's earlier ruling in that respect.

Ground 1 - Accessorial liability and representations as to future matters

28 As I have mentioned, Mr Magro's claim against the appellants, as it was advanced at the trial, depended upon s 52, s 53B and s 82 of the Act read with s 75B. No case was advanced that the appellants had themselves contravened the provisions of the FTA and were directly liable under s 79 of that Act.

29 Section 52 and s 53B of the Act read as follows:

(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

(2) Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1)."

"53B. Misleading conduct in relation to employment

A corporation shall not, in relation to employment that is to be, or may be, offered by the corporation or by another person, engage in conduct that is liable to mislead persons seeking the employment as to the availability, nature, terms or conditions of, or any other matter relating to, the employment."

30 The cases decided prior to the enactment of s 51A of the Act (quoted above) establish that a prediction or statement as to the future does not contravene s 52 merely because it turns out to be incorrect. Those cases (some of which are discussed below) revealed that there would only be a contravention if the prediction or statement encompassed a false statement in respect of an existing or past fact, which might include the state of mind of the person making the prediction or statement or of some-one whose state of mind might be imputed to that person. This was the approach adopted by Franki J in Thompson v Mastertouch TV Services Pty Ltd (1977) 15 ALR 487 at 495 (in the context of s 59 of the Act, which at the relevant time prohibited corporations from making false or misleading statements in specified respects).

31 In adopting that approach Franki J drew upon what had been said by the House of Lords concerning s 14(1) of the Trade Descriptions Act 1968 (UK). That section made it an offence for any person, in the course of any trade or business, "(a) to make a statement which he knows to be false; or (b) recklessly to make a statement which is false" in respect of specified matters. The House of Lords, in British Airways Board v Taylor [1976] 1 WLR 13, held that promises as to future conduct cannot have the character of being either true or false at the time they are made: Lord Wilberforce at 17, Lord Edmund-Davies at 23. Lord Fraser quoted from R v Sunair Holidays Ltd [1973] 1 WLR 1105 at 1109, where MacKenna J had said:

"A statement that a fact exists now, or that it existed in the past, is either true or false at the time when it is made. But it is not the case with a promise or a prediction about the future. A prediction may come true or it may not. A promise to do something in the future may be kept or it may be broken. But neither the prediction nor the promise can be said to have been true or false at the time when it was made."

However, the House of Lords went on to hold that "an assertion of existing fact and a promise of future conduct may both be found in one and the same statement" (at 23 per Lord Edmund-Davies). Each of Lord Edmund-Davies and Lord Fraser quoted MacKenna J's explanation of this in Sunair Holdings as follows:

"A promise or forecast may contain by implication a statement of present fact. The person who makes the promise may be implying that his present intention is to keep it or that he has at present the power to perform it. The person who makes the forecast may be implying that he now believes that his prediction will come true or that he has the means of bringing it to pass. Such implied statements of present intention, means or belief, when they are made, may well be ... punishable if they were false and were made knowingly or recklessly. But if they are punishable, the offence is not the breaking of a promise or the failure to make a prediction come true. It is the making of a false statement of an existing fact, somebody's present state of mind or present means."

32 There is a distinction between s 52 (and s 10 of the FTA), on the one hand, and the provisions considered by the House of Lords, on the other. The latter provisions made it an offence to make "a statement" which the maker "knows to be false" or recklessly to make "a statement which is false". Section 52 (and s 10 of the FTA) on the other hand, refers to "conduct" which is false or "misleading". Notwithstanding these distinctions, this approach was generally adopted in cases dealing with alleged contraventions of s 52 until the enactment of s 51A of the Act: Bill Acceptance Corporation Ltd v GWA Ltd [1983] FCA 269; (1983) 78 FLR 171 at 178 - 179 per Lockhart J; Stack v Coast Securities No 9 Pty Ltd (1983) 46 ALR 451 at 456 per Fitzgerald J; Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd [1984] FCA 180; (1984) 2 FCR 82 at 88; James v ANZ Banking Group Ltd [1986] FCA 41; (1986) 64 ALR 347 at 372 per Toohey J; Collier v Electrum Acceptance Pty Ltd (1986) 66 ALR 613 at 635 - 636 per Woodward J; Johnson v Eastern Micro Electronics Pty Ltd (1986) 70 ALR 339 at 350 per Ryan J. In James (at 372) Toohey J said, in respect of forecasts or predictions:

"(1) A corporation may be in contravention of s 52, whatever its intention or the state of mind of those controlling it ...

(2) The mere fact that representations as to future conduct or events do not come to pass does not make them misleading or deceptive ...

(3) Nevertheless, a statement relating to the future may contain an implied statement as to present or past fact. It may represent impliedly that the promisor has a present intention to make good the promise and it may represent impliedly that he has the means to do so ...

(4) A statement involving the state of mind of the maker of the statement, eg promises, predictions and opinions, ordinarily conveys the meaning that the maker of the statement had a particular state of mind when the statement was made and that there was basis for that state of mind. If the meaning contained in or conveyed by the statement is false in that or in any other respect, there will have been a contravention of s 52 ... "

33 Consequently, leaving to one side the operation of s 51A, it is established by the cases to which I have referred that the mere fact that a promise or prediction about the future does not come to pass does not make it misleading or deceptive, at the time that it was made, for the purposes of s 52. Nor does it make it liable to mislead for the purposes of s 53B. There must be an implied representation as to a present or past fact that is misleading or deceptive or liable to mislead or there must be a need for some qualification to be attached to the statement or for the disclosure of its possible non-fulfilment as a requirement of fair trading: see, in this last respect, Wheeler Grace & Pierucci Pty Ltd v Wright [1989] FCA 127; (1989) ATPR 40-940 at 50,251 per Lee J; Famel Pty Ltd v Burswood Management Ltd (1989) ATPR 40-962 at 50,509 per French J; Bowler v Hilda Pty Ltd (1998) 80 FCR 191 at 205 - 206 per Heerey J; Rousselis v Aizeema (Australia) Pty Ltd (1994) ATPR (Digest) 46-116 at 53,539 per Wilcox J; Phoenix Court Pty Ltd v Melbourne Central Pty Ltd (1997) ATPR (Digest) 46-179 at 54,432 per Goldberg J. This approach originates in and is generally consistent with the approach of the common law to misrepresentations: Edgington v Fitzmaurice (1885) 29 Ch D 459 at 483 per Bowen LJ; Ritter v North Side Enterprises Pty Ltd [1975] HCA 18; (1975) 132 CLR 301 at 303.

34 Some commentators have questioned the approach taken in the cases. D W Greig and J L R Davis, "The Law of Contract" (1987) suggest (at 814 - 815) that:

"As Fitzgerald J has pointed out in a slightly different context, in Tiplady v Gold Coast Carlton Pty Ltd [1984] FCA 152; (1984) 3 FCR 426 at 458, the offending conduct [for the purposes of s 52] may spread over a period of time ... So too in the case of promissory statements, it is arguable that the necessary conduct can consist of both the initial promise and its subsequent breach. It will be recorded that the High Court, in the Hornsby Building Centre case [1978] HCA 11; (1978) 140 CLR 216 and Parkdale v Puxu [1982] HCA 44; (1982) 149 CLR 191 ... had said that a contravention of s 52 is constituted by conduct which reasonably leads the applicant into error. If the respondent makes a contractual promise, the applicant may reasonably believe that it will be performed; when the promise is not performed, the applicant's belief is found to be erroneous, and it may fairly be said that the respondent's original promise, together with his subsequent repudiation thereof, is conduct which has led the applicant into error."

While these commentators have not been without their critics in this respect (see J Cornwall-Jones "Breach of Contract and Misleading Conduct: A Storm in a Teacup?" [2000] MelbULawRw 10; (2000) 24 Melbourne University Law Review 249 at 260; Futuretronics International Pty Ltd v Gadzhis [1992] VicRp 63; [1992] 2 VR 217 at 238 - 239 per Ormiston J), they have also not been without support, or qualified support: see, for example, Holt v Biroka Pty Ltd (1988) 13 NSWLR 629 at 636 per Kearney J. Others who have criticised the conventional approach are French J in Adelaide Petroleum NL v Poseidon Ltd (1988) ATPR 40-901 at 49,699 - 49,700 and, writing extra-judicially, in "A Lawyers' Guide to Misleading or Deceptive Conduct" (1989) 63 ALJ 250; Pincus J in Hamer v Westpac Banking Corporation (1987) 17 FCR 320 at 48,824; and C Lockhart in "The Law of Misleading or Deceptive Conduct" (2nd ed, 2003) at [4.19].

35 Notwithstanding these criticisms, the preponderance of authority supports the traditional approach (as has been recognised by most of those who have criticised it) and the remarks made in this respect by the Full Federal Court in Global Sportsman have many times been applied: see, for example, Milchas Investments v Larkin (1989) 96 FLR 464 at 476, where Young J pointed out that, even in Hamer and in Adelaide Petroleum, the established line of authority on the point was ultimately respected. In those circumstances, it would be inappropriate for this Court to depart from the established line of authority and, for my part, I would not be willing to do so.

36 Section 51A was introduced in 1986 as a consequence of the difficulties referred to by Franki J in Thompson. The explanatory memorandum which accompanied the amending legislation (the Trade Practices Revision Bill 1986) read as follows (at 20 - 21):

"Difficulties have occurred in relation to the ability of relevant provisions of Division 1 of Part V to deal with false or misleading statements, representations or predictions about future matters. The circumstances surrounding these representations are often matters within the knowledge of the person or corporation making the representation, and it has therefore been difficult to obtain conclusive proof of dishonesty or recklessness from the surrounding circumstances without an admission of guilt from the defendant.

These problems were highlighted in Thompson v Mastertouch TV Services Pty Ltd (1977) 15 ALR 487, in which Franki J held that:

' ... a prediction or statement as to the future is not false within the words of [s 59(1)] if it proves to be incorrect unless it is a false statement as to an existing or past fact which may include the state of mind of the person making the statement or of a person whose state of mind may be imputed to the person making the statement.' (Page 495)

Accordingly, a promoter's promise or prediction as to the performance or profitability of a business opportunity is not presently caught unless it is based on existing or past facts. Another problem identified in that case was that a promoter's promise or prediction is not caught by the Act unless it can be shown that the defendant 'did not believe that the forecast or prediction would be satisfied or was recklessly indifferent concerning the forecast or prediction'. (Ibid, page 495)

The new s 51A deems a prediction made by a corporation in relation to matters specified therein to be misleading for the purposes of Division 1 of Part V (including s 52) unless the corporation making the prediction has reasonable grounds for making the prediction. The onus is on the corporation to establish on the balance of probabilities that it had reasonable grounds for the belief."

37 I should mention, in respect of this issue of onus, that subpar (2) in the Bill, as it was originally introduced, provided that the onus of establishing that a corporation had reasonable grounds for making a representation referred to in s 51A(1) was "on the corporation". However, the wording of that clause was amended by the Senate to its current form before the amending legislation was enacted.

38 It seems to me that s 51A (as is the case with s 9 of the FTA) was intended to provide an additional avenue by which an applicant might prove that conduct involving a representation with respect to a future matter was misleading or likely to mislead. It is plain from s 51A(3) that s 51A(1) was not intended to limit the meaning of a reference in Div 1 of Pt V to a misleading representation or to one that is misleading in a material particular or to conduct that is misleading or is likely or liable to mislead. However, it has been accepted that s 51A(2), by negative implication, has the effect that, if a person adduces evidence that he or she had reasonable grounds for making a representation as to future conduct, then the representation will no longer be taken to be misleading: Futuretronics at 240 per Ormiston J; Quinlivan at [14]. This proposition has been criticised by C Lockhart "The Law of Misleading or Deceptive Conduct" (2nd ed, 2003) at [4.30]. He says:

"Dicta to the effect that statements as to the future which lie outside the ambit of s 51A are, for that reason alone, incapable of being misleading (Futuretronics International Pty Ltd v Gadzhis [1992] VicRp 63; [1992] 2 VR 217 at 240 per Ormiston J (Vic SC); Heidelberg Graphics Equipment Ltd v Andrew Knox & Associates Pty Ltd [1994] FCA 1085; (1994) ATPR 41-326 at 42,234 per O'Loughlin J (Fed CT)) appear, with respect, to be at odds with the express words of the provision (cf Lake Koala Pty Ltd v Walker [1991] 2 Qd R 49 at 58 per Connolly J (Qld SC)). Rather, s 51A would appear to expand the range of promises and predictions which may contravene s 52, by providing for an additional, procedurally advantageous means of proof of breach ... "

(Cp Peter Gillies "Representations as to the Future: Section 51A of the Trade Practices Act 1974 - Plaintiff's Sword or Defendant's Shield?" (2005) 7 UNDALR 99 at 107; and see, as regards the application of s 51A to implied representations of intention and other existing facts, Ting v Blanche [1993] FCA 524; (1993) 118 ALR 543 at 552 - 553 per Hill J; Digi-Tech (Australia) Ltd v Brand [2004] NSWCA 58; (2004) ATPR 46-248 at 54,238 - 54,239 per Sheller, Ipp and McColl JJA and, in relation to the limitation of s 51A to representations rather than conduct, Wheeler Grace & Pierucci at 50,254 per Lee J.)

39 That brings me to the question of accessorial liability under s 82 and s 75B(1) of the Act in the context of a claim for damages for contravention of s 52 or s 53B read with s 51A.

40 Section 82(1) of the Act provides that a person who suffers loss or damage by conduct of another in contravention of a provision of Pt V may recover the amount of that loss or damage by action against that other person or against any person involved in the contravention. Section 75B(1) of the Act reads as follows:

"(1) A reference in this Part [Pt VI, which includes s 82] to a person involved in a contravention of a provision of Part ... V ... shall be read as a reference to a person who:

(a) has aided, abetted, counselled or procured the contravention;

(b) has induced, whether by threats or promises or otherwise, the contravention;

(c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or

(d) has conspired with others to effect the contravention."

41 It is settled that a person will only come within the ambit of s 75B if that person intentionally participated in the contravention. This means that, in addition to the involvement of that person, there must have been actual knowledge of the essential matters which go to make up the offence (although a failure to inquire in combination with suspicious circumstances may lead to the conclusion that there was the requisite knowledge): Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661 at 667, 670 per Mason ACJ, Wilson, Deane and Dawson JJ, at 677 per Brennan J; Giorgianni v The Queen [1985] HCA 29; (1985) 156 CLR 473; Pereira v Director of Public Prosecutions (1988) 63 ALJR 1.

42 The interaction between s 51A and s 75B(1) has been considered in a number of cases: Australian Competition and Consumer Commission v Universal Sports Challenge Ltd [2002] FCA 1276; Australian Competition and Consumer Commission v Michigan Group Pty Ltd [2002] FCA 1439; King v GIO Australia Holdings Ltd [2001] FCA 308; (2001) 184 ALR 98; Australian Competition and Consumer Commission v Global Prepaid Communications Pty Ltd [2003] FCA 1221 and, ultimately, Quinlivan. In Quinlivan, the Full Federal Court (Heerey, Sundberg and Dowsett JJ) concluded (at [10]) that:

" ... s 51A does not detract from the Yorke principle that actual knowledge of the essential elements of the contravention is required if s 75B ... is to apply. 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 ... "

The court went on to conclude (at [11]) that the reversal of onus in s 51A(2) does not apply where accessorial liability under s 75B is relied on. Then, after saying that it was implicit in s 51A(1) that there will be no contravention of s 52 where a corporation has reasonable grounds for making a representation with respect to a future matter, the court went on to say (at [15]):

"Accordingly, where s 75B ... accessorial liability is in issue in relation to a representation with respect to a future matter, the existence or otherwise of reasonable grounds will be relevant. If reasonable grounds exist, there will have been no contravention and thus no question of accessorial liability will arise. However, as against the accessorial respondent, the onus will be on the applicant to show the respondent had actual knowledge that

• the representation was made and
• it was misleading or
• the corporation had no reasonable grounds for making it

(See Australian Competition and Consumer Commission v Michigan Group Pty Ltd [2002] FCA 1439 at [303].)"

43 That brings me back to the reasoning of the trial Judge.

44 It is plain, from what he said, that he found that the Club had contravened s 52 and s 53B of the Act ([131] of his judgment). However, he did not explain what it was that led him to this conclusion other than by referring to his prior findings to the effect that the representations as to future matters had been made and that the matters represented had not come to pass. I have already said that this, of itself, was not sufficient to render the misrepresentations misleading or deceptive, or likely to mislead or deceive or liable to mislead, at the time at which they were made. The trial Judge did not refer in this context to s 51A of the Act.

45 The trial Judge then turned to the issue of accessorial liability. After referring to s 75B, and to what had been said in Yorke, he observed that Mr Magro based his claim on representations as to future matters. I have earlier mentioned that he said (at [134]) that, on the facts found, the claim could have been based on a representation as to an existing fact (a communication by Mr McNeill to Mr Magro in early October 1997 that conveyed to Mr Magro that he had been appointed on the basis represented) but that the claim had not been pleaded in this way. That being so, he said (at [134]), it was "relevant to note" the provisions of s 51A. Then, as I have also mentioned, having referred to Quinlivan, he concluded (at [137]) that the appellants would "only be liable if the plaintiff has established that they each had actual knowledge that the relevant representations were made, and that such representations were misleading or that [the Club] had no reasonable grounds for making the same".

46 I have earlier set out the findings then made by the trial Judge in [138] - [146] of his judgment. Essentially, these amounted to the following:

(a) each of the appellants was aware of the representations that were made on behalf of the Club;

(b) the appellants had the authority to appoint Mr Magro as assistant coach and to determine the terms of his appointment;

(c) the appellants did not appoint Mr Magro on the terms represented;

(d) the appellants appointed Mr Magro "without saying more, thus misleading him into believing that his appointment was as previously represented";

(e) there was consequently no scope for the operation of s 51A(2) or, to put it differently, because the appellants had, "by their own conduct [brought] about the situation where [the] representations [were] not met, they [were] necessarily a 'party' to the contraventions involved" and there was no need to resort to the question whether there were reasonable grounds for making the representations;

(f) even if he was wrong in this last view, "the deeming provision in s 51A can only operate to the extent that the representations are 'taken to be misleading'" and cannot operate where they are "likely to" or "liable to mislead", as was the fact in this case; and

(g) even though he had earlier accepted that Mr Magro could only succeed against the appellants if s 51A(2) applied to their accessorial liability, there was no unfairness in his finding that the appellants were liable on a different basis as there was no evidence or argument that could have produced a different result.

47 There are, with due respect, difficulties with this reasoning insofar as it resulted in a finding of liability against the appellants.

48 The first is that, as I have said, on the existing state of authority the facts set out in (a) to (c) are insufficient, of themselves, to result in liability if, contrary to what had been pleaded, s 51A had no application.

49 The second difficulty is that, so far as (d) is concerned, this was not the case that was pleaded or run at trial against the appellants as, indeed, the trial Judge had earlier recognised (at [134] of his judgment). It was consequently not open to the trial Judge to find the appellants liable upon this basis: Banque Commerciale SA (en liq) v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 at 286 - 287; Dare v Pulham [1982] HCA 70; (1982) 148 CLR 658 at 664. Nor would it be open to this Court to uphold his finding upon that basis: Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1. In any event, the trial Judge said (at [146]) that his findings as to liability fell "squarely within the ambit of the statement of claim", from which it might be inferred that, notwithstanding his conclusion in (d), this was not his reason for imposing liability.

50 The third difficulty is that it is not clear what part, if any, s 51A(2) played in the trial Judge's reasons. It seems to me from what he said to the effect set out in (e) and (f) that he did not regard that section as having any operation in respect of the appellants. However, counsel for Mr Magro contended that the operation of the section may have led to the trial Judge's decision that the Club had contravened s 52, even though he did not mention it in that context. It has been held that s 51A(2) cannot be relied upon to establish the contravention by the principal in a case which proceeds only against the accessories: Universal Sports at [43] - [45] (where Emmett J regarded s 51A(2) as having no relevance in such a case); and see also Quinlivan at [11]. If that is correct, it was not open to the trial Judge to rely upon s 51A(2) if, indeed, he did so. An alternative approach might be that s 51A(2) continues to apply in such a case, but only for the purpose of determining whether there has been a contravention by the principal (irrespective of whether or not the claim is against the principal, or the accessory, or both). However, even this approach would not relieve a plaintiff of the obligation to prove that an accessorial defendant was involved in the contravention and, hence, that the defendant had actual knowledge of all of the essential elements of that contravention, including, where applicable, an absence of reasonable grounds for making a representation as to a future matter. It is consequently plain that s 51A(2) is, on any basis, of no practical assistance in establishing the accessorial liability of the appellants.

51 The next difficulty relates to the reasoning encapsulated in (e), so far as it is to the effect that the appellants were necessarily a party to the contraventions because they had, by their own conduct, brought about the non-fulfilment of the representations. On the existing state of authority referred to above, the mere fact that the appellants themselves subsequently brought about the non-fulfilment of representations that they had made on behalf of the Club cannot, of itself, result in their liability as accessories in the circumstances of this case. The only misleading conduct alleged against them is the making of the representations. Nothing has been pleaded, and no case was run at trial, to the effect that they had not, at the time of making the representations, intended to honour them or that they did not then have reasonable grounds for making them or that there was any other basis, apart from the reliance placed upon s 51A, for finding that the appellants knew of facts or circumstances that rendered the representations misleading or deceptive. The fact that they subsequently did nothing to bring about the matters represented (or if they subsequently prevented them from coming into being) might, in the absence of any explanation, raise an inference as to their earlier states of mind, or as to the absence of reasonable grounds for making the representations. However, the mere fact that they did nothing to honour their representations, or even deliberately prevented them from being honoured (in circumstances in which they have never been invited to explain their conduct because no inference was sought to be drawn against them arising out of it), does not of itself establish that the appellants knew that the representations were misleading or deceptive or likely to mislead or, so far as s 53B is concerned, that they were "liable to mislead" at the time at which they were made. Nor was the trial Judge entitled to find them liable on that basis when there was no pleading to that effect and when that was not the case that was run against them at the trial: Banque Commerciale SA at 286 - 287; Dare at 664; and see also Precision Plastics Pty Ltd v Demir [1975] HCA 27; (1975) 132 CLR 362 at 370; Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1 at 16.

52 In my respectful opinion, it was not open to the trial Judge to say (as he did, in the comments summarised in (g) above) that no evidence or argument could have produced a different result. I reiterate that no case was made against the appellants that their misleading conduct comprised not only the making of the representations but also their failure to bring them to fruition in circumstances in which they had the ability to do so (if a case of that kind is open: see, in this respect, Holt at 636; cp Futuretronics at 238 - 239). Had such a case been advanced, submissions would no doubt have been made concerning the question whether such a case is open on the existing state of the law. Also, I would be very reluctant to find that no additional evidence might have been adduced in that event. I reiterate, too, that no case was pleaded or run against the appellants, and nor do I understand any case to have been found against them, that they knew, at the time of making the representations, of their misleading character for the purposes of s 75B of the Act. Nor was any case run, or found, against the appellants, or any notice of contention lodged in support of the proposition, that they then lacked reasonable grounds for making the representations (s 9 of the FTA) for the purpose of establishing that they had themselves contravened s 10 or s 14 of the FTA. Rather, as I have said, a case of that kind was disclaimed and the trial Judge made it clear, in effect, that the appellants need not concern themselves with evidence regarding the existence of reasonable grounds.

53 Before leaving this ground I should comment briefly on an additional submission which, at one point during the appeal, was advanced on behalf of Mr Magro (as it had been during the strike-out application). The submission was that what was said in Quinlivan, to the effect that s 51A(2) has no application to an accessory, does not apply when the accessory is the "prime actor", in the sense of being the person who made the representations on behalf of the principal. It is enough to say, in that respect, that a defendant is either a principal offender or an accessory, whether a "prime actor" in the sense described or not. If the person is an accessory then, on my reading of Quinlivan, what was there said concerning s 51A(2) is applicable to that person. In any event the trial Judge did not decide the case upon that basis. There is no notice of contention in that respect or, as I have said, concerning the possible operation of s 9(2) of the FTA in this regard.

54 It follows that I am not persuaded that any sufficient basis was shown at the trial for a finding of liability on the part of any of the appellants. I would allow the appeal on this ground, set aside the judgment and orders made by the trial Judge and, in lieu, dismiss the action against the appellants.

55 This conclusion makes it unnecessary for me to address the remaining grounds of appeal or the cross-appeal. However, I will comment briefly on the remaining grounds of appeal in relation to liability (but not those which deal solely with quantum).

56 I have said that, while the trial Judge described as "superficially attractive" the submission that he should find that Mr Magro was in fact awarded a three-year contract with the Club and that there was, as a consequence, no loss that he could claim, he said that this did not "take account of the realities of what occurred". This was so, he said (at [144]), because the appellants had ignored or denied the existence of the contract and because there was no plea in the defence that Mr Magro had, in fact, a three-year term of appointment.

57 In his statement of claim, Mr Magro pleaded (par 20) that "the Defendants" had orally contracted to engage him for a term of three years. That plea (which was of course made when the Club was still a defendant) accorded with the representation that was pleaded to have been made earlier, namely that his "contract ... was to be for a duration of three years" (par 15). The pleaded representation was not one (and was not found to be one) to the effect that the Club would retain the services of Mr Magro for a period of three years in any circumstances. Nor, in my opinion, could it reasonably have been understood in that way. So to understand it would mean that the representation conveyed that there would be no breach of contract on the part of the Club by failing to retain Mr Magro for the period specified. There is no suggestion that this is what the representation conveyed and nor, in my opinion, could there sensibly be any such suggestion. What was said by Mahoney JA in Wright v TNT Management Pty Ltd (1989) 15 NSWLR 679 at 683 - 684, as follows, is apposite:

"Where what is said relates to the future, it will not always, as of necessity, be right to take the truth of it from the actor's conduct. Thus, where the statement, representation, or warranty is, for example, that rain will not fall next month, that will not, of necessity, give the other person to understand that it will not rain. The nature of such conduct is different: it may give the person to understand merely that, if the statement, representation or warranty proves wrong, the actor will pay damages or otherwise suffer the consequences of his inaccurate prediction. What is to be taken from a statement, representation or warranty of that kind will depend upon the circumstances of the case."

58 Next, it seems to me that it was undoubtedly necessary for the trial Judge to reach a conclusion whether or not a contract for a term of three years was in fact entered into, even though the Club was no longer a defendant and regardless of whether the defence filed on behalf of the appellants had, or had not, denied the existence of a contract in those terms. I have said that the trial Judge appeared to place some reliance on the non-fulfilment of the various representations in arriving at his conclusion that those representations were misleading or liable to mislead. If that was the basis for his conclusion, and assuming for this purpose that it was a sustainable basis, it was plainly necessary for the trial Judge to conclude whether or not the contract was in fact entered into for a term of three years. On the other hand, if the issue concerning the existence or non-existence of a three-year term was not determinative of the question whether or not there had been a misleading or deceptive representation in that respect (as seems to me to have been the case), that issue remained relevant to the assessment of damages. If Mr Magro had a three-year contract, then the prior misrepresentation concerning the term of the contract (if there was one in that circumstance) would have had no consequence. Any loss to Mr Magro would have resulted from the Club's breach of the contract and not from the misrepresentation.

59 It is difficult to see how, on the findings of fact made by the trial Judge, he could have arrived at any other conclusion than that the contract entered into between Mr Magro and the Club was one for a term of three years. I have said that he found that Mr Magro told the appellants, at the

interview on 21 September 1997, that he would only accept a contract if it was for a term of three years. I have also mentioned that he found that Mr Hatt indicated to Mr Magro that this would not be a problem and that neither Mr Kelly nor Mr McNeill demurred (at [122]). The three men were found to have had the authority to appoint Mr Magro and to determine the terms of his employment (at [139] and [141]). The trial Judge also found that the Club was aware, through the appellants, that the respondent was willing to accept the appointment only if it was for a three-year term (at [125]) and that, when the appointment was announced on 4 October 1997, all of the appellants were aware that Mr Magro had accepted the appointment subject to that condition (at [123]). I have also said that the trial Judge found that Mr McNeill's communication to Mr Magro in early October 1997 "was implicitly to the effect that Mr Magro had been appointed on the basis as previously represented" (at [134]). All of this evidence, accepted by the trial Judge, seems to me quite plainly to establish that the contract entered into was one for a three-year term.

60 Had it been necessary, I would consequently have upheld grounds 2 and 3 also.

61 As to ground 4, it will be apparent from what I have already said that I do not consider that it was open to the trial Judge to decide the case upon a basis different from that pleaded, in circumstances in which he had, prior to the commencement of the trial, made it plain that he regarded Mr Magro as being bound by his pleadings and in which the trial had been run accordingly: Banque Commerciale SA at 286 - 287. For the reasons already given, to the extent that the trial Judge did not confine his decision to the pleaded basis of the claim against the appellants, he was, in my respectful opinion, in error.

62 I would allow the appeal, set aside the decision of the trial Judge and the orders made by him and, in lieu, order that the plaintiff's action against the defendants be dismissed. It is unnecessary for me to consider the cross-appeal.

63 WHEELER JA: I have had the advantage of reading in draft the reasons for decision of Steytler P. I agree with those reasons and have nothing to add.

64 PULLIN JA: The President has set out a summary of the case, referred to the principles of law and recorded the findings that were made by the trial Judge.

65 As the President explains in his reasons, s 51A(2) of the Trade Practices Act 1974 (Cth) does not apply where accessorial liability under s 75B is relied upon. Moore J in King v GIO Australia Holdings Ltd [2001] FCA 308; (2001) 184 ALR 98 at [28] to [30] was prepared to acknowledge the arguability of a contrary view when he was hearing an application concerning pleadings. This view was based on a suggested interpretation of s 51A which would have it read that a corporation is deemed against any party to a proceeding not to have reasonable grounds for making a representation unless that party adduced evidence to the contrary.

66 In Australian Competition and Consumer Commission v Universal Sports Challenge Ltd [2002] FCA 1276, Emmett J rejected this view. That case was like this one, in the respect that the action was settled against the corporation and continued against the individuals who were involved in the contravention. Emmett J noted (at [43]) that if s 51A(2) applied against the accessory, it might give rise to a irrebuttable presumption that there were no reasonable grounds because the corporation, not being any longer involved in the case, could not adduce evidence to show that it had reasonable grounds and no evidence led by the accessory would lead to any different conclusion. Emmett J rejected the view identified by Moore J about the possible interpretation of s 51A. He then referred to policy considerations. Emmett J could see good policy reasons for imposing on a corporation which makes a representation with respect to a future matter the evidentiary onus of demonstrating that the representation was not misleading. He said that it was a different matter altogether to impose such a burden on a person who did not make the representation, even if the person was knowingly involved in the making of the statement.

67 The observations of Emmett J in his reasons between [43] to [45] were approved in Quinlivan v Australian Competition and Consumer Commission [2004] FCAFC 175; (2004) ATPR 42-010 at [13]. The consequence of this is that, in a case when a s 52 contravention is alleged against a corporation with a claim also against an accessory, the plaintiff has to prove against the accessory what it is not necessary to prove against the corporation, namely the absence of reasonable grounds for making the representation.

68 In this case the respondent could have mounted a case alleging that the appellants were "persons" who contravened s 10 of the Fair Trading Act, and have then relied on s 9 of the Fair Trading Act which reverses the onus of proof. The pleadings were arguably capable of sustaining such a claim, but they were ambiguous because par 36 pleaded the suffering of loss and damage only referring to a contravention by the corporation of s 52 of the Trade Practices Act and s 10 of the Fair Trading Act.

69 The ambiguity led the appellants to clarify the situation via the strike-out application. The President has explained how the appellants were left to understand that they faced a claim as accessories to a contravention by the club of s 52 of the Trade Practices Act and s 10 of the Fair Trading Act. It appears that counsel for the respondent did not ever seem to realise that it would have been a simple matter to make it clear that the case was that the appellants (not the club) contravened s 10 of the Fair Trading Act. He spoke of the appellants being "prime actors", but only to try and argue that Quinlivan's case did not apply to a claim against them as accessories to the club's contravention of s 52 of the Trade Practices Act and s 10 of the Fair Trading Act.

70 In [132] of the trial Judge's reasons for decision, he records the position taken by the respondent when he said:

"However, the plaintiff does not claim that the remaining defendants are directly liable for these contraventions in the sense that any of them personally breached s 10 or s 14 of the FTA. The case against the remaining defendants is that they are accessorily liable pursuant to s 75B of the TPA."

71 There is no notice of contention challenging that view of the case. I therefore agree with the President for the reasons that he gives (supplemented by my additional comments) that ground 1 must be upheld.

72 I would also uphold grounds 2, 3 and 4. As a result, the appeal must be allowed.