Houghton v Arms [2006] HCA 59 | Case summary

What happened

Mr Arms conducted business under the name Australian Cellar Door. He developed a proposal for an internet website (www.auscellardoor.com.au) that would allow small to medium independent wineries to sell wine directly to consumers at a lower sales-tax rate and without paying the usual 30 per cent distributor margin. WSA Online Limited was retained to design, construct and administer the site. Mr Student, described as WSA Online project manager, introduced Mr Houghton, described as the "guru of interactive website design and development", to Mr Arms.

At a meeting in late January 2000 Mr Houghton told Mr Arms that the ANZ e-Gate financial-transaction product would be "perfect" for the business. He said customers could pay by all major credit cards with funds clearing directly into the winery's account for a small transaction fee. Either Mr Houghton or Mr Student added that wineries could be added to the site "by simply filling in a form" and paying a small set-up fee. In fact, the ANZ Bank had informed WSA that each winery required its own credit-card merchant facility, an approval process, financial data and, in some cases, a business plan. WSA itself would hold the e-Gate licence and sub-licence the facility.

On 23 June 2000, days before the planned launch and after approximately 30 wineries had been enrolled, Mr Student informed Mr Arms that Mr Houghton had made a mistake. Each winery would need separate merchant accreditation with ANZ, Diners Club and American Express, supported by two years' profit-and-loss statements and a business plan. It was impossible to obtain that accreditation in the time available. To preserve credibility with the enrolled wineries, Mr Arms converted Australian Cellar Door into a retailer, absorbing a 5 per cent commission, paying higher sales tax, and operating at a loss for 12 months until June 2001. Ryan J found that, had Mr Arms known the true position earlier, he would have adopted a profitable structure by November 2000 and would have avoided a seven-month "set back" loss of $58,331.

Proceedings were commenced in the Federal Court. WSA was sued for contravention of s 52 of the Trade Practices Act 1974 (Cth) and judgment was entered against it for $58,331. The claims against Mr Houghton and Mr Student were initially framed as accessorial liability under s 75B but that claim was abandoned. Instead, the trial proceeded on the basis that each had contravened s 9 of the Fair Trading Act 1999 (Vic). Ryan J dismissed the claims against the individuals on the ground that neither was engaged in trade or commerce on his own account. The Full Court of the Federal Court allowed Mr Arms' appeal, holding that an employee acting within the scope of actual authority could be liable. The High Court granted leave, heard the appeal, and dismissed it with costs. The Director of Consumer Affairs Victoria appeared as amicus curiae supporting Mr Arms.

Why the court decided this way

The joint judgment rests on a close reading of the text and structure of s 9 of the Fair Trading Act 1999 (Vic). Section 9(1) provides that "[a] person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive." The court emphasised that the prohibition is addressed to any "person", a term that, by ordinary principles of construction and s 38 of the Interpretation of Legislation Act 1984 (Vic), includes natural persons and is not limited to those trading on their own account or as principals.

The court applied the construction of "in trade or commerce" given in Concrete Constructions (NSW) Pty Ltd v Nelson to s 9. That construction limits the phrase to conduct that has the character of an aspect or element of trading or commercial activities or transactions. The representations about the simplicity of the ANZ e-Gate facility and the absence of additional documentation plainly satisfied that test because they were made in the course of WSA's business of supplying website services and in the course of Mr Arms' own commercial venture. It was irrelevant that the employees were not themselves proprietors; the section does not, in terms, refer to the trade or commerce "of any particular" person.

A central plank of the reasoning is that the status of an employee does not, in the world of tort or under this statute, divest the individual of personal liability. The court cited Lord Rodger in Standard Chartered Bank v Pakistan Shipping Corpn (Nos 2 and 4) for the proposition that an employee remains personally liable for wrongful acts committed in the course of employment. There is "no good reason" to read s 9 as though it contained the words "as principal". To read the word "person" down to exclude employees would not promote the main purpose of the Act, stated in s 1(a), of encouraging fair trading practices.

The court rejected the argument that the absence of provisions equivalent to s 75B (accessorial liability) and s 84(2) (deeming conduct on behalf of a corporation) in the Fair Trading Act between 1999 and 2003 required a narrower construction. Those omissions did not impliedly limit the generality of s 9(1). The court noted the concurrent operation of the two statutes, upheld in R v Credit Tribunal; Ex parte General Motors Acceptance Corporation, and observed that no constitutional difficulty arose. It was also unnecessary to decide whether WSA could have been liable under s 159 of the Fair Trading Act as well as under s 82 of the Trade Practices Act, or to explore double-satisfaction questions.

The judgment further drew on Hamilton v Whitehead to confirm that the distinct legal personality of a corporation means an individual's act can be both a corporate act and the separate act of the individual. Thus, even if the appellants' conduct was also attributed to WSA, that did not prevent their own direct liability under s 9. The primary judge had erred in law by treating the absence of an independent commercial interest as decisive.

Before and after state of the law

Prior to the Fair Trading Act 1999 (Vic), the Fair Trading Act 1985 (Vic) had applied prohibitions on misleading conduct to individuals and partnerships in terms modelled on s 52 of the Trade Practices Act. That earlier statute was enacted to take advantage of the developing federal case law and to implement a ministerial agreement for uniform legislation. Part V of the Trade Practices Act rested primarily on the corporations power, but s 6 extended its operation to individuals in defined circumstances, and s 75 expressed an intention not to exclude concurrent State laws.

The 1999 Act continued that policy. Section 9 was cast in substantially identical language to s 52, and s 159 mirrored s 82 save that it referred only to "any person involved in the contravention". Between 1999 and 2003 the Victorian statute contained neither an equivalent of s 75B(1) (defining involvement) nor a general deeming provision corresponding to s 84(2). The latter provision had been limited to prosecutions under the 1985 Act. The legislative history therefore left a "lacuna" that the court was required to fill by ordinary principles of construction rather than by importing Commonwealth accessorial or deeming mechanisms.

The 2003 amendments inserted a new s 145 and substituted s 144, supplying counterparts to the federal provisions, but the events in suit occurred before those changes. The High Court's decision therefore interprets the unamended 1999 Act. It confirms that the absence of those provisions does not narrow the primary prohibition in s 9. After the decision, practitioners understood that employees could be joined directly under State fair-trading legislation without proof of the mental elements required for accessorial liability under federal law. The concurrent operation of the two regimes was reinforced, allowing plaintiffs to choose the statutory pathway most advantageous on the facts.

Key passages with plain-English translation

Paragraph [20] states that the construction of "in trade or commerce" in Concrete Constructions "applies to s 9 of the FT Act". In plain English: the same test used for the federal Act governs the Victorian one; the conduct must be part of business dealing, not private chatter.

At [22] the court says the representations "undoubtedly were of this nature". Translation: telling a businessman that a payment system needs only a simple form is exactly the sort of commercial advice the law regulates.

Paragraph [36] contains the pivotal sentence: "in the world of tort the status of an individual as an employee does not divest that person of personal liability for wrongful acts committed while an employee. There is no good reason for treating the text of s 9 any differently and, in particular, for construing the section as if it read '[a] person, as principal, must not ...'." Plain English: just because you are on the payroll does not give you immunity from being sued personally for misleading someone; the Victorian Parliament did not hide a "only bosses can be sued" rule inside the word "person".

Paragraph [37] notes that reading down "person" to exclude employees "would not promote" the statutory object of fair trading. Translation: limiting the law to company directors or sole traders would undermine the very purpose of stopping deceptive sales talk.

At [49] the court adopts the statement from Hamilton v Whitehead that "the act of an individual might be both a corporate act and the separate act of the actor as an individual". Translation: a company and its employee can both be on the hook for the same misleading statement; one does not cancel out the other.

These passages are grounded squarely in the joint reasons and supply the ratio that later courts must apply when employees are sued under equivalent State provisions.

What fact patterns trigger this precedent

The precedent is triggered whenever an employee makes a representation or omission that satisfies three elements: (1) the actor is a "person" (including a natural person employed by a corporation); (2) the conduct occurs "in trade or commerce", meaning it has the character of an aspect or element of trading or commercial activities (Concrete Constructions test); and (3) the conduct is misleading or deceptive or likely to mislead or deceive, causing loss or damage recoverable under s 159.

Typical triggers include: an employee of a professional-services firm (web designer, accountant, consultant) giving incorrect advice to a client about regulatory requirements, technical specifications or financial products; sales staff misdescribing product attributes or approval processes; project managers assuring a customer that "no further paperwork is needed" when in fact approvals, licences or financial data are required. The employee need not have an independent commercial interest, nor act as principal. The representation need only form part of the commercial transaction between the customer's business and the employer's business. The precedent applies even if the employer is also sued under the Trade Practices Act, because the statutes operate concurrently. It is not necessary to prove the mental elements required for accessorial liability under s 75B. The fact that the employee was acting within actual authority is sufficient to engage personal liability.

Conversely, the precedent does not apply to purely internal communications (as in Concrete Constructions itself) or to conduct lacking any commercial character. It is not limited to cases where the employee is the "embodiment" of the company under the Tesco organic theory; direct liability arises independently.

How later courts have treated it

The judgment itself treats Concrete Constructions as supplying the authoritative construction of "in trade or commerce" and applies it without qualification to s 9. It treats Hamilton v Whitehead as supporting, rather than undermining, personal liability, emphasising the dual character of an individual's acts. Standard Chartered Bank is cited for the tort principle that employment does not confer immunity, and Tesco Supermarkets Ltd v Nattrass is distinguished on the basis that no allegation was made that the appellants were the "mind" of WSA. The reasoning in General Motors Acceptance Corporation is relied upon to confirm that the Trade Practices Act does not cover the field so as to exclude State liability.

The court rejects any implied limitation derived from the absence of s 75B or s 84 equivalents, thereby giving the 1999 Act (pre-2003 amendments) the same practical reach against individuals as the federal regime achieves through accessorial provisions. Subsequent references in the reasons to Astvilla Pty Ltd v Director of Consumer Affairs (a Victorian Supreme Court decision) reinforce that a narrow reading of "person" would frustrate the statutory purpose. The judgment therefore stands as a deliberate choice to preserve the widest possible application of the primary prohibition, consistent with the legislative history of uniform consumer-protection laws. Courts applying the decision are directed to focus on the commercial character of the conduct rather than the employment relationship or the existence of parallel corporate liability.

Still-open questions

The court expressly left open whether WSA might also have been held liable in damages under s 159 of the Fair Trading Act as well as under s 82 of the Trade Practices Act, and what procedural consequences would follow. Questions of double satisfaction and election between concurrent liabilities therefore remain for future decision.

It was unnecessary to decide whether the organic theory of corporate liability (Tesco Supermarkets Ltd v Nattrass) could render WSA directly liable on the basis that the appellants were its "embodiment", because no such case was pleaded or proved. The boundary between direct corporate liability and vicarious liability for statutory contraventions is therefore untouched.

The interaction between the pre-2003 version of the Fair Trading Act and the post-2003 amendments that inserted equivalents to ss 75B and 84 was not explored. Whether the addition of those provisions alters the construction of s 9 itself is unanswered.

Finally, the precise scope of "in trade or commerce" in hybrid situations (for example, where an employee speaks partly in a personal capacity and partly on behalf of the employer) is not settled by the reasons, although the emphasis on the commercial character of the specific representations supplies a strong pointer. The extent to which the decision applies to conduct regulated by the Australian Securities and Investments Commission Act 2001 (Cth) after the financial-services carve-out from the Trade Practices Act is also left for another day.

Gotchas

Most practitioners still assume that only the company can be sued for employee misstatements and that a separate accessorial case with its higher mental-element threshold is required. Houghton v Arms shows the opposite is true under State fair-trading Acts: the employee is a primary contravener under s 9, mental elements are irrelevant, and the claim can run in accrued jurisdiction alongside the federal corporate claim. Another gotcha is the belief that "in trade or commerce" requires the employee to have a personal profit motive; the court makes clear that the test looks at the character of the conduct, not the actor's ownership of the business. Finally, many miss that the 1999-2003 legislative lacuna actually widened direct liability; the absence of a deeming provision like s 84(2) did not shrink s 9 but left it to operate at full strength against individuals. Pleading only the federal accessorial route can therefore unnecessarily complicate proof and expose the claim to Yorke v Lucas defences that are irrelevant to a direct s 9 case.

Judgment (53 paragraphs)

D J O'Callaghan SC with M D Rush for the appellants (instructed by Deacons)

P J Riordan SC with D W Bennett for the respondent (instructed by Middletons)

D R Williams QC with S Bhojani for the Director of Consumer Affairs of Victoria appearing as amicus (instructed by Department of Justice)

Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

Trade practices − Misleading or deceptive conduct in trade or commerce - Where appellant employees of a corporation made misleading or deceptive statements to respondent in the course of their employment − Where the corporation was sued for contravention of s 52 of the Trade Practices Act 1974 (Cth) ("the Commonwealth Act") by reason of the conduct of the appellants − Where the appellants were also sued for contravention of s 9 of the Fair Trading Act 1999 (Vic) ("the State Act") − Whether each appellant was a "person" for the purposes of s 9 of the State Act − Whether conduct of each appellant was "in trade or commerce" for the purposes of s 9 of the State Act.

Statutes − Statutory construction − Construction of s 9 of the State Act − Where the Commonwealth Act and the State Act have concurrent and overlapping operation − Where the Commonwealth Act had, but the State Act did not have, provisions imposing accessorial liability upon persons "involved" in a contravention − Where the Commonwealth Act had, but the State Act did not have, provisions deeming conduct engaged in on behalf of a corporation to have been engaged in by the corporation − Whether s 9 of the State Act is to be construed so as not to apply to persons who were not engaged in trade or commerce on their own account.

Trade Practices Act 1974 (Cth), ss 52, 75, 75B, 82, 84.

The action giving rise to this appeal was instituted by the present respondent (Mr Arms) in the Federal Court of Australia. He sought declaratory relief and damages in respect of alleged misleading and deceptive conduct. It was admitted on the pleadings that each of the first appellant (Mr Houghton) and the second appellant (Mr Student) was an employee of WSA Online Limited ("WSA"). WSA was the first respondent to the action but was subject to a deed of company arrangement.
At the trial before Ryan J, Mr Arms recovered judgment against WSA in the sum of $58,331, but his claims against Mr Houghton and Mr Student were dismissed[1]. WSA on the one hand and Mr Houghton and Mr Student on the other had had separate representation. Mr Houghton and Mr Student thereafter have maintained their joint representation. WSA has not been a party to the subsequent steps in the litigation.
An appeal by Mr Arms against the dismissal of his claims against Mr Houghton and Mr Student was allowed by the Full Court (Nicholson, Mansfield and Bennett JJ)[2] essentially on the basis that an employee acting within the scope of actual authority could be liable for misleading or deceptive conduct. The orders of Ryan J were varied, with the result that judgment was entered against all three respondents. The particular order now read: "There be judgment for [Mr Arms] against [WSA, Mr Houghton and Mr Student] in the sum of $58,331.00."
It is against these Full Court orders that Mr Houghton and Mr Student appeal to this Court.
The Court received written and oral submissions by the Director, Consumer Affairs, Victoria, who administers the relevant State legislation. The submissions were presented as amicus curiae but their effect was to support the respondent, Mr Arms.

Mr Arms traded under the name "Australian Cellar Door" and formulated a proposal for the provision by means of an internet web site, www.auscellardoor.com.au, of a service for the direct marketing of the products of small to medium independent wineries. The expectation was that direct "cellar door" sales would attract sales tax at a much lower rate and would avoid the need for the payment by the wineries of the margin, usually in the order of 30 per cent, required by agents or distributors when sales were effected by retail outlets.
WSA was engaged to provide advice and services on web site design, construction and administration. Mr Student was described in the dealings with Mr Arms as "WSA Online project manager" and he introduced his fellow employee, Mr Houghton, to Mr Arms as the "guru of interactive website design and development".
At a meeting in late January 2000, or shortly thereafter, Mr Houghton told Mr Arms that he was aware of a financial transactions product called "ANZ e‑Gate" which would be "perfect" for the requirements of Mr Arms' business. It was said that this facility would enable customers to pay by means of all major credit cards with funds clearing directly into the account of the relevant winery, in return for the payment by the winery of a small transaction fee. Thereafter, either Mr Houghton or Mr Student told Mr Arms that wineries could be added to the auscellardoor web site (incorporating the ANZ e‑Gate facility) "by simply filling in a form" and paying a small set‑up fee.
However, WSA was told by the ANZ Bank in meetings conducted by Mr Houghton that WSA should obtain an e‑Gate licence from that bank and then sub‑licence Australian Cellar Door or others of its clients requiring a facility of that kind. WSA was also told that each winery would be required to have an ANZ credit card merchant facility which was plugged into the ANZ e‑Gate engine; each winery would be subject to an approval process consisting of a completed application form, financial data and, perhaps, a business plan. Later, in February 2000, WSA and the ANZ Bank agreed that the ANZ e‑Gate licence would belong to WSA and the credit card merchant facilities would belong to the individual wineries who had signed up with auscellardoor.
On 23 June 2000, Mr Student told Mr Arms that Mr Houghton had made a mistake in describing the operation of the ANZ e‑Gate facility and that Australian Cellar Door would have to arrange for each participating winery to become a "merchant" accredited by the ANZ Bank, and for separate merchant accreditation to be obtained of Diners Club and American Express. Mr Student further said that to achieve that accreditation each winery would have to provide to those three entities acceptable profit and loss statements for the last two years and a business plan. At that stage, Australian Cellar Door had already enrolled about 30 wineries and its web site was to be launched within five days. In that time it was impossible for Mr Arms to arrange for the wineries to comply with the conditions necessary for them to become individual merchants.

Something more first should be said of the framework of the Federal Court action. As applicant, Mr Arms initially claimed declarations that WSA had contravened s 52 of the Trade Practices Act 1974 (Cth) ("the TP Act")[5] and that Mr Houghton and Mr Student were "involved" in that contravention within the meaning of s 75B(1), thereby rendering them, as well as WSA, subject to the recovery under s 82(1) of the TP Act of the amount of the loss or damage suffered by Mr Arms[6].
The particular claim under s 75B(1) was that the individual respondents had been knowingly concerned in, or parties to, the contraventions of s 52 by WSA. Pursuit of that claim would have involved proof of the mental elements indicated by Yorke v Lucas[7], something not required to establish the direct or primary contraventions of s 52 alleged against WSA[8].
The claim of accessorial liability under s 75B(1) was expressly abandoned when an amended application was filed. Instead, the trial was conducted on the pleading that the individual respondents had contravened a State law, s 9 of the FT Act.

Part 2 of the FT Act (ss 7‑32) is headed "Unfair Practices" and s 9 states:

"(1) A person must 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 Part is to be taken as limiting by implication the generality of sub‑section (1)."

The term "engaging in conduct", which accommodates the phrase "engage in conduct"[9], is defined in s 3 so as to include refusing to do an act and refraining (other than inadvertently) from doing an act.

Section 159 appears in Pt 11 of the FT Act, which is headed "Enforcement and Remedies". Section 159(1) states:

"A person who suffers loss, injury or damage because of a contravention of a provision of this Act may recover the amount of the loss or damage or damages in respect of the injury by proceeding against any person involved in the contravention."

The FT Act replaced the Fair Trading Act 1985 (Vic) ("the 1985 Act"), together with the Consumer Affairs Act 1972 (Vic) and the Ministry of Consumer Affairs Act 1973 (Vic). The new legislation was designed to continue the application to individuals and partnerships, by the 1985 Act, of prohibitions upon misleading or deceptive practices that were prohibitions cast in the same terms as those in the TP Act. The TP Act had rested principally on the corporations power. The 1985 Act had been modelled upon the TP Act, partly to take advantage of the body of case law which had developed in the preceding decade and partly to implement an agreement between State and Territory Ministers to use the federal statute "as the basis upon which uniform legislation is to be developed"[10].
Part V of the TP Act (ss 51AF‑75AS) encompasses a range of provisions dealing not only with unfair practices but also with the implication of certain conditions and warranties in consumer transactions. Section 6 gives these provisions an operation in some circumstances which does not rely upon the corporations power. Section 75, with an exception respecting offence provisions (of which s 52 is not one[11]), stated a legislative intention that Pt V not "exclude or limit the concurrent operation of any law of a State or Territory". The validity of that provision, as respects the operation of State law and the operation of s 109 of the Constitution, was upheld in R v Credit Tribunal; Ex parte General Motors Acceptance Corporation[12].
The similarities between the text of s 52 of the TP Act and s 9 of the FT Act, and between s 82(1) and s 159(1) will be readily apparent. However, several points should be noted. First, s 159 differs from s 82(1) by omitting any reference to the party whose conduct contravened the statute and referring only to those involved in the contravention[13]. The legislative assumption appears to be that involvement in a contravention includes the actor whose conduct occasioned the contravention. Secondly, at the relevant time[14], the FT Act contained no counterpart to s 75B(1) of the TP Act, so that there was no statutory exegesis of the phrase "any person involved in the contravention" appearing in the damages provision in s 159(1). The reason for this lacuna in the FT Act (covering the period 1999‑2003) was not explained.
Thirdly, the opening words of s 9(1) are "[a] person", whilst those of s 52(1) are "[a] corporation". However, when s 52(1) is read with the additional operation given it by s 6 of the TP Act, it is apparent that, in some circumstances, s 52(1) applies immediately to individuals. On the other hand, in accordance with ordinary principles of construction, and subject to any apparent contrary intention, a body corporate may answer the description of "a person" in s 9(1) of the FT Act[15]. It is not expressly limited to "natural persons".

In respect of the individuals, Mr Houghton and Mr Student, the Federal Court had accrued jurisdiction to determine the non‑federal claim made against them under the FT Act. It was this claim which Ryan J dismissed, the Full Court allowed and is now before this Court.
The expression "accrued jurisdiction" appears in authorities including Fencott v Muller[16] and Australian Securities and Investments Commission v Edensor Nominees Pty Ltd[17]. In Edensor, the Court saw no harm in the continued use of the term "accrued jurisdiction" provided it be borne in mind that, whilst there might be several claims made in litigation, there was but one "matter", and that jurisdiction conferred with respect to that matter is not "discretionary" and ordinarily is to be exercised by the court concerned[18].
The appellants were joined by the Full Court in the order for damages made against WSA but, by following a distinct and different statutory path from that followed for WSA. In particular, the appellants emphasise that the State legislation lacked an accessorial provision but was applied to fix them with liability without proof of the mental element that would have been required for proof of their accessorial liability under the federal law.

It may be observed that (a) while on the face of things WSA was amenable to claims against it of contravention both of s 52(1) of the TP Act and of s 9 of the FT Act, only the former was relied upon and damages were sought against it under s 82(1) of the TP Act; (b) while the extended operation of s 52(1) given by s 6 of the TP Act[19] in the present circumstances was not said to apply directly to Mr Houghton and Mr Student, they may have been amenable to the combined operation of ss 52, 75B and 82 of the TP Act had the claim of accessorial liability not been dropped; and (c) Mr Houghton and Mr Student were "persons" to whom s 9(1) of the FT Act apparently was addressed directly and who suffered the liability to damages imposed by s 159 of the FT Act. Mr Houghton and Mr Student, the present appellants, challenge proposition (c).
The grounds upon which the appellants put their case are related and fix upon their character as individuals who acted in the course of their employment by WSA. It is said that WSA, but neither of the appellants, could answer the description "a person" in s 9(1) of the FT Act, and further that the individuals were not "for themselves" acting "in" trade or commerce as required by s 9(1), as distinct from acting in the trade or commerce of the company.
The second submission may be dealt with forthwith and rejected. The first submission will require more detailed consideration, but also should be rejected.

The text and structure of the comparable provisions of the two laws are not identical, but, as submitted by the respondent, it may be accepted that the construction of the phrase "in trade or commerce" as it appears in s 52 of the TP Act which was given by this Court in Concrete Constructions (NSW) Pty Ltd v Nelson[20], applies to s 9 of the FT Act[21].
In Concrete Constructions, Mason CJ, Deane, Dawson and Gaudron JJ construed the expression "in trade or commerce" as referring only to conduct with the character of an aspect or element of trading or commercial activities or transactions[22]. The representations to the effect that in order for Mr Arms effectively to operate the auscellardoor web site, he would not be required to obtain from the wineries any documentation other than a form with provision for banking details, undoubtedly were of this nature.
Moreover, in his judgment in Concrete Constructions, Toohey J emphasised that, while in most cases, the focus would be on the nature of the business of the party making the representation, s 52 was not so limited; in particular, the section did not, in terms, refer to the trade or commerce of any particular corporation[23]. Accordingly, statements made by a person not himself or herself engaged in trade or commerce may answer the statutory expression if, for example, they are designed to encourage others to invest, or to continue investments, in a particular trading entity[24].
Mr Arms was engaging in trade and commerce under the name "Australian Cellar Door" and by means of the auscellardoor web site. He enlisted WSA to provide services and advice for the purposes of his business. It was the business of WSA to provide such advice and services. It is not to the point that Mr Houghton and Mr Student themselves were not business proprietors or that their activities were an aspect or element of the trade or commerce of WSA (and of Australian Cellar Door) but not of "their" trade or commerce. Mr Houghton and Mr Student nevertheless engaged in conduct in the course of trade or commerce and were thus within the ambit of the FT Act.

Did s 9 of the FT Act otherwise not apply to the appellants?

Reference has been made earlier in these reasons to the absence from the Victorian legislation between 1999 and 2003 of an equivalent of the accessorial provision of s 75B(1) of the TP Act. There was a further curiosity of the legislation in that period, as follows.
Section 84(2) of the TP Act was described by Lockhart J in Walplan Pty Ltd v Wallace[25] as both in form and substance a deeming and enlarging provision of general application to civil and criminal proceedings under the TP Act, designed to facilitate the proof of the responsibility of a corporation. However, the FT Act, before a new s 144 was substituted in 2003[26], had a provision of this nature applying only for prosecution purposes and not for the purposes generally of the FT Act.
Section 84(2) states:

"Any conduct engaged in on behalf of a body corporate:

(a) by a director, servant or agent of the body corporate within the scope of the person's actual or apparent authority; or

(b) by any other person at the direction or with the consent or agreement (whether express or implied) of a director, servant or agent of the body corporate, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, servant or agent;

shall be deemed, for the purposes of this Act, to have been engaged in also by the body corporate." (emphasis added)

The validity of s 84(2) was upheld in Fencott v Muller by Gibbs CJ[27].

The upshot of the legislative history in Victoria is that, because the critical events occurred between 1999 and 2003, s 9 of the FT Act falls for application in a context in which there is no counterpart of s 75B(1) or s 84(2) of the TP Act.
The appellants are fixed with the findings by the primary judge respecting the conduct in which they engaged, being certain acts and omissions. As indicated earlier in these reasons, these were "in trade or commerce". Why then are the appellants not persons who contravened the prohibition imposed by s 9 of the FT Act? As a general proposition, and as Lord Rodger of Earlsferry stressed in Standard Chartered Bank v Pakistan Shipping Corpn (Nos 2 and 4)[28], in the world of tort the status of an individual as an employee does not divest that person of personal liability for wrongful acts committed while an employee. There is no good reason for treating the text of s 9 any differently and, in particular, for construing the section as if it read "[a] person, as principal, must not ...".
The main purposes of the FT Act include (s 1(a)) the promotion and encouragement of "fair trading practices". As Bell J pointed out in Astvilla Pty Ltd v Director of Consumer Affairs[29], and as relied upon by the present respondent, to read down the word "person" in s 9(1) to exclude employees would not promote that object.
It is no answer that a provision such as s 75B(1) of the TP Act, had it been found in the FT Act, could have drawn in parties who were neither officers nor employees of a principal. Further, while s 84(2) assisted the case against WSA under the TP Act, the effect of s 75 and the decision in General Motors Acceptance Corporation[30], is that no field of liability thereby was covered to the exclusion of any operation of s 9 of the FT Act.
It is unnecessary to determine whether, in addition to the appellants, WSA might have been held liable in damages under s 159 of the FT Act as well as in respect of its liability under s 82 of the TP Act, and the procedural consequences of such an outcome[31].
Even in the absence in the FT Act of a facilitative provision to the effect of s 84(2) of the TP Act, it may be that, had it been shown that the appellants were "an embodiment" of WSA in the sense described by Lord Reid in Tesco Supermarkets Ltd v Nattrass[32], liability of WSA would have been direct. No question then would have arisen respecting the applicability of tortious notions of vicarious liability to contraventions of s 9 of the FT Act. But, as the respondent stressed, there were no such allegations, findings or evidence in this case to found any application of the reasoning in Tesco.

The attack on the outcome in the Full Court fails. The appeal should be dismissed and the appellants pay the costs of the respondent.

"(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)."

Part V (in which s 52 appears) no longer applies to the supply of financial services within the meaning of Pt 2 Div 2 of the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act"). Section 51AF of the TP Act provides for this excision from the TP Act. Section 12DA of the ASIC Act deals with the misleading or deceptive conduct in relation to financial services, as defined in s 12BAB thereof. ↑

Section 75B(1) provides that a reference in Pt VI of the TP Act (which includes s 82) to a person involved in a contravention of a provision of Pt IV or Pt V shall be read as referring to a person who:

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

Section 82(1) renders liable in damages not only the person whose conduct contravened a provision of Pt IV or Pt V, but also "any person involved in the contravention". ↑

[8]

Yorke v Lucas (1985) 158 CLR 661 at 666, 675‑676. ↑

[9]

Interpretation of Legislation Act 1984 (Vic) ("the Interpretation Act"), s 39. ↑

[10]

Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 28 May 1985 at 20. See also Zeus & Ra Pty Ltd v Nicolaou (2003) 6 VR 606 at 625. ↑

[11]

See s 79, which creates offences in respect of certain conduct in relation to contraventions of Pt VC of the TP Act (ss 75AZA-75AZU). ↑

[12]

(1977) 137 CLR 545 at 561‑565 per Mason J, with whom Barwick CJ, Gibbs and Stephen JJ agreed. ↑

[13]

The earlier Victorian statute, the 1985 Act, had, in s 37(1), followed closely the terms of the federal provision. ↑

[14]

Before the insertion of a new s 145 by s 58 of the Fair Trading (Amendment) Act 2003 (Vic) ("the 2003 Amendment Act"). The 1985 Act had included in s 31 a provision following s 75B(1). ↑

[15]

Interpretation Act, s 38; K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309 at 324. ↑

(2001) 204 CLR 559 at 585‑586 [52], 638‑639 [218]. ↑

For example, by including the conduct of individuals using postal, telegraphic or telephonic services (s 6(3)). ↑

See Prestia v Aknar (1996) 40 NSWLR 165 at 182; Fasold v Roberts (1997) 70 FCR 489 at 528. ↑

See Fasold v Roberts (1997) 70 FCR 489 at 531. ↑

By s 56 of the 2003 Amendment Act. The 1985 Act had included in s 39(2) a provision following s 84(2). ↑

(1983) 152 CLR 570 at 583; cf per Mason, Murphy, Brennan and Deane JJ at 600, Dawson J at 618‑619. ↑

[2003] 1 AC 959 at 973‑974. See also at 968 per Lord Hoffmann. ↑

See as to "double satisfaction", Baxter v Obacelo Pty Ltd (2001) 205 CLR 635 at 659‑661 [57]-[63]. ↑

[1972] AC 153 at 170; see also as to this "organic theory", Walplan Pty Ltd v Wallace (1985) 8 FCR 27; Hamilton v Whitehead (1988) 166 CLR 121 at 127. ↑

Houghton v Arms

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